|
|
|
|
|
|
|
|
|
|
Previous: SECURITY INCOME FUND /KS/, 24F-2NT, 1999-03-31 |
Next: SEPARATE ACCOUNT A OF EQUITABLE LIFE ASSU SOC OF THE US, 24F-2NT, 1999-03-31 |
<PAGE> 1
Dear Contract Owner:
Over the last six months financial markets have been quite volatile and
investors' emotions have shifted back and forth. During August, September and
early October events such as the Asian and Russian economic crises as well as
the near default of Long Term Capital, a U.S. hedge fund, rocked investors.
In the fixed income markets, these events caused Treasuries to surge in price
and significantly outperform all other market sectors. The markets calmed in the
fourth quarter as the Federal Reserve, in three orchestrated steps, lowered the
discount rates thereby supplying liquidity to the market. This curative action
caused a narrowing of spreads and Treasuries underperformed other sectors.
Remarkably in the face of strong Federal Reserve action, long term rates have
risen almost three quarters of a percent from their lows and the yield curve has
steepened appreciably.
In the equity markets, stocks bounced back strongly following a sharp correction
in August and September. However, the advance was led by a small group of large
capitalization growth stocks, which accounted for much of the gains. Growth
stocks in general continued to outpace value stocks, as has been the case for
the past few years.
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/ RICHARD C. PEARSON
Richard C. Pearson
President
[SECURITY FIRST TRUST LOGO]
<PAGE> 2
SECURITY FIRST TRUST:
T. ROWE PRICE GROWTH
AND INCOME SERIES AND
EQUITY SERIES
EQUITY MARKET OVERVIEW
"It was the best of times, it was the worst of times." This opening sentence
in Charles Dickens' classic, A Tale of Two Cities, describes the dramatic
volatility in financial markets, as well as the wide range of performance within
the U.S. equity market in 1998. While the S&P 500 posted a 28% advance in 1998
(and 4.18% for the first month of 1999), more than one half of last year's
return was generated by 15 of the largest-capitalization companies in the index.
Much of the market's leadership was contained in the largest-cap growth stocks,
while high-yield and low P/E stocks were out of favor. Thus, while the S&P 500
produced a healthy return, the average stock on the New York Stock Exchange
actually declined slightly in value.
EQUITY MARKET OUTLOOK
A year ago, we commented on the rapid appreciation of stock prices compared
with the growth in the underlying earnings and dividends. In 1997, share prices
increased at a much faster rate than the underlying fundamentals, and this
"delinkage" between price and value grew even more pronounced in 1998.
Although early results have not shown it, we expect 1999 as a whole to be a
more challenging year than the one just ended. This could lead to more moderate
returns than the robust, and, in our view, unsustainable performance of the past
four years.
PORTFOLIO MANAGEMENT:
T. ROWE PRICE GROWTH
AND INCOME SERIES
We made significant new investments in several companies, including Baker
Hughes, Boeing, and Corning, all of which we bought at prices well below their
highs for the year. Many of our holdings typically trade at below-average
valuation levels because, for many diverse reasons, their share prices declined
before we took a position in them. Baker Hughes is a good example. While the
jury may be out on this investment for a while, we invested in this oil service
company at approximately $17 per share, down from the 1998 high of approximately
$45. In our view, the company represents reasonable value at the price we paid
for the stock and offers the potential for good returns once investors grow less
concerned about recent trends in energy prices.
GROWTH AND INCOME SERIES
SECTOR DIVERSIFICATION
[GRAPH]
This investment strategy -- buying out of favor stocks with good long-term
potential -- has served shareholders well in the past, and we believe it will in
the future when investors focus again on stocks with appealing market
valuations. The fund's yield is more than double that of the broad index, its
price/book value ratio is about half and its price/earnings ratio even lower --
while the fund has only about two-thirds of the volatility of the S&P 500.
1
<PAGE> 3
Among your fund's largest holdings are companies from many diverse
industries, including British Petroleum, Citigroup, SBC Communications, General
Electric, General Mills, American Home Products, Anheuser-Busch, Travelers
Property, and others that represent a broad cross-section of the U.S. economy.
T. ROWE PRICE GROWTH & INCOME SERIES
15 LARGEST HOLDINGS
<TABLE>
<CAPTION>
Percentage of
Security Portfolio
-------- -------------
<S> <C>
BPAmoco PLC 2.5
Citigroup, Inc. 2.0
Dayton Hudson Corp. 1.8
SBCCommunications, Inc. 1.8
Hewlett-Packard Co. 1.8
Motorola, Inc. 1.7
General Electric Co. 1.7
Kimberly-Clark 1.6
Corning, Inc. 1.6
First Data Corp. 1.5
Philip Morris Companies, Inc. 1.5
General Mills, Inc. 1.4
Int'l. Flavors & Fragrance 1.4
Schering-Plough Corp. 1.4
Norfolk Southern Corp. 1.2
----
TOTAL 24.9
====
</TABLE>
PORTFOLIO MANAGEMENT: EQUITY SERIES
The financial stocks in the Equity Series' portfolio performed very well
during the period, and the portfolio benefited from our holdings of companies
such as Chase Manhattan and Morgan Stanley Dean Witter. Technology stocks also
did very well and stock selection within that sector, notably our holdings in
Texas Instruments, Lucent Technologies and Cisco Systems further boosted
returns. Sector allocations remained within narrow bands around the benchmark
(S&P 500) allocations.
Recent additions that we made to the portfolio include Fox Entertainment
Group and Unocal. Positions that we sold during the period include Aetna, IMC,
Global, McGraw Hill, Seagate and Tyson Foods.
EQUITY SERIES
SECTOR DIVERSIFICATION
[GRAPH]
The Security First Trust Equity Series portfolio's philosophy is to remain
relatively sector neutral to the S&P 500 while focusing on undervalued
securities. The large divergence between growth and value continued during the
fourth quarter, as investors focused on companies exhibiting superior earnings
growth and momentum. The valuation disparity between the two investment styles
is expected to return to more traditional parameters. We remain committed to our
investment philosophy and discipline, as it has proven successful over the long
term.
2
<PAGE> 4
EQUITY SERIES
15 LARGEST HOLDINGS
<TABLE>
<CAPTION>
Percentage of
Security Portfolio
<S> <C>
Microsoft Corp. 4.8
General Electric Co. 3.5
Intel Corp. 2.8
Exxon Corp. 2.6
IBM Corp. 2.5
Bristol Myers Squibb Co. 2.2
SBC Communications, Inc. 2.1
Cisco Systems Inc. 2.1
Lucent Technologies, Inc. 2.0
Merck & Co. 1.9
Banc One Corp. 1.9
Walmart Stores 1.9
Pfizer, Inc. 1.8
Bankamerica Corp. 1.8
Coca-Cola 1.8
----
TOTAL 35.7
====
</TABLE>
SECURITY FIRST TRUST:
BOND SERIES AND U.S.
GOVERNMENT INCOME SERIES
FIXED-INCOME MARKET OVERVIEW
The U.S. economy continued to experience rapid growth during the fourth
quarter of 1998, with annualized growth of 5.6%. The strong fourth quarter
results capped a year filled with global economic and political uncertainties.
Despite these uncertainties, the U.S. economy continued to bask in its
"oasis of prosperity," a phenomenon that Federal Reserve Chairman Alan Greenspan
asserted was bound to end.
Contrary to the Treasury market's outstanding performance in the second half
of 1998, yields were little changed in January 1999. Benefiting from
revived liquidity, off-the-run issues continue to outperform early in the year
relative to newly issued securities. Mortgage securities experienced
liquidity-related underperformance in 1998. In addition, the sector suffered
from a sharp spike in prepayments as interest rates reached new cyclical lows in
the fourth quarter. However, mortgages began to recover during the first month
of 1999. Much improved liquidity and favorable yields made mortgages attractive
compared to other spread sectors. Furthermore, the FNMA prepayment data has
benefited higher coupons as prepayment speeds declined by 20 to 25% across the
board.
FIXED-INCOME MARKET OUTLOOK
We expect that the domestic economy will thrive in the first half of the
year supported by a surging stock market (the "wealth effect") and rebounding
industrial production. Although delayed in its arrival, we still expect that the
economy will slow in the latter half of 1999 in part due to the deteriorating
trade picture. Although inflation remains subdued, continued stronger than
expected economic data could warrant possible Federal Reserve tightening in the
future. However, the likelihood of a rate increase is not high.
In the first half of 1999, we expect interest rates will be range-bound near
current levels. The exception may be longer-maturity securities, which may
outperform if investors begin to accept lower inflation risk premiums. Longer
term, a weakening domestic economy and uncertainty in Brazil and other Latin
American countries may lead to more volatility and a decline in yields during
the latter part of the year.
PORTFOLIO MANAGEMENT:
BOND SERIES
During this six month period your fund grew by almost $6 million.
Consequently, investment activity has to be viewed in the context of strategy
and the availability of securities in the marketplace. We sought to broaden the
portfolio's diversification as the yield spread of fixed income sectors to
Treasuries widened. We increased commitments in mortgage pass-throughs,
3
<PAGE> 5
investment grade corporate issues, and asset-backed securities. The Bond Series'
international exposure was also increased because we believe that those markets
have brighter prospects than the U.S. market. Conversely, we lowered the overall
investment in federal agencies. The portfolio's duration was modestly extended
in response to the fall in rates, although given market volatility we have
maintained an about average market exposure.
BOND SERIES
SECTOR DIVERSIFICATION
[GRAPH]
The market environment has created a number of interesting investment
opportunities. Spreads remain robust and we are actively seeking to increase the
portfolio yield through further diversification. However, as value buyers we
want to insure that each issue meets our own rigorous standards, and thus to
some extent are governed by market availability. This is particularly true of
high yield issues, which we believe are very attractive.
In terms of market exposure our current position reflects our reaction to
increasing interest rates. We believe the yield curve will steepen and have a
reduced commitment to long maturity issues. At the same time we are struck by
both the benign fundamental environment for fixed income securities, and the
robust growth of money supply. Thus, as in the past, we will stay abreast of
market trends seeking to capture market opportunities while staying aware of the
risks in a volatile environment.
PORTFOLIO MANAGEMENT:
U.S. GOVERNMENT
INCOME SERIES
We continue to emphasize a controlled duration (interest rate sensitive)
approach to managing money, which includes active sector rotation and security
selection. We recently increased our allocation to Treasuries, although overall
allocation remains relatively low as we have focused on mortgage-backed
securities in recent months. We continue to avoid on-the-run issues and look to
add more agency debentures opportunistically. In mortgage-backed securities, we
are concentrating on lower coupon 15-year securities and non-agency prepayment
protected instruments. With spreads continuing to tighten amid an anticipated
decline in supply, commercial mortgage-backed security deals are consistently
met with strong demand. Going forward, we look to maintain our commercial
mortgage-backed securities exposure and look for alternatives to higher coupon
mortgage pass-throughs, such as shorter duration asset-backed securities.
Therefore, we are maintaining a positive outlook for the mortgage sector.
U.S. GOVERNMENT INCOME SERIES
SECTOR DIVERSIFICATION
[GRAPH]
4
<PAGE> 6
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, 1998, 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.
<TABLE>
<CAPTION>
Average Annual Total Returns
Fund 1 Year 3 Years 5 Years 10 Years
<S> <C> <C> <C> <C>
Growth and
Income 10.16% 19.45% 18.08% 14.85%
Series(1)(2)
Bond 7.49% 6.42% 6.32% 7.75%
Series(1)(2)
Equity 23.21% 23.61% 17.76% N/A(*)
Series(1)
U.S.
Government 7.37% 5.97% 5.57% N/A(*)
Income(1)
Consumer 1.61% 2.26% 2.37% 3.13%
Price Index
</TABLE>
(*) Funds were introduced as of May 1993.
<TABLE>
<CAPTION>
Compound Total Returns
Fund 1 Year 3 Years 5 Years 10 Years
<S> <C> <C> <C> <C>
Growth and
Income 10.16% 70.43% 129.55% 299.31%
Series(1)(2)
Bond 7.49% 20.52% 35.85% 110.95%
Series(1)(2)
Equity
Series(1) 23.21% 88.87% 126.46% N/A(*)
U.S.
Government 7.37% 19.00% 31.13% N/A(*)
Income(1)
Consumer 1.61% 6.93% 12.43% 36.10%
Price Index
</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.
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, 1998, 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
1997 15.52 1.25 78.12 +27.2 +1440.8
1998 15.81 1.29 86.06 +10.2 +1597.4
</TABLE>
SECURITY 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, 1998, 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
1997 3.95 .21 14.81 +9.1 +374.6
1998 4.03 .21 15.92 +7.5 +410.3
</TABLE>
6
<PAGE> 8
SECURITIES FIRST TRUST
EQUITY SERIES
The Per Share Data Table below illustrates the growth in per share value for
the period ending December 31, 1998, of one share of the Security First Trust
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
1997 7.63 .72 9.52 +29.3 +90.4
1998 7.89 1.51 11.73 +23.2 +134.6
</TABLE>
(+) change from 5-19-93 to 12-31-93
SECURITY FIRST TRUST
U.S. GOVERNMENT INCOME SERIES
The Per Share Data Table below illustrates the growth in per share value for
the period ending December 31, 1998, of one share of the Security First Trust
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
1997 5.26 .24 6.24 +7.0 +24.8
1998 5.25 .40 6.70 +7.4 +34.0
</TABLE>
(+) change from 5-19-93 to 12-31-93
7
<PAGE> 9
SECURITY FIRST TRUST
STATEMENT OF ASSETS AND LIABILITIES
JANUARY 31, 1999
UNAUDITED
<TABLE>
<CAPTION>
T. Rowe Price
Growth and 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 - $23,301,055; Growth
and Income Series - $248,556,467;
Equity Series - $45,137,074;
U.S. Government Income Series - $32,446,295) $ 23,626,721 $ 312,656,582 $ 57,790,946 $ 32,955,515
Cash 29,814 170,535 644,061 793,411
Interest receivable 262,213 515 1,945 471,256
Dividends receivable 448,107 55,634
Receivable for securities sold 885,644 12,882 796,906
Receivable for capital shares purchased 3,747
Unrealized appreciation on foreign
currency contracts 4,342
------------- ------------- ------------- -------------
24,808,734 313,275,739 58,505,468 35,020,835
LIABILITIES
Payable for securities purchased 891,844 18,808 727,077
Accrued expenses 12,534 88,688 16,735 16,165
Payable for capital shares redeemed 33,861 17,140 28,350
Payable to investment adviser - Note B 6,566 87,014 24,519 10,570
Payable for directors' fees 601 7,922 1,439 903
------------- ------------- ------------- -------------
945,406 200,764 89,851 754,715
NET ASSETS
Capital shares (authorized 100,000,000
shares of $.01 par value for each series) 23,445,046 245,020,827 45,598,442 33,600,130
Undistributed net investment income 97,443 307,686 14,256 141,513
Undistributed net realized gain (loss) (9,169) 3,646,347 149,047 15,257
Net unrealized appreciation of investments 330,008 64,100,115 12,653,872 509,220
------------- ------------- ------------- -------------
NET ASSETS $ 23,863,328 $ 313,074,975 $ 58,415,617 $ 34,266,120
============= ============= ============= =============
Capital shares outstanding 5,895,455 19,939,203 7,130,889 6,495,447
Net asset value per share $ 4.05 $ 15.70 $ 8.19 $ 5.28
</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, 1999
UNAUDITED
<TABLE>
<CAPTION>
T. Rowe Price
Growth and U.S. Government
Income Equity Income
Bond Series Series Series Series
------------ ------------- ------------ ---------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends $ 2,858,506 $ 410,925
Interest $ 628,943 745,289 11,309 $ 1,015,040
------------ ------------ ------------ ------------
628,943 3,603,795 422,234 1,015,040
EXPENSES
Custodian fees 7,261 31,693 7,659 7,728
Adviser fees - Note B 36,712 507,865 144,471 68,285
Management fees - Note B 15,734 218,134 39,401 25,607
Printing expenses 7,659 105,605 18,712 17,340
Audit fees 4,258 2,361 2,017 3,409
Insurance expenses 954 13,546 2,414 1,535
Directors' fees and expenses 1,035 14,124 2,431 1,738
Miscellaneous expenses 93 2,983 2,869 2,448
------------ ------------ ------------ ------------
73,706 896,311 219,974 128,090
NET INVESTMENT INCOME 555,237 2,707,484 202,260 886,950
NET REALIZED AND UNREALIZED GAINS
(LOSSES) ON INVESTMENTS - Notes A and C
Net realized gain on sale of investments 79,258 10,118,968 153,038 526,563
Net unrealized appreciation (depreciation) of:
Investments during the period 111,153 (4,653,613) 6,722,445 28,809
Assets denominated in foreign currencies 4,342
------------ ------------ ------------ ------------
Net gain on investments 194,753 5,465,355 6,875,483 555,372
------------ ------------ ------------ ------------
INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $ 749,990 $ 8,172,839 $ 7,077,743 $ 1,442,322
============ ============ ============ ============
</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, 1999
UNAUDITED
<TABLE>
<CAPTION>
T. Rowe Price
Growth and U.S. Government
Income Equity Income
Bond Series Series Series Series
------------- ------------- ------------- ----------------
<S> <C> <C> <C> <C>
OPERATIONS
Net investment income $ 555,237 $ 2,707,484 $ 202,260 $ 886,950
Net realized gain on sale of investments 79,258 10,118,968 153,038 526,563
Net unrealized appreciation (depreciation)
during the period 115,495 (4,653,613) 6,722,445 28,809
------------- ------------- ------------- -------------
INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS 749,990 8,172,839 7,077,743 1,442,322
DISTRIBUTIONS TO SHAREOWNERS
Net investment income (968,742) (5,234,796) (449,055) (1,847,027)
Net realized gains (207,719) (18,412,869) (8,668,236) (597,259)
CAPITAL SHARE TRANSACTIONS - NOTE D
Reinvestment of net investment income
distributed 968,742 5,234,796 449,055 1,847,027
Reinvestment of net realized gains
distributed 207,719 18,412,869 8,668,236 597,259
Sales of capital shares 6,504,619 19,259,629 234,995 1,158,253
Redemptions of capital shares (1,325,673) (4,799,021) (3,700,273) (2,425,374)
------------- ------------- ------------- -------------
INCREASE IN NET ASSETS FROM
CAPITAL SHARE TRANSACTIONS 6,355,407 38,108,273 5,652,013 1,177,165
------------- ------------- ------------- -------------
TOTAL INCREASE IN NET ASSETS 5,928,936 22,633,447 3,612,465 175,201
NET ASSETS
BEGINNING OF PERIOD 17,934,392 290,441,528 54,803,152 34,090,919
------------- ------------- ------------- -------------
END OF PERIOD (including undistributed net
investment income: Bond Series -$97,443;
Growth and Income Series - $307,686;
Equity Series - $14,256; U.S. Government
Income Series - $141,513) $ 23,863,328 $ 313,074,975 $ 58,415,617 $ 34,266,120
============= ============= ============= =============
</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, 1998
<TABLE>
<CAPTION>
T. Rowe Price
Growth and U.S. Government
Income Equity Income
Bond Series Series Series Series
------------- ------------- ------------- ---------------
<S> <C> <C> <C> <C>
OPERATIONS
Net investment income $ 793,704 $ 4,757,262 $ 449,747 $ 1,841,411
Net realized gain on sale of investments 258,714 14,401,027 11,847,457 137,839
Net unrealized appreciation (depreciation)
during the year (52,442) 3,597,110 (4,704,685) 68,011
------------- ------------- ------------- -------------
INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS 999,976 22,755,399 7,592,519 2,047,261
DISTRIBUTIONS TO SHAREOWNERS
Net investment income (647,867) (4,191,181) (482,528) (1,507,408)
Net realized gains (13,443,002) (4,086,984)
CAPITAL SHARE TRANSACTIONS - NOTE D
Reinvestment of net investment income
distributed 647,867 4,191,181 482,528 1,507,408
Reinvestment of net realized gains
distributed 13,443,002 4,086,984
Sales of capital shares 7,387,828 68,143,134 6,440,386 6,833,426
Redemptions of capital shares (1,088,132) (5,160,103) (6,801,222) (3,679,228)
------------- ------------- ------------- -------------
INCREASE IN NET ASSETS FROM
CAPITAL SHARE TRANSACTIONS 6,947,563 80,617,214 4,208,676 4,661,606
------------- ------------- ------------- -------------
TOTAL INCREASE IN NET ASSETS 7,299,672 85,738,430 7,231,683 5,201,459
NET ASSETS
BEGINNING OF YEAR 10,634,720 204,703,098 47,571,469 28,889,460
------------- ------------- ------------- -------------
END OF YEAR (including undistributed net
investment income: Bond Series -$510,948;
Growth and Income Series - $2,834,998;
Equity Series - $261,051; U.S. Government
Income Series - $1,101,590) $ 17,934,392 $ 290,441,528 $ 54,803,152 $ 34,090,919
============= ============= ============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
11
<PAGE> 13
SCHEDULE I
SECURITY FIRST TRUST
BOND SERIES
PORTFOLIO OF INVESTMENTS
JANUARY 31, 1999
UNAUDITED
<TABLE>
<CAPTION>
Percentage
of Market
Value of Market
Fixed Maturities Portfolio Principal Value
- ---------------- --------- --------- ----------
<S> <C> <C> <C>
CORPORATE NOTES 24.7%
Aerospace & Defense: 0.7%
Boeing Co., 8.75%, 08/15/21 50,000 $ 63,625
Lockheed Martin Corp., 7.75%, 05/01/26 90,000 103,275
----------
166,900
Automobiles & Related: 1.2%
Ford Motor Credit, 9.50%, 04/15/00 50,000 52,415
GMAC Corporate Bond, 9.63%, 12/15/01 100,000 111,125
Mark IV Industries, Inc., 7.75%, 04/01/06 120,000 117,600
----------
281,140
Banking: 3.9%
Bank One Corp., 7.75%, 07/15/25 200,000 230,750
Chase Manhattan Corp., 6.00%, 11/01/05 250,000 254,687
HSBC Fin Nederland Bank, 7.40%, 04/15/03 100,000 106,375
NationsBank Corp., 6.875%, 02/15/05 300,000 319,500
----------
911,312
Building Materials & Garden Supplies: 0.4%
NBTY, Inc., 8.63%, 09/15/07 100,000 97,375
Computer & Office Equipment: 1.6%
Hydrochem Industrial Service, Inc., 10.375%, 08/01/07 85,000 84,575
IBM Corp., 5.375%, 02/01/09 235,000 234,960
Printpack, Inc., 10.625%, 08/15/06 60,000 58,950
----------
378,485
Electric and Electronic Equipment: 0.4%
Honeywell, Inc., 6.60%, 04/15/01 100,000 103,125
</TABLE>
The accompanying notes are an integral part of these financial statements.
12
<PAGE> 14
SCHEDULE I
SECURITY FIRST TRUST
BOND SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JANUARY 31, 1999
UNAUDITED
<TABLE>
<CAPTION>
Percentage
of Market
Value of Market
Fixed Maturities Portfolio Principal Value
- ---------------- ----------- --------- ----------
<S> <C> <C> <C>
CORPORATE NOTES (Continued)
Electric Utilities: .9%
National Rural Utilities, 6.50%, 09/15/02 100,000 $ 104,375
Public Service Electric & Gas Co., 6.25%, 01/01/07 100,000 105,125
----------
209,500
Finance & Credit: 3.9%
Chase Commercial Mortgage Sec., 6.60%, 11/19/07 110,000 113,933
Commercial Credit Group, 9.60%, 05/15/99 50,000 50,618
Margaretten Financial, 6.75%, 06/15/00 100,000 101,865
Premier Auto Trust, 6.32%, 03/06/02 300,000 307,695
Standard Credit Card, 7.25%, 04/07/08 100,000 110,793
UCFC Trust, 6.48%, 05/15/12 230,000 225,975
----------
910,879
Food & Beverages: 0.7%
Ameriserve Food Co., 10.125%, 07/15/07 85,000 73,100
Doskocil Manufacturing Inc., 10.125%, 09/15/07 60,000 57,250
Southern Foods Group, 9.875%, 09/01/07 60,000 63,150
----------
193,500
Forest Products: 0.8%
Noranda Forest, Inc., 7.50%, 07/15/03 100,000 102,125
Stone Container Corp., 12.25%, 04/01/02 80,000 80,400
----------
182,525
Insurance Carriers: 0.4%
Prudential Insurance Co. America, 6.875%, 04/15/03 100,000 104,500
</TABLE>
The accompanying notes are an integral part of these financial statements.
13
<PAGE> 15
SCHEDULE I
SECURITY FIRST TRUST
BOND SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JANUARY 31, 1999
UNAUDITED
<TABLE>
<CAPTION>
Percentage
of Market
Value of Market
Fixed Maturities Portfolio Principal Value
---------------- --------- --------- ----------
<S> <C> <C> <C>
CORPORATE NOTES (Continued)
Miscellaneous Consumer Products: 1.4%
French Fragrances, Inc., 10.375%, 05/15/07 60,000 $ 61,050
Hedstrom Corp., 10.00%, 06/01/07 70,000 60,550
Home Products International, Inc., 9.625%, 05/15/08 70,000 68,600
Kinder Care Learning Centers, 9.50%, 02/15/09 70,000 68,425
S C International Service, Inc., 9.25%, 09/01/07 60,000 60,750
----------
319,375
Oil and Gas Extraction: 0.5%
Quaker State Corp., 6.63%, 10/15/05 100,000 106,375
Security, Commodity Brokers & Services: 5.4%
Lehman Brothers, 8.50%, 05/01/07 100,000 112,625
Merrill Lynch & Co, Inc., 6.00%, 02/12/03 240,000 243,600
Morgan Stanley, 6.52%, 01/15/08 350,000 362,250
MS Wells Fargo, 6.54%, 07/15/30 230,000 238,395
Salomon Smith Barney, Inc., 7.375%, 05/15/07 300,000 326,625
----------
1,283,495
Telephone Communication: 1.2%
GTE Corp., 6.94%, 04/15/28 100,000 108,375
U.S. West Communications, 7.50%, 06/15/23 80,000 85,400
Worldcom, Inc., 6.95%, 08/15/28 100,000 108,625
----------
302,400
Textile Mill Products: 0.5%
GFSI, Inc., 9.625%, 03/01/07 60,000 56,475
Polymer Group, Inc., 9.00%, 07/01/07 60,000 60,525
----------
117,000
</TABLE>
The accompanying notes are an integral part of these financial statements.
14
<PAGE> 16
SCHEDULE I
SECURITY FIRST TRUST
BOND SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JANUARY 31, 1999
UNAUDITED
<TABLE>
<CAPTION>
Percentage
of Market
Value of Market
Fixed Maturities Portfolio Principal Value
---------------- --------- --------- ----------
<S> <C> <C> <C>
CORPORATE NOTES (Continued)
Transportation: 0.8%
Newport News Shipbuilding, Inc., 9.25%, 12/01/06 60,000 $ 63,900
Norfolk Southern Corp., 7.8%, 05/15/27 100,000 118,750
----------
182,650
----------
TOTAL CORPORATE NOTES
(COST $5,744,377) 5,850,536
FEDERAL AGENCIES 44.6%
Federal Home Loan Bank: 0.8%
5.50%, 01/10/01 200,000 202,078
Federal Home Loan Mortgage Corp.: 0.2%
9.50%, 04/01/19 26,921 28,789
9.00%, 06/01/19 13,804 14,671
----------
43,460
Federal National Mortgage Assn.: 16.0%
5.75%, 04/15/03 410,000 420,734
6.92%, 03/19/07 75,000 82,676
6.21%, 11/07/07 1,635,000 1,732,200
6.31%, 02/01/08 222,885 230,129
7.00%, 09/01/10 333,594 341,623
7.00%, 05/01/12 171,742 175,875
6.50%, 03/01/13 149,584 146,966
6.50%, 03/01/13 366,947 373,251
7.50%, 08/25/21 9,069 9,237
6.43%, 03/17/30 260,000 259,350
----------
3,772,041
</TABLE>
The accompanying notes are an integral part of these financial statements.
15
<PAGE> 17
SCHEDULE I
SECURITY FIRST TRUST
BOND SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JANUARY 31, 1999
UNAUDITED
<TABLE>
<CAPTION>
Percentage
of Market
Value of Market
Fixed Maturities Portfolio Principal Value
---------------- ---------- --------- -----------
<S> <C> <C> <C>
FEDERAL AGENCIES (Continued)
Government National Mortgage Association: 27.6%
9.00%, 04/15/09 2,925 $ 3,103
9.00%, 05/15/09 14,838 15,746
9.00%, 05/15/09 6,204 6,584
9.00%, 05/15/09 4,448 4,720
9.00%, 05/15/09 1,951 2,070
9.00%, 05/15/09 3,089 3,279
9.00%, 05/15/09 8,664 9,195
11.25%, 09/15/15 80,721 89,524
11.50%, 11/15/15 55,442 62,458
10.00%, 08/15/16 7,015 7,662
10.00%, 06/15/17 27,500 30,035
9.25%, 07/15/17 15,989 17,063
10.00%, 11/15/17 7,833 8,556
11.50%, 02/15/18 3,319 3,740
10.00%, 03/15/19 38,864 42,447
10.00%, 03/15/20 13,953 15,239
9.25%, 05/15/20 30,079 32,099
7.50%, 09/15/20 230,378 238,296
9.25%, 05/15/21 88,863 94,836
9.25%, 06/15/21 21,521 22,967
7.50%, 06/15/23 105,026 108,635
7.00%, 08/15/23 89,902 92,206
7.50%, 10/15/23 170,118 175,957
7.00%, 01/15/24 142,785 146,443
7.00%, 03/15/24 121,232 124,339
7.00%, 01/15/25 440,550 451,837
9.50%, 01/15/25 50,588 54,587
9.50%, 05/15/25 15,940 17,199
7.00%, 02/15/26 543,039 556,951
6.50%, 04/15/28 795,279 804,965
7.00%, 05/01/28 423,064 433,903
</TABLE>
The accompanying notes are an integral part of these financial statements.
16
<PAGE> 18
SCHEDULE I
SECURITY FIRST TRUST
BOND SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JANUARY 31, 1999
UNAUDITED
<TABLE>
<CAPTION>
Percentage
of Market
Value of Market
Fixed Maturities Portfolio Principal Value
- ---------------- ----------- --------- ----------
<S> <C> <C> <C>
FEDERAL AGENCIES (Continued)
Government National Mortgage Association (Continued)
7.00%, 06/01/28 368,427 $ 377,866
6.50%, 10/15/28 1,902,708 1,925,883
6.50%, 11/15/28 543,196 549,812
----------
6,530,202
----------
TOTAL FEDERAL AGENCIES
(COST $10,381,506) 10,547,781
U.S. GOVERNMENT OBLIGATIONS 26.1%
U.S. Treasury Bond: 6.3%
6.75%, 08/15/26 1,240,000 1,494,758
U.S. Treasury Notes: 19.8%
7.75%, 11/30/99 15,000 15,375
5.63%, 11/30/00 110,000 111,849
6.38%, 08/15/02 415,000 437,543
5.38%, 06/30/03 3,340,000 3,435,423
3.38%, 01/15/07 687,911 668,773
----------
4,668,963
----------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(COST $6,150,024) 6,163,721
FOREIGN GOVERNMENT OBLIGATIONS 4.3%
Canada Government Bond, 6.00%, 06/01/08 538,961 576,677
Swedish Government Bond, 5.50%, 04/12/02 401,554 428,109
----------
TOTAL FOREIGN GOVERNMENT OBLIGATIONS
(COST $965,251) 1,004,786
----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
17
<PAGE> 19
SCHEDULE I
SECURITY FIRST TRUST
BOND SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JANUARY 31, 1999
UNAUDITED
<TABLE>
<CAPTION>
Percentage
of Market
Value of Market
Fixed Maturities Portfolio Principal Value
---------------- --------- --------- ------------
<S> <C> <C> <C>
TOTAL FIXED MATURITIES
(COST $23,241,158) $23,566,824
Short-Term Investments
SHORT-TERM INVESTMENTS 0.3%
Federal Home Loan Mortgage Corp.: 0.3%
4.73%, 02/12/99 60,000 59,897
-----------
TOTAL SHORT-TERM INVESTMENTS
(COST $59,897) 59,897
-----------
TOTAL INVESTMENTS
(COST $23,301,055) 100.0% 23,626,721
Unrealized
Forward Foreign Currency Contracts Gain (Loss)
CONTRACTS TO SELL -----------
905,000 Canadian Dollars (Settlement Date 02/22/99;
Receivable amount $592,995; Market value $596,000) (3,038)
380,000 Euro Dollars (Settlement Date 02/22/99;
Receivable amount $440,960; Market value $433,580) 7,380
-----------
4,342
Other assets less liabilities 232,265
-----------
NET ASSETS $23,863,328
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
18
<PAGE> 20
SCHEDULE I
SECURITY FIRST TRUST
T. ROWE PRICE GROWTH AND INCOME SERIES
PORTFOLIO OF INVESTMENTS
JANUARY 31, 1999
UNAUDITED
<TABLE>
<CAPTION>
Percentage
of Market
Value of No. of Market
Equity Securities Portfolio Shares Value
----------------- ---------- ------ -----------
<S> <C> <C> <C>
CAPITAL EQUIPMENT 4.5%
Electrical Equipment: 4.5%
General Electric Co. 50,000 $ 5,243,750
Honeywell, Inc. 30,000 1,955,610
Hubbell, Inc. Class B 40,000 1,465,000
Motorola, Inc. 75,000 5,418,750
-----------
14,083,110
CONSUMER CYCLICALS 0.8%
Automobiles & Related: 0.8%
Genuine Parts Co. 80,000 2,550,000
CONSUMER NONDURABLES 19.4%
Food & Beverages: 5.4%
Anheuser-Busch Company, Inc. 50,000 3,534,350
Best Foods 24,000 1,207,488
General Mills, Inc. 54,000 4,532,598
McCormick & Co. 75,000 2,212,500
Pepsico, Inc. 50,000 1,953,100
Quaker Oats Company 30,000 1,668,750
Ralston-Ralston Purina Group 60,000 1,642,500
-----------
16,751,286
Health Services: 0.7%
Baxter International, Inc. 30,000 2,128,110
</TABLE>
The accompanying notes are an integral part of these financial statements.
19
<PAGE> 21
SCHEDULE I
SECURITY FIRST TRUST
T. ROWE PRICE GROWTH AND INCOME SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JANUARY 31, 1999
UNAUDITED
<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: 7.7%
Colgate Palmolive Co. 30,000 $ 2,413,110
Eastman Kodak 40,000 2,615,000
Fortune Brands, Inc. 100,000 3,325,000
Int'l. Flavors & Fragrance 100,000 4,362,500
Owens Corning 70,000 2,502,500
Philip Morris Companies, Inc. 100,000 4,700,000
Stanley Works 75,000 1,889,025
UST, Inc. 75,000 2,362,500
----------
24,169,635
Pharmaceuticals: 5.6%
Abbott Laboratories 80,000 3,714,960
American Home Products 60,000 3,521,220
Johnson & Johnson 45,000 3,825,000
Pharmacia-Upjohn, Inc. 36,250 2,084,375
Schering-Plough Corp. 80,000 4,360,000
----------
17,505,555
CONSUMER SERVICES 12.4%
Entertainment & Leisure: 1.2%
Hilton Hotels Corp. 175,000 2,526,475
Park Place Entertainment Corp.* 175,000 1,192,100
----------
3,718,575
General Merchandise Stores: 4.7%
Dayton Hudson Corp. 90,000 5,737,500
J.C. Penney, Inc. 40,000 1,567,480
Neiman-Marcus Group, Inc.* 90,000 2,216,250
Toys R Us, Inc.* 200,000 3,000,000
Tupperware Corp. 100,000 2,056,200
----------
14,577,430
</TABLE>
*Non-income producing
The accompanying notes are an integral part of these financial statements.
20
<PAGE> 22
SCHEDULE I
SECURITY FIRST TRUST
T. ROWE PRICE GROWTH AND INCOME SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JANUARY 31, 1999
UNAUDITED
<TABLE>
<CAPTION>
Percentage
of Market
Value of No. of Market
Equity Securities Portfolio Shares Value
----------------- --------- ------ -----------
<S> <C> <C> <C>
CONSUMER SERVICES (Continued)
Media & Communications: 2.8%
CBS Corp. 75,000 $ 2,550,000
Knight Ridder, Inc. 60,000 2,865,000
Meredith Corp. 60,000 2,235,000
Readers Digest Assn., Inc. 35,000 966,875
-----------
8,616,875
Miscellaneous Business Services: 1.9%
Browning Ferris, Inc. 125,000 3,437,500
Waste Management, Inc. 50,750 2,534,303
-----------
5,971,803
Real Estate: 1.8%
Crescent Real Estate Equity Co. 90,000 1,906,830
Starwood Hotel & Resort Trust 150,000 3,750,000
-----------
5,656,830
ENERGY 9.6%
Oil And Gas Extraction: 9.6%
Amerada Hess Corp. 55,000 2,612,500
Atlantic Richfield Co. 30,000 1,721,250
BP Amoco PLC 96,167 7,801,547
Baker Hughes, Inc. 175,000 2,953,125
Chevron Corp. 40,000 2,990,000
Exxon Corp. 36,000 2,535,732
Mobil Corp. 16,000 1,402,992
Occidental Petroleum Corp. 80,000 1,204,960
Pioneer Natural Resources Co. 125,000 1,031,250
Royal Dutch Petroleum Co. ADR 40,000 1,602,480
Texaco, Inc. 30,600 1,449,675
Unocal Corp. 100,000 2,850,000
-----------
30,155,511
</TABLE>
The accompanying notes are an integral part of these financial statements.
21
<PAGE> 23
SCHEDULE I
SECURITY FIRST TRUST
T. ROWE PRICE GROWTH AND INCOME SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JANUARY 31, 1999
UNAUDITED
<TABLE>
<CAPTION>
Percentage
of Market
Value of No. of Market
Equity Securities Portfolio Shares Value
----------------- --------- ------ -----------
<S> <C> <C> <C>
FINANCIAL 11.8%
Banking: 3.1%
Chase Manhattan Corp. 30,000 $ 2,308,110
Mellon Bank Corp. 50,000 3,350,000
National City Corp. 20,000 1,421,240
Wells Fargo & Co. 66,660 2,328,990
-----------
9,408,340
Federal Agencies: 1.2%
Federal Home Loan Mortgage Corp. 60,000 3,720,000
Financial Services: 4.7%
American Express Co. 30,000 3,086,250
H&R Block, Inc. 60,000 2,632,500
Citigroup, Inc. 110,365 6,187,283
J.P. Morgan & Co., Inc. 25,000 2,637,500
-----------
14,543,533
Insurance Carriers: 2.8%
Loews Corp. 30,000 2,525,610
St. Paul Companies, Inc. 105,136 3,088,370
Travelers Aetna P&C 120,000 3,457,440
-----------
9,071,420
PROCESS INDUSTRIES 13.1%
Chemicals And Allied Products: 7.4%
Corning, Inc. 100,000 4,870,000
Dow Chemical Co. 30,000 2,641,860
Dupont Co. 50,000 2,559,350
Great Lakes Chemical Corp. 60,000 2,272,500
Hercules, Inc. 120,000 3,232,440
Imperial Chemical ADR 60,000 2,156,220
</TABLE>
The accompanying notes are an integral part of these financial statements.
22
<PAGE> 24
SCHEDULE I
SECURITY FIRST TRUST
T. ROWE PRICE GROWTH AND INCOME SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JANUARY 31, 1999
UNAUDITED
<TABLE>
<CAPTION>
Percentage
of Market
Value of No. of Market
Equity Securities Portfolio Shares Value
----------------- --------- ------ -----------
<S> <C> <C> <C>
PROCESS INDUSTRIES (Continued)
Chemicals and Allied Products (Continued)
Minnesota Mining & Manufacturing Co. 38,300 $ 2,973,037
Pall Corp. 100,000 2,318,700
----------
23,024,107
Forest Products: 1.2%
Georgia Pacific Corp. 35,000 2,257,500
Weyerhaeuser Co. 30,000 1,623,750
----------
3,881,250
Metal Mining: 2.3%
Inco Ltd. 175,000 1,848,350
Newmont Mining Corp. 75,000 1,326,525
Phelps Dodge Corp. 50,000 2,171,850
Reynolds Metals Co. 40,000 1,955,000
----------
7,301,725
Paper And Allied Products: 2.2%
Kimberly-Clark 100,000 4,981,200
International Paper Co. 25,000 989,050
Union Camp Corp. 15,000 935,625
----------
6,905,875
TECHNOLOGY 4.5%
Computer and Office Equipment: 4.5%
Computer Associates International, Inc. 75,000 3,796,875
First Data Corp. 125,000 4,789,000
Hewlett-Packard Co. 70,000 5,486,250
----------
14,072,125
</TABLE>
The accompanying notes are an integral part of these financial statements.
23
<PAGE> 25
SCHEDULE I
SECURITY FIRST TRUST
T. ROWE PRICE GROWTH AND INCOME SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JANUARY 31, 1999
UNAUDITED
<TABLE>
<CAPTION>
Percentage
of Market
Value of No. of Market
Equity Securities Portfolio Shares Value
----------------- --------- -------- -----------
<S> <C> <C> <C>
TRANSPORTATION 7.3%
Aerospace and Defense: 4.1%
Allied Signal, Inc. 90,000 $ 3,510,000
Boeing Company 100,000 3,456,200
Lockheed Martin Corp. 60,000 2,115,000
Olin Corp. 45,000 1,063,125
Raytheon Co. 50,000 2,796,850
---------
12,941,175
Railroad Transportation: 3.2%
Burlington Northern Santa Fe 75,000 2,596,875
Norfolk Southern Corp. 140,000 3,858,680
Union Pacific Corp. 70,000 3,600,590
---------
10,056,145
UTILITIES 6.7%
Telephone Communication: 4.1%
AT&T Co. 20,000 1,815,000
Frontier Corp. 70,000 2,528,750
GTE Corp. 40,000 2,700,000
SBC Communications, Inc. 104,865 5,662,710
---------
12,706,460
Utility Holding Companies: 2.6%
Edison International 50,000 1,390,561
GPU 16,000 682,000
Peco Energy Co. 50,000 1,909,350
Pacificorp 70,000 1,439,340
Unicom Corp. 75,000 2,676,600
---------
8,097,851
---------
TOTAL EQUITY SECURITIES
(COST $217,514,611) 281,614,726
</TABLE>
The accompanying notes are an integral part of these financial statements.
24
<PAGE> 26
SCHEDULE I
SECURITY FIRST TRUST
T. ROWE PRICE GROWTH AND INCOME SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JANUARY 31, 1999
UNAUDITED
<TABLE>
<CAPTION>
Percentage
of Market
Value of Market
Short-Term Investments Portfolio Principal Value
---------------------- --------- ---------- -------------
<S> <C> <C> <C>
SHORT-TERM INVESTMENTS 9.9%
Commercial Paper: 9.9%
Allied Signal, Inc., 4.85%, 02/09/99 2,100,000 $ 2,097,169
Aluminum Company of America, 4.82%, 02/05/99 1,265,000 1,263,981
Ameritech Corp., 4.80%, 02/09/99 1,000,000 998,665
Dresdner U S Finance, Inc., 4.80%, 03/08/99 3,400,000 3,383,193
General Electric Capital Corp., 4.80%, 03/10/99 1,100,000 1,093,858
General Electric Capital Corp., 4.85%, 03/19/99 2,635,000 2,617,917
Lucent Technologies, Inc., 4.80%, 02/18/99 4,900,000 4,887,568
Metlife Funding, Inc., 4.80%, 02/24/99 10,000,000 9,966,644
Proctor & Gamble Co., 4.80%, 02/26/99 4,750,000 4,732,861
-------------
TOTAL SHORT-TERM INVESTMENTS
(COST $31,041,856) 31,041,856
-------------
TOTAL INVESTMENTS
(COST $248,556,467) 100.0% 312,656,582
Other assets less liabilities 418,393
-------------
NET ASSETS $ 313,074,975
=============
</TABLE>
The accompanying notes are an integral part of these financial statements.
25
<PAGE> 27
SCHEDULE I
SECURITY FIRST TRUST
EQUITY SERIES
PORTFOLIO OF INVESTMENTS
JANUARY 31, 1999
UNAUDITED
<TABLE>
<CAPTION>
Percentage
of Market
Value of No. of Market
Equity Securities Portfolio Shares Value
----------------- --------- ------ -----------
<S> <C> <C> <C>
CAPITAL EQUIPMENT 8.3%
Electrical Equipment: 7.1%
Emerson Electric Co. 6,400 $ 372,397
General Electric Co. 19,200 2,013,600
Lucent Technologies, Inc. 10,400 1,170,645
Motorola, Inc. 7,300 527,425
----------
4,084,067
Machinery: 1.2%
Eaton Corp. 3,800 264,575
Illinois Tool Works, Inc. 7,000 422,184
----------
686,759
CONSUMER NONDURABLES 22.2%
Food & Beverages: 4.4%
Anheuser-Busch Company, Inc. 4,700 332,229
Archer Daniels Midland Co. 11,760 177,870
Best Foods 10,200 513,182
Coca Cola 15,500 1,014,273
Pepsico, Inc. 12,300 480,463
----------
2,518,017
Health Services: 1.7%
Columbia/HCA Health System, Inc. 10,000 181,250
Medtronic, Inc. 3,700 294,842
United Healthcare Corp.* 10,700 478,825
----------
954,917
</TABLE>
*Non-income producing
The accompanying notes are an integral part of these financial statements.
26
<PAGE> 28
SCHEDULE I
SECURITY FIRST TRUST
EQUITY SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JANUARY 31, 1999
UNAUDITED
<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: 5.4%
Colgate Palmolive Co. 4,400 $ 353,923
Gillette Co. 7,100 417,125
McDonalds Corp. 6,800 535,921
Philip Morris Companies, Inc. 18,800 883,600
Proctor & Gamble Co. 10,200 926,925
----------
3,117,494
Pharmaceuticals: 10.7%
American Home Products Co. 14,400 845,093
Bristol Myers Squibb Co. 9,900 1,269,051
Johnson & Johnson 8,900 756,500
Eli Lilly & Co. 9,400 880,658
Merck & Co. 7,600 1,115,300
Pfizer, Inc. 8,000 1,029,000
Pharmacia-Upjohn, Inc. 5,900 339,250
----------
6,234,852
CONSUMER CYCLICALS 2.2%
Automobiles & Related: 2.2%
Ford Motor Co. 9,800 602,083
General Motors Corp. 5,900 529,525
Goodyear Tire And Rubber Co. 3,400 166,600
----------
1,298,208
CONSUMER SERVICES 8.9%
General Merchandise Stores: 5.7%
Albertsons, Inc. 5,200 317,200
Home Depot, Inc. 10,600 639,975
K Mart Corp.* 23,400 410,951
</TABLE>
*Non-income producing
The accompanying notes are an integral part of these financial statements.
27
<PAGE> 29
SCHEDULE I
SECURITY FIRST TRUST
EQUITY SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JANUARY 31, 1999
UNAUDITED
<TABLE>
<CAPTION>
Percentage
of Market
Value of No. of Market
Equity Securities Portfolio Shares Value
----------------- --------- ------ ----------
<S> <C> <C> <C>
CONSUMER SERVICES (Continued)
General Merchandise Stores (Continued)
J.C. Penney, Inc. 8,700 $ 340,927
Pep Boys Manny Moe & Jack 7,200 113,400
Sears Roebuck & Co. 6,800 272,850
Toys R Us, Inc.* 10,600 159,000
Walmart Stores 12,600 1,083,600
----------
3,337,903
Media & Communications: 2.8%
Walt Disney Co. 18,800 620,400
Fox Entertainment Group, Inc. 10,600 295,475
News Corp. 9,900 277,200
Time Warner, Inc. 2,000 125,000
Tribune Co. 4,300 274,929
----------
1,593,004
Building & Real Estate: 0.4%
Fluor Corp. 3,200 122,000
Starwood Hotel & Resort Trust 8,600 215,000
----------
337,000
ENERGY 7.0%
Oil And Gas Extraction: 7.0%
Atlantic Richfield Co. 4,100 235,238
BP Amoco PLC 4,300 348,838
Enron Corp. 4,200 277,200
Exxon Corp. 21,700 1,528,483
Mobil Corp. 6,100 534,891
Royal Dutch Petroleum Co. ADR 13,900 556,862
Schlumberger Limited 6,300 300,038
Unocal Corp. 9,100 259,350
----------
4,040,900
</TABLE>
*Non-income producing
The accompanying notes are an integral part of these financial statements.
28
<PAGE> 30
SCHEDULE I
SECURITY FIRST TRUST
EQUITY SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JANUARY 31, 1999
UNAUDITED
<TABLE>
<CAPTION>
Percentage
of Market
Value of No. of Market
Equity Securities Portfolio Shares Value
----------------- --------- ------ -----------
<S> <C> <C> <C>
FINANCIAL 16.7%
Banking: 8.0%
Bank One Corp. 20,814 $ 1,090,133
Bankamerica Corp. 15,246 1,019,576
Bank of Boston Corp. 7,600 280,721
Chase Manhattan Corp. 11,300 869,388
Household International, Inc. 5,900 259,228
U.S. Bankcorp 8,400 282,971
Washington Mutual, Inc. 8,150 342,300
Wells Fargo & Co. 15,000 524,055
-----------
4,668,372
Federal Agencies: 1.0%
Federal Home Loan Mortgage Corp. 7,600 553,850
Financial Services: 4.5%
Associates First Capital Corp. 5,200 210,922
CIT Group, Inc. 9,300 296,438
Citigroup, Inc. 10,350 580,242
Equifax, Inc. 7,500 296,715
Fleet Financial Group 12,000 531,744
Morgan Stanley Dean Witter 7,685 667,150
-----------
2,583,211
Insurance Carriers: 3.2%
Allstate Corp. 9,300 349,327
American General Corp. 3,400 242,461
American International Group 8,550 880,111
Cigna Corp. 2,100 172,988
Conseco, Inc. 5,800 179,435
-----------
1,824,322
</TABLE>
The accompanying notes are an integral part of these financial statements.
29
<PAGE> 31
SCHEDULE I
SECURITY FIRST TRUST
EQUITY SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JANUARY 31, 1999
UNAUDITED
<TABLE>
<CAPTION>
Percentage
of Market
Value of No. of Market
Equity Securities Portfolio Shares Value
----------------- --------- ------ ----------
<S> <C> <C> <C>
PROCESS INDUSTRIES 3.6%
Chemicals and Allied Products: 2.7%
Air Products & Chemical 6,400 $ 215,200
Dow Chemical Co. 2,200 193,736
Dupont Co. 8,500 435,090
Fort James Corp. 8,200 294,175
Minnesota Mining & Manufacturing Co. 3,600 279,450
PPG Industries, Inc. 3,000 161,250
----------
1,578,901
Metal Mining: 0.5%
Alcoa, Inc. 1,800 150,525
Barrick Gold Corp. 5,800 110,560
----------
261,085
Paper And Allied Products: 0.4%
Westvaco Corp. 9,300 205,055
TECHNOLOGY 18.0%
Computer & Office Equipment: 18.0%
Applied Materials, Inc.* 6,500 410,716
Cisco Systems, Inc.* 10,800 1,204,870
Compaq Computer Corp. 15,800 752,475
Hewlett Packard Co. 8,300 650,512
Intel Corp. 11,300 1,592,588
International Business Machines Corp. 7,800 1,429,350
Microsoft Corp. 15,800 2,765,000
Oracle Corp.* 11,800 653,425
Texas Instruments 5,200 514,150
Xerox Corp. 3,300 409,200
----------
10,382,286
</TABLE>
*Non-income producing
The accompanying notes are an integral part of these financial statements.
30
<PAGE> 32
SCHEDULE I
SECURITY FIRST TRUST
EQUITY SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JANUARY 31, 1999
UNAUDITED
<TABLE>
<CAPTION>
Percentage
of Market
Value of No. of Market
Equity Securities Portfolio Shares Value
----------------- --------- ------ ----------
<S> <C> <C> <C>
TRANSPORTATION 2.7%
Aerospace & Defense: 1.6%
Boeing Company 7,500 $ 259,215
Lockheed Martin Corp. 8,200 289,050
United Technologies Corp. 3,000 358,311
----------
906,576
Transportation Services: 1.1%
AMR Corp.* 5,800 340,750
Delta Air Lines, Inc. 5,600 305,547
----------
646,297
UTILITIES 10.4%
Telephone Communication: 8.4%
AT&T Co. 10,900 989,175
Alltel Corp. 6,600 426,109
Bell Atlantic Corp. 9,100 546,000
GTE Corp. 10,800 729,000
MCI Worldcom, Inc.* 10,800 861,300
SBC Communications, Inc. 23,000 1,242,000
----------
4,793,584
</TABLE>
*Non-income producing
The accompanying notes are an integral part of these financial statements.
31
<PAGE> 33
SCHEDULE I
SECURITY FIRST TRUST
EQUITY SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JANUARY 31, 1999
UNAUDITED
<TABLE>
<CAPTION>
Percentage
of Market
Value of No. of Market
Equity Securities Portfolio Shares Value
----------------- --------- ------ ------------
<S> <C> <C> <C>
UTILITIES (Continued)
Utility Holding Companies: 2.0%
Cinergy Corp. 7,800 $ 244,233
Entergy Corp. 9,900 291,426
FPL Group, Inc. 7,400 406,075
Southern Co. 9,000 242,552
------------
1,184,286
------------
TOTAL INVESTMENTS
(COST $45,137,074) 100.0% 57,790,946
Other assets less liabilities 624,671
------------
NET ASSETS $ 58,415,617
============
</TABLE>
The accompanying notes are an integral part of these financial statements.
32
<PAGE> 34
SCHEDULE I
SECURITY FIRST TRUST
U.S. GOVERNMENT INCOME SERIES
PORTFOLIO OF INVESTMENTS
JANUARY 31, 1999
UNAUDITED
<TABLE>
<CAPTION>
Percentage
of Market
Value of Market
Fixed Maturities Portfolio Principal Value
- ---------------- --------- --------- ----------
<S> <C> <C> <C>
CORPORATE NOTES 6.8%
Finance & Credit: 6.8%
Bear Stearns Mortgage Sec. Inc., 8.125%, 09/25/27 400,000 $ 408,250
GMAC Mortgage Corp., 6.42%, 05/15/31 75,000 77,164
GMAC Mortgage Corp., 5.94%, 07/01/13 491,385 480,636
Morgan Stanley Capital Inc., 6.33%, 08/01/10 268,392 273,358
Mortgage Capital Funding Inc., 6.00%, 11/18/31 375,000 379,688
Residential Accredit Lines Inc., 7.75%, 04/25/27 600,000 616,314
----------
TOTAL CORPORATE NOTES
(COST $2,228,560) 2,235,410
U.S. GOVERNMENT OBLIGATIONS 37.1%
U.S. Treasury Bonds: 13.2%
8.75%, 11/15/08 500,000 581,155
12.75%, 11/15/10 600,000 867,246
14.00%, 11/15/11 50,000 78,886
6.50%, 11/15/26 150,000 175,518
6.38%, 08/15/27 2,300,000 2,661,583
----------
4,364,388
U.S. Treasury Note: 23.9%
6.125%, 08/15/07 7,205,000 7,872,399
----------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(COST $12,209,639) 12,236,787
</TABLE>
The accompanying notes are an integral part of these financial statements.
33
<PAGE> 35
SCHEDULE I
SECURITY FIRST TRUST
U.S. GOVERNMENT INCOME SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JANUARY 31, 1999
UNAUDITED
<TABLE>
<CAPTION>
Percentage
of Market
Value of Market
Fixed Maturities Portfolio Principal Value
- ---------------- ----------- --------- ----------
<S> <C> <C> <C>
FEDERAL AGENCIES 56.1%
Federal Farm Credit Bank: 7.2%
6.05%, 04/21/03 550,000 $ 569,569
6.94%, 05/19/05 125,000 136,684
7.37%, 08/01/06 1,500,000 1,626,690
----------
2,332,943
Federal Home Loan Bank: 0.8%
8.00%, 08/27/01 250,000 268,315
Federal Home Loan Mortgage Corp.: 16.5%
7.00%, 07/15/99 218,882 218,884
7.36%, 06/05/07 1,500,000 1,601,460
7.00%, 07/01/07 109,484 113,076
7.00%, 09/01/10 223,456 228,971
6.50%, 04/01/11 1,275,679 1,298,399
6.00%, 05/11/11 1,296,170 1,303,856
8.04%, 01/01/27 689,312 688,015
----------
5,452,661
Federal National Mortgage Assn.: 26.2%
6.00%, 11/01/03 81,691 82,712
6.125%, 11/25/03 269,376 268,904
8.625%, 06/30/04 150,000 174,574
6.00%, 10/01/08 340,150 343,976
6.09%, 10/01/08 521,647 534,688
6.50%, 03/01/09 145,896 147,628
7.00%, 04/01/11 1,146,145 1,173,721
5.50%, 07/01/13 490,185 484,361
8.00%, 11/01/13 777,317 807,679
5.50%, 01/01/14 495,000 489,738
5.50%, 02/01/14 495,000 489,746
6.50%, 05/17/15 700,000 714,437
</TABLE>
The accompanying notes are an integral part of these financial statements.
34
<PAGE> 36
SCHEDULE I
SECURITY FIRST TRUST
U.S. GOVERNMENT INCOME SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JANUARY 31, 1999
UNAUDITED
<TABLE>
<CAPTION>
Percentage
of Market
Value of Market
Fixed Maturities Portfolio Principal Value
- ---------------- --------- --------- ------------
<S> <C> <C> <C>
FEDERAL AGENCIES (Continued)
Federal National Mortgage Assn. (Continued)
6.315%, 10/01/23 709,485 $ 712,589
8.00%, 10/01/25 218,009 226,524
6.00%, 10/01/28 1,006,787 996,085
6.00%, 12/01/28 371,296 367,349
6.00%, 12/01/28 314,487 311,144
6.00%, 12/01/28 312,897 309,571
------------
8,635,426
Government National Mortgage Assn.:
7.50%, 01/15/26 4.1% 998,036 1,032,340
6.00%, 07/20/27 295,123 310,708
------------
1,343,048
Other Federal Agencies: 1.3%
Small Business Admin., 5.50%, 10/01/18 355,000 348,153
Student Loan Marketing Assn., 7.50%, 03/08/00 100,000 102,772
------------
450,925
------------
TOTAL FEDERAL AGENCIES
(COST $18,008,096) 18,483,318
------------
TOTAL INVESTMENTS
(COST $ 32,446,295) 100.0% 32,955,515
Other assets less liabilities 1,310,605
------------
NET ASSETS $ 34,266,120
============
</TABLE>
The accompanying notes are an integral part of these financial statements.
35
<PAGE> 37
SECURITY FIRST TRUST
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 1999
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
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 Equity Series and the U.S. Government
Income Series on January 11, 1993, which commenced operations May 19, 1993.
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 annually 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.
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.
36
<PAGE> 38
SECURITY FIRST TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE A -- ORGANIZATION OF THE TRUST AND SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
CURRENCY TRANSLATION -- Assets and liabilities are translated into U.S. dollars
at the prevailing exchange rate at the end of the reporting period. Purchases
and sales of securities and income and expenses are translated into U.S. dollars
at the prevailing exchange rate on the dates of such transactions. The effect of
changes in foreign exchange rates on realized and unrealized security gains and
losses is reflected as a component of such gains and losses.
FOREIGN CURRENCY CONTRACTS -- The Trust may use foreign currency contracts to
facilitate transactions in foreign securities and to manage the Trust's currency
exposure.
Contracts to buy generally are used to acquire exposure to foreign currencies,
while contracts to sell are used to hedge the Trust's investments against
currency fluctuations. Also, a contract to buy or sell can offset a previous
contract. Losses may arise from changes in the value of the foreign currency or
if the counterparties do not perform under the contractual terms.
The U.S. dollar value of forward foreign currency contracts is determined using
forward currency exchange rates supplied by The Wall Street Journal. Purchases
and sales of forward foreign currency contracts having the same settlement date
are offset, and any gain or loss is recognized on the date of offset; otherwise,
the gain or loss is recognized on the settlement date.
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:
Security First Investment Management Corporation (Security Management or
Manager) serves as both investment adviser and manager, and 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' sub-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, 1999, 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.
37
<PAGE> 39
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.
Equity Series and U.S. Government Income Series:
Security Management serves as both investment adviser and manager, and is
entitled by agreement to a monthly fee equal to 1/17 of 1% (equivalent annually
to .7%) of the average daily net asset value of the Equity Series and 1/22 of 1%
(equivalent annually to .55%) of the average daily net asset value of the U.S.
Government Income Series, less compensation payable to the Series' sub-adviser,
Blackrock, Inc. (Blackrock). 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 Blackrock waive their fees.
Blackrock provides investment advice and makes investment decisions for the U.S.
Government Income Series and for the Equity Series. Blackrock is paid an annual
fee of .40% of the average daily net assets of the U.S. Government Income Series
and an annual fee of .55% of the average daily net assets of the Equity Series.
38
<PAGE> 40
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, 1999 were as follows:
<TABLE>
<CAPTION>
T. Rowe Price
Growth U.S.
and Government
Income Equity Income
Bond Series Series Series Series
----------- ------------- ---------- -----------
<S> <C> <C> <C> <C>
U.S. Government Securities:
Purchases $14,387,604 $53,517,905
Sales 8,771,963 55,052,045
Other Investment Securities:
Purchases 1,779,023 $49,444,164 $6,024,087 2,848,245
Sales 682,098 22,006,203 9,314,400 2,375,699
</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, 1999 was the same
for both financial statement and federal income tax purposes. At January 31,
1999, 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 $ 416,371 $ 86,363 $ 330,008
T. Rowe Price Growth and Income Series 82,062,148 17,962,033 64,100,115
Equity Series 15,149,109 2,495,237 12,653,872
U.S. Government Income Series 552,719 43,499 509,220
</TABLE>
39
<PAGE> 41
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, 1999
Bond Series 1,559,003 240,383 51,543 (318,967) 1,531,962
T. Rowe Price Growth and Income Series 1,207,550 331,107 1,164,634 (303,882) 2,399,409
Equity Series 29,050 56,914 1,098,636 (445,186) 739,414
U.S. Government Income Series 208,542 351,815 113,764 (436,094) 238,027
YEAR ENDED JULY 31, 1998
Bond Series 1,821,690 164,017 (270,227) 1,715,480
T. Rowe Price Growth and Income Series 4,129,204 270,050 866,173 (313,712) 4,951,715
Equity Series 797,059 63,241 535,647 (821,153) 574,794
U.S. Government Income Series 1,267,299 286,579 (683,910) 869,968
</TABLE>
NOTE E -- IMPACT OF YEAR 2000
Security Management has conducted a comprehensive review of its computer systems
to identify the systems that could be affected by the Year 2000 issue and has
developed and implemented a plan to resolve the issue. Security Management
currently believes that, with modifications to existing software and converting
to new software and hardware, the Year 2000 issue will not pose significant
operational problems for Security First Management's computer systems. However,
if such modifications and conversions are not completed on a timely basis, the
Year 2000 issue may have a material impact on the operations of Security
Management. Furthermore, even if Security Management completes such
modifications and conversions on a timely basis, there can be no assurance that
the failure by vendors or other third parties to solve the Year 2000 issue will
not have a material impact on the operations of Security Management.
40
<PAGE> 42
SECURITY FIRST TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE F -- 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 REALIZED VALUE AT
BEGINNING INVESTMENT (LOSSES) ON INVESTMENT INVESTMENT CAPITAL END OF TOTAL
OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME GAINS PERIOD RETURN(1)
---------- ----------- ----------- ------------- ----------- -------------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BOND SERIES
Year ended July 31,
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
1998 4.02 .19 .11 .30 (.21) 4.11 7.46
Six months ended
January 31, 1999 4.11 .08 .08 .16 (.18) (.04) 4.05 3.89
T. ROWE PRICE
GROWTH AND
INCOME SERIES
Year ended July 31,
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
1998 16.26 .28 1.27 1.55 (.30) (.95) 16.56 9.53
Six months ended
January 31,1999 16.56 .14 .29 .43 (.29) (1.00) 15.70 2.60
EQUITY SERIES
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
1998 8.18 .07 1.04 1.11 (.08) (.64) 8.57 13.57
Six months ended
January 31, 1999 8.57 .03 1.10 1.13 (.07) (1.44) 8.19 13.19
U.S. GOVERNMENT
INCOME SERIES
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
1998 5.36 .27 .06 .33 (.24) 5.45 6.16
Six months ended
January 31, 1999 5.45 .16 .08 .24 (.31) (.10) 5.28 4.40
</TABLE>
(1) Total return computed after deduction of all series expenses, but before
deduction of actuarial risk charges and other fees of the variable annuity
account.
41
<PAGE> 43
SECURITY FIRST TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE F -- 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,
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
1998 .73 5.78 125 17,934,392
Six months ended
January 31, 1999 .70 5.32 48 23,863,328
T. ROWE PRICE
GROWTH AND INCOME SERIES
Year ended July 31,
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
1998 .57 1.92 11 290,441,528
Six months ended
January 31, 1999 .62 1.88 8 313,074,975
EQUITY SERIES
Year ended July 31,
1994 1.00% 1.38% 121% $ 3,007,073
1995 1.00 1.29 84 7,765,719
1996 1.00 2.24 88 20,701,776
1997 1.00* 1.56* 55 47,571,469
1998 .91* .86* 87 54,803,152
Six months ended
January 31, 1999 .84 .78 11 58,415,617
U.S. GOVERNMENT INCOME SERIES
Year ended July 31,
1994 .70% 3.62% 17% $ 3,424,487
1995 .70 5.19 16 5,996,149
1996 .70 5.38 148 14,888,824
1997 .70** 5.68** 62 28,889,460
1998 .66** 5.53** 103 34,090,919
Six months ended
January 31, 1999 .76 5.22 172 34,266,120
</TABLE>
* The former investment adviser had agreed to waive a portion of its management
and advisory fees. Absent this agreement, the ratio of expenses to average net
assets and the ratio of net investment income to average net assets would have
been .98% and .81% and 1.05% and 1.51% for 1998 and 1997 respectively.
** The former investment adviser had agreed to waive a portion of its management
and advisory fees. Absent this agreement, the ratio of expenses to average net
assets and the ratio of net investment income to average net assets would have
been .90% and 5.27% and 1.04% and 5.34% for 1998 and 1997 respectively.
42
<PAGE> 44
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 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 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, 1999
SECURITY
FIRST
TRUST
Board Of Trustees
Jack R. Borsting Howard H. Kayton
Katherine L. Hensley Lawrence E. Marcus
Security First Trust Bond Series
Security First Trust T. Rowe Price Growth and Income Series
Security First Trust Equity Series
Security First Trust U.S. Government Income Series
|
|