<PAGE> 1
FARM BUREAU LIFE INSURANCE COMPANY
FARM BUREAU MUTUAL FUNDS
5400 UNIVERSITY AVENUE
WEST DES MOINES, IOWA 50266 FARM BUREAU FINANCIAL SERVICES LOGO
EquiTrust
Variable Insurance
Series Fund
FARM BUREAU LOGO
SEMI-ANNUAL REPORT
JUNE 30, 1998
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> 2
PRESIDENT'S LETTER
Dear Shareholder:
For the six-month period ended June 30, 1998, the S&P 500 was up 17.6% on a
total return basis. The Dow Jones Industrial Average (DJIA) rose 14.1% during
the same period, while the Russell 2000 small cap index was up only 4.9% through
June (each of these returns assumes reinvestment of dividends).
Total return for long-term Treasury bonds exceeded 6% for the period, as
rising bond prices caused yields to decline roughly three-tenths of one percent
by June 30th. The already flat yield curve has flattened even further. During
the first half of 1998, the incremental yield for extending from 2-year to
10-year maturities went from 15 hundredths of one percent to minus 3 tenths
(i.e. the 10-year yield was less than the 2-year). While nominal yields are the
lowest observed in the last 20 to 30 years, real yields (inflation adjusted) are
not. Inflation, as measured by the Consumer Price Index (CPI), remains stable.
The twelve-month CPI through May was 1.69% and 0.93% as of June 30th. The
Federal Reserve remains concerned, however, that tight labor market conditions
may lead to outsized wage gains, which could in turn accelerate consumer price
inflation.
The Federal Reserve has enacted no change in short-term interest rates
since March of 1997 and seems unlikely to do so in the near future. The domestic
economy viewed in isolation would likely have given Federal Reserve Chairman
Alan Greenspan justification for a "pre-emptive strike" against inflation. The
United States is facing tight labor market conditions and a stock market that
some consider irrationally exuberant, or at least potentially so. But when the
camera rolls back to a bigger, more global perspective, the picture becomes less
clear. Alan Greenspan is increasingly assuming the role of central banker for
the world. In his own words, a tightening by the Fed "could have outsized
effects on very sensitive financial markets in Asia."
The financial markets have focused most of their attention on Asia during
recent months. The Asian crisis is not stabilizing as rapidly as the Mexican
Peso crisis that took place in 1995. In late July, Federal Reserve Chairman Alan
Greenspan told Congress that the Asian crisis "has shown no evidence of
stabilization at this point."
Even now, the damage is not limited to Asia. Resultant falling commodity
prices are straining Latin American economies dependent on natural resource
sales for a large portion of government revenues. The impact of falling
commodity prices can be felt at home as well. Prices for agricultural
commodities have suffered due to diminished Asian demand and industrial
commodities have been adversely affected. Copper is down 35% over the past year,
at its lowest level since 1987. Crude oil plummeted from $20 in the first
quarter of 1997 to under $14 recently, a drop of more than 30%. In many
instances, stock prices for companies in these industries or those who serve
them are down by nearly 50% from 52-week highs.
To the extent that the outcome of the Asian crisis depends on political
decisions, the potential impact on domestic financial markets cannot be gauged
with any certainty. As always, our value-oriented investment strategies are to
assess the risk-adjusted potential for long-term returns by seeking to use the
market's uncertainty to our shareholders' advantage. The following paragraphs
2
<PAGE> 3
describe how we are seeking to strike a balance between the risks we see and
potential long-term returns for the various Equitrust Variable Insurance Series
Fund Portfolios:
VALUE GROWTH: The recent market squall has adversely affected the current
returns. Suffering the most during this market decline have been energy-related
stocks, as the market seems to be very skeptical about the future outlook for
oil and gas prices. The Standard & Poor's Drilling and Equipment Index is down
over 20%, while the S&P 500 is up over 15%. The selling of these issues was
sparked by fears of lower oil industry capital expenditures in 1998, due to
sharply lower oil prices. Although a reduction in near-term capital spending is
occurring, we believe that drilling activity will continue to increase in the
long-term, and as a result, these stocks are on the "bargain table." At today's
depressed prices, they are selling at about one-half of their replacement value
(the cost of building new rigs today to match the current fleet). It would
appear that once this selling pressure abates, the upside potential for these
companies is 50-100%.
Most recently, after appreciating approximately 25% through March, drilling
stocks held in this Portfolio have suffered a severe reversal in price. One of
the stronger performing companies we own is Transocean Offshore, Inc. Transocean
provides contract drilling services for offshore oil and gas wells, primarily in
the North Sea, Gulf of Mexico, Persian Gulf, West Africa, and off the coasts of
Brazil, Egypt, and India. Its focus is on technically demanding deepwater/harsh
environment drilling. Transocean is doing well despite soft oil prices. Average
dayrates (daily rental for rigs in dollars) for the company's fleet of
semisubmersible rigs and drillships increased to nearly $113,000 in the first
quarter, up about 30% from a year ago, yet the stock is down from a high of $60
to a yearly low of $35.
The company has firm contract commitments from Chevron and Unocal for a
total of $745 million on two new ultra-deepwater drillships currently under
construction. The ships, which will be capable of drilling at depths down to
10,000 feet and will cost in excess of $300 million each, are scheduled for
completion in the year 2000. We think the limited supply of rigs capable of
drilling in deepwater and harsh environments will support high utilization
(number of rigs working, expressed as a percentage of 100) and dayrates for
Transocean's fleet in the coming years. The stock sells at 12 times the 1998
earnings estimate, versus the S&P, which sells at 24 times the 1998 earnings
estimate. This stock is a good example of our value-oriented investment
approach, by paying 50 cents for every dollar's worth of "business value." In
other words, we believe the company is worth approximately $70/share. The only
reason that it is this inexpensive, is because of the short-term pessimism
relating to all energy stocks.
Contrast Transocean at 12 times earnings, selling at half of replacement
value, with Amazon.com, which now has a market capitalization of $5.4 billion
(shares outstanding x market price) and exceeds the market capitalizations of
the two largest U.S. booksellers, Barnes & Noble and Borders, combined.
Moreover, Amazon has yet to produce one cent of net income and isn't expected to
for a couple of years. Of course, by Internet standards, Amazon is a seasoned
company now that it has been public for over 14 months. To us, this represents
rampant speculation that is likely to lead to a severe downward adjustment. We
believe that the business of making sure the U.S. has a secure daily energy
supply is still the most important industry in our country, and if we ever have
another energy shock (1974-1982 was the last one), it would reverberate more
painfully through our economy today than it did in the 1970's. Oil and gas are
still non-renewable sources of energy. When a barrel of oil is consumed, it is
gone and cannot be replaced. In other words, current depletion is offsetting
most supply additions, while long-term global demand is increasing. The
3
<PAGE> 4
Value Growth Portfolio has invested in the energy area with the prospect that
over the next 5-10 years the growth potential could be extremely rewarding.
In addition to the drastic market sell-off of energy stocks, small- and
mid-cap stocks have taken more than their fair share of a market drubbing. On
the NASDAQ, according to CNN, an amazing 71% of stocks are down 30% or more. All
in all, the Value Growth Portfolio has experienced its own bear market. However,
while prices can and may go lower, we believe many of these issues are at
give-away prices and selling at substantial discounts to their true business
value. The likely scenario, as it has played out in the past, is that the blue
chips may catch up on the downside. The timing of these developments remains to
be seen.
HIGH GRADE BOND: Treasury yields declined approximately 20- to 30-basis
points, depending upon their maturity, during the six-month period ended June
30, 1998. For example, the 2-, 10- and 30-year Treasury issues yielded 5.64%,
5.74% and 5.92% respectively, as of December 31, 1997, and 5.48%, 5.45% and
5.63% as of June 30, 1998.
At the present time, the yield curve is slightly inverted with the 10-year
Treasury yielding less than the short-term Federal Funds rate of 5.50%. Because
the market is already pricing in an imminent reduction in short-term rates by
the Federal Reserve, the market could "sell-off" if the Federal Reserve holds
rates steady. Given the crosscurrents of a strong domestic economy on the one
hand, and low current inflation rates and the Asian economic crisis on the
other, we feel the Federal Reserve will be on hold for at least several more
months. Based on this outlook, we will continue to maintain the Portfolio's
duration at a level below the Lehman Brothers Aggregate Index. As a result, our
returns should continue to lag those of more aggressive funds in both up and
down markets.
HIGH YIELD BOND: During the past six months the high yield bond market
slightly outperformed the high grade corporate bond market. The higher yields
available on high yield bonds were significant enough to offset the widening of
spreads on high yield issues that took place over this period. According to the
DLJ High Yield Index, the average high yield spread was 359 basis points during
the fourth quarter of 1997 compared to 409 basis points during June 1998.
Despite this recent widening in spreads, the market remains at levels only
slightly above recent historically low levels. These spread levels may be
reasonable given the current low default rate on high yield bonds, the strong
domestic economy and a vibrant equity market, but they leave little room for
error. We will continue to focus on adding higher-rated non-investment grade, as
well as investment grade issues, to the Portfolio.
MANAGED: The Managed Portfolio's convertible holdings insulated it against
the significant downdrafts that have been occurring in the broad market. The
convertible exposure affords the portfolio downside protection in what is likely
to be a highly volatile market. At the same time, our convertible exposure
produces an attractive income stream averaging close to 4.5% before expenses.
With the overall market performance suffering, income will likely regain its
status as a meaningful component of total return (income + price appreciation).
The recent market sell-off has created further opportunity for purchases of
attractive convertibles. The stocks of many fine companies have fallen 25-50%
from the highs of March. Some of these companies have convertibles available
that are now becoming (as a result of the decline) very attractively priced.
Dura Pharmaceuticals' common stock, which has fallen from a high of $53 to its
current price of $24, has a 3.5% convertible debenture due July 15, 2002, that
trades at $86, providing a current yield of 4.06% (coupon / price) and a yield
to maturity (income + price growth to par) of over 7.5%. This is an
4
<PAGE> 5
attractive income and growth opportunity. Dura is a specialty respiratory
pharmaceutical and pulmonary drug delivery company. The 7.5% yield to maturity,
which is equivalent to a straight bond yield, should provide excellent downside
protection, with long-term growth potential. We are looking for similar
convertible opportunities in these extremely volatile markets and hope to
capitalize on this development.
MONEY MARKET: Alan Greenspan met before the Senate in July for his
semi-annual "Humphrey Hawkins testimony" and delivered a message of neutrality.
He indicated the U.S. economy is headed for a soft landing from its recent rapid
growth rate, suggesting that central bankers won't raise - or lower - interest
rates anytime soon. Reduced exports to Asia, the strike at General Motors
Corporation and decreased stockpiling of unsold goods are slowing the economy
from its 5.4% annual rate in the first quarter. With an outlook of neutrality,
we are remaining in short defensive debt instruments such as high-grade
commercial paper and agency discount notes.
BLUE CHIP: True to its passive strategy, the performance of the Blue Chip
Portfolio over the past year has reflected that of the large capitalization
market sector which it represents. The Blue Chip Portfolio will, at all times,
remain substantially invested in common stocks of large companies. This
Portfolio is designed for those investors who prefer substantial exposure to
common stocks at all times or who wish to make their own market value judgments.
/s/ Edward M. Wiederstein
EDWARD M. WIEDERSTEIN
PRESIDENT
August 5, 1998
5
<PAGE> 6
EQUITRUST VARIABLE INSURANCE SERIES FUND
STATEMENTS OF ASSETS AND LIABILITIES
JUNE 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
HIGH
VALUE GROWTH GRADE BOND
PORTFOLIO PORTFOLIO
------------ ----------
<S> <C> <C>
ASSETS
Investments in securities, at value (cost -- $54,046,492;
$7,103,056; $12,156,911; $56,507,992; $7,063,396; and
$37,932,378, respectively) (Note 5)..................... $48,583,578 $7,362,564
Cash...................................................... 81,274 117,629
Accrued dividends and interest receivable................. 42,979 122,995
Prepaid expense........................................... 1,657 208
----------- ----------
Total Assets.............................................. $48,709,488 $7,603,396
=========== ==========
LIABILITIES AND NET ASSETS
Liabilities:
Accrued expenses........................................ $ 11,998 $ 8,142
----------- ----------
Total Liabilities......................................... 11,998 8,142
Net assets applicable to shares of beneficial interest
(Note 4)................................................ 48,697,490 7,595,254
----------- ----------
Total Liabilities and Net Assets.......................... $48,709,488 $7,603,396
=========== ==========
Shares issued and outstanding as of June 30, 1998......... 4,105,048 747,242
NET ASSET VALUE PER SHARE................................. $ 11.86 $ 10.16
=========== ==========
</TABLE>
See accompanying notes.
6
<PAGE> 7
<TABLE>
<CAPTION>
HIGH
YIELD BOND MANAGED MONEY MARKET BLUE CHIP
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ----------- ----------- ------------ -----------
<S> <C> <C> <C>
$12,532,965 $55,160,859 $7,063,396 $51,563,761
75,604 165,703 551,695 349,280
219,659 274,092 12,130 60,609
337 1,706 200 1,330
- ----------- ----------- ---------- -----------
$12,828,565 $55,602,360 $7,627,421 $51,974,980
=========== =========== ========== ===========
$ 8,844 $ 8,844 $ 8,621 $ 12,949
- ----------- ----------- ---------- -----------
8,844 8,844 8,621 12,949
12,819,721 55,593,516 7,618,800 51,962,031
- ----------- ----------- ---------- -----------
$12,828,565 $55,602,360 $7,627,421 $51,974,980
=========== =========== ========== ===========
1,247,406 4,452,803 7,618,800 1,434,863
$ 10.28 $ 12.49 $ 1.00 $ 36.21
=========== =========== ========== ===========
</TABLE>
7
<PAGE> 8
EQUITRUST VARIABLE INSURANCE SERIES FUND
STATEMENTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
HIGH
VALUE GROWTH GRADE BOND
PORTFOLIO PORTFOLIO
------------ ----------
<S> <C> <C>
INVESTMENT INCOME
Dividends................................................... $ 199,673 $ 7,800
Interest.................................................... 293,437 214,779
----------- --------
Total Investment Income..................................... 493,110 222,579
EXPENSES
Paid to EquiTrust Investment Management Services, Inc.:
(Note 3)
Investment advisory and management fees................... 107,256 9,316
Accounting fees........................................... 11,917 1,553
Custodial fees.............................................. 4,624 2,358
Legal fees.................................................. 292 37
Reports to shareholders..................................... 1,291 622
Trustees' fees and expenses................................. 898 80
Insurance and bonds......................................... 25 65
Miscellaneous............................................... 1,786 1,825
----------- --------
Total Expenses.............................................. 128,089 15,856
Net Investment Income....................................... 365,021 206,723
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) from investment transactions....... 2,938,718 (2,362)
Change in unrealized appreciation/depreciation of
investments............................................... (6,374,937) 42,499
----------- --------
Net Gain (Loss) on Investments.............................. (3,436,219) 40,137
----------- --------
Net Increase (Decrease) in Net Assets Resulting from
Operations................................................ $(3,071,198) $246,860
=========== ========
</TABLE>
See accompanying notes.
8
<PAGE> 9
<TABLE>
<CAPTION>
HIGH
YIELD BOND MANAGED MONEY MARKET BLUE CHIP
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ---------- ----------- ------------ ----------
<S> <C> <C> <C>
$ 19,197 $ 568,548 $ 0 $ 301,957
384,624 676,480 166,956 122,230
-------- ----------- -------- ----------
403,821 1,245,028 166,956 424,187
23,314 113,976 7,506 41,620
2,590 12,664 1,501 10,405
2,922 2,182 2,578 1,635
63 251 43 256
755 622 715 1,116
187 944 111 719
105 512 63 227
1,657 2,195 1,935 1,371
-------- ----------- -------- ----------
31,593 133,346 14,452 57,349
372,228 1,111,682 152,504 366,838
22,397 1,231,254 193,979
66,118 (2,844,020) 5,464,608
-------- ----------- -------- ----------
88,515 (1,612,766) 0 5,658,587
-------- ----------- -------- ----------
$460,743 $ (501,084) $152,504 $6,025,425
======== =========== ======== ==========
</TABLE>
9
<PAGE> 10
EQUITRUST VARIABLE INSURANCE SERIES FUND
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
VALUE GROWTH
PORTFOLIO
--------------------------------
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31,
(UNAUDITED) 1997
------------- ------------
<S> <C> <C>
OPERATIONS
Net investment income....................................... $ 365,021 $ 876,108
Net realized gain (loss) from investment transactions....... 2,938,718 2,628,392
Change in unrealized appreciation/depreciation of
investments............................................... (6,374,937) (1,441,898)
----------- -----------
Net Increase (Decrease) in Net Assets Resulting from
Operations................................................ (3,071,198) 2,062,602
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM (Note 6)
Net investment income....................................... (869,530)
Net realized gain from investment transactions.............. (2,981,975)
Distributions in excess of net realized gain from investment
transactions.............................................. (456,979)
----------- -----------
0 (4,308,484)
CAPITAL SHARE TRANSACTIONS (Note 4)......................... 8,302,767 18,523,352
----------- -----------
Total Increase in Net Assets................................ 5,231,569 16,277,470
NET ASSETS
Beginning of period......................................... 43,465,921 27,188,451
----------- -----------
End of period (including undistributed net investment income
as set forth below)....................................... $48,697,490 $43,465,921
=========== ===========
Undistributed Net Investment Income......................... $ 373,331 $ 8,310
=========== ===========
</TABLE>
See accompanying notes.
10
<PAGE> 11
<TABLE>
<CAPTION>
HIGH GRADE BOND HIGH YIELD BOND
PORTFOLIO PORTFOLIO
- -------------------------------- --------------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31, JUNE 30, 1998 DECEMBER 31,
(UNAUDITED) 1997 (UNAUDITED) 1997
- ------------- ------------ ------------- ------------
<S> <C> <C> <C>
$ 206,723 $ 293,404 $ 372,228 $ 552,718
(2,362) 9,918 22,397 64,050
42,499 122,117 66,118 208,688
---------- ---------- ----------- ----------
246,860 425,439 460,743 825,456
(206,723) (293,404) (372,228) (552,718)
(52,004)
---------- ---------- ----------- ----------
(206,723) (293,404) (372,228) (604,722)
2,180,737 1,707,790 4,107,960 2,473,420
---------- ---------- ----------- ----------
2,220,874 1,839,825 4,196,475 2,694,154
5,374,380 3,534,555 8,623,246 5,929,092
---------- ---------- ----------- ----------
$7,595,254 $5,374,380 $12,819,721 $8,623,246
========== ========== =========== ==========
$ 0 $ 0 $ 0 $ 0
========== ========== =========== ==========
</TABLE>
11
<PAGE> 12
EQUITRUST VARIABLE INSURANCE SERIES FUND
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
<TABLE>
<CAPTION>
MANAGED
PORTFOLIO
--------------------------------
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31,
(UNAUDITED) 1997
------------- ------------
<S> <C> <C>
OPERATIONS
Net investment income....................................... $ 1,111,682 $ 1,744,902
Net realized gain (loss) from investment transactions....... 1,231,254 1,646,469
Change in unrealized appreciation/depreciation of
investments............................................... (2,844,020) 106,045
----------- -----------
Net Increase (Decrease) in Net Assets Resulting from
Operations................................................ (501,084) 3,497,416
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM (Note 6)
Net investment income....................................... (1,727,782)
Net realized gain from investment transactions.............. (2,130,931)
Distributions in excess of net realized gain from investment
transactions..............................................
----------- -----------
0 (3,858,713)
CAPITAL SHARE TRANSACTIONS (Note 4)......................... 11,145,839 19,287,783
----------- -----------
Total Increase in Net Assets................................ 10,644,755 18,926,486
NET ASSETS
Beginning of period......................................... 44,948,761 26,022,275
----------- -----------
End of period (including undistributed net investment income
as set forth below)....................................... $55,593,516 $44,948,761
=========== ===========
Undistributed Net Investment Income......................... $ 1,130,633 $ 18,951
=========== ===========
</TABLE>
See accompanying notes.
12
<PAGE> 13
<TABLE>
<CAPTION>
MONEY MARKET BLUE CHIP
PORTFOLIO PORTFOLIO
- ------------------------------------- -------------------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31, JUNE 30, 1998 DECEMBER 31,
(UNAUDITED) 1997 (UNAUDITED) 1997
- ------------- ----------------- ------------- -----------------
<S> <C> <C> <C>
$ 152,504 $ 197,908 $ 366,838 $ 427,722
193,979 17,242
5,464,608 4,627,295
---------- ---------- ----------- -----------
152,504 197,908 6,025,425 5,072,259
(152,504) (197,908) (426,904)
(14,230)
---------- ---------- ----------- -----------
(152,504) (197,908) 0 (441,134)
1,541,283 2,258,256 14,071,681 12,740,683
---------- ---------- ----------- -----------
1,541,283 2,258,256 20,097,106 17,371,808
6,077,517 3,819,261 31,864,925 14,493,117
---------- ---------- ----------- -----------
$7,618,800 $6,077,517 $51,962,031 $31,864,925
========== ========== =========== ===========
$ 0 $ 0 $ 368,983 $ 2,145
========== ========== =========== ===========
</TABLE>
13
<PAGE> 14
EQUITRUST VARIABLE INSURANCE SERIES FUND
SCHEDULE OF INVESTMENTS
VALUE GROWTH PORTFOLIO
JUNE 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES
HELD VALUE
---------- -----------
<S> <C> <C>
COMMON STOCKS (61.38%)
APPAREL AND ACCESSORY STORES (1.24%)
Gymboree Corp............................................. 40,000(1) $ 606,252
BUSINESS SERVICES (1.60%)
Olsten Corp............................................... 70,000 783,125
COMMUNICATIONS (0.74%)
Andrew Corp............................................... 20,000 361,250
ELECTRIC, GAS AND SANITARY SERVICES (7.64%)
Airgas, Inc............................................... 50,000(1) 718,750
Equitable Resources....................................... 37,100 1,131,550
Matrix Service Co......................................... 257,600(1) 1,867,600
-----------
3,717,900
ELECTRONIC AND OTHER ELECTRIC EQUIPMENT (6.46%)
CompUSA, Inc.............................................. 40,000(1) 722,500
Diebold, Inc.............................................. 38,000 1,097,250
FSI Int'l, Inc............................................ 30,000(1) 290,625
Park Electrochemical Corp................................. 5,800 122,525
Rohn, Inc................................................. 172,500 808,594
Sunbeam Corporation....................................... 10,000 103,750
-----------
3,145,244
HEALTH SERVICES (3.91%)
Mallinckrodt, Inc......................................... 30,000 890,625
Medpartners, Inc.......................................... 40,000(1) 320,000
Phycor, Inc............................................... 42,000(1) 695,625
-----------
1,906,250
HEAVY CONSTRUCTION (0.81%)
Stone & Webster, Inc...................................... 10,000 396,250
HOLDING AND OTHER INVESTMENT OFFICES (0.12%)
Wintrust Financial Corp................................... 3,000(1) 59,250
INSTRUMENTS & RELATED PRODUCTS (3.02%)
Allied Healthcare Products................................ 167,400 816,075
Moore Products Co......................................... 4,000 111,000
Pall Corp................................................. 16,125 330,563
Polaroid Corp............................................. 6,000 213,375
-----------
1,471,013
</TABLE>
14
<PAGE> 15
EQUITRUST VARIABLE INSURANCE SERIES FUND
SCHEDULE OF INVESTMENTS
VALUE GROWTH PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
SHARES
HELD VALUE
---------- -----------
<S> <C> <C>
INSURANCE CARRIERS (3.88%)
Amerus Life Holdings, Inc................................. 25,000 $ 809,375
Danielson Holding Corp.................................... 71,700(1) 528,788
MMI Companies, Inc........................................ 10,000 231,250
NAC RE Corp............................................... 6,000 320,250
-----------
1,889,663
METAL MINING (10.90%)
Barrick Gold Corp......................................... 70,000 1,343,125
Glamis Gold, Ltd.......................................... 204,300 715,050
Kinross Gold Corp......................................... 234,052(1) 760,669
Newmont Mining Corp....................................... 50,000 1,181,250
R & B Falcon Corp......................................... 30,000(1) 678,750
TVX Gold, Inc............................................. 205,000(1) 627,813
-----------
5,306,657
MISCELLANEOUS MANUFACTURING INDUSTRIES (0.58%)
Parker Drilling Corp...................................... 40,000(1) 282,500
MISCELLANEOUS RETAIL (2.10%)
Southland Corp............................................ 200,000(1) 550,000
Toys R Us, Inc............................................ 20,000(1) 471,250
-----------
1,021,250
NON METAL MINERALS (1.08%)
De Beers Cons Mines....................................... 30,000 525,000
OIL AND GAS EXTRACTION (12.23%)
Cooper Cameron Corp....................................... 8,000 408,000
Cross Timbers Oil Co...................................... 10,000 190,625
EVI Weatherford, Inc...................................... 33,000(1) 1,225,125
Global Industries, Ltd.................................... 40,000 675,000
Global Marine, Inc........................................ 60,000(1) 1,121,250
Grey Wolf, Inc............................................ 90,000(1) 281,250
Marine Drilling Co........................................ 20,000(1) 320,000
Nabors Industries, Inc.................................... 35,000(1) 693,438
Offshore Logistics........................................ 30,000(1) 532,500
Pride International, Inc.................................. 30,000(1) 508,125
-----------
5,955,313
PRINTING AND PUBLISHING (1.04%)
John H Harland Co......................................... 30,000 508,125
</TABLE>
15
<PAGE> 16
EQUITRUST VARIABLE INSURANCE SERIES FUND
SCHEDULE OF INVESTMENTS
VALUE GROWTH PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
SHARES
HELD VALUE
---------- -----------
<S> <C> <C>
RAILROAD TRANSPORTATION (1.09%)
Union Pacific Corp........................................ 12,000 $ 529,500
REAL ESTATE (0.49%)
Forest City Enterprises................................... 4,000 236,750
WATER TRANSPORTATION (0.84%)
Hvide Marine, Inc......................................... 30,000(1) 406,875
WHOLESALE TRADE -- DURABLE GOODS (1.54%)
TBC Corporation........................................... 113,000(1) 748,625
WHOLESALE TRADE -- NONDURABLE GOODS (0.07%)
Howell Corp............................................... 2,970 32,299
-----------
Total Common Stocks......................................... 29,889,091
PREFERRED STOCKS (5.55%)
HOLDING AND OTHER INVESTMENT OFFICES (2.59%)
General Growth Properties, Inc............................ 50,000 1,262,500
OIL AND GAS EXTRACTION (1.13%)
Chesapeake Energy Corp.................................... 13,000 550,875
RAILROAD TRANSPORTATION (0.19%)
Union Pacific Capital Trust............................... 2,000 92,250
WHOLESALE TRADE -- NONDURABLE GOODS (1.64%)
Howell Corp............................................... 18,000 798,750
-----------
Total Preferred Stocks...................................... 2,704,375
PRINCIPAL
AMOUNT
----------
CORPORATE BONDS (0.80%)
OIL AND GAS EXTRACTION (0.80%)
Nabors Industries, Inc., 5.00%, due 5/15/06............... $ 300,000 387,801
SHORT-TERM INVESTMENTS (32.04%)
COMMERCIAL PAPER (7.70%)
American General Finance Co., 5.55%, due 7/23/98.......... 2,400,000 2,400,000
General Electric Capital Corp., 5.56%, due 7/15/98........ 1,350,000 1,350,000
-----------
3,750,000
MONEY MARKET MUTUAL FUND (3.65%)
Provident Treasury Cash Management........................ 1,776,396 1,776,396
</TABLE>
16
<PAGE> 17
EQUITRUST VARIABLE INSURANCE SERIES FUND
SCHEDULE OF INVESTMENTS
VALUE GROWTH PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
---------- -----------
<S> <C> <C>
UNITED STATES GOVERNMENT AGENCIES (20.69%)
Federal Home Loan Bank, due 7/07/98....................... $ 625,000 $ 624,432
Federal Home Loan Bank, due 7/20/98....................... 2,250,000 2,243,544
Federal Home Loan Bank, due 7/27/98....................... 750,000 747,044
Federal Home Loan Bank, due 8/05/98....................... 2,700,000 2,685,688
Federal Home Loan Bank, due 8/26/98....................... 1,800,000 1,784,850
Federal National Mortgage Assoc., due 7/30/98............. 1,250,000 1,244,555
Federal National Mortgage Assoc., due 8/07/98............. 750,000 745,802
-----------
10,075,915
-----------
Total Short-Term Investments................................ 15,602,311
-----------
Total Investments (99.77%).................................. 48,583,578
OTHER ASSETS LESS LIABILITIES (0.23%)
Cash, receivables and prepaid expense, less liabilities... 113,912
-----------
Total Net Assets (100.00%).................................. $48,697,490
===========
</TABLE>
(1) Non-income producing securities.
See accompanying notes.
17
<PAGE> 18
EQUITRUST VARIABLE INSURANCE SERIES FUND
SCHEDULE OF INVESTMENTS
HIGH GRADE BOND PORTFOLIO
JUNE 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
--------- ----------
<S> <C> <C>
PREFERRED STOCK (2.69%)
DEPOSITORY INSTITUTIONS (2.69%)
New Plan Realty Trust, 3.250%............................. $ 4,000 $ 204,250
CORPORATE BONDS (62.46%)
COMMUNICATIONS (2.40%)
Comcast Cable Communications, 8.50%, due 5/01/27.......... 150,000 182,106
DEPOSITORY INSTITUTIONS (4.09%)
Midland America Capital, 12.75%, due 11/15/03............. 155,000 158,856
J. P. Morgan & Co., 7.25%, due 10/01/10................... 150,000 151,899
----------
310,755
ELECTRIC, GAS AND SANITARY SERVICES (18.97%)
Narragansett Electric Co., 9.125%, due 5/01/21............ 300,000 344,286
National Co-op Services Corp., 9.48%, due 01/01/12........ 350,000 373,037
New England Power Co., 8.00%, due 8/01/22................. 150,000 167,105
OPC Scherer, 6.974%, due 6/30/11.......................... 400,000 412,252
Western Penn Power, 7.875%, due 12/01/04.................. 140,000 144,453
----------
1,441,133
GENERAL MERCHANDISE STORES (4.43%)
J.C. Penney & Co., 8.25%, due 8/15/22..................... 300,000 336,450
HOLDING AND OTHER INVESTMENT OFFICES (11.37%)
Federal Realty Investment Trust, 8.875%, due 1/15/00...... 100,000 104,008
Glenborough Properties, 7.625%, due 3/15/05............... 250,000 252,202
Meditrust, 7.60%, due 9/13/05............................. 150,000 153,639
Washington REIT, 6.898%, due 2/25/08...................... 350,000 353,423
----------
863,272
NONDEPOSITORY INSTITUTIONS (6.44%)
Household Finance Co., 7.30%, due 7/30/12................. 200,000 206,718
Security Capital Pacific, 7.20%, due 3/01/13.............. 275,000 282,114
----------
488,832
PAPER AND ALLIED PRODUCTS (4.01%)
Union Camp Corp., 8.625%, due 4/15/16..................... 290,000 304,515
PRINTING AND PUBLISHING (1.48%)
Valassis Communications, Inc., 9.55%, due 12/01/03........ 100,000 112,582
RAILROAD TRANSPORTATION (1.72%)
Union Pacific Corp., 8.50%, due 1/15/17................... 125,000 130,424
</TABLE>
18
<PAGE> 19
EQUITRUST VARIABLE INSURANCE SERIES FUND
SCHEDULE OF INVESTMENTS
HIGH GRADE BOND PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
--------- ----------
<S> <C> <C>
SECURITY AND COMMODITY BROKERS (1.33%)
Lehman Brothers Holding, Inc., 8.875%, due 11/01/98....... $100,000 $ 101,094
TEXTILE MILL PRODUCTS (3.64%)
Unifi, 6.50%, due 2/01/08................................. 280,000 276,746
TRANSPORTATION EQUIPMENT (2.58%)
Ford Motor Credit Co., 9.50%, due 9/15/11................. 150,000 195,702
----------
Total Corporate Bonds....................................... 4,743,611
MORTGAGE-BACKED SECURITIES (7.40%)
FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA) (0.52%)
Pool # 50276, 9.50%, due 2/01/20.......................... 36,293 39,196
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (GNMA) (6.88%)
Pool # 1512, 7.50%, due 12/20/23.......................... 347,683 355,833
Pool # 236070, 10.00%, due 10/15/12....................... 83,341 90,634
Pool # 276337, 10.00%, due 8/15/19........................ 69,119 76,419
----------
522,886
----------
Total Mortgage-Backed Securities............................ 562,082
UNITED STATES TREASURY OBLIGATION (5.73%)
U.S. Treasury Note, 7.25%, due 8/15/04.................... 400,000 435,488
SHORT-TERM INVESTMENTS (18.66%)
UNITED STATES GOVERNMENT AGENCIES
Federal Home Loan Bank, due 8/04/98....................... 450,000 447,682
Federal National Mortgage Assn., due 7/30/98.............. 550,000 547,604
Federal National Mortgage Assn., due 8/19/98.............. 425,000 421,847
----------
Total Short-Term Investments................................ 1,417,133
----------
Total Investments (96.94%).................................. 7,362,564
OTHER ASSETS LESS LIABILITIES (3.06%)
Cash, receivables and prepaid expense less liabilities.... 232,690
----------
Total Net Assets (100.00%).................................. $7,595,254
==========
</TABLE>
See accompanying notes.
19
<PAGE> 20
EQUITRUST VARIABLE INSURANCE SERIES FUND
SCHEDULE OF INVESTMENTS
HIGH YIELD BOND PORTFOLIO
JUNE 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
--------- -----------
<S> <C> <C>
PREFERRED STOCK (3.81%)
DEPOSITORY INSTITUTIONS (3.81%)
CFB Capital, 2.219%....................................... $ 5,000 $ 131,250
New Plan Realty Trust, 3.250%............................. 7,000 357,438
-----------
Total Preferred Stock....................................... 488,688
CORPORATE BONDS (79.60%)
AMUSEMENT & RECREATION SERVICES (2.00%)
AMF Bowling Worldwide, Inc., 10.875%, due 3/15/06......... 240,000 256,800
APPAREL AND OTHER TEXTILE PRODUCTS (1.66%)
Dan River, Inc., 10.125%, due 12/15/03.................... 200,000 213,000
AUTO REPAIR SERVICE PARK (.78%)
Envirotest Systems Corp., 9.625%, due 4/01/03............. 100,000 99,500
BUSINESS SERVICES (1.22%)
Borg-Warner Corp., 9.125%, due 5/01/03.................... 150,000 156,843
COMMUNICATIONS (6.25%)
Comcast Cable Communications, 8.50%, due 5/01/27.......... 300,000 364,212
Savoy Pictures, 7.00%, due 7/01/03........................ 450,000 436,500
-----------
800,712
DEPOSITORY INSTITUTIONS (1.95%)
First Bank NA, 6.25%, due 8/15/05......................... 250,000 250,393
EATING AND DRINKING PLACES (3.96%)
Tricon Global Restaurants, Inc., 7.65%, due 5/15/08....... 500,000 507,840
ELECTRIC, GAS AND SANITARY SERVICES (18.33%)
Cleveland Electric Illum., 8.375%, due 12/01/11........... 400,000 413,380
ESI Tractebel, 7.99%, due 12/30/11........................ 340,000 338,725
Narragansett Electric, 9.125%, due 5/01/21................ 500,000 573,810
New England Power Co., 8.00%, due 8/01/22................. 200,000 222,806
Niagra Mohawk Power, 7.875%, due 4/01/24.................. 400,000 422,116
Waterford 3 Nuclear Power Plant, 8.09%, due 1/02/17....... 350,000 379,043
-----------
2,349,880
ELECTRONIC AND OTHER ELECTRIC EQUIPMENT (1.99%)
Advanced Micro Devices, Inc., 11.00%, due 8/01/03......... 240,000 254,700
</TABLE>
20
<PAGE> 21
EQUITRUST VARIABLE INSURANCE SERIES FUND
SCHEDULE OF INVESTMENTS
HIGH YIELD BOND PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
--------- -----------
<S> <C> <C>
FOOD STORES (2.21%)
P & C Food Markets, 11.50%, due 10/15/01.................. $150,000 $ 122,625
Penn Traffic Co., 10.25%, due 2/15/02..................... 200,000 160,000
-----------
282,625
GENERAL MERCHANDISE STORES (2.63%)
J.C. Penney & Co., 8.25%, due 8/15/22..................... 300,000 336,450
HEALTH SERVICES (3.94%)
Tenet Healthcare, 7.625%, due 6/01/08..................... 500,000 505,250
HOLDING AND OTHER INVESTMENT OFFICES (18.20%)
Bradley Operating LP, 7.20%, due 1/15/08.................. 450,000 457,537
Federal Realty Investment Trust, 8.875%, due 1/15/00...... 600,000 649,024
Glenborough Properties, 7.625%, due 3/15/05............... 400,000 403,524
Price Development Company, 7.29%, due 3/11/08............. 450,000 460,382
Susa Partnership LP, 8.20%, due 6/01/17................... 325,000 362,291
-----------
2,332,758
LUMBER & WOOD PRODUCTS (4.89%)
Georgia Pacific, 9.875%, due 11/01/21..................... 225,000 253,899
Georgia Pacific, 9.125%, due 7/01/22...................... 150,000 165,692
Pacific Lumber Co., 10.50%, due 3/01/03................... 200,000 207,000
-----------
626,591
MISCELLANEOUS RETAIL (1.70%)
Eckerd, 9.25%, due 2/15/04................................ 205,000 218,225
NONDEPOSITORY INSTITUTIONS (1.53%)
Macsaver Financial, 7.40%, due 2/15/02.................... 200,000 196,444
OIL AND GAS EXTRACTION (.77%)
Dawson Production Services, 9.375%, due 2/01/07........... 100,000 98,750
PAPER AND ALLIED PRODUCTS (1.68%)
Container Corp. of America, 9.75%, due 4/01/03............ 200,000 215,500
TRANSPORTATION EQUIPMENT (3.91%)
Federal Mogul Co., 7.75%, due 7/01/06..................... 500,000 501,750
-----------
Total Corporate Bonds....................................... 10,204,011
</TABLE>
21
<PAGE> 22
EQUITRUST VARIABLE INSURANCE SERIES FUND
SCHEDULE OF INVESTMENTS
HIGH YIELD BOND PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
--------- -----------
<S> <C> <C>
SHORT-TERM INVESTMENTS (14.35%)
UNITED STATES GOVERNMENT AGENCIES
Federal Home Loan Bank, due 7/08/98....................... $200,000 $ 199,790
Federal Home Loan Mortgage Co., due 7/08/98............... 250,000 249,734
Federal Home Loan Mortgage Co., due 8/05/98............... 700,000 696,289
Federal Home Loan Mortgage Co., due 9/01/98............... 500,000 495,324
Federal National Mortgage Assoc., due 7/30/98............. 200,000 199,129
-----------
Total Short-Term Investments................................ 1,840,266
-----------
Total Investments (97.76%).................................. 12,532,965
OTHER ASSETS LESS LIABILITIES (2.24%)
Cash, receivables and prepaid expense, less liabilities... 286,756
-----------
Total Net Assets (100.00%).................................. $12,819,721
===========
</TABLE>
See accompanying notes.
22
<PAGE> 23
EQUITRUST VARIABLE INSURANCE SERIES FUND
SCHEDULE OF INVESTMENTS
MANAGED PORTFOLIO
JUNE 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES
HELD VALUE
---------- -----------
<S> <C> <C>
COMMON STOCKS (15.12%)
ELECTRIC, GAS AND SANITARY SERVICES (7.92%)
Citizens Utilities Co., Class B........................... 175,070 $ 1,685,049
MidAmerican Energy Holdings Co............................ 40,000 865,000
Otter Tail Power Co....................................... 50,000 1,853,125
-----------
4,403,174
FORESTRY (2.49%)
Weyerhaeuser Co........................................... 30,000 1,385,625
HOLDING AND OTHER INVESTMENT OFFICES (2.31%)
General Growth Properties, Inc............................ 34,375 1,284,766
INSTRUMENTS AND RELATED PRODUCTS (2.40%)
Pall Corp................................................. 65,000 1,332,500
-----------
Total Common Stocks......................................... 8,406,065
OPTION (0.01%)
Security Capital Group.................................... 1,133(1) 390
PREFERRED STOCKS (25.62%)
DEPOSITORY INSTITUTIONS (6.26%)
CFB Capital, 2.219%....................................... 57,500 1,509,375
Harris Preferred Capital, 1.844%.......................... 20,000 500,000
Taylor Capital Group, Inc., 2.25%......................... 58,000 1,468,125
-----------
3,477,500
ELECTRIC, GAS AND SANITARY SERVICES (2.24%)
Equitable Resources, 1.837%............................... 50,000 1,243,750
HOLDING AND OTHER INVESTMENT OFFICES (3.34%)
General Growth Properties, Inc............................ 50,000 1,262,500
Prologis Trust, 7%, Series B.............................. 19,000 596,125
-----------
1,858,625
INSURANCE CARRIERS (1.62%)
Equitable of Iowa Capital................................. 34,147 900,627
MISCELLANEOUS MANUFACTURING INDUSTRY (2.45%)
Cyprus Amax Minerals Co................................... 30,000 1,361,250
NONDEPOSITORY INSTITUTIONS (1.54%)
Hvide Capital Trust....................................... 20,000 857,500
</TABLE>
23
<PAGE> 24
EQUITRUST VARIABLE INSURANCE SERIES FUND
SCHEDULE OF INVESTMENTS
MANAGED PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
SHARES
HELD VALUE
---------- -----------
<S> <C> <C>
OIL AND GAS EXTRACTION (6.96%)
Chesapeake Energy Corp.................................... 26,000 $ 1,101,750
Chieftain International................................... 11,000 335,500
EVI, Inc.................................................. 40,000 1,640,000
El Paso Energy Capital Trust I, 4.75%..................... 15,000 795,000
-----------
3,872,250
RAILROAD TRANSPORTATION (0.33%)
Union Pacific Capital Trust............................... 4,000 184,500
WHOLESALE TRADE - NONDURABLE GOODS (0.88%)
Howell Corp............................................... 11,000 488,125
-----------
Total Preferred Stocks...................................... 14,244,127
PRINCIPAL
AMOUNT
----------
CORPORATE BONDS (33.17%)
DEPOSITORY INSTITUTIONS (0.20%)
Midland America Capital Corp., 12.75%, due 11/15/03....... $ 110,000 112,737
ELECTRIC, GAS AND SANITARY SERVICES (0.16%)
National Co-op Services Corp., (Arkansas Electric),
9.48%, due 1/01/12..................................... 85,000 90,595
ELECTRONIC & OTHER ELECTRIC EQUIPMENT (3.67%)
California Microwave, Inc., Convertible Sub. Deb.,
5.25%, due 12/15/03.................................... 1,000,000 881,250
Sunbeam Corp., due 3/25/18................................ 5,000,000 1,158,700
-----------
2,039,950
HEALTH SERVICES (4.97%)
Dura Pharmaceuticals, 3.50%, due 7/15/02.................. 2,000,000 1,696,500
Quantum Healthcare Resources, 4.75%, due 10/01/00......... 1,125,000 1,065,938
-----------
2,762,438
INSURANCE CARRIERS (2.06%)
NAC Re Corp., 5.25%, due 12/15/02......................... 1,000,000 1,147,540
METAL MINING (2.07%)
Teck Corp., 3.75%, due 7/15/06............................ 1,500,000 1,151,250
MISCELLANEOUS MANUFACTURING INDUSTRIES (4.00%)
Halter Marine Group, Inc., 4.50%, due 9/15/04............. 625,000 504,375
Parker Drilling Corp., 5.50%, due 8/01/04................. 200,000 1,722,500
-----------
2,226,875
</TABLE>
24
<PAGE> 25
EQUITRUST VARIABLE INSURANCE SERIES FUND
SCHEDULE OF INVESTMENTS
MANAGED PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
---------- -----------
<S> <C> <C>
NONDEPOSITORY INSTITUTIONS (2.50%)
Consumer Portfolio Services, Inc., 3.50%, due 1/27/04..... $1,400,000 $ 1,389,500
OIL AND GAS EXTRACTION (11.74%)
Diamond Offshore Drilling, 3.75%, due 2/15/07............. 1,700,000 1,977,474
Nabors Industries, Inc., 5.00%, due 5/15/06............... 1,700,000 2,197,539
Offshore Logistics, 6.00%, due 12/15/03................... 1,500,000 1,570,320
Pride International, Inc., 6.25%, due 2/15/06............. 540,000 781,790
-----------
6,527,123
PETROLEUM AND COAL PRODUCTS (1.78%)
Trizec Hahn Corp., 3.25%, due 12/10/18.................... 1,400,000 992,908
-----------
Total Corporate Bonds....................................... 18,440,916
SHORT-TERM INVESTMENTS (25.31%)
COMMERCIAL PAPER (7.02%)
American General Finance Corp., 5.56%, due 7/16/98........ 2,225,000 2,225,000
General Electric Capital Corp., 5.61%, due 7/15/98........ 1,675,000 1,675,000
-----------
3,900,000
MONEY MARKET MUTUAL FUND (2.66%)
Provident Treasury Cash Management........................ 1,475,305 1,475,305
UNITED STATES GOVERNMENT AGENCIES (15.63%)
Federal Farm Credit Bank, due 7/27/98..................... 2,100,000 2,091,758
Federal Home Loan Bank, due 7/08/98....................... 2,000,000 1,997,899
Federal National Mortgage Assoc., due 8/28/98............. 2,100,000 2,081,706
Federal National Mortgage Assoc., due 9/10/98............. 2,550,000 2,522,693
-----------
8,694,056
-----------
Total Short-Term Investments................................ 14,069,361
-----------
Total Investments (99.22%).................................. 55,160,859
OTHER ASSETS LESS LIABILITIES (0.78%)
Cash, receivables and prepaid expense, less liabilities... 432,657
-----------
Total Net Assets (100.00%).................................. $55,593,516
===========
</TABLE>
(1) Non-income producing securities.
25
<PAGE> 26
EQUITRUST VARIABLE INSURANCE SERIES FUND
SCHEDULE OF INVESTMENTS
MONEY MARKET PORTFOLIO
JUNE 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
ANNUALIZED
YIELD ON
PURCHASE PRINCIPAL
DATE AMOUNT VALUE
---------- --------- ----------
<S> <C> <C> <C>
SHORT-TERM INVESTMENTS (92.71%)
COMMERCIAL PAPER (22.18%)
NONDEPOSITORY INSTITUTIONS
American General Finance Co., 5.59%, due 9/03/98... 5.592% $300,000 $ 300,000
Ford Motor Credit Corp., 5.56%, due 8/25/98........ 5.562 340,000 340,000
General Electric Capital Corp., 5.56%, due
8/14/98.......................................... 5.564 275,000 275,000
IBM Credit Corp., 5.53%, due 8/06/98............... 5.533 275,000 275,000
John Deere Capital Corp., 5.54%, due 8/03/98....... 5.541 275,000 275,000
Norwest Financial, Inc., 5.57%, due 7/29/98........ 5.569 225,000 225,000
----------
Total Commercial Paper.................................. 1,690,000
UNITED STATES GOVERNMENT AGENCIES (70.53%)
Federal Farm Credit Bank, due 7/21/98.............. 5.526 300,000 299,094
Federal Farm Credit Bank, due 7/24/98.............. 5.517 250,000 249,134
Federal Home Loan Bank, due 8/20/98................ 5.545 243,000 241,168
Federal Home Loan Mortgage Corp., due 7/06/98...... 5.524 300,000 299,773
Federal Home Loan Mortgage Corp., due 7/10/98...... 5.530 325,000 324,557
Federal Home Loan Mortgage Corp., due 7/14/98...... 5.562 300,000 299,407
Federal Home Loan Mortgage Corp., due 8/10/98...... 5.559 350,000 347,881
Federal Home Loan Mortgage Corp., due 8/18/98...... 5.536 325,000 322,651
Federal Home Loan Mortgage Corp., due 8/27/98...... 5.519 400,000 396,582
Federal Home Loan Mortgage Corp., due 9/01/98...... 5.558 400,000 396,259
Federal Home Loan Mortgage Corp., due 9/08/98...... 5.554 275,000 272,143
Federal Home Loan Mortgage Corp., due 9/10/98...... 5.569 300,000 296,785
Federal National Mortgage Assoc., due 7/01/98...... 5.831 225,000 225,000
Federal National Mortgage Assoc., due 7/13/98...... 5.522 358,000 357,351
Federal National Mortgage Assoc., due 7/16/98...... 5.491 550,000 548,762
Federal National Mortgage Assoc., due 8/12/98...... 5.512 500,000 496,849
----------
Total United States Government Agencies................. 5,373,396
----------
Total Short-Term Investments............................ 7,063,396
OTHER ASSETS LESS LIABILITIES (7.29%)
Cash, receivables and prepaid expense, less
liabilities........................................ 555,404
----------
Total Net Assets (100.00%).............................. $7,618,800
==========
</TABLE>
See accompanying notes.
26
<PAGE> 27
EQUITRUST VARIABLE INSURANCE SERIES FUND
SCHEDULE OF INVESTMENTS
BLUE CHIP PORTFOLIO
JUNE 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES
HELD VALUE
---------- -----------
<S> <C> <C>
COMMON STOCKS (87.46%)
CHEMICALS AND ALLIED PRODUCTS (15.69%)
Bristol-Myers Squibb Co................................... 11,278 $ 1,296,265
DuPont (EI) de Nemours & Co............................... 14,250 1,063,406
Eastman Chemical.......................................... 11,243 699,877
Johnson & Johnson......................................... 13,829 1,019,889
Merck & Co., Inc.......................................... 9,082 1,214,718
Praxair, Inc.............................................. 17,727 829,845
Procter & Gamble Co....................................... 12,513 1,139,465
Union Carbide Corp........................................ 16,658 889,121
-----------
8,152,586
COMMUNICATIONS (5.13%)
American Telephone & Telegraph Corp....................... 14,270 815,174
Bell Atlantic Corp........................................ 19,172 874,722
CBS Corp.................................................. 30,693 974,503
-----------
2,664,399
DEPOSITORY INSTITUTIONS (1.61%)
J. P. Morgan & Co......................................... 7,143 836,624
EATING AND DRINKING PLACES (2.07%)
McDonald's Corp........................................... 15,593 1,075,917
ELECTRONIC & OTHER ELECTRIC EQUIPMENT (5.37%)
General Electric Co....................................... 14,125 1,285,375
Lucent Technologies, Inc.................................. 14,603 1,214,787
Raytheon Co............................................... 5,032 289,969
-----------
2,790,131
FOOD AND KINDRED PRODUCTS (5.70%)
Coca-Cola Co. (The)....................................... 14,763 1,262,237
PepsiCo, Inc.............................................. 22,229 915,557
Philip Morris Companies, Inc.............................. 19,888 783,090
-----------
2,960,884
GENERAL MERCHANDISE STORES (5.48%)
Sears, Roebuck & Co....................................... 14,090 860,371
Venator Group, Inc........................................ 33,561 641,854
Wal-Mart Stores, Inc...................................... 22,135 1,344,701
-----------
2,846,926
</TABLE>
27
<PAGE> 28
EQUITRUST VARIABLE INSURANCE SERIES FUND
SCHEDULE OF INVESTMENTS
BLUE CHIP PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
SHARES
HELD VALUE
---------- -----------
<S> <C> <C>
INDUSTRIAL MACHINERY AND EQUIPMENT (3.90%)
Caterpillar, Inc.......................................... 17,941 $ 948,630
International Business Machines Corp...................... 9,383 1,077,286
-----------
2,025,916
INSTRUMENTS AND RELATED PRODUCTS (1.47%)
Eastman Kodak Co.......................................... 10,488 766,280
INSURANCE CARRIERS (4.56%)
Allstate Corp............................................. 10,941 1,001,785
American International Group, Inc......................... 9,367 1,367,582
-----------
2,369,367
MOTION PICTURES (1.93%)
Disney (Walt) Co.......................................... 9,537 1,001,981
PAPER AND ALLIED PRODUCTS (2.73%)
International Paper Co.................................... 15,876 682,668
Minnesota Mining & Manufacturing Co....................... 8,939 734,674
-----------
1,417,342
PETROLEUM AND COAL PRODUCTS (9.89%)
Amoco Corp................................................ 17,541 730,144
Chevron Corp.............................................. 10,463 869,083
Exxon Corp................................................ 13,743 980,048
Mobil Corp................................................ 11,162 855,288
Texaco, Inc............................................... 14,118 842,668
USX Corp. -- Marathon Group............................... 25,093 861,004
-----------
5,138,235
PRIMARY METAL INDUSTRIES (2.85%)
Aluminum Company of America............................... 11,094 731,511
Bethlehem Steel Corp...................................... 60,226(1) 749,061
-----------
1,480,572
RUBBER AND MISCELLANEOUS PLASTICS PRODUCTS (1.86%)
Goodyear Tire & Rubber Co................................. 14,987 965,725
SECURITY AND COMMODITY BROKERS (8.29%)
American Express Co....................................... 11,757 1,340,298
Lehman Brothers Holding, Inc.............................. 18,063 1,401,011
Morgan Stanley, Dean Witter, Discover & Co................ 17,172 1,569,092
-----------
4,310,401
</TABLE>
28
<PAGE> 29
EQUITRUST VARIABLE INSURANCE SERIES FUND
SCHEDULE OF INVESTMENTS
BLUE CHIP PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
SHARES
HELD VALUE
---------- -----------
<S> <C> <C>
TRANSPORTATION EQUIPMENT (8.93%)
Allied-Signal, Inc........................................ 22,544 $ 1,000,390
Boeing Co. (The).......................................... 15,984 712,287
Ford Motor Co............................................. 18,920 1,116,280
General Motors Corp....................................... 11,970 799,746
United Technologies Corp.................................. 10,958 1,013,615
-----------
4,642,318
-----------
Total Common Stocks......................................... 45,445,604
PRINCIPAL
AMOUNT
----------
SHORT-TERM INVESTMENTS (11.77%)
MONEY MARKET MUTUAL FUND (.19%)
Provident Treasury Cash Management........................ $ 100,045 100,045
UNITED STATES GOVERNMENT AGENCIES (11.58%)
Federal Home Loan Bank, due 7/06/98....................... 225,000 224,830
Federal Home Loan Mortgage Co., due 7/06/98............... 200,000 199,849
Federal Home Loan Mortgage Co., due 7/10/98............... 950,000 948,712
Federal Home Loan Mortgage Co., due 7/14/98............... 700,000 698,616
Federal National Mortgage Assn., due 7/06/98.............. 3,700,000 3,697,194
Federal National Mortgage Assn., due 7/30/98.............. 250,000 248,911
-----------
6,018,112
-----------
Total Short-Term Investments................................ 6,118,157
-----------
Total Investments (99.23%).................................. 51,563,761
OTHER ASSETS LESS LIABILITIES (0.77%)
Cash, receivables and prepaid expense, less liabilities... 398,270
-----------
Total Net Assets (100.00%).................................. $51,962,031
===========
</TABLE>
(1) Non-income producing securities.
See accompanying notes.
29
<PAGE> 30
EQUITRUST VARIABLE INSURANCE SERIES FUND
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998
(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. Effective May 1, 1998, FBL Variable Insurance Series Fund was renamed
EquiTrust Variable Insurance Series Fund. 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. 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.
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.
30
<PAGE> 31
EQUITRUST VARIABLE INSURANCE SERIES FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
2. FEDERAL INCOME TAXES
No provision for federal income taxes is considered necessary because the
Fund is qualified as a "regulated investment company" under the Internal Revenue
Code and intends to distribute each year substantially all of its net investment
income and realized capital gains to shareholders. The cost of investments is
the same for both federal income tax and financial reporting purposes.
At June 30, 1998 the High Grade Bond Portfolio had a net capital loss
carryforward of approximately $9,000, which will expire from 2002 through 2005.
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 their 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 current period,
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 January 1, 1998, through June 30, 1998. For the period
ended June 30, 1998, the fund's expenses did not exceed the reimbursement
threshold, and accordingly, no expenses were reimbursed by EquiTrust Investment.
Certain officers and trustees of the Fund are also officers of EquiTrust
Investment and its indirect parent, Farm Bureau Life Insurance Company. At June
30, 1998, all of the shares of each
31
<PAGE> 32
EQUITRUST VARIABLE INSURANCE SERIES FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. MANAGEMENT CONTRACT AND TRANSACTIONS WITH AFFILIATES (CONTINUED)
portfolio are owned by Farm Bureau Life Insurance Company, Farm Bureau Life
Variable Account and Farm Bureau Life Annuity Account.
4. 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, 1998, consisted of:
<TABLE>
<CAPTION>
PORTFOLIO
------------------------------------------------------------------------------------
VALUE HIGH GRADE HIGH YIELD MONEY BLUE
GROWTH BOND BOND MANAGED MARKET CHIP
----------- ---------- ----------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Paid-in capital................ $51,305,334 $7,345,002 $12,408,800 $54,567,152 $7,618,800 $37,764,248
Accumulated undistributed net
investment income............ 373,331 1,130,633 368,983
Accumulated undistributed net
realized gain (loss) from
investment transactions...... 2,481,739 (9,256) 34,867 1,242,864 197,417
Net unrealized appreciation
(depreciation) of
investments.................. (5,462,914) 259,508 376,054 (1,347,133) 13,631,383
----------- ---------- ----------- ----------- ---------- -----------
Net Assets..................... $48,697,490 $7,595,254 $12,819,721 $55,593,516 $7,618,800 $51,962,031
=========== ========== =========== =========== ========== ===========
</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>
Period ended June 30, 1998:
Value Growth............... 700,970 $ 8,974,105 0 $ 0 51,787 $ 671,338 649,183 $ 8,302,767
High Grade Bond............ 206,747 2,090,469 20,431 206,451 11,488 116,183 215,690 2,180,737
High Yield Bond............ 393,004 4,010,056 35,800 365,901 26,221 267,997 402,583 4,107,960
Managed.................... 921,296 11,789,671 0 0 50,015 643,832 871,281 11,145,839
Money Market............... 16,029,460 16,029,460 107,899 107,899 14,596,076 14,596,076 1,541,283 1,541,283
Blue Chip.................. 415,129 14,349,170 0 0 7,969 277,489 407,160 14,071,681
Year ended December 31,
1997:
Value Growth............... 1,168,439 $15,889,865 341,131 $4,308,483 124,474 $ 1,674,996 1,385,096 $18,523,352
High Grade Bond............ 184,783 1,833,550 29,647 293,404 42,480 419,164 171,950 1,707,790
High Yield Bond............ 332,510 3,281,504 53,490 588,602 139,590 1,396,686 246,410 2,473,420
Managed.................... 1,303,761 17,145,342 307,712 3,858,714 129,178 1,716,273 1,482,295 19,287,783
Money Market............... 22,643,257 22,643,257 110,337 110,337 20,495,338 20,495,338 2,258,256 2,258,256
Blue Chip.................. 501,000 14,545,654 14,235 441,134 74,838 2,246,105 440,397 12,740,683
</TABLE>
32
<PAGE> 33
EQUITRUST VARIABLE INSURANCE SERIES FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
5. INVESTMENT TRANSACTIONS
For the period ended June 30, 1998, the cost of investment securities
purchased and proceeds from investment securities sold (not including short-term
investments and U.S. Government securities) by portfolio, were as follows:
<TABLE>
<CAPTION>
PORTFOLIO PURCHASES SALES
--------- ----------- -----------
<S> <C> <C>
Value Growth...................................... $50,109,909 $51,548,443
High Grade Bond................................... 2,795,973 1,516,886
High Yield Bond................................... 5,046,041 4,185,885
Managed........................................... 26,194,967 15,503,807
Blue Chip......................................... 11,813,268 4,977,673
</TABLE>
At June 30, 1998, net unrealized appreciation of investments by portfolio
was composed of the following:
<TABLE>
<CAPTION>
NET UNREALIZED
GROSS UNREALIZED APPRECIATION
---------------------------- (DEPRECIATION)
PORTFOLIO APPRECIATION DEPRECIATION OF INVESTMENTS
--------- ------------ ------------ --------------
<S> <C> <C> <C>
Value Growth........................ $ 250,249 $(5,713,163) $(5,462,914)
High Grade Bond..................... 266,089 (6,581) 259,508
High Yield Bond..................... 449,259 (73,205) 376,054
Managed............................. 1,382,724 (2,729,857) (1,347,133)
Blue Chip........................... 13,700,371 (68,988) 13,631,383
</TABLE>
6. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income for the following portfolios are
declared daily and were payable on the last business day of the month as
follows:
<TABLE>
<CAPTION>
PORTFOLIO
--------------------------
HIGH HIGH
GRADE YIELD MONEY
PAYABLE DATE BOND BOND MARKET
------------ ------ ------ ------
<S> <C> <C> <C>
January 30, 1998.................................... $.0541 $.0620 $.0044
February 27, 1998................................... .0592 .0648 .0039
March 31, 1998...................................... .0547 .0602 .0043
April 30, 1998...................................... .0530 .0586 .0041
May 29, 1998........................................ .0610 .0581 .0040
June 30, 1998....................................... .0620 .0596 .0044
------ ------ ------
Total dividends per share........................... $.3440 $.3633 $.0251
====== ====== ======
</TABLE>
7. YEAR 2000 PROBLEM
Like other mutual funds, financial and business organizations and
individuals around the world, the Fund could be adversely affected if the
computer systems used by EquiTrust Investment and
33
<PAGE> 34
EQUITRUST VARIABLE INSURANCE SERIES FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
7. YEAR 2000 PROBLEM (CONTINUED)
other service providers do not properly process and calculate date-related
information and data from and after January 1, 2000. This is commonly known as
the "Year 2000 Problem." EquiTrust Investment is taking steps that it believes
are reasonably designed to address the Year 2000 Problem with respect to
computer systems that it uses and to obtain reasonable assurances that
comparable steps are being taken by the Fund's other major service providers. At
this time, however, there can be no assurance that these steps will be
sufficient to avoid any adverse impact to the Fund.
34
<PAGE> 35
(This page has been left blank intentionally.)
35
<PAGE> 36
EQUITRUST VARIABLE INSURANCE SERIES FUND
FINANCIAL HIGHLIGHTS
PERIOD ENDED JUNE 30, 1998 (UNAUDITED) AND
YEARS ENDED DECEMBER 31, 1997, 1996, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
VALUE GROWTH
PORTFOLIO
-------------------------------------------------------------------------
1998 1997 1996 1995 1994 1993
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period........ $ 12.58 $ 13.13 $ 12.31 $ 10.39 $ 11.52 $ 10.05
Income From Investment Operations
Net investment income................... 0.09 0.28 0.35 0.55 0.48 0.63
Net gains or losses on securities (both
realized and unrealized).............. (0.81) 0.55 1.82 2.13 (0.99) 2.10
------- ------- ------- ------- ------- -------
Total from investment operations.......... (0.72) 0.83 2.17 2.68 (0.51) 2.73
------- ------- ------- ------- ------- -------
Less Distributions
Dividends (from net investment income).. (0.28) (0.30) (0.50) (0.36) (0.57)
Distributions (from capital gains)...... (0.95) (1.05) (0.26) (0.11) (0.69)
Distributions in excess of net realized
gains................................. (0.15) (0.15)
------- ------- ------- ------- ------- -------
Total distributions....................... 0.00 (1.38) (1.35) (0.76) (0.62) (1.26)
------- ------- ------- ------- ------- -------
Net asset value, end of period.............. $ 11.86 $ 12.58 $ 13.13 $ 12.31 $ 10.39 $ 11.52
======= ======= ======= ======= ======= =======
Total Return:
Total investment return based on net asset
value (1)............................... -4.37%(3) 6.30% 17.65% 25.87% -4.43% 27.20%
Ratios/Supplemental Data:
Net assets, end of period (000's
omitted)................................ $48,697 $43,466 $27,188 $16,295 $10,603 $ 4,730
Ratio of net expenses to average net
assets.................................. 0.54%(3) 0.55% 0.55% 0.55% 0.55% 0.55%
Ratio of net income to average net
assets.................................. 1.54%(3) 2.43% 2.68% 4.78% 4.35% 5.41%
Portfolio turnover rate................... 103%(3) 118% 72% 98% 78% 81%
Average commission rate per share (2)..... $0.0483 $0.0512 $0.0536
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 $ 0.53 $ 0.46 $ 0.59
Ratio of expenses to average net
assets................................ 0.58% 0.69% 0.72% 0.77% 0.89%
Amount reimbursed....................... $14,093 $29,686 $22,306 $16,706 $13,353
</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.
(2) Average commission rate per share disclosure is not required for fiscal
years prior to December 31, 1996.
(3) Computed on an annualized basis.
See accompanying notes.
36
<PAGE> 37
<TABLE>
<CAPTION>
HIGH HIGH
GRADE BOND YIELD BOND
PORTFOLIO PORTFOLIO
------------------------------------------------------ -----------------------------------------------------------
1998 1997 1996 1995 1994 1993 1998 1997 1996 1995 1994 1993
------ ------ ------ ------ ------ ------ ------- ------ ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$10.11 $ 9.83 $ 9.98 $ 9.44 $10.23 $10.14 $ 10.21 $ 9.91 $ 9.69 $ 9.32 $ 10.44 $ 9.92
0.34 0.69 0.72 0.77 0.76 0.77 0.36 0.79 0.84 0.87 0.91 0.95
0.05 0.28 (0.15) 0.54 (0.79) 0.09 0.07 0.36 0.33 0.49 (1.01) 0.58
------ ------ ------ ------ ------ ------ ------- ------ ------- ------- ------- -------
0.39 0.97 0.57 1.31 (0.03) 0.86 0.43 1.15 1.17 1.36 (0.10) 1.53
------ ------ ------ ------ ------ ------ ------- ------ ------- ------- ------- -------
(0.34) (0.69) (0.72) (0.77) (0.76) (0.77) (0.36) (0.79) (0.84) (0.87) (0.91) (0.95)
(0.06) (0.11) (0.12) (0.11) (0.06)
------ ------ ------ ------ ------ ------ ------- ------ ------- ------- ------- -------
(0.34) (0.69) (0.72) (0.77) (0.76) (0.77) (0.36) (0.85) (0.95) (0.99) (1.02) (1.01)
------ ------ ------ ------ ------ ------ ------- ------ ------- ------- ------- -------
$10.16 $10.11 $ 9.83 $ 9.98 $ 9.44 $10.23 $ 10.28 $10.21 $ 9.91 $ 9.69 $ 9.32 $ 10.44
====== ====== ====== ====== ====== ====== ======= ====== ======= ======= ======= =======
10.71%(3) 10.24% 5.94% 14.26% -0.26% 8.74% 11.33%(3) 12.07% 12.65% 15.15% -1.01% 15.05%
$7,595 $5,374 $3,535 $3,208 $2,452 $2,349 $12,820 $8,623 $ 5,929 $ 4,810 $ 4,172 $ 4,536
0.51%(3) 0.52% 0.55% 0.55% 0.55% 0.55% 0.60%(3) 0.57% 0.55% 0.55% 0.55% 0.55%
6.60%(3) 6.94% 7.22% 7.81% 7.76% 7.58% 7.09%(3) 7.74% 8.47% 8.96% 9.17% 9.25%
32%(3) 31% 32% 14% 15% 38% 21%(3) 35% 30% 32% 10% 58%
$ 0.68 $ 0.70 $ 0.74 $ 0.73 $ 0.76 $ 0.78 $ 0.81 $ 0.84 $ 0.88 $ 0.92
0.57% 0.80% 0.84% 0.80% 0.72% 0.65% 0.87% 0.88% 0.84% 0.85%
$2,294 $8,233 $8,255 $6,207 $5,343 $5,819 $17,094 $15,105 $12,667 $12,872
</TABLE>
37
<PAGE> 38
EQUITRUST VARIABLE INSURANCE SERIES FUND
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
MANAGED PORTFOLIO
------------------------------------------------------------------------
1998 1997 1996 1995 1994 1993
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period...... $ 12.55 $ 12.40 $ 11.71 $ 9.93 $ 11.33 $ 10.06
Income From Investment Operations
Net investment income................. 0.25 0.53 0.60 0.65 0.66 0.72
Net gains or losses on securities
(both realized and unrealized)...... (0.31) 0.79 1.44 1.90 (1.22) 1.57
------- ------- ------- ------- ------- -------
Total from investment operations........ (0.06) 1.32 2.04 2.55 (0.56) 2.29
------- ------- ------- ------- ------- -------
Less Distributions
Dividends (from net investment
income)............................. (0.52) (0.50) (0.59) (0.54) (0.63)
Distributions (from capital gains).... (0.65) (0.85) (0.18) (0.23) (0.39)
Distributions in excess of net
realized gains...................... (0.07)
------- ------- ------- ------- ------- -------
Total distributions..................... 0.00 (1.17) (1.35) (0.77) (0.84) (1.02)
------- ------- ------- ------- ------- -------
Net asset value, end of period............ $ 12.49 $ 12.55 $ 12.40 $ 11.71 $ 9.93 $ 11.33
======= ======= ======= ======= ======= =======
Total Return:
Total investment return based on net
asset value (1)....................... 4.66%(3) 10.67% 17.39% 25.69% -4.96% 22.71%
Ratios/Supplemental Data:
Net assets, end of period (000's
omitted).............................. $55,594 $44,949 $26,022 $14,487 $ 9,758 $ 4,951
Ratio of net expenses to average net
assets................................ 0.53%(3) 0.54% 0.55% 0.55% 0.55% 0.55%
Ratio of net income to average net
assets................................ 4.40%(3) 4.94% 4.73% 5.80% 6.23% 6.23%
Portfolio turnover rate................. 64%(3) 52% 82% 48% 59% 59%
Average commission rate per share (2)... $0.0536 $0.0557 $0.0534
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 $ 0.62 $ 0.63 $ 0.67
Ratio of expenses to average net
assets................................ 0.60% 0.75% 0.77% 0.80% 0.91%
Amount reimbursed....................... $17,771 $38,874 $26,008 $19,147 $15,076
</TABLE>
38
<PAGE> 39
<TABLE>
<CAPTION>
MONEY MARKET PORTFOLIO BLUE CHIP PORTFOLIO
- --------------------------------------------------- ------------------------------------------------------
1998 1997 1996 1995 1994 1993 1998 1997 1996 1995 1994 1993
- ------ ------ ------ ------ ------ ------ ------- ------- ------- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 31.01 $ 24.68 $ 20.70 $15.82 $15.67 $13.96
0.02 0.05 0.05 0.05 0.04 0.03 0.26 0.42 0.45 0.39 0.34 0.29
4.94 6.34 3.99 4.80 0.07 1.72
- ------ ------ ------ ------ ------ ------ ------- ------- ------- ------ ------ ------
0.02 0.05 0.05 0.05 0.04 0.03 5.20 6.76 4.44 5.19 0.41 2.01
- ------ ------ ------ ------ ------ ------ ------- ------- ------- ------ ------ ------
(0.02) (0.05) (0.05) (0.05) (0.04) (0.03) (0.42) (0.34) (0.31) (0.26) (0.30)
(0.01) (0.12)
- ------ ------ ------ ------ ------ ------ ------- ------- ------- ------ ------ ------
(0.02) (0.05) (0.05) (0.05) (0.04) (0.03) 0.00 (0.43) (0.46) (0.31) (0.26) (0.30)
- ------ ------ ------ ------ ------ ------ ------- ------- ------- ------ ------ ------
$ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 36.21 $ 31.01 $ 24.68 $20.70 $15.82 $15.67
====== ====== ====== ====== ====== ====== ======= ======= ======= ====== ====== ======
5.19%(3) 5.07% 4.90% 5.47% 3.68% 2.68% 23.42%(3) 27.41% 21.43% 32.81% 2.65% 14.36%
$7,619 $6,078 $3,819 $3,159 $2,658 $2,300 $51,962 $31,865 $14,493 $6,665 $3,262 $1,654
0.45%(3) 0.48% 0.55% 0.55% 0.55% 0.55% 0.32%(3) 0.33% 0.48% 0.55% 0.55% 0.55%
4.72%(3) 4.65% 4.58% 5.27% 3.63% 2.65% 1.70%(3) 1.83% 1.92% 2.07% 2.19% 1.92%
0%(3) 0% 0% 0% 0% 0% 1%(3) 3% 2% 1% 0% 0%
$0.0503 $0.0353 $0.0825
$ 0.05 $ 0.04 $ 0.05 $ 0.04 $ 0.02 $ 0.38 $ 0.30 $ 0.24
0.55% 0.82% 0.90% 0.82% 0.79% 0.59% 0.81% 0.89%
$2,912 $9,569 $9,816 $7,157 $5,838 $1,952 $6,360 $5,495
</TABLE>
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