SECURITY EQUITY FUND, 497, 1999-02-03

SECURITY EQUITY FUND
497, 1999-02-03

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<PAGE>
SECURITY FUNDS
================================================================================
PROSPECTUS

FEBRUARY 1, 1999

- Security Growth and Income Fund

- Security Equity Fund

- Security Global Fund

- Security Value Fund

- Security Small Company Fund

- Security Ultra Fund

-----------------------------------
THE SECURITIES AND EXCHANGE
COMMISSION HAS NOT APPROVED OR
DISAPPROVED THESE SECURITIES OR
PASSED UPON THE ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
-----------------------------------

SECURITY DISTRIBUTORS, INC.
A Member of The Security Benefit
Group of Companies
<PAGE>
FUNDS' OBJECTIVES........................................................... 2
Security Growth and Income Fund........................................... 2
Security Equity Fund...................................................... 2
Security Global Fund...................................................... 2
Security Value Fund....................................................... 2
Security Small Company Fund............................................... 2
Security Enhanced Index Fund.............................................. 2
Security International Fund............................................... 2
Security Select 25 Fund................................................... 2
Security Ultra Fund....................................................... 2
FUNDS' PRINCIPAL INVESTMENT STRATEGIES...................................... 2
Security Growth and Income Fund........................................... 2
Security Equity Fund...................................................... 2
Security Global Fund...................................................... 3
Security Value Fund....................................................... 3
Security Small Company Fund............................................... 3
Security Enhanced Index Fund.............................................. 4
Security International Fund............................................... 4
Security Select 25 Fund................................................... 5
Security Ultra Fund....................................................... 5
MAIN RISKS.................................................................. 5
Market Risk............................................................... 5
Smaller Companies......................................................... 5
Value Stocks.............................................................. 6
Growth Stocks............................................................. 6
Foreign Securities........................................................ 6
Emerging Markets.......................................................... 6
Options and Futures....................................................... 6
Fixed-Income Securities................................................... 6
Diversification........................................................... 7
Investment in Investment Companies........................................ 7
Active Trading............................................................ 7
PAST PERFORMANCE............................................................ 7
FEES AND EXPENSES OF THE FUNDS.............................................. 11
INVESTMENT MANAGER.......................................................... 12
Management Fees........................................................... 13
Portfolio Managers........................................................ 14
Year 2000 Compliance...................................................... 15
BUYING SHARES............................................................... 16
Class A Shares............................................................ 16
Class A Distribution Plan................................................. 16
Class B Shares............................................................ 16
Class B Distribution Plan................................................. 17
Class C Shares............................................................ 17
Class C Distribution Plan................................................. 17
Waiver of Deferred Sales Charge........................................... 17
Confirmations and Statements.............................................. 17
SELLING SHARES.............................................................. 17
By Mail................................................................... 18
By Telephone.............................................................. 18
By Broker................................................................. 18
Payment of Redemption Proceeds............................................ 18
DIVIDENDS AND TAXES......................................................... 19
Tax on Distributions...................................................... 19
Taxes on Sales or Exchanges............................................... 19
Backup Withholding........................................................ 19
DETERMINATION OF NET ASSET VALUE............................................ 19
SHAREHOLDER SERVICES........................................................ 20
Accumulation Plan......................................................... 20
Systematic Withdrawal Program............................................. 20
Exchange Privilege........................................................ 20
Retirement Plans.......................................................... 21
GENERAL INFORMATION......................................................... 21
Shareholder Inquiries..................................................... 21
FINANCIAL HIGHLIGHTS........................................................ 22
APPENDIX A - REDUCED SALES CHARGES.......................................... 28
Class A Shares............................................................ 28
Rights of Accumulation.................................................... 28
Statement of Intention.................................................... 28
Reinstatement Privilege................................................... 28
<PAGE>
FUNDS' OBJECTIVES

Described below are the investment objectives for each of the Funds. Each Fund's
Board of Directors may change their investment objectives without shareholder
approval. As with any investment, there can be no guarantee the Funds will
achieve their investment objectives.

SECURITY GROWTH AND INCOME FUND -- The Growth and Income Fund seeks long-term
growth of capital with secondary emphasis on income.

SECURITY EQUITY FUND -- The Equity Fund seeks long-term capital growth.

SECURITY GLOBAL FUND -- The Global Fund seeks long-term growth of capital
primarily through investment in securities of companies in foreign countries and
the United States.

SECURITY VALUE FUND -- The Value Fund seeks long-term growth of capital.

SECURITY SMALL COMPANY FUND -- The Small Company Fund seeks long-term growth of
capital.

SECURITY ENHANCED INDEX FUND -- The Enhanced Index Fund seeks to outperform the
S&P 500 Index through stock selection resulting in different weightings of
common stocks relative to the index.

SECURITY INTERNATIONAL FUND -- The International Fund seeks long-term capital
appreciation primarily by investing in non-U.S. equity securities and other
securities with equity characteristics.

SECURITY SELECT 25 FUND -- The Select 25 Fund seeks long-term growth of capital.

SECURITY ULTRA FUND -- The Ultra Fund seeks capital appreciation.

FUNDS' PRINCIPAL INVESTMENT STRATEGIES

SECURITY GROWTH AND INCOME FUND -- The Fund pursues its objective by investing,
under normal circumstances, in a well-diversified portfolio of stocks that the
Investment Manager, Security Management Company, LLC, believes are attractively
valued with above-average growth potential. The Fund also invests in
fixed-income securities, which are less volatile than stocks, to adjust the risk
characteristics of the portfolio. Fixed-income securities and stocks that
provide income will make up at least 25 percent of the Fund's portfolio.

The Investment Manager uses a value-oriented strategy to choose stocks. The
Investment Manager identifies stocks that are undervalued in terms of price or
other financial measurements with above average growth potential. The Fund
typically invests in the common stock of companies whose total market value is
$1 billion or greater at the time of purchase.

To manage risk in declining or volatile markets, the Investment Manager may
invest more in cash, fixed-income securities and stocks that provide income.
Fixed-income securities may include U.S. government securities, high yield
securities (also referred to as "junk bonds") and other corporate debt
securities.

The Fund typically sells an investment when the reasons for buying no longer
apply, or when the company or issuer begins to show deteriorating fundamentals
or poor relative performance.

Under adverse market conditions, the Fund could invest some or all of its assets
in government bonds or money market securities. Although the Fund would do this
only in seeking to avoid losses, the Fund may be unable to pursue its investment
objective during that time, and it could reduce the benefit from any upswing in
the market.

SECURITY EQUITY FUND -- The Fund pursues its objective by investing, under
normal circumstances, at least 65% of its total assets in a widely-diversified
portfolio of stocks.

To choose stocks, the Investment Manager uses a blended approach, investing in
growth stocks and value stocks. The Investment Manager typically chooses larger,
growth-oriented companies. The Investment Manager will also invest in
value-oriented stocks to attempt to reduce the Fund's potential volatility. In
choosing the balance of growth stocks and value stocks, the Investment Manager
compares the potential risks and rewards of each category.

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GROWTH-ORIENTED STOCKS are stocks of established companies that typically have a
record of consistent earnings growth.

VALUE-ORIENTED STOCKS are stocks of companies that are believed to be
undervalued in terms of price or other financial measurements and that are
believed to have above average growth potential.
- --------------------------------------------------------------------------------

The Fund typically sells a stock when the reasons for buying it no longer apply,
or when the company begins to show deteriorating fundamentals or poor relative
performance.

Under adverse market conditions, the Fund could invest some or all of its assets
in cash or money market securities. Although the Fund would do this only in
seeking to avoid losses, the Fund may be unable to pursue its investment
objective during that time, and it could reduce the benefit from any upswing in
the market.

SECURITY GLOBAL FUND -- The Fund pursues its objective by investing, under
normal circumstances, in a diversified portfolio of securities with at least 65%
of its total assets in at least three countries, one of which may be the United
States. The Fund primarily invests in foreign and domestic common stocks or
convertible stocks of growth-oriented companies considered to have appreciation
possibilities. Investments in debt securities may be made when market conditions
are uncertain. The Fund also may invest some assets in options, futures and
foreign currencies, which are primarily used to hedge the Fund's portfolio but
may be used to increase returns.

The Sub-Adviser, OppenheimerFunds, Inc., uses a disciplined theme approach to
choose securities in foreign and U.S. markets. By identifying key worldwide
trends, OppenheimerFunds focuses on areas they believe offer some of the best
opportunities for long-term growth. These trends fall into three categories of
change: (1) technological change; (2) demographic/geopolitical change; and (3)
changing resource needs.

OppenheimerFunds looks for the following securities:

* Stocks of small, medium and large growth-oriented companies worldwide

* Companies that stand to benefit from one or more global trends

* Businesses with strong competitive positions and high demand for their
products or services

To lower the risks of foreign investing, such as currency fluctuations,
OppenheimerFunds generally diversifies broadly across countries and industries.

Under adverse market conditions, the Fund could invest some or all of its assets
in debt obligations consisting of repurchase agreements and money market
instruments of foreign or domestic issuers and the U.S. and foreign governments.
Although the Fund would do this only in seeking to avoid losses, the Fund may be
unable to pursue its investment objective during that time, and it could reduce
the benefit from any upswing in the market.

SECURITY VALUE FUND -- The Fund pursues its objective by investing, under normal
circumstances, at least 65% of its total assets in a diversified portfolio of
stocks which are considered undervalued.

The Investment Manager typically chooses stocks that appear undervalued relative
to assets, earnings, growth potential or cash flows. The value stocks included
in the Fund's portfolio consist of all sizes of companies, but due to the nature
of value companies, typically consist of small- to medium-size companies.

The Fund may sell a stock if it is no longer considered undervalued or when the
company begins to show deteriorating fundamentals.

SECURITY SMALL COMPANY FUND -- The Fund pursues its investment objective by
investing at least 65% of its assets in equity securities of domestic and
foreign companies with total market value of less than $1.2 billion at the time
of purchase. The Fund may also invest in securities of emerging growth companies
(some of which have total market value over $1.2 billion). Emerging growth
companies include companies that are past their start-up phase and that show
positive earnings and prospects of achieving significant profit and gain in a
relatively short period of time.

The Sub-Adviser, Strong Capital Management, Inc., focuses on common stocks of
companies that it believes are reasonably priced and have above-average growth
potential. Strong may decide to sell a stock when the company's growth prospects
become less attractive, but it is not required to do so.

Under adverse market conditions, the Fund could invest some or all of its assets
in cash, fixed-income securities or money market securities. Although the Fund
would do this only in seeking to avoid losses, the Fund may be unable to pursue
its investment objective during that time, and it could reduce the benefit from
any upswing in the market.

SECURITY ENHANCED INDEX FUND -- The Fund pursues its objective by investing,
under normal circumstances in a portfolio of stocks representative of the
holdings in the S&P 500 Index. The stocks are analyzed using a set of
quantitative criteria that is designed to indicate whether a stock will
predictably generate returns that will exceed or be less than the S&P 500 Index.
Based on the quantitative criteria, the Sub-Adviser, Bankers Trust Company,
determines whether the Fund should (1) overweight - invest more in a particular
stock, (2) underweight - invest less in a particular stock or (3) hold a neutral
position in the stock - invest a similar amount in a particular stock, relative
to the proportion of the S&P 500 Index that the stock represents. While the
majority of issues held by the Fund will be similar to those comprising the S&P
500, approximately 100 will be over- or underweighted relative to the index. In
addition, Bankers Trust may determine that certain S&P 500 stocks should not be
held by the Fund in any amount. Under normal conditions, the Fund will invest at
least 80% of its assets in equity securities of companies in the index and
futures contracts representative of the stocks which make up the index. Bankers
Trust believes that its quantitative criteria will result in a portfolio with an
overall risk similar to that of the S&P 500.

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THE S&P 500 INDEX is a well-known stock market index that includes common stocks
of 500 companies. These companies are from several industrial sectors
representing a significant portion of the market value of all common stocks
publicly traded in the U.S., most of which are listed on the New York Stock
Exchange.
- --------------------------------------------------------------------------------

The Fund also may invest a portion of its assets in options and futures, which
are primarily used to hedge the Fund's portfolio but may be used to increase
returns and to maintain exposure to the equity markets.

SECURITY INTERNATIONAL FUND -- The Fund pursues its objective by investing,
under normal circumstances, at least 65% of its assets in equity securities of
foreign issuers. These issuers are primarily established companies based in
developed countries outside of the United States. However, the Fund may also
invest in securities of issuers based in underdeveloped countries. Investments
in underdeveloped countries will be based on what the Sub-Adviser, Bankers Trust
Company, believes to be an acceptable degree of risk in anticipation of superior
returns. The Fund will, under normal circumstances, be invested in the
securities of issuers based in at least 3 countries other than the United
States.

- --------------------------------------------------------------------------------
EQUITY SECURITIES may include common stock, preferred stock, trust or limited
partnership interests, rights and warrants and convertible securities
(consisting of debt securities or preferred stock that may be converted into
common stock or that carry the right to purchase common stock).
- --------------------------------------------------------------------------------

The Fund's investments will generally be diversified among several geographic
regions and countries. Bankers Trust uses the following criteria to determine
the appropriate distribution of investments among various countries and regions:

* The prospects for relative growth among foreign countries

* Expected levels of inflation

* Government policies influencing business conditions

* The outlook for currency relationships

* The range of alternative opportunities available to international investors

In countries and regions with well-developed capital markets where more
information is available, Bankers Trust will identify individual investments for
the Fund. Criteria for selection of individual securities include:

* The issuer's competitive position

* Prospects for growth

* Management strength

* Earnings quality

* Underlying asset value

* Relative market value

* Overall marketability

In other countries and regions where capital markets are underdeveloped or not
easily accessed and information is difficult to obtain, Bankers Trust may choose
to invest only at the market level through use of options or futures based upon
an established index of securities of locally based issuers. Similarly, country
exposure may also be achieved through investments in other registered investment
companies.

The Fund typically sells an investment when the reasons for buying it no longer
apply, or when the issuer begins to show deteriorating fundamentals or poor
relative performance.

SECURITY SELECT 25 FUND -- The Fund pursues its objective by concentrating its
investments in a core position of 20-30 common stocks of growth companies which
have exhibited consistent above average earnings growth. The Investment Manager
selects what it believes to be premier growth companies as the core position for
the Fund. The Investment Manager uses a "bottom-up" approach in selecting growth
stocks. Portfolio holdings will be replaced when one or more of a company's
fundamentals have changed and, in the opinion of the Investment Manager, it is
no longer a premier growth company.

- --------------------------------------------------------------------------------
BOTTOM-UP APPROACH means that the Investment Manager primarily analyzes the
fundamentals of individual companies rather than focusing on broader market or
sector themes. Some of the factors which the Investment Manager looks at when
analyzing individual companies include relative earnings growth, profitability
trends, the company's financial strength, valuation analysis and strength of
management.
- --------------------------------------------------------------------------------

SECURITY ULTRA FUND -- The Fund pursues its objective by investing, under normal
circumstances, in a diversified portfolio of stocks that the Investment Manager
believes are attractively valued with the greatest potential for appreciation.

The Investment Manager uses a value-oriented strategy and "bottom-up" approach
to choose stocks. The Investment Manager identifies stock of companies that are
in the early to middle stages of growth and are valued at a reasonable price.
Stocks considered to have appreciation potential may include securities of
smaller and less mature companies which have unique proprietary products or
profitable market niches and the potential to grow very rapidly.

The Fund also may invest a portion of its assets in futures, which are primarily
used to hedge the Fund's portfolio but may be used to increase returns and to
maintain exposure to the equity markets.

The Fund typically sells a stock if its growth prospects diminish, or if better
opportunities become available.

MAIN RISKS

- --------------------------------------------------------------------------------
An investment in the Funds is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. The value of an investment in the Funds will go up and down, which means
investors could lose money.
- --------------------------------------------------------------------------------

MARKET RISK -- While stocks have historically been a leading choice of long-term
investors, they do fluctuate in price. Their prices tend to fluctuate more
dramatically over the shorter term than do the prices of other asset classes.
These movements may result from factors affecting individual companies, or from
broader influences like changes in interest rates, market conditions, investor
confidence or announcements of economic, political or financial information.

SMALLER COMPANIES -- While potentially offering greater opportunities for
capital growth than larger, more established companies, the stocks of smaller
companies may be particularly volatile, especially during periods of economic
uncertainty. Securities of smaller companies may present additional risks
because their earnings are less predictable, their share prices tend to be more
volatile and their securities often are less liquid than larger, more
established companies, among other reasons. By virtue of their investment
strategies, Value Fund, Small Company Fund and Ultra Fund may be particularly
susceptible to the risks posed by investing in smaller companies.

VALUE STOCKS -- Investments in value stocks are subject to the risk that their
intrinsic values may never be realized by the market, or that their prices may
go down. While the Funds' investments in value stocks may limit downside risk
over time, a Fund may, as a trade-off, produce more modest gains than riskier
stock funds. Growth and Income Fund, Equity Fund, Value Fund and Ultra Fund in
particular offer the potential rewards, and risks, of a value-oriented
investment strategy.

GROWTH STOCKS -- While potentially offering greater or more rapid capital
appreciation potential than value stocks, investments in growth stocks may lack
the dividend yield that can cushion stock prices in market downturns. Growth
companies often are expected to increase their earnings at a certain rate. If
expectations are not met, investors can punish the stocks, even if earnings do
increase. Equity Fund, Global Fund, Small Company Fund, Enhanced Index Fund,
International Fund and Select 25 Fund feature an investment strategy that
emphasizes investment in growth stocks.

FOREIGN SECURITIES -- Global Fund, International Fund and, to a lesser extent,
the other Funds may invest in foreign securities and/or American Depositary
Receipts (ADRs). Investing in foreign securities involves additional risks such
as currency fluctuations, differences in financial reporting standards, a lack
of adequate company information and political instability. These risks may be
particularly acute in underdeveloped capital markets.

RISKS OF CONVERSION TO EURO. On January 1, 1999, eleven countries in the
European Monetary Union adopted the euro as their official currency. However,
their current currencies (for example, the franc, the mark, and the lira) will
also continue in use until January 1, 2002. After that date, it is expected that
only the euro will be used in those countries. A common currency is expected to
provide some benefits in those markets, by consolidating the government debt
market for those countries and reducing some currency risks and costs. But the
conversion to the new currency will affect the Funds operationally and also has
potential risks, some of which are listed below. Among other things, the
conversion will affect:

* issuers in which the Funds invest, because of changes in the competitive
environment from a consolidated currency market and greater operational costs
from converting to the new currency. This might depress stock values.

* vendors the Funds depend on to carry out their business, such as the
custodian bank (which holds the foreign securities the Funds buy), the
Investment Manager (which prices the Funds' investments to deal with the
conversion to the euro) and brokers, foreign markets and securities
depositories. If the vendors are not prepared, there could be delays in
settlements and additional costs to the Funds.

* exchange contracts and derivatives that are outstanding during the transition
to the euro. The lack of currency rate calculations between the affected
currencies and the need to update the Funds' contracts could pose extra costs
to the Funds.

The Investment Manager is upgrading its computer and bookkeeping systems to deal
with the conversion. The Funds' custodian bank has advised the Investment
Manager of its plans to deal with the conversion, including how it will update
its record keeping systems and handle the redenomination of outstanding foreign
debt. The possible effect of these factors on the Funds' investments cannot be
determined with certainty at this time, but they may reduce the value of some of
the Funds' holdings and increase its operational costs.

EMERGING MARKETS -- Global Fund and International Fund may invest in securities
of developing countries or emerging markets. All of the risks of investing in
foreign securities are heightened by investing in developing countries and
emerging markets. The markets of developing countries historically have been
more volatile than the markets of developed countries with mature economies.
These markets often have provided higher rates of return, and greater risks, to
investors.

OPTIONS AND FUTURES -- Global Fund, Enhanced Index Fund and International Fund
may invest some of their assets in options and futures. Ultra Fund also may
invest some of its assets in futures. These practices are used primarily to
hedge a Fund's portfolio or to increase returns. However, there is the risk that
such practices sometimes may reduce returns or increase volatility. These
practices also entail transactional expenses.

FIXED-INCOME SECURITIES -- Growth and Income Fund may invest a significant
portion of its assets in fixed-income securities. Fixed-income investing may
present risks because the market value of fixed-income investments generally are
affected by changes in interest rates. When interest rates rise, the market
value of a fixed-income security declines. Generally, the longer a bond's
maturity, the greater the risk. A bond's value can also be affected by changes
in the credit rating or financial condition of its issuer. Investments in higher
yielding, high risk debt securities may present additional risk because these
securities may be less liquid than investment grade bonds. They also tend to be
more susceptible to high interest rates and to real or perceived adverse
economic and competitive industry conditions. Because bond values fluctuate, an
investor may receive more or less money than originally invested.

DIVERSIFICATION -- Select 25 Fund may invest in the securities of a limited
number of issuers. The use of a focused investment strategy may increase the
volatility of the Fund's investment performance, as the Fund may be more
susceptible to risks associated with a single economic, political or regulatory
event than a more diversified portfolio. If the securities in which the Fund
invests perform poorly, the Fund could incur greater losses than it would have
had it been invested in a greater number of securities.

INVESTMENT IN INVESTMENT COMPANIES -- Because International Fund may invest in
other investment companies in order to gain exposure to a foreign securities
market, it will incur its pro rata share of the underlying investment companies'
expenses to the extent it pursues its investment objective in this manner. In
addition, the Fund will be subject to the effects of business and regulatory
developments that affect an underlying investment company or the investment
company industry generally. The Small Company Fund also may invest in other
investment companies.

ACTIVE TRADING -- The Growth and Income, Global, Small Company and Ultra Funds
may engage in active trading, which will increase the costs the Funds incur. It
may also increase the amount of capital gains tax an investor pays on the Funds'
returns.

PAST PERFORMANCE

The charts and tables below give an indication of certain of the Funds' risks
and performance by showing changes in the Funds' Class A share performance from
year to year. The Enhanced Index, International, and Select 25 Funds and all of
the Funds' Class C shares are new and do not have performance records. The
tables also show how the Funds' average annual total returns for the periods
indicated compare to those of broad measures of market performance. In addition,
some Funds may make a comparison to a narrower index that more closely mirrors
that Fund. As with all mutual funds, past performance is not a prediction of
future results.

The bar charts below do not reflect the sales charges applicable to Class A
shares which, if reflected, would lower the returns shown. Average annual total
returns for each Fund's Class A shares include deduction of the 5.75% front-end
sales charge and for Class B shares include the appropriate deferred sales
charge, which is 5% in the first year declining to 0% in the sixth and later
years. The average annual total returns also assume that Class B shareholders
redeem all their shares at the end of the period indicated.

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SECURITY GROWTH AND INCOME FUND - CLASS A
- --------------------------------------------------------------------------------

[BAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]

1989 20.5%
1990 -3.0%
1991 21.8%
1992 4.8%
1993 8.2%
1994 -7.9%
1995 27.8%
1996 12.0%
1997 31.7%
1998 -0.3%

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HIGHEST AND LOWEST RETURNS
(QUARTERLY 1989-1998)
- ---------------------------------------------------------------
QUARTER ENDED

Highest 15.50% September 30, 1997
Lowest -12.32% September 30, 1998
- ---------------------------------------------------------------

- ---------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
(THROUGH DECEMBER 31, 1998)
- ---------------------------------------------------------------
PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
Class A -6.06% 11.67% 10.86%
Class B -6.32% 11.59% 10.98%*
S&P 500 28.58% 24.06% 19.19%*
- ---------------------------------------------------------------
*For the period beginning October 19, 1993 (date of inception)
to December 31, 1998. Index performance information is only
available to the Fund at the beginning of each month. The
performance of the index for the period October 1, 1993 to
December 31, 1998 was 23.33%.
- ---------------------------------------------------------------

- --------------------------------------------------------------------------------
SECURITY EQUITY FUND - CLASS A
- --------------------------------------------------------------------------------

[BAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]

1989 30.7%
1990 -4.6%
1991 35.2%
1992 10.7%
1993 14.6%
1994 -2.5%
1995 38.4%
1996 22.7%
1997 29.6%
1998 26.5%

- ---------------------------------------------------------------
HIGHEST AND LOWEST RETURNS
(QUARTERLY 1989-1998)
- ---------------------------------------------------------------
QUARTER ENDED

Highest 25.04% September 30, 1989
Lowest -15.29% September 30, 1990
- ---------------------------------------------------------------

- ---------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
(THROUGH DECEMBER 31, 1998)
- ---------------------------------------------------------------
PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
Class A 19.15% 20.65% 18.53%
Class B 20.06% 20.69% 20.52%*
S&P 500 28.58% 24.06% 19.19%*
- ---------------------------------------------------------------
*For the period beginning October 19, 1993 (date of inception)
to December 31, 1998. Index performance information is only
available to the Fund at the beginning of each month. The
performance of the index for the period October 1, 1993 to
December 31, 1998 was 23.33%.
- ---------------------------------------------------------------

- --------------------------------------------------------------------------------
SECURITY GLOBAL FUND - CLASS A
- --------------------------------------------------------------------------------

[BAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]

1994 1.3%
1995 10.4%
1996 17.1%
1997 6.9%
1998 19.2%

- ---------------------------------------------------------------
HIGHEST AND LOWEST RETURNS
(QUARTERLY 1994-1998)
- ---------------------------------------------------------------
QUARTER ENDED

Highest 19.31% December 31, 1998
Lowest -11.44% September 30, 1998
- ---------------------------------------------------------------

- ---------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
(THROUGH DECEMBER 31, 1998)
- ---------------------------------------------------------------
LIFE OF FUND
PAST 1 YEAR PAST 5 YEARS (SINCE 10/1/93)
Class A 12.31% 9.46% 9.66%
Class B 12.91% 9.38% 9.92%*
MSCI 24.80% 16.19% 15.74%*
- ---------------------------------------------------------------
*For the period beginning October 19, 1993 (date of inception)
to December 31, 1998. Performance information for the index is
only available to the Fund at the beginning of each month.
MSCI performance is for the period October 1, 1993 to December
31, 1998.
- ---------------------------------------------------------------

- --------------------------------------------------------------------------------
SECURITY VALUE FUND - CLASS A
- --------------------------------------------------------------------------------

[BAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]

1998 16.1%

- ---------------------------------------------------------------
HIGHEST AND LOWEST RETURNS
(QUARTERLY 1998)
- ---------------------------------------------------------------
QUARTER ENDED

Highest 21.34% December 31, 1998
Lowest -16.06% September 30, 1998
- ---------------------------------------------------------------

Class A 9.46% 23.20%
Class B 9.82% 24.32%
S&P 500 28.58% 31.43%
BARRA Value Index 14.67% 22.98%
- ---------------------------------------------------------------

- --------------------------------------------------------------------------------
SECURITY SMALL COMPANY FUND - CLASS A
- --------------------------------------------------------------------------------

[BAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]

1998 10.4%

- ---------------------------------------------------------------
HIGHEST AND LOWEST RETURNS
(QUARTERLY 1998)
- ---------------------------------------------------------------
QUARTER ENDED

Highest 21.95% December 31, 1998
Lowest -17.30% September 30, 1998
- ---------------------------------------------------------------

Class A 4.02% 0.05%
Class B 4.16% -0.08%
Russell 2000 Index -2.55% -4.68%
- ---------------------------------------------------------------

- --------------------------------------------------------------------------------
SECURITY ULTRA FUND - CLASS A
- --------------------------------------------------------------------------------

[BAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]

1989 11.9%
1990 -27.4%
1991 59.7%
1992 7.7%
1993 9.9%
1994 -6.6%
1995 19.3%
1996 18.0%
1997 17.8%
1998 16.7%

- ---------------------------------------------------------------
HIGHEST AND LOWEST RETURNS
(QUARTERLY 1989-1998)
- ---------------------------------------------------------------
QUARTER ENDED

Highest 36.65% March 31, 1991
Lowest -41.16% September 30, 1990

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

- ---------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
(THROUGH DECEMBER 31, 1998)
- ---------------------------------------------------------------
PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
Class A 10.01% 11.24% 10.10%
Class B 10.61% 11.38% 11.28%*
S&P Midcap 400 19.12% 18.85% 19.29%*
- ---------------------------------------------------------------
*For the period beginning October 19, 1993 (date of inception)
to December 31, 1998. Index performance information is only
available to the Fund at the beginning of each month. The
performance of the index for the period October 1, 1993 to
December 31, 1998 was 18.47%.
- ---------------------------------------------------------------

<PAGE>
FEES AND EXPENSES OF THE FUNDS

THIS TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY AND HOLD
SHARES OF THE FUNDS.

- --------------------------------------------------------------------------------
SHAREHOLDER FEES (ALL FUNDS) (fees paid directly from your investment)
- --------------------------------------------------------------------------------
CLASS A CLASS B CLASS C
SHARES SHARES(1) SHARES

Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) 5.75% None None

Maximum Deferred Sales Charge (as a
percentage of original purchase price or
redemption proceeds, whichever is lower) None(2) 5%(3) 1%(4)

- --------------------------------------------------------------------------------
1 Class B shares convert tax-free to Class A shares automatically after eight
years.
2 Purchases of Class A shares in amounts of $1,000,000 or more are not subject
to an initial sales load; however, a deferred sales charge of 1% is imposed
in the event of redemption within one year of purchase.
3 5% during the first year, decreasing to 0% in the sixth and following years.
4 A deferred sales charge of 1% is imposed in the event of redemption within
one year of purchase.
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund assets)
- --------------------------------------------------------------------------------
Class A
--------------------------------------------------------
Total
Annual Fund
Management Distribution Other Operating
Fees (12b-1) Fees(5) Expenses(6) Expenses

Growth and Income Fund 1.21% None 0.00% 1.21%
Equity Fund 1.02% None 0.00% 1.02%
Global Fund 2.00% None 0.00% 2.00%
Value Fund 1.00% None 0.51% 1.51%
Small Company Fund 1.00% 0.25% 1.40% 2.65%
Enhanced Index Fund 0.75% 0.25% 0.52% 1.52%
International Fund 1.10% 0.25% 0.57% 1.92%
Select 25 Fund 0.75% 0.25% 0.79% 1.79%
Ultra Fund 1.23% None 0.00% 1.23%
- --------------------------------------------------------------------------------
5 Long-term holders of shares that are subject to a 12b-1 distribution fee may
pay more than the equivalent of the maximum front-end sales charge otherwise
permitted by National Association of Securities Dealers, Inc. Rules.
6 The amount of "Other Expenses" of Enhanced Index Fund, International Fund and
Select 25 Fund is based on estimated amounts for the period ending September
30, 1999.
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund assets)
- --------------------------------------------------------------------------------
Class B
---------------------------------------------------------
Total
Annual Fund
Management Distribution Other Operating
Fees (12b-1) Fees(5) Expenses(6) Expenses

Growth and Income Fund 1.21% 1.00% 0.00% 2.21%
Equity Fund 1.02% 1.00% 0.00% 2.02%
Global Fund 2.00% 1.00% 0.00% 3.00%
Value Fund 1.00% 1.00% 0.59% 2.59%
Small Company Fund 1.00% 1.00% 1.38% 3.38%
Enhanced Index Fund 0.75% 1.00% 0.52% 2.27%
International Fund 1.10% 1.00% 0.57% 2.67%
Select 25 Fund 0.75% 1.00% 0.79% 2.54%
Ultra Fund 1.23% 1.00% 0.00% 2.23%
- --------------------------------------------------------------------------------
5 Long-term holders of shares that are subject to a 12b-1 distribution fee may
pay more than the equivalent of the maximum front-end sales charge otherwise
permitted by National Association of Securities Dealers, Inc. Rules.
6 The amount of "Other Expenses" of Enhanced Index Fund, International Fund and
Select 25 Fund is based on estimated amounts for the period ending September
30, 1999.
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund Assets)
- --------------------------------------------------------------------------------
Class C
---------------------------------------------------------
Total
Annual Fund
Management Distribution Other Operating
Fees (12b-1) Fees(5) Expenses(6) Expenses

6 The amount of "Other Expenses" of Enhanced Index Fund, International Fund and
Select 25 Fund is based on estimated amounts for the period ending September
30, 1999.
- --------------------------------------------------------------------------------

EXAMPLE

This example is intended to help you compare the cost of investing in the Funds
with the cost of investing in other mutual funds.

Each Example assumes that you invest $10,000 in a Fund for the time periods
indicated. Each Example also assumes that your investment has a 5% return each
year and that the Funds' operating expenses remain the same. Although your
actual costs may be higher or lower, based on these assumptions your costs would
be:

You would pay the following expenses if you redeemed your shares at the end of
each period.

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------------------------- ------------------------- ------------------------- -------------------------
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Growth and Income Fund $691 $724 $324 $ 937 $ 991 $ 691 $1,202 $1,385 $1,185 $1,957 $2,544 $2,544
Equity Fund 673 705 305 881 934 634 1,106 1,288 1,088 1,751 2,348 2,348
Global Fund 766 803 403 1,166 1,227 927 1,591 1,777 1,577 2,768 3,318 3,318
Value Fund 720 762 362 1,025 1,105 805 1,351 1,575 1,375 2,273 2,925 2,925
Small Company Fund 828 841 441 1,351 1,339 1,039 1,899 1,960 1,760 3,387 3,667 3,667
Enhanced Index Fund 721 730 330 1,028 1,009 709 --- --- --- --- --- ---
International Fund 759 770 370 1,143 1,129 829 --- --- --- --- --- ---
Select 25 Fund 746 757 357 1,106 1,091 791 --- --- --- --- --- ---
Ultra Fund 693 730 330 943 997 697 1,212 1,395 1,195 1,978 2,565 2,565
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

You would pay the following expenses if you did not redeem your shares.

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------------------------- ------------------------- ------------------------- -------------------------
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Growth and Income Fund $691 $224 $224 $ 937 $ 691 $ 691 $1,202 $1,185 $1,185 $1,957 $2,544 $2,544
Equity Fund 673 205 205 881 634 634 1,106 1,088 1,088 1,751 2,348 2,348
Global Fund 766 303 303 1,166 927 927 1,591 1,577 1,577 2,768 3,318 3,318
Value Fund 720 262 262 1,025 805 805 1,351 1,375 1,375 2,273 2,925 2,925
Small Company Fund 828 341 341 1,351 1,039 1,039 1,899 1,760 1,760 3,387 3,667 3,667
Enhanced Index Fund 721 230 230 1,028 709 709 --- --- --- --- --- ---
International Fund 759 270 270 1,143 829 829 --- --- --- --- --- ---
Select 25 Fund 746 257 257 1,106 791 791 --- --- --- --- --- ---
Ultra Fund 693 226 226 943 697 697 1,212 1,195 1,195 1,978 2,565 2,565
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

INVESTMENT MANAGER

Security Management Company, LLC (the "Investment Manager"), 700 SW Harrison
Street, Topeka, Kansas 66636, is the Funds' investment manager. On September 30,
1998, the aggregate assets of all of the mutual funds under the investment
management of the Investment Manager were approximately $4.7 billion.

The Investment Manager has engaged OppenheimerFunds, Inc., Two World Trade
Center, New York, New York 10048, to provide investment advisory services to
Global Fund. OppenheimerFunds and its subsidiaries currently manage investment
companies, including Oppenheimer funds, with assets of more than $95 billion as
of December 31, 1998, and with more than 4 million shareholder accounts.
OppenheimerFunds became the Global Fund's Sub-Adviser on November 1, 1998,
replacing Lexington Management Corporation which served as Sub-Adviser of the
Fund from its inception in October 1993 to November 1, 1998.

The Investment Manager has engaged Strong Capital Management, Inc., 900 Heritage
Reserve, Menomonee Falls, Wisconsin 53051, to provide investment advisory
services to the Small Company Fund. Strong was established in 1974 and as of
September 30, 1998, manages over $30 billion in assets.

The Investment Manager has also engaged Bankers Trust Company, One Bankers Trust
Plaza, New York, New York 10006, to provide investment advisory services to the
Enhanced Index Fund and International Fund. Bankers Trust was founded in 1903
and manages over $300 billion in assets.

Bankers Trust Company is a wholly owned subsidiary of Bankers Trust Corporation.
On November 30, 1998, Bankers Trust Corporation entered into an Agreement and
Plan of Merger with Deutsche Bank AG under which Bankers Trust Corporation and
all of its subsidiaries would merge with and into a subsidiary of Deutsche Bank
AG. Deutsche Bank AG is a major global banking institution that is engaged in a
wide range of financial services, including retail and commercial banking,
investment banking and insurance. The transaction is contingent upon various
regulatory approvals. If the transaction is completed, Deutsche Bank AG, will
control the operations of Bankers Trust Company as the new parent company.
Bankers Trust Company believes that, under this new arrangement, its
sub-advisory services to the Investment Manager will be maintained at their
current level.

The merger may be deemed to result in a change of control of Bankers Trust
Company, which would have the effect of terminating the current sub-advisory
agreement between the Investment Manager and Bankers Trust Company. However, the
Investment Manager and Bankers Trust Company have negotiated a new sub-advisory
agreement for the Enhanced Index Fund and International Fund to take effect
after the closing of the merger transaction. The new sub-advisory agreement has
been approved by the initial shareholder of the Enhanced Index Fund and
International Fund. In addition, it is anticipated that the Board of Directors
of Security Equity Fund will also approve the new sub-advisory agreement prior
to the closing of the merger transaction. The new sub-advisory agreement is
substantially identical in its terms as the current sub-advisory agreement,
except for the commencement date. In the event that the merger is not completed,
Bankers Trust Company will continue to serve as sub-adviser under the terms of
the current sub-advisory agreement.

The Funds intend to apply to the Securities and Exchange Commission ("SEC") for
an exemptive order from the Investment Company Act of 1940 that will permit the
Funds and the Investment Manager to enter into and materially amend sub-advisory
agreements with new or existing sub-advisers without the agreements or
amendments being approved by shareholders. However, this order would not apply
to sub-advisory agreements with an affiliate of the Investment Manager. If this
order is obtained, the Funds or the Investment Manager could terminate a
sub-advisory agreement with an existing sub-adviser and engage a new
sub-adviser, or materially amend a sub-advisory agreement, without shareholder
approval of the new sub-advisory agreement or the amendment.

In order for the Funds to enter into and amend sub-advisory agreements without
shareholder approval, the Funds and the Investment Manager must not only receive
an order from the SEC, but the shareholders of the Funds must also initially
approve this method of operation. However, shareholder approval of this method
of operation may not be necessary for the International Fund, Enhanced Index
Fund and Select 25 Fund as the sole initial shareholder of those Funds have
approved this method of operation. Therefore, the International Fund, Enhanced
Index Fund and Select 25 Fund could be operated under the method of operation
described above upon effectiveness of the exemptive order.

There can be no assurance that the exemptive order will be issued by the SEC. It
is anticipated that if the exemptive order is granted, notice to shareholders
would be required of new sub-advisory agreements or material amendments to
sub-advisory agreements. Any material change to the investment advisory
agreement between the Funds and the Investment Manager would not be subject to
the exemptive order, and therefore, would still require shareholder approval.

MANAGEMENT FEES -- The following chart shows the investment management fees paid
by each Fund during the last fiscal year, except as otherwise indicated.

-------------------------------------------------------
MANAGEMENT FEES
(expressed as a percentage of average net assets)
-------------------------------------------------------
Growth and Income Fund....................... 1.21%
Equity Fund.................................. 1.02%
Global Fund.................................. 2.00%
Value Fund................................... 1.00%
Small Company Fund........................... 1.00%
Enhanced Index Fund*......................... 0.75%
International Fund*.......................... 1.10%
Select 25 Fund*.............................. 0.75%
Ultra Fund................................... 1.23%
-------------------------------------------------------
*These Funds were not available until January 31, 1999.
-------------------------------------------------------

The Investment Manager may waive some or all of its management fee to limit the
total operating expenses of a Fund to a specified level. The Investment Manager
also may reimburse expenses of the Fund from time to time to help it maintain
competitive expense ratios. These arrangements are voluntary and may be
terminated at any time. The fees without waivers or reimbursements are shown in
the fee table on page 11.

PORTFOLIO MANAGERS -- SIDNEY F. HOOTS, Managing Director of Bankers Trust, has
been the manager of Enhanced Index Fund since its inception in January 1999. He
is the Senior Portfolio Manager for the Structured Equity Group at Bankers
Trust. He has responsibility for a variety of funds ranging from an enhanced
index fund using quantitative stock selection to an equity-based relative value
hedge fund which combines traditional hedge fund trading with quantitative
techniques. In addition, he is responsible for a tax-advantaged equity product.
Mr. Hoots also directs the quantitative equity research effort for Bankers
Trust. Mr. Hoots joined Bankers Trust in 1983 and has 15 years of investment
experience. He has a B.S. degree from Duke University and an M.B.A. from the
University of Chicago. He is also a Member of the American Finance Association.

MICHAEL LEVY, Managing Director of Bankers Trust, has been co-lead manager of
International Fund since its inception in January 1999. He has been a portfolio
manager of other investment products with similar investment objectives since
joining Bankers Trust in 1993. Mr. Levy is Bankers Trust's International Equity
Strategist and is head of the international equity team. He has served in each
of these capacities since 1993. The international equity team is responsible for
the day-to-day management of the Fund as well as other international equity
portfolios managed by Bankers Trust. Mr. Levy's experience prior to joining
Bankers Trust includes senior equity analyst with Oppenheimer & Company, as well
as positions in investment banking, technology and manufacturing enterprises. He
has 27 years of business experience, of which seventeen years have been in the
investment industry.

TERRY A. MILBERGER, Senior Portfolio Manager of the Investment Manager, has been
the manager of Equity Fund since 1981. He has been the manager of Select 25 Fund
since its inception in January 1999. 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 an M.B.A. from the University of Kansas and is a Chartered Financial
Analyst.

RONALD C. OGNAR, Portfolio Manager of Strong, has been the manager of 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. For approximately 3 years 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
been the manager of 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.

ROBERT REINER, Managing Director at Bankers Trust, has been co-lead manager of
International Fund since its inception in January 1999. He has been a portfolio
manager of other investment products with similar investment objectives since
joining Bankers Trust in 1994. At Bankers Trust, he has been involved in
developing analytical and investment tools for the group's international equity
team. His primary focus has been on Japanese and European markets. Prior to
joining Bankers Trust, he was an equity analyst and also provided macroeconomic
coverage for Scudder, Stevens & Clark from 1993 to 1994. He previously served as
Senior Analyst at Sanford C. Bernstein & Co. from 1991 to 1992, and was
instrumental in the development of Bernstein's International Value Fund. Mr.
Reiner spent more than nine years at Standard & Poor's Corporation, where he was
a member of its international ratings group. His tenure included managing the
day-to-day operations of the Standard & Poor's Corporation Tokyo office for
three years.

JAMES P. SCHIER, Portfolio Manager of the Investment Manager, has been the
manager of Value Fund since its inception in 1997 and has managed 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 a 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 1993 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.

JULIE WANG, Principal at Bankers Trust, has been co-manager of International
Fund since its inception in January 1999. She has been a manager of other
investment products with similar investment objectives since joining Bankers
Trust in 1994. Ms. Wang has primary focus on the Asia-Pacific region and the
Fund's emerging market exposure. Prior to joining Bankers Trust, Ms. Wang was an
investment manager at American International Group, where she assisted in the
management of $7 billion of assets in Southeast Asia, including private and
listed equities, bonds, loans and structured products. Ms. Wang received her
B.A. (economics) from Yale University and her M.B.A. from the Wharton School.

WILLIAM L. WILBY, Senior Vice President and Director of International Equities
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.

YEAR 2000 COMPLIANCE -- Like other mutual funds, as well as other financial and
business organizations around the world, the Funds could be adversely affected
if the computer systems used by the Investment Manager, and other service
providers, in performing their management and administrative functions do not
properly process and calculate date-related information and data before, during
and after January 1, 2000. Some computer software and hardware systems currently
cannot distinguish between the year 2000 and the year 1900 or some other date
because of the way date fields were encoded. This is commonly known as the "Year
2000 Problem." If not addressed, the Year 2000 Problem could impact the
management services provided to the Funds by the Investment Manager and
Sub-Advisers, as well as transfer agency, accounting, custody, distribution and
other services provided to the Funds and their shareholders.

The Investment Manager has adopted a plan to be "Year 2000 Compliant" with
respect to both its internally built systems as well as systems provided by
external vendors. The Investment Manager considers a system "Year 2000
Compliant" when it is able to correctly process, provide and/or receive data
before, during and after the Year 2000. The Investment Manager's overall
approach to addressing the Year 2000 Problem is as follows: (1) to inventory its
internal and external hardware, software, telecommunications and data
transmissions to customers and conduct a risk assessment with respect to the
impact that a failure of any such system would have on its business operations;
(2) to modify or replace its internal systems and obtain vendor certifications
of Year 2000 compliance for systems provided by vendors or replace such systems
that are not Year 2000 Compliant; and (3) to implement and test its systems for
Year 2000 compliance. The Investment Manager has completed the inventory of its
internal and external systems and has made substantial progress toward
completing the modification/replacement of its internal systems, as well as
towards obtaining Year 2000 Compliant certifications from its external vendors.
Overall systems testing is scheduled to commence in December 1998 and is
scheduled to extend into the first six months of 1999.

Although the Investment Manager has taken steps to ensure that its systems will
function properly before, during and after the Year 2000, its key operating
systems and information sources are provided by or through external vendors
which creates uncertainty to the extent the Investment Manager is relying on the
assurance of such vendors as to whether their systems will be Year 2000
Compliant. The costs or consequences of incomplete or untimely resolution of the
Year 2000 issue are unknown to the Investment Manager at this time but could
have a material adverse impact on the operations of the Funds and the Investment
Manager.

The Year 2000 Problem is also expected to impact operating companies, which may
include issuers of portfolio securities held by the Funds, to varying degrees
based upon various factors, including, but not limited to, the company's
industry sector and degree of technological sophistication. The Funds and the
Investment Manager are unable to predict what impact, if any, the Year 2000
Problem will have on issuers of the portfolio securities held by the Funds and,
indirectly, on the value of the Funds' shares.

BUYING SHARES

Shares of the Funds are available through broker/dealers, banks, and other
financial intermediaries that have an agreement with the Funds' Distributor,
Security Distributors, Inc.

There are three different ways to buy shares of the Funds--Class A shares, Class
B shares or Class C shares. The different classes of a Fund differ primarily
with respect to the sales charges and Rule 12b-1 distribution fees to which they
are subject. The minimum initial investment is $100. Subsequent investments must
be $100 (or $20 under an Accumulation Plan). The Funds reserve the right to
reject any order to purchase shares.

CLASS A SHARES -- Class A shares are subject to a sales charge at the time of
purchase. An order for Class A shares will be priced at a Fund's net asset value
per share (NAV), plus the sales charge set forth below. The NAV, plus the sales
charge, is the "offering price." A Fund's NAV is generally calculated as of the
close of trading on every day the New York Stock Exchange is open. An order for
Class A shares is priced at the NAV next calculated after the order is accepted
by the Fund, plus the sales charge.

- --------------------------------------------------------------------------------
SALES CHARGE
------------------------------------
AS A PERCENTAGE
AS A PERCENTAGE OF NET AMOUNT
AMOUNT OF ORDER OF OFFERING PRICE INVESTED

Less than $50,000 ........................ 5.75% 6.10%
$50,000 to $99,999 ....................... 4.75% 4.99%
$100,000 to $249,999 ..................... 3.75% 3.90%
$250,000 to $499,999 ..................... 2.75% 2.83%
$500,000 to $999,999 ..................... 2.00% 2.04%
$1,000,000 or more* ...................... None None
- --------------------------------------------------------------------------------
*Purchases of $1,000,000 or more are not subject to a sales charge at the time
of purchase, but are subject to a deferred sales charge of 1.00% if redeemed
within one year following purchase. The deferred sales charge is a percentage
of the lesser of the NAV of the shares redeemed or the net cost of such shares.
Shares that are not subject to a deferred sales charge are redeemed first.
- --------------------------------------------------------------------------------

Please see Appendix A for options that are available for reducing the sales
charge applicable to purchases of Class A shares.

CLASS A DISTRIBUTION PLAN -- The Small Company, International, Enhanced Index
and Select 25 Funds have adopted Class A Distribution Plans that allow each of
these Funds to pay distribution fees to the Funds' Distributor. The Distributor
uses the fees to pay for activities related to the sale of Class A shares and
services provided to shareholders. The distribution fee is equal to 0.25% of the
average daily net assets of the Fund's Class A shares. Because the distribution
fees are paid out of the Fund's assets on an ongoing basis, over time these fees
will increase the cost of a shareholder's investment and may cost an investor
more than paying other types of sales charges.

CLASS B SHARES -- Class B shares are not subject to a sales charge at the time
of purchase. An order for Class B shares will be priced at the Fund's NAV next
calculated after the order is accepted by the Fund. A Fund's NAV is generally
calculated as of the close of trading on every day the New York Stock Exchange
is open.

Class B shares are subject to a deferred sales charge if redeemed within 5 years
from the date of purchase. The deferred sales charge is a percentage of the NAV
of the shares at the time they are redeemed or the original purchase price,
whichever is less. Shares that are not subject to the deferred sales charge are
redeemed first. Then, shares held the longest will be the first to be redeemed.

The amount of the deferred sales charge is based upon the number of years since
the shares were purchased, as follows:

--------------------------------
NUMBER OF YEARS DEFERRED
SINCE PURCHASE SALES CHARGE
--------------------------------
1 5%
2 4%
3 3%
4 3%
5 2%
6 and more 0%
--------------------------------

The Distributor will waive the deferred sales charge under certain
circumstances. See "Waiver of the Deferred Sales Charge" below.

CLASS B DISTRIBUTION PLAN -- The Funds have adopted Class B Distribution Plans
that allow each of the Funds to pay distribution fees to the Distributor. The
Distributor uses the fees to finance activities related to the sale of Class B
shares and services to shareholders. The distribution fee is equal to 1.00% of
the average daily net assets of the Fund's Class B shares. Because the
distribution fees are paid out of the Fund's assets on an ongoing basis, over
time these fees will increase the cost of a shareholder's investment and may
cost an investor more than paying other types of sales charges.

Class B shares automatically convert to Class A shares on the eighth anniversary
of purchase. This is advantageous to such shareholders because Class A shares
are subject to a lower distribution fee than Class B shares (or in some cases,
no distribution fee). A pro rata amount of Class B shares purchased through the
reinvestment of dividends or other distributions is also converted to Class A
shares each time that shares purchased directly are converted.

CLASS C SHARES -- Class C shares are not subject to a sales charge at the time
of purchase. An order for Class C shares will be priced at a Fund's NAV next
calculated after the order is accepted by the Fund. A Fund's NAV is generally
calculated as of the close of trading on every day the New York Stock Exchange
is open.

Class C shares are subject to a deferred sales charge of 1.00% if redeemed
within one year from the date of purchase. The deferred sales charge is a
percentage of the NAV of the shares at the time they are redeemed or the
original purchase price, whichever is less. Shares that are not subject to the
deferred sales charge are redeemed first. Then, shares held the longest will be
the first to be redeemed. The Distributor will waive the deferred sales charge
under certain circumstances. See "Waiver of the Deferred Sales Charge" below.

CLASS C DISTRIBUTION PLAN -- The Funds have adopted Class C Distribution Plans
that allow each of the Funds to pay distribution fees to the Distributor. The
Distributor uses the fees to finance activities related to the sale of Class C
shares and services to shareholders. The distribution fee is equal to 1.00% of
the average daily net assets of the Fund's Class C shares. Because the
distribution fees are paid out of the Fund's assets on an ongoing basis, over
time these fees will increase the cost of a shareholder's investment and may
cost an investor more than paying other types of sales charges.

WAIVER OF DEFERRED SALES CHARGE -- The Distributor will waive the deferred sales
charge under the following circumstances:

* Upon the death of the shareholder if shares are redeemed within one year of
the shareholder's death

* Upon the disability of the shareholder prior to age 65 if shares are redeemed
within one year of the shareholder becoming disabled and the shareholder was
not disabled when the shares were purchased

* In connection with required minimum distributions from a retirement plan
qualified under Section 401(a), 401(k), 403(b) or 408 of the Internal Revenue
Code

* In connection with distributions from retirement plans qualified under
Section 401(a) or 401(k) of the Internal Revenue Code for:

- returns of excess contributions to the plan

- retirement of a participant in the plan

- a loan from the plan (loan repayments are treated as new sales for
purposes of the deferred sales charge)

* Upon the financial hardship (as defined in regulations under the Code) of a
participant in a plan

* Upon termination of employment of a participant in a plan

* Upon any other permissible withdrawal under the terms of the plan.

CONFIRMATIONS AND STATEMENTS -- The Funds will send you a confirmation statement
after every transaction that affects your account balance or registration.
However, certain automatic transactions may be confirmed on a quarterly basis
including systematic withdrawals, automatic purchases and reinvested dividends.
Each shareholder will receive a quarterly statement setting forth a summary of
the transactions that occurred during the preceding quarter.

SELLING SHARES

Selling your shares of a Fund is called a "redemption," because the Fund buys
back its shares. A shareholder may sell shares at any time. Shares will be
redeemed at the NAV next determined after the order is accepted by the Fund's
transfer agent, less any applicable deferred sales charge. A Fund's NAV is
generally calculated as of the close of trading on every day the New York Stock
Exchange is open. Any share certificates representing Fund shares being sold
must be returned with a request to sell the shares.

When redeeming recently purchased shares, if the Fund has not collected payment
for the shares, it may delay sending the proceeds until it has collected
payment, which may take up to 15 days.

BY MAIL -- To sell shares by mail, send a letter of instruction that includes:

* The name and signature of the account owner(s)

* The name of the Fund

* The dollar amount or number of shares to sell

* Where to send the proceeds

* A signature guarantee if

- The check will be mailed to a payee or address different than that of the
account owner, or

- The sale of shares is more than $10,000.

- --------------------------------------------------------------------------------
A SIGNATURE GUARANTEE helps protect against fraud. Banks, brokers, credit
unions, national securities exchanges and savings associations provide signature
guarantees. A notary public is not an eligible signature guarantor. For joint
accounts, both signatures must be guaranteed.
- --------------------------------------------------------------------------------

Mail your request to:

Security Management Company, LLC
P.O. Box 750525
Topeka, KS 66675-9135

Signature requirements vary based on the type of account you have:

* INDIVIDUAL OR JOINT TENANTS: Written instructions must be signed by an
individual shareholder, or in the case of joint accounts, all of the
shareholders, exactly as the name(s) appears on the account.

* UGMA or UTMA: Written instructions must be signed by the custodian as it
appears on the account.

* SOLE PROPRIETOR OR GENERAL PARTNER: Written instructions must be signed by an
authorized individual as it appears on the account.

* CORPORATION OR ASSOCIATION: Written instructions must be signed by the
person(s) authorized to act on the account. A certified resolution dated
within six months of the date of receipt, authorizing the signer to act, must
accompany the request if not on file with the Funds.

* TRUST: Written instructions must be signed by the trustee(s). If the name of
the current trustee(s) does not appear on the account, a certified
certificate of incumbency dated within 60 days must also be submitted.

* RETIREMENT: Written instructions must be signed by the account owner.

BY TELEPHONE -- If you selected this option on your account application, you may
make redemptions from your account by calling 1-800-888-2461, extension 3127, on
weekdays (except holidays) between 7:00 a.m. and 6:00 p.m. Central time. The
Funds require that requests for redemptions over $10,000 be in writing with
signatures guaranteed. You may not close your account by telephone or redeem
shares for which a certificate has been issued. If you would like to establish
this option on an existing account, please call 1-800-888-2461, extension 3127.
Shareholders may not redeem shares held in an IRA or 403(b)(7) account by
telephone.

BY BROKER -- You may redeem your shares through your broker. Brokers may charge
a commission upon the redemption of shares.

PAYMENT OF REDEMPTION PROCEEDS -- Payments may be made by check.

The Funds may suspend the right of redemption during any period when trading on
the New York Stock Exchange is restricted or such Exchange is closed for other
than weekends or holidays, or any emergency is deemed to exist by the Securities
and Exchange Commission.

BY CHECK. Redemption proceeds will be sent to the shareholder(s) of record at
the address on our records generally within seven days after receipt of a valid
redemption request. For a charge of $15 deducted from redemption proceeds, the
Investment Manager will provide a certified or cashier's check, or send the
redemption proceeds by express mail, upon the shareholder's request.

DIVIDENDS AND TAXES

Each Fund pays its shareholders dividends from its net investment income, and
distributes any net capital gains that it has realized, at least annually. Your
dividends and distributions will be reinvested in the Fund, unless you instruct
the Investment Manager otherwise. There are no fees or sales charges on
reinvestments.

TAX ON DISTRIBUTIONS -- Fund dividends and distributions are taxable to
shareholders (unless your investment is in an Individual Retirement Account
("IRA") or other tax-advantaged retirement account) whether you reinvest your
dividends or distributions or take them in cash.

In addition to federal tax, dividends and distributions may be subject to state
and local taxes. If a Fund declares a dividend or distribution in October,
November or December but pays it in January, you may be taxed on that dividend
or distribution as if you received it in the previous year. In general,
dividends and distributions from the Funds are taxable as follows:

--------------------------------------------------
TYPE OF TAX RATE FOR TAX RATE FOR 28%
DISTRIBUTION 15% BRACKET BRACKET OR ABOVE
--------------------------------------------------
Income Ordinary Ordinary
dividends Income rate Income rate

Short-term Ordinary Ordinary
capital gains Income rate Income rate

Long-term
capital gains 10% 20%
--------------------------------------------------

Tax-deferred retirement accounts generally do not generate a tax liability
unless you are taking a distribution or making a withdrawal.

The Fund has "short-term capital gains" when it sells shares within 12 months
after buying them. The Fund has "long-term capital gains" when it sells shares
that it has owned for more than 12 months. The Funds expect that their
distributions will consist primarily of net long-term capital gains.

The Fund will mail you information concerning the tax status of the
distributions for each calendar year on or before January 31 of the following
year.

TAXES ON SALES OR EXCHANGES -- You may be taxed on any sale or exchange of Fund
shares. The amount of gain or loss will depend primarily upon how much you pay
for the shares, how much you sell them for, and how long you hold them.

The table above can provide a guide for your potential tax liability when
selling or exchanging Fund shares. "Short-term capital gains" applies to Fund
shares sold or exchanged up to one year after buying them. "Long-term capital
gains" applies to shares held for more than one year.

BACKUP WITHHOLDING -- As with all mutual funds, a Fund may be required to
withhold U.S. federal income tax at the rate of 31% of all taxable distributions
payable to you if you fail to provide the Fund with your correct taxpayer
identification number or to make required certifications, or if you have been
notified by the Internal Revenue Service that you are subject to backup
withholding. Backup withholding is not an additional tax; rather, it is a way in
which the Internal Revenue Service ensures it will collect taxes otherwise due.
Any amounts withheld may be credited against your U.S. federal income tax
liability.

You should consult your tax professional about federal, state and local tax
consequences to you of an investment in the Fund. Please see the Statement of
Additional Information for additional tax information.

DETERMINATION OF NET ASSET VALUE

The net asset value per share (NAV) of each Fund is computed as of the close of
regular trading hours on the New York Stock Exchange (normally 3 p.m. Central
time) on days when the Exchange is open. The Exchange is open Monday through
Friday, except on observation of the following holidays: New Year's Day, Martin
Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving Day and Christmas Day.

Each Fund's NAV is generally based upon the market value of securities held in
the Fund's portfolio. If market prices are not available, the fair value of
securities is determined using procedures approved by each Fund's Board of
Directors.

Foreign securities are valued based on quotations from the primary market in
which they are traded, and are converted from the local currency into U.S.
dollars using current exchange rates. Foreign securities may trade in their
primary markets on weekends or other days when the Fund does not price its
shares. Therefore, the NAV of Funds holding foreign securities may change on
days when shareholders will not be able to buy or sell shares of the Funds.

SHAREHOLDER SERVICES

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

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

Investors may also choose to use "Secur-O-Matic" (automatic bank draft) to make
Fund purchases. There is no additional charge for choosing to use Secur-O-Matic.
Withdrawals from your bank account may occur up to 3 business days before the
date scheduled to purchase Fund shares. An application for Secur-O-Matic may be
obtained from the Funds.

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

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

EXCHANGE PRIVILEGE -- Shareholders who own shares of the Funds may exchange
those shares for shares of another of the Funds, for shares of the other mutual
funds distributed by the Distributor or for shares of Security Cash Fund at net
asset value per share. The other funds currently distributed by the Distributor
include Security Asset Allocation, Social Awareness, Corporate Bond, Limited
Maturity Bond, U.S. Government, High Yield and Municipal Bond Funds. Exchanges
may be made only in those states where shares of the fund into which an exchange
is to be made are qualified for sale. No service fee or sales charge is
presently imposed on such an exchange. Shares of a particular class of the Funds
may be exchanged only for shares of the same class of another fund distributed
by the Distributor or for shares of Security Cash Fund, a money market fund that
offers a single class of shares. At present, Corporate Bond, Limited Maturity
Bond, U.S. Government, High Yield and Municipal Bond Funds do not offer Class C
shares. Any applicable contingent deferred sales charge will be imposed upon
redemption and calculated from the date of the initial purchase without regard
to the time shares were held in Security Cash Fund. For tax purposes, an
exchange is a sale of shares which may result in a taxable gain or loss. Special
rules may apply to determine the amount of gain or loss on an exchange occurring
within ninety days after the exchanged shares were acquired. Exchanges are made
upon receipt of a properly completed Exchange Authorization form. A current
prospectus of the fund into which an exchange is made will be given to each
shareholder exercising this privilege.

To exchange shares by telephone, a shareholder must hold shares in
non-certificate form and must either have completed the Telephone Exchange
section of the application or a Telephone Transfer Authorization form which may
be obtained from the Investment Manager. Once authorization has been received by
the Investment Manager, a shareholder may exchange shares by telephone by
calling the Funds at (800) 888-2461, extension 3127, on weekdays (except
holidays) between the hours of 7:00 a.m. and 6:00 p.m. Central time. Exchange
requests received by telephone after the close of the New York Stock Exchange
(normally 3 p.m. Central time) will be treated as if received on the next
business day. The exchange privilege, including telephone exchanges, may be
changed or discontinued at any time by either the Investment Manager or the
Funds upon 60 days' notice to shareholders.

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

GENERAL INFORMATION

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

FINANCIAL HIGHLIGHTS

The financial highlights table is intended to help you understand certain of the
Funds' financial performance for their Class A shares and Class B shares during
the past five years or, the period since commencement of a Fund. Certain
information reflects financial results for a single Fund share. The total
returns in the table represent the rate that an investor would have earned (or
lost) on an investment in the Fund assuming reinvestment of all dividends and
distributions. This information has been audited by Ernst & Young LLP, whose
report, along with the Funds' financial statements, are included in their annual
reports, which are available upon request.

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
SECURITY GROWTH AND INCOME FUND (CLASS A)
- -------------------------------------------------------------------------------------------------------------------------------

FISCAL YEAR ENDED SEPTEMBER 30
----------------------------------------------------------------
1998(D) 1997(D) 1996(D) 1995(D) 1994(D)
------- ------- ------- ------- -------
<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....................................... 0.13 0.144 0.18 0.16 0.13
Net gain (loss) on securities (realized & unrealized)....... (0.87) 2.813 1.373 1.183 (0.713)
----- ------ ------ ------ ------
Total from investment operations............................ (0.74) 2.957 1.553 1.343 (0.583)

LESS DISTRIBUTIONS
Dividends (from net investment income)...................... (0.13) (0.155) (0.158) (0.158) (0.128)
Distributions (from capital gains).......................... (2.59) (0.708) (0.275) (0.215) (0.169)
----- ------ ------ ------ ------
Total distributions......................................... (2.72) (0.863) (0.433) (0.373) (0.297)
----- ------ ------ ------ ------
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 to average net assets........ 1.49% 1.53% 2.09% 2.21% 1.70%
Portfolio turnover rate..................................... 144% 124% 69% 130% 163%
</TABLE>

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
SECURITY GROWTH AND INCOME FUND (CLASS B)
- -------------------------------------------------------------------------------------------------------------------------------

FISCAL YEAR ENDED SEPTEMBER 30
----------------------------------------------------------------
1998(D) 1997(D) 1996(D) 1995(D) 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....................................... 0.05 0.048 0.09 0.08 0.05
Net gain (loss) on securities (realized & unrealized)....... (0.88) 2.776 1.353 1.179 (0.694)
----- ------ ------ ------ ------
Total from investment operations............................ (0.83) 2.824 1.443 1.259 (0.644)

LESS DISTRIBUTIONS
Dividends (from net investment income)...................... (0.03) (0.063) (0.078) (0.094) (0.117)
Distributions (from capital gains).......................... (2.59) (0.708) (0.275) (0.215) (0.169)
----- ------ ------ ------ ------
Total distributions......................................... (2.62) (0.771) (0.353) (0.309) (0.286)
----- ------ ------ ------ ------
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% (8.00)%

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 to average net assets........ 0.59% 0.53% 1.09% 1.21% 1.03%
Portfolio turnover rate..................................... 144% 124% 69% 130% 178%
</TABLE>

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
SECURITY EQUITY FUND (CLASS A)
- -------------------------------------------------------------------------------------------------------------------------------

INCOME FROM INVESTMENT OPERATIONS:
Net investment income....................................... 0.04 0.04 0.05 0.04 0.05
Net gain (loss) on securities (realized & unrealized)....... 0.56 2.199 1.482 1.377 0.085
----- ------ ------ ------ ------
Total from investment operations............................ 0.60 2.239 1.532 1.417 0.135

LESS DISTRIBUTIONS
Dividends (from net investment income)...................... (0.03) (0.041) (0.060) --- (0.120)
Distributions (from capital gains).......................... (0.80) (0.648) (0.482) (0.407) (1.205)
----- ------ ------ ------ ------
Total distributions......................................... (0.83) (0.689) (0.542) (0.407) (1.325)
----- ------ ------ ------ ------
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 to average net assets........ 0.39% 0.46% 0.75% 0.87% 0.86%
Portfolio turnover rate..................................... 47% 66% 64% 95% 79%
</TABLE>

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
SECURITY EQUITY FUND (CLASS B)
- -------------------------------------------------------------------------------------------------------------------------------

INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)................................ (0.05) (0.04) (0.02) (0.01) 0.01
Net gain (loss) on securities (realized & unrealized)....... 0.55 2.148 1.449 1.357 (0.005)
----- ------ ------ ------ ------
Total from investment operations............................ 0.50 2.108 1.429 1.347 0.005

LESS DISTRIBUTIONS
Dividends (from net investment income)...................... --- --- (0.017) --- (0.12)
Distributions (from capital gains).......................... (0.80) (0.648) (0.482) (0.407) (1.205)
----- ------ ------ ------ ------
Total distributions......................................... (0.80) (0.648) (0.499) (0.407) (1.325)
----- ------ ------ ------ ------
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 loss to average net assets.......... (0.61)% (0.54)% (0.13)% (0.01)% (0.01)%
Portfolio turnover rate..................................... 47% 66% 64% 95% 80%
</TABLE>

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
SECURITY GLOBAL FUND (CLASS A)
- -------------------------------------------------------------------------------------------------------------------------------

FISCAL YEAR ENDED SEPTEMBER 30
----------------------------------------------------------------
1998(D) 1997(D) 1996(D) 1995(D) 1994(C)
------- ------- ------- ------- -------
<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 on securities (realized & unrealized).............. (1.19) 2.289 1.874 0.31 0.87
----- ------ ------ ----- -----
Total from investment operations............................ (1.17) 2.299 1.884 0.29 0.84

LESS DISTRIBUTIONS
Dividends (from net investment income)...................... (0.09) (0.376) (0.248) --- ---
Distributions (from capital gains).......................... (1.07) (0.783) (0.156) (0.19) ---
----- ------ ------ ----- -----
Total distributions......................................... (1.16) (1.159) (0.404) (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%
</TABLE>

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SECURITY GLOBAL FUND (CLASS B)
- --------------------------------------------------------------------------------------------------------------------------------

FISCAL YEAR ENDED SEPTEMBER 30
-----------------------------------------------------------------
1998(D) 1997(D) 1996(D) 1995(D) 1994(B)(C)
------- ------- ------- ------- ----------
<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 loss......................................... (0.10) (0.11) (0.10) (0.12) (0.12)
Net gain on securities (realized & unrealized).............. (1.16) 2.237 1.841 0.30 0.91
----- ------ ------ ----- -----
Total from investment operations............................ (1.26) 2.127 1.741 0.18 0.79

LESS DISTRIBUTIONS
Dividends (from net investment income)...................... --- (0.304) (0.145) --- ---
Distributions (from capital gains).......................... (1.07) (0.783) (0.156) (0.19) ---
----- ------ ------ ----- -----
Total distributions......................................... (1.07) (1.087) (0.301) (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 loss to average net assets.......... (0.85)% (0.93)% (0.93)% (1.17)% (0.01)%
Portfolio turnover rate..................................... 122% 132% 142% 141% 73%
</TABLE>

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
SECURITY VALUE FUND (CLASS A)
- ----------------------------------------------------------------------------------------------

FISCAL PERIOD ENDED SEPTEMBER 30
--------------------------------
1998(D)(G) 1997(D)(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 & 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%
</TABLE>

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
SECURITY VALUE FUND (CLASS B)
- ----------------------------------------------------------------------------------------------

INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)................................ (0.15) 0.01
Net gain (loss) on securities (realized & 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>

- --------------------------------------------------------------------------------
SECURITY SMALL COMPANY FUND (CLASS A)
- --------------------------------------------------------------------------------

FISCAL PERIOD
ENDED
SEPTEMBER 30
-------------
1998(D)(G)(H)
-------------
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 & 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%

- --------------------------------------------------------------------------------
SECURITY SMALL COMPANY FUND (CLASS B)
- --------------------------------------------------------------------------------

FISCAL PERIOD
ENDED
SEPTEMBER 30
-------------
1998(D)(G)(H)
-------------
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 & 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>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
SECURITY ULTRA FUND (CLASS A)
- -------------------------------------------------------------------------------------------------------------------------------

INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)................................ (0.06) (0.08) (0.05) (0.02) (0.056)
Net gain (loss) on securities (realized & unrealized)....... (1.06) 1.649 1.096 1.535 (0.188)
----- ------ ------ ------ ------
Total from investment operations............................ (1.12) 1.569 1.046 1.515 (0.244)

LESS DISTRIBUTIONS
Dividends (from net investment income)...................... --- --- --- --- ---
Distributions (from capital gains).......................... (0.47) (0.579) (0.996) (0.135) (1.066)
----- ------ ------ ------ ------
Total distributions......................................... (0.47) (0.579) (0.996) (0.135) (1.066)
----- ------ ------ ------ ------
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% (3.60)%

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%
</TABLE>

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
SECURITY ULTRA FUND (CLASS B)
- -------------------------------------------------------------------------------------------------------------------------------

INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)................................ (0.14) (0.15) (0.13) (0.09) (0.103)
Net gain (loss) on securities (realized & unrealized)....... (1.01) 1.599 1.046 1.525 (0.321)
----- ------ ------ ------ ------
Total from investment operations............................ (1.15) 1.449 0.916 1.435 (0.424)

LESS DISTRIBUTIONS
Dividends (from net investment income)...................... --- --- --- --- ---
Distributions (from capital gains).......................... (0.47) (0.579) (0.996) (0.135) (1.066)
----- ------ ------ ------ ------
Total distributions......................................... (0.47) (0.579) (0.996) (0.135) (1.066)
----- ------ ------ ------ ------
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)% (1.32)% (1.76)%
Portfolio turnover rate..................................... 116% 68% 161% 180% 110%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

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

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

(d) Net investment income (loss) was computed using average shares outstanding
throughout the period.

(e) Figures for the period May 1, 1997 (date of inception) to September 30,
1997. Percentage amounts have been annualized, except for total return.

(f) Security Value Fund was initially capitalized on May 1, 1997, with a net
asset value of $10 per share.

(g) Fund expenses were reduced by the Investment Manager during the period, and
expense ratios absent such reimbursement would have been as follows:

-----------------------------------------------------------
1997 1998
----------------- -----------------
CLASS A CLASS B CLASS A CLASS B

Value Fund 1.90% 2.80% 1.51% 2.59%
Small Company Fund 2.10% 3.16% 2.40% 3.38%
-----------------------------------------------------------

(h) Security Small Company Fund was initially capitalized on October 15, 1997,
with a net asset value of $10 per share. Percentage amounts for the period
have been annualized, except for total return.

<PAGE>
APPENDIX A
- --------------------------------------------------------------------------------

REDUCED SALES CHARGES

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

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

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

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

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

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

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

- --------------------------------------------------------------------------------
BY TELEPHONE -- Call 1-800-888-2461.

BY MAIL -- Write to:

Security Management Company, LLC
700 SW Harrison
Topeka, KS 66636-0001

ON THE INTERNET -- Reports and other information about the Funds can be viewed
online or downloaded from:

SEC: http://www.sec.gov

SMC, LLC: http://www.securitybenefit.com

Additional information about the Funds (including the statement of additional
information) can be reviewed and copied at the Securities and Exchange
Commission's Public Reference Room in Washington, DC. Information about the
operation of the public reference room may be obtained by calling the Commission
at 1-800-SEC-0330. Copies may be obtained, upon payment of a duplicating fee, by
writing the Public Reference Section of the Commission, Washington, DC
20549-6009.
- --------------------------------------------------------------------------------

ANNUAL/SEMI-ANNUAL REPORT -- Additional information about the Funds' investments
is available in the Funds' annual and semi-annual reports to shareholders. In
the Funds' annual report, you will find a discussion of the market conditions
and investment strategies that significantly affected the Funds' performance
during its last fiscal year.

STATEMENT OF ADDITIONAL INFORMATION -- The Funds' statement of additional
information and the Funds' annual or semi-annual report are available, without
charge upon request by calling the Funds' toll-free telephone number
1-800-888-2461, extension 3127. Shareholder inquiries should be addressed to
SMC, LLC, 700 SW Harrison Street, Topeka, Kansas 66636-0001, or by calling the
Funds' toll-free telephone number listed above. The Funds' Statement of
Additional Information is incorporated into this prospectus by reference.

Each Fund's Investment Company Act file number is listed below:

Security Equity Fund...................... 811-1136
Security Growth and Income Fund........... 811-0487
Security Ultra Fund....................... 811-1316
<PAGE>
SECURITY FUNDS
===============================================================================
PROSPECTUS

FEBRUARY 1, 1999

- Security Asset
Allocation Fund

SECURITY DISTRIBUTORS, INC.
A Member of The Security Benefit
Group of Companies
<PAGE>
TABLE OF CONTENTS
- --------------------------------------------------------------------------------

OBJECTIVE................................................................... 2
PRINCIPAL INVESTMENT STRATEGIES............................................. 2
MAIN RISKS.................................................................. 3
Market Risk............................................................... 3
Fixed-Income Securities................................................... 3
Foreign Securities........................................................ 3
Gold Stocks............................................................... 4
PAST PERFORMANCE............................................................ 5
FEES AND EXPENSES OF THE FUND............................................... 6
INVESTMENT MANAGER.......................................................... 7
Management Fees........................................................... 7
Portfolio Managers........................................................ 7
Year 2000 Compliance...................................................... 8
BUYING SHARES............................................................... 9
Class A Shares............................................................ 9
Class B Shares............................................................ 10
Class B Distribution Plan................................................. 10
Class C Shares............................................................ 10
Class C Distribution Plan................................................. 11
Waiver of Deferred Sales Charge........................................... 11
Confirmations and Statements.............................................. 11
SELLING SHARES.............................................................. 11
By Mail................................................................... 12
By Telephone.............................................................. 12
By Broker................................................................. 13
Payment of Redemption Proceeds............................................ 13
DIVIDENDS AND TAXES......................................................... 13
Tax on Distributions...................................................... 13
Taxes on Sales or Exchanges............................................... 14
Backup Withholding........................................................ 14
DETERMINATION OF NET ASSET VALUE............................................ 14
SHAREHOLDER SERVICES........................................................ 14
Accumulation Plan......................................................... 14
Systematic Withdrawal Program............................................. 15
Exchange Privilege........................................................ 15
Retirement Plans.......................................................... 16
GENERAL INFORMATION......................................................... 16
Shareholder Inquiries..................................................... 16
FINANCIAL HIGHLIGHTS........................................................ 17
APPENDIX A - REDUCED SALES CHARGES.......................................... 19
Class A Shares............................................................ 19
Rights of Accumulation.................................................... 19
Statement of Intention.................................................... 19
Reinstatement Privilege................................................... 19
<PAGE>
OBJECTIVE

Described below is the investment objective for Security Asset Allocation Fund.
The Fund's Board of Directors may change its investment objective without
shareholder approval. As with any investment, there can be no guarantee the Fund
will achieve its investment objective.

The Security Asset Allocation Fund seeks high total return, consisting of
capital appreciation and current income.

PRINCIPAL INVESTMENT STRATEGIES

The Fund pursues its objective by following an asset allocation strategy that
contemplates shifts among a wide range of investment categories and market
sectors. The Fund's Sub-Adviser, Meridian Investment Management Corporation,
decides what percentage of the Fund's assets will be invested in the various
investment categories. The Fund expects that normally:

* A minimum of 35% of its assets will be invested in equity securities; and

* A minimum of 10% of its assets will be invested in debt securities.

The Fund may invest:

* Up to 55% of its assets in money market instruments;

* Up to 80% of its assets in foreign securities; and

* Up to 20% of its assets in gold stocks.

Meridian uses a quantitative asset allocation model to strategically allocate
the Fund's assets among the investment categories. In choosing equity
securities, the model analyzes equity securities based on the following factors:
(1) current earnings; (2) earnings history; (3) long-term earnings projections;
(4) current-price; and (5) risk.

When selecting equity securities for the Fund, Meridian uses a "top-down"
approach, first determining a sector and/or country, and then identifying which
equity securities to purchase within that sector/country.

- --------------------------------------------------------------------------------
TOP-DOWN APPROACH means that the Sub-Adviser looks first at broad market
factors, and on the basis of those market factors, chooses certain sectors or
industries within the overall market. The Sub-Adviser then looks at individual
companies within those sectors or industries.
- --------------------------------------------------------------------------------

When selecting debt securities for the Fund, Meridian's asset allocation model
analyzes the prices of commodities and finished goods to arrive at an interest
rate projection. The Investment Manager, Security Management Company, LLC, then
determines the portion of the portfolio to allocate to debt securities and the
duration of those securities based on the model's interest rate projection.

The Fund also may invest a portion of its assets in options and futures, which
are primarily used to hedge the Fund's portfolio but may be used to increase
returns.

The Fund typically sells an investment when the company or issuer begins to show
deteriorating fundamentals or poor relative performance.

MAIN RISKS

- --------------------------------------------------------------------------------
An investment in the Fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. The value of an investment in the Fund will go up and down, which means
investors could lose money.
- --------------------------------------------------------------------------------

FIXED-INCOME SECURITIES -- Fixed-income investing may present risks because the
market value of fixed-income investments generally are affected by changes in
interest rates. When interest rates rise, the market value of a fixed-income
security declines. Generally, the longer a bond's maturity, the greater the
risk. A bond's value can also be affected by changes in the credit rating or
financial condition of its issuer. Because bond values fluctuate, an investor
may receive more or less money than originally invested.

FOREIGN SECURITIES -- Investing in foreign securities involves additional risks
such as currency fluctuations, differences in financial reporting standards, a
lack of adequate company information and political instability. These risks may
be particularly acute in underdeveloped capital markets.

RISKS OF CONVERSION TO EURO. On January 1, 1999, eleven countries in the
European Monetary Union adopted the euro as their official currency. However,
their current currencies (for example, the franc, the mark, and the lira) will
also continue in use until January 1, 2002. After that date, it is expected that
only the euro will be used in those countries. A common currency is expected to
provide some benefits in those markets, by consolidating the government debt
market for those countries and reducing some currency risks and costs. But the
conversion to the new currency will affect the Fund operationally and also has
potential risks, some of which are listed below. Among other things, the
conversion will affect:

* issuers in which the Fund invest, because of changes in the competitive
environment from a consolidated currency market and greater operational costs
from converting to the new currency. This might depress stock values.

* vendors the Fund depends on to carry out their business, such as the
custodian bank (which holds the foreign securities the Fund buys), the
Investment Manager (which prices the Fund's investments to deal with the
conversion to the euro) and brokers, foreign markets and securities
depositories. If the vendors are not prepared, there could be delays in
settlements and additional costs to the Fund.

The Investment Manager is upgrading its computer and bookkeeping systems to deal
with the conversion. The Fund's custodian bank has advised the Investment
Manager of its plans to deal with the conversion, including how it will update
its record keeping systems and handle the redenomination of outstanding foreign
debt. The possible effect of these factors on the Fund's investments cannot be
determined with certainty at this time, but they may reduce the value of some of
the Fund's holdings and increase its operational costs.

GOLD STOCKS -- The Fund may invest a portion of its assets in equity securities
of companies involved in the exploration, mining, development, production and
distribution of gold. Investing in gold stocks presents risks because the prices
of gold can fluctuate substantially over short periods of time. Prices may be
affected by unpredictable monetary and political policies, such as currency
devaluations or revaluations, economic and social conditions within an
individual country, trade imbalances, or trade or currency restrictions between
countries.

OPTIONS AND FUTURES -- The Fund may invest some of its assets in options and
futures. These practices are used primarily to hedge the Fund's portfolio or to
increase returns. However, there is the risk that such practices sometimes may
reduce returns or increase volatility. These practices also entail transactional
expenses.

<PAGE>
PAST PERFORMANCE

The chart and table below give an indication of the Fund's risks and performance
by showing changes in the Fund's Class A share performance from year to year.
The Fund's Class C shares are new and do not have a performance record. The
table shows how the Fund's average annual total returns for the periods
indicated compare to those of broad measures of market performance. As with all
mutual funds, past performance is not a prediction of future results.

The bar chart does not reflect the sales charge applicable to Class A shares
which, if reflected, would lower the returns shown. Average annual total returns
for the Fund's Class A shares include deduction of the 5.75% front-end sales
charge and for Class B shares include the appropriate deferred sales charge,
which is 5% in the first year declining to 0% in the sixth and later years. The
average annual total returns also assume that Class B shareholders redeem all
their shares at the end of the period indicated.

- --------------------------------------------------------------------------------
SECURITY ASSET ALLOCATION FUND - CLASS A
- --------------------------------------------------------------------------------

[BAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]

1996 13.2%
1997 6.1%
1998 12.1%

- -------------------------------------------------
HIGHEST AND LOWEST RETURNS
(QUARTERLY 1996-1998)
- -------------------------------------------------
QUARTER ENDED

Highest 13.20% December 31, 1998
Lowest -11.47% September 30, 1998
- -------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
(THROUGH DECEMBER 31, 1998)
- -------------------------------------------------
PAST LIFE OF FUND
1 YEAR (SINCE JUNE 1, 1995)

Class A 5.61% 9.10%
Class B 5.97% 9.20%
S&P 500 28.58% 9.20%
- -------------------------------------------------
<PAGE>
FEES AND EXPENSES OF THE FUND

THIS TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY AND HOLD
SHARES OF THE FUND.

- --------------------------------------------------------------------------------
SHAREHOLDER FEES (fees paid directly from your investment)
- --------------------------------------------------------------------------------
CLASS A CLASS B CLASS C
SHARES SHARES(1) SHARES

Maximum Sales Charge Imposed on Purchases 5.75% None None
(as a percentage of offering price)

Maximum Deferred Sales Charge (as a percentage None(2) 5%(3) 1%(4)
of original purchase price or redemption
proceeds, whichever is lower)
- --------------------------------------------------------------------------------
1 Class B shares convert tax-free to Class A shares automatically after eight
years.
2 Purchases of Class A shares in amounts of $1,000,000 or more are not subject
to an initial sales load; however, a deferred sales charge of 1% is imposed
in the event of redemption within one year of purchase.
3 5% during the first year, decreasing to 0% in the sixth and following years.
4 A deferred sales charge of 1% is imposed in the event of redemption within
one year of purchase.
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund assets)
- --------------------------------------------------------------------------------
Total
Annual Fund
Management Distribution Other Operating
Fees (12b-1) Fees(5) Expenses Expenses

Class A 1.00% None 1.50% 2.50%
Class B 1.00% 1.00% 1.44% 3.44%
Class C 1.00% 1.00% 1.44% 3.44%
- -------------------------------------------------------------------------------
5 Long-term holders of shares that are subject to a 12b-1 distribution fee may
pay more than the equivalent of the maximum front-end sales charge otherwise
permitted by National Association of Securities Dealers, Inc. Rules.
- --------------------------------------------------------------------------------

EXAMPLE

This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds.

The Example assumes that you invest $10,000 in the Fund for the time periods
indicated. The Example also assumes that your investment has a 5% return each
year and that the Fund's operating expenses remain the same. Although your
actual costs may be higher or lower, based on these assumptions your costs would
be:

You would pay the following expenses if you redeemed your shares at the end of
each period.

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------- --------------------------- --------------------------- ---------------------------
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$814 $847 $447 $1,309 $1,356 $1,056 $1,829 $1,988 $1,788 $3,248 $3,721 $3,721
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>

You would pay the following expenses if you did not redeem your shares.

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------- --------------------------- --------------------------- ---------------------------
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$814 $347 $347 $1,309 $1,056 $1,056 $1,829 $1,788 $1,788 $3,248 $3,721 $3,721
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>

INVESTMENT MANAGER

Security Management Company, LLC (the "Investment Manager"), 700 SW Harrison
Street, Topeka, Kansas 66636, is the Fund's investment manager. On September 30,
1998, the aggregate assets of all of the Funds under the investment management
of the Investment Manager were approximately $4.7 billion.

The Investment Manager has engaged Meridian Investment Management Corporation,
12835 East Arapahoe Road, Tower II, 7th Floor, Englewood, Colorado 80112 to
provide investment advisory services to Asset Allocation Fund. Meridian provides
investment advice to individuals, pension and profit sharing plans, public
retirement systems and registered investment companies and currently manages
over $500 million in assets.

MANAGEMENT FEES -- The investment management fees paid by the Fund during the
last fiscal year were equal to 1.00% of the Fund's average net assets.

PORTFOLIO MANAGERS -- STEVE BOWSER, Second Vice President and Portfolio Manager
of the Investment Manager, has co-managed the fixed-income portion of the 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. He is a Chartered Financial Analyst.

PAT BOYLE, Portfolio Manager of Meridian, has managed the equity portion of the
Fund's portfolio since August 1997. He is a research analyst and portfolio
manager of the Sub-Adviser. Prior to joining Meridian, Mr. Boyle was employed at
Citicorp as an Operations Analyst. 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 in Finance and a M.S. degree.

DAVID ESHNAUR, Assistant Vice President and Portfolio Manager of the Investment
Manager, has co-managed the fixed-income portion of the 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.

YEAR 2000 COMPLIANCE -- Like other mutual funds, as well as other financial and
business organizations around the world, the Fund could be adversely affected if
the computer systems used by the Investment Manager, and other service
providers, in performing their management and administrative functions do not
properly process and calculate date-related information and data before, during
and after January 1, 2000. Some computer software and hardware systems currently
cannot distinguish between the year 2000 and the year 1900 or some other date
because of the way date fields were encoded. This is commonly known as the "Year
2000 Problem." If not addressed, the Year 2000 Problem could impact the
management services provided to the Fund by the Investment Manager and
Sub-Adviser, as well as transfer agency, accounting, custody, distribution and
other services provided to the Fund and its shareholders.

The Investment Manager has adopted a plan to be "Year 2000 Compliant" with
respect to both its internally built systems as well as systems provided by
external vendors. The Investment Manager considers a system "Year 2000
Compliant" when it is able to correctly process, provide and/or receive data
before, during and after the Year 2000. The Investment Manager's overall
approach to addressing the Year 2000 Problem is as follows: (1) to inventory its
internal and external hardware, software, telecommunications and data
transmissions to customers and conduct a risk assessment with respect to the
impact that a failure of any such system would have on its business operations;
(2) to modify or replace its internal systems and obtain vendor certifications
of Year 2000 compliance for systems provided by vendors or replace such systems
that are not Year 2000 Compliant; and (3) to implement and test its systems for
Year 2000 compliance. The Investment Manager has completed the inventory of its
internal and external systems and has made substantial progress toward
completing the modification/replacement of its internal systems, as well as
towards obtaining Year 2000 Compliant certifications from its external vendors.
Overall systems testing commenced in December 1998 and is scheduled to extend
into the first six months of 1999.

The Year 2000 Problem is also expected to impact operating companies, which may
include issuers of portfolio securities held by the Fund, to varying degrees
based upon various factors, including, but not limited to, the company's
industry sector and degree of technological sophistication. The Fund and the
Investment Manager are unable to predict what impact, if any, the Year 2000
Problem will have on issuers of the portfolio securities held by the Fund and
indirectly, on the value of the Fund's shares.

BUYING SHARES

Shares of the Fund are available through broker/dealers, banks, and other
financial intermediaries that have an agreement with the Fund's Distributor,
Security Distributors, Inc.

There are three different ways to buy shares of the Fund--Class A shares, Class
B shares or Class C shares. The different classes of a Fund differ primarily
with respect to the sales charges and Rule 12b-1 distribution fees to which they
are subject. The minimum initial investment is $100. Subsequent investments must
be $100 (or $20 under an Accumulation Plan). The Fund reserves the right to
reject any order to purchase shares.

CLASS A SHARES -- Class A shares are subject to a sales charge at the time of
purchase. An order for Class A shares will be priced at the Fund's net asset
value per share (NAV), plus the sales charge, set forth below. The NAV, plus the
sales charge is the "offering price." The Fund's NAV is generally calculated as
of the close of trading on every day the New York Stock Exchange is open. An
order for Class A shares is priced at the NAV next calculated after the order is
accepted by the Fund, plus the sales charge.

--------------------------------------------------------------------
SALES CHARGE
-------------------------------------
AS A PERCENTAGE
AS A PERCENTAGE OF NET AMOUNT
AMOUNT OF ORDER OF OFFERING PRICE INVESTED
--------------------------------------------------------------------
Less than $50,000.............. 5.75% 6.10%
$50,000 to $99,999............. 4.75% 4.99%
$100,000 to $249,999........... 3.75% 3.90%
$250,000 to $499,999........... 2.75% 2.83%
$500,000 to $999,999........... 2.00% 2.04%
$1,000,000 or more*............ None None
--------------------------------------------------------------------
*Purchases of $1,000,000 or more are not subject to a sales charge
at the time of purchase, but are subject to a deferred sales charge
of 1.00% if redeemed within one year following purchase. The
deferred sales charge is a percentage of the lesser of the NAV of
the shares redeemed or the net cost of such shares. Shares that are
not subject to a deferred sales charge are redeemed first.
--------------------------------------------------------------------

Please see Appendix A for options that are available for reducing the sales
charge applicable to purchases of Class A shares.

CLASS B SHARES -- Class B shares are not subject to a sales charge at the time
of purchase. An order for Class B shares will be priced at the Fund's NAV next
calculated after the order is accepted by the Fund. The Fund's NAV is generally
calculated as of the close of trading on every day the New York Stock Exchange
is open.

The amount of the deferred sales charge is based upon the number of years since
the shares were purchased, as follows:

--------------------------------
NUMBER OF YEARS DEFERRED
SINCE PURCHASE SALES CHARGE
--------------------------------
1 5%
2 4%
3 3%
4 3%
5 2%
6 and more 0%
--------------------------------

The Distributor will waive the deferred sales charge under certain
circumstances. See "Waiver of the Deferred Sales Charge" below.

CLASS B DISTRIBUTION PLAN -- The Fund has adopted a Class B Distribution Plan
that allows the Fund to pay distribution fees to the Distributor. The
Distributor uses the fees to finance activities related to the sale of Class B
shares and services to shareholders. The distribution fee is equal to 1.00% of
the average daily net assets of the Fund's Class B shares. Because the
distribution fees are paid out of the Fund's assets on an ongoing basis, over
time these fees will increase the cost of a shareholder's investment and may
cost an investor more than paying other types of sales charges.

Class B shares automatically convert to Class A shares on the eighth anniversary
of purchase. This is advantageous to such shareholders because Class A shares
are subject to a lower distribution fee than Class B shares. A pro rata amount
of Class B shares purchased through the reinvestment of dividends or other
distributions is also converted to Class A shares each time that shares
purchased directly are converted.

CLASS C SHARES -- Class C shares are not subject to a sales charge at the time
of purchase. An order for Class C shares will be priced at the Fund's NAV next
calculated after the order is accepted by the Fund. The Fund's NAV is generally
calculated as of the close of trading on every day the New York Stock Exchange
is open.

CLASS C DISTRIBUTION PLAN -- The Fund has adopted a Class C Distribution Plan
that allows the Fund to pay distribution fees to the Distributor. The
Distributor uses the fees to finance activities related to the sale of Class C
shares and services to shareholders. The distribution fee is equal to 1.00% of
the average daily net assets of the Fund's Class C shares. Because the
distribution fees are paid out of the Fund's assets on an ongoing basis, over
time these fees will increase the cost of a shareholder's investment and may
cost an investor more than paying other types of sales charges.

WAIVER OF DEFERRED SALES CHARGE -- The Distributor will waive the deferred sales
charge under the following circumstances:

* Upon the death of the shareholder if shares are redeemed within one year of
the shareholder's death

* In connection with required minimum distributions from a retirement plan
qualified under Section 401(a), 401(k), 403(b) or 408 of the Internal Revenue
Code

* In connection with distributions from retirement plans qualified under
Section 401(a) or 401(k) of the Internal Revenue Code for:

- returns of excess contributions to the plan

- retirement of a participant in the plan

- a loan from the plan (loan repayments are treated as new sales for
purposes of the deferred sales charge)

* Upon the financial hardship (as defined in regulations under the Code) of a
participant in a plan

* Upon termination of employment of a participant in a plan

* Upon any other permissible withdrawal under the terms of the plan

CONFIRMATIONS AND STATEMENTS -- The Fund will send you a confirmation statement
after every transaction that affects your account balance or registration.
However, certain automatic transactions may be confirmed on a quarterly basis
including systematic withdrawals, automatic purchases and reinvested dividends.
Each shareholder will receive a quarterly statement setting forth a summary of
the transactions that occurred during the preceding quarter.

SELLING SHARES

When redeeming recently purchased shares, if the Fund has not collected payment
for the shares, it may delay sending the proceeds until it has collected
payment, which may take up to 15 days.

BY MAIL -- To sell shares by mail, send a letter of instruction that includes:

* The name and signature of the account owner(s)

* The name of the Fund

* The dollar amount or number of shares to sell

* Where to send the proceeds

* A signature guarantee if

- The check will be mailed to a payee or address different than that of the
account owner, or

- The sale of shares is more than $10,000.

Mail your request to:

Security Management Company, LLC
P.O. Box 750525
Topeka, KS 66675-9135

Signature requirements vary based on the type of account you have:

* UGMA OR UTMA: Written instructions must be signed by the custodian as it
appears on the account.

* SOLE PROPRIETOR OR GENERAL PARTNER: Written instructions must be signed by an
authorized individual as it appears on the account.

* RETIREMENT: Written instructions must be signed by the account owner.

BY TELEPHONE -- If you selected this option on your account application, you may
make redemptions from your account by calling 1-800-888-2461, extension 3127, on
weekdays (except holidays) between 7:00 a.m. and 6:00 p.m. Central time. The
Fund requires that requests for redemptions over $10,000 be in writing with
signatures guaranteed. You may not close your account by telephone or redeem
shares for which a certificate has been issued. If you would like to establish
this option on an existing account, please call 1-800-888-2461, extension 3127.
Shareholders may not redeem shares held in an IRA or 403(b)(7) account by
telephone.

BY BROKER -- You may redeem your shares through your broker. Brokers may charge
a commission upon the redemption of shares.

PAYMENT OF REDEMPTION PROCEEDS -- Payments may be made by check.

The Fund may suspend the right of redemption during any period when trading on
the New York Stock Exchange is restricted or such Exchange is closed for other
than weekend or holidays, or any emergency is deemed to exist by the Securities
and Exchange Commission.

DIVIDENDS AND TAXES

In addition to federal tax, dividends and distributions may be subject to state
and local taxes. If the Fund declares a dividend or distribution in October,
November, or December but pays it in January, you may be taxed on that dividend
or distribution as if you received it in the previous year. In general,
distributions from the Fund are taxable as follows:

------------------------------------------------
TYPE OF TAX RATE FOR TAX RATE FOR 28%
DISTRIBUTION 15% BRACKET BRACKET OR ABOVE
------------------------------------------------

Income Ordinary Ordinary
dividends Income rate Income rate

Short-term Ordinary Ordinary
capital gains Income rate Income rate

Long-term
capital gains 10% 20%
------------------------------------------------

Tax-deferred retirement accounts do not generate a tax liability unless you are
taking a distribution or making a withdrawal.

The Fund has "short-term capital gains" when it sells shares within 12 months
after buying them. The Fund has "long-term capital gains" when it sells shares
that it has owned for more than 12 months. The Fund expects that its
distributions will consist primarily of net long-term capital gains.

The Fund will mail you information concerning the tax status of the
distributions for each calendar year on or before January 31 of the following
year.

DETERMINATION OF NET ASSET VALUE

The net asset value per share (NAV) of the Fund is computed as of the close of
regular trading hours on the New York Stock Exchange (normally 3 p.m. Central
time) on days when the Exchange is open. The Exchange is open Monday through
Friday, except on observation of the following holidays: New Year's Day, Martin
Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving Day and Christmas Day.

The Fund's NAV is generally based upon the market value of securities held in
the Fund's portfolio. If market prices are not available, the fair value of
securities is determined using procedures approved by the Fund's Board of
Directors.

Foreign securities are valued based on quotations from the primary market in
which they are traded, and are converted from the local currency into U.S.
dollars using current exchange rates. Foreign securities may trade in their
primary markets on weekends or other days when the Fund does not price its
shares. Therefore, the NAV of a Fund holding foreign securities may change on
days when shareholders will not be able to buy or sell shares of the Fund.

SHAREHOLDER SERVICES

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

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

EXCHANGE PRIVILEGE -- Shareholders who own shares of the Fund may exchange those
shares for shares of another series of Security Equity Fund, Security Ultra
Fund, Security Growth and Income Fund, Security Income Fund, Security Municipal
Bond Fund, or Security Cash Fund (the "Security Funds") at net asset value per
share. Exchanges may be made only in those states where shares of the fund into
which an exchange is to be made are qualified for sale. No service fee or sales
charge is presently imposed on such an exchange. Shares of a particular class of
the Fund may be exchanged only for shares of the same class of another fund
distributed by the Distributor, or for shares of Security Cash Fund, a money
market fund that offers a single class of shares. At present, Corporate Bond,
Limited Maturity Bond, U.S. Government, High Yield and Municipal Bond Funds do
not offer Class C shares. Any applicable contingent deferred sales charge will
be imposed upon redemption and calculated from the date of the initial purchase
without regard to the time shares were held in Security Cash Fund. For tax
purposes, an exchange is a sale of shares which may result in a taxable gain or
loss. Special rules may apply to determine the amount of gain or loss on an
exchange occurring within ninety days after the exchanged shares were acquired.
Exchanges are made upon receipt of a properly completed Exchange Authorization
form. A current prospectus of the fund into which an exchange is made will be
given to each shareholder exercising this privilege.

To exchange shares by telephone, a shareholder must hold shares in
non-certificate form and must either have completed the Telephone Exchange
section of the application or a Telephone Transfer Authorization form which may
be obtained from the Investment Manager. Once authorization has been received by
the Investment Manager, a shareholder may exchange shares by telephone by
calling the Fund at (800) 888-2461, extension 3127, on weekdays (except
holidays) between the hours of 7:00 a.m. and 6:00 p.m. Central time. Exchange
requests received by telephone after the close of the New York Stock Exchange
(normally 3 p.m. Central time) will be treated as if received on the next
business day on which the Exchange is open. The exchange privilege, including
telephone exchanges, may be changed or discontinued at any time by either the
Investment Manager or the Fund upon 60 days' notice to shareholders.

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

GENERAL INFORMATION

FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------

The financial highlights table is intended to help you understand the Fund's
financial performance for its Class A shares and Class B shares during the past
five years or, the period since commencement of the Fund. Certain information
reflects financial results for a single Fund share. The total returns in the
table represent the rate that an investor would have earned (or lost) on an
investment in the Fund assuming reinvestment of all dividends and distributions.
This information has been audited by Ernst & Young LLP, whose report, along with
the Fund's financial statements, are included in the annual report, which is
available upon request.

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
SECURITY ASSET ALLOCATION FUND (CLASS A)
- -------------------------------------------------------------------------------------------------------------------------

FISCAL PERIOD ENDED SEPTEMBER 30
----------------------------------------------------
1998(C)(D) 1997(C)(D)(E) 1996(C)(D) 1995(B)(C)(D)
<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 & unrealized)................ (0.98) 1.862 0.765 0.50
----- ------ ------ -----
Total from investment operations..................................... (0.90) 2.032 1.015 0.54

LESS DISTRIBUTIONS
Dividends (from net investment income)............................... (0.20) (0.260) (0.328) ---
Distributions (from capital gains)................................... (0.75) (0.252) (0.167) ---
----- ------ ------ -----
Total distributions.................................................. (0.95) (0.512) (0.495) ---
----- ------ ------ -----
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%

- -------------------------------------------------------------------------------------------------------------------------
SECURITY ASSET ALLOCATION FUND (CLASS B)
- -------------------------------------------------------------------------------------------------------------------------

INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)......................................... (0.03) 0.07 0.14 0.01
Net gain (loss) on securities (realized & unrealized)................ (0.96) 1.843 0.77 0.49
----- ------ ------ -----
Total from investment operations..................................... (0.99) 1.913 0.91 0.50

LESS DISTRIBUTIONS
Dividends (from net investment income)............................... (0.09) (0.181) (0.273) ---
Distributions (from capital gains)................................... (0.75) (0.252) (0.167) ---
------ ------ ------ -----
Total distributions.................................................. (0.84) (0.433) (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%
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>

(a) Total return information does not reflect deduction of any sales charges
imposed at the time of purchase for Class A shares or upon redemption for
Class B shares.

(b) Security Asset Allocation Fund 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.

(c) 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
----------------------------------------
Class A 3.6% 3.1% 2.4% 2.5%
Class B 4.7% 3.9% 3.3% 3.4%
----------------------------------------

(d) Net investment income (loss) was computed using average shares outstanding
throughout the period.

(e) Meridian Investment Management Corporation ("Meridian") was added as a
sub-adviser to the Fund effective August 1, 1997.
<PAGE>
APPENDIX A
- --------------------------------------------------------------------------------

REDUCED SALES CHARGES

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

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

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

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

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

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

- --------------------------------------------------------------------------------
BY TELEPHONE -- Call 1-800-888-2461.

BY MAIL -- Write to:

Security Management Company, LLC
700 SW Harrison
Topeka, KS 66636-0001

ON THE INTERNET -- Reports and other information about the Fund can be viewed
online or downloaded from:

SEC: http://www.sec.gov

SMC, LLC: http://www.securitybenefit.com

Additional information about the Fund (including the Statement of Additional
Information) can be reviewed and copied at the Securities and Exchange
Commission's Public Reference Room in Washington, DC. Information about the
operation of the public reference room may be obtained by calling the Commission
at 1-800-SEC-0330. Copies may be obtained, upon payment of a duplicating fee, by
writing the Public Reference Section of the Commission, Washington, DC
20549-6009.
- --------------------------------------------------------------------------------

ANNUAL/SEMI-ANNUAL REPORT -- Additional information about the Fund's investments
is available in the Fund's annual and semi-annual reports to shareholders. In
the Fund's annual report, you will find a discussion of the market conditions
and investment strategies that significantly affected the Fund's performance
during its last fiscal year.

STATEMENT OF ADDITIONAL INFORMATION -- The Fund's Statement of Additional
Information and the Fund's annual or semi-annual report are available, without
charge upon request by calling the Fund's toll-free telephone number
1-800-888-2461, extension 3127. Shareholder inquiries should be addressed to
SMC, LLC, 700 SW Harrison Street, Topeka, Kansas 66636-0001, or by calling the
Fund's toll-free telephone number listed above. The Fund's Statement of
Additional Information is incorporated into this prospectus by reference.

The Fund's Investment Company Act file number is listed below:

Security Equity Fund.............. 811-1136
<PAGE>
SECURITY FUNDS
===============================================================================
PROSPECTUS

FEBRUARY 1, 1999

- Security Social
Awareness Fund

SECURITY DISTRIBUTORS, INC.
A Member of The Security Benefit
Group of Companies
<PAGE>
TABLE OF CONTENTS
- --------------------------------------------------------------------------------

OBJECTIVE................................................................... 2
PRINCIPAL INVESTMENT STRATEGIES............................................. 2
MAIN RISKS.................................................................. 3
Market Risk............................................................... 3
Social Investing.......................................................... 3
Value Stocks.............................................................. 3
Growth Stocks............................................................. 3
PAST PERFORMANCE............................................................ 4
FEES AND EXPENSES OF THE FUND............................................... 5
INVESTMENT MANAGER.......................................................... 6
Management Fees........................................................... 6
Portfolio Managers........................................................ 6
Year 2000 Compliance...................................................... 6
BUYING SHARES............................................................... 7
Class A Shares............................................................ 8
Class B Shares............................................................ 8
Class B Distribution Plan................................................. 8
Class C Shares............................................................ 9
Class C Distribution Plan................................................. 9
Waiver of Deferred Sales Charge........................................... 9
Confirmations and Statements.............................................. 10
SELLING SHARES.............................................................. 10
By Mail................................................................... 10
By Telephone.............................................................. 11
By Broker................................................................. 11
Payment of Redemption Proceeds............................................ 11
DIVIDENDS AND TAXES......................................................... 11
Tax on Distributions...................................................... 11
Taxes on Sales or Exchanges............................................... 12
Backup Withholding........................................................ 12
DETERMINATION OF NET ASSET VALUE............................................ 13
SHAREHOLDER SERVICES........................................................ 13
Accumulation Plan......................................................... 13
Systematic Withdrawal Program............................................. 13
Exchange Privilege........................................................ 14
Retirement Plans.......................................................... 14
GENERAL INFORMATION......................................................... 15
Shareholder Inquiries..................................................... 15
FINANCIAL HIGHLIGHTS........................................................ 16
APPENDIX A - REDUCED SALES CHARGES.......................................... 18
Class A Shares............................................................ 18
Rights of Accumulation.................................................... 18
Statement of Intention.................................................... 18
Reinstatement Privilege................................................... 18
<PAGE>
OBJECTIVE

Described below is the investment objective for Security Social Awareness Fund.
The Fund's Board of Directors may change its investment objective without
shareholder approval. As with any investment, there can be no guarantee the Fund
will achieve its investment objective.

The Security Social Awareness Fund seeks capital appreciation.

PRINCIPAL INVESTMENT STRATEGIES

The Fund pursues its objective by investing, under normal circumstances, in a
well-diversified portfolio of stocks that the Investment Manager, Security
Management Company, LLC, believes have above-average earnings potential and
which meet certain established social criteria. The Fund may also invest in
fixed-income securities.

The Investment Manager uses a "bottom-up" approach when selecting
growth-oriented and value-oriented stocks. The Fund typically invests in the
common stock of companies whose total market value is $1 billion or greater at
the time of purchase.

GROWTH-ORIENTED STOCKS are stocks of established companies that typically have a
record of consistent growth.

VALUE-ORIENTED STOCKS are stocks of companies that are believed to be
undervalued in terms of price or other financial measurements and that have
above average growth potential.
- --------------------------------------------------------------------------------

After identifying potential investments, the Investment Manager determines if
the securities meet the Fund's established social criteria. The Fund does not
invest in securities of companies that engage in the production of:

* Nuclear energy

* Alcoholic beverages

* Tobacco products

Additionally, the Fund does not invest in companies that significantly engage
in:

* The manufacture of weapons

* Practices that have a detrimental effect on the environment

* The gambling industry

The Fund seeks out companies that:

* Contribute substantially to the communities in which they operate

* Demonstrate a positive record on employment relations

* Demonstrate substantial progress in the promotion of women and minorities or
in the implementation of benefit policies that support working parents

* Take notably positive steps in addressing environmental challenges

The Investment Manager continues to evaluate an issuer's activities to determine
whether it engages in any practices prohibited by the Fund's social criteria. If
the Investment Manager determines that a security held by the Fund does not
comply with its social criteria, the security is sold within a reasonable time.

Under adverse market conditions, the Fund could invest some or all of its assets
in cash and money market securities. Although the Fund would do this only in
seeking to avoid losses, the Fund may be unable to pursue its investment
objective during that time, and it could reduce the benefit from any upswing in
the market.

MAIN RISKS

SOCIAL INVESTING -- Investment in companies that must meet the Fund's
established social criteria may present additional risks because it will limit
the availability of investment opportunities compared to those of similar funds
which do not impose such restrictions on investment. In addition, if the
Investment Manager determines that a security held by the Fund does not comply
with its social criteria, the Fund must sell the security at a time when it may
be disadvantageous to do so.

VALUE STOCKS -- Investments in value stocks are subject to the risk that their
intrinsic values may never be realized by the market, or that their prices may
go down. While the Fund's investments in value stocks may limit downside risk
over time, the Fund may, as a trade-off, produce more modest gains than riskier
stock funds.

PAST PERFORMANCE

The chart and table below give an indication of the Fund's risks and performance
by showing changes in the Fund's Class A share performance from year to year.
The Fund's Class C shares are new and do not have a performance record. The
table also shows how the Fund's average annual total returns for the periods
indicated compare to those of broad measures of market performance. In addition,
the table compares the Fund to a narrower index that more closely mirrors the
Fund. As with all mutual funds, past performance is not a prediction of future
results.

The bar chart does not reflect the sales charge applicable to Class A shares,
which if reflected, would lower the returns shown. Average annual total returns
for the Fund's Class A shares include deduction of the 5.75% front-end sales
charge and for Class B shares include the appropriate deferred sales charge,
which is 5% in the first year declining to 0% in the sixth and later years. The
average annual total returns also assume that Class B shareholders redeem all
their shares at the end of the period indicated.

- --------------------------------------------------------------------------------
SECURITY SOCIAL AWARENESS FUND - CLASS A
- --------------------------------------------------------------------------------

[BAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]

1997 22.3%
1998 30.4%

- -------------------------------------------------
HIGHEST AND LOWEST RETURNS
(QUARTERLY 1997-1998)
- -------------------------------------------------
QUARTER ENDED
Highest 23.50% December 31, 1998
Lowest -8.59% September 30, 1998

- -------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
(THROUGH DECEMBER 31, 1998)
- -------------------------------------------------
PAST LIFE OF FUND
1 YEAR (SINCE 11/4/96)
Class A 22.93% 20.78%
Class B 24.06% 21.34%
S&P 500 28.58% 31.46%
Domini Social Index 7.50% 23.10%
- -------------------------------------------------
<PAGE>
FEES AND EXPENSES OF THE FUND

THIS TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY AND HOLD
SHARES OF THE FUND.

Maximum Sales Charge Imposed on Purchases 5.75% None None
(as a percentage of offering price)

Maximum Deferred Sales Charge (as a percentage None(2) 5%(3) 1%(4)
of original purchase price or redemption
proceeds, whichever is lower)
- --------------------------------------------------------------------------------
1 Class B shares convert tax-free to Class A shares automatically after eight
years.
2 Purchases of Class A shares in amounts of $1,000,000 or more are not subject
to an initial sales load; however, a deferred sales charge of 1% is imposed
in the event of redemption within one year of purchase.
3 5% during the first year, decreasing to 0% in the sixth and following years
4 A deferred sales charge of 1% is imposed in the event of redemption within
one year of purchase.
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund assets)
- --------------------------------------------------------------------------------
Total
Annual Fund
Management Distribution Other Operating
Fees (12b-1) Fees(5) Expenses Expenses

Class A 1.00% None 0.51% 1.51%
Class B 1.00% 1.00% 0.48% 2.48%
Class C 1.00% 1.00% 0.48% 2.48%
- --------------------------------------------------------------------------------
5 Long-term holders of shares that are subject to a 12b-1 distribution fee may
pay more than the equivalent of the maximum front-end sales charge otherwise
permitted by National Association of Securities Dealers, Inc. Rules.
- --------------------------------------------------------------------------------

EXAMPLE

This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds.

You would pay the following expenses if you redeemed your shares at the end of
each period.

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------------------------- ------------------------- ------------------------- -------------------------
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$720 $751 $351 $1,025 $1,073 $773 $1,351 $1,521 $1,321 $2,273 $2,816 $2,816
- -------------------------------------------------------------------------------------------------------------
</TABLE>

You would pay the following expenses if you did not redeem your shares.

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------------------------- ------------------------- ------------------------ -------------------------
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$720 $251 $251 $1,025 $773 $773 $1,351 $1,321 $1,321 $2,273 $2,826 $2,816
- -------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
INVESTMENT MANAGER

MANAGEMENT FEES -- The investment management fees paid by the Fund during the
last fiscal year were equal to 1.00% of the Fund's average net assets.

PORTFOLIO MANAGER -- CINDY SHIELDs, Assistant Vice President and Portfolio
Manager of the Investment Manager, has managed the Social Awareness Fund since
its inception in 1996. She joined the Investment Manager in 1989. Ms. Shields
graduated from Washburn University with a bachelor of business administration
degree, majoring in finance and economics. She is a Chartered Financial Analyst
with ten years of investment experience.

YEAR 2000 COMPLIANCE -- Like other mutual funds, as well as other financial and
business organizations around the world, the Fund could be adversely affected if
the computer systems used by the Investment Manager, and other service
providers, in performing their management and administrative functions do not
properly process and calculate date-related information and data before, during
and after January 1, 2000. Some computer software and hardware systems currently
cannot distinguish between the year 2000 and the year 1900 or some other date
because of the way date fields were encoded. This is commonly known as the "Year
2000 Problem." If not addressed, the Year 2000 Problem could impact the
management services provided to the Fund by the Investment Manager, as well as
transfer agency, accounting, custody, distribution and other services provided
to the Fund and its shareholders.

The Investment Manager has adopted a plan to be "Year 2000 Compliant" with
respect to both its internally built systems as well as systems provided by
external vendors. The Investment Manager considers a system "Year 2000
Compliant" when it is able to correctly process, provide and/or receive data
before, during and after the Year 2000. The Investment Manager's overall
approach to addressing the Year 2000 Problem is as follows: (1) to inventory its
internal and external hardware, software, telecommunications and data
transmissions to customers and conduct a risk assessment with respect to the
impact that a failure of any such system would have on its business operations;
(2) to modify or replace its internal systems and obtain vendor certifications
of Year 2000 compliance for systems provided by vendors or replace such systems
that are not Year 2000 Compliant; and (3) to implement and test its systems for
Year 2000 compliance. The Investment Manager has completed the inventory of its
internal and external systems and has made substantial progress toward
completing the modification/replacement of its internal systems, as well as
towards obtaining Year 2000 Compliant certifications from its external vendors.
Overall systems testing commenced in December 1998 and is scheduled to extend
into the first six months of 1999.

BUYING SHARES

Shares of the Fund are available through broker/dealers, banks, and other
financial intermediaries that have an agreement with the Fund's Distributor,
Security Distributors, Inc.

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SALES CHARGE
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AS A PERCENTAGE
AS A PERCENTAGE OF NET AMOUNT
AMOUNT OF ORDER OF OFFERING PRICE INVESTED
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Less than $50,000 ............. 5.75% 6.10%
$50,000 to $99,999 ............ 4.75% 4.99%
$100,000 to $249,999 .......... 3.75% 3.90%
$250,000 to $499,999 .......... 2.75% 2.83%
$500,000 to $999,999 .......... 2.00% 2.04%
$1,000,000 or more* ........... None None
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*Purchases of $1,000,000 or more are not subject to a sales charge
at the time of purchase, but are subject to a deferred sale charge
of 1.00% if redeemed within one year following purchase. The
deferred sales charge is a percentage of the lesser of the NAV of
the shares redeemed orthe net cost of such shares. Shares that are
not subject to a deferred sales charge are redeemed first.
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