SECURITY EQUITY FUND, 485APOS, 1995-03-16

SECURITY EQUITY FUND
485APOS, 1995-03-16

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<PAGE> 1
File Nos. 811-1136
2-19458

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
Post-Effective Amendment No. 71 [x]

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. 71 [x]
(Check appropriate box or boxes)

SECURITY EQUITY FUND
(Exact Name of Registrant as Specified in Charter)

700 HARRISON STREET, TOPEKA, KANSAS 66636-0001
(Address of Principal Executive Offices/Zip Code)

Registrant's Telephone Number, including area code:
(913) 295-3127
<TABLE>
<S> <C>
Copies To:

John D. Cleland, President Amy J. Lee, Secretary
Security Equity Fund Security Equity Fund
700 Harrison Street 700 Harrison Street
Topeka, KS 66636-0001 Topeka, KS 66636-0001
(Name and address of Agent for Service)
</TABLE>

It is proposed that this filing will become effective (check appropriate box):

[ ]immediately upon filing pursuant to paragraph (b)
[ ] on June 1, 1995, pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(i)
[ ] on June 1, 1995, pursuant to paragraph (a)(i)
[ ] 75 days after filing pursuant to paragraph (a)(ii)
[x] on June 1, 1995, pursuant to paragraph (a)(ii) of rule 485
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective
date for a previously filed post-effective amendment

The Registrant has registered an indefinite amount of securities
under the Securities Act of 1933 pursuant to Section 24(f) under
the Investment Company Act of 1940; accordingly, no fee is
payable herewith. The Registrant filed the Notice required by
24f-2 on November 29, 1994.
<PAGE> 2

SECURITY EQUITY FUND
FORM N-1A
CROSS REFERENCE SHEET

<TABLE>
<CAPTION>
Form N-1A
Item Number Caption
- ---------- -------
<S> <C>
Part A PROSPECTUS
----- ----------
1. Cover Page
2. Not Applicable
2a. Transaction and Operating Expense Table
3. Financial Highlights; Performance
4. Investment Objective and Policies of the Funds
5. Management of the Funds; Trading Practices and
Brokerage
6. General Information; Dividends and Taxes; Foreign Taxes
7. How to Purchase Shares; Determination of Net Asset
Value; Shareholder Services; Appendix A
8. How to Redeem Shares
9. Not Applicable

Part B STATEMENT OF ADDITIONAL INFORMATION
----- -----------------------------------

10. Cover Page
11. Table of Contents
12. Not Applicable
13. Investment Objective and Policies of the Funds;
Investment Policy Limitations
14. Officers and Directors
15. Remuneration of Directors and Others
16. Investment Management; Distributor; Custodian, Transfer
Agent and Dividend-Paying Agent
17. Allocation of Portfolio Brokerage
18. Organization
19. How to Purchase Shares; How Net Asset Value is
Determined; How to Redeem Shares; How to Exchange
Shares; Systematic Withdrawal Program; Accumulation
Plan; Retirement Plans; Individual Retirement Accounts
(IRAs); Pension and Profit Sharing Plans; 403(b)
Retirement Plans; Simplified Employee Pension Plans
(SEPPs); Appendix B
20. Dividends and Taxes
21. Distributor
22. Performance Information
23. Financial Statements; Independent Auditors

</TABLE>
<PAGE> 3

SECURITY
FUNDS

PROSPECTUS

JUNE 1, 1995

- - Security Growth
and Income Fund

- - Security Equity
Fund
-Equity Series
-Global Series

- - Security Ultra
Fund

- - Application

[LOGO]
<PAGE> 4

SECURITY FUNDS
PROSPECTUS

SECURITY GROWTH AND INCOME FUND
SECURITY EQUITY FUND
EQUITY SERIES
GLOBAL SERIES
SECURITY ULTRA FUND
MEMBERS OF THE SECURITY BENEFIT GROUP OF COMPANIES
700 HARRISON, TOPEKA, KANSAS 66636-0001

PROSPECTUS

June 1, 1995

Security Growth and Income Fund, Security Equity Fund, Security Global Fund
and Security Ultra Fund are diversified, open-end management investment
companies, each of which has a different investment objective.

The investment objective of Security Growth and Income Fund ("Growth and
Income Fund") is long-term growth of capital with a secondary emphasis on
income. Growth and Income Fund seeks to achieve this objective through
investment in a diversified portfolio which will ordinarily consist principally
of common stocks but may also include other securities when deemed advisable.
Such other securities may include securities convertible into common stocks,
preferred stocks and debt securities, which may include higher yielding, higher
risk securities ("junk bonds") ordinarily characteristic of securities in the
lower rating categories of the recognized rating services. BECAUSE GROWTH AND
INCOME FUND INVESTS IN SUCH JUNK BONDS, IT MAY NOT BE SUITABLE FOR ALL
INVESTORS. IN ADDITION TO OTHER RISKS, JUNK BONDS ARE SUBJECT TO GREATER
FLUCTUATIONS IN VALUE AND RISK OF LOSS OF INCOME AND PRINCIPAL DUE TO DEFAULT
BY THE ISSUER THAN ARE LOWER YIELDING, HIGHER RATED BONDS.

The investment objective of Security Equity Fund ("Equity Fund") is
long-term capital growth. Equity Fund seeks this objective primarily through
investment in equity securities, and emphasis is placed upon the selection of
those securities which, in the opinion of the Investment Manager, offer basic
value or above-average capital growth potential.

The investment objective of Security Global Fund ("Global Fund") is
long-term growth of capital. Global Fund seeks this objective primarily through
investment in common stocks and equivalents of companies domiciled in foreign
countries and the United States. Investments in foreign securities may involve
risks not present in domestic investments.

The investment objective of Security Ultra Fund ("Ultra Fund") is capital
appreciation. Ultra Fund seeks this objective primarily through investment in
equity securities. Ultra Fund will ordinarily invest in a diversified portfolio
of common stocks and securities convertible into common stocks, and the
portfolio may include the securities of smaller and less mature companies.
ULTRA FUND MAY ENGAGE IN SHORT-TERM TRADING WHICH MAY BE CONSIDERED
SPECULATIVE, AND INCREASES RISKS TO ULTRA FUND.

This Prospectus sets forth concisely the information that a prospective
investor should know about the Funds. It should be read and retained for future
reference. A "Statement of Additional Information" about the Funds, dated June
1, 1995, which is incorporated by reference in this Prospectus, has been filed
with the Securities and Exchange Commission. It is available at no charge by
writing Security Distributors, Inc., 700 Harrison, Topeka, Kansas 66636-0001,
or by calling (913) 295-3127 or (800) 888-2461.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.

AN INVESTMENT IN THE FUNDS INVOLVES RISK, INCLUDING LOSS OF PRINCIPAL, AND IS
NOT A DEPOSIT OR OBLIGATION OF, OR GUARANTEED OR ENDORSED BY, ANY BANK. THE
FUNDS ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION,
THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY.
<PAGE> 5

SECURITY FUNDS
CONTENTS

Page
Transaction and Operating Expense Table 1
Financial Highlights 2
Investment Objective and Policies of the Funds 4
Growth and Income Fund 4
Equity Fund 6
Global Fund 6
Ultra Fund 10
American Depositary Receipts 10
Management of the Funds 11
Portfolio Management 12
How to Purchase Shares 13
Alternative Purchase Options 13
Class A Shares 14
Class B Shares 14
Class B Distribution Plan 15
Calculation and Waiver of Contingent Deferred
Sales Charges 16
Arrangements with Broker-Dealers and Others 16
Purchases at Net Asset Value 17
How to Redeem Shares 17
Telephone Redemptions 18
Dividends and Taxes 19
Foreign Taxes 20
Determination of Net Asset Value 20
Trading Practices and Brokerage 21
Performance 21
Shareholder Services 22
Accumulation Plan 22
Systematic Withdrawal Program 22
Exchange Privilege 23
Retirement Plans 23
General Information 24
Organization 24
Stockholder Inquiries 24
Appendix A 25
Class A Shares Reduced Sales Charges 25
Rights of Accumulation 25
Statement of Intention 25
Reinstatement Privilege 25

<PAGE> 6

SECURITY FUNDS
PROSPECTUS

TRANSACTION AND OPERATING EXPENSE TABLE

<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES (ALL FUNDS) CLASS A SHARES CLASS B SHARES(1)
- -------------------------------------------- -------------- -----------------
<S> <C> <C>
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price) 5.75% None
Maximum Sales Load Imposed on Reinvested Dividends None None
Deferred Sales Load (as a percentage of original purchase price
or redemption proceeds, whichever is lower) None 2 5% during the first
year, decreasing to 0% in
the sixth and following
years
</TABLE>

<TABLE>
<CAPTION>
GROWTH AND INCOME FUND EQUITY FUND GLOBAL fUND ULTRA fUND
Class A Class B Class A Class B Class A Class B Class A Class B
------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of net assets)
Management Fees(3) 1.28% 1.27% 1.06% 1.07% 2.00% 2.00% 1.33% 1.36%
12b-1 Fees(4) None 1.00% None 1.00% None 1.00% None 1.00%
Other Expenses None None None None None None None None
---- ---- ---- ---- ---- ---- ---- ----
Total Fund Operating Expenses 1.28% 2.27% 1.06% 2.07% 2.00% 3.00% 1.33% 2.36%
===== ===== ===== ===== ===== ===== ===== =====

EXAMPLE
You would pay the following 1 Year $ 70 $ 73 $ 68 $ 71 $ 77 $ 80 $ 70 $ 74
expenses on a $1,000 invest- 3 Years 96 101 89 95 117 123 97 104
ment, assuming (1) 5 percent 5 Years 124 142 113 131 159 178 126 146
annual return and (2) 10 Years 203 261 179 240 277 332 208 270
redemption at the end of each
time period(5)

EXAMPLE
You would pay the following 1 Year $ 70 $ 23 $ 68 $ 21 $ 77 $ 30 $ 70 $ 24
expenses on a $1,000 invest- 3 Years 96 71 89 65 117 93 97 74
ment, assuming (1) 5 percent 5 Years 124 122 113 111 159 158 126 126
annual return and (2) no
redemption 10 Years 203 261 179 240 277 332 208 270
</TABLE>

(1) Class B shares convert tax-free to Class A shares automatically after
eight years.
(2) Purchases of Class A shares in amounts of $1,000,000 or more are not
subject to an initial sales load; however, a contingent deferred sales
charge of 1% is imposed in the event of redemption within one year of
purchase. See "Class A Shares" on page 14.
(3) Many investment companies pay smaller management fees; however, most such
companies also pay certain of their own expenses while most of the Funds'
required services are provided as part of the management fee.
(4) Long-term holders of Class B shares may pay more than the equivalent of
the maximum front-end sales charge otherwise permitted by NASD Rules.
(5) This example does not reflect deduction of the contingent deferred sales
charge which is imposed upon redemption of Class A shares purchased in
amounts of $1,000,000 or more.

THE ABOVE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES AS ACTUAL EXPENSES MAY BE GREATER OR LESSER THAN THOSE SHOWN. THE
ASSUMED FIVE PERCENT ANNUAL RETURN IS HYPOTHETICAL AND SHOULD NOT BE CONSIDERED
A REPRESENTATION OF PAST OR FUTURE ANNUAL RETURN. THE ACTUAL RETURN MAY BE
GREATER OR LESSER THAN THE ASSUMED AMOUNT.

The purpose of the foregoing fee table is to assist the investor in
understanding the various costs and expenses that an investor in Growth and
Income, Equity, Global and Ultra Funds will bear directly or indirectly. For a
more detailed discussion of the Funds' fees and expenses, see the discussion
under "Management of the Funds," page 11. See "How to Purchase Shares," page
13, for more information concerning the sales load. Also, see Appendix A for a
discussion of "Rights of Accumulation" and "Statement of Intention," which
options may serve to reduce the front-end sales load on purchases of Class A
shares.
1
<PAGE> 7

SECURITY FUNDS
FINANCIAL HIGHLIGHTS

The following condensed financial information, including total returns, for
each of the years in the period ended September 30, 1994, has been audited by
Ernst & Young LLP. Such information for each of the five years in the period
ended September 30, 1994, should be read in conjunction with the financial
statements of the Funds and the report of Ernst & Young LLP, the Funds'
independent auditors, appearing in the September 30, 1994 Annual Report to
Stockholders which is incorporated by reference in this prospectus. The Funds'
Annual Report to stockholders also contains additional information about the
performance of the Funds and may be obtained without charge by calling Security
Distributors, Inc. at 1-800-888-2461. The information for each of the years in
the period ended September 30, 1989 is not covered by the report of Ernst &
Young LLP.

<TABLE>
<CAPTION>
Ratio
Ratio of
Net Total of net
Fiscal asset Net gains from Dividends Distribu- Net expenses income
year value Net (losses on invest- (from net tions asset Net assets to (loss) to
ended beginn- invest- securities ment invest- (from Returns Total value end of average average Portfolio
Septem- ing of ment (realized & opera- ment in- capital of distri- end of Total period net net turnover
ber 30 period income unrealized) tions come) gains) capital butions period return (a) (thousands) assets assets rate
- ------ ------ ------ ---------- ----- ------- ------ ------- ------- ------ ---------- ---------- ------ ------ -------
SECURITY GROWTH AND INCOME FUND (CLASS A)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1985 $8.47 $.50 $ .87 $1.37 $(.62) $(.25) $--- $.87 $8.97 17.4% $102,154 .75% 5.62% 25%
1986 8.97 .52 .84 1.36 (.56) (.16) --- .72 9.61 15.7% 103,957 .75% 5.42% 37%
1987 9.61 .51 (.87) (.36) (.50) (.42) --- .92 8.33 (4.7%) 84,493 .74% 5.02% 32%
1988 8.33 .54 .55 1.09 (.54) (.45) --- .99 8.43 13.8% 81,357 .78% 6.22% 47%
1989(b) 8.43 .44 1.114 1.554 (.537) (.387) --- (.924) 9.06 19.9% 84,964 1.10% 5.93% 49%
1990 9.06 .52 ( .978) (.458) (.509) (.663) --- (1.172) 7.43 (5.8%) 70,588 1.28% 6.24% 66%
1991 7.43 .45 .992 1.442 (.474) (1.088) --- (1.562) 7.31 22.3% 77,418 1.28% 6.14% 103%
1992 7.31 .35 (.016) .334 (.343) (.171) --- (.514) 7.13 4.7% 75,436 1.27% 4.79% 74%
1993 7.13 .21 .876 1.086 (.218) (.158) --- (.376) 7.84 15.6% 81,982 1.26% 2.80% 135%
1994 7.84 .13 (.713) (.583) (.128) (.169) --- (.297) 6.96 (7.6%) 65,328 1.28% 1.70% 163%

SECURITY GROWTH AND INCOME FUND (CLASS B)

<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1994(g) $7.83 $0.05 $(0.694) $(0.644) $(0.117) $(0.169) --- $(0.286) $6.90 (8.00%) $668 2.27% 1.03% 178%

SECURITY EQUITY FUND
EQUITY SERIES (CLASS A)

<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1985(c) $6.47 $.23 $.51 $.74 $(.31) $(1.40) $--- $(1.71) $5.50 14.9% $232,347 .70% 4.24% 91%
1986 5.50 .17 1.11 1.28 (.22) (1.17)(d) --- (1.39) 5.39 24.5% 235,166 .71% 3.07% 108%
1987 5.39 .14 1.88 2.02 (.14) (.32) --- (.46) 6.95 40.1% 288,431 .66% 2.15% 151%
1988 6.95 .14 (1.05) (.91) (.11) (1.19) --- (1.30) 4.74 (10.6%) 231,807 .72% 2.78% 142%
1989 4.74 .15 1.758 1.908 (.118) --- --- (.118) 6.53 41.2% 283,662 .99% 2.62% 86%
1990 6.53 .15 (1.115) (.965) (.166) (.579) --- (.745) 4.82 (15.9%) 226,186 1.08% 2.72% 97%
1991 4.82 .12 1.403 1.523 (.148) (.375) --- (.523) 5.82 34.2% 295,030 1.08% 2.34% 61%
1992 5.82 .09 .475 .565 (.132) (.393) --- (.525) 5.86 10.2% 313,582 1.06% 1.48% 83%
1993 5.86 .12 1.165 1.285 (.053) (.362) --- (.415) 6.73 22.7% 375,565 1.06% 1.95% 95%
1994 6.73 .05 .085 .135 (.120) (1.205) --- (1.325) 5.54 1.95% 358,237 1.06% .86% 79%

EQUITY SERIES (CLASS B)

<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1994(g) $6.81 $0.01 $(0.005) $0.005 $(0.12) $(1.205) --- $(1.325) $5.49 (0.15%) $7,452 2.07% (0.01%) 80%

</TABLE>

2
<PAGE> 8

SECURITY FUNDS
FINANCIAL HIGHLIGHTS (CONTINUED)

<TABLE>
<CAPTION>
Ratio
Ratio of
Net Total of net
Fiscal asset Net Net gains from Dividends Distribu- Net Net expenses income
year value invest- (losses) on invest- (from net tions asset assets to (loss) to
ended beginn- ment securities ment invest- (from Returns Total value end of average average Portfolio
Septem- ing of income (realized & opera- ment in- capital of distri- end of Total period net net turnover
ber 30 period (loss) unrealized tions come) gains) capital butions period return (a) (millions) assets assets rate
- ------ ------ ------ ---------- ----- ------- ------ ------- ------- ------ ---------- ---------- ------ ------ -----
GLOBAL SERIES (CLASS A)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1994(h) $10.00 $(.03) $.87 $.84 $--- $--- $--- $--- $10.84 8.40% $20,128 2.00% (0.01%) 73%

GLOBAL SERIES (CLASS B)

<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1994(g)(h) $9.96 $(0.12) $.91 $0.79 $--- $--- $--- $--- $10.75 7.90% $3,960 3.00% (0.01%) 73%

SECURITY ULTRA FUND (CLASS A)

<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1985 $7.65 $.30 $1.40 $1.70 $(.24) $(.06) $--- $(.30) $9.05 23.1% $98,054 1.13% 3.20% 104%
1986 9.05 .31 1.10 1.41 (.26) (.85) --- (1.11) 9.35 17.3% 100,360 .78% 3.22% 179%
1987 9.35 .13 (1.89) (1.76) (.35) (1.88) --- (2.23) 5.36 (24.1%) 62,246 .84% 1.45% 301%
1988(e) 5.36 (.02) 1.135 1.115 (.125) (.06) --- (.185) 6.29 21.4% 68,700 1.54% (.24%) 120%
1989(b)(e) 6.29 (.12) 1.72 1.60 --- --- --- --- 7.89 25.4% 66,841 3.53% (1.66%) 89%
1990(e) 7.89 (.14) (2.845) (2.985) --- (.445) --- (.445) 4.46 (39.6%) 31,486 2.58% (1.82%) 96%
1991(e)(f) 4.46 (.03) 2.525 2.495 --- (.235) --- (.235) 6.72 58.4% 65,449 1.61% (.51%) 163%
1992 6.72 (.09) (.202) (.292) --- (.172) --- (.172) 6.66 1.5% 57,128 1.32% (.46%) 142%
1993 6.66 (.028) 1.791 1.763 --- (.293) --- (.293) 8.13 26.8% 71,056 1.30% (.50%) 101%
1994 8.13 (.056) (.188) (.244) --- (1.066) --- (1.066) 6.82 (3.6%) 60,695 1.33% (.80%) 111%

SECURITY ULTRA FUND (CLASS B)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1994(g) $8.30 $(0.103) $(0.321) $(0.424) $--- $(1.066) $--- $(1.066) 6.81 (5.7%) 1,254 2.36% (1.76%) 110%
</TABLE>

(a) Total return information does not take into account any sales charge at
time of purchase for Class A shares or upon redemption for Class B shares.

(b) Effective in 1989, the fiscal year ends of Growth and Income and Ultra
Funds were changed from November 30 and October 31, respectively, to
September 30. The information presented in the table above for the fiscal
year ended September 30, 1989, represents 10 months of performance for
Growth and Income Fund and 11 months of performance for Ultra Fund. The
data for years 1985 through 1988 are for fiscal years ended November 30
for Growth and Income Fund and October 31 for Ultra Fund. Percentage
amounts for the period have been annualized.

(c) The amounts shown for Equity Fund include amounts attributable to Security
Omni Fund as follows: Net investment income -- $.01, Net gains or losses on
securities (realized and unrealized) -- $.16, and Net asset value at end of
period -- $.70.

(d) Cash distribution of $.40 per share made in October, 1985. The remaining
$.77 per share was distributed in the form of Security Omni Fund shares,
which were spun-off to Equity Fund stockholders on April 30, 1986.

<TABLE>
<CAPTION>
(e) Weighted Weighted
Debt outstanding Average Average month- Average Interest
at end of debt outstanding end shares debt per expense
Year period during the period outstanding share per share
---- ----------------- ----------------- --------------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Security Ultra Fund 1988 $ --- $ 4,217,187 11,834,629 $ .36 $.03
Security Ultra Fund 1989 17,742,849 13,322,428 9,374,183 1.42 .17
Security Ultra Fund 1990 8,207,425 5,948,569 7,713,750 .77 .08
Security Ultra Fund 1991 --- 970,096 8,817,652 .11 .01
</TABLE>

Borrowings and related interest, if any, were immaterial in 1992, 1993,
and 1994.

(f) Portfolio turnover calculation excludes the portfolio investments acquired
in the Security Omni Fund merger. Per share data has been calculated using
the average month-end shares outstanding.

(g) Class "B" shares were initially issued on October 19, 1993. Percentage
amounts for the period, except total return, have been annualized. Per
share data has been calculated using the average month-end shares
outstanding.

(h) Security Global Series was initially capitalized on October 1, 1993, with
net asset value of $10 per share.
3
<PAGE> 9

SECURITY FUNDS
PROSPECTUS

INVESTMENT OBJECTIVE AND
POLICIES OF THE FUNDS

Security Growth and Income Fund, Security Equity Fund and Security Ultra Fund
are diversified, open-end management investment companies, which were organized
as Kansas corporations on February 2, 1944, November 27, 1961, and April 20,
1965, respectively. Each of Security Growth and Income Fund ("Growth and Income
Fund"), the Equity Series ("Equity Fund") and the Global Series ("Global Fund")
of Security Equity Fund and Security Ultra Fund ("Ultra Fund") (collectively,
the "Funds") has its own investment objective and policies which are described
below. There, of course, can be no assurance that such investment objectives
will be achieved. While there is no present intention to do so, each Fund's
investment objective and policies, unless otherwise noted, may be changed by
its Board of Directors without the approval of stockholders. If there is a
change in investment objective, stockholders should consider whether the Fund
remains an appropriate investment in light of their then current financial
position and needs. Each of the Funds is also subject to certain investment
policy limitations which may not be changed without stockholder approval. Among
these limitations, some of the more important ones are that each Fund will not
invest more than 5 percent of the value of its assets in any one issuer or
purchase more than 10 percent of the outstanding voting securities of any one
issuer or invest more than 25 percent of its total assets in any one industry.
The full text of the investment policy limitations of each Fund is set forth in
the Statement of Additional Information of the Funds.

GROWTH AND INCOME FUND
The investment objective of Growth and Income Fund is long-term growth of
capital with a secondary emphasis on income. Growth and Income Fund seeks to
achieve this objective through investment in a diversified portfolio which will
ordinarily consist principally of common stocks, which may include American
Depositary Receipts ("ADRs"), but may also include other securities when deemed
advisable. (See the discussion of ADRs on page 10.) Such other securities may
include securities convertible into common stocks, preferred stocks and debt
securities. In the selection of securities for investment, the potential for
appreciation and future dividends is given more weight than current dividends.

No dealer, salesperson, or other person has been authorized to give any
information or to make any representations, other than those contained in this
Prospectus and in the Funds' Statement of Additional Information, and if given
or made, such other information or representations must not be relied upon as
having been authorized by the Funds, the Investment Manager, or the
Distributor.
4
<PAGE> 10

SECURITY FUNDS
PROSPECTUS

of the recognized rating services (commonly referred to as "junk bonds"). These
include securities rated Ba or lower by Moody's or BB or lower by Standard &
Poor's and are regarded as predominantly speculative with respect to the
ability of the issuer to meet principal and interest payments. However, the
Investment Manager will not rely principally on the ratings assigned by the
rating services. Because Growth and Income Fund may invest in lower rated
securities and unrated securities of comparable quality, the achievement of the
Fund's investment objective may be more dependent on the Investment Manager's
own credit analysis than would be true if investing in higher rated securities.

Growth and Income Fund may purchase securities on a "when issued" or "delayed
delivery basis" in excess of customary settlement periods for the type of
security involved. Securities purchased on a when issued basis are subject to
market fluctuation and no interest or dividends accrue to the Fund prior to the
settlement date. Growth and Income Fund will establish a segregated account
with its custodian bank in which it will maintain cash, cash equivalents, U.S.
Government securities, or other appropriate liquid, high grade debt obligations
equal in value to commitments for such when issued securities.

From time to time, Growth and Income Fund may purchase government bonds or
commercial notes for temporary defensive purposes. The Fund may utilize
repurchase agreements on an overnight basis or bank demand accounts, pending
investment in securities or to meet potential redemptions or expenses.

SPECIAL RISKS OF HIGH YIELD INVESTING - Because Growth and Income Fund
invests in the high yield, high risk debt securities (commonly referred to as
"junk bonds") described above, its share price and yield are expected to
fluctuate more than the share price and yield of a fund investing in higher
quality, shorter-term securities. The market values of high yield securities
tend to reflect individual corporate developments to a greater extent than do
higher rated securities, which react primarily to fluctuations in the general
level of interest rates. High yield securities also tend to be more
susceptible to real or perceived adverse economic and competitive industry
conditions than investment grade bonds. A projection of an economic downturn,
or higher interest rates, for example, could cause a decline in high yield bond
prices because an advent of such events could lessen the ability of highly
leveraged companies to make principal and interest payments on their debt
securities. In addition, the secondary trading market for high yield bonds may
be less liquid than the market for higher grade bonds, which can adversely
affect the ability of Growth and Income Fund to dispose of its portfolio
securities. Bonds for which there is only a "thin" market can be more difficult
to value inasmuch as objective pricing data may be less available and judgment
may play a greater role in the valuation process. Many of the high yield
securities traded in today's market were issued relatively recently and have
not endured a major business recession. A long-term track record on default
rates, such as that for investment grade corporate bonds, does not exist for
the high yield market. It may be that future default rates on high yield
securities will be higher than in the past, especially during periods of
deteriorating economic conditions.
5
<PAGE> 11

SECURITY FUNDS
PROSPECTUS

DESCRIPTION OF CORPORATE BOND RATINGS

<TABLE>
<S> <C> <C>
MOODY'S STANDARD &
INVESTORS POOR'S
SERVICE, INC. CORPORATION DEFINITION
Aaa AAA Highest quality
Aa AA High quality
A A Upper medium grade
Baa BBB Medium grade
Ba BB Lower medium grade/
speculative elements
B B Speculative
Caa CCC More speculative/
possibly in or high
risk of default
-- D In default
Not rated Not rated Not rated
</TABLE>

A more complete description of the corporate bond ratings is found in the
Appendix to the Funds' Statement of Additional Information.

During the year ended September 30, 1994, the dollar weighted average of
Growth and Income Fund's holdings (excluding equities) had the following credit
quality characteristics.

<TABLE>
<CAPTION>
PERCENT OF
INVESTMENT NET ASSETS
- ---------- ----------
<S> <C>
U.S. Government Securities . . . . . . . . . . . . . . . . . . 0%
Cash and other Assets, Less Liabilities . . . . . . . . . . . . 5.89%
Rated Fixed Income Securities . . . . . . . . . . . . . . . . .
A . . . . . . . . . . . . . . . . . . . . . . . . . . . 0%
Baa/BBB . . . . . . . . . . . . . . . . . . . . . . . . 0%
Ba/BB . . . . . . . . . . . . . . . . . . . . . . . . . 4.09%
B . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.77%
Caa/CCC . . . . . . . . . . . . . . . . . . . . . . . . 3.79%
Unrated Securities Comparable in Quality to
A . . . . . . . . . . . . . . . . . . . . . . . . . . . 0%
Baa/BBB . . . . . . . . . . . . . . . . . . . . . . . . .72%
Ba/BB . . . . . . . . . . . . . . . . . . . . . . . . . 0%
B . . . . . . . . . . . . . . . . . . . . . . . . . . . 0%
Caa/CCC . . . . . . . . . . . . . . . . . . . . . . . . 0%
----------
22.26%
</TABLE>

The foregoing table is intended solely to provide disclosure about Growth and
Income Fund's asset composition during the year ended September 30, 1994. The
asset composition after this may or may not be approximately the same as shown
above.

EQUITY FUND
Equity Fund's objective is to seek long-term capital growth, and emphasis
is placed upon the selection of those securities which, in the opinion of the
Investment Manager, offer basic value or above-average capital growth
potential. Income potential will be considered in the selection of securities,
to the extent doing so is consistent with the Fund's investment objective of
long-term capital growth.

Equity Fund will ordinarily have at least 90 percent of its total assets
invested in a broadly diversified portfolio of common stocks, which may include
ADRs, and securities convertible into common stocks, although it reserves the
right to invest in fixed income securities. (See the discussion of ADRs on
page 10.) Equity Fund also reserves the right to invest its assets temporarily
in cash and money market instruments when, in the opinion of the Investment
Manager, it is advisable to do so on account of current or anticipated market
conditions. Except when in a temporary defensive position, Equity Fund will
maintain at least 65 percent of its assets invested in equity securities; the
remaining 35 percent of the Fund's assets may be invested in investment grade
debt securities (or unrated securities of comparable quality), which may
include commercial paper or other debt securities issued by U.S. corporations,
and U.S. Government securities. Equity Fund may utilize repurchase agreements
on an overnight basis or bank demand accounts, pending investment in securities
or to meet potential redemptions or expenses.

GLOBAL FUND
The investment objective of Global Fund is to seek long-term growth of
capital primarily through investment in securities of companies domiciled in
foreign countries and the United States. Global Fund
6
<PAGE> 12

SECURITY FUNDS
PROSPECTUS

will seek to achieve its objective through investment in a diversified
portfolio of securities which under normal circumstances will consist primarily
of various types of common stocks and equivalents (the following constitute
equivalents: convertible debt securities, warrants and options). The Fund may
also invest in preferred stocks, bonds and other debt obligations, which
include money market instruments of foreign and domestic companies and the U.S.
Government and foreign governments, governmental agencies and international
organizations.

Global Fund will at all times invest at least 65% or more of its assets in
at least three countries, one of which may be the United States. The Fund is
not required to maintain any particular geographic or currency mix of its
investments, nor is it required to maintain any particular proportion of
stocks, bonds or other securities in its portfolio. Global Fund may invest
substantially or primarily in foreign debt securities when it appears that the
capital appreciation available from investments in such securities will equal
or exceed the capital appreciation available from investments in equity
securities. Because the market value of debt obligations can be expected to
vary inversely to changes in prevailing interest rates, investing in debt
obligations may provide an opportunity for capital appreciation when interest
rates are expected to decline. When a defensive position is deemed advisable in
the judgment of Lexington Management Corporation (the "Sub-Adviser"), Global
Fund may temporarily invest up to 100% of its assets in debt obligations
consisting of repurchase agreements, and money market instruments of foreign or
domestic companies and the U.S. Government and foreign governments,
governmental and international organizations. The Fund will limit its
investments in debt securities to those obligations which are considered to be
investment grade by the Sub-Adviser. The Fund will be moved into a defensive
position when, in the judgment of the Sub-Adviser, conditions in the securities
markets would make pursuing the Fund's basic investment strategy inconsistent
with the best interests of the shareholders. Global Fund may utilize bank
demand accounts, pending investment in securities or to meet potential
redemptions or expenses.

Global Fund is intended to provide investors with the opportunity to
invest in a portfolio of securities of companies and governments located
throughout the world. In making the allocation of assets among the various
countries and geographic regions, the Sub-Adviser ordinarily considers such
factors as prospects for relative economic growth between the U.S. and other
countries; expected levels of inflation and interest rates; government policies
influencing business conditions; the range of investment opportunities
available to international investors; and other pertinent financial, tax,
social and national factors--all in relation to the prevailing prices of the
securities in each country or region.

Investments may be made in companies based in (or governments of or
within) such areas and countries as the Sub-Adviser may determine from time to
time. Global Fund may invest in companies located in developing countries
without limitation. Such countries may have relatively unstable governments,
economies based on only a few industries, and securities markets which trade a
small number of companies. Prices on these exchanges tend to be volatile and
in the past these exchanges have offered greater potential for gain, as well as
loss, than exchanges in developed countries. While Global Fund invests only in
countries that it considers as having relatively stable and friendly
governments, it is possible that certain Fund investments could be subject to
foreign expropriation or exchange control restrictions. See "Risk
Considerations" below.

Although the Fund does not intend to invest for the purpose of seeking
short-term profits, the Fund's investments may be changed whenever the
Sub-Adviser deems it appropriate to do so, without regard to the length of time
a particular security has been held.
7
<PAGE> 13

SECURITY FUNDS
PROSPECTUS

CERTAIN INVESTMENT METHODS. Global Fund may from time to time engage in
the following investment practices:

SETTLEMENT TRANSACTIONS - Global Fund may, for a fixed amount of United
States dollars, enter into a forward foreign exchange contract for the purchase
or sale of the amount of foreign currency involved in the underlying securities
transaction. In so doing, the Fund will attempt to insulate itself against
possible losses and gains resulting from a change in the relationship between
the United States dollar and the foreign currency during the period between the
date a security is purchased or sold and the date on which payment is made or
received. This process is known as "transaction hedging."

To effect the translation of the amount of foreign currencies involved in
the purchase and sale of foreign securities and to effect the "transaction
hedging" described above, the Fund may purchase or sell foreign currencies on a
"spot" (i.e. cash) basis or on a forward basis whereby the Fund purchases or
sells a specific amount of foreign currency, at a price set at the time of the
contract, for receipt of delivery at a specified date which may be any fixed
number of days in the future.

Such spot and forward foreign exchange transactions may also be utilized
to reduce the risk inherent in fluctuations in the exchange rate between the
United States dollar and the relevant foreign currency when foreign securities
are purchased or sold for settlement beyond customary settlement time (as
described below). Neither type of foreign currency transaction will eliminate
fluctuations in the prices of the Fund's portfolio or securities or prevent
loss if the price of such securities should decline.

PORTFOLIO HEDGING - When, in the opinion of the Sub-Adviser, it is
desirable to limit or reduce exposure in a foreign currency in order to
moderate potential changes in the United States dollar value of the portfolio,
Global Fund may enter into a forward foreign currency exchange contract by
which the United States dollar value of the underlying foreign portfolio
securities can be approximately matched by an equivalent United States dollar
liability. The Fund may also enter into forward currency exchange contracts to
increase its exposure to a foreign currency that the Sub-Adviser expects to
increase in value relative to the United States dollar. The Fund will not
attempt to hedge all of its portfolio positions and will enter into such
transactions only to the extent, if any, deemed appropriate by the Sub-Adviser.
Hedging against a decline in the value of currency does not eliminate
fluctuations in the prices of portfolio securities or prevent losses if the
prices of such securities decline. Global Fund will not enter into forward
foreign currency exchange transactions for speculative purposes. The Fund
intends to limit such transactions to not more than 20% of its total assets.

FORWARD COMMITMENTS - Global Fund may make contracts to purchase
securities for a fixed price at a future date beyond customary settlement time
("forward commitments") because new issues of securities are typically offered
to investors, such as Global Fund, on that basis. Forward commitments involve
a risk of loss if the value of the security to be purchased declines prior to
the settlement date. This risk is in addition to the risk of decline in value
of the Fund's other assets. Although the Fund will enter into such contracts
with the intention of acquiring the securities, it may dispose of a commitment
prior to settlement if the Sub-Adviser deems it appropriate to do so. The Fund
may realize short-term profits or losses upon the sale of forward commitments.

COVERED CALL OPTIONS - Global Fund may seek to preserve capital by writing
covered call options on securities which it owns. Such an option on an
underlying security would obligate the Fund to sell, and give the purchaser of
the option the right to buy, that security at a stated exercise price at any
time until a stated expiration date of the option.

REPURCHASE AGREEMENTS - A repurchase agreement is a contract under which
Global Fund would acquire a security for a relatively short period
8
<PAGE> 14

SECURITY FUNDS
PROSPECTUS

(usually not more than 7 days) subject to the obligation of the seller to
repurchase and the Fund to resell such security at a fixed time and price
(representing the Fund's cost plus interest). Although the Fund may enter into
repurchase agreements with respect to any portfolio securities which it may
acquire consistent with its investment polices and restrictions, it is the
Fund's present intention to enter into repurchase agreements only with respect
to obligations of the United States Government or its agencies or
instrumentalities to meet anticipated redemptions or pending investment or
reinvestment of Fund assets in portfolio securities. The Fund will enter into
repurchase agreements only with member banks of the Federal Reserve System and
with "primary dealers" in United States Government securities. Repurchase
agreements will be fully collateralized including interest earned thereon
during the entire term of the agreement. If the institution defaults on the
repurchase agreement, the Fund will retain possession of the underlying
securities. If bankruptcy proceedings are commenced with respect to the
seller, realization on the collateral by the Fund may be delayed or limited and
the Fund may incur additional costs. In such case, the Fund will be subject to
risks associated with changes in market value of the collateral securities.
The Fund intends to limit repurchase agreements to institutions believed by the
Sub-Adviser to present minimal credit risk. The operating expenses of the Fund
can be expected to be higher than those of an investment company investing
exclusively in United States securities.

RULE 144A SECURITIES - Global Fund may purchase securities that are
restricted as to disposition under the federal securities laws, provided that
such restricted securities are eligible for resale to qualified institutional
investors pursuant to Rule 144A under the Securities Act of 1933 and subject to
the Fund's investment policy limitation that not more than 10 percent of its
total assets will be invested in restricted securities. The Investment Manager,
under procedures adopted by the Board of Directors, will determine whether
securities eligible for resale under Rule 144A are liquid or not.

RISK CONSIDERATIONS. Investments in foreign securities may involve risks
and considerations not present in domestic investments. Since foreign
securities generally are denominated and pay interest or dividends in foreign
currencies, the value of the assets of Global Fund as measured in United States
dollars will be affected favorably or unfavorably by changes in the
relationship of the United States dollar and other currency rates. Global Fund
may incur costs in connection with the conversion or transfer of foreign
currencies. In addition, there may be less publicly available information
about foreign companies than United States companies. Foreign companies may
not be subject to accounting, auditing, and financial reporting standards,
practices and requirements comparable to those applicable to United States
companies. Foreign securities markets, while growing in volume, have for the
most part substantially less volume than United States securities markets and
securities of foreign companies are generally less liquid and at times their
prices may be more volatile than prices of comparable United States
companies. Foreign stock exchanges, brokers and listed companies generally
are subject to less government supervision and regulation than in the United
States. The customary settlement time for foreign securities may be longer
than the 5 day customary settlement time for United States securities.
Although the Fund will try to invest in companies and governments of countries
having stable political environments, there is the possibility of expropriation
or confiscatory taxation, seizure or nationalization or foreign government
restrictions or other adverse political, social or diplomatic developments that
could affect investment in these nations. Income from foreign securities held
by
9
<PAGE> 15

SECURITY FUNDS
PROSPECTUS

Global Fund may, and in some cases will be reduced by a withholding tax at the
source or other foreign taxes.

ULTRA FUND
Ultra Fund's objective is to seek capital appreciation and emphasis is
placed upon the selection of those securities which, in the opinion of the
Investment Manager, offer the greatest potential for appreciation. Current
income will not be a factor in the selection of investments and any such income
should be considered incidental.

Ultra Fund will ordinarily invest in a diversified portfolio of common
stocks, which may include ADRs, and securities convertible into common stocks,
although it reserves the right to invest in fixed income securities. (See the
discussion of ADRs below.) Ultra Fund also reserves the right to invest its
assets in cash and money market instruments when, in the opinion of the
Investment Manager, it is advisable to do so on account of current or
anticipated market conditions. Ultra Fund may utilize repurchase agreements on
an overnight basis or bank demand accounts, pending investment in securities or
to meet potential redemptions or expenses.

Stocks considered to have appreciation potential will often include
securities of smaller and less mature companies which often have a unique
proprietary product or profitable market niche and the potential to grow very
rapidly. Such companies may present greater opportunities for capital
appreciation because of high potential earnings growth, but may also involve
greater risks than investments in more established companies with demonstrated
earning power. Smaller companies may have limited product lines, markets or
financial resources and their securities may trade less frequently and in
limited volume. As a result, the securities of smaller companies may be subject
to more abrupt or erratic changes in value than securities of larger, more
established companies. In seeking capital appreciation, Ultra Fund may, during
certain periods, trade to a substantial degree in securities for the short
term. That is, Ultra Fund may be engaged essentially in trading operations
based on short-term market considerations, as distinct from long-term
investments based on fundamental evaluations of securities. This investment
policy is speculative and involves substantial risk.

Ultra Fund may make short sales if, at the time of such sale, it owns or
has the right to acquire an equal amount of such securities without payment of
any further consideration. Short sales will be used by Ultra Fund only for the
purpose of deferring recognition of gain or loss for federal income tax
purposes. Ultra Fund may invest up to 5 percent of its assets in companies
having a record of less than three years continuous operation or in warrants.

AMERICAN DEPOSITARY RECEIPTS
Each of the Funds may purchase American Depositary Receipts ("ADRs") which
are dollar-denominated receipts issued generally by U.S. banks and which
represent the deposit with the bank of a foreign company's securities. ADRs are
publicly traded on exchanges or over-the-counter in the United States.
Investors should consider carefully the substantial risks involved in investing
in securities issued by companies of foreign nations, which are in addition to
the usual risks inherent in domestic investments. Although the Funds intend to
invest only in nations which are considered to have relatively stable and
friendly governments, there is the possibility of expropriation,
nationalization or confiscatory taxation, foreign exchange controls (which may
include suspension of the ability to transfer currency from a given country),
political or social instability or diplomatic developments which could affect
investment in securities of issuers in those nations. In addition, in many
countries there is less publicly available information about issuers than is
available in reports about companies in the United States. Foreign companies
are not generally subject to uniform accounting, auditing and financial
10
<PAGE> 16

SECURITY FUNDS
PROSPECTUS

reporting standards, and auditing practices and requirements may not be
comparable to those applicable to U.S. companies. In many foreign countries,
there is less government supervision and regulation of business and industry
practices, stock exchanges, brokers and listed companies than in the United
States. Foreign investments may be subject to taxation abroad. In addition, the
foreign securities markets of many of the countries in which the Funds may
invest may also be smaller, less liquid, and subject to greater price
volatility than those in the United States.

MANAGEMENT OF THE FUNDS

The management of the Funds' business and affairs is the responsibility of
the Board of Directors. Security Management Company (the "Investment Manager"),
700 Harrison Street, Topeka, Kansas, is responsible for selection and
management of the Funds' portfolio investments. The Investment Manager is an
indirect wholly-owned subsidiary of Security Benefit Life Insurance Company, a
mutual life insurance company with over $13 billion of insurance in force. The
Investment Manager also acts as investment adviser to Security Asset Allocation
Fund, Security Income Fund, Security Tax-Exempt Fund, Security Cash Fund and
SBL Fund. On December 31, 1994, the aggregate assets of all of the Funds under
the investment management of the Investment Manager were approximately $2.1
billion.

The Investment Manager has engaged Lexington Management Corporation (the
"Sub-Adviser"), Park 80 West, Plaza Two, Saddle Brook, New Jersey 07663, to
provide certain investment advisory services to Global Fund. The Sub-Adviser is
a wholly-owned subsidiary of Piedmont Management Company Inc., a diversified
financial services holding company which is organized as a Delaware
corporation, the majority of the common stock of which is owned by descendants
of Lunsford Richardson, Sr., their spouses, trusts and other related entities.
The Sub-Adviser was established in 1938 and currently manages over $3.8 billion
in assets.

Subject to the supervision and direction of the Funds' Board of Directors,
the Investment Manager manages the Funds' portfolios in accordance with each
Fund's stated investment objective and policies and makes all investment
decisions. As to Global Fund, the Investment Manager supervises the management
of this Fund's portfolio by the Sub-Adviser. The Investment Manager has agreed
that total annual expenses of the respective Funds (including for any fiscal
year, the management fee, but excluding interest, taxes, brokerage commissions,
extraordinary expenses and Class B distribution fees) shall not for each of the
Funds exceed the level of expenses which the Funds are permitted to bear under
the most restrictive expense limitation imposed by any state in which shares of
the Fund are then qualified for sale. The Investment Manager will contribute
such funds to the Funds or waive such portion of its compensation as may be
necessary to insure that such total annual expenses do not exceed any such
limitation.

The Investment Manager also acts as the administrative agent and transfer
agent and dividend disbursing agent for the Funds, and as such performs
administrative functions, transfer agency and dividend disbursing services, and
the bookkeeping, accounting and pricing functions for the Funds. The Investment
Manager has arranged for the Sub-Adviser to provide certain administrative
services to Global Fund, including performing certain accounting and pricing
functions.

For its services, the Investment Manager receives, with respect to Growth
and Income, Equity and Ultra Funds, on an annual basis, a fee of 2 percent of
the first $10 million of the average net assets, 1 1/2 percent of the next $20
million of the average net assets and 1 percent of the remaining average net
assets of these Funds, calculated daily and payable monthly. The Investment
Manager receives with respect to the Global Fund, on an annual basis, 2 percent
of the first $70 million of the average net assets and 1 1/2 percent of the
remaining average net assets of this Fund, calculated daily and payable
11
<PAGE> 17

SECURITY FUNDS
PROSPECTUS

monthly. The Investment Manager pays the Sub-Adviser an amount equal to .50
percent of the average net assets of Global Fund, calculated on a daily basis
and payable monthly.

For the year ended September 30, 1994, the total expenses, as a percentage
of average net assets, were 1.28 percent for Class A shares and 2.27 percent
for Class B shares of Growth and Income Fund; 1.06 percent for Class A and 2.07
percent for Class B shares of Equity Fund; 2.0 percent for Class A and 3.0
percent for Class B shares of Global Fund; and 1.33 percent for Class A and
2.36 percent for Class B shares of Ultra Fund.

Many investment companies pay smaller management fees. However, most such
companies also pay certain of their own expenses in addition to management fees
while most of the Funds' required services are included as part of the
management fee.

PORTFOLIO MANAGEMENT
John D. Cleland is Senior Vice President and Director of the Investment
Manager. In his capacity as Senior Vice President, Mr. Cleland supervises
portfolio management, trading and research performed by the Investment Manager
and its portfolio managers report directly to Mr. Cleland.

Mr. Cleland has been involved in the securities industry for more than 30
years. Before joining the Investment Manager in 1968, he was involved in the
investment business in securities and residential and commercial real estate
for approximately ten years.

Terry A. Milberger is a Vice President and Senior Portfolio Manager of the
Investment Manager and manages the portfolio of Equity Fund. Mr. Milberger has
more than 19 years of investment experience and has managed Equity Fund's
portfolio since 1981. He began his career as an investment analyst in the
insurance industry and from 1974 through 1978 he served as an assistant
portfolio manager for the Investment Manager. He was then employed as Vice
President of Texas Commerce Bank and managed its pension fund assets until he
returned to the Investment Manager in 1981.

Mr. Milberger holds a bachelor's degree in business and an M.B.A. from the
University of Kansas and is a Chartered Financial Analyst. His investment
philosophy is based on patience and opportunity for the long-term investor.

Scott F. Stephenson is the Assistant Vice President and Senior Investment
Analyst of the Investment Manager and manages Growth and Income Fund. Mr.
Stephenson has 14 years investment experience. Prior to joining the Investment
Manager in 1992, he was employed with PaineWebber as an Institutional Sales
Representative/Analyst and from 1988 to 1992, Mr. Stephenson was employed with
Fahnestock/ Christopher as a Senior Investment Analyst.

Mr. Stephenson graduated from the University of Kansas with a B.S. in
economics. He is also a Chartered Financial Analyst and a Certified Public
Accountant.

Cindy L. Shields is Portfolio Manager of the Investment Manager and
manages Ultra Fund. Ms. Shields has five years experience in the securities
field and joined the Investment Manager in 1989.

Ms. Shields graduated from Washburn University with a Bachelor of Business
Administration degree, majoring in finance and economics. She is also a
Chartered Financial Analyst.

Global Fund is managed by an investment management team of the
Sub-Adviser. Alan Wapnick and Richard T. Saler are the lead managers.

Mr. Wapnick is a Senior Vice President of the Sub-Adviser and is
responsible for portfolio management. He has 25 years investment experience.
Prior to joining the Sub-Adviser in 1986, Mr. Wapnick was an equity analyst
with Merrill Lynch, J. & W. Seligman, Dean Witter and most recently Union
Carbide Corporation. Mr. Wapnick is a graduate of Dartmouth College and
received a Master's Degree in Business Administration from Columbia University.

Mr. Saler is a Senior Vice President of the Sub-Adviser and is responsible
for international investment analysis and portfolio management. He has eight
years of investment experience. Mr. Saler
12
<PAGE> 18

SECURITY FUNDS
PROSPECTUS

has focused on international markets since first joining the Sub-Adviser in
1986. Most recently he was a strategist with Nomura Securities and rejoined the
Sub-Adviser in 1992. Mr. Saler is a graduate of New York University with a B.S.
Degree in Marketing and an M.B.A. in Finance from New York University's
Graduate School of Business Administration.

HOW TO PURCHASE SHARES
Security Distributors, Inc. (the "Distributor"), 700 Harrison St., Topeka,
Kansas, a wholly-owned subsidiary of the Investment Manager, is principal
underwriter for the Funds. Shares of the Funds may be purchased through
authorized investment dealers. In addition, banks and other financial
institutions that have an agreement with the Distributor, may make shares of
the Funds available to their customers. The minimum initial purchase must be
$100. Subsequent purchases must be $100 unless made through an Accumulation
Plan which allows subsequent purchases of $20.

Orders for the purchase of shares of the Funds will be confirmed at an
offering price equal to the net asset value per share next determined after
receipt of the order in proper form by the Distributor (generally as of the
close of the New York Stock Exchange on that day) plus the sales charge in the
case of Class A shares. Orders received by dealers or other firms prior to the
close of the Exchange and received by the Distributor prior to the close of its
business day will be confirmed at the offering price effective as of the close
of the Exchange on that day.

Orders for shares received by broker-dealers prior to that day's close of
trading on the New York Stock Exchange and transmitted to the Fund prior to its
close of business that day will receive the offering price equal to the net
asset value per share computed at the close of trading on the Exchange on the
same day plus, in the case of Class A shares, the sales charge. Orders received
by broker-dealers after that day's close of trading on the Exchange and
transmitted to the Fund prior to the close of business on the next business day
will receive the next business day's offering price.

The Funds reserve the right to withdraw all or any part of the offering
made by this prospectus and to reject purchase orders.

ALTERNATIVE PURCHASE OPTIONS
The Funds offer two classes of shares:
CLASS A SHARES - FRONT-END LOAD OPTION - Class A shares are sold with a sales
charge at the time of purchase. Class A shares are not subject to a sales
charge when they are redeemed (except that shares sold in an amount of
$1,000,000 or more without a front-end sales charge will be subject to a
contingent deferred sales charge for one year). See Appendix A for a
discussion of "Rights of Accumulation" and "Statement of Intention," which
options may reduce the front-end sales charge on purchases of Class A shares.

CLASS B SHARES - BACK-END LOAD OPTION - Class B shares are sold without a sales
charge at the time of purchase, but are subject to a deferred sales charge if
they are redeemed within five years of the date of purchase. Class B shares
will automatically convert tax-free to Class A shares at the end of eight years
after purchase.

The decision as to which class is more beneficial to an investor depends
on the amount and intended length of the investment. Investors who would rather
pay the entire cost of distribution at the time of investment, rather
than spreading such cost over time, might consider Class A shares. Other
investors might consider Class B shares, in which case 100% of the purchase
price is invested immediately, depending on the amount of the purchase and the
intended length of investment. The Funds will not normally accept any purchase
of Class B shares in the amount of $500,000 or more.

Dealers or others may receive different levels of compensation depending
on which class of shares they sell.
13
<PAGE> 19

SECURITY FUNDS
PROSPECTUS

CLASS A SHARES
Class A shares are offered at net asset value plus an initial sales charge
as follows:

<TABLE>
<CAPTION>
Sales Charge
----------------------------------------------------
Amount of Percentage Percentage of Percentage
Transaction at of Offering Net Amount Reallowable
Offering Price Price Invested to Dealers
-------------- ----------- ------------- ----------
<S> <C> <C> <C>
Less than $50,000 5.75% 6.10% 5.00%
$50,000 but less than
$100,000 4.75% 4.99% 4.00%
$100,000 but less than
$250,000 3.75% 3.90% 3.00%
$250,000 but less than
$500,000 2.75% 2.83% 2.25%
$500,000 but less than
$1,000,000 2.00% 2.04% 1.75%
$1,000,000 or more None None (See below)
</TABLE>

Purchases of Class A shares in an amount of $1,000,000 or more are at net
asset value (without a sales charge), but are subject to a contingent deferred
sales charge of one percent in the event of redemption within one year
following purchase. For a discussion of the contingent deferred sales charge,
see "Calculation and Waiver of Contingent Deferred Sales Charges" on page 16.

The Distributor will pay a commission to dealers on Class A purchases of
$1,000,000 or more as follows: 1.00 percent on sales up to $5,000,000, plus .50
percent on sales of $5,000,000 or more up to $10,000,000 and .10 percent on any
amount of $10,000,000 or more.

The Investment Manager may, at its expense, pay a service fee to dealers
who satisfy certain criteria established by the Investment Manager from time to
time relating to the volume of their sales of Class A shares of the Funds and
certain other Security Funds during prior periods and certain other factors,
including providing certain services to their clients who are stockholders of
the Funds. Such services include assisting in maintaining records, processing
purchase and redemption requests and establishing stockholder accounts,
assisting stockholders in changing account options or enrolling in specific
plans, and providing stockholders with information regarding the Funds and
related developments.

Currently, service fees are paid on the aggregate value of accounts opened
after July 31, 1990, in Security Equity, Ultra, Global, Growth and Income and
Tax-Exempt Funds at the following annual rates: .25 percent of aggregate net
asset value for amounts of $100,000 but less than $5,000,000 and .30 percent
for amounts of $5,000,000 or more.

Additional information may be obtained by referring to the Funds'
Statement of Additional Information.

CLASS B SHARES
Class B shares are offered at net asset value, without an initial sales
charge. With certain exceptions, the Funds may impose a deferred sales charge
on shares redeemed within five years of the date of purchase. No deferred sales
charge is imposed on amounts redeemed thereafter. If imposed, the deferred
sales charge is deducted from the redemption proceeds otherwise payable to you.
The deferred sales charge is retained by the Distributor.

Whether a contingent deferred sales charge is imposed and the amount of
the charge will depend on the number of years since the investor made a
purchase payment from which an amount is being redeemed, according to the
following schedule:

<TABLE>
<CAPTION>
Year Since Purchase Contingent Deferred
Payment Was Made Sales Charge
----------------- ------------
<S> <C>
First 5%
Second 4%
Third 3%
Fourth 3%
Fifth 2%
Sixth and following 0%

</TABLE>
14
<PAGE> 20

SECURITY FUNDS
PROSPECTUS

Class B shares (except shares purchased through the reinvestment of
dividends and other distributions paid with respect to Class B shares) will
automatically convert on the eighth anniversary of the date such shares were
purchased to Class A shares which are subject to a lower distribution fee. This
automatic conversion of Class B shares will take place without imposition of
a front-end sales charge or exchange fee. (Conversion of Class B shares
represented by stock certificates will require the return of the stock
certificates to the Investment Manager.) All shares purchased through
reinvestment of dividends and other distributions paid with respect to Class B
shares ("reinvestment shares") will be considered to be held in a separate
subaccount. Each time any Class B shares (other than those held in the
subaccount) convert to Class A shares, a pro rata portion of the reinvestment
shares held in the subaccount will also convert to Class A shares. Class B
shares so converted will no longer be subject to the higher expenses borne by
Class B shares. Because the net asset value per share of the Class A shares may
be higher or lower than that of the Class B shares at the time of conversion,
although the dollar value will be the same, a shareholder may receive more or
less Class A shares than the number of Class B shares converted. Under current
law, it is the Funds' opinion that such a conversion will not constitute a
taxable event under federal income tax law. In the event that this ceases to be
the case, the Board of Directors will consider what action, if any, is
appropriate and in the best interests of the Class B stockholders.

CLASS B DISTRIBUTION PLAN
Each Fund bears some of the costs of selling its Class B shares under
a Distribution Plan adopted with respect to its Class B shares ("Class B
Distribution Plan") pursuant to Rule 12b-1 under the Investment Company Act of
1940 ("1940 Act"). This Plan provides for payments at an annual rate of 1.00
percent of the average daily net asset value of Class B shares. Amounts paid by
the Funds are currently used to pay dealers and other firms that make Class B
shares available to their customers (1) a commission at the time of purchase
normally equal to 4.00 percent of the value of each share sold and (2) a
service fee payable for the first year, initially, and for each year
thereafter, quarterly, in an amount equal to .25 percent annually of the
average daily net asset value of Class B shares sold by such dealers and other
firms and remaining outstanding on the books of the Funds.

NASD Rules limit the aggregate amount that the Funds may pay annually
in distribution costs for the sale of its Class B shares to 6.25 percent of
gross sales of Class B shares since the inception of the Distribution Plan,
plus interest at the prime rate plus one percent on such amount (less any
contingent deferred sales charges paid by Class B shareholders to the
Distributor). The Distributor intends, but is not obligated, to continue to pay
or accrue distribution charges incurred in connection with the Class B
Distribution Plan which exceed current annual payments permitted to be received
by the Distributor from the Funds. The Distributor intends to seek full payment
of such charges from the Fund (together with annual interest thereon at the
prime rate plus one percent) at such time in the future as, and to the extent
that, payment thereof by the Funds would be within permitted limits.

Each Fund's Class B Distribution Plan may be terminated at any time by
vote of its directors who are not interested persons of the Fund as defined in
the 1940 Act or by vote of a majority of the outstanding Class B shares. In the
event the Class B Distribution Plan is terminated by the Class B stockholders
or the Funds' Board of Directors, the payments made to the Distributor pursuant
to the Plan up to that time would be retained by the Distributor. Any expenses
incurred by the Distributor in excess of those payments would be absorbed by
the Distributor. The Funds make no payments in connection with the sale of
their shares other than the distribution fee paid to the Distributor.
15
<PAGE> 21

SECURITY FUNDS
PROSPECTUS

CALCULATION AND WAIVER OF CONTINGENT DEFERRED SALES CHARGES
Any contingent deferred sales charge imposed upon redemption of Class
A shares (purchased in an amount of $1,000,000 or more) and Class B shares is a
percentage of the lesser of (1) the net asset value of the shares redeemed or
(2) the net cost of such shares. No contingent deferred sales charge is imposed
upon redemption of amounts derived from (1) increases in the value above the
net cost of such shares due to increases in the net asset value per share of
the Fund; (2) shares acquired through reinvestment of income dividends and
capital gain distributions; or (3) Class A shares (purchased in an amount of
$1,000,000 or more) held for more than one year or Class B shares held for more
than five years. Upon request for redemption, shares not subject to the
contingent deferred sales charge will be redeemed first. Thereafter, shares
held the longest will be the first to be redeemed.

The contingent deferred sales charge is waived (1) following the death
of a stockholder if redemption is made within one year after death; (2) upon
the disability (as defined in Section 72(m)(7) of the Internal Revenue Code) of
a stockholder prior to age 65 if redemption is made within one year after the
disability, provided such disability occurred after the stockholder opened the
account; (3) in connection with required minimum distributions in the case of
an IRA, SAR-SEP or Keogh or any other retirement plan qualified under section
401(a), 401(k) or 403(b) of the Code; and (4) in the case of distributions from
retirement plans qualified under section 401(a) or 401(k) of the Internal
Revenue Code due to (i) returns of excess contributions to the plan, (ii)
retirement of a participant in the plan, (iii) a loan from the plan (repayment
of loans, however, will constitute new sales for purposes of assessing the
CDSC), (iv) "financial hardship" of a participant in the plan, as that term is
defined in Treasury Regulation section 1.401(k)-1(d)(2), as amended from time
to time, (v) termination of employment of a participant in the plan, (vi) any
other permissible withdrawal under the terms of the plan. The contingent
deferred sales charge will also be waived in the case of redemptions of Class B
shares of the Funds pursuant to a systematic withdrawal program. See
"Systematic Withdrawal Program," page 22 for details.

ARRANGEMENTS WITH BROKER-DEALERS AND OTHERS
The Investment Manager or Distributor, from time to time, will provide
promotional incentives or pay a bonus, including reallowance of up to the
entire sales charge, to certain dealers whose representatives have sold or are
expected to sell significant amounts of the Funds and/or certain other funds
managed by the Investment Manager. Such promotional incentives will include
payment for attendance (including travel and lodging expenses) by qualifying
registered representatives (and members of their families) at sales seminars at
luxury resorts within or without the United States. The Distributor may also
provide financial assistance to dealers in connection with advertising. No
compensation will be offered to the extent it is prohibited by the laws of any
state or self-regulatory agency, such as the National Association of Securities
Dealers, Inc. ("NASD"). A dealer to whom substantially the entire sales charge
of Class A shares is reallowed may be deemed to be an "underwriter" under
federal securities laws.

The Distributor also may pay banks and other financial services firms
that facilitate transactions in shares of the funds for their clients a
transaction fee up to the level of the payments made allowable to dealers for
the sale of such shares as described above. Banks currently are prohibited
under the Glass-Steagall Act from providing certain underwriting or
distribution services. If banking firms were prohibited from acting in any
capacity or providing any of the described services, the Fund's Board of
Directors would consider what action, if any, would be appropriate.
16
<PAGE> 22

SECURITY FUNDS
PROSPECTUS

In addition, state securities laws on this issue may differ from the
interpretations of federal law expressed herein and banks and financial
institutions may be required to register as dealers pursuant to state law. The
Investment Manager or Distributor also may pay a marketing allowance to dealers
who meet certain eligibility criteria. This allowance is paid with reference to
new sales of Fund shares in a calendar year. To be eligible for this
allowance in any given year, the dealer must sell a minimum of $5,000,000 of
such shares during that year. The marketing allowance ranges from .15 percent
to .60 percent of aggregate new sales depending upon the volume of shares sold
and the level of services provided by the Distributor to the dealer.

PURCHASES AT NET ASSET VALUE
Class A shares of the Funds may be purchased at net asset value by (1)
directors, officers and employees of the Funds, the Funds' Investment Manager
or Distributor; directors, officers and employees of Security Benefit Life
Insurance Company and its subsidiaries; agents licensed with Security Benefit
Life Insurance Company; spouses or minor children of any such agents; as well
as the following relatives of any such directors, officers and employees (and
their spouses): spouses, grandparents, parents, children, grandchildren,
siblings, nieces and nephews; (2) any trust, pension, profit sharing or other
benefit plan established by any of the foregoing corporations for persons
described above; (3) retirement plans where third party administrators of such
plans have entered into certain arrangements with the Distributor or its
affiliates provided that no commission is paid to dealers; and (4) officers,
directors, partners or registered representatives (and their spouses and minor
children) of broker-dealers who have a selling agreement with the Distributor.
Such sales are made upon the written assurance of the purchaser that the
purchase is made for investment purposes and that the securities will not be
transferred or resold except through redemption or repurchase by or on behalf
of the Funds.

Associated personnel of broker-dealers and life agents must obtain a
special application from their employer or from the Distributor in order to
qualify for such purchases.

Class A shares of the Funds may also be purchased at net asset value
when the purchase is made on the recommendation of (i) a registered investment
adviser, trustee or financial intermediary who has authority to make investment
decisions on behalf of the investor; or (ii) a certified financial planner or
registered broker-dealer who either charges periodic fees to its customers for
financial planning, investment advisory or asset management services, or
provides such services in connection with the establishment of an investment
account for which a comprehensive "wrap fee" is imposed. The Distributor must
be notified when a purchase is made that qualifies under this provision.

A stockholder of Equity Fund who formerly invested in the Bondstock
Investment Plans or Life Insurance Investors Investment Plans may purchase
Class A shares of Equity Fund at net asset value provided that such
stockholder maintains his or her Equity Fund account.

HOW TO REDEEM SHARES
A stockholder may redeem shares at the net asset value next determined
after the time when such shares are tendered for redemption.

Shares will be redeemed on request of the stockholder in proper order
to the Funds' Investment Manager, Security Management Company, 700 Harrison
St., Topeka, Kansas 66636-0001, which serves as the Funds' transfer agent. A
request is made in proper order by submitting the following items to the
Investment Manager: (1) a written request for redemption signed by all
registered owners exactly as the account is registered, including fiduciary
titles, if
17
<PAGE> 23

SECURITY FUNDS
PROSPECTUS

any, and specifying the account number and the dollar amount or number of
shares to be redeemed; (2) a guarantee of all signatures on the written request
or on the share certificate or accompanying stock power; (3) any share
certificates issued for any of the shares to be redeemed; and (4) any
additional documents which may be required by the Investment Manager for
redemption by corporations or other organizations, executors, administrators,
trustees, custodians or the like. Transfers of shares are subject to the same
requirements. The signature guarantee must be provided by an eligible guarantor
institution, such as a bank, broker, credit union, national securities exchange
or savings association. A signature guarantee is not required for redemptions
of $10,000 or less, requested by and payable to all stockholders of record for
an account, to be sent to the address of record. The Investment Manager
reserves the right to reject any signature guarantee pursuant to its written
procedures which may be revised in the future. To avoid delay in redemption or
transfer, stockholders having questions should contact the Investment Manager
by calling 1-800-888-2461, extension 3127.

The redemption price will be the net asset value of the shares next
computed after the redemption request in proper order is received by the
Investment Manager. Payment of the amount due, less any applicable deferred
sales charge, will be made by check within seven days after receipt of the
redemption request in proper order. Payment may also be made by wire at the
sole discretion of the Investment Manager. If a wire transfer is requested, the
Investment Manager must be provided with the name and address of the
stockholder's bank as well as the account number to which payment is to be
wired. Checks will be mailed to the stockholder's registered address (or as
otherwise directed). Remittance by wire (to a commercial bank account in the
same name(s) as the shares are registered), by certified or cashier's check, or
by express mail, if requested, will be at a charge of $15, which will be
deducted from the redemption proceeds.

In addition to the foregoing redemption procedure, the Funds
repurchase shares from broker-dealers at the price determined as of the close
of business on the day such offer is confirmed. Dealers may charge a commission
on the repurchase of shares.

At various times, requests may be made to redeem shares for which good
payment has not yet been received. Accordingly, the mailing of a redemption
check may be delayed until such time as good payment has been collected for the
purchase of the shares in question, which may take up to 15 days.

Requests may also be made to redeem shares in an account for which the
stockholder's tax identification number has not been provided. To the extent
permitted by law, the redemption proceeds from such an account will be reduced
by $50 to reimburse for the penalty imposed by the Internal Revenue Service for
failure to report the tax identification number.

TELEPHONE REDEMPTIONS
A stockholder may redeem uncertificated shares in amounts up to
$10,000 by telephone request, provided the stockholder has completed the
Telephone Redemption section of the application or a Telephone Redemption form
which may be obtained from the Investment Manager. The proceeds of a telephone
redemption will be sent to the stockholder at his or her address as set forth
in the application or in a subsequent written authorization with a signature
guarantee. Once authorization has been received by the Investment Manager, a
stockholder may redeem shares by calling the Funds at (800) 888-2461, extension
3127, on weekdays (except holidays) between the hours of 8:00 a.m. and 5:00
p.m. Central time. Redemption requests received by telephone after the close
of the New York Stock Exchange (normally 3 p.m. Central time) will be treated
as if received on the next business day. A stockholder who authorizes telephone
redemptions authorizes the Investment Manager to act upon the instructions of
any person identifying themselves as the owner of an account or the owner's
18
<PAGE> 24

SECURITY FUNDS
PROSPECTUS

broker. The Investment Manager has established procedures to confirm that
instructions communicated by telephone are genuine and may be liable for any
losses due to fraudulent or unauthorized instructions if it fails to comply
with its procedures. The Investment Manager's procedures require that any
person requesting a telephone redemption provide the account registration and
number and the owner's tax identification number, and such instructions must be
received on a recorded line. Neither the Fund, the Investment Manager, nor the
Distributor shall be liable for any loss, liability, cost or expense arising
out of any redemption request, provided the Investment Manager complied with
its procedures. Thus, a stockholder who authorizes telephone redemptions may
bear the risk of loss from a fraudulent or unauthorized request. The telephone
redemption privilege may be changed or discontinued at any time by the
Investment Manager or the Funds.

During periods of severe market or economic conditions, telephone
redemptions may be difficult to implement and stockholders should make
redemptions by mail as described under "How to Redeem Shares."

DIVIDENDS AND TAXES
It is each Fund's policy to distribute realized capital gains, if any,
in excess of any capital losses and capital loss carryovers, at least once a
year and to pay dividends from net investment income as the Funds' Board of
Directors may declare from time to time, except Growth and Income Fund which
pays dividends quarterly in March, June, September, and December. Because Class
A shares of the Funds bear most of the costs of distribution of such shares
through payment of a front-end sales charge, while Class B shares of the Funds
bear such costs through a higher distribution fee, expenses attributable to
Class B shares will generally be higher and, as a result, income distributions
paid by the Funds with respect to Class B shares generally will be lower than
those paid with respect to Class A shares. Any dividend payment or capital gain
distribution will result in a decrease of the net asset value of the shares in
an amount equal to the payment or distribution. All dividends and distributions
are automatically reinvested on the payable date in shares of the Funds at net
asset value as of the record date (reduced by an amount equal to the amount of
the dividend or distribution), unless the Investment Manager is previously
notified in writing by the stockholder that such dividends or distributions are
to be received in cash. A stockholder may request that such dividends or
distributions be directly deposited to the stockholder's bank account.
Dividends or distributions paid with respect to Class A shares and received in
cash may, within 30 days of the payment date, be reinvested without a sales
charge.

Each of the series of Security Equity Fund is to be treated separately
in determining the amounts of income and capital gains distributions, and for
this purpose, each series will reflect only the income and gains, net of
losses, of that series.

Each of the Funds intends to qualify as a "regulated investment
company" under the Internal Revenue Code. Such qualification generally removes
the liability for federal income taxes from the Fund, and generally makes
federal income tax upon income and capital gains generated by the Fund's
investments, the sole responsibility of its stockholders provided the Fund
continues to so qualify and distributes all of its net investment income and
net realized capital gain to its stockholders. Furthermore, the Funds generally
will not be subject to excise taxes imposed on certain regulated investment
companies provided that each Fund distributes 98 percent of its ordinary income
and 98 percent of its net capital gain income each year.

SECURITY FUNDS
PROSPECTUS

of the excess, if any, of net long-term capital gains over net short-term
capital losses are taxable to stockholders as long-term capital gains
regardless of how long a stockholder has held the Fund's shares and regardless
of whether received in cash or reinvested in additional shares. Stockholders
should consult their tax adviser to determine the federal, state and local tax
consequences to them from an investment in the Fund.

Certain dividends declared in October, November or December of a
calendar year are taxable to stockholders as though received on December 31 of
that year if paid to stockholders during January of the following calendar
year.

Advice as to the tax status of each year's distributions will be
mailed on or before January 31, of the following year. The Funds are required
by law to withhold 31 percent of taxable dividends and distributions (including
redemption proceeds) to stockholders who do not furnish their correct taxpayer
identification numbers, or are otherwise subject to the backup withholding
provisions of the Internal Revenue Code.

FOREIGN TAXES
Investment income received from sources within foreign countries may
be subject to foreign income taxes. In this regard, withholding tax rates in
countries with which the United States does not have a tax treaty are often as
high as 30 percent or more. The United States has entered into tax treaties
with many foreign countries which entitle certain investors (such as the Funds)
to a reduced tax rate (generally ten to fifteen percent) or to certain
exemptions from tax. The Funds will operate so as to qualify for such reduced
tax rates or tax redemptions whenever possible. While stockholders will bear
the cost of any foreign tax withholding, they will not be able to claim foreign
tax credit or deduction for taxes paid by the Fund.

DETERMINATION OF NET ASSET VALUE
The net asset value of each Fund is computed as of the close of
regular trading hours on the New York Stock Exchange (normally 3 p.m. Central
time) on days when the Exchange is open.

The net asset value per share is computed by adding the value of all
securities and other assets in the portfolio, deducting any liabilities and
dividing by the number of shares outstanding. In determining each Fund's total
net assets, securities listed or traded on a recognized securities exchange
will be valued on the basis of the last sale price. If there are no sales on a
particular day, then the securities are valued at the mean between the bid and
asked prices. If a mean cannot be determined, then the securities are valued at
the best available current bid price. If a security is traded on multiple
exchanges, its value will be based on prices from the principal exchange where
it is traded. All other securities for which market quotations are available
are valued on the basis of the last current bid price. If there is no bid
price, or if the bid price is deemed unsatisfactory by the Board of Directors
or by the Investment Manager, then the securities are valued in good faith by
such method as the Board of Directors determines will reflect the fair market
value. Valuations of the Funds' securities are supplied by a pricing service
approved by the Funds' Board of Directors.

Because the expenses of distribution are borne by Class A shares
through a front-end sales charge and by Class B shares through an ongoing
distribution fee, the expenses attributable to each class of shares will
differ, resulting in different net asset values. The net asset value of Class B
shares will generally be lower than the net asset value of Class A shares as a
result of the distribution fee charged to Class B shares. It is expected,
however, that the net asset value per share will tend to converge immediately
after the payment of dividends which will differ in amount for Class A and B
shares by approximately the amount of the different distribution expenses
attributable to Class A and B shares.
20
<PAGE> 26

SECURITY FUNDS
PROSPECTUS

TRADING PRACTICES AND BROKERAGE
The portfolio turnover rate for each of the Funds for the fiscal year
ended September 30, 1994, was Growth and Income Fund, Class A - 163 percent,
and Class B - 178 percent; Equity Fund, Class A - 79 percent and Class B - 80
percent; Global Fund, Class A - 73 percent and Class B - 73 percent; Ultra
Fund, Class A - 111 percent and Class B - 110 percent. Higher portfolio
turnover subjects a Fund to increased brokerage costs and may, in some cases,
have adverse tax effects on the Fund or its stockholders. The annual
portfolio turnover of Growth and Income and Global Funds generally will be less
than 100 percent, that of Equity Fund generally will be in the area of 100
percent, and that of Ultra Fund generally will be more than 100 percent.

Transactions in portfolio securities for each Fund are effected in the
manner deemed to be in the best interests of the Fund. In selecting a broker to
execute a specific transaction, all relevant factors will be considered.
Portfolio transactions may be directed to brokers who furnish investment
information or research services to the Investment Manager or who sell shares
of the Funds. The Investment Manager may, consistent with the NASD Rules of
Fair Practice, consider sales of Fund shares in the selection of a broker.
Securities held by the Funds may also be held by other investment advisory
clients of the Investment Manager, including other investment companies, and by
the Investment Manager's parent company, Security Benefit Life Insurance
Company ("SBL"). Purchases or sales of the same security occurring on the same
day (which may include orders from SBL) may be aggregated and executed as a
single transaction. Aggregated purchases or sales are generally effected at an
average price and on a pro-rata basis in proportion to the amounts desired to
be purchased or sold. See the Funds' Statement of Additional Information for a
more detailed description of aggregated transactions.

PERFORMANCE
Each Fund may, from time to time, include quotations of its average
annual total return and aggregate total return in advertisements or reports to
stockholders or prospective investors.

Quotations of average annual total return will be expressed in terms
of the average annual compounded rate of return of a hypothetical investment in
the Fund over periods of 1, 5 and 10 years (up to the life of the Fund). Such
total return figures will reflect the deduction of the maximum sales charge
and a proportional share of Fund expenses on an annual basis, and will assume
that all dividends and distributions are reinvested when paid.

Quotations of aggregate total return will be calculated for any
specified period by assuming a hypothetical investment in the Fund on the date
of the commencement of the period and assuming that all dividends and
distributions are reinvested when paid. The net increase or decrease in the
value of the investment over the period will be divided by its beginning value
to arrive at total return. Total return calculated in this manner reflects
actual performance over a stated period of time while average annual total
return is a hypothetical rate of return that, if achieved annually, would have
produced the same aggregate total return.

In addition, quotations of aggregate total return may also be
calculated for several consecutive one-year periods, expressing the total
return as a percentage increase or decrease in the value of the investment for
each year relative to the ending value for the previous year. The Funds may
from time to time quote total return that does not reflect deduction of any
applicable sales charge, which charges, if reflected, would reduce the total
return quoted.

SECURITY FUNDS
PROSPECTUS

on changes in market conditions and the level of the Fund's expenses, and no
reported performance figure should be considered an indication of performance
which may be expected in the future.

In connection with communicating its average annual total return and
aggregate total return to current or prospective stockholders, each Fund also
may compare these figures to the performance of other mutual fund rating
services or to other unmanaged indexes which may assume reinvestment of
dividends, but generally do not reflect deductions for administrative and
management costs and expenses. Each Fund will include performance data for both
Class A and Class B shares of the Fund in any advertisement or report including
performance data of the Fund.

For a more detailed description of the methods used to calculate the
average annual total return and aggregate total return of the Funds, see the
Funds' Statement of Additional Information.

SHAREHOLDER SERVICES

ACCUMULATION PLAN
An investor may choose to invest in one of the Funds through a
voluntary Accumulation Plan. This allows for an initial investment of $100
minimum and subsequent investments of $20 minimum at any time. An Accumulation
Plan involves no obligation to make periodic investments, and is terminable at
will.

Payments are made by sending a check to the Distributor who (acting as
an agent for the dealer) will purchase whole and fractional shares of the Fund
as of the close of business on such day as the payment is received. The
investor will receive a confirmation and statement after each investment.

Investors may choose to use "Secur-O-Matic" (automatic bank draft) to
make their Fund purchases. There is no additional charge for choosing to use
Secur-O-Matic. An application for Secur-O-Matic may be obtained from the Funds.

SYSTEMATIC WITHDRAWAL PROGRAM
Stockholders who wish to receive regular monthly, quarterly,
semiannual, or annual payments of $25 or more may establish a Systematic
Withdrawal Program. A stockholder may elect a payment that is a specified
percentage of the initial or current account value or a specified dollar
amount. A Systematic Withdrawal Program will be allowed only if shares with a
current offering price of $5,000 or more are deposited with the Investment
Manager, which will act as agent for the stockholder under the Program. Shares
are liquidated at net asset value. The Program may be terminated on written
notice, or it will terminate automatically if all shares are liquidated or
withdrawn from the account.

A stockholder may establish a Systematic Withdrawal Program with
respect to Class B shares without the imposition of any applicable contingent
deferred sales charge, provided that such withdrawals do not in any 12-month
period, beginning on the date the Program is established, exceed 10 percent of
the value of the account on that date ("Free Systematic Withdrawals"). Free
Systematic Withdrawals are not available if a Program established with respect
to Class B shares provides for withdrawals in excess of 10 percent of the value
of the account in any Program year and, as a result, all withdrawals under such
a Program would be subject to any applicable contingent deferred sales charge.
Free Systematic Withdrawals will be made first by redeeming those shares that
are not subject to the contingent deferred sales charge and then by redeeming
shares held the longest. The contingent deferred sales charge applicable to a
redemption of Class B shares requested while Free Systematic Withdrawals are
being made will be calculated as described under "Calculation and Waiver of
Contingent Deferred Sales Charges," page 16. A Systematic Withdrawal form may
be obtained from the Funds.
22
<PAGE> 28

SECURITY FUNDS
PROSPECTUS

EXCHANGE PRIVILEGE

Stockholders who own shares of the Funds may exchange those shares for
shares of another of the Funds, Security Asset Allocation Fund, Security Income
Fund, Security Tax-Exempt Fund, or Security Cash Fund at net asset value.
Exchanges may be made only in those states where shares of the fund into which
an exchange is to be made are qualified for sale. No service fee is presently
imposed on such an exchange. Class A and Class B shares of the Funds may be
exchanged for Class A and Class B shares, respectively, of another fund or for
shares of Security Cash Fund, a money market fund that offers a single class of
shares. Any applicable contingent deferred sales charge will be imposed upon
redemption and calculated from the date of the initial purchase without regard
to the time shares were held in Security Cash Fund. For tax purposes, an
exchange is a sale of shares which may result in a taxable gain or loss.
Special rules may apply to determine the amount of gain or loss on an exchange
occurring within ninety days after the exchanged shares were acquired.
Exchanges are made upon receipt of a properly completed Exchange Authorization
form. A current prospectus of the fund into which an exchange is made will be
given to each stockholder exercising this privilege.

To exchange shares by telephone, a stockholder must hold shares in
non-certificate form and must either have completed the Telephone Exchange
section of the application or a Telephone Transfer Authorization form which may
be obtained from the Investment Manager. Once authorization has been received
by the Investment Manager, a stockholder may exchange shares by telephone
by calling the Funds at (800) 888-2461, extension 3127, on weekdays (except
holidays) between the hours of 8:00 a.m. and 5:00 p.m. Central time. Exchange
requests received by telephone after the close of the New York Stock Exchange
(normally 3 p.m. Central time) will be treated as if received on the next
business day. A stockholder who authorizes telephone exchanges authorizes the
Investment Manager to act upon the instructions of any person by telephone to
exchange shares between any identically registered accounts with the Funds
listed above. The Investment Manager has established procedures to confirm that
instructions communicated by telephone are genuine and may be liable for any
losses due to fraudulent or unauthorized instructions if it fails to comply
with its procedures. The Investment Manager's procedures require that any
person requesting an exchange by telephone provide the account registration and
number and the owner's tax identification number and such instructions must be
received on a recorded line. Neither the Fund, the Investment Manager nor the
Distributor shall be liable for any loss, liability, cost or expense arising
out of any request, including any fraudulent request, provided the Investment
Manager complied with its procedures. Thus, a stockholder who authorizes
telephone exchanges may bear the risk of loss from a fraudulent or unauthorized
request. The exchange privilege, including telephone exchanges, may be changed
or discontinued at any time by either the Investment Manager or the Funds upon
60 days' notice to stockholders.

In periods of severe market or economic conditions, the telephone
exchange of shares may be difficult to implement and stockholders should make
exchanges by writing to Security Distributors, Inc., 700 Harrison, Topeka,
Kansas 66636-0001.

RETIREMENT PLANS
The Funds have available tax-qualified retirement plans for
individuals, prototype plans for the self-employed, pension and profit sharing
plans for corporations and custodial accounts for employees of public school
systems and organizations meeting the requirements of Section 501(c)(3) of the
Internal Revenue Code. Further information concerning these plans is contained
in the Funds' Statement of Additional Information.
23
<PAGE> 29

SECURITY FUNDS
PROSPECTUS

GENERAL INFORMATION

ORGANIZATION

The Articles of Incorporation of each Fund provide for the issuance of
shares of common stock in one or more classes or series. Security Equity Fund
has authorized capital stock of 5,000,000,000 shares of $.25 par value
and currently issues its shares in three series, each of which has authority to
issue such shares as follows: Equity Fund - 2,000,000,000 shares, Global Fund -
1,000,000,000 shares and Asset Allocation Fund - 1,000,000,000 shares. The
remaining 1,000,000,000 shares has not been allocated to any series. The shares
of each series of Security Equity Fund represent a pro rata beneficial interest
in that series' net assets and in the earnings and profits or losses derived
from the investment of such assets. Growth and Income and Ultra Funds have not
issued shares in any additional series at the present time. Growth and Income
and Ultra Funds each have authorized capital stock of 1,000,000,000 shares of
$1.00 par value and $.50 par value, respectively.

Each of the Funds currently issues two classes of shares which
participate proportionately based on their relative net asset values in
dividends and distributions and have equal voting, liquidation and other rights
except that (i) expenses related to the distribution of each class of shares or
other expenses that the Board of Directors may designate as class expenses from
time to time, are borne solely by each class; (ii) each class of shares has
exclusive voting rights with respect to any Distribution Plan adopted for that
class; (iii) each class has different exchange privileges; and (iv) each class
has a different designation. When issued and paid for, the shares will be fully
paid and nonassessable by the Funds. Shares may be exchanged as described above
under "Exchange Privilege," but will have no other preference, conversion,
exchange or preemptive rights. Shares are transferable, redeemable and
assignable and have cumulative voting privileges for the election of directors.

On certain matters, such as the election of directors, all shares of
the series of Security Equity Fund vote together, with each share having one
vote. On other matters affecting a particular series, such as the investment
advisory contract or the fundamental policies, only shares of that series are
entitled to vote, and a majority vote of the shares of that series is required
for approval of the proposal.

The Funds do not generally hold annual meetings of stockholders and
will do so only when required by law. Stockholders may remove directors from
office by vote cast in person or by proxy at a meeting of stockholders. Such a
meeting will be called at the written request of 10 percent of a Fund's
outstanding shares.

Although each Fund offers only its own shares, it is possible one Fund
might become liable for any misstatement, inaccuracy, or incomplete disclosure
in this prospectus relating to another of the Funds. The Funds' Board of
Directors has considered this risk and has approved the use of a combined
prospectus.

STOCKHOLDER INQUIRIES
Stockholders who have questions concerning their account or wish to
obtain additional information, may call the Funds (see back cover for address
and telephone numbers), or contact their securities dealer.
24
<PAGE> 30

SECURITY FUNDS
PROSPECTUS

APPENDIX A

APPENDIX A
CLASS A SHARES
REDUCED SALES CHARGES
Initial sales charges may be reduced or eliminated for persons or
organizations purchasing Class A shares of the Funds alone or in combination
with Class A shares of other Security Funds.

For purposes of qualifying for reduced sales charges on purchases made
pursuant to Rights of Accumulation or a Statement of Intention, the term
"Purchaser" includes the following persons: an individual, his or her spouse
and children under the age of 21; a trustee or other fiduciary of a single
trust estate or single fiduciary account established for their benefit; an
organization exempt from federal income tax under Section 501(c)(3) or (13) of
the Internal Revenue Code; or a pension, profit-sharing or other employee
benefit plan whether or not qualified under Section 401 of the Internal Revenue
Code.

RIGHTS OF ACCUMULATION
To reduce sales charges on purchases of Class A shares of a Fund, a
Purchaser may combine all previous purchases of the Funds with a contemplated
current purchase and receive the reduced applicable front-end sales charge. The
Distributor must be notified when a sale takes place which might qualify for
the reduced charge on the basis of previous purchases.

Rights of accumulation also apply to purchases representing a
combination of the Class A shares of the Funds, and other Security Funds,
except Security Cash Fund, in those states where shares of the fund being
purchased are qualified for sale.

STATEMENT OF INTENTION

A Purchaser may choose to sign a Statement of Intention within 90 days
after the first purchase to be included thereunder, which will cover future
purchases of Class A shares of the Funds, and other Security Funds, except
Security Cash Fund. The amount of these future purchases shall be specified and
must be made within a 13-month period (or 36-month period for purchases of $1
million or more) to become eligible for the reduced front-end sales charge
applicable to the actual amount purchased under the Statement. Five percent
(5%) of the amount specified in the Statement of Intention will be held in
escrow shares until the statement is completed or terminated. These shares may
be redeemed by the Fund if the Purchaser is required to pay additional sales
charges.

A Statement of Intention may be revised during the 13-month period.
Additional Class A shares received from reinvestment of income dividends and
capital gains distributions are included in the total amount used to determine
reduced sales charges. A Statement of Intention may be obtained from the Funds.

REINSTATEMENT PRIVILEGE

Stockholders who redeem their Class A shares of the Funds have a
one-time privilege (1) to reinstate their accounts by purchasing Class A shares
without a sales charge up to the dollar amount of the redemption proceeds; or
(2) to the extent the redeemed shares would have been eligible for the exchange
privilege, to purchase Class A shares of another of the Security Funds, without
a sales charge up to the dollar amount of the redemption proceeds. To exercise
this privilege, a stockholder must provide written notice and a check in the
amount of the reinvestment to the Fund within thirty days after the redemption
request; the reinstatement will be made at the net asset value on the date
received by the Fund.

25
<PAGE> 31
This page left blank intentionally.
<PAGE> 32

[LOGO] SECURITY DISTRIBUTORS, INC.

700 SW HARRISON ST.
TOPEKA, KANSAS 66636-0001
(913) 295-3127
(800) 888-2461

SECURITY FUNDS

BULK RATE
U.S. POSTAGE
PAID
TOPEKA, KS
PERMIT NO. 385

[LOGO] SECURITY DISTRIBUTORS, INC.
A Member of The Security Benefit
Group of Companies

700 SW Harrison St., Topeka, Kansas 66636-0001

SDI 602 (R6-95) 46-06021-00
<PAGE> 33

SECURITY
FUNDS

PROSPECTUS
JUNE 1, 1995

Security Asset
Allocation Fund

Application

[LOGO]
SECURITY DISTRIBUTORS, INC.
A MEMBER OF THE SECURITY BENEFIT GROUP OF COMPANIES

<PAGE> 34

[LETTERHEAD]
SECURITY FUNDS
PROSPECTUS

SECURITY EQUITY FUND
ASSET ALLOCATION SERIES
A MEMBER OF THE SECURITY BENEFIT GROUP OF COMPANIES
700 HARRISON, TOPEKA, KANSAS 66636-0001

PROSPECTUS
June 1, 1995

Security Asset Allocation Fund (the "Fund") is a diversified, open-end
management investment company.

The Fund seeks high total return, consisting of capital appreciation and
current income. The Fund seeks this objective by following an asset allocation
strategy that contemplates shifts among a wide range of investment categories
and market sectors. The Fund will invest in the following investment
categories: equity securities of domestic and foreign issuers, including
common stocks, preferred stocks, convertible securities and warrants; debt
securities of domestic and foreign issuers, including mortgage-related and
other asset-backed securities; exchange-traded real estate investment trusts
(REITs); equity securities of companies involved in the exploration, mining,
development, production and distribution of gold ("gold stocks"); and domestic
money market instruments. An investment in the Fund involves risk which is
described more fully in the Prospectus and the Fund's Statement of Additional
Information.

This Prospectus sets forth concisely the information that a prospective
investor should know about the Fund. It should be read and retained for future
reference. A "Statement of Additional Information" about the Fund, dated June
1, 1995, which is incorporated by reference in this Prospectus, has been filed
with the Securities and Exchange Commission. It is available at no charge by
writing Security Distributors, Inc., 700 Harrison, Topeka, Kansas 66636-0001,
or by calling (913) 295-3127 or (800) 888-2461.

AN INVESTMENT IN THE FUND INVOLVES RISK, INCLUDING LOSS OF PRINCIPAL, AND IS
NOT A DEPOSIT OR OBLIGATION OF, OR GUARANTEED OR ENDORSED BY, ANY BANK. THE
FUND IS NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
FEDERAL RESERVE BOARD OR ANY OTHER AGENCY.

<PAGE> 35

SECURITY FUNDS
CONTENTS

<TABLE>
<CAPTION>
Page
<S> <C>
Transaction and Operating Expense Table . . . . . . . . . . . . . . . . . . . . . . 1
Investment Objective and Policies of the Fund . . . . . . . . . . . . . . . . . . . 2
Investment Methods and Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . 4
Management of the Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Portfolio Management . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
How to Purchase Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Alternative Purchase Options . . . . . . . . . . . . . . . . . . . . . . . 12
Class A Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Class B Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Class B Distribution Plan . . . . . . . . . . . . . . . . . . . . . . . . . 14
Calculation and Waiver of Contingent Deferred Sales Charges . . . . . . . . 15
Arrangements with Broker-Dealers and Others . . . . . . . . . . . . . . . . 15
Purchases at Net Asset Value . . . . . . . . . . . . . . . . . . . . . . . 16
How to Redeem Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Telephone Redemptions . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Dividends and Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Foreign Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Determination of Net Asset Value . . . . . . . . . . . . . . . . . . . . . . . . . 20
Trading Practices and Brokerage . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Shareholder Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Accumulation Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Systematic Withdrawal Program . . . . . . . . . . . . . . . . . . . . . . . 22
Exchange Privilege . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Retirement Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Stockholder Inquiries . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Appendix A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Class A Shares Reduced Sales Charges . . . . . . . . . . . . . . . . . . . 25
Rights of Accumulation . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Statement of Intention . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Reinstatement Privilege . . . . . . . . . . . . . . . . . . . . . . . . . . 25

</TABLE>

<PAGE> 36

SECURITY FUNDS
PROSPECTUS

TRANSACTION AND OPERATING EXPENSE TABLE

<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES CLASS A SHARES CLASS B SHARES(1)
- ------------------------------------------------------------ -------------- -----------------
<S> <C> <C>
Maximum Sales Load Imposed on Purchases (as a percentage of offering price) 5.75% None
Maximum Sales Load Imposed on Reinvested Dividends None None
Deferred Sales Load (as a percentage of original purchase price
or redemption proceeds, whichever is lower) None 2 5% during the
first year, decreasing
to 0% in the sixth and following
years
</TABLE>

<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES
-------------- --------------
<S> <C> <C>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of net assets)
Management Fees 1.00% 1.00%
12b-1 Fees 3 None 1.00%
Other Expenses 4 1.00% 1.00%
----- -----
Total Fund Operating Expenses 2.00% 3.00%
===== =====
<CAPTION>
EXAMPLE
<S> <C> <C> <C>
You would pay the following expenses on a 1 Year $ 77 $ 80
$1,000 investment, assuming (1) 5 percent 3 Years 117 123
annual return and (2) redemption at the
end of each time period 5

EXAMPLE
You would pay the following expenses on a 1 Year $ 77 $ 30
$1,000 investment, assuming (1) 5 percent 3 Years 117 93
annual return and (2) no redemption
</TABLE>

1 Class B shares convert tax-free to Class A shares automatically after
eight years.

2 Purchases of Class A shares in amounts of $1,000,000 or more are not
subject to an initial sales load; however, a contingent deferred sales
charge of 1% is imposed in the event of redemption within one year of
purchase. See "Class A Shares" on page 13.

3 Long-term holders of Class B shares may pay more than the equivalent of
the maximum front-end sales charge otherwise permitted by NASD Rules.

4 "Other Expenses" is based on estimated amounts for the current fiscal
year.

5 This example does not reflect deduction of the contingent deferred sales
charge which is imposed upon redemption of Class A shares purchased in
amounts of $1,000,000 or more.

The purpose of the foregoing fee table is to assist the investor in
understanding the various costs and expenses that an investor in the Fund will
bear directly or indirectly. For a more detailed discussion of the Fund's fees
and expenses, see the discussion under "Management of the Fund," page 10. See
"How to Purchase Shares," page 12, for more information concerning the sales
load. Also, see Appendix A for a discussion of "Rights of Accumulation" and
"Statement of Intention," which options may serve to reduce the front-end sales
load on purchases of Class A shares.

1
<PAGE> 37

SECURITY FUNDS
PROSPECTUS

INVESTMENT OBJECTIVE AND
POLICIES OF THE FUND

Security Asset Allocation Fund (the "Fund") is a series of Security Equity
Fund, a diversified, open-end management investment company of the series type,
which was organized as a Kansas corporation on November 27, 1961. The Fund's
investment objective and policies are described below. There, of course, can be
no assurance that such investment objective will be achieved. While there is no
present intention to do so, the Fund's investment objective and policies,
unless otherwise noted, may be changed by its Board of Directors without the
approval of stockholders. If there is a change in investment objective,
stockholders should consider whether the Fund remains an appropriate investment
in light of their then current financial position and needs. The Fund is
subject to certain investment policy limitations which may not be changed
without stockholder approval. Among these limitations, some of the more
important ones are that the Fund will not, with respect to 75 percent of its
total assets, invest more than 5 percent of the value of its assets in any one
issuer or purchase more than 10 percent of the outstanding voting securities of
any one issuer. In addition, the Fund will not invest more than 25 percent of
its total assets in any one industry. The full text of the investment policy
limitations of the Fund is set forth in the Statement of Additional
Information.

The investment objective of the Fund is to seek high total return,
consisting of capital appreciation and current income. The Fund seeks this
objective by following an asset allocation strategy that contemplates shifts
among a wide range of investment categories and market sectors. The Fund will
invest in the following investment categories: equity securities of domestic
and foreign issuers, including common stocks, preferred stocks, convertible
securities and warrants; debt securities of domestic and foreign issuers,
including mortgage-related and other asset-backed securities; exchange-traded
real estate investment trusts (REITs); equity securities of companies involved
in the exploration, mining, development, production and distribution of gold
("gold stocks"); and domestic money market instruments. See "Investment Methods
and Risk Factors" for a discussion of the additional risks associated with
investment in foreign securities and REITs, and see the discussion of the risks
associated with investment in gold stocks below.

Investment in gold stocks presents risks, because the prices of gold have
fluctuated substantially over short periods of time. Prices may be affected by
unpredictable monetary and political policies, such as currency devaluations or
revaluations, economic and social conditions within an individual country,
trade imbalances, or trade or currency restrictions between countries. The
unstable political and social conditions in South Africa and unsettled
political conditions prevailing in neighboring countries may have disruptive
effects on the market prices of securities of South African companies.

The Fund is not required to maintain a portion of its assets in each of
the permitted investment categories. The Fund, however, under normal

- ---------------

No dealer, salesperson, or other person has been authorized to give any
information or to make any representations, other than those contained in this
Prospectus and in the Fund's Statement of Additional Information, and if given
or made, such other information or representations must not be relied upon as
having been authorized by the Fund, the Investment Manager, or the Distributor.

2
<PAGE> 38

SECURITY FUNDS
PROSPECTUS

circumstances, will maintain a minimum of 35 percent of its total assets in
equity securities and 10 percent in debt securities. The Fund will not invest
more than 55 percent of its total assets in money market instruments (except
when in a temporary defensive position), more than 80 percent of its total
assets in foreign securities, nor more than 20 percent of its total assets in
gold stocks.

The Investment Manager then determines (based on the results of Meridian's
analysis) which sectors within an identified investment category are deemed to
be the most attractive relative to other sectors. For example, the model may
indicate that a portion of the Fund's assets should be invested in the domestic
equity category of the market and within this category that pharmaceutical
stocks represent a sector with an attractive total return potential. Although
the Investment Manager anticipates relying on much of the research provided by
Meridian, the Investment Manager has ultimate responsibility for the selection
of the investment categories and the sectors within those categories.

The Investment Manager identifies sectors of the domestic and
international economy (based on the research provided by Meridian) in which the
Fund will invest and then determines which equity securities to purchase within
the identified countries and/or sectors. The Investment Manager utilizes
certain analytical research provided by Templeton Quantitative Advisors, Inc.
("Templeton") in selecting equity securities, including gold stocks, for the
Fund. Templeton analyzes equity securities in the identified sectors and makes
recommendations based on computer models and financial data bases which it
maintains. It is contemplated that the Investment Manager will implement most
of the recommendations made by Templeton regarding equity securities; however,
the Investment Manager has ultimate responsibility for all buy and sell
decisions of the Fund and may determine not to execute specific recommendations
made by Templeton.

With respect to the selection of debt securities for the Fund, the asset
allocation model provided by Meridian analyzes the prices of commodities and
finished goods to arrive at an interest rate projection. The Investment Manager
will determine the portion of the portfolio to allocate to debt securities and
the duration of those securities based on the model's interest rate
projections. Gold stocks and REITs will be analyzed in a manner similar to that
used for equity securities. Money market instruments will be analyzed based on
current returns and the current yield curve. The asset allocation model and
stock selection techniques used by the Fund may evolve over time or be replaced
by other asset allocation models and/or stock selection techniques. There is no
assurance that the model will correctly predict market trends or enable the
Fund to achieve its investment objective.

The debt securities in which the Fund may invest will, at the time of
investment, consist of

3
<PAGE> 39

SECURITY FUNDS
PROSPECTUS

"investment grade" bonds, which are bonds rated BBB or better by Standard &
Poor's Corporation ("S&P") or Baa or better by Moody's Investors Service, Inc.
("Moody's") or that are unrated by S&P and Moody's but considered by the
Investment Manager to be of equivalent credit quality. Securities rated BBB by
S&P or Baa by Moody's have speculative characteristics and may be more
susceptible than higher grade bonds to adverse economic conditions or other
adverse circumstances which may result in a weakened capacity to make principal
and interest payments.

The Fund may invest in investment grade mortgage-backed securities (MBSs),
including mortgage pass-through securities and collateralized mortgage
obligations (CMOs). The Fund will not invest in an MBS if, as a result of such
investment, more than 25 percent of its total assets would be invested in MBSs,
including CMOs and mortgage pass-through securities. For a discussion of MBSs
and the risks associated with such securities, see "Investment Methods and Risk
Factors" - "Mortgage-Backed Securities," below.

The Fund may write covered call options and purchase put options and may
enter into interest rate and/or stock index futures contracts. It is the Fund's
operating policy that initial margin deposits and premiums on options used for
non-hedging purposes will not equal more than 5% of the Fund's net assets. The
total market value of securities against which the Fund has written call
options may not exceed 25% of its total assets. The Fund will not commit more
than 5% of its total assets to premiums when purchasing put options. Futures
contracts and options may not always be successful hedges and their prices can
be highly volatile. Using futures contracts and options could lower the Fund's
total return and the potential loss from the use of futures can exceed the
Fund's initial investment in such contracts. Futures contracts and options and
the risks associated with such instruments are described in further detail
under "Investment Methods and Risk Factors" - "Futures and Options" below.

INVESTMENT METHODS AND RISK FACTORS

Some of the risk factors related to certain securities, instruments and
techniques are described in the "Investment Objective and Policies" section of
this Prospectus and in the "Investment Objective and Policies" section of the
Fund's Statement of Additional Information. The following is a description of
certain additional risk factors related to various securities, instruments and
techniques. Also included is a general description of some of the investment
instruments, techniques and methods which may be used by the Fund. Although the
Fund may employ the techniques, instruments and methods described below,
consistent with its investment objective and policies and any applicable law,
it is not required to do so.

INVESTMENT VEHICLES

CONVERTIBLE SECURITIES AND WARRANTS - Convertible securities are debt or
preferred equity securities convertible into or exchangeable for equity
securities. Traditionally, convertible securities have paid dividends or
interest at rates higher than common stocks but lower than non-convertible
securities. They generally participate in the appreciation or depreciation of
the underlying stock into which they are convertible, but to a lesser degree.
In recent years, convertibles have been developed which combine higher or lower
current income with

4
<PAGE> 40

SECURITY FUNDS
PROSPECTUS

options and other features. Warrants are options to buy a stated number of
shares of common stock at a specified price any time during the life of the
warrants (generally two or more years).

MORTGAGE-BACKED SECURITIES - Mortgage-backed securities (MBSs), including
mortgage pass-through securities and collateralized mortgage obligations
(CMOs), include certain securities issued or guaranteed by the United States
government or one of its agencies or instrumentalities, such as the Government
National Mortgage Association (GNMA), Federal National Mortgage Association
(FNMA), or Federal Home Loan Mortgage Corporation (FHLMC); securities issued by
private issuers that represent an interest in or are collateralized by
mortgage-backed securities issued or guaranteed by the U.S. government or one
of its agencies or instrumentalities; and securities issued by private issuers
that represent an interest in or are collateralized by mortgage loans. A
mortgage pass-through security is a pro rata interest in a pool of mortgages
where the cash flow generated from the mortgage collateral is passed through to
the security holder. CMOs are obligations fully collateralized by a portfolio
of mortgages or mortgage-related securities. The Fund will not invest in
securities known as "inverse floating obligations," "residual interest bonds,"
or "interest-only" (IO) and "principal-only" (PO) bonds, the market values of
which will generally be more volatile than the market values of most MBSs. MBSs
have been referred to as "derivatives" because the performance of MBSs is
dependent upon and derived from underlying securities.

Investment in MBSs poses several risks, including prepayment, market and
credit risks. Prepayment risk reflects the chance that borrowers may prepay
their mortgages faster than expected, thereby affecting the investment's
average life and perhaps its yield. Borrowers are most likely to exercise their
prepayment options at a time when it is least advantageous to investors,
generally prepaying mortgages as interest rates fall, and slowing payments as
interest rates rise. Certain classes of CMOs may have priority over others with
respect to the receipt of prepayments on the mortgages and the Fund may invest
in CMOs which are subject to greater risk of prepayment. Market risk reflects
the chance that the price of the security may fluctuate over time. The price of
MBSs may be particularly sensitive to prevailing interest rates, the length of
time the security is expected to be outstanding and the liquidity of the issue.
In a period of unstable interest rates, there may be decreased demand for
certain types of MBSs, and a fund invested in such securities wishing to sell
them may find it difficult to find a buyer, which may in turn decrease the
price at which they may be sold. Credit risk reflects the chance that the Fund
may not receive all or part of its principal because the issuer or credit
enhancer has defaulted on its obligations. Obligations issued by U.S.
Government-related entities are guaranteed as to the payment of principal and
interest, but are not backed by the full faith and credit of the U.S.
Government. The performance of private label MBSs, issued by private
institutions, is based on the financial health of those institutions. There is
no guarantee the Fund's investment in MBSs will be successful, and the Fund's
total return could be adversely affected as a result.

ASSET-BACKED SECURITIES - Asset-backed securities represent a participation in,
or are secured by and payable from, a stream of payments generated by
particular assets, for example, automobile, credit

5
<PAGE> 41

SECURITY FUNDS
PROSPECTUS

card or trade receivables. Asset-backed commercial paper, one type of
asset-backed security, is issued by a special purpose entity, organized solely
to issue the commercial paper and to purchase interests in the assets. The
credit quality of these securities depends primarily upon the quality of the
underlying assets and the level of credit support and/or enhancement provided.

The underlying assets (e.g. loans) are subject to prepayments which
shorten the securities' weighted average life and may lower their return. If
the credit support or enhancement is exhausted, losses or delays in payment may
result if the required payments of principal and interest are not made. The
value of these securities also may change because of changes in the market's
perception of the creditworthiness of the servicing agent for the pool, the
originator of the pool, or the financial institution providing the credit
support or enhancement.

REAL ESTATE INVESTMENT TRUSTS (REITS) -- Investment in Reits involves certain
special risks. Equity REITs may be affected by any changes in the value of the
underlying property owned by the trusts, while mortgage REITs may be affected
by the quality of any credit extended. Further, equity and mortgage REITs are
dependent upon management skill, are not diversified, and are therefore subject
to the risk of financing single or a limited number of projects. Such trusts
are also subject to heavy cash flow dependency, defaults by borrowers, self
liquidation, and the possibility of failing to qualify for special tax
treatment under Subchapter M of the Internal Revenue Code and to maintain an
exemption under the Investment Company Act of 1940. Finally, certain REITs may
be self-liquidating in that a specific term of existence is provided for in the
trust document. Such trusts run the risk of liquidating at an economically
inopportune time.

WHEN-ISSUED AND FORWARD COMMITMENT SECURITIES -- Purchase or sale of securities
on a "forward commitment" basis may be used to hedge against anticipated
changes in interest rates and prices. The price, which is generally expressed
in yield terms, is fixed at the time the commitment is made, but delivery and
payment for the securities take place at a later date. When-issued securities
and forward commitments may be sold prior to the settlement date, but the Fund
will enter into when-issued and forward commitments only with the intention of
actually receiving or delivering the securities, as the case may be; however,
the Fund may dispose of a commitment prior to settlement if the Investment
Manager deems it appropriate to do so. No income accrues on securities which
have been purchased pursuant to a forward commitment or on a when-issued basis
prior to delivery of the securities. If the Fund disposes of the right to
acquire a when-issued security prior to its acquisition or disposes of its
right to deliver or receive against a forward commitment, it may incur a gain
or loss. At the time the Fund enters into a transaction on a when-issued or
forward commitment basis, a segregated account consisting of cash or high grade
liquid debt securities equal to the value of the when-issued or forward
commitment securities will be established and maintained with its custodian and
will be marked to market daily. There is a risk that the securities may not be
delivered and that the Fund may incur a loss.

RESTRICTED SECURITIES -- Restricted securities are acquired through private
placement transactions, directly from the issuer or from security holders,
generally at higher yields or on terms more favorable to investors than
comparable publicly traded securities. However, the restrictions on resale of
such securities may make it difficult for

6
<PAGE> 42

SECURITY FUNDS
PROSPECTUS

the Fund to dispose of such securities at the time considered most
advantageous, and/or may involve expenses that would not be incurred in the
sale of securities that were freely marketable. The Fund may purchase only
restricted securities that are eligible for resale to qualified institutional
investors pursuant to Rule 144A under the Securities Act of 1933. Trading
restricted securities pursuant to Rule 144A may enable the Fund to dispose of
restricted securities at a time considered to be advantageous and/or at a more
favorable price than would be available if such securities were not traded
pursuant to Rule 144A. However, the Rule 144A market is relatively new and
liquidity of the Fund's investment in such market could be impaired if trading
does not develop or declines. Risks associated with restricted securities
include the potential obligation to pay all or part of the registration
expenses in order to sell certain restricted securities. A considerable period
of time may elapse between the time of the decision to sell a security and the
time the Fund may be permitted sell it under an effective registration
statement. If, during a period, adverse conditions were to develop, a Fund
might obtain a less favorable price than prevailing when it decided to sell.

AMERICAN DEPOSITARY RECEIPTS (ADRS) -- ADRs are dollar-denominated receipts
issued generally by U.S. banks and which represent the deposit with the bank of
a foreign company's securities. ADRs are publicly traded on exchanges or
over-the-counter in the United States. Investors should consider carefully the
substantial risks involved in investing in securities issued by companies of
foreign nations, which are in addition to the usual risks inherent in domestic
investments. See "Foreign Investment Risks," below.

REPURCHASE AGREEMENTS -- A repurchase agreement is a contract under which the
Fund would acquire a security for a relatively short period (usually not more
than 7 days) subject to the obligation of the seller to repurchase and the Fund
to resell such security at a fixed time and price. The resale price is in
excess of the purchase price and reflects an agreed-upon market rate unrelated
to the coupon rate of the purchased security. Repurchase agreements will be
fully collateralized including interest earned thereon during the entire term
of the agreement. If the institution defaults on the repurchase agreement, the
Fund will retain possession of the underlying securities. If bankruptcy
proceedings are commenced with respect to the seller, realization on the
collateral by the Fund may be delayed or limited and the Fund may incur
additional costs. In such case, the Fund will be subject to risks associated
with changes in market value of the collateral securities. The Fund intends to
limit repurchase agreements to institutions believed by the Investment Manager
to present minimal credit risk.

MANAGEMENT PRACTICES

CASH RESERVES -- The Fund may establish and maintain reserves as the Investment
Manager believes is advisable to facilitate the Fund's cash flow needs (e.g.,
redemptions, expenses and, purchases of portfolio securities) or for temporary,
defensive purposes. Such reserves will be invested in domestic money market
instruments rated within the top two credit categories by a national rating
organization, or if unrated, the Investment Manager equivalent. The Fund may
also invest in certificates of deposit issued by banks and bank demand
accounts.

BORROWING -- The Fund can borrow money from banks as a temporary measure for
emergency purposes, to facilitate redemption requests, or for

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SECURITY FUNDS
PROSPECTUS

other purposes consistent with the Fund's investment objective and policies.
Such borrowings may be collateralized with Fund assets.

OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS -- In seeking to protect
against currency exchange rate or interest rate changes that are adverse to
their present or prospective positions, the Fund may employ certain risk
management practices involving the use of forward currency contracts and
options contracts, futures contracts and options on futures contracts on U.S.
and foreign government securities and currencies. There can be no assurance
that such risk management practices will succeed.

To attempt to hedge against adverse movements in exchange rates between
currencies, the Fund may enter into forward currency contracts for the purchase
or sale of a specified currency at a specified future date. Such contracts may
involve the purchase or sale of a foreign currency against the U.S. dollar or
may involve two foreign currencies. The Fund may enter into forward currency
contracts either with respect to specific transactions or with respect to the
Fund's portfolio positions. For example, when the Fund anticipates making a
purchase or sale of a security, it may enter into a forward currency contract
in order to set the rate (either relative to the U.S. dollar or another
currency) at which a currency exchange transaction related to the purchase or
sale will be made. Further, if the Investment Manager believes that a
particular currency may decline compared to the U.S. dollar or another
currency, the Fund may enter into a forward contract to sell the currency the
Investment Manager expects to decline in an amount up to the value of the
portfolio securities held by the Fund denominated in a foreign currency.

The Fund's use of forward currency contracts or options and futures
transactions involve certain investment risks and transaction costs to which it
might not otherwise be subject. These risks include: dependence on the
Investment Manager's ability to predict movements in exchange rates; imperfect
correlation between movements in exchange rates and movements in the currency
hedged; and the fact that the skills needed to effectively hedge against the
Fund's currency risks are different from those needed to select the securities
in which the Fund invests. The Fund also may conduct foreign currency exchange
transactions on a spot (i.e., cash) basis at the spot rate prevailing in the
foreign currency exchange market.

FUTURES AND OPTIONS -- Futures are often used to manage risk, because they
enable the investor to buy or sell an asset in the future at an agreed upon
price. Options give the investor the right, but not the obligation, to buy or
sell an asset at a predetermined price in the future. The Fund may buy and
sell futures contracts to manage exposure to changes in securities prices and
as an efficient means of adjusting overall exposure to certain markets.

The Fund may purchase put options and write covered call options on
securities that are traded on recognized securities exchanges and
over-the-counter ("OTC") markets. When the Fund writes a covered call option,
it gives the purchaser of the option the right, but not the obligation, to buy
the underlying security owned by the Fund at the agreed upon exercise price at
any time prior to the expiration of the contract, regardless of the market
price of the security during the option period. The purchase price (premium)
paid to the Fund is the consideration for undertaking the obligations of the
option contract. The Fund

8
<PAGE> 44

SECURITY FUNDS
PROSPECTUS

forgoes the opportunity to profit from an increase in the market price of the
underlying security above the exercise price so long as the option remains open
and covered, except insofar as the premium represents profit. A put option
gives the Fund the right, but not the obligation, to sell the underlying
security to the writer of the option at the exercise price at any time prior to
the expiration of the contract, regardless of the market price of the security
during the option period. The writer may be forced to purchase a security from
the Fund at a price much higher than the market price at the time the option is
exercised. The Fund in purchasing a put option risks the loss of the entire
purchase price (premium) of the option.

The Fund also may enter into interest rate and stock index futures
contracts to the extent permitted under regulations of the Commodities Futures
Trading Commission ("CFTC"). An interest rate futures contract obligates the
seller of the contract to deliver, and the purchaser to take delivery of,
interest rate securities called for in a contract at a specified future time at
a specified price. A stock index assigns relative values to common stocks
included in the index and the index fluctuates with changes in the market
values of the common stocks included. A stock index futures contract is a
bilateral contract pursuant to which two parties agree to take or make delivery
of an amount of cash equal to a specified dollar amount times the difference
between the stock index value at the close of the last trading day of the
contract and the price at which the futures contract is originally struck.

Futures contracts and options can be highly volatile and could result in
reduction of the Fund's total return, and the Fund's attempt to use such
investments for hedging purposes may not be successful. Successful futures
strategies require the ability to predict future movements in securities
prices, interest rates and other economic factors. The Fund's potential losses
from futures contracts extends beyond its initial investment in such contracts.
Also, losses from futures could be significant if the Fund is unable to close
out its position due to distortions in the market or lack of liquidity.

The use of futures and options involves investment risks and transaction
costs to which the Fund would not be subject absent the use of these
strategies. If the Investment Manager seeks to protect the Fund against
potential adverse movements in the securities or interest rate markets using
these instruments and such markets do not move in a direction adverse to the
Fund, the Fund could be left in a less favorable position than if such
strategies had not been used. Risks inherent in the use of futures and options
include: (1) the risk that interest rates or securities prices will not move
in the directions anticipated; (2) imperfect correlation between the price of
futures and options and movements in the prices of the securities being hedged;
(3) the fact that skills needed to use these strategies are different from
those needed to select portfolio securities; (4) the possible absence of a
liquid secondary market for any particular instrument at any time; and (5) the
possible need to defer closing out certain hedged positions to avoid adverse
tax consequences. The Fund's ability to terminate option positions established
in the over-the-counter market may be more limited than in the case of
exchange-traded options and may also involve the risk that securities dealers
participating in such transactions would fail to meet their obligations to the
Fund. Certain provisions of the Internal Revenue Code of 1986, as amended
("Code"), limit the extent to which the Fund may enter into futures contracts
or engage in options transactions.

9
<PAGE> 45

SECURITY FUNDS
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RISK FACTORS

GENERAL -- The Fund's net asset value will fluctuate, reflecting fluctuations in
the market value of its portfolio positions and, if invested in foreign
securities, its net currency exposure. The value of fixed income securities
generally fluctuates inversely with interest rate movements. Longer term bonds
held by the Fund are subject to greater interest rate risk. There is no
assurance that the Fund will achieve its investment objective.

FOREIGN INVESTMENT RISKS -- Investment in foreign securities may involve risks
and considerations not present in domestic investments. Foreign companies
generally are not subject to uniform accounting, auditing and financial
reporting standards, practices and requirements comparable to those applicable
to U.S. companies. The securities of non-U.S. issuers generally are not
registered with the SEC, nor are the issuers thereof usually subject to the
SEC's reporting requirements. Accordingly, there may be less publicly available
information about foreign securities and issuers than is available with respect
to U.S. securities and issuers. The Fund's net investment income from foreign
issuers may be subject to non-U.S. withholding taxes, thereby reducing its net
investment income. In addition, with respect to some foreign countries, there
is the increased possibility of expropriation or confiscatory taxation,
limitations on the removal of funds or other assets of the Fund, political or
social instability, or diplomatic developments which could affect the
investments of the Fund in those countries. Moreover, individual foreign
economies may differ favorably or unfavorably from the U.S. economy in such
respects as growth of gross national product, rate of inflation, rate of
savings and capital reinvestment, resource self-sufficiency and balance of
payments positions.

CURRENCY RISK -- Because the Fund invests in securities denominated in
currencies other than the U.S. dollar and may hold foreign currencies, it will
be affected favorably or unfavorably by exchange control regulations or changes
in the exchange rates between such currencies and the U.S. dollar. Changes in
currency exchange rates will influence the value of the Fund's shares, and also
may affect the value of dividends and interest earned by the Fund and gains and
losses realized by the Fund. In addition, the Fund may incur costs in
connection with the conversion or transfer of foreign currencies. Currencies
generally are evaluated on the basis of fundamental economic criteria (e.g.,
relative inflation and interest rate levels and trends, growth rate forecasts,
balance of payments status and economic policies) as well as technical and
political data. The exchange rates between the U.S. dollar and other currencies
are determined by supply and demand in the currency exchange markets, the
international balance of payments, governmental intervention, speculation and
other economic and political conditions. If the currency in which a security is
denominated appreciates against the U.S. dollar, the dollar value of the
security will increase. Conversely, a decline in the exchange rate of the
currency would adversely affect the value of the security expressed in U.S.
dollars.

MANAGEMENT OF THE FUND

The management of the Fund's business and affairs is the responsibility of
the Board of Directors. Security Management Company (the "Investment Manager"),
700 Harrison Street, Topeka, Kansas, is responsible for selection and
management of the Fund's portfolio investments.

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<PAGE> 46

SECURITY FUNDS
PROSPECTUS

The Investment Manager is an indirect wholly-owned subsidiary of Security
Benefit Life Insurance Company, a mutual life insurance company with over $13
billion of insurance in force. The Investment Manager also acts as investment
adviser to Security Growth and Income Fund, Security Ultra Fund, Security
Income Fund, Security Tax-Exempt Fund, Security Cash Fund and SBL Fund. On
January 31, 1995, the aggregate assets of all of the Funds under the investment
management of the Investment Manager were approximately $2.1 billion.

The Investment Manager has entered into a quantitative research agreement
with Meridian Investment Management Corporation, 12835 East Arapahoe Road,
Tower II, 7th Floor, Englewood, Colorado 80112 ("Meridian"). Meridian provides
research which the Investment Manager uses in strategically allocating the
assets of the Fund among investment categories and market sectors. Meridian is
a wholly-owned subsidiary of Meridian Management & Research Corporation.

The Investment Manager has entered into a consulting and analytical
research agreement with Templeton Quantitative Advisors, Inc., 31 West 52nd
Street, 10th Floor, New York, New York 10019 ("Templeton"). Templeton provides
research used by the Investment Manager in the selection of equity securities
for the Fund. The Investment Manager pays Templeton an annual fee equal to .30%
of the average net assets of the Fund invested in equity securities. Templeton
is a wholly-owned subsidiary of Templeton Worldwide, Inc. which in turn is a
wholly-owned subsidiary of Franklin Resources, Inc.

Subject to the supervision and direction of the Fund's Board of Directors,
the Investment Manager manages the Fund's portfolio in accordance with the
Fund's stated investment objective and policies and makes all investment
decisions. The Investment Manager has agreed that total annual expenses of the
Fund (including for any fiscal year, the management fee, but excluding
interest, taxes, brokerage commissions, extraordinary expenses and Class B
distribution fees) shall not exceed the level of expenses which the 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. The Investment
Manager will contribute such funds to the Fund or waive such portion of its
compensation as may be necessary to insure that such total annual expenses do
not exceed any such limitation.

The Investment Manager also acts as the administrative agent and transfer
agent for the Fund, and as such performs administrative functions, transfer
agency and dividend disbursing services, and the bookkeeping, accounting and
pricing functions for the Fund.

For its services, the Investment Manager receives, on an annual basis, an
investment advisory fee equal to 1 percent of the average daily net assets of
the Fund, calculated daily and payable monthly. The Investment Manager also
receives, on an annual basis, an administrative fee equal to .045 percent of
the average daily net assets of the Fund plus 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.

PORTFOLIO MANAGEMENT

The Fund is managed by an investment management team of Portfolio Managers
and Research Analysts of the Investment Manager. The team meets regularly to
review portfolio holdings and to discuss purchase and sale activity. The

11
<PAGE> 47

SECURITY FUNDS
PROSPECTUS

team is responsible for the day-to-day management of the Fund's portfolio.

HOW TO PURCHASE SHARES

Security Distributors, Inc. (the "Distributor"), 700 Harrison St., Topeka,
Kansas, a wholly-owned subsidiary of the Investment Manager, is principal
underwriter of the Fund. Shares of the Fund may be purchased through authorized
investment dealers. In addition, banks and other financial institutions that
have an agreement with the Distributor, may make shares of the Funds available
to their customers. The minimum initial purchase must be $100. Subsequent
purchases must be $100 unless made through an Accumulation Plan which allows
subsequent purchases of $20.

Orders for the purchase of shares of the Fund will be confirmed at an
offering price equal to the net asset value per share next determined after
receipt of the order in proper form by the Distributor (generally as of the
close of the New York Stock Exchange on that day) plus the sales charge in the
case of Class A shares. Orders received by dealers or other firms prior to the
close of the Exchange and received by the Distributor prior to the close of its
business day will be confirmed at the offering price effective as of the close
of the Exchange on that day.

The Fund reserves the right to withdraw all or any part of the offering
made by this prospectus and to reject purchase orders.

ALTERNATIVE PURCHASE OPTIONS

The Fund offers two classes of shares:

CLASS A SHARES -- FRONT-END LOAD OPTION -- Class A shares are sold with a sales
charge at the time of purchase. Class A shares are not subject to a sales
charge when they are redeemed (except that shares sold in an amount of
$1,000,000 or more without a front-end sales charge will be subject to a
contingent deferred sales charge for one year). See Appendix A for a
discussion of "Rights of Accumulation" and "Statement of Intention," which
options may reduce the front-end sales charge on purchases of Class A shares.

CLASS B SHARES -- BACK-END LOAD OPTION -- Class B shares are sold without a
sales charge at the time of purchase, but are subject to a deferred sales
charge if they are redeemed within five years of the date of purchase. Class B
shares will automatically convert tax-free to Class A shares at the end of
eight years after purchase.

The decision as to which class is more beneficial to an investor depends
on the amount and intended length of the investment. Investors who would rather
pay the entire cost of distribution at the time of investment, rather than
spreading such cost over time, might consider Class A shares. Other investors
might consider Class B shares, in which case 100% of the purchase price is
invested immediately, depending on the amount of the purchase and the intended
length of investment. The Fund will not normally accept any purchase of Class B
shares in the amount of $500,000 or more.

Dealers or others may receive different levels of compensation depending
on which class of shares they sell.

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<PAGE> 48

SECURITY FUNDS
PROSPECTUS

CLASS A SHARES

Class A shares are offered at net asset value plus an initial sales charge
as follows:

<TABLE>
<CAPTION>
SALES CHARGE
-------------------------------------------
AMOUNT OF PERCENTAGE PERCENTAGE OF PERCENTAGE
TRANSACTION AT OF OFFERING NET AMOUNT REALLOWABLE
OFFERING PRICE PRICE INVESTED TO DEALERS
- --------------- ----------- ------------- -----------
<S> <C> <C> <C>
Less than $50,000 5.75% 6.10% 5.00%
$50,000 but less
than $100,000 4.75% 4.99% 4.00%
$100,000 but less
than $250,000 3.75% 3.90% 3.00%
$250,000 but less
than $500,000 2.75% 2.83% 2.25%
$500,000 but less
than $1,000,000 2.00% 2.04% 1.75%
$1,000,000 or more None None (See below)

</TABLE>

The Investment Manager may, at its expense, pay a service fee to dealers
who satisfy certain criteria established by the Investment Manager from time to
time relating to the volume of their sales of Class A shares of the Fund and
certain other Security Funds during prior periods and certain other factors,
including providing certain services to their clients who are stockholders of
the Fund. Such services include assisting in maintaining records, processing
purchase and redemption requests and establishing stockholder accounts,
assisting stockholders in changing account options or enrolling in specific
plans, and providing stockholders with information regarding the Fund and
related developments.

Currently, service fees are paid at the following annual rates: .25
percent of aggregate net asset value for amounts of $100,000 but less than
$5,000,000 and .30 percent for amounts of $5,000,000 or more.

Additional information may be obtained by referring to the Fund's
Statement of Additional Information.

CLASS B SHARES

Class B shares are offered at net asset value, without an initial sales
charge. With certain exceptions, the Fund may impose a deferred sales charge on
shares redeemed within five years of the date of purchase. No deferred sales
charge is imposed on amounts redeemed thereafter. If imposed, the deferred
sales charge is deducted from the redemption proceeds otherwise payable to you.
The deferred sales charge is retained by the Distributor.

<TABLE>
<CAPTION>
Year Since Purchase Contingent Deferred
Payment Was Made Sales Charge
---------------- ------------
<S> <C>
First 5%
Second 4%
Third 3%
Fourth 3%
Fifth 2%
Sixth and following 0%
</TABLE>

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<PAGE> 49

SECURITY FUNDS
PROSPECTUS

Class B shares (except shares purchased through the reinvestment of
dividends and other distributions paid with respect to Class B shares) will
automatically convert on the eighth anniversary of the date such shares were
purchased to Class A shares which are subject to a lower distribution fee. This
automatic conversion of Class B shares will take place without imposition of
a front-end sales charge or exchange fee. (Conversion of Class B shares
represented by stock certificates will require the return of the stock
certificates to the Investment Manager.) All shares purchased through
reinvestment of dividends and other distributions paid with respect to Class B
shares ("reinvestment shares") will be considered to be held in a separate
subaccount. Each time any Class B shares (other than those held in the
subaccount) convert to Class A shares, a pro rata portion of the reinvestment
shares held in the subaccount will also convert to Class A shares. Class B
shares so converted will no longer be subject to the higher expenses borne by
Class B shares. Because the net asset value per share of the Class A shares may
be higher or lower than that of the Class B shares at the time of conversion,
although the dollar value will be the same, a shareholder may receive more or
less Class A shares than the number of Class B shares converted. Under current
law, it is the Fund's opinion that such a conversion will not constitute a
taxable event under federal income tax law. In the event that this ceases to be
the case, the Board of Directors will consider what action, if any, is
appropriate and in the best interests of the Class B stockholders.

CLASS B DISTRIBUTION PLAN

The Fund bears some of the costs of selling its Class B shares under a
Distribution Plan adopted with respect to its Class B shares ("Class B
Distribution Plan") pursuant to Rule 12b-1 under the Investment Company Act of
1940 ("1940 Act"). This Plan provides for payments at an annual rate of 1.00
percent of the average daily net asset value of Class B shares. Amounts paid by
the Fund are currently used to pay dealers and other firms that make Class B
shares available to their customers (1) a commission at the time of purchase
normally equal to 4.00 percent of the value of each share sold and (2) a
service fee payable for the first year, initially, and for each year
thereafter, quarterly, in an amount equal to .25 percent annually of the
average daily net asset value of Class B shares sold by such dealers and other
firms and remaining outstanding on the books of the Fund.

NASD Rules limit the aggregate amount that the Fund may pay annually in
distribution costs for the sale of its Class B shares to 6.25 percent of gross
sales of Class B shares since the inception of the Distribution Plan, plus
interest at the prime rate plus one percent on such amount (less any contingent
deferred sales charges paid by Class B shareholders to the Distributor). The
Distributor intends, but is not obligated, to continue to pay or accrue
distribution charges incurred in connection with the Class B Distribution Plan
which exceed current annual payments permitted to be received by the
Distributor from the Fund. The Distributor intends to seek full payment of such
charges from the Fund (together with annual interest thereon at the prime rate
plus one percent) at such time in the future as, and to the extent that,
payment thereof by the Fund would be within permitted limits.

The Fund's Class B Distribution Plan may be terminated at any time by vote
of its directors who are not interested persons of the Fund as defined

14
<PAGE> 50

SECURITY FUNDS
PROSPECTUS

in the 1940 Act or by vote of a majority of the outstanding Class B shares. In
the event the Class B Distribution Plan is terminated by the Class B
stockholders or the Fund's Board of Directors, the payments made to the
Distributor pursuant to the Plan up to that time would be retained by the
Distributor. Any expenses incurred by the Distributor in excess of those
payments would be absorbed by the Distributor. The Fund makes no payments in
connection with the sale of its shares other than the distribution fee paid to
the Distributor.

CALCULATION AND WAIVER OF CONTINGENT DEFERRED SALES CHARGES

Any contingent deferred sales charge imposed upon redemption of Class A
shares (purchased in an amount of $1,000,000 or more) and Class B shares is a
percentage of the lesser of (1) the net asset value of the shares redeemed or
(2) the net cost of such shares. No contingent deferred sales charge is imposed
upon redemption of amounts derived from (1) increases in the value above the
net cost of such shares due to increases in the net asset value per share of
the Fund; (2) shares acquired through reinvestment of income dividends and
capital gain distributions; or (3) Class A shares (purchased in an amount of
$1,000,000 or more) held for more than one year or Class B shares held for more
than five years. Upon request for redemption, shares not subject to the
contingent deferred sales charge will be redeemed first. Thereafter, shares
held the longest will be the first to be redeemed.

The contingent deferred sales charge is waived (1) following the death of
a stockholder if redemption is made within one year after death; (2) upon the
disability (as defined in Section 72(m)(7) of the Internal Revenue Code) of a
stockholder prior to age 65 if redemption is made within one year after the
disability, provided such disability occurred after the stockholder opened the
account; (3) in connection with required minimum distributions in the case of
an IRA, SAR-SEP or Keogh or any other retirement plan qualified under section
401(a), 401(k) or 403(b) of the Code; and (4) in the case of distributions from
retirement plans qualified under section 401(a) or 401(k) of the Internal
Revenue Code due to (i) returns of excess contributions to the plan, (ii)
retirement of a participant in the plan, (iii) a loan from the plan (repayment
of loans, however, will constitute new sales for purposes of assessing the
CDSC), (iv) "financial hardship" of a participant in the plan, as that term is
defined in Treasury Regulation section 1.401(k)-1(d)(2), as amended from time
to time, (v) termination of employment of a participant in the plan, (vi) any
other permissible withdrawal under the terms of the plan. The contingent
deferred sales charge will also be waived in the case of redemptions of Class B
shares of the Fund pursuant to a systematic withdrawal program. See "Systematic
Withdrawal Program," page 22 for details.

ARRANGEMENTS WITH BROKER-DEALERS AND OTHERS

15
<PAGE> 51

SECURITY FUNDS
PROSPECTUS

be offered to the extent it is prohibited by the laws of any state or
self-regulatory agency, such as the National Association of Securities Dealers,
Inc. ("NASD"). A dealer to whom substantially the entire sales charge of Class
A shares is reallowed may be deemed to be an "underwriter" under federal
securities laws.

The Distributor also may pay banks and other financial services firms that
facilitate transactions in shares of the Fund for their clients a transaction
fee up to the level of the payments made allowable to dealers for the sale of
such shares as described above. Banks currently are prohibited under the
Glass-Steagall Act from providing certain underwriting or distribution
services. If banking firms were prohibited from acting in any capacity or
providing any of the described services, the Fund's Board of Directors would
consider what action, if any, would be appropriate.

PURCHASES AT NET ASSET VALUE

Class A shares of the Fund may be purchased at net asset value by (1)
directors, officers and employees of the Fund, the Fund's Investment Manager or
Distributor; directors, officers and employees of Security Benefit Life
Insurance Company and its subsidiaries; agents licensed with Security Benefit
Life Insurance Company; spouses or minor children of any such agents; as well
as the following relatives of any such directors, officers and employees (and
their spouses): spouses, grandparents, parents, children, grandchildren,
siblings, nieces and nephews; (2) any trust, pension, profit sharing or other
benefit plan established by any of the foregoing corporations for persons
described above; (3) retirement plans where third party administrators of such
plans have entered into certain arrangements with the Distributor or its
affiliates provided that no commission is paid to dealers; and (4) officers,
directors, partners or registered representatives (and their spouses and minor
children) of broker-dealers who have a selling agreement with the Distributor.
Such sales are made upon the written assurance of the purchaser that the
purchase is made for investment purposes and that the securities will not be
transferred or resold except through redemption or repurchase by or on behalf
of the Fund.

Associated personnel of broker-dealers and life agents must obtain a
special application from their employer or from the Distributor in order to
qualify for such purchases.

Class A shares of the Fund may also be purchased at net asset value when
the purchase is made on the recommendation of (i) a registered investment
adviser, trustee or financial intermediary who has authority to make investment
decisions on behalf of the investor; or (ii) a certified financial planner or
registered broker-dealer who either charges periodic fees to its customers for
financial planning, investment

16
<PAGE> 52

SECURITY FUNDS
PROSPECTUS

advisory or asset management services, or provides such services in
connection with the establishment of an investment account for which a
comprehensive "wrap fee" is imposed. The Distributor must be notified when a
purchase is made that qualifies under this provision.

HOW TO REDEEM SHARES

A stockholder may redeem shares at the net asset value next determined
after the time when such shares are tendered for redemption.

Shares will be redeemed on request of the stockholder in proper order to
the Fund's Investment Manager, Security Management Company, 700 Harrison St.,
Topeka, Kansas 66636-0001, which serves as the Fund's transfer agent. A request
is made in proper order by submitting the following items to the Investment
Manager: (1) a written request for redemption signed by all registered owners
exactly as the account is registered, including fiduciary titles, if any, and
specifying the account number and the dollar amount or number of shares to be
redeemed; (2) a guarantee of all signatures on the written request or on the
share certificate or accompanying stock power; (3) any share certificates
issued for any of the shares to be redeemed; and (4) any additional documents
which may be required by the Investment Manager for redemption by corporations
or other organizations, executors, administrators, trustees, custodians or the
like. Transfers of shares are subject to the same requirements. The signature
guarantee must be provided by an eligible guarantor institution, such as a
bank, broker, credit union, national securities exchange or savings
association. A signature guarantee is not required for redemptions of $10,000
or less, requested by and payable to all stockholders of record for an account,
to be sent to the address of record. The Investment Manager reserves the right
to reject any signature guarantee pursuant to its written procedures which may
be revised in the future. To avoid delay in redemption or transfer,
stockholders having questions should contact the Investment Manager by calling
1-800-888-2461, extension 3127.

In addition to the foregoing redemption procedure, the Fund repurchases
shares from broker-dealers at the price determined as of the close of business
on the day such offer is confirmed. Dealers may charge a commission on the
repurchase of shares.

17
<PAGE> 53

SECURITY FUNDS
PROSPECTUS

TELEPHONE REDEMPTIONS

A stockholder may redeem uncertificated shares in amounts up to $10,000 by
telephone request, provided the stockholder has completed the Telephone
Redemption section of the application or a Telephone Redemption form which may
be obtained from the Investment Manager. The proceeds of a telephone redemption
will be sent to the stockholder at his or her address as set forth in the
application or in a subsequent written authorization with a signature
guarantee. Once authorization has been received by the Investment Manager, a
stockholder may redeem shares by calling the Fund at (800) 888-2461, extension
3127, on weekdays (except holidays) between the hours of 8:00 a.m. and 5:00
p.m. Central time. Redemption requests received by telephone after the close
of the New York Stock Exchange (normally 3 p.m. Central time) will be treated
as if received on the next business day. A stockholder who authorizes telephone
redemptions authorizes the Investment Manager to act upon the instructions of
any person identifying themselves as the owner of an account or the owner's
broker. The Investment Manager has established procedures to confirm that
instructions communicated by telephone are genuine and may be liable for any
losses due to fraudulent or unauthorized instructions if it fails to comply
with its procedures. The Investment Manager's procedures require that any
person requesting a telephone redemption provide the account registration and
number and the owner's tax identification number, and such instructions must be
received on a recorded line. Neither the Fund, the Investment Manager, nor the
Distributor shall be liable for any loss, liability, cost or expense arising
out of any redemption request, provided the Investment Manager complied with
its procedures. Thus, a stockholder who authorizes telephone redemptions may
bear the risk of loss from a fraudulent or unauthorized request. The telephone
redemption privilege may be changed or discontinued at any time by the
Investment Manager or the Fund.

During periods of severe market or economic conditions, telephone
redemptions may be difficult to implement and stockholders should make
redemptions by mail as described under "How to Redeem Shares."

DIVIDENDS AND TAXES

It is the Fund's policy to distribute realized capital gains, if any, in
excess of any capital losses and capital loss carryovers, at least once a year
and to pay dividends from net investment income as the Fund's Board of
Directors may declare from time to time. Because Class A shares of the Fund
bear most of the costs of distribution of such shares through payment of a
front-end sales charge, while Class B shares of the Fund bear such costs
through a higher distribution fee, expenses attributable to Class B shares will
generally be higher and, as a result, income distributions paid by the Fund
with respect to Class B shares generally will be lower than those paid with
respect to Class A shares. Any dividend payment or capital gain distribution
will result in a decrease of the net asset value of the shares in

18
<PAGE> 54

SECURITY FUNDS
PROSPECTUS

an amount equal to the payment or distribution. All dividends and distributions
are automatically reinvested on the payable date in shares of the Fund at net
asset value as of the record date (reduced by an amount equal to the amount of
the dividend or distribution), unless the Investment Manager is previously
notified in writing by the stockholder that such dividends or distributions are
to be received in cash. A stockholder may request that such dividends or
distributions be directly deposited to the stockholder's bank account.
Dividends or distributions paid with respect to Class A shares and received in
cash may, within 30 days of the payment date, be reinvested without a sales
charge.

The Fund is to be treated separately from the other series of Security
Equity Fund, in determining the amounts of income and capital gains
distributions, and for this purpose, each series will reflect only the income
and gains, net of losses, of that series.

The Fund intends to qualify as a "regulated investment company" under the
Internal Revenue Code. Such qualification generally removes the liability for
federal income taxes from the Fund, and generally makes federal income tax upon
income and capital gains generated by the Fund's investments, the sole
responsibility of its stockholders provided the Fund continues to so qualify
and distributes all of its net investment income and net realized capital gain
to its stockholders. Furthermore, the Fund generally will not be subject to
excise taxes imposed on certain regulated investment companies provided that it
distributes 98 percent of its ordinary income and 98 percent of its net capital
gain income each year.

Distributions of net investment income and realized net short-term capital
gain are taxable to stockholders as ordinary income whether received in cash or
reinvested in additional shares. Distributions (designated by the Fund as
"capital gain dividends") of the excess, if any, of net long-term capital gains
over net short-term capital losses are taxable to stockholders as long-term
capital gains regardless of how long a stockholder has held the Fund's shares
and regardless of whether received in cash or reinvested in additional shares.
Stockholders should consult their tax adviser to determine the federal, state
and local tax consequences to them from an investment in the Fund.

Certain dividends declared in October, November or December of a calendar
year are taxable to stockholders as though received on December 31 of that year
if paid to stockholders during January of the following calendar year.

Advice as to the tax status of each year's distributions will be mailed on
or before January 31, of the following year. The Fund is required by law to
withhold 31 percent of taxable dividends and distributions (including
redemption proceeds) to stockholders who do not furnish their correct taxpayer
identification numbers, or are otherwise subject to the backup withholding
provisions of the Internal Revenue Code.

FOREIGN TAXES

Investment income received from sources within foreign countries may be
subject to foreign income taxes. In this regard, withholding tax rates in
countries with which the United States does not have a tax treaty are often as
high as 30 percent or more. The United States has entered into tax treaties
with many foreign countries which entitle certain investors (such as the Fund)
to a reduced tax rate (generally ten to fifteen percent) or to certain
exemptions from tax. The Fund will operate so as to qualify for such reduced
tax rates or tax redemptions whenever possible. While

19
<PAGE> 55

SECURITY FUNDS
PROSPECTUS

stockholders will bear the cost of any foreign tax withholding, they will not
be able to claim foreign tax credit or deduction for taxes paid by the Fund.

DETERMINATION OF NET ASSET VALUE

The net asset value of the Fund is computed as of the close of
regular trading hours on the New York Stock Exchange (normally 3 p.m. Central
time) on days when the Exchange is open.

The net asset value per share is computed by adding the value of all
securities and other assets in the portfolio, deducting any liabilities and
dividing by the number of shares outstanding. In determining the Fund's total
net assets, securities listed or traded on a recognized securities exchange
will be valued on the basis of the last sale price. If there are no sales on a
particular day, then the securities are valued at the mean between the bid and
asked prices. If a mean cannot be determined, then the securities are valued at
the best available current bid price. If a security is traded on multiple
exchanges, its value will be based on prices from the principal exchange where
it is traded. All other securities for which market quotations are available
are valued on the basis of the last current bid price. If there is no bid
price, or if the bid price is deemed unsatisfactory by the Board of Directors
or by the Investment Manager, then the securities are valued in good faith by
such method as the Board of Directors determines will reflect the fair market
value. Valuations of the Fund's securities are supplied by a pricing service
approved by the Fund's Board of Directors.

Because the expenses of distribution are borne by Class A shares through a
front-end sales charge and by Class B shares through an ongoing distribution
fee, the expenses attributable to each class of shares will differ, resulting
in different net asset values. The net asset value of Class B shares will
generally be lower than the net asset value of Class A shares as a result of
the distribution fee charged to Class B shares. It is expected, however, that
the net asset value per share will tend to converge immediately after the
payment of dividends which will differ in amount for Class A and B shares by
approximately the amount of the different distribution expenses attributable to
Class A and B shares.

TRADING PRACTICES AND BROKERAGE

Portfolio turnover rates are not yet available for the Fund as it did not
begin operations until June 1, 1995. Higher portfolio turnover subjects a Fund
to increased brokerage costs and may, in some cases, have adverse tax effects
on the Fund or its stockholders. The annual portfolio turnover of the Fund
generally will be more than 100 percent and may be more than 150 percent.

Transactions in portfolio securities for the Fund are effected in the
manner deemed to be in the best interests of the Fund. In selecting a broker to
execute a specific transaction, all relevant factors will be considered.
Portfolio transactions may be directed to brokers who furnish investment
information or research services to the Investment Manager or who sell shares
of the Fund. The Investment Manager may, consistent with the NASD Rules of Fair
Practice, consider sales of Fund shares in the selection of a broker.
Securities held by the Fund may also be held by other investment advisory
clients of the Investment Manager, including other investment companies, and by
the Investment Manager's parent company, Security Benefit Life Insurance
Company ("SBL"). Purchases or sales of the same security occurring on the same
day (which may include orders from SBL) may be aggregated and executed as a
single

20
<PAGE> 56

SECURITY FUNDS
PROSPECTUS

transaction. Aggregated purchases or sales are generally effected at an average
price and on a pro rata basis in proportion to the amounts desired to be
purchased or sold. See the Fund's Statement of Additional Information for a
more detailed description of aggregated transactions.

PERFORMANCE

The Fund may, from time to time, include quotations of its average annual
total return and aggregate total return in advertisements or reports to
stockholders or prospective investors.

Quotations of average annual total return will be expressed in terms of
the average annual compounded rate of return of a hypothetical investment in
the Fund over periods of 1, 5 and 10 years (up to the life of the Fund). Such
total return figures will reflect the deduction of the maximum sales charge
and a proportional share of Fund expenses on an annual basis, and will assume
that all dividends and distributions are reinvested when paid.

Quotations of aggregate total return will be calculated for any specified
period by assuming a hypothetical investment in the Fund on the date of the
commencement of the period and assuming that all dividends and distributions
are reinvested when paid. The net increase or decrease in the value of the
investment over the period will be divided by its beginning value to arrive at
total return. Total return calculated in this manner reflects actual
performance over a stated period of time while average annual total return is a
hypothetical rate of return that, if achieved annually, would have produced the
same aggregate total return.

In addition, quotations of aggregate total return may also be calculated
for several consecutive one-year periods, expressing the total return as a
percentage increase or decrease in the value of the investment for each year
relative to the ending value for the previous year. The Fund may from time to
time quote total return that does not reflect deduction of any applicable sales
charge, which charges, if reflected, would reduce the total return quoted.

Quotations of average annual total return or aggregate total return
reflect only the performance of a hypothetical investment in the Fund during
the particular time period on which the calculations are based. Such quotations
for the Fund will vary based on changes in market conditions and the level of
the Fund's expenses, and no reported performance figure should be considered an
indication of performance which may be expected in the future.

In connection with communicating its average annual total return and
aggregate total return to current or prospective stockholders, the Fund also
may compare these figures to the performance of other mutual fund rating
services or to other unmanaged indexes which may assume reinvestment of
dividends, but generally do not reflect deductions for administrative and
management costs and expenses. The Fund will include performance data for both
Class A and Class B shares of the Fund in any advertisement or report including
performance data of the Fund.

For a more detailed description of the methods used to calculate the
average annual total return and aggregate total return of the Fund, see the
Fund's Statement of Additional Information.

SHAREHOLDER SERVICES

ACCUMULATION PLAN

An investor may choose to invest in the Fund through a voluntary
Accumulation Plan. This allows for an initial investment of $100 minimum and
subsequent investments of $20 minimum at

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<PAGE> 57

SECURITY FUNDS
PROSPECTUS

any time. An Accumulation Plan involves no obligation to make periodic
investments, and is terminable at will.

Payments are made by sending a check to the Distributor who (acting as an
agent for the dealer) will purchase whole and fractional shares of the Fund as
of the close of business on such day as the payment is received. The investor
will receive a confirmation and statement after each investment.

Investors may choose to use "Secur-O-Matic" (automatic bank draft) to make
their Fund purchases. There is no additional charge for choosing to use
Secur-O-Matic. An application for Secur-O-Matic may be obtained from the Fund.

SYSTEMATIC WITHDRAWAL PROGRAM

Stockholders who wish to receive regular monthly, quarterly, semiannual,
or annual payments of $25 or more may establish a Systematic Withdrawal
Program. A stockholder may elect a payment that is a specified percentage of
the initial or current account value or a specified dollar amount. A Systematic
Withdrawal Program will be allowed only if shares with a current offering price
of $5,000 or more are deposited with the Investment Manager, which will act as
agent for the stockholder under the Program. Shares are liquidated at net asset
value. The Program may be terminated on written notice, or it will terminate
automatically if all shares are liquidated or withdrawn from the account.

A stockholder may establish a Systematic Withdrawal Program with respect
to Class B shares without the imposition of any applicable contingent deferred
sales charge, provided that such withdrawals do not in any 12-month period,
beginning on the date the Program is established, exceed 10 percent of the
value of the account on that date ("Free Systematic Withdrawals"). Free
Systematic Withdrawals are not available if a Program established with respect
to Class B shares provides for withdrawals in excess of 10 percent of the value
of the account in any Program year and, as a result, all withdrawals under such
a Program would be subject to any applicable contingent deferred sales charge.
Free Systematic Withdrawals will be made first by redeeming those shares that
are not subject to the contingent deferred sales charge and then by redeeming
shares held the longest. The contingent deferred sales charge applicable to a
redemption of Class B shares requested while Free Systematic Withdrawals are
being made will be calculated as described under "Calculation and Waiver of
Contingent Deferred Sales Charges," page 15. A Systematic Withdrawal form may
be obtained from the Fund.

EXCHANGE PRIVILEGE

Stockholders who own shares of the Fund may exchange those shares for
shares of another series of Security Equity Fund, Security Ultra Fund, Security
Growth and Income Fund, Security Income Fund, Security Tax-Exempt Fund, or
Security Cash Fund (the "Security Funds") at net asset value. Exchanges may be
made only in those states where shares of the fund into which an exchange is to
be made are qualified for sale. No service fee is presently imposed on such an
exchange. Class A and Class B shares of the Fund may be exchanged for Class A
and Class B shares, respectively, of another fund or for shares of Security
Cash Fund, a money market fund that offers a single class of shares. Any
applicable contingent deferred sales charge will be imposed upon redemption and
calculated from the date of the initial purchase without regard to the time
shares were held in Security Cash Fund. For tax

22
<PAGE> 58

SECURITY FUNDS
PROSPECTUS

purposes, an exchange is a sale of shares which may result in a taxable gain or
loss. Special rules may apply to determine the amount of gain or loss on an
exchange occurring within ninety days after the exchanged shares were acquired.
Exchanges are made upon receipt of a properly completed Exchange Authorization
form. A current prospectus of the fund into which an exchange is made will be
given to each stockholder exercising this privilege.

To exchange shares by telephone, a stockholder must hold shares in
non-certificate form and must either have completed the Telephone Exchange
section of the application or a Telephone Transfer Authorization form which may
be obtained from the Investment Manager. Once authorization has been received
by the Investment Manager, a stockholder may exchange shares by telephone
by calling the Fund at (800) 888-2461, extension 3127, on weekdays (except
holidays) between the hours of 8:00 a.m. and 5:00 p.m. Central time. Exchange
requests received by telephone after the close of the New York Stock Exchange
(normally 3 p.m. Central time) will be treated as if received on the next
business day on which the Exchange is open. A stockholder who authorizes
telephone exchanges authorizes the Investment Manager to act upon the
instructions of any person by telephone to exchange shares between any
identically registered accounts with the Security Funds. The Investment Manager
has established procedures to confirm that instructions communicated by
telephone are genuine and may be liable for any losses due to fraudulent or
unauthorized instructions if it fails to comply with its procedures. The
Investment Manager's procedures require that any person requesting an
exchange by telephone provide the account registration and number and the
owner's tax identification number and such instructions must be received on a
recorded line. Neither the Fund, the Investment Manager nor the Distributor
shall be liable for any loss, liability, cost or expense arising out of any
request, including any fraudulent request, provided the Investment Manager
complied with its procedures. Thus, a stockholder who authorizes telephone
exchanges may bear the risk of loss from a fraudulent or unauthorized request.
The exchange privilege, including telephone exchanges, may be changed or
discontinued at any time by either the Investment Manager or the Fund upon 60
days' notice to stockholders.

In periods of severe market or economic conditions, the telephone exchange
of shares may be difficult to implement and stockholders should make exchanges
by writing to Security Distributors, Inc., 700 Harrison, Topeka, Kansas
66636-0001.

RETIREMENT PLANS

The Fund has available tax-qualified retirement plans for individuals,
prototype plans for the self-employed, pension and profit sharing plans for
corporations and custodial accounts for employees of public school systems and
organizations meeting the requirements of Section 501(c)(3) of the Internal
Revenue Code. Further information concerning these plans is contained in the
Fund's Statement of Additional Information.

GENERAL INFORMATION

ORGANIZATION

The Articles of Incorporation of Security Equity Fund provide for the
issuance of shares of common stock in one or more classes or series. Security
Equity Fund has authorized capital stock

23
<PAGE> 59

SECURITY FUNDS
PROSPECTUS

of 5,000,000,000 shares of $.25 par value and currently issues its shares in
three series, each of which has authority to issue such shares as follows:
Equity Fund -- 2,000,000,000 shares, Global Fund -- 1,000,000,000 shares and
Asset Allocation Fund -- 1,000,000,000 shares. The remaining 1,000,000,000
shares has not been allocated to any series. The shares of each series of
Security Equity Fund represent a pro rata beneficial interest in that series'
net assets and in the earnings and profits or losses derived from the
investment of such assets.

The Fund currently issues two classes of shares which participate
proportionately based on their relative net asset values in dividends and
distributions and have equal voting, liquidation and other rights except that
(i) expenses related to the distribution of each class of shares or other
expenses that the Board of Directors may designate as class expenses from time
to time, are borne solely by that class; (ii) each class of shares has
exclusive voting rights with respect to any Distribution Plan adopted for that
class; (iii) each class has different exchange privileges; and (iv) each class
has a different designation. When issued and paid for, the shares will be fully
paid and nonassessable by the Fund. Shares may be exchanged as described above
under "Exchange Privilege," but will have no other preference, conversion,
exchange or preemptive rights. Shares are transferable, redeemable and
assignable and have cumulative voting privileges for the election of directors.

On certain matters, such as the election of directors, all shares of the
series of Security Equity Fund vote together, with each share having one vote.
On other matters affecting a particular series, such as the investment advisory
contract or the fundamental policies, only shares of that series are entitled
to vote, and a majority vote of the shares of that series is required for
approval of the proposal.

The Fund does not generally hold annual meetings of stockholders and will
do so only when required by law. Stockholders may remove directors from office
by vote cast in person or by proxy at a meeting of stockholders. Such a meeting
will be called at the written request of 10 percent of Security Equity Fund's
outstanding shares.

STOCKHOLDER INQUIRIES

Stockholders who have questions concerning their account or wish to obtain
additional information, may call the Fund (see back cover for address and
telephone numbers), or contact their securities dealer.

24
<PAGE> 60

SECURITY FUNDS
PROSPECTUS

APPENDIX A

CLASS A SHARES
REDUCED SALES CHARGES

Initial sales charges may be reduced or eliminated for persons or
organizations purchasing Class A shares of the Fund alone or in combination
with Class A shares of other Security Funds.

RIGHTS OF ACCUMULATION

To reduce sales charges on purchases of Class A shares of the Fund, a
Purchaser may combine all previous purchases of the Fund with a contemplated
current purchase and receive the reduced applicable front-end sales charge. The
Distributor must be notified when a sale takes place which might qualify for
the reduced charge on the basis of previous purchases.

Rights of accumulation also apply to purchases representing a combination
of the Class A shares of the Fund and other Security Funds, except Security
Cash Fund, in those states where shares of the fund being purchased are
qualified for sale.

STATEMENT OF INTENTION

A Purchaser may choose to sign a Statement of Intention within 90 days
after the first purchase to be included thereunder, which will cover future
purchases of Class A shares of the Fund and other Security Funds, except
Security Cash Fund. The amount of these future purchases shall be specified and
must be made within a 13-month period (or 36-month period for purchases of $1
million or more) to become eligible for the reduced front-end sales charge
applicable to the actual amount purchased under the Statement. Five percent
(5%) of the amount specified in the Statement of Intention will be held in
escrow shares until the statement is completed or terminated. These shares may
be redeemed by the Fund if the Purchaser is required to pay additional sales
charges.

REINSTATEMENT PRIVILEGE

Stockholders who redeem their Class A shares of the Fund have a one-time
privilege (1) to reinstate their accounts by purchasing Class A shares without
a sales charge up to the dollar amount of the redemption proceeds; or (2) to
the extent the redeemed shares would have been eligible for the exchange
privilege, to purchase Class A shares of another of the Security Funds without
a sales charge up to the dollar amount of the redemption proceeds. To exercise
this privilege, a stockholder must provide written notice and a check in the
amount of the reinvestment to the Fund within thirty days after the redemption
request; the reinstatement will be made at the net asset value on the date
received by the Fund.

25
<PAGE> 61

[LOGO]

700 SW HARRISON ST. BULK RATE
TOPEKA, KANSAS 66636-0001 U.S. POSTAGE
(913) 295-3127 PAID
(800) 888-2461 TOPEKA, KS
PERMIT NO. 385

[LOGO]
700 SW Harrison St., Topeka, Kansas 66636-0001

<PAGE> 62

SECURITY GROWTH AND INCOME FUND
(formerly Security Investment Fund)

SECURITY EQUITY FUND

- - EQUITY SERIES
- - GLOBAL SERIES

- - ASSET ALLOCATION SERIES

SECURITY ULTRA FUND

STATEMENT OF ADDITIONAL INFORMATION

JUNE 1, 1995

RELATING TO THE PROSPECTUS DATED JUNE 1, 1995

(913) 295-3127
(800) 888-2461

INVESTMENT MANAGER
Security Management Company
700 SW Harrison Street
Topeka, Kansas 66636-0001

UNDERWRITER
Security Distributors, Inc.
700 SW Harrison Street
Topeka, Kansas 66636-0001

CUSTODIAN
UMB Bank, n.a.
928 Grand Avenue
Kansas City, Missouri 64106

Chase Manhattan Bank
1211 Avenue of the Americas
New York, New York 10036

INDEPENDENT AUDITORS
Ernst & Young LLP
One Kansas City Place
1200 Main Street
Kansas City, Missouri 64105-2143

<PAGE> 63

SECURITY GROWTH AND INCOME FUND
(formerly Security Investment Fund)
SECURITY EQUITY FUND
SECURITY ULTRA FUND
Members of The Security Benefit Group of Companies
700 SW Harrison, Topeka, Kansas 66636-0001

STATEMENT OF
ADDITIONAL INFORMATION

June 1, 1995

(RELATING TO THE PROSPECTUS DATED JUNE 1, 1995)

This Statement of Additional Information is not a Prospectus. It
should be read in conjunction with the Prospectus dated June 1, 1995. A
Prospectus may be obtained by writing or calling Security Distributors, Inc.,
700 SW Harrison, Topeka, Kansas 66636-0001, or by calling (913) 295-3127 or
(800) 888-2461, ext. 3127.

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Investment Objective and Policies of the Funds . . . . . . . . . . . . . . . . . . . . . 2
Security Growth and Income Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Security Equity Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Equity Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Global Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Asset Allocation Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Security Ultra Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Investment Policy Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Security Growth and Income Fund's Fundamental Policies . . . . . . . . . . . . . . . . 12
Security Equity Fund's Fundamental Policies . . . . . . . . . . . . . . . . . . . . . 12
Security Ultra Fund's Fundamental Policies . . . . . . . . . . . . . . . . . . . . . . 13
Officers and Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Remuneration of Directors and Others . . . . . . . . . . . . . . . . . . . . . . . . . . 15
How to Purchase Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Alternative Purchase Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Class A Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Class B Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Class B Distribution Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Calculation and Waiver of Contingent Deferred Sales Charges . . . . . . . . . . . . . 18
Arrangements With Broker-Dealers and Others . . . . . . . . . . . . . . . . . . . . . 18
Purchases at Net Asset Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Accumulation Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Systematic Withdrawal Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Investment Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Portfolio Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Distributor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Allocation of Portfolio Brokerage . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
How Net Asset Value is Determined . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
How to Redeem Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Telephone Redemptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
How to Exchange Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Exchange by Telephone . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Dividends and Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Custodian, Transfer Agent and Dividend-Paying Agent . . . . . . . . . . . . . . . . . . . 30
Independent Auditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Performance Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Retirement Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Individual Retirement Accounts (IRAs) . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Pension and Profit-Sharing Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
403(b) Retirement Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Simplified Employee Pension Plans (SEPPs) . . . . . . . . . . . . . . . . . . . . . . . . 33
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Appendix A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Appendix B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

</TABLE>

<PAGE> 64

GENERAL INFORMATION

Security Growth and Income Fund (formerly Security Investment Fund),
Security Equity Fund and Security Ultra Fund were organized as Kansas
corporations on February 2, 1944, November 27, 1961 and April 20, 1965,
respectively. The name of Security Growth and Income Fund (formerly Security
Investment Fund) was changed effective July 6, 1993. The Funds are registered
with the Securities and Exchange Commission as investment companies. Such
registration does not involve supervision by the Securities and Exchange
Commission of the management or policies of the Funds. The Funds are open-end
investment companies that, upon the demand of the investor, must redeem their
shares and pay the investor the current net asset value thereof. (See "How to
Redeem Shares," page_____.)

Each of Security Growth and Income Fund ("Growth and Income Fund"), the
Equity Series ("Equity Fund"), Global Series ("Global Fund"), and Asset
Allocation Series ("Asset Allocation Fund") of Security Equity Fund, and
Security Ultra Fund ("Ultra Fund") (collectively, the "Funds") has its own
investment objective and policies which are described below. While there is no
present intention to do so, the investment objective and policies of each Fund,
unless otherwise noted, may be changed by its Board of Directors without the
approval of stockholders. Each of the Funds is also required to operate within
limitations imposed by its fundamental investment policies which may not be
changed without stockholder approval. These limitations are set forth below
under "Investment Policy Limitations," page_____. An investment in one of the
Funds does not constitute a complete investment program.

The value of the shares of each Fund fluctuates, reflecting fluctuations in
the value of the portfolio securities and, to the extent it is invested in
foreign securities, its net currency exposure. Each Fund may realize losses or
gains when it sells portfolio securities and will earn income to the extent
that it receives dividends or interest from its investments. (See "Dividends
and Taxes," page_____.)

The Funds' shares are sold to the public at net asset value, plus a sales
commission which is allocated between the principal underwriter and dealers who
sell the shares ("Class A Shares"), or at net asset value with a contingent
deferred sales charge ("Class B Shares"). (See "How to Purchase Shares,"
page_____.)

Professional investment advice is provided to each Fund by Security
Management Company (the "Investment Manager"). The Investment Manager has
appointed Lexington Management Corporation ("Lexington") to provide certain
investment advisory services to Global Fund. The Investment Manager has
arranged for Meridian Investment Management Corporation ("Meridian") to provide
quantitative investment research, and Templeton Quantitative Advisors, Inc.
("Templeton") to provide analytical research, to the Asset Allocation Fund.

The Funds receive investment advisory, administrative, accounting, and
transfer agency services from the Investment Manager for a fee. The fee for
each Fund, except Global and Asset Assocation Funds, on an annual basis, is 2%
of the first $10 million of the average net assets, 1 1/2% of the next $20
million of the average net assets and 1% of the remaining average net assets of
the respective Funds, determined daily and payable monthly. The fee paid by
Global Fund, on an annual basis, is 2% of the first $70 million of the average
net assets, and 1 1/2% of the remaining average net assets, determined daily
and payable monthly.

Separate fees are paid by Asset Allocation Fund to the Investment Manager
for investment advisory, administrative and transfer agency services. The
investment advisory fee for Asset Allocation Fund on an annual basis is equal
to 1% of the average daily net assets of the Fund, calculated daily and payable
monthly. The administrative fee for Asset Allocation Fund on an annual basis
is equal to .045% of the average daily net assets of the Fund plus the greater
of .10% 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. The transfer agency fee for the Asset Allocation Fund consists of
an annual maintenance fee of $8.00 per account, and a transaction fee of $1.00
per transaction.

The Investment Manager bears all expenses of the Funds, except Asset
Allocation Fund, except for its fees and the expenses of brokerage commissions,
interest, taxes, Class B distribution fees, and extraordinary expenses approved
by the Board of Directors of the Funds. Asset Allocation pay all of its
expenses not assumed by the Investment Manager or Security Distributors, Inc.
(the "Distributor") as described under "Investment Management," page_____.

The Investment Manager guarantees that the total annual expenses of any
class or Series of a Fund (including the management fee and its other fees, but
excluding interest, taxes, brokerage commissions, extraordinary expenses and
Class B distribution fees) will not exceed any expense limitation imposed by
any

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state. See "Investment Management," page_____ for a discussion of the
Investment Manager and the Investment Management and Services Agreements.

Under Distribution Plans adopted with respect to the Class B shares of the
Funds, pursuant to Rule 12b-1 under the Investment Company Act of 1940, each
Fund is authorized to pay the Distributor an annual fee of 1.00% of the average
daily net assets of the Class B shares of the respective Funds to finance
various distribution-related activities. (See "Class B Distribution Plan,"
page_____.)

INVESTMENT OBJECTIVE AND POLICIES OF THE FUNDS

AMERICAN DEPOSITARY RECEIPTS. Each of the Funds may purchase American
Depositary Receipts ("ADRs") which are dollar-denominated receipts issued
generally by U.S. banks and which represent the deposit with the bank of a
foreign company's securities. ADRs are publicly traded on exchanges or
over-the-counter in the United States. Investors should consider carefully the
substantial risks involved in investing in securities issued by companies of
foreign nations, which are in addition to the usual risks inherent in domestic
investments. Although the Funds intend to invest only in nations which are
considered to have relatively stable and friendly governments, there is the
possibility of expropriation, nationalization or confiscatory taxation, foreign
exchange controls (which may include suspension of the ability to transfer
currency from a given country), political or social instability or diplomatic
developments which could affect investment in securities of issuers in those
nations. In addition, in many countries there is less publicly available
information about issuers than is available in reports about companies in the
United States. Foreign companies are not generally subject to uniform
accounting, auditing and financial reporting standards, and auditing practices
and requirements may not be comparable to those applicable to U.S. companies.
In many foreign countries, there is less government supervision and regulation
of business and industry practices, stock exchanges, brokers and listed
companies than in the United States. Foreign investments may be subject to
taxation abroad. In addition, the foreign securities markets of many of the
countries in which the Funds may invest may also be smaller, less liquid, and
subject to greater price volatility than those in the United States.

REPURCHASE AGREEMENTS. Each of the Funds may utilize repurchase agreements
on an overnight basis (or with maturities of up to seven days in the case of
Global Fund) wherein the Fund acquires a debt instrument for the short period,
subject to the obligation of the seller to repurchase and the Fund to resell
such debt instrument at a fixed price. The Funds will enter into repurchase
agreements only with (i) banks which are members of the Federal Reserve System,
or (ii) securities dealers (if permitted to do so under the Investment Company
Act of 1940) who are members of a national securities exchange or market makers
in government securities--in either case, only where the debt instrument
subject to the repurchase agreement is a U.S. Treasury or agency obligation.
Such repurchase agreements may subject the Funds to the risks that (i) they may
not be able to liquidate the securities immediately upon the insolvency of the
other party, or (ii) that amounts received in closing out a repurchase
transaction might be deemed voidable preferences upon the bankruptcy of the
other party. In the opinion of the Investment Manager, such risks are not
material.

SECURITY GROWTH AND INCOME FUND

The investment objective of Growth and Income Fund is long-term growth of
capital with a secondary emphasis on income. The value of Growth and Income
Fund's shares will fluctuate with changes in the market value of the Fund's
investments. The investment objective and policies of Growth and Income Fund
may be altered by the Board of Directors without the approval of stockholders
of the Fund. There can be no assurance that the stated investment objective
will be achieved.

The policy of Growth and Income Fund is to invest in a diversified portfolio
which will ordinarily consist principally of common stocks (which may include
ADRs), but may also include other securities when deemed advisable. Such other
securities may include securities convertible into common stocks, preferred
stocks and debt securities. The Fund may also invest in warrants. However,
such investment may not exceed 5% of its total assets valued at the lower of
cost or market. Included in that amount, but not to exceed 2% of the value of
the Fund's assets may be warrants which are not listed on the New York or
American Stock Exchange. Warrants acquired by the Fund in units or attached to
securities may be deemed to be without value. In the selection of securities
for investment, the potential for appreciation and future dividends is given
more weight than current dividends.

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Except when in a temporary defensive position, Growth and Income Fund will
maintain at least 25% of its assets invested in securities selected for their
capital growth potential, principally common stocks, and at least another 25%
of its total assets invested in securities which provide income.

With respect to Growth and Income Fund's investment in debt securities,
there is no percentage limitation on the amount of the Fund's assets that may
be invested in securities within any particular rating classification (see
Appendix A on page_____ for a more complete description of the corporate bond
ratings), and the Fund may invest without limit in unrated securities. Growth
and Income Fund may invest in securities rated Baa by Moody's Investors
Service, Inc., or BBB by Standard & Poor's Corporation. Baa securities are
considered to be "medium grade" obligations by Moody's and BBB is the lowest
classification which is still considered an "investment grade" rating by
Standard & Poor's. Bonds rated Baa by Moody's or BBB by Standard & Poor's have
speculative characteristics and may be more susceptible than higher grade bonds
to adverse economic conditions or other adverse circumstances which may result
in a weakened capacity to make principal and interest payments. In addition,
the Fund may invest in higher yielding, longer-term debt securities in the
lower rating (higher risk) categories of the recognized rating services
(commonly referred to as "junk bonds"). These include securities rated Ba or
lower by Moody's or BB or lower by Standard & Poor's and are regarded as
predominantly speculative with respect to the ability of the issuer to meet
principal and interest payments. However, the Investment Manager will not rely
principally on the ratings assigned by the rating services. Because Growth and
Income Fund may invest in lower rated securities and unrated securities of
comparable quality, the achievement of the Fund's investment objective may be
more dependent on the Investment Manager's own credit analysis than would be
the case if investing in higher rated securities.

Growth and Income Fund may purchase securities on a "when issued" or
"delayed delivery basis" in excess of customary settlement periods for the type
of security involved. Securities purchased on a when issued basis are subject
to market fluctuation and no interest or dividends accrue to the Fund prior to
the settlement date. Growth and Income Fund will establish a segregated
account with its custodian bank in which it will maintain cash, cash
equivalents, U.S. government securities or other appropriate liquid, high grade
debt obligations equal in value to commitments for such when issued securities.

From time to time, Growth and Income Fund may purchase government bonds or
commercial notes for temporary defensive purposes. The Fund may also utilize
repurchase agreements on an overnight basis or bank demand accounts, pending
investment in securities or to meet potential redemptions or expenses.

Growth and Income Fund's policy is to diversify its investments among
various industries, but freedom of action is reserved (at times when deemed
appropriate for the attainment of its investment objectives) to invest up to
25% of its assets in one industry. This is a fundamental policy of Growth and
Income Fund which cannot be changed without stockholder approval.

There is no restriction on Growth and Income Fund's portfolio turnover, but
it is the Fund's practice to invest its funds for long-term growth and
secondarily for income. The portfolio turnover rate of Class A shares for the
fiscal year ended September 30, 1994 was 163%. The portfolio turnover rate of
Class A shares for the fiscal years ended September 30, 1993 and 1992 was as
follows: 1993 - 135% and 1992 - 74%. The portfolio turnover rate of Class B
shares of Growth and Income Fund for the period October 19, 1993 to September
30, 1994 was 178%. Portfolio turnover is the percentage of the lower of
security sales or purchases to the average portfolio value and would be 100% if
all securities in the Fund were replaced within a period of one year. The Fund
will usually not trade securities for short-term profits.

SPECIAL RISKS OF HIGH YIELD INVESTING

Because Growth and Income Fund invests in the high yield, high risk debt
securities (commonly referred to as "junk bonds") described above, its share
price and yield are expected to fluctuate more than the share price and yield
of a fund investing in higher quality, shorter-term securities. High yield
bonds may be more susceptible to real or perceived adverse economic and
competitive industry conditions than investment grade bonds. A projection of
an economic downturn, or higher interest rates, for example, could cause a
decline in high yield bond prices because an advent of such events could lessen
the ability of highly leveraged companies to make principal and interest
payments on its debt securities. In addition, the secondary trading market for
high yield bonds may be less liquid than the market for higher grade bonds,
which can adversely affect the ability of Growth and Income Fund to dispose of
its portfolio securities. Bonds for which there is only a "thin" market can be
more difficult to value inasmuch as objective pricing data may be less
available and judgment may play a greater role in the valuation process.

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SECURITY EQUITY FUND

Security Equity Fund currently issues its shares in three series--Equity
Series ("Equity Fund"), Global Series ("Global Fund") and Asset Allocation
Series ("Asset Allocation Fund"). The assets of each Series are held separate
from the assets of the other Series and each Series has an investment objective
which differs from that of the other Series. The investment objective and
policies of each Series are described below. There are risks inherent in the
ownership of any security and there can be no assurance that such investment
objective will be achieved.

Although there is no present intention to do so, the investment objective of
the Funds may be altered by the Board of Directors without the approval of
stockholders of the Fund.

EQUITY FUND

The investment objective of Equity Fund is to provide a medium for
investment in equity securities to complement fixed-obligation types of
investments, such as annuities and life insurance. Emphasis will be placed
upon selection of those securities which in the opinion of the Investment
Manager offer basic value and have the most long-term capital growth potential.
Income potential will be considered in selecting investments, to the extent
doing so is consistent with Equity Fund's investment objective of long-term
capital growth.

Equity Fund ordinarily will have at least 90% of its total assets invested
in a broadly diversified selection of common stocks (which may include ADRs)
and of preferred stocks convertible into common stocks. However, the Fund
reserves the right to invest temporarily in fixed income securities or in cash
and money market instruments. Equity Fund may invest in certificates of
deposit issued by banks or other bank demand accounts, pending investment in
other securities or to meet potential redemptions or expenses. Equity Fund's
investment policy, with emphasis on investing in securities for potential
capital enhancement possibilities, may involve a more rapid portfolio turnover
than other investment companies.

The portfolio turnover rate for Equity Fund, Class A shares, for the fiscal
year ended September 30, 1994 was 79%. The portfolio turnover rate of Class A
shares of Equity Fund for fiscal years ended September 30, 1993 and 1992 was as
follows: 1993 - 95% and 1992 - 83%. The portfolio turnover rate for Class B
shares of Equity Fund for the period October 19, 1993 to September 30, 1994 was
80%. Portfolio turnover is the percentage of the lower of security sales or
purchases to the average portfolio value and would be 100% if all securities in
the Fund were replaced within a period of one year.

It is not the policy of Equity Fund to purchase securities for trading
purposes. Nevertheless, securities may be disposed of without regard to the
length of time held if such sales are deemed advisable in order to meet the
Fund's investment objective. Equity Fund does not intend to purchase
restricted stock.

GLOBAL FUND

The investment objective of Global Fund is to seek long-term growth of
capital primarily through investment in securities of companies domiciled in
foreign countries and the United States. Global Fund will seek to achieve its
objective through investment in a diversified portfolio of securities which
under normal circumstances will consist primarily of various types of common
stocks and equivalents (the following constitute equivalents: convertible debt
securities, warrants and options). The Fund may also invest in preferred
stocks, bonds and other debt obligations, which include money market
instruments of foreign and domestic companies and the U.S. Government and
foreign governments, governmental agencies and international organizations.
For a full description of the Fund's investment objective and policies, see the
prospectus.

In seeking to achieve its investment objective, Global Fund may from time to
time engage in the following investment practices:

SETTLEMENT TRANSACTIONS. Global Fund may, for a fixed amount of United
States dollars, enter into a forward foreign exchange contract for the purchase
or sale of the amount of foreign currency involved in the underlying securities
transactions. In so doing, the Fund will attempt to insulate itself against
possible losses and gains resulting from a change in the relationship between
the United States dollar and the foreign currency during the period between the
date a security is purchased or sold and the date on which payment is made or
received. This process is known as "transaction hedging."

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<PAGE> 68

amount of foreign currency, at a price set at the time of the contract, for
receipt of delivery at a specified date which may be any fixed number of days
in the future.

Such spot and forward foreign exchange transactions may also be utilized to
reduce the risk inherent in fluctuations in the exchange rate between the
United States dollar and the relevant foreign currency when foreign securities
are purchased or sold for settlement beyond customary settlement time (as
described below). Neither type of foreign currency transaction will eliminate
fluctuations in the prices of the Fund's portfolio or securities or prevent
loss if the price of such securities should decline.

PORTFOLIO HEDGING. When, in the opinion of Lexington, it is desirable to
limit or reduce exposure in a foreign currency in order to moderate potential
changes in the United States dollar value of the portfolio, Global Fund may
enter into a forward foreign currency exchange contract by which the United
States dollar value of the underlying foreign portfolio securities can be
approximately matched by an equivalent United States dollar liability. The
Fund may also enter into forward currency exchange contracts to increase its
exposure to a foreign currency that Lexington expects to increase in value
relative to the United States dollar. The Fund will not attempt to hedge all
of its portfolio positions and will enter into such transactions only to the
extent, if any, deemed appropriate by Lexington. Hedging against a decline in
the value of currency does not eliminate fluctuations in the prices of
portfolio securities or prevent losses if the prices of such securities
decline. Global Fund will not enter into forward foreign currency exchange
transactions for speculative purposes. The Fund intends to limit such
transactions to not more than 20% of its total assets.

FORWARD COMMITMENTS. Global Fund may make contracts to purchase securities
for a fixed price at a future date beyond customary settlement time ("forward
commitments") because new issues of securities are typically offered to
investors, such as Global Fund, on that basis. Forward commitments involve a
risk of loss if the value of the security to be purchased declines prior to the
settlement date. This risk is in addition to the risk of decline in value of
the Fund's other assets. Although the Fund will enter into such contracts with
the intention of acquiring the securities, it may dispose of a commitment prior
to settlement if Lexington deems it appropriate to do so. The Fund may realize
short-term profits or losses upon the sale of forward commitments.

COVERED CALL OPTIONS. Global Fund may seek to preserve capital by writing
covered call options on securities which it owns. Such an option on an
underlying security would obligate the Fund to sell, and give the purchaser of
the option the right to buy, that security at a stated exercise price at any
time until a stated expiration date of the option.

REPURCHASE AGREEMENTS. A repurchase agreement is a contract under which
Global Fund would acquire a security for a relatively short period (usually not
more than 7 days) subject to the obligation of the seller to repurchase and the
Fund to resell such security at a fixed time and price (representing the Fund's
cost plus interest). Although the Fund may enter into repurchase agreements
with respect to any portfolio securities which it may acquire consistent with
its investment policies and restrictions, it is the Fund's present intention to
enter into repurchase agreements only with respect to obligations of the United
States Government or its agencies or instrumentalities to meet anticipated
redemptions or pending investment or reinvestment of Fund assets in portfolio
securities. The Fund will enter into repurchase agreements only with member
banks of the Federal Reserve System and with "primary dealers" in United States
Government securities. Repurchase agreements will be fully collateralized
including interest earned thereon during the entire term of the agreement. If
the institution defaults on the repurchase agreement, the Fund will retain
possession of the underlying securities. If bankruptcy proceedings are
commenced with respect to the seller, realization on the collateral by Global
Fund may be delayed or limited and the Fund may incur additional costs. In
such case, the Fund will be subject to risks associated with changes in market
value of the collateral securities. The Fund intends to limit repurchase
agreements to institutions believed by Lexington to present minimal credit
risk. The operating expenses of Global Fund can be expected to be higher than
those of an investment company investing exclusively in United States
securities.

RULE 144A SECURITIES. Global Fund may purchase securities that are
restricted as to disposition under the federal securities laws, provided that
such restricted securities are eligible for resale to qualified institutional
investors pursuant to Rule 144A under the Securities Act of 1933 and subject to
the Fund's investment policy limitation that not more than 10% of its total
assets will be invested in restricted securities. The Investment Manager,
under procedures adopted by the Board of Directors, will determine whether
securities eligible for resale under Rule 144A are liquid or not.

Portfolio turnover rates for Global Fund, Class A shares, for the period
October 5, 1993 to September 30, 1994 was 73%. The portfolio turnover rate for
Global Fund, Class B shares, for the period October 19, 1993 to

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<PAGE> 69

September 30, 1994 was 73%. Portfolio turnover is the percentage of the lower
of security sales or purchases to the average portfolio value and would be 100%
if all securities in the Fund were replaced within a period of one year.

ASSET ALLOCATION FUND

The investment objective of Asset Allocation Fund is to seek high total
return, consisting of capital appreciation and current income. The Fund seeks
this objective by following an asset allocation strategy that contemplates
shifts among a wide range of investment categories and market sectors. The
Fund will invest in the following investment categories: equity securities of
domestic and foreign issuers, including common stocks, preferred stocks,
convertible securities and warrants; debt securities of domestic and foreign
issuers, including mortgage-related and other asset-backed securities;
exchange-traded real estate investment trusts (REITs); equity securities of
companies involved in the exploration, mining, development, production and
distribution of gold ("gold stocks"); and domestic money market instruments.
See "Investment Methods and Risk Factors" in the prospectus for a discussion of
the additional risks associated with investment in foreign securities, and see
the discussion of the risks associated with investment in gold stocks and REITs
below.

Asset Allocation Fund may invest in real estate investment trusts ("REITs").
Investment in REITs involves certain special risks. Equity REITs may be
affected by any changes in the value of the underlying property owned by the
trusts, while mortgage REITs may be affected by the quality of any credit
extended. Further, equity and mortgage REITs are dependent upon management
skill, are not diversified, and are therefore subject to the risk of financing
single or a limited number of projects. Such trusts are also subject to heavy
cash flow dependency, defaults by borrowers, self-liquidation, and the
possibility of failing to qualify for special tax treatment under Subchapter M
of the Internal Revenue Code and to maintain an exemption under the Investment
Company Act of 1940. Finally, certain REITs may be self-liquidating in that a
specific term of existence is provided for in the trust document. Such trusts
run the risk of liquidating at an economically inopportune time.

The Fund is not required to maintain a portion of its assets in each of the
permitted investment categories. The Fund, however, will maintain under normal
circumstances a minimum of 35% of its total assets in equity securities and 10%
in debt securities. The Fund will not invest more than 55% of its total assets
in money market instruments (except for temporary defensive purposes), more
than 80% of its total assets in foreign securities, nor more than 20% of its
total assets in gold stocks.

The Investment Manager receives quantitative investment research from
Meridian Investment Management Corporation ("Meridian"), which research the
Investment Manager uses in strategically allocating the Fund's assets among the
investment categories identified above, primarily on the basis of a
quantitative asset allocation model. With respect to equity securities, the
model analyzes a large number of equity securities based on the following
factors: current earnings, earnings history, long-term earnings projections,
current price, and risk. The Investment Manager then determines (based on the
results of Meridian's analysis) which sectors within an identified investment
category are deemed to be the most attractive relative to other sectors. For
example, the model may indicate that a portion of the Fund's assets should be
invested in the domestic equity category of the market and within this category
that pharmaceutical stocks represent a sector with an attractive total return
potential. Although the Investment Manager anticipates relying on much of the
research provided by Meridian, the Investment Manager has ultimate
responsibility for the selection of the investment categories and the sectors
within those categories.

The Investment Manager identifies sectors of the domestic and international
economy (based on the research provided by Meridian) in which the Fund will
invest and then determines which equity securities to purchase within the
identified sectors. The Investment Manager utilizes certain analytical
research provided by Templeton Quantitative Advisors, Inc. ("Templeton") in
selecting equity securities, including gold stocks, for Asset Allocation Fund.
Templeton analyzes equity securities in the identified sectors and makes
recommendations based on computer models and financial data bases which it
maintains. It is contemplated that the Investment Manager will implement most
of the recommendations made by Templeton regarding equity securities; however,
the

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Investment Manager has ultimate responsibility for all buy and sell decisions
of Asset Allocation Fund and may determine not to execute specific
recommendations made by Templeton.

With respect to the selection of debt securities for the Fund, the asset
allocation model provided by Meridian, analyzes the prices of commodities and
finished goods to arrive at an interest rate projection. The Investment
Manager will determine the portion of the portfolio to allocate to debt
securities and the duration of those securities based on the model's interest
rate projections. Gold stocks and REITs will be analyzed in a manner similar
to that used for equity securities. Money market instruments will be analyzed
based on current returns and the current yield curve. The asset allocation
model and stock selection techniques used by the Fund may evolve over time or
be replaced by other asset allocation models and/or stock selection techniques.
There is no assurance that the model will correctly predict market trends or
enable the Fund to achieve its investment objective.

The debt securities in which the Fund may invest will, at the time of
investment, consist of "investment grade" bonds, which are bonds rated BBB or
better by S&P or Baa or better by Moody's or that are unrated by S&P and
Moody's but considered by the Investment Manager to be of equivalent credit
quality. Securities rated BBB by S&P or Baa by Moody's have speculative
characteristics as described in Appendix A and under "Investment Methods and
Risk Factors" - "Description of Corporate Bond Ratings" in the Prospectus.

Asset Allocation Fund may invest in investment grade mortgage-backed
securities (MBSs), including mortgage pass-through securities and
collateralized mortgage obligations (CMOs). The Fund will not invest in an MBS
if, as a result of such investment, more than 25% of its total assets would be
invested in MBSs, including CMOs and mortgage pass-through securities. For a
discussion of MBSs and the risks associated with such securities, see
"Investment Methods and Risk Factors" - "Mortgage-Backed Securities" in the
Prospectus.

The Fund may write covered call options and purchase put options as
described in further detail under "Investment Methods and Risk Factors" in the
Prospectus.

FUTURES CONTRACTS

TRANSACTIONS IN FUTURES. The Fund may enter into financial futures
contracts including stock index and interest rate futures. Stock index futures
contracts may be used to provide a hedge for a portion of the Fund's portfolio,
as a cash management tool, or as an efficient way for the Investment Manager to
implement either an increase or decrease in portfolio market exposure in
response to changing market conditions. Futures contracts are currently traded
with respect to the S&P 500 Index and other broad stock market indices, such as
the New York Stock Exchange Composite Stock Index and the Value Line Composite
Stock Index. The Fund may, however, purchase or sell futures contracts with
respect to any stock index. Nevertheless, to hedge the Fund's portfolio
successfully, the Investment Manager must sell futures contracts with respect
to indices or subindices whose movements will have a significant correlation
with movements in the prices of all or a portion of the Fund's portfolio
securities.

Interest rate futures contracts may be used as a hedge against changes in
prevailing levels of interest rates in order to establish more definitely the
effective return on securities held or intended to be acquired by the Fund. In
this regard, the Fund could sell interest rate futures as an offset against the
effect of expected increases in interest rates and purchase such futures as an
offset against the effect of expected declines in interest rates.

The Fund will enter into futures contracts which are traded on national
futures exchanges and are standardized as to maturity date and underlying
financial instrument. The principal futures exchanges in the United States are
currently the Board of Trade of the City of Chicago, the Chicago Mercantile
Exchange, New York Futures Exchange, and the Kansas City Board of Trade.
Futures Exchanges and trading are regulated under the Commodity Exchange Act by
the Commodity Futures Trading Commission ("CFTC"). Although techniques other
than the sale and purchase of futures contracts could be used by the Fund,
futures contracts offer an effective and relatively low cost means of
implementing the Fund's objectives in these areas.

REGULATORY LIMITATIONS. The Fund will engage in transactions in futures
contracts only for bona fide hedging, yield enhancement and risk management
purposes, in each case in accordance with rules and regulations of the CFTC.

The Fund will not enter into a futures contract if, with respect to
positions which do not qualify as bona fide hedging under applicable CFTC
rules, the sum of the amounts of initial margin deposits on the Fund's existing
futures would exceed 5% of the net asset value of the Fund's portfolio after
taking into account unrealized profits and unrealized losses on any such
contracts it entered into; provided, however, that in the case of an option
which is in-the-money at the time of purchase, the in-the-money amount may be
excluded in computing such 5%. In instances involving the purchase of futures
contracts by the Fund, an amount of cash, U.S. Government

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securities or other liquid, high-grade debt obligations, equal to the market
value of the stock index futures contracts (less any related margin deposits),
will be deposited in a segregated account with the Fund's custodian to cover
the position, or alternative cover will be employed thereby insuring that the
use of such futures contracts is unleveraged.

As an alternative to bona fide hedging as defined by the CFTC, the Fund may
comply with a different standard established by CFTC rules with respect to
stock index futures contracts purchased by the Fund incidental to the Fund's
activities in the securities markets, under which the value of the assets
underlying such positions will not exceed the sum of (a) cash set aside in an
identifiable manner or short-term U.S. Government or other U.S.
dollar-denominated high-grade short-term debt securities segregated for this
purpose, (b) cash proceeds on existing investments due within thirty days and
(c) accrued profits on the particular futures contract.

In addition, CFTC regulations may impose limitations on the Fund's ability
to engage in certain yield enhancement and risk management strategies. If the
CFTC or other regulatory authorities adopt different (including less stringent)
or additional restrictions, the Fund would comply with such new restrictions.

TRADING IN FUTURES. A futures contract provides for the future sale by one
party and purchase by another party of a specific financial instrument (e.g.,
units of a stock index) for a specified price, date, time and place designated
at the time the contract is made. Brokerage fees are incurred when a futures
contract is bought or sold and margin deposits must be maintained. Entering
into a contract to buy is commonly referred to as buying or purchasing a
contract or holding a long position. Entering into a contract to sell is
commonly referred to as selling a contract or holding a short position.

An example of a stock index futures contract follows. The Standard & Poor's
500 Stock Index is composed of 500 selected common stocks, most of which are
listed on the New York Stock Exchange. The S&P 500 Index assigns relative
weightings to the common stocks included in the Index, and the Index fluctuates
with changes in the market values of those common stocks. In the case of the
S&P 500 Index, contracts are to buy or sell 500 units. Thus, if the value of
the S&P 500 Index were $150, one contract would be worth $75,000 (500 units x
$150). The stock index futures contract specifies that no delivery of the
actual stock making up the index will take place. Instead, settlement in cash
occurs. Over the life of the contract, the gain or loss realized by the Fund
will equal the difference between the purchase (or sale) price of the contract
and the price at which the contract is terminated. For example, if the Fund
enters into a futures contract to buy 500 units of the S&P 500 Index at a
specified future date at a contract price of $150 and the S&P 500 Index is at
$154 on that future date, the Fund will gain $2,000 (500 units x gain of $4).
If the Fund enters into a futures contract to sell 500 units of the stock index
at a specified future date at a contract price of $150 and the S&P 500 Index is
at $152 on that future date, the Fund will lose $1,000 (500 units x loss of
$2).

Unlike when the Fund purchases or sells an equity security, no price would
be paid or received by the Fund upon the purchase or sale of a futures
contract. Upon entering into a futures contract, and to maintain the Fund's
open positions in futures contracts, the Fund would be required to deposit with
its custodian in a segregated account in the name of the futures broker an
amount of cash or U.S. Government securities, suitable money market
instruments, or liquid, high-grade debt obligations known as "initial margin."
The margin required for a particular futures contract is set by the exchange on
which the contract is traded, and may be significantly modified from time to
time by the exchange during the term of the contract. Futures contracts are
customarily purchased and sold on margins that may range upward from less than
5% of the value of the contract being traded.

If the price of an open futures contract changes (by increase in the case of
a sale or by decrease in the case of a purchase) so that the loss on the
futures contract reaches a point at which the margin on deposit does not
satisfy margin requirements, the broker will require an increase in the margin.
However, if the value of a position increases because of favorable price
changes in the futures contract so that the margin deposit exceeds the required
margin, the broker will pay the excess to the Fund.

These subsequent payments, called "variation margin," to and from the
futures broker, are made on a daily basis as the price of the underlying assets
fluctuate making the long and short positions in the futures contract more or
less valuable, a process known as "marking to the market." The Fund expects to
earn interest income on its margin deposits.

Although certain futures contracts, by their terms, require actual future
delivery of and payment for the underlying instruments, in practice most
futures contracts are usually closed out before the delivery date. Closing out
an open futures contract sale or purchase is effected by entering into an
offsetting futures contract purchase or sale, respectively, for the same
aggregate amount of the identical securities and the same delivery date. If
the

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offsetting purchase price is less than the original sale price, the Fund
realizes a gain; if it is more, the Fund realizes a loss. Conversely, if the
offsetting sale price is more than the original purchase price, the Fund
realizes a gain ; if it is less, the Fund realizes a loss. The transaction
costs must also be included in these calculations. There can be no assurance,
however, that the Fund will be able to enter into an offsetting transaction
with respect to a particular futures contract at a particular time. If the
Fund is not able to enter into an offsetting transaction, the Fund will
continue to be required to maintain the margin deposits on the futures
contract.

SPECIAL RISKS OF TRANSACTIONS IN STOCK INDEX FUTURES CONTRACTS

VOLATILITY AND LEVERAGE. The prices of futures contracts are volatile and
are influenced, among other things, by actual and anticipated changes in the
market and interest rates, which in turn are affected by fiscal and monetary
policies and national and international policies and economic events.

Most futures exchanges limit the amount of fluctuation permitted in futures
contract prices during a single trading day. The daily limit establishes the
maximum amount that the price of a futures contract may vary either up or down
from the previous day's settlement price at the end of a trading session. Once
the daily limit has been reached in a particular type of contract, no trades
may be made on that day at a price beyond that limit. The daily limit governs
only price movement during a particular trading day and therefore does not
limit potential losses, because the limit may prevent the liquidation of
unfavorable positions. Futures contract prices have occasionally moved to the
daily limit for several consecutive trading days with little or no trading,
thereby preventing prompt liquidation of futures positions and subjecting some
futures traders to substantial losses.

Because of the low margin deposits required, futures trading involves an
extremely high degree of leverage. As a result, a relatively small price
movement in a futures contract may result in immediate and substantial loss or
gain, to the investor. For example, if at the time of purchase, 10% of the
value of the futures contract is deposited as margin, a subsequent 10% decrease
in the value of the futures contract would result in a total loss of the margin
deposit, before any deduction for the transaction costs, if the account were
then closed out. A 15% decrease would result in a loss equal to 150% of the
original margin deposit, if the contract were closed out. Thus, a purchase or
sale of a futures contract may result in losses in excess of the amount
invested in the futures contract. However, the Fund would presumably have
sustained comparable losses if, instead of the futures contract, it had
invested in the underlying financial instrument and sold it after the decline.
Furthermore, in the case of a futures contract purchase, in order to be certain
that the Fund has sufficient assets to satisfy its obligations under a futures
contract, the Fund earmarks to the futures contract money market instruments
equal in value to the current value of the underlying instrument less the
margin deposit.

LIQUIDITY. The Fund may elect to close some or all of its futures positions
at any time prior to their expiration. The Fund would do so to reduce exposure
represented by long futures positions or increase exposure represented by short
futures positions. The Fund may close its positions by taking opposite
positions which would operate to terminate the Fund's position in the futures
contracts. Final determinations of variation margin would then be made,
additional cash would be required to be paid by or released to the Fund, and
the Fund would realize a loss or a gain.

Stock index futures contracts may be closed out only on the exchange or
board of trade where the contracts were initially traded. For example, stock
index futures contracts can currently be purchased or sold with respect to the
Standard & Poor's 500 Stock Index on the Chicago Mercantile Exchange, the New
York Stock Exchange Composite Stock Index on the New York Futures Exchange and
the Value Line Composite Stock Index on the Kansas City Board of Trade.
Although the Fund intends to purchase or sell futures contracts only on
exchanges or boards of trade where there appears to be an active market, there
is no assurance that a liquid market on an exchange or board of trade will
exist for any particular contract at any particular time. In such event, it
might not be possible to close a futures contract, and in the event of adverse
price movements, the Fund would continue to be required to make daily cash
payments of variation margin. However, in the event futures contracts have
been used to hedge portfolio securities, the Fund would continue to hold
securities subject to the hedge until the futures contracts could be
terminated. In such circumstances, an increase in the price of the securities,
if any, might partially or completely offset losses on the futures contract.
However, as described below, there is no guarantee that the price of the
securities will, in fact, correlate with the price movements in the futures
contract and thus provide an offset to losses on a futures contract.

HEDGING RISK. A decision of whether, when, and how to hedge involves skill
and judgment, and even a well-conceived hedge may be unsuccessful to some
degree because of unexpected market behavior or market trends. There are
several risks in connection with the use by the Fund of futures contracts as a
hedging device. One risk arises because of the imperfect correlation between
movements in the prices of the futures and

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<PAGE> 73

movements in the prices of the underlying instruments which are the subject of
the hedge. The Investment Manager will, however, attempt to reduce this risk
by entering into futures contracts whose movements, in its judgment, will have
a significant correlation with movements in the prices of the Fund's underlying
instruments sought to be hedged.

Successful use of futures contracts by the Fund for hedging purposes is also
subject to the Investment Manager's ability to correctly predict movements in
the direction of the market. It is possible that, when the Fund has sold
futures to hedge its portfolio against a decline in the market, the index,
indices, or instruments underlying futures might advance and the value of the
underlying instruments held in the Fund's portfolio might decline. If this
were to occur, the Fund would lose money on the futures and also would
experience a decline in value in its underlying instruments. However, while
this might occur to a certain degree, the Investment Manager believes that over
time the value of the Fund's portfolio will tend to move in the same direction
as the market indices used to hedge the portfolio. It is also possible that if
the Fund were to hedge against the possibility of a decline in the market
(adversely affecting the underlying instruments held in its portfolio) and
prices instead increased, the Fund would lose part or all of the benefit of
increased value of those underlying instruments that it had hedged, because it
would have offsetting losses in its futures positions. In addition, in such
situations, if the Fund had insufficient cash, it might have to sell underlying
instruments to meet daily variation margin requirements. Such sales of
underlying instruments might be, but would not necessarily be, at increased
prices (which would reflect the rising market). The Fund might have to sell
underlying instruments at a time when it would be disadvantageous to do so.

In addition to the possibility that there might be an imperfect correlation,
or no correlation at all, between price movements in the futures contracts and
the portion of the portfolio being hedged, the price movements of futures
contracts might not correlate perfectly with price movements in the underlying
instruments due to certain market distortions. First, all participants in the
futures market are subject to margin deposit and maintenance requirements.
Rather than meeting additional margin deposit requirements, investors might
close future contracts through offsetting transactions which could distort the
normal relationship between the underlying instruments and futures markets.
Second, the margin requirements in the futures market are less onerous than
margin requirements in the securities markets, and as a result the futures
market might attract more speculators than the securities markets do.
Increased participation by speculators in the futures market might also cause
temporary price distortions. Due to the possibility of price distortion in the
futures market and also because of the imperfect correlation between movements
in the underlying instruments and movements in the prices of futures contracts,
even a correct forecast of general market trends by the Investment Manager
might not result in a successful hedging transaction over a very short time
period.

Portfolio turnover rates are not yet available for Asset Allocation Fund as
this Fund did not begin operations until June 1, 1995.

FEDERAL TAX TREATMENT OF FUTURES CONTRACTS. Generally, the Fund is
required, for federal income tax purposes, to recognize as income for each
taxable year its net unrealized gains and losses on futures contracts as of the
end of the year as well as those actually realized during the year. Gain or
loss recognized with respect to a futures contract will generally be 60%
long-term capital gain or loss and 40% short-term capital gain or loss, without
regard to the holding period of the contract.

Futures contracts which are intended to hedge against a change in the value
of securities may be classified as "mixed straddles," in which case the
recognition of losses may be deferred to a later year. In addition, sales of
such futures contracts on securities or securities indexes may affect the
holding period of the hedged security and, consequently, the nature of the gain
or loss on such security on disposition.

In order for the Fund to continue to qualify for federal income tax
treatment as a regulated investment company, at least 90% of its gross income
for a taxable year must be derived from qualifying income; i.e., dividends,
interest, income derived from loans of securities, and gains from the sale of
securities. Gains realized on the sale or other disposition of securities,
including futures contracts on securities or securities indexes, held for less
than three months, must be limited to less than 30% of the Fund's annual gross
income. In order to avoid realizing excessive gains on securities held less
than three months, the Fund may be required to defer the closing out of futures
contracts beyond the time when it would otherwise be advantageous to do so. It
is anticipated that unrealized gains on futures contracts, which have been open
for less than three months as of the end of the Fund's fiscal year and which
are recognized for tax purposes, will not be considered gains on securities
held less than three months for purposes of the 30% test.

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The Fund will distribute to shareholders annually any net gains which have
been recognized for federal income tax purposes from futures transactions
(including unrealized gains at the end of the Fund's fiscal year). Such
distributions will be combined with distributions of ordinary income or capital
gains realized on the Fund's other investments. Shareholders will be advised
of the nature of the payments.

SECURITY ULTRA FUND

The investment objective of Ultra Fund is to seek capital appreciation.
Investment securities will be selected on the basis of their appreciation
possibilities. Current income will not be a factor in selecting investments
and any such income should be considered incidental.

There can be no assurance that the investment objective of Ultra Fund will
be achieved. Nevertheless, Ultra Fund hopes, by careful selection of
individual securities and by supervision of the investment portfolio, to
increase the value of the Fund's shares.

Stock considered to have growth potential will include securities of newer,
unseasoned companies and may involve greater risks than investments in
companies with demonstrated earning power. At times Ultra Fund may invest in
warrants to purchase (or securities convertible into) common stocks or in other
classes of securities which the Investment Manager believes will contribute to
the attainment of its investment objective. Securities other than common stock
may be held, but Ultra Fund will not normally invest in fixed income securities
except for defensive purposes or to employ uncommitted cash balances. Ultra
Fund expects that it may invest in certificates of deposit issued by banks or
other bank demand accounts, pending investment in other securities or to meet
potential redemptions or expenses. Ultra Fund will not concentrate its
investments in a particular industry or group of industries. As a matter of
operating policy, Ultra Fund may not invest in illiquid securities in excess of
15% of its total assets.

In seeking to obtain capital appreciation, Ultra Fund expects to trade to a
substantial degree in securities for the short term. That is, Ultra Fund will
be engaged essentially in trading operations based on short term market
considerations, as distinct from long-term investments, based upon fundamental
evaluation of securities. Investments for long-term profits are made when such
action is considered to be sound and helpful to Ultra Fund's overall objective.
This investment policy is very speculative and involves substantial risk. An
investor should not consider a purchase of Ultra Fund's shares as equivalent to
a complete investment program. Ultra Fund does not presently purchase letter
or restricted stock.

Since Ultra Fund will trade securities for the short term, the annual
portfolio turnover rate generally may be expected to be greater than 100%.
Portfolio turnover is the percentage of the lower of security sales or
purchases to the average portfolio value and would be 100% if all securities in
Ultra Fund were replaced within a period of one year. A 100% turnover rate is
substantially greater than that of most mutual funds. The portfolio turnover
rate of Class A shares of Ultra Fund for the fiscal year ended September 30,
1994 was 111%. The portfolio turnover rate of Class A shares of Ultra Fund for
the fiscal years ended September 30, 1993 and 1992 was as follows: 1993 - 101%
and 1992 - 142%. The portfolio turnover rate of Class B shares of Ultra Fund
for the period October 19, 1993 to December 30, 1994 was 110%.

Short-term investments increase portfolio turnover and brokerage costs to
Ultra Fund and thus to its stockholders. Moreover, to the extent short-term
transactions result in the realization of net gains in securities held less
than one year, Ultra Fund's stockholders will be taxed on any such gains at
ordinary income tax rates.

Ultra Fund will not make short sales of securities unless at the time of
such sales it owns or has the right to acquire, as a result of the ownership of
convertible or exchangeable securities and without the payment of further
consideration, an equal amount of such securities, and it will retain such
securities so long as it is in a short position as to them. Should such
securities be sold short, the underlying security will be valued at the asked
price. Such short sales will be used by Ultra Fund only for the purpose of
deferring recognition of gain or loss for federal income tax purposes.

The foregoing investment objective and policies of Ultra Fund may be altered
by the Board of Directors without the approval of stockholders.

INVESTMENT POLICY LIMITATIONS

Each of the Funds operates within certain fundamental investment policy
limitations which may not be changed without the approval of the lesser of (i)
67% or more of the voting securities present at a meeting if the holders of
more than 50% of the outstanding voting securities of the Fund are present or
represented by proxy, or (ii) more than 50% of the outstanding voting
securities of the Fund. Investments bound by the following

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limitations are adhered to at the time of investment, but later increases or
decreases in percentages resulting from change in value or net assets will not
result in violation of such limitations.

SECURITY GROWTH AND INCOME FUND'S FUNDAMENTAL POLICIES

Growth and Income Fund's fundamental investment policy limitations are:

1. Not to invest more than 5% of its total assets in the securities of any
one issuer.
2. Not to purchase more than 10% of the outstanding voting securities of any
one issuer.
3. Not to purchase securities for the purpose of exercising control over the
issuers thereof.
4. Not to act as an underwriter, either directly or indirectly.
5. Not to borrow money or securities for any purpose except to the extent
that borrowing up to 5% of the Fund's total assets is permitted for
emergency purposes, provided such borrowing is made on a temporary basis
from commercial banks and is not used for investment purposes.
6. Not to lend money or securities to any person, corporation, securities
dealer, or bank, other than the purchase of publicly distributed debt
securities which are not considered loans, or by entry into repurchase
agreements.
7. Not to buy securities on margin or effect short sales of securities.
8. Not to mortgage, pledge or hypothecate any securities or funds of the
Fund other than as might become necessary to furnish bond to governmental
agencies required for the conduct of the business of the Fund.
9. Not to purchase any security other than securities listed on a national
securities exchange registered under the Securities Exchange Act of 1934,
or actively traded over-the-counter.
10. Not to invest in companies having a record of less than three years'
continuous operation, which may include the operations of predecessor
companies.
11. Not to invest in the securities of an issuer if the officers and
directors of the Fund, Underwriter or Manager own more than 1/2 of 1% of
such securities, or if all such persons together own more than 5% of such
securities.
12. Not to invest in the securities of other investment companies except in
the open market at ordinary broker's commissions.
13. Not to allow officers or directors of the Fund, Underwriter or Manager to
purchase shares of the Fund except for investment at current net asset
value.
14. Not to own, buy or sell real estate, commodities or commodity contracts.
15. Not to invest in puts, calls, straddles, spreads or any combination
thereof.
16. Not to invest in limited partnerships or similar interests in oil, gas,
mineral leases, and other mineral exploration development programs;
provided, however, that the Fund may invest in the securities of other
corporations whose activities include such exploration and development.

Although Investment Limitation 16 is intended to apply only to certain oil,
gas and other mineral exploration development programs and not to securities
traded on national securities exchanges, the Board of Directors reviewed and
considered in 1986 the scope of this limitation. Prior to that time, the Fund
had made an investment, which incurred a loss, in an oil and gas company which
was organized as a limited partnership with its securities traded on the New
York Stock Exchange. The directors concluded that the limitation was not
intended to apply to such investments, but in order to avoid possible future
questions regarding the permissibility of such investments, have determined
that Growth and Income Fund will not purchase limited partnership securities of
any type in the future.

SECURITY EQUITY FUND'S FUNDAMENTAL POLICIES

Security Equity Fund's fundamental policy limitations, which are applicable
to each of Equity Fund, Global Fund and Asset Allocation Fund, are:

1. Not to invest more than 5% of its total assets in the securities of any
one issuer; provided, however, that for Asset Allocation Fund this
limitation applies only with respect to 75% of its total assets.

2. Not to purchase more than 10% of the outstanding voting securities of any
one issuer; provided, however, that for Asset Allocation Fund this
limitation applies only with respect to 75% of its total assets.

3. Not to purchase securities for the purpose of exercising control over the
issuers thereof.

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4. Not to underwrite securities of other issuers, provided that this policy
shall not be construed to prevent or limit in any manner the right of the
Fund to purchase securities for investment purposes.

5. Not to borrow money or securities for any purpose except to the extent
that borrowing up to 10% of the Fund's total assets is permitted for
emergency purposes. With respect to Equity Fund and Global Fund, any
such borrowings will be made on a temporary basis from banks and will not
be made for investment purposes; provided, however, that this investment
limitation does not apply to Asset Allocation Fund, which may borrow up
to the limit allowed by applicable law. It is not expected that such
borrowings would ever exceed 5% of total assets of Equity Fund or Global
Fund. The Funds may also obtain such short-term credits as are necessary
for the clearance of portfolio transactions.

6. Not to make loans to other persons other than the purchase of publicly
distributed debt securities which are not considered loans, or by entry
into repurchase agreements; provided, however, that this investment
limitation does not apply to Asset Allocation Fund.

7. Not to buy securities on margin or effect short sales of securities;
provided, however, that Asset Allocation Fund may make margin deposits in
connection with transactions in options, futures, and options on futures.

8. Not to issue senior securities; provided, however, that Asset Allocation
Fund may issue senior securities in compliance with the Investment
Company Act of 1940.

9. Not to invest in the securities of other investment companies; provided,
however, that this investment limitation does not apply to Asset
Allocation Fund.

10. Not to invest in companies having a record of less than three years'
continuous operation, which may include the operations of predecessor
companies; provided, however, that this investment limitation does not
apply to Asset Allocation Fund.

11. Not to invest in the securities of an issuer if the officers and
directors of the Fund, the Underwriter or Investment Manager own more
than 1/2 of 1% of such securities, or if all such persons together own
more than 5% of such securities.
12. Not to allow officers or directors of the Fund, the Underwriter or
Investment Manager to purchase shares of the Fund except for investment
at current net asset value.

13. Not to invest more than 25% of the Fund's total assets in a particular
industry; provided, however, that this investment limitation does not
apply to Asset Allocation Fund.

14. Not to own, buy or sell real estate, commodities or commodity contracts;
provided, however, that Asset Allocation Fund may enter into forward
currency contracts and forward commitments, and transactions in futures,
options, and options on futures. (This policy shall not prevent any of
the Funds from investing in securities or other instruments backed by
real estate or in securities of companies engaged in the real estate
business.)

15. Not to invest in warrants unless acquired as a unit or attached to other
securities; provided, however, that this investment limitation does not
apply to Asset Allocation Fund.

16. Not to invest more than 10% of its total assets in restricted securities;
provided, however, that this investment limitation does not apply to
Asset Allocation Fund. (Restricted securities are those securities for
which an active and substantial market does not exist at the time of
purchase or upon subsequent valuation, or for which there are legal or
contractual restrictions as to disposition.)

17. Not to invest more than 2% of its total assets in puts, calls, straddles,
spreads, or any combination thereof; provided, however, that this
investment limitation does not apply to Asset Allocation Fund. (With
respect to Equity Fund and Global Fund, there is no present intention to
invest any of the Fund's assets in puts, calls, straddles, spreads, or
any combination thereof.)

18. Not to invest in limited partnerships or similar interests in oil, gas,
mineral leases or other mineral exploration development programs;
provided, however, that the Fund may invest in the securities of other
corporations whose activities include such exploration and development.

SECURITY ULTRA FUND'S FUNDAMENTAL POLICIES

Ultra Fund's fundamental policy limitations are:

1. Not to invest more than 5% of its total assets in the securities of any
one issuer (other than the United States of America).
2. Not to purchase more than 10% of the outstanding voting securities (or of
any class of outstanding securities) of any one issuer.

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3. Not to purchase securities for the purpose of exercising control over the
issuers thereof.
4. Not to underwrite securities of other issuers.
5. Not to purchase restricted securities.
6. Not to pledge any portion of its assets.
7. Not to make loans to other persons other than the purchase of publicly
distributed debt securities which are not considered loans, or by entry
into repurchase agreements.
8. Not to buy securities on margin but it may obtain such short-term credits
as may be necessary for the clearance of purchases and sales of
securities.
9. Not to issue senior securities, except that it may borrow money from
banks for temporary or emergency purposes in an amount up to 5% of the
Fund's total assets, provided that the Fund will not purchase portfolio
securities at any time it has outstanding borrowings.
10. Not to invest in the securities of other investment companies.
11. Not to make short sales of securities unless at the time it owns an equal
amount of such securities, or by virtue of ownership of convertible or
exchangeable securities, it has the right to obtain through the
conversion or exchange of such other securities an equal amount of
securities sold short.
12. Not to invest more than 25% of the Fund's total assets in a particular
industry.
13. Not to own, buy or sell real estate, commodities or commodity contracts.
14. Not to invest more than 5% of the value of the Fund's net assets in
warrants, valued at the lower of cost or market. Included within that
amount (but not to exceed 2% of the value of the Fund's net assets) may
be warrants which are not listed on the New York or American Stock
Exchanges. Warrants acquired by the Fund in units or attached to
securities may be deemed to be without value.
15. Not to invest more than 5% of its total assets in any issuer or issuers
having a record of less than three years continuous operation, which may
include the operations of predecessor companies.
16. Not to invest in puts, calls, straddles, spreads, or any combination
thereof.
17. Not to invest in limited partnerships or similar interests in oil, gas,
mineral leases, and other mineral exploration or development programs;
provided, however, that the Fund may invest in the securities of other
corporations whose activities include such exploration and development.

OFFICERS AND DIRECTORS

The officers and directors of the Funds and their principal occupations for
at least the last five years are as follows. Unless otherwise noted, the
address of each officer and director is 700 Harrison Street, Topeka, Kansas
66636-0001.

<TABLE>
<CAPTION>
NAME, ADDRESS AND POSITIONS HELD
WITH THE FUNDS PRINCIPAL OCCUPATIONS DURING PAST FIVE YEARS
<S> <C>
JEFFREY B. PANTAGES,* Director President, Chief Investment Officer and Director, Security Management Company; Senior
Vice President and Chief Investment Officer, Security Benefit Life Insurance Company.
Prior to April 1992, Managing Director, Capital Management Group of The Prudential

JOHN D. CLELAND,* President Senior Vice President and Director, Security Management Company
and Director

WILLIS A. ANTON, JR., Director Partner, Classic Awning & Design. Prior to October 1991, President, Classic Awning &
3616 Yorkway Design. Prior to July 1989, Vice President, Kansas Canvas Products
Topeka, Kansas 66604

DONALD A. CHUBB, JR., Director President, Neon Tube Light, Inc.
605 SE 8th Street
Topeka, Kansas 66607

JACK H. HAMILTON,** Director Chief Executive Officer, CGF Industries, Inc. (Multi-industry holding company)
6135 SW 34th Terrace
Topeka, Kansas 66614

DONALD L. HARDESTY, Director President, Central Research Corporation
900 Bank IV Tower
Topeka, Kansas 66603
</TABLE>

14
<PAGE> 78

<TABLE>
<CAPTION>
NAME, ADDRESS AND POSITIONS HELD
WITH THE FUNDS PRINCIPAL OCCUPATIONS DURING PAST FIVE YEARS
<S> <C>
PENNY A. LUMPKIN,** Director Vice President, Palmer News, Inc. Prior to October 1991, Secretary and Director,
3616 Canterbury Town Road Palmer Companies, Inc. (Wholesale Periodicals)
Topeka, Kansas 66610

MARK L. MORRIS, JR.,** Director President, Mark Morris Associates (Veterinary Research and Education)
5500 SW 7th Street
Topeka, Kansas 66606

HAROLD G. WORSWICK,** Director Chairman of the Board, Emeritus, Wolfe's Camera Shops, Inc. Prior to October 1991,
3101 Burlingame Road Chairman of the Board, Wolfe's Camera Shops, Inc.
Topeka, Kansas 66611

JAMES R. SCHMANK, Vice President Senior Vice President, Treasurer, Chief Fiscal Officer and Director, Security
and Treasurer Management Company; Vice President, Security Benefit Group, Inc.

TERRY A. MILBERGER, Vice President Vice President and Senior Portfolio Manager, Security Management Company
(Equity Fund only)

MARK E. YOUNG, Vice President Vice President -- Operations, Security Management Company

AMY J. LEE, Secretary Assistant Counsel, Security Benefit Group, Inc.

BRENDA M. LUTHI, Assistant Vice President, Assistant Treasurer and Assistant Secretary, Security
Assistant Treasurer and Management Company
Assistant Secretary
</TABLE>

* These directors are deemed to be "interested persons" of the Funds under
the Investment Company Act of 1940, as amended, by reason of their
positions with the Funds' Investment Manager and/or the parent of the
Investment Manager.

** These directors serve on the Funds' joint audit committee, the purpose of
which is to meet with the independent auditors, to review the work of the
auditors, and to oversee the handling by Security Management Company of
the accounting functions for the Funds.

The directors and officers of the Funds hold identical offices in the other
Funds managed by the Investment Manager, except Mr. Milberger, who is also Vice
President of SBL Fund. (See the table under "Investment Management," on
page_____, for positions held by such persons with the Investment Manager.)
Mr. Young and Ms. Lee hold identical offices for the Funds' underwriter,
Security Distributors, Inc., and Messrs. Cleland and Schmank serve as Vice
Presidents and Directors, while Ms. Luthi serves as Treasurer of the
underwriter.

REMUNERATION OF DIRECTORS AND OTHERS

The Funds' directors, except those directors who are "interested persons" of
the Funds, receive from each of Security Growth and Income Fund, Security
Equity Fund and Security Ultra Fund an annual retainer of $1,042 and a fee of
$100 per meeting, plus reasonable travel costs, for each meeting of the board
attended. In addition, certain directors who are members of the Funds' joint
audit committee receive a fee of $100 per hour with a minimum fee of $200 and
reasonable travel costs for each meeting of the Funds' audit committee
attended. Such fees and travel costs are paid by the Investment Manager for
each Fund, except Asset Allocation Fund, pursuant to its Investment Management
and Services Agreements with the Funds which provide that the Investment
Manager will bear all Fund expenses except for its fee and the expenses of
brokerage commissions, interest, taxes and extraordinary expenses approved by
the Board of Directors. Asset Allocation Fund pays its share of directors'
fees and travel costs. (See page ____, "Investment Management.") Such fees
and travel costs for Growth and Income Fund, Equity Fund, Global Fund and Ultra
Fund, respectively, aggregated $17,533, $9,880, $299, and $8,550, for the
fiscal year ended September 30, 1994. No other compensation was received from
the Funds by any officer or director. The Investment Manager compensates its
officers and directors who may also serve as officers or directors of the
Funds. On February 28, 1995, the Funds' officers and directors (as a group)
beneficially owned 13,465, 100,052 and 85,582 of Class A shares of Growth and
Income Fund, Equity Fund and Ultra Fund, respectively, which represented
approximately .149%, .284% and 1.076% of the total outstanding Class A shares
of each Fund on that date.

15
<PAGE> 79

HOW TO PURCHASE SHARES

Investors may purchase shares of the Funds through authorized dealers who
are members of the National Association of Securities Dealers, Inc. In
addition, banks and other financial institutions may make shares of the Funds
available to their customers. (Banks and other financial institutions that
make shares of the Funds available to their customers in Texas must be
registered with that state as securities dealers.) The minimum initial
investment is $100. The minimum subsequent investment is $100 unless made
through an Accumulation Plan which allows for subsequent investments of $20.
(See "Accumulation Plan," page ____.) An application may be obtained from the
Investment Manager.

As a convenience to investors and to save operating expenses, the Funds do
not issue certificates for full shares except upon written request by the
investor or his or her investment dealer. Certificates will be issued at no
cost to the stockholder. No certificates will be issued for fractional shares
and fractional shares may be withdrawn only by redemption for cash.

Orders for the purchase of shares of the Funds will be confirmed at an
offering price equal to the net asset value per share next determined after
receipt of the order in proper form by Security Distributors, Inc. (the
"Distributor") (generally as of the close of the Exchange on that day) plus the
sales charge in the case of Class A shares. Orders received by dealers or
other firms prior to the close of the Exchange and received by the Distributor
prior to the close of its business day will be confirmed at the offering price
effective as of the close of the Exchange on that day. Dealers and other
financial services firms are obligated to transmit orders promptly.

The Funds reserve the right to withdraw all or any part of the offering made
by this prospectus and to reject purchase orders.

ALTERNATIVE PURCHASE OPTIONS

The Funds offer two classes of shares:

CLASS A SHARES -- FRONT-END LOAD OPTION. Class A shares are sold with a
sales charge at the time of purchase. Class A shares are not subject to a
sales charge when they are redeemed (except that shares sold in an amount of
$1,000,000 or more without a front-end sales charge will be subject to a
contingent deferred sales charge for one year). See Appendix B for a
discussion of "Rights of Accumulation" and "Statement of Intention," which
options may serve to reduce the front-end sales charge.

CLASS B SHARES -- BACK-END LOAD OPTION. Class B shares are sold without a
sales charge at the time of purchase, but are subject to a deferred sales
charge if they are redeemed within five years of the date of purchase. Class B
shares will automatically convert to Class A shares at the end of eight years
after purchase.

The decision as to which class is more beneficial to an investor depends on
the amount and intended length of the investment. Investors who would rather
pay the entire cost of distribution at the time of investment, rather than
spreading such cost over time, might consider Class A shares. Other investors
might consider Class B shares, in which case 100% of the purchase price is
invested immediately, depending on the amount of the purchase and the intended
length of investment. The Funds will not normally accept any purchase of Class
B shares in the amount of $500,000 or more.

Dealers or others may receive different levels of compensation depending on
which class of shares they sell.

CLASS A SHARES

Class A shares are offered at net asset value plus an initial sales charge
as follows:

<TABLE>
<CAPTION>
SALES CHARGE
--------------------------------------------------------------
AMOUNT OF PURCHASE PERCENTAGE OF PERCENTAGE OF NET PERCENTAGE REALLOWABLE
AT OFFERING PRICE OFFERING PRICE AMOUNT INVESTED TO DEALERS
- ----------------- -------------- ----------------- ----------------------
<S> <C> <C> <C>
Less than $50,000 5.75% 6.10% 5.00%
$50,000 but less than $100,000 4.75 4.99 4.00
$100, 000 but less than $250,000 3.75 3.90 3.00
$250,000 but less than $500,000 2.75 2.83 2.25
$500,000 but less than $1,000,000 2.00 2.04 1.75
$1,000,000 and over None None (See below)
</TABLE>

16
<PAGE> 80

The Underwriter will pay a commission to dealers on purchases of $1,000,000
or more as follows: 1.00% on sales up to $5,000,000, plus .50% on sales of
$5,000,000 or more up to $10,000,000, and .10% on any amount of $10,000,000 or
more.

The Investment Manager may, at its expense, pay a service fee to dealers who
satisfy certain criteria established by the Investment Manager from time to
time relating to the volume of their sales of Class A shares of the Funds and
certain other Security Funds during prior periods and certain other factors,
including providing to their clients who are stockholders of the Funds certain
services, which include assisting in maintaining records, processing purchase
and redemption requests and establishing shareholder accounts, assisting
shareholders in changing account options or enrolling in specific plans, and
providing shareholders with information regarding the Funds and related
developments. Service fees are paid quarterly and may be discontinued at any
time.

CLASS B SHARES

Class B shares are offered at net asset value, without an initial sales
charge. With certain exceptions, the Funds may impose a deferred sales charge
on shares redeemed within five years of the date of purchase. No deferred
sales charge is imposed on amounts redeemed thereafter. If imposed, the
deferred sales charge is deducted from the redemption proceeds otherwise
payable to you. The deferred sales charge is retained by the Distributor.

Whether a contingent deferred sales charge is imposed and the amount of the
charge will depend on the number of years since the investor made a purchase
payment from which an amount is being redeemed, according to the following
schedule:

<TABLE>
<CAPTION>
Year Since Purchase Payment Was Made Contingent Deferred Sales Charge
------------------------------------ --------------------------------
<S> <C>
First 5%
Second 4%
Third 3%
Fourth 3%
Fifth 2%
Sixth and Following 0%
</TABLE>

Class B shares (except shares purchased through the reinvestment of
dividends and other distributions paid with respect to Class B shares) will
automatically convert, on the eighth anniversary of the date such shares were
purchased, to Class A shares which are subject to a lower distribution fee.
This automatic conversion of Class B shares will take place without imposition
of a front-end sales charge or exchange fee. (Conversion of Class B shares
represented by stock certificates will require the return of the stock
certificates to the Investment Manager.) All shares purchased through
reinvestment of dividends and other distributions paid with respect to Class B
shares ("reinvestment shares") will be considered to be held in a separate
subaccount. Each time any Class B shares (other than those held in the
subaccount) convert to Class A shares, a pro rata portion of the reinvestment
shares held in the subaccount will also convert to Class A shares. Class B
shares so converted will no longer be subject to the higher expenses borne by
Class B shares. Because the net asset value per share of the Class A shares
may be higher or lower than that of the Class B shares at the time of
conversion, although the dollar value will be the same, a shareholder may
receive more or less Class A shares than the number of Class B shares
converted. Under current law, it is the Funds' opinion that such a conversion
will not constitute a taxable event under federal income tax law. In the event
that this ceases to be the case, the Board of Directors will consider what
action, if any, is appropriate and in the best interests of the Class B
stockholders.

CLASS B DISTRIBUTION PLAN

Each Fund bears some of the costs of selling its Class B shares under a
Distribution Plan adopted with respect to its Class B shares ("Class B
Distribution Plan") pursuant to Rule 12b-1 under the Investment Company Act of
1940 ("1940 Act"). This Plan provides for payments at an annual rate of 1.00%
of the average daily net asset value of Class B shares. Amounts paid by the
Funds are currently used to pay dealers and other firms that make Class B
shares available to their customers (1) a commission at the time of purchase
normally equal to 4.00% of the value of each share sold and (2) a service fee
payable for the first year, initially, and for each year thereafter, quarterly,
in an amount equal to .25% annually of the average daily net asset value of
Class B shares sold by such dealers and other firms and remaining outstanding
on the books of the Funds.

17
<PAGE> 81

Rules of the National Association of Securities Dealers, Inc. ("NASD") limit
the aggregate amount that the Funds may pay annually in distribution costs for
the sale of its Class B shares to 6.25% of gross sales of Class B shares since
the inception of the Distribution Plan, plus interest at the prime rate plus 1%
on such amount (less any contingent deferred sales charges paid by Class B
shareholders to the Distributor). The Distributor intends, but is not
obligated, to continue to pay or accrue distribution charges incurred in
connection with the Class B Distribution Plan which exceed current annual
payments permitted to be received by the Distributor from the Funds. The
Distributor intends to seek full payment of such charges from the Fund
(together with annual interest thereon at the prime rate plus 1%) at such time
in the future as, and to the extent that, payment thereof by the Funds would be
within permitted limits.

Each Fund's Class B Distribution Plan may be terminated at any time by vote
of its directors who are not interested persons of the Fund as defined in the
1940 Act or by vote of a majority of the outstanding Class B shares. In the
event the Class B Distribution Plan is terminated by the Class B stockholders
or the Funds' Board of Directors, the payments made to the Distributor pursuant
to the Plan up to that time would be retained by the Distributor. Any expenses
incurred by the Distributor in excess of those payments would be absorbed by
the Distributor. The Funds make no payments in connection with the sales of
their shares other than the distribution fee paid to the Distributor.

CALCULATION AND WAIVER OF CONTINGENT DEFERRED SALES CHARGES

Any contingent deferred sales charge imposed upon redemption of Class A
shares (purchased in amounts of $1,000,000 or more) and Class B shares is a
percentage of the lesser of (1) the net asset value of the shares redeemed or
(2) the net cost of such shares. No contingent deferred sales charge is
imposed upon redemption of amounts derived from (1) increases in the value
above the net cost of such shares due to increases in the net asset value per
share of the Fund; (2) shares acquired through reinvestment of income dividends
and capital gain distributions; or (3) Class A shares (purchased in amounts of
$1,000,000 or more) held for more than one year or Class B shares held for more
than five years. Upon request for redemption, shares not subject to the
contingent deferred sales charge will be redeemed first. Thereafter, shares
held the longest will be the first to be redeemed.

The contingent deferred sales charge is waived: (1) following the death of
a stockholder if redemption is made within one year after death; (2) upon the
disability (as defined in section 72(m)(7) of the Internal Revenue Code) of a
stockholder prior to age 65 if redemption is made within one year after the
disability, provided such disability occurred after the stockholder opened the
account; (3) in connection with required minimum distributions in the case of
an IRA, SAR-SEP or Keogh or any other retirement plan qualified under Section
401(a), 401(k) or 403(b) of the Code; and (4) in the case of distributions from
retirement plans qualified under Section 401(a) or 401(k) of the Internal
Revenue Code due to (i) returns of excess contributions to the plan, (ii)
retirement of a participant in the plan, (iii) a loan from the plan (repayment
of loans, however, will constitute new sales for purposes of assessing the
CDSC), (iv) "financial hardship" of a participant in the plan, as that term is
defined in Treasury Regulation Section 1.401(k)-1(d)(2), as amended from time
to time, (v) termination of employment of a participant in the plan, (vi) any
other permissible withdrawal under the terms of the plan. The contingent
deferred sales charge will also be waived in the case of redemptions of shares
of the Funds pursuant to a systematic withdrawal program. (See "Systematic
Withdrawal Program," page_____.)

ARRANGEMENTS WITH BROKER-DEALERS AND OTHERS

The Investment Manager or Distributor, from time to time, will provide
promotional incentives or pay a bonus, including reallowance of up to the
entire sales charge, to certain dealers whose representatives have sold or are
expected to sell significant amounts of the Funds and/or certain other funds
managed by the Investment Manager. Such promotional incentives will include
payment for attendance (including travel and lodging expenses) by qualifying
registered representatives (and members of their families) at sales seminars at
luxury resorts within or without the United States. The Distributor may also
provide financial assistance to dealers in connection with advertising. No
compensation will be offered to the extent it is prohibited by the laws of any
state or self-regulatory agency, such as the National Association of Securities
Dealers, Inc. ("NASD"). A dealer to whom substantially the entire sales charge
of Class A shares is reallowed may be deemed to be an "underwriter" under
federal securities laws.

The Distributor also may pay banks and other financial services firms that
facilitate transactions in shares of the Funds for their clients a transaction
fee up to the level of the payments made allowable to dealers for the sale of
such shares as described above. Banks currently are prohibited under the
Glass-Steagall Act from providing

18
<PAGE> 82

certain underwriting or distribution services. If banking firms were
prohibited from acting in any capacity or providing any of the described
services, the Fund's Board of Directors would consider what action, if any,
would be appropriate.

The Investment Manager or Distributor also may pay a marketing allowance to
dealers who meet certain eligibility criteria. This allowance is paid with
reference to new sales of Fund shares in a calendar year and may be
discontinued at any time. To be eligible for this allowance in any given year,
the dealer must sell a minimum of $5,000,000 of such shares during that year.
For aggregate sales in excess of $5,000,000 but less than $10,000,000 the
marketing allowance will range from 0.15% to 0.60%. For the calendar year
ended December 31, 1994, Legend Equities Corporation and Financial Network
Investment Corporation received marketing allowances in the amounts of $29,383
and $2,991, respectively.

PURCHASES AT NET ASSET VALUE

Class A shares of the Funds may be purchased at net asset value by (1)
directors, officers and employees of the Funds, the Funds' Investment Manager
or Distributor; directors, officers and employees of Security Benefit Life
Insurance Company and its subsidiaries; agents licensed with Security Benefit
Life Insurance Company; spouses or minor children of any such agents; as well
as the following relatives of any such directors, officers and employees (and
their spouses): spouses, grandparents, parents, children, grandchildren,
siblings, nieces and nephews; (2) any trust, pension, profit sharing or other
benefit plan established by any of the foregoing corporations for persons
described above; (3) retirement plans where third party administrators of such
plans have entered into certain arrangements with the Distributor or its
affiliates provided that no commission is paid to dealers; and (4) officers,
directors, partners or registered representatives (and their spouses and minor
children) of broker-dealers who have a selling agreement with the Distributor.
Such sales are made upon the written assurance of the purchaser that the
purchase is made for investment purposes and that the securities will not be
transferred or resold except through redemption or repurchase by or on behalf
of the Fund.

Associated personnel of broker-dealers and life agents must obtain a special
application from their employer or from the Distributor in order to qualify for
such purchases.

Class A shares of the Funds may also be purchased at net asset value when
the purchase is made on the recommendation of (i) a registered investment
adviser, trustee or financial intermediary who has authority to make investment
decisions on behalf of the investor; or (ii) a certified financial planner or
registered broker-dealer who either charges periodic fees to its customers for
financial planning, investment advisory or asset management services, or
provides such services in connection with the establishment of an investment
account for which a comprehensive "wrap fee" is imposed. The Distributor must
be notified when a purchase is made that qualifies under these provisions.

A stockholder of Equity Fund who formerly invested in the Bondstock
Investment Plans or Life Insurance Investors Investment Plans received Class A
shares of Equity Fund in liquidation of the Plans. Such a stockholder may
purchase Class A shares of Equity Fund at net asset value provided that such
stockholder maintains his or her Equity Fund account.

ACCUMULATION PLAN

Investors may purchase shares on a periodic basis under an Accumulation Plan
which provides for an initial investment of $100 minimum and subsequent
investments of $20 minimum at any time. An Accumulation Plan is a voluntary
program, involving no obligation to make periodic investments, and is
terminable at will. Payments are made by sending a check to the Distributor
who (acting as an agent for the dealer) will purchase whole and fractional
shares of the Fund as of the close of business on the day such payment is
received. A confirmation and statement of account will be sent to the investor
following each investment. Certificates for whole shares will be issued upon
request. No certificates will be issued for fractional shares which may be
withdrawn only by redemption for cash. Investors may choose to use
"Secur-O-Matic" (automatic bank draft) to make their Fund purchases. There is
no additional charge for using Secur-O-Matic. An application may be obtained
from the Funds.

19
<PAGE> 83

SYSTEMATIC WITHDRAWAL PROGRAM

A Systematic Withdrawal Program may be established by stockholders who wish
to receive regular monthly, quarterly, semiannual or annual payments of $25 or
more. A stockholder may elect a payment that is a specified percentage of the
initial or current account value or a specified dollar amount. The Program may
also be based upon the liquidation of a fixed or variable number of shares
provided that the amount withdrawn monthly is at least $25. However, the Funds
do not recommend this (or any other amount) as an appropriate monthly
withdrawal. Shares with a current aggregate offering price of $5,000 or more
must be deposited with the Investment Manager acting as agent for the
stockholder under the Program. There is no service charge on the Program.

Sufficient shares will be liquidated at net asset value to meet the
specified withdrawals. Liquidation of shares may deplete the investment,
particularly in the event of a market decline. Payments cannot be considered
as actual yield or income since part of such payments is a return of capital.
Such withdrawals constitute a taxable event to the stockholder. The
maintenance of a Withdrawal Program concurrently with purchases of additional
shares of the Fund would be disadvantageous because of the sales commission
payable in respect to such purchases. During the withdrawal period, no
payments will be accepted under an Accumulation Plan. Income dividends and
capital gains distributions are automatically reinvested at net asset value.
If an investor has an Accumulation Plan in effect, it must be terminated before
a Systematic Withdrawal Program may be initiated.

A stockholder may establish a Systematic Withdrawal Program with respect to
Class B shares without the imposition of any applicable contingent deferred
sales charge, provided that such withdrawals do not in any 12-month period,
beginning on the date the Program is established, exceed 10% of the value of
the account on that date ("Free Systematic Withdrawals"). Free Systematic
Withdrawals are not available if a Program established with respect to Class B
shares provides for withdrawals in excess of 10% of the value of the account in
any Program year and, as a result, all withdrawals under such a Program are
subject to any applicable contingent deferred sales charge. Free Systematic
Withdrawals will be made first by redeeming those shares that are not subject
to the contingent deferred sales charge and then by redeeming shares held the
longest. The contingent deferred sales charge applicable to a redemption of
Class B shares requested while Free Systematic Withdrawals are being made will
be calculated as described under "Calculation and Waiver of Contingent Deferred
Sales Charges," page _______.

The stockholder receives confirmation of each transaction showing the source
of the payment and the share balance remaining in the Program. A Program may
be terminated on written notice by the stockholder or by the Fund, and it will
terminate automatically if all shares are liquidated or withdrawn from the
account.

INVESTMENT MANAGEMENT

Security Management Company (the "Investment Manager"), 700 SW Harrison
Street, Topeka, Kansas, has served as investment adviser to Security Growth and
Income Fund (formerly Security Investment Fund), Security Equity Fund, and
Security Ultra Fund, respectively, since April 1, 1964, January 1, 1964, and
April 22, 1965. The Investment Manager also acts as investment adviser to
Security Income Fund, Security Cash Fund, SBL Fund, and Security Tax-Exempt
Fund. Security Benefit Group, Inc. ("SBG") owns all of the stock of the
Investment Manager. SBG is an insurance and financial services holding company
wholly-owned by Security Benefit Life Insurance Company, 700 SW Harrison
Street, Topeka, Kansas 66636-0001. Security Benefit Life, a mutual life
insurance company with over $13 billion of insurance in force, is incorporated
under the laws of Kansas.

The Investment Manager serves as investment adviser to Security Growth and
Income Fund, Security Equity Fund and Security Ultra Fund, respectively, under
Investment Management and Services Agreements, which were approved by the
shareholders of the Funds on March 29, 1989, December 8, 1988 and December 30,
1988, and which became effective on March 31, 1989, January 31, 1989 and
February 28, 1989. Security Equity Fund's Agreement was amended by its Board
of Directors at a regular meeting held on July 23, 1993, to provide for the
Investment Manager to serve as investment adviser to Global Fund and on April
3, 1995, to provide for the Investment Manager to serve as investment adviser
to Asset Allocation Fund. The Agreements were last renewed by the Funds' Board
of Directors at a regular meeting held on October 21, 1994.

Pursuant to the Investment Management and Services Agreements, the
Investment Manager furnishes investment advisory, statistical and research
services to the Funds, supervises and arranges for the purchase and sale of
securities on behalf of the Funds, and provides for the compilation and
maintenance of records pertaining to the investment advisory function.

20
<PAGE> 84

The Investment Manager has retained Lexington Management Corporation
("Lexington") to furnish certain advisory services to Global Fund pursuant to a
Sub-Advisory Agreement, dated October 1, 1993. Pursuant to this agreement,
Lexington furnishes investment advisory, statistical and research facilities,
supervises and arranges for the purchase and sale of securities on behalf of
Global Fund and provides for the compilation and maintenance of records
pertaining to such investment advisory services, subject to the control and
supervision of the Board of Directors of Security Equity Fund and the
Investment Manager. For such services, the Investment Manager pays Lexington
an amount equal to .50% of the average net assets of Global Fund, computed on a
daily basis and payable monthly. The Sub-Advisory Agreement may be terminated
without penalty at any time by either party on 60 days' written notice and is
automatically terminated in the event of its assignment or in the event that
the Investment Advisory Contract between the Investment Manager and the Fund is
terminated, assigned or not renewed.

Lexington is a wholly-owned subsidiary of Piedmont Management Company Inc.,
a diversified financial services holding company which is organized as a
Delaware corporation, the majority of the common stock of which is owned by
descendents of Lunsford Richardson, Sr. and their spouses, trusts and other
related entities. Lexington was established in 1938 and currently manages over
$3.8 billion in assets.

The Investment Manager has entered into a quantitative research agreement
with Meridian Investment Management Corporation, 12835 East Arapahoe Road,
Tower II, 7th Floor, Englewood, Colorado 80112 ("Meridian"). Meridian provides
research which the Investment Manager uses in strategically allocating the
assets of Asset Allocation Fund among investment categories and market sectors.
Meridian is a wholly-owned subsidiary of Meridian Management & Research
Corporation.

The Investment Manager has entered into an agreement with Templeton
Quantitative Advisors, Inc. ("Templeton") to provide consulting and analytical
research used by the Investment Manager in the selection of equity securities
for Asset Allocation Fund. The Investment manager pays Templeton an annual fee
equal to .30% of the average net assets of Asset Allocation Fund invested in
equity securities. Templeton is a wholly-owned subsidiary of Templeton
Worldwide, Inc., which in turn is a wholly-owned subsidiary of Franklin
Resources, Inc.

Pursuant to the Investment Management and Services Agreements, the
Investment Manager also performs administrative functions and the bookkeeping,
accounting and pricing functions for the Funds, and performs all shareholder
servicing functions, including transferring record ownership, processing
purchase and redemption transactions, answering inquiries, mailing shareholder
communications and acting as the dividend disbursing agent. The Investment
Manager has arranged for Lexington to provide certain administrative services
to Global Fund, including certain accounting and pricing functions.

The Investment Manager has also agreed to arrange for others (or itself) to
provide to the Funds, except Asset Allocation Fund, all other services,
including custodian and independent accounting services, required by the Funds.
The Investment Manager will when necessary engage the services of third parties
such as a custodian bank or independent auditors, in accordance with applicable
legal requirements, including approval by the Funds' Board of Directors. The
Investment Manager bears the expenses of providing the services it is required
to furnish under the Agreement for each Fund, except Asset Allocation Fund.
Thus, those Funds' expenses include only fees paid to the Investment Manager as
well as expenses of brokerage commissions, interest, taxes and extraordinary
expenses approved by the Board of Directors.

Asset Allocation Fund will pay all of its expenses not assumed by the
Investment Manager or the Distributor, including organization expenses;
directors' fees; fees of its custodian; taxes and governmental fees; interest
charges; any membership dues; brokerage commissions; expenses of preparing and
distributing reports to shareholders; costs of shareholder and other meetings;
and legal, auditing and accounting expenses. This Fund will also pay for the
preparation and distribution of the prospectus to its shareholders and all
expenses in connection with registration under the Investment Company Act of
1940 and the registration of its capital stock under federal and state
securities laws. Asset Allocation Fund will pay nonrecurring expenses as may
arise, including litigation expenses affecting it.

The Investment Manager has agreed to reimburse the Funds or waive a portion
of its management fee for any amount by which the total annual expenses of the
Funds (including management fees, but excluding interest, taxes, brokerage
commissions, extraordinary expenses and Class B distribution fees) for any
fiscal year that exceeds the level of expenses which the Funds are permitted to
bear under the most restrictive expense limitation imposed by any state in
which shares of the Funds are then qualified for sale.

21
<PAGE> 85

The most restrictive expense limitation currently imposed by state
securities regulation, of which the Investment Manager is aware, provides that
the aggregate annual expenses of an investment company shall not exceed 2-1/2%
of the first $30 million of the average net assets, 2% of the next $70 million
of the average net assets, and 1-1/2% of the remaining average net assets of
the investment company for any fiscal year, determined at least monthly. For
this limitation, "aggregate annual expenses" include management fees, but
exclude interest, taxes, brokerage commissions, extraordinary expenses (such as
litigation) and Class B distribution fees.

As compensation for its services, the Investment Manager receives with
respect to Growth and Income, Equity and Ultra Funds, on an annual basis, 2% of
the first $10 million of the average net assets, 1-1/2% of the next $20 million
of the average net assets and 1% of the remaining average net assets of the
Funds, determined daily and payable monthly. The Investment Manager receives
with respect to the Global Fund, on an annual basis, 2% of the first $70
million of the average net assets and 1-1/2% of the remaining average net
assets, determined daily and payable monthly.

Separate fees are paid by Asset Allocation Fund to the Investment Manager
for investment advisory, administrative and transfer agency services. The
Investment Manager receives, on an annual basis, an investment advisory fee
equal to 1% of the average daily net assets of the Asset Allocation Fund,
calculated daily and payable monthly. The Investment Manager also receives, on
an annual basis, an administrative fee equal to .045% of the average daily net
assets of the Asset Allocation Fund plus the greater of .10% 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. For transfer agency
services provided to Asset Allocation Fund, the Investment Manager receives an
annual maintenance fee of $8.00 per account, and a transaction fee of $1.00 per
transaction.

During the fiscal years ended September 30, 1994, 1993, and 1992, the Funds
paid the following amounts to the Investment Manager for its services: 1994 -
$948,953, 1993 - $974,857 and 1992 - $973,935 for Growth and Income Fund; 1994
- - $3,926,084, 1993 - $3,720,569 and 1992 - $3,409,999 for Equity Fund; and 1994
- - $819,550, 1993 - $856,685 and 1992 - $827,367 for Ultra Fund. Global Fund
paid $346,421 to the Investment Manager for its services for the period October
5, 1993 to September 30, 1994.

The total expenses for Growth and Income Fund, Equity Fund and Ultra Fund,
respectively, for the fiscal year ended September 30, 1994, were $956,814,
$3,951,290, and $824,852, which represent 1.28%, 1.06% and 1.33% of the average
net assets of each Fund's Class A shares for the fiscal year. Total expenses
of Global Fund for the period October 5, 1993 to September 30, 1994 were
$361,883 which represents 2.00% of Global Fund's Class A shares' average net
assets. Total expenses of Class B shares for the period of October 19, 1993 to
September 30, 1994 for Growth and Income Fund, Equity Fund, Global Fund and
Ultra Fund represents 2.27%, 2.07%, 3.00% and 2.36%, respectively, of each
Fund's Class B shares' average net assets. Expense figures for Asset
Allocation Fund are not yet available as this Fund did not begin operations
until June 1, 1995.

The Funds' Investment Management and Services Agreements shall continue in
force until March 1, 1996, January 1, 1996 and February 1, 1996, for Growth and
Income Fund, Equity Fund and Ultra Fund, respectively. The Agreements are
renewable annually by the Funds' Board of Directors or by a vote of a majority
of the individual Fund's outstanding securities and, in either event, by a
majority of the board who are not parties to the Agreement or interested
persons of any such party. The Agreements provide that they may be terminated
without penalty at any time by either party on 60 days' notice and are
automatically terminated in the event of assignment.

The following persons are affiliated with the Funds and also with the Funds'
investment adviser, Security Management Company, in these capacities:

<TABLE>
<CAPTION>
NAME POSITION(S) WITH THE FUNDS POSITION(S) WITH SECURITY MANAGEMENT COMPANY
- ---- -------------------------- --------------------------------------------
<S> <C> <C>
Jeffrey B. Pantages Director President, Chief Investment Officer and Director

John D. Cleland President and Director Senior Vice President and Director

James R. Schmank Vice President and Treasurer Senior Vice President, Treasurer, Chief Fiscal Officer and Director

Terry A. Milberger Vice President Vice President and Senior Portfolio Manager
(Equity Fund only)
Mark E. Young Vice President Vice President-Operations

Amy J. Lee Secretary Secretary

Brenda M. Luthi Assistant Treasurer Assistant Vice President, Assistant Treasurer
and Assistant Secretary and Assistant Secretary

</TABLE>

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<PAGE> 86

PORTFOLIO MANAGEMENT

John D. Cleland is Senior Vice President and Director of the Investment
Manager. In his capacity as Senior Vice President, Mr. Cleland supervises
portfolio management, trading and research performed by the Investment Manager
and its portfolio managers report directly to Mr. Cleland.

Terry A. Milberger is a Vice President and Senior Portfolio Manager of the
Investment Manager and manages the portfolio of Equity Fund. Mr. Milberger
has more than 19 years of investment experience and has managed Equity Fund's
portfolio since 1981. He began his career as an investment analyst in the
insurance industry and from 1974 through 1978 he served as an assistant
portfolio manager for the Investment Manager. He was then employed as Vice
President of Texas Commerce Bank and managed its pension fund assets until he
returned to the Investment Manager in 1981.

Mr. Milberger holds a bachelor's degree in business and an M.B.A. from the
University of Kansas and is also a Chartered Financial Analyst. His investment
philosophy is based on patience and opportunity for the long-term investor.

Scott F. Stephenson is the Assistant Vice President and Senior Investment
Analyst of the Investment Manager and manages Growth and Income Fund. Mr.
Stephenson has 14 years of investment experience. Prior to joining the
Investment Manager in 1992, he was employed with PaineWebber as an
Institutional Sales Representative/Analyst and from 1988 to 1992, Mr.
Stephenson was employed with Fahnestock/Christopher as a Senior Investment
Analyst.

Mr. Stephenson graduated from the University of Kansas with a B.S. in
economics. He is also a Chartered Financial Analyst and a Certified Public
Accountant.

Cindy L. Shields is Portfolio Manager of the Investment Manager and manages
Ultra Fund. Ms. Shields has five years experience in the securities field and
joined the Investment Manager in 1989.

Ms. Shields graduated from Washburn University with a Bachelor of Business
Administration degree, majoring in finance and economics. She is also a
Chartered Financial Analyst.

Global Fund is managed by an investment management team of Lexington. Alan
Wapnick and Richard T. Saler are the lead managers.

Mr. Wapnick is a Senior Vice President of Lexington and is responsible for
portfolio management. He has 25 years investment experience. Prior to joining
Lexington in 1986, Mr. Wapnick was an equity analyst with Merrill Lynch, J. &
W. Seligman, Dean Witter and most recently Union Carbide Corporation. Mr.
Wapnick is a graduate of Dartmouth College and received a Master's degree in
Business Administration from Columbia University.

Mr. Saler is a Senior Vice President of Lexington and is responsible for
international investment analysis and portfolio management. He has eight years
of investment experience. Mr. Saler has focused on international markets since
first joining Lexington in 1986. Most recently he was a strategist with Nomura
Securities and rejoined Lexington in 1992. Mr. Saler is a graduate of New York
University with a B.S. degree in Marketing and an M.B.A. in Finance from New
York University's Graduate School of Business Administration.

Asset Allocation Fund is managed by an investment management team of
Portfolio Managers and Research Analysts of the Investment Manager. The team
meets regularly to review portfolio holdings and to discuss purchase and sale
activity. The team is responsible for the day-to-day management of Asset
Allocation Fund's portfolio.

DISTRIBUTOR

Security Distributors, Inc. (the "Distributor"), a Kansas corporation and
wholly-owned subsidiary of the Investment Manager, serves as the principal
underwriter for shares of Growth and Income Fund, Equity Fund, Global Fund,
Asset Allocation Fund and Ultra Fund pursuant to Distribution Agreements dated
April 1, 1964, January 1, 1964, April 7, 1995 and January 9, 1969,
respectively. The Distributor also acts as principal underwriter for the
following investment companies: Security Income Fund, Security Tax-Exempt
Fund, and The Parkstone Advantage Fund.

The Distributor receives a maximum commission on sales of Class A shares of
5.75% and allows a maximum discount of 5% from the offering price to authorized
dealers on the Fund shares sold. The discount is the same

23
<PAGE> 87

for all dealers, but the Distributor at its discretion may increase the
discount for specific periods. Salespersons employed by dealers may also be
licensed to sell insurance with Security Benefit Life.

For the fiscal years ended September 30, 1994, 1993, and 1992, the
Distributor received gross underwriting commissions on the sale of Class A
shares of the Funds as follows: 1994 - $80,457, 1993 - $152,633 and 1992 -
$134,903 for Growth and Income Fund; 1994 - $597,792, 1993 - $1,072,077 and
1992 - $867,509 for Equity Fund; and 1994 - $75,084, 1993 - $128,552 and 1992 -
$141,741 for Ultra Fund. For these years, the Distributor retained net
underwriting commissions as follows: 1994 - $12,674, 1993 - $25,818 and 1992 -
$22,311 for Growth and Income Fund; 1994 - $98,610, 1993 - $163,296, and 1992 -
$138,496 for Equity Fund; and 1994 - $15,554, 1993 - $27,883 and 1992 - $38,106
for Ultra Fund. For the period October 5, 1993 through September 30, 1994, the
Distributor received gross underwriting commissions on the sale of Class A
shares of $93,332 for Global Fund and retained net underwriting commissions of
$14,560. For the period October 19, 1993 through September 30, 1994, the
Distributor received gross underwriting commissions on the sale of Class B
shares of Growth and Income, Equity, Global and Ultra Funds in the amounts of
$755, $2,702, $700 and $90, respectively. Gross underwriting commissions were
not paid by Asset Allocation Fund as this Fund did not begin operations until
June 1, 1995.

The Distributor, on behalf of the Funds, may act as a broker in the purchase
and sale of securities not effected on a securities exchange, provided that any
such transactions and any commissions shall comply with requirements of the
Investment Company Act of 1940 and all rules and regulations of the Securities
and Exchange Commission. The Distributor has not acted as a broker.

The Funds' Distribution Agreements are renewable annually either by the
Board of Directors or by the vote of a majority of the Fund's outstanding
securities, and, in either event, by a majority of the board who are not
parties to the contract or interested persons of any such party. The contract
may be terminated by either party upon 60 days' written notice.

ALLOCATION OF PORTFOLIO BROKERAGE

Transactions in portfolio securities shall be effected in such manner as
deemed to be in the best interests of the respective Funds. In reaching a
judgment relative to the qualifications of a broker-dealer ("broker") to obtain
the best execution of a particular transaction, all relevant factors and
circumstances will be taken into account by the Investment Manager, including
the overall reasonableness of commissions paid to a broker, the firm's general
execution and operational capabilities, and its reliability and financial
condition. Subject to the foregoing considerations, the execution of portfolio
transactions may be directed to brokers who furnish investment information or
research services to the Investment Manager. Such investment information and
research services include advice as to the value of securities, the
advisability of investing in, purchasing or selling securities, and the
availability of securities and purchasers or sellers of securities, and
furnishing analyses and reports concerning issues, industries, securities,
economic factors and trends, portfolio strategy and performance of accounts.
Such investment information and research services may be furnished by brokers
in many ways, including: (1) on-line data base systems, the equipment for
which is provided by the broker, that enable the Investment Manager to have
real-time access to market information, including quotations; (2) economic
research services, such as publications, chart services and advice from
economists concerning macroeconomic information; and (3) analytical investment
information concerning particular corporations. If a transaction is directed
to a broker supplying such information or services, the commission paid for
such transaction may be in excess of the commission another broker would have
charged for effecting that transaction provided that the Investment Manager
shall have determined in good faith that the commission is reasonable in
relation to the value of the investment information or the research services
provided, viewed in terms of either that particular transaction or the overall
responsibilities of the Investment Manager with respect to all accounts as to
which it exercises investment discretion. The Investment Manager may use all,
none, or some of such information and services in providing investment advisory
services to each of the mutual funds under its management, including the Funds.

In addition, brokerage transactions may be placed with broker-dealers who
sell shares of the Funds managed by the Investment Manager and who may or may
not also provide investment information and research services. The Investment
Manager may, consistent with the NASD Rules of Fair Practice, consider sales of
shares of the Funds in the selection of a broker.

24
<PAGE> 88

The Funds may also buy securities from, or sell securities to, dealers
acting as principals or market makers. The Investment Manager generally will
not purchase investment information or research services in connection with
such principal transactions.

Securities held by the Funds may also be held by other investment advisory
clients of the Investment Manager, including other investment companies. In
addition, the Investment Manager's parent company, Security Benefit Life
Insurance Company ("SBL"), may also hold some of the same securities as the
Funds. When selecting securities for purchase or sale for a Fund, the
Investment Manager may at the same time be purchasing or selling the same
securities for one or more of such other accounts. It is the policy of the
Investment Manager not to favor one account over the other. Any purchase or
sale orders executed simultaneously (which may also include orders from SBL)
are allocated at the average price and as nearly as practicable on a pro rata
basis in proportion to the amounts desired to be purchased or sold by each
account. In those instances where it is not practical to allocate purchase or
sale orders on a pro rata basis, then the allocation will be made on a rotating
or other equitable basis. While it is conceivable that in certain instances
this procedure could adversely affect the price or number of shares involved in
the Fund's transaction, it is believed that the procedure generally contributes
to better overall execution of the Fund's portfolio transactions. The Board of
Directors of the Funds has adopted guidelines governing this procedure and will
monitor the procedure to determine that the guidelines are being followed and
that the procedure continues to be in the best interest of the Fund and its
stockholders.

The following table sets forth the brokerage fees paid by the Funds during
the last three fiscal years and certain other information:

<TABLE>
<CAPTION>
FUND TRANSACTIONS DIRECTED
TO AND COMMISSIONS PAID TO
FUND BROKERAGE BROKER-DEALERS WHO ALSO
COMMISSIONS PAID PERFORMED SERVICES
CLASS A SHARES FUND TO SECURITY ---------------------------------
ANNUAL PORTFOLIO TOTAL BROKERAGE DISTRIBUTORS INC., BROKERAGE
YEAR TURNOVER RATE COMMISSIONS PAID THE UNDERWRITER TRANSACTIONS COMMISSIONS
---- ---------------- ---------------- ----------------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Security Growth & Income Fund
1994 163% $ 448,925 0 $21,666,518 $ 53,256
1993 135% 239,633 0 30,387,092 56,190
1992 74% 139,367 0 11,493,230 20,075

Security Equity Fund
Equity Series
1994 79% $1,073,763 0 $74,497,202 $182,980
1993 95% 1,309,963 0 109,889,802 189,736
1992 83% 1,074,977 0 60,762,780 136,411

Security Equity Fund
Global Series
1994 73% $ 186,281 0 $ 7,774,273 $ 16,685

Security Ultra Fund
1994 111% $ 296,484 0 $10,321,410 $ 44,151
1993 101% 328,319 0 65,467,390 198,006
1992 142% 390,595 0 74,163,342 232,895
</TABLE>

Class B shares' annual portfolio turnover rate for the period October 19,
1993 to September 30, 1994 were 178%, 80%, 73%, 110% for Growth and Income,
Equity, Global and Ultra Funds, respectively.

Portfolio turnover rates for Asset Allocation Fund are not yet available as
this Fund did not begin operations until June 1, 1995.

HOW NET ASSET VALUE IS DETERMINED

The per share net asset value of each Fund is determined by dividing the
total value of its securities and other assets, less liabilities, by the total
number of shares outstanding. The public offering price for each Fund is its
net asset value per share plus, in the case of Class A shares, the applicable
sales charge. The net asset value and offering price are computed once daily
as of the close of regular trading hours on the New York Stock Exchange
(normally 3:00 p.m. Central time) on each day the Exchange is open for trading,
which is Monday through Friday, except for the following dates when the
exchange is closed in observance of federal holidays:

25
<PAGE> 89

New Year's Day, President's Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day and Christmas Day.

The offering price determined at the close of business on the New York Stock
Exchange on each day on which the Exchange is open will be applicable to all
orders for the purchase of Fund shares received by the dealer prior to such
close of business and transmitted to the Funds prior to the close of its
business day (normally 5:00 p.m. Central time unless the Exchange closes
early). Orders accepted by the dealer after the close of business of the
Exchange or on a day when the Exchange is closed will be filled on the basis of
the offering price determined as of the close of business of the Exchange on
the next day on which the Exchange is open. It is the responsibility of the
dealer to promptly transmit orders to the Funds.

In determining net asset value, securities listed or traded on a national
securities exchange are valued on the basis of the last sale price. If there
are no sales on a particular day, then the securities shall be valued at the
mean between the bid and asked prices. If a mean cannot be determined, then
the securities are valued at the best available current bid price. All other
securities for which market quotations are available are valued on the basis of
the last current bid price. If there is no bid price, or if the bid price is
deemed to be unsatisfactory by the Board of Directors or the Funds' Investment
Manager, then the securities shall be valued in good faith by such method as
the Board of Directors determines will reflect their fair market value.

Because the expenses of distribution are borne by Class A shares through a
front-end sales charge and by Class B shares through an ongoing distribution
fee, the expenses attributable to each class of shares will differ, resulting
in different net asset values. The net asset value of Class B shares will
generally be lower than the net asset value of Class A shares as a result of
the distribution fee charged to Class B shares. It is expected, however, that
the net asset value per share will tend to converge immediately after the
payment of dividends which will differ in amount for Class A and B shares by
approximately the amount of the different distribution expenses attributable to
Class A and B shares.

HOW TO REDEEM SHARES

Stockholders may turn in their shares directly to the Investment Manager for
redemption at net asset value (which may be more or less than the investor's
cost, depending upon the market value of the portfolio securities at the time
of redemption). The redemption price in cash will be the net asset value next
determined after the time when such shares are tendered for redemption.

Shares will be redeemed on request of the stockholder in proper order to the
Investment Manager, which serves as the Funds' transfer agent. A request is
made in proper order by submitting the following items to the Investment
Manager: (l) a written request for redemption signed by all registered owners
exactly as the account is registered, including fiduciary titles, if any, and
specifying the account number and the dollar amount or number of shares to be
redeemed; (2) a guarantee of all signatures on the written request or on the
share certificate or accompanying stock power; (3) any share certificates
issued for any of the shares to be redeemed; and (4) any additional documents
which may be required by the Investment Manager for redemption by corporations
or other organizations, executors, administrators, trustees, custodians or the
like. Transfers of shares are subject to the same requirements. A signature
guarantee is not required for redemptions of $10,000 or less, requested by and
payable to all stockholders of record for an account, to be sent to the address
of record. The signature guarantee must be provided by an eligible guarantor
institution, such as a bank, broker, credit union, national securities exchange
or savings association. The Investment Manager reserves the right to reject
any signature guarantee pursuant to its written procedures which may be revised
in the future. To avoid delay in redemption or transfer, stockholders having
questions should contact the Investment Manager.

The Articles of Incorporation of Security Equity Fund provide that the Board
of Directors, without the vote or consent of the stockholders, may adopt a plan
to redeem at net asset value all shares in any stockholder account in which
there has been no investment (other than the reinvestment of income dividends
or capital gains distributions) for the last six months and in which there are
fewer than 25 shares or such fewer number of shares as may be specified by the
Board of Directors. Any plan of involuntary redemption adopted by the Board of
Directors shall provide that the plan is in the economic best interests of the
Fund or is necessary to reduce disproportionately burdensome expenses in
servicing stockholder accounts. Such plan shall further provide that prior
notice of at least six months shall be given to a stockholder before
involuntary redemption, and that the stockholder will have at least six months
from the date of the notice to avoid redemption by increasing his or her
account to at least the minimum number of shares established in the Articles of
Incorporation, or such fewer shares as are specified in the plan.

26
<PAGE> 90

When investing in the Funds, stockholders are required to furnish their tax
identification number and to state whether or not they are subject to
withholding for prior underreporting, certified under penalties of perjury as
prescribed by the Internal Revenue Code. To the extent permitted by law, the
redemption proceeds of stockholders who fail to furnish this information will
be reduced by $50 to reimburse for the IRS penalty imposed for failure to
report the tax identification number on information reports.

Payment in cash of the amount due on redemption, less any applicable
deferred sales charge, for shares redeemed will be made within seven days after
tender, except that the Funds may suspend the right of redemption during any
period when trading on the New York Stock Exchange is restricted or such
Exchange is closed for other than weekends or holidays, or any emergency is
deemed to exist by the Securities and Exchange Commission. When a redemption
request is received, the redemption proceeds are deposited into a redemption
account established by the Distributor and the Distributor sends a check in the
amount of redemption proceeds to the stockholder. The Distributor earns
interest on the amounts maintained in the redemption account. Conversely, the
Distributor causes payments to be made to the Funds in the case of orders for
purchase of Fund shares before it actually receives federal funds.

The Funds have committed themselves to pay in cash all requests for
redemptions by any stockholder of record limited in amount during any 90-day
period to the lesser of $250,000 or 1% of the net asset value of the Fund at
the beginning of such period.

In addition to the foregoing redemption procedure, the Funds repurchase
shares from broker-dealers at the price determined as of the close of business
on the day such offer is confirmed. The Distributor has been authorized, as
agent, to make such repurchases for the Funds' account. Dealers may charge a
commission on the repurchase of shares.

The repurchase or redemption of shares held in a tax-qualified retirement
plan must be effected through the trustee of the plan and may result in adverse
tax consequences. (See "Retirement Plans," page __.)

At various times the Funds may be requested to redeem shares for which they
have not yet received good payment. Accordingly, the Funds may delay the
mailing of a redemption check until such time as they have assured themselves
that good payment (e.g., cash or certified check on a U.S. bank) has been
collected for the purchase of such shares.

TELEPHONE REDEMPTIONS

A stockholder may redeem uncertificated shares in amounts up to $10,000 by
telephone request, provided the stockholder has completed the Telephone
Redemption section of the application or a Telephone Redemption form which may
be obtained from the Investment Manager. The proceeds of a telephone
redemption will be sent to the stockholder at his or her address as set forth
in the application or in a subsequent written authorization with a signature
guarantee. Once authorization has been received by the Investment Manager, a
stockholder may redeem shares by calling the Funds at (800) 888-2461, extension
3127, on weekdays (except holidays) between the hours of 8:00 a.m. and 5:00
p.m. Central time. Redemption requests received by telephone after the close
of the New York Stock Exchange (normally 3:00 p.m. Central time) will be
treated as if received on the next business day. A stockholder who authorizes
telephone redemptions authorizes the Investment Manager to act upon the
instructions of any person identifying themselves as the owner of the account
or the owner's broker. The Investment Manager has established procedures to
confirm that instructions communicated by telephone are genuine and may be
liable for any losses due to fraudulent or unauthorized instructions if it
fails to comply with its procedures. The Investment Manager's procedures
require that any person requesting a redemption by telephone provide the
account registration and number, the owner's tax identification number, and the
dollar amount or number of shares to be redeemed, and such instructions must be
received on a recorded line. Neither the Fund, the Investment Manager, nor the
Distributor will be liable for any loss, liability, cost or expense arising out
of any redemption request provided that the Investment Manager complied with
its procedures. Thus, a stockholder who authorizes telephone redemptions may
bear the risk of loss from a fraudulent or unauthorized request. The telephone
redemption privilege may be changed or discontinued at any time by the
Investment Manager or the Funds.

During periods of severe market or economic conditions, telephone
redemptions may be difficult to implement and stockholders should make
redemptions by mail as described under "How to Redeem Shares" above.

27
<PAGE> 91

HOW TO EXCHANGE SHARES

Pursuant to arrangements with the Distributor (which also acts as principal
underwriter for Security Income Fund and Security Tax-Exempt Fund) and with
Security Cash Fund, stockholders of the Funds may exchange their shares for
shares of another of the Funds, Security Income Fund, Security Tax-Exempt Fund
or Security Cash Fund at net asset value. Exchanges may be made only in those
states where shares of the fund into which an exchange is to be made are
qualified for sale.

Class A and Class B shares of the Funds may be exchanged for Class A and
Class B shares, respectively, of another Fund or for shares of Security Cash
Fund, a money market fund that offers a single class of shares. Any applicable
contingent deferred sales charge will be imposed upon redemption and calculated
from the date of the initial purchase without regard to the time shares were
held in Security Cash Fund. Such transactions generally have the same tax
consequences as ordinary sales and purchases. No service fee is presently
imposed on such an exchange. They are not tax-free exchanges.

Exchanges are made promptly upon receipt of a properly completed Exchange
Authorization form and (if issued) share certificates in good order for
transfer. If the stockholder is a corporation, partnership, agent, fiduciary
or surviving joint owner, additional documentation of a customary nature, such
as a stock power and guaranteed signature, will be required. (See "How to
Redeem Shares," page __.)

This privilege may be changed or discontinued at any time at the discretion
of the management of the Funds upon 60 days' notice to stockholders. It is
contemplated, however, that the privilege will be extended in the absence of
objection by regulatory authorities and provided shares of the respective
companies are available and may be legally sold in the jurisdiction in which
the stockholder resides. A current prospectus of the Fund into which an
exchange is made will be given each stockholder exercising this privilege.

EXCHANGE BY TELEPHONE

To exchange shares by telephone, a shareholder must have completed either
the Telephone Exchange section of the application or a Telephone Transfer
Authorization form which may be obtained from the Investment Manager.
Authorization must be on file with the Investment Manager before exchanges may
be made by telephone. Once authorization has been received by the Investment
Manager, a stockholder may exchange shares by telephone by calling the Funds at
(800) 888-2461, extension 3127 on weekdays (except holidays) between the hours
of 8:00 a.m. and 5:00 p.m. Central time. Exchange requests received after the
close of the New York Stock Exchange (normally 3:00 p.m. Central time) will be
treated as if received on the next business day. Shares which are held in
certificate form may not be exchanged by telephone.

The telephone exchange privilege is only permitted between accounts with
identical registration. The Investment Manager has established procedures to
confirm that instructions communicated by telephone are genuine and may be
liable for any losses due to fraudulent or unauthorized instructions if it
fails to comply with its procedures. The Investment Manager's procedures
require that any person requesting an exchange by telephone provide the account
registration and number, the tax identification number, the dollar amount or
number of shares to be exchanged, and the names of the Security Funds from
which and into which the exchange is to be made, and such instructions must be
received on a recorded line. Neither the Funds, the Investment Manager nor the
Distributor will be liable for any loss, liability, cost or expense arising out
of any request, including any fraudulent request provided the Investment
Manager complied with its procedures. Thus, a stockholder who authorizes
telephone exchanges may bear the risk of loss in the event of a fraudulent or
unauthorized request. This telephone exchange privilege may be changed or
discontinued at any time at the discretion of the management of the Funds. In
particular, the Funds may set limits on the amount and frequency of such
exchanges, in general or as to any individual who abuses such privilege.

DIVIDENDS AND TAXES

It is each Fund's policy to pay dividends from net investment income as from
time to time declared by the Board of Directors, and to distribute realized
capital gains (if any) in excess of any capital losses and capital loss
carryovers, at least once a year. Because Class A shares of the Funds bear
most of the costs of distribution of such shares through payment of a front-end
sales charge, while Class B shares of the Funds bear such costs through a
higher distribution fee, expenses attributable to Class B shares, generally,
will be higher and as a result, income distributions paid by the Funds with
respect to Class B shares generally will be lower than those paid with respect
to Class A shares. Because the value of a share is based directly on the
amount of the net

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<PAGE> 92

assets rather than on the principle of supply and demand, any distribution of
capital gains or payment of an income dividend will result in a decrease in the
value of a share equal to the amount paid. All such dividends and
distributions are automatically reinvested on the payable date in shares of the
Funds at net asset value as of the record date (reduced by an amount equal to
the amount of the dividend or distribution), unless the Investment Manager is
previously notified in writing by the stockholder that such dividends or
distributions are to be received in cash. A stockholder may request that such
dividends or distributions be directly deposited to the stockholder's bank
account. A stockholder who elected not to reinvest dividends or distributions
paid with respect to Class A shares may, at any time within 30 days after the
payment date, reinvest a dividend check without imposition of a sales charge.

For federal income tax purposes, dividends paid by the Funds from net
investment income may qualify for the corporate stockholder's dividends
received deduction to the extent the Funds designate the amount distributed as
a qualified dividend. The aggregate amount designated as a qualified dividend
by the Funds cannot exceed the aggregate amount of dividends received by the
Funds from domestic corporations for the taxable year. The corporate dividends
received deduction will be limited if the shares with respect to which the
dividends are received are treated as debt-financed or are deemed to have been
held less than 46 days. In addition, a corporate stockholder must hold Fund
shares for at least 46 days to be eligible to claim the dividends received
deduction. All dividends from net investment income, together with
distributions of any realized net short-term capital gains, whether paid direct
to the stockholder or reinvested in shares of the Funds, are taxable as
ordinary income.

Stockholders will report as long-term capital gains income any realized net
long-term capital gains in excess of any capital loss carryover which is
distributed to them and designated by the Fund as a capital gain dividend,
whether or not reinvested in the Fund, and regardless of the period of time
such shares have been owned by the stockholders. Advice as to the tax status
of each year's dividends and distributions will be mailed annually.

A purchase of shares shortly before payment of a dividend or distribution is
disadvantageous because the dividend or distribution to the purchaser has the
effect of reducing the per share net asset value of the shares by the amount of
the dividends or distributions. In addition, all or a portion of such
dividends or distributions (although in effect a return of capital) may be
taxable.

During the taxable year ended September 30, 1994, Growth and Income, Equity
and Ultra Funds met the requirements of Subchapter M of the Internal Revenue
Code (Asset Allocation Fund did not begin operations until June 1, 1995). Each
of the Funds intends to meet these requirements in the future and therefore,
generally will not be liable for federal income taxes to the extent their
earnings are distributed. Amounts not distributed on a timely basis in
accordance with a calendar year distribution requirement are subject to a
nondeductible 4% excise tax. To avoid the tax, each Fund must distribute
during each calendar year (1) at least 98% of its ordinary income (not taking
into account any capital gains or losses) for the calendar year, (2) at least
98% of its capital gains in excess of its capital losses (adjusted for certain
ordinary losses) for the 12-month period ending on October 31 of the calendar
year, and (3) all ordinary income and capital gains for previous years that
were not distributed during such years. A distribution will be treated as paid
on December 31 of a calendar year if it is declared by the Fund during October,
November or December to shareholders of record on a date in such a month and
paid by the Fund by January 31 of the following year. Such distributions will
be taxable to shareholders in the calendar year the distributions are declared,
rather than the year in which the distributions are received. To avoid
application of the excise tax, the Funds intend to make their distributions in
accordance with the calendar year distribution requirement.

Generally, gain or loss realized upon the sale or redemption of shares
(including the exchange of shares for shares of another fund) will be capital
gain or loss if the shares are capital assets in the shareholder's hands, and
will be long-term capital gain or loss if the shares have been held for more
than one year. Investors should be aware that any loss realized upon the sale
or redemption of shares held for six months or less will be treated as a
long-term capital loss to the extent of any distribution of long-term capital
gain to the shareholder with respect to such shares. In addition, any loss
realized on a sale or exchange of shares will be disallowed to the extent the
shares disposed of are replaced within a period of 61 days, beginning 30 days
before and ending 30 days after the date the shares are disposed of, such as
pursuant to the reinvestment of dividends. In such case, the basis of the
shares acquired will be adjusted to reflect the disallowed loss.

Under certain circumstances, the sales charge incurred in acquiring Class A
shares of the Funds may not be taken into account in determining the gain or
loss on the disposition of those shares. This rule applies in circumstances
when shares of the Fund are exchanged within 90 days after the date they were
purchased and

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<PAGE> 93

new shares in a regulated investment company are acquired without a sales
charge or at a reduced sales charge. In that case, the gain or loss recognized
on the exchange will be determined by excluding from the tax basis of the
shares exchanged all or a portion of the sales charge incurred in acquiring
those shares. This exclusion applies to the extent that the otherwise
applicable sales charge with respect to the newly acquired shares is reduced as
a result of having incurred the sales charge initially. Instead, the portion
of the sales charge affected by this rule will be treated as an amount paid for
the new shares.

The Funds are required by law to withhold 31% of taxable dividends and
distributions to shareholders who do not furnish their correct taxpayer
identification numbers, or are otherwise subject to the backup withholding
provisions of the Internal Revenue Code.

Each series of Security Equity Fund will be treated separately in
determining the amounts of income and capital gains distributions. For this
purpose, each series will reflect only the income and gains, net of losses of
that series.

The foregoing is a general description of some of the principal federal
income tax consequences from an investment in the Funds. Distributions from
the Funds and gain on the disposition of Fund shares may also be subject to
state, local or foreign taxes depending upon the shareholder's individual
circumstances. In addition, foreign shareholders may be subject to federal
income tax rules that may differ from those described above. All investors and
prospective investors are advised to consult their tax advisers with respect to
the tax consequences to them from an investment in the Funds.

ORGANIZATION

The Articles of Incorporation of each Fund provide for the issuance of
shares of common stock in one or more classes or series. Security Equity Fund
has authorized capital stock of 5,000,000,000 shares of $.25 par value and
currently issues its shares in three series, Equity Fund, Global Fund and Asset
Allocation Fund, each of which has authority to issue such shares as follows:
Equity Fund - 2,000,000,000 shares, Global Fund - 1,000,000,000 shares and
Asset Allocation Fund - 1,000,000,000 shares. The shares of each series of
Security Equity Fund represent a pro rata beneficial interest in that series'
net assets and in the earnings and profits or losses derived from the
investment of such assets. Growth and Income and Ultra Funds have not issued
shares in any additional series at the present time. Growth and Income and
Ultra Funds each have authorized capital stock of 1,000,000,000 shares of $1.00
par value and $.50 par value, respectively.

Each of the Funds currently issues two classes of shares which participate
proportionately based on their relative net asset values in dividends and
distributions and have equal voting, liquidation and other rights except that
(i) expenses related to the distribution of each class of shares or other
expenses that the Board of Directors may designate as class expenses from time
to time, are borne solely by each class; (ii) each class of shares has
exclusive voting rights with respect to any Distribution Plan adopted for that
class; (iii) each class has different exchange privileges; and (iv) each class
has a different designation. When issued and paid for, the shares will be
fully paid and nonassessable by the Funds. Shares may be exchanged as
described under "How to Exchange Shares," page_____, but will have no other
preference, conversion, exchange or preemptive rights. Shares are
transferable, redeemable and assignable and have cumulative voting privileges
for the election of directors.

On certain matters, such as the election of directors, all shares of the
Series of Security Equity Fund, Equity Fund, Global Fund and Asset Allocation
Fund, vote together, with each share having one vote. On other matters
affecting a particular series, such as the investment advisory contract or the
fundamental policies, only shares of that series are entitled to vote, and a
majority vote of the shares of that series is required for approval of the
proposal.

The Funds do not generally hold annual meetings of stockholders and will do
so only when required by law. Stockholders may remove directors from office by
vote cast in person or by proxy at a meeting of stockholders. Such a meeting
will be called at the written request of 10% of a Fund's outstanding shares.

CUSTODIAN, TRANSFER AGENT AND DIVIDEND-PAYING AGENT

UMB Bank, n.a., 928 Grand Avenue, Kansas City, Missouri, acts as the
custodian for the portfolio securities of Growth and Income Fund, Equity Fund
and Ultra Fund. Chase Manhattan Bank, 1211 Avenue of the Americas, New York,
New York 10036 acts as custodian for the portfolio securities of Global and
Asset Allocation Funds, including those held by foreign banks and foreign
securities depositories which qualify as eligible foreign custodians under the
rules adopted by the Securities Exchange Commission. Security Management
Company acts as the Funds' transfer and dividend-paying agent.

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<PAGE> 94

INDEPENDENT AUDITORS

The firm of Ernst & Young LLP, One Kansas City Place, 1200 Main Street,
Kansas City, Missouri, has been selected by the Funds' Board of Directors to
serve as the Funds' independent auditors, and as such, the firm will perform
the annual audit of the Funds' financial statements.

PERFORMANCE INFORMATION

The Funds may, from time to time, include performance information in
advertisements, sales literature or reports to shareholders or prospective
investors. Performance information in advertisements or sales literature may
be expressed as average annual total return or aggregate total return.

Quotations of average annual total return will be expressed in terms of the
average annual compounded rate of return of a hypothetical investment in the
Funds over periods of 1, 5 and 10 years (up to the life of the Fund),
calculated pursuant to the following formula:
P(1+T)(7) = ERV
(where P = a hypothetical initial payment of $1,000, T = the average annual
total return, n = the number of years, and ERV = the ending redeemable value of
a hypothetical $1,000 payment made at the beginning of the period). All total
return figures will reflect the deduction of the maximum initial sales load of
5.75% in the case of quotations of performance of Class A shares or the
applicable contingent deferred sales charge in the case of quotations of
performance of Class B shares and a proportional share of Fund expenses on an
annual basis, and assume that all dividends and distributions are reinvested
when paid.

For the 1-, 5- and 10-year periods ended September 30, 1994, respectively,
the average annual total return of Class A shares of Growth and Income Fund was
- -12.96%, 3.95% and 7.64%. For the period October 19, 1993 (date of inception)
to September 30, 1994, the average annual total return for Class B shares of
Growth and Income Fund was -12.58%.

For the 1-, 5- and 10-year periods ended September 30, 1994, respectively,
the average annual total return of Class A shares of Equity Fund was -3.90%,
7.95% and 14.01%. For the period October 19, 1993 (date of inception) to
September 30, 1994, the average annual total return for Class B shares of
Equity Fund was -5.15%.

For the period October 5, 1993 (date of inception) to September 30, 1994,
the average annual total return of Class A shares of Global Fund was 2.17%.
For the period October 19, 1993 (date of inception) to September 30, 1994, the
average annual total return of Class B shares of Global Fund was 2.93%.

For the 1-, 5- and 10-year periods ended September 30, 1994, respectively,
the average annual total return of Class A shares of Ultra Fund was -9.20%,
2.29% and 6.50%. For the period October 19, 1993 (date of inception) to
September 30, 1994, the average annual total return for Class B shares of Ultra
Fund was -10.42%.

Performance figures for Asset Allocation Fund are not yet available as this
Fund did not begin operations until June 1, 1995.

Quotations of aggregate total return will be calculated for any specified
period pursuant to the following formula:
ERV-P
----- = T
P
(where P = a hypothetical initial payment of $1,000, T = the total return, and
ERV = the ending redeemable value of a hypothetical $1,000 payment made at the
beginning of the period). All total return figures will assume that all
dividends and distributions are reinvested when paid. The Funds may, from time
to time, include quotations of aggregate total return that do not reflect
deduction of the sales load. The sales load, if reflected, would reduce the
total return.

The total return on an investment made in Class A shares of Growth and
Income Fund, Equity Fund and Ultra Fund calculated as described above for the
period from October 1, 1984 through September 30, 1994 was 108.74%, 271.13% and
87.76%, respectively. Total return on an investment made in Class A shares of
Global Fund calculated as described above for the period October 5, 1993
through September 30, 1994 was 2.17%. Total return on an investment made in
Class B shares of Growth and Income, Equity, Global and Ultra Funds calculated
as described above for the period October 19, 1993 through September 30, 1994
was -12.58%, -5.15%, 2.93% and -10.42%, respectively. These figures reflect
deduction of the maximum sales load.

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<PAGE> 95

In addition, quotations of total return will also be calculated for several
consecutive one-year periods, expressing the total return as a percentage
increase or decrease in the value of the investment for each year relative to
the ending value for the previous year.

Quotations of average annual total return and aggregate total return will
reflect only the performance of a hypothetical investment in the Funds during
the particular time period shown. Such quotations for the Funds will vary
based on changes in market conditions and the level of the Funds' expenses, and
no reported performance figure should be considered an indication of
performance which may be expected in the future.

In connection with communicating its average annual total return or
aggregate total return to current or prospective shareholders, the Funds also
may compare these figures to the performance of other mutual funds tracked by
mutual fund rating services or to other unmanaged indexes which may assume
reinvestment of dividends but generally do not reflect deductions for
administrative and management costs. Each Fund will include performance data
for both Class A and Class B Shares of the Fund in any advertisement or report
including performance data of the Fund. Such mutual fund rating services
include the following: Lipper Analytical Services; Morningstar, Inc.;
Investment Company Data; Schabacker Investment Management; Wiesenberger
Investment Companies Service; Computer Directions Advisory (CDA); and Johnson's
Charts. Such unmanaged indexes include the following: S&P 500; the Dow Jones
Industrial Average; NASDAQ 100 and NASDAQ 200; Russell 2000 and Russell 2500;
as well as the Wilshire 1750 and Wilshire 4500. When comparing the Funds'
performance with that of other alternatives, investors should understand that
shares of the Funds may be subject to greater market risks than are certain
other types of investments.

RETIREMENT PLANS

The Funds offer tax-qualified retirement plans for individuals (Individual
Retirement Accounts, known as IRAs), several prototype retirement plans for the
self-employed (Keogh plans), pension and profit-sharing plans for corporations,
and custodial account plans for employees of public school systems and
organizations meeting the requirements of Section 501(c)(3) of the Internal
Revenue Code. Actual documents and detailed materials about the plans will be
provided upon request to the Distributor.

Purchases of the Funds' shares under any of these plans are made at the
public offering price next determined after contributions are received by the
Distributor. The Funds' shares owned under any of the plans have full
dividend, voting and redemption privileges. Depending on the terms of the
particular plan, retirement benefits may be paid in a lump sum or in
installment payments over a specified period. There are possible penalties for
premature distributions from such plans.

Security Management Company is available to act as custodian for the plans
on a fee basis. For IRAs, Section 403(b) Retirement Plans, and Simplified
Employee Pension Plans (SEPPs), service fees for such custodial services
currently are: (1) $10 for annual maintenance of the account and (2) benefit
distribution fee of $5 per distribution. Service fees for other types of plans
will vary. These fees will be deducted from the plan assets. Optional
supplemental services are available from Security Benefit Life Insurance
Company for additional charges.

Retirement investment programs involve commitments covering future years.
It is important that the investment objectives and structure of the Funds be
considered by the investors for such plans. A brief description of the
available tax-qualified retirement plans is provided below. However the tax
rules applicable to such qualified plans vary according to the type of plan and
the terms and conditions of the plan itself. Therefore, no attempt is made to
provide more than general information about the various types of qualified
plans.

Investors are urged to consult their own attorneys or tax advisers when
considering the establishment and maintenance of any such plans.

INDIVIDUAL RETIREMENT ACCOUNTS (IRAs)

Individual Retirement Account Custodial Agreements are available to provide
investment in shares of the Funds or in other Funds in the Security Group. An
individual may initiate an IRA through the Underwriter by executing the
custodial agreement and making a minimum initial investment of at least $100
plus $15 to cover the fees for opening and maintaining the account for the
first year.

An individual may make a contribution to an IRA each year of up to the
lesser of $2,000 or 100% of earned income under current tax law. If
contributions are also made to an IRA of a nonworking spouse, the maximum is
raised to a total for the two accounts of $2,250; the taxpayers may choose how
to allocate the $2,250 between

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<PAGE> 96

the accounts, as long as no more than $2,000 is contributed to either account.
If both husband and wife work, each may establish his or her own IRA and
contribute up to the maximum allowed for individuals.

Deductions for IRA contributions are limited for taxpayers who are covered
by an employer-sponsored retirement plan. However, these limitations do not
apply to a single taxpayer with adjusted gross income of $25,000 or less or
married taxpayers with adjusted gross income of $40,000 or less (if they file a
joint tax return). Taxpayers with adjusted gross income less than $10,000 in
excess of these amounts may deduct a portion of their IRA contributions. The
nondeductible portion is calculated by reference to the amount of the
taxpayer's income above $25,000 (single) or $40,000 (married) as a percentage
of $10,000.

Contributions must be made in cash no later than April 15 following the
close of the tax year. No annual contribution is permitted for the year in
which the investor reaches age 70 1/2 or any year thereafter.

In addition to annual contributions, total distributions and certain partial
distributions from certain employer-sponsored retirement plans may be eligible
to be reinvested into an IRA if the reinvestment is made within 60 days of
receipt of the distribution by the taxpayer. Such rollover contributions are
not subject to the limitations on annual IRA contributions described above.

PENSION AND PROFIT-SHARING PLANS

Prototype corporate pension or profit-sharing plans meeting the requirements
of Internal Revenue Code Section 401(a) are available. Information concerning
these plans may be obtained from the Distributor.

403(b) RETIREMENT PLANS

Employees of public school systems and tax-exempt organizations meeting the
requirements of Internal Revenue Code Section 501(c)(3) may purchase shares of
the Funds or of the other Funds in the Security Group under a Section 403(b)
Plan. Section 403(b) Plans are subject to numerous restrictions on the amount
that may be contributed, the persons who are eligible to participate and on the
time when distributions may commence.

SIMPLIFIED EMPLOYEE PENSION PLANS (SEPPs)

A prototype SEPP is available for corporations, partnerships or sole
proprietors desiring to adopt such a plan for purchases of IRAs for their
employees. Employers establishing a SEPP may contribute a maximum of $30,000 a
year to an IRA for each employee. This maximum is subject to a number of
limitations.

FINANCIAL STATEMENTS

The audited financial statements of the Funds, which are contained in the
Funds' September 30, 1994 Annual Report are incorporated herein by reference.
A copy of the Annual Report dated September 30, 1994, is provided to every
person requesting a Statement of Additional Information.

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<PAGE> 97

APPENDIX A
DESCRIPTION OF CORPORATE BOND RATINGS

MOODY'S INVESTORS SERVICE, INC.

Aaa - Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt-edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.

Aa - Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known
as high grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than in Aaa
securities.

A - Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may be
present which suggest a susceptibility to impairment sometime in the future.

Baa - Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present, but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.

Ba - Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.

B - Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.

Caa - Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.

Ca - Bonds which are rated Ca represent obligations which are speculative in
a high degree. Such issues are often in default or have other marked
shortcomings.

C - Bonds which are rated C are the lowest rated class of bonds and issues
so rated can be regarded as having extremely poor prospects of ever attaining
any real investment standing.

STANDARD & POOR'S CORPORATION

AAA - Bonds rated AAA have the highest rating assigned by Standard & Poor's
to debt obligation. Capacity to pay interest and repay principal is extremely
strong.

AA - Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from the highest rated issues only in small degree.

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<PAGE> 98

A - Bonds rated A have a strong capacity to pay interest and repay principal
although they are somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions than bonds in higher rated categories.

BBB - Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing circumstances
are more likely to lead to a weakened capacity to pay interest and repay
principal for bonds in this category than for bonds in higher rated categories.

BB, B, CCC, CC - Bonds rated BB, B, CCC and CC are regarded, on balance, as
predominately speculative with respect to the issuer's capacity to pay interest
and repay principal in accordance with the terms of obligation. BB indicates
the lowest degree of speculation and CC the highest degree of speculation.
While such bonds will likely have some quality and protective characteristics,
these are outweighed by large uncertainties or major risk exposures to adverse
conditions.

C - The rating C is reserved for income bonds on which no interest is being
paid.

D - Debt rated D is in default and payment of interest and/or repayment of
principal is in arrears.

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<PAGE> 99

APPENDIX B

CLASS A SHARES

REDUCED SALES CHARGES

Initial sales charges may be reduced or eliminated for persons or
organizations purchasing Class A shares of the Funds alone or in combination
with Class A shares of certain other Security Funds.

For purposes of qualifying for reduced sales charges on purchases made
pursuant to Rights of Accumulation, a Statement of Intention or Letters of
Intent, the term "Purchaser" includes the following persons: an individual,
his or her spouse and children under the age 21; a trustee or other fiduciary
of a single trust estate or single fiduciary account established for their
benefit; an organization exempt from federal income tax under Section 501(c)(3)
or (13) of the Internal Revenue Code; or a pension, profit-sharing or other
employee benefit plan whether or not qualified under Section 401 of the
Internal Revenue Code.

RIGHTS OF ACCUMULATION

A Purchaser may combine all previous purchases with his or her contemplated
current purchases of Class A Shares of a Fund, for the purpose of determining
the sales charge applicable to the current purchase. For example, an investor
who already owns Class A shares of a Fund either worth $30,000 at the
applicable current offering price or purchased for $30,000 and who invests an
additional $25,000, is entitled to a reduced front-end sales charge of 4.75% on
the latter purchase. The Underwriter must be notified when a sale takes place
which would qualify for the reduced charge on the basis of previous purchases
subject to confirmation of the investor's holding through the Fund's records.
Rights of accumulation apply also to purchases representing a combination of
the Class A shares of the Funds, Security Income Fund or Security Tax-Exempt
Fund in those states where shares of the Fund being purchased are qualified for
sale.

STATEMENT OF INTENTION

A Purchaser may sign a Statement of Intention, which may be signed within 90
days after the first purchase to be included thereunder, in the form provided
by the Underwriter covering purchases of Class A shares of the Funds, Security
Income Fund or Security Tax-Exempt Fund to be made within a period of 13 months
(or a 36-month period for purchases of $1 million or more) and thereby become
eligible for the reduced front-end sales charge applicable to the actual amount
purchased under the Statement. Five percent of the amount specified in the
Statement of Intention will be held in escrow shares until the Statement is
completed or terminated. The shares so held may be redeemed by the Funds if
the investor is required to pay additional sales charges which may be due if
the amount of purchases made by the Purchaser during the period the Statement
is effective is less than the total specified in the Statement of Intention.

A Statement of Intention may be revised during the 13-month period (or a
36-month period for purchases of $1 million or more). Additional Class A
shares received from reinvestment of income dividends and capital gains
distributions are included in the total amount used to determine reduced sales
charges. The Statement is not a binding obligation upon the investor to
purchase or any Fund to sell the full indicated amount. A Statement of
Intention form may be obtained from the Funds. An investor considering signing
such an agreement should read the Statement of Intention carefully.

REINSTATEMENT PRIVILEGE

Stockholders who redeem their Class A shares of the Funds have a one-time
privilege (1) to reinstate their accounts by purchasing shares without a sales
charge up to the dollar amount of the redemption proceeds, or (2) to the extent
the redeemed shares would have been eligible for the exchange privilege, to
purchase Class A shares of another of the Funds, Security Income Fund, and
Security Tax-Exempt Fund without a sales charge up to the dollar amount of the
redemption proceeds. Written notice and a check in the amount of the
reinvestment from eligible stockholders wishing to exercise this reinstatement
privilege must be received by a fund within 30 days after the redemption
request was received (or such longer period as may be permitted by rules and
regulations promulgated under the Investment Company Act of 1940). The
reinstatement or exchange will be made at the net asset value on the day that
notice of the exercise of the privilege is received. Stockholders making use
of the reinstatement privilege should note that any gains realized upon the
redemption will be taxable while any losses may be deferred under the "wash
sale" provision of the Internal Revenue Code.

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<PAGE> 100

SECURITY EQUITY FUND

PART C. OTHER INFORMATION

Item 24. Financial Statements and Exhibits

a. Financial Statements

Included in Part A of this Registration Statement:

Per Share Income and Capital Changes

Included in Part B of this Registration Statement:

The audited financial statements contained in the
most recent Annual Report to Stockholders of Security
Equity Fund are incorporated by reference in Part B of
this Registration Statement.(b)

b. Exhibits:

(1) Articles of Incorporation.
(2) Corporate Bylaws of Registrant.
(3) Not applicable.
(4) Specimen copy of share certificate for
Registrant's shares of capital stock.
(5) Investment Management and Services Agreement.(a)
Sub-Advisory Contract.(b)
(6) Distribution Agreement.(a)
Class B Distribution Agreement.(a)
(7) Non-Qualified Deferred Compensation Plan.(a)
(8) Custodian Agreement.(b)
Custodian Agreement (Global Series).(a)
(9) Not applicable.
(10) Opinion of counsel as to the legality of the
securities offered.
(11) Consent of Independent Public Accountants.
(12) Not applicable.
(13) Not applicable.
(14) Not applicable.
(15) Distribution Plan.(a)
(16) Schedule of Computation of Performance.(b)

(a) Incorporated herein by reference to the Exhibits filed with
the Registrant's Post-Effective Amendment No. 69 to
Registration Statement No. 2-19458 (January 28, 1994).
(b) Incorporated herein by reference to the Exhibits filed with
the Registrant's Post-Effective Amendment No. 70 to
Registration Statement No. 2-19458 (January 27, 1995).

<PAGE> 101

Item 25. Persons Controlled by or Under Common Control with Registrant.

Not applicable.

Item 26. Number of Holders of Securities as of February 23, 1995.

<TABLE>
<CAPTION>
(1) (2)
Number of Record
Title of Class Shareholders
-------------- ----------------

<S> <C> <C>
Shares of Common Stock 28,373 Class A - Equity Series
1,349 Class B - Equity Series
1,991 Class A - Global Series
789 Class B - Global Series
</TABLE>

Item 27. Indemnification.

A policy of insurance covering Security Management Company, its
subsidiaries, including Security Distributors, Inc., and all of the
registered investment companies advised by Security Management
Company insures the Registrant's directors and officers against
liability arising by reason of an alleged breach of duty caused by
any negligent act, error or accidental omission in the scope of
their duties.

Article Tenth of Registrant's Articles of Incorporation
provides in relevant part as follows:

(5) Each director and officer (and his heirs, executors and
administrators) shall be indemnified by the Corporation against
reasonable costs and expenses incurred by him in connection with
any action, suit or proceeding to which he is made a party
by reason of his being or having been a director or officer of
the Corporation, except in relation to any action, suit or
proceeding in which he has been adjudged liable because of
willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his office.
In the absence of an adjudication which expressly absolves the
director or officer of liability to the Corporation or
its stockholders for willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the
conduct of his office, or in the event of a settlement,
each director and officer (and his heirs, executors and
administrators) shall be indemnified by the Corporation against
payment made, including reasonable costs and expenses, provided
that such indemnity shall be conditioned upon a written
opinion of independent counsel that the director or officer has
no liability by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the
conduct of his office. The indemnity provided herein shall, in
the event of settlement of any such action, suit or proceeding,
not exceed the cost and expenses (including attorneys' fees)
which would reasonably have been incurred if such action, suit
or proceeding had been litigated to a final conclusion. Such a
determination by independent counsel and the payment of amounts
by the Corporation on the basis thereof shall not prevent a

<PAGE> 102

stockholder from challenging such indemnification by appropriate
legal proceedings on the grounds that the officer or
director was liable because of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in
the conduct of his office. The foregoing rights and
indemnification shall not be exclusive of any other rights to
which the officers and directors may be entitled according to
law.

Article Sixteenth of Registrant's Articles of Incorporation, as amended
December 10, 1987, provides as follows:

"A director shall not be personally liable to the corporation or to its
stockholders for monetary damages for breach of fiduciary duty as a
director, provided that this sentence shall not eliminate nor limit the
liability of a director:

A. for any breach of his or her duty of loyalty to the
corporation or to its stockholders;
B. for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation
of law;
C. for an unlawful dividend, stock purchase or redemption
under the provisions of Kansas Statutes Annotated
(K.S.A.) 17-6424 and amendments thereto; or
D. for any transaction from which the director derived an
improper personal benefit."

Item 28. Business or Other Connections of Investment Adviser

Security Management Company also acts as investment manager to
SBL Fund, Security Cash Fund, Security Income Fund,
Security Growth and Income Fund, Security Tax-Exempt Fund, and
Security Ultra Fund and as administrator to The Parkstone Advantage
Fund.
<PAGE> 103

<TABLE>
<CAPTION>
Business* and Other Connections of the Executive
Name Officers and Directors of Registrant's Adviser
---- ------------------------------------------------
<S> <C>
Jeffrey B. Pantages President, Chief Investment Officer and Director
Security Management Company
Director
Security Cash Fund, Security
Income Fund, Security Tax-Exempt
Fund, SBL Fund, Security Growth
and Income Fund, Security Equity
Fund, Security Ultra Fund
Senior Vice President and Chief Investment Officer
Security Benefit Life Insurance Company
Security Benefit Group, Inc.
Director
Mulvane Art Center
Mulvane Art Museum
Washburn University
17th & Jewell
Topeka, Kansas
United Way of Greater Topeka
P.O. Box 4188
Topeka, Kansas
John D. Cleland Senior Vice President and Director
Security Management Company
President and Director
Security Cash Fund, Security Income Fund,
Security Tax-Exempt Fund, SBL Fund, Security
Growth and Income Fund, Security Equity Fund,
Security Ultra Fund
Vice President and Director
Security Distributors, Inc.
Trustee and Treasurer
Mount Hope Cemetery Corporation
4700 SW 17th
Topeka, Kansas
Past President
Top of the Tower Club
1 Townsite Plaza
Topeka, Kansas
Trustee
Topeka Community Foundation
5100 SW 10th
Topeka, Kansas
</TABLE>

<PAGE> 104

<TABLE>
<CAPTION>
Business* and Other Connections of the Executive
Name Officers and Directors of Registrant's Adviser
---- -------------------------------------------------
<S> <C>
James W. Lammers Senior Vice President and Director
Security Management Company
National Sales Manager, Senior Vice President and
Director
Security Distributors, Inc.
James R. Schmank Senior Vice President, Treasurer, Chief Fiscal
Officer and Director
Security Management Company
Chairman of the Board, President and Trustee
The Parkstone Advantage Fund
Vice President and Director
Security Distributors, Inc.
Vice President
Security Benefit Group, Inc. and Security
Benefit Life Insurance Company
Vice President and Treasurer
Security Growth and Income Fund,
Security Income Fund, Security
Cash Fund, Security Tax-Exempt
Fund, Security Ultra Fund,
Security Equity Fund, SBL Fund

Donald E. Caum Director
Security Management Company
Senior Vice President
Security Benefit Life Insurance Company
Security Benefit Group
Director
YMCA Metro
225 SW 12th Street
Topeka, Kansas
Executive Director
Boy Scouts of America
1020 SE Monroe
Topeka, Kansas
Jayhawk Area Council BSA
1020 SE Monroe
Topeka, Kansas
Metropolitan Ballet
Topeka, Kansas
</TABLE>
<PAGE> 105

<TABLE>
<CAPTION>
Business* and Other Connections of the Executive
Name Officers and Directors of Registrant's Adviser
---- --------------------------------------------------
<S> <C>
James L. Woods Senior Vice President
Security Management Company
Senior Vice President and Treasurer
Security Benefit Life Insurance Company and
Security Benefit Group, Inc.
Director
Midwest Superconductivity
1315 Wakarusa Drive
Lawrence, Kansas

Mark E. Young Vice President - Operations
Security Management Company
Vice President
Security Growth and Income Fund, Security
Income Fund, Security Cash Fund, Security
Tax-Exempt Fund, Security Ultra Fund, Security
Equity Fund, SBL Fund, Security Distributors,
Inc.
Trustee
Topeka Zoological Foundation
635 Gage Boulevard
Topeka, Kansas

Terry A. Milberger Senior Portfolio Manager and Vice President
Security Management Company
Vice President
Security Equity Fund, SBL Fund

Jane A. Tedder Vice President and Senior Portfolio Manager
Security Management Company
Vice President
Security Cash Fund, Security Income Fund,
Security Tax-Exempt Fund, SBL Fund

Gregory A. Hamilton Second Vice President
Security Management Company
Director
Downtown Topeka, Inc.
906 South Kansas Avenue
Topeka, Kansas
Trustee
Kansas State University
Foundation
Manhattan, Kansas
</TABLE>

<PAGE> 106

<TABLE>
<CAPTION>
Business* and Other Connections of the Executive
Name Officers and Directors of Registrant's Adviser
---- ------------------------------------------------
<S> <C>
Scott F. Stephenson Assistant Vice President and Senior Investment
Analyst
Security Management Company
Treasurer
Horizon Construction
927 North 1464 Road
Lawrence, Kansas

Andrew P. Mohn Vice President
Security Distributors, Inc.
Assistant Vice President, Mutual Fund Marketing
Administration
Security Management Company

Amy J. Lee Second Vice President and Assistant Counsel
Security Benefit Group, Inc. and Security
Benefit
Life Insurance Company
Secretary
Security Management Company, Security
Distributors, Inc., Security Cash Fund, Security
Equity Fund, Security Tax-Exempt Fund,
Security Ultra Fund, SBL Fund, Security Growth
and Income Fund, Security Income Fund
Vice President, Assistant Secretary and Assistant
Treasurer
The Parkstone Advantage Fund
Director
Everywoman's Resource Center
1002 SW Garfield Avenue
Topeka, Kansas

Brenda M. Luthi Assistant Vice President, Assistant Treasurer and
Assistant Secretary
Security Management Company
Assistant Treasurer and Assistant Secretary
Security Equity Fund, Security Ultra Fund,
Security Growth and Income Fund, Security
Income Fund, Security Cash Fund, SBL Fund,
Security Tax-Exempt Fund
Treasurer
Security Distributors, Inc.
Trustee, Vice President, Treasurer and Secretary
The Parkstone Advantage Fund
</TABLE>

<PAGE> 107

<TABLE>
<CAPTION>
Business* and Other Connections of the Executive
Name Officers and Directors of Registrant's Adviser
---- ------------------------------------------------
<S> <C>
Steven M. Bowser Assistant Vice President and Portfolio Manager
Security Management Company
Assistant Vice President
Security Benefit Life Insurance Company
Security Benefit Group, Inc.

Thomas A. Swank Assistant Vice President and Portfolio Manager
Security Management Company
Assistant Vice President
Security Benefit Life Insurance Company
Security Benefit Group, Inc.

Barbara J. Davison Assistant Vice President
Security Management Company
Security Benefit Life Insurance Company
Security Benefit Group, Inc.
President
Topeka Chapter International
Institute of Internal Auditors
Topeka, Kansas
Executive Mentor
ASSIST Catholic Social Services
Topeka, Kansas

Cindy L. Shields Assistant Vice President and Portfolio Manager
Security Management Company

Larry L. Valencia Assistant Vice President and Senior Research Analyst
Security Management Company
</TABLE>

*Located at 700 Harrison, Topeka, Kansas 66636-0001.

LEXINGTON MANAGEMENT CORPORATION:

Lexington Management Corporation, sub-adviser to Global Series, acts
as investment adviser, sub-adviser and/or sponsor to 15 investment
companies other than Registrant.
<PAGE> 108
<TABLE>
<CAPTION>
Business* and Other Connections of the Executive
Name Officers and Directors of Registrant's Adviser
---- ------------------------------------------------
<S> <C>
Robert M. DeMichele President and Director
Piedmont Management Company, Inc.
Chairman and Chief Executive Officer
Lexington Management Corporation, Lexington
Funds Distributor, Inc.
Director
Reinsurance Corporation of New York,
Continental National Corporation, Navigator's
Insurance Group, Vanguard Cellular Systems,
Inc.
Chairman of the Board
Lexington Group of Investment Companies,
Market Systems Research, Inc., Market Systems
Research Advisors, Inc., Lexington Capital
Management, Inc.

Richard M. Hisey Chief Financial Officer, Managing Director and
Director
Lexington Management Corporation
Chief Financial Officer, Vice President and Director
Lexington Funds Distributor, Inc.
Vice President and Treasurer
Market Systems Research Advisors, Inc.
Chief Financial Officer and Vice President
Lexington Group of Investment Companies

Lawrence Kantor Executive Vice President, Managing Director and
Director
Lexington Management Corporation
Executive Vice President and Director
Lexington Funds Distributor, Inc.
Vice President and Director
Lexington Group of Investment Companies

James H. O'Leary Managing Director and Director
Lexington Management Corporation

Peter Palenzona Director
Lexington Management Corporation
Chief Financial Officer and Senior Vice President
Piedmont Management Company, Inc.

Stuart S. Richardson Director
Lexington Management Corporation
Vice Chairman
Piedmont Management Company, Inc.

John B. Waymire Vice President and Director
Lexington Management Corporation
President and Director
Lexington Capital Management, Inc.
</TABLE>

* Located at P.O. Box 1515, Saddlebrook, New Jersey 07662,
except for Messrs.Palenzona and Richardson whose address is 80 Maiden
Lane, New York, New York 10038 and Mr.Waymire whose address is 2339
Gold Meadow Way, Gold River, California 95670.

<PAGE> 109

TEMPLETON QUANTITATIVE ADVISORS, INC.

Templeton Quantitative Advisors, Inc. ("TQA") (aka The DAIS Group),
provides consulting and analytical research services to the
Registrant's Asset Allocation Series. TQA serves as adviser to two
investment companies other than the Registrant.

Charles E. Johnson Director
Templeton Quantitative Advisors, Inc.

Martin L. Flanagan Director
Templeton Quantitative Advisors, Inc.

Howard J. Leonard Director
Templeton Quantitative Advisors, Inc.

Gregory E. McGowan Director
Templeton Quantitative Advisors, Inc.

Jean W. Thomas Secretary and Director of Corporate Operations
Templeton Quantitative Advisors, Inc.

Bartholomew C. Chief Financial Officer
Tesoriero Templeton Quantitative Advisors, Inc.

Suzanne V. Treasurer
Montemurro Templeton Quantitative Advisors, Inc.

George J. Esser Senior Vice President
Templeton Quantitative Advisors, Inc.

Hans L. Erickson Senior Vice President
Templeton Quantitative Advisors, Inc.
</TABLE>

*Located at 31 W. 52nd Street, Suite 10, New York, New York 10019

<PAGE> 110
MERIDIAN INVESTMENT MANAGEMENT CORPORATION

Meridian Investment Management Corporation provides quantitative
research services to the Registrant's Asset Allocation Series.

Craig T. Callahan Secretary/Treasurer
Meridian Investment Management Corporation
Vice President
Meridian Clearing Corporation

Deborah L. Zele Compliance Officer
Meridian Investment Management Corporation
Financial and Operations Principal
Meridian Clearing Corporation
</TABLE>

*Located at 12835 East Arapahoe Road, TWR II - 7th Floor, Englewood,
Colorado 80112.

Item 29. Principal Underwriters
Security Ultra Fund
Security Income Fund
Security Tax-Exempt Fund
Variflex Variable Annuity Account
Varilife Variable Annuity Account
Parkstone Variable Annuity Account
The Parkstone Advantage Fund
Security Varilife Separate Account
Variflex LS Variable Annuity Account
<PAGE> 111
(b)

<TABLE>
<CAPTION>
(1) (2) (3)
Name and Principal Position and Offices Position and Offices
Business Address* with Underwriter with Registrant
------------------ -------------------- -------------------

<S> <C> <C>
Richard K Ryan President and Director None

John D. Cleland Vice President President and Director
and Director

James W. Lammers National Sales Manager, None
Senior Vice President
and Director

James R. Schmank Vice President and Vice President
Director and Treasurer

Louis R. Jicha Vice President and None
Director

Mark E. Young Vice President Vice President

Amy J. Lee Secretary Secretary

Brenda M. Luthi Treasurer Assistant Secretary
and Assistant
Treasurer

Andrew P. Mohn Vice President None

Daniel J. McNichol Vice President None

Steven D. Eklund Regional Vice President None

Sharon A. Burlingame Regional Vice President None

Steven S. Doerrer Regional Vice President None

Anthony L.Hammock Regional Vice President None

Douglas J. Ikenberry Regional Vice President None

</TABLE>

Daniel L. Murphy Regional Vice President None

Ronald V. Vermillion Regional Vice President None

Jennifer A. Zaat Regional Vice President None

Kent N. Spillman Regional Vice President None

</TABLE>

*700 Harrison, Topeka, Kansas 66636-0001

Item 30. Location of Accounts and Records.

Certain accounts, books and other documents required to be
maintained by Section 31(a) of the 1940 Act and the rules
promulgated thereunder are maintained by Security Management
Company, 700 Harrison, Topeka, Kansas 66636-0001. Records
relating to the duties of the Registrant's custodian are maintained
by UMB Bank, N.A., 928 Grand Avenue, Kansas City, Missouri 64106 and
Chase Manhattan Bank, N.A., 1211 Avenue of the Americas, New York,
NY 10036.

Item 31. Management Services.

Not applicable.

Item 32. Undertakings.

(a) Not applicable.

(b) Registrant hereby undertakes to file a post-effective
amendment, using financial statements which need not be
certified, within four to six months from the effective date
of Registrant's 1933 Act Registration Statement.

(c) Upon the inclusion of Item 5A's required performance
information in the Registrant's annual report, the Registrant
hereby undertakes to furnish each person, to whom a
prospectus is delivered, a copy of the Registrant's latest
report to shareholders upon request and without charge.

<PAGE> 112

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Topeka, and State of Kansas on the 3rd day of
February, 1995.

SECURITY EQUITY FUND
(The Registrant)

By: John D. Cleland, President
John D. Cleland, President

Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the date indicated:

Date: February 3, 1995

Willis A. Anton, Jr. Director
Willis A. Anton, Jr.

Donald A. Chubb, Jr. Director
Donald A. Chubb, Jr.

John D. Cleland President and Director
John D. Cleland

Jack H. Hamilton Director
Jack H. Hamilton

Donald L. Hardesty Director
Donald L. Hardesty

Penny A. Lumpkin Director
Penny A. Lumpkin

Mark L. Morris, Jr. Director
Mark L. Morris, Jr.

Jeffrey B. Pantages Director
Jeffrey B. Pantages

Harold G. Worswick Director
Harold G. Worswick

<PAGE> 113
EXHIBIT INDEX

99. Articles of Incorporation

99. Bylaws

(3) None

99. Specimen copy of share certificate

(5) None

(6) None

(7) None

(8) None

(9) None

99. Opinion of Counsel

99. Consent of Independent Public Accountants

(12) None

(13) None

(14) None

(15) None

(16) None

EX 27.1 EQUITY-CLASS A FINN DATA SCHEDULE

EX 27.2 EQUITY-CLASS B

EX 27.3 GLOBAL-CLASS A

EX 27.4 GLOBAL-CLASS B

<PAGE> 1
EXHIBIT 1
ARTICLES OF INCORPORATION

SECURITY EQUITY FUND, INC.

We, the undersigned incorporators, hereby associate ourselves together to form
and establish a corporation for profit under the laws of the State of Kansas.

FIRST: The name of the corporation (hereinafter called the Corporation) is
SECURITY EQUITY FUND, INC.

SECOND: The location of its registered office in Kansas is Security Benefit
Life Building, 700 Harrison Street, Topeka Kansas.

THIRD: The name and address of its registered agent in Kansas is Dean L.
Smith, Security Benefit Life Building, 700 Harrison Street, Topeka, Kansas.

FOURTH: The purposes for which the Corporation is formed are as follows:

(1) To engage in the business of an investment company and to hold, invest
and reinvest its funds, and in connection therewith to hold part or all
of its funds in cash, and to purchase or otherwise acquire, hold for
investment or otherwise, sell, assign, negotiate, transfer, exchange or
otherwise dispose of or turn to account or realize upon, securities
(which term "securities" shall for the purposes of this Article, without
limitation of the generality thereof, be deemed to include any stocks,
shares, bonds, debentures, notes, mortgages or other obligations, and any
certificates, receipts, warrants or other instruments representing rights
to receive, purchase or subscribe for the same, or evidencing or
representing any other rights or interests therein, or in any property or
assets) created or issued by any persons, firms, associations,
corporations, syndicates, combinations, organizations, governments or
subdivisions thereof; and to exercise, as owner or holder of any
securities, all rights, powers and privileges in respect thereof; and to
do any and all acts and things for the preservation, protection,
improvement and enhancement in value of any and all such securities;
provided, however, that the Corporation shall not:

(a) purchase any securities on margin except such short-term
credits as are necessary for the clearance of transactions;

(b) effect any short sales of securities;

(c) purchase the securities of any person, firm, association,
corporation, syndicate, combination or organization for the
purpose of gaining or exercising control or management of such
person, firm, association, corporation, syndicate, combination
or organization;

<PAGE> 2

(d) purchase the securities of any person, firm, association,
corporation, syndicate, combination, organization, government
(other than the United States of America) or any subdivision
thereof, if, immediately after and as a result of such
purchase, more than five percent of its total assets,
determined in such manner as may be approved by the Board of
Directors of the Corporation and applied on a consistent
basis, would consist of the securities of such person, firm,
association, corporation, syndicate, combination,
organization, government or subdivision;

(e) lend any of its funds or other assets other than through the
purchase of publicly distributed bonds, debentures, notes and
other evidences of indebtedness as herein authorized;

(f) purchase the securities of any person, firm, association,
corporation, syndicate, combination, organization, government
or any subdivision thereof, if, upon such purchase, the
Corporation would own more than ten percent of any class of
the outstanding securities of such person, firm, association,
corporation, syndicate, combination, organization, government
or subdivision. For the purposes of this restriction, all
kinds of securities of a company representing debt shall be
deemed to constitute a single class, regardless of relative
priorities, maturities, conversion rights and other
differences, and all kinds of stock of a company preferred
over the common stock as to dividends or in liquidation shall
be deemed to constitute a single class regardless of relative
priorities, series designations, conversion rights and other
differences;

(g) purchase the securities of any investment company or
investment trust (as such terms may reasonably be understood
by the Corporation), other than the Corporation;

(h) underwrite the sale of, or participate in any underwriting or
selling group in connection with the public distribution of,
any securities (other than the capital stock of the
Corporation), provided, however, that this provision shall not
be construed to prevent or limit in any manner the right of
the Corporation to purchase securities for investment
purposes;

(i) purchase or sell any real estate or any commodities or
commodity contracts; or

(j) enter into any loan transaction as borrower unless such
borrowing is undertaken only as a temporary measure for
extraordinary and emergency purposes and then only if,
immediately after and as a result of such transaction, the
total loans outstanding against the Corporation shall be not
more than ten percent of its total assets, determined in such
manner as may be approved by the Board of Directors of the
Corporation and applied on a consistent basis.

(2) To issue and sell shares of its own capital stock in such amounts
and on such terms and conditions, for such purposes and for such
amount or kind of consideration (including,

<PAGE> 3

without limitation thereof, securities) now or hereafter permitted
by the laws of Kansas, by these Articles of Incorporation and the
Bylaws of the Corporation, as its Board of Directors may
determine.

(3) To purchase or otherwise acquire, hold, dispose of, resell,
transfer, or reissue (all without any vote or consent of
stockholders of the Corporation) shares of its capital stock, in
any manner and to the extent now or hereafter permitted by the
laws of the State of Kansas, by these Articles of Incorporation
and by the By-Laws of the Corporation.

(4) To conduct its business in all its branches at one or more offices
in Kansas and elsewhere in any part of the world, without
restriction or limit as to extent.

(5) To carry out all or any of the foregoing purposes as principal or
agent, and alone or with associates or, to the extent now or
hereafter permitted by the laws of Kansas, as a member of, or as
the owner or holder of any stock of, or shares of interest in, any
firm, association, corporation, trust or syndicate; and in
connection therewith to make or enter into such deeds or contracts
with any persons, firms, associations, corporations, syndicates,
governments or subdivisions thereof, and to do such acts and
things and to exercise such powers, as a natural person could
lawfully make, enter into, do or exercise.

(6) To do any and all such further acts and things and to exercise any
and all such further powers as may be necessary, incidental,
relative, conducive, appropriate or desirable for the
accomplishment, carrying out or attainment of all or any of the
foregoing purposes.

It is the intention that each of the purposes, specified in each
of the paragraphs of this Article FOURTH, shall be in no wise
limited or restricted by reference to or inference from the terms
of any other paragraph, but that the purposes specified in each of
the paragraphs of this Article FOURTH shall be regarded as
independent objects, purposes and powers. The enumeration of the
specific purposes of this Article FOURTH shall not be construed to
restrict in any manner the general objects, purposes and powers of
this corporation, nor shall the expression of one thing be deemed
to exclude another, although it be of like nature. The
enumeration of purposes herein shall not be deemed to exclude or
in any way limit by inference any objects, purposes or powers
which this corporation has power to exercise, whether expressly or
by force of the laws of the State of Kansas, now or hereafter in
effect, or impliedly by any reasonable construction of such laws.

FIFTH: The aggregate number of shares which the Corporation shall have
authority to issue shall be 1,000,000 shares of capital stock of the par value
of $1.00 per share.

The following provisions are hereby adopted for the purpose of setting forth
the powers, rights, qualifications, limitations or restrictions of the capital
stock of the Corporation:

(1) At all meetings of stockholders each stockholder of the Corporation shall
be entitled to one vote on each matter submitted to a vote at such
meeting for each share of stock standing in his name on the books of the
Corporation on the date, fixed in accordance with the Bylaws,

<PAGE> 4

for determination of stockholders entitled to vote at such meeting. At
all elections of directors each stockholder shall be entitled to as many
votes as shall equal the number of shares of stock multiplied by the
number of directors to be elected, and he may cast all of such votes for
a single director or may distribute them among the number to be voted
for, or any two or more of them as he may see fit.

(2) (a) Each holder of capital stock of the corporation, upon request to
the Corporation accompanied by surrender of the appropriate stock
certificate or certificates in proper form for transfer, shall be
entitled to require the Corporation to repurchase all or any part
of the shares of capital stock standing in the name of such holder
on the books of the Corporation, at the net asset value of such
shares, less a charge, not to exceed one percent of such net asset
value, if and as fixed by resolution of the Board of Directors of
the Corporation from time to time. The method of computing such
net asset value, the time as of which such net asset value shall
be computed and the time within which the Corporation shall make
payment therefor shall be determined as hereinafter provided in
Article TENTH of these Articles of Incorporation. Notwithstanding
the foregoing, the Board of Directors of the Corporation may
suspend the right of the holders of the capital stock of the
Corporation to require the Corporation to redeem shares of such
capital stock:

(i) for any period (A) during which the New York Stock Exchange
is closed other than customary weekend and holiday closings,
or (B) during which trading on the New York Stock Exchange
is restricted;

(ii) for any period during which an emergency, as defined by
rules of the Securities and Exchange Commission or any
successor thereto, exists as a result of which (A) disposal
by the Corporation of securities owned by it is not
reasonably practicable, or (B) it is not reasonably
practicable for the Corporation fairly to determine the
value of its net assets; or

(iii) for such other periods as the Securities and Exchange
Commission or any successor thereto may by order permit for
the protection of security holders of the Corporation.

(b) From and after the close of business on the day when the shares
are properly tendered for repurchase the owner shall, with respect
of said shares, cease to be a stockholder of the Corporation and
shall have only the right to receive the repurchase price in
accordance with the provisions hereof. The shares so repurchased
may, as the Board of Directors determines, be held in the treasury
of the Corporation and may be resold, or, if the laws of Kansas
shall permit, may be retired. Repurchase of shares is conditional
upon the Corporation having funds or property legally available
therefor.

(3) No holder of stock of the Corporation shall, as such holder, have any
right to purchase or subscribe for any shares of the capital stock of the
Corporation of any class which it may issue or sell (whether out of the
number of shares authorized by these Articles of

<PAGE> 5

Incorporation, or out of any shares of the capital stock of the
Corporation acquired by it after the issue thereof, or otherwise) other
than such right, if any, as the Board of Directors, in its discretion,
may determine.

(4) All persons who shall acquire stock in the Corporation shall acquire the
same subject to the provisions of these Articles of Incorporation.

SIXTH: The minimum amount of capital with which the Corporation will commence
business is One Thousand Dollars.

SEVENTH: The names and places of residence of each of the incorporators are as
follows:

Names Places of Residence

Herbert F. Laing 915 Buchanan
Topeka, Kansas

Dean L. Smith 1800 W 25th
Topeka, Kansas

Robert E. Jacoby 5026 W. 23rd Terrace
Topeka, Kansas

EIGHTH: The duration of corporate existence of the Corporation is one hundred
years.

NINTH: The number of Directors of the Corporation shall be seven. Unless
otherwise provided by the Bylaws of the Corporation, the Directors of the
Corporation need not be stockholders therein.

TENTH: (1) Except as may be otherwise specifically provided by (i) statute,
(ii) the Articles of Incorporation of the corporation as from time to time
amended or (iii) bylaw provisions adopted from time to time by the stockholders
or directors of the corporation, all powers of management, direction and
control of the corporation shall be, and hereby are, vested in the board of
directors.

(2) If the bylaws so provide, the board of directors, by resolution adopted
by a majority of the whole board, may designate two or more directors to
constitute an executive committee, which committee, to the extent
provided in said resolution or in the bylaws of the corporation, shall
have and exercise all of the authority of the board of directors in the
management of the corporation.

(3) Shares of stock in other corporations shall be voted by the President or
a Vice President, or such officer or officers of the Corporation as the
Board of Directors shall from time to time designate for the purpose, or
by a proxy or proxies thereunto duly authorized by the Board of
Directors, except as otherwise ordered by vote of the holders of a
majority of the shares of the capital stock of the Corporation
outstanding and entitled to vote in respect thereto.

<PAGE> 6

(4) Subject only to the provisions of the federal Investment Company Act of
1940, any Director, officer or employee individually, or any partnership
of which any Director, officer or employee may be a member, or any
corporation or association of which any Director, officer or employee may
be an officer, director, trustee, employee or stockholder, may be a party
to, or may be pecuniarily or otherwise interested in, any contract or
transaction of the Corporation, and in the absence of fraud no contract
or other transaction shall be thereby affected or invalidated; provided
that in case a Director, or a partnership, corporation or association of
which a Director is a member, officer, director, trustee, employee or
stockholder is so interested, such fact shall be disclosed or shall have
been known to the Board of Directors or a majority thereof; and any
Director of the Corporation who is so interested, or who is also a
director, officer, trustee, employee or stockholder of such other
corporation or association or a member of such partnership which is so
interested, may be counted in determining the existence of a quorum at
any meeting of the Board of Directors of the Corporation which shall
authorize any such contract or transaction, and may vote thereat to
authorize any such contract or transaction, with like force and effect as
if he were not such director, officer, trustee, employee or stockholder
of such other corporation or association or not so interested or a member
of a partnership so interested.

(5) Each Director and officer (and his heirs, executors and administrators)
shall be indemnified by the Corporation against reasonable costs and
expenses incurred by him in connection with any action, suit or
proceeding to which he is made a party by reason of his being or having
been a Director or officer of the Corporation, except in relation to any
action, suit or proceeding in which he has been adjudged liable because
of willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of his office. In the absence of
an adjudication which expressly absolves the Director or officer of
liability to the Corporation or its stockholders for willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved
in the conduct of his office, or in the event of a settlement, each
Director and officer (and his heirs, executors and administrators) shall
be indemnified by the Corporation against payment made, including
reasonable costs and expenses, provided that such indemnity shall be
conditioned upon a written opinion of independent counsel that the
Director or officer has no liability by reason of willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved
in the conduct of his office. The indemnity provided herein shall, in
the event of the settlement of any such action, suit or proceeding, not
exceed the costs and expenses (including attorneys' fees) which would
reasonably have been incurred if such action, suit or proceeding had been
litigated to a final conclusion. Such a determination by independent
counsel and the payment of amounts by the Corporation on the basis
thereof shall not prevent a stockholder from challenging such
indemnification by appropriate legal proceeding on the grounds that the
officer or Director was liable because of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the
conduct of his office. The foregoing rights and indemnifications shall
not be exclusive of any other right to which the officers and Directors
may be entitled according to law.

<PAGE> 7

(6) The Board of Directors is hereby empowered to authorize the issuance and
sale, from time to time, of shares of the capital stock of the
Corporation, whether for cash at not less than the par value thereof or
for such other consideration including securities as the Board of
Directors may deem advisable, in the manner and to the extent now or
hereafter permitted by the Bylaws of the Corporation and by the laws of
Kansas; provided, however, that the consideration per share to be
received by the Corporation upon the sale of any shares of its capital
stock shall not be less than the net asset value per share of such
capital stock outstanding at the time as of which the computation of such
net asset value shall be made. For purposes of the computation of net
asset value, as in these Articles of Incorporation referred to, the
following rules shall apply:

(a) The net asset value of each share of capital stock of the
Corporation surrendered to the Corporation for repurchase pursuant
to the provisions of paragraph (2) (a) of Article FIFTH of these
Articles of Incorporation shall be determined as of the close of
business on the last full business day on which the New York Stock
Exchange is open next succeeding the date on which such capital
stock is so surrendered.

(b) The net asset value of each share of capital stock of the
Corporation for the purpose of issue of such capital stock shall
be determined either as of the close of business on the last
business day on which the New York Stock Exchange was open next
preceding the date on which a subscription to such stock was
accepted, or in accordance with any provision of the Investment
Company Act of 1940, or any rule or regulation thereunder, or any
rule or regulation made or adopted by any securities association
registered under the Securities Exchange Act of 1934.

(c) The net asset value of each share of capital stock of the
Corporation, as of the close of business on any day, shall be the
quotient obtained by dividing the value, as at such close, of the
net assets of the Corporation (i.e., the value of the assets of
the Corporation less its liabilities exclusive of capital stock
and surplus) by the total number of shares of capital stock
outstanding at such close. The assets and liabilities of the
Corporation shall be determined in accordance with generally
accepted accounting principles; provided, however, that in
determining the value of the assets of the Corporation for the
purpose of obtaining the net asset value, each security listed on
the New York Stock Exchange shall be valued on the basis of the
closing sale thereof on the New York Stock Exchange on the
business day as of which such value is being determined. If there
be no such sale on such day, then the security shall be valued on
the basis of the mean between the closing and asked prices upon
such day. If no bid and asked prices are quoted for such day,
then the security shall be valued by such method as the Board of
Directors shall deem to reflect its fair market value. Securities
not listed on the New York Stock Exchange shall be valued in like
manner on the basis of quotations on any other stock exchange
which the Board of Directors may from time to time approve for
that purpose, or by such other method as the Board of Directors
shall deem to reflect their fair market value, and all other
assets of the Corporation shall be valued by such method as they
shall deem to reflect their fair market value.

<PAGE> 8

For the purposes hereof

(A) Capital stock subscribed for shall be deemed to be
outstanding as of the time of acceptance of any subscription
and the entry thereof in the books of the Corporation and
the net price thereof shall be deemed to be an asset of the
Corporation; and

(B) Capital stock surrendered for repurchase by the Corporation
pursuant to the provisions of paragraph (2)(a) of Article
FIFTH of these Articles of Incorporation shall be deemed to
be outstanding until the close of business on the date as of
which such value is being determined as provided in
paragraph 6(a) of this Article TENTH and thereupon and until
paid the price thereof shall be deemed to be a liability of
the Corporation.

(d) The net asset value of each share of the capital stock of the
Corporation, as of any time other than the close of business on
any day, may be determined by applying to the net asset value as
of the close of business on the preceding business day, computed
as provided in paragraph 6(c) of this Article TENTH, such
adjustments as are authorized by or pursuant to the directions of
the Board of Directors and designed reasonably to reflect any
material changes in the market value of securities and other
assets held and any other material changes in the assets or
liabilities of the Corporation and in the number of its
outstanding shares which shall have taken place since the close of
business on such preceding business day.

(e) In addition to the foregoing, the Board of Directors is empowered,
in its absolute discretion, to establish other bases or times, or
both, for determining the net asset value of each share of capital
stock of the Corporation.

(f) Payment of the net asset value of capital stock of the Corporation
surrendered to it for repurchase pursuant to the provisions of
paragraph 2(a) of Article FIFTH of the Articles of Incorporation
shall be made by the Corporation within seven days after surrender
of such stock to the Corporation for such purposes, to the extent
permitted by law. Any such payment may be made in portfolio
securities of the Corporation or in cash, or in both portfolio
securities and cash, as the Board of Directors shall deem
advisable, and no stockholder shall have a right, other than as
determined by the Board of Directors to have his shares
repurchased in kind. For the purpose of determining the amount of
any payment to be made, pursuant to paragraph 2(a) of Article
FIFTH, in portfolio securities, such securities shall be valued as
provided in subdivision (c) of paragraph 6 of this Article TENTH.

ELEVENTH: The private property of the stockholders shall not be subject to the
payment of the debts of the Corporation.

<PAGE> 9

TWELFTH: The Board of Directors shall have power to make, and from time to
time alter, amend and repeal the Bylaws of the Corporation; provided, however,
that the paramount power to make, alter, amend and repeal the Bylaws, or any
provision thereof, or to adopt new Bylaws, shall always be vested in the
stockholders, which power may be exercised by the affirmative vote of the
holders of a majority of the outstanding shares of stock of the Corporation
entitled to vote, at any annual or special meeting of the stockholders;
provided, further, that thereafter the directors shall have the power to
suspend, repeal, amend or otherwise alter the Bylaws or any portion thereof so
enacted by the stockholders, unless the stockholders in enacting such Bylaws or
portion thereof shall otherwise provide.

THIRTEENTH: In so far as permitted under the laws of Kansas, the stockholders
and directors shall have power to hold their meetings, if the bylaws so
provide, and to keep the books and records of the corporation outside of the
State of Kansas, and to have one or more offices, within or without the State
of Kansas, at such places as may be from time to time designated in the bylaws
or by resolution of the stockholders or directors.

FOURTEENTH: Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them, secured or unsecured, or
between this Corporation and its stockholders, or any class of them, any court,
state or federal, of competent jurisdiction within the State of Kansas may on
the application in a summary way of this corporation, or of any creditor,
secured or unsecured, or stockholders thereof, or on the application of
trustees in dissolution, or on the application of any receiver or receivers
appointed for this corporation by any court, state or federal, of competent
jurisdiction, order a meeting of the creditors or class of creditors secured or
unsecured or of the stockholders or class of stockholders of this corporation,
as the case may be, to be summoned in such manner as said court directs. If a
majority in number representing three fourths in value of the creditors or
class of creditors, or of the stockholders, or class of stockholders of this
corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this corporation as a consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, or on all the
stockholders or class of stockholders, of this corporation, as the case may be,
and also on this corporation.

FIFTEENTH: This corporation reserves the right to alter, amend or repeal any
provision contained in these Articles of Incorporation in the manner now or
hereafter prescribed by the statutes of Kansas, and all rights and powers
conferred herein are granted subject to this reservation; and, in particular,
the corporation reserves the right and privilege to amend its Articles of
Incorporation from time to time so as to authorize other or additional classes
of shares of stock, to increase or decrease the number of shares of stock of
any class now or hereafter authorized and to vary the preferences,
qualifications, limitations, restrictions and the special or relative rights or
other characteristics in respect of the shares of each class, in the manner and
upon such minimum vote of the stockholders entitled to vote thereon as may at
the time be prescribed or be permitted by the laws of Kansas, or such larger
vote as may then be required by the Articles of Incorporation of the
corporation.

<PAGE> 10

IN WITNESS WHEREOF, we have hereunto subscribed our names this 27th day of
November, 1961.

Herbert F. Laing

Dean L. Smith

Robert E. Jacoby

STATE OF KANSAS )
) ss.
COUNTY OF SHAWNEE )

Personally appeared before me, a notary public in and for Shawnee County,
Kansas, the above named HERBERT F. LAING, DEAN L. SMITH AND ROBERT E. JACOBY,
who are personally known to me to be the same persons who executed the
foregoing instrument of writing, and such persons duly acknowledged the
execution of the same.

IN TESTIMONY WHEREOF, I have hereunto subscribed my name and affixed my
official seal this 27th day of November, 1961.

Geraldine Skinner
Notary Public

My commission expires December 31, 1961.

<PAGE> 11
Topeka, Kansas November 27, 1961

OFFICE OF SECRETARY OF STATE

RECEIVED OF SECURITY EQUITY FUND, INC.

and deposited in the State Treasury, fees on these Articles of Incorporation as
follows:

Application Fee . . . . . . . . . . . . . . . . . . . . . $ 25.00

Filing and Recording Fee . . . . . . . . . . . . . . . . . $ 2.50

Capitalization Fee . . . . . . . . . . . . . . . . . . . . $550.00

Paul R. Shanahan
Secretary of State

By James L. Galb
Assistant Secretary of State

<PAGE> 12

CERTIFICATE OF AMENDMENT
OF THE ARTICLES OF INCORPORATION OF
SECURITY EQUITY FUND, INC.

We, DEAN L. SMITH, President, and WILLIAM J. MILLER, JR., Secretary, of
Security Equity Fund, Inc., a corporation organized and existing under the laws
of the State of Kansas (hereinafter sometimes for convenience called the
"Company"), with its principal office in the City of Topeka, Shawnee County,
Kansas, do hereby certify as follows:

FIRST: That the Board of Directors of the Company at a meeting held on October
16, 1962, duly adopted the following amendment to the Articles of Incorporation
of the Company, and declared the advisability of said amendment, said
resolution reading as follows:

RESOLVED, that the Articles of Incorporation of Security Equity Fund, Inc., be
amended by deleting the present Article NINTH of said Articles of Incorporation
and inserting in lieu thereof the following Article NINTH:

NINTH: Directors of the corporation shall be nine. Unless otherwise
provided by the Bylaws of the corporation, the directors of the
corporation need not be stockholders therein.

SECOND: That the Board of Directors of the Company also duly adopted the
following amendment to the Articles of Incorporation of the Company, and
declared the advisability of said amendment, said resolution reading as
follows:

RESOLVED, that the Articles of Incorporation of Security Equity Fund, Inc. be
amended by deleting the present subdivision (a) of paragraph (6) of Article
TENTH of said Articles of Incorporation and inserting in lieu thereof the
following subdivision (a) of paragraph (6) of Article TENTH:

(a) The net asset value of each share of capital stock of the
corporation surrendered to the corporation for repurchase pursuant to
the provisions of paragraph (2)(a) of Article FIFTH of these Articles
of Incorporation shall be determined as of the close of business on
the first full business day on which the New York Stock Exchange is
open next succeeding the date on which such capital stock is so
surrendered.

THIRD: That thereafter on the 4th day of December, 1962, upon notice duly
given as provided by law and the bylaws of the Company to each holder of shares
of Capital Stock of the Company entitled to vote on the proposed amendments of
the Articles of Incorporation, the annual meeting of said stockholders was held
and there were present at such meeting in person or by proxy the holders of
more than a majority of the voting stock of the Company.

FOURTH: That at said annual meeting of the stockholders of the Company, the
aforesaid resolutions, set forth in Division FIRST and Division SECOND hereof,
amending the Articles of

<PAGE> 13

Incorporation of the Company, were presented for consideration and a vote of
the stockholders present at said meeting in person and by proxy was taken by
ballot for and against each of the proposed resolutions, which vote was
conducted by two Judges appointed for that purpose by the officer presiding at
such meeting; that the said Judges decided upon the qualifications of the
voters and accepted their votes and when the voting was completed said Judges
counted and ascertained the number of shares voted respectively for and against
each of the proposed amendments to the Articles of Incorporation and declared
that the persons holding a majority of the Capital Stock of the Company had
voted for each of the proposed amendments; and the said Judges made out a
certificate accordingly that the number of shares of Capital Stock issued and
outstanding and entitled to vote on said resolutions was 23,732 shares of
Capital Stock, that 23,533 shares of said stock were voted for and 100 shares
of said stock were voted against the proposed amendment set forth in Division
FIRST hereof, that 23,633 shares of said stock were voted for and 0 shares of
said stock were voted against the proposed amendment set forth in Division
SECOND hereof, and the said Judges subscribed and delivered the said
certificate to the Secretary of the Company.

FIFTH: That a certificate of said Judges having been made, subscribed and
delivered as aforesaid and it appearing by said certificate of the Judges that
the holders of more than a majority of the Capital Stock of the Company
entitled to vote thereon had voted in favor of each of the amendments to the
Articles of Incorporation set forth in Division FIRST and Division SECOND
hereof, the said amendments were declared duly adopted.

SIXTH: That, accordingly, the amendments to Articles NINTH and TENTH of the
Articles of Incorporation of Security Equity Fund, Inc., as heretofore set
forth in Division FIRST and Division SECOND of this certificate, have been duly
adopted in accordance with Article 42 of the General Corporation Code of
Kansas.

SEVENTH: That the capital of the Company will not be reduced under or by
reason of said amendment.

IN WITNESS WHEREOF, we, Dean L. Smith, President, and William J. Miller, Jr.,
Secretary, have hereunto severally set our hands and caused the corporate seal
of the Company to be hereto affixed this 4th day of December, 1962.

Dean L. Smith
President

William J. Miller, Jr.
Secretary
[Corporate Seal]

<PAGE> 14

STATE OF KANSAS )
) ss.
COUNTY OF SHAWNEE )

BE IT REMEMBERED, that on this 4th day of December, 1962, before me, a Notary
Public in and for the county and state aforesaid, came Dean L. Smith and
William J. Miller, Jr., President and Secretary, respectively, of Security
Equity Fund, Inc., a Kansas corporation, who are personally known to me to be
the President and Secretary, respectively, of said corporation and the same
persons who executed the foregoing instrument and they duly acknowledged the
execution of the same.

IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my notarial seal
on the day and year last above written.

Florence McKuisey
Notary Public

My Commission Expires November 21, 1965

OFFICE OF SECRETARY OF STATE
Topeka, Kansas December 4, 1962

Received of SECURITY EQUITY FUND, INC.

Two and fifty/100 ------------------------------ Dollars,

fee for filing the within Certificate of Amendment.

Paul R. Shanahan
SECRETARY OF STATE

By: Assistant Secretary of State

<PAGE> 15

CERTIFICATE OF AMENDMENT
OF THE ARTICLES OF INCORPORATION OF
SECURITY EQUITY FUND, INC.

We, DEAN L. SMITH, President and WILL J. MILLER, JR., Secretary, of Security
Equity Fund, Inc., a corporation organized and existing under the laws of the
State of Kansas [hereinafter sometimes for convenience called the "Company"],
with its principal office in the City of Topeka, Shawnee County, Kansas, do
hereby certify as follows:

FIRST: That the board of directors of the Company at a meeting held on
December 2, 1963, duly adopted the following amendment to the Articles of
Incorporation of the Company, and declared the advisability of said amendment,
said resolution reading as follows:

FURTHER RESOLVED, That the Articles of Incorporation of the Fund be amended by
deleting the present subdivision (a) of paragraph (6) of Article TENTH of said
Articles of Incorporation and inserting in lieu thereof the following
subdivision (a) of paragraph (6) of Article TENTH:

(a) The net asset value of each share of capital stock of the
Corporation tendered to the Corporation for repurchase pursuant to the
provisions of paragraph (2) (a) of Article FIFTH of these Articles of
Incorporation shall be determined as of the close of business on the
date on which such capital stock is so tendered.

SECOND: That the board of directors of the Company also duly adopted the
following amendment to the Articles of Incorporation of the Company, and
declared the advisability of said amendment, said resolution reading as
follows:

FURTHER RESOLVED, That the Articles of Incorporation of Security Equity Fund,
Inc., be amended by deleting the first paragraph only of the present
subdivision (c) of paragraph (6) of Article TENTH of said Articles of
Incorporation and inserting in lieu thereof the following first paragraph of
subdivision (c) of paragraph (6) of Article TENTH:

<PAGE> 16

such method as the Board of Directors shall deem to reflect its fair
market value. Securities not listed on the New York Stock Exchange
shall be valued in like manner on the basis of quotations on any other
stock exchange which the Board of Directors may from time to time
approve for that purpose, or by such other method as the Board of
Directors shall deem to reflect their fair market value, and all other
assets of the Corporation shall be valued by such method as they shall
deem to reflect their fair market value.

THIRD: That thereafter on the 20th day of December, 1963, upon notice duly
given as provided by law and the bylaws of the Company to each holder of shares
of Capital Stock of the Company entitled to vote on the proposed amendments of
the Articles of Incorporation, the deferred annual meeting of said stockholders
was held and there were present at such meeting in person or by proxy the
holders of more than a majority of the voting stock of the Company.

FOURTH: That at said deferred annual meeting of the stockholders of the
Company, the aforesaid resolutions, set forth in Division FIRST and Division
SECOND hereof, amending the Articles of Incorporation of the Company, were
presented for consideration and a vote of the stockholders present at said
meeting in person and by proxy was taken by ballot for and against each of the
proposed resolutions, which vote was conducted by two Judges appointed for that
purpose by the officer presiding at such meeting; that the said Judges decided
upon the qualifications of the voters and accepted their votes and when the
voting was completed said Judges counted and ascertained the number of shares
voted respectively for and against each of the proposed amendments to the
Articles of Incorporation and declared that the persons holding a majority of
the Capital Stock of the Company had voted for each of the proposed amendments;
and the said Judges made out a certificate accordingly that the number of
shares of Capital Stock issued and outstanding and entitled to vote on said
resolutions was 41,213 shares of Capital Stock, that 30,185 shares of said
stock were voted for and 0 shares of said stock were voted against the proposed
amendments set forth in Division FIRST hereof, that 30,185 shares of said stock
were voted for and 0 shares of said stock were voted against the proposed
amendment set forth in DIVISION SECOND hereof, and the said Judges subscribed
and delivered the said certificate to the Secretary of the Company.

SIXTH: That, accordingly, the amendments to Article TENTH of the Articles of
Incorporation of Security Equity Fund, Inc., as heretofore set forth in
Division FIRST and Division SECOND of this certificate, have been duly adopted
in accordance with Article 42 of the General Corporation Code of Kansas.

SEVENTH: That the capital of the Company will not be reduced under or by
reason of said amendment.

<PAGE> 17

IN WITNESS WHEREOF, we, Dean L. Smith, President, and Will J. Miller, Jr.,
Secretary, have hereunto severally set our hands and caused the corporate seal
of the Company to be hereto affixed this 20th day of December, 1963.

Dean L. Smith
President

Will J. Miller, Jr.
Secretary
[Corporate Seal]

STATE OF KANSAS )
) ss.
COUNTY OF SHAWNEE )

BE IT REMEMBERED, that on this 20th day of December, 1963, before me, a Notary
Public in and for the county and state aforesaid, came Dean L. Smith and Will
J. Miller, Jr., President and Secretary, respectively, of Security Equity Fund,
Inc., a Kansas corporation, who are personally known to me to be the President
and Secretary, respectively, of said corporation, and the same persons who
executed the foregoing instrument and they duly acknowledged the execution of
the same.

IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my notarial seal
on the day and year last above written.

Amelia F. Letuke
Notary Public

My Commission expires: June 4, 1967

OFFICE OF SECRETARY OF STATE
Topeka, Kansas December 20, 1963

RECEIVED OF SECURITY EQUITY FUND, INC.

Two and fifty/100 ------------------------------ Dollars,

fee for filing the within Certificate of Amendment.

Paul R. Shanahan
SECRETARY OF STATE

William R. Stewart
By: Assistant Secretary of State

<PAGE> 18

CERTIFICATE OF AMENDMENT
OF THE ARTICLES OF INCORPORATION OF
SECURITY EQUITY FUND, INC.

We, DEAN L. SMITH, President, and WILL J. MILLER, JR., Secretary, of Security
Equity Fund, Inc., a corporation organized and existing under the laws of the
State of Kansas (hereinafter sometimes for convenience called the "Company"),
with its principal office in the City of Topeka, Shawnee County, Kansas, do
hereby certify as follows:

FIRST: That the board of directors of the Company at a meeting held on April
7, 1966, duly adopted the following amendment to the Articles of Incorporation
of the Company, and declared the advisability of said amendment, said
resolution reading as follows:

"RESOLVED, That the Articles of Incorporation of Security Equity Fund,
Inc., as heretofore amended, be further amended by deleting the first
paragraph of the Article Fifth and by inserting in lieu thereof the
following paragraph:

"The aggregate number of shares which the Corporation shall
have authority to issue shall be 5,000,000 shares of capital
stock of the par value of $1.00 per share.""

SECOND: That thereafter on the 9th day of June, 1966, upon notice duly given
as provided by law and the bylaws of the Company to each holder of shares of
Capital Stock of the Company entitled to vote on the proposed amendment of the
Articles of Incorporation, the special meeting of said stockholders was held
and there were present at such meeting in person or by proxy the holders of
more than a majority of the voting stock of the Company.

THIRD: That at said special meeting of the stockholders of the Company, the
aforesaid resolution, set forth in division FIRST hereof, amending the Articles
of Incorporation of the Company, was presented for consideration and a vote of
the stockholders present at said meeting in person and by proxy was taken by
ballot for and against each of the proposed resolution, which vote was
conducted by two Judges appointed for that purpose by the officer presiding at
such meeting; that the said Judges decided upon the qualifications of the
voters and accepted their votes and when the voting was completed said Judges
counted and ascertained the number of shares voted respectively for and against
the proposed amendment to the Articles of Incorporation and declared that the
persons holding a majority of the Capital Stock of the Company had voted for
the proposed amendment; and the said Judges made out a certificate accordingly
that the number of shares of Capital Stock issued and outstanding and entitled
to vote on said resolution was 578,333 shares of Capital Stock, that 335,865
shares of stock were voted for and 4,199 shares of stock were voted against the
proposed amendment set forth in division FIRST hereof, and the said Judges
subscribed and delivered the said certificate to the Secretary of the Company.

<PAGE> 19

FOURTH: That a certificate of said Judges having been made, subscribed and
delivered as aforesaid and it appearing by said certificate of the Judges that
the holders of more than a majority of the Capital Stock of the Company
entitled to vote thereon had voted in favor of the amendment to the Articles of
Incorporation set forth in division FIFTH hereof, the said amendment was
declared duly adopted.

FIFTH: That, accordingly, the amendment to Article FIFTH of the Articles of
Incorporation of Security Equity Fund, Inc., as heretofore set forth in
Division FIRST of this certificate, have been duly adopted in accordance with
Article 42 of the General Corporation Code of Kansas.

SIXTH: That the capital of the Company will not be reduced under or by reason
of said amendment.

Dean L. Smith
President

Will J. Miller, Jr.
Secretary

(Corporate Seal)

STATE OF KANSAS )
) ss.
COUNTY OF SHAWNEE )

BE IT REMEMBERED, that on this 9th day of June, 1966, before me, a Notary
Public in and for the County and State aforesaid, came Dean L. Smith and Will
J. Miller, Jr., President and Secretary, respectively, of Security Equity Fund,
Inc., a Kansas corporation, who are personally known to me to be the President
and Secretary, respectively, of said corporation, and the same persons who
executed the foregoing instrument and they duly acknowledged the execution of
the same.

IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my notarial seal
on the day and year last above written.

Lois J. Hedrick
Notary Public

My Commission Expires January 8, 1968.

OFFICE OF SECRETARY OF STATE
Topeka, Kansas June 13, 1966

RECEIVED OF SECURITY EQUITY FUND, INC.

Two Thousand Fifty Two and fifty/100 ------------------------------ Dollars,

fee for filing the within Certificate of Amendment.

Elwill M. Shanahan
Secretary of State

William R. Stewart
By: Assistant Secretary of State

<PAGE> 20

CERTIFICATE OF AMENDMENT
OF THE ARTICLES OF INCORPORATION OF
SECURITY EQUITY FUND, INC.

FIRST: That the board of directors of the Company at a meeting held on July 6,
1967, duly adopted the following amendment to the Articles of Incorporation of
the Company, and declared the advisability of said amendment, said resolution
reading as follows:

"The aggregate number of shares which the Corporation shall
have authority to issue shall be 15,000,000 shares of capital
stock of the par value of $1.00 per share."

SECOND: That thereafter on the 30th day of August, 1967, upon notice duly
given as provided by law and the bylaws of the Company to each holder of shares
of Capital Stock of the Company entitled to vote on the proposed amendment of
the Articles of Incorporation, the special meeting of said stockholders was
held and there were present at such meeting in person or by proxy the holders
of more than a majority of the voting stock of the Company.

THIRD: That at said special meeting of the stockholders of the Company, the
aforesaid resolution, set forth in division FIRST hereof, amending the Articles
of Incorporation of the Company, was presented for consideration and a vote of
the stockholders present at said meeting in person and by proxy was taken by
ballot for and against the proposed resolution, which vote was conducted by two
Judges appointed for that purpose by the officer presiding at such meeting;
that the said Judges decided upon the qualifications of the voters and accepted
their votes and when the voting was completed said Judges counted and
ascertained the number of shares voted respectively for and against the
proposed amendment to the Articles of Incorporation and declared that the
persons holding a majority of the Capital Stock of the Company had voted for
the proposed amendment; and the said Judges made out a certificate accordingly
that the number of shares of Capital Stock issued and outstanding and entitled
to vote on said resolution was 3,118,651 shares of Capital Stock, that
1,613,533 shares of stock were voted for and 45,071 shares of stock were voted
against the proposed amendment set forth in division FIRST hereof, and the said
Judges subscribed and delivered the said certificate to the Secretary of the
Company.

FOURTH: That a certificate of said Judges having been made, subscribed and
delivered as aforesaid and it appearing by said certificate of the Judges that
the holders of more than a majority

<PAGE> 21

of the Capital Stock of the Company entitled to vote thereon had voted in favor
of the amendment to the Articles of Incorporation set forth in division FIRST
hereof, the said amendment was declared duly adopted.

FIFTH: That, accordingly, the amendment to Article Fifth of the Articles of
Incorporation of Security Equity Fund, Inc., as heretofore set forth in
Division FIRST of this certificate, has been duly adopted in accordance with
Article 42 of the General Corporation Code of Kansas.

SIXTH: That the capital of the Company will not be reduced under or by reason
of said amendment.

Dean L. Smith
President

(Corporate Seal)

Will J. Miller, Jr.
Secretary

STATE OF KANSAS )
) ss.
COUNTY OF SHAWNEE )

BE IT REMEMBERED, that on this 30th day of August, 1967, before me, a Notary
Public in and for the County and State aforesaid, came Dean L. Smith and Will
J. Miller, Jr., President and Secretary, respectively, of Security Equity Fund,
Inc., a Kansas corporation, who are personally known to me to be the President
and Secretary, respectively, of said corporation, and the same persons who
executed the foregoing instrument and they duly acknowledged the execution of
the same.

IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my notarial seal
on the day and year last above written.

Lois J. Hedrick
Notary Public

My Commission Expires: January 8, 1968

OFFICE OF SECRETARY OF STATE
Topeka, Kansas August 30, 1967

RECEIVED OF SECURITY EQUITY FUND, INC.

Five Thousand Fifty Two and fifty/100 ----------------------------- Dollars,

Fee for filing the within Amendment.

Elwill M. Shanahan
SECRETARY OF STATE

William R. Stewart
By: Assistant Secretary of State

<PAGE> 22

CERTIFICATE OF AMENDMENT TO ARTICLES OF INCORPORATION
OF
SECURITY EQUITY FUND, INC.

FIRST: That the board of directors of the Company at a meeting held on October
10, 1968, duly adopted the following amendment to the Articles of Incorporation
of the Company, and declared the advisability of said amendment, said
resolution reading as follows:

RESOLVED, That the Articles of Incorporation of Security Equity Fund,
Inc., as heretofore amended, be further amended by deleting the first
paragraph of the Article FIFTH and by inserting in lieu thereof the
following paragraph:

"The aggregate number of shares which the Corporation shall have the
authority to issue shall be 100,000,000 shares of capital stock of the
par value of $0.25 (twenty-five cents) per share. Upon the
effectiveness of this amendment:

(a) Each share of capital stock, par value $1.00 per share, heretofore
issued by the Corporation and presently outstanding shall, without
further act or deed, be deemed to be changed and converted into four
shares of capital stock of the par value of $0.25 each; and

(b) Each stock certificate for shares of capital stock of the par
value of $1.00 per share issued and outstanding immediately prior to
this amendment evidencing shares or capital stock, par value $1.00 per
share, shall be deemed to evidence an identical number of shares of
capital stock of the par value of $0.25 each."

SECOND: That thereafter on the 12th day of December, 1968, upon notice duly
given as provided by law and the bylaws of the Company to each holder of shares
of Capital Stock of the Company entitled to vote on the proposed amendment of
the Articles of Incorporation, the annual meeting of said stockholders was held
and there were present at such meeting in person or by proxy the holders of
more than a majority of the voting stock of the Company.

THIRD: That at said annual meeting of the stockholders of the Company, the
aforesaid resolution, set forth in division FIRST hereof, amending the Articles
of Incorporation of the Company, was presented for consideration and a vote of
the stockholders present at said meeting in person and by proxy was taken by
ballot for and against the proposed resolution, which vote was conducted by two
Judges appointed for that purpose by the officer presiding at such meeting;
that the said Judges decided upon the qualifications of the voters and accepted
their votes and when the voting was completed said Judges counted and
ascertained the number of shares voted

<PAGE> 23

respectively for and against the proposed amendment to the Articles of
Incorporation and declared that the persons holding a majority of the Capital
Stock of the Company had voted for the proposed amendment; and the said Judges
made out a certificate accordingly that the number of shares of Capital Stock
issued and outstanding and entitled to vote on said resolution was 7,683,768
shares of Capital Stock, that 4,391,182 shares of stock were voted for, and
214,740 shares of stock were voted against the proposed amendment set forth in
division FIRST hereof, and the said Judges subscribed and delivered the said
certificate to the Secretary of the Company.

FOURTH: That a certificate of said Judges having been made, subscribed and
delivered as aforesaid and it appearing by said certificate of the Judges that
the holders of more than a majority of the Capital Stock of the Company
entitled to vote thereon had voted in favor of the amendment to the Articles of
Incorporation set forth in division FIRST hereof, the said amendment was
declared duly adopted.

SIXTH: That the capital of the Company will not be reduced under or by reason
of said amendment.

IN WITNESS WHEREOF, We, Dean L. Smith, President, and Will J. Miller, Jr.,
Secretary, have hereunto severally set our hands and caused the corporate seal
of the Company to be hereto affixed this 31st day of December, 1968.

Dean L. Smith, President

Will J. Miller, Jr., Secretary

<PAGE> 24
STATE OF KANSAS )
) ss.
COUNTY OF SHAWNEE )

BE IT REMEMBERED, that on this 31st day of December, 1968, before me, a Notary
Public in and for the County and State aforesaid, came Dean L. Smith and Will
J. Miller, Jr., President and Secretary, respectively, of Security Equity Fund,
Inc., a Kansas corporation, who are personally known to me to be the President
and Secretary, respectively, of said corporation, and the same persons who
executed the foregoing instrument and they duly acknowledged the execution of
the same.

IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my notarial seal
on the day and year last above written.

Lois J. Hedrick
Notary Public

My Commission Expires January 8, 1972.

OFFICE OF SECRETARY OF STATE
Topeka, Kansas December 31, 1968

Received of SECURITY EQUITY FUND, INC.

Five Thousand, Fifty-two and 50/100 ------------------------------ DOLLARS

fee for filing the within Amendment.

Elwill M. Shanahan, Secretary of State

Hart Workman, Assistant Secretary of State

<PAGE> 25

CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION

SECURITY EQUITY FUND, INC.

We, Dean L. Smith, president, and Will J. Miller, Jr., secretary, of Security
Equity Fund, Inc., a corporation organized and existing under the laws of the
State of Kansas (hereinafter called the "Corporation"), do hereby certify as
follows:

FIRST. That on October 30, 1969, the board of directors of the Corporation
duly adopted the following resolution setting forth the following proposed
amendment to the Articles of Incorporation of the Corporation, and declared the
advisability of said amendment, said resolution reading as follows:

RESOLVED, that the Articles of Incorporation of Security Equity Fund,
Inc., a Kansas corporation, be amended by deleting the present first
sentence of subparagraph (a) of paragraph (2) of Article FIFTH thereof
in its entirety and substituting in lieu thereof the following new
first sentence of subparagraph (a) of paragraph (2) of Article FIFTH:

(2)(a) Each holder of capital stock of the Corporation, upon
request to the Corporation accompanied by surrender of the
appropriate stock certificate or certificates in proper form
for transfer, shall be entitled to require the Corporation to
repurchase all or any part of the shares of capital stock
standing in the name of such holder on the books of the
Corporation, at the net asset value of such shares.

SECOND. That on October 30, 1969, the board of directors of the Corporation
also duly adopted the following resolution setting forth the following proposed
amendment to the Articles of Incorporation of the Corporation, and declared the
advisability of said amendment, said resolution reading as follows:

RESOLVED, that the Articles of Incorporation of Security Equity Fund,
Inc., a Kansas corporation, be amended by deleting the present first
paragraph and subparagraphs (a) and (b) of paragraph (6) of Article
TENTH thereof in their entirety and substituting in lieu thereof the
following new first paragraph and new subparagraphs (a) and (b) of
paragraph (6) of Article TENTH:

<PAGE> 26

Board of Directors may deem advisable, in the manner and to
the extent now or hereafter permitted by the Bylaws of the
Corporation and by the laws of Kansas; provided, however, that
the consideration per share to be received by the Corporation
upon the sale of any shares of its capital stock shall not be
less than the net asset value per share of such capital stock
outstanding at the time as of which the computation of such
net asset value shall be made. For the purposes of the
computation of net asset value, as in these Articles of
Incorporation referred to, such computation shall be computed
as provided in the Investment Company Act of 1940 or in any
other statute administered by the Securities and Exchange
Commission or any successor thereto, or in any rule,
regulation or order issued under any such statute and, except
as so provided, shall be computed in accordance with the
following rules:

(a) the net asset value of each share of capital stock of the
Corporation surrendered to the Corporation for repurchase
pursuant to the provisions of paragraph (2) (a) of Article
FIFTH of these Articles of Incorporation shall be the net
asset value next computed after the time such share is
tendered for redemption.

(b) the net asset value of each share of capital stock of the
Corporation for the purpose of issue of such capital stock
shall be determined at the close of business on the New York
Stock Exchange (the "Exchange") on each day on which the
Exchange is open with respect to all orders accepted prior to
such close of business of the Exchange on that day. Orders
accepted after the close of business of the Exchange will be
filled on the basis of the offering price determined as of the
close of business on the Exchange on the next day on which the
Exchange is open.

THIRD. That on December 30, 1969, at the annual meeting of the stockholders of
the Corporation, notice of which annual meeting was duly given as provided by
law and the bylaws of the Corporation to each holder of shares of capital stock
of the Corporation entitled to vote on the proposed amendments of the Articles
of Incorporation, the aforesaid resolutions set forth in Division FIRST and
Division SECOND, amending the Articles of Incorporation of the Corporation,
were presented for consideration, and a vote of the stockholders present at
said meeting in person or by proxy was taken by ballot for and against each of
the proposed resolutions, which votes were conducted by two judges appointed
for that purpose by the officer presiding at such meeting; that the said judges
decided upon the qualifications of the voters and accepted their votes and when
the voting was completed said judges counted and ascertained the number of
shares voted respectively for and against each of the proposed amendments to
the Articles of Incorporation and declared that the persons holding a majority
of the capital stock of the Corporation had voted for each of the proposed
amendments; and the said judges made out a certificate accordingly that the
number of shares of capital stock of the Corporation issued and

<PAGE> 27

outstanding and entitled to vote on said resolutions was 21,222,857 shares of
capital stock, that 20,919,065 shares of said stock were voted for and 281,869
shares of said stock were voted against the proposed amendment set forth in
Division FIRST hereof, that 20,976,162 shares of said stock were voted for and
224,772 shares of said stock were voted against the proposed amendment set
forth in Division SECOND hereof, and the said judges subscribed and delivered
the said certificate to the secretary of the Corporation.

FOURTH. That the certificate of said judges having been made, subscribed and
delivered as aforesaid, and it appearing by said certificate of the judges that
the holders of more than a majority of the capital stock of the Corporation
entitled to vote thereon had voted in favor of each of the amendments to the
Articles of Incorporation set forth in Division FIRST and Division SECOND
hereof, the said amendments were declared duly adopted.

FIFTH. That accordingly, the amendments of the Articles of Incorporation of
the Corporation, as hereinbefore set forth in Division FIRST and Division
SECOND of this certificate, have been duly adopted in accordance with Article
42 of the General Corporation Code of Kansas.

SIXTH. That the capital of the Corporation will not be reduced under or by
reason of said amendments.

IN WITNESS WHEREOF, we, Dean L. Smith, president, and Will J. Miller, Jr.,
secretary, have hereunto severally set our hands and caused the corporate seal
of the Corporation to be hereto affixed this 30th day of December, 1969.

Dean L. Smith, President

Will J. Miller, Jr., Secretary

[CORPORATE SEAL]

STATE OF KANSAS )
) ss.
COUNTY OF SHAWNEE )

BE IT REMEMBERED, that on this 30th day of December, 1969, before me, a notary
public in and for the County and State aforesaid, came DEAN L. SMITH,
President, and WILL J. MILLER, JR., Secretary, of Security Equity Fund, Inc., a
Kansas corporation, who are personally known to me to be the President and
Secretary, respectively, of said Corporation and the same persons who executed
the foregoing instrument and they duly acknowledged the execution of the same.

IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my notarial seal
on the day and year last above written.

Lois J. Hedrick
Notary Public

My commission expires: January 8, 1972.

<PAGE> 28

OFFICE OF SECRETARY OF STATE
Topeka, Kansas

December 30, 1969

Received of SECURITY EQUITY FUND, INC.

Two and 50/100 -------------------------------- Dollars,

fee for filing the within Amendment.

Elwill M. Shanahan
Secretary of State

By Hart Workman
Assistant Secretary of State

<PAGE> 29

CHANGE OF LOCATION OF REGISTERED OFFICE
AND/OR
CHANGE OF RESIDENT AGENT

STATE OF KANSAS )
) ss.
COUNTY OF SHAWNEE )

We, Dean L. Smith President and Larry D. Armel Secretary of Security Equity
Fund, Inc., a corporation organized and existing under and by virtue of the
laws of the State of Kansas do hereby certify that a regular meeting of the
Board of Directors of said corporation held on the 9th day of July 1975, the
following resolution was duly adopted.

Be it further resolved that the Resident Agent of said corporation in the
State of Kansas be changed from Dean L. Smith, Security Benefit Life Bldg., 700
Harrison Street, Topeka, Shawnee, Kansas the same being of record in the office
of Secretary of State of Kansas to Security Management Company, Inc., Security
Benefit Life Bldg., 700 Harrison Street, Topeka, Shawnee, Kansas 66636.

The President and Secretary are hereby authorized to file and record the
same in the manner as required by law.

Dean L. Smith, President
SEAL
Larry D. Armel, Secretary

STATE OF KANSAS )
) ss.
COUNTY OF SHAWNEE )

Be it remembered, that before me Lois J. Hedrick a Notary Public in and for
the County and State aforesaid, same Dean L. Smith President, and Larry D.
Armel Secretary, of Security Equity Fund, Inc. a corporation, personally known
to me to be the persons who executed the foregoing instrument of writing as
president and secretary respectively, and duly acknowledged the execution of
the same this 9th day of July 1975.

[SEAL] Lois J. Hedrick, Notary Public

My commission expires January 8, 1976.

<PAGE> 30

CERTIFICATE OF AMENDMENT TO ARTICLES OF INCORPORATION
OF
SECURITY EQUITY FUND, INC.

STATE OF KANSAS )
) ss.
COUNTY OF SHAWNEE )

We, Everett S. Gille, President, and Larry D. Armel, Secretary of
Security Equity Fund, Inc., a corporation organized and existing under the laws
of the State of Kansas, and whose registered office is Security Benefit Life
Building, 700 Harrison Street, Topeka, Shawnee, Kansas, do hereby certify that
at the regular meeting of the Board of Directors of said corporation held on
the 13th day of October, 1976, said board adopted a resolution setting forth
the following amendment to the Articles of Incorporation and declared its
advisability, to wit:

RESOLVED, that the Articles of Incorporation of Security Equity Fund,
Inc., a Kansas corporation, be amended by adding the following new
subparagraph (2)(c) to Article FIFTH thereof, such new subparagraph
(2)(c) to be inserted immediately following subparagraph (2)(b) and
immediately before paragraph (3) thereof:

(c) The Corporation, pursuant to a resolution by the Board of
Directors and without the vote or consent of stockholders of the
Corporation, shall have the right to redeem at net asset value all
shares of capital stock of the Corporation in any stockholder account
in which there has been no investment (other than the reinvestment of
income dividends or capital gains distributions) for at least six
months and in which there are fewer than 25 shares or such fewer
shares as shall be specified in such resolution. Such resolution
shall set forth that redemption of shares in such accounts has been
determined to be in the economic best interests of the Corporation or
necessary to reduce disproportionately burdensome expenses in
servicing stockholder accounts. Such resolution shall provide that
prior notice of at least six months shall be given to a stockholder
before such redemption of shares, and that the stockholder will have
six months (or such longer period as specified in the resolution) from
the date of the notice to avoid such redemption by increasing his
account to at least 25 shares, or such fewer shares as is specified in
the resolution.

That thereafter, pursuant to said resolution and in accordance with
the by-laws and the laws of the State of Kansas, said directors called a
meeting of stockholders for the consideration of said amendment, and
thereafter, pursuant to said notice and in accordance with the statutes of the
State of Kansas, on the 9th day of December, 1976, said stockholders met and
convened and considered said proposed amendment.

<PAGE> 31

That at said meeting the stockholders entitled to vote did vote upon
said amendment, and the majority of voting stockholders of the corporation had
voted for the proposed amendment certifying that the votes were 16,855,355
(common) shares in favor of the proposed amendment and 442,958 (common) shares
against the amendment.

That said amendment was duly adopted in accordance with the provisions
of K.S.A. 17-6602.

That the capital of said corporation will not be reduced under or by
reason of said amendment.

IN WITNESS WHEREOF we have hereunto set
our hands and affixed the seal of said
corporation this 23rd day of December
1976.

Everett S. Gille, President
[SEAL]
Larry D. Armel, Secretary

STATE OF KANSAS )
) ss.
COUNTY OF SHAWNEE )

Be it remembered, that before me, Lois J. Hedrick, a Notary Public in
and for the County and State aforesaid, came Everett S. Gille, President, and
Larry D. Armel, Secretary, of Security Equity Fund, Inc. a corporation,
personally known to me to be the persons who executed the foregoing instrument
of writing as president and secretary respectively, and duly acknowledged the
execution of the same this 23rd day of December, 1976.

[SEAL] Lois J. Hedrick, Notary Public

My commission expires January 8, 1980.

<PAGE> 32

CERTIFICATE OF AMENDMENT TO ARTICLES OF INCORPORATION
OF
SECURITY EQUITY FUND, INC.

STATE OF KANSAS )
) ss.
COUNTY OF SHAWNEE )

We, Everett S. Gille, President, and Larry D. Armel, Secretary of
Security Equity Fund, Inc., a corporation organized and existing under the laws
of the State of Kansas, and whose registered office is Security Benefit Life
Building, 700 Harrison Street, Topeka, Shawnee County, Kansas, do hereby
certify that at the regular meeting of the Board of Directors of said
corporation held on the 12th day of October, 1979, said board adopted a
resolution setting forth the following amendment to the Articles of
Incorporation and declared its advisability, to wit:

RESOLVED, that whereas the Board of Directors deems it advisable and
in the best interests of the corporation to increase the authorized
capitalization of the corporation, that the Articles of Incorporation
of Security Equity Fund, Inc. be amended by deleting the first
paragraph [including sub-paragraphs (a) and (b)] of Article FIFTH in
its entirety, and by inserting, in lieu thereof, the following new
first paragraph of Article FIFTH:

"The total number of shares which the Corporation shall
have authority to issue shall be 150,000,000 shares of capital
stock, each of the par value of $0.25 (twenty-five cents)."

FURTHER RESOLVED, that the foregoing proposed amendment to the
Articles of Incorporation of the Fund be presented to the stockholders
of the Fund for consideration at the annual meeting of stockholders to
be held on December 13, 1979.

That thereafter, pursuant to said resolution and in accordance with
the by-laws and the laws of the State of Kansas, said directors called a
meeting of stockholders for the consideration of said amendment and thereafter,
pursuant to said notice and in accordance with the statutes of the State of
Kansas, on the 13th day of December, 1979, said stockholders met and convened
and considered said proposed amendment.

That at said meeting, the stockholders entitled to vote did vote upon
said amendment, and the majority of voting stockholders of the corporation had
voted for the proposed amendment certifying that the votes were 11,600,855
(common) shares in favor of the proposed amendment and 691,585 (common) shares
against the amendment.

That said amendment was duly adopted in accordance with the provisions
of K.S.A. 17-6602, as amended.

<PAGE> 33

That the capital of said corporation will not be reduced under or by
reason of said amendment.

IN WITNESS WHEREOF we have hereunto set
our hands and affixed the
seal of said corporation this
18th day of December 1979.

[SEAL] Everett S. Gille, President

Larry D. Armel, Secretary

STATE OF KANSAS )
) ss.
COUNTY OF SHAWNEE )

Be it remembered, that before me, Lois J. Hedrick, a Notary Public in
and for the County and State aforesaid, came Everett S. Gille, President, and
Larry D. Armel, Secretary, of Security Equity Fund, Inc. a corporation,
personally known to me to be the person who executed the foregoing instrument
of writing as president and secretary respectively, and duly acknowledged the
execution of the same this 18th day of December 1979.

[SEAL] Lois J. Hedrick, Notary Public

My commission expires January 8, 1980.

<PAGE> 34

CERTIFICATE OF AMENDMENT TO ARTICLES OF INCORPORATION
OF
SECURITY EQUITY FUND, INC.

STATE OF KANSAS )
) ss.
COUNTY OF SHAWNEE )

We, Everett S. Gille, President, and Larry D. Armel, Secretary of
Security Equity Fund, Inc., a corporation organized and existing under the laws
of the State of Kansas, and whose registered office is Security Benefit Life
Building, 700 Harrison Street, Topeka, Kansas 66636, do hereby certify that at
the regular meeting of the Board of Directors of said corporation held on the
9th day of October, 1981, said board adopted a resolution setting forth the
following amendment to the Articles of Incorporation and declared its
advisability, to wit:

RESOLVED, that the Articles of Incorporation of Security Equity Fund,
Inc., a heretofore amended, be further amended by deleting Article
FIRST in its entirety and by inserting, in lieu thereof, the following
new Article FIRST:

"FIRST: the name of the corporation (hereinafter called the
"Corporation") is SECURITY EQUITY FUND."

FURTHER RESOLVED, that the Board of Directors of this corporation
hereby declares the advisability of the foregoing amendment to the
Articles of Incorporation of this corporation and hereby recommends
that the stockholders of this corporation adopt said amendment.

FURTHER RESOLVED, that at the annual meeting of the stockholders of
this corporation to be held at the offices of the corporation in
Topeka, Kansas, on December 10, 1981, beginning at 10:00 A.M. on that
day, the matter of the aforesaid proposed amendment to the Articles of
Incorporation of this corporation shall be submitted to the
stockholders entitled to vote thereon.

FURTHER RESOLVED, that in the event the stockholders of this
corporation shall approve and adopt the proposed amendment to the
Articles of Incorporation of this corporation as heretofore adopted
and recommended by this Board of Directors, the appropriate officers
of this corporation be, and they hereby are authorized and directed,
for and in behalf of this corporation, to make, execute, verify,
acknowledge and file or record in any and all appropriate governmental
offices any and all certificates and other instruments, and to take
any and all other action as may be necessary to effectuate the said
proposed amendment to the Articles of Incorporation of this
corporation."

That thereafter, pursuant to said resolution and in accordance with
the by-laws and the laws of the State of Kansas, said directors called a
meeting of stockholders for the consideration

<PAGE> 35

of said amendment, and thereafter, pursuant to said notice and in accordance
with the statutes of the State of Kansas, on the 10th day of December, 1981,
said stockholders met and convened and considered said proposed amendment.

That at said meeting, the stockholders entitled to vote did vote upon
said amendment, and the majority of voting stockholders of the corporation had
voted for the proposed amendment certifying that the votes were 15,967,961
(common stock) shares in favor of the proposed amendment and 842,670 (common
stock) shares against the amendment.

That said amendment was duly adopted in accordance with the provisions
of K.S.A. 17-6602, as amended.

That the capital of said corporation will not be reduced under or by
reason of said amendment.

IN WITNESS WHEREOF we have hereunto set
our hands and affixed the
seal of said corporation this
14th day of December 1981.

[SEAL] Everett S. Gille, President

Larry D. Armel, Secretary

STATE OF KANSAS )
) ss.
COUNTY OF SHAWNEE )

[SEAL] Lois J. Hedrick, Notary Public

My commission or appointment expires January 8, 1984.

<PAGE> 36

CERTIFICATE OF AMENDMENT TO THE
ARTICLES OF INCORPORATION OF
SECURITY EQUITY FUND

We, Michael J. Provines, President or Vice President, and Amy J. Lee, Secretary
or Assistant Secretary, of the above named corporation, a corporation organized
and existing under the laws of the State of Kansas, do hereby certify that at a
meeting of the Board of Directors of said corporation, the board adopted a
resolution setting forth the following amendment to the Articles of
Incorporation and declaring its advisability:

RESOLVED, that whereas the Corporation's board of directors deems it
advisable and in the best interest of the corporation to increase the
authorized capitalization of the corporation, that the articles of
incorporation of Security Equity Fund be amended by deleting the first
paragraph of Article FIFTH in its entirety, and by inserting, in lieu
thereof, the following new first paragraph of Article FIFTH:

"The total number of shares which the Corporation shall have
authority to issue shall be 300,000,000 shares of capital
stock, each of the par value of $0.25 (twenty-five cents) per
share."

We further certify that thereafter, pursuant to said resolution, and in
accordance with the by-laws of the corporation and the laws of the State of
Kansas, the Board of Directors called a meeting of stockholders for
consideration of the proposed amendment, and thereafter, pursuant to notice and
in accordance with the statutes of the State of Kansas, the stockholders
convened and considered the proposed amendment.

We further certify that at the meeting a majority of the stockholders entitled
to vote voted in favor of the proposed amendment.

We further certify that the amendment was duly adopted in accordance with the
provisions of K.S.A. 17-6602, as amended.

We further certify that the capital of said corporation will not be reduced
under or by reason of said amendment.

In Witness Whereof, we have hereunto
set our hands and affixed the
seal of said corporation this
15th day of July 1987.

[SEAL] Michael J. Provines, President

Amy J. Lee, Secretary

STATE OF KANSAS )
) ss.
COUNTY OF SHAWNEE )

Be it remembered that before me, a Notary Public in and for the
aforesaid county and state, personally appeared Michael J. Provines, President
or Vice President and Amy J. Lee, Secretary or Assistant Secretary of the
corporation named in this document, who are known to me to be the same persons
who executed the foregoing certificate, and duly acknowledged the execution of
the same this 15th day of July, 1987.

[SEAL] Glenda J. Overstreet, Notary Public

My appointment or commission expires February 1, 1990.

<PAGE> 37

CERTIFICATE OF AMENDMENT TO THE
ARTICLES OF INCORPORATION OF
SECURITY EQUITY FUND

RESOLVED, that whereas the Corporation's board of directors deems it
advisable and in the best interest of the corporation that the
Articles of Incorporation be amended by adopting the following
Articles Sixteenth:

"A director shall not be personally liable to the
corporation or to its stockholders for monetary
damages for breach of fiduciary duty as a director,
provided that this sentence shall not eliminate nor
limit the liability of a director:

A. for any breach of his or her duty of loyalty
to the corporation or to its stockholders;
B. for acts or omissions not in good faith or
which involve intentional misconduct or a
knowing violation of law;
C. for an unlawful dividend, stock purchase or
redemption under the provisions of Kansas
Statutes Annotated (K.S.A.) 17-6424 and
amendments thereto; or
D. for any transaction from which the director
derived an improper personal benefit."

We further certify that at the meeting a majority of the stockholders entitled
to vote voted in favor of the proposed amendment.

We further certify that the amendment was duly adopted in accordance with the
provisions of K.S.A. 17-6602, as amended.

We further certify that the capital of said corporation will not be reduced
under or by reason of said amendment.

In Witness Whereof, we have hereunto
set our hands and affixed the
seal of said corporation this
11th day of December 1987.

[SEAL] Michael J. Provines, President

Amy J. Lee, Secretary

STATE OF KANSAS )
) ss.
COUNTY OF SHAWNEE )

[SEAL] Glenda J. Overstreet, Notary Public

My appointment or commission expires February 1, 1990.

<PAGE> 38

CERTIFICATE OF AMENDMENT TO THE
ARTICLES OF INCORPORATION OF
SECURITY EQUITY FUND

We, Michael J. Provines, President and Amy J. Lee, Secretary, of the above
named corporation, a corporation organized and existing under the laws of the
State of Kansas, do hereby certify that at a meeting of the Board of Directors
of said corporation, the board adopted a resolution setting forth the following
amendment to the Articles of Incorporation and declaring its advisability:

See attached amendment.

We further certify that at the meeting a majority of the stockholders entitled
to vote voted in favor of the proposed amendment.

We further certify that the amendment was duly adopted in accordance with the
provisions of K.S.A. 17-6602, as amended.

In Witness Whereof, we have hereunto
set our hands and affixed the
seal of said corporation this
27th day of July 1993.

Michael J. Provines, President

Amy J. Lee, Secretary

STATE OF KANSAS )
) ss.
COUNTY OF SHAWNEE )

Be it remembered that before me, a Notary Public in and for the
aforesaid county and state, personally appeared Michael J. Provines, President
and Amy J. Lee, Secretary of the corporation named in this document, who are
known to me to be the same persons who executed the foregoing certificate, and
duly acknowledged the execution of the same this 27th day of July, 1993.

[SEAL] Peggy S. Avey, Notary Public

My appointment or commission expires November 21, 1996.

<PAGE> 39

SECURITY EQUITY FUND

The Board of Directors of Security Equity Fund recommends that the Articles of
Incorporation be amended by deleting Article Fifth in its entirety and by
inserting, in lieu thereof, the following new Article:

FIFTH: The total number of shares which this Corporation shall have authority
to issue shall be 300,000,000 shares of capital stock, each of the par value of
$0.25 (twenty-five cents). The board of directors of the Corporation is
expressly authorized to cause shares of capital stock of the Corporation
authorized herein to be issued in one or more classes or series as may be
established from time to time by setting or changing in one or more respects
the voting powers, rights, qualifications, limitations or restrictions of such
shares of stock and to increase or decrease the number of shares so authorized
to be issued in any such class or series.

The following provisions are hereby adopted for the purpose of setting forth
the powers, rights, qualifications, limitations or restrictions of the capital
stock of the Corporation (unless provided otherwise by the board of directors
with respect to any such additional class or series at the time of establishing
and designating such additional class or series):

(1) At all meetings of stockholders each stockholder of the Corporation of
any class or series shall be entitled to one vote on each matter
submitted to a vote at such meeting for each share of stock standing
in his name on the books of the Corporation on the date, fixed in
accordance with the Bylaws, for determination of stockholders entitled
to vote at such meeting. At all elections of directors each
stockholder of any class or series shall be entitled to as many votes
as shall equal the number of shares of stock multiplied by the number
of directors to be elected, and stockholders may cast all of such
votes for a single director or may distribute them among the number to
be voted for, or any two or more of them as they may see fit.

(2) (a) Each holder of capital stock of the Corporation, of any class
or series, upon request to the Corporation accompanied by
surrender of the appropriate stock certificate or certificates
in proper form for transfer, shall be entitled to require the
Corporation to repurchase all or any part of the shares of
capital stock standing in the name of such holder on the books
of the Corporation, at the net asset value of such shares.
The method of computing such net asset value, the time as of
which such net asset value shall be computed and the time
within which the Corporation shall make payment therefor shall
be determined as hereinafter provided in Article TENTH of
these Articles of Incorporation. Notwithstanding the
foregoing, the Board of Directors of the Corporation may
suspend the right of the holders of the capital stock of the
Corporation to require the Corporation to redeem shares of
such capital stock:

<PAGE> 40

(i) for any period (A) during which the New York Exchange
is closed other than customary weekend and holiday
closings, or (B) during which trading on the New York
Stock Exchange is restricted;

(ii) for any period during which an emergency, as defined
by rules of the Securities and Exchange Commission or
any successor thereto, exists as a result of which
(A) disposal by the Corporation of securities owned
by it is not reasonably practicable or (B) it is not
reasonably practicable for the Corporation fairly to
determine the value of its net assets; or

(iii) for such other periods as the Securities and Exchange
Commission or any successor thereto may by order
permit for the protection of security holders of the
Corporation.

(b) From and after the close of business on the day when
the shares are properly tendered for repurchase the
owner shall, with respect of said shares, cease to be
a stockholder of the Corporation and shall have only
the right to receive the repurchase price in
accordance with the provisions hereof. The shares so
repurchased may, as the Board of Directors
determines, be held in the treasury of the
Corporation and may be resold, or, if the laws of
Kansas shall permit, may be retired. Repurchase of
shares is conditional upon the Corporation having
funds or property legally available therefor.

(c) The Corporation, pursuant to a resolution by the
Board of Directors and without the vote or consent of
stockholders of the Corporation, shall have the right
to redeem at net asset value all shares of capital
stock of the Corporation in any stockholder account
in which there has been no investment (other than
reinvestment of income dividends or capital gains
distributions) for at least six months and in which
there are fewer than 25 shares or such fewer shares
as shall be specified in such resolution. Such
resolution shall set forth that redemption of shares
in such accounts has been determined to be in the
economic best interests of the Corporation or
necessary to reduce disproportionately burdensome
expenses in that prior notice of at least six months
shall be given to a stockholder before such
redemption of shares, and that the stockholder will
have six months (or such longer period as specified
in the resolution) from the date of the notice to
avoid such redemption by increasing his account to at
least 25 shares, or such fewer shares as is specified
in the resolution.

(3) No holder of stock of the Corporation of any class or series shall, as
such holder, have any rights to purchase or subscribe for any shares
of the capital stock of the Corporation of any class or series which
it may issue or sell (whether out of the number of shares authorized
by these Articles of Incorporation, or out of any shares of the
capital stock of the Corporation acquired by it after the issue
thereof, or otherwise) other than such right, if any, as the Board of
Directors, in its discretion, may determine.

(4) All persons who shall acquire stock in the Corporation shall acquire
the same subject to the provisions of these Articles of Incorporation.

<PAGE> 41

CERTIFICATE OF CHANGE OF
DESIGNATION OF COMMON STOCK
OF
SECURITY EQUITY FUND

STATE OF KANSAS )
) ss.
COUNTY OF SHAWNEE )

We, Michael J. Provines, President, and Amy J. Lee, Secretary, of Security
Equity Fund, a corporation organized and existing under the laws of the State
of Kansas, and whose registered office is Security Benefit Life Building, 700
Harrison Street, Topeka, Shawnee, Kansas, do hereby certify that pursuant to
authority expressly vested in the Board of Directors by the provisions of the
corporation's Articles of Incorporation, the Board of Directors of said
corporation at a meeting duly convened and held on the 23rd day of July 1993,
adopted resolutions setting forth the preferences, rights, privileges and
restrictions of the separate series of stock of Security Equity Fund, which
resolutions are provided in their entirety as follows:

RESOLVED that, pursuant to the authority vested in the Board of Directors of
Security Equity Fund by its Articles of Incorporation, the officers of the Fund
are hereby directed and authorized to establish four separate series of the
common stock of the corporation, effective October 5, 1993. The first such
series shall be known as the Equity Series A and shall consist of that series
of stock currently being issued by the Fund. The other series shall be new
series and shall be known as Equity Series B, Global Series A and Global Series
B. The officers of the Fund are hereby directed and authorized to establish
such series of common stock allocating 265,000,000 $0.25 par value shares of
the corporation's authorized capital stock of 300,000,000 shares to the Equity
Series A; 20,000,000 $0.25 par value shares to the Equity Series B; 7,500,000
$0.25 par value shares to the Global Series A; and the remaining 7,500,000
$0.25 par value shares to the Global Series B.

FURTHER RESOLVED, that the preferences, rights, privileges and restrictions of
the shares of each series of Security Equity Fund shall be as follows:

1. Except as set forth below and as may be hereafter established by the
Board of Directors of the corporation all shares of the corporation,
regardless of series, shall be equal.

2. At all meetings of stockholders, each stockholder of the corporation
shall be entitled to one vote in person or by proxy on each matter
submitted to a vote at such meeting for each share of common stock
standing in his or her name on the books of the corporation on the date,
fixed in accordance with the bylaws, for determination of stockholders
entitled to vote at such meeting. At all elections of directors each
stockholder shall be entitled to as many votes as shall equal the number
of shares of stock multiplied by the number of directors to be elected,
and he or she may cast all of such votes for a single director or may
distribute them among the number to be voted for, or any two or more of
them as he or she may see

<PAGE> 42

fit. Notwithstanding the foregoing, (i) if any matter is submitted to the
stockholders which does not affect the interests of all series, then only
stockholders of the affected series shall be entitled to vote and (ii) in
the event the Investment Company Act of 1940, as amended, or the rules and
regulations promulgated thereunder shall require a greater or different
vote than would otherwise be required herein or by the Articles of
Incorporation of the corporation, such greater or different voting
requirement shall also be satisfied.

3. (a) The corporation shall redeem any of its shares for which it has
received payment in full that may be presented to the corporation
on any date after the issue date of any such shares at the net
asset value thereof, such redemption and the valuation and payment
in connection therewith to be made in compliance with the
provisions of the Investment Company Act of 1940 and the Rules and
Regulations promulgated thereunder and with the Rules of Fair
Practice of the National Association of Securities Dealers, Inc.,
as from time to time amended.

(b) From and after the close of business on the day when the shares are
properly tendered for repurchase the owner shall, with respect of
said shares, cease to be a stockholder of the corporation and shall
have only the right to receive the repurchase price in accordance
with the provisions hereof. The shares so repurchased may, as the
Board of Directors determines, be held in the treasury of the
corporation and may be resold, or, if the laws of Kansas shall
permit, may be retired. Repurchase of shares is conditional upon
the corporation having funds or property legally available
therefor.

4. The corporation, pursuant to a resolution by the Board of Directors and
without the vote or consent of stockholders of the corporation, shall
have the right to redeem at net asset value all shares of capital stock
of the corporation in any stockholder account in which there has been no
investment (other than the reinvestment of income dividend or capital
gains distributions) for at least six months and in which there are fewer
than 25 shares or such few shares as shall be specified in such
resolution. Such resolution shall set forth that redemption of shares in
such accounts has been determined to be in the economic best interests of
the corporation or necessary to reduce disproportionately burdensome
expenses in servicing stockholder accounts. Such resolution shall
provide that prior notice of at least six months shall be given to a
stockholder before such redemption of shares, and that the stockholder
will have six months (or such longer period as specified in the
resolution) from the date of the notice to avoid such redemption by
increasing his or her account to at least 25 shares, or such fewer shares
as is specified in the resolution.

5. All shares of the corporation, upon issuance and sale, shall be fully
paid, nonassessable and redeemable. Within the respective series of the
corporation, all shares have equal voting, participation and liquidation
rights, but have no subscription or preemptive rights.

6. (a) Outstanding shares of Equity Series A and B shall represent a
stockholder interest in a particular fund of assets held by the
corporation which fund shall be invested and reinvested in
accordance with policies and objectives established by the Board of
Directors for these series. Outstanding shares of Global Series A
and B shall represent

<PAGE> 43

a stockholder interest in a particular fund of assets held by the
corporation which fund shall be invested and reinvested in
accordance with policies and objectives established by the Board of
Directors for these series.

(b) All cash and other property received by the corporation from the
sale of shares of the Equity Series A and B and Global Series A and
B, respectively, all securities and other property held as a result
of the investment and reinvestment of such cash and other property,
all revenues and income received or receivable with respect to such
cash, other property, investments and reinvestments, and all
proceeds derived from the sale, exchange, liquidation or other
disposition of any of the foregoing, shall be allocated to the
Equity Series A and B or Global Series A and B to which they relate
and held for the benefit of the stockholders owning shares of such
series.

(c) All losses, liabilities and expenses of the corporation (including
accrued liabilities and expenses and such reserves as the Board of
Directors may determine are appropriate) shall be allocated and
charged to the series to which such loss, liability or expense
relates. Where any loss, liability or expense relates to more than
one series, the Board of Directors shall allocate the same between
or among such series pro rata based on the respective net asset
values of such series or on such other basis as the Board of
Directors deems appropriate.

(d) All allocations made hereunder by the Board of Directors shall be
conclusive and binding upon all stockholders and upon the
corporation.

7. Each share of stock of a series shall have the same preferences, rights,
privileges and restrictions as each other share of stock of that series.
Each fractional share of stock of a series proportionately shall have the
same preferences, rights, privileges and restrictions as a whole share.

8. Dividends may be paid when, as and if declared by the Board of Directors
out of funds legally available therefor. Shares of Equity Series A and B
represent a stockholder interest in a particular fund of assets held by
the corporation and, accordingly, dividends shall be calculated and
declared for these series in the same manner, at the same time, on the
same day, and will be paid at the same dividend rate except that expenses
attributable to Equity Series A or B and payments made pursuant to a
12b-1 Plan or Shareholder Services Plan shall be borne exclusively by the
affected Equity Series. Stockholders of the Equity Series shall share in
dividends declared and paid with respect to such series pro rata based on
their ownership of shares of such series. Shares of Global Series A and
B represent a stockholder interest in a particular fund of assets held by
the corporation and, accordingly, dividends shall be calculated and
declared for these series in the same manner, at the same time, on the
same day, and shall be paid at the same dividend rate, except that
expenses attributable to a particular series and payments made pursuant
to a 12b-1 Plan or Shareholder Services Plan shall be borne exclusively
by the affected Global Series. Stockholders of the Global Series shall
share in dividends declared and paid with respect to such series pro rata
based on their ownership of shares of such series. Whenever dividends
are declared and paid with respect

<PAGE> 44

to the Equity Series A and B or the Global Series A and B, the holders of
shares of the other series shall have no rights in or to such dividends.

9. In the event of liquidation, stockholders of each series shall be
entitled to share in the assets of the corporation that are allocated to
such series and that are available for distribution to the stockholders
of such series. Liquidating distributions shall be made to the
stockholders of each series pro rata based on their share ownership of
such series.

10. On the eighth anniversary of the purchase of shares of the Equity Series
B or the Global Series B, those shares (except those purchased through
the reinvestment of dividends and other distributions) shall
automatically convert to Equity Series A or Global Series A shares,
respectively, at the relative net asset values of each of the series
without the imposition of any sales load, fee or other charge. All
shares in a stockholder's account that were purchased through the
reinvestment of dividends and other distributions paid with respect to
Series B shares will be considered to be held in a separate sub-account.
Each time Series B shares are converted to Series A shares, a pro rata
portion of the Series B shares held in the sub-account will also convert
to Series A shares.

IN WITNESS WHEREOF, we have hereunto set our hands this 5th day of October
1993.

Michael J. Provines, President

[SEAL] Amy J. Lee, Secretary

STATE OF KANSAS )
) ss.
COUNTY OF SHAWNEE )

Be it remembered, that before me Judith M. Ralston a Notary Public in and for
the County and State aforesaid, came Michael J. Provines, President, and Amy J.
Lee, Secretary, of Security Equity Fund, a Kansas corporation, personally known
to me to be the persons who executed the foregoing instrument of writing as
President and Secretary, respectively, and duly acknowledged the execution of
the same this 5th day of October 1993.

Judith M. Ralston Notary Public

My Commission Expires: January 1, 1995

<PAGE> 45

CERTIFICATE OF AMENDMENT TO THE
ARTICLES OF INCORPORATION

SECURITY EQUITY FUND

We, John D. Cleland, President, and Amy J. Lee, Secretary, of Security Equity
Fund, a corporation organized and existing under the laws of the State of
Kansas, do hereby certify that at a meeting of the Board of Directors of said
corporation, the board adopted a resolution setting forth the following
amendment to the Articles of Incorporation and declaring its advisability:

See attached amendment

We further certify that at the meeting, a majority of the stockholders entitled
to vote, voted in favor of the proposed amendment.

We further certify that the amendment was duly adopted in accordance with the
provisions of K.S.A. 17-6602, as amended.

IN WITNESS WHEREOF, we have hereunto set our hands and affixed the seal of said
corporation this 21st day of December, 1994.

John D. Cleland, President

Amy J. Lee, Secretary

<PAGE> 46

STATE OF KANSAS )
) ss.
COUNTY OF SHAWNEE )

BE IT REMEMBERED that before me, a Notary Public in and for the aforesaid
county and state, personally appeared John D. Cleland, President, and Amy J.
Lee, Secretary, of Security Equity Fund, who are known to me to be the same
persons who executed the foregoing certificate, and duly acknowledged the
execution of the same this 21st day of December, 1994.

Judith M. Ralston, Notary

(SEAL)

My Commission Expires January 1, 1995.

PLEASE SUBMIT THIS DOCUMENT IN DUPLICATE, WITH $20 FILING FEE TO:

Secretary of State
2nd Floor, State Capitol
Topeka, KS 66612-1594
(913) 296-4564

<PAGE> 1
EXHIBIT 2

BYLAWS

SECURITY EQUITY FUND

OFFICES

1. Registered Office and Registered Agent. The location of the
registered office and the name of the registered agent of the
Corporation in the State of Kansas shall be as stated in the Articles
of Incorporation or as shall be determined from time the time by the
Board of Directors and on file in the appropriate public offices of
the State of Kansas pursuant to applicable provisions of law.

2. Corporate Offices. The Corporation may have such other
corporate offices and places of business anywhere within or without
the State of Kansas as the Board of Directors may from time to time
designate or the business of the Corporation may require.

3. Corporate Records. The books and records of the Corporation
may be kept at any one or more offices of the Corporation within or
without the State of Kansas, except that the original or duplicate
stock ledger containing the names and addresses of the stockholders,
and the number of shares held by them, respectively, shall be kept at
the registered office of the Corporation in the State of Kansas.

4. Stockholders' Right of Inspection. A stockholder of record,
upon written demand to inspect the records of the Corporation pursuant
to any statutory or other legal right, shall be privileged to inspect
such records only during the usual and customary hours of business and
in such manner as will not unduly interfere with the regular conduct
of the business of the Corporation. A stockholder may delegate
his/her right of inspection to a certified or public accountant on the
condition, to be enforced at the option of the Corporation, that the
stockholder and accountant agree with the Corporation to furnish to
the Corporation promptly a true and correct copy of each report with
respect to such inspection made by such accountant. No stockholder
shall use, permit to be used or acquiesce in the use by others of any
information so obtained to the detriment competitively of the
Corporation, nor shall he/she furnish or permit to be furnished any
information so obtained to any competitor or prospective competitor of
the Corporation. The Corporation as a condition precedent to any
stockholder's inspection of the records of the Corporation may require
the stockholder to indemnify the Corporation, in such manner and for
such amount as may be determined by the Board of Directors, against
any loss or damage which may be suffered by it arising out of or
resulting from any unauthorized disclosure made or permitted to be
made by such stockholder of information obtained in the course of such
inspection.
<PAGE> 2

SEAL

5. Seal. The Corporation shall have a corporate seal inscribed
with the name of the Corporation and the words "Corporate Seal -
Kansas". The form of the seal may be altered at pleasure and shall be
used by causing it or a facsimile thereof to be impressed, affixed,
reproduced or otherwise used.

STOCKHOLDERS' MEETINGS

6. Place of Meetings. Meetings of the stockholders may be held
at any place within or without the State of Kansas, as shall be
determined from time to time by the Board of Directors. All meetings
of the stockholders for the election of Directors shall be held at the
principal office of the Corporation in Kansas. Meetings of the
stockholders for any purpose other than the election of Directors may
be held at such place as shall be specified in the notice thereof.

7. Annual Meeting. No annual meeting of stockholders is required
to be held for the purpose of electing directors or any other reason,
except when specifically and expressly required under state or federal
law. When an annual meeting is held for the purpose of electing
directors, such directors shall hold office until the next annual
meeting at which directors are to be elected and until their
successors are elected and qualified, or until their earlier
resignation or removal herein.

8. Special Meetings. Special meetings of the stockholders for any
purpose or purposes, unless otherwise prescribed by statute, may be
called by the President, or a Vice President, by the Board of
Directors or by the holders of not less than 10% of all outstanding
shares of stock entitled to vote at any annual meeting; and shall be
called by any officer directed to do so by the Board of Directors.

The "call" and the "notice" of any such meeting shall
be deemed to be synonymous.

9. Notice of Meetings. Written or printed notice of each meeting
of the stockholders, whether annual or special, stating the place,
date and time thereof and in case of a special meeting, the purpose or
purposes thereof shall be delivered or mailed to each stockholder
entitled to vote thereat, not less than ten (10) days nor more than
fifty (50) days prior to the meeting, unless as to a particular
matter, other or further notice is required by law, in which case such
other or further notice shall be given. The Board of Directors may
fix in advance a date, which shall not be more than sixty (60) days
nor less than ten (10) days preceding the date of any meeting of the
stockholders, as a record date for the determination of the
stockholders entitled to notice of, and to vote at, any such meeting
and any adjournment thereof; provided, however, that the Board of
Directors may fix a new record date for any adjourned meeting. Any
notice of a stockholders' meeting sent by mail shall be deemed to be
delivered when deposited in the United States mail with postage
prepaid thereon, addressed to the stockholder at his/her address as it
appears on the books of the Corporation.
<PAGE> 3

10. Registered Stockholders - Exceptions - Stock Ownership
Presumed. The Corporation shall be entitled to treat the holders of
the shares of stock of the Corporation, as recorded on the stock
record or transfer books of the Corporation, as the holders of record
and as the holders and owners in fact thereof and, accordingly, the
Corporation shall not be required to recognize any equitable or other
claim to or interest in any such shares on the part of any other
person or other claim to or interest in any such shares on the part of
any other person, firm, partnership, corporation or association,
whether or not the Corporation shall have express or other notice
thereof, except as is otherwise expressly required by law, and the
term "stockholder" as used in these Bylaws means one who is a holder
of record of shares of the Corporation; provided, however, that if
permitted by law,

(a) shares standing in the name of another corporation,
domestic or foreign, may be voted by such officer, agent
or proxy as the Bylaws of such corporation may prescribe,
or, in the absence of such provision, as the Board of
Directors of such corporation may determine;

(b) shares held by a person in a fiduciary capacity may be
voted by such person; and,

(c) a stockholder whose shares are pledged shall be
entitled to vote such shares, unless in the transfer of the
shares by the pledgor on the books of the Corporation,
he/she shall have expressly empowered the pledgee to vote
thereon, in which case only the pledgee or his/her proxy may
represent said stock and vote thereon.

11. Consent of Stockholders in Lieu of Meeting. To the extent, if
any, and in the manner permitted by statute and unless otherwise
provided in the Articles of Incorporation, any action required to be
taken at any annual or special meeting of stockholders of the
Corporation, or any action which may be taken at any annual or special
meeting of such stockholders, may be taken by written consent without
a meeting.

12. Waiver of Notice. Whenever any notice is required to be given
under the provisions of these Bylaws, the Articles of Incorporation of
the Corporation, or of any law, a waiver thereof, if not expressly
prohibited by law, in writing signed by the person or persons entitled
to notice shall, whether before or after the time stated therein, be
deemed the equivalent to the giving of such notice. Attendance of a
person at a meeting shall constitute a waiver of notice of such
meeting, except when a person attends a meeting for the express
purpose of objecting at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully
called or convened.

13. Quorum. Except as otherwise may be provided by law, by the
Articles of Incorporation of the Corporation or by these Bylaws, the
holders of a majority of the stock issued and outstanding and entitled
to vote thereat, present in person or represented by proxy, shall be
required for and shall constitute a quorum at all meetings of the
stockholders for the transaction of any business. Every decision of a
majority in amount of shares of such
<PAGE> 4

quorum shall be valid as a corporate act, except in those
specific instances in which a larger vote is required by law or by the
Articles of Incorporation or by these Bylaws.

If a quorum be not present at any meeting, the stockholders
entitled to vote thereat, present in person or by proxy, shall have
power to adjourn the meeting from time to time without notice other
than announcement at the meeting, until the requisite amount of voting
stock shall be present. If the adjournment is for more than thirty
(30) days, or if after adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be given to
each stockholder of record entitled to vote at the meeting. At any
subsequent session of the meeting at which a quorum is present in
person or by proxy any business may be transacted which could have
been transacted at the initial session of the meeting if a quorum had
been present.

14. Proxies. At any meeting of the stockholders, every stockholder
having the right to vote shall be entitled to vote in person or by
proxy executed by an instrument in writing subscribed by such a
stockholder and bearing a date not more than three (3) years prior to
said meeting unless said instrument provides that it shall be valid
for a longer period.

15. Voting. Each stockholder shall have one vote for each share of
stock having voting power registered in his/her name on the books of
the Corporation and except where the transfer books of the Corporation
shall have been closed or a date shall have been fixed as a record
date for the determination of its stockholders entitled to vote, no
share of stock shall be voted at any election for directors which
shall have been transferred on the books of the Corporation within
twenty (20) days next preceding such election of Directors. At all
elections of Directors, cumulative voting shall prevail, so that each
stockholder shall be entitled to as many votes as shall equal the
number of his/her shares of stock multiplied by the number of
Directors to be elected, and he/she may cast all of such votes for a
single Director or may distribute them among the number to be voted
for, or any two or more as he/she sees fit. Voting shall be by ballot
for the election of Directors and on such matters as may be required
by law, provided that voting by ballot on any matter may be waived by
the unanimous consent of those stockholders entitled to vote present
at the meeting. A stockholder holding stock in a fiduciary capacity
shall be entitled to vote the shares so held, and a stockholder whose
stock is pledged shall be entitled to vote unless, in the transfer by
the pledgor on the books of the Corporation, (s)he shall have
expressly empowered the pledgee to vote thereon, in which case only
the pledgee or his/her proxy may represent said stock and vote
thereon.

16. Stockholders' Lists. A complete list of the stockholders
entitled to vote at every election of Directors, arranged in
alphabetical order, with the address of and the number of voting
shares held by each stockholder, shall be prepared by the officer
having charge of the stock books of the Corporation and for at least
ten (10) days prior to the date of the election shall be open at the
place where the election is to be held, during the usual hours for
business, to the examination of any stockholder and shall be produced
and kept open at the place of the election during the whole time
thereof for the inspection of any stockholder present. The original
or duplicate stock ledger shall be the only evidence as to who are
stockholders
<PAGE> 5

entitled to examine such lists, or the books of the
Corporation, or to vote in person or by proxy, at such election.
Failure to comply with the foregoing shall not affect the validity or
any action taken at any such meeting.

17. Presiding Officials. Every meeting of the stockholders, for
whatever object, shall be convened by the President, or by the officer
or person who called the meeting by notice as above provided, but it
shall be presided over by the officers specified in paragraphs 37 and
38 of these Bylaws; provided, however, that the stockholders at any
meeting, by a majority vote in amount of shares represented thereat,
and notwithstanding anything to the contrary contained elsewhere in
these Bylaws, may select any persons of their choosing to act as
Chairman and Secretary of such meeting or any session thereof.

BOARD OF DIRECTORS

18. Offices. The Directors may have one or more offices, and keep
the books of the Corporation (except the original or duplicated stock
ledgers, and such other books and records as may by law be required to
be kept at a particular place) at such place or places within or
without the State of Kansas as the Board of Directors may from time to
time determine.

19. Management. The management of all affairs, property and
business of the corporation shall be vested in a Board of Directors,
consisting of a minimum of six (6) and a maximum of nine (9)
directors. Unless required by the Articles of Incorporation,
Directors need not be stockholders. Each person who shall serve on
the Board of Directors and who shall be recommended and nominated for
election or reelection as a director shall be a person who is in good
standing in his/her community and who shall not, at the time of
election or reelection, have attained his/her 70th birthday. In
addition to the power and authorities by these Bylaws and the Articles
of Incorporation expressly conferred upon it, the Board of Directors
may exercise all such powers of the Corporation, and do all such
lawful acts and things as are not by statute or by the Articles of
Incorporation or by these Bylaws directed or required to be exercised
or done by the stockholders.

20. Vacancies and Newly Created Directorships. Vacancies and newly
created directorships resulting from any increase in the authorized
number of Directors may be filled by a majority of the Directors then
in office, though less than a quorum, or by a sole remaining Director,
unless it is otherwise provided in the Articles of Incorporation or
these Bylaws, and the Directors so chosen shall hold office until the
next annual election and until their successors are duly elected and
qualified, or until their earlier resignation or removal. If there
are no Directors in office, then an election of Directors may be held
in the manner provided by statute.

21. Meetings of the Newly Elected Board -- Notice. The first
meeting of the members of each newly elected Board of Directors shall
be held (a) at such time and place either within or without the State
of Kansas as shall be suggested or provided by resolution of the
stockholders at the meeting at which such newly elected Board was
elected, and no notice
<PAGE> 6
of such meeting shall be necessary to the newly elected
Directors in order legally to constitute the meeting, provided a
quorum shall be present, or (b) if not so suggested or provided for
by resolution of the stockholders or if a quorum shall not be present,
at such time and place as shall be consented to in writing by a
majority of the newly elected Directors, provided that written or
printed notice of such meeting shall be given to each of the other
Directors in the same manner as provided in section 23 of these Bylaws
with respect to the giving of notice for special meetings of the Board
except that it shall not be necessary to state the purpose of the
meeting in such notice, or (c) regardless of whether or not the time
and place of such meeting shall be suggested or provided for by
resolution of the stockholders, at such time and place as shall be
consented to in writing by all of the newly elected Directors.

Every Director of the Corporation, upon his/her election, shall
qualify by accepting the office of the Director, and his/her
attendance at, or his/her written approval of the minutes of, any
meeting of the Board subsequent to his/her election shall constitute
his/her acceptance of such office; or he/she may execute such
acceptance by a separate writing, which shall be placed in the minute
book.

22. Regular Meetings. Regular meetings of the Board of Directors
may be held without notice at such times and places either within or
without the State of Kansas as shall from time to time be fixed by
resolution adopted by the full Board of Directors. Any business may
be transacted at a regular meeting.

23. Special Meetings. Special meetings of the Board of Directors
may be called at any time by the Chairman of the Board, the President,
and Vice President or the Secretary, or by any two (2) or more of the
Directors. The place may be within or without the State of Kansas as
designated in the notice.

24. Notice of Special Meetings. Written or printed notice of each
special meeting of the Board, stating the place, day and hour of the
meeting and the purpose or purposes thereof, shall be mailed to each
Director addressed to him/her at his/her residence or usual place of
business at least three (3) days before the day on which the meeting
is to be held, or shall be sent to him/her by telegram, or delivered
to him/her personally, at least two (2) days before the day on which
the meeting is to be held. If mailed, such notice shall be deemed to
be delivered when it is deposited in the United States mail with
postage thereon addressed to the Director at his/her residence or
usual place of business. If given by telegraph, such notice shall be
deemed to be delivered when it is delivered to the telegraph company.
The notice may be given by any officer having authority to call the
meeting. "Notice" and "call" with respect to such meetings shall be
deemed to be synonymous. Any meeting of the Board of Directors shall
be a legal meeting without any notice thereof having been given if all
Directors shall be present.

25. Meetings by Conference Telephone or Similar Communications
Equipment. Unless otherwise restricted by law, the Articles of
Incorporation or these Bylaws, members of the Board of Directors of
the Corporation, or any committee designated by the board, may

<PAGE> 7
participate in a meeting of the board or committee by means of
conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other,
and participation in a meeting pursuant hereto shall constitute
presence in person at such meeting.

26. Quorum. Unless otherwise required by law, the Articles of
Incorporation or these Bylaws, a majority of the total number of
Directors shall be necessary at all meetings to constitute a quorum
for the transaction of business, and except as may be otherwise
provided by law, the Articles of Incorporation or these Bylaws, the
act of a majority of the Directors present at any meeting at which
there is a quorum shall be the act of the Board of Directors.

If at least two (2) Directors or one-third (1/3) of the whole
Board of Directors, whichever is greater, is present at any meeting at
which a quorum is not present, a majority of the Directors present at
such meeting shall have power successively to adjourn the meeting from
time to time to a subsequent date, without notice to any Directors
other than announcement at the meeting. At such adjourned meeting at
which a quorum is present, any business may be transacted which might
have been transacted at the original meeting with was adjourned.

27. Standing or Temporary Committees. The Board of Directors may,
by resolution or resolutions passed by a majority of the whole Board,
designate one (1) or more committees, each committee to consist of one
(1) or more Directors of the Corporation. The Board may designate one
(1) or more Directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the
committee. In the absence or disqualification of a member of a
committee, the member or members thereof present at any meeting and
not disqualified from voting, whether or not he/she or they constitute
a quorum, may unanimously appoint another member of the Board of
Directors to act at the meeting in the place of any such absent or
disqualified member. Any such committee, to the extent provided in
the resolution of the Board of Directors or in these Bylaws, shall
have and may exercise all of the powers and authority of the Board of
Directors in the management of the business and affairs of the
Corporation, and may authorize the seal of the Corporation to be
affixed to all papers which may require it; but no such committee
shall have the power of authority of the Board of Directors with
respect to amending the Articles of Incorporation, adopting an
agreement of merger or consolidation, recommending to the stockholders
the sale, lease or exchange of all or substantially all of the
Corporation's property and assets, recommending to the stockholders a
dissolution of the Corporation or a revocation of a dissolution, or
amending the Bylaws of the Corporation; and, unless the resolution,
these Bylaws or the Articles of Incorporation expressly so provide, no
such committee shall have power or authority to declare a dividend or
to authorize the issuance of stock.

Such committee or committees shall have such name or names as
may be determined from time to time by resolution adopted by the Board
of Directors. All committees so appointed shall, unless otherwise
provided by the Board of Directors, keep regular minutes of the
transactions at their meetings and shall cause them to be recorded in
books kept for that
<PAGE> 8

purpose in the office of the Corporation and shall report the
same to the Board of Directors at its next meeting. The Secretary or
an Assistant Secretary of the Corporation may act as Secretary of the
committee if the committee so requests.

28. Compensation. Unless otherwise restricted by the Articles of
Incorporation, the Board of Directors may, by resolution, fix the
compensation to be paid Directors for serving as Directors of the
Corporation and may, by resolution, fix a sum which shall be allowed
and paid for attendance at each meeting of the Board of Directors and
may provide for reimbursement of expenses incurred by Directors in
attending each meeting; provided that nothing herein contained shall
be construed to preclude any Director from serving the Corporation in
any other capacity and receiving his/her regular compensation
therefor. Members of special or standing committees may be allowed
similar compensation for attending committee meetings. Nothing herein
contained shall be construed to preclude any Director or committee
member from serving the Corporation in any other capacity and
receiving compensation therefor.

29. Resignations. Any Director may resign at any time upon written
notice to the Corporation. Such resignation shall take effect at the
time specified therein or shall take effect upon receipt thereof by
the Corporation if no time is specified therein, and unless otherwise
specified therein, the acceptance of such resignation shall not be
necessary to make it effective.

30. Indemnification and Liability of Directors and Officers. Each
person who is or was a Director or officer of the Corporation or is or
was serving at the request of the Corporation as a Director or officer
of another corporation (including the heirs, executors, administrators
and estate of such person) shall be indemnified by the Corporation as
of right to the full extent permitted or authorized by the laws of the
State of Kansas, as now in effect and is hereafter amended, against
any liability, judgment, fine, amount paid in settlement, cost and
expense (including attorneys' fees) asserted or threatened against and
incurred by such person in his/her capacity as or arising out of
his/her status as a Director or officer of the Corporation or, if
serving at the request of the Corporation, as a Director or officer of
another corporation. The indemnification provided by this bylaw
provision shall not be exclusive of any other rights to which those
indemnified may be entitled under the Articles of Incorporation, under
any other bylaw or under any agreement, vote of stockholders or
disinterested directors or otherwise, and shall not limit in any way
any right which the Corporation may have to make different or further
indemnification with respect to the same or different persons or
classes of persons.

No person shall be liable to the Corporation for any loss,
damage, liability or expense suffered by it on account of any action
taken or omitted to be taken by him/her as a Director or officer of
the Corporation or of any other corporation which he/she serves as a
Director or officer at the request of the Corporation, if such person
(a) exercised the same degree of care and skill as a prudent person
would have exercised under the circumstances in the conduct of his/her
own affairs, or (b) took or omitted to take such action in reliance
upon advice of counsel for the Corporation, or for such other
corporation, or upon
<PAGE> 9

statement made or information furnished by Directors, officers,
employees or agents of the Corporation, or of such other corporation,
which he/she had no reasonable grounds to disbelieve.

In the event any provision of this section 30 shall be in
violation of the Investment Company Act of 1940, as amended, or of the
rules and regulations promulgated thereunder, such provisions shall be
void to the extent of such violations.

31. Action Without a Meeting. Unless otherwise restricted by law,
the Articles of Incorporation or these Bylaws, any action required or
permitted to be taken at any meeting of the Board of Directors or any
committee thereof may be taken without a meeting if written consent
thereto is signed by all members of the Board of Directors or of such
committee, as the case may be, and such written consent is filed with
the minutes of proceedings of the Board or committee.

32. Numbers and Powers of the Board. The property and business of
this Corporation shall be managed by a Board of Directors, and the
number of Directors to constitute the Board shall be not less than
five (5) nor more than eight (8). Directors need not be stockholders.
In addition to the powers and authorities by these Bylaws expressly
conferred upon the Board of Directors, the Board may exercise all such
powers of the corporation and do or cause to be done all such lawful
acts and things as are not by statute or by the Articles of
Incorporation or by these Bylaws prohibited, or required to be
exercised or done by the stockholders only.

33. Term of Office. The first Board of Directors shall be elected
at the first duly held meeting of the incorporators and thereafter
they shall be elected at the annual meetings of the stockholders.
Except as may otherwise be provided by law, the Articles of
Incorporation or these Bylaws, each Director shall hold office until
the next annual election and until a successor shall be duly elected
and qualified, or until his/her written resignation shall have been
filed with the Secretary of the Corporation. Each Director, upon
his/her election, shall qualify by accepting the office of Director by
executing and filing with the Corporation a written acceptance of
his/her election which shall be placed in the minute book.

34. Waiver. Any notice provided or required to be given to the
Directors may be waived in writing by any of them. Attendance of a
Director at any meeting shall constitute a waiver of notice of such
meeting except where he/she attends for the express purpose of
objecting to the transaction of any business thereat because the
meeting is not lawfully called or convened.

OFFICERS

35. (a) Officers -- Who Shall Constitute. The officers of the
Corporation shall be a Chairman of the Board, a President, one or
more Vice Presidents, a Secretary, a Treasurer, one or more
Assistant Secretaries and one or more Assistant Treasurers. The
Board shall
<PAGE> 10
elect a President, a Secretary and a Treasurer at its first
meeting after each annual meeting of the stockholders. The Board
then, or from time to time, may elect one or more of the other
prescribed officers as it may deem advisable, but need not elect
any officers other than a President, a Secretary and a Treasurer.
The Board may, if it desires, elect or appoint additional
officers and may further identify or describe any one or more of
the officers of the Corporation. In the discretion of the Board
of Directors, the office of Chairman of the Board of Directors
may remain unfilled. The Chairman of the Board of Directors, if
any, shall at all times be, and other officers may be, members of
the Board of Directors.

Officers of the Corporation need not be members of the Board of
Directors. Any two (2) or more offices may be held by the same
person.

An officer shall be deemed qualified when he/she enters upon
the duties of the office to which he/she has been elected or
appointed and furnishes any bond required by the Board; but the
Board may also require his/her written acceptance and promise
faithfully to discharge the duties of such office.

(b) Term of Office. Each officer of the Corporation shall hold
his/her office at the pleasure of the Board of Directors or for
such other period as the Board may specify at the time of his/her
election or appointment, or until his/her death, resignation or
removal by the Board, whichever first occurs. In any event, each
officer of the Corporation who is not reelected or reappointed at
the annual election of officers by the Board next succeeding
his/her election or appointment shall be deemed to have been
removed by the Board, unless the Board provides otherwise at the
time of his/her election or appointment.

(c) Other Agents. The Board from time to time may also appoint
such other agents for the Corporation as it shall deem necessary
or advisable, each of whom shall serve at the pleasure of the
Board or for such period as the Board may specify, and shall
exercise such powers, have such titles and perform such duties as
shall be determined from time to time by the Board or by an
officer empowered by the Board to make such determinations.

36. Chairman of the Board. If a Chairman of the Board be elected,
he/she shall preside at all meetings of the stockholders and Directors
at which he/she may be present and shall have such other duties,
powers and authority as may be prescribed elsewhere in these Bylaws.
The Board of Directors may delegate such other authority and assign
such additional duties to the Chairman of the Board, other than those
conferred by law exclusively upon the President, as it may from time
to time determine, and, to the extent permissible by law, the Board
may designate the Chairman of the Board as the Chief Executive Officer
of the Corporation with all of the powers otherwise conferred upon the
President of the Corporation under paragraph 37 of these Bylaws, or it
may, from time to time, divide the responsibilities, duties and
authority for the general control and management of the Corporation's
business and affairs between the Chairman of the Board and the
President.
<PAGE> 11

37. The President. Unless the Board otherwise provides, the
President shall be the Chief Executive Officer of the Corporation with
such general executive powers and duties of supervision and management
as are usually vested in the office of the Chief Executive Officer of
a corporation, and he/she shall carry into effect all directions and
resolutions of the Board. The President, in the absence of the
Chairman of the Board or if there be no Chairman of the Board, shall
preside at all meetings of the stockholders and Directors.

The President may execute all bonds, notes, debentures,
mortgages and other instruments for and in the name of the
Corporation, may cause the corporate seal to be affixed thereto, and
may execute all other instruments for and in the name of the
Corporation.

Unless the Board otherwise provides, the President, or any
person designated in writing by him/her, shall have full power and
authority on behalf of this Corporation (a) to attend and vote or
take action at any meeting of the holders of securities of
corporations in which this Corporation may hold securities, and at
such meetings shall possess and may exercise any and all rights and
powers incident to being a holder of such securities, and (b) to
execute and deliver waivers of notice and proxies for and in the name
of the Corporation with respect to any securities held by this
Corporation.

He/she shall, unless the Board otherwise provides, be ex
officio a member of all standing committees.

He/she shall have such other or further duties and authority as
may be prescribed elsewhere in these Bylaws or from time to time by
the Board of Directors.

If a Chairman of the Board be elected or appointed and
designated as the Chief Executive Officer of the Corporation, as
provided in paragraph 36 of these Bylaws, the President shall perform
such duties as may be specifically delegated to him/her by the Board
of Directors or are conferred by law exclusively upon him/her, and in
the absence, disability, or inability or refusal to act of the
Chairman of the Board, the President shall perform the duties and
exercise the powers of the Chairman of the Board.

38. Vice President. In the absence of the President or in the
event of his/her disability or inability or refusal to act, any Vice
President may perform the duties and exercise the powers of the
President until the Board otherwise provides. Vice Presidents shall
perform such other duties as the Board may from time to time
prescribe.

39. Secretary and Assistant Secretaries. The Secretary shall
attend all meetings of the Board and all meetings of the stockholders,
shall prepare minutes of all proceedings at such meetings and shall
preserve them in a minute book of the Corporation. He/she shall
perform similar duties for the executive and other standing committees
when requested by the Board or any such committee.
<PAGE> 12
It shall be the principal responsibility of the Secretary to
give, or cause to be given, notice of all meetings of the stockholders
and of the Board of Directors, but this shall not lessen the authority
of others to give such notice as is authorized elsewhere in these
Bylaws.

The Secretary shall see that all books, records, lists and
information, or duplicates, required to be maintained in Kansas, or
elsewhere, are so maintained.

The Secretary shall keep in safe custody the seal of the
Corporation, and shall have authority to affix the seal to any
instrument requiring a corporate seal and, when so affixed, he/she
shall attest the seal by his/her signature. The Board of Directors
may give general authority to any other officer to affix the seal of
the Corporation and to attest the affixing by his/her signature.

The Secretary shall have the general duties, responsibilities
and authorities of a Secretary of a Corporation and shall perform such
other duties and have such other responsibility and authority as may
be prescribed elsewhere in these Bylaws or from time to time by the
Board of Directors or the Chief Executive Officer of the Corporation,
under whose direct supervision (s)he shall be.

In the absence of the Secretary or in the event of his/her
disability, or inability or refusal to act, any Assistant Secretary
may perform the duties and exercise the powers of the Secretary until
the Board otherwise provides. Assistant Secretaries shall perform
such other duties as the Board of Directors may from time to time
prescribe.

40. Treasurer and Assistant Treasurers. The Treasurer shall have
responsibility for the safekeeping of the funds and securities of the
Corporation, shall keep or cause to be kept full and accurate accounts
of receipts and disbursements in books belonging to the Corporation
and shall keep, or cause to be kept, all other books of account and
accounting records of the Corporation. He/she shall deposit or cause
to be deposited all moneys and other valuable effects in the name and
to the credit of the Corporation in such depositories as may be
designated by the Board of Directors or by any officer of the
Corporation to whom such authority has been granted by the Board.

He/she shall disburse, or permit to be disbursed, the funds of
the Corporation as may be ordered, or authorized generally, by the
Board, and shall render to the Chief Executive Officer of the
Corporation and the Directors whenever they may require it, an account
of all his/her transactions as Treasurer and of those under his/her
jurisdiction, and of the financial condition of the Corporation.

He/she shall perform such other duties and shall have such
other responsibility and authority as may be prescribed elsewhere in
these Bylaws or from time to time by the Board of Directors.
<PAGE> 13

He/she shall have the general duties, powers and responsibility
of a Treasurer of a corporation and shall, unless otherwise provided
by the Board, be the Chief Financial and Accounting Officer of the
Corporation.

If required by the Board, he/she shall give the Corporation a
bond in a sum and with one or more sureties satisfactory to the Board,
for the faithful performance of the duties of his/her office and for
the restoration to the Corporation, in the case of his/her death,
resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind in his/her
possession or under his/her control which belong to the Corporation.

In the absence of the Treasurer or in the event of his/her
disability, or inability or refusal to act, any Assistant Treasurer
may perform the duties and exercise the powers of the Treasurer until
the Board otherwise provides. Assistant Treasurers shall perform such
other duties and have such other authority as the Board of Directors
may from time to time prescribe.

41. Duties of Officers May be Delegated. If any officer of the
Corporation be absent or unable to act, or for any other reason that
the Board may deem sufficient, the Board may delegate, for the time
being, some or all of the functions, duties, powers and
responsibilities of any officer to any other officer, or to any other
agent or employee of the Corporation or other responsible person,
provided a majority of the whole Board concurs.

42. Removal. Any officer or agent elected or appointed by the
Board of Directors, and any employee, may be removed or discharged by
the Board whenever in its judgment the best interests of the
Corporation would be served thereby, but such removal or discharge
shall be without prejudice to the contract rights, if any, of the
person so removed or discharged.

43. Salaries and Compensation. Salaries and compensation of all
elected officers of the Corporation shall be fixed, increased or
decreased by the Board of Directors, but this power, except as to the
salary or compensation of the Chairman of the Board and the President,
may, unless prohibited by law, be delegated by the Board to the
Chairman of the Board or the President, or may be delegated to a
committee. Salaries and compensation of all appointed officer, agents,
and employees of the Corporation may be fixed, increased or decreased
by the Board of Directors, but until action is taken with respect
thereto by the Board of Directors the same fixed, increased or
decreased by the Chairman of the Board, the President or such other
officer or officers as may be empowered by the Board of Directors to
do so.

44. Delegation of Authority to Hire, Discharge and Designate
Duties. The Board from time to time may delegate to the Chairman of
the Board, the President or other officer or executive employee of the
Corporation, authority to hire, discharge and fix and modify the
duties, salary or other compensation of employees of the Corporation
under their jurisdiction, and the Board may delegate to such officer
or executive employee similar authority with respect
<PAGE> 14

to obtaining and retaining for the Corporation the services of
attorneys, accountants and other experts.

STOCK

45. Certificates for Shares of Stock. Certificates for shares of
stock shall be issued in numerical order, and each stockholder shall
be entitled to a certificate signed by, or in the name of the
Corporation by, the Chairman of the Board or the President or a Vice
President, and by the Treasurer or an Assistant Treasurer or the
Secretary or an Assistant Secretary, certifying the number of shares
owned by him/her. To the extent permitted by statute, any of or all
of the signatures on such certificate may be a facsimile. In case any
officer, transfer agent or registrar who has signed or whose facsimile
signature has been placed upon a certificate shall have ceased to be
such officer, transfer agent or registrar before such certificate is
issued, such certificate may nevertheless be issued by the Corporation
with the same effect as if such officer, transfer agent or registrar
who signed such certificate, or whose facsimile signature shall have
been used thereon, had not ceased to be such officer, transfer agent
or registrar of the Corporation.

46. Transfers of Stock. Transfers of stock shall be made only upon
the transfer books of the Corporation, kept at the office of the
Corporation or of the transfer agent designated to transfer the class
of stock, and before a new certificate is issued the old certificate
shall be surrendered for cancellation. Until and unless the Board
appoints some other person, firm or corporation as its transfer agent
(and upon the revocation of any such appointment, thereafter, until a
new appointment is similarly made) the Secretary of the Corporation
shall be the transfer agent of the Corporation without the necessity
of any formal action of the Board, and the Secretary, or any person
designated by him/her, shall perform all of the duties thereof.

47. Registered Stockholders. Only registered stockholders shall be
entitled to be treated by the Corporation as the holders and owners in
fact of the shares standing in their respective names, and the
Corporation shall not be bound to recognize any equitable or other
claim to or interest in such shares on the part of any other person,
whether or not it shall have express or other notice thereof, except
as expressly provided by the laws of Kansas.

48. Lost Certificates. The Board of Directors may authorize the
Secretary to direct that a new certificate or certificates be issued
in place of any certificate or certificates theretofore issued by the
Corporation, alleged to have been lost, stolen or destroyed, upon the
making of an affidavit of the fact by the person claiming the
certificate or certificates to be lost, stolen or destroyed. When
authorizing such issue of a replacement certificate or certificates,
the Secretary may, as a condition precedent to the issuance thereof,
require the owner of such lost, stolen or destroyed certificate or
certificates, or his/her legal representative, to give the Corporation
and its transfer agents and registrars, if any, a bond in such sum as
it may direct to indemnify it against any claim that may be made
against it with respect to the certificate or certificates alleged to
have been lost, stolen or destroyed, or with respect to the issuance
of such new certificate or certificates.
<PAGE> 15

49. Regulations. The Board of Directors shall have power and
authority to make all such rules and regulations as it may deem
expedient concerning the issue, transfer, conversion and registration
of certificates for shares of stock of the Corporation, not
inconsistent with the laws of the State of Kansas, the Articles of
Incorporation of the Corporation and these Bylaws.

50. Fixing Record Date. In order that the Corporation may
determine the stockholders entitled to notice of or to vote at any
meeting of stockholders or any adjournment thereof, or to express
consent to corporate action in writing without a meeting, or entitled
to receive payment of any dividend or other distribution or allotment
of any rights, or entitled to exercise in respect of any change,
conversion or exchange of stock or for the purpose of any other lawful
action, the Board of Directors may fix, in advance, a record date,
which shall not be more than sixty (60) days not less than ten (10)
days before the date of such meeting, nor more than sixty (60) days
prior to any other action. A determination of stockholders of record
entitled to notice of or to vote at a meeting of stockholders shall
apply to any adjournment of the meeting; provided, however, that the
Board of Directors may fix a new record date for the adjourned
meeting.

DIVIDENDS AND FINANCE

51. Dividends. Dividends upon the outstanding shares of stock of
the Corporation, subject to the provisions of the Articles of
Incorporation and of any applicable law and of these Bylaws, may be
declared by the Board of Directors at any meeting. Subject to such
provisions, dividends may be paid in cash, in property, or in shares
of stock of the Corporation.

52. Creation of Reserves. The Directors may set apart out of any
of the funds of the Corporation available for dividends a reserve or
reserves for any proper purpose or may abolish any such reserve in the
manner in which it was created.

53. Depositories. The moneys of the Corporation shall be deposited
in the name of the Corporation in such bank or banks or other
depositories as the Board of Directors shall designate, and shall be
drawn out only by check signed by persons designated by resolution
adopted by the Board of Directors, except that the Board of Directors
may delegate said powers in the manner hereinafter provided in this
bylaw 53. The Board of Directors may by resolution authorize an
officer or officers of the Corporation to designate any bank or banks
or other depositories in which moneys of the Corporation may be
deposited, and to designate the persons who may sign checks drawn on
any particular account or accounts of the Corporation, whether created
by direct designation of the Board of Directors or by authorized
officer or officers as aforesaid.

54. Fiscal Year. The Board of Directors shall have power to fix
and from time to time change the fiscal year of the Corporation. In
the absence of action by the Board of Directors, the fiscal year of
the Corporation shall end each year on the date which the Corporation
treated
<PAGE> 16

as the close of its first fiscal year, until such time, if any,
as the fiscal year shall be changed by the Board of Directors.

55. Directors' Statement. The Board of Directors may present at
each annual meeting of the stockholders, and when called for by vote
of the stockholders shall present to any annual or special meeting of
the stockholders, a full and clear statement of the business and
condition of the Corporation.

56. Fixing of Capital, Transfers of Surplus. Except as may be
specifically otherwise provided in the Articles of Incorporation, the
Board of Directors is expressly empowered to exercise all authority
conferred upon it or the Corporation by any law or statute, and in
conformity therewith, relative to:

(a) the determination of what part of the consideration received
for shares of the Corporation shall be capital

(b) increasing or reducing capital;

(d) all similar or related matters;

provided that any concurrent action or consent by or of the
Corporation and its stockholders required to be taken or given
pursuant to law shall be duly taken or given in connection therewith.

57. Loans to Officers and Directors Prohibited. The Corporation
shall not loan money to any officer or director of the Corporation.

58. Books, Accounts and Records. The books, accounts and records
of the Corporation, except as may be otherwise required by the laws of
the State of Kansas, may be kept outside the State of Kansas, at such
place or places as the Board of Directors may from time to time
determine. The Board of Directors shall determine whether, to what
extent and the conditions upon which the book, accounts and records of
the Corporation, or any of them, shall be open to the inspection of
the stockholders, and no stockholder shall have any right to inspect
any book, account or record of the Corporation, except as conferred by
law or by resolution of the stockholders or Directors.

INVESTMENT AND MANAGEMENT POLICIES

59. Custody of Securities. Without limitation as to any
restriction imposed by the Articles of Incorporation of the
Corporation or by operation of law on the conduct of the Corporation's
investment company business, the custody of the Corporation's
securities shall be subject to the following requirements:
<PAGE> 17

(a) The securities of the Corporation shall be placed in the
custody and care of a custodian which shall be a bank or trust
company having not less than $2,000,000 aggregate capital,
surplus and undivided profits.

(b) Upon the resignation or inability to serve of the custodian,
the officers and directors shall be required to use their best
efforts to locate a successor, to whom all cash and securities
must be delivered directly, and in the event that no successor
can be found, to submit to stockholders the question of whether
the corporation should be liquidated or shall function without a
custodian.

(c) Any agreement with the custodian shall require it to deliver
securities owned by the Corporation only (1) upon sale of such
securities for the account of the Corporation and receipt of
payment; (2) to the broker or dealer selling the securities in
accordance with "street delivery" custom; (3) on redemption,
retirement of maturity; (4) on conversion or exchange into other
securities pursuant to a conversion or exchange privilege, or
plan of merger, consolidation, reorganization, recapitalization,
readjustment, share split-up, change of par value, deposit in or
withdrawal from a voting trust, or similar transaction or event
affecting the issuer; or (5) pursuant to the redemption in kind
of any securities of the Corporation.

(d) Any agreement with the custodian shall require it to deliver
funds of the Corporation only (1) upon the purchase of securities
for the portfolio of the Corporation and delivery of such
securities to the custodian, or (2) for the redemption of shares
by the Corporation, the payment of interest, dividend
disbursements, taxes, management fees, the making of payments in
connection with the conversion, exchange or surrender of
securities owned by the Corporation and the payment of operating
expenses of the Corporation.

60. Restrictions on the Investment of Funds. Without limitation
as to any restrictions imposed by the Articles of Incorporation of the
of the Corporation or by operation of law on the conduct of the
Corporation's investment company business, the officers and Directors
of the Corporation shall not permit the Corporation to take any action
not permitted by its fundamental investment policies, as amended, set
forth in the Corporation's registration statement.

61. Distribution of Earnings.

A. The Directors by appropriate resolution shall from time to time
distribute the net earnings of the Corporation to its
shareholders pro-rata by mailing checks to the shareholders at
the address shown on the books of the Company.

B. In addition to paying all current expenses, it shall be the
duty of the officers and Directors to set up adequate reserves to
cover taxes, auditors' fees, and any and all necessary expenses
that can be anticipated but are not currently payable, and same
shall be deducted from gross earnings before net earnings may be
distributed.
<PAGE> 18

C. If any of the net earnings of this Corporation is profit from
sale of its securities or from any source that would be
considered as capital gains, this information shall be clearly
revealed to the stockholders and the basis of calculation of such
gains set forth.

D. The officers and Directors shall distribute not less than that
amount of net earnings of this Corporation to its shareholders as
may be required or advisable under applicable law and special
distribution of net earnings may be made at the discretion of the
Directors at any time to meet this requirement or for any other
reason.

62. Underwriting or Principal Broker Agreement.

A. The officers and Directors of this Corporation shall not enter
into an agreement or contract with any person or corporation to
act as underwriter or principal broker for the sale and/or
distribution of its shares, unless said person or corporation is
fully qualified as a broker and has met all the requirements of
the Kansas Corporation Commission and United States Securities
and Exchange Commission and is currently in good standing with
said Commissions.

B. No commission, sales load or discount from the offering price
of said shares shall be greater than that which is permitted
under the Investment Company Act of 1940 and the rules,
regulations and orders promulgated thereunder.

C. Any such contract so made shall not endure for a period of more
than on year, unless such extension has been duly ratified and
approved by a majority vote of the Directors of the Corporation,
and such contract shall contain a provision that it may be
terminated for cause upon sixty days written notice by either
party.

MISCELLANEOUS

63. Waiver of Notice. Whenever any notice is required to be given
under the provisions of the statutes of Kansas, or of the Articles of
Incorporation or of these Bylaws, a waiver thereof in writing, signed
by the person or persons entitled to said notice, whether before or
after the time stated therein, shall be deemed equivalent to notice.
Attendance of a person at a meeting shall constitute a waiver of
notice of such meeting, except when the person attends a meeting for
the express purpose of objecting, at the beginning of the meeting, to
the transaction of any business because the meeting is not lawfully
called or convened. Neither the business to be transacted at, nor the
purpose of, any regular or special meeting of the stockholders,
Directors or members of a committee of directors need not be specified
in any written waiver of notice unless so required by the Articles of
Incorporation of these Bylaws.
<PAGE> 19

64. Contracts. The Board of Directors may authorize any officer or
officers, or agent or agents, to enter into any contract or execute
and deliver any instrument in the name of and on behalf of the
Corporation, and such authority may be general or confined to specific
instances.

65. Amendments. These Bylaws may be altered, amended or repealed,
or new Bylaws may be adopted, in any of the following ways: (i) by
the holders of a majority of the outstanding shares of stock of the
Corporation entitled to vote, or (ii) by a majority of the full Board
of Directors and any change so made by the stockholders may thereafter
be further changed by a majority of the directors; provided, however,
that the power of the Board of Directors to alter, amend or repeal the
Bylaws, or to adopt new Bylaws, may be denied as to any Bylaws or
portion thereof as the stockholders shall so expressly provide.

CERTIFICATE

The undersigned Secretary of Security Equity Fund, a Kansas
Corporation, hereby certifies that the foregoing Bylaws are the
amended/restated Bylaws of said Corporation adopted by the Directors of the
Corporation.

Dated: February 3, 1995

Amy J. Lee
Secretary

<PAGE> 1
EXHIBIT 4

No. SHARES _______________
SECURITY EQUITY FUND
EQUITY SERIES
INCORPORATED UNDER THE LAWS OF THE STATE OF KANSAS
Total Authorized Shares:
5,000,000,000 Shares of Capital Stock of Security Equity Fund with a Par Value
of $0.25 Each

THIS CERTIFIES THAT

is the owner of

fully paid and non-assessable shares of Common Stock, each of the par value of
$0.25 per share, of SECURITY EQUITY FUND, transferable on the books of the
corporation by the holder hereof in person or by attorney, upon surrender of
this certificate duly endorsed or assigned.

This certificate and the shares represented hereby are subject to the laws of
the State of Kansas and to the Articles of Incorporation and the Bylaws of the
corporation as from time to time amended.

IN WITNESS WHEREOF, SECURITY EQUITY FUND, has caused this certificate to be
signed by its duly authorized officers and to be sealed with the seal of the
corporation.

Dated Account No.

SECRETARY-ASSISTANT SECRETARY PRESIDENT-VICE PRESIDENT

(SEAL)
<PAGE> 2

No. SHARES _______________
SECURITY EQUITY FUND
GLOBAL SERIES
INCORPORATED UNDER THE LAWS OF THE STATE OF KANSAS
Total Authorized Shares:
5,000,000,000 Shares of Capital Stock of Security Equity Fund with a Par Value
of $0.25 Each

THIS CERTIFIES THAT

is the owner of

This certificate and the shares represented hereby are subject to the laws of
the State of Kansas and to the Articles of Incorporation and the Bylaws of the
corporation as from time to time amended.

IN WITNESS WHEREOF, SECURITY EQUITY FUND, has caused this certificate to be
signed by its duly authorized officers and to be sealed with the seal of the
corporation.

Dated Account No.

SECRETARY-ASSISTANT SECRETARY PRESIDENT-VICE PRESIDENT

(SEAL)

<PAGE> 3

No. SHARES _______________
SECURITY EQUITY FUND
ASSET ALLOCATION SERIES
INCORPORATED UNDER THE LAWS OF THE STATE OF KANSAS
Total Authorized Shares:
5,000,000,000 Shares of Capital Stock of Security Equity Fund with a Par Value
of $0.25 Each

THIS CERTIFIES THAT

is the owner of

This certificate and the shares represented hereby are subject to the laws of
the State of Kansas and to the Articles of Incorporation and the Bylaws of the
corporation as from time to time amended.

IN WITNESS WHEREOF, SECURITY EQUITY FUND, has caused this certificate to be
signed by its duly authorized officers and to be sealed with the seal of the
corporation.

Dated Account No.

SECRETARY-ASSISTANT SECRETARY PRESIDENT-VICE PRESIDENT

(SEAL)

<PAGE> 1

EXHIBIT 10

[THE SECURITY BENEFIT GROUP OF COMPANIES LETTERHEAD]

March 15, 1995

Security Equity Fund
700 Harrison Street
Topeka, KS 66636-0001

Dear Sir/Madam:

I refer to the registration statement, File No. 2-19458, of Security Equity
Fund, a Kansas corporation, hereinafter referred to as the "Company," being
filed with the Securities and Exchange Commission for the purpose of
registering under the Securities Act of 1933 the shares of the Company.

I have examined the Articles of Incorporation and the bylaws of the Company,
minutes of the applicable meetings of the Board of Directors and stockholders
of the Company, and other corporate records, applicable certificates of public
officials, and other documents I have deemed relevant.

Based upon the foregoing, it is my opinion that:

(1) The Company is duly organized, existing and in good standing under the
laws of the State of Kansas.

(2) The Company has authorization to sell 5 billion shares of capital
stock of the par value of $.25 per share pursuant to an indefinite
registration of such shares made effective October 25, 1982.

(3) All necessary corporate actions have been taken to authorize the sale
by the Company, for the consideration set forth in the registration
statement, and, upon the sale by the Company of those shares, they
will be duly issued, fully paid and nonassessable.

Very truly yours,

Amy J. Lee

AMY J. LEE
Assistant Counsel
Security Benefit Group, Inc.

<PAGE> 1

EXHIBIT 11

CONSENT OF INDEPENDENT AUDITORS

We consent to the reference to our firm under the captions "Financial
Highlights" and "Independent Auditors" in the Registration Statement (Form
N-1A) and related prospectus of Security Equity Fund and to the incorporation
by reference of our report dated October 28, 1994, with respect to the
financial statements of Security Equity Fund included in its Annual Report to
Shareholders for the year ended September 30, 1994.

Ernst & Young LLP
---------------------
Ernst & Young LLP

Kansas City, Missouri
March 13, 1995

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<PAID-IN-CAPITAL-COMMON> 296,452
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<SHARES-COMMON-PRIOR> 55,834
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<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 21,454
<OVERDISTRIBUTION-GAINS> 0
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<NET-ASSETS> 365,689
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<EXPENSES-NET> 3,951
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<NET-CHANGE-FROM-OPS> 6,581
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<DISTRIBUTIONS-OF-INCOME> 6,496
<DISTRIBUTIONS-OF-GAINS> 65,231
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<ACCUMULATED-NII-PRIOR> 7,186
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<INVESTMENTS-AT-COST> 317,859
<INVESTMENTS-AT-VALUE> 361,789
<RECEIVABLES> 3,478
<ASSETS-OTHER> 2,537
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 367,804
<PAYABLE-FOR-SECURITIES> 631
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<OTHER-ITEMS-LIABILITIES> 1,484
<TOTAL-LIABILITIES> 2,115
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<PAID-IN-CAPITAL-COMMON> 296,452
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<ACCUMULATED-NII-CURRENT> 3,853
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 21,454
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 43,930
<NET-ASSETS> 365,689
<DIVIDEND-INCOME> 5,636
<INTEREST-INCOME> 1,481
<OTHER-INCOME> 0
<EXPENSES-NET> 3,951
<NET-INVESTMENT-INCOME> 3,166
<REALIZED-GAINS-CURRENT> 29,000
<APPREC-INCREASE-CURRENT> (25,585)
<NET-CHANGE-FROM-OPS> 6,581
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 3
<DISTRIBUTIONS-OF-GAINS> 30
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,488
<NUMBER-OF-SHARES-REDEEMED> 1,137
<SHARES-REINVESTED> 6
<NET-CHANGE-IN-ASSETS> 7,452
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3,926
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,951
<AVERAGE-NET-ASSETS> 371,213
<PER-SHARE-NAV-BEGIN> 6.81
<PER-SHARE-NII> .01
<PER-SHARE-GAIN-APPREC> (.005)
<PER-SHARE-DIVIDEND> .12
<PER-SHARE-DISTRIBUTIONS> 1.205
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 5.49
<EXPENSE-RATIO> 2.07
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
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<NAME> SECURITY EQUITY FUND
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<CURRENCY> U.S. DOLLAR

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<PERIOD-END> SEP-30-1994
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<INVESTMENTS-AT-COST> 21,705
<INVESTMENTS-AT-VALUE> 22,582
<RECEIVABLES> 203
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<TOTAL-ASSETS> 24,603
<PAYABLE-FOR-SECURITIES> 428
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 87
<TOTAL-LIABILITIES> 515
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 22,750
<SHARES-COMMON-STOCK> 1,857
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 502
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 836
<NET-ASSETS> 24,088
<DIVIDEND-INCOME> 328
<INTEREST-INCOME> 1
<OTHER-INCOME> (30)
<EXPENSES-NET> 362
<NET-INVESTMENT-INCOME> (63)
<REALIZED-GAINS-CURRENT> 502
<APPREC-INCREASE-CURRENT> 836
<NET-CHANGE-FROM-OPS> 1,275
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
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<NUMBER-OF-SHARES-REDEEMED> 498
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<NET-CHANGE-IN-ASSETS> 20,128
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
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<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 362
<AVERAGE-NET-ASSETS> 17,554
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> (.03)
<PER-SHARE-GAIN-APPREC> .87
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<PER-SHARE-NAV-END> 10.84
<EXPENSE-RATIO> 2.0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

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<PERIOD-END> SEP-30-1994
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<SENIOR-LONG-TERM-DEBT> 0
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<TOTAL-LIABILITIES> 515
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 22,750
<SHARES-COMMON-STOCK> 368
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 502
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 836
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<DIVIDEND-INCOME> 328
<INTEREST-INCOME> 1
<OTHER-INCOME> (30)
<EXPENSES-NET> 362
<NET-INVESTMENT-INCOME> (63)
<REALIZED-GAINS-CURRENT> 502
<APPREC-INCREASE-CURRENT> 836
<NET-CHANGE-FROM-OPS> 1,275
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<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
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<NET-CHANGE-IN-ASSETS> 3,960
<ACCUMULATED-NII-PRIOR> 0
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<PER-SHARE-NAV-BEGIN> 9.96
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</TABLE>