<PAGE> 1
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Dear Contract Owner:
Stocks performed well through the end of June, then gave up some of the gains in
July. For the six months ended July 31, the S&P 500 Stock Index ended with a
respectable return of 4.5%. Conservative stocks did considerably better, as
investors shifted their attention from the small group of large-cap growth
stocks that had previously been in favor to a broader universe of value and
cyclical stocks.
In the fixed income markets, interest rates have moved higher during this six
month period. The 30-year Treasury increased 94 basis points during the last six
months. This was primarily caused by the Federal Reserve rate tightening on June
30, as well as Chairman Greenspan's subsequent cautious Congressional testimony.
As a result, bonds did not perform well during the six months ended July 31,
with the Lehman Aggregate Index dropping 2.5%.
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]
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<PAGE> 2
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SECURITY FIRST TRUST:
T. ROWE PRICE GROWTH
AND INCOME SERIES AND
EQUITY SERIES
EQUITY MARKET OVERVIEW
The U.S. equity market turned in strong positive returns once again during
the second quarter of 1999 and has rebounded significantly since its collapse in
September of 1998, despite higher interest rates. Healthier markets throughout
the world and strong domestic economic news combined to support equities. Early
in the quarter, higher than expected producer and consumer price data, together
with tight labor market conditions and increased demand from foreign markets,
led to inflationary fears. In June, the Federal Reserve boosted interest rates
by 25 basis points and stated that the bias has moved away from higher rates and
is now neutral. The Fed's activity seems to have quelled inflationary fears for
the present time and to have created renewed confidence in both the economy and
in stocks.
The second quarter saw a distinct shift in market favor. Small cap stocks,
which had been underperforming for well over a year, outperformed large cap
stocks. Given the early inflationary fears, investors may have believed that the
significantly lower valuations seen at the small end of the market would provide
some protection. Increased confidence in future economic growth also contributed
to the renewed interest in small caps. Finally, better than expected first
quarter earnings reports by many small companies moved them into a more
favorable light.
Value stocks, which had lagged as investors focused on growth stocks, also
moved into the spotlight. While value's outperformance was most significant at
the larger end of the market, the trend held across all market capitalizations.
Fears of higher interest rates contributed here as well, given that value stocks
traditionally outperform in rising rate environments. Growth stocks,
particularly at the large end of the market, began the quarter with lofty
valuations. Fears of a less favorable economic environment led many investors to
shift their emphasis away from these names, leading to the underperformance.
Cyclical stocks within the value indices, including industrial stocks such as
those in the materials and processing and producer durables sectors, were the
best performers.
EQUITY MARKET OUTLOOK
Despite July's volatility, we were pleasantly surprised by the durability of
the stock market's strength and resilience, particularly in the face of rising
interest rates. Given historically high stock valuations and unrealistic
investor expectations, we would not be surprised to see a bit of turbulence
ahead. However, we believe that a conservative profile will offer good
protection if a significant correction should occur. A strategy emphasizing
investments in sound companies may offer an attractive combination of good
upside potential and relatively limited downside risk.
PORTFOLIO MANAGEMENT: T. ROWE PRICE GROWTH AND INCOME SERIES
During the past few months, we eliminated or reduced positions in several
holdings whose share prices had risen to levels that reduced their valuation
appeal. Georgia-Pacific, for example, benefited from the market's renewed
interest in cyclical stocks. After the stock appreciated in price, we eliminated
it from the portfolio. We cut back on other holdings that had advanced in price,
including Corning, Bestfoods, and American Express.
Among our purchases during the past six months were Campbell, Chubb, Hershey
Foods, Merck, and Washington Mutual. They all share the common characteristics
of providing a good combination of attractive stock valuations, good yields and
dividend growth potential, and high-quality management. The portfolio's top
holdings at the end of July included BP Amoco, Citigroup, Hewlett-Packard,
Motorola, and First Data.
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1
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GROWTH & INCOME SERIES
15 LARGEST HOLDINGS
<TABLE>
<CAPTION>
Percentage of
Security Portfolio
-------- -------------
<S> <C>
BP Amoco PLC. 3.0
Citigroup, Inc. 2.0
Hewlett-Packard Co. 2.0
Yale University 2.0
Motorola, Inc. 1.9
Ciesco Ltd. 1.8
First Data Corp. 1.7
Kimberly-Clark 1.7
Baker Hughes, Inc. 1.7
SBC Communications, Inc. 1.6
Dayton Hudson Corp. 1.6
Allied Signal, Inc. 1.6
Browning Ferris, Inc. 1.5
General Electric Co. 1.5
Travelers Aetna P&C 1.3
----
TOTAL 26.9
====
</TABLE>
Energy and utility stocks together accounted for approximately 17% of
portfolio assets, consumer nondurables 20%, financial stocks 12%, and 16% of
assets were in capital equipment, process industries, and basic materials. The
balance was diversified among several other industries.
GROWTH AND INCOME SERIES
SECTOR DIVERSIFICATION
Capital Equipment 3.1%
Consumer Non-Durables 19.9%
Consumer Cyclicals 0.7%
Consumer Services 12.9%
Transportation 7.2%
Energy 10.9%
Financial 12.5%
Process Industries 13.4%
Technology 6.5%
Utilities 5.8%
Short-Term Securities 7.1%
PORTFOLIO MANAGEMENT:
EQUITY SERIES
The Equity Series' philosophy is to remain relatively sector neutral to the
S&P 500 while focusing on undervalued securities. It appears as though market
participants rediscovered valuation as an important investment parameter in the
second quarter. This is apparent through the decline in the P/E ratios of the
drug and specialty retail sectors of the market. This move was coincident with a
rally in the basic material, energy and mature retailing sectors. We had long
anticipated this market rotation and have based our security selection emphasis
on finding the best-undervalued companies in each sector of the market.
The excess return of the portfolio resulted from strong security selection
during the quarter. The stock selection within the technology area was
particularly strong, as Hewlett Packard was up 48%, IBM up 46%, Texas
Instruments up 45%, and Oracle up 41%.
EQUITY SERIES
15 LARGEST HOLDINGS
<TABLE>
<CAPTION>
Percentage of
Security Portfolio
-------- -------------
<S> <C>
Microsoft Corp. 4.6
General Electric Co. 3.6
IBM 3.5
Intel Corp. 2.5
Cisco Systems, Inc. 2.3
Exxon Corp. 2.2
SBC Communications, Inc. 2.1
Walmart Stores 1.8
AT&T Co. 1.8
Merck & Co. 1.8
Lucent Technologies, Inc. 1.7
American International Group 1.7
Bristol Myers Squibb Co. 1.6
Bankamerica Corp. 1.6
Coca Cola 1.6
----
TOTAL 34.4
====
</TABLE>
As the quarter ended, we were focused on specific opportunities in the basic
material and finance sector, while being cautious in the retail and technology
area.
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2
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We were pleased that the Federal Reserve raised interest rates by only 25
basis points and relieved that they assumed a neutral posture toward future rate
increases. As a result, we saw a market rally on the last day of the quarter and
investors across all market sectors turned their focus back to earnings and
sales and away from interest rate pressures.
EQUITY SERIES
SECTOR DIVERSIFICATION
<TABLE>
<CAPTION>
Consumer Consumer Capital Consumer Process
Non-Durables Transportation Technology Cyclicals Financial Equipment Services Energy Industries Utilities
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
19.0% 3.6% 23.1% 1.4% 16.2% 4.8% 8.6% 8.1% 3.5% 11.7%
</TABLE>
SECURITY FIRST TRUST:
BOND SERIES AND U.S. GOVERNMENT INCOME SERIES
FIXED-INCOME MARKET OVERVIEW
At the end of the last six month reporting period we commented on the
turbulent nature of the fixed-income markets during the previous six months. In
the current reporting period, while there have been no external shocks to the
market, the tone and breadth of the market have continued to reflect investor
caution regarding the direction of interest rates. While inflation -- as
measured by the CPI -- has remained in check, the surprising strength in the
domestic economy coupled with signs of recovery in Asian and European economies
has roiled the fixed-income markets. This has been primarily a function of the
Federal Reserve's 25 basis point increase in the discount rate on June 30, and
the subsequent cautious testimony of Chairman Greenspan in his semi-annual
Humphrey/Hawkins presentation. Thus, during this period interest rates have
moved steadily higher.
Fears of a Fed tightening, the Y2K effect, and continuing stock repurchase
programs prompted an avalanche of corporate and Agency bond offerings that
spanned all credit ratings and the scope of the yield curve. Consequently, in
the face of supply and uncertainty, the yield spreads of all fixed-income
sectors to Treasuries widened during the period and in some cases spreads
actually exceeded the levels of last September.
FIXED-INCOME MARKET OUTLOOK
In every cloud there is a silver lining, and in this case, it is our view
that true values are starting to emerge. The market has already discounted
another rate increase at the August FOMC meeting. Even if inflation were to
increase, no one expects a precipitous change, but rather a move to more
historic levels. Thus with interest rates today near 6.25% and highly attractive
spreads available, we continue to look for good values. Additionally, it is our
sense, that we are closer to a cyclical high in rates as opposed to being on the
verge of a move even more sharply upward.
PORTFOLIO MANAGEMENT:
BOND SERIES
This was a challenging environment for any investor and given the broad
latitude allowed by your guidelines, we believe we have delivered competitive
results.
In the broadest sense the portfolio activity reflected a continuation of the
same strategy that was discussed in our last report. For much of the period --
until mid July -- we remained cautious in our duration strategy while seeking to
capture incremental yield through diversification.
We continued to reduce our exposure to Treasuries, which have benefited from
reduced supply. We also modestly cut our Agency position. While Agencies
remained attractive, we were able to identify better long-term opportunities in
other areas including high yield and international issues. We added about 1% to
our position in Inflation Indexed Notes, which have performed very well in a
difficult market. We eliminated commercial mortgage-backed issues when spreads
on these issues tightened and also eliminated our position in CMOs to fund other
purchases.
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3
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In particular we almost doubled our commitment to high yield issues. We are
broadly diversified in this sector which continues to offer excellent value, and
have been able to steadily build our commitment. In a similar fashion we
increased our international commitment based upon our belief that the dollar is
likely to move sideways to downward in the coming months.
BOND SERIES
SECTOR DIVERSIFICATION
<TABLE>
<CAPTION>
Corporate Foreign Federal U.S. Government
Bonds Governments Agencies Obligations
<S> <C> <C> <C>
28.1% 6.2% 41.2% 24.5%
</TABLE>
We continued to maintain a yield curve structure that will benefit returns if
the yield curve steepens. The current relationship of ten and thirty year yields
is very narrow and likely to widen and become more normal in coming months.
In mid-July as rates stabilized we extended duration by about one half year.
Looking forward, we have a generally neutral market position, a robust yield and
a conservative yield curve posture. As the markets stabilize and supply drops
off, we should be well positioned to deliver attractive absolute and relative
returns.
PORTFOLIO MANAGEMENT:
U.S. GOVERNMENT INCOME SERIES
The portfolio ended the quarter slightly long in duration versus the
benchmark; however, we outperformed the benchmark by 40 basis points net of
fees. The Treasury allocation decreased from 37% to 32% as we continue to extend
duration via longer maturity bonds. As a result, mortgages, especially CMOs, and
other spread sectors were pared accordingly. We continued to keep our commercial
mortgage-backed securities holdings steady at 2% of the portfolio.
U.S. GOVERNMENT INCOME SERIES
SECTOR DIVERSIFICATION
<TABLE>
<CAPTION>
Federal Corporate U.S. Government
Agencies Bonds Obligations
<S> <C> <C>
59.7% 8.7% 31.6%
</TABLE>
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4
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PERFORMANCE OF SECURITY FIRST TRUST GROWTH AND INCOME SERIES, BOND SERIES,
EQUITY SERIES AND U.S. GOVERNMENT INCOME SERIES
The following are the average annual and total returns for each series for
the period ending July 31, 1999, 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
Series(1)(2) 17.62% 22.70% 20.83% 13.17%
Bond Series(1)(2) 0.78% 6.22% 6.42% 6.57%
Equity Series(1) 18.69% 25.93% 20.45% N/A*
U.S. Government Income(1) 0.77% 5.15% 5.50% N/A*
Consumer Price Index 2.13% 2.00% 2.35% 2.97%
- --------------------------------------------------------------------------------------
</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
Series(1)(2) 17.62% 84.75% 157.51% 244.74%
Bond Series(1)(2) 0.78% 19.85% 36.50% 89.04%
Equity Series(1) 18.69% 99.69% 153.49% N/A*
U.S. Government Income(1) 0.77% 16.25% 30.72% N/A*
Consumer Price Index 2.13% 6.12% 12.33% 33.94%
</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 total returns while repayments of such reimbursements reduces these
returns.
================================================================================
5
<PAGE> 7
The following graphs set forth the historical performance of each series as
compared to a stated market index for the periods ended July 31:
Comparison of Change in Value of $10,000 Investment in Security First Trust T.
Rowe Price Growth and Income Series and Standard and Poors 500 Index Assuming
Dividends and Distributions are Reinvested.
[GRAPH] PLOT POINT MISSING
The performance indicated here may not be indicative of future performance.
Comparison of Change in Value of $10,000 Investment in Security First Trust Bond
Series, Lehman Government Bonds Index, and the Lehman Aggregate Bond Index
Assuming Dividends and Distributions are Reinvested.
[GRAPH] PLOT POINT MISSING
The performance indicated here may not be indicative of future performance.
Comparison of Change in Value of $10,000 Investment in Security First Trust
Equity Series and Standard and Poors 500 Index Assuming Dividends and
Distributions are Reinvested.
[GRAPH] PLOY POINT MISSING
The performance indicated here may not be indicative of future performance.
*The Series commenced operations on 5/19/93.
Comparison of Change in Value of $10,000 Investment in Security First Trust U.S.
Government Income Series and Lehman Government and Intermediate Index Assuming
Dividends and Distributions are Reinvested.
[GRAPH] PLOT POINT MISSING
The performance indicated here may not be indicative of future performance.
*The Series commenced operations on 5/19/93.
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6
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SECURITY FIRST TRUST T. ROWE PRICE GROWTH AND INCOME SERIES
The graph and Per Share Data Table below illustrate the growth in per share
value for the period ending July 31, 1999, of one share of the Security First
Trust T. Rowe Price Growth and Income Series purchased on August 1, 1979, at a
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 POINT MISSING
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>
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
7/1999 18.01 -- 98.01 +13.9 +1833.1
</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 July 31, 1999, 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] PLOT POINT MISSING
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>
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
7/1999 3.93 -- 15.52 -2.5 +397.4
</TABLE>
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7
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SECURITY FIRST TRUST
EQUITY SERIES
The Per Share Data Table below illustrates the growth in per share value for
the period ending July 31, 1999, 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
7/1999 8.54 -- 12.70 +8.3 +154.0
</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 July 31, 1999, 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
7/1999 5.10 -- 6.51 -2.8 +30.2
</TABLE>
+change from 5-19-93 to 12-31-93
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SECURITY FIRST TRUST
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 1999
<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 - $24,705,369; Growth
and Income Series - $267,445,522;
Equity Series - $44,265,252;
U.S. Government Income Series -
$32,756,552) $ 23,948,048 $367,297,873 $57,999,389 $ 31,760,918
Cash 506,915 1,375,426 354,162 145,855
Interest receivable 298,061 4,714 1,092 434,814
Dividends receivable 466,455 61,807
Receivable for securities sold 450 87,724 2,315
Receivable for capital shares purchased 153,829
Unrealized appreciation on foreign
currency contracts 3,612
------------- ------------ ----------- ------------
24,757,086 369,298,297 58,504,174 32,343,902
LIABILITIES
Payable for securities purchased 102,164
Accrued expenses 13,411 75,982 14,673 13,303
Payable for capital shares redeemed 18,550 45,878 6,795
Payable to investment adviser - Note B 7,156 108,701 27,668 10,579
Payable for directors' fees 265 2,429 629 676
------------- ------------ ----------- ------------
39,382 187,112 191,012 31,353
NET ASSETS
Capital shares (authorized 100,000,000
shares of $.01 par value for each series) 24,992,823 254,632,508 43,017,733 32,775,232
Undistributed net investment income 765,101 3,364,585 210,605 1,057,930
Undistributed net realized gain (loss) (286,511) 11,261,741 1,350,687 (524,979)
Net unrealized appreciation (depreciation)
of investments (753,709) 99,852,351 13,734,137 (995,634)
------------- ------------ ----------- ------------
NET ASSETS $ 24,717,704 $369,111,185 $58,313,162 $ 32,312,549
============= ============ =========== ============
Capital shares outstanding 6,284,950 20,495,939 6,827,497 6,336,073
Net asset value per share $ 3.93 $ 18.01 $ 8.54 $ 5.10
</TABLE>
The accompanying notes are an integral part of these financial statements.
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SECURITY FIRST TRUST
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JULY 31, 1999
<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 $ 6,098,773 $ 820,370
Interest $ 1,369,651 1,517,513 25,097 $ 2,040,305
----------- ----------- ---------- -----------
1,369,651 7,616,286 845,467 2,040,305
EXPENSES
Custodian fees 15,767 52,929 16,873 16,317
Adviser fees - Note B 78,847 1,118,247 306,436 134,661
Management fees - Note B 33,791 479,726 83,574 50,498
Printing expenses 7,749 130,177 17,860 18,664
Audit fees 5,583 6,727 5,606 4,465
Insurance expenses 2,269 34,154 5,758 3,293
Directors' fees and expenses 1,856 24,818 4,421 3,117
Miscellaneous expenses 894 5,126 6,330 5,923
----------- ----------- ---------- -----------
146,756 1,851,904 446,858 236,938
----------- ----------- ---------- -----------
NET INVESTMENT INCOME 1,222,895 5,764,382 398,609 1,803,367
NET REALIZED AND UNREALIZED GAINS
(LOSSES) ON INVESTMENTS - Notes A and C
Net realized gain (loss) on sale of investments (198,084) 17,734,362 1,354,678 (13,673)
Net unrealized appreciation (depreciation) of:
Investments during the year (971,834) 31,098,623 7,802,709 (1,476,045)
Assets denominated in foreign currencies 3,612
----------- ----------- ---------- -----------
Net gain (loss) on investments (1,166,306) 48,832,985 9,157,387 (1,489,718)
----------- ----------- ---------- -----------
INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $ 56,589 $54,597,367 $9,555,996 $ 313,649
=========== =========== ========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
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10
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SECURITY FIRST TRUST
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED JULY 31, 1999
<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 $ 1,222,895 $ 5,764,382 $ 398,609 $ 1,803,367
Net realized gain (loss) on sale
of investments (198,084) 17,734,362 1,354,678 (13,673)
Net unrealized appreciation (depreciation)
during the period (968,222) 31,098,623 7,802,709 (1,476,045)
------------ ------------- ------------ ------------
INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS 56,589 54,597,367 9,555,996 313,649
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 207,719 18,412,869 8,668,236 597,259
Sales of capital shares 9,504,353 37,641,014 793,709 2,362,361
Redemptions of capital shares (2,777,630) (13,568,724) (6,839,695) (4,454,380)
------------ ------------- ------------ ------------
INCREASE IN NET ASSETS FROM
CAPITAL SHARE TRANSACTIONS 7,903,184 47,719,955 3,071,305 352,267
------------ ------------- ------------ ------------
TOTAL INCREASE IN NET ASSETS 6,783,312 78,669,657 3,510,010
TOTAL DECREASE IN NET ASSETS (1,778,370)
NET ASSETS
BEGINNING OF YEAR 17,934,392 290,441,528 54,803,152 34,090,919
------------ ------------- ------------ ------------
END OF YEAR (including undistributed net
investment income: Bond Series - $765,101;
Growth and Income Series - $3,364,585;
Equity Series - $210,605; U.S. Government
Income Series - $1,057,930) $ 24,717,704 $ 369,111,185 $ 58,313,162 $ 32,312,549
============ ============= ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
================================================================================
11
<PAGE> 13
================================================================================
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.
================================================================================
12
<PAGE> 14
================================================================================
SECURITY FIRST TRUST SCHEDULE I
BOND SERIES
PORTFOLIO OF INVESTMENTS
JULY 31, 1999
<TABLE>
<CAPTION>
Percentage
of Market
Value of Market
Fixed Maturities Portfolio Principal Value
- ---------------- ---------- --------- --------
<S> <C> <C> <C>
CORPORATE NOTES 28.1%
Aerospace & Defense: 1.3%
Boeing Co., 8.75%, 08/15/21 $ 50,000 $ 56,500
Lockheed Martin Corp., 7.75% , 05/01/26 90,000 88,988
Tyco International Group, 6.375%, 06/15/05 165,000 159,638
--------
305,126
Automobiles & Related: 1.4%
Borg Warner Automotive, Inc., 6.5%, 02/15/09 235,000 220,606
GMAC Corporate Bond., 9.625%, 12/15/01 100,000 106,625
--------
327,231
Banking: 2.3%
Banc One Corp., 7.75%, 07/15/25 200,000 206,250
Chase Manhattan Corp., 6.00%, 11/01/05 250,000 238,125
HSBC Fin Nederland Bank, 7.40%, 04/15/03 100,000 101,250
--------
545,625
Building Materials & Garden Supplies: 0.3%
NBTY, Inc., 8.625%, 09/15/07 100,000 85,125
Computer & Office Equipment: 1.4%
Hydrochem Industrial Svcs., Inc., 10.375%, 08/01/07 85,000 74,694
IBM Corp., 5.375%, 02/01/09 235,000 212,088
Printpack, Inc., 10.625%, 08/15/06 60,000 57,225
--------
344,007
Chemicals and Allied Products: 1.9%
Fort James Corp., 6.875%, 09/15/07 245,000 242,550
Rohm & Haas Co., 6.95%, 07/15/04 200,000 201,250
--------
443,800
</TABLE>
The accompanying notes are an integral part of these financial statements.
================================================================================
13
<PAGE> 15
================================================================================
SECURITY FIRST TRUST SCHEDULE I
BOND SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED) I
JULY 31, 1999
<TABLE>
<CAPTION>
Percentage
of Market
Value of Market
Fixed Maturities Portfolio Principal Value
- ---------------- ---------- ---------- ----------
<S> <C> <C> <C>
CORPORATE NOTES (Continued)
Electric Utilities: 1.8%
CMS Energy Corp., 8.00%, 07/01/11 $ 225,000 $ 225,844
National Rural Utilities, 6.50%, 09/15/02 100,000 100,000
Public Service Electric & Gas Co., 6.25%, 01/01/07 100,000 95,875
----------
421,719
Finance & Credit: 4.9%
G.E. Capital Mortgage Svcs, Inc., 6.25%, 12/25/28 248,770 174,139
G.E. Capital Mortgage Svcs, Inc., 6.50%, 04/25/29 308,980 220,148
Northwest Asset Corp., 6.75%, 05/25/29 249,798 189,269
Standard Credit Card, 7.25%, 04/07/08 100,000 101,875
Salomon Smith Barney, Inc., 7.375%, 05/15/07 300,000 300,000
Texaco Capital Inc., 5.5%, 01/15/09 220,000 198,825
----------
1,184,256
Food & Beverages: 1.7%
Archer Daniels Midland Co., 6.625%, 05/01/29 120,000 108,900
Hershey Foods Corp., 6.95%, 08/15/12 235,000 237,350
Southern Foods Group, 9.875% , 09/01/07 60,000 61,875
----------
408,125
Forest Products: 0.8%
Noranda Forest, Inc., 7.50%, 07/15/03 100,000 99,750
Stone Container Corp.,12.25%, 04/01/02 80,000 80,400
----------
180,150
Health Services: 0.7%
ICN Pharmaceuticals, Inc., 8.75%, 11/15/08 100,000 100,375
Tenet Healthcare Corp., 7.875%, 01/15/03 70,000 68,338
----------
168,713
</TABLE>
The accompanying notes are an integral part of these financial statements.
================================================================================
14
<PAGE> 16
================================================================================
SECURITY FIRST TRUST SCHEDULE I
BOND SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JULY 31, 1999
<TABLE>
<CAPTION>
Percentage
of Market
Value of Market
Fixed Maturities Portfolio Principal Value
- ---------------- ---------- ---------- ----------
<S> <C> <C> <C>
CORPORATE NOTES (Continued)
Insurance Carriers: 1.2%
Conseco, Inc., 6.40%, 06/15/01 $ 200,000 $ 195,750
Prudential Insurance Co. America, 6.875%, 04/15/03 100,000 99,625
----------
295,375
Media & Communications: 0.6%
Liberty Media Corp., 7.875%, 07/15/09 150,000 149,813
Miscellaneous Business Services: 0.4%
Allied Waste North America, 7.875%, 01/0/09 115,000 106,375
Miscellaneous Consumer Products: 2.3%
French Fragrances, Inc., 10.375% , 05/15/07 60,000 60,900
Hedstrom Corp., 10.00%, 06/01/2007 70,000 62,912
Home Products International, Inc., 9.625%, 05/15/08 70,000 64,925
Jones Apparel Group, Inc., 7.875%, 06/15/06 230,000 229,138
Kinder Care Learning Centers, 9.50%, 02/15/09 70,000 67,375
S C International Service, Inc., 9.25%, 09/01/07 60,000 61,875
----------
547,125
Oil and Gas Extraction: 0.4%
Quaker State Corp., 6.63%, 10/15/05 100,000 98,875
Building & Real Estate: 0.4%
Webb Del Corp., 10.25%, 02/15/10 100,000 100,250
Telephone Communication: 2.4%
GTE Corp., 6.94%, 4/15/28 100,000 94,125
Global Crossing Holdings Ltd., 9.625%, 05/15/08 100,000 104,500
Telecom Argentina Stetfrances, 9.75%, 07/12/01 200,000 198,000
U.S. West Communications, 7.50%, 06/15/23 80,000 75,400
Worldcom, Inc., 6.95%, 08/15/28 100,000 93,125
----------
565,150
</TABLE>
The accompanying notes are an integral part of these financial statements.
================================================================================
15
<PAGE> 17
================================================================================
SECURITY FIRST TRUST SCHEDULE I
BOND SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JULY 31, 1999
<TABLE>
<CAPTION>
Percentage
of Market
Value of Market
Fixed Maturities Portfolio Principal Value
- ---------------- ---------- ---------- ----------
<S> <C> <C> <C>
CORPORATE NOTES (Continued)
Textile Mill Products: 0.4%
GFSI, Inc., 9.625%, 03/01/07 $ 45,000 $ 39,544
Polymer Group, Inc., 9.00%, 07/01/07 60,000 58,800
----------
98,344
Transportation: 1.5%
Newport News Shipbuilding, Inc., 9.25%, 12/01/06 60,000 62,850
Norfolk Southern Corp., 7.8%, 05/15/27 100,000 102,500
Sea Containers Ltd., 7.875%, 02/15/08 200,000 187,000
----------
352,350
----------
TOTAL CORPORATE NOTES
(COST $6,984,143) 6,727,534
FEDERAL AGENCIES 41.2%
Federal Home Loan Mortgage Corp.: 0.2%
9.50%, 04/01/19 26,722 28,559
9.00%, 06/01/19 13,651 14,521
----------
43,080
Federal National Mortgage Assn.: 11.8%
5.75%, 04/15/03 910,000 891,836
6.92%, 03/19/07 75,000 76,412
6.21%, 11/07/07 1,205,000 1,175,273
7.00%, 09/01/10 195,217 194,545
7.00%, 05/01/12 146,912 146,407
6.50%, 03/01/13 332,982 325,384
7.50%, 08/25/21 9,069 9,094
----------
2,818,951
</TABLE>
The accompanying notes are an integral part of these financial statements.
================================================================================
16
<PAGE> 18
================================================================================
SECURITY FIRST TRUST SCHEDULE I
BOND SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JULY 31, 1999
<TABLE>
<CAPTION>
Percentage
of Market
Value of Market
Fixed Maturities Portfolio Principal Value
- ---------------- ---------- ---------- ----------
<S> <C> <C> <C>
FEDERAL AGENCIES (Continued)
Government National Mortgage Association: 29.2%
9.00%, 04/15/09 $ 2,335 $ 2,457
9.00%, 05/15/09 12,868 13,540
9.00%, 05/15/09 3,721 3,915
9.00%, 05/15/09 3,917 4,121
9.00%, 05/15/09 1,137 1,196
9.00%, 05/15/09 1,894 1,993
9.00%, 05/15/09 8,404 8,843
11.25%, 09/15/15 79,903 88,193
11.50%, 11/15/15 42,216 47,334
10.00%, 06/15/17 21,774 23,713
9.25%, 07/15/17 7,168 7,611
10.00%, 11/15/17 7,765 8,456
11.50%, 02/15/18 3,296 3,696
10.00%, 03/15/19 33,662 36,660
10.00%, 03/15/20 13,858 15,093
9.25%, 05/15/20 29,860 31,707
9.25%, 05/15/21 88,272 93,734
9.25%, 06/15/21 21,385 22,708
7.50%, 06/15/23 91,471 91,413
7.00%, 08/15/23 87,031 84,856
7.50%, 10/15/23 141,552 141,463
7.00%, 01/15/24 141,441 137,905
7.00%, 03/15/24 93,591 91,251
7.00%, 01/15/25 399,796 390,049
9.50%, 01/15/25 27,162 29,258
9.50%, 05/15/25 8,845 9,528
7.00%, 02/15/26 507,990 495,290
7.50%, 09/15/26 183,001 182,886
8.00%, 05/15/27 229,977 235,078
6.50%, 04/15/28 780,602 741,322
7.00%, 05/15/28 373,599 364,259
7.00%, 06/15/28 333,639 325,298
</TABLE>
The accompanying notes are an integral part of these financial statements.
================================================================================
17
<PAGE> 19
================================================================================
SECURITY FIRST TRUST SCHEDULE I
BOND SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JULY 31, 1999
<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)
6.50%, 10/15/28 $1,871,641 $1,777,460
6.50%, 11/15/28 539,506 512,358
6.50%, 03/15/29 815,283 774,258
8.00%, 07/15/29 209,979 214,633
----------
7,013,535
TOTAL FEDERAL AGENCIES
(COST $ 10,247,597) 9,875,566
U.S. GOVERNMENT OBLIGATIONS 24.5%
U.S. Treasury Bond: 4.4%
6.75%, 08/15/26 1,000,000 1,058,040
U.S. Treasury Notes: 20.1%
6.375%, 08/15/02 115,000 116,845
5.375%, 06/30/03 1,290,000 1,269,218
3.375%, 01/15/07 933,619 894,230
5.625%, 05/15/08 2,605,000 2,530,132
----------
4,810,425
TOTAL U.S. GOVERNMENT OBLIGATIONS
(COST $5,980,437) 5,868,465
</TABLE>
The accompanying notes are an integral part of these financial statements.
================================================================================
18
<PAGE> 20
================================================================================
SECURITY FIRST TRUST SCHEDULE I
BOND SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JULY 31, 1999
<TABLE>
<CAPTION>
Percentage
of Market
Value of Market
Fixed Maturities Portfolio Principal Value
- ---------------- ---------- ---------- ----------
<S> <C> <C> <C>
FOREIGN GOVERNMENT OBLIGATIONS 6.2%
Canada Government Bond, 6.00%, 06/01/08 $ 538,961 $ 562,142
New South Wales Treasury Corp., 6.50%, 05/01/06 932,148 914,341
----------
TOTAL FOREIGN GOVERNMENT OBLIGATIONS
(COST $1,493,192) 1,476,483
----------
TOTAL INVESTMENTS
(COST $ 24,705,369) 100.0% 23,948,048
Forward Foreign Currency Contracts
CONTRACT TO SELL
800,000 Aussie Dollars (Settlement Date 08/23/99;
Receivable amt. $521,680; Market value $520,000) 1,680
CONTRACT TO BUY
120,000 Euro Dollars (Settlement Date 09/10/99;
Payable amt. $126,744; Market value $128,676) 1,932
----------
3,612
Other assets less liabilities 766,044
----------
NET ASSETS $24,717,704
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
================================================================================
19
<PAGE> 21
================================================================================
SECURITY FIRST TRUST SCHEDULE I
T. ROWE PRICE GROWTH AND INCOME SERIES
PORTFOLIO OF INVESTMENTS
JULY 31, 1999
<TABLE>
<CAPTION>
Percentage
of Market
Value of No. of Market
Equity Securities Portfolio Shares Value
- ----------------- ---------- ---------- ----------
<S> <C> <C> <C>
CAPITAL EQUIPMENT 3.1%
Electrical Equipment: 3.1%
General Electric Co. 50,000 $5,450,000
Honeywell, Inc. 30,000 3,594,375
Hubbell, Inc. Class B 60,000 2,475,000
----------
11,519,375
CONSUMER CYCLICALS 0.7%
Automobiles & Related: 0.7%
Genuine Parts Co. 80,000 2,485,000
CONSUMER NONDURABLES 19.9%
Food & Beverages: 6.9%
Anheuser-Busch Company, Inc. 50,000 3,946,875
Campbell Soup Co. 100,000 4,400,000
General Mills, Inc. 54,000 4,471,875
Hershey Foods, Inc. 40,000 2,320,000
McCormick & Co. 100,000 3,306,250
Pepsico, Inc. 50,000 1,956,250
Quaker Oats Company 30,000 2,041,875
Ralston-Ralston Purina Group 100,000 2,993,750
----------
25,436,875
Health Services: 0.6%
Baxter International, Inc. 30,000 2,060,625
</TABLE>
The accompanying notes are an integral part of these financial statements.
================================================================================
20
<PAGE> 22
================================================================================
SECURITY FIRST TRUST SCHEDULE I
T. ROWE PRICE GROWTH AND INCOME SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JULY 31, 1999
<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: 7.2%
Colgate Palmolive Co. 60,000 $2,962,500
Eastman Kodak 50,000 3,456,250
Fortune Brands, Inc. 92,300 3,645,850
Int'l. Flavors & Fragrance 100,000 4,531,250
Owens Corning Fiber 70,000 2,161,250
Philip Morris Companies, Inc. 100,000 3,725,000
Stanley Works 100,000 2,793,750
UST, Inc. 100,000 3,100,000
----------
26,375,850
Pharmaceuticals: 5.2%
Abbott Laboratories 100,000 4,293,750
American Home Products 60,000 3,060,000
Johnson & Johnson 45,000 4,145,625
Merck & Co. 27,500 1,861,406
Pharmacia-Upjohn, Inc. 36,250 1,950,703
Schering-Plough Corp. 80,000 3,920,000
----------
19,231,484
CONSUMER SERVICES 12.9%
Entertainment & Leisure: 0.8%
Hilton Hotels Corp. 225,000 2,939,063
General Merchandise Stores: 5.2%
Dayton Hudson Corp. 90,000 5,821,875
J.C. Penney, Inc. 50,000 2,187,500
Neiman-Marcus Group, Inc.* 90,000 2,250,000
Rite Aid Corp. 150,000 3,178,125
Toys R Us, Inc.* 200,000 3,250,000
Tupperware Corp. 100,000 2,362,500
----------
19,050,000
</TABLE>
* Non-income producing
The accompanying notes are an integral part of these financial statements.
================================================================================
21
<PAGE> 23
================================================================================
SECURITY FIRST TRUST SCHEDULE I
T. ROWE PRICE GROWTH AND INCOME SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JULY 31, 1999
<TABLE>
<CAPTION>
Percentage
of Market
Value of No. of Market
Equity Securities Portfolio Shares Value
- ----------------- ---------- ---------- ----------
<S> <C> <C> <C>
CONSUMER SERVICES (Continued)
Media & Communications: 3.4%
CBS Corp. 75,000 $3,295,313
Walt Disney Co. 100,000 2,762,500
Knight Ridder, Inc. 60,000 3,217,500
Meredith Corp. 60,000 2,156,250
Readers Digest Assn., Inc. 35,000 1,102,500
----------
12,534,063
Miscellaneous Business Services: 1.9%
Browning Ferris, Inc. 125,000 5,609,375
Waste Management, Inc. 50,750 1,297,297
----------
6,906,672
Building & Real Estate: 1.6%
Crescent Real Estate Equity Co. 90,000 1,980,000
Starwood Hotel & Resort Trust 150,000 4,050,000
----------
6,030,000
ENERGY 10.9%
Oil And Gas Extraction: 10.9%
Amerada Hess Corp. 55,000 3,255,313
Atlantic Richfield Co. 30,000 2,701,875
BP Amoco PLC 96,166 11,143,235
Baker Hughes, Inc. 175,000 6,092,188
Chevron Corp. 40,000 3,650,000
Exxon Corp. 36,000 2,857,500
Mobil Corp. 16,000 1,636,000
Pioneer Natural Resources Co. 125,000 1,453,121
Royal Dutch Petroleum Co. ADR 40,000 2,440,000
Texaco, Inc. 30,600 1,906,763
Unocal Corp. 75,000 2,976,563
----------
40,112,558
</TABLE>
The accompanying notes are an integral part of these financial statements.
================================================================================
22
<PAGE> 24
================================================================================
SECURITY FIRST TRUST SCHEDULE I
T. ROWE PRICE GROWTH AND INCOME SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JULY 31, 1999
<TABLE>
<CAPTION>
Percentage
of Market
Value of No. of Market
Equity Securities Portfolio Shares Value
- ----------------- ---------- ---------- ----------
<S> <C> <C> <C>
FINANCIAL 12.5%
Banking: 3.7%
Chase Manhattan Corp. 30,000 $2,306,250
Mellon Bank Corp. 100,000 3,375,000
National City Corp. 40,000 1,190,000
Washington Mutual, Inc. 120,000 4,117,500
Wells Fargo & Co. 66,660 2,599,740
----------
13,588,490
Federal Agencies: 0.9%
Freddie Mac 60,000 3,442,500
Financial Services: 4.7%
American Express Co. 25,000 3,293,750
H&R Block, Inc. 60,000 3,277,500
Citigroup, Inc. 165,547 7,377,188
J.P. Morgan & Co., Inc. 25,000 3,196,875
----------
17,145,313
Insurance Carriers: 3.2%
Chubb Corp. 27,800 1,662,788
Loews Corp. 30,000 2,103,750
St. Paul Companies, Inc. 105,136 3,272,358
Travelers Aetna P&C 120,000 4,740,000
----------
11,778,896
PROCESS INDUSTRIES 13.4%
Chemicals And Allied Products: 8.0%
Dow Chemical Co. 30,000 3,720,000
Dupont Co. 50,000 3,603,125
Fort James Corp. 125,000 4,562,500
Great Lakes Chemical Corp. 60,000 2,655,000
Hercules, Inc. 120,000 4,185,000
</TABLE>
The accompanying notes are an integral part of these financial statements.
================================================================================
23
<PAGE> 25
================================================================================
SECURITY FIRST TRUST SCHEDULE I
T. ROWE PRICE GROWTH AND INCOME SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JULY 31, 1999
<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)
Imperial Chemical ADR 100,000 $4,612,500
Minnesota Mining & Manufacturing Co. 38,300 3,368,006
Pall Corp. 125,000 2,632,813
----------
29,338,944
Forest Products: 0.5%
Weyerhaeuser Co. 30,000 1,940,625
Metal Mining: 2.6%
Inco Ltd. 175,000 3,106,250
Newmont Mining Corp. 75,000 1,387,500
Phelps Dodge Corp. 50,000 2,965,625
Reynolds Metals Co. 40,000 2,265,000
----------
9,724,375
Paper And Allied Products: 2.3%
Kimberly-Clark 100,000 6,100,000
International Paper Co. 47,278 2,417,088
----------
8,517,088
TECHNOLOGY 6.5%
Computer and Office Equipment: 6.5%
Computer Associates International, Inc. 75,000 3,440,625
First Data Corp. 125,000 6,195,313
Hewlett-Packard Co. 70,000 7,328,125
Motorola, Inc. 75,000 6,843,750
----------
23,807,813
</TABLE>
The accompanying notes are an integral part of these financial statements.
================================================================================
24
<PAGE> 26
================================================================================
SECURITY FIRST TRUST SCHEDULE I
T. ROWE PRICE GROWTH AND INCOME SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JULY 31, 1999
<TABLE>
<CAPTION>
Percentage
of Market
Value of No. of Market
Equity Securities Portfolio Shares Value
- ----------------- ---------- ---------- ----------
<S> <C> <C> <C>
TRANSPORTATION 7.2%
Aerospace and Defense: 4.4%
Allied Signal, Inc. 90,000 $5,821,875
Boeing Company 100,000 4,537,500
Lockheed Martin Corp. 60,000 2,088,750
Raytheon Co CL B 50,000 3,515,625
----------
15,963,750
Railroad Transportation: 2.8%
Burlington Northern Santa Fe 75,000 2,400,000
Norfolk Southern Corp. 140,000 4,095,000
Union Pacific Corp. 70,000 3,801,875
----------
10,296,875
UTILITIES 5.8%
Telephone Communication: 2.9%
AT&T Co. 30,000 1,558,125
GTE Corp. 40,000 2,947,500
SBC Communications, Inc. 104,865 5,996,967
----------
10,502,592
Utility Holding Companies: 2.9%
Edison International 50,000 1,265,625
GPU 16,000 614,000
Niagara Mohawk Holdings, Inc.* 137,500 2,165,625
Peco Energy Co. 50,000 2,118,750
Pacificorp 70,000 1,277,500
Unicom Corp. 75,000 2,943,750
----------
10,385,250
----------
TOTAL EQUITY SECURITIES
(COST $241,262,283) 341,114,076
</TABLE>
* Non-income producing
The accompanying notes are an integral part of these financial statements.
================================================================================
25
<PAGE> 27
================================================================================
SECURITY FIRST TRUST SCHEDULE I
T. ROWE PRICE GROWTH AND INCOME SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JULY 31, 1999
<TABLE>
<CAPTION>
Percentage
of Market
Value of Market
Short-Term Investments Portfolio Principal Value
- ---------------------- ---------- ---------- ----------
<S> <C> <C> <C>
SHORT-TERM INVESTMENTS 7.1%
Commercial Paper: 7.1%
Abbey National North America, 4.80%, 08/09/1999 $3,720,000 $3,715,506
Ciesco Ltd., 5.10%, 08/17/1999 6,565,000 6,549,133
Commonwealth Bank/Australia, 4.80%, 08/10/1999 3,000,000 2,995,929
Duke University, 5.17%, 10/06/1999 1,000,000 990,780
General Electric Capital Corp., 4.81%, 08/11/1999 295,000 294,561
Internationale Nederlanden, 5.14%, 10/07/1999 275,000 272,457
Motiva Enterprises LLC, 5.10%, 09/23/1999 2,000,000 1,984,696
Repsol International Finance, 4.82%, 08/12/1999 1,600,000 1,597,394
Shell Oil Co., 5.15%, 08/02/1999 530,000 529,849
Yale University, 5.11%, 09/09/1999 7,295,000 7,253,492
----------
(COST $26,183,239) 26,183,797
----------
TOTAL INVESTMENTS
(COST $267,445,522) 100.0% 367,297,873
Other assets less liabilities 1,813,312
----------
NET ASSETS $369,111,185
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
================================================================================
26
<PAGE> 28
================================================================================
SECURITY FIRST TRUST SCHEDULE I
EQUITY SERIES
PORTFOLIO OF INVESTMENTS
JULY 31, 1999
<TABLE>
<CAPTION>
Percentage
of Market
Value of No. of Market
Equity Securities Portfolio Shares Value
- ----------------- ---------- ---------- ----------
<S> <C> <C> <C>
CAPITAL EQUIPMENT 4.8%
Electrical Equipment: 4.3%
General Electric Co. 19,200 $2,092,800
Emerson Electric Co. 6,400 382,000
----------
2,474,800
Machinery: 0.5%
Illinois Tool Works, Inc. 4,100 304,681
CONSUMER NONDURABLES 19.0%
Food & Beverages: 3.8%
Anheuser-Busch Company, Inc. 4,700 371,006
Best Foods 10,200 497,250
Coca Cola 15,100 910,719
Pepsico, Inc. 10,800 422,550
----------
2,201,525
Health Services: 1.4%
Columbia/HCA Health System, Inc. 10,000 222,500
Medtronic, Inc. 3,700 266,631
United Healthcare Corp. 4,900 298,900
----------
788,031
Miscellaneous Consumer Products: 5.1%
Colgate Palmolive Co. 8,800 434,500
Gillette Co. 6,000 262,875
Heinz (H J) Co. 6,100 287,463
McDonalds Corp. 12,200 508,587
Philip Morris Companies, Inc. 16,700 622,075
Proctor & Gamble Co. 9,500 859,750
----------
2,975,250
</TABLE>
The accompanying notes are an integral part of these financial statements.
================================================================================
27
<PAGE> 29
================================================================================
SECURITY FIRST TRUST SCHEDULE I
EQUITY SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JULY 31, 1999
<TABLE>
<CAPTION>
Percentage
of Market
Value of No. of Market
Equity Securities Portfolio Shares Value
- ----------------- ---------- ---------- ----------
<S> <C> <C> <C>
CONSUMER NONDURABLES (Continued)
Pharmaceuticals: 8.7%
American Home Products Co. 14,400 $ 734,400
Bristol Myers Squibb Co. 14,300 950,950
Johnson & Johnson 6,900 635,663
Eli Lilly & Co. 8,200 538,125
Merck & Co. 15,200 1,028,850
Pfizer, Inc. 20,700 702,506
Warner Lambert Co. 7,200 475,200
----------
5,065,694
CONSUMER CYCLICALS 1.4%
Automobiles & Related: 1.4%
Ford Motor Co. 9,300 452,213
General Motors Corp. 5,900 359,531
----------
811,744
CONSUMER SERVICES 8.6%
Building & Real Estate: 0.3%
Starwood Hotel & Resort Trust 7,500 202,500
General Merchandise Stores: 5.4%
Albertsons, Inc. 5,200 258,375
Home Depot, Inc. 9,900 631,744
K Mart Corp.* 23,400 339,300
J.C. Penney, Inc. 7,200 315,000
Pep Boys Manny Moe & Jack 7,200 119,700
Sears Roebuck & Co. 6,800 275,400
Toys R Us, Inc.* 9,400 152,750
Walmart Stores 25,200 1,064,700
----------
3,156,969
</TABLE>
* Non-income producing
The accompanying notes are an integral part of these financial statements.
================================================================================
28
<PAGE> 30
================================================================================
SECURITY FIRST TRUST SCHEDULE I
EQUITY SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JULY 31, 1999
<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%
Walt Disney Co. 18,800 $ 519,350
Fox Entertainment Group, Inc. 10,600 263,675
Time Warner, Inc. 6,800 489,600
Tribune Co. 4,300 378,669
----------
1,651,294
0.1%
Miscellaneous Business Services:
Waste Management, Inc. 3,300 84,356
ENERGY 8.1%
Oil And Gas Extraction: 8.1%
Atlantic Richfield Co. 4,100 369,256
BP Amoco PLC 2,400 278,100
Chevron Corp. 3,900 355,875
Enron Corp. 3,600 306,675
Exxon Corp. 16,200 1,285,875
Mobil Corp. 5,400 552,150
Royal Dutch Petroleum Co. ADR 13,200 805,200
Schlumberger Ltd. 6,300 381,544
Unocal Corp. 9,100 361,156
----------
4,695,831
FINANCIAL 16.2%
Banking: 7.6%
Banc One Corp. 15,614 851,939
Bankamerica Corp. 14,246 945,578
Bank of Boston Corp. 3,700 173,669
Chase Manhattan Corp. 11,300 868,688
Household International, Inc. 5,900 253,331
</TABLE>
The accompanying notes are an integral part of these financial statements.
================================================================================
29
<PAGE> 31
================================================================================
SECURITY FIRST TRUST SCHEDULE I
EQUITY SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JULY 31, 1999
<TABLE>
<CAPTION>
Percentage
of Market
Value of No. of Market
Equity Securities Portfolio Shares Value
- ----------------- ---------- ---------- ----------
<S> <C> <C> <C>
FINANCIAL (Continued)
Banking (Continued)
Suntrust Banks, Inc. 3,800 $ 245,100
U S Bancorp 8,400 261,450
Washington Mutual, Inc. 6,150 211,021
Wells Fargo & Co. 15,000 585,000
----------
4,395,776
Federal Agencies: 0.9%
Federal National Mortgage Assn 7,600 524,400
Financial Services: 4.8%
American Express Co. 1,500 197,625
Associates First Capital Corp. 5,374 205,891
CIT Group, Inc. 6,700 179,225
Citigroup, Inc. 18,375 818,836
Equifax, Inc., 6,400 210,400
Fleet Financial Group 8,700 352,350
Lehman Brothers Holdings, Inc. 2,000 107,500
Morgan Stanley Dean Witter 7,685 692,611
----------
2,764,438
Insurance Carriers: 2.9%
Allstate Corp. 9,300 330,150
American International Group 8,550 992,869
Cigna Corp. 2,100 185,194
Conseco, Inc. 5,800 167,112
----------
1,675,325
</TABLE>
The accompanying notes are an integral part of these financial statements.
================================================================================
30
<PAGE> 32
================================================================================
SECURITY FIRST TRUST SCHEDULE I
EQUITY SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JULY 31, 1999
<TABLE>
<CAPTION>
Percentage
of Market
Value of No. of Market
Equity Securities Portfolio Shares Value
- ----------------- ---------- ---------- ----------
<S> <C> <C> <C>
PROCESS INDUSTRIES 3.5%
Chemicals and Allied Products: 2.6%
Air Products & Chemical 5,000 $ 167,188
Dow Chemical Co. 2,100 260,400
Dupont Co. 8,500 612,531
Fort James Corp. 8,000 292,000
PPG Industries, Inc. 3,000 178,875
----------
1,510,994
Metal Mining: 0.5%
Alcoa, Inc. 2,800 167,650
Barrick Gold Corp. 5,800 107,663
----------
275,313
Paper And Allied Products: 0.4%
Bowater, Inc. 5,000 248,750
TECHNOLOGY 23.1%
Computer & Office Equipment: 23.1%
America Online, Inc.* 3,200 304,400
Applied Materials, Inc.* 5,000 359,688
Cisco Systems, Inc.* 21,600 1,341,900
Dell Computer Corp.* 12,100 494,588
EMC Corp.* 7,000 423,938
Hewlett Packard Co. 8,300 868,906
Intel Corp. 21,400 1,476,600
International Business Machines Corp. 16,200 2,036,138
Lucent Technologies, Inc. 15,500 1,008,469
Microsoft Corp. 31,300 2,685,930
Motorola, Inc. 6,400 584,000
Oracle Corp.* 14,200 540,488
Sun Microsystems * 4,500 305,437
Texas Instruments, Inc. 4,200 604,800
</TABLE>
* Non-income producing
The accompanying notes are an integral part of these financial statements.
================================================================================
31
<PAGE> 33
================================================================================
SECURITY FIRST TRUST SCHEDULE I
EQUITY SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JULY 31, 1999
<TABLE>
<CAPTION>
Percentage
of Market
Value of No. of Market
Equity Securities Portfolio Shares Value
- ----------------- ---------- ---------- ----------
<S> <C> <C> <C>
TECHNOLOGY (Continued)
Computer & Office Equipment (Continued)
Xerox Corp. 6,600 $ 321,749
----------
13,357,031
TRANSPORTATION 3.6%
Aerospace & Defense: 2.6%
Boeing Company 5,300 240,488
Lockheed Martin Corp. 8,200 285,463
Tyco International, Ltd. 7,600 742,425
United Technologies Corp. 3,400 226,737
----------
1,495,113
Transportation Services: 1.0%
AMR Corp. 4,100 265,987
Burlington Northern Santa Fe 3,700 118,400
Delta Air Lines, Inc. 3,500 208,688
----------
593,075
UTILITIES 11.7%
Telephone Communication: 9.5%
AT&T Co. 20,200 1,049,138
Alltel Corp. 5,300 380,606
Bell Atlantic Corp. 9,100 580,125
BellSouth Corp. 6,300 302,400
GTE Corp. 10,100 744,244
MCI Worldcom, Inc.* 10,800 891,000
Mediaone Group, Inc. 1,000 72,375
SBC Communications, Inc. 21,100 1,206,656
US West Communications, Inc. 3,800 217,787
----------
5,444,331
</TABLE>
* Non-income producing
The accompanying notes are an integral part of these financial statements.
================================================================================
32
<PAGE> 34
================================================================================
SECURITY FIRST TRUST SCHEDULE I
EQUITY SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JULY 31, 1999
<TABLE>
<CAPTION>
Percentage
of Market
Value of No. of Market
Equity Securities Portfolio Shares Value
- ----------------- ---------- ---------- ----------
<S> <C> <C> <C>
UTILITIES (Continued)
Utility Holding Companies: 2.2%
Cinergy Corp. 7,800 $ 233,513
Duke Energy Corp. 3,400 179,988
Entergy Corp. 8,300 251,593
FPL Group, Inc. 7,400 399,138
Southern Co. 9,000 237,936
----------
1,302,168
----------
TOTAL INVESTMENTS
(COST $44,265,252) 100.0% 57,999,389
Other assets less liabilities 313,773
----------
NET ASSETS $58,313,162
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
================================================================================
33
<PAGE> 35
================================================================================
SECURITY FIRST TRUST SCHEDULE I
U.S. GOVERNMENT INCOME SERIES
PORTFOLIO OF INVESTMENTS
JULY 31, 1999
<TABLE>
<CAPTION>
Percentage
of Market
Value of Market
Fixed Maturities Portfolio Principal Value
- ---------------- ---------- ---------- ----------
<S> <C> <C> <C>
CORPORATE NOTES 8.7%
Finance & Credit: 8.7%
Bear Stearns Mortgage Sec., Inc., 8.125%, 09/25/27 $ 400,000 $ 394,625
Commercial Mortgage Asset Trust, 6.25%, 08/17/06 196,538 190,518
GMAC Mortgage Securities, Inc., 6.42%, 08/15/08 10,000 9,530
GMAC Mortgage Corp., 5.94%, 07/01/13 457,480 421,923
First Union Lehman Bros. Trust, 7.15%, 02/18/04 652,396 655,159
LB Commercial Conduit Trust, 6.78%, 04/15/09 375,000 361,466
Morgan Stanley Capital, Inc., 6.33%, 08/01/10 117,480 113,727
Residential Accredit Lines, Inc., 7.75%, 04/25/27 600,000 608,304
----------
TOTAL CORPORATE NOTES
(COST $2,847,544) 2,755,252
U.S. GOVERNMENT OBLIGATIONS 31.6%
U.S. Treasury Bond: 22.0%
8.75%, 11/15/08 500,000 549,425
12.75%, 11/15/10 600,000 801,504
14.00%, 11/15/11 50,000 72,389
8.50%, 02/15/20 1,575,000 1,954,166
6.375%, 08/15/27 3,580,000 3,624,464
----------
7,001,948
U.S. Treasury Notes: 9.6%
6.50%, 10/15/06 2,900,000 2,968,150
5.5%, 05/15/09 75,000 72,732
----------
3,040,882
----------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(COST $10,610,021) 10,042,830
</TABLE>
The accompanying notes are an integral part of these financial statements.
================================================================================
34
<PAGE> 36
================================================================================
SECURITY FIRST TRUST SCHEDULE I
U.S. GOVERNMENT INCOME SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JULY 31, 1999
<TABLE>
<CAPTION>
Percentage
of Market
Value of Market
Fixed Maturities Portfolio Principal Value
- ---------------- ---------- ---------- ----------
<S> <C> <C> <C>
FEDERAL AGENCIES 59.7%
Federal Farm Credit Bank: 7.0%
6.05%, 04/21/03 $ 550,000 $ 546,695
6.94%, 05/19/05 125,000 127,968
7.37%, 08/01/06 1,500,000 1,532,565
----------
2,207,228
Federal Home Loan Bank: 0.8%
8.00%, 08/27/01 250,000 259,628
Federal Home Loan Mortgage Corp.: 23.1%
7.36%, 06/05/07 1,500,000 1,520,400
7.00%, 07/01/07 85,508 84,518
7.00%, 09/01/10 178,488 178,153
6.50%, 04/01/11 1,119,642 1,095,144
6.00%, 05/11/11 1,188,056 1,138,300
5.50%, 05/01/14 500,000 468,750
6.50%, 04/01/29 1,487,620 1,417,880
6.50%, 05/01/29 499,231 475,827
6.50%, 05/01/29 499,113 475,715
6.50%, 06/01/29 499,582 476,161
----------
7,330,848
Federal National Mortgage Assn.: 22.7%
6.00%, 11/01/03 66,451 64,830
6.125%, 11/25/03 213,309 209,444
5.125%, 02/13/04 175,000 166,206
6.09%, 10/01/08 518,871 487,525
6.00%, 11/01/08 316,004 307,904
6.50%, 03/01/09 113,977 114,618
7.00%, 04/01/11 963,969 960,653
5.50%, 07/01/13 475,377 445,072
8.00%, 11/01/13 657,097 671,264
</TABLE>
The accompanying notes are an integral part of these financial statements.
================================================================================
35
<PAGE> 37
================================================================================
SECURITY FIRST TRUST SCHEDULE I
U.S. GOVERNMENT INCOME SERIES
PORTFOLIO OF INVESTMENTS (CONTINUED)
JULY 31, 1999
<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)
5.50%, 01/01/14 $ 484,500 $ 453,613
5.50%, 02/01/14 483,836 452,991
6.00%, 02/01/14 186,105 178,136
6.00%, 02/01/14 158,148 151,376
6.00%, 03/01/14 634,110 606,957
6.00%, 06/01/14 457,777 438,175
6.50%, 05/17/15 700,000 683,375
6.315%, 10/01/23 703,743 647,444
8.00%, 10/01/25 171,155 174,847
----------
7,214,430
Government National Mortgage Assn.: 4.8%
8.25%, 02/15/09 256,464 265,037
7.50%, 01/15/26 785,449 784,954
6.00%, 04/15/14 498,346 477,321
----------
1,527,312
Other Federal Agencies: 1.3%
Small Business Admin., 5.50%, 10/01/18 349,342 322,222
Student Loan Marketing Assn., 7.50%, 03/08/00 100,000 101,168
----------
423,390
----------
TOTAL FEDERAL AGENCIES
(COST $19,298,987) 18,962,836
----------
TOTAL INVESTMENTS
(COST $ 32,756,552) 100.0% 31,760,918
Other assets less liabilities 551,631
----------
NET ASSETS $32,312,549
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
================================================================================
36
<PAGE> 38
================================================================================
SECURITY FIRST TRUST
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1999
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 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.
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.
================================================================================
37
<PAGE> 39
================================================================================
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 and to sell foreign currency generally are used to minimize the
effect of currency fluctuation on the portfolios. Also, a contract to buy or to
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. Net realized gain or loss on sale of investments is determined by the
specific identification method.
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 and T. Rowe Price Associates, respectively. 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.
SECURITY FIRST TRUST
================================================================================
38
<PAGE> 40
================================================================================
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.
================================================================================
39
<PAGE> 41
================================================================================
SECURITY FIRST TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE C -- INVESTMENT SECURITIES TRANSACTIONS
Purchases and sales of fixed maturities and equity securities for the year ended
July 31, 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 $24,478,274 $97,036,942
Sales 21,160,842 98,189,292
Other Investment Securities:
Purchases 14,711,578 $95,525,002 $12,926,717 3,265,959
Sales 9,819,588 44,339,369 17,088,851 2,812,222
- ------------------------------------------------------------------------------------------------
</TABLE>
The cost of investments at July 31, 1999 was the same for both financial
statement and federal income tax purposes. At July 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 $ 51,525 $ 805,234 $ (753,709)
T. Rowe Price Growth and Income Series 114,817,646 14,965,295 99,852,351
Equity Series 15,456,520 1,722,383 13,734,137
U.S. Government Income Series 73,246 1,068,880 (995,634)
- --------------------------------------------------------------------------------------------
</TABLE>
================================================================================
40
<PAGE> 42
SECURITY FIRST TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE D -- CAPITAL SHARE TRANSACTIONS
Transactions in capital shares of the Trust were as follows:
<TABLE>
<CAPTION>
Shares Issued
in Connection
with Reinvestment of
---------------------------
Net Net
Investment Realized
Income Gain
Sold Distributions Distributions Redeemed Net
--------- ------------- ------------- ---------- ---------
<S> <C> <C> <C> <C> <C>
YEAR ENDED JULY 31, 1999
Bond Series 2,312,332 240,383 51,543 (682,801) 1,921,457
T. Rowe Price Growth and Income
Series 2,272,424 331,107 1,164,634 (812,020) 2,956,145
Equity Series 94,561 56,914 1,098,636 (814,089) 436,022
U.S. Government Income Series 441,277 351,815 113,764 (828,203) 78,653
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 (UNAUDITED)
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
performed the necessary repairs to the systems as well as upgrades to
infrastructure. All systems have been tested and certified and testing will
continue throughout 1999. Security Management currently believes that the Year
2000 issue will not pose significant operational problems for Security
Management's computer systems. However, 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.
================================================================================
41
<PAGE> 43
================================================================================
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
AND TOTAL DISTRIBUTIONS
NET ASSET UNREALIZED INCOME 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 YEAR INCOME INVESTMENTS OPERATIONS INCOME GAINS YEAR RETURN(1)
--------- --------- ------------- --------- ---------- ------------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BOND SERIES
Year ended July 31,
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) .99 4.11 7.46
1999 4.11 .18 (.14) .04 (.18) (.04) 3.93 0.97
T. ROWE PRICE
GROWTH AND
INCOME SERIES
Year ended July 31,
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
1999 16.56 .29 2.45 2.74 (.29) (1.00) 18.01 16.55
EQUITY SERIES
Year ended July 31,
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
1999 8.57 .06 1.42 1.48 (.07) (1.44) 8.54 17.27
U.S. GOVERNMENT
INCOME SERIES
Year ended July 31,
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
1999 5.45 .30 (.24) .06 (.31) (.10) 5.10 1.10
</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.
================================================================================
42
<PAGE> 44
================================================================================
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 Year
---------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
BOND SERIES
Year ended July 31,
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
1999 .66 5.46 147 24,717,704
T. ROWE PRICE
GROWTH AND INCOME SERIES
Year ended July 31,
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
1999 .59 1.83 15 369,111,185
EQUITY SERIES
Year ended July 31,
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
1999 .81 .72 23 58,313,162
U.S. GOVERNMENT INCOME SERIES
Year ended July 31,
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
1999 .71 5.37 307 32,312,549
</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.
================================================================================
43
<PAGE> 45
INDEPENDENT AUDITORS' REPORT
To the Shareholders and the Board of Trustees
of the Security First Trust:
We have audited the statements of assets and liabilities, including the
portfolio of investments, of the Security First Trust comprised of the Security
First Trust Bond Series, the T. Rowe Price Growth and Income Series, the Equity
Series, and the U.S. Government Income Series (collectively, the "Trust") as of
July 31, 1999, and the related statements of operations, statements of changes
in net assets, and the financial highlights for the year then ended. These
financial statements and financial highlights are the responsibility of the
Trust's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audit. The statements
of changes in net assets of the Trust for the year ended July 31, 1998, and the
financial highlights for the four years ended July 31, 1998, were audited by
other auditors whose report, dated September 14, 1998, expressed an unqualified
opinion on those statements and the financial highlights for each of the four
years.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of July 31, 1999, by correspondence with the
custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Security First Trust Bond Series, the T. Rowe Price Growth and Income Series,
the Equity Series, and the U.S. Government Income Series as of July 31, 1999,
and the results of their operations, the changes in their net assets and
financial highlights for the year then ended, in conformity with generally
accepted accounting principles.
Deloitte & Touche LLP
September 10, 1999
Los Angeles, California
<PAGE> 46
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
SFG 1768 (310) 312-6100
ANNUAL REPORT
July 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
