<PAGE>
SECURITY FUNDS
ANNUAL REPORT
SEPTEMBER 30, 1996
* SECURITY GROWTH AND INCOME FUND
* SECURITY EQUITY FUND
- EQUITY SERIES
- GLOBAL SERIES
- ASSET ALLOCATION SERIES
* SECURITY ULTRA FUND
[SDI LOGO]
<PAGE>
PRESIDENT'S COMMENTARY
- --------------------------------------------------------------------------------
NOVEMBER 15, 1996
SECURITY FUNDS
To Our Shareholders:
The fiscal year completed September 30 has been another very rewarding period
for equity investors. The Dow Jones Industrial Average increased 23.54% in the
past twelve months, the Standard & Poor's 500 gained 20.32%, and the Russell
2000 Index was up 12.83%. Your equity portfolios in the Security Funds family
all turned in excellent performances, with double-digit total returns.
ECONOMIC CONTRIBUTIONS TO EQUITY PERFORMANCE
The leading contributor to strong markets this fiscal year was moderate but
stable growth of the economy in an environment marked by the absence of
accelerating inflation. Moreover, the global inflation story was positive as
well, with declining rates of inflation in most of the world's major economies.
This was a powerful contributor to global economic growth and interest rate
stability throughout the year. Such a climate is extremely favorable for
corporate earnings.
A second factor encouraging equity growth was productivity improvement. As the
technological revolution has progressed, both workers and plant assets have been
employed more efficiently and costs have been reduced. This has generated
uninterrupted growth in corporate earnings and accordingly, equity market
growth.
A CORRECTION MAY BE IN THE CARDS
As the next fiscal year unfolds, we expect some changes to develop in the
economic picture. An economic slowdown, while not necessarily inevitable, may
take place in the second half of 1997 that might be sufficient to produce a
short-lived consumer recession. This would be accompanied by declining corporate
profits and the possibility of a correction in stock prices.
[PHOTO OF JOHN CLELAND]
JOHN CLELAND, PRESIDENT
We expect, however, that the correction would be short in time. In our view, the
globalization of the world's economy makes it unlikely that any one country's
economic contraction would last very long. Many companies in Europe and Asia are
early in their productivity improvement processes. Competitiveness, as well as
earnings which are global in nature, will keep companies worldwide working hard
at cost efficiency and earnings growth.
OUR VIEW OF THE LONG TERM
Volatility remains the constant companion of equity investors. Because of
ever-growing liquidity in the financial markets, traders can more rapidly
respond to reports of all kinds, moving markets oftentimes in wide swings.
However, long-term investors are able to step back and view the broader upward
trends in the market indexes without overreacting to daily changes.
We believe that the long-term bull market for financial assets remains intact.
The world in general is at peace with the United States, the only surviving
global superpower. This continues to provide a positive outlook for financial
markets as we approach the dawn of the twenty-first century.
As always, we are pleased that you have chosen us to manage your investments. We
invite your questions or comments at any time.
Sincerely,
JOHN CLELAND
John Cleland
President
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1
<PAGE>
MANAGER'S COMMENTARY
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NOVEMBER 15, 1996
SECURITY GROWTH AND INCOME FUND
To Our Shareholders:
At the close of the fiscal year completed September 30 we look back with
surprise at the strength of the market. A year ago we felt that corporate
earnings in 1996 would slow, in turn limiting the stock market to a modest
upside movement. Instead earnings remained strong even in the face of rising
interest rates, and the stock markets reached record highs. Your Growth and
Income Fund returned 20.31% for the year, topping last year's return and
paralleling the 20.32% gain for the Standard & Poor's 500 Index.*
CONTRIBUTORS TO STRONG PERFORMANCE
The greatest exposure in the portfolio was to companies with high quality,
consistently above-average earnings and low economic sensitivity. Our analytical
efforts paid off as we worked to identify good earnings prospects. Many, such as
Walgreens Company, a chain of retail drug stores, were in the consumer
nondurable goods sector and had low economic sensitivity.
Issues including Smithkline Beecham PLC ADR and Merck & Company, Inc. in the
health care industry generated solid earnings as they felt little impact from
rising interest rates. Albertson's, Inc., a food retailer, also was a strong
performer, showing very little sensitivity to a moderating economy.
Even though the technology sector was more volatile than many other areas, a
strong-performing stock in the portfolio was Microsoft Corporation, increasing
over 65% since purchase in early 1996. Another outstanding performer was U.S.
Industries, Inc., a manufacturing and distribution conglomerate, which posted a
75% gain in its stock price since we added it to our holdings.
THE FIXED INCOME PORTION OF THE PORTFOLIO
Consistently throughout the fiscal year about 20% of the fund's portfolio was
invested in high yield bonds. This portion contained both BB and B-rated issues,
Standard & Poor's two highest rating categories in the high yield area of the
fixed income market. Companies in these rating categories exhibit stronger
balance sheets than their lower-rated counterparts, and generally will hold
their value better in the event of an economic slowdown.
Corporate buyouts played a substantial part in the total return contribution of
the bond holdings. Cable television operator Continental Cablevision was
purchased by U.S. West, Inc., a telecommunications service provider. Because
U.S. West was rated higher, our Continental Cablevision bonds benefitted from an
upgrade after the purchase. A similar situation in the finance industry involved
Keystone Group, a mutual fund company, and its acquiror, a bank holding company
called First Union Corporation. The perception that Keystone will soon be
upgraded to First Union's ranking drove the price upward.
[PHOTO OF THE SECURITY MANAGEMENT GROWTH-INCOME TEAM]
THE SECURITY MANAGEMENT GROWTH-INCOME TEAM:
(L-R) CHUCK LAUBER, TERRY MILBERGER, TOM SWANK,
JIM SCHIER AND (SEATED) JOHN CLELAND
LOOKING AHEAD
We expect the long-awaited economic slowdown to unfold sometime in 1997. The
path we pursued in 1996-focusing on stable growth companies-should continue to
serve us well in that event. When economic strength resumes after this period of
moderation, it is likely that we will increase our exposure to stocks of a more
cyclical nature such as chemicals, paper producers, capital goods-related
industries and the housing industry.
Terry Milberger
Senior Portfolio Manager
Tom Swank
Portfolio Manager
*Performance figures are based on Class A shares and do not reflect deduction of
the sales charge.
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2
<PAGE>
MANAGER'S COMMENTARY (CONTINUED)
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NOVEMBER 15, 1996
SECURITY GROWTH AND INCOME FUND
PERFORMANCE -------------------------------------------------------------------
SECURITY GROWTH AND INCOME FUND VS. S&P 500
[LINE GRAPH WITH FOLLOWING INFORMATION CHARTED]
BLENDED INDEX
OF 80% S&P 500
AND 20% LEHMAN
BROTHERS LONG BB
SECURITY GROWTH HIGH YIELD
AND INCOME FUND S&P 500 BOND INDEX
----------------------------------------------------------------
12/31/86 9,647.52 10,558.65 10,539
3/31/87 11,073.61 12,811.51 12,471
6/30/87 11,466.66 13,452.05 12,960
9/30/87 11,765.21 14,340.79 13,608
12/31/87 9,732.90 11,108.76 11,213
3/31/88 10,287.69 11,639.74 11,898
6/30/88 10,629.71 12,411.48 12,607
9/30/88 10,482.14 12,450.80 12,732
12/31/88 10,776.56 12,830.71 13,152
3/31/89 11,437.43 13,738.04 13,920
6/30/89 12,146.18 14,948.76 15,054
9/30/89 12,714.35 16,546.27 16,427
12/31/89 12,978.10 16,882.45 16,783
3/31/90 12,493.36 16,371.56 16,418
6/30/90 12,572.14 17,396.25 17,347
9/30/90 11,978.80 15,017.92 15,365
12/31/90 12,589.17 16,355.85 16,483
3/31/91 13,681.07 18,723.54 18,691
6/30/91 13,895.14 18,684.26 19,449
9/30/91 14,645.95 19,683.96 19,743
12/31/91 15,341.48 21,321.71 21,257
3/31/92 15,050.76 20,786.06 20,991
6/30/92 14,903.63 21,182.53 21,434
9/30/92 15,329.00 21,683.89 22,092
12/31/92 16,079.63 22,770.27 23,126
3/31/93 16,803.06 23,758.75 24,163
6/30/93 16,955.43 23,873.65 24,497
9/30/93 17,721.93 24,488.58 25,191
12/31/93 17,394.03 25,053.11 25,820
3/31/94 16,974.35 24,111.23 24,852
6/30/94 15,908.79 24,217.77 24,838
9/30/94 16,368.88 25,402.86 25,888
12/31/94 16,027.39 25,397.70 25,924
3/31/95 16,967.16 27,864.59 28,376
6/30/95 18,571.77 30,516.98 31,107
9/30/95 19,683.37 32,938.57 33,285
12/31/95 20,475.35 34,917.17 35,236
3/31/96 21,867.19 36,787.15 36,693
6/30/96 22,730.29 38,433.91 38,018
9/30/96 23,681.51 39,610.93 39,196
$10,000 OVER TEN YEARS
This chart assumes a $10,000 investment in Class A shares of Growth and Income
Fund on September 30, 1986, and reflects deduction of the 5.75% sales load. On
September 30, 1996, the value of your investment in Class A shares of the fund
(with dividends reinvested) would have grown to $23,682. By comparison, the same
$10,000 investment would have grown to $39,611 based on the S&P's performance.
Comparison is also made to a blend of market indexes which reflect the asset
classes in which the Fund invests. The blended index consists of 80% S&P 500 and
20% Lehman Brothers Long BB High Yield Index. The same $10,000 investment in the
blended index would have grown to $39,005.
The performance illustrated above is based on the performance of Class A shares.
The performance of Class B shares, which were first offered on October 19, 1993,
will be greater or less than the performance shown for Class A shares as a
result of the different loads and fees associated with an investment in Class B
shares.
TOP 5 HOLDINGS**
% OF
NET ASSETS
----------
Monsanto Company 1.7%
Oracle Corporation 1.7%
American Home Products Corporation 1.7%
Chase Manhattan Corporation 1.6%
Eastman Kodak Company 1.6%
**At September 30, 1996
AVERAGE ANNUAL RETURNS
As of September 30, 1996
1 year 5 years 10 years
----------------------------
A Shares 20.31% 10.09% 9.65%
A Shares with sales charge 13.45% 8.78% 9.00%
B Shares 19.01% 9.41% N/A
(10-19-93)
B Shares with CDSC 14.01% 8.55% N/A
(10-19-93)
ONE YEAR RETURN PARALLELS INDEX
A SHARES - 20.31% S&P 500 - 20.32%
The performance data above represents past performance which is not predictive
of future results. The investment return and principal value of an investment in
the fund will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost. The figures above do not reflect
deduction of the maximum front-end sales charge of 5.75% for Class A shares or
contingent deferred sales charge of 5% for Class B shares, as applicable, except
where noted. Such figures would be lower if the maximum sales charge were
deducted.
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3
<PAGE>
MANAGER'S COMMENTARY
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NOVEMBER 15, 1996
SECURITY EQUITY FUND - EQUITY SERIES
To Our Shareholders:
The stock markets during the fiscal year completed September 30 surprised us
with their strength. Your Equity Series showed outstanding growth, returning
24.90% for the year compared with the Standard & Poor's 500 Index return of
20.32%.* A year ago at this time we anticipated that corporate earnings would
slow in 1996, limiting the stock market to a modest rise at best. Instead
earnings remained strong despite slightly higher interest rates, and the equity
markets reached record high levels.
GROWTH ORIENTATION PRODUCES EXCELLENT RETURNS
Throughout the year we have maintained a preference for growth companies. The
basic portfolio mix has been heavily weighted toward firms exhibiting high
quality, above-average earnings growth. For example, one of our best performers
has been Safeway, Inc. a grocery retailing chain which has been restructuring to
improve their expense structure. This realignment has produced increasing profit
margins, resulting in a stock price that more than doubled in the past twelve
months.
We have kept a large exposure to the healthcare industry, a sector which is now
reaping the benefits of cost cutting and many promising new products. The stock
of American Home Products Corporation has exhibited steady growth since the
company purchased American Cyanamid. Investors perceive that the merger will
bring cost efficiencies to the combined company which will lead to higher value.
Another company in this sector, Shering-Plough Corporation, has an excellent
outlook because of its new product flow.
In the highly volatile technology sector we held Microsoft Corporation stock
which appreciated over 65% since we purchased it. We also maintained an
overweighted position in the aerospace/defense area, including such names as
Lockheed Martin Corporation and McDonnell Douglas Corporation. On the negative
side, we held a lower weighting than the S&P 500 Index in banking and in the
energy sector. Banks were surprisingly strong performers despite rising interest
rates, and oil prices have increased much more than anticipated.
[PHOTO OF THE SECURITY MANAGEMENT LARGE CAP TEAM]
THE SECURITY MANAGEMENT LARGE CAP TEAM
JOHN CLELAND, TERRY MILBERGER, CHUCK LAUBER
PLANS FOR THE COMING YEAR
We think our blend of growth issues and selected value stocks is unique among
growth funds. We believe that over time, this combination lowers the fund's
volatility while increasing the potential for strong returns. We expect to
continue our same strategy over the coming months, given our outlook for a
moderating economy in 1997.
We plan to maintain an emphasis on companies with above-average earnings growth,
including those with exposure to foreign earnings. We think that many foreign
economies have the potential to show better growth in the months ahead than the
U.S. economy will generate.
Terry Milberger
Portfolio Manager
*Performance figures are based on Class A shares and do not reflect deduction of
the sales charge.
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4
<PAGE>
MANAGER'S COMMENTARY (CONTINUED)
- --------------------------------------------------------------------------------
NOVEMBER 15, 1996
SECURITY EQUITY FUND - EQUITY SERIES
PERFORMANCE -------------------------------------------------------------------
SECURITY EQUITY SERIES VS. S&P 500
[LINE GRAPH WITH FOLLOWING INFORMATION CHARTED]
Equity Series S&P 500
------------------------------------------------------
12/31/86 9,821.47 10,558.65
3/31/87 11,736.94 12,811.51
6/30/87 12,233.07 13,452.05
9/30/87 13,181.37 14,340.79
12/31/87 10,238.37 11,108.76
3/31/88 10,934.18 11,639.74
6/30/88 11,331.79 12,411.48
9/30/88 11,754.25 12,450.80
12/31/88 12,200.27 12,830.71
3/31/89 13,219.09 13,738.04
6/30/89 14,543.55 14,948.76
9/30/89 16,632.11 16,546.27
12/31/89 15,953.97 16,882.45
3/31/90 15,518.86 16,371.56
6/30/90 16,505.10 17,396.25
9/30/90 13,981.48 15,017.92
12/31/90 15,215.92 16,355.85
3/31/91 17,827.12 18,723.54
6/30/91 17,859.35 18,684.26
9/30/91 18,762.00 19,683.96
12/31/91 20,576.87 21,321.71
3/31/92 20,823.93 20,786.06
6/30/92 20,541.58 21,182.53
9/30/92 20,682.76 21,683.89
12/31/92 22,781.62 22,770.27
3/31/93 24,177.18 23,758.75
6/30/93 23,988.59 23,873.65
9/30/93 25,384.15 24,488.58
12/31/93 26,113.40 25,053.11
3/31/94 25,179.11 24,111.23
6/30/94 24,758.69 24,217.77
9/30/94 25,879.83 25,402.86
12/31/94 25,444.24 25,397.70
3/31/95 27,917.98 27,864.59
6/30/95 30,694.64 30,516.98
9/30/95 33,067.42 32,938.57
12/31/95 35,220.14 34,917.17
3/31/96 38,068.41 36,787.15
6/30/96 39,711.67 38,433.91
9/30/96 41,300.13 39,610.93
$10,000 OVER TEN YEARS
This chart assumes a $10,000 investment in Class A shares of Equity Series on
September 30, 1986, and reflects deduction of the 5.75% sales load. On September
30, 1996, the value of your investment in Class A shares of the Series (with
dividends reinvested) would have grown to $41,300. By comparison, the same
$10,000 investment would have grown to $39,611 based on the S&P's performance.
The performance illustrated above is based on the performance of Class A shares.
The performance of Class B shares, which were first offered on October 19, 1993,
will be greater or less than the performance shown for Class A shares as a
result of the different loads and fees associated with an investment in Class B
shares.
TOP 5 HOLDINGS**
% OF
NET ASSETS
----------
AlliedSignal, Inc. 1.7%
American Home Products Corporation 1.7%
U.S. Industries, Inc. 1.6%
Bristol-Myers Squibb Company 1.6%
Chase Manhattan Corporation 1.6%
**At September 30, 1996
AVERAGE ANNUAL RETURNS
As of September 30, 1996
1 year 5 years 10 years
----------------------------
A Shares 24.90% 17.09% 15.92%
A Shares with sales charge 17.71% 15.70% 15.24%
B Shares 23.57% 16.34% N/A
(10-19-93)
B Shares with CDSC 18.57% 15.58% N/A
(10-19-93)
The performance data above represents past performance which is not predictive
of future results. The investment return and principal value of an investment in
the fund will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost. The figures above do not reflect
deduction of the maximum front-end sales charge of 5.75% for Class A shares or
contingent deferred sales charge of 5% for Class B shares, as applicable, except
where noted. Such figures would be lower if the maximum sales charge were
deducted.
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5
<PAGE>
MANAGER'S COMMENTARY
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NOVEMBER 15, 1996
SECURITY EQUITY FUND - GLOBAL SERIES
[LEXINGTON LOGO]
SUBADVISOR - LEXINGTON MANAGEMENT CORPORATION
To Our Shareholders:
The Global Series of Security Equity Fund had an outstanding year in the fiscal
year completed September 30, posting a 17.73% gain.* This compares favorably
with both the 13.01% average return of its peer group and the 12.98% advance of
its benchmark, the Morgan Stanley Capital International World Index.**
WORLD EQUITY MARKET PERFORMANCE
Stock markets in both Europe and North America performed well the past year
while many Far Eastern markets suffered. Japan and Thailand, for example, both
declined over the most recent quarter. Hong Kong, conversely, continued to post
strong gains due to an improving outlook for interest rates and property prices
there.
The Global Series portfolio benefitted from its overweighting in Europe.
Interest sensitive stocks did well as weak economies and rising expectations for
monetary union pushed interest rates lower. Our holdings in Greece and Poland
also added to overall gains. The portfolio's underweighting in the United States
dampened performance, however, as that market turned in strong results.
THE GLOBAL ECONOMIC PICTURE
The outlook for the global economy remains mixed. The U.S. economy is doing well
with growth in the 2% to 3% range and inflation remaining subdued. Global equity
markets should continue to enjoy a positive environment unless U.S. growth and
inflation accelerate, forcing global bond yields higher. The U.S. stock market
looks less appealing than those overseas due to an anemic profit outlook
combined with high prices for stocks.
[PHOTO OF RICHARD SALER] [PHOTO OF ALAN WAPNICK]
RICHARD SALER ALAN WAPNICK
PORTFOLIO MANAGER PORTFOLIO MANAGER
European communities are struggling to maintain any growth at all. Governments
are attempting to reduce budget deficits in order to qualify for European
Monetary Union membership. This fiscal drag, along with double digit
unemployment rates, is keeping growth to a minimum. Equity investors are
benefitting from several factors. Because inflation remains low and deficits are
being cut, interest rates continue to fall, propelling stock prices to record
highs in many European markets. The European profit outlook is excellent as
companies are aggressively cutting costs to improve competitiveness.
The Japanese economy has finally emerged from recession, but with government
fiscal stimulus slowing and a planned 2% increase in consumption taxes, the
outlook going forward is muted. Most Japanese companies continue to be managed
for the worker rather than the shareholder, reducing their long-term
attractiveness.
LOOKING FORWARD INTO 1997
We believe European stocks will continue to look attractive because interest
rates should remain low for some time. Profits should continue to expand rapidly
in many companies undergoing restructuring, as cost cutting will provide several
years of margin expansion. The outlook for European monetary union has improved,
and several sectors and countries will benefit from this.
Japanese stocks are less exciting. Because of a subdued long-term profit
outlook, their future remains cloudy. We believe that profits will surprise
positively only if the yen continues to decline. In the emerging markets, Poland
provides favorable opportunities. Greece is attractive also because of low
equity valuations and the potential for falling interest rates if the newly
elected government succeeds in bringing down the budget deficit. We feel that
U.S. equities may underperform given their high valuations currently and the
potential for profit disappointments.
Richard Saler and Alan Wapnick
Portfolio Managers
*Performance figures are based on Class A shares and do not reflect deduction of
the sales charge.
**Peer group performance information based on data provided by Lipper Analytical
Services, Inc.
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6
<PAGE>
MANAGER'S COMMENTARY (CONTINUED)
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NOVEMBER 15, 1996
SECURITY EQUITY FUND - GLOBAL SERIES
PERFORMANCE -------------------------------------------------------------------
SECURITY GLOBAL SERIES VS. MORGAN STANLEY
CAPITAL INTERNATIONAL WORLD INDEX
[LINE GRAPH WITH FOLLOWING INFORMATION CHARTED]
Global Series MSCI
------------------------------------------
12/93 9,745.28 9,899.23
3/94 9,773.58 9,971.48
6/94 10,009.43 10,282.89
9/94 10,226.42 10,515.81
12/94 9,869.12 10,451.79
3/95 9,744.20 10,954.69
6/95 9,955.61 11,436.49
9/95 10,512.97 12,089.93
12/95 10,892.47 12,679.75
3/96 11,590.07 13,210.98
6/96 12,217.90 13,609.02
9/96 12,377.35 14,189.26
This chart assumes a $10,000 investment in Class A shares of Global Series on
October 1, 1993, and reflects deduction of the 5.75% sales load. On September
30, 1996, the value of your investment in Class A shares of the Series (with
dividends reinvested) would have grown to $12,377. By comparison, the same
$10,000 investment would have grown to $14,189 based on the MSCI's performance.
The performance illustrated above is based on the performance of Class A shares.
The performance of Class B shares, which were first offered on October 19, 1993,
will be greater or less than the performance shown for Class A shares as a
result of the different loads and fees associated with an investment in Class B
shares.
PORTFOLIO BREAKDOWN BY COUNTRY (TOP 5)**
% OF
NET ASSETS
----------
United States 17.9%
Japan 12.8%
United Kingdom 8.1%
Germany 6.1%
France 6.0%
**At September 30, 1996
AVERAGE ANNUAL RETURNS
As of September 30, 1996
1 year Since Inception
------ ---------------
A Shares 17.73% 9.47%
(10-1-93)
A Shares with sales charge 10.94% 7.33%
(10-1-93)
B Shares 16.57% 8.75%
(10-19-93)
B Shares with CDSC 11.57% 7.88%
(10-19-93)
The performance data above represents past performance which is not predictive
of future results. The investment return and principal value of an investment in
the fund will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost. The figures above do not reflect
deduction of the maximum front-end sales charge of 5.75% for Class A shares or
contingent deferred sales charge of 5% for Class B shares, as applicable, except
where noted. Such figures would be lower if the maximum sales charge were
deducted.
Investing in foreign countries may involve risks, such as currency fluctuations
and political instability, not associated with investing exclusively in the U.S.
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7
<PAGE>
MANAGER'S COMMENTARY
- --------------------------------------------------------------------------------
NOVEMBER 15, 1996
SECURITY EQUITY FUND - ASSET ALLOCATION SERIES
[TEMPLETON LOGO]
[MERIDIAN INVESTMENT MANAGEMENT LOGO]
[SECURITY MANAGEMENT COMPANY, LLC LOGO]
MANAGED BY SECURITY MANAGEMENT COMPANY, LLC
RESEARCH PROVIDED BY MERIDIAN INVESTMENT MANAGEMENT CORPORATION AND
TEMPLETON/FRANKLIN INVESTMENT SERVICES, INC. TEMPLETON/FRANKLIN'S
RESEARCH IS DERIVED FROM RESEARCH PROVIDED BY A THIRD PARTY WHICH IS
ANALYZED AND MONITORED BY TEMPLETON/FRANKLIN.
To Our Shareholders:
The newest member of the Security Equity Fund family, the Asset Allocation
Series, returned a respectable 10.01% to its shareholders in the fiscal year
ended September 30.* It is difficult in years when one asset category far
outperforms the others, as the U.S. stock market has done the past twelve
months, to compare an allocation funds results with those of other types of
portfolios. Over the longer term, however, we believe the theories of reduced
risk and favorable return that spawned the asset allocation concept will reward
its investors.
PERFORMANCE IN FISCAL YEAR 1996
The portfolio for the Asset Allocation Series can be divided among seven asset
categories: U.S. stocks, foreign stocks, U.S. bonds, foreign bonds, real estate
(through Real Estate Investment Trusts), gold stocks, and cash.** For most of
the past year we have used all of these categories except gold stocks and cash.
The sector allocations recommended by our outside provider of research, Meridian
Investment Management Corporation, have been timely. Country recommendations in
the foreign equity sector have been strong. However, certain industry choices
within the U.S. equity sector have been disappointing. It appears that some of
these shifts were too early. Meridian remains positive in their outlook for the
industries now held in the portfolio.
ALLOCATION CHANGES SINCE MID-YEAR
Since the semiannual report was written, Meridian has recommended four
allocation changes. The first, in early May, was to sell completely our position
in the United Kingdom, and to sell the chemical stock portion of the U.S. equity
portfolio. Proceeds from these sales were invested in Italy, raising exposure
there to 5.4% of the total portfolio.
[PHOTO OF JANE TEDDER]
JANE TEDDER
PORTFOLIO MANAGER
In mid-June Meridian suggested that the Fund's entire cash position (2.65% of
the total portfolio) be moved into the real estate sector. They believed that
yields were very attractive relative both to the sector's long-term averages and
to interest rates in general. This move was followed in July by sales of
holdings in the shoe and housing industries in the U.S. equity sector,
reinvesting a month later in restaurant and broadcast stocks.
THOUGHTS ABOUT NEXT YEAR
Going forward, we are considering the value of increasing exposure to bonds,
both in the U.S. and foreign sectors. The money would be taken from the U.S.
equity sector, which may be nearing a correction as economic growth slows. The
research we have been receiving from Meridian indicates that foreign equities
will likely outperform U.S. stocks in coming months, especially in Italy and
Germany.
From an economic standpoint, we believe the potential for rising inflation is
slim. Therefore a position in gold stocks, a traditional inflation hedge, is not
expected to be added.
Jane Tedder
Portfolio Manager
*Performance figures are based on Class A shares and do not reflect deduction of
the sales charge.
**Investing in foreign countries may involve risks, such as currency
fluctuations and political instability, not associated with investing
exclusively in the U.S.
- --------------------------------------------------------------------------------
8
<PAGE>
MANAGER'S COMMENTARY (CONTINUED)
- --------------------------------------------------------------------------------
NOVEMBER 15, 1996
SECURITY EQUITY FUND - ASSET ALLOCATION SERIES
PERFORMANCE -------------------------------------------------------------------
SECURITY ASSET ALLOCATION SERIES VS. S&P 500
[LINE GRAPH WITH FOLLOWING INFORMATION CHARTED]
ASSET MERIDIAN
ALLOCATION SERIES S&P 500 BLENDED INDEX
-----------------------------------------------------------------
6/30/95 9,500.47 10,277.96 10,083
7/31/95 9,820.92 10,604.75 10,391
8/31/95 9,811.50 10,601.17 10,348
9/30/95 9,934.02 11,090.91 10,607
10/31/95 10,056.55 11,035.31 10,520
11/30/95 10,056.55 11,488.30 10,829
12/31/95 10,158.02 11,756.45 11,109
1/31/96 10,424.82 12,139.91 11,320
2/29/96 10,464.34 12,224.09 11,348
3/31/96 10,563.16 12,385.41 11,445
4/30/96 10,770.67 12,551.95 11,599
5/31/96 10,899.12 12,838.99 11,694
6/30/96 10,790.43 12,941.36 11,784
7/31/96 10,405.06 12,349.31 11,479
8/31/96 10,592.80 12,581.65 11,640
9/30/96 10,928.77 13,339.23 12,052
This chart assumes a $10,000 investment in Class A shares of Asset Allocation
Series on June 1, 1995, and reflects deduction of the 5.75% sales load. On
September 30, 1996, the value of your investment in Class A shares of the Series
(with dividends reinvested) would have grown to $10,929. By comparison, the same
$10,000 investment would have grown to $13,339, based on the S&P's performance.
Comparison is also made to a blend of market indexes which reflect the asset
classes in which the Series has invested over the past fiscal year. The blended
index consists of 40% S&P 500, 5% U.S. 30-day Treasury, 20% Lehman Brothers
Aggregate Bond, 25% Financial Times World Index (excluding U.S.), 10% Wilshire
Real Estate Securities. The same $10,000 investment in the blended index would
have grown to $12,052.
The performance illustrated above is based on the performance of Class A shares.
The performance of Class B shares will be greater or less than the performance
shown for Class A shares as a result of the different loads and fees associated
with an investment in Class B shares.
ASSET MIX**
% OF
NET ASSETS
----------
International Equities & Equivalents 32.9%
U. S. Equities 34.5%
U. S. Bonds 15.9%
Real Estate 14.8%
Cash & Equivalents 1.9%
**At September 30, 1996
AVERAGE ANNUAL RETURNS
As of September 30, 1996
1 year Since Inception
------ ---------------
A Shares 10.01% 11.73%
(6-1-95)
A Shares with sales charge 3.69% 6.88%
(6-1-95)
B Shares 8.97% 10.63%
(6-1-95)
B Shares with CDSC 3.97% 7.71%
(6-1-95)
The performance data above represents past performance which is not predictive
of future results. The investment return and principal value of an investment in
the fund will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost. The figures above do not reflect
deduction of the maximum front-end sales charge of 5.75% for Class A shares or
contingent deferred sales charge of 5% for Class B shares, as applicable, except
where noted. In addition, the investment manager is waiving a portion of the
management fee for the Series. Performance figures would be lower if the maximum
sales charge and advisory fee were deducted.
- --------------------------------------------------------------------------------
9
<PAGE>
MANAGER'S COMMENTARY
- --------------------------------------------------------------------------------
NOVEMBER 15, 1996
SECURITY ULTRA FUND
To Our Shareholders:
The strength of the stock markets in the fiscal year completed September 30 has
surprised us all. Small-cap and mid-cap stocks have turned in a fine performance
over the year. Your Ultra Fund shares generated a 15.36% total return, strongly
outperforming the 12.32% return of the fund's benchmark, the Standard & Poor's
400 Midcap Growth Stock Index.*
CONTRIBUTORS TO A SUCCESSFUL YEAR
Our nearly 30% weighting in technology for most of the year has proven to be a
wise decision. We reduced the position prior to the summer months when the
market experienced a period of correction, and reinvested in late summer as the
upward movement resumed. Many of our holdings in this sector generated very
strong returns.
A software manufacturer called Viasoft, Inc. gained over 280% since we purchased
the stock in January. The company has developed software which helps correct the
"millenium" issue in mainframe computers. Many applications which still run on
the COBOL language (the Department of Motor Vehicles, for example, still uses
this system) will read the two-digit "00" as the year 1900 instead of 2000. The
Viasoft program determines how much of the code must be changed and where in the
program it appears.
Another issue which we purchased in February, Cascade Communications
Corporation, rose over 130% during the balance of the year. Cascade specializes
in the networking area, manufacturing switches which are used in wide-area
networks. These systems allow companies to communicate more rapidly with remote
sites by speeding up the flow of data through the telephone lines.
OTHER STRONG PERFORMING SECTORS
The health care area has helped portfolio performance this year also. Dura
Pharmaceuticals, Inc. has capitalized on the mergers of major pharmaceutical
manufacturers by buying smaller market-share drugs from them. These products
usually receive little attention from the major companies in terms of sales
efforts. Dura is purchasing these drugs after they have already received FDA
approval, and can concentrate their sales efforts to increase market
penetration. Another holding in the health care sector is Guidant Corporation, a
manufacturer of cardiac defibrillators which can be implanted in pectoral
muscles to regulate heartbeats.
[PHOTO OF THE SECURITY MANAGEMENT SMALL CAP TEAM]
THE SECURITY MANAGEMENT SMALL CAP TEAM
LARRY VALENCIA, FRANK WHITSELL, CINDY SHIELDS, JOHN CLELAND
In the business services arena, an outstanding performer is Cambridge Technology
Partners (Massachusetts), Inc. The company performs information technology
consulting and software development. They assist companies in projects such as
moving from their old mainframe computer systems to newer client/server
environments. Protecting their clients from cost overruns, Cambridge performs
these services for a guaranteed fixed cost and within a guaranteed time period.
A LOOK FORWARD TO THE NEXT YEAR
We think the U.S. economy will be slowing and inflation will remain under
control. We expect small- and mid-cap stocks to outperform the large-cap issues
in the months ahead. Large companies have been achieving earnings growth through
cutting costs, while small companies have been expanding earnings through sales
growth. In our opinion, investors may be willing to pay more for companies
showing revenue gains from sales increases than through cost reductions.
Overall, we believe the fiscal year ahead will be another favorable one for
equity investors.
Cindy Shields
Portfolio Manager
*Performance figures are based on Class A shares and do not reflect deduction of
the sales charge.
- --------------------------------------------------------------------------------
10
<PAGE>
MANAGER'S COMMENTARY (CONTINUED)
- --------------------------------------------------------------------------------
NOVEMBER 15, 1996
SECURITY ULTRA FUND
PERFORMANCE -------------------------------------------------------------------
SECURITY ULTRA FUND VS. S&P MIDCAP 400
[LINE GRAPH WITH FOLLOWING INFORMATION CHARTED]
Security Ultra Fund S&P Midcap 400
----------------------------------------------------------------
Dec-86 9,349.19 10,231.21
Mar-87 11,076.90 12,371.30
Jun-87 11,076.90 12,266.45
Sep-87 11,480.96 12,816.07
Dec-87 7,654.05 10,023.15
Mar-88 8,687.99 11,328.66
Jun-88 9,492.16 11,951.35
Sep-88 9,075.72 11,794.81
Dec-88 9,414.11 12,114.83
Mar-89 9,774.53 13,271.13
Jun-89 10,178.20 14,599.23
Sep-89 11,374.78 16,192.45
Dec-89 10,538.74 16,420.52
Mar-90 10,492.52 15,908.44
Jun-90 11,678.90 16,852.55
Sep-90 6,871.76 13,856.38
Dec-90 7,647.54 15,580.30
Mar-91 10,450.55 19,156.41
Jun-91 9,948.29 19,015.77
Sep-91 10,888.02 20,826.68
Dec-91 12,215.99 23,385.48
Mar-92 12,332.17 23,267.27
Jun-92 10,606.01 22,543.45
Sep-92 11,054.15 23,419.84
Dec-92 13,157.80 26,171.07
Mar-93 13,261.27 27,028.62
Jun-93 13,209.53 27,659.14
Sep-93 14,020.03 29,051.46
Dec-93 14,464.52 29,825.72
Mar-94 13,671.95 28,694.22
Jun-94 12,443.46 27,648.94
Sep-94 13,513.43 29,521.48
Dec-94 13,506.57 28,759.69
Mar-95 13,971.61 31,112.96
Jun-95 14,901.70 33,826.76
Sep-95 16,579.92 37,128.28
Dec-95 16,112.61 37,658.64
Mar-96 17,248.61 39,976.91
Jun-96 18,662.81 41,128.06
Sep-96 19,126.48 42,325.44
$10,000 OVER TEN YEARS
This chart assumes a $10,000 investment in Class A shares of Ultra Fund on
September 30, 1986, and reflects deduction of the 5.75% sales load. On September
30, 1996, the value of your investment in Class A shares of the fund (with
dividends reinvested) would have grown to $19,126. In comparison, the same
$10,000 investment would have grown to $42,325 based on the S&P's performance.
The performance illustrated above is based on the performance of Class A shares.
The performance of Class B shares, which were first offered on October 19, 1993,
will be greater or less than the performance shown for Class A shares as a
result of the different loads and fees associated with an investment in Class B
shares.
TOP 5 HOLDINGS**
% OF
NET ASSETS
----------
Franklin Resources, Inc. 1.9%
Viasoft, Inc. 1.8%
Dura Pharmaceuticals, Inc. 1.7%
Cognos, Inc. (Cl. F) 1.7%
HFS, Inc. 1.6%
**At September 30, 1996
AVERAGE ANNUAL RETURNS
As of September 30, 1996
1 year 5 years 10 years
----------------------------
A Shares 15.36% 11.93% 7.34%
A Shares with sales charge 8.73% 10.61% 6.70%
B Shares 13.81% 9.42% N/A
(10-19-93)
B Shares with CDSC 8.81% 8.56% N/A
(10-19-93)
ONE YEAR RETURN BEATS INDEX
A SHARES - 15.36% S&P MIDCAP 400 - 12.32%
The performance data above represents past performance which is not predictive
of future results. The investment return and principal value of an investment in
the fund will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost. The figures above do not reflect
deduction of the maximum front-end sales charge of 5.75% for Class A shares or
contingent deferred sales charge of 5% for Class B shares, as applicable, except
where noted. Such figures would be lower if the maximum sales charge were
deducted.
- --------------------------------------------------------------------------------
11
<PAGE>
STATEMENTS OF NET ASSETS
- --------------------------------------------------------------------------------
SEPTEMBER 30, 1996
SECURITY GROWTH AND INCOME FUND
PRINCIPAL MARKET
AMOUNT CORPORATE BONDS VALUE
- --------------------------------------------------------------------------------
AUTOMOTIVE - 0.4%
$300,000 Exide Corporation,
10.75% - 2002 ...................................... $313,500
BUILDING MATERIALS - 0.4%
250,000 Knoll, Inc.,
10.875% - 2006 ..................................... 265,000
CHEMICALS - 0.4%
250,000 Environdyne Industries, Inc.,
12% - 2000 ......................................... 267,813
COMMUNICATIONS - 2.9%
250,000 Allbritton Communication Company,
11.5% - 2004 ....................................... 265,625
750,000 Century Communications Corporation,
9.5% - 2005 ........................................ 753,750
500,000 Comcast Corporation,
9.125% - 2006 ...................................... 496,250
250,000 Heritage Media Corporation,
8.75% - 2006 ....................................... 237,500
500,000 Rogers Cablesystems, Ltd.,
9.625% - 2002 ...................................... 503,750
__________
2,256,875
CONGLOMERATE - 1.0%
250,000 Jordan Industries, Inc.,
10.375% - 2003 ..................................... 245,625
500,000 Sequa Corporation,
9.375% - 2003 ...................................... 503,750
__________
749,375
CONSUMER GOODS & SERVICES - 0.6%
800,000 Semi-Tech Corporation,
0% - 2003(1) ....................................... 482,000
ELECTRIC & GAS COMPANIES - 0.8%
250,000 AES Corporation,
10.25% - 2006 ...................................... 265,000
300,000 CalEnergy Company, Inc.,
9.5% - 2006(2) ..................................... 304,500
__________
569,500
ENTERTAINMENT - 1.0%
250,000 AMF Group, Inc.,
10.875% - 2006 ..................................... 256,875
500,000 Harrah's Operating Company, Inc.,
8.75% - 2000 ....................................... 508,125
__________
765,000
FINANCE - 1.0%
1,000,000 Home Holdings,
7.75% - 1998 ....................................... 765,000
PRINCIPAL MARKET
AMOUNT CORPORATE BONDS (CONTINUED) VALUE
- --------------------------------------------------------------------------------
FOOD & BEVERAGES - 1.4%
$500,000 Cott Corporation,
9.375% - 2005 ...................................... $500,000
500,000 TLC Beatrice International Holdings,
11.5% - 2005 ....................................... 524,375
__________
1,024,375
GROCERY STORES - 0.6%
500,000 Penn Traffic Company,
10.65% - 2004 ...................................... 443,750
INDUSTRIAL PRODUCT - 0.4%
300,000 Shop Vac Corporation,
10.625% - 2003(2) .................................. 308,250
MEDICAL & HEALTH SERVICES - 1.0%
500,000 Regency Health Services,
9.875% - 2002 ...................................... 503,750
250,000 Tenet Healthcare Corporation,
10.125% - 2005 ..................................... 271,250
__________
775,000
OIL & GAS COMPANIES - 0.7%
500,000 Seagull Energy Corporation,
8.625% - 2005 ...................................... 503,750
PUBLISHING & PRINTING - 1.3%
250,000 Golden Books Publishing,
7.65% - 2002 ....................................... 224,375
1,000,000 Marvel Holdings,
0% - 1998 .......................................... 790,000
__________
1,014,375
REFINERY - 0.7%
500,000 Crown Central Petroleum,
10.875% - 2005 ..................................... 508,125
RESTAURANTS - 0.7%
500,000 Carrols Corporation,
11.5% - 2003 ....................................... 525,000
TEXTILE - 0.7%
500,000 Westpoint Stevens Inc.,
9.375% - 2005 ...................................... 501,250
TOBACCO PRODUCTS - 0.3%
250,000 Dimon, Inc.,
8.875% - 2006 ...................................... 251,250
__________
Total corporate bonds -
(cost $12,254,780) - 16.3% ......................... 12,289,188
SEE ACCOMPANYING NOTES.
- --------------------------------------------------------------------------------
12
<PAGE>
STATEMENTS OF NET ASSETS
- --------------------------------------------------------------------------------
SEPTEMBER 30, 1996
SECURITY GROWTH AND INCOME FUND (CONTINUED)
NUMBER OF MARKET
SHARES PREFERRED STOCKS VALUE
- --------------------------------------------------------------------------------
BANKING & CREDIT - 1.2%
8,250 First Nationwide Bank ................................ $932,250
ENTERTAINMENT - 0.7%
524 Time Warner, Inc.,(2) ................................ 552,883
PUBLISHING & PRINTING - 0.6%
5,000 K-III Communications Corporation ..................... 467,500
RADIO & TELEVISION - 0.7%
5,139 Cablevision Systems Corporation ...................... 498,483
__________
Total preferred stocks
(cost $2,344,749) - 3.2% ........................... 2,451,116
COMMON STOCKS
-------------
ADVERTISING - 1.5%
25,000 Omnicom Group, Inc. .................................. 1,168,750
AEROSPACE & DEFENSE - 4.8%
10,000 Lockheed Martin Corporation .......................... 901,250
20,000 McDonnell Douglas Corporation ........................ 1,050,000
15,000 Raytheon Company ..................................... 834,375
15,000 Rockwell International Corporation ................... 845,625
__________
3,631,250
BANKING & FINANCE - 1.6%
15,000 Chase Manhattan Corporation .......................... 1,201,875
CHEMICALS - BASIC - 3.6%
15,000 Hercules, Inc. ....................................... 821,250
35,000 Monsanto Company ..................................... 1,277,500
8,000 Olin Corporation ..................................... 672,000
__________
2,770,750
CHEMICALS - SPECIALTY - 2.5%
20,000 Morton International, Inc. ........................... 795,000
25,000 Praxair, Inc. ........................................ 1,075,000
__________
1,870,000
COMMUNICATION EQUIPMENT - 0.9%
10,000 U.S. Robotics Corporation* ........................... 646,250
COMPUTER SERVICES - 3.5%
20,000 Ceridian Corporation* ................................ 1,000,000
10,000 Computer Sciences Corporation* ....................... 768,750
15,000 Electronic Data Systems Corporation .................. 920,625
__________
2,689,375
NUMBER OF MARKET
SHARES COMMON STOCKS (CONTINUED) VALUE
- --------------------------------------------------------------------------------
COMPUTER SOFTWARE - 3.1%
8,000 Microsoft Corporation* ............................... $1,055,000
30,000 Oracle Corporation* .................................. 1,276,875
__________
2,331,875
CONGLOMERATE - 6.5%
15,000 AlliedSignal, Inc. ................................... 988,125
40,000 Canadian Pacific, Ltd. ............................... 925,000
20,000 Cooper Industries, Inc. .............................. 865,000
10,000 Tenneco, Inc. ........................................ 501,250
40,000 U.S. Industries, Inc.* ............................... 1,050,000
30,000 Westinghouse Electric Corporation .................... 558,750
__________
4,888,125
CONSUMER SERVICES - 0.8%
30,000 ADT Ltd.* ............................................ 573,750
ELECTRICAL MACHINERY & ELECTRONIC COMPONENTS - 1.4%
12,000 General Electric Company ............................. 1,092,000
ENTERTAINMENT - 2.1%
30,000 Carnival Corporation (Cl. A) ......................... 930,000
10,000 The Walt Disney Company .............................. 633,750
__________
1,563,750
FERTILIZER - 1.0%
10,000 Potash Corporation of Saskatchewan, Inc. ............. 731,250
FINANCIAL - 1.1%
24,000 Federal National Mortgage Association ................ 837,000
FOOD & BEVERAGES - 6.3%
30,000 Anheuser-Busch Companies, Inc. ....................... 1,128,750
15,000 CPC International, Inc. .............................. 1,123,125
20,000 ConAgra, Inc. ........................................ 985,000
30,000 PepsiCo, Inc. ........................................ 847,500
20,000 Sara Lee Corporation ................................. 715,000
__________
4,799,375
HOSPITAL MANAGEMENT & SERVICES - 1.1%
15,000 Columbia/HCA Healthcare Corporation .................. 853,125
HOUSEHOLD FURNISHINGS - 1.6%
40,000 Leggett & Platt, Inc. ................................ 1,175,000
HOUSEHOLD PRODUCTS - 1.3%
10,000 Procter & Gamble Company ............................. 975,000
SEE ACCOMPANYING NOTES.
- --------------------------------------------------------------------------------
13
<PAGE>
STATEMENTS OF NET ASSETS
- --------------------------------------------------------------------------------
SEPTEMBER 30, 1996
SECURITY GROWTH AND INCOME FUND (CONTINUED)
NUMBER OF MARKET
SHARES COMMON STOCKS (CONTINUED) VALUE
- --------------------------------------------------------------------------------
INSURANCE - 2.6%
15,000 Allstate Corporation ................................. $738,750
20,000 Equitable Companies, Inc. ............................ 515,000
13,000 Jefferson-Pilot Corporation .......................... 672,750
__________
1,926,500
MACHINERY - 1.4%
25,000 Deere & Company ...................................... 1,050,000
MANUFACTURING - 1.1%
30,000 Pall Corporation ..................................... 847,500
MEDICAL INSTRUMENTS & SUPPLIES - 2.1%
20,000 Baxter International, Inc. ........................... 935,000
10,000 Medtronic, Inc. ...................................... 641,250
__________
1,576,250
NATURAL GAS - 2.8%
25,000 Coastal Corporation .................................. 1,031,250
25,000 El Paso Natural Gas Company .......................... 1,100,000
__________
2,131,250
OIL & GAS PIPELINES - 0.8%
10,000 MAPCO, Inc. .......................................... 596,250
PHARMACEUTICALS - 8.3%
15,000 Allergan, Inc. ....................................... 571,875
20,000 American Home Products Corporation ................... 1,275,000
10,000 Bristol-Myers Squibb Company ......................... 963,750
20,000 Elan Corporation PLC ADR* ............................ 597,500
13,000 Merck & Company, Inc. ................................ 914,875
25,000 Pharmacia & Upjohn, Inc. ............................. 1,031,250
15,000 SmithKline Beecham PLC ADR ........................... 913,125
__________
6,267,375
PHOTOGRAPHIC EQUIPMENT & SUPPLIES - 1.6%
15,000 Eastman Kodak Company ................................ 1,177,500
PUBLISHING & PRINTING - 0.7%
13,000 McGraw-Hill Companies, Inc. .......................... 554,125
RESTAURANTS & FOOD SERVICE - 2.4%
20,000 McDonald's Corporation ............................... 947,500
40,000 Wendy's International, Inc. .......................... 860,000
__________
1,807,500
RETAIL TRADE - 5.0%
20,000 Albertson's, Inc. .................................... 842,500
30,000 Federated Department Stores, Inc.* ................... 1,005,000
15,000 Kroger Company ....................................... 671,250
20,000 Walgreens Company .................................... 740,000
20,000 Wal-Mart Stores, Inc. ................................ 527,500
__________
3,786,250
NUMBER OF MARKET
SHARES COMMON STOCKS (CONTINUED) VALUE
- --------------------------------------------------------------------------------
TELECOMMUNICATIONS - 1.2%
35,000 Frontier Corporation ................................. $931,875
TRANSPORTATION - 2.1%
10,000 Burlington Northern Santa Fe ......................... 843,750
10,000 Union Pacific Corporation ............................ 732,500
___________
1,576,250
___________
Total common stocks -
(cost $42,945,898) - 76.8% ......................... 58,027,125
___________
Total investments -
(cost $57,545,427) - 96.3% ......................... 72,767,429
Cash and other assets,
less liabilities - 3.7% ............................ 2,752,865
___________
Total net assets - 100.0% ............................ $75,520,294
===========
SECURITY EQUITY FUND - EQUITY SERIES
COMMON STOCKS
-------------
ADVERTISING - 1.5%
200,000 Omnicom Group, Inc. .................................. $9,350,000
AEROSPACE & DEFENSE - 5.1%
100,000 Lockheed Martin Corporation .......................... 9,012,500
160,000 McDonnell Douglas Corporation ........................ 8,400,000
100,000 Raytheon Company ..................................... 5,562,500
150,000 Rockwell International Corporation ................... 8,456,250
___________
31,431,250
BANKING & FINANCE - 3.5%
120,000 Chase Manhattan Corporation .......................... 9,615,000
60,000 Northern Trust Corporation ........................... 3,945,000
30,000 Wells Fargo & Company ................................ 7,800,000
___________
21,360,000
CHEMICALS - BASIC - 3.4%
120,000 Hercules, Inc. ....................................... 6,570,000
250,000 Monsanto Company ..................................... 9,125,000
60,000 Olin Corporation ..................................... 5,040,000
___________
20,735,000
CHEMICALS - SPECIALTY - 2.5%
170,000 Morton International, Inc. ........................... 6,757,500
200,000 Praxair, Inc. ........................................ 8,600,000
___________
15,357,500
SEE ACCOMPANYING NOTES.
- --------------------------------------------------------------------------------
14
<PAGE>
STATEMENTS OF NET ASSETS
- --------------------------------------------------------------------------------
SEPTEMBER 30, 1996
SECURITY EQUITY FUND - EQUITY SERIES (CONTINUED)
NUMBER OF MARKET
SHARES COMMON STOCKS (CONTINUED) VALUE
- --------------------------------------------------------------------------------
COMMUNICATION EQUIPMENT - 0.8%
75,000 U.S. Robotics Corporation* ........................... $4,846,875
COMPUTER SERVICES - 4.0%
150,000 Ceridian Corporation* ................................ 7,500,000
100,000 Computer Sciences Corporation* ....................... 7,687,500
150,000 Electronic Data Systems Corporation .................. 9,206,250
___________
24,393,750
COMPUTER SOFTWARE - 2.2%
65,000 Microsoft Corporation* ............................... 8,571,875
112,500 Oracle Corporation* .................................. 4,788,281
___________
13,360,156
CONGLOMERATE - 6.9%
160,000 AlliedSignal, Inc. ................................... 10,540,000
400,000 Canadian Pacific, Ltd. ............................... 9,250,000
170,000 Cooper Industries, Inc. .............................. 7,352,500
380,000 U.S. Industries, Inc.* ............................... 9,975,000
300,000 Westinghouse Electric Corporation .................... 5,587,500
___________
42,705,000
CONSUMER SERVICES - 0.9%
300,000 ADT, Ltd.* ........................................... 5,737,500
ELECTRICAL MACHINERY & ELECTRONIC COMPONENTS - 1.5%
100,000 General Electric Company ............................. 9,100,000
ENTERTAINMENT - 3.2%
240,000 Carnival Corporation (Cl. A) ......................... 7,440,000
337,900 International Game Technology ........................ 6,926,950
80,000 The Walt Disney Company .............................. 5,070,000
___________
19,436,950
FERTILIZER - 1.0%
82,800 Potash Corporation of Saskatchewan, Inc. ............. 6,054,750
FINANCE - 1.3%
230,000 Federal National Mortgage Association ................ 8,021,250
FOOD & BEVERAGES - 6.3%
200,000 Anheuser-Busch Companies, Inc. ....................... 7,525,000
120,000 CPC International, Inc. .............................. 8,985,000
160,000 ConAgra, Inc. ........................................ 7,880,000
260,000 PepsiCo, Inc. ........................................ 7,345,000
200,000 Sara Lee Corporation ................................. 7,150,000
___________
38,885,000
NUMBER OF MARKET
SHARES COMMON STOCKS (CONTINUED) VALUE
- --------------------------------------------------------------------------------
HOSPITAL MANAGEMENT - 1.2%
125,000 Columbia/HCA Healthcare Corporation .................. $7,109,375
HOUSEHOLD PRODUCTS - 3.4%
75,000 Colgate-Palmolive Company ............................ 6,515,625
100,000 Gillette Company ..................................... 7,212,500
75,000 Procter & Gamble Company ............................. 7,312,500
___________
21,040,625
INSURANCE - 6.2%
175,000 Allstate Corporation ................................. 8,618,750
80,000 American International Group, Inc. ................... 8,060,000
270,000 Equitable Companies, Inc. ............................ 6,952,500
55,000 ITT Hartford Group, Inc. ............................. 3,245,000
111,400 Jefferson-Pilot Corporation .......................... 5,764,950
150,000 Provident Companies, Inc. ............................ 5,625,000
___________
38,266,200
MACHINERY - 1.4%
210,000 Deere & Company ...................................... 8,820,000
MANUFACTURING - 1.0%
217,500 Pall Corporation ..................................... 6,144,375
MEDICAL INSTRUMENTS - 2.8%
200,000 Baxter International, Inc. ........................... 9,350,000
120,000 Medtronic, Inc. ...................................... 7,695,000
___________
17,045,000
NATURAL GAS - 1.1%
170,000 Coastal Corporation .................................. 7,012,500
OIL & GAS COMPANIES - 0.7%
100,000 Noble Affiliates, Inc. ............................... 4,225,000
OIL & GAS PIPELINES - 1.2%
120,000 MAPCO, Inc. .......................................... 7,155,000
PAINT & ALLIED PRODUCTS - 1.3%
175,000 Sherwin-Williams Company ............................. 8,115,625
PERSONNEL SERVICES - 0.5%
100,000 Manpower, Inc. ....................................... 3,325,000
PETROLEUM REFINING - 2.6%
70,000 Mobil Corporation .................................... 8,102,500
50,000 Royal Dutch Petroleum Company ADR .................... 7,806,250
___________
15,908,750
SEE ACCOMPANYING NOTES.
- --------------------------------------------------------------------------------
15
<PAGE>
STATEMENTS OF NET ASSETS
- --------------------------------------------------------------------------------
SEPTEMBER 30, 1996
SECURITY EQUITY FUND - EQUITY SERIES (CONTINUED)
NUMBER OF MARKET
SHARES COMMON STOCKS (CONTINUED) VALUE
- --------------------------------------------------------------------------------
PHARMACEUTICALS - 9.9%
200,000 Allergan, Inc. ....................................... $7,625,000
160,000 American Home Products Corporation ................... 10,200,000
100,000 Bristol-Myers Squibb Company ......................... 9,637,500
140,000 Elan Corporation PLC ADR* ............................ 4,182,500
115,000 Merck & Company, Inc. ................................ 8,093,125
200,000 Pharmacia & Upjohn, Inc. ............................. 8,250,000
110,000 Schering-Plough Corporation .......................... 6,765,000
100,000 SmithKline Beecham PLC ADR ........................... 6,087,500
___________
60,840,625
PHOTOGRAPHIC EQUIPMENT & SUPPLIES - 1.8%
100,000 Eastman Kodak Company ................................ 7,850,000
60,000 Xerox Corporation .................................... 3,217,500
___________
11,067,500
PUBLISHING & PRINTING - 1.3%
30,000 Gannett Company, Inc. ................................ 2,111,250
145,000 McGraw-Hill Companies, Inc. .......................... 6,180,625
___________
8,291,875
RESTAURANTS & FOOD SERVICE - 2.4%
170,000 McDonald's Corporation ............................... 8,053,750
305,000 Wendy's International, Inc. .......................... 6,557,500
___________
14,611,250
RETAIL TRADE - 7.1%
200,000 Albertson's, Inc. .................................... 8,425,000
235,000 Federated Department Stores, Inc.* ................... 7,872,500
100,000 Kroger Company* ...................................... 4,475,000
170,000 Safeway, Inc.* ....................................... 7,246,250
90,000 TJX Companies, Inc. .................................. 3,228,750
180,000 Wal-Mart Stores, Inc. ................................ 4,747,500
200,000 Walgreens Company .................................... 7,400,000
___________
43,395,000
SEMICONDUCTORS - 1.0%
85,000 Linear Technology Corporation ........................ 3,134,375
85,000 Xilinx, Inc.* ........................................ 2,890,000
___________
6,024,375
TELECOMMUNICATIONS - 1.3%
300,000 Frontier Corporation ................................. 7,987,500
TOYS & SPORTING GOODS - 0.7%
162,500 Mattel, Inc. ......................................... 4,204,688
PRINCIPAL
AMOUNT OR
NUMBER OF MARKET
SHARES COMMON STOCKS (CONTINUED) VALUE
- --------------------------------------------------------------------------------
TRANSPORTATION - 2.4%
85,000 Burlington Northern Santa Fe ......................... $7,171,875
100,000 Union Pacific Corporation ............................ 7,325,000
____________
14,496,875
____________
Total common stocks
(cost $413,186,524) - 95.4% ........................ 585,862,119
COMMERCIAL PAPER
----------------
$700,000 Philip Morris Companies, Inc.
5.255%, 10-15-96 ................................... 698,569
____________
Total commercial paper
(cost $698,569) - 0.1% ............................. 698,569
____________
Total investments -
(cost $413,885,093) - 95.5% ........................ 586,560,688
Cash and other assets,
less liabilities - 4.5% ............................ 27,941,988
____________
Total net assets - 100.0% ............................$614,502,676
============
SECURITY EQUITY FUND - GLOBAL SERIES
PREFERRED STOCKS
----------------
GERMANY - 2.5%
2,260 SAP AG ............................................... $380,099
618 Sto AG ............................................... 305,940
__________
Total preferred stocks -
(cost $642,693) - 2.5% ............................. 686,039
COMMON STOCKS
-------------
AUSTRALIA - 1.1%
55,625 QBE Insurance Group, Ltd. ............................ 299,271
AUSTRIA - 2.8%
3,700 Bank Austria AG ...................................... 144,517
3,300 Creditanstalt-Bankverein ............................. 203,029
2,200 Wienerberger Baustoff ................................ 403,188
__________
750,734
BRAZIL - 0.8%
26,700 Aracruz Cellulose S.A. ADR ........................... 233,625
CANADA - 1.3%
9,600 Jetform Corporation .................................. 183,600
28,200 Noranda Forest, Inc. ................................. 177,039
__________
360,639
SEE ACCOMPANYING NOTES.
- --------------------------------------------------------------------------------
16
<PAGE>
STATEMENTS OF NET ASSETS
- --------------------------------------------------------------------------------
SEPTEMBER 30, 1996
SECURITY EQUITY FUND - GLOBAL SERIES (CONTINUED)
NUMBER OF MARKET
SHARES COMMON STOCKS (CONTINUED) VALUE
- --------------------------------------------------------------------------------
CHILE - 2.1%
22,800 Antofagasta Holdings PLC ............................. $128,438
18,800 Banco Santander ADR .................................. 251,450
7,500 Santa Isabel S.A. ADR ................................ 192,188
__________
572,076
FRANCE - 6.0%
3,570 Alcatel Alsthom ...................................... 301,084
8,600 Lafarge .............................................. 507,126
5,500 SGS-Thomson Microelectronics N.V. .................... 262,975
3,320 Sidel S.A. ........................................... 199,311
1,540 Societe Generale de Surveillance Holding S.A. "B" .... 170,289
2,000 Synthelabo ........................................... 170,649
__________
1,611,434
GERMANY - 3.6%
10,800 Continental AG ....................................... 197,645
5,600 Daimler-Benz AG ...................................... 308,072
4,500 Duetsche Bank AG ..................................... 212,150
1,160 G.M. Pfaff AG ........................................ 22,819
6,100 Hoechst AG ........................................... 222,705
__________
963,391
GREECE - 1.6%
3,900 Ergo Bank S.A. ....................................... 225,059
12,300 Hellenic Tellecommunications ......................... 207,068
__________
432,127
HONG KONG - 0.6%
188,000 National Mutual Asia, Ltd. ........................... 165,321
HUNGARY - 0.4%
2,600 Pick Szeged Rt. ...................................... 120,129
INDONESIA - 0.5%
51,000 PT Semen Cibinong .................................... 131,794
IRELAND - 2.6%
38,000 Allied Irish Banks PLC ............................... 223,484
172,500 Jefferson Smurfit .................................... 469,933
__________
693,417
ITALY - 0.6%
8,400 Bulgari SPA .......................................... 156,362
JAPAN - 12.8%
19,000 Amada Company, Ltd. .................................. 175,625
6,248 Amway Japan, Ltd. .................................... 271,385
4,000 CSK Corporation ...................................... 124,563
3,000 H.I.S. Company, Ltd. ................................. 176,883
28,000 Hino Motors, Ltd. .................................... 273,894
NUMBER OF MARKET
SHARES COMMON STOCKS (CONTINUED) VALUE
- --------------------------------------------------------------------------------
JAPAN (CONTINUED)
1,700 Kokusai Denshin Denwa Company ........................ $161,715
32,000 Komatsu Forklift Company, Ltd. ....................... 211,362
2,260 Maruco Company ....................................... 148,058
16,000 Marsushita Electric Industrial Company, Ltd. ......... 268,509
17,000 Matsushita Refrigeration Company, Ltd. ............... 122,049
38,000 Mazda Motor Corporation .............................. 185,175
80 NTT Data Communications Systems Corporation .......... 248,408
9,000 National House Industrial Corporation ................ 139,729
29,000 Nippon Chemi-Con Corporation ......................... 188,684
10,000 Nitto Denko Corporation .............................. 153,459
1,500 Ryohin Keikaku Company, Ltd. ......................... 127,075
4,700 Sony Corporation ..................................... 296,517
16,000 Yamato Kogyo Company, Ltd. ........................... 166,561
__________
3,439,651
MALAYSIA - 0.9%
44,000 Malaysian Assurance .................................. 242,279
MEXICO - 1.1%
26,300 Tubos De Acero De Mexico S.A. ADR .................... 286,013
NETHERLANDS - 1.3%
9,350 Philips Electronics N.V. ............................. 337,912
NEW ZEALAND - 2.8%
215,100 Brierley Investments, Ltd. ........................... 207,489
85,500 Carter Holt Harvey, Ltd. ............................. 188,259
43,200 Fisher & Paykel Industries, Ltd. ..................... 147,964
91,900 Fletcher Challenge Building, Ltd. .................... 204,277
__________
747,989
NORWAY - 2.5%
51,400 Fokus Banken AS ...................................... 287,208
23,500 Saga Petroleum AS .................................... 379,826
__________
667,034
PHILIPPINES - 1.3%
277,100 C & P Homes, Inc. .................................... 187,729
462,750 Filinvest Land, Inc. ................................. 167,791
__________
355,520
SEE ACCOMPANYING NOTES.
- --------------------------------------------------------------------------------
17
<PAGE>
STATEMENTS OF NET ASSETS
- --------------------------------------------------------------------------------
SEPTEMBER 30, 1996
SECURITY EQUITY FUND - GLOBAL SERIES (CONTINUED)
NUMBER OF MARKET
SHARES COMMON STOCKS (CONTINUED) VALUE
- --------------------------------------------------------------------------------
POLAND - 2.7%
8,700 Debica S.A. .......................................... $185,996
21,100 Elektrim S.A. ........................................ 206,753
4,403 Wedel S.A. ........................................... 235,328
1,520 Zaklady Piwowarski w Zywcu S.A. ...................... 90,447
__________
718,524
PORTUGAL - 1.1%
11,500 Portugal Telecom S.A. ................................ 295,841
RUSSIA - 0.4%
3,600 Lukoil Oil Company ADR ............................... 131,688
SINGAPORE - 1.1%
31,000 Inchcape ............................................. 103,972
21,000 United Overseas Bank ................................. 204,434
__________
308,406
SOUTH AFRICA - 0.6%
2,900 Rustenburg Platinum Holdings, Ltd. ................... 45,702
6,819 Rustenburg Platinum Holdings, Ltd. ADR ............... 107,476
__________
153,178
SPAIN - 0.7%
5,500 Repsol S.A. .......................................... 180,805
SWEDEN - 0.4%
2,660 Astra AB ............................................. 112,524
SWITZERLAND - 2.9%
283 Nestle S.A. .......................................... 315,322
42 Roche Holdings AG .................................... 309,133
140 Union Bank of Switzerland ............................ 134,677
__________
759,132
THAILAND - 2.4%
10,000 Avanced Info ......................................... 129,814
44,000 Krung Thai Bank Public Company, Ltd. ................. 188,663
9,000 Property Perfect Public Company ...................... 26,199
4,400 Securities One Public Company ........................ 31,415
16,200 Shinawatra Computer Company .......................... 278,084
__________
654,175
NUMBER OF MARKET
SHARES COMMON STOCKS (CONTINUED) VALUE
- --------------------------------------------------------------------------------
UNITED KINGDOM - 8.1%
157,500 Aegis Group PLC ...................................... $160,813
9,700 Bluebird Toys PLC .................................... 21,326
57,900 British Telecommunication PLC ........................ 322,996
25,200 D.F.S. Furniture Company PLC ......................... 214,120
82,000 Grand Metropolitan PLC ............................... 611,415
10,700 RTZ Corporation PLC .................................. 163,833
3,300 SmithKline Beecham PLC ADR ........................... 200,888
110,900 Tomkins PLC .......................................... 480,695
__________
2,176,086
UNITED STATES - 17.9%
1,000 AMR Corporation ...................................... 79,625
1,900 Abbott Laboratories .................................. 93,575
1,600 AlliedSignal, Inc. ................................... 105,400
1,000 American International Group ......................... 100,750
2,200 American Re Corporation .............................. 139,700
2,000 B.J. Services Company* ............................... 72,500
1,600 BMC Software, Inc.* .................................. 127,400
2,400 Becton Dickenson Company ............................. 106,200
1,200 Boeing Company ....................................... 113,400
2,800 Borders Group, Inc.* ................................. 104,300
2,000 Boston Scientific Corporation* ....................... 115,000
1,200 CPC International, Inc. .............................. 89,850
2,000 Cisco Systems, Inc. .................................. 124,125
1,200 Citicorp ............................................. 108,750
1,300 Colgate-Palmolive Company ............................ 112,939
1,950 Computer Associates International, Inc. .............. 116,514
2,800 Conseco, Inc. ........................................ 137,900
3,100 Crown Cork & Seal Company, Inc. ...................... 142,988
2,100 Diamond Offshore Drilling, Inc. ...................... 115,500
2,200 Dover Corporation .................................... 105,050
3,100 Ecolab, Inc. ......................................... 104,626
2,700 Federal National Mortgage Association ................ 94,164
3,300 Gap, Inc. ............................................ 95,288
2,800 Hershey Foods Corporation ............................ 140,700
1,900 Honeywell, Inc. ...................................... 119,938
2,200 Johnson & Johnson .................................... 112,750
1,300 Lockheed Martin Corporation .......................... 117,165
900 Mobil Corporation .................................... 104,175
4,200 Monsanto Company ..................................... 153,300
SEE ACCOMPANYING NOTES.
- --------------------------------------------------------------------------------
18
<PAGE>
STATEMENTS OF NET ASSETS
- --------------------------------------------------------------------------------
SEPTEMBER 30, 1996
SECURITY EQUITY FUND - GLOBAL SERIES (CONTINUED)
NUMBER OF MARKET
SHARES COMMON STOCKS (CONTINUED) VALUE
- --------------------------------------------------------------------------------
UNITED STATES (CONTINUED)
2,500 NAC Re Corporation ................................... $90,000
1,200 NationsBank Corporation .............................. 104,250
1,300 Nike, Inc. (Cl. B) ................................... 157,950
3,200 PepsiCo, Inc. ........................................ 90,400
1,000 Procter & Gamble Company ............................. 97,500
1,500 Ralston-Purina Group ................................. 102,750
3,200 Safeway, Inc.* ....................................... 136,400
1,200 Schlumberger, Ltd. ................................... 101,400
4,200 Service Corporation International .................... 127,050
2,000 Union Pacific Corporation ............................ 146,500
2,700 WMX Technologies, Inc. ............................... 88,763
1,800 Warner-Lambert Company ............................... 118,800
1,400 Willamette Industries, Inc. .......................... 91,350
2,200 Williams Companies, Inc. ............................. 112,200
___________
4,818,885
___________
Total common stocks -
(cost $20,969,213) - 85.0% ......................... 22,875,962
___________
Total investments -
(cost $21,611,906) - 87.5% ......................... 23,562,001
Cash and other assets,
less liabilities - 12.5% ........................... 3,366,511
___________
Total net assets - 100.0% ............................ $26,928,512
===========
INVESTMENT CONCENTRATION
- -------------------------
At September 30, 1996, Global Series' investment concentration, by industry, was
as follows:
Banking .......................................................... 8.7%
Capital Equipment ................................................ 6.2%
Chemicals ........................................................ 0.6%
Construction and Housing ......................................... 1.2%
Consumer Durables ................................................ 8.2%
Consumer Nondurables ............................................. 9.1%
Electrical and Electronics ....................................... 6.0%
Energy Sources ................................................... 4.1%
Financial Services ............................................... 6.3%
Healthcare ....................................................... 5.0%
Materials ........................................................ 13.1%
Merchandising .................................................... 3.2%
Metals and Mining ................................................ 0.2%
Multi-Industry ................................................... 3.8%
Real Estate ...................................................... 0.7%
Services ......................................................... 5.8%
Telecommunications ............................................... 3.7%
Trade ............................................................ 0.8%
Transportation ................................................... 0.8%
Cash and other assets, less liabilities .......................... 12.5%
_________
100.0%
=========
SECURITY EQUITY FUND - ASSET ALLOCATION SERIES
PRINCIPAL
AMOUNT OR
NUMBER OF MARKET
SHARES CORPORATE BONDS VALUE
- --------------------------------------------------------------------------------
BROKERAGE - 1.0%
$50,000 Merrill Lynch & Company, Inc.,
8.0% - 2007 ........................................ $52,188
FINANCIAL SERVICES 0.5%
$25,000 MCN Investment Corporation,
6.32% - 2003 ....................................... 24,031
__________
Total corporate bonds
(cost $78,785) - 1.5% .............................. 76,219
COMMON STOCKS
-------------
AUTO PARTS & SUPPLIES - 2.6%
600 Arvin Industries, Inc. ............................... 14,775
1,400 Dana Corporation ..................................... 42,350
400 Eaton Corporation .................................... 24,150
800 Modine Manufacturing Company ......................... 21,000
1,500 Simpson Industries ................................... 15,187
1,000 Walbro Corporation ................................... 19,000
__________
136,462
BUILDING MATERIALS - 3.6%
900 Ameron International Corporation ..................... 34,650
700 Crane Company ........................................ 31,062
1,500 Jacobs Engineering Group* ............................ 33,750
600 Owens Corning Corporation ............................ 22,125
3,500 Schuller Corporation ................................. 33,688
300 TJ International, Inc. ............................... 5,475
1,400 Thomas Industries, Inc. .............................. 27,125
__________
187,875
BROADCAST MEDIA - 2.7%
1,000 A.H. Belo Corporation - Series A ..................... 34,500
2,400 Tele-Communications, Inc.* ........................... 35,850
1,000 Time Warner, Inc. .................................... 38,625
2,000 U.S. West Media Group* ............................... 33,750
__________
142,725
COMPUTER SYSTEMS - 4.5%
600 Compaq Computer Corporation* ......................... 38,475
400 Dell Computer Corporation* ........................... 31,100
600 Hewlett-Packard Company .............................. 29,250
400 International Business Machines Corporation .......... 49,800
SEE ACCOMPANYING NOTES.
- --------------------------------------------------------------------------------
19
<PAGE>
STATEMENTS OF NET ASSETS
- --------------------------------------------------------------------------------
SEPTEMBER 30, 1996
SECURITY EQUITY FUND - ASSET ALLOCATION SERIES (CONTINUED)
NUMBER OF MARKET
SHARES COMMON STOCKS (CONTINUED) VALUE
- --------------------------------------------------------------------------------
COMPUTER SYSTEMS (CONTINUED)
1,000 Quantum Corporation* ................................. $17,562
600 SCI Systems, Inc.* ................................... 33,750
600 Sun Microsystems, Inc.* .............................. 37,275
__________
237,212
ELECTRONICS - 3.9%
900 Arrow Electronics, Inc.* ............................. 40,050
800 Avnet, Inc. .......................................... 38,800
1,000 Core Industries, Inc. ................................ 13,625
900 Fluke (John) Manufacturing Company ................... 33,187
400 Harris Corporation ................................... 26,050
1,100 Pioneer Standard Electronics, Inc. ................... 12,375
600 Varian Associates, Inc. .............................. 28,800
400 Wyle Electronics ..................................... 12,850
__________
205,737
HOUSING - HOME BUILDING - 0.2%
300 Centex Corporation ................................... 9,788
MACHINERY - 3.9%
900 Bearings, Inc. ....................................... 25,425
300 Briggs & Stratton Corporation ........................ 13,312
700 Dover Corporation .................................... 33,425
500 Duriron Company, Inc. ................................ 13,250
700 GATX Corporation ..................................... 32,725
1,300 Graco, Inc. .......................................... 24,375
200 Lindsay Manufacturing Company ........................ 8,300
600 Parker-Hannifin Corporation .......................... 25,200
900 Trinova Corporation .................................. 28,350
__________
204,362
MINING & METALS - 2.3%
200 Aluminum Company of America .......................... 11,800
600 Asarco, Inc. ......................................... 15,975
1,400 Ashland Coal, Inc. ................................... 34,825
700 Phelps Dodge Corporation ............................. 44,888
300 Reynolds Metals Company .............................. 15,337
__________
122,825
RECREATION - 4.0%
2,200 Brunswick Corporation ................................ 52,800
2,000 CPI Corporation ...................................... 37,500
400 Harcourt General, Inc. ............................... 22,100
1,100 Harley-Davidson, Inc. ................................ 47,300
1,300 King World Productions, Inc.* ........................ 47,938
__________
207,638
PRINCIPAL
AMOUNT OR
NUMBER OF MARKET
SHARES COMMON STOCKS (CONTINUED) VALUE
- --------------------------------------------------------------------------------
RESTAURANTS - 2.4%
600 Applebees International, Inc. ........................ $15,900
500 CKE Restaurants, Inc. ................................ 15,375
1,000 International Dairy Queen, Inc. (Cl. A)* ............. 20,500
1,000 Luby's Cafeterias, Inc. .............................. 24,000
1,500 Ruby Tuesday, Inc. ................................... 28,500
1,000 Wendy's International, Inc. .......................... 21,500
__________
125,775
STEEL - 2.2%
400 Carpenter Technology ................................. 14,000
400 Cleveland Cliffs, Inc. ............................... 16,000
900 Commercial Metals Company ............................ 29,475
100 Nucor Corporation .................................... 5,075
900 Oregon Steel Mills, Inc. ............................. 13,838
800 Quanex Corporation ................................... 21,500
1,000 Steel Technologies, Inc. ............................. 12,500
__________
112,388
TELECOMMUNICATIONS - 2.2%
400 Ameritech Corporation ................................ 21,050
500 Bell Atlantic Corporation ............................ 29,938
200 Bellsouth Corporation ................................ 7,400
500 GTE Corporation ...................................... 19,250
400 Nynex Corporation .................................... 17,400
300 Southern New England Telecommunications .............. 11,062
200 Sprint Corporation ................................... 7,775
__________
113,875
__________
Total common stocks -
(cost $1,749,717) - 34.5% .......................... 1,806,662
U.S. GOVERNMENT & AGENCIES
--------------------------
FEDERAL HOME LOAN MORTGAGE CORPORATION - 5.7%
$150,000 5.27% - 10/15/96 ..................................... 149,692
$100,000 7.0% - 2020 .......................................... 98,562
$50,000 7.0% - 2021 .......................................... 48,177
__________
296,431
FINANCING CORPORATION - 0.5%
$75,000 0% - 2010 ............................................ 26,441
SEE ACCOMPANYING NOTES.
- --------------------------------------------------------------------------------
20
<PAGE>
STATEMENTS OF NET ASSETS
- --------------------------------------------------------------------------------
SEPTEMBER 30, 1996
SECURITY EQUITY FUND - ASSET ALLOCATION SERIES (CONTINUED)
PRINCIPAL
AMOUNT OR
NUMBER OF MARKET
SHARES U.S. GOVERNMENT & AGENCIES (CONTINUED) VALUE
- --------------------------------------------------------------------------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 6.9%
$48,043 6.5% - 2018 .......................................... $45,191
$50,000 6.5% - 2018 .......................................... 47,955
$130,000 6.95% - 2020 ......................................... 125,042
$40,000 7.5% - 2020 .......................................... 39,392
$100,000 8.8% - 2025 .......................................... 102,875
__________
360,455
U.S. TREASURY BONDS - 0.8%
$50,000 6.00% - 2026 ......................................... 43,936
U.S. TREASURY NOTES - 0.5%
$25,000 6.38% - 2002 ......................................... 24,819
__________
Total U.S. government & agencies
(cost $759,730) - 14.4% ............................ 752,082
REAL ESTATE INVESTMENT TRUSTS
-----------------------------
2,200 Bre Properties, Inc. ................................. 44,000
3,400 Cambridge Shopping Centres, Ltd. ..................... 22,837
2,500 Federal Realty Investment Trust ...................... 58,750
4,000 First Union Real Estate Investment Trust ............. 26,000
1,700 HRE Properties ....................................... 25,925
2,500 MGI Properties, Inc. ................................. 46,875
5,500 New Plan Realty Trust ................................ 118,250
1,400 Pennsylvania Real Estate Investment Trust ............ 29,750
2,000 Santa Anita Realty Enterprises, Inc. ................. 36,500
6,800 Security Capital Pacific Trust ....................... 143,650
5,300 United Dominion Realty Trust ......................... 74,200
3,350 Washington Real Estate Investment Trust .............. 53,600
2,400 Weingarten Realty Investors .......................... 93,000
__________
Total real estate investment trusts
(costs $747,996) - 14.8% ........................... 773,337
NUMBER OF MARKET
SHARES FOREIGN STOCKS VALUE
- --------------------------------------------------------------------------------
BELGIUM - 4.8%
500 Cementbedrijven Cimenteries .......................... $36,955
500 Delhaize - Le Lion ................................... 27,716
100 Electrabel ........................................... 22,332
200 Fortis AG ............................................ 28,162
250 Gevaert Photo Productions ............................ 16,486
100 Petrofina SA ......................................... 30,965
150 Royale Belgium ....................................... 29,818
100 Solvay SA ............................................ 60,210
__________
252,644
GERMANY - 8.0%
36 Allianz AG Holdings .................................. 63,561
1,081 BASF AG .............................................. 33,736
735 Bayer AG ............................................. 26,851
202 Continental AG ....................................... 3,696
850 Daimler-Benz AG* ..................................... 46,672
14 Degussa AG ........................................... 5,101
692 Deutsche Bank AG ..................................... 32,552
1,211 Dresdner Bank AG ..................................... 31,957
7 Friedrich Grohe AG - Vorzugsak ....................... 1,923
79 Heidelberger Zement AG ............................... 5,490
180 Hochtief AG .......................................... 8,497
14 Linde AG ............................................. 8,931
187 Merck KGAA ........................................... 6,737
7 Muenchener Rueckversicherungs-Gesellschaft AG ........ 15,865
72 Preussag AG .......................................... 18,056
122 SAP AG ............................................... 20,149
1,038 Siemens AG ........................................... 54,627
634 Veba AG .............................................. 33,220
__________
417,621
HONG KONG - 5.1%
3,600 Bank of East Asia .................................... 13,245
5,000 Cathay Pacific Airways ............................... 8,115
4,000 China Light and Power Company ........................ 18,622
8,000 Chinese Estates ...................................... 7,242
1,600 Dicksons Concept International ....................... 5,193
4,000 Hong Kong and Shanghai Hotels ........................ 7,216
18,410 Hong Kong Telecommunications ......................... 33,330
8,000 Hutchinson Whampoa Limited ........................... 53,795
SEE ACCOMPANYING NOTES.
- --------------------------------------------------------------------------------
21
<PAGE>
STATEMENTS OF NET ASSETS
- --------------------------------------------------------------------------------
SEPTEMBER 30, 1996
SECURITY EQUITY FUND - ASSET ALLOCATION SERIES (CONTINUED)
NUMBER OF MARKET
SHARES FOREIGN STOCKS (CONTINUED) VALUE
- --------------------------------------------------------------------------------
HONG KONG (CONTINUED)
2,000 Kumagai Gumi ......................................... $1,862
2,000 Lai-Sun Garment International ........................ 2,741
3,000 Oriental Press Group ................................. 1,455
2,000 Peregrine Investments Holdings ....................... 3,168
8,000 Sun Hung Kai Properties .............................. 85,090
12,000 Tai Cheung Holdings .................................. 9,543
2,400 Wing Lung Bank ....................................... 14,121
__________
264,738
ITALY - 5.4%
2,475 Assicurazioni Generali ............................... 52,685
11,000 Banco Commerciale Italiane ........................... 21,970
4,000 Edison Spa ........................................... 24,940
7,000 Fiat Spa ............................................. 19,684
16,638 Ina-Instituto Naz Assicuraz .......................... 24,104
3,208 Instituto Mobiliare Italiano ......................... 27,273
3,500 Mediobanca* .......................................... 20,236
29,600 Montedison Spa* ...................................... 19,136
18,821 Telecom Italia Mobile Spa ............................ 41,796
15,000 Telecom Italia-Spa ................................... 33,360
__________
285,184
JAPAN - 9.6%
2,000 The Bank of Tokyo-Mitsubishi ......................... 43,636
1 East Japan Railway Company ........................... 4,831
1,000 Hitachi, Ltd. (Hit. Seisakusho) ...................... 9,697
1,000 Itoham Foods ......................................... 7,138
1,000 Japan Energy Corporation ............................. 3,529
3,000 Kawasaki Heavy Industries ............................ 14,465
1,000 Marui Company, Ltd. .................................. 19,304
1,000 Matsushita Electric Industrial Company, Ltd. ......... 16,790
2,000 Mitsubishi Corporation ............................... 25,499
2,000 Mitsubishi Heavy Industrial, Ltd. .................... 16,287
3,000 Mitsubishi Materials Corporation ..................... 14,384
1,000 Nippon Comsys Corporation ............................ 13,468
1,000 Nippon Shokubai K.K. Company ......................... 8,817
2,000 NSK Limited .......................................... 13,702
200 Oyo Corporation ...................................... 10,325
100 Sega Enterprises ..................................... 4,355
2,000 Sekisui House, Ltd. .................................. 21,908
3,000 Shimizu Corporation .................................. 29,630
1,000 Shin-Etsu Chemical Company ........................... 17,957
2,000 Sumitomo Bank ........................................ 36,992
NUMBER OF MARKET
SHARES FOREIGN STOCKS (CONTINUED) VALUE
- --------------------------------------------------------------------------------
JAPAN (CONTINUED)
4,000 Sumitomo Chemical Company ............................ $18,532
1,000 Sumitomo Marine and Fire ............................. 7,883
1,000 Tokyo Dome Corporation ............................... 20,651
1,800 Tokyo Electric Power ................................. 43,636
3,000 Tokyu Corporation .................................... 21,118
1,000 Toyoda Auto Loom Works ............................... 19,035
1,000 Toyota Motor Corporation ............................. 25,589
2,000 Yamaichi Securities .................................. 12,301
__________
501,459
__________
Total foreign stocks
(cost $1,667,743) - 32.9% .......................... 1,721,646
FOREIGN WARRANTS
----------------
HONG KONG - 0.0%
400 Kumagai Gumi - Warrants 6/30/98 77
200 Peregrine Investments Holdings - Warrants 5/15/98 37
__________
114
__________
Total foreign warrants
(cost $0) - 0.0% ................................... 114
TEMPORARY CASH INVESTMENTS
83,000 Chase Master Note .................................... 83,000
Total temporary cash investments
(cost $83,000) - 1.6% .............................. 83,000
__________
Total investments -
(cost $5,086,971) - 99.7% .......................... 5,213,060
Cash and other assets,
liabilities - 0.3% ................................. 17,112
__________
Total net assets - 100.0% $5,230,172
==========
SEE ACCOMPANYING NOTES.
- --------------------------------------------------------------------------------
22
<PAGE>
STATEMENTS OF NET ASSETS
- --------------------------------------------------------------------------------
SEPTEMBER 30, 1996
SECURITY ULTRA FUND
NUMBER OF MARKET
SHARES COMMON STOCKS VALUE
- --------------------------------------------------------------------------------
ADVERTISING - 0.8%
13,500 Omnicom Group, Inc. .................................. $631,125
BANKS & TRUSTS - 1.3%
18,000 State Street Boston Corporation ...................... 1,032,750
BIOTECHNOLOGY - 1.0%
12,500 Amgen, Inc.* ......................................... 789,063
BROKERAGE - 1.4%
47,000 Schwab (Charles) Corporation ......................... 1,086,875
BUSINESS SERVICES - 9.7%
14,500 APAC Teleservices, Inc.* ............................. 743,125
11,000 Cintas Corporation ................................... 616,000
21,000 Concord EFS, Inc.* ................................... 540,750
12,750 Corestaff, Inc.* ..................................... 341,062
22,000 Corrections Corporation of America* .................. 687,500
31,500 Equifax, Inc. ........................................ 830,813
11,530 First Data Corporation ............................... 941,136
14,000 Ha-Lo Industries, Inc.* .............................. 406,000
35,250 PMT Services, Inc.* .................................. 713,813
16,500 Paychex, Inc. ........................................ 957,000
20,250 Snap-On, Inc. ........................................ 650,531
___________
7,427,730
CHEMICALS - SPECIALTY - 2.5%
16,000 IMC Global, Inc. ..................................... 626,000
16,000 Praxair, Inc. ........................................ 688,000
11,000 Sigma-Aldrich ........................................ 627,000
___________
1,941,000
COMMUNICATIONS - EQUIPMENT - 6.4%
11,000 Ascend Communications, Inc.* ......................... 727,375
15,500 Aspect Telecommunications* ........................... 964,875
12,500 Cascade Communications Corporation* .................. 1,018,750
14,500 Tellabs, Inc.* ....................................... 1,024,062
18,400 U.S. Robotics Corporation* ........................... 1,189,100
___________
4,924,162
COMPUTER SOFTWARE - 19.7%
7,500 BMC Software* ........................................ 596,250
8,000 CBT Group PLC ADR* ................................... 376,000
20,250 Cadence Design Systems, Inc.* ........................ 723,937
33,500 Cambridge Technology Partners (Massachusetts), Inc.* . 1,013,375
NUMBER OF MARKET
SHARES COMMON STOCKS (CONTINUED) VALUE
- --------------------------------------------------------------------------------
COMPUTER SOFTWARE (CONTINUED)
8,000 Clarify, Inc.* ....................................... $496,000
39,000 Cognos, Inc. (Cl. F)* ................................ 1,272,375
9,000 Electronics For Imaging, Inc.* ....................... 645,750
15,500 HBO & Company ........................................ 1,034,625
11,000 HCIA, Inc.* .......................................... 660,000
8,000 HNC Software, Inc.* .................................. 320,000
14,500 Informix Corporation* ................................ 404,188
9,500 INSO Corporation* .................................... 515,375
10,000 McAfee Associates* ................................... 690,000
13,000 Medic Computer Systems* .............................. 472,875
10,000 Pairgain Technologies, Inc.* ......................... 781,250
25,000 Parametric Technology Corporation* ................... 1,234,375
10,500 Peoplesoft, Inc.* .................................... 874,125
14,500 Project Software & Development* ...................... 612,625
15,446 Pure Atria Corporation* .............................. 583,086
6,500 Veritas Software Corporation* ........................ 459,875
33,500 Viasoft, Inc.* ....................................... 1,407,000
___________
15,173,086
COMPUTER SYSTEMS - 2.9%
14,500 Dell Computer Corporation* ........................... 1,127,375
14,000 SCI Systems, Inc.* ................................... 787,500
7,000 Verifone, Inc.* ...................................... 313,250
___________
2,228,125
CONSUMER SERVICES - 1.3%
15,000 Apollo Group, Inc.* .................................. 401,250
17,500 Stewart Enterprises, Inc. (Cl. A) .................... 590,625
___________
991,875
ELECTRONICS - 1.2%
22,500 Thermo Electron Corporation* ......................... 911,250
FINANCIAL SERVICES - 1.9%
22,000 Franklin Resources, Inc. ............................. 1,460,250
HEALTH CARE - 4.9%
13,500 Cardinal Health, Inc. ................................ 1,115,437
16,500 OccuSystems, Inc.* ................................... 495,000
24,000 Omnicare, Inc. ....................................... 732,000
20,250 PhyCor, Inc.* ........................................ 770,765
8,500 Quintiles Transnational Corporation* ................. 622,625
___________
3,735,827
HEALTH CARE - HMO - 0.5%
7,700 Oxford Health Plans* ................................. 383,075
SEE ACCOMPANYING NOTES.
- --------------------------------------------------------------------------------
23
<PAGE>
STATEMENTS OF NET ASSETS
- --------------------------------------------------------------------------------
SEPTEMBER 30, 1996
SECURITY ULTRA FUND
NUMBER OF MARKET
SHARES COMMON STOCKS (CONTINUED) VALUE
- --------------------------------------------------------------------------------
HOSPITAL SUPPLIES/MANAGEMENT - 1.4%
28,500 HEALTHSOUTH Corporation* ............................. $1,093,687
HOTEL/MOTEL - 2.5%
18,500 HFS, Inc.* ........................................... 1,237,188
33,750 La Quinta Inns, Inc. ................................. 658,125
___________
1,895,313
INSURANCE - 2.7%
27,500 AFLAC, Inc. .......................................... 976,250
32,000 SunAmerica, Inc. ..................................... 1,104,000
___________
2,080,250
MANUFACTURING - 1.0%
10,500 Illinois Tool Works .................................. 757,313
MEDICAL PRODUCTS - 3.0%
15,500 Guidant Corporation .................................. 856,375
19,500 Hologic, Inc.* ....................................... 546,000
25,000 Rexall Sundown, Inc.* ................................ 912,500
___________
2,314,875
OFFICE EQUIPMENT & SUPPLIES - 2.5%
15,500 Corporate Express, Inc.* ............................. 602,563
11,000 Diebold, Inc. ........................................ 642,125
23,000 Viking Office Products, Inc.* ........................ 690,000
___________
1,934,688
OIL & GAS DRILLING - 1.6%
25,000 Global Marine, Inc.* ................................. 393,750
20,000 Noble Affiliates, Inc. ............................... 845,000
___________
1,238,750
OIL & GAS EXPLORATION - 0.9%
16,500 Sonat, Inc. .......................................... 730,125
PACKAGING & CONTAINERS - 0.4%
9,000 Sealed Air Corporation* .............................. 335,250
PHARMACEUTICALS - 2.9%
36,000 Dura Pharmaceuticals, Inc.* .......................... 1,327,500
19,000 Jones Medical Industries, Inc. ....................... 921,500
___________
2,249,000
POLLUTION CONTROL - 2.1%
19,500 Superior Services, Inc.* ............................. 312,000
16,500 United States Filter Corporation* .................... 563,063
21,000 United Waste Systems, Inc.* .......................... 729,750
___________
1,604,813
RESTAURANTS - 2.0%
29,500 Landry's Seafood Restaurants* ........................ 737,500
14,750 Papa John's International, Inc.* ..................... 774,375
___________
1,511,875
NUMBER OF MARKET
SHARES COMMON STOCKS (CONTINUED) VALUE
- --------------------------------------------------------------------------------
RETAIL - 9.5%
16,000 Bed Bath & Beyond, Inc.* ............................. $438,000
9,500 CDW Computer Centers, Inc.* .......................... 648,375
18,750 Claire's Stores* ..................................... 400,781
20,000 Dollar General Corporation ........................... 622,500
5,500 Fila Holdings SPA ADR ................................ 528,687
18,000 Gadzooks* ............................................ 625,500
6,500 Jones Apparel Group, Inc. ............................ 414,375
10,000 Just For Feet, Inc.* ................................. 501,250
20,000 Kohl's Corporation* .................................. 720,000
12,000 Nine West Group, Inc.* ............................... 651,000
46,375 Staples, Inc.* ....................................... 1,028,945
8,000 Tiffany & Company .................................... 320,000
11,000 West Marine, Inc.* ................................... 363,000
___________
7,262,413
SEMICONDUCTORS - 3.4%
11,000 Altera Corporation* .................................. 556,875
27,500 Analog Devices, Inc.* ................................ 745,937
11,000 Atmel Corporation* ................................... 339,625
10,000 Linear Technology Corporation ........................ 368,750
18,000 Xilinx, Inc.* ........................................ 612,000
___________
2,623,187
TEXTILES - APPAREL - 0.9%
11,500 Tommy Hilfiger Corporation* .......................... 681,375
TRANSPORTATION - 0.6%
13,500 Illinois Central Corporation ......................... 426,939
___________
Total common stocks
(cost $54,337,203) - 92.9% ......................... 71,456,046
___________
Total investments
(cost $54,337,203) - 92.9% ......................... 71,456,046
Cash and other assets,
less liabilities - 7.1% ............................ 5,472,389
___________
Total net assets - 100.0% ............................ $76,928,435
===========
The identified cost of investments owned at September 30, 1996, was the same for
federal income tax and financial statement purposes, except for Ultra Fund for
which the identified cost of investments for federal income tax purposes was
$54,391,123.
*Securities on which no cash dividend was paid during the preceding twelve
months.
ADR (American Depositary Receipt)
(1) Deferred interest obligation; currently zero coupon under terms of initial
offering.
(2) Restricted Security (a portfolio security that may be sold privately, but
that is required to be registered with the SEC or to be exempted from such
registration before it may be sold in public distribution). The total value of
restricted securities in Security Growth and Income Fund is 1.2% of total net
assets.
SEE ACCOMPANYING NOTES.
- --------------------------------------------------------------------------------
24
<PAGE>
BALANCE SHEETS
- --------------------------------------------------------------------------------
SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
SECURITY EQUITY FUND
-------------------------------------------
SECURITY ASSET SECURITY
GROWTH AND EQUITY GLOBAL ALLOCATION ULTRA
INCOME FUND SERIES SERIES SERIES FUND
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments, at value (identified cost
$57,545,427, $413,186,524,
$21,611,906, $5,086,971 and
$54,337,203, respectively) .................. $72,767,429 $585,862,119 $23,562,001 $5,213,060 $71,456,046
Commercial paper, at amortized cost
which approximates market value ............. -- 698,569 -- -- --
Cash ........................................... 2,626,784 30,227,821 3,300,894 986 5,576,094
Receivables:
Fund shares sold ............................ 7,170 698,756 185,812 28,025 65,839
Securities sold ............................. 762,411 4,204,469 35,311 -- 54,911
Foreign forward exchange contracts .......... -- -- 73,725 -- --
Dividends ................................... 326,455 799,590 54,783 7,516 15,076
Interest .................................... 4,424 130,532 11,246 5,908 15,996
Foreign taxes recoverable ................... -- -- 27,074 927 --
Prepaid expenses ............................... -- -- -- 6,532 --
___________ ____________ ___________ ____________ ___________
Total assets ......................... $76,494,673 $622,621,856 $27,250,846 $5,262,954 $77,183,962
=========== ============ =========== ============ ===========
LIABILITIES AND NET ASSETS
Liabilities:
Payable for:
Fund shares redeemed ...................... $92,842 $300,369 $64,517 $634 $34,798
Securities purchased ...................... 800,000 7,259,213 212,697 -- 137,437
Other Liabilities:
Management fees ........................... 79,730 524,858 40,330 6,326 80,777
Custodian fees ............................ -- -- -- 361 --
Transfer and administration fees .......... -- -- -- 4,400 --
12b-1 distribution plan fees .............. 1,807 30,977 4,790 2,279 2,515
Miscellaneous fees ........................ -- 3,763 -- 18,782 --
___________ ____________ ___________ ____________ ___________
Total liabilities ....................... 974,379 8,119,180 322,334 32,782 255,527
Net Assets:
Paid in capital ............................. 54,388,672 392,830,437 22,674,750 4,863,583 55,074,630
Undistributed net investment income ......... 182,698 2,728,863 671,849 112,622 --
Accumulated undistributed net realized
gain on sale of investments, futures
and foreign currency transactions ......... 5,726,922 46,267,781 1,558,961 127,889 4,734,962
Net unrealized appreciation in value
of investments, futures and
translation of assets and liabilities
in foreign currencies ..................... 15,222,002 172,675,595 2,022,952 126,078 17,118,843
___________ ____________ ___________ ____________ ___________
Net assets .............................. 75,520,294 614,502,676 26,928,512 5,230,172 76,928,435
___________ ____________ ___________ ____________ ___________
Total liabilities and net assets ...... $76,494,673 $622,621,856 $27,250,846 $5,262,954 $77,183,962
=========== ============ =========== ============ ===========
CLASS "A" SHARES
Capital shares outstanding .................. 8,099,424 76,389,986 1,582,223 221,414 8,994,692
Net assets .................................. $73,273,461 $575,680,473 $19,643,985 $2,449,515 $74,230,177
Net asset value per share (net
assets divided by shares outstanding) ..... $9.05 $7.54 $12.42 $11.06 $ 8.25
Add: Selling commission (5.75% of the
offering price) ........................... 0.55 0.46 0.76 0.67 0.50
___________ ____________ ___________ ____________ ___________
Offering price per share (net asset
value divided by 94.25%) .................. $9.60 $8.00 $13.18 $11.73 $8.75
=========== ============ =========== ============ ===========
CLASS "B" SHARES
Capital shares outstanding .................. 251,446 5,275,526 598,242 253,411 336,000
Net assets .................................. $2,246,833 $38,822,203 $7,284,527 $2,780,657 $2,698,258
Net asset value per share
(net assets divided by shares outstanding). $8.94 $7.36 $12.18 $10.97 $8.03
=========== ============ =========== ============ ===========
</TABLE>
See accompanying notes.
- --------------------------------------------------------------------------------
25
<PAGE>
STATEMENTS OF OPERATIONS
- --------------------------------------------------------------------------------
FOR THE YEAR ENDED SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
SECURITY EQUITY FUND
-------------------------------------------
SECURITY ASSET SECURITY
GROWTH AND EQUITY GLOBAL ALLOCATION ULTRA
INCOME FUND SERIES SERIES SERIES FUND
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest .................................... $1,348,538 $1,238,261 $80,041 $108,168 $198,794
Dividends ................................... 1,068,605 8,213,370 455,115 86,911 260,084
___________ ____________ ___________ ____________ ___________
2,417,143 9,451,631 535,156 195,079 458,878
Less foreign tax expense .................. -- -- (47,577) (1,779) --
___________ ____________ ___________ ____________ ___________
Total investment income ................. 2,417,143 9,451,631 487,579 193,300 458,878
EXPENSES:
Management fees ............................. 919,674 5,528,818 470,077 39,560 862,190
Custodian fees .............................. -- -- -- 3,674 --
Transfer/maintenance fees ................... -- -- -- 5,571 --
Administration fees ......................... -- -- -- 36,957 --
Directors' fees ............................. -- -- -- 72 --
Professional fees ........................... -- -- -- 11,284 --
Reports to shareholders ..................... -- -- -- 974 --
Registration fees ........................... -- -- -- 25,949 --
Other expenses .............................. -- -- -- 6,286 --
12b-1 distribution plan fees (Class B) ...... 16,080 279,934 59,852 22,229 36,559
Interest .................................... -- -- -- 193 --
Reimbursement of expenses ................... -- -- -- (43,856) --
___________ ____________ ___________ ____________ ___________
Total expenses ............................ 935,754 5,808,752 529,929 108,893 898,749
___________ ____________ ___________ ____________ ___________
Net investment income (loss) ............ 1,481,389 3,642,879 (42,350) 84,407 (439,871)
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) during the year on:
Investments ............................... 6,097,347 54,909,397 2,087,000 198,823 7,783,798
Foreign currency transactions ............. -- -- 580,735 (5,918) --
Futures contracts ......................... -- -- -- 59,868 81,216
___________ ____________ ___________ ____________ ___________
Net realized gains ...................... 6,097,347 54,909,397 2,667,735 252,773 7,865,014
Net change in unrealized appreciation
(depreciation) during the year on:
Investments ............................... 5,572,992 59,008,440 1,018,925 36,071 2,292,201
Translation of assets and liabilities
in foreign currencies ................... -- -- 72,857 (11) --
Futures contracts ......................... -- -- -- 13,545 --
___________ ____________ ___________ ____________ ___________
Net unrealized appreciation ............. 5,572,992 59,008,440 1,091,782 49,605 2,292,201
___________ ____________ ___________ ____________ ___________
Net gain .............................. 11,670,339 113,917,837 3,759,517 302,378 10,157,215
___________ ____________ ___________ ____________ ___________
Net increase in net assets
resulting from operations ......... $13,151,728 $117,560,716 $3,717,167 $386,785 $9,717,344
=========== ============ =========== ============ ===========
</TABLE>
See accompanying notes.
- --------------------------------------------------------------------------------
26
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
FOR THE YEAR ENDED SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
SECURITY EQUITY FUND
-------------------------------------------
SECURITY ASSET SECURITY
GROWTH AND EQUITY GLOBAL ALLOCATION ULTRA
INCOME FUND SERIES SERIES SERIES FUND
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS:
Net investment income (loss) ................ $1,481,389 $3,642,879 $(42,350) $84,407 $(439,871)
Net realized gain ........................... 6,097,347 54,909,397 2,667,735 252,773 7,865,014
Unrealized appreciation during the year ..... 5,572,992 59,008,440 1,091,782 49,605 2,292,201
___________ ____________ ___________ ____________ ___________
Net increase in net assets
resulting from operations ............... 13,151,728 117,560,716 3,717,167 386,785 9,717,344
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A ................................... (1,303,374) (4,154,225) (357,503) (59,841) --
Class B ................................... (16,567) (64,778) (72,239) (50,821) --
Net realized gain
Class A ................................... (2,290,075) (33,371,334) (224,880) (30,468) (7,109,009)
Class B ................................... (44,993) (1,836,652) (77,719) (31,088) (500,515)
___________ ____________ ___________ ____________ ___________
Total distributions to shareholders ....... (3,655,009) (39,426,989) (732,341) (172,218) (7,609,524)
CAPITAL SHARE TRANSACTIONS (A):
Proceeds from sale of shares
Class A ................................... 3,975,290 299,520,899 5,778,490 682,087 27,602,365
Class B ................................... 1,200,271 93,534,094 2,179,465 1,119,612 3,050,423
Dividends reinvested
Class A ................................... 3,265,411 34,973,081 570,969 89,987 6,772,088
Class B ................................... 60,327 1,882,247 149,212 81,908 500,487
Shares redeemed
Class A ................................... (10,667,756) (273,412,317) (5,192,505) (337,484) (28,420,959)
Class B ................................... (369,561) (79,755,552) (1,236,321) (55,397) (6,164,145)
___________ ____________ ___________ ____________ ___________
Net increase (decrease) from
capital share transactions .............. (2,536,018) 76,742,452 2,249,310 1,580,713 3,340,259
___________ ____________ ___________ ____________ ___________
Total increase in net assets .......... 6,960,701 154,876,179 5,234,136 1,795,280 5,448,079
NET ASSETS:
Beginning of year ........................... 68,559,593 459,626,497 21,694,376 3,434,892 71,480,356
___________ ____________ ___________ ____________ ___________
End of year ................................. $75,520,294 $614,502,676 $26,928,512 $5,230,172 $76,928,435
=========== ============ =========== ============ ===========
Undistributed net investment income
at end of year .............................. $182,698 $2,728,863 $671,849 $112,622 $--
=========== ============ =========== ============ ===========
(a) Shares issued and redeemed
Shares sold
Class A ............................... 474,232 43,657,565 491,586 63,688 3,632,551
Class B ............................... 143,440 13,771,902 186,645 104,927 412,321
Dividends reinvested
Class A ............................... 404,486 5,483,525 52,399 8,801 996,776
Class B ............................... 7,601 300,151 13,842 8,014 75,103
Shares redeemed
Class A ............................... (1,281,262) (39,986,054) (447,772) (31,916) (3,688,397)
Class B ............................... (43,575) (11,797,000) (107,952) (5,145) (820,769)
___________ ____________ ___________ ____________ ___________
Net increase (decrease) ............. (295,078) 11,430,089 188,748 148,369 (607,585)
=========== ============ =========== ============ ===========
</TABLE>
See accompanying notes.
- --------------------------------------------------------------------------------
27
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
FOR THE YEAR ENDED SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
SECURITY EQUITY FUND
-------------------------------------------
SECURITY ASSET SECURITY
GROWTH AND EQUITY GLOBAL ALLOCATION ULTRA
INCOME FUND SERIES SERIES SERIES FUND
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS:
Net investment income (loss) ................ $1,407,287 $3,304,987 $(91,058) $13,792 $(223,015)
Net realized gain ........................... 1,984,078 27,972,416 419,260 61,764 4,989,643
Unrealized appreciation
during the period ......................... 8,482,309 69,736,879 95,995 76,473 8,466,565
___________ ____________ ___________ ____________ ___________
Net increase in net assets resulting
from operations ......................... 11,873,674 101,014,282 424,197 152,029 13,233,193
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A ................................... (1,378,072) -- -- -- --
Class B ................................... (11,951) -- -- -- --
Net realized gain
Class A ................................... (1,912,997) (26,300,092) (347,497) -- (1,149,264)
Class B ................................... (23,632) (690,558) (84,333) -- (28,504)
___________ ____________ ___________ ____________ ___________
Total distributions to shareholders ....... (3,326,652) (26,990,650) (431,830) -- (1,177,768)
CAPITAL SHARE TRANSACTIONS (A):
Proceeds from sale of shares
Class A ................................... 2,681,709 159,433,767 4,130,645 1,846,588 97,988,749
Class B ................................... 635,799 36,310,779 3,765,671 1,469,193 10,247,969
Dividends reinvested
Class A ................................... 2,965,256 24,498,993 340,567 -- 1,088,376
Class B ................................... 34,468 690,184 84,001 -- 28,502
Shares redeemed
Class A ................................... (11,959,939) (172,929,497) (8,249,891) (28,739) (105,077,941)
Class B ................................... (340,406) (28,090,274) (2,457,097) (4,179) (6,799,714)
___________ ____________ ___________ ____________ ___________
Net increase (decrease) from
capital share transactions ............ (5,983,113) 19,913,952 (2,386,104) 3,282,863 (2,524,059)
___________ ____________ ___________ ____________ ___________
Total increase (decrease)
in net assets ....................... 2,563,909 93,937,584 (2,393,737) 3,434,892 9,531,366
NET ASSETS:
Beginning of period ......................... 65,995,684 365,688,913 24,088,113 -- 61,948,990
___________ ____________ ___________ ____________ ___________
End of period ............................... $68,559,593 $459,626,497 $21,694,376 $3,434,892 $71,480,356
=========== ============ =========== ============ ===========
Undistributed net investment income
at end of period ............................ $17,267 $3,304,987 $135,605 $13,792 $--
=========== ============ =========== ============ ===========
(a) Shares issued and redeemed
Shares sold
Class A ............................... 380,257 27,957,351 395,288 183,574 13,881,834
Class B ............................... 91,007 6,432,534 366,335 146,016 1,427,321
Dividends reinvested
Class A ............................... 434,705 4,858,020 33,389 -- 164,781
Class B ............................... 5,126 138,507 8,325 -- 4,328
Shares redeemed
Class A ............................... (1,697,766) (30,292,120) (799,467) (2,733) (14,892,245)
Class B ............................... (48,979) (4,927,928) (237,369) (401) (946,401)
___________ ____________ ___________ ____________ ___________
Net increase (decrease) ............. (835,650) 4,166,364 (233,499) 326,456 (360,382)
=========== ============ =========== ============ ===========
*Period June 1, 1995 (inception) through September 30, 1995.
</TABLE>
See accompanying notes.
- --------------------------------------------------------------------------------
28
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
SELECTED DATA FOR EACH SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
AVERAGE
NET RATIO COMMIS-
GAINS OR DIVI- RATIO OF NET SION
NET LOSSES TOTAL DENDS NET OF EX- INCOME PAID
FISCAL ASSET NET ON SEC- FROM (FROM DISTRI- NET ASSETS PENSES (LOSS) PORT- PER
YEAR VALUE INVEST- URITIES INVEST- NET BUTIONS ASSET END OF TO TO AVE- FOLIO INVEST-
ENDED BEGIN- MENT (REALIZED MENT INVEST- (FROM TOTAL VALUE TOTAL PERIOD AVERAGE RAGE TURN- MENT
SEPTEM- NING OF INCOME & UNREAL- OPERA- MENT REALIZED DISTRI- END OF RETURN (THOU- NET NET OVER SECURITY
BER 30 PERIOD (LOSS) IZED) TIONS INCOME) GAINS) BUTIONS PERIOD (A) SANDS) ASSETS ASSETS RATE TRADED
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SECURITY GROWTH AND INCOME FUND (CLASS A)(b)
1992 $7.31 $0.35 $(0.016) $0.334 $(0.343) $(0.171) $(0.514) $7.13 4.70% $75,436 1.27% 4.79% 74% $---
1993 7.13 0.21 0.876 1.086 (0.218) (0.158) (0.376) 7.84 15.60% 81,982 1.26% 2.80% 135% ---
1994(c) 7.84 0.13 (0.713) (0.583) (0.128) (0.169) (0.297) 6.96 (7.60)% 65,328 1.28% 1.70% 163% ---
1995(g) 6.96 0.16 1.183 1.343 (0.158) (0.215) (0.373) 7.93 20.25% 67,430 1.31% 2.21% 130% ---
1996(g) 7.93 0.18 1.373 1.553 (0.158) (0.275) (0.433) 9.05 20.31% 73,273 1.29% 2.09% 69% 0.0625
SECURITY GROWTH AND INCOME FUND (CLASS B)
1994(c) $7.83 $0.05 $(0.694) $(0.644) $(0.117) $(0.169) $(0.286) $6.90 (8.00%) $668 2.27% 1.03% 178% $---
1995(g) 6.90 0.08 1.179 1.259 (0.094) (0.215) (0.309) 7.85 19.07% 1,130 2.31% 1.21% 130% ---
1996(g) 7.85 0.09 1.353 1.443 (0.078) (0.275) (0.353) 8.94 19.01% 2,247 2.29% 1.09% 69% 0.0625
SECURITY EQUITY SERIES (CLASS A)
1992 $5.82 $0.09 $.475 $0.565 $(0.132) $(0.393) $(0.525) $5.86 10.20% $313,582 1.06% 1.48% 83% $---
1993 5.86 0.12 1.165 1.285 (0.053) (0.362) (0.415) 6.73 22.70% 375,565 1.06% 1.95% 95% ---
1994(c) 6.73 0.05 0.085 0.135 (0.120) (1.205) (1.325) 5.54 1.95% 358,237 1.06% 0.86% 79% ---
1995(g) 5.54 0.04 1.377 1.417 --- (0.407) (0.407) 6.55 27.77% 440,339 1.05% 0.87% 95% ---
1996(g) 6.55 0.05 1.482 1.532 (0.060) (0.482) (0.542) 7.54 24.90% 575,680 1.04% 0.75% 64% 0.0609
SECURITY EQUITY SERIES (CLASS B)
1994(c) $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% $---
1995(g) 5.49 (0.01) 1.357 1.347 --- (0.407) (0.407) 6.43 26.69% 19,288 2.05% (0.13%) 95% ---
1996(g) 6.43 (0.02) 1.449 1.429 (0.017) (0.482) (0.499) 7.36 23.57% 38,822 2.04% (0.25%) 64% 0.0609
SECURITY GLOBAL SERIES (CLASS A)
1994 $10.00 $(0.03) $0.87 $0.84 $--- $--- $--- $10.84 8.40% $20,128 2.00% (0.01%) 73% $---
(c)(d)
1995(g) 10.84 (0.02) 0.31 0.29 --- (0.19) (0.19) 10.94 2.80% 16,261 2.00% (0.17%) 141% ---
1996(g) 10.94 0.01 1.874 1.884 (0.248) (0.156) (0.404) 12.42 17.73% 19,644 2.00% 0.07% 142% 0.0338
SECURITY GLOBAL SERIES (CLASS B)
1994 $9.96 $(0.12) $0.91 $0.79 $--- $--- $--- $10.75 7.90% $3,960 3.00% (0.01%) 73% $---
(c)(d)
1995(g) 10.75 (0.12) 0.30 0.18 --- (0.19) (0.19) 10.74 1.79% 5,433 3.00% (1.17%) 141% ---
1996(g) 10.74 (0.10) 1.841 1.741 (0.145) (0.156) (0.301) 12.18 16.57% 7,285 3.00% (0.93%) 142% 0.0338
SECURITY ASSET ALLOCATION SERIES (CLASS A)
1995 $10.00 $0.04 $0.50 $0.54 $--- $--- $--- $10.54 5.40% $1,906 2.00% 1.33% 129% $---
(e)(f)(g)
1996(g) 10.54 0.25 0.765 1.015 (0.328) (0.167) (0.495) 11.06 10.01% 2,449 2.00% 2.32% 75% 0.0247
SECURITY ASSET ALLOCATION SERIES (CLASS B)
1995 $10.00 $0.01 $0.490 $0.500 $--- $--- $--- $10.50 5.00% $1,529 3.00% 0.31% 129% $---
(e)(f)(g)
1996(g) 10.50 0.14 0.77 0.91 (0.273) (0.167) (0.44) 10.97 8.97% 2,781 3.00% 1.32% 75% 0.0247
</TABLE>
See accompanying notes.
- --------------------------------------------------------------------------------
29
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
SELECTED DATA FOR EACH SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
AVERAGE
NET RATIO COMMIS-
GAINS OR DIVI- RATIO OF NET SION
NET LOSSES TOTAL DENDS NET OF EX- INCOME PAID
FISCAL ASSET NET ON SEC- FROM (FROM DISTRI- NET ASSETS PENSES (LOSS) PORT- PER
YEAR VALUE INVEST- URITIES INVEST- NET BUTIONS ASSET END OF TO TO AVE- FOLIO INVEST-
ENDED BEGIN- MENT (REALIZED MENT INVEST- (FROM TOTAL VALUE TOTAL PERIOD AVERAGE RAGE TURN- MENT
SEPTEM- NING OF INCOME & UNREAL- OPERA- MENT REALIZED DISTRI- END OF RETURN (THOU- NET NET OVER SECURITY
BER 30 PERIOD (LOSS) IZED) TIONS INCOME) GAINS) BUTIONS PERIOD (A) SANDS) ASSETS ASSETS RATE TRADED
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SECURITY ULTRA FUND (CLASS A)
1992 $6.72 $(0.090) $(0.202) $(0.292) $--- $(0.172) $(0.172) $6.66 1.50% $57,128 1.32% (0.46%) 142% $---
1993 6.66 (0.028) 1.791 1.763 --- (0.293) (0.293) 8.13 26.80% 71,056 1.30% (0.50%) 101% ---
1994(c) 8.13 (0.056) (0.188) (0.244) --- (1.066) (1.066) 6.82 (3.60%) 60,695 1.33% (0.80%) 111% ---
1995(g) 6.82 (0.02) 1.535 1.515 --- (0.135) (0.135) 8.20 22.69% 66,052 1.32% (0.31%) 180% ---
1996(g) 8.20 (0.05) 1.096 1.046 --- (0.996) (0.996) 8.25 15.36% 74,230 1.31% (0.61%) 161% 0.0606
SECURITY ULTRA FUND (CLASS B)
1994(c) $8.30 $(0.103) $(0.321) $(0.424) $--- $(1.066) $(1.066) $6.81 (5.70%) $1,254 2.36% (1.76%) 110% $---
1995(g) 6.81 (0.09) 1.525 1.435 --- (0.135) (0.135) 8.11 21.53% 5,428 2.32% (1.32%) 180% ---
1996(g) 8.11 (0.13) 1.046 0.916 --- (0.996) (0.996) 8.03 13.81% 2,698 2.31% (1.61%) 161% 0.0606
</TABLE>
(a) Total return information does not reflect deduction of any sales charges
imposed at the time of purchase for Class A shares or upon redemption for
Class B shares.
(b) Effective July 6, 1993, Security Growth and Income Fund changed its
investment objective from investing for income with secondary emphasis on
long-term capital growth to long-term capital growth with secondary
emphasis on income. Effective the same date the fund changed its name from
Security Investment Fund to Security Growth and Income Fund.
(c) Class "B" Shares were initially capitalized 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.
(d) Security Global Series was initially capitalized on October 1, 1993, with a
net asset value of $10 per share. Percentage amounts for the period, except
for total return, have been annualized.
(e) Security Asset Allocation Series was initially capitalized on June 1, 1995,
with a net asset value of $10 per share. Percentage amounts for the period
have been annualized, except for total return. Per share data has been
calculated using average month-end shares outstanding.
(f) Fund expenses were reduced by the Investment Manager during the period and
expense ratios absent such reimbursement would have been as follows:
1995 1996
---- ----
Asset Allocation Series Class A 3.6% 3.1%
Class B 4.7% 3.9%
(g) Net investment income (loss) was computed using average shares outstanding
throughout the period.
See accompanying notes.
- --------------------------------------------------------------------------------
30
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
SEPTEMBER 30, 1996
1. SIGNIFICANT ACCOUNTING POLICIES
Security Growth and Income, Equity and Ultra Funds (the Funds) are
registered under the Investment Company Act of 1940, as amended, as diversified
open-end management investment companies. The shares of Security Equity Fund are
currently issued in three Series, the Equity Series, the Global Series, and the
Asset Allocation Series, with each Series, in effect representing a separate
Fund. The Funds began offering an additional class of shares ("B" shares) to the
public on October 19, 1993. The shares are offered without a front-end sales
charge but incur additional class - specific expenses. Redemptions of the shares
within five years of acquisition incur a contingent deferred sales charge. The
following is a summary of the significant accounting policies followed by the
Funds in the preparation of their financial statements. These policies are in
conformity with generally accepted accounting principles.
A. SECURITY VALUATION - Valuations of the Funds' securities are supplied by
a pricing service approved by the Board of Directors. Securities listed or
traded on a national securities exchange are valued on the basis of the last
sales price. If there are no sales on a particular day, then the securities are
valued at the last 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 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 are valued in good faith by such method as the
Board of Directors determines will reflect the fair market value. The Funds
generally will value short-term debt securities at prices based on market
quotations for securities of similar type, yield, quality and duration, except
those securities purchased with 60 days or less to maturity are valued on the
basis of amortized cost which approximates market value.
Generally, trading in foreign securities markets is substantially completed
each day at various times prior to the close of the New York Stock Exchange. The
values of foreign securities are determined as of the close of such foreign
markets or the close of the New York Stock Exchange, if earlier. All investments
quoted in foreign currency are valued in U.S. dollars on the basis of the
foreign currency exchange rates prevailing at the close of business. The Global
Series' and Asset Allocation Series' investments in foreign securities may
involve risks not present in domestic investments. Since foreign securities may
be denominated in a foreign currency and involve settlement and pay interest or
dividends in foreign currencies, changes in the relationship of these foreign
currencies to the U.S. dollar can significantly affect the value of the
investments and earnings of the Funds. Foreign investments may also subject the
Global Series and Asset Allocation Series to foreign government exchange
restrictions, expropriation, taxation or other political, social or economic
developments, all of which could affect the market and/or credit risk of the
investments.
B. FOREIGN CURRENCY TRANSACTIONS - The accounting records of the Funds are
maintained in U.S. dollars. All assets and liabilities initially expressed in
foreign currencies are converted into U.S. dollars at prevailing exchange rates.
Purchases and sales of investment securities, dividend and interest income, and
certain expenses are translated at the rates of exchange prevailing on the
respective dates of such transactions.
The Funds do not isolate that portion of the results of operations
resulting from changes in the foreign exchange rates on investments from the
fluctuations arising from changes in the market prices of securities held. Such
fluctuations are included with the net realized and unrealized gain or loss on
investments.
Net realized foreign exchange gains or losses arise from sales of portfolio
securities, sales of foreign currencies, and the difference between asset and
liability amounts initially stated in foreign currencies and the U.S. dollar
value of the amounts actually received or paid. Net unrealized foreign exchange
gains or losses arise from changes in the value of portfolio securities and
other assets and liabilities at the end of the reporting period, resulting from
changes in the exchange rates.
C. FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS - Global Series and Asset
Allocation Series may enter into forward foreign exchange contracts in order to
manage against foreign currency risk from purchase or sale of securities
denominated in foreign currency. Global Series and Asset Allocation Series may
also enter into such contracts to manage changes in foreign currency exchange
rates on portfolio positions. These contracts are marked to market daily, by
recognizing the difference between the contract exchange rate and the current
market rate as unrealized gains or losses. Realized gains or losses are
recognized when contracts are settled and are reflected in the statement of
operations. These contracts involve market risk in excess of the amount
reflected in the balance sheet. The face or contract amount in U.S. dollars
reflects the total exposure the Global Series and Asset Allocation Series have
in that particular currency contract. Losses may arise due to changes in the
value of the foreign currency or if the counterparty does not perform under the
contract.
D. FUTURES - Asset Allocation Series and Ultra Fund utilize futures
contracts to a limited extent, with the objectives of maintaining full exposure
to the underlying stock markets, enhancing returns, maintaining liquidity, and
minimizing transaction costs. Asset Allocation Series and Ultra Fund may
purchase futures contracts to immediately position incoming cash in the market,
thereby simulating a fully invested position in the underlying index while
maintaining a cash balance for liquidity. In the event of redemptions, the Asset
Allocation Series and Ultra Fund may pay departing shareholders from its cash
balances and reduce their futures positions accordingly. Returns may be enhanced
by purchasing futures contracts instead of the underlying securities when
futures are believed to be priced more attractively than the underlying
securities. The primary risks associated with the use of futures contracts are
imperfect correlation between changes in market values of stocks contained in
the indexes and the prices of futures contracts, and the possibility of an
illiquid market. Futures contracts are valued based upon their quoted daily
settlement prices. Upon entering into a futures contract, the Funds are required
to deposit either cash or securities, representing the initial margin, equal to
a certain percentage of the contract value. Subsequent changes in the value of
the contract, or variation margin, are recorded as unrealized gains or losses.
The variation margin is paid or received in cash daily by the Funds. The Funds
realize a gain or loss when the contract is closed or expires. There were no
futures contracts held by the Funds at September 30, 1996.
- --------------------------------------------------------------------------------
31
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
E. SECURITY TRANSACTIONS AND INVESTMENT INCOME - Security transactions are
accounted for on the date the securities are purchased or sold. Realized gains
and losses are reported on an identified cost basis. Dividend income less
foreign taxes withheld (if any) plus foreign taxes recoverable (if any) are
recorded on the ex-dividend date. Interest income is recognized on the accrual
basis. Premium and discounts (except original issue discounts) on debt
securities are not amortized.
F. DISTRIBUTIONS TO SHAREHOLDERS - Distributions to shareholders are
recorded on the ex-dividend date. The character of distributions made during the
year from net investment income or net realized gains may differ from their
ultimate characterization for federal income tax purposes. These differences are
primarily due to differing treatments relating to the expiration of net
operating losses and the recharacterization of foreign currency gains and
losses.
G. TAXES - The Funds complied with the requirements of the Internal Revenue
Code applicable to regulated investment companies and distributed all of their
taxable net income and net realized gains sufficient to relieve them from all,
or substantially all, federal income, excise and state income taxes. Therefore,
no provision for federal or state income tax is required.
2. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Under terms of the investment advisory contract, Security Management
Company (SMC) agrees to provide, or arrange for others to provide, all the
services required by the Funds for a single fee (except for the Asset Allocation
Series of Security Equity Fund), including investment advisory services,
transfer agent services and certain other administrative services. For Growth
and Income Fund, Equity Series and Ultra Fund this fee is equal to 2% of the
first $10 million of the average daily closing value of each Fund's net assets,
1 1/2% of the next $20 million, and 1% of the remaining net assets of the Fund
for the fiscal year. For Global Series this fee is equal to 2% of the first $70
million of the average daily closing value of the Series' net assets and 1 1/2%
of the remaining average net assets of the Series for the fiscal year.
Additionally, SMC agrees to assume all of the Funds' expenses, except for its
fee and the expenses of interest, taxes, brokerage commissions and extraordinary
items and Class B distribution fees. SMC also serves as Investment Advisor to
the Asset Allocation Series, and accordingly receives a fee equal to 1% of the
average net assets of this Series.
SMC also acts as the administrative agent and transfer agent for the Asset
Allocation Series, and as such performs administrative functions, transfer
agency and dividend disbursing services, and the bookkeeping, accounting and
pricing functions for the Series. For these services, the Investment Manager
receives an administrative fee equal to .045% of the average daily net assets of
the Series plus the greater of .10% of its average net assets or (i) $45,000 in
the year ending June 1, 1997; and (ii) $60,000 thereafter. For transfer agent
services, SMC is paid an annual fixed charge per account as well as a
transaction fee for all shareholder and dividend payments.
SMC pays a Sub-Advisor, Lexington Management Corporation (LMC), an annual
fee in an amount equal to .50% of the average daily net assets of Global Series,
for investment advisory and certain administrative services provided to the
Global Series. SMC pays Templeton/Franklin Investment Services, Inc. for
research provided to the Asset Allocation Series, an annual fee equal to .30% of
the first $50 million of the average net assets of the Asset Allocation Series
invested in equity securities and .25% of the average equity security assets in
excess of $50 million. SMC also pays Meridian Management Corporation for
research provided to the Asset Allocation Series an annual fee equal to .20% of
the average net assets of that Series. SMC has agreed to limit the total
expenses of the Asset Allocation Series to 2% of the average net assets,
excluding 12b-1 fees.
For the Asset Allocation Series, SMC and Meridian Management Corporation
have agreed to waive their portions of the management fees to December 31, 1996.
The Funds have adopted Distribution Plans related to the offering of Class
B shares pursuant to Rule 12b-1 under the Investment Company Act of 1940. The
Plans provide for payments at an annual rate of 1.0% of the average net assets
of each Fund's Class B shares.
Security Distributors, Inc. (SDI), a wholly-owned subsidiary of SMC and the
national distributor for the Funds, received net underwriting commissions after
allowances to brokers and dealers in the amounts presented in the following
table:
ASSET
GROWTH AND EQUITY GLOBAL ALLOCATION ULTRA
INCOME FUND SERIES SERIES SERIES FUND
-----------------------------------------------------------
SDI underwriting $7,615 $107,976 $3,907 $911 $9,163
Broker/Dealer $30,541 $761,334 $25,565 $6,482 $33,172
Certain officers and directors of the Funds are also officers and/or
directors of Security Benefit Life Insurance Company and its subsidiaries, which
include SMC and SDI.
3. FEDERAL INCOME TAX MATTERS
For federal income tax purposes, the amounts of unrealized appreciation
(depreciation) at September 30, 1996, were as follows:
ASSET
GROWTH AND EQUITY GLOBAL ALLOCATION ULTRA
INCOME FUND SERIES SERIES SERIES FUND
-------------------------------------------------------------
Gross unrealized
appreciation $15,608,749 $173,772,495 $2,757,579 $266,330 $17,462,661
Gross unrealized
depreciation (386,747) (1,096,900) (734,627) (140,252) (397,738)
-------------------------------------------------------------
Net unrealized
appreciation $15,222,002 $172,675,595 $2,022,952 $126,078 $17,064,923
=============================================================
The Growth and Income Fund, Equity Series, Global Series and Ultra Fund hereby
respectively designate $959,581, $25,710,137, $19,397, and $6,430,082 as capital
gain dividends paid during the fiscal year ended September 30, 1996, for the
purpose of the dividends paid deduction on each Fund's federal income tax
return.
- --------------------------------------------------------------------------------
32
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
4. INVESTMENT TRANSACTIONS
Investment transactions for the year ended September 30, 1996, (excluding
overnight investments and short-term commercial paper) are as follows:
ASSET
GROWTH AND EQUITY GLOBAL ALLOCATION ULTRA
INCOME FUND SERIES SERIES SERIES FUND
-----------------------------------------------------------------
Purchases $47,200,987 $353,045,127 $30,917,967 $5,247,673 $100,294,618
Proceeds
from sales
$47,075,606 $320,288,296 $31,561,347 $2,947,521 $105,246,179
5. FORWARD FOREIGN EXCHANGE CONTRACTS
At September 30, 1996, Global Series had the following open forward foreign
exchange contracts to sell currency (excluding foreign currency contracts used
for purchase and sale settlements):
UNREALIZED
SETTLEMENT CONTRACT CONTRACT CURRENT GAIN
CURRENCY DATE AMOUNT RATE RATE (LOSS)
- --------------------------------------------------------------------------------
French Franc 3-5-97 3,717,779 5.0379 5.11460 $11,067
Japanese Yen 10-11-97 93,628,967 105.6950 111.36000 45,064
Japanese Yen 1-6-97 9,067,305 106.4600 109.92000 2,681
Japanese Yen 1-6-97 81,674,489 107.7200 109.92000 15,175
Japanese Yen 1-6-97 1,204,051 107.4950 109.92000 247
New Zealand Dollar 4-1-97 771,335 0.6859 0.68656 (509)
-------
$73,725
6. FEDERAL TAX STATUS OF DIVIDENDS
The income dividends paid by the Funds are taxable as ordinary income on
the shareholder's tax return. The portion of ordinary income of dividends
(including net short-term capital gains) attributed to fiscal year ended
September 30, 1996, that qualified for the dividends received deductions for
corporate shareholders was 22%, 31%, 3%, 19% and 22% of the amount taxable as
ordinary income for Growth and Income Fund, Equity Series, Global Series, Asset
Allocation Series and Ultra Fund respectively, in accordance with the provisions
of the Internal Revenue Code.
- --------------------------------------------------------------------------------
33
<PAGE>
REPORT OF ERNST & YOUNG LLP INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
THE SHAREHOLDERS AND BOARD OF DIRECTORS
SECURITY GROWTH AND INCOME FUND, SECURITY EQUITY FUND, AND SECURITY ULTRA FUND
We have audited the accompanying balance sheets and statements of net
assets of Security Growth and Income Fund, Security Equity Fund (comprised of
the Equity, Global and Asset Allocation Series) and Security Ultra Fund (the
Funds) as of September 30, 1996, the related statements of operations for the
year then ended and statements of changes in net assets for each of the two
years in the period then ended of Security Growth and Income Fund, Security
Equity Series, Security Equity Global Series and Security Ultra Fund and the
statements of changes in net assets for the year then ended and for the period
June 1, 1995 (commencement of operations) to September 30, 1995 of Security
Equity Asset Allocation Series and financial highlights for each of the five
years in the period ended September 30, 1996. These financial statements and the
financial highlights are the responsibility of the Funds' management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of investments owned as of
September 30, 1996, by correspondence with the custodian. As to securities
relating to uncompleted transactions, we performed other audit procedures. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of the
Funds at September 30, 1996, and the results of their operations, changes in
their net assets and the financial highlights for the periods indicated above in
conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Kansas City, Missouri
November 1, 1996
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34
<PAGE>
THE SECURITY GROUP OF MUTUAL FUNDS
Security Growth and Income Fund
Security Equity Fund
* Equity Series
* Global Series
* Asset Allocation Series
Security Ultra Fund
Security Income Fund
* Corporate Bond Series
* U.S. Government Series
* Limited Maturity Bond Series
* Global Aggressive Bond Series
* High Yield Series
Security Tax-Exempt Fund
Security Cash Fund
This report is submitted for the general information of the shareholders of the
Funds. The report is not authorized for distribution to prospective investors in
the Funds unless preceded or accompanied by an effective prospectus which
contains details concerning the sales charges and other pertinent information.
SECURITY FUNDS
OFFICERS AND DIRECTORS
DIRECTORS
- ---------
Willis A. Anton
Donald A. Chubb, Jr.
John D. Cleland
Donald L. Hardesty
Penny A. Lumpkin
Mark L. Morris, Jr., D.V.M.
Jeffrey B. Pantages
Hugh L. Thompson, Ph.D.
OFFICERS
- --------
John D. Cleland, PRESIDENT
James R. Schmank, VICE PRESIDENT AND TREASURER
Mark E. Young, VICE PRESIDENT
Terry A. Milberger, VICE PRESIDENT, EQUITY FUND
Jane A. Tedder, VICE PRESIDENT
Greg A. Hamilton, ASSISTANT VICE PRESIDENT
Cindy L. Shields, ASSISTANT VICE PRESIDENT
Thomas A. Swank, ASSISTANT VICE PRESIDENT
Amy J. Lee, SECRETARY
Christopher D. Swickard, ASSISTANT SECRETARY
Brenda M. Luthi, ASSISTANT TREASURER AND ASSISTANT SECRETARY
BULK RATE
U.S. POSTAGE PAID
[SDI LOGO] TOPEKA, KS
PERMIT NO. 385
700 SW HARRISON ST.
TOPEKA, KS 66636-0001
(913) 295-3127
(800) 888-2461
