<PAGE> 1
SECURITY FUNDS
SEMI-ANNUAL REPORT
JUNE 30, 1995
- - - Security Income Fund
- Corporate Bond Series
- U.S. Government Series
- Limited Maturity Bond Series
- Global Aggressive Bond Series
- - - Security Tax-Exempt Fund
- - - Security Cash Fund
[SECURITY DISTRIBUTORS, INC. LOGO]
<PAGE> 2
PRESIDENT'S LETTER
AUGUST 15, 1995
SECURITY
FUNDS
[PICTURE GOES HERE]
Dear Shareholder:
JOHN CLELAND
The generally positive investment environment that marked the first
half of 1995 was cheered by fixed-income investors, especially following 1994 -
the worst year for bonds since the Great Depression. Fixed-income investors who
remained in the market had the opportunity in the first half of 1995 to make up
for last year's losses and then some! History shows that market fluctuations
are inevitable. However, investors who remain committed and continue to invest
regardless of the overall level of the market stand to benefit over time.*
A gradual slowdown in economic growth and continued subdued inflation
produced a strong bond market rally in the first half of 1995. It appears the
Federal Reserve Board's five short-term interest rate increases in 1994 and
early 1995 were successful in cooling the economy and keeping inflation under
control. Early concern about whether the economy could have a soft landing gave
way to the belief by many that the economy had a "perfect" landing.
Triggering the bond market rally was a dramatic decline in interest
rates across all maturity sectors. Investors in taxable long-term bonds
benefited from substantial price appreciation. Tax-exempt bonds also
experienced a remarkable recovery in the second quarter thanks to declining
interest rates. Only short-term money funds saw yields decline.
Globally, the European bond market underperformed the U.S. market
during the six-month period. However, attractive buys are available on a
country-by-country basis. We anticipate that our new Global Aggressive Bond
Fund's exposure to the U.S. bond market will decrease as Treasury bills are
sold and the proceeds invested in European bonds. The portfolio will also
maintain its significant weighting in southern European countries. With the
exception of Turkey, all these countries are showing progress in reducing
inflation and government deficits.
Looking forward through the rest of 1995, we expect interest rates
will moderate slightly, providing continuing attractive returns for
fixed-income investors. We believe conditions should remain generally favorable
for owners of all types of financial assets for the remainder of the year.
Over the next several pages, we review the factors influencing the
performance of Security Tax-Exempt Fund, Security Cash Fund and each Series of
Security Income Fund for the six-month period ended June 30, 1995. As always,
our goal is to provide you with positive investment results over time along
with the highest-quality service in the industry. We invite your questions and
comments. Please call our customer service center at 1-800-888-2461, extension
3127.
Sincerely,
John D. Cleland
John D. Cleland
President - Security Funds
*Programs of regular investing do not assure profits or protect against loss in
a declining market.
1
<PAGE> 3
SECURITY SECURITY FUNDS
FUNDS AUGUST 15, 1995
[PICTURE GOES HERE]
THE SECURITY MANAGEMENT FIXED-INCOME TEAM:
ELAINE MILLER, JANE TEDDER, GREG HAMILTON, JOHN CLELAND, TOM SWANK, STEVE
BOWSER
SECURITY INCOME FUND
CORPORATE BOND SERIES
U.S. GOVERNMENT SERIES
LIMITED MATURITY BOND SERIES
SECURITY TAX-EXEMPT FUND
SECURITY CASH FUND
The bond markets were much kinder to fixed-income investors in the first six
months of 1995 than they were in 1994. We were pleased with the actions taken
by the Federal Reserve Open Market Committee last year to keep inflation under
control. As economic activity slowed, fears of rampant inflation disappeared
and bond prices moved upward, producing attractive total returns for
shareholders.
When bond prices rise, a portfolio can benefit most by being on the long end of
the yield curve as was the Corporate Bond Series; that is, by holding
securities that are longer than average in maturity and duration. By the same
token, a portfolio which is on the long end of the yield curve will be at a
disadvantage when bond prices fall.
CORPORATE BOND SERIES
AVERAGE ANNUAL TOTAL RETURN
AS OF JUNE 30, 1995
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES
<S> <C> <C> <C>
1 Year 5.26% 1 Year 4.82%
5 Years 7.33% Since Inception 4.12%
10 Years 8.21% 10-19-93
</TABLE>
Corporate Bond Series
6-30-95
[PIE CHART GOES HERE]
<TABLE>
<S> <C>
Cash and equivalents 2.2%
AAA 1.6%
AA 26.4%
A 64.9%
BBB 4.9%
</TABLE>
Being on the long end of the yield curve also allowed the U.S. Government
Series to perform very well for the period. The decision was made early in 1995
to extend the maturities of many of the portfolio holdings out beyond 20 years,
thereby maximizing performance in the strong bond market. The bonds held in
this fund are of the highest credit quality, as all are issued by the U.S.
Government, its agencies or instrumentalities.* This high credit standard did
not constrain performance, however, as the total return for the six-month
period was 12.07%.**
2
<PAGE> 4
SECURITY SECURITY FUNDS
FUNDS AUGUST 15, 1995
U.S. GOVERNMENT SERIES
AVERAGE ANNUAL TOTAL RETURN
AS OF JUNE 30, 1995
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES
<S> <C> <C> <C>
1 Year 6.29% 1 Year 5.71%
5 Years 7.20% Since Inception 1.84 %
10 Years 8.04% 10-19-93
</TABLE>
U.S. Government Series
6-30-95
[PIE CHART GOES HERE]
<TABLE>
<S> <C>
Cash and equivalents 2.0%
FNMAs 39.6%
Treasury 36.4%
GNMAs 22.0%
</TABLE>
A new addition to the Security Income Fund family in 1995, the Limited Maturity
Bond Series, also performed well with a total return of 8.7% since its
inception on January 17, 1995.** This series is designed for investors who seek
a higher dividend yield than offered by money market funds, but who do not want
the additional risk that generally accompanies a long-maturity bond fund.
However, as with all bond funds, the share price of the Series will fluctuate
inversely with changes in interest rates. The weighted average maturity of the
securities in the Limited Maturity Bond Series will not exceed 10 years. While
this maturity restriction may dampen total return performance in periods of
rapidly rising bond prices, it will also reduce potential losses in periods of
declining prices.
LIMITED MATURITY BOND SERIES
AVERAGE ANNUAL TOTAL RETURN
AS OF JUNE 30, 1995
<TABLE>
<S> <C>
CLASS A SHARES
Since Inception 1-17-95 3.60%*
CLASS B SHARES
Since Inception 1-17-95 3.34%*
</TABLE>
*The percentage amounts are from inception and not annualized.
Limited Maturity Bond Series
6-30-95
[PIE CHART GOES HERE]
<TABLE>
<S> <C>
Cash and equivalents 3.4%
AAA 30.3%
AA 12.9%
A 38.0%
BBB 11.3%
BB 4.1%
</TABLE>
Investors' concerns about possible tax reform legislation and its impact on
municipal bonds held back performance in the tax exempt sector of the
fixed-income markets. Although performance in municipal bond funds was not as
spectacular as that of the taxable arena, the Security Tax Exempt Fund still
provided an attractive 7.81%** total return for the six-month period.*** As in
our other bond funds, the longer maturities of the securities in the portfolio
contributed to the strong results. At Security Management Company, we are
closely monitoring the numerous tax proposals submitted to Congress for
consideration. We believe, however, that it will be at least two years before
any kind of change can be effected in the tax structure. Any final legislation
will almost
3
<PAGE> 5
SECURITY SECURITY FUNDS
FUNDS AUGUST 15, 1995
certainly differ a great deal from the proposals being discussed at this time.
Meanwhile, the municipal market seems undervalued at today's prices, and may
present an appealing investment option.
TAX-EXEMPT FUND
AVERAGE ANNUAL TOTAL RETURN
AS OF JUNE 30, 1995
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES
<S> <C> <C> <C>
1 Year 0.78% 1 Year 0.46%
5 Years 5.65% Since Inception 4.55%
10 Years 6.58% 10-19-93
</TABLE>
Tax-Exempt Fund
6-30-95
[PIE CHART GOES HERE]
<TABLE>
<S> <C>
Cash and equivalents 2.2%
AAA 8.3%
AA 61.9%
A 17.2%
BBB 10.4%
</TABLE>
Interest rate increases initiated by the Federal Reserve Open Market Committee
in 1994 allowed dividend yields on the Security Cash Fund to rise along with
other short-term investment instruments.+ The seven-day yield at June 30, 1995,
was 5.14%, compared with a rate of 3.42% on the same date in 1994. This fund
invests only in high-quality money market instruments, providing an excellent
option for short-term investments.
The Fixed-Income Management Team continually monitors economic changes and
developments, and is prepared to make adjustments accordingly. We are confident
that the Federal Reserve Board remains determined to keep inflation under
control, which should prove to be positive for the bond markets. We anticipate
interest rates will continue to decline in the second half of 1995, providing
continued attractive returns for shareholders.
* Although the securities purchased by the U.S. Government Series are
guaranteed as to the timely payment of principal and interest by the U.S.
Government, its agencies or instrumentalities, the shares of the Series itself
are not so guaranteed.
** These performance figures are based on Class A share prices and do not
reflect deduction of the sales charge.
*** Income from the Security Tax-Exempt Fund may be subject to the alternative
minimum tax.
+ The Security Cash Fund is neither insured nor guaranteed by the U.S.
Government and there is no assurance that the fund will be able to maintain a
stable net asset value of $1.00 per share.
The performance data given here represents past performance, which is not
predictive of future results. For Class A shares these figures reflect
deduction of the maximum sales charge of 4.75%. For Class B shares the total
return includes deduction of the maximum contingent deferred sales charge. The
investment return and principal value of an investment will fluctuate so that
an investor's shares, when redeemed, may be worth more or less than their
original cost.
4
<PAGE> 6
SECURITY SECURITY FUNDS
FUNDS AUGUST 15, 1995
GLOBAL AGGRESSIVE BOND SERIES
[MER LOGO] [LEXINGTON LOGO]
SUBADVISORS - MFR ADVISORS, INC., AND LEXINGTON MANAGEMENT CORPORATION
PORTFOLIO MANAGERS, MARIA FIORINI RAMIREZ AND DENIS JAMISON
Introduced June 1, 1995, our new Global Aggressive Bond Series' seeks to
provide shareholders a high level of current income with capital appreciation
as a secondary objective. No single bond market has consistently provided the
best returns, and the opportunity for maximum yield shifts from country to
country. The Series offers income oriented investors the opportunity to
globally diversify their portfolios with exposure to potentially the most
attractive fixed-income investments worldwide. To accomplish its goal, the
Series purchases fixed-income investments based upon positive outlooks for
individual countries: their economies, currencies and interest rates.
As of June 30, 1995, the Series portfolio was invested 54% in non-dollar
denominated bonds and 46% in dollar denominated bonds. We believe the
combination of a slowing domestic economy and declining short-term interest
rates limits the U.S. dollar's appreciation potential. As a result, the
portfolio's U.S. dollar exposure will likely decline to around 30% over the
next several months.
One of the portfolio's largest concentrations is in Southern European
countries, which are all showing progress on reducing inflation and government
deficits. Their currencies are tightening relative to those in the core
European countries of Switzerland, Germany and France. However, the
portfolio's small position in Turkey, whose currency is depreciating, is
designed to boost the portfolio's nominal yield.
As of June 30, 1995, the average maturity of the portfolio was 9.7 years.
However, some of the positions in the portfolio have variable interest rates
which are likely to reset sooner than the average maturity would indicate.
Because of their relatively stable economic environments, the bulk of the
longer term assets are in the U.S. dollar block - U.S., Canada and Australia -
and core European countries.
Investing in foreign countries may involve risks, such as currency fluctuations
and political instability, not associated with investing exclusively in the
U.S.
5
<PAGE> 7
STATEMENTS OF NET ASSETS
JUNE 30, 1995
(UNAUDITED)
SECURITY INCOME FUND
CORPORATE BOND SERIES
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT CORPORATE BONDS VALUE
- - --------- --------------- -------
<S> <C> <C>
AEROSPACE & DEFENSE - 5.1%
$4,900,000 Lockheed Corporation,
7.875% - 2023 . . . . . . . . . . . . . . . . . . . . . . $5,028,625
ALUMINUM - 1.1%
1,000,000 Alcan Aluminum Ltd., 9.625%
- 2019 . . . . . . . . . . . . . . . . . . . . . . . . . 1,146,250
BANKS - 8.2%
3,640,000 Citicorp, 9.375% - 2016 . . . . . . . . . . . . . . . . . . 3,844,750
4,000,000 Bank of Montreal, 7.80% - 2007 . . . . . . . . . . . . . . . 4,225,000
-----------
8,069,750
BROKERS, DEALERS & SERVICES - 5.4%
1,000,000 Bear Stearns, 8.75% - 2004 . . . . . . . . . . . . . . . . . 1,101,250
4,000,000 Lehman Brothers Holdings,
Inc., 8.50% - 2007 . . . . . . . . . . . . . . . . . . . . 4,230,000
-----------
5,331,250
DISCOUNT STORES - 4.5%
4,500,000 Wal-Mart Stores, Inc.,
7.25% - 2013 . . . . . . . . . . . . . . . . . . . . . . . 4,483,125
DRUGS - 4.5%
4,500,000 Eli Lilly & Company,
7.125% - 2025 . . . . . . . . . . . . . . . . . . . . . . 4,449,375
DRUG STORES - 5.1%
4,800,000 Rite Aid Corporation,
7.625% - 2005 . . . . . . . . . . . . . . . . . . . . . .
5,064,000
FOOD & BEVERAGE TRADE - 4.5%
4,300,000 Super Valu Stores, 8.875% - 2016 . . . . . . . . . . . . . . 4,504,250
INSURANCE - 4.5%
4,000,000 GEICO Corporation, 9.15% - 2021 . . . . . . . . . . . . . . 4,490,000
LUMBER & WOOD PRODUCTS - 4.9%
4,500,000 Georgia Pacific Company,
9.125% - 2022 . . . . . . . . . . . . . . . . . . . . . . 4,826,250
MACHINERY - 3.5%
3,500,000 Ingersoll-Rand Company,
7.20% - 2025 . . . . . . . . . . . . . . . . . . . . . . . 3,430,000
PAPER PRODUCTS - 9.7%
4,600,000 International Paper Products,
7.625% - 2007 . . . . . . . . . . . . . . . . . . . . . . 4,887,500
5,000,000 Scott Paper Company,
7.00% - 2023 . . . . . . . . . . . . . . . . . . . . . . . 4,650,000
-----------
9,537,500
PETROLEUM REFINING & PRODUCTS - 9.6%
BP America, Inc.,
$3,500,000 8.75% debs. - 2003 . . . . . . . . . . . . . . . . . . . . $ 3,906,875
1,000,000 10.00% debs - 2018 . . . . . . . . . . . . . . . . . . . . 1,116,250
4,500,000 Texaco Capital, Inc., 7.50% - 2043 . . . . . . . . . . . . . 4,471,875
-----------
9,495,000
SANITARY SERVICES - 5.0%
4,500,000 Waste Management Inc.,
8.75% - 2018 . . . . . . . . . . . . . . . . . . . . . . . 4,978,125
SPECIALTY CHEMICALS & PLASTICS - 4.6%
4,000,000 Rohm & Haas Company,
9.50% - 2021 . . . . . . . . . . . . . . . . . . . . . . . 4,525,000
TELECOMMUNICATION EQUIPMENT - 3.3%
3,000,000 Comsat Corporation, 8.125% - 2004 . . . . . . . . . . . . . 3,240,000
UTILITIES - ELECTRIC - 4.5%
4,500,000 Potomac Edison Company,
7.625% - 2025 . . . . . . . . . . . . . . . . . . . . . . 4,421,250
UTILITIES - ELECTRIC & GAS - 8.2%
5,000,000 Public Service Electric & Gas
Company, 8.75% - 2021 . . . . . . . . . . . . . . . . . . 5,362,500
2,500,000 Washington Gas & Light
Company, 8.625% - 2017 . . . . . . . . . . . . . . . . . . 2,700,000
-----------
8,062,500
-----------
Total corporate bonds
- (cost $92,018,283) - 96.2% . . . . . . . . . . . . . . . 95,082,250
GOVERNMENT & GOVERNMENT
AGENCY SECURITIES
U.S. GOVERNMENT AGENCIES - 1.6%
1,500,000 Federal Home Loan Mortgage
Corporation, 7.974% - 2005 . . . . . . . . . . . . . . . . 1,539,240
-----------
Total government & government
agency securities -
(cost $1,500,000) - 1.6% . . . . . . . . . . . . . . . . . 1,539,240
-----------
Total investments -
(cost $93,518,283) - 97.8% . . . . . . . . . . . . . . . . 96,621,490
Cash and other assets, less
liabilities - 2.2% . . . . . . . . . . . . . . . . . . . . 2,199,79
-----------
Total net assets - Corporate Bond
Series - 100.0% . . . . . . . . . . . . . . . . . . . . . $98,821,286
===========
</TABLE>
See accompanying notes.
6
<PAGE> 8
STATEMENTS OF NET ASSETS
JUNE 30, 1995
(UNAUDITED)
SECURITY INCOME FUND
U.S. GOVERNMENT SERIES
<TABLE>
<CAPTION>
PRINCIPAL U.S. GOVERNMENT AND MARKET
AMOUNT GOVERNMENT AGENCY SECURITIES VALUE
--------- ---------------------------- -------
<S> <C> <C>
FEDERAL NATIONAL MORTGAGE CORPORATION - 39.6%
$ 500,000 8.20% - 2016 . . . . . . . . . . . . . . . . . . . . . . . $ 560,805
1,000,000 8.10% - 2019 . . . . . . . . . . . . . . . . . . . . . . . 1,115,770
1,000,000 9.05% - 2021 . . . . . . . . . . . . . . . . . . . . . . . 1,055,730
500,000 7.93% - 2025 . . . . . . . . . . . . . . . . . . . . . . . 552,360
-----------
3,284,665
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION - 22.0%
987,063 8.50%, due 8-20-24 . . . . . . . . . . . . . . . . . . . . 1,016,945
760,861 9.50%, due 8-15-09 . . . . . . . . . . . . . . . . . . . . 803,766
6,313 11.00%, due 10-15-15 . . . . . . . . . . . . . . . . . . . 6,942
-----------
1,827,653
U.S. TREASURY BONDS - 35.2%
1,100,000 8.75% - 2008 . . . . . . . . . . . . . . . . . . . . . . . 1,266,166
1,050,000 7.25% - 2016 . . . . . . . . . . . . . . . . . . . . . . . 1,114,837
500,000 7.50% - 2016 . . . . . . . . . . . . . . . . . . . . . . . 544,720
-----------
2,925,723
U.S. TREASURY NOTES - 1.2%
100,000 5.125% - 1995 . . . . . . . . . . . . . . . . . . . . . . 99,804
-----------
Total investments - (cost $7,712,181) -98.0% . . . . . . . 8,137,845
Cash and other assets, less liabilities - 2.0% . . . . . . . 162,077
-----------
Total net assets - U.S. Government
Series - 100.0% . . . . . . . . . . . . . . . . . . . . . . $8,299,922
===========
</TABLE>
SECURITY INCOME FUND
LIMITED MATURITY BOND SERIES
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT CORPORATE BONDS VALUE
--------- --------------- ------
<S> <C> <C>
ALUMINUM - 4.4%
$148,000 Alcan Aluminum, 9.20% - 2001 . . . . . . . . . . . . . . . . $165,390
BANKS - 3.9%
150,000 Nationsbank, 6.50% - 2003 . . . . . . . . . . . . . . . . . 146,250
ELECTRIC COMPANIES - 8.1%
150,000 Consolidated Edison Company,
6.625% - 2002 . . . . . . . . . . . . . . . . . . . . . . 149,250
150,000 Texas Utilities Electric Company,
7.375% - 2001 . . . . . . . . . . . . . . . . . . . . . . 154,125
-----------
303,375
ELECTRIC & GAS COMPANIES - 4.3%
150,000 Public Service Electric & Gas
Company, 8.75% - 1999 . . . . . . . . . . . . . . . . . . 161,813
FINANCE - 12.8%
150,000 Ford Motor Credit Company,
8.375% - 2000 . . . . . . . . . . . . . . . . . . . . . . 160,313
150,000 Household Finance Corporation,
8.00% - 2004 . . . . . . . . . . . . . . . . . . . . . . . 161,063
150,000 International Lease Finance Corporation,
8.25% - 2000 . . . . . . . . . . . . . . . . . . . . . . . 159,375
-----------
480,751
GROCERY STORES - 4.1%
150,000 Penn Traffic Company,
10.65% - 2004 . . . . . . . . . . . . . . . . . . . . . . 155,813
NATURAL GAS EXPLORATION & PRODUCTION - 4.4%
150,000 Vastar Resources, Inc.,
8.75% - 2005 . . . . . . . . . . . . . . . . . . . . . . . 164,438
PETROLEUM REFINING & PRODUCTS - 4.5%
150,000 BP America, 8.75% - 2003 . . . . . . . . . . . . . . . . . . 167,438
RETAIL TRADE - 7.0%
100,000 Kmart Corporation, 8.125% - 2006 . . . . . . . . . . . . . . 104,125
150,000 Wal-Mart Stores, Inc., 7.50% - 2004 . . . . . . . . . . . . 158,438
-----------
262,563
</TABLE>
See accompanying notes.
7
<PAGE> 9
STATEMENTS OF NET ASSETS
JUNE 30, 1995
(UNAUDITED)
SECURITY INCOME FUND
LIMITED MATURITY BOND SERIES (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT CORPORATE BONDS (continued) VALUE
--------- -------------------------- -------
<S> <C> <C>
SANITARY SERVICES - 4.2%
$150,000 WMX Technologies, Inc.,
8.25% - 1999 . . . . . . . . . . . . . . . . . . . . . . . $ 159,750
TOBACCO PRODUCTS - 4.2%
150,000 Philip Morris Companies, Inc.,
7.625% - 2002 . . . . . . . . . . . . . . . . . . . . . . 156,750
-----------
Total corporate bonds -
(cost $2,178,942) - 61.9% . . . . . . . . . . . . . . . . 2,324,331
GOVERNMENT & GOVERNMENT
AGENCY SECURITIES
CANADIAN PROVINCES - 4.4%
150,000 Province of Quebec, 8.625% - 2005 . . . . . . . . . . . . . 166,125
U.S. GOVERNMENT AGENCIES - 18.0%
Federal Home Loan Bank,
150,000 7.69% - 1996 . . . . . . . . . . . . . . . . . . . . . . . 153,386
100,000 7.17% - 2000 . . . . . . . . . . . . . . . . . . . . . . . 103,750
100,000 Federal Home Loan Mortgage
Corporation, 7.69% - 1996 . . . . . . . . . . . . . . . . 102,285
Federal National Mortgage Association,
150,000 7.05% - 1998 . . . . . . . . . . . . . . . . . . . . . . . 153,556
150,000 8.50% - 2005 . . . . . . . . . . . . . . . . . . . . . . . 160,977
-----------
673,954
U.S. TREASURY - 12.3%
U.S. Treasury Notes,
150,000 7.375% - 1997 . . . . . . . . . . . . . . . . . . . . . . 154,872
150,000 7.50% - 1997 . . . . . . . . . . . . . . . . . . . . . . . 153,713
150,000 7.25% - 1998 . . . . . . . . . . . . . . . . . . . . . . . 154,866
-----------
463,451
-----------
Total government & government
agency securities - (cost $1,254,116)
- 34.7% . . . . . . . . . . . . . . . . . . . . . . . . . 1,303,530
-----------
Total investments - (cost $3,433,058) -
96.6% . . . . . . . . . . . . . . . . . . . . . . . . . . 3,627,861
Cash and other assets,
less liabilities - 3.4% . . . . . . . . . . . . . . . . . 125,907
-----------
Total net assets - Limited Maturity
Bond Series - 100.0% . . . . . . . . . . . . . . . . . . . . $3,753,768
===========
</TABLE>
SECURITY INCOME FUND
GLOBAL AGGRESSIVE BOND SERIES
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT GOVERNMENT OBLIGATIONS VALUE
--------- ---------------------- -------
<S> <C> <C>
ARGENTINA - 4.5%
350,000 Republic of Argentina,
5.00% - 2023 . . . . . . . . . . . . . . . . . . . . . . . $ 168,000
AUSTRALIA - 3.9%
200,000 Treasury Corporation of Victoria,
10.25% - 2006(2) . . . . . . . . . . . . . . . . . . . . . 147,756
BRAZIL - 5.3%
350,000 Republic of Brazil,
7.25% - 2024 . . . . . . . . . . . . . . . . . . . . . . . 200,375
CANADA - 3.8%
200,000 Republic of Canada,
8.00% - 2023(2) . . . . . . . . . . . . . . . . . . . . . . 140,546
ECUADOR - 4.3%
500,000 Republic of Ecuador,
3.00% - 2025 . . . . . . . . . . . . . . . . . . . . . . . 160,000
GERMANY - 3.8%
200,000 Bundesrepublic Deutschland,
6.875% - 2005(2). . . . . . . . . . . . . . . . . . . . . . 144,243
GREECE - 8.4%
70,000,000 Hellenic Treasury Note,
17.75% - 2002(2). . . . . . . . . . . . . . . . . . . . . . 313,130
IRELAND - 4.3%
100,000 Republic of Ireland,
8.00% - 2000(2) . . . . . . . . . . . . . . . . . . . . . . 160,651
ITALY - 3.7%
250,000,000 Buoni Poliennali Del Tes,
8.50% - 1999(2) . . . . . . . . . . . . . . . . . . . . . . 138,135
PHILIPPINES - 4.8%
250,000 Central Bank of Philippines,
5.75% - 2017 . . . . . . . . . . . . . . . . . . . . . . . 180,938
PORTUGAL - 4.0%
22,500,000 Obrig Do Tes Medio Prazo,
8.875% - 1997(2). . . . . . . . . . . . . . . . . . . . . . 149,045
SOUTH AFRICA - 3.1%
500,000 Republic of South Africa,
11.50% - 2000(2). . . . . . . . . . . . . . . . . . . . . . 114,727
-----------
Total government obligations -
(cost $2,048,251) - 53.9% . . . . . . . . . . . . . . . . . 2,017,546
</TABLE>
See accompanying notes.
8
<PAGE> 10
STATEMENTS OF NET ASSETS
JUNE 30, 1995
(UNAUDITED)
SECURITY INCOME FUND
GLOBAL AGGRESSIVE BOND SERIES (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT CORPORATE BONDS VALUE
--------- --------------------------- -------
<S> <C> <C>
BRAZIL - 3.7%
150,000 Aracruz Celulose S.A.,
10.375% - 2002 . . . . . . . . . . . . . . . . . . . . . . $ 139,875
CZECHOSLOVAKIA - 3.9%
3,750,000 Skofin S.R.O.,
11.625% - 2008(2) . . . . . . . . . . . . . . . . . . . . . 146,430
DENMARK - 4.0%
900,000 Nykredit,
8.00% - 2026(2) . . . . . . . . . . . . . . . . . . . . . . 148,051
INDONESIA - 4.1%
150,000 Indah Kiat International Finance,
11.875% - 2002 . . . . . . . . . . . . . . . . . . . . . . 152,250
MEXICO - 3.5%
150,000 Cemex S.A.,
8.875% - 1998 . . . . . . . . . . . . . . . . . . . . . . 129,844
SOUTH AFRICA - 3.6%
500,000 Electricity Supply Commission,
15.00% - 1998(2) . . . . . . . . . . . . . . . . . . . . . 133,882
UNITED STATES - 4.1%
150,000 Chiquita Brands International, Inc.,
11.50% - 2001 . . . . . . . . . . . . . . . . . . . . . . 153,750
-----------
Total corporate bonds -
(cost $1,010,864) - 26.9% . . . . . . . . . . . . . . . . 1,004,082
SHORT TERM INVESTMENTS
----------------------
POLAND - 4.3%
380,000 Government of Poland Treasury Bill,
0% - 07/26/95(2) . . . . . . . . . . . . . . . . . . . . . $ 159,655
TURKEY - 2.8%
5,000,000,000 Government of Turkey Treasury Bill,
0% - 08/10/95(2) . . . . . . . . . . . . . . . . . . . . . 104,648
UNITED STATES - 10.6%
200,000 U.S. Treasury Bill,
5.33% - 08/31/95 . . . . . . . . . . . . . . . . . . . . . 198,194
200,000 U.S. Treasury Bill,
5.34% - 08/31/95 . . . . . . . . . . . . . . . . . . . . . 198,190
-----------
396,384
-----------
Total short-term investments -
(cost $663,749) - 17.7% . . . . . . . . . . . . . . . . . 660,687
-----------
Total investments -
(cost $3,722,864) - 98.5% . . . . . . . . . . . . . . . . 3,682,315
Cash and other assets, less
liabilities - 1.5% . . . . . . . . . . . . . . . . . . . . 57,874
-----------
Total net assets -
Global Aggressive
Bond Series - 100.0% . . . . . . . . . . . . . . . . . . . $3,740,189
===========
</TABLE>
See accompanying notes.
9
<PAGE> 11
STATEMENTS OF NET ASSETS
JUNE 30, 1995
(UNAUDITED)
SECURITY TAX-EXEMPT FUND
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT MUNICIPAL BONDS VALUE
--------- --------------- -------
<S> <C> <C>
EDUCATION REVENUE - 16.5%
$1,000,000 Clark County, Nevada School District,
Series A, 5.50% - 2016 . . . . . . . . . . . . . . . . . . $ 932,500
1,250,000 Florida State Board of Education
Capital Outlay Refunding,
Series A, 5.50% - 2014 . . . . . . . . . . . . . . . . . . 1,182,813
1,000,000 Illinois Educational Facility
Authority (Northwestern University),
6.90% - 2021 . . . . . . . . . . . . . . . . . . . . . . . 1,128,750
1,000,000 North Brunswick Township, N.J.
Board of Education,
6.30% - 2013 1,028,750
-----------
4,272,813
ELECTRIC UTILITY REVENUE - 19.0%
1,300,000 Intermountain Power Agency
(Utah) Power Supply, Series C,
5.25% - 2014 . . . . . . . . . . . . . . . . . . . . . . . 1,196,000
1,200,000 Massachusetts Muncipal Wholesale
Electric Company Power Supply
System, Series B, 6.625% - 2004 . . . . . . . . . . . . . 1,291,500
1,000,000 Puerto Rico Electric Power Authority,
7.00% - 2021 . . . . . . . . . . . . . . . . . . . . . . . 1,096,250
1,300,000 Washington Public Power Supply
System, Nuclear Project #2,
6.30% - 2012 . . . . . . . . . . . . . . . . . . . . . . . 1,314,625
-----------
4,898,375
GENERAL OBLIGATION - 23.2%
1,000,000 Chicago, Illinois Metropolitan Water
Reclamation District G.O.,
6.25% - 2014 . . . . . . . . . . . . . . . . . . . . . . . 1,023,750
1,000,000 Houston, Texas G.O., 6.25% - 2012 . . . . . . . . . . . . . 1,021,250
1,400,000 State of Illinois G.O., 6.25% - 2011 . . . . . . . . . . . . 1,424,500
1,250,000 Commonwealth of Massachusetts
G.O., Series A, 6.50% - 2011 . . . . . . . . . . . . . . . 1,298,438
1,250,000 State of Washington G.O.,
5.80% - 2020 . . . . . . . . . . . . . . . . . . . . . . . 1,201,563
-----------
5,969,501
HIGHWAY REVENUE - 5.5%
1,400,000 Harris County, Texas, Series A,
Toll Road & Tax, 6.125% - 2020 . . . . . . . . . . . . . . 1,414,000
SEWER REVENUE - 3.9%
1,000,000 King County, Washington Sewer
Revenue, Series A, 6.25% - 2034 . . . . . . . . . . . . . 998,750
TRANSPORTATION - 5.4%
$1,300,000 Metropolitan Transit Authority of
New York Service Contract
Refunding Series 5, 7.00% - 2012 . . . . . . . . . . . . . $ 1,387,750
VARIOUS PURPOSE REVENUE - 16.6%
1,250,000 Austin Texas Utility System,
5.75% - 2024 . . . . . . . . . . . . . . . . . . . . . . . 1,200,000
1,000,000 Indianapolis, Indiana Local Public
Improvement Bond Bank, Series A,
6.00% - 2018 . . . . . . . . . . . . . . . . . . . . . . . 988,750
1,000,000 New York State Local Government
Assistance Corporation, Series A,
6.50% - 2020 . . . . . . . . . . . . . . . . . . . . . . . 1,031,250
1,000,000 Salt River Project, Arizona Agriculture
Improvement & Power District
Electric System, 6.625% - 2012 . . . . . . . . . . . . . . 1,052,500
-----------
4,272,500
WASTE MANAGEMENT - 3.9%
1,000,000 Kentucky Infrastructure Authority,
Solid Waste Revolving Fund, PG-A,
6.30% - 2012 . . . . . . . . . . . . . . . . . . . . . . . 1,015,000
WATER SUPPLY REVENUE - 3.8%
1,000,000 Metropolitan Water District,
Southern California Water Works,
6.00% - 2021 . . . . . . . . . . . . . . . . . . . . . . . 981,250
-----------
Total investments -
(cost $25,023,340) - 97.8% . . . . . . . . . . . . . . . . 25,209,939
Cash and other assets - less
liabilities - 2.2% . . . . . . . . . . . . . . . . . . . . 560,151
-----------
Total net assets -
Tax-Exempt Fund - 100.0% . . . . . . . . . . . . . . . . . $25,770,090
===========
</TABLE>
See accompanying notes.
10
<PAGE> 12
STATEMENTS OF NET ASSETS
JUNE 30, 1995
(UNAUDITED)
SECURITY CASH FUND
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT COMMERCIAL PAPER RATING VALUE
--------- ---------------- ------ -------
<S> <C> <C> <C>
AIR TRANSPORTATION - 1.8%
$1,000,000 Harper Group, Inc., (The), A1
5.90% - 9-12-95 . . . . . . . . . . . . . . . . . . . . . $ 988,036
ALCOHOLIC & MALT BEVERAGES - 3.5%
2,000,000 Anheuser-Busch Companies, Inc., A1+
5.87% - 7-10-95 . . . . . . . . . . . . . . . . . . . . . 998,532
5.90% - 7-21-95 . . . . . . . . . . . . . . . . . . . . . 996,722
-----------
1,995,254
AUTOMOBILES - 3.5%
2,000,000 Toyota Motor Credit Corporation, A1+
5.84% - 7-12-95 . . . . . . . . . . . . . . . . . . . . . 1,996,431
BEVERAGES - 3.5%
2,000,000 Coca-Cola Company, (The), A1+
5.80% - 9-15-95 . . . . . . . . . . . . . . . . . . . . . 1,975,511
BUSINESS SERVICES - 8.8%
2,000,000 AI Credit Corporation, A1+
5.91% - 7-19-95 . . . . . . . . . . . . . . . . . . . . . 1,994,090
1,000,000 General Electric Capital Corporation, A1+
5.80% - 9-14-95 . . . . . . . . . . . . . . . . . . . . . 987,917
1,000,000 Nordstrom Credit, Inc., A1
5.985% - 7-12-95 . . . . . . . . . . . . . . . . . . . . . 998,171
1,000,000 Penney (J.C.) Funding Corporation, A1
5.90% - 7-24-95 . . . . . . . . . . . . . . . . . . . . . 996,230
-----------
4,976,408
COMPUTERS - 1.8%
1,000,000 Hewlett-Packard Company, A1+
5.83% - 8-29-95 . . . . . . . . . . . . . . . . . . . . . 990,445
CONSTRUCTION - 6.1%
1,500,000 Stanley Works, 5.975% - 7-26-95 A1 1,493,776
2,000,000 Vulcan Materials Company, A1+
5.75% - 8-1-95 . . . . . . . . . . . . . . . . . . . . . . 1,990,097
-----------
3,483,873
DISCOUNT STORES - 3.5%
2,000,000 Wal-Mart Stores, Inc., A1+
5.965% - 7-14-95 . . . . . . . . . . . . . . . . . . . . . 1,995,692
DRUGS & TOILETRIES - 1.8%
1,000,000 Allergan, Inc., 5.91% - 8-01-95 . . . . . . . . . . . . . . A1 994,911
ELECTRIAL EQUIPMENT - 3.5%
2,000,000 General Electric Company, A1+
5.98% - 7-12-95 . . . . . . . . . . . . . . . . . . . . . 1,996,345
ELECTRIC COMPANIES & SYSTEMS - 15.8%
$2,000,000 Alabama Power Company, A1
5.89% - 7-31-95 . . . . . . . . . . . . . . . . . . . . . $ 497,546
5.965% - 7-31-95 . . . . . . . . . . . . . . . . . . . . . 1,492,544
2,200,000 Central & South West Corporation, P1
5.91% - 7-14-95 . . . . . . . . . . . . . . . . . . . . . 1,995,732
5.88% - 7-18-95 . . . . . . . . . . . . . . . . . . . . . 199,445
2,500,000 New England Power Company, A1
5.92% - 8-18-95 . . . . . . . . . . . . . . . . . . . . . 1,488,160
5.80% - 9-15-95 . . . . . . . . . . . . . . . . . . . . . 97,756
2,000,000 South Carolina Electric & Gas A1
Company, 5.93% - 8-07-95 . . . . . . . . . . . . . . . . . 1,987,810
300,000 Tampa Electric Company, A1+
5.86% - 7-10-95 . . . . . . . . . . . . . . . . . . . . . 299,560
-----------
8,948,553
ELECTRONICS - 4.4%
2,500,000 TDK U.S.A. Corporation, A1+
5.94% - 7-17-95 . . . . . . . . . . . . . . . . . . . . . 2,493,400
GAS & ELECTRIC COMPANIES - 3.8%
2,175,000 Baltimore Gas & Electric Company, A1
5.91% - 7-27-95 . . . . . . . . . . . . . . . . . . . . . 995,732
5.91% - 8-08-95 . . . . . . . . . . . . . . . . . . . . . 1,167,670
-----------
2,163,402
GROCERY STORES - 4.4%
2,500,000 Winn Dixie Stores, Inc., A1
5.86% - 9-14-95 . . . . . . . . . . . . . . . . . . . . . 2,469,479
INSURANCE - 3.5%
2,000,000 American General Corporation, A1+
6.00% - 7-19-95 . . . . . . . . . . . . . . . . . . . . . 1,994,000
LEASING COMPANIES - 7.9%
2,000,000 International Lease Finance
Corporation, A1
6.00% - 7-13-95 . . . . . . . . . . . . . . . . . . . . . 1,996,000
2,500,000 P.H.H. Corporation, A1
5.935% - 7-05-95 . . . . . . . . . . . . . . . . . . . . . 499,670
5.93% - 7-13-95 . . . . . . . . . . . . . . . . . . . . . 1,996,047
-----------
4,491,717
PRINTING - 3.5%
2,000,000 Houghton Mifflin Company, A1
5.985% - 7-10-95 . . . . . . . . . . . . . . . . . . . . . 1,997,007
</TABLE>
See accompanying notes.
11
<PAGE> 13
STATEMENTS OF NET ASSETS
JUNE 30, 1995
(UNAUDITED)
SECURITY CASH FUND
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT COMMERCIAL PAPER (CONTINUED) RATING VALUE
--------- ---------------------------- ------ -------
<S> <C> <C> <C>
TELEPHONE & TELEGRAPH - 5.4%
$2,000,000 AT & T Corporation, A1+
5.81% - 8-18-95 . . . . . . . . . . . . . . . . . . . . . $ 1,984,507
1,100,000 GTE Northwest, Inc., A1
6.03% - 7-05-95 . . . . . . . . . . . . . . . . . . . . . 1,099,263
-----------
3,083,770
TOBACCO PRODUCTS - 7.0%
2,000,000 B.A.T. Capital Corporation, A1
5.95% - 7-26-95 . . . . . . . . . . . . . . . . . . . . . 1,991,778
2,000,000 Philip Morris Companies, Inc., A1
5.90% - 7-07-95 . . . . . . . . . . . . . . . . . . . . . 999,017
5.83% - 8-04-95 . . . . . . . . . . . . . . . . . . . . . 994,494
-----------
3,985,289
TOYS & SPORTING GOODS - 4.9%
800,000 Hasbro, Inc., 5.88% - 8-14-95 . . . . . . . . . . . . . . . . A1 794,251
2,000,000 Toys "R" Us, Inc., A1+
5.91% - 7-28-95 . . . . . . . . . . . . . . . . . . . . . 1,991,135
-----------
2,785,386
-----------
Total commercial paper -
(cost $55,804,909) - 98.4% . . . . . . . . . . . . . . . . 55,804,909
FEDERAL FARM CREDIT BANKS - 5.3%
$1,000,000 6.15% - 10-02-95 . . . . . . . . . . . . . . . . . . . . . $ 1,000,000
2,000,000 5.70% - 01-02-96 . . . . . . . . . . . . . . . . . . . . . 2,000,000
-----------
3,000,000
SBA POOLS - 3.4%
1,913,991 SBA Pool GCS# 501 927,
7.25%, due 7-25-171 . . . . . . . . . . . . . . . . . . . 1,932,224
-----------
Total U.S. government and
government agency securities
- (cost $4,932,224) - 8.7% . . . . . . . . . . . . . . . . 4,932,224
-----------
Total investments - (cost
$60,737,133) - 107.1% . . . . . . . . . . . . . . . . . . 60,737,133
Cash and other assets, less
liabilities - (7.1%) . . . . . . . . . . . . . . . . . . . (4,007,638)
-----------
Total net assets -
Cash Fund 100.0% . . . . . . . . . . . . . . . . . . . . . $56,729,495
===========
</TABLE>
The identified cost of investments owned at June 30, 1995 was the same for
Federal income tax and book purposes.
Ratings were provided by Moody's Investor Services and Standard & Poor's
Corporation.
(1) Variable rate security which may be reset the first of each month.
(2) Principal amount on foreign bond is reflected in local currency (i.e.
Japanese yen, Canadian dollar or deutsche mark) while market value is
reflected in base U.S. dollars.
See accompanying notes.
12
<PAGE> 14
BALANCE SHEETS
JUNE 30, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
SECURITY INCOME FUND
----------------------------------------------------------
CORPORATE U.S. LIMITED GLOBAL SECURITY SECURITY
BOND GOVERNMENT MATURITY AGGRESSIVE TAX-EXEMPT CASH
SERIES SERIES BOND SERIES BOND SERIES FUND FUND
------------ ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments, at value (identified cost
$93,518,283, $7,712,181, $3,433,058,
$3,722,864, $25,023,340 and
$4,932,224 respectively)............. $ 96,621,490 $8,137,845 $3,627,861 $3,682,315 $25,209,939 $ 4,932,224
Commercial paper, at amortized cost
which approximates market value...... -- -- -- -- -- 55,804,909
Cash.................................. 580,687 51,581 41,339 12,229 25,591 449,100
Receivables:
Fund shares sold..................... 9,528 143 39 -- -- 482,203
Securities sold...................... 4,261,270 -- -- -- -- 5,835
Interest............................. 2,001,532 112,607 82,424 51,590 550,869 49,813
Security Management Company.......... 1,046 3,928 -- 3,785 492 --
Prepaid expense...................... 9,266 4,926 3,935 15,564 27,144
------------ ----------- ----------- ----------- ----------- -----------
Total assets............... $103,484,819 $8,311,030 $3,755,598 $3,749,919 $25,802,455 $61,751,228
============ =========== =========== =========== =========== ===========
LIABILITIES AND NET ASSETS
Liabilities:
Payable for fund shares redeemed..... $ 117,638 $ -- $ -- $ -- $ 12,567 $ 2,966,303
Dividends payable to shareholders.... -- -- -- -- -- 5,745
Securities purchased ................ 4,456,076 -- -- -- -- 2,000,000
Other liabilities:
Management fees.................... 41,131 3,493 -- 2,315 10,755 22,845
12b-1 distribution plan fees....... 23,279 1,993 1,198 1,542 848 --
Custodian and transfer agent fees.. 8,158 1,508 112 2,136 1,364 12,105
Administration fees................ 7,404 628 278 139 1,936 2,029
Professional fees.................. 5,031 2,179 -- -- 2,625 3,392
Miscellaneous...................... 4,816 1,307 242 3,598 2,270 9,314
------------ ----------- ----------- ----------- ----------- -----------
Total liabilities and net assets.. 4,663,533 11,108 1,830 9,730 32,365 5,021,733
Net Assets:
Paid in capital..................... 108,211,839 9,122,944 3,556,687 3,756,751 27,338,767 56,729,495
Accumulated and undistributed net
investment income.................. 19,887 1,998 1,434 28,116 1,361 --
Accumulated net realized gain
(loss) on sale of investments...... (12,513,647) (1,250,684) 844 (4,318) (1,756,637) --
Net unrealized appreciation
(depreciation) in value of
investments........................ 3,103,207 425,664 194,803 (40,360) 186,599 --
------------ ----------- ----------- ----------- ----------- -----------
Net assets........................ 98,821,286 8,299,922 3,753,768 3,740,189 25,770,090 56,729,495
------------ ----------- ----------- ----------- ----------- -----------
Total liabilities and
net assets.................... $103,484,819 $8,311,030 $3,755,598 $3,749,919 $25,802,455 $61,751,228
============ =========== =========== =========== =========== ===========
CLASS "A" SHARES
Capital shares outstanding............ 13,270,027 1,676,462 289,287 250,678 2,602,618 56,729,495
Net assets............................ $94,413,983 $7,896,427 $3,062,396 $2,496,229 $24,747,227 $56,729,495
Net asset value per share (net assets
divided by shares outstanding)....... $7.11 $4.71 $10.59 $9.96 $9.51 $1.00
Add: Selling commission (4.75% of
offering price) (excluding
Cash Fund)........................... .35 0.23 0.53 .50 0.47 --
------------ ----------- ----------- ----------- ----------- -----------
Offering price per share (net asset
value divided by 95.25%)............. $7.46 $4.94 $11.12 $10.46 $9.98 $1.00
============ =========== =========== =========== =========== ===========
CLASS "B" SHARES
Capital shares outstanding............ 616,538 85,593 65,337 125,000 107,516 --
Net assets............................ $4,407,303 $403,495 $691,372 $1,243,960 $1,022,863 --
Net asset value per share (net assets
divided by shares outstanding)....... $7.15 $4.71 $10.58 $9.95 $9.51 --
============ =========== =========== =========== =========== ===========
</TABLE>
See accompanying notes.
13
<PAGE> 15
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
SECURITY INCOME FUND
------------------------------------------------------
CORPORATE U.S. LIMITED GLOBAL SECURITY SECURITY
BOND GOVERNMENT MATURITY AGGRESSIVE TAX-EXEMPT CASH
SERIES SERIES BOND SERIES BOND SERIES FUND FUND
---------- ---------- ----------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest........................... $ 3,966,897 $ 326,704 $104,701 $ 35,059 $ 763,363 $1,533,548
EXPENSES:
Management fees.................... 243,971 20,717 8,640 1,080 64,251 128,043
Transfer/maintenance fees.......... 54,683 8,749 528 36 8,394 75,215
12b-1 distribution plan fees....... 137,380 11,746 5,902 1,542 4,566 --
Administration fees................ 43,914 3,729 1,389 139 11,565 11,442
Custodian fees..................... 3,850 237 -- 2,100 -- 2,170
Directors' fees.................... 4,859 428 317 4 5,321 4,463
Professional fees.................. 5,882 735 1,185 294 3,264 3,960
Registration....................... 16,957 10,087 557 1,785 13,291 20,244
Other expenses..................... 12,172 2,087 470 2,513 4,392 10,548
---------- ---------- -------- -------- ----------- ----------
523,668 58,515 18,988 9,493 115,044 256,085
Reimbursement of expenses.......... (6,731) (11,551) (8,640) (2,550) (1,990) --
---------- ---------- -------- -------- ----------- ----------
Total expenses................... 516,937 46,964 10,348 6,943 113,054 256,085
---------- ---------- -------- -------- ----------- ----------
Net investment income........ 3,449,960 279,740 94,353 28,116 650,309 1,277,463
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) on sale
of investments:
Proceeds from sale of
investments..................... 96,583,307 5,488,867 50,625 145,451 13,041,994 --
Cost of investments sold......... 95,164,933 5,555,862 49,781 149,769 12,962,895 --
---------- ---------- -------- -------- ----------- ----------
Net realized gain (loss)..... 1,418,374 (66,995) 844 (4,318) 79,099 --
Unrealized appreciation (depreciation)
of investments:
Beginning of period.............. (1,640,065) (312,720) -- -- (994,757) --
End of period.................... 3,103,207 425,664 194,803 (40,360) 186,599 --
---------- ---------- -------- -------- ----------- ----------
Unrealized appreciation
(depreciation) of investments
during the period.............. 4,743,272 738,834 194,803 (40,360) 1,181,356 --
---------- ---------- -------- -------- ----------- ----------
Net gain (loss) on investments..... 6,161,646 671,389 195,647 (44,678) 1,260,455 --
---------- ---------- -------- -------- ----------- ----------
Net increase (decrease)
in net assets resulting
from operations............ $9,611,606 $951,129 $290,000 $(16,562) $1,910,764 $1,277,463
========== ======== ======== ======== ========== ==========
</TABLE>
See accompanying notes.
14
<PAGE> 16
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED JUNE 30, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
SECURITY INCOME FUND
----------------------------------------------------
CORPORATE U.S. LIMITED GLOBAL SECURITY SECURITY
BOND GOVERNMENT MATURITY AGGRESSIVE TAX-EXEMPT CASH
SERIES SERIES BOND SERIES BOND SERIES FUND FUND
----------- ----------- ----------- ----------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS:
Net investment income . . . . . . . . . . . . $ 3,449,960 $ 279,740 $ 94,353 $ 28,116 $ 650,309 $ 1,277,463
Net realized gain (loss) on sale of
investments . . . . . . . . . . . . . . . 1,418,374 (66,995) 844 (4,318) 79,099 --
Unrealized appreciation (depreciation)
of investments during the year. . . . . . . 4,743,272 738,384 194,803 (40,360) 1,181,356 --
----------- ---------- ---------- ---------- ---------- -------------
Net increase (decrease) in
net assets resulting from operations. . . 9,611,606 951,129 290,000 (16,562) 1,910,764 1,277,463
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A . . . . . . . . . . . . . . . . . . (3,323,092) (269,993) (77,967) -- (634,248) (1,277,463)
Class B . . . . . . . . . . . . . . . . . . (125,788) (11,132) (14,952) -- (18,559) --
----------- ---------- ---------- ---------- ---------- -------------
Total distributions to shareholders . . . (3,448,880) (281,125) (92,919) -- (652,807) (1,277,463)
CAPITAL SHARE TRANSACTIONS (A):
Proceeds from sale of shares
Class A . . . . . . . . . . . . . . . . . . 3,456,308 335,550 2,829,123 2,506,751 898,537 158,154,617
Class B . . . . . . . . . . . . . . . . . . 587,695 97,104 642,557 1,250,000 222,183 --
Dividends reinvested
Class A . . . . . . . . . . . . . . . . . . 2,539,994 207,593 76,643 -- 360,298 1,258,477
Class B . . . . . . . . . . . . . . . . . . 101,266 7,265 14,339 -- 11,450 --
Cost of shares redeemed
Class A . . . . . . . . . . . . . . . . . . (8,078,627) (1,595,949) (5,175) -- (1,823,451) (160,785,314)
Class B . . . . . . . . . . . . . . . . . . (419,244) (51,784) (800) -- (8,989) --
----------- ---------- ---------- ---------- ---------- -------------
Net increase (decrease) from capital
share transactions . . . . . . . . . . . . (1,812,608) (1,000,221) 3,556,687 3,755,751 (339,972) (1,372,220)
----------- ---------- ---------- ---------- ---------- -------------
Total increase (decrease) in
net assets . . . . . . . . . . . 4,350,118 (330,217) 3,753,768 3,740,189 917,985 (1,372,220)
NET ASSETS:
Beginning of period . . . . . . . . . . . . . 94,471,168 8,630,139 -- -- 24,852,105 58,101,715
----------- ---------- ---------- ---------- ---------- -------------
End of period . . . . . . . . . . . . . . . . $98,821,286 $8,299,922 $3,753,768 $3,740,189 $25,770,090 $56,729,495
=========== ========== ========== ========== =========== =============
Undistributed net investment income . . . . . . $19,887 $1,998 $1,434 $28,116 $1,361 --
=========== ========== ========== ========== =========== =============
(a) Shares issued and redeemed:
Shares sold
Class A . . . . . . . . . . . . . . . . 503,212 73,979 282,396 250,678 94,868 158,154,617
Class B . . . . . . . . . . . . . . . . 84,651 21,706 64,035 125,000 23,257 --
Dividends reinvested
Class A . . . . . . . . . . . . . . . . 365,470 45,805 7,387 -- 37,821 1,258,477
Class B . . . . . . . . . . . . . . . . 14,506 1,596 1,381 -- 1,201 --
Shares redeemed
Class A . . . . . . . . . . . . . . . . (1,157,772) (354,803) (496) -- (193,074) (160,785,314)
Class B . . . . . . . . . . . . . . . . (60,694) (11,499) (79) -- (943) --
----------- ---------- ---------- ----------- ----------- -------------
Net increase (decrease) . . . . . . . . . (250,627) (223,216) 354,624 325,678 (36,870) (1,372,220)
=========== ========== ========== =========== ============ =============
</TABLE>
See accompanying notes.
15
<PAGE> 17
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
SECURITY INCOME FUND
------------------------------
CORPORATE U.S. SECURITY SECURITY
BOND GOVERNMENT TAX-EXEMPT CASH
SERIES SERIES FUND FUND
------------ ----------- ----------- ----------
<S> <C> <C> <C> <C>
INCREASE IN NET ASSETS
FROM OPERATIONS:
Net investment income. . . . . . . . . . . . $ 7,115,246 $ 590,335 $ 1,432,309 $ 1,855,864
Net realized loss on sale of investments . . (13,932,021) (1,181,780) (1,836,112) --
Unrealized depreciation
of investments during the year . . . . . . (2,419,117) (67,508) (2,221,295) --
------------ ----------- ------------ -------------
Net increase (decrease) in net assets
resulting from operations . . . . . . (9,235,892) (658,953) (2,625,098) 1,855,864
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A . . . . . . . . . . . . . . . . . (6,917,267) (572,250) (1,408,315) (1,855,864)
Class B . . . . . . . . . . . . . . . . . (183,907) (16,526) (19,759) --
------------ ----------- ------------ -------------
Total distributions to shareholders. . . (7,101,174) (588,776) (1,428,074) (1,855,864)
CAPITAL SHARE TRANSACTIONS (A):
Proceeds from sale of shares
Class A . . . . . . . . . . . . . . . . . 24,783,087 2,812,392 12,166,067 301,350,492
Class B . . . . . . . . . . . . . . . . . 4,319,121 262,697 780,435 --
Dividends reinvested
Class A . . . . . . . . . . . . . . . . . 5,297,609 445,310 841,591 1,707,488
Class B . . . . . . . . . . . . . . . . . 151,234 7,183 12,160 --
Cost of shares redeemed
Class A . . . . . . . . . . . . . . . . . (41,957,570) (3,833,454) (17,034,040) (316,825,978)
Class B . . . . . . . . . . . . . . . . . (1,240,487) (54,497) (81,117) --
------------ ----------- ------------ -------------
Net decrease from capital share
transactions . . . . . . . . . . . . . . (8,647,006) (360,369) (3,314,904) (13,767,998)
------------ ----------- ------------ -------------
Total decrease in net assets . . . . . (24,984,072) (1,608,098) (7,368,076) (13,767,998)
NET ASSETS:
Beginning of period. . . . . . . . . . . . . 119,455,240 10,238,237 32,220,181 71,869,713
------------ ----------- ------------ -------------
End of period. . . . . . . . . . . . . . . . $ 94,471,168 $ 8,630,139 $ 24,852,105 $ 58,101,715
============ =========== ============ =============
Undistributed net investment income. . . . . . $18,807 $3,383 $3,859 --
============ =========== ============ =============
(a) Shares issued and redeemed:
Shares sold
Class A . . . . . . . . . . . . . . 3,430,737 603,088 1,239,726 301,350,492
Class B . . . . . . . . . . . . . . 604,793 55,933 80,986 --
Dividends reinvested
Class A . . . . . . . . . . . . . . 747,626 97,587 88,532 1,707,488
Class B . . . . . . . . . . . . . . 21,813 1,631 1,306 --
Shares redeemed
Class A . . . . . . . . . . . . . . (5,789,251) (820,118) (1,762,983) (316,825,978)
Class B . . . . . . . . . . . . . . (179,031) (11,973) (8,499) --
------------ ----------- ------------ -------------
Net decrease . . . . . . . . . . . . . (1,163,313) (73,852) (360,932) (13,767,998)
============ =========== ============ =============
</TABLE>
See accompanying notes.
16
<PAGE> 18
FINANCIAL HIGHLIGHTS
- - -------------------------------------------------------------------------
SELECTED DATA FOR EACH SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH
PERIOD
<TABLE>
<CAPTION>
Net
gain
(loss)
on Ratio
Net secu- Total Distri- Net Ration of net
Fiscal assets Net rities from Dividends butions Re- Net assets of expen- income Port-
year value in- (real- invest- (from net (from turn asset end of ses to to folio
ended begin- vest- ized & ment invest- cap- of Total value period average average turn-
Decem- ning of ment unreal- oper- ment ital cap- distri- end of Total (thou- net net over
ber 31 period income ized) ations income) gains) ital butions period return(a) sands) assets assets rate
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CORPORATE BOND SERIES (CLASS A)
1990 $7.45 $0.69 $(0.232) $0.458 $(0.688) $ -- $ -- $(0.688) $7.22 6.6% $65,962 1.10% 9.42% 87%
1991 7.22 0.65 0.458 1.108 (0.648) -- -- (0.648) 7.68 16.1% 85,824 1.03% 8.75% 32%
1992 7.68 0.61 0.044 0.654 (0.614) -- -- (0.614) 7.72 9.0% 104,492 1.01% 7.97% 61%
1993 7.72 0.52 0.521 1.041 (0.527) (0.424) -- (0.951) 7.81 13.4% 118,433 1.02% 6.46% 157%
1994 7.81 0.49 (1.127) (0.637) (0.493) -- -- (0.493) 6.68 (8.3%) 90,593 1.01% 6.91% 204%
1995(d) 6.68 0.24 0.437 0.677 (0.247) -- -- (0.247) 7.11 10.3% 94,414 1.02% 7.11% 177%
CORPORATE BOND SERIES (CLASS B)
1993(b) $8.59 $0.11 $(0.324) $(0.214) $(0.112) $(0.424) $ -- $(0.536) $7.84 (2.5%) $1,022 1.88% 5.16% 164%
1994(c) 7.84 0.43 (1.129) (0.699) (0.431) -- -- (0.431) 6.71 (9.0%) 3,878 1.85% 6.08% 204%
1995(d) 6.71 0.22 0.433 0.653 (0.213) -- -- (0.213) 7.15 9.9% 4,407 1.85% 6.14% 177%
U.S. GOVERNMENT SERIES (CLASS A)
1990(c) $4.89 $0.42 $ 0.032 $0.452 $(0.412) $ -- $ -- $(0.412) $4.93 9.8% $6,017 1.11% 8.60% 22%
1991(c) 4.93 0.40 0.248 0.648 (0.404) -- (.004) (0.408) 5.17 13.8% 7,319 1.11% 7.94% 41%
1992(c) 5.17 0.37 (0.126) 0.244 (0.366) -- (.008) (0.374) 5.04 5.0% 9,364 1.11% 7.22% 157%
1993(c) 5.04 0.31 0.273 0.583 (0.310) (0.344) -- (0.654) 4.97 10.9% 10,098 1.10% 5.90% 153%
1994(c) 4.97 0.30 (0.621) (0.321) (0.299) -- -- (0.299) 4.35 (6.5%) 8,309 1.10% 6.47% 220%
1995(d) 4.35 0.15 0.366 0.516 (0.156) -- -- (0.156) 4.71 12.1% 7,896 1.10% 6.79% 117%
U.S. GOVERNMENT SERIES (CLASS B)
1993(b)(c) $5.51 $0.04 $(0.193) $(0.153) $(0.043) $(0.344) $ -- $(0.387) $4.97 (1.4%) $140 1.61% 5.54% 114%
1994(c) 4.97 0.26 (0.624) (0.364) (0.256) -- -- (0.256) 4.35 (7.4%) 321 1.85% 5.76% 220%
1995(d) 4.35 0.13 0.366 0.4960 (0.136) -- -- (0.136) 4.71 11.6% 403 1.85% 5.91% 117%
LIMITED MATURITY BOND SERIES (CLASS A)
1995(d)(e) $10.00 $0.29 $0.578 $0.868 $(0.278) $ -- $ -- $(0.278) $10.59 8.8% $3,062 0.53% 6.24% 4%
LIMITED MATURITY BOND SERIES (CLASS B)
1995(d)(e) $10.00 $0.25 $0.576 $0.826 $(0.246) $ -- $ -- $(0.246) $10.58 8.3% $691 1.33% 5.52% 4%
GLOBAL AGGRESSIVE BOND SERIES(CLASS A)
1995(d)(f) $10.00 $0.08 $(0.120) $(0.040) $ -- $ -- $ -- $ -- $9.96 (.40%) $2,496 2.00% 9.36% 58%
GLOBAL AGGRESSIVE BOND SERIES(CLASS B)
1995(d)(f) $10.00 $0.07 $(0.120) $(0.050) $ -- $ -- $ -- $ -- $9.95 (.60%) $1,244 2.75% 8.61% 58%
</TABLE>
See accompanying notes.
17
<PAGE> 19
FINANCIAL HIGHLIGHTS (CONTINUED)
SELECTED DATA FOR EACH SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH
PERIOD
<TABLE>
<CAPTION>
Ratio Ratio
Net Net gain Total Net of of
Fiscal asset (loss) on from Dividends Distri- Net assets expen- net in- Port-
year value Net securities invest- (from net butions asset end of ses to come to folio
ended begin- invest- (realized ment invest- (from Return Total value Total period average average turn-
Decem- ning of ment & un- opera- ment capital of distribu- end of return (thou- net net over
ber 31 period income realized) tions income) gains) capital tions period (a) sands assets assets rate
- - ------------------------------------------------------------------------------------------------------------------------------------
SECURITY TAX-EXEMPT FUND (CLASS A)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1990 $ 9.60 $0.64 $(0.072) $0.568 $(0.638) $ -- $ -- $(0.638) $ 9.53 6.2% $20,566 0.96% 6.75% 74%
1991 9.53 0.63 0.446 1.076 (0.636) -- -- (0.636) 9.97 11.7% 23,218 0.89% 6.55% 38%
1992 9.97 0.61 0.092 0.702 (0.612) -- -- (0.612) 10.06 7.3% 28,608 0.84% 6.07% 91%
1993 10.06 0.51 0.702 1.212 (0.514) (0.388) -- (0.902) 10.37 11.6% 32,115 0.82% 4.92% 118%
1994 10.37 0.47 (1.317) (0.847) (0.473) -- -- (0.473) 9.05 (8.3%) 24,092 0.82% 4.74% 88%
1995(d) 9.05 0.23 0.474 0.704 (0.244) -- -- (0.244) 9.51 7.8% 24,747 0.84% 5.11% 105%
SECURITY TAX-EXEMPT FUND (CLASS B)
1993 $10.88 $0.10 $(0.128) $(0.028) $(0.094) $(0.388) $ -- $(0.482) $10.37 (0.2%) $106 2.89% 2.71% 90%
1994 10.37 0.35 (1.321) (0.971) (0.349) -- -- (0.349) 9.05 (9.5%) 760 2.00% 3.50% 88%
1995(d) 9.05 0.18 0.479 0.659 (0.199) -- -- (0.199) 9.51 7.2% 1,023 2.00% 3.86% 105%
SECURITY CASH FUND
1990(c) $1.00 $0.073 $ -- $ 0.073 $(0.073) $ -- $ -- $(0.073) $1.00 7.6% $65,018 1.00% 7.31% --
1991 1.00 0.051 -- 0.051 (0.051) -- -- (0.051) 1.00 5.2% 48,843 0.96% 5.21% --
1992(c) 1.00 0.028 -- 0.028 (0.028) -- -- (0.028) 1.00 2.8% 56,694 1.00% 2.75% --
1993(c) 1.00 0.023 -- 0.023 (0.023) -- -- (0.023) 1.00 2.4% 71,870 1.00% 2.28% --
1994 1.00 0.033 -- 0.033 (0.033) -- -- (0.033) 1.00 3.4% 58,102 0.96% 3.24% --
1995(d) 1.00 0.025 -- 0.025 (0.025) -- -- (0.025) 1.00 2.9% 56,729 1.00% 5.00% --
</TABLE>
(a) Total return information does not take into account any charges paid
at time of purchase or contingent deferred sales charges paid at time
of redemption.
(b) Class "B" shares were initially issued on October 19, 1993. Percentage
amounts for the period, except total return, have been annualized.
(c) Fund expenses were reduced by the Investment Manager during the
period, and expense ratios absent such reimbursement would have been
as follows:
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994 1995
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Corporate Bond Class A -- -- -- -- -- --
Class B -- -- -- -- 2.00% 2.18%
U.S. Government Class A 1.34% 1.24% 1.20% 1.20% 1.20% 1.30%
Class B -- -- -- 1.75% 2.91% 3.82%
Limited Maturity Class A -- -- -- -- -- 1.09%
Bond Class B -- -- -- -- -- 1.89%
Global Aggressive Class A -- -- -- -- -- 2.67%
Bond Class B -- -- -- -- -- 3.88%
Tax-Exempt Class A -- -- -- -- -- --
Class B -- -- -- -- 2.32% 2.43%
Cash 1.01% -- 1.03% 1.03% -- --
</TABLE>
(d) For the six months ended June 30, 1995 (unaudited). Percentage
amounts for the period, except total return, have been annualized.
Per share data has been calculated using the average month-end
shares outstanding.
(e) Security Limited Maturity Bond Series was initially capitalized on
January 17, 1995, with a net asset value of $10 per share.
(f) Security Global Aggressive Bond Series was initially capitalized
on June 1, 1995, with a net asset value of $10 per share.
See accompanying notes.
18
<PAGE> 20
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1995
1. SIGNIFICANT ACCOUNTING POLICIES
Security Income Fund, Security Tax-Exempt Fund and Security Cash Fund
(the Funds) are registered under the Investment Company Act of 1940, as
amended, as diversified, open-end management investment companies. The shares
of Security Income Fund are currently issued in four Series, the Corporate Bond
Series, the U.S. Government Series, the Limited Maturity Bond Series and the
Global Aggressive Bond Series, with each Series, in effect, representing a
separate fund. The Income Fund is required to account for each series
separately and to allocate general expenses to each series based upon the net
asset value of each Series. The Limited Maturity Bond Series and the Global
Aggressive Bond Series were initially capitalized on January 17, 1995 and June
1, 1995 respectively. The following is a summary of the significant accounting
policies followed by the Funds in the preparation of their financial
statements.
A. SECURITY VALUATION -- Valuations of Income Fund's and Tax-Exempt
Fund's securities are supplied by a pricing service approved by the Board of
Directors. Securities listed or traded on a national securities exchange are
valued on the basis of the last sales price. If there are no sales on a
particular day, then the securities are valued at the mean between the bid and
the asked prices. If a mean cannot be determined, then the securities for which
market quotations are available are valued on the basis of the current bid
price. Securities for which market quotations are not readily available are
valued by a pricing service considering securities with similar yields,
quality, type of issue, coupon, duration and rating. The Funds' officers, under
the general supervision of the Board of Directors, regularly review procedures
used by, and valuations provided by, the pricing service.
Cash Fund, by approval of the Board of Directors, utilizes the
amortized cost method for valuing portfolio securities, whereby all investments
are valued by reference to their acquisition cost as adjusted for amortization
of premium or accretion of discount.
Generally, trading in foreign securities markets is substantially
completed each day at various times prior to the close of the New York Stock
Exchange. The values of foreign securities are determined as of the close of
such foreign markets or the close of the New York Stock Exchange if earlier.
All investments quoted in foreign currency are valued in U.S. dollars on the
basis of the foreign currency exchange rate prevailing at the close of
business.
Foreign Currency Transactions -- Foreign currencies (and foreign
currency receivables and payables) are translated into U.S. dollar amounts at
the current exchange rate. Translation gains or losses resulting from changes
in exchange rates and realized gains and losses on the settlement of foreign
currency transactions are reported in the statement of operations. In addition,
Global Aggressive Bond Series may enter into forward foreign exchange contracts
in order to manage against foreign currency risk from purchase or sale of
securities denominated in foreign currency. Global Aggressive Bond Series may
also enter into such contracts to manage changes in foreign currency exchange
rates on portfolio positions. These contracts are marked to market daily, by
recognizing the difference between the contract exchange rate and the current
market rate as unrealized gains or losses. Realized gains or losses are
recognized when contracts are settled and are reflected in the statement of
operations. These contracts involve market risk in excess of the amount
reflected in the balance sheet. The face or contract amount in U.S. dollars
reflects the total exposure the Global Aggressive Bond Series has in that
particular currency contract. Losses may arise due to changes in the value of
the foreign currency or if the counterparty does not perform under the
contract.
B. FEDERAL INCOME TAXES -- The Funds complied with the requirements of
the Internal Revenue Code applicable to regulated investment companies and
distributed their taxable net income and net realized gains sufficient to
relive them from all, or substantially all, federal income, excise and state
income taxes. Therefore, no provision for federal or state income tax is
required.
C. OTHER -- As is common in the industry, security transactions are
accounted for on the date the securities are purchased or sold. Distributions
to shareholders are recorded on the ex-dividend date. Interest is accrued on
portfolio investments daily. Realized gains and losses are reported on an
identified cost basis. Premiums and discounts (except original issue discount)
on securities are not amortized, except Security Tax-Exempt Fund which
amortizes premiums. Income distributions and capital gain distributions are
determined in accordance with income tax regulations which may differ from
generally accepted accounting principles. These differences are primarily due
to differing treatments related to wash sales.
2. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Management fees are payable to Security Management Company (SMC) under
investment advisory contracts at an annual rate of 1/2 of 1% of the average net
assets of each Fund. For Global Aggressive Bond Series this fee is an annual
rate of 3/4 of 1% of the average net assets of the Series. SMC has agreed to
waive all of the management fees for the Limited Maturity Bond Series until
July 1, 1995 and .40% of the management fees for the Global Aggressive Bond
Series until December 1, 1995. The investment advisory contract for Income Fund
provides that the total annual expenses of each series of the Fund (including
management fees, but excluding interest, taxes, brokerage commissions and
extraordinary expenses) will not exceed the level of expenses which Income Fund
is permitted to bear under the most restrictive expense limitation imposed by
any state in which shares of the Fund are then qualified for sale. For the
period ended June 30, 1995, SMC agreed to limit the total expenses of Corporate
Bond Series, U.S. Government Series and Limited Maturity Bond Series to an
annual rate of 1.1% of the average daily net asset value of Class A shares and
1.85% of Class B shares of each respective Series; SMC has also agreed to limit
the total expenses of the Global Aggressive Bond Series to 2.0% for Class A
Shares and 2.75% for Class B shares. The investment advisory contract for
Tax-Exempt and Cash Funds provide that the total annual expenses of the Funds
will not exceed an amount equal to an annual rate of 1.0% of the average net
assets of Class A shares and 2.0% of Class B shares of the Tax-Exempt Fund as
calculated on a daily basis.
See accompanying notes.
19
<PAGE> 21
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The Funds have entered into contracts with SMC for transfer agent
services and certain other administrative services which SMC provides to the
Funds. SMC is paid an annual fixed charge per account and shareholder and
dividend transaction fees. The administrative services provided by SMC
principally include all fund and portfolio accounting and regulatory filings.
The Investment Manager also acts as the administrative agent for the
Funds, and as such performs administrative functions, and the bookkeeping,
accounting and pricing functions for the Funds. For this service SMC receives
on an annual basis, a fee of .09 percent of the average daily net assets of
Corporate Bond, Limited Maturity Bond, U.S. Government, and Tax-Exempt Funds
and .045 percent of the average daily net assets of Cash and Global Aggressive
Bond Funds, calculated daily and payable monthly. For the identified
administrative services the SMC also receives, with respect to the Global
Aggressive Bond Fund, an annual fee equal to the greater of .10 percent of its
average net assets or (i) $30,000 in the year ending April 29, 1996; (ii)
$45,000 in the year ending April 29, 1997; and (iii) $60,000 thereafter.
SMC pays the Sub-Advisor, Lexington Management Corporation (LMC) an
annual fee in an amount equal to .35% of the average net assets of Global
Aggressive Bond Series, for investment advisory and certain administrative
services provided to the Global Aggressive Bond Series. The Sub-Advisor has
entered into a sub-advisory contract with MFR Advisors, Inc., ("MFR"), under
which MFR will provide the Global Aggressive Bond Fund with investment and
economic research services. For the service provided by MFR, MFR receives from
the Sub-Advisor, a fee equal to .15% of the average daily net assets of the
Global Aggressive Bond Fund.
Income and Tax-Exempt Funds have adopted Distribution Plans related to
the offering of Class B shares pursuant to Rule 12b-1 under the Investment
Company Act of 1940. The Plan provides for payments at an annual rate of 1.0%
of the average net assets of Class B shares. Class A shares of Income Fund
incur 12b-1 distribution fees at an annual rate of .25% of average net assets
of each Series.
Security Distributors, Inc. (SDI), a wholly-owned subsidiary of SMC and
the national distributor for Income and Tax-Exempt Funds, received net
underwriting commissions after allowances to brokers and dealers in the amounts
presented below:
<TABLE>
<CAPTION>
LIMITED GLOBAL
CORPORATE U.S. MATURITY AGGRESSIVE TAX-
BOND GOVERNMENT BOND BOND EXEMPT
SERIES SERIES SERIES SERIES FUND
---------------------------------------------------
<S> <C> <C> <C> <C> <C>
SDI Underwriting $ 2,007 $1,560 $0 $0 $2,187
Broker/Dealer 30,242 7,685 3,413 $0 8,109
</TABLE>
Certain officers and directors of the Funds are also officers and/or
directors of Security Benefit Life Insurance Company and its subsidiaries,
which include SMC and SDI.
3. INVESTMENT TRANSACTIONS
Investment transactions for the period ended June 30, 1995, (excluding
overnight investments and short-term debt securities) were as follows:
<TABLE>
<CAPTION>
LIMITED GLOBAL
CORPORATE U.S. MATURITY AGGRESSIVE TAX-
BOND GOVERNMENT BOND BOND EXEMPT
SERIES SERIES SERIES SERIES FUND
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Purchases $95,023,758 $4,689,789 $3,482,839 $3,308,884 $13,043,049
Proceeds
from sales 96,583,307 5,488,867 50,625 145,451 13,041,994
</TABLE>
4. FEDERAL INCOME TAX MATTERS
The amounts of unrealized appreciation (depreciation) as of June 30,
1995, were as follows:
<TABLE>
<CAPTION>
LIMITED GLOBAL
CORPORATE U.S. MATURITY AGGRESSIVE TAX-
BOND GOVERNMENT BOND BOND EXEMPT
SERIES SERIES SERIES SERIES FUND
------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Aggregate gross
unrealized
appreciation $3,463,487 $448,408 $195,877 $ 16,596 $ 485,453
Aggregate gross
unrealized
depreciation (360,280) (22,744) (1,074) (56,956) (298,854)
------------------------------------------------------------
Net unrealized
appreciation
(depreciation) $3,103,207 $425,664 $194,803 $(40,360) $ 186,599
------------------------------------------------------------
</TABLE>
See accompanying notes.
20
<PAGE> 22
THE SECURITY GROUP
OF MUTUAL FUNDS
Security Growth and Income Fund
Security Equity Fund
o Equity Series
o Equity Global Series
o Asset Allocation Series
Security Ultra Fund
Security Income Fund
o Corporate Bond Series
o U.S. Government Series
o Limited Maturity Bond Series
o Global Aggressive Bond Series
Security Tax-Exempt Fund
Security Cash Fund
This report is submitted for the general information of the shareholders of the
Funds. The report is not authorized for distribution to prospective investors
in the Funds unless preceded or accompanied by an effective prospectus which
contains details concerning the sales charges and other pertinent information.
SECURITY FUNDS
OFFICERS AND DIRECTORS
DIRECTORS
Willis A. Anton
Donald A. Chubb, Jr.
John D. Cleland
Jack H. Hamilton
Donald L. Hardesty
Penny A. Lumpkin
Mark L. Morris, Jr., D.V.M.
Jeffrey B. Pantages
Harold G. Worswick
OFFICERS
John D. Cleland, President
James R. Schmank, Vice President and Treasurer
Jane A. Tedder, Vice President
Mark E. Young, Vice President
Greg Hamilton, Assistant Vice President
Amy J. Lee, Secretary
Brenda M. Luthi, Assistant Treasurer and Assistant Secretary
BULK RATE
U.S. POSTAGE PAID
TOPEKA, KS
PERMIT NO. 385
(LOGO) SECURITY DISTRIBUTORS, INC.
700 SW Harrison St.
Topeka, KS 66636-0001
(913) 295-3127
(800) 888-2461
SDI-609 (R8-95)
46-06091-00
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000354185
<NAME> SECURITY TAX-EXEMPT FUND
<SERIES>
<NUMBER> 001
<NAME> CLASS A
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 25,023
<INVESTMENTS-AT-VALUE> 25,210
<RECEIVABLES> 0
<ASSETS-OTHER> 25
<OTHER-ITEMS-ASSETS> 567
<TOTAL-ASSETS> 25,802
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 32
<TOTAL-LIABILITIES> 32
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 27,339
<SHARES-COMMON-STOCK> 2,603
<SHARES-COMMON-PRIOR> 2,663
<ACCUMULATED-NII-CURRENT> 1
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (1,757)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 187
<NET-ASSETS> 25,770
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 763
<OTHER-INCOME> 0
<EXPENSES-NET> 113
<NET-INVESTMENT-INCOME> 650
<REALIZED-GAINS-CURRENT> 79
<APPREC-INCREASE-CURRENT> 1,182
<NET-CHANGE-FROM-OPS> 1,911
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 634
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 95
<NUMBER-OF-SHARES-REDEEMED> 193
<SHARES-REINVESTED> 38
<NET-CHANGE-IN-ASSETS> 655
<ACCUMULATED-NII-PRIOR> 4
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 64
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 113
<AVERAGE-NET-ASSETS> 25,771
<PER-SHARE-NAV-BEGIN> 9.05
<PER-SHARE-NII> 0.23
<PER-SHARE-GAIN-APPREC> 0.474
<PER-SHARE-DIVIDEND> 0.244
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.51
<EXPENSE-RATIO> 0.84
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000354185
<NAME> SECURITY TAX-EXEMPT FUND
<SERIES>
<NUMBER> 002
<NAME> CLASS B
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 25,023
<INVESTMENTS-AT-VALUE> 25,210
<RECEIVABLES> 0
<ASSETS-OTHER> 25
<OTHER-ITEMS-ASSETS> 567
<TOTAL-ASSETS> 25,802
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 32
<TOTAL-LIABILITIES> 32
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 27,339
<SHARES-COMMON-STOCK> 108
<SHARES-COMMON-PRIOR> 84
<ACCUMULATED-NII-CURRENT> 1
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (1,757)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 187
<NET-ASSETS> 25,770
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 763
<OTHER-INCOME> 0
<EXPENSES-NET> 113
<NET-INVESTMENT-INCOME> 650
<REALIZED-GAINS-CURRENT> 79
<APPREC-INCREASE-CURRENT> 1,182
<NET-CHANGE-FROM-OPS> 1,911
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 19
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 24
<NUMBER-OF-SHARES-REDEEMED> 1
<SHARES-REINVESTED> 1
<NET-CHANGE-IN-ASSETS> 263
<ACCUMULATED-NII-PRIOR> 4
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 64
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 113
<AVERAGE-NET-ASSETS> 25,771
<PER-SHARE-NAV-BEGIN> 9.05
<PER-SHARE-NII> 0.18
<PER-SHARE-GAIN-APPREC> 0.479
<PER-SHARE-DIVIDEND> 0.199
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.51
<EXPENSE-RATIO> 2.0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
