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, 2008
Date of reporting period: June 30, 2008
Item 1. | Reports to Stockholders. |
EquiTrust Variable Insurance Series Fund
SEMI-ANNUAL REPORT
JUNE 30, 2008
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.
July 25, 2008
PRESIDENT’S LETTER
Dear Shareholders:
For this report, it is prudent to first address the current macroeconomic environment before discussing the performance of the markets and your EquiTrust portfolios. Judging by measures such as employment, income, industrial production and domestic sales, the U.S. economy appears to have peaked near the end of 2007 and has declined rapidly since then. While not yet officially labeled as such, many observers, professional and non-professional alike, note the current environment looks and feels like a recession. At the very least, the U.S. economy, led by the U.S. consumer, appears to be slowing substantially from recent years.
You are likely well aware of the challenges facing U.S. consumers. The rapid rise in the price of oil has driven up the price of gasoline and contributed to sharp increases in food prices. With staples demanding more of Americans’ income, there is simply less available for discretionary items. Because the U.S. housing market remains weak, declining home values have likely also contributed to contracting consumer purchases. Further, unemployment increased in the first half of 2008, climbing to 5.50% from below 5.00% at the beginning of the year. To no surprise, measures of consumer sentiment have fallen to recessionary levels amidst rising prices and falling employment.
The U.S. government has intervened on several fronts, though with modest success near-term. Federal Reserve Chairman Ben Bernanke, along with the Federal Open Market Committee (“FOMC”), has cut 2.25% off the fed funds rate since the beginning of 2008. The Fed has traditionally used rate cuts to support a weakening economy or jump-start growth. Congress and the Whitehouse have also attempted to offset the weakening economy. This spring’s tax rebate stimulus checks were an attempt to keep U.S. consumers spending in spite of their abilities otherwise.
The domestic and global equity markets peaked last year at nearly the same time as the economy, and have declined through the first half of 2008. For the six months ended June 30, 2008, the S&P 500 Stock Composite Index (“S&P 500”) lost 11.91% on a total return basis. International stocks fared only moderately better, with the developed markets’ MSCI EAFE Index falling 10.58% over the same period.
Fixed-income returns were better than those of equities over the six-month period, but even the best performing fixed-income sectors, such as U.S. Treasuries, returned little more than their modest coupons. The Lehman Brothers U.S. Aggregate Index (“Aggregate Index”) gained 1.13% for the period, behind the 2.23% return for Lehman Brothers U.S. Treasury Index. As described in more detail below, investors stayed with extremely high quality securities over this period, while widening spreads led to declines in corporate fixed-income securities.
The declines in the equity markets can be discouraging, but they also provide opportunities for individuals investing for the long-term. We encourage investors to follow an asset allocation plan and to continue adding to it when the financial markets present long-term opportunities, similar to those becoming apparent in equities now. In that regard, the EquiTrust portfolios offer investors exposure to the domestic equity and fixed-income markets. Below is a summary of portfolio and market performance for the six months ended June 30, 2008.
Value Growth: The S&P 500 declined 11.91% for the period, and was down nearly 17% from its high in early October 2007. This is within shouting distance of the 20% decline that draws Wall Street’s bear market label. To no surprise, financial stocks accounted for half of the Index’s loss year-to-date. Only energy and materials stocks avoided declines over this period, rallying along with the prices of their underlying commodities.
The Initial Class of the Value Growth Portfolio returned -7.20% for the period. The Portfolio’s Service Class was incepted on June 1, 2008; assuming the Service Class had been available for the entire six-month period, its return would have been -7.33%. The Portfolio hasn’t totally avoided the market’s declines given its relatively full equity weighting and high correlation to the S&P 500. Relative to the Index, though, the Portfolio benefited from its underweight position in financials, while also benefiting from better-performing individual stocks. Our stock picking was favorable, as well, in the energy and health care sectors, but detracted from the Portfolio’s returns in the industrials and utilities sectors.
In the market’s declines, we are finding numerous stocks trading near their 52-week lows and/or are 10%-20% off their start for the year. However, given the portfolio’s modest cash balance, we remain fairly selective and tend to look for stocks to sell to fund purchases.
High Grade Bond: The U.S. Treasury curve got steeper over the period as the two-year Treasury declined 43 basis points (0.43%) to 2.62% and the ten-year Treasury decreased 5 basis points (0.05%) to 3.97%; while the thirty-year Treasury increased 7 basis points (0.07%) to 4.52%.
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The Initial Class of the High Grade Bond Portfolio underperformed its benchmark as reflected by the -0.52% total return produced by the Portfolio versus the 1.13% total return produced by the Aggregate Index. The Portfolio’s Service Class was incepted on June 1, 2008; assuming the Service Class had been available for the entire six-month period, its return would have been -0.64 percent. The total returns for the major components of the Aggregate Index for this period were as follows: U.S. fixed-rate mortgage-backed securities (39% of the Index) 1.93%; U.S. Treasury securities (22% of the Index) 2.23%; and U.S. investment grade corporate securities (20% of the Index) -0.84%. The Aggregate Index had an effective duration of 4.68 as of June 30, 2008. In comparison, the Portfolio had approximately 49% of its assets in fixed-rate mortgage-backed securities or agencies, 31% in corporate securities, 17% in cash equivalents and 3% in commercial mortgage-backed securities. The effective duration of the Portfolio was 4.30. The Portfolio underperformed the Aggregate Index mainly because of its overexposure to underperforming corporate securities and its lower exposure to outperforming Treasury securities.
The current level of additional yield that investors are receiving on fixed-income securities that entail credit risk over credit risk-free Treasury bonds is at historically wide levels, making these assets appear very attractively priced relative to Treasury bonds. Because of this, we will be more willing to increase our exposure to these fixed-income securities which should result in increasing the duration of the Portfolio to be more closely in line with the Aggregate Index.
Strategic Yield: The Lehman Brothers U.S. High Yield Index (“High Yield Index”) produced a return of -1.31% for the period with the option-adjusted spread at 708 basis points (7.08%) at the end of the period, which was 139 basis points (1.39%) more than at the start of the period. The High Yield Index was hurt by a reduction in market liquidity and concerns over increased levels of future defaults.
During the reporting period, the Initial Class of the Strategic Yield Portfolio produced a total return of -1.50%, lagging that of the High Yield Index and the -0.84% return on the Lehman Brothers U.S. Investment Grade Corporate Index. The Portfolio’s Service Class was incepted on June 1, 2008; assuming the Service Class had been available for the entire six-month period, its return would have been -1.62 percent. The Portfolio’s performance was hindered by its high exposure to underperforming financial issues and Portfolio expenses. At the end of the period, the Portfolio had approximately 56% of its assets in securities rated investment grade, 40% in securities rated high yield by Moody’s or S&P and 11% invested in cash equivalents.
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 S&P 500 declined 11.91% for the period, and the yield on the 10-year Treasury, at 3.97%, was uncompelling. The Initial Class of the Managed Portfolio returned -4.17% for the reporting period. The Portfolio’s Service Class was incepted on June 1, 2008; assuming the Service Class had been available for the entire six-month period, its return would have been -4.29%.
The Portfolio’s equity holdings, and particularly its financials stock holdings, outperformed the S&P 500. An overweight allocation in gold stocks and our specific stock selections within the health care sector contributed the balance of the Portfolio’s positive relative equity return, modestly offset by trailing performance in the consumer discretionary and industrials sectors. The fixed-income and cash allocations contributed half of the Portfolio’s above-average performance for the period.
We prefer high quality, dividend-paying equities given the low yields on high quality fixed-income issues.
Money Market: The interest rates offered by money market funds are closely related to the target rates set by the FOMC. The FOMC meets several times throughout the year to determine the target Fed Funds rate, or overnight lending rates between banks. These rates have been lowered to 2.00% through June 30, 2008. The FOMC continues to evaluate the greater risk to the economy as the US is facing both slowing growth and increasing inflation. While slower growth alone would require the FOMC to drop short-term interest rates to stimulate the economy, higher inflation on its own, would indicate the FOMC should increase rates to stop prices from rising too fast. Recent troubles with Government-Sponsored Entities, which support lending in the housing market, have become a focus for the FOMC. Stability in the mortgage and housing market is critical to a recovery for the U.S. economy. The market is predicting that the FOMC will leave rates substantially unchanged throughout the fall of 2008. On June 30, 2008, the Money Market Portfolio had a 7-day yield of 1.73% for the Initial Class and 1.52% for the Service Class.
Blue Chip: The Blue Chip Portfolio passively tracks the direction of the large capitalization domestic equity market. It 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. The Initial Class of the Blue Chip Portfolio returned -13.44% for the reporting period. The Portfolio’s Service Class was incepted on June 1, 2008; assuming the Service Class had been available for the entire six-month period, its return would have been -13.57%. The Portfolio thus
3
trailed the S&P 500’s -11.91% return for the period reflecting the moderately deeper declines suffered by the domestic equity market’s largest names, which have a larger weight in the Portfolio than in the S&P 500.
We appreciate your investment in the Fund and we take seriously our tasks of growing and protecting that investment. Thank you for continued support of the Fund.
Craig A. Lang
President
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.
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EQUITRUST VARIABLE INSURANCE SERIES FUND
June 30, 2008
Value Growth Portfolio
Portfolio Holdings by Industry Sector
High Grade Bond Portfolio
Portfolio Holdings by Credit Quality and Type of Security**
Strategic Yield Portfolio
Portfolio Holdings by Credit Quality and Type of Security**
* | This category may include short-term investments in commercial paper, money market mutual funds and U.S. government agencies, along with cash, receivables, prepaid expenses and other assets, less liabilities. |
** | Credit quality as reported by Standard & Poor’s. |
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EQUITRUST VARIABLE INSURANCE SERIES FUND
June 30, 2008
Managed Portfolio
Portfolio Holdings by Industry Sector
Money Market Portfolio
Portfolio Holdings by Asset Type
Blue Chip Portfolio
Portfolio Holdings by Industry Sector
* | This category may include short-term investments in commercial paper, money market mutual funds and U.S. government agencies, along with cash, receivables, prepaid expenses and other assets, less liabilities. |
6
Expense Example:
As a shareholder of the Fund, you may incur ongoing costs, including management fees and other Fund expenses. In addition, Service Class (“SC”) shares also incur distribution (12b-1) fees. This Example is intended to help you understand your ongoing costs (in dollars) of investing in a given Portfolio and Share Class of the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. For Initial Class (“IC”) shares, the Example is based on an investment of $1,000 invested on January 1, 2008 and held until June 30, 2008. For SC shares, the Example is based on investment of $1,000 invested on June 2, 2008 and held until June 30, 2008.
Actual Expenses –
The first line for each Portfolio and Share Class in the following table provides information about actual account values and actual expenses for that Portfolio and Share Class. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” for the same Portfolio and Share Class to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes –
The second line for each Portfolio and Share Class in the following table provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio of that Portfolio and Share Class and an assumed rate of return of 5% per year before expenses, which is not the actual return of the Portfolio and Share Class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in a given Portfolio and Share Class of the Fund with other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Portfolio and Share Class | Beginning Account 1/1/2008 (1) | Ending Account 6/30/2008 | Expenses Paid 1/1/2008 - 6/30/2008 (2) | Annualized Expense Ratio (2)(3) | ||||||||
Value Growth — IC | 0.57 | % | ||||||||||
Actual | $ | 1,000 | $ | 928.00 | $ | 2.72 | ||||||
Hypothetical (4) | $ | 1,000 | $ | 1,022.18 | $ | 2.85 | ||||||
Value Growth — SC | 0.44 | % | ||||||||||
Actual | $ | 1,000 | $ | 934.10 | $ | 0.33 | ||||||
Hypothetical (4) | $ | 1,000 | $ | 1,024.65 | $ | 0.35 | ||||||
High Grade Bond — IC | 0.43 | % | ||||||||||
Actual | $ | 1,000 | $ | 994.80 | $ | 2.11 | ||||||
Hypothetical (4) | $ | 1,000 | $ | 1,022.88 | $ | 2.14 | ||||||
High Grade Bond — SC | 0.16 | % | ||||||||||
Actual | $ | 1,000 | $ | 999.10 | $ | 0.13 | ||||||
Hypothetical (4) | $ | 1,000 | $ | 1,024.87 | $ | 0.13 | ||||||
Strategic Yield — IC | 0.58 | % | ||||||||||
Actual | $ | 1,000 | $ | 985.00 | $ | 2.84 | ||||||
Hypothetical (4) | $ | 1,000 | $ | 1,022.14 | $ | 2.90 | ||||||
Strategic Yield — SC | 0.80 | % | ||||||||||
Actual | $ | 1,000 | $ | 999.20 | $ | 0.63 | ||||||
Hypothetical (4) | $ | 1,000 | $ | 1,024.36 | $ | 0.64 | ||||||
Managed — IC | 0.55 | % | ||||||||||
Actual | $ | 1,000 | $ | 958.30 | $ | 2.66 | ||||||
Hypothetical (4) | $ | 1,000 | $ | 1,022.29 | $ | 2.75 |
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Portfolio and Share Class | Beginning Account 1/1/2008 (1) | Ending Account 6/30/2008 | Expenses Paid 1/1/2008 - 6/30/2008 (2) | Annualized Expense Ratio (2)(3) | ||||||||
Managed — SC | 0.22 | % | ||||||||||
Actual | $ | 1,000 | $ | 952.60 | $ | 0.17 | ||||||
Hypothetical (4) | $ | 1,000 | $ | 1,024.82 | $ | 0.18 | ||||||
Money Market — IC | 0.45 | % | ||||||||||
Actual | $ | 1,000 | $ | 1,012.00 | $ | 2.24 | ||||||
Hypothetical (4) | $ | 1,000 | $ | 1,022.77 | $ | 2.25 | ||||||
Money Market — SC | 0.67 | % | ||||||||||
Actual | $ | 1,000 | $ | 1,001.30 | $ | 0.53 | ||||||
Hypothetical (4) | $ | 1,000 | $ | 1,024.47 | $ | 0.54 | ||||||
Blue Chip — IC | 0.30 | % | ||||||||||
Actual | $ | 1,000 | $ | 865.60 | $ | 1.39 | ||||||
Hypothetical (4) | $ | 1,000 | $ | 1,023.51 | $ | 1.50 | ||||||
Blue Chip — SC | 0.20 | % | ||||||||||
Actual | $ | 1,000 | $ | 910.20 | $ | 0.15 | ||||||
Hypothetical (4) | $ | 1,000 | $ | 1,024.84 | $ | 0.16 |
(1) | The “Beginning Account Value” date for SC shares is June 2, 2008, the initial offering date. |
(2) | SC shares represent the period beginning June 2, 2008 through June 30, 2008. Large purchases occurring on the last day in June caused the “annualized expense ratio” and “expenses paid during period” for the SC shares to calculate low for the period. Over the long-term, the annualized expense ratio for the SC shares should be approximately 0.25% higher than the IC shares. |
(3) | Expenses are equal to the Annualized Expense Ratio as shown in the table for each Portfolio and Class, multiplied by the average account value over the period, multiplied by 182 days for IC, and 29 days for SC, and divided by 366 to reflect the one-half year period. |
(4) | Hypothetical examples are based on 5% return before expenses. |
8
EQUITRUST VARIABLE INSURANCE SERIES FUND
STATEMENTS OF ASSETS AND LIABILITIES
June 30, 2008
(Unaudited)
Value Growth Portfolio | High Grade Bond Portfolio | Strategic Yield Portfolio | Managed Portfolio | Money Market Portfolio | Blue Chip Portfolio | ||||||||||||||||||
ASSETS | |||||||||||||||||||||||
Investments in securities, at value (cost — $58,366,622; $51,356,268; $46,476,036; $84,618,383; $15,103,957; and $65,193,447, respectively) | $ | 61,296,398 | $ | 50,058,783 | $ | 43,995,681 | $ | 89,798,834 | $ | 15,103,957 | $ | 80,103,512 | |||||||||||
Cash | — | — | — | — | 103,133 | — | |||||||||||||||||
Receivables: | |||||||||||||||||||||||
Accrued dividends and interest | 73,309 | 354,273 | 627,527 | 192,673 | 4,087 | 99,210 | |||||||||||||||||
Fund shares sold | 30,443 | 253,627 | 6,878 | 73,277 | 4,494 | 77,169 | |||||||||||||||||
Investment securities sold | 617,209 | — | — | — | — | — | |||||||||||||||||
Prepaid expense and other assets | 1,577 | 1,170 | 1,113 | 2,305 | 431 | 2,071 | |||||||||||||||||
Total Assets | 62,018,936 | 50,667,853 | 44,631,199 | 90,067,089 | 15,216,102 | 80,281,962 | |||||||||||||||||
LIABILITIES | |||||||||||||||||||||||
Payables: | |||||||||||||||||||||||
Fund shares redeemed | 98,339 | 135,098 | 83,568 | 107,890 | 38,610 | 115,802 | |||||||||||||||||
Investment securities purchased | — | 2,932,833 | — | — | — | — | |||||||||||||||||
Dividends | — | 21 | 25 | — | 1,779 | — | |||||||||||||||||
Accrued expenses | 10,265 | 6,805 | 7,217 | 13,017 | 3,623 | 13,537 | |||||||||||||||||
Total Liabilities | 108,604 | 3,074,757 | 90,810 | 120,907 | 44,012 | 129,339 | |||||||||||||||||
NET ASSETS | $ | 61,910,332 | $ | 47,593,096 | $ | 44,540,389 | $ | 89,946,182 | $ | 15,172,090 | $ | 80,152,623 | |||||||||||
ANALYSIS OF NET ASSETS | |||||||||||||||||||||||
Paid-in capital | $ | 59,620,452 | $ | 48,871,890 | $ | 49,074,725 | $ | 83,689,175 | $ | 15,172,090 | $ | 68,828,699 | |||||||||||
Accumulated undistributed net investment income | 487,751 | — | — | 1,194,310 | — | 980,360 | |||||||||||||||||
Accumulated undistributed net realized gain (loss) from investment transactions | (1,127,647 | ) | 18,691 | (2,053,981 | ) | (117,754 | ) | — | (4,566,501 | ) | |||||||||||||
Net unrealized appreciation (depreciation) of investments | 2,929,776 | (1,297,485 | ) | (2,480,355 | ) | 5,180,451 | — | 14,910,065 | |||||||||||||||
NET ASSETS | $ | 61,910,332 | $ | 47,593,096 | $ | 44,540,389 | $ | 89,946,182 | $ | 15,172,090 | $ | 80,152,623 | |||||||||||
See accompanying notes.
9
EQUITRUST VARIABLE INSURANCE SERIES FUND
STATEMENTS OF ASSETS AND LIABILITIES (continued)
June 30, 2008
(Unaudited)
Value Growth Portfolio | High Grade Bond Portfolio | Strategic Yield Portfolio | Managed Portfolio | Money Market Portfolio | Blue Chip Portfolio | |||||||||||||
NET ASSET VALUE PER SHARE | ||||||||||||||||||
Initial Class: Net Assets | $ | 61,861,274 | $ | 47,224,860 | $ | 44,531,950 | $ | 89,824,304 | $ | 15,167,090 | $ | 80,033,453 | ||||||
Shares issued and outstanding | 4,741,308 | 4,809,555 | 5,206,187 | 6,288,116 | 15,167,090 | 2,228,986 | ||||||||||||
NET ASSET VALUE PER SHARE | $ | 13.05 | $ | 9.82 | $ | 8.55 | $ | 14.28 | $ | 1.00 | $ | 35.91 | ||||||
Service Class: Net Assets | $ | 49,058 | $ | 368,236 | $ | 8,439 | $ | 121,878 | $ | 5,000 | $ | 119,170 | ||||||
Shares issued and outstanding | 3,760 | 37,503 | 987 | 8,534 | 5,000 | 3,320 | ||||||||||||
NET ASSET VALUE PER SHARE | $ | 13.05 | $ | 9.82 | $ | 8.55 | $ | 14.28 | $ | 1.00 | $ | 35.90 | ||||||
See accompanying notes.
10
EQUITRUST VARIABLE INSURANCE SERIES FUND
STATEMENTS OF OPERATIONS
Six Months Ended June 30, 2008
(Unaudited)
Value Growth Portfolio | High Grade Bond Portfolio | Strategic Yield Portfolio | Managed Portfolio | Money Market Portfolio | Blue Chip Portfolio | �� | ||||||||||||||||||
INVESTMENT INCOME | ||||||||||||||||||||||||
Dividends | $ | 601,516 | $ | — | $ | 23,587 | $ | 747,087 | $ | — | $ | 1,064,201 | ||||||||||||
Interest | 72,593 | 1,251,758 | 1,428,556 | 707,448 | 233,765 | 46,435 | ||||||||||||||||||
Less foreign tax withholding | (3,659 | ) | — | — | (5,133 | ) | — | — | ||||||||||||||||
Total Investment Income | 670,450 | 1,251,758 | 1,452,143 | 1,449,402 | 233,765 | 1,110,636 | ||||||||||||||||||
EXPENSES | ||||||||||||||||||||||||
Paid to Affiliates: | ||||||||||||||||||||||||
Investment advisory and management fees | 145,136 | 70,193 | 100,561 | 210,290 | 20,490 | 87,173 | ||||||||||||||||||
Distribution fees | 1 | 2 | 1 | 1 | 1 | 1 | ||||||||||||||||||
Accounting fees | 14,750 | 11,699 | 11,173 | 14,723 | 4,098 | 14,571 | ||||||||||||||||||
Custodian fees | 3,403 | 3,428 | 2,926 | 4,143 | 4,405 | 2,895 | ||||||||||||||||||
Professional fees | 5,222 | 4,060 | 3,952 | 6,819 | 2,462 | 6,771 | ||||||||||||||||||
Trustees’ fees and expenses | 2,904 | 2,084 | 1,981 | 4,191 | 732 | 3,899 | ||||||||||||||||||
Reports to shareholders | 1,426 | 949 | 941 | 2,036 | 325 | 1,982 | ||||||||||||||||||
Insurance and bonds | 1,266 | 855 | 844 | 1,823 | 266 | 1,789 | ||||||||||||||||||
Proxy expense | 3,471 | 2,512 | 2,419 | 5,086 | 928 | 4,774 | ||||||||||||||||||
Miscellaneous | 5,126 | 3,850 | 3,906 | 5,988 | 2,960 | 6,429 | ||||||||||||||||||
Total Expenses | 182,705 | 99,632 | 128,704 | 255,100 | 36,667 | 130,284 | ||||||||||||||||||
Fees paid indirectly | (6 | ) | (4 | ) | (4 | ) | (8 | ) | (1 | ) | (8 | ) | ||||||||||||
Net Expenses | 182,699 | 99,628 | 128,700 | 255,092 | 36,666 | 130,276 | ||||||||||||||||||
Net Investment Income | 487,751 | 1,152,130 | 1,323,443 | 1,194,310 | 197,099 | 980,360 | ||||||||||||||||||
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS | ||||||||||||||||||||||||
Net realized gain (loss) from investment transactions | (1,037,202 | ) | 18,691 | 11,947 | (233,188 | ) | — | (238 | ) | |||||||||||||||
Change in unrealized appreciation (depreciation) of investments | (4,310,123 | ) | (1,455,218 | ) | (1,981,959 | ) | (4,878,996 | ) | — | (13,596,340 | ) | |||||||||||||
Net Loss on Investments | (5,347,325 | ) | (1,436,527 | ) | (1,970,012 | ) | (5,112,184 | ) | — | (13,596,578 | ) | |||||||||||||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | (4,859,574 | ) | $ | (284,397 | ) | $ | (646,569 | ) | $ | (3,917,874 | ) | $ | 197,099 | $ | (12,616,218 | ) | |||||||
See accompanying notes.
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EQUITRUST VARIABLE INSURANCE SERIES FUND
STATEMENTS OF CHANGES IN NET ASSETS
Value Growth Portfolio | High Grade Bond Portfolio | Strategic Yield Portfolio | ||||||||||||||||||||||
Six Months Ended June 30, 2008 (Unaudited) | Year Ended December 31, 2007 | Six Months Ended June 30, 2008 (Unaudited) | Year Ended December 31, 2007 | Six Months Ended June 30, 2008 (Unaudited) | Year Ended December 31, 2007 | |||||||||||||||||||
OPERATIONS | ||||||||||||||||||||||||
Net investment income | $ | 487,751 | $ | 1,502,365 | $ | 1,152,130 | $ | 2,247,831 | $ | 1,323,443 | $ | 2,722,242 | ||||||||||||
Net realized gain (loss) from investment transactions | (1,037,202 | ) | 2,409,768 | 18,691 | 29,609 | 11,947 | 1,755 | |||||||||||||||||
Change in unrealized appreciation (depreciation) of investments | (4,310,123 | ) | (453,003 | ) | (1,455,218 | ) | 45,176 | (1,981,959 | ) | (1,224,366 | ) | |||||||||||||
Net Increase (Decrease) in Net Assets Resulting from Operations | (4,859,574 | ) | 3,459,130 | (284,397 | ) | 2,322,616 | (646,569 | ) | 1,499,631 | |||||||||||||||
DIVIDENDS AND DISTRIBUTIONS TO | ||||||||||||||||||||||||
Net investment income: | ||||||||||||||||||||||||
Initial Class | (1,502,365 | ) | (1,163,459 | ) | (1,152,037 | ) | (2,247,831 | ) | (1,323,416 | ) | (2,722,242 | ) | ||||||||||||
Service Class | — | — | (93 | ) | — | (27 | ) | — | ||||||||||||||||
Net realized gain from investment transactions: | ||||||||||||||||||||||||
Initial Class | (2,736,188 | ) | (2,257,123 | ) | (19,907 | ) | (21,030 | ) | — | — | ||||||||||||||
Service Class | — | — | — | — | — | — | ||||||||||||||||||
Total Dividends and Distributions | (4,238,553 | ) | (3,420,582 | ) | (1,172,037 | ) | (2,268,861 | ) | (1,323,443 | ) | (2,722,242 | ) | ||||||||||||
CAPITAL SHARE TRANSACTIONS | 3,138,937 | 2,118,738 | 3,010,338 | 6,614,216 | 1,263,260 | 4,988,713 | ||||||||||||||||||
Total Increase (Decrease) in Net Assets | (5,959,190 | ) | 2,157,286 | 1,553,904 | 6,667,971 | (706,752 | ) | 3,766,102 | ||||||||||||||||
NET ASSETS | ||||||||||||||||||||||||
Beginning of period | 67,869,522 | 65,712,236 | 46,039,192 | 39,371,221 | 45,247,141 | 41,481,039 | ||||||||||||||||||
End of period (including accumulated undistributed net investment income as set forth below) | $ | 61,910,332 | $ | 67,869,522 | $ | 47,593,096 | $ | 46,039,192 | $ | 44,540,389 | $ | 45,247,141 | ||||||||||||
Accumulated Undistributed Net Investment Income | $ | 487,751 | $ | 1,502,365 | $ | — | $ | — | $ | — | $ | — | ||||||||||||
See accompanying notes.
12
EQUITRUST VARIABLE INSURANCE SERIES FUND
STATEMENTS OF CHANGES IN NET ASSETS (continued)
Managed Portfolio | Money Market Portfolio | Blue Chip Portfolio | ||||||||||||||||||||||
Six Months Ended June 30, 2008 (Unaudited) | Year Ended December 31, 2007 | Six Months Ended June 30, 2008 (Unaudited) | Year Ended December 31, 2007 | Six Months Ended June 30, 2008 (Unaudited) | Year Ended December 31, 2007 | |||||||||||||||||||
OPERATIONS | ||||||||||||||||||||||||
Net investment income | $ | 1,194,310 | $ | 3,357,314 | $ | 197,099 | $ | 670,368 | $ | 980,360 | $ | 1,916,168 | ||||||||||||
Net realized gain (loss) from investment transactions | (233,188 | ) | 3,101,563 | — | — | (238 | ) | 1,455,563 | ||||||||||||||||
Change in unrealized appreciation (depreciation) of investments | (4,878,996 | ) | (997,219 | ) | — | — | (13,596,340 | ) | 2,437,202 | |||||||||||||||
Net Increase (Decrease) in Net Assets Resulting from Operations | (3,917,874 | ) | 5,461,658 | 197,099 | 670,368 | (12,616,218 | ) | 5,808,933 | ||||||||||||||||
DIVIDENDS AND DISTRIBUTIONS TO | ||||||||||||||||||||||||
Net investment income: | ||||||||||||||||||||||||
Initial Class | (3,357,314 | ) | (2,642,530 | ) | (197,093 | ) | (670,368 | ) | (1,916,168 | ) | (1,750,924 | ) | ||||||||||||
Service Class | — | — | (6 | ) | — | — | — | |||||||||||||||||
Net realized gain from investment transactions: | ||||||||||||||||||||||||
Initial Class | (3,363,319 | ) | (3,999,345 | ) | — | — | — | — | ||||||||||||||||
Service Class | — | — | — | — | — | — | ||||||||||||||||||
Total Dividends and Distributions | (6,720,633 | ) | (6,641,875 | ) | (197,099 | ) | (670,368 | ) | (1,916,168 | ) | (1,750,924 | ) | ||||||||||||
CAPITAL SHARE TRANSACTIONS | 3,511,921 | 4,457,107 | (1,291,764 | ) | 7,906,872 | (81,119 | ) | 447,012 | ||||||||||||||||
Total Increase (Decrease) in Net Assets | (7,126,586 | ) | 3,276,890 | (1,291,764 | ) | 7,906,872 | (14,613,505 | ) | 4,505,021 | |||||||||||||||
NET ASSETS | ||||||||||||||||||||||||
Beginning of period | 97,072,768 | 93,795,878 | 16,463,854 | 8,556,982 | 94,766,128 | 90,261,107 | ||||||||||||||||||
End of period (including accumulated undistributed net investment income as set forth below) | $ | 89,946,182 | $ | 97,072,768 | $ | 15,172,090 | $ | 16,463,854 | $ | 80,152,623 | $ | 94,766,128 | ||||||||||||
Accumulated Undistributed Net Investment Income | $ | 1,194,310 | $ | 3,357,314 | $ | — | $ | — | $ | 980,360 | $ | 1,916,168 | ||||||||||||
See accompanying notes.
13
EQUITRUST VARIABLE INSURANCE SERIES FUND
SCHEDULE OF INVESTMENTS
VALUE GROWTH PORTFOLIO
June 30, 2008
(Unaudited)
Shares Held | Value | ||||
COMMON STOCKS (93.82%) | |||||
BUSINESS SERVICES (7.10%) | |||||
Adobe Systems Inc. (1) | 11,700 | $ | 460,863 | ||
eBay Inc. (1) | 19,135 | 522,960 | |||
Intuit Inc. (1) | 13,980 | 385,429 | |||
Microsoft Corp. | 48,455 | 1,332,997 | |||
Oracle Corp. (1) | 46,070 | 967,470 | |||
Symantec Corp. (1) | 28,002 | 541,839 | |||
VASCO Data Security International, Inc. (1) | 17,500 | 184,275 | |||
4,395,833 | |||||
CHEMICALS AND ALLIED PRODUCTS (14.27%) | |||||
Abbott Laboratories | 10,400 | 550,888 | |||
Amgen Inc. (1) | 7,625 | 359,595 | |||
Colgate-Palmolive Co. | 5,355 | 370,030 | |||
Dow Chemical Co. (The) | 5,330 | 186,070 | |||
E. I. du Pont de Nemours and Co. | 16,005 | 686,454 | |||
Genentech, Inc. (1) | 4,600 | 349,140 | |||
Johnson & Johnson | 24,600 | 1,582,764 | |||
K-V Pharmaceutical Co.-Class A (1) | 12,700 | 245,491 | |||
Mylan Inc. | 24,650 | 297,526 | |||
Novartis AG | 5,700 | 313,728 | |||
Pfizer Inc. | 66,886 | 1,168,498 | |||
Procter & Gamble Co. (The) | 16,425 | 998,804 | |||
Schering-Plough Corp. | 14,980 | 294,956 | |||
Teva Pharmaceutical Industries Ltd. | 21,791 | 998,028 | |||
Wyeth | 8,985 | 430,921 | |||
8,832,893 | |||||
COMMUNICATIONS (3.16%) | |||||
AT&T Inc. | 17,660 | 594,965 | |||
Comcast Corp.-Class A | 18,765 | 355,972 | |||
Embarq Corp. | 6,700 | 316,709 | |||
Sprint Nextel Corp. | 33,013 | 313,624 | |||
Verizon Communications Inc. | 10,625 | 376,125 | |||
1,957,395 | |||||
DEPOSITORY INSTITUTIONS (4.22%) | |||||
Bank of America Corp. | 16,089 | 384,044 | |||
Bank of New York Mellon Corp. (The) | 21,040 | 795,943 | |||
Citigroup Inc. | 22,363 | 374,804 | |||
National City Corp. | 6,830 | 32,579 | |||
New York Community Bancorp, Inc. | 23,156 | 413,103 | |||
State Street Corp. | 3,130 | 200,289 | |||
U.S. Bancorp | 9,135 | 254,775 | |||
Wachovia Corp. | 9,950 | 154,523 | |||
2,610,060 | |||||
DRUG STORES AND PROPRIETARY STORES (0.59%) | |||||
Walgreen Co. | 11,245 | 365,575 |
Shares Held | Value | ||||
ELECTRIC, GAS AND SANITARY SERVICES (3.40%) | |||||
Atmos Energy Corp. | 11,267 | $ | 310,631 | ||
CMS Energy Corp. | 28,300 | 421,670 | |||
Integrys Energy Group, Inc. | 9,886 | 502,505 | |||
Pinnacle West Capital Corp. | 9,200 | 283,084 | |||
Waste Management, Inc. | 5,300 | 199,863 | |||
Xcel Energy Inc. | 19,405 | 389,458 | |||
2,107,211 | |||||
ELECTRONIC AND OTHER ELECTRICAL EQUIPMENT (7.06%) | |||||
Cisco Systems, Inc. (1) | 46,570 | 1,083,218 | |||
Emerson Electric Co. | 4,600 | 227,470 | |||
General Electric Co. | 82,780 | 2,209,398 | |||
Helen of Troy Ltd. (1) | 8,966 | 144,532 | |||
Intel Corp. | 17,500 | 375,900 | |||
JDS Uniphase Corp. (1) | 12,750 | 144,840 | |||
QUALCOMM Inc. | 4,200 | 186,354 | |||
4,371,712 | |||||
FABRICATED METAL PRODUCTS (0.97%) | |||||
Illinois Tool Works Inc. | 12,580 | 597,676 | |||
FOOD AND KINDRED PRODUCTS (4.40%) | |||||
Anheuser-Busch Companies, Inc. | 9,930 | 616,852 | |||
Coca-Cola Co. (The) | 11,970 | 622,201 | |||
Coca-Cola FEMSA, S.A.B. de C.V. | 3,700 | 208,643 | |||
Dr Pepper Snapple Group, Inc. (1) | 15,300 | 320,994 | |||
Kraft Foods Inc. | 12,708 | 361,542 | |||
PepsiCo, Inc. | 9,330 | 593,295 | |||
2,723,527 | |||||
FOOD STORES (0.54%) | |||||
Kroger Co. (The) | 11,686 | 337,375 | |||
FORESTRY (0.49%) | |||||
Weyerhaeuser Co. | 5,965 | 305,050 | |||
FURNISHINGS AND HOME FURNITURE STORES (0.32%) | |||||
Bed Bath & Beyond Inc. (1) | 7,010 | 196,981 | |||
GENERAL MERCHANDISE STORES (2.37%) | |||||
Target Corp. | 13,790 | 641,097 | |||
Wal-Mart Stores, Inc. | 14,735 | 828,107 | |||
1,469,204 | |||||
HOLDING AND OTHER INVESTMENT OFFICES (1.85%) | |||||
Adams Express Co. (The) | 63,254 | 749,560 | |||
H&Q Life Sciences Investors | 34,474 | 393,693 | |||
1,143,253 |
14
EQUITRUST VARIABLE INSURANCE SERIES FUND
SCHEDULE OF INVESTMENTS
VALUE GROWTH PORTFOLIO (continued)
Shares Held | Value | ||||
INDUSTRIAL MACHINERY AND EQUIPMENT (5.07%) | |||||
3M Co. | 14,430 | $ | 1,004,184 | ||
EMC Corp. (1) | 62,025 | 911,147 | |||
Hewlett-Packard Co. | 5,270 | 232,987 | |||
Ingersoll-Rand Co. Ltd.-Class A | 19,260 | 720,902 | |||
Sigma Designs, Inc. (1) | 19,400 | 269,466 | |||
3,138,686 | |||||
INSTRUMENTS AND RELATED PRODUCTS (6.54%) | |||||
Agilent Technologies, Inc. (1) | 7,000 | 248,780 | |||
Becton, Dickinson and Co. | 11,026 | 896,414 | |||
Danaher Corp. | 2,400 | 185,520 | |||
Excel Technology, Inc. (1) | 6,600 | 147,312 | |||
Medtronic, Inc. | 15,340 | 793,845 | |||
Stryker Corp. | 7,980 | 501,782 | |||
Thermo Fisher Scientific Inc. (1) | 16,352 | 911,297 | |||
Zimmer Holdings, Inc. (1) | 5,330 | 362,706 | |||
4,047,656 | |||||
INSURANCE AGENTS, BROKERS AND SERVICE (0.48%) | |||||
Arthur J. Gallagher & Co. | 12,365 | 297,996 | |||
INSURANCE CARRIERS (3.51%) | |||||
Allstate Corp. (The) | 4,910 | 223,847 | |||
American Equity Investment Life Holding Co. | 29,300 | 238,795 | |||
American International Group, Inc. | 12,765 | 337,762 | |||
EMC Insurance Group Inc. | 13,620 | 327,970 | |||
Lincoln National Corp. | 4,485 | 203,260 | |||
MBIA Inc. | 4,690 | 20,589 | |||
MetLife, Inc. | 8,705 | 459,363 | |||
Protective Life Corp. | 4,215 | 160,381 | |||
WellPoint, Inc. (1) | 4,222 | 201,221 | |||
2,173,188 | |||||
LUMBER & OTHER BUILDING MATERIALS DEALERS (0.53%) | |||||
Lowe’s Companies, Inc. | 15,690 | 325,567 | |||
MANAGEMENT AND RELATED SERVICES (1.06%) | |||||
Paychex, Inc. | 9,900 | 309,672 | |||
Quest Diagnostics Inc. | 7,200 | 348,984 | |||
658,656 | |||||
METAL MINING (2.84%) | |||||
Barrick Gold Corp. | 24,946 | 1,135,043 | |||
Newmont Mining Corp. | 12,000 | 625,920 | |||
1,760,963 | |||||
MOTION PICTURES (1.12%) | |||||
News Corp.-Class A | 17,040 | 256,282 | |||
Time Warner Inc. | 29,390 | 434,972 | |||
691,254 |
Shares Held | Value | ||||
MOTOR FREIGHT TRANSPORTATION AND WAREHOUSING (0.56%) | |||||
United Parcel Service, Inc.-Class B | 5,675 | $ | 348,842 | ||
NONDEPOSITORY INSTITUTIONS (0.14%) | |||||
SLM Corp. (1) | 4,275 | 82,721 | |||
OIL AND GAS EXTRACTION (9.80%) | |||||
Anadarko Petroleum Corp. | 7,400 | 553,816 | |||
Apache Corp. | 5,200 | 722,800 | |||
Baker Hughes Inc. | 6,200 | 541,508 | |||
Exterran Holdings, Inc. (1) | 5,900 | 421,791 | |||
Helmerich & Payne, Inc. | 14,600 | 1,051,492 | |||
Noble Corp. | 8,600 | 558,656 | |||
Occidental Petroleum Corp. | 6,800 | 611,048 | |||
Rowan Companies, Inc. | 8,800 | 411,400 | |||
Transocean Inc. (1) | 3,100 | 472,409 | |||
Weatherford International Ltd. (1) | 14,600 | 724,014 | |||
6,068,934 | |||||
PAPER AND ALLIED PRODUCTS (1.12%) | |||||
AbitibiBowater Inc. | 5,797 | 54,086 | |||
Kimberly-Clark Corp. | 10,720 | 640,842 | |||
694,928 | |||||
PERSONAL SERVICES (0.58%) | |||||
Cintas Corp. | 13,560 | 359,476 | |||
PETROLEUM AND COAL PRODUCTS (4.31%) | |||||
BP p.l.c. | 6,000 | 417,420 | |||
Chevron Corp. | 10,300 | 1,021,039 | |||
ConocoPhillips | 10,257 | 968,158 | |||
Valero Energy Corp. | 6,300 | 259,434 | |||
2,666,051 | |||||
PRINTING AND PUBLISHING (0.80%) | |||||
Meredith Corp. | 8,945 | 253,054 | |||
R. R. Donnelley & Sons Co. | 8,110 | 240,786 | |||
493,840 | |||||
RAILROAD TRANSPORTATION (0.38%) | |||||
Union Pacific Corp. | 3,140 | 237,070 | |||
TOBACCO PRODUCTS (0.48%) | |||||
Altria Group, Inc. | 4,260 | 87,586 | |||
Philip Morris International Inc. | 4,260 | 210,401 | |||
297,987 | |||||
TRANSPORTATION EQUIPMENT (3.12%) | |||||
Federal Signal Corp. | 13,300 | 159,600 | |||
Honeywell International Inc. | 18,835 | 947,024 | |||
ITT Corp. | 13,020 | 824,557 | |||
1,931,181 |
15
EQUITRUST VARIABLE INSURANCE SERIES FUND
SCHEDULE OF INVESTMENTS
VALUE GROWTH PORTFOLIO (continued)
Shares Held | Value | |||||
WHOLESALE TRADE — NONDURABLE GOODS (0.64%) | ||||||
SYSCO Corp. | 14,390 | $ | 395,869 | |||
Total Common Stocks | 58,084,610 | |||||
SHORT-TERM INVESTMENTS (5.19%) | ||||||
MONEY MARKET MUTUAL FUND (0.10%) | ||||||
JP Morgan U.S. Treasury Plus Money Market Fund | 62,914 | 62,914 | ||||
Principal Amount | ||||||
COMMERCIAL PAPER (2.18%) | ||||||
NONDEPOSITORY INSTITUTIONS (1.70%) | ||||||
American Express Credit Corp., 2.20%, due 07/07/08 | $ | 200,000 | 200,000 | |||
American General Finance Corp., 2.52%, due 07/11/08 | 300,000 | 300,000 | ||||
General Electric Capital Corp., 2.24%, due 07/23/08 | 550,000 | 550,000 | ||||
1,050,000 | ||||||
PETROLEUM AND COAL PRODUCTS (0.48%) | ||||||
Chevron Corp., 2.05%, due 07/01/08 | 300,000 | 300,000 | ||||
Total Commercial Paper | 1,350,000 | |||||
UNITED STATES GOVERNMENT AGENCIES (2.91%) | ||||||
Federal Home Loan Bank, due 07/01/08 | 300,000 | 300,000 | ||||
Federal Home Loan Bank, due 07/02/08 | 350,000 | 349,980 | ||||
Federal Home Loan Bank, due 07/14/08 | 300,000 | 299,767 | ||||
Federal Home Loan Bank, due 07/18/08 | 850,000 | 849,127 | ||||
Total United States Government Agencies | 1,798,874 | |||||
Total Short-Term Investments | 3,211,788 | |||||
Total Investments (99.01%) | 61,296,398 | |||||
OTHER ASSETS LESS LIABILITIES (0.99%) | ||||||
Cash, receivables, prepaid expense and other assets, less liabilities | 613,934 | |||||
Total Net Assets (100.00%) | $ | 61,910,332 | ||||
(1) | Non-income producing securities. |
See accompanying notes.
16
EQUITRUST VARIABLE INSURANCE SERIES FUND
SCHEDULE OF INVESTMENTS
HIGH GRADE BOND PORTFOLIO
June 30, 2008
(Unaudited)
Principal Amount | Value | |||||
CORPORATE BONDS (32.28%) | ||||||
DEPOSITORY INSTITUTIONS (8.38%) | ||||||
Comerica Bank, 5.20%, due 08/22/17 | $ | 1,000,000 | $ | 841,150 | ||
Fifth Third Bancorp, 5.45%, due 01/15/17 | 1,000,000 | 834,210 | ||||
Huntington National Bank, 5.50%, due 02/15/16 | 700,000 | 570,402 | ||||
PNC Preferred FD, 144A, 6.517%, due 12/31/49 (1) | 1,500,000 | 1,126,065 | ||||
Washington Mutual Bank, FA, 5.65%, due 08/15/14 | 750,000 | 618,128 | ||||
3,989,955 | ||||||
ELECTRIC, GAS AND SANITARY SERVICES (6.15%) | ||||||
Maritime & NE Pipeline, 144A, 7.70%, due 11/30/19 (1) | 700,000 | 797,587 | ||||
Oglethorpe Power Corp., 6.974%, due 06/30/11 | 366,000 | 378,078 | ||||
PacifiCorp, 6.90%, due 11/15/11 | 750,000 | 805,238 | ||||
Westar Energy, Inc., 5.15%, due 01/01/17 | 1,000,000 | 947,100 | ||||
2,928,003 | ||||||
FOOD AND KINDRED PRODUCTS (2.11%) | ||||||
Diageo Capital plc, 4.375%, due 05/03/10 | 1,000,000 | 1,005,620 | ||||
FOOD STORES (1.34%) | ||||||
Ahold Finance U.S.A., LLC, 8.25%, due 07/15/10 | 600,000 | 635,250 | ||||
FURNITURE AND FIXTURES (1.06%) | ||||||
Steelcase Inc., 6.50%, due 08/15/11 | 500,000 | 506,100 | ||||
HOLDING AND OTHER INVESTMENT OFFICES (1.34%) | ||||||
Washington Real Estate Investment Trust, 5.25%, due 01/15/14 | 700,000 | 637,014 | ||||
INSURANCE CARRIERS (4.80%) | ||||||
Prudential Financial, Inc., 6.10%, due 06/15/17 | 1,500,000 | 1,509,750 | ||||
SunAmerica Inc., 8.125%, due 04/28/23 | 700,000 | 774,984 | ||||
2,284,734 | ||||||
SECURITY AND COMMODITY BROKERS (4.15%) | ||||||
Goldman Sachs Group, Inc. (The), 5.125%, due 01/15/15 | 900,000 | 870,021 | ||||
Morgan Stanley-Series MTNC, 5.125%, due 02/11/19 | 1,300,000 | 1,105,442 | ||||
1,975,463 |
Principal Amount | Value | |||||
TOBACCO PRODUCTS (1.62%) | ||||||
UST Inc., 7.25%, due 06/01/09 | $ | 750,000 | $ | 769,320 | ||
TRANSPORTATION — BY AIR (1.12%) | ||||||
Continental Airlines, Inc. Pass-Through Certificates 1991-1 Class A, 6.545%, due 08/02/20 | 374,681 | 337,999 | ||||
FedEx Corp. Pass-Through Certificates, 7.50%, due 01/15/18 | 184,028 | 192,433 | ||||
530,432 | ||||||
TRANSPORTATION EQUIPMENT (0.21%) | ||||||
Ford Motor Co., 9.215%, due 09/15/21 | 150,000 | 101,250 | ||||
Total Corporate Bonds | 15,363,141 | |||||
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES (2.67%) | ||||||
TIAA Seasoned Commercial Mortgage Trust 2007-C4 Class AJ, 6.09%, due 08/01/39 | 1,500,000 | 1,270,665 | ||||
Total Commercial Mortgage Pass-Through Certificates | 1,270,665 | |||||
MORTGAGE-BACKED SECURITIES (51.92%) | ||||||
FEDERAL HOME LOAN MORTGAGE CORPORATION (FHLMC) (17.97%) | ||||||
3023 Class TG, 5.50%, due 08/01/35 | 1,300,655 | 1,274,122 | ||||
3051 Class MY, 5.50%, due 10/01/25 | 1,000,000 | 986,420 | ||||
Pool # A53146, 5.50%, due 10/01/36 (3) | 1,853,545 | 1,829,217 | ||||
Pool # A69436, 6.00%, due 12/01/37 | 881,707 | 891,352 | ||||
Pool # G02562, 6.00%, due 01/01/37 | 1,293,020 | 1,308,147 | ||||
Pool # G02648, 5.50%, due 12/01/36 | 1,314,300 | 1,297,049 | ||||
Pool # G03803, 5.50%, due 01/01/38 | 980,829 | 967,342 | ||||
8,553,649 | ||||||
FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA) (15.48%) | ||||||
Pool # 50276, 9.50%, due 02/01/20 | 626 | 699 | ||||
Pool # 7148, 5.50%, due 07/01/38 (2) | 3,000,000 | 2,956,641 | ||||
Pool # 256103, 5.50%, due 02/01/26 | 731,983 | 730,455 | ||||
Pool # 897144, 6.00%, due 09/01/36 | 851,453 | 860,349 | ||||
Pool # 906224, 5.50%, due 01/01/37 (3) | 1,571,892 | 1,552,459 | ||||
Pool # 928570, 6.00%, due 08/01/37 | 1,252,732 | 1,265,430 | ||||
7,366,033 |
17
EQUITRUST VARIABLE INSURANCE SERIES FUND
SCHEDULE OF INVESTMENTS
HIGH GRADE BOND PORTFOLIO (continued)
Principal Amount | Value | |||||
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (GNMA) (18.47%) | ||||||
2003-1 Class PE, 5.50%, due 07/01/32 | $ | 1,000,000 | $ | 989,274 | ||
2003-116 Class JC, 5.00%, due 05/01/30 | 1,000,000 | 1,005,534 | ||||
Pool # 1512, 7.50%, due 12/01/23 | 12,659 | 13,576 | ||||
Pool # 2631, 7.00%, due 08/01/28 | 18,176 | 19,347 | ||||
Pool # 2658, 6.50%, due 10/01/28 | 32,829 | 34,059 | ||||
Pool # 2701, 6.50%, due 01/01/29 | 41,954 | 43,514 | ||||
Pool # 2796, 7.00%, due 08/01/29 | 32,660 | 34,750 | ||||
Pool # 3039, 6.50%, due 02/01/31 | 13,077 | 13,553 | ||||
Pool # 3040, 7.00%, due 02/01/31 | 20,719 | 22,017 | ||||
Pool # 3188, 6.50%, due 01/01/32 | 75,186 | 77,827 | ||||
Pool # 3239, 6.50%, due 05/01/32 | 73,020 | 75,584 | ||||
Pool # 3261, 6.50%, due 07/01/32 | 139,380 | 144,275 | ||||
Pool # 3320, 5.50%, due 12/01/32 | 596,033 | 593,751 | ||||
Pool # 3333, 5.50%, due 01/01/33 | 488,031 | 485,854 | ||||
Pool # 3375, 5.50%, due 04/01/33 | 74,194 | 73,863 | ||||
Pool # 3390, 5.50%, due 05/01/33 | 325,231 | 323,780 | ||||
Pool # 3403, 5.50%, due 06/01/33 | 553,180 | 550,712 | ||||
Pool # 3458, 5.00%, due 10/01/33 | 501,524 | 485,882 | ||||
Pool # 3499, 5.00%, due 01/01/34 | 772,420 | 747,931 | ||||
Pool # 3556, 5.50%, due 05/01/34 | 779,294 | 775,919 | ||||
Pool # 3623, 5.00%, due 10/01/34 | 1,287,962 | 1,247,127 | ||||
Pool # 22630, 6.50%, due 08/01/28 | 18,868 | 19,576 | ||||
Pool # 276337, 10.00%, due 08/01/19 | 5,115 | 5,779 | ||||
Pool # 643816, 6.00%, due 07/01/25 | 984,496 | 1,005,668 | ||||
8,789,152 | ||||||
Total Mortgage-Backed Securities | 24,708,834 | |||||
SHORT-TERM INVESTMENTS (18.31%) | ||||||
COMMERCIAL PAPER (6.20%) | ||||||
NONDEPOSITORY INSTITUTIONS | ||||||
American Express Credit Corp., 2.37%, due 07/11/08 | 150,000 | 150,000 | ||||
American Express Credit Corp., 2.20%, due 07/14/08 | 250,000 | 250,000 | ||||
American Express Credit Corp., 2.20%, due 07/14/08 | 950,000 | 950,000 | ||||
American General Finance Corp., 2.58%, due 07/14/08 | 1,250,000 | 1,250,000 | ||||
General Electric Capital Corp., 2.00%, due 07/11/08 | 350,000 | 350,000 | ||||
Total Commercial Paper | 2,950,000 |
Principal Amount | Value | ||||||
UNITED STATES GOVERNMENT AGENCIES (11.91%) | |||||||
Federal Home Loan Bank, due 07/02/08 | $ | 1,300,000 | $ | 1,299,924 | |||
Federal Home Loan Bank, due 07/07/08 | 1,000,000 | 999,655 | |||||
Federal Home Loan Bank, due 07/11/08 | 475,000 | 474,721 | |||||
Federal Home Loan Bank, due 07/14/08 | 500,000 | 499,611 | |||||
Federal Home Loan Bank, due 07/18/08 | 2,400,000 | 2,397,557 | |||||
Total United States | 5,671,468 | ||||||
Shares Held | |||||||
MONEY MARKET MUTUAL FUND (0.20%) | |||||||
JPMorgan U.S. Treasury Plus Money Market Fund | 94,675 | 94,675 | |||||
Total Short-Term Investments | 8,716,143 | ||||||
Total Investments (105.18%) | 50,058,783 | ||||||
OTHER ASSETS LESS LIABILITIES (-5.18%) | |||||||
Cash, receivables, prepaid expense and other assets, less liabilities | (2,465,687 | ) | |||||
Total Net Assets (100.00%) | $ | 47,593,096 | |||||
(1) | Restricted Securities: |
PNC Preferred FD, was purchased at 100.000 on 11/29/06. As of 06/30/08, the carrying value of each unit was 75.071, representing $1,126,065 or 2.37% of total net assets. |
Maritime & NE Pipeline was purchased at 104.481 on 04/20/01. As of 06/30/08, the carrying value of each unit was 113.941, representing $797,587 or 1.68% of total net assets. |
As of 06/30/08, the carrying value of all restricted securities was $1,923,652 or 4.05% of total net assets. |
(2) | Firm commitment to purchase on 7/14/08. |
(3) | Trade restricted in a segregated account to cover firm commitment. |
See accompanying notes.
18
EQUITRUST VARIABLE INSURANCE SERIES FUND
SCHEDULE OF INVESTMENTS
STRATEGIC YIELD PORTFOLIO
June 30, 2008
(Unaudited)
Shares Held | Value | |||||
PREFERRED STOCKS (1.36%) | ||||||
DEPOSITORY INSTITUTIONS | ||||||
Sovereign Capital Trust V, 7.75% (Cost $800,000) | 32,000 | $ | 604,160 | |||
Principal Amount | ||||||
CORPORATE BONDS (68.54%) | ||||||
APPAREL AND ACCESSORY STORES (2.96%) | ||||||
Woolworth (FW) Corp., 8.50%, due 01/15/22 | $ | 1,400,000 | 1,319,500 | |||
CHEMICALS AND ALLIED PRODUCTS (4.82%) | ||||||
Chemtura Corp., 6.875%, due 06/01/16 | 1,700,000 | 1,487,500 | ||||
Nova Chemicals, Ltd., 7.875%, due 09/15/25 | 800,000 | 660,000 | ||||
2,147,500 | ||||||
DEPOSITORY INSTITUTIONS (2.53%) | ||||||
PNC Preferred FD, 144A, 6.517%, due 12/31/49 (1) | 1,500,000 | 1,126,065 | ||||
ELECTRIC, GAS AND SANITARY | ||||||
Avista Corp., 5.95%, due 06/01/18 | 1,400,000 | 1,332,940 | ||||
Bruce Mansfield Unit 1, 6.85% due 06/01/34 | 1,500,000 | 1,507,620 | ||||
Entergy Corp., 6.18%, due 03/01/35 | 1,700,000 | 1,551,964 | ||||
ESI Tractebel, 7.99%, due 12/30/11 | 213,000 | 216,195 | ||||
Sabine Pass LNG, L.P., 7.50%, due 11/30/16 | 1,000,000 | 905,000 | ||||
Waterford 3 Nuclear Power Plant, 8.09%, due 01/02/17 | 181,300 | 174,203 | ||||
5,687,922 | ||||||
FOOD STORES (2.94%) | ||||||
Safeway Inc., 7.45%, due 09/15/27 | 1,200,000 | 1,310,868 | ||||
FURNITURE AND FIXTURES (2.96%) | ||||||
Steelcase Inc., 6.50%, due 08/15/11 | 1,300,000 | 1,315,860 | ||||
HOLDING AND OTHER INVESTMENT OFFICES (17.65%) | ||||||
Federal Realty Investment Trust, 7.48%, due 08/15/26 | 600,000 | 600,420 | ||||
First Industrial L.P., 7.60%, due 07/15/28 | 700,000 | 640,115 | ||||
First Industrial L.P., 7.75%, due 04/15/32 | 500,000 | 446,015 | ||||
Hospitality Properties Trust, 6.75%, due 02/15/13 | 1,300,000 | 1,239,927 |
Principal Amount | Value | |||||
HRPT Properties Trust, 6.25%, due 08/15/16 | $ | 1,075,000 | $ | 979,755 | ||
iStar Financial, Inc.-Series B, 5.70%, due 03/01/14 | 1,171,000 | 949,915 | ||||
Realty Income Corp., 6.75%, due 08/15/19 | 1,500,000 | 1,400,010 | ||||
Rouse Company, LP (The), 5.375%, due 11/26/13 | 2,000,000 | 1,603,240 | ||||
7,859,397 | ||||||
INSURANCE CARRIERS (1.44%) | ||||||
PXRE Capital Trust, 8.85%, due 02/01/27 | 670,000 | 642,363 | ||||
MOTION PICTURES (1.95%) | ||||||
Time Warner Inc., 8.375%, due 03/15/23 | 800,000 | 868,848 | ||||
PAPER AND ALLIED PRODUCTS (7.68%) | ||||||
AbitibiBowater Inc., 9.375%, due 12/15/21 | 900,000 | 580,500 | ||||
Cascades Inc., 7.25%, due 02/15/13 | 1,000,000 | 882,500 | ||||
International Paper Co., 7.95%, due 06/15/18 | 1,000,000 | 997,740 | ||||
Potlatch Corp., 9.125%, due 12/01/09 | 900,000 | 959,625 | ||||
3,420,365 | ||||||
PIPELINES, EXCEPT NATURAL GAS (3.65%) | ||||||
NuStar Ligistics, L.P., 7.65%, due 04/15/18 | 1,600,000 | 1,623,616 | ||||
TRANSPORTATION — BY AIR (2.18%) | ||||||
Continental Airlines, Inc. Pass-Through Certificates 1997-1 Class 1A, | 1,100,653 | 970,556 | ||||
WATER TRANSPORTATION (5.01%) | ||||||
Overseas Shipholding Group, Inc., 8.75%, due 12/01/13 | 1,100,000 | 1,155,000 | ||||
Windsor Petroleum Transportation, 144A, 7.84%, due 01/15/21 (1) | 1,000,000 | 1,076,540 | ||||
2,231,540 | ||||||
Total Corporate Bonds | 30,524,400 | |||||
MORTGAGE-BACKED SECURITIES (18.12%) | ||||||
FEDERAL HOME LOAN MORTGAGE CORPORATION (FHLMC) (11.71%) | ||||||
3023 Class TG, 5.50%, due 08/01/35 | 975,492 | 955,591 | ||||
3051 Class MY, 5.50%, due 10/01/25 | 1,000,000 | 986,420 |
19
EQUITRUST VARIABLE INSURANCE SERIES FUND
SCHEDULE OF INVESTMENTS
STRATEGIC YIELD PORTFOLIO (continued)
Principal Amount | Value | |||||
FEDERAL HOME LOAN MORTGAGE CORPORATION (FHLMC) (11.71%) — continued | ||||||
Pool # A53146, 5.50%, due 10/01/36 | $ | 648,740 | $ | 640,225 | ||
Pool # A69436, 6.00%, due 12/01/37 | 1,322,560 | 1,337,029 | ||||
Pool # G02648, 5.50%, due 12/01/36 | 1,314,299 | 1,297,049 | ||||
5,216,314 | ||||||
FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA) (6.41%) | ||||||
Pool # 256103, 5.50%, due 02/01/26 | 731,983 | 730,455 | ||||
Pool # 897144, 6.00%, due 09/01/36 | 851,453 | 860,349 | ||||
Pool # 928570, 6.00%, due 08/01/37 | 1,252,732 | 1,265,431 | ||||
2,856,235 | ||||||
Total Mortgage-Backed Securities | 8,072,549 | |||||
SHORT-TERM INVESTMENTS (10.76%) | ||||||
COMMERCIAL PAPER | ||||||
NONDEPOSITORY INSTITUTIONS (1.57%) | ||||||
American General Finance Corp., 2.71%, due 07/07/08 | 700,000 | 700,000 | ||||
Total Commercial Paper | 700,000 | |||||
UNITED STATES GOVERNMENT AGENCIES (8.97%) | ||||||
Federal Farm Credit Bank, | 1,000,000 | 1,000,000 | ||||
Federal Home Loan Bank, | 1,000,000 | 999,417 | ||||
Federal Home Loan Bank, | 1,000,000 | 998,207 | ||||
Federal National Mtg Assn, | 1,000,000 | 999,238 | ||||
Total United States | 3,996,862 |
Shares Held | Value | ||||
MONEY MARKET MUTUAL FUND (0.22%) | |||||
JPMorgan U.S. Treasury Plus Money Market Fund | 97,710 | $ | 97,710 | ||
Total Short-Term Investments | 4,794,572 | ||||
Total Investments (98.78%) | 43,995,681 | ||||
OTHER ASSETS LESS LIABILITIES (1.22%) | |||||
Cash, receivables, prepaid expense and other assets, less liabilities | 544,708 | ||||
Total Net Assets (100.00%) | $ | 44,540,389 | |||
(1) | Restricted Securities: |
PNC Preferred FD, was purchased at 100.000 on 11/29/2006. As of 06/30/08, the carrying value of each unit was 75.071, representing $1,126,065 or 2.53% of total net assets. |
Windsor Petroleum Transportation was purchased at 80.500 on 08/26/99. As of 06/30/08, the carrying value of each unit was 107.654, representing $1,076,540 or 2.42% of total net assets. |
As of 06/30/08, the carrying value of all restricted securities was $2,202,605 or 4.95% of total net assets. |
See accompanying notes.
20
EQUITRUST VARIABLE INSURANCE SERIES FUND
SCHEDULE OF INVESTMENTS
MANAGED PORTFOLIO
June 30, 2008
(Unaudited)
Shares Held | Value | ||||
COMMON STOCKS (72.00%) | |||||
BUSINESS SERVICES (1.79%) | |||||
eBay Inc. (1) | 8,900 | $ | 243,237 | ||
Microsoft Corp. | 30,600 | 841,806 | |||
Oracle Corp. (1) | 24,830 | 521,430 | |||
1,606,473 | |||||
CHEMICALS AND ALLIED PRODUCTS (11.55%) | |||||
Abbott Laboratories | 21,600 | 1,144,152 | |||
Amgen Inc. (1) | 3,900 | 183,924 | |||
Colgate-Palmolive Co. | 7,430 | 513,413 | |||
Dow Chemical Co. (The) | 13,965 | 487,518 | |||
E. I. du Pont de Nemours and Co. | 22,875 | 981,109 | |||
Johnson & Johnson | 33,612 | 2,162,596 | |||
K-V Pharmaceutical Co.-Class A (1) | 12,600 | 243,558 | |||
Mylan Inc. | 35,550 | 429,088 | |||
Novartis AG | 8,060 | 443,622 | |||
Pfizer Inc. | 90,184 | 1,575,514 | |||
Procter & Gamble Co. (The) | 13,605 | 827,320 | |||
Schering-Plough Corp. | 15,700 | 309,133 | |||
Teva Pharmaceutical Industries, Ltd. | 11,399 | 522,074 | |||
Wyeth | 11,800 | 565,928 | |||
10,388,949 | |||||
COMMUNICATIONS (2.22%) | |||||
AT&T Inc. | 12,600 | 424,494 | |||
Comcast Corp.-Class A | 13,590 | 257,802 | |||
Embarq Corp. | 9,600 | 453,792 | |||
Sprint Nextel Corp. | 46,171 | 438,625 | |||
Verizon Communications Inc. | 11,800 | 417,720 | |||
1,992,433 | |||||
DEPOSITORY INSTITUTIONS (2.84%) | |||||
Bank of America Corp. | 17,202 | 410,612 | |||
Bank of New York Mellon Corp. (The) | 12,683 | 479,798 | |||
Citigroup Inc. | 19,822 | 332,217 | |||
National City Corp. | 8,695 | 41,475 | |||
New York Community Bancorp, Inc. | 44,834 | 799,839 | |||
U.S. Bancorp | 12,895 | 359,642 | |||
Wachovia Corp. | 8,328 | 129,334 | |||
2,552,917 | |||||
DRUG STORES AND PROPRIETARY STORES (0.56%) | |||||
Walgreen Co. | 15,560 | 505,856 | |||
ELECTRIC, GAS AND SANITARY SERVICES (4.81%) | |||||
Atmos Energy Corp. | 22,952 | 632,787 | |||
Integrys Energy Group, Inc. | 14,304 | 727,072 | |||
Pinnacle West Capital Corp. | 24,200 | 744,634 | |||
Tortoise Energy Capital Corp. | 45,369 | 1,145,567 |
Shares Held | Value | ||||
Waste Management, Inc. | 15,400 | $ | 580,734 | ||
Xcel Energy Inc. | 24,690 | 495,528 | |||
4,326,322 | |||||
ELECTRONIC AND OTHER ELECTRICAL EQUIPMENT (4.61%) | |||||
Cisco Systems, Inc. (1) | 35,830 | 833,406 | |||
General Electric Co. | 106,965 | 2,854,896 | |||
Helen of Troy Ltd. (1) | 12,334 | 198,824 | |||
Intel Corp. | 11,900 | 255,612 | |||
4,142,738 | |||||
FABRICATED METAL PRODUCTS (0.54%) | |||||
Illinois Tool Works Inc. | 10,155 | 482,464 | |||
FOOD AND KINDRED PRODUCTS (3.40%) | |||||
Anheuser-Busch Companies, Inc. | 11,995 | 745,129 | |||
Coca-Cola Co. (The) | 10,380 | 539,552 | |||
Diageo plc | 7,200 | 531,864 | |||
Kraft Foods Inc. | 15,399 | 438,102 | |||
PepsiCo, Inc. | 12,650 | 804,414 | |||
3,059,061 | |||||
FORESTRY (1.07%) | |||||
Weyerhaeuser Co. | 18,770 | 959,898 | |||
GENERAL MERCHANDISE STORES (1.51%) | |||||
Target Corp. | 4,760 | 221,292 | |||
Wal-Mart Stores, Inc. | 20,290 | 1,140,298 | |||
1,361,590 | |||||
HOLDING AND OTHER INVESTMENT OFFICES (0.71%) | |||||
H&Q Life Sciences Investors | 19,081 | 217,905 | |||
iShares MSCI Japan Index | 34,030 | 424,694 | |||
642,599 | |||||
INDUSTRIAL MACHINERY AND EQUIPMENT (3.30%) | |||||
3M Co. | 20,305 | 1,413,025 | |||
EMC Corp. (1) | 36,800 | 540,592 | |||
Hewlett-Packard Co. | 5,460 | 241,387 | |||
Ingersoll-Rand Co., Ltd.-Class A | 20,634 | 772,331 | |||
2,967,335 | |||||
INSTRUMENTS AND RELATED PRODUCTS (2.50%) | |||||
Becton, Dickinson and Co. | 6,235 | 506,906 | |||
Medtronic, Inc. | 10,150 | 525,263 | |||
Stryker Corp. | 5,140 | 323,203 | |||
Thermo Fisher Scientific Inc. (1) | 7,840 | 436,923 | |||
Zimmer Holdings, Inc. (1) | 6,750 | 459,337 | |||
2,251,632 |
21
EQUITRUST VARIABLE INSURANCE SERIES FUND
SCHEDULE OF INVESTMENTS
MANAGED PORTFOLIO (continued)
Shares Held | Value | ||||
INSURANCE AGENTS, BROKERS AND SERVICE (0.47%) | |||||
Arthur J. Gallagher & Co. | 17,455 | $ | 420,666 | ||
INSURANCE CARRIERS (3.73%) | |||||
Allstate Corp. (The) | 7,140 | 325,513 | |||
American International Group, Inc. | 8,375 | 221,603 | |||
EMC Insurance Group Inc. | 43,608 | 1,050,081 | |||
Lincoln National Corp. | 6,630 | 300,472 | |||
MetLife, Inc. | 11,370 | 599,995 | |||
Old Republic International Corp. | 31,100 | 368,224 | |||
Protective Life | 6,225 | 236,861 | |||
WellPoint, Inc. (1) | 5,328 | 253,932 | |||
3,356,681 | |||||
LUMBER & OTHER BUILDING MATERIAL DEALERS (0.17%) | |||||
Lowe’s Companies, Inc. | 7,525 | 156,144 | |||
MANAGEMENT AND RELATED SERVICES (0.68%) | |||||
Quest Diagnostics Inc. | 12,600 | 610,722 | |||
METAL MINING (3.94%) | |||||
Barrick Gold Corp. | 57,916 | 2,635,178 | |||
Newmont Mining Corp. | 17,500 | 912,800 | |||
3,547,978 | |||||
MOTION PICTURES (0.50%) | |||||
News Corp. | 29,500 | 452,825 | |||
MOTOR FREIGHT TRANSPORTATION AND WAREHOUSING (0.46%) | |||||
United Parcel Service, Inc.-Class B | 6,720 | 413,078 | |||
NONDEPOSITORY CREDIT INSTITUTIONS (0.11%) | |||||
SLM Corp. (1) | 5,095 | 98,588 | |||
OIL AND GAS EXTRACTION (8.12%) | |||||
Anadarko Petroleum Corp. | 13,700 | 1,025,308 | |||
Apache Corp. | 6,700 | 931,300 | |||
Baker Hughes Inc. | 8,700 | 759,858 | |||
Devon Energy Corp. | 6,400 | 769,024 | |||
Occidental Petroleum Corp. | 22,250 | 1,999,385 | |||
Rowan Companies, Inc. | 16,700 | 780,725 | |||
Weatherford International Ltd. (1) | 21,000 | 1,041,390 | |||
7,306,990 | |||||
PAPER AND ALLIED PRODUCTS (1.08%) | |||||
AbitibiBowater Inc. | 8,358 | 77,980 | |||
Kimberly-Clark Corp. | 15,015 | 897,597 | |||
975,577 | |||||
PERSONAL SERVICES (0.57%) | |||||
Cintas Corp. | 19,235 | 509,920 |
Shares Held | Value | |||||
PETROLEUM AND COAL PRODUCTS (2.94%) | ||||||
BP p.l.c. | 8,100 | $ | 563,517 | |||
ConocoPhillips | 17,170 | 1,620,676 | ||||
Valero Energy Corp. | 11,100 | 457,098 | ||||
2,641,291 | ||||||
PIPELINES, EXCEPT NATURAL GAS (3.46%) | ||||||
Buckeye Partners, L.P. | 12,500 | 534,625 | ||||
Enbridge Energy Partners, L.P. | 12,200 | 613,782 | ||||
Kinder Morgan Management, LLC (1) | 27,088 | 1,458,689 | ||||
Magellan Midstream Partners, L.P. | 14,100 | 501,819 | ||||
3,108,915 | ||||||
PRINTING AND PUBLISHING (0.77%) | ||||||
Meredith Corp. | 13,010 | 368,053 | ||||
R. R. Donnelley & Sons Co. | 10,925 | 324,363 | ||||
692,416 | ||||||
TOBACCO PRODUCTS (0.32%) | ||||||
Altria Group, Inc. | 4,045 | 83,165 | ||||
Philip Morris International Inc. | 4,045 | 199,782 | ||||
282,947 | ||||||
TRANSPORTATION EQUIPMENT (2.75%) | ||||||
Federal Signal Corp. | 36,400 | 436,800 | ||||
Genuine Parts Co. | 13,600 | 539,648 | ||||
Honeywell International Inc. | 16,905 | 849,983 | ||||
ITT Corp. | 10,190 | 645,333 | ||||
2,471,764 | ||||||
WHOLESALE TRADE — NONDURABLE GOODS (0.52%) | ||||||
SYSCO Corp. | 17,085 | 470,008 | ||||
Total Common Stocks | 64,756,777 | |||||
Principal Amount | ||||||
MORTGAGE-BACKED SECURITIES (23.43%) | ||||||
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (GNMA) | ||||||
2003-1 Class PE, 5.50%, due 07/01/32 | $ | 2,250,000 | 2,225,866 | |||
2003-11 Class QC, 5.50%, due 02/01/33 | 2,500,000 | 2,438,500 | ||||
2003-71 Class AK, 5.00%, due 09/01/29 | 600,000 | 602,527 | ||||
2003-116 Class JC, 5.00%, due 05/01/30 | 1,560,000 | 1,568,633 | ||||
2004-22 Class BK, 3.47%, due 04/01/34 | 257,547 | 255,708 | ||||
2004-26 Class GC, 5.00%, due 06/01/31 | 1,300,000 | 1,299,734 | ||||
2004-72 Class DE, 5.00%, due 07/01/32 | 500,000 | 482,973 |
22
EQUITRUST VARIABLE INSURANCE SERIES FUND
SCHEDULE OF INVESTMENTS
MANAGED PORTFOLIO (continued)
Principal Amount | Value | |||||
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (GNMA) — continued | ||||||
2004-76 Class VG, 5.00%, due 09/01/23 | $ | 700,000 | $ | 703,678 | ||
2004-89 Class KC, 4.00%, due 10/01/34 | 533,278 | 527,436 | ||||
2004-105 Class PB, 5.00%, due 06/01/33 | 1,693,200 | 1,669,516 | ||||
2004-105 Class VE, 5.50%, due 05/01/24 | 2,000,000 | 2,007,398 | ||||
2004-109 Class WE, 5.00%, due 05/01/33 | 780,000 | 747,903 | ||||
2005-44 Class KC, 5.00%, due 04/01/31 | 1,500,000 | 1,500,388 | ||||
2005-80 Class VC, 5.00%, due 05/01/29 | 1,000,000 | 948,610 | ||||
2006-38 Class OG, 5.00%, due 06/01/36 | 1,448,667 | 1,357,178 | ||||
Pool # 2796, 7.00%, due 08/01/29 | 48,989 | 52,125 | ||||
Pool # 3040, 7.00%, due 02/01/31 | 25,899 | 27,522 | ||||
Pool # 3188, 6.50%, due 01/01/32 | 75,187 | 77,827 | ||||
Pool # 3239, 6.50%, due 05/01/32 | 122,291 | 126,586 | ||||
Pool # 3333, 5.50%, due 01/01/33. | 213,514 | 212,561 | ||||
Pool # 3403, 5.50%, due 06/01/33 | 174,382 | 173,603 | ||||
Pool # 3442, 5.00%, due 09/01/33 | 754,748 | 731,207 | ||||
Pool # 3459, 5.50%, due 10/01/33 | 495,649 | 493,437 | ||||
Pool # 672081, 6.00%, due 08/01/37 | 825,752 | 839,622 | ||||
Total Mortgage-Backed Securities | 21,070,538 | |||||
SHORT-TERM INVESTMENTS (4.41%) | ||||||
COMMERCIAL PAPER (1.22%) | ||||||
NONDEPOSITORY INSTITUTIONS | ||||||
American General Finance Corp., 2.46%, due 07/03/08 | 1,100,000 | 1,100,000 | ||||
Total Commercial Paper | 1,100,000 | |||||
UNITED STATES GOVERNMENT AGENCIES (3.03%) | ||||||
Federal Farm Credit Bank, due 07/01/08 | 600,000 | 600,000 | ||||
Federal Home Loan Bank, due 07/11/08 | 1,000,000 | 999,413 | ||||
Federal Home Loan Bank, due 07/14/08 | 725,000 | 724,450 | ||||
Federal National Mortgage, Assoc., due 07/09/08 | 400,000 | 399,816 | ||||
Total United States | 2,723,679 |
Shares Held | Value | ||||
MONEY MARKET MUTUAL FUND (0.16%) | |||||
JPMorgan U.S. Treasury Plus Money Market Fund | 147,840 | $ | 147,840 | ||
Total Short-Term Investments | 3,971,519 | ||||
Total Investments (99.84%) | 89,798,834 | ||||
OTHER ASSETS LESS LIABILITIES (0.16%) | |||||
Cash, receivables, prepaid expense and other assets, less liabilities | 147,348 | ||||
Total Net Assets (100.00%) | $ | 89,946,182 | |||
(1) | Non-income producing securities. |
See accompanying notes.
23
EQUITRUST VARIABLE INSURANCE SERIES FUND
SCHEDULE OF INVESTMENTS
MONEY MARKET PORTFOLIO
June 30, 2008
(Unaudited)
Annualized Yield on Purchase Date | Principal Amount | Value | |||||||
SHORT-TERM INVESTMENTS (99.55%) | |||||||||
COMMERCIAL PAPER (21.26%) | |||||||||
INSURANCE CARRIERS (4.94%) | |||||||||
Prudential Funding, LLC, due 07/02/08 | 2.085 | % | $ | 250,000 | $ | 250,000 | |||
Prudential Funding, LLC, due 07/24/08 | 2.226 | 250,000 | 250,000 | ||||||
Prudential Funding, LLC, due 08/07/08 | 2.257 | 250,000 | 250,000 | ||||||
750,000 | |||||||||
NONDEPOSITORY INSTITUTIONS (14.67%) | |||||||||
American Express Credit Corp., due 07/07/08 | 2.236 | 250,000 | 250,000 | ||||||
American Express Credit Corp., due 08/21/08 | 2.460 | 250,000 | 250,000 | ||||||
American Express Credit Corp., due 08/22/08 | 2.460 | 250,000 | 250,000 | ||||||
American General Finance, due 07/02/08 | 2.802 | 225,000 | 225,000 | ||||||
American General Finance, due 08/25/08 | 2.823 | 250,000 | 250,000 | ||||||
American General Finance, due 08/26/08 | 2.823 | 250,000 | 250,000 | ||||||
General Electric Capital Corp., due 07/08/08 | 2.155 | 250,000 | 250,000 | ||||||
General Electric Capital Corp., due 07/15/08 | 2.257 | 250,000 | 250,000 | ||||||
General Electric Capital Corp., due 07/31/08 | 2.358 | 250,000 | 250,000 | ||||||
2,225,000 | |||||||||
PETROLEUM AND COAL PRODUCTS (1.65%) | |||||||||
Chevron Corp., due 07/10/08 | 2.075 | 250,000 | 250,000 | ||||||
Total Commercial Paper (Cost $3,225,000) | 3,225,000 | ||||||||
UNITED STATES GOVERNMENT AGENCIES (78.29%) | |||||||||
Federal Farm Credit Bank, due 07/10/08 | 2.090 | 250,000 | 249,871 | ||||||
Federal Farm Credit Bank, due 07/22/08 | 2.082 | 250,000 | 249,701 | ||||||
Federal Home Loan Bank, due 07/09/08 | 1.964 | 125,000 | 124,946 | ||||||
Federal Home Loan Bank, due 07/11/08 | 2.036 | 500,000 | 499,721 | ||||||
Federal Home Loan Bank, due 07/14/08 | 2.085 | 300,000 | 299,777 | ||||||
Federal Home Loan Bank, due 07/22/08 | 2.114 | 275,000 | 274,666 | ||||||
Federal Home Loan Bank, due 07/23/08 | 2.056 | 400,000 | 399,505 | ||||||
Federal Home Loan Bank, due 07/25/08 | 2.187 | 350,000 | 349,497 | ||||||
Federal Home Loan Bank, due 08/06/08 | 2.199 | 325,000 | 324,297 | ||||||
Federal Home Loan Bank, due 08/08/08 | 2.136 | 250,000 | 249,445 | ||||||
Federal Home Loan Bank, due 08/13/08 | 2.219 | 300,000 | 299,218 | ||||||
Federal Home Loan Bank, due 08/20/08 | 2.280 | 300,000 | 299,066 | ||||||
Federal Home Loan Bank, due 08/27/08 | 2.270 | 350,000 | 348,764 | ||||||
Federal Home Loan Mortgage Corp., due 07/16/08 | 2.196 | 325,000 | 324,707 | ||||||
Federal Home Loan Mortgage Corp., due 07/17/08 | 2.084 | 350,000 | 349,681 | ||||||
Federal Home Loan Mortgage Corp., due 07/21/08 | 2.068 | 400,000 | 399,547 | ||||||
Federal Home Loan Mortgage Corp., due 07/28/08 | 2.089 | 500,000 | 499,229 | ||||||
Federal Home Loan Mortgage Corp., due 08/01/08 | 2.038 | 300,000 | 299,482 | ||||||
Federal Home Loan Mortgage Corp., due 08/04/08 | 2.199 | 375,000 | 374,233 | ||||||
Federal Home Loan Mortgage Corp., due 08/11/08 | 2.150 | 350,000 | 349,157 | ||||||
Federal Home Loan Mortgage Corp., due 08/15/08 | 2.225 | 300,000 | 299,179 | ||||||
Federal Home Loan Mortgage Corp., due 08/18/08 | 2.221 | 300,000 | 299,126 | ||||||
Federal Home Loan Mortgage Corp., due 09/02/08 | 2.302 | 300,000 | 298,813 | ||||||
Federal Home Loan Mortgage Corp., due 09/08/08 | 2.343 | 275,000 | 273,787 |
24
EQUITRUST VARIABLE INSURANCE SERIES FUND
SCHEDULE OF INVESTMENTS
MONEY MARKET PORTFOLIO (continued)
Annualized Yield on Purchase Date | Principal Amount | Value | ||||||
UNITED STATES GOVERNMENT AGENCIES (78.29%) — continued | ||||||||
Federal National Mortgage Assoc., due 07/01/08 | 1.882 | $ | 300,000 | $ | 300,000 | |||
Federal National Mortgage Assoc., due 07/03/08 | 2.003 | 600,000 | 599,934 | |||||
Federal National Mortgage Assoc., due 07/09/08 | 1.954 | 125,000 | 124,947 | |||||
Federal National Mortgage Assoc., due 07/16/08 | 2.068 | 300,000 | 299,745 | |||||
Federal National Mortgage Assoc., due 07/18/08 | 2.086 | 350,000 | 349,660 | |||||
Federal National Mortgage Assoc., due 07/29/08 | 2.146 | 475,000 | 474,219 | |||||
Federal National Mortgage Assoc., due 07/30/08 | 2.069 | 600,000 | 599,015 | |||||
Federal National Mortgage Assoc., due 08/05/08 | 2.217 | 300,000 | 299,364 | |||||
Federal National Mortgage Assoc., due 08/12/08 | 2.187 | 250,000 | 249,372 | |||||
Federal National Mortgage Assoc., due 08/14/08 | 2.187 | 250,000 | 249,343 | |||||
Federal National Mortgage Assoc., due 08/19/08 | 2.290 | 250,000 | 249,234 | |||||
Federal National Mortgage Assoc., due 08/29/08 | 2.291 | 350,000 | 348,709 | |||||
Total United States Government Agencies (Cost $11,878,957) | 11,878,957 | |||||||
Total Short-Term Investments (Cost $15,103,957) | 15,103,957 | |||||||
OTHER ASSETS LESS LIABILITIES (0.45%) | ||||||||
Cash, receivables, prepaid expense and other assets, less liabilities | 68,133 | |||||||
Total Net Assets (100.00%) | $ | 15,172,090 | ||||||
See accompanying notes.
25
EQUITRUST VARIABLE INSURANCE SERIES FUND
SCHEDULE OF INVESTMENTS
BLUE CHIP PORTFOLIO
June 30, 2008
(Unaudited)
Shares Held | Value | ||||
COMMON STOCKS (96.83%) | |||||
BUSINESS SERVICES (4.65%) | |||||
Microsoft Corp. | 91,883 | $ | 2,527,701 | ||
Oracle Corp. (1) | 57,149 | 1,200,129 | |||
3,727,830 | |||||
CHEMICALS AND ALLIED PRODUCTS (15.84%) | |||||
Abbott Laboratories | 24,755 | 1,311,272 | |||
Amgen Inc. (1) | 17,835 | 841,099 | |||
Bristol-Myers Squibb Co. | 41,053 | 842,818 | |||
Colgate-Palmolive Co. | 6,950 | 480,245 | |||
Dow Chemical Co. (The) | 10,505 | 366,729 | |||
E. I. du Pont de Nemours and Co. | 15,756 | 675,775 | |||
Eli Lilly and Co. | 17,662 | 815,278 | |||
Johnson & Johnson | 42,710 | 2,747,961 | |||
Merck & Co., Inc. | 31,708 | 1,195,075 | |||
Pfizer Inc. | 44,377 | 775,266 | |||
Procter & Gamble Co. (The) | 43,542 | 2,647,789 | |||
12,699,307 | |||||
COMMUNICATIONS (4.62%) | |||||
AT&T Inc. | 34,855 | 1,174,265 | |||
CBS Corp.-Class B | 12,084 | 235,517 | |||
Comcast Corp.-Class A | 33,054 | 627,034 | |||
Verizon Communications Inc. | 36,562 | 1,294,295 | |||
Viacom Inc.-Class B (1) | 12,084 | 369,045 | |||
3,700,156 | |||||
DEPOSITORY INSTITUTIONS (6.00%) | |||||
Bank of America Corp. | 45,666 | 1,090,047 | |||
Citigroup Inc. | 48,341 | 810,195 | |||
JPMorgan Chase & Co. | 46,325 | 1,589,411 | |||
Wachovia Corp. | 25,460 | 395,394 | |||
Wells Fargo & Co. | 39,005 | 926,369 | |||
4,811,416 | |||||
EATING AND DRINKING PLACES (3.12%) | |||||
McDonald’s Corp. | 44,467 | 2,499,935 | |||
ELECTRIC, GAS AND SANITARY SERVICES (3.63%) | |||||
Exelon Corp. | 24,105 | 2,168,486 | |||
Southern Co. (The) | 21,215 | 740,828 | |||
2,909,314 | |||||
ELECTRONIC AND OTHER ELECTRICAL EQUIPMENT (7.38%) | |||||
Cisco Systems, Inc. (1) | 61,023 | 1,419,395 | |||
General Electric Co. | 84,256 | 2,248,793 | |||
Intel Corp. | 57,041 | 1,225,241 | |||
Motorola, Inc. | 37,189 | 272,967 | |||
Texas Instruments Inc. | 26,461 | 745,142 | |||
5,911,538 |
Shares Held | Value | ||||
FOOD AND KINDRED PRODUCTS (5.03%) | |||||
Anheuser-Busch Companies, Inc. | 11,202 | $ | 695,868 | ||
Coca-Cola Co. (The) | 31,034 | 1,613,147 | |||
Kraft Foods Inc. | 26,424 | 751,763 | |||
PepsiCo, Inc. | 15,208 | 967,077 | |||
4,027,855 | |||||
FORESTRY (0.40%) | |||||
Weyerhaeuser Co. | 6,270 | 320,648 | |||
GENERAL MERCHANDISE STORES (3.62%) | |||||
Target Corp. | 11,900 | 553,231 | |||
Wal-Mart Stores, Inc. | 41,773 | 2,347,643 | |||
2,900,874 | |||||
INDUSTRIAL MACHINERY AND EQUIPMENT (10.56%) | |||||
3M Co. | 17,453 | 1,214,554 | |||
Applied Materials, Inc. | 23,520 | 448,997 | |||
Caterpillar Inc. | 28,044 | 2,070,208 | |||
Dell Inc. (1) | 30,585 | 669,200 | |||
EMC Corp. (1) | 37,308 | 548,054 | |||
Hewlett-Packard Co. | 40,454 | 1,788,471 | |||
International Business Machines Corp. | 14,526 | 1,721,767 | |||
8,461,251 | |||||
INSURANCE CARRIERS (1.23%) | |||||
American International Group, Inc. | 37,204 | 984,418 | |||
MOTION PICTURES (2.32%) | |||||
Time Warner Inc. | 49,492 | 732,481 | |||
Walt Disney Co. (The) | 36,092 | 1,126,070 | |||
1,858,551 | |||||
NONDEPOSITORY INSTITUTIONS (2.91%) | |||||
American Express Co. | 54,692 | 2,060,248 | |||
Federal National Mortgage Assoc. | 14,090 | 274,896 | |||
2,335,144 | |||||
PETROLEUM AND COAL PRODUCTS (12.46%) | |||||
Chevron Corp. | 38,610 | 3,827,409 | |||
Exxon Mobil Corp. | 69,936 | 6,163,460 | |||
9,990,869 | |||||
PRIMARY METAL INDUSTRIES (1.35%) | |||||
Alcoa Inc. | 30,278 | 1,078,502 | |||
SECURITY AND COMMODITY | |||||
Ameriprise Financial, Inc. | 10,349 | 420,894 | |||
TOBACCO PRODUCTS (3.33%) | |||||
Altria Group, Inc. | 38,185 | 785,084 | |||
Philip Morris International Inc. | 38,185 | 1,885,957 | |||
2,671,041 |
26
EQUITRUST VARIABLE INSURANCE SERIES FUND
SCHEDULE OF INVESTMENTS
BLUE CHIP PORTFOLIO (continued)
Shares Held | Value | |||||
TRANSPORTATION | ||||||
Boeing Co. (The) | 26,912 | $ | 1,768,657 | |||
General Motors Corp. | 16,365 | 188,197 | ||||
Honeywell International Inc. | 37,254 | 1,873,131 | ||||
United Technologies Corp. | 40,007 | 2,468,432 | ||||
6,298,417 | ||||||
Total Common Stocks | 77,607,960 | |||||
SHORT-TERM INVESTMENTS (3.11%) | ||||||
MONEY MARKET MUTUAL FUND (0.15%) | ||||||
JPMorgan U.S. Treasury Plus Money Market Fund | 121,786 | 121,786 | ||||
Principal Amount | ||||||
COMMERCIAL PAPER (0.90%) | ||||||
INSURANCE CARRIERS (0.37%) | ||||||
Prudential Funding, LLC, | $ | 300,000 | 300,000 | |||
NONDEPOSITORY INSTITUTIONS (0.53%) | ||||||
American General Finance Corp., | 425,000 | 425,000 | ||||
Total Commercial Paper | 725,000 | |||||
Principal Amount | Value | |||||
UNITED STATES GOVERNMENT | ||||||
Federal Home Loan Bank, | $ | 400,000 | $ | 399,760 | ||
Federal Home Loan Bank, | 300,000 | 299,691 | ||||
Federal Home Loan Bank, | 400,000 | 399,413 | ||||
Federal National Mortgage Assoc., | 400,000 | 399,954 | ||||
Federal National Mortgage Assoc., | 150,000 | 149,948 | ||||
Total United States Government Agencies | 1,648,766 | |||||
Total Short-Term Investments | 2,495,552 | |||||
Total Investments (99.94%) | 80,103,512 | |||||
OTHER ASSETS LESS LIABILITIES (0.06%) | ||||||
Cash, receivables, prepaid expense and other assets, less liabilities | 49,111 | |||||
Total Net Assets (100.00%) | $ | 80,152,623 | ||||
(1) | Non-income producing securities. |
See accompanying notes.
27
EQUITRUST VARIABLE INSURANCE SERIES FUND
NOTES TO FINANCIAL STATEMENTS
June 30, 2008
(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). The Fund offers Initial Class (“IC”) and Service Class (“SC”) shares. The Fund began offering SC shares on June 1, 2008. 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).
SC shares are charged distribution fees while IC shares are not. The shares of each Portfolio have equal rights and privileges with all other shares of that Portfolio, except SC shares have separate and exclusive voting rights with respect to the Fund’s Rule 12b-1 Plan. Each share of a Portfolio represents an equal proportionate interest in that Portfolio with each other share, subject to any preferences (such as resulting from Rule 12b-1 distribution fees with respect to the SC shares). In addition, the Board of Trustees of the Fund declares separate dividends on each class of shares.
The Fund allocates daily all income, expenses (other than distribution fees which are only charged to SC shares), and realized and unrealized gains or losses to each class of shares based upon the relative proportion of the value of shares outstanding of each class. Expenses not directly attributed to a Portfolio are apportioned among each of the Portfolios based upon the relative value of each Portfolio. Expenses specifically attributable to a particular class are charged directly to such class.
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. In situations where market quotations are not readily available or quoted market prices are not reliable, investments are valued at fair value in accordance with the procedures adopted 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 value.
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 and Strategic Yield 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 Money Market Portfolio, each day the net asset value per share is calculated, net investment income and any realized gains and losses from investment transactions will be declared, as of the
28
EQUITRUST VARIABLE INSURANCE SERIES FUND
NOTES TO FINANCIAL STATEMENTS (continued)
1. | Significant Accounting Policies (continued) |
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 U.S. generally accepted accounting principles. These differences are primarily due to differing treatments for certain basis adjustments resulting from a taxable spin-off and taxable mergers. 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.
Dividends and distributions which exceed current and accumulated earnings and profits for federal income tax purposes are reported as return of capital distributions.
Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Indemnifications
Under the Fund’s organizational documents, its present and past officers and trustees are indemnified against certain liability arising out of the performance of their duties to the Fund. At the discretion of the Board of Trustees, employees and agents may also be indemnified. In addition, in the normal course of business the Fund enters into contracts that contain a variety of representations and warranties which provide general indemnifications. The Fund’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Fund that have not yet occurred.
New Accounting Pronouncements
Effective January 1, 2008, the Fund adopted Statement on Financial Accounting Standards (Statement) No. 157 “Fair Value Measurements.” This standard establishes a single authoritative definition of fair value, sets out a framework for measuring fair value and requires additional disclosures about fair value measurements. See Note 4, “Fair Value”, for detailed information regarding fair value measurements.
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, 2008, the Fund is not aware of any uncertain tax positions. The Fund is no longer subject to U.S. federal, state and local income tax examinations by tax authorities for tax tears prior to 2004.
29
EQUITRUST VARIABLE INSURANCE SERIES FUND
NOTES TO FINANCIAL STATEMENTS (continued)
2. | Federal Income Taxes (continued) |
As of June 30, 2008, the following Portfolios had approximate net capital loss carryforwards set forth below:
Portfolio | ||||||||||||
Net Capital Loss Carryforwards Expire In: | Value Growth | Strategic Yield | Managed | Blue Chip | ||||||||
2010 | $ | — | $ | 1,483,000 | $ | — | $ | — | ||||
2011 | — | 571,000 | — | 3,950,000 | ||||||||
2012 | — | — | — | 556,000 | ||||||||
2013 | — | — | — | 60,000 | ||||||||
2016 | 1,329,000 | — | 259,000 | — | ||||||||
$ | 1,329,000 | $ | 2,054,000 | $ | 259,000 | $ | 4,566,000 | |||||
For the period ended June 30, 2008, the Strategic Yield Portfolio utilized approximately $12,000 of capital loss carryforwards.
As of June 30, 2008, the components of accumulated earnings 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 | $ | 487,751 | $ | 1,194,310 | ||||
Accumulated capital losses | (1,329,054 | ) | (258,591 | ) | ||||
Net unrealized appreciation of investments | 3,131,183 | 5,321,288 | ||||||
Total accumulated earnings | $ | 2,289,880 | $ | 6,257,007 | ||||
Differences between book and tax amounts are primarily attributable to taxable spin-offs, mergers and corporate inversions.
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 has entered into agreements 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. Pursuant to these agreements, SC pays a 12B-1 distribution fee at an annual rate of 0.25% of the average daily net asset value attributable to the class of shares. There are no other fees paid by the Fund associated with these services.
EquiTrust Investment has agreed to reimburse the Portfolios annually for total expenses (excluding brokerage, interest, taxes and extraordinary expenses) in excess of 1.50% of each Portfolio’s average daily net assets. The amount reimbursed, however, shall not exceed the amount of the investment advisory and management fee paid by the Portfolio for such period. During the period ended June 30, 2008, EquiTrust Investment further agreed to reimburse any IC Portfolio, to the extent that annual operating expenses, including the investment advisory fee, exceed 0.65%. For the period ended June 30, 2008, no expense reimbursements were made to the Fund by EquiTrust Investment.
30
EQUITRUST VARIABLE INSURANCE SERIES FUND
NOTES TO FINANCIAL STATEMENTS (continued)
3. | Management Contract and Transactions with Affiliates (continued) |
Certain officers and trustees of the Fund are also officers of EquiTrust Investment, Farm Bureau Life Insurance Company and other affiliated entities. As of June 30, 2008, the total number of the shares of each Portfolio owned by Farm Bureau Life Insurance Company, EquiTrust Life Insurance Company and related separate accounts were as follows:
Initial Class Portfolio | Shares | |
Value Growth | 4,628,794 | |
High Grade Bond | 4,162,070 | |
Strategic Yield | 4,383,474 | |
Managed | 5,912,196 | |
Money Market | 12,488,394 | |
Blue Chip | 2,146,329 | |
Service Class Portfolio | Shares | |
Value Growth | 1,499 | |
High Grade Bond | 12,842 | |
Strategic Yield | 986 | |
Managed | 4,159 | |
Money Market | 5,000 | |
Blue Chip | 1,196 |
4. | Fair Value |
Various inputs are used in determining the value of the Portfolio’s investments. These inputs are summarized in three broad levels listed below:
• | Level 1 — quoted prices in active markets for identical securities |
• | Level 2 — other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.) |
• | Level 3 — significant unobservable inputs (including the Portfolio’s own assumptions in determining the fair value of the investments) |
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. For example, money market securities are valued using amortized cost, in accordance with rules under the Investment Company Act of 1940. Generally, amortized cost approximates the current fair value of a security, but since the value is not obtained from a quoted price in an active market, such securities are reflected as Level 2.
At January 1, 2008 and June 30, 2008, there were no valuation inputs classified as level 3.
The following is a summary of the inputs used to value the Portfolio’s net assets as of June 30, 2008:
Investments in Securities | ||||||||||||||||||
Valuation Inputs | Value Growth Portfolio | High Grade Bond Portfolio | Strategic Yield Portfolio | Managed Portfolio | Money Market Portfolio | Blue Chip Portfolio | ||||||||||||
Level 1 — Quoted Prices | $ | 58,147,524 | $ | 94,675 | $ | 701,870 | $ | 64,904,617 | $ | — | $ | 77,729,746 | ||||||
Level 2 — Other Significant Observable Inputs | 3,148,874 | 49,964,108 | 43,293,811 | 24,894,217 | 15,103,957 | 2,373,766 | ||||||||||||
Level 3 — Significant Unobservable Inputs | — | — | — | — | — | — | ||||||||||||
Total | $ | 61,296,398 | $ | 50,058,783 | $ | 43,995,681 | $ | 89,798,834 | $ | 15,103,957 | $ | 80,103,512 | ||||||
31
EQUITRUST VARIABLE INSURANCE SERIES FUND
NOTES TO FINANCIAL STATEMENTS (continued)
5. | Expense Offset Arrangements |
The Fund and other mutual funds managed by EquiTrust Investment have an agreement with the custodian banks to indirectly pay a portion of the custodians’ fees through credits earned by the Funds’ cash on deposit with the bank. This deposit agreement is an alternative to overnight investments. 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.
6. | Capital Share Transactions |
Transactions in shares of beneficial interest for each Portfolio were as follows:
Shares Sold | Shares Issued In Reinvestment of Dividends and Distributions | Shares Redeemed | Net Increase (Decrease) | |||||||||||||||||||
Portfolio | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | ||||||||||||||
Period ended June 30, 2008: | ||||||||||||||||||||||
Value Growth IC | 123,070 | $ | 1,678,504 | 319,650 | $ | 4,238,553 | 208,346 | $ | 2,827,465 | 234,374 | $ | 3,089,592 | ||||||||||
Value Growth SC | 3,760 | 49,346 | — | — | — | 1 | 3,760 | 49,345 | ||||||||||||||
High Grade Bond IC | 405,083 | 4,071,181 | 117,064 | 1,171,944 | 259,923 | 2,601,010 | 262,224 | 2,642,115 | ||||||||||||||
High Grade Bond SC | 37,497 | 368,164 | 7 | 72 | 1 | 13 | 37,503 | 368,223 | ||||||||||||||
Strategic Yield IC | 364,035 | 3,199,989 | 152,294 | 1,323,416 | 373,416 | 3,268,610 | 142,913 | 1,254,795 | ||||||||||||||
Strategic Yield SC | 987 | 8,463 | — | 2 | — | — | 987 | 8,465 | ||||||||||||||
Managed IC | 135,714 | 2,012,095 | 462,853 | 6,720,633 | 359,144 | 5,342,683 | 239,423 | 3,390,045 | ||||||||||||||
Managed SC | 8,534 | 121,881 | — | — | — | 5 | 8,534 | 121,876 | ||||||||||||||
Money Market IC | 21,257,210 | 21,257,210 | 182,051 | 182,051 | 22,736,025 | 22,736,025 | (1,296,764 | ) | (1,296,764 | ) | ||||||||||||
Money Market SC | 5,000 | 5,000 | — | — | — | — | 5,000 | 5,000 | ||||||||||||||
Blue Chip IC | 62,130 | 2,422,174 | 49,488 | 1,916,168 | 117,052 | 4,539,292 | (5,434 | ) | (200,950 | ) | ||||||||||||
Blue Chip SC | 3,320 | 119,835 | — | — | — | 4 | 3,320 | 119,831 | ||||||||||||||
Year Ended December 31, 2007: | ||||||||||||||||||||||
Value Growth IC | 315,759 | $ | 4,743,978 | 238,534 | $ | 3,420,582 | 401,982 | $ | 6,045,822 | 152,311 | $ | 2,118,738 | ||||||||||
High Grade Bond IC | 823,371 | 8,291,582 | 225,005 | 2,268,861 | 391,457 | 3,946,227 | 656,919 | 6,614,216 | ||||||||||||||
Strategic Yield IC | 757,336 | 6,886,780 | 299,636 | 2,722,242 | 507,961 | 4,620,309 | 549,011 | 4,988,713 | ||||||||||||||
Managed IC | 364,695 | 5,762,999 | 438,408 | 6,641,875 | 501,851 | 7,947,767 | 301,252 | 4,457,107 | ||||||||||||||
Money Market IC | 59,151,850 | 59,151,850 | 611,918 | 611,918 | 51,856,896 | 51,856,896 | 7,906,872 | 7,906,872 | ||||||||||||||
Blue Chip IC | 162,130 | 6,821,860 | 43,697 | 1,750,924 | 194,153 | 8,125,772 | 11,674 | 447,012 |
7. | Investment Transactions |
For the period ended June 30, 2008, 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 | $ | 11,181,603 | $ | 6,159,289 | ||
High Grade Bond | — | 563,003 | ||||
Strategic Yield | 5,544,952 | 484,039 | ||||
Managed | 13,973,774 | 2,436,516 | ||||
Blue Chip | 1,953,809 | 6,047 |
32
EQUITRUST VARIABLE INSURANCE SERIES FUND
NOTES TO FINANCIAL STATEMENTS (continued)
7. | Investment Transactions (continued) |
Any of the Portfolios may purchase newly issued securities on a “when-issued” basis and may purchase or sell securities on a “delayed delivery” basis. When-issued or delayed delivery transactions involve a commitment by a portfolio to purchase or sell particular securities with payment and delivery to take place at a future date. The transactions will not settle until they are delivered to the portfolio. The transactions are subject to market fluctuations and the current value is determined in the same manner as other portfolio securities. The High Grade Bond Portfolio has a purchase commitment on a debenture with a face amount of $3,000,000, cost of $2,932,833, and market value of $2,956,641 that is expected to settle on July 14, 2008.
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, 2008, by Portfolio, was composed of the following:
Tax Cost of Investments in Securities | Gross Unrealized | Net Unrealized Appreciation (Depreciation) of Investments | |||||||||||
Portfolio | Appreciation | Depreciation | |||||||||||
Value Growth | $ | 58,165,215 | $ | 10,728,847 | $ | 7,597,664 | $ | 3,131,183 | |||||
High Grade Bond | 51,356,268 | 351,743 | 1,649,228 | (1,297,485 | ) | ||||||||
Strategic Yield | 46,476,036 | 356,186 | 2,836,541 | (2,480,355 | ) | ||||||||
Managed | 84,477,546 | 13,010,782 | 7,689,494 | 5,321,288 | |||||||||
Blue Chip | 65,193,447 | 26,131,978 | 11,221,913 | 14,910,065 |
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.
8. | 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 Bond | Strategic Yield | Money Market | ||||||||||||||||
Payable Date | IC | SC | IC | SC | IC | SC | ||||||||||||
January 31, 2008 | $ | 0.0434 | $ | — | $ | 0.0429 | $ | — | $ | 0.0032 | $ | — | ||||||
February 29, 2008 | 0.0406 | — | 0.0432 | — | 0.0024 | — | ||||||||||||
March 31, 2008 | 0.0408 | — | 0.0411 | — | 0.0020 | — | ||||||||||||
April 30, 2008 | 0.0400 | — | 0.0415 | — | 0.0015 | — | ||||||||||||
May 30, 2008 | 0.0381 | — | 0.0436 | — | 0.0014 | — | ||||||||||||
June 30, 2008 | 0.0425 | 0.0413 | 0.0449 | 0.0434 | 0.0014 | 0.0013 | ||||||||||||
Total dividends per share | $ | 0.2454 | $ | 0.0413 | $ | 0.2572 | $ | 0.0434 | $ | 0.0119 | $ | 0.0013 | ||||||
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, 2008 for the following Portfolios:
Ordinary Income Dividends:
Declaration Date | Record Date | Payable Date | Amount Per Share | |||||||||
Portfolio | IC | SC | ||||||||||
Value Growth | 1/23/08 | 1/23/08 | 1/24/08 | $ | 0.3333 | $ | — | |||||
Managed | 1/23/08 | 1/23/08 | 1/24/08 | 0.5593 | — | |||||||
Blue Chip | 1/23/08 | 1/23/08 | 1/24/08 | 0.8613 | — |
33
EQUITRUST VARIABLE INSURANCE SERIES FUND
NOTES TO FINANCIAL STATEMENTS (continued)
8. | Dividends and Distributions to Shareholders (continued) |
Short-Term Capital Gains Distributions:
Declaration Date | Record Date | Payable Date | Amount Per Share | |||||||||
Portfolio | IC | SC | ||||||||||
Value Growth | 1/23/08 | 1/23/08 | 1/24/08 | $ | 0.0261 | $ | — | |||||
Managed | 1/23/08 | 1/23/08 | 1/24/08 | 0.0084 | — |
The character of the short-term capital gain distributions were treated as ordinary for tax purposes.
Long-Term Capital Gains Distributions:
Declaration Date | Record Date | Payable Date | Amount Per Share | |||||||||
Portfolio | IC | SC | ||||||||||
Value Growth | 1/23/08 | 1/23/08 | 1/24/08 | $ | 0.5810 | $ | — | |||||
High Grade Bond | 1/23/08 | 1/23/08 | 1/24/08 | 0.0043 | — | |||||||
Managed | 1/23/08 | 1/23/08 | 1/24/08 | 0.5518 | — |
The Fund designates long-term capital gain distributions in accordance with Section 852(b)(3) of the Internal Revenue Code.
34
EQUITRUST VARIABLE INSURANCE SERIES FUND
FINANCIAL HIGHLIGHTS
Period ended June 30, 2008 (Unaudited) and
Years ended December 31, 2007, 2006, 2005, 2004 and 2003
Income from Investment Operations | Less Distributions | Ratios/Supplemental Data | |||||||||||||||||||||||||||||||||||||||||||||
Net Asset Value at Beginning of Period | Net Invest- ment Income | Net Realized and Unrealized Gain (Loss) on Investments | Total from Investment Operations | Dividends from Net Investment Income | Distributions from Capital Gains | Total Distributions | Net Asset Value at End of Period | Total Investment Return Based on Net Asset Value (1) | Net Assets at End of Period (in thousands) | Ratio of Total Expenses to Average Net Assets (3) | Ratio of Net Expenses to Average Net Assets (3) | Ratio of Net Investment Income to Average Net Assets (3) | Portfolio Turnover Rate | ||||||||||||||||||||||||||||||||||
Value Growth Portfolio | |||||||||||||||||||||||||||||||||||||||||||||||
Initial Class: | |||||||||||||||||||||||||||||||||||||||||||||||
2008 | $ | 15.06 | $ | 0.10 | $ | (1.17 | ) | $ | (1.07 | ) | $ | (0.33 | ) | $ | (0.61 | ) | $ | (0.94 | ) | $ | 13.05 | (7.20 | )% | $ | 61,861 | 0.57 | % | 0.57 | % | 1.51 | % | 10 | % | ||||||||||||||
2007 | 15.09 | 0.33 | 0.43 | 0.76 | (0.27 | ) | (0.52 | ) | (0.79 | ) | 15.06 | 5.27 | % | 67,870 | 0.55 | % | 0.55 | % | 2.20 | % | 17 | % | |||||||||||||||||||||||||
2006 | 13.65 | 0.27 | 1.36 | 1.63 | (0.19 | ) | — | (0.19 | ) | 15.09 | 12.07 | % | 65,712 | 0.58 | % | 0.58 | % | 1.88 | % | 30 | % | ||||||||||||||||||||||||||
2005 | 12.98 | 0.19 | 0.63 | 0.82 | (0.15 | ) | — | (0.15 | ) | 13.65 | 6.41 | % | 60,223 | 0.58 | % | 0.58 | % | 1.42 | % | 18 | % | ||||||||||||||||||||||||||
2004 | 11.76 | 0.15 | 1.20 | 1.35 | (0.13 | ) | — | (0.13 | ) | 12.98 | 11.53 | % | 58,354 | 0.58 | % | 0.58 | % | 1.22 | % | 17 | % | ||||||||||||||||||||||||||
2003 | 9.14 | 0.12 | 2.64 | 2.76 | (0.14 | ) | — | (0.14 | ) | 11.76 | 30.68 | % | 52,812 | 0.63 | % | 0.63 | % | 1.26 | % | 17 | % | ||||||||||||||||||||||||||
Service Class: | |||||||||||||||||||||||||||||||||||||||||||||||
2008 (2) | $ | 13.97 | $ | — | $ | (0.92 | ) | $ | (0.92 | ) | $ | — | $ | — | $ | $ | 13.05 | (6.59 | )% | $ | 49 | 0.44 | % | 0.44 | % | 0.64 | % | 10 | % | ||||||||||||||||||
High Grade Bond Portfolio | |||||||||||||||||||||||||||||||||||||||||||||||
Initial Class: | |||||||||||||||||||||||||||||||||||||||||||||||
2008 | $ | 10.12 | $ | 0.25 | $ | (0.30 | ) | $ | (0.05 | ) | $ | (0.25 | ) | $ | — | $ | (0.25 | ) | $ | 9.82 | (0.52 | )% | $ | 47,225 | 0.43 | % | 0.43 | % | 4.92 | % | 13 | % | |||||||||||||||
2007 | 10.12 | 0.53 | 0.01 | 0.54 | (0.53 | ) | (0.01 | ) | (0.54 | ) | 10.12 | 5.48 | % | 46,039 | 0.42 | % | 0.42 | % | 5.30 | % | 11 | % | |||||||||||||||||||||||||
2006 | 10.16 | 0.51 | (0.04 | ) | 0.47 | (0.51 | ) | — | (0.51 | ) | 10.12 | 4.78 | % | 39,371 | 0.44 | % | 0.44 | % | 5.08 | % | 17 | % | |||||||||||||||||||||||||
2005 | 10.38 | 0.47 | (0.20 | ) | 0.27 | (0.47 | ) | (0.02 | ) | (0.49 | ) | 10.16 | 2.65 | % | 34,946 | 0.45 | % | 0.45 | % | 4.63 | % | 12 | % | ||||||||||||||||||||||||
2004 | 10.42 | 0.45 | — | 0.45 | (0.45 | ) | (0.04 | ) | (0.49 | ) | 10.38 | 4.30 | % | 29,980 | 0.45 | % | 0.45 | % | 4.34 | % | 26 | % | |||||||||||||||||||||||||
2003 | 10.39 | 0.47 | 0.08 | 0.55 | (0.47 | ) | (0.05 | ) | (0.52 | ) | 10.42 | 5.43 | % | 26,659 | 0.49 | % | 0.49 | % | 4.51 | % | 28 | % | |||||||||||||||||||||||||
Service Class: | |||||||||||||||||||||||||||||||||||||||||||||||
2008 (2) | $ | 9.87 | $ | 0.04 | $ | (0.05 | ) | $ | (0.01 | ) | $ | (0.04 | ) | $ | — | $ | (0.04 | ) | $ | 9.82 | (0.09 | )% | $ | 368 | 0.16 | % | 0.16 | % | 2.51 | % | 13 | % | |||||||||||||||
Strategic Yield Portfolio | |||||||||||||||||||||||||||||||||||||||||||||||
Initial Class: | |||||||||||||||||||||||||||||||||||||||||||||||
2008 | $ | 8.94 | $ | 0.26 | $ | (0.39 | ) | $ | (0.13 | ) | $ | (0.26 | ) | $ | — | $ | (0.26 | ) | $ | 8.55 | (1.50 | )% | $ | 44,532 | 0.58 | % | 0.58 | % | 5.92 | % | 8 | % | |||||||||||||||
2007 | 9.19 | 0.57 | (0.25 | ) | 0.32 | (0.57 | ) | — | (0.57 | ) | 8.94 | 3.56 | % | 45,247 | 0.57 | % | 0.57 | % | 6.26 | % | 17 | % | |||||||||||||||||||||||||
2006 | 9.14 | 0.55 | 0.05 | 0.60 | (0.55 | ) | — | (0.55 | ) | 9.19 | 6.79 | % | 41,481 | 0.58 | % | 0.58 | % | 6.04 | % | 16 | % | ||||||||||||||||||||||||||
2005 | 9.37 | 0.53 | (0.23 | ) | 0.30 | (0.53 | ) | — | (0.53 | ) | 9.14 | 3.26 | % | 37,067 | 0.59 | % | 0.59 | % | 5.71 | % | 1 | % | |||||||||||||||||||||||||
2004 | 9.13 | 0.55 | 0.24 | 0.79 | (0.55 | ) | — | (0.55 | ) | 9.37 | 8.94 | % | 30,637 | 0.59 | % | 0.59 | % | 5.98 | % | 34 | % | ||||||||||||||||||||||||||
2003 | 8.75 | 0.63 | 0.38 | 1.01 | (0.63 | ) | — | (0.63 | ) | 9.13 | 11.97 | % | 25,498 | 0.65 | % | 0.65 | % | 7.07 | % | 32 | % | ||||||||||||||||||||||||||
Service Class: | |||||||||||||||||||||||||||||||||||||||||||||||
2008 (2) | $ | 8.60 | $ | 0.04 | $ | (0.05 | ) | $ | (0.01 | ) | $ | (0.04 | ) | $ | — | $ | (0.04 | ) | $ | 8.55 | (0.08 | )% | $ | 8 | 0.80 | % | 0.80 | % | 6.36 | % | 8 | % |
35
EQUITRUST VARIABLE INSURANCE SERIES FUND
FINANCIAL HIGHLIGHTS (continued)
Income from Investment Operations | Less Distributions | Ratios/Supplemental Data | |||||||||||||||||||||||||||||||||||||||||||||
Net Asset Value at Beginning of Period | Net Invest- ment Income | Net Realized and Unrealized Gain (Loss) on Investments | Total from Investment Operations | Dividends from Net Investment Income | Distributions from Capital Gains | Total Distributions | Net Asset Value at End of Period | Total Investment Return Based on Net Asset Value (1) | Net Assets at End of Period (in thousands) | Ratio of Total Expenses to Average Net Assets (3) | Ratio of Net Expenses to Average Net Assets (3) | Ratio of Net Investment Income to Average Net Assets (3) | Portfolio Turnover Rate | ||||||||||||||||||||||||||||||||||
Managed Portfolio | |||||||||||||||||||||||||||||||||||||||||||||||
Initial Class: | |||||||||||||||||||||||||||||||||||||||||||||||
2008 | $ | 16.05 | $ | 0.19 | $ | (0.84 | ) | $ | (0.65 | ) | $ | (0.56 | ) | $ | (0.56 | ) | $ | (1.12 | ) | $ | 14.28 | (4.17 | )% | $ | 89,824 | 0.55 | % | 0.55 | % | 2.56 | % | 12 | % | ||||||||||||||
2007 | 16.32 | 0.56 | 0.33 | 0.89 | (0.46 | ) | (0.70 | ) | (1.16 | ) | 16.05 | 5.87 | % | 97,073 | 0.54 | % | 0.54 | % | 3.47 | % | 14 | % | |||||||||||||||||||||||||
2006 | 15.80 | 0.49 | 1.28 | 1.77 | (0.37 | ) | (0.88 | ) | (1.25 | ) | 16.32 | 11.99 | % | 93,796 | 0.55 | % | 0.55 | % | 2.98 | % | 24 | % | |||||||||||||||||||||||||
2005 | 15.67 | 0.35 | 0.32 | 0.67 | (0.27 | ) | (0.27 | ) | (0.54 | ) | 15.80 | 4.53 | % | 83,368 | 0.56 | % | 0.56 | % | 2.34 | % | 24 | % | |||||||||||||||||||||||||
2004 | 14.73 | 0.27 | 0.97 | 1.24 | (0.30 | ) | — | (0.30 | ) | 15.67 | 8.58 | % | 74,876 | 0.56 | % | 0.56 | % | 1.87 | % | 26 | % | ||||||||||||||||||||||||||
2003 | 12.34 | 0.30 | 2.43 | 2.73 | (0.34 | ) | — | (0.34 | ) | 14.73 | 22.72 | % | 66,733 | 0.62 | % | 0.62 | % | 2.35 | % | 24 | % | ||||||||||||||||||||||||||
Service Class: | |||||||||||||||||||||||||||||||||||||||||||||||
2008 (2) | $ | 14.99 | $ | — | $ | (0.71 | ) | $ | (0.71 | ) | $ | — | $ | — | $ | — | $ | 14.28 | (4.74 | )% | $ | 122 | 0.22 | % | 0.22 | % | 1.24 | % | 12 | % | |||||||||||||||||
Money Market Portfolio | |||||||||||||||||||||||||||||||||||||||||||||||
Initial Class: | |||||||||||||||||||||||||||||||||||||||||||||||
2008 | $ | 1.00 | $ | 0.01 | $ | — | $ | 0.01 | $ | (0.01 | ) | $ | — | $ | (0.01 | ) | $ | 1.00 | 1.20 | % | $ | 15,167 | 0.45 | % | 0.45 | % | 2.41 | % | 0 | % | |||||||||||||||||
2007 | 1.00 | 0.05 | — | 0.05 | (0.05 | ) | — | (0.05 | ) | 1.00 | 4.71 | % | 16,464 | 0.45 | % | 0.45 | % | 4.60 | % | 0 | % | ||||||||||||||||||||||||||
2006 | 1.00 | 0.04 | — | 0.04 | (0.04 | ) | — | (0.04 | ) | 1.00 | 4.43 | % | 8,557 | 0.54 | % | 0.54 | % | 4.37 | % | 0 | % | ||||||||||||||||||||||||||
2005 | 1.00 | 0.02 | — | 0.02 | (0.02 | ) | — | (0.02 | ) | 1.00 | 2.50 | % | 6,288 | 0.61 | % | 0.61 | % | 2.47 | % | 0 | % | ||||||||||||||||||||||||||
2004 | 1.00 | 0.01 | — | 0.01 | (0.01 | ) | — | (0.01 | ) | 1.00 | 0.74 | % | 6,592 | 0.56 | % | 0.56 | % | 0.72 | % | 0 | % | ||||||||||||||||||||||||||
2003 | 1.00 | 0.01 | — | 0.01 | (0.01 | ) | — | (0.01 | ) | 1.00 | 0.52 | % | 6,728 | 0.59 | % | 0.59 | % | 0.53 | % | 0 | % | ||||||||||||||||||||||||||
Service Class: | |||||||||||||||||||||||||||||||||||||||||||||||
2008 (2) | $ | 1.00 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 1.00 | 0.13 | % | $ | 5 | 0.67 | % | 0.67 | % | 1.64 | % | 0 | % | |||||||||||||||||||
Blue Chip Portfolio | |||||||||||||||||||||||||||||||||||||||||||||||
Initial Class: | |||||||||||||||||||||||||||||||||||||||||||||||
2008 | $ | 42.41 | $ | 0.44 | $ | (6.08 | ) | $ | (5.64 | ) | $ | (0.86 | ) | $ | — | $ | (0.86 | ) | $ | 35.91 | (13.44 | )% | $ | 80,033 | 0.30 | % | 0.30 | % | 2.25 | % | 0 | % | |||||||||||||||
2007 | 40.61 | 0.86 | 1.73 | 2.59 | (0.79 | ) | — | (0.79 | ) | 42.41 | 6.49 | % | 94,766 | 0.29 | % | 0.29 | % | 2.04 | % | 2 | % | ||||||||||||||||||||||||||
2006 | 35.27 | 0.79 | 5.25 | 6.04 | (0.70 | ) | — | (0.70 | ) | 40.61 | 17.42 | % | 90,261 | 0.31 | % | 0.31 | % | 2.07 | % | 0 | % | ||||||||||||||||||||||||||
2005 | 35.17 | 0.70 | 0.07 | 0.77 | (0.67 | ) | — | (0.67 | ) | 35.27 | 2.29 | % | 82,501 | 0.31 | % | 0.31 | % | 1.98 | % | 0 | % | ||||||||||||||||||||||||||
2004 | 33.65 | 0.67 | 1.35 | 2.02 | (0.50 | ) | — | (0.50 | ) | 35.17 | 6.07 | % | 84,960 | 0.30 | % | 0.30 | % | 2.00 | % | 1 | % | ||||||||||||||||||||||||||
2003 | 27.22 | 0.50 | 6.38 | 6.88 | (0.45 | ) | — | (0.45 | ) | 33.65 | 25.70 | % | 79,832 | 0.36 | % | 0.36 | % | 1.72 | % | 17 | % | ||||||||||||||||||||||||||
Service Class: | |||||||||||||||||||||||||||||||||||||||||||||||
2008 (2) | $ | 39.44 | $ | — | $ | (3.54 | ) | $ | (3.54 | ) | $ | — | $ | — | $ | — | $ | 35.90 | (8.98 | )% | $ | 119 | 0.20 | % | 0.20 | % | 0.64 | % | 0 | % |
(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) | Service Class financial highlights are for the period June 1, 2008 to June 30, 2008. Respective ratios/supplemental data are computed on an annualized basis. |
(3) | Computed on an annualized basis, unless otherwise indicated. |
See accompanying notes.
36
EQUITRUST VARIABLE INSURANCE SERIES FUND
SHAREHOLDER MEETING RESULTS
A special meeting of the Fund’s shareholders was held on February 14, 2008. The results of votes taken among shareholders on proposals before them are reported below. Each vote reported represents one share held on the record date for the meeting.
PROPOSAL 1 Approval of amendments to the Fund’s Declaration of Trust:
Number of Votes | ||||||||
Portfolio | For | Against | Abstain | Total | ||||
Value Growth | 4,153,901 | 164,278 | 188,175 | 4,506,354 | ||||
High Grade Bond | 3,870,771 | 146,713 | 533,958 | 4,551,442 | ||||
Strategic Yield | 4,569,437 | 85,548 | 412,927 | 5,067,912 | ||||
Managed | 4,747,542 | 377,741 | 919,168 | 6,044,451 | ||||
Money Market | 12,180,280 | 879,626 | 2,539,462 | 15,599,368 | ||||
Blue Chip | 2,050,714 | 72,965 | 108,239 | 2,231,918 |
PROPOSAL 2 Election of Trustees:
Number of Votes | ||||||
For | Withheld | Total | ||||
Value Growth Portfolio | ||||||
Craig A. Lang | 4,371,803 | 134,551 | 4,506,354 | |||
James W. Noyce | 4,380,187 | 126,167 | 4,506,354 | |||
Erwin H. Johnson | 4,382,402 | 123,952 | 4,506,354 | |||
Kenneth Kay | 4,375,052 | 131,302 | 4,506,354 | |||
Steven W. Plate | 4,389,841 | 116,513 | 4,506,354 | |||
James D. Wallace | 4,380,038 | 126,316 | 4,506,354 | |||
Erlin J. Weness | 4,380,038 | 126,316 | 4,506,354 | |||
High Grade Bond Portfolio | ||||||
Craig A. Lang | 4,363,836 | 187,606 | 4,551,442 | |||
James W. Noyce | 4,364,066 | 187,376 | 4,551,442 | |||
Erwin H. Johnson | 4,352,884 | 198,558 | 4,551,442 | |||
Kenneth Kay | 4,355,856 | 195,586 | 4,551,442 | |||
Steven W. Plate | 4,367,419 | 184,023 | 4,551,442 | |||
James D. Wallace | 4,364,066 | 187,376 | 4,551,442 | |||
Erlin J. Weness | 4,348,833 | 202,609 | 4,551,442 | |||
Strategic Yield Portfolio | ||||||
Craig A. Lang | 4,859,665 | 208,247 | 5,067,912 | |||
James W. Noyce | 4,899,789 | 168,123 | 5,067,912 | |||
Erwin H. Johnson | 4,873,028 | 194,884 | 5,067,912 | |||
Kenneth Kay | 4,899,808 | 168,104 | 5,067,912 | |||
Steven W. Plate | 4,899,808 | 168,104 | 5,067,912 | |||
James D. Wallace | 4,895,824 | 172,088 | 5,067,912 | |||
Erlin J. Weness | 4,899,255 | 168,657 | 5,067,912 | |||
Managed Portfolio | ||||||
Craig A. Lang | 5,617,803 | 426,648 | 6,044,451 | |||
James W. Noyce | 5,621,671 | 422,780 | 6,044,451 | |||
Erwin H. Johnson | 5,644,017 | 400,434 | 6,044,451 | |||
Kenneth Kay | 5,652,701 | 391,750 | 6,044,451 | |||
Steven W. Plate | 5,654,133 | 390,318 | 6,044,451 | |||
James D. Wallace | 5,618,076 | 426,375 | 6,044,451 | |||
Erlin J. Weness | 5,626,851 | 417,600 | 6,044,451 |
37
EQUITRUST VARIABLE INSURANCE SERIES FUND
SHAREHOLDER MEETING RESULTS (continued)
PROPOSAL 2 Election of Trustees: (continued)
Number of Votes | ||||||
For | Withheld | Total | ||||
Money Market Portfolio | ||||||
Craig A. Lang | 15,567,161 | 32,207 | 15,599,368 | |||
James W. Noyce | 15,568,156 | 31,212 | 15,599,368 | |||
Erwin H. Johnson | 15,568,154 | 31,214 | 15,599,368 | |||
Kenneth Kay | 15,568,154 | 31,214 | 15,599,368 | |||
Steven W. Plate | 15,568,154 | 31,214 | 15,599,368 | |||
James D. Wallace | 15,568,154 | 31,214 | 15,599,368 | |||
Erlin J. Weness | 15,568,154 | 31,214 | 15,599,368 | |||
Blue Chip Portfolio | ||||||
Craig A. Lang | 2,184,706 | 47,212 | 2,231,918 | |||
James W. Noyce | 2,192,762 | 39,156 | 2,231,918 | |||
Erwin H. Johnson | 2,186,764 | 45,154 | 2,231,918 | |||
Kenneth Kay | 2,191,776 | 40,142 | 2,231,918 | |||
Steven W. Plate | 2,196,952 | 34,966 | 2,231,918 | |||
James D. Wallace | 2,190,537 | 41,381 | 2,231,918 | |||
Erlin J. Weness | 2,190,521 | 41,397 | 2,231,918 |
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APPROVAL OF THE INVESTMENT ADVISORY CONTRACT
On November 15, 2007 the Board of Trustees, including a majority of the trustees who are not parties to or “interested persons” of either party to the investment advisory contract (the “independent trustees”), approved for continuance the Investment Advisory and Management Services Agreement as amended and restated May 21, 2003 between all Portfolios of EquiTrust Variable Insurance Series Fund (the “Fund”) and EquiTrust Investment Management Services, Inc. (“Adviser”) (the “Agreement”).
The Board of Trustees, including a majority of the independent trustees, determined that approval of the Agreement was in the best interests of the Fund. The independent trustees were assisted by independent legal counsel in making their determination.
The Board noted that the Adviser has managed each Portfolio since its inception. The Board recognizes that a long-term relationship with a capable, conscientious investment adviser is in the best interests of shareholders and that shareholders have invested in the Portfolios knowing that the Adviser managed the Portfolios and knowing the investment advisory fee schedule.
Nature, Quality and Extent of Services. With respect to the nature, quality and extent of the services provided by the Adviser to the Portfolios, the Board considered the functions performed by the Adviser and the personnel providing such services, the Adviser’s financial condition and the compliance regime created by the Adviser, including the fact that the Fund has had no material compliance issues.
The Board also reviewed and discussed reports prepared by the Adviser containing information on each Portfolio’s total returns and average annual total returns over various periods of time. The Board also considered for each Portfolio, with the exception of the Money Market Portfolio, the Portfolio’s Morningstar “snapshot” report which includes various peer group data and the Morningstar rating. The Board concluded that as to each Portfolio, the investment performance was satisfactory, and in some cases, good relative to the peer group of mutual funds included in the reports. Based on the information provided, the Board concluded that the nature and extent of services provided to each Portfolio were appropriate and that the quality was good.
Fees and Expenses. The Board reviewed the amounts paid to the Adviser for advisory services. The Board compared expense ratios with other registered funds pursuing broadly similar strategies as included in reports prepared by the Adviser. The Board also reviewed a report management uses to review and evaluate expenses. This information showed that the advisory fee of each Portfolio was below average compared to other mutual funds pursuing broadly similar strategies. This information also showed that the expense ratios of each Portfolio were below average compared to similar mutual funds. The Board received information from the Adviser regarding the Adviser’s standard advisory fee schedules for the Adviser’s other clients. With respect to the Adviser’s other clients, the Board considered that the mix of services provided and the level of responsibility required under the Agreement with the Fund were different than the Adviser’s obligations for similar client accounts and that the advisory fees of such accounts are less relevant to the Board’s consideration because they reflect different competitive forces than those in the mutual fund marketplace. With respect to other EquiTrust funds, the Board considered differences in fund and fee structures in light of the different distribution channels of the funds. Based on the information considered, the Board concluded that each Portfolio’s advisory fee was reasonable and appropriate in amount given the quality of services provided.
Profitability. With respect to the costs of services provided and profits realized by the Adviser, the Board considered the advisory fees received by the Adviser from each Portfolio, and requested and received from the Adviser information on each Portfolio’s net assets and expense ratios over a ten-year period. The Board also considered the fact that the Adviser continues to be subject to an expense reimbursement agreement and that the Adviser has kept expenses at a reasonable level. Based on this information, the Board concluded for each Portfolio that the Adviser’s profitability was not unreasonable.
Economies of Scale. The Board considered the extent to which economies of scale would be realized as each Portfolio grows and whether fee levels reflect economies of scale for the benefit of Portfolio shareholders. The Board reviewed each Portfolio’s net assets and expense ratios over a ten-year period. The Board noted that the High Grade Bond, Strategic Yield and Value Growth Portfolios have advisory fee breakpoints designed to share economies of scale with shareholders. The Board also considered that the current size of each Portfolio does not lend itself to economies of scale. The Board concluded with respect to each of the Portfolios, that the total expense ratios were reasonable.
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Other Benefits to the Adviser and its Affiliates. The Board considered the character and amount of other incidental benefits received by the Adviser and its affiliates from their relationship with the Fund, including fees received by the Adviser for accounting services, shareholder services, dividend disbursing and transfer agent services and fees received by an affiliate of the Adviser for distribution services. The Board also considered the Adviser’s placement of trades for certain of the Fund’s portfolios with broker-dealers that provide research products and services, in addition to the execution of the securities transactions. In doing so, the Board considered the Adviser’s determination that the level and amount of such commissions were reasonable in relation to the value and type of research received, the benefit of the research to the portfolio managers in the performance of their investment decision-making responsibilities and, in turn, the Portfolios, the research is eligible for purchase with hard dollars, and the use of traders and quality of execution and other brokerage services available through such broker-dealers. The Board concluded that, taking into account these benefits, the Portfolios’ advisory fees were reasonable.
Based on all of the information considered and the conclusions reached, the Board determined to approve the Agreement. The Board of Trustees, including the independent trustees, did not identify any single factor or group of factors as all important or controlling and considered all factors together.
Information on Proxy Voting:
The Fund has delegated the authority to vote proxies related to the its Portfolio securities to the Fund’s investment adviser, EquiTrust Investment Management Services, Inc.. 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 http://www.sec.gov. The Fund’s proxy voting record for the most recent 12-month period ended June 30, 2008 is available without charge, by calling the toll-free number listed above or by accessing the SEC’s website.
Form N-Q Disclosure:
The Fund files a complete schedule of Portfolio holdings for its 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, by calling the Fund at 1-877-860-2904.
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Item 2. | Code of Ethics. |
Not applicable to this filing.
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. | Schedules of Investments. |
See Item 1.
Item 7. | Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. |
Not applicable.
Item 8. | Portfolio Managers of Closed-End Management Investment Company. |
Not applicable.
Item 9. | Purchase of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers. |
Not applicable.
Item 10. | Submission of Matters to a Vote of Security Holders. |
On November 18, 2004, the registrant adopted procedures by which shareholders may recommend nominees to the registrant’s board of trustees. Those procedures specify that shareholders may recommend candidates for board positions by forwarding their correspondence by U.S. mail or courier service to the registrant’s secretary to the attention of the Chairman of the Nominating Committee. Suggestions for candidates for specific positions must be received by such date as established by the Nominating Committee.
Item 11. | 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 second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting. |
Item 12. | Exhibits. |
(a)(1) | Not applicable to this filing. | |
(a)(2) | Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto. | |
(a)(3) | Not applicable. | |
(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: 8/26/08 |
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: 8/26/08 | ||
By: | /s/ James P. Brannen | |
Name: James P. Brannen | ||
Title: Chief Financial Officer | ||
Date: 8/26/08 |