<PAGE> 1
================================================================================
Dear Contract Owner:
The stock market soared, dove, then rose again during the six months ended July
31, 2000, creating significant volatility among various sectors and individual
stocks. By the time the dust settled at the end of June, most major market
indices were mixed for the six-month period.
Bond prices, which move inversely to their yields, have risen in expectation of
a slowing economy due to higher short-term interest rates. Treasury yields
decreased in the first half of 2000. Over the course of the last six months, the
yield of the thirty year Treasury has decreased by nearly 58 basis points.
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
There have been signs during the past few months that momentum may have
begun to shift back toward quality companies with a history of earnings growth
and relatively high dividend yields, and we regard this development -- if it
continues --as a welcome return to reality in the equities market.
The year began with a continuation of the pattern that characterized the
stock market through most of last year. In the first quarter, the
technology-heavy Nasdaq Composite led the way as the more aggressive market
sectors provided the strongest performance. In April and May, those stocks
experienced a sudden and sharp decline, and traditional value stocks provided
better relative performance. In June, the market under-went another reversal in
sentiment, with growth stocks rebounding from their spring decline. By the end
of July, the Standard and Poors 500 rose slightly while the Nasdaq Composite
suffered a modest loss. Within these indices, growth stocks generally fared
better than value stocks, and smaller and mid-cap shares outperformed the
largest-cap stocks.
EQUITY MARKET OUTLOOK
After the shakeout of the past six months, the market ended up treading
water as investors digested a series of tightening moves by the Fed aimed at
slowing the pace of economic growth. In earlier reports we discussed the
de-linkage between stock prices and the earnings and dividend growth that
normally support them, since share prices have risen at a faster pace in recent
years. This gap began to close modestly during the recent period, with earnings
and dividend growth moving ahead while stocks declined in value. Despite the
improved performance of value stocks mentioned earlier, they remain very
inexpensive relative to their growth stock siblings. If history is any guide,
true value tends to reassert itself over time.
PORTFOLIO MANAGEMENT:
T. ROWE PRICE GROWTH
AND INCOME SERIES
During the six-month period, the portfolio benefited from several
successful investments and suffered from some that did not work out as well. Our
holdings in the financial, consumer nondurables, and technology sectors were
generally good performers, while business services, transportation, and basic
materials were weaker overall.
GROWTH AND INCOME SERIES
SECTOR DIVERSIFICATION PIE CHART
<TABLE>
<S> <C>
Utilities 5.3%
Capital Equipment 4.1%
Consumer Non-Durables 20.6%
Short-Term Securities 3.4%
Consumer Services 16.6%
Transportation 5.9%
Energy 10.5%
Financial 16.9%
Consumer Cyclicals 0.5%
Process Industries 10.7%
Technology 5.5%
</TABLE>
Among our major holdings were BP Amoco, Citigroup, American Home
Products, Abbott Laboratories, Disney, and Starwood Hotels & Resorts Worldwide.
================================================================================
1
<PAGE> 3
================================================================================
--------------------------------------------------------------------------------
GROWTH & INCOME SERIES
15 LARGEST HOLDINGS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Percentage of
Security Portfolio
-------- -------------
<S> <C>
BP Amoco PLC 3.9
Citigroup, Inc. 3.6
American Home Products 2.0
Abbott Laboratories 1.9
Disney Walt Company Holding Co. 1.9
Starwood Hotel & Resort
Worldwide, Inc. 1.8
First Data Corp. 1.8
Kimberly-Clarke Corp. 1.8
General Electric Co. 1.7
Viacom, Inc. CL B 1.7
Target Corp. 1.6
Boeing Company 1.5
Chubb Corp. 1.5
St. Paul Companies, Inc. 1.4
Waste Management, Inc. 1.4
-----
TOTAL 29.5
=====
</TABLE>
The strategy we followed during the period was to invest in good
companies after the sell-off. Equity investors not only have high expectations
for future returns, but also little tolerance for any disappointing news
affecting their investments. As a result, the stocks of many quality companies
with solid earnings histories suffered in the downdraft.
In this climate, we capitalized on the significant price declines in
several stocks to make new investments. Our experience suggests that investing
in strong companies after they lose much of their value is often a rewarding
move. This was our reason for purchases of Rockwell International, Gillette,
Microsoft, America Online, Black & Decker, and Motorola. Rockwell is the classic
value stock. Having fallen substantially in price, the stock sold for 10 times
earnings and sported a dividend yield of 3% --an attractive valuation for a
leading manufacturing company. Our other purchases share the common
characteristics of recent price weakness, strong market position, and attractive
valuations. Microsoft is a slightly unusual holding for us given our general
reluctance to invest in technology stocks for valuation reasons. Nonetheless,
after its highly publicized antitrust problems and stock price nosedive, we
though it was an opportune time to initiate a small position.
Most of the portfolio sales were of successful investments whose
valuations reached unattractive levels as their share prices rose, which
diminished their appeal for us. Included among our major sales were Baker Hughes
and General Electric.
The fund's holdings sell at a substantial discount to the overall
market. Our historical approach has been to invest in companies selling at
relatively low price/earnings ratios with attractive dividend yields and other
compelling valuation characteristics. Compared with the broad market, at the end
of June we had a portfolio of undervalued companies with good prospects over the
next few years.
PORTFOLIO MANAGEMENT:
EQUITY SERIES
In this volatile market environment, the Security First Trust Equity
Series portfolio underperformed the Standard and Poors 500 Index for the
quarter. In particular, an overweight position in the technology sector and an
underweight position in the consumer staples sector early in the second quarter
hurt performance.
EQUITY SERIES
SECTOR DIVERSIFICATION PIE CHART
<TABLE>
<S> <C>
Utilities 8.2%
Capital Equipment 6.3%
Consumer Non-Durables 14.9%
Consumer Services 10.2%
Energy 5.6%
Financial 18.1%
Consumer Cyclicals 0.5%
Process Industries 1.9%
Technology 34.3%
</TABLE>
================================================================================
2
<PAGE> 4
================================================================================
Stock selection also detracted from performance among the larger
positions in the portfolio while stock selection among the smaller positions in
the portfolio contributed positively to performance.
During the last few months, we bought Alcatel, Anheuser Busch, Ericsson
and Mellon Financial Group. This group showed improving fundamentals and
attractive growth prospects. We sold Fleet Boston Financial Corp. due to
earnings uncertainty, sold Qualcomm because of deteriorating fundamentals and
sold Warner-Lambert because it was fully valued. As of the end of June, the top
ten holdings included Cisco Systems, General Electric, Intel and Microsoft.
--------------------------------------------------------------------------------
EQUITY SERIES
15 LARGEST HOLDINGS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Percentage of
Security Portfolio
-------- -------------
<S> <C>
Cisco Systems 4.8
General Electric 4.2
Intel Corp. 4.2
Citigroup, Inc. 4.1
SPDR Trust 3.4
Microsoft Corp. 3.2
American International Group 2.8
Exxon Mobil Corp. 2.8
Nortel Networks Corp. 2.7
Walmart Stores 2.5
EMC Mass Corp. 1.9
Merck & Co. 1.9
Pfizer, Inc. 1.8
Dell Computer Corp. 1.8
Royal Dutch Petroleum Co. ADR 1.8
-----
TOTAL 43.9
=====
</TABLE>
Going forward, the portfolio still maintains a value tilt with modes
overweight positions in the capital goods, energy and financial sectors relative
to the Standard and Poors 500 Index. Despite this value bias, the Portfolio
holds many companies that should benefit from the market's emphasis on companies
with strong earnings growth prospects.
SECURITY FIRST TRUST:
BOND SERIES AND U.S.
GOVERNMENT INCOME SERIES
FIXED-INCOME MARKET OVERVIEW
The U.S. economy finally slowed from its rapid pace in the second
quarter as gains related to Y2K liquidity and preparations, bonus compensation
payments, unseasonably warm weather and tax receipts began to dissipate. While
the consumer continued to spend, it was clearly with less enthusiasm than the
first quarter, as retail sales declined significantly in the second quarter. A
slowdown in the manufacturing sector appeared as well, with the NAPM Purchasing
Managers Index falling to its lowest level in 18 months. While the economy is
surely slowing, inflation appears less clear. Secular trends such as improving
technology and globalization of labor markets continue to put downward pressure
on inflation. However, the sharp increase in oil and natural gas prices, along
with an upward trending core CPI and Personal Consumption Expenditure deflator,
suggest that cyclical inflationary pressures could continue to build even if the
economy slows to a more sustainable pace. In March, the Federal Reserve raised
both the overnight rate and the discount rate 0.25% to 6.0% and 5.5%,
respectively. Despite the sell-off in the equity market in April, in May
concerns about an overheating economy due to an increased shortage of labor and
rising oil prices led the Federal Reserve to rise rates another 0.50% to 6.5%
Treasury yields decreased in the first half of 2000. Over the course of
the year so far, the yield of the 30-year Treasury has decreased by nearly 58
basis points (0.58%). The yield of the 10-Year Treasury posted a net decrease of
42 basis points (0.42%). We anticipate a continued flattening of the yield curve
as a result of an active Federal Reserve and potential Treasury repurchases of
long maturity debt.
Mortgages posted positive returns during the first half of the year, but
trailed the broader market, which was led by the strong rally in the Treasury
market. As measured by the Lehman Brothers Mortgage Index, mortgages posted a
3.67% total return versus 3.99% for the Lehman Brothers Aggregate Index.
Strength in the housing market has continued unabated, leading
================================================================================
3
<PAGE> 5
================================================================================
to more supply than expected, but in comparison to other spread sectors,
mortgages benefited from greater liquidity and higher credit quality. On a
relative valuation basis mortgages appear cheap, although uncertainty was
increased in the market by Treasury Undersecretary Gensler's testimony
concerning a bill seeking to end the quasi-governmental status of FNMA and
FHLMC. GNMAs performed well during the first quarter as a Treasury substitute,
since it is the only other asset class backed by the full faith and credit of
the U.S. Government.
FIXED-INCOME MARKET OUTLOOK
While some imbalanced and potential inflationary pressures exist, data
points to slower economic growth and restrained inflation. We believe that the
Fed will refrain from tightening rates for the rest of the year.
PORTFOLIO MANAGEMENT:
BOND SERIES
We manage the Bond Series portfolio with the objective of earning
superior total returns than broadly diversified investment quality bond
portfolios that are measured against the Lehman Aggregate Index. We seek to meet
this objective through a superior yield profile, diversification, capital
appreciation and minimal capital loss.
During the first half of the Series' fiscal year (August 1, 1999 -
January 31, 2000), an extension of the bear market produced anemic returns (-14%
at the portfolio level). However, in the second half (February 1, 2000 - July
31, 2000) a bond market rally produced much more robust returns (4.49% at the
portfolio level).
In addition, while reviewing those results one should bear in mind that
for the last year, risk involving fixed income securities has simply not been
rewarded. Treasury Bills -- the risk free asset class --have provided some of
the highest returns and the under-performance of riskier asset classes is
perhaps not surprising.
The evolution of the portfolio structure over the last year has been a
reduction to our commitment to the Treasury sector, an increase in commitment to
the mortgage sector, reduced commitment to high yield and international issues
and our conservative duration posture.
BOND SERIES
SECTOR DIVERSIFICATION CHART
<TABLE>
<S> <C>
Corporate Bonds 26.6%
Foreign Governments 1.6%
Federal Agencies 58.0%
U.S. Government Obligations 13.8%
</TABLE>
During the last year mortgage spreads returned to levels not seen in the
last decade, and we took advantage of this by adding primarily GNMA securities
that offer the full faith and credit of the United States Government combined
with minimal prepayment risk. Offered the opportunity to add yield with no
credit risk, we increased our commitment by over 50% during the course of the
year.
The high yield and international sectors suffered during the last year.
High yield was buffeted by higher rates, a slowing economy and increasing
downgrade and defaults. International markets suffered as the dollar continued
to show strength versus all currencies except the yen. We responded by cutting
our commitment. There are a number of high yield issuers that seem quite
attractive. We have moved to issues with good visibility, larger size and access
to the equity market. Internationally, we expect that the dollar's strength will
wane in the coming months and present us with new opportunities. In the meantime
caution is our watchword, and we will add to positions slowly.
================================================================================
4
<PAGE> 6
PORTFOLIO MANAGEMENT:
U.S. GOVERNMENT
INCOME SERIES
During the semi-annual period, the duration of the Portfolio remained
long relative to its benchmark for most of the first quarter. The Portfolio
ended the quarter with a duration of 5.75 versus 5.64 for the benchmark. We
reduced residential mortgage positions during the quarter in favor of
Treasuries/Agencies, although mortgages are our largest overweight position. The
Portfolio's residential mortgage exposure in the quarter decreased from 45% to
40%. We added slightly to Treasuries/Agencies in the quarter, although our
Treasury and agency allocation remains below the market weighting. The
Portfolio's exposure to Treasuries/Agencies decreased from 97.4% to 91.5% for
the quarter. We also had a slightly higher allocation to cash at the end of the
quarter. Looking forward, we are structuring the Portfolio to take advantage of
the intermediate-long part of the yield curve. Our yield curve structure in the
Portfolio emphasizes the 10- to 20-year part of the curve over the front-end.
U.S. GOVERNMENT INCOME SERIES
SECTOR DIVERSIFICATION CHART
<TABLE>
<S> <C>
Corporate Bonds 1.9%
Federal Agencies 59.5%
Short-Term Securities 6.6%
U.S. Government Obligations 32.0%
</TABLE>
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, 2000, 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 -7.48% 6.17% 15.02% 13.37%
Series(1)(2)
--------------------------------------------------------------------------------
Bond 3.29% 3.90% 5.30% 6.52%
Series(1)(2)
--------------------------------------------------------------------------------
Equity 8.11% 13.74% 18.89% N/A(*)
Series(1)
--------------------------------------------------------------------------------
U.S
Government 5.99% 4.31% 5.18% N/A(*)
Income(1)
--------------------------------------------------------------------------------
Consumer 3.61% 2.47% 2.51% 2.84%
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 -7.48% 19.68% 101.31% 250.74%
Series(1)(2)
--------------------------------------------------------------------------------
Bond 3.29% 12.16% 29.46% 88.07%
Series(1)(2)
--------------------------------------------------------------------------------
Equity
Series(1) 8.11% 47.14% 137.53% N/A(*)
--------------------------------------------------------------------------------
U.S
Government 5.99% 13.50% 28.73% N/A(*)
Income(1)
--------------------------------------------------------------------------------
Consumer 3.61% 7.59% 13.20% 32.32%
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 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]
10000 0
9500 550
10000 2000
10500 3000
11500 2500
13500 1500
15000 4000
17000 5000
25000 9000
28000 12000
38000 8000
35000 15000
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]
10000 0 0
11000 230 242
12500 400 400
13000 750 750
12750 800 800
14000 900 1000
15000 900 1000
16000 1000 1000
17000 1200 1000
17500 1500 750
18000 2500 500
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]
10000 0
10000 256
10040 745
12000 2014
12500 3115
18000 6500
25500 9000
27500 10000
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]
10000 0
10100 0
10000 100
10750 150
11100 400
12000 500
12900 750
13000 1000
13750 1250
The performance indicated here may not be indicative of future performance.
(*)The Series commenced operations on 5/19/93.
================================================================================
6
<PAGE> 8
================================================================================
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, 2000, 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]
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>
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
1999 16.06 1.06 93.67 +8.8 +1747.5
7/2000 15.63 -- 90.68 -3.2 +1688.6
</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, 2000, 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>
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
1999 3.72 .22 15.51 -2.6 +397.1
7/2000 3.84 -- 16.03 +3.4 +413.8
</TABLE>
================================================================================
7
<PAGE> 9
================================================================================
SECURITY FIRST TRUST
EQUITY SERIES
The Per Share Data Table below illustrates the growth in per share value
for the period ending July 31, 2000, 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
1999 9.19 .31 14.16 +20.7 +183.2
7/2000 8.93 -- 13.73 -3.0 +174.6
</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 July 31, 2000, 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> <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
1999 4.83 .29 6.53 -2.5 +30.6
7/2000 5.10 -- 6.90 +5.7 +38.0
</TABLE>
+change from 5-19-93 to 12-31-93
================================================================================
8
<PAGE> 10
================================================================================
SECURITY FIRST TRUST
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 2000
<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 - $22,623,192; Growth
and Income Series - $279,333,808;
Equity Series - $44,935,123;
U.S. Government Income Series - $32,553,278) $ 22,203,630 $323,981,404 $58,124,170 $ 32,011,805
Cash 606,373 720,133 1,098,402 63,714
Interest receivable 219,885 2,936 4,478 467,431
Dividends receivable 436,244 26,446
Receivable for securities sold 1,846,756 1,218,552 2,102,505
------------- ------------ ----------- ------------
24,876,644 325,140,717 60,472,048 34,645,455
LIABILITIES
Payable for securities purchased 1,614,601 1,411,012 2,099,625
Accrued expenses 14,023 51,269 15,642 14,198
Payable for capital shares redeemed 19,729 33,871 882 304
Payable to investment adviser - Note B 6,947 97,241 28,309 10,653
Payable for directors' fees 305 4,332 776 626
Unrealized depreciation on foreign
currency contracts 1,349
------------- ------------ ----------- ------------
1,656,954 186,713 1,456,621 2,125,406
NET ASSETS
Capital shares (authorized 100,000,000
shares of $.01 par value for each series) 24,156,181 261,640,068 41,153,313 32,937,994
Undistributed net investment income 876,932 3,412,895 35,302 1,113,498
Undistributed net realized gain (loss) (1,392,512) 15,253,445 4,637,765 (989,970)
Net unrealized appreciation (depreciation)
of investments (420,911) 44,647,596 13,189,047 (541,473)
------------- ------------ ----------- ------------
NET ASSETS $ 23,219,690 $324,954,004 $59,015,427 $ 32,520,049
============= ============ =========== ============
Capital shares outstanding 6,052,985 20,789,263 6,610,048 6,379,108
Net asset value per share $ 3.84 $ 15.63 $ 8.93 $ 5.10
</TABLE>
The accompanying notes are an integral part of these financial statements.
================================================================================
9
<PAGE> 11
================================================================================
SECURITY FIRST TRUST
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JULY 31, 2000
<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 $ 6,810,679 $ 607,061
Interest $ 1,685,659 1,273,872 52,216 $ 2,121,312
----------- ------------ ----------- -----------
1,685,659 8,084,551 659,277 2,121,312
EXPENSES
Custodian fees 16,947 50,938 22,847 18,950
Adviser fees - Note B 84,927 1,199,868 329,031 129,811
Management fees - Note B 36,397 514,229 89,736 48,679
Printing expenses 16,391 31,743 13,490 14,542
Insurance expenses 1,064 15,631 2,744 1,487
Audit fees 5,132 7,676 6,397 5,116
Directors' fees and expenses 1,781 26,514 4,468 2,079
Miscellaneous expenses 859 6,914 5,708 8,128
----------- ------------ ----------- -----------
163,498 1,853,513 474,421 228,792
----------- ------------ ----------- -----------
NET INVESTMENT INCOME 1,522,161 6,231,038 184,856 1,892,520
NET REALIZED AND UNREALIZED GAINS
(LOSSES) ON INVESTMENTS - Notes A and C
Net realized gain (loss) on sale of investments (1,106,001) 20,126,873 5,002,057 (464,991)
Net unrealized appreciation (depreciation) of:
Investments during the period 334,147 (55,204,755) (545,090) 454,161
Assets denominated in foreign currencies (1,349)
----------- ------------ ----------- -----------
Net gain (loss) on investments (773,203) (35,077,882) 4,456,967 (10,830)
----------- ------------ ----------- -----------
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $ 748,958 $(28,846,844) $ 4,641,823 $ 1,881,690
=========== ============ =========== ===========
</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, 2000
<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 $ 1,522,161 $ 6,231,038 $ 184,856 $ 1,892,520
Net realized gain (loss) on sale
of investments (1,106,001) 20,126,873 5,002,057 (464,991)
Net unrealized appreciation (depreciation)
during the period 332,798 (55,204,755) (545,090) 454,161
------------ ------------- ------------ ------------
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 748,958 (28,846,844) 4,641,823 1,881,690
------------ ------------- ------------ ------------
DISTRIBUTIONS TO SHAREOWNERS
Net investment income (1,410,330) (6,182,728) (360,159) (1,836,952)
Net realized gains (16,135,169) (1,714,979)
CAPITAL SHARE TRANSACTIONS - NOTE D
Reinvestment of net investment income
distributed 1,410,330 6,182,728 360,159 1,836,952
Reinvestment of net realized gains 16,135,169 1,714,979
Sales of capital shares 3,319,764 19,704,012 1,705,091 2,282,843
Redemptions of capital shares (5,566,736) (35,014,349) (5,644,649) (3,957,033)
------------ ------------- ------------ ------------
INCREASE (DECREASE) IN NET ASSETS
FROM CAPITAL SHARE
TRANSACTIONS (836,642) 7,007,560 (1,864,420) 162,762
------------ ------------- ------------ ------------
TOTAL INCREASE (DECREASE)
IN NET ASSETS (1,498,014) (44,157,181) 702,265 207,500
NET ASSETS
BEGINNING OF YEAR 24,717,704 369,111,185 58,313,162 32,312,549
------------ ------------- ------------ ------------
END OF YEAR (including undistributed net
investment income: Bond Series -$876,932;
Growth and Income Series - $3,412,895;
Equity Series - $35,302; U.S. Government
Income Series - $1,113,498) $ 23,219,690 $ 324,954,004 $ 59,015,427 $ 32,520,049
============ ============= ============ ============
</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, 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 (DECREASE)
IN NET ASSETS 6,783,312 78,669,657 3,510,010 (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.
================================================================================
12
<PAGE> 14
================================================================================
SECURITY FIRST TRUST SCHEDULE I
BOND SERIES
PORTFOLIO OF INVESTMENTS
JULY 31, 2000
<TABLE>
<CAPTION>
Percentage
of Market
Value of Market
Fixed Maturities Portfolio Principal Value
---------------- ---------- --------- ------
<S> <C> <C> <C>
CORPORATE NOTES 26.6%
Aerospace & Defense: 1.0%
Boeing Co., 8.75%, 08/15/21 50,000 $ 56,688
Lockheed Martin Corp., 7.75%, 05/01/26 90,000 86,063
Tyco International, Ltd., 6.375%, 06/15/05 80,000 76,100
--------
218,851
Automobiles & Related: 2.1%
Amerco., 8.80%, 02/04/05 150,000 143,813
Borg Warner Automotive, Inc., 6.5%, 02/15/09 235,000 208,269
Capital Auto Receivables Asset, 6.30%, 05/15/04 125,000 123,628
--------
475,710
Banking: 1.6%
Dime Bancorp, Inc., 6.375%, 01/30/01 250,000 248,445
HSBC Fin Nederland Bank, 7.40%, 04/15/03 100,000 99,750
--------
348,195
Chemicals and Allied Products: 0.8%
Fort James Corp., 6.875%, 09/15/07 195,000 182,325
Electric Utilities: 1.9%
CMS Energy Corp., 8.00%, 07/01/11 225,000 222,188
National Rural Utilities, 6.50%, 09/15/02 100,000 98,875
Public Service Electric & Gas Co., 6.25%, 01/01/07 100,000 92,750
--------
413,813
</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)
JULY 31, 2000
<TABLE>
<CAPTION>
Percentage
of Market
Value of Market
Fixed Maturities Portfolio Principal Value
---------------- ---------- --------- ----------
<S> <C> <C> <C>
CORPORATE NOTES (Continued)
Finance & Credit: 7.5%
G.E. Capital Mortgage Svcs., Inc., 6.25%, 12/25/28 245,861 $ 169,644
G.E. Capital Mortgage Svcs., Inc., 6.50%, 04/25/29 305,696 208,240
Honda Auto Lease Trust, 6.45%, 09/16/02 325,000 322,943
Hayes Lemerz International, Inc., 8.25%, 12/15/08 50,000 43,500
Northwest Asset Corp., 6.75%, 05/25/29 246,974 178,864
Merrill Lynch Mtg. Investment, Inc., 7.56%, 09/15/09 115,000 113,850
Salomon Smith Barney, Inc., 7.375%, 05/15/07 300,000 291,750
Texaco Capital, Inc., 5.5%, 01/15/09 220,000 194,700
Valero Pass-Through Asset Trust, 6.75%, 12/15/02 140,000 135,450
----------
1,658,941
Food & Beverages: 0.4%
Archer Daniels Midland Co., 6.625%, 05/01/29 120,000 102,150
Forest Products: 0.4%
Noranda Forest, Inc., 7.50%, 07/15/03 100,000 98,625
Health Services: 0.3%
Tenet Healthcare Corp., 7.875%, 01/15/03 70,000 68,950
Insurance Carriers: 1.2%
Conseco, Inc., 6.40%, 06/15/01 200,000 169,000
Prudential Insurance Co. America, 6.875%, 04/15/03 100,000 98,125
----------
267,125
Media & Communications: 1.5%
CSC Holdings, Inc., 8.125%, 07/15/2009 25,000 24,594
Isle of Capri Casinos, Inc., 8.75%, 04/15/09 100,000 91,500
Liberty Media Corp., 7.875%, 07/15/09 150,000 145,875
Metromedia Fiber Network, Inc., 10.00%, 12/15/09 70,000 68,250
----------
330,219
</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, 2000
<TABLE>
<CAPTION>
Percentage
of Market
Value of Market
Fixed Maturities Portfolio Principal Value
----------------- ---------- --------- -----------
<S> <C> <C> <C>
CORPORATE NOTES (Continued)
Miscellaneous Business Services: 0.5%
Allied Waste North America, 7.875%, 01/0/09 115,000 $ 102,063
Miscellaneous Consumer Products: 2.5%
American Standard, Inc., 7.375%, 04/15/05 45,000 42,525
Jones Apparel Group, Inc., 7.875%, 06/15/06 230,000 219,937
S C International Service, Inc., 9.25%, 09/01/07 60,000 57,375
WMX Technologies, Inc., 7.125%, 06/15/01 250,000 245,625
------------
565,462
Oil and Gas Extraction: 1.6%
Apache Corp., 7.70%, 03/15/26 155,000 153,063
Quaker State Corp., 6.625%, 10/15/05 100,000 96,375
Tosco Corp., 8.125%, 02/15/2030 100,000 101,500
------------
350,938
Telephone Communication: 1.9%
Allegiance Telecom, Inc., 0.00%, 02/15/08 25,000 18,625
Charter Communications Holdings, 8.625%, 04/01/09 100,000 88,000
Crown Castle International, 0.00%, 05/15/11 75,000 47,250
GTE Corp., 6.94%, 04/15/28 100,000 90,121
Global Crossing Holdings, Ltd., 9.625%, 05/15/08 100,000 98,250
US West Communications, Inc., 7.50%, 06/15/23 80,000 73,900
------------
416,146
Transportation: 1.4%
Canadian National Railway Co., 6.90%, 07/15/28 165,000 145,200
Newport News Shipbuilding, Inc., 9.25% 12/01/06 60,000 60,600
Norfolk Southern Corp., 7.80%, 05/15/27 100,000 98,250
------------
304,050
------------
TOTAL CORPORATE NOTES
(COST $6,195,796) 5,903,563
</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, 2000
<TABLE>
<CAPTION>
Percentage
of Market
Value of Market
Fixed Maturities Portfolio Principal Value
----------------- ----------- --------- -----------
<S> <C> <C> <C>
FEDERAL AGENCIES 58.0%
Federal Home Loan Mortgage Corp.: 0.2%
9.50%, 04/01/19 26,287 $ 27,346
9.00%, 06/01/19 13,352 13,811
------------
41,157
Federal National Mortgage Assn.: 10.8%
6.625%, 01/15/02 1,835,000 1,828,908
7.00%, 09/01/10 149,495 146,831
7.00%, 05/01/12 132,560 130,197
6.50%, 03/01/13 290,404 280,510
7.50%, 08/25/21 9,069 9,086
------------
2,395,532
Government National Mortgage Assn.: 47.0%
9.00%, 04/15/09 2,174 2,227
9.00%, 05/15/09 11,631 11,915
9.00%, 05/15/09 3,477 3,562
9.00%, 05/15/09 2,752 2,819
9.00%, 05/15/09 1,061 1,087
9.00%, 05/15/09 1,599 1,638
11.25%, 09/15/15 78,115 85,511
11.50%, 11/15/15 9,611 10,662
10.00%, 06/15/17 21,329 22,782
9.25%, 07/15/17 7,003 7,200
10.00%, 11/15/17 7,615 8,134
11.50%, 02/15/18 3,244 3,599
10.00%, 03/15/19 23,635 25,245
10.00%, 03/15/20 13,654 14,584
9.25%, 05/15/20 29,390 30,216
9.25%, 05/15/21 86,986 89,432
9.25%, 06/15/21 21,090 21,683
</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, 2000
<TABLE>
<CAPTION>
Percentage
Of Market
Value of Market
Fixed Maturities Portfolio Principal Value
----------------- ---------- --------- -----------
<S> <C> <C> <C>
FEDERAL AGENCIES (Continued)
Government National Mortgage Assn. (Continued)
7.00%, 08/15/23 70,120 $ 68,213
7.50%, 06/15/23 79,457 78,836
7.50%, 10/15/23 117,086 116,170
7.00%, 01/15/24 113,194 110,116
7.00%, 03/15/24 78,222 76,095
7.00%, 01/15/25 350,914 341,590
9.50%, 01/15/25 10,583 10,983
9.50%, 05/15/25 7,044 7,310
7.00%, 02/15/26 462,666 450,086
7.50%, 09/15/26 163,631 162,351
8.00%, 05/15/27 196,047 197,884
6.50%, 04/15/28 731,865 694,810
7.00%, 05/15/28 339,969 330,726
7.00%, 06/15/28 298,407 290,293
6.50%, 10/15/28 1,760,691 1,671,548
6.50%, 11/15/28 504,356 478,821
6.50%, 01/15/29 233,482 221,661
6.50%, 03/15/29 261,925 248,663
6.50%, 04/15/29 245,761 233,318
6.50%, 05/15/29 937,928 891,031
6.50%, 05/15/29 272,923 259,276
6.50%, 06/15/29 149,737 142,156
6.50%, 07/15/29 653,751 620,652
8.00%, 07/15/29 157,641 159,118
7.00%, 08/15/29 988,686 961,803
7.50%, 09/15/29 543,844 539,592
8.00%, 09/15/29 246,506 248,816
8.00%, 01/15/30 252,752 255,120
8.00%, 06/15/30 229,799 231,885
---------------
10,441,219
---------------
TOTAL FEDERAL AGENCIES
(COST $13,094,895) 12,877,908
</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, 2000
<TABLE>
<CAPTION>
Percentage
of Market
Value of Market
Fixed Maturities Portfolio Principal Value
----------------- ---------- --------- -----------
<S> <C> <C> <C>
U.S. GOVERNMENT OBLIGATIONS 13.8%
U.S. Treasury Bonds: 3.4%
6.625%, 02/15/27 260,000 $ 280,067
5.25%, 02/15/29 520,000 469,622
------------
749,689
U.S. Treasury Notes: 10.4%
3.375%, 01/15/07 316,839 305,252
5.50%, 05/15/09 1,385,000 1,327,869
6.00%, 08/15/09 675,000 670,565
------------
2,303,686
------------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(COST $2,969,151) 3,053,375
FOREIGN GOVERNMENT OBLIGATIONS 1.6%
Argentina Rep, 0.00%, 03/31/05 400,000 368,784
------------
TOTAL FOREIGN GOVERNMENT OBLIGATIONS
(COST $363,350) 368,784
------------
TOTAL INVESTMENTS
(COST $22,623,192) 100.0% 22,203,630
</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, 2000
<TABLE>
<CAPTION>
Percentage
Of Market
Value of Market
Forward Foreign Currency Contracts Portfolio Principal Value
----------------------------------- ---------- --------- -----------
<S> <C> <C> <C>
CONTRACTS TO BUY
557,000 Canadian Dollars (Settlement Date 08/09/00;
Payable amount $377,627; Market value $376,922) $ (705)
25,000 Euro Dollars (Settlement Date 08/22/00;
Payable amount $23,739; Market value $23,095) (644)
------------
(1,349)
Other assets less liabilities 1,017,409
------------
NET ASSETS $23,219,690
============
</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, 2000
<TABLE>
<CAPTION>
Percentage
of Market
Value of No. of Market
Equity Securities Portfolio Shares Value
----------------- ---------- -------- ------------
<S> <C> <C> <C>
CAPITAL EQUIPMENT 4.1%
Electrical Equipment: 4.1%
Black & Decker Corp. 68,200 $ 2,536,187
General Electric Co. 105,000 5,400,938
Hubbell, Inc. Class B 60,000 1,447,500
Stanley Works 150,000 3,928,125
-------------
13,312,750
CONSUMER CYCLICALS 0.5%
Automobiles & Related: 0.5%
Genuine Parts Co. 80,000 1,605,000
CONSUMER NONDURABLES 20.6%
Food & Beverages: 6.4%
Anheuser-Busch Company, Inc. 50,000 4,025,000
Campbell Soup Co. 100,000 2,650,000
General Mills, Inc. 108,000 3,712,500
Hershey Foods, Inc. 70,000 3,237,500
McCormick & Co. 100,000 2,931,250
Pepsico, Inc. 50,000 2,290,625
Ralston Purina Group 100,000 2,018,750
-------------
20,865,625
Health Services: 0.7%
Baxter International, Inc. 30,000 2,332,500
Miscellaneous Consumer Products: 5.5%
Colgate Palmolive Co. 60,000 3,341,250
Eastman Kodak Company 60,000 3,292,500
Fortune Brands, Inc. 120,000 2,700,000
Gillette Co. 51,300 1,497,318
</TABLE>
These 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, 2000
<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 (Continued)
Int'l. Flavors & Fragrance 100,000 $ 2,675,000
Owens Corning Fiber 70,000 385,000
Philip Morris Companies, Inc. 100,000 2,525,000
UST, Inc. 100,000 1,450,000
-------------
17,866,068
Pharmaceuticals: 8.0%
Abbott Laboratories 150,000 6,243,750
American Home Products Corporation 125,000 6,632,812
Johnson & Johnson 45,000 4,187,813
Merck & Co. 27,500 1,971,406
Pharmacia Corporation 59,500 3,257,625
Schering-Plough Corp. 80,000 3,455,000
-------------
25,748,406
CONSUMER SERVICES 16.6%
Entertainment & Leisure: 3.1%
Hilton Hotels Corp. 400,000 4,100,000
Starwood Hotel & Resort Worldwide, Inc. 175,000 5,971,875
-------------
10,071,875
General Merchandise Stores: 6.6%
Albertsons, Inc. 125,000 3,773,437
May Department Stores Co. 58,000 1,377,500
Neiman-Marcus Group, Inc.* 90,000 2,970,000
Nordstrom, Inc. 67,000 1,172,500
Penney J C Co. 50,000 806,250
Target Corp. 180,000 5,220,000
Toys R Us, Inc.* 250,000 4,125,000
Tupperware Corp. 100,000 1,943,750
-------------
21,388,437
</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, 2000
<TABLE>
<CAPTION>
Percentage
of Market
Value of No. of Market
Equity Securities Portfolio Shares Value
----------------- ----------- -------- ------------
<S> <C> <C> <C>
CONSUMER SERVICES (Continued)
Media & Communications: 5.5%
Walt Disney Company Holding Co. 156,300 $ 6,046,855
Knight Ridder, Inc. 60,000 3,127,500
Meredith Corp. 60,000 1,908,750
Readers Digest Assn., Inc. 35,000 1,194,375
Viacom, Inc. CL B * 81,375 5,396,180
-------------
17,673,660
Miscellaneous Business Services: 1.4%
Waste Management, Inc. 250,000 4,671,875
ENERGY 10.5%
Oil And Gas Extraction: 10.5%
Amerada Hess Corp. 65,000 3,932,500
BP Amoco PLC. 241,532 12,635,143
Baker Hughes, Inc. 131,200 4,542,800
Chevron Corp. 40,000 3,160,000
Exxon Mobil Corp. 57,122 4,569,760
Texaco, Inc. 30,600 1,512,788
Unocal Corp. 125,000 3,781,250
-------------
34,134,241
FINANCIAL 16.9%
Banking: 6.6%
Bank One Corp. 110,000 3,499,375
Chase Manhattan Corp. 45,000 2,235,938
Firstar Corp.* 175,000 3,456,250
Mellon Financial Corp. 100,000 3,768,750
National City Corp. 100,000 1,775,000
Washington Mutual, Inc. 120,000 3,855,000
</TABLE>
* Non-income producing
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, 2000
<TABLE>
<CAPTION>
Percentage
of Market
Value of No. of Market
Equity Securities Portfolio Shares Value
----------------- ---------- -------- -------------
<S> <C> <C> <C>
FINANCIAL (Continued)
Banking (Continued)
Wells Fargo & Co. 66,660 $ 2,753,891
-------------
21,344,204
Federal Agencies: 0.7%
Freddie Mac 60,000 2,366,250
Financial Services: 5.2%
H&R Block, Inc. 60,000 1,920,000
Citigroup, Inc. 165,547 11,681,410
J.P. Morgan & Co. 25,000 3,337,500
-------------
16,938,910
Insurance Carriers: 4.4%
Chubb Corp. 65,000 4,810,000
Loews Corp. 30,000 1,882,500
St. Paul Companies, Inc. 105,136 4,671,981
UnumProvident Corp. 125,000 2,875,000
-------------
14,239,481
PROCESS INDUSTRIES 10.7%
Chemicals and Allied Products: 7.0%
Dow Chemical Co. 90,000 2,587,500
Dupont Co. 50,000 2,265,625
Fort James Corp. 125,000 3,820,313
Great Lakes Chemical Corp. 100,000 2,937,500
Hercules, Inc. 130,000 1,941,875
Imperial Chemical ADR 100,000 2,868,750
Minnesota Mining & Manufacturing Co. 38,300 3,449,394
Pall Corp. 125,000 2,593,750
-------------
22,464,707
</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, 2000
<TABLE>
<CAPTION>
Percentage
of Market
Value of No. of Market
Equity Securities Portfolio Shares Value
----------------- --------- ------ -----
PROCESS INDUSTRIES (Continued)
<S> <C> <C> <C>
Forest Products: 0.4%
Weyerhaeuser Co. 30,000 $ 1,370,625
Metal Mining: 1.0%
Newmont Mining Corp. 75,000 1,331,250
Phelps Dodge Corp. 50,000 2,034,375
-------------
3,365,625
Paper And Allied Products: 2.3%
Kimberly-Clark Corp. 100,000 5,743,750
International Paper Co. 47,278 1,607,452
-------------
7,351,202
TECHNOLOGY 5.5%
Computer and Office Equipment: 5.5%
America Online, Inc.* 40,000 2,132,500
BMC Software, Inc.* 100,000 1,887,500
Computer Associates International, Inc. 75,000 1,860,938
First Data Corp. 125,000 5,757,813
Microsoft Corp. 40,000 2,792,500
Motorola, Inc. 50,000 1,653,125
Xerox Corp. 120,000 1,785,000
-------------
17,869,376
TRANSPORTATION 5.9%
Aerospace and Defense: 3.8%
Boeing Company 100,000 4,900,000
Lockheed Martin Corp. 100,000 2,812,500
Raytheon Co. CL B 100,000 2,425,000
Rockwell International Corp. 60,000 2,103,750
-------------
12,241,250
</TABLE>
*Non-income producing
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, 2000
<TABLE>
<CAPTION>
Percentage
of Market
Value of No. of Market
Equity Securities Portfolio Shares Value
----------------- --------- ------ -----
<S> <C> <C> <C>
TRANSPORTATION (Continued)
Railroad Transportation: 2.1%
Norfolk Southern Corp. 200,000 $ 3,725,000
Union Pacific Corp. 70,000 3,023,125
------------
6,748,125
UTILITIES 5.3%
Telephone Communication: 2.4%
AT&T Co. 30,000 928,125
SBC Communications, Inc. 104,865 4,463,317
Verizon Communications, Inc. 48,800 2,293,600
------------
7,685,042
Utility Holding Companies: 2.9%
Edison International 50,000 984,375
Niagara Mohawk Holdings, Inc.* 137,500 1,830,468
Peco Energy Co. 50,000 2,134,375
Scottish Power PLC* 40,600 1,344,875
Unicom Corp. 75,000 3,079,688
------------
9,373,781
============
TOTAL EQUITY SECURITIES
(COST $268,381,419) 313,029,015
</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, 2000
<TABLE>
<CAPTION>
Percentage
of Market
Value of Market
Short-Term Investments Portfolio Principal Value
---------------------- ----------- ---------- -------------
<S> <C> <C> <C>
SHORT-TERM INVESTMENTS 3.4%
Commercial Paper: 3.4%
Ciesco L.P, 6.55%, 08/17/2000 5,000,000 $ 4,985,340
Knight Ridder Inc., 6.54%, 08/31/2000 6,000,000 5,967,049
------------
TOTAL SHORT-TERM INVESTMENTS
(COST $10,952,389) 10,952,389
------------
TOTAL INVESTMENTS
(COST $279,333,808) 100.0% 323,981,404
Other assets less liabilities 972,600
------------
NET ASSETS $ 324,954,004
=============
</TABLE>
*Non-income producing
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, 2000
<TABLE>
<CAPTION>
Percentage
of Market
Value of No. of Market
Equity Securities Portfolio Shares Value
----------------- ----------- -------- -----------
<S> <C> <C> <C>
CAPITAL EQUIPMENT 6.3%
Aerospace & Defense: 1.1%
Boeing Company 4,400 $ 215,600
Tyco International, Ltd. 8,100 433,350
-----------
648,950
Electrical Equipment: 4.2%
General Electric Co. 47,600 2,448,425
Machinery: 1.0%
Illinois Tool Works, Inc. 9,600 549,600
CONSUMER NONDURABLES 14.9%
Food & Beverages: 3.4%
Anheuser-Busch Company, Inc. 9,700 780,850
Coca Cola 13,800 846,112
Pepsico, Inc. 7,400 339,013
-----------
1,965,975
Health Services: 0.7%
Medtronic, Inc. 7,900 403,394
Miscellaneous Consumer Products: 1.3%
McDonalds Corp. 10,300 324,450
Proctor & Gamble Co. 7,200 409,500
-----------
733,950
Pharmaceuticals: 9.5%
American Home Products Co. 12,000 636,750
Amgen, Inc.* 6,000 389,625
Johnson & Johnson 10,300 958,544
Lilly Eli & Co. 7,800 810,225
Merck & Co. 15,100 1,082,481
</TABLE>
*Non-income producing
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, 2000
<TABLE>
<CAPTION>
Percentage
of Market
Value of No. of Market
Equity Securities Portfolio Shares Value
----------------- ------------ ------- ------------
<S> <C> <C> <C>
CONSUMER NONDURABLES (Continued)
Pharmaceuticals (Continued)
Pfizer, Inc. 24,475 $ 1,055,484
Schering Plough Corp. 13,800 595,988
------------
5,529,097
CONSUMER CYCLICALS 0.5%
Automobiles & Related: 0.5%
Ford Motor Co. 6,400 298,000
CONSUMER SERVICES 10.2%
General Merchandise Stores: 5.2%
Costco Wholesale Corp.* 14,300 465,644
Gap, Inc. 8,300 297,244
Home Depot, Inc. 16,450 851,288
Walmart Stores 26,000 1,428,375
------------
3,042,551
Media & Communications: 5.0%
A T & T Corp Liberty Media Group 15,400 342,650
Clear Channel Communication, Inc.* 10,500 799,969
Walt Disney Company Holding Co. 14,000 541,625
Time Warner, Inc. 7,600 582,825
Viacom, Inc. CL B * 9,154 607,025
------------
2,874,094
ENERGY 5.6%
Oil And Gas Extraction: 5.6%
Exxon Mobil Corp. 20,528 1,642,240
</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, 2000
<TABLE>
<CAPTION>
Percentage
of Market
Value of No. of Market
Equity Securities Portfolio Shares Value
----------------- ----------- -------- ------------
<S> <C> <C> <C>
ENERGY (Continued)
Oil And Gas Extraction (Continued)
Royal Dutch Petroleum Co. ADR 17,700 $ 1,031,025
Schlumberger Limited 8,200 606,288
Transocean Sedco Forex, Inc. 26 1,287
------------
3,280,840
FINANCIAL 18.1%
Banking: 1.8%
Chase Manhattan Corp. 12,800 636,000
Mellon Financial Corp. 11,500 433,406
------------
1,069,406
Federal Agencies: 1.3%
Federal National Mortgage Assn. 18,700 737,481
Financial Services: 12.0%
American Express Co. 6,400 362,800
Citigroup, Inc. 33,475 2,362,080
MBNA Corp. 13,700 457,238
Morgan Stanley Dean Witter 9,870 900,638
Northern Trust Corp. 6,500 486,688
Charles Schwab Corp. 12,100 437,113
SPDR Trust 13,800 1,972,535
------------
6,979,092
Insurance Carriers: 3.0%
Ace Limited 2,400 86,400
American International Group 18,880 1,655,540
------------
1,741,940
</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, 2000
<TABLE>
<CAPTION>
Percentage
of Market
Value of No. of Market
Equity Securities Portfolio Shares Value
----------------- ------------ ------ -----------
<S> <C> <C> <C>
PROCESS INDUSTRIES 1.9%
Chemicals and Allied Products: 0.6%
Dow Chemical Co. 11,100 $ 319,125
Metal Mining: 0.7%
Alcoa, Inc. 14,300 432,575
Paper And Allied Products: 0.6%
International Paper Co. 10,700 363,800
TECHNOLOGY 34.3%
Communication Equipment: 8.3%
Arcatel Sponsored ADRS 4,100 299,813
Corning, Inc. 2,000 467,875
Lucent Technologies, Inc. 16,300 713,125
Motorola, Inc. 27,000 892,688
Nextel Communication, Inc.* 9,800 548,188
Nortel Networks Corp. 20,900 1,554,436
Vodafone Airtouch PLC ADR 8,000 340,000
-----------
4,816,125
Computer & Office Equipment: 26.0%
America Online, Inc.* 18,100 964,956
Applied Materials, Inc.* 4,000 303,500
Cisco Systems Inc.* 42,600 2,787,638
Dell Computer Corp.* 24,000 1,054,500
EMC Mass Corp.* 13,100 1,115,138
Electronic Data System Corp. 10,500 451,500
Hewlett Packard Co. 5,200 567,775
Intel Corp. 36,600 2,443,050
</TABLE>
*Non-income producing
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, 2000
<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)
International Business Machines Corp. 8,800 $ 989,450
Microsoft Corp. 26,800 1,870,975
Oracle Corp.* 13,500 1,015,031
Sun Microsystems, Inc.* 7,900 832,956
Texas Instruments, Inc. 12,700 745,331
-------------
15,141,800
UTILITIES 8.2%
Telephone Communication: 5.9%
AT&T Co. 12,000 371,250
Qwest Communications International, Inc. 11,936 560,246
SBC Communications, Inc. 19,000 808,687
Verizon Communications, Inc. 19,900 935,300
Worldcom, Inc.* 19,000 742,187
-------------
3,417,670
Utility Holding Companies: 2.3%
Aes Corp.* 13,800 737,437
American Power Conversion Corp.* 6,500 165,343
Calpine Corp. 6,000 427,500
-------------
1,330,280
-------------
TOTAL INVESTMENTS
(COST $44,935,123) 100.0% 58,124,170
Other assets less liabilities 891,257
-------------
NET ASSETS $ 59,015,427
=============
</TABLE>
*Non-income producing
The accompanying notes are an integral part of these financial statements.
================================================================================
31
<PAGE> 33
================================================================================
SECURITY FIRST TRUST SCHEDULE I
U.S. GOVERNMENT INCOME SERIES
PORTFOLIO OF INVESTMENTS
JULY 31, 2000
<TABLE>
<CAPTION>
Percentage
of Market
Value of Market
Fixed Maturities Portfolio Principal Value
---------------- ----------- ---------- -----------
<S> <C> <C> <C>
CORPORATE NOTES 1.9%
Finance & Credit: 1.9%
Deutsche Mortgage & Asset, 6.22%, 09/15/07 106,776 $ 102,804
GMAC Mortgage Corp., 5.94%, 07/01/13 431,651 387,757
Residential Accredit Lines, Inc., 6.75%, 05/25/28 116,248 113,822
-----------
604,383
-----------
TOTAL CORPORATE NOTES
(COST $639,117) 604,383
U.S. GOVERNMENT OBLIGATIONS 32.0%
U.S. Treasury Bonds: 30.7%
8.75%, 11/15/08 500,000 532,030
12.75%, 11/15/10 600,000 768,186
14.00%, 11/15/11 50,000 69,438
9.25%, 02/15/16 410,000 536,202
8.50%, 02/15/20 3,130,000 3,969,216
6.375%, 08/15/27 3,580,000 3,744,429
5.25%, 02/15/29 230,000 207,718
-----------
9,827,219
U.S. Treasury Notes: 1.3%
6.375%, 04/30/02 250,000 250,000
5.875%, 11/15/04 170,000 167,768
-----------
417,768
-----------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(COST $10,361,424) 10,244,987
</TABLE>
The accompanying notes are an integral part of these financial statements.
================================================================================
32
<PAGE> 34
================================================================================
SECURITY FIRST TRUST SCHEDULE I
PORTFOLIO OF INVESTMENTS (CONTINUED)
JULY 31, 2000
<TABLE>
<CAPTION>
Percentage
of Market
Value of Market
Fixed Maturities Portfolio Principal Value
---------------- ---------- ---------- -----------
<S> <C> <C> <C>
FEDERAL AGENCIES 59.5%
Federal Farm Credit Bank: 6.7%
6.05%, 04/21/03 550,000 $ 538,203
6.94%, 05/19/05 125,000 124,816
7.37%, 08/01/06 1,500,000 1,496,835
-----------
2,159,854
Federal Home Loan Bank: 0.8%
8.00%, 08/27/01 250,000 252,768
Federal Home Loan Mortgage Corp.: 16.1%
7.36%, 06/05/07 1,500,000 1,476,150
7.00%, 07/01/07 54,479 53,236
7.00%, 09/01/10 159,137 156,500
6.50%, 04/01/11 942,803 911,568
6.00%, 05/11/11 999,667 949,054
5.50%, 05/01/14 465,156 432,595
6.918%, 07/01/27 6,176 6,183
6.50%, 04/01/29 487,194 461,158
6.50%, 05/01/29 715,730 677,481
6.50%, 06/01/29 35,025 33,154
-----------
5,157,079
Federal National Mortgage Assn.: 22.1%
6.125%, 11/25/03 130,144 128,787
5.125%, 02/13/04 175,000 165,120
6.14%, 09/10/08 225,000 208,861
6.09%, 10/01/08 513,030 475,168
6.00%, 11/01/08 270,526 259,705
6.50%, 03/01/09 71,587 70,693
7.00%, 04/01/11 775,935 762,108
7.00%, 05/01/11 370,525 363,922
5.50%, 07/01/13 428,017 396,985
</TABLE>
The accompanying notes are an integral part of these financial statements.
================================================================================
33
<PAGE> 35
================================================================================
SECURITY FIRST TRUST SCHEDULE I
PORTFOLIO OF INVESTMENTS (CONTINUED)
JULY 31, 2000
<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)
8.00%, 11/01/13 523,443 $ 525,406
5.50%, 01/01/14 462,803 429,249
5.50%, 02/01/14 458,187 424,968
6.00%, 03/01/14 61,348 58,127
8.00%, 08/01/14 246,977 249,677
6.50%, 05/17/15 700,000 662,816
6.32%, 10/01/23 691,946 633,131
8.00%, 10/01/25 144,592 145,134
6.00%, 06/01/29 487,442 447,681
6.50%, 06/01/29 495,016 467,944
6.50%, 09/01/29 194,289 183,663
-----------
7,059,145
Government National Mortgage Assn.: 12.9%
8.25%, 02/15/09 199,930 203,179
6.00%, 04/15/14 453,313 431,780
7.00%, 10/15/23 480,979 467,901
7.50%, 01/15/26 689,529 684,135
6.50%, 03/15/29 214,265 203,417
6.50%, 04/15/29 176,935 167,977
6.50%, 05/15/29 230,708 219,028
6.50%, 06/15/29 216,195 205,249
6.50%, 07/15/29 537,122 509,927
6.50%, 07/15/29 498,364 473,132
6.50%, 08/15/29 602,089 571,605
-----------
4,137,330
Other Federal Agencies: 0.9%
Small Business Admin., 5.50%, 10/01/18 334,152 296,259
-----------
TOTAL FEDERAL AGENCIES
(COST $19,452,737) 19,062,435
</TABLE>
The accompanying notes are an integral part of these financial statements.
================================================================================
34
<PAGE> 36
================================================================================
SECURITY FIRST TRUST SCHEDULE I
PORTFOLIO OF INVESTMENTS (CONTINUED)
JULY 31, 2000
<TABLE>
<CAPTION>
Percentage
Of Market
Value of Market
Short-Term Investments Portfolio Principal Value
---------------------- --------- ---------- -------------
<S> <C> <C> <C>
SHORT-TERM INVESTMENTS 6.6%
Federal Home Loan Bank, 5.72%, 08/01/00
(COST $2,100,000) 2,100,000 $ 2,100,000
-------------
TOTAL INVESTMENTS
(COST $32,553,278) 100.0% 32,011,805
Other assets less liabilities 508,244
-------------
NET ASSETS $ 32,520,049
=============
</TABLE>
The accompanying notes are an integral part of these financial statements.
================================================================================
35
<PAGE> 37
================================================================================
SECURITY FIRST TRUST
NOTES TO FINANCIAL STATEMENTS
JULY 31, 2000
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 July 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.
As of 12/31/1999 the Bond Series and U.S. Government Income Series had capital
loss carryforwards of $657,021 and $857,344, respectively. The loss
carryforwards expire on 12/31/2009.
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 that 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 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.
ESTIMATES -- Certain amounts reported in the accompanying financial statements
are based on management's best estimates and judgements. Actual results could
differ from those estimates.
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, 2000,
Security Management has also agreed to reimburse the Bond Series for any
remaining expenses exceeding a limitation
SECURITY FIRST TRUST
================================================================================
37
<PAGE> 39
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE B -- REMUNERATION OF MANAGER AND OTHERS (CONTINUED)
equivalent annually to 1.5%. Security Management may elect on an annual basis to
reimburse the Series for future excess expenses.
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.
SECURITY FIRST TRUST
================================================================================
38
<PAGE> 40
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, 2000 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 $ 27,262,380 $ 50,241,251
Sales 28,207,320 51,138,844
Other Investment Securities:
Purchases 15,323,341 $ 77,736,240 $ 48,945,616 256,172
Sales 16,089,569 50,617,104 48,275,745 1,597,940
</TABLE>
The cost of investments at July 31, 2000 was the same for both financial
statement and federal income tax purposes. At July 31, 2000, 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 $ 151,839 $ (572,750) $ (420,911)
T. Rowe Price Growth and Income Series 87,812,518 (43,164,922) 44,647,596
Equity Series 15,042,867 (1,853,820) 13,189,047
U.S. Government Income Series 235,733 (777,206) (541,473)
</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>
YEAR ENDED JULY 31, 2000
Bond Series 860,594 379,121 (1,471,680) (231,965)
T. Rowe Price Growth and Income Series 1,176,075 385,000 1,004,682 (2,272,433) 293,324
Equity Series 191,684 39,195 186,614 (634,942) (217,449)
U.S. Government Income Series 453,683 380,323 (790,971) 43,035
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
</TABLE>
================================================================================
40
<PAGE> 42
SECURITY FIRST TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE E -- FINANCIAL HIGHLIGHTS
The per share information for each respective series' capital stock outstanding
throughout the period is as follows:
<TABLE>
<CAPTION>
NET REALIZED TOTAL
AND UNREALIZED INCOME
NET ASSET GAINS (LOSS) DIVIDENDS
VALUE AT NET (LOSSES) ON FROM FROM NET
BEGINNING INVESTMENT INVESTMENTS INVESTMENT INVESTMENT
OF YEAR INCOME OPERATIONS INCOME
-------------- -------------- --------------- ------------- --------------
<S> <C> <C> <C> <C> <C>
BOND SERIES
Year ended July 31,
1996 $ 3.92 $ .24 $ (.04) $ .20 $ (.24)
1997 3.88 .24 .14 .38 (.24)
1998 4.02 .19 .11 .30 (.21)
1999 4.11 .18 (.14) .04 (.18)
2000 3.93 .24 (.11) .13 (.22)
T. ROWE PRICE
GROWTH AND
INCOME SERIES
Year ended July 31,
1996 $ 10.58 $ .30 $ 1.56 $ 1.86 $ (.30)
1997 12.10 .30 4.69 4.99 (.29)
1998 16.26 .28 1.27 1.55 (.30)
1999 16.56 .29 2.45 2.74 (.29)
2000 18.01 .29 (1.61) (1.32) (.29)
EQUITY SERIES
Year ended July 31,
1996 $ 5.70 $ .10 $ .46 $ .56 $ (.05)
1997 6.05 .09 2.60 2.69 (.11)
1998 8.18 .07 1.04 1.11 (.08)
1999 8.57 .06 1.42 1.48 (.07)
2000 8.54 .02 .68 .70 (.05)
U.S. GOVERNMENT
INCOME SERIES
Year ended July 31,
1996 $ 5.13 $ .18 $ .04 $ .22 $ (.19)
1997 5.15 .23 .20 .43 (.22)
1998 5.36 .27 .06 .33 (.24)
1999 5.45 .30 (.24) .06 (.31)
2000 5.10 .30 (.01) .29 (.29)
<CAPTION>
DISTRIBUTIONS
FROM NET ASSET
REALIZED VALUE AT
CAPITAL END OF TOTAL
GAINS YEAR RETURN(1)
--------------- ------------- --------------
<S> <C> <C> <C>
BOND SERIES
Year ended July 31,
1996 $ 3.88 5.10%
1997 4.02 9.79
1998 4.11 7.46
1999 $ (.04) 3.93 0.97
2000 3.84 3.31
T. ROWE PRICE
GROWTH AND
INCOME SERIES
Year ended July 31,
1996 $ (.04) $ 12.10 17.58%
1997 (.54) 16.26 41.24
1998 (.95) 16.56 9.53
1999 (1.00) 18.01 16.55
2000 (.77) 15.63 (7.33
EQUITY SERIES
Year ended July 31,
1996 $ (.16) $ 6.05 9.82%
1997 (.45) 8.18 44.46
1998 (.64) 8.57 13.57
1999 (1.44) 8.54 17.27
2000 (.26) 8.93 8.20
U.S. GOVERNMENT
INCOME SERIES
Year ended July 31,
1996 $ (.01) $ 5 .15 4.29%
1997 5.36 8.35
1998 5.45 6.16
1999 (.10) 5.10 1.10
2000 5.10 5.69
</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 E -- FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
Ratio of
Ratio of Net
Operating Investment
Expenses Income Portfolio Net Assets
to Average to Average Turnover End of
Net Assets Net Assets Rate Year
---------- ---------- ---------- -------------
<S> <C> <C> <C> <C>
BOND SERIES
Year ended July 31,
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
2000 .68 6.30 177 23,219,690
T. ROWE PRICE
GROWTH AND INCOME SERIES
Year ended July 31,
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
2000 .55 1.83 16 324,954,004
EQUITY SERIES
Year ended July 31,
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
2000 .80 .31 83 59,015,427
U.S. GOVERNMENT INCOME SERIES
Year ended July 31,
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
2000 .71 5.85 159 32,520,049
</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
INDEPENDENT AUDITORS' REPORT
To the Shareholders and the Board of Trustees
of the Security First Trust:
We have audited the accompanying statements of assets and liabilities, including
the portfolio of investments, of the Security First Trust comprised of the 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, 2000
and the related statements of operations for the year then ended and the
statements of changes in net assets and the financial highlights for each of the
two years in the period 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 audits. The financial highlights for the three years ended July 31,
1998, were audited by other auditors whose report, dated September 14, 1998,
expressed an unqualified opinion on those financial highlights for each of the
three years.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights 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, 2000, 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 audits provide 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
Security First Trust's Bond Series, T. Rowe Price Growth and Income Series,
Equity Series, and U.S. Government Income Series as of July 31, 2000, the
results of their operations for the year then ended, and the changes in their
net assets and the financial highlights for each of the two years in the period
then ended, in conformity with accounting principles generally accepted in the
United States of America.
/s/ DELOITTE & TOUCHE LLP
-------------------------
September 1, 2000
Los Angeles, California
<PAGE> 45
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.
ANNUAL REPORT
JULY 31, 2000
SECURITY
FIRST
TRUST
--------------------------------------------------------------------------------
BOARD OF TRUSTEES
Jack R. Borsting Howard H. Kayton
Katherine L. Hensley Lawrence E. Marcus
[SECURITY FIRST TRUST LOGO]
11365 West Olympic Boulevard
Los Angeles, California 90064
(310) 312-6100
SFG 1768
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
