SECURITY FUNDS
ANNUAL REPORT
SEPTEMBER 30, 1997
o Security Growth and Income Fund
o Security Equity Fund
- Equity Series
- Global Series
- Asset Allocation Series
- Social Awareness Series
- Value Series
o Security Ultra Fund
SECURITY DISTRIBUTORS, INC.
[LOGO] A MEMBER OF THE SECURITY BENEFIT
GROUP OF COMPANIES
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SECURITY FUNDS
PRESIDENT'S COMMENTARY
NOVEMBER 15, 1997
To Our Shareholders:
The fiscal year ended September 30 proved to be another extremely rewarding year
for investors in equity oriented funds. Shareholders in all the series
experienced absolute returns well above historic averages, with performance
varying on differing investment objectives. Please read the portfolio managers'
letters which follow for more detail about performance in their individual
series.
IMPROVING GLOBAL ECONOMIC PICTURE
The global economic backdrop for investors was perhaps the most favorable of any
time in the last 30 years. With the United States as the only world superpower,
the geopolitical environment produced steady progress toward expansion of
democracy and the free market system around the world. Economic globalization
has resulted in the most competitive marketplace in history, forcing U.S.
companies to focus on productivity improvement rather than price increases to
produce record levels of profit growth. Reduced global inflation continued to
encourage lower interest rates and the financial markets responded as one would
expect from such a bullish scenario.
We continue to believe that the picture remains bright and the potential for
further gains in the markets lie ahead in the years to come. The global picture
on balance continues to be one which should remain favorable for the markets.
Concerns about high valuation levels for equities should ease if, as we expect,
long-term interest rates continue to decline in response to favorable global
inflation conditions. We believe that the productivity improvement story still
has an extended life and will enable companies to generate further earnings
gains in the years ahead.
OUR VIEW OF THE MARKETS IN THE MONTHS AHEAD
We expect the markets to respond positively to both lower interest rates and
continued improvement in corporate earnings. With continuing strong money flows
from investors into equity mutual fund portfolios, we should have ample
opportunity for further market moves to the upside. We would not, however,
expect total returns to be of the magnitude of those produced the last three
years. On a further cautionary note we expect market volatility to be extremely
high by historical standards and suggest investors continue to focus on their
long-term investment plans in order to keep from being distracted by short-term
events.
As always, we appreciate your confidence in our investment professionals. We
invite your comments and questions at any time.
Sincerely,
/s/ John Cleland
President
1
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SECURITY GROWTH AND INCOME FUND
MANAGER'S COMMENTARY
NOVEMBER 15, 1997
To Our Shareholders:
The Growth and Income Fund returned 35.31% in the fiscal year ended September
30, very close to the average return of 35.76% for its peer group.1 Performance
was improved in the last half of the fiscal year after the emphasis was shifted
from well-known large capitalization companies to investment in midcap issues.
In addition, the fixed income portion of the portfolio was reduced from near 20%
to about 10% over that period.
THE STRUCTURE OF THE PORTFOLIO
The Growth and Income Fund held large weightings in specialty chemicals,
utilities, and technology stocks compared with its benchmark, the S&P 500 Index.
At the same time it was underweighted in energy and financial stocks. Stock
selection rather than sector selection, however, provided the most return in the
portfolio.
For example, Tandem Computers increased 170% in value after it was purchased by
Compaq Computer Corporation. Mylan Laboratories, Inc., the country's largest
producer of generic pharmaceuticals, increased over 80%, recovering from
distressed levels which had resulted from fears of too much competition in the
generic drug industry.
Other "winners" included Forcenergy, Inc., a small oil exploration and
production company with activity in Alaska and China. Its stock appreciated
sharply after the company announced a minor discovery in the Gulf of Mexico in
March and drew strong purchase recommendations by analysts in subsequent months.
McGraw-Hill Companies, Inc., performed well after gaining market share in the
recent textbook adoption cycle. Its subsidiary, Standard & Poor's, made a strong
contribution to earnings as a beneficiary of the strong market cycle.
THE BONDS IN THE PORTFOLIO
The fixed income holdings in the portfolio are all bonds which are rated BB or
B, the upper tier ratings in the high yield market. The portfolio was the
beneficiary of a number of upgrades or potential upgrades including bonds of
Seagull Energy Corporation and Heritage Media Corporation. The issuers of two of
our holdings, Regency Health Services, Inc. and TLC/Beatrice Holdings, made
tender offers for their bonds substantially above the levels at which we had
purchased them.
The bond portion of the portfolio is well diversified, with a large number of
companies represented. We continue to seek out companies with solid asset value
and quality management. These companies are generally considered takeover
candidates, but remain strong enough on their own merits that they could come to
market with initial public offerings of their own as well.
PLANS FOR THE COMING FISCAL YEAR
We anticipate that for at least the next few months the stock/bond balance in
the portfolio will remain close to the current levels. With stock indexes at
record high levels, it would be hard to find buying opportunities should we
decide to sell holdings in either part of the Fund. As in the past, we retain
the flexibility to add to or reduce fixed income positions as market conditions
dictate.
Jim Schier
Portfolio Manager
Tom Swank
Portfolio Manager
(1) Performance figures are based on Class A shares and do not reflect
deduction of the sales charge.
2
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SECURITY GROWTH AND INCOME FUND
MANAGER'S COMMENTARY (continued)
NOVEMBER 15, 1997
Security Growth and Income Fund
vs. S&P 500
[LINEAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]
Blended Index of 80%
S&P 500 and 20%
Security Growth Lehman Brothers Long BB
& Income Fund S&P 500 High Yield Bond Index
12/31/87 .... 7,797.81 7,737.00 8,216
3/31/88 ..... 8,242.31 8,191.45 8,683
6/30/88 ..... 8,516.36 8,731.68 9,190
9/30/88 ..... 8,398.14 8,765.43 9,267
12/31/88 .... 8,634.09 9,037.53 9,550
3/31/89 ..... 9,163.57 9,672.65 10,094
6/30/89 ..... 9,731.38 10,523.53 10,895
9/30/89 ..... 10,186.62 11,644.29 11,873
12/31/89 .... 10,397.92 11,883.53 12,084
3/31/90 ..... 10,009.53 11,524.48 11,813
6/30/90 ..... 10,072.70 12,249.36 12,504
9/30/90 ..... 9,597.34 10,561.09 10,980
12/31/90 .... 10,086.40 11,506.50 11,794
3/31/91 ..... 10,961.24 13,181.80 13,400
6/30/91 ..... 11,132.78 13,154.52 13,519
9/30/91 ..... 11,734.31 13,862.61 14,206
12/31/91 .... 12,291.54 15,021.68 15,289
3/31/92 ..... 12,058.61 14,638.33 15,137
6/30/92 ..... 11,940.75 14,926.04 15,414
9/30/92 ..... 12,281.57 15,388.86 15,923
12/31/92 .... 12,882.97 16,173.87 16,602
3/31/93 ..... 13,462.60 16,866.88 17,335
6/30/93 ..... 13,584.67 16,953.66 17,550
9/30/93 ..... 14,198.80 17,387.25 18,026
12/31/93 .... 13,936.03 17,789.61 18,457
3/31/94 ..... 13,599.78 17,110.97 17,816
6/30/94 ..... 12,746.07 17,180.83 17,852
9/30/94 ..... 13,114.66 18,026.75 18,634
12/31/94 .... 12,841.14 18,022.17 18,644
3/31/95 ..... 13,594.05 19,776.75 20,334
6/30/95 ..... 14,879.60 21,653.34 22,164
9/30/95 ..... 15,770.24 23,374.82 23,694
12/31/95 .... 16,404.77 24,767.78 24,958
3/31/96 ..... 17,519.85 26,114.05 26,056
6/30/96 ..... 18,211.31 27,293.02 27,042
9/30/96 ..... 18,973.42 28,128.03 27,898
12/31/96 .... 19,570.68 30,482.74 30,951
3/31/97 ..... 19,522.10 31,280.23 31,672
6/30/97 ..... 22,226.84 36,752.08 36,424
9/30/97 ..... 25,672.03 39,516.47 38,955
12/31/97
$10,000 OVER TEN YEARS
This chart assumes a $10,000 investment in Class A shares of Growth and Income
Fund on September 30, 1987, and reflects deduction of the 5.75% sales load. On
September 30, 1997, the value of your investment in Class A shares of the fund
(with dividends reinvested) would have grown to $25,672. By comparison, the same
$10,000 investment would have grown to $39,516 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 BB Composite Index. The same $10,000 investment in the
blended index would have grown to $38,955.
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
---------------
Mylan Laboratories, Inc. 5.0%
Harris Corporation 3.4%
Computer Sciences Corporation 3.3%
The Cheesecake Factory 3.1%
Equitable Resources, Inc. 2.7%
**At September 30, 1997
AVERAGE ANNUAL RETURNS
As of September 30, 1997
1 year 5 years 10 years
------ ------- --------
A Shares 35.31% 15.89% 10.54%
A Shares with sales charge 27.55% 14.54% 9.89%
B Shares 34.01% 15.18% N/A
(10-19-93)
(since inception)
B Shares with CDSC 29.01% 14.67% N/A
(10-19-93)
(since inception)
ONE YEAR RETURN INCREASES 15%
A Shares: 9/30/97 35.31%
9/30/96 20.31%
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.
3
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SECURITY EQUITY FUND-EQUITY SERIES
MANAGER'S COMMENTARY
NOVEMBER 15, 1997
TO OUR SHAREHOLDERS:
The environment for the stock market continued to be positive throughout the
fiscal year just completed. Inflation extended its downward progress, and
interest rates followed suit. These factors combined with moderate economic
growth to provide favorable market conditions in which stock prices could
appreciate. Security Equity Series gained 32.08% for the year, slightly below
the 33.52% average return of its peer group of funds.(1)
CONTRIBUTORS TO SOLID PERFORMANCE
Our emphasis on high quality, above-average earnings growth companies was the
primary reason for good performance in the Series. Large cap companies with a
portion of their earnings coming from international operations were the stars of
the stock markets during the first part of the fiscal year. Our overweighting in
financial stocks such as banks and insurance companies added to total return,
too, as these issues benefited from falling interest rates and low inflation.
We also had an above-average weighting in the health care sector, which was a
positive for performance as this sector continued to do well. Early in the year,
the expectation was that economic growth would slow, and we believed that
earnings of health care companies would remain stable in this slowing
environment.
WINNERS IN THE PORTFOLIO
Among stocks which contributed the most to total return was Microsoft
Corporation, up just over 100% during the fiscal year. Bristol-Myers Squibb
Company rose over 76% in the year as an improving new product outlook was
perceived as leading to an accelerating growth rate.
A new holding in the portfolio, Halliburton Company (a diversified energy
services firm), rose steadily along with other stocks in the oil services
industry. This is one of very few industries that had the ability to increase
prices in a very price-competitive environment as capacity has not increased and
consolidation of companies within the industry decreased competition.
ADVERSE EFFECTS ON PERFORMANCE
During the late months of the fiscal year, disturbances in the currency markets
caused the foreign earnings of some of the same large multinational companies
that had done well earlier, to be hurt because of the currency translations.
Stocks of midcap companies outperformed during this time because of their
smaller exposure to currency risks. Our underweighting in midcap issues hurt our
performance in these later months.
Specific earnings problems at Corning, Inc., a manufacturer of fiber for
fiberoptic cable, had a negative impact on portfolio return as Corning lowered
its estimate of its earnings growth. Similarly, analysts expected that earnings
disappointments were possible for Aetna, Inc. The concerns were based on medical
claims cost increases overwhelming gains in medical insurance premiums.
THE COMING YEAR
Expectations are for economic growth to moderate without sliding
into a recession in coming months. We believe inflation and interest rates
should continue to support a positive environment for stocks. Our emphasis will
remain on seeking companies with consistent above-average earnings growth. We
also plan to increase our investment in medium sized companies. Their relative
valuation and earnings growth potential at this time make them more attractive
than many larger companies.
Terry Milberger
Senior Portfolio Manager
(1) Performance figures are based on Class A shares and do not reflect
deduction of the sales charge.
4
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SECURITY EQUITY FUND-EQUITY SERIES
MANAGER'S COMMENTARY (continued)
NOVEMBER 15, 1997
PERFORMANCE
SECURITY EQUITY SERIES VS. S&P 500
[LINEAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]
S&P 500 Equity Series
12/31/87 ..... 7,737.00 7,324.67
3/31/88 ...... 8,191.45 7,822.46
6/30/88 ...... 8,731.68 8,106.92
9/30/88 ...... 8,765.43 8,409.15
12/31/88 ..... 9,037.53 8,728.25
3/31/89 ...... 9,672.65 9,457.13
6/30/89 ...... 10,523.53 10,404.67
9/30/89 ...... 11,644.29 11,898.85
12/31/89 ..... 11,883.53 11,413.68
3/31/90 ...... 11,524.48 11,102.38
6/30/90 ...... 12,249.36 11,807.95
9/30/90 ...... 10,561.09 10,002.52
12/31/90 ..... 11,506.50 10,885.65
3/31/91 ...... 13,181.80 12,753.74
6/30/91 ...... 13,154.52 12,776.80
9/30/91 ...... 13,862.61 13,422.56
12/31/91 ..... 15,021.68 14,720.94
3/31/92 ...... 14,638.33 14,897.70
6/30/92 ...... 14,926.04 14,695.69
9/30/92 ...... 15,388.86 14,796.69
12/31/92 ..... 16,173.87 16,298.23
3/31/93 ...... 16,866.88 17,296.62
6/30/93 ...... 16,953.66 17,161.72
9/30/93 ...... 17,387.25 18,160.11
12/31/93 ..... 17,789.61 18,681.85
3/31/94 ...... 17,110.97 18,013.45
6/30/94 ...... 17,180.83 17,712.67
9/30/94 ...... 18,026.75 18,514.74
12/31/94 ..... 18,022.17 18,203.12
3/31/95 ...... 19,776.75 19,972.88
6/30/95 ...... 21,653.34 21,959.33
9/30/95 ...... 23,374.82 23,656.84
12/31/95 ..... 24,767.78 25,197.00
3/31/96 ...... 26,114.05 27,234.70
6/30/96 ...... 27,293.02 28,410.30
9/30/96 ...... 28,128.03 29,546.70
12/31/96 ..... 30,482.74 30,910.18
3/31/97 ...... 31,280.23 31,124.85
6/30/97 ...... 36,752.08 36,405.34
9/30/97 ...... 39,516.47 39,024.12
12/31/97
$10,000 OVER TEN YEARS
This chart assumes a $10,000 investment in Class A shares of Equity Series on
September 30, 1987, and reflects deduction of the 5.75% sales load. On September
30, 1997, the value of your investment in Class A shares of the Series (with
dividends reinvested) would have grown to $39,024. By comparison, the same
$10,000 investment would have grown to $39,516 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
---------------
Tyco International, Ltd. 1.9%
Compaq Computer Corporation 1.8%
Bristol-Myers Squibb Company 1.8%
U.S. Industries, Inc. 1.7%
Omnicom Group, Inc. 1.7%
**At September 30, 1997
AVERAGE ANNUAL RETURNS
As of September 30, 1997
1 YEAR 5 YEARS 10 YEARS
------ ------- --------
A Shares 32.08% 21.40% 15.26%
A Shares with sales charge 24.48% 19.97% 14.59%
B Shares 30.85% 19.86% N/A
(10-19-93)
(since inception)
B Shares with CDSC 25.85% 19.41% N/A
(10-19-93)
(since inception)
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.
5
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SECURITY EQUITY FUND-GLOBAL SERIES
MANAGER'S COMMENTARY
NOVEMBER 15, 1997
[LOGO] SUBADVISOR - LEXINGTON
MANAGEMENT CORPORATION
TO OUR SHAREHOLDERS:
The Global Equity Series of Security Equity Fund returned 20.22% during the
fiscal year ended September 30, 1997.(1) The average global fund gained 24.63%
according to Lipper Analytical Services, Inc., while the benchmark Morgan
Stanley Capital International World Index rose 22.36%.
CONTRIBUTORS TO PERFORMANCE
The Series benefited from strength in European holdings, low weightings in Japan
and Southeast Asia, and strong stock selection in several smaller countries.
Nonetheless, an underweighting of U.S. stocks, which climbed an astounding
40.45% as measured by the S&P 500 Index, held performance down. The value bias
of the portfolio hurt as well, as value investing trailed momentum and growth
stock investing throughout the year.
STRONG PERFORMANCES IN WORLD EQUITY MARKETS
The global bull market continued in 1997 driven by liquidity and by companies'
greater emphasis on shareholder value. World bond market yields declined between
50 and 100 basis points, while a strong dollar enhanced earnings of many
businesses in Europe and Japan. The dollar rose 15.4% against the German mark
and 8.1% against the Japanese yen.
European markets performed extremely well for several reasons. Falling interest
rates, driven lower by weak economic activity as well as growing investor belief
in European Monetary Union, drove European equity prices higher. Profits also
surged in Europe due to an accelerated pace of corporate restructuring and a
strong U.S. dollar, which improved the earnings of export-driven companies. The
U.S. market powered ahead as a result of continued money flows into U.S. stocks
and bonds. Earnings often surprised on the upside as American profit
maximization continued. Japan remains the one troubled economic power
struggling, while corporate Japan still lacks a focus on shareholder value.
LOOKING AHEAD AT GLOBAL MARKETS
It is unlikely that 1998 will be as strong a year for stocks as 1997 proved to
be. Global liquidity may be less accommodative if interest rates rise in Europe
and the United States. European markets appear to offer the best investment
opportunity because of a relatively young restructuring story. We believe
profits should remain strong in Europe; however, U.S. profit growth may be dull.
It is hard to argue for a further rise in U.S. profitability when it is already
at historically lofty levels.
Inflation remains a major risk particularly on the wage front. Rising wages
could lead to higher interest rates as well as some profit margin contraction,
and this is not a good scenario for U.S. stocks. Japanese equities may at some
point present a buying opportunity if they continue to plummet.
OUR PLANS FOR THE COMING FISCAL YEAR
The Global Equity Series maintains its focus on individual stocks which offer
good value. Strong management with high incentives to create shareholder value
remains our major criterion for stock selection. Opportunities are still
plentiful, but as always, risk must be considered as well as reward. Weightings
in the Series continue to favor Europe over Japan and the U.S. because of the
stronger profit outlook there and increasing corporate activity in some sectors.
After the sharp fall in Asian markets, we added several export-driven companies
to the portfolio, in keeping with our focus on finding quality companies at
attractive prices. We expect this strategy to pay off in the long term.
Richard Saler
Portfolio Manager
Alan Wapnick
Portfolio Manager
(1) 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.
6
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SECURITY EQUITY FUND-GLOBAL SERIES
MANAGER'S COMMENTARY (continued)
NOVEMBER 15, 1997
PERFORMANCE
SECURITY GLOBAL SERIES VS. MORGAN
STANLEY CAPITAL INTERNATIONAL WORLD INDEX
[LINEAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]
MSCI Global Series
12/31/93 .... 10,093.00 10,283.02
3/31/94 ..... 10,452.39 9,971.70
6/30/94 ..... 10,993.54 10,132.08
9/30/94 ..... 11,011.45 10,443.40
12/31/94 .... 10,906.63 9,436.69
3/31/95 ..... 11,118.33 9,926.78
6/30/95 ..... 11,207.89 10,561.01
9/30/95 ..... 11,684.06 10,339.99
12/31/95 .... 12,166.47 11,330.95
3/31/96 ..... 12,527.21 12,018.59
6/30/96 ..... 12,734.65 11,839.21
9/30/96 ..... 12,728.36 12,277.69
12/31/96 .... 12,940.36 13,146.09
3/31/97 ..... 12,746.89 13,080.25
6/30/97 ..... 14,411.02 14,901.82
9/30/97 ..... 14,318.68 14,879.87
12/31/97
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, 1997, the value of your investment in Class A shares of the Series (with
dividends reinvested) would have grown to $14,880. By comparison, the same
$10,000 investment would have grown to $14,319 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.
TOP 5 HOLDINGS**
% of net assets
---------------
Bohler-Uddeholm AG 2.6%
Foster's Brewing Group, Ltd. 2.3%
Imax Corporation 2.0%
Jefferson Smurfit 1.9%
Deutsche Bank AG 1.9%
**At September 30, 1997
AVERAGE ANNUAL RETURNS
As of September 30, 1997
1 YEAR SINCE INCEPTION
------ ---------------
A Shares 20.22% 12.07%
(10-1-93)
A Shares with sales charge 13.29% 10.42%
(10-1-93)
B Shares 19.01% 11.26%
(10-19-93)
B Shares with CDSC 14.01% 10.70%
(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.
7
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SECURITY EQUITY FUND-ASSET ALLOCATION SERIES
MANAGER'S COMMENTARY
NOVEMBER 15, 1997
MERIDIAN
[LOGO] INVESTMENT
MANAGEMENT
SUBADVISOR: MERIDIAN INVESTMENT MANAGEMENT CORPORATION
TO OUR SHAREHOLDERS:
The Asset Allocation Series returned 19.00% over the last 12 months, relative to
a peer group average return of 21.22%.(1) A continued surge in global equity
markets has allowed asset allocation portfolios to post returns far in excess of
historical norms.
The strong performance of many asset allocation portfolios is due to their heavy
weightings in large capitalization U.S. stocks. This is evidenced by the high
correlation between the S&P 500 and the Lipper asset allocation peer group. As
the S&P 500 has gained approximately 40% the last 12 months, many asset
allocation portfolios have benefited. However, the reliance on U.S stocks in
asset allocation portfolios reduces the potential benefits of diversification
and exposes these portfolios to the risk of a falling U.S.
market.
DIVERSIFICATION IN THE PORTFOLIO
The Asset Allocation Series has demonstrated low correlation with the S&P 500, a
desirable portfolio characteristic for investors seeking diversification from a
typical domestic equity portfolio. The low correlation relative to the S&P 500
is due to the portfolio's composition, which can include foreign stocks, U.S.
stocks, U.S. bonds, gold stocks, and real estate investment trusts (REITs).
Throughout the fiscal year we maintained approximately 25% of the portfolio in
the U.S. stock market, and many industries we have owned have been market
leaders. The truck parts & supplies, trucking, and computer peripheral
industries have been among the best in the market the last twelve months.
Since valuations for the U.S. stock market have remained near historic highs,
the portfolio has invested in undervalued markets outside the U.S. Foreign
equity markets emphasized the last year include Japan, Germany, Italy, and
Belgium. All of these markets, with the exception of Japan, have outperformed
the U.S. market in local currency terms. Due to the strength of the dollar,
however, the full benefit of these market rallies was reduced when converted to
dollar terms.
THE ATTRACTIVENESS OF THE JAPANESE MARKET
Most equity markets in the last several years have appreciated far in excess of
their historical norms. Because of this, many markets are not the bargains they
once were. The exception to this is Japan. The Japanese market has yet to
recover from the decline it has seen through much of the 1990s. However, our
valuation measures suggest that the Japanese stock market is undervalued and a
compelling investment opportunity. With negative sentiment in the market, prices
near recent lows, and attractive valuations, we remain bullish and expect that
market to contribute to the appreciation of the Asset Allocation portfolio.
VALUE IN DEPRESSED GOLD STOCKS
The portfolio holds a small position in gold stocks, purchased in spite of
recent negative market sentiment. As a portfolio that seeks undervalued
investments, the Asset Allocation portfolio often owns securities that are out
of favor with the investing public. This negative market sentiment, however,
creates an opportunity for value investors as prices are pushed below their
intrinsic values. As gold prices were dropping to recent lows and the prices of
gold stocks were being punished, we purchased select gold issues. Initially a
drag on the portfolio, these holdings were among the market leaders as the
fiscal year ended.
Many asset categories and markets have experienced rapid appreciation in the
last year, and many valuations in some markets are stretched. Because of this we
will continue to be deliberate in our selection process and valuation
methodology.
Patrick Boyle
Portfolio Manager
(1) Performance figures are based on Class A shares and do not reflect
deduction of the sales charge. The Investment Manager waived a portion
of the Fund's management fee for the fiscal year ended September 30,
1997, and in the absence of such waiver the performance quoted would be
reduced.
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>
SECURITY EQUITY FUND-ASSET ALLOCATION SERIES
MANAGER'S COMMENTARY (continued)
NOVEMBER 15, 1997
PERFORMANCE
SECURITY ASSET ALLOCATION SERIES
VS. S&P 500
[LINEAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]
S&P 500 Meridian Blended Index Asset Allocation Series
6/30/95 ..... 10,235.00 10,083 9,500.47
9/30/95 ..... 11,049.00 10,607 9,934.02
12/31/95 .... 11,707.00 11,109 10,158.02
3/31/96 ..... 12,343.00 11,445 10,563.16
6/30/96 ..... 12,901.00 11,784 10,790.43
9/30/96 ..... 13,295.00 12,052 10,928.77
12/31/96 .... 14,408.00 12,800 11,496.36
3/31/97 ..... 14,785.00 12,909 11,568.73
6/30/97 ..... 17,372.00 14,391 12,375.13
9/30/97 ..... 18,679.00 15,083 13,005.77
12/31/97
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, 1997, the value of your investment in Class A shares of the Series
(with dividends reinvested) would have grown to $13,006. By comparison, the same
$10,000 investment would have grown to $18,679, 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 $15,083.
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.
TOP 5 EQUITY HOLDINGS**
% of net assets
---------------
Placer Dome, Inc. 2.0%
Barrick Gold Corporation 1.9%
Newmont Mining Corporation1 1.7%
Battle Mountain Gold Company 1.3%
Homestake Mining Company 1.2%
**At September 30, 1997
AVERAGE ANNUAL RETURNS
As of September 30, 1997
1 year Since Inception
------ ---------------
A Shares 19.00% 14.79% (6-1-95)
A Shares with sales charge 12.16% 11.92% (6-1-95)
B Shares 17.95% 13.70% (6-1-95)
B Shares with CDSC 12.95% 12.25% (6-1-95)
ONE YEAR RETURN INCREASES 8.99%
A Shares: 9/30/97 19.00%
9/30/96 10.01%
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>
SECURITY EQUITY FUND-SOCIAL AWARENESS SERIES
MANAGER'S COMMENTARY
NOVEMBER 15, 1997
To Our Shareholders:
The Social Awareness Series is off to a great start. The Series began operations
on November 1, 1996, and has returned 19.93% to its shareholders in this partial
year of operation.(1) Net assets have grown quickly to nearly $10 million.
THE SOCIAL SCREENS USED FOR THE SERIES
Portfolio managers for this type of fund have the responsibility of monitoring
the social records of companies held or considered for inclusion in the funds.
In the Social Awareness Series we seek out companies that substantially support
the communities in which they operate, have sound employee relations policies
and practices, have fair and unbiased employment practices, have strong family
benefits, and have taken positive steps to address environmental challenges.
In addition to these positive screens, we also include a list of six negative
screens. We look for companies that do not engage in the production of nuclear
energy, manufacturing of weapons systems, practices that pollute the
environment, production of alcoholic beverages, manufacturing of tobacco
products, or engage in gaming operations. We will be happy to provide more
details about our screening processes to any requesting shareholder .
STRONG PERFORMERS IN THE PORTFOLIO
Electronics manufacturer, Solectron Corporation, has risen 66% since the
inception of the Social Awareness Series. Five out of the company's eight senior
line executives are Asian American, including one woman. Located in Milpitas,
California, the company's workforce is remarkably diverse. It often publishes
information sheets for employees in six languages. Solectron encourages
self-directed work teams and provides substantial employee training. It was
recently announced that Solectron again won the Malcolm Baldridge National
Quality Award for performance excellence among U.S. companies. It's the first
company in the award's ten-year history to win for a second time.
Oxford Health Plans, Inc., up 60% since the portfolio's inception, provides
managed care health benefit plans in the northeastern United States. Its
SmokEnders subsidiary provides smoking cessation services. In 1996 the company
donated 2.2% of its average earnings for the past three years to charity, and
gave 42 computers to schools and community organizations in its service areas.
Oxford Health Plans believes strongly in incentive compensation and performance
awards for employees at all levels.
Coffee and expresso beverage retailer, Starbucks Corporation, is well known for
its strong social practices. The company is one of few U.S. firms that offers
part-time employees health benefits, stock options, and participation in its
401(k) plan. Even local communities of the countries where the company purchases
its coffee beans receive generous charitable support. Starbucks stock has risen
28% since it was included in the portfolio.
THE FUTURE FOR SOCIAL FUNDS
Demand for investments in the social awareness arena continues to grow. The
Social Investment Forum has just released a study on the growth of the industry
which shows that money invested in social funds has grown from $639 billion in
1995 to nearly $1.2 trillion currently. We are pleased to note that far more
corporations are willing to openly discuss their progress on social issues as
public demand has increased for them to do so. We look forward to combining
strong performance with social consciousness for shareholders in the Social
Awareness Series in the years ahead.
Cindy Shields
Portfolio Manager
(1) Performance figures are based on Class A shares, are not annualized and
do not reflect deduction of the sales charge. The Investment Manager
waived the Fund's management fee for the fiscal year ended September 30,
1997 and in the absence of such waiver the performance quoted would be
reduced.
10
<PAGE>
SECURITY EQUITY SOCIAL AWARENESS SERIES
MANAGER'S COMMENTARY (continued)
NOVEMBER 15, 1997
PERFORMANCE
SECURITY SOCIAL AWARENESS SERIES
VS. S&P 500 AND DOMINI SOCIAL INDEX
[LINEAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]
S&P 500 Domini Social Index Social Awareness Series
12/31/96 .... 10,548.00 10,553.42 9,440.95
3/31/97 ..... 10,824.00 10,912.97 9,007.54
6/30/97 ..... 12,718.00 12,857.55 10,433.42
9/30/97 ..... 13,675.00 13,937.09 11,300.25
This chart assumes a $10,000 investment in Class A shares of Social Awareness
Series on November 1, 1996, and reflects deduction of the 5.75% sales load. On
September 30, 1997, the value of your investment in Class A shares of the Series
(with dividends reinvested) would have grown to $11,300. By comparison, the same
$10,000 investment would have grown to $13,675 based on the S&P 500 Index's
performance and $13,937 based on the Domini Social Index.
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.
TOP 5 HOLDINGS**
% of net assets
---------------
Intel Corporation 3.4%
Microsoft Corporation 2.8%
Coca-Cola Company 2.6%
Merck & Company, Inc. 2.5%
Procter & Gamble, Inc. 2.1%
**At September 30, 1997
AVERAGE ANNUAL RETURNS
As of September 30, 1997
Since Inception
---------------
A Shares 19.93%
A Shares with sales charge 13.00%
B Shares 18.73%
B Shares with CDSC 13.73%
The performance data above represents past performance which is not predictive
of future results. The returns have been calculated from November 1, 1996 (date
of inception) to September 30, 1997 and are not annualized. 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 waived the management fee for the Series for the fiscal
year ended September 30, 1997. Performance figures would be lower if the maximum
sales charge and advisory fee were deducted.
11
<PAGE>
SECURITY EQUITY FUND-VALUE SERIES
MANAGER'S COMMENTARY
NOVEMBER 15, 1997
To Our Shareholders:
The Value Series of Security Equity Fund is off to an amazing start. >From its
inception May 1, 1997, through September 30, it returned 29.50%.(1) This
compares most favorably with the 20.39% same-period return of a group of 218
funds with a similar objective.
The portfolio is diversified across a broad variety of industries. The primary
reason for strong performance wasn't the choice of industries, it was instead
stock selection within those industries. The outperforming issues were mostly in
three sectors: health care, energy, and consumer staples.
SOME STOCKS PERFORMED EXCEPTIONALLY WELL
Leading the winning stocks was Tandem Computers, which was bought by Compaq
Computer Corporation in June and subsequently rose 170% in value. Another
outperformer was Mylan Laboratories, Inc., the largest producer of generic drugs
in the U.S. Prior to our purchase of the stock, Mylan's stock had declined in
value because of investors' fears that increasing competition in the generic
pharmaceuticals industry would erode its earnings. We believed that the company
had value greater than the price to which its stock had fallen, and were
rewarded after our purchase with an 80% return.
Canandaigua Brands, Inc., a company which produces and markets wines, beers and
distilled spirits, has generated a 60% return since we purchased it. The stock's
price had been depressed based on fears of higher grape costs. Canandaigua's
earnings results were strong and once these cost pressures subsided, the stock
price recovered. Other companies which have performed favorably in the portfolio
include Louisiana Land and Exploration Company, Forcenergy, Inc., and Corporate
Express, Inc.
It is interesting to note that among the top ten strongest-performing stocks in
the Value Series, only two were large capitalization companies over $5 billion
in size. The average asset size of the companies represented in the portfolio as
of September 30, was about $3.4 billion.
NOT ALL THE HOLDINGS WERE WINNERS
As you would expect, some of the portfolio holdings underperformed industry
averages. A small-cap company called Material Sciences Corporation had the most
significant negative impact on performance, declining 5% over the holding
period. Material Sciences is an industrial company with wide product lines that
capitalizes on its skills in metallurgy and chemistry to provide value-added
features to everyday products. Its second quarter earnings were disappointing
because sales were below expectations and manufacturing efficiencies that the
company had projected developed slower than planned. We still hold the stock
because of its strong propietary market positions in several areas such as the
manufacture of a film used in window glass to block various types of the sun's
rays, and a metal coating on the interior of automobile brakes to make them
quieter.
LOOKING AHEAD TO OUR FIRST FULL FISCAL YEAR
In the Value Series portfolio we look for undervalued individual stocks rather
than betting on the performance of particular industries. We are currently
seeing more attractive ideas in the small capitalization area, along with a few
occasionally in the large-cap arena. With the strong market advances we have
experienced in recent months, it is difficult to find undervalued issues. If we
have difficulty locating enough stocks that look relatively underpriced, we
anticipate that our focus will shift to emphasizing stable low-risk investments.
Jim Schier
Portfolio Manager
(1) Performance figures are based on Class A shares, are not annualized and
do not reflect deduction of the sales charge. The Investment Manager
waived the Fund's management fee for the fiscal year ended September 30,
1997, and in the absence of such waiver the performance quoted would be
reduced.
12
<PAGE>
SECURITY EQUITY FUND-VALUE SERIES
MANAGER'S COMMENTARY (continued)
NOVEMBER 15, 1997
PERFORMANCE
SECURITY VALUE SERIES
VS. S&P 500/BARRA VALUE INDEX
[LINEAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]
Value Series S&P 500/BARRA Value Index
5/31/97 .... 10,084.83 10,593
6/30/97 .... 10,386.43 10,980
7/31/97 .... 11,489.16 11,841
8/31/97 .... 11,555.14 11,282
9/30/97 .... 12,205.47 11,922
This chart assumes a $10,000 investment in Class A shares of Value Series on May
1, 1997, and reflects deduction of the 5.75% sales load. On September 30, 1997,
the value of your investment in Class A shares of the Series (with dividends
reinvested) would have grown to $12,205. By comparison, the same $10,000
investment would have grown to $11,922, based on the S&P 500 Index performance.
Comparison is also made to the S&P 500/BARRA Value Index. The same $10,000
investment in the S&P 500/BARRA Value Index would have grown to $11,922.
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.
TOP 5 HOLDINGS**
% of net assets
---------------
Angelica Corporation 3.8%
Computer Sciences Corporation 3.5%
Mylan Laboratories, Inc. 3.3%
Chiquita Brands International, Inc. 3.1%
Corporate Express, Inc. 3.1%
**At September 30, 1997
AVERAGE ANNUAL RETURNS
As of September 30, 1997
Since Inception
---------------
A Shares 29.50%
(5-1-97)
A Shares with sales charge 22.05%
(5-1-97)
B Shares 29.10%
(5-1-97)
B Shares with CDSC 24.10%
(5-1-97)
The performance data above represents past performance which is not predictive
of future results. The returns have been caluclated from May 1, 1997 (date of
inception) to September 30, 1997, and are not annualized. 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 waived the management fee for the Series for the fiscal year ended
September 30, 1997. Performance figures would be lower if the maximum sales
charge and advisory fee were deducted.
13
<PAGE>
SECURITY ULTRA FUND
MANAGER'S COMMENTARY
NOVEMBER 15, 1997
To Our Shareholders:
During the first half of the fiscal year, the emphasis on growth stocks held
back performance in the Ultra Fund as value-oriented issues outperformed their
growth counterparts. Our total return of 20.57% for the year ended September 30,
while very attractive, was less than the 26.88% average of our peer group of
funds.(1)
A BETTER SECOND HALF
Performance in the midcap sector improved in the second half of the fiscal year
as expectations for a slowdown in earnings of S&P 500 companies became a
reality. The strong U.S. dollar had a negative impact on larger companies, while
midsized firms with less exposure to foreign earnings, benefited.
The supply and demand ratio became better balanced in the second half, also. The
calendar of initial public offerings diminished while cash flows into mutual
funds remained strong. Passage of a capital gains tax cut gave a psychological
boost to midcap stocks during this period as well. Stocks of midsized companies
generally receive a smaller portion of their total return from dividends, which
are taxed as ordinary income rather than at the more favorable capital gains
levels.
AREAS OF STRONG PERFORMANCE
Stocks representing the financial sector in the Ultra Fund did especially well
in the year just completed. Our investments in this area were tailored primarily
around asset management firms, which gained because of the strong equity
markets. These included Franklin Resources, Inc., up 110% over the year, State
Street Corporation which rose 112%, and Charles Schwab Corporation, gaining 133%
during the period. Our investments in the oil field service company area of the
energy sector outperformed also. The companies advanced in share price as
drilling activity and demand for equipment increased. The capacity in the oil
field service area is less than in the late 1980's as companies have merged or
gone out of business. This enables the remaining firms to raise their prices, a
feat that other industries have found difficult in these price-competitive
times. Two of our stronger performers were ENSCO International, Inc., up 71%,
and Global Marine, Inc., returning 112%.
PLANS FOR THE MONTHS AHEAD
We believe that midcap stocks still have upside price potential, although a
"breather" from the upward market movement would not be surprising. In general,
midcap valuations remain lower than their large-cap counterparts, and growth
prospects for the sector are favorable. When the currency markets are extremely
volatile, those midcap companies with smaller portions of earnings coming from
overseas should stay in favor with investors. Finally, when earnings of the
Standard and Poor's 500 stocks show signs of slowing, the growth component of
the midcap sector should gain as investors seek faster earnings growth.
Cindy Shields
Portfolio Manager
(1) Performance figures are based on Class A shares and do not reflect
deduction of the sales charge.
14
<PAGE>
SECURITY ULTRA FUND
MANAGER'S COMMENTARY (continued)
NOVEMBER 15, 1997
PERFORMANCE
SECURITY ULTRA FUND
VS. S&P MIDCAP 400
[LINEAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]
S&P Midcap 400 Security Ultra Fund
12/31/87 .... 7,820.77 6,285.32
3/31/88 ..... 8,839.42 7,134.37
6/30/88 ..... 9,325.29 7,794.74
9/30/88 ..... 9,203.14 7,452.76
12/31/88 .... 9,452.84 7,730.71
3/31/89 ..... 10,355.07 8,026.67
6/30/89 ..... 11,391.35 8,358.15
9/30/89 ..... 12,634.49 9,340.77
12/31/89 .... 12,812.45 8,654.28
3/31/90 ..... 12,412.89 8,616.32
6/30/90 ..... 13,149.55 9,590.56
9/30/90 ..... 10,811.73 5,642.99
12/31/90 .... 12,156.85 6,280.08
3/31/91 ..... 14,947.18 8,581.88
6/30/91 ..... 14,837.45 8,169.42
9/30/91 ..... 16,250.45 8,941.13
12/31/91 .... 18,247.00 10,031.64
3/31/92 ..... 18,154.77 10,127.04
6/30/92 ..... 17,589.99 8,709.53
9/30/92 ..... 18,273.82 9,077.55
12/31/92 .... 20,420.52 10,805.04
3/31/93 ..... 21,089.64 10,890.01
6/30/93 ..... 21,581.62 10,847.52
9/30/93 ..... 22,668.00 11,513.09
12/31/93 .... 23,272.13 11,878.08
3/31/94 ..... 22,389.26 11,227.23
6/30/94 ..... 21,573.66 10,218.40
9/30/94 ..... 23,034.67 11,097.06
12/31/94 .... 22,440.35 11,091.44
3/31/95 ..... 24,276.53 11,473.33
6/30/95 ..... 26,394.03 12,237.10
9/30/95 ..... 28,970.11 13,615.23
12/31/95 .... 29,383.93 13,231.44
3/31/96 ..... 31,192.81 14,164.31
6/30/96 ..... 32,091.02 15,325.63
9/30/96 ..... 33,025.30 15,706.39
12/31/96 .... 35,025.97 15,616.47
3/31/97 ..... 34,505.64 14,386.82
6/30/97 ..... 39,577.13 16,415.73
9/30/97 ..... 45,941.47 18,936.50
12/31/97
$10,000 OVER TEN YEARS
This chart assumes a $10,000 investment in Class A shares of Ultra Fund on
September 30, 1987, and reflects deduction of the 5.75% sales load. On September
30, 1997, the value of your investment in Class A shares of the fund (with
dividends reinvested) would have grown to $18,937. In comparison, the same
$10,000 investment would have grown to $45,941 based on the S&P Midcap'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. 2.9%
Coca-Cola Enterprises, Inc. 2.6%
State Street Corporation 2.4%
Charles Schwab Corporation 2.3%
SunAmerica, Inc. 2.1%
**At September 30, 1997
AVERAGE ANNUAL RETURNS
As of September 30, 1997
1 YEAR 5 YEARS 10 YEARS
------ ------- --------
A Shares 20.57% 14.96% 6.90%
A Shares with sales charge 13.68% 13.59% 6.27%
B Shares 19.58% 11.91% N/A
(10-19-93)
(since inception)
B Shares with CDSC 14.58% 11.36% N/A
(10-19-93)
(since inception)
ONE YEAR RETURN INCREASES 5.21%
A Shares: 9/30/97 20.57%
9/30/96 15.36%
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.
15
<PAGE>
STATEMENTS OF NET ASSETS
SEPTEMBER 30, 1997
SECURITY GROWTH AND INCOME FUND
PRINCIPAL
AMOUNT OR
NUMBER MARKET
PREFERRED STOCKS OF SHARES VALUE
- --------------------------------------------------------------------------------
BANKING AND CREDIT - 1.0%
California Federal Bank ...................... 8,250 $ 941,015
COMMUNICATION - 0.2%
Cablevision Systems Corporation .............. 2,193 240,172
ENTERTAINMENT - 0.4%
Time Warner, Inc. ............................ 322 367,526
PUBLISHING & PRINTING - 0.3%
K-III Communications Corporation ............. 3,000 319,500
----------
Total preferred stocks - 1.9% ............... 1,868,213
TRUST PREFERRED SECURITIES(1)
FINANCE - 0.3%
S I Financing, Inc., 9.50% - 2026 ............ 10,000 268,125
CORPORATE BONDS
AEROSPACE & DEFENSE - 0.2%
Burke Industries, Inc.,
10.00% - 2007 ............................... $ 200,000 204,500
BANKING & CREDIT - 0.4%
BF Saul REIT, 11.625% - 2002 ................. $ 250,000 269,062
Bay View Capital Corporation,
9.125% - 2007 ............................... $ 100,000 103,250
----------
372,312
OFFICE EQUIPMENT & SUPPLIES - 0.1%
Knoll, Inc., 10.875% - 2006 .................. $ 63,000 70,245
CHEMICALS - 0.3%
Envirodyne Industries, Inc.,
12.00% - 2000 ............................... $ 250,000 274,687
COMMUNICATIONS - 1.6%
Albritton Communications Company,
9.75% - 2007 ................................ $ 125,000 124,375
Century Communications Corporation,
9.50% - 2005 ................................ $ 250,000 261,250
CF Cable TV, Inc., 11.625% - 2005 ............ $ 200,000 230,500
Comcast Corporation, 9.125% - 2006 ........... $ 385,000 413,394
Heritage Media Corporation,
8.75% - 2006 ................................ $ 100,000 107,625
Rogers Cablesystems Ltd.,
9.625% - 2002 ............................... $ 250,000 265,000
Rogers Communications, Inc.,
9.125% - 2006 ............................... $ 200,000 205,000
----------
1,607,144
DIVERSIFIED - 0.3%
Sequa Corporation, 9.375% - 2003 ............. $ 250,000 $ 261,875
ELECTRIC & GAS COMPANIES - 0.5%
AES Corporation, 10.25% - 2006 ............... 250,000 274,375
Cal Energy Company, Inc.,
9.50% - 2006 ................................ 200,000 215,500
----------
489,875
ENTERTAINMENT - 0.4%
Harrah's Operating, Inc.,
8.75% - 2000 ................................ 400,000 411,500
FINANCE - 0.5%
Dollar Financial Group, Inc.,
10.875% - 2006 .............................. 300,000 323,250
Homeside, Inc., 11.25% - 2003 ................ 121,000 142,629
----------
465,879
FOOD & BEVERAGE TRADE - 0.5%
Cott Corporation, 9.375% - 2005 .............. 250,000 261,875
Delta Beverage Group,
9.75% - 2003 ................................ 250,000 262,813
----------
524,688
HOSPITAL MANAGEMENT - 0.8%
Regency Health Services, Inc.,
9.875% - 2002 ............................... 475,000 526,062
Tenet Healthcare Corporation,
10.125% - 2005 .............................. 250,000 273,437
----------
799,499
INDUSTRIAL PRODUCT - 0.3%
Shop Vac Corporation,
10.625% - 2003 .............................. 250,000 269,688
MANUFACTURING - 0.3%
AGCO Corporation, 8.50% - 2006 ............... 250,000 259,375
OIL & GAS COMPANIES - 0.3%
Seagull Energy Corporation,
8.625% - 2005 ............................... 250,000 261,875
PUBLISHING & PRINTING - 0.2%
Golden Books Publishing, Inc.,
7.65% - 2002 ................................ 250,000 237,500
REFINERY - 0.3%
Crown Central Petroleum Corporation,
10.875% - 2005 .............................. 250,000 262,812
RESTAURANTS - 0.5%
Carrols Corporation, 11.50% - 2003 ........... 475,000 507,063
See accompanying notes
16
<PAGE>
STATEMENTS OF NET ASSETS
SEPTEMBER 30, 1997
SECURITY GROWTH AND INCOME FUND (continued)
PRINCIPAL
AMOUNT OR
NUMBER MARKET
CORPORATE BONDS (continued) OF SHARES VALUE
- --------------------------------------------------------------------------------
RETAIL - SPECIALTY - 0.1%
Zale's Corporation, 8.50% - 2007 ............. $ 100,000 $ 100,125
STEEL & METAL PRODUCTS - 0.1%
AK Steel Corporation,
9.125% - 2006 .............................. $ 125,000 132,500
TEXTILES - 0.5%
Delta Mills, Inc., 9.625% - 2007 ............. $ 100,000 100,375
Pillowtex Corporation, 10.00% - 2006 ......... $ 125,000 131,875
Westpoint Stevens, Inc.,
9.375% - 2005 ............................... $ 250,000 263,125
----------
495,375
----------
Total corporate bonds - 8.2% ................ 8,008,517
COMMON STOCKS
BANKS - MAJOR REGIONAL - 3.8%
Bank Of New York Company, Inc. ............... 20,000 960,000
Northern Trust Corporation ................... 20,000 1,182,500
Wells Fargo & Company ........................ 5,800 1,595,000
----------
3,737,500
CHEMICALS - BASIC - 1.3%
Praxair, Inc. ................................ 25,000 1,279,687
CHEMICALS - SPECIALTY - 3.4%
Dexter Corporation ........................... 40,000 1,602,500
Materials Sciences Corporation* .............. 28,000 399,000
Minerals Technologies, Inc. .................. 30,000 1,336,875
----------
3,338,375
COMMUNICATION EQUIPMENT - 4.6%
ANTEC Corporation* ........................... 100,000 1,175,000
Harris Corporation ........................... 72,000 3,294,000
----------
4,469,000
COMPUTER HARDWARE - 0.6%
Compaq Computer Corporation* ................. 8,000 598,000
COMPUTER PERIPHERALS - 0.5%
Seagate Technology, Inc.* .................... 13,200 476,850
COMPUTER SOFTWARE/SERVICES - 5.6%
Computer Sciences Corporation* ............... 46,000 3,254,500
DST Systems, Inc.* ........................... 60,000 2,220,000
----------
5,474,500
ELECTRIC COMPANIES - 2.0%
Scana Corporation ............................ 40,000 1,002,500
Wisconsin Energy Corporation ................. 36,000 936,000
----------
1,938,500
ELECTRONICS - SEMICONDUCTORS - 1.1%
Atmel Corporation* ........................... 30,000 $1,093,125
ELECTRONICS - INSTRUMENTATION - 1.6%
E G & G, Inc. ................................ 22,000 455,125
Perkin-Elmer Corporation ..................... 15,000 1,095,938
----------
1,551,063
FINANCIAL - DIVERSE - 1.6%
Capital One Financial Corporation ............ 34,000
1,555,500
FOODS - 1.7%
Chiquita Brands International, Inc. .......... 105,000
1,693,125
HEALTH CARE - SPECIALIZED SERVICES - 1.0%
Allegiance Corporation ....................... 30,000 930,000
HOUSEHOLD FURNISHINGS & APPLIANCES - 1.8%
Leggett & Platt, Inc. ........................ 40,000 1,782,500
INSURANCE - LIFE/HEALTH - 1.0%
AFLAC, Inc. .................................. 18,000 976,500
INSURANCE - PROPERTY - 2.9%
Allstate Corporation ......................... 15,000 1,205,625
Leucadia National Corporation ................ 30,000 1,031,250
W.R. Berkley Corporation ..................... 15,000 645,938
----------
2,882,813 IRON & STEEL - 0.7%
Cleveland-Cliffs, Inc. ....................... 15,000 654,375
LEISURE TIME PRODUCTS - 2.6%
Hasbro, Inc. ................................. 50,000 1,406,250
Mattel, Inc. ................................. 35,000 1,159,375
----------
2,565,625
LODGING - HOTELS - 1.4%
Carnival Corporation (Cl. A) ................. 30,000 1,387,500
MANUFACTURING - DIVERSIFIED - 1.8%
U.S. Industries, Inc. ........................ 60,000 1,740,000
MEDICAL PRODUCTS & SUPPLIES - 1.9%
ATLUltrasound, Inc.* ......................... 20,000 935,000
Sunrise Medical, Inc.* ....................... 60,000 937,500
----------
1,872,500
METALS & MINING - 1.0%
Cyprus Amax Minerals Company ................. 40,000 960,000
NATURAL GAS - 7.3%
Coastal Corporation .......................... 25,000 1,531,250
Eastern Enterprises .......................... 48,000 1,791,000
Equitable Resources, Inc. .................... 85,200 2,683,800
People's Energy Corporation .................. 30,000 1,130,625
----------
7,136,675
See accompanying notes
17
<PAGE>
STATEMENTS OF NET ASSETS
SEPTEMBER 30, 1997
SECURITY GROWTH AND INCOME FUND (continued)
NUMBER MARKET
COMMON STOCKS (continued) OF SHARES VALUE
- --------------------------------------------------------------------------------
OFFICE EQUIPMENT & SUPPLIES - 1.8%
Corporate Express, Inc.* ..................... 82,000 $1,732,250
OIL & GAS - EXPLORATION & PRODUCTION - 7.7%
Forcenergy, Inc.* ............................ 60,000 2,328,750
Louisiana Land & Exploration
Company ..................................... 20,000 1,566,250
Noble Affiliates, Inc. ....................... 24,000 1,074,000
YPF Sociedad Anomima ADR ..................... 70,000 2,581,250
----------
7,550,250
PHARMACEUTICALS - 8.2%
Mylan Laboratories, Inc. ..................... 220,000 4,936,250
SmithKline Beecham PLC ADR ................... 30,000 1,466,250
Teva Pharmaceutical Industries,
Ltd., ADR ................................... 30,000 1,672,500
----------
8,075,000
PUBLISHING - 0.7%
McGraw-Hill Companies, Inc. .................. 10,000 676,875
PUBLISHING - NEWSPAPER - 4.1%
E.W. Scripps Company ......................... 60,000 2,636,250
Tribune Company .............................. 25,000 1,332,812
----------
3,969,062
RAILROADS - 1.2%
Canadian Pacific, Ltd. ....................... 40,000 1,182,500
RESTAURANTS - 3.1%
The Cheesecake Factory* ...................... 111,500 3,073,219
RETAIL - SPECIALTY - 4.1%
AutoZone, Inc.* .............................. 75,000 2,250,000
Toys "R" Us, Inc.* ........................... 50,000 1,775,000
----------
4,025,000
SERVICES - ADVERTISING / MARKETING - 2.6%
Acxiom Corporation* .......................... 60,000 1,046,250
Omnicom Group, Inc. .......................... 20,000 1,455,000
----------
2,501,250
SERVICES - COMMERCIAL & CONSUMER - 2.6%
Angelica Corporation ......................... 130,000 2,583,750
SERVICES - DATA PROCESSING - 1.4%
First Data Corporation ....................... 38,000 1,427,375
TRUCKS & PARTS - 0.8%
Titan International, Inc. .................... 40,800 816,000
----------
Total common stocks - 89.5% ................. 87,706,244
----------
Total investments - 99.9% ................... $97,851,099
Other assets, less liabilities - 0.1% ....... 137,329
----------
Total net assets - 100.0% ................... $97,988,428
==========
SECURITY EQUITY FUND - EQUITY SERIES
COMMON STOCKS
AEROSPACE / DEFENSE - 0.9%
Boeing Company ............................... 50,000 $2,721,875
Lockheed Martin Corporation .................. 50,000 5,331,250
----------
8,053,125
AGRICULTURAL PRODUCTS - 0.9%
Archer-Daniels-Midland Company ............... 315,000 7,540,313
ALUMINUM - 1.0%
Aluminum Company of America .................. 100,000 8,200,000
BANKS - MAJOR REGIONAL - 4.1%
Bank of New York Company, Inc. ............... 200,000 9,600,000
Northern Trust Corporation ................... 200,000 11,825,000
Norwest Corporation .......................... 120,000 7,350,000
Wells Fargo & Company ........................ 20,000 5,500,000
----------
34,275,000
BANKS - MONEY CENTER - 1.5%
Chase Manhattan Corporation .................. 110,000 12,980,000
BEVERAGES - SOFT DRINK - 1.2%
PepsiCo, Inc. ................................ 260,000 10,546,250
CHEMICALS - BASIC - 1.2%
Praxair, Inc. ................................ 200,000 10,237,500
CHEMICALS - DIVERSIFIED - 1.4%
BF Goodrich Company .......................... 100,000 4,525,000
Monsanto Company ............................. 200,000 7,800,000
----------
12,325,000
CHEMICALS - SPECIALTY - 0.5%
Nalco Chemical Company ....................... 95,000 3,805,938
COMPUTER HARDWARE - 3.0%
Compaq Computer Corporation* ................. 200,000 14,950,000
International Business Machines
Corporation ................................. 100,000 10,593,750
----------
25,543,750
See accompanying notes
18
<PAGE>
STATEMENTS OF NET ASSETS
SEPTEMBER 30, 1997
SECURITY EQUITY FUND-EQUITY SERIES (continued)
NUMBER MARKET
COMMON STOCKS (continued) OF SHARES VALUE
- --------------------------------------------------------------------------------
COMPUTERS - NETWORKING - 1.2%
3Com Corporation* ............................ 60,000 $3,075,000
Cisco Systems, Inc.* ......................... 100,000 7,306,250
Wang Laboratories, Inc. Warrants ............. 2,369 15,398
----------
10,396,648
COMPUTER SOFTWARE/SERVICES - 3.4%
BMC Software, Inc.* .......................... 135,000 8,741,250
Computer Sciences Corporation* ............... 100,000 7,075,000
Microsoft Corporation* ....................... 100,000 13,231,250
----------
29,047,500
ELECTRICAL EQUIPMENT - 2.3%
Emerson Electric Company ..................... 100,000 5,762,500
General Electric Company ..................... 200,000 13,612,500
----------
19,375,000
ELECTRONICS - SEMICONDUCTORS - 2.0%
Intel Corporation ............................ 90,000 8,308,125
Linear Technology Corporation ................ 70,000 4,812,500
Xilinx, Inc.* ................................ 70,000 3,543,750
----------
16,664,375
ELECTRONICS - INSTRUMENTATION - 1.0%
Perkin-Elmer Corporation ..................... 120,000 8,767,500
FINANCIAL - DIVERSE - 2.4%
Federal National Mortgage
Association ................................. 230,000 10,810,000
Federal Home Loan Mortgage
Corporation ................................. 270,000 9,517,500
----------
20,327,500
FOODS - 2.6%
Conagra, Inc. ................................ 160,000 10,560,000
CPC International, Inc. ...................... 120,000 11,115,000
----------
21,675,000
HEALTH CARE - DIVERSE - 3.1%
American Home Products Corporation ........... 150,000 10,950,000
Bristol-Myers Squibb Company ................. 180,000 14,895,000
----------
25,845,000
HOUSEHOLD PRODUCTS - 3.5%
Colgate-Palmolive Company .................... 150,000 10,453,125
Fort James Corporation ....................... 200,000 9,162,500
Procter & Gamble Company ..................... 150,000 10,359,375
----------
29,975,000
INSURANCE - LIFE/HEALTH - 0.5%
Equitable Companies, Inc. .................... 108,500 4,455,281
INSURANCE - MULTI-LINE - 2.5%
American International Group, Inc. ........... 120,000 $12,382,500
Hartford Financial Services Group,
Inc ......................................... 100,000 8,606,250
----------
20,988,750
INSURANCE - PROPERTY - 4.5%
Allstate Corporation ......................... 175,000 14,065,625
Chubb Corporation ............................ 160,000 11,370,000
St. Paul Companies, Inc. ..................... 150,000 12,234,375
----------
37,670,000
LODGING - HOTELS - 1.3%
Carnival Corporation (Cl. A) ................. 240,000 11,100,000
MANUFACTURING - DIVERSIFIED - 7.8%
AlliedSignal, Inc. ........................... 320,000 13,600,000
Crane Company ................................ 200,000 8,225,000
Textron, Inc. ................................ 60,000 3,900,000
Tyco International, Ltd. ..................... 192,532 15,799,657
U.S. Industries, Inc. ........................ 510,000 14,790,000
United Technologies Corporation .............. 115,000 9,315,000
----------
65,629,657
MEDICAL PRODUCTS & SUPPLIES - 4.5%
Baxter International, Inc. ................... 200,000 10,450,000
Becton, Dickinson & Company .................. 200,000 9,575,000
Boston Scientific Corporation* ............... 120,000 6,622,500
Medtronic, Inc. .............................. 240,000 11,280,000
----------
37,927,500
NATURAL GAS - 1.2%
Coastal Corporation .......................... 170,000 10,412,500
OIL - INTERNATIONAL - 5.0%
Amoco Corporation ............................ 100,000 9,637,500
Mobil Corporation ............................ 140,000 10,360,000
Royal Dutch Petroleum Company
NY Shares ................................... 200,000 11,100,000
Texaco, Inc. ................................. 180,000 11,058,750
----------
42,156,250
OIL & GAS - DRILLING & EQUIPMENT - 2.1%
Halliburton Company .......................... 170,000 8,840,000
Schlumberger, Ltd. ........................... 110,000 9,260,625
----------
18,100,625
OIL & GAS - EXPLORATION & PRODUCTION - 1.4%
Louisiana Land & Exploration Company ......... 150,000 11,746,875
See accompanying notes
19
<PAGE>
STATEMENTS OF NET ASSETS
SEPTEMBER 30, 1997
SECURITY EQUITY FUND-EQUITY SERIES (continued)
NUMBER MARKET
COMMON STOCKS (continued) OF SHARES VALUE
- --------------------------------------------------------------------------------
PERSONAL CARE - 1.0%
Gillette Company ............................. 100,000 $8,631,250
PHARMACEUTICALS - 3.6%
Merck & Company, Inc. ........................ 90,000 8,994,375
Schering-Plough Corporation .................. 220,000 11,330,000
SmithKline Beecham PLC ADR ................... 200,000 9,775,000
----------
30,099,375
PHOTOGRAPHY / IMAGING - 1.2%
Xerox Corporation ............................ 120,000 10,102,500
PUBLISHING - 1.2%
McGraw-Hill Companies, Inc. .................. 145,000 9,814,687
PUBLISHING - NEWSPAPER - 2.4%
Gannett Company, Inc. ........................ 90,000 9,714,375
Tribune Company .............................. 200,000 10,662,500
----------
20,376,875
RAILROADS - 1.4%
Canadian Pacific, Ltd. ....................... 400,000 11,825,000
RETAIL - APPAREL - 0.9%
TJXCompanies, Inc. ........................... 260,000 7,946,250
RETAIL - BUILDING SUPPLIES - 1.2%
Sherwin-Williams Company ..................... 350,000 10,303,125
RETAIL - DEPARTMENT STORES - 1.2%
Federated Department Stores, Inc.* ........... 235,000
10,134,375
RETAIL - DRUG STORES - 2.3%
Rite Aid Corporation ......................... 170,000 9,424,375
Walgreen Company ............................. 400,000 10,250,000
----------
19,674,375
RETAIL - FOOD CHAINS - 1.1%
Safeway, Inc.* ............................... 170,000 9,243,750
RETAIL - GENERAL MERCHANDISE - 0.9%
Dayton Hudson Corporation .................... 125,000 7,492,188
RETAIL - SPECIALTY - 3.9%
Payless ShoeSource, Inc.* .................... 225,000 13,429,687
Toys "R"Us, Inc.* ............................ 300,000 10,650,000
Woolworth Corporation* ....................... 400,000 8,850,000
----------
32,929,687
SERVICES - ADVERTISING / MARKETING - 1.7%
Omnicom Group, Inc. .......................... 200,000 14,550,000
SERVICES - COMMERCIAL & CONSUMER - 0.9%
Viad Corporation ............................. 400,000 7,625,000
WASTE MANAGEMENT - 0.9%
Waste Management, Inc. ....................... 220,000 $7,686,250
----------
Total common stocks - 93.8% ................. 794,202,524
Cash and other assets,
less liabilities - 6.2% ................... 52,653,715
----------
Total net assets - 100.0% ................... $846,856,239
==========
SECURITY EQUITY FUND - GLOBAL SERIES
PREFERRED STOCKS
GERMANY - 0.8%
Sto AG ....................................... 758 $ 309,005
COMMON STOCKS
AUSTRALIA - 3.4%
Foster's Brewing Group, Ltd. ................. 400,000 842,892
QBE Insurance Group, Ltd.* ................... 66,425 418,042
----------
1,260,934
AUSTRIA - 4.3%
Bohler-Uddeholm AG ........................... 11,400 958,432
Wienerberger Bastoffindustrie AG ............. 3,100 646,702
----------
1,605,134
BRAZIL - 1.3%
Aracruz Cellulose S.A. ADR ................... 23,350 480,134
CANADA - 7.0%
Bombardier, Inc. `B' ......................... 26,800 542,686
Hudson's Bay Company ......................... 13,200 351,777
Imax Corporation* ............................ 28,800 748,800
Noranda Forest, Inc. ......................... 36,400 247,448
Tarragon Oil & Gas, Ltd.* .................... 24,600 277,533
Yogen Fruz World-Wide, Inc.* ................. 72,600 430,533
----------
2,598,777
CHILE - 0.8%
Banco Santander ADR .......................... 11,100 163,725
Maderas y Sinteticos Sociedad
Anonima S.A. ADR ............................ 10,500 147,000
----------
310,725
See accompanying notes
20
<PAGE>
STATEMENTS OF NET ASSETS
SEPTEMBER 30, 1997
SECURITY EQUITY FUND-GLOBAL SERIES (continued)
NUMBER MARKET
COMMON STOCKS (continued) OF SHARES VALUE
- --------------------------------------------------------------------------------
FRANCE - 5.9%
Alcatel Alsthom .............................. 2,570 $ 341,817
Elf Aquitaine S.A. ADR ....................... 8,500 566,844
Lafarge ...................................... 6,600 483,745
Sidel S.A .................................... 2,520 165,247
Usinor Sacilor* .............................. 32,600 658,900
----------
2,216,553
GERMANY - 4.1%
Continental AG ............................... 12,300 316,660
Deutsche Bank AG ............................. 9,800 690,255
Hoechst AG ................................... 2,500 110,974
Volkswagon AG* ............................... 590 409,883
----------
1,527,772
GREECE - 1.2%
Hellenic Tellecom ............................ 11,900 298,204
Michaniki S.A ................................ 19,080 155,272
----------
453,476
HONG KONG - 1.4%
JCG Holdings, Ltd. ........................... 320,000 252,245
National Mutual Asia, Ltd. ................... 272,000 291,736
----------
543,981
INDONESIA - 1.4%
HM Sampoerna* ................................ 84,000 173,394
PT Tambang Timah ............................. 250,500 369,621
----------
543,015
IRELAND - 4.0%
Allied Irish Banks Plc ....................... 38,900 343,664
Elan Corporation Plc ADR* .................... 3,700 185,231
Jefferson Smurfit ............................ 212,900 712,688
Ryanair Holdings PLC* ........................ 41,900 240,884
----------
1,482,467
ITALY - 1.6%
Industrie Natuzzi S.p.a. ADR ................. 11,300 267,669
Telecom Italia ............................... 47,100 314,782
----------
582,451
JAPAN - 6.6%
Acom Company, Ltd. ........................... 4,700 244,869
Amway Japan, Ltd. ............................ 7,300 209,211
Douter Coffee Company, Ltd.* ................. 4,500 129,338
Maruco Company, Ltd. ......................... 2,200 10,751
Matsushita Electric Industrial
Company, Ltd. ............................... 12,000 216,682
Mitsubishi Estate Company,Ltd ................ 20,000 291,560
Nippon Steel Corporation ..................... 84,000 185,074
JAPAN (CONTINUED)
Omron Corporation ............................ 7,000 $ 146,691
Sony Corporation ............................. 3,400 321,047
Sumitomo Electric Industries ................. 9,000 128,965
Tiemco, Ltd.* ................................ 3,300 55,214
Tokyo Electron, Ltd. ......................... 6,000 366,272
Yamato Kogyo Company, Ltd. ................... 16,000 141,804
----------
2,447,478
MALAYSIA - 1.1%
Austral Enterprises* ......................... 33,000 51,411
Kuala Lumpur Kepong* ......................... 73,000 180,161
Tanjong PLC .................................. 81,000 173,667
----------
405,239
MEXICO - 2.3%
Cemex S.A. de C.V. "B"* ...................... 48,400 289,758
Grupo Financiero Banamex "B"* ................ 107,000 337,147
Grupo Financiero Bancomer
S.A. de C.V.* ............................... 355,000 241,977
----------
868,882
NETHERLANDS - 1.0%
Ahrend NV* ................................... 1,600 55,092
Philips Electronics N.V ...................... 3,950 334,360
----------
389,452
NEW ZEALAND - 2.5%
Brierley Investments, Ltd. ................... 361,100 312,010
Carter Holt Harvey, Ltd. ..................... 110,600 239,973
Fletcher Challenge Building, Ltd. ............ 113,000 368,856
----------
920,839
NORWAY - 1.6%
Saga Petroleum AS ............................ 27,800 588,069
PHILIPPINES - 0.8%
C & P Homes, Inc. ............................ 1,397,450 134,253
Ionics Circuit* .............................. 34,200 155,274
----------
289,527
POLAND - 1.2%
Elektrim S.A ................................. 18,000 201,636
Wedel S.A .................................... 4,239 247,965
----------
449,601
SPAIN - 1.8%
Adolfo Dominguez S.A.* ....................... 6,900 241,918
Banco Popular Espanol S.A .................... 3,600 231,681
Tele Pizza S.A.* ............................. 2,700 188,241
----------
661,840
See accompanying notes
21
<PAGE>
STATEMENTS OF NET ASSETS
SEPTEMBER 30, 1997
SECURITY EQUITY FUND-GLOBAL SERIES (continued)
NUMBER MARKET
COMMON STOCKS (continued) OF SHARES VALUE
- --------------------------------------------------------------------------------
SWEDEN - 3.4%
Castellum AB* ................................ 33,000 $ 317,707
Hufvudstaden* ................................ 19,200 96,475
Industrial & Financial Systems,
IFS AB* ..................................... 55,300 306,312
S,K.F. AB "B"* ............................... 10,800 314,779
Skandianviska Enskiilda Banken ............... 18,900 229,318
----------
1,264,591
SWITZERLAND - 2.6%
Nestle S.A ................................... 226 315,282
Novartis AG .................................. 190 291,749
Saurer AG* ................................... 440 349,328
----------
956,359
UNITED KINGDOM - 11.5%
Aegis Group PLC .............................. 222,500 234,525
D.F.S. Furniture Company PLC ................. 29,600 291,677
George Wimpey PLC ............................ 212,000 417,807
Grand Metropolitan PLC ....................... 28,800 275,419
Harvey Nichols PLC ........................... 22,800 105,705
Inchcape PLC ................................. 82,100 381,295
Oriflame International S.A ................... 12,000 93,048
PizzaExpress PLC ............................. 25,400 329,275
Polypipe PLC ................................. 74,300 259,252
Provident Financial PLC ...................... 27,300 298,118
Regent Inns PLC* ............................. 22,200 106,152
Rio Tinto PLC ................................ 13,800 220,807
Royal Bank of Scotland* ...................... 25,900 288,897
Tomkins PLC .................................. 69,000 389,562
Vodafone Group PLC ........................... 53,400 286,823
Whitbread PLC* ............................... 23,000 298,720
----------
4,277,082
UNITED STATES - 21.4%
Ace, Ltd. .................................... 2,000 188,000
Adaptec, Inc.* ............................... 4,700 219,431
AlliedSignal, Inc. ........................... 3,200 136,000
Allstate Corporation ......................... 1,400 112,525
BJ Services Company* ......................... 1,900 141,075
Boeing Company ............................... 2,400 130,650
Borders Group, Inc.* ......................... 6,000 165,000
Bristol-Myers Squibb Company ................. 2,000 165,500
CVS Corporation .............................. 2,800 159,250
Cardinal Health, Inc. ........................ 2,000 142,000
Case Corporation ............................. 2,400 159,900
Chase Manhattan Corporation .................. 1,400 165,200
Citicorp ..................................... 1,200 160,725
Conseco, Inc. ................................ 3,200 156,200
Costco Companies, Inc.* ...................... 4,200 157,894
UNITED STATES (CONTINUED)
Cymer, Inc.* ................................. 4,500 $ 123,047
Dana Corporation ............................. 3,300 162,938
Data General Corporation* .................... 5,300 141,113
Diamond Offshore Drilling, Inc. .............. 2,400 132,450
Disney (Walt) Productions .................... 1,800 145,125
Dover Corporation ............................ 2,700 183,263
EMC Corporation* ............................. 3,100 180,963
Equity Residential Properties Trust .......... 2,600 141,863
Federal National Mortgage
Association ................................. 3,500 164,500
Fort James Corporation ....................... 4,300 196,994
Gap, Inc. .................................... 3,300 165,206
General Electric Company ..................... 2,300 156,544
Georgia Pacific Corporation .................. 1,700 177,438
Global Industries, Ltd.* ..................... 3,600 143,775
Ingersoll-Rand Company ....................... 3,150 135,647
LSI Logic Corporation ........................ 3,100 99,588
Lilly, (Eli) and Company ..................... 1,300 156,894
Mobil Corporation ............................ 1,800 133,200
NAC Re Corporation ........................... 3,000 154,125
NationsBank Corporation ...................... 1,900 117,563
Nu Skin Asia, Inc.* .......................... 6,300 121,669
PepsiCo, Inc. (New) .......................... 3,900 146,250
Perkin Elmer Corporation ..................... 1,500 109,594
Pfizer, Inc. ................................. 2,100 126,131
Procter & Gamble Company ..................... 2,000 138,125
Reynolds Metals Company ...................... 2,200 155,788
Rite Aid Corporation ......................... 3,400 188,488
Rofin-Sinar Technologies, Inc.* .............. 11,300 187,863
Safeway, Inc.* ............................... 2,400 130,500
Structural Dynamics
Research Corporation* ....................... 6,000 154,125
Texaco, Inc. ................................. 2,800 172,025
Tyco International, Ltd. ..................... 2,100 172,331
UNUM Corporation ............................. 3,600 164,250
Union Planters Corporation ................... 2,600 145,275
United Healthcare Corporation ................ 3,000 150,000
Valero Energy Corporation .................... 4,900 160,781
Warner-Lambert Company ....................... 3,000 161,925
----------
7,956,706
----------
Total common stocks - 94.2% .................. 35,081,084
----------
Total investments - 95.0% .................... 35,390,089
Cash and other assets,
less liabilities - 5.0% .................... 1,864,410
----------
Total net assets - 100.0% .................... $37,254,499
==========
See accompanying notes
22
<PAGE>
STATEMENTS OF NET ASSETS
SEPTEMBER 30, 1997
SECURITY EQUITY FUND-GLOBAL SERIES (continued)
INVESTMENT CONCENTRATION
At September 30, 1997, Global Series' investment concentration,
by industry, was as follows:
Banking ......................................................... 8.0%
Capital Equipment ............................................... 10.2%
Construction and Housing ........................................ 1.9%
Consumer Durables ............................................... 5.7%
Consumer Nondurables ............................................ 9.5%
Electrical and Electronics ...................................... 3.7%
Energy Sources .................................................. 5.8%
Financial Services .............................................. 7.8%
Healthcare ...................................................... 4.3%
Materials ....................................................... 17.8%
Merchandising ................................................... 6.6%
Multi-Industry .................................................. 3.4%
Real Estate ..................................................... 2.3%
Services ........................................................ 3.3%
Telecommunications .............................................. 2.4%
Trade ........................................................... 1.6%
Transportation .................................................. 0.7%
Cash and other assets, less liabilities ......................... 5.0%
----------
100.0%
==========
SECURITY EQUITY FUND-ASSET ALLOCATION SERIES
NUMBER MARKET
OF SHARES VALUE
- --------------------------------------------------------------------------------
CORPORATE BONDS
BROKERAGE - 0.7%
Merrill Lynch & Company, Inc.,
8.00% - 2007 ................................ $ 50,000 $ 54,375
FINANCIAL SERVICES - 0.3%
MCN Investment Corporation,
6.32% - 2003 ................................ 25,000 24,781
INDUSTRIAL SERVICES - 9.7%
Rite Aid Corporation, 6.70% - 2001 ........... 125,000 125,938
Sun Company, 7.125% - 2004 ................... 300,000 306,375
Xerox Corporation, 8.125% - 2002 ............. 300,000 320,250
----------
752,563
INSURANCE - 2.0%
Hartford Life, Inc., 7.10% - 2007 ............ 150,000 153,375
RENTAL AUTO/EQUIPMENT - 2.0%
Hertz Corporation, 7.00% - 2004 .............. 150,000 152,250
----------
Total corporate bonds - 14.7% ............... 1,137,344
NUMBER MARKET
COMMON STOCKS OF SHARES VALUE
- --------------------------------------------------------------------------------
AMERICAN GOLD - 9.9%
Barrick Gold Corporation ..................... 6,000 $ 148,500
Battle Mountain Gold Company ................. 14,000 100,625
Echo Bay Mines, Ltd. ......................... 16,000 91,000
Hecla Mining Company* ........................ 4,000 24,250
Homestake Mining Company ..................... 6,000 91,875
Newmont Mining Corporation ................... 3,000 134,813
Placer Dome, Inc. ............................ 8,000 153,000
Stillwater Mining Company* ................... 1,000 21,312
----------
765,375
BROADCAST MEDIA - 1.4%
A.H. Belo Corporation ........................ 300 14,550
TCI Satellite Entertainment, Inc.* ........... 240 1,815
Tele-Communications, Inc.* ................... 2,400 49,200
U.S. West Media Group* ....................... 2,000 44,625
----------
110,190
ENTERTAINMENT - 1.6%
King World Productions, Inc. ................. 600 25,950
Time Warner, Inc. ............................ 1,000 54,187
Viacom, Inc.* ................................ 600 18,863
The Walt Disney Company ...................... 300 24,188
----------
123,188
GAMING & LOTTERY - 2.4%
Circus Circus Enterprises, Inc.* ............. 1,400 35,262
Harrah's Entertainment, Inc.* ................ 2,100 47,119
International Game Technology, Inc. .......... 2,300 52,325
Mirage Resorts, Inc.* ........................ 1,750 52,719
----------
187,425
LEISURE TIME PRODUCTS - 0.9%
Brunswick Corporation ........................ 1,200 42,300
Callaway Golf Company ........................ 700 24,413
----------
66,713
LONG TERM CARE - 2.1%
Beverly Enterprises* ......................... 1,100 19,113
Genesis Health Ventures, Inc.* ............... 1,000 38,937
Healthsouth Corporation* ..................... 750 20,016
Health Care and Retirements
Corporation* ................................ 500 18,594
Horizon/CMS Healthcare
Corporation* ................................ 950 21,256
Integrated Health Services, Inc. ............. 700 23,406
Mariner Health Group, Inc.* .................. 1,450 22,837
----------
164,159
See accompanying notes
23
<PAGE>
STATEMENTS OF NET ASSETS
SEPTEMBER 30, 1997
SECURITY EQUITY FUND-ASSET ALLOCATION SERIES (continued)
NUMBER MARKET
COMMON STOCKS (continued) OF SHARES VALUE
- --------------------------------------------------------------------------------
MANAGED CARE - 1.6%
Express Scripts, Inc.* ....................... 500 $ 26,938
Healthcare Compare Corporation* .............. 500 31,938
Oxford Health Plans* ......................... 350 26,206
Pacificare Health Systems, Inc.* ............. 250 17,031
United Healthcare Corporation ................ 400 20,000
----------
122,113
NETWORKING - 2.5%
Bay Networks, Inc.* .......................... 1,500 57,938
Cabletron Systems, Inc.* ..................... 1,500 48,000
Cisco Systems, Inc.* ......................... 500 36,531
3Com Corporation* ............................ 1,000 51,250
----------
193,719
PERIPHERALS - 2.2%
EMC Corporation* ............................. 500 29,188
Iomega Corporation* .......................... 1,000 26,125
Lexmark International Group, Inc.* ........... 800 26,400
Quantum Corporation* ......................... 800 30,650
Read-Rite Corporation* ....................... 700 17,150
Seagate Technology, Inc.* .................... 400 14,450
Storage Technology Corporation* .............. 600 28,687
----------
172,650
RESTAURANTS - 2.6%
Applebees International, Inc. ................ 600 15,000
Brinker International, Inc.* ................. 1,700 30,281
CKE Restaurants, Inc. ........................ 1,500 63,000
Cracker Barrel Old Country Store, Inc. ....... 700 22,663
McDonalds Corporation ........................ 400 19,050
Outback Steakhouse, Inc.* .................... 1,100 30,387
Wendy's International, Inc. .................. 1,000 21,250
----------
201,631
STEEL - 1.8%
Allegheny Teledyne, Inc. ..................... 500 14,312
Carpenter Technology Corporation ............. 400 19,800
Cleveland-Cliffs, Inc. ....................... 1,300 56,713
Quanex Corporation ........................... 1,000 35,063
Steel Technologies, Inc. ..................... 1,000 12,437
----------
138,325
TELECOMMUNICATIONS - 2.3%
Ameritech Corporation ........................ 600 $ 39,900
Bell Atlantic Corporation .................... 807 64,913
Bellsouth Corporation ........................ 500 23,125
GTE Corporation .............................. 500 22,688
SBC Communication, Inc. ...................... 292 17,921
Southern New England
Telecommunications Corporation .............. 300 12,281
----------
180,828
TRUCKING - 1.8%
Caliber System, Inc. ......................... 700 37,975
Rollings Truck Leasing Corporation ........... 1,500 25,594
Ryder System, Inc. ........................... 650 23,359
USFreightways Corporation .................... 800 26,900
Werner Enterprises, Inc. ..................... 1,100 26,675
----------
140,503
TRUCKING PARTS & SUPPLIES - 2.4%
Cummins Engine Company, Inc. ................. 600 46,837
Navistar International
Corporation* ................................ 3,000 82,875
PACCAR, Inc. ................................. 1,000 56,000
----------
185,712
----------
Total common stocks - 35.5% ................. 2,752,531
U.S. GOVERNMENT AGENCIES
FEDERAL HOME LOAN MORTGAGES - 1.9%
7.00% - 2020 ................................ $ 100,000 100,268
7.00% - 2021 ................................ $ 50,000 49,770
----------
150,038
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 2.8%
6.50% - 2018 ................................ $ 50,000 49,227
6.95% - 2020 ................................ $ 130,000 129,284
7.50% - 2020 ................................ $ 40,000 40,657
----------
219,168
----------
Total U.S. government & government
agencies - 4.7% ........................... 369,206
See accompanying notes
24
<PAGE>
STATEMENTS OF NET ASSETS
SEPTEMBER 30, 1997
SECURITY EQUITY FUND-ASSET ALLOCATION SERIES (continued)
NUMBER MARKET
REAL ESTATE INVESTMENT TRUSTS OF SHARES VALUE
- --------------------------------------------------------------------------------
American Health Properties, Inc. ............. 700 $ 17,150
Avalon Properties, Inc. ...................... 600 17,850
CBL & Associates Properties, Inc. ............ 700 18,156
Duke Realty Investments, Inc. ................ 900 20,531
Equity Residential Properties Trust .......... 400 21,825
Federal Realty Investment Trust .............. 650 16,372
General Growth Property, Inc. ................ 550 20,350
Glimcher Realty Trust ........................ 850 19,497
Health Care Property Investors, Inc. ......... 500 19,375
Kimco Realty Corporation ..................... 600 20,888
Merry Land & Investment Company .............. 800 17,650
New Plan Realty Trust ........................ 800 18,900
Post Properties, Inc. ........................ 450 17,888
Public Storage, Inc. ......................... 600 17,775
Security Capital Pacific Trust ............... 800 18,800
Simon Debartolo Group, Inc ................... 600 19,800
Spieker Properties, Inc. ..................... 500 20,281
United Realty Trust Dominion ................. 1,200 18,000
Washington Real Estate Investment
Trust ....................................... 1,000 17,000
Weingarten Realty Investors .................. 400 15,975
----------
Total real estate investment
trusts - 4.8% ............................. 374,063
FOREIGN STOCKS
BELGIUM - 5.7%
Cementbedrijven Cimenteries .................. 800 70,025
Compagnie Benelux Pariabas SA
(COBEPA) .................................... 200 8,671
Delhaize - Le Lion ........................... 800 39,513
Electrabel ................................... 150 31,445
Fortis AG .................................... 300 60,092
Gevaert NV ................................... 400 17,342
Petrofina SA ................................. 150 58,754
Royale Belgium ............................... 250 65,100
Solvay SA .................................... 1,500 90,550
----------
441,492
DENMARK - 3.5%
A/S Dampskibsselskabet Svendborg ............. 1 72,121
A/S Forsikringsselskabet Codan ............... 45 6,190
Akeiselskabet Potagua ........................ 140 4,476
Bang & Olufsen Holding A/S ................... 82 4,877
BG Bank A/S .................................. 133 7,614
Carlsberg A/S ................................ 197 10,780
Cheminova Holding A/S ........................ 214 5,692
DENMARK (CONTINUED)
D/S Norden A/S ............................... 35 $ 4,996
Danisco A/S .................................. 244 13,897
Danske Traelast .............................. 54 4,858
Den Danske Bank .............................. 245 26,705
Finansierings Instituttet for Industri
og Handvaerk A/S ............................ 189 4,918
Finansieringsselskabet Gefion A/S ............ 240 5,175
FLS Industries A/S ........................... 212 6,305
ISS International Service System A/S ......... 148 4,864
J. Lauritzen Holdings A/S* ................... 89 9,132
Jyske Bank A/S ............................... 61 5,724
Korn-OG Foderstof Kompagniet A/S ............. 153 4,778
Novo Nordisk A/S ............................. 263 29,410
Radiometer A/S ............................... 94 4,389
Sophus Berendsen A/S ......................... 88 14,105
Sydbank A/S .................................. 108 4,995
Tele Danmark A/S ............................. 94 4,948
Topdanmark A/S* .............................. 30 4,417
Tryg-Baltica Forsikring A/S .................. 128 7,309
----------
272,675
GERMANY - 7.2%
Allianz AG Holding ........................... 360 87,096
BASF AG ...................................... 1,081 39,110
Bayer AG ..................................... 735 29,255
Continental AG ............................... 202 5,192
Daimler-Benz AG .............................. 850 70,240
Degussa AG ................................... 140 7,681
Deutsche Bank AG ............................. 692 48,584
Dresdner Bank AG ............................. 1,211 55,607
Friedrich Grohe AG-Vorzugsak ................. 7 1,994
Heidelberger Zement AG ....................... 87 6,997
Hochtief AG .................................. 180 8,286
Linde AG ..................................... 14 9,829
Merck KGAA ................................... 187 7,200
Muenchener Rueckversicherungs-
Gesellschaft AG ............................. 70 23,614
Preussag AG .................................. 72 20,179
SAP AG ....................................... 122 31,360
Siemens AG ................................... 1,038 70,025
Veba AG ...................................... 634 36,991
----------
559,240
See accompanying notes
25
<PAGE>
STATEMENTS OF NET ASSETS
SEPTEMBER 30, 1997
SECURITY EQUITY FUND-ASSET ALLOCATION SERIES (continued)
NUMBER MARKET
FOREIGN STOCKS (continued) OF SHARES VALUE
- --------------------------------------------------------------------------------
ITALY - 4.9%
Assicurazioni Gererali ....................... 2,475 $ 55,935
Banco Commerciale Italiane ................... 11,000 31,617
Edison SPA ................................... 4,000 21,534
Fiat SPA ..................................... 7,700 27,487
Ina - Instituto Naz Assicuraz ................ 16,638 26,563
Instituto Mobiliare Italiano ................. 3,208 34,429
Mediobanca ................................... 3,500 27,381
Montedison SPA ............................... 29,600 21,613
Telecom Italia Mobile SPA .................... 18,821 74,710
Telecom Italia - SPA ......................... 8,333 55,532
----------
376,801
JAPAN - 11.8%
All Nippon Airways Company, Ltd. ............. 2,000 11,182
Asahi Glass Company, Ltd. .................... 2,000 15,539
Chubu Electric Power Company, Inc. ........... 400 6,792
Fuji Bank, Ltd. .............................. 1,000 11,016
Fujitsu, Ltd. ................................ 2,000 25,014
Hitachi, Ltd. (Hit. Seisakusho) .............. 3,000 26,091
Industrial Bank of Japan ..................... 2,000 24,849
Kansai Electric Power Company ................ 1,400 24,932
Kawasaki Heavy Industries .................... 4,000 13,816
Kawasaki Steel Corporation ................... 5,000 9,567
Kinki Nippon Railway ......................... 2,000 11,414
Kirin Brewery Company, Ltd. .................. 1,000 8,233
Kyocera Corporation .......................... 100 6,535
Marubeni Corporation ......................... 3,000 9,940
Marui Company, Ltd. .......................... 1,000 16,483
Matsushita Electric Industrial
Company, Ltd. ............................... 2,000 36,114
Mitsubishi Corporation ....................... 4,000 38,764
Mitsubishi Estate Company Limited ............ 1,000 14,578
Mitsubishi Heavy Industrial, Ltd. ............ 4,000 21,900
Mitsubishi Motors Corporation ................ 2,000 10,271
Mitsubishi Trust & Bank ...................... 1,000 15,572
Mitsui Fudosan Company, Ltd. ................. 1,000 12,176
NEC Corporation .............................. 2,000 24,352
Nippon Steel Corporation ..................... 6,000 13,220
Nissan Motor Company, Ltd. ................... 2,000 11,927
Normura Securities Company, Ltd. ............. 2,000 26,008
NSK Limited .................................. 4,000 17,096
Sekisui House, Ltd. .......................... 4,000 38,102
Sharp Corporation ............................ 2,000 18,222
Shin-Etsu Chemical Company ................... 1,000 27,499
Sony Corporation ............................. 100 9,443
Sumitomo Bank ................................ 4,000 60,300
Sumitomo Chemical Company .................... 6,000 22,016
The Bank of Tokyo-Mitsubishi ................. 3,000 57,152
Tokio Marine & Fire Insurance
Company ..................................... 2,000 24,021
Tokyo Electric Power ......................... 2,700 51,884
Tokyu Corporation ............................ 4,000 19,216
Toshiba Corporation .......................... 3,000 15,207
Toyoda Automatic Loom Works .................. 1,000 19,879
Toyota Motor Corporation ..................... 3,000 91,941
----------
918,263
----------
Total foreign stocks - 33.1% ................ 2,568,471
TEMPORARY CASH INVESTMENTS
MONEY MARKET FUNDS - 3.2%
Chase Master Note Program ................... 251,000 251,000
FEDERAL MORTGAGE CORPORATION - 3.9%
5.20% - 10-21-97 ............................ $ 300,000 299,133
----------
Total temporary cash investments - 7.1% ..... 550,133
----------
Total investments - 99.9% ................... 7,751,748
Cash and other assets,
less liabilities - 0.1% ................... 5,632
----------
Total net assets - 100% ..................... $7,757,380
==========
SECURITY EQUITY FUND - SOCIAL AWARENESS SERIES
COMMON STOCKS
AUTO PARTS & EQUIPMENT - 1.4%
Snap-On, Inc. ................................ 2,900 $ 133,581
BANKS - MAJOR REGIONAL - 5.5%
Banc One Corporation ......................... 2,400 133,950
Bank of New York Company, Inc. ............... 2,900 139,200
Northern Trust Corporation ................... 2,600 153,725
Wells Fargo & Company ........................ 400 110,000
----------
536,875
BEVERAGES - SOFT DRINK - 4.1%
Coca-Cola Company ............................ 4,200 255,938
PepsiCo, Inc. ................................ 3,600 146,025
----------
401,963
See accompanying notes
26
<PAGE>
STATEMENTS OF NET ASSETS
SEPTEMBER 30, 1997
SECURITY EQUITY FUND-SOCIAL AWARENESS SERIES (continued)
NUMBER MARKET
COMMON STOCKS (continued) OF SHARES VALUE
- --------------------------------------------------------------------------------
CHEMICALS - BASIC - 1.1%
Praxair, Inc. ................................ 2,200 $ 112,612
CHEMICALS - SPECIALTY - 0.8%
Sigma-Aldrich Corporation .................... 2,500 82,344
COMMUNICATION EQUIPMENT - 0.9%
Tellabs, Inc.* ............................... 1,700 87,550
COMPUTER HARDWARE - 4.0%
Compaq Computer Corporation* ................. 2,000 149,500
Hewlett-Packard Company ...................... 2,000 139,125
Sun Microsystems, Inc.* ...................... 2,300 107,669
----------
396,294
COMPUTER NETWORKING - 2.3%
3Com Corporation* ............................ 2,000 102,500
Cisco Systems, Inc.* ......................... 1,700 124,206
----------
226,706
COMPUTER PERIPHERALS - 0.4%
Seagate Technology, Inc.* .................... 1,100 39,738
COMPUTER SOFTWARE/SERVICES - 5.7%
BMC Software, Inc.* .......................... 1,900 123,025
Electronics for Imaging, Inc.* ............... 1,300 66,300
Microsoft Corporation* ....................... 2,100 277,856
PeopleSoft, Inc.* ............................ 1,600 95,600
----------
562,781
DISTRIBUTION - FOOD & HEALTH - 1.0%
Cardinal Health, Inc ......................... 1,350 95,850
ELECTRICAL EQUIPMENT - 2.8%
Sanmina Corporation* ......................... 1,500 129,844
Solectron Corporation* ....................... 3,200 142,400
----------
272,244
ELECTRONICS - INSTRUMENTATION - 0.7%
Perkin-Elmer Corporation ..................... 1,000 73,063
ELECTRONICS - SEMICONDUCTORS - 6.5%
Analog Devices, Inc.* ........................ 3,200 107,200
Atmel Corporation* ........................... 2,600 94,737
Intel Corporation ............................ 3,600 332,325
Xilinx, Inc.* ................................ 2,100 106,313
----------
640,575
FINANCIAL - DIVERSE - 5.0%
Federal Home Loan Mortgage
Corporation ................................. 3,500 123,375
Federal National Mortgage Association ........ 2,600 122,200
Finova Group, Inc. ........................... 1,400 132,475
SunAmerica, Inc. ............................. 3,000 117,563
----------
495,613
FOODS - 1.0%
Interstate Bakeries Corporation .............. 1,500 $ 102,844
HEALTH CARE - DIVERSE - 1.6%
Johnson & Johnson ............................ 2,800 161,350
HEALTH CARE - MANAGED CARE - 1.2%
Oxford Health Plans, Inc.* ................... 1,600 119,800
HEALTH CARE - SPECIALIZED SERVICES - 1.0%
Quintiles Transnational Corporation* ......... 1,200 101,100
HOUSEHOLD FURNISHINGS & APPLIANCES - 1.5%
Leggett & Platt, Inc. ........................ 3,400 151,512
HOUSEHOLD PRODUCTS - 5.5%
Clorox Company ............................... 1,800 133,425
Colgate-Palmolive Company .................... 1,800 125,438
Kimberly-Clark Corporation ................... 1,500 73,406
Procter & Gamble Company ..................... 3,000 207,187
----------
539,456
INSURANCE - MULTI-LINE - 1.9%
American International Group, Inc. ........... 1,800 185,737
INSURANCE - PROPERTY - 1.4%
Chubb Corporation ............................ 2,000 142,125
LEISURE TIME PRODUCTS - 0.9%
Mattel, Inc. ................................. 2,700 89,437
MACHINERY - DIVERSE - 1.2%
Deere & Company .............................. 2,200 118,250
MANUFACTURING - DIVERSIFIED - 1.2%
Illinois Tool Works, Inc. .................... 2,400 120,000
MANUFACTURING - SPECIALIZED - 2.1%
Sealed Air Corporation* ...................... 1,900 104,381
United States Filter Corporation* ............ 2,400 103,350
----------
207,731
MEDICAL PRODUCTS & SUPPLIES - 1.7%
Guidant Corporation .......................... 2,900 162,400
NATURAL GAS - 0.8%
Sonat, Inc. .................................. 1,600 81,400
OFFICE EQUIPMENT & SUPPLIES - 1.2%
Corporate Express, Inc.* ..................... 5,500 116,187
OIL & GAS - EXPLORATION/PRODUCTION - 2.2%
Anadarko Petroleum Corporation ............... 1,400 100,538
Apache Corporation ........................... 2,600 111,475
----------
212,013
See accompanying notes
27
<PAGE>
STATEMENTS OF NET ASSETS
SEPTEMBER 30, 1997
SECURITY EQUITY FUND-SOCIAL AWARENESS SERIES (continued)
NUMBER MARKET
COMMON STOCKS (continued) OF SHARES VALUE
- --------------------------------------------------------------------------------
PHARMACEUTICALS - 5.0%
Dura Pharmaceuticals, Inc.* .................. 2,000 $ 87,250
Merck & Company, Inc. ........................ 2,500 249,844
Schering-Plough Corporation .................. 3,000 154,500
----------
491,594
RESTAURANTS - 1.8%
Papa John's International, Inc.* ............. 2,350 80,341
Starbucks Corporation* ....................... 2,400 100,350
----------
180,691
RETAIL - APPAREL - 1.1%
TJX Companies, Inc. .......................... 3,400 103,912
RETAIL - DEPARTMENT STORES - 2.4%
Kohl's Corporation* .......................... 1,500 106,500
Proffitt's, Inc.* ............................ 2,200 130,350
----------
236,850
RETAIL - DRUG STORES - 1.3%
Walgreen Company ............................. 4,800 123,000
RETAIL - GENERAL MERCHANDISE - 1.5%
Dayton Hudson Corporation .................... 2,400 143,850
RETAIL - SPECIALTY - 2.9%
Staples, Inc.* ............................... 4,900 135,363
Tiffany & Company ............................ 1,700 72,250
Woolworth Corporation ........................ 3,500 77,437
----------
285,050
SAVINGS & LOAN - 1.5%
Ahmanson (H.F.) & Company .................... 2,600 147,713
SERVICES - ADVERTISING/MARKETING - 1.5%
Omnicom Group, Inc. .......................... 2,000 145,500
SERVICES - COMMERCIAL & CONSUMER - 2.9%
Apollo Group, Inc.* .......................... 3,000 127,125
Service Corporation International ............ 1,900 61,156
Sylvan Learning Systems, Inc.* ............... 2,250 98,719
----------
287,000
SERVICES - DATA PROCESSINGS - 1.9%
Automatic Data Processing, Inc. .............. 1,600 80,000
Paychex, Inc. ................................ 3,150 109,856
----------
189,856
TEXTILES - APPAREL - 1.2%
Jones Apparel Group, Inc.* ................... 2,200 118,800
----------
Total common stocks - 93.6% ................. 9,222,947
Cash and other assets,
less liabilities - 6.4% ................... 626,997
----------
Total net assets - 100.0% ................... $9,849,944
==========
SECURITY EQUITY FUND-VALUE SERIES
COMMON STOCKS
AIR FREIGHT - 2.0%
Old Dominion Freight Line, Inc.* ............. 8,500 $ 163,625
BANKS - MAJOR REGIONAL - 2.7%
Bank of New York Company, Inc. ............... 900 43,200
Northern Trust Corporation ................... 1,600 94,600
Wells Fargo & Company ........................ 300 82,500
----------
220,300
BEVERAGES - ALCOHOLIC - 1.1%
Canandaigu Brands, Inc. (Cl. A)* ............. 1,900 89,538
CHEMICALS - SPECIALTY - 7.0%
Dexter Corporation ........................... 2,400 96,150
M.A. Hanna Company ........................... 9,000 239,062
Material Sciences Corporation* ............... 9,000 128,250
Minerals Technologies, Inc. .................. 2,500 111,406
----------
574,868
COMMUNICATION EQUIPMENT - 3.8%
ANTEC Corporation* ........................... 10,800 126,900
Harris Corporation ........................... 4,000 183,000
----------
309,900
COMPUTER HARDWARE - 1.2%
Compaq Computer Corporation* ................. 1,312 98,072
COMPUTER PERIPHERALS - 0.9%
Seagate Technology, Inc.* .................... 2,000 72,250
COMPUTER SOFTWARE/SERVICES - 4.6%
Computer Sciences Corporation* ............... 4,000 283,000
DST Systems, Inc.* ........................... 2,700 99,900
----------
382,900
CONTAINERS & PACKAGING - 1.7%
Sealright Company, Inc.* ..................... 10,600 139,125
ELECTRIC COMPANIES - 6.6%
Aquarion Company ............................. 2,500 69,375
CIPSCO, Inc. ................................. 3,700 141,062
Scana Corporation ............................ 8,000 200,500
Wisconsin Energy Corporation ................. 5,000 130,000
----------
540,937
ELECTRONICS - SEMICONDUCTORS - 0.7%
Atmel Corporation* ........................... 1,600 58,300
ELECTRONICS - INSTRUMENTATION - 1.7%
E G & G, Inc. ................................ 1,400 28,963
Perkin-Elmer Corporation ..................... 1,500 109,594
----------
138,557
See accompanying notes
28
<PAGE>
STATEMENTS OF NET ASSETS
SEPTEMBER 30, 1997
SECURITY EQUITY FUND-VALUE SERIES (continued)
NUMBER MARKET
COMMON STOCKS (continued) OF SHARES VALUE
- --------------------------------------------------------------------------------
FINANCIAL - DIVERSE - 2.0%
American Express Company ..................... 600 $ 49,125
Capital One Financial Corporation ............ 2,600 118,950
----------
168,075
FOODS - 4.1%
Chiquita Brands International, Inc. .......... 16,000 258,000
Hormel Foods Corporation ..................... 2,400 76,950
----------
334,950
HOUSEHOLD FURNISHINGS & APPLIANCES - 0.8%
Leggett & Platt, Inc. ........................ 1,400 62,388
HOUSEHOLD PRODUCTS - 2.7%
Dial Corporation ............................. 4,500 78,469
Kimberly-Clark Corporation ................... 3,000 146,812
----------
225,281
INSURANCE - LIFE/HEALTH - 2.6%
AFLAC, Inc. .................................. 4,000 217,000
INSURANCE - PROPERTY - 2.4%
Leucadia National Corporation ................ 3,000 103,125
W.R. Berkley Corporation ..................... 2,100 90,431
----------
193,556
IRON & STEEL - 1.7%
Cleveland-Cliffs, Inc. ....................... 3,300 143,963
LEISURE TIME PRODUCTS - 2.5%
Hasbro, Inc. ................................. 5,000 140,625
Mattel, Inc. ................................. 2,000 66,250
----------
206,875
MANUFACTURING - DIVERSIFIED - 2.4%
Textron, Inc. ................................ 400 26,000
U.S. Industries, Inc. ........................ 6,000 174,000
----------
200,000
MEDICAL PRODUCTS & SUPPLIES - 2.9%
ATL Ultrasound, Inc.* ........................ 1,000 46,750
Sunrise Medical, Inc.* ....................... 12,000 187,500
----------
234,250
METALS & MINING - 0.4%
Cyprus Amax Minerals Company ................. 1,500 36,000
NATURAL GAS - 7.5%
Coastal Corporation .......................... 700 42,875
Eastern Enterprises .......................... 4,500 167,906
Equitable Resources, Inc. .................... 8,000 252,000
People's Energy Corporation .................. 4,000 150,750
----------
613,531
OFFICE EQUIPMENT & SUPPLIES - 3.1%
Corporate Express, Inc.* ..................... 12,000 $ 253,500
OIL & GAS - EXPLORATION & PRODUCTION - 7.3%
Apache Corporation ........................... 2,000 85,750
Forcenergy, Inc.* ............................ 4,800 186,300
Louisiana Land & Exploration
Company ..................................... 900 70,481
Noble Affiliates, Inc. ....................... 1,600 71,600
YPF Sociedad Anomima ADR ..................... 5,000 184,375
----------
598,506
PHARMACEUTICALS - 6.1%
Mylan Laboratories, Inc. ..................... 12,200 273,737
R.P. Scherer Corporation* .................... 2,000 123,875
Teva Pharmaceutical Industries,
Ltd. ADR .................................... 1,900 105,925
----------
503,537
PUBLISHING - 0.5%
McGraw-Hill Companies, Inc. .................. 600 40,613
PUBLISHING - NEWSPAPER - 3.4%
E.W. Scripps Company ......................... 4,200 184,537
Tribune Company* ............................. 1,800 95,963
----------
280,500
REAL ESTATE INVESTMENT TRUSTS - 0.1%
CCA Prison Realty Trust ...................... 200 7,550
RESTAURANTS - 2.5%
The Cheesecake Factory* ...................... 7,500 206,719
RETAIL - SPECIALTY - 2.2%
AutoZone, Inc.* .............................. 3,000 90,000
Payless ShoeSource, Inc.* .................... 800 47,750
Toys "R" Us, Inc.* ........................... 1,100 39,050
----------
176,800
SERVICES - ADVERTISING / MARKETING - 0.7%
Acxiom Corporation* .......................... 3,300 57,544
SERVICES - COMMERCIAL & CONSUMER - 3.8%
Angelica Corporation ......................... 15,500 308,062
SERVICES - DATA PROCESSING - 2.1%
First Data Corporation ....................... 4,500 169,031
TRUCKS & PARTS - 1.5%
Titan International, Inc. .................... 6,000 120,000
----------
Total common stocks - 99.3% ................. 8,146,603
Cash and other assets,
less liabilities - 0.7% ................... 55,988
----------
Total net assets - 100.0% ................... $8,202,591
==========
See accompanying notes
29
<PAGE>
STATEMENTS OF NET ASSETS
SEPTEMBER 30, 1997
SECURITY ULTRA FUND
NUMBER MARKET
COMMON STOCKS OF SHARES VALUE
- --------------------------------------------------------------------------------
AUTO PARTS &EQUIPMENT - 1.0%
Snap-On, Inc. ................................ 20,250 $ 932,766
BANKS - MAJOR REGIONAL - 4.1%
Northern Trust Corporation ................... 26,000 1,537,250
State Street Corporation ..................... 36,000 2,193,750
----------
3,731,000
BEVERAGES - SOFT DRINK - 2.6%
Coca-Cola Enterprises, Inc. .................. 85,800 2,311,238
BIOTECHNOLOGY - 2.7%
BioChem Pharma, Inc.* ........................ 37,000 1,165,500
Biogen, Inc.* ................................ 17,200 557,925
Centocor, Inc.* .............................. 16,000 761,000
----------
2,484,425
CHEMICALS - BASIC - 1.2%
Praxair, Inc. ................................ 21,000 1,074,938
CHEMICALS - SPECIALTY - 0.8%
Sigma-Aldrich Corporation .................... 22,000 724,625
COMMUNICATION EQUIPMENT - 2.5%
ADC Telecommunications, Inc.* ................ 28,000 910,000
CIENA Corporation* ........................... 9,000 445,781
Tellabs, Inc.* ............................... 17,000 875,500
----------
2,231,281
COMPUTER HARDWARE - 2.9%
Dell Computer Corporation* ................... 19,000 1,840,625
ENCAD, Inc.* ................................. 24,500 753,375
----------
2,594,000
COMPUTER SOFTWARE/SERVICES - 9.6%
America OnLine, Inc.* ........................ 20,500 1,546,469
BMC Software, Inc.* .......................... 25,000 1,618,750
Cambridge Technology Partners,
Inc.* ....................................... 26,000 931,125
Compuware Corporation* ....................... 17,800 1,076,900
Electronics for Imaging, Inc.* ............... 18,000 918,000
McAfee Associates, Inc.* ..................... 12,000 636,000
PeopleSoft, Inc.* ............................ 23,000 1,374,250
Viasoft, Inc.* ............................... 12,000 594,000
----------
8,695,494
DISTRIBUTION - FOOD & HEALTH - 1.4%
Cardinal Health, Inc. ........................ 17,500 1,242,500
ELECTRIC COMPANIES - 1.4%
AES Corporation* ............................. 29,000 1,268,750
ELECTRICAL EQUIPMENT - 2.9%
Sanmina Corporation* ......................... 13,500 $1,168,594
SCI Systems, Inc.* ........................... 30,000 1,486,875
----------
2,655,469
ELECTRONICS - INSTRUMENTATION - 0.6%
Perkin-Elmer Corporation ..................... 7,300 533,356
ELECTRONICS - SEMICONDUCTORS - 6.6%
Altera Corporation* .......................... 19,000 973,750
ANADIGICS, Inc.* ............................. 18,000 887,625
Analog Devices, Inc.* ........................ 34,666 1,161,311
Atmel Corporation* ........................... 24,500 892,719
Linear Technology Corporation ................ 16,000 1,100,000
Xilinx, Inc.* ................................ 18,000 911,250
----------
5,926,655
FINANCIAL - DIVERSE - 2.1%
SunAmerica, Inc. ............................. 48,000 1,881,000
FOODS - 1.2%
Dole Food Company, Inc. ...................... 12,800 578,400
Interstate Bakeries Corporation .............. 8,000 548,500
----------
1,126,900
HEALTH CARE - MANAGED CARE - 1.4%
Oxford Health Plans, Inc.* ................... 17,100 1,280,362
HEALTH CARE - SPECIALIZED SERVICES - 1.9%
Parexel International Corporation* ........... 19,500 770,250
Quintiles Transnational Corporation* ......... 11,100 935,175
----------
1,705,425
HOUSEHOLD FURNISHINGS & APPLIANCES - 1.0%
Leggett & Platt, Inc. ........................ 19,900 886,794
HOUSEHOLD PRODUCTS - 0.4%
Dial Corporation ............................. 22,000 383,625
INSURANCE - LIFE/HEALTH - 1.8%
AFLAC, Inc. .................................. 29,300 1,589,525
INSURANCE - PROPERTY - 1.5%
Progressive Corporation ...................... 13,000 1,392,625
INVESTMENT BANK/BROKERAGE - 6.2%
Franklin Resources, Inc. ..................... 28,000 2,607,500
Charles Schwab Corporation ................... 58,500 2,091,375
T. Rowe Price Associates, Inc. ............... 13,700 921,325
----------
5,620,200
LEISURE TIME PRODUCTS - 0.6%
Callaway Golf Company ........................ 15,800 551,025
LODGING - HOTELS - 0.5%
Promus Hotel Corporation* .................... 11,000 492,937
See accompanying notes
30
<PAGE>
STATEMENTS OF NET ASSETS
SEPTEMBER 30, 1997
SECURITY ULTRA FUND (continued)
NUMBER MARKET
COMMON STOCKS (continued) OF SHARES VALUE
- --------------------------------------------------------------------------------
MANUFACTURING - DIVERSIFIED - 1.2%
Illinois Tool Works, Inc. .................... 21,000 $1,050,000
MANUFACTURING - SPECIALIZED - 1.8%
Sealed Air Corporation* ...................... 17,000 933,938
United States Filter Corporation* ............ 16,500 710,531
----------
1,644,469
MEDICAL PRODUCTS & SUPPLIES - 2.7%
ATL Ultrasound, Inc.* ........................ 20,500 958,375
Guidant Corporation .......................... 26,500 1,484,000
----------
2,442,375
NATURAL GAS - 0.9%
Sonat, Inc. .................................. 16,500 839,437
OFFICE EQUIPMENT & SUPPLIES - 1.1%
Corporate Express, Inc.* ..................... 47,000 992,875
OIL & GAS - DRILLING & EQUIPMENT - 6.1%
BJ Services Company* ......................... 9,000 668,250
ENSCO International, Inc. .................... 35,000 1,380,313
Global Marine, Inc.* ......................... 42,000 1,396,500
Smith International, Inc.* ................... 10,000 776,875
Tidewater, Inc. .............................. 15,000 888,750
Varco International, Inc.* ................... 8,000 388,000
----------
5,498,688
OIL & GAS - EXPLORATION & PRODUCTION - 1.0%
Anadarko Petroleum Corporation ............... 12,400 890,475
PHARMACEUTICALS - 2.5%
Dura Pharmaceuticals, Inc.* .................. 36,000 1,570,500
Jones Medical Industries, Inc. ............... 15,500 488,250
Miravant Medical Technologies* ............... 4,000 220,000
----------
2,278,750
RESTAURANTS - 1.6%
Papa John's International, Inc.* ............. 22,125 756,398
Starbucks Corporation* ....................... 16,500 689,906
----------
1,446,304
RETAIL - DEPARTMENT STORES - 3.8%
Dollar General Corporation ................... 31,250 1,064,453
Kohl's Corporation* .......................... 20,000 1,420,000
Proffitt's, Inc.* ............................ 16,000 948,000
----------
3,432,453
RETAIL - GENERAL MERCHANDISE - 0.9%
Consolidated Stores Corporation* ............. 20,000 837,500
RETAIL - SPECIALTY - 3.1%
Bed Bath & Beyond, Inc.* ..................... 16,000 $ 562,000
Payless ShoeSource, Inc.* .................... 11,000 656,563
Staples, Inc.* ............................... 46,375 1,281,109
Tiffany & Company ............................ 8,000 340,000
----------
2,839,672
SERVICES - ADVERTISING/MARKETING - 1.5%
Omnicom Group, Inc. .......................... 19,000 1,382,250
SERVICES - COMMERCIAL & CONSUMER - 3.5%
Apollo Group, Inc.* .......................... 22,400 949,200
Manpower, Inc. ............................... 17,000 671,500
Robert Half International, Inc.* ............. 18,750 775,781
Stewart Enterprises, Inc. .................... 17,500 765,625
----------
3,162,106
SERVICES - COMPUTER SYSTEMS - 0.5%
Sungard Data Systems, Inc.* .................. 17,000 412,250
SERVICES - DATA PROCESSING - 1.4%
Fiserv, Inc.* ................................ 9,500 416,812
Paychex, Inc. ................................ 23,400 816,075
----------
1,232,887
TEXTILES - APPAREL - 0.8%
Jones Apparel Group, Inc.* ................... 13,000 702,000
WASTE MANAGEMENT - 1.4%
USA Waste Services, Inc.* .................... 31,075 1,239,116
----------
Total common stocks - 94.7% ................. 85,640,522
Cash and other assets,
less liabilities - 5.3% ................... 4,826,749
----------
Total net assets - 100.0% ................... $90,467,271
==========
The identified cost of investments owned at September 30, 1997, was the same for
federal income tax and financial statement purposes, except for Growth & Income
Fund, Global Series Asset Allocation Series and Ultra Fund for which the
identified cost of investments for federal income tax purposes was $79,181,851,
$30,885,836, $7,025,531 and $55,393,579, respectively.
* Securities on which no cash dividend was paid during the preceding twelve
months. ADR (American Depositary Receipt)
1 Trust preferred securities - securities issued by financial institutions to
augment their Tier 1 capital base. Issued on a subordinate basis relative to
senior notes or debentures. Institutions may defer cash payments for up to 10
pay periods.
See accompanying notes
31
<PAGE>
BALANCE SHEETS
SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
Security Equity Fund
---------------------------------------------
Security Asset
Growth and Equity Global Allocation
Income Fund Series Series Series
------------ ------------ ----------- ----------
<S> <C> <C> <C> <C>
ASSETS
Investments, at value (identified cost $79,178,585,
$494,763,814, $30,841,704 and $7,005,829,
respectively) .............................................. $ 97,851,099 $794,202,524 $35,390,089 $7,751,748
Cash ......................................................... (1,219,246) 41,330,829 3,481,020 467
Receivables:
Fund shares sold ........................................... 127,671 4,025,627 73,342 29
Securities sold ............................................ 1,273,410 9,013,937 144,822 --
Forward foreign exchange contracts ......................... -- -- 37,290 --
Interest ................................................... 166,860 169,484 16,050 25,356
Dividends .................................................. 118,648 914,046 66,175 5,786
Foreign taxes recoverable .................................. -- -- 31,278 2,333
Prepaid expenses ........................................... -- -- -- 10,211
------------ ------------ ----------- ----------
Total assets ............................................... $ 98,318,442 $849,656,447 $39,240,066 $7,795,930
============ ============ =========== ==========
LIABILITIES AND NET ASSETS
Liabilities:
Payable for:
Securities purchased ....................................... $ -- $ 1,666,534 $ 1,717,101 $ --
Fund shares redeemed ....................................... 222,762 315,308 196,921 20,177
Other Liabilities:
Management fees ............................................ 101,742 744,097 60,999 2,617
Custodian fees ............................................. -- -- -- 1,001
Transfer and administration fees ........................... -- -- -- 6,018
Professional fees .......................................... -- -- -- 5,063
12b-1 distribution plan fees ............................... 5,510 74,269 10,546 3,244
Other payables ............................................. -- -- -- 430
------------ ------------ ----------- ----------
Total liabilities ........................................ 330,014 2,800,208 1,985,567 38,550
Net Assets:
Paid in capital .............................................. 58,128,021 482,735,990 29,641,700 6,490,140
Undistributed net investment income .......................... 96,355 2,266,283 105,784 67,914
Accumulated undistributed net realized gain
on sale of investments, and foreign
currency transactions ...................................... 21,091,538 62,415,256 2,920,172 453,490
Net unrealized appreciation
in value of investments, futures and
translation of assets and liabilities
in foreign currency ........................................ 18,672,514 299,438,710 4,586,843 745,836
------------ ------------ ----------- ----------
Net assets ............................................... 97,988,428 846,856,239 37,254,499 7,757,380
------------ ------------ ----------- ----------
Total liabilities and net assets ....................... $ 98,318,442 $849,656,447 $39,240,066 $7,795,930
============ ============ =========== ==========
CLASS "A" SHARES
Capital shares outstanding ................................... 8,190,671 83,310,733 1,784,153 310,479
Net assets ................................................... $ 91,251,769 $757,520,288 $24,193,467 $3,906,431
Net asset value per share (net assets
divided by shares outstanding) ........................... $ 11.14 $ 9.09 $ 13.56 $ 12.58
Add: Selling commission (5.75% of
the offering price) ....................................... $ 0.68 $ 0.55 $ 0.83 $ 0.77
------------ ------------ ----------- ----------
Offering price per share (net asset value
divided by 94.25%) ......................................... $ 11.82 $ 9.64 $ 14.39 $ 13.35
============ ============ =========== ==========
CLASS "B" SHARES
Capital shares outstanding ................................... 613,052 10,125,359 987,744 309,214
Net assets ................................................... $ 6,736,659 $ 89,335,951 $13,061,032 $3,850,949
Net asset value per share (net assets
divided by shares outstanding) ............................ $ 10.99 $ 8.82 $ 13.22 $ 12.45
============ ============ =========== ==========
SEE ACCOMPANYING NOTES
32
</TABLE>
<PAGE>
BALANCE SHEETS
SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
Security Equity Fund
--------------------------------
Social Security
Awareness Value Ultra
Series Series Fund
------------ ---------- -----------
<S> <C> <C> <C>
ASSETS
Investments, at value (identified cost $7,582,342,
$7,289,634 and $55,329,839, respectively) ..................... $ 9,222,947 $8,146,603 $85,640,522
Cash ............................................................ 613,875 9,995 5,170,008
Receivables:
Fund shares sold .............................................. 3,653 72,133 5,300
Securities sold ............................................... 303,738 65,498 740,265
Interest ...................................................... 2,816 1,636 21,636
Dividends ..................................................... 5,884 11,359 26,742
Prepaid expenses ................................................ 7,424 14,486 --
------------ ---------- -----------
Total assets ................................................ $ 10,160,337 $8,321,710 $91,604,473
============ ========== ===========
LIABILITIES AND NET ASSETS
Liabilities:
Payable for:
Securities purchased .......................................... $ 301,375 $ 107,423 $ 159,000
Fund shares redeemed .......................................... 977 6,360 517,390
Other Liabilities:
Management fees ............................................... -- -- 95,032
Custodian fees ................................................ -- 375 --
Transfer and administration fees .............................. 1,388 972 --
Professional fees ............................................. 3,500 991 --
12b-1 distribution plan fees .................................. 3,128 2,956 4,910
Other payables ................................................ 25 42 360,870
------------ ---------- -----------
Total liabilities ........................................... 310,393 119,119 1,137,202
Net Assets:
Paid in capital ................................................. 8,408,655 7,227,345 58,126,275
Undistributed net investment income ............................. 5,542 11,189 --
Accumulated undistributed net realized gain (loss)
on sale of investments and futures ............................ (204,858) 107,088 2,030,313
Net unrealized appreciation
in value of investments and futures ........................... 1,640,605 856,969 30,310,683
------------ ---------- -----------
Net assets .................................................. 9,849,944 8,202,591 90,467,271
------------ ---------- -----------
Total liabilities and net assets .......................... $ 10,160,337 $8,321,710 $91,604,473
============ ========== ===========
CLASS "A" SHARES
Capital shares outstanding ...................................... 345,128 357,524 9,149,312
Net assets ...................................................... $ 6,209,250 $4,630,730 $84,503,522
Net asset value per share (net assets divided by
shares outstanding) ........................................... $ 17.99 $ 12.95 $ 9.24
Add: Selling commission (5.75% of the
offering price) ............................................... $ 1.10 $ 0.79 $ 0.56
------------ ---------- -----------
Offering price per share (net asset value
divided by 94.25%) ............................................ $ 19.09 $ 13.74 $ 9.80
============ ========== ===========
CLASS "B" SHARES
Capital shares outstanding ...................................... 204,366 276,573 669,926
Net assets ...................................................... $ 3,640,694 $3,571,861 $ 5,963,749
Net asset value per share (net assets divided by
shares outstanding) ........................................... $ 17.81 $ 12.91 $ 8.90
============ ========== ===========
SEE ACCOMPANYING NOTES
33
</TABLE>
<PAGE>
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
Security Equity Fund
-------------------------------------------------
Security Asset
Growth and Equity Global Allocation
Income Fund Series Series Series
----------- ------------ ----------- -----------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends ..................................... $ 1,076,326 $ 9,352,053 $ 628,639 $ 91,400
Interest ...................................... 1,209,223 1,347,977 105,160 127,936
----------- ------------ ----------- -----------
2,285,549 10,700,030 733,799 219,336
Less foreign tax expense ........................ -- -- (68,229) (5,595)
----------- ------------ ----------- -----------
Total investment income ......................... 2,285,549 10,700,030 665,570 213,741
EXPENSES:
Management fees ............................... 1,024,369 7,375,751 642,585 62,322
Custodian fees ................................ -- -- -- 12,017
Transfer/maintenance fees ..................... -- -- -- 7,611
Administration fees ........................... -- -- -- 53,010
Directors' fees ............................... -- -- -- 99
Professional fees ............................. -- -- -- 4,870
Reports to shareholders ....................... -- -- -- 699
Registration fees ............................. -- -- -- 12,727
Other expenses ................................ -- -- -- 1,015
12b-1 distribution plan fees (Class B) ........ 40,165 631,537 100,029 34,702
Reimbursement of expenses ..................... -- -- -- (45,581)
----------- ------------ ----------- -----------
Total expenses .............................. 1,064,534 8,007,288 742,614 143,491
----------- ------------ ----------- -----------
Net investment income (loss) .............. 1,221,015 2,692,742 (77,044) 70,250
NET REALIZED AND UNREALIZED GAIN:
Net realized gain during the period on:
Investments ................................... 21,245,450 70,480,807 3,217,212 460,170
Foreign currency transactions ................. -- -- 210,315 923
----------- ------------ ----------- -----------
Net realized gain ............................. 21,245,450 70,480,807 3,427,527 461,093
Net change in unrealized appreciation
(depreciation) during the period on:
Investments ................................... 3,450,512 126,763,115 2,598,290 619,830
Translation of assets and liabilities
in foreign currencies ....................... -- -- (34,399) (72)
----------- ------------ ----------- -----------
Net unrealized appreciation ................... 3,450,512 126,763,115 2,563,891 619,758
----------- ------------ ----------- -----------
Net gain .................................... 24,695,962 197,243,922 5,991,418 1,080,851
----------- ------------ ----------- -----------
Net increase in net assets
resulting from operations ............... $25,916,977 $199,936,664 $ 5,914,374 $ 1,151,101
=========== ============ =========== ===========
</TABLE>
SEE ACCOMPANYING NOTES
34
<PAGE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
Security Equity Fund
-----------------------------
Social Security
Awareness Value Ultra
Series* Series** Fund
----------- --------- ------------
<S> <C> <C> <C>
Investment Income:
Dividends ....................................................... $ 35,732 $ 25,955 $ 231,003
Interest ........................................................ 27,525 7,972 325,052
----------- --------- ------------
Total investment income ....................................... 63,257 33,927 556,055
Expenses:
Management fees ................................................. 50,880 17,003 985,285
Custodian fees .................................................. 2,195 1,048 --
Transfer/maintenance fees ....................................... 3,925 1,345 --
Administration fees ............................................. 4,579 1,530 --
Directors' fees ................................................. 74 26 --
Professional fees ............................................... 4,704 991 --
Reports to shareholders ......................................... 114 23 --
Registration fees ............................................... 21,309 8,575 --
Other expenses .................................................. 774 459 360,870
12b-1 distribution plan fees (Class B) .......................... 20,041 8,741 42,336
Reimbursement of expenses ....................................... (50,880) (17,003) --
----------- --------- ------------
Total expenses ................................................ 57,715 22,738 1,388,491
----------- --------- ------------
Net investment income (loss) ................................ 5,542 11,189 (832,436)
Net Realized and Unrealized Gain (Loss):
Net realized gain (loss) during the period on:
Investments ..................................................... (204,858) 107,088 2,810,675
Futures contracts ............................................... -- -- (8,387)
----------- --------- ------------
Net realized gain (loss) ...................................... (204,858) 107,088 2,802,288
Net change in unrealized appreciation during the period on:
Investments ..................................................... 1,640,605 856,969 13,191,840
----------- --------- ------------
Net gain ...................................................... 1,435,747 964,057 15,994,128
----------- --------- ------------
Net increase in net assets
resulting from operations ................................. $ 1,441,289 $ 975,246 $ 15,161,692
=========== ========= ============
</TABLE>
*Period November 1, 1996 (inception) through September 30, 1997.
**Period May 1, 1997 (inception) through September 30, 1997.
SEE ACCOMPANYING NOTES
35
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
Security Equity Fund
--------------------------------------------------
Security Asset
Growth and Equity Global Allocation
Income Fund Series Series Series
------------ ------------- ------------ -----------
<S> <C> <C> <C> <C>
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income (loss) ......................... $ 1,221,015 $ 2,692,742 $ (77,044) $ 70,250
Net realized gain .................................... 21,245,450 70,480,807 3,427,527 461,093
Unrealized appreciation during the period ............ 3,450,512 126,763,115 2,563,891 619,758
------------ ------------- ------------ -----------
Net increase in net assets resulting from operations 25,916,977 199,936,664 5,914,374 1,151,101
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A ............................................ (1,278,257) (3,155,322) (597,023) (63,009)
Class B ............................................ (29,101) -- (199,976) (52,830)
Net realized gain
Class A ............................................ (5,648,284) (49,869,431) (1,243,269) (61,070)
Class B ............................................ (232,550) (4,463,901) (515,069) (73,554)
------------ ------------- ------------ -----------
Total distributions to shareholders .............. (7,188,192) (57,488,654) (2,555,337) (250,463)
CAPITAL SHARE TRANSACTIONS (A):
Proceeds from sales of shares
Class A ............................................ 5,721,292 221,241,550 6,304,969 1,478,803
Class B ............................................ 3,688,134 110,104,405 6,613,460 1,009,991
Dividends reinvested
Class A ............................................ 6,351,214 49,656,213 1,808,607 122,613
Class B ............................................ 253,502 4,431,044 714,502 124,004
Shares redeemed
Class A ............................................ (11,732,659) (219,339,034) (5,834,526) (595,393)
Class B ............................................ (542,134) (76,188,625) (2,640,062) (513,448)
------------ ------------- ------------ -----------
Net increase from capital share transactions ....... 3,739,349 89,905,553 6,966,950 1,626,570
------------ ------------- ------------ -----------
Total increase in net assets ..................... 22,468,134 232,353,563 10,325,987 2,527,208
NET ASSETS:
Beginning of year .................................... 75,520,294 614,502,676 26,928,512 5,230,172
------------ ------------- ------------ -----------
End of year .......................................... $ 97,988,428 $ 846,856,239 $ 37,254,499 $ 7,757,380
============ ============= ============ ===========
Undistributed net investment income at end of year ... $ 96,355 $ 2,266,283 $ 105,784 $ 67,914
============ ============= ============ ===========
(a) Shares issued and redeemed
Shares sold
Class A ............................................ 602,485 27,937,552 503,842 128,634
Class B ............................................ 388,324 14,249,362 537,435 89,049
Dividends reinvested
Class A ............................................ 721,721 6,886,178 157,805 11,078
Class B ............................................ 29,373 628,340 63,438 11,246
Shares redeemed
Class A ............................................ (1,232,959) (27,902,983) (459,717) (50,647)
Class B ............................................ (56,091) (10,027,869) (211,371) (44,492)
------------ ------------- ------------ -----------
Net increase ....................................... 452,853 11,770,580 591,432 144,868
============ ============= ============ ===========
</TABLE>
SEE ACCOMPANYING NOTES
36
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
Security Equity Fund
--------------------------------
Social Security
Awareness Value Ultra
Series* Series** Fund
----------- ----------- ------------
<S> <C> <C> <C>
Increase in net assets from operations:
Net investment income (loss) ..................................... $ 5,542 $ 11,189 $ (832,436)
Net realized gain (loss) ......................................... (204,858) 107,088 2,802,288
Unrealized appreciation during the period ........................ 1,640,605 856,969 13,191,840
----------- ----------- ------------
Net increase in net assets
resulting from operations ..................................... 1,441,289 975,246 15,161,692
Distributions to shareholders from:
Net investment income
Class A ........................................................ -- -- --
Class B ........................................................ -- -- --
Net realized gain
Class A ........................................................ -- -- (5,180,781)
Class B ........................................................ -- -- (326,156)
----------- ----------- ------------
Total distributions to shareholders ............................ -- -- (5,506,937)
Capital share transactions (a):
Proceeds from sales of shares
Class A ........................................................ 5,535,748 4,177,778 22,311,821
Class B ........................................................ 3,185,475 3,087,104 6,072,670
Dividends reinvested
Class A ........................................................ -- -- 4,973,701
Class B ........................................................ -- -- 326,142
Shares redeemed
Class A ........................................................ (306,673) (23,359) (26,312,322)
Class B ........................................................ (5,895) (14,178) (3,487,931)
----------- ----------- ------------
Net increase from capital share transactions ................... 8,408,655 7,227,345 3,884,081
----------- ----------- ------------
Total increase in net assets ................................. 9,849,944 8,202,591 13,538,836
Net assets:
Beginning of period .............................................. -- -- 76,928,435
----------- ----------- ------------
End of period .................................................... $ 9,849,944 $ 8,202,591 $ 90,467,271
=========== =========== ============
Undistributed net investment income at
end of period .................................................. $ 5,542 $ 11,189 $ --
=========== =========== ============
(a) Shares issued and redeemed
Shares sold
Class A ........................................................ 363,334 359,432 2,872,813
Class B ........................................................ 204,698 277,836 766,245
Dividends reinvested
Class A ........................................................ -- -- 656,941
Class B ........................................................ -- -- 44,428
Shares redeemed
Class A ........................................................ (18,206) (1,908) (3,375,134)
Class B ........................................................ (332) (1,263) (476,747)
----------- ----------- ------------
Net increase ................................................... 549,494 634,097 488,546
=========== =========== ============
</TABLE>
*Period November 1, 1996 (inception) through September 30, 1997.
**Period May 1, 1997 (inception) through September 30, 1997.
SEE ACCOMPANYING NOTES
37
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED SEPTEMBER 30, 1997
<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 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
38
<PAGE>
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR EACH SHARE OF
CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
SECURITY GROWTH AND INCOME FUND (CLASS A) (b)
Fiscal Period Ended September 30
------------------------------------------------------------------------------
1997(g) 1996(g) 1995(g) 1994(c) 1993
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA
NET ASSET VALUE BEGINNING OF PERIOD ........... $ 9.05 $ 7.93 $ 6.96 $ 7.84 $ 7.13
Income from Investment Operations:
Net Investment Income ......................... 0.144 0.18 0.16 0.13 0.21
Net Gain (Loss) on Securities
(realized and unrealized) .................... 2.813 1.373 1.183 (0.713) 0.876
------------ ------------ ------------ ------------ ------------
Total from Investment Operations .............. 2.957 1.553 1.343 (0.583) 1.086
Less Distributions
Dividends (from Net Investment Income) ........ (0.155) (0.158) (0.158) (0.128) (0.218)
Distributions (from Capital Gains) ............ (0.708) (0.275) (0.215) (0.169) (0.158)
------------ ------------ ------------ ------------ ------------
Total Distributions ........................ (0.863) (0.433) (0.373) (0.297) (0.376)
------------ ------------ ------------ ------------ ------------
NET ASSET VALUE END OF PERIOD ................. $ 11.14 $ 9.05 $ 7.93 $ 6.96 $ 7.84
============ ============ ============ ============ ============
TOTAL RETURN (a) .............................. 35.31% 20.31% 20.25% (7.6%) 15.6
RATIOS/SUPPLEMENTAL DATA
Net Assets End of Period (thousands) .......... $ 91,252 $ 73,273 $ 67,430 $ 65,328 $ 81,982
Ratio of Expenses to Average Net Assets ....... 1.24% 1.29% 1.31% 1.28% 1.26%
Ratio of Net Investment Income (Loss)
to Average Net Assets ....................... 1.53% 2.09% 2.21% 1.70% 2.80%
Portfolio Turnover Rate ....................... 124% 69% 130% 163% 135%
Average Commission Paid Per Equity
Share Traded (j) ............................ $ 0.0600 $ 0.0625 -- -- --
SECURITY GROWTH AND INCOME FUND (CLASS B)
Fiscal Period Ended September 30
--------------------------------------------------------------
1997(g) 1996(g) 1995(g) 1994(c)
------------ ------------ ------------ ------------
PER SHARE DATA
NET ASSET VALUE BEGINNING OF PERIOD ........... $ 8.94 $ 7.85 $ 6.90 $ 7.83
Income from Investment Operations:
Net Investment Income ......................... 0.048 0.09 0.08 0.05
Net Gain (Loss) on Securities
(realized and unrealized) .................... 2.776 1.353 1.179 (0.694)
------------ ------------ ------------ ------------
Total from Investment Operations .............. 2.824 1.443 1.259 (0.644)
Less Distributions
Dividends (from Net Investment Income) ........ (0.063) (0.078) (0.094) (0.117)
Distributions (from Capital Gains) ............ (0.708) (0.275) (0.215) (0.169)
------------ ------------ ------------ ------------
Total Distributions ........................ (0.771) (0.353) (0.309) (0.286)
------------ ------------ ------------ ------------
NET ASSET VALUE END OF PERIOD ................. $ 10.99 $ 8.94 $ 7.85 $ 6.90
============ ============ ============ ============
TOTAL RETURN (a) .............................. 34.01% 19.01% 19.07% (8.0%)
RATIOS/SUPPLEMENTAL DATA
Net Assets End of Period (thousands) .......... $ 6,737 $ 2,247 $ 1,130 $ 668
Ratio of Expenses to Average Net Assets ....... 2.24% 2.29% 2.31% 2.27%
Ratio of Net Investment Income (Loss)
to Average Net Assets ....................... 0.53% 1.09% 1.21% 1.03%
Portfolio Turnover Rate ....................... 124% 69% 130% 178%
Average Commission Paid Per
Equity Share Traded (j) ..................... $ 0.0600 $ 0.0625 -- --
</TABLE>
SEE ACCOMPANYING NOTES
39
<PAGE>
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR EACH SHARE OF
CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
SECURITY EQUITY SERIES (CLASS A)
Fiscal Period Ended September 30
-------------------------------------------------------------------------------
1997(g) 1996(g) 1995(g) 1994(c) 1993
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA
NET ASSET VALUE BEGINNING OF PERIOD .............. $ 7.54 $ 6.55 $ 5.54 $ 6.73 $ 5.86
Income from Investment Operations:
Net Investment Income ............................ 0.04 0.05 0.04 0.05 0.12
Net Gain (Loss) on Securities
(realized and unrealized) ....................... 2.199 1.482 1.377 0.085 1.165
------------- ------------- ------------- ------------- -------------
Total from Investment Operations ................. 2.239 1.532 1.417 0.135 1.285
Less Distributions
Dividends (from Net Investment Income) ........... (0.041) (0.060) -- (0.120) (0.053)
Distributions (from Capital Gains) ............... (0.648) (0.482) (0.407) (1.205) (0.362)
------------- ------------- ------------- ------------- -------------
Total Distributions ........................... (0.689) (0.542) (0.407) (1.325) (0.415)
------------- ------------- ------------- ------------- -------------
NET ASSET VALUE END OF PERIOD .................... $ 9.09 $ 7.54 $ 6.55 $ 5.54 $ 6.73
============= ============= ============= ============= =============
TOTAL RETURN(a) .................................. 32.08% 24.90% 27.77% 1.95% 22.70%
RATIOS/SUPPLEMENTAL DATA
Net Assets End of Period (thousands) ............. $ 757,520 $ 575,680 $ 440,339 $ 358,237 $ 375,565
Ratio of Expenses to Average Net Assets .......... 1.03% 1.04% 1.05% 1.06% 1.06%
Ratio of Net Investment Income (Loss) to Average
Net Assets ..................................... 0.46% 0.75% 0.87% 0.86% 1.95%
Portfolio Turnover Rate .......................... 66% 64% 95% 79% 95%
Average Commission Paid Per Equity
Share Traded (j) ............................... $ 0.0600 $ 0.0609 -- -- --
SECURITY EQUITY SERIES (CLASS B)
Fiscal Period Ended September 30
---------------------------------------------------------------
1997(g) 1996(g) 1995(g) 1994(c)
------------- ------------- ------------- -------------
PER SHARE DATA
NET ASSET VALUE BEGINNING OF PERIOD .............. $ 7.36 $ 6.43 $ 5.49 $ 6.81
Income from Investment Operations:
Net Investment Income (Loss) ..................... (0.04) (0.02) (0.01) 0.01
Net Gain (Loss) on Securities
(realized and unrealized) ....................... 2.148 1.449 1.357 (0.005)
------------- ------------- ------------- -------------
Total from Investment Operations ................. 2.108 1.429 1.347 0.005
Less Distributions
Dividends (from Net Investment Income) ........... -- (0.017) -- (0.12)
Distributions (from Capital Gains) ............... (0.648) (0.482) (0.407) (1.205)
------------- ------------- ------------- -------------
Total Distributions ........................... (0.648) (0.499) (0.407) (1.325)
------------- ------------- ------------- -------------
NET ASSET VALUE END OF PERIOD .................... $ 8.82 $ 7.36 $ 6.43 $ 5.49
============= ============= ============= =============
TOTAL RETURN(a) .................................. 30.85% 23.57% 26.69% (0.15%)
RATIOS/SUPPLEMENTAL DATA
Net Assets End of Period (thousands) ............. $ 89,336 $ 38,822 $ 19,288 $ 7,452
Ratio of Expenses to Average Net Assets .......... 2.03% 2.04% 2.05% 2.07%
Ratio of Net Investment Income
(Loss) to Average Net Assets ................... (0.54%) (0.25%) (0.13%) (0.01%)
Portfolio Turnover Rate .......................... 66% 64% 95% 80%
Average Commission Paid Per Equity
Share Traded (j) ............................... $ 0.0600 $ 0.0609 -- --
</TABLE>
SEE ACCOMPANYING NOTES
40
<PAGE>
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR EACH SHARE OF
CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
SECURITY GLOBAL SERIES (CLASS A)
Fiscal Period Ended September 30
-------------------------------------------------------------------
1997(g) 1996(g) 1995(g) 1994(c)(d)
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
PER SHARE DATA
NET ASSET VALUE BEGINNING OF PERIOD .................. $ 12.42 $ 10.94 $ 10.84 $ 10.00
Income from Investment Operations:
Net Investment Income (Loss) ......................... 0.01 0.01 (0.02) (0.03)
Net Gain (Loss) on Securities
(realized and unrealized) ........................... 2.289 1.874 0.31 0.87
------------ ------------ ------------ ------------
Total from Investment Operations ..................... 2.299 1.884 0.29 0.84
Less Distributions
Dividends (from Net Investment Income) ............... (0.376) (0.248) -- --
Distributions (from Capital Gains) ................... (0.783) (0.156) (0.19) --
------------ ------------ ------------ ------------
Total Distributions ............................... (1.159) (0.404) (0.19) --
------------ ------------ ------------
NET ASSET VALUE END OF PERIOD ........................ $ 13.56 $ 12.42 $ 10.94 $ 10.84
============ ============ ============ ============
TOTAL RETURN (a) ..................................... 20.22% 17.73% 2.80% 8.40%
RATIOS/SUPPLEMENTAL DATA NET ASSETS
End of Period (thousands) ............................ $ 24,193 $ 19,644 $ 16,261 $ 20,128
Ratio of Expenses to
Average Net Assets ................................. 2.00% 2.00% 2.00% 2.00%
Ratio of Net Investment Income (Loss)
to Average Net Assets .............................. (0.07%) 0.07% (0.17%) (0.01%)
Portfolio Turnover Rate .............................. 132% 142% 141% 73%
Average Commission Paid Per Equity
Share Traded (j) ................................... $ 0.0141 $ 0.0338 -- --
SECURITY GLOBAL SERIES (CLASS B)
Fiscal Period Ended September 30
-------------------------------------------------------------------
1997(g) 1996(g) 1995(g) 1994(c)(d)
------------ ------------ ------------ ------------
PER SHARE DATA
NET ASSET VALUE BEGINNING OF PERIOD .................. $ 12.18 $ 10.74 $ 10.75 $ 9.96
Income from Investment Operations:
Net Investment Loss .................................. (0.11) (0.10) (0.12) (0.12)
Net Gain on Securities
(realized and unrealized) ........................... 2.237 1.841 0.30 0.91
------------ ------------ ------------ ------------
Total from Investment Operations ..................... 2.127 1.741 0.18 0.79
Less Distributions
Dividends (from Net Investment Income) ............... (0.304) (0.145) -- --
Distributions (from Capital Gains) ................... (0.783) (0.156) (0.19) --
------------ ------------ ------------ ------------
Total Distributions ............................... (1.087) (0.301) (0.19) --
------------ ------------ ------------ ------------
NET ASSET VALUE END OF PERIOD ........................ $ 13.22 $ 12.18 $ 10.74 $ 10.75
============ ============ ============ ============
TOTAL RETURN(a) ..................................... 19.01% 16.57% 1.79% 7.90%
Ratios/Supplemental Data
Net Assets End of Period (thousands) ................. $ 13,061 $ 7,285 $ 5,433 $ 3,960
Ratio of Expenses to Average Net Assets .............. 3.00% 3.00% 3.00% 3.00%
Ratio of Net Investment Income (Loss) to Average
Net Assets ......................................... (0.93%) (0.93%) (1.17%) (0.01%)
Portfolio Turnover Rate .............................. 132% 142% 141% 73%
Average Commission Paid Per Equity
Share Traded (j) ................................... $ 0.0141 $ 0.0338 -- --
</TABLE>
SEE ACCOMPANYING NOTES
41
<PAGE>
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR EACH SHARE OF
CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
SECURITY ASSET ALLOCATION SERIES (CLASS A)
Fiscal Period Ended September 30
-----------------------------------------------------------
1997(f)(g)(k) 1996(f)(g) 1995(e)(f)(g)
----------- ----------- -----------
<S> <C> <C> <C>
PER SHARE DATA
NET ASSET VALUE BEGINNING OF PERIOD ...................... $ 11.06 $ 10.54 $ 10.00
Income from Investment Operations:
Net Investment Income (Loss) ............................. 0.17 0.25 0.04
Net Gain (Loss) on Securities
(realized and unrealized) ............................... 1.862 0.765 0.50
----------- ----------- -----------
Total from Investment Operations ......................... 2.032 1.015 0.54
Less Distributions
Dividends (from Net Investment Income) ................... (0.260) (0.328) --
Distributions (from Capital Gains) ....................... (0.252) (0.167) --
----------- ----------- -----------
Total Distributions ................................... (0.512) --
----------- ----------- -----------
NET ASSET VALUE END OF PERIOD ............................ $ 12.58 $ 11.06 $ 10.54
=========== =========== ===========
TOTAL RETURN(a) .......................................... 19.00% 10.01% 5.40%
Ratios/Supplemental Data
Net Assets End of Period (thousands) ..................... $ 3,906 $ 2,449 $ 1,906
Ratio of Expenses to Average Net Assets .................. 1.68% 2.00% 2.00%
Ratio of Net Investment Income (Loss) to Average
Net Assets ............................................. 1.52% 2.32% 1.33%
Portfolio Turnover Rate .................................. 79% 75% 129%
Average Commission Paid Per Equity
Share Traded (j) ....................................... $ 0.0409 $ 0.0247 --
SECURITY ASSET ALLOCATION SERIES (CLASS B)
Fiscal Period Ended September 30
-----------------------------------------------------------
1997(f)(g)(k) 1996(f)(g) 1995(e)(f)(g)
----------- ----------- -----------
PER SHARE DATA
NET ASSET VALUE BEGINNING OF PERIOD ...................... $ 10.97 $ 10.50 $ 10.00
Income from Investment Operations:
Net Investment Income (Loss) ............................. 0.07 0.14 0.01
Net Gain (Loss) on Securities
(realized and unrealized) ............................... 1.843 0.77 0.49
----------- ----------- -----------
Total from Investment Operations ......................... 1.913 0.91 0.50
Less Distributions
Dividends (from Net Investment Income) ................... (0.181) (0.273) --
Distributions (from Capital Gains) ....................... (0.252) (0.167) --
----------- ----------- -----------
Total Distributions ................................... (0.433) (0.440) --
----------- ----------- -----------
NET ASSET VALUE END OF PERIOD ............................ $ 12.45 $ 10.97 $ 10.50
=========== =========== ===========
TOTAL RETURN(a) .......................................... 17.95% 8.97% 5.00%
Ratios/Supplemental Data
Net Assets End of Period (thousands) ..................... $ 3,851 $ 2,781 $ 1,529
Ratio of Expenses to Average Net Assets .................. 2.58% 3.00% 3.00%
Ratio of Net Investment Income (Loss) to Average
Net Assets ............................................. 0.61% 1.32% 0.31%
Portfolio Turnover Rate .................................. 79% 75% 129%
Average Commission Paid Per Equity
Share Traded (j) ....................................... $ 0.0409 $ 0.0247 --
</TABLE>
SEE ACCOMPANYING NOTES
42
<PAGE>
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR EACH SHARE OF
CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
SECURITY SOCIAL AWARENESS SERIES (CLASS A)
Fiscal Period Ended September 30
--------------------------------
1997(g)(h)
-----------
Per Share Data
Net Asset Value Beginning of Period ............. $ 15.00
Income from Investment Operations:
Net Investment Income (Loss) .................... 0.08
Net Gain (Loss) on Securities
(realized and unrealized) ...................... 2.91
-----------
Total from Investment Operations ................ 2.99
Less Distributions
Dividends (from Net Investment Income) .......... --
Distributions (from Capital Gains) .............. --
-----------
Total Distributions .......................... --
-----------
Net Asset Value End of Period ................... $ 17.99
===========
Total Return (a) ................................ 19.93%
Ratios/Supplemental Data
Net Assets End of Period (thousands) ............ $ 6,209
Ratio of Expenses to Average Net Assets ......... 0.67%
Ratio of Net Investment Income (Loss) to Average
Net Assets .................................... 0.57%
Portfolio Turnover Rate ......................... 38%
Average Commission Paid Per Equity
Share Traded (j) .............................. $ 0.0600
SECURITY SOCIAL AWARENESS SERIES (CLASS B)
Fiscal Period Ended September 30
--------------------------------
1997(f)(g)(h)
-----------
Per Share Data
Net Asset Value Beginning of Period ............. $ 15.00
Income from Investment Operations:
Net Investment Income (Loss) .................... (0.08)
Net Gain (Loss) on Securities
(realized and unrealized) ...................... 2.89
-----------
Total from Investment Operations ................ 2.81
Less Distributions
Dividends (from Net Investment Income) .......... --
Distributions (from Capital Gains) .............. --
-----------
Total Distributions .......................... --
-----------
Net Asset Value End of Period ................... $ 17.81
===========
Total Return (a) ................................ 18.73%
Ratios/Supplemental Data
Net Assets End of Period (thousands) ............ $ 3,641
Ratio of Expenses to Average Net Assets ......... 1.84%
Ratio of Net Investment Income (Loss) to Average
Net Assets .................................... (0.60%)
Portfolio Turnover Rate ......................... 38%
Average Commission Paid Per Equity
Share Traded (j) .............................. $ 0.0600
SEE ACCOMPANYING NOTES
43
<PAGE>
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR EACH SHARE OF
CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
SECURITY VALUE SERIES (CLASS A)
Fiscal Period Ended September 30
--------------------------------
1997(f)(g)(i)
-----------
Per Share Data
Net Asset Value Beginning of Period ............. $ 10.00
Income from Investment Operations:
Net Investment Income (Loss) .................... 0.05
Net Gain (Loss) on Securities
(realized and unrealized) ...................... 2.90
-----------
Total from Investment Operations ................ 2.95
Less Distributions
Dividends (from Net Investment Income) .......... --
Distributions (from Capital Gains) .............. --
-----------
Total Distributions .......................... --
-----------
Net Asset Value End of Period ................... $ 12.95
===========
Total Return (a) ................................ 29.50%
Ratios/Supplemental Data
Net Assets End of Period (thousands) ............ $ 4,631
Ratio of Expenses to Average Net Assets ......... 1.10%
Ratio of Net Investment Income (Loss) to Average
Net Assets .................................... 1.43%
Portfolio Turnover Rate ......................... .35%
Average Commission Paid Per Equity
Share Traded (j) .............................. $ 0.0600
SECURITY VALUE SERIES (CLASS B)
Fiscal Period Ended September 30
--------------------------------
1997(f)(g)(i)
-----------
Per Share Data
Net Asset Value Beginning of Period ............. $ 10.00
Income from Investment Operations:
Net Investment Income (Loss) .................... 0.01
Net Gain (Loss) on Securities
(realized and unrealized) ...................... 2.90
-----------
Total from Investment Operations ................ 2.91
Less Distributions
Dividends (from Net Investment Income) .......... --
Distributions (from Capital Gains) .............. --
-----------
Total Distributions .......................... --
-----------
Net Asset Value End of Period ................... $ 12.91
===========
Total Return (a) ................................ 29.10%
Ratios/Supplemental Data
Net Assets End of Period (thousands) ............ $ 3,572
Ratio of Expenses to Average Net Assets ......... 2.26%
Ratio of Net Investment Income (Loss) to Average
Net Assets .................................... 0.27%
Portfolio Turnover Rate ......................... .35%
Average Commission Paid Per Equity
Share Traded (j) .............................. $ 0.0600
SEE ACCOMPANYING NOTES
44
<PAGE>
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR EACH SHARE OF
CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
SECURITY ULTRA FUND (CLASS A)
Fiscal Period Ended September 30
---------------------------------------------------------------------------
1997(g) 1996(g) 1995(f) 1994(c) 1993
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA
NET ASSET VALUE BEGINNING OF PERIOD .............. $ 8.25 $ 8.20 $ 6.82 $ 8.13 $ 6.66
Income from Investment Operations:
Net Investment Income (loss) ..................... (0.08) (0.05) (0.02) (0.056)
Net Gain (Loss) on Securities
(realized and unrealized) ....................... 1.649 1.096 1.535 (0.188) 1.791
------------ ------------ ------------ ------------ ------------
Total from Investment Operations ................. 1.569 1.046 1.515 (0.244) 1.763
Less Distributions
Dividends (from Net Investment Income) ........... -- -- -- -- --
Distributions (from Capital Gains) ............... (0.579) (0.996) (0.135) (1.066) (0.293)
------------ ------------ ------------ ------------ ------------
Total Distributions ........................... (0.579) (0.996) (0.135) (1.066) (0.293)
------------ ------------ ------------ ------------ ------------
Net Asset Value End of Period .................... $ 9.24 $ 8.25 $ 8.20 $ 6.82 $ 8.13
============ ============ ============ ============ ============
TOTAL RETURN(a) 20.57% 15.36% 22.69% (3.6%) 26.80%
RATIOS/SUPPLEMENTAL DATA
Net Assets End of Period (thousands) ............. $ 84,504 $ 74,230 $ 66,052 $ 60,695 $ 71,056
Ratio of Expenses to Average Net Assets .......... 1.71% 1.31% 1.32% 1.33% 1.30%
Ratio of Net Investment Income (Loss)
to Average Net Assets .......................... (1.01%) (.61%) (.31%) (.80%) (.50%)
Portfolio Turnover Rate .......................... 68% 161% 180% 111% 101%
Average Commission Paid Per Equity
Share Traded (j) ............................... $ 0.0600 $ 0.0606 -- -- --
SECURITY ULTRA FUND (CLASS B)
Fiscal Period Ended September 30
-----------------------------------------------------------
1997(g) 1996(g) 1995(g) 1994(c)
------------ ------------ ------------ ------------
PER SHARE DATA
NET ASSET VALUE BEGINNING OF PERIOD .............. $ 8.03 $ 8.11 $ 6.81 $ 8.30
Income from Investment Operations:
Net Investment Income (loss) ..................... (0.15) (0.13) (0.09) (0.103)
Net Gain (Loss) on Securities
(realized and unrealized) ....................... 1.599 1.046 1.525 (0.321)
------------ ------------ ------------ ------------
Total from Investment Operations ................. 1.449 0.916 1.435 (0.424)
Less Distributions
Dividends (from Net Investment Income) ........... -- -- -- --
Distributions (from Capital Gains) ............... (0.579) (0.996) (0.135) (1.066)
------------ ------------ ------------ ------------
Total Distributions ........................... (0.579) (0.996) (0.135) (1.066)
------------ ------------ ------------ ------------
NET ASSET VALUE END OF PERIOD .................... $ 8.90 $ 8.03 $ 8.11 $ 6.81
============ ============ ============ ============
TOTAL RETURN(a) .................................. 19.58% 13.81% 21.53% (5.70%)
Ratios/Supplemental Data
Net Assets End of Period (thousands) ............. $ 5,964 $ 2,698 $ 5,428 $ 1,254
Ratio of Expenses to Average Net Assets .......... 2.71% 2.31% 2.32% 2.36%
Ratio of Net Investment Income
(Loss) to Average Net Assets ................... (2.01%) (1.61%) (1.32%) (1.76%)
Portfolio Turnover Rate .......................... 68% 161% 180% 110%
Average Commission Paid Per Equity
Share Traded (j) ............................... $ 0.0600 $ 0.0606 -- --
</TABLE>
SEE ACCOMPANYING NOTES
45
<PAGE>
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR EACH SHARE OF
CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
(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 1997
Asset Allocation Series Class A 3.6% 3.1% 2.4%
Class B 4.7% 3.9% 3.3%
Social Awareness Series Class A N/A N/A 1.7%
Class B N/A N/A 2.8%
Value Series Class A N/A N/A 1.9%
Class B N/A N/A 2.8%
(g) Net investment income (loss) was computed using average shares
outstanding throughout the period.
(h) Security Social Awareness Series was initially capitalized on November
1, 1996, with a net asset value of $15 per share. Percentage amounts
for the period, except for total return, have been annualized.
(i) Security Value Series was initially capitalized on May 1, 1997, with a
net asset value of $10 per share. Percentage amounts for the period,
except for total return, have been annualized.
(j) Brokerage commissions paid on portfolio transactions increase the cost
of securities purchased or reduce the proceeds of securities sold and
are not reflected in the Fund's statement of operations. Shares traded
on a principal basis, such as most over-the-counter and fixed-income
transactions, pay a "spread" or "mark-up" rather than a commission and
are therefore excluded from this calculation. Generally, non-U.S.
commissions are lower than U.S. commissions when expressed as cents
per share but higher when expressed as a percentage of transactions
because of the lower per-share prices of many non-U.S. securities.
Prior to 1996, average commission information was not required to be
disclosed.
(k) Meridian Investment Management Corporation (Meridian) became the
sub-advisor of Asset Allocation Series effective August 1, 1997. Prior
to August 1, 1997 SMC paid Templeton/Franklin Investment Services,
Inc. and Meridian for research services provided to Asset Allocation
Series.
46
<PAGE>
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
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 five Series, the Equity Series, the Global Series, the Asset
Allocation Series, the Social Awareness Series and the Value Series, with each
Series, in effect representing a separate Fund. Class A shares are sold with a
sales charge at the time of purchase. Class A shares are not subject to a sales
charge when they are redeemed. 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, Social Awareness 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, Social Awareness 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, Social
Awareness 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
47
<PAGE>
NOTES TO FINANCIAL STATEMENTS - (continued)
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, 1997.
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, LLC (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, Social Awareness and Value 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, Social Awareness and
Value Series, and accordingly receives a fee equal to 1% of the average net
assets of these Series.
SMC also acts as the administrative agent and transfer agent for the
Asset Allocation, Social Awareness and Value Series, and as such performs
administrative functions, transfer agency and dividend disbursing services, and
the bookkeeping, accounting and pricing functions for each Series. For these
services, the Investment Manager receives, from Asset Allocation Series, 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
ended June 1, 1997; and (ii) $60,000 thereafter. For administrative services
provided to the Social Awareness Series and the Value Series, SMC receives an
administrative fee equal to .09% of the average daily net assets of each Series.
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 Meridian Investment Management Corporation for
subadvisory services provided to the Asset Allocation Series, an annual fee
equal to the following schedule:
Average Daily Net Assets of the Series
- --------------------------------------
Annual Fees Less Than $100 Million ...................... .40%, plus
$100 Million but less than $200 Million ................ .35%, plus
$200 Million but less than $400 Million ................. .30%, plus
$400 Million or more .................................... .25%
SMC has agreed to limit the total expenses of the Asset Allocation
Series, Social Awareness Series and Value Series to 2% of the average net
assets, excluding 12b-1 fees. SMC has agreed to waive a portion of the
management fees for the Asset Allocation Series until December 31, 1997. SMC has
also agreed to waive the management fees for the Social Awareness Series and
Value Series until December 31, 1997.
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. (SDl), a wholly-owned subsidiary of SMC and
the national distributor for the Funds, received net underwriting commissions on
sales of Class A shares and contingent deferred sales charges on redemptions
occurring within 5 years of the date of purchase of Class B shares after
allowances to brokers and dealers in the amounts presented in the following
table:
SDI BROKER/ BROKER/
UNDERWRITING CDSC DEALER DEALER
(CLASS A) (CLASS B) (CLASS A) (CLASS B)
------- ------- -------- ----------
Growth & Income Fund $ 6,497 $ 1,741 $ 55,940 $ 85,564
Equity Series $21,344 $31,015 $778,593 $1,754,380
Global Series $ 2,930 $13,291 $ 26,859 $ 55,345
Asset Allocation Series $ 3,114 $ 1,692 $ 25,882 $ 31,946
Social Awareness Series $ 7,639 $ 267 $ 54,306 $ 32,082
Value Series $ 2,015 $ 2 $ 72,587 $ 103,444
Ultra Fund $ 5,388 $20,208 $ 29,224 $ 27,608
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, 1997, were as follows:
GROSS GROSS NET UNREALIZED
UNREALIZED UNREALIZED APPRECIATION
APPRECIATION DEPRECIATION (DEPRECIATION)
----------- ---------- -----------
Growth & Income Fund $18,918,936 $(249,688) $18,669,248
Equity Series 300,425,818 (987,108) 299,438,710
Global Series 5,804,947 (1,270,603) 4,534,344
Asset Allocation Series 862,282 (136,148) 726,134
Social Awareness Series 1,689,008 (48,403) 1,640,605
Value Series 907,176 (50,207) 856,969
Ultra Fund 30,685,496 (438,553) 30,246,943
48
<PAGE>
NOTES TO FINANCIAL STATEMENTS - (continued)
The Growth and Income Fund, Equity Series and Ultra Fund hereby respectively
designate $2,267,187, $34,713,025 and $5,506,937 as capital gain dividends paid
during the fiscal year ended September 30, 1997, for the purpose of the
dividends paid deduction on each Funds' federal income tax return.
4. INVESTMENT TRANSACTIONS
Investment transactions for the year ended September 30, 1997,
(excluding overnight investments and short-term commercial paper) are as
follows:
PROCEEDS
PURCHASES FROM SALES
------------ ------------
Growth & Income Fund $ 99,960,633 $ 99,598,523
Equity Series 460,221,504 449,109,177
Global Series 45,641,917 39,169,516
Asset Allocation Series 6,558,807 5,418,430
Social Awareness Series 9,617,933 1,830,734
Value Series 7,852,627 670,080
Ultra Fund 48,583,055 50,356,848
5. FORWARD FOREIGN EXCHANGE CONTRACTS
At September 30, 1997, 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 CURRENCY GAIN
CURRENCY DATE AMOUNT RATE RATE (LOSS)
- ------------------ ------- ---------- ------- ------- -------
British Pound 4/1/98 $1,161,148 1.59965 1.6057 ($7,025)
New Zealand Dollar 10/3/97 $917,017 0.689975 0.64165 44,315
-------
$37,290
=======
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, 1997, that qualified for the dividends received deductions for
corporate shareholders was 12%, 86%, 4%, 15%, 100%, 21% and 0% of the amount
taxable as ordinary income for Growth and Income Fund, Equity Series, Global
Series, Asset Allocation Series, Social Awareness Series, Value Series and Ultra
Fund respectively, in accordance with the provisions of the Internal Revenue
Code.
7. LEGAL PROCEEDINGS
Security Ultra Fund was named as a class defendant in an adversary
proceeding filed on March 14, 1995, in a pending bankruptcy, captioned In re:
Integra Realty Resources, Inc., Integra-a Hotel and restaurant Company
(Integra), and BHC of Denver, Inc., United States Bankruptcy Court for the
District of Colorado. The adversary proceeding was brought by the Trustee for
the Integra Unsecured Creditors against the principal defendant Fidelity Capital
Appreciation Fund and over 6,000 other class defendants, including the Ultra
Fund. The Trustee alleges that the defendants, former shareholders of Integra
Realty Resources, Inc., improperly received a distribution of Integra's assets
in December 1988, when Integra distributed all of the shares of its subsidiary,
ShowBiz Pizza Time, to its shareholders, leaving insufficient resources for
Integra to continue to operate to the detriment of the Integra Unsecured
Creditors. Ultra Fund has reached a settlement agreement, with the plaintiff for
$360,870, which will be paid in October, 1997. This settlement was approved by
the Fund's Board of Directors and is reflected as other payables and other
expenses in the accompanying financial statements.
8. SHAREHOLDERS' MEETING
A special meeting of the shareholders of the Asset Allocation Series was
held on August 1, 1997. At this meeting, shareholders voted to approve a new
Sub-Advisory Contract between Security Management Company, LLC and Meridian
Investment Management Corporation. Holders of 449,320 shares out of a total of
611,069 shares of capital stock of the Series issued and outstanding on the
record date for the meeting (close of business on June 5, 1997) were represented
at the meeting. Of the shares 449,320 represented, 428,751 shares were voted
for, 11,732 shares abstained and 8,837 shares voted against.
49
<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, Asset Allocation, Social Awareness and Value Series) and
Security Ultra Fund (the Funds) as of September 30, 1997, and the related
statements of operations, changes in net assets, and financial highlights for
the periods indicated therein. 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, 1997, 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, 1997, 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
October 31, 1997
50
<PAGE>
The Security Group of Mutual Funds
Security Growth and Income Fund
Security Equity Fund
o Equity Series
o Global Series
o Asset Allocation Series
o Social Awareness Series
o Value Series
Security Ultra Fund
Security Income Fund
o Corporate Bond Series
o U.S. Government Series
o Limited Maturity Bond Series
o 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
Donald A. Chubb, Jr.
John D. Cleland
Donald L. Hardesty
Penny A. Lumpkin
Mark L. Morris, Jr., D.V.M.
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
Cindy L. Shields, Assistant Vice President
Thomas A. Swank, Vice President
Amy J. Lee, Secretary
Christopher D. Swickard, Assistant Secretary
Brenda M. Harwood, Assistant Treasurer and Assistant Secretary
Security Distributors, Inc.
700 SW Harrison St.
Topeka, KS 66636-0001
(785) 431-3127
(800) 888-2461
