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Previous: SCIENTIFIC INDUSTRIES INC, DEF 14A, 1996-09-30 |
Next: SENSORMATIC ELECTRONICS CORP, DEFR14A, 1996-09-30 |
<PAGE> 1
Dear Contract Owner:
The stock market continued to perform well during both the 6- and 12-month
periods ended July 31, but with a higher degree of volatility than in recent
years. However, the bond market has suffered over the past few months as yields
rose sharply from their low levels at the end of January.
There are increasing signs that the economy is performing more strongly than
anticipated earlier this year by most forecasters. The concern now is whether
the economy is growing too fast, raising the specter of a possible increase in
the rate of inflation. The rise in interest rates during the last six months
has clouded the picture to some extent, creating a more challenging environment
for both stocks and bonds through the rest of the year.
I encourage your review of this report. Please feel free to contact us if you
have any further questions.
Respectfully submitted,
/s/ ROBERT G. MEPHAM
Robert G. Mepham
President
[LOGO]
<PAGE> 2
BLANK
<PAGE> 3
SECURITY FIRST TRUST:
T. ROWE PRICE GROWTH AND INCOME SERIES AND VIRTUS EQUITY SERIES
EQUITY MARKET OVERVIEW
The economy advanced at a faster pace in the first two quarters of 1996,
accompanied by a rise in employment, hours worked, and consumer incomes. This
surprised most observers after last year's slowdown. However, these otherwise
favorable trends created concern in the bond market that inflationary pressures
or credit demands might accelerate and cause the Federal Reserve to pursue a
more restrictive monetary policy. In response, bond prices fell as the 30-year
Treasury bond yield rose from under 6% at the beginning of the year to around
7% at the end of July.
The broad stock market advance during this period reflected the favorable
trend in corporate profits and the huge inflows of mutual fund money into
stocks. Although the past six months were rewarding, we see some cautionary
signals for the months ahead. The two most important investment fundamentals
are trends in corporate profits and interest rates. Although rising profits
overcame rising interest rates in recent months, there is increasing evidence
that profit gains are becoming more difficult for many companies. While stock
market returns were appealing over the past six and 12 months, recent
volatility in July suggests that they may be difficult to sustain over the near
term.
EQUITY MARKET OUTLOOK
The last few years have been extremely favorable for equities, and your fund
has enjoyed a long period of consecutive quarterly gains. The underlying
business fundamentals supporting the market have been unusually positive. At
this stage of the business cycle, we suspect that the investment environment is
slowly becoming more challenging.
Corporate earnings comparisons are likely to be more difficult than they
have been, and there has been a good deal of discussion about the durability of
mutual fund inflows. The presidential election this year is another variable,
since it creates some uncertainty about the nation's political and economic
agenda. Therefore, we have few reasons to be either overly optimistic or overly
pessimistic and believe that equity returns in general may become fairly
routine over the next 12 months or so. However, in any environment we believe
we can uncover interesting investment values on your behalf.
PORTFOLIO MANAGEMENT: T. ROWE PRICE GROWTH AND INCOME SERIES
Your fund performed relatively well since our last report at the end of
January, and also over the past 12 months. For the fiscal year ended July 31,
1996, your fund surpassed both the S&P 500 Index and the Lipper Growth & Income
Funds average, two widely used performance benchmarks. A not insignificant
portion of the above average performance came in July when the fund declined
less than the overall market. Controlling risk is one of our hallmarks in
managing your fund.
GROWTH AND INCOME SERIES
SECTOR DIVERSIFICATION
<TABLE>
<S> <C>
Capital Equipment 5.4%
Consumer Non-Durables 24.1%
Consumer Cyclicals 0.7%
Consumer Services 9.2%
Transportation 3.5%
Energy 10.6%
Financial 15.8%
Process Industries 10.8%
Utilities 5.0%
Short-Term Securities 14.9%
</TABLE>
1
<PAGE> 4
Regarding portfolio changes, we made several significant purchases during
the past few months including relatively large investments in companies such as
Abbott Laboratories, Conrail, Dow Chemical, FMC, Mellon Bank, and
Travelers/Aetna. Their common denominators include attractive valuations and
favorable risk/return potential, in our opinion.
Among our sales, the most notable included CIGNA, Monsanto, and Times
Mirror. These holdings represented investments made several years ago that
performed relatively well but no longer offer outstanding value. We are always
struck by how investor perceptions can change and how our valuation discipline
can help identify promising investments at opportune times.
GROWTH & INCOME SERIES
15 LARGEST HOLDINGS
<TABLE>
<CAPTION>
Percentage of
Security Portfolio
-------- ---------
<S> <C>
Travelers Group Inc. 2.1
American Express 2.0
General Telephone Electronics Corp. 1.8
Abbott Laboratories 1.6
American Home Products 1.5
California Federal Bancorp 1.5
Pfizer, Inc. 1.5
Corning, Inc. 1.5
British Petroleum PLC 1.5
Conrail, Inc. 1.5
Warner Lambert Co. 1.5
Smithkline-Beecham 1.5
Honeywell, Inc. 1.4
Phillip Morris 1.4
Wells Fargo & Co. 1.4
---
TOTAL 23.7
====
</TABLE>
PORTFOLIO MANAGEMENT: VIRTUS EQUITY SERIES
The Virtus Equity Series is positioned as a growth and income portfolio
investing primarily in equity securities. The portfolio is currently
emphasizing value stocks over growth stocks in the composition of the
portfolio.
The Virtus Equity Series is managed to take advantage of trends in the stock
market that favor different styles of stock selection (Value or Growth). The
portfolio seeks to capture the predominant investment style to take greater
advantage of market trends. This involves opportunistic positioning defined by
style. "Style" refers to two widely accepted descriptions of stocks known as
"growth" and "value". Growth stocks are those companies with above-average
earnings expectations. Value stocks are those companies selling at a low price
relative to actual value of their underlying assets.
The overweighting in the value style is accomplished by emphasizing those
S&P 500 sectors heavily comprised of value stocks such as energy, financials,
and utilities. A de-emphasis is placed on sectors heavily comprised of growth
stocks such as technology and consumer staples. The companies in the portfolio
are large capitalization firms and the overall dividend yield is greater than
that of the S&P 500.
VIRTUS EQUITY SERIES
SECTOR DIVERSIFICATION
<TABLE>
<S> <C>
Consumer Non-Durables 0.8%
Consumer Cyclicals 9.9%
Technology 5.8%
Consumer Services 3.5%
Transportation 2.8%
Financial 28.5%
Capital Equipment 1.3%
Energy 10.7%
Process Industries 7.3%
Utilities 29.4%
</TABLE>
For the year ending July 31, 1996, the Virtus Equity Fund gained 9.82%. The
S&P 500 Index returned 16.52% for the same period. The Virtus investment
strategy is structured in a capital preservation position for the remainder of
1996. We believe value stocks will provide defensiveness due to their higher
yields, lower price-earnings ratios and lower volatility.
2
<PAGE> 5
EQUITY SERIES
15 LARGEST HOLDINGS
<TABLE>
<CAPTION>
% of
Security Portfolio
-------- ---------
<S> <C>
Int'l Business Machines 5.8
Bellsouth Corporation 3.9
GTE Corporation 3.8
General Motors Corporation 3.5
Exxon Corporation 3.5
Ford Motor Company 3.3
Amoco Corporation 2.9
Chase Manhattan Corporation 2.8
BankAmerica Corporation 2.7
Nationsbank Corporation 2.4
Texaco, Inc. 2.1
Chrysler Corporation 2.0
Nynex Corporation 1.8
Dow Chemical Company 1.8
First Union Corporation 1.7
----
TOTAL 44.0
====
</TABLE>
SECURITY FIRST TRUST:
T. ROWE PRICE BOND SERIES
AND VIRTUS U.S. GOVERNMENT INCOME SERIES
FIXED-INCOME MARKET OVERVIEW
The environment for fixed income investors during the six months ended July
31, 1996, was generally negative, a sharp reversal from the preceding six
months. The economy, which had been perceived as weak through the end of 1995,
began showing signs of strength early in the period. The February employment
report indicated that more than 700,000 new jobs had been created the previous
month. This report was subsequently followed by continued strength in
employment as well as in other sectors, such as retail sales. These factors,
combined with other indicators including increases in commodity prices, were
considered inflationary and, therefore, bad news for fixed income assets. In
this economic environment, the market anticipated that the Federal Reserve
might switch to a neutral or tightening mode from its earlier policy of
monetary easing.
Investors reacted by selling bonds and driving up interest rates. Over the
last six months, for example, 10-year Treasury yields increased 70 basis
points. As the chart below shows, interest rates all across the yield curve
have increased.
[INTEREST RATE LEVELS GRAPH]
FIXED-INCOME MARKET OUTLOOK
We are fairly neutral on our outlook for the bond market during the
remainder of the year. The economy at this writing appears to be growing at a
more moderate pace than earlier in the year. If this moderation with relatively
low inflation continues, the Federal Reserve could well remain neutral which
could cause the bond market to trade in a narrow range around current levels.
However, should the economy grow more rapidly, the Federal Reserve would likely
increase short-term rates.
We intend to remain fully invested with minimal cash levels, while
emphasizing mortgage-backed securities and high quality corporate bonds.
However, as we suggested in previous reports, we are cautious about adding
substantially to either sector for several reasons: corporate yield spreads are
at the narrow end of a five-year range and may experience upward pressure with
falling prices if the economy weakens; in addition, yields on mortgage
securities could also rise if prepayments increased because of lower interest
rates. We are therefore likely to steer a steady course during the months
ahead.
3
<PAGE> 6
PORTFOLIO MANAGEMENT: T. ROWE PRICE BOND SERIES
The fund's return of 5.1% over the year ended July 31, 1996, was as good as
could be expected in a generally negative environment for bonds.
We reduced the portfolios duration modestly over the past six months to
decrease its interest rate sensitivity. As usual, we maintained a high-quality
overall credit rating (AA) over the period while generating an attractive level
of income.
At the end of July, your fund was 38% invested in corporate bonds, 20% in
U.S. government obligations, 36% in federal agency issues, and the rest in
short-term securities.
BOND SERIES
SECTOR DIVERSIFICATION
<TABLE>
<S> <C>
Short-Term Securities 6.8%
Corporate Bonds 37.6%
Federal Agencies 36.0%
U.S. Government Obligations 19.6%
</TABLE>
PORTFOLIO MANAGEMENT: VIRTUS U.S. GOVERNMENT INCOME SERIES
The Virtus U.S. Government Income Series was established with the objective
of providing investors with current income generated from a portfolio of high
quality, intermediate maturity, U.S. Treasury, government agency, and agency
mortgage-backed securities.
We remained fully invested for the first half of the fiscal year, then sold
longer bonds as interest rates rose in February. By late June, we felt that the
economy would begin to slow and rates would fall. We added longer bonds back to
the portfolio, pushing out our average effective maturity to our longest level,
about 4.7 years.
Yields on mortgage-backed bonds were very attractive during the middle of
the fiscal year, so we increased our percentage holdings of these bonds. By
July, the rate advantage had narrowed somewhat, but we continue to selectively
add mortgages to improve your income, and provide a better total return. Yields
on other government and agency bonds remain too low versus Treasuries to
justify additional purchases, given their less liquid nature.
For the year, your fund returned 4.29%, including dividends and the change
in NAV. This compares to a return of 5.15% on the Lehman Brothers Intermediate
Treasury Index, a composite of similar maturity bonds as those found in your
portfolio.
Looking forward, we will add as many higher yielding mortgage backed bonds,
and government agencies as possible, while staying within our conservative
portfolio structure. A core of U.S. Treasuries will be maintained for liquidity
and to facilitate active management. Excess short-term cash will be kept to a
minimum unless we feel interest rates may go higher over the near term.
U.S. GOVERNMENT INCOME SERIES
SECTOR DIVERSIFICATION
<TABLE>
<S> <C>
Short-Term Securities 7.5%
Federal Agencies 45.5%
U.S. Government Obligations 47.0%
</TABLE>
4
<PAGE> 7
PERFORMANCE OF SECURITY FIRST TRUST GROWTH AND INCOME SERIES, BOND SERIES,
EQUITY SERIES AND U.S. GOVERNMENT INCOME SERIES
The following are the average annual and total returns for each series for
the period ending July 31, 1996, assuming an investment of $10,000 at the start
of the period, and redemption at the end of the period, with dividends
reinvested. These returns are based on past experience. Future values of
shares will fluctuate so that their redemption values may be more or less than
original cost.
Average Annual Total Returns
<TABLE>
<CAPTION>
Fund 1 Year 3 Years 5 Years 10 Years
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Growth and
Income 17.78% 14.47% 13.16% 12.69%
Series(1)(2)
- --------------------------------------------------------------------------------------
Bond
Series(1)(2) 4.60% 4.10% 7.17% 6.84%
- --------------------------------------------------------------------------------------
Equity Series 10.03% 8.42% N/A*
- --------------------------------------------------------------------------------------
U.S.
Government 4.48% 3.37% N/A*
Income
- --------------------------------------------------------------------------------------
Consumer
Price Index 2.93% 2.83% 2.89% 3.68%
- --------------------------------------------------------------------------------------
</TABLE>
Compound Total Returns
<TABLE>
<CAPTION>
Fund 1 Year 3 Years 5 Years 10 Years
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Growth and
Income 17.78% 49.99% 85.55% 230.12%
Series(1)(2)
- --------------------------------------------------------------------------------------
Bond
Series(1)(2) 4.60% 12.80% 41.38% 93.86%
- --------------------------------------------------------------------------------------
Equity Series 10.03% 27.45% N/A*
- --------------------------------------------------------------------------------------
U.S.
Government 4.48% 10.45% N/A*
Income
- --------------------------------------------------------------------------------------
Consumer
Price Index 2.93% 8.74% 15.29% 43.59%
- --------------------------------------------------------------------------------------
</TABLE>
* Funds were introduced as of May 1993.
(1) Return is computed after deduction of all series expenses, but before
deduction of actuarial risk charges and other fees of the variable annuity
account.
(2) From inception to July 1983, Security First Investment Management
Corporation reimbursed the Growth and Income Series for expenses in excess of
the maximum expense limitation, and these reimbursements were repaid from
August 1983 to July 1986. Likewise, the Bond Series was reimbursed for excess
expenses from inception to July 1985, and these reimbursements were repaid from
August 1985 to July 1993. Reimbursement of expenses to a series increases
average annual reimbursements reduces these returns.
(3) For a period of three years from inception, Security Management and
Virtus Management have also agreed to reimburse the Equity Series for any
remaining expenses exceeding a limitation equivalent annually to 1% and to
reimburse the U.S. Government Income Series for any remaining expenses
exceeding a limitation a equivalent annually to .7%.
5
<PAGE> 8
The following graphs set forth the historical performance of each series as
compared to a stated market index for the periods ended July 31:
Comparison of Change in Value of $10,000 Investment in Security First Trust
T. Rowe Price Growth and Income Series and Standard and Poors 500 Index
Assuming Dividends and Distributions are Reinvested.
[GRAPH]
The performance indicated here may not be indicative of future performance.
Comparison of Change in Value of $10,000 Investment in Security First Trust
T. Rowe Price Bond Series, Lehman Government Bonds Index, and the
Lehman Aggregate Bond Index Assuming Dividends and Distributions are
Reinvested.
[GRAPH]
The performance indicated here may not be indicative of future performance.
Comparison of Change in Value of $10,000 Investment in Security First Trust
Virtus Equity Series and Standard and Poors 500 Index Assuming
Dividends and Distributions are Reinvested.
[GRAPH]
The performance indicated here may not be indicative of future performance.
*The Series commenced operations on 5/19/93.
Comparison of Change in Value of $10,000 Investment in Security First Trust
Virtus U.S. Government Income Series and Lehman Government and Intermediate
Index
Assuming Dividends and Distributions are Reinvested.
[GRAPH]
The performance indicated here may not be indicative of future performance.
*The Series commenced operations on 5/19/93.
6
<PAGE> 9
SECURITY FIRST TRUST T. ROWE PRICE GROWTH AND INCOME SERIES
The graph and Per Share Data Table below illustrate the growth in per share
value for the period ending July 31, 1996, of one of the Security First Trust
T. Rowe Price Growth and Income Series purchased on August 1, 1979, at the
price of $5.07 assuming that dividends and capital gains were reinvested.
The results shown should not be considered a representation of the income
that may be earned by investing in the Series today. The value of variable
annuities funded by shares in this Series will be reduced by any actuarial risk
charges.
[GROWTH AND INCOME SERIES GRAPH]
PER SHARE DATA
<TABLE>
<CAPTION>
Per Share
Value with Cumulative
Calendar Net Dividend Dividends & Change
Year Asset & Capital Capital Gains Yearly from
Ending Value Gains Reinvested Change 8/1/79
- -------- ------- ---------- ------------- ------ --------
<S> <C> <C> <C> <C> <C>
1981 $5.41 $1.69 $8.14 -1.3% +60.6%
1982 5.95 .41 9.73 +19.5% +93.9
1983 7.27 .28 12.45 +28.0 +145.6
1984 6.75 .51 12.48 +0.2 +146.1
1985 7.84 .30 15.11 +21.1 +198.1
1986 7.76 .59 16.07 +6.3 +216.9
1987 5.98 2.62 17.47 +8.8 +244.6
1988 6.97 .41 21.56 +23.4 +325.3
1989 7.52 1.09 26.64 +23.6 +425.4
1990 6.25 .44 23.70 -11.0 +367.5
1991 7.69 .24 30.07 +26.9 +493.1
1992 8.17 .22 32.80 +9.1 +546.9
1993 9.12 .22 37.49 +14.3 +639.4
1994 9.05 .32 38.51 +2.7 +659.6
1995 11.52 .34 50.49 +31.1 +895.8
July/1996 12.10 N/A* 53.05 +5.07** +946.3
</TABLE>
SECURITIES FIRST TRUST
T. ROWE PRICE BOND SERIES
The graph and Per Share Data Table below illustrate the growth in per share
value for the period ending July 31, 1996, of one share of the Security First
Trust T. Rowe Price Bond Series purchased on August 1, 1979, at a price of
$3.12 assuming that dividends and capital gains were reinvested.
The results shown should not be considered a representation of the income
that may be earned by investing in the Series today. The value of variable
annuities funded by shares in this Series will be reduced by any actuarial risk
charges.
[BOND SERIES GRAPH]
PER SHARE DATA
<TABLE>
<CAPTION>
Per Share
Value with Cumulative
Calendar Net Dividend Dividends & Change
Year Asset & Capital Capital Gains Yearly from
Ending Value Gains Reinvested Change 8/1/79
- -------- ------- ---------- ------------- ------ --------
<S> <C> <C> <C> <C> <C>
1981 $3.28 $.36 $3.81 +22.9% +22.1%
1982 3.93 0.00 4.56 +19.8 +46.3
1983 3.79 .31 4.78 +4.7 +53.2
1984 3.87 .28 5.26 +10.1 +68.6
1985 4.15 .33 6.14 +16.8 +96.9
1986 4.38 .30 6.95 +13.2 +122.8
1987 3.83 .66 7.14 +2.8 +128.8
1988 3.77 .28 7.55 +5.7 +142.1
1989 3.89 .30 8.39 +11.1 +168.9
1990 3.52 .54 8.76 +4.4 +180.8
1991 3.79 .25 10.06 +14.8 +222.4
1992 3.80 .23 10.70 +6.4 +242.9
1993 3.94 .22 11.72 +9.5 +275.6
1994 3.58 .22 11.31 -3.5 +262.5
1995 3.94 .24 13.21 +16.8 +323.4
July/1996 3.87 N/A* 12.95 -2.0** +315.1
</TABLE>
* Dividends and capital gains declared in December ** For 7 months
year to date 1996
7
<PAGE> 10
SECURITIES FIRST TRUST VIRTUS EQUITY SERIES
The Per Share Data Table below illustrates the growth in per share value
for the period ending July 31, 1996, of one share of the Security First Trust
Virtus Equity Series purchased on May 19, 1993, at a price of $5.00 assuming
that dividends and capital gains were invested.
The results shown should not be considered a representation of the income
that may be earned by investing in the Series today. The value of variable
annuities funded by shares in this Series will be reduced by any actuarial risk
charges.
PER SHARE DATA
<TABLE>
<CAPTION>
Per Share
Value with Cumulative
Calendar Net Dividend Dividends & Change
Year Asset & Capital Capital Gains Yearly from
Ending Value Gains Reinvested Change 5/19/93
- -------- ------- ---------- ------------- ------ --------
<S> <C> <C> <C> <C> <C>
1993 $5.15 $.03 $5.18 +3.6% 3.6%++
1994 4.78 .05 4.85 -6.3 -3.0
1995 5.91 .21 6.21 +28.0 +24.2
July/1996 6.05 N/A* 6.36 +2.42** +27.2
</TABLE>
++change from 5-19-93 to 12-31-93
SECURITY FIRST TRUST VIRTUS U.S. GOVERNMENT INCOME SERIES
The Per Share Data Table below illustrates the growth in per share value
for the period ending July 31, 1996, of one share of the Security First Trust
Virtus U.S. Government Income Series purchased on May 19, 1993, at a price of
$5.00 assuming the dividends and capital gains were reinvested.
The results shown should not be considered a representation of the income
that may be earned by investing in the Series today. The value of variable
annuities funded by shares in this Series will be reduced by any actuarial risk
charges.
PER SHARE DATA
<TABLE>
<CAPTION>
Per Share
Value with Cumulative
Calendar Net Dividend Dividends & Change
Year Asset & Capital Capital Gains Yearly from
Ending Value Gains Reinvested Change 5/19/93
- -------- ------- ---------- ------------- ------ --------
<S> <C> <C> <C> <C> <C>
1993 $5.04 $.08 $5.11 2.2% 2.2%++
1994 4.74 .14 4.96 -2.94 -0.8
1995 5.18 .20 5.63 +13.5 +12.6
July/1996 5.15 N/A* 5.60 -0.5** +12.0
</TABLE>
++change from 5-19-93 to 12-31-93
* Dividends and capital gains declared in December ** For 7 months
year to date 1996
8
<PAGE> 11
SECURITY FIRST TRUST
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 1996
<TABLE>
<CAPTION>
T. Rowe Price Virtus
Growth and Virtus U.S.Government
T. Rowe Price Income Equity Income
Bond Series Series Series Series
-------------------- ------------- ------------- --------------
<S> <C> <C> <C> <C>
ASSETS
Investments at market - Note A and Schedule I:
Investment securities (cost:
Bond Series - $8,807,034; Growth
and Income Series - $84,964,956;
Equity Series - $20,714,306;
U.S. Government Income Series -
$14,677,943) $ 8,847,187 $111,747,194 $ 20,340,928 $ 14,582,047
Cash 664,672 269,026 47,166
Interest receivable 122,369 2,437 994 245,089
Dividends receivable 229,211 57,601
Receivable for securites sold 86,157 8,667
Receivable for capital shares
purchased 803 67,617 51,425 19,370
Prepaid insurance 997 12,957 2,375 1,607
------------- ------------ ------------ ------------
9,057,513 112,724,088 20,722,349 14,903,946
LIABILITIES
Payable for securities purchased 44,731
Accrued expenses 18,874 53,706 9,875 10,062
Payable for capital shares redeemed 9,461 79,809
Payable to investment adviser - Note B 2,880 35,635 10,579 4,935
Payable for directors fees 202 2,045 119 125
------------- ------------ ------------ ------------
76,148 171,195 20,573 15,122
NET ASSETS
Composed of:
Capital shares (authorized 100,000,000
shares of $.01 par value for
each series) 8,848,867 80,587,189 19,381,389 14,714,081
Undistributed net investment income 326,064 1,559,772 247,404 377,157
Undistributed net realized gain (loss) (233,719) 3,623,694 1,446,361 (106,518)
Net unrealized appreciation
(depreciation) of investments 40,153 26,782,238 (373,378) (95,896)
------------- ------------ ----------- -----------
Net assets $ 8,981,365 $112,552,893 $ 20,701,776 $ 14,888,824
============= ============ ============ ============
Capital shares outstanding 2,316,930 9,299,102 3,419,627 2,890,258
Net asset value per share $ 3.88 $ 12.10 $ 6.05 $ 5.15
</TABLE>
The accompanying notes are an integral part of these financial statements.
9
<PAGE> 12
SECURITY FIRST TRUST
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JULY 31, 1996
<TABLE>
<CAPTION>
T. Rowe Price Virtus
Growth and Virtus U.S. Government
T. Rowe Price Income Equity Income
Bond Series Series Series Series
--------------- ------------ ------------ ---------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends $ 2,342,914 $ 421,171
Interest $ 621,786 1,028,045 43,991 $ 615,440
Miscellaneous income 742 143
------------- ------------ ------------ -------------
621,786 3,371,701 465,305 615,440
EXPENSES
Custodian fees 15,290 29,336 11,614 7,466
Adviser fees - Note B 30,217 351,274 107,354 75,451
Management fees - Note B 12,950 150,392 21,471 15,090
Printing expenses 7,181 54,277 473 2,168
Audit fees 6,782 8,092 5,601 8,816
Insurance expenses 1,625 17,064 1,645 1,303
Directors' fees and expenses 2,089 23,823 3,161 2,218
Taxes, licenses and fees 875 875 933 875
Miscellaneous expenses 414 3,530 4,464 1,422
------------- ------------ ------------ -------------
77,423 638,663 156,716 114,809
Less: Waiver of management fees (523) (295)
Waiver of adviser fees (12,163) (43,033)
------------- ------------ ----------- -------------
77,423 638,663 144,030 71,481
------------- ------------ ------------ -------------
Net investment income 544,363 2,733,038 321,275 543,959
NET REALIZED AND UNREALIZED GAINS
(LOSSES) ON INVESTMENTS Notes A and C
Net realized gain(loss) on sale of
investments 36,467 3,625,576 1,781,966 (56,907)
Net unrealized appreciation
(depreciation) of investments
during the year (193,455) 8,923,218 (1,223,826) (143,327)
------------ ------------ ----------- -------------
Net gain (loss) on investments (156,988) 12,548,794 558,140 (200,234)
------------ ------------ ------------ -------------
Increase in net assets
resulting from operations $ 387,375 $ 15,281,832 $ 879,415 $ 343,725
============= ============== ============ =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
10
<PAGE> 13
SECURITY FIRST TRUST
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED JULY 31, 1996
<TABLE>
<CAPTION>
T. Rowe Price Virtus
Growth and Virtus U.S. Government
T. Rowe Price Income Equity Income
Bond Series Series Series Series
--------------- ------------ ------------ ---------------
<S> <C> <C> <C> <C>
Operations:
Net investment income $ 544,363 $ 2,733,038 $ 321,275 $ 543,959
Net realized gain(loss) on sale
of investments 36,467 3,625,576 1,781,966 (56,907)
Net unrealized appreciation
(depreciation) of investments
during the year (193,455) 8,923,218 (1,223,826) (143,327)
------------ ------------- ------------ ------------
Increase in net assets
resulting from operations 387,375 15,281,832 879,415 343,725
Distributions to shareowners from:
Net investment income (494,898) (2,489,944) (115,461) (326,728)
Net realized gains (351,978) (328,664) (22,717)
Capital share transactions - Note D:
Reinvestment of net investment income
distributed 494,898 2,489,944 115,461 326,728
Reinvestment of net realized gains 351,978 328,664 22,717
Sales of capital shares 2,367,725 20,549,022 12,488,481 8,862,888
Redemptions of capital shares (1,751,516) (7,067,607) (431,839) (313,938)
----------- ------------- ------------ ------------
Increase in net assets from
capital share transactions 1,111,107 16,323,337 12,500,767 8,898,395
------------ ------------- ------------ ------------
Total increase in net assets 1,003,584 28,763,247 12,936,057 8,892,675
Net Assets:
Beginning of year 7,977,781 83,789,646 7,765,719 5,996,149
------------ ------------- ------------ ------------
End of year (including undistributed net
investment income: Bond Series -
$326,064; Growth and Income
Series - $1,559,772; Equity
Series - $247,404; U.S. Government
Income Series - $377,157) $ 8,981,365 $ 112,552,893 $ 20,701,776 $ 14,888,824
============ ============= ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
11
<PAGE> 14
SECURITY FIRST TRUST
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED JULY 31, 1995
<TABLE>
<CAPTION>
T. Rowe Price Virtus
Growth and Virtus U.S. Government
T. Rowe Price Income Equity Income
Bond Series Series Series Series
--------------- ------------ ------------ ---------------
<S> <C> <C> <C> <C>
Operations:
Net investment income $ 457,766 $ 2,254,767 $ 66,351 $ 244,291
Net realized gain (loss) on
investments (85,491) 723,499 10,119 (26,894)
Net unrealized appreciation
of investments during the year 258,476 9,667,042 866,272 155,555
------------- ------------ ------------ -------------
Increase in net assets
resulting from operations 630,751 12,645,308 942,742 372,952
Distributions to shareowners from:
Net investment income (403,613) (1,896,472) (43,805) (133,049)
Net realized gains (440,124)
Capital share transactions -- Note D:
Reinvestment of net investment income
distributed 403,613 1,896,472 43,805 133,049
Reinvestment of net realized gains 440,124
Sales of capital shares 1,520,473 14,215,043 4,494,367 2,982,198
Redemptions of capital shares (1,399,407) (8,731,675) (678,463) (783,488)
------------- ------------ ------------ -------------
Increase in net assets from
capital share transactions 524,679 7,819,964 3,859,709 2,331,759
------------- ------------ ------------ -------------
Total increase in net assets 751,817 18,128,676 4,758,646 2,571,662
Net Assets:
Beginning of year 7,225,964 65,660,970 3,007,073 3,424,487
------------- ------------ ------------ -------------
End of year (including
undistributed net investment
income: Bond Series - $276,600;
Growth and Income Series -
$1,316,678; Equity Series - $41,590;
U.S. Government Income Series -
$159,926) $ 7,977,781 $ 83,789,646 $ 7,765,719 $ 5,996,149
============= ============ ============ =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
12
<PAGE> 15
SECURITY FIRST TRUST SCHEDULE I
T. ROWE PRICE BOND SERIES
PORTFOLIO OF INVESTMENTS
JULY 31, 1996
<TABLE>
<CAPTION>
Percentage
of Market
Value of Market
Fixed Maturities Portfolio Principal Value
- --------------------------------------------------- ------------ ------------- --------------
<S> <C> <C> <C>
CORPORATE NOTES 37.6%
Aerospace and Defense: 1.8
Boeing Co., 8.75%, 08/15/21 $ 50,000 $ 56,322
Northrop Grumman Corp., 7.88%, 03/01/26 100,000 99,980
-------------
156,302
Banking: 5.1
Ahmanson H F Co., 8.25%, 10/01/02 50,000 52,376
Bankers Trust Co., 0.00%, 10/01/96 95,000 94,050
First Hawaiian Bank, 6.93%, 12/01/03 75,000 72,102
HSBC Fin Nederland, 7.40%, 04/15/03 100,000 99,940
National Australia Bank, 9.70%, 10/15/98 125,000 132,798
-------------
451,266
Credit Card - Backed: 1.6
First Chicago Master Trust II, 8.40%, 06/15/19 41,667 41,784
Standard Credit Card, 7.25%, 04/07/08 100,000 100,963
-------------
142,747
Electric and Electronic Equipment: 1.1
Honeywell Inc., 6.60%, 04/15/01 100,000 98,623
Electric Utilities: 4.5
Commonwealth Edison Co., 7.00%, 07/01/05 100,000 95,227
Connecticut Light & Power Co., 5.75%, 07/01/00 125,000 117,689
National Rural Utilities, 6.50%, 09/15/02 100,000 97,189
Public Services Electric & Gas Co., 6.25%, 01/01/07 100,000 90,500
-------------
400,605
Finance & Credit: 8.6
Advanta Corp., 7.00%, 05/01/01 100,000 98,738
American Express Credit Corp., 7.75%, 03/01/97 65,000 65,584
Beneficial Corp., 9.05%, 03/14/97 50,000 50,829
Commercial Credit Group, 9.60%, 05/15/99 50,000 53,457
Credit Foncier France, 8.00%, 01/14/02 100,000 100,700
Ford Motor Credit, 9.50%, 04/15/00 50,000 54,028
General Electric Capital, 9.38%, 10/06/98 125,000 131,840
GMAC, 9.63%, 12/15/01 100,000 110,884
Margaretten Financial, 6.75%, 06/15/00 100,000 98,939
-------------
764,999
</TABLE>
13
<PAGE> 16
SECURITY FIRST TRUST SCHEDULE I
T. ROWE PRICE BOND SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JULY 31, 1996
<TABLE>
<CAPTION>
Percentage
of Market
Value of Market
Fixed Maturities Portfolio Principal Value
- --------------------------------------------------- ------------ ------------- --------------
<S> <C> <C> <C>
CORPORATE NOTES
(CONTINUED)
Forest Products: 2.4%
Boise Cascade Co., 9.85%, 06/15/02 $ 100,000 $ 111,238
Noranda Forest, Inc., 7.50%, 07/15/03 100,000 98,406
-------------
209,644
Health Services: 1.1
Columbia/HCA Healthcare, 7.69%,06/15/25 100,000 98,597
Insurance Carriers: 1.1
Prudential Insurance Co. America, 6.88%, 04/15/03 100,000 96,597
Media and Communications: 4.3
Disney Global Bond, 6.38%, 03/30/01 125,000 121,375
News American Holdings Inc., 7.50%, 03/01/00 50,000 50,599
Tele Communications Inc., 9.25%, 04/15/02 100,000 105,630
Time Warner Inc., 7.75%, 06/15/05 100,000 97,375
-------------
374,979
Oil and Gas Exploration: 1.1
Quaker State Corp., 6.63%, 10/15/05 100,000 93,993
Security, Commodity Brokers, and Services: 2.3
Lehman Bros., 8.50%, 05/01/07 100,000 104,414
Salomon, Inc., 6.05%, 12/17/98 100,000 97,783
-------------
202,197
Telephone Communication: 2.6
GTE Corp., 8.85%, 03/01/98 50,000 51,686
Rochester Telephone, 8.77%, 04/16/01 100,000 105,766
U.S. West Communications, 7.50%, 06/15/23 80,000 75,582
-------------
233,034
-------------
TOTAL CORPORATE NOTES
(COST $3,340,039) 3,323,583
</TABLE>
14
<PAGE> 17
SECURITY FIRST TRUST SCHEDULE I
T. ROWE PRICE BOND SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JULY 31, 1996
<TABLE>
<CAPTION>
Percentage
of Market
Value of Market
Fixed Maturities Portfolio Principal Value
- --------------------------------------------------- ------------ ------------- --------------
<S> <C> <C> <C>
FEDERAL AGENCIES 36.0%
Federal Home Loan Bank: 3.0
5.43%, 02/25/99 $ 75,000 $ 73,266
5.50%, 01/10/01 200,000 190,906
-------------
264,172
Federal Home Loan Mortgage Corp.: 5.0
7.13%, 07/21/99 235,000 239,040
9.00%, 01/01/17 3,510 3,659
9.50%, 04/01/19 34,008 36,165
9.00%, 06/01/19 14,412 15,024
7.00%, 07/15/21 150,000 145,547
-------------
439,435
Federal National Mortgage Assn.: 2.2
8.35%, 11/10/99 175,000 183,969
7.50%, 08/25/21 9,069 8,820
-------------
192,789
Government National Mortgage Assn.: 23.7
12.50%, 04/15/10 . 5,432 6,312
9.00%, 04/15/09 4,831 5,089
9.00%, 05/15/09 28,571 30,097
9.00%, 05/15/09 6,998 7,372
9.00%, 05/15/09 10,886 11,467
9.00%, 05/15/09 4,222 4,448
9.00%, 05/15/09 4,081 4,299
9.00%, 05/15/09 18,514 19,503
11.25%, 07/15/13 1,620 1,823
11.50%, 11/15/15 73,478 83,190
9.00%, 10/15/16 120,466 126,000
9.00%, 05/15/16 267,827 282,783
9.00%, 07/15/16 160,565 167,941
10.00%, 08/15/16 40,671 44,229
9.00%, 11/15/16 148,115 154,919
10.00%, 06/15/17 28,602 29,129
</TABLE>
15
<PAGE> 18
SECURITY FIRST TRUST SCHEDULE I
T. ROWE PRICE BOND SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JULY 31, 1996
<TABLE>
<CAPTION>
Percentage
of Market
Value of Market
Fixed Maturities Portfolio Principal Value
- --------------------------------------------------- ------------ ------------- --------------
<S> <C> <C> <C>
FEDERAL AGENCIES
(CONTINUED)
9.25%, 07/15/17 $ 66,258 $ 69,881
10.00%, 11/15/17 34,083 37,065
11.50%, 02/15/18 10,800 12,227
10.00%, 03/15/19 65,312 71,027
10.00%, 03/15/20 84,022 91,451
7.00%, 08/15/23 103,465 98,938
7.50%, 10/15/23 261,619 257,040
7.50%, 06/15/23 154,269 151,690
7.00%, 01/15/24 180,564 172,665
7.00%, 03/15/24 175,197 167,532
-------------
2,108,117
Tennessee Valley Authority: 2.1%
8.38%, 10/01/99 175,000 183,832
-------------
TOTAL FEDERAL AGENCIES
(COST $3,172,102) 3,188,345
U.S. GOVERNMENT OBLIGATIONS 19.6
U.S. Treasury Bonds: 13.4
8.50%, 02/15/20 180,000 207,000
8.75%, 05/15/20 200,000 235,813
8.75%, 08/15/20 100,000 118,000
8.00%, 11/15/21 150,000 164,531
7.25%, 08/15/22 250,000 252,578
0.00%, 05/15/04 350,000 207,841
-------------
1,185,763
U.S. Treasury Notes: 6.2
7.75%, 11/30/99 15,000 15,530
5.63%, 11/30/00 550,000 529,719
-------------
545,249
TOTAL U.S. GOVERNMENT OBLIGATIONS
(COST $1,690,646) 1,731,012
-------------
TOTAL FIXED MATURITIES 8,242,940
(COST $8,202,787)
</TABLE>
16
<PAGE> 19
SECURITY FIRST TRUST SCHEDULE I
T. ROWE PRICE BOND SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JULY 31, 1996
<TABLE>
<CAPTION>
Percentage
of Market
Value of Market
Short-Term Investments Portfolio Principal Value
- --------------------------------------------------- ------------ ------------- --------------
<S> <C> <C> <C>
SHORT-TERM INVESTMENTS 6.8%
Abbott Laboratories, 5.30%, 08/07/96 $ 300,000 $ 299,734
Bell Atlantic Financial, 5.28%, 08/05/96 240,000 239,859
Federal Farm Credit Bank, 5.29%, 08/29/96 20,000 19,917
US Treasury Bill, 5.01%, 09/12/96 45,000 44,737
-------------
TOTAL SHORT-TERM INVESTMENTS
(COST $604,247) 604,247
-------------
TOTAL INVESTMENTS
(COST $8,807,034) 100.0 8,847,187
Other assets less liabilities 134,178
-------------
NET ASSETS $ 8,981,365
=============
</TABLE>
The accompanying notes are an integral part of these financial statements.
17
<PAGE> 20
SECURITY FIRST TRUST SCHEDULE I
T. ROWE PRICE GROWTH AND INCOME SERIES
PORTFOLIO OF INVESTMENTS
JULY 31, 1996
<TABLE>
<CAPTION>
Percentage
of Market
Value of No. of Market
Equity Securities Portfolio Shares Value
- --------------------------------------------------- ------------ ------------- --------------
<S> <C> <C> <C>
CAPITAL EQUIPMENT 5.4%
Electrical Equipment: 3.6
General Telephone Electronics Corp. 25,000 $ 2,056,250
Honeywell, Inc. 30,000 1,590,000
Westinghouse Electric Corp. 25,000 418,750
-------------
4,065,000
Machinery: 1.8
Coltec Industries, Inc.* 50,000 706,250
FMC Corp.* 20,000 1,290,000
-------------
1,996,250
CONSUMER CYCLICALS 0.7
Automobiles and Related: 0.7
Ford Motor Co. 22,857 739,995
CONSUMER NONDURABLES 24.1
Food and Beverages: 6.2
Anheuser-Busch Company, Inc. 12,000 897,000
CPC International, Inc. 12,000 802,500
General Mills, Inc. 25,000 1,353,125
McCormick & Co. 50,000 993,750
Pepsico, Inc. 20,000 635,000
Quaker Oats Company 30,000 960,000
Ralston-Ralston Purina Group 20,000 1,255,000
-------------
6,896,375
Health Services: 1.7
Baxter International, Inc. 30,000 1,248,750
United Healthcare Corp. 20,000 675,000
-------------
1,923,750
Miscellaneous Consumer Products: 3.9
American Brands, Inc. 18,000 819,000
Colgate Palmolive Co. 12,000 942,000
Phillip Morris 15,000 1,569,375
Tambrands, Inc. 25,000 1,018,750
-------------
4,349,125
</TABLE>
*Non-Income Producing
18
<PAGE> 21
SECURITY FIRST TRUST SCHEDULE I
T. ROWE PRICE GROWTH AND INCOME SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JULY 31, 1996
<TABLE>
<CAPTION>
Percentage
of Market
Value of No. of Market
Equity Securities Portfolio Shares Value
- --------------------------------------------------- ------------ ------------- --------------
<S> <C> <C> <C>
CONSUMER NONDURABLES
(CONTINUED)
Pharmaceuticals: 12.3%
Abbott Laboratories 40,000 $ 1,755,000
American Home Products 30,000 1,702,500
Johnson & Johnson 30,000 1,432,500
Eli Lilly & Co. 24,000 1,344,000
Pharmacia-Upjohn, Inc. 36,250 1,490,781
Pfizer, Inc. 24,000 1,677,000
Schering-Plough Corp. 20,000 1,100,000
Smith-Kline Beecham PLC ADR 30,200 1,623,251
Warner Lambert Co. 30,000 1,635,000
-------------
13,760,032
CONSUMER SERVICES 9.2
General Merchandisers: 3.2
Dayton-Hudson 45,000 1,361,250
J.C. Penney, Inc. 20,000 992,500
Walmart Stores 50,000 1,200,000
-------------
3,553,750
Media and Communications: 4.2
Dun & Bradstreet Corp. 17,000 977,500
McGraw-Hill, Inc. 26,000 1,014,000
Meredith Corp. 30,000 1,218,750
Vodafone Group PLC ADR 40,000 1,430,000
-------------
4,640,250
Miscellaneous: 1.8
Imation Corp.* 1,300 29,575
Readers Digest Assn., Inc. 30,000 1,136,250
WMX Technologies, Inc. 30,000 888,750
-------------
2,054,575
</TABLE>
*Non-Income Producing
19
<PAGE> 22
SECURITY FIRST TRUST SCHEDULE I
T. ROWE PRICE GROWTH AND INCOME SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JULY 31, 1996
<TABLE>
<CAPTION>
Percentage
of Market
Value of No. of Market
Equity Securities Portfolio Shares Value
- --------------------------------------------------- ------------ ------------- --------------
<S> <C> <C> <C>
ENERGY 10.6%
Oil and Gas Extraction: 10.6
Atlantic Richfield Co. 12,000 $ 1,392,000
British Petroleum PLC 15,000 1,648,125
Chevron Corp. 20,000 1,157,500
Exxon Corp. 18,000 1,480,500
Halliburton Co. 15,000 781,875
Mobil Corp. 8,000 882,000
Murphy Oil Corp. 12,000 511,500
Pennzoil Co. 8,000 393,000
Royal Dutch Petroleum Co. ADR 10,000 1,508,750
Texaco, Inc. 15,300 1,300,500
Unocal Corp. 25,000 815,625
-------------
11,871,375
FINANCIAL 15.8
Banking: 5.7
California Federal Bancorp * 75,000 1,696,875
California Federal Bancorp FSB * 7,500 84,375
Chase Manhattan Corp. 15,000 1,042,500
Mellon Bank Corp. 25,000 1,318,750
National City Corp. 20,000 692,500
Wells Fargo & Co. 6,666 1,552,345
-------------
6,387,345
Federal Agencies: 2.1
Federal Home Loan Mortgage Corp. 15,000 1,263,750
Student Loan Marketing Assn. 15,000 1,095,000
-------------
2,358,750
Financial Services: 4.6
American Express 52,000 2,275,000
H&R Block, Inc. 20,000 522,500
Travelers Group, Inc. 55,184 2,331,503
-------------
5,129,003
</TABLE>
*Non-Income Producing
20
<PAGE> 23
SECURITY FIRST TRUST SCHEDULE I
T. ROWE PRICE GROWTH AND INCOME SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JULY 31, 1996
<TABLE>
<CAPTION>
Percentage
of Market
Value of No. of Market
Equity Securities Portfolio Shares Value
- --------------------------------------------------- ------------ ------------- --------------
<S> <C> <C> <C>
FINANCIAL
(CONTINUED)
Insurance Carriers: 2.2%
Travelers Aetna P&C 40,000 $ 1,065,000
U S F & G Corp. 80,000 1,270,000
Willis Corroon Group Sponsored ADR 14,000 148,750
-------------
2,483,750
Security, Commodity Brokers, and Services: 1.2
JP Morgan and Co., Inc. 15,000 1,275,000
PROCESS INDUSTRIES 10.8
Chemicals and Allied Products: 5.7
Corning, Inc. 45,000 1,659,375
Dow Chemical Co. 15,000 1,113,750
Du Pont Corp. 17,000 1,372,750
Great Lakes Chemical Corp. 25,000 1,440,625
Minnesota Mining & Manufacturing Co. 13,000 845,000
-------------
6,431,500
Forest Products: 1.8
Georgia Pacific Corp. 18,000 1,345,500
Weyerhaeuser Co. 15,000 624,375
-------------
1,969,875
Metal Mining: 1.1
Reynolds Metals Co. 25,000 1,268,728
Paper and Allied Products: 2.2
International Paper Co. 25,000 946,875
Kimberly Clark Corp. 10,000 760,000
Union Camp Corp. 15,000 720,000
-------------
2,426,875
</TABLE>
21
<PAGE> 24
SECURITY FIRST TRUST SCHEDULE I
T. ROWE PRICE GROWTH AND INCOME SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JULY 31, 1996
<TABLE>
<CAPTION>
Percentage
of Market
Value of No. of Market
Equity Securities Portfolio Shares Value
- --------------------------------------------------- ------------ ------------- --------------
<S> <C> <C> <C>
TRANSPORTATION 3.5%
Railroad Transportation: 2.1
Canadian Pacific 30,000 $ 652,500
Conrail, Inc. 25,000 1,637,500
-------------
2,290,000
Transportation Services: 1.4
PHH Corporation 20,000 1,065,000
Ryder System,Inc. 20,000 532,500
-------------
1,597,500
UTILITIES 5.0
Telephone Communication: 2.4
AT&T Co. 12,000 627,000
GTE Corp. 25,000 1,028,125
Southern New England Telecom Corp. 17,000 656,625
Telefonos De Mexico SA 13,000 398,125
-------------
2,709,875
Utility Holding Companies: 2.6
Edison International 50,000 768,750
Entergy Corp. 22,000 561,000
General Public Utilities Corp. 16,000 520,000
Pacificorp 50,000 1,043,750
-------------
2,893,500
-------------
TOTAL EQUITY SECURITIES
(COST $68,289,940) 95,072,178
</TABLE>
22
<PAGE> 25
SECURITY FIRST TRUST SCHEDULE I
T. ROWE PRICE GROWTH AND INCOME SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JULY 31, 1996
<TABLE>
<CAPTION>
Percentage
of Market
Value of Market
Short-Term Investments Portfolio Principal Value
- --------------------------------------------------- ------------ ------------- --------------
<S> <C> <C> <C>
SHORT-TERM INVESTMENTS 14.9%
Commercial Paper: 14.9
Abbott Laboratories, 5.32%, 08/07/96 $ 1,000,000 $ 999,110
Asset Securitization Co., 5.33%, 08/21/96 2,000,000 1,994,065
Heinz (HJ) Company, 5.29%, 8/23/96 1,300,000 1,295,794
Metlife Funding, Inc., 5.33%, 08/15/96 500,000 498,961
Minnesota Mining & Manufacturing, 5.30%, 08/09/96 4,600,000 4,594,569
Pfizer, Inc., 5.37%, 08/05/96 3,600,000 3,597,842
Pitney Bowes Credit Corp., 5.32%, 08/01/96 1,700,000 1,700,000
Raytheon Co., 5.30%, 08/23/96 1,000,000 996,756
Yorkshire Building Society, 5.34%, 08/15/96 1,000,000 997,919
-------------
TOTAL SHORT-TERM INVESTMENTS
(COST $16,675,016) 16,675,016
-------------
TOTAL INVESTMENTS
(COST $84,964,956) 100.0 111,747,194
Other assets less liabilities 805,699
-------------
NET ASSETS $ 112,552,893
=============
</TABLE>
The accompanying notes are an integral part of these financial statements.
23
<PAGE> 26
SECURITY FIRST TRUST SCHEDULE I
VIRTUS EQUITY SERIES
PORTFOLIO OF INVESTMENTS
JULY 31, 1996
<TABLE>
<CAPTION>
Percentage
of Market
Value of No. of Market
Equity Securities Portfolio Shares Value
- --------------------------------------------------- ------------ ------------- --------------
<S> <C> <C> <C>
CAPITAL EQUIPMENT 1.3%
Electrical Equipment: 0.6
DQE, Inc. 1,300 $ 35,588
Harris Corp. 700 40,250
Johnson Controls, Inc. 700 50,400
-------------
126,238
Machinery: 0.7
Cooper Industries, Inc. 2,100 82,688
Cummins Engine, Inc. 700 26,163
Snap-On, Inc. 700 31,063
-------------
139,914
CONSUMER NONDURABLES 0.8
Miscellaneous Consumer Products: 0.8
American Brands, Inc. 3,469 157,840
CONSUMER CYCLICALS 9.9
Automobiles and Related: 9.9
Chrysler Corp. 14,200 402,925
Echlin, Inc. 1,000 33,375
Ford Motors Co. 20,791 675,708
General Motors Corp. 14,489 706,339
B.F. Goodrich Co. 900 32,625
Goodyear Tire and Rubber 3,000 132,750
Timken Co. 500 18,313
-------------
2,002,035
</TABLE>
24
<PAGE> 27
SECURITY FIRST TRUST SCHEDULE I
VIRTUS EQUITY SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JULY 31, 1996
<TABLE>
<CAPTION>
Percentage
of Market
Value of No. of Market
Equity Securities Portfolio Shares Value
- --------------------------------------------------- ------------ ------------- --------------
<S> <C> <C> <C>
CONSUMER SERVICES 3.5%
Apparel and Accessory Stores: 0.8
Limited, Inc. 5,300 $ 102,025
V.F. Corp. 1,100 61,463
-------------
163,488
General Merchandisers: 2.1
Dayton Hudson Corp. 3,600 108,900
Melville Corp. 2,000 78,250
J.C. Penney, Inc. 4,197 208,801
Supervalu, Inc. 1,100 30,663
-------------
426,614
Miscellaneous: 0.6
Brunswick Corp. 1,900 36,100
National Service Industries 800 30,500
New York Times Co. 1,900 55,338
-------------
121,938
ENERGY 10.7
Oil and Gas Extraction: 10.7
Amoco 8,700 581,813
Exxon Corp. 8,553 703,484
Mobil Corp. 2,235 246,688
Occidental Petroleum Corp. 6,200 138,725
Pacific Enterprises 1,400 41,125
Sun, Inc. 1,200 31,050
Texaco, Inc. 5,139 436,815
-------------
2,179,700
</TABLE>
25
<PAGE> 28
SECURITY FIRST TRUST SCHEDULE I
VIRTUS EQUITY SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JULY 31, 1996
<TABLE>
<CAPTION>
Percentage
of Market
Value of No. of Market
Equity Securities Portfolio Shares Value
- --------------------------------------------------- ------------ ------------- --------------
<S> <C> <C> <C>
FINANCIAL 28.5%
Banking: 23.2
Ahmanson (H.F.) Co. 2,350 $ 59,338
Banc One Corp. 8,809 304,977
Bancorp Hawaii, Inc. 700 24,413
Bank Of Boston 2,200 116,600
Bank Of New York, Inc. 3,830 197,245
Bankamerica Corp. 7,000 558,250
Barnett Banks, Inc. 2,100 128,888
Boatmans Bancshares, Inc. 3,000 120,000
Chase Manhattan Corp. 8,222 571,429
Comerica, Inc. 2,300 100,913
Corestate Financial Corp. 1,647 64,645
Crestar Financial Corp. 700 40,338
First America Bank Corp. 1,000 45,375
First Chicago Corp. 6,244 240,394
First Security Corp. 1,200 30,600
First Tennessee National Corp. 1,100 32,450
First Union Corp. 5,541 351,854
First Virginia Banks, Inc. 600 24,150
Firstar Corp. 1,200 54,300
Great Western Fin'l. Corp. 2,700 64,125
Key Corp. 4,412 170,414
Mellon Bank Corp. 2,662 140,421
Mercantile Bancorp 1,100 50,463
National City Corp. 2,800 96,950
Nationsbank Corp. 5,750 493,781
Old Kent Financial Corp. 800 29,600
PNC Bank Corp. 6,413 186,779
Regions Financial Corp. 1,000 43,625
Republic NY Corp. 1,400 88,725
Southtrust Corp. 1,700 47,175
Star Banc Corp. 500 37,500
Summit Bancorp. 1,800 63,225
Wachovia Corp. 3,237 143,237
-------------
4,722,179
</TABLE>
26
<PAGE> 29
SECURITY FIRST TRUST SCHEDULE I
VIRTUS EQUITY SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JULY 31, 1996
<TABLE>
<CAPTION>
Percentage
of Market
Value of No. of Market
Equity Securities Portfolio Shares Value
- --------------------------------------------------- ------------ ------------- --------------
<S> <C> <C> <C>
FINANCIAL
(CONTINUED)
Financial Services: 0.1%
Reliastar Financial 600 $ 25,125
Insurance Carriers: 3.3
American General Corp. 3,900 135,525
Chubb Corp. 1,700 70,975
Jefferson Pilot Corp. 1,300 68,250
Linoln National Corp. 2,100 89,513
Safeco Corp. 2,400 82,649
St. Paul Cos. 1,500 77,625
Torchmark Corp. 1,300 55,413
Transamerica Corp. 1,300 89,863
-------------
669,813
Security, Commodity Brokers, and Services: 1.9
Bear Stearns & Co., Inc. 2,310 51,975
Edwards (AG), Inc. 1,100 30,113
JP Morgan & Co., Inc. 3,545 304,870
-------------
386,958
PROCESS INDUSTRIES 7.3
Chemicals and Allied Products: 2.0
Dow Chemical Co. 4,812 357,892
Lubrizol 1,000 28,625
Witco Corp. 900 26,100
-------------
412,617
Forest Products: 2.1
Georgia Pacific Corp. 2,000 149,500
Louisiana Pacific Corp. 2,100 42,788
Weyerhaeuser Co. 3,825 159,695
Willamette Industries, Inc. 1,400 82,250
-------------
434,233
</TABLE>
27
<PAGE> 30
SECURITY FIRST TRUST SCHEDULE I
VIRTUS EQUITY SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JULY 31, 1996
<TABLE>
<CAPTION>
Percentage
of Market
Value of No. of Market
Equity Securities Portfolio Shares Value
- --------------------------------------------------- ------------ ------------- --------------
<S> <C> <C> <C>
PROCESS INDUSTRIES
(CONTINUED)
Metal Mining: 1.6%
Asarco, Inc. 700 $ 16,800
Cyprus Amax Mineral 1,800 38,700
Phelps Dodge Corp. 1,600 94,000
Reynolds Metals Co. 1,100 55,825
USX-Marathon Group 5,600 114,800
-------------
320,125
Paper and Allied Products: 1.6
International Paper Co. 5,735 217,213
Union Camp Corp. 1,200 57,600
Westvaco Corp. 1,700 48,238
-------------
323,051
TECHNOLOGY 5.8
Computer and Office Equipment: 5.8
International Business Machines Corp. 11,021 1,188,890
TRANSPORTATION 2.8
Aerospace and Defense: 0.9
General Dynamics 1,500 96,000
Northrop Grumman Corp. 800 55,000
Olin Corp. 400 33,900
-------------
184,900
Railroad Transportation: 1.5
Conrail, Inc. 1,300 85,150
Norfolk Southern Corp. 2,600 210,275
-------------
295,425
Transportation Services: 0.4
Ryder System, Inc. 1,300 34,613
Temple Inland, Inc. 900 42,638
-------------
77,251
</TABLE>
28
<PAGE> 31
SECURITY FIRST TRUST SCHEDULE I
VIRTUS EQUITY SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JULY 31, 1996
<TABLE>
<CAPTION>
Percentage
of Market
Value of No. of Market
Equity Securities Portfolio Shares Value
- --------------------------------------------------- ------------ ------------- --------------
<S> <C> <C> <C>
UTILITIES 29.4%
Electric Utilities: 4.9
American Electrical Power 3,500 $ 145,250
Consolidated Edison Co. 4,400 118,800
Duke Power Co. 3,896 186,521
Houston Industries, Inc. 5,100 115,388
Long Island Lighting 2,400 40,800
New England Electric System 1,100 34,788
Northern States Power Co. 1,100 49,225
Public Service Co. Colorado 1,100 38,913
Public Service Enterprise Group 4,500 117,563
Puget Sound Power & Light 1,100 25,025
Union Electric Co. 2,000 75,250
Wisconsin Energy Corp. 2,100 55,913
-------------
1,003,436
Telephone Communication: 12.2
Bell South Corp. 19,185 786,585
GTE Corp. 18,784 774,840
Nynex Corp. 8,122 364,475
Pacific Telesis Group 8,312 279,491
U S West, Inc. 9,102 276,473
-------------
2,481,864
Utility Holding Companies: 12.3
Allegheny Power System 2,400 70,200
Baltimore Gas & Electric Co. 2,800 72,100
CMR Energy Corp. 1,800 54,675
Carolina Power & Light 3,000 108,000
Centerior Energy Corp. 2,800 20,650
DPL, Inc. 2,100 47,513
DTE Energy Co. 2,800 80,500
Delmarva Power & Light Co. 1,000 20,625
Dominion Resources, Inc. 3,300 124,163
Edison International 8,348 129,394
Enova Corp. 2,200 45,650
Entergy Corp. 4,300 109,650
FPL Group, Inc. 3,535 160,401
Florida Progress Co. 1,900 63,650
General Public Utilities Corp. 2,400 78,000
Illinova Corp. 1,300 33,475
</TABLE>
29
<PAGE> 32
SECURITY FIRST TRUST SCHEDULE I
VIRTUS EQUITY SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JULY 31, 1996
<TABLE>
<CAPTION>
Percentage
of Market
Value of No. of Market
Equity Securities Portfolio Shares Value
- --------------------------------------------------- ------------ ------------- --------------
<S> <C> <C> <C>
UTILITIES
(CONTINUED)
Ipalco Enterprises 900 $ 23,175
Kansas Power & Light Co. 1,000 26,750
New York State E&G 1,200 25,950
Nipsco Industries, Inc. 1,000 37,375
Northeast Utilities 2,400 29,700
Ohio Edison Co. 2,900 60,900
Oklahoma Gas & Electric 700 27,475
Peco Energy 4,200 98,700
PP & L Resources, Inc. 3,000 67,125
Pacific Gas & Electric Co. 7,874 155,512
Pacificorp 5,700 118,988
Panenergy Corp. 2,900 92,075
Pinnacle West Capital Co. 1,700 48,025
Scana Corp. 2,000 51,750
Southern Co. 12,930 292,541
Unicom Corp. 4,000 94,000
Western Resources, Inc. 1,000 28,607
-------------
2,497,294
-------------
TOTAL INVESTMENTS
(COST $20,714,306) 100.0% 20,340,928
Other assets less liabilities 360,848
-------------
NET ASSETS $ 20,701,776
=============
</TABLE>
The accompanying notes are an integral part of these financial statements.
30
<PAGE> 33
SECURITY FIRST TRUST SCHEDULE I
VIRTUS U.S. GOVERNMENT INCOME SERIES
PORTFOLIO OF INVESTMENTS
JULY 31, 1996
<TABLE>
<CAPTION>
Percentage
of Market
Value of Market
Fixed Maturities Portfolio Principal Value
- --------------------------------------------------- ------------ ------------- --------------
<S> <C> <C> <C>
U.S. GOVERNMENT OBLIGATIONS 47.0%
U.S. Treasury Notes: 20.7
6.38%, 05/15/99 $ 1,800,000 $ 1,796,625
7.75%, 01/31/00 200,000 207,250
6.25%, 08/31/00 500,000 493,594
5.63%, 02/28/01 550,000 528,172
--------------
3,025,641
U.S. Treasury Bonds: 26.3
5.50%, 04/15/00 160,000 154,400
7.88%, 08/15/01 3,500,000 3,677,188
--------------
3,831,588
--------------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(COST $6,878,338) 6,857,229
FEDERAL AGENCIES 45.5
Federal Farm Credit Bank:
6.05%, 04/21/03 550,000 525,679
6.94%, 05/19/05 125,000 123,688
--------------
649,367
Federal Home Loan Bank:
4.80%, 09/22/98 350,000 339,605
6.82%, 06/07/01 1,000,000 994,590
8.00%, 08/27/01 250,000 262,665
--------------
1,596,860
Federal National Mortgage Assn.:
7.00%, 07/01/07 221,849 213,321
7.00%, 09/01/10 468,119 461,533
--------------
674,854
Federal Home Loan Mortgage Assn.:
6.00%, 11/01/03 134,146 129,535
8.63%, 06/30/04 150,000 163,557
6.50%, 03/01/09 347,519 346,650
8.00%, 09/01/20 420,584 423,213
--------------
1,062,955
</TABLE>
31
<PAGE> 34
SECURITY FIRST TRUST SCHEDULE I
VIRTUS U.S. GOVERNMENT INCOME SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JULY 31, 1996
<TABLE>
<CAPTION>
Percentage
of Market
Value of Market
Fixed Maturities Portfolio Principal Value
- --------------------------------------------------- ------------ ------------- --------------
<S> <C> <C> <C>
FEDERAL AGENCIES
(CONTINUED)
Other Federal Agencies:
Government National Mortgage Assn., 7.50%, 11/15/26 $ 1,484,303 $ 1,459,708
Small Business Administration, 6.90%, 08/25/08 286,357 280,629
Student Loan Marketing Assn.:
5.49%, 12/20/96 300,000 300,000
7.50%, 03/08/00 100,000 102,640
Tennessee Valley Auth., 8.25%, 11/15/96 500,000 503,125
--------------
2,646,102
--------------
TOTAL FEDERAL AGENCIES
(COST $6,704,925) 6,630,138
--------------
TOTAL FIXED MATURITIES
(COST $13,583,263) 13,487,367
Short-Term Investments
-----------------------------
SHORT-TERM INVESTMENTS 7.5%
U.S. Treasury Bills: 7.5
0.00%, 09/05/96 1,100,000 1,094,680
--------------
TOTAL SHORT-TERM INVESTMENTS
(COST $1,094,680) 1,094,680
--------------
TOTAL INVESTMENTS
(COST $14,677,943) 100.0 14,582,047
Other assets less liabilities 306,777
--------------
NET ASSETS $ 14,888,824
==============
</TABLE>
The accompanying notes are an integral part of these financial statements.
32
<PAGE> 35
SECURITY FIRST TRUST
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1996
NOTE A -- ORGANIZATION OF THE TRUST AND SIGNIFICANT ACCOUNTING POLICIES
Security First Trust (the Trust) was established under Massachusetts law
pursuant to a Declaration of Trust dated February 13, 1987, as an
unincorporated business trust, a form of organization that is commonly called a
Massachusetts Business Trust. The Trust is registered with the Securities and
Exchange Commission as a diversified open-end management investment company
(mutual fund) under the Investment Company Act of 1940 (1940 Act).
On June 17, 1987, the shareowners of Security First Legal Reserve Fund, Inc.
and Security First Variable Life Fund, Inc. (the Funds), each of which was a
Maryland corporation registered as an investment company under the 1940 Act,
approved Plans of Reorganization and Liquidation and on July 24, 1987, the
Funds became Series of the Trust and their shareowners became shareowners of
the Bond Series and the Growth and Income Series, respectively, in a tax-free
exchange of shares. The Trust operates as a "series company," as that term is
used in Rule 18f-2 under the 1940 Act. Financial information for periods prior
to June 17, 1987, reflect the results of the respective funds.
The Declaration of Trust permits the Trustees to issue an unlimited number of
shares and to divide such shares into an unlimited number of series, all
without shareowner approval. Pursuant to this authority, the Board of Trustees
of Security First Trust established the Value Equity Series and the U.S.
Government Income Series on January 11, 1993, which commenced operations May
19, 1993.
On April 10, 1996, the Board of Trustees of Security First Trust unanimously
approved the name change of the series of the Trust as follows: Bond Series to
T. Rowe Price Bond Series; Growth and Income Series to T. Rowe Price Growth and
Income Series; Value Equity Series to Virtus Equity Series; and U. S.
Government Income Series to Virtus U. S. Government Income Series. The
following is a summary of significant accounting policies followed by the
Trust:
FEDERAL INCOME TAXES -- Each series of the Trust has elected to qualify as a
"Regulated Investment Company." No provision for federal income taxes is
necessary because each series intends to maintain its qualification as a
"Regulated Investment Company" under the Internal Revenue Code and distribute
each year substantially all of its net income and realized capital gains to its
shareowners. Income and gains to be distributed are determined as of December
31, because the Trust reports for tax purposes on a calendar year.
PORTFOLIO VALUATION -- Investments are carried at market value. The market
value of equity securities is determined as follows: Securities traded on a
national securities exchange are valued at the last sale price; securities not
traded on a national securities exchange are valued at the bid price for such
securities as reported by security dealers. Fixed maturities are valued at
prices obtained from a major dealer in bonds.
33
<PAGE> 36
SECURITY FIRST TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE A -- ORGANIZATION OF THE TRUST AND SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
Short-term investments which have remaining maturities of more than 60 days and
for which representative market quotations are readily available are valued at
the most recent bid price or yield equivalent as quoted by a major
broker-dealer in money market securities. Securities with remaining maturities
of 60 days or less are valued at their amortized cost, which approximates
market value due to the short duration to maturity. Securities and other
assets for which such procedures are deemed not to reflect fair value, or for
which representative quotes are not readily available, are valued at prices
deemed best to reflect their fair value as determined in good faith by or under
supervision of officers of the Trust in a manner specifically authorized by the
Board of Directors and applied on a consistent basis.
DIVIDENDS AND DISTRIBUTIONS -- Each series declares dividends annually. Net
realized gains from security transactions, if any, are distributed annually.
OTHER -- As is common in the industry, security transactions are accounted for
no later than the day following the date the securities are purchased or sold.
Dividend income is recorded on the ex-dividend date. Interest income is
accrued daily.
NOTE B -- REMUNERATION OF MANAGER AND OTHERS
T. Rowe Price Bond Series and T. Rowe Price Growth and Income Series:
The Manager, Security First Investment Management Corporation (Security
Management), is entitled by agreement to a monthly fee equal to 1/24 of 1% of
the average daily net asset value of the T. Rowe Price Bond Series (Bond
Series) and T. Rowe Price Growth and Income Series (Growth and Income Series)
(equivalent annually to .5%), less compensation payable to the Series'
investment adviser, T. Rowe Price Associates. However, to the extent that
operating expenses (including management fees but excluding interest and taxes
and certain extraordinary expenses) of each series exceed 2.5% of the first $30
million of each series' average daily net assets, 2.0% of the next $70 million
of each series' average daily net assets, and 1.5% of each series' average
daily net assets in excess of that amount, calculated on the basis of each
series' fiscal year (the expense limitation), the agreement requires that
Security Management waive its fee. In addition, for the year ended July 31,
1996, Security Management has also agreed to reimburse the Bond Series for any
remaining expenses exceeding a limitation equivalent annually to 1.5%.
Security Management may elect on an annual basis to reimburse the Series for
future excess expenses.
34
<PAGE> 37
SECURITY FIRST TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE B -- REMUNERATION OF MANAGER AND OTHERS (CONTINUED)
If during the fiscal year repayments are made to the Manager and the series'
expenses subsequently exceed the expense limitation, the Series shall recover
such repayments from the Manager to the extent of the excess determined.
Conversely, if during the fiscal year repayments are made by the Manager and
the series' expenses subsequently are within the expense limitation, the
Manager shall recover such repayments to the extent of the excess repaid. It
is management's opinion that it is reasonably possible that actual operating
expense may be less than the expense limitation; however, in accordance with
the requirements of FASB Statement No. 5, no accrual has been made for the
contingent obligation to repay Security Management for excess expense
reimbursements since the conditions required for such accrual have not, in the
opinion of management, been met.
T. Rowe Price Associates provides investment advice and makes investment
decisions for the Bond Series and Growth and Income Series. T. Rowe Price
Associates is paid an annual fee of .35% of the average daily net assets of
each series less any compensation payable to Security Management acting as
adviser on certain assets in which a series may invest.
Virtus Equity Series and Virtus U.S. Government Income Series:
The Manager, Security Management, is entitled by agreement to a monthly fee
equal to 1/13 of 1% of the average daily net asset value of the Virtus Equity
Series (Equity Series) and Virtus U.S. Government Income Series (U.S.
Government Income Series) (equivalent annually to .9%), less compensation
payable to the Series' investment adviser, Virtus Capital Managment (Virtus).
However, to the extent that operating expenses (including management fees but
excluding interest and taxes and certain extraordinary expenses) of each series
exceed 2.5% of the first $30 million of each series' average daily net assets,
2.0% of the next $70 million of each series' average daily net assets and 1.5%
of each series' average daily net assets in excess of that amount, calculated
on the basis of each series' fiscal year (the expense limitation), the
agreement requires that Security Management and Virtus waive their fees. For a
period of three years from inception, Security Management and Virtus have also
agreed to reimburse the Equity Series for any remaining expenses exceeding a
limitation equivalent annually to 1% and to reimburse the U.S. Government
Income Series for any remaining expenses exceeding a limitation equivalent
annually to .7%.
Virtus provides investment advice and makes investment decisions for the Equity
Series and U.S. Government Income Series. Virtus is paid an annual fee of .75%
of the average daily net assets of the two series.
35
<PAGE> 38
SECURITY FIRST TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE C -- INVESTMENT SECURITIES TRANSACTIONS
Purchases and sales of fixed maturities and equity securities for the year
ended July 31, 1996 were as follows:
<TABLE>
<CAPTION>
T. Rowe Price Virtus
Growth U.S.
and Virtus Government
T. Rowe Price Income Equity Income
Bond Series Series Series Series
-------------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
U.S. Government Securities:
Purchases $ 1,084,091 $ 21,364,744
Sales 1,390,473 13,280,453
Other Investment Securities:
Purchases 2,330,007 $ 25,335,055 $ 26,629,024
Sales 1,439,990 6,597,723 12,055,583
</TABLE>
Net realized gain or loss on sale of investments is determined by the specific
identification method and would not have been significantly different using the
average cost method. The cost of investments at July 31, 1996 was the same for
both financial statement and federal income tax purposes. At July 31, 1996,
the composition of unrealized appreciation and depreciation of investment
securities was as follows:
<TABLE>
<CAPTION>
Unrealized
Appreciation Depreciation Net
------------- ------------ -----------
<S> <C> <C> <C>
T. Rowe Price Bond Series $ 157,259 $ (117,106) $ 40,153
T. Rowe Price Growth and Income Series 28,768,484 (1,986,246) 26,782,238
Virtus Equity Series 675,052 (1,048,430) (373,378)
Virtus U.S. Government Income Series 39,575 (135,471) (95,896)
</TABLE>
36
<PAGE> 39
SECURITY FIRST TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE D -- CAPITAL SHARE TRANSACTIONS
Transactions in capital shares of the Trust were as follows:
<TABLE>
<CAPTION>
Shares Issued
in Connection
with Reinvestment of
---------------------------
Net Net
Investment Realized
Income Gain
Sold Distributions Distributions Redeemed Net
--------- ------------- ------------- --------- ----------
<S> <C> <C> <C> <C> <C>
YEAR ENDED JULY 31, 1996
T. Rowe Price Bond Series 604,806 125,609 (448,248) 282,167
T. Rowe Price Growth and Income Series 1,739,490 216,141 30,554 (605,443) 1,380,742
Virtus Equity Series 2,053,694 19,537 55,612 (72,335) 2,056,508
Virtus U.S. Government Income Series 1,714,405 63,075 4,386 (60,803) 1,721,063
YEAR ENDED JULY 31, 1995
T. Rowe Price Bond Series 401,797 112,741 (370,655) 143,883
T. Rowe Price Growth and Income Series 1,480,071 209,555 48,632 (912,125) 826,133
Virtus Equity Series 888,244 9,164 (137,439) 759,969
Virtus U.S. Government Income Series 604,546 28,069 (161,083) 471,532
</TABLE>
37
<PAGE> 40
SECURITY FIRST TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE E -- FINANCIAL HIGHLIGHTS
The per share information for each respective series' capital stock outstanding
throughout the period is as follows:
<TABLE>
<CAPTION>
NET INCOME
REALIZED (LOSSES) DISTRIBUTIONS
NET ASSET AND FROM DIVIDENDS FROM NET ASSET
VALUE AT NET UNREALIZED INVESTMENT FROM NET REALIZED VALUE AT
BEGINNING INVESTMENT GAINS OPERATIONS INVESTMENT CAPITAL END OF TOTAL
OF PERIOD INCOME (LOSSES) ON INVESTMENTS INCOME GAINS PERIOD RETURN(2)
--------- ----------- ----------- ----------- ---------- ------------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
T. ROWE PRICE
BOND SERIES
Year ended July 31,
1992 $ 3.68 $ .24 $ .28 $ .52 $ (.25) $ 3.95 14.13%
1993 3.95 .22 .14 .36 (.23) 4.08 9.11
1994 4.08 .21 (.25) ( .04) (.22) 3.82 (0.98)
1995 3.82 .24 .08 .32 (.22) 3.92 8.38
1996 3.92 .24 (.04) .20 (.24) 3.88 5.10
T. ROWE PRICE
GROWTH AND INCOME SERIES
Year ended July 31,
1992 $ 7.54 $ .23 $ .79 $ 1 .02 $ (.24) $ 8.32 13.53%
1993 8.32 .22 .49 .71 (.22) 8.81 8.53
1994 8.81 .23 .44 .67 (.22) 9.26 7.60
1995 9.26 .29 1.35 1 .64 (.26) $ (.06) 10.58 17.71
1996 10.58 .30 1.56 1 .86 (.30) (.04) 12.10 17.58
VIRTUS EQUITY SERIES
May 19, 1993 through July 31,
1993 (3) $ 5.00 $ .01 $ (.01) $ .00 $ .00 $ 5.0(1) 0.00%
Year ended July 31,
1994 5.00 .05 (.03) .02 (.03) 4.99 0.40
1995 4.99 .05 .71 .76 (.05) 5.70 15.23
1996 5.70 .10 .46 .56 (.05) $ (.16) 6.05 9.82
VIRTUS
U.S. GOVERNMENT INCOME SERIES
May 19, 1993
through July 31,
1993 (3) $ 5.00 $ .03 $ .04 $ .07 $ .00 $ 5.0(1) 7.10%
Year ended July 31,
1994 5.07 .11 (.19) ( .08) (.07) $ (.01) 4.91 (1.58)
1995 4.91 .21 .15 .36 (.14) 5.13 7.33
1996 5.13 .18 .04 .22 (.19) (.01) 5.15 4.29
</TABLE>
(1) Annualized
(2) Total return computed after deduction of all series expenses, but before
deduction of actuarial risk charges and other fees of the variable annuity
account.
(3) The Equity Series and U.S. Government Income Series commenced operations
on May 19, 1993.
38
<PAGE> 41
SECURITY FIRST TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE E -- FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
Ratio of
Ratio of Net
Operating Investment
Expenses Income Portfolio Net Assets
to Average to Average Turnover End of
Net Assets Net Assets Rate Period
----------- ----------- ---------- ------------
<S> <C> <C> <C> <C>
T. ROWE PRICE
BOND SERIES
Year ended July 31,
1992 1.50% 6.42% 50% $ 5,682,609
1993 1.45 6.02 36 7,229,959
1994 1.30 5.45 58 7,225,964
1995 1.29 6.27 56 7,977,781
1996 .90 6.32 34 8,981,365
T. ROWE PRICE
GROWTH AND INCOME SERIES
Year ended July 31,
1992 .86% 3.10% 20% $ 42,814,515
1993 .75 2.77 5 55,160,198
1994 .78 2.62 11 65,660,970
1995 .74 3.10 8 83,789,646
1996 .64 2.73 8 112,552,893
VIRTUS EQUITY SERIES
May 19, 1993 through July 31, 1993 (2) 1.00% (1) .85% (1) 7% $ 1,333,852
Year Ended July 31, 1994 1.00 1.38 121 3,007,073
Year Ended July 31, 1995 1.00 1.29 84 7,765,719
Year ended July 31, 1996 1.00 2.24 88 20,701,776
VIRTUS
U.S. GOVERNMENT INCOME SERIES
May 19, 1993 through July 31, 1993 (2) .70% (1) 3.91% (1) 0% $ 469,060
Year ended July 31, 1994 .70 3.62 17 3,424,487
Year ended July 31, 1995 .70 5.19 16 5,996,149
Year ended July 31, 1996 .70 5.38 148 14,888,824
</TABLE>
(1) Annualized
(2) The Equity Series and U.S. Government Income Series commenced operations
on May 19, 1993.
39
<PAGE> 42
REPORT OF INDEPENDENT AUDITORS
To the Trustees and Shareholders
Security First Trust
We have audited the accompanying statement of assets and liabilities, including
the portfolios of investments, of the Security First Trust's T. Rowe Price Bond
Series, T. Rowe Price Growth and Income Series, Virtus Equity Series, and Virtus
U.S. Government Income Series as of July 31, 1996, the related statements of
operations and the changes in net assets for each of the periods indicated.
These financial statements are the responsibility of the Trust's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures
included confirmation of securities owned as of July 31, 1996, by correspondence
with the custodian. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Security First Trust's T.
Rowe Price Bond Series, T. Rowe Price Growth and Income Series, Virtus Equity
Series, and Virtus U.S. Government Income Series at July 31, 1996, the results
of their operations and the changes in their net assets for each of the periods
indicated in conformity with generally accepted accounting principles.
/s/ ERNST & YOUNG LLP
September 6, 1996
Los Angeles, California
<PAGE> 43
VARIABLE ANNUITIES OFFER
CHOICES AND BENEFITS THAT
REGULAR MUTUAL FUNDS CAN'T
Tax-deferred retirement savings plans are among the best investments a
person can make today for his or her future. As a vehicle for creating
tax-favored retirement savings, variable annuities offer many advantages.
A variable annuity offers the opportunity to invest in a diversified
portfolio of securities similar to mutual funds. Taxes are deferred on all
dividends and on all increases in portfolio value until you take your money
out.
At retirement, another significant advantage is that the variable annuity
can provide you with income that is based on the performance of the fund or
funds in which you participated. You may elect to receive monthly, quarterly or
annual payments for a specified number of years, your lifetime, or the longer
of your lifetime and the lifetime of your joint payee. See your policy for
specific options available to you.
The Security First Trust series offers you a choice of professionally
managed options. You may invest in a Bond Series, Growth and Income Series,
Equity Series, or U.S. Government Income Series, each with a varying degree of
risk:
SECURITY FIRST TRUST T. ROWE PRICE BOND SERIES is for conservative
investors. The objective is to achieve the highest investment income over the
long term consistent with the preservation of capital.
SECURITY FIRST TRUST T. ROWE PRICE GROWTH AND INCOME SERIES is for
individuals willing to accept a degree of risk. The fund's goal is growth of
principal with a reasonable level of income primarily through investment in
common stocks.
SECURITY FIRST TRUST VIRTUS EQUITY SERIES also seeks to provide growth of
capital and income through investment in common stocks of high quality
companies. The fund is for individuals willing to accept a degree of risk.
SECURITY FIRST TRUST VIRTUS U.S. GOVERNMENT INCOME SERIES is for
conservative investors and seeks to provide current income through investment
in a diversified portfolio limited primarily to U.S. government securities.
[LOGO]
11365 West Olympic Boulevard
Los Angeles, California 90064
(310) 312-6100
ANNUAL REPORT
JULY 31, 1996
SECURITY
FIRST
TRUST
BOARD OF TRUSTEES
<TABLE>
<S> <C>
Jack R. Borsting Melvin M. Hawkrigg
Katherine L. Hensley Lawrence E. Marcus
</TABLE>
Security First Trust T. Rowe Price Bond Series
Security First Trust T. Rowe Price Growth and Income Series
Security First Trust Virtus Equity Series
Security First Trust Virtus U.S. Government Income Series
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