<PAGE> PAGE 1
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000 C000000 0000088498
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000 J000000 A
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002 A000000 700 HARRISON
002 B000000 TOPEKA
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<PAGE> PAGE 2
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010 A000801 SECURITY MANAGEMENT COMPANY, LLC
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012 C040801 0001
013 A000801 ERNST & YOUNG LLP
013 B010801 KANSAS CITY
013 B020801 MO
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015 A000801 UMB BANK, N.A.
015 B000801 C
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<PAGE> PAGE 3
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<PAGE> PAGE 4
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<PAGE> PAGE 5
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<PAGE> PAGE 6
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<PAGE> PAGE 7
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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.
EXHIBIT 77B: Accountant's Report on Internal Control
Report of Independent Auditors
To the Board of Directors
Security Income Fund - Security Capital Preservation Fund
In planning and performing our audit of the financial statements of Security
Capital Preservation Fund (the "Fund") for the year ended September 30, 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
requirements of Form N-SAR, and not to provide assurance on 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 internal control components does not reduce to a relatively low level the
risk that misstatements caused by 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
September 30, 1999.
This report is intended solely for the information and use of the board of
directors and management of Security Capital Preservation 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
November 8, 1999
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<NAME> CAPITAL PRESERVATION SERIES - A
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<PERIOD-TYPE> 5-MOS
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<PERIOD-START> MAY-03-1999
<PERIOD-END> SEP-30-1999
<EXCHANGE-RATE> 1.000
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<TOTAL-LIABILITIES> 173
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<PAID-IN-CAPITAL-COMMON> 25779
<SHARES-COMMON-STOCK> 2526
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
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<ACCUMULATED-NET-GAINS> (33)
<OVERDISTRIBUTION-GAINS> 0
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<NET-ASSETS> 25779
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<INTEREST-INCOME> 493
<OTHER-INCOME> 0
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<NET-INVESTMENT-INCOME> 425
<REALIZED-GAINS-CURRENT> (33)
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<DISTRIBUTIONS-OF-GAINS> 0
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<NUMBER-OF-SHARES-REDEEMED> 2
<SHARES-REINVESTED> 15
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</TABLE>
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</TABLE>
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<NUMBER> 083
<NAME> CAPITAL PRESERVATION SERIES - C
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<S> <C>
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<PERIOD-END> SEP-30-1999
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<OVERDISTRIBUTION-GAINS> 0
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<DISTRIBUTIONS-OF-GAINS> 0
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<NET-CHANGE-IN-ASSETS> 194
<ACCUMULATED-NII-PRIOR> 0
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<PER-SHARE-NII> .21
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</TABLE>
EXHIBIT 77D: Policies with respect to security investments
WHEREAS, certain states formerly imposed restrictions on the investments
which could be made by registered investment companies, which restrictions
were not required by the Investment Company Act of 1940 (the "1940 Act");
WHEREAS, the National Securities Market Improvement Act of 1996 pre-empted
the states' ability to impose investment restrictions on investment
companies registered under the 1940 Act; and
WHEREAS, the Board of Directors of Security Equity Fund, Security Growth
and Income Fund, Security Ultra Fund, SBL Fund, Security Income Fund,
Security Municipal Bond Fund and Security Cash Fund has determined that it
is in the best interests of the Security Funds and their respective
shareholders to remove the state law investment limitations from their
respective registration statements;
NOW THEREFORE, BE IT RESOLVED, that the appropriate officers of the
Security Funds are authorized and directed to remove the following
investment limitations from the registration statements of the Security
Fund:
The investment limitation that (i) a Fund limit the aggregate market value
of all securities or currencies covering call or put options to 25% of the
market value of the Fund's net assets, (ii) a Fund will not write a covered
put option if as a result, the aggregate market value of all portfolio
securities or currencies covering put or call options exceeds 25% of the
market value of the Fund's net assets, and (iii) a Fund not commit more
than 5% of its assets to premiums when purchasing call and put options.
