SECURITY
FUNDS
ANNUAL
REPORT
September 30, 1995
- - Security
Growth And
Income Fund
- - Security Equity
Fund
-Equity Series
-Global Series
-Asset
Allocation
Series
- - Security Ultra
Fund
[SDI LOGO]
<PAGE>
PRESIDENT'S COMMENTARY
NOVEMBER 15, 1995
SECURITY
FUNDS
To Our Shareholders:
What a difference a year makes! History shows that market fluctuations are
inevitable, and shareholders who remain committed and continue to invest
regardless of overall market levels stand to benefit over time.* And what better
argument for remaining invested than the 12-month period ending September 30,
1995?
The $68 billion that flowed into stock mutual funds in the first three
quarters of 1995 helped push stock prices to new highs, as evidenced by the Dow
Jones Industrial Average finally topping 4800 and the Standard & Poor's 500
stock index posting a record high of 583.61 in the third quarter. All stock
categories, regardless of capitalization, were up for the nine-month period
ending September 30, 1995. The S&P 500 posted nearly a 30% gain as of September
30, 1995, and the S&P 600 small-cap index finished the period up 29% as did the
S&P mid-cap index!
TECHNOLOGY STOCKS LED MARKET
Technology stocks of all sizes were the undisputed market leaders through the
third quarter. Demand reached a fever pitch during the second quarter,
surprising even seasoned investment professionals. Stock prices soared for
semiconductors, computers and software, and the group ended the third quarter up
nearly 100%. Companies were not able to ship products, from microchips to
personal computers, fast enough to keep up with demand. Although technology
stocks faltered somewhat late in the third quarter, this was mainly due to a
moderate sell-off from a group that had performed very well. In addition, money
managers attempting to reduce overweightings in their portfolios began selling
technology issues in the third quarter.
LARGE CAPS ENJOYED LENGTHY RUN
The general feeling early in 1995 was that the U.S. economy would slow due to
increases in interest rates initiated by the Federal Reserve in 1994. Perception
became reality as investors rushed to buy stocks of large capitalization
companies whose earnings tend to remain consistent regardless of economic
activity.
Aided by stronger-than-expected U.S. earnings growth, large cap stocks, as
represented by the Standard & Poor's returned 29.77% in the first three quarters
of 1995, nearly tripling its historical average annual return of 10%. Beating
the S&P's third-quarter return proved to be difficult. However, the Class A
shares of Security Equity Fund posted a third quarter September 30 return of
29.96%, even being underweighted compared to the technology sector of the index.
Also positive, Class A shares of the Security Growth and Income Fund posted a
September 30 return of 22.15%. The Security Ultra Fund, although not measured
against the S&P 500, closed the third quarter with a total return of 22.75% for
Class A shares.**
SMALL AND MID-CAP RESURGENCE
The strengthening U.S. dollar, which modestly impacted companies with
substantial foreign revenues, as well as the belief that large caps could not
sustain their superior first-half performance, led to increased interest in
small capitalization companies in the third quarter. The Standard & Poor's
600-stock index (small-cap stocks) trailed the S&P 500 by almost 6% at June 30,
1995. However, by September 30, it had pulled nearly neck to neck to close the
quarter with a 29% return.
GLOBAL MARKETS
Looking globally, foreign markets in 1995 demonstrated much of the volatility
that plagued the U.S. markets for much of 1994. At mid-year the story from Japan
wasn't particularly positive, but Japanese stocks did experience gains in the
third quarter. Europe was very much a stock-by-stock play, and Latin America
remained under the "tequila effect"-not yet having recovered from Mexico's
fiscal and monetary problems. However, we remain quite positive on the
international markets, especially the fixed income markets. We believe late 1995
and 1996 could be a good period for non-U.S. markets, due in part to reduced
volatility. Many foreign economies are growing faster than ours, and U.S.
companies doing significant business internationally, as well as international
markets themselves should benefit.
NEAR TERM OUTLOOK
Looking forward, we see the investment climate of slow growth with low
inflation as positive for financial assets. We will continue to seek out
companies whose 1996 earnings prospects look attractive. Investors should
remember that the average bull market lasts over 3.5 years and the average bear
market lasts only nine months. As always, we believe owners of financial assets
should be adequately diversified and remain invested regardless of market
conditions.
Over the next several pages, we review the factors influencing the
performance of each Fund for the 12-month period ending September 30, 1995. As
always, our goal is to provide you with positive investment results over time
along with the highest-quality service in the industry. We invite your questions
and comments. Please call our customer service center at 1-800-888-2461, ext.
3127.
Sincerely,
/s/ John D. Cleland
John D. Cleland
President-Security Funds
*Programs of regular investing do not assure profits or protect against loss
in a declining market.
**These performance figures do not reflect deduction of the maximum front-end
sales charge of 5.75%. If the sales charge were deducted, the performance
quoted would be reduced.
[upper right hand corner, picture of John Cleland]
JOHN CLELAND
1
<PAGE>
MANAGER'S COMMENTARY
NOVEMBER 15, 1995
SECURITY GROWTH AND
INCOME FUND
The Growth and Income Fund returned 20.25% for the 12-month period ending
September 30, 1995, compared to the 29.77% returned by the Standard & Poor's
500-stock index.* An underweight position relative to the index in technology,
telephones and banks was the main reason why the Fund's performance lagged the
S&P 500. The portfolio also has more of a value tilt than the S&P 500, and value
stocks as a group underperformed growth stocks through the third quarter of the
year.
Historically, the Growth and Income Fund has been under exposed to value
stocks. But because of price declines due to economic slowdown, we added some
value names to the traditional growth bias of the portfolio. Some of these value
names include Time Warner, Inc., Sara Lee Corporation and Dial Corporation
(The). As of September 30, 1995, approximately 60% of assets were in growth
issues and 20% were in value names. The remaining 20% of assets were in high
yield bonds and cash.
The portfolio lacked exposure to telephone and bank stocks and this hurt
performance. These stocks are not high growth issues, but they tend to do well
when interest rates decline. Economic slowdown, positive regulatory changes and
lower interest rates combined to produce a good environment for telephone stocks
throughout the period. Although we believed bank stock fundamentals were
deteriorating, i.e., loan growth was slowing, the sector got a boost from heavy
merger activity throughout the third quarter.
Positive contributors to the Fund's performance for the period included
classic growth stocks such as Duracell International and General Electric
Company. In addition, performance was favorably impacted by weightings in
pharmaceutical giants Merck & Company, Inc. and Bristol-Meyers Squibb Company.
And last, exposure to multinational companies such as McDonald's Corporation,
whose foreign sales resulted in strong earnings growth, positively influenced
the Fund's return.
The income component of the portfolio as of September 30, 1995, roughly
15.8%, was comprised of high yield bonds rated BB or B, one and two levels below
investment grade respectively. For the nine-month period, the income component
of the portfolio returned 16.21%, compared to the Lehman Brothers Single B Index
return of 13.97% and the Salomon Brothers Single B return of 13.95%.* The
returns on high yield bonds often behave more like equity returns. However,
because of the high yield and subsequent cash flow, they are normally less
volatile than equities. In fact, high yield bonds have historically delivered
the highest cumulative return for all categories of bonds over the ten-year
period ending December 31, 1994.**
Going forward, we anticipate the growth component of the portfolio will do
well as the economy continues to weaken. Concern about corporate profit growth
in 1996 has led us to structure the portfolio more defensively - a position we
believe to be better suited to that kind of market. The portfolio's asset
allocation will continue to focus on growth and value stocks on the equity side,
and high yield bonds on the income side.
*This performance figure is based on Class A share prices and does not
reflect deduction of the sales charge.
**Although high-yield bonds have delivered higher performance in the past
than other categories of bonds, they also present a greater risk that interest
and principal payments will not be made.
[upper right hand corner, picture of Chuck Lauber, Terry Milberger, Tom Swank,
John Cleland]
THE SECURITY MANAGEMENT GROWTH AND INCOME TEAM
CHUCK LAUBER, TERRY MILBERGER, TOM SWANK, JOHN CLELAND
2
<PAGE>
MANAGER'S COMMENTARY (CONTINUED)
NOVEMBER 15, 1995
SECURITY
GROWTH AND
INCOME FUND
PERFORMANCE
[LINE GRAPH WITH FOLLOWING INFORMATION CHARTED]
SECURITY GROWTH AND INCOME FUND
VS. S&P 500
Security Growth
S&P 500 and Income Fund
------- ---------------
September 1985 $10,000.00 $10,000.00
October 1985 10,447.00 9,594.30
November 1985 11,195.01 9,956.14
December 1985 11,717.81 10,057.44
January 1986 11,769.37 10,102.80
February 1986 12,665.02 10,692.40
March 1986 13,366.66 11,147.78
April 1986 13,200.91 11,067.25
May 1986 13,925.65 11,354.86
June 1986 14,156.81 11,505.74
July 1986 13,351.29 10,910.62
August 1986 14,349.96 11,470.74
September 1986 13,170.40 10,968.48
October 1986 13,902.67 11,276.46
November 1986 14,258.58 11,371.21
December 1986 13,882.15 11,221.63
January 1987 15,746.53 12,190.32
February 1987 16,396.86 12,605.47
March 1987 16,842.85 12,880.44
April 1987 16,694.64 12,587.71
May 1987 16,866.59 12,791.35
June 1987 17,708.23 13,337.58
July 1987 18,590.10 13,891.17
August 1987 19,305.82 14,110.03
September 1987 18,881.09 13,684.88
October 1987 14,817.88 11,302.06
November 1987 13,604.30 10,833.32
December 1987 14,608.30 11,321.00
January 1988 15,232.07 11,769.92
February 1988 15,947.98 12,148.69
March 1988 15,466.35 11,966.35
April 1988 15,633.38 12,065.95
May 1988 15,755.32 11,994.80
June 1988 16,486.37 12,364.12
July 1988 16,420.43 12,263.14
August 1988 15,876.91 11,873.60
September 1988 16,550.09 12,192.46
October 1988 17,001.91 12,426.65
November 1988 16,760.48 12,338.83
December 1988 17,063.85 12,534.97
January 1989 18,297.56 13,255.73
February 1989 17,841.95 13,193.06
March 1989 18,263.02 13,303.63
April 1989 19,205.40 13,828.14
May 1989 19,977.45 14,098.35
June 1989 19,869.57 14,127.96
July 1989 21,653.86 14,691.79
August 1989 22,071.78 14,852.88
September 1989 21,985.70 14,788.83
October 1989 21,473.43 14,674.57
November 1989 21,920.08 14,788.83
December 1989 22,437.40 15,095.63
January 1990 20,931.85 14,326.53
February 1990 21,201.87 14,380.20
March 1990 21,759.48 14,531.77
April 1990 21,222.02 14,023.16
May 1990 23,291.16 14,713.41
June 1990 23,128.13 14,623.41
July 1990 23,054.12 14,734.04
August 1990 20,972.33 14,107.07
September 1990 19,940.49 13,933.26
October 1990 19,866.71 13,952.01
November 1990 21,146.13 14,495.85
December 1990 21,725.53 14,643.29
January 1991 22,685.80 14,977.61
February 1991 24,310.10 15,713.12
March 1991 24,888.68 15,913.37
April 1991 24,958.37 16,049.38
May 1991 26,026.59 16,502.75
June 1991 24,837.17 16,162.40
July 1991 25,999.55 16,645.21
August 1991 26,610.54 17,036.04
September 1991 26,174.13 17,035.74
October 1991 26,524.86 17,338.70
November 1991 25,453.26 16,756.09
December 1991 28,362.57 17,844.78
January 1992 27,835.02 17,602.98
February 1992 28,191.31 17,602.98
March 1992 27,638.76 17,506.57
April 1992 28,443.05 17,433.02
May 1992 28,596.64 17,359.46
June 1992 28,181.99 17,335.44
July 1992 29,317.73 17,830.74
August 1992 28,725.51 17,781.21
September 1992 29,055.85 17,830.28
October 1992 29,160.45 17,830.28
November 1992 30,143.16 18,405.46
December 1992 30,538.03 18,703.42
January 1993 30,760.96 18,703.42
February 1993 31,176.23 18,884.00
March 1993 31,846.52 19,544.93
April 1993 31,066.28 18,869.19
May 1993 31,905.07 19,233.05
June 1993 32,010.36 19,722.16
July 1993 31,859.91 19,696.01
August 1993 33,073.77 20,428.39
September 1993 32,829.03 20,613.72
October 1993 33,495.46 20,508.55
November 1993 33,180.60 19,824.93
December 1993 33,588.72 20,232.27
January 1994 34,713.94 21,208.63
February 1994 33,776.67 20,856.07
March 1994 32,307.38 19,744.08
April 1994 32,727.38 19,390.05
May 1994 33,260.83 19,172.19
June 1994 32,439.29 18,504.66
July 1994 33,513.03 18,777.60
August 1994 34,877.01 19,432.62
September 1994 34,036.48 19,039.85
October 1994 34,815.91 19,012.49
November 1994 33,538.17 18,328.59
December 1994 34,027.83 18,642.65
January 1995 34,912.55 18,671.02
February 1995 36,267.16 19,210.16
March 1995 37,340.66 19,735.72
April 1995 38,427.28 20,364.07
May 1995 39,945.15 20,992.42
June 1995 40,883.87 21,602.11
July 1995 42,245.30 22,521.35
August 1995 42,359.36 22,262.82
September 1995 44,134.22 22,895.11
$10,000 OVER TEN YEARS
This chart assumes a $10,000 investment in Class A shares of Growth and
Income Fund on September 30, 1985, and reflects deduction of the 5.75% sales
load. On September 30, 1995, the value of your investment in Class A shares of
the fund (with dividends reinvested) would have grown to $22,895. By comparison,
the same $10,000 investment would have grown to $44,134 based on the S&P's
performance.
The performance illustrated above is based on the performance of Class A
shares. The performance of Class B shares, which were first offered on October
19, 1993, will be greater or less than the performance shown for Class A shares
as a result of the different loads and fees associated with an investment in
Class B shares.
TOP 5 HOLDINGS***
% of
net assets
----------
DSC Communications Corporation 2.20%
Ceridian Corporation 1.90%
Frontier Corporation 1.90%
PepsiCo, Inc. 1.90%
McDonnell Douglas Corporation 1.80%
***At September 30, 1995
AVERAGE ANNUAL RETURNS
As of September 30, 1995
1 year 5 years 10 years
------ ------- --------
A Shares 20.25% 10.44% 9.28%
A Shares with sales charge 13.41% 9.15% 8.64%
B Shares 19.07% 4.80% N/A
(10-19-93)
B Shares with CDSC 14.07% 2.82% N/A
(10-19-93)
The performance data above represents past performance which is not predictive
of future results. The investment return and principal value of an investment in
the fund will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost. The figures above do not reflect
deduction of the maximum front end sales charge of 5.75% for Class A shares or
contingent deferred sales charge of 5% for Class B shares, as applicable, except
where noted. Such figures would be lower if the maximum sales charge were
deducted.
3
<PAGE>
MANAGER'S COMMENTARY
NOVEMBER 15, 1995
SECURITY EQUITY
FUND-
EQUITY SERIES
Economic slowdown and declining interest rates boosted stock prices and led
the U.S. stock market to superior performance in the first three quarters of
1995. Security Equity Series gained 29.96% for the nine-month period ending
September 30, 1995, besting the 29.77% return delivered by the Standard & Poor's
500-Stock Index for the same time period.* Beating the S&P 500 is difficult, and
Security Equity Series led the S&P throughout most of the year despite being
underweighted compared to the index in technology stocks, the index's
top-performing sector.
As of September 30, 1995, the portfolio included large capitalization
technology giants such as Microsoft Corporation, IBM and Xerox Corporation.
However, technology stocks of all sizes outperformed expectations throughout the
first seven months of 1995. Increased volatility in August and September was
primarily a result of the group's exceptional performance. A significant
third-quarter sell-off occurred due to investors taking profits, money managers
adjusting portfolio overweightings and the announcement by a few technology
companies that earnings would not meet expectations.
This pull back in technology hurt the portfolio's performance only slightly.
In addition, underexposure to certain other S&P 500 sectors that performed well
such as telephone stocks, utilities and banks, also dampened total return.
Increased exposure to these industries would have boosted the portfolio's total
return for the period.
Contributing to positive performance for the period were the stocks of
high-quality companies with consistent earnings growth in the healthcare sector
such as Baxter International, Inc., and Merck & Company, Inc. Consumer staples
giants such as Procter & Gamble Company also turned in very strong performances.
The portfolio's exposure to international markets through its multinational
holdings, U.S. companies with significant overseas presence, also contributed to
positive total return. Worldwide franchise companies such as McDonald's
Corporation and Procter & Gamble Company are experiencing dramatic international
growth as they benefit from increasing worldwide consumer demand.
Throughout the 12-month period ending September 30,1995, we remained
principally fully invested to capture the opportunity provided by the rising
market. As of September 30, 1995, approximately 80% of the portfolio's assets
were in growth names, 10% in value stocks, 5% in economically-sensitive
companies and 5% in interest-sensitive stocks.
Looking forward, we see an even greater shift away from
economically-sensitive issues and toward traditional growth stocks. Because we
anticipate an earnings slowdown in 1996, we have already positioned the
portfolio to focus on stable growth issues, such as financial services, consumer
products and healthcare, whose earnings tend to hold up regardless of economic
activity.
*This performance figure is based on Class A share prices and does not
reflect deduction of the sales charge.
[upper right hand corner, picture of John Cleland, Terry Milberger,
Chuck Lauber]
THE SECURITY MANAGEMENT LARGE CAP TEAM
JOHN CLELAND, TERRY MILBERGER, CHUCK LAUBER
4
<PAGE>
MANAGER'S COMMENTARY (CONTINUED)
NOVEMBER 15, 1995
SECURITY EQUITY
FUND-
EQUITY SERIES
PERFORMANCE
[LINE GRAPH WITH FOLLOWING INFORMATION CHARTED]
SECURITY EQUITY SERIES VS. S&P 500
S&P 500 Equity Series
------- -------------
September 1985 $10,000.00 $10,000.00
October 1985 10,447.00 9,823.81
November 1985 11,195.01 10,332.91
December 1985 11,717.81 10,766.60
January 1986 11,769.37 10,766.60
February 1986 12,665.02 11,633.96
March 1986 13,366.66 12,407.04
April 1986 13,200.91 12,269.89
May 1986 13,925.65 12,759.45
June 1986 14,156.81 12,998.95
July 1986 13,351.29 12,149.77
August 1986 14,349.96 12,802.98
September 1986 13,170.40 11,757.85
October 1986 13,902.67 12,534.83
November 1986 14,258.58 12,605.12
December 1986 13,882.15 12,253.67
January 1987 15,746.53 13,800.03
February 1987 16,396.86 14,456.06
March 1987 16,842.85 14,643.49
April 1987 16,694.64 14,623.54
May 1987 16,866.59 14,741.85
June 1987 17,708.23 15,262.43
July 1987 18,590.10 16,350.92
August 1987 19,305.82 16,611.21
September 1987 18,881.09 16,445.56
October 1987 14,817.88 12,351.92
November 1987 13,604.30 11,618.38
December 1987 14,608.30 12,773.76
January 1988 15,232.07 12,990.80
February 1988 15,947.98 13,827.92
March 1988 15,466.35 13,641.89
April 1988 15,633.38 13,765.90
May 1988 15,755.32 13,672.89
June 1988 16,486.37 14,137.96
July 1988 16,420.43 14,199.97
August 1988 15,876.91 14,044.94
September 1988 16,550.09 14,665.03
October 1988 17,001.91 15,037.07
November 1988 16,760.48 14,913.06
December 1988 17,063.85 15,221.56
January 1989 18,297.56 16,206.68
February 1989 17,841.95 15,825.34
March 1989 18,263.02 16,492.68
April 1989 19,205.40 17,446.00
May 1989 19,977.45 18,399.34
June 1989 19,869.57 18,145.11
July 1989 21,653.86 20,115.34
August 1989 22,071.78 20,306.00
September 1989 21,985.70 20,750.90
October 1989 21,473.43 19,734.00
November 1989 21,920.08 19,956.45
December 1989 22,437.40 19,904.83
January 1990 20,931.85 18,529.58
February 1990 21,201.87 19,036.25
March 1990 21,759.48 19,361.97
April 1990 21,222.02 18,855.29
May 1990 23,291.16 20,664.82
June 1990 23,128.13 20,592.44
July 1990 23,054.12 20,266.73
August 1990 20,972.33 18,384.82
September 1990 19,940.49 17,443.86
October 1990 19,866.71 17,262.91
November 1990 21,146.13 18,421.00
December 1990 21,725.53 18,983.98
January 1991 22,685.80 20,230.81
February 1991 24,310.10 21,759.18
March 1991 24,888.68 22,241.82
April 1991 24,958.37 22,322.25
May 1991 26,026.59 23,569.09
June 1991 24,837.17 22,282.04
July 1991 25,999.55 23,488.65
August 1991 26,610.54 24,011.50
September 1991 26,174.13 23,408.21
October 1991 26,524.86 23,931.07
November 1991 25,453.26 22,724.46
December 1991 28,362.57 25,672.52
January 1992 27,835.02 25,584.45
February 1992 28,191.31 26,333.04
March 1992 27,638.76 25,980.76
April 1992 28,443.05 26,200.94
May 1992 28,596.64 26,421.11
June 1992 28,181.99 25,628.48
July 1992 29,317.73 26,509.19
August 1992 28,725.51 25,672.52
September 1992 29,055.85 25,804.62
October 1992 29,160.45 26,509.19
November 1992 30,143.16 28,006.38
December 1992 30,538.03 28,423.21
January 1993 30,760.96 28,752.62
February 1993 31,176.23 28,846.74
March 1993 31,846.52 30,164.36
April 1993 31,066.28 29,317.31
May 1993 31,905.07 29,599.67
June 1993 32,010.36 29,929.07
July 1993 31,859.91 30,164.36
August 1993 33,073.77 31,293.77
September 1993 32,829.03 31,670.23
October 1993 33,495.46 32,281.99
November 1993 33,180.60 31,434.94
December 1993 33,588.72 32,580.13
January 1994 34,713.94 33,629.23
February 1994 33,776.67 33,162.96
March 1994 32,307.38 31,414.47
April 1994 32,727.38 31,705.89
May 1994 33,260.83 31,764.17
June 1994 32,439.29 30,889.93
July 1994 33,513.03 31,589.32
August 1994 34,877.01 32,813.27
September 1994 34,036.48 32,288.72
October 1994 34,815.91 32,580.13
November 1994 33,538.17 31,181.34
December 1994 34,027.83 31,745.29
January 1995 34,912.55 32,501.14
February 1995 36,267.16 33,823.85
March 1995 37,340.66 34,831.64
April 1995 38,427.28 36,028.39
May 1995 39,945.15 37,288.13
June 1995 40,883.87 38,295.90
July 1995 42,245.30 40,059.53
August 1995 42,359.36 39,870.57
September 1995 44,134.22 41,256.28
$10,000 OVER TEN YEARS
This chart assumes a $10,000 investment in Class A shares of Equity Series on
September 30, 1985, and reflects deduction of the 5.75% sales load. On September
30, 1995, the value of your investment in Class A shares of the Series (with
dividends reinvested) would have grown to $41,256. By comparison, the same
$10,000 investment would have grown to $44,134 based on the S&P's performance.
The performance illustrated above is based on the performance of Class A
shares. The performance of Class B shares, which were first offered on October
19, 1993, will be greater or less than the performance shown for Class A shares
as a result of the different loads and fees associated with an investment in
Class B shares.
TOP 5 HOLDINGS**
% of
net assets
----------
Frontier Corporation 1.90%
Hercules, Inc. 1.80%
Monsanto Company 1.80%
Amgen, Inc. 1.70%
Loral Corporation 1.70%
**At September 30, 1995
AVERAGE ANNUAL RETURNS
As of September 30, 1995
1 year 5 years 10 years
------ ------- --------
A Shares 27.77% 18.79% 15.91%
A Shares with sales charge 20.38% 17.41% 15.22%
B Shares 26.69% 12.80% N/A
(10-19-93)
B Shares with CDSC 21.69% 10.96% N/A
(10-19-93)
The performance data above represents past performance which is not
predictive of future results. The investment return and principal value of an
investment in the fund will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than their original cost. The figures above
do not reflect deduction of the maximum front end sales charge of 5.75% for
Class A shares or contingent deferred sales charge of 5% for Class B shares, as
applicable, except where noted. Such figures would be lower if the maximum sales
charge were deducted.
5
<PAGE>
MANAGER'S COMMENTARY
NOVEMBER 15, 1995
SECURITY
EQUITY FUND-
GLOBAL SERIES
[LEXINGTON LOGO] SUBADVISOR - LEXINGTON
MANAGEMENT CORPORATION
The Global Series, subadvised by Lexington Management Corporation, returned
2.80% for the 12-month period ending September 30, 1995, underperforming the
12.42% returned by the Morgan Stanley Capital International World Index (MSCI)
for the same period.* However, the Series returned 5.6% for the third-quarter of
1995, virtually even with the MSCI's 5.7% return for the same period.
Underexposure to the U.S. equity market, specifically the technology sectors,
as well as an overweight position in Japan during the fourth quarter of 1994 and
early in 1995 were the primary reasons the Series underperformed its benchmark
index. We increased our U.S. weighting during the second and third quarters of
the year, but the lack of exposure to the technology sectors severely dampened
the portfolio's U.S. returns. Recently, we have decreased our U.S. exposure and
we anticipate investors will benefit from increased weighting in foreign
securities. We believe earnings in the U.S. have peaked and there is better
relative value and earnings momentum to be found overseas.
As with every investment made outside the U.S., we had to be aware of the
currency fluctuation between the U.S. dollar and in this case, the Japanese Yen.
Because we believed the U.S. dollar was going to increase in value relative to
the Yen, we purchased forward currency contracts to preserve the gains which we
expected to recognize as the Japanese market rebounded. This technique worked
well and resulted in a nice gain for the portfolio. Although Japan still has
significant structural problems, the recently strengthening Yen versus the
dollar enhances the competitiveness and profitability of many Japanese
companies.
Going forward, we will continue our bottom up search for good companies
internationally. One area that looks appealing is non-U.S. technology companies,
such as the share prices of non-U.S. technology companies have not had the
spectacular run enjoyed by the U.S. firms. We will also continue to monitor
certain companies in emerging markets as we have recently been quite successful
investing in selected companies in Israel and Southeast Asia.
PERFORMANCE
[LINE GRAPH WITH FOLLOWING INFORMATION CHARTED]
SECURITY GLOBAL SERIES VS. MORGAN STANLEY
CAPITAL INTERNATIONAL WORLD INDEX
MSCI Global Series
---- -------------
September 1993 $10,000.00
October 1993 10,277.20 $10,000.00
November 1993 9,697.46 9,084.91
December 1993 10,173.64 9,745.28
January 1994 10,846.34 10,283.02
February 1994 10,707.72 10,264.15
March 1994 10,247.89 9,773.58
April 1994 10,566.48 9,971.70
May 1994 10,595.49 10,066.04
June 1994 10,567.93 10,009.43
July 1994 10,770.71 10,132.08
August 1994 11,096.94 10,518.87
September 1994 10,807.30 10,226.42
October 1994 11,116.69 10,443.40
November 1994 10,636.52 9,943.40
December 1994 10,741.51 9,869.12
January 1995 10,582.24 9,436.69
February 1995 10,738.57 9,407.86
March 1995 11,258.35 9,744.20
April 1995 11,652.94 9,926.78
May 1995 11,754.85 10,042.10
June 1995 11,753.51 9,955.61
July 1995 12,343.90 10,561.01
August 1995 12,071.11 10,436.09
September 1995 12,424.79 10,512.97
This chart assumes a $10,000 investment in Class A shares of Global Series on
October 1, 1993, and reflects deduction of the 5.75% sales load. On September
30, 1995, the value of your investment in Class A shares of the Series (with
dividends reinvested) would have grown to $10,513. By comparison, the same
$10,000 investment would have grown to $12,425 based on the MSCI's performance.
The performance illustrated above is based on the performance of Class A
shares. The performance of Class B shares, which were first offered on October
19, 1993, will be greater or less than the performance shown for Class A shares
as a result of the different loads and fees associated with an investment in
Class B shares.
AVERAGE ANNUAL RETURNS
As of September 30, 1995
1 Year Since Inception 10-1-93
A Shares 2.80% 5.56%
A Shares with sales charge -3.10% 2.48%
1 Year Since Inception 10-19-93
B Shares 1.79% 4.94%
B Shares with CDSC -3.21% 2.96%
The performance data above represents past performance which is not
predictive of future results. The investment return and principal value of an
investment in the Series will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than their original cost. The figures above
do not reflect deduction of the maximum front end sales charge of 5.75% for
Class A shares or contingent deferred sales charge of 5% for Class B shares, as
applicable, except where noted.
*This performance figure is based on Class A share prices and does not
reflect deduction of the sales charge.
6
<PAGE>
MANAGER'S COMMENTARY
NOVEMBER 15, 1995
SECURITY
EQUITY FUND -
ASSET ALLOCATION
SERIES
[MERIDIAN INVESTMENT MANAGEMENT LOGO, TEMPLETON LOGO, SBG LOGO]
MANAGED BY SECURITY MANAGEMENT COMPANY
RESEARCH PROVIDED BY MERIDIAN INVESTMENT
MANAGEMENT CORPORATION
AND TEMPLETON QUANTITATIVE ADVISORS, INC.
Pursuing high total return through capital appreciation and current income,
our unique new Asset Allocation Series became available to shareholders June 1,
1995. The Series employs an aggressive asset allocation strategy that attempts
to identify undervalued sectors and countries with the potential to become
future market leaders, both domestically and internationally. Unlike most asset
allocation models that simply rotate between stocks and bonds, this Series may
invest in seven different general asset classes: domestic stocks and bonds,
international stocks and bonds, gold stocks, real estate (through
exchange-traded real estate investment trusts or REITS) and cash.* In addition,
the Fund attempts to identify undervalued opportunities by their respective
sector groups, such as computers, chemicals or electrical equipment; or
countries, such as Belgium, United Kingdom, Japan, etc.
For the four-month period from inception through September 30, 1995, the
Series returned 5.40%.** This compares favorably to the 5.60% return for the
Morgan Stanley Capital International World Index and the 5.65% average return
for Lipper Global Flexible Funds category, the Series' peer group. Contributing
heavily to the Series' positive performance was its U.S. exposure, as both stock
and bond markets enjoyed good runs. Specifically, the portfolio's top-performing
U.S. sector was electronics. Other strong performers included real estate and
international equities, as international markets were firm and Japan was up
nicely up for much of the period.
As of September 30, 1995, the Series' asset allocation was 40% in domestic
stocks - with weightings in appliances, auto parts, building materials, basic
chemicals, computers, electrical equipment, electronics, housing, machinery, and
metals and mining (not including gold). Another 35% of assets were allocated to
international investments including futures contracts on country-specific
indices and individual stocks, with concentrations in Hong Kong, Germany, Japan,
Belgium, and the United Kingdom. The Series also had approximately 15% allocated
to domestic bonds and 10% allocated to REITS.
PORTFOLIO DISTRIBUTION***
% of
net assets
----------
International Stocks - Futures Contracts 35.6%
Domestic Stocks 39.7%
U.S. Government 14.6%
Real Estate 10.0%
Cash & equivalents 0.1%
***At September 30, 1995
AVERAGE ANNUAL RETURNS
From inception June 1, 1995 to September 30, 1995
A Shares 5.40%
A Shares with sales charge -0.66%
B Shares 5.00%
B Shares with CDSC 0.00%
The percentage amounts are from inception and are not annualized.
The performance data above represents past performance which is not
predictive of future results. The investment return and principal value of an
investment in the fund will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than their original cost. The figures above
do not reflect deduction of the maximum front end sales charge of 5.75% for
Class A shares or contingent deferred sales charge of 5% for Class B shares, as
applicable, except where noted. Such figures would be lower if the maximum sales
charge were deducted.
*Investment in foreign securities involves risks, such as currency
fluctuations and political instability, not associated with investment in U.S.
securities.
**This performance figure is based on Class A share prices and does not
reflect deduction of the sales charge.
7
<PAGE>
MANAGER'S COMMENTARY
NOVEMBER 15, 1995
SECURITY
ULTRA
FUND
For the 12-month period ending September 30, 1995, the Ultra Fund returned
22.69%* to shareholders as compared to the Standard & Poor's 400 Mid Cap Growth
Index's gain of 26.97%. Underexposure to technology stocks in the first half of
1995 was the main reason the Fund underperformed its benchmark index.
We gradually increased our technology exposure to finish the 12-month period
in line with our index at 27.6%. Focusing on stocks of companies in the range of
$200 million to $2 billion in market capitalization, stocks we bought included
small and mid-cap technology companies, such as PC manufacturers Dell Computer
Corporation and Gateway 2000. The portfolio also included Autodesk, Inc. and
Symantec Corporation, computer software manufacturers.
The whole communications explosion includes growing demand for newer, faster,
more powerful PCs on both the consumer and business side, as well as pagers,
cellular phones and other electronic devices. All of this combined to fuel the
technology sector's performance, up as a group nearly 100% by the end of the
third quarter of the year.
Semiconductor stocks were in great demand as were stocks of the companies
that manufacture the equipment used to make the chips such as Kulicke & Soffa
Industries, Inc., and Teradyne, Inc. Considering the supply/demand imbalance of
semiconductors in addition to the demand for upgrades of computing equipment,
companies like these offer great long-term potential.
Although not a full correction, technology pulled back briefly in September.
This pull back was prompted in part by the August 24th rollout of Microsoft's
newest operating software, Windows 95. The occurrence was truly a case of the
market buying on rumor and selling on news. Fueled by pent-up demand and great
expectations, the market believed Windows 95 would trigger a huge rush to
upgrade PCs. However, after the initial burst, Windows 95 sales slowed to more
normal levels and the media declared consumer reception disappointing. In
reality, Windows 95 sales actually exceeded Microsoft's internal third-quarter
sales goals. Believing technology is in a multi-year cycle, we viewed the
shortlived pull back as a buying opportunity and took advantage of temporarily
lower prices.
The portfolio weighting in healthcare stocks was in line with its index at
September 30, 1995. HMOs are experiencing increased costs and shrinking profits
due to an increase in healthcare utilization. For the portfolio's healthcare
weighting, we concentrated on the device side of healthcare by owning companies
such as St. Jude Medical, Inc., manufacturers of heart valves and catheters.
Financial services companies also delivered strong, consistent performance
for the 12-month period. The portfolio included interest-sensitive specialty
financial service companies such as automobile financers Credit Acceptance
Corporation, Mercury Finance Company and WFS Financial, Inc. We found these
stocks' valuations to be more attractive and the growth rates higher than those
of banks. We were also pleased with the performance of credit card issuers such
as First USA, Inc.
The current small capitalization cycle that actually began in 1990 is still
intact. Because mid capitalization stocks typically benefit from increased
buying during small cap cycles, we believe valuations remain attractive. Given
the slowing economy, and the fact that small companies are more nimble than
larger companies at cutting costs, we anticipate the earnings outlook will
remain positive for small and mid-cap companies. Looking forward, we expect
growth stocks to continue to outperform as investors focus on earnings
stability. And because small and mid-cap stocks typically have limited foreign
currency risk as they have little international exposure, we anticipate earnings
to remain strong.
*This performance figure is based on Class A share prices and does not
reflect deduction of the sales charge.
[upper right hand corner, photo of Larry Valencia, Frank Whitsell, Cindy
Shields, John Cleland]
THE SECURITY MANAGEMENT SMALL CAP TEAM
LARRY VALENCIA, FRANK WHITSELL, CINDY SHIELDS, JOHN CLELAND
8
<PAGE>
MANAGER'S COMMENTARY (CONTINUED)
NOVEMBER 15, 1995
SECURITY
ULTRA
FUND
PERFORMANCE
[LINE GRAPH WITH FOLLOWING INFORMATION CHARTED]
SECURITY ULTRA FUND VS. S&P
MIDCAP AND RUSSELL 2000
S&P Midcap Russell 2000 Ultra Fund
---------- ------------ ----------
September 1985 $10,000.00 $10,000.00 $10,000.00
October 1985 10,554.60 10,380.30 9,858.39
November 1985 11,210.57 11,127.16 10,215.84
December 1985 11,765.60 11,616.65 10,438.46
January 1986 11,961.74 11,800.31 10,735.29
February 1986 12,843.44 12,647.57 11,192.91
March 1986 13,462.49 13,261.35 11,798.93
April 1986 13,563.19 13,456.56 11,761.83
May 1986 14,096.76 13,921.49 12,083.38
June 1986 14,472.73 13,904.08 12,293.64
July 1986 13,757.48 12,603.50 11,502.10
August 1986 14,509.33 13,004.03 11,662.88
September 1986 13,363.82 12,201.56 11,069.22
October 1986 13,924.03 12,685.23 11,563.94
November 1986 13,918.60 12,641.84 11,344.93
December 1986 13,672.80 12,276.75 10,984.77
January 1987 15,432.90 13,705.76 12,016.13
February 1987 16,151.91 14,860.74 12,916.52
March 1987 16,532.78 15,261.83 13,014.74
April 1987 15,984.71 14,824.43 12,900.15
May 1987 15,821.35 14,775.81 12,736.44
June 1987 16,392.66 15,153.77 13,014.74
July 1987 16,853.29 15,625.51 13,407.65
August 1987 17,464.39 16,084.74 13,947.88
September 1987 17,127.16 15,788.30 13,489.49
October 1987 13,078.98 10,954.71 8,774.72
November 1987 12,433.40 10,366.88 8,021.67
December 1987 13,394.75 11,200.17 8,993.07
January 1988 14,008.23 11,686.93 8,942.45
February 1988 14,897.34 12,738.52 9,937.93
March 1988 15,139.42 13,336.34 10,207.89
April 1988 15,215.87 13,638.54 10,241.63
May 1988 14,898.01 13,268.39 9,954.81
June 1988 15,971.56 14,215.36 11,152.75
July 1988 15,542.41 14,079.17 10,781.56
August 1988 15,181.67 13,718.89 10,258.51
September 1988 15,762.37 14,081.48 10,663.45
October 1988 15,870.97 13,925.03 10,654.53
November 1988 15,561.80 13,461.19 10,485.15
December 1988 16,190.03 13,988.33 11,061.07
January 1989 17,293.06 14,612.07 11,298.21
February 1989 17,349.95 14,719.61 11,196.58
March 1989 17,735.30 15,065.97 11,484.53
April 1989 18,694.95 15,722.84 11,857.19
May 1989 19,597.36 16,399.08 12,433.11
June 1989 19,510.15 16,025.18 11,958.82
July 1989 20,669.05 16,648.72 12,754.95
August 1989 21,403.22 17,053.29 13,313.93
September 1989 21,639.30 17,106.49 13,364.75
October 1989 20,729.36 16,092.59 11,908.01
November 1989 21,187.28 16,195.26 12,331.48
December 1989 21,944.09 16,259.88 12,382.42
January 1990 20,088.27 14,839.74 11,278.13
February 1990 20,809.84 15,300.22 11,947.95
March 1990 21,259.75 15,900.30 12,328.11
April 1990 20,434.45 15,380.67 12,074.67
May 1990 22,429.26 16,470.09 13,866.86
June 1990 22,521.45 16,513.57 13,722.03
July 1990 22,006.61 15,789.61 12,491.03
August 1990 19,725.40 13,677.59 9,775.58
September 1990 18,517.42 12,461.52 8,073.92
October 1990 17,953.38 11,700.74 7,567.04
November 1990 19,678.88 12,593.39 8,327.36
December 1990 20,821.23 13,087.94 8,985.44
January 1991 22,466.11 14,267.16 10,413.21
February 1991 24,483.34 15,867.22 11,079.50
March 1991 25,600.27 16,979.99 12,278.83
April 1991 25,593.87 16,936.18 12,145.57
May 1991 26,773.50 17,742.85 12,754.75
June 1991 25,412.33 16,716.78 11,688.69
July 1991 26,941.65 17,301.70 12,088.46
August 1991 27,922.59 17,939.79 12,564.39
September 1991 27,832.40 18,079.72 12,792.83
October 1991 28,922.87 18,557.75 13,668.53
November 1991 27,948.17 17,698.90 13,344.90
December 1991 31,251.93 19,115.16 14,353.06
January 1992 31,804.77 20,665.40 15,074.62
February 1992 32,310.79 21,268.62 15,562.16
March 1992 31,093.96 20,548.89 14,489.57
April 1992 30,722.70 19,827.42 13,377.99
May 1992 31,013.65 20,091.13 13,612.02
June 1992 30,126.65 19,147.04 12,461.42
July 1992 31,622.44 19,812.60 12,812.45
August 1992 30,866.03 19,252.30 12,539.43
September 1992 31,297.85 19,695.68 12,987.96
October 1992 32,048.37 20,317.27 13,573.00
November 1992 33,839.24 21,873.17 14,918.60
December 1992 34,974.54 22,634.35 15,459.56
January 1993 35,411.72 23,399.85 16,128.18
February 1993 34,915.96 22,860.25 15,317.72
March 1993 36,120.56 23,601.83 15,581.13
April 1993 35,175.29 22,953.02 14,953.03
May 1993 36,779.28 23,968.23 15,520.35
June 1993 36,963.17 24,117.07 15,520.35
July 1993 36,892.94 24,450.13 15,338.00
August 1993 38,416.62 25,505.89 15,824.27
September 1993 38,823.84 26,225.66 16,472.64
October 1993 38,951.96 26,900.97 16,938.64
November 1993 38,091.12 26,024.54 16,553.69
December 1993 39,858.55 26,913.80 16,994.87
January 1994 40,787.25 27,757.01 17,483.77
February 1994 40,208.07 27,656.25 17,227.67
March 1994 38,346.44 26,199.60 16,063.64
April 1994 38,631.74 26,354.96 15,667.87
May 1994 38,265.89 26,058.47 15,365.23
June 1994 36,949.55 25,179.25 14,620.25
July 1994 38,201.40 25,593.20 15,062.58
August 1994 40,202.01 27,018.74 15,830.84
September 1994 39,451.84 26,927.15 15,877.40
October 1994 39,883.04 26,818.36 16,017.08
November 1994 38,084.32 25,734.63 15,411.79
December 1994 38,433.93 26,423.55 15,869.31
January 1995 38,834.03 26,089.82 15,774.29
February 1995 40,869.71 27,175.94 16,225.65
March 1995 41,578.80 27,641.73 16,415.70
April 1995 42,413.70 28,255.93 16,391.95
May 1995 43,437.14 28,741.65 16,368.20
June 1995 45,205.47 30,232.77 17,508.50
July 1995 47,563.84 31,974.18 18,720.08
August 1995 48,443.30 32,635.72 18,957.65
September 1995 49,617.56 33,218.60 19,480.29
$10,000 OVER TEN YEARS
This chart references a change in the Ultra Fund's benchmark index. The
Fund's new benchmark index is the Standard & Poor's Midcap 400 - stock index. We
believe the capitalization of the stocks in the S&P Midcap more closely reflect
the securities the Ultra Fund purchases.
This chart assumes a $10,000 investment in Class A shares of Ultra Fund on
September 30, 1985, and reflects deduction of the 5.75% sales load. On September
30, 1995, the value of your investment in Class A shares of the fund (with
dividends reinvested) would have grown to $19,480. In comparison, the same
$10,000 investment would have grown to $33,219 based on the performance of the
Russell 2000. Also in comparison, the same $10,000 investment would have grown
to $49,618 based on the S&P's performance.
The performance illustrated above is based on the performance of Class A
shares. The performance of Class B shares, which were first offered on October
19, 1993, will be greater or less than the performance shown for Class A shares
as a result of the different loads and fees associated with an investment in
Class B shares.
TOP 5 HOLDINGS**
% of
net assets
----------
Sunglass Hut International, Inc. 2.30%
Dell Computer Systems Corporation 2.10%
Research Industries Corporation 2.10%
DSC Communications Corporation 2.10%
Symantec Corporation 2.10%
**At September 30, 1995
AVERAGE ANNUAL RETURNS
As of September 30,1995
1 year 5 years 10 years
------ ------- --------
A Shares 22.69% 19.26% 7.53%
A Shares with sales charge 15.57% 17.87% 6.90%
B Shares 21.53% 7.23% N/A
(10-19-93)
B Shares with CDSC 16.53% 5.30% N/A
(10-19-93)
The performance data above represents past performance which is not
predictive of future results. The investment return and principal value of an
investment in the fund will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than their original cost. The figures above
do not reflect deduction of the maximum front end sales charge of 5.75% for
Class A shares or contingent deferred sales charge of 5% for Class B shares, as
applicable, except where noted. Such figures would be lower if the maximum sales
charge were deducted.
9
<PAGE>
STATEMENTS OF NET ASSETS
SEPTEMBER 30, 1995
SECURITY GROWTH AND INCOME FUND
Principal Market
Amount CORPORATE BONDS Value
- --------------------------------------------------------------------------------
COMMUNICATIONS - 4.5%
$1,000,000 Century Communications,
9.50% - 2005 ................................... $1,003,750
1,000,000 Continental Cablevision, Inc.,
8.875% - 2005 .................................. 1,026,250
1,000,000 Rogers Communications, Inc.,
10.875% - 2004 ................................. 1,042,500
----------
3,072,500
CONSUMER GOODS & SERVICES - 0.8%
1,000,000 International Semi-Tech,
0% - 2003(1) ................................... 518,750
DIVERSIFIED - 1.3%
1,000,000 Sequa Corporation,
9.375% - 2003 .................................. 900,000
FINANCE - 1.4%
500,000 Home Holdings,
7.75% - 1998 ................................... 453,750
500,000 Keystone Group, Inc.,
9.75% - 2003 ................................... 496,250
----------
950,000
FOOD & BEVERAGES - 0.7%
500,000 Cott Corporation,
9.375% - 2005 .................................. 510,000
GROCERY STORES - 1.4%
1,000,000 Penn Traffic Company,
10.65% - 2004 .................................. 987,500
HOTELS - 1.3%
900,000 Harrahs Entertainment,
8.75% - 2000 ................................... 904,500
MEDICAL & HEALTH SERVICES - 1.5%
1,000,000 Healthsouth Rehabilitation,
Corporation, 9.50% - 2001 ...................... 1,040,000
PUBLISHING & PRINTING - 0.5%
500,000 Marvel Holdings,
0% - 1998 ...................................... 362,500
STEEL AND METAL PRODUCTS - 0.8%
500,000 Weirton Steel Corporation,
11.50% - 1998 .................................. 512,500
----------
Total corporate bonds -
(Cost $9,523,433) - 14.2% ...................... 9,758,250
Number of Market
Shares PREFERRED STOCK Value
- --------------------------------------------------------------------------------
BANKING & CREDIT - 1.6%
10,000 First Nationwide Bank ............................ $1,110,000
----------
Total preferred stock -
(Cost $1,051,250) - 1.6% ....................... 1,110,000
COMMON STOCKS
-------------
ADVERTISING - 1.4%
15,000 Omnicom Group, Inc. .............................. 978,750
AEROSPACE & DEFENSE - 5.3%
15,000 Allied Signal, Inc. .............................. 661,875
15,000 Lockheed Martin Corporation ...................... 1,006,875
15,000 McDonnell Douglas
Corporation .................................... 1,241,250
15,000 Rockwell International
Corporation .................................... 708,750
----------
3,618,750
AMUSEMENT & RECREATIONAL SERVICES - 2.7%
40,000 Carnival Cruise Lines, Inc. ...................... 960,000
15,000 Disney (Walt) Company ............................ 860,625
----------
1,820,625
BANKING - 1.3%
15,000 Chemical Banking Corporation ..................... 913,125
BROADCASTING - 1.5%
20,000 Viacom, Inc. (Cl.B)* ............................. 995,000
BUSINESS SERVICES - 1.8%
10,000 ITT Corporation .................................. 1,240,000
CASINOS - 1.0%
20,000 Mirage Resorts, Inc.* ............................ 657,500
CHEMICALS - 5.8%
15,000 Great Lakes Chemical Corporation ................. 1,014,375
20,000 Hercules, Inc. ................................... 1,160,000
10,000 Monsanto Company ................................. 1,007,500
30,000 Praxair,Inc ...................................... 802,500
----------
3,984,375
COMPUTER SERVICES - 2.9%
30,000 Ceridian Corporation* ............................ 1,331,250
15,000 General Motors Corporation, (Cl.E) ............... 682,500
----------
2,013,750
COMPUTER SYSTEMS - 1.4%
10,000 International Business
Machines Corporation ........................... 943,750
See accompanying notes.
10
<PAGE>
STATEMENTS OF NET ASSETS
SEPTEMBER 30, 1995
SECURITY GROWTH AND INCOME FUND
(CONTINUED)
Number of Market
Shares COMMON STOCKS (continued) Value
- --------------------------------------------------------------------------------
CONSUMER GOODS & SERVICES - 2.0%
20,000 Duracell International, Inc. ..................... $ 897,500
20,000 Newell Company ................................... 495,000
----------
1,392,500
ELECTRIC COMPANIES & SYSTEMS - 1.8%
25,000 Phillips Electronics, N.V. ....................... 1,218,750
ELECTRICAL MACHINERY &
ELECTRONIC COMPONENTS - 7.9%
25,000 DSC Communications Corporation* .................. 1,481,250
15,000 General Electric Company ......................... 956,250
20,000 Loral Corporation ................................ 1,140,000
10,000 Motorola, Inc. ................................... 763,750
20,000 Varian Associates, Inc. .......................... 1,060,000
----------
5,401,250
ENVIRONMENTAL SERVICES - 1.1%
25,000 Browning Ferris Industry, Inc. ................... 759,375
FOOD & BEVERAGES - 5.5%
15,000 CPC International, Inc. .......................... 990,000
20,000 Heinz (H.J.) Company ............................. 915,000
25,000 PepsiCo, Inc. .................................... 1,275,000
20,000 Sara Lee Corporation ............................. 595,000
----------
3,775,000
HOUSEHOLD PRODUCTS - 1.1%
10,000 Procter & Gamble Company ......................... 770,000
INSURANCE - 2.1%
20,000 American General
Corporation .................................... 747,500
10,000 MBIA, Inc. ....................................... 705,000
----------
1,452,500
MANUFACTURING - 1.0%
30,000 Pall Corporation ................................. 697,500
MEDICAL & HEALTH CARE - 1.4%
20,000 Columbia Healthcare
Corporation .................................... 972,500
MEDICAL INSTRUMENTS & SUPPLIES - 1.2%
20,000 Baxter International, Inc. ....................... 822,500
PAPER PRODUCTS - 1.2%
15,000 Champion International
Corporation .................................... 808,125
PERSONAL SERVICES - 1.1%
30,000 Dial Corporation (The) ........................... 742,500
Principal
Amount or
Number of Market
Shares COMMON STOCKS (continued) Value
- --------------------------------------------------------------------------------
PETROLEUM REFINING - 2.6%
20,000 Anadarko Petroleum Corporation ................... 947,500
25,000 Coastal Corporation (The) ........................ 840,625
----------
1,788,125
PHARMACEUTICALS - 5.4%
10,000 American Home Products Corporation ............... 848,750
10,000 Bristol-Meyers Squibb Company .................... 728,750
20,000 Merck & Company, Inc. ............................ 1,120,000
20,000 Smithkline Beecham PLC ........................... 1,012,500
----------
3,710,000
PHOTOGRAPHIC EQUIPMENT & SUPPLIES - 1.0%
5,000 Xerox Corporation ................................ 671,875
PUBLISHING & PRINTING - 2.1%
30,000 News Corporation Ltd.
(The) ADR ...................................... 660,000
20,000 Time-Warner, Inc. ................................ 795,000
----------
1,455,000
RESTAURANTS & FOOD SERVICE - 2.4%
20,000 McDonald's Corporation ........................... 765,000
40,000 Wendy's International, Inc. ...................... 845,000
----------
1,610,000
RETAIL TRADE - 3.8%
30,000 Federated Department Stores* ..................... 851,250
20,000 Home Depot, Inc. ................................. 797,500
40,000 Leggett & Platt, Inc. ............................ 985,000
----------
2,633,750
TRANSPORTATION - 1.1%
10,000 Burlington Northern, Inc. ........................ 725,000
UTILITIES - 1.9%
50,000 Frontier Corporation ............................. 1,331,250
----------
Total common stocks -
(Cost $40,547,682) - 72.8% ..................... 49,903,125
COMMERCIAL PAPER
----------------
AIR TRANSPORTATION - 1.4%
$ 935,000 Harper Group, Inc., (The)
5.74%, 10-10-95 ................................ 933,509
ALCOHOLIC & MALT BEVERAGES - 0.7%
$ 500,000 Anheuser-Busch Companies,Inc.,
5.735%, 10-20-95 ............................... 498,407
DISCOUNT STORES - 1.5%
$1,000,000 Wal-Mart Stores, Inc.,
5.70%, 10-16-95 ................................ 997,467
See accompanying notes.
11
<PAGE>
STATEMENTS OF NET ASSETS
SEPTEMBER 30, 1995
SECURITY GROWTH AND INCOME FUND
(CONTINUED)
Principal
Amount or
Number of Market
Shares COMMERCIAL PAPER (continued) Value
- --------------------------------------------------------------------------------
ELECTRIC COMPANIES & SYSTEMS - 0.6%
$ 425,000 New England Power Company,
5.77%, 10-06-95 ................................ $ 424,591
GAS COMPANIES & SYSTEMS - 2.9%
$2,000,000 Consolidated Natural Gas Company,
5.70%, 10-03-95 ................................ 1,999,050
LEASING COMPANIES - 2.2%
$1,500,000 International Lease Finance Corporation,
5.80%, 10-13-95 ................................ 1,496,858
TOY STORES - 1.0%
$ 700,000 Toys "R" Us, Inc.,
5.705%, 10-06-95 ............................... 699,335
------------
Total commercial paper -
(cost $7,049,217) - 10.3% ...................... 7,049,217
------------
Total investments -
(cost $58,171,582) - 98.9% ..................... 67,820,592
Cash and other assets,
less liabilities - 1.1% ........................ 739,001
------------
Total net assets - 100.0% ........................ $68,559,593
============
SECURITY EQUITY FUND - EQUITY SERIES
COMMON STOCKS
-------------
ADVERTISING - 1.4%
100,000 Omnicom Group, Inc. .............................. $6,525,000
AEROSPACE & DEFENSE - 9.1%
160,000 Allied-Signal, Inc. .............................. 7,060,000
100,000 Lockheed Martin Corporation ...................... 6,712,500
135,000 Loral Corporation ................................ 7,695,000
90,000 McDonnell Douglas Corporation .................... 7,447,500
70,000 Raytheon Company ................................. 5,950,000
150,000 Rockwell International Corporation ............... 7,087,500
----------
41,952,500
AMUSEMENT & RECREATIONAL
SERVICES - 2.3%
240,000 Carnival Cruise Lines, Inc. ...................... 5,760,000
80,000 Disney (Walt) Company ............................ 4,590,000
----------
10,350,000
BANKING - 1.6%
120,000 Chemical Banking Corporation* .................... 7,305,000
BROADCASTING - 1.3%
125,000 Viacom, Inc. (Cl.B)* ............................. 6,218,750
BUSINESS SERVICES - 1.3%
50,000 ITT Corporation .................................. $6,200,000
CASINOS - 1.1%
150,000 Mirage Resorts, Inc.* ............................ 4,931,250
CHEMICALS - 7.2%
79,000 Great Lakes Chemical Corporation ................. 5,342,375
140,000 Hercules, Inc. ................................... 8,120,000
80,000 Monsanto Company ................................. 8,060,000
200,000 Praxair,Inc ...................................... 5,350,000
400,000 US Industries* ................................... 6,200,000
----------
33,072,375
COMPUTER SERVICES - 4.3%
150,000 Ceridian Corporation* ............................ 6,656,250
100,000 Computer Sciences
Corporation* ................................... 6,437,500
150,000 General Motors Corporation,
(Cl.E) ......................................... 6,825,000
-----------
19,918,750
COMPUTER SOFTWARE - 1.3%
65,000 Microsoft Corporation* ........................... 5,882,500
COMPUTER SYSTEMS - 1.4%
70,000 International Business
Machines Corporation ........................... 6,606,250
CONSUMER GOODS & SERVICES - 1.7%
100,000 Duracell International, Inc. ..................... 4,487,500
140,000 Newell Company ................................... 3,465,000
----------
7,952,500
ELECTRIC COMPANIES & SYSTEMS - 1.6%
150,000 Phillips Electronics N.V. ........................ 7,312,500
ELECTRICAL MACHINERY &
ELECTRONIC COMPONENTS - 5.9%
100,000 DSC Communications Corporation* .................. 5,925,000
120,000 General Electric Company ......................... 7,650,000
80,000 Motorola, Inc. ................................... 6,110,000
140,000 Varian Associates, Inc. .......................... 7,420,000
----------
27,105,000
ENVIRONMENTAL SERVICES - 0.9%
130,000 Browning-Ferris Industries, Inc. ................. 3,948,750
FERTILIZER - 0.8%
59,000 Potash Corporation of
Saskatchewan, Inc. ............................. 3,672,750
See accompanying notes.
12
<PAGE>
STATEMENTS OF NET ASSETS
SEPTEMBER 30, 1995
SECURITY EQUITY FUND - EQUITY SERIES
(CONTINUED)
Number of Market
Shares COMMON STOCKS (continued) Value
- --------------------------------------------------------------------------------
FINANCE - 1.1%
50,000 Federal National Mortgage
Association .................................... $ 5,175,000
FOOD & BEVERAGES - 5.0%
100,000 CPC International, Inc. .......................... 6,600,000
65,000 Heinz (H.J.) Company ............................. 2,973,750
150,000 PepsiCo, Inc. .................................... 7,650,000
200,000 Sara Lee Corporation ............................. 5,950,000
----------
23,173,750
HOUSEHOLD PRODUCTS - 1.3%
75,000 Procter & Gamble Company ......................... 5,775,000
INSURANCE - 5.9%
180,000 American General Corporation ..................... 6,727,500
90,000 American International Group, Inc. ............... 7,650,000
85,000 Jefferson Pilot Corporation ...................... 5,461,250
100,000 MBIA, Inc. ....................................... 7,050,000
-----------
26,888,750
MANUFACTURING - 1.0%
200,000 Pall Corporation ................................. 4,650,000
MEDICAL & HEALTH CARE - 1.3%
125,000 Columbia Healthcare Corporation .................. 6,078,125
MEDICAL INSTRUMENTS - 1.6%
180,000 Baxter International, Inc. ....................... 7,402,500
PAINT & ALLIED PRODUCTS - 1.3%
175,000 Sherwin-Williams Company ......................... 6,125,000
PAPER PRODUCTS - 1.1%
90,000 Champion International Corporation ............... 4,848,750
PERSONAL SERVICES - 0.7%
130,000 Dial Corporation (The) ........................... 3,217,500
PETROLEUM REFINING - 5.3%
120,000 Anadarko Petroleum Corporation ................... 5,685,000
170,000 Coastal Corporation (The) ........................ 5,716,250
70,000 Mobil Corporation ................................ 6,973,750
50,000 Royal Dutch Petroleum
Company ADR .................................... 6,137,500
-----------
24,512,500
PHARMACEUTICALS - 8.7%
80,000 American Home Products
Corporation .................................... $ 6,790,000
160,000 Amgen, Inc.* ..................................... 7,980,000
100,000 Bristol-Meyers Squibb Company .................... 7,287,500
130,000 Merck & Company, Inc. ............................ 7,280,000
110,000 Schering Plough Corporation ...................... 5,665,000
100,000 Smithkline Beecham PLC ADR ....................... 5,062,500
----------
40,065,000
PHOTOGRAPHIC EQUIPMENT & SUPPLIES - 1.5%
50,000 Xerox Corporation ................................ 6,718,750
PUBLISHING & PRINTING - 2.7%
250,000 News Corporation, Ltd.
(The) ADR ...................................... 5,500,000
170,000 Time-Warner, Inc. ................................ 6,757,500
----------
12,257,500
RESTAURANTS & FOOD SERVICE - 3.1%
200,000 McDonald's Corporation ........................... 7,650,000
305,000 Wendy's International, Inc. ...................... 6,443,125
-----------
14,093,125
RETAIL TRADE - 5.0%
250,000 Federated Department Stores, Inc.* ............... 7,093,750
100,000 Home Depot, Inc. ................................. 3,987,500
135,000 Safeway, Inc.* ................................... 5,636,250
220,000 Walgreen Company ................................. 6,160,000
----------
22,877,500
TRANSPORTATION - 3.9%
85,000 Burlington Northern, Inc. ........................ 6,162,500
135,000 Illinois Central Corporation ..................... 5,281,875
100,000 Union Pacific Corporation ........................ 6,625,000
-----------
18,069,375
UTILITIES - 1.9%
320,000 Frontier Corporation ............................. 8,520,000
----------
Total common stocks -
(Cost $325,734,845) - 95.6% 439,402,000
COMMERCIAL PAPER
----------------
ALCOHOLIC & MALT BEVERAGES - 0.6%
$2,700,000 Anheuser Busch Companies, Inc.
5.70%, 10-04-95 ................................ 1,499,050
5.70%, 10-05-95 ................................ 1,199,050
----------
2,698,100
AUTOMOBILES - 0.4%
$2,000,000 Toyota Motor Credit Corporation,
6.01%, 10-06-95 ................................ 1,997,997
See accompanying notes.
13
<PAGE>
STATEMENTS OF NET ASSETS
SEPTEMBER 30, 1995
SECURITY EQUITY FUND - EQUITY SERIES
(CONTINUED)
Principal
Amount or
Number of Market
Shares COMMERCIAL PAPER (continued) Value
- --------------------------------------------------------------------------------
GAS COMPANIES & SYSTEMS - 0.4%
$1,800,000 Consolidated Natural Gas Company,
5.70%, 10-03-95 ................................ $ 1,799,145
INSURANCE - 0.2%
$1,000,000 AIG Funding, Inc.,
5.68%, 10-11-95 ................................ 998,264
LEASING COMPANIES - 1.3%
$5,900,000 International Lease Finance Corporation,
5.80%, 10-13-95 ................................ 3,492,669
5.71%, 10-17-95 ................................ 2,393,529
----------
5,886,198
TELEPHONE & TELEGRAPH - 0.6%
$3,000,000 GTE North, Inc.,
5.73%, 10-12-95 ................................ 2,994,270
TOY STORES - 0.1%
$ 300,000 Toys "R" Us,
5.70%, 10-06-95 ................................ 299,715
------------
Total commercial paper -
(cost $16,673,689) - 3.6% ...................... 16,673,689
------------
Total investments -
(cost $342,408,534) - 99.2% .................... 456,075,689
Cash and other assets,
less liabilities - 0.8% ........................ 3,550,808
------------
Total net assets - 100.0% ........................ $459,626,497
============
SECURITY EQUITY FUND - GLOBAL SERIES
COMMON STOCKS
-------------
AUSTRALIA - 2.2%
38,900 QBE Insurance Group Ltd. ......................... $ 165,569
45,800 TABcorp Holdings, Ltd. ........................... 119,461
7,300 TABcorp Holdings ADR ............................. 187,975
-----------
473,005
CANADA - 0.9%
8,800 Canadian Pacific, Ltd. ........................... 140,989
49,900 Markborough Properties Inc. ...................... 64,332
-----------
205,321
CHILE - 1.0%
13,900 Banco Osorno y La Union ADR ...................... 215,450
DENMARK - 0.9%
1,760 Novo-Nordisk A.S ................................. 213,437
FINLAND - 0.7%
4,600 Huhtamaki Group "I" .............................. 158,425
FRANCE - 6.9%
3,420 Banque Nationale de Paris ........................ 134,050
1,631 Cetelem .......................................... 253,395
1,080 Ecco S.A ......................................... 187,750
70 Grand Optical Photoservice ....................... 6,976
1,450 Havas ............................................ 108,485
2,900 Groupe SEB S.A ................................... 353,371
360 Sidel S.A ........................................ 114,936
7,300 Valeo S.A ........................................ 343,657
-----------
1,502,620
GERMANY - 5.8%
340 Ava Allgemeine Handelsgelesschaft
der Verbraucher AG ............................. 129,569
18,800 Continental AG ................................... 266,432
3,300 Deutsche Bank AG ................................. 157,267
1,650 G.M. Pfaff AG .................................... 165,294
830 Siemens AG ....................................... 419,395
228 Sto AG ........................................... 122,984
-----------
1,260,941
HONG KONG - 1.6%
23,000 Johnson Electric Holdings Ltd. ................... 45,816
103,600 Peregrine Investments Holdings Ltd. .............. 155,447
100,000 Semi-Tech (Global) Ltd. .......................... 150,692
-----------
351,955
INDONESIA - 0.8%
86,500 PT Kawasan Industri Jababeka ..................... 166,126
IRELAND - 0.8%
34,900 Allied Irish Banks Plc ........................... 173,707
ISRAEL - 2.5%
100 Africa-Israel Investments Ltd. ................... 142,030
17,000 Clal Industries Ltd. ............................. 101,300
3,160 Koor Industries Ltd. ............................. 292,692
-----------
536,022
ITALY - 1.0%
11,300 Alleanza Assicurazioni ........................... 102,843
4,900 Assicurazioni Generali ........................... 113,457
-----------
216,300
See accompanying notes.
14
<PAGE>
STATEMENTS OF NET ASSETS
SEPTEMBER 30, 1995
SECURITY EQUITY FUND - GLOBAL SERIES
(CONTINUED)
Number of Market
Shares COMMON STOCKS (continued) Value
- --------------------------------------------------------------------------------
JAPAN - 22.8%
23,000 Japan Vilene Company, Ltd. ....................... $ 138,903
17,000 Joshin Denki Company, Ltd. ....................... 205,345
75,000 Kawasaki Kisen Kaisha Ltd. ....................... 226,472
103,000 Kawasaki Steel ................................... 369,079
7,000 Komatsu Fork Lift Company, Ltd. .................. 45,093
9,000 Makino Milling Machine
Company, Ltd. .................................. 69,753
15,000 Matsushita Electric Industrial
Company, Ltd. .................................. 229,492
14,000 Matsushita Refrigeration
Company, Ltd. .................................. 96,115
29,000 Mitsubishi Estate Company, Ltd. .................. 324,006
60,000 Mitsui Engineering and Shipbuild ................. 143,734
7,000 Mori Seiki Company, Ltd. ......................... 138,802
15,000 NGK Spark Plug ................................... 202,315
25,000 Nippon Chemi-Con Corporation ..................... 175,893
8,000 Nippon Electric Glass Company, Ltd. .............. 151,384
95,000 Nippon Steel Corporation ......................... 330,851
4,000 Nissen Company, Ltd. ............................. 110,317
19,000 NOK Corporation .................................. 132,531
14,000 Nomura Securities Corporation .................... 273,377
12,000 Okasan Securities Company, Ltd. .................. 53,387
7,000 Royal Company, Ltd. .............................. 106,392
25,000 Sansui Electric Company, Ltd. .................... 51,334
20,000 Sanyo Denki ...................................... 182,184
10,000 Sharp ............................................ 139,909
33,000 Shinmaywa Industries Ltd. ........................ 280,674
8,000 Shinobu Foods Product
Company, Ltd. .................................. 61,600
3,100 Sony Corporation ................................. 160,382
32,000 Sumitomo Realty and Development .................. 223,855
5,000 Tokyo Electron Ltd. .............................. 216,910
12,000 Yamato Kogyo Company, Ltd. ....................... 95,420
----------
4,935,509
MALAYSIA - 1.1%
25,000 Commerce Asset Holdings Bhd ...................... 131,239
42,000 Land & General Holdings Bhd ...................... 110,241
----------
241,480
MEXICO - 0.8%
29,400 Tubos de Acero
de Mexico S.A. ADR ............................. 176,400
NETHERLANDS - 1.2%
20,600 Elsevier N.V. .................................... 263,958
NEW ZEALAND - 2.2%
183,200 Brierley Investments Ltd. ........................ 139,769
23,000 Ceramco Corporation Ltd. ......................... 34,036
60,900 Fisher & Paykel Industries Ltd. .................. 188,253
36,300 Independent Newspapers Ltd. ...................... 105,048
----------
467,106
NORWAY - 0.9%
15,500 Saga Petroleum A.S. .............................. 200,099
PHILIPPINES - 2.2%
355,100 C & P Homes ...................................... 221,597
374,500 Filinvest Land Inc. .............................. 120,806
286,800 Universal Robina Corporation ..................... 137,674
-----------
480,077
POLAND - 0.3%
4,034 Debica S.A. ...................................... 58,079
PORTUGAL - 0.7%
7,900 Portugal Telecom S.A. ............................ 151,204
SINGAPORE - 1.3%
101,000 Comfort Group Ltd. ............................... 90,112
22,000 United Overseas Bank Ltd. ........................ 190,095
----------
280,207
SOUTH AFRICA - 0.5%
4,500 Rustenburg Platinum
Holdings, Ltd. ADR ............................. 97,979
SPAIN - 1.8%
1,500 Corporacion Mapfre ............................... 77,545
5,500 Repsol S.A. ...................................... 173,128
10,800 Telefonica de Espana ............................. 148,760
----------
399,433
SWEDEN - 1.2%
15,300 Atlas Copco AB ................................... 254,893
SWITZERLAND - 2.5%
150 Nestle S.A. ...................................... 153,570
215 Union Bank of Switzerland ........................ 220,308
270 Winterthur Schiveizerische
Versicherungs-Gesellschaft ..................... 176,183
----------
550,061
THAILAND - 0.3%
12,100 Total Access Communication
Public Company Ltd. ............................ 75,625
15
<PAGE>
STATEMENTS OF NET ASSETS
SEPTEMBER 30, 1995
SECURITY EQUITY FUND - GLOBAL SERIES
(CONTINUED)
Number of Market
Shares COMMON STOCKS (continued) Value
- --------------------------------------------------------------------------------
UNITED KINGDOM - 4.6%
157,500 Aegis Group Plc .................................. $ 91,386
14,000 Antofagasta Holdings Plc ......................... 74,813
20,100 BAT Industries Plc ............................... 168,106
26,300 D.F.S. Furniture Company Plc ..................... 133,473
15,200 RTZ Corporation Plc .............................. 222,774
32,100 Takare Plc ....................................... 112,666
50,600 Tomkins Plc ...................................... 201,597
----------
1,004,815
UNITED STATES - 26.7%
2,900 Air Products and Chemicals Inc. .................. 151,165
12,800 Albemarle Corporation ............................ 240,000
3,000 Boatmen's Bancshares, Inc. ....................... 111,375
2,100 Boeing Company ................................... 143,325
10,300 Borders Group, Inc. .............................. 176,388
2,500 Burlington Northern, Inc. ........................ 181,250
800 CSX Corporation .................................. 67,300
5,400 Capital One Financial
Corporation .................................... 158,625
4,100 Centex Corporation ............................... 118,900
1,100 Colgate-Palmolive Company ........................ 73,288
2,100 Columbia/HCA Healthcare
Corporation .................................... 102,113
4,300 Compaq Computer Corporation ...................... 208,013
2,300 Deere & Company .................................. 187,163
1,700 Du Pont (E.I.) de Nemours
& Company ...................................... 116,875
4,600 Duracell International, Inc. ..................... 206,435
4,600 Firstar Corporation .............................. 170,775
4,000 Fluor Corporation ................................ 224,000
2,400 General Electric Company ......................... 153,000
2,400 Halliburton Company .............................. 100,200
2,800 Illinois Tool Works, Inc. ........................ 164,850
3,300 Ingersoll-Rand Company ........................... 123,750
1,900 Integra Financial Corporation .................... 110,443
7,200 Jetform Corporation .............................. 95,400
8,000 Kaufman & Broad Home
Corporation .................................... 101,000
5,200 Limited, Inc. .................................... 98,800
2,700 May Department Stores
Company ........................................ 118,125
1,300 McGraw-Hill Companies, Inc. ...................... 106,280
9,200 Nabisco Holdings Corporation* .................... 272,550
2,300 PepsiCo, Inc. .................................... 117,300
2,400 Pioneer Hi-Bred International, Inc. .............. 110,700
1,200 Procter & Gamble Company ......................... 92,400
4,900 Pulte Corporation ................................ 139,038
7,200 Ryland Group, Inc. ............................... 111,600
3,300 Schlumberger, Ltd. ............................... 215,325
4,600 Signet Banking Corporation ....................... 120,750
2,100 Texaco, Inc. ..................................... 135,713
5,100 Toys "R" Us, Inc. ................................ 137,700
4,400 Trinity Industries, Inc. ......................... 136,400
4,800 UJB Financial Corporation ........................ 153,600
4,200 Wal-Mart Stores, Inc. ............................ 104,475
800 Xerox Corporation ................................ 107,500
------------
5,763,889
------------
Total investments -
(cost $20,196,635) - 96.2% ..................... 20,874,123
Cash and other assets
less liabilities - 3.8% ........................ 820,253
------------
Total net assets - 100.0% ........................ $21,694,376
============
INVESTMENT CONCENTRATION
- ------------------------
At September 30, 1995, Global Series' investment concentration, by industry, was
as follows:
Banking ............................................... 9.4%
Capital Equipment ..................................... 16.5%
Consumer Durables ..................................... 10.8%
Consumer Nondurables .................................. 9.9%
Electrical and Electronics ............................ 1.7%
Energy ................................................ 1.1%
Energy Sources ........................................ 3.0%
Financial Services .................................... 6.5%
Healthcare ............................................ 1.5%
Materials ............................................. 9.5%
Merchandising ......................................... 4.4%
Multi-Industry ........................................ 5.9%
Real Estate ........................................... 3.3%
Services .............................................. 9.9%
Telecommunications .................................... 1.7%
Transportation ........................................ 1.1%
Cash and other assets, less liabilities ............... 3.8%
----------
Total net assets ...................................... 100.0%
==========
See accompanying notes.
16
<PAGE>
STATEMENTS OF NET ASSETS
SEPTEMBER 30, 1995
SECURITY EQUITY FUND
- ASSET ALLOCATION SERIES
Number of Market
Shares COMMON STOCKS Value
- --------------------------------------------------------------------------------
APPLIANCES - 2.6%
900 Black & Decker Corporation ....................... $ 30,712
1,700 Maytag Corporation ............................... 29,750
900 Toro Company ..................................... 28,350
-----------
88,812
AUTO PARTS & SUPPLIES - 2.6%
700 Dana Corporation ................................. 20,212
400 Eaton Corporation ................................ 21,200
600 Modine Manufacturing Company ..................... 17,100
1,500 Simpson Industries ............................... 14,813
800 Walbro Corporation ............................... 16,000
-----------
89,325
BUILDING MATERIALS - 3.6%
400 Ameron, Inc. ..................................... 14,550
1,100 Apogee Enterprises, Inc. ......................... 16,500
300 Armstrong World Industries, Inc. ................. 16,650
750 Butler Manufacturing Company ..................... 21,000
400 Crane Company .................................... 13,800
400 Owens-Corning Fiberglass
Corporation* ................................... 17,850
1,200 Ply Gem Industries ............................... 22,800
-----------
123,150
CHEMICALS - 2.8%
300 Arco Chemical Company ............................ 14,625
200 Dow Chemicals .................................... 14,900
300 DuPont (EI)
de Nemours & Company ........................... 20,625
400 Lyondell Petrochemical Company ................... 10,350
300 Olin Corporation ................................. 20,625
400 Union Carbide Corporation ........................ 15,900
----------
97,025
COMPUTER SYSTEMS - 4.5%
500 Apple Computer, Inc. ............................. 18,625
300 Compaq Computer Corporation* ..................... 14,513
200 Dell Computer Corporation* ....................... 17,000
200 Hewett-Packard Company ........................... 16,675
200 International Business
Machines Corporation ........................... 18,875
500 Quantum Corporation* ............................. 10,937
500 SCI Systems, Inc.* ............................... 17,250
600 Sequent Computer Systems, Inc.* .................. 11,925
300 Sun Microsystems, Inc.* .......................... 18,900
700 Tandem Computers, Inc.* .......................... 8,575
-------
153,275
ELECTRICAL EQUIPMENT - 2.2%
600 Baldor Electric Company .......................... 15,075
189 Cooper Cameron Corporation* ...................... 4,890
416 Cooper Industries Inc. ........................... 14,664
200 General Electric Company ......................... 12,750
200 Johnson Controls, Inc. ........................... 12,650
500 Measurex Corporation ............................. 17,125
------
77,154
ELECTRONICS - 3.9%
300 Amp, Inc. ........................................ 11,550
200 Arrow Electronics, Inc.* ......................... 10,875
600 Augat, Inc. ...................................... 11,325
300 Avnet, Inc. ...................................... 15,488
1,000 Core Industries, Inc. ............................ 11,750
200 Fluke (John) Manufacturing
Company ........................................ 7,600
400 Harris Corporation ............................... 21,950
600 Pioneer Standard Electronics, Inc. ............... 10,500
300 Varian Associates, Inc. .......................... 15,900
400 Wyle Electronics ................................. 17,950
-------
134,888
HOUSING - HOME BUILDING - 2.6%
600 Clayton Homes, Inc. .............................. 14,250
700 Fleetwood Enterprises, Inc. ...................... 13,912
1,200 Hechinger Company ................................ 5,400
500 Hughes Supply, Inc. .............................. 12,000
400 Lowes Companies, Inc. ............................ 12,000
400 Oakwood Homes Corporation ........................ 14,100
400 PPG Industries, Inc. ............................. 18,600
------
90,262
MACHINERY - 3.9%
1500 Baldwin Technology Company, Inc.* ................ 9,562
600 Bearings, Inc. ................................... 20,325
300 Briggs & Stratton Corporation .................... 12,075
700 Commercial Intertech Corporation ................. 13,387
400 Dover Corporation ................................ 15,300
300 GATX Corporation ................................. 15,525
400 Graco, Inc. ...................................... 13,650
400 Parker-Hannifin Corporation ...................... 15,200
600 Trinova Corporation .............................. 20,250
-----------
135,274
MINING & METALS - 2.4%
300 Alcan Aluminum, Ltd. ............................. 9,716
200 Aluminum Company America ......................... 10,575
300 Asarco, Inc. ..................................... 9,450
300 Ashland Coal, Inc. ............................... 9,037
700 Magma Copper Company* ............................ 13,125
200 Phelps Dodge Corporation ......................... 12,525
300 Reynolds Metals Company .......................... 17,325
-----------
81,753
See accompanying notes.
17
<PAGE>
STATEMENTS OF NET ASSETS
SEPTEMBER 30, 1995
SECURITY EQUITY FUND
- ASSET ALLOCATION SERIES (CONTINUED)
Principal
Amount or
Number of Market
Shares COMMON STOCKS (continued) Value
- --------------------------------------------------------------------------------
RECREATION - 3.9%
1,000 Brunswick Corporation ............................ $ 20,250
1,300 CPI Corporation .................................. 28,762
400 Disney (Walt) Company ............................ 22,950
500 Harcourt General, Inc. ........................... 20,938
800 Harley Davidson, Inc. ............................ 19,500
600 King World Productions, Inc.* .................... 21,975
-----------
134,375
SHOES - 2.5%
2,000 J Baker, Inc. .................................... 16,250
500 Brown Group, Inc. ................................ 9,188
200 Nike, Inc. ....................................... 22,225
500 Reebok International, Ltd. ....................... 17,187
800 Wolverine Worldwide, Inc. ........................ 21,900
-----------
86,750
STEEL - 2.2%
500 Birmingham Steel Corporation ..................... 8,750
400 Carpenter Technology ............................. 15,650
200 Cleveland Cliffs, Inc. ........................... 8,225
400 Commercial Metals Company ........................ 10,800
300 Lukens Steel Company ............................. 8,737
400 Quanex Corporation ............................... 8,650
1,000 Steel Technologies, Inc. ......................... 10,000
----------
70,812
----------
Total common stocks -
(cost $1,282,259) - 39.7% ...................... 1,362,855
U.S. GOVERNMENT & AGENCIES
--------------------------
FEDERAL HOME LOAN
MORTGAGE CORPORATION - 4.3%
$100,000 FHLMC Series 1250 CL:H
7.0%, 2020 ..................................... 100,231
$ 50,000 FHLMC 7.0%, 2021 ................................. 48,878
------------
149,109
FICO - 0.8%
$ 75,000 0%, 2010 ....................................... 26,413
----------
26,413
FEDERAL NATIONAL MORTGAGE
ASSOCIATION - 9.5%
$ 50,000 6.5%, 2018 ...................................... 48,730
$130,000 6.95%, 2020 ..................................... 127,097
$ 40,000 7.5%, 2020 ...................................... 40,369
$100,000 8.8%, 2025 ...................................... 108,469
------------
324,665
U.S. TREASURY BILL - 28.8%
$990,000 U.S. Treasury Bill,
5.28% - 5.45%, 10-5-95(2) ...................... $ 989,158
------------
989,158
------------
Total U.S. government & agencies
(cost $1,479,608) - 43.4% ...................... 1,489,345
REAL ESTATE INVESTMENT TRUSTS
-----------------------------
1,000 BRE Properties, Inc. ............................. 33,500
3,400 Cambridge Shopping Centres, Ltd. ................. 32,815
1,300 Federal Realty Investment Trust .................. 30,387
3,100 First Union Real Estate
Investment Trust ............................... 22,863
1,700 HRE Properties ................................... 23,800
1,600 MGI Properties, Inc. ............................. 24,800
1,200 New Plan Realty Trust ............................ 26,550
1,100 Pennsylvania Real Estate
Investment Trust ............................... 23,925
2,000 Santa Anita Realty Enterprises, Inc. ............. 27,000
1,300 Security Capital Pacific Trust ................... 24,700
1,700 United Realty Trust Dominion ..................... 24,225
1,600 Washington Real Estate
Investment Trust ............................... 24,400
700 Weingarten Realty Investors ...................... 24,763
-----------
Total real estate investment trusts -
(cost $337,461) - 10.0% ........................ 343,728
FOREIGN STOCKS
--------------
BELGIUM - 6.7%
100 Cementbedrijven Cimenteries ...................... 40,541
500 Delhaize - Le Lion ............................... 21,245
100 Electrabel ....................................... 21,998
200 Fortis AG ........................................ 21,245
250 Gevaert Photo Productions ........................ 14,198
100 Petrofina SA ..................................... 31,132
150 Royale Belgium ................................... 26,223
100 Solvay ........................................... 53,455
-----------
Total foreign stocks -
(cost $236,619) - 6.7% ......................... 230,037
TEMPORARY CASH INVESTMENTS
--------------------------
4,000 Chase Master Note Program ........................ 4,000
------------
Total temporary cash investments -
(cost $4,000) - 0.1% ........................... 4,000
------------
Total investments -
(cost $3,339,947) - 99.9% ...................... 3,429,965
Cash and other assets, less
liabilities - 0.1% ............................. 4,927
------------
Total net assets - 100.0% ........................ $3,434,892
============
See accompanying notes.
18
<PAGE>
STATEMENTS OF NET ASSETS
SEPTEMBER 30, 1995
SECURITY ULTRA FUND
Number of Market
Shares COMMON STOCKS Value
- --------------------------------------------------------------------------------
BROADCASTING - 0.1%
2,750 TCA Cable TV ..................................... $ 79,063
BUSINESS SERVICES - 3.9%
41,100 Alternative Resources Corporation* ............... 1,315,200
31,500 Paychex, Inc. .................................... 1,456,875
-----------
2,772,075
CHEMICALS - 2.7%
36,500 Praxair, Inc. .................................... 976,375
20,000 Sigma Aldrich Corporation ........................ 970,000
-----------
1,946,375
COMMUNICATIONS - 1.0%
24,000 Commnet Cellular* ................................ 696,000
COMMUNICATION EQUIPMENT - 6.6%
42,500 Aspect Telecommunications* ....................... 1,147,500
28,000 Cidco, Inc.* ..................................... 987,000
16,000 Cisco Systems, Inc.* ............................. 1,104,000
25,000 DSC Communications Corporation* .................. 1,481,250
---------
4,719,750
COMPUTER NETWORKING - 2.0%
32,000 3Com Corporation* ................................ 1,456,000
COMPUTER SOFTWARE - 9.5%
23,500 Autodesk, Inc. ................................... 1,028,125
36,400 Bisys Group, Inc.* ............................... 928,200
12,000 First Financial Management
Corporation .................................... 1,171,500
18,500 HBO & Company .................................... 1,156,250
30,500 SCI Systems, Inc.* ............................... 1,052,250
49,000 Symantec Corporation* ............................ 1,470,000
-----------
6,806,325
COMPUTER SYSTEMS - 3.8%
18,000 Dell Computer Corporation* ......................... 1,530,000
40,000 Gateway 2000* ...................................... 1,225,000
-----------
2,755,000
CONSUMER PRODUCTS - 1.5%
30,000 CUC International* ............................... 1,046,250
ELECTRICAL MACHINERY &
ELECTRONIC COMPONENTS - 7.5%
38,000 Atmel Corporation* ............................... 1,282,500
20,500 Gasonics International
Corporation* ................................... 763,625
13,300 Kulicke & Soffa Industries, Inc.* ................ 485,450
24,000 Teradyne, Inc.* .................................. 864,000
18,000 Ultratech Stepper, Inc.* ......................... 760,500
28,764 Vishay Intertechnology, Inc.* .................... 1,208,088
-----------
5,364,163
FERTILIZER - 3.2%
20,000 IMC Global, Inc. ................................. 1,267,500
24,500 Vigoro Corporation (The) ......................... 1,035,125
-----------
2,302,625
FINANCIAL SERVICES - 8.2%
44,500 Credit Acceptance Corporation* ................... 1,201,500
26,500 Finova Group ..................................... 1,179,250
21,500 First USA, Inc. .................................. 1,166,375
54,000 Mercury Finance Company .......................... 1,316,250
45,000 WFS Financial, Inc.* ............................. 1,023,750
-----------
5,887,125
FOOD & BEVERAGES - 1.8%
23,500 I.B.P., Inc. ..................................... 1,254,313
HEALTH CARE - HMO'S - 1.6%
15,500 Oxford Health Plans* ............................. 1,127,625
HOSPITAL MANAGEMENT - 1.6%
27,500 Community Health Systems* ........................ 1,110,313
HOTEL MANAGEMENT - 1.4%
35,500 LaQuinta Inns .................................... 994,000
INSURANCE - 2.6%
14,500 Jefferson-Pilot Corporation ...................... 931,625
13,500 MBIA, Inc. ....................................... 951,750
-----------
1,883,375
MANUFACTURING - 3.1%
18,000 Illinois Tool Works, Inc. ........................ 1,059,750
31,500 Millipore ........................................ 1,181,250
-----------
2,241,000
MEDICAL INSTRUMENTS & SUPPLIES - 6.9%
20,500 Cardinal Health, Inc. ............................ 1,135,188
51,000 Research Industries Corporation* ................. 1,485,375
20,500 St. Jude Medical, Inc.* .......................... 1,296,625
22,000 Summit Technology, Inc.* ......................... 1,006,500
-----------
4,923,688
NATURAL GAS PIPELINES - 1.4%
30,500 Sonat, Inc. ...................................... 976,000
PAPER PRODUCTS - 1.5%
23,500 Bowater .......................................... 1,095,688
See accompanying notes.
19
<PAGE>
STATEMENTS OF NET ASSETS
SEPTEMBER 30, 1995
SECURITY ULTRA FUND (CONTINUED)
Principal
Amount or
Number Market
of Shares COMMON STOCKS (continued) Value
- --------------------------------------------------------------------------------
PHARMACEUTICALS - 3.4%
26,000 Amgen, Inc.* ..................................... $ 1,296,750
37,500 Dura Pharmaceuticals, Inc.* ...................... 1,115,625
-----------
2,412,375
PUBLISHING & PRINTING - 1.2%
18,000 Houghton Mifflin Company ......................... 837,000
RESTAURANTS - 2.9%
35,000 Applebees International .......................... 953,750
43,000 Boston Chicken* .................................. 1,123,375
-----------
2,077,125
RETAIL TRADE - 10.5%
60,000 Casey's General Stores, Inc. ..................... 1,357,500
23,000 Department 56* ................................... 1,075,250
38,500 Hollywood Entertainment* ......................... 825,344
51,400 Leggett & Platt, Inc. ............................ 1,265,725
47,250 Staples, Inc.* ................................... 1,334,813
33,000 Sunglass Hut International, Inc.* ................ 1,650,000
-----------
7,508,632
TEXTILES - 1.2%
16,500 VF Corporation ................................... 841,500
TRANSPORTATION - 2.9%
26,000 Illinois Central Corporation ..................... 1,017,250
41,000 Southwest Airlines Company ....................... 1,035,250
-----------
2,052,500
-----------
Total common stock -
(Cost $52,339,243) - 94.0% ..................... 67,165,885
COMMERCIAL PAPER
----------------
ALCOHOLIC & MALT BEVERAGES - 1.4%
$1,000,000 Anheuser Busch Companies, Inc.,
5.76%, 10-05-95 ................................ 999,200
BEVERAGES - 2.8%
$2,000,000 PepsiCo, Inc.,
6.01%, 10-05-95 ................................ 1,998,331
GAS COMPANIES & SYSTEMS - 2.8%
$2,000,000 Consolidated Natural Gas Company,
6.01%, 10-03-95 ................................ 1,998,998
LEASING COMPANIES - 2.8%
$2,000,000 International Lease Finance Corporation,
5.80%, 10-13-95 ................................ 1,995,811
----------
Total commercial paper -
(cost $6,992,340) - 9.8% ....................... $ 6,992,340
----------
Total investments -
(cost $59,331,583) - 103.8% .................... 74,158,225
Cash and other assets,
less liabilities - (3.8%) ...................... (2,677,869)
-----------
Total net assets - 100.0% ........................ $71,480,356
===========
The identified cost of investments owned at September 30, 1995, was the same for
federal income tax and financial statement purposes, except for Security Global
Series for which the identified cost of investments for federal income tax
purposes was $20,207,995.
*Securities on which no cash dividend was paid during the preceding twelve
months.
ADR (American Depositary Receipt)
(1)Deferred interest obligation; currently zero coupon under terms of initial
offering.
(2)This security has been segregated with the custodian to cover margin
requirements for the following open long financial futures contracts traded
on foreign exchanges as indicated below:
Unrealized
Type Contracts Gain (Loss)
- ---- --------- ----------
Financial Index - DAX (12/95) 2 $(14,758)
Financial Index - TOPIX (12/95) 2 3,649
Financial Index - HangSeng (10/95) 4 155
Financial Index - FTSE (12/95) 1 (2,591)
---------
$(13,545)
=========
See accompanying notes.
20
<PAGE>
BALANCE SHEETS
SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
SECURITY EQUITY FUND
--------------------
SECURITY ASSET SECURITY
GROWTH AND EQUITY GLOBAL ALLOCATION ULTRA
INCOME FUND SERIES SERIES SERIES FUND
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments, at value (identified cost $51,122,365,
$325,734,845, $20,196,635, $3,339,947 and
$52,339,243, respectively)..................... $60,771,375 $439,402,000 $20,874,123 $3,429,965 $67,165,885
Commercial paper, at amortized cost which
approximates market value ..................... 7,049,217 16,673,689 -- -- 6,992,340
Cash .............................................. 371,653 1,496,327 677,456 841 690,973
Receivables:
Fund shares sold ................................ 10,012 97,970 14,718 -- 108,987
Securities sold ................................. 135,950 1,891,114 501,681 -- 2,580,646
Foreign forward exchange contracts .............. -- -- 253,580 -- --
Dividends ....................................... 78,248 731,887 53,202 3,272 35,248
Prepaid expenses ................................ -- 2,472 -- 15,021 --
Interest ........................................ 218,768 914 -- 3,330 1,004
Foreign taxes recoverable ....................... -- -- 32,939 -- --
Miscellaneous receivables ....................... -- -- 10,003 -- --
Security Management Company ..................... 2,776 5,021 -- -- 4,558
Variation Margin ................................ -- -- -- 4,163 --
----------- ------------ ----------- ---------- -----------
Total assets ............................. $68,637,999 $460,301,394 $22,417,702 $3,456,592 $77,579,641
=========== ============ =========== ========== ===========
LIABILITIES AND NET ASSETS
Liabilities:
Payable for:
Fund shares redeemed .......................... $ 6,761 $ 278,615 $ 15,109 $ -- $ 7,923
Securities purchased .......................... -- -- 669,434 -- 6,014,939
Other Liabilities:
Management fees ............................... 70,181 378,265 34,493 2,738 71,979
Custodian fees ................................ -- -- -- 5,456 --
Transfer and administration fees .............. -- -- -- 2,890 --
12b-1 distribution plan fees .................. 885 15,553 4,290 1,209 3,554
Miscellaneous fees ............................ 579 2,464 -- 9,407 890
----------- ------------ ----------- ---------- -----------
Total liabilities ........................ 78,406 674,897 723,326 21,700 6,099,285
Net Assets:
Paid in capital ................................. 56,924,690 316,087,985 20,425,440 3,282,863 51,734,371
Undistributed net investment income (loss) ...... 17,267 3,304,987 135,605 13,792 --
Accumulated undistributed net realized gain on sale
of investments, futures and foreign
currency transactions ......................... 1,968,626 26,566,370 202,161 61,764 4,919,343
Net unrealized appreciation in value of
investments, futures and translation of assets
and liabilities in foreign currencies ......... 9,649,010 113,667,155 931,170 76,473 14,826,642
----------- ------------ ----------- ---------- -----------
Net assets ............................... 68,559,593 459,626,497 21,694,376 3,434,892 71,480,356
----------- ------------ ----------- ---------- -----------
Total liabilities and net assets ..... $68,637,999 $460,301,394 $22,417,702 $3,456,592 $77,579,641
=========== ============ =========== ========== ===========
CLASS "A" SHARES
Capital shares outstanding ...................... 8,501,968 67,234,950 1,486,010 180,841 8,053,762
Net assets ...................................... $67,429,969 $440,338,877 $16,261,115 $1,905,502 $66,052,333
Net assets value per share (net assets divided by
shares outstanding) .......................... $7.93 $6.55 $10.94 $10.54 $8.20
Add: Selling commission (5.75% of the
offering price) .............................. 0.48 0.40 0.67 0.64 0.50
----------- ------------ ----------- ---------- -----------
Offering price per share (net asset value
divided by 94.25%) ........................... $8.41 $6.95 $11.61 $11.18 $8.70
=========== ============ =========== ========== ===========
CLASS "B" SHARES
Capital shares outstanding ...................... 143,980 3,000,473 505,707 145,615 669,345
Net assets ...................................... $1,129,624 $19,287,620 $5,433,261 $1,529,390 $5,428,023
Net asset value per share
(net assets divided by shares outstanding) ... $7.85 $6.43 $10.74 $10.50 $8.11
=========== ============ =========== ========== ===========
</TABLE>
See accompanying notes.
21
<PAGE>
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
SECURITY EQUITY FUND
--------------------
SECURITY ASSET SECURITY
GROWTH AND EQUITY GLOBAL ALLOCATION ULTRA
INCOME FUND SERIES SERIES SERIES FUND
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest ....................................... $ 1,307,131 $ 1,404,690 $ 10,916 $ 31,915 $ 299,604
Dividends ....................................... 948,094 6,221,156 445,444 6,632 322,235
----------- ------------ ----------- ---------- -----------
2,255,225 7,625,846 456,360 38,547 621,839
Less foreign tax expense ..................... -- -- (38,840) -- --
----------- ------------ ----------- ---------- -----------
Total investment income .................... 2,255,225 7,625,846 417,520 38,547 621,839
EXPENSES:
Management fees ................................. 839,358 4,185,144 457,489 10,134 816,039
Custodian fees .................................. -- -- -- 5,456 --
Transfer/maintenance fees ....................... -- -- -- 790 --
Administration fees ............................. -- -- -- 10,456 --
Directors' fees ................................. -- -- -- 17 --
Professional fees ............................... -- -- -- 1,500 --
Reports to shareholders ......................... -- -- -- 69 --
Registration fees ............................... -- -- -- 7,044 --
Other expenses .................................. -- -- -- 1,405 --
12b-1 distribution plan fees (Class B) .......... 8,580 134,026 51,089 4,499 28,752
Interest ........................................ -- 1,689 -- -- 63
Reimbursement of expenses ....................... -- -- -- (16,615) --
----------- ------------ ----------- ---------- -----------
Total expenses ............................. 847,938 4,320,859 508,578 24,755 844,854
----------- ------------ ----------- ---------- -----------
Net investment income (loss) ............. 1,407,287 3,304,987 (91,058) 13,792 (223,015)
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) during the period on:
Investments ................................... 1,984,078 27,972,416 222,579 (9,371) 4,989,643
Foreign currency transactions ................. -- -- 196,681 (4,800) --
Futures contracts ............................. -- -- -- 75,935 --
----------- ------------ ----------- ---------- -----------
Net realized gains ....................... 1,984,078 27,972,416 419,260 61,764 4,989,643
Net change in unrealized appreciation
(depreciation) during the period on:
Investments ................................... 8,482,309 69,736,879 (198,611) 90,018 8,466,565
Translation of assets and liabilities in
foreign currencies ............................ -- -- 294,606 -- --
Futures contracts ............................. -- -- -- (13,545) --
----------- ------------ ----------- ---------- -----------
Net unrealized appreciation .............. 8,482,309 69,736,879 95,995 76,473 8,466,565
----------- ------------ ----------- ---------- -----------
Net gain .............................. 10,466,387 97,709,295 515,255 138,237 13,456,208
----------- ------------ ----------- ---------- -----------
Net increase in net assets
resulting from operations ..... $11,873,674 $101,014,282 $424,197 $152,029 $13,233,193
=========== ============ =========== ========== ===========
</TABLE>
*Period June 1, 1995 (inception) through September 30 ,1995.
See accompanying notes.
22
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
SECURITY EQUITY FUND
--------------------
SECURITY ASSET SECURITY
GROWTH AND EQUITY GLOBAL ALLOCATION ULTRA
INCOME FUND SERIES SERIES SERIES FUND
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INCREASE IN NET ASSETS
FROM OPERATIONS:
Net investment income (loss) .................... $ 1,407,287 $ 3,304,987 $ (91,058) $ 13,792 $ (223,015)
Net realized gain ............................... 1,984,078 27,972,416 419,260 61,764 4,989,643
Unrealized appreciation
during the period ............................ 8,482,309 69,736,879 95,995 76,473 8,466,565
------------ ------------ ------------ ----------- ------------
Net increase in net assets resulting
from operations ........................... 11,873,674 101,014,282 424,197 152,029 13,233,193
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A .................................. (1,378,072) -- -- -- --
Class B .................................. (11,951) -- -- -- --
Net realized gain
Class A .................................. (1,912,997) (26,300,092) (347,497) -- (1,149,264)
Class B .................................. (23,632) (690,558) (84,333) -- (28,504)
------------ ------------ ------------ ----------- ------------
Total distributions to shareholders ...... (3,326,652) (26,990,650) (431,830) -- (1,177,768)
CAPITAL SHARE TRANSACTIONS (A):
Proceeds from sale of shares
Class A .................................. 2,681,709 159,433,767 4,130,645 1,846,588 97,988,749
Class B .................................. 635,799 36,310,779 3,765,671 1,469,193 10,247,969
Dividends reinvested
Class A .................................. 2,965,256 24,498,993 340,567 -- 1,088,376
Class B .................................. 34,468 690,184 84,001 -- 28,502
Shares redeemed
Class A .................................. (11,959,939) (172,929,497) (8,249,891) (28,739) (105,077,941)
Class B .................................. (340,406) (28,090,274) (2,457,097) (4,179) (6,799,714)
------------ ------------ ------------ ----------- ------------
Net increase (decrease) from capital share
transactions ........................... (5,983,113) 19,913,952 (2,386,104) 3,282,863 (2,524,059)
------------ ------------ ------------ ----------- ------------
Total increase (decrease) in net assets 2,563,909 93,937,584 (2,393,737) 3,434,892 9,531,366
NET ASSETS:
Beginning of period ............................. 65,995,684 365,688,913 24,088,113 -- 61,948,990
------------ ------------ ------------ ----------- ------------
End of period ................................... $68,559,593 $459,626,497 $21,694,376 $3,434,892 $71,480,356
============ ============ ============ =========== ============
Undistributed net investment income (loss)
at end of period ................................ $17,267 $3,304,987 $135,605 $13,792 $ --
============ ============ =========== =========== ============
(a) Shares issued and redeemed
Shares sold
Class A .................................. 380,257 27,957,351 395,288 183,574 13,881,834
Class B .................................. 91,007 6,432,534 366,335 146,016 1,427,321
Dividends reinvested
Class A .................................. 434,705 4,858,020 33,389 -- 164,781
Class B .................................. 5,126 138,507 8,325 -- 4,328
Shares redeemed
Class A .................................. (1,697,766) (30,292,120) (799,467) (2,733) (14,892,245)
Class B .................................. (48,979) (4,927,928) (237,369) (401) (946,401)
------------ ------------ ------------ ----------- ------------
Net increase (decrease) ............... (835,650) 4,166,364 (233,499) 326,456 (360,382)
============ ============ ============ =========== ============
</TABLE>
*Period June 1, 1995 (inception) through September 30, 1995.
See accompanying notes.
23
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED SEPTEMBER 30, 1994
<TABLE>
<CAPTION>
SECURITY EQUITY FUND
--------------------
SECURITY SECURITY
GROWTH AND EQUITY GLOBAL ULTRA
INCOME FUND SERIES SERIES FUND
-----------------------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS:
Net investment income (loss) ..................... $ 1,261,142 $ 3,165,837 $ (63,054) $ (492,428)
Net realized gain on sale of investments ......... 2,952,894 28,999,838 502,173 2,698,928
Unrealized appreciation (depreciation)
during the year ................................ (10,068,384) (25,585,163) 835,690 (4,046,772)
------------ ------------ ------------ ------------
Net increase (decrease) in net assets resulting
from operations .............................. (5,854,348) 6,580,512 1,274,809 (1,840,272)
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A ...................................... (1,282,878) (6,495,995) -- --
Class B ...................................... (4,016) (3,001) -- --
Net realized gain
Class A ...................................... (1,709,797) (65,230,492) -- (8,147,095)
Class B ...................................... (1,855) (30,137) -- (4,565)
------------ ------------ ------------ ------------
Total distributions to shareholders .......... (2,998,546) (71,759,625) -- (8,151,660)
CAPITAL SHARE TRANSACTIONS (A):
Proceeds from sale of shares
Class A ...................................... 7,680,929 173,504,752 24,256,624 59,208,377
Class B ...................................... 1,401,417 13,572,886 4,059,395 2,182,716
Dividends reinvested
Class A ...................................... 2,687,871 66,562,965 -- 7,719,477
Class B ...................................... 5,609 32,937 -- 3,114
Shares redeemed
Class A ...................................... (18,206,699) (192,197,708) (5,344,170) (67,279,953)
Class B ...................................... (702,391) (6,172,823) (158,545) (949,360)
------------ ------------ ------------ ------------
Net increase (decrease) from capital share
transactions .............................. (7,133,264) 55,303,009 22,813,304 884,371
------------ ------------ ------------ ------------
Total increase (decrease) in net assets .. (15,986,158) (9,876,104) 24,088,113 (9,107,561)
NET ASSETS:
Beginning of year................................. 81,981,842 375,565,017 -- 71,056,551
------------ ------------ ------------ ------------
End of year....................................... $65,995,684 $365,688,913 $ 24,088,113 $61,948,990
============ ============ ============ ============
Undistributed net investment income at end of year.. $87,422 $3,852,320 $ -- $ --
============ ============ ============ ============
(a) Shares issued and redeemed
Shares sold
Class A...................................... 1,028,902 30,498,096 2,354,656 8,545,741
Class B...................................... 196,294 2,488,139 383,242 326,136
Dividends reinvested
Class A...................................... 363,018 11,982,532 -- 1,079,043
Class B...................................... 789 5,929 -- 436
Shares redeemed
Class A...................................... (2,465,336) (33,603,067) (497,856) (9,467,423)
Class B...................................... (100,257) (1,136,708) (14,826) (142,475)
------------ ------------ ------------ ------------
Net increase (decrease)...................... (976,590) (10,234,921) 2,225,216 341,458
============ ============ ============ ============
</TABLE>
See accompanying notes.
24
<PAGE>
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR EACH SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
Net Total Ratio of
Fiscal asset Net Net gains from Dividends Distribu- net
year value invest-or losses on invest-(from net tions Net asset Net assets Ratio of income
ended begin- ment securities ment invest- (from Total value end of expenses (loss) to Portfolio
Septem ning of income (realized & opera- ment in- realized distri- end of Total period to average average turnover
- -ber 30 period (loss) (unrealized) tions come) gains) butions period return(a) (thousands) net assets net assets rate
- ------------------------------------------------------------------------------------------------------------------------------------
SECURITY GROWTH AND INCOME FUND (CLASS A)(b)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1991 $7.43 $0.45 $0.992 $1.442 $(0.474) $(1.088) $(1.562) $7.31 22.30% $77,418 1.28% 6.14% 103%
1992 7.31 0.35 (0.016) 0.334 (0.343) (0.171) (0.514) 7.13 4.70% 75,436 1.27% 4.79% 74%
1993 7.13 0.21 0.876 1.086 (0.218) (0.158) (0.376) 7.84 15.60% 81,982 1.26% 2.80% 135%
1994
(e) 7.84 0.13 (0.713) (0.583) (0.128) (0.169) (0.297) 6.96 (7.60)% 65,328 1.28% 1.70% 163%
1995
(i) 6.96 0.16 1.183 1.343 (0.158) (0.215) (0.373) 7.93 20.25% 67,430 1.31% 2.21% 130%
SECURITY GROWTH AND INCOME FUND (CLASS B)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1994
(e) $7.83 $0.05 $(0.694) $(0.644)$(0.117) $(0.169) $(0.286) $6.90 (8.00%) $ 668 2.27% 1.03% 178%
1995
(i) 6.90 0.08 1.179 1.259 (0.094) (0.215) (0.309) 7.85 19.07% 1,130 2.31% 1.21% 130%
SECURITY EQUITY SERIES (CLASS A)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1991 $4.82 $0.12 $1.403 $1.523 $(0.148) $(0.375) $(0.523) $5.82 34.20% $295,030 1.08% 2.34% 61%
1992 5.82 0.09 .475 0.565 (0.132) (0.393) (0.525) 5.86 10.20% 313,582 1.06% 1.48% 83%
1993 5.86 0.12 1.165 1.285 (0.053) (0.362) (0.415) 6.73 22.70% 375,565 1.06% 1.95% 95%
1994
(e) 6.73 0.05 0.085 0.135 (0.120) (1.205) (1.325) 5.54 1.95% 358,237 1.06% 0.86% 79%
1995
(i) 5.54 0.04 1.377 1.417 --- (0.407) (0.407) 6.55 27.77% 440,339 1.05% 0.87% 95%
SECURITY EQUITY SERIES (CLASS B)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1994
(e) $6.81 $0.01 $(0.005) $0.005 $(0.12) $(1.205) $(1.325) $5.49 (0.15%) $7,452 2.07% (0.01%) 80%
1995
(i) 5.49 (0.01) 1.357 1.347 --- (0.407) (0.407) 6.43 26.69% 19,288 2.05% (0.13%) 95%
SECURITY GLOBAL SERIES (CLASS A)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1994
(e)(f) $10.00 $(0.03) $0.87 $0.84 $ --- $ --- $ --- $10.84 8.40% $20,128 2.0% (0.01%) 73%
1995
(i) 10.84 (0.02) 0.31 0.29 --- (0.19) (0.19) 10.94 2.80% 16,261 2.0% (0.17%) 141%
SECURITY GLOBAL SERIES (CLASS B)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1994
(e)(f) $9.96 $(0.12) $0.91 $0.79 $ --- $ --- $ --- $10.75 7.90% $ 3,960 3.0% (0.01%) 73%
1995
(i) 10.75 (0.12) 0.30 0.18 --- (0.19) (0.19) 10.74 1.79% 5,433 3.0% (1.17%) 141%
SECURITY ASSET ALLOCATION SERIES (CLASS A)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1995
(g)(h)(i)$10.00 $0.04 $0.50 $0.54 $ --- $ --- $ --- $10.54 5.40% $ 1,906 2.0% 1.33% 43%
SECURITY ASSET ALLOCATION SERIES (CLASS B)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1995
(g)(h)(i)$10.00 $0.01 $0.49 $0.50 $ --- $ --- $ --- $10.50 5.00% $ 1,529 3.0% .31% 43%
</TABLE>
See accompanying notes.
25
<PAGE>
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR EACH SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
Net Total Ratio of
Fiscal asset Net Net gains from Dividends Distribu- net
year value invest-or losses on invest-(from net tions Net asset Net assets Ratio of income
ended begin- ment securities ment invest- (from Total value end of expenses (loss) to Portfolio
Septem ning of income (realized & opera- ment in- capital distri- end of Total period to average average turnover
- -ber 30 period (loss) (unrealized) tions come) gains) butions period return(a) (thousands) net assets net assets rate
- ------------------------------------------------------------------------------------------------------------------------------------
SECURITY ULTRA FUND (CLASS A)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1991
(c)(d) $4.46 $(0.030) $2.525 $2.495 $ --- $(0.235) $(0.235) $6.72 58.40% $65,449 1.61% (0.51%) 163%
1992 6.72 (0.090) (0.202) (0.292) --- (0.172) (0.172) 6.66 1.50% 57,128 1.32% (0.46%) 142%
1993 6.66 (0.028) 1.791 1.763 --- (0.293) (0.293) 8.13 26.80% 71,056 1.30% (0.50%) 101%
1994
(e) 8.13 (0.056) (0.188) (0.244) --- (1.066) (1.066) 6.82 (3.60)% 60,695 1.33% (0.80%) 111%
1995
(i) 6.82 (0.02) 1.535 1.515 --- (0.135) (0.135) 8.20 22.69% 66,052 1.32% (0.31%) 180%
SECURITY ULTRA FUND (CLASS B)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1994
(e) $8.30 $(0.103) $(0.321) $(0.424)$ --- $(1.066) $(1.066) $6.81 (5.70%) $1,254 2.36% (1.76%) 110%
1995
(i) 6.81 (0.09) 1.525 1.435 --- (0.135) (0.135) 8.11 21.53% 5,428 2.32% (1.32%) 180%
</TABLE>
(a) Total return information does not reflect deduction of any sales charges
imposed at the time of purchase for Class A shares or upon redemption for
Class B shares.
(b) Effective July 6, 1993, Security Growth and Income Fund changed its
investment objective frorm investing for income with secondary emphasis on
long-term capital growth to long-term capital growth with secondary
emphasis on income. Effective the same date the fund changed its name from
Security Investment Fund to Security Growth and Income Fund.
<TABLE>
<CAPTION>
(c) Debt outstanding Weighted average debt Weighted average month- Average debt Average debt
Year at end of period outstanding during the period end shares outstanding per share per share
---- ---------------- ----------------------------- ---------------------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Security Ultra Fund 1991 --- 970,096 8,817,652 .11 .01
</TABLE>
Borrowings and related interest, if any, were immaterial in 1992, 1993,
1994, and 1995.
(d) Portfolio turnover calculation excludes the portfolio investments acquired
in the Omni Fund merger. Per share data has been calculated using the
average month-end shares outstanding.
(e) Class "B" Shares were initially capitalized on October 19, 1993. Percentage
amounts for the period, except total return, have been annualized. Per
share data has been calculated using the average month-end shares
outstanding.
(f) Security Global Series was initially capitalized on October 1, 1993, with a
net asset value of $10 per share.
(g) Security Asset Allocation Series was initially capitalized on June 1, 1995,
with a net asset value of $10 per share. Percentage amounts for the period
have been annualized, except for total return.
(h) Fund expenses were reduced by the Investment Manager during the period and
expense ratios absent such reimbursement would have been as follows:
1995
-----------------------
Asset Allocation Series Class A 3.6%
Class B 4.7%
(i) Net investment income (loss) was computed using average shares outstanding
throughout the period.
See accompanying notes.
26
<PAGE>
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1995
1. SIGNIFICANT ACCOUNTING POLICIES
Security Growth and Income, Equity and Ultra Funds (the Funds) are registered
under the Investment Company Act of 1940, as amended, as diversified open-end
management investment companies. The shares of Security Equity Fund are
currently issued in three Series, the Equity Series, the Global Series, and the
Asset Allocation Series with each Series, in effect representing a separate
Fund. The Funds began offering an additional class of shares ("B" shares) to the
public on October 19, 1993. The shares are offered without a front-end sales
charge but incur additional class - specific expenses. Redemptions of the shares
within five years of acquisition incur a contingent deferred sales charge. The
following is a summary of the significant accounting policies followed by the
Funds in the preparation of their financial statements. These policies are in
conformity with generally accepted accounting principles.
A. SECURITY VALUATION - Valuations of the Funds' securities are supplied by a
pricing service approved by the Board of Directors. Securities listed or traded
on a national securities exchange are valued on the basis of the last sales
price. If there are no sales on a particular day, then the securities are valued
at the mean between the bid and the asked prices. If a mean cannot be determined
then the securities are valued at the best available current bid price. All
other securities for which market quotations are available are valued on the
basis of the current bid price. If there is no bid price or if the bid price is
deemed to be unsatisfactory by the Board of Directors or the Funds' investment
manager, then the securities are valued in good faith by such method as the
Board of Directors determines will reflect the fair market value. The Funds
generally will value short-term debt securities at prices based on market
quotations for securities of similar type, yield, quality and duration, except
that securities purchased with 60 days or less to maturity are valued on the
basis of the amortized cost which approximates market value.
Generally, trading in foreign securities markets is substantially completed
each day at various times prior to the close of the New York Stock Exchange. The
values of foreign securities are determined as of the close of such foreign
markets or the close of the New York Stock Exchange if earlier. All investments
quoted in foreign currency are valued in U.S. dollars on the basis of the
foreign currency exchange rates prevailing at the close of business. The Global
Series and Asset Allocation Series investments in foreign securities may involve
risks not present in domestic investments. Since foreign securities may be
denominated in a foreign currency and involve settlement and pay interest or
dividends in foreign currencies, changes in the relationship of these foreign
currencies to the U.S. dollar can significantly affect the value of the
investments and earnings of the Funds. Foreign investments may also subject the
Global Series and Asset Allocation Series to foreign government exchange
restrictions, expropriation, taxation or other political, social or economic
developments, all of which could affect the market and/or credit risk of the
investments.
B. FOREIGN CURRENCY TRANSACTIONS - The accounting records of the Funds are
maintained in U.S. dollars. All assets and liabilities initially expressed in
foreign currencies are converted into U.S. dollars at prevailing exchange rates.
Purchases and sales of investment securities, dividend and interest income, and
certain expenses are translated at the rates of exchange prevailing on the
respective dates of such transactions.
The Funds do not isolate that portion of the results of operations resulting
from changes in the foreign exchange rates on investments from the fluctuations
arising from changes in the market prices of securities held. Such fluctuations
are included with the net realized and unrealized gain or loss on investments.
Net realized foreign exchange gains or losses arise from sales of portfolio
securities, sales of foreign currencies, and the difference between asset and
liability amounts initially stated in foreign currencies and the U.S. dollar
value of the amounts actually received or paid. Net unrealized foreign exchange
gains or losses arise from changes in the value of portfolio securities and
other assets and liabilities at the end of the reporting period, resulting from
changes in the exchange rates.
C. FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS - Global Series and Asset
Allocation Series may enter into forward foreign exchange contracts in order to
manage against foreign currency risk from purchase or sale of securities
denominated in foreign currency. Global Series and Asset Allocation Series may
also enter into such contracts to manage changes in foreign currency exchange
rates on portfolio positions. These contracts are marked to market daily, by
recognizing the difference between the contract exchange rate and the current
market rate as unrealized gains or losses. Realized gains or losses are
recognized when contracts are settled and are reflected in the statement of
operations. These contracts involve market risk in excess of the amount
reflected in the Balance Sheet. The face or contract amount in U.S. dollars
reflects the total exposure the Global Series and Asset Allocation Series have
in that particular currency contract. Losses may arise due to changes in the
value of the foreign currency or if the counterparty does not perform under the
contract.
D. FUTURES - Asset Allocation Series utilizes futures contracts to a limited
extent, with the objectives of maintaining full exposure to the underlying stock
markets, enhancing returns, maintaining liquidity, and minimizing transaction
costs. Asset Allocation Series may purchase futures contracts to immediately
position incoming cash in the market, thereby simulating a fully invested
position in the underlying index while maintaining a cash balance for liquidity.
In the event of redemptions, the Asset Allocation Series may pay departing
shareholders from their cash balances and reduce their futures positions
accordingly. Returns may be enhanced by purchasing futures contracts instead of
the underlying securites when futures are believed to be priced more
attractively than the underlying securities. The primary risks associated with
the use of futures contracts are imperfect correlation between changes in market
values of stocks contained in the indexes and the prices of futures contracts,
and the possibility of an illiquid market. Futures contracts are valued based
upon their quoted daily settlement prices. Upon entering into a futures
contract, the Series is required to deposit either cash or securities,
representing the initial margin, equal to a certain percentage of the contract
value. Subsequent changes in the value of the contract, or variation margin, are
recorded as unrealized gains or losses. The variation margin is paid or received
in cash daily by the Series. The Series realizes a gain or loss when the
contract is closed or expires.
27
<PAGE>
NOTES TO FINANCIAL STATEMENTS
E. SECURITY TRANSACTIONS AND INVESTMENT INCOME - Security transactions are
accounted for on the date the securities are purchased or sold. Realized gains
and losses are reported on an identified cost basis. Dividend income less
foreign taxes withheld (if any) are recorded on the ex-dividend date. Interest
income is recognized on the accrual basis. Premium and discounts (except
original issue discounts) on debt securities are not amortized.
F. DISTRIBUTIONS TO SHAREHOLDERS - Distributions to shareholders are recorded
on the ex-dividend date. The character of distributions made during the year
from net investment income or net realized gains may differ from their ultimate
characterization for federal income tax purposes. These differences are
primarily due to differing treatments for tax equalization debits, expiration of
net operating losses and recharacterization of foreign currency gains and
losses.
G. TAXES - The Funds complied with the requirements of the Internal Revenue
Code applicable to regulated investment companies and distributed all of their
taxable net income and net realized gains sufficient to relieve them from all,
or substantially all, federal income, excise and state income taxes. Therefore,
no provision for federal or state income tax is required.
2. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Under terms of the investment advisory contract, Security Management Company
(SMC) agrees to provide, or arrange for others to provide, all the services
required by the Funds for a single fee (except for the Asset Allocation Series
of Security Equity Fund), including investment advisory services, transfer agent
services and certain other administrative services. For Growth and Income Fund,
Equity Series and Ultra Fund this fee is equal to 2% of the first $10 million of
the average daily closing value of each Fund's net assets, 1 1/2% of the next
$20 million, and 1% of the remaining net asset value of the Fund for the fiscal
year. For Global Series this fee is equal to 2% of the first $70 million of the
average daily closing value of the Series net assets and 1 1/2% of the remaining
average net assets of the Series, for the fiscal year. Additionally, SMC agrees
to assume all of the Funds' expenses, except for its fee and the expenses of
interest, taxes, brokerage commissions and extraordinary items and Class B
distribution fees. SMC also serves as Investment Advisor to the Asset Allocation
Series, and accordingly receives a fee equal to 1% of the average net assets of
this Series.
SMC also acts as the administrative agent and transfer agent for the Asset
Allocation Series, and as such performs administrative functions, transfer
agency and dividend disbursing services, and the bookkeeping, accounting and
pricing functions for the Series. For these services, the Investment Manager
receives an administrative fee equal to .045% of the average daily net assets of
the Series plus the greater of .10% of its average net assets or (i) $30,000 in
the year ending June 1, 1996; (ii) $45,000 in the year ending June 1, 1997; and
(iii) $60,000 thereafter. For transfer agent services, SMC is paid an annual
fixed charge per account as well as a transaction fee for all shareholder and
dividend payments.
SMC pays a Sub-Advisor, Lexington Management Corporation (LMC), an annual fee
in an amount equal to .50% of the average daily net assets of Global Series, for
investment advisory and certain administrative services provided to the Global
Series. SMC pays Templeton Quantitative Advisors for research provided to the
Asset Allocation Series, an annual fee equal to .30% of the first $50,000,000 of
the average net assets of the Asset Allocation Series invested in equity
securities and .25% of the average equity security assets in excess of
$50,000,000. SMC also pays Meridian Management Corporation for research provided
to the Asset Allocation Series, an annual fee equal to .20% of the average net
assets of that Series. SMC has agreed to limit the total expenses of the Asset
Allocation Series to 2% of the average net assets, excluding 12b-1 fees.
The Funds have adopted Distribution Plans related to the offering of Class B
shares pursuant to Rule 12b-1 under the Investment Company Act of 1940. The
Plans provide for payments at an annual rate of 1.0% of the average net assets
of each Fund's Class B shares.
Security Distributors, Inc. (SDl), a wholly-owned subsidiary of SMC and the
national distributor for the Funds, received net underwriting commissions after
allowances to brokers and dealers in the amounts presented in the following
table:
Asset
Growth And Equity Global Allocation Ultra
Income Fund Series Series Series Fund
----------- ------ ------ ------ ----
SDI underwriting $ 5,020 $96,169 $ 4,002 $198 $14,803
Broker/Dealer $25,820 $514,291 $21,276 $621 $71,879
Certain officers and directors of the Funds are also officers and/or
directors of Security Benefit Life Insurance Company and its subsidiaries, which
include SMC and SDI.
3. FEDERAL INCOME TAX MATTERS
For federal income tax purposes, the amounts of unrealized appreciation
(depreciation) at September 30, 1995, were as follows:
Asset
Growth And Equity Global Allocation Ultra
Income Fund Series Series Series Fund
----------- ------ ------ ------ ----
Gross unrealized
appreciation $9,791,095 $114,295,267 $1,796,270 $147,833 $15,561,308
Gross unrealized
depreciation (142,085) (628,112) (876,460) (71,360) (734,666)
------------------------------------------------------------
Net unrealized
appreciation $9,649,010 $113,667,155 $ 919,810 $76,473 $14,826,642
============================================================
The Growth and Income Fund, Equity Series, Global Series and Ultra Fund hereby
respectively designate $968,758, $20,717,586, $18,239, and $4,956,836 as capital
gain dividends attributable to the fiscal year ended September 30, 1995, for the
purpose of the dividends paid deduction on each Fund's federal income tax
return. Asset Allocation Series has a capital loss carryover of $9,371 for
federal income tax purposes which will expire in 2003.
28
<PAGE>
NOTES TO FINANCIAL STATEMENTS
4. INVESTMENT TRANSACTIONS
Investment transactions for the period ended September 30, 1995, (excluding
overnight investments and short-term commercial paper) are as follows:
Asset
Growth And Equity Global Allocation Ultra
Income Fund Series Series Series Fund
----------- ------ ------ ------ ----
Purchases $76,688,330 $368,157,730 $29,541,921 $3,615,370 $102,020,220
Proceeds from
sales $87,952,729 $359,818,550 $30,781,283 $1,256,749 $104,199,978
5. FORWARD FOREIGN EXCHANGE CONTRACTS
At September 30, 1995, Global Series had the following open forward foreign
exchange contracts to sell currency (excluding foreign currency contracts used
for purchase and sale settlements):
Settlement Contract Contract Current Unrealized Gain
Currency Date Amount Rate Rate (Loss)
- -------- ---- ------ ---- ---- ------
French Franc 11-24-95 1,607,190 5.011 4.9272 $ (5,455)
Japanese Yen 11-15-95 62,757,012 83.263 98.6581 117,614
Japanese Yen 01-31-96 43,145,815 86.15 97.5267 58,422
Japanese Yen 02-14-96 71,091,550 90.42 97.3715 56,131
Japanese Yen 02-20-96 42,629,075 94.29 97.2842 13,915
Japanese Yen 02-20-96 10,596,499 95.36 97.2842 2,198
Japanese Yen 02-20-96 51,041,970 95.33 97.2842 10,755
---------
$253,580
=========
6. FEDERAL TAX STATUS OF DIVIDENDS
The income dividends paid by the Funds are taxable as ordinary income on the
shareholder's tax return. The portion of ordinary income of dividends (including
net short-term capital gains) attributed to fiscal year ended September 30,
1995, that qualified for the dividends received deduction for corporate
shareholders was 37%, 55%, 17%, 8% and 0% of the amount taxable as ordinary
income for Growth and Income Fund, Equity Series, Global Series, Asset
Allocation Series and Ultra Fund respectively, in accordance with the provisions
of the Internal Revenue Code.
7. FOREIGN TAX CREDIT INFORMATION
For purposes of the foreign tax credit designation requirements, Security
Global Series paid foreign taxes of $38,840 and had foreign source gross income
of $315,643.
29
<PAGE>
REPORT OF ERNST & YOUNG LLP INDEPENDENT AUDITORS
To the Shareholders and Boards of Directors
Security Growth and Income Fund, Security Equity Fund, and Security Ultra Fund
We have audited the accompanying balance sheets and statements of net assets
of Security Growth and Income Fund, Security Equity Fund (comprised of the
Equity, Global and Asset Allocation Series), and Security Ultra Fund (the Funds)
as of September 30, 1995, the related statements of operations for the year then
ended, and changes in net assets for each of the two years in the period then
ended of Security Growth and Income Fund, Security Equity Series, Security
Equity Global Series, and Security Ultra Fund and the related statements of
operations and changes in net assets for the period June 1, 1995 (commencement
of operations) to September 30, 1995 of Security Equity Asset Allocation Series
and the financial highlights for each of the five years in the period then
ended. These financial statements and the financial highlights are the
responsibility of the Funds' management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the 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 investments owned as of
September 30, 1995, by correspondence with the custodian. As to securities
relating to uncompleted transactions, we performed other auditing procedures. 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 the
Funds at September 30, 1995, and the results of their operations, changes in
their net assets and the financial highlights for the periods indicated above in
conformity with generally accepted accounting principles.
Ernst & Young LLP
Kansas City, Missouri
October 27, 1995
30
<PAGE>
THE SECURITY GROUP OF
MUTUAL FUNDS
- ---------------------
Security Growth and Income Fund
Security Equity Fund
- Equity Series
- Global Series
- Asset Allocation Series
Security Ultra Fund
Security Income Fund
- Corporate Bond Series
- U.S. Government Series
- Limited Maturity Bond Series
- Global Aggressive Bond Series
Security Tax-Exempt Fund
Security Cash Fund
This report is submitted for the general information of the shareholders of the
Funds. The report is not authorized for distribution to prospective investors in
the Funds unless preceded or accompanied by an effective prospectus which
contains details concerning the sales charges and other pertinent information.
SECURITY FUNDS
OFFICERS AND DIRECTORS
- ----------------------
DIRECTORS
- ---------
Willis A. Anton
Donald A. Chubb, Jr.
John D. Cleland
Donald L. Hardesty
Penny A. Lumpkin
Mark L. Morris, Jr., D.V.M.
Jeffrey B. Pantages
Harold G. Worswick
OFFICERS
- --------
John D. Cleland, President
James R. Schmank, Vice President and Treasurer
Mark E. Young, Vice President
Terry A. Milberger, Vice President, Equity Fund
Greg A. Hamilton, Assistant Vice President
Cindy L. Shields, Assistant Vice President
Amy J. Lee, Secretary
Brenda M. Luthi, Assistant Treasurer and Assistant Secretary
[SDI LOGO]
700 SW Harrison St.
Topeka, KS 66636-0001
(913) 295-3127
(800) 888-2461
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U.S. POSTAGE PAID
TOPEKA, KS
PERMIT NO. 385
