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Previous: SECURITY FIRST TRUST, NSAR-A, 1997-03-27 |
Next: BISCAYNE APPAREL INC /FL/, 10-K, 1997-03-27 |
<PAGE> 1
Dear Contract Owner:
Domestic stocks soared after the November election, then hit turbulent skies in
early December before reaching a record high in January. Bond prices also fell
early in December, but have since rebounded.
The economy provided strong support for stock and bond investors, with low
unemployment, moderate growth, and subdued inflation. If this scenario
continues, 1997 could be another rewarding year, but investors should anticipate
considerable volatility, including the possibility of a stock market correction.
Certainly we do not expect the same robust returns from domestic stocks that we
enjoyed in 1995 and 1996.
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> 2
SECURITY FIRST TRUST: T. ROWE PRICE GROWTH AND INCOME SERIES AND VIRTUS EQUITY
SERIES
EQUITY MARKET OVERVIEW
The equity market generated strong returns over the last six months,
reflecting continued good corporate earnings reports, a generally favorable
economic and interest rate environment, and strong investor demand for stocks.
The postelection rally was particularly volatile in light of how little the
political scene actually changed. Stocks have now provided six years of positive
returns with no interim corrections of 10% or more.
While the last six and twelve month periods were strong for the broad
equity market, it was challenging for income-oriented investors. Bond and money
market returns were generally in the single-digit range in 1996, with
shorter-maturity securities returning more than those with longer maturities.
EQUITY MARKET OUTLOOK
In 1997 we expect continued moderate economic growth, low inflation, and a
generally supportive interest rate environment. Investors will continue to focus
on the sustainability of high levels of corporate profitability and the strength
of mutual fund cash inflows as important factors contributing to a continuing
healthy stock market environment.
Stock valuations are, at best, currently only modestly attractive. Over the
last few years, stock prices have appreciated at a much faster rate than the
earnings and dividends of the underlying companies. Because of this "delinkage,"
we expect more subdued equity performance in 1997. Following the robust
back-to-back returns of 1995 and 1996, the long-anticipated correction in equity
prices is possible at some point during the year.
PORTFOLIO MANAGEMENT: T. ROWE PRICE GROWTH AND INCOME SERIES
The six months ended January 31, 1997 were a rewarding period for your
portfolio. Despite a relatively conservative asset structure, performance was
reasonable over the last six months and for all of 1996.
GROWTH AND INCOME SERIES SECTOR DIVERSIFICATION
[PIE CHART]
<TABLE>
<S> <C>
Short-Term Securities 16.9%
Utilities 6.0%
Process Industries 9.0%
Financial 17.7%
Energy 9.1%
Transportation 3.3%
Consumer Services 11.0%
Consumer Cyclicals 0.5%
Consumer Non-Durables 21.4%
Capital Equipment 5.1%
</TABLE>
Since our last report at the end of July, we added several new issues to your
portfolio, including AT&T, Frontier Corp., ITT, and St. Paul Companies. For
various reasons, these stocks had been subpar performers and, consequently,
provided us with opportunities to acquire good companies at attractive
valuations. In our opinion, each of them was undervalued on either a
price-to-earnings or price-to-cash-flow basis and offered an appealing
combination of reasonable appreciation potential and limited downside risk.
1
<PAGE> 3
GROWTH & INCOME SERIES
15 LARGEST HOLDINGS
<TABLE>
<CAPTION>
Percentage of
Security Portfolio
-------- ---------
<S> <C>
Travelers Group Inc. 2.6
Abbott Laboratories 2.4
American Express Co. 2.2
General Electric 1.7
Warner Lambert Co. 1.6
ITT Corp. 1.5
Pfizer, Inc. 1.5
Smithkline-Beecham 1.5
Honeywell, Inc. 1.5
Conrail, Inc. 1.4
British Petroleum PLC 1.4
Wells Fargo & Co. 1.4
AT&T Co, 1.3
PHH Corp. 1.3
American Home Products 1.3
----
TOTAL 24.6
====
</TABLE>
We have maintained a moderate cash reserve position for some time in the
expectation that any broad-based stock market correction, or correction among
individual stocks, will present us with attractive investment opportunities
during the year.
PORTFOLIO MANAGEMENT: VIRTUS EQUITY SERIES
We have positioned the Virtus Equity Series as an equity growth and income
portfolio which seeks to take advantage of trends in the stock market that favor
different styles of stock selection (value or growth). The portfolio is
currently emphasizing value stocks over growth stocks in the composition of the
portfolio. Value stocks are those companies selling at a low price relative to
actual value of their underlying assets. Growth stocks are those companies with
above-average earnings expectations.
We achieve overweighting in the value style by emphasizing those S&P 500
sectors heavily comprised of value stocks such as energy, financials and
utilities. We de-emphasize sectors heavily comprised of growth stocks such as
technology and consumer staples. Hence, the companies in the portfolio are large
capitalization firms and the overall dividend yield is greater than that of the
S&P 500.
EQUITY SERIES SECTOR DIVERSIFICATION
[PIE CHART]
<TABLE>
<S> <C>
Consumer Non-Durables 5.7%
Utilities 14.3%
Process Industries 6.9%
Energy 17.4%
Consumer Services 5.9%
Capital Equipment 4.1%
Financial 26.3%
Consumer Cyclicals 3.2%
Transportation 10.6%
Technology 5.6%
</TABLE>
For the six months ending January 31, 1997, the Virtus Equity Series gained
20.8% for your portfolio. The S&P 500 Index returned 24.3% for the same period.
The fund's investment strategy is in a capital preservation position for 1997.
We see the equity market measuring very high on a historical valuation analysis
and believe value stocks will provide defensiveness due to their higher yields,
lower price-earnings ratios and lower volatility. The Virtus Equity Series is
currently structured to outperform in a difficult equity market environment.
2
<PAGE> 4
EQUITY SERIES
15 LARGEST HOLDINGS
<TABLE>
<CAPTION>
% of
Security Portfolio
-------- ---------
<S> <C>
Exxon Corp. 4.4
Royal Dutch Petroleum 3.8
Int Business Machines 3.3
AT&T Corp. 2.4
Mobil Corp. 2.1
Citicorp 2.0
Amoco Corp. 1.7
Nationsbank Corp. 1.7
Bellsouth Corp. 1.7
Chevron Corp. 1.5
Bankamerica Corp. 1.5
Boeing Co. 1.4
Bell Atlantic Corp. 1.4
Ford Motor Co. 1.4
Federal Home Loan Mtg. Corp. 1.3
----
TOTAL 31.6
====
</TABLE>
SECURITY FIRST TRUST: BOND SERIES AND VIRTUS U.S. GOVERNMENT INCOME SERIES
FIXED-INCOME MARKET OVERVIEW
The environment for fixed income investors over the six months ended
January 31, 1997, was positive, as interest rates declined from the high levels
reached last July. At its peak in early July, the 10-year Treasury note was
yielding just over 7% - one and a half percentage points higher than at the
start of the year. By early December this rate had dropped to 6%. As always,
changing economic trends were behind the rate declines.
The economy appeared to be moderating in strength, and investors saw few
signs of inflation growth in most of the economic reports released during the
year. By December, however, the economy seemed to be gathering momentum as
indicated by employment, housing, and consumer confidence data. The question was
whether the Federal Reserve would continue its neutral wait-and-see attitude.
Fearing the worst, investors sold bonds, and the fixed income market gave back
some of its gains. Currently, the 10-year Treasury note is yielding 6.4% and the
Federal Reserve is continuing its neutral stance. The accompanying chart shows
the fluctuations in interest rates during the past twelve months.
INTEREST RATE LEVELS
[GRAPH]
[PLOT POINTS TO COME]
Turning to sector performance, over the most recent six month period,
Treasury and agency securities performed well as typically occurs when rates are
declining. Investors bought higher-yielding corporate bonds, driving their
yields down closer to Treasury yields and tightening the spread between them.
Lower-quality corporate bonds, junk bonds, and emerging market debt
outperformed Treasuries significantly. Mortgage-backed securities (MBS) turned
in a strong performance relative to comparable government and corporate issues.
Investors viewed the sector as a higher-yielding, higher-quality alternative to
corporate securities.
FIXED-INCOME MARKET OUTLOOK
We remain neutral on the bond market over the first half of 1997. The
economy appears to be growing now at a more moderate pace than earlier this
year. If moderate growth accompanied by low inflation continues, it is likely
that the Federal Reserve will remain neutral, and the bond market will trade in
a range close to that of 1996.
3
<PAGE> 5
This environment should benefit fixed income securities, especially those
with higher yield levels than Treasuries. We intend to remain fully invested
with minimal cash levels, while emphasizing MBS and high-quality corporate
bonds. However, as we suggested in previous communications, we remain cautious
about adding significantly to either sector at this time. Yields on corporate
securities are not compelling, and the spread between corporates and Treasuries
could be expected to widen if the economy weakens significantly. Mortgage
securities, which in mid-1996 constituted an attractive alternative to corporate
bonds, are less desirable at current levels.
PORTFOLIO MANAGEMENT: BOND SERIES
We increased duration modestly over the past six months to allow the
portfolio to participate in the declining interest rate trend. As usual, we
maintained a high-quality portfolio (AA) with an attractive level of income
during the period. We reduced our allocation to corporate securities slightly to
take advantage of tightening corporate spread levels, mentioned earlier, and to
increase our government bond exposure.
Your portfolio participated in bond market price gains over the recent
six-month period and benefited from the income generated from coupons and
reinvestment.
BOND SERIES SECTOR DIVERSIFICATION
[PIE CHART]
<TABLE>
<S> <C>
Short-Term Securities 4.4%
U.S. Government Obligations 24.7%
Federal Agencies 39.7%
Corporate Bonds 31.2%
</TABLE>
PORTFOLIO MANAGEMENT: VIRTUS U.S. GOVERNMENT INCOME SERIES
We continued to maintain the portfolio's average maturity - long - ,
relative to our median target during the period through mid November. We felt
that economic growth would slow and fears of inflation would subside, allowing
interest rates to fall. Buying bonds longer than our average goal allows us to
effectively "lock in" higher rates for a longer time period.
In mid-November we sold some long maturity bonds and reinvested in shorter
maturities, feeling that interest rates had fallen to a level below where
economic data justified. We maintained our average maturity outlook through
January 31, as interest rates rose to more than 6.4%; then in late January, we
began adding longer bonds to the portfolio.
U.S. GOVERNMENT INCOME SERIES SECTOR DIVERSIFICATION
[PIE CHART]
<TABLE>
<S> <C>
Short-Term Securities 22.1%
U.S. Government Obligations 20.6%
Federal Agencies 57.3%
</TABLE>
We have continued to maintain a 30% to 40% weighting in mortgage-backed
securities. On a related note, the yield advantage of owning mortgage-backed
securities declined sharply in December and January. This decline provided a
favorable return, but it made new purchases less attractive.
4
<PAGE> 6
Looking ahead, we feel that interest rates are heading slightly lower. As a
result, we are buying longer maturity bonds. Additional yield will most likely
come from mortgage-backed securities and other, higher yielding bonds that
perform well in a calm interest rate environment.
For the first six months of the year, the series returned 4.67% for your
portfolio, including dividend reinvestments and the change in NAV. This exceeded
the 4.15% return for the Lehman Brothers Intermediate Government Index, a
composite of similar maturity as is found in the series.
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 December 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
Series(1)(2) 21.65% 17.89% 15.35% 14.35%
Bond
Series(1)(2) 2.80% 5.03% 6.18% 6.93%
Equity
Series(1)(3) 18.52% 12.42% N/A*
U.S.
Government
Income(1)(3) 3.55% 4.49% N/A*
Consumer
Price Index 3.46% 2.83% 2.84% 3.66%
</TABLE>
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) 21.65% 63.83% 104.86% 282.20%
Bond
Series(1)(2) 2.80% 15.87% 34.99% 95.40%
Equity
Series(1)(3) 18.52% 42.08% N/A*
U.S.
Government
Income(1)(3) 3.55% 14.09% N/A*
Consumer
Price Index 3.46% 8.75% 15.01% 43.29%
</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> 7
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 December 31, 1996, 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]
[PLOT POINTS TO COME]
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 +21.65 +1111.4
</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 December 31, 1996, 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.
[GRAPH]
[PLOT POINTS TO COME]
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 +2.80 +335.3
</TABLE>
6
<PAGE> 8
SECURITIES FIRST TRUST VIRTUS EQUITY SERIES
The Per Share Data Table below illustrates the growth in per share value
for the period ending December 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 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 8/1/79
- ------ ----- ----- ---------- ------ ------
<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 +18.52 +47.2
</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 December 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 8/1/79
- ------ ----- ----- ---------- ------ ------
<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
1996 5.14 .22 5.83 +3.55 +16.6
</TABLE>
*change from 5-19-93 to 12-31-93
7
<PAGE> 9
SECURITY FIRST TRUST
STATEMENT OF ASSETS AND LIABILITIES
JANUARY 31, 1997
UNAUDITED
<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 - $9,512,237; Growth
and Income Series - $102,529,321;
Equity Series - $26,296,694;
U.S. Government Income Series -
$18,417,663) $ 9,671,500 $148,386,772 $29,560,719 $ 18,515,096
Cash 36,682 681,790 715,550 776,882
Receivable for securities sold 94,087 4,000,000 5,798
Receivable for capital shares purchased 974 79,509 24,805 10,639
Interest receivable 137,709 2,500 2,624 228,153
Dividends receivable 257,031 49,930
Prepaid insurance 393 5,114 939 634
------------- ------------ ----------- ------------
9,941,345 153,412,716 30,354,567 19,537,202
LIABILITIES
Payable for securities purchased 3,782,199
Payable for capital shares redeemed 23,809
Payable to investment adviser - Note B 2,957 43,098 16,737 6,892
Payable for directors fees 211 1,795 23 17
Accrued expenses 14,784 51,777 6,184 7,504
------------- ------------ ----------- ------------
17,952 3,902,678 22,944 14,413
NET ASSETS
Composed of:
Capital shares (authorized 100,000,000
shares of $ .01 par value for each series) 9,941,226 102,179,330 26,455,736 19,382,870
Undistributed net investment income 49,381 194,175 22,207 94,472
Undistributed net realized gain (loss) (226,477) 1,279,082 589,655 (51,986)
Net unrealized appreciation of investments 159,263 45,857,451 3,264,025 97,433
------------- ------------ ----------- ------------
Net assets $ 9,923,393 $149,510,038 $30,331,623 $ 19,522,789
============= ============ =========== ============
Capital shares outstanding 2,598,336 10,923,088 4,495,649 3,779,585
Net asset value per share $ 3.82 $ 13.69 $ 6.75 $ 5.17
</TABLE>
The accompanying notes are an integral part of these financial statements.
8
<PAGE> 10
SECURITY FIRST TRUST
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JANUARY 31, 1997
UNAUDITED
<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 $ 1,331,843 $ 325,800
Interest $ 345,657 625,136 17,257 $556,451
Miscellaneous income 191 119
----------- ------------ ---------- --------
345,657 1,957,170 343,176 556,451
EXPENSES
Custodian fees 8,117 16,763 8,281 4,400
Adviser fees - Note B 16,932 230,195 95,314 64,666
Management fees - Note B 7,257 98,655 19,063 12,933
Printing expenses 1,724 10,659 118 232
Audit fees 2,115 2,858 2,576 2,772
Insurance expenses 604 7,842 1,437 973
Directors' fees and expenses 891 11,547 2,158 1,459
Taxes, licenses and fees 73 79 74 74
Miscellaneous expenses 2,358 3,893 1,127
----------- ------------ ---------- --------
37,713 380,956 132,914 88,636
Less: Waiver of management fees (479) (147)
Waiver of adviser fees (3,659) (28,931)
----------- ------------ ---------- --------
37,713 380,956 128,776 59,558
----------- ------------ ---------- --------
Net investment income 307,944 1,576,214 214,400 496,893
NET REALIZED AND UNREALIZED GAINS
ON INVESTMENTS - Notes A and C
Net realized gain on sale of investments 7,242 3,064,047 945,206 54,533
Net unrealized appreciation of
investments during the period 119,110 19,075,213 3,637,403 193,329
----------- ------------ ---------- --------
Net gain on investments 126,352 22,139,260 4,582,609 247,862
----------- ------------ ---------- --------
Increase in net assets
resulting from operations $ 434,296 $ 23,715,474 $4,797,009 $744,755
=========== ============ ========== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
9
<PAGE> 11
SECURITY FIRST TRUST
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED JANUARY 31, 1997
UNAUDITED
<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 $ 307,944 $ 1,576,214 $ 214,400 $ 496,893
Net realized gain on sale of investments 7,242 3,064,047 945,206 54,533
Net unrealized appreciation of
investments during the period 119,110 19,075,213 3,637,403 193,329
----------- ------------- ------------ ------------
Increase in net assets
resulting from operations 434,296 23,715,474 4,797,009 744,755
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 5,408,660 1,801,912
Sales of capital shares 1,346,679 17,101,862 5,302,793 4,193,214
Redemptions of capital shares (838,947) (3,860,191) (469,955) (304,004)
----------- ------------- ------------ ------------
Increase in net assets from
capital share transactions 1,092,359 21,592,141 7,074,347 4,668,788
----------- ------------- ------------ ------------
Total increase in net assets 942,028 36,957,145 9,629,847 4,633,965
Net Assets:
Beginning of period 8,981,365 112,552,893 20,701,776 14,888,824
----------- ------------- ------------ ------------
End of period (including undistributed net
investment income: Bond Series -
$49,381; Growth and Income
Series - $194,175; Equity
Series - $22,207; U.S. Government
Income Series - $94,472) $ 9,923,393 $ 149,510,038 $ 30,331,623 $ 19,522,789
=========== ============= ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
10
<PAGE> 12
SECURITY FIRST TRUST
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED JULY 31, 1996
UNAUDITED
<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 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> 13
SECURITY FIRST TRUST SCHEDULE I
BOND SERIES
PORTFOLIO OF INVESTMENTS
JANUARY 31, 1997
UNAUDITED
<TABLE>
<CAPTION>
Percentage
of Market
Value of Market
Fixed Maturities Portfolio Principal Value
- ------------------------------------------------------------ ----------- --------------- --------------
<S> <C> <C> <C>
CORPORATE NOTES 31.2%
Aerospace & Defense: 2.9
Boeing Co., 8.75%, 08/15/21 $ 50,000 $ 58,188
Northrop Grumman Corp., 7.88%, 03/01/26 100,000 99,625
Aircraft Lease Portfolio Securitization, 7.15%, 09/15/04 123,113 124,344
--------------
282,157
Automobiles & Related: 1.7
Ford Motor Credit, 9.50%, 04/15/00 50,000 54,313
GMAC Corporate Bond, 9.63%, 12/15/01 100,000 112,250
--------------
166,563
Banking: 4.8
Ahmanson H F Co., 8.25%, 10/01/02 50,000 53,313
Banca Commercial SBA, 8.25%, 07/15/07 100,000 106,250
First Hawaiian Bank, 6.93%, 12/01/03 75,000 74,344
HSBC Fin Nederland Bank, 7.40%, 04/15/03 100,000 101,375
National Australia Bank, 9.70%, 10/15/98 125,000 131,563
--------------
466,845
Electric and Electronic Equipment: 2.4
General Electric Capital, 9.38%, 10/06/98 125,000 131,556
Honeywell Inc., 6.60%, 04/15/01 100,000 100,000
--------------
231,556
Electric Utilities: 2.0
National Rural Utilities, 6.50%, 09/15/02 100,000 99,625
Public Services Electric & Gas Co., 6.25%, 01/01/07 100,000 93,500
--------------
193,125
Finance & Credit: 5.9
Advanta Corp., 7.00%, 05/01/01 100,000 100,250
Allmerica Financial Corp, 7.63%, 10/15/25 100,000 98,500
American Express Credit Corp., 7.75%, 03/01/97 65,000 65,095
Beneficial Corp., 9.05%, 03/14/97 50,000 50,192
Commercial Credit Group, 9.60%, 05/15/99 50,000 53,500
Margaretten Financial, 6.75%, 06/15/00 100,000 100,250
Standard Credit Card, 7.25%, 04/07/08 100,000 101,795
--------------
569,582
</TABLE>
12
<PAGE> 14
SECURITY FIRST TRUST SCHEDULE I
BOND SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JANUARY 31, 1997
UNAUDITED
<TABLE>
<CAPTION>
Percentage
of Market
Value of Market
Fixed Maturities Portfolio Principal Value
- ------------------------------------------------------------ ----------- --------------- --------------
<S> <C> <C> <C>
CORPORATE NOTES
(CONTINUED)
Forest Products: 1.1%
Noranda Forest, Inc., 7.50%, 07/15/03 $ 100,000 $ 103,000
Insurance Carriers: 2.0
Prudential Insurance Co. America, 6.88%, 04/15/03 100,000 99,125
Zurich Reinsurance, 7.13%, 10/15/23 100,000 91,250
--------------
190,375
Media and Communications: 2.9
Disney Global Bond, 6.38%, 03/30/01 125,000 124,531
News American Holdings Inc., 7.50%, 03/01/00 50,000 51,063
Time Warner Inc., 7.75%, 06/15/05 100,000 101,875
--------------
277,469
Oil and Gas Exploration: 1.0
Quaker State Corp., 6.63%, 10/15/05 100,000 96,625
Security, Commodity Brokers, and Services: 2.1
Lehman Bros., 8.50%, 05/01/07 100,000 107,375
Salomon Bros., Inc., 6.05%, 12/17/98 100,000 98,661
--------------
206,036
Telephone Communication: 2.4
GTE Corp., 8.85%, 03/01/98 50,000 51,459
Rochester Telephone, 8.77%, 04/16/01 100,000 107,250
U.S. West Communications, 7.50%, 06/15/23 80,000 77,200
--------------
235,909
--------------
TOTAL CORPORATE NOTES
(COST $3,159,700) 3,019,242
FEDERAL AGENCIES 39.7
Federal Home Loan Bank: 2.8
5.43%, 02/25/99 75,000 74,135
5.50%, 01/10/01 200,000 194,216
--------------
268,351
Federal Home Loan Mortgage Corp.: 4.6
7.00%, 07/15/21 150,000 146,615
7.13%, 07/21/99 235,000 240,699
</TABLE>
13
<PAGE> 15
SECURITY FIRST TRUST SCHEDULE I
BOND SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JANUARY 31, 1997
UNAUDITED
<TABLE>
<CAPTION>
Percentage
of Market
Value of Market
Fixed Maturities Portfolio No. of Shares Value
- ------------------------------------------------------------ ----------- --------------- --------------
<S> <C> <C> <C>
FEDERAL AGENCIES
(CONTINUED)
9.00%, 01/01/17 $ 3,488 $ 3,683
9.50%, 04/01/19 33,826 36,405
9.00%, 06/01/19 14,304 15,104
--------------
442,506
Federal National Mortgage Assn.: 2.0%
8.35%, 11/10/99 175,000 185,005
7.50%, 08/25/21 9,069 8,806
--------------
193,811
Government National Mortgage Assn.: 28.4
7.50%, 10/15/23 252,435 253,222
7.50%, 06/15/23 149,125 149,590
8.50%, 03/15/25 105,788 109,986
7.00%, 01/15/24 175,007 171,616
9.50%, 01/15/25 58,220 62,987
7.00%, 03/15/24 166,467 163,241
8.50%, 07/15/24 209,411 217,720
8.50%, 11/15/24 177,556 184,601
8.50%, 08/15/24 63,370 65,884
8.50%, 08/15/25 93,556 97,268
12.50%, 04/15/10 5,355 6,212
9.50%, 05/15/25 64,670 69,964
9.00%, 04/15/09 4,725 4,962
9.00%, 05/15/09 25,839 26,862
9.00%, 05/15/09 6,854 7,199
9.00%, 05/15/09 9,699 9,799
9.00%, 05/15/09 4,132 4,340
9.00%, 05/15/09 3,831 4,023
9.00%, 05/15/09 18,130 19,043
11.25%, 07/15/13 1,604 1,769
10.00%, 08/15/16 40,264 44,290
10.00%, 06/15/17 28,404 31,245
10.00%, 11/15/17 33,855 37,241
11.50%, 11/15/15 72,350 81,710
10.00%, 03/15/20 58,467 64,314
11.50%, 02/15/18 10,729 12,117
10.00%, 03/15/19 75,935 83,529
11.25%, 09/15/15 83,556 92,146
9.25%, 05/15/20 73,593 77,907
9.25%, 07/15/17 65,639 69,782
9.25%, 01/15/20 31,938 33,954
9.25%, 01/15/21 33,205 35,301
</TABLE>
14
<PAGE> 16
SECURITY FIRST TRUST SCHEDULE I
BOND SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JANUARY 31, 1997
UNAUDITED
<TABLE>
<CAPTION>
Percentage
of Market
Value of Market
Fixed Maturities Portfolio Principal Value
- ------------------------------------------------------------ ----------- --------------- --------------
<S> <C> <C> <C>
FEDERAL AGENCIES
(CONTINUED)
9.25%, 09/15/21 $ 65,798 $ 69,952
9.25%, 06/15/21 64,073 68,117
9.25%, 04/15/21 75,070 79,809
9.25%, 07/15/21 42,586 45,274
9.25%, 05/15/21 91,191 96,947
7.00%, 08/15/23 102,246 100,265
--------------
2,754,188
Tennessee Valley Authority: 1.9%
8.38%, 10/01/99 175,000 184,406
--------------
TOTAL FEDERAL AGENCIES
(COST $3,610,676) 3,843,262
U.S. GOVERNMENT OBLIGATIONS 24.7
U.S. Treasury Bonds: 15.6
8.50%, 02/15/20 180,000 212,981
8.75%, 05/15/20 200,000 242,534
8.75%, 08/15/20 100,000 121,373
8.00%, 11/15/21 150,000 169,241
7.25%, 08/15/22 250,000 260,118
6.88%, 08/15/25 500,000 500,290
--------------
1,506,537
U.S. Treasury Notes: 9.1
7.75%, 11/30/99 15,000 15,647
5.63%, 11/30/00 550,000 539,688
7.00%, 07/15/06 100,000 103,269
0.00%, 05/15/04 350,000 220,115
--------------
878,719
--------------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(COST $2,318,121) 2,385,256
--------------
TOTAL FIXED MATURITIES
(COST $9,088,497) 9,247,760
</TABLE>
15
<PAGE> 17
SECURITY FIRST TRUST SCHEDULE I
BOND SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JANUARY 31, 1997
UNAUDITED
<TABLE>
<CAPTION>
Percentage
of Market
Value of Market
Short-Term Investments Portfolio Principal Value
- ------------------------------------------------------------ ----------- --------------- --------------
<S> <C> <C> <C>
SHORT-TERM INVESTMENTS 4.4%
Federal Home Loan Mortgage Corp.: 3.8
5.25%, 02/03/97 $ 100,000 $ 99,971
5.24%, 02/10/97 145,000 144,797
5.22%, 02/26/97 125,000 124,546
--------------
369,314
U.S. Treasury Bills: 0.6
5.00%, 04/17/97 55,000 54,426
--------------
TOTAL SHORT-TERM INVESTMENTS
(COST $423,740) 423,740
--------------
TOTAL INVESTMENTS
(COST $9,512,237) 100.0 9,671,500
Other assets less liabilities 251,893
NET ASSETS $ 9,923,393
=============
</TABLE>
The accompanying notes are an integral part of these financial statements.
16
<PAGE> 18
SECURITY FIRST TRUST SCHEDULE I
T. ROWE PRICE GROWTH AND INCOME SERIES
PORTFOLIO OF INVESTMENTS
JANUARY 31, 1997
UNAUDITED
<TABLE>
<CAPTION>
Percentage
of Market
Value of Market
Equity Securities Portfolio No. of Shares Value
- ------------------------------------------------------------ ----------- --------------- --------------
<S> <C> <C> <C>
CAPITAL EQUIPMENT 5.1%
Electrical Equipment: 3.5
General Electric Co. 25,000 $ 2,587,500
Honeywell, Inc. 30,000 2,163,750
Westinghouse Electric Corp. 25,000 462,500
-------------
5,213,750
Machinery: 1.6
Coltec Industries, Inc.* 50,000 1,000,000
FMC Corp.* 20,000 1,402,500
-------------
2,402,500
CONSUMER CYCLICALS 0.5
Automobiles and Related: 0.5
Ford Motor Co. 22,857 734,281
CONSUMER NONDURABLES 21.4
Food and Beverages: 6.3
Anheuser-Busch Company, Inc. 24,000 1,020,000
CPC International, Inc. 12,000 922,500
General Mills, Inc. 25,000 1,693,750
McCormick & Co. 50,000 1,237,500
Pepsico, Inc. 50,000 1,743,750
Quaker Oats Company 30,000 1,147,500
Ralston-Ralston Purina Group 20,000 1,572,500
-------------
9,337,500
Health Services: 1.6
Baxter International, Inc. 30,000 1,383,750
United Healthcare Corp.* 20,000 975,000
-------------
2,358,750
Miscellaneous Consumer Products: 2.9
Colgate Palmolive Co. 12,000 1,161,000
Phillip Morris 15,000 1,783,125
Tambrands, Inc. 35,000 1,439,375
-------------
4,383,500
</TABLE>
*Non-Income Producing
17
<PAGE> 19
SECURITY FIRST TRUST SCHEDULE I
T. ROWE PRICE GROWTH AND INCOME SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JANUARY 31, 1997
UNAUDITED
<TABLE>
<CAPTION>
Percentage
of Market
Value of Market
Equity Securities Portfolio No. of Shares Value
- ------------------------------------------------------------ ----------- --------------- --------------
<S> <C> <C> <C>
CONSUMER NONDURABLES
(CONTINUED)
Pharmaceuticals: 10.6%
Abbott Laboratories 40,000 $ 2,180,000
American Home Products 30,000 1,901,250
Covance, Inc.* 11,250 212,344
Johnson & Johnson 30,000 1,732,500
Pharmacia-Upjohn, Inc. 36,250 1,350,313
Pfizer, Inc. 24,000 2,220,000
Quest Diagnostic, Inc.* 5,625 88,594
Schering-Plough Corp. 20,000 1,512,500
Smith-Kline Beecham PLC ADR 30,200 2,178,176
Warner Lambert Co. 30,000 2,430,000
-------------
15,805,677
CONSUMER SERVICES 11.0
Entertainment & Leisure: 2.3
ITT Corp. New* 40,000 2,285,000
Readers Digest Assn., Inc. 30,000 1,065,000
-------------
3,350,000
General Merchandisers: 3.4
Dayton-Hudson 45,000 1,693,125
J.C. Penney, Inc. 20,000 947,500
Toys R Us, Inc.* 50,000 1,250,000
Walmart Stores 50,000 1,187,500
-------------
5,078,125
Media and Communications: 3.7
Dun & Bradstreet Corp. 40,000 960,000
McGraw-Hill, Inc. 26,000 1,293,500
Meredith Corp. 30,000 1,541,250
Vodafone Group PLC ADR 40,000 1,720,000
-------------
5,514,750
Miscellaneous: 1.6
American Brands, Inc. 25,000 1,275,000
WMX Technologies, Inc. 30,000 1,098,750
-------------
2,373,750
</TABLE>
*Non-Income Producing
18
<PAGE> 20
SECURITY FIRST TRUST SCHEDULE I
T. ROWE PRICE GROWTH AND INCOME SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JANUARY 31, 1997
UNAUDITED
<TABLE>
<CAPTION>
Percentage
of Market
Value of Market
Equity Securities Portfolio No. of Shares Value
- ------------------------------------------------------------ ----------- --------------- --------------
<S> <C> <C> <C>
ENERGY 9.1%
Oil and Gas Extraction: 9.1
Atlantic Richfield Co. 12,000 $ 1,587,000
British Petroleum PLC 15,000 2,124,375
Chevron Corp. 20,000 1,327,500
Exxon Corp. 18,000 1,865,250
Mobil Corp. 8,000 1,051,000
Murphy Oil Corp. 12,000 604,500
Pennzoil Co. 8,000 499,000
Royal Dutch Petroleum Co. ADR 10,000 1,735,000
Texaco, Inc. 15,300 1,619,884
Unocal Corp. 25,000 1,053,125
-------------
13,466,634
FINANCIAL 17.7
Banking: 4.2
Chase Manhattan Corp. 15,000 1,387,500
Mellon Bank Corp. 25,000 1,865,625
National City Corp. 20,000 907,500
Wells Fargo & Co. 6,666 2,031,464
-------------
6,192,089
Federal Agencies: 2.3
Federal Home Loan Mortgage Corp. 60,000 1,815,000
Student Loan Marketing Assn. 15,000 1,633,125
-------------
3,448,125
Financial Services: 6.0
American Express 52,000 3,230,500
H&R Block, Inc. 50,000 1,481,250
Mercury Finance Co. 96,800 205,700
Travelers Group, Inc. 73,577 3,853,595
-------------
8,771,045
</TABLE>
19
<PAGE> 21
SECURITY FIRST TRUST SCHEDULE I
T. ROWE PRICE GROWTH AND INCOME SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JANUARY 31, 1997
UNAUDITED
<TABLE>
<CAPTION>
Percentage
of Market
Value of Market
Equity Securities Portfolio No. of Shares Value
- ------------------------------------------------------------ ----------- --------------- --------------
<S> <C> <C> <C>
FINANCIAL
(CONTINUED)
Insurance Carriers: 4.2%
St. Paul Companies, Inc. 30,000 $ 1,875,000
Travelers Aetna P&C 40,000 1,460,000
U S F & G Corp. 80,000 1,700,000
Willis Corroon Group Sponsored ADR 109,500 1,231,875
-------------
6,266,875
Security, Commodity Brokers, and Services: 1.0
JP Morgan and Co., Inc. 15,000 1,545,000
PROCESS INDUSTRIES 9.0
Chemicals and Allied Products: 4.8
Corning, Inc. 45,000 1,603,125
Dow Chemical Co. 15,000 1,156,875
Du Pont Corp. 17,000 1,863,625
Great Lakes Chemical Corp. 30,000 1,293,750
Minnesota Mining & Manufacturing Co. 13,000 1,108,250
-------------
7,025,625
Forest Products: 1.4
Deltic Timber Corp. 3,428 84,415
Georgia Pacific Corp. 18,000 1,325,250
Weyerhaeuser Co. 15,000 682,500
-------------
2,092,165
Metal Mining: 1.0
Reynolds Metals Co. 25,000 1,509,375
Paper and Allied Products: 1.8
International Paper Co. 25,000 1,021,875
Kimberly Clark Corp. 10,000 975,000
Union Camp Corp. 15,000 710,625
-------------
2,707,500
</TABLE>
20
<PAGE> 22
SECURITY FIRST TRUST SCHEDULE I
T. ROWE PRICE GROWTH AND INCOME SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JANUARY 31, 1997
UNAUDITED
<TABLE>
<CAPTION>
Percentage
of Market
Value of Market
Equity Securities Portfolio No. of Shares Value
- ------------------------------------------------------------ ----------- --------------- --------------
<S> <C> <C> <C>
TRANSPORTATION 3.3%
Railroad Transportation: 2.0
Canadian Pacific 30,000 $ 813,750
Conrail, Inc. 20,000 2,145,000
-------------
2,958,750
Transportation Services: 1.3
PHH Corporation 40,000 1,925,000
UTILITIES 6.0
Telephone Communication: 3.8
AT&T Co. 50,000 1,962,500
Frontier Corp. 60,000 1,312,500
GTE Corp. 25,000 1,175,000
Southern New England Telecom Corp. 17,000 633,250
Telefonos De Mexico SA 13,000 489,126
-------------
5,572,376
Utility Holding Companies: 2.2
Edison International 50,000 1,068,750
Entergy Corp. 22,000 599,500
General Public Utilities Corp. 16,000 536,000
Pacificorp 50,000 1,062,500
-------------
3,266,750
-------------
TOTAL EQUITY SECURITIES
(COST $77,442,441) 123,299,892
</TABLE>
21
<PAGE> 23
SECURITY FIRST TRUST SCHEDULE I
T. ROWE PRICE GROWTH AND INCOME SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JANUARY 31, 1997
UNAUDITED
<TABLE>
<CAPTION>
Percentage
of Market
Value of Market
Short-Term Investments Portfolio Principal Value
- ------------------------------------------------------------ ----------- --------------- --------------
<S> <C> <C> <C>
SHORT-TERM INVESTMENTS 16.9%
Commercial Paper: 16.9
Abbott Laboratories, 5.25%, 03/18/97 $ 1,320,000 $ 1,311,319
Asset Securitization Co., 5.40%, 02/25/97 1,577,000 1,571,280
Delaware Funding Corp., 5.32%, 02/13/97 1,000,000 998,221
Exxon Imperial U.S. Inc., 5.30%, 02/20/97 5,000,000 4,985,962
FNMA Discount Note, 5.24%, 02/13/97 1,285,000 1,282,750
FNMA Discount Note, 5.27%, 03/04/97 3,800,000 3,782,753
Manufacturers Investment, 5.33%, 03/27/97 2,480,000 2,460,128
Kingdom Of Sweden, 5.34%, 02/04/97 5,000,000 4,997,755
Times Mirror Company, 5.33%, 02/07/97 3,700,000 3,696,712
-------------
TOTAL SHORT-TERM INVESTMENTS
(COST $25,086,880) 25,086,880
-------------
TOTAL INVESTMENTS
(COST $102,529,321) 100.0 148,386,772
Other assets less liabilities 1,123,266
-------------
NET ASSETS $ 149,510,038
=============
</TABLE>
The accompanying notes are an integral part of these financial statements.
22
<PAGE> 24
SECURITY FIRST TRUST SCHEDULE I
VIRTUS EQUITY SERIES
PORTFOLIO OF INVESTMENTS
JANUARY 31, 1997
UNAUDITED
<TABLE>
<CAPTION>
Percentage
of Market
Value of Market
Equity Securities Portfolio No. of Shares Value
- ------------------------------------------------------------ ----------- --------------- --------------
<S> <C> <C> <C>
CAPITAL EQUIPMENT 4.1%
Electrical Equipment: 3.2
Amp, Inc. 3,500 $ 142,625
Applied Materials, Inc.* 2,600 128,375
Eaton Corp. 700 49,000
Grainger W.W. Inc. 1,300 100,425
Harris Corp. 1,800 137,025
Honeywell, Inc. 1,900 137,038
Johnson Controls, Inc. 1,500 129,000
Whirlpool Corp. 2,300 117,013
-------------
940,501
Machinery: 0.9
Cooper Industries, Inc. 2,700 116,438
Cummins Engine, Inc. 1,800 94,725
FMC Corporation* 700 49,088
-------------
260,251
CONSUMER NONDURABLES 5.7
Food & Beverages: 0.6
Seagram Ltd. 4,500 178,313
Health Services: 2.6
Baxter International, Inc. 4,300 198,338
Becton, Dickinson & Co. 2,000 98,500
Columbia/HCA Healthcare 7,300 288,350
ITT Corp.* 3,400 194,225
-------------
779,413
Miscellaneous Consumer Products: 1.8
American Brands, Inc. 2,200 112,200
Browning Ferris Industries 6,800 221,000
Service Corp. International 3,400 98,600
Sherwin Williams Co. 1,700 94,350
-------------
526,150
Pharmaceuticals: 0.7
Pharmacia-Upjohn, Inc. 5,600 208,600
CONSUMER CYCLICALS 3.2
Automobiles and Related: 3.2
Chrysler Corp. 8,200 285,975
Ford Motor Co. 12,800 411,200
Genuine Parts Co. 2,400 105,900
Goodyear Tire and Rubber 2,600 141,700
-------------
944,775
</TABLE>
*Non-Income Producing
23
<PAGE> 25
SECURITY FIRST TRUST SCHEDULE I
VIRTUS EQUITY SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JANUARY 31, 1997
UNAUDITED
<TABLE>
<CAPTION>
Percentage
of Market
Value of Market
Equity Securities Portfolio No. of Shares Value
- ------------------------------------------------------------ ----------- --------------- --------------
<S> <C> <C> <C>
CONSUMER SERVICES 5.9%
General Merchandise Stores: 4.5
American Stores Company 2,000 $ 84,000
Federated Department Stores* 3,700 121,638
May Dept. Stores Co. 3,800 169,100
CVS Corp. 2,600 112,450
Nordstrom, Inc. 2,600 96,525
J.C. Penney, Inc . 3,900 184,763
Pitney Bowes, Inc. 1,900 109,488
Sears Roebuck & Co. 5,800 278,400
Toys R Us, Inc. 3,300 82,500
V.F. Corp. 1,800 119,700
-------------
1,358,564
Building Materials & Garden Supplies: 0.4
Armstrong World Industries 1,600 113,600
Media & Communications: 1.0
Times Mirror Co. 2,000 94,500
Viacom, Inc.* 5,600 191,800
-------------
286,300
ENERGY 17.4
Gas Production And Distribution: 0.7
Columbia Gas System 1,700 110,713
Enron Corp. 2,100 86,625
-------------
197,338
Oil and Gas Extraction: 16.7
Amerada Hess Corp. 1,800 106,200
Amoco 5,800 504,600
Burlington Resources, Inc. 2,000 99,500
Chevron Corp. 6,600 438,075
Exxon Corp . 12,600 1,305,675
Mobil Corp . 4,800 630,600
Phillips Petroleum Co. 2,900 127,963
Royal Dutch Petroleum Co. ADR 6,500 1,127,750
Tenneco, Inc. 3,200 128,000
Texaco, Inc. 3,300 349,388
Unocal Corp. 2,900 122,163
-------------
4,939,914
</TABLE>
*Non-Income Producing
24
<PAGE> 26
SECURITY FIRST TRUST SCHEDULE I
VIRTUS EQUITY SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JANUARY 31, 1997
UNAUDITED
<TABLE>
<CAPTION>
Percentage
of Market
Value of Market
Equity Securities Portfolio No. of Shares Value
- ------------------------------------------------------------ ----------- --------------- --------------
<S> <C> <C> <C>
FINANCIAL 26.3%
Banking: 12.7
Banc One Corp. 4,501 $ 204,188
Bank Of New York, Inc. 4,400 161,150
Bankamerica Corp. 3,900 435,338
Bankers Trust New York 1,100 93,500
Barnett Banks, Inc. 3,000 132,000
Chase Manhattan Corp. 1,300 120,250
Citicorp 5,100 593,513
Comerica, Inc. 2,100 119,963
First Chicago Corp. 3,600 205,650
First Union Corp. 2,800 234,150
Golden West Financial Corp. 2,200 147,675
Key Corp. 2,700 141,413
Mellon Bank Corp. 1,600 119,400
National City Corp. 2,800 127,050
Nationsbank Corp. 4,635 500,580
Norwest Corp. 2,800 133,350
PNC Bank Corp. 3,900 155,025
Wachovia Corp. 2,300 132,538
-------------
3,756,733
Federal Agencies: 1.3
Federal Home Loan Mortgage Corp. 12,400 375,100
Financial Services: 3.8
American Express Co. 5,200 323,050
Dean Witter Discover & Co. 4,400 167,750
Fleet Financial Group 2,900 156,600
Republic NY Corp. 1,300 115,213
Travelers Group, Inc. 6,900 361,388
-------------
1,124,001
Insurance Carriers: 6.4
Aetna, Inc. 2,800 221,200
American General Corp. 3,400 135,575
Cigna Corp. 1,700 257,763
Chubb Corp. 2,500 136,250
General Re Corp. 1,900 306,850
ITT Hartford Group, Inc. 1,400 102,725
Lincoln National Corp. 1,800 96,525
Loews Corp. 1,800 177,975
MBIA, Inc.* 1,100 105,738
</TABLE>
*Non-Income Producing
25
<PAGE> 27
SECURITY FIRST TRUST SCHEDULE I
VIRTUS EQUITY SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JANUARY 31, 1997
UNAUDITED
<TABLE>
<CAPTION>
Percentage
of Market
Value of Market
Equity Securities Portfolio No. of Shares Value
- ------------------------------------------------------------ ----------- --------------- --------------
<S> <C> <C> <C>
FINANCIAL
(CONTINUED)
Insurance Carriers (continued):
Safeco Corp. 2,400 $ 91,200
St. Paul Cos. 1,400 87,500
Transamerica Corp. 2,200 180,950
-------------
1,900,251
Security, Commodity Brokers, and Services: 2.1%
Merrill Lynch & Co., Inc. 2,300 193,775
JP Morgan & Co., Inc . 2,700 278,100
Morgan Stanley Group 2,400 137,100
-------------
608,975
PROCESS INDUSTRIES 6.9
Chemicals and Allied Products: 2.7
Air Products & Chemical 2,100 149,888
Dow Chemical Co. 3,300 254,513
W.R. Grace & Co. 1,700 84,575
Great Lakes Chemical 2,200 94,875
Rohm & Haas Co. 1,500 123,000
Union Carbide, Inc. 2,100 95,288
-------------
802,139
Forest Products: 0.4
Weyerhaeuser Co. 2,900 131,950
Gold and Silver Products: 0.4
Barrick Gold Corp. 4,300 115,563
Metal Mining: 1.8
Alcan Aluminum Ltd. 5,000 176,250
Inco Ltd. 3,400 115,175
USX-Marathon Group 5,300 141,113
USX-U.S. Steel Corp. 3,000 94,875
-------------
527,413
Paper and Allied Products: 1.6
International Paper Co. 4,100 167,588
Mead Corp. 1,900 106,875
Union Camp Corp. 2,300 108,963
Willamette Industries, Inc. 1,300 81,738
-------------
465,164
</TABLE>
26
<PAGE> 28
SECURITY FIRST TRUST SCHEDULE I
VIRTUS EQUITY SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JANUARY 31, 1997
UNAUDITED
<TABLE>
<CAPTION>
Percentage
of Market
Value of Market
Equity Securities Portfolio No. of Shares Value
- ------------------------------------------------------------ ----------- --------------- --------------
<S> <C> <C> <C>
PROCESS INDUSTRIES
(CONTINUED)
TECHNOLOGY 5.6%
Computer and Office Equipment: 5.6
Digital Equipment Corp.* 3,100 $ 116,250
International Business Machines Corp. 6,200 974,950
LSI Logic Corp.* 2,500 86,875
Micron Technology 700 24,325
Texas Instruments, Inc. 2,800 219,450
Xerox Corp. 4,000 234,500
-------------
1,656,350
TRANSPORTATION 10.6
Aerospace and Defense: 6.7
Allied Signal, Inc. 2,300 161,575
Boeing Co. 4,000 428,500
Lockheed Martin Corp. 2,500 230,000
McDonnell Douglas Corp. 2,200 147,950
Northrop Grumman Corp. 1,100 85,938
Raytheon Co. 3,300 151,388
Rockwell International Corp. 3,200 210,400
TRW, Inc. 3,400 172,550
Textron, Inc. 1,700 165,538
United Technologies Corp. 3,000 209,250
-------------
1,963,089
Airline Transportation: 1.2
AMR Corporation.* 2,200 177,100
Delta Air Lines, Inc. 2,400 189,600
-------------
366,700
Railroad Transportation: 2.5
Burlington Northern Santa Fe 1,800 157,500
CSX Corp. 2,600 126,100
Conrail, Inc. 1,500 160,875
Norfolk Southern Corp. 1,500 132,938
Union Pacific 2,800 168,000
-------------
745,413
Transportation Services: 0.2
Paccar, Inc. 900 58,838
</TABLE>
*Non-Income Producing
27
<PAGE> 29
SECURITY FIRST TRUST SCHEDULE I
VIRTUS EQUITY SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JANUARY 31, 1997
UNAUDITED
<TABLE>
<CAPTION>
Percentage
of Market
Value of Market
Equity Securities Portfolio No. of Shares Value
- ------------------------------------------------------------ ----------- --------------- --------------
<S> <C> <C> <C>
UTILITIES 14.3%
Electric Utilities: 0.8
Consolidated Edison Co. 3,000 $ 93,000
Duke Power Co. 3,100 145,313
-------------
238,313
Telephone Communication: 9.9
AT&T Co. 18,100 712,688
Airtouch Communications* 5,200 134,550
Bell Atlantic Corp. 6,300 423,675
Bell South Corp. 11,100 492,563
MCI Communications Corp. 7,900 277,488
Nynex Corp. 6,900 349,313
Sprint Corp. 5,300 215,975
U. S. West, Inc. 6,300 207,113
U.S. West, Inc. Media Group* 6,300 117,338
-------------
2,930,703
Utility Holding Companies: 3.6
Carolina Power & Light 2,200 82,775
Dominion Resources, Inc. 2,900 114,913
Edison International 8,348 178,439
Entergy Corp. 3,500 94,740
GPU, Inc. 2,400 80,400
Peco Energy 3,800 87,400
PG&E Corp. 6,500 147,875
Panenergy Corp. 2,900 133,763
Southern Co . 6,400 140,000
-------------
1,060,305
-------------
TOTAL INVESTMENTS
(COST $26,296,694) 100.0 29,560,719
Other assets less liabilities 770,904
-------------
NET ASSETS $ 30,331,623
=============
</TABLE>
*Non-Income Producing
The accompanying notes are an integral part of these financial statements.
28
<PAGE> 30
SECURITY FIRST TRUST SCHEDULE I
VIRTUS U.S. GOVERNMENT INCOME SERIES
PORTFOLIO OF INVESTMENTS
JANUARY 31, 1997
UNAUDITED
<TABLE>
<CAPTION>
Percentage
of Market
Value of Market
Fixed Maturities Portfolio Principal Value
- ------------------------------------------------------------ ----------- --------------- --------------
<S> <C> <C> <C>
U.S. GOVERNMENT OBLIGATIONS 20.6%
U.S. Treasury Notes: 20.6
7.88%, 08/15/01 $ 1,500,000 $ 1,594,875
5.50%, 04/15/00 160,000 157,365
7.75%, 01/31/00 200,000 209,016
6.25%, 08/31/00 500,000 501,390
5.63%, 02/28/01 550,000 538,356
6.38%, 05/15/99 800,000 806,896
--------------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(COST $2,218,163) 3,807,898
FEDERAL AGENCIES 57.3
Federal Farm Credit Bank:
6.05%, 04/21/03 3.6 550,000 536,343
6.94%, 05/19/05 125,000 126,629
--------------
662,972
Federal Home Loan Bank: 8.7
4.80%, 09/22/98 350,000 344,155
6.83%, 06/07/01 1,000,000 1,005,810
8.00%, 08/27/01 250,000 265,505
--------------
1,615,470
Federal Home Loan Mortgage Assn.: 21.2
7.00%, 07/01/07 204,359 200,590
7.00%, 09/01/10 442,695 443,523
6.50%, 04/11/11 1,747,578 1,719,722
6.00%, 05/11/11 1,625,593 1,568,177
--------------
3,932,012
Federal National Mortgage Assn.:
6.00%, 11/01/03 5.4 125,473 123,080
8.63%, 06/30/04 150,000 167,558
6.50%, 03/01/09 302,122 304,482
8.00%, 09/01/25 400,744 409,885
--------------
1,005,005
</TABLE>
29
<PAGE> 31
SECURITY FIRST TRUST SCHEDULE I
VIRTUS U.S. GOVERNMENT INCOME SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JANUARY 31, 1997
UNAUDITED
<TABLE>
<CAPTION>
Percentage
of Market
Value of Market
Fixed Maturities Portfolio Principal Value
- ------------------------------------------------------------ ----------- --------------- --------------
<S> <C> <C> <C>
FEDERAL AGENCIES
(CONTINUED)
Other Federal Agencies: 18.4%
Farmermac, 7.37%, 08/01/06 $ 1,500,000 $ 1,552,725
Government National Mortgage Assn., 7.50%, 01/15/26 1,464,149 1,468,717
Small Business Administration, 6.90%, 08/25/08 276,204 274,305
Student Loan Marketing Assn., 7.50%, 03/08/00 100,000 103,547
--------------
3,399,294
--------------
TOTAL FEDERAL AGENCIES
(COST $12,104,879) 10,614,753
--------------
TOTAL FIXED MATURITIES
(COST $14,323,042) 14,422,651
Short-Term
Investments
SHORT-TERM INVESTMENTS 22.1
Federal National Mortgage Assn, 5.27%, 03/21/97 2,200,000 2,184,443
U.S. Treasury Bills: 5.16%, 12/11/97 2,000,000 1,908,002
--------------
TOTAL SHORT-TERM INVESTMENTS
(COST $4,094,621) 4,092,445
--------------
TOTAL INVESTMENTS
(COST $18,417,663) 100.0 18,515,096
Other assets less liabilities 1,007,693
--------------
NET ASSETS $ 19,522,789
==============
</TABLE>
The accompanying notes are an integral part of these financial statements.
30
<PAGE> 32
SECURITY FIRST TRUST
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 1997
UNAUDITED
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.
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. On February 27, 1997 the
Board of Trustees changed the name of the T. Rowe Price Bond Series back 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.
31
<PAGE> 33
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:
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 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, 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.
32
<PAGE> 34
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
expenses 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 Management (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 contribution 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.
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.
33
<PAGE> 35
SECURITY FIRST TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE C -- INVESTMENT SECURITIES TRANSACTIONS
Purchases and sales of fixed maturities and equity securities for the period
ended January 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 $ 390,910 $ 7,747,288
Sales 663,886 7,000,958
Other Investment Securities:
Purchases 2,254,240 $ 14,284,888 $ 20,476,452
Sales 1,098,325 5,132,387 14,894,064
</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 January 31, 1997 was the same
for both financial statement and federal income tax purposes. At January 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 $ 227,633 $ (68,370) $ 159,263
T. Rowe Price Growth and Income Series 47,938,711 (2,081,260) 45,857,451
Virtus Equity Series 3,559,665 (295,640) 3,264,025
Virtus U.S. Government Income Series 149,956 (52,523) 97,433
</TABLE>
34
<PAGE> 36
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>
SIX MONTHS ENDED JANUARY 31, 1997
Bond Series 340,488 153,044 (212,126) 281,406
T. Rowe Price Growth and Income Series 1,283,676 223,202 410,369 (293,261) 1,623,986
Virtus Equity Series 799,034 68,155 279,366 (70,533) 1,076,022
Virtus U.S. Government Income Series 795,663 151,669 (58,005) 889,327
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>
35
<PAGE> 37
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
and Total
Unrealized Income Distributions Net
Net Asset Gains (Loss) Distributions from Asset
Value at Net (Losses) from from Net Realized Value at
Beginning Investment 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,
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
Six months ended
January 31, 1997 3.88 .12 .06 .18 (.24) 3.82 4.64
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
Six months ended
January 31, 1997 12.10 .14 2.28 2.42 (.29) (.54) 13.69 20.00
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
Six months ended
January 31, 1997 6.05 .04 1.22 1.26 (.11) (.45) 6.75 20.83
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
Six months ended
January 31, 1997 5.15 .11 .13 .24 (.22) 5.17 4.66
</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.
36
<PAGE> 38
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>
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
Six months ended
January 31, 1997 .80 6.50 20 9,923,393
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
Six months ended
January 31, 1997 .60 2.44 5 149,510,038
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
Six months ended
January 31, 1997 1.00 1.72 61 30,331,623
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
Six months ended January 31, 1997 .70 5.84 48 19,522,789
</TABLE>
(1) Annualized
(2) The Equity Series and U.S. Government Income Series commenced
operations on May 19, 1993.
37
<PAGE> 39
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
SEMI-ANNUAL REPORT
JANUARY 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
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