<PAGE>
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[LOGO]
EquiTrust Variable Insurance
Series Fund
SEMI-ANNUAL REPORT
JUNE 30, 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.
<PAGE>
PRESIDENT'S LETTER
Dear Shareholder:
For the six-month period ended June 30, 2000, the Standard & Poor's 500
Stock Composite Index (S&P 500) was down 0.44% on a total return basis, and the
Dow Jones Industrial Average (DJIA) was down 8.47%. Ending its streak of
dramatic price gains, the NASDAQ Composite Index peaked in March and ended the
six-month period down 2.47%. During the same period, the Russell 2000 small cap
index rose 3.04%.
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 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 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 2.51% and long-term Treasury bonds returned
9.68%. In general, longer maturity and higher quality bonds performed best.
During the six months ended June 30, 2000, the consumer price index (CPI)
rose 2.07%, compared to 1.56% for the last six months of 1999. Higher energy
prices contributed substantially to this increase.
Federal Reserve Chairman Alan Greenspan has initiated a series of interest
rate hikes in 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 this year, 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 Variable
Insurance 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 change, we have
substantially restructured the Portfolio. Convertible bonds and preferred stocks
have been reduced to only nominal 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 four-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
2
<PAGE>
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.
The Portfolio remains substantially (nearly 30%) underweight in the S&P 500
Index technology sector. Significant price volatility in the technology sector
left this portion of the S&P 500 down 1.61% for the period, which would
understate the price swings observed. 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: Treasury yields ended the six-month reporting period mixed
with shorter maturity yields rising modestly and longer maturity yields falling
rather dramatically. For example, the 2, 10 and 30-year Treasury issues yielded
6.24%, 6.44% and 6.48%, respectively, as of December 31, 1999 and 6.36%, 6.12%
and 5.90% as of June 30, 2000.
During this period, corporate issues underperformed Treasury issues as
investors became increasingly concerned about credit risk due to the growing
possibility of future economic weakness as well as negative industry and
company-specific events. According to one major brokerage firm, the spread on
their index of Baa-rated bonds hit its widest level in eight decades for a
non-recession or non-expected recession period on June 1, 2000. Given the wide
historic spread levels available on corporate and other spread issues, we have
maintained our duration (a time measure of a bond's interest rate sensitivity)
at a level that slightly exceeds that of the Lehman Brothers Aggregate Index.
HIGH YIELD BOND: During the past six months, the high yield bond market
greatly underperformed the high-grade bond market. Spread levels widened
dramatically as increased actual defaults and estimated future defaults along
with net cash outflows from high yield mutual funds resulted in a repricing of
the high yield market. According to the DLJ High Yield Index, the average high
yield spread was 554 basis points as of December 29, 1999, compared to 695 basis
points as of June 30, 2000. Given these wider spread levels as well as the wider
spreads available on lower investment-grade issues, we plan to maintain a fully
invested position with about a 50/50 split between high yield issues and lower
investment-grade issues.
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
3
<PAGE>
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.
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.
<TABLE>
<CAPTION>
AS OF CHANGE FROM
ASSET ALLOCATION 6/30/00 2/29/00
---------------- --------------- ---------------
<S> <C> <C>
Corporate Bonds:........................ 0.21% -0.04%
Common Stocks:.......................... 53.46% +43.36%
Securities Convertible into Common
Stocks:
Preferred............................. 22.80% -15.94%
Debentures............................ 4.05% -21.31%
Preferred Stocks:....................... 9.12% -5.51%
Cash Equivalents:....................... 10.35% -0.57%
</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 six months 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 9, 2000
4
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(This page has been left blank intentionally.)
5
<PAGE>
EQUITRUST VARIABLE INSURANCE SERIES FUND
STATEMENTS OF ASSETS AND LIABILITIES
JUNE 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
HIGH
VALUE GROWTH GRADE BOND
PORTFOLIO PORTFOLIO
------------ -----------
<S> <C> <C>
ASSETS
Investments in
securities, at value
(cost -- $38,052,789;
$13,260,133;
$17,439,674;
$41,479,226; $7,107,129;
and $68,141,843,
respectively)........... $35,468,311 $12,635,273
Cash..................... 42,173
Accrued dividends and
interest receivable..... 43,051 207,044
Prepaid expense.......... 697 108
Investment securities
sold.................... 376,626
----------- -----------
Total Assets............. $35,888,685 $12,884,598
=========== ===========
LIABILITIES AND NET
ASSETS
Liabilities:
Net outstanding
redemptions in excess
of bank balance....... $ 78,462
Investment securities
purchased............. 470,058
Dividends payable...... $ 93,448
Accrued expenses....... 9,753 4,975
----------- -----------
Total Liabilities........ 558,273 98,423
Net assets applicable to
shares of beneficial
interest................ 35,330,412 12,786,175
----------- -----------
Total Liabilities and Net
Assets.................. $35,888,685 $12,884,598
=========== ===========
Shares issued and
outstanding as of
June 30, 2000........... 4,071,255 1,351,014
NET ASSET VALUE PER
SHARE................... $ 8.68 $ 9.46
=========== ===========
</TABLE>
SEE ACCOMPANYING NOTES.
6
<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 -- $38,052,789;
$13,260,133;
$17,439,674;
$41,479,226; $7,107,129;
and $68,141,843,
respectively)........... $15,843,661 $41,243,518 $7,107,129 $91,837,802
Cash..................... 31,905 132,859
Accrued dividends and
interest receivable..... 362,634 117,183 3,854 63,924
Prepaid expense.......... 131 520 62 602
Investment securities
sold.................... 753,253
----------- ----------- ---------- -----------
Total Assets............. $16,238,331 $42,114,474 $7,243,904 $91,902,328
=========== =========== ========== ===========
LIABILITIES AND NET
ASSETS
Liabilities:
Net outstanding
redemptions in excess
of bank balance....... $ 104,260 $ 201,078
Investment securities
purchased............. 686,052
Dividends payable...... $ 132,041
Accrued expenses....... 5,479 8,498 $ 3,664 14,333
----------- ----------- ---------- -----------
Total Liabilities........ 137,520 798,810 3,664 215,411
Net assets applicable to
shares of beneficial
interest................ 16,100,811 41,315,664 7,240,240 91,686,917
----------- ----------- ---------- -----------
Total Liabilities and Net
Assets.................. $16,238,331 $42,114,474 $7,243,904 $91,902,328
=========== =========== ========== ===========
Shares issued and
outstanding as of
June 30, 2000........... 1,777,528 3,930,246 7,240,240 2,183,844
NET ASSET VALUE PER
SHARE................... $ 9.06 $ 10.51 $ 1.00 $ 41.98
=========== =========== ========== ===========
</TABLE>
7
<PAGE>
EQUITRUST VARIABLE INSURANCE SERIES FUND
STATEMENTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
HIGH
VALUE GROWTH GRADE BOND
PORTFOLIO PORTFOLIO
------------ ----------
<S> <C> <C>
INVESTMENT INCOME
Dividends................ $ 403,156 $ 50,417
Interest................. 129,551 449,373
----------- --------
Total Investment
Income.................. 532,707 499,790
EXPENSES
Paid to EquiTrust
Investment Management
Services, Inc.:
Investment advisory and
management fees........ 82,823 19,905
Accounting fees......... 9,202 3,318
Custodial fees........... 4,365 2,732
Professional fees........ 575 199
Reports to
shareholders............ 1,052 351
Trustees' fees and
expenses................ 1,379 513
Insurance and bonds...... 515 82
Miscellaneous............ 8,068 4,305
----------- --------
Total Expenses........... 107,979 31,405
Fees paid indirectly..... (1,586) (444)
----------- --------
Net Expenses............. 106,393 30,961
----------- --------
Net Investment Income.... 426,314 468,829
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized gain (loss)
from investment
transactions............ (2,451,397) (16,416)
Change in unrealized
appreciation/depreciation
of investments.......... 2,632,745 (1,270)
----------- --------
Net Gain (Loss) on
Investments............. 181,348 (17,686)
----------- --------
Net Increase (Decrease)
in Net Assets Resulting
from Operations......... $ 607,662 $451,143
=========== ========
</TABLE>
SEE ACCOMPANYING NOTES.
8
<PAGE>
<TABLE>
<CAPTION>
HIGH
YIELD BOND MANAGED MONEY MARKET BLUE CHIP
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
---------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends................ $ 58,571 $ 958,554 $ 474,918
Interest................. 700,113 352,980 $220,835 207,268
--------- ----------- -------- -----------
Total Investment
Income.................. 758,684 1,311,534 220,835 682,186
EXPENSES
Paid to EquiTrust
Investment Management
Services, Inc.:
Investment advisory and
management fees........ 37,403 97,720 9,314 88,874
Accounting fees......... 4,156 10,858 1,863 14,176
Custodial fees........... 2,400 2,439 3,182 3,899
Professional fees........ 240 624 119 1,363
Reports to
shareholders............ 457 1,232 170 2,237
Trustees' fees and
expenses................ 629 1,628 301 3,452
Insurance and bonds...... 98 447 50 473
Miscellaneous............ 4,570 8,201 3,128 12,109
--------- ----------- -------- -----------
Total Expenses........... 49,953 123,149 18,127 126,583
Fees paid indirectly..... (392) (684) (1,143) (1,749)
--------- ----------- -------- -----------
Net Expenses............. 49,561 122,465 16,984 124,834
--------- ----------- -------- -----------
Net Investment Income.... 709,123 1,189,069 203,851 557,352
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized gain (loss)
from investment
transactions............ (35,138) (5,075,703) 573,926
Change in unrealized
appreciation/depreciation
of investments.......... (403,869) 6,479,339 (3,036,556)
--------- ----------- -------- -----------
Net Gain (Loss) on
Investments............. (439,007) 1,403,636 (2,462,630)
--------- ----------- -------- -----------
Net Increase (Decrease)
in Net Assets Resulting
from Operations......... $ 270,116 $ 2,592,705 $203,851 $(1,905,278)
========= =========== ======== ===========
</TABLE>
9
<PAGE>
EQUITRUST VARIABLE INSURANCE SERIES FUND
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
VALUE GROWTH
PORTFOLIO
---------------------------------
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, 2000 DECEMBER 31,
(UNAUDITED) 1999
---------------- ---------------
<S> <C> <C>
OPERATIONS
Net investment income.... $ 426,314 $ 855,293
Net realized gain (loss)
from investment
transactions............ (2,451,397) 766,209
Change in unrealized
appreciation/depreciation
of investments.......... 2,632,745 (4,469,838)
----------- -----------
Net Increase (Decrease)
in Net Assets Resulting
from Operations......... 607,662 (2,848,336)
DIVIDENDS AND
DISTRIBUTIONS TO
SHAREHOLDERS FROM
Net investment income.... (855,293) (976,831)
Net realized gain from
investment
transactions............
Distributions in excess
of net realized gain
from investment
transactions............
----------- -----------
(855,293) (976,831)
CAPITAL SHARE
TRANSACTIONS............ (5,269,532) 2,008,325
----------- -----------
Total Increase (Decrease)
in Net Assets........... (5,517,163) (1,816,842)
NET ASSETS
Beginning of period...... 40,847,575 42,664,417
----------- -----------
End of period (including
undistributed net
investment income as set
forth below)............ $35,330,412 $40,847,575
=========== ===========
Undistributed Net
Investment Income....... $ 426,314 $ 855,293
=========== ===========
</TABLE>
SEE ACCOMPANYING NOTES.
10
<PAGE>
<TABLE>
<CAPTION>
HIGH HIGH
GRADE BOND YIELD BOND
PORTFOLIO PORTFOLIO
--------------------------------- ---------------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED
JUNE 30, 2000 DECEMBER 31, JUNE 30, 2000 DECEMBER 31,
(UNAUDITED) 1999 (UNAUDITED) 1999
---------------- --------------- ---------------- ---------------
<S> <C> <C> <C> <C>
OPERATIONS
Net investment income.... $ 468,829 $ 792,882 $ 709,123 $ 1,341,692
Net realized gain (loss)
from investment
transactions............ (16,416) 18,112 (35,138) (104,066)
Change in unrealized
appreciation/depreciation
of investments.......... (1,270) (857,578) (403,869) (1,364,981)
----------- ----------- ----------- -----------
Net Increase (Decrease)
in Net Assets Resulting
from Operations......... 451,143 (46,584) 270,116 (127,355)
DIVIDENDS AND
DISTRIBUTIONS TO
SHAREHOLDERS FROM
Net investment income.... (468,829) (792,882) (709,123) (1,341,692)
Net realized gain from
investment
transactions............ (18,110) (35,447)
Distributions in excess
of net realized gain
from investment
transactions............ (92,105)
----------- ----------- ----------- -----------
(486,939) (828,329) (709,123) (1,433,797)
CAPITAL SHARE
TRANSACTIONS............ (816,184) 4,257,599 (1,212,100) 3,633,230
----------- ----------- ----------- -----------
Total Increase (Decrease)
in Net Assets........... (851,980) 3,382,686 (1,651,107) 2,072,078
NET ASSETS
Beginning of period...... 13,638,155 10,255,469 17,751,918 15,679,840
----------- ----------- ----------- -----------
End of period (including
undistributed net
investment income as set
forth below)............ $12,786,175 $13,638,155 $16,100,811 $17,751,918
=========== =========== =========== ===========
Undistributed Net
Investment Income....... $ 0 $ 0 $ 0 $ 0
=========== =========== =========== ===========
</TABLE>
11
<PAGE>
EQUITRUST VARIABLE INSURANCE SERIES FUND
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
<TABLE>
<CAPTION>
MANAGED
PORTFOLIO
---------------------------
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, 2000 DECEMBER 31,
(UNAUDITED) 1999
------------- ------------
<S> <C> <C>
OPERATIONS
Net investment income.... $ 1,189,069 $ 2,911,537
Net realized gain (loss)
from investment
transactions............ (5,075,703) (627,679)
Change in unrealized
appreciation/depreciation
of investments.......... 6,479,339 (3,923,204)
----------- -----------
Net Increase (Decrease)
in Net Assets Resulting
from Operations......... 2,592,705 (1,639,346)
DIVIDENDS AND
DISTRIBUTIONS TO
SHAREHOLDERS FROM
Net investment income.... (2,911,537) (2,634,990)
Net realized gain from
investment
transactions............
Distributions in excess
of net realized gain
from investment
transactions............
----------- -----------
(2,911,537) (2,634,990)
CAPITAL SHARE
TRANSACTIONS............ (6,194,847) (4,330,475)
----------- -----------
Total Increase (Decrease)
in Net Assets........... (6,513,679) (8,604,811)
NET ASSETS
Beginning of period...... 47,829,343 56,434,154
----------- -----------
End of period (including
undistributed net
investment income as set
forth below)............ $41,315,664 $47,829,343
=========== ===========
Undistributed Net
Investment Income....... $ 1,189,069 $ 2,911,537
=========== ===========
</TABLE>
SEE ACCOMPANYING NOTES.
12
<PAGE>
<TABLE>
<CAPTION>
MONEY MARKET BLUE CHIP
PORTFOLIO PORTFOLIO
--------------------------- ---------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED
JUNE 30, 2000 DECEMBER 31, JUNE 30, 2000 DECEMBER 31,
(UNAUDITED) 1999 (UNAUDITED) 1999
------------- ------------ ------------- ------------
<S> <C> <C> <C> <C>
OPERATIONS
Net investment income.... $ 203,851 $ 272,474 $ 557,352 $ 1,070,657
Net realized gain (loss)
from investment
transactions............ 573,926 1,153,608
Change in unrealized
appreciation/depreciation
of investments.......... (3,036,556) 11,661,537
---------- ---------- ----------- -----------
Net Increase (Decrease)
in Net Assets Resulting
from Operations......... 203,851 272,474 (1,905,278) 13,885,802
DIVIDENDS AND
DISTRIBUTIONS TO
SHAREHOLDERS FROM
Net investment income.... (203,851) (272,474) (1,070,657) (816,323)
Net realized gain from
investment
transactions............ (916,814)
Distributions in excess
of net realized gain
from investment
transactions............
---------- ---------- ----------- -----------
(203,851) (272,474) (1,987,471) (816,323)
CAPITAL SHARE
TRANSACTIONS............ 630,793 567,273 8,730,786 12,929,326
---------- ---------- ----------- -----------
Total Increase (Decrease)
in Net Assets........... 630,793 567,273 4,838,037 25,998,805
NET ASSETS
Beginning of period...... 6,609,447 6,042,174 86,848,880 60,850,075
---------- ---------- ----------- -----------
End of period (including
undistributed net
investment income as set
forth below)............ $7,240,240 $6,609,447 $91,686,917 $86,848,880
========== ========== =========== ===========
Undistributed Net
Investment Income....... $ 0 $ 0 $ 557,352 $ 1,070,657
========== ========== =========== ===========
</TABLE>
13
<PAGE>
EQUITRUST VARIABLE INSURANCE SERIES FUND
SCHEDULE OF INVESTMENTS
VALUE GROWTH PORTFOLIO
JUNE 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES
HELD VALUE
------------- ------------
<S> <C> <C>
COMMON STOCKS (87.13%)
---------------------------
APPAREL AND ACCESSORY STORES (0.56%)
Wolverine World Wide, Inc............. 20,200 $ 199,475
BUSINESS SERVICES (1.97%)
Computer Associates
International, Inc................... 5,655 289,466
Compuware Corp........................ 16,050(1) 166,519
Microsoft Corp........................ 3,000(1) 240,000
-----------
695,985
CHEMICALS AND ALLIED PRODUCTS (7.59%)
Abbott Laboratories................... 14,250 635,016
Dial Corp............................. 40,712 422,387
Du Pont (E.I.) De Nemours............. 5,000 218,750
Johnson & Johnson..................... 6,150 626,531
RPM, Inc.............................. 36,370 368,246
Solutia, Inc.......................... 29,800 409,750
-----------
2,680,680
COMMUNICATIONS (5.83%)
AT&T Corp............................. 10,000 316,250
Centurytel, Inc....................... 14,200 408,250
SBC Communications.................... 15,000 648,750
Worldcom, Inc......................... 15,000(1) 688,125
-----------
2,061,375
DEPOSITORY INSTITUTIONS (3.10%)
Associated Bank-Corp.................. 10,070 219,652
Bank of America....................... 6,175 265,525
First Union Corp...................... 11,850 294,028
U.S. Bancorp.......................... 16,400 315,700
-----------
1,094,905
ELECTRIC, GAS AND SANITARY SERVICES (5.56%)
Atmos Energy.......................... 20,312 355,460
Laclede Gas Co........................ 17,415 335,239
New Century Energies, Inc............. 13,100 393,000
Nisource, Inc......................... 22,100 411,613
Northwest Natural Gas Co.............. 21,000 469,875
-----------
1,965,187
ELECTRONIC AND OTHER ELECTRICAL EQUIPMENT (2.30%)
Adaptec, Inc.......................... 9,100(1) 207,025
ECI Telecom, Ltd...................... 10,000 357,500
National Service Industries, Inc...... 12,600 245,700
-----------
810,225
</TABLE>
14
<PAGE>
EQUITRUST VARIABLE INSURANCE SERIES FUND
SCHEDULE OF INVESTMENTS
VALUE GROWTH PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
SHARES
HELD VALUE
------------- ------------
<S> <C> <C>
FABRICATED METAL PRODUCTS (1.82%)
Crown Cork & Seal Co., Inc............ 6,800 $ 102,000
Cooper Industries, Inc................ 6,138 199,869
United Dominion Industries, Ltd....... 20,096 341,632
-----------
643,501
FOOD AND KINDRED PRODUCTS (5.29%)
ConAgra, Inc.......................... 18,636 355,249
Dean Foods Co......................... 13,200 418,275
Interstate Bakeries................... 5,000 70,000
Philip Morris Companies, Inc.......... 24,000 637,500
Sara Lee Corp......................... 20,000 386,250
-----------
1,867,274
FOOD STORES (7.72%)
Albertson's, Inc...................... 8,000 266,000
Casey's General Stores, Inc........... 102,098 1,059,267
7-Eleven, Inc......................... 74,080(1) 1,018,600
Universal Foods Corp.................. 20,805 384,893
-----------
2,728,760
FURNITURE AND FIXTURES (1.09%)
Newell Rubbermaid, Inc................ 15,000 386,250
GENERAL MERCHANDISE STORES (1.54%)
Harcourt General, Inc................. 10,000 543,750
HEALTH SERVICES (1.43%)
Schering-Plough Corp.................. 10,000 505,000
HOLDING AND OTHER INVESTMENT OFFICES (2.94%)
MBIA, Inc............................. 15,000 722,813
Wintrust Financial Corp............... 20,550 317,241
-----------
1,040,054
INDUSTRIAL MACHINERY AND EQUIPMENT (1.73%)
Ingersoll-Rand Co..................... 10,000 402,500
Solectron Corp........................ 5,000(1) 209,375
-----------
611,875
INSTRUMENTS AND RELATED PRODUCTS (2.54%)
Becton Dickinson & Co................. 20,000 573,750
Pall Corp............................. 17,450 322,825
-----------
896,575
</TABLE>
15
<PAGE>
EQUITRUST VARIABLE INSURANCE SERIES FUND
SCHEDULE OF INVESTMENTS
VALUE GROWTH PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
SHARES
HELD VALUE
------------- ------------
<S> <C> <C>
INSURANCE CARRIERS (5.80%)
Aetna, Inc............................ 6,171 $ 396,101
Allstate Corp......................... 15,300 340,425
Chubb Corp............................ 10,000 615,000
MONY Group, Inc....................... 15,000 507,187
United Fire & Casualty Co............. 12,250 189,875
-----------
2,048,588
METAL MINING (1.03%)
Barrick Gold Corp..................... 20,000 363,750
MISCELLANEOUS MANUFACTURING INDUSTRIES (1.39%)
Emerson Electric...................... 8,108 489,520
NONDEPOSITORY INSTITUTIONS (2.49%)
Federal Home Loan Mortgage Corp....... 12,500 506,250
SLM Holding Corp...................... 10,000 374,375
-----------
880,625
OIL AND GAS EXTRACTION (2.79%)
Burlington Resources, Inc............. 10,000 382,500
Ocean Energy, Inc..................... 12,160 172,520
Offshore Logistics.................... 30,000(1) 431,250
-----------
986,270
PAPER AND ALLIED PRODUCTS (1.00%)
Glatfelter (P.H.) Co.................. 34,505 351,519
PERSONAL SERVICES (0.18%)
Service Corporation International..... 20,000 63,750
PETROLEUM AND COAL PRODUCTS (4.56%)
Ashland Oil Co........................ 5,000 175,312
Chevron Corp.......................... 5,000 424,062
Conoco, Inc........................... 21,750 478,500
Texaco, Inc........................... 10,000 532,500
-----------
1,610,374
PRIMARY METAL INDUSTRIES (1.39%)
Northwest Pipe Co..................... 41,400(1) 491,625
PRINTING AND PUBLISHING (3.01%)
Belo (A.H.) Corp...................... 22,000 380,875
Mail-Well, Inc........................ 79,200(1) 683,100
-----------
1,063,975
RUBBER AND MISCELLANEOUS PLASTICS PRODUCTS (1.36%)
Illinois Tool Works, Inc.............. 8,400 478,800
TRANSPORTATION -- BY AIR (1.08%)
Petroleum Helicopters, Inc.
(Non-Voting)......................... 39,800 383,075
</TABLE>
16
<PAGE>
EQUITRUST VARIABLE INSURANCE SERIES FUND
SCHEDULE OF INVESTMENTS
VALUE GROWTH PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
SHARES
HELD VALUE
------------- ------------
<S> <C> <C>
TRANSPORTATION EQUIPMENT (1.85%)
ITT Industries, Inc................... 11,800 $ 358,425
United Technologies Corp.............. 5,000 294,375
-----------
652,800
TRANSPORTATION SERVICES (0.96%)
GATX Corp............................. 10,000 340,000
TRUCKING AND WAREHOUSING (1.89%)
Heartland Express, Inc................ 22,280(1) 371,797
United Parcel Services, Class B....... 5,000 295,000
-----------
666,797
WATER TRANSPORTATION (0.64%)
American Water Works, Inc............. 9,000 225,000
WHOLESALE TRADE -- NONDURABLE GOODS (2.70%)
Cardinal Health, Inc.................. 10,000 740,000
Unilever NV........................... 5,000 215,000
-----------
955,000
-----------
Total Common Stocks..................... 30,782,339
PREFERRED STOCKS (2.60%)
-----------------------------
COMMUNICATIONS (0.14%)
Cellnet Funding, LLC.................. 28,500 49,162
HOLDING AND OTHER INVESTMENT OFFICES (2.46%)
General Growth Properties, Inc........ 39,960 869,130
-----------
Total Preferred Stocks.................. 918,292
</TABLE>
17
<PAGE>
EQUITRUST VARIABLE INSURANCE SERIES FUND
SCHEDULE OF INVESTMENTS
VALUE GROWTH PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
SHARES
HELD VALUE
------------- ------------
<S> <C> <C>
SHORT-TERM INVESTMENTS (10.66%)
------------------------------------
MONEY MARKET MUTUAL FUND (1.69%)
Provident Institutional Funds, T-Fund
Portfolio............................ 597,680 $ 597,680
<CAPTION>
PRINCIPAL
AMOUNT
-------------
<S> <C> <C>
COMMERCIAL PAPER (8.97%)
General Electric Capital, 6.44%, due
7/03/00.............................. $1,165,000 1,165,000
Ford Motor Credit Corp., 6.82%, due
7/05/00.............................. 830,000 830,000
Texaco, Inc., 6.73%, due 7/06/00...... 1,175,000 1,175,000
-----------
Total Commercial Paper................ 3,170,000
-----------
Total Short-Term Investments............ 3,767,680
-----------
Total Investments (100.39%)............. 35,468,311
OTHER ASSETS LESS LIABILITIES (-0.39%)
------------------------------------------
Cash, receivables and prepaid expense,
less liabilities..................... (137,899)
-----------
Total Net Assets (100.00%).............. $35,330,412
===========
</TABLE>
(1) Non-income producing securities.
SEE ACCOMPANYING NOTES.
18
<PAGE>
EQUITRUST VARIABLE INSURANCE SERIES FUND
SCHEDULE OF INVESTMENTS
HIGH GRADE BOND PORTFOLIO
JUNE 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES
HELD VALUE
--------- -----------
<S> <C> <C>
PREFERRED STOCKS (9.94%)
-----------------------------
DEPOSITORY INSTITUTIONS (2.97%)
Chase Capital V....................... 18,000 $ 380,250
ELECTRIC, GAS AND SANITARY SERVICES (5.77%)
Virginia Electric & Power............. 32,000 738,000
HOLDING AND OTHER INVESTMENT OFFICES (1.20%)
New Plan Excel Realty Trust........... 4,000 153,000
-----------
Total Preferred Stocks.................. 1,271,250
<CAPTION>
PRINCIPAL
AMOUNT
---------
<S> <C> <C>
CORPORATE BONDS (54.23%)
-----------------------------
DEPOSITORY INSTITUTIONS (1.13%)
J. P. Morgan & Co., 7.25%, due
10/01/10............................. $150,000 144,197
ELECTRIC, GAS AND SANITARY SERVICES (5.47%)
National Co-op Services Corp.
(Arkansas Electric), 9.48%, due
1/01/12.............................. 336,000 352,749
Oglethorpe Power (OPC Scherer),
6.974%, due 6/30/11.................. 368,000 347,050
-----------
699,799
GENERAL MERCHANDISE STORES (1.92%)
J.C. Penney & Co., 8.25%, due
8/15/22.............................. 300,000 245,736
HOLDING AND OTHER INVESTMENT OFFICES (5.16%)
Meditrust, 7.60%, due 9/13/05......... 150,000 102,611
Security Capital Pacific, 7.20%, due
3/01/13.............................. 275,000 240,405
Washington REIT, 6.898%, due
2/15/18.............................. 350,000 316,761
-----------
659,777
INDUSTRIAL MACHINERY AND EQUIPMENT (3.92%)
Thermo Fibertek, 4.50%, due 7/15/04... 600,000 501,750
NONDEPOSITORY INSTITUTIONS (1.52%)
Household Finance Co., 7.30%, due
7/30/12.............................. 200,000 194,262
PETROLEUM AND COAL PRODUCTS (5.50%)
Texaco Capital, Inc., 7.25%, due
1/10/10.............................. 700,000 702,884
SECURITY AND COMMODITY BROKERS (5.03%)
Goldman Sachs Group, Inc., 7.80%, due
1/28/10.............................. 650,000 643,585
TEXTILE MILL PRODUCTS (1.98%)
Unifi, 6.50%, due 2/01/08............. 280,000 252,750
TOBACCO PRODUCTS (5.06%)
UST, Inc., 7.25%, due 6/01/09......... 750,000 646,635
TRANSPORTATION EQUIPMENT (1.31%)
Ford Motor Credit Co., 9.215%, due
9/15/21.............................. 150,000 167,342
</TABLE>
19
<PAGE>
EQUITRUST VARIABLE INSURANCE SERIES FUND
SCHEDULE OF INVESTMENTS
HIGH GRADE BOND PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
--------- -----------
<S> <C> <C>
TRANSPORTATION BY AIR (14.51%)
Continental Airlines, 6.545%, due
8/02/20.............................. $486,944 $ 431,652
Northwest Airlines, 7.575%, due
9/01/20.............................. 795,873 757,448
US Air, Inc., 8.36%, due 1/20/19...... 700,000 666,722
-----------
1,855,822
TRUCKING AND WAREHOUSING (1.72%)
Federal Express, 7.50%, due 1/15/18... 223,308 219,632
-----------
Total Corporate Bonds................... 6,934,171
MORTGAGE-BACKED SECURITIES (23.77%)
------------------------------------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA)
(0.12%)
Pool # 50276, 9.50%, due 2/01/20...... 14,416 14,920
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (GNMA)
(23.65%)
Pool # 1512, 7.50%, due 12/20/23...... 230,081 227,851
Pool # 22630, 6.50%, due 8/01/28...... 446,622 422,196
Pool # 2631, 7.00%, due 8/01/28....... 643,554 623,443
Pool # 2658, 6.50%, due 10/01/28...... 806,779 762,406
Pool # 2701, 6.50%, due 1/20/29....... 924,126 873,299
Pool # 236070, 10.00%, due 10/15/12... 77,654 81,731
Pool # 276337, 10.00%, due 8/15/19.... 31,496 33,298
-----------
3,024,224
-----------
Total Mortgage-Backed Securities........ 3,039,144
UNITED STATES TREASURY OBLIGATION (3.24%)
------------------------------------------------
U.S. Treasury Note, 7.25%, due
8/15/04.............................. 400,000 413,652
SHORT-TERM INVESTMENTS (7.64%)
-----------------------------------
UNITED STATES GOVERNMENT AGENCIES (7.41%)
Federal Home Loan Mortgage Corp., due
7/05/00.............................. 300,000 349,753
Federal Home Loan Bank, due 7/14/00... 350,000 299,308
Federal Home Loan Bank, due 7/31/00... 300,000 298,394
-----------
947,455
</TABLE>
<TABLE>
<CAPTION>
SHARES
HELD
--------
<S> <C> <C>
MONEY MARKET MUTUAL FUND (0.23%)
Provident Institutional Funds, T-Fund
Portfolio ........................... 29,601 29,601
----------
Total Short-Term Investments............ 977,056
----------
Total Investments (98.82%).............. 12,635,273
OTHER ASSETS LESS LIABILITIES (1.18%)
-----------------------------------------
Cash, receivables and prepaid expense,
less liabilities..................... 150,902
----------
Total Net Assets (100.00%).............. $12,786,175
==========
</TABLE>
SEE ACCOMPANYING NOTES.
20
<PAGE>
EQUITRUST VARIABLE INSURANCE SERIES FUND
SCHEDULE OF INVESTMENTS
HIGH YIELD BOND PORTFOLIO
JUNE 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES
HELD VALUE
---------- -----------
<S> <C> <C>
COMMON STOCKS (0.37%)
--------------------------
FOOD STORES
Penn Traffic Co....................... 9,092(1) $ 60,235
PREFERRED STOCKS (6.46%)
-----------------------------
HOLDING AND OTHER INVESTMENT OFFICES (1.66%)
New Plan Excel Realty Trust........... 7,000 267,750
METAL MINING (4.80%)
Cameco Corp........................... 36,000 771,750
-----------
Total Preferred Stocks.................. 1,039,500
<CAPTION>
PRINCIPAL
AMOUNT
----------
<S> <C> <C>
CORPORATE BONDS (86.64%)
-----------------------------
AMUSEMENT AND RECREATION SERVICES (0.46%)
AMF Bowling Worldwide, Inc., 10.875%,
due 3/15/06.......................... $ 240,000 73,200
APPAREL AND OTHER TEXTILE PRODUCTS (1.21%)
Dan River, Inc., 10.125%, due
12/15/03............................. 200,000 195,000
AUTO REPAIR, SERVICES AND PARKING (2.80%)
Budget Group, Inc., 9.125%, due
4/01/06.............................. 700,000 451,500
BUSINESS SERVICES (3.61%)
Cendant Corporation, 7.75%, due
12/01/03............................. 600,000 581,808
CHEMICALS AND ALLIED PRODUCTS (6.76%)
Lyondell Chemical Co., 9.625%, due
5/01/07.............................. 900,000 895,500
Terra Industries, Inc., 10.50%, due
6/15/05.............................. 300,000 193,500
-----------
1,089,000
COMMUNICATIONS (5.68%)
Savoy Pictures, 7.00%, due 7/01/03.... 450,000 438,750
Telephone & Data Systems, Inc., 7.00%,
due 8/01/06.......................... 500,000 476,290
-----------
915,040
DEPOSITORY INSTITUTIONS (1.55%)
First Bank N.A., 6.25%, due 8/15/05... 250,000 249,937
ELECTRIC, GAS AND SANITARY SERVICES (12.13%)
Allied Waste North America, 10.00%,
due 8/01/09.......................... 800,000 672,000
ESI Tractebel, 7.99%, due 12/30/11.... 340,000 301,656
Gulf States Utilities, 8.94%, due
1/01/22.............................. 700,000 695,464
Waterford 3 Nuclear Power Plant,
8.09%, due 1/02/17................... 297,892 284,502
-----------
1,953,622
ELECTRONIC AND OTHER ELECTRIC EQUIPMENT (1.54%)
Advanced Micro Devices, Inc., 11.00%,
due 8/01/03.......................... 240,000 248,400
</TABLE>
21
<PAGE>
EQUITRUST VARIABLE INSURANCE SERIES FUND
SCHEDULE OF INVESTMENTS
HIGH YIELD BOND PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
---------- -----------
<S> <C> <C>
FOOD STORES (0.23%)
Penn Traffic Co., 11.00%, due
6/29/09.............................. $ 47,850 $ 37,084
GENERAL MERCHANDISE STORES (1.53%)
J.C. Penney & Co., 8.25%, due
8/15/22.............................. 300,000 245,736
HEALTH SERVICES (2.87%)
Tenet Healthcare, 7.625%, due
6/01/08.............................. 500,000 461,250
HOLDING AND OTHER INVESTMENT OFFICES (10.09%)
Bradley Operating LP, 7.20%, due
1/15/08.............................. 450,000 350,141
Federal Realty Investment Trust,
7.48%, due 8/15/26................... 600,000 566,017
Price Development Company, 7.29%, due
3/11/08.............................. 450,000 413,046
SUSA Partnership LP, 8.20%, due
6/01/17.............................. 325,000 296,039
-----------
1,625,243
INDUSTRIAL MACHINERY AND EQUIPMENT (5.19%)
AGCO Corp., 8.50%, due 3/15/06........ 900,000 834,750
INSTRUMENTS AND RELATED PRODUCTS (5.16%)
Thermo Electron Corp., 4.25%, due
1/01/03.............................. 900,000 831,330
LUMBER AND WOOD PRODUCTS (2.42%)
Georgia-Pacific Corp., 9.875%, due
11/01/21............................. 225,000 238,376
Georgia-Pacific Corp., 9.125%, due
7/01/22.............................. 150,000 150,933
-----------
389,309
METAL MINING (2.51%)
Inco, Ltd., 9.875%, due 6/15/19....... 401,000 404,204
NONDEPOSITORY INSTITUTIONS (0.86%)
Macsaver Financial, 7.40%, due
2/15/02.............................. 200,000 138,000
OIL AND GAS EXTRACTION (7.97%)
Occidental Petroleum Co., 7.375%, due
11/15/08............................. 400,000 385,984
Pool Energy Services, 8.625%, due
4/01/08.............................. 900,000 897,750
-----------
1,283,734
PAPER AND ALLIED PRODUCTS (1.25%)
Container Corp. of America, 9.75%, due
4/01/03.............................. 200,000 201,000
REAL ESTATE (3.73%)
United Dominion Realty Trust, 8.125%,
due 11/15/00......................... 600,000 599,706
TRANSPORTATION SERVICES (2.22%)
Federal Mogul Co., 7.75%, due
7/01/06.............................. 500,000 357,500
WATER TRANSPORTATION (4.87%)
Windsor Petroleum Transport, 7.84%,
due 1/15/21.......................... 1,000,000 783,750
-----------
Total Corporate Bonds................... 13,950,103
</TABLE>
22
<PAGE>
EQUITRUST VARIABLE INSURANCE SERIES FUND
SCHEDULE OF INVESTMENTS
HIGH YIELD BOND PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
---------- -----------
<S> <C> <C>
SHORT-TERM INVESTMENTS (4.93%)
-----------------------------------
UNITED STATES GOVERNMENT AGENCIES (3.10%)
Federal Home Loan Mortgage Corp., due
7/05/00.............................. $ 500,000 $ 499,647
<CAPTION>
SHARES
HELD
----------
<S> <C> <C>
MONEY MARKET MUTUAL FUND (1.83%)
Provident Institutional Funds, T-Fund
Portfolio............................ 294,176 294,176
-----------
Total Short-Term Investments............ 793,823
-----------
Total Investments (98.40%).............. 15,843,661
OTHER ASSETS LESS LIABILITIES (1.60%)
-----------------------------------------
Cash, receivables and prepaid expense
less liabilities..................... 257,150
-----------
Total Net Assets (100.00%).............. $16,100,811
===========
</TABLE>
(1) Non-income producing securities.
SEE ACCOMPANYING NOTES.
23
<PAGE>
EQUITRUST VARIABLE INSURANCE SERIES FUND
SCHEDULE OF INVESTMENTS
MANAGED PORTFOLIO
JUNE 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES
HELD VALUE
------------ -----------
<S> <C> <C>
COMMON STOCKS (53.34%)
---------------------------
BUSINESS SERVICES (0.86%)
Computer Associates
International, Inc................... 3,500 $ 179,156
Compuware Corp........................ 17,000(1) 176,375
-----------
355,531
CHEMICALS AND ALLIED PRODUCTS (5.04%)
Dial Corp............................. 47,420 491,983
Johnson & Johnson..................... 6,000 611,250
RPM, Inc.............................. 50,000 506,250
Solutia, Inc.......................... 34,500 474,375
-----------
2,083,858
COMMUNICATIONS (3.24%)
AT&T Corp............................. 12,150 384,244
Centurytel, Inc....................... 17,040 489,900
Worldcom, Inc......................... 10,100(1) 463,337
-----------
1,337,481
DEPOSITORY INSTITUTIONS (4.61%)
Associated Banc-Corp.................. 17,694 385,950
Bank of America....................... 6,175 265,525
First Union Corp...................... 20,500 508,656
US Bancorp............................ 38,800 746,900
-----------
1,907,031
ELECTRIC, GAS AND SANITARY SERVICES (8.97%)
Atmos Energy Corp..................... 50,102 876,785
Laclede Gas Co........................ 41,057 790,347
New Century Energies, Inc............. 31,800 954,000
Northwest Natural Gas Co.............. 48,600 1,087,425
-----------
3,708,557
ELECTRONIC AND OTHER ELECTRIC EQUIPMENT (0.67%)
National Service Industries........... 14,250 277,875
FABRICATED METAL PRODUCTS (2.31%)
Cooper Industries..................... 10,771 350,731
Crown Cork & Seal Co., Inc............ 13,600 204,000
United Dominion Industries, Inc....... 23,474 399,058
-----------
953,789
</TABLE>
24
<PAGE>
EQUITRUST VARIABLE INSURANCE SERIES FUND
SCHEDULE OF INVESTMENTS
MANAGED PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
SHARES
HELD VALUE
------------ -----------
<S> <C> <C>
FOOD AND KINDRED PRODUCTS (4.94%)
ConAgra, Inc.......................... 23,520 $ 448,350
Dean Foods Co......................... 15,840 501,930
Philip Morris Companies, Inc.......... 33,800 897,812
Sara Lee Corp......................... 10,000 193,125
-----------
2,041,217
FOOD STORES (2.15%)
7-Eleven, Inc......................... 30,240(1) 415,800
Universal Foods Corp.................. 25,465 471,103
-----------
886,903
FURNITURE AND FIXTURES (0.98%)
Newell Rubbermaid, Inc................ 15,700 404,275
HOLDING AND OTHER INVESTMENT OFFICES (1.02%)
MBIA, Inc............................. 8,721 420,243
INSTRUMENTS AND RELATED PRODUCTS (2.53%)
Becton Dickinson & Co................. 23,500 674,156
Pall Corp............................. 20,150 372,775
-----------
1,046,931
INSURANCE CARRIERS (2.03%)
Aetna, Inc............................ 7,174 460,481
Allstate Corp......................... 17,100 380,475
-----------
840,956
METAL MINING (1.06%)
Barrick Gold Corp..................... 24,000 436,500
MISCELLANEOUS MANUFACTURING INDUSTRIES (1.48%)
Emerson Electric...................... 10,101 609,848
OIL AND GAS EXTRACTION (2.67%)
Ocean Energy, Inc..................... 14,136(1) 200,554
Offshore Logistics.................... 62,700(1) 901,313
-----------
1,101,867
PAPER AND ALLIED PRODUCTS (1.46%)
Glatfelter (P.H.) Co.................. 59,035 601,419
PETROLEUM AND COAL PRODUCTS (3.28%)
Conoco, Inc........................... 25,300 556,600
Texaco, Inc........................... 15,000 798,750
-----------
1,355,350
PRINTING AND PUBLISHING (1.41%)
Belo (A.H.) Corp...................... 33,600 581,700
TRANSPORTATION EQUIPMENT (1.02%)
ITT Industries, Inc................... 13,900 422,213
</TABLE>
25
<PAGE>
EQUITRUST VARIABLE INSURANCE SERIES FUND
SCHEDULE OF INVESTMENTS
MANAGED PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
SHARES
HELD VALUE
------------ -----------
<S> <C> <C>
WHOLESALE TRADE -- NONDURABLE GOODS (1.61%)
Cardinal Health, Inc.................. 9,000 $ 666,000
-----------
Total Common Stocks..................... 22,039,544
PREFERRED STOCKS (31.89%)
------------------------------
COMMUNICATIONS (0.02%)
Cellnet Funding, LLC.................. 5,000 8,625
DEPOSITORY INSTITUTIONS (2.47%)
Taylor Capital Group, Inc............. 58,000 1,018,625
ELECTRIC, GAS AND SANITARY SERVICES (4.20%)
Nisource, Inc......................... 28,000 1,107,750
Virginia Electric & Power............. 27,100 624,994
-----------
1,732,744
HEALTH SERVICES (1.26%)
McKesson Financing Trust.............. 14,700 521,850
HOLDING AND OTHER INVESTMENT OFFICES (4.00%)
General Growth Properties, Inc........ 76,000 1,653,000
OIL AND GAS EXTRACTION (6.18%)
EVI, Inc.............................. 34,300 1,586,375
El Paso Energy Capital Trust, Inc..... 15,000 965,625
-----------
2,552,000
PETROLEUM AND COAL PRODUCTS (5.45%)
Canadian Occidental Petroleum......... 56,000 1,281,000
Tosco Financial Trust................. 20,000 972,500
-----------
2,253,500
PIPELINES EXCEPT NATURAL GAS (2.03%)
Enron Capital......................... 37,200 839,325
TRANSPORTATION EQUIPMENT (1.42%)
Fleetwood Capital Trust............... 20,000 587,500
WHOLESALE TRADE -- NONDURABLE GOODS (4.86%)
Howell Corp........................... 30,000 1,091,250
Suiza Capital Trust II................ 24,000 915,000
-----------
2,006,250
-----------
Total Preferred Stocks.................. 13,173,419
<CAPTION>
PRINCIPAL
AMOUNT
------------
<S> <C> <C>
CORPORATE BONDS (4.26%)
----------------------------
ELECTRIC, GAS AND SANITARY SERVICES (0.21%)
National Co-op Services Corp.
(Arkansas Electric), 9.48%,
due 1/01/12.......................... $ 82,000 86,088
</TABLE>
26
<PAGE>
EQUITRUST VARIABLE INSURANCE SERIES FUND
SCHEDULE OF INVESTMENTS
MANAGED PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------------ -----------
<S> <C> <C>
METAL MINING (2.76%)
Teck Corp., 3.75%, due 7/15/06........ $1,500,000 $ 1,140,000
OIL AND GAS EXTRACTION (1.29%)
Diamond Offshore Drilling, 3.75%, due
2/15/07.............................. 500,000 533,045
-----------
Total Corporate Bonds................... 1,759,133
<CAPTION>
SHARES
HELD
------------
<S> <C> <C>
SHORT-TERM INVESTMENTS (10.34%)
------------------------------------
MONEY MARKET MUTUAL FUND (0.77%)
Provident Institutional Funds, T-Fund
Portfolio............................ 316,422 316,422
<CAPTION>
PRINCIPAL
AMOUNT
------------
<S> <C> <C>
COMMERCIAL PAPER (9.57%)
General Electric Capital, 6.44%, due
7/03/00.............................. $ 750,000 750,000
Ford Motor Credit Corp., 6.82%, due
7/05/00.............................. 1,280,000 1,280,000
Texaco, Inc., 6.73%, due 7/06/00...... 1,925,000 1,925,000
-----------
Total Commercial Paper................ 3,955,000
-----------
Total Short-Term Investments............ 4,271,422
-----------
Total Investments (99.83%).............. 41,243,518
OTHER ASSETS LESS LIABILITIES (0.17%)
-----------------------------------------
Cash, receivables and prepaid expense,
less liabilities..................... 72,146
-----------
Total Net Assets (100.00%).............. $41,315,664
===========
</TABLE>
(1) Non-income producing securities.
SEE ACCOMPANYING NOTES.
27
<PAGE>
EQUITRUST VARIABLE INSURANCE SERIES FUND
SCHEDULE OF INVESTMENTS
MONEY MARKET PORTFOLIO
JUNE 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
ANNUALIZED
YIELD ON
PURCHASE PRINCIPAL
DATE AMOUNT VALUE
---------- --------- ----------
<S> <C> <C> <C>
SHORT-TERM INVESTMENTS (98.16%)
------------------------------------
COMMERCIAL PAPER (21.68%)
NONDEPOSITORY INSTITUTIONS
American General Finance,
6.48%, due 7/06/00............ 6.477% $300,000 $ 300,000
Ford Motor Credit Corp., 6.58%,
due 7/19/00................... 6.578 295,000 295,000
General Electric Capital,
6.48%, due 7/03/00............ 6.481 280,000 280,000
Norwest Financial Corporation,
6.57%, due 7/12/00............ 6.574 340,000 340,000
Texaco, Inc., 6.53%, due
7/10/00....................... 6.531 355,000 355,000
----------
Total Commercial Paper........... 1,570,000
UNITED STATES GOVERNMENT AGENCIES (76.48%)
Federal Farm Credit Bank, due
7/11/00....................... 6.431 400,000 399,296
Federal Home Loan Bank, due
7/07/00....................... 6.467 235,000 234,751
Federal Home Loan Bank, due
7/14/00....................... 6.493 380,000 379,123
Federal Home Loan Bank, due
7/21/00....................... 6.475 400,000 398,586
Federal Home Loan Bank, due
7/24/00....................... 6.478 360,000 358,536
Federal Home Loan Bank, due
7/26/00....................... 6.537 225,000 223,997
Federal Home Loan Bank, due
7/28/00....................... 6.573 285,000 283,621
Federal Home Loan Bank, due
7/31/00....................... 6.548 500,000 497,324
Federal Home Loan Mortgage
Corp., due 7/05/00............ 6.451 375,000 374,735
Federal Home Loan Mortgage
Corp., due 7/13/00............ 6.495 405,000 404,137
Federal Home Loan Mortgage
Corp., due 7/18/00............ 6.501 405,000 403,778
Federal Home Loan Mortgage
Corp., due 7/27/00............ 6.511 350,000 348,384
Federal National Mortgage
Assoc., due 7/17/00........... 6.461 535,000 533,489
Federal National Mortgage
Assoc., due 7/20/00........... 6.494 400,000 398,652
Federal National Mortgage
Assoc., due 7/25/00........... 6.518 300,000 298,720
----------
Total United States Government
Agencies........................ 5,537,129
----------
Total Short-Term Investments....... 7,107,129
OTHER ASSETS LESS LIABILITIES (1.84%)
-----------------------------------------
Cash, receivables and prepaid
expense, less liabilities....... 133,111
----------
Total Net Assets (100.00%)......... $7,240,240
==========
</TABLE>
SEE ACCOMPANYING NOTES.
28
<PAGE>
EQUITRUST VARIABLE INSURANCE SERIES FUND
SCHEDULE OF INVESTMENTS
BLUE CHIP PORTFOLIO
JUNE 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES
HELD VALUE
---------- -----------
<S> <C> <C>
COMMON STOCKS (91.16%)
---------------------------
BUSINESS SERVICES (2.61%)
America Online, Inc................... 20,013(1) $ 1,055,686
Microsoft Corp........................ 16,761(1) 1,340,880
-----------
2,396,566
CHEMICALS AND ALLIED PRODUCTS (11.70%)
Bristol-Myers Squibb Co............... 30,491 1,776,101
DuPont (EI) de Nemours & Co........... 22,000 962,500
Johnson & Johnson..................... 19,699 2,006,836
Lilly & Company....................... 14,887 1,486,839
Merck & Co., Inc...................... 25,554 1,958,075
Pfizer, Inc........................... 31,592 1,516,416
Procter & Gamble Co................... 17,906 1,025,118
-----------
10,731,885
COMMUNICATIONS (8.92%)
AT&T Corp............................. 33,568 1,061,588
Bell Atlantic Corp.................... 28,197 1,432,760
SBC Communications, Inc............... 29,774 1,287,725
Viacom, Inc. -- Class B............... 46,732(1) 3,186,538
Worldcom, Inc......................... 26,347(1) 1,208,669
-----------
8,177,280
DEPOSITORY INSTITUTIONS (2.29%)
BankAmerica Corp...................... 19,618 843,574
J. P. Morgan & Co..................... 11,366 1,251,681
-----------
2,095,255
EATING AND DRINKING PLACES (1.60%)
McDonald's Corp....................... 44,537 1,466,937
ELECTRONIC AND OTHER ELECTRIC EQUIPMENT (10.94%)
General Electric Co................... 56,166 2,976,798
Intel Corporation..................... 18,722 2,502,897
Lucent Technologies, Inc.............. 41,159 2,438,671
Motorola, Inc......................... 25,221 732,985
Texas Instruments..................... 20,124 1,382,267
-----------
10,033,618
FOOD AND KINDRED PRODUCTS (4.21%)
Coca-Cola Co. (The)................... 22,707 1,304,233
PepsiCo, Inc.......................... 36,906 1,640,010
Philip Morris Companies, Inc.......... 34,408 913,963
-----------
3,858,206
GENERAL MERCHANDISE STORES (3.55%)
Wal-Mart Stores, Inc.................. 56,466 3,253,853
</TABLE>
29
<PAGE>
EQUITRUST VARIABLE INSURANCE SERIES FUND
SCHEDULE OF INVESTMENTS
BLUE CHIP PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
SHARES
HELD VALUE
---------- -----------
<S> <C> <C>
INDUSTRIAL MACHINERY AND EQUIPMENT (16.54%)
Caterpillar, Inc...................... 27,683 $ 937,762
Cisco Systems, Inc.................... 51,136(1) 3,250,332
Dell Computer Corp.................... 30,200(1) 1,489,237
EMC Corp.............................. 22,102(1) 1,700,473
Hewlett-Packard Co.................... 15,678 1,957,790
International Business Machines
Corp................................. 24,268 2,658,863
Oracle Corp........................... 21,684(1) 1,822,811
Sun Microsystems, Inc................. 14,809(1) 1,346,693
-----------
15,163,961
INSTRUMENTS AND RELATED PRODUCTS (1.62%)
Agilent Technologies, Inc............. 5,979(1) 440,951
Eastman Kodak Co...................... 17,483 1,040,238
-----------
1,481,189
INSURANCE CARRIERS (3.01%)
American International Group, Inc..... 23,481 2,759,017
LUMBER AND WOOD PRODUCTS (1.13%)
Home Depot, Inc....................... 20,803 1,038,850
MOTION PICTURES (1.87%)
Disney (Walt) Co...................... 44,219 1,716,250
NONDEPOSITORY INSTITUTIONS (2.20%)
Citigroup, Inc........................ 33,490 2,017,773
PAPER AND ALLIED PRODUCTS (2.19%)
International Paper Co................ 26,609 793,281
Minnesota Mining & Manufacturing
Co................................... 14,716 1,214,070
-----------
2,007,351
PETROLEUM AND COAL PRODUCTS (3.49%)
Exxon Mobil Corporation............... 40,717 3,196,285
PRIMARY METAL INDUSTRIES (2.03%)
ALCOA, Inc............................ 64,332 1,865,628
PRINTING AND PUBLISHING (1.17%)
Time Warner, Inc...................... 14,059 1,068,484
SECURITY AND COMMODITY BROKERS (2.71%)
American Express Co................... 47,700 2,486,363
TRANSPORTATION EQUIPMENT (7.33%)
Boeing Co. (The)...................... 27,989 1,170,290
Ford Motor Co......................... 30,973 1,331,839
General Motors Corp................... 21,690 1,259,376
Honeywell International, Inc.......... 32,913 1,108,757
United Technologies Corp.............. 31,399 1,848,616
-----------
6,718,878
</TABLE>
30
<PAGE>
EQUITRUST VARIABLE INSURANCE SERIES FUND
SCHEDULE OF INVESTMENTS
BLUE CHIP PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
SHARES
HELD VALUE
---------- -----------
<S> <C> <C>
WHOLESALE -- DURABLE GOODS (0.05%)
Visteon Corp.......................... 4,055(1) $ 49,172
-----------
Total Common Stocks..................... 83,582,801
SHORT-TERM INVESTMENTS (9.00%)
-----------------------------------
MONEY MARKET MUTUAL FUND (0.45%)
Provident Institutional Funds, T-Fund
Portfolio............................ 411,761 411,761
<CAPTION>
PRINCIPAL
AMOUNT
----------
<S> <C> <C>
UNITED STATES GOVERNMENT AGENCIES (8.55%)
Federal Home Loan Bank, due 7/14/00... $4,615,000 4,604,356
Federal Home Loan Bank, due 7/26/00... 1,250,000 1,244,428
Federal Home Loan Bank, due 7/28/00... 1,000,000 995,162
Federal Home Loan Mortgage Corp., due
7/05/00.............................. 1,000,000 999,294
-----------
7,843,240
-----------
Total Short-Term Investments............ 8,255,001
-----------
Total Investments (100.16%)............. 91,837,802
OTHER ASSETS LESS LIABILITIES (-0.16%)
------------------------------------------
Cash, receivables and prepaid expense,
less liabilities..................... (150,885)
-----------
Total Net Assets (100.00%).............. $91,686,917
===========
</TABLE>
(1) Non-income producing securities.
SEE ACCOMPANYING NOTES.
31
<PAGE>
EQUITRUST VARIABLE INSURANCE SERIES FUND
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000
(UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES
EquiTrust Variable Insurance Series Fund (the "Fund") is registered under
the Investment Company Act of 1940, as amended, as a no-load, 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). Shares of the Fund are sold only to certain life insurance
companies' separate accounts to fund the benefits under variable insurance
contracts issued by such life insurance companies, including Farm Bureau Life
Insurance Company (see NOTE 3).
All portfolios, other than the Money Market Portfolio, value their common
stocks, preferred stocks, corporate bonds, United States Treasury obligations
and mortgage-backed securities that are traded on any national exchange at the
last sale price on the day of valuation or, lacking any sales, at the mean
between the closing bid and asked prices. If the mean is not available, exchange
traded securities are valued using the prior day's closing prices. Investments
traded in the over-the-counter market are valued at the mean between the bid and
asked prices or yield equivalent as obtained from one or more dealers that make
markets in the securities. Investments for which market quotations are not
readily available are valued at fair value as determined in good faith by the
Fund's Board of Trustees. 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.
The Money Market Portfolio values investments at amortized cost, which
approximates market value. Under the amortized cost method, a security is valued
at its cost on the date of purchase and thereafter is adjusted to reflect a
constant amortization to maturity of the difference between the principal amount
due at maturity and the cost of the investment to the portfolio.
The value of the underlying securities serving to collateralize repurchase
agreements is marked to market daily. Should the value of the underlying
securities decline, the seller would be required to provide the applicable
portfolio with additional securities, so that the aggregate value of the
underlying securities was at least equal to the repurchase price. If a seller of
a repurchase agreement were to default, the affected portfolio might experience
losses in enforcing its rights. To minimize this risk, the investment adviser
(under the supervision of the Board of Trustees) will monitor the
creditworthiness of the seller of the repurchase agreement and must find such
creditworthiness satisfactory before a portfolio may enter into the repurchase
agreement.
The Fund records investment transactions generally one day after the trade
date. The identified cost basis has been used in determining the net realized
gain or loss from investment transactions and unrealized appreciation or
depreciation on investments. Dividend income is recorded on the ex-dividend date
and interest is recognized on an accrual basis. Discounts and premiums on
investments purchased are amortized over the life of the respective investments.
Dividends and distributions to shareholders are recorded on the record date.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
32
<PAGE>
EQUITRUST VARIABLE INSURANCE SERIES FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
2. FEDERAL INCOME TAXES
No provision for federal income taxes is considered necessary because the
Fund is qualified as a "regulated investment company" under the Internal Revenue
Code and intends to distribute each year substantially all of its net investment
income and realized capital gains to shareholders. The cost of investments is
the same for both federal income tax and financial reporting purposes.
At June 30, 2000, the Portfolios had approximate net capital loss
carryforwards as follows:
<TABLE>
<CAPTION>
-----------------------------------------------
VALUE HIGH GRADE HIGH YIELD
NET CAPITAL LOSS CARRYFORWARDS EXPIRE IN: GROWTH BOND BOND MANAGED
----------------------------------------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
2006............................... $10,702,000 $3,188,000
2007............................... $104,000 691,000
2008............................... 3,690,000 $16,000 35,000 5,433,000
----------- ------- -------- ----------
$14,392,000 $16,000 $139,000 $9,312,000
=========== ======= ======== ==========
</TABLE>
3. MANAGEMENT CONTRACT AND TRANSACTIONS WITH AFFILIATES
The Fund has entered into agreements with EquiTrust Investment Management
Services, Inc. ("EquiTrust Investment") relating to the management of the
portfolios and the investment of its assets. Pursuant to these agreements, fees
paid to EquiTrust Investment are as follows: (1) annual investment advisory and
management fees, which are based on each portfolio's daily net assets as
follows: Value Growth Portfolio -- 0.45%; High Grade Bond Portfolio -- 0.30%;
High Yield Bond Portfolio -- 0.45%; Managed Portfolio -- 0.45%; Money Market
Portfolio -- 0.25% ; and Blue Chip Portfolio -- 0.20%, and (2) 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.
The Fund has entered into an agreement with EquiTrust Investment whereby
EquiTrust Investment also serves as the principal underwriter and distributor of
the Fund's shares and as the Fund's shareholder service, transfer and dividend
disbursing agent. There are no additional fees associated with these services.
EquiTrust Investment has agreed to reimburse the portfolios annually for
total expenses, excluding brokerage, interest, taxes and extraordinary expenses
in excess of 1.50% of each portfolio's average daily net assets. The amount
reimbursed, however, shall not exceed the amount of the investment advisory and
management fee paid by the portfolio for such period. During the period ended
June 30, 2000, EquiTrust Investment further agreed to reimburse any portfolio,
to the extent that annual operating expenses, including the investment advisory
fee, exceed 0.65%. For the period ended June 30, 2000, the Fund's net expenses
did not exceed the reimbursement thresholds and accordingly, no expenses were
reimbursed by EquiTrust Investment.
33
<PAGE>
EQUITRUST VARIABLE INSURANCE SERIES FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. MANAGEMENT CONTRACT AND TRANSACTIONS WITH AFFILIATES (CONTINUED)
Certain officers and trustees of the Fund are also officers of EquiTrust
Investment and its affiliate, Farm Bureau Life Insurance Company and other
affiliated entities. At June 30, 2000, the total number of the shares of each
portfolio owned by Farm Bureau Life Insurance Company, EquiTrust Life Insurance
Company (an affiliate), and related separate accounts are as follows:
<TABLE>
<CAPTION>
PORTFOLIO SHARES
--------- ----------
<S> <C>
Value Growth...................................... 4,070,305
High Grade Bond................................... 1,345,106
High Yield Bond................................... 1,771,732
Managed........................................... 3,930,246
Money Market...................................... 7,240,240
Blue Chip......................................... 2,181,699
</TABLE>
4. EXPENSE OFFSET ARRANGEMENTS
The Fund and other mutual funds managed by EquiTrust Investment have an
agreement with the custodian bank to indirectly pay a portion of the custodian's
fees through credits earned by the Funds' cash on deposit with the bank. This
deposit agreement is an alternative to overnight investments.
5. CAPITAL SHARE TRANSACTIONS
The Fund has an unlimited number of shares of beneficial interest authorized
with no par value. Net assets as of June 30, 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>
Paid-in capital.......... $51,880,028 $13,427,451 $17,836,029 $49,673,667 $7,240,240 $66,859,680
Accumulated undistributed
net investment income... 426,314 1,189,069 557,352
Accumulated undistributed
net realized gain (loss)
from investment
transactions............ (14,391,452) (16,416) (139,205) (9,311,364) 573,926
Net unrealized
appreciation
(depreciation) of
investments............. (2,584,478) (624,860) (1,596,013) (235,708) 23,695,959
----------- ----------- ----------- ----------- ---------- -----------
Net Assets............... $35,330,412 $12,786,175 $16,100,811 $41,315,664 $7,240,240 $91,686,917
=========== =========== =========== =========== ========== ===========
</TABLE>
34
<PAGE>
EQUITRUST VARIABLE INSURANCE SERIES FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
5. CAPITAL SHARE TRANSACTIONS (CONTINUED)
Transactions in shares of beneficial interest for each portfolio were as
follows:
<TABLE>
<CAPTION>
SHARES ISSUED IN
REINVESTMENT OF
DIVIDENDS AND NET INCREASE
SHARES SOLD DISTRIBUTIONS SHARES REDEEMED (DECREASE)
----------------------- ------------------- ----------------------- ----------------------
PORTFOLIO SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
--------- ---------- ----------- ------- ---------- ---------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Period ended June 30, 2000:
Value Growth............. 80,615 $ 688,556 102,800 $ 855,293 811,809 $ 6,813,381 (628,394) $(5,269,532)
High Grade Bond.......... 137,054 1,299,089 39,626 393,492 262,953 2,508,765 (86,273) (816,184)
High Yield Bond.......... 116,621 1,070,764 62,351 571,028 309,478 2,853,892 (130,506) (1,212,100)
Managed.................. 35,458 356,188 295,587 2,911,537 940,586 9,462,572 (609,541) (6,194,847)
Money Market............. 15,371,652 15,371,652 155,232 155,232 14,896,091 14,896,091 630,793 630,793
Blue Chip................ 225,212 9,429,737 48,134 1,987,471 64,164 2,686,422 209,182 8,730,786
Year ended December 31, 1999:
Value Growth............. 627,488 $ 5,858,468 108,176 $ 976,830 525,556 $ 4,826,973 210,108 $ 2,008,325
High Grade Bond.......... 526,191 5,159,899 83,419 828,359 178,662 1,730,659 430,948 4,257,599
High Yield Bond.......... 470,766 4,628,710 146,656 1,422,137 251,178 2,417,617 366,244 3,633,230
Managed.................. 295,358 3,261,397 241,742 2,634,990 927,759 10,226,862 (390,659) (4,330,475)
Money Market............. 20,514,197 20,514,197 193,244 193,244 20,140,168 20,140,168 567,273 567,273
Blue Chip................ 409,813 16,501,862 21,903 816,323 107,309 4,388,859 324,407 12,929,326
</TABLE>
6. INVESTMENT TRANSACTIONS
For the period ended June 30, 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............................ $20,918,445 $29,679,007
High Grade Bond......................... 2,401,473 554,461
High Yield Bond......................... 0 1,109,828
Managed................................. 23,509,218 34,452,201
Blue Chip............................... 16,633,761 10,250,712
</TABLE>
35
<PAGE>
EQUITRUST VARIABLE INSURANCE SERIES FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
6. INVESTMENT TRANSACTIONS (CONTINUED)
At June 30, 2000, net unrealized appreciation (depreciation) of investments
by portfolio was composed of the following:
<TABLE>
<CAPTION>
GROSS UNREALIZED NET UNREALIZED
-------------------------- APPRECIATION (DEPRECIATION)
PORTFOLIO APPRECIATION DEPRECIATION OF INVESTMENTS
--------- ------------ ------------ ---------------------------
<S> <C> <C> <C>
Value Growth....................... $ 1,824,538 $(4,409,016) $(2,584,478)
High Grade Bond.................... 91,650 (716,510) (624,860)
High Yield Bond.................... 22,490 (1,618,503) (1,596,013)
Managed............................ 2,737,768 (2,973,476) (235,708)
Blue Chip.......................... 26,452,540 (2,756,581) 23,695,959
</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:
<TABLE>
<CAPTION>
PORTFOLIO
-------------------------------
HIGH HIGH
GRADE YIELD MONEY
PAYABLE DATE BOND BOND MARKET
------------ ---------- ---------- -------
<S> <C> <C> <C>
January 31, 2000................... $.0530 $.0632 $.0044
February 29, 2000.................. .0476 .0601 .0041
March 31, 2000..................... .0674 .0750 .0045
April 28, 2000..................... .0457 .0569 .0042
May 31, 2000....................... .0525 .0632 .0048
June 30, 2000...................... .0676 .0740 .0049
------ ------ ------
Total dividends per share.......... $.3338 $.3924 $.0269
====== ====== ======
</TABLE>
36
<PAGE>
EQUITRUST VARIABLE INSURANCE SERIES FUND
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
period ended June 30, 2000, for the following portfolios:
ORDINARY INCOME DIVIDENDS:
<TABLE>
<CAPTION>
DIVIDEND
DECLARATION RECORD PAYABLE AMOUNT
PORTFOLIO DATE DATE DATE PER SHARE
--------- ----------- --------- --------- ---------
<S> <C> <C> <C> <C>
Value Growth.................. 1/27/00 1/26/00 1/27/00 $0.1880
Managed....................... 1/27/00 1/26/00 1/27/00 0.6617
Blue Chip..................... 1/27/00 1/26/00 1/27/00 0.5319
</TABLE>
CAPITAL GAINS DISTRIBUTIONS:
<TABLE>
<CAPTION>
DECLARATION RECORD PAYABLE AMOUNT
PORTFOLIO DATE DATE DATE PER SHARE
--------- ----------- --------- --------- ---------
<S> <C> <C> <C> <C>
High Grade Bond............... 1/27/00 1/26/00 1/27/00 $0.0129
Blue Chip..................... 1/27/00 1/26/00 1/27/00 0.4555
</TABLE>
37
<PAGE>
EQUITRUST VARIABLE INSURANCE SERIES FUND
FINANCIAL HIGHLIGHTS
PERIOD ENDED JUNE 30, 2000 (UNAUDITED) AND
YEARS ENDED DECEMBER 31, 1999, 1998, 1997, AND 1996
<TABLE>
<CAPTION>
VALUE GROWTH
PORTFOLIO
---------------------------------------------------
2000 1999 1998 1997 1996
---------- -------- -------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period..... $ 8.69 $ 9.50 $ 12.58 $ 13.13 $ 12.31
Income From Investment
Operations
Net investment
income.............. 0.11 0.18 0.22 0.28 0.35
Net gains (losses) on
securities (both
realized and
unrealized)......... 0.07 (0.77) (3.29) 0.55 1.82
------- ------- ------- ------- -------
Total from investment
operations............ 0.18 (0.59) (3.07) 0.83 2.17
------- ------- ------- ------- -------
Less Distributions
Dividends (from net
investment
income)............. (0.19) (0.22) (0.01) (0.28) (0.30)
Distributions (from
capital gains)...... (0.95) (1.05)
Distributions in
excess of net
realized gains...... (0.15)
------- ------- ------- ------- -------
Total distributions.... (0.19) (0.22) (0.01) (1.38) (1.35)
------- ------- ------- ------- -------
Net asset value, end of
period.................. $ 8.68 $ 8.69 $ 9.50 $ 12.58 $ 13.13
======= ======= ======= ======= =======
Total Return:
Total investment return
based on net asset
value (1)............. 2.13% (6.34)% (24.43)% 6.30% 17.65%
Ratios/Supplemental Data:
Net assets, end of
period (000's
omitted).............. $35,330 $40,848 $42,664 $43,466 $27,188
Ratio of total expenses
to average net
assets................ 0.59%(2) 0.57% 0.56% 0.55% 0.55%
Ratio of net expenses
to average net
assets................ 0.58%(2) 0.57% 0.55%
Ratio of net investment
income to average net
assets................ 2.32%(2) 1.91% 2.17% 2.43% 2.68%
Portfolio turnover
rate.................. 61%(3) 152% 230% 118% 72%
Information assuming no
voluntary reimbursement
or waiver by EquiTrust
Investment of excess
operating
expenses (see NOTE 3):
Per share net
investment income..... $ 0.27 $ 0.33
Ratio of expenses to
average net assets.... 0.58% 0.69%
Amount reimbursed...... $14,093 $29,686
</TABLE>
------------------------------
Note: Per share amounts have been calculated on the basis of monthly per share
amounts (using average monthly outstanding shares) accumulated for the
period.
(1) Total investment return is calculated assuming an initial investment made
at the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at net asset value during the period, and
redemption on the last day of the period and is not annualized for periods
less than one year.
(2) Computed on an annualized basis.
(3) Not annualized.
SEE ACCOMPANYING NOTES.
38
<PAGE>
<TABLE>
<CAPTION>
HIGH HIGH
GRADE BOND YIELD BOND
PORTFOLIO PORTFOLIO
------------------------------------------------ -------------------------------------------------
2000 1999 1998 1997 1996 2000 1999 1998 1997 1996
---------- -------- ------- ------ ------ ---------- -------- ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period..... $ 9.49 $ 10.19 $ 10.11 $ 9.83 $ 9.98 $ 9.30 $ 10.17 $ 10.21 $ 9.91 $ 9.69
Income From Investment
Operations
Net investment
income.............. 0.33 0.62 0.66 0.69 0.72 0.39 0.74 0.71 0.79 0.84
Net gains (losses) on
securities (both
realized and
unrealized)......... (0.02) (0.67) 0.08 0.28 (0.15) (0.24) (0.81) (0.03) 0.36 0.33
------- ------- ------- ------ ------ ------- ------- ------- ------ -------
Total from investment
operations............ 0.31 (0.05) 0.74 0.97 0.57 0.15 (0.07) 0.68 1.15 1.17
------- ------- ------- ------ ------ ------- ------- ------- ------ -------
Less Distributions
Dividends (from net
investment
income)............. (0.33) (0.62) (0.66) (0.69) (0.72) (0.39) (0.74) (0.71) (0.79) (0.84)
Distributions (from
capital gains)...... (0.01) (0.03) (0.01) (0.06) (0.11)
Distributions in
excess of net
realized gains...... (0.06)
------- ------- ------- ------ ------ ------- ------- ------- ------ -------
Total distributions.... (0.34) (0.65) (0.66) (0.69) (0.72) (0.39) (0.80) (0.72) (0.85) (0.95)
------- ------- ------- ------ ------ ------- ------- ------- ------ -------
Net asset value, end of
period.................. $ 9.46 $ 9.49 $ 10.19 $10.11 $ 9.83 $ 9.06 $ 9.30 $ 10.17 $10.21 $ 9.91
======= ======= ======= ====== ====== ======= ======= ======= ====== =======
Total Return:
Total investment return
based on net asset
value (1)............. 3.25% (0.46)% 7.51% 10.24% 5.94% 1.68% (0.75)% 6.88% 12.07% 12.65%
Ratios/Supplemental Data:
Net assets, end of
period (000's
omitted).............. $12,786 $13,638 $10,255 $5,374 $3,535 $16,101 $17,752 $15,680 $8,623 $ 5,929
Ratio of total expenses
to average net
assets................ 0.47%(2) 0.48% 0.50% 0.52% 0.55% 0.60%(2) 0.60% 0.61% 0.57% 0.55%
Ratio of net expenses
to average net
assets................ 0.47%(2) 0.47% 0.46% 0.60%(2) 0.59% 0.58%
Ratio of net investment
income to average net
assets................ 7.07%(2) 6.34% 6.44% 6.94% 7.22% 8.53%(2) 7.62% 6.92% 7.74% 8.47%
Portfolio turnover
rate.................. 6%(3) 24% 46% 31% 32% 0%(3) 27% 43% 35% 30%
Information assuming no
voluntary reimbursement
or waiver by EquiTrust
Investment of excess
operating
expenses (see NOTE 3):
Per share net
investment income..... $ 0.68 $ 0.70 $ 0.78 $ 0.81
Ratio of expenses to
average net assets.... 0.57% 0.80% 0.65% 0.87%
Amount reimbursed...... $2,294 $8,233 $5,819 $17,094
</TABLE>
39
<PAGE>
EQUITRUST VARIABLE INSURANCE SERIES FUND
FINANCIAL HIGHLIGHTS (continued)
<TABLE>
<CAPTION>
MANAGED
PORTFOLIO
---------------------------------------------------
2000 1999 1998 1997 1996
---------- -------- -------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period..... $ 10.54 $ 11.45 $ 12.55 $ 12.40 $ 11.71
Income From Investment
Operations
Net investment
income.............. 0.32 0.64 0.53 0.53 0.60
Net gains (losses) on
securities (both
realized and
unrealized)......... 0.31 (1.02) (1.63) 0.79 1.44
------- ------- ------- ------- -------
Total from investment
operations............ 0.63 (0.38) (1.10) 1.32 2.04
------- ------- ------- ------- -------
Less Distributions
Dividends (from net
investment
income)............. (0.66) (0.53) (0.52) (0.50)
Distributions (from
capital gains)...... (0.65) (0.85)
Distributions in
excess of net
realized gains......
------- ------- ------- ------- -------
Total distributions.... (0.66) (0.53) (1.17) (1.35)
------- ------- ------- ------- -------
Net asset value, end of
period.................. $ 10.51 $ 10.54 $ 11.45 $ 12.55 $ 12.40
======= ======= ======= ======= =======
Total Return:
Total investment return
based on net asset
value (1)............. 6.43% (3.45)% (8.71)% 10.67% 17.39%
Ratios/Supplemental Data:
Net assets, end of
period (000's
omitted).............. $41,316 $47,829 $56,434 $44,949 $26,022
Ratio of total expenses
to average net
assets................ 0.57%(2) 0.56% 0.55% 0.54% 0.55%
Ratio of net expenses
to average net
assets................ 0.56%(2) 0.56% 0.54%
Ratio of net investment
income to average net
assets................ 5.48%(2) 5.28% 4.97% 4.94% 4.73%
Portfolio turnover
rate.................. 61%(3) 43% 74% 52% 82%
Information assuming no
voluntary reimbursement
or waiver by EquiTrust
Investment of excess
operating
expenses (see NOTE 3):
Per share net
investment income..... $ 0.52 $ 0.57
Ratio of expenses to
average net assets.... 0.60% 0.75%
Amount reimbursed...... $17,771 $38,874
</TABLE>
40
<PAGE>
<TABLE>
<CAPTION>
MONEY MARKET BLUE CHIP
PORTFOLIO PORTFOLIO
-------------------------------------------- -------------------------------------------------
2000 1999 1998 1997 1996 2000 1999 1998 1997 1996
--------- ------ ------ ------ ------ ---------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period..... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 43.98 $ 36.87 $ 31.01 $ 24.68 $ 20.70
Income From Investment
Operations
Net investment
income.............. 0.03 0.04 0.05 0.05 0.05 0.24 0.54 0.49 0.42 0.45
Net gains (losses) on
securities (both
realized and
unrealized)......... (1.25) 7.06 5.37 6.34 3.99
------ ------ ------ ------ ------ ------- ------- ------- ------- -------
Total from investment
operations............ 0.03 0.04 0.05 0.05 0.05 (1.01) 7.60 5.86 6.76 4.44
------ ------ ------ ------ ------ ------- ------- ------- ------- -------
Less Distributions
Dividends (from net
investment
income)............. (0.03) (0.04) (0.05) (0.05) (0.05) (0.53) (0.49) (0.42) (0.34)
Distributions (from
capital gains)...... (0.46) (0.01) (0.12)
Distributions in
excess of net
realized gains
------ ------ ------ ------ ------ ------- ------- ------- ------- -------
Total distributions.... (0.03) (0.04) (0.05) (0.05) (0.05) (0.99) (0.49) (0.43) (0.46)
------ ------ ------ ------ ------ ------- ------- ------- ------- -------
Net asset value, end of
period.................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 41.98 $ 43.98 $ 36.87 $ 31.01 $ 24.68
====== ====== ====== ====== ====== ======= ======= ======= ======= =======
Total Return:
Total investment return
based on net asset
value (1)............. 2.73% 4.53% 5.00% 5.07% 4.90% (2.26)% 20.85% 18.91% 27.41% 21.43%
Ratios/Supplemental Data:
Net assets, end of
period (000's
omitted).............. $7,240 $6,609 $6,042 $6,078 $3,819 $91,687 $86,849 $60,850 $31,865 $14,493
Ratio of total expenses
to average net
assets................ 0.49%(2) 0.55% 0.52% 0.48% 0.55% 0.28%(2) 0.30% 0.30% 0.33% 0.48%
Ratio of net expenses
to average net
assets................ 0.46%(2) 0.54% 0.45% 0.28%(2) 0.30% 0.29%
Ratio of net investment
income to average net
assets................ 5.47%(2) 4.49% 4.67% 4.65% 4.58% 1.25%(2) 1.43% 1.72% 1.83% 1.92%
Portfolio turnover
rate.................. 0%(3) 0% 0% 0% 0% 13%(3) 5% 12% 3% 2%
Information assuming no
voluntary reimbursement
or waiver by EquiTrust
Investment of excess
operating
expenses (see NOTE 3):
Per share net
investment income..... $ 0.05 $ 0.04
Ratio of expenses to
average net assets.... 0.55% 0.82%
Amount reimbursed...... $2,912 $9,569
</TABLE>
41
