<PAGE>
-----------------
Farm Bureau
Financial Services
FBL Variable Insurance
Series Fund
[LOGO]
ANNUAL REPORT
DECEMBER 31, 1995
INVESTMENT MANAGER AND
PRINCIPAL UNDERWRITER
FBL INVESTMENT ADVISORY
SERVICES, INC.
5400 UNIVERSITY AVENUE
WEST DES MOINES, IA 50266
1-800-247-4170 (OUTSIDE IOWA)
1-800-422-3175 (IN IOWA)
225-5586 (DES MOINES)
FARM BUREAU LIFE INSURANCE COMPANY
FARM BUREAU MUTUAL FUNDS This report is not to be distributed
5400 UNIVERSITY AVENUE unless preceded or accompanied by
WEST DES MOINES, IOWA 50266 [LOGO] a prospectus.
737-525 (95)
<PAGE>
PRESIDENT'S LETTER
Dear Shareholder,
Setting aside all the noise that has been generated by the "budget battle,"
markets have acquitted themselves admirably. The equity market, as measured by
the S&P 500 continues to set new highs, delivering to investors 37% returns
during 1995. As stocks saw nothing but blue skies, bonds also delivered very
nice double-digit returns the past year. In the case of bonds, however, it is an
economy performing below its potential that is the driving force. One of these
markets is not telling the truth.
It is a truism that at the end of every bull market move, the words "it's
different this time" are heard to justify the lofty valuations prevailing at the
moment. Nobody wants to give up a very good thing, and human emotions get
involved in wishing that trees really could grow to the sky. Thus,
rationalizations are invented and new era talk becomes common place.
Measures citing overvaluation abound: historically low dividend yields,
proliferation of mutual funds, historically high price-to-book value ratios,
etc. For each of these factors, the bulls offer reasonable rationalizations:
historically low payout ratios, individual ownership of equities still below the
1960s peak, massive write-downs of corporate assets distorting book value, etc.
It is possible that this market has some life left in it. Nonetheless, all
markets do reach logical end-points and periods of over-performance are
punctuated by periods of under-performance.
It has been said that it is currently a greater sin to be out of a rising
market than to be fully invested in a falling one. This proposition is the
classic problem of an unrestrained bull market. Just when does a market cross
over the line of performing on sound underlying fundamentals to unrestrained
greed? No definitive answer has been provided. What can be said with assurance
is that the cross-over point will come, the air will go out of the values now
prevailing, and the greater sin will become, why didn't I sell when I had the
chance?
This is not an argument to be out of the market, or to persuade that timing
market movements is a profitable enterprise. It is an argument to be very sure
that the stocks (or mutual funds) that make up your investment program really do
represent good value. Make up your own mind and be wary of what the herd thinks
or does. Be aware that some returns currently available come with very high risk
factors. Do not be persuaded that human nature has been reformed. In other
words, it is not different this time.
For the actively managed FBL Variable Insurance Series Fund Portfolios
(those other than the passive Blue Chip Portfolio) we constantly assess the
securities held to ensure that valuations are reasonable. In so doing, we seek
to produce attractive risk-adjusted performance and create lasting value for our
shareholders. Below are activity and strategy summaries for the various
portfolios of FBL Variable Insurance Series Fund.
GROWTH COMMON STOCK: With the backdrop of a very favorable economic
environment, investments in the U.S. equity market provided outstanding returns
in 1995. Inflation was essentially unchanged in the fifth year of economic
recovery, and productivity improved contrary to many economists' expectations.
Also, corporate profits exceeded most estimates despite slower-than-expected
economic growth and corporate after-tax profit margins reached a 25-year high of
about 6%. All this coincided with a near 200-basis point drop in long-term
interest rates. The stock market benefitted from a price-to-earnings (PE)
expansion and an earnings explosion thanks to an increase in profit margins,
recording a 1995 total return of approximately 37% in terms of the S&P 500.
2
<PAGE>
Risk in the market increased substantially and investor expectations were
high. The Growth Common Stock Portfolio continued to look for companies and
industries that were undervalued with the opportunity to appreciate favorably.
The Portfolio utilized convertible securities to reduce risk and provide
attractive income. In some cases, convertible positions were cut back and the
focus was shifted to the underlying common stock where improving fundamentals
were quite evident, aiding the Portfolio's performance. This was particularly
true in the oil and gas drilling equities.
Also, the Growth Common Stock Portfolio was able to benefit from merger
activity as two of its holdings were bought out at premiums to the market price.
In the case of American City Business Journals, the Portfolio doubled its money.
By continuing to focus on undervalued securities, we expect further merger
activity will add to the Portfolio's growth. We plan to maintain the Portfolio's
good representation in the undervalued energy and banking sectors as the
long-term picture for these industries looks attractive.
HIGH GRADE BOND: U.S. Treasury yields decreased dramatically during 1995.
For example, the 2-year, 10-year and 30-year Treasury issues yielded 7.69%,
7.83% and 7.88%, respectively, at January 2, 1995, but at December 29, 1995,
were 5.15%, 5.57% and 5.95%. In addition, corporate spreads remain near
historically low levels, suggesting that investors are not being well
compensated for taking on the credit and market risk inherent in corporate
bonds.
This Portfolio continues to hold a significant portion of its assets in
high-coupon, callable bonds that offer attractive incremental yields relative to
similar non-callable issues. Due to their call features, these types of
corporate issues tend to go up in price less than non-callable issues when
interest rates drop; and conversely, due to their incremental yield, tend to go
down less than non-callable issues when interest rates rise. Because of this,
Portfolio returns will tend to lag other, more aggressive funds in both up and
down markets.
HIGH YIELD BOND: During 1995, the high yield bond market slightly
underperformed the high grade corporate bond market. The reasons for this
underperformance were the naturally shorter duration of high yield bonds and a
general increase in their yield spreads as investors became more concerned about
a rise in actual default rates and the potential for an economic slowdown.
During this period, the yield and spread over the comparable Treasury issue
on the DLJ 100 High Yield Active Issues Index went from a 12.30% yield and a 445
basis-point spread to a 10.81% yield and a spread of 534 basis-points. In
general, we view these spread levels as reasonable, and therefore, no major
changes in the Portfolio are contemplated at this time.
MANAGED: The Managed Portfolio continues to seek out high income with
modest growth potential. This Portfolio uses a value philosophy, but
concentrates on securities that produce an income stream twice that of the S&P
500. Currently, the S&P 500 is yielding a minuscule 2.3%. We achieve higher
income by investing in a mixture of high dividend-paying stocks, preferreds,
convertibles (debentures and preferreds) and corporate bonds. In the past year,
much of the return was attributed to the high yielding financial and energy
holdings. In 1996, the Portfolio will continue to seek out securities which
provide income in the range of 4% - 9%, and reduce its holdings of income-only
preferreds in favor of convertibles and common stock where a potential for
greater growth exists.
MONEY MARKET: During 1995, we watched the Fed funds rate seesaw from 5.50%
to 6.00% and back again. Once the U.S. economy appeared to be slowing down after
the increase in interest rates in
3
<PAGE>
January, 1995, the Federal Reserve Board reacted by lowering the Fed funds rate
25 basis points in July and again in January, 1996. Money market investors are
certainly feeling the pain of lower interest rates and hopefully, this recent
fine tuning will yield the desired results of the Fed.
BLUE CHIP: True to its passive strategy, the performance of the Blue Chip
Portfolio over the past year has reflected that of the large capitalization
market sector which it represents. The Blue Chip Portfolio will, at all times,
remain substantially invested in common stocks of large companies. This
Portfolio is designed for those investors who prefer substantial exposure to
common stocks at all times or who wish to make their own market value judgments.
EDWARD M. WIEDERSTEIN
PRESIDENT
February 14, 1996
4
<PAGE>
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
GROWTH COMMON STOCK PORTFOLIO
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
IN THE GROWTH COMMON STOCK PORTFOLIO AND S&P 500
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
GROWTH COMMON STOCK PORTFOLIO S&P 500 STOCK COMPOSITE INDEX
<S> <C> <C>
11/01/87 10000 10000
12/31/87 9768 9859
12/31/88 11102 11516
12/31/89 12337 15142
12/31/90 12911 14662
12/31/91 14787 19141
12/31/92 16333 20608
12/31/93 20775 22687
12/31/94 19855 22982
12/31/95 24992 31609
</TABLE>
For the twelve-month period ended December 31, 1995, the total return for
the Growth Common Stock Portfolio was 25.87% compared to the 37.54% total return
produced by the S&P 500 Stock Composite Index. The previous market rally to
surpass such a strong year occurred in 1958 in which the S&P rose a dramatic
43.40%. The 1995 rally was fairly broad-based, the weakest markets were reported
by the Value Line Index (representative of the average stock) which gained
19.30% for the year. While we are pleased with the absolute performance of the
Growth Common Stock Portfolio, we are disappointed about the relative
performance as compared to the S&P 500. We presume this difference is largely
due to the stellar year of the technology sector, which is unsustainably high
and could be vulnerable to substantial setbacks. The Growth Common Stock
Portfolio achieved its returns in the energy, banking, utilities and gold mining
industries. We remain committed to the undervalued sectors of the market, the
same industries that aided our performance in 1995. Long-term, we believe
returns from these industries will be attractive, at a reduced risk level. Cash
is likely to accumulate as we take profits and await further investment
opportunities.
5
<PAGE>
HIGH GRADE BOND PORTFOLIO
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE HIGH GRADE BOND
PORTFOLIO AND LEHMAN BROTHERS MUTUAL FUND AGGREGATE INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
HIGH GRADE BOND PORTFOLIO LEHMAN BROTHERS
<S> <C> <C>
11/01/87 10000 10000
12/31/87 10251 10217
12/31/88 10976 11022
12/31/89 12375 12623
12/31/90 13471 13753
12/31/91 15682 15953
12/31/92 16999 17136
12/31/93 18485 18807
12/31/94 18438 18258
12/31/95 21066 21630
</TABLE>
During the twelve-month period ended December 31, 1995, the High Grade Bond
Portfolio underperformed the Lehman Brothers Mutual Fund Aggregate Index, as
reflected by the 14.26% total return produced by the Portfolio versus the 18.47%
return produced by the Lehman Brothers Aggregate Index. The Portfolio continued
to pursue an investment strategy of holding a large position in high-coupon,
callable bonds. These bonds generally offer additional yield for taking on call
risk and allow for a more stable return to the Portfolio. Because these
securities have a call feature, they tend to underperform similar non-callable
issues when interest rates go down, and conversely, outperform similar
non-callable issues when interest rates rise.
6
<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>
HIGH YIELD BOND PORTFOLIO LEHMAN BROTHERS
<S> <C> <C>
11/01/87 10000 10000
12/31/87 10545 10322
12/31/88 11803 11308
12/31/89 12757 12724
12/31/90 12842 13423
12/31/91 16372 16195
12/31/92 18565 17708
12/31/93 21533 19981
12/31/94 21316 19292
12/31/95 24544 23484
</TABLE>
For the twelve-month period ended December 31, 1995, the 15.15% total return
produced by the High Yield Bond Portfolio was less than the 21.73% return
produced by the Lehman Brothers Mutual Fund Corporate/High Yield Index. The
Portfolio maintains a larger percentage of its investments in high yield bonds
than the Lehman Brothers Corporate/High Yield Index and during the year, the
high yield bond market tended to underperform the high grade corporate bond
market. In addition, the Portfolio continued to hold a substantial portion of
its assets in high-coupon, premium-priced callable bonds. These bonds generally
offer additional yield for taking on call risk and allow for a more stable
return to the Portfolio. Because these securities have a call feature, they tend
to underperform similar non-callable issues when interest rates go down, and
conversely, outperform similar non-callable issues when interest rates rise.
7
<PAGE>
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>
11/01/87 10000 10000
12/31/87 9992 9859
12/31/88 10785 11516
12/31/89 11740 15142
12/31/90 12696 14662
12/31/91 14308 19141
12/31/92 16556 20608
12/31/93 20316 22687
12/31/94 19309 22982
12/31/95 24270 31609
</TABLE>
The Managed Portfolio is an asset allocation portfolio and will not likely
mirror any particular index (equity or fixed-income) over time. During the
twelve-month period ended December 31, 1995, the Portfolio produced a total
return of 25.69% compared to the 37.54% total return produced by the S&P 500
Stock Composite Index. The Managed Portfolio has emphasized securities producing
current income, and during the year, maintained a majority of its assets in
convertible bonds and convertible preferred stocks. The majority of the
Portfolio is represented by high-income common stocks and convertibles of the
following industry groups: banking, energy and utilities. The Managed Portfolio
will continue to seek out high income, concentrating on convertible issues of
smaller banking situations. We believe this is a fertile investment area where
we are paid to wait for the profitable experience created by ongoing mergers and
consolidations in the banking industry. This is a lower risk strategy that takes
advantage of a distinct long-term financial trend.
8
<PAGE>
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>
11/01/90 10000 10000
12/31/90 10902 10936
12/31/91 13976 14276
12/31/92 15427 15371
12/31/93 17643 16922
12/31/94 18110 17142
12/31/95 24052 23577
</TABLE>
The Blue Chip Portfolio is designed to represent the large capitalization
sector of the domestic equity market and remains substantially invested in
approximately 40 such common stock issues at all times. Accordingly, the
performance of this Portfolio will roughly parallel that of the Dow Jones
Industrial Average and S&P 500 Stock Composite Index. As is apparent from the
line graph, the performance of the Blue Chip Portfolio, adjusted for expenses,
was similar to that of the S&P 500 for the twelve-month period ended December
31, 1995.
9
<PAGE>
FBL VARIABLE INSURANCE SERIES FUND
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
<TABLE>
<CAPTION>
GROWTH HIGH
COMMON STOCK GRADE BOND
PORTFOLIO PORTFOLIO
--------------- -------------
<S> <C> <C>
ASSETS
Investments in securities, at value (cost -- $14,845,260; $3,000,641; $ 16,079,757 $ 3,156,229
$4,833,875; $13,520,382; $3,091,161; and $4,779,340, respectively) (NOTE
5).......................................................................
Cash....................................................................... 21,902 4,302
Receivables:
Accrued dividends and interest........................................... 69,459 53,244
Investment securities sold............................................... 183,477
Prepaid expense............................................................ 618 342
--------------- -------------
Total Assets............................................................... $ 16,355,213 $ 3,214,117
--------------- -------------
--------------- -------------
LIABILITIES AND NET ASSETS
Liabilities:
Investment securities purchased.......................................... $ 53,138
Accrued expenses......................................................... 6,844 $ 5,721
--------------- -------------
Total Liabilities.......................................................... 59,982 5,721
Net assets applicable to shares of beneficial interest (NOTE 4)............ 16,295,231 3,208,396
--------------- -------------
Total Liabilities and Net Assets........................................... $ 16,355,213 $ 3,214,117
--------------- -------------
--------------- -------------
Shares issued and outstanding as of December 31, 1995...................... 1,323,819 321,363
NET ASSET VALUE PER SHARE.................................................. $ 12.31 $ 9.98
--------------- -------------
--------------- -------------
</TABLE>
SEE ACCOMPANYING NOTES.
10
<PAGE>
<TABLE>
<CAPTION>
HIGH
YIELD BOND MANAGED MONEY MARKET BLUE CHIP
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ------------- -------------- -------------- -------------
<S> <C> <C> <C>
$ 4,807,554 $ 14,422,324 $ 3,091,161 $ 6,609,304
10,430 68,979 51,510
97,818 87,552 4,033 10,609
412 547 341 412
- ------------- -------------- -------------- -------------
$ 4,916,214 $ 14,510,423 $ 3,164,514 $ 6,671,835
- ------------- -------------- -------------- -------------
- ------------- -------------- -------------- -------------
$ 100,415
5,706 $ 23,106 $ 5,941 $ 7,031
- ------------- -------------- -------------- -------------
106,121 23,106 5,941 7,031
4,810,093 14,487,317 3,158,573 6,664,804
- ------------- -------------- -------------- -------------
$ 4,916,214 $ 14,510,423 $ 3,164,514 $ 6,671,835
- ------------- -------------- -------------- -------------
- ------------- -------------- -------------- -------------
496,603 1,237,511 3,158,573 321,986
$ 9.69 $ 11.71 $ 1.00 $ 20.70
- ------------- -------------- -------------- -------------
- ------------- -------------- -------------- -------------
</TABLE>
11
<PAGE>
FBL VARIABLE INSURANCE SERIES FUND
STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
GROWTH HIGH
COMMON STOCK GRADE BOND
PORTFOLIO PORTFOLIO
--------------- ------------
<S> <C> <C>
INVESTMENT INCOME
Dividends............................................................. $ 425,724
Interest.............................................................. 275,272 $ 236,768
--------------- ------------
Total Investment Income............................................... 700,996 236,768
EXPENSES
Paid to FBL Investment Advisory Services, Inc. (NOTE 3):
Investment advisory and management fees............................. 65,647 8,481
Accounting fees..................................................... 6,565 1,413
Custodial fees........................................................ 7,393 4,342
Legal fees............................................................ 2,894 610
Audit fees............................................................ 5,100 5,100
Reports to shareholders............................................... 2,867 2,867
Trustees' fees and expenses........................................... 2,262 495
Insurance and bonds................................................... 1,683 463
Miscellaneous......................................................... 251 31
--------------- ------------
Total Expenses........................................................ 94,662 23,802
Expense reimbursement (NOTE 3)........................................ (22,306) (8,255)
--------------- ------------
Net Expenses.......................................................... 72,356 15,547
--------------- ------------
Net Investment Income................................................. 628,640 221,221
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) from investment transactions................. 858,654 (1,090)
Change in unrealized appreciation/depreciation of investments......... 1,599,431 150,916
--------------- ------------
Net Gain on Investments............................................... 2,458,085 149,826
--------------- ------------
Net Increase in Net Assets Resulting from Operations.................. $ 3,086,725 $ 371,047
--------------- ------------
--------------- ------------
</TABLE>
SEE ACCOMPANYING NOTES.
12
<PAGE>
<TABLE>
<CAPTION>
HIGH
YIELD BOND MANAGED MONEY MARKET BLUE CHIP
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ----------- ------------- -------------- -------------
<S> <C> <C> <C>
$ 453,506 $ 99,681
$ 439,229 303,889 $ 158,411 25,388
- ----------- ------------- -------------- -------------
439,229 757,395 158,411 125,069
23,073 65,457 8,050 9,533
2,307 5,951 1,342 2,383
4,593 5,524 5,632 6,043
972 2,833 617 1,125
5,100 5,100 5,100 4,800
2,867 2,867 2,867 2,867
822 2,049 478 774
724 1,558 459 597
53 126 30 46
- ----------- ------------- -------------- -------------
40,511 91,465 24,575 28,168
(15,105) (26,008) (9,816) (1,952)
- ----------- ------------- -------------- -------------
25,406 65,457 14,759 26,216
- ----------- ------------- -------------- -------------
413,823 691,938 143,652 98,853
66,905 543,441 (9)
167,210 1,503,900 1,221,621
- ----------- ------------- -------------- -------------
234,115 2,047,341 1,221,612
- ----------- ------------- -------------- -------------
$ 647,938 $ 2,739,279 $ 143,652 $ 1,320,465
- ----------- ------------- -------------- -------------
- ----------- ------------- -------------- -------------
</TABLE>
13
<PAGE>
FBL VARIABLE INSURANCE SERIES FUND
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
GROWTH
COMMON STOCK
PORTFOLIO
------------------------------
YEAR ENDED DECEMBER 31,
1995 1994
-------------- --------------
<S> <C> <C>
OPERATIONS
Net investment income...................................................... $ 628,640 $ 347,743
Net realized gain (loss) from investment transactions...................... 858,654 94,588
Change in unrealized appreciation/depreciation of investments.............. 1,599,431 (740,889)
-------------- --------------
Net Increase (Decrease) in Net Assets Resulting from Operations............ 3,086,725 (298,558)
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM (NOTE 6)
Net investment income...................................................... (629,398) (344,259)
Net realized gain from investment transactions............................. (331,104) (109,783)
Distributions in excess of net realized gain from investment
transactions............................................................. (144,035)
-------------- --------------
(960,502) (598,077)
CAPITAL SHARE TRANSACTIONS (NOTE 4)........................................ 3,565,672 6,769,691
-------------- --------------
Total Increase (Decrease) in Net Assets.................................... 5,691,895 5,873,056
NET ASSETS
Beginning of year.......................................................... 10,603,336 4,730,280
-------------- --------------
End of year (including undistributed net investment income as set forth
below)................................................................... $ 16,295,231 $ 10,603,336
-------------- --------------
-------------- --------------
Undistributed net investment income........................................ $ 2,962 $ 3,720
-------------- --------------
-------------- --------------
</TABLE>
SEE ACCOMPANYING NOTES.
14
<PAGE>
<TABLE>
<CAPTION>
HIGH HIGH
GRADE BOND YIELD BOND
PORTFOLIO PORTFOLIO
- ---------------------------- ----------------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
1995 1994 1995 1994
- ------------- ------------- ------------- -------------
<S> <C> <C> <C>
$ 221,221 $ 194,700 $ 413,823 $ 395,160
(1,090) (10,026) 66,905 46,030
150,916 (192,944) 167,210 (482,152)
- ------------- ------------- ------------- -------------
371,047 (8,270) 647,938 (40,962)
(221,221) (194,700) (413,823) (395,160)
(61,458) (47,664)
- ------------- ------------- ------------- -------------
(221,221) (194,700) (475,281) (442,824)
606,696 305,534 465,130 120,492
- ------------- ------------- ------------- -------------
756,522 102,564 637,787 (363,294)
2,451,874 2,349,310 4,172,306 4,535,600
- ------------- ------------- ------------- -------------
$ 3,208,396 $ 2,451,874 $ 4,810,093 $ 4,172,306
- ------------- ------------- ------------- -------------
- ------------- ------------- ------------- -------------
$ 0 $ 0 $ 0 $ 0
- ------------- ------------- ------------- -------------
- ------------- ------------- ------------- -------------
</TABLE>
15
<PAGE>
FBL VARIABLE INSURANCE SERIES FUND
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
<TABLE>
<CAPTION>
MANAGED
PORTFOLIO
------------------------------
YEAR ENDED DECEMBER 31,
1995 1994
-------------- --------------
<S> <C> <C>
OPERATIONS
Net investment income....................................................... $ 691,938 $ 489,449
Net realized gain (loss) from investment transactions....................... 543,441 197,608
Change in unrealized appreciation/depreciation of investments............... 1,503,900 (1,051,125)
-------------- --------------
Net Increase (Decrease) in Net Assets Resulting from Operations............. 2,739,279 (364,068)
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
FROM (NOTE 6)
Net investment income....................................................... (690,665) (490,192)
Net realized gain from investment transactions.............................. (206,978) (204,880)
Distributions in excess of net realized gain from investment transactions... (68,958)
-------------- --------------
(897,643) (764,030)
CAPITAL SHARE TRANSACTIONS (NOTE 4)......................................... 2,887,288 5,935,082
-------------- --------------
Total Increase (Decrease) in Net Assets..................................... 4,728,924 4,806,984
NET ASSETS
Beginning of year........................................................... 9,758,393 4,951,409
-------------- --------------
End of year (including undistributed net investment income as
set forth below).......................................................... $ 14,487,317 $ 9,758,393
-------------- --------------
-------------- --------------
Undistributed net investment income......................................... $ 3,413 $ 2,140
-------------- --------------
-------------- --------------
</TABLE>
SEE ACCOMPANYING NOTES.
16
<PAGE>
<TABLE>
<CAPTION>
MONEY MARKET BLUE CHIP
PORTFOLIO PORTFOLIO
- ---------------------------- ----------------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
1995 1994 1995 1994
- ------------- ------------- ------------- -------------
<S> <C> <C> <C>
$ 143,652 $ 98,125 $ 98,853 $ 53,678
(9) (10)
1,221,621 20,752
- ------------- ------------- ------------- -------------
143,652 98,125 1,320,465 74,420
(143,652) (98,125) (98,331) (53,782)
- ------------- ------------- ------------- -------------
(143,652) (98,125) (98,331) (53,782)
500,759 358,160 2,180,879 1,587,198
- ------------- ------------- ------------- -------------
500,759 358,160 3,403,013 1,607,836
2,657,814 2,299,654 3,261,791 1,653,955
- ------------- ------------- ------------- -------------
$ 3,158,573 $ 2,657,814 $ 6,664,804 $ 3,261,791
- ------------- ------------- ------------- -------------
- ------------- ------------- ------------- -------------
$ 0 $ 0 $ 741 $ 219
- ------------- ------------- ------------- -------------
- ------------- ------------- ------------- -------------
</TABLE>
17
<PAGE>
FBL VARIABLE INSURANCE SERIES FUND
SCHEDULE OF INVESTMENTS
GROWTH COMMON STOCK PORTFOLIO
DECEMBER 31, 1995
<TABLE>
<CAPTION>
SHARES
HELD VALUE
------- -----------
<S> <C> <C>
COMMON STOCKS (57.93%)
CHEMICALS AND ALLIED PRODUCTS (3.25%)
Crompton & Knowles Corp. ................................... 40,000 $ 530,000
COMMUNICATIONS (0.78%)
Lincoln Telecommunications Co. ............................. 6,000 126,750
DEPOSITORY INSTITUTIONS (3.02%)
CU Bancorp.................................................. 48,000 492,000
ELECTRIC, GAS AND SANITARY SERVICES (8.61%)
Citizens Utilities Co. ..................................... 57,352 724,069
Montana Power Co. .......................................... 30,000 678,750
-----------
1,402,819
FURNITURE AND FIXTURES (4.27%)
Ladd Furniture, Inc. ....................................... 52,950 694,969
HOLDING AND OTHER INVESTMENT OFFICES (4.84%)
General Growth Properties, Inc. ............................ 38,000 788,500
INSURANCE CARRIERS (4.64%)
EMC Insurance Group, Inc. .................................. 55,000 756,250
METAL MINING (1.06%)
Echo Bay Mines, Ltd. ....................................... 16,680 173,055
MISCELLANEOUS RETAIL (3.29%)
Ferrellgas Partners, L.P. .................................. 23,200 536,500
NONDEPOSITORY INSTITUTIONS (0.98%)
Berkshire Hathaway, Inc. ................................... 5(1) 160,525
OIL AND GAS EXTRACTION (14.08%)
Apache Corp. ............................................... 28,000 826,000
Global Marine, Inc. ........................................ 100,000 875,000
Noble Drilling Corp. ....................................... 66,000 594,000
-----------
2,295,000
STONE, CLAY AND GLASS PRODUCTS (3.03%)
Lafarge Corp. .............................................. 26,300 493,125
TRANSPORTATION -- BY AIR (2.78%)
Petroleum Helicopters, Inc. (Voting)........................ 4,250 60,562
Petroleum Helicopters, Inc. (Non-Voting).................... 27,500 391,875
-----------
452,437
</TABLE>
18
<PAGE>
FBL VARIABLE INSURANCE SERIES FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
GROWTH COMMON STOCK PORTFOLIO
<TABLE>
<CAPTION>
SHARES
HELD VALUE
------- -----------
WHOLESALE TRADE -- NONDURABLE GOODS (3.30%)
<S> <C> <C>
Howell Corp. ............................................... 26,500 $ 380,938
Super Valu Stores, Inc. .................................... 5,000 157,500
-----------
538,438
-----------
Total Common Stocks........................................... 9,440,368
PREFERRED STOCKS (20.55%)
DEPOSITORY INSTITUTIONS (8.24%)
Community First Bankshares, Inc. ........................... 21,800 790,250
Conservative Savings Corp., Convertible..................... 12,926 420,095
Sterling Financial Corp. ................................... 4,500 131,625
-----------
1,341,970
GAS PRODUCTION AND DISTRIBUTION (1.07%)
Western Gas Resources, Inc., Convertible.................... 5,000 175,000
OIL AND GAS EXTRACTION (5.98%)
Chieftain International, Inc., Convertible.................. 15,000 378,750
Noble Drilling Corp., Convertible........................... 9,000 231,750
Reading & Bates Corp., Convertible.......................... 8,070 363,150
-----------
973,650
WATER TRANSPORTATION (4.38%)
Sea Containers, Ltd., Convertible........................... 16,320 714,000
WHOLESALE TRADE -- NONDURABLE GOODS (0.88%)
Howell Corp. ............................................... 3,000 144,000
-----------
Total Preferred Stocks........................................ 3,348,620
</TABLE>
19
<PAGE>
FBL VARIABLE INSURANCE SERIES FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
GROWTH COMMON STOCK PORTFOLIO
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
---------- -----------
<S> <C> <C>
CORPORATE BONDS (1.22%)
HOLDING AND OTHER INVESTMENT OFFICES (1.22%)
Centennial Bancorp, 7.00%, due 5/01/04......................... $ 175,000 $ 198,296
SHORT-TERM INVESTMENTS (18.98%)
UNITED STATES GOVERNMENT AGENCIES
Federal Farm Credit Bank, due 1/11/96.......................... 1,100,000 1,097,976
Federal Home Loan Mortgage Corp., due 2/01/96.................. 400,000 398,021
Federal National Mortgage Assn., due 1/08/96................... 600,000 599,149
Federal National Mortgage Assn., due 1/16/96................... 1,000,000 997,327
-----------
Total Short-Term Investments..................................... 3,092,473
-----------
Total Investments (98.68%)....................................... 16,079,757
OTHER ASSETS LESS LIABILITIES (1.32%)
Cash, receivables and prepaid expense, less liabilities........ 215,474
-----------
Total Net Assets (100.00%)....................................... $16,295,231
-----------
-----------
</TABLE>
(1) Non-income producing security.
SEE ACCOMPANYING NOTES.
20
<PAGE>
FBL VARIABLE INSURANCE SERIES FUND
SCHEDULE OF INVESTMENTS
HIGH GRADE BOND PORTFOLIO
DECEMBER 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
----------- ----------
<S> <C> <C>
CORPORATE BONDS (83.08%)
APPAREL AND ACCESSORY STORES (3.30%)
TJX Companies, Inc., 9.50%, due 5/01/16.......................... $ 100,000 $ 105,864
COMMUNICATIONS (7.96%)
New York Telephone Co., 7.75%, due 12/15/06...................... 150,000 153,270
Pacific Telephone & Telegraph Co., 7.25%, due 2/01/08............ 100,000 101,971
----------
255,241
DEPOSITORY INSTITUTIONS (24.06%)
Midland America Capital Corp., 12.75%, due 11/15/03.............. 155,000 183,018
Morgan, J. P. & Co., 7.25%, due 10/01/10......................... 150,000 155,932
National Westminster Bancorp, Inc., 9.45%, due 5/01/01........... 100,000 115,678
Norwest Corp., 9.25%, due 5/01/97................................ 100,000 104,796
Third National Bank, 7.50%, due 11/15/02......................... 111,000 112,041
UnionBancorp, Inc., (Defeased), 8.50%, due 4/01/96............... 100,000 100,380
----------
771,845
ELECTRIC, GAS AND SANITARY SERVICES (16.25%)
MDU Resources Group, Inc., 9.125%, due 10/01/16.................. 100,000 107,159
National Rural Utilities Cooperative Finance Corp., 9.00%, due
3/15/16......................................................... 154,000 158,537
Texas Eastern Transmission, 10.00%, due 10/01/11................. 100,000 105,644
Western Penn Power, 7.875%, due 12/01/04......................... 140,000 150,107
----------
521,447
HOLDING AND OTHER INVESTMENT OFFICES (3.39%)
Federal Realty Investment Trust, 8.875%, due 1/15/00............. 100,000 108,726
INSURANCE (7.42%)
Old Republic International, 10.00%, due 2/01/18.................. 100,000 106,628
Torchmark Corp., 8.625%, due 3/01/17............................. 125,000 131,412
----------
238,040
NONDEPOSITORY INSTITUTIONS (3.26%)
Dillard Investment Co., 9.25%, due 5/01/97....................... 100,000 104,587
PRINTING AND PUBLISHING (3.22%)
Valassis Communications, Inc., 9.55%, due 12/01/03............... 100,000 103,190
RAILROAD TRANSPORTATION (4.91%)
Union Pacific Corp., 8.50%, due 1/15/17.......................... 150,000 157,635
SECURITY AND COMMODITY BROKERS (3.34%)
Lehman Brothers Holding, Inc., 8.875%, due 11/01/98.............. 100,000 107,225
</TABLE>
21
<PAGE>
FBL VARIABLE INSURANCE SERIES FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
HIGH GRADE BOND PORTFOLIO
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
----------- ----------
TRANSPORTATION EQUIPMENT (5.97%)
<S> <C> <C>
Ford Motor Credit Co., 9.50%, due 9/15/11........................ $ 150,000 $ 191,577
----------
Total Corporate Bonds.............................................. 2,665,377
MORTGAGE-BACKED SECURITIES (10.62%)
FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA) (2.24%)
Pool # 50276, 9.50%, due 2/01/20................................. 67,422 71,867
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (GNMA) (5.40%)
Pool # 276337, 10.00%, due 8/15/19............................... 157,421 173,259
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (GNMA) (2.98%)
Pool # 236070, 10.00%, due 10/15/12.............................. 88,997 95,726
----------
Total Mortgage-Backed Securities................................... 340,852
SHORT-TERM INVESTMENT (4.67%)
COMMERCIAL PAPER
General Electric Capital Corp., 5.79%, due 1/11/96............... 150,000 150,000
----------
Total Investments (98.37%)......................................... 3,156,229
OTHER ASSETS LESS LIABILITIES (1.63%)
Cash, receivables and prepaid expense, less liabilities.......... 52,167
----------
Total Net Assets (100.00%)......................................... $3,208,396
----------
----------
</TABLE>
SEE ACCOMPANYING NOTES.
22
<PAGE>
FBL VARIABLE INSURANCE SERIES FUND
SCHEDULE OF INVESTMENTS
HIGH YIELD BOND PORTFOLIO
DECEMBER 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
----------- ----------
<S> <C> <C>
CORPORATE BONDS (86.44%)
APPAREL AND ACCESSORY STORES (5.14%)
Genesco, Inc., 10.375%, due 2/01/03.............................. $ 100,000 $ 88,500
TJX Companies, Inc., 9.50%, due 5/01/16.......................... 150,000 158,796
----------
247,296
APPAREL AND OTHER TEXTILE PRODUCTS (6.74%)
Dan River, Inc., 10.125%, due 12/15/03........................... 200,000 185,500
Fieldcrest Cannon, Inc., 11.25%, due 6/15/04..................... 150,000 138,750
----------
324,250
AUTO REPAIR, SERVICES AND PARKING (1.53%)
Envirotest Systems Corp., 9.625%, due 4/01/03.................... 100,000 73,500
BUSINESS SERVICES (2.85%)
Borg-Warner Corp., 9.125%, due 5/01/03........................... 150,000 137,250
CHEMICALS AND ALLIED PRODUCTS (2.39%)
Huntsman Corp., 11.00%, due 4/15/04.............................. 100,000 115,125
COMMUNICATIONS (4.45%)
Panamsat, L.P., 9.75%, due 8/01/00............................... 200,000 214,000
ELECTRIC, GAS AND SANITARY SERVICES (8.47%)
Montana Power Co., 7.50%, due 1/01/98............................ 100,000 100,596
Public Service Company of New Mexico, 5.875%, due 5/01/97........ 150,000 148,362
Texas Eastern Transmission Corp., 10.00%, due 10/01/11........... 150,000 158,466
----------
407,424
ELECTRONIC AND OTHER ELECTRIC EQUIPMENT (4.76%)
Amphenol Corp., 12.75%, due 12/15/02............................. 200,000 229,000
FOOD STORES (7.04%)
P&C Food Markets, Inc., 11.50%, due 10/15/01..................... 150,000 146,625
Penn Traffic Co., 10.25%, due 2/15/02............................ 200,000 192,000
----------
338,625
GENERAL MERCHANDISE STORES (4.56%)
Federated Department Stores, Inc., 10.00%, due 2/15/01........... 200,000 219,500
INSURANCE CARRIERS (4.37%)
Torchmark Corp., 8.625%, due 3/01/17............................. 200,000 210,260
LUMBER AND WOOD PRODUCTS (7.24%)
Georgia-Pacific Corp., 9.25%, due 3/15/16........................ 150,000 158,283
Pacific Lumber Co., 10.50%, due 3/01/03.......................... 200,000 189,750
----------
348,033
</TABLE>
23
<PAGE>
FBL VARIABLE INSURANCE SERIES FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
HIGH YIELD BOND PORTFOLIO
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
----------- ----------
MISCELLANEOUS RETAIL (4.54%)
<S> <C> <C>
Eckerd Corp., 9.25%, due 2/15/04................................. $ 205,000 $ 218,325
PAPER AND ALLIED PRODUCTS (4.06%)
Container Corp. of America, 9.75%, due 4/01/03................... 200,000 195,500
PETROLEUM AND COAL PRODUCTS (2.76%)
Clark Oil & Refining Corp., 10.50%, due 12/01/01................. 125,000 132,500
RUBBER AND MISCELLANEOUS PLASTICS PRODUCTS (3.78%)
Plastic Specialties & Technologies, Inc., 11.25%, due 12/01/03... 200,000 182,000
STONE, CLAY AND GLASS PRODUCTS (6.87%)
Owens-Illinois, Inc., 11.00%, due 12/01/03....................... 150,000 170,250
USG Corp., 9.25%, due 9/15/01.................................... 150,000 160,125
----------
330,375
TEXTILE MILL PRODUCTS (0.94%)
Bibb Co. (The), 14.00%, due 10/01/99............................. 125,000 45,000
WATER TRANSPORTATION (3.95%)
Moran Transportation Co., 11.75%, due 7/15/04.................... 200,000 190,000
----------
Total Corporate Bonds.............................................. 4,157,963
SHORT-TERM INVESTMENTS (13.51%)
COMMERCIAL PAPER (9.36%)
American General Finance Corp., 5.98%, due 1/25/96............... 240,000 240,000
Ford Motor Credit Corp., 5.99%, due 1/18/96...................... 210,000 210,000
----------
450,000
UNITED STATES GOVERNMENT AGENCY (4.15%)
Federal National Mortgage Assn., due 1/12/96..................... 200,000 199,591
----------
Total Short-Term Investments....................................... 649,591
----------
Total Investments (99.95%)......................................... 4,807,554
OTHER ASSETS LESS LIABILITIES (0.05%)
Cash, receivables and prepaid expense, less liabilities.......... 2,539
----------
Total Net Assets (100.00%)......................................... $4,810,093
----------
----------
</TABLE>
SEE ACCOMPANYING NOTES.
24
<PAGE>
FBL VARIABLE INSURANCE SERIES FUND
SCHEDULE OF INVESTMENTS
MANAGED PORTFOLIO
DECEMBER 31, 1995
<TABLE>
<CAPTION>
SHARES
HELD VALUE
----------- ----------
<S> <C> <C>
COMMON STOCKS (20.69%)
ELECTRIC, GAS AND SANITARY SERVICES (6.56%)
Montana Power Co................................................ 28,000 $ 633,500
Peoples Energy Corp............................................. 10,000 317,500
----------
951,000
HOLDING AND OTHER INVESTMENT OFFICES (5.30%)
General Growth Properties, Inc. ................................ 37,000 767,750
INSURANCE CARRIERS (4.53%)
EMC Insurance Group, Inc........................................ 47,700 655,875
METAL MINING (0.95%)
Echo Bay Mines, Ltd. ........................................... 13,187 136,815
MISCELLANEOUS RETAIL (3.35%)
Ferrellgas Partners, L.P. ...................................... 21,000 485,625
----------
Total Common Stocks............................................... 2,997,065
PREFERRED STOCKS (36.08%)
DEPOSITORY INSTITUTIONS (10.35%)
Community First Bankshares, Inc., Convertible................... 20,000 725,000
Conservative Savings Corp., Convertible......................... 18,000 585,000
Sterling Financial Corp. ....................................... 6,450 188,663
----------
1,498,663
ELECTRIC GAS & SANITARY SERVICES (1.43%)
Empire District Electric Co. ................................... 20,000 207,500
GAS PRODUCTION AND DISTRIBUTION (2.90%)
Western Gas Resources, Inc., Convertible........................ 12,000 420,000
OIL AND GAS EXTRACTION (14.14%)
Chieftain International, Inc., Convertible...................... 11,000 277,750
ICO, Inc........................................................ 20,000 420,000
Noble Drilling Corp., Convertible............................... 25,000 643,750
Reading & Bates Corp., Convertible.............................. 15,700 706,500
----------
2,048,000
WATER TRANSPORTATION (3.62%)
Sea Containers, Ltd., Convertible............................... 12,000 525,000
WHOLESALE TRADE -- NON-DURABLE GOODS (3.64%)
Howell Corp. ................................................... 11,000 528,000
----------
Total Preferred Stocks............................................ 5,227,163
</TABLE>
25
<PAGE>
FBL VARIABLE INSURANCE SERIES FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
MANAGED PORTFOLIO
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
----------- -----------
<S> <C> <C>
CORPORATE BONDS (8.52%)
DEPOSITORY INSTITUTIONS (2.87%)
Columbia Banking System, Inc., Convertible Sub. Deb., 7.85%,
due 6/30/02................................................... $ 130,000 $ 141,050
Midland America Capital Corp., 12.75%, due 11/15/03............ 110,000 129,884
National Westminster Bancorp, Inc., 9.45%, due 5/01/01......... 125,000 144,597
-----------
415,531
ELECTRIC, GAS AND SANITARY SERVICES (0.69%)
National Co-op Services Corp. (Arkansas Electric), 9.48%, due
1/01/12....................................................... 93,000 100,453
HOLDING AND OTHER INVESTMENT OFFICES (3.31%)
Centennial Bancorp, 7.00%, due 5/01/04......................... 423,000 479,310
INSURANCE CARRIERS (1.09%)
Torchmark Corp., 8.625%, due 3/01/17........................... 150,000 157,695
PETROLEUM AND COAL PRODUCTS (0.56%)
Pennzoil Co., 9.00%, due 4/01/17............................... 77,000 81,474
-----------
Total Corporate Bonds............................................ 1,234,463
</TABLE>
26
<PAGE>
FBL VARIABLE INSURANCE SERIES FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
MANAGED PORTFOLIO
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
----------- -----------
SHORT-TERM INVESTMENTS (34.26%)
<S> <C> <C>
COMMERCIAL PAPER (9.15%)
Ford Motor Credit Corp., 5.59%, due 1/12/96.................... $ 700,000 $ 700,000
General Electric Capital Corp., 5.54%, due 2/15/96............. 625,000 625,000
-----------
1,325,000
UNITED STATES GOVERNMENT AGENCIES (25.11%)
Federal Farm Credit Bank, due 1/25/96.......................... 900,000 896,452
Federal Farm Credit Bank, due 2/09/96.......................... 500,000 496,837
Federal Home Loan Bank, due 1/16/96............................ 600,000 598,399
Federal Home Loan Bank, due 2/05/96............................ 100,000 99,428
Federal Home Loan Mortgage Assn., due 1/04/96.................. 800,000 799,378
Federal National Mortgage Assn., due 1/12/96................... 400,000 399,181
Federal National Mortgage Assn., due 1/18/96................... 350,000 348,958
-----------
3,638,633
-----------
Total Short-Term Investments..................................... 4,963,633
-----------
Total Investments (99.55%)....................................... 14,422,324
OTHER ASSETS LESS LIABILITIES (0.45%)
Receivables and prepaid expense, less liabilities.............. 64,993
-----------
Total Net Assets (100.00%)....................................... $14,487,317
-----------
-----------
</TABLE>
SEE ACCOMPANYING NOTES.
27
<PAGE>
FBL VARIABLE INSURANCE SERIES FUND
SCHEDULE OF INVESTMENTS
MONEY MARKET PORTFOLIO
DECEMBER 31, 1995
<TABLE>
<CAPTION>
ANNUALIZED
YIELD ON
PURCHASE PRINCIPAL
DATE AMOUNT VALUE
------------- ----------- ----------
<S> <C> <C> <C>
SHORT-TERM INVESTMENTS (97.87%)
COMMERCIAL PAPER (18.84%)
NONDEPOSITORY INSTITUTIONS
Ford Motor Credit Corp., due 1/24/96.............. 5.800% $ 155,000 $ 155,000
IBM Credit Corp., due 1/25/96..................... 5.819 150,000 150,000
John Deere Capital Corp., due 3/12/96............. 5.471 140,000 140,000
Norwest Financial, Inc., due 1/04/96.............. 5.820 150,000 150,000
----------
Total Commercial Paper.............................. 595,000
UNITED STATES GOVERNMENT AGENCIES (79.03%)
Federal Farm Credit Bank, due 2/02/96............. 5.511 500,000 497,447
Federal Farm Credit Bank, due 3/04/96............. 5.479 250,000 247,584
Federal Home Loan Bank, due 2/16/96............... 5.655 300,000 297,785
Federal Home Loan Bank, due 2/29/96............... 5.673 260,000 257,558
Federal Home Loan Mortgage Corp., due 1/19/96..... 5.756 300,000 299,057
Federal Home Loan Mortgage Corp., due 1/22/96..... 5.531 400,000 398,611
Federal National Mortgage Assn., due 1/12/96...... 5.761 300,000 299,386
Federal National Mortgage Assn., due 2/09/96...... 5.673 200,000 198,733
----------
Total United States Government Agencies............. 2,496,161
----------
Total Short-Term Investments (97.87%)................. 3,091,161
OTHER ASSETS LESS LIABILITIES (2.13%)
Cash, receivables and prepaid expense, less
liabilities........................................ 67,412
----------
Total Net Assets (100.00%)............................ $3,158,573
----------
----------
</TABLE>
SEE ACCOMPANYING NOTES.
28
<PAGE>
FBL VARIABLE INSURANCE SERIES FUND
SCHEDULE OF INVESTMENTS
BLUE CHIP PORTFOLIO
DECEMBER 31, 1995
<TABLE>
<CAPTION>
SHARES
HELD VALUE
------- -----------
<S> <C> <C>
COMMON STOCKS (90.97%)
CHEMICALS AND ALLIED PRODUCTS (17.39%)
Bristol-Myers Squibb Co. ................................. 1,543 $ 132,505
DuPont (EI) de Nemours & Co. ............................. 1,863 130,177
Eastman Chemical Co. ..................................... 1,471 92,121
Johnson & Johnson......................................... 1,989 170,308
Merck & Co., Inc.......................................... 2,710 178,183
Praxair, Inc. ............................................ 4,863 163,518
Procter & Gamble Co. ..................................... 1,692 140,436
Union Carbide Corp. ...................................... 4,044 151,650
-----------
1,158,898
COMMUNICATIONS (6.16%)
American Telephone & Telegraph Co. ....................... 2,048 132,608
Bell Atlantic Corp. ...................................... 1,784 119,305
Capital Cities/ABC, Inc. ................................. 1,286 158,660
-----------
410,573
DEPOSITORY INSTITUTIONS (1.94%)
Morgan JP & Co., Inc. .................................... 1,610 129,203
EATING AND DRINKING PLACES (2.65%)
McDonald's Corp. ......................................... 3,913 176,574
ELECTRONIC & OTHER ELECTRIC EQUIPMENT (2.37%)
General Electric Co. ..................................... 2,192 157,824
FOOD AND KINDRED PRODUCTS (7.28%)
Coca-Cola Co. (The)....................................... 2,465 183,026
PepsiCo, Inc. ............................................ 2,780 155,333
Philip Morris Companies, Inc. ............................ 1,621 146,700
-----------
485,059
GENERAL MERCHANDISE STORES (4.16%)
Sears, Roebuck & Co. ..................................... 2,556 99,684
Wal-Mart Stores, Inc. .................................... 4,724 105,700
Woolworth (F.W.) Co., Ltd. ............................... 5,541 72,033
-----------
277,417
INDUSTRIAL MACHINERY AND EQUIPMENT (3.72%)
Caterpillar, Inc. ........................................ 2,424 142,410
International Business Machines Corp. .................... 1,150 105,513
-----------
247,923
</TABLE>
29
<PAGE>
FBL VARIABLE INSURANCE SERIES FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
BLUE CHIP PORTFOLIO
<TABLE>
<CAPTION>
SHARES
HELD VALUE
------- -----------
INSTRUMENTS AND RELATED PRODUCTS (1.97%)
<S> <C> <C>
Eastman Kodak Co. ........................................ 1,963 $ 131,521
INSURANCE CARRIERS (4.18%)
Allstate Corp. ........................................... 2,404 98,864
American International Group, Inc. ....................... 1,944 179,820
-----------
278,684
MOTION PICTURES (2.11%)
Disney (Walt) Co. ........................................ 2,388 140,892
NONDEPOSITORY INSTITUTIONS (1.45%)
Dean Witter, Discover & Co. .............................. 2,047 96,209
PAPER AND ALLIED PRODUCTS (3.56%)
International Paper Co. .................................. 2,938 111,277
Minnesota Mining & Manufacturing Co. ..................... 1,902 126,008
-----------
237,285
PETROLEUM AND COAL PRODUCTS (10.40%)
Amoco Corp. .............................................. 1,577 113,347
Chevron Corp. ............................................ 2,208 115,920
Exxon Corp. .............................................. 1,547 123,953
Mobil Corp. .............................................. 1,194 133,728
Texaco, Inc. ............................................. 1,477 115,944
USX Corp. - Marathon Group................................ 4,626 90,207
-----------
693,099
PRIMARY METAL INDUSTRIES (3.28%)
Aluminum Company of America............................... 2,420 127,958
Bethlehem Steel Corp. .................................... 6,463(1) 90,482
-----------
218,440
RUBBER AND MISCELLANEOUS PLASTICS PRODUCTS (3.31%)
Goodyear Tire & Rubber Co. ............................... 4,864 220,704
SECURITY AND COMMODITY BROKERS (3.20%)
American Express Co. ..................................... 3,334 137,944
Lehman Brothers Holding, Inc. ............................ 3,541 75,246
-----------
213,190
</TABLE>
30
<PAGE>
FBL VARIABLE INSURANCE SERIES FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
BLUE CHIP PORTFOLIO
<TABLE>
<CAPTION>
SHARES
HELD VALUE
------- -----------
TRANSPORTATION EQUIPMENT (10.37%)
<S> <C> <C>
Allied-Signal, Inc. ...................................... 3,535 $ 167,913
Boeing Co. (The).......................................... 1,890 148,129
Ford Motor Co. ........................................... 3,987 115,623
General Motors Corp. ..................................... 2,183 115,426
United Technologies Corp. ................................ 1,521 144,305
-----------
691,396
WHOLESALE TRADE -- DURABLE GOODS (1.47%)
Westinghouse Electric Corp. .............................. 5,938 97,977
-----------
Total Common Stocks......................................... 6,062,868
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
-------
<S> <C> <C>
SHORT-TERM INVESTMENTS (8.20%)
UNITED STATES GOVERNMENT AGENCIES
Federal Home Loan Mortgage Corp., due 2/05/96............. $150,000 149,142
Federal National Mortgage Assn., due 2/13/96.............. 400,000 397,294
-----------
Total Short-Term Investments................................ 546,436
-----------
Total Investments (99.17%).................................. 6,609,304
OTHER ASSETS LESS LIABILITIES (0.83%)
Cash, receivables and prepaid expense, less liabilities... 55,500
-----------
Total Net Assets (100.00%).................................. $ 6,664,804
-----------
-----------
</TABLE>
(1) Non-income producing security.
SEE ACCOMPANYING NOTES.
31
<PAGE>
FBL VARIABLE INSURANCE SERIES FUND
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
1. SIGNIFICANT ACCOUNTING POLICIES
FBL 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 Growth Common Stock, 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. Investments traded in the
over-the-counter market are valued at the mean between the bid and asked prices
or yield equivalent as obtained from one or more dealers that make markets in
the securities. Investments for which market quotations are not readily
available are valued at fair value as determined in good faith by the Board of
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 with respect to the
Money Market Portfolio, which approximates market.
The Money Market Portfolio values investments at amortized cost, which
approximates market. Under the amortized cost method, a security is valued at
its cost on the date of purchase and thereafter is adjusted to reflect a
constant amortization to maturity of the difference between the principal amount
due at maturity and the cost of the investment to the portfolio.
The value of the underlying securities serving to collateralize repurchase
agreements is marked to market daily. Should the value of the underlying
securities decline, the seller would be required to provide the applicable
portfolio with additional securities so that the aggregate value of the
underlying securities was at least equal to the repurchase price. If a seller of
a repurchase agreement were to default, the affected portfolio might experience
losses in enforcing its rights. To minimize this risk, the investment adviser
(under the supervision of the Board of 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
32
<PAGE>
FBL VARIABLE INSURANCE SERIES FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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 December 31, 1995, the High Grade Bond Portfolio had net capital loss
carryforwards of approximately $31,000, which will expire from 1996 through
2003. During the year ended December 31, 1995, the High Grade Bond Portfolio had
net capital loss carryforwards of $8,355 that expired. As a result, $8,355 was
reclassified from accumulated undistributed net realized gain (loss) from
investment transactions to paid-in capital.
3. MANAGEMENT CONTRACT AND TRANSACTIONS WITH AFFILIATES
The Fund has entered into agreements with FBL Investment Advisory Services,
Inc. ("FBL Investment") relating to the management of the portfolios and the
investment of their assets. Pursuant to these agreements, fees paid to FBL
Investment are as follows: (1) annual investment advisory and management fees,
which are based on each portfolio's daily net assets as follows: Growth Common
Stock Portfolio - 0.50%; High Grade Bond Portfolio - 0.30%; High Yield Bond
Portfolio - 0.50%; Managed Portfolio - 0.55%; Money Market Portfolio - 0.30%;
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 FBL Investment whereby FBL
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.
FBL 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 year ended
December 31, 1995, FBL Investment further agreed to reimburse any portfolio, to
the extent that annual operating expenses, including the investment advisory
fee, exceed 0.55%.
Certain officers and trustees of the Fund are also officers of FBL
Investment and its indirect parent, Farm Bureau Life Insurance Company. At
December 31, 1995, all of the shares of each portfolio are owned by Farm Bureau
Life Insurance Company, Farm Bureau Life Variable Account and Farm Bureau Life
Annuity Account.
33
<PAGE>
FBL VARIABLE INSURANCE SERIES FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
4. CAPITAL SHARE TRANSACTIONS
The Fund has an unlimited number of shares of beneficial interest authorized
with no par value. Net assets as of December 31, 1995 consisted of:
<TABLE>
<CAPTION>
PORTFOLIO
------------------------------------------------------------------------
GROWTH HIGH
COMMON HIGH GRADE YIELD MONEY BLUE
STOCK BOND BOND MANAGED MARKET CHIP
----------- ---------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Paid-in capital................................ $14,674,257 $3,083,647 $4,829,597 $13,314,457 $3,158,573 $4,834,107
Accumulated undistributed net investment
income........................................ 2,962 3,413 741
Accumulated undistributed net realized gain
(loss) from investment transactions........... 383,515 (30,839) 6,817 267,505 (8)
Net unrealized appreciation (depreciation) of
investments................................... 1,234,497 155,588 (26,321) 901,942 1,829,964
----------- ---------- ---------- ----------- ---------- ----------
Net Assets..................................... $16,295,231 $3,208,396 $4,810,093 $14,487,317 $3,158,573 $6,664,804
----------- ---------- ---------- ----------- ---------- ----------
----------- ---------- ---------- ----------- ---------- ----------
</TABLE>
Transactions in shares of beneficial interest for each portfolio were as
follows:
<TABLE>
<CAPTION>
SHARES ISSUED IN
REINVESTMENT OF
DIVIDENDS AND
SHARES SOLD DISTRIBUTIONS SHARES REDEEMED NET INCREASE
--------------------- ---------------------- --------------------- ---------------------
PORTFOLIO SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
- ----------------------------- --------- ---------- ----------- --------- --------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Year ended December 31, 1995:
Growth Common Stock.......... 281,715 $3,253,282 78,153 $ 960,501 56,399 $ 648,111 303,469 $3,565,672
High Grade Bond.............. 67,261 661,381 16,525 162,663 22,105 217,348 61,681 606,696
High Yield Bond.............. 151,202 1,473,718 33,048 321,812 135,449 1,330,400 48,801 465,130
Managed...................... 249,343 2,771,019 76,919 897,643 71,102 781,374 255,160 2,887,288
Money Market................. 4,079,456 4,079,456 22,654 22,654 3,601,351 3,601,351 500,759 500,759
Blue Chip.................... 126,819 2,376,704 4,762 98,331 15,781 294,156 115,800 2,180,879
Year ended December 31, 1994:
Growth Common Stock.......... 711,870 $7,979,985 57,563 $ 598,077 159,782 $1,808,371 609,651 $6,769,691
High Grade Bond.............. 119,560 1,179,789 10,697 103,559 100,157 977,814 30,100 305,534
High Yield Bond.............. 177,347 1,758,710 17,703 170,840 181,544 1,809,058 13,506 120,492
Managed...................... 660,426 7,285,225 76,787 764,030 191,953 2,114,173 545,260 5,935,082
Money Market................. 7,474,248 7,474,248 15,994 15,994 7,132,082 7,132,082 358,160 358,160
Blue Chip.................... 116,204 1,835,336 3,395 53,782 18,937 301,920 100,662 1,587,198
</TABLE>
34
<PAGE>
FBL VARIABLE INSURANCE SERIES FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
5. INVESTMENT TRANSACTIONS
For the period ended December 31, 1995, 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>
Growth Common Stock.............................. $9,880,437 $9,563,949
High Grade Bond.................................. 1,103,737 366,867
High Yield Bond.................................. 1,567,644 1,275,180
Managed.......................................... 4,641,135 5,886,708
Blue Chip........................................ 1,910,900 23,429
</TABLE>
At December 31, 1995, 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>
Growth Common Stock........................... $ 1,436,242 $ (201,745) $ 1,234,497
High Grade Bond............................... 157,699 (2,111) 155,588
High Yield Bond............................... 164,977 (191,298) (26,321)
Managed....................................... 1,024,149 (122,207) 901,942
Blue Chip..................................... 1,861,858 (31,894) 1,829,964
</TABLE>
6. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income for the following portfolios are
declared daily and are payable on the last business day of the month as follows:
<TABLE>
<CAPTION>
HIGH GRADE HIGH YIELD MONEY
PAYABLE DATE BOND BOND MARKET
- ------------------------------------------------------------ ----------- ----------- -----------
<S> <C> <C> <C>
January 31, 1995............................................ $ .0629 $ .0763 $ .0046
February 28, 1995........................................... .0633 .0775 .0040
March 31, 1995.............................................. .0636 .0774 .0047
April 28, 1995.............................................. .0591 .0673 .0042
May 31, 1995................................................ .0692 .0767 .0047
June 30, 1995............................................... .0651 .0716 .0045
July 31, 1995............................................... .0644 .0709 .0045
August 31, 1995............................................. .0639 .0700 .0044
September 29, 1995.......................................... .0616 .0661 .0041
October 31, 1995............................................ .0657 .0739 .0045
November 30, 1995........................................... .0638 .0717 .0043
December 29, 1995........................................... .0631 .0692 .0045
----------- ----------- -----------
Total dividends per share................................... $ .7657 $ .8686 $ .0530
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
35
<PAGE>
FBL VARIABLE INSURANCE SERIES FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
6. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS (CONTINUED)
In addition, dividends and distributions to shareholders from net investment
income and net realized gain on investment transactions were paid during the
year ended December 31, 1995, for the following portfolios:
ORDINARY INCOME DIVIDENDS:
<TABLE>
<CAPTION>
PERCENT
DIVIDEND QUALIFYING FOR
DECLARATION RECORD PAYABLE AMOUNT PER DEDUCTION BY
PORTFOLIO DATE DATE DATE SHARE CORPORATIONS
- -------------------------------------- ----------- --------- --------- ----------- -----------------
<S> <C> <C> <C> <C> <C>
Growth Common Stock................... 12/21/95 12/28/95 12/28/95 $ 0.5026 60%
Managed............................... 12/21/95 12/28/95 12/28/95 0.5913 60
Blue Chip............................. 12/21/95 12/28/95 12/28/95 0.3100 80
</TABLE>
CAPITAL GAINS DISTRIBUTIONS:
<TABLE>
<CAPTION>
DIVIDEND
DECLARATION RECORD PAYABLE AMOUNT PER
PORTFOLIO DATE DATE DATE SHARE
- -------------------------------------- ----------- --------- --------- -----------
<S> <C> <C> <C> <C> <C>
Growth Common Stock................... 12/21/95 12/28/95 12/28/95 $ 0.2644
High Yield Bond....................... 12/21/95 12/28/95 12/28/95 0.1252
Managed............................... 12/21/95 12/28/95 12/28/95 0.1772
</TABLE>
The capital gains distributions related to the Growth Common Stock, High
Yield Bond and Managed Portfolios include net short-term realized gains of
$306,684 ($0.2449 per share), $55,202 ($0.1125 per share) and $179,529 ($0.1537
per share), respectively, that are taxable to shareholders as ordinary income
dividends.
36
<PAGE>
(This page has been left blank intentionally.)
37
<PAGE>
FBL VARIABLE INSURANCE SERIES FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
GROWTH
COMMON STOCK
PORTFOLIO
----------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------
1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year.................................... $ 10.39 $ 11.52 $ 10.05 $ 9.55 $ 8.65
Income from Investment Operations
Net investment income............................................. 0.55 0.48 0.63 0.46 0.51
Net gains or losses on securities (both realized and unrealized).. 2.13 (0.99) 2.10 0.54 0.75
---------- ---------- ---------- ---------- ----------
Total from investment operations.................................... 2.68 (0.51) 2.73 1.00 1.26
---------- ---------- ---------- ---------- ----------
Less Distributions
Dividends (from net investment income)............................ (0.50) (0.36) (0.57) (0.50) (0.36)
Distributions (from capital gains)................................ (0.26) (0.11) (0.69)
Distributions in excess of net realized gains..................... (0.15)
---------- ---------- ---------- ---------- ----------
Total distributions................................................. (0.76) (0.62) (1.26) (0.50) (0.36)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year.......................................... $ 12.31 $ 10.39 $ 11.52 $ 10.05 $ 9.55
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Total Return:
Total investment return based on net asset value (1)................ 25.87% -4.43% 27.20% 10.46% 14.53%
Ratios/Supplemental Data:
Net assets, end of year (000's omitted)............................. $ 16,295 $ 10,603 $ 4,730 $ 3,017 $ 3,663
Ratio of net expenses to average net assets......................... 0.55% 0.55% 0.55% 0.55% 0.58%
Ratio of net income to average net assets........................... 4.78% 4.35% 5.41% 4.54% 5.23%
Portfolio turnover rate............................................. 98% 78% 81% 88% 117%
Information assuming no voluntary reimbursement or
waiver by FBL Investment of excess operating expenses
(see NOTE 3):
Per share net investment income..................................... $ 0.53 $ 0.46 $ 0.59 $ 0.41 $ 0.46
Ratio of expenses to average net assets............................. 0.72% 0.77% 0.89% 1.09% 1.07%
Amount reimbursed................................................... $ 22,306 $ 16,706 $ 13,353 $ 17,373 $ 12,733
</TABLE>
Note: Per share amounts have been calculated on the basis of monthly per share
amounts (using average monthly outstanding shares) accumulated for the
year.
(1) Total investment return is calculated assuming an intial investment made at
the net asset value at the beginning of the year, reinvestment of all
dividends and distributions at net asset value during the year, and
redemption on the last day of the year.
38
<PAGE>
<TABLE>
<CAPTION>
HIGH HIGH
GRADE BOND YIELD BOND
PORTFOLIO
YEAR ENDED DECEMBER 31, ----------------------------------------------------------
PORTFOLIO
- ---------------------------------------------------------- YEAR ENDED DECEMBER 31,
- ---------------------------------------------------------- ----------------------------------------------------------
1995 1994 1993 1992 1991 1995 1994 1993 1992 1991
- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 9.44 $ 10.23 $ 10.14 $ 10.15 $ 9.52 $ 9.32 $ 10.44 $ 9.92 $ 9.65 $ 8.47
0.77 0.76 0.77 0.83 0.86 0.87 0.91 0.95 0.98 1.04
0.54 (0.79) 0.09 (0.01) 0.63 0.49 (1.01) 0.58 0.27 1.18
- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
1.31 (0.03) 0.86 0.82 1.49 1.36 (0.10) 1.53 1.25 2.22
- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
(0.77) (0.76) (0.77) (0.83) (0.86) (0.87) (0.91) (0.95) (0.98) (1.04)
(0.12) (0.11) (0.06)
- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
(0.77) (0.76) (0.77) (0.83) (0.86) (0.99) (1.02) (1.01) (0.98) (1.04)
- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
$ 9.98 $ 9.44 $ 10.23 $ 10.14 $ 10.15 $ 9.69 $ 9.32 $ 10.44 $ 9.92 $ 9.65
- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
14.26% -0.26% 8.74% 8.40% 16.42% 15.15% -1.01% 15.05% 13.39% 27.49%
$ 3,208 $ 2,452 $ 2,349 $ 3,704 $ 3,659 $ 4,810 $ 4,172 $ 4,536 $ 4,015 $ 3,965
0.55% 0.55% 0.55% 0.55% 0.43% 0.55% 0.55% 0.55% 0.55% 0.43%
7.81% 7.76% 7.58% 8.19% 8.82% 8.96% 9.17% 9.25% 9.88% 11.32%
14% 15% 38% 16% 38% 32% 10% 58% 35% 76%
$ 0.74 $ 0.73 $ 0.76 $ 0.80 $ 0.83 $ 0.84 $ 0.88 $ 0.92 $ 0.88 $ 0.99
0.84% 0.80% 0.72% 0.79% 0.73% 0.88% 0.84% 0.85% 0.99% 0.93%
$ 8,255 $ 6,207 $ 5,343 $ 9,004 $ 10,458 $ 15,105 $ 12,667 $ 12,872 $ 17,310 $ 18,111
</TABLE>
39
<PAGE>
FBL VARIABLE INSURANCE SERIES FUND
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
MANAGED
PORTFOLIO
----------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------
1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year.................................... $ 9.93 $ 11.33 $ 10.06 $ 9.27 $ 8.99
Income from Investment Operations
Net investment income............................................. 0.65 0.66 0.72 0.69 0.75
Net gains or losses on securities (both realized and unrealized).. 1.90 (1.22) 1.57 0.77 0.39
---------- ---------- ---------- ---------- ----------
Total from investment operations.................................... 2.55 (0.56) 2.29 1.46 1.14
---------- ---------- ---------- ---------- ----------
Less Distributions
Dividends (from net investment income)............................ (0.59) (0.54) (0.63) (0.67) (0.86)
Distributions (from capital gains)................................ (0.18) (0.23) (0.39)
Distributions in excess of net realized gains.....................
(0.07)
---------- ---------- ---------- ---------- ----------
Total distributions................................................. (0.77) (0.84) (1.02) (0.67) (0.86)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year.......................................... $ 11.71 $ 9.93 $ 11.33 $ 10.06 $ 9.27
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Total Return:
Total investment return based on net asset value (1)................ 25.69% -4.96% 22.71% 15.72% 12.69%
Ratios/Supplemental Data:
Net assets, end of year (000's omitted)............................. $ 14,487 $ 9,758 $ 4,951 $ 3,019 $ 2,633
Ratio of net expenses to average net assets......................... 0.55% 0.55% 0.55% 0.55% 0.47%
Ratio of net income to average net assets........................... 5.80% 6.23% 6.23% 7.00% 7.97%
Portfolio turnover rate............................................. 48% 59% 59% 60% 40%
Information assuming no voluntary reimbursement or waiver by FBL
Investment of excess operating expenses (see NOTE 3):
Per share net investment income..................................... $ 0.62 $ 0.63 $ 0.67 $ 0.64 $ 0.69
Ratio of expenses to average net assets............................. 0.77% 0.80% 0.91% 1.13% 1.03%
Amount reimbursed................................................... $ 26,008 $ 19,147 $ 15,076 $ 16,480 $ 17,024
</TABLE>
40
<PAGE>
<TABLE>
<CAPTION>
MONEY MARKET BLUE CHIP
PORTFOLIO
YEAR ENDED DECEMBER 31, ----------------------------------------------------------
PORTFOLIO
- ---------------------------------------------------------- YEAR ENDED DECEMBER 31,
- ---------------------------------------------------------- ----------------------------------------------------------
1995 1994 1993 1992 1991 1995 1994 1993 1992 1991
- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 15.82 $ 15.67 $ 13.96 $ 12.91 $ 10.51
0.05 0.04 0.03 0.03 0.05 0.39 0.34 0.29 0.29 0.31
4.80 0.07 1.72 1.05 2.65
- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
0.05 0.04 0.03 0.03 0.05 5.19 0.41 2.01 1.34 2.96
- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
(0.05) (0.04) (0.03) (0.03) (0.05) (0.31) (0.26) (0.30) (0.29) (0.31)
(.25)
- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
(0.05) (0.04) (0.03) (0.03) (0.05) (0.31) (0.26) (0.30) (0.29) (0.56)
- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
$ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 20.70 $ 15.82 $ 15.67 $ 13.96 $ 12.91
- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
5.47% 3.68% 2.68% 3.28% 5.77% 32.81% 2.65% 14.36% 10.38% 28.20%
$ 3,159 $ 2,658 $ 2,300 $ 2,530 $ 2,798 $ 6,665 $ 3,262 $ 1,654 $ 1,502 $ 1,352
0.55% 0.55% 0.55% 0.55% 0.48% 0.55% 0.55% 0.55% 0.55% 0.71%
5.27% 3.63% 2.65% 3.30% 5.60% 2.07% 2.19% 1.92% 2.13% 2.57%
0% 0% 0% 0% 0% 1% 0% 0% 0% 7%
$ 0.05 $ 0.04 $ 0.02 $ 0.03 $ 0.05 $ 0.38 $ 0.30 $ 0.24 $ 0.22 $ 0.29
0.90% 0.82% 0.79% 0.93% 0.78% 0.59% 0.81% 0.89% 1.06% 0.91%
$ 9,816 $ 7,157 $ 5,838 $ 10,168 $ 8,232 $ 1,952 $ 6,360 $ 5,495 $ 7,320 $ 2,556
</TABLE>
41
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Trustees and Shareholders
FBL Variable Insurance Series Fund
We have audited the accompanying statements of assets and liabilities,
including the schedules of investments, of FBL Variable Insurance Series Fund
(comprising, respectively, the Growth Common Stock, High Grade Bond, High Yield
Bond, Managed, Money Market and Blue Chip Portfolios) as of December 31, 1995,
and the related statements of operations for the year then ended, the statements
of changes in net assets for each of the two years in the period then ended, and
the financial highlights for each of the five years in the period then ended.
These financial statements and financial highlights are the responsibility of
the Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1995, 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 FBL Variable Insurance Series
Fund at December 31, 1995, the results of their operations for the year then
ended, the changes in their net assets for each of the two years in the period
then ended, and the financial highlights for each of the five years in the
period then ended, in conformity with generally accepted accounting principles.
[LOGO]
Des Moines, Iowa
February 2, 1996
