-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TdrDJLojUL8OO3IsCbjUUJVRrWP9BUoFocl2zos/duaLPvqhN7fca/GC2QKkC9CH E4LjyHvog/Ctqo5OAFzXAg== 0001047469-04-027468.txt : 20040827 0001047469-04-027468.hdr.sgml : 20040827 20040827162010 ACCESSION NUMBER: 0001047469-04-027468 CONFORMED SUBMISSION TYPE: N-CSRS PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20040630 FILED AS OF DATE: 20040827 DATE AS OF CHANGE: 20040827 EFFECTIVENESS DATE: 20040827 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EQUITRUST VARIABLE INSURANCE SERIES FUND CENTRAL INDEX KEY: 0000811707 IRS NUMBER: 426407453 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-CSRS SEC ACT: 1940 Act SEC FILE NUMBER: 811-05069 FILM NUMBER: 041002731 BUSINESS ADDRESS: STREET 1: 5400 UNIVERSITY AVE CITY: WEST DES MOINES STATE: IA ZIP: 50266-5997 BUSINESS PHONE: 5152255400 MAIL ADDRESS: STREET 1: 5400 UNIVERSITY AVENUE CITY: WEST DES MOINES STATE: IA ZIP: 50266-5997 FORMER COMPANY: FORMER CONFORMED NAME: FBL VARIABLE INSURANCE SERIES FUND DATE OF NAME CHANGE: 19920703 N-CSRS 1 a2142271zn-csrs.txt N-CSRS UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 33-12791 & 811-5069 --------------------------------------------- EquiTrust Variable Insurance Series Fund - ------------------------------------------------------------------------------- (Exact name of registrant as specified in charter) 5400 University Avenue, West Des Moines IA 50266-5997 - ------------------------------------------------------------------------------- (Address of principal executive offices) (Zip code) Kristi Rojohn, 5400 University Avenue, West Des Moines IA 50266-5997 - ------------------------------------------------------------------------------- (Name and address of agent for service) Registrant's telephone number, including area code: 515/225-5400 ---------------------------- Date of fiscal year end: December 31, 2004 -------------------------- Date of reporting period: June 30, 2004 ------------------------- ITEM 1. REPORTS TO STOCKHOLDERS. [EQUITRUST FINANCIAL SERVICES LOGO] EquiTrust Variable Insurance Series Fund SEMI-ANNUAL REPORT JUNE 30, 2004 5400 UNIVERSITY AVENUE WEST DES MOINES, IA 50266 1-877-860-2904 1-515-225-5586 This report is not to be distributed unless preceded or accompanied by a current prospectus. PRESIDENT'S LETTER Dear Shareholder: Both equity investors and fixed income investors have experienced moderate returns so far in 2004. After their performance during 2003, the equity markets have been more subdued so far this year. The S&P 500 Stock Composite Index (the "S&P 500") climbed almost 29% in 2003, but in the six-month period ended June 30th, it had returned just 3.44%. Similarly, the NASDAQ Composite (the "NASDAQ") returned 2.43% in the first half of 2004, relative to a gain of over 50% in 2003. Small company stocks generally outperformed those of large companies, as the Russell 2000 returned 6.80%. However, during the second quarter, large company stock indexes began gaining against the small company indexes. Returns in the fixed income markets were modest due to rising interest rates and, consequently, declining security values. Numerous benchmarks incurred losses, while others achieved only meager gains. For example, the Lehman Brothers U.S. Aggregate Index, a measure of the broad domestic fixed income security market, recorded a return of just 0.15% for the six-month period; its income gain was almost entirely offset by losses in the value of its underlying securities. High-grade corporate issues and U.S. Treasury securities, as represented by their respective Lehman Brothers benchmarks, actually suffered losses, while high yield and mortgage-backed securities generally recorded small gains. The financial markets have operated so far this year under expectations of rising inflation and, consequently, interest rates. After several years of benign inflation and even a threat of deflation, prices appear to be creeping upward in goods and services as the economy improves. For the past several months, the financial markets have expected the Federal Reserve Board (the "Fed") to begin raising the short-term federal funds rate to prevent any severe inflation threat. Indeed, the Fed did raise the benchmark rate in June, from 1% to 1.25%, after having cut it repeatedly between January, 2001 and June, 2003. The Fed has also signaled its intent to make further hikes as necessary. Fixed income investors have actually been demanding higher yields for the past few months to compensate for higher expected inflation. Reflecting the inverse relationship between rates and bond prices, fixed income security values have declined as a result of the higher yields. While bond investors continue to receive their interest payments, their total return has been suffering due to the decline in the value of their bonds. As mentioned above, for some fixed income benchmarks, the decline in security values has significantly impacted total returns to date. In spite of continued growth in corporate earnings and improvement in the economy in general, equity performance has largely been restrained. Here, too, inflation has indirectly muted equity returns as fixed income investments have become more attractive relative to equity investments due to rising interest rates. In addition, investor expectations for strong earnings contributed to the strong performance of equities in 2003 and valuations now account for those expectations. Both equity and fixed income securities face challenges to near-term performance. Equity valuations are becoming more attractive as a consequence of continued earnings growth, but returns may be modest until valuations dip below long-term averages. Despite their interest payments, fixed income investments may continue to record modest total returns as long as interest rates rise and bond prices decline. In this environment, investors should assess their risk tolerance, determine an appropriate asset allocation suited to that risk tolerance and rebalance their portfolios annually to capture the value of "buying low and selling high." The Fund's portfolios provide a means for our investors to gain exposure to the domestic equity and fixed income markets. Below is a summary of how the individual portfolios have performed so far this year. MONEY MARKET: The interest rates offered by money market funds reflect the rates set by central banks such as the Federal Open Market Committee ("FOMC") and the British Banker's Association ("BBA"). The FOMC controls the Federal Funds rate (the overnight lending rate between banks), and the BBA sets the London Interbank Offered Rate ("LIBOR") (the interest rate banks charge each other in England's Eurodollar market). The FOMC met June 30, 2004 and raised the Federal Funds rate by a quarter percent to 1.25%. The committee said it will move "at a pace that is likely to be measured" but added that the policymaking board "will respond to changes in economic prospects as needed to fulfill its obligation to maintain price stability." In other words, short-term interest rates are going to be raised but the FOMC plans a gentle rise in rates. However, whether they can follow this path will depend largely on the strength of the economy and, more importantly, inflation. Inflation has accelerated markedly this year, driven largely by higher food and energy costs, but the FOMC down-played inflation risks claiming that the increase was due, in part, to "transitory factors." The committee knows that it will have to raise rates towards a more normal level in the years ahead, but it wants to do so in a relatively benign fashion until it feels positive that the investment and employment uptrends are securely entrenched. The Federal Funds rate is expected to rise to 2.25% by the end of the year. 2 HIGH GRADE BOND: The two-year Treasury yield rose by 86 basis points (.86%) to 2.68%, the ten-year Treasury yield rose 34 basis points (.34%) to 4.58%, and the thirty-year Treasury yield rose 22 basis points (.22%) to 5.29% over the six-month reporting period ended June 30, 2004. During the six-month period ended June 30, 2004, the High Grade Bond Portfolio underperformed the Lehman Brothers U.S. Aggregate Index ("Aggregate Index"), as reflected by the .09% total return produced by the Portfolio versus the .15% total return produced by the Index. The total returns for the major components of the Aggregate Index for this period were as follows: U.S. Fixed Rate Mortgage Backed Securities (36% of the Index), .77%; U.S. Government Securities (35% of the Index), -.13%; and U.S. Investment Grade Corporate Securities (21% of the Index), -.26%. In comparison, the Portfolio had approximately 41% of its assets invested in fixed rate mortgage-backed securities, 32% in corporate securities and 27% in cash equivalents. The Index had an effective duration(1) of 4.77 as of June 30, 2004, while the effective duration of the Portfolio was 4.01. The Portfolio's overexposure to outperforming fixed-rate mortgage-backed securities and cash equivalents was not enough to offset the Portfolio's overexposure to underperforming investment grade corporate securities and fund expenses. Given the relatively low level of interest rates and the persisting signs that the economy is recovering, we continue to feel that it is not an appropriate time to take on a larger amount of interest rate risk than the Aggregate Index. However, given the very steep yield curve it is costly to remain in cash so we will keep the majority of the Portfolio invested in intermediate maturity securities. STRATEGIC YIELD: The Lehman Brothers High Yield Index ("High Yield Index") generated a return of 1.36% during the six-month period ending June 30, 2004, underperforming U.S. equities (the S & P 500 returned 2.60%), but outperforming the Lehman Brothers U.S. Investment Grade Corporate Securities Index (which had a return of -.26%). On a fundamental basis, a continued decline in defaults and improvement in the credit rating upgrade-to-downgrade ratio helped the high yield market outperform the investment grade corporate market. The option-adjusted spread on the High Yield Index finished the current period at 393 basis points (3.93%) which was only 1 basis point (.01%) lower than at the start of the period. The High Yield Index had an excess return of 155 basis points (1.55%) relative to duration neutral U.S. Treasuries during the period. The range of total return by rating category was not widely dispersed with the Caa rated component of the Index returning 1.05%, Ba rated component returning 1.15% and B rated component returning 1.25% over the six-month reporting period. During the six-month reporting period, the Portfolio produced a total return of 2.76%, which exceeded the return of the High Yield Index. The general outperformance of the securities held by the Portfolio more than offset fund expenses and the Portfolio's higher exposure to underperforming cash equivalents and investment grade issues than the High Yield Index. The Portfolio has historically invested in a mix of high yield and investment grade issues, attempting to find attractive issues in both markets. As always, we will attempt to seek out securities in both the investment grade and non-investment grade markets that we feel offer attractive potential returns for the amount of risk taken. MANAGED: The Managed Portfolio returned 2.62% through June 30, 2004, relative to 3.44% for the S&P 500. The Portfolio remains most heavily allocated to quality equities, but inflows have raised its cash levels and brought down both the equity and fixed income weightings. Equity valuations have improved of late with continued growth in earnings, so that trailing P/E multiples are no longer at extreme levels. From a long-term perspective though, valuation is still above average and not broadly compelling. As of June 30th, the S&P 500 traded at 20.4 times trailing earnings, down from almost 24 times earnings in February, but high relative to a long-term average near sixteen. Interest rates have risen modestly since the beginning of the year, and the higher yields are making fixed income securities more attractive on an absolute basis and also relative to equities. We would expect to work down the Portfolio's cash level by purchasing additional fixed income or equity securities as either asset class becomes more attractive. VALUE GROWTH: For the first half of 2004, the Portfolio's performance generally tracked that of its benchmark, the S&P 500. It returned 3.20% for the period, whereas the S&P 500 gained 3.44%. We have positioned the Portfolio so that it is weighted most heavily towards high quality stocks and sectors as well as those that have historically performed the best in a period of decelerating earnings growth. This means that the Portfolio is heavy in the energy, consumer staples and health care sectors, and underweight in more cyclical sectors such as consumer discretionary and information technology. It does have a substantial weight in utility stocks as well, but we trimmed its exposure to this sector as rates rose this spring. - ---------- (1) Duration is a measure of interest rate risk for individual securities and portfolios. The lower the duration for a security or portfolio, the less sensitive it is to movements in interest rates. 3 BLUE CHIP: The Blue Chip Portfolio passively tracks the direction of the large capitalization equity market. Year-to-date, it has returned 0.76%. The Portfolio remains substantially invested in common stocks of large companies and is designed for those investors who prefer substantial exposure to common stocks at all times or who wish to make their own market value judgments. We appreciate your investment in the Fund and we take seriously our task of seeking to grow and protect that investment. Thank you for continued support of the Fund. /s/ Craig A. Lang CRAIG A. LANG PRESIDENT August 2, 2004 An investment in the Money Market Portfolio is neither insured nor guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Portfolio seeks to preserve the net asset value of $1.00 per share, it is possible to lose money by investing in the Portfolio. Past performance is not a guarantee of future results. 4 EQUITRUST VARIABLE INSURANCE SERIES FUND STATEMENTS OF ASSETS AND LIABILITIES JUNE 30, 2004 (UNAUDITED)
HIGH STRATEGIC VALUE GROWTH GRADE BOND YIELD MANAGED MONEY MARKET BLUE CHIP PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO ------------ ------------ ------------ ------------ ------------ ------------ ASSETS Investments in securities, at value (cost -- $49,086,147; $27,141,382; $26,669,863; $60,356,164; $6,196,957; and $69,689,505, respectively) $ 54,744,389 $ 27,549,009 $ 27,443,583 $ 70,066,869 $ 6,196,957 $ 81,302,886 Cash 49,176 22,382 106,968 48,860 55,130 39,981 Accrued dividends and interest receivable 64,578 189,754 493,886 144,251 1,338 89,020 Receivable for fund shares sold 20,124 7,415 12,916 19,081 461,283 18,158 Prepaid expense and other assets 834 409 397 1,042 93 1,264 ------------ ------------ ------------ ------------ ------------ ------------ Total Assets $ 54,879,101 $ 27,768,969 $ 28,057,750 $ 70,280,103 $ 6,714,801 $ 81,451,309 ------------ ------------ ------------ ------------ ------------ ------------ LIABILITIES Payable for fund shares redeemed $ 50,299 $ 28,657 $ 30,036 $ 84,153 $ 8,042 $ 84,112 Accrued expenses 11,132 7,763 7,097 12,750 4,924 14,146 ------------ ------------ ------------ ------------ ------------ ------------ Total Liabilities 61,431 36,420 37,133 96,903 12,966 98,258 ------------ ------------ ------------ ------------ ------------ ------------ NET ASSETS $ 54,817,670 $ 27,732,549 $ 28,020,617 $ 70,183,200 $ 6,701,835 $ 81,353,051 ============ ============ ============ ============ ============ ============ ANALYSIS OF NET ASSETS Paid in Capital $ 57,134,496 $ 27,367,862 $ 29,602,694 $ 60,604,416 $ 6,701,835 $ 76,117,178 Accumulated undistibuted net investment income 284,952 -- -- 648,559 -- 636,725 Accumulated undistibuted net realized loss from investment transactions (8,260,020) (42,940) (2,355,797) (780,480) -- (7,014,233) Net unrealized appreciation of investments 5,658,242 407,627 773,720 9,710,705 -- 11,613,381 ------------ ------------ ------------ ------------ ------------ ------------ NET ASSETS $ 54,817,670 $ 27,732,549 $ 28,020,617 $ 70,183,200 $ 6,701,835 $ 81,353,051 ============ ============ ============ ============ ============ ============ Shares issued and outstanding as of June 30, 2004 4,564,065 2,723,550 3,078,945 4,739,047 6,701,835 2,434,650 NET ASSET VALUE PER SHARE $ 12.01 $ 10.18 $ 9.10 $ 14.81 $ 1.00 $ 33.41 ============ ============ ============ ============ ============ ============
SEE ACCOMPANYING NOTES. 5 STATEMENTS OF OPERATIONS SIX MONTHS ENDED JUNE 30, 2004 (UNAUDITED)
HIGH STRATEGIC VALUE GROWTH GRADE BOND YIELD MANAGED MONEY MARKET BLUE CHIP PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO ------------ ------------ ------------ ------------ ------------ ------------ INVESTMENT INCOME Dividends $ 406,903 $ 23,472 $ 52,770 $ 563,643 $ -- $ 732,164 Interest 35,238 623,085 851,582 280,926 32,808 28,797 Foreign tax withholding (1,801) -- -- (2,546) -- -- ------------ ------------ ------------ ------------ ------------ ------------ Total Investment Income 440,340 646,557 904,352 842,023 32,808 760,961 EXPENSES Paid to EquiTrust Investment Management Services, Inc.: Investment advisory and management fees 120,060 40,378 60,189 152,487 8,115 80,268 Accounting fees 13,340 6,730 6,688 14,951 1,623 14,664 Custodial fees 4,127 3,903 3,626 4,459 4,242 3,734 Professional fees 5,235 2,632 2,624 6,656 643 7,869 Reports to shareholders 1,709 873 868 2,179 216 2,569 Trustees' fees and expenses 2,068 1,042 1,038 2,631 255 3,119 Insurance and bonds 612 327 311 782 75 923 Miscellaneous 8,408 5,845 5,456 9,504 3,694 11,223 ------------ ------------ ------------ ------------ ------------ ------------ Total Expenses 155,559 61,730 80,800 193,649 18,863 124,369 Fees paid indirectly (171) (164) (205) (185) (286) (133) ------------ ------------ ------------ ------------ ------------ ------------ Net Expenses 155,388 61,566 80,595 193,464 18,577 124,236 ------------ ------------ ------------ ------------ ------------ ------------ Net Investment Income 284,952 584,991 823,757 648,559 14,231 636,725 NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) from investment transactions 340,227 (42,940) 54,883 786,623 -- (556,374) Change in unrealized appreciation/ depreciation of investments 1,047,755 (510,604) (162,160) 347,471 -- 549,821 ------------ ------------ ------------ ------------ ------------ ------------ Net Gain (Loss) on Investments 1,387,982 (553,544) (107,277) 1,134,094 -- (6,553) ------------ ------------ ------------ ------------ ------------ ------------ Net Increase in Net Assets Resulting from Operations $ 1,672,934 $ 31,447 $ 716,480 $ 1,782,653 $ 14,231 $ 630,172 ============ ============ ============ ============ ============ ============
SEE ACCOMPANYING NOTES. 6 STATEMENTS OF CHANGES IN NET ASSETS
HIGH VALUE GROWTH GRADE BOND PORTFOLIO PORTFOLIO ----------------------------- ----------------------------- SIX MONTHS SIX MONTHS ENDED YEAR ENDED ENDED YEAR ENDED JUNE 30, 2004 DECEMBER 31, JUNE 30, 2004 DECEMBER 31, (UNAUDITED) 2003 (UNAUDITED) 2003 ------------- ------------ ------------- ------------ OPERATIONS Net investment income $ 284,952 $ 563,058 $ 584,991 $ 1,190,431 Net realized gain (loss) from investment transactions 340,227 1,385,175 (42,940) 70,428 Change in unrealized appreciation/(depreciation) of investments 1,047,755 10,456,789 (510,604) 140,930 ------------- ------------ ------------- ------------ Net Increase in Net Assets Resulting from Operations 1,672,934 12,405,022 31,447 1,401,789 DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM Net investment income (563,058) (632,800) (584,991) (1,190,431) Net realized gain from investment transactions -- -- (70,428) (126,083) ------------- ------------ ------------- ------------ Total Dividends and Distributions (563,058) (632,800) (655,419) (1,316,514) CAPITAL SHARE TRANSACTIONS 895,387 87,080 1,697,289 1,589,484 ------------- ------------ ------------- ------------ Total Increase (Decrease) in Net Assets 2,005,263 11,859,302 1,073,317 1,674,759 NET ASSETS Beginning of period 52,812,407 40,953,105 26,659,232 24,984,473 ------------- ------------ ------------- ------------ End of period (including undistributed net investment income as set forth below) $ 54,817,670 $ 52,812,407 $ 27,732,549 $ 26,659,232 ============= ============ ============= ============ Undistributed Net Investment Income $ 284,952 $ 563,058 $ -- $ -- ============= ============ ============= ============
SEE ACCOMPANYING NOTES. 7
STRATEGIC YIELD MANAGED PORTFOLIO PORTFOLIO ------------------------------ ------------------------------ SIX MONTHS SIX MONTHS ENDED YEAR ENDED ENDED YEAR ENDED JUNE 30, 2004 DECEMBER 31, JUNE 30, 2004 DECEMBER 31, (UNAUDITED) 2003 (UNAUDITED) 2003 ------------- ------------- ------------- ------------- OPERATIONS Net investment income $ 823,757 $ 1,675,320 $ 648,559 $ 1,367,844 Net realized gain (loss) from investment transactions 54,883 (573,460) 786,623 1,211,076 Change in unrealized appreciation/(depreciation) of investments (162,160) 1,601,235 347,471 9,622,628 ------------- ------------- ------------- ------------- Net Increase in Net Assets Resulting from Operations 716,480 2,703,095 1,782,653 12,201,548 DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM Net investment income (823,757) (1,675,320) (1,367,844) (1,494,900) Net realized gain from investment transactions -- -- -- -- ------------- ------------- ------------- ------------- Total Dividends and Distributions (823,757) (1,675,320) (1,367,844) (1,494,900) CAPITAL SHARE TRANSACTIONS 2,629,488 2,075,200 3,035,618 1,598,322 ------------- ------------- ------------- ------------- Total Increase (Decrease) in Net Assets 2,522,211 3,102,975 3,450,427 12,304,970 NET ASSETS Beginning of period 25,498,406 22,395,431 66,732,773 54,427,803 ------------- ------------- ------------- ------------- End of period (including undistributed net investment income as set forth below) $ 28,020,617 $ 25,498,406 $ 70,183,200 $ 66,732,773 ============= ============= ============= ============= Undistributed Net Investment Income $ -- $ -- $ 648,559 $ 1,367,844 ============= ============= ============= =============
SEE ACCOMPANYING NOTES. 8
MONEY MARKET BLUE CHIP PORTFOLIO PORTFOLIO ------------------------------ ------------------------------ SIX MONTHS SIX MONTHS ENDED YEAR ENDED ENDED YEAR ENDED JUNE 30, 2004 DECEMBER 31, JUNE 30, 2004 DECEMBER 31, (UNAUDITED) 2003 (UNAUDITED) 2003 ------------- ------------- ------------- ------------- OPERATIONS Net investment income $ 14,231 $ 35,564 $ 636,725 $ 1,194,008 Net realized gain (loss) from investment transactions -- -- (556,374) (4,671,594) Change in unrealized appreciation/(depreciation) of investments -- -- 549,821 19,623,555 ------------- ------------- ------------- ------------- Net Increase in Net Assets Resulting from Operations 14,231 35,564 630,172 16,145,969 DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM Net investment income (14,231) (35,564) (1,194,008) (1,066,311) Net realized gain from investment transactions -- -- -- -- ------------- ------------- ------------- ------------- Total Dividends and Distributions (14,231) (35,564) (1,194,008) (1,066,311) CAPITAL SHARE TRANSACTIONS (25,717) (1,421,989) 2,084,797 1,053,814 ------------- ------------- ------------- ------------- Total Increase (Decrease) in Net Assets (25,717) (1,421,989) 1,520,961 16,133,472 NET ASSETS Beginning of period 6,727,552 8,149,541 79,832,090 63,698,618 ------------- ------------- ------------- ------------- End of period (including undistributed net investment income as set forth below) $ 6,701,835 $ 6,727,552 $ 81,353,051 $ 79,832,090 ============= ============= ============= ============= Undistributed Net Investment Income $ -- $ -- $ 636,725 $ 1,194,008 ============= ============= ============= =============
9 EQUITRUST VARIABLE INSURANCE SERIES FUND SCHEDULE OF INVESTMENTS VALUE GROWTH PORTFOLIO JUNE 30, 2004 (UNAUDITED)
SHARES HELD VALUE -------------- -------------- COMMON STOCKS (86.16%) BUSINESS SERVICES (4.08%) Affiliated Computer Services, Inc.-Class A 5,800(1) $ 307,052 Computer Associates International, Inc. 12,055 338,263 Compuware Corp. 16,050(1) 105,930 First Data Corp. 3,520 156,710 Microsoft Corp. 14,800 422,688 Oracle Corp. 12,300(1) 146,739 SunGard Data Systems, Inc. 6,200(1) 161,200 Symantec Corp. 13,600(1) 595,408 -------------- 2,233,990 CHEMICALS AND ALLIED PRODUCTS (8.09%) Abbott Laboratories 8,000 326,080 Bristol-Myers Squibb Co. 12,540 307,230 E.I. du Pont de Nemours & Co. 6,400 284,288 GlaxoSmithKline plc 5,500 228,030 Hospira, Inc. 800(1) 22,080 IVAX Corp. 13,600(1) 326,264 Johnson & Johnson 8,200 456,740 KV Pharmaceutical Co.-Class A 12,700(1) 293,243 Merck & Co., Inc. 9,764 463,790 Mylan Laboratories, Inc. 21,825 441,956 Olin Corp. 6,400 112,768 Pfizer, Inc. 19,449 666,712 SurModics, Inc. 11,992(1) 295,483 Wyeth 5,835 210,994 -------------- 4,435,658 COMMUNICATIONS (2.56%) ADC Telecommunications, Inc. 67,700(1) 192,268 Centurytel, Inc. 19,300 579,772 Comcast Corp.-Class A 3,235(1) 90,677 Ectel, Ltd. 614(1) 1,773 Nextel Communications, Inc. 20,200(1) 538,532 -------------- 1,403,022 DEPOSITORY INSTITUTIONS (8.86%) AmSouth Bancorporation 17,100 435,537 Associated Banc-Corp 12,940 383,412 Astoria Financial Corp. 7,700 281,666 Bank of America Corp. 10,417 881,487 Citigroup, Inc. 13,055 607,057 National City Corp. 6,830 239,118 New York Community Bancorp, Inc. 23,156 454,552 U. S. Bancorp 31,870 878,337 Wachovia Corp. 7,650 340,425 Wilmington Trust Corp. 9,500 353,590 -------------- 4,855,181 EATING & DRINKING PLACES (0.53%) Wendy's International, Inc. 8,400 $ 292,656 ELECTRIC, GAS AND SANITARY SERVICES (3.50%) Alliant Energy Corp. 8,660 225,853 Atmos Energy Corp. 17,012 435,337 Black Hills Corp. 7,520 236,880 Nisource, Inc. 19,500 402,090 Pepco Holdings, Inc. 16,200 296,136 Xcel Energy, Inc. 19,405 324,258 -------------- 1,920,554 ELECTRONIC AND OTHER ELECTRICAL EQUIPMENT (2.04%) Acuity Brands, Inc. 18,500 499,500 Adaptec, Inc. 23,150(1) 195,849 ECI Telecom, Ltd. 10,000(1) 68,300 Electronic Data Systems Corp. 5,745 110,017 Intel Corp. 8,900 245,640 -------------- 1,119,306 FABRICATED METAL PRODUCTS (1.09%) Cooper Industries, Ltd. 4,738 281,485 Shaw Group, Inc. 10,400(1) 105,352 Stanley Works (The) 4,600 209,668 -------------- 596,505 FOOD AND KINDRED PRODUCTS (5.29%) ConAgra Foods, Inc. 42,416 1,148,625 Sara Lee Corp. 23,400 537,966 Sensient Technologies Corp. 56,375 1,210,935 -------------- 2,897,526 FOOD STORES (3.03%) 7-Eleven, Inc. 35,930(1) 641,350 Kroger Co. 19,526(1) 355,373 Safeway, Inc. 26,230(1) 664,668 -------------- 1,661,391 GENERAL MERCHANDISE STORES (1.54%) Federated Department Stores, Inc. 6,008 294,993 Fred's, Inc. 14,700 324,723 Target Corp. 5,300 225,091 -------------- 844,807 HEALTH SERVICES (5.03%) Laboratory Corp. of America Holdings 18,500(1) 734,450 Province Healthcare Co. 35,900(1) 615,685 Schering-Plough Corp. 23,200 428,736 Select Medical Corp. 19,200 257,664 Taro Pharmaceutical Industries, Ltd. 6,600(1) 287,100 Universal Health Services, Inc.-Class B 9,420 432,284 -------------- 2,755,919
10
SHARES HELD VALUE -------------- -------------- HOLDING AND OTHER INVESTMENT OFFICES (2.85%) Highwoods Properties, Inc. 17,500 $ 411,250 MBIA, Inc. 11,400 651,168 Reckson Assoc. Realty Corp.-Class A 18,250 501,145 -------------- 1,563,563 INDUSTRIAL MACHINERY AND EQUIPMENT (2.49%) Cisco Systems, Inc. 6,500(1) 154,050 EMC Corp. 22,500(1) 256,500 Hewlett-Packard Co. 6,000 126,600 Ingersoll-Rand Co. Ltd.-Class A 9,950 679,685 Solectron Corp. 22,500(1) 145,575 -------------- 1,362,410 INSTRUMENTS AND RELATED PRODUCTS (4.31%) Agilent Technologies, Inc. 7,000(1) 204,960 Becton Dickinson & Co. 20,100 1,041,180 JDS Uniphase Corp. 16,400(1) 62,156 Medtronic, Inc. 2,800 136,416 Pall Corp. 25,980 680,416 Perkinelmer, Inc. 11,900 238,476 -------------- 2,363,604 INSURANCE CARRIERS (4.40%) Allstate Corp. 15,200 707,560 American International Group, Inc. 7,450 531,036 Protective Life Corp. 9,300 359,631 Safeco Corp. 8,800 387,200 WellPoint Health Networks, Inc. 3,800(1) 425,638 -------------- 2,411,065 METAL MINING (1.38%) Barrick Gold Corp. 20,000 395,000 Placer Dome, Inc. 21,600 359,424 -------------- 754,424 MISCELLANEOUS MANUFACTURING INDUSTRIES (0.71%) Emerson Electric Co. 2,300 146,165 Hasbro, Inc. 12,900 245,100 -------------- 391,265 MOTION PICTURES (0.31%) Time Warner, Inc. 9,600(1) 168,768 NONDEPOSITORY INSTITUTIONS (0.57%) Federal Home Loan Mortgage Corp. 4,900 310,170 OIL AND GAS EXTRACTION (4.14%) Burlington Resources, Inc. 20,000 723,600 EOG Resources, Inc. 5,800 346,318 Occidental Petroleum Co. 8,600 416,326 Rowan Companies, Inc. 16,900(1) 411,177 Whiting Petroleum Corp. 14,900(1) 374,735 -------------- 2,272,156 PAPER AND ALLIED PRODUCTS (1.67%) Abitibi Consolidated, Inc. 92,600 $ 637,088 Sonoco Products Co. 10,900 277,950 -------------- 915,038 PETROLEUM AND COAL PRODUCTS (5.13%) BP PLC 6,000 321,420 ChevronTexaco Corp. 7,050 663,475 ConocoPhillips 16,833 1,284,190 Marathon Oil Corp. 14,400 544,896 -------------- 2,813,981 PRIMARY METAL INDUSTRIES (0.70%) Northwest Pipe Co. 21,745(1) 383,799 PRINTING AND PUBLISHING (2.05%) Belo Corp. 26,400 708,840 Cenveo, Inc. 36,450(1) 106,799 R.R. Donnelley & Sons Co. 9,400 310,388 -------------- 1,126,027 RAILROAD TRANSPORTATION (0.23%) Union Pacific Corp. 2,155 128,115 SECURITY & COMMODITY BROKER (0.03%) Piper Jaffray Co. 347(1) 15,695 TOBACCO PRODUCTS (1.29%) Altria Group, Inc. 14,100 705,705 TRANSPORTATION -- BY AIR (0.45%) Petroleum Helicopters, Inc. (Non-Voting) 12,665(1) 245,828 TRANSPORTATION EQUIPMENT (4.03%) Federal Signal Corp. 13,300 247,513 Genuine Parts Co. 7,800 309,504 Honeywell International, Inc. 23,500 860,805 ITT Industries, Inc. 4,185 347,355 SPX Corp. 9,514 441,830 -------------- 2,207,007 WHOLESALE TRADE -- DURABLE GOODS (0.85%) Apogent Technologies, Inc. 14,600(1) 467,200 WHOLESALE TRADE -- NONDURABLE GOODS (1.16%) Dean Foods Co. 16,986(1) 633,748 MISCELLANEOUS EQUITIES (1.77%) H & Q Life Sciences Investors 23,336 364,514 NASDAQ-100 Trust 16,100(1) 607,775 -------------- 972,289 -------------- Total Common Stocks (Cost $41,570,130) 47,228,372
11
SHARES HELD VALUE -------------- -------------- SHORT-TERM INVESTMENTS (13.71%) MONEY MARKET MUTUAL FUND (1.36%) Blackrock Provident Institutional Funds, T-Fund Portfolio (Cost $747,612) 747,612 $ 747,612 PRINCIPAL AMOUNT -------------- COMMERCIAL PAPER (4.64%) NONDEPOSITORY INSTITUTIONS American General Finance Corp., 1.06%, due 07/06/04 $ 825,000 825,000 American General Finance Corp., 1.05%, due 07/07/04 450,000 450,000 General Electric Capital Corp., 1.11%, due 07/14/04 700,000 700,000 General Electric Capital Corp., 1.18%, due 07/20/04 570,000 570,000 -------------- Total Commercial Paper (Cost $2,545,000) 2,545,000 UNITED STATES GOVERNMENT AGENCIES (7.71%) Federal Home Loan Bank, due 07/28/04 1,100,000 1,099,166 Federal Home Loan Mortgage Corp., due 07/06/04 225,000 224,968 Federal Home Loan Mortgage Corp., due 07/20/04 800,000 799,552 Federal National Mortgage Assoc., due 07/02/04 500,000 499,986 Federal National Mortgage Assoc., due 07/07/04 1,600,000 1,599,733 -------------- Total United States Government Agencies (Cost $4,223,405) 4,223,405 -------------- Total Short-Term Investments (Cost $7,516,017) 7,516,017 -------------- Total Investments (Cost $49,086,147) (99.87%) 54,744,389 OTHER ASSETS LESS LIABILITIES (0.13%) Cash, receivables, prepaid expense and other assets, less liabilities 73,281 -------------- Total Net Assets (100.00%) $ 54,817,670 ==============
(1) Non-income producing securities. SEE ACCOMPANYING NOTES. 12 EQUITRUST VARIABLE INSURANCE SERIES FUND SCHEDULE OF INVESTMENTS HIGH GRADE BOND PORTFOLIO JUNE 30, 2004 (UNAUDITED)
SHARES HELD VALUE -------------- -------------- PREFERRED STOCKS (2.36%) DEPOSITORY INSTITUTIONS (1.62%) Chase Capital V, 7.03%, due 03/31/28 18,000 $ 450,180 HOLDING AND OTHER INVESTMENT OFFICES (0.74%) New Plan Excel Realty Trust-Series D, 7.80% 4,000 205,500 -------------- Total Preferred Stocks (Cost $561,620) 655,680 PRINCIPAL AMOUNT -------------- CORPORATE BONDS (28.75%) ELECTRIC, GAS AND SANITARY SERVICES (6.83%) Maritime & NE Pipeline, 144A, 7.70%, due 11/30/19 $ 700,000(1) 781,487 Oglethorpe Power (OPC Scherer), 6.974%, due 06/30/11 264,786 280,234 PacifiCorp, 6.90%, due 11/15/11 750,000 832,057 -------------- 1,893,778 FOOD STORES (2.29%) Ahold Finance USA, Inc., 8.25%, due 07/15/10 600,000 636,000 GENERAL MERCHANDISE STORES (0.95%) J.C. Penney & Co., 8.25%, due 08/15/22 254,000 263,525 HOLDING AND OTHER INVESTMENT OFFICES (2.99%) Meditrust, 7.60%, due 09/13/05 150,000 155,250 Security Capital Pacific, 7.20%, due 03/01/13 275,000 296,986 Washington REIT, 6.898%, due 02/15/18 350,000 377,338 -------------- 829,574 INSURANCE CARRIERS (3.08%) SunAmerica, 8.125%, due 04/28/23 700,000 855,078 SECURITY & COMMODITY BROKERS (4.28%) Morgan Stanley, 5.125%, due 02/11/19 1,300,000 1,187,277 TOBACCO PRODUCTS (2.99%) UST, Inc., 7.25%, due 06/01/09 750,000 829,238 PRINCIPAL AMOUNT VALUE -------------- -------------- TRANSPORTATION -- BY AIR (4.74%) Continental Airlines, Inc., 6.545%, due 08/02/20 $ 422,096 $ 396,771 Federal Express, 7.5%, due 01/15/18 203,228 229,556 Northwest Airlines, 7.575%, due 03/01/19 692,797 687,601 -------------- 1,313,928 TRANSPORTATION EQUIPMENT (0.60%) Ford Motor Co., 9.215%, due 09/15/21 150,000 165,552 -------------- Total Corporate Bonds (Cost $7,711,680) 7,973,950 MORTGAGE-BACKED SECURITIES (41.84%) FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA) (0.01%) Pool # 50276, 9.50%, due 02/01/20 1,945 2,205 GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (GNMA) (41.83%) Pool # 1512, 7.50%, due 12/20/23 47,172 51,057 Pool # 2631, 7.00%, due 08/01/28 73,490 78,145 Pool # 2658, 6.50%, due 10/01/28 114,998 120,220 Pool # 2701, 6.50%, due 01/20/29 139,218 145,436 Pool # 2796, 7.00%, due 08/01/29 125,962 133,842 Pool # 3039, 6.50%, due 02/01/31 51,779 54,065 Pool # 3040, 7.00%, due 02/01/31 102,006 108,333 Pool # 3188, 6.50%, due 02/20/32 328,027 342,434 Pool # 3239, 6.50%, due 05/01/32 290,246 302,993 Pool # 3261, 6.50%, due 07/20/32 573,215 598,390 Pool # 3320, 5.50%, due 12/01/32 1,595,180 1,595,628 Pool # 3333, 5.50%, due 01/01/33 1,306,776 1,306,812 Pool # 3375, 5.50%, due 04/01/33 207,566 207,571 Pool # 3390, 5.50%, due 05/01/33 937,757 937,783 Pool # 3403, 5.50%, due 06/01/33 1,596,518 1,596,561 Pool # 3458, 5.00%, due 10/01/33 949,928 922,106 Pool # 3499, 5.00%, due 01/01/34 1,468,394 1,424,158 Pool # 3556, 5.50%, due 05/01/34 1,596,255 1,595,424 Pool # 22630, 6.50%, due 08/01/28 64,381 67,305 Pool # 276337, 10.00%, due 08/15/19 9,775 10,979 -------------- 11,599,242 -------------- Total Mortgage-Backed Securities (Cost $11,552,808) 11,601,447 UNITED STATES TREASURY OBLIGATION (1.45%) U.S. Treasury Note, 7.25%, due 08/15/04 (Cost $400,358) 400,000 403,016
13
PRINCIPAL AMOUNT VALUE -------------- -------------- SHORT-TERM INVESTMENTS (24.94%) COMMERCIAL PAPER (6.85%) NONDEPOSITORY INSTITUTIONS (6.85%) American General Finance Corp., 1.06%, due 07/09/04 $ 950,000 $ 950,000 General Electric Capital Corp., 1.18%, due 07/20/04 950,000 950,000 -------------- Total Commercial Paper (Cost $1,900,000) 1,900,000 UNITED STATES GOVERNMENT AGENCIES (17.12%) Federal Home Loan Bank, due 07/16/04 1,100,000 1,099,537 Federal Home Loan Bank, due 07/28/04 400,000 399,676 Federal Home Loan Mortgage Corp., due 07/06/04 700,000 699,902 Federal Home Loan Mortgage Corp., due 07/20/04 350,000 349,776 Federal Home Loan Mortgage Corp., due 08/03/04 1,000,000 999,008 Federal Home Loan Mortgage Corp., due 08/17/04 750,000 748,815 Federal National Mortgage Assoc., due 07/14/04 450,000 449,834 -------------- Total United States Government Agencies (Cost $4,746,548) 4,746,548 SHARES HELD -------------- MONEY MARKET MUTUAL FUND (0.97%) Blackrock Provident Institutional Funds, T-Fund Portfolio (Cost $268,368) 268,368 268,368 -------------- Total Short-Term Investments (Cost $6,914,916) 6,914,916 -------------- Total Investments (Cost $27,141,382) (99.34%) 27,549,009 OTHER ASSETS LESS LIABILITIES (0.66%) Cash, receivables, prepaid expense and other assets, less liabilities 183,540 -------------- Total Net Assets (100.00%) $ 27,732,549 ==============
(1) Each unit was purchased at 104.481 on 04/20/01. As of 6/30/04, the carrying value of each unit was 111.641 and represented 2.82% of total net assets. SEE ACCOMPANYING NOTES. 14 EQUITRUST VARIABLE INSURANCE SERIES FUND SCHEDULE OF INVESTMENTS STRATEGIC YIELD PORTFOLIO JUNE 30, 2004 (UNAUDITED)
SHARES HELD VALUE -------------- -------------- PREFERRED STOCKS (4.58%) HOLDING AND OTHER INVESTMENT OFFICES (1.28%) New Plan Excel Realty Trust-- Series D, 7.80% 7,000 $ 359,625 METAL MINING (3.30%) Cameco Corp., 8.75%, due 09/30/47 36,000 923,400 -------------- Total Preferred Stocks (Cost $1,213,640) 1,283,025 PRINCIPAL AMOUNT -------------- CORPORATE BONDS (72.85%) CHEMICALS AND ALLIED PRODUCTS (8.81%) Lyondell Chemical Co., 9.625%, due 05/01/07 $ 900,000 945,000 Nova Chemicals, Ltd., 7.875%, due 09/15/25 800,000 784,664 Polyone Corp., 8.875%, due 05/01/12 750,000 740,625 -------------- 2,470,289 COMMUNICATIONS (1.91%) Telephone & Data Systems, Inc., 7.00%, due 08/01/06 500,000 534,665 ELECTRIC, GAS AND SANITARY SERVICES (9.65%) Alliant Energy Resources, Inc., 9.75%, due 01/15/13 1,000,000 1,260,110 ESI Tractebel, 7.99%, due 12/30/11 306,196 316,913 Semco Energy, Inc., 7.125%, due 05/15/08 900,000 927,000 Waterford 3 Nuclear Power Plant, 8.09%, due 01/02/17 194,488 201,212 -------------- 2,705,235 GENERAL MERCHANDISE STORES (7.15%) DR Structured Finance, 8.35%, due 02/15/04 376,793(1) 252,452 J.C. Penney & Co., 8.25%, due 8/15/22 255,000 264,562 Woolworth (FW) Corp., 8.50%, due 01/15/22 1,400,000 1,487,500 -------------- 2,004,514 PRINCIPAL AMOUNT VALUE -------------- -------------- HOLDING AND OTHER INVESTMENT OFFICES (13.14%) Bradley Operating, L.P., 7.20%, due 01/15/08 $ 450,000 $ 476,586 Federal Realty Investment Trust, 7.48%, due 08/15/26 600,000 634,669 First Industrial LP, 7.60%, due 07/15/28 700,000 750,785 iStar Financial Inc., 7.00%, due 03/15/08 300,000 319,500 Price Development Company, 7.29%, due 03/11/08 450,000 455,917 Trinet Corp. Realty, 7.70%, due 07/15/17 1,000,000 1,043,680 -------------- 3,681,137 INSURANCE CARRIERS (6.10%) Markel Capital Trust, 8.71%, due 01/01/46 1,000,000 1,039,020 PXRE Capital Trust, 8.85%, due 02/01/27 670,000 670,000 -------------- 1,709,020 METAL MINING (2.75%) Teck Cominco Ltd., 3.75%, due 07/15/06 800,000 770,040 PAPER AND ALLIED PRODUCTS (10.88%) Bowater, Inc., 9.375%, due 12/15/21 900,000 969,912 Cascades, Inc., 7.25%, due 02/15/13 1,000,000 1,000,000 Potlatch Corp., 12.50%, due 12/01/09 900,000 1,078,083 -------------- 3,047,995 TRANSPORTATION -- BY AIR (4.95%) Continental Airlines, Inc., 7.461%, due 04/01/15 1,261,847 1,184,558 Northwest Airlines, 7.575%, due 03/01/19 203,509 201,983 -------------- 1,386,541 WATER TRANSPORTATION (7.51%) Overseas Shipholding Group, Inc., 8.75%, due 12/01/13 1,100,000 1,208,625 Windsor Petroleum Transportation, 144A, 7.84%, due 01/15/21 1,000,000(2) 894,430 -------------- 2,103,055 -------------- Total Corporate Bonds (Cost $19,708,156) 20,412,491
15
PRINCIPAL AMOUNT VALUE -------------- -------------- SHORT-TERM INVESTMENTS (20.51%) COMMERCIAL PAPER (4.46%) NONDEPOSITORY INSTITUTIONS American General Finance Corp., 1.20%, due 08/09/04 $ 500,000 $ 500,000 General Electric Capital Corp., 1.20%, due 07/28/04 750,000 750,000 -------------- Total Commercial Paper (Cost $1,250,000) 1,250,000 UNITED STATES GOVERNMENT AGENCIES (14.53%) Federal Home Loan Bank., due 07/16/04 400,000 399,830 Federal Home Loan Bank., due 07/23/04 750,000 749,537 Federal Home Loan Bank., due 08/06/04 500,000 499,400 Federal Home Loan Mortgage Corp., due 07/06/04 550,000 549,922 Federal Home Loan Mortgage Corp., due 07/20/04 400,000 399,776 Federal Home Loan Mortgage Corp., due 08/03/04 500,000 499,504 Federal Home Loan Mortgage Corp., due 08/17/04 975,000 973,460 -------------- Total United States Government Agencies (Cost $4,071,429) 4,071,429 SHARES HELD -------------- MONEY MARKET MUTUAL FUND (1.52%) Blackrock Provident Institutional Funds, T-Fund Portfolio (Cost $426,638) 426,638 426,638 -------------- Total Short-Term Investments (Cost $5,748,067) 5,748,067 -------------- Total Investments (Cost $26,669,863) (97.94%) 27,443,583 OTHER ASSETS LESS LIABILITIES (2.06%) Cash, receivables, prepaid expense and other assets, less liabilities 577,034 -------------- Total Net Assets (100.00%) $ 28,020,617 ==============
(1) Partial or no interest was received on this security on its last scheduled interest payment date. (2) Each unit was purchased at 80.500 on 8/26/99. As of 6/30/04, the carrying value of each unit was 89.443 and represents 3.19% of total net assets. SEE ACCOMPANYING NOTES. 16 EQUITRUST VARIABLE INSURANCE SERIES FUND SCHEDULE OF INVESTMENTS MANAGED PORTFOLIO JUNE 30, 2004 (UNAUDITED)
SHARES HELD VALUE -------------- -------------- COMMON STOCKS (62.81%) CHEMICALS AND ALLIED PRODUCTS (5.34%) Bristol-Myers Squibb Co. 12,300 $ 301,350 GlaxoSmithKline plc 4,700 194,862 IVAX Corp. 17,100(1) 410,229 Johnson & Johnson 7,200 401,040 KV Pharmaceutical Co.-Class A 12,600(1) 290,934 Merck & Co., Inc. 15,158 720,005 Mylan Laboratories, Inc. 26,325 533,081 Olin Corp. 17,100 301,302 Pfizer, Inc. 17,310 593,387 -------------- 3,746,190 COMMUNICATIONS (1.84%) Centurytel, Inc. 24,040 722,162 Comcast Corp.-Class A 3,930(1) 110,158 Nextel Communications, Inc. 17,200(1) 458,552 -------------- 1,290,872 DEPOSITORY INSTITUTIONS (8.53%) AmSouth Bancorporation 24,800 631,656 Associated Banc Corp. 22,833 676,542 Astoria Financial Corp. 10,100 369,458 Bank of America Corp. 11,136 942,328 Citigroup, Inc. 3,400 158,100 National City Corp. 8,695 304,412 New York Community Bancorp 44,834 880,091 U. S. Bancorp. 43,230 1,191,419 Wachovia Corp. 8,328 370,596 Wilmington Trust Corp. 12,500 465,250 -------------- 5,989,852 ELECTRIC, GAS AND SANITARY SERVICES (5.03%) Alliant Energy Corp. 22,115 576,759 Atmos Energy Corp. 38,252 978,869 Black Hills Corp. 9,655 304,133 Nisource, Inc. 25,000 515,500 Pepco Holdings, Inc. 40,600 742,168 Xcel Energy, Inc. 24,690 412,570 -------------- 3,529,999 ELECTRONIC AND OTHER ELECTRIC EQUIPMENT (1.51%) Acuity Brands, Inc. 33,850 913,950 Electronic Data Systems Corp. 7,500 143,625 -------------- 1,057,575 FABRICATED METAL PRODUCTS (1.28%) Cooper Industries, Ltd. 5,521 328,003 Stanley Works (The) 12,500 569,750 -------------- 897,753 FOOD AND KINDRED PRODUCTS (4.68%) ConAgra Foods, Inc. 42,230 1,143,588 Sara Lee Corp. 24,100 554,059 Sensient Technologies Corp. 73,945 1,588,339 -------------- 3,285,986 FOOD STORES (1.85%) Kroger Co. 25,186(1) $ 458,385 Safeway, Inc. 33,280(1) 843,315 -------------- 1,301,700 GENERAL MERCHANDISE STORES (0.54%) Federated Department Stores, Inc. 7,681 377,137 HEALTH SERVICES (2.32%) Province Healthcare Co. 26,400(1) 452,760 Schering-Plough Corp. 15,700 290,136 Select Medical Corp. 24,600 330,132 Taro Pharmaceutical Industries, Ltd. 6,030(1) 262,305 Universal Health Services, Inc.-Class B 6,350 291,402 -------------- 1,626,735 HOLDING AND OTHER INVESTMENT OFFICES (2.30%) Highwoods Properties, Inc. 21,500 505,250 MBIA, Inc. 7,781 444,451 Reckson Associates Realty Corp.- Class A 24,260 666,180 -------------- 1,615,881 INDUSTRIAL MACHINERY & EQUIPMENT (1.20%) Hewlett-Packard Co. 6,900 145,590 Ingersoll-Rand Co. Ltd.-Class A 10,222 698,265 -------------- 843,855 INSTRUMENTS AND RELATED PRODUCTS (2.44%) Becton Dickinson & Co. 20,000 1,036,000 Pall Corp. 25,750 674,392 -------------- 1,710,392 INSURANCE CARRIERS (2.82%) Allstate Corp. 15,300 712,215 Protective Life 6,200 239,754 Safeco Corp. 11,200 492,800 WellPoint Health Networks, Inc. 4,800(1) 537,648 -------------- 1,982,417 METAL MINING (2.36%) Barrick Gold Corp. 41,200 813,700 Placer Dome, Inc. 50,500 840,320 -------------- 1,654,020 MISCELLANEOUS MANUFACTURING INDUSTRIES (0.07%) Emerson Electric Co. 800 50,840 OIL AND GAS EXTRACTION (2.49%) Burlington Resources, Inc. 15,000 542,700 Occidental Petroleum Co. 16,500 798,765 Rowan Companies, Inc. 16,700(1) 406,311 -------------- 1,747,776
17
SHARES HELD VALUE -------------- -------------- PAPER AND ALLIED PRODUCTS (2.71%) Abitibi Consolidated, Inc. 133,500 $ 918,480 Glatfelter 31,300 440,704 Sonoco Products Co. 21,200 540,600 -------------- 1,899,784 PETROLEUM AND COAL PRODUCTS (4.08%) BP PLC 8,100 433,917 ConocoPhillips 21,012 1,603,005 Marathon Oil Corp. 21,800 824,912 -------------- 2,861,834 PRIMARY METAL INDUSTRIES (0.18%) Wolverine Tube, Inc. 11,400(1) 124,260 PRINTING AND PUBLISHING (1.98%) Belo Corp.-Series A 29,600 794,760 R.R. Donnelley & Sons Co. 18,100 597,662 -------------- 1,392,422 RAILROAD TRANSPORTATION (0.23%) Union Pacific Corp. 2,710 161,109 SECURITY & COMMODITY BROKERS (0.03%) Piper Jaffray Co. 490(1) 22,163 TOBACCO PRODUCTS (1.10%) Altria Group, Inc. 15,400 770,770 TRANSPORTATION EQUIPMENT (4.57%) Federal Signal Corp. 36,400 677,404 Genuine Parts Co. 14,700 583,296 Honeywell International, Inc. 27,400 1,003,662 ITT Industries, Inc. 5,095 422,885 SPX Corp. 11,228 521,428 -------------- 3,208,675 WHOLESALE TRADE -- DURABLE GOODS (0.32%) Apogent Technologies, Inc. 7,000(1) 224,000 WHOLESALE TRADE -- NONDURABLE GOODS (1.01%) Dean Foods Co. 19,069(1) 711,464 -------------- Total Common Stocks (Cost $34,441,379) 44,085,461 PREFERRED STOCKS (0.94%) DEPOSITORY INSTITUTIONS Taylor Capital Group, Inc.-Series A, 9.00%, 26,000 657,314 -------------- Total Preferred Stocks (Cost $655,000) 657,314 PRINCIPAL AMOUNT VALUE -------------- -------------- CORPORATE BONDS (2.06%) METAL MINING Teck Cominco Ltd., 3.75%, due 07/15/06 (Cost $1,416,687) $ 1,500,000 $ 1,443,825 MORTGAGE-BACKED SECURITIES (6.76%) GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (GNMA) Pool # 2796, 7.00%, due 08/01/29 188,943 200,763 Pool # 3040, 7.00%, due 02/01/31 127,508 135,416 Pool # 3188, 6.50%, due 02/20/32 328,027 342,434 Pool # 3239, 6.50%, due 05/01/32 486,098 507,447 Pool # 3333, 5.50%, due 01/01/33 571,715 571,730 Pool # 3403, 5.50%, due 06/01/33 503,278 503,291 Pool # 3442, 5.00%, due 09/01/33 1,423,459 1,381,769 Pool # 3459, 5.50%, due 10/01/33 1,101,596 1,101,626 -------------- Total Mortgage-Backed Securities (Cost $4,707,305) 4,744,476 SHORT-TERM INVESTMENTS (27.26%) COMMERCIAL PAPER (8.48%) NONDEPOSITORY INSTITUTIONS (6.34%) American General Finance Corp., 1.03%, due 07/02/04 1,150,000 1,150,000 American General Finance Corp., 1.07%, due 07/28/04 1,550,000 1,550,000 Citigroup Inc., 1.05%, due 07/06/04 1,100,000 1,100,000 General Electric Capital Corp., 1.30%, due 08/18/04 650,000 650,000 -------------- 4,450,000 PETROLEUM AND COAL PRODUCTS (2.14%) ChevronTexaco Corp., 1.21%, due 08/11/04 1,500,000 1,500,000 -------------- Total Commercial Paper (Cost $5,950,000) 5,950,000
18
PRINCIPAL AMOUNT VALUE -------------- -------------- UNITED STATES GOVERNMENT AGENCIES (17.76%) Federal Home Loan Bank, due 07/16/04 $ 1,600,000 $ 1,599,326 Federal Home Loan Bank, due 07/21/04 1,475,000 1,474,163 Federal Home Loan Bank, due 07/28/04 200,000 199,838 Federal Home Loan Mortgage Corp., due 07/06/04 3,125,000 3,124,562 Federal National Mortgage Assoc., due 07/14/04 2,100,000 2,099,233 Federal National Mortgage Assoc., due 08/04/04 2,600,000 2,597,319 Federal National Mortgage Assoc., due 08/18/04 1,375,000 1,372,853 -------------- Total United States Government Agencies (Cost $12,467,294) 12,467,294 SHARES HELD -------------- MONEY MARKET MUTUAL FUND (1.02%) Blackrock Provident Institutional Funds, T-Fund Portfolio (Cost $718,499) 718,499 718,499 -------------- Total Short-Term Investments (Cost $19,135,793) 19,135,793 -------------- Total Investments (Cost $60,356,164) (99.83%) 70,066,869 OTHER ASSETS LESS LIABILITIES (0.17%) Cash, receivables, prepaid expense and other assets, less liabilities 116,331 -------------- Total Net Assets (100.00%) $ 70,183,200 ==============
(1) Non-income producing securities. SEE ACCOMPANYING NOTES. 19 EQUITRUST VARIABLE INSURANCE SERIES FUND SCHEDULE OF INVESTMENTS MONEY MARKET PORTFOLIO JUNE 30, 2004 (UNAUDITED)
ANNUALIZED YIELD ON PURCHASE PRINCIPAL DATE AMOUNT VALUE ---------- --------- ------------- SHORT-TERM INVESTMENTS (92.47%) COMMERCIAL PAPER (17.76%) NONDEPOSITORY INSTITUTIONS (13.36%) American General Finance Corp., 1.10%, due 07/16/04 1.101% $ 165,000 $ 165,000 American General Finance Corp., 1.11%, due 08/26/04 1.113 140,000 140,000 General Electric Capital Corp., 1.08%, due 07/12/04 1.082 120,000 120,000 General Electric Capital Corp., 1.11%, due 07/14/04 1.111 170,000 170,000 International Business Machines Corp., 1.39%, due 07/01/04 1.399 300,000 300,000 ------------- 895,000 PETROLEUM AND COAL PRODUCTS (4.40%) ChevronTexaco Corp., 1.01%, due 07/01/04 1.012 175,000 175,000 ChevronTexaco Corp., 1.22%, due 08/30/04 1.223 120,000 120,000 ------------- 295,000 ------------- Total Commercial Paper (Cost $1,190,000) 1,190,000 UNITED STATES GOVERNMENT AGENCIES (66.14%) Federal Home Loan Bank, due 07/09/04 1.005 125,000 124,972 Federal Home Loan Bank, due 07/23/04 1.167 250,000 249,824 Federal Home Loan Bank, due 07/28/04 1.016 125,000 124,906 Federal Home Loan Bank, due 07/30/04 1.016 250,000 249,798 Federal Home Loan Bank, due 08/13/04 1.234 225,000 224,673 Federal Home Loan Bank, due 09/15/04 1.160 525,000 523,735 Federal Home Loan Mortgage Corp., due 07/06/04 1.016 200,000 199,972 Federal Home Loan Mortgage Corp., due 07/13/04 1.116 225,000 224,918 Federal Home Loan Mortgage Corp., due 07/27/04 1.037 200,000 199,852 Federal Home Loan Mortgage Corp., due 08/10/04 1.128 200,000 199,753 Federal Home Loan Mortgage Corp., due 08/17/04 1.240 225,000 224,642 Federal Home Loan Mortgage Corp., due 08/31/04 1.200 225,000 224,550 Federal Home Loan Mortgage Corp., due 09/28/04 1.476 225,000 224,193 Federal National Mortgage Assoc., due 07/21/04 1.027 170,000 169,904 Federal National Mortgage Assoc., due 08/04/04 1.052 190,000 189,814 Federal National Mortgage Assoc., due 08/18/04 1.169 185,000 184,716 Federal National Mortgage Assoc., due 08/20/04 1.129 175,000 174,730 Federal National Mortgage Assoc., due 09/01/04 1.332 250,000 249,436 Federal National Mortgage Assoc., due 09/08/04 1.393 225,000 224,409 Federal National Mortgage Assoc., due 11/03/04 1.393 245,000 243,837 ------------- Total United States Government Agencies (Cost $4,432,634) 4,432,634 UNITED STATES TREASURY OBLIGATIONS (8.57%) U.S. Treasury Note, due 08/05/04 1.047 350,000 349,649 U.S. Treasury Note, due 08/19/04 1.082 225,000 224,674 ------------- Total United States Treasury Obligations (Cost $574,323) 574,323 ------------- Total Short-Term Investments (Cost $6,196,957) 6,196,957 OTHER ASSETS LESS LIABILITIES (7.53%) Cash, receivables, prepaid expense and other assets, less liabilities 504,878 ------------- Total Net Assets (100.00%) $ 6,701,835 =============
SEE ACCOMPANYING NOTES. 20 EQUITRUST VARIABLE INSURANCE SERIES FUND SCHEDULE OF INVESTMENTS BLUE CHIP PORTFOLIO JUNE 30, 2004 (UNAUDITED)
SHARES HELD VALUE ------------ ------------ COMMON STOCKS (90.88%) BUSINESS SERVICES (3.82%) Microsoft Corp. 84,480 $ 2,412,749 Oracle Corp. 58,314(1) 695,686 ------------ 3,108,435 CHEMICALS AND ALLIED PRODUCTS (15.86%) Abbott Laboratories 25,260 1,029,598 Amgen, Inc. 18,200(1) 993,174 Bristol-Myers Squibb Co. 36,063 883,543 Dow Chemical Co. 10,720 436,304 E.I. du Pont de Nemours & Co. 16,081 714,318 Johnson & Johnson 43,580 2,427,406 Eli Lilly & Co. 18,022 1,259,918 Merck & Co., Inc. 28,928 1,374,080 Pfizer, Inc. 45,282 1,552,267 Procter & Gamble Co. 41,042 2,234,326 ------------ 12,904,934 COMMUNICATIONS (4.58%) Comcast Corp.-Class A 22,486(1) 630,283 SBC Communications, Inc. 35,565 862,451 Verizon Communications 37,307 1,350,140 Viacom, Inc.-Class B 24,668 881,141 ------------ 3,724,015 DEPOSITORY INSTITUTIONS (10.32%) Bank of America 23,298 1,971,477 Citigroup, Inc. 49,326 2,293,659 J. P. Morgan Chase & Co. 47,270 1,832,658 Wachovia Corp. 25,980 1,156,110 Wells Fargo Co. 19,900 1,138,877 ------------ 8,392,781 EATING AND DRINKING PLACES (1.65%) McDonald's Corp. 51,752 1,345,552 ELECTRIC, GAS AND SANITARY SERVICES (2.68%) Dominion Resources, Inc. 11,600 731,728 Exelon Corp. 24,600 818,934 Southern Co. 21,650 631,098 ------------ 2,181,760 ELECTRONIC AND OTHER ELECTRIC EQUIPMENT (7.14%) Applied Materials, Inc. 24,000(1) 470,880 General Electric Co. 73,576 2,383,862 Intel Corp. 58,206 1,606,486 Motorola, Inc. 37,949 692,569 Texas Instruments, Inc. 27,001 652,884 ------------ 5,806,681 FOOD AND KINDRED PRODUCTS (3.42%) Anheuser Busch Companies, Inc. 11,432 617,328 Coca-Cola Co. (The) 26,389 1,332,117 PepsiCo, Inc. 15,518 836,110 ------------ 2,785,555 FORESTRY (0.50%) Weyerhaeuser Co. 6,400 $ 403,968 GENERAL MERCHANDISE STORES (2.76%) Wal-Mart Stores, Inc. 42,623 2,248,789 INDUSTRIAL MACHINERY AND EQUIPMENT (9.77%) 3M Co. 17,808 1,602,898 Caterpillar, Inc. 14,307 1,136,548 Cisco Systems, Inc. 62,268(1) 1,475,752 Dell, Inc. 31,210(1) 1,117,942 EMC Corp. 38,068(1) 433,975 Hewlett-Packard Co. 41,279 870,987 International Business Machines Corp. 14,821 1,306,471 ------------ 7,944,573 INSURANCE CARRIERS (3.33%) American International Group, Inc. 37,964 2,706,074 LUMBER AND WOOD PRODUCTS (1.12%) Home Depot, Inc. 25,913 912,138 MOTION PICTURES (2.25%) Disney (Walt) Co. 36,832 938,848 Time Warner, Inc. 50,502(1) 887,825 ------------ 1,826,673 NONDEPOSITORY INSTITUTIONS (1.26%) Federal National Mortgage Assoc. 14,400 1,027,584 PETROLEUM AND COAL PRODUCTS (6.09%) ChevronTexaco Corp. 19,700 1,853,967 Exxon Mobil Corp. 69,771 3,098,530 ------------ 4,952,497 PRIMARY METAL INDUSTRIES (1.25%) Alcoa, Inc. 30,898 1,020,561 SECURITY AND COMMODITY BROKERS (3.33%) American Express Co. 52,797 2,712,710 TOBACCO PRODUCTS (2.40%) Altria Group, Inc. 38,965 1,950,198 TRANSPORTATION EQUIPMENT (7.35%) Boeing Co. (The) 32,082 1,639,069 General Motors Corp. 16,700 778,053 Honeywell International, Inc. 38,024 1,392,819 United Technologies Corp. 23,701 2,168,167 ------------ 5,978,108 ------------ Total Common Stocks (Cost $62,320,205) 73,933,586
21
PRINCIPAL AMOUNT VALUE ------------ ------------ SHORT-TERM INVESTMENTS (9.06%) COMMERCIAL PAPER (1.23%) NONDEPOSITORY INSTITUTIONS General Electric Capital Corp., 1.08%, due 07/12/04 $ 500,000 $ 500,000 General Electric Capital Corp., 1.17%, due 08/03/04 500,000 500,000 ------------ Total Commercial Paper (Cost $1,000,000) 1,000,000 UNITED STATES GOVERNMENT AGENCIES (7.34%) Federal Home Loan Bank, due 07/16/04 1,000,000 999,579 Federal Home Loan Bank, due 08/13/04 2,500,000 2,496,446 Federal Home Loan Bank, due 08/20/04 600,000 598,966 Federal Home Loan Mortgage Corp., due 07/06/04 450,000 449,936 Federal Home Loan Mortgage Corp., due 08/03/04 475,000 474,529 Federal Home Loan Mortgage Corp., due 08/10/04 725,000 724,101 Federal National Mortgage Assoc., due 09/15/04 225,000 224,434 ------------ Total United States Government Agencies (Cost $5,967,991) 5,967,991 SHARES HELD ------------ MONEY MARKET MUTUAL FUND (0.49%) Blackrock Provident Institutional Funds, T-Fund Portfolio (Cost $401,309) 401,309 401,309 ------------ Total Short-Term Investments (Cost $7,369,300) 7,369,300 ------------ Total Investments (Cost $69,689,505) (99.94%) 81,302,886 OTHER ASSETS LESS LIABILITIES (0.06%) Cash, receivables, prepaid expense and other assets, less liabilities 50,165 ------------ Total Net Assets (100.00%) $ 81,353,051 ============
(1) Non-income producing securities. SEE ACCOMPANYING NOTES. 22 EQUITRUST VARIABLE INSURANCE SERIES FUND NOTES TO FINANCIAL STATEMENTS JUNE 30, 2004 (UNAUDITED) 1. SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION 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, or mutual fund. The Fund is authorized to issue an unlimited number of shares of beneficial interest with no par value. The Fund currently consists of six portfolios (known as the Value Growth, High Grade Bond, Strategic Yield, 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 and EquiTrust Life Insurance Company (see NOTE 3). SECURITY VALUATION All portfolios, other than the Money Market Portfolio, value their investment securities that are traded on any national exchange at the last sale price on the day of valuation or, lacking any sales, at the mean between the closing bid and asked prices. Investments traded in the over-the-counter market are valued at the mean between the bid and asked prices or yield equivalent as obtained from one or more dealers that make markets in the securities. Investments for which market quotations are not readily available, or in situations when liquidation of the holdings at quoted market prices is questionable, are valued at fair value as determined in good faith by the Fund's Board of Trustees. Short-term investments are valued at market value, except that obligations maturing in 90 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 value. Under the amortized cost method, a security is valued at its cost on the date of purchase and thereafter is adjusted to reflect a constant amortization to maturity of the difference between the principal amount due at maturity and the cost of the investment to the portfolio. INCOME AND INVESTMENT TRANSACTIONS For financial reporting purposes, investment transactions are recorded on 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 On each day that the net asset value per share is calculated in the High Grade Bond, Strategic Yield and Money Market Portfolios, that Portfolio's net investment income will be declared, as of the close of the New York Stock Exchange, as a dividend to shareholders of record prior to the declaration. With respect to the High Grade Bond and Strategic Yield Portfolios, any net short-term and long-term gains will be declared and distributed periodically, but in no event less frequently than annually. Dividends and distributions of the other portfolios are recorded on the ex-dividend date. Dividends and distributions from net investment income and net realized gain from investments are determined in accordance with federal tax regulations, which may differ from accounting principles generally accepted in the United States. These differences are primarily due to differing treatments for certain defaulted securities, and basis adjustments resulting from corporate reorganizations. Permanent book and tax basis differences are reclassified within the capital accounts based on their federal tax-basis treatment; temporary differences do not require reclassification. During the six month period ended June 30, 2004, there were no permanent adjustments reflected in the statements of assets and liabilities. Dividends and distributions which exceed net investment income and net realized capital gains for financial reporting purposes, but not for tax purposes, are reported as dividends in excess of net investment income or distributions in excess of net realized capital gains. To the extent distributions exceed current and accumulated earnings and profits for federal income tax purposes, they are reported as return of capital distributions. 23 USE OF ESTIMATES The preparation of financial statements in conformity with accounting principles generally accepted in the United States 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. As of June 30, 2004, the following Portfolios had approximate net capital loss carryforwards set forth below:
PORTFOLIO ------------------------------------------------------------------------ VALUE HIGH GRADE STRATEGIC BLUE NET CAPITAL LOSS CARRYFORWARDS EXPIRE IN: GROWTH BOND YIELD MANAGED CHIP ----------------------------------------- ------------ ------------ ------------ ------------ ------------ 2006 $ 5,369,000 $ -- $ -- $ -- $ -- 2008 2,848,000 -- -- 699,000 -- 2010 -- -- 1,785,000 -- 1,786,000 2011 -- -- 571,000 -- 4,672,000 2012 -- 43,000 -- -- 556,000 ------------ ------------ ------------ ------------ ------------ $ 8,217,000 $ 43,000 $ 2,356,000 $ 699,000 $ 7,014,000 ============ ============ ============ ============ ============
As of June 30, 2004, the components of accumulated earnings (deficit) and capital gains (losses) on a tax basis were identical to those reported in the statements of assets and liabilities, except as follows:
PORTFOLIO --------------------------- VALUE GROWTH MANAGED ------------ ------------ Undistributed ordinary income $ 284,952 $ 648,559 Accumulated capital and other losses (8,217,524) (699,021) Net unrealized appreciation of investments 5,615,746 9,629,246 ------------ ------------ Total accumulated earnings (deficit) $ (2,316,826) $ 9,578,784 ============ ============
During 2002, the Value Growth and Managed Portfolios held securities in companies that completed corporate inversions. These events resulted in realized capital gains for these investments being recognized for tax but not for book purposes. As of June 30, 2004, unrealized depreciation and accumulated capital gains book and tax differences related to corporate inversions were $42,496 for the Value Growth Portfolio and $81,459 for the Managed Portfolio. 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 average daily net assets as follows: Value Growth Portfolio -- 0.45%; High Grade Bond Portfolio -- 0.30%; Strategic Yield 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 entered into an agreement with EquiTrust Investment whereby EquiTrust Investment also serves as the Fund's shareholder service, transfer and dividend disbursing agent. EquiTrust Marketing Services, LLC serves as the principal underwriter and distributor. There are no fees paid by the Fund associated with these services. 24 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 six month period ended June 30, 2004, 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 six months ended June 30, 2004, no expense reimbursements were made to the Fund by EquiTrust Investment. Certain officers and trustees of the Fund are also officers of EquiTrust Investment, Farm Bureau Life Insurance Company and other affiliated entities. As of June 30, 2004, the total number of the shares of each portfolio owned by Farm Bureau Life Insurance Company, EquiTrust Life Insurance Company and related separate accounts are as follows:
PORTFOLIO SHARES --------- ------ Value Growth 4,529,202 High Grade Bond 2,651,453 Strategic Yield 2,990,587 Managed 4,680,990 Money Market 5,632,512 Blue Chip 2,409,502
4. EXPENSE OFFSET ARRANGEMENTS The Fund and other mutual funds managed by EquiTrust Investment have an agreement with the custodian bank to indirectly pay a portion of the custodian's fees through credits earned by the funds' cash on deposit with the bank. This deposit agreement is an alternative to overnight investments. Custodial fees have been adjusted to reflect amounts that would have been paid without this agreement, with a corresponding adjustment reflected as fees paid indirectly in the statements of operations. 5. CAPITAL SHARE TRANSACTIONS Transactions in shares of beneficial interest for each portfolio were as follows:
SHARES ISSUED IN REINVESTMENT OF DIVIDENDS AND NET INCREASE SHARES SOLD DISTRIBUTIONS SHARES REDEEMED (DECREASE) ----------------------- -------------------- ----------------------- ------------------------ PORTFOLIO SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT - --------- ---------- ------------ ------- ----------- --------- ------------ ---------- ------------ Six month period ended June 30, 2004: Value Growth 164,367 $ 1,941,167 47,355 $ 563,058 136,756 $ 1,608,838 74,966 $ 895,387 High Grade Bond 258,805 2,670,221 63,364 655,419 156,927 1,628,351 165,242 1,697,289 Strategic Yield 307,743 2,831,378 88,874 818,403 110,484 1,020,293 286,133 2,629,488 Managed 249,703 3,640,131 94,010 1,367,844 135,531 1,972,357 208,182 3,035,618 Money Market 15,763,650 15,763,650 10,385 10,385 15,799,752 15,799,752 (25,717) (25,717) Blue Chip 100,885 3,365,880 35,399 1,194,008 74,137 2,475,091 62,147 2,084,797 Year ended December 31, 2003: Value Growth 257,935 $ 2,576,305 70,078 $ 632,800 320,621 $ 3,122,025 7,392 $ 87,080 High Grade Bond 428,153 4,432,359 126,995 1,316,514 401,456 4,159,389 153,692 1,589,484 Strategic Yield 298,163 2,649,915 186,889 1,663,360 252,088 2,238,075 232,964 2,075,200 Managed 326,436 4,283,785 124,058 1,494,900 329,695 4,180,363 120,799 1,598,322 Money Market 20,443,151 20,443,151 26,348 26,348 21,891,488 21,891,488 (1,421,989) (1,421,989) Blue Chip 172,893 5,107,154 39,362 1,066,311 179,712 5,119,651 32,543 1,053,814
25 6. INVESTMENT TRANSACTIONS For the six month period ended June 30, 2004, 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:
PORTFOLIO PURCHASES SALES --------- ------------ ------------ Value Growth $ 3,013,623 $ 2,904,820 High Grade Bond 1,262,625 881,385 Strategic Yield 6,324,526 4,706,824 Managed 3,363,480 5,629,557 Blue Chip 519,325 1,427,738
The basis of the Fund's investments in securities and the net unrealized appreciation (depreciation) of investments for U.S. federal income tax purposes as of June 30, 2004, by portfolio, were composed of the following:
TAX COST OF GROSS UNREALIZED NET UNREALIZED INVESTMENTS --------------------------- APPRECIATION (DEPRECIATION) PORTFOLIO IN SECURITIES APPRECIATION DEPRECIATION OF INVESTMENTS --------- ------------- ------------ ------------ --------------------------- Value Growth $ 49,128,643 $ 9,924,564 $ 4,308,818 $ 5,615,746 High Grade Bond 27,141,382 578,473 170,846 407,627 Strategic Yield 26,669,863 1,082,055 308,335 773,720 Managed 60,437,623 10,935,532 1,306,286 9,629,246 Blue Chip 69,689,505 18,792,869 7,179,488 11,613,381
The basis for U.S. federal income tax purposes and financial reporting purposes for investments in the Money Market Portfolio is the same and is equal to the underlying investments' carrying value. 7. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS Dividends from net investment income for the following portfolios are declared daily and were payable on the last business day of the month as follows:
PORTFOLIO ------------------------------------ HIGH GRADE STRATEGIC MONEY PAYABLE DATE BOND YIELD MARKET ------------ ---------- ---------- ---------- January 30, 2004 $ 0.0334 $ 0.0430 $ 0.0004 February 27, 2004 0.0351 0.0530 0.0003 March 31, 2004 0.0442 0.0586 0.0004 April 30, 2004 0.0354 0.0364 0.0003 May 28, 2004 0.0315 0.0374 0.0003 June 30, 2004 0.0435 0.0532 0.0005 ---------- ---------- ---------- Total dividends per share $ 0.2231 $ 0.2816 $ 0.0022 ========== ========== ==========
26 In addition, dividends and distributions to shareholders from net investment income and net realized gain on investment transactions were paid during the period ended June 30, 2004 for the following portfolios: ORDINARY INCOME DIVIDENDS:
DIVIDEND DECLARATION RECORD PAYABLE AMOUNT PORTFOLIO DATE DATE DATE PER SHARE --------- ----------- -------- -------- ---------- Value Growth 1/19/04 1/19/04 1/20/04 $ 0.1250 Managed 1/19/04 1/19/04 1/20/04 0.3005 Blue Chip 1/19/04 1/19/04 1/20/04 0.5017
CAPITAL GAINS DISTRIBUTIONS:
DIVIDEND DECLARATION RECORD PAYABLE AMOUNT PORTFOLIO DATE DATE DATE PER SHARE --------- ----------- -------- -------- ---------- High Grade Bond 1/19/04 1/19/04 1/20/04 $ 0.0274
The federal income tax character of dividends and distributions to shareholders during 2004 and 2003 was the same for financial reporting purposes. 27 EQUITRUST VARIABLE INSURANCE SERIES FUND FINANCIAL HIGHLIGHTS PERIOD ENDED JUNE 30, 2004 (UNAUDITED) AND YEARS ENDED DECEMBER 31, 2003, 2002, 2001 AND 2000
VALUE GROWTH PORTFOLIO ----------------------------------------------------------------- 2004 2003 2002 2001 2000 ---------- ---------- ---------- ---------- ---------- Net asset value, beginning of period $ 11.76 $ 9.14 $ 10.39 $ 9.92 $ 8.69 Income From Investment Operations Net investment income 0.06 0.12 0.14 0.18 0.22 Net gains (losses) on securities (both realized and unrealized) 0.31 2.64 (1.20) 0.50 1.20 ---------- ---------- ---------- ---------- ---------- Total from investment operations 0.37 2.76 (1.06) 0.68 1.42 ---------- ---------- ---------- ---------- ---------- Less Distributions Dividends (from net investment income) (0.12) (0.14) (0.19) (0.21) (0.19) Distributions (from capital gains) -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Total distributions (0.12) (0.14) (0.19) (0.21) (0.19) ---------- ---------- ---------- ---------- ---------- Net asset value, end of period $ 12.01 $ 11.76 $ 9.14 $ 10.39 $ 9.92 ========== ========== ========== ========== ========== Total Return: Total investment return based on net asset value (1) 3.20% 30.68% (10.43)% 6.98% 16.71% Ratios/Supplemental Data: Net assets, end of period (000's omitted) $ 54,818 $ 52,812 $ 40,953 $ 45,522 $ 40,173 Ratio of total expenses to average net assets 0.58%(2) 0.63% 0.59% 0.57% 0.57% Ratio of net expenses to average net assets 0.58%(2) 0.63% 0.59% 0.57% 0.56% Ratio of net investment income to average net assets 1.07%(2) 1.26% 1.46% 1.89% 2.34% Portfolio turnover rate 6%(3) 17% 15% 40% 78%
- ---------- Note: Per share amounts have been calculated on the basis of monthly per share amounts (using average monthly outstanding shares) accumulated for the period. (1) Total investment return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption on the last day of the period, and is not annualized for periods less than one year. (2) Computed on an annualized basis. (3) Not annualized. SEE ACCOMPANYING NOTES. 28
HIGH GRADE BOND PORTFOLIO ----------------------------------------------------------------- 2004 2003 2002 2001 2000 ---------- ---------- ---------- ---------- ---------- Net asset value, beginning of period $ 10.42 $ 10.39 $ 10.08 $ 9.82 $ 9.49 Income From Investment Operations Net investment income 0.22 0.47 0.50 0.62 0.67 Net gains (losses) on securities (both realized and unrealized) (0.21) 0.08 0.32 0.26 0.34 ---------- ---------- ---------- ---------- ---------- Total from investment operations 0.01 0.55 0.82 0.88 1.01 ---------- ---------- ---------- ---------- ---------- Less Distributions Dividends (from net investment income) (0.22) (0.47) (0.50) (0.62) (0.67) Distributions (from capital gains) (0.03) (0.05) (0.01) -- (0.01) ---------- ---------- ---------- ---------- ---------- Total distributions (0.25) (0.52) (0.51) (0.62) (0.68) ---------- ---------- ---------- ---------- ---------- Net asset value, end of period $ 10.18 $ 10.42 $ 10.39 $ 10.08 $ 9.82 ========== ========== ========== ========== ========== Total Return: Total investment return based on net asset value (1) 0.09% 5.43% 8.37% 9.10% 11.14% Ratios/Supplemental Data: Net assets, end of period (000's omitted) $ 27,733 $ 26,659 $ 24,984 $ 18,908 $ 13,934 Ratio of total expenses to average net assets 0.46%(2) 0.49% 0.46% 0.45% 0.45% Ratio of net expenses to average net assets 0.46%(2) 0.49% 0.46% 0.45% 0.45% Ratio of net investment income to average net assets 4.35%(2) 4.51% 4.92% 6.10% 7.03% Portfolio turnover rate 14%(3) 28% 22% 17% 7% STRATEGIC YIELD PORTFOLIO ----------------------------------------------------------------- 2004 2003 2002 2001 2000 ---------- ---------- ---------- ---------- ---------- Net asset value, beginning of period $ 9.13 $ 8.75 $ 8.90 $ 8.82 $ 9.30 Income From Investment Operations Net investment income 0.28 0.63 0.62 0.73 0.75 Net gains (losses) on securities (both realized and unrealized) (0.03) 0.38 (0.15) 0.08 (0.48) ---------- ---------- ---------- ---------- ---------- Total from investment operations 0.25 1.01 0.47 0.81 0.27 ---------- ---------- ---------- ---------- ---------- Less Distributions Dividends (from net investment income) (0.28) (0.63) (0.62) (0.73) (0.75) Distributions (from capital gains) -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Total distributions (0.28) (0.63) (0.62) (0.73) (0.75) ---------- ---------- ---------- ---------- ---------- Net asset value, end of period $ 9.10 $ 9.13 $ 8.75 $ 8.90 $ 8.82 ========== ========== ========== ========== ========== Total Return: Total investment return based on net asset value (1) 2.76% 11.97% 5.43% 9.22% 3.05% Ratios/Supplemental Data: Net assets, end of period (000's omitted) $ 28,021 $ 25,498 $ 22,395 $ 20,182 $ 16,410 Ratio of total expenses to average net assets 0.60%(2) 0.65% 0.61% 0.59% 0.59% Ratio of net expenses to average net assets 0.60%(2) 0.65% 0.61% 0.59% 0.58% Ratio of net investment income to average net assets 6.15%(2) 7.07% 7.04% 7.93% 8.30% Portfolio turnover rate 22%(3) 32% 34% 33% 3%
29
MANAGED PORTFOLIO ----------------------------------------------------------------- 2004 2003 2002 2001 2000 ---------- ---------- ---------- ---------- ---------- Net asset value, beginning of period $ 14.73 $ 12.34 $ 13.00 $ 12.58 $ 10.54 Income From Investment Operations Net investment income 0.14 0.30 0.34 0.44 0.59 Net gains (losses) on securities (both realized and unrealized) 0.24 2.43 (0.57) 0.55 2.11 ---------- ---------- ---------- ---------- ---------- Total from investment operations 0.38 2.73 (0.23) 0.99 2.70 ---------- ---------- ---------- ---------- ---------- Less Distributions Dividends (from net investment income) (0.30) (0.34) (0.43) (0.57) (0.66) Distributions (from capital gains) -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Total distributions (0.30) (0.34) (0.43) (0.57) (0.66) ---------- ---------- ---------- ---------- ---------- Net asset value, end of period $ 14.81 $ 14.73 $ 12.34 $ 13.00 $ 12.58 ========== ========== ========== ========== ========== Total Return: Total investment return based on net asset value (1) 2.62% 22.72% (1.80)% 8.12% 27.39% Ratios/Supplemental Data: Net assets, end of period (000's omitted) $ 70,183 $ 66,733 $ 54,428 $ 53,795 $ 48,012 Ratio of total expenses to average net assets 0.57%(2) 0.62% 0.58% 0.56% 0.56% Ratio of net expenses to average net assets 0.57%(2) 0.62% 0.58% 0.56% 0.55% Ratio of net investment income to average net assets 1.91%(2) 2.35% 2.73% 3.47% 4.96% Portfolio turnover rate 7%(3) 24% 18% 40% 85%
30
MONEY MARKET PORTFOLIO ----------------------------------------------------------------- 2004 2003 2002 2001 2000 ---------- ---------- ---------- ---------- ---------- Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 Income From Investment Operations Net investment income -- 0.01 0.01 0.03 0.06 Net gains (losses) on securities (both realized and unrealized) -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Total from investment operations -- 0.01 0.01 0.03 0.06 ---------- ---------- ---------- ---------- ---------- Less Distributions Dividends (from net investment income) -- (0.01) (0.01) (0.03) (0.06) Distributions (from capital gains) -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Total distributions -- (0.01) (0.01) (0.03) (0.06) ---------- ---------- ---------- ---------- ---------- Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ========== ========== ========== ========== ========== Total Return: Total investment return based on net asset value (1) 0.22% 0.52% 1.16% 3.51% 5.85% Ratios/Supplemental Data: Net assets, end of period (000's omitted) $ 6,702 $ 6,728 $ 8,150 $ 9,320 $ 7,233 Ratio of total expenses to average net assets 0.58%(2) 0.59% 0.52% 0.50% 0.50% Ratio of net expenses to average net assets 0.57%(2) 0.59% 0.52% 0.48% 0.48% Ratio of net investment income to average net assets 0.44%(2) 0.53% 1.16% 3.41% 5.74% Portfolio turnover rate --%(3) --% --% --% --% BLUE CHIP PORTFOLIO ----------------------------------------------------------------- 2004 2003 2002 2001 2000 ---------- ---------- ---------- ---------- ---------- Net asset value, beginning of period $ 33.65 $ 27.22 $ 34.14 $ 39.29 $ 43.98 Income From Investment Operations Net investment income 0.26 0.50 0.46 0.50 0.56 Net gains (losses) on securities (both realized and unrealized) 0.00 6.38 (6.88) (4.83) (4.26) ---------- ---------- ---------- ---------- ---------- Total from investment operations 0.26 6.88 (6.42) (4.33) (3.70) ---------- ---------- ---------- ---------- ---------- Less Distributions Dividends (from net investment income) (0.50) (0.45) (0.50) (0.56) (0.53) Distributions (from capital gains) -- -- -- (0.26) (0.46) ---------- ---------- ---------- ---------- ---------- Total distributions (0.50) (0.45) (0.50) (0.82) (0.99) ---------- ---------- ---------- ---------- ---------- Net asset value, end of period $ 33.41 $ 33.65 $ 27.22 $ 34.14 $ 39.29 ========== ========== ========== ========== ========== Total Return: Total investment return based on net asset value (1) 0.76% 25.70% (19.07)% (11.28)% (8.52)% Ratios/Supplemental Data: Net assets, end of period (000's omitted) $ 81,353 $ 79,832 $ 63,699 $ 79,124 $ 87,118 Ratio of total expenses to average net assets 0.31%(2) 0.36% 0.31% 0.28% 0.27% Ratio of net expenses to average net assets 0.31%(2) 0.36% 0.31% 0.28% 0.27% Ratio of net investment income to average net assets 1.59%(2) 1.72% 1.50% 1.42% 1.39% Portfolio turnover rate 1%(3) 17% --% --% 13%
31 INFORMATION ON PROXY VOTING: EquiTrust Variable Insurance Series Fund (the "Fund") has delegated the authority to vote proxies related to the Fund's portfolio securities to the Fund's investment adviser, EquiTrust Investment Management Services, Inc. (the "Adviser"). A description of the policies and procedures that the Adviser uses in fulfilling this responsibility is available, without charge, upon request by calling 1-877-860-2904. It also appears in the Fund's Statement of Additional Information, which can be found on the SEC's website at www.sec.gov. The Fund's proxy voting record for the 12-month period ended June 30, 2004 will be available on Form N-PX after August 31, 2004. A copy of Form N-PX can be obtained after that date, without charge, by calling the toll-free number listed above or by accessing the SEC's website. FORM N-Q DISCLOSURE: Beginning with the quarter ending September 30, 2004, the Fund will file a complete schedule of portfolio holdings for the first and third quarters of each fiscal year with the SEC on Form N-Q. The Fund's Forms N-Q are available on the SEC's website at http://www.sec.gov or may be reviewed and copied at the SEC's Public Reference Room in Washington, D.C. Information regarding the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. A copy of Form N-Q is also available, without charge, upon request by calling the Fund at 1-877-860-2904. ITEM 2. CODE OF ETHICS. (a) - (e) Not applicable to this filing. (f) A copy of the code of ethics may be obtained upon request, without charge, by contacting the registrant at it principal executive office. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. Not applicable to this filing. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. Not applicable to this filing. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable. ITEM 6. [RESERVED] ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 8. PURCHASE OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. Not applicable. ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. The registrant has not been required to provide disclosure in response to the requirements of Item 7(d)(2)(ii)(G) of Schedule 14A (17 CFR 240.14a-101) regarding the procedures by which shareholders may recommend nominees to the registrant's board of directors. ITEM 10. CONTROLS AND PROCEDURES (a) The registrant's principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the "1940 Act") (17 CFR 270.30a-3(c))) are effective, as of a date within 90 days of the filing date of the report that includes the disclosure required by this paragraph, based on their evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Exchange Act (17 CFR 240.13a-15(b) or 240.15d-15(b)). (b) There has been no change to the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. ITEM 11. EXHIBITS. (a)(1) See Item 2(f). (a)(2) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto. (b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. (Registrant) EQUITRUST VARIABLE INSURANCE SERIES FUND By: /s/ Dennis M. Marker ---------------------------------------- Name: Dennis M. Marker Title: Chief Executive Officer Date: 8/19/04 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: /s/ Dennis M. Marker ---------------------------------------- Name: Dennis M. Marker Title: Chief Executive Officer Date: 8/19/04 By: /s/ James W. Noyce ---------------------------------------- Name: James W. Noyce Title: Chief Financial Officer Date: 8/19/04 EX-99.CERT 2 a2142271zex-99_cert.txt EX-99.CERT Exhibit 99.Cert N-CSR FORM OF CERTIFICATION I, Dennis M. Marker, certify that: 1. I have reviewed this report on Form N-CSR of EquiTrust Variable Insurance Series Fund; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in rule 30a-3(c) under the Investment Company Act) for the registrant and have: (a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (c) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: 8/27/04 /s/ Dennis M. Marker ------------------------------------ Dennis M. Marker Chief Executive Officer N-CSR FORM OF CERTIFICATION I, James W. Noyce, certify that: 1. I have reviewed this report on Form N-CSR of EquiTrust Variable Insurance Series Fund; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in rule 30a-3(c) under the Investment Company Act) for the registrant and have: (a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (c) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: 8/27/04 /s/ James W. Noyce ------------------------------------ James W. Noyce Chief Financial Officer EX-99.906CERT 3 a2142271zex-99_906cert.txt EX-99.906CERT Exhibit 99.906Cert SECTION 906 CERTIFICATION THE FOLLOWING CERTIFICATION IS PROVIDED BY THE UNDERSIGNED CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER OF EQUITRUST VARIABLE INSURANCE SERIES FUND ON THE BASIS OF SUCH OFFICERS' KNOWLEDGE AND BELIEF FOR THE SOLE PURPOSE OF COMPLYING WITH 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002. CERTIFICATION In connection with the Semi-Annual Report of EquiTrust Variable Insurance Series Fund (the "Company") on Form N-CSR for the period ended June 30, 2004 as filed with the Securities and Exchange Commission (the "Report"), we, Dennis M. Marker and James W. Noyce, Chief Executive Officer and Chief Financial Officer, respectively, of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: 1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ Dennis M. Marker -------------------------------------------- Name: Dennis M. Marker Title: Chief Executive Officer Date: 8/27/04 /s/ James W. Noyce -------------------------------------------- Name: James W. Noyce Title: Chief Financial Officer Date: 8/27/04 -----END PRIVACY-ENHANCED MESSAGE-----