<PAGE>
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[LOGO]
EquiTrust Series Fund, Inc.
ANNUAL REPORT
JULY 31, 2000
INVESTMENT MANAGER AND
PRINCIPAL UNDERWRITER
EQUITRUST INVESTMENT
MANAGEMENT SERVICES, INC.
5400 UNIVERSITY AVENUE
WEST DES MOINES, IA 50266
1-800-247-4170 (OUTSIDE IOWA)
1-800-422-3175 (IN IOWA)
225-5586 (DES MOINES)
This report is not to be
distributed unless preceded or
accompanied
by a prospectus.
737-028(00)
<PAGE>
PRESIDENT'S LETTER
Dear Shareholder:
For the twelve-month period ended July 31, 2000, the Standard & Poor's 500
Stock Composite Index (S&P 500) was up 8.96% on a total return basis, and the
Dow Jones Industrial Average (DJIA) was up only 0.27%. While its streak of
dramatic price gains may have ended after the NASDAQ Composite Index peaked in
March, the Index finished the twelve-month period up 43.02%. During the same
twelve-month period, the Russell 2000 small cap index rose 13.77%.
Relative to historical valuation measures, the major equity market indices
remain aggressively valued. Price-to-earnings (P/E) ratios for the S&P 500 are
at nearly twice the 30-year average of 15.6. The market valuation of equities as
a percentage of gross domestic product (GDP) is nearly three times its 75-year
average.
The numbers for the tech-heavy NASDAQ are more extreme than the S&P 500.
However, even the S&P 500 has become increasingly dominated by technology. The
technology sector weighting as a percentage of the overall S&P 500 Index has
increased from 22% on June 30, 1999, to 33% as of June 30, 2000. The S&P 500
technology sector P/E ratio of 60 is roughly double that of the non-tech portion
of the index.
The fixed income markets generally outperformed equities during the period.
High-grade corporate bonds returned 4.70% and long-term Treasury bonds returned
9.40%. In general, longer maturity and higher quality bonds performed best.
During the 12 months ended July 31, 2000, the consumer price index (CPI)
rose 3.5%, compared to 2.1% for the prior 12 months. Higher energy prices
contributed substantially to this increase.
Federal Reserve Chairman Alan Greenspan has initiated a series of interest
rate hikes with the objective of slowing the economy to a level of growth he
deems sustainable. Of particular concern to him is the possibility of rising
wage costs due to the historically low unemployment rates observed recently.
During the first half of 2000, the Fed raised the short-term, Federal Funds
rates in three increments from 5.50% to 6.50%. These moves follow three upward
moves during 1999.
Some indications of economic slowdown have occurred and many market
participants now believe that the Fed may be done raising rates for the present
time. Others have argued that soft numbers for the second quarter may be due to
unique factors that stimulated more activity in the first quarter at the expense
of the second. Increased electronic tax filing accelerated tax refunds earlier
in the year, while taxes being paid on capital gains took place during the
second quarter. Also, a warmer first quarter stimulated construction activity
early in the year and may have robbed that activity from the second quarter's
schedule. Accordingly, it is possible the economy will show some rebound in the
third quarter. The Fed's "soft landing" may or may not have already been
achieved.
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 activity.
VALUE GROWTH: Since the March 1, 2000 management changes, we have
substantially restructured the Portfolio. Convertible bonds and preferred stocks
have been reduced to only nominal
2
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amounts. We have sought to reduce the most heavily weighted individual positions
and also to reduce our exposure to micro-cap securities. The goal of these
actions is to reduce our tracking error relative to the major market indices and
to ensure that the Portfolio is representative of the overall U.S. economy.
The five-month period since the end of February has seen substantial
volatility, particularly in the tech-heavy NASDAQ. The NASDAQ Composite Index
reached a closing price peak of 5048.62 on March 10th and then declined to a low
of 3164.55 on May 23rd. After declining for the first two months of the year,
the S&P 500 rose sharply during late March to a high of 1527.46 and then fell
sharply during mid-April to a low of 1357.31. Much of the decline in the S&P 500
can be attributed to the performance of its technology component.
Since the first of March, the NASDAQ has been the real news in terms of
percentage moves. From its March-high to May-low closing prices, the index
declined by over 37%. The high/low range for the S&P 500 was just over 11%.
The P/E ratios for both indices remain at rather high levels relative to
historic norms. The P/E for the NASDAQ is currently 155.06x and for the S&P 500,
30.86x. These extremely high valuations give us some cause for concern. However,
a large number of stocks trade at very substantial discounts to the averages,
and we have focused our attention on those stocks.
<TABLE>
<CAPTION>
7/31/2000 S&P 500
SECTOR PORTFOLIO WEIGHTING INDEX WEIGHTING DEVIATION
------ ------------------- --------------- ---------------
<S> <C> <C> <C>
Basic Materials.................... 6.52% 1.93% +4.59%
Capital Goods...................... 11.75% 7.93% +3.82%
Community Services................. 6.00% 6.79% -0.79%
Consumer Cyclicals................. 11.19% 7.35% +3.84%
Consumer Staples................... 12.64% 10.21% +2.43%
Energy............................. 8.34% 5.40% +2.94%
Financial.......................... 13.77% 12.65% +1.12%
Health Care........................ 9.56% 11.59% -2.03%
Technology......................... 3.59% 33.10% -29.51%
Transportation..................... 3.37% 0.59% +2.78%
Utilities.......................... 7.29% 2.46% +4.83%
</TABLE>
The technology sector has experienced substantial price volatility during
recent months. The current P/E ratio for the sector is 55.7x. We utilized the
price volatility to begin doing some bargain shopping in this sector, but an
abrupt recovery rally somewhat curtailed our actions. Following a 2.6% increase
in our exposure, we remain dramatically underweight in this sector. We believe
that much of the pricing in this sector remains quite unrealistic and that we
will have opportunities in the future to add to this important sector at more
modest valuations. Even as the overall sector valuations remain high, individual
issues have been dealt with harshly following any earnings disappointment. Such
responses may at times be overreactions and provide us with opportunities.
HIGH GRADE BOND: Over the twelve-month reporting period, the Federal
Reserve has raised the rate charged on overnight loans between banks by 1.5% to
a nine-year high of 6.5%. These increases were made due to concerns that the
robust U.S. economy and tight labor market could possibly lead to an increase in
future inflation. At the same time the Fed was raising short-term rates, the
U.S. Treasury began to use part of the current budget surplus to buy back
long-term Treasury issues. As a result of the
3
<PAGE>
shrinking supply of long-term bonds, the yield on the 30-year Treasury bond
declined over this timeframe while shorter maturity issue yields increased. For
example, the 2, 10, and 30-year Treasury issues yielded 5.62%, 5.90% and 6.10%,
respectively, as of July 31, 1999, and 6.28%, 6.04% and 5.79% as of July 31,
2000.
Over this time period, corporate issues underperformed Treasury issues. The
yield spread between corporates and Treasury issues reached historically wide
levels for a non-recessionary period as increased volatility in the equity and
bond markets, the general decline in overall credit quality and fears of slower
economic growth weighed on the corporate market. These wider spreads made
corporates look very attractive and we increased our exposure to this asset
class. Our duration has increased slightly during this period and is now almost
equal to that of the Lehman Brothers U.S. Aggregate Index. Given the recent
decline in absolute yields available in the market, we do not plan to extend our
duration and we will probably let it drop slightly going forward.
HIGH YIELD BOND: During the past twelve months, the high yield bond market
greatly underperformed the high-grade bond market. For example, the Lehman
Brothers U.S. Investment Grade Corporate Index had a total return of 4.83%
compared to a -0.67% return for the Lehman Brothers U.S. High Yield Corporate
Index for the 12 months ending July 31, 2000. Higher actual defaults, a general
decline in credit quality and net cash outflows from high yield mutual funds
hurt performance. Given these factors, the average yield spread has continued to
widen so that it stood at an average of 694 basis points at the end of July 2000
compared to 553 basis points at the end of July 1999, according to the DLJ High
Yield Index.
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 to increase our exposure to
higher yielding issues. Barring an economic recession, these current spread
levels appear to provide adequate compensation for taking on the credit and
market risk inherent in the high yield market.
MANAGED: The Managed Portfolio has undergone a rather dramatic
transformation. We have sought to substantially increase the exposure to common
stocks and to reduce the exposure to convertible bonds and preferred stocks. As
we have made common stock acquisitions for the Value Growth Portfolio, we have
normally added the names to the Managed Portfolio, but often in different
weightings. In addition, we have monitored the existing equity names in the
Value Growth Portfolio and in cases where prices have come back into our buy
range, we have added these names to the Managed Portfolio.
Because the Managed Portfolio has more of an income bias and a somewhat more
pure value orientation (as opposed to growth), the sector weightings differ
somewhat from the Value Growth Portfolio. This is consistent with our
expectation that the Managed Portfolio will, over time, have a lower correlation
to the S&P 500 and hopefully, a lower standard deviation.
As long as we are able to continue adding good companies at such modest
valuations (e.g. P/E ratios from 9 to 12) and relatively attractive dividend
yields, we will maintain a rather substantial equity exposure in this Portfolio.
We have reduced the Portfolio's exposure to convertible bonds and preferred
stocks because we feel straight common stocks offer us a better risk/reward
profile at this point in time. Also, we prefer the higher degree of liquidity
and pricing certainty offered by actively traded common stocks.
4
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As discussed in our last report, this Portfolio will be managed as a
tactical asset allocation portfolio. We will, in general, utilize common stocks
similar to those found in the Value Growth Portfolio, straight debt securities
similar to those found in the High Grade Bond Portfolio and money market
instruments. The relative weightings in these three sectors will be driven by
overall stock market valuations and the general level and trend of interest
rates. The Portfolio will retain its bias towards income producing securities
and will seek to produce higher levels of current income than most equity funds
and higher capital appreciation potential than most fixed-income funds.
ASSET ALLOCATION
<TABLE>
<CAPTION>
AS OF CHANGE FROM
6/30/00 2/29/00
------- ---------------
<S> <C> <C>
Corporate Bonds:........................ 0.41% 0.16%
Common Stocks:.......................... 57.63% +47.53%
Securities Convertible into Common
Stocks:
Preferred............................. 16.84% -21.90%
Debentures............................ 5.28% -20.08%
Preferred Stocks:..................... 12.00% -2.63%
Cash Equivalents:..................... 7.84% -3.08%
</TABLE>
MONEY MARKET: With the Fed moving the Fed Funds rate to a current level of
6.50%, money market fund yields are at cyclically high levels. Also, when
comparing the Fed Funds rate to the U.S. Treasury 30-year bond rate of 5.90%,
there is additional incentive to stay in liquid, relatively stable money market
funds. The holdings of the Portfolio are invested in high-quality commercial
paper, which are obligations of top U.S. corporations and agency discount notes
that are obligations of government agencies such as FNMA, FHLB and FHLMC. These
securities offer additional yield over Treasury securities with minimal
incremental risk. Going forward, Greenspan may not raise rates, but may hold at
the current level, at least until after the elections in November.
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
August 31, 2000
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MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
VALUE GROWTH PORTFOLIO
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
THE VALUE GROWTH PORTFOLIO AND S&P 500
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
VALUE GROWTH PORTFOLIO S&P 500 STOCK COMPOSITE INDEX
<S> <C> <C>
1990 $10,000 $10,000
1991 $11,167 $11,277
1992 $12,564 $12,716
1993 $15,988 $13,819
1994 $16,042 $14,535
1995 $17,544 $18,321
1996 $20,774 $21,348
1997 $25,310 $32,453
1998 $21,167 $38,707
1999 $19,587 $46,507
2000 $17,560 $50,674
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
<S> <C>
1 Year -10.35%
5 Year 0.02%
10 Year 5.79%
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
For the twelve-month period ended July 31, 2000, the total return for the
Value Growth Portfolio was -10.35%, compared to +8.96% for the S&P 500 Stock
Composite Index. The performance differential can be attributed to the extreme
performance disparity between smaller market capitalization stocks and larger
issues, and between the technology sector and the other market sectors.
Issues with market capitalizations between $305 million and $2.95 billion
returned -35% on a price basis. At the other end of the spectrum, issues with
market capitalizations between $25.8 billion and $508 billion returned nearly
20%. Overall, the correlation between market capitalization and performance was
highly positive.
The technology sector generated returns in excess of 50% during the
twelve-month period while the health care sector was the only other sector
making even double-digit returns. The basic materials, telecommunications and
consumer staples sectors all had negative returns for the period.
The Value Growth Portfolio was substantially underweight in technology
during this period because the fundamental valuations in this sector did not
appear to be reasonable. The Portfolio also had substantial exposure to smaller
market capitalization issues, which appear to be attractively valued, but
underperformed during the period.
6
<PAGE>
HIGH GRADE BOND PORTFOLIO
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE
HIGH GRADE BOND PORTFOLIO AND LEHMAN BROTHERS MUTUAL FUND U.S. AGGREGATE INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
LEHMAN BROTHERS MUTUAL FUND
<S> <C> <C>
HIGH GRADE BOND PORTFOLIO U.S. AGGREGATE INDEX
1990 $10,000 $10,000
1991 $11,029 $11,071
1992 $12,542 $12,710
1993 $13,558 $14,005
1994 $13,798 $14,015
1995 $14,934 $15,432
1996 $15,737 $16,287
1997 $17,242 $18,040
1998 $18,369 $19,460
1999 $18,566 $19,945
2000 $18,987 $21,136
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
<S> <C>
1 Year 2.27%
5 Year 4.92%
10 Year 6.62%
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
During the twelve-month period ended July 31, 2000, the High Grade Bond
Portfolio underperformed the Lehman Brothers Mutual Fund U.S. Aggregate Index,
as reflected by the 2.27% total return produced by the Portfolio versus the
5.97% total return produced by the Index. The main factors that caused this
divergence in performance were Portfolio expenses, and the larger exposure to
corporate issues that the Portfolio contained relative to the Index. Corporates,
in general, underperformed Government issues over this time period.
7
<PAGE>
HIGH YIELD BOND PORTFOLIO
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE HIGH YIELD BOND
PORTFOLIO AND LEHMAN BROTHERS MUTUAL FUND CORPORATE/HIGH YIELD INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
LEHMAN BROTHERS MUTUAL FUND
HIGH YIELD BOND PORTFOLIO CORPORATE/HIGH YIELD INDEX
<S> <C> <C>
1990 $10,000 $10,000
1991 $11,283 $11,115
1992 $13,137 $13,044
1993 $14,838 $14,634
1994 $15,117 $14,692
1995 $16,585 $16,489
1996 $17,857 $17,535
1997 $20,298 $19,871
1998 $21,739 $21,404
1999 $21,928 $21,592
2000 $22,288 $22,361
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
<S> <C>
1 Year 1.64%
5 Year 6.09%
10 Year 8.34%
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
During the twelve-month period ended July 31, 2000, the 1.64% total return
produced by the High Yield Bond Portfolio trailed the 3.56% total return
produced by the Lehman Brothers Mutual Fund Corporate/High Yield Index. The main
factors causing this divergence in performance were Portfolio expenses and the
Portfolio's larger exposure to high yield issues than the Index (80% investment
grade corporate issues; 20% high yield issues) during a period when the high
yield market underperformed the investment grade corporate bond market.
8
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MANAGED PORTFOLIO
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
THE MANAGED PORTFOLIO AND S&P 500
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
MANAGED PORTFOLIO S&P 500 STOCK COMPOSITE INDEX
<S> <C> <C>
1990 $10,000 $10,000
1991 $10,705 $11,277
1992 $12,289 $12,716
1993 $15,118 $13,819
1994 $15,025 $14,535
1995 $16,437 $18,321
1996 $19,281 $21,348
1997 $22,927 $32,453
1998 $21,886 $38,707
1999 $20,517 $46,507
2000 $20,809 $50,674
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
<S> <C>
1 Year 1.42%
5 Year 4.83%
10 Year 7.60%
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
The Managed Portfolio is a tactical asset allocation portfolio with an
emphasis on securities producing income and with capital growth potential, and
will not likely mirror any particular equity index over longer periods of time.
During the twelve-month period ended July 31, 2000, the Portfolio produced a
return of 1.42% compared to 8.96% for the S&P 500 Stock Composite Index and
5.97% for the Lehman Brothers Aggregate Index.
Because most of the positive return generated by the S&P 500 came from the
technology component and this Portfolio had very little exposure to technology,
the weaker relative performance is not surprising. The lofty valuations recently
observed in the technology sector heighten the price risk investors face. This
price risk combined with the lack of any meaningful dividend income from such
issues made substantial investment in this sector inappropriate for the Managed
Portfolio.
9
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BLUE CHIP PORTFOLIO
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
THE BLUE CHIP PORTFOLIO AND S&P 500
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
BLUE CHIP PORTFOLIO S&P 500 STOCK COMPOSITE INDEX
<S> <C> <C>
1990 $10,000 $10,000
1991 $10,836 $11,277
1992 $12,003 $12,716
1993 $12,749 $13,819
1994 $13,610 $14,535
1995 $16,709 $18,321
1996 $19,355 $21,348
1997 $27,827 $32,453
1998 $31,025 $38,707
1999 $35,526 $46,507
2000 $36,310 $50,674
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
<S> <C>
1 Year 2.21%
5 Year 16.79%
10 Year 13.76%
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
The Blue Chip Portfolio is designed to represent the large capitalization
sector of the domestic equity market and remains substantially invested in
approximately 50 such common stock issues at all times. Accordingly, the
performance of this Portfolio will roughly parallel that of the Dow Jones
Industrial Average and S&P 500 Stock Composite Index. During the twelve-month
period ended July 31, 2000, the performance of these two large capitalization
indices varied to a greater degree than they have in the several years prior.
This deviation is due to the increasing significance technology stocks have on
the S&P 500. The Portfolio's return of +2.21% was less than the S&P 500 but
greater than the Dow Jones Industrial Average return of 0.27%. Adjusted for
expenses, the Portfolio's performance was consistent with our expectations.
10
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(This page has been left blank intentionally.)
11
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EQUITRUST SERIES FUND, INC.
STATEMENTS OF ASSETS AND LIABILITIES
JULY 31, 2000
<TABLE>
<CAPTION>
HIGH
VALUE GROWTH GRADE BOND
PORTFOLIO PORTFOLIO
------------ ------------
<S> <C> <C>
ASSETS
Investments in securities, at value (cost --
$69,443,206; $13,567,138; $12,596,815; $31,659,862;
$4,624,596; and $43,647,015, respectively)............ $64,352,532 $12,814,917
Cash................................................... 13,983
Receivables:
Accrued dividends and interest....................... 119,023 189,267
Investment securities sold........................... 279,553
Prepaid expense and other assets..................... 1,100 2,090
----------- -----------
Total Assets........................................... $64,752,208 $13,020,257
=========== ===========
LIABILITIES AND NET ASSETS
Liabilities:
Payable to EquiTrust Investment Management
Services, Inc....................................... $ 38,716 $ 6,371
Net outstanding redemptions in excess of bank
balance............................................. 38,916
Accrued expenses..................................... 15,323 5,916
----------- -----------
Total Liabilities...................................... 92,955 12,287
Net assets applicable to outstanding capital stock..... 64,659,253 13,007,970
----------- -----------
Total Liabilities and Net Assets....................... $64,752,208 $13,020,257
=========== ===========
NET ASSET VALUE PER SHARE
Class A: Net Assets.................................... $60,429,351 $11,512,508
Shares issued and outstanding...................... 7,084,525 1,188,647
Net asset value per share.......................... $ 8.53 $ 9.69
=========== ===========
Class I: Net Assets.................................... $ 4,229,902 $ 1,495,462
Shares issued and outstanding...................... 492,959 154,333
Net asset value per share.......................... $ 8.58 $ 9.69
=========== ===========
</TABLE>
SEE ACCOMPANYING NOTES.
12
<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 --
$69,443,206; $13,567,138; $12,596,815; $31,659,862;
$4,624,596; and $43,647,015, respectively)............ $11,606,509 $31,808,834 $4,624,596 $66,582,432
Cash................................................... 2,859 35,632 5,677
Receivables:
Accrued dividends and interest....................... 215,273 65,603 4,056 49,467
Investment securities sold........................... 92,227
Prepaid expense and other assets..................... 131 466 44 557
----------- ----------- ---------- -----------
Total Assets........................................... $11,824,772 $31,967,130 $4,664,328 $66,638,133
=========== =========== ========== ===========
LIABILITIES AND NET ASSETS
Liabilities:
Payable to EquiTrust Investment Management
Services, Inc....................................... $ 8,104 $ 16,875 $ 1,492 $ 26,573
Net outstanding redemptions in excess of bank
balance............................................. 33,635
Accrued expenses..................................... 5,158 8,394 4,695 8,188
----------- ----------- ---------- -----------
Total Liabilities...................................... 13,262 58,904 6,187 34,761
Net assets applicable to outstanding capital stock..... 11,811,510 31,908,226 4,658,141 66,603,372
----------- ----------- ---------- -----------
Total Liabilities and Net Assets....................... $11,824,772 $31,967,130 $4,664,328 $66,638,133
=========== =========== ========== ===========
NET ASSET VALUE PER SHARE
Class A: Net Assets.................................... $10,276,274 $29,442,864 $3,928,200 $60,700,937
Shares issued and outstanding...................... 1,099,526 2,927,471 3,928,200 1,282,907
Net asset value per share.......................... $ 9.35 $ 10.06 $ 1.00 $ 47.32
=========== =========== ========== ===========
Class I: Net Assets.................................... $ 1,535,236 $ 2,465,362 $ 729,941 $ 5,902,435
Shares issued and outstanding...................... 164,352 244,688 729,941 123,749
Net asset value per share.......................... $ 9.34 $ 10.08 $ 1.00 $ 47.70
=========== =========== ========== ===========
</TABLE>
13
<PAGE>
EQUITRUST SERIES FUND, INC
STATEMENTS OF OPERATIONS
YEAR ENDED JULY 31, 2000
<TABLE>
<CAPTION>
HIGH
VALUE GROWTH GRADE BOND
PORTFOLIO PORTFOLIO
------------ ------------
<S> <C> <C>
INVESTMENT INCOME
Dividends.............................................. $ 1,319,503 $ 47,663
Interest............................................... 444,849 988,342
----------- ----------
Total Investment Income................................ 1,764,352 1,036,005
EXPENSES
Paid to EquiTrust Investment Management
Services, Inc.:
Investment advisory and management fees.............. 363,262 55,042
Transfer and dividend disbursing agent fees.......... 215,048 40,304
Distribution fees.................................... 339,873 61,234
Administrative service fees.......................... 169,936 30,617
Accounting fees...................................... 30,000 6,880
Custodian fees......................................... 26,499 9,787
Professional fees...................................... 44,538 11,715
Directors' fees and expenses........................... 3,704 721
Reports to shareholders................................ 49,782 9,033
Registration fees...................................... 10,441 7,181
Miscellaneous.......................................... 9,527 (73)
----------- ----------
Total Expenses......................................... 1,262,610 232,441
Expense reimbursement..................................
Fees paid indirectly................................... (4,263) (3,052)
----------- ----------
Net Expenses........................................... 1,258,347 229,389
----------- ----------
Net Investment Income.................................. 506,005 806,616
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized gain (loss) from investment
transactions.......................................... (6,387,220) (22,258)
Change in unrealized appreciation/depreciation of
investments........................................... (3,507,051) (483,258)
----------- ----------
Net Gain (Loss) on Investments......................... (9,894,271) (505,516)
----------- ----------
Net Increase (Decrease) in Net Assets Resulting from
Operations............................................ $(9,388,266) $ 301,100
=========== ==========
</TABLE>
SEE ACCOMPANYING NOTES.
14
<PAGE>
<TABLE>
<CAPTION>
HIGH
YIELD BOND MANAGED MONEY MARKET BLUE CHIP
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends.............................................. $ 98,105 $ 1,648,609 $ 793,156
Interest............................................... 1,025,249 652,419 $269,601 264,386
----------- ----------- -------- ----------
Total Investment Income................................ 1,123,354 2,301,028 269,601 1,057,542
EXPENSES
Paid to EquiTrust Investment Management
Services, Inc.:
Investment advisory and management fees.............. 68,404 214,591 11,672 163,960
Transfer and dividend disbursing agent fees.......... 47,877 135,921 11,927 190,363
Distribution fees.................................... 54,342 165,330 19,713 298,289
Administrative service fees.......................... 27,171 82,665 9,856 149,144
Accounting fees...................................... 6,219 17,883 2,335 30,000
Custodian fees......................................... 8,929 11,202 9,167 11,395
Professional fees...................................... 11,128 22,570 3,110 33,282
Directors' fees and expenses........................... 648 1,835 252 3,545
Reports to shareholders................................ 8,213 24,399 3,340 40,828
Registration fees...................................... 7,201 8,245 5,844 10,243
Miscellaneous.......................................... 926 3,378 3,753 3,898
----------- ----------- -------- ----------
Total Expenses......................................... 241,058 688,019 80,969 934,947
Expense reimbursement.................................. (2,521) (1,701)
Fees paid indirectly................................... (2,448) (3,957) (1,265) (3,570)
----------- ----------- -------- ----------
Net Expenses........................................... 236,089 684,062 78,003 931,377
----------- ----------- -------- ----------
Net Investment Income.................................. 887,265 1,616,966 191,598 126,165
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized gain (loss) from investment
transactions.......................................... (43,949) (3,810,028) 2,102,038
Change in unrealized appreciation/depreciation of
investments........................................... (667,488) 2,369,754 (828,775)
----------- ----------- -------- ----------
Net Gain (Loss) on Investments......................... (711,437) (1,440,274) 1,273,263
----------- ----------- -------- ----------
Net Increase (Decrease) in Net Assets Resulting from
Operations............................................ $ 175,828 $ 176,692 $191,598 $1,399,428
=========== =========== ======== ==========
</TABLE>
15
<PAGE>
EQUITRUST SERIES FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
VALUE GROWTH
PORTFOLIO
-----------------------------
YEAR ENDED JULY 31,
-----------------------------
2000 1999
------------ -------------
<S> <C> <C>
OPERATIONS
Net investment income.................................. $ 506,005 $ 837,369
Net realized gain (loss) from investment
transactions.......................................... (6,387,220) (29,242,846)
Change in unrealized appreciation/depreciation of
investments........................................... (3,507,051) 21,062,739
------------ ------------
Net Increase (Decrease) in Net Assets Resulting from
Operations............................................ (9,388,266) (7,342,738)
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS FROM
Net investment income:
Class A.............................................. (404,083) (896,298)
Class I.............................................. (49,796) (71,985)
Net realized gain from investment transactions:
Class A..............................................
Class I..............................................
Distributions in excess of net realized gain from
investment transactions:
Class A.............................................. (4,276,604)
Class I.............................................. (248,105)
------------ ------------
Total Dividends and Distributions...................... (453,879) (5,492,992)
CAPITAL SHARE TRANSACTIONS............................. (13,799,635) 3,404,142
------------ ------------
Total Increase (Decrease) in Net Assets................ (23,641,780) (9,431,588)
NET ASSETS
Beginning of year...................................... 88,301,033 97,732,621
------------ ------------
End of year (including undistributed
net investment income as set forth below)............. $ 64,659,253 $ 88,301,033
============ ============
Undistributed Net Investment Income.................... $ 334,916 $ 282,790
============ ============
</TABLE>
SEE ACCOMPANYING NOTES.
16
<PAGE>
<TABLE>
<CAPTION>
HIGH HIGH
GRADE BOND YIELD BOND
PORTFOLIO PORTFOLIO
---------------------------- ----------------------------
YEAR ENDED JULY 31, YEAR ENDED JULY 31,
---------------------------- ----------------------------
2000 1999 2000 1999
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
OPERATIONS
Net investment income.................................. $ 806,616 $ 766,005 $ 887,265 $ 777,387
Net realized gain (loss) from investment
transactions.......................................... (22,258) 159,598 (43,949) (29,781)
Change in unrealized appreciation/depreciation of
investments........................................... (483,258) (790,290) (667,488) (625,744)
----------- ----------- ----------- -----------
Net Increase (Decrease) in Net Assets Resulting from
Operations............................................ 301,100 135,313 175,828 121,862
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS FROM
Net investment income:
Class A.............................................. (710,241) (682,413) (766,307) (680,208)
Class I.............................................. (96,375) (83,592) (120,958) (97,179)
Net realized gain from investment transactions:
Class A.............................................. (17,275) (74,415) (21,316)
Class I.............................................. (2,156) (8,345) (2,821)
Distributions in excess of net realized gain from
investment transactions:
Class A.............................................. (19,893) (84,990)
Class I.............................................. (2,484) (11,235)
----------- ----------- ----------- -----------
Total Dividends and Distributions...................... (848,424) (848,765) (887,265) (897,749)
CAPITAL SHARE TRANSACTIONS............................. (1,076,121) 2,458,225 (846,071) 1,708,593
----------- ----------- ----------- -----------
Total Increase (Decrease) in Net Assets................ (1,623,445) 1,744,773 (1,557,508) 932,706
NET ASSETS
Beginning of year...................................... 14,631,415 12,886,642 13,369,018 12,436,312
----------- ----------- ----------- -----------
End of year (including undistributed
net investment income as set forth below)............. $13,007,970 $14,631,415 $11,811,510 $13,369,018
=========== =========== =========== ===========
Undistributed Net Investment Income.................... $ 0 $ 0 $ 0 $ 0
=========== =========== =========== ===========
</TABLE>
17
<PAGE>
EQUITRUST SERIES FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
<TABLE>
<CAPTION>
MANAGED
PORTFOLIO
----------------------------
YEAR ENDED JULY 31,
----------------------------
2000 1999
------------ ------------
<S> <C> <C>
OPERATIONS
Net investment income.................................. $ 1,616,966 $ 1,836,141
Net realized gain (loss) from investment
transactions.......................................... (3,810,028) (6,463,959)
Change in unrealized appreciation/depreciation of
investments........................................... 2,369,754 1,724,570
----------- -----------
Net Increase (Decrease) in Net Assets Resulting from
Operations............................................ 176,692 (2,903,248)
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS FROM
Net investment income:
Class A.............................................. (1,479,298) (1,708,510)
Class I.............................................. (138,884) (127,401)
Net realized gain from investment transactions:
Class A..............................................
Class I..............................................
Distributions in excess of net investment income:
Class A.............................................. (1,964)
Class I.............................................. (185)
Distributions in excess of net realized gain from
investment transactions:
Class A.............................................. (1,863,050)
Class I.............................................. (128,794)
----------- -----------
Total Dividends and Distributions...................... (1,620,331) (3,827,755)
CAPITAL SHARE TRANSACTIONS............................. (7,591,219) 1,310,015
----------- -----------
Total Increase (Decrease) in Net Assets................ (9,034,858) (5,420,988)
NET ASSETS
Beginning of year...................................... 40,943,084 46,364,072
----------- -----------
End of year (including undistributed
net investment income as set forth below)............. $31,908,226 $40,943,084
=========== ===========
Undistributed Net Investment Income.................... $ 0 $ 1,216
=========== ===========
</TABLE>
SEE ACCOMPANYING NOTES.
18
<PAGE>
<TABLE>
<CAPTION>
MONEY MARKET BLUE CHIP
PORTFOLIO PORTFOLIO
---------------------------- ----------------------------
YEAR ENDED JULY 31, YEAR ENDED JULY 31,
---------------------------- ----------------------------
2000 1999 2000 1999
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
OPERATIONS
Net investment income.................................. $ 191,598 $ 124,144 $ 126,165 $ 188,991
Net realized gain (loss) from investment
transactions.......................................... 2,102,038 (147,965)
Change in unrealized appreciation/depreciation of
investments........................................... (828,775) 7,509,719
---------- ---------- ----------- -----------
Net Increase (Decrease) in Net Assets Resulting from
Operations............................................ 191,598 124,144 1,399,428 7,550,745
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS FROM
Net investment income:
Class A.............................................. (159,037) (102,909) (139,452) (176,178)
Class I.............................................. (32,561) (21,235) (48,724) (29,314)
Net realized gain from investment transactions:
Class A.............................................. (639,236) (52,637)
Class I.............................................. (66,185) (4,819)
Distributions in excess of net investment income:
Class A..............................................
Class I
Distributions in excess of net realized gain from
investment transactions:
Class A.............................................. (133,393)
Class I.............................................. (12,080)
---------- ---------- ----------- -----------
Total Dividends and Distributions...................... (191,598) (124,144) (893,597) (408,421)
CAPITAL SHARE TRANSACTIONS............................. 455,916 1,001,217 5,451,225 6,473,226
---------- ---------- ----------- -----------
Total Increase (Decrease) in Net Assets................ 455,916 1,001,217 5,957,056 13,615,550
NET ASSETS
Beginning of year...................................... 4,202,225 3,201,008 60,646,316 47,030,766
---------- ---------- ----------- -----------
End of year (including undistributed
net investment income as set forth below)............. $4,658,141 $4,202,225 $66,603,372 $60,646,316
========== ========== =========== ===========
Undistributed Net Investment Income.................... $ 0 $ 0 $ 12,973 $ 74,984
========== ========== =========== ===========
</TABLE>
19
<PAGE>
EQUITRUST SERIES FUND, INC.
SCHEDULE OF INVESTMENTS
VALUE GROWTH PORTFOLIO
JULY 31, 2000
<TABLE>
<CAPTION>
SHARES
HELD VALUE
-------------- ------------
<S> <C> <C>
COMMON STOCKS (92.39%)
---------------------------
APPAREL AND ACCESSORY STORES (0.75%)
Wolverine World Wide, Inc............................ 45,800 $ 483,763
BUSINESS SERVICES (1.82%)
Computer Associates International, Inc............... 22,345 554,435
Compuware Corp....................................... 29,950(1) 239,600
Microsoft Corp....................................... 5,500(1) 383,969
-----------
1,178,004
CHEMICALS AND ALLIED PRODUCTS (7.80%)
Abbott Laboratories.................................. 26,450 1,100,981
Dial Corp............................................ 75,232 954,506
Du Pont (E.I.) De Nemours............................ 10,000 453,125
Solutia, Inc......................................... 55,300 791,481
Johnson & Johnson.................................... 11,500 1,070,219
RPM, Inc............................................. 72,000 670,500
-----------
5,040,812
COMMUNICATIONS (5.97%)
AT&T Corp............................................ 20,000 618,750
Centurytel, Inc...................................... 26,980 790,851
Worldcom, Inc........................................ 30,000(1) 1,171,875
SBC Communications................................... 30,000 1,276,875
-----------
3,858,351
DEPOSITORY INSTITUTIONS (3.26%)
Associated Bank-Corp................................. 29,301 668,429
Bank of America...................................... 6,175 292,541
First Union Corp..................................... 21,750 561,422
U. S. Bancorp........................................ 30,600 587,138
-----------
2,109,530
ELECTRIC, GAS AND SANITARY SERVICES (6.09%)
Atmos Energy......................................... 38,268 789,278
Laclede Gas Co....................................... 32,457 643,054
New Century Energies, Inc............................ 24,300 830,756
Nisource, Inc........................................ 40,300 783,331
Northwest Natural Gas Co............................. 38,600 892,625
-----------
3,939,044
</TABLE>
20
<PAGE>
EQUITRUST SERIES FUND, INC.
SCHEDULE OF INVESTMENTS
VALUE GROWTH PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
SHARES
HELD VALUE
-------------- ------------
<S> <C> <C>
ELECTRONIC AND OTHER ELECTRICAL EQUIPMENT (2.93%)
Adaptec, Inc......................................... 16,900(1) $ 418,275
ECI Telecom, Ltd..................................... 20,000 712,500
National Service Industries, Inc..................... 37,400 764,363
-----------
1,895,138
FABRICATED METAL PRODUCTS (1.51%)
Cooper Industries, Inc............................... 11,329 363,236
United Dominion Industries, Ltd...................... 37,461 615,765
-----------
979,001
FOOD AND KINDRED PRODUCTS (5.66%)
ConAgra, Inc......................................... 43,122 881,306
Dean Foods........................................... 25,080 873,098
Philip Morris Companies, Inc......................... 50,000 1,262,500
Sara Lee Corp........................................ 35,000 645,313
-----------
3,662,217
FOOD STORES (7.96%)
7-Eleven, Inc........................................ 135,520(1) 1,702,470
Albertson's, Inc..................................... 15,000 452,812
Casey's General Store................................ 187,502 2,214,867
Universal Foods Corp................................. 39,711 774,365
-----------
5,144,514
FURNITURE AND FIXTURES (1.25%)
Newell Rubbermaid, Inc............................... 30,000 808,125
GENERAL MERCHANDISE STORES (2.63%)
Federated Department Stores, Inc..................... 24,865(1) 598,314
Harcourt General, Inc................................ 20,000 1,103,750
-----------
1,702,064
HEALTH SERVICES (1.34%)
Schering-Plough Corp................................. 20,000 863,750
HOLDING AND OTHER INVESTMENT OFFICES (3.74%)
MBIA, Inc............................................ 30,000 1,670,625
Wintrust Financial Corp.............................. 47,750 746,094
-----------
2,416,719
</TABLE>
21
<PAGE>
EQUITRUST SERIES FUND, INC.
SCHEDULE OF INVESTMENTS
VALUE GROWTH PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
SHARES
HELD VALUE
-------------- ------------
<S> <C> <C>
INDUSTRIAL MACHINERY AND EQUIPMENT (1.78%)
Ingersoll-Rand Co.................................... 20,000 $ 785,000
Solectron Corp....................................... 9,100(1) 366,844
-----------
1,151,844
INSTRUMENTS AND RELATED PRODUCTS (2.60%)
Becton Dickinson & Co................................ 40,000 1,010,000
Pall Corp............................................ 32,300 670,225
-----------
1,680,225
INSURANCE CARRIERS (3.66%)
Aetna, Inc........................................... 11,461 636,085
Allstate Corp........................................ 28,300 780,019
MONY Group, Inc...................................... 14,500 518,375
United Fire & Casualty Co............................ 22,750 435,094
-----------
2,369,573
METAL MINING (0.94%)
Barrick Gold Corp.................................... 38,000 605,625
MISCELLANEOUS MANUFACTURING INDUSTRIES (1.41%)
Emerson Electric..................................... 14,921 911,114
NONDEPOSITORY INSTITUTIONS (2.86%)
Federal Home Loan Mortgage Corp...................... 25,000 985,937
SLM Holding Corp..................................... 20,000 861,250
-----------
1,847,187
OIL AND GAS EXTRACTION (2.80%)
Burlington Resources, Inc............................ 20,000 652,500
Ocean Energy, Inc.................................... 22,642(1) 274,534
Offshore Logistics................................... 70,000(1) 883,750
-----------
1,810,784
PAPER AND ALLIED PRODUCTS (0.99%)
Glatfelter (P.H.) Co................................. 63,015 638,027
PERSONAL SERVICES (0.16%)
Service Corporation International.................... 40,000 102,500
PETROLEUM AND COAL PRODUCTS (4.13%)
Chevron Corp......................................... 10,000 790,000
Conoco, Inc.......................................... 39,950 893,881
Texaco, Inc.......................................... 20,000 988,750
-----------
2,672,631
</TABLE>
22
<PAGE>
EQUITRUST SERIES FUND, INC.
SCHEDULE OF INVESTMENTS
VALUE GROWTH PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
SHARES
HELD VALUE
-------------- ------------
<S> <C> <C>
PRIMARY METAL INDUSTRIES (1.60%)
Northwest Pipe Co.................................... 80,800(1) $ 1,035,250
PRINTING AND PUBLISHING (3.14%)
Belo A.H. Corp....................................... 51,500 994,594
Mail-Well, Inc....................................... 147,000(1) 1,038,187
-----------
2,032,781
RUBBER AND MISCELLANEOUS PLASTICS (1.37%)
Illinois Tool Works.................................. 15,500 887,375
TRANSPORTATION -- BY AIR (1.36%)
Petroleum Helicopters, Inc. (Non-voting)............. 90,000 883,125
TRANSPORTATION EQUIPMENT (3.40%)
Honeywell International, Inc......................... 26,793 900,915
ITT Industries, Inc.................................. 21,700 713,387
United Technologies Corp............................. 10,000 583,750
-----------
2,198,052
TRANSPORTATION SERVICES (1.24%)
GATX Corp............................................ 20,000 798,750
TRUCKING AND WAREHOUSING (2.12%)
Heartland Express, Inc............................... 43,820(1) 783,282
United Parcel Service -- Class B..................... 10,000 587,500
-----------
1,370,782
WATER TRANSPORTATION (1.16%)
American Water Works, Inc............................ 31,000 751,750
WHOLESALE - NONDURABLE GOODS (2.96%)
Cardinal Health, Inc................................. 20,000 1,470,000
Unilever N. V........................................ 10,000 442,500
-----------
1,912,500
-----------
Total Common Stocks.................................... 59,740,907
PREFERRED STOCKS (1.18%)
-----------------------------
COMMUNICATIONS (0.01%)
Cellnet Funding, LLC................................. 29,000 2,320
HOLDING AND OTHER INVESTMENT OFFICES (1.17%)
General Growth Properties, Inc....................... 33,240 758,287
-----------
Total Preferred Stocks................................. 760,607
</TABLE>
23
<PAGE>
EQUITRUST SERIES FUND, INC.
SCHEDULE OF INVESTMENTS
VALUE GROWTH PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
SHARES
HELD VALUE
-------------- ------------
<S> <C> <C>
SHORT-TERM INVESTMENTS (5.96%)
-----------------------------------
MONEY MARKET MUTUAL FUND (0.78%)
Provident Institutional Funds, T-Fund Portfolio...... 501,018 $ 501,018
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
-------------
<S> <C> <C>
COMMERCIAL PAPER (5.18%)
Ford Motor Credit Corp., 6.32%, due 8/01/2000......... $2,035,000 2,035,000
General Electric Capital, 6.51%, due 8/07/2000........ 655,000 655,000
General Electric Capital, 6.51%, due 8/04/2000........ 660,000 660,000
----------
Total Commercial Paper.................................. 3,350,000
----------
Total Short-term Investments............................ 3,851,018
----------
Total Investments (99.53%).............................. 64,352,532
OTHER ASSETS LESS LIABILITIES (0.47%)
-----------------------------------------
Cash, receivables, prepaid expense and other assets,
less liabilities..................................... 306,721
----------
Total Net Assets (100.00%).............................. $64,659,253
==========
</TABLE>
(1) Non-income producing securities.
SEE ACCOMPANYING NOTES.
24
<PAGE>
EQUITRUST SERIES FUND, INC.
SCHEDULE OF INVESTMENTS
HIGH GRADE BOND PORTFOLIO
JULY 31, 2000
<TABLE>
<CAPTION>
SHARES
HELD VALUE
--------- -----------
<S> <C> <C>
PREFERRED STOCKS (5.44%)
-----------------------------
New Plan Excel Realty Trust........... 9,000 $ 356,907
Virginia Electric & Power............. 15,000 351,563
-----------
708,470
<CAPTION>
PRINCIPAL
AMOUNT
---------
<S> <C> <C>
CORPORATE BONDS (62.33%)
-----------------------------
DEPOSITORY INSTITUTIONS (6.03%)
First Bank, N.A., 6.25%, due
8/15/05.............................. $450,000 452,394
J. P. Morgan & Co., 7.25%, due
10/01/10............................. 350,000 332,119
-----------
784,513
ELECTRIC, GAS AND SANITARY SERVICES (9.03%)
National Co-op Services Corp.
(Arkansas Electric), 9.48%, due
1/01/12.............................. 537,000 564,355
Oglethorpe Power (OPC Scherer),
6.974%, due 6/30/11.................. 645,000 609,841
-----------
1,174,196
FOOD STORES (1.17%)
Ahold Finance USA, Inc., 8.25%, due
7/15/10.............................. 150,000 151,693
GENERAL MERCHANDISE STORES (2.50%)
J.C. Penney & Co., 8.25%, due
8/15/22.............................. 400,000 325,064
HOLDING AND OTHER INVESTMENT OFFICES (6.54%)
Meditrust, 7.60%, due 9/13/05......... 350,000 240,924
Security Capital Pacific, 7.20%, due
3/01/13.............................. 225,000 202,057
Washington REIT, 6.898%, due
2/15/18.............................. 450,000 407,304
-----------
850,285
INDUSTRIAL MACHINERY AND EQUIPMENT (4.29%)
Thermo Fibertek, 4.50%, due 7/15/04... 650,000 557,791
NONDEPOSITORY INSTITUTIONS (2.16%)
Household Finance Co., 7.30%, due
7/30/12.............................. 300,000 281,250
OIL AND GAS EXTRACTION (1.71%)
Burlington Resources, Inc., 9.125%,
due 10/01/21......................... 200,000 222,786
PETROLEUM AND COAL PRODUCTS (3.85%)
Texaco Capital, Inc., 7.25%, due
1/10/10.............................. 500,000 500,960
SECURITY AND COMMODITY BROKERS (2.69%)
Goldman Sachs Group, Inc., 7.80%, due
1/28/10.............................. 350,000 349,272
</TABLE>
25
<PAGE>
EQUITRUST SERIES FUND, INC.
SCHEDULE OF INVESTMENTS
HIGH GRADE BOND PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
--------- -----------
<S> <C> <C>
TEXTILE MILL PRODUCTS (3.80%)
Unifi, 6.50%, due 2/01/08............. $550,000 $ 494,840
TRANSPORTATION -- BY AIR (11.91%)
Continental Airlines, Inc., 6.545%,
due 8/02/20.......................... 681,722 599,383
Northwest Airlines, 7.575%, due
9/01/20.............................. 696,389 662,273
US Air, Inc., 8.36%, due 1/20/19...... 299,466 288,045
-----------
1,549,701
TOBACCO PRODUCTS (4.95%)
UST, Inc., 7.25%, due 6/01/09......... 750,000 644,258
TRANSPORTATION EQUIPMENT (1.70%)
Ford Motor Co., 9.215%, due 9/15/21... 200,000 221,104
-----------
Total Corporate Bonds................... 8,107,713
ASSET-BACKED SECURITIES (0.15%)
------------------------------------
Federal Home Loan Mortgage Corp.,
10.15%, due 4/15/06.................. 18,874 18,909
MORTGAGE-BACKED SECURITIES (28.42%)
------------------------------------------
FEDERAL HOME LOAN MORTGAGE CORP. (FHLMC) (0.19%)
Pool # 503442, 9.50%, due 7/01/05..... 24,107 24,453
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
(GNMA) (28.23%)
Pool # 236070, 10.00%, due 10/15/12... 541,737 567,978
Pool # 1512, 7.50%, due 12/20/23...... 449,927 444,582
Pool # 22630, 6.50%, due 8/01/28...... 442,350 418,021
Pool # 2631, 7.00%, due 8/01/28....... 477,958 462,425
Pool # 2658, 6.50%, due 10/01/28...... 888,519 839,375
Pool # 2701, 6.50%, due 1/20/29....... 915,943 865,282
Pool # 144332, 9.00%, due 7/15/16..... 10,066 10,428
Pool # 194692, 8.00%, due 5/15/17..... 62,984 63,889
-----------
3,671,980
-----------
Total Mortgage-Backed Securities........ 3,696,433
SHORT-TERM INVESTMENTS (2.18%)
-----------------------------------
UNITED STATES GOVERNMENT AGENCIES (1.92%)
Federal Home Loan Mortgage Corp., due
8/17/00.............................. 250,000 249,294
</TABLE>
26
<PAGE>
EQUITRUST SERIES FUND, INC.
SCHEDULE OF INVESTMENTS
HIGH GRADE BOND PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
SHARES
HELD VALUE
--------- -----------
<S> <C> <C>
MONEY MARKET MUTUAL FUND (0.26%)
Provident Institutional Funds, T-Fund
Portfolio............................ 34,098 $ 34,098
-----------
Total Short-Term Investments............ 283,392
-----------
Total Investments (98.52%).............. 12,814,917
OTHER ASSETS LESS LIABILITIES (1.48%)
-----------------------------------------
Cash, receivables, prepaid expense and
other assets, less liabilities....... 193,053
-----------
Total Net Assets (100.00%).............. $13,007,970
===========
</TABLE>
SEE ACCOMPANYING NOTES.
27
<PAGE>
EQUITRUST SERIES FUND, INC.
SCHEDULE OF INVESTMENTS
HIGH YIELD BOND PORTFOLIO
JULY 31, 2000
<TABLE>
<CAPTION>
SHARES
HELD VALUE
----------- -----------
<S> <C> <C>
COMMON STOCKS (0.56%)
--------------------------
FOOD STORES
Penn Traffic Co....................... 9,092(1) $ 65,917
PREFERRED STOCKS (6.60%)
-----------------------------
HOLDING AND OTHER INVESTMENT OFFICES (2.35%)
New Plan Excel Realty Trust........... 7,000 277,594
METAL MINING (4.25%)
Cameco Corp........................... 24,000 502,500
-----------
Total Preferred Stocks.................. 780,094
<CAPTION>
PRINCIPAL
AMOUNT
-----------
<S> <C> <C>
CORPORATE BONDS (86.58%)
-----------------------------
AMUSEMENT AND RECREATION SERVICES (0.67%)
AMF Bowling Worldwide, Inc., 10.875%,
due 3/15/06.......................... $260,000 79,300
APPAREL AND OTHER TEXTILE PRODUCTS (2.32%)
Dan River, Inc., 10.125%, due
12/15/03............................. 280,000 274,400
AUTO REPAIR, SERVICES AND PARKING (0.63%)
Budget Group, Inc., 9.125%, due
4/01/06.............................. 100,000 74,500
BUSINESS SERVICES (2.50%)
Cendant Corporation, 7.75%, due
12/01/03............................. 300,000 295,830
CHEMICALS AND ALLIED PRODUCTS (6.28%)
Lyondell Chemical Co., 9.625%, due
5/01/07.............................. 600,000 610,500
Terra Industries, Inc., 10.50%, due
6/15/05.............................. 200,000 131,000
-----------
741,500
COMMUNICATIONS (4.45%)
Savoy Pictures, 7.00%, due 7/01/03.... 550,000 525,250
DEPOSITORY INSTITUTIONS (2.98%)
First Bank, N.A., 6.25%, due
8/15/05.............................. 350,000 351,862
ELECTRIC, GAS AND SANITARY SERVICES (13.39%)
Allied Waste North America, 10.00%,
due 8/01/09.......................... 500,000 438,750
ESI Tractebel, 7.99%, due 12/30/11.... 460,000 408,323
Gulf States Utilities, 8.94%, due
1/01/22.............................. 400,000 410,284
Waterford 3 Nuclear Power Plant,
8.09%, due 1/02/17................... 340,448 324,906
-----------
1,582,263
ELECTRONIC AND OTHER ELECTRIC EQUIPMENT (3.33%)
Advanced Micro Devices, Inc., 11.00%,
due 8/01/03.......................... 360,000 393,300
</TABLE>
28
<PAGE>
EQUITRUST SERIES FUND, INC.
SCHEDULE OF INVESTMENTS
HIGH YIELD BOND PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
----------- -----------
<S> <C> <C>
FOOD STORES (0.32%)
Penn Traffic Co., 11.00%, due
6/29/09.............................. $ 47,850 $ 37,323
HEALTH SERVICES (3.19%)
Tenet Healthcare, 7.625%, due
6/01/08.............................. 400,000 377,000
HOLDING AND OTHER INVESTMENT OFFICES (13.03%)
Bradley Operating, L.P., 7.20%, due
1/15/08.............................. 500,000 394,265
Federal Realty Investment Trust,
7.48%, due 8/15/26................... 600,000 565,989
Price Development Company, 7.29%, due
3/11/08.............................. 250,000 229,465
SUSA Partnership, L.P., 8.20%, due
6/01/17.............................. 375,000 349,643
-----------
1,539,362
INDUSTRIAL MACHINERY AND EQUIPMENT (4.85%)
AGCO Corp., 8.50%, due 3/15/06........ 600,000 573,000
INSTRUMENTS AND RELATED PRODUCTS (5.50%)
Thermo Electron Corp., 4.25%, due
1/01/03.............................. 700,000 649,712
LUMBER AND WOOD PRODUCTS (3.81%)
Georgia-Pacific Corp., 9.875%, due
11/01/21............................. 330,000 349,523
Georgia-Pacific Corp., 9.125%, due
7/01/22.............................. 100,000 99,933
-----------
449,456
METAL MINING (1.38%)
Inco, Ltd., 9.875%, due 6/15/19....... 160,000 163,158
NONDEPOSITORY INSTITUTIONS (1.29%)
Macsaver Financial, 7.40%, due
2/15/02.............................. 300,000 153,000
OIL AND GAS EXTRACTION (5.84%)
Occidental Petroleum Co., 7.375%, due
11/15/08............................. 300,000 290,553
Pool Energy Services, 8.625%, due
4/01/08.............................. 400,000 399,000
-----------
689,553
PAPER AND ALLIED PRODUCTS (2.13%)
Container Corp. of America, 9.75%, due
4/01/03.............................. 250,000 251,250
REAL ESTATE (3.39%)
United Dominion Realty Trust, 8.125%,
due 11/15/00......................... 400,000 399,980
TRANSPORTATION SERVICES (1.98%)
Preston Corp., 7.00%, due 5/01/11..... 306,000 234,090
WATER TRANSPORTATION (3.32%)
Windsor Petroleum Transportation,
7.84%, due 1/15/21................... 500,000 391,875
-----------
Total Corporate Bonds................... 10,226,964
</TABLE>
29
<PAGE>
EQUITRUST SERIES FUND, INC.
SCHEDULE OF INVESTMENTS
HIGH YIELD BOND PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
----------- -----------
<S> <C> <C>
SHORT-TERM INVESTMENTS (4.52%)
-----------------------------------
UNITED STATES GOVERNMENT AGENCIES (2.11%)
Federal Home Loan Bank, due 8/16/00... $250,000 $ 249,337
<CAPTION>
SHARES
HELD
-----------
<S> <C> <C>
MONEY MARKET MUTUAL FUND (2.41%)
Provident Institutional Funds, T-Fund
Portfolio............................ 284,197 284,197
-----------
Total Short-Term Investments............ 533,534
-----------
Total Investments (98.26%).............. 11,606,509
OTHER ASSETS LESS LIABILITIES (1.74%)
-----------------------------------------
Cash, receivables, prepaid expense and
other assets, less liabilities....... 205,001
-----------
Total Net Assets (100.00%).............. $11,811,510
===========
</TABLE>
(1) Non-income producing securities.
SEE ACCOMPANYING NOTES.
30
<PAGE>
EQUITRUST SERIES FUND, INC.
SCHEDULE OF INVESTMENTS
MANAGED PORTFOLIO
JULY 31, 2000
<TABLE>
<CAPTION>
SHARES
HELD VALUE
------------- -----------
<S> <C> <C>
COMMON STOCKS (57.45%)
---------------------------
BUSINESS SERVICES (0.75%)
Computer Associates
International, Inc................... 5,500 $ 136,469
Compuware Corp........................ 13,000(1) 104,000
-----------
240,469
CHEMICALS AND ALLIED PRODUCTS (5.08%)
Dial Corp............................. 36,636 464,819
Johnson & Johnson..................... 4,500 418,781
RPM, Inc.............................. 38,000 353,875
Solutia, Inc.......................... 26,900 385,006
-----------
1,622,481
COMMUNICATIONS (3.06%)
AT&T Corp............................. 9,450 292,359
Centurytel, Inc....................... 12,780 374,614
Worldcom, Inc......................... 7,900(1) 308,594
-----------
975,567
DEPOSITORY INSTITUTIONS (5.58%)
Associated Bank-Corp.................. 21,417 488,575
Bank of America....................... 6,175 292,541
First Union Corp...................... 15,900 410,419
U. S. Bancorp......................... 30,700 589,056
-----------
1,780,591
ELECTRIC, GAS AND SANITARY SERVICES (9.69%)
Atmos Energy.......................... 37,818 779,996
Laclede Gas Co........................ 31,771 629,463
New Century Energies, Inc............. 24,300 830,756
Northwest Natural Gas Co.............. 36,800 851,000
-----------
3,091,215
ELECTRONIC AND OTHER ELECTRIC EQUIPMENT (0.69%)
National Service Industries, Inc...... 10,750 219,703
FABRICATED METAL PRODUCTS (1.77%)
Cooper Industries, Inc................ 8,262 264,900
United Dominion Industries, Ltd....... 18,269 300,297
-----------
565,197
</TABLE>
31
<PAGE>
EQUITRUST SERIES FUND, INC.
SCHEDULE OF INVESTMENTS
MANAGED PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
SHARES
HELD VALUE
------------- -----------
<S> <C> <C>
FOOD AND KINDRED PRODUCTS (5.59%)
ConAgra, Inc.......................... 20,997 $ 429,126
Dean Foods............................ 11,880 413,573
Philip Morris Companies, Inc.......... 26,300 664,075
Sara Lee Corp......................... 15,000 276,562
-----------
1,783,336
FOOD STORES (2.08%)
7-Eleven, Inc......................... 23,760(1) 298,485
Universal Foods Corp.................. 18,719 365,020
-----------
663,505
FURNITURE AND FIXTURES (1.04%)
Newell Rubbermaid, Inc................ 12,300 331,331
GENERAL MERCHANDISE STORES (0.91%)
Federated Department Stores, Inc...... 12,096(1) 291,060
HOLDING AND OTHER INVESTMENT OFFICES (1.15%)
MBIA, Inc............................. 6,579 366,368
INDUSTRIAL MACHINERY AND EQUIPMENT (1.00%)
Ingersoll-Rand Co..................... 8,178 320,987
INSTRUMENTS AND RELATED PRODUCTS (2.42%)
Becton Dickinson & Co................. 17,600 444,400
Pall Corp............................. 15,800 327,850
-----------
772,250
INSURANCE CARRIERS (2.09%)
Aetna, Inc............................ 5,594 310,467
Allstate Corp......................... 12,900 355,556
-----------
666,023
METAL MINING (0.90%)
Barrick Gold Corp..................... 18,000 286,875
MISCELLANEOUS MANUFACTURING INDUSTRIES (1.49%)
Emerson Electric...................... 7,770 474,456
OIL AND GAS EXTRACTION (1.29%)
Ocean Energy, Inc..................... 10,962(1) 132,914
Offshore Logistics.................... 22,000(1) 277,750
-----------
410,664
</TABLE>
32
<PAGE>
EQUITRUST SERIES FUND, INC.
SCHEDULE OF INVESTMENTS
MANAGED PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
SHARES
HELD VALUE
------------- -----------
<S> <C> <C>
PAPER AND ALLIED PRODUCTS (1.48%)
Glatfelter (P.H.) Co.................. 46,745 $ 473,293
PETROLEUM AND COAL PRODUCTS (3.73%)
Conoco, Inc........................... 20,000 447,500
Texaco, Inc........................... 15,000 741,563
-----------
1,189,063
PRINTING AND PUBLISHING (1.60%)
Belo A.H. Corp........................ 26,400 509,850
TRANSPORTATION EQUIPMENT (2.45%)
Honeywell International, Inc.......... 12,928 434,704
ITT Industries, Inc................... 10,600 348,475
-----------
783,179
WHOLESALE -- NONDURABLE GOODS (1.61%)
Cardinal Health, Inc.................. 7,000 514,500
-----------
Total Common Stocks..................... 18,331,963
PREFERRED STOCKS (28.75%)
------------------------------
DEPOSITORY INSTITUTIONS (4.05%)
Taylor Capital Group, Inc............. 72,000 1,291,500
ELECTRIC, GAS AND SANITARY SERVICES (4.76%)
Nisource, Inc......................... 22,000 907,500
Virginia Electric & Power............. 26,100 611,719
-----------
1,519,219
HOLDING AND OTHER INVESTMENT OFFICES (3.32%)
General Growth Properties, Inc........ 46,400 1,058,500
OIL AND GAS EXTRACTION (6.74%)
EVI, Inc.............................. 26,700 1,228,200
El Paso Energy Capital Trust, Inc..... 15,000 922,500
-----------
2,150,700
PETROLEUM AND COAL PRODUCTS (3.27%)
Canadian Occident Petroleum........... 44,000 1,045,000
PIPELINES EXCLUDING NATURAL GAS (2.72%)
Enron Capital......................... 37,200 869,550
</TABLE>
33
<PAGE>
EQUITRUST SERIES FUND, INC.
SCHEDULE OF INVESTMENTS
MANAGED PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
SHARES
HELD VALUE
------------- -----------
<S> <C> <C>
WHOLESALE -- NONDURABLE GOODS (3.89%)
Howell Corp........................... 20,000 $ 700,000
Suiza Capital Trust II................ 14,400 540,000
-----------
1,240,000
-----------
Total Preferred Stocks.................. 9,174,469
<CAPTION>
PRINCIPAL
AMOUNT
-------------
<S> <C> <C>
CORPORATE BONDS (5.67%)
----------------------------
ELECTRIC, GAS AND SANITARY SERVICES (0.41%)
National Co-op Services Corp.
(Arkansas Electric),
9.48%, due 1/01/12................... $ 123,000 129,266
METAL MINING (3.57%)
Teck Corp., 3.75%, due 7/15/06........ 1,500,000 1,140,000
OIL AND GAS EXTRACTION (1.69%)
Diamond Offshore Drilling, 3.75%, due
2/15/07.............................. 500,000 539,375
-----------
Total Corporate Bonds................... 1,808,641
SHORT-TERM INVESTMENTS (7.82%)
-----------------------------------
COMMERCIAL PAPER (7.32%)
General Electic Capital Corp., 6.51%,
due 8/04/00.......................... 1,235,000 1,235,000
Ford Motor Credit Corp., 6.32%, due
8/01/00.............................. 1,100,000 1,100,000
-----------
2,335,000
<CAPTION>
SHARES
HELD
-------------
<S> <C> <C>
MONEY MARKET MUTUAL FUND (0.50%)
Provident Institutional Funds, T-Fund
Portfolio............................ 158,761 158,761
-----------
Total Short-term Investments............ 2,493,761
-----------
Total Investments (99.69%).............. 31,808,834
OTHER ASSETS LESS LIABILITIES (0.31%)
-----------------------------------------
Cash, receivables, prepaid expense and
other assets, less liabilities....... 99,392
-----------
Total Net Assets (100.00%).............. $31,908,226
===========
</TABLE>
(1) Non-income producing securities.
SEE ACCOMPANYING NOTES.
34
<PAGE>
EQUITRUST SERIES FUND, INC.
SCHEDULE OF INVESTMENTS
MONEY MARKET PORTFOLIO
JULY 31, 2000
<TABLE>
<CAPTION>
ANNUALIZED
YIELD ON
PURCHASE PRINCIPAL
DATE AMOUNT VALUE
---------- --------- ----------
<S> <C> <C> <C>
SHORT-TERM INVESTMENTS (99.28%)
------------------------------------
COMMERCIAL PAPER (26.83%)
NONDEPOSITORY INSTITUTIONS
American General Finance Co.,
6.55%, due 8/01/00............ 6.551% $230,000 $ 230,000
Ford Motor Credit Corp., 6.50%,
due 8/07/00................... 6.503 235,000 235,000
General Electric Capital Corp.,
6.53%, due 8/02/00............ 6.527 165,000 165,000
IBM Credit Corp., 6.42%, due
8/14/00....................... 6.421 230,000 230,000
Texaco, Inc., 6.50%, due
8/10/00....................... 6.496 230,000 230,000
Wells Fargo Financial, 6.53%,
due 8/04/00................... 6.527 160,000 160,000
----------
Total Commercial Paper........... 1,250,000
UNITED STATES GOVERNMENT AGENCIES (72.45%)
Federal Home Loan Bank, due
8/11/00....................... 6.458 300,000 299,470
Federal Home Loan Bank, due
8/16/00....................... 6.469 200,000 199,470
Federal Home Loan Bank, due
8/25/00....................... 6.462 400,000 398,308
Federal Home Loan Bank, due
9/01/00....................... 6.485 500,000 497,261
Federal Home Loan Bank, due
8/09/00....................... 6.438 200,000 199,718
Federal Home Loan Mortgage
Corp., due 8/08/00............ 6.480 475,000 474,410
Federal Home Loan Mortgage
Corp., due 8/15/00............ 6.452 160,000 159,605
Federal Home Loan Mortgage
Corp., due 8/18/00............ 6.480 245,000 244,263
Federal Home Loan Mortgage
Corp., due 8/22/00............ 6.487 180,000 179,331
Federal Home Loan Mortgage
Corp., due 8/29/00............ 6.459 185,000 184,088
Federal National Mortgage
Assoc., due 8/03/00........... 6.530 225,000 224,919
Federal National Mortgage
Assoc., due 8/23/00........... 6.491 205,000 204,201
Federal National Mortgage
Assoc., due 8/24/00........... 6.491 110,000 109,552
----------
Total United States Government
Agencies........................ 3,374,596
----------
Total Short-Term Investments....... 4,624,596
OTHER ASSETS LESS LIABILITIES (0.72%)
-----------------------------------------
Cash, receivables, prepaid
expense and other assets, less
liabilities..................... 33,545
----------
Total Net Assets (100.00%)......... $4,658,141
==========
</TABLE>
SEE ACCOMPANYING NOTES.
35
<PAGE>
EQUITRUST SERIES FUND, INC.
SCHEDULE OF INVESTMENTS
BLUE CHIP PORTFOLIO
JULY 31, 2000
<TABLE>
<CAPTION>
SHARES
HELD VALUE
------------- ------------
<S> <C> <C>
COMMON STOCKS (94.85%)
---------------------------
BUSINESS SERVICES (2.28%)
America Online, Inc................... 13,424(1) $ 715,667
Microsoft Corp........................ 11,489(1) 802,076
-----------
1,517,743
CHEMICALS AND ALLIED PRODUCTS (12.13%)
Bristol-Myers Squibb Co............... 24,962 1,238,739
DuPont (E.I.) de Nemours & Co......... 18,318 830,034
Johnson & Johnson..................... 17,092 1,590,624
Lilly (Eli) & Co...................... 10,096 1,048,722
Merck & Co., Inc...................... 22,138 1,587,018
Pfizer, Inc........................... 20,888 900,795
Procter & Gamble Co................... 15,521 882,757
-----------
8,078,689
COMMUNICATIONS (8.30%)
AT&T Corp............................. 24,525 758,742
SBC Communications, Inc............... 19,989 850,782
Verizon Communications................ 21,290 1,000,630
Viacom, Inc., Class B................. 33,323(1) 2,209,731
Worldcom, Inc......................... 18,154(1) 709,141
-----------
5,529,026
DEPOSITORY INSTITUTIONS (2.64%)
Bank of America....................... 13,502 639,657
J. P. Morgan & Co., Inc............... 8,384 1,119,264
-----------
1,758,921
EATING AND DRINKING PLACES (1.76%)
McDonald's Corp....................... 37,219 1,172,399
ELECTRONIC AND OTHER ELECTRIC EQUIPMENT (10.36%)
General Electric Co................... 49,887 2,566,063
Intel Corporation..................... 25,232 1,684,236
Lucent Technologies, Inc.............. 29,609 1,295,394
Motorola, Inc......................... 16,965 560,905
Texas Instruments, Inc................ 13,554 795,450
-----------
6,902,048
</TABLE>
36
<PAGE>
EQUITRUST SERIES FUND, INC.
SCHEDULE OF INVESTMENTS
BLUE CHIP PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
SHARES
HELD VALUE
------------- ------------
<S> <C> <C>
FOOD AND KINDRED PRODUCTS (4.99%)
Coca-Cola Co. (The)................... 21,658 $ 1,327,906
PepsiCo, Inc.......................... 28,494 1,305,381
Philip Morris Companies, Inc.......... 27,405 691,976
-----------
3,325,263
GENERAL MERCHANDISE STORES (3.81%)
Wal-Mart Stores, Inc.................. 46,192 2,537,673
INDUSTRIAL MACHINERY AND EQUIPMENT (16.13%)
Caterpillar, Inc...................... 23,586 803,398
Cisco Systems, Inc.................... 35,144(1) 2,299,735
Dell Computer Corp.................... 20,300(1) 891,931
EMC Corp.............................. 14,866(1) 1,265,468
Hewlett-Packard Co.................... 10,651 1,162,956
International Business Machines
Corp................................. 19,341 2,174,654
Oracle Corp........................... 14,586(1) 1,096,685
Sun Microsystems, Inc................. 9,961(1) 1,050,263
-----------
10,745,090
INSTRUMENTS AND RELATED PRODUCTS (1.29%)
Agilent Technologies, Inc............. 4,062(1) 165,527
Eastman Kodak Co...................... 12,652 694,279
-----------
859,806
INSURANCE CARRIERS (4.26%)
American International Group, Inc..... 32,374 2,838,839
LUMBER AND WOOD PRODUCTS (1.09%)
Home Depot, Inc....................... 13,973 723,103
MOTION PICTURES (2.06%)
Disney (Walt) Co...................... 35,381 1,368,802
NONDEPOSITORY INSTITUTIONS (2.42%)
Citigroup, Inc........................ 22,863 1,613,270
PAPER AND ALLIED PRODUCTS (2.46%)
International Paper Co................ 19,138 650,692
Minnesota Mining & Manufacturing
Co................................... 10,936 984,924
-----------
1,635,616
PETROLEUM AND COAL PRODUCTS (3.90%)
Exxon Mobil Corp...................... 32,446 2,595,680
PRIMARY METAL INDUSTRIES (2.27%)
Alcoa, Inc............................ 49,892 1,509,233
</TABLE>
37
<PAGE>
EQUITRUST SERIES FUND, INC.
SCHEDULE OF INVESTMENTS
BLUE CHIP PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
SHARES
HELD VALUE
------------- ------------
<S> <C> <C>
PRINTING AND PUBLISHING (1.09%)
Time Warner, Inc...................... 9,435 $ 723,547
SECURITY AND COMMODITY BROKERS (3.28%)
American Express Co................... 38,568 2,186,323
TRANSPORTATION EQUIPMENT (8.27%)
Boeing Co. (The)...................... 20,953 1,026,697
Ford Motor Co......................... 23,530 1,095,616
General Motors Corp................... 15,539 884,752
Honeywell International, Inc.......... 29,211 982,220
United Technologies Corp.............. 26,009 1,518,275
-----------
5,507,560
WHOLESALE DURABLE GOODS (0.06%)
Visteon Corp.......................... 3,080 43,120
-----------
Total Common Stocks..................... 63,171,751
SHORT-TERM INVESTMENTS (5.12%)
-----------------------------------
MONEY MARKET MUTUAL FUND (0.62%)
Provident Institutional Funds, T-Fund
Portfolio............................ 414,209 414,209
<CAPTION>
PRINCIPAL
AMOUNT
-------------
<S> <C> <C>
UNITED STATES GOVERNMENT AGENCIES (4.50%)
Federal National Mortgage Association,
due 8/09/00.......................... $2,500,000 2,496,472
Federal Home Loan Mortgage Corp., due
8/01/00.............................. 500,000 500,000
-----------
2,996,472
-----------
Total Short-Term Investments............ 3,410,681
-----------
Total Investments (99.97%).............. 66,582,432
OTHER ASSETS LESS LIABILITIES (0.03%)
-----------------------------------------
Cash, receivables, prepaid expense and
other assets, less liabilities....... 20,940
-----------
Total Net Assets (100.00%).............. $66,603,372
===========
</TABLE>
(1) Non-income producing securities.
SEE ACCOMPANYING NOTES.
38
<PAGE>
EQUITRUST SERIES FUND, INC.
NOTES TO FINANCIAL STATEMENTS
JULY 31, 2000
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).
Institutional shares ("Class I") 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.
Traditional shares ("Class A") 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 service fees are only charged against Class A shares. Other
class-specific expenses charged to each class during the year ended July 31,
2000, 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.................. $204,240 $10,808 $7,817 $2,624
High Grade Bond............... 35,065 5,239 4,606 2,575
High Yield Bond............... 42,546 5,331 4,615 2,586
Managed....................... 125,741 10,180 5,662 2,583
Money Market.................. 6,483 5,444 4,016 1,828
Blue Chip..................... 178,329 12,034 7,591 2,652
</TABLE>
39
<PAGE>
EQUITRUST SERIES FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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, or in situations where liquidation of the holdings at quoted market
prices is questionable, 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 Fund records investment transactions generally one day after the trade
date. The identified cost basis has been used in determining the net realized
gain or loss from investment transactions and unrealized appreciation or
depreciation on investments. Dividends are taken into income on an accrual basis
as of the ex-dividend date and interest is recognized on an accrual basis.
Discounts and premiums on investments purchased are amortized over the life of
the respective investments.
Dividends and distributions to shareholders are recorded on the ex-dividend
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 July 31, 2000, the Value Growth, High Yield and Managed Portfolios had
net capital loss carryforwards of approximately $29,276,000, $92,000 and
$6,326,000, respectively, which will expire from 2007 through 2008. In addition,
for the period from November 1, 1999 through July 31, 2000, the Value Growth,
High Grade Bond, High Yield Bond and Managed Portfolios incurred net realized
capital losses of approximately $6,354,000, $22,000, $47,000 and $3,948,000,
respectively. As permitted by tax
40
<PAGE>
EQUITRUST SERIES FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
2. FEDERAL INCOME TAXES (CONTINUED)
regulations, each Portfolio intends to elect to defer these losses and treat
them as arising in the fiscal year ending July 31, 2001.
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) 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, 2000. There can be no assurance that EquiTrust Investment
will continue to waive this expense beyond December 31, 2000.
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 both Class A and Class I
shares 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.
41
<PAGE>
EQUITRUST SERIES FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. MANAGEMENT CONTRACT AND TRANSACTIONS WITH AFFILIATES (CONTINUED)
Certain officers and directors of the Fund are also officers of FBL
Financial Group, Inc., EquiTrust Investment, EquiTrust Marketing and other
affiliated entities. At July 31, 2000, 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 100,603 shares of Value Growth Portfolio
(Class A) at July 31, 2000.
4. EXPENSE OFFSET ARRANGEMENTS
The Fund and other mutual funds managed by EquiTrust Investment have an
agreement with the custodian banks to indirectly pay a portion of the
custodians' fees through credits earned by the Funds' cash on deposit with the
bank. This deposit agreement is an alternative to overnight investments.
5. CAPITAL SHARE TRANSACTIONS
Net assets as of July 31, 2000 consisted of:
<TABLE>
<CAPTION>
PORTFOLIO
-----------------------------------------------------------------------------
VALUE HIGH GRADE HIGH YIELD MONEY BLUE
GROWTH BOND BOND MANAGED MARKET CHIP
------------ ----------- ----------- ------------ ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Capital Stock
(5,000,000,000 shares of
$.001 par value Capital
Stock authorized)....... $ 7,577 $ 1,343 $ 1,264 $ 3,172 $ 4,658 $ 1,407
Additional paid-in
capital................. 105,037,500 13,781,225 12,940,726 42,030,069 4,653,483 42,404,923
Accumulated undistributed
net investment income... 334,916 12,973
Accumulated undistributed
net realized gain (loss)
from investment
transactions............ (35,630,066) (22,377) (140,174) (10,273,987) 1,248,652
Net unrealized
appreciation
(depreciation) of
investments............. (5,090,674) (752,221) (990,306) 148,972 22,935,417
------------ ----------- ----------- ------------ ---------- -----------
Net Assets............... $ 64,659,253 $13,007,970 $11,811,510 $ 31,908,226 $4,658,141 $66,603,372
============ =========== =========== ============ ========== ===========
</TABLE>
42
<PAGE>
EQUITRUST SERIES FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
5. CAPITAL SHARE TRANSACTIONS (CONTINUED)
Transactions in Capital Stock for each portfolio were as follows:
YEAR ENDED JULY 31, 2000:
<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................ 507,475 109,750 152,911 150,831 2,453,451 285,255
Class I................ 100,064 21,187 24,572 44,320 122,817 35,896
Shares issued in
reinvestment of
dividends and/or capital
gains distribution:
Class A................ 46,595 59,085 61,900 139,704 79,804 15,569
Class I................ 4,298 3,828 5,266 10,243 9,298 1,823
Shares redeemed:
Class A................ (2,128,361) (282,185) (303,726) (1,020,997) (2,072,094) (191,831)
Class I................ (173,885) (21,699) (31,149) (91,477) (137,360) (32,814)
------------ ----------- ----------- ------------ ----------- -----------
Net Increase
(Decrease).............. (1,643,814) (110,034) (90,226) (767,376) 455,916 113,898
============ =========== =========== ============ =========== ===========
Value of shares sold:
Class A................ $ 4,313,835 $ 1,074,317 $ 1,445,398 $ 1,508,419 $ 2,453,451 $13,569,410
Class I................ 864,903 208,262 232,056 447,970 122,817 1,732,803
Value issued in
reinvestment of
dividends and/or capital
gains distribution:
Class A................ 392,597 579,078 582,456 1,385,155 79,804 769,683
Class I................ 36,316 37,535 49,547 101,740 9,298 90,400
Value redeemed:
Class A................ (17,957,242) (2,763,593) (2,862,778) (10,131,454) (2,072,094) (9,150,049)
Class I................ (1,450,044) (211,720) (292,750) (903,049) (137,360) (1,561,022)
------------ ----------- ----------- ------------ ----------- -----------
Net Increase
(Decrease).............. $(13,799,635) $(1,076,121) $ (846,071) $ (7,591,219) $ 455,916 $ 5,451,225
============ =========== =========== ============ =========== ===========
</TABLE>
43
<PAGE>
EQUITRUST SERIES FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
5. CAPITAL SHARE TRANSACTIONS (CONTINUED)
YEAR ENDED JULY 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................ 1,093,340 334,499 278,716 411,574 2,379,910 301,869
Class I................ 136,043 21,652 29,023 61,989 275,807 42,315
Shares issued in
reinvestment of
dividends and/or capital
gains distribution:
Class A................ 572,232 55,948 58,350 317,600 41,669 8,453
Class I................ 24,347 2,805 3,959 17,659 5,547 797
Shares redeemed:
Class A................ (1,393,178) (177,704) (196,728) (660,841) (1,528,394) (188,360)
Class I................ (38,706) (3,696) (6,138) (25,818) (173,322) (11,583)
------------ ----------- ----------- ----------- ----------- -----------
Net Increase............. 394,078 233,504 167,182 122,163 1,001,217 153,491
============ =========== =========== =========== =========== ===========
Value of shares sold:
Class A................ $ 10,430,281 $3,508,582 $ 2,852,823 $ 4,477,308 $ 2,379,910 $12,875,650
Class I................ 1,225,133 225,669 287,297 671,578 275,807 1,817,166
Value issued in
reinvestment of
dividends and/or capital
gains distribution:
Class A................ 5,067,247 583,214 593,444 3,345,622 41,669 355,959
Class I................ 217,816 29,180 40,175 186,062 5,547 33,610
Value redeemed:
Class A................ (13,163,062) (1,849,459) (2,002,783) (7,091,136) (1,528,394) (8,095,048)
Class I................ (373,273) (38,961) (62,363) (279,419) (173,322) (514,111)
------------ ----------- ----------- ----------- ----------- -----------
Net Increase............. $ 3,404,142 $2,458,225 $ 1,708,593 $ 1,310,015 $ 1,001,217 $ 6,473,226
============ =========== =========== =========== =========== ===========
</TABLE>
6. INVESTMENT TRANSACTIONS
For the year ended July 31, 2000, 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............................ $72,635,509 $88,704,594
High Grade Bond......................... 1,613,441 1,387,555
High Yield Bond......................... 402,500 1,444,262
Managed................................. 23,217,574 33,108,108
Blue Chip............................... 18,293,942 10,771,619
</TABLE>
44
<PAGE>
EQUITRUST SERIES FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
6. INVESTMENT TRANSACTIONS (CONTINUED)
At July 31, 2000, net unrealized appreciation (depreciation) of investments
by portfolio was composed of the following:
<TABLE>
<CAPTION>
NET UNREALIZED
GROSS UNREALIZED APPRECIATION
-------------------------- (DEPRECIATION)
PORTFOLIO APPRECIATION DEPRECIATION OF INVESTMENTS
--------- ------------ ------------ --------------
<S> <C> <C> <C>
Value Growth....................... $ 3,231,772 $8,322,446 $(5,090,674)
High Grade Bond.................... 133,283 885,504 (752,221)
High Yield Bond.................... 71,505 1,061,811 (990,306)
Managed............................ 2,226,332 2,077,360 148,972
Blue Chip.......................... 23,988,114 1,052,697 22,935,417
</TABLE>
7. 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, 1999.......... $0.0475 $0.0516 $0.0510 $0.0562 $0.0029 $0.0031
September 30, 1999....... 0.0522 0.0560 0.0643 0.0690 0.0029 0.0031
October 29, 1999......... 0.0428 0.0467 0.0503 0.0547 0.0028 0.0029
November 30, 1999........ 0.0465 0.0503 0.0525 0.0573 0.0032 0.0032
December 30, 1999........ 0.0508 0.0543 0.0640 0.0684 0.0033 0.0034
January 31, 2000......... 0.0449 0.0502 0.0537 0.0597 0.0035 0.0039
February 29, 2000........ 0.0453 0.0502 0.0500 0.0557 0.0032 0.0034
March 31, 2000........... 0.0555 0.0609 0.0652 0.0714 0.0035 0.0037
April 28, 2000........... 0.0403 0.0441 0.0493 0.0536 0.0033 0.0035
May 31, 2000............. 0.0453 0.0511 0.0509 0.0565 0.0038 0.0040
June 30, 2000............ 0.0548 0.0601 0.0636 0.0681 0.0039 0.0040
July 31, 2000............ 0.0440 0.0504 0.0497 0.0556 0.0041 0.0045
------- ------- ------- ------- ------- -------
Total Dividends per
Share................... $0.5699 $0.6259 $0.6645 $0.7262 $0.0404 $0.0427
======= ======= ======= ======= ======= =======
</TABLE>
The percentages of income dividends qualifying for deduction by corporate
shareholders for the High Grade Bond and High Yield Bond portfolios are 2% and
6%, respectively.
45
<PAGE>
EQUITRUST SERIES FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
7. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS (CONTINUED)
In addition, dividends and distributions to shareholders from net investment
income and net realized gain on investment transactions were paid during the
year ended July 31, 2000, 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............. 12/28/99 12/28/99 12/29/99 $0.0494 $0.0871
Managed.................. 10/28/99 10/28/99 10/29/99 0.1284 0.1401
Managed.................. 12/28/99 12/28/99 12/29/99 0.0720 0.0824
Managed.................. 4/27/00 4/27/00 4/28/00 0.1847 0.2159
Managed.................. 7/30/00 7/30/00 7/31/00 0.0780 0.0920
Blue Chip................ 12/28/99 12/28/99 12/29/99 0.1132 0.3820
</TABLE>
The percentages of income dividends qualifying for deduction by corporate
shareholders for the Value Growth, Managed and Blue Chip portfolios are 100%,
34% and 100%, respectively.
CAPITAL GAINS DISTRIBUTIONS:
<TABLE>
<CAPTION>
DIVIDEND
AMOUNT
DECLARATION RECORD PAYABLE PER SHARE
PORTFOLIO DATE DATE DATE (BOTH CLASSES)
--------- ----------- --------- --------- --------------
<S> <C> <C> <C> <C>
High Grade Bond............... 12/28/99 12/28/99 12/29/99 $0.0295
Blue Chip..................... 12/28/99 12/28/99 12/29/99 0.5189
</TABLE>
46
<PAGE>
(This page has been left blank intentionally.)
47
<PAGE>
EQUITRUST SERIES FUND, INC.
FINANCIAL HIGHLIGHTS
YEARS ENDED JULY 31, 2000, 1999, 1998, 1997 AND 1996
<TABLE>
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS LESS DISTRIBUTIONS
------------------------------------- --------------------------
NET REALIZED
AND
NET ASSET UNREALIZED TOTAL DIVIDENDS
VALUE AT NET GAIN FROM FROM NET DISTRIBUTIONS
BEGINNING INVESTMENT (LOSS) ON INVESTMENT INVESTMENT FROM
OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME CAPITAL GAINS
--------- ---------- ------------- ---------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C>
VALUE GROWTH PORTFOLIO
Class A:
2000................................ $ 9.57 $ 0.06 $ (1.05) $ (0.99) $ (0.05) $ --
1999................................ 11.07 0.09 (0.97) (0.88) (0.11) --
1998................................ 15.63 0.13 (2.26) (2.13) (0.17) (2.26)
1997................................ 14.68 0.18 2.89 3.07 (0.18) (1.94)
1996................................ 13.04 0.27 2.10 2.37 (0.46) (0.27)
Class I:
2000................................ $ 9.60 $ 0.12 $ (1.05) $ (0.93) $ (0.09) $ --
1999................................ 11.08 0.19 (1.01) (0.82) (0.15) --
1998................................ 16.16 0.19 (2.83) (2.64) (0.18) (2.26)
HIGH GRADE BOND PORTFOLIO
Class A:
2000................................ $ 10.07 $ 0.57 $ (0.35) $ 0.22 $ (0.57) $ (0.01)
1999................................ 10.57 0.56 (0.44) 0.12 (0.56) (0.06)
1998................................ 10.50 0.60 0.07 0.67 (0.60) --
1997................................ 10.16 0.60 0.34 0.94 (0.60) --
1996................................ 10.26 0.64 (0.10) 0.54 (0.64) --
Class I:
2000................................ $ 10.07 $ 0.63 $ (0.35) $ 0.28 $ (0.63) $ (0.01)
1999................................ 10.57 0.60 (0.44) 0.16 (0.60) (0.06)
1998................................ 10.53 0.42 0.04 0.46 (0.42) --
HIGH YIELD BOND PORTFOLIO
Class A:
2000................................ $ 9.87 $ 0.66 $ (0.52) $ 0.14 $ (0.66) $ --
1999................................ 10.48 0.60 (0.51) 0.09 (0.60) (0.02)
1998................................ 10.48 0.65 0.07 0.72 (0.65) (0.07)
1997................................ 9.99 0.70 0.61 1.31 (0.70) (0.12)
1996................................ 10.03 0.75 (0.01) 0.74 (0.75) (0.03)
Class I:
2000................................ $ 9.87 $ 0.73 $ (0.53) $ 0.20 $ (0.73) $ --
1999................................ 10.47 0.65 (0.50) 0.15 (0.65) (0.02)
1998................................ 10.52 0.45 0.02 0.47 (0.45) (0.07)
<CAPTION>
LESS DISTRIBUTIONS
-----------------------------------
DISTRIBUTIONS
IN EXCESS OF TOTAL
NET REALIZED GAINS DISTRIBUTIONS
-------------------- -------------
<S> <C> <C>
VALUE GROWTH PORTFOLIO
Class A:
2000................................ $ -- $ (0.05)
1999................................ (0.51) (0.62)
1998................................ -- (2.43)
1997................................ -- (2.12)
1996................................ -- (0.73)
Class I:
2000................................ $ -- $ (0.09)
1999................................ (0.51) (0.66)
1998................................ -- (2.44)
HIGH GRADE BOND PORTFOLIO
Class A:
2000................................ $ (0.02) $ (0.60)
1999................................ -- (0.62)
1998................................ -- (0.60)
1997................................ -- (0.60)
1996................................ -- (0.64)
Class I:
2000................................ $ (0.02) $ (0.66)
1999................................ -- (0.66)
1998................................ -- (0.42)
HIGH YIELD BOND PORTFOLIO
Class A:
2000................................ $ -- $ (0.66)
1999................................ (0.08) (0.70)
1998................................ -- (0.72)
1997................................ -- (0.82)
1996................................ -- (0.78)
Class I:
2000................................ $ -- $ (0.73)
1999................................ (0.08) (0.75)
1998................................ -- (0.52)
</TABLE>
48
<PAGE>
<TABLE>
<CAPTION>
RATIOS/SUPPLEMENTAL DATA
TOTAL ----------------------------------
INVESTMENT
NET ASSET RETURN BASED RATIO OF
CAPITAL VALUE AT ON NET ASSETS AT TOTAL EXPENSES TO
CONTRIBUTION END NET ASSET END OF PERIOD AVERAGE
FROM AFFILIATE OF PERIOD VALUE (1) (IN THOUSANDS) NET ASSETS
-------------- ---------- ------------- -------------- ------------------
<S> <C> <C> <C> <C> <C>
VALUE GROWTH PORTFOLIO
Class A:
2000................................ $ -- $ 8.53 (10.35)% $ 60,429 1.79%
1999................................ -- 9.57 (7.46)% 82,902 1.74%
1998................................ -- 11.07 (16.37)% 92,848 1.60%
1997................................ -- 15.63 21.83% 112,985 1.65%
1996................................ -- 14.68 18.41% 86,534 1.62%
Class I:
2000................................ $ -- $ 8.58 (9.70)% $ 4,230 1.01%
1999................................ -- 9.60 (6.83)% 5,399 1.19%
1998................................ -- 11.08 (18.97)%(3) 4,885 0.73%(3)
HIGH GRADE BOND PORTFOLIO
Class A:
2000................................ $ -- $ 9.69 2.27% $ 11,513 1.75%
1999................................ -- 10.07 1.07% 13,110 1.67%
1998................................ -- 10.57 6.53% 11,510 1.71%
1997................................ -- 10.50 9.56% 10,250 1.82%
1996................................ -- 10.16 5.37% 9,122 1.85%
Class I:
2000................................ $ -- $ 9.69 2.85% $ 1,495 1.19%
1999................................ -- 10.07 1.47% 1,521 1.26%
1998................................ -- 10.57 4.40%(3) 1,376 0.95%(3)
HIGH YIELD BOND PORTFOLIO
Class A:
2000................................ $ -- $ 9.35 1.64% $ 10,276 2.02%
1999................................ -- 9.87 0.87% 11,734 1.95%
1998................................ -- 10.48 7.10% 10,982 1.97%
1997................................ -- 10.48 13.29% 9,156 2.10%(4)
1996................................ -- 9.99 7.67% 7,349 2.22%(4)
Class I:
2000................................ $ -- $ 9.34 2.20% $ 1,535 1.34%
1999................................ -- 9.87 1.43% 1,635 1.50%
1998................................ -- 10.47 4.62%(3) 1,454 1.05%(3)
<CAPTION>
RATIOS/SUPPLEMENTAL DATA
-----------------------------------------
RATIO OF NET
RATIO OF NET INVESTMENT
EXPENSES TO INCOME TO PORTFOLIO
AVERAGE NET AVERAGE TURNOVER
ASSETS NET ASSETS RATE
-------------- -------------- ---------
<S> <C> <C> <C>
VALUE GROWTH PORTFOLIO
Class A:
2000................................ 1.78% 0.64% 103%
1999................................ 1.74% 0.92% 220%
1998................................ 1.60% 0.87% 217%
1997................................ 1.65% 1.18% 77%
1996................................ 1.62% 1.87% 92%
Class I:
2000................................ 1.00% 1.42% 103%
1999................................ 1.18% 1.48% 220%
1998................................ 0.73%(3) 0.64%(3) 217%(3)
HIGH GRADE BOND PORTFOLIO
Class A:
2000................................ 1.73% 5.80% 12%
1999................................ 1.66% 5.33% 29%
1998................................ 1.71% 5.67% 38%
1997................................ 1.82% 5.85% 30%
1996................................ 1.85% 6.19% 34%
Class I:
2000................................ 1.17% 6.36% 12%
1999................................ 1.25% 5.74% 29%
1998................................ 0.95%(3) 3.89%(3) 38%(3)
HIGH YIELD BOND PORTFOLIO
Class A:
2000................................ 1.98% 7.05% 3%
1999................................ 1.94% 5.93% 44%
1998................................ 1.97% 6.17% 30%
1997................................ 2.00% 6.82% 45%
1996................................ 2.00% 7.44% 30%
Class I:
2000................................ 1.33% 7.71% 3%
1999................................ 1.49% 6.38% 44%
1998................................ 1.05%(3) 4.26%(3) 30%(3)
</TABLE>
49
<PAGE>
EQUITRUST SERIES FUND, INC.
FINANCIAL HIGHLIGHTS (CONTINUED)
YEARS ENDED JULY 31, 2000, 1999, 1998, 1997, AND 1996
<TABLE>
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS LESS DISTRIBUTIONS
------------------------------------ -------------------------
NET REALIZED
AND
NET ASSET UNREALIZED TOTAL DIVIDENDS
VALUE AT NET GAIN FROM FROM NET DISTRIBUTIONS
BEGINNING INVESTMENT (LOSS) ON INVESTMENT INVESTMENT FROM
OF PERIOD INCOME INVESTMENT OPERATIONS INCOME CAPITAL GAINS
--------- ---------- ------------ ---------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
MANAGED PORTFOLIO
Class A:
2000................. $10.39 $0.46 $(0.33) $ 0.13 $(0.46) $ --
1999................. 12.15 0.47 (1.25) (0.78) (0.47) --
1998................. 14.05 0.44 (1.00) (0.56) (0.44) (0.90)
1997................. 13.33 0.48 1.91 2.39 (0.46) (1.21)
1996................. 11.85 0.46 1.54 2.00 (0.45) (0.10)
Class I:
2000................. $10.41 $0.53 $(0.33) $ 0.20 $(0.53) $ --
1999................. 12.13 0.49 (1.21) (0.72) (0.49) --
1998................. 14.21 0.34 (1.16) (0.82) (0.36) (0.90)
MONEY MARKET PORTFOLIO
Class A:
2000................. $ 1.00 $0.04 $ -- $ 0.04 $(0.04) $ --
1999................. 1.00 0.03 -- 0.03 (0.03) --
1998................. 1.00 0.04 -- 0.04 (0.04) --
1997................. 1.00 0.03 -- 0.03 (0.03) --
1996................. 1.00 0.04 -- 0.04 (0.04) --
Class I:
2000................. $ 1.00 $0.04 $ -- $ 0.04 $(0.04) $ --
1999................. 1.00 0.03 -- 0.03 (0.03) --
1998................. 1.00 0.02 -- 0.02 (0.02) --
BLUE CHIP PORTFOLIO
Class A:
2000................. $46.89 $0.06 $ 1.00 $ 1.06 $(0.11) $(0.52)
1999................. 41.27 0.13 5.82 5.95 (0.16) (0.05)
1998................. 37.20 0.18 4.08 4.26 (0.16) (0.03)
1997................. 26.26 0.16 11.22 11.38 (0.14) (0.30)
1996................. 22.85 0.17 3.43 3.60 (0.19) --
Class I:
2000................. $47.13 $0.43 $ 1.04 $ 1.47 $(0.38) $(0.52)
1999................. 41.37 0.38 5.84 6.22 (0.29) (0.05)
1998................. 36.77 0.29 4.51 4.80 (0.17) (0.03)
<CAPTION>
LESS DISTRIBUTIONS
---------------------------------
DISTRIBUTIONS
IN EXCESS OF TOTAL
NET REALIZED GAINS DISTRIBUTIONS
------------------ -------------
<S> <C> <C>
MANAGED PORTFOLIO
Class A:
2000................. $ -- $(0.46)
1999................. (0.51) (0.98)
1998................. -- (1.34)
1997................. -- (1.67)
1996................. -- (0.55)
Class I:
2000................. $ -- $(0.53)
1999................. (0.51) (1.00)
1998................. -- (1.26)
MONEY MARKET PORTFOLIO
Class A:
2000................. $ -- $(0.04)
1999................. -- (0.03)
1998................. -- (0.04)
1997................. -- (0.03)
1996................. -- (0.04)
Class I:
2000................. $ -- $(0.04)
1999................. -- (0.03)
1998................. -- (0.02)
BLUE CHIP PORTFOLIO
Class A:
2000................. $ -- $(0.63)
1999................. (0.12) (0.33)
1998................. -- (0.19)
1997................. -- (0.44)
1996................. -- (0.19)
Class I:
2000................. $ -- $(0.90)
1999................. (0.12) (0.46)
1998................. -- (0.20)
</TABLE>
50
<PAGE>
<TABLE>
<CAPTION>
RATIOS/SUPPLEMENTAL DATA
TOTAL ---------------------------------
INVESTMENT
NET ASSET RETURN BASED RATIO OF
CAPITAL VALUE AT ON NET ASSETS AT TOTAL EXPENSES TO
CONTRIBUTION END NET ASSET END OF PERIOD AVERAGE
FROM AFFILIATE OF PERIOD VALUE (1) (IN THOUSANDS) NET ASSETS
-------------- --------- ------------ -------------- -----------------
<S> <C> <C> <C> <C> <C>
MANAGED PORTFOLIO
Class A:
2000................. $ -- $10.06 1.42% $29,443 1.96%
1999................. -- 10.39 (6.26)% 38,012 1.95%
1998................. -- 12.15 (4.54)% 43,602 1.83%
1997................. -- 14.05 17.88% 40,994 1.95%
1996................. 0.03(2) 13.33 17.30%(2) 27,470 1.91%
Class I:
2000................. $ -- $10.08 2.10% $ 2,465 1.30%
1999................. -- 10.41 (5.75)% 2,931 1.47%
1998................. -- 12.13 (6.31)%(3) 2,762 1.03%(3)
MONEY MARKET PORTFOLIO
Class A:
2000................. $ -- $ 1.00 4.12% $ 3,928 1.73%
1999................. -- 1.00 3.19% 3,467 1.91%
1998................. -- 1.00 3.65% 2,574 1.95%
1997................. -- 1.00 3.51% 2,466 2.28%(4)
1996................. -- 1.00 3.64% 2,552 2.43%(4)
Class I:
2000................. $ -- $ 1.00 4.36% $ 730 1.73%(4)
1999................. -- 1.00 3.16% 735 2.22%(4)
1998................. -- 1.00 2.47%(3) 627 1.29%(3)
BLUE CHIP PORTFOLIO
Class A:
2000................. $ -- $47.32 2.21% $60,701 1.50%
1999................. -- 46.89 14.51% 55,045 1.52%
1998................. -- 41.27 11.49% 43,418 1.55%
1997................. -- 37.20 43.77% 29,863 1.74%
1996................. -- 26.26 15.83% 14,641 1.79%
Class I:
2000................. $ -- $47.70 3.05% $ 5,902 0.69%
1999................. -- 47.13 15.18% 5,601 0.94%
1998................. -- 41.37 13.14%(3) 3,613 0.76%(3)
<CAPTION>
RATIOS/SUPPLEMENTAL DATA
-------------------------------------
RATIO OF NET
RATIO OF NET INVESTMENTS
EXPENSES TO INCOME TO PORTFOLIO
AVERAGE AVERAGE TURNOVER
NET ASSETS NET ASSETS RATE
------------ ------------ ---------
<S> <C> <C> <C>
MANAGED PORTFOLIO
Class A:
2000................. 1.96% 4.47% 70%
1999................. 1.95% 4.30% 67%
1998................. 1.83% 3.33% 66%
1997................. 1.95% 3.48% 74%
1996................. 1.91% 3.47% 81%
Class I:
2000................. 1.29% 5.14% 70%
1999................. 1.47% 4.78% 67%
1998................. 1.03%(3) 2.30%(3) 66%(3)
MONEY MARKET PORTFOLIO
Class A:
2000................. 1.71% 4.03% 0%
1999................. 1.89% 3.13% 0%
1998................. 1.95% 3.57% 0%
1997................. 2.00% 3.46% 0%
1996................. 2.00% 3.58% 0%
Class I:
2000................. 1.47% 4.48% 0%
1999................. 1.97% 3.07% 0%
1998................. 1.29%(3) 2.37%(3) 0%(3)
BLUE CHIP PORTFOLIO
Class A:
2000................. 1.49% 0.12% 18%
1999................. 1.52% 0.30% 7%
1998................. 1.55% 0.49% 3%
1997................. 1.74% 0.49% 0%
1996................. 1.79% 0.66% 3%
Class I:
2000................. 0.69% 0.93% 18%
1999................. 0.94% 0.88% 7%
1998................. 0.76%(3) 0.51%(3) 3%(3)
</TABLE>
51
<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) 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 as shown:
<TABLE>
<CAPTION>
PER SHARE
NET INVESTMENT AMOUNT
YEAR INCOME REIMBURSED
---- -------------- ----------
<S> <C> <C> <C>
HIGH YIELD BOND PORTFOLIO
Class A 2000 $0.66 $ 2,521
1997 0.69 8,681
1996 0.73 15,361
MONEY MARKET PORTFOLIO
Class A 1997 $0.03 $ 7,255
1996 0.03 10,718
Class I 2000 $0.04 $ 1,701
1999 0.03 1,724
</TABLE>
52
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Shareholders
EquiTrust Series Fund, Inc.
We have audited the accompanying statements of assets and liabilities,
including the schedules of investments, of EquiTrust Series Fund, Inc.
(comprised of the Value Growth, High Grade Bond, High Yield Bond, Managed, Money
Market and Blue Chip Portfolios) as of July 31, 2000, and the related statements
of operations for the year then ended, the statements of changes in net assets
for each of the two years in the period then ended, and the financial highlights
for each of the five years in the period then ended. These financial statements
and financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
and financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of July 31, 2000, by correspondence with the custodian and brokers. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
each of the respective portfolios constituting the EquiTrust Series Fund, Inc.
at July 31, 2000, and the results of their operations for the year then ended,
the changes in their net assets for each of the two years in the period then
ended, and the financial highlights for each of the five years in the period
then ended, in conformity with accounting principles generally accepted in the
United States.
/s/ ERNST & YOUNG LLP
Des Moines, Iowa
August 31, 2000
53
