<Page>
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, 2003
--------------------------
Date of reporting period:
December 31, 2003
-------------------------
<Page>
ITEM 1. REPORTS TO STOCKHOLDERS.
<Page>
[EQUITRUST LOGO]
FINANCIAL SERVICES
EquiTrust Variable Insurance Series Fund
ANNUAL REPORT
DECEMBER 31, 2003
5400 UNIVERSITY AVENUE
WEST DES MOINES, IA 50266
1-877-860-2904
225-5586 (DES MOINES)
This report is not to be distributed unless preceded or accompanied by a current
prospectus.
<Page>
PRESIDENT'S LETTER
Dear Shareholder:
Following three consecutive years of losses, equities finally recorded
gains for 2003. Between 2000 and 2002, the NASDAQ Composite (the "NASDAQ") lost
a cumulative 66.87%. In 2003, though, it led the major equity indices with a
total return of 50.77%; it actually gained 58.18% from its low in March. The S&P
500 Stock Composite Index (the "S&P 500") returned 28.68% for the year, while
the returns on more than half of its constituent stocks exceeded even that. The
Dow Jones Industrial Average (the "Dow") performed similarly, returning 28.29%
for the year.
Aside from the gains for corporate investment grade and high-yield issues,
fixed income returns largely trailed those of equities. The Lehman Brothers U.S.
Aggregate Index, which includes U.S. Treasury, mortgage-backed and corporate
securities, returned just 4.10% for 2003. Similarly, Lehman's U.S. Treasury
Index and its Fixed Rate Mortgage Backed Securities Index returned 2.24% and
3.07%, respectively. The Lehman Brothers Corporate Investment Grade Index,
though, recorded a return of 8.24%. Lower-quality, high-yield issues performed
the best among domestic fixed income sectors, as Lehman's U.S. High Yield Index
returned 28.97%.
Boosted by tax cuts and low interest rates, the economy improved
dramatically in 2003. After showing growth of only 1.4% for the first quarter,
the nation's gross domestic product (GDP) expanded at an annualized rate of 3.1%
in the second quarter and an astonishing 8.2% for the third quarter. Observers
of the economy anticipate that it expanded again in the fourth quarter,
estimating it did so at an annualized rate of 4.5%.
After having languished for almost two years, corporate earnings
strengthened substantially in 2003. Reported earnings for the S&P 500 are
estimated to have grown more than 60% over 2002 earnings. The improvement comes
from a combination of cost cutting, productivity gains and recovering sales.
Analysts expect earnings growth to slow for 2004, but to a still-healthy pace of
around 10-14%.
The nation's unemployment rate peaked at 6.4% in June after starting the
year at 6.0%. It declined to 5.7% by the end of the year, but still shows that
corporations have been conservative in hiring despite the improving economy. We
are presently at the stage of recovery where hiring should increase; the next
few months will be telling in that regard.
The Federal Reserve Board (the "Fed") generally influences domestic
monetary policy by altering the target federal funds rate, the rate at which
banks lend money to each other. It uses this tool to either slow or stimulate
the economy, raising rates when it believes the economy's strength could lead to
inflation, or dropping them to boost economic activity. In June, the Fed cut
this benchmark rate from 1.25% to 1%, citing its concerns for deflation as
rationale for its 13th consecutive cut.
Symptomatic of low domestic interest rates and the nation's trade and
budget deficits, the dollar declined in value relative to other currencies for
much of 2003. This has benefited U.S. companies that derive substantial revenues
from overseas markets, as it has made prices for their goods more competitive
relative to those of foreign companies. The dollar's value relative to other
world currencies increased during the 1990s due to the U.S. economy's strength
relative to other economies. Therefore, a decline in the value of the dollar now
should not cause concern as long as its value begins to stabilize.
The Fund's portfolios were impacted by macroeconomic factors to the extent
that these factors affected the behavior of the financial markets. Equities
benefited from improving earnings and monetary stimulus, while the fixed income
markets were impacted by budget and trade deficits and rising interest rates. In
addition, reflecting the demand for risky assets, lower-quality financial assets
generally outperformed higher-quality financial assets. The following are our
thoughts regarding the performance of the portfolios during 2003.
2
<Page>
VALUE GROWTH: For 2003, the equity markets were led by low quality stocks
such as those in the technology and consumer discretionary sectors. Serving as a
proxy for richly valued technology stocks, the NASDAQ's returns topped those of
most equity indices. Similarly, the S&P 500's technology sector was the
benchmark's best performer for the year; close behind technology was the S&P
500's consumer discretionary sector. Of interest is the fact that most mutual
fund managers heavily overweighted both sectors during 2003.
For the twelve-month period, the Value Growth Portfolio returned 30.68%,
modestly outperforming the S&P 500 in spite of having far less exposure to the
technology and consumer discretionary sectors. It has, instead, been overweight
in higher quality sectors such as health care, consumer staples, energy and
utilities. As several of these sectors did not perform as well as the lower
quality sectors, the Portfolio's performance was attributable to individual
security selection, as well as timing of purchases and sales. Going into 2004,
we expect the Portfolio to benefit from its exposure to the health care and
consumer staples sectors, both of which tend to benefit from rotation in sector
leadership that occurs as earnings growth slows. For this reason, we do not
anticipate making significant changes to sector weightings at the present time.
HIGH GRADE BOND: The two-year Treasury yield rose by 22 basis points (.22%)
to 1.82%, the ten-year Treasury yield rose 43 basis points (.43%) to 4.25%, and
the thirty-year Treasury yield rose 29 basis points (.29%) to 5.07% over the
twelve-month reporting period ended December 31, 2003. The best performing
sector of the Lehman Brothers U.S. Aggregate Index ("Aggregate Index") for this
period was the Investment Grade Corporate Securities sector, as corporate
spreads declined due to strong technical factors, as well as an improvement in
the fundamental credit quality of the investment grade corporate bond market.
The Portfolio returned 5.43% for the twelve-month period, which exceeded
the return of the Aggregate Index. The Portfolio's larger exposure to the
outperforming corporate bond and fixed rate mortgage-backed sectors and lower
duration than the Aggregate Index during a period of rising interest rates more
than offset the Portfolio's higher exposure to underperforming cash equivalents
and Portfolio expenses.
Given the relatively low level of interest rates and the continuing signs
that the economy is recovering we continue to feel that it is not an appropriate
time to take on a larger amount of interest risk than the Aggregate Index.
However, given the very steep yield curve it is costly to remain in cash so we
will keep the majority of the Portfolio invested in intermediate maturity
securities.
STRATEGIC YIELD: The Lehman Brothers U.S. High Yield Index ("High Yield
Index") recorded excellent results for the one year period ending December 31,
2003, with a 28.97% return. The option-adjusted spread on the High Yield Index
finished the current period at 394 basis points (3.94%) which was 457 basis
points (4.57%) lower than at the start of the reporting period. On a fundamental
basis a continued decline in defaults and improvement in the credit rating
upgrade-to-downgrade ratio helped the high yield market. Technically, the market
was helped by very strong cash inflows into high yield funds over the reporting
period.
During the most recent fiscal year, the Portfolio produced a total return
of 11.97%, lagging that of the High Yield Index. Its performance was hindered by
having less exposure to both high yield issues and lower rated issues relative
to the Index; in general, the lowest rated issues were the best performers
during the period. A higher exposure to cash and investment grade corporate
securities than the Index, the underperformance of several individual issues,
and Portfolio expenses, also helped to lower our returns relative to the Index.
It appears that the high yield market may be getting a little ahead of the
fundamentals. Given that it has dramatically outperformed the investment grade
bond market, we may be more inclined to lean toward lower investment grade
issues when making new acquisitions.
MANAGED: The Managed Portfolio lagged the S&P 500 for 2003, returning
22.72%, but it readily outperformed the Lehman Brothers U.S. Aggregate Index.
Given its value bias, its exposure to cash and fixed income securities and lower
volatility in its returns relative to the S&P 500, the Portfolio's risk profile
is currently substantially below that of the equity benchmark. Per the
Portfolio's objective, its risk profile is also above that of the fixed income
benchmark.
3
<Page>
As of December 31, 2003, the Portfolio was allocated 65.72% to equities,
13.85% to fixed income securities and 20.43% to cash. We would anticipate
drawing the cash level down some if interest rates were to rise or if we were to
find attractively valued equity securities. At this time, though, interest rates
are not attractive enough to warrant additions to the Portfolio's fixed income
holdings. Similarly, we are currently finding few attractively valued equities
to add to the Portfolio's equity exposure.
MONEY MARKET: At the last meeting of the Federal Open Market Committee
("FOMC") meeting, the FOMC articulated that the risks of inflation and deflation
were equally balanced, which was a change from its prior emphasis on avoiding
deflation. The committee is comfortable that there is growth in the U.S. economy
but is still holding off on raising interest rates until jobs recover.
Businesses remain reluctant to add to payrolls and can do so because there are
outsized productivity gains which should keep the FOMC on hold for much of 2004.
The current Federal Funds rate of 1.00% should hold until the FOMC sees risks
weighted strongly in either direction.
BLUE CHIP: True to its passive strategy, the performance of the Blue Chip
Portfolio over the past twelve months has reflected that of the large
capitalization sector it represents. The Portfolio's total return for the period
was 25.70%. The Portfolio will remain substantially invested in common stocks of
large companies and is designed for those investors who prefer substantial
exposure to common stocks at all times, or who wish to make their own market
value judgments.
We appreciate your investment in the Fund and we take seriously our task of
seeking to grow and protect that investment. Thank you for continued support of
the Fund.
/s/ Craig A. Lang
CRAIG A. LANG
PRESIDENT
January 26, 2004
An investment in the Money Market Portfolio is neither insured nor
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. Although the Portfolio seeks to preserve the net asset value of $1.00
per share, it is possible to lose money by investing in the Portfolio.
Past performance is not a guarantee of future results.
4
<Page>
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
VALUE GROWTH PORTFOLIO
[CHART]
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
IN THE VALUE GROWTH PORTFOLIO AND S&P 500
<Table>
<Caption>
VALUE GROWTH PORTFOLIO S&P 500 STOCK COMPOSITE INDEX
12/31/1993 $ 10,000 $ 10,000
12/31/1994 $ 9,557 $ 10,130
12/31/1995 $ 12,030 $ 13,922
12/31/1996 $ 14,153 $ 17,134
12/31/1997 $ 15,045 $ 22,857
12/31/1998 $ 11,370 $ 29,391
12/31/1999 $ 10,649 $ 35,578
12/31/2000 $ 12,429 $ 32,339
12/13/2001 $ 13,299 $ 28,491
12/31/2002 $ 11,910 $ 22,195
12/31/2003 $ 15,563 $ 28,561
</Table>
AVERAGE ANNUAL TOTAL RETURN*
<Table>
1 Year 30.68%
5 Year 6.48%
10 Year 4.52%
</Table>
PERFORMANCE NUMBERS ARE NET OF ALL FUND-OPERATING EXPENSES. THEY DO NOT INCLUDE
ANY FEES AND CHARGES APPLICABLE TO THE SEPARATE ACCOUNT, WHICH WOULD LOWER THE
TOTAL RETURN FIGURES SHOWN. FOR TOTAL RETURN INFORMATION NET OF ALL
INSURANCE-RELATED FEES AND CHARGES, PLEASE REFER TO THE PERFORMANCE REPORT. PAST
PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
For 2003, the Value Growth Portfolio outperformed its benchmark, the S&P
500 Stock Composite Index ("S&P 500"). The equity markets, in general, awarded
more risky and lower quality securities with the highest returns for 2003. In
particular, sectors such as technology and consumer discretionary outperformed
most others within the S&P 500.
The Portfolio, however, has much less exposure to the S&P 500's lower
quality sectors. Instead, it is overweight in high quality sectors such as
health care, consumer staples, energy and utilities. Because these sectors
tended to underperform most others for the year, the Portfolio's performance
relative to the benchmark can be attributed to individual security selection.
The Portfolio also attained a high correlation to the benchmark in 2003. We
have positioned the Portfolio to achieve a modest correlation to the S&P 500,
but given its sector weightings, we view the high correlation the Portfolio
recorded in 2003 to be anomalous; we would not expect it to continuously record
such a high correlation going forward.
* Returns shown do not reflect the deduction of taxes that a shareholder may
pay on fund distributions or the redemption of fund shares.
5
<Page>
HIGH GRADE BOND PORTFOLIO
[CHART]
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE
HIGH GRADE BOND PORTFOLIO AND LEHMAN BROTHERS U.S. AGGREGATE INDEX
<Table>
<Caption>
HIGH GRADE BOND PORTFOLIO LEHMAN BROTHERS U.S. AGGREGATE INDEX
12/31/1993 $ 10,000 $ 10,000
12/31/1994 $ 9,974 $ 9,708
12/31/1995 $ 11,396 $ 11,501
12/31/1996 $ 12,073 $ 11,919
12/31/1997 $ 13,310 $ 13,068
12/31/1998 $ 14,310 $ 14,203
12/31/1999 $ 14,244 $ 14,087
12/31/2000 $ 15,832 $ 15,725
12/31/2001 $ 17,272 $ 17,051
12/31/2002 $ 18,718 $ 18,801
12/31/2003 $ 19,735 $ 19,572
</Table>
AVERAGE ANNUAL TOTAL RETURN*
<Table>
1 Year 5.43%
5 Year 6.64%
10 Year 7.03%
</Table>
PERFORMANCE NUMBERS ARE NET OF ALL FUND-OPERATING EXPENSES. THEY DO NOT INCLUDE
ANY FEES AND CHARGES APPLICABLE TO THE SEPARATE ACCOUNT, WHICH WOULD LOWER THE
TOTAL RETURN FIGURES SHOWN. FOR TOTAL RETURN INFORMATION NET OF ALL
INSURANCE-RELATED FEES AND CHARGES, PLEASE REFER TO THE PERFORMANCE REPORT. PAST
PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
During the twelve-month period ended December 31, 2003, the High Grade Bond
portfolio outperformed the Lehman Brothers U.S. Aggregate Index, as reflected by
the 5.43% total return produced by the Portfolio versus the 4.10% total return
produced by the Index.
The total returns for the major components of the Lehman Brothers U.S.
Aggregate Index for this period were as follows: U.S. Fixed Rate Mortgage Backed
Securities (36% of the Index), 3.07%; U.S. Government Securities (34% of the
Index), 2.36%; and U.S. Investment Grade Corporate Securities (22% of the
Index), 8.24%. The Index had an effective duration(1) of 4.50 as of December 31,
2003. In comparison, the Portfolio had approximately 41% of its assets invested
in fixed rate mortgage-backed securities, 33% in corporate securities and 25% in
cash equivalents. The effective duration of the Portfolio was 3.40. The
Portfolio outperformed the Index mainly because it had a higher exposure to
outperforming corporate and fixed rate mortgage-backed securities and a lower
amount of interest rate risk than the Index. These positives more than offset
the Portfolio's higher exposure to underperforming cash than the Index and
Portfolio expenses.
The composition of the Portfolio at the end of the reporting period was
approximately similar to that at the start with a slight decrease in fixed rate
mortgage-backed issues and a slight increase in cash equivalents. Going forward,
we anticipate continuing to maintain a duration below that of the Index as we
feel the risk of rising interest rates outweighs the possible upside from
falling rates at the present time.
- ----------
(1) Duration is a measure of interest rate risk for individual securities and
portfolios. The lower the duration for a security or portfolio, the less
sensitive it is to movements in interest rates.
* Returns shown do not reflect the deduction of taxes that a shareholder may
pay on fund distributions or the redemption of fund shares.
6
<Page>
STRATEGIC YIELD PORTFOLIO
[CHART]
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE
STRATEGIC YIELD PORTFOLIO AND LEHMAN BROTHERS U.S. CREDIT/HIGH YIELD INDEX
<Table>
<Caption>
LEHMAN BROTHERS MUTUAL FUND
STRATEGIC YIELD PORTFOLIO U.S. CREDIT/HIGH YIELD INDEX
1993 $ 10,000 $ 10,000
1994 $ 9,899 $ 9,654
1995 $ 11,398 $ 11,752
1996 $ 12,841 $ 12,305
1997 $ 14,390 $ 13,627
1998 $ 15,380 $ 14,575
1999 $ 15,265 $ 14,423
2000 $ 15,731 $ 15,351
2001 $ 17,181 $ 16,818
2002 $ 18,115 $ 18,263
2003 $ 20,282 $ 20,316
</Table>
AVERAGE ANNUAL TOTAL RETURN*
<Table>
1 Year 11.97%
5 Year 5.69%
10 Year 7.33%
</Table>
PERFORMANCE NUMBERS ARE NET OF ALL FUND-OPERATING EXPENSES. THEY DO NOT INCLUDE
ANY FEES AND CHARGES APPLICABLE TO THE SEPARATE ACCOUNT, WHICH WOULD LOWER THE
TOTAL RETURN FIGURES SHOWN. FOR TOTAL RETURN INFORMATION NET OF ALL
INSURANCE-RELATED FEES AND CHARGES, PLEASE REFER TO THE PERFORMANCE REPORT. PAST
PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
During the twelve-month period ended December 31, 2003, the 11.97% total
return produced by the Strategic Yield Portfolio was greater than the 11.24%
return produced by the Lehman Brothers U.S. Credit/High Yield Index. The total
returns for the two components of the Lehman Brothers U.S. Credit/ High Yield
Index over this period were as follows: U.S. Investment Grade Credit (80% of the
Index), 7.70%; and U.S. High Yield (20% of the Index), 28.97%. In comparison,
the Portfolio had approximately 24% of its assets invested in corporate
securities rated investment grade by both Moody's and Standard & Poor's, 57% of
its assets invested in corporate securities rated as non-investment grade or
high yield by Moody's and/or Standard & Poor's and 19% of its assets invested in
cash equivalents. The Portfolio outperformed the overall Lehman Brothers U.S.
Credit/High Yield Index due to its larger exposure to the outperforming high
yield sector relative to that Index, which more than offset the Portfolio's
higher exposure to underperforming cash equivalents and Portfolio expenses.
However, the Portfolio underperformed the Lehman Brothers U.S. High Yield
component of the Index due to its lower exposure to the high yield sector and a
higher exposure to underperforming cash equivalents than that component of the
Index, as well as Portfolio expenses.
The Portfolio has historically invested in a mix of high yield and
investment grade issues attempting to find attractive issues in both markets.
Given the current narrower spreads available in the high yield market, we may
lean toward adding more lower investment grade issues to the Portfolio. 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.
* Returns shown do not reflect the deduction of taxes that a shareholder may
pay on fund distributions or the redemption of fund shares.
7
<Page>
MANAGED PORTFOLIO
[CHART]
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE
MANAGED PORTFOLIO AND S&P 500
<Table>
<Caption>
MANAGED PORTFOLIO S&P 500 STOCK COMPOSITE INDEX
1993 $ 10,000 $ 10,000
1994 $ 9,504 $ 10,130
1995 $ 11,946 $ 13,922
1996 $ 14,023 $ 17,134
1997 $ 15,520 $ 22,857
1998 $ 14,168 $ 29,391
1999 $ 13,679 $ 35,578
2000 $ 17,426 $ 32,339
2001 $ 18,841 $ 28,491
2002 $ 18,502 $ 22,195
2003 $ 22,706 $ 28,561
</Table>
AVERAGE ANNUAL TOTAL RETURN*
<Table>
1 Year 22.72%
5 Year 9.89%
10 Year 8.55%
</Table>
PERFORMANCE NUMBERS ARE NET OF ALL FUND-OPERATING EXPENSES. THEY DO NOT INCLUDE
ANY FEES AND CHARGES APPLICABLE TO THE SEPARATE ACCOUNT, WHICH WOULD LOWER THE
TOTAL RETURN FIGURES SHOWN. FOR TOTAL RETURN INFORMATION NET OF ALL
INSURANCE-RELATED FEES AND CHARGES, PLEASE REFER TO THE PERFORMANCE REPORT. PAST
PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
The Managed Portfolio underperformed the S&P 500 for the year, but it
outperformed the Lehman Brothers U.S. Aggregate Index. For 2003, equities,
particularly those of the lowest quality, largely outperformed fixed income
securities, whose total returns were affected by rising interest rates.
For much of 2003, the Portfolio had roughly 65% of its assets invested in
equities. Because its equity holdings are high quality and value-oriented, and
because the Portfolio was not fully invested in equities, its returns lagged
that of the S&P 500. However, due to its quality equity holdings and its fixed
income and cash positions, the Portfolio experienced substantially lower
volatility in returns than did the S&P 500.
* Returns shown do not reflect the deduction of taxes that a shareholder may
pay on fund distributions or the redemption of fund shares.
8
<Page>
BLUE CHIP PORTFOLIO
[CHART]
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE
BLUE CHIP PORTFOLIO AND S&P 500
<Table>
<Caption>
BLUE CHIP PORTFOLIO S&P 500 STOCK COMPOSITE INDEX
12/31/1993 $ 10,000 $ 10,000
12/31/1994 $ 10,265 $ 10,130
12/31/1995 $ 13,633 $ 13,922
12/31/1996 $ 16,554 $ 17,134
12/31/1997 $ 21,091 $ 22,857
12/31/1998 $ 25,079 $ 29,391
12/31/1999 $ 30,309 $ 35,578
12/31/2000 $ 27,727 $ 32,339
12/31/2001 $ 24,598 $ 28,491
12/31/2002 $ 19,907 $ 22,195
12/31/2003 $ 25,023 $ 28,561
</Table>
AVERAGE ANNUAL TOTAL RETURN*
<Table>
1 Year 25.70%
5 Year -0.05%
10 Year 9.61%
</Table>
PERFORMANCE NUMBERS ARE NET OF ALL FUND-OPERATING EXPENSES. THEY DO NOT INCLUDE
ANY FEES AND CHARGES APPLICABLE TO THE SEPARATE ACCOUNT, WHICH WOULD LOWER THE
TOTAL RETURN FIGURES SHOWN. FOR TOTAL RETURN INFORMATION NET OF ALL
INSURANCE-RELATED FEES AND CHARGES, PLEASE REFER TO THE PERFORMANCE REPORT. PAST
PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
The Blue Chip Portfolio is designed to represent the large capitalization
sector of the domestic equity market. It remains substantially invested in
approximately 50 such common stock issues, consisting of the 30 companies in the
Dow Jones Industrial Average (the "Dow") and roughly 20 stocks of the S&P 500's
largest companies not also in the Dow. Accordingly, the Portfolio's performance
will roughly parallel that of the Dow and the S&P 500.
* Returns shown do not reflect the deduction of taxes that a shareholder may
pay on fund distributions or the redemption of fund shares.
9
<Page>
EQUITRUST VARIABLE INSURANCE SERIES FUND
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 2003
<Table>
<Caption>
HIGH
VALUE GROWTH GRADE BOND
PORTFOLIO PORTFOLIO
------------- -------------
ASSETS
Investments in securities, at value (cost -- $48,137,668;
$25,450,628; $24,072,015; $57,174,042; $6,591,085; and
$68,682,399, respectively) $ 52,748,155 $ 26,368,859
Cash -- 83,188
Receivables:
Dividends and interest 80,452 213,727
EquiTrust Investment Management Services, Inc. -- --
Prepaid expense and other assets 123 73
------------- -------------
Total Assets $ 52,828,730 $ 26,665,847
============= =============
LIABILITIES AND NET ASSETS
Liabilities:
Net outstanding redemptions in excess of bank balance $ 7,819 $ --
Accrued expenses 8,504 6,615
------------- -------------
Total Liabilities 16,323 6,615
Net assets applicable to shares of beneficial interest 52,812,407 26,659,232
------------- -------------
Total Liabilities and Net Assets $ 52,828,730 $ 26,665,847
============= =============
Shares issued and outstanding as of December 31, 2003 4,489,099 2,558,308
NET ASSET VALUE PER SHARE $ 11.76 $ 10.42
============= =============
</Table>
SEE ACCOMPANYING NOTES.
10
<Page>
<Table>
<Caption>
STRATEGIC
YIELD MANAGED MONEY MARKET BLUE CHIP
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------- ------------- ------------- -------------
ASSETS
Investments in securities, at value (cost -- $48,137,668;
$25,450,628; $24,072,015; $57,174,042; $6,591,085; and
$68,682,399, respectively) $ 25,007,895 $ 66,537,276 $ 6,591,085 $ 79,745,959
Cash 28,754 26,498 140,848 333
Receivables:
Dividends and interest 467,821 178,274 1,016 96,086
EquiTrust Investment Management Services, Inc. 334 -- -- --
Prepaid expense and other assets 63 158 24 189
------------- ------------- ------------- -------------
Total Assets $ 25,504,867 $ 66,742,206 $ 6,732,973 $ 79,842,567
============= ============= ============= =============
LIABILITIES AND NET ASSETS
Liabilities:
Net outstanding redemptions in excess of bank balance $ -- $ -- $ -- $ --
Accrued expenses 6,461 9,433 5,421 10,477
------------- ------------- ------------- -------------
Total Liabilities 6,461 9,433 5,421 10,477
Net assets applicable to shares of beneficial interest 25,498,406 66,732,773 6,727,552 79,832,090
------------- ------------- ------------- -------------
Total Liabilities and Net Assets $ 25,504,867 $ 66,742,206 $ 6,732,973 $ 79,842,567
============= ============= ============= =============
Shares issued and outstanding as of December 31, 2003 2,792,812 4,530,865 6,727,552 2,372,503
NET ASSET VALUE PER SHARE $ 9.13 $ 14.73 $ 1.00 $ 33.65
============= ============= ============= =============
</Table>
11
<Page>
STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 2003
<Table>
<Caption>
HIGH
VALUE GROWTH GRADE BOND
PORTFOLIO PORTFOLIO
------------- -------------
INVESTMENT INCOME
Dividends $ 784,099 $ 46,629
Interest 64,869 1,273,496
Foreign tax withholding (2,995) --
------------- -------------
Total Investment Income 845,973 1,320,125
EXPENSES
Paid to EquiTrust Investment Management Services, Inc.:
Investment advisory and management fees 200,871 79,209
Accounting fees 22,319 13,201
Custodial fees 9,054 8,027
Professional fees 23,815 16,159
Proxy expense 15,169 6,180
Reports to shareholders 5,908 3,537
Trustees' fees and expenses 3,510 2,057
Insurance and bonds 939 612
Miscellaneous 1,717 1,066
------------- -------------
Total Expenses 283,302 130,048
Expense reimbursement -- --
Fees paid indirectly (387) (354)
------------- -------------
Net Expenses 282,915 129,694
------------- -------------
Net Investment Income 563,058 1,190,431
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain (loss) from investment transactions 1,385,175 70,428
Change in unrealized appreciation/depreciation of
investments 10,456,789 140,930
------------- -------------
Net Gain on Investments 11,841,964 211,358
------------- -------------
Net Increase in Net Assets Resulting from
Operations $ 12,405,022 $ 1,401,789
============= =============
</Table>
SEE ACCOMPANYING NOTES.
12
<Page>
<Table>
<Caption>
STRATEGIC
YIELD MANAGED MONEY MARKET BLUE CHIP
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------- ------------- ------------- -------------
INVESTMENT INCOME
Dividends $ 104,989 $ 1,210,786 $ -- $ 1,404,431
Interest 1,723,832 522,011 75,014 39,464
Foreign tax withholding -- (4,726) -- --
------------- ------------- ------------- -------------
Total Investment Income 1,828,821 1,728,071 75,014 1,443,895
EXPENSES
Paid to EquiTrust Investment Management Services, Inc.:
Investment advisory and management fees 106,561 261,615 16,834 138,310
Accounting fees 11,840 29,068 3,367 30,000
Custodial fees 7,180 9,695 8,126 6,956
Professional fees 15,163 29,033 8,696 34,013
Proxy expense 7,053 15,351 991 22,302
Reports to shareholders 3,159 7,689 888 9,202
Trustees' fees and expenses 1,840 4,556 520 5,384
Insurance and bonds 538 1,260 175 1,470
Miscellaneous 962 2,285 312 2,644
------------- ------------- ------------- -------------
Total Expenses 154,296 360,552 39,909 250,281
Expense reimbursement (334) -- -- --
Fees paid indirectly (461) (325) (459) (394)
------------- ------------- ------------- -------------
Net Expenses 153,501 360,227 39,450 249,887
------------- ------------- ------------- -------------
Net Investment Income 1,675,320 1,367,844 35,564 1,194,008
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain (loss) from investment transactions (573,460) 1,211,076 -- (4,671,594)
Change in unrealized appreciation/depreciation of
investments 1,601,235 9,622,628 -- 19,623,555
------------- ------------- ------------- -------------
Net Gain on Investments 1,027,775 10,833,704 -- 14,951,961
------------- ------------- ------------- -------------
Net Increase in Net Assets Resulting from
Operations $ 2,703,095 $ 12,201,548 $ 35,564 $ 16,145,969
============= ============= ============= =============
</Table>
13
<Page>
STATEMENTS OF CHANGES IN NET ASSETS
<Table>
<Caption>
VALUE GROWTH
PORTFOLIO
YEAR ENDED DECEMBER 31,
------------------------------
2003 2002
------------- -------------
OPERATIONS
Net investment income $ 563,058 $ 632,800
Net realized gain (loss) from investment transactions 1,385,175 1,208,684
Change in unrealized appreciation/(depreciation) of
investments 10,456,789 (6,690,817)
------------- -------------
Net Increase (Decrease) in Net Assets Resulting from
Operations 12,405,022 (4,849,333)
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS FROM
Net investment income (632,800) (815,691)
Net realized gain from investment transactions -- --
------------- -------------
Total Dividends and Distributions (632,800) (815,691)
CAPITAL SHARE TRANSACTIONS 87,080 1,095,790
------------- -------------
Total Increase (Decrease) in Net Assets 11,859,302 (4,569,234)
NET ASSETS
Beginning of year 40,953,105 45,522,339
------------- -------------
End of year (including undistributed net
investment income as set forth below) $ 52,812,407 $ 40,953,105
============= =============
Undistributed Net Investment Income $ 563,058 $ 632,800
============= =============
</Table>
SEE ACCOMPANYING NOTES.
14
<Page>
<Table>
<Caption>
HIGH STRATEGIC
GRADE BOND YIELD
PORTFOLIO PORTFOLIO
------------------------------ ------------------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
------------------------------ ------------------------------
2003 2002 2003 2002
------------- ------------- ------------- -------------
OPERATIONS
Net investment income $ 1,190,431 $ 1,099,597 $ 1,675,320 $ 1,537,019
Net realized gain (loss) from investment transactions 70,428 126,083 (573,460) (227,764)
Change in unrealized appreciation/(depreciation) of
investments 140,930 558,780 1,601,235 (151,342)
------------- ------------- ------------- -------------
Net Increase (Decrease) in Net Assets Resulting from
Operations 1,401,789 1,784,460 2,703,095 1,157,913
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS FROM
Net investment income (1,190,431) (1,099,597) (1,675,320) (1,537,019)
Net realized gain from investment transactions (126,083) (19,864) -- --
------------- ------------- ------------- -------------
Total Dividends and Distributions (1,316,514) (1,119,461) (1,675,320) (1,537,019)
CAPITAL SHARE TRANSACTIONS 1,589,484 5,411,928 2,075,200 2,592,491
------------- ------------- ------------- -------------
Total Increase (Decrease) in Net Assets 1,674,759 6,076,927 3,102,975 2,213,385
NET ASSETS
Beginning of year 24,984,473 18,907,546 22,395,431 20,182,046
------------- ------------- ------------- -------------
End of year (including undistributed net
investment income as set forth below) $ 26,659,232 $ 24,984,473 $ 25,498,406 $ 22,395,431
============= ============= ============= =============
Undistributed Net Investment Income $ -- $ -- $ -- $ --
============= ============= ============= =============
</Table>
15
<Page>
<Table>
<Caption>
MANAGED
PORTFOLIO
------------------------------
YEAR ENDED DECEMBER 31,
2003 2002
------------- -------------
OPERATIONS
Net investment income $ 1,367,844 $ 1,494,900
Net realized gain (loss) from investment transactions 1,211,076 1,015,684
Change in unrealized appreciation/(depreciation) of
investments 9,622,628 (3,624,741)
------------- -------------
Net Increase (Decrease) in Net Assets Resulting from
Operations 12,201,548 (1,114,157)
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS FROM
Net investment income (1,494,900) (1,801,236)
Net realized gain from investment transactions -- --
------------- -------------
Total Dividends and Distributions (1,494,900) (1,801,236)
CAPITAL SHARE TRANSACTIONS 1,598,322 3,548,291
------------- -------------
Total Increase (Decrease) in Net Assets 12,304,970 632,898
NET ASSETS
Beginning of year 54,427,803 53,794,905
------------- -------------
End of year (including undistributed net
investment income as set forth below) $ 66,732,773 $ 54,427,803
============= =============
Undistributed Net Investment Income $ 1,367,844 $ 1,494,900
============= =============
</Table>
SEE ACCOMPANYING NOTES.
16
<Page>
<Table>
<Caption>
MONEY MARKET BLUE CHIP
PORTFOLIO PORTFOLIO
------------------------------ ------------------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
------------------------------ ------------------------------
2003 2002 2003 2002
------------- ------------- ------------- -------------
OPERATIONS
Net investment income $ 35,564 $ 95,445 $ 1,194,008 $ 1,066,311
Net realized gain (loss) from investment transactions -- -- (4,671,594) (1,786,208)
Change in unrealized appreciation/(depreciation) of
investments -- -- 19,623,555 (14,510,432)
------------- ------------- ------------- -------------
Net Increase (Decrease) in Net Assets Resulting from
Operations 35,564 95,445 16,145,969 (15,230,329)
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS FROM
Net investment income (35,564) (95,445) (1,066,311) (1,156,568)
Net realized gain from investment transactions -- -- -- --
------------- ------------- ------------- -------------
Total Dividends and Distributions (35,564) (95,445) (1,066,311) (1,156,568)
CAPITAL SHARE TRANSACTIONS (1,421,989) (1,170,621) 1,053,814 961,297
------------- ------------- ------------- -------------
Total Increase (Decrease) in Net Assets (1,421,989) (1,170,621) 16,133,472 (15,425,600)
NET ASSETS
Beginning of year 8,149,541 9,320,162 63,698,618 79,124,218
------------- ------------- ------------- -------------
End of year (including undistributed net
investment income as set forth below) $ 6,727,552 $ 8,149,541 $ 79,832,090 $ 63,698,618
============= ============= ============= =============
Undistributed Net Investment Income $ -- $ -- $ 1,194,008 $ 1,066,311
============= ============= ============= =============
</Table>
17
<Page>
EQUITRUST VARIABLE INSURANCE SERIES FUND
SCHEDULE OF INVESTMENTS
VALUE GROWTH PORTFOLIO
DECEMBER 31, 2003
<Table>
<Caption>
SHARES
HELD VALUE
------------- -------------
COMMON STOCKS (86.73%)
BUSINESS SERVICES (3.38%)
Affiliated Computer Services, Inc.-Class A 5,800(1) $ 315,868
Computer Associates International, Inc. 12,055 329,584
Compuware Corp. 16,050(1) 96,942
Microsoft Corp. 14,800 407,592
Oracle Corp. 12,300(1) 162,360
Symantec Corp. 13,600(1) 471,240
-------------
1,783,586
CHEMICALS AND ALLIED PRODUCTS (9.96%)
Abbott Laboratories 8,000 372,800
Bristol-Myers Squibb Co. 12,540 358,644
E.I. du Pont de Nemours & Co. 6,400 293,696
GlaxoSmithKline plc 5,500 256,410
IVAX Corp. 17,800(1) 425,064
Johnson & Johnson 8,200 423,612
KV Pharmaceutical Co.-Class A 19,200(1) 489,600
Lyondell Chemical Co. 17,000 288,150
Merck & Co., Inc. 9,764 451,097
Mylan Laboratories, Inc. 21,825 551,299
Olin Corp. 6,400 128,384
Pfizer, Inc. 19,449 687,133
SurModics, Inc. 11,992(1) 286,609
Wyeth 5,835 247,696
-------------
5,260,194
COMMUNICATIONS (1.96%)
ADC Telecommunications, Inc. 67,700(1) 201,069
Centurytel, Inc. 13,000 424,060
Comcast Corp.-Class A 3,235(1) 106,334
Nextel Communications, Inc. 6,600(1) 185,196
SBC Communications, Inc. 4,500 117,315
-------------
1,033,974
DEPOSITORY INSTITUTIONS (7.99%)
AmSouth Bancorporation 17,100 418,950
Associated Banc-Corp 8,627 367,942
Astoria Financial Corp. 7,700 286,440
Citigroup, Inc. 7,430 360,652
FleetBoston Financial Corp. 18,760 818,874
National City Corp. 6,830 231,810
U. S. Bancorp 34,796 1,036,225
Wachovia Corp. 7,650 356,414
Wilmington Trust Corp. 9,500 342,000
-------------
4,219,307
EATING & DRINKING PLACES (0.62%)
Wendy's International, Inc. 8,400 329,616
</Table>
18
<Page>
<Table>
<Caption>
SHARES
HELD VALUE
------------- -------------
ELECTRIC, GAS AND SANITARY SERVICES (5.27%)
Alliant Energy Corp. 8,660 $ 215,634
Atmos Energy Corp. 17,012 413,392
Black Hills Corp. 7,520 224,322
Nisource, Inc. 24,800 544,112
Northwest Natural Gas Co. 12,500 384,375
Pepco Holdings, Inc. 16,200 316,548
Puget Energy, Inc. 14,330 340,624
Xcel Energy, Inc. 20,305 344,779
-------------
2,783,786
ELECTRONIC AND OTHER ELECTRICAL EQUIPMENT (2.21%)
Acuity Brands, Inc. 18,500 477,300
Adaptec, Inc. 23,150(1) 204,415
ECI Telecom, Ltd. 10,000(1) 57,300
Electronic Data Systems Corp. 5,745 140,982
Intel Corp. 8,900 286,580
-------------
1,166,577
ENGINEERING & MANAGEMENT SERVICES (0.16%)
Affymetrix, Inc. 3,400(1) 83,674
FABRICATED METAL PRODUCTS (1.12%)
Cooper Industries, Ltd. 4,738 274,472
Shaw Group, Inc. 10,400(1) 141,648
Stanley Works (The) 4,600 174,202
-------------
590,322
FOOD AND KINDRED PRODUCTS (5.13%)
ConAgra Foods, Inc. 46,616 1,230,196
Sara Lee Corp. 23,400 508,014
Sensient Technologies Corp. 49,075 970,213
-------------
2,708,423
FOOD STORES (2.33%)
7-Eleven, Inc. 35,930(1) 576,677
Kroger Co. 10,900(1) 201,759
Safeway, Inc. 20,730(1) 454,194
-------------
1,232,630
GENERAL MERCHANDISE STORES (0.92%)
Federated Department Stores, Inc. 6,008 283,157
Target Corp. 5,300 203,520
-------------
486,677
HEALTH SERVICES (5.50%)
Laboratory Corp. of America Holdings 18,500(1) 683,575
Province Healthcare Co 35,900(1) 574,400
Schering-Plough Corp. 23,200 403,448
Select Medical Corp. 19,200 312,576
Taro Pharmaceutical Industries, Ltd. 6,600(1) 425,700
Universal Health Services, Inc.-Class B 9,420 506,042
-------------
2,905,741
</Table>
19
<Page>
<Table>
<Caption>
SHARES
HELD VALUE
------------- -------------
HOLDING AND OTHER INVESTMENT OFFICES (2.96%)
Highwoods Properties, Inc. 17,500 $ 444,500
MBIA, Inc. 11,400 675,222
Reckson Assoc. Realty Corp.-Class A 18,250 443,475
-------------
1,563,197
INDUSTRIAL MACHINERY AND EQUIPMENT (2.64%)
Cisco Systems, Inc. 6,500(1) 157,885
EMC Corp. 22,500(1) 290,700
Hewlett-Packard Co. 6,000 137,820
Ingersoll-Rand Co. Ltd.-Class A 9,950 675,406
Solectron Corp 22,500(1) 132,975
-------------
1,394,786
INSTRUMENTS AND RELATED PRODUCTS (3.98%)
Agilent Technologies, Inc. 7,000(1) 204,680
Becton Dickinson & Co. 22,800 937,992
JDS Uniphase Corp. 16,400(1) 59,860
Pall Corp. 25,980 697,043
Perkinelmer, Inc. 11,900 203,133
-------------
2,102,708
INSURANCE CARRIERS (4.12%)
Allstate Corp. 15,200 653,904
American International Group, Inc. 7,450 493,786
Protective Life Corp. 9,300 314,712
Safeco Corp. 8,800 342,584
WellPoint Health Networks Inc. 3,800(1) 368,562
-------------
2,173,548
METAL MINING (0.86%)
Barrick Gold Corp. 20,000 454,200
MISCELLANEOUS MANUFACTURING INDUSTRIES (0.80%)
Emerson Electric Co. 2,300 148,925
Hasbro, Inc. 12,900 274,512
-------------
423,437
MOTION PICTURES (0.33%)
Time Warner, Inc. 9,600(1) 172,704
NONDEPOSITORY INSTITUTIONS (0.72%)
Federal Home Loan Mortgage Corp. 6,500 379,080
OIL AND GAS EXTRACTION (4.12%)
Burlington Resources, Inc. 10,000 553,800
EOG Resources, Inc. 5,800 267,786
Occidental Petroleum Co. 8,600 363,264
Offshore Logistics, Inc. 18,500(1) 453,620
Rowan Companies, Inc. 16,900(1) 391,573
Veritas DGC, Inc. 13,800(1) 144,624
-------------
2,174,667
</Table>
20
<Page>
<Table>
<Caption>
SHARES
HELD VALUE
------------- -------------
PAPER AND ALLIED PRODUCTS (1.93%)
Abitibi Consolidated, Inc. 92,600 $ 750,986
Sonoco Products Co. 10,900 268,358
-------------
1,019,344
PETROLEUM AND COAL PRODUCTS (4.70%)
BP Amoco 6,000 296,100
ChevronTexaco Corp. 7,050 609,050
ConocoPhillips 16,833 1,103,740
Marathon Oil Corp. 14,400 476,496
-------------
2,485,386
PRIMARY METAL INDUSTRIES (0.66%)
Northwest Pipe Co. 26,100(1) 347,652
PRINTING AND PUBLISHING (2.64%)
Belo Corp. 26,400 748,176
Mail-Well, Inc. 79,200(1) 365,112
R.R. Donnelley & Sons Co. 9,400 283,410
-------------
1,396,698
TOBACCO PRODUCTS (1.45%)
Altria Group, Inc. 14,100 767,322
TRANSPORTATION -- BY AIR (0.74%)
Petroleum Helicopters, Inc. (Non-Voting) 14,490(1) 391,230
TRANSPORTATION EQUIPMENT (4.07%)
Federal Signal Corp. 13,300 233,016
Genuine Parts Co. 7,800 258,960
Honeywell International, Inc. 23,500 785,605
ITT Industries, Inc. 4,185 310,569
SPX Corp. 9,514(1) 559,518
-------------
2,147,668
WHOLESALE TRADE -- DURABLE GOODS (0.64%)
Apogent Technologies, Inc. 14,600(1) 336,384
WHOLESALE TRADE -- NONDURABLE GOODS (1.05%)
Dean Foods Co. 16,986(1) 558,330
MISCELLANEOUS EQUITIES (1.77%)
H & Q Life Sciences Investors 22,352 346,677
NASDAQ-100 Trust 16,100 586,362
-------------
933,039
-------------
Total Common Stocks 45,805,887
</Table>
21
<Page>
<Table>
<Caption>
SHARES
HELD VALUE
------------- -------------
SHORT-TERM INVESTMENTS (13.15%)
MONEY MARKET MUTUAL FUND (1.03%)
Blackrock Provident Institutional Funds, T-Fund Portfolio 545,081 $ 545,081
<Caption>
PRINCIPAL
AMOUNT
-------------
COMMERCIAL PAPER (3.36%)
NONDEPOSITORY INSTITUTIONS
American General Finance Corp., 1.06%, due 01/21/04 $ 775,000 775,000
General Electric Capital Corp., 1.07%, due 01/16/04 600,000 600,000
General Electric Capital Corp., 1.07%, due 01/27/04 400,000 400,000
-------------
1,775,000
UNITED STATES GOVERNMENT AGENCIES (8.76%)
Federal Home Loan Bank, due 01/02/04 700,000 699,980
Federal Home Loan Bank, due 01/09/04 350,000 349,921
Federal Home Loan Mortgage Corp., due 01/06/04 500,000 499,929
Federal National Mortgage Assoc., due 01/14/04 550,000 549,793
Federal National Mortgage Assoc., due 02/04/04 1,100,000 1,098,950
Federal National Mortgage Assoc., due 02/05/04 1,425,000 1,423,614
-------------
4,622,187
-------------
Total Short-Term Investments 6,942,268
-------------
Total Investments (99.88%) 52,748,155
OTHER ASSETS LESS LIABILITIES (0.12%)
Cash, receivables, prepaid expense and other assets, less
liabilities 64,252
-------------
Total Net Assets (100.00%) $ 52,812,407
=============
</Table>
(1) Non-income producing securities.
SEE ACCOMPANYING NOTES.
22
<Page>
EQUITRUST VARIABLE INSURANCE SERIES FUND
SCHEDULE OF INVESTMENTS
HIGH GRADE BOND PORTFOLIO
DECEMBER 31, 2003
<Table>
<Caption>
SHARES
HELD VALUE
------------- -------------
PREFERRED STOCKS (2.50%)
DEPOSITORY INSTITUTIONS (1.70%)
Chase Capital V, 7.03%, due 03/31/28 18,000 $ 452,700
HOLDING AND OTHER INVESTMENT OFFICES (0.80%)
New Plan Excel Realty Trust-Series D, 7.80% 4,000 215,000
-------------
Total Preferred Stocks 667,700
<Caption>
PRINCIPAL
AMOUNT
-------------
CORPORATE BONDS (29.70%)
ELECTRIC, GAS AND SANITARY SERVICES (7.42%)
Maritime & NE Pipeline, 144A, 7.70%, due 11/30/19 $ 700,000(1) 822,758
Oglethorpe Power (OPC Scherer), 6.974%, due 06/30/11 271,000 293,965
PacifiCorp, 6.90%, due 11/15/11 750,000 860,512
-------------
1,977,235
FOOD STORES (2.45%)
Ahold Finance USA, Inc., 8.25%, due 07/15/10 600,000 652,500
GENERAL MERCHANDISE STORES (0.99%)
J.C. Penney & Co., 8.25%, due 08/15/22 254,000 264,160
HOLDING AND OTHER INVESTMENT OFFICES (3.18%)
Meditrust, 7.60%, due 09/13/05 150,000 155,625
Security Capital Pacific, 7.20%, due 03/01/13 275,000 305,231
Washington REIT, 6.898%, due 02/15/18 350,000 387,209
-------------
848,065
INSURANCE CARRIERS (3.30%)
SunAmerica, 8.125%, due 04/28/23 700,000 878,689
TEXTILE MILL PRODUCTS (0.94%)
Unifi, 6.50%, due 02/01/08 280,000 249,900
TOBACCO PRODUCTS (3.22%)
UST, Inc., 7.25%, due 06/01/09 750,000 858,593
TRANSPORTATION -- BY AIR (7.55%)
Continental Airlines, Inc., 6.545%, due 08/02/20 433,980 435,065
Federal Express, 7.50%, due 01/15/18 207,691 241,131
Northwest Airlines, 7.575%, due 03/01/19 706,136 732,616
US Air, Inc., 8.36%, due 01/20/19 609,908 605,334
-------------
2,014,146
</Table>
23
<Page>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
------------- -------------
TRANSPORTATION EQUIPMENT (0.65%)
Ford Motor Co., 9.215%, due 09/15/21 $ 150,000 $ 172,101
-------------
Total Corporate Bonds 7,915,389
MORTGAGE-BACKED SECURITIES (40.36%)
FEDERAL NATIONAL MORTGAGE ASSOCIATION
(FNMA) (0.01%)
Pool # 50276, 9.50%, due 02/01/20 2,785 3,119
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
(GNMA) (40.35%)
Pool # 1512, 7.50%, due 12/20/23 59,708 63,963
Pool # 2631, 7.00%, due 08/01/28 102,037 108,636
Pool # 2658, 6.50%, due 10/01/28 159,613 168,259
Pool # 2701, 6.50%, due 01/20/29 191,124 201,390
Pool # 2796, 7.00%, due 08/01/29 178,283 189,634
Pool # 3039, 6.50%, due 02/01/31 77,098 81,195
Pool # 3040, 7.00%, due 02/01/31 147,766 157,115
Pool # 3188, 6.50%, due 02/20/32 484,277 509,752
Pool # 3239, 6.50%, due 05/01/32 424,796 447,142
Pool # 3261, 6.50%, due 07/20/32 826,238 869,703
Pool # 3320, 5.50%, due 12/01/32 1,948,119 1,977,774
Pool # 3333, 5.50%, due 01/01/33 1,580,549 1,604,558
Pool # 3375, 5.50%, due 04/01/33 250,799 254,609
Pool # 3390, 5.50%, due 05/01/33 1,113,046 1,129,953
Pool # 3403, 5.50%, due 06/01/33 1,875,431 1,903,918
Pool # 3458, 5.00%, due 10/01/33 995,164 985,262
Pool # 22630, 6.50%, due 08/01/28 87,999 92,765
Pool # 276337, 10.00%, due 08/15/19 10,982 12,381
-------------
10,758,009
-------------
Total Mortgage-Backed Securities 10,761,128
UNITED STATES TREASURY OBLIGATION (1.56%)
U.S. Treasury Note, 7.25%, due 08/15/04 400,000 415,156
SHORT-TERM INVESTMENTS (24.79%)
COMMERCIAL PAPER (7.59%)
NONDEPOSITORY INSTITUTIONS (4.78%)
American General Finance Corp., 1.05%, due 01/13/04 650,000 650,000
General Electric Capital Corp., 1.09%, due 01/27/04 625,000 625,000
-------------
1,275,000
PETROLEUM AND COAL PRODUCTS (2.81%)
ChevronTexaco Corp., 1.02%, due 01/30/04 750,000 750,000
-------------
Total Commercial Paper 2,025,000
</Table>
24
<Page>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
------------- -------------
UNITED STATES GOVERNMENT AGENCIES (16.31%)
Federal Home Loan Bank, due 01/02/04 $ 600,000 $ 599,983
Federal Home Loan Bank, due 01/09/04 400,000 399,910
Federal Home Loan Bank, due 01/21/04 550,000 549,688
Federal Home Loan Bank, due 01/30/04 700,000 699,430
Federal Home Loan Bank, due 02/06/04 650,000 649,350
Federal Home Loan Mortgage Corp., due 01/06/04 550,000 549,922
Federal National Mortgage Assoc., due 01/16/04 550,000 549,759
Federal National Mortgage Assoc., due 02/04/04 350,000 349,669
-------------
4,347,711
<Caption>
SHARES
HELD
-------------
MONEY MARKET MUTUAL FUND (0.89%)
Blackrock Provident Institutional Funds, T-Fund Portfolio 236,775 236,775
-------------
Total Short-Term Investments 6,609,486
-------------
Total Investments (98.91%) 26,368,859
OTHER ASSETS LESS LIABILITIES (1.09%)
Cash, receivables, prepaid expense and other assets, less
liabilities 290,373
-------------
Total Net Assets (100.00%) $ 26,659,232
=============
</Table>
(1) Maritime & NE Pipeline, 144A, 7.70%, due 11/30/19. Each unit was purchased
at a price of 104.481 on 04/20/2001. As of 12/31/2003, the carrying value of
each unit was 117.537 and represented 3.09% of total net assets.
SEE ACCOMPANYING NOTES.
25
<Page>
EQUITRUST VARIABLE INSURANCE SERIES FUND
SCHEDULE OF INVESTMENTS
STRATEGIC YIELD PORTFOLIO
DECEMBER 31, 2003
<Table>
<Caption>
SHARES
HELD VALUE
------------- -------------
PREFERRED STOCKS (5.07%)
HOLDING AND OTHER INVESTMENT OFFICES (1.47%)
New Plan Excel Realty Trust - Series D, 7.80% 7,000 $ 376,250
METAL MINING (3.60%)
Cameco Corp., 8.75%, due 09/30/47 36,000 916,560
-------------
Total Preferred Stocks 1,292,810
<Caption>
PRINCIPAL
AMOUNT
-------------
CORPORATE BONDS (74.06%)
CHEMICALS AND ALLIED PRODUCTS (9.65%)
Lyondell Chemical Co., 9.625%, due 05/01/07 $ 900,000 954,000
Nova Chemicals, Ltd., 7.875%, due 09/15/25 800,000 811,592
Polyone Corp., 8.875%, due 05/01/12 750,000 693,750
-------------
2,459,342
COMMUNICATIONS (2.15%)
Telephone & Data Systems, Inc., 7.00%, due 08/01/06 500,000 547,300
ELECTRIC, GAS AND SANITARY SERVICES (14.31%)
Alliant Energy Resources, Inc., 9.75%, due 01/15/13 1,000,000 1,286,179
Allied Waste North America, 10.00%, due 08/01/09 800,000 868,000
ESI Tractebel, 7.99%, due 12/30/11 306,340 324,721
Semco Energy, Inc., 7.125%, due 05/15/08 900,000 947,070
Waterford 3 Nuclear Power Plant, 8.09%, due 01/02/17 213,225 222,001
-------------
3,647,971
FOOD STORES (0.03%)
Penn Traffic Co., 11.00%, due 06/29/09 47,850(1) 8,852
GENERAL MERCHANDISE STORES (1.63%)
DR Structured Finance, 8.35%, due 02/15/04 376,794(1) 151,188
J.C. Penney & Co., 8.25%, due 08/15/22 255,000 265,200
-------------
416,388
HOLDING AND OTHER INVESTMENT OFFICES (8.63%)
Bradley Operating, L.P., 7.20%, due 01/15/08 450,000 441,230
Federal Realty Investment Trust, 7.48%, due 08/15/26 600,000 652,942
iStar Financial Inc., 7.00%, due 03/15/08 300,000 325,500
Price Development Company, 7.29%, due 03/11/08 . 450,000 463,721
Trinet Corp. Realty, 7.70%, due 07/15/17 300,000 317,850
-------------
2,201,243
INDUSTRIAL MACHINERY AND EQUIPMENT (3.55%)
AGCO Corp., 8.50%, due 03/15/06 900,000 904,500
</Table>
26
<Page>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
------------- -------------
INSURANCE CARRIERS (6.62%)
Markel Capital Trust, 8.71%, due 01/01/46 $ 1,000,000 $ 1,054,940
PXRE Capital Trust, 8.85%, due 02/01/27 670,000 633,150
-------------
1,688,090
LUMBER AND WOOD PRODUCTS (1.54%)
Georgia-Pacific Corp., 9.875%, due 11/01/21 225,000 236,250
Georgia-Pacific Corp., 9.125%, due 07/01/22 150,000 156,000
-------------
392,250
METAL MINING (2.95%)
Teck Cominco Ltd., 3.75%, due 07/15/06 800,000 753,600
PAPER AND ALLIED PRODUCTS (8.14%)
Bowater Inc., 9.375%, due 12/15/21 900,000 995,490
Potlatch Corp., 12.50%, due 12/01/09 900,000 1,079,505
-------------
2,074,995
TRANSPORTATION -- BY AIR (11.28%)
Continental Airlines, Inc., 7.461%, due 04/01/15 1,288,595 1,267,655
Northwest Airlines, 7.575%, due 03/01/19 207,427 215,206
United Airlines, 7.783%, due 01/01/14 1,692,636 1,394,309
-------------
2,877,170
WATER TRANSPORTATION (3.58%)
Windsor Petroleum Transportation, 144A, 7.84%,
due 01/15/21 1,000,000(2) 911,490
-------------
Total Corporate Bonds 18,883,191
SHORT-TERM INVESTMENTS (18.95%)
COMMERCIAL PAPER (3.33%)
NONDEPOSITORY INSTITUTIONS
ChevronTexaco Corp., 1.02%, due 01/15/04 500,000 500,000
General Electric Capital Corp., 1.07%, due 01/13/04 350,000 350,000
-------------
850,000
UNITED STATES GOVERNMENT AGENCIES (13.93%)
Federal Home Loan Bank, due 01/02/04 400,000 399,989
Federal Home Loan Bank, due 01/07/04 350,000 349,940
Federal Home Loan Bank, due 01/23/04 475,000 474,701
Federal Home Loan Bank, due 02/13/04 550,000 549,323
Federal Home Loan Mortgage Corp., due 01/27/04 600,000 599,549
Federal National Mortgage Assoc., due 02/09/04 1,180,000 1,178,709
-------------
3,552,211
<Caption>
SHARES
HELD
-------------
MONEY MARKET MUTUAL FUND (1.69%)
Blackrock Provident Institutional Funds, T-Fund Portfolio 429,683 429,683
-------------
Total Short-Term Investments 4,831,894
-------------
Total Investments (98.08%) 25,007,895
</Table>
27
<Page>
<Table>
<Caption>
VALUE
-------------
OTHER ASSETS LESS LIABILITIES (1.92%)
Cash, receivables, prepaid expense and other assets, less
liabilities $ 490,511
-------------
Total Net Assets (100.00%) $ 25,498,406
=============
</Table>
(1) Partial or no interest was received from this security on its last scheduled
interest payment date.
(2) Windsor Petroleum Transportation, 144A, 7.84%, due 01/15/21. Each unit was
purchased at a price of 80.500 on 08/26/1999. As of 12/31/03, the carrying
value of each unit was 91.149 and represented 3.57% of total net assets.
SEE ACCOMPANYING NOTES.
28
<Page>
EQUITRUST VARIABLE INSURANCE SERIES FUND
SCHEDULE OF INVESTMENTS
MANAGED PORTFOLIO
DECEMBER 31, 2003
<Table>
<Caption>
SHARES
HELD VALUE
------------- -------------
COMMON STOCKS (65.53%)
CHEMICALS AND ALLIED PRODUCTS (7.03%)
Bristol-Myers Squibb Co. 12,300 $ 351,780
GlaxoSmithKline plc 4,700 219,114
IVAX Corp. 21,500(1) 513,420
Johnson & Johnson 7,200 371,952
KV Pharmaceutical Co.-Class A 12,600(1) 321,300
Lyondell Chemical Co. 34,900 591,555
Merck & Co., Inc. 15,158 700,300
Mylan Laboratories, Inc. 26,325 664,969
Olin Corp. 17,100 343,026
Pfizer, Inc. 17,310 611,563
-------------
4,688,979
COMMUNICATIONS (1.01%)
Centurytel, Inc. 16,740 546,059
Comcast Corp.-Class A 3,930(1) 129,179
-------------
675,238
DEPOSITORY INSTITUTIONS (7.65%)
AmSouth Bancorporation 24,800 607,600
Associated Banc Corp. 15,222 649,218
Astoria Financial Corp. 10,100 375,720
FleetBoston Financial Corp. 20,055 875,401
National City Corp. 8,695 295,108
U.S. Bancorp 49,082 1,461,662
Wachovia Corp. 8,328 388,001
Wilmington Trust Corp. 12,500 450,000
-------------
5,102,710
ELECTRIC, GAS AND SANITARY SERVICES (8.03%)
Alliant Energy Corp. 22,115 550,664
Atmos Energy Corp. 38,252 929,524
Black Hills Corp. 9,655 288,009
Nisource, Inc. 32,000 702,080
Northwest Natural Gas Co. 15,800 485,850
Pepco Holdings, Inc. 40,600 793,324
Puget Energy, Inc. 32,360 769,197
Xcel Energy, Inc. 49,290 836,944
-------------
5,355,592
ELECTRONIC AND OTHER ELECTRIC EQUIPMENT (1.58%)
Acuity Brands, Inc. 33,850 873,330
Electronic Data Systems Corp. 7,500 184,050
-------------
1,057,380
</Table>
29
<Page>
<Table>
<Caption>
SHARES
HELD VALUE
------------- -------------
FABRICATED METAL PRODUCTS (1.19%)
Cooper Industries, Ltd. 5,521 $ 319,832
Stanley Works (The) 12,500 473,375
-------------
793,207
FOOD AND KINDRED PRODUCTS (4.60%)
ConAgra Foods, Inc. 49,530 1,307,097
Sara Lee Corp. 24,100 523,211
Sensient Technologies Corp. 62,845 1,242,446
-------------
3,072,754
FOOD STORES (1.09%)
Kroger Co. 14,350(1) 265,619
Safeway, Inc. 21,080(1) 461,863
-------------
727,482
GENERAL MERCHANDISE STORES (0.54%)
Federated Department Stores, Inc. 7,681 362,006
HEALTH SERVICES (2.74%)
Province Healthcare Co. 26,400(1) 422,400
Schering-Plough Corp. 15,700 273,023
Select Medical Corp. 24,600 400,488
Taro Pharmaceutical Industries, Ltd. 6,030(1) 388,935
Universal Health Services, Inc.-Class B 6,350 341,122
-------------
1,825,968
HOLDING AND OTHER INVESTMENT OFFICES (2.39%)
Highwoods Properties, Inc. 21,500 546,100
MBIA, Inc. 7,781 460,869
Reckson Associates Realty Corp.-Class A 24,260 589,518
-------------
1,596,487
INDUSTRIAL MACHINERY & EQUIPMENT (1.28%)
Hewlett-Packard Co. 6,900 158,493
Ingersoll-Rand Co. Ltd.-Class A 10,222 693,869
-------------
852,362
INSTRUMENTS AND RELATED PRODUCTS (2.48%)
Becton Dickinson & Co. 23,500 966,790
Pall Corp. 25,750 690,873
-------------
1,657,663
INSURANCE CARRIERS (2.65%)
Allstate Corp. 15,300 658,206
Protective Life 6,200 209,808
Safeco Corp. 11,200 436,016
WellPoint Health Networks Inc. 4,800(1) 465,552
-------------
1,769,582
METAL MINING (1.40%)
Barrick Gold Corp. 41,200 935,652
</Table>
30
<Page>
<Table>
<Caption>
SHARES
HELD VALUE
------------- -------------
MISCELLANEOUS MANUFACTURING INDUSTRIES (0.08%)
Emerson Electric Co. 800 $ 51,800
OIL AND GAS EXTRACTION (3.82%)
Burlington Resources, Inc. 7,500 415,350
Occidental Petroleum Co. 16,500 696,960
Offshore Logistics 35,850(1) 879,042
Rowan Companies, Inc. 16,700(1) 386,939
Veritas DGC, Inc. 16,400(1) 171,872
-------------
2,550,163
PAPER AND ALLIED PRODUCTS (2.99%)
Abitibi Consolidated, Inc. 133,500 1,082,685
Glatfelter 31,300 389,685
Sonoco Products Co. 21,200 521,944
-------------
1,994,314
PETROLEUM AND COAL PRODUCTS (3.74%)
BP Amoco 8,100 399,735
ConocoPhillips 21,012 1,377,756
Marathon Oil Corp. 21,800 721,362
-------------
2,498,853
PRIMARY METAL INDUSTRIES (0.11%)
Wolverine Tube, Inc. 11,400(1) 71,820
PRINTING AND PUBLISHING (2.08%)
Belo Corp.-Series A 29,600 838,864
R.R. Donnelley & Sons Co. 18,100 545,715
-------------
1,384,579
TOBACCO PRODUCTS (1.25%)
Altria Group, Inc. 15,400 838,068
TRANSPORTATION EQUIPMENT (4.62%)
Federal Signal Corp. 36,400 637,728
Genuine Parts Co. 14,700 488,040
Honeywell International, Inc. 27,400 915,982
ITT Industries, Inc. 5,095 378,100
SPX Corp. 11,228(1) 660,319
-------------
3,080,169
WHOLESALE TRADE -- DURABLE GOODS (0.24%)
Apogent Technologies, Inc. 7,000(1) 161,280
WHOLESALE TRADE -- NONDURABLE GOODS (0.94%)
Dean Foods Co. 19,069(1) 626,798
-------------
Total Common Stocks 43,730,906
</Table>
31
<Page>
<Table>
<Caption>
SHARES
HELD VALUE
------------- -------------
PREFERRED STOCKS (3.11%)
DEPOSITORY INSTITUTIONS (0.99%)
Taylor Capital Group, Inc.-Series A, 9.00%, 26,000 $ 657,314
PETROLEUM AND COAL PRODUCTS (2.12%)
Nexen, Inc.-Series 1, 9.375%, due 03/31/48 56,000 1,416,240
-------------
Total Preferred Stocks 2,073,554
<Caption>
PRINCIPAL
AMOUNT
-------------
CORPORATE BONDS (2.12%)
METAL MINING
Teck Cominco Ltd., 3.75%, due 07/15/06 $ 1,500,000 1,413,000
MORTGAGE-BACKED SECURITIES (8.58%)
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION (GNMA)
Pool # 2796, 7.00%, due 08/01/29 267,425 284,450
Pool # 3040, 7.00%, due 02/01/31 184,708 196,394
Pool # 3188, 6.50%, due 02/20/32 484,277 509,752
Pool # 3239, 6.50%, due 05/01/32 711,438 748,863
Pool # 3333, 5.50%, due 01/01/33 691,491 701,994
Pool # 3403, 5.50%, due 06/01/33 591,200 600,180
Pool # 3442, 5.00%, due 09/01/33 1,488,599 1,473,787
Pool # 3459, 5.50%, due 10/01/33 1,193,039 1,211,161
-------------
Total Mortgage-Backed Securities 5,726,581
SHORT-TERM INVESTMENTS (20.37%)
COMMERCIAL PAPER (7.08%)
NONDEPOSITORY INSTITUTIONS ( 5.13%)
American General Finance Corp., 1.05%, due 01/26/04 525,000 525,000
American General Finance Corp., 1.04%, due 02/06/04 675,000 675,000
General Electric Capital Corp., 1.09%, due 01/06/04 500,000 500,000
General Electric Capital Corp., 1.09%, due 01/21/04 875,000 875,000
General Electric Capital Corp., 1.05%, due 02/10/04 850,000 850,000
-------------
3,425,000
PETROLEUM AND COAL PRODUCTS (1.95%)
ChevronTexaco Corp., 1.02%, due 01/13/04 600,000 600,000
ChevronTexaco Corp., 1.02%, due 01/29/04 700,000 700,000
-------------
1,300,000
-------------
Total Commercial Paper 4,725,000
</Table>
32
<Page>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
------------- -------------
UNITED STATES GOVERNMENT AGENCIES (11.92%)
Federal Home Loan Bank, due 01/09/04 $ 750,000 $ 749,830
Federal Home Loan Bank, due 01/23/04 300,000 299,813
Federal Home Loan Bank, due 02/13/04 600,000 599,261
Federal Home Loan Bank, due 02/18/04 600,000 599,232
Federal Home Loan Bank, due 02/25/04 900,000 898,569
Federal Home Loan Mortgage Corp., due 03/01/04 750,000 748,699
Federal National Mortgage Assoc., due 01/02/04 1,100,000 1,099,968
Federal National Mortgage Assoc., due 01/16/04 900,000 899,606
Federal National Mortgage Assoc., due 02/04/04 700,000 699,308
Federal National Mortgage Assoc., due 02/05/04 1,360,000 1,358,677
-------------
Total United States Government Agencies 7,952,963
<Caption>
SHARES
HELD
---------------
MONEY MARKET MUTUAL FUND (1.37%)
Blackrock Provident Institutional Funds, T-Fund Portfolio 915,272 915,272
-------------
Total Short-Term Investments 13,593,235
-------------
Total Investments (99.71%) 66,537,276
OTHER ASSETS LESS LIABILITIES (0.29%)
Cash, receivables, prepaid expense and other assets, less
liabilities 195,497
-------------
Total Net Assets (100.00%) $ 66,732,773
=============
</Table>
(1) Non-income producing securities.
SEE ACCOMPANYING NOTES.
33
<Page>
EQUITRUST VARIABLE INSURANCE SERIES FUND
SCHEDULE OF INVESTMENTS
MONEY MARKET PORTFOLIO
DECEMBER 31, 2003
<Table>
<Caption>
ANNUALIZED
YIELD ON
PURCHASE PRINCIPAL
DATE AMOUNT VALUE
---------- ---------- ------------
SHORT-TERM INVESTMENTS (97.97%)
COMMERCIAL PAPER (15.83%)
DEPOSITORY INSTITUTIONS (4.09%)
State Street Corp., due 01/14/04 1.057% $ 275,000 $ 274,897
NONDEPOSITORY INSTITUTIONS (8.77%)
American General Finance Corp., 1.05%, due 01/12/04 1.052 300,000 300,000
General Electric Capital Corp., 1.09%, due 02/17/04 1.093 140,000 140,000
General Electric Capital Corp., 1.09%, due 03/01/04 1.093 150,000 150,000
------------
590,000
PETROLEUM AND COAL PRODUCTS (2.97%)
ChevronTexaco Corp., 1.02%, due 01/06/04 1.022 200,000 200,000
------------
Total Commercial Paper 1,064,897
UNITED STATES GOVERNMENT AGENCIES (82.14%)
Federal Home Loan Bank, due 01/02/04 1.036 200,000 199,994
Federal Home Loan Bank, due 01/07/04 1.036 200,000 199,966
Federal Home Loan Bank, due 01/09/04 1.036 200,000 199,955
Federal Home Loan Bank, due 01/16/04 1.037 200,000 199,915
Federal Home Loan Bank, due 01/23/04 1.037 150,000 149,906
Federal Home Loan Bank, due 01/26/04 1.046 200,000 199,857
Federal Home Loan Bank, due 01/28/04 1.067 142,000 141,888
Federal Home Loan Bank, due 01/30/04 1.027 150,000 149,878
Federal Home Loan Bank, due 02/06/04 1.026 150,000 149,848
Federal Home Loan Bank, due 02/13/04 1.037 100,000 99,878
Federal Home Loan Bank, due 02/20/04 0.975 275,000 274,633
Federal Home Loan Bank, due 02/25/04 1.057 200,000 199,682
Federal Home Loan Bank, due 02/27/04 0.975 275,000 274,582
Federal Home Loan Mortgage Corp., due 01/15/04 1.036 175,000 174,930
Federal Home Loan Mortgage Corp., due 01/20/04 1.056 150,000 149,918
Federal Home Loan Mortgage Corp., due 01/21/04 1.027 250,000 249,859
Federal Home Loan Mortgage Corp., due 01/27/04 1.037 175,000 174,871
Federal Home Loan Mortgage Corp., due 02/03/04 1.015 150,000 149,862
Federal Home Loan Mortgage Corp., due 03/12/04 1.042 125,000 124,747
Federal Home Loan Mortgage Corp., due 03/15/04 1.016 150,000 149,692
Federal Home Loan Mortgage Corp., due 03/18/04 1.042 150,000 149,671
Federal National Mortgage Assoc., due 01/29/04 1.046 275,000 274,780
Federal National Mortgage Assoc., due 02/04/04 1.062 200,000 199,802
Federal National Mortgage Assoc., due 02/05/04 1.015 225,000 224,781
Federal National Mortgage Assoc., due 02/09/04 1.025 240,000 239,737
Federal National Mortgage Assoc., due 02/11/04 1.062 200,000 199,762
Federal National Mortgage Assoc., due 03/03/04 1.078 275,000 274,498
Federal National Mortgage Assoc., due 03/05/04 1.031 150,000 149,729
Federal National Mortgage Assoc., due 03/17/04 1.042 200,000 199,567
------------
5,526,188
------------
Total Short-Term Investments 6,591,085
</Table>
34
<Page>
<Table>
<Caption>
VALUE
------------
OTHER ASSETS LESS LIABILITIES (2.03%)
Cash, receivables, prepaid expense and other assets, less
liabilities $ 136,467
------------
Total Net Assets (100.00%) $ 6,727,552
============
</Table>
SEE ACCOMPANYING NOTES.
35
<Page>
EQUITRUST VARIABLE INSURANCE SERIES FUND
SCHEDULE OF INVESTMENTS
BLUE CHIP PORTFOLIO
December 31, 2003
<Table>
<Caption>
SHARES
HELD VALUE
------------- -------------
COMMON STOCKS (93.76%)
BUSINESS SERVICES (3.88%)
Microsoft Corp. 84,480 $ 2,326,579
Oracle Corp. 58,314(1) 769,745
-------------
3,096,324
CHEMICALS AND ALLIED PRODUCTS (15.94%)
Abbott Laboratories 25,260 1,177,116
Amgen, Inc. 18,200(1) 1,124,760
Bristol-Myers Squibb Co. 36,063 1,031,402
Dow Chemical Co. 10,720 445,630
E.I. du Pont de Nemours & Co. 16,081 737,957
Johnson & Johnson 43,580 2,251,343
Eli Lilly & Co. 18,022 1,267,487
Merck & Co., Inc. 28,928 1,336,474
Pfizer, Inc. 36,882 1,303,041
Procter & Gamble Co. 20,521 2,049,637
-------------
12,724,847
COMMUNICATIONS (5.15%)
AT&T Corp. 9,732 197,560
Comcast Corp.-Class A 22,486(1) 739,115
SBC Communications, Inc. 35,565 927,180
Verizon Communications 32,907 1,154,378
Viacom, Inc.-Class B 24,668 1,094,766
-------------
4,112,999
DEPOSITORY INSTITUTIONS (10.51%)
Bank of America 23,298 1,873,858
Citigroup, Inc. 49,326 2,394,284
J. P. Morgan Chase & Co. 47,270 1,736,227
Wachovia Corp. 25,980 1,210,408
Wells Fargo Co. 19,900 1,171,911
-------------
8,386,688
EATING AND DRINKING PLACES (1.61%)
McDonald's Corp. 51,752 1,285,002
ELECTRIC, GAS AND SANITARY SERVICES (2.77%)
Dominion Resources, Inc. 11,600 740,428
Exelon Corp. 12,300 816,228
Southern Co. 21,650 654,913
-------------
2,211,569
ELECTRONIC AND OTHER ELECTRIC EQUIPMENT (7.54%)
Applied Materials, Inc. 24,000(1) 538,800
General Electric Co. 73,576 2,279,385
Intel Corp. 58,206 1,874,233
Motorola, Inc. 37,949 533,942
Texas Instruments, Inc. 27,001 793,289
-------------
6,019,649
</Table>
36
<Page>
<Table>
<Caption>
SHARES
HELD VALUE
------------- -------------
FOOD AND KINDRED PRODUCTS (3.34%)
Anheuser Busch Companies, Inc. 11,432 $ 602,238
Coca-Cola Co. (The). 26,389 1,339,242
PepsiCo, Inc. 15,518 723,449
-------------
2,664,929
FORESTRY (0.51%)
Weyerhaeuser Co. 6,400 409,600
GENERAL MERCHANDISE STORES (2.83%)
Wal-Mart Stores, Inc. 42,623 2,261,150
INDUSTRIAL MACHINERY AND EQUIPMENT (10.13%)
3M Co. 17,808 1,514,214
Caterpillar, Inc. 14,307 1,187,767
Cisco Systems, Inc. 62,268(1) 1,512,490
Dell Inc. 31,210(1) 1,059,892
EMC Corp. 38,068(1) 491,839
Hewlett-Packard Co. 41,279 948,179
International Business Machines Corp. 14,821 1,373,610
-------------
8,087,991
INSTRUMENTS AND RELATED PRODUCTS (0.49%)
Eastman Kodak Co. 15,278 392,186
INSURANCE CARRIERS (3.15%)
American International Group, Inc. 37,964 2,516,254
LUMBER AND WOOD PRODUCTS (1.15%)
Home Depot, Inc. 25,913 919,652
MOTION PICTURES (2.21%)
Disney (Walt) Co. 36,832 859,290
Time Warner, Inc. 50,502(1) 908,531
-------------
1,767,821
NONDEPOSITORY INSTITUTIONS (1.35%)
Federal National Mortgage Assoc. 14,400 1,080,864
PAPER AND ALLIED PRODUCTS (0.94%)
International Paper Co. 17,317 746,536
PETROLEUM AND COAL PRODUCTS (5.72%)
ChevronTexaco Corp. 19,700 1,701,883
Exxon Mobil Corp. 69,771 2,860,611
-------------
4,562,494
PRIMARY METAL INDUSTRIES (1.47%)
Alcoa, Inc. 30,898 1,174,124
</Table>
37
<Page>
<Table>
<Caption>
SHARES
HELD VALUE
------------- -------------
SECURITY AND COMMODITY BROKERS (3.19%)
American Express Co. 52,797 $ 2,546,399
TOBACCO PRODUCTS (2.66%)
Altria Group, Inc. 38,965 2,120,475
TRANSPORTATION EQUIPMENT (7.22%)
Boeing Co. (The) 32,082 1,351,935
General Motors Corp. 16,700 891,780
Honeywell International, Inc. 38,024 1,271,142
United Technologies Corp. 23,701 2,246,144
-------------
5,761,001
-------------
Total Common Stocks 74,848,554
<Caption>
PRINCIPAL
AMOUNT
-------------
SHORT-TERM INVESTMENTS (6.13%)
COMMERCIAL PAPER (2.63%)
NONDEPOSITORY INSTITUTIONS
American General Finance Corp., 1.05%, due 01/14/04 $ 650,000 650,000
General Electric Capital Corp., 1.08%, due 01/14/04 950,000 950,000
General Electric Capital Corp., 1.09%, due 01/21/04 500,000 500,000
-------------
2,100,000
UNITED STATES GOVERNMENT AGENCIES (2.56%)
Federal Home Loan Bank, due 01/07/04 1,000,000 999,830
Federal National Mortgage Assoc., due 01/28/04 600,000 599,531
Federal National Mortgage Assoc., due 02/18/04 450,000 449,379
-------------
2,048,740
<Caption>
SHARES
HELD
-------------
MONEY MARKET MUTUAL FUND (0.94%)
Blackrock Provident Institutional Funds, T-Fund Portfolio 748,665 748,665
-------------
Total Short-Term Investments 4,897,405
-------------
Total Investments (99.89%) 79,745,959
OTHER ASSETS LESS LIABILITIES (0.11%)
Cash, receivables, prepaid expense and other assets, less
liabilities 86,131
-------------
Total Net Assets (100.00%) $ 79,832,090
=============
</Table>
(1) Non-income producing securities.
SEE ACCOMPANYING NOTES.
38
<Page>
EQUITRUST VARIABLE INSURANCE SERIES FUND
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2003
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 and operates in the mutual fund
industry. The Fund currently consists of six portfolios (known as the Value
Growth, High Grade Bond, Strategic Yield, Managed, Money Market and Blue Chip
Portfolios). Shares of the Fund are sold only to certain life insurance
companies' separate accounts to fund the benefits under variable insurance
contracts issued by such life insurance companies, including Farm Bureau Life
Insurance Company and EquiTrust Life Insurance Company (see Note 3).
SECURITY VALUATION
All portfolios, other than the Money Market Portfolio, value their
investment securities that are traded on any national exchange at the last sale
price on the day of valuation or, lacking any sales, at the mean between the
closing bid and asked prices. If the mean is not available, exchange-traded
securities are valued using the prior day's closing prices. Investments traded
in the over-the-counter market are valued at the mean between the bid and asked
prices or yield equivalent as obtained from one or more dealers that make
markets in the securities. Investments for which market quotations are not
readily available, or holdings where liquidation at quoted market prices is
questionable, are valued at fair value as determined in good faith by the Fund's
Board of Trustees. Short-term investments are valued at market value, except
that obligations maturing in 90 days or less are valued using the amortized cost
method of valuation described below with respect to the Money Market Portfolio,
which approximates market.
The Money Market Portfolio values investments at amortized cost, which
approximates market value. Under the amortized cost method, a security is valued
at its cost on the date of purchase and thereafter is adjusted to reflect a
constant amortization to maturity of the difference between the principal amount
due at maturity and the cost of the investment to the portfolio.
INCOME AND INVESTMENT TRANSACTIONS
For financial reporting purposes, investment transactions are recorded on
the trade date. The identified cost basis has been used in determining the net
realized gain or loss from investment transactions and unrealized appreciation
or depreciation on investments. Dividend income is recorded on the ex-dividend
date and interest is recognized on an accrual basis. Discounts and premiums on
investments purchased are amortized over the life of the respective investments.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
On each day that the net asset value per share is calculated in the High
Grade Bond, Strategic Yield and Money Market Portfolios, that Portfolio's net
investment income will be declared, as of the close of the New York Stock
Exchange, as a dividend to shareholders of record prior to the declaration. With
respect to the High Grade Bond and Strategic Yield Portfolios, any net
short-term and long-term gains will be declared and distributed periodically,
but in no event less frequently than annually. Dividends and distributions of
the other portfolios are recorded on the ex-dividend date. Dividends and
distributions from net investment income and net realized gain from investments
are determined in accordance with federal tax regulations, which may differ from
accounting principles generally accepted in the United States. These differences
are primarily due to differing treatments for certain defaulted securities, and
basis adjustments resulting from corporate reorganizations. Permanent book and
tax basis differences are reclassified within the capital accounts based on
their federal tax-basis treatment; temporary differences
39
<Page>
do not require reclassification. During the year ended December 31, 2003, there
were no permanent adjustments reflected in the statements of assets and
liabilities.
Dividends and distributions which exceed net investment income and net
realized capital gains for financial reporting purposes, but not for tax
purposes, are reported as dividends in excess of net investment income or
distributions in excess of net realized capital gains. To the extent
distributions exceed current and accumulated earnings and profits for federal
income tax purposes, they are reported as returns of capital distributions.
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
2. FEDERAL INCOME TAXES
No provision for federal income taxes is considered necessary because the
Fund is qualified as a "regulated investment company" under the Internal Revenue
Code and intends to distribute each year substantially all of its net investment
income and realized capital gains to shareholders.
As of December 31, 2003, the following Portfolios had approximate net
capital loss carryforwards set forth below:
<Table>
<Caption>
PORTFOLIO
---------------------------------------------------------
VALUE STRATEGIC BLUE
NET CAPITAL LOSS CARRYFORWARDS EXPIRE IN: GROWTH YIELD MANAGED CHIP
- ----------------------------------------- ------------ ------------ ------------ ------------
2006 $ 5,710,000 $ -- $ -- $ --
2007 -- 9,000 -- --
2008 2,848,000 14,000 1,486,000 --
2010 -- 1,814,000 -- 1,786,000
2011 -- 571,000 -- 4,672,000
------------ ------------ ------------ ------------
$ 8,558,000 $ 2,408,000 $ 1,486,000 $ 6,458,000
============ ============ ============ ============
</Table>
As of December 31, 2003, the Strategic Yield Portfolio had post-October
capital losses of $2,383 that were deferred to the first day of the next fiscal
year.
3. MANAGEMENT CONTRACT AND TRANSACTIONS WITH AFFILIATES
The Fund has entered into agreements with EquiTrust Investment Management
Services, Inc. ("EquiTrust Investment") relating to the management of the
portfolios and the investment of their assets. Pursuant to these agreements,
fees paid to EquiTrust Investment are as follows: (1) annual investment advisory
and management fees, which are based on each portfolio's average daily net
assets as follows: Value Growth Portfolio -- 0.45%; High Grade Bond Portfolio --
0.30%; Strategic Yield Portfolio -- 0.45%; Managed Portfolio -- 0.45%; Money
Market Portfolio -- 0.25% ; and Blue Chip Portfolio -- 0.20% and (2) accounting
fees, which are based on each portfolio's daily net assets at an annual rate of
0.05%, with a maximum per portfolio annual expense of $30,000.
The Fund entered into an agreement with EquiTrust Investment whereby
EquiTrust Investment also serves as the principal underwriter and distributor of
the Fund's shares and as the Fund's shareholder service, transfer and dividend
disbursing agent. Effective December 1, 2003, EquiTrust Marketing Services, LLC
began serving as the principal underwriter and distributor. There are no fees
paid by the Fund associated with these services.
40
<Page>
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 year ended
December 31, 2003, EquiTrust Investment further agreed to reimburse any
portfolio, to the extent that annual operating expenses, including the
investment advisory fee, exceed 0.65%. As of December 31, 2003, the Strategic
Yield Portfolio had $334 due from EquiTrust Investment for the reimbursement of
expenses.
Certain officers and trustees of the Fund are also officers of EquiTrust
Investment, Farm Bureau Life Insurance Company and other affiliated entities. As
of December 31, 2003, the total number of the shares of each portfolio owned by
Farm Bureau Life Insurance Company, EquiTrust Life Insurance Company and related
separate accounts are as follows:
<Table>
<Caption>
PORTFOLIO SHARES
--------- ---------
Value Growth 4,481,561
High Grade Bond 2,537,624
Strategic Yield 2,770,048
Managed 4,510,311
Money Market 6,288,068
Blue Chip 2,360,589
</Table>
4. EXPENSE OFFSET ARRANGEMENTS
The Fund and other mutual funds managed by EquiTrust Investment have an
agreement with the custodian bank to indirectly pay a portion of the custodian's
fees through credits earned by the funds' cash on deposit with the bank. This
deposit agreement is an alternative to overnight investments. Custodial fees
have been adjusted to reflect amounts that would have been paid without this
agreement, with a corresponding adjustment reflected as fees paid indirectly in
the statements of operations.
5. CAPITAL SHARE TRANSACTIONS
The Fund has an unlimited number of shares of beneficial interest
authorized with no par value. Net assets as of December 31, 2003, consisted of
the following for financial reporting purposes:
<Table>
<Caption>
PORTFOLIO
-------------------------------------------------------------------------------------------
VALUE HIGH GRADE STRATEGIC MONEY BLUE
GROWTH BOND YIELD MANAGED MARKET CHIP
------------- ------------- ------------- ------------- ------------- -------------
Paid-in capital $ 56,239,109 $ 25,670,573 $ 26,973,206 $ 57,568,798 $ 6,727,552 $ 74,032,381
Accumulated undistributed net
investment income 563,058 -- -- 1,367,844 -- 1,194,008
Accumulated undistributed net
realized gain (loss) from
investment transactions (8,600,247) 70,428 (2,410,680) (1,567,103) -- (6,457,859)
Net unrealized appreciation
of investments 4,610,487 918,231 935,880 9,363,234 -- 11,063,560
------------- ------------- ------------- ------------- ------------- -------------
Net Assets $ 52,812,407 $ 26,659,232 $ 25,498,406 $ 66,732,773 $ 6,727,552 $ 79,832,090
============= ============= ============= ============= ============= =============
</Table>
41
<Page>
As of December 31, 2003, the components of accumulated earnings (deficit)
and capital gains (losses) on a tax basis were identical to those reported in
the statements of assets and liabilities, except as follows:
<Table>
<Caption>
PORTFOLIO
-----------------------------------------------
VALUE STRATEGIC
GROWTH YIELD MANAGED
------------- ------------- -------------
Undistributed ordinary income $ 563,058 $ 17,670 $ 1,367,844
Accumulated capital and other
losses (8,557,751) (2,410,680) (1,485,644)
Net unrealized appreciation
(depreciation) of investments 4,567,991 935,880 9,281,775
Other timing differences -- (17,670) --
------------- ------------- -------------
Total accumulated earnings
(deficit) $ (3,426,702) $ (1,474,800) $ 9,163,975
============= ============= =============
</Table>
During 2002, the Value Growth and Managed Portfolios held securities in
companies that completed corporate inversions. These events resulted in realized
capital gains for these investments being recognized for tax but not for book
purposes. As of December 31, 2003, unrealized depreciation and accumulated
capital gains book and tax differences related to corporate inversions were
$42,496 for the Value Growth Portfolio and $81,459 for the Managed Portfolio.
Additionally, the Strategic Yield Portfolio held defaulted securities which had
accrued interest in the amount of $17,670 for tax purposes and not for financial
reporting purposes.
Transactions in shares of beneficial interest for each portfolio were as
follows:
<Table>
<Caption>
SHARES ISSUED IN
REINVESTMENT OF
DIVIDENDS AND NET INCREASE
SHARES SOLD DISTRIBUTIONS SHARES REDEEMED (DECREASE)
------------------------ -------------------- ------------------------ --------------------------
PORTFOLIO SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
- --------- ---------- ------------ ------- ----------- ---------- ------------ ------------ -----------
Year ended December 31, 2003:
Value Growth 257,935 $ 2,576,305 70,078 $ 632,800 320,621 $ 3,122,025 7,392 $ 87,080
High Grade Bond 428,153 4,432,359 126,995 1,316,514 401,456 4,159,389 153,692 1,589,484
Strategic Yield 298,163 2,649,915 186,889 1,663,360 252,088 2,238,075 232,964 2,075,200
Managed 326,436 4,283,785 124,058 1,494,900 329,695 4,180,363 120,799 1,598,322
Money Market 20,443,151 20,443,151 26,348 26,348 21,891,488 21,891,488 (1,421,989) (1,421,989)
Blue Chip 172,893 5,107,154 39,362 1,066,311 179,712 5,119,651 32,543 1,053,814
Year ended December 31, 2002:
Value Growth 313,599 $ 3,060,299 79,813 $ 815,691 293,302 $ 2,780,200 100,110 $ 1,095,790
High Grade Bond 629,420 6,433,056 109,184 1,119,460 209,026 2,140,588 529,578 5,411,928
Strategic Yield 387,871 3,430,716 173,173 1,525,246 270,103 2,363,471 290,941 2,592,491
Managed 446,596 5,652,393 143,639 1,801,236 317,632 3,905,338 272,603 3,548,291
Money Market 23,190,009 23,190,009 74,993 74,993 24,435,623 24,435,623 (1,170,621) (1,170,621)
Blue Chip 193,377 5,860,594 34,889 1,156,568 205,739 6,055,865 22,527 961,297
</Table>
42
<Page>
6. INVESTMENT TRANSACTIONS
For the year ended December 31, 2003, the cost of investment securities
purchased and proceeds from investment securities sold (not including short-term
investments and U.S. Government securities) by portfolio, were as follows:
<Table>
<Caption>
PORTFOLIO PURCHASES SALES
--------- ------------- ------------
Value Growth $ 7,133,363 $ 6,409,491
High Grade Bond 854,266 954,830
Strategic Yield 6,535,235 9,025,712
Managed 8,051,869 9,550,729
Blue Chip 10,955,298 11,438,275
</Table>
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 December 31, 2003, by portfolio, were composed of the following:
<Table>
<Caption>
NET UNREALIZED
TAX COST OF GROSS UNREALIZED APPRECIATION
INVESTMENTS --------------------------- (DEPRECIATION)
PORTFOLIO IN SECURITIES APPRECIATION DEPRECIATION OF INVESTMENTS
- --------- ------------- ------------ ------------ --------------
Value Growth $ 48,180,164 $ 9,054,233 $ 4,486,242 $ 4,567,991
High Grade Bond 25,450,628 959,295 41,064 918,231
Strategic Yield 24,072,015 1,377,271 441,391 935,880
Managed 57,255,501 10,538,726 1,256,951 9,281,775
Blue Chip 68,682,399 18,549,185 7,485,625 11,063,560
</Table>
The basis for U.S. federal income tax purposes and financial reporting
purposes for investments in the Money Market Portfolio is the same and is equal
to the underlying investments' carrying value.
7. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income for the following portfolios are
declared daily and were payable on the last business day of the month as
follows:
<Table>
<Caption>
PORTFOLIO
----------------------------------
HIGH
GRADE STRATEGIC MONEY
PAYABLE DATE BOND YIELD MARKET
------------ --------- --------- ---------
January 31, 2003 $ 0.0356 $ 0.0553 $ 0.0006
February 28, 2003 0.0357 0.0616 0.0005
March 31, 2003 0.0451 0.0623 0.0005
April 30, 2003 0.0342 0.0487 0.0005
May 30, 2003 0.0323 0.0490 0.0005
June 30, 2003 0.0471 0.0633 0.0005
July 31, 2003 0.0374 0.0403 0.0004
August 29, 2003 0.0347 0.0486 0.0003
September 30, 2003 0.0482 0.0447 0.0004
October 31, 2003 0.0356 0.0491 0.0003
November 28, 2003 0.0336 0.0454 0.0003
December 31, 2003 0.0477 0.0609 0.0005
--------- --------- ---------
Total dividends per share $ 0.4672 $ 0.6292 $ 0.0053
========= ========= =========
</Table>
None of the ordinary income dividends qualify for the dividends received
deduction by corporate shareholders for the High Grade Bond, Strategic Yield and
Money Market Portfolios.
43
<Page>
In addition, dividends and distributions to shareholders from net
investment income and net realized gain on investment transactions were paid
during the period ended December 31, 2003 for the following portfolios:
ORDINARY INCOME DIVIDENDS:
<Table>
<Caption>
DIVIDEND PERCENT
AMOUNT QUALIFYING FOR
DECLARATION RECORD PAYABLE PER DEDUCTIONS BY
PORTFOLIO DATE DATE DATE SHARE CORPORATIONS
- --------- ----------- ------- ------- --------- --------------
Value Growth 1/22/03 1/22/03 1/23/03 $ 0.1411 100%
Managed 1/22/03 1/22/03 1/23/03 0.3387 67%
Blue Chip 1/22/03 1/22/03 1/23/03 0.4549 100%
</Table>
CAPITAL GAINS DISTRIBUTIONS:
<Table>
<Caption>
DECLARATION RECORD PAYABLE AMOUNT
PORTFOLIO DATE DATE DATE PER SHARE
- --------- ----------- ------- ------- ---------
High Grade 1/22/03 1/22/03 1/23/03 $ 0.0521
</Table>
The federal income tax character of dividends and distributions to
shareholders during 2003 and 2002 was the same for financial reporting purposes.
44
<Page>
(This page has been left blank intentionally.)
<Page>
EQUITRUST VARIABLE INSURANCE SERIES FUND
FINANCIAL HIGHLIGHTS
YEARS ENDED DECEMBER 31, 2003, 2002, 2001, 2000 AND 1999
<Table>
<Caption>
VALUE GROWTH
PORTFOLIO
-------------------------------------------------------------
2003 2002 2001 2000 1999
--------- --------- --------- --------- ---------
Net asset value, beginning of period $ 9.14 $ 10.39 $ 9.92 $ 8.69 $ 9.50
Income From Investment Operations
Net investment income 0.12 0.14 0.18 0.22 0.18
Net gains (losses) on securities
(both realized and unrealized) 2.64 (1.20) 0.50 1.20 (0.77)
--------- --------- --------- --------- ---------
Total from investment operations 2.76 (1.06) 0.68 1.42 (0.59)
--------- --------- --------- --------- ---------
Less Distributions
Dividends (from net investment income) (0.14) (0.19) (0.21) (0.19) (0.22)
Distributions (from capital gains) -- -- -- -- --
Distributions in excess of net realized gains -- -- -- -- --
--------- --------- --------- --------- ---------
Total distributions (0.14) (0.19) (0.21) (0.19) (0.22)
--------- --------- --------- --------- ---------
Net asset value, end of period $ 11.76 $ 9.14 $ 10.39 $ 9.92 $ 8.69
========= ========= ========= ========= =========
Total Return:
Total investment return based on net asset value (1) 30.68% (10.43)% 6.98% 16.71% (6.34)%
Ratios/Supplemental Data:
Net assets, end of period (000's omitted) $ 52,812 $ 40,953 $ 45,522 $ 40,173 $ 40,848
Ratio of total expenses to average net assets 0.63% 0.59% 0.57% 0.57% 0.57%
Ratio of net expenses to average net assets 0.63% 0.59% 0.57% 0.56% 0.57%
Ratio of net investment income to average net assets 1.26% 1.46% 1.89% 2.34% 1.91%
Portfolio turnover rate 17% 15% 40% 78% 152%
</Table>
- ----------
Note: Per share amounts have been calculated on the basis of monthly per share
amounts (using average monthly outstanding shares) accumulated for the
period.
(1) Total investment return is calculated assuming an initial investment made
at the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at net asset value during the period, and
redemption on the last day of the period.
SEE ACCOMPANYING NOTES.
46
<Page>
<Table>
<Caption>
HIGH
GRADE BOND
PORTFOLIO
-------------------------------------------------------------
2003 2002 2001 2000 1999
--------- --------- --------- --------- ---------
Net asset value, beginning of period $ 10.39 $ 10.08 $ 9.82 $ 9.49 $ 10.19
Income From Investment Operations
Net investment income 0.47 0.50 0.62 0.67 0.62
Net gains (losses) on securities
(both realized and unrealized) 0.08 0.32 0.26 0.34 (0.67)
--------- --------- --------- --------- ---------
Total from investment operations 0.55 0.82 0.88 1.01 (0.05)
--------- --------- --------- --------- ---------
Less Distributions
Dividends (from net investment income) (0.47) (0.50) (0.62) (0.67) (0.62)
Distributions (from capital gains) (0.05) (0.01) -- (0.01) (0.03)
Distributions in excess of net realized gains -- -- -- -- --
--------- --------- --------- --------- ---------
Total distributions (0.52) (0.51) (0.62) (0.68) (0.65)
--------- --------- --------- --------- ---------
Net asset value, end of period $ 10.42 $ 10.39 $ 10.08 $ 9.82 $ 9.49
========= ========= ========= ========= =========
Total Return:
Total investment return based on net asset value (1) 5.43% 8.37% 9.10% 11.14% (0.46)%
Ratios/Supplemental Data:
Net assets, end of period (000's omitted) $ 26,659 $ 24,984 $ 18,908 $ 13,934 $ 13,638
Ratio of total expenses to average net assets 0.49% 0.46% 0.45% 0.45% 0.48%
Ratio of net expenses to average net assets 0.49% 0.46% 0.45% 0.45% 0.47%
Ratio of net investment income to average net assets 4.51% 4.92% 6.10% 7.03% 6.34%
Portfolio turnover rate 28% 22% 17% 7% 24%
<Caption>
STRATEGIC
YIELD
PORTFOLIO
-------------------------------------------------------------
2003 2002 2001 2000 1999
--------- --------- --------- --------- ---------
Net asset value, beginning of period $ 8.75 $ 8.90 $ 8.82 $ 9.30 $ 10.17
Income From Investment Operations
Net investment income 0.63 0.62 0.73 0.75 0.74
Net gains (losses) on securities
(both realized and unrealized) 0.38 (0.15) 0.08 (0.48) (0.81)
--------- --------- --------- --------- ---------
Total from investment operations 1.01 0.47 0.81 0.27 (0.07)
--------- --------- --------- --------- ---------
Less Distributions
Dividends (from net investment income) (0.63) (0.62) (0.73) (0.75) (0.74)
Distributions (from capital gains) -- -- -- -- --
Distributions in excess of net realized gains -- -- -- -- (0.06)
--------- --------- --------- --------- ---------
Total distributions (0.63) (0.62) (0.73) (0.75) (0.80)
--------- --------- --------- --------- ---------
Net asset value, end of period $ 9.13 $ 8.75 $ 8.90 $ 8.82 $ 9.30
========= ========= ========= ========= =========
Total Return:
Total investment return based on net asset value (1) 11.97% 5.43% 9.22% 3.05% (0.75)%
Ratios/Supplemental Data:
Net assets, end of period (000's omitted) $ 25,498 $ 22,395 $ 20,182 $ 16,410 $ 17,752
Ratio of total expenses to average net assets 0.65% 0.61% 0.59% 0.59% 0.60%
Ratio of net expenses to average net assets 0.65% 0.61% 0.59% 0.58% 0.59%
Ratio of net investment income to average net assets 7.07% 7.04% 7.93% 8.30% 7.62%
Portfolio turnover rate 32% 34% 33% 3% 27%
</Table>
47
<Page>
<Table>
<Caption>
MANAGED
PORTFOLIO
-------------------------------------------------------------
2003 2002 2001 2000 1999
--------- --------- --------- --------- ---------
Net asset value, beginning of period $ 12.34 $ 13.00 $ 12.58 $ 10.54 $ 11.45
Income From Investment Operations
Net investment income 0.30 0.34 0.44 0.59 0.64
Net gains (losses) on securities
(both realized and unrealized) 2.43 (0.57) 0.55 2.11 (1.02)
--------- --------- --------- --------- ---------
Total from investment operations 2.73 (0.23) 0.99 2.70 (0.38)
--------- --------- --------- --------- ---------
Less Distributions
Dividends (from net investment income) (0.34) (0.43) (0.57) (0.66) (0.53)
Distributions (from capital gains) -- -- -- -- --
Distributions in excess of net realized gains -- -- -- -- --
--------- --------- --------- --------- ---------
Total distributions (0.34) (0.43) (0.57) (0.66) (0.53)
--------- --------- --------- --------- ---------
Net asset value, end of period $ 14.73 $ 12.34 $ 13.00 $ 12.58 $ 10.54
========= ========= ========= ========= =========
Total Return:
Total investment return based on net asset value (1) 22.72% (1.80)% 8.12% 27.39% (3.45)%
Ratios/Supplemental Data:
Net assets, end of period (000's omitted) $ 66,733 $ 54,428 $ 53,795 $ 48,012 $ 47,829
Ratio of total expenses to average net assets 0.62% 0.58% 0.56% 0.56% 0.56%
Ratio of net expenses to average net assets 0.62% 0.58% 0.56% 0.55% 0.56%
Ratio of net investment income to average net assets 2.35% 2.73% 3.47% 4.96% 5.28%
Portfolio turnover rate 24% 18% 40% 85% 43%
</Table>
48
<Page>
<Table>
<Caption>
MONEY MARKET
PORTFOLIO
-------------------------------------------------------------
2003 2002 2001 2000 1999
--------- --------- --------- --------- ---------
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income From Investment Operations
Net investment income 0.01 0.01 0.03 0.06 0.04
Net gains (losses) on securities
(both realized and unrealized) -- -- -- -- --
--------- --------- --------- --------- ---------
Total from investment operations 0.01 0.01 0.03 0.06 0.04
--------- --------- --------- --------- ---------
Less Distributions
Dividends (from net investment income) (0.01) (0.01) (0.03) (0.06) (0.04)
Distributions (from capital gains) -- -- -- -- --
Distributions in excess of net realized gains -- -- -- -- --
--------- --------- --------- --------- ---------
Total distributions (0.01) (0.01) (0.03) (0.06) (0.04)
--------- --------- --------- --------- ---------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= ========= ========= ========= =========
Total Return:
Total investment return based on net asset value (1) 0.52% 1.16% 3.51% 5.85% 4.53%
Ratios/Supplemental Data:
Net assets, end of period (000's omitted) $ 6,728 $ 8,150 $ 9,320 $ 7,233 $ 6,609
Ratio of total expenses to average net assets 0.59% 0.52% 0.50% 0.50% 0.55%
Ratio of net expenses to average net assets 0.59% 0.52% 0.48% 0.48% 0.54%
Ratio of net investment income to average net assets 0.53% 1.16% 3.41% 5.74% 4.49%
Portfolio turnover rate -- -- -- -- --
<Caption>
BLUE CHIP
PORTFOLIO
-------------------------------------------------------------
2003 2002 2001 2000 1999
--------- --------- --------- --------- ---------
Net asset value, beginning of period $ 27.22 $ 34.14 $ 39.29 $ 43.98 $ 36.87
Income From Investment Operations
Net investment income 0.50 0.46 0.50 0.56 0.54
Net gains (losses) on securities
(both realized and unrealized) 6.38 (6.88) (4.83) (4.26) 7.06
--------- --------- --------- --------- ---------
Total from investment operations 6.88 (6.42) (4.33) (3.70) 7.60
--------- --------- --------- --------- ---------
Less Distributions
Dividends (from net investment income) (0.45) (0.50) (0.56) (0.53) (0.49)
Distributions (from capital gains) -- -- (0.26) (0.46) --
Distributions in excess of net realized gains -- -- -- -- --
--------- --------- --------- --------- ---------
Total distributions (0.45) (0.50) (0.82) (0.99) (0.49)
--------- --------- --------- --------- ---------
Net asset value, end of period $ 33.65 $ 27.22 $ 34.14 $ 39.29 $ 43.98
========= ========= ========= ========= =========
Total Return:
Total investment return based on net asset value (1) 25.70% (19.07)% (11.28)% (8.52)% 20.85%
Ratios/Supplemental Data:
Net assets, end of period (000's omitted) $ 79,832 $ 63,699 $ 79,124 $ 87,118 $ 86,849
Ratio of total expenses to average net assets 0.36% 0.31% 0.28% 0.27% 0.30%
Ratio of net expenses to average net assets 0.36% 0.31% 0.28% 0.27% 0.30%
Ratio of net investment income to average net assets 1.72% 1.50% 1.42% 1.39% 1.43%
Portfolio turnover rate 17% 0% 0% 13% 5%
</Table>
49
<Page>
REPORT OF INDEPENDENT AUDITORS
The Board of Trustees and Shareholders
EquiTrust Variable Insurance Series Fund
We have audited the accompanying statements of assets and liabilities,
including the schedules of investments, of EquiTrust Variable Insurance Series
Fund [comprised of the Value Growth, High Grade Bond, Strategic Yield, Managed,
Money Market and Blue Chip Portfolios] as of December 31, 2003, and the related
statements of operations for the year then ended, the statements of changes in
net assets for each of the two years in the period then ended, and the financial
highlights for each of the five years in the period then ended. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
our audit to obtain reasonable assurance about whether the financial statements
and financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our procedures included
confirmation of securities owned as of December 31, 2003, by correspondence with
the custodian. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
each of the respective portfolios constituting the EquiTrust Variable Insurance
Series Fund at December 31, 2003, and the results of their operations for the
year then ended, the changes in their net assets for each of the two years in
the period then ended, and the financial highlights for each of the five years
in the period then ended, in conformity with accounting principles generally
accepted in the United States.
/s/ Ernst & Young LLP
Des Moines, Iowa
January 19, 2004
50
<Page>
OFFICERS AND TRUSTEES
<Table>
<Caption>
TERM OF NUMBER OF
OFFICE & PORTFOLIOS IN
LENGTH FUND COMPLEX
POSITION(S) HELD OF TIME PRINCIPAL OCCUPATION(S) OVERSEEN BY
NAME, ADDRESS AND AGE WITH FUND SERVED(1) DURING PAST FIVE YEARS TRUSTEE OTHER DIRECTORSHIPS HELD BY TRUSTEE
- ------------------------------------------------------------------------------------------------------------------------------------
INTERESTED TRUSTEES
AND OFFICERS(2)
Craig A.Lang (52) President and Since 2002 Dairy Farmer; Chairman 13 None
Trustee and Director, FBL
Financial Group, Inc.;
President and Director,
Iowa Farm Bureau
Federation and other
affiliates of the
foregoing; Director,
Western Agricultural
Insurance Company and
other affiliates of the
foregoing; Member,
Growmark, Inc.
Coordinating Committee
and American Farm Bureau
Federation Board of
Directors; past member,
Cattlemens Beef Board
William J. Oddy (59) Vice President Since 1981 Chief Executive Officer 13 Director, American Equity Investment
and Trustee and Management Director, Life Insurance Company, Berthel
FBL Financial Group, Fisher & Company, Inc. and Berthel
Inc.; Chief Executive Fisher & Company Financial Services,
Officer, Farm Bureau Life Inc.
Insurance Company and
other affiliates of the
foregoing; Chief
Executive Officer and
Director, EquiTrust Life
Insurance Company and
other affiliates of the
foregoing, and RIK, Inc.;
Chief Executive Officer
and Manager, EquiTrust
Marketing Services, LLC;
Chief Executive Officer
and Director, EquiTrust
Investment Management
Services, Inc.; Vice
President and Director,
EquiTrust Series Fund,
Inc. and EquiTrust Money
Market Fund, Inc.;
President and Director,
FBL Real Estate Ventures,
Ltd.
James W. Noyce (48) Chief Financial Since 1996 Chief Financial Officer N/A N/A
Officer and and Chief Administrative
Treasurer Officer, FBL Financial
Group, Inc. and other
affiliates of the
foregoing; Chief
Financial Officer, Chief
Administrative Officer,
Treasurer and Manager,
EquiTrust Marketing
Services, LLC; Vice
President, Treasurer and
Director, EquiTrust
Investment Management
Services, Inc. and other
affiliates of the
foregoing; President,
Treasurer and Director,
FBL Leasing Services,
Inc.; Chief Executive
Officer, Chief Financial
Officer and Chief
Administrative Officer,
Western Computer
Services, Inc.; Chief
Financial Officer and
Treasurer, EquiTrust
Series Fund, Inc. and
EquiTrust Money Market
Fund, Inc.
Dennis M. Marker (52) Chief Executive Since 1982 Vice President-Investment N/A N/A
Officer Administration, FBL
Financial Group, Inc. and
other affiliates of the
foregoing; President and
Director, EquiTrust
Investment Management
Services, Inc.; Vice
President-Investment
Administration and
Manager, EquiTrust
Marketing Services, LLC;
Chief Executive Officer,
EquiTrust Series Fund,
Inc. and EquiTrust Money
Market Fund, Inc.; Vice
President and Director,
FBL Leasing Services,
Inc.
Stephen M. Morain (58) Senior Vice Since 1982 General Counsel and N/A N/A
President and Assistant Secretary, Iowa
General Counsel Farm Bureau Federation;
General Counsel,
Secretary and Director,
Farm Bureau Management
Corporation; Senior Vice
President and General
Counsel, FBL Financial
Group, Inc. and other
affiliates of the
foregoing; Senior Vice
President, General
Counsel and Manager,
EquiTrust Marketing
Services, LLC; Senior
Vice President, General
Counsel and Director,
EquiTrust Investment
Management Services, Inc.
JoAnn Rumelhart (50) Executive Vice Since 2000 Executive Vice President N/A N/A
President and General Manager-Life
Cos., FBL Financial
Group, Inc.; Executive
Vice President and
General Manager, Farm
Bureau Life Insurance
Company and other
affiliates of the
foregoing; Executive Vice
President and Director,
EquiTrust Investment
Management Services,
Inc.; Executive Vice
President and Manager,
Equitrust Marketing
Services, LLC; Executive
Vice President, EquiTrust
Series Fund, Inc. and
EquiTrust Money Market
Fund, Inc.
</Table>
51
<Page>
<Table>
<Caption>
TERM OF NUMBER OF
OFFICE & PORTFOLIOS IN
LENGTH FUND COMPLEX
POSITION(S) HELD OF TIME PRINCIPAL OCCUPATION(S) OVERSEEN BY
NAME, ADDRESS AND AGE WITH FUND SERVED(1) DURING PAST FIVE YEARS TRUSTEE OTHER DIRECTORSHIPS HELD BY TRUSTEE
- ------------------------------------------------------------------------------------------------------------------------------------
John M. Paule (47) Chief Marketing Since 2000 Chief Marketing Officer, N/A N/A
Officer FBL Financial Group, Inc.
and other affiliates of
the foregoing; Chief
Marketing Officer and
Director, EquiTrust
Investment Management
Services, Inc.; Chief
Marketing Officer and
Manager, EquiTrust
Marketing Services, LLC.
Lou Ann Sandburg (55) Vice President- Since 1999 Vice President-Investments N/A N/A
Investments and and Assistant Treasurer,
Assistant FBL Financial Group, Inc.
Treasurer and other affiliates of
the foregoing; Vice
President-Investments,
Assistant Treasurer and
Director, EquiTrust
Investment Management
Services, Inc.; Vice
President, Assistant
Treasurer and Manager,
EquiTrust Marketing
Services, LLC; Vice
President, FBL Financial
Services, Inc. and other
affiliates of the
foregoing; Vice President
and Director, FBL Leasing
Services, Inc.; Vice
President, Secretary and
Director, FBL Real Estate
Ventures, Ltd.
Kristi Rojohn (40) Investment Since 1990 Investment Compliance N/A N/A
Compliance Vice Vice President and
President and Secretary, EquiTrust
Secretary Investment Management
Services, Inc. and other
affiliates of the
foregoing.
Susan M. Coombs (43) Mutual Fund Since 2002 Mutual Fund Accounting N/A N/A
Accounting Director, EquiTrust
Director Investment Management
Services, Inc. and other
affiliates of the
foregoing.
Rebecca L. Howe (49) Assistant Since 2003 Assistant Secretary, N/A N/A
Secretary EquiTrust Investment
Management Services, Inc.
and other affiliates of
the foregoing.
NON-INTERESTED
TRUSTEES
Erwin H. Johnson (61) Trustee Since 1989 Farmer; Owner and 13 Director, First Security Bank and
1841 March Avenue Manager, Center View Trust Co. (Charles City, Iowa)
Charles City, Iowa Farms, Co.; Farm
50616-9115 Financial Planner; Iowa
State University
Cooperative Extension
Service Seed Sales;
Syngenta; Director, Iowa
4-H Foundation and Ag
Ventures Alliance;
Council Member, West St.
Charles United Methodist
Church.
Kenneth Kay (61) Trustee Since 1996 President, K-Ranch, Inc. 13 Director, First Whitney Bank & Trust
51606 590th Street (Atlantic, Iowa)
Atlantic, Iowa
50022-8233
Paul E. Larson (51) Trustee Since 2003 Former President, 13 Director, Wellmark, Inc.
588 Chardonnay Point Equitable Life Insurance
Waukee, Iowa 50263 Company of Iowa and
related entities, retired
since March,1999
Steven W.Plate(47) Trustee Since 2003 CPA/Owner, Plate, Baker & 13
c/o Plate, Baker & Co. Co., P.C., Certified
1003 Main Street Public Accountants
Grinnell, Iowa 50112
Erlin J. Weness(59) Trustee Since 2003 Owner and Operator, 13 Director, First State Bank Southwest
1620 Pinewood Drive Weness Consulting; (Worthington, Minnesota), First
Worthington, Extension Educator-Farm State Insurance Agency (Worthington,
Minnesota 56187 Management, University of Minnesota) and First Rushmore
Minnesota Bancorporation (Worthington,
Minnesota)
</Table>
(1) Officers are elected annually by the Board of Trustees, and their terms
continue until they are replaced or resign. Each trustee shall serve as a
trustee of the Fund until the next meeting of shareholders called for the
purpose of conducting the election of such trustee or a successor to such
trustee, and until his successor is elected and qualified, or until such
trustee sooner dies, resigns or is removed.
(2) All interested trustees and officers maintain the same business address of
5400 University Avenue, West Des Moines, Iowa 50266.
The officers and trustees of the Fund also serve in similar capacities as
officers and directors of EquiTrust Money Market Fund, Inc. and EquiTrust Series
Fund, Inc. All of the Fund's officers and interested trustees are officers and
directors of the Adviser and/or the Distributor or an affiliate thereof.
Interested trustees serve without any compensation from the Fund. Each of the
trustees not affiliated with the Adviser and/or the Distributor or an affiliate
thereof will be compensated by the Fund. Each unaffiliated trustee will receive
an annual retainer of $5,000 for serving on the boards of all EquiTrust Mutual
Funds, and a fee of $1,000 plus expenses for each trustees' meeting of the
EquiTrust Mutual Funds attended. A fee of $250 shall be paid for each telephonic
board or committee meeting attended. For the fiscal year ended December 31,2003,
the Fund paid Trustees' fees totaling $16,230.
The Statement of Additional Information (SAI) includes additional information
about fund trustees and is available upon request without charge. To request a
copy of the SAI, please call 1-877-860-2904 M-F 8:00 am to 4:30 pm.
52
<Page>
ITEM 2. CODE OF ETHICS.
(a) The registrant has adopted a code of ethics that applies to the
registrant's principal executive officer, principal financial
officer, principal accounting officer or controller, or persons
performing similar functions. A copy of the code of ethics may be
obtained upon request, without charge, by contacting the
registrant at its principal executive office.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
(a) (1) The registrant's board of directors has determined that the
registrant has at least one audit committee financial expert
serving on the audit committee.
(2) The audit committee financial expert is Paul E. Larson.
Mr. Larson is independent as defined in Form N-CSR Item 3(a)(2).
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) AUDIT FEES: For the Fund's fiscal years ended December 31, 2002
and December 31, 2003, the aggregate fees billed by the Fund's
principal accountant for the audit of the Fund's financial
statements were $41,500 and $45,700, respectively.
(b) AUDIT-RELATED FEES: For the Fund's fiscal year ended December 31,
2003, the aggregate fees billed by the Fund's principal accountant
for research and consultation fees related to the audit of the
Fund were $338. There were no audit-related fees billed to the
Fund for the fiscal year ended December 31, 2002.
(c) TAX FEES: None.
(d) ALL OTHER FEES: For the Fund's fiscal years ended December 31,
2002 and December 31, 2003, the aggregate fees billed by the
Fund's principal accountant included research and consultation
fees for miscellaneous accounting matters; fees related to the
audits of EquiTrust Series Fund, Inc. and EquiTrust Money Market
Fund, Inc.; as well as fees for services performed by the
principal accountant for EquiTrust Investment Management Services,
Inc. and EquiTrust Marketing Services, LLC, affiliates of the Fund
that provide support for the operations of the Fund. The amounts
of these fees are as follows:
<Table>
<Caption>
FISCAL YEAR ENDED: DECEMBER 31, 2002 DECEMBER 31, 2003
-------------------------------------------------------------------------------
Research and consultation fees
billed to the Fund for miscellaneous
accounting matters $ 702 none
Fees related to audits of EquiTrust
Series Fund, Inc. and EquiTrust
</Table>
<Page>
<Table>
<Caption>
Money Market Fund, Inc. and for
research and consultation on
miscellaneous accounting matters $ 56,648 $ 63,188
Services performed for EquiTrust
Marketing Services, LLC and
EquiTrust Investment Management
Services, Inc. related to the audits
of these entities and for research and
consultation on miscellaneous
accounting matters $ 30,000 $ 32,300
</Table>
(e) (1) The Fund's Audit Committee adopted the following pre-approval
policies and procedures:
IV. RESPONSIBILITIES AND DUTIES
To fulfill its responsibilities and duties the Audit Committee
shall:
...
C. INDEPENDENT AUDITORS
...
2. Pre-approve any engagement of the independent auditors to
provide any services to the Fund, including the fees and
other compensation to be paid to the independent
auditors. Notwithstanding the above, the independent
auditors shall not perform any of the following non-audit
services for the Fund ("prohibited non-audit services"):
a. bookkeeping or other services related to the
accounting records or financial statements of the
Fund;
b. financial information systems design and
implementation;
c. appraisal or valuation services, fairness opinions,
or contribution-in-kind reports;
d. actuarial services;
e. internal audit outsourcing services;
f. management functions or human resources;
g. broker or dealer, investment adviser, or investment
banking services;
h. legal services and expert services unrelated to the
audit; and
i. any other services that the Public Company Accounting
Oversight Board determines are impermissible.
3. Pre-approve any engagement of the independent auditors,
including the fees and other compensation to be paid to
the independent auditors, to provide any non-audit
services to the Adviser (or any "control affiliate"(1) of
the Adviser providing ongoing services to the
- ----------
(1) "Control affiliate" means any entity controlling, controlled by, or under
common control with the Adviser.
<Page>
Fund), if the engagement relates directly to the
operations and financial reporting of the Fund.
- The Chairman of the Audit Committee (or in his
absence, any member of the Audit Committee) may grant
the pre-approval referenced in Sections IV.C. 2 and 3
above for non-prohibited services for engagements of
less than $5000. Each member of the Audit Committee
shall be notified in writing of the pre-approval
promptly following the granting of such approval. In
addition, all such delegated pre-approvals shall be
presented to the Audit Committee no later than the
next Audit Committee meeting.
- Pre-approval of non-audit services for the Fund
pursuant to Section IV.C. 2 above is not required, if:
(a) the aggregate amount of all non-audit services
provided to the Fund is less than 5% of the total
fees paid by the Fund to the independent auditors
during the fiscal year in which the non-audit
services are provided;
(b) the services were not recognized by Fund
management at the time of the engagement as
non-audit services; and
(c) such services are promptly brought to the
attention of the Audit Committee by Fund
management and the Audit Committee approves them
(which may be by delegation) prior to the
completion of the audit.
- Pre-approval of non-audit services for the Adviser (or
any affiliate of the Adviser providing ongoing
services to the Fund) pursuant to Section IV.C.3 above
is not required, if:
(a) the aggregate amount of all non-audit services
provided is less than 5% of the total fees paid by
the Fund, the Adviser and any "control affiliate"
of the Adviser providing ongoing services to the
Fund to the independent auditors during the fiscal
year in which the non-audit services are provided;
(b) the services were not recognized by Fund
management at the time of the engagement as
non-audit services; and
(c) such services are promptly brought to the
attention of the Audit Committee by Fund
management and the Audit Committee approves them
(which may be by delegation) prior to the
completion of the audit.
...
(e) (2) Not applicable.
(f) Not applicable.
<Page>
(g) AGGREGATE NON-AUDIT FEES: For the Fund's fiscal year ended
December 31, 2002, the aggregate non-audit fees billed by the
Fund's principal accountant for services rendered to the Fund, the
Fund's investment adviser and any entity controlling, controlled
by, or under common control with the adviser that provides ongoing
services to the Fund were $1,350. The fees billed were research
and consultation fees for miscellaneous accounting matters. There
were no non-audit fees billed for the fiscal year ended December
31, 2003.
(h) The Audit Committee of the Board of Directors of the Fund has
reviewed the statement of independence provided by Ernst & Young,
the Fund's principal accountant, considered whether the provision
of additional services by the firm is compatible with such firm's
independence with respect to the Fund, and concluded that the
additional services provided by Ernst & Young does not compromise
that firm's independence with regard to the Fund.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANT.
Not applicable.
ITEM 6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. [RESERVED]
ITEM 9. CONTROLS AND PROCEDURES
(a) The registrant's principal executive and principal financial
officers, or persons performing similar functions, have concluded
that the registrant's disclosure controls and procedures (as
defined in Rule 30a-3(c) under the Investment Company Act of 1940,
as amended (the "1940 Act") (17 CFR 270.30a-3(c))) are effective,
as of a date within 90 days of the filing date of the report that
includes the disclosure required by this paragraph, based on their
evaluation of these controls and procedures required by Rule
30a-3(b) under the 1940 Act (17 CFR 270.30a-3(b)) and Rules
13a-15(b) or 15d-15(b) under the Exchange Act (17 CFR
240.13a-15(b) or 240.15d-15(b)).
(b) There has been no change to the registrant's internal control over
financial reporting that occurred during the registrant's most
recent fiscal half-year that has materially affected, or is
reasonably likely to materially affect, the registrant's internal
control over financial reporting.
<Page>
ITEM 10. EXHIBITS.
(a)(1) See Item 2(a).
(a)(2) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002 are attached hereto.
(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002 are attached hereto.
<Page>
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: 2/19/04
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ Dennis M. Marker
-------------------------------------------
Name: Dennis M. Marker
Title: Chief Executive Officer
Date: 2/19/04
By: /s/ James W. Noyce
-------------------------------------------
Name: James W. Noyce
Title: Chief Financial Officer
Date: 2/19/04