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SIGNATURE AMY J. LEE
TITLE SECRETARY
EXHIBIT 77Q-1
RESOLVED, that the Bylaws of SBL Fund, Security Equity Fund, Security
Ultra Fund, Security Growth And Income Fund, Security Cash Fund, Security
Income Fund, Security Municipal Bond Fund, and Advisor's Fund are hereby
amended to allow shareholders to vote, in addition to voting in person or
by proxy, by telephone or through the Internet. The amendment to the
Bylaws is filed following the minutes of this meeting and is incorporated
herein by reference.
EXHIBIT 77B: Accountant's Report on Internal Control
Report of Independent Auditors
To the Shareholders and
Board of Directors of
Security Municipal Bond Fund
In planning and performing our audit of the financial statements of Security
Municipal Bond Fund (the Fund) for the year ended December 31, 1999, we
considered its internal control, including control activities for safeguarding
securities, in order to determine our auditing procedures for the purpose of
expressing our opinion on the financial statements and to comply with the
requirement of Form N-SAR, and not to provide assurance on the internal control.
The management of the Fund is responsible for establishing and maintaining
internal control. In fulfilling this responsibility, estimates and judgments by
management are required to assess the expected benefits and related costs of
controls. Generally, controls that are relevant to an audit pertain to the
entity's objective of preparing financial statements for external purposes that
are fairly presented in conformity with generally accepted accounting
principles. Those controls include the safeguarding of assets against
unauthorized acquisition, use or disposition.
Because of inherent limitations in internal control, errors or fraud may occur
and not be detected. Also, projection of any evaluation of internal control to
future periods is subject to the risk that it may become inadequate because of
changes in conditions or that the effectiveness of the design and operation may
deteriorate.
Our consideration of internal control would not necessarily disclose all matters
in internal control that might be material weaknesses under standards
established by the American Institute of Certified Public Accountants. A
material weakness is a condition in which the design or operation of one or more
of the specific internal control components does not reduce to a relatively low
level the risk that error or fraud in amounts that would be material in relation
to the financial statements being audited may occur and not be detected within a
timely period by employees in the normal course of performing their assigned
functions. However, we noted no matters involving internal control and its
operation, including controls for safeguarding securities, that we consider to
be material weaknesses as defined above at December 31, 1999.
This report is intended solely for the information and use of the Board of
Directors and management of the Fund and the Securities and Exchange Commission,
and is not intended to be and, should not be, used by anyone other than these
specified parties.
Ernst & Young LLP
Kansas City, Missouri
February 11, 2000
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<NAME> SECURITY MUNICIPAL BOND FUND
<SERIES>
<NUMBER> 001
<NAME> CLASS A
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
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<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<EXCHANGE-RATE> 1.000
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<INVESTMENTS-AT-VALUE> 18926
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<TOTAL-LIABILITIES> 40
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<PAID-IN-CAPITAL-COMMON> 20607
<SHARES-COMMON-STOCK> 1859
<SHARES-COMMON-PRIOR> 1856
<ACCUMULATED-NII-CURRENT> 2
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (1081)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (237)
<NET-ASSETS> 19291
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1031
<OTHER-INCOME> 0
<EXPENSES-NET> 211
<NET-INVESTMENT-INCOME> 820
<REALIZED-GAINS-CURRENT> (107)
<APPREC-INCREASE-CURRENT> (1412)
<NET-CHANGE-FROM-OPS> (699)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 760
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 277
<NUMBER-OF-SHARES-REDEEMED> 323
<SHARES-REINVESTED> 49
<NET-CHANGE-IN-ASSETS> (1382)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (975)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 99
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 244
<AVERAGE-NET-ASSETS> 19887
<PER-SHARE-NAV-BEGIN> 10.24
<PER-SHARE-NII> .42
<PER-SHARE-GAIN-APPREC> (.76)
<PER-SHARE-DIVIDEND> .42
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.48
<EXPENSE-RATIO> 1.01
</TABLE>
<TABLE> <S> <C>
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<NAME> SECURITY MUNICIPAL BOND FUND
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<NAME> CLASS B
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<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
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<INVESTMENTS-AT-COST> 19163
<INVESTMENTS-AT-VALUE> 18926
<RECEIVABLES> 296
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<TOTAL-ASSETS> 19331
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<TOTAL-LIABILITIES> 40
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<SHARES-COMMON-STOCK> 175
<SHARES-COMMON-PRIOR> 133
<ACCUMULATED-NII-CURRENT> 2
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (1081)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (237)
<NET-ASSETS> 19291
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1031
<OTHER-INCOME> 0
<EXPENSES-NET> 211
<NET-INVESTMENT-INCOME> 820
<REALIZED-GAINS-CURRENT> (107)
<APPREC-INCREASE-CURRENT> (1412)
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<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 65
<NUMBER-OF-SHARES-REDEEMED> 26
<SHARES-REINVESTED> 3
<NET-CHANGE-IN-ASSETS> 294
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (975)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 99
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 244
<AVERAGE-NET-ASSETS> 19887
<PER-SHARE-NAV-BEGIN> 10.26
<PER-SHARE-NII> .34
<PER-SHARE-GAIN-APPREC> (.76)
<PER-SHARE-DIVIDEND> .34
<PER-SHARE-DISTRIBUTIONS> 0
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</TABLE>
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The combined annual meeting of the stockholders of Corporate Bond Series, U.S.
Government Series, Limited Maturity Bond Series, High Yield Series and Capital
Preservation Series of Security Income Fund, Security Municipal Bond Fund and
Security Cash Fund, Kansas corporations, was held October 29, 1999.
The following matters were voted upon:
* To amend the Fund's fundamental investment limitation concerning borrowing.
Votes For 833,701
Votes Against 224,722
* To amend the fund's fundamental investment limitation concerning senior
securities.
Votes For 894,738
Votes Against 163,685
* To eliminate the Fund's fundamental investment limitation concerning margin
purchases of securities and short sales.
Votes For 799,173
Votes Against 259,250
* To amend the Fund's fundamental investment limitation concerning lending.
Votes For 885,062
Votes Against 173,361
* To amend the Fund's fundamental investment limitation concerning buying or
selling real estate, commodities, commodities futures contracts or interests
in oil, gas or other mineral exploration or development programs.
Votes For 805,799
Votes Against 252,624
* To eliminate the Fund's fundamental investment limitation concerning
investment in other investment companies.
Votes For 843,617
Votes Against 214,806
* To eliminate the Fund's fundamental investment limitation concerning
pledging, mortgaging or hypothecating its assets.
Votes For 831,800
Votes Against 226,623
* To eliminate the Fund's fundamental investment limitation concerning
investment in puts and calls.
Votes For 831,800
Votes Against 226,623
* To eliminate the Fund's fundamental investment limitation concerning illiquid
and restricted securities.
Votes For 831,800
Votes Against 226,623
