<Page>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 33-12791 & 811-5069
---------------------------------------------
EquiTrust Variable Insurance Series Fund
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
5400 University Avenue, West Des Moines IA 50266-5997
- -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Kristi Rojohn, 5400 University Avenue, West Des Moines IA 50266-5997
- -------------------------------------------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: 515/225-5400
----------------------------
Date of fiscal year end: December 31, 2004
--------------------------
Date of reporting period: June 30, 2004
-------------------------
<Page>
ITEM 1. REPORTS TO STOCKHOLDERS.
<Page>
[EQUITRUST FINANCIAL SERVICES LOGO]
EquiTrust Variable Insurance Series Fund
SEMI-ANNUAL REPORT
JUNE 30, 2004
5400 UNIVERSITY AVENUE
WEST DES MOINES, IA 50266
1-877-860-2904
1-515-225-5586
This report is not to be distributed unless preceded or accompanied by a current
prospectus.
<Page>
PRESIDENT'S LETTER
Dear Shareholder:
Both equity investors and fixed income investors have experienced moderate
returns so far in 2004. After their performance during 2003, the equity markets
have been more subdued so far this year. The S&P 500 Stock Composite Index (the
"S&P 500") climbed almost 29% in 2003, but in the six-month period ended June
30th, it had returned just 3.44%. Similarly, the NASDAQ Composite (the "NASDAQ")
returned 2.43% in the first half of 2004, relative to a gain of over 50% in
2003. Small company stocks generally outperformed those of large companies, as
the Russell 2000 returned 6.80%. However, during the second quarter, large
company stock indexes began gaining against the small company indexes.
Returns in the fixed income markets were modest due to rising interest
rates and, consequently, declining security values. Numerous benchmarks incurred
losses, while others achieved only meager gains. For example, the Lehman
Brothers U.S. Aggregate Index, a measure of the broad domestic fixed income
security market, recorded a return of just 0.15% for the six-month period; its
income gain was almost entirely offset by losses in the value of its underlying
securities. High-grade corporate issues and U.S. Treasury securities, as
represented by their respective Lehman Brothers benchmarks, actually suffered
losses, while high yield and mortgage-backed securities generally recorded small
gains.
The financial markets have operated so far this year under expectations of
rising inflation and, consequently, interest rates. After several years of
benign inflation and even a threat of deflation, prices appear to be creeping
upward in goods and services as the economy improves. For the past several
months, the financial markets have expected the Federal Reserve Board (the
"Fed") to begin raising the short-term federal funds rate to prevent any severe
inflation threat. Indeed, the Fed did raise the benchmark rate in June, from 1%
to 1.25%, after having cut it repeatedly between January, 2001 and June, 2003.
The Fed has also signaled its intent to make further hikes as necessary.
Fixed income investors have actually been demanding higher yields for the
past few months to compensate for higher expected inflation. Reflecting the
inverse relationship between rates and bond prices, fixed income security values
have declined as a result of the higher yields. While bond investors continue to
receive their interest payments, their total return has been suffering due to
the decline in the value of their bonds. As mentioned above, for some fixed
income benchmarks, the decline in security values has significantly impacted
total returns to date.
In spite of continued growth in corporate earnings and improvement in the
economy in general, equity performance has largely been restrained. Here, too,
inflation has indirectly muted equity returns as fixed income investments have
become more attractive relative to equity investments due to rising interest
rates. In addition, investor expectations for strong earnings contributed to the
strong performance of equities in 2003 and valuations now account for those
expectations.
Both equity and fixed income securities face challenges to near-term
performance. Equity valuations are becoming more attractive as a consequence of
continued earnings growth, but returns may be modest until valuations dip below
long-term averages. Despite their interest payments, fixed income investments
may continue to record modest total returns as long as interest rates rise and
bond prices decline. In this environment, investors should assess their risk
tolerance, determine an appropriate asset allocation suited to that risk
tolerance and rebalance their portfolios annually to capture the value of
"buying low and selling high."
The Fund's portfolios provide a means for our investors to gain exposure
to the domestic equity and fixed income markets. Below is a summary of how the
individual portfolios have performed so far this year.
MONEY MARKET: The interest rates offered by money market funds reflect the
rates set by central banks such as the Federal Open Market Committee ("FOMC")
and the British Banker's Association ("BBA"). The FOMC controls the Federal
Funds rate (the overnight lending rate between banks), and the BBA sets the
London Interbank Offered Rate ("LIBOR") (the interest rate banks charge each
other in England's Eurodollar market). The FOMC met June 30, 2004 and raised the
Federal Funds rate by a quarter percent to 1.25%. The committee said it will
move "at a pace that is likely to be measured" but added that the policymaking
board "will respond to changes in economic prospects as needed to fulfill its
obligation to maintain price stability." In other words, short-term interest
rates are going to be raised but the FOMC plans a gentle rise in rates. However,
whether they can follow this path will depend largely on the strength of the
economy and, more importantly, inflation. Inflation has accelerated markedly
this year, driven largely by higher food and energy costs, but the FOMC
down-played inflation risks claiming that the increase was due, in part, to
"transitory factors." The committee knows that it will have to raise rates
towards a more normal level in the years ahead, but it wants to do so in a
relatively benign fashion until it feels positive that the investment and
employment uptrends are securely entrenched. The Federal Funds rate is expected
to rise to 2.25% by the end of the year.
2
<Page>
HIGH GRADE BOND: The two-year Treasury yield rose by 86 basis points
(.86%) to 2.68%, the ten-year Treasury yield rose 34 basis points (.34%) to
4.58%, and the thirty-year Treasury yield rose 22 basis points (.22%) to 5.29%
over the six-month reporting period ended June 30, 2004.
During the six-month period ended June 30, 2004, the High Grade Bond
Portfolio underperformed the Lehman Brothers U.S. Aggregate Index ("Aggregate
Index"), as reflected by the .09% total return produced by the Portfolio versus
the .15% total return produced by the Index. The total returns for the major
components of the Aggregate Index for this period were as follows: U.S. Fixed
Rate Mortgage Backed Securities (36% of the Index), .77%; U.S. Government
Securities (35% of the Index), -.13%; and U.S. Investment Grade Corporate
Securities (21% of the Index), -.26%. In comparison, the Portfolio had
approximately 41% of its assets invested in fixed rate mortgage-backed
securities, 32% in corporate securities and 27% in cash equivalents. The Index
had an effective duration(1) of 4.77 as of June 30, 2004, while the effective
duration of the Portfolio was 4.01. The Portfolio's overexposure to
outperforming fixed-rate mortgage-backed securities and cash equivalents was not
enough to offset the Portfolio's overexposure to underperforming investment
grade corporate securities and fund expenses.
Given the relatively low level of interest rates and the persisting signs
that the economy is recovering, we continue to feel that it is not an
appropriate time to take on a larger amount of interest rate risk than the
Aggregate Index. However, given the very steep yield curve it is costly to
remain in cash so we will keep the majority of the Portfolio invested in
intermediate maturity securities.
STRATEGIC YIELD: The Lehman Brothers High Yield Index ("High Yield Index")
generated a return of 1.36% during the six-month period ending June 30, 2004,
underperforming U.S. equities (the S & P 500 returned 2.60%), but outperforming
the Lehman Brothers U.S. Investment Grade Corporate Securities Index (which had
a return of -.26%). On a fundamental basis, a continued decline in defaults and
improvement in the credit rating upgrade-to-downgrade ratio helped the high
yield market outperform the investment grade corporate market. The
option-adjusted spread on the High Yield Index finished the current period at
393 basis points (3.93%) which was only 1 basis point (.01%) lower than at the
start of the period. The High Yield Index had an excess return of 155 basis
points (1.55%) relative to duration neutral U.S. Treasuries during the period.
The range of total return by rating category was not widely dispersed with the
Caa rated component of the Index returning 1.05%, Ba rated component returning
1.15% and B rated component returning 1.25% over the six-month reporting period.
During the six-month reporting period, the Portfolio produced a total
return of 2.76%, which exceeded the return of the High Yield Index. The general
outperformance of the securities held by the Portfolio more than offset fund
expenses and the Portfolio's higher exposure to underperforming cash equivalents
and investment grade issues than the High Yield Index.
The Portfolio has historically invested in a mix of high yield and
investment grade issues, attempting to find attractive issues in both markets.
As always, we will attempt to seek out securities in both the investment grade
and non-investment grade markets that we feel offer attractive potential returns
for the amount of risk taken.
MANAGED: The Managed Portfolio returned 2.62% through June 30, 2004,
relative to 3.44% for the S&P 500. The Portfolio remains most heavily allocated
to quality equities, but inflows have raised its cash levels and brought down
both the equity and fixed income weightings.
Equity valuations have improved of late with continued growth in earnings,
so that trailing P/E multiples are no longer at extreme levels. From a long-term
perspective though, valuation is still above average and not broadly compelling.
As of June 30th, the S&P 500 traded at 20.4 times trailing earnings, down from
almost 24 times earnings in February, but high relative to a long-term average
near sixteen.
Interest rates have risen modestly since the beginning of the year, and
the higher yields are making fixed income securities more attractive on an
absolute basis and also relative to equities. We would expect to work down the
Portfolio's cash level by purchasing additional fixed income or equity
securities as either asset class becomes more attractive.
VALUE GROWTH: For the first half of 2004, the Portfolio's performance
generally tracked that of its benchmark, the S&P 500. It returned 3.20% for the
period, whereas the S&P 500 gained 3.44%.
We have positioned the Portfolio so that it is weighted most heavily
towards high quality stocks and sectors as well as those that have historically
performed the best in a period of decelerating earnings growth. This means that
the Portfolio is heavy in the energy, consumer staples and health care sectors,
and underweight in more cyclical sectors such as consumer discretionary and
information technology. It does have a substantial weight in utility stocks as
well, but we trimmed its exposure to this sector as rates rose this spring.
- ----------
(1) Duration is a measure of interest rate risk for individual securities and
portfolios. The lower the duration for a security or portfolio, the less
sensitive it is to movements in interest rates.
3
<Page>
BLUE CHIP: The Blue Chip Portfolio passively tracks the direction of the
large capitalization equity market. Year-to-date, it has returned 0.76%. The
Portfolio remains substantially invested in common stocks of large companies and
is designed for those investors who prefer substantial exposure to common stocks
at all times or who wish to make their own market value judgments.
We appreciate your investment in the Fund and we take seriously our task
of seeking to grow and protect that investment. Thank you for continued support
of the Fund.
/s/ Craig A. Lang
CRAIG A. LANG
PRESIDENT
August 2, 2004
An investment in the Money Market Portfolio is neither insured nor guaranteed by
the Federal Deposit Insurance Corporation or any other government agency.
Although the Portfolio seeks to preserve the net asset value of $1.00 per share,
it is possible to lose money by investing in the Portfolio.
Past performance is not a guarantee of future results.
4
<Page>
EQUITRUST VARIABLE INSURANCE SERIES FUND
STATEMENTS OF ASSETS AND LIABILITIES
JUNE 30, 2004
(UNAUDITED)
<Table>
<Caption>
HIGH STRATEGIC
VALUE GROWTH GRADE BOND YIELD MANAGED MONEY MARKET BLUE CHIP
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------ ------------ ------------ ------------ ------------
ASSETS
Investments in securities, at value
(cost -- $49,086,147; $27,141,382;
$26,669,863; $60,356,164; $6,196,957;
and $69,689,505, respectively) $ 54,744,389 $ 27,549,009 $ 27,443,583 $ 70,066,869 $ 6,196,957 $ 81,302,886
Cash 49,176 22,382 106,968 48,860 55,130 39,981
Accrued dividends and interest receivable 64,578 189,754 493,886 144,251 1,338 89,020
Receivable for fund shares sold 20,124 7,415 12,916 19,081 461,283 18,158
Prepaid expense and other assets 834 409 397 1,042 93 1,264
------------ ------------ ------------ ------------ ------------ ------------
Total Assets $ 54,879,101 $ 27,768,969 $ 28,057,750 $ 70,280,103 $ 6,714,801 $ 81,451,309
------------ ------------ ------------ ------------ ------------ ------------
LIABILITIES
Payable for fund shares redeemed $ 50,299 $ 28,657 $ 30,036 $ 84,153 $ 8,042 $ 84,112
Accrued expenses 11,132 7,763 7,097 12,750 4,924 14,146
------------ ------------ ------------ ------------ ------------ ------------
Total Liabilities 61,431 36,420 37,133 96,903 12,966 98,258
------------ ------------ ------------ ------------ ------------ ------------
NET ASSETS $ 54,817,670 $ 27,732,549 $ 28,020,617 $ 70,183,200 $ 6,701,835 $ 81,353,051
============ ============ ============ ============ ============ ============
ANALYSIS OF NET ASSETS
Paid in Capital $ 57,134,496 $ 27,367,862 $ 29,602,694 $ 60,604,416 $ 6,701,835 $ 76,117,178
Accumulated undistibuted net
investment income 284,952 -- -- 648,559 -- 636,725
Accumulated undistibuted net realized loss
from investment transactions (8,260,020) (42,940) (2,355,797) (780,480) -- (7,014,233)
Net unrealized appreciation of investments 5,658,242 407,627 773,720 9,710,705 -- 11,613,381
------------ ------------ ------------ ------------ ------------ ------------
NET ASSETS $ 54,817,670 $ 27,732,549 $ 28,020,617 $ 70,183,200 $ 6,701,835 $ 81,353,051
============ ============ ============ ============ ============ ============
Shares issued and outstanding as of
June 30, 2004 4,564,065 2,723,550 3,078,945 4,739,047 6,701,835 2,434,650
NET ASSET VALUE PER SHARE $ 12.01 $ 10.18 $ 9.10 $ 14.81 $ 1.00 $ 33.41
============ ============ ============ ============ ============ ============
</Table>
SEE ACCOMPANYING NOTES.
5
<Page>
STATEMENTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 2004
(UNAUDITED)
<Table>
<Caption>
HIGH STRATEGIC
VALUE GROWTH GRADE BOND YIELD MANAGED MONEY MARKET BLUE CHIP
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------ ------------ ------------ ------------ ------------
INVESTMENT INCOME
Dividends $ 406,903 $ 23,472 $ 52,770 $ 563,643 $ -- $ 732,164
Interest 35,238 623,085 851,582 280,926 32,808 28,797
Foreign tax withholding (1,801) -- -- (2,546) -- --
------------ ------------ ------------ ------------ ------------ ------------
Total Investment Income 440,340 646,557 904,352 842,023 32,808 760,961
EXPENSES
Paid to EquiTrust Investment
Management Services, Inc.:
Investment advisory and management fees 120,060 40,378 60,189 152,487 8,115 80,268
Accounting fees 13,340 6,730 6,688 14,951 1,623 14,664
Custodial fees 4,127 3,903 3,626 4,459 4,242 3,734
Professional fees 5,235 2,632 2,624 6,656 643 7,869
Reports to shareholders 1,709 873 868 2,179 216 2,569
Trustees' fees and expenses 2,068 1,042 1,038 2,631 255 3,119
Insurance and bonds 612 327 311 782 75 923
Miscellaneous 8,408 5,845 5,456 9,504 3,694 11,223
------------ ------------ ------------ ------------ ------------ ------------
Total Expenses 155,559 61,730 80,800 193,649 18,863 124,369
Fees paid indirectly (171) (164) (205) (185) (286) (133)
------------ ------------ ------------ ------------ ------------ ------------
Net Expenses 155,388 61,566 80,595 193,464 18,577 124,236
------------ ------------ ------------ ------------ ------------ ------------
Net Investment Income 284,952 584,991 823,757 648,559 14,231 636,725
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS
Net realized gain (loss) from investment
transactions 340,227 (42,940) 54,883 786,623 -- (556,374)
Change in unrealized appreciation/
depreciation of investments 1,047,755 (510,604) (162,160) 347,471 -- 549,821
------------ ------------ ------------ ------------ ------------ ------------
Net Gain (Loss) on Investments 1,387,982 (553,544) (107,277) 1,134,094 -- (6,553)
------------ ------------ ------------ ------------ ------------ ------------
Net Increase in Net Assets
Resulting from Operations $ 1,672,934 $ 31,447 $ 716,480 $ 1,782,653 $ 14,231 $ 630,172
============ ============ ============ ============ ============ ============
</Table>
SEE ACCOMPANYING NOTES.
6
<Page>
STATEMENTS OF CHANGES IN NET ASSETS
<Table>
<Caption>
HIGH
VALUE GROWTH GRADE BOND
PORTFOLIO PORTFOLIO
----------------------------- -----------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED
JUNE 30, 2004 DECEMBER 31, JUNE 30, 2004 DECEMBER 31,
(UNAUDITED) 2003 (UNAUDITED) 2003
------------- ------------ ------------- ------------
OPERATIONS
Net investment income $ 284,952 $ 563,058 $ 584,991 $ 1,190,431
Net realized gain (loss) from investment transactions 340,227 1,385,175 (42,940) 70,428
Change in unrealized appreciation/(depreciation) of
investments 1,047,755 10,456,789 (510,604) 140,930
------------- ------------ ------------- ------------
Net Increase in Net Assets Resulting from Operations 1,672,934 12,405,022 31,447 1,401,789
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM
Net investment income (563,058) (632,800) (584,991) (1,190,431)
Net realized gain from investment transactions -- -- (70,428) (126,083)
------------- ------------ ------------- ------------
Total Dividends and Distributions (563,058) (632,800) (655,419) (1,316,514)
CAPITAL SHARE TRANSACTIONS 895,387 87,080 1,697,289 1,589,484
------------- ------------ ------------- ------------
Total Increase (Decrease) in Net Assets 2,005,263 11,859,302 1,073,317 1,674,759
NET ASSETS
Beginning of period 52,812,407 40,953,105 26,659,232 24,984,473
------------- ------------ ------------- ------------
End of period (including undistributed net investment
income as set forth below) $ 54,817,670 $ 52,812,407 $ 27,732,549 $ 26,659,232
============= ============ ============= ============
Undistributed Net Investment Income $ 284,952 $ 563,058 $ -- $ --
============= ============ ============= ============
</Table>
SEE ACCOMPANYING NOTES.
7
<Page>
<Table>
<Caption>
STRATEGIC
YIELD MANAGED
PORTFOLIO PORTFOLIO
------------------------------ ------------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED
JUNE 30, 2004 DECEMBER 31, JUNE 30, 2004 DECEMBER 31,
(UNAUDITED) 2003 (UNAUDITED) 2003
------------- ------------- ------------- -------------
OPERATIONS
Net investment income $ 823,757 $ 1,675,320 $ 648,559 $ 1,367,844
Net realized gain (loss) from investment transactions 54,883 (573,460) 786,623 1,211,076
Change in unrealized appreciation/(depreciation) of
investments (162,160) 1,601,235 347,471 9,622,628
------------- ------------- ------------- -------------
Net Increase in Net Assets Resulting from Operations 716,480 2,703,095 1,782,653 12,201,548
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM
Net investment income (823,757) (1,675,320) (1,367,844) (1,494,900)
Net realized gain from investment transactions -- -- -- --
------------- ------------- ------------- -------------
Total Dividends and Distributions (823,757) (1,675,320) (1,367,844) (1,494,900)
CAPITAL SHARE TRANSACTIONS 2,629,488 2,075,200 3,035,618 1,598,322
------------- ------------- ------------- -------------
Total Increase (Decrease) in Net Assets 2,522,211 3,102,975 3,450,427 12,304,970
NET ASSETS
Beginning of period 25,498,406 22,395,431 66,732,773 54,427,803
------------- ------------- ------------- -------------
End of period (including undistributed net investment
income as set forth below) $ 28,020,617 $ 25,498,406 $ 70,183,200 $ 66,732,773
============= ============= ============= =============
Undistributed Net Investment Income $ -- $ -- $ 648,559 $ 1,367,844
============= ============= ============= =============
</Table>
SEE ACCOMPANYING NOTES.
8
<Page>
<Table>
<Caption>
MONEY MARKET BLUE CHIP
PORTFOLIO PORTFOLIO
------------------------------ ------------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED
JUNE 30, 2004 DECEMBER 31, JUNE 30, 2004 DECEMBER 31,
(UNAUDITED) 2003 (UNAUDITED) 2003
------------- ------------- ------------- -------------
OPERATIONS
Net investment income $ 14,231 $ 35,564 $ 636,725 $ 1,194,008
Net realized gain (loss) from investment transactions -- -- (556,374) (4,671,594)
Change in unrealized appreciation/(depreciation) of
investments -- -- 549,821 19,623,555
------------- ------------- ------------- -------------
Net Increase in Net Assets Resulting from Operations 14,231 35,564 630,172 16,145,969
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM
Net investment income (14,231) (35,564) (1,194,008) (1,066,311)
Net realized gain from investment transactions -- -- -- --
------------- ------------- ------------- -------------
Total Dividends and Distributions (14,231) (35,564) (1,194,008) (1,066,311)
CAPITAL SHARE TRANSACTIONS (25,717) (1,421,989) 2,084,797 1,053,814
------------- ------------- ------------- -------------
Total Increase (Decrease) in Net Assets (25,717) (1,421,989) 1,520,961 16,133,472
NET ASSETS
Beginning of period 6,727,552 8,149,541 79,832,090 63,698,618
------------- ------------- ------------- -------------
End of period (including undistributed net investment
income as set forth below) $ 6,701,835 $ 6,727,552 $ 81,353,051 $ 79,832,090
============= ============= ============= =============
Undistributed Net Investment Income $ -- $ -- $ 636,725 $ 1,194,008
============= ============= ============= =============
</Table>
9
<Page>
EQUITRUST VARIABLE INSURANCE SERIES FUND
SCHEDULE OF INVESTMENTS
VALUE GROWTH PORTFOLIO
JUNE 30, 2004
(UNAUDITED)
<Table>
<Caption>
SHARES
HELD VALUE
-------------- --------------
COMMON STOCKS (86.16%)
BUSINESS SERVICES (4.08%)
Affiliated Computer Services,
Inc.-Class A 5,800(1) $ 307,052
Computer Associates
International, Inc. 12,055 338,263
Compuware Corp. 16,050(1) 105,930
First Data Corp. 3,520 156,710
Microsoft Corp. 14,800 422,688
Oracle Corp. 12,300(1) 146,739
SunGard Data Systems, Inc. 6,200(1) 161,200
Symantec Corp. 13,600(1) 595,408
--------------
2,233,990
CHEMICALS AND ALLIED PRODUCTS (8.09%)
Abbott Laboratories 8,000 326,080
Bristol-Myers Squibb Co. 12,540 307,230
E.I. du Pont de Nemours & Co. 6,400 284,288
GlaxoSmithKline plc 5,500 228,030
Hospira, Inc. 800(1) 22,080
IVAX Corp. 13,600(1) 326,264
Johnson & Johnson 8,200 456,740
KV Pharmaceutical Co.-Class A 12,700(1) 293,243
Merck & Co., Inc. 9,764 463,790
Mylan Laboratories, Inc. 21,825 441,956
Olin Corp. 6,400 112,768
Pfizer, Inc. 19,449 666,712
SurModics, Inc. 11,992(1) 295,483
Wyeth 5,835 210,994
--------------
4,435,658
COMMUNICATIONS (2.56%)
ADC Telecommunications, Inc. 67,700(1) 192,268
Centurytel, Inc. 19,300 579,772
Comcast Corp.-Class A 3,235(1) 90,677
Ectel, Ltd. 614(1) 1,773
Nextel Communications, Inc. 20,200(1) 538,532
--------------
1,403,022
DEPOSITORY INSTITUTIONS (8.86%)
AmSouth Bancorporation 17,100 435,537
Associated Banc-Corp 12,940 383,412
Astoria Financial Corp. 7,700 281,666
Bank of America Corp. 10,417 881,487
Citigroup, Inc. 13,055 607,057
National City Corp. 6,830 239,118
New York Community
Bancorp, Inc. 23,156 454,552
U. S. Bancorp 31,870 878,337
Wachovia Corp. 7,650 340,425
Wilmington Trust Corp. 9,500 353,590
--------------
4,855,181
EATING & DRINKING PLACES (0.53%)
Wendy's International, Inc. 8,400 $ 292,656
ELECTRIC, GAS AND SANITARY SERVICES (3.50%)
Alliant Energy Corp. 8,660 225,853
Atmos Energy Corp. 17,012 435,337
Black Hills Corp. 7,520 236,880
Nisource, Inc. 19,500 402,090
Pepco Holdings, Inc. 16,200 296,136
Xcel Energy, Inc. 19,405 324,258
--------------
1,920,554
ELECTRONIC AND OTHER ELECTRICAL
EQUIPMENT (2.04%)
Acuity Brands, Inc. 18,500 499,500
Adaptec, Inc. 23,150(1) 195,849
ECI Telecom, Ltd. 10,000(1) 68,300
Electronic Data Systems Corp. 5,745 110,017
Intel Corp. 8,900 245,640
--------------
1,119,306
FABRICATED METAL PRODUCTS (1.09%)
Cooper Industries, Ltd. 4,738 281,485
Shaw Group, Inc. 10,400(1) 105,352
Stanley Works (The) 4,600 209,668
--------------
596,505
FOOD AND KINDRED PRODUCTS (5.29%)
ConAgra Foods, Inc. 42,416 1,148,625
Sara Lee Corp. 23,400 537,966
Sensient Technologies Corp. 56,375 1,210,935
--------------
2,897,526
FOOD STORES (3.03%)
7-Eleven, Inc. 35,930(1) 641,350
Kroger Co. 19,526(1) 355,373
Safeway, Inc. 26,230(1) 664,668
--------------
1,661,391
GENERAL MERCHANDISE STORES (1.54%)
Federated Department Stores, Inc. 6,008 294,993
Fred's, Inc. 14,700 324,723
Target Corp. 5,300 225,091
--------------
844,807
HEALTH SERVICES (5.03%)
Laboratory Corp. of America Holdings 18,500(1) 734,450
Province Healthcare Co. 35,900(1) 615,685
Schering-Plough Corp. 23,200 428,736
Select Medical Corp. 19,200 257,664
Taro Pharmaceutical
Industries, Ltd. 6,600(1) 287,100
Universal Health Services,
Inc.-Class B 9,420 432,284
--------------
2,755,919
</Table>
10
<Page>
<Table>
<Caption>
SHARES
HELD VALUE
-------------- --------------
HOLDING AND OTHER INVESTMENT OFFICES (2.85%)
Highwoods Properties, Inc. 17,500 $ 411,250
MBIA, Inc. 11,400 651,168
Reckson Assoc. Realty
Corp.-Class A 18,250 501,145
--------------
1,563,563
INDUSTRIAL MACHINERY AND EQUIPMENT (2.49%)
Cisco Systems, Inc. 6,500(1) 154,050
EMC Corp. 22,500(1) 256,500
Hewlett-Packard Co. 6,000 126,600
Ingersoll-Rand Co. Ltd.-Class A 9,950 679,685
Solectron Corp. 22,500(1) 145,575
--------------
1,362,410
INSTRUMENTS AND RELATED PRODUCTS (4.31%)
Agilent Technologies, Inc. 7,000(1) 204,960
Becton Dickinson & Co. 20,100 1,041,180
JDS Uniphase Corp. 16,400(1) 62,156
Medtronic, Inc. 2,800 136,416
Pall Corp. 25,980 680,416
Perkinelmer, Inc. 11,900 238,476
--------------
2,363,604
INSURANCE CARRIERS (4.40%)
Allstate Corp. 15,200 707,560
American International Group, Inc. 7,450 531,036
Protective Life Corp. 9,300 359,631
Safeco Corp. 8,800 387,200
WellPoint Health Networks, Inc. 3,800(1) 425,638
--------------
2,411,065
METAL MINING (1.38%)
Barrick Gold Corp. 20,000 395,000
Placer Dome, Inc. 21,600 359,424
--------------
754,424
MISCELLANEOUS MANUFACTURING
INDUSTRIES (0.71%)
Emerson Electric Co. 2,300 146,165
Hasbro, Inc. 12,900 245,100
--------------
391,265
MOTION PICTURES (0.31%)
Time Warner, Inc. 9,600(1) 168,768
NONDEPOSITORY INSTITUTIONS (0.57%)
Federal Home Loan Mortgage Corp. 4,900 310,170
OIL AND GAS EXTRACTION (4.14%)
Burlington Resources, Inc. 20,000 723,600
EOG Resources, Inc. 5,800 346,318
Occidental Petroleum Co. 8,600 416,326
Rowan Companies, Inc. 16,900(1) 411,177
Whiting Petroleum Corp. 14,900(1) 374,735
--------------
2,272,156
PAPER AND ALLIED PRODUCTS (1.67%)
Abitibi Consolidated, Inc. 92,600 $ 637,088
Sonoco Products Co. 10,900 277,950
--------------
915,038
PETROLEUM AND COAL PRODUCTS (5.13%)
BP PLC 6,000 321,420
ChevronTexaco Corp. 7,050 663,475
ConocoPhillips 16,833 1,284,190
Marathon Oil Corp. 14,400 544,896
--------------
2,813,981
PRIMARY METAL INDUSTRIES (0.70%)
Northwest Pipe Co. 21,745(1) 383,799
PRINTING AND PUBLISHING (2.05%)
Belo Corp. 26,400 708,840
Cenveo, Inc. 36,450(1) 106,799
R.R. Donnelley & Sons Co. 9,400 310,388
--------------
1,126,027
RAILROAD TRANSPORTATION (0.23%)
Union Pacific Corp. 2,155 128,115
SECURITY & COMMODITY BROKER (0.03%)
Piper Jaffray Co. 347(1) 15,695
TOBACCO PRODUCTS (1.29%)
Altria Group, Inc. 14,100 705,705
TRANSPORTATION -- BY AIR (0.45%)
Petroleum Helicopters, Inc.
(Non-Voting) 12,665(1) 245,828
TRANSPORTATION EQUIPMENT (4.03%)
Federal Signal Corp. 13,300 247,513
Genuine Parts Co. 7,800 309,504
Honeywell International, Inc. 23,500 860,805
ITT Industries, Inc. 4,185 347,355
SPX Corp. 9,514 441,830
--------------
2,207,007
WHOLESALE TRADE -- DURABLE GOODS (0.85%)
Apogent Technologies, Inc. 14,600(1) 467,200
WHOLESALE TRADE -- NONDURABLE GOODS (1.16%)
Dean Foods Co. 16,986(1) 633,748
MISCELLANEOUS EQUITIES (1.77%)
H & Q Life Sciences Investors 23,336 364,514
NASDAQ-100 Trust 16,100(1) 607,775
--------------
972,289
--------------
Total Common Stocks
(Cost $41,570,130) 47,228,372
</Table>
11
<Page>
<Table>
<Caption>
SHARES
HELD VALUE
-------------- --------------
SHORT-TERM INVESTMENTS (13.71%)
MONEY MARKET MUTUAL FUND (1.36%)
Blackrock Provident Institutional
Funds, T-Fund Portfolio
(Cost $747,612) 747,612 $ 747,612
<Caption>
PRINCIPAL
AMOUNT
--------------
COMMERCIAL PAPER (4.64%)
NONDEPOSITORY INSTITUTIONS
American General Finance Corp.,
1.06%, due 07/06/04 $ 825,000 825,000
American General Finance Corp.,
1.05%, due 07/07/04 450,000 450,000
General Electric Capital Corp., 1.11%,
due 07/14/04 700,000 700,000
General Electric Capital Corp., 1.18%,
due 07/20/04 570,000 570,000
--------------
Total Commercial Paper
(Cost $2,545,000) 2,545,000
UNITED STATES GOVERNMENT AGENCIES (7.71%)
Federal Home Loan Bank,
due 07/28/04 1,100,000 1,099,166
Federal Home Loan Mortgage Corp.,
due 07/06/04 225,000 224,968
Federal Home Loan Mortgage Corp.,
due 07/20/04 800,000 799,552
Federal National Mortgage Assoc.,
due 07/02/04 500,000 499,986
Federal National Mortgage Assoc.,
due 07/07/04 1,600,000 1,599,733
--------------
Total United States Government Agencies
(Cost $4,223,405) 4,223,405
--------------
Total Short-Term Investments
(Cost $7,516,017) 7,516,017
--------------
Total Investments
(Cost $49,086,147) (99.87%) 54,744,389
OTHER ASSETS LESS LIABILITIES (0.13%)
Cash, receivables, prepaid expense
and other assets, less liabilities 73,281
--------------
Total Net Assets (100.00%) $ 54,817,670
==============
</Table>
(1) Non-income producing securities.
SEE ACCOMPANYING NOTES.
12
<Page>
EQUITRUST VARIABLE INSURANCE SERIES FUND
SCHEDULE OF INVESTMENTS
HIGH GRADE BOND PORTFOLIO
JUNE 30, 2004
(UNAUDITED)
<Table>
<Caption>
SHARES
HELD VALUE
-------------- --------------
PREFERRED STOCKS (2.36%)
DEPOSITORY INSTITUTIONS (1.62%)
Chase Capital V, 7.03%,
due 03/31/28 18,000 $ 450,180
HOLDING AND OTHER INVESTMENT OFFICES (0.74%)
New Plan Excel Realty Trust-Series D,
7.80% 4,000 205,500
--------------
Total Preferred Stocks
(Cost $561,620) 655,680
<Caption>
PRINCIPAL
AMOUNT
--------------
CORPORATE BONDS (28.75%)
ELECTRIC, GAS AND SANITARY SERVICES (6.83%)
Maritime & NE Pipeline, 144A,
7.70%, due 11/30/19 $ 700,000(1) 781,487
Oglethorpe Power (OPC Scherer),
6.974%, due 06/30/11 264,786 280,234
PacifiCorp, 6.90%, due 11/15/11 750,000 832,057
--------------
1,893,778
FOOD STORES (2.29%)
Ahold Finance USA, Inc., 8.25%,
due 07/15/10 600,000 636,000
GENERAL MERCHANDISE STORES (0.95%)
J.C. Penney & Co., 8.25%,
due 08/15/22 254,000 263,525
HOLDING AND OTHER INVESTMENT OFFICES (2.99%)
Meditrust, 7.60%, due 09/13/05 150,000 155,250
Security Capital Pacific, 7.20%,
due 03/01/13 275,000 296,986
Washington REIT, 6.898%,
due 02/15/18 350,000 377,338
--------------
829,574
INSURANCE CARRIERS (3.08%)
SunAmerica, 8.125%, due 04/28/23 700,000 855,078
SECURITY & COMMODITY BROKERS (4.28%)
Morgan Stanley, 5.125%,
due 02/11/19 1,300,000 1,187,277
TOBACCO PRODUCTS (2.99%)
UST, Inc., 7.25%, due 06/01/09 750,000 829,238
<Caption>
PRINCIPAL
AMOUNT VALUE
-------------- --------------
TRANSPORTATION -- BY AIR (4.74%)
Continental Airlines, Inc., 6.545%,
due 08/02/20 $ 422,096 $ 396,771
Federal Express, 7.5%,
due 01/15/18 203,228 229,556
Northwest Airlines, 7.575%,
due 03/01/19 692,797 687,601
--------------
1,313,928
TRANSPORTATION EQUIPMENT (0.60%)
Ford Motor Co., 9.215%,
due 09/15/21 150,000 165,552
--------------
Total Corporate Bonds
(Cost $7,711,680) 7,973,950
MORTGAGE-BACKED SECURITIES (41.84%)
FEDERAL NATIONAL MORTGAGE ASSOCIATION
(FNMA) (0.01%)
Pool # 50276, 9.50%, due 02/01/20 1,945 2,205
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
(GNMA) (41.83%)
Pool # 1512, 7.50%, due 12/20/23 47,172 51,057
Pool # 2631, 7.00%, due 08/01/28 73,490 78,145
Pool # 2658, 6.50%, due 10/01/28 114,998 120,220
Pool # 2701, 6.50%, due 01/20/29 139,218 145,436
Pool # 2796, 7.00%, due 08/01/29 125,962 133,842
Pool # 3039, 6.50%, due 02/01/31 51,779 54,065
Pool # 3040, 7.00%, due 02/01/31 102,006 108,333
Pool # 3188, 6.50%, due 02/20/32 328,027 342,434
Pool # 3239, 6.50%, due 05/01/32 290,246 302,993
Pool # 3261, 6.50%, due 07/20/32 573,215 598,390
Pool # 3320, 5.50%, due 12/01/32 1,595,180 1,595,628
Pool # 3333, 5.50%, due 01/01/33 1,306,776 1,306,812
Pool # 3375, 5.50%, due 04/01/33 207,566 207,571
Pool # 3390, 5.50%, due 05/01/33 937,757 937,783
Pool # 3403, 5.50%, due 06/01/33 1,596,518 1,596,561
Pool # 3458, 5.00%, due 10/01/33 949,928 922,106
Pool # 3499, 5.00%, due 01/01/34 1,468,394 1,424,158
Pool # 3556, 5.50%, due 05/01/34 1,596,255 1,595,424
Pool # 22630, 6.50%, due 08/01/28 64,381 67,305
Pool # 276337, 10.00%, due 08/15/19 9,775 10,979
--------------
11,599,242
--------------
Total Mortgage-Backed Securities
(Cost $11,552,808) 11,601,447
UNITED STATES TREASURY OBLIGATION (1.45%)
U.S. Treasury Note, 7.25%,
due 08/15/04 (Cost $400,358) 400,000 403,016
</Table>
13
<Page>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
-------------- --------------
SHORT-TERM INVESTMENTS (24.94%)
COMMERCIAL PAPER (6.85%)
NONDEPOSITORY INSTITUTIONS (6.85%)
American General Finance Corp.,
1.06%, due 07/09/04 $ 950,000 $ 950,000
General Electric Capital Corp.,
1.18%, due 07/20/04 950,000 950,000
--------------
Total Commercial Paper
(Cost $1,900,000) 1,900,000
UNITED STATES GOVERNMENT AGENCIES (17.12%)
Federal Home Loan Bank,
due 07/16/04 1,100,000 1,099,537
Federal Home Loan Bank,
due 07/28/04 400,000 399,676
Federal Home Loan Mortgage Corp.,
due 07/06/04 700,000 699,902
Federal Home Loan Mortgage Corp.,
due 07/20/04 350,000 349,776
Federal Home Loan Mortgage Corp.,
due 08/03/04 1,000,000 999,008
Federal Home Loan Mortgage Corp.,
due 08/17/04 750,000 748,815
Federal National Mortgage Assoc.,
due 07/14/04 450,000 449,834
--------------
Total United States Government
Agencies (Cost $4,746,548) 4,746,548
<Caption>
SHARES
HELD
--------------
MONEY MARKET MUTUAL FUND (0.97%)
Blackrock Provident Institutional
Funds, T-Fund Portfolio
(Cost $268,368) 268,368 268,368
--------------
Total Short-Term Investments
(Cost $6,914,916) 6,914,916
--------------
Total Investments
(Cost $27,141,382) (99.34%) 27,549,009
OTHER ASSETS LESS LIABILITIES (0.66%)
Cash, receivables, prepaid expense
and other assets, less liabilities 183,540
--------------
Total Net Assets (100.00%) $ 27,732,549
==============
</Table>
(1) Each unit was purchased at 104.481 on 04/20/01. As of 6/30/04, the
carrying value of each unit was 111.641 and represented 2.82% of total net
assets.
SEE ACCOMPANYING NOTES.
14
<Page>
EQUITRUST VARIABLE INSURANCE SERIES FUND
SCHEDULE OF INVESTMENTS
STRATEGIC YIELD PORTFOLIO
JUNE 30, 2004
(UNAUDITED)
<Table>
<Caption>
SHARES
HELD VALUE
-------------- --------------
PREFERRED STOCKS (4.58%)
HOLDING AND OTHER INVESTMENT OFFICES (1.28%)
New Plan Excel Realty Trust--
Series D, 7.80% 7,000 $ 359,625
METAL MINING (3.30%)
Cameco Corp., 8.75%, due 09/30/47 36,000 923,400
--------------
Total Preferred Stocks
(Cost $1,213,640) 1,283,025
<Caption>
PRINCIPAL
AMOUNT
--------------
CORPORATE BONDS (72.85%)
CHEMICALS AND ALLIED PRODUCTS (8.81%)
Lyondell Chemical Co.,
9.625%, due 05/01/07 $ 900,000 945,000
Nova Chemicals, Ltd.,
7.875%, due 09/15/25 800,000 784,664
Polyone Corp.,
8.875%, due 05/01/12 750,000 740,625
--------------
2,470,289
COMMUNICATIONS (1.91%)
Telephone & Data Systems, Inc.,
7.00%, due 08/01/06 500,000 534,665
ELECTRIC, GAS AND SANITARY SERVICES (9.65%)
Alliant Energy Resources, Inc.,
9.75%, due 01/15/13 1,000,000 1,260,110
ESI Tractebel, 7.99%, due 12/30/11 306,196 316,913
Semco Energy, Inc.,
7.125%, due 05/15/08 900,000 927,000
Waterford 3 Nuclear Power Plant,
8.09%, due 01/02/17 194,488 201,212
--------------
2,705,235
GENERAL MERCHANDISE STORES (7.15%)
DR Structured Finance,
8.35%, due 02/15/04 376,793(1) 252,452
J.C. Penney & Co.,
8.25%, due 8/15/22 255,000 264,562
Woolworth (FW) Corp.,
8.50%, due 01/15/22 1,400,000 1,487,500
--------------
2,004,514
<Caption>
PRINCIPAL
AMOUNT VALUE
-------------- --------------
HOLDING AND OTHER INVESTMENT OFFICES (13.14%)
Bradley Operating, L.P.,
7.20%, due 01/15/08 $ 450,000 $ 476,586
Federal Realty Investment Trust,
7.48%, due 08/15/26 600,000 634,669
First Industrial LP,
7.60%, due 07/15/28 700,000 750,785
iStar Financial Inc.,
7.00%, due 03/15/08 300,000 319,500
Price Development Company,
7.29%, due 03/11/08 450,000 455,917
Trinet Corp. Realty,
7.70%, due 07/15/17 1,000,000 1,043,680
--------------
3,681,137
INSURANCE CARRIERS (6.10%)
Markel Capital Trust,
8.71%, due 01/01/46 1,000,000 1,039,020
PXRE Capital Trust,
8.85%, due 02/01/27 670,000 670,000
--------------
1,709,020
METAL MINING (2.75%)
Teck Cominco Ltd.,
3.75%, due 07/15/06 800,000 770,040
PAPER AND ALLIED PRODUCTS (10.88%)
Bowater, Inc.,
9.375%, due 12/15/21 900,000 969,912
Cascades, Inc.,
7.25%, due 02/15/13 1,000,000 1,000,000
Potlatch Corp.,
12.50%, due 12/01/09 900,000 1,078,083
--------------
3,047,995
TRANSPORTATION -- BY AIR (4.95%)
Continental Airlines, Inc.,
7.461%, due 04/01/15 1,261,847 1,184,558
Northwest Airlines,
7.575%, due 03/01/19 203,509 201,983
--------------
1,386,541
WATER TRANSPORTATION (7.51%)
Overseas Shipholding Group, Inc.,
8.75%, due 12/01/13 1,100,000 1,208,625
Windsor Petroleum Transportation,
144A, 7.84%, due 01/15/21 1,000,000(2) 894,430
--------------
2,103,055
--------------
Total Corporate Bonds
(Cost $19,708,156) 20,412,491
</Table>
15
<Page>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
-------------- --------------
SHORT-TERM INVESTMENTS (20.51%)
COMMERCIAL PAPER (4.46%)
NONDEPOSITORY INSTITUTIONS
American General Finance Corp.,
1.20%, due 08/09/04 $ 500,000 $ 500,000
General Electric Capital Corp.,
1.20%, due 07/28/04 750,000 750,000
--------------
Total Commercial Paper
(Cost $1,250,000) 1,250,000
UNITED STATES GOVERNMENT AGENCIES (14.53%)
Federal Home Loan Bank.,
due 07/16/04 400,000 399,830
Federal Home Loan Bank.,
due 07/23/04 750,000 749,537
Federal Home Loan Bank.,
due 08/06/04 500,000 499,400
Federal Home Loan Mortgage Corp.,
due 07/06/04 550,000 549,922
Federal Home Loan Mortgage Corp.,
due 07/20/04 400,000 399,776
Federal Home Loan Mortgage Corp.,
due 08/03/04 500,000 499,504
Federal Home Loan Mortgage Corp.,
due 08/17/04 975,000 973,460
--------------
Total United States Government
Agencies (Cost $4,071,429) 4,071,429
<Caption>
SHARES
HELD
--------------
MONEY MARKET MUTUAL FUND (1.52%)
Blackrock Provident Institutional
Funds, T-Fund Portfolio
(Cost $426,638) 426,638 426,638
--------------
Total Short-Term Investments
(Cost $5,748,067) 5,748,067
--------------
Total Investments
(Cost $26,669,863) (97.94%) 27,443,583
OTHER ASSETS LESS LIABILITIES (2.06%)
Cash, receivables, prepaid expense
and other assets, less liabilities 577,034
--------------
Total Net Assets (100.00%) $ 28,020,617
==============
</Table>
(1) Partial or no interest was received on this security on its last scheduled
interest payment date.
(2) Each unit was purchased at 80.500 on 8/26/99. As of 6/30/04, the carrying
value of each unit was 89.443 and represents 3.19% of total net assets.
SEE ACCOMPANYING NOTES.
16
<Page>
EQUITRUST VARIABLE INSURANCE SERIES FUND
SCHEDULE OF INVESTMENTS
MANAGED PORTFOLIO
JUNE 30, 2004
(UNAUDITED)
<Table>
<Caption>
SHARES
HELD VALUE
-------------- --------------
COMMON STOCKS (62.81%)
CHEMICALS AND ALLIED PRODUCTS (5.34%)
Bristol-Myers Squibb Co. 12,300 $ 301,350
GlaxoSmithKline plc 4,700 194,862
IVAX Corp. 17,100(1) 410,229
Johnson & Johnson 7,200 401,040
KV Pharmaceutical Co.-Class A 12,600(1) 290,934
Merck & Co., Inc. 15,158 720,005
Mylan Laboratories, Inc. 26,325 533,081
Olin Corp. 17,100 301,302
Pfizer, Inc. 17,310 593,387
--------------
3,746,190
COMMUNICATIONS (1.84%)
Centurytel, Inc. 24,040 722,162
Comcast Corp.-Class A 3,930(1) 110,158
Nextel Communications, Inc. 17,200(1) 458,552
--------------
1,290,872
DEPOSITORY INSTITUTIONS (8.53%)
AmSouth Bancorporation 24,800 631,656
Associated Banc Corp. 22,833 676,542
Astoria Financial Corp. 10,100 369,458
Bank of America Corp. 11,136 942,328
Citigroup, Inc. 3,400 158,100
National City Corp. 8,695 304,412
New York Community Bancorp 44,834 880,091
U. S. Bancorp. 43,230 1,191,419
Wachovia Corp. 8,328 370,596
Wilmington Trust Corp. 12,500 465,250
--------------
5,989,852
ELECTRIC, GAS AND SANITARY SERVICES (5.03%)
Alliant Energy Corp. 22,115 576,759
Atmos Energy Corp. 38,252 978,869
Black Hills Corp. 9,655 304,133
Nisource, Inc. 25,000 515,500
Pepco Holdings, Inc. 40,600 742,168
Xcel Energy, Inc. 24,690 412,570
--------------
3,529,999
ELECTRONIC AND OTHER ELECTRIC
EQUIPMENT (1.51%)
Acuity Brands, Inc. 33,850 913,950
Electronic Data Systems Corp. 7,500 143,625
--------------
1,057,575
FABRICATED METAL PRODUCTS (1.28%)
Cooper Industries, Ltd. 5,521 328,003
Stanley Works (The) 12,500 569,750
--------------
897,753
FOOD AND KINDRED PRODUCTS (4.68%)
ConAgra Foods, Inc. 42,230 1,143,588
Sara Lee Corp. 24,100 554,059
Sensient Technologies Corp. 73,945 1,588,339
--------------
3,285,986
FOOD STORES (1.85%)
Kroger Co. 25,186(1) $ 458,385
Safeway, Inc. 33,280(1) 843,315
--------------
1,301,700
GENERAL MERCHANDISE STORES (0.54%)
Federated Department Stores, Inc. 7,681 377,137
HEALTH SERVICES (2.32%)
Province Healthcare Co. 26,400(1) 452,760
Schering-Plough Corp. 15,700 290,136
Select Medical Corp. 24,600 330,132
Taro Pharmaceutical Industries, Ltd. 6,030(1) 262,305
Universal Health Services,
Inc.-Class B 6,350 291,402
--------------
1,626,735
HOLDING AND OTHER INVESTMENT OFFICES (2.30%)
Highwoods Properties, Inc. 21,500 505,250
MBIA, Inc. 7,781 444,451
Reckson Associates Realty Corp.-
Class A 24,260 666,180
--------------
1,615,881
INDUSTRIAL MACHINERY & EQUIPMENT (1.20%)
Hewlett-Packard Co. 6,900 145,590
Ingersoll-Rand Co. Ltd.-Class A 10,222 698,265
--------------
843,855
INSTRUMENTS AND RELATED PRODUCTS (2.44%)
Becton Dickinson & Co. 20,000 1,036,000
Pall Corp. 25,750 674,392
--------------
1,710,392
INSURANCE CARRIERS (2.82%)
Allstate Corp. 15,300 712,215
Protective Life 6,200 239,754
Safeco Corp. 11,200 492,800
WellPoint Health Networks, Inc. 4,800(1) 537,648
--------------
1,982,417
METAL MINING (2.36%)
Barrick Gold Corp. 41,200 813,700
Placer Dome, Inc. 50,500 840,320
--------------
1,654,020
MISCELLANEOUS MANUFACTURING
INDUSTRIES (0.07%)
Emerson Electric Co. 800 50,840
OIL AND GAS EXTRACTION (2.49%)
Burlington Resources, Inc. 15,000 542,700
Occidental Petroleum Co. 16,500 798,765
Rowan Companies, Inc. 16,700(1) 406,311
--------------
1,747,776
</Table>
17
<Page>
<Table>
<Caption>
SHARES
HELD VALUE
-------------- --------------
PAPER AND ALLIED PRODUCTS (2.71%)
Abitibi Consolidated, Inc. 133,500 $ 918,480
Glatfelter 31,300 440,704
Sonoco Products Co. 21,200 540,600
--------------
1,899,784
PETROLEUM AND COAL PRODUCTS (4.08%)
BP PLC 8,100 433,917
ConocoPhillips 21,012 1,603,005
Marathon Oil Corp. 21,800 824,912
--------------
2,861,834
PRIMARY METAL INDUSTRIES (0.18%)
Wolverine Tube, Inc. 11,400(1) 124,260
PRINTING AND PUBLISHING (1.98%)
Belo Corp.-Series A 29,600 794,760
R.R. Donnelley & Sons Co. 18,100 597,662
--------------
1,392,422
RAILROAD TRANSPORTATION (0.23%)
Union Pacific Corp. 2,710 161,109
SECURITY & COMMODITY BROKERS (0.03%)
Piper Jaffray Co. 490(1) 22,163
TOBACCO PRODUCTS (1.10%)
Altria Group, Inc. 15,400 770,770
TRANSPORTATION EQUIPMENT (4.57%)
Federal Signal Corp. 36,400 677,404
Genuine Parts Co. 14,700 583,296
Honeywell International, Inc. 27,400 1,003,662
ITT Industries, Inc. 5,095 422,885
SPX Corp. 11,228 521,428
--------------
3,208,675
WHOLESALE TRADE -- DURABLE GOODS (0.32%)
Apogent Technologies, Inc. 7,000(1) 224,000
WHOLESALE TRADE -- NONDURABLE GOODS (1.01%)
Dean Foods Co. 19,069(1) 711,464
--------------
Total Common Stocks
(Cost $34,441,379) 44,085,461
PREFERRED STOCKS (0.94%)
DEPOSITORY INSTITUTIONS
Taylor Capital Group,
Inc.-Series A, 9.00%, 26,000 657,314
--------------
Total Preferred Stocks
(Cost $655,000) 657,314
<Caption>
PRINCIPAL
AMOUNT VALUE
-------------- --------------
CORPORATE BONDS (2.06%)
METAL MINING
Teck Cominco Ltd.,
3.75%, due 07/15/06
(Cost $1,416,687) $ 1,500,000 $ 1,443,825
MORTGAGE-BACKED SECURITIES (6.76%)
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
(GNMA)
Pool # 2796, 7.00%, due 08/01/29 188,943 200,763
Pool # 3040, 7.00%, due 02/01/31 127,508 135,416
Pool # 3188, 6.50%, due 02/20/32 328,027 342,434
Pool # 3239, 6.50%, due 05/01/32 486,098 507,447
Pool # 3333, 5.50%, due 01/01/33 571,715 571,730
Pool # 3403, 5.50%, due 06/01/33 503,278 503,291
Pool # 3442, 5.00%, due 09/01/33 1,423,459 1,381,769
Pool # 3459, 5.50%, due 10/01/33 1,101,596 1,101,626
--------------
Total Mortgage-Backed Securities
(Cost $4,707,305) 4,744,476
SHORT-TERM INVESTMENTS (27.26%)
COMMERCIAL PAPER (8.48%)
NONDEPOSITORY INSTITUTIONS (6.34%)
American General Finance Corp.,
1.03%, due 07/02/04 1,150,000 1,150,000
American General Finance Corp.,
1.07%, due 07/28/04 1,550,000 1,550,000
Citigroup Inc.,
1.05%, due 07/06/04 1,100,000 1,100,000
General Electric Capital Corp.,
1.30%, due 08/18/04 650,000 650,000
--------------
4,450,000
PETROLEUM AND COAL PRODUCTS (2.14%)
ChevronTexaco Corp.,
1.21%, due 08/11/04 1,500,000 1,500,000
--------------
Total Commercial Paper
(Cost $5,950,000) 5,950,000
</Table>
18
<Page>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
-------------- --------------
UNITED STATES GOVERNMENT AGENCIES (17.76%)
Federal Home Loan Bank,
due 07/16/04 $ 1,600,000 $ 1,599,326
Federal Home Loan Bank,
due 07/21/04 1,475,000 1,474,163
Federal Home Loan Bank,
due 07/28/04 200,000 199,838
Federal Home Loan Mortgage Corp.,
due 07/06/04 3,125,000 3,124,562
Federal National Mortgage Assoc.,
due 07/14/04 2,100,000 2,099,233
Federal National Mortgage Assoc.,
due 08/04/04 2,600,000 2,597,319
Federal National Mortgage Assoc.,
due 08/18/04 1,375,000 1,372,853
--------------
Total United States Government
Agencies (Cost $12,467,294) 12,467,294
<Caption>
SHARES
HELD
--------------
MONEY MARKET MUTUAL FUND (1.02%)
Blackrock Provident Institutional Funds,
T-Fund Portfolio (Cost $718,499) 718,499 718,499
--------------
Total Short-Term Investments
(Cost $19,135,793) 19,135,793
--------------
Total Investments
(Cost $60,356,164) (99.83%) 70,066,869
OTHER ASSETS LESS LIABILITIES (0.17%)
Cash, receivables, prepaid expense
and other assets, less liabilities 116,331
--------------
Total Net Assets (100.00%) $ 70,183,200
==============
</Table>
(1) Non-income producing securities.
SEE ACCOMPANYING NOTES.
19
<Page>
EQUITRUST VARIABLE INSURANCE SERIES FUND
SCHEDULE OF INVESTMENTS
MONEY MARKET PORTFOLIO
JUNE 30, 2004
(UNAUDITED)
<Table>
<Caption>
ANNUALIZED
YIELD ON
PURCHASE PRINCIPAL
DATE AMOUNT VALUE
---------- --------- -------------
SHORT-TERM INVESTMENTS (92.47%)
COMMERCIAL PAPER (17.76%)
NONDEPOSITORY INSTITUTIONS (13.36%)
American General Finance Corp., 1.10%, due 07/16/04 1.101% $ 165,000 $ 165,000
American General Finance Corp., 1.11%, due 08/26/04 1.113 140,000 140,000
General Electric Capital Corp., 1.08%, due 07/12/04 1.082 120,000 120,000
General Electric Capital Corp., 1.11%, due 07/14/04 1.111 170,000 170,000
International Business Machines Corp., 1.39%, due 07/01/04 1.399 300,000 300,000
-------------
895,000
PETROLEUM AND COAL PRODUCTS (4.40%)
ChevronTexaco Corp., 1.01%, due 07/01/04 1.012 175,000 175,000
ChevronTexaco Corp., 1.22%, due 08/30/04 1.223 120,000 120,000
-------------
295,000
-------------
Total Commercial Paper (Cost $1,190,000) 1,190,000
UNITED STATES GOVERNMENT AGENCIES (66.14%)
Federal Home Loan Bank, due 07/09/04 1.005 125,000 124,972
Federal Home Loan Bank, due 07/23/04 1.167 250,000 249,824
Federal Home Loan Bank, due 07/28/04 1.016 125,000 124,906
Federal Home Loan Bank, due 07/30/04 1.016 250,000 249,798
Federal Home Loan Bank, due 08/13/04 1.234 225,000 224,673
Federal Home Loan Bank, due 09/15/04 1.160 525,000 523,735
Federal Home Loan Mortgage Corp., due 07/06/04 1.016 200,000 199,972
Federal Home Loan Mortgage Corp., due 07/13/04 1.116 225,000 224,918
Federal Home Loan Mortgage Corp., due 07/27/04 1.037 200,000 199,852
Federal Home Loan Mortgage Corp., due 08/10/04 1.128 200,000 199,753
Federal Home Loan Mortgage Corp., due 08/17/04 1.240 225,000 224,642
Federal Home Loan Mortgage Corp., due 08/31/04 1.200 225,000 224,550
Federal Home Loan Mortgage Corp., due 09/28/04 1.476 225,000 224,193
Federal National Mortgage Assoc., due 07/21/04 1.027 170,000 169,904
Federal National Mortgage Assoc., due 08/04/04 1.052 190,000 189,814
Federal National Mortgage Assoc., due 08/18/04 1.169 185,000 184,716
Federal National Mortgage Assoc., due 08/20/04 1.129 175,000 174,730
Federal National Mortgage Assoc., due 09/01/04 1.332 250,000 249,436
Federal National Mortgage Assoc., due 09/08/04 1.393 225,000 224,409
Federal National Mortgage Assoc., due 11/03/04 1.393 245,000 243,837
-------------
Total United States Government Agencies (Cost $4,432,634) 4,432,634
UNITED STATES TREASURY OBLIGATIONS (8.57%)
U.S. Treasury Note, due 08/05/04 1.047 350,000 349,649
U.S. Treasury Note, due 08/19/04 1.082 225,000 224,674
-------------
Total United States Treasury Obligations (Cost $574,323) 574,323
-------------
Total Short-Term Investments (Cost $6,196,957) 6,196,957
OTHER ASSETS LESS LIABILITIES (7.53%)
Cash, receivables, prepaid expense and other assets, less liabilities 504,878
-------------
Total Net Assets (100.00%) $ 6,701,835
=============
</Table>
SEE ACCOMPANYING NOTES.
20
<Page>
EQUITRUST VARIABLE INSURANCE SERIES FUND
SCHEDULE OF INVESTMENTS
BLUE CHIP PORTFOLIO
JUNE 30, 2004
(UNAUDITED)
<Table>
<Caption>
SHARES
HELD VALUE
------------ ------------
COMMON STOCKS (90.88%)
BUSINESS SERVICES (3.82%)
Microsoft Corp. 84,480 $ 2,412,749
Oracle Corp. 58,314(1) 695,686
------------
3,108,435
CHEMICALS AND ALLIED PRODUCTS (15.86%)
Abbott Laboratories 25,260 1,029,598
Amgen, Inc. 18,200(1) 993,174
Bristol-Myers Squibb Co. 36,063 883,543
Dow Chemical Co. 10,720 436,304
E.I. du Pont de Nemours & Co. 16,081 714,318
Johnson & Johnson 43,580 2,427,406
Eli Lilly & Co. 18,022 1,259,918
Merck & Co., Inc. 28,928 1,374,080
Pfizer, Inc. 45,282 1,552,267
Procter & Gamble Co. 41,042 2,234,326
------------
12,904,934
COMMUNICATIONS (4.58%)
Comcast Corp.-Class A 22,486(1) 630,283
SBC Communications, Inc. 35,565 862,451
Verizon Communications 37,307 1,350,140
Viacom, Inc.-Class B 24,668 881,141
------------
3,724,015
DEPOSITORY INSTITUTIONS (10.32%)
Bank of America 23,298 1,971,477
Citigroup, Inc. 49,326 2,293,659
J. P. Morgan Chase & Co. 47,270 1,832,658
Wachovia Corp. 25,980 1,156,110
Wells Fargo Co. 19,900 1,138,877
------------
8,392,781
EATING AND DRINKING PLACES (1.65%)
McDonald's Corp. 51,752 1,345,552
ELECTRIC, GAS AND SANITARY SERVICES (2.68%)
Dominion Resources, Inc. 11,600 731,728
Exelon Corp. 24,600 818,934
Southern Co. 21,650 631,098
------------
2,181,760
ELECTRONIC AND OTHER ELECTRIC EQUIPMENT (7.14%)
Applied Materials, Inc. 24,000(1) 470,880
General Electric Co. 73,576 2,383,862
Intel Corp. 58,206 1,606,486
Motorola, Inc. 37,949 692,569
Texas Instruments, Inc. 27,001 652,884
------------
5,806,681
FOOD AND KINDRED PRODUCTS (3.42%)
Anheuser Busch Companies, Inc. 11,432 617,328
Coca-Cola Co. (The) 26,389 1,332,117
PepsiCo, Inc. 15,518 836,110
------------
2,785,555
FORESTRY (0.50%)
Weyerhaeuser Co. 6,400 $ 403,968
GENERAL MERCHANDISE STORES (2.76%)
Wal-Mart Stores, Inc. 42,623 2,248,789
INDUSTRIAL MACHINERY AND EQUIPMENT (9.77%)
3M Co. 17,808 1,602,898
Caterpillar, Inc. 14,307 1,136,548
Cisco Systems, Inc. 62,268(1) 1,475,752
Dell, Inc. 31,210(1) 1,117,942
EMC Corp. 38,068(1) 433,975
Hewlett-Packard Co. 41,279 870,987
International Business Machines Corp. 14,821 1,306,471
------------
7,944,573
INSURANCE CARRIERS (3.33%)
American International Group, Inc. 37,964 2,706,074
LUMBER AND WOOD PRODUCTS (1.12%)
Home Depot, Inc. 25,913 912,138
MOTION PICTURES (2.25%)
Disney (Walt) Co. 36,832 938,848
Time Warner, Inc. 50,502(1) 887,825
------------
1,826,673
NONDEPOSITORY INSTITUTIONS (1.26%)
Federal National Mortgage Assoc. 14,400 1,027,584
PETROLEUM AND COAL PRODUCTS (6.09%)
ChevronTexaco Corp. 19,700 1,853,967
Exxon Mobil Corp. 69,771 3,098,530
------------
4,952,497
PRIMARY METAL INDUSTRIES (1.25%)
Alcoa, Inc. 30,898 1,020,561
SECURITY AND COMMODITY BROKERS (3.33%)
American Express Co. 52,797 2,712,710
TOBACCO PRODUCTS (2.40%)
Altria Group, Inc. 38,965 1,950,198
TRANSPORTATION EQUIPMENT (7.35%)
Boeing Co. (The) 32,082 1,639,069
General Motors Corp. 16,700 778,053
Honeywell International, Inc. 38,024 1,392,819
United Technologies Corp. 23,701 2,168,167
------------
5,978,108
------------
Total Common Stocks
(Cost $62,320,205) 73,933,586
</Table>
21
<Page>
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
------------ ------------
SHORT-TERM INVESTMENTS (9.06%)
COMMERCIAL PAPER (1.23%)
NONDEPOSITORY INSTITUTIONS
General Electric Capital Corp.,
1.08%, due 07/12/04 $ 500,000 $ 500,000
General Electric Capital Corp.,
1.17%, due 08/03/04 500,000 500,000
------------
Total Commercial Paper
(Cost $1,000,000) 1,000,000
UNITED STATES GOVERNMENT AGENCIES (7.34%)
Federal Home Loan Bank,
due 07/16/04 1,000,000 999,579
Federal Home Loan Bank,
due 08/13/04 2,500,000 2,496,446
Federal Home Loan Bank,
due 08/20/04 600,000 598,966
Federal Home Loan Mortgage Corp.,
due 07/06/04 450,000 449,936
Federal Home Loan Mortgage Corp.,
due 08/03/04 475,000 474,529
Federal Home Loan Mortgage Corp.,
due 08/10/04 725,000 724,101
Federal National Mortgage Assoc.,
due 09/15/04 225,000 224,434
------------
Total United States Government
Agencies (Cost $5,967,991) 5,967,991
<Caption>
SHARES
HELD
------------
MONEY MARKET MUTUAL FUND (0.49%)
Blackrock Provident Institutional
Funds, T-Fund Portfolio
(Cost $401,309) 401,309 401,309
------------
Total Short-Term Investments
(Cost $7,369,300) 7,369,300
------------
Total Investments
(Cost $69,689,505) (99.94%) 81,302,886
OTHER ASSETS LESS LIABILITIES (0.06%)
Cash, receivables, prepaid expense
and other assets, less liabilities 50,165
------------
Total Net Assets (100.00%) $ 81,353,051
============
</Table>
(1) Non-income producing securities.
SEE ACCOMPANYING NOTES.
22
<Page>
EQUITRUST VARIABLE INSURANCE SERIES FUND
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2004
(UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
EquiTrust Variable Insurance Series Fund (the "Fund") is registered under
the Investment Company Act of 1940, as amended, as a no-load, open-end
diversified management investment company, or mutual fund. The Fund is
authorized to issue an unlimited number of shares of beneficial interest with no
par value. The Fund currently consists of six portfolios (known as the Value
Growth, High Grade Bond, Strategic Yield, Managed, Money Market and Blue Chip
Portfolios). Shares of the Fund are sold only to certain life insurance
companies' separate accounts to fund the benefits under variable insurance
contracts issued by such life insurance companies, including Farm Bureau Life
Insurance Company and EquiTrust Life Insurance Company (see NOTE 3).
SECURITY VALUATION
All portfolios, other than the Money Market Portfolio, value their
investment securities that are traded on any national exchange at the last sale
price on the day of valuation or, lacking any sales, at the mean between the
closing bid and asked prices. Investments traded in the over-the-counter market
are valued at the mean between the bid and asked prices or yield equivalent as
obtained from one or more dealers that make markets in the securities.
Investments for which market quotations are not readily available, or in
situations when liquidation of the holdings at quoted market prices is
questionable, are valued at fair value as determined in good faith by the Fund's
Board of Trustees. Short-term investments are valued at market value, except
that obligations maturing in 90 days or less are valued using the amortized cost
method of valuation described below with respect to the Money Market Portfolio,
which approximates market.
The Money Market Portfolio values investments at amortized cost, which
approximates market value. Under the amortized cost method, a security is valued
at its cost on the date of purchase and thereafter is adjusted to reflect a
constant amortization to maturity of the difference between the principal amount
due at maturity and the cost of the investment to the portfolio.
INCOME AND INVESTMENT TRANSACTIONS
For financial reporting purposes, investment transactions are recorded on
the trade date. The identified cost basis has been used in determining the net
realized gain or loss from investment transactions and unrealized appreciation
or depreciation on investments. Dividend income is recorded on the ex-dividend
date and interest is recognized on an accrual basis. Discounts and premiums on
investments purchased are amortized over the life of the respective investments.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
On each day that the net asset value per share is calculated in the High
Grade Bond, Strategic Yield and Money Market Portfolios, that Portfolio's net
investment income will be declared, as of the close of the New York Stock
Exchange, as a dividend to shareholders of record prior to the declaration. With
respect to the High Grade Bond and Strategic Yield Portfolios, any net
short-term and long-term gains will be declared and distributed periodically,
but in no event less frequently than annually. Dividends and distributions of
the other portfolios are recorded on the ex-dividend date. Dividends and
distributions from net investment income and net realized gain from investments
are determined in accordance with federal tax regulations, which may differ from
accounting principles generally accepted in the United States. These differences
are primarily due to differing treatments for certain defaulted securities, and
basis adjustments resulting from corporate reorganizations. Permanent book and
tax basis differences are reclassified within the capital accounts based on
their federal tax-basis treatment; temporary differences do not require
reclassification. During the six month period ended June 30, 2004, there were no
permanent adjustments reflected in the statements of assets and liabilities.
Dividends and distributions which exceed net investment income and net
realized capital gains for financial reporting purposes, but not for tax
purposes, are reported as dividends in excess of net investment income or
distributions in excess of net realized capital gains. To the extent
distributions exceed current and accumulated earnings and profits for federal
income tax purposes, they are reported as return of capital distributions.
23
<Page>
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
2. FEDERAL INCOME TAXES
No provision for federal income taxes is considered necessary because the
Fund is qualified as a "regulated investment company" under the Internal Revenue
Code and intends to distribute each year substantially all of its net investment
income and realized capital gains to shareholders.
As of June 30, 2004, the following Portfolios had approximate net capital
loss carryforwards set forth below:
<Table>
<Caption>
PORTFOLIO
------------------------------------------------------------------------
VALUE HIGH GRADE STRATEGIC BLUE
NET CAPITAL LOSS CARRYFORWARDS EXPIRE IN: GROWTH BOND YIELD MANAGED CHIP
----------------------------------------- ------------ ------------ ------------ ------------ ------------
2006 $ 5,369,000 $ -- $ -- $ -- $ --
2008 2,848,000 -- -- 699,000 --
2010 -- -- 1,785,000 -- 1,786,000
2011 -- -- 571,000 -- 4,672,000
2012 -- 43,000 -- -- 556,000
------------ ------------ ------------ ------------ ------------
$ 8,217,000 $ 43,000 $ 2,356,000 $ 699,000 $ 7,014,000
============ ============ ============ ============ ============
</Table>
As of June 30, 2004, the components of accumulated earnings (deficit) and
capital gains (losses) on a tax basis were identical to those reported in the
statements of assets and liabilities, except as follows:
<Table>
<Caption>
PORTFOLIO
---------------------------
VALUE GROWTH MANAGED
------------ ------------
Undistributed ordinary income $ 284,952 $ 648,559
Accumulated capital and other losses (8,217,524) (699,021)
Net unrealized appreciation of investments 5,615,746 9,629,246
------------ ------------
Total accumulated earnings (deficit) $ (2,316,826) $ 9,578,784
============ ============
</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 June 30, 2004, unrealized depreciation and accumulated capital
gains book and tax differences related to corporate inversions were $42,496 for
the Value Growth Portfolio and $81,459 for the Managed Portfolio.
3. MANAGEMENT CONTRACT AND TRANSACTIONS WITH AFFILIATES
The Fund has entered into agreements with EquiTrust Investment Management
Services, Inc. ("EquiTrust Investment") relating to the management of the
portfolios and the investment of their assets. Pursuant to these agreements,
fees paid to EquiTrust Investment are as follows: (1) annual investment advisory
and management fees, which are based on each portfolio's average daily net
assets as follows: Value Growth Portfolio -- 0.45%; High Grade Bond Portfolio --
0.30%; Strategic Yield Portfolio -- 0.45%; Managed Portfolio -- 0.45%; Money
Market Portfolio -- 0.25%; and Blue Chip Portfolio -- 0.20%, and (2) accounting
fees, which are based on each portfolio's daily net assets at an annual rate of
0.05%, with a maximum per portfolio annual expense of $30,000.
The Fund entered into an agreement with EquiTrust Investment whereby
EquiTrust Investment also serves as the Fund's shareholder service, transfer and
dividend disbursing agent. EquiTrust Marketing Services, LLC serves as the
principal underwriter and distributor. There are no fees paid by the Fund
associated with these services.
24
<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 six month
period ended June 30, 2004, EquiTrust Investment further agreed to reimburse any
portfolio, to the extent that annual operating expenses, including the
investment advisory fee, exceed 0.65%. For the six months ended June 30, 2004,
no expense reimbursements were made to the Fund by EquiTrust Investment.
Certain officers and trustees of the Fund are also officers of EquiTrust
Investment, Farm Bureau Life Insurance Company and other affiliated entities. As
of June 30, 2004, the total number of the shares of each portfolio owned by Farm
Bureau Life Insurance Company, EquiTrust Life Insurance Company and related
separate accounts are as follows:
<Table>
<Caption>
PORTFOLIO SHARES
--------- ------
Value Growth 4,529,202
High Grade Bond 2,651,453
Strategic Yield 2,990,587
Managed 4,680,990
Money Market 5,632,512
Blue Chip 2,409,502
</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
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
- --------- ---------- ------------ ------- ----------- --------- ------------ ---------- ------------
Six month period ended
June 30, 2004:
Value Growth 164,367 $ 1,941,167 47,355 $ 563,058 136,756 $ 1,608,838 74,966 $ 895,387
High Grade Bond 258,805 2,670,221 63,364 655,419 156,927 1,628,351 165,242 1,697,289
Strategic Yield 307,743 2,831,378 88,874 818,403 110,484 1,020,293 286,133 2,629,488
Managed 249,703 3,640,131 94,010 1,367,844 135,531 1,972,357 208,182 3,035,618
Money Market 15,763,650 15,763,650 10,385 10,385 15,799,752 15,799,752 (25,717) (25,717)
Blue Chip 100,885 3,365,880 35,399 1,194,008 74,137 2,475,091 62,147 2,084,797
Year ended December 31, 2003:
Value Growth 257,935 $ 2,576,305 70,078 $ 632,800 320,621 $ 3,122,025 7,392 $ 87,080
High Grade Bond 428,153 4,432,359 126,995 1,316,514 401,456 4,159,389 153,692 1,589,484
Strategic Yield 298,163 2,649,915 186,889 1,663,360 252,088 2,238,075 232,964 2,075,200
Managed 326,436 4,283,785 124,058 1,494,900 329,695 4,180,363 120,799 1,598,322
Money Market 20,443,151 20,443,151 26,348 26,348 21,891,488 21,891,488 (1,421,989) (1,421,989)
Blue Chip 172,893 5,107,154 39,362 1,066,311 179,712 5,119,651 32,543 1,053,814
</Table>
25
<Page>
6. INVESTMENT TRANSACTIONS
For the six month period ended June 30, 2004, the cost of investment
securities purchased and proceeds from investment securities sold (not including
short-term investments and U.S. Government securities) by portfolio, were as
follows:
<Table>
<Caption>
PORTFOLIO PURCHASES SALES
--------- ------------ ------------
Value Growth $ 3,013,623 $ 2,904,820
High Grade Bond 1,262,625 881,385
Strategic Yield 6,324,526 4,706,824
Managed 3,363,480 5,629,557
Blue Chip 519,325 1,427,738
</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 June 30, 2004, by portfolio, were composed of the following:
<Table>
<Caption>
TAX COST OF GROSS UNREALIZED NET UNREALIZED
INVESTMENTS --------------------------- APPRECIATION (DEPRECIATION)
PORTFOLIO IN SECURITIES APPRECIATION DEPRECIATION OF INVESTMENTS
--------- ------------- ------------ ------------ ---------------------------
Value Growth $ 49,128,643 $ 9,924,564 $ 4,308,818 $ 5,615,746
High Grade Bond 27,141,382 578,473 170,846 407,627
Strategic Yield 26,669,863 1,082,055 308,335 773,720
Managed 60,437,623 10,935,532 1,306,286 9,629,246
Blue Chip 69,689,505 18,792,869 7,179,488 11,613,381
</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 30, 2004 $ 0.0334 $ 0.0430 $ 0.0004
February 27, 2004 0.0351 0.0530 0.0003
March 31, 2004 0.0442 0.0586 0.0004
April 30, 2004 0.0354 0.0364 0.0003
May 28, 2004 0.0315 0.0374 0.0003
June 30, 2004 0.0435 0.0532 0.0005
---------- ---------- ----------
Total dividends per share $ 0.2231 $ 0.2816 $ 0.0022
========== ========== ==========
</Table>
26
<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 June 30, 2004 for the following portfolios:
ORDINARY INCOME DIVIDENDS:
<Table>
<Caption>
DIVIDEND
DECLARATION RECORD PAYABLE AMOUNT
PORTFOLIO DATE DATE DATE PER SHARE
--------- ----------- -------- -------- ----------
Value Growth 1/19/04 1/19/04 1/20/04 $ 0.1250
Managed 1/19/04 1/19/04 1/20/04 0.3005
Blue Chip 1/19/04 1/19/04 1/20/04 0.5017
</Table>
CAPITAL GAINS DISTRIBUTIONS:
<Table>
<Caption>
DIVIDEND
DECLARATION RECORD PAYABLE AMOUNT
PORTFOLIO DATE DATE DATE PER SHARE
--------- ----------- -------- -------- ----------
High Grade Bond 1/19/04 1/19/04 1/20/04 $ 0.0274
</Table>
The federal income tax character of dividends and distributions to
shareholders during 2004 and 2003 was the same for financial reporting purposes.
27
<Page>
EQUITRUST VARIABLE INSURANCE SERIES FUND
FINANCIAL HIGHLIGHTS
PERIOD ENDED JUNE 30, 2004 (UNAUDITED) AND
YEARS ENDED DECEMBER 31, 2003, 2002, 2001 AND 2000
<Table>
<Caption>
VALUE GROWTH
PORTFOLIO
-----------------------------------------------------------------
2004 2003 2002 2001 2000
---------- ---------- ---------- ---------- ----------
Net asset value, beginning of period $ 11.76 $ 9.14 $ 10.39 $ 9.92 $ 8.69
Income From Investment Operations
Net investment income 0.06 0.12 0.14 0.18 0.22
Net gains (losses) on securities (both
realized and unrealized) 0.31 2.64 (1.20) 0.50 1.20
---------- ---------- ---------- ---------- ----------
Total from investment operations 0.37 2.76 (1.06) 0.68 1.42
---------- ---------- ---------- ---------- ----------
Less Distributions
Dividends (from net investment income) (0.12) (0.14) (0.19) (0.21) (0.19)
Distributions (from capital gains) -- -- -- -- --
---------- ---------- ---------- ---------- ----------
Total distributions (0.12) (0.14) (0.19) (0.21) (0.19)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 12.01 $ 11.76 $ 9.14 $ 10.39 $ 9.92
========== ========== ========== ========== ==========
Total Return:
Total investment return based on net asset value (1) 3.20% 30.68% (10.43)% 6.98% 16.71%
Ratios/Supplemental Data:
Net assets, end of period (000's omitted) $ 54,818 $ 52,812 $ 40,953 $ 45,522 $ 40,173
Ratio of total expenses to average net assets 0.58%(2) 0.63% 0.59% 0.57% 0.57%
Ratio of net expenses to average net assets 0.58%(2) 0.63% 0.59% 0.57% 0.56%
Ratio of net investment income to average net assets 1.07%(2) 1.26% 1.46% 1.89% 2.34%
Portfolio turnover rate 6%(3) 17% 15% 40% 78%
</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, and is not annualized for periods
less than one year.
(2) Computed on an annualized basis.
(3) Not annualized.
SEE ACCOMPANYING NOTES.
28
<Page>
<Table>
<Caption>
HIGH GRADE BOND
PORTFOLIO
-----------------------------------------------------------------
2004 2003 2002 2001 2000
---------- ---------- ---------- ---------- ----------
Net asset value, beginning of period $ 10.42 $ 10.39 $ 10.08 $ 9.82 $ 9.49
Income From Investment Operations
Net investment income 0.22 0.47 0.50 0.62 0.67
Net gains (losses) on securities (both
realized and unrealized) (0.21) 0.08 0.32 0.26 0.34
---------- ---------- ---------- ---------- ----------
Total from investment operations 0.01 0.55 0.82 0.88 1.01
---------- ---------- ---------- ---------- ----------
Less Distributions
Dividends (from net investment income) (0.22) (0.47) (0.50) (0.62) (0.67)
Distributions (from capital gains) (0.03) (0.05) (0.01) -- (0.01)
---------- ---------- ---------- ---------- ----------
Total distributions (0.25) (0.52) (0.51) (0.62) (0.68)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 10.18 $ 10.42 $ 10.39 $ 10.08 $ 9.82
========== ========== ========== ========== ==========
Total Return:
Total investment return based on net asset value (1) 0.09% 5.43% 8.37% 9.10% 11.14%
Ratios/Supplemental Data:
Net assets, end of period (000's omitted) $ 27,733 $ 26,659 $ 24,984 $ 18,908 $ 13,934
Ratio of total expenses to average net assets 0.46%(2) 0.49% 0.46% 0.45% 0.45%
Ratio of net expenses to average net assets 0.46%(2) 0.49% 0.46% 0.45% 0.45%
Ratio of net investment income to average net assets 4.35%(2) 4.51% 4.92% 6.10% 7.03%
Portfolio turnover rate 14%(3) 28% 22% 17% 7%
<Caption>
STRATEGIC YIELD
PORTFOLIO
-----------------------------------------------------------------
2004 2003 2002 2001 2000
---------- ---------- ---------- ---------- ----------
Net asset value, beginning of period $ 9.13 $ 8.75 $ 8.90 $ 8.82 $ 9.30
Income From Investment Operations
Net investment income 0.28 0.63 0.62 0.73 0.75
Net gains (losses) on securities (both
realized and unrealized) (0.03) 0.38 (0.15) 0.08 (0.48)
---------- ---------- ---------- ---------- ----------
Total from investment operations 0.25 1.01 0.47 0.81 0.27
---------- ---------- ---------- ---------- ----------
Less Distributions
Dividends (from net investment income) (0.28) (0.63) (0.62) (0.73) (0.75)
Distributions (from capital gains) -- -- -- -- --
---------- ---------- ---------- ---------- ----------
Total distributions (0.28) (0.63) (0.62) (0.73) (0.75)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 9.10 $ 9.13 $ 8.75 $ 8.90 $ 8.82
========== ========== ========== ========== ==========
Total Return:
Total investment return based on net asset value (1) 2.76% 11.97% 5.43% 9.22% 3.05%
Ratios/Supplemental Data:
Net assets, end of period (000's omitted) $ 28,021 $ 25,498 $ 22,395 $ 20,182 $ 16,410
Ratio of total expenses to average net assets 0.60%(2) 0.65% 0.61% 0.59% 0.59%
Ratio of net expenses to average net assets 0.60%(2) 0.65% 0.61% 0.59% 0.58%
Ratio of net investment income to average net assets 6.15%(2) 7.07% 7.04% 7.93% 8.30%
Portfolio turnover rate 22%(3) 32% 34% 33% 3%
</Table>
29
<Page>
<Table>
<Caption>
MANAGED
PORTFOLIO
-----------------------------------------------------------------
2004 2003 2002 2001 2000
---------- ---------- ---------- ---------- ----------
Net asset value, beginning of period $ 14.73 $ 12.34 $ 13.00 $ 12.58 $ 10.54
Income From Investment Operations
Net investment income 0.14 0.30 0.34 0.44 0.59
Net gains (losses) on securities (both
realized and unrealized) 0.24 2.43 (0.57) 0.55 2.11
---------- ---------- ---------- ---------- ----------
Total from investment operations 0.38 2.73 (0.23) 0.99 2.70
---------- ---------- ---------- ---------- ----------
Less Distributions
Dividends (from net investment income) (0.30) (0.34) (0.43) (0.57) (0.66)
Distributions (from capital gains) -- -- -- -- --
---------- ---------- ---------- ---------- ----------
Total distributions (0.30) (0.34) (0.43) (0.57) (0.66)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 14.81 $ 14.73 $ 12.34 $ 13.00 $ 12.58
========== ========== ========== ========== ==========
Total Return:
Total investment return based on net asset value (1) 2.62% 22.72% (1.80)% 8.12% 27.39%
Ratios/Supplemental Data:
Net assets, end of period (000's omitted) $ 70,183 $ 66,733 $ 54,428 $ 53,795 $ 48,012
Ratio of total expenses to average net assets 0.57%(2) 0.62% 0.58% 0.56% 0.56%
Ratio of net expenses to average net assets 0.57%(2) 0.62% 0.58% 0.56% 0.55%
Ratio of net investment income to average net assets 1.91%(2) 2.35% 2.73% 3.47% 4.96%
Portfolio turnover rate 7%(3) 24% 18% 40% 85%
</Table>
30
<Page>
<Table>
<Caption>
MONEY MARKET
PORTFOLIO
-----------------------------------------------------------------
2004 2003 2002 2001 2000
---------- ---------- ---------- ---------- ----------
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income From Investment Operations
Net investment income -- 0.01 0.01 0.03 0.06
Net gains (losses) on securities (both
realized and unrealized) -- -- -- -- --
---------- ---------- ---------- ---------- ----------
Total from investment operations -- 0.01 0.01 0.03 0.06
---------- ---------- ---------- ---------- ----------
Less Distributions
Dividends (from net investment income) -- (0.01) (0.01) (0.03) (0.06)
Distributions (from capital gains) -- -- -- -- --
---------- ---------- ---------- ---------- ----------
Total distributions -- (0.01) (0.01) (0.03) (0.06)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ========== ========== ==========
Total Return:
Total investment return based on net asset value (1) 0.22% 0.52% 1.16% 3.51% 5.85%
Ratios/Supplemental Data:
Net assets, end of period (000's omitted) $ 6,702 $ 6,728 $ 8,150 $ 9,320 $ 7,233
Ratio of total expenses to average net assets 0.58%(2) 0.59% 0.52% 0.50% 0.50%
Ratio of net expenses to average net assets 0.57%(2) 0.59% 0.52% 0.48% 0.48%
Ratio of net investment income to average net assets 0.44%(2) 0.53% 1.16% 3.41% 5.74%
Portfolio turnover rate --%(3) --% --% --% --%
<Caption>
BLUE CHIP
PORTFOLIO
-----------------------------------------------------------------
2004 2003 2002 2001 2000
---------- ---------- ---------- ---------- ----------
Net asset value, beginning of period $ 33.65 $ 27.22 $ 34.14 $ 39.29 $ 43.98
Income From Investment Operations
Net investment income 0.26 0.50 0.46 0.50 0.56
Net gains (losses) on securities (both
realized and unrealized) 0.00 6.38 (6.88) (4.83) (4.26)
---------- ---------- ---------- ---------- ----------
Total from investment operations 0.26 6.88 (6.42) (4.33) (3.70)
---------- ---------- ---------- ---------- ----------
Less Distributions
Dividends (from net investment income) (0.50) (0.45) (0.50) (0.56) (0.53)
Distributions (from capital gains) -- -- -- (0.26) (0.46)
---------- ---------- ---------- ---------- ----------
Total distributions (0.50) (0.45) (0.50) (0.82) (0.99)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 33.41 $ 33.65 $ 27.22 $ 34.14 $ 39.29
========== ========== ========== ========== ==========
Total Return:
Total investment return based on net asset value (1) 0.76% 25.70% (19.07)% (11.28)% (8.52)%
Ratios/Supplemental Data:
Net assets, end of period (000's omitted) $ 81,353 $ 79,832 $ 63,699 $ 79,124 $ 87,118
Ratio of total expenses to average net assets 0.31%(2) 0.36% 0.31% 0.28% 0.27%
Ratio of net expenses to average net assets 0.31%(2) 0.36% 0.31% 0.28% 0.27%
Ratio of net investment income to average net assets 1.59%(2) 1.72% 1.50% 1.42% 1.39%
Portfolio turnover rate 1%(3) 17% --% --% 13%
</Table>
31
<Page>
INFORMATION ON PROXY VOTING:
EquiTrust Variable Insurance Series Fund (the "Fund") has delegated the
authority to vote proxies related to the Fund's portfolio securities to the
Fund's investment adviser, EquiTrust Investment Management Services, Inc. (the
"Adviser"). A description of the policies and procedures that the Adviser uses
in fulfilling this responsibility is available, without charge, upon request by
calling 1-877-860-2904. It also appears in the Fund's Statement of Additional
Information, which can be found on the SEC's website at www.sec.gov. The Fund's
proxy voting record for the 12-month period ended June 30, 2004 will be
available on Form N-PX after August 31, 2004. A copy of Form N-PX can be
obtained after that date, without charge, by calling the toll-free number listed
above or by accessing the SEC's website.
FORM N-Q DISCLOSURE:
Beginning with the quarter ending September 30, 2004, the Fund will file a
complete schedule of portfolio holdings for the first and third quarters of each
fiscal year with the SEC on Form N-Q. The Fund's Forms N-Q are available on the
SEC's website at http://www.sec.gov or may be reviewed and copied at the SEC's
Public Reference Room in Washington, D.C. Information regarding the operation of
the Public Reference Room may be obtained by calling 1-800-SEC-0330. A copy of
Form N-Q is also available, without charge, upon request by calling the Fund at
1-877-860-2904.
<Page>
ITEM 2. CODE OF ETHICS.
(a) - (e) Not applicable to this filing.
(f) A copy of the code of ethics may be obtained upon request, without
charge, by contacting the registrant at it principal executive office.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable to this filing.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable to this filing.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PURCHASE OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The registrant has not been required to provide disclosure in response
to the requirements of Item 7(d)(2)(ii)(G) of Schedule 14A (17 CFR
240.14a-101) regarding the procedures by which shareholders may
recommend nominees to the registrant's board of directors.
<Page>
ITEM 10. CONTROLS AND PROCEDURES
(a) The registrant's principal executive and principal financial officers,
or persons performing similar functions, have concluded that the
registrant's disclosure controls and procedures (as defined in Rule
30a-3(c) under the Investment Company Act of 1940, as amended (the
"1940 Act") (17 CFR 270.30a-3(c))) are effective, as of a date within
90 days of the filing date of the report that includes the disclosure
required by this paragraph, based on their evaluation of these controls
and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR
270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Exchange Act
(17 CFR 240.13a-15(b) or 240.15d-15(b)).
(b) There has been no change to the registrant's internal control over
financial reporting that occurred during the registrant's most recent
fiscal half-year that has materially affected, or is reasonably likely
to materially affect, the registrant's internal control over financial
reporting.
ITEM 11. EXHIBITS.
(a)(1) See Item 2(f).
(a)(2) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of
2002 are attached hereto.
(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of
2002 are attached hereto.
<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: 8/19/04
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ Dennis M. Marker
----------------------------------------
Name: Dennis M. Marker
Title: Chief Executive Officer
Date: 8/19/04
By: /s/ James W. Noyce
----------------------------------------
Name: James W. Noyce
Title: Chief Financial Officer
Date: 8/19/04