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PROSPECTUS
SUPPLEMENT
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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
MEMBERS OF THE SECURITY BENEFIT GROUP OF COMPANIES
700 HARRISON, TOPEKA, KANSAS 66636-0001
SUPPLEMENT DATED NOVEMBER 2, 1998
TO PROSPECTUS DATED APRIL 1, 1998
Effective November 2, 1998, OppenheimerFunds, Inc. became the sub-adviser to
the Global Fund. This Prospectus is amended as set forth below to reflect this
change in the Fund's sub-adviser and certain changes in the Fund's investment
policies.
The section "INVESTMENT OBJECTIVE AND POLICIES OF THE FUNDS," page 9, is
deleted in its entirety and replaced with the following:
Security Growth and Income Fund, Security Equity Fund and Security
Ultra Fund are diversified, open-end management investment companies,
which were organized as Kansas corporations on February 2, 1944,
November 27, 1961, and April 20, 1965, respectively. Equity Fund,
Global Fund, Value Fund and Small Company Fund are series of Security
Equity Fund. Each of Growth and Income Fund, Equity Fund, Global Fund,
Value Fund, Small Company Fund and Ultra Fund (collectively, the
"Funds") has its own investment objective and policies which are
described below. There, of course, can be no assurance that such
investment objectives will be achieved. While there is no present
intention to do so, each Fund's investment objective and policies,
unless otherwise noted, may be changed by its Board of Directors
without the approval of stockholders. If there is a change in
investment objective, stockholders should consider whether the Fund
remains an appropriate investment in light of their then current
financial position and needs. Each of the Funds is also subject to
certain investment policy limitations which may not be changed without
stockholder approval. Among these limitations, some of the more
important ones are that each Fund will not invest more than 5 percent
of the value of its assets in any one issuer (for the Global Fund,
Value Fund and Small Company Fund, this limitation applies only with
respect to 75 percent of the value of its total assets) or purchase
more than 10 percent of the outstanding voting securities of any one
issuer or invest more than 25 percent of its total assets in any one
industry. The full text of the investment policy limitations of each
Fund is set forth in the Statement of Additional Information of the
Funds.
Under the section "GLOBAL FUND," on page 11, the references to Lexington
Management Corporation as the Sub-Adviser are replaced with OppenheimerFunds,
Inc. as the Sub-Adviser.
Effective November 2, 1998, certain changes to the Global Fund's fundamental
investment limitations were approved by shareholders. As a result, the following
investment methods are now available to the Fund and the following sub-sections
under "INVESTMENT METHODS AND RISK FACTORS," beginning on page 15, are amended
to include the Global Fund:
* SHARES OF OTHER INVESTMENT COMPANIES, page 15;
* REAL ESTATE SECURITIES, page 17;
* LENDING PORTFOLIO SECURITIES, page 18;
* FUTURES CONTRACTS AND RELATED OPTIONS, page 20.
The sub-section "RESTRICTED SECURITIES," page 18, under "INVESTMENT METHODS
AND RISK FACTORS" states that the Fund may not invest more than 10 percent of
its total assets in securities which are restricted as to disposition under the
federal securities law. Effective November 2, 1998, the limitation no longer
applies to restricted securities which are eligible for resale pursuant to Rule
144A under the Securities Act of 1933.
The second paragraph of the section "MANAGEMENT OF THE FUNDS," page 22, is
deleted in its entirety and replaced with the following:
The Investment Manager has engaged OppenheimerFunds, Inc.
("Oppenheimer"), Two World Trade Center, New York, NY 10048-0203, to
provide certain investment advisory services to Global Fund.
Oppenheimer is owned by Oppenheimer Acquisition Corp., a holding
company that is owned in part by senior officers of Oppenheimer and
controlled by Massachusetts Mutual Life Insurance Company. Oppenheimer
has been providing investment advice since 1959. In addition,
Oppenheimer and its subsidiaries currently manage investment companies
with assets of more than $85 billion, and more than 4 million
shareholder accounts.
The sixth paragraph of the section "MANAGEMENT OF THE FUNDS," page 22, is
deleted in its entirety and replaced with the following:
For the services provided to the Funds, the Investment Manager
receives, with respect to Growth and Income, Equity and Ultra Funds,
on an annual basis, a fee of 2 percent of the first $10 million of the
average net assets, 1.50 percent of the next $20 million of the
average net assets and 1 percent of the remaining average net assets
of these Funds, calculated daily and payable monthly. The Investment
Manager receives with respect to the Global Fund, on an annual basis,
2 percent of the first $70 million of the average net assets and 1.50
percent of the remaining average net assets of this Fund, calculated
daily and payable monthly. The Investment Manager pays Oppenheimer an
annual fee equal to a percentage of the average daily closing value of
the combined net assets of Global Fund and another series managed by
the Investment Manager, computed on a daily basis as follows: 0.35
percent of the combined average daily net assets up to $300 million,
plus 0.30 percent of such assets over $300 million up to $750 million
and 0.25 percent of such assets over $750 million. For the investment
advisory services provided to the Value Fund and Small Company Fund,
the Investment Manager receives, on an annual basis, a fee of 1
percent of the average daily net assets of each fund, calculated daily
and payable monthly. The Investment Manager pays Strong with respect
to the Small Company Fund, an annual fee based on the combined average
net assets of the fund and another fund to which Strong provides
advisory services. The fee is equal to .50 percent of the combined
average net assets at or above $150 million but less than $500
million, and .40 percent of the combined average net assets at or
above $500 million. As compensation for providing administrative,
bookkeeping, accounting and pricing services to the Value Fund and
Small Company Fund, the Investment Manager receives on an annual basis
a fee of .09 percent of the average daily net assets of each Fund,
calculated daily and payable monthly.
The section "PORTFOLIO MANAGEMENT," page 23, is deleted in its entirety and
replaced with the following:
TERRY A. MILBERGER, Senior Portfolio Manager of Investment Manager,
has managed Equity Fund since 1981. He has more than 20 years of
investment experience. He began his career as an investment analyst in
the insurance industry and from 1974 through 1978 he served as an
assistant portfolio manager for the Investment Manager. He was then
employed as Vice President of Texas Commerce bank and managed its
pension assets until he returned to the Investment Manager in 1981.
Mr. Milberger holds a bachelor's degree in business and a Masters of
Business Administration from the University of Kansas and is a
Chartered Financial Analyst. His investment philosophy is based on
patience and opportunity for the long-term investor.
RONALD C. OGNAR, Portfolio Manager of Strong, has managed Small
Company Fund since its inception in 1997. He is a Chartered Financial
Analyst with more than 25 years of investment experience. Mr. Ognar
joined Strong in April 1993 after two years as a principal and
portfolio manager with RCM Capital Management. Prior to his position
at RCM Capital Management, he was a portfolio manager at Kemper
Financial Services in Chicago. Mr. Ognar began his investment career
in 1968 at LaSalle National Bank. He is a graduate of the University
of Illinois with a bachelor's degree in accounting.
MICHAEL A. PETERSEN, Senior Portfolio Manager of the Investment
Manager, has managed Growth and Income Fund since January 1998. He has
15 years of investment experience. Prior to joining the Investment
Manager in 1997, he was Director of Equity Research and Fund
Management at Old Kent Bank and Trust Corporation from 1988 to 1997.
Prior to 1988, he was an Investment Officer at First Asset Management.
Mr. Petersen earned a Bachelor of Science degree in Accounting from
the University of Minnesota. He is a Chartered Financial Analyst.
JAMES P. SCHIER, Portfolio Manager of the Investment Manager, has
managed Value Fund since its inception in 1997 and Ultra Fund since
January 1998. He has 13 years experience in the investment field and
is a Chartered Financial Analyst. While employed by the Investment
Manager, he also served as research analyst. Prior to joining the
Investment Manager in 1995, he was a portfolio manager for Mitchell
Capital Management from 1993 to 1995. From 1988 to 1995 he served as
Vice President and Portfolio Manager for Fourth Financial. Prior to
1988, Mr. Schier served in various positions in the investment field
for Stifel Financial, Josepthal & Company and Mercantile Trust
Company. Mr. Schier earned a Bachelor of Business degree from the
University of Notre Dame and an M.B.A. from Washington University.
WILLIAM L. WILBY, Senior Vice President of Oppenheimer, became the
manager of Global Fund in November 1998. Prior to joining Oppenheimer
in 1991, he was an international investment strategist at Brown
Brothers Harriman & Co. Prior to Brown Brothers, Mr. Wilby was a
managing director and portfolio manager at AIG Global Investors. He
joined AIG from Northern Trust Bank in Chicago, where he was an
international pension manager. Before starting his career in portfolio
management, Mr. Wilby was an international financial economist at
Northern Trust Bank and at the Federal Reserve Bank in Chicago. Mr.
Wilby is a graduate of the United States Military Academy and holds an
M.A. and a Ph.D. in International Monetary Economics from the
University of Colorado. He is a Chartered Financial Analyst.
<PAGE>
SECURITY GROWTH AND INCOME FUND
SECURITY EQUITY FUND
SECURITY ULTRA FUND
Members of The Security Benefit Group of Companies
700 SW Harrison, Topeka, Kansas 66636-0001
SUPPLEMENT DATED NOVEMBER 2, 1998
TO STATEMENT OF ADDITIONAL INFORMATION
DATED APRIL 1, 1998
Effective November 2, 1998, OppenheimerFunds, Inc. became the sub-adviser to
the Global Fund and certain changes to the Global Fund's fundamental investment
limitations were approved by shareholders. This Statement of Additional
Information is amended as set forth below to reflect these changes.
The fifth paragraph of the section "GENERAL INFORMATION," page 1, is deleted
in its entirety and replaced with the following:
Professional investment advice is provided to each Fund by Security
Management Company, LLC (the "Investment Manager"). The Investment
Manager has engaged OppenheimerFunds, Inc. ("Oppenheimer") to provide
investment advisory services to Global Fund, Meridian Investment
Management Corporation ("Meridian") to provide quantitative investment
research and investment advisory services to the Asset Allocation Fund
and Strong Capital Management, Inc. ("Strong") to provide investment
advisory services to Small Company Fund.
Under the section "GLOBAL FUND," page 4, the references to Lexington
Management Corporation as the Sub-Adviser should be replaced with
OppenheimerFunds, Inc. as the Sub-Adviser.
The section "SECURITY EQUITY FUND'S FUNDAMENTAL POLICIES," page 31, is
amended by deleting all references to Global Fund in the first sentence. The
section is further amended by adding the following:
Security Equity Fund's fundamental policy limitations, which are
applicable to Global Fund, are:
1. Not to invest more than 5% of its total assets in the securities
of any one issuer (other than obligations of, or guaranteed by,
the U.S. Government, its agencies or instrumentalities); provided
that this limitation applies only with respect to 75% of the
Fund's total assets.
2. Not to purchase more than 10 percent of the outstanding voting
securities of any one issuer.
3. Not to purchase securities for the purpose of exercising control
over the issuers thereof.
4. Not to act as underwriter of securities issued by others, except
to the extent that the Fund may be considered an underwriter
within the meaning of the Securities Act of 1933 in the
disposition of restricted securities.
5. Not to borrow in excess of 33 1/3% of its total assets.
6. Not to lend any security or make any other loan if, as a result,
more than 33 1/3% of the Fund's total assets would be lent to
other parties, except (i) through the purchase of a portion of an
issue of debt securities in accordance with its investment
objective and policies, or (ii) by engaging in repurchase
agreements with respect to portfolio securities.
7. Not to issue senior securities, except as permitted under the
Investment Company Act of 1940.
8. Not to purchase or sell physical commodities, except that the
Fund may enter into futures contracts and options thereon.
9. Not to allow officers or directors of the Fund, the Underwriter
or the Investment Manager to purchase shares of the Fund except
for investment at current net asset value.
10. Not to invest 25% or more of the Fund's total assets in a
particular industry.
11. Not to purchase or sell real estate unless acquired as a result
of ownership of securities or other instruments (but this shall
not prevent the Fund from investment in securities or other
instruments backed by real estate or securities of companies
engaged in the real estate business).
The following operating policies of Global Fund are not fundamental
policies and may be changed by a vote of a majority of the Fund's
Board of Directors without shareholder approval.
1. The Fund may not borrow money or securities for any purposes
except that borrowing up to 10% of the Fund's total assets from
commercial banks is permitted for emergency or temporary
purposes.
2. The Fund does not currently intend to lend assets other than
securities to other parties. (This limitation does not apply to
purchases of debt securities or to repurchase agreements).
3. The Fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent
in kind and amount to the securities sold short, and provided
that transactions in futures contracts and options are not deemed
to constitute selling securities short. In addition, the Fund
does not currently intend to purchase securities on margin,
except that the Fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that
margin payments in connection with futures contracts and options
on futures contracts shall not constitute purchasing securities
on margin.
4. The Fund may not, except in connection with a merger,
consolidation, acquisition, or reorganization, invest in the
securities of other investment companies, including investment
companies advised by the Investment Manager, if, immediately
after such purchase or acquisition, more than 10% of the value of
the Fund's total assets would be invested in such securities,
more than 5% of the value of the Fund's total assets would be
invested in the securities of any one investment company, or the
Fund would own more than 3% of the total outstanding stock of
another investment company.
5. The Fund may not invest in securities of an issuer, that together
with any predecessor, has been in operation for less than three
years, if, as a result, more than 5% of the total assets of the
fund would then be invested in such securities.
6. The Fund does not currently intend to purchase warrants, valued
at the lower of cost or market, in excess of 10% of the Fund's
net assets. Included in that amount but not to exceed 2% of net
assets, are warrants of which the underlying securities are not
traded on principal domestic or foreign exchanges. Warrants
acquired by the Fund in units or attached to securities are not
subject to these restrictions.
7. The Fund may not invest more than 10% of its total assets in
securities which are restricted as to disposition under the
federal securities laws, except that the Fund may purchase
without regard to this limitation restricted securities which are
eligible for resale pursuant to Rule 144A under the Securities
Act of 1933 (the "1933 Act").
8. The Fund may buy and sell exchange-traded and over-the-counter
put and call options, including index options, securities
options, currency options and options on futures, provided that a
call or put may be purchased only if after such purchase, the
value of all call and put options held by the Fund will not
exceed 5% of the Fund's total assets. The Fund may write only
covered put and call options. The Fund does not currently intend
to engage in spread or straddle transactions.
9. The Fund does not currently intend to invest in oil, gas, mineral
leases or other mineral exploration or development programs.
The fourth and fifth paragraphs of the section "INVESTMENT MANAGEMENT," page
41, are deleted in their entirety and replaced with the following:
The Investment Manager has entered into a sub-advisory agreement
with OppenheimerFunds, Inc. ("Oppenheimer"), Two World Trade Center,
New York, NY 10048-0203, to provide certain investment advisory
services to Global Fund. Pursuant to this agreement, Oppenheimer
furnishes investment advisory, statistical and research facilities,
supervises and arranges for the purchase and sale of securities on
behalf of Global Fund and provides for the compilation and maintenance
of records pertaining to such investment advisory services, subject to
the control and supervision of the Fund's Board of Directors and the
Investment Manager. For such services, the Investment Manager pays
Oppenheimer an annual fee equal to a percentage of the average daily
closing value of the combined net assets of Global Fund and another
series managed by the Investment Manager, SBL Fund, Series D, computed
on a daily basis as follows: 0.35 percent of the combined average
daily net assets up to $300 million, plus 0.30 percent of such assets
over $300 million up to $750 million and 0.25 percent of such assets
over $750 million.
Oppenheimer is owned by Oppenheimer Acquisition Corp., a holding
company that is owned in part by senior officers of Oppenheimer and
controlled by Massachusetts Mutual Life Insurance Company. Oppenheimer
has been providing investment advice since 1959. In addition,
Oppenheimer and its subsidiaries currently manage investment companies
with assets of more than $85 billion, and more than 4 million
shareholder accounts.
The section "PORTFOLIO MANAGEMENT," page 44 is deleted in its entirety and
replaced with the following:
STEVEN M. BOWSER, Portfolio Manager of the Investment Manager, has
co-managed the fixed-income portion of Asset Allocation Fund's
portfolio since January 1998. He joined the Investment Manager in
1992. Prior to joining the Investment Manager, he was Assistant Vice
President and Portfolio Manager with the Federal Home Loan Bank of
Topeka from 1989 to 1992. He was employed at the Federal Reserve Bank
of Kansas City in 1988 and began his career with the Farm Credit
System from 1982 to 1987, serving as a Senior Financial Analyst and
Assistant Controller. He graduated with a Bachelor of Science Degree
from Kansas State University in 1982.
PAT BOYLE, Portfolio Manager of Meridian, has managed the equity
portion of Asset Allocation Fund's portfolio since August 1997. He has
five years of investment experience and is a Chartered Financial
Analyst. Mr. Boyle graduated from the University of Denver with a
B.S.B.A. degree and an M.S. degree in Finance.
DAVID ESHNAUR, Portfolio Manager of the Investment Manager, has
co-managed the fixed-income portion of Asset Allocation Fund's
portfolio since January 1998. Mr. Eshnaur has 15 years of investment
experience. Prior to joining the Investment Manager in 1997, he worked
at Waddell & Reed in the positions of Assistant Vice President,
Assistant Portfolio Manager, Senior Analyst, Industry Analyst and
Account Administrator. Mr. Eshnaur earned a Bachelor of Arts degree in
Business Administration from Coe College and an M.B.A. degree in
Finance from the University of Missouri - Kansas City.
TERRY A. MILBERGER, Senior Portfolio Manager of Investment Manager,
has managed Equity Fund since 1981. He has more than 20 years of
investment experience. He began his career as an investment analyst in
the insurance industry and from 1974 through 1978 he served as an
assistant portfolio manager for the Investment Manager. He was then
employed as Vice President of Texas Commerce Bank and managed its
pension assets until he returned to the Investment Manager in 1981.
Mr. Milberger holds a bachelor's degree in business and a Masters of
Business Administration from the University of Kansas and is a
Chartered Financial Analyst. His investment philosophy is based on
patience and opportunity for the long-term investor.
RONALD C. OGNAR, Portfolio Manager of Strong, has managed Small
Company Fund since its inception in 1997. He is a Chartered Financial
Analyst with more than 25 years of investment experience. Mr. Ognar
joined Strong in April 1993 after two years as a principal and
portfolio manager with RCM Capital Management. Prior to his position
at RCM Capital Management, he was a portfolio manager at Kemper
Financial Services in Chicago. Mr. Ognar began his investment career
in 1968 at LaSalle National Bank. He is a graduate of the University
of Illinois with a bachelor's degree in accounting.
MICHAEL A. PETERSEN, Senior Portfolio Manager of the Investment
Manager, has managed Growth and Income Fund since January 1998. He has
15 years of investment experience. Prior to joining the Investment
Manager in 1997, he was Director of Equity Research and Fund
Management at Old Kent Bank and Trust Corporation from 1988 to 1997.
Prior to 1988, he was an Investment Officer at First Asset Management.
Mr. Petersen earned a Bachelor of Science degree in Accounting from
the University of Minnesota. He is a Chartered Financial Analyst.
JAMES P. SCHIER, Portfolio Manager of the Investment Manager, has
managed Value Fund since its inception in 1997 and Ultra Fund since
January 1998. He has 13 years experience in the investment field and
is a Chartered Financial Analyst. While employed by the Investment
Manager, he also served as research analyst. Prior to joining the
Investment Manager in 1995, he was a portfolio manager for Mitchell
Capital Management from 1993 to 1995. From 1988 to 1995 he served as
Vice President and Portfolio Manager for Fourth Financial. Prior to
1988, Mr. Schier served in various positions in the investment field
for Stifel Financial, Josepthal & Company and Mercantile Trust
Company. Mr. Schier earned a Bachelor of Business degree from the
University of Notre Dame and an M.B.A. from Washington University.
CINDY L. SHIELDS, Portfolio Manager of the Investment Manager, has
managed Social Awareness Fund since its inception in 1996. Ms. Shields
has eight years experience in the securities field and joined the
Investment Manager in 1989. She has been a portfolio manager since
1994, and prior to that time, she served as a research analyst for the
Investment Manager. Ms. Shields graduated from Washburn University
with a Bachelor of Business Administration degree, majoring in finance
and economics. She is a Chartered Financial Analyst.
WILLIAM L. WILBY, Senior Vice President of Oppenheimer, became the
manager of Global Fund in November 1998. Prior to joining Oppenheimer
in 1991, he was an international investment strategist at Brown
Brothers Harriman & Co. Prior to Brown Brothers, Mr. Wilby was a
managing director and portfolio manager at AIG Global Investors. He
joined AIG from Northern Trust Bank in Chicago, where he was an
international pension manager. Before starting his career in portfolio
management, Mr. Wilby was an international financial economist at
Northern Trust Bank and at the Federal Reserve Bank in Chicago. Mr.
Wilby is a graduate of the United States Military Academy and holds an
M.A. and a Ph.D. in International Monetary Economics from the
University of Colorado. He is a Chartered Financial Analyst.
