<PAGE> 1
SECURITY
FUNDS
===============================================================================
ANNUAL
REPORT
SEPTEMBER 30, 1998
- Security
Growth and
Income Fund
- Security Equity
Fund
-Equity Series
-Global Series
-Asset
Allocation
Series
-Social
Awareness
Series
-Value
Series
-Small
Company
Series
- Security Ultra
Fund
SECURITY DISTRIBUTORS, INC.
A Member of The Security Benefit
Group of Companies
<PAGE> 2
PRESIDENT'S COMMENTARY
...............................................................................
NOVEMBER 15, 1998
To Our Shareholders:
The twelve months ended September 30, 1998 reintroduced an element of reality to
the financial markets. The total return of 9.05% from the large-cap Standard &
Poor's 500 Stock Index more closely approximates historical rates of return than
the unrealistic 20% to 30% gains of the previous three years. Most other equity
markets produced negative returns for the year. The small cap and midcap markets
were adversely impacted as investors moved to the larger stocks in a search for
quality and liquidity, perceiving that the world is still a troubled place.
[John Cleland PHOTO]
THE EXOGENOUS SHOCKS FINALLY ARRIVE
The meltdown in Russia, followed in short order by the collapse of the Long Term
Capital Management Fund, proved to be the exogenous shocks to the system that
changed the psychological climate in the equity markets dramatically. We do not
believe, however, that the current climate of gloom and doom is any more
warranted than the excessive euphoria that prevailed a year ago. There are still
some strong positive factors at work that should favorably impact the markets
once the global climate quiets.
The U.S. economy, while clearly slowing its growth rate, remains an enormously
powerful engine driven by the consumer. Consumer confidence and disposable
income continue to be at high levels because inflationary pressures have largely
disappeared and unemployment remains low. We expect further cuts by the Federal
Reserve Bank in short term interest rates over the coming months, which should
allow long term rates to continue to decline.
VOLATILITY WILL REMAIN HIGH,
BUT MARKETS WILL FINALLY STABILIZE
While we believe market volatility will continue at historically high levels,
once global events settle down and the political uncertainty in our nation's
capital is resolved investors' psychological attitudes should improve
dramatically and the equity markets can resume their upward climb. We continue
to encourage the ratcheting down of return expectations to levels closer to
their historical norms for holders of equities as we expect markets in coming
years to perform closer to those averages.
In the following pages our portfolio managers discuss the performance of their
respective funds as well as their outlooks for the months ahead. As always, we
appreciate your continuing investments in Security products. We invite your
questions and comments at any time.
Sincerely,
/s/ John Cleland
- -----------------------
John Cleland, President
The Security Funds
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1
<PAGE> 3
MANAGER'S COMMENTARY
- -------------------------------------------------------------------------------
SECURITY GROWTH AND INCOME FUND
NOVEMBER 15, 1998
To Our Shareholders:
The fiscal year ended September 30, 1998 was a difficult year overall for the
equity markets, and especially so for income oriented stocks in general. A large
portion of the price appreciation over the course of the year occurred in the
large-cap growth names, while those sectors and companies which traditionally
provide the higher dividends that are typical holdings in growth and income
portfolios lagged the markets. Our portfolio was no exception to this trend,
generating a negative 7.95% total return for the year versus the Standard and
Poor's 500 Stock Index return of +9.05%1. The average return for our Lipper peer
group was -1.08%.
[Michael A. Petersen
Portfolio Manager PHOTO]
RESTRUCTURING EARLY IN THE FISCAL YEAR
We entered the fiscal year with a portfolio invested approximately 90% in
equities and 10% in high yield corporate bonds and still maintain that balance.
At the beginning of the period the orientation of the stocks was primarily
midcap value. Over the last nine months, however, we have shifted more toward
the large-cap issues with higher dividend yields that are more typical of growth
and income funds. We have also concentrated on lower risk, more defensive names
and have diversified well across a broad spectrum of sectors. The percentage of
assets invested in the utility and energy sectors, the standard growth and
income havens, has been increased.
During the first half of calendar year 1998 our moves into more defensive stocks
worked against us as the environment at that time favored aggressive growth
companies. In the July through September quarter, however, these same stocks
helped us outperform our peers as the markets turned negative. An underweighting
in the financial sector in this later quarter also was a positive as money
center banks and brokerage houses fell 30% to 60% from their summer highs.
PRICE SWINGS CREATE BUYING OPPORTUNITIES
As a result of the downturn in the stock markets in recent months, a number of
industries have accompanied the financial sector in price declines. These
include many commodity-oriented companies which suffered as demand for
commodities around the world slowed. The prices now appear to have fully
discounted a coming recession, and are looking very attractive at current
levels. We are now looking in the financial, capital goods, consumer cyclicals,
and basic materials sectors for issues which appear to offer excellent
investment opportunities at current prices.
THE GLOBAL SLOWDOWN WILL BE WITH US AWHILE
We expect the global slowdown to continue for several more months. This slowing
could continue to put pressure on corporate earnings for the next two quarters.
We therefore plan to maintain our current defensive posture until earnings
growth appears to be turning positive again. We expect equity total returns in
the coming year to once again be closer to historical norms than in the past
three years. In this environment a high dividend yield becomes a more important
component of total return. We will focus on those companies that exhibit
above-average earnings and dividend growth potential.
/s/ Michael A. Petersen
- -----------------------
Michael A. Petersen
Portfolio Manager
(1) Performance figures are based on Class A shares and do not reflect deduction
of the sales charge.
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2
<PAGE> 4
MANAGER'S COMMENTARY (CONTINUED)
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SECURITY GROWTH AND INCOME FUND
NOVEMBER 15, 1998
- -------------------------------------------------------------PERFORMANCE-------
SECURITY GROWTH AND INCOME FUND
VS. S&P 500
[GRAPH]
$10,000 OVER TEN YEARS
This chart assumes a $10,000 investment in Class A shares of Growth and Income
Fund on September 30, 1988, and reflects deduction of the 5.75% sales load. On
September 30, 1998, the value of your investment in Class A shares of the fund
(with dividends reinvested) would have grown to $26,515. By comparison, the same
$10,000 investment would have grown to $48,691 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
----------
SBC Communications, Inc. 1.8%
Royal Dutch Petroleum
Company ADR 1.8%
Schlumberger, Ltd. 1.8%
AT&T Corporation 1.8%
Philip Morris Companies, Inc. 1.7%
**At September 30, 1998
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS
As of September 30, 1998
1 year 5 years 10 years
------ ------- --------
A Shares (7.95%) 10.73% 10.90%
A Shares with sales charge (13.24%) 9.42% 10.24%
B Shares (8.95%) 9.84% N/A
(10-19-93)
(since inception)
B Shares with CDSC (13.50%) 9.41% 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.
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3
<PAGE> 5
MANAGER'S COMMENTARY
- -------------------------------------------------------------------------------
SECURITY EQUITY FUND - EQUITY SERIES
NOVEMBER 15, 1998
To Our Shareholders:
The fiscal year ended September 30, 1998 was a rewarding one for shareholders in
the Equity Series of Security Equity Fund. The Series returned a positive 7.38%
for the twelve months, outpacing the -1.44% average return of its Lipper peer
group.1
[Terry Milberger
Portfolio Manager PHOTO]
A YEAR CONTAINING TWO DISTINCT MARKET CYCLES
Two distinct market cycles were apparent over the course of the fiscal year. The
first half was strong, with a six-month rise of 17.22% for the Standard and
Poor's 500 Stock Index. The subsequent six months, however, produced a decline
of 6.97% in the index. Our portfolio performance was helped in the early months
by our financial weighting, including such insurance companies as American
International Group, Inc. and Lincoln National Corporation. Our large health
care weighting also contributed to favorable returns during the period. Such
issues as Bristol-Myers Squibb Company and Shering-Plough Corporation did very
well during the up-market cycle, but also declined less than the average stock
during the down months.
Another positive factor in the negative-performance months was our
underweighting versus the benchmark S&P Index in money center banks. These
institutions suffered as their large international exposure hurt their
performance when overseas countries' economies weakened. In general we held a
low percentage of issues which were impacted by the difficulties in Japan,
Southeast Asia, and Latin America. Our orientation toward companies which derive
most of their earnings from domestic operations--companies such as Kroger
Company, Safeway, Inc., and various telephone companies--proved to be a strong
advantage. We held about 10% of our assets in cash through the latter months of
the fiscal year as well, which also lessened the negative impact of weak
markets.
MORE DIVERSIFICATION DURING PERIODS OF TURMOIL
The financial turmoil in Southeast Asia began in the late summer of 1997.
Because we expected the ensuing fiscal year to be a period of higher volatility,
we diversified the portfolio to include more names and smaller positions than
during normal economic conditions. Now as stock markets appear to be bottoming
we must reassess our strategy.
We believe that the recent declines in the markets have created some buying
opportunities. We are examining individual sectors and companies to get a sense
of where earnings risks now lie and how to avoid them. As earnings reports for
the third calendar quarter are released, we will study them carefully for hints
of weakness or strength.
OUR PLANS FOR THE BETTER MARKETS THAT LIE AHEAD
Historically in periods of financial crisis the markets reach their lows for the
cycle. We want to take advantage of the buying opportunities during these
cyclical lows because we have learned that stock markets traditionally begin
their move upward before all the economic problems are resolved. We are, in
fact, trying to take advantage of today's "maximum uncertainty."
Although the risk is not completely out of the picture, in keeping with our
long-term investment horizon we plan to purchase those stocks we believe are
bargains in today's markets and wait for them to prove their worth. We expect
that the Federal Reserve under the able leadership of Alan Greenspan will stand
ready to help stabilize the markets if conditions call for action. We will seek
the rewards that can come from companies with consistent above average earnings
growth and high quality balance sheets.
/s/ Terry Milberger
- ----------------------
Terry Milberger
Portfolio Manager
(1) Performance figures are based on Class A shares and do not reflect deduction
of the sales charge.
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4
<PAGE> 6
MANAGER'S COMMENTARY (CONTINUED)
- -------------------------------------------------------------------------------
SECURITY EQUITY FUND - EQUITY SERIES
NOVEMBER 15, 1998
- -------------------------------------------------------------PERFORMANCE-------
SECURITY EQUITY SERIES
VS. S&P 500
[GRAPH]
$10,000 OVER TEN YEARS
This chart assumes a $10,000 investment in Class A shares of Equity Series on
September 30, 1988, and reflects deduction of the 5.75% sales load. On September
30, 1998, the value of your investment in Class A shares of the Series (with
dividends reinvested) would have grown to $46,953. By comparison, the same
$10,000 investment would have grown to $48,691 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
----------
Microsoft Corporation 2.2%
Schering-Plough Corporation 2.2%
General Electric Company 1.8%
Safeway, Inc. 1.8%
Bristol-Myers Squibb Company 1.8%
**At September 30, 1998
- -------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS
As of September 30, 1998
1 year 5 years 10 years
------ ------- --------
A Shares 7.38% 18.20% 17.42%
A Shares with sales charge 1.25% 16.81% 16.73%
B Shares 6.38% 17.00% N/A
(10-19-93)
(since inception)
B Shares with CDSC 1.38% 16.67% 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.
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5
<PAGE> 7
MANAGER'S COMMENTARY
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SECURITY EQUITY FUND - GLOBAL SERIES
NOVEMBER 15, 1998
Subadvisor - LEXINGTON
MANAGEMENT CORPORATION
To Our Shareholders:
For the fiscal year ended September 30, 1998 the Global Equity Series of
Security Equity Fund returned -8.47%.(1) The average global fund fell 7.57% over
the same period, according to Lipper Analytical Services, Inc. The Morgan
Stanley World Index dropped 1.15% in the year.
[Richard Saler
Portfolio Manager PHOTO]
GLOBAL ECONOMIES HEAD TOWARD RECESSION
[Alan Wapnick
Portfolio Manager PHOTO]
The global economic environment continues to head dangerously toward recession.
Although many of the world's economies have been in decline for well over a
year, western financial markets have only now begun to take notice. Interest
rates continue to fall rapidly. The thirty-year U.S. Treasury bond ended 1997
with a yield of 5.93% and by the end of September this year had fallen to 4.98%.
German ten-year bond yields now stand at 3.84%, down from 5.16% just nine months
ago.
Unfortunately, falling interest rates are not enough to propel stocks higher.
Corporate profits are expected to come under increasingly strong negative
pressure. The world faces the greatest economic challenge perhaps since the
Great Depression. Asia is awash with too much debt and excess capacity in
manufacturing and real estate. Making matters worse, much of this debt is U.S.
dollar denominated and Asian currencies have collapsed versus the dollar. A
large portion of an estimated $1.5 trillion in Asian debt is unlikely to be
repaid. Ultimately, western banks and investors to whom this debt is owed may
have to write off a portion and convert some debt to equity. Investors have
rapidly sought safe havens such as U.S. Treasury bonds and cash equivalents.
Equities which provide visible earnings streams even in weak economies will
continue to be favored.
LOOKING FOR POSITIVE LEGISLATIVE EVENTS IN JAPAN
Failure by global leaders to address the world's economic ills could lead to a
more severe economic contraction. Japan, a key player, finds its economy in a
deep recession with a financial system teetering on collapse. Time is running
out on timid government policies: strong action is urgently needed to
recapitalize banks.
Positive events are likely over the next several months to help counter global
doom. Interest rates around the world should continue to move lower. The
International Monetary Fund is likely to gain additional funding and provide
support to countries in need, such as Brazil. Finally, in our view it is
unthinkable that Japan will not get more aggressive in solving its banking
problems.
A TIME TO BE DEFENSIVE
Given this difficult economic outlook, we believe an emphasis on defensive
stocks and sectors is appropriate. Value is developing rapidly, however,
particularly in many emerging markets which have been decimated. These emerging
markets should be the main beneficiaries as global solutions are ultimately
implemented. In effect, a transfer of wealth from developed economies to
emerging countries will have to take place to cure the global economy.
/s/ Richard Saler
- -----------------------
Richard Saler
Portfolio Manager
/s/ Alan Wapnick
- -----------------------
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
<PAGE> 8
MANAGER'S COMMENTARY (CONTINUED)
- -------------------------------------------------------------------------------
SECURITY EQUITY FUND - GLOBAL SERIES
NOVEMBER 15, 1998
- -------------------------------------------------------------PERFORMANCE-------
SECURITY GLOBAL SERIES
VS. MORGAN STANLEY CAPITAL
INTERNATIONAL WORLD INDEX
[GRAPH]
This chart assumes a $10,000 investment in Class A shares of Global Series on
October1, 1993, and reflects deduction of the 5.75% sales load. On September30,
1998, the value of your investment in ClassA shares of the Series (with
dividends reinvested) would have grown to $13,620. By comparison, the same
$10,000 investment would have grown to $17,771 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
----------
Elan Corporation PLC ADR 2.6%
Imax Corporation ADR 2.2%
Novartis AG 2.1%
Teva Pharmaceutical,
Industries Ltd. ADR 2.0%
Roche Holdings AG 1.9%
**At September 30, 1998
- -------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS
As of September 30, 1998
1 year Since Inception
------ ---------------
A Shares (8.47%) 7.62%
(10-1-93)
A Shares with sales charge (13.75%) 6.35%
(10-1-93)
B Shares (9.43%) 6.73%
(10-19-93)
B Shares with CDSC (13.96%) 6.26%
(10-19-93)
- -------------------------------------------------------------------------------
The performance data above represents past performance which is not predictive
of future results. The investment return and principal value of an investment in
the fund will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost. The figures above do not reflect
deduction of the maximum front-end sales charge of 5.75% for Class A shares or
contingent deferred sales charge of 5% for Class B shares, as applicable, except
where noted. Such figures would be lower if the maximum sales charge were
deducted.
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7
<PAGE> 9
MANAGER'S COMMENTARY
- -------------------------------------------------------------------------------
SECURITY EQUITY FUND - ASSET ALLOCATION SERIES
NOVEMBER 15, 1998
[MERIDIAN LOGO] SUBADVISOR: MERIDIAN INVESTMENT MANAGEMENT CORPORATION
To Our Shareholders:
Recent financial market turmoil has highlighted the importance of a diversified
investment strategy. From their highs, domestic stock indices have fallen nearly
20%, the level which defines a bear market. Many international market returns
have been much worse. The biggest losses, however, have been sustained by
investors in emerging markets and hedge funds. The Asset Allocation Series of
Security Equity Fund returned -7.19% in the fiscal year just completed, compared
with the average -3.96% of the Lipper peer group of similar funds. (1) The
disruption in the advance of world financial markets is an unpleasant reminder
that investing is a long term process.
[Patrick Boyle
Portfolio Manager PHOTO]
MARKET SELLOFFS CREATE BUYING OPPORTUNITIES
We view the recent price declines as a buying opportunity and believe that
emotional overreactions are primarily responsible for the sharp selloff in
equity markets. Global worries have focused on economic troubles in Asia,
Russia, and Latin America. Domestically, investors have been distracted by the
potential impeachment of President Clinton. What started as isolated concern for
Japan and emerging markets has transformed into global pessimism. Despite the
general health of the U.S. and European economies, these stock markets have
experienced sizeable rapid declines.
Our quantitative model, which includes earnings, growth, risk, and interest
rates, currently indicates that the U.S. stock market and many international
markets are extremely undervalued. Our domestic investments have targeted three
sectors: technology, consumer cyclicals, and leisure. As investors' concerns
about the overall level of the stock market increased, they sold technology
stocks. The crisis in Asia has also put downward pressure on these issues. As
value investors we realize that often the best buying opportunities are in an
atmosphere of fear and uncertainty. This certainly characterizes current
investor sentiment toward technology stocks and reinforces our belief in this
sector.
VOLATILITY IN THE INTERNATIONAL MARKETS
International equity markets have been more volatile than the U.S. stock market.
European markets led the global rally in early 1998; however, their recent
declines have erased most gains. Our decision to sell the Italian shares in late
April has thus far proven correct, as that market has fallen more than 30% from
its peak. We continue to hold stocks in Germany, Belgium, Denmark, and Japan.
Our Japanese position was a drag on the portfolio in 1997 and early 1998;
however, during the recent global market volatility Japanese stocks have behaved
defensively. We expect that market's next major move will be higher.
The U.S. bond market has benefited from the global volatility. Investors fearing
a broad bear market have reduced equity holdings and purchased U.S. Treasuries
as a safe haven. This, coupled with a cooling domestic economy, has pushed long
term bond yields to record lows.
STOCK MARKETS LEAD THE ECONOMY
The stock market has a long history of leading the economy by approximately six
to nine months. When markets rally, they do so in advance of an economic
turnaround, while news is still quite pessimistic. The old adage that "markets
climb a wall of worry" is quite appropriate to define current times. We believe
that the current period of uncertainty will likely be followed by a strong
global stock rally.
/s/ Patrick Boyle
- --------------------
Patrick Boyle
Portfolio Manager
(1) Performance figures are based on Class A shares and do not reflect deduction
of the sales charge. Management fee waivers reduced Fund expenses and in the
absence of such waivers 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.
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8
<PAGE> 10
MANAGER'S COMMENTARY (CONTINUED)
- -------------------------------------------------------------------------------
SECURITY EQUITY FUND - ASSET ALLOCATION SERIES
NOVEMBER 15, 1998
- -------------------------------------------------------------PERFORMANCE-------
SECURITY ASSET ALLOCATION SERIES
VS. S&P 500 MERIDIAN BLENDED INDEX
[GRAPH]
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
September30, 1998, the value of your investment in Class A shares of the Series
(with dividends reinvested) would have grown to $12,071. By comparison, the same
$10,000 investment would have grown to $20,138, 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 $15,307.
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
----------
Tele-Communications, Inc. 1.4%
MediaOne Group, Inc. 1.3%
Cisco Systems, Inc. 1.1%
EMC Corporation 0.9%
Lexmark International Group, Inc. 0.8%
**At September 30, 1998
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS
As of September 30, 1998
1 year Since Inception
------ ---------------
A Shares (7.19%) 7.70% (6-1-95)
A Shares with sales charge (12.52%) 5.81% (6-1-95)
B Shares (7.99%) 6.71% (6-1-95)
B Shares with CDSC (12.59%) 5.93% (6-1-95)
- -------------------------------------------------------------------------------
The performance data above represents past performance which is not predictive
of future results. The investment return and principal value of an investment in
the fund will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost. The figures above do not reflect
deduction of the maximum front-end sales charge of 5.75% for Class A shares or
contingent deferred sales charge of 5% for Class B shares, as applicable, except
where noted. In addition, the investment manager waived a portion of the
management fee for the Series for the period ended January 31, 1998 and began
charging management fees February 1, 1998. Performance figures would be lower if
the maximum sales charge and advisory fee were deducted.
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9
<PAGE> 11
MANAGER'S COMMENTARY
- ------------------------------------------------------------------------------
SECURITY EQUITY FUND - SOCIAL AWARENESS SERIES
NOVEMBER 15, 1998
To Our Shareholders:
The Social Awareness Series had an excellent year, returning 7.89% versus the
Lipper peer group average of -3.57% in the twelve months ended September 30,
1998. (1) The benchmark Domini Social Index, which is highly concentrated in
large cap stocks such as Microsoft Corporation, Coca-Cola Company, Merck &
Company, Inc., and Johnson & Johnson, increased 12.54% over the same period.
[Cindy Shields
Portfolio Manager PHOTO]
ELEMENTS OF A STRONG PERFORMANCE
The key element to our positive results over the past twelve months was the
timing of our move to more defensive stocks early in the calendar year. In
assuming a defensive posture we focused on large cap companies, adding to
sectors such as food companies, cable providers, long distance phone companies,
and regional Bell telephone operating companies.
Our technology sector was a strong contributor to the positive total return.
Microsoft Corporation, our largest holding at approximately 3.6% of the total
portfolio, climbed 67% during the fiscal year. Our general practice is to hold
much smaller positions, restricting block size in most names to about 1.5% of
assets in times when the markets seem confused. This is in contrast to the
benchmark Domini Social Index. As noted above, it is highly concentrated in
large cap stocks, with the top ten in size making up about 28% of the total
index.
A DEFENSIVE POSTURE IS APPROPRIATE AWHILE LONGER
We plan to maintain our defensive orientation while the market continues to be
concerned about global economic conditions. We believe that excellent valuations
are developing in many small-cap and midcap companies and economically sensitive
stocks. When we sense that a market recovery is in sight we plan to move
cautiously into some of these companies. Currently we believe analysts'
estimates for 1999 earnings are too high. We are hesitant to shift the portfolio
holdings until these estimates have been adjusted downward.
WHEN THE GLOBAL ECONOMY STARTS TO IMPROVE
When world conditions begin to improve, investors will be willing to move back
into the cyclical sectors. History has proven that the best time to own these
cyclicals, as well as small-cap and midcap stocks, is when the economy begins
its climb out of an economic downturn.
Stock selection for social awareness portfolios can become more difficult as
markets rise. In the cyclical industries which are expected to perform well
after an economic slowdown, many companies can find themselves facing
environmental and other problems. Traditional cyclical companies in industries
such as chemicals, machinery, manufacturing, and auto parts and equipment as
well as others require careful screening before being included in portfolios
such as ours.
We take seriously our obligations to the shareholders in the Social Awareness
Series. As usual, our stock selection process will focus first on financial
soundness. We realize, however, that the next step, the social screening
process, is of prime importance to you. We appreciate your trust and will use
utmost care in choosing the companies in which we invest.
/s/ Cindy Shields
- --------------------
Cindy Shields
Portfolio Manager
(1) Performance figures are based on Class A shares and do not reflect
deduction of the sales charge. Management fee waivers reduced fund expenses and
in the absence of such waiver the performance quoted would be reduced.
- -------------------------------------------------------------------------------
10
<PAGE> 12
MANAGER'S COMMENTARY (CONTINUED)
- -------------------------------------------------------------------------------
SECURITY EQUITY FUND - SOCIAL AWARENESS SERIES
NOVEMBER 15, 1998
- -------------------------------------------------------------PERFORMANCE-------
SECURITY SOCIAL AWARENESS SERIES
VS. S&P 500 AND DOMINI SOCIAL INDEX
[GRAPH]
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
September30, 1998, the value of your investment in Class A shares of the Series
(with dividends reinvested) would have grown to $12,192. By comparison, the same
$10,000 investment would have grown to $14,743 based on the S&P 500 Index's
performance and $15,687 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
----------
Microsoft Corporation 3.6%
Intel Corporation 3.1%
International Business
Machines Corporation 2.6%
Merck & Company, Inc. 2.5%
Schering-Plough Corporation 2.4%
**At September 30, 1998
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS
As of September 30, 1998
1 Year Since Inception
------ ---------------
A Shares 7.89% 14.40% (11-1-96)
A Shares with sales charge 1.67% 10.90% (11-1-96)
B Shares 6.74% 13.17% (11-1-96)
B Shares with CDSC 1.74% 11.29% (11-1-96)
- -------------------------------------------------------------------------------
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, 1998 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 period
ended January 31, 1998 and began charging management fees February 1, 1998.
Performance figures would be lower if the maximum sales charge and advisory fee
were deducted.
- -------------------------------------------------------------------------------
11
<PAGE> 13
MANAGER'S COMMENTARY
- -------------------------------------------------------------------------------
SECURITY EQUITY FUND - VALUE SERIES
NOVEMBER 15, 1998
To Our Shareholders:
In the fiscal year ended September 30, 1998 the Value Series of Security Equity
Fund produced a -4.31% return, underperforming its Lipper peer group average of
- -1.08% and the S&P Barra Value Index return of -0.27% (1) The midcap
orientation of the fund which distinguishes it from the larger-cap average of
the peer group has been the most significant negative factor. To illustrate, the
S&P 400 Midcap Stock Index returned -6.33% for the twelve-month period.
[Jim Schier
Portfolio Manager PHOTO]
MIDCAP STOCKS SUFFER IN THE FLIGHT TO SAFETY AND LIQUIDITY
The portfolio performed reasonably well, given its midcap characteristics. The
recent preference on the part of investors for recession-resistant stocks has
driven them away from the midcaps to the larger issues perceived to have a
higher degree of safety and liquidity. This was perhaps most evident in the
energy sector where the large multinational oil companies were perceived as safe
havens. The smaller issues which we held fared much worse. For example,
Tuboscope, Inc., which provides pipeline and technical services and engineered
products to the oil and gas industry, declined nearly 60% over the twelve
months. Oil exploration and development company Apache Corporation fell 33% in
the same period. Consumer staples and consumer cyclicals sectors were also
punished in the midcap area of the market.
THERE WERE POSITIVES ALSO DURING THE YEAR
There were positives in the portfolio during the year, however. We held some
health care issues which performed extremely well. Mylan Laboratories, Inc., a
generic drug manufacturer, rose 41.5% during the time we owned it as generic
drug prices rebounded and the company reported strong earnings. Allegiance
Corporation, a company that provides health care products and services to
hospitals and other health care providers, also exhibited favorable earnings and
rose over 70% during our holding period.
Our underweighting in the financial sector versus the benchmark index was also a
positive as this group suffered under a cloud of weakening international
conditions. We held about a 5.5% weighting, while the index contains 26.4% in
financial stocks. We also received good performance from three software and
technology services companies which we purchased early in the fund's existence.
These were Computer Sciences Corporation, Rational Software Corporation, and
American Management Systems, Inc.
OPPORTUNITIES ABOUND IN DEPRESSED MARKETS
Much has changed in the stock markets over the last year. The perception of
midcaps as more value-oriented than their large cap counterparts continues to
grow. It is now easy to find midcap stocks with valuation levels not seen since
the mid-1980s, despite the fact that interest rates are about half of what they
were at that time.
We continue to seek attractively priced stocks that should be only minimally
negatively impacted by a barrage of Asian and emerging market imports, such as
computer service companies and other industries with high entry barriers. We
also believe there are excellent bargains in less well-known names that have
been undeservedly depressed by investors' preference for defensive issues.
/s/ Jim Schier
- -----------------------
Jim Schier
Portfolio Manager
(1) Performance figures are based on Class A shares and do not reflect deduction
of the sales charge. Management fee waivers reduced fund expenses and in the
absence of such waiver the performance quoted would be reduced.
- -------------------------------------------------------------------------------
12
<PAGE> 14
MANAGER'S COMMENTARY (CONTINUED)
- -------------------------------------------------------------------------------
SECURITY EQUITY FUND - VALUE SERIES
NOVEMBER 15, 1998
- -------------------------------------------------------------PERFORMANCE-------
SECURITY VALUE SERIES VS. S&P 500
AND S&P500/BARRA VALUE INDEX
[GRAPH]
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, 1998,
the value of your investment in Class A shares of the Series (with dividends
reinvested) would have been $11,680. By comparison, the same $10,000 investment
would have been $12,853, 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 been $11,668.
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
Mylan Laboratories, Inc. 4.4%
Comverse Technology, Inc. 3.7%
Equitable Resources, Inc. 3.2%
Angelica Corporation 2.9%
RailAmerica, Inc. 2.9%
**At September 30, 1998
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS
As of September 30, 1998
1 Year Since Inception
------ ---------------
A Shares (4.31%) 16.31% (5-1-97)
A Shares with sales charge (9.81%) 11.56% (5-1-97)
B Shares (5.38%) 15.14% (5-1-97)
B Shares with CDSC (10.11%) 12.47% (5-1-97)
- -------------------------------------------------------------------------------
The performance data above represents past performance which is not predictive
of future results. The returns have been calculated from May 1, 1997 (date of
inception) to September 30, 1998. 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 period ended January 31, 1998, and began
charging management fees February 1, 1998. Performance figures would be lower if
the maximum sales charge and advisory fee were deducted.
- -------------------------------------------------------------------------------
13
<PAGE> 15
MANAGER'S COMMENTARY
- -------------------------------------------------------------------------------
SECURITY EQUITY FUND - SMALL COMPANY SERIES
NOVEMBER 15, 1998
[STRONG LOGO]
To Our Shareholders:
The quarter from July 1, 1998 through September 30, 1998 was witness to some of
the most turbulent markets in recent history. Many of the concerns existing
since the beginning of the Asian crisis last year have come to the forefront.
What appeared at first to be confined to Asia spread throughout the world's
financial markets. Many global economies are now in recession, and others are
teetering on the brink. In financial markets investors are fleeing from risk,
triggering a credit crunch that further threatens growth.
[Ronald C. Ognar
Portfolio Manager PHOTO]
SMALL CAP STOCKS SUFFERED MORE THAN THEIR LARGE CAP COUNTERPARTS
U.S. equities fell sharply as investors lowered earnings expectations. Many
stocks, both large and small, have experienced declines in excess of 20% from
their 1998 highs. The declines in the average stock resemble those that occurred
in 1987 and 1990. While the declines in the large-cap stocks have been severe,
mid- and small-caps have suffered greater losses in the flight to quality.
For the period from inception of the fund, October 15, 1997, through September
30 of this year, the Small Company Series of Security Equity Fund returned
- -12.95% (1) As bad as this sounds, it was really quite favorable when compared
with the benchmark Russell 2000 Index which declined 20.49% over the same
period. The portfolio outperformed its benchmark primarily because of its
larger-than-normal cash position and advantageous stock selection in commercial
services and retail sectors of the market.
SECTOR SHIFTS BASED ON INCREASED RISK
During the fourth quarter of the fiscal year (the third calendar quarter) we
shifted away from the most cyclical issues, particularly retailers and other
consumer cyclicals, as high valuations and recession fears increased the risk in
those groups. We also reduced our holdings in financials. A portion of the
proceeds from these sales went into stocks with more dependable earnings, and we
raised cash reserves with the remainder. Health care exposure was significantly
increased as we sought safe havens where consumer spending will likely remain
stable during an economic slowdown. Later in the quarter we began cautiously to
redeploy cash reserves into technology and health care issues that had been
severely depressed.
VOLATILITY AND INTERNATIONAL INSTABILITY EXPECTED TO CONTINUE
Looking ahead, we expect continued volatility in equities. A great deal of
negative news has been priced into the market so far, but more may be
forthcoming. We are especially concerned about earnings reductions over the next
several months, additional negative news regarding President Clinton, and
continued international instability. Because of their relatively low current
valuations, we believe small cap stocks may do better in the months ahead.
The Federal Reserve now seems willing to lower interest rates in an effort to
maintain healthy economic growth in the U.S. It may take several more Fed rate
cuts and a coordinated effort by the G7 countries before the market will be in
the position to start a new up phase. We will continue to invest in the highest
quality growth companies with capable managements, selling at reasonable
valuations.
/s/ Ronald C. Ognar
- ------------------------
Ronald C. Ognar
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 period ended September 30, 1998 and in the
absence of such waiver the performance quoted would be reduced.
- -------------------------------------------------------------------------------
14
<PAGE> 16
MANAGER'S COMMENTARY (CONTINUED)
- -------------------------------------------------------------------------------
SECURITY EQUITY FUND - SMALL COMPANY SERIES
NOVEMBER 15, 1998
- -------------------------------------------------------------PERFORMANCE-------
SMALL COMPANY SERIES
VS. RUSSELL 2000 INDEX, AND
RUSSELL 2000 GROWTH INDEX
[GRAPH]
This chart assumes a $10,000 investment in Class A shares of Small Company
Series on October 15, 1997, and reflects deduction of the 5.75% sales load. On
September 30, 1998, the value of your investment in Class A shares of the Series
(with dividends reinvested) would have been $8,205. By comparison, the same
$10,000 investment would have been $7,912, based on the Russell 2000 index
performance. Comparison is also made to the S&P Russell 2000 Growth Index. The
same $10,000 investment in the Russell 2000 Growth Index would have been $7,342
over the same period.
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
----------
Lason, Inc. 3.7%
Profit Recovery Group
International, Inc. 3.0%
99 Cents Only Stores 2.8%
ResMed, Inc. 2.5%
Province Healthcare Company 2.4%
**At September 30, 1998
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS
As of September 30, 1998
Since Inception
---------------
A Shares (12.95%) (10-15-97)
A Shares with sales charge (17.95%) (10-15-97)
B Shares (13.70%) (10-15-97)
B Shares with CDSC (18.02%) (10-15-97)
- -------------------------------------------------------------------------------
The performance data above represents past performance which is not predictive
of future results. The returns have been calculated from October 15, 1997 (date
of inception) to September 30, 1998. 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 period ended September 30, 1998.
Performance figures would be lower if the maximum sales charge and advisory fee
were deducted.
- -------------------------------------------------------------------------------
15
<PAGE> 17
MANAGER'S COMMENTARY
- -------------------------------------------------------------------------------
SECURITY ULTRA FUND
NOVEMBER 15, 1998
To Our Shareholders:
The year ended September 30, 1998 was difficult for all but the largest stocks.
Security Ultra Fund generated a -12.45% total return for the fiscal year, while
the Lipper peer group average dropped 11.95% (1) The benchmark Standard &
Poor's Midcap 400 Index returned -6.1% while the small-cap Russell 2000 Index
lost 18.9%.
SOME BRIGHT SPOTS IN AN OTHERWISE GLOOMY PICTURE
Despite the weak markets, there were some positive factors in the portfolio. Our
overweightings versus the benchmark S&P Midcap 400 Index in the technology and
health care sectors, two sectors which performed favorably versus the overall
index results, lent some stability. A strong stock selection in the financial
industry allowed that sector of the portfolio to generate a slightly positive
return while the parallel sector in the benchmark was down nearly 8%.
In the health care arena we also benefited from takeovers in three stocks in the
portfolio. R.P. Scherer Corporation, a developer and producer of drug delivery
systems, agreed to merge with Cardinal Health, Inc. ATL Ultrasound, Inc., which
develops, manufactures, and markets diagnostic medical ultrasound systems and
supplies, was acquired by Philips Electronics NV. Depuy, Inc., a manufacturer of
orthopedic devices and supplies, was purchased by Johnson & Johnson.
Among the financial stocks in the portfolio the strongest performer was AFLAC
Inc., whose principal subsidiary is American Family Life Assurance Company. The
stock rose 11.77% over the fiscal year as it generated strong growth despite the
difficult economic conditions in Japan, one of the primary countries in which it
does business.
AREAS WHICH FARED LESS WELL
Even though the decision to overweight the technology sector helped overall
performance, some names among the portfolio holdings underperformed their peers
in the benchmark index. Chief among these was the stock of Transcrypt
International, Inc., which designs and manufactures information security
products and wireless communications equipment. Transcrypt suffered under the
cloud of alleged irregularities in accounting practices. Three other tech
issues, ADC Telecommunications, Inc., Cambridge Technology, Inc., and Sawtek,
Inc., all lost ground because of investors' fears of slowing earnings growth in
the companies.
In the portfolio our utility sector weighting was low at about 1% compared with
the benchmark index's 11%. This sector turned in a strong performance after
mid-July because these companies' operations and earnings are largely
U.S.-oriented. When the developing global economic crisis began to weigh heavily
on companies with international exposure, those firms such as the utilities with
domestic orientations outperformed.
COMPANIES WITH LITTLE INTERNATIONAL EXPOSURE SHOULD PERFORM FAVORABLY
We believe that the midcap sector of the stock market is poised for a powerful
rally once market participants begin to believe that 1999 earnings will not
decline precipitously. We are acutely aware that the world is a much different
place today than a year ago, and we seek to emphasize companies with unique
products and competitive strengths that are not directly negatively influenced
by a more competitive international marketplace. We expect that the technology
service, health care, and media companies will be among this group and plan to
emphasize them in the coming months.
/s/ Jim Schier
- --------------------------
Jim Schier
Portfolio Manager
(1) Performance figures are based on Class A shares and do not reflect deduction
of the sales charge.
- -------------------------------------------------------------------------------
16
<PAGE> 18
MANAGER'S COMMENTARY (CONTINUED)
- -------------------------------------------------------------------------------
SECURITY ULTRA FUND
NOVEMBER 15, 1998
- -------------------------------------------------------------PERFORMANCE-------
SECURITY ULTRA FUND
VS.S&P MIDCAP 400
[GRAPH]
$10,000 OVER TEN YEARS
This chart assumes a $10,000 investment in Class A shares of Ultra Fund on
September 30, 1988, and reflects deduction of the 5.75% sales load. On September
30, 1998, the value of your investment in Class A shares of the fund (with
dividends reinvested) would have grown to $20,952. In comparison, the same
$10,000 investment would have grown to $46,759 based on the S&P Midcap 400'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
----------
Mylan Laboratories, Inc. 6.5%
Comverse Technology, Inc. 5.0%
Rational Software Corporation 3.2%
AFLAC, Inc. 3.2%
American Management Systems, Inc. 3.1%
**At September 30, 1998
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS
As of September 30, 1998
1 year 5 years 10 years
------ ------- --------
A Shares (12.45%) 7.57% 8.32%
A Shares with sales charge (17.45%) 6.29% 7.68%
B Shares (13.30%) 6.28% N/A
(10-19-93)
(since inception)
B Shares with CDSC (17.64%) 5.80% 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.
- -------------------------------------------------------------------------------
17
<PAGE> 19
SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
SEPTEMBER 30, 1998
SECURITY GROWTH AND INCOME FUND
PRINCIPAL
AMOUNT OR
NUMBER MARKET
PREFERRED STOCKS OF SHARES VALUE
- ----------------------------------------------------------------------------
BANKING - 0.2%
California Federal Bank.......................... 7,000 $178,938
CONSUMER CYCLICAL - 0.5%
CSC Holdings, Inc................................ 1,888 202,498
Primedia, Inc.................................... 2,500 255,000
------------
457,498
------------
Total preferred stocks - 0.7%............................ 636,436
CORPORATE BONDS
- ---------------
AEROSPACE - 0.2%
Burke Industries, Inc.,
10.00% - 2007................................. $175,000 174,563
BANKING - 0.4%
Bay View Capital Corporation,
9.125% - 2007................................. $100,000 97,875
BF Saul REIT, 9.75% - 2008....................... $100,000 87,500
Homeside, Inc., 11.25% - 2003.................... $121,000 140,511
------------
325,886
BEVERAGE - 0.2%
Delta Beverage Group,
9.75% - 2003.................................. $200,000 200,000
BROKERAGE - 0.2%
SI Financing Trust I,
9.50% - 2026(1)............................... 7,500 200,625
BUILDING MATERIALS - 0.2%
Nortek, Inc., 8.875% - 2008...................... $150,000 144,750
CHEMICALS - 0.0%
Envirodyne Industries, Inc.,
12.00% - 2000................................. $34,000 34,128
CONSTRUCTION MACHINERY - 0.3%
AGCO Corporation,
8.50% - 2006.................................. $150,000 146,625
Columbus McKinnon Corporation,
8.50% - 2008.................................. $150,000 143,437
------------
290,062
CONSUMER CYCLICAL - OTHER - 0.1%
American ECO Corporation,
9.625% - 2008................................. $125,000 108,125
CONSUMER PRODUCTS - 0.2%
Revlon Consumer Products,
8.125% - 2006................................. $175,000 172,813
PRINCIPAL MARKET
CORPORATE BONDS (CONTINUED) AMOUNT VALUE
- ----------------------------------------------------------------------------
ELECTRIC UTILITY - 0.4%
AES Corporation, 10.25% - 2006................... $200,000 $207,500
Cal Energy Company, Inc.,
9.50% - 2006.................................. 100,000 109,000
------------
316,500
ENERGY - OTHER - 0.1%
P&L Coal Holdings Corporation,
8.875% - 2008................................. 75,000 76,125
ENERGY - REFINING - 0.3%
Crown Central Petroleum,
10.875% - 2005................................ 200,000 206,750
ENTERTAINMENT - 0.1%
Empress Entertainment, Inc.,
8.125% - 2006................................. 75,000 74,625
FINANCE - 0.4%
Dollar Financial Group, Inc.,
10.875% - 2006................................ 300,000 294,750
FOOD - 0.6%
Carrolls Corporation,
11.50% - 2003................................. 425,000 444,125
Nash Finch Company,
8.50% - 2008.................................. 100,000 94,000
------------
538,125
GAMING - 0.3%
MGM Grand, Inc., 6.95% - 2005.................... 125,000 127,812
Mirage Resorts, Inc.,
6.625% - 2005................................. 125,000 126,094
------------
253,906
HEALTH CARE - 0.4%
Multicare Companies, Inc.,
9.00% - 2007.................................. 200,000 188,500
Prime Medical Services, Inc.,
8.75% - 2008.................................. 75,000 69,000
Tenet Healthcare Corporation,
8.125% - 2008................................. 100,000 102,375
------------
359,875
HOME CONSTRUCTION - 0.2%
Hovnanian Enterprise,
9.75% - 2005.................................. 100,000 91,750
Toll Corporation, 7.75% - 2007................... 100,000 98,750
------------
190,500
INSURANCE - 0.1%
General American Life Insurance
Company, 8.525% - 2027........................ 75,000 83,906
See accompanying notes.
- -----------------------------------------------------------------------------
18
<PAGE> 20
SCHEDULE OF INVESTMENTS
- -----------------------------------------------------------------------------
SEPTEMBER 30, 1998
SECURITY GROWTH AND INCOME FUND
(CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
CORPORATE BONDS (CONTINUED) AMOUNT VALUE
- ---------------------------------------------------------------
<S> <C> <C>
LODGING - 0.2%
Properties, 7.875% - 2008 $175,000 $ 172,812
MEDIA - CABLE - 1.6%
Adelphia Communication Corporation,
8.125% - 2003 175,000 175,875
Century Communications Corporation,
9.50% - 2005 100,000 108,500
8.375% - 2007 100,000 103,000
CF Cable T.V., Inc.,
11.625% - 2005 150,000 166,312
CSC Holdings, Ltd.,
7.625% - 2018 75,000 72,375
7.875% - 2018 25,000 24,688
Diamond Holdings, Inc.,
9.125% - 2008 125,000 122,187
Jones Intercable, Inc.,
7.625% - 2008 100,000 103,000
Lenfest Communications, Inc.,
10.50% - 2006 125,000 141,875
Rogers Cablesystems, Inc.,
9.625% - 2002 175,000 184,844
Rogers Communications, Inc.,
9.125% - 2006 200,000 199,500
------------
1,402,156
MEDIA - NONCABLE - 0.6%
Albritton Communications Company,
9.75% - 2007 125,000 128,438
Golden Books Publishing, Inc.,
7.65% - 2002 200,000 62,500
Heritage Media Corporation,
8.75% - 2006 100,000 104,500
Hollinger International, Inc.,
9.25% - 2006 200,000 208,000
------------
503,438
METALS - 0.4%
Ameristeel Corporation,
8.75% - 2008 100,000 96,875
Simcala, Inc., 9.625% - 2006 75,000 59,813
Wheeling-Pittsburgh Corporation,
9.25% - 2007 100,000 92,500
WHX Corporation,
10.50% - 2005 75,000 68,812
------------
318,000
PACKAGING - 0.2%
Indesco International, Inc.,
9.75% - 2008 175,000 162,750
RETAILERS - 0.3%
Specialty Retailers, Inc.,
8.50% - 2005 $125,000 $ 115,938
Zale Corporation, 8.50% - 2007 $100,000 97,750
------------
213,688
SERVICES - 0.3%
Loewen Group, Inc.,
6.70% - 1999 $75,000 73,781
Protection One, Inc.,
7.375% - 2005 $200,000 209,000
------------
282,781
TELECOMMUNICATIONS - 1.1%
Comcast Cellular Holdings, Inc.,
9.50% - 2007 $200,000 205,250
Mastec, Inc., 7.75% - 2008 $75,000 69,844
Mcleodusa, Inc., 8.375% - 2008 $175,000 172,375
MJD Communications, Inc.,
9.50% - 2008 $175,000 175,875
RCN Corporation, 10.00% - 2007 $225,000 210,937
Satelites Mexicanos, Inc.,
10.125% - 2004 $200,000 135,500
------------
969,781
TEXTILES - 0.2%
Delta Mills, Inc., 9.625% - 2007 $100,000 92,250
Westpoint Stevens, Inc.,
7.875% - 2008 $75,000 76,312
------------
168,562
------------
Total corporate bonds - 9.6% 8,239,982
COMMON STOCKS
- -------------
AEROSPACE/DEFENSE - 1.4%
Boeing Company 20,000 686,250
Precision Castparts Corporation 12,000 495,000
------------
1,181,250
AUTOMOBILES - 0.8%
General Motors Corporation 13,000 710,937
AUTO PARTS & EQUIPMENT - 1.7%
Genuine Parts Company 20,000 601,250
TRW, Inc. 20,000 887,500
------------
1,488,750
BANKS - MAJOR REGIONAL - 2.6%
Banc One Corporation 16,000 682,000
Bankers Trust Corporation 12,000 708,000
J.P. Morgan & Company, Inc. 10,000 846,250
------------
2,236,250
</TABLE>
See accompanying notes.
- -------------------------------------------------------------------------------
19
<PAGE> 21
SCHEDULE OF INVESTMENTS
- -----------------------------------------------------------------------------
SEPTEMBER 30, 1998
SECURITY GROWTH AND INCOME FUND
(CONTINUED)
<TABLE>
<CAPTION>
NUMBER MARKET
COMMON STOCK (CONTINUED) OF SHARES VALUE
- ---------------------------------------------------------------
<S> <C> <C>
BEVERAGES - ALCOHOLIC - 1.1%
Anheuser-Busch Companies, Inc........... 18,000 $ 972,000
BEVERAGES - SOFT DRINK - 0.5%
PepsiCo, Inc............................ 14,000 412,125
CHEMICALS - BASIC - 1.4%
E.I. du Pont de Nemours & Company 12,000 673,500
Praxair, Inc............................ 16,000 523,000
------------
1,196,500
COMMUNICATION EQUIPMENT - 0.6%
Motorola, Inc........................... 12,000 512,250
CONTAINERS & PACKAGING - 1.8%
Bemis Company, Inc...................... 20,000 701,250
Crown Cork & Seal Company, Inc. 16,000 428,000
Union Camp Corporation.................. 10,000 393,750
------------
1,523,000
ELECTRICAL EQUIPMENT - 1.1%
Emerson Electric Company................ 6,000 373,500
Hubbell, Inc. (Cl.B).................... 15,000 532,500
------------
906,000
ELECTRIC COMPANIES - 6.5%
Allegheny Energy, Inc................... 13,000 410,313
Baltimore Gas & Electric Company........ 10,000 333,750
Cinergy Corporation..................... 20,000 765,000
Kansas City Power & Light Company....... 30,000 913,125
LG&E Energy Corporation................. 10,000 278,750
Northern States Power Company........... 16,000 449,000
Peco Energy Company..................... 24,000 877,500
Potomac Electric Power Company.......... 20,000 530,000
Public Service Enterprise Group, Inc.... 13,000 511,062
Texas Utilities Company................. 10,000 465,625
------------
5,534,125
ELECTRONICS - DEFENSE - 1.3%
Raytheon Company (Cl.B)................. 20,200 1,089,537
ELECTRONICS - DISTRIBUTION - 0.5%
W.W. Grainger, Inc...................... 10,000 421,250
ELECTRONICS - INSTRUMENTATION - 0.3%
Tektronix, Inc.......................... 15,000 232,500
FOODS - 2.2%
ConAgra, Inc............................ 10,000 269,375
General Mills, Inc...................... 12,700 889,000
Tyson Foods, Inc. (Cl.A)................ 34,700 689,662
------------
1,848,037
FOOTWEAR - 0.2%
Nike, Inc. (Cl.B)....................... 4,000 147,250
GAMING & LOTTERY - 0.4%
Mirage Resorts, Inc..................... 20,000 $ 335,000
HEALTH CARE - DRUGS (MAJOR) - 1.3%
Mylan Laboratories, Inc................. 8,000 236,000
Teva Pharmaceutical
Industries, Ltd. ADR................. 22,200 840,825
------------
1,076,825
HEALTH CARE - LONG TERM CARE - 0.6%
Integrated Health Services, Inc......... 30,500 512,781
HEALTH CARE - MANAGED CARE - 1.8%
Humana, Inc.*........................... 44,600 730,325
United Healthcare Corporation........... 22,800 798,000
------------
1,528,325
HEALTH CARE - SPECIALIZED SERVICES - 0.4%
Alza Corporation*....................... 8,000 347,000
HOUSEHOLD FURNISHINGS & APPLIANCES - 0.5%
Whirlpool Corporation................... 9,000 423,000
HOUSEHOLD PRODUCTS - 0.9%
Kimberly-Clark Corporation.............. 18,000 729,000
INSURANCE - LIFE/HEALTH - 0.6%
Aetna, Inc.............................. 8,000 556,000
INSURANCE - PROPERTY & CASUALTY - 3.5%
Chubb Corporation....................... 10,000 630,000
Leucadia National Corporation........... 30,000 879,375
SAFECO Corporation...................... 15,000 625,313
St. Paul Companies, Inc................. 26,700 867,750
------------
3,002,438
MACHINERY - DIVERSE - 1.4%
Deere & Company......................... 20,000 605,000
Ingersoll-Rand Company.................. 16,000 607,000
------------
1,212,000
MANUFACTURING - DIVERSIFIED - 1.1%
Tenneco, Inc............................ 28,000 920,500
MEDICAL PRODUCTS & SUPPLIES - 2.5%
Baxter International, Inc............... 20,000 1,190,000
Dentsply International, Inc............. 8,000 179,000
St. Jude Medical, Inc.*................. 32,000 740,000
------------
2,109,000
METALS - MINING - 1.3%
Asarco, Inc............................. 60,000 1,147,500
</TABLE>
See accompanying notes.
- -----------------------------------------------------------------------------
20
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SCHEDULE OF INVESTMENTS
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SEPTEMBER 30, 1998
SECURITY GROWTH AND INCOME FUND
(CONTINUED)
<TABLE>
<CAPTION>
NUMBER MARKET
COMMON STOCKS OF SHARES VALUE
- ---------------------------------------------------------------
<S> <C> <C>
NATURAL GAS - 2.8%
Consolidated Natural Gas Company....... 15,000 $ 817,500
Equitable Resources, Inc............... 20,000 508,750
People's Energy Corporation............ 30,000 1,080,000
------------
2,406,250
OFFICE EQUIPMENT & SUPPLIES - 1.4%
Corporate Express, Inc.*............. 100,000 1,193,750
OIL - DOMESTIC - 0.6%
Unocal Corporation................... 15,000 543,750
OIL - INTERNATIONAL - 2.7%
Mobil Corporation.................... 10,000 759,375
Royal Dutch Petroleum
Company ADR....................... 32,600 1,552,575
------------
2,311,950
OIL & GAS - DRILLING & EQUIPMENT - 2.8%
Halliburton Company.................... 32,000 914,000
Schlumberger, Ltd...................... 30,300 1,524,469
------------
2,438,469
OIL & GAS - EXPLORATION & PRODUCTION -.3.6%
Apache Corporation..................... 25,000 670,313
Burlington Resources, Inc.............. 19,000 710,125
Kerr-McGee Corporation................. 18,000 819,000
Phillips Petroleum Company............. 19,000 857,375
------------
3,056,813
OIL & GAS - REFINING & MARKETING - 0.8%
Ultramar Diamond
Shamrock Corporation................ 30,000 682,500
PAPER & FOREST PRODUCTS - 2.3%
Boise Cascade Corporation.............. 20,000 506,250
Champion International
Corporation......................... 10,000 313,125
International Paper Company............ 8,000 373,000
Louisiana-Pacific Corporation.......... 40,000 815,000
------------
2,007,375
PERSONAL CARE - 0.5%
Alberto-Culver Company................. 20,000 467,500
PHOTOGRAPHY - IMAGING - 0.9%
Eastman Kodak Company.................. 10,000 773,125
PUBLISHING - 0.9%
Dow Jones & Company, Inc............... 16,000 744,000
RAILROADS - 2.2%
Burlington Northern Santa Fe
Corporation......................... 21,000 672,000
Norfolk Southern Corporation........... 18,000 523,125
Union Pacific Corporation.............. 16,000 682,000
------------
1,877,125
REAL ESTATE INVESTMENT TRUSTS - 3.5%
Camden Property Trust.................. 20,000 $ 558,750
HRPT Properties Trust.................. 20,000 322,500
Highwoods Properties, Inc.............. 10,000 277,500
Hospitality Properties Trust........... 20,000 595,000
Liberty Property Trust................. 24,000 571,500
Simon Property Group, Inc.............. 12,000 357,000
United Dominion Realty Trust, Inc...... 30,000 341,250
------------
....................................... 3,023,500
RESTAURANTS - 1.8%
Landry's Seafood Restaurants, Inc.*.... 60,000 405,000
McDonald's Corporation................. 8,000 477,500
Wendy's International, Inc............. 30,000 665,625
------------
1,548,125
RETAIL - DEPARTMENT STORES - 0.7%
Dillard's Inc.......................... 20,000 566,250
RETAIL - FOOD CHAINS - 1.0%
Giant Food, Inc........................ 20,000 863,750
RETAIL - SPECIALTY - 0.4%
Toys "R" Us, Inc.*..................... 20,000 323,750
SERVICES - COMMERCIAL & CONSUMER - 1.4%
Angelica Corporation................... 43,800 703,538
Laidlaw, Inc........................... 49,000 462,437
------------
1,165,975
SERVICES - DATA PROCESSING - 1.6%
Electronic Data System Corporation..... 20,000 663,750
First Data Corporation................. 30,000 705,000
------------
1,368,750
TELECOMMUNICATION - 6.1%
Alltel Corporation..................... 24,000 1,137,000
Bell Atlantic Corporation.............. 26,000 1,259,375
GTE Corporation........................ 24,000 1,320,000
SBC Communications, Inc................ 35,000 1,555,312
------------
5,271,687
TELECOMMUNICATION - LONG DISTANCE - 1.8%
AT&T Corporation....................... 26,000 1,519,375
TEXTILES - APPAREL - 0.5%
The Warnaco Group, Inc................. 20,000 462,500
TOBACCO - 2.5%
Philip Morris Companies, Inc........... 31,000 1,427,938
UST, Inc............................... 24,000 709,500
------------
2,137,438
</TABLE>
See accompanying notes
- -----------------------------------------------------------------------------
21
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SEPTEMBER 30, 1998
SECURITY GROWTH AND INCOME FUND
(CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
COMMON STOCK (CONTINUED) AMOUNT VALUE
- ---------------------------------------------------------------
<S> <C> <C>
TRUCKING - 0.4%
Werner Enterprises, Inc................ 24,000 $ 378,000
WASTE MANAGEMENT - 0.8%
Browning-Ferris Industries, Inc........ 23,000 695,750
------------
Total common stocks - 84.3%................... 72,138,587
------------
Total investments - 94.6%..................... 81,015,005
Cash and other assets, less liabilities - 5.4% 4,613,119
------------
Total net assets - 100.0%..................... $85,628,124
============
<CAPTION>
SECURITY EQUITY FUND-EQUITY SERIES
- ------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS
AEROSPACE/DEFENSE - 1.0%
Lockheed Martin Corporation. . . . . . . 85,000 $ 8,569,062
AUTOMOBILES - 0.5%
Chrysler Corporation. . . . . . . . . . 90,000 4,308,750
BANKS - MAJOR REGIONAL - 3.7%
Bank of New York Company, Inc.. . . . . 400,000 10,950,000
Northern Trust Corporation. . . . . . . 200,000 13,650,000
Norwest Corporation . . . . . . . . . . 240,000 8,595,000
------------
33,195,000
BANKS - MONEY CENTER - 0.9%
Chase Manhattan Corporation . . . . . . 190,000 8,217,500
BEVERAGES - SOFT DRINK - 0.7%
Whitman Corporation . . . . . . . . . . 400,000 6,375,000
BROADCAST MEDIA - 0.6%
Chancellor Media Corporation* . . . . . 150,000 5,006,250
BUILDING MATERIALS - 0.4%
Masco Corporation . . . . . . . . . . . 150,000 3,693,750
CHEMICALS - BASIC - 0.6%
Praxair, Inc. . . . . . . . . . . . . . 80,000 2,615,000
Solutia, Inc. . . . . . . . . . . . . . 120,000 2,707,500
------------
5,322,500
COMPUTER HARDWARE - 2.2%
Compaq Computer Corporation . . . . . . 200,000 6,325,000
International Business Machines
Corporation. . . . . . . . . . . . . 60,000 7,680,000
Sun Microsystems, Inc.* . . . . . . . . 120,000 5,977,500
------------
19,982,500
COMPUTERS - NETWORKING - 1.0%
Cisco Systems, Inc.* . . . . . . . . . 150,000 $ 9,271,875
COMPUTER SOFTWARE/SERVICES - 4.7%
BMC Software, Inc.* . . . . . . . . . . 250,000 15,015,625
Computer Sciences Corporation* . . . . 120,000 6,540,000
Microsoft Corporation* . . . . . . . . 180,000 19,811,250
Wang Laboratories, Inc. Warrants* . . . 2,369 12,807
------------
41,379,682
ELECTRICAL EQUIPMENT - 2.8%
Emerson Electric Company . . . . . . . 150,000 9,337,500
General Electric Company . . . . . . . 200,000 15,912,500
------------
25,250,000
ELECTRONICS - SEMICONDUCTORS - 0.6%
Intel Corporation . . . . . . . . . . . 60,000 5,145,000
ENTERTAINMENT - 0.8%
Time Warner, Inc. . . . . . . . . . . . 80,000 7,005,000
FINANCIAL - DIVERSE - 4.3%
American General Corporation . . . . . 150,000 9,581,250
Fannie Mae . . . . . . . . . . . . . . 230,000 14,777,500
Freddie Mac. . . . . . . . . . . . . . 270,000 13,348,125
------------
37,706,875
FOODS - 3.1%
Bestfoods . . . . . . . . . . . . . . 240,000 11,625,000
ConAgra, Inc. . . . . . . . . . . . . 320,000 8,620,000
Ralston-Ralston Purina Group. . . . . 255,000 7,458,750
------------
27,703,750
HEALTH CARE - DIVERSE - 4.2%
American Home Products
Corporation . . . . . . . . . . . . 260,000 13,617,500
Bristol-Myers Squibb Company . . . . . 150,000 15,581,250
Johnson & Johnson. . . . . . . . . . . 100,000 7,825,000
------------
37,023,750
HOUSEHOLD FURNISHINGS & APPLIANCES - 1.1%
Leggett & Platt, Inc.. . . . . . . . . 461,000 9,565,750
HOUSEHOLD PRODUCTS - 3.0%
Colgate-Palmolive Company. . . . . . . 100,000 6,850,000
Fort James Corporation . . . . . . . . 280,000 9,187,500
Procter & Gamble Company, The. . . . . 150,000 10,640,625
------------
26,678,125
INSURANCE - LIFE/HEALTH - 1.4%
Protective Life Corporation. . . . . . 130,000 4,680,000
Unum Corporation . . . . . . . . . . . 150,000 7,453,125
------------
12,133,125
</TABLE>
See accompanying notes.
- -----------------------------------------------------------------------------
22
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SEPTEMBER 30, 1998
SECURITY EQUITY FUND - GLOBAL SERIES
(CONTINUED)
<TABLE>
<CAPTION>
NUMBER MARKET
COMMON STOCKS (CONTINUED) OF SHARES VALUE
- ---------------------------------------------------------------
<S> <C> <C>
INSURANCE - MULTI-LINE - 3.6%
American International Group, Inc...... 150,000 $11,550,000
Hartford Financial Services
Group, Inc.......................... 200,000 9,487,500
Lincoln National Corporation........... 135,000 11,103,750
------------
32,141,250
INSURANCE - PROPERTY & CASUALTY - 1.3%
Allstate Corporation.................. 270,000 11,255,625
LODGING - HOTELS - 1.3%
Carnival Corporation (Cl. A).......... 370,000 11,770,625
MANUFACTURING - DIVERSIFIED - 6.1%
AlliedSignal, Inc..................... 320,000 11,320,000
Crane Company......................... 300,000 7,050,000
Textron, Inc.......................... 105,000 6,365,625
Tyco International, Ltd............... 240,000 13,260,000
U.S. Industries, Inc.................. 470,000 7,079,375
United Technologies Corporation....... 115,000 8,790,312
------------
53,865,312
MEDICAL PRODUCTS & SUPPLIES - 4.0%
Baxter International, Inc............. 200,000 11,900,000
Becton, Dickinson & Company........... 300,000 12,337,500
Medtronic, Inc........................ 200,000 11,575,000
------------
35,812,500
NATURAL GAS - 1.3%
Coastal Corporation................... 340,000 11,475,000
OIL - DOMESTIC - 0.6%
USX - Marathon Group.................. 155,000 5,492,812
OIL - INTERNATIONAL - 4.4%
Chevron Corporation................... 90,000 7,565,625
Mobil Corporation..................... 140,000 10,631,250
Royal Dutch Petroleum
Company ADR........................ 200,000 9,525,000
Texaco, Inc........................... 180,000 11,283,750
------------
39,005,625
OIL & GAS - REFINING & MARKETING - 1.0%
Williams Companies, Inc., The.......... 300,000 8,625,000
PHARMACEUTICALS - 3.4%
Schering-Plough Corporation............ 185,000 19,159,063
SmithKline Beecham PLC ADR............. 200,000 10,950,000
------------
30,109,063
PHOTOGRAPHY/IMAGING - 1.0%
Xerox Corporation...................... 100,000 8,475,000
PUBLISHING - 1.0%
McGraw-Hill Companies, Inc............ 110,000 8,717,500
PUBLISHING - NEWSPAPER - 1.9%
Gannett Company, Inc.................. 160,000 $ 8,570,000
Tribune Company....................... 165,000 8,301,563
------------
16,871,563
RETAIL - APPAREL - 0.9%
TJX Companies, Inc..................... 440,000 7,837,500
RETAIL - BUILDING SUPPLIES - 1.3%
Lowes Companies, Inc.................. 125,000 3,976,563
Sherwin-Williams Company.............. 350,000 7,568,750
------------
11,545,313
RETAIL - DEPARTMENT STORES - 1.6%
Federated Department Stores, Inc.*.... 200,000 7,275,000
Saks, Inc.*........................... 300,000 6,731,250
------------
14,006,250
RETAIL - DRUG STORES - 2.6%
Rite Aid Corporation.................. 340,000 12,070,000
Walgreen Company...................... 250,000 11,015,625
------------
23,085,625
RETAIL - FOOD CHAINS - 2.8%
Kroger Company*....................... 175,000 8,750,000
Safeway, Inc.*........................ 340,000 15,767,500
------------
24,517,500
RETAIL - GENERAL MERCHANDISE - 0.6%
Dayton Hudson Corporation.............. 160,000 5,720,000
RETAIL - SPECIALTY - 1.0%
Payless ShoeSource, Inc.*.............. 225,000 9,309,375
SERVICES - ADVERTISING/MARKETING - 1.2%
Omnicom Group, Inc..................... 240,000 10,800,000
SERVICES - COMMERCIAL & CONSUMER - 1.4%
Viad Corporation....................... 450,000 12,065,625
TELECOMMUNICATIONS - 2.6%
GTE Corporation........................ 100,000 5,500,000
MCI Worldcom, Inc.*.................... 250,000 12,218,750
SBC Communications, Inc................ 125,000 5,554,688
------------
23,273,438
TELECOMMUNICATIONS - LONG DISTANCE - 1.4%
Sprint Corporation.................... 170,000 12,240,000
WASTE MANAGEMENT - 0.9%
Waste Management, Inc................. 160,000 7,690,000
------------
Total common stocks - 86.8%.................... 769,240,745
Cash and other assets,
less liabilities - 13.2%..................... 117,343,812
------------
Total net assets - 100.0%...................... $886,584,557
============
</TABLE>
See accompanying notes.
- -----------------------------------------------------------------------------
23
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- -----------------------------------------------------------------------------
SEPTEMBER 30, 1998
SECURITY EQUITY FUND - GLOBAL SERIES
(CONTINUED)
<TABLE>
<CAPTION>
NUMBER MARKET
COMMON STOCKS (CONTINUED) OF SHARES VALUE
- ---------------------------------------------------------------
<S> <C> <C>
AUSTRALIA - 1.1%
Telestra Corporation....................119,600 $ 334,856
BRAZIL - 0.5%
Telecomunicacoes Brasileiras S.A.*...... 2,500 176,094
CANADA - 2.8%
Imax Corporation ADR*................... 34,500 690,000
Lowen Group, Inc., The.................. 4,300 63,425
Yogen Fruz World-Wide, Inc.*............ 27,830 119,438
------------
872,863
DENMARK - 1.3%
Tele Danmark A/S........................ 4,100 407,097
FRANCE - 6.9%
Alcatel Alsthom......................... 1,420 126,170
AXA-UAP................................. 2,840 259,941
Banque Nationale De Paris............... 2,400 128,461
Elf Aquitaine S.A. ADR.................. 6,900 429,094
SEITA................................... 6,000 346,846
Sidel S.A............................... 4,720 323,380
Vivendi................................. 2,760 549,558
------------
2,163,450
GERMANY - 2.5%
Allianz AG............................. 960 296,949
Kamps AG*.............................. 700 36,646
Rhoen-Klinikum AG...................... 5,050 453,213
------------
786,808
GREECE - 2.1%
Aktor S.A.*............................ 14,700 132,196
Commercial Bank of Greece S.A.......... 4,200 328,119
Ergo Bank S.A.......................... 2,600 209,441
------------
669,756
HONG KONG - 0.2%
JCG Holdings, Ltd...................... 320,000 57,818
IRELAND - 3.8%
Allied Irish Banks PLC................. 19,500 285,599
Elan Corporation PLC ADR............... 11,500 828,719
Ryanair Holdings PLC................... 13,640 75,832
------------
1,190,150
ITALY - 3.2%
Banca Nazionale del Lavoro*........... 89,000 226,210
Instituto Nazionale delle
Assicurazioni...................... 88,300 224,430
Mediolanum SpA........................ 9,000 206,421
Telecom Italia SpA.................... 52,900 364,149
------------
1,021,210
JAPAN - 7.7%
Amway Japan, Ltd...................... 13,300 $ 97,708
Asahi Diamond Industry
Company, Ltd....................... 49,000 196,907
Benesse Corporation................... 2,000 79,929
Bunka Shutter Company, Ltd............ 24,000 49,368
Doutor Coffee Company, Ltd............ 7,000 194,902
House Foods Corporation............... 12,000 150,749
Mos Food Service, Inc................. 18,000 218,190
National House Industrial
Company, Ltd....................... 46,000 324,420
Nippon Flour Mills.................... 65,000 138,481
Nisshin Flour Milling Company, Ltd.... 23,000 167,448
Paris Miki, Inc....................... 3,600 48,398
Rinnai Corporation.................... 9,500 149,353
Snow Brand Milk Products
Company, Ltd....................... 70,000 212,386
Sumitomo Forestry Company............. 33,000 162,188
Tiemco, Ltd........................... 3,300 20,607
York-Benimaru Company, Ltd............ 9,900 232,736
------------
2,443,770
LUXEMBOURG - 0.6%
Espirito Santo Financial Group ADR.... 12,900 200,756
NETHERLANDS - 2.4%
Koninklijke Ahold NV.................. 18,600 555,504
Koninklijke KPN LV.................... 6,600 203,766
------------
759,270
NORWAY - 1.9%
Saga Petroleum ASA "A"................ 30,300 311,109
Storebrand ASA*....................... 41,200 283,873
------------
594,982
PHILIPPINES - 0.0%
C&P Homes, Inc........................1,397,450 7,506
SINGAPORE - 1.8%
Keppel Fels, Ltd...................... 21,000 23,310
Mandarin Oriental International, Ltd.. 60,000 28,200
Singapore Press Holdings, Ltd......... 21,000 174,512
Singapore Telecommunications, Ltd..... 203,000 339,799
------------
565,821
SPAIN - 2.2%
Mapfre Vida Seguros................... 4,949 191,599
Tabacalera S.A........................ 22,500 493,348
------------
684,947
</TABLE>
See accompanying notes.
- -----------------------------------------------------------------------------
24
<PAGE> 26
SCHEDULE OF INVESTMENTS
- -----------------------------------------------------------------------------
SEPTEMBER 30, 1998
SECURITY EQUITY FUND - GLOBAL SERIES
(CONTINUED)
<TABLE>
<CAPTION>
NUMBER MARKET
COMMON STOCKS (CONTINUED) OF SHARES VALUE
- ---------------------------------------------------------------
<S> <C> <C>
SWEDEN - 2.6%
Castellum AB*........................... 55,000 $ 544,068
Swedish Match AB........................ 87,224 271,653
------------
815,721
SWITZERLAND - 5.8%
Nestle S.A.............................. 202 401,870
Novartis AG............................. 414 663,632
Roche Holdings AB....................... 56 602,759
Schweizerische Lebensversicherungs-
und Rentenstalt...................... 342 153,422
------------
1,821,683
UNITED KINGDOM - 13.1%
Aegis Group PLC.........................339,000 486,802
BritishTelecommunications PLC........... 20,500 273,824
Cadbury Schweppes PLC................... 22,300 289,909
Capita Group PLC........................ 35,900 369,711
D.F.S. Furniture Company PLC............ 55,800 188,705
George Wimpey PLC.......................108,000 177,112
Glaxo Wellcome PLC...................... 12,600 371,078
Oriflame International S.A.............. 12,000 27,224
Polypipe PLC............................ 65,500 114,650
Provident Financial PLC................. 32,161 431,223
Regent Inns PLC......................... 72,700 174,200
Rio Tinto PLC........................... 25,600 307,578
Royal Bank of Scotland Group PLC........ 11,400 131,738
SmithKline Beecham PLC.................. 47,800 527,597
Vodafone Group PLC...................... 22,900 266,966
------------
4,138,317
UNITED STATES - 24.1%
Ace, Ltd................................ 3,900 117,000
Adaptec, Inc.*.......................... 11,800 112,100
BJ Services Company*.................... 8,800 143,000
Bristol-Myers Squibb Company............ 1,700 176,588
Caribiner International, Inc.*.......... 5,400 45,900
Chevron Corporation..................... 2,100 176,531
Comcast Corporation..................... 2,700 126,731
Consolidated Edison, Inc................ 2,700 140,738
Costco Companies, Inc.*................. 2,300 108,963
Cymer, Inc.*............................ 10,500 95,812
Data General Corporation*............... 14,900 162,037
Dominion Resources, Inc................. 2,900 129,412
EMC Corporation*........................ 2,300 131,531
Emerson Electric Company................ 2,900 180,525
EXEL, Ltd............................... 1,800 113,400
Fannie Mae.............................. 2,700 173,475
Federal-Mogul Corporation............... 3,000 140,250
Fort James Corporation.................. 5,600 183,750
<CAPTION>
NUMBER MARKET
COMMON STOCKS (CONTINUED) OF SHARES VALUE
- ---------------------------------------------------------------
<S> <C> <C>
UNITED STATES (CONTINUED)
Gap, Inc................................ 1,950 $ 102,863
General Electric Company................ 1,900 151,169
GTE Corporation......................... 2,600 143,000
Hershey Foods Corporation............... 2,700 184,781
Home Depot, Inc......................... 2,600 102,700
Johnson & Johnson....................... 2,000 156,500
Lucent Technologies, Inc................ 1,400 96,688
Marsh & Mclennan
Companies, Inc....................... 2,250 111,937
Martin Marietta Materials, Inc.......... 3,700 159,794
Merrill Lynch & Company, Inc............ 1,200 56,850
Millennium Chemicals, Inc............... 7,100 132,237
Mobil Corporation....................... 2,600 197,438
Motorola, Inc........................... 2,300 98,181
NationsBank Corporation................. 1,900 101,650
Network Associates, Inc.*............... 3,000 106,500
Newell Company.......................... 2,800 128,975
Pfizer, Inc............................. 1,200 127,125
Pharmacia & Upjohn, Inc................. 4,200 210,788
Philip Morris Companies, Inc............ 3,300 152,006
Procter & Gamble Company, The........... 2,000 141,875
Rite Aid Corporation.................... 4,200 149,100
Rubbermaid, Inc......................... 5,900 141,231
Safeway, Inc.*.......................... 3,400 157,675
Structural Dynamics
Research Corporation*................ 14,400 162,000
Sungard Data Systems, Inc.*............. 4,800 151,200
Teva Pharmaceutical
Industries, Ltd. ADR................. 17,000 643,875
Texaco, Inc............................. 2,800 175,525
Time Warner, Inc........................ 1,100 96,319
TJX Companies, Inc...................... 5,200 92,625
Tyco International, Ltd................. 1,500 82,875
U.S. Foodservice, Inc.*................. 4,700 195,638
Warner-Lambert Company.................. 2,400 181,200
Williams Companies, Inc., The........... 5,300 152,375
Zale Corporation*....................... 4,500 115,312
------------
7,617,750
------------
Total common stocks - 86.6%................. 27,330,625
PREFERRED STOCKS
- ----------------
GERMANY - 1.5%
Fielman AG.............................. 7,400 285,569
Sto Ag Vorzug........................... 578 186,742
------------
Total preferred stocks - 1.5% 472,311
</TABLE>
See accompanying notes.
- -----------------------------------------------------------------------------
25
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SCHEDULE OF INVESTMENTS
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SEPTEMBER 30, 1998
SECURITY EQUITY FUND - ASSET ALLOCATION SERIES
(CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
U.S. GOVERNMENT SECURITIES AMOUNT VALUE
- ---------------------------------------------------------------
<S> <C> <C>
U.S. Treasury Strip,
0.00% - 2023..................... $1,915,000 $ 530,090
U.S. Treasury Strip,
0.00% - 2023..................... 4,337,000 1,184,825
------------
Total U.S. government securities - 5.4%..... 1,714,915
------------
Total investments - 93.5%................... 29,517,851
Cash and other assets,
less liabilities - 6.5%................... 2,042,095
------------
Total net assets - 100.0%................... $31,559,946
============
<CAPTION>
INVESTMENT CONCENTRATION
- ------------------------
<S> <C>
At September 30, 1998, Global Series' investment concentration,
by industry, was as follows:
Banking.............................................. 5.9%
Building Materials................................... 5.0%
Electric Equipment................................... 2.4%
Chemicals............................................ 0.5%
Computer Software/Services........................... 3.4%
Entertainment........................................ 3.7%
Financial Services................................... 11.4%
Foods/Beverages...................................... 7.7%
Government........................................... 5.4%
Health Care/Drugs.................................... 15.8%
Household Products................................... 6.3%
Machinery............................................ 1.1%
Manufacturing........................................ 4.0%
Oil & Gas............................................ 4.1%
Retail............................................... 5.5%
Services............................................. 3.4%
Telecommunications................................... 7.6%
Transportation....................................... 0.3%
Cash, short-term instruments
and other assets, less liabilities................ 6.5%
---------
100.0%
=========
<CAPTION>
SECURITY EQUITY FUND - ASSET ALLOCATION SERIES
PRINCIPAL
AMOUNT OR
NUMBER MARKET
CORPORATE BONDS OF SHARES VALUE
- ---------------------------------------------------------------
<S> <C> <C>
BANKING - 0.8%
Bank of New York Co., Inc.,
6.50% - 2003........................ $25,000 $ 26,375
Washington Mutual Capital I,
8.375% - 2027(1).................... $25,000 27,469
------------
53,844
BROKERAGE - 0.8%
Merrill Lynch & Company, Inc.,
8.00% - 2007........................ $25,000 28,625
SI Financing Trust I, 9.50% - 2026(1).. 910 24,342
------------
52,967
CAPITAL GOODS - 0.4%
Lafarge Corporation,
6.375% - 2005....................... $25,000 26,094
CONSUMER CYCLICAL - 3.1%
Lowe's Companies, Inc.,
6.70% - 2007........................ $25,000 26,625
MGM Grand, Inc., 6.95% - 2005.......... $10,000 10,225
Mirage Resorts, Inc.,
6.625% - 2005....................... $10,000 10,087
NewsAmerican Holdings,
8.625% - 2003....................... $25,000 27,969
Rite Aid Corporation, 6.70% - 2001.....$125,000 129,688
------------
204,594
CONSUMER NONCYCLICAL - 0.9%
Archer-Daniels-Midland Company,
8.875% - 2011....................... $25,000 32,344
Cargill, Inc., 6.15% - 2008............ $25,000 26,687
------------
59,031
INSURANCE - 0.4%
Hartford Life, Inc., 7.10% - 2007...... $25,000 27,594
NATURAL GAS - 0.4%
MCN Investment Corporation,
6.32% - 2003........................ $25,000 26,000
TECHNOLOGY - 0.4%
Dell Computer Corporation,
6.55% - 2008........................ $25,000 26,500
TELECOMMUNICATIONS.- 0.8%
SBC Communications, Inc.,
6.625% - 2007....................... $25,000 27,281
MCI Worldcom, Inc.,
6.4% - 2005......................... $25,000 26,375
------------
53,656
</TABLE>
See accompanying notes.
- ----------------------------------------------------------------------------
26
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SCHEDULE OF INVESTMENTS
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SEPTEMBER 30, 1998
SECURITY EQUITY FUND - ASSET ALLOCATION SERIES
(CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OR
NUMBER MARKET
CORPORATE BONDS (CONTINUED) OF SHARES VALUE
- ---------------------------------------------------------------
<S> <C> <C>
TRANSPORTATION - 2.5%
Hertz Corporation, 7.00% - 2004....... $150,000 $162,000
YANKEE - CORPORATES - 0.4%
Abbey National PLC, 6.69% - 2005...... $25,000 26,281
------------
Total corporate bonds - 10.9%............... 718,561
COMMON STOCKS
BROADCAST MEDIA - 2.8%
MediaOne Group, Inc.*................. 2,000 88,875
TCI Satellite Entertainment, Inc.*.... 240 690
Tele-Communications, Inc.*............ 2,400 93,900
------------
183,465
COMMUNICATION EQUIPMENT - 2.2%
ADC Telecommunications, Inc.*......... 800 16,900
Allen Telecom, Inc.*.................. 900 6,019
Andrew Corporation*................... 700 9,275
Leap Wireless International, Inc.*.... 75 351
Lucent Technologies, Inc.............. 400 27,625
Motorola, Inc......................... 400 17,075
Northern Telecom, Ltd................. 1,300 41,600
QUALCOMM, Inc.*....................... 300 14,381
Tellabs, Inc.*........................ 300 11,944
------------
145,170
COMPUTERS - NETWORKING - 1.8%
Cabletron Systems, Inc.*.............. 1,500 16,875
Cisco Systems, Inc.*.................. 1,125 69,539
3Com Corporation*..................... 1,000 30,063
------------
116,477
COMPUTERS - PERIPHERALS - 2.9%
EMC Corporation*...................... 1,000 57,188
Iomega Corporation*................... 2,000 7,500
Lexmark International Group, Inc.*.... 800 55,450
Quantum Corporation*.................. 800 12,700
Read-Rite Corporation*................ 700 5,469
Seagate Technology, Inc.*............. 800 20,050
Storage Technology Corporation*....... 1,200 30,525
------------
188,882
CONSUMER FINANCE - 1.2%
Capital One Financial Corporation..... 200 20,700
ContiFinancial Corporation*........... 800 6,000
Household International, Inc.......... 600 22,500
MBNA Corporation...................... 900 25,763
------------
74,963
<CAPTION>
NUMBER MARKET
COMMON STOCKS (CONTINUED) OF SHARES VALUE
- ---------------------------------------------------------------
<S> <C> <C>
ENTERTAINMENT - 1.5%
Time Warner, Inc...................... 600 $ 52,537
Viacom, Inc. (CI.A)*.................. 600 34,500
Walt Disney Company, The.............. 600 15,187
------------
102,224
EQUIPMENT - SEMICONDUCTORS - 0.9%
Applied Materials, Inc.*.............. 700 17,675
KLA-Tencor Corporation*............... 600 14,925
Novellus Systems, Inc.*............... 700 18,375
Teradyne, Inc.*....................... 600 10,950
------------
61,925
FOOTWEAR - 2.0%
Nike, Inc. (CI.B)..................... 1,500 55,219
Nine West Group, Inc.*................ 2,400 22,950
Reebok International, Ltd.*........... 2,300 31,194
Wolverine World Wide, Inc............. 2,300 25,012
------------
134,375
GAMING & LOTTERY - 1.2%
Circus Circus Enterprises, Inc.*...... 1,400 13,212
Harrah's Entertainment, Inc.*......... 1,400 18,638
International Game Technology, Inc.... 1,300 24,131
Mirage Resorts, Inc.*................. 1,550 25,963
------------
81,944
GOLD COMPANIES - 3.2%
Barrick Gold Corporation.............. 1,700 34,000
Battle Mountain Gold Company.......... 5,700 34,556
Hecla Mining Company*................. 3,600 18,225
Homestake Mining Company.............. 3,100 37,587
Newmont Mining Corporation............ 1,100 26,675
Placer Dome, Inc...................... 2,800 38,675
Stillwater Mining Company*............ 700 22,094
------------
211,812
LONG TERM HEALTH CARE - 1.1%
Beverly Enterprises, Inc.*............ 1,100 8,800
Genesis Health Ventures, Inc.*........ 1,000 12,250
HCR Manor Care, Inc.*................. 500 14,656
HEALTHSOUTH Corporation*.............. 1,551 16,382
Integrated Health Services, Inc....... 700 11,769
Mariner Post-Acute Network, Inc.*..... 1,450 7,431
------------
71,288
INSURANCE - PROPERTY & CASUALTY - 1.8%
Allstate Corporation.................. 700 29,181
Chubb Corporation..................... 500 31,500
Cincinnati Financial Corporation...... 1,000 30,750
St. Paul Companies, Inc............... 900 29,250
------------
120,681
</TABLE>
See accompanying notes.
- -----------------------------------------------------------------------------
27
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SEPTEMBER 30, 1998
SECURITY EQUITY FUND - ASSET ALLOCATION SERIES
(CONTINUED)
<TABLE>
<CAPTION>
NUMBER MARKET
COMMON STOCKS (CONTINUED) OF SHARES VALUE
- -----------------------------------------------------------------
<S> <C> <C>
MEDICAL PRODUCTS & SUPPLIES - 2.3%
Baxter International, Inc.............. 600 $ 35,700
Becton, Dickinson & Company............ 800 32,900
Boston Scientific Corporation*......... 400 20,550
Guidant Corporation.................... 400 29,700
Medtronic, Inc......................... 500 28,938
------------
147,788
OIL & GAS - DRILLING & EQUIPMENT - 1.2%
Baker Hughes, Inc...................... 800 16,750
Halliburton Company.................... 700 19,994
Schlumberger, Ltd...................... 400 20,125
Transocean Offshore, Inc............... 700 24,281
------------
81,150
RESTAURANTS - 1.7%
Applebee's International, Inc.......... 600 12,525
Brinker International, Inc.*........... 900 16,875
CKE Restaurants, Inc................... 470 13,983
Cracker Barrel Old Country Store, Inc.. 600 13,650
McDonald's Corporation................. 400 23,875
Outback Steakhouse, Inc.*.............. 400 10,550
Wendy's International, Inc............. 1,000 22,187
------------
113,645
RETAIL - BUILDING SUPPLIES - 1.3%
Fastenal Company....................... 700 17,500
Hughes Supply, Inc..................... 900 25,650
Lowe's Companies, Inc.................. 700 22,269
Sherwin-Williams Company............... 1,000 21,625
------------
87,044
RETAIL - SPECIALTY - 3.1%
AutoZone, Inc.*........................ 1,100 27,088
Claire's Stores........................ 1,600 28,800
Home Depot, Inc........................ 700 27,650
Office Depot, Inc.*.................... 1,000 22,438
OfficeMax, Inc.*....................... 2,100 20,606
The Pep Boys - Manny, Moe & Jack....... 1,200 16,050
Staples, Inc.*......................... 1,550 45,531
Toys "R" Us, Inc.*..................... 900 14,569
------------
202,732
SERVICES - ADVERTISING/MARKETING - 2.0%
Acxiom Corporation*.................... 1,200 29,775
Gartner Group, Inc.*................... 1,000 20,875
Interpublic Group of Companies, Inc.... 500 26,969
Omnicom Group, Inc..................... 600 27,000
True North Communications, Inc......... 1,100 24,406
------------
129,025
<CAPTION>
PRINCIPAL
AMOUNT OR
NUMBER MARKET
COMMON STOCKS (CONTINUED) OF SHARES VALUE
- -----------------------------------------------------------------
<S> <C> <S>
TELECOMMUNICATIONS - 1.1%
Ameritech Corporation.................. 300 $ 14,212
Bell Atlantic Corporation.............. 214 10,366
BellSouth Corporation.................. 200 15,050
GTE Corporation........................ 200 11,000
SBC Communications, Inc................ 384 17,064
U S West, Inc.......................... 54 2,832
------------
70,524
TOBACCO - 1.9%
Philip Morris Companies, Inc........... 1,000 46,063
RJR Nabisco Holdings Corporation....... 1,500 37,781
UST, Inc............................... 1,500 44,344
------------
128,188
TRUCKING - 1.2%
Rollins Truck Leasing Corporation...... 2,250 25,171
Ryder System, Inc...................... 650 16,169
USFreightways Corporation.............. 800 15,900
Werner Enterprises, Inc................ 1,375 21,656
------------
78,896
------------
Total common stocks - 38.4%......... 2,532,198
U.S. GOVERNMENT & GOVERNMENT AGENCIES
- ---------------------------------------
FEDERAL HOME LOAN MORTGAGES - 2.1%
7.00% - 2020........................ $100,000 100,954
7.00% - 2021........................ $39,685 40,370
------------
141,324
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 3.3%
6.50% - 2018........................ $48,451 48,560
6.95% - 2020........................ $130,000 135,839
7.50% - 2020........................ $32,750 33,793
------------
218,192
U.S. TREASURY NOTES - 6.5%
6.50% - 2006........................ $375,000 425,415
U.S. TREASURY BONDS - 1.7%
6.00% - 2026........................ $100,000 111,697
------------
Total U.S. government & government
agencies - 13.6%.................. 896,628
</TABLE>
See accompanying notes.
- -----------------------------------------------------------------------------
28
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- --------------------------------------------------------------------------------
SEPTEMBER 30, 1998
SECURITY EQUITY FUND - ASSET ALLOCATION SERIES
(CONTINUED)
<TABLE>
<CAPTION>
NUMBER MARKET
REAL ESTATE INVESTMENT TRUSTS OF SHARES VALUE
- ---------------------------------------------------------------
<S> <C> <C>
American Health Properties, Inc.......... 700 $ 16,450
Archstone Communities Trust.............. 800 16,300
Avalon Bay Communities, Inc.............. 460 15,669
CBL & Associates Properties, Inc......... 700 18,025
Duke Realty Investments, Inc............. 900 20,869
Equity Residential Properties Trust...... 400 16,875
Federal Realty Investment Trust.......... 650 14,706
General Growth Properties, Inc........... 550 19,594
Glimcher Realty Trust.................... 850 14,556
Health Care Property Investors, Inc...... 500 16,500
Kimco Realty Corporation................. 600 22,800
Merry Land & Investment Company.......... 800 17,900
New Plan Excel Realty Trust.............. 800 18,650
Post Properties, Inc..................... 450 17,353
Public Storage, Inc...................... 600 16,087
Simon Property Group, Inc................ 600 17,850
Spieker Properties, Inc.................. 500 18,375
United Realty Trust Dominion............. 1,200 13,650
Washington Real Estate Investment
Trust................................. 1,000 16,188
Weingarten Realty Investors.............. 400 16,400
------------
Total real estate investment
trusts - 5.2%....................... 344,797
FOREIGN STOCKS
- --------------
BELGIUM - 4.1%
Cementbedrijven Cimenteries.............. 200 15,396
Delhaize - Le Lion....................... 300 22,659
Electrabel SA............................ 150 59,147
Fortis AG................................ 200 49,290
Gevaert NV............................... 200 12,409
Petrofina SA............................. 150 55,016
Solvay SA................................ 800 53,349
------------
267,266
DENMARK - 3.8%
A/S Dampskibsselskabet Svendborg......... 5 48,781
A/S Forsikringsselskabet Codan........... 45 5,671
Akieselskabet Potagua.................... 140 3,179
Bang & Olufsen Holding A/S............... 82 5,548
BG Bank A/S.............................. 133 6,906
Carlsberg A/S............................ 197 11,458
Cheminova Holding A/S.................... 214 4,041
D/S Norden A/S........................... 35 3,194
Danisco A/S.............................. 244 16,510
Danske Traelast.......................... 54 4,674
Den Danske Bank.......................... 245 27,758
<CAPTION>
NUMBER MARKET
FOREIGN STOCKS (CONTINUED) OF SHARES VALUE
- ---------------------------------------------------------------
<S> <C> <C>
DENMARK (CONTINUED)
Finansierings Institutte for Industri
og Handvaerk A/S...................... 189 $ 4,035
Finansieringsselskabet Gefion A/S ....... 240 3,985
FLS Industries A/S....................... 212 4,470
ISS International Service
System A/S*........................... 148 7,802
J. Lauritzen Holdings A/S*............... 89 7,563
Jyske Bank A/S........................... 61 4,991
Korn-OG Foderstof
Kompagniet A/S........................ 153 3,491
Novo Nordisk A/S......................... 263 31,659
Radiometer A/S........................... 94 4,148
Ratin A/S*............................... 88 15,301
Sophus Berendsen A/S*.................... 88 3,407
Sydbank A/S.............................. 108 4,928
Tele Danmark A/S......................... 94 9,333
Topdanmark A/S*.......................... 30 4,390
Tryg-Baltica Forsikring A/S.............. 128 3,323
------------
250,546
GERMANY - 10.4%
Allianz AG............................... 360 111,356
BASF AG.................................. 1,081 41,781
Bayer AG................................. 735 29,067
Bayerische Motoren Werke
(BMW) AG.............................. 100 66,411
Bayerische Motoren Werke
(Bonus Issue)......................... 20 13,103
Continental AG........................... 202 4,895
Daimler-Benz AG.......................... 450 38,231
Degussa AG............................... 140 6,031
Deutsche Bank AG......................... 692 36,724
Deutsche Telekom AG...................... 2,900 90,050
Dresdner Bank AG......................... 611 23,213
Friedrich Grohe AG-Vorzugsak............. 7 1,927
Heidelberger Zement AG................... 86 5,686
Hochtief AG.............................. 180 5,277
Linde AG................................. 14 8,326
Merck KGAA............................... 187 7,664
Muenchener Rueckversicherungs-
Gesellschaft AG....................... 70 30,573
Preussag AG.............................. 72 25,330
SAP AG................................... 122 54,306
Siemens AG............................... 1,038 56,701
Veba AG.................................. 634 32,849
------------
689,501
</TABLE>
See accompanying notes.
- -----------------------------------------------------------------------------
29
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- --------------------------------------------------------------------------------
SEPTEMBER 30, 1998
SECURITY EQUITY FUND - ASSET ALLOCATION SERIES
(CONTINUED)
<TABLE>
<CAPTION>
NUMBER MARKET
FOREIGN STOCKS (CONTINUED) OF SHARES VALUE
- ---------------------------------------------------------------
<S> <C> <C>
JAPAN - 8.8%
All Nippon Airways Company, Ltd......... 2,000 $ 6,465
Asahi Glass Company, Ltd................ 2,000 9,697
Bank of Tokyo-Mitsubishi, Ltd........... 3,000 19,285
Chubu Electric Power Company, Inc....... 400 6,421
Fuji Bank, Ltd.......................... 1,000 2,020
Fujitsu, Ltd............................ 2,000 17,338
Hitachi, Ltd............................ 3,000 13,224
Industrial Bank of Japan, Ltd........... 2,000 7,347
Kansai Electric Power Company........... 1,400 24,221
Kawasaki Heavy Industries............... 4,000 8,081
Kawasaki Steel Corporation.............. 5,000 5,877
Kinki Nippon Railway
Company, Ltd......................... 2,000 8,684
Kirin Brewery Company, Ltd.............. 1,000 8,022
Kyocera Corporation..................... 100 4,379
Marubeni Corporation.................... 3,000 3,548
Marui Company, Ltd...................... 1,000 14,546
Matsushita Electric Industrial
Company, Ltd......................... 2,000 27,255
Mitsubishi Corporation.................. 4,000 19,395
Mitsubishi Estate Company, Ltd.......... 1,000 6,560
Mitsubishi Heavy Industrial, Ltd........ 4,000 13,723
Mitsubishi Motors Corporation........... 2,000 3,306
Mitsubishi Trust & Banking
Corporation.......................... 1,000 3,526
Mitsui Fudosan Company, Ltd............. 1,000 5,135
NEC Corporation......................... 2,000 13,003
Nippon Steel Corporation................ 6,000 8,640
Nissan Motor Company, Ltd............... 2,000 5,583
Nomura Securities Company, Ltd.......... 2,000 14,399
NSK Ltd................................. 4,000 13,811
Sekisui House, Ltd...................... 4,000 32,589
Sharp Corporation....................... 2,000 11,945
Shin-Etsu Chemical Company.............. 1,000 15,905
Sony Corporation........................ 100 6,972
Sumitomo Bank, Ltd...................... 4,000 27,917
Sumitomo Chemical Company............... 6,000 17,940
Tokio Marine & Fire Insurance
Company.............................. 2,000 17,925
Tokyo Electric Power Company............ 2,700 51,771
Tokyu Corporation....................... 4,000 8,933
Toshiba Corporation..................... 3,000 10,821
Toyoda Automatic Loom Works, Ltd........ 1,000 15,428
Toyota Motor Corporation................ 3,000 67,220
------------
578,857
------------
Total foreign stocks - 27.1%................ 1,786,170
<CAPTION>
PRINCIPAL
AMOUNT OR
NUMBER MARKET
TEMPORARY CASH INVESTMENTS OF SHARES VALUE
- ---------------------------------------------------------------
<S> <C> <C>
MONEY MARKET FUND - 3.8%
Chase Master Note Program........ $ 253,700 $ 253,700
------------
Total temporary cash investments - 3.8%... 253,700
------------
Total investments - 99.0%................. 6,532,054
Cash and other assets,
less liabilities - 1.0%................. 66,431
------------
Total net assets - 100%................... $6,598,485
============
<CAPTION>
SECURITY EQUITY FUND - SOCIAL AWARENESS SERIES
COMMON STOCKS
- -------------
<S> <C> <C>
AIRLINES - 0.5%
AMR Corporation*........................ 1,100 $ 60,981
AUTO PARTS & EQUIPMENT - 0.7%
Snap-On, Inc............................ 2,900 89,356
BANKS - MAJOR REGIONAL - 5.1%
Banc One Corporation.................... 2,640 112,530
Bank of New York Company, Inc........... 5,800 158,775
First Chicago NBD Corporation........... 1,500 102,750
Northern Trust Corporation.............. 2,600 177,450
Wachovia Corporation.................... 1,300 110,825
------------
662,330
BANKS - MONEY CENTER - 0.7%
Chase Manhattan Corporation............. 2,000 86,500
BEVERAGES - SOFT DRINK - 2.1%
Coca-Cola Company....................... 4,800 276,600
BROADCAST MEDIA - 3.0%
Comcast Corporation (CI.A).............. 2,500 117,344
Tele-Communications, Inc.*.............. 2,900 113,463
Viacom, Inc., (CI.B)*................... 2,600 150,800
------------
381,607
CHEMICALS - SPECIALTY - 0.5%
Fuller (H.B.) Company................... 900 34,087
Nalco Chemical Company.................. 1,200 35,400
------------
69,487
</TABLE>
See accompanying notes.
- -----------------------------------------------------------------------------
30
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- --------------------------------------------------------------------------------
SEPTEMBER 30, 1998
SECURITY EQUITY FUND - SOCIAL AWARENESS SERIES
(CONTINUED)
<TABLE>
<CAPTION>
NUMBER MARKET
COMMON STOCKS OF SHARES VALUE
- ---------------------------------------------------------------
<S> <C> <C>
COMMUNICATIONS - EQUIPMENT - 1.2%
ADC Telecommunications, Inc.*........... 1,900 $ 40,137
Tellabs, Inc.*.......................... 1,200 47,775
Scientific-Atlanta, Inc................. 3,100 65,487
------------
153,399
COMPUTER SOFTWARE/SERVICES - 7.1%
Affiliated Computer
Services, Inc. (Cl.A)*............... 3,100 94,550
American Management Systems, Inc.*...... 4,600 125,925
BMC Software, Inc.*..................... 3,800 228,237
Microsoft Corporation*.................. 4,200 462,262
------------
910,974
COMPUTER HARDWARE - 4.4%
Compaq Computer Corporation............. 4,200 132,825
Hewlett-Packard Company................. 2,000 105,875
International Business Machines
Corporation.......................... 2,600 332,800
------------
571,500
COMPUTERS - NETWORKING - 2.0%
Ascend Communications, Inc.*........... 600 27,300
Cisco Systems, Inc.*................... 3,825 236,433
------------
263,733
DISTRIBUTION - FOOD & HEALTH - 0.5%
Cardinal Health, Inc.................. 650 67,112
ELECTRIC COMPANIES - 0.4%
New Century Energies, Inc............. 1,000 48,687
ELECTRICAL EQUIPMENT - 0.4%
Hubbell, Inc. (CI.B).................. 1,500 53,250
ELECTRONICS - DISTRIBUTION - 0.5%
W.W. Grainger, Inc.................... 1,600 67,400
ELECTRONICS - SEMICONDUCTORS - 3.5%
Analog Devices, Inc.*................. 3,200 51,400
Intel Corporation..................... 4,700 403,025
------------
454,425
ENTERTAINMENT - 1.1%
Time Warner, Inc...................... 1,700 148,856
FINANCIAL - DIVERSE - 7.4%
American Express Company.............. 1,600 124,200
American General Corporation.......... 2,500 159,687
Fannie Mae............................ 2,600 167,050
Freddie Mac........................... 3,500 173,031
Finova Group, Inc..................... 2,800 139,825
SunAmerica, Inc....................... 3,000 183,000
------------
946,793
<CAPTION>
NUMBER MARKET
COMMON STOCKS (CONTINUED) OF SHARES VALUE
- ---------------------------------------------------------------
<S> <C> <C>
FOODS - 2.6%
General Mills, Inc.................... 1,500 $105,000
Interstate Bakeries Corporation....... 4,000 124,000
Ralston-Ralston Purina Group.......... 3,600 105,300
------------
334,300
HARDWARE & TOOLS - 0.4%
Black & Decker Corporation.............. 1,200 49,950
HEALTH CARE - DIVERSE - 2.3%
Johnson & Johnson....................... 3,700 289,525
HEALTH CARE - MANAGED CARE - 0.5%
Wellpoint Health Networks, Inc.*........ 1,200 67,275
HEALTH CARE - SPECIALIZED SERVICES - 0.5%
ALZA Corporation*....................... 1,400 60,725
HOUSEHOLD FURNISHINGS & APPLIANCES - 1.1%
Leggett & Platt, Inc.................... 6,800 141,100
HOUSEHOLD PRODUCTS - 4.4%
Clorox Company.......................... 1,800 148,500
Colgate-Palmolive Company............... 1,800 123,300
Kimberly-Clark Corporation.............. 2,000 81,000
Procter & Gamble Company, The........... 3,000 212,812
------------
565,612
INSURANCE - LIFE/HEALTH - 1.1%
UNUM Corporation........................ 2,800 139,125
INSURANCE - MULTI-LINE - 1.6%
American International Group, Inc....... 2,700 207,900
INSURANCE - PROPERTY & CASUALTY - 1.0%
Chubb Corporation....................... 2,000 126,000
LEISURE TIME PRODUCTS - 0.6%
Mattel, Inc............................. 2,700 75,600
MANUFACTURING - DIVERSIFIED - 0.8%
Illinois Tool Works, Inc................ 1,900 103,550
MANUFACTURING - SPECIALIZED - 0.2%
Avery Dennison Corporation.............. 600 26,213
MEDICAL PRODUCTS & SUPPLIES - 0.5%
Guidant Corporation..................... 800 59,400
NATURAL GAS - 0.5%
Consolidated Natural Gas Company........ 1,100 59,950
OFFICE EQUIPMENT & SUPPLIES - 0.8%
Pitney Bowes, Inc....................... 1,800 98,213
OIL - INTERNATIONAL - 1.6%
Amoco Corporation....................... 3,800 204,725
</TABLE>
See accompanying notes.
- -----------------------------------------------------------------------------
31
<PAGE> 33
SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
SEPTEMBER 30, 1998
SECURITY EQUITY FUND - SOCIAL AWARENESS SERIES
(CONTINUED)
<TABLE>
<CAPTION>
NUMBER MARKET
COMMON STOCKS (CONTINUED) OF SHARES VALUE
- ---------------------------------------------------------------
<S> <C> <C>
OIL & GAS - DRILLING & EQUIPMENT - 0.2%
ENSCO International, Inc................ 1,100 $ 11,894
Smith International, Inc.*.............. 600 16,463
------------
28,357
OIL & GAS - EXPLORATION PRODUCTION - 1.4%
Anadarko Petroleum Corporation.......... 2,800 110,075
Apache Corporation...................... 2,600 69,713
------------
179,788
PAPER & FOREST PRODUCTS - 0.2%
Mead Corporation........................ 800 23,550
PHARMACEUTICALS - 5.4%
Forest Laboratories, Inc.*.............. 1,800 61,875
Merck & Company, Inc.................... 2,500 323,906
Schering-Plough Corporation............. 3,000 310,688
------------
696,469
PHOTOGRAPHY/IMAGING - 0.8%
Xerox Corporation...................... 1,200 101,700
PUBLISHING - 0.6%
McGraw-Hill Companies, Inc............. 900 71,325
RAILROADS - 0.4%
Norfolk Southern Corporation........... 1,700 49,406
RESTAURANTS - 0.8%
McDonald's Corporation................. 1,800 107,438
RETAIL - APPAREL - 1.4%
TJX Companies, Inc..................... 6,800 121,125
Talbots, Inc........................... 3,000 53,625
------------
174,750
RETAIL - BUILDING SUPPLIES - 0.6%
Lowes Companies, Inc................... 2,600 82,713
RETAIL - DEPARTMENT STORES - 1.3%
Kohl's Corporation*.................... 1,600 62,400
Saks, Inc.*............................ 4,400 98,725
------------
161,125
RETAIL - DRUG STORES - 1.5%
Rite Aid Corporation................... 5,600 198,800
RETAIL - FOOD CHAINS - 1.2%
Kroger Company*........................ 3,000 150,000
RETAIL - GENERAL MERCHANDISE - 1.3%
Dayton Hudson Corporation.............. 4,800 171,600
<CAPTION>
NUMBER MARKET
COMMON STOCKS (CONTINUED) OF SHARES VALUE
- ---------------------------------------------------------------
<S> <C> <C>
SAVINGS & LOAN - 0.4%
Ahmanson (H.F.) & Company.............. 1,000 $ 55,500
SERVICES - ADVERTISING/MARKETING - 1.4%
Omnicom Group, Inc..................... 4,000 180,000
SERVICES - COMMERCIAL & CONSUMER - 0.5%
Service Corporation International...... 1,900 60,563
SERVICES - COMPUTER SYSTEMS - 0.8%
Sungard Data Systems, Inc.*............ 3,500 110,250
TELECOMMUNICATIONS - 7.4%
Ameritech Corporation.................. 3,000 142,125
Bell Atlantic Corporation.............. 4,200 203,438
BellSouth Corporation.................. 2,700 203,175
MCI Worldcom, Inc.*.................... 4,000 195,500
SBC Communications, Inc................ 4,600 204,413
------------
948,651
TELECOMMUNICATIONS - LONG DISTANCE - 2.7%
AT&T Corporation....................... 4,600 268,813
Sprint Corporation..................... 1,100 79,200
------------
348,013
TRUCKING - 0.2%
FDX Corporation*....................... 500 22,562
------------
Total common stocks - 92.1%................. 11,844,713
Cash and other assets,
less liabilities - 7.9%................... 1,019,107
------------
Total net assets - 100.0%................... $12,863,820
============
</TABLE>
See accompanying notes.
- -----------------------------------------------------------------------------
32
<PAGE> 34
SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
SEPTEMBER 30, 1998
SECURITY FUND - VALUE SERIES
<TABLE>
<CAPTION>
NUMBER MARKET
COMMON STOCKS OF SHARES VALUE
- ---------------------------------------------------------------
<S> <C> <C>
AUTO PARTS & EQUIPMENT - 1.3%
Motorcar Parts & Accessories, Inc.*.. 19,000 $ 220,875
BANKS - MAJOR REGIONAL - 2.0%
Banc One Corporation................. 5,700 242,962
Northern Trust Corporation........... 1,600 109,200
------------
352,162
BIOTECHNOLOGY - 1.4%
Ligand Pharmaceuticals, Inc. (CI.B)*.. 26,000 237,250
CHEMICALS - SPECIALTY - 4.0%
Bush Boake Allen, Inc.*............... 5,200 139,100
M.A. Hanna Company.................... 26,600 299,250
Material Sciences Corporation*........ 30,000 262,500
------------
700,850
COMMUNICATION EQUIPMENT - 7.1%
ANTEC Corporation*.................... 24,300 373,613
Comverse Technology, Inc.*............ 15,800 645,825
Motorola, Inc......................... 3,800 162,213
Transcrypt International, Inc.*....... 25,000 65,500
------------
1,247,151
COMPUTER HARDWARE - 1.0%
CHS Electronics, Inc.*................ 15,400 167,475
COMPUTER SOFTWARE/SERVICES - 8.9%
American Management Systems, Inc.*.... 12,000 328,500
Computer Sciences Corporation*........ 8,800 479,600
DST Systems, Inc.*.................... 5,400 284,850
Rational Software Corporation*........ 28,000 470,750
------------
1,563,700
ELECTRICAL EQUIPMENT - 6.7%
Benchmark Electronics, Inc.*.......... 19,000 433,437
Cooper Cameron Corporation*........... 5,000 140,625
Maxwell International
Corporation*....................... 16,000 336,000
Rockwell International
Corporation........................ 7,200 260,100
------------
1,170,162
ELECTRONICS - INSTRUMENTATION - 3.8%
E G & G, Inc.......................... 9,700 219,463
Perkin-Elmer Corporation.............. 6,400 439,600
------------
659,063
ENTERTAINMENT - 0.6%
Metromedia International Group, Inc.*. 26,000 100,750
HEALTH CARE - LONG TERM CARE - 1.9%
Integrated Health Services, Inc....... 20,000 336,250
<CAPTION>
NUMBER MARKET
COMMON STOCKS OF SHARES VALUE
- ---------------------------------------------------------------
<S> <C> <C>
HOUSEHOLD FURNISHINGS & APPLIANCES - 2.5%
Meadowcraft, Inc.*.................... 11,000 $ 110,687
O'Sullivan Industries Holdings, Inc.*. 33,000 319,688
------------
430,375
INSURANCE - LIFE/HEALTH - 4.0%
AFLAC, Inc............................ 12,000 342,750
UNUM Corporation...................... 7,400 367,688
------------
710,438
INSURANCE - PROPERTY & CASUALTY - 1.5%
Horace Mann Educators Corporation..... 9,000 270,000
IRON & STEEL - 1.1%
Cleveland-Cliffs, Inc................. 5,000 195,000
LEISURE TIME PRODUCTS - 2.2%
Hasbro, Inc........................... 13,000 383,500
MANUFACTURING - DIVERSIFIED - 1.2%
AEP Industries, Inc.*................. 10,200 214,200
MEDICAL PRODUCTS & SUPPLIES - 3.4%
Dentsply International, Inc........... 7,200 161,100
Sunrise Medical, Inc.*................ 43,600 436,000
------------
597,100
NATURAL GAS - 3.2%
Equitable Resources, Inc.............. 22,000 559,625
OIL - INTERNATIONAL - 1.7%
Tesoro Petroleum Corporation*......... 23,000 300,438
OIL & GAS - EXPLORATION & PRODUCTION - 6.9%
Chieftain International, Inc.*........ 18,000 307,125
Forcenergy, Inc.*..................... 35,000 203,438
Kerr-McGee Corporation................ 4,000 182,000
MCN Energy Group, Inc................. 7,200 122,850
Ocean Energy, Inc.*................... 30,000 393,750
------------
1,209,163
PHARMACEUTICALS - 7.5%
Dura Pharmaceuticals, Inc.*........... 19,000 207,812
Mylan Laboratories, Inc............... 26,000 767,000
Teva Pharmaceutical Industries,
Ltd. ADR........................... 8,900 337,087
------------
1,311,899
PUBLISHING - NEWSPAPER - 3.2%
E.W. Scripps Company (Cl.A)........... 7,000 304,500
News Corporation, Ltd. ADR............ 10,000 256,250
------------
560,750
RAILROADS - 2.9%
RailAmerica, Inc.*.................... 86,100 505,837
</TABLE>
See accompanying notes.
- -----------------------------------------------------------------------------
33
<PAGE> 35
SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
SEPTEMBER 30, 1998
SECURITY EQUITY FUND - VALUE SERIES
(CONTINUED)
<TABLE>
<CAPTION>
NUMBER MARKET
COMMON STOCK (CONTINUED) OF SHARES VALUE
- ---------------------------------------------------------------
<S> <C> <C>
RESTAURANTS - 6.0%
The Cheesecake Factory*............... 16,500 $ 255,750
Morrison Health Care, Inc............. 21,000 372,750
Sonic Corporation*.................... 24,000 420,000
------------
1,048,500
RETAIL - APPAREL - 2.2%
Stage Stores, Inc.*................... 16,000 195,000
Talbots, Inc.......................... 11,000 196,625
------------
391,625
RETAIL - DEPARTMENT STORES - 1.5%
Elder-Beerman Stores Corporation, Inc.* 15,400 267,575
RETAIL - SPECIALTY - 1.2%
Keystone Automotive Industries, Inc.* 10,500 207,375
SERVICES - COMMERCIAL & CONSUMER - 6.1%
Angelica Corporation.................. 32,000 514,000
FTI Consulting, Inc.*................. 20,000 103,750
Pinkerton's, Inc.*.................... 32,500 448,906
------------
1,066,656
------------
Total common stocks - 97.0%................. 16,985,744
Cash and other assets,
less liabilities - 3.0%................... 529,838
------------
Total net assets - 100.0%................... $17,515,582
============
<CAPTION>
SECURITY EQUITY FUND - SMALL COMPANY SERIES
COMMON STOCKS
- -------------
<S> <C> <C>
AIRLINES - 1.5%
Midwest Express Holdings, Inc.*.......... 1,900 $ 63,650
BEVERAGES - ALCOHOLIC - 1.2%
Adolph Coors Company..................... 400 18,375
Beringer Wine Estates Holdings,
Inc. (CI.B)*.......................... 800 30,650
------------
49,025
BIOTECHNOLOGY - 1.1%
IDEXX Laboratories, Inc.*................ 2,000 47,750
COMMUNICATION EQUIPMENT - 3.6%
Cellular Communication
International, Inc.*.................. 1,200 65,100
GeoTel Communications
Corporation*.......................... 1,500 40,312
L-3 Communication Holdings, Inc.*........ 1,000 39,687
------------
145,099
SECURITY EQUITY FUND - SMALL COMPANY SERIES
(CONTINUED)
<CAPTION>
NUMBER MARKET
COMMON STOCK (CONTINUED) OF SHARES VALUE
- ---------------------------------------------------------------
<S> <C> <C>
COMPUTER HARDWARE - 1.7%
Cybex Computer Products
Corporation*......................... 700 $ 17,587
Jack Henry & Associates, Inc............ 100 4,776
Network Appliance, Inc.*................ 1,000 50,625
------------
72,988
COMPUTER SOFTWARE/SERVICES - 12.5%
Advantage Learning Systems, Inc.*....... 600 22,800
Best Software, Inc.*.................... 600 14,400
Concord Communications, Inc.*........... 2,500 99,375
Dendrite International, Inc.*........... 2,500 59,687
Inktomi Corporation*.................... 600 45,150
Insight Enterprises, Inc.*.............. 600 16,950
Legato Systems, Inc.*................... 400 20,550
Mercury Interactive Corporation*........ 1,500 59,531
Nova Corporation*....................... 400 12,275
Peregrine Systems, Inc.*................ 600 24,150
PSINet, Inc.*........................... 3,200 44,600
TSI International Software, Ltd.*....... 1,000 34,625
Visio Corporation*...................... 800 19,250
Wind River Systems*..................... 1,000 47,250
------------
520,593
COMPUTERS - NETWORKING - 0.6%
International Network Services*......... 600 24,900
COMPUTERS - PERIPHERALS - 1.1%
Xircom, Inc.*........................... 1,800 44,100
DISTRIBUTION - FOOD & HEALTH - 1.1%
Hain Food Group, Inc.".................. 2,200 33,000
Patterson Dental Company................ 400 14,800
------------
47,800
ELECTRIC COMPANIES - 2.8%
Montana Power Company................... 200 8,938
Philadelphia Suburban Corporation....... 1,000 26,812
WPS Resources Corporation............... 2,300 82,225
------------
117,975
ELECTRICAL EQUIPMENT - 1.7%
QLogic Corporation*...................... 1,100 71,775
ELECTRONICS - DEFENSE - 0.4%
Symbol Technologies, Inc................. 300 15,394
ELECTRONICS - DISTRIBUTION - 1.6%
Power Integrations, Inc.*................ 4,000 54,250
Superior Telecom, Inc.................... 300 14,512
------------
68,762
</TABLE>
See accompanying notes.
- -----------------------------------------------------------------------------
34
<PAGE> 36
SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
SEPTEMBER 30, 1998
SECURITY EQUITY FUND - SMALL COMPANY SERIES
(CONTINUED)
<TABLE>
<CAPTION>
NUMBER MARKET
COMMON STOCKS (CONTINUED) OF SHARES VALUE
- ---------------------------------------------------------------
<S> <C> <C>
ENTERTAINMENT - 0.4%
Gemstar International Group, Ltd.*..... 400 $ 18,550
FINANCIAL - DIVERSE - 2.0%
LandAmerica Financial Group, Inc....... 1,600 82,000
FOODS - 0.4%
American Italian Pasta Company (CI.A)*.... 500 13,125
Worthington Foods, Inc.................... 200 3,875
------------
17,000
HEALTH CARE - LONG TERM CARE - 1.3%
Hanger Orthopedic Group, Inc.*........... 3,000 55,875
HEALTH CARE - MANAGED CARE - 1.2%
Express Scripts, Inc.*................... 600 49,350
HEALTH CARE - SPECIALIZED SERVICES - 4.5%
Clark/Bardes Holdings, Inc.*............. 1,100 9,350
Covance, Inc.*........................... 900 23,344
Parexel International*................... 1,700 66,300
Pediatrix Medical Group, Inc.*........... 1,500 67,313
Pharmaceutical Product
Development, Inc.*.................... 800 22,400
------------
188,707
HOSPITAL MANAGEMENT - 2.4%
Province Healthcare Company*............. 3,000 102,188
HOUSEHOLD FURNISHINGS & APPLIANCES - 1.0%
La-Z-Boy, Inc............................ 2,200 43,175
INSURANCE - PROPERTY & CASUALTY - 0.5%
Fidelity National Financial, Inc......... 600 20,287
LODGING - HOTELS - 0.7%
ResortQuest International, Inc.*......... 3,400 29,963
MEDICAL PRODUCTS & SUPPLIES - 5.2%
ADAC Laboratories........................ 2,500 60,000
MiniMed, Inc.*........................... 800 52,800
ResMed, Inc.*............................ 2,000 104,000
------------
216,800
MISCELLANEOUS BUSINESS SERVICES - 1.6%
META Group, Inc.*........................ 2,000 65,375
OFFICE EQUIPMENT & SUPPLIES - 0.5%
National Computer Systems, Inc........... 700 20,650
OIL & GAS - DRILLING & EQUIPMENT - 0.8%
BJ Services Company*..................... 1,100 17,875
Smith International, Inc.*............... 500 13,719
------------
31,594
<CAPTION>
NUMBER MARKET
COMMON STOCKS (CONTINUED) OF SHARES VALUE
- ---------------------------------------------------------------
<S> <C> <C>
OIL & GAS - EXPLORATION & PRODUCTION - 1.2%
Cross Timbers Oil Company................ 700 $ 10,544
Devon Energy Corporation................. 300 9,881
Houston Exploration Company*............. 600 11,700
Newfield Exploration Company*............ 400 9,000
Snyder Oil Corporation................... 600 9,562
------------
50,687
PHARMACEUTICALS - 1.8%
Alpharma, Inc............................ 900 23,625
Amerisource Health Corporation*.......... 700 38,106
Sepracor, Inc.*.......................... 200 13,150
------------
74,881
RESTAURANTS - 1.2%
Ryan's Family Steak House, Inc.*......... 4,200 50,138
RETAIL - BUILDING SUPPLIES - 0.1%
Rental Service Corporation*.............. 300 5,400
RETAIL - DEPARTMENT STORES - 2.8%
99 Cents Only Stores*.................... 3,000 118,688
RETAIL - DRUG STORES - 2.2%
CVS Trust Automatic Common
Exchange Securities................... 200 16,300
Duane Reade, Inc.*....................... 1,000 37,937
Longs Drug Stores Corporation............ 900 36,169
------------
90,406
RETAIL - FOOD CHAINS - 0.7%
Dominick's Supermarkets, Inc.*........... 700 29,925
RETAIL - GENERAL MERCHANDISE - 1.0%
Linens `N Things, Inc.*.................. 1,500 41,250
RETAIL - SPECIALTY - 1.5%
School Specialty, Inc.*.................. 2,500 38,437
United Auto Group, Inc*.................. 1,700 24,119
------------
62,556
SERVICES - ADVERTISING/MARKETING - 3.8%
Acxiom Corporation*..................... 1,500 37,219
Boron, Lepore & Associates, Inc.*....... 1,700 64,387
Lamar Advertising Company*.............. 2,000 56,000
------------
157,606
SERVICES - COMMERCIAL & CONSUMER - 7.5%
Century Business Services, Inc.*........ 1,500 30,563
International Telecommunication
Data Systems, Inc.*.................. 1,100 31,900
Market Facts, Inc.*..................... 800 22,200
Profit Recovery Group International,Inc.* 4,000 125,000
Rent-Way, Inc.*......................... 1,000 24,625
Romac International, Inc.*.............. 4,500 81,000
------------
315,288
</TABLE>
See accompanying notes.
- -----------------------------------------------------------------------------
35
<PAGE> 37
SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
SECURITY EQUITY FUND - SMALL COMPANY SERIES
(CONTINUED)
NUMBER MARKET
COMMON STOCK (CONTINUED) OF SHARES VALUE
- ---------------------------------------------------------------
<S> <C> <C>
SERVICES - DATA PROCESSING - 3.7%
Lason, Inc.*............................. 3,000 $ 153,750
SERVICES - FACILITIES/ENVIRONMENTAL - 1.4%
Metzler Group, Inc.*..................... 1,700 58,225
TELECOMMUNICATIONS - CELLULAR - 0.3%
COMSAT Corporation....................... 300 10,575
TELECOMMUNICATIONS - LONG DISTANCE - 1.1%
Excite, Inc.*............................ 400 16,325
Lycos, Inc.*............................. 900 30,431
------------
46,756
TEXTILES - APPAREL - 0.2%
OshKosh B'Gosh, Inc...................... 400 8,300
WASTE MANAGEMENT - 1.2%
Eastern Environmental Services, Inc.*.... 1,700 51,425
------------
Total common stocks - 85.1%................. 3,557,181
Cash and other assets,
less liabilities - 14.9%.................. 623,776
------------
Total net assets - 100.0%................... $4,180,957
============
<CAPTION>
SECURITY ULTRA FUND
COMMON STOCKS
- ---------------------------------------------------------------
<S> <C> <C>
AIR FREIGHT - 1.3%
Expeditors International of
Washington, Inc...................... 34,000 $ 943,500
BANKS - MAJOR REGIONAL - 4.7%
Northern Trust Corporation.............. 26,000 1,774,500
State Street Corporation................ 31,000 1,691,437
------------
3,465,937
BIOTECHNOLOGY - 3.9%
Ligand Pharmaceuticals, Inc., (CI.B)*.. 180,000 1,642,500
Millennium Pharmaceutical*............. 70,000 1,216,250
------------
2,858,750
CHEMICALS - SPECIALTY - 2.4%
Bush Boake Allen, Inc.*................ 32,000 856,000
Material Sciences Corporation*......... 105,200 920,500
------------
1,776,500
SECURITY ULTRA FUND
(CONTINUED)
NUMBER MARKET
COMMON STOCKS (CONTINUED) OF SHARES VALUE
- ---------------------------------------------------------------
<S> <C> <C>
COMMUNICATION EQUIPMENT - 7.0%
Comverse Technology, Inc.*............. 90,000 $3,678,750
General Instrument Corporation*........ 45,000 973,125
Transcrypt International, Inc.*........ 166,500 436,230
------------
....................................... 5,088,105
COMPUTER HARDWARE - 1.0%
CHS Electronics, Inc.*................. 68,500 744,938
COMPUTER SOFTWARE/SERVICES - 13.5%
American Management Systems, Inc.*..... 83,000 2,272,125
Cambridge Technology, Inc.*............ 60,000 1,338,750
Computer Sciences Corporation*......... 22,000 1,199,000
Electronic Processing, Inc.*........... 35,000 402,500
Electronics for Imaging, Inc.*......... 18,000 380,250
Network Associates, Inc.*.............. 34,500 1,224,750
Rational Software Corporation*......... 140,000 2,353,750
USCS International, Inc.*.............. 22,000 706,750
------------
9,877,875
DISTRIBUTION - FOOD & HEALTH - 0.3%
Cardinal Health, Inc................... 2,000 206,500
ELECTRICAL EQUIPMENT - 4.1%
Cooper Cameron Corporation*............ 28,000 787,500
Maxwell Technologies, Inc.*............ 103,300 2,169,300
------------
2,956,800
ELECTRONICS - INSTRUMENTATION - 4.0%
E G & G, Inc........................... 44,000 995,500
Perkin-Elmer Corporation............... 28,000 1,923,250
------------
2,918,750
ELECTRONICS - SEMI-CONDUCTORS - 0.6%
Uniphase Corporation*.................. 11,100 455,100
ENTERTAINMENT - 0.6%
Metromedia International Group, Inc.*.. 120,000 465,000
FOODS - 2.0%
Chiquita Brands International, Inc..... 132,000 1,394,250
HEALTH CARE - LONG TERM CARE - 1.1%
Integrated Health Services, Inc........ 46,000 773,375
HEALTH CARE - SPECIALIZED SERVICES - 6.1%
ALZA Corporation*...................... 36,000 1,561,500
CryoLife, Inc.*........................ 31,000 488,250
Quintiles Transnational Corporation*... 22,200 971,250
Shire Pharmaceuticals Group, PLC*...... 65,000 1,421,875
------------
4,442,875
</TABLE>
See accompanying notes.
- -----------------------------------------------------------------------------
36
<PAGE> 38
SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
SECURITY ULTRA FUND
(CONTINUED)
NUMBER MARKET
COMMON STOCKS (CONTINUED) OF SHARES VALUE
- ---------------------------------------------------------------
<S> <C> <C>
HOUSEHOLD FURNISHINGS & APPLIANCES - 3.0%
Leggett & Platt, Inc.................... 39,800 $ 825,850
Meadowcraft, Inc.*...................... 70,000 704,375
O'Sullivan Industries Holdings, Inc.*... 70,000 678,125
------------
2,208,350
INSURANCE - LIFE & HEALTH - 3.2%
AFLAC, Inc............................. 82,000 2,342,125
LEISURE TIME PRODUCTS - 1.5%
Hasbro, Inc............................ 38,000 1,121,000
MANUFACTURING - SPECIALIZED - 0.8%
Ionics, Inc.*.......................... 21,000 556,500
MEDICAL PRODUCTS & SUPPLIES - 3.4%
Dentsply International, Inc............ 32,000 716,000
Stryker Corporation.................... 22,000 748,000
Sunrise Medical, Inc.*................. 100,000 1,000,000
------------
....................................... 2,464,000
OFFICE EQUIPMENT & SUPPLIES - 1.8%
Corporate Express, Inc.*............... 110,000 1,313,125
OIL - INTERNATIONAL - 1.4%
Tesoro Petroleum Corporation*.......... 80,100 1,046,306
OIL & GAS - EXPLORATION & PRODUCTION - 3.6%
ForceEnergy, Inc.*..................... 100,000 581,250
Kerr-McGee Corporation................. 17,000 773,500
MCN Energy Group, Inc.................. 35,000 597,188
Ocean Energy, Inc.*.................... 54,000 708,750
------------
2,660,688
PHARMACEUTICALS - 9.6%
Dura Pharmaceuticals, Inc.*............ 85,000 929,688
Mylan Laboratories, Inc................ 160,000 4,720,000
Teva Pharmaceutical
Industries, Ltd. ADR ............... 36,500 1,382,438
------------
7,032,126
PUBLISHING - NEWSPAPER - 2.0%
E.W. Scripps Company, (CI.A)........... 34,000 1,479,000
RAILROADS - 1.2%
RailAmerica, Inc.*..................... 150,000 881,250
RESTAURANTS - 0.9%
The Cheesecake Factory*................ 42,000 651,000
RETAIL - APPAREL - 0.8%
Stage Stores, Inc.*.................... 49,000 597,187
<CAPTION>
NUMBER MARKET
COMMON STOCKS (CONTINUED) OF SHARES VALUE
- ---------------------------------------------------------------
<S> <C> <C>
RETAIL - DEPARTMENT STORES - 0.5%
Family Dollar Stores, Inc.............. 21,000 $ 330,750
RETAIL - GENERAL MERCHANDISE - 0.6%
Consolidated Stores Corporation*....... 24,000 471,000
RETAIL - SPECIALTY - 0.5%
Keystone Automotive Industries, Inc.*.. 20,000 395,000
SERVICES - ADVERTISING/MARKETING - 7.1%
Acxiom Corporation*.................... 70,000 1,736,875
CKS Group, Inc.*....................... 27,100 479,331
DoubleClick, Inc.*..................... 10,800 257,850
Omnicom Group, Inc..................... 38,000 1,710,000
True North Communications, Inc......... 45,000 998,437
------------
5,182,493
SERVICES - COMMERCIAL & CONSUMER - 1.7%
Angelica Corporation................... 20,000 321,250
FTI Consulting, Inc.*.................. 53,500 277,531
Pinkerton's, Inc.*..................... 46,000 635,375
------------
1,234,156
SERVICES - COMPUTER SYSTEMS - 0.7%
Sungard Data Systems, Inc.*........... 17,000 535,500
------------
Total common stocks - 96.9%................. 70,869,811
Cash and other assets,
less liabilities - 3.1%................... 2,294,710
------------
Total net assets - 100.0%................... $73,164,521
============
</TABLE>
The identified cost of investments owned at September 30, 1998 was the same for
book and tax purposes, except for Growth and Income Fund, Global Series, Asset
Allocation Series, and Ultra Fund for which the identified cost for federal
income tax purposes was $87,565,358, $30,410,442, $6,875,143, and $72,249,937,
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.
- -----------------------------------------------------------------------------
37
<PAGE> 39
BALANCE SHEETS
- --------------------------------------------------------------------------------
SEPTEMBER 30, 1998
<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: $87,392,841,
$489,769,337, $30,315,512 and $6,875,073,
respectively)............................................ $81,015,005 $769,240,745 $29,517,851 $6,532,054
Cash....................................................... 3,707,875 119,661,583 2,111,570 37
Receivables:
Fund shares sold......................................... 101,350 658,349 2,378 33,037
Securities sold.......................................... 557,079 320,939 -- 1,339
Forward foreign exchange contracts....................... -- -- 32,513 --
Interest................................................. 215,137 436,055 7,316 27,208
Dividends................................................ 200,017 731,737 51,108 8,108
Foreign taxes recoverable................................ -- -- 33,184 1,684
Security Management Company.............................. -- -- -- 6,539
Prepaid expenses........................................... -- -- -- 8,878
----------- ------------ ----------- ----------
Total assets........................................... $85,796,463 $891,049,408 $31,755,920 $6,618,884
=========== ============ =========== ==========
Liabilities and Net Assets
Liabilities:
Payable for:
Securities purchased..................................... $ -- $ 3,401,906 $ 109,107 $ --
Fund shares redeemed..................................... 74,470 232,171 24,221 --
Other liabilities:
Management fees.......................................... 86,387 740,546 52,277 5,403
Custodian fees........................................... -- -- -- 173
Transfer and administration fees......................... -- -- -- 6,124
Professional fees........................................ -- -- -- 5,000
12b-1 distribution plan fees............................. 7,482 90,228 10,369 2,726
Other payables........................................... -- -- -- 973
----------- ------------ ----------- ----------
Total liabilities...................................... 168,339 4,464,851 195,974 20,399
Net Assets:
Paid in capital............................................ 77,362,763 539,625,718 29,921,708 6,427,676
Undistributed net investment income (loss) ................ 160,376 2,411,996 (122,744) 61,017
Accumulated undistributed net realized gain
on sale of investments and foreign
currency transactions.................................... 14,482,821 65,075,435 2,524,727 452,729
Net unrealized appreciation (depreciation)
in value of investments and translation
of assets and liabilities in foreign currency............ (6,377,836) 279,471,408 (763,745) (342,937)
----------- ------------ ----------- ----------
Net assets............................................. 85,628,124 886,584,557 31,559,946 6,598,485
----------- ------------ ----------- ----------
Total liabilities and net assets..................... $85,796,463 $891,049,408 $31,755,920 $6,618,884
=========== ============ =========== ==========
Class "A" Shares
Capital shares outstanding................................. 9,948,830 87,294,217 1,687,311 306,981
Net assets................................................. $76,370,950 $773,606,316 $18,940,723 $3,294,479
Net asset value per share (net assets divided by
shares outstanding)...................................... $7.68 $8.86 $11.23 $10.73
Add: Selling commission (5.75% of the
offering price).......................................... 0.47 0.54 0.69 0.65
----------- ------------ ----------- ----------
Offering price per share (net asset value
divided by 94.25%)....................................... $8.15 $9.40 $11.92 $11.38
=========== ============ =========== ==========
Class "B" Shares
Capital shares outstanding................................. 1,228,069 13,267,776 1,158,945 311,145
Net assets................................................. $9,257,174 $112,978,241 $12,619,223 $3,304,006
Net asset value per share (net assets divided by
shares outstanding)...................................... $7.54 $8.52 $10.89 $10.62
=========== ============ =========== ==========
</TABLE>
See accompanying notes.
- --------------------------------------------------------------------------------
38
<PAGE> 40
BALANCE SHEETS
- --------------------------------------------------------------------------------
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
SECURITY EQUITY FUND
-------------------------------------------
SOCIAL SMALL SECURITY
AWARENESS VALUE COMPANY ULTRA
SERIES SERIES SERIES FUND
<S> <C> <C> <C> <C>
Assets
Investments, at value (identified cost: $9,958,208,
$17,806,004, $3,418,984 and $72,062,782,
respectively)............................................ $11,844,713 $16,985,744 $3,557,181 $70,869,811
Cash....................................................... 1,011,115 669,232 1,132,601 1,134,507
Receivables:
Fund shares sold......................................... 10,663 54,799 -- 20,457
Securities sold.......................................... -- -- 93,525 1,765,004
Interest................................................. 3,299 690 3,257 5,022
Dividends................................................ 9,984 11,942 28 39,610
Prepaid expenses........................................... 6,168 7,924 5,431 --
----------- ------------ ----------- -----------
Total assets........................................... $12,885,942 $17,730,331 $4,792,023 $73,834,411
=========== ============ =========== ===========
Liabilities and Net Assets
Liabilities:
Payable for:
Securities purchased..................................... $ -- $ 184,350 $ 601,840 $ 565,435
Fund shares redeemed..................................... -- -- -- 23,526
Other liabilities:
Management fees.......................................... 10,614 13,860 -- 76,393
Custodian fees........................................... 680 953 2,435 --
Transfer and administration fees......................... 2,454 3,545 911 --
Professional fees........................................ 2,487 6,000 -- --
12b-1 distribution plan fees............................. 4,222 5,339 1,225 4,536
Other payables........................................... 1,665 702 4,655 --
----------- ------------ ----------- -----------
Total liabilities...................................... 22,122 214,749 611,066 669,890
Net Assets:
Paid in capital............................................ 10,711,122 18,313,385 4,685,111 55,429,438
Undistributed net investment loss ......................... -- -- -- --
Accumulated undistributed net realized gain (loss)
on sale of investments and
foreign currency transactions............................ 266,193 22,457 (642,351) 18,928,054
Net unrealized appreciation (depreciation)
in value of investments and translation
of assets and liabilities in foreign currency............ 1,886,505 (820,260) 138,197 (1,192,971)
----------- ------------ ----------- -----------
Net assets............................................. 12,863,820 17,515,582 4,180,957 73,164,521
----------- ------------ ----------- -----------
Total liabilities and net assets..................... $12,885,942 $17,730,331 $4,792,023 $73,834,411
=========== ============ =========== ===========
Class "A" Shares
Capital shares outstanding................................. 393,357 903,422 307,649 8,831,863
Net assets................................................. $7,618,508 $10,901,036 $2,676,895 $67,554,143
Net asset value per share (net assets divided by
shares outstanding)...................................... $19.37 $12.07 $8.70 $7.65
Add: Selling commission (5.75% of the
offering price).......................................... 1.18 0.74 0.53 0.47
----------- ------------ ----------- -----------
Offering price per share (net asset value
divided by 94.25%)....................................... $20.55 $12.81 $9.23 $8.12
=========== ============ =========== ===========
Class "B" Shares
Capital shares outstanding................................. 275,857 554,061 174,329 770,616
Net assets................................................. $5,245,312 $6,614,546 $1,504,062 $5,610,378
Net asset value per share (net assets divided by
shares outstanding)...................................... $19.01 $11.94 $8.63 $7.28
=========== ============ =========== ===========
</TABLE>
See accompanying notes.
- --------------------------------------------------------------------------------
39
<PAGE> 41
STATEMENTS OF OPERATIONS
- -------------------------------------------------------------------------------
FOR THE YEAR ENDED SEPTEMBER 30, 1998
<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................................................ $1,764,997 $10,325,189 $ 589,288 $ 78,776
Interest................................................. 856,440 2,453,906 182,467 118,225
----------- ------------ ----------- ----------
2,621,437 12,779,095 771,755 197,001
Less foreign tax expense............................... -- -- (51,034) (4,670)
----------- ------------ ----------- ----------
Total investment income................................ 2,621,437 12,779,095 720,721 192,331
Expenses:
Management fees.......................................... 1,168,375 9,261,209 670,488 72,662
Custodian fees........................................... -- -- -- 4,681
Transfer/maintenance fees................................ -- -- -- 12,372
Administration fees...................................... -- -- -- 63,270
Directors' fees.......................................... -- -- -- 74
Professional fees........................................ -- -- -- 5,837
Reports to shareholders.................................. -- -- -- 590
Registration fees........................................ -- -- -- 19,738
Other expenses........................................... -- -- -- 425
12b-1 distribution plan fees (Class B)................... 88,110 1,026,720 122,163 36,063
----------- ------------ ----------- ----------
1,256,485 10,287,929 792,651 215,712
Less: Reimbursement of expenses........................ -- -- -- (36,703)
----------- ------------ ----------- ----------
Total expenses....................................... 1,256,485 10,287,929 792,651 179,009
----------- ------------ ----------- ----------
Net investment income (loss)......................... 1,364,952 2,491,166 (71,930) 13,322
Net Realized and Unrealized Gain:
Net realized gain (loss) during the period on:
Investments.............................................. 16,026,155 74,934,557 2,543,979 522,251
Foreign currency transactions............................ -- -- (20,654) (706)
----------- ------------ ----------- ----------
Net realized gain ..................................... 16,026,155 74,934,557 2,523,325 521,545
Net change in unrealized appreciation (depreciation) during
the period on:
Investments.............................................. (25,050,350) (19,967,302) (5,346,047) (1,088,938)
Translation of assets and liabilities
in foreign currencies.................................. -- -- (4,541) 165
----------- ------------ ----------- ----------
Net unrealized depreciation ............................. (25,050,350) (19,967,302) (5,350,588) (1,088,773)
----------- ------------ ----------- ----------
Net gain (loss) ....................................... (9,024,195) 54,967,255 (2,827,263) (567,228)
----------- ------------ ----------- ----------
Net increase (decrease) in net assets
resulting from operations.......................... ($7,659,243) $57,458,421 ($2,899,193) ($553,906)
=========== ============ =========== ==========
</TABLE>
See accompanying notes.
- --------------------------------------------------------------------------------
40
<PAGE> 42
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
FOR THE YEAR ENDED SEPTEMBER 30, 1998, EXCEPT AS NOTED.
<TABLE>
<CAPTION>
SECURITY EQUITY FUND
-------------------------------------------
SOCIAL SMALL SECURITY
AWARENESS VALUE COMPANY ULTRA
SERIES SERIES SERIES* FUND
<S> <C> <C> <C> <C>
Investment Income:
Dividends................................................ $116,364 $ 145,147 $ 7,614 $ 381,759
Interest................................................. 30,903 19,676 27,349 132,043
----------- ------------ ----------- -----------
Total investment income................................ 147,267 164,823 34,963 513,802
Expenses:
Management fees.......................................... 120,016 144,005 33,554 1,068,177
Custodian fees........................................... 3,635 3,873 10,041 --
Transfer/maintenance fees................................ 14,440 19,523 4,672 --
Administration fees...................................... 10,801 12,984 3,020 --
Directors' fees.......................................... 128 183 33 --
Professional fees........................................ 4,887 12,208 5,350 --
Reports to shareholders.................................. 722 954 189 --
Registration fees........................................ 24,117 28,630 22,240 --
Other expenses........................................... 1,291 -- 1,121 --
12b-1 distribution plan fees (Class B)................... 45,580 55,844 14,745 62,235
----------- ------------ ----------- ----------
225,617 278,204 94,965 1,130,412
Less: Reimbursement of expenses........................ (34,388) (35,151) (33,554) --
----------- ------------ ----------- -----------
Total expenses........................................ 191,229 243,053 61,411 1,130,412
----------- ------------ ----------- -----------
Net investment (loss)................................ (43,962) (78,230) (26,448) (616,610)
Net Realized and Unrealized Gain (Loss):
Net realized gain (loss) during the
period on investments ........................... 478,803 254,031 (642,351) 21,894,442
Net change in unrealized appreciation (depreciation)
during the period on investments......................... 245,900 (1,677,229) 138,197 (31,503,654)
------------ ------------ ------------ ------------
Net gain (loss) ....................................... 724,703 (1,423,198) (504,154) (9,609,212)
------------ ------------ ------------ ------------
Net increase (decrease) in net assets
resulting from operations......................... $680,741 ($1,501,428) ($530,602) ($10,225,822)
=========== ============ =========== ============
</TABLE>
*Period October 15, 1997 (inception) through September 30, 1998.
See accompanying notes.
- --------------------------------------------------------------------------------
41
<PAGE> 43
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
FOR THE YEAR ENDED SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
SECURITY EQUITY FUND
----------------------------------------------------
SECURITY ASSET
GROWTH AND EQUITY GLOBAL ALLOCATION
INCOME FUND SERIES SERIES SERIES
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS:
Net investment income (loss)............................. $ 1,364,952 $ 2,491,166 $ (71,930) $ 13,322
Net realized gain ....................................... 16,026,155 74,934,557 2,523,325 521,545
Unrealized depreciation
during the period.................................. (25,050,350) (19,967,302) (5,350,588) (1,088,773)
----------- ------------ ----------- ----------
Net increase (decrease) in net assets
resulting from operations............................ (7,659,243) 57,458,421 (2,899,193) (553,906)
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A................................................ (1,262,953) (2,345,453) (149,975) (58,957)
Class B................................................ (37,978) -- -- (28,111)
Net realized gain
Class A................................................ (20,855,139) (64,378,392) (1,839,513) (224,701)
Class B................................................ (1,779,733) (7,895,986) (1,085,880) (230,756)
----------- ------------ ----------- ----------
Total distributions to shareholders.................. (23,935,803) (74,619,831) (3,075,368) (542,525)
CAPITAL SHARE TRANSACTIONS (a):
Proceeds from sales of shares
Class A................................................ 8,039,594 136,274,032 6,756,901 477,764
Class B................................................ 6,982,465 87,126,289 7,257,866 273,444
Dividends reinvested
Class A................................................ 20,461,757 62,161,314 1,961,738 281,349
Class B................................................ 1,801,115 7,737,823 1,084,862 257,508
Shares redeemed
Class A................................................ (14,689,087) (169,188,732) (10,210,710) (834,386)
Class B................................................ (3,361,102) (67,220,998) (6,570,649) (518,143)
----------- ------------ ----------- ----------
Net increase (decrease)
from capital share transactions...................... 19,234,742 56,889,728 280,008 (62,464)
----------- ------------ ----------- ----------
Total increase (decrease) in net assets.............. (12,360,304) 39,728,318 (5,694,553) (1,158,895)
NET ASSETS:
Beginning of period...................................... 97,988,428 846,856,239 37,254,499 7,757,380
----------- ------------ ----------- ----------
End of period............................................ $85,628,124 $886,584,557 $31,559,946 $6,598,485
=========== ============ =========== ==========
Undistributed net investment income (loss) at
end of period.......................................... $160,376 $2,411,996 ($122,744) $61,017
=========== ============ =========== ==========
(a) Shares issued and redeemed
Shares sold
Class A................................................ 897,930 14,708,089 550,745 40,767
Class B................................................ 777,100 9,679,948 609,174 23,179
Dividends reinvested
Class A................................................ 2,491,694 7,660,051 178,892 26,301
Class B................................................ 224,071 983,955 101,172 24,152
Shares redeemed
Class A................................................ (1,631,465) (18,384,656) (826,479) (70,566)
Class B................................................ (386,154) (7,521,486) (539,145) (45,400)
----------- ------------ ----------- ----------
Net increase (decrease) ............................... 2,373,176 7,125,901 74,359 (1,567)
=========== ============ =========== ==========
</TABLE>
See accompanying notes.
- --------------------------------------------------------------------------------
42
<PAGE> 44
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
FOR THE YEAR ENDED SEPTEMBER 30, 1998, EXCEPT AS NOTED.
<TABLE>
<CAPTION>
SECURITY EQUITY FUND
-------------------------------------------
SOCIAL SMALL SECURITY
AWARENESS VALUE COMPANY ULTRA
SERIES SERIES SERIES FUND
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS:
Net investment loss................................... $ (43,962) $ (78,230) $ (26,448) $ (616,610)
Net realized gain (loss)................................. 478,803 254,031 (642,351) 21,894,442
Unrealized appreciation (depreciation)
during the period...................................... 245,900 (1,677,229) 138,197 (31,503,654)
----------- ------------ ---------- -----------
Net increase (decrease) in net assets
resulting from operations............................. 680,741 (1,501,428) (530,602) (10,225,822)
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A................................................ (13,294) (23,776) (1,066) --
Class B................................................ -- -- -- --
Net realized gain
Class A................................................ -- (148,467) -- (4,076,926)
Class B................................................ -- (99,378) -- (303,165)
----------- ------------ ----------- -----------
Total distributions to shareholders.................... (13,294) (271,621) (1,066) (4,380,091)
CAPITAL SHARE TRANSACTIONS (a):
Proceeds from sales of shares
Class A................................................ 1,947,642 8,620,440 3,335,436 15,549,214
Class B................................................ 1,754,799 4,903,668 1,815,706 5,484,993
Dividends reinvested
Class A................................................ 12,614 169,124 1,049 3,906,218
Class B................................................ -- 87,953 -- 296,771
Shares redeemed
Class A................................................ (1,015,030) (1,448,635) (357,569) (22,820,668)
Class B................................................ (353,596) (1,246,510) (81,997) (5,113,365)
----------- ------------ ----------- -----------
Net increase (decrease)
from capital share transactions....................... 2,346,429 11,086,040 4,712,625 (2,696,837)
----------- ------------ ----------- -----------
Total increase (decrease) in net assets.............. 3,013,876 9,312,991 4,180,957 (17,302,750)
NET ASSETS:
Beginning of period...................................... 9,849,944 8,202,591 -- 90,467,271
----------- ------------ ----------- -----------
End of period............................................ $12,863,820 $17,515,582 $4,180,957 $73,164,521
=========== ============ =========== ===========
Undistributed net investment income at
end of period.......................................... $-- $-- $-- $--
=========== ============ =========== ===========
(a) Shares issued and redeemed
Shares sold
Class A................................................ 99,548 638,717 342,821 1,810,198
Class B................................................ 89,089 368,016 182,081 652,253
Dividends reinvested
Class A................................................ 705 13,847 113 479,762
Class B................................................ -- 7,210 -- 37,989
Shares redeemed
Class A................................................ (52,024) (106,666) (35,285) (2,607,409)
Class B................................................ (17,598) (97,738) (7,752) (589,552)
----------- ------------ ----------- -----------
Net increase (decrease) ............................... 119,720 823,386 481,978 (216,759)
=========== ============ =========== ===========
</TABLE>
*Period October 15, 1997 (inception) through September 30, 1998.
See accompanying notes.
- --------------------------------------------------------------------------------
43
<PAGE> 45
STATEMENTS 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.
- --------------------------------------------------------------------------------
44
<PAGE> 46
STATEMENTS OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------------------
FOR THE YEAR ENDED SEPTEMBER 30, 1997, EXCEPT AS NOTED.
<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.
- --------------------------------------------------------------------------------
45
<PAGE> 47
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
SELECTED DATA FOR EACH SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
SECURITY GROWTH AND INCOME FUND (CLASS A)
FISCAL PERIOD ENDED SEPTEMBER 30
-------------------------------------------------------
1998(f) 1997(f) 1996(f) 1995(f) 1994(b)
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA
NET ASSET VALUE BEGINNING OF PERIOD $11.14 $9.05 $7.93 $6.96 $7.84
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income (Loss) 0.13 0.15 0.18 0.16 0.13
Net Gain (Loss) on Securities
(realized and unrealized) (0.87) 2.81 1.37 1.18 (0.71)
------- ------- ------- -------- --------
Total from Investment Operations (0.74) 2.96 1.55 1.34 (0.58)
LESS DISTRIBUTIONS
Dividends (from Net Investment Income) (0.13) (0.16) (0.16) (0.16) (0.13)
Distributions (from Capital Gains) (2.59) (0.71) (0.27) (0.21) (0.17)
------- ------- ------- -------- --------
Total Distributions (2.72) (0.87) (0.43) (0.37) (0.30)
------- ------- ------- -------- --------
NET ASSET VALUE END OF PERIOD $7.68 $11.14 $9.05 $7.93 $6.96
======= ======= ======= ======== ========
TOTAL RETURN (a) (7.95%) 35.31% 20.31% 20.25% (7.6%)
RATIOS/SUPPLEMENTAL DATA
Net Assets End of Period (thousands) $76,371 $91,252 $73,273 $67,430 $65,328
Ratio of Expenses to Average Net Assets 1.21% 1.24% 1.29% 1.31% 1.28%
Ratio of Net Investment Income (Loss) to Average
Net Assets 1.49% 1.53% 2.09% 2.21% 1.70%
Portfolio Turnover Rate 144% 124% 69% 130% 163%
<CAPTION>
SECURITY GROWTH AND INCOME FUND (CLASS B)
FISCAL PERIOD ENDED SEPTEMBER 30
-------------------------------------------------------
1998(f) 1997(f) 1996(f) 1995(f) 1994(b)
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA
NET ASSET VALUE BEGINNING OF PERIOD $10.99 $8.94 $7.85 $6.90 $7.83
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income (Loss) 0.05 0.05 0.09 0.08 0.05
Net Gain (Loss) on Securities
(realized and unrealized) (0.88) 2.77 1.35 1.18 (0.69)
-------- -------- -------- -------- --------
Total from Investment Operations (0.83) 2.82 1.44 1.26 (0.64)
LESS DISTRIBUTIONS
Dividends (from Net Investment Income) (0.03) (0.06) (0.08) (0.09) (0.12)
Distributions (from Capital Gains) (2.59) (0.71) (0.27) (0.22) (0.17)
-------- -------- -------- -------- --------
Total Distributions (2.62) (0.77) (0.35) (0.31) (0.29)
-------- -------- -------- -------- --------
NET ASSET VALUE END OF PERIOD $7.54 $10.99 $8.94 $7.85 $6.90
======== ======== ======== ======== ========
TOTAL RETURN (a) (8.95%) 34.01% 19.01% 19.07% (8.0%)
RATIOS/SUPPLEMENTAL DATA
Net Assets End of Period (thousands) $9,257 $6,737 $2,247 $1,130 $668
Ratio of Expenses to Average Net Assets 2.21% 2.24% 2.29% 2.31% 2.27%
Ratio of Net Investment Income (Loss) to Average
Net Assets 0.59% 0.53% 1.09% 1.21% 1.03%
Portfolio Turnover Rate 144% 124% 69% 130% 178%
</TABLE>
See accompanying notes.
- --------------------------------------------------------------------------------
46
<PAGE> 48
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
SELECTED DATA FOR EACH SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
SECURITY EQUITY FUND - EQUITY SERIES (CLASS A)
FISCAL PERIOD ENDED SEPTEMBER 30
-------------------------------------------------------
1998(f) 1997(f) 1996(f) 1995(f) 1994(b)
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA
NET ASSET VALUE BEGINNING OF PERIOD....................... $9.09 $7.54 $6.55 $5.54 $6.73
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income (Loss).............................. 0.04 0.04 0.05 0.04 0.05
Net Gain (Loss) on Securities
(realized and unrealized)................................ 0.56 2.20 1.48 1.38 0.09
-------- -------- -------- -------- --------
Total from Investment Operations.......................... 0.60 2.24 1.53 1.42 0.14
LESS DISTRIBUTIONS
Dividends (from Net Investment Income).................... (0.03) (0.04) (0.06) -- (0.12)
Distributions (from Capital Gains) (0.80) (0.65) (0.48) (0.41) (1.21)
-------- -------- -------- -------- --------
Total Distributions.................................... (0.83) (0.69) (0.54) (0.41) (1.33)
-------- -------- -------- -------- --------
NET ASSET VALUE END OF PERIOD............................. $8.86 $9.09 $7.54 $6.55 $5.54
======== ======== ======== ======== ========
TOTAL RETURN (a).......................................... 7.38% 32.08% 24.90% 27.77% 1.95%
RATIOS/SUPPLEMENTAL DATA
Net Assets End of Period (thousands)...................... $773,606 $757,520 $575,680 $440,339 $358,237
Ratio of Expenses to Average Net Assets................... 1.02% 1.03% 1.04% 1.05% 1.06%
Ratio of Net Investment Income (Loss) to Average
Net Assets.............................................. 0.39% 0.46% 0.75% 0.87% 0.86%
Portfolio Turnover Rate................................... 47% 66% 64% 95% 79%
<CAPTION>
SECURITY EQUITY FUND - EQUITY SERIES (CLASS B)
FISCAL PERIOD ENDED SEPTEMBER 30
-------------------------------------------------------
1998(f) 1997(f) 1996(f) 1995(f) 1994(b)
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA
NET ASSET VALUE BEGINNING OF PERIOD....................... $8.82 $7.36 $6.43 $5.49 $6.81
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income (Loss).............................. (0.05) (0.04) (0.02) (0.01) 0.01
Net Gain (Loss) on Securities
(realized and unrealized)................................ 0.55 2.15 1.45 1.36 --
-------- -------- -------- -------- --------
Total from Investment Operations.......................... 0.50 2.11 1.43 1.35 0.01
LESS DISTRIBUTIONS
Dividends (from Net Investment Income).................... -- -- (0.02) -- (0.12)
Distributions (from Capital Gains) (0.80) (0.65) (0.48) (0.41) (1.21)
-------- -------- -------- -------- --------
Total Distributions.................................... (0.80) (0.65) (0.50) (0.41) (1.33)
-------- -------- -------- -------- --------
NET ASSET VALUE END OF PERIOD............................. $8.52 $8.82 $7.36 $6.43 $5.49
======== ======== ======== ======== ========
TOTAL RETURN (a).......................................... 6.38% 30.85% 23.57% 26.69% (0.15%)
RATIOS/SUPPLEMENTAL DATA
Net Assets End of Period (thousands)...................... $112,978 $89,336 $38,822 $19,288 $7,452
Ratio of Expenses to Average Net Assets................... 2.02% 2.03% 2.04% 2.05% 2.07%
Ratio of Net Investment Income (Loss) to Average
Net Assets.............................................. (0.61%) (0.54%) (0.25%) (0.13%) (0.01%)
Portfolio Turnover Rate................................... 47% 66% 64% 95% 80%
</TABLE>
See accompanying notes.
- --------------------------------------------------------------------------------
47
<PAGE> 49
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
SELECTED DATA FOR EACH SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
SECURITY EQUITY FUND - GLOBAL SERIES (CLASS A)
FISCAL PERIOD ENDED SEPTEMBER 30
-------------------------------------------------------
1998(F) 1997(F) 1996(F) 1995(F) 1994(B)
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA
NET ASSET VALUE BEGINNING OF PERIOD....................... $13.56 $12.42 $10.94 $10.84 $10.00
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income (Loss).............................. 0.02 0.01 0.01 (0.02) (0.03)
Net Gain (Loss) on Securities
(realized and unrealized)................................ (1.19) 2.29 1.87 0.31 0.87
-------- -------- -------- -------- --------
Total from Investment Operations.......................... (1.17) 2.30 1.88 0.29 0.84
LESS DISTRIBUTIONS
Dividends (from Net Investment Income).................... (0.09) (0.38) (0.25) -- --
Distributions (from Capital Gains) (1.07) (0.78) (0.15) (0.19) --
-------- -------- -------- -------- --------
Total Distributions.................................... (1.16) (1.16) (0.40) (0.19) --
-------- -------- -------- -------- --------
NET ASSET VALUE END OF PERIOD............................. $11.23 $13.56 $12.42 $10.94 $10.84
======== ======== ======== ======== ========
TOTAL RETURN (a).......................................... (8.47%) 20.22% 17.73% 2.80% 8.40%
RATIOS/SUPPLEMENTAL DATA
Net Assets End of Period (thousands)...................... $18,941 $24,193 $19,644 $16,261 $20,128
Ratio of Expenses to Average Net Assets................... 2.00% 2.00% 2.00% 2.00% 2.00%
Ratio of Net Investment Income (Loss) to Average
Net Assets.............................................. 0.15% 0.07% 0.07% (0.17%) (0.01%)
Portfolio Turnover Rate................................... 122% 132% 142% 141% 73%
<CAPTION>
SECURITY EQUITY FUND - GLOBAL SERIES (CLASS B)
FISCAL PERIOD ENDED SEPTEMBER 30
-------------------------------------------------------
1998(f) 1997(f) 1996(f) 1995(f) 1994(b)
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA
NET ASSET VALUE BEGINNING OF PERIOD....................... $13.22 $12.18 $10.74 $10.75 $9.96
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income (Loss).............................. (0.10) (0.11) (0.10) (0.12) (0.12)
Net Gain (Loss) on Securities
(realized and unrealized)................................ (1.16) 2.24 1.84 0.30 0.91
-------- -------- -------- -------- --------
Total from Investment Operations.......................... (1.26) 2.13 1.74 0.18 0.79
LESS DISTRIBUTIONS
Dividends (from Net Investment Income).................... -- (0.31) (0.14) -- --
Distributions (from Capital Gains) (1.07) (0.78) (0.16) (0.19) --
-------- -------- -------- -------- --------
Total Distributions.................................... (1.07) (1.09) (0.30) (0.19) --
-------- -------- -------- -------- --------
NET ASSET VALUE END OF PERIOD............................. $10.89 $13.22 $12.18 $10.74 $10.75
======== ======== ======== ======== ========
TOTAL RETURN (a).......................................... (9.43%) 19.01% 16.57% 1.79% 7.90%
RATIOS/SUPPLEMENTAL DATA
Net Assets End of Period (thousands)...................... $12,619 $13,061 $7,285 $5,433 $3,960
Ratio of Expenses to Average Net Assets................... 3.00% 3.00% 3.00% 3.00% 3.00%
Ratio of Net Investment Income (Loss) to Average
Net Assets.............................................. (0.85%) (0.93%) (0.93%) (1.17%) (0.01%)
Portfolio Turnover Rate................................... 122% 132% 142% 141% 73%
</TABLE>
See accompanying notes.
- --------------------------------------------------------------------------------
48
<PAGE> 50
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
SELECTED DATA FOR EACH SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
SECURITY EQUITY FUND - ASSET ALLOCATION SERIES (CLASS A)
FISCAL PERIOD ENDED SEPTEMBER 30
-------------------------------------------------------------
1998(e)(f) 1997(e)(f)(i) 1996(e)(f) 1995(d)(e)(f)
---------- ------------- ---------- -------------
<S> <C> <C> <C> <C>
PER SHARE DATA
NET ASSET VALUE BEGINNING OF PERIOD....................... $12.58 $11.06 $10.54 $10.00
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income (Loss).............................. 0.08 0.17 0.25 0.04
Net Gain (Loss) on Securities
(realized and unrealized)................................ (0.98) 1.86 0.77 0.50
-------- -------- -------- --------
Total from Investment Operations.......................... (0.90) 2.03 1.02 0.54
LESS DISTRIBUTIONS
Dividends (from Net Investment Income).................... (0.20) (0.26) (0.33) --
Distributions (from Capital Gains) (0.75) (0.25) (0.17) --
-------- -------- -------- --------
Total Distributions.................................... (0.95) (0.51) (0.50) --
-------- -------- -------- --------
NET ASSET VALUE END OF PERIOD............................. $10.73 $12.58 $11.06 $10.54
======== ======== ======== ========
TOTAL RETURN (a).......................................... (7.19%) 19.00% 10.01% 5.40%
RATIOS/SUPPLEMENTAL DATA
Net Assets End of Period (thousands)...................... $3,294 $3,906 $2,449 $1,906
Ratio of Expenses to Average Net Assets................... 2.00% 1.68% 2.00% 2.00%
Ratio of Net Investment Income (Loss) to Average
Net Assets.............................................. 0.65% 1.52% 2.32% 1.33%
Portfolio Turnover Rate................................... 45% 79% 75% 129%
<CAPTION>
SECURITY EQUITY FUND - ASSET ALLOCATION SERIES (CLASS B)
FISCAL PERIOD ENDED SEPTEMBER 30
-------------------------------------------------------------
1998(e)(f) 1997(e)(f)(i) 1996(e)(f) 1995(d)(e)(f)
---------- ------------- ---------- -------------
<S> <C> <C> <C> <C>
PER SHARE DATA
NET ASSET VALUE BEGINNING OF PERIOD....................... $12.45 $10.97 $10.50 $10.00
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income (Loss).............................. (0.03) 0.07 0.14 0.01
Net Gain (Loss) on Securities
(realized and unrealized)................................ (0.96) 1.84 0.77 0.49
-------- -------- -------- --------
Total from Investment Operations.......................... (0.99) 1.91 0.91 0.50
LESS DISTRIBUTIONS
Dividends (from Net Investment Income).................... (0.09) (0.18) (0.27) --
Distributions (from Capital Gains) (0.75) (0.25) (0.17) --
-------- -------- -------- --------
Total Distributions.................................... (0.84) (0.43) (0.44) --
-------- -------- -------- --------
NET ASSET VALUE END OF PERIOD............................. $10.62 $12.45 $10.97 $10.50
======== ======== ======== ========
TOTAL RETURN (a).......................................... (7.99%) 17.95% 8.97% 5.00%
RATIOS/SUPPLEMENTAL DATA
Net Assets End of Period (thousands)...................... $3,304 $3,851 $2,781 $1,529
Ratio of Expenses to Average Net Assets................... 2.94% 2.58% 3.00% 3.00%
Ratio of Net Investment Income (Loss) to Average
Net Assets.............................................. (0.29%) 0.61% 1.32% 0.31%
Portfolio Turnover Rate................................... 45% 79% 75% 129%
Portfolio Turnover Rate
</TABLE>
See accompanying notes.
- --------------------------------------------------------------------------------
49
<PAGE> 51
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
SELECTED DATA FOR EACH SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
SECURITY EQUITY FUND - SOCIAL AWARENESS SERIES (CLASS A)
FISCAL PERIOD ENDED SEPTEMBER 30
--------------------------------
1998(e)(f) 1997(e)(f)(g)
------------ ------------
<S> <C> <C>
PER SHARE DATA
NET ASSET VALUE BEGINNING OF PERIOD....................... $17.99 $15.00
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income (Loss).............................. -- 0.08
Net Gain (Loss) on Securities
(realized and unrealized)................................ 1.42 2.91
-------- --------
Total from Investment Operations.......................... 1.42 2.99
LESS DISTRIBUTIONS
Dividends (from Net Investment Income).................... (0.04) --
Distributions (from Capital Gains) -- .--
-------- --------
Total Distributions.................................... (0.04) --
-------- --------
NET ASSET VALUE END OF PERIOD............................. $19.37 $17.99
======== ========
TOTAL RETURN (a).......................................... 7.89% 19.93%
RATIOS/SUPPLEMENTAL DATA
Net Assets End of Period (thousands)...................... $7,619 $6,209
Ratio of Expenses to Average Net Assets................... 1.22% 0.67%
Ratio of Net Investment Income (Loss) to Average
Net Assets.............................................. -- 0.57%
Portfolio Turnover Rate................................... 41% 38%
<CAPTION>
SECURITY EQUITY FUND - SOCIAL AWARENESS SERIES (CLASS B)
FISCAL PERIOD ENDED SEPTEMBER 30
--------------------------------
1998(e)(f) 1997(e)(f)(g)
------------ ------------
<S> <C> <C>
PER SHARE DATA
NET ASSET VALUE BEGINNING OF PERIOD....................... $17.81 $15.00
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income (Loss).............................. (0.19) (0.08)
Net Gain (Loss) on Securities
(realized and unrealized)................................ 1.39 2.89
-------- --------
Total from Investment Operations.......................... 1.20 2.81
LESS DISTRIBUTIONS
Dividends (from Net Investment Income) -- --
Distributions (from Capital Gains) -- --
-------- --------
Total Distributions -- --
-------- --------
NET ASSET VALUE END OF PERIOD............................. $19.01 $17.81
======== ========
TOTAL RETURN (a).......................................... 6.74% 18.73%
RATIOS/SUPPLEMENTAL DATA
Net Assets End of Period (thousands)...................... $5,245 $3,641
Ratio of Expenses to Average Net Assets................... 2.20% 1.84%
Ratio of Net Investment Income (Loss) to Average
Net Assets.............................................. (0.98%) (0.60%)
Portfolio Turnover Rate................................... 41% 38%
</TABLE>
See accompanying notes.
- --------------------------------------------------------------------------------
50
<PAGE> 52
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
SELECTED DATA FOR EACH SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
SECURITY EQUITY FUND - VALUE SERIES (CLASS A)
FISCAL PERIOD ENDED SEPTEMBER 30
--------------------------------
1998(e)(f) 1997(e)(f)(g)
------------ ------------
<S> <C> <C>
PER SHARE DATA
NET ASSET VALUE BEGINNING OF PERIOD....................... $12.95 $10.00
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income (Loss).............................. (0.02) 0.05
Net Gain (Loss) on Securities
(realized and unrealized)................................ (0.53) 2.90
--------- ---------
Total from Investment Operations.......................... (0.55) 2.95
LESS DISTRIBUTIONS
Dividends (from Net Investment Income).................... (0.05) --
Distributions (from Capital Gains)........................ (0.28) --
--------- ---------
Total Distributions.................................... (0.33) --
--------- ---------
NET ASSET VALUE END OF PERIOD............................. $12.07 $12.95
========= =========
TOTAL RETURN (a).......................................... (4.31%) 29.50%
RATIOS/SUPPLEMENTAL DATA
Net Assets End of Period (thousands)...................... $10,901 $4,631
Ratio of Expenses to Average Net Assets................... 1.27% 1.10%
Ratio of Net Investment Income (Loss) to Average
Net Assets.............................................. (0.13%) 1.43%
Portfolio Turnover Rate................................... 98% 35%
<CAPTION>
SECURITY EQUITY FUND - VALUE SERIES (CLASS B)
FISCAL PERIOD ENDED SEPTEMBER 30
--------------------------------
1998(e)(f) 1997(e)(f)(g)
------------ ------------
<S> <C> <C>
PER SHARE DATA
NET ASSET VALUE BEGINNING OF PERIOD....................... $12.91 $10.00
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income (Loss).............................. (0.15) 0.01
Net Gain (Loss) on Securities
(realized and unrealized)................................ (0.54) 2.90
--------- ---------
Total from Investment Operations.......................... (0.69) 2.91
LESS DISTRIBUTIONS
Dividends (from Net Investment Income) -- --
Distributions (from Capital Gains)........................ (0.28) --
--------- ---------
Total Distributions.................................... (0.28) --
--------- ---------
NET ASSET VALUE END OF PERIOD............................. $11.94 $12.91
========= =========
TOTAL RETURN (a).......................................... (5.38%) 29.10%
RATIOS/SUPPLEMENTAL DATA
Net Assets End of Period (thousands)...................... $6,615 $3,572
Ratio of Expenses to Average Net Assets................... 2.33% 2.26%
Ratio of Net Investment Income (Loss) to Average
Net Assets.............................................. (1.19%) 0.27%
Portfolio Turnover Rate................................... 98% 35%
</TABLE>
See accompanying notes.
- --------------------------------------------------------------------------------
51
<PAGE> 53
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
SELECTED DATA FOR EACH SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
SECURITY EQUITY FUND - SMALL COMPANY SERIES (CLASS A)
FISCAL PERIOD ENDED SEPTEMBER 30
--------------------------------------
1998(e)(f)(j)
------------
<S> <C>
PER SHARE DATA
NET ASSET VALUE BEGINNING OF PERIOD.......................... $10.00
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income (Loss)................................. (0.03)
Net Gain (Loss) on Securities
(realized and unrealized)................................... (1.26)
--------
Total from Investment Operations............................. (1.29)
LESS DISTRIBUTIONS
Dividends (from Net Investment Income)....................... (0.01)
Distributions (from Capital Gains) --
--------
Total Distributions....................................... (0.01)
--------
NET ASSET VALUE END OF PERIOD $8.70
========
TOTAL RETURN (a)............................................. (12.95%)
RATIOS/SUPPLEMENTAL DATA
Net Assets End of Period (thousands)......................... $2,677
Ratio of Expenses to Average Net Assets...................... 1.39%
Ratio of Net Investment Income (Loss) to Average
Net Assets................................................. (0.35%)
Portfolio Turnover Rate...................................... 366%
<CAPTION>
SECURITY EQUITY FUND - SMALL COMPANY SERIES (CLASS B)
FISCAL PERIOD ENDED SEPTEMBER 30
--------------------------------------
1998(e)(f)(j)
------------
PER SHARE DATA
NET ASSET VALUE BEGINNING OF PERIOD.......................... $10.00
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income (Loss)................................. (0.13)
Net Gain (Loss) on Securities
(realized and unrealized)................................... (1.24)
--------
Total from Investment Operations............................. (1.37)
LESS DISTRIBUTIONS
Dividends (from Net Investment Income) --
Distributions (from Capital Gains) --
--------
Total Distributions -
--------
NET ASSET VALUE END OF PERIOD................................ $8.63
========
TOTAL RETURN (a)............................................. (13.70%)
RATIOS/SUPPLEMENTAL DATA
Net Assets End of Period (thousands)......................... $1,504
Ratio of Expenses to Average Net Assets...................... 2.38%
Ratio of Net Investment Income (Loss) to Average
Net Assets................................................. (1.34%)
Portfolio Turnover Rate...................................... 366%
</TABLE>
See accompanying notes.
- --------------------------------------------------------------------------------
52
<PAGE> 54
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
-------------------------------------------------------
1998(f) 1997(f) 1996(f) 1995(f) 1994(b)
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA
NET ASSET VALUE BEGINNING OF PERIOD....................... $9.24 $8.25 $8.20 $6.82 $8.13
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income (loss).............................. (0.06) (0.08) (0.05) (0.02) (0.05)
Net Gain (Loss) on Securities
(realized and unrealized)................................ (1.06) 1.65 1.10 1.54 (0.19)
-------- -------- -------- -------- --------
Total from Investment Operations.......................... (1.12) 1.57 1.05 1.52 (0.24)
LESS DISTRIBUTIONS
Dividends (from Net Investment Income) -- -- -- -- --
Distributions (from Capital Gains)........................ (0.47) (0.58) (1.00) (0.14) (1.07)
-------- -------- -------- -------- --------
Total Distributions.................................... (0.47) (0.58) (1.00) (0.14) (1.07)
-------- -------- -------- -------- --------
NET ASSET VALUE END OF PERIOD............................. $7.65 $9.24 $8.25 $8.20 $6.82
======== ======== ======== ======== ========
TOTAL RETURN (a).......................................... (12.45%) 20.57% 15.36% 22.69% (3.6%)
RATIOS/SUPPLEMENTAL DATA
Net Assets End of Period (thousands)...................... $67,554 $84,504 $74,230 $66,052 $60,695
Ratio of Expenses to Average Net Assets................... 1.23% 1.71% 1.31% 1.32% 1.33%
Ratio of Net Investment Income (Loss) to Average
Net Assets.............................................. (0.64%) (1.01%) (0.61%) (0.31%) (0.80%)
Portfolio Turnover Rate................................... 116% 68% 161% 180% 111%
<CAPTION>
SECURITY ULTRA FUND (CLASS B)
FISCAL PERIOD ENDED SEPTEMBER 30
-------------------------------------------------------
1998(f) 1997(f) 1996(f) 1995(f) 1994(b)
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA
NET ASSET VALUE BEGINNING OF PERIOD....................... $8.90 $8.03 $8.11 $6.81 $8.30
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income (loss).............................. (0.14) (0.15) (0.13) (0.09) (0.10)
Net Gain (Loss) on Securities
(realized and unrealized)................................ (1.01) 1.60 1.05 1.53 (0.32)
-------- -------- -------- -------- --------
Total from Investment Operations.......................... (1.15) 1.45 0.92 1.44 (0.42)
LESS DISTRIBUTIONS
Dividends (from Net Investment Income) -- -- -- - --
Distributions (from Capital Gains)........................ (0.47) (0.58) (1.00) (0.14) (1.07)
-------- -------- -------- -------- --------
Total Distributions.................................... (0.47) (0.58) (1.00) (0.14) (1.07)
-------- -------- -------- -------- --------
NET ASSET VALUE END OF PERIOD............................. $7.28 $8.90 $8.03 $8.11 $6.81
======== ======== ======== ======== ========
TOTAL RETURN (a).......................................... (13.30%) 19.58% 13.81% 21.53% (5.70%)
RATIOS/SUPPLEMENTAL DATA
Net Assets End of Period (thousands)...................... $5,610 $5,964 $2,698 $5,428 $1,254
Ratio of Expenses to Average Net Assets................... 2.23% 2.71% 2.31% 2.32% 2.36%
Ratio of Net Investment Income (Loss) to Average
Net Assets.............................................. (1.64%) (2.01%) (1.61%) (1.31%) (1.76%)
Portfolio Turnover Rate................................... 116% 68% 161% 180% 110%
</TABLE>
See accompanying notes.
- --------------------------------------------------------------------------------
53
<PAGE> 55
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) 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.
(c) 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.
(d) 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.
(e) 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 1998
Asset Allocation Series Class A 3.6% 3.1% 2.4% 2.5%
Class B 4.7% 3.9% 3.3% 3.4%
Social Awareness Series Class A N/A N/A 1.7% 1.5%
Class B N/A N/A 2.8% 2.5%
Value Series Class A N/A N/A 1.9% 1.5%
Class B N/A N/A 2.8% 2.6%
Small Company Series Class A N/A N/A N/A 2.4%
Class B N/A N/A N/A 3.4%
(f) Net investment income (loss) was computed using average shares outstanding
throughout the period.
(g) 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.
(h) 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.
(i) 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.
(j) Security Small Company Series was initially capitalized on October 15, 1997,
with a net asset value of $10 per share. Percentage amounts for the period,
except for total return, have been annualized.
- --------------------------------------------------------------------------------
54
<PAGE> 56
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
SEPTEMBER 30, 1998
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 six Series, the Equity Series, the Global Series, the Asset
Allocation Series, the Social Awareness Series, the Value Series, and the Small
Company 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.
A. SECURITY VALUATION - 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 foreign currency risk from purchase or sale of securities denominated in
foreign currency. These funds 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 these funds 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 - Growth & Income Fund, 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 market,
enhancing returns, maintaining liquidity, and minimizing transaction costs.
These funds 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 Funds may pay departing shareholders from its cash balances and
reduce their futures positions accordingly. Returns may be enhanced by
purchasing futures contracts instead of the underlying securities when futures
are believed to be priced more attractively than the underlying securities. The
primary risks associated with the use of futures contracts are imperfect
correlation between changes in market values of stocks contained in the indexes
and the prices of futures contracts, and the possibility of an illiquid market.
Futures contracts are valued based upon their quoted daily settlement prices.
Upon entering into a futures contract, the Funds are required to deposit either
cash or securities, representing the initial margin, equal to a certain
percentage of the contract value. Subsequent changes in the value of the
contract, or variation margin, are recorded as unrealized gains or losses. The
variation
- -----------------------------------------------------------------------------
55
<PAGE> 57
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
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, 1998.
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, Value and Small Company 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,
Value and Small Company 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, Value and Small Company 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) $60,000.
For administrative services provided to the Social Awareness Series, Value
Series and the Small Company 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 pays Strong Capital Management, Inc. ("Strong") with respect to Small
Company Series, an annual fee based on the combined average net assets of the
Series and another fund within the Security Funds for which Strong provides
advisory services. The fee is equal to .50% of the combined average net assets
under $150,000,000, .45% of the combined average net assets at or above
$150,000,000 but less than $500,000,000, and .40% of the combined average net
assets at or above $500,000,000.
SMC has agreed to limit the total expenses of the Asset Allocation Series,
Social Awareness Series, Value Series and the Small Company Series to 2% of the
average net assets, excluding 12b-1 fees. SMC waived management fees on the
Asset Allocation Series, Social Awareness Series and Value Series until February
1, 1998. SMC has also waived the management fees for the Small Company Series
until September 30, 1998.
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 and the
Small Company Series has also adopted such a plan with repect to its Class A
shares. ThePlans provide for payments at an annual rate of 1.0% of the average
net assets of each Fund's Class B shares and .25% of the net assets of the Small
Company Series' Class A shares.
Security Distributors, Inc. (SDI), a wholly-owned subsidiary of Security
Benefit Group, Inc. and the national distributor of 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 $11,930 $12,982 $149,153 $214,268
Security Equity Fund:
Equity Series 137,516 123,648 1,449,073 1,639,476
Global Series 66 24,076 16,744 58,103
Asset Allocation Series 728 7,197 13,572 10,531
Social Awareness Series 4,310 4,833 69,520 59,703
Value Series 4,530 5,438 171,982 183,293
Small Company Series 28 2,250 29,762 15,283
Ultra Fund 3,908 19,376 47,718 32,808
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.
<PAGE> 58
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- -------------------------------------------------------------------------------
3. FEDERAL INCOME TAX MATTERS
For federal income tax purposes, the amounts of unrealized appreciation
(depreciation) at September 30, 1998, were as follows:
GROSS GROSS NET UNREALIZED
UNREALIZED UNREALIZED APPRECIATION
APPRECIATION DEPRECIATION (DEPRECIATION)
Growth & Income Fund $2,969,808 ($9,520,161) ($6,550,353)
Security Equity Fund:
Equity Series 292,259,977 (12,788,569) 279,471,408
Global Series 3,093,345 (3,984,533) (891,188)
Asset Allocation Series 799,720 (1,142,727) (343,007)
Social Awareness Series 2,453,107 (566,602) 1,886,505
Value Series 1,462,992 (2,283,252) (820,260)
Small Company Series 237,534 (99,337) 138,197
Ultra Fund 9,136,169 (10,516,295) (1,380,126)
The Growth and Income Fund, Equity Series, Global Series, Asset Allocation
Series and Ultra Fund hereby respectively designate $15,391,976, $65,468,053,
$1,414,896, $336,558, and $4,380,091 as capital gain dividends paid during the
fiscal year ended September 30, 1998 for the purpose of the dividends paid
deduction on each Fund's federal income tax return. The Small Company Series
has a capital loss camiforward of $83,808, which is available to offset future
taxable gains and expires in 2006.
4. INVESTMENT TRANSACTIONS
Investment transactions for the year ended September 30, 1998, (excluding
overnight investments and short-term commercial paper) are as follows:
PROCEEDS
PURCHASES FROM SALES
Growth & Income Fund $135,939,311 $143,767,512
Security Equity Fund:
Equity Series 393,619,848 473,548,883
Global Series 38,494,344 41,606,702
Asset Allocation Series 3,080,169 3,436,269
Social Awareness Series 6,534,238 4,637,172
Value Series 23,910,139 13,647,800
Small Company Series 14,722,414 10,661,079
Ultra Fund 96,136,753 101,175,598
5. FORWARD FOREIGN EXCHANGE CONTRACTS
At September 30, 1998, Global Series had the following open forward
foreign exchange contracts to buy or sell currency (excluding foreign currency
contracts used for purchase and sale settlements):
<TABLE>
<CAPTION>
NET
FOREIGN AMOUNT TO BE UNREALIZED
SETTLEMENT CURRENCY (RECEIVED)/PAID U.S. $ VALUE APPRECIATION
CURRENCY TYPE DATE TO BE DELIVERED IN U.S.$ AS OF 9/30/98 (DEPRECIATION)
<S> <C> <C> <C> <C> <C> <C>
Australian Dollar Sell 11/05/98 1,189,825 ($772,818) ($706,010) $ 66,808
Australian Dollar Sell 11/05/98 188,961 (112,753) (112,090) 663
Australian Dollar Buy 11/05/98 936,458 553,787 555,669 1,882
British Pound Sell 10/06/98 1,194,832 (1,967,654) (2,030,104) (62,450)
British Pound Buy 10/06/98 1,194,832 1,993,330 2,030,104 36,774
Canadian Dollar Sell 11/30/98 1,414,840 (973,804) (924,369) 49,435
Canadian Dollar Buy 11/30/98 1,204,857 821,723 787,180 (34,543)
German Deutsche Mark Sell 10/01/98 1,902,027 (1,039,984) (1,137,984) (98,000)
German Deutsche Mark Buy 10/01/98 1,902,027 1,069,050 1,137,984 68,934
Japanese Yen Sell 03/15/99 125,819,846 (963,251) (942,920) 20,331
Swedish Krona Sell 10/01/98 5,481,412 (693,323) (699,650) (6,327)
Swedish Krona Buy 10/01/98 5,481,412 710,644 699,650 (10,994)
----------
$ 32,513
==========
</TABLE>
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, 1998, that qualified for the dividends received deductions for
corporate shareholders was 18%, 100%, 100%, 100%, 100%, 57%, 0% and 44% of the
amount taxable as ordinary income for Growth and Income Fund, Equity Series,
Global Series, Asset Allocation Series, Social Awareness Series, Value Series,
Small Company Series and Ultra Fund respectively, in accordance with the
provisions of the Internal Revenue Code.
- -------------------------------------------------------------------------------
57
<PAGE> 59
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, including the schedule of
investments of Security Growth and Income Fund, Security Equity Fund (comprised
of the Equity, Global, Asset Allocation, Social Awareness, Value and Small
Company Series) and Security Ultra Fund (the Funds) as of September 30, 1998,
and the related statements of operations, changes in net assets and financial
highlights for the periods indicated therein. These financial statements and
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 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 and financial highlights. Our procedures included confirmation of
securities owned as of September 30, 1998, 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, 1998, and the results of their operations, changes in
their net assets and financial highlights for the periods indicated above in
conformity with generally accepted accounting principles.
/S/ Ernst & Young llp
- -----------------------------
Ernst & Young llp
Kansas City, Missouri
October 30,1998
- -----------------------------------------------------------------------------
58
<PAGE> 60
THIS PAGE LEFT BLANK INTENTIONALLY.
<PAGE> 61
THE SECURITY GROUP
OF MUTUAL FUNDS
- -------------------------------
Security Growth and Income Fund
Security Equity Fund
- Equity Series
- Global Series
- Asset Allocation Series
- Social Awareness Series
- Value Series
- Small Company Series
Security Ultra Fund
Security Income Fund
- Corporate Bond Series
- U.S. Government Series
- Limited Maturity Bond Series
- High Yield Series
Security Municipal Bond 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
Penny A. Lumpkin
Mark L. Morris, Jr., D.V.M.
Maynard F. Oliverius
James R. Schmank
OFFICERS
- --------
John D. Cleland, President
James R. Schmank, Vice President
Mark E. Young, Vice President
Steven M. Bowser, Vice President, Equity Fund
David Eshnaur, Vice President, Equity Fund
Terry A. Milberger, Vice President, Equity Fund
Michael A. Petersen, Vice President, Growth and Income Fund
James P. Schier, Vice President, Equity Fund
Cindy L. Shields, Vice President, Ultra and Equity Fund
Jane A. Tedder, Vice President, Equity Fund
Amy J. Lee, Secretary
Christopher D. Swickard, Assistant Secretary
Brenda M. Harwood, Treasurer
- --------------------------- ------------------
SECURITY DISTRIBUTORS, INC. BULKRATE
- --------------------------- U.S. POSTAGE PAID
PERMIT NO. 941
700 SW Harrison St. CHICAGO, IL
Topeka, KS 66636-0001 ------------------
(785) 431-3127
(800) 888-2461
SDI 604 (R11-98) 46-06048-00
