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Previous: SAFECO CORP, SC 13G/A, 1997-10-10 |
Next: SEMTECH CORP, S-3, 1997-10-10 |
<PAGE> 1
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 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.
[SECURITY FIRST TRUST LOGO]
11365 West Olympic Boulevard
Los Angeles, California 90064
(310) 312-6100
ANNUAL REPORT
JULY 31, 1997
SECURITY
FIRST
TRUST
- --------------------------------------------------------------------------------
BOARD OF TRUSTEES
- --------------------------------------------------------------------------------
Jack R. Borsting Melvin M. Hawkrigg
Katherine L. Hensley Lawrence E. Marcus
Security First Trust 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
<PAGE> 2
Dear Contract Owner:
Domestic stocks soared through the end of July, recovering from a fall of nearly
10% in the spring. Bond prices also rose in June and July, pushing interest
rates lower after they had risen early in the year.
The economy continued to offer strong support for stock and bond investors, with
low unemployment, moderate growth, and subdued inflation. However, based on
historical measures, the stock market is trading at very high multiples.
I encourage you to review the following report covering the past six months and
to contact us if you have any questions.
Respectfully submitted,
/s/ ROBERT G. MEPHAM
----------------------------------
Robert G. Mepham
President
[SECURITY FIRST TRUST LOGO]
<PAGE> 3
SECURITY FIRST TRUST:
T. ROWE PRICE GROWTH AND
INCOME SERIES AND VIRTUS
EQUITY SERIES
EQUITY MARKET OVERVIEW
The Equity market responded to what some observers have described as nearly
perfect conditions for stocks. The pace of the economy has been fast enough to
sustain a favorable growth rate in corporate profits while pushing unemployment
to a 25-year low. At the same time, the ideal pace of economic growth has not
caused inflation to accelerate or interest rates to rise. Meanwhile, this
extended six-year period of economic prosperity has resulted in a reduced budget
deficit and a strong U.S. dollar.
These conditions combined to create a supportive environment for rising
stock prices through the end of July. The return for the broad market during the
last six months was one of the best in 50 years, and it was particularly
surprising coming in the wake of powerful returns in 1995 and 1996. The latest
advance put stock valuations at extended levels based on historical measures.
EQUITY MARKET OUTLOOK
So far in 1997, stock market returns have far exceeded our expectations. As
discussed in past reports, we have some concerns about the valuation levels of
many stocks. However, the underlying economic and financial fundamentals
continue to be favorable and dominate investor perceptions.
PORTFOLIO MANAGEMENT: T. ROWE PRICE GROWTH AND INCOME SERIES
Continuing the pattern of 1996, the past six months were a generally
rewarding period for your portfolio. The stock market's advance has been nothing
short of breath-taking. In such an ebullient atmosphere, it is not unusual for
our relatively conservative investment style to lag the overall market, which
has been the case during the past twelve months. However, we intend to stay
focused on our valuation disciplines, in the belief that our conservative
investment approach should enhance longer-term returns if a less benign economic
environment arises.
GROWTH AND INCOME SERIES
SECTOR DIVERSIFICATION
<TABLE>
<S> <C>
Capital Equipment 6.4%
Consumer Non-Durables 19.6%
Consumer Cyclicals 0.5%
Consumer Services 10.7%
Transportation 3.0%
Energy 8.7%
Financial 16.0%
Process Industries 11.4%
Technology 0.9%
Utilities 6.1%
Short-Term Securities 16.7%
</TABLE>
In the past six months we were able to identify attractive stocks for
investment, including Amerada Hess, Bankers Trust, and Burlington Northern Santa
Fe. These companies share the common characteristic of relatively attractive
valuations brought on by negative investor perceptions, which is only temporary
in our view. We believe, therefore, that investments such as these offer an
attractive combination of low downside risk and reasonable upside potential.
1
<PAGE> 4
GROWTH & INCOME SERIES
15 LARGEST HOLDINGS
<TABLE>
<CAPTION>
Percentage of
Security Portfolio
-------- ---------
<S> <C>
Travelers Group Inc. 3.5
American Express Co. 2.1
General Electric 1.7
Newmont Mining 1.5
SmithKline Beecham 1.4
Dayton Hudson 1.4
Dow Chemical 1.4
Corning 1.4
Amerada Hess 1.3
Abbott Laboratories 1.3
ITT 1.3
Mellon Bank 1.2
Pall 1.2
American Home Products 1.2
British Petroleum 1.2
----
TOTAL 23.1
====
</TABLE>
PORTFOLIO MANAGEMENT: VIRTUS EQUITY SERIES
During the past six months, the performance of your portfolio was strong,
although it slightly lagged the S&P 500. As in 1996, the portfolio is
emphasizing value stocks over growth stocks. Value stocks are those companies
selling at low price relative to actual value of their underlying assets. Growth
stocks are those companies with above-average earnings expectations.
EQUITY SERIES
SECTOR DIVERSIFICATION
<TABLE>
<S> <C>
Consumer Non-Durables 3.5%
Technology 5.7%
Transportation 11.4%
Consumer Cyclicals 2.5%
Financial 31.0%
Capital Equipment 5.6%
Consumer Services 5.7%
Energy 17.4%
Process Industries 6.7%
Utilities 10.5%
</TABLE>
The fund's investment strategy continues to be structured in a capital
preservation position. We believe value stocks will provide defensiveness due to
their higher yields, lower price-earnings ratios and lower volatility. The
Virtus Equity Series is structured to outperform in a difficult equity market
environment.
EQUITY SERIES 15 LARGEST HOLDINGS
<TABLE>
<CAPTION>
Percentage of
Security Portfolio
-------- ---------
<S> <C>
Royal Dutch Petroleum 5.1
Exxon Corp. 4.2
Int'l Business Machines 4.1
Mobil Corp. 2.7
Citicorp 2.4
Bankamerica Corp. 2.2
Bell Atlantic Corp. 1.7
Amoco Corp. 1.7
Nationsbank Corp. 1.5
Boeing Co. 1.5
AT&T Corp. 1.4
General RE Corp. 1.4
Morgan, J.P. & Co. 1.4
Dow Chemical 1.4
Texaco Inc. 1.3
-----
TOTAL 34.0
=====
</TABLE>
2
<PAGE> 5
SECURITY FIRST TRUST:
BOND SERIES AND VIRTUS U.S.
GOVERNMENT INCOME SERIES
FIXED-INCOME MARKET OVERVIEW
The environment for fixed income investors over the 6 months ended July 31,
1997, was mixed as interest rates rose sharply through the first quarter but
moderated and declined from their early-year levels by the end of July. The
economy appeared very strong at the beginning of the year, evidenced by
employment gains, retail and home sales, equity market strength, and the
performance of the U.S. dollar against foreign currencies. Although inflation
seemed tame, the Federal Reserve chose to tighten monetary policy by raising the
federal funds rate a quarter of a point in March. Then, when the economy began
to cool toward the end of the second quarter, interest rates declined. July
witnessed a strong bond market rally when the Fed hinted that it had no
immediate intention of raising short-term rates further.
[LINE GRAPH]
Regarding sector performance, during the past six months Treasury and agency
securities lagged the lower-quality, higher-yielding areas of the fixed income
market. The yields between corporate and Treasury bonds continued to narrow, as
investors drove corporate bond prices higher. Lower-quality corporate bonds,
junk bonds, and emerging market debt significantly outperformed Treasuries.
Mortgage-backed securities (MBS) were reasonably strong, although they lagged
comparable government and corporate issues. Investors turned to MBS in hopes
their prices would advance because of declining rates on mortgage prepayments.
FIXED-INCOME MARKET OUTLOOK
We remain moderately optimistic about the bond market through the balance of
1997. The economy appears to be growing at a more moderate pace than earlier
this year. If this pace continues and inflation remains low, the Federal Reserve
may maintain a steady course on monetary policy, with interest rates staying
close to current levels. This environment should benefit fixed income
securities, especially those with higher yields than Treasuries, particularly
corporate securities, discount MBS, and call-protected, collateralized mortgage
obligations.
PORTFOLIO MANAGEMENT:
BOND SERIES
We increased our portfolio duration (a measure of a portfolio's sensitivity
to changes in interest rates) modestly over the past six months to take
advantage of the declining trend in interest rates. As usual, we maintained a
high-quality portfolio (AA) over the period
BOND SERIES
SECTOR DIVERSIFICATION
<TABLE>
<S> <C>
Short-Term Securities 4.8%
Corporate Bonds 25.4%
Federal Agencies 27.1%
U.S. Government Obligations 42.7%
</TABLE>
3
<PAGE> 6
with an attractive level of income. We reduced our allocation to corporate
securities slightly because of the tightening corporate spreads discussed
earlier, and also to increase our exposure to government bonds.
Your portfolio participated in bond market price gains during the period and
benefited from the income generated by coupons and the reinvestment of interest.
PORTFOLIO MANAGEMENT:
VIRTUS U.S. GOVERNMENT
INCOME SERIES
While remaining essentially neutral on interest rates during most of the
period, we added value to your account by capitalizing on the relatively calm
interest rate markets and buying higher-yielding securities such as mortgages.
In prior years where interest rates moved over a larger range, mortgages tended
to provide less performance.
U.S. GOVERNMENT INCOME SERIES
SECTOR DIVERSIFICATION
<TABLE>
<S> <C>
Short-Term Securities 10.2%
Federal Agencies 52.3%
U.S. Government Obligations 37.5%
</TABLE>
We continue to search the markets for opportunities to buy bonds that will
increase the yield on your account while still providing necessary liquidity and
safety. Mortgages and direct agency securities were not appealing in the early
part of this year and have only recently become more attractive. Once mortgage
spreads improve, we will add additional mortgages to the portfolio to enhance
its yield and also its total return capabilities.
We will continue to maintain an extremely high-quality, low-risk government
bond portfolio with an emphasis on income, provided the potential remains for
improved bond prices in a declining interest rate environment.
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, 1997, 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
Series(1)(2) 42.83% 25.80% 18.42% 13.61%
Bond
Series(1)(2) 10.35% 7.92% 6.38% 7.51%
Equity
Series(1)(3) 46.70% 23.03% N/A* N/A*
U.S.
Government
Income(1)(3) 8.57% 6.88% N/A* N/A*
Consumer
Price Index 219% 2.65% 2.70% 3.50%
</TABLE>
* Funds were introduced as of May 1993.
4
<PAGE> 7
Compound Total Returns
<TABLE>
<CAPTION>
Fund 1 Year 3 Years 5 Years 10 Years
- ---- ------ ------- ------- --------
<S> <C> <C> <C> <C>
Growth and
Income
Series(1)(2) 42.83% 99.08% 132.92% 258.25%
Bond
Series(1)(2) 10.35% 25.68% 36.22% 106.20%
Equity
Series(1)(3) 46.70% 86.23% N/A* N/A*
U.S.
Government
Income(1)(3) 8.57% 22.09% N/A* N/A*
Consumer
Price Index 219% 8.17% 14.23% 41.05%
</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) While they are not obligated to do so, Security Management and Virtus
have agreed to continue, until notice to the contrary, to defer their fees (and
make contributions in respect of excess expenses) in order to maintain the
expense ratios of the Virtus Equity and the Virtus U.S. Government Income Series
at a level of 1.00% and .70% respectively, or less.
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
Bond Series, Lehman Government Bond 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 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.
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.
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, 1997, of one share 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
1996 13.18 .83 61.42 +21.7 +1111.4
July 1997 16.26 N/A* 75.77 +23.4** +1394.5
</TABLE>
SECURITIES FIRST TRUST BOND SERIES
The graph and Per Share Data Table below illustrate the growth in per share
value for the period ending July 31, 1997, of one share of the Security First
Trust 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
1996 3.82 .24 13.58 +2.8 +335.3
July 1997 4.02 N/A* 14.29 +5.2** +358.0
</TABLE>
* Dividend and Capital Gains declared in December
** For 7 months to date 1997
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, 1997, 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 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 $5.15 $.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
1996 6.45 .55 7.36 +18.5 +47.2
July 1997 8.18 N/A* 9.33 +26.8** +86.6
</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, 1997, 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 -2.9 -0.8
1995 5.18 .20 5.63 +13.5 +12.6
1996 5.14 .22 5.83 +3.6 +16.6
July 1997 5.36 N/A* 6.08 +4.3** +21.6
</TABLE>
+change from 5-19-93 to 12-31-93
* Dividend and Capital Gains declared in December
** For 7 months to date 1997
8
<PAGE> 11
SECURITY FIRST TRUST
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 1997
<TABLE>
<CAPTION>
T. Rowe Price Virtus
Growth and Virtus U.S.Government
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 - $9,573,049; Growth
and Income Series - $137,932,607;
Equity Series - $35,054,331;
U.S. Government Income Series -
$27,465,189) $ 9,840,004 $ 203,089,226 $ 45,690,443 $ 27,877,589
Cash 605,734 1,443,948 1,823,022 645,701
Interest receivable 136,080 4,516 6,937 384,351
Dividends receivable 340,007 72,786
Receivable for securites sold 264 6,436
Receivable for capital shares purchased 66,781 421,389 13,196 3,768
Prepaid insurance 607 11,573 2,667 1,637
------------- ------------- ------------- -------------
10,649,470 205,310,659 47,609,051 28,919,482
LIABILITIES
Payable for securities purchased 499,919
Accrued expenses 11,250 44,902 13,382 11,355
Payable for capital shares redeemed 980 11,641
Payable to investment adviser - Note B 3,103 58,484 22,709 6,673
Payable for directors fees 397 4,256 511 353
------------- ------------- ------------- -------------
14,750 607,561 37,582 30,022
NET ASSETS
Composed of:
Capital shares (authorized
100,000,000 shares of $.01 par
value for each series) 10,142,076 126,295,340 35,737,755 27,761,358
Undistributed net investment income 365,111 2,268,916 293,831 767,587
Undistributed net realized gain (loss) (139,422) 10,982,223 903,771 (51,885)
Net unrealized appreciation of
investments 266,955 65,156,619 10,636,112 412,400
------------- ------------- ------------- -------------
Net assets $ 10,634,720 $ 204,703,098 $ 47,571,469 $ 28,889,460
============= ============= ============= =============
Capital shares outstanding 2,648,013 12,588,079 5,816,681 5,387,452
Net asset value per share $ 4.02 $ 16.26 $ 8.18 $ 5.36
</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, 1997
<TABLE>
<CAPTION>
T. Rowe Price Virtus
Growth and Virtus U.S.Government
Income Equity Income
Bond Series Series Series Series
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends $ 3,063,055 $ 746,573
Interest $ 695,889 1,445,915 50,572 $ 1,313,061
Miscellaneous income 518 240 252
------------ ------------ ------------ ------------
696,407 4,509,210 797,397 1,313,061
EXPENSES
Custodian fees 15,778 29,641 15,554 8,833
Adviser fees - Note B 34,257 526,023 233,813 153,616
Management fees - Note B 14,681 225,438 46,763 30,776
Printing expenses 2,010 28,695 7,682 8,069
Audit fees 2,115 4,159 5,000 2,772
Insurance expenses 1,143 15,395 2,903 1,940
Directors' fees and expenses 1,876 27,800 5,649 3,699
Taxes, licenses and fees 874 879 874 874
Miscellaneous expenses 225 8,795 2,575
------------ ------------ ------------ ------------
72,734 858,255 327,033 213,154
Less: Waiver of management fees (816) (522)
Waiver of adviser fees (14,845) (69,578)
------------ ------------ ------------ ------------
72,734 858,255 311,372 143,054
------------ ------------ ------------ ------------
Net investment income 623,673 3,650,955 486,025 1,170,007
NET REALIZED AND UNREALIZED GAINS
ON INVESTMENTS - Notes A and C
Net realized gain on sale of investments 94,297 12,767,189 1,259,322 54,633
Net unrealized appreciation of
investments during the year 226,803 38,374,380 11,009,490 508,296
------------ ------------ ------------ ------------
Net gain on investments 321,100 51,141,569 12,268,812 562,929
------------ ------------ ------------ ------------
Increase in net assets
resulting from operations $ 944,773 $ 54,792,524 $ 12,754,837 $ 1,732,936
============ ============ ============ ============
</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, 1997
<TABLE>
<CAPTION>
T. Rowe Price Virtus
Growth and Virtus U.S.Government
Income Equity Income
Bond Series Series Series Series
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Operations:
Net investment income $ 623,673 $ 3,650,955 $ 486,025 $ 1,170,007
Net realized gain on sale of investments 94,297 12,767,189 1,259,322 54,633
Net unrealized appreciation of
investments during the year 226,803 38,374,380 11,009,490 508,296
------------- ------------- ------------- -------------
Increase in net assets
resulting from operations 944,773 54,792,524 12,754,837 1,732,936
Distributions to shareowners from:
Net investment income (584,627) (2,941,810) (439,597) (779,578)
Net realized gains (5,408,660) (1,801,912)
Capital share transactions - Note D:
Reinvestment of net investment income
distributed 584,627 2,941,810 439,597 779,578
Reinvestment of net realized gains
distributed 5,408,660 1,801,912
Sales of capital shares 2,732,192 45,115,260 15,570,582 13,139,907
Redemptions of capital shares (2,023,610) (7,757,579) (1,455,726) (872,207)
------------- ------------- ------------- -------------
Increase in net assets from
capital share transactions 1,293,209 45,708,151 16,356,365 13,047,278
------------- ------------- ------------- -------------
Total increase in net assets 1,653,355 92,150,205 26,869,693 14,000,636
Net Assets:
Beginning of year 8,981,365 112,552,893 20,701,776 14,888,824
------------- ------------- ------------- -------------
End of year (including undistributed net
investment income: Bond Series -
$365,111; Growth and Income
Series - $2,268,916; Equity
Series - $293,831; U.S. Government
Income Series - $767,587) $ 10,634,720 $ 204,703,098 $ 47,571,469 $ 28,889,460
============= ============= ============= =============
</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, 1996
<TABLE>
<CAPTION>
T. Rowe Price Virtus
Growth and Virtus U.S.Government
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 36,467 3,625,576 1,781,966 (56,907)
investments
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
distributed 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.
12
<PAGE> 15
SCHEDULE I
SECURITY FIRST TRUST
BOND SERIES
PORTFOLIO OF INVESTMENTS
JULY 31, 1997
<TABLE>
<CAPTION>
Percentage
of Market
Value of Market
Fixed Maturities Portfolio Principal Value
- ------------------------------------------------- ------------ -------------- --------------
<S> <C> <C> <C>
CORPORATE NOTES 25.4%
Aerospace and Defense: 0.6%
Boeing Co., 8.75%, 08/15/21 $ 50,000 $ 61,688
--------
61,688
Automobiles and Related: 1.7%
Ford Motor Credit, 9.50%, 04/15/00 50,000 54,188
GMAC Corporate Bond, 9.63%, 12/15/01 100,000 112,500
--------
166,688
Banking: 5.7%
Banc One Corp., 7.75%, 07/15/25 300,000 322,875
HSBC Fin Nederland Bank, 7.40%, 04/15/03 100,000 103,250
National Australia Bank, 9.70%, 10/15/98 125,000 130,469
--------
556,594
Electric and Electronic Equipment: 2.4%
General Electric Capital, 9.38%, 10/06/98 125,000 130,271
Honeywell, Inc., 6.60%, 04/15/01 100,000 101,375
--------
231,646
Electric Utilities: 2.0%
National Rural Utilities, 6.50%, 09/15/02 100,000 101,250
Public Service Electric & Gas Co., 6.25%, 01/01/07 100,000 98,000
--------
199,250
Finance and Credit: 2.6%
Commercial Credit Group, 9.60%, 05/15/99 50,000 53,062
Margaretten Financial, 6.75%, 06/15/00 100,000 101,125
Standard Credit Card, 7.25%, 04/07/08 100,000 105,294
--------
259,481
Forest Products: 1.1%
Noranda Forest, Inc., 7.50%, 07/15/03 100,000 104,500
</TABLE>
13
<PAGE> 16
SCHEDULE I
SECURITY FIRST TRUST
BOND SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JULY 31, 1997
<TABLE>
<CAPTION>
Percentage
of Market
Value of Market
Fixed Maturities Portfolio Principal Value
- ------------------------------------------------- ------------ -------------- --------------
<S> <C> <C> <C>
CORPORATE NOTES
(CONTINUED)
Insurance Carriers: 1.0%
Prudential Insurance Co.
America, 6.88%, 04/15/03 $ 100,000 $ 101,125
Media and Communications: 0.5%
News American Holdings Inc., 7.50%, 03/01/00 50,000 51,563
Oil and Gas Extraction: 1.0%
Quaker State Corp., 6.63%, 10/15/05 100,000 99,875
Security and Commodity Brokers and Services: 4.4%
Lehman Brothers, 8.50%, 05/01/07 100,000 112,000
Smith Barney Inc., 7.38%, 05/15/07 300,000 314,625
---------
426,625
Telephone Communication: 2.4%
GTE Corp., 8.85%, 03/01/98 50,000 50,850
Rochester Telephone, 8.77%, 04/16/01 100,000 107,875
U.S. West Communications, 7.50%, 06/15/23 80,000 81,200
---------
239,925
---------
TOTAL CORPORATE NOTES
(COST $2,418,889) 2,498,960
FEDERAL AGENCIES 27.1%
Federal Home Loan Bank: 2.7%
5.43%, 02/25/99 75,000 74,730
5.50%, 01/10/01 200,000 197,164
---------
271,894
</TABLE>
14
<PAGE> 17
SCHEDULE I
SECURITY FIRST TRUST
BOND SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JULY 31, 1997
<TABLE>
<CAPTION>
Percentage
of Market
Value of Market
Fixed Maturities Portfolio Principal Value
- ------------------------------------------------- ------------ -------------- --------------
<S> <C> <C> <C>
FEDERAL AGENCIES
(CONTINUED)
Federal Home Loan Mortgage Corp.: 3.0%
7.13%, 07/21/99 $ 235,000 $ 240,894
9.00%, 01/01/17 3,456 3,675
9.50%, 04/01/19 33,602 35,954
9.00%, 06/01/19 14,175 15,074
------
295,597
Federal National Mortgage Assn.: 2.0%
8.35%, 11/10/99 175,000 184,394
7.50%, 08/25/21 9,069 9,031
-----
193,425
Government National Mortgage Assn.: 19.4%
7.50%, 10/15/23 245,924 250,379
7.50%, 06/15/23 141,713 144,281
7.00%, 01/15/24 173,715 174,203
9.50%, 01/15/25 52,147 56,497
9.50%, 05/15/25 42,745 46,525
9.00%, 04/15/09 4,617 4,887
9.00%, 05/15/09 23,103 24,453
9.00%, 05/15/09 6,703 7,094
9.00%, 05/15/09 8,063 8,534
9.00%, 05/15/09 4,037 4,273
9.00%, 05/15/09 3,511 3,716
9.00%, 05/15/09 17,729 18,764
11.25%, 07/15/13 1,587 1,775
10.00%, 08/15/16 39,834 43,755
10.00%, 06/15/17 28,196 30,971
10.00%, 11/15/17 33,622 36,931
11.50%, 11/15/15 71,152 80,802
10.00%, 03/15/20 58,410 64,159
11.50%, 02/15/18 10,590 12,027
10.00%, 03/15/19 56,447 62,003
11.25%, 09/15/15 82,908 92,701
9.25%, 05/15/20 30,671 32,760
</TABLE>
15
<PAGE> 18
SCHEDULE I
SECURITY FIRST TRUST
BOND SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JULY 31, 1997
<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 $ 57,810 $ 61,748
9.25%, 01/15/20 31,744 33,906
9.25%, 01/15/21 33,025 35,275
9.25%, 09/15/21 26,546 28,355
9.25%, 06/15/21 63,744 68,087
9.25%, 04/15/21 74,673 79,760
9.25%, 07/15/21 42,368 45,254
7.00%, 03/15/24 161,655 162,110
9.25%, 05/15/21 90,713 96,892
7.00%, 08/15/23 93,211 93,472
---------
1,906,349
---------
TOTAL FEDERAL AGENCIES
(COST $2,598,205) 2,667,265
U.S. GOVERNMENT OBLIGATIONS 42.7%
U.S. Treasury Bonds: 11.4%
8.75%, 08/15/20 100,000 128,545
8.00%, 11/15/21 150,000 179,780
7.25%, 08/15/22 250,000 277,003
6.88%, 08/15/25 500,000 534,150
---------
1,119,478
U.S. Treasury Notes: 31.3%
3.38%, 01/15/07 250,000 245,938
6.63%, 04/30/02 475,000 489,022
6.38%, 05/15/99 1,000,000 1,010,860
7.75%, 11/30/99 15,000 15,644
5.63%, 11/30/00 550,000 546,903
7.00%, 07/15/06 100,000 106,418
6.50%, 10/15/06 650,000 669,877
---------
3,084,662
---------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(COST $4,086,316) 4,204,140
---------
TOTAL FIXED MATURITIES
(COST $9,103,410) 9,370,365
</TABLE>
16
<PAGE> 19
SCHEDULE I
SECURITY FIRST TRUST
BOND SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JULY 31, 1997
<TABLE>
<CAPTION>
Percentage
of Market
Value of Market
Short Term Investments Portfolio Principal Value
- ------------------------------------------------- ------------ -------------- --------------
<S> <C> <C> <C>
SHORT-TERM INVESTMENTS 4.8%
Commercial Paper: 4.3%
Abbott Laboratories, 5.50%, 08/06/97 $ 125,000 $ 124,904
Ciesco, 5.50%, 08/05/97 300,000 299,816
------------
424,720
Federal Home Loan Mortgage Corp.: 0.5%
5.36%, 08/13/97 45,000 44,919
------------
TOTAL SHORT-TERM INVESTMENTS
(COST $469,639) 469,639
------------
TOTAL INVESTMENTS
(COST $9,573,049) 100.0% 9,840,004
Other assets less liabilities 794,716
------------
NET ASSETS $ 10,634,720
============
</TABLE>
The accompanying notes are an integral part of these financial statements.
17
<PAGE> 20
SCHEDULE I
SECURITY FIRST TRUST
T. ROWE PRICE GROWTH AND INCOME SERIES
PORTFOLIO OF INVESTMENTS
JULY 31, 1997
<TABLE>
<CAPTION>
Percentage
of Market
Value of No. of Market
Equity Securities Portfolio Shares Value
- ------------------------------------------------- ------------ -------------- --------------
<S> <C> <C> <C>
CAPITAL EQUIPMENT 6.4%
Electrical Equipment: 4.7%
General Electric Co. 50,000 $ 3,506,250
Honeywell, Inc. 30,000 2,240,625
Hubbell, Inc. Class B 40,000 1,902,500
Westinghouse Electric Corp. 75,000 1,804,688
---------
9,454,063
Machinery: 1.7%
Coltec Industries, Inc.* 50,000 1,100,000
Pall Corp. 100,000 2,512,500
---------
3,612,500
CONSUMER CYCLICALS 0.5%
Automobiles & Related: 0.5%
Ford Motor Co. 22,857 934,280
CONSUMER NONDURABLES 19.6%
Food & Beverages: 6.6%
Anheuser-Busch Company, Inc. 50,000 2,146,875
CPC International, Inc. 12,000 1,151,250
General Mills, Inc. 25,000 1,728,125
International Flavors & Fragrance 35,000 1,857,188
McCormick & Co. 50,000 1,300,000
Pepsico, Inc. 50,000 1,912,500
Quaker Oats Company 30,000 1,535,625
Ralston-Ralston Purina Group 20,000 1,805,000
---------
13,436,563
Health Services: 0.9%
Baxter International, Inc. 30,000 1,732,500
</TABLE>
*Non-Income Producing
18
<PAGE> 21
SCHEDULE I
SECURITY FIRST TRUST
T. ROWE PRICE GROWTH AND INCOME SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JULY 31, 1997
<TABLE>
<CAPTION>
Percentage
of Market
Value of No. of Market
Equity Securities Portfolio Shares Value
- ------------------------------------------------- ------------ -------------- --------------
<S> <C> <C> <C>
CONSUMER NONDURABLES
(CONTINUED)
Miscellaneous Consumer Products: 5.5%
Colgate Palmolive Co. 24,000 $ 1,818,000
Corporate Express, Inc. 150,000 2,250,000
Fortune Brands, Inc. 25,000 885,938
Gallaher Group PLC* 25,000 448,438
Philip Morris Companies, Inc. 45,000 2,030,625
UST, Inc. 60,000 1,747,500
Waste Management, Inc. 60,000 1,920,000
-----------
11,100,501
Pharmaceuticals: 6.6%
Abbott Laboratories 40,000 2,617,500
American Home Products 30,000 2,473,125
Johnson & Johnson 30,000 1,863,750
Pharmacia-Upjohn, Inc. 36,250 1,368,438
Schering-Plough Corp. 40,000 2,182,500
Smith-Kline Beecham PLC ADR 30,200 2,933,175
-----------
13,438,488
CONSUMER SERVICES 10.7%
Entertainment & Leisure: 1.7%
ITT Corp. New* 40,000 2,557,500
Readers Digest Assn., Inc. 35,000 848,750
-----------
3,406,250
General Merchandise Stores: 5.8%
Dayton Hudson Corp. 45,000 2,908,125
J.C. Penney, Inc. 20,000 1,171,250
Limited, Inc. 75,000 1,673,438
Neiman-Marcus Group, Inc. 75,000 2,137,500
Toys R Us, Inc.* 60,000 2,043,750
Walmart Stores 50,000 1,875,000
-----------
11,809,063
</TABLE>
*Non-Income Producing
19
<PAGE> 22
SCHEDULE I
SECURITY FIRST TRUST
T. ROWE PRICE GROWTH AND INCOME SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JULY 31, 1997
<TABLE>
<CAPTION>
Percentage
of Market
Value of No. of Market
Equity Securities Portfolio Shares Value
- ------------------------------------------------- ------------ -------------- --------------
<S> <C> <C> <C>
CONSUMER SERVICES
(CONTINUED)
Media and Communications: 3.2%
Dun & Bradstreet Corp. 40,000 $ 1,080,000
Knight Ridder, Inc. 40,000 1,987,500
McGraw Hill, Inc. 26,000 1,763,125
Meredith Corp. 60,000 1,661,250
-----------
6,491,875
ENERGY 8.7%
Oil And Gas Extraction: 8.7%
Amerada Hess Corp. 44,600 2,623,038
Atlantic Richfield Co. 24,000 1,788,000
British Petroleum PLC 30,000 2,473,125
Chevron Corp. 20,000 1,580,000
Exxon Corp. 36,000 2,313,000
Mobil Corp. 16,000 1,224,000
Murphy Oil Corp. 12,000 624,750
Royal Dutch Petroleum Co. ADR 40,000 2,237,500
Texaco, Inc. 15,300 1,775,756
Unocal Corp. 25,000 1,000,000
-----------
17,639,169
FINANCIAL 16.0%
Banking: 4.5%
Bankers Trust New York Corp. 20,000 2,023,750
Chase Manhattan Corp. 15,000 1,703,438
Mellon Bank Corp. 50,000 2,521,875
National City Corp. 20,000 1,190,000
Wells Fargo & Co. 6,666 1,832,733
----------
9,271,796
Federal Agencies: 1.1%
Federal Home Loan Mortgage Corp. 60,000 2,163,750
</TABLE>
20
<PAGE> 23
SCHEDULE I
SECURITY FIRST TRUST
T. ROWE PRICE GROWTH AND INCOME SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JULY 31, 1997
<TABLE>
<CAPTION>
Percentage
of Market
Value of No. of Market
Equity Securities Portfolio Shares Value
- ------------------------------------------------- ------------ -------------- --------------
<S> <C> <C> <C>
FINANCIAL
(CONTINUED)
Financial Services: 5.8%
American Express Co. 52,000 $ 4,355,000
H&R Block, Inc. 50,000 1,915,625
Mercury Finance Co.* 96,800 187,550
Travelers Group, Inc. 73,577 5,292,945
-----------
11,751,120
Insurance Carriers: 3.8%
St. Paul Companies, Inc. 30,000 2,353,125
Travelers Aetna P&C 40,000 1,720,000
U S F & G Corp. 80,000 1,965,000
Willis Corroon Group PLC Sponsored ADR 150,000 1,621,875
-----------
7,660,000
Security and Commodity Brokers and Services: 0.8%
J.P. Morgan & Co., Inc. 15,000 1,738,125
PROCESS INDUSTRIES 11.4%
Chemicals and Allied Products: 6.5%
Corning, Inc. 45,000 2,784,375
Dow Chemical Co. 30,000 2,850,000
Dupont Co. 34,000 2,280,125
Great Lakes Chemical Corp. 40,000 2,002,500
Imperial Chemical ADR 30,000 2,021,250
Minnesota Mining & Manufacturing Co. 13,000 1,231,750
-----------
13,170,000
Forest Products: 1.3%
Georgia Pacific Corp. 18,000 1,699,875
Weyerhaeuser Co. 15,000 933,750
-----------
2,633,625
Metal Mining: 2.5%
Newmont Mining Corp. 75,000 3,093,750
Reynolds Metals Co. 25,000 1,950,000
-----------
5,043,750
</TABLE>
*Non-Income Producing
21
<PAGE> 24
SCHEDULE I
SECURITY FIRST TRUST
T. ROWE PRICE GROWTH AND INCOME SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JULY 31, 1997
<TABLE>
<CAPTION>
Percentage
of Market
Value of No. of Market
Equity Securities Portfolio Shares Value
- ------------------------------------------------- ------------ -------------- --------------
<S> <C> <C> <C>
PROCESS INDUSTRIES
(CONTINUED)
Paper And Allied Products: 1.1%
International Paper Co. 25,000 $ 1,450,000
Union Camp Corp. 15,000 878,438
-----------
2,328,438
TECHNOLOGY 0.9%
Computer and Office Equipment:
Intuit* 0.9% 75,000 1,889,063
TRANSPORTATION 3.0%
Aerospace and Defense: 1.8%
Olin Corp. 35,900 1,521,263
Raytheon Co. 40,000 2,235,000
-----------
3,756,263
Railroad Transportation: 1.2%
Burlington Northern Santa Fe 25,000 2,414,063
UTILITIES 6.1%
Telephone Communication: 2.7%
AT&T Co. 60,000 2,208,750
Frontier Corp. 70,000 1,443,750
GTE Corp. 25,000 1,160,938
Southern New England Telecom Corp. 17,000 675,750
-----------
5,489,188
Utility Holding Companies: 3.4%
Edison International 50,000 1,262,500
Entergy Corp. 22,000 600,875
General Public Utilities Corp. 16,000 555,000
Peco Energy Co. 50,000 1,175,000
Pacificorp 70,000 1,561,875
Unicom Corp. 75,000 1,701,557
-----------
6,856,807
-----------
TOTAL EQUITY SECURITIES
(COST $104,064,573) 169,221,240
</TABLE>
*Non-Income Producing
22
<PAGE> 25
SCHEDULE I
SECURITY FIRST TRUST
T. ROWE PRICE GROWTH AND INCOME SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JULY 31, 1997
<TABLE>
<CAPTION>
Percentage
of Market
Value of Market
Short-Term Investments Portfolio Principal Value
- ------------------------------------------------- ------------ -------------- --------------
<S> <C> <C> <C>
SHORT-TERM INVESTMENTS 16.7%
Commercial Paper: 16.7%
Asset Securitization Co., 5.50%, 08/22/97 $ 800,000 $ 797,425
BMW US Capital Corp., 5.51%, 09/18/97 5,000,000 4,963,205
Beta Finance Inc., 5.56%, 08/08/97 2,000,000 1,997,823
Chubb Capital Corp., 5.50%, 08/18/97 1,000,000 997,398
Delaware Funding Corp., 5.53%, 08/15/97 5,000,000 4,989,219
Dover Corp., 5.50%, 08/18/97 3,000,000 2,992,187
Golden Managers Acceptance, 5.54%, 08/05/97 375,000 374,769
Internationale Nederland, 5.55%, 08/04/97 1,000,000 999,537
Internationale Nederland, 5.52%, 08/08/97 3,575,000 3,571,146
Koch Industries, Inc., 5.855%, 08/01/97 500,000 500,000
Motorola Credit Corp., 5.46%, 09/16/97 3,900,000 3,872,692
Pfizer Inc., 5.52%, 08/05/1997 1,809,000 1,807,885
Province Of Quebec, 5.54%, 12/05/97 2,300,000 2,255,196
Vermond American Corp., 5.47%, 08/28/97 3,765,000 3,749,504
-------------
(COST $33,868,034) 33,867,986
TOTAL INVESTMENTS
(COST $137,932,607) 100.0% 203,089,226
Other assets less liabilities 1,613,872
NET ASSETS $204,703,098
============
</TABLE>
The accompanying notes are an integral part of these financial statements.
23
<PAGE> 26
SCHEDULE I
SECURITY FIRST TRUST
VIRTUS EQUITY SERIES
PORTFOLIO OF INVESTMENTS
JULY 31, 1997
<TABLE>
<CAPTION>
Percentage
of Market
Value of No. of Market
Equity Securities Portfolio Shares Value
- ------------------------------------------------- ------------ -------------- --------------
<S> <C> <C> <C>
CAPITAL EQUIPMENT 5.6%
Electrical Equipment: 3.3%
Amp, Inc. 3,500 $ 182,875
Applied Materials, Inc.* 3,600 330,750
Grainger W.W. Inc. 3,500 336,000
Harris Corp. 4,200 364,875
Tandy Corp. 2,800 166,425
Whirlpool Corp. 2,300 115,000
----------
1,495,925
Machinery: 2.3%
Caterpillar, Inc. 9,800 548,800
Cooper Industries, Inc. 2,700 150,019
Cummins Engine, Inc. 2,300 180,550
Tenneco, Inc. 3,200 149,200
----------
1,028,569
CONSUMER NONDURABLES 3.5%
Food & Beverages: 0.4%
Seagram Ltd. 4,500 172,406
Health Services: 1.3%
Baxter International, Inc. 4,300 248,594
Becton, Dickinson & Co. 2,000 107,250
Columbia/HCA Healthcare 7,300 235,425
----------
591,269
Miscellaneous: 1.3%
Browning Ferris Industries 6,800 251,600
Fortune Brands, Inc. 2,200 77,963
Gallaher Group PLC* 2,200 39,463
Service Corp. International 3,400 115,600
Sherwin Williams Co. 3,400 109,013
----------
593,639
Pharmaceuticals: 0.5%
Pharmacia-Upjohn, Inc. 5,600 211,400
</TABLE>
*Non-Income Producing
24
<PAGE> 27
SCHEDULE I
SECURITY FIRST TRUST
VIRTUS EQUITY SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JULY 31, 1997
<TABLE>
<CAPTION>
Percentage
of Market
Value of No. of Market
Equity Securities Portfolio Shares Value
- ------------------------------------------------- ------------ -------------- --------------
<S> <C> <C> <C>
CONSUMER CYCLICALS 2.5%
Automobiles & Related: 2.5%
Chrysler Corp. 8,200 $ 304,425
Ford Motor Co. 12,800 523,200
Genuine Parts Co. 3,600 117,450
Goodyear Tire And Rubber 3,400 219,513
-----------
1,164,588
CONSUMER SERVICES 5.7%
Entertainment & Leisure: 0.5%
ITT Corp. New * 3,700 236,569
General Merchandise Stores: 4.3%
American Stores Company 4,000 101,000
CVS Corp. 2,600 147,875
Federated Deparment Stores* 3,700 162,106
May Dept. Stores Co. 3,800 212,325
Nordstrom, Inc. 2,600 147,388
J.C. Penney, Inc. 3,900 228,150
Pitney Bowes, Inc. 1,900 142,738
Sears Roebuck & Co. 6,300 398,869
Toys R Us, Inc.* 3,300 112,406
V.F. Corp. 3,400 305,150
-----------
1,958,007
Building Materials & Garden Supplies: 0.3%
Armstrong World Industries 2,600 191,913
Media & Communications: 0.6%
Times Mirror Co. 2,000 109,250
Viacom, Inc.* 5,600 172,900
-----------
282,150
</TABLE>
*Non-Income Producing
25
<PAGE> 28
SCHEDULE I
SECURITY FIRST TRUST
VIRTUS EQUITY SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JULY 31, 1997
<TABLE>
<CAPTION>
Percentage
of Market
Value of No. of Market
Equity Securities Portfolio Shares Value
- ------------------------------------------------- ------------ -------------- --------------
<S> <C> <C> <C>
ENERGY 17.4%
Gas Production And Distribution: 0.3%
Columbia Gas System 1,700 $ 116,875
Oil And Gas Extraction: 17.1%
Amerada Hess Corp. 1,800 105,863
Amoco Corp. 8,100 761,400
Burlington Resources, Inc. 2,000 94,500
Chevron Corp. 6,600 522,225
Exxon Corp. 29,600 1,901,800
Mobil Corp. 15,900 1,216,350
Phillips Petroleum Co. 2,900 133,581
Royal Dutch Petroleum Co. ADR 41,600 2,327,000
Texaco, Inc. 5,300 615,131
Unocal Corp. 2,900 116,000
----------
7,793,850
FINANCIAL 31.0%
Banking: 14.4%
Banc One Corp. 4,501 252,563
Bank Of New York, Inc. 4,400 213,675
Bankamerica Corp. 13,400 1,011,700
Bankers Trust New York 3,200 323,800
Barnett Banks, Inc. 3,000 170,813
Chase Manhattan Corp. 1,300 147,631
Citicorp. 8,000 1,086,000
Comerica, Inc. 2,100 158,813
Fifth Third Bancorp. 3,150 199,041
First Chicago Corp. 3,600 273,150
First Union Corp. 4,300 436,181
Golden West Financial Corp. 2,200 185,075
Household International, Inc. 3,100 401,450
Key Corp. 2,700 167,906
Mellon Bank Corp. 4,000 201,750
National City Corp. 2,800 166,600
</TABLE>
26
<PAGE> 29
SCHEDULE I
SECURITY FIRST TRUST
VIRTUS EQUITY SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JULY 31, 1997
<TABLE>
<CAPTION>
Percentage
of Market
Value of No. of Market
Equity Securities Portfolio Shares Value
- ------------------------------------------------- ------------ -------------- --------------
<S> <C> <C> <C>
FINANCIAL
(CONTINUED)
Nationsbank Corp. 9,800 $ 697,638
Norwest Corp. 2,800 176,575
PNC Bank Corp. 3,900 178,425
Wachovia Corp. 2,300 148,350
----------
6,597,136
Federal Agencies: 1.0%
Federal Home Loan Mortgage Corp. 12,400 447,175
Financial Services: 3.6%
American Express Co. 6,200 519,250
Beneficial Corp. 1,200 87,000
Fleet Financial Group 2,900 196,838
MGIC Investment Corp. 1,200 63,075
Republic NY Corp. 2,400 277,200
Travelers Group, Inc. 6,900 496,369
----------
1,639,732
Insurance Carriers: 8.3%
Aetna, Inc. 4,400 501,325
Allstate Corp. 2,700 213,300
American General Corp. 3,400 181,050
Cigna Corp. 3,000 598,500
Chubb Corp. 2,500 176,250
General Re Corp. 3,100 647,513
Hartford Financial Service Group, Inc. 1,400 121,975
Lincoln National Corp. 1,800 127,800
Loews Corp. 3,700 400,063
MBIA, Inc. 1,800 212,400
Safeco Corp. 2,400 114,900
St. Paul Companies, Inc. 1,400 109,813
Transamerica Corp. 4,000 403,500
----------
3,808,389
</TABLE>
27
<PAGE> 30
SCHEDULE I
SECURITY FIRST TRUST
VIRTUS EQUITY SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JULY 31, 1997
<TABLE>
<CAPTION>
Percentage
of Market
Value of No. of Market
Equity Securities Portfolio Shares Value
- ------------------------------------------------- ------------ -------------- --------------
<S> <C> <C> <C>
FINANCIAL
(CONTINUED)
Security, Commodity Brokers, & Services: 3.7%
Merrill Lynch & Co., Inc. 8,000 $ 563,500
J.P. Morgan & Co., Inc. 5,500 637,313
Morgan Stanley Dean Witter 9,185 480,490
----------
1,681,303
PROCESS INDUSTRIES 6.7%
Chemicals and Allied Products: 3.1%
Air Products & Chemical 5,100 449,756
Dow Chemical Co. 6,600 627,000
W.R. Grace & Co. 1,700 104,550
Great Lakes Chemical Corp. 2,200 110,138
Union Carbide, Inc. 2,100 116,288
----------
1,407,732
Forest Products: 0.4%
Weyerhaeuser Co. 2,900 180,525
Gold And Silver Products: 0.2%
Barrick Gold Corp. 4,300 98,094
Metal Mining: 1.6%
Alcan Aluminum Ltd. 5,000 195,938
Inco Ltd. 3,400 105,188
NACCO Industries 2,200 152,625
USX-Marathon Group 5,300 170,594
USX-U.S. Steel Group 3,000 109,688
----------
734,033
Paper And Allied Products: 1.4%
International Paper Co. 4,100 229,600
Union Camp Corp. 2,300 134,694
Willamette Industries, Inc. 3,600 274,275
----------
638,569
</TABLE>
28
<PAGE> 31
SCHEDULE I
SECURITY FIRST TRUST
VIRTUS EQUITY SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JULY 31, 1997
<TABLE>
<CAPTION>
Percentage
of Market
Value of No. of Market
Equity Securities Portfolio Shares Value
- ------------------------------------------------- ------------ -------------- --------------
<S> <C> <C> <C>
TECHNOLOGY 5.7%
Computer & Office Equipment: 5.7%
Digital Equipment Corp.* 3,100 $ 127,681
International Business Machines Corp. 17,700 1,871,775
LSI Logic Corp.* 2,500 78,906
Seagate Technology, Inc.* 1,300 53,381
Xerox Corp. 5,900 485,275
-----------
2,617,018
TRANSPORTATION 11.4%
Aerospace & Defense: 7.0%
Allied Signal, Inc. 2,300 212,175
Boeing Co. 11,600 682,225
Lockheed Martin Corp. 5,600 596,400
McDonnell Douglas Corp. 2,200 168,300
Northrop Grumman Corp. 2,900 333,863
Raytheon Co. 3,300 184,388
TRW, Inc. 3,400 198,900
Textron, Inc. 8,000 560,500
United Technologies Corp. 3,000 253,688
-----------
3,190,439
Airline Transportation: 1.7%
AMR Corp.* 4,000 430,250
Delta Air Lines, Inc. 4,000 355,500
-----------
785,750
Railroad Transportation: 2.7%
Burlington Northern Santa Fe 4,300 415,219
CSX Corp. 2,600 160,550
Norfolk Southern Corp. 4,100 454,075
Union Pacific 2,800 200,725
-----------
1,230,569
</TABLE>
*Non-Income Producing
29
<PAGE> 32
SCHEDULE I
SECURITY FIRST TRUST
VIRTUS EQUITY SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JULY 31, 1997
<TABLE>
<CAPTION>
Percentage
of Market
Value of No. of Market
Equity Securities Portfolio Shares Value
- ------------------------------------------------- ------------ -------------- --------------
<S> <C> <C> <C>
UTILITIES 10.5%
Electric Utilities: 0.9%
Consolidated Edison Co. 3,000 $ 94,875
Energy Corp. 6,128 310,613
-----------
405,488
Telephone Communication: 7.5%
AT&T Co. 18,100 666,306
Airtouch Communications* 5,200 171,275
Bell Atlantic Corp. 10,600 769,163
Bell South Corp. 11,100 525,863
MCI Communications Corp. 7,900 278,969
NYNEX Corp. 6,900 382,519
Sprint Corp. 5,300 262,350
U.S. West, Inc. 6,300 230,344
U.S. West, Inc. Media Group* 6,300 138,994
-----------
3,425,783
Utility Holding Companies: 2.1%
Carolina Power & Light 2,200 78,375
Dominion Resources, Inc. 2,900 106,575
Edison International 8,348 210,787
Entergy Corp. 3,500 95,594
GPU, Inc. 2,400 83,250
Peco Energy Company 3,800 89,300
PG&E Corp. 6,500 161,267
Southern Co. 6,400 140,400
-----------
965,548
-----------
TOTAL INVESTMENTS
(COST $35,054,331) 100.0% 45,690,443
Other assets less liabilities 1,881,026
-----------
NET ASSETS $47,571,469
===========
</TABLE>
*Non-Income Producing
The accompanying notes are an integral part of these financial statements.
30
<PAGE> 33
SCHEDULE I
SECURITY FIRST TRUST
VIRTUS U.S. GOVERNMENT INCOME SERIES
PORTFOLIO OF INVESTMENTS
JULY 31, 1997
<TABLE>
<CAPTION>
Percentage
of Market
Value of Market
Fixed Maturities Portfolio Principal Value
- ------------------------------------------------- ------------ -------------- --------------
<S> <C> <C> <C>
U.S. GOVERNMENT OBLIGATIONS 37.5%
U.S. Treasury Notes: 37.5%
6.00%, 11/30/97 $ 2,800,000 $ 2,804,648
5.875%, 01/31/99 1,000,000 1,002,890
5.875%, 02/28/99 2,800,000 2,808,792
6.38%, 05/15/99 800,000 808,688
7.75%, 01/31/00 200,000 209,094
5.50%, 04/15/00 160,000 158,917
6.25%, 08/31/00 500,000 506,230
5.63%, 02/28/01 550,000 546,546
7.88%, 08/15/01 1,500,000 1,607,805
-----------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(COST $10,369,780) 10,453,610
-----------
FEDERAL AGENCIES 52.3%
Federal Farm Credit Bank: 2.4%
6.05%, 04/21/03 550,000 547,833
6.94%, 05/19/05 125,000 130,245
-----------
678,078
Federal Home Loan Bank: 5.8%
4.80%, 09/22/98 350,000 346,801
6.83%, 06/07/01 1,000,000 1,015,360
8.00%, 08/27/01 250,000 267,528
-----------
1,629,689
Federal Home Loan Mortgage Corp.: 22.2%
7.00%, 07/15/99 855,976 862,652
7.36%, 06/05/07 1,500,000 1,562,625
7.00%, 07/01/07 164,678 164,884
7.00%, 09/01/10 382,599 387,619
6.50%, 04/11/11 1,665,787 1,661,622
6.00%, 05/11/11 1,569,183 1,540,247
-----------
6,179,649
</TABLE>
31
<PAGE> 34
SCHEDULE I
SECURITY FIRST TRUST
VIRTUS U.S. GOVERNMENT INCOME SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JULY 31, 1997
<TABLE>
<CAPTION>
Percentage
of Market
Value of Market
Fixed Maturities Portfolio Principal Value
- ------------------------------------------------- ------------ -------------- --------------
<S> <C> <C> <C>
FEDERAL AGENCIES
(CONTINUED)
Federal National Mortgage Assn.: 9.5%
6.00%, 11/01/03 $ 113,320 $ 112,292
8.63%, 06/30/04 150,000 170,460
6.50%, 03/01/09 259,706 262,381
7.00%, 04/01/11 1,707,619 1,725,225
8.00%, 09/01/25 379,849 391,837
------------
2,662,195
Other Federal Agencies: 12.3%
Farmermac, 7.37%, 08/01/06 1,500,000 1,598,370
Gov't. National Mortgage Assn., 7.50%, 01/15/26 1,428,843 1,454,733
Small Business Administration, 6.90%, 08/25/08 268,053 269,555
Student Loan Marketing Assn., 7.50%, 03/08/00 100,000 103,896
------------
3,426,554
------------
TOTAL FEDERAL AGENCIES
(COST $14,247,595) 14,576,165
------------
TOTAL FIXED MATURITIES
(COST $24,617,375) 25,029,775
Short-Term Investments
- -------------------------------------------------
SHORT-TERM INVESTMENTS 10.2%
Federal Home Loan Bank, 5.39%, 08/08/97 1,250,000 1,248,681
Federal Home Loan Mortgage Corp., 5.30%, 08/05/97 1,100,000 1,099,351
Federal Home Loan Mortgage Corp., 5.22%, 08/04/97 500,000 499,782
------------
TOTAL SHORT-TERM INVESTMENTS
(COST $2,847,814) 2,847,814
------------
TOTAL INVESTMENTS
(COST $27,465,189) 100.0% 27,877,589
Other assets less liabilities 1,011,871
------------
NET ASSETS $ 28,889,460
============
</TABLE>
The accompanying notes are an integral part of these financial statements.
32
<PAGE> 35
SECURITY FIRST TRUST
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1997
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
and the T. Rowe Price Growth and Income Series (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 February 27, 1997 the Board of Trustees unanimously approved the name change
of the T. Rowe Price Bond Series to the Bond 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
Bond Series and T. Rowe Price Growth and Income Series:
Effective July 15, 1997, Neuberger & Berman, LLC became investment advisers for
the Bond Series replacing T. Rowe Price Associates. 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 Bond Series and Growth and Income Series (equivalent annually to
.5%), less compensation payable to the Series' investment advisers, Neuberger &
Berman, LLC (Bond Series) and T. Rowe Price Associates (Growth and Income
Series). 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, 1997, 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 Growth and Income Series, while Neuberger & Berman, LLC
provides the same for the Bond Series. T. Rowe Price Associates and Neuberger &
Berman, LLC are each paid an annual fee of .35% of the average daily net assets
of the series for which they respectively provide investment advice 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% (equivalent annually to .9%) of the average daily net asset
value of the Virtus Equity Series (the Equity Series) and Virtus U.S. Government
Income Series (the U.S. Government Income Series), 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. While they are
not obligated to do so, Security Management and Virtus have agreed to continue,
until notice to the contrary, to defer their fees (and make contributions in
respect of excess expenses) in order to maintain the expense ratios of the
Equity Series and the U.S. Government Income Series at a level of 1% and .7%
respectively, or less.
Virtus provides investment advice and makes investment decisions for the Equity
Series and the 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, 1997 were as follows:
<TABLE>
<CAPTION>
T. Rowe Price Virtus
Growth U.S.
and Virtus Government
Income Equity Income
Bond Series Series Series Series
----------- ------ ------ ------
<S> <C> <C> <C> <C>
U.S. Government Securities:
Purchases $ 4,552,737 $22,367,938
Sales 2,806,299 11,321,907
Other Investment Securities:
Purchases 1,213,738 $53,277,272 $31,192,673
Sales 2,058,626 17,502,639 16,852,648
</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, 1997 was the same for
both financial statement and federal income tax purposes. At July 31, 1997, the
composition of unrealized appreciation and depreciation of investment securities
was as follows:
<TABLE>
<CAPTION>
Unrealized
--------------------------------
Appreciation Depreciation Net
------------ ------------- ------------
<S> <C> <C> <C>
Bond Series $ 277,855 $ 10,900 $ 266,955
T. Rowe Price Growth and Income Series 67,090,357 1,933,738 65,156,619
Virtus Equity Series 10,838,973 202,861 10,636,112
Virtus U.S. Government Income Series 422,800 10,400 412,400
</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, 1997
Bond Series 697,683 153,044 (519,644) 331,083
T. Rowe Price Growth and Income Series 3,217,205 223,202 410,369 (561,799) 3,288,977
Virtus Equity Series 2,258,599 68,155 279,366 (209,066) 2,397,054
Virtus U.S. Government Income Series 2,512,098 151,669 (166,573) 2,497,194
YEAR ENDED JULY 31, 1996
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
</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 Realized Total
and Income Distributions
Net Asset Unrealized (Losses) Dividends from Net Asset
Value at Net Gains from from Net Related Value at
Beginning Investment (Losses) on Investment Investment Capital End of Total
of Period Income Investments Operations Income Gains Period Return(2)
-------- ------- -------- ------- -------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BOND SERIES
Year ended July 31,
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
1997 3.88 .24 .14 .38 (.24) 4.02 9.79
T. ROWE PRICE
GROWTH AND
INCOME SERIES
Year ended
July 31,
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
1997 12.10 .30 4.69 4.99 (.29) (.54) 16.26 41.24
VIRTUS EQUITY
SERIES
May 19, 1993
through
July 31,
1993 (3) $ 5.00 $ .01 $ (.01) $ .00 $ .00 $ 5.00 0.00%(1)
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
1997 6.05 .09 2.60 2.69 (.11) (.45) 8.18 44.46
VIRTUS
U.S. GOVERNMENT
INCOME SERIES
May 19, 1993
through
July 31,
1993 (3) $ 5.00 $ .03 $ .04 $ .07 $ .00 $ 5.07 7.10%(1)
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
1997 5.15 .23 .20 .43 (.22) 5.36 8.35
</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 Virtus 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)
<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>
BOND SERIES
Year ended July 31,
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
1997 .75 6.41 54 10,634,720
T. ROWE PRICE
GROWTH AND INCOME SERIES
Year ended July 31,
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
1997 .57 2.44 14 204,703,098
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
Year ended July 31, 1997 1.00 1.56 55 47,571,469
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
Year ended July 31, 1997 .70 5.68 62 28,889,460
</TABLE>
(1) Annualized
(2) The Virtus Equity Series and U.S. Government Income Series commenced
operations on May 19, 1993.
39
<PAGE> 42
SECURITY FIRST TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE F -- SUBSEQUENT EVENTS
On August 13, 1997, an agreement was signed for Metropolitan Life Insurance
Company to acquire the parent of Security Management, Security First Group,
Inc., from London Insurance Group, Inc. The closing of the transaction is
pending regulatory approval.
40
<PAGE> 43
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 Bond Series,
T. Rowe Price Growth and Income Series, Virtus Equity Series and Virtus U.S.
Government Income Series as of July 31, 1997, 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, 1997, 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
Bond Series, T. Rowe Price Growth and Income Series, Virtus Equity Series, and
Virtus U.S. Government Income Series at July 31, 1997, 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.
ERNST & YOUNG LLP
September 18, 1997
Los Angeles, California
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