N-14

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Securities Act File No.

      As filed with the Securities and Exchange Commission on May 30, 2002

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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM N-14

             REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
                           Pre-Effective Amendment No.      [ ]
                          Post-Effective Amendment No.      [ ]

                              SECURITY EQUITY FUND
               (Exact Name of Registrant as Specified in Charter)


                One Security Benefit Place, Topeka, Kansas 66636
               (Address of Principal Executive Offices) (Zip Code)

                                 (785) 438-3000
                  (Registrant's Area Code and Telephone Number)

                                   Amy J. Lee
                        Security Management Company, LLC
                           One Security Benefit Place
                              Topeka, Kansas 66636
                     (Name and Address of Agent for Service)

Approximate Date of Proposed Public Offering:  As soon as practicable after this
Registration Statement becomes effective.

It is proposed that this filing will become  effective on June 29, 2002 pursuant
to Rule 488 under the Securities Act of 1933.

No filing fee is required because an indefinite  number of shares has previously
been registered pursuant to Rule 24f-2 under the Investment Company Act of 1940,
as amended.



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                             Total Return Series of
                              Security Equity Fund
                           One Security Benefit Place
                                Topeka, KS 66636
                                 (800) 888-2461

                                                                  ____, 2002

Dear Shareholder:

Your Board of  Directors  has called a special  meeting of  Shareholders  of the
Total Return Series ("Total Return Fund") of Security Equity Fund, to be held at
9:30 a.m.,  local time,  on August 20, 2002,  at the offices of Security  Equity
Fund,  Security  Benefit Group  Building,  One Security  Benefit Place,  Topeka,
Kansas 66636.

The Board of Directors of Security Equity Fund has approved a reorganization  of
the Total Return Fund, into the Equity Series ("Equity Fund") of Security Equity
Fund, which is managed by Security  Management  Company,  LLC and is part of the
Security  Group of Mutual  Funds (the  "Reorganization").  The  Equity  Fund has
investment objectives and policies that are similar in many respects to those of
the Total Return  Fund.  The  Reorganization  is expected to result in operating
expenses that are lower for Total Return Fund's shareholders.

You are asked to vote to  approve  a Plan of  Reorganization.  The  accompanying
document  describes  the  proposed  transaction  and  compares  the policies and
expenses of the Funds for your evaluation.

After  careful  consideration,  the Board of Directors  of Security  Equity Fund
unanimously  approved  this  proposal  with  respect  to Total  Return  Fund and
recommended that shareholders of the Fund vote "FOR" the proposal.

A Proxy  Statement/Prospectus  that describes the Reorganization is enclosed. We
urge you to vote your shares by completing  and returning the enclosed  proxy in
the  envelope  provided,  or vote by Internet  or  telephone,  at your  earliest
convenience.

YOUR VOTE IS IMPORTANT  REGARDLESS  OF THE NUMBER OF SHARES YOU OWN. IN ORDER TO
AVOID THE ADDED  COST OF  FOLLOW-UP  SOLICITATIONS  AND  POSSIBLE  ADJOURNMENTS,
PLEASE TAKE A FEW MINUTES TO READ THE PROXY  STATEMENT/PROSPECTUS  AND CAST YOUR
VOTE. IT IS IMPORTANT THAT YOUR VOTE BE RECEIVED NO LATER THAN AUGUST _, 2002.

We appreciate  your  participation  and prompt response in this matter and thank
you for your continued support.

                                                              Sincerely,


                                                              James R. Schmank
                                                              President



                             Total Return Series of
                              Security Equity Fund
                           One Security Benefit Place
                                Topeka, KS 66636
                                 (800) 888-2461

                  NOTICE OF SPECIAL MEETING OF SHAREHOLDERS OF
                               TOTAL RETURN SERIES
                             OF SECURITY EQUITY FUND
                          TO BE HELD ON AUGUST 20, 2002

To the Shareholders:


A special  meeting of  Shareholders  of the Total Return Series  ("Total  Return
Fund") of  Security  Equity  Fund will be held on August 20,  2002 at 9:30 a.m.,
local time, at the Security Benefit Group Building,  One Security Benefit Place,
Topeka, Kansas 66636.

The purposes of the special meeting of the Total Return Fund are as follows:

1.   To approve a Plan of Reorganization providing for the acquisition of all of
     the assets and  liabilities  of the Total Return Fund by the Equity  Series
     ("Equity  Fund") of Security  Equity Fund solely in exchange  for shares of
     the Equity Fund,  followed by the complete  liquidation of the Total Return
     Fund; and

2.   To transact  such other  business as may  properly  come before the special
     meeting of Shareholders or any adjournments thereof.

Shareholders of record at the close of business on June 24, 2002 are entitled to
notice  of,  and to vote at,  the  meeting.  Your  attention  is  called  to the
accompanying  Proxy  Statement/Prospectus.  Regardless  of  whether  you plan to
attend the meeting, PLEASE COMPLETE, SIGN AND RETURN PROMPTLY THE ENCLOSED PROXY
CARD OR VOTE BY  TELEPHONE  OR  INTERNET  so that a quorum will be present and a
maximum  number of shares may be voted.  If you are present at the meeting,  you
may change your vote, if desired, at that time.

                                             By Order of the Board of Directors


                                             Amy J. Lee
                                             Secretary

______, 2002





                                TABLE OF CONTENTS

INTRODUCTION...........................................................       5

SUMMARY................................................................       6
   The Proposed Reorganization.........................................       6
   Purchase, Redemption, and Exchange Information......................       7
   Federal Income Tax Consequences of the Reorganization...............       7

COMPARISON OF RISKS INVOLVED IN INVESTING IN THE FUNDS.................       7

INVESTMENT OBJECTIVES AND POLICIES.....................................       8
   Comparison of Objectives and Primary Investment Strategies..........       8
   Comparison of Portfolio Characteristics.............................       9
   Relative Performance................................................       9
   Comparisons of Securities and Investment Techniques.................      10

COMPARISON OF FEES AND EXPENSES........................................      12
   Operating Expenses..................................................      12
   General Information.................................................      13

ADDITIONAL INFORMATION ABOUT EQUITY FUND...............................      14
   Investment Manager..................................................      14
   Investment Personnel................................................      14
   Performance of Equity Fund..........................................      14

INFORMATION ABOUT THE REORGANIZATION...................................      15
   The Reorganization Plan.............................................      15
   Reasons for the Reorganization......................................      16
   Board Consideration.................................................      16
   Tax Considerations..................................................      16
   Expenses of the Reorganization......................................      17

ADDITIONAL INFORMATION ABOUT THE FUNDS.................................      17
   Form of Organization................................................      17
   Dividends and Other Distributions...................................      17
   Capitalization......................................................      17

GENERAL INFORMATION ABOUT THE PROXY STATEMENT..........................      18
   Solicitation of Proxies.............................................      18
   Voting Rights.......................................................      18
   Other Matters to Come Before the Meeting............................      18
   Shareholder Proposals...............................................      18
   Information about the Funds.........................................      19
   Reports to Shareholders.............................................      19

MORE INFORMATION REGARDING THE FUNDS...................................      20

APPENDIX A.............................................................      30

APPENDIX B.............................................................      40

APPENDIX C.............................................................      41





                           PROXY STATEMENT/PROSPECTUS

                              SECURITY EQUITY FUND
                           ONE SECURITY BENEFIT PLACE
                              TOPEKA, KANSAS 66636
                                 (800) 888-2461

                  SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON
                                 AUGUST 20, 2002

                               TOTAL RETURN SERIES
                             OF SECURITY EQUITY FUND
                       RELATING TO THE REORGANIZATION INTO
                                  EQUITY SERIES
               OF SECURITY EQUITY FUND (COLLECTIVELY, THE "FUNDS")

INTRODUCTION

This Proxy Statement/Prospectus provides you with information about the proposed
transactions.  The  transactions  involve the  transfer of all of the assets and
liabilities  of Total  Return  Series  ("Total  Return  Fund") to Equity  Series
("Equity  Fund") of Security  Equity  Fund,  an open-end  management  investment
company,  solely in exchange  for shares of Equity Fund (the  "Reorganization").
The Total Return Fund would then distribute to you your portion of the shares of
Equity Fund it received in the Reorganization. The result would be a liquidation
of Total  Return  Fund.  You would  receive  shares of the Equity Fund having an
aggregate  value equal to the aggregate value of the shares of Total Return Fund
held by you as of the  close of  business  on the  business  day  preceding  the
closing  of the  Reorganization.  You are  being  asked  to vote on the  Plan of
Reorganization through which these transactions would be accomplished.

Because you, as a shareholder of Total Return Fund, are being asked to approve a
transaction  that will result in your holding shares of Equity Fund,  this Proxy
Statement also serves as a Prospectus for Equity Fund.

This Proxy  Statement/Prospectus,  which you should retain for future reference,
contains  important  information  about  Equity Fund that you should know before
investing.  A Statement of Additional  Information dated ____, 2002,  containing
additional  information about the Reorganization has been filed with the SEC and
is available,  without charge,  by calling (800)  888-2461.  For a more detailed
discussion of the investment  objectives,  policies,  restrictions  and risks of
each of the Funds,  see the Prospectus (the "Security  Equity Fund  Prospectus")
and the  Statement of  Additional  Information  for the Funds dated  February 1,
2002, as supplemented  May 1, 2002,  which may be obtained,  without charge,  by
calling (800) 888-2461.  Each of the Funds also provides periodic reports to its
shareholders,  which highlight  certain  important  information about the Funds,
including  investment results and financial  information.  The annual report for
the Funds dated  September  30, 2001, is included  herewith and is  incorporated
herein by reference.

You may also obtain  proxy  materials,  reports and other  information  filed by
Equity Fund from the SEC's Public  Reference Room  (1-800-SEC-0330)  or from the
SEC's internet website at www.sec.gov.

THE  SECURITIES AND EXCHANGE  COMMISSION  HAS NOT APPROVED OR DISAPPROVED  THESE
SECURITIES,  OR DETERMINED THAT THIS PROXY  STATEMENT/PROSPECTUS  IS TRUTHFUL OR
COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

DATE:  ____, 2002





SUMMARY

You should read this entire Proxy Statement/Prospectus carefully. For additional
information, you should consult the Security Equity Fund Prospectus and the Plan
of Reorganization, which is attached hereto as Appendix A.

THE  PROPOSED  REORGANIZATION  -- On May 3,  2002,  the  Board of  Directors  of
Security  Equity  Fund  approved  with  respect  to each of the  Funds a Plan of
Reorganization (the "Reorganization  Plan"). Subject to approval of Total Return
Fund shareholders, the Reorganization Plan provides for:

o    the transfer of all of the assets of Total  Return Fund to Equity Fund,  in
     exchange for shares of Equity Fund;

o    the  assumption  by Equity Fund of all of the  liabilities  of Total Return
     Fund;

o    the  distribution  of shares of Equity  Fund to the  shareholders  of Total
     Return Fund; and

o    the complete liquidation of Total Return Fund.

The  Reorganization  is expected to be effective upon the opening of business on
August 28, 2002, or on a later date as the parties may agree (the "Closing"). As
a result of the Reorganization,  each shareholder of Class A, Class B, and Class
C shares of Total  Return Fund would become a  shareholder  of the same class of
shares of Equity  Fund.  Each  shareholder  would  hold,  immediately  after the
Closing,  shares of each class of Equity Fund having an aggregate value equal to
the  aggregate  value of the shares of that same class of shares of Total Return
Fund held by that  shareholder  as of the close of business on the  business day
preceding the Closing.

The  Reorganization  is intended  to  eliminate  duplication  of costs and other
inefficiencies arising from having two substantially similar mutual funds within
the same group of funds,  as well as to assist in achieving  economies of scale.
Shareholders  in Total Return Fund are expected to benefit from the  elimination
of this  duplication  and from the larger  asset base that will  result from the
Reorganization.

Approval of the  Reorganization  Plan with respect to Total Return Fund requires
the affirmative vote of a majority of the outstanding shares of the Fund. In the
event  that  the   shareholders   of  Total  Return  Fund  do  not  approve  the
Reorganization, the Fund would continue to operate as a separate entity, and the
Fund's Board of Directors would determine what further action, if any, to take.

AFTER  CAREFUL  CONSIDERATION,  THE BOARD OF DIRECTORS  OF SECURITY  EQUITY FUND
UNANIMOUSLY APPROVED THE PROPOSED REORGANIZATION.  THE BOARD RECOMMENDS THAT YOU
VOTE "FOR" THE PROPOSED REORGANIZATION.

In considering whether to approve the Reorganization, you should note that:

o    Total Return Fund has  investment  objectives and policies that are similar
     in many respects to the investment  objectives and policies of Equity Fund.
     Total  Return  Fund  seeks  high  total   return,   consisting  of  capital
     appreciation  and  current  income.  Equity  Fund seeks  long-term  capital
     growth. Each Fund invests primarily in equity securities of U.S. companies.

o    The proposed  Reorganization  offers actual  reductions in total  operating
     expenses for  shareholders  of Total Return Fund.  This chart  compares the
     current   operating   expenses,   management  fees,  and  distribution  and
     shareholder service fees of the Funds.

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                   MANAGEMENT          DISTRIBUTION AND               OTHER
                      FEES             SERVICE FEES(1)               EXPENSES
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CLASS OF             ALL
 SHARES            CLASSES      CLASS A   CLASS B   CLASS C   CLASS A   CLASS B   CLASS C
- --------------- ------------- ---------- --------- --------- --------- --------- --------
Total Return         0.75%       0.00%    1.00%     1.00%     0.76%     0.76%     0.71%
- --------------- ------------- ---------- --------- --------- --------- --------- --------
Equity              0.75%(2)    0.25%(2)  1.00%     1.00%     0.20%     0.20%     0.20%
- -----------------------------------------------------------------------------------------
1.   Fees are expressed as an annual rate of average daily net assets.
2.   The expense  information  for Equity Fund has been  restated to reflect its
     new investment  advisory fee and new Class A  distribution  fee, which fees
     were effective May 1, 2002.
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This chart shows an estimate of the likely  expenses  after the  Reorganization.
Combining the Funds should lower expenses because of economies of scale realized
from a larger asset base.

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                   MANAGEMENT          DISTRIBUTION AND               OTHER
                      FEES             SERVICE FEES                  EXPENSES
- -----------------------------------------------------------------------------------------
CLASS OF             ALL
 SHARES            CLASSES    CLASS A    CLASS B   CLASS C   CLASS A   CLASS B   CLASS C
- ---------------------------- ---------- --------- --------- --------- --------- ---------
PRO FORMA -
Equity
including           0.75%      0.25%      1.00%     1.00%     0.20%     0.20%     0.20%
Total Return
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o    The current  sales load  structure  for the each of the Funds is identical,
     except  with  regard to the Class A  distribution  fee which  applies  only
     Equity Fund. See the "Comparison of Fees and Expenses," page 12.

For  further  information  on fees and  expenses,  see  "Comparison  of Fees and
Expenses."

o    The Funds have the same investment  manager,  Security  Management Company,
     LLC ("Security  Management"),  One Security Benefit Place, Topeka,  Kansas,
     66636.

PURCHASE,  REDEMPTION, AND EXCHANGE INFORMATION -- The purchase,  redemption and
exchange  provisions  and  privileges for the Funds are the same. For additional
information on purchase,  redemption and exchange  procedures see "Comparison of
Fees and Expenses," page 12 and "More Information Regarding the Funds," page 20.

FEDERAL INCOME TAX CONSEQUENCES OF THE  REORGANIZATION  -- The Funds expect that
the  Reorganization  will be  considered  a tax-free  reorganization  within the
meaning of section  368(a)(1) of the Internal  Revenue Code of 1986,  as amended
(the  "Code").  As such you will not  recognize  gain or loss as a result of the
Reorganization. See "Information About The Reorganization - Tax Considerations."

COMPARISON OF RISKS INVOLVED IN INVESTING IN THE FUNDS

Because the Funds have similar investment objectives and policies,  the risks of
an investment in the Funds are substantially  similar.  The principal risk of an
investment  in one of the Funds is  fluctuation  in the net  asset  value of the
Fund's shares. Market conditions, investment policies, portfolio management, and
other factors affect such fluctuations.

Each Fund is subject to risks  associated  with investing in equity  securities,
the prices of which tend to fluctuate  more  dramatically  over the shorter term
than do the prices of other  asset  classes.  These  movements  may result  from
factors affecting individual companies,  or from broader influences like changes
in interest rates,  market conditions,  investor  confidence or announcements of
economic, political or financial information.

o    Each Fund  invests  primarily  in growth  stocks.  Growth  stocks can offer
     greater or more rapid capital  appreciation than value stocks, but may lack
     the dividend yield that can cushion stock prices in market downturns.

o    Each  Fund may  invest in value  stocks to  attempt  to reduce  the  Fund's
     potential  volatility and possibly add to current income.  Value stocks are
     subject  to the risk that the market may never  recognize  their  intrinsic
     values, and their prices may go down. While investments in value stocks may
     limit downside risk over time, the Funds may, as a trade-off,  produce more
     modest gains than riskier stock funds.

o    Each Fund may invest in dollar-denominated foreign securities. Investing in
     foreign  securities  involves  additional  risks  such  as  differences  in
     financial reporting  standards,  a lack of adequate company information and
     political   instability.   These  risks  may  be   particularly   acute  in
     underdeveloped capital markets.

o    Each Fund may invest in options and  futures.  Options and futures are used
     to hedge a Fund's portfolio,  to increase returns,  or to maintain exposure
     to a market without buying individual  securities.  These  transactions may
     result in reduced  returns or  increased  volatility,  and may also  entail
     transaction expenses.

o    Each  Fund  may  invest  in  investment  companies,   which  could  include
     index-based  investments such as SPDRs (based on the S&P 500), MidCap SPDRs
     (based on the S&P MidCap 400 Index),  Select Sector SPDRs (based on sectors
     or  industries  of the S&P 500 Index),  Nasdaq-100  Index  Tracking  Stocks
     (based  on the  Nasdaq-100  index),  and  DIAMONDS  (based on the Dow Jones
     Industrial  Average).  To the extent each Fund invests in other  investment
     companies,  it will incur its pro rata share of the  underlying  investment
     companies' expenses.  In addition, a Fund will be subject to the effects of
     business and regulatory  developments that affect an underlying  investment
     company or the investment company industry generally.

o    Total  Return Fund may invest in  fixed-income  securities,  which  present
     risks  because the market value of  fixed-income  investments  generally is
     affected by changes in interest rates. When interest rates rise, the market
     value of a fixed-income security declines.  Generally,  the longer a bond's
     maturity,  the  greater  the risk.  A bond's  value can also be affected by
     changes  in the  credit  rating  or  financial  condition  of  its  issuer.
     Investments  in higher  yielding,  high risk debt  securities  may  present
     additional risk because these securities may be less liquid than investment
     grade bonds.  They also tend to be more  susceptible to high interest rates
     and  to  real  or  perceived  adverse  economic  and  competitive  industry
     conditions.  Because bond values fluctuate, an investor may receive more or
     less money than originally invested.


INVESTMENT OBJECTIVES AND POLICIES

COMPARISON OF OBJECTIVES  AND PRIMARY  INVESTMENT  STRATEGIES -- The  investment
objectives,  policies and restrictions of the Funds are similar,  although there
are certain differences. There can be no assurance that either Fund will achieve
its stated objective.

INVESTMENT OBJECTIVE.  The Funds have similar investment objectives and policies.

o Total Return Fund seeks high total return,  consisting of capital appreciation
and current income.

o Equity Fund seeks long-term capital growth.

PRIMARY INVESTMENT STRATEGIES.

o    To choose  equity  securities  for the Funds,  Security  Management  uses a
     blended  approach,  investing in growth stocks and value  stocks.  Security
     Management  typically chooses stock of larger,  growth-oriented  companies.
     The Funds also may invest in value-oriented securities to attempt to reduce
     the Fund's  potential  volatility  and possibly add to current  income.  In
     choosing the balance of growth stocks and value stocks, Security Management
     compares the potential risks and rewards of each category.

TOTAL RETURN FUND.

o    Total   Return   Fund,   under   normal   circumstances,   invests   in   a
     well-diversified  portfolio  of  equity  securities  of U.S.  companies  in
     different  capitalization  ranges.  The  Fund  may also  invest  in  equity
     securities  offering the potential  for current  income and in fixed income
     securities in any rating category, including restricted securities eligible
     for resale to qualified institutional investors under Rule 144A.

o    Total Return Fund typically sells a security when the reasons for buying it
     no  longer  apply,  or  when  the  company  begins  to  show  deteriorating
     fundamentals or poor relative performance.

o    Total  Return  Fund also may invest a portion of its assets in options  and
     futures  contracts.  These  instruments  may be used to  hedge  the  Fund's
     portfolio,  to  increase  returns  or to  maintain  exposure  to the equity
     markets.

o    Total  Return  Fund  may  invest  in a  variety  of  investment  companies,
     including  those that seek to track the  composition  and  performance of a
     specific index. The Fund may use these index-based  investments as a way of
     managing its cash position or to gain  exposure to the equity  markets or a
     particular sector of the equity market, while maintaining liquidity.

o    Under adverse conditions, Total Return Fund could invest some or all of its
     assets in cash or money market securities.

EQUITY FUND.

o    Equity Fund pursues its objective by investing, under normal circumstances,
     at least 80% of its net assets in a widely-diversified  portfolio of equity
     securities,  whose total  market value is $5 billion or greater at the time
     of purchase and which may include American Depositary Receipts ("ADRs") and
     convertible securities.

o    Equity  Fund may  invest a portion of its  assets in  options  and  futures
     contracts.  These instruments may be used to hedge the Fund's portfolio, to
     maintain exposure to the equity markets or to increase returns.

o    Equity  Fund may invest in a variety  of  investment  companies,  including
     those  that seek to track the  composition  and  performance  of a specific
     index. The Fund may use these index-based  investments as a way of managing
     its cash position or to gain exposure to the equity markets or a particular
     sector of the equity markets, while maintaining liquidity.

o    Equity Fund  typically  sells a security  when the reasons for buying it no
     longer apply, or when the company begins to show deteriorating fundamentals
     or poor relative performance.

o    Under  adverse  conditions,  Equity  Fund could  invest  some or all of its
     assets in cash or money market securities.

Following the  Reorganization and in the ordinary course of business as a mutual
fund,  certain  holdings of the Total Return Fund that were  transferred  to the
Equity Fund in connection  with the  Reorganization  may be sold. Such sales may
result in increased  transactional costs for Equity Fund, and the realization of
taxable gains or losses.

COMPARISON OF PORTFOLIO  CHARACTERISTICS -- The following tables compare certain
characteristics of the portfolios of the Funds as of September 30, 2001:

- ------------------------------------------------------------- ------------------
                                        TOTAL RETURN FUND         EQUITY FUND
- ------------------------------------------------------------- ------------------
Net Assets                                  $5,475,169            $663,962,435
- ------------------------------------------------------------- ------------------
Number of Holdings                              95                     109
- ------------------------------------------------------------- ------------------
Portfolio Turnover Rate
 (12 months ended 9/30/01)                      35%                    23%
- ------------------------------------------------------------- ------------------

                     TOP 10 HOLDINGS (AS A % OF NET ASSETS)

- ----------------------------------------------------------------- ------------------------
        TOTAL RETURN FUND                                   EQUITY FUND
- ----------------------------------- -------- -------------------------------------- ------
General Electric Company              4.7%   General Electric Company                 5.0%
- ----------------------------------- -------- -------------------------------------- ------
Microsoft Corporation                 4.0%   Standard & Poor's 500 Index Fund         4.1%
- ----------------------------------- -------- -------------------------------------- ------
American International Group, Inc.    2.9%   Microsoft Corporation                    3.5%
- ----------------------------------- -------- -------------------------------------- ------
Wal-Mart Stores, Inc.                 2.6%   Exxon Mobil Corporation                  3.0%
- ----------------------------------- -------- -------------------------------------- ------
Exxon Mobil Corporation               2.5%   American International Group, Inc.       2.8%
- ----------------------------------- -------- -------------------------------------- ------
Johnson & Johnson                     2.2%   Citigroup, Inc.                          2.4%
- ----------------------------------- -------- -------------------------------------- ------
Citigroup, Inc.                       2.2%   Pfizer, Inc.                             2.4%
- ----------------------------------- -------- -------------------------------------- ------
Merck & Company, Inc.                 2.2%   S & P Mid-Cap 400 Depositary Receipts    2.4%
- ----------------------------------- -------- -------------------------------------- ------
Dell Computer Corporation             2.2%   Wal-mart Stores, Inc.                    2.2%
- ----------------------------------- -------- -------------------------------------- ------
J.P. Morgan Chase & Company           2.1%   International Business Machines
                                             Corporation           2.2%
- ----------------------------------- -------- -------------------------------------- ------

RELATIVE  PERFORMANCE -- The following table shows, for each calendar year since
1996 in the case of Total Return Fund and for each  calendar  year since 1992 in
the case of Equity Fund,  the average annual total return for (a) Class A shares
of Total  Return Fund,  (b) Class A shares of Equity  Fund,  and (c) the S&P 500
Index.  Performance  of the  Funds  in the  table  below  does not  reflect  the
deduction  of  sales  loads.  The  S&P 500  Index  has an  inherent  performance
advantage  over the  Funds,  since an index  has no cash in its  portfolio,  and
incurs no  operating  expenses.  An investor  cannot  invest in an index.  Total
return is  calculated  assuming  reinvestment  of all dividends and capital gain
distributions  at net  asset  value and  excluding  the  deduction  of any sales
charges.

- --------------------- --------------------- --------------- -----------------
   CALENDAR YEAR/
    PERIOD ENDED        TOTAL RETURN FUND     EQUITY FUND     S&P 500 INDEX
- --------------------- --------------------- --------------- -----------------
      12/31/92                 ---              10.72%            7.61%
- --------------------- --------------------- --------------- -----------------
      12/31/93                 ---              14.60%           10.06%
- --------------------- --------------------- --------------- -----------------
      12/31/94                 ---              -2.56%            1.31%
- --------------------- --------------------- --------------- -----------------
      12/31/95                 7.78%1           38.42%           37.53%2
- --------------------- --------------------- --------------- -----------------
      12/31/96                13.18%            22.67%           22.95%
- --------------------- --------------------- --------------- -----------------
      12/31/97                 6.08%            29.60%           33.35%
- --------------------- --------------------- --------------- -----------------
      12/31/98                12.06%            26.47%           28.60%
- --------------------- --------------------- --------------- -----------------
      12/31/99                15.92%            10.99%           21.03%
- --------------------- --------------------- --------------- -----------------
      12/31/00               -12.49%           -12.52%           -9.10%4
- --------------------- --------------------- --------------- -----------------
      12/31/01               -14.48%           -11.85%          -11.88%
- -----------------------------------------------------------------------------
1.   For the period from June 1, 1995 (Total Return Fund's date of inception) to
     December 31, 1995.
2.   S&P 500 Index  performance for the period June 1, 1995 to December 31, 1995
     was 31.05%.
- --------------------------------------------------------------------------------

COMPARISON OF SECURITIES AND INVESTMENT TECHNIQUES -- The following is a summary
of the types of  securities  in which the Funds may  invest and  strategies  the
Funds  may  employ  in  pursuit  of  their  investment  objectives.  As with any
security,  an investment in a Fund's shares  involves  certain risks,  including
loss of principal. The Funds are subject to varying degrees of financial, market
and credit risk.  An  investment  in the Funds is not a deposit of a bank and is
not insured by the Federal Deposit Insurance Corporation or any other government
agency.

FOREIGN  SECURITIES.   Each  Fund  may  invest  in  dollar  denominated  foreign
securities,  which involve certain special risks, including, but not limited to:
(i) adverse  political and economic  developments;  (ii)  unreliable or untimely
information;  (iii) limited legal recourse; (iv) limited markets; and (v) higher
operational expenses.

Foreign  investments  may be  subject  to the  risks  of  seizure  by a  foreign
government,  imposition of  restrictions on the exchange or transport of foreign
currency,  and tax  increases.  There  may  also be  less  information  publicly
available  about a foreign company than about most U.S.  companies,  and foreign
companies  are  usually  not  subject  to  accounting,  auditing  and  financial
reporting standards and practices  comparable to those in the United States. The
legal  remedies for  investors in foreign  investments  may be more limited than
those available in the United States.  Certain  foreign  investments may be less
liquid  (harder to buy and sell) and more volatile  than  domestic  investments,
which  means a Fund may at times be unable to sell its  foreign  investments  at
desirable prices.  For the same reason, a Fund may at times find it difficult to
value  its  foreign  investments.  Brokerage  commissions  and  other  fees  are
generally  higher for foreign  investments  than for domestic  investments.  The
procedures and rules for settling  foreign  transactions may also involve delays
in payment,  delivery or recovery of money or investments.  Foreign  withholding
taxes may reduce the amount of income available to distribute to shareholders of
the Funds.

SMALLER  COMPANIES.  Each Fund may  invest in small or  medium-sized  companies.
Small- or medium-sized  companies are more likely than larger  companies to have
limited product lines, markets or financial resources,  or to depend on a small,
inexperienced  management  group.  Stocks  of these  companies  may  trade  less
frequently  and in limited  volume,  and their  prices may  fluctuate  more than
stocks of other  companies.  Stocks of these  companies  may  therefore  be more
vulnerable to adverse developments than those of larger companies.

CONVERTIBLE  SECURITIES AND WARRANTS.  Each Fund may invest in debt or preferred
equity  securities  convertible  into, or exchangeable  for, equity  securities.
Traditionally,  convertible  securities have paid dividends or interest at rates
higher  than  common  stocks  but lower  than  nonconvertible  securities.  They
generally  participate in the  appreciation  or  depreciation  of the underlying
stock into which they are convertible,  but to a lesser degree. In recent years,
convertible securities have been developed which combine higher or lower current
income with  options and other  features.  Warrants  are options to buy a stated
number of shares of common stock at a specified price anytime during the life of
the warrants (generally, two or more years).

RESTRICTED  SECURITIES.  Each Fund may invest in  restricted  securities,  which
cannot be sold to the public  without  registration  under the Securities Act of
1933 ("1933 Act"). Unless registered for sale, restricted securities can be sold
only in  privately  negotiated  transactions  or pursuant to an  exemption  from
registration.  Restricted  securities  are  generally  considered  illiquid and,
therefore, subject to each Fund's limitation on illiquid securities.

Restricted securities (including Rule 144A Securities) may involve a high degree
of business and financial  risk,  which may result in  substantial  losses.  The
securities may be less liquid than publicly  traded  securities.  Although these
securities  may be resold  in  privately  negotiated  transactions,  the  prices
realized from these sales could be less than those  originally paid by the Fund.
In   particular,   Rule  144A   Securities  may  be  resold  only  to  qualified
institutional  buyers in accordance  with Rule 144A under the  Securities Act of
1933.  Rule 144A  permits  the  resale to  "qualified  institutional  buyers" of
"restricted  securities"  that,  when  issued,  were  not of the  same  class as
securities  listed on a U.S.  securities  exchange  or  quoted  in the  National
Association of Securities  Dealers  Automated  Quotation  System (the "Rule 144A
Securities").  A  "qualified  institutional  buyer"  is  defined  by  Rule  144A
generally as an  institution,  acting for its own account or for the accounts of
other qualified  institutional buyers, that in the aggregate owns and invests on
a  discretionary  basis at least $100  million  in  securities  of  issuers  not
affiliated with the institution.

Investing in Rule 144A Securities and other restricted securities could have the
effect  of  increasing  the  amount  of a Fund's  assets  invested  in  illiquid
securities   to  the  extent  that   qualified   institutional   buyers   become
uninterested, for a time, in purchasing these securities.

INITIAL  PUBLIC  OFFERING.  Each Fund may  invest in  initial  public  offerings
(IPOs).  A Fund's  investment  in  securities  offered  through  IPOs may have a
magnified  performance impact,  either positive or negative, on the Funds due to
their small asset base.  There is no guarantee  that as a Fund's assets grow, it
will continue to experience  substantially  similar  performance by investing in
IPOs. A Fund's  investments  in IPOs may make it subject to more  erratic  price
movements than the overall equity market.

HIGH YIELD  SECURITIES.  Total  Return Fund may invest in higher  yielding  debt
securities in the lower rating (higher risk) categories of the recognized rating
services,  which are commonly  referred to as "junk bonds." The total return and
yield of junk bonds can be expected to fluctuate  more than the total return and
yield of higher-quality  bonds. Junk bonds (those rated below BBB or in default)
are  regarded  as  predominantly   speculative  with  respect  to  the  issuer's
continuing  ability  to  meet  principal  and  interest   payments.   Successful
investment in lower-medium  and low-quality  bonds involves  greater  investment
risk and is highly dependent on Security Management's credit analysis. A real or
perceived  economic  downturn or higher  interest rates could cause a decline in
high yield bond prices by lessening the ability of issuers to make principal and
interest payments. These bonds are often thinly traded and can be more difficult
to sell and value accurately than high-quality bonds.  Because objective pricing
data may be less  available,  judgment may play a greater role in the  valuation
process.  In  addition,  the entire junk bond market can  experience  sudden and
sharp price  swings due to a variety of factors,  including  changes in economic
forecasts, stock market activity, large or sustained sales by major investors, a
high-profile default, or just a change in the market's psychology.  This type of
volatility  is usually  associated  more with stocks  than bonds,  but junk bond
investors should be prepared for it.

CASH RESERVES.  Each Fund maintains cash reserves,  which may include  domestic,
foreign  money market  instruments,  as well as  certificates  of deposit,  bank
demand accounts and repurchase agreements.  The Funds may establish and maintain
reserves as Security  Management  believes is advisable to facilitate the Fund's
cash  flow  needs  (e.g.,  redemptions,  expenses  and  purchases  of  portfolio
securities) or for temporary, defensive purposes.

BORROWING.  Each Fund may borrow money.  Borrowings may be  collateralized  with
Fund  assets.  To the  extent  that a Fund  purchases  securities  while  it has
outstanding  borrowings,  it is using leverage,  i.e.,  using borrowed funds for
investment.  Leveraging  will  exaggerate  the effect on net asset  value of any
increase or decrease in the market value of the Fund's portfolio. Money borrowed
for  leveraging  will  be  subject  to  interest  costs  that  may or may not be
recovered  by  appreciation  of the  securities  purchased;  in  certain  cases,
interest  costs may exceed the return  received on the securities  purchased.  A
Fund also may be required to maintain  minimum  average  balances in  connection
with such  borrowing or to pay a  commitment  or other fee to maintain a line of
credit;  either of these  requirements would increase the cost of borrowing over
the stated interest rate.

FUTURES AND  OPTIONS.  Each Fund may utilize  futures  contracts  and options on
futures and may purchase  call and put options and write call and put options on
a "covered"  basis.  Futures (a type of potentially  high-risk  derivative)  are
often used to manage or hedge risk  because  they enable the  investor to buy or
sell an asset in the future at an agreed-upon  price.  Options  (another type of
potentially  high-risk  derivative)  give the  investor  the  right  (where  the
investor  purchases the options),  or the obligation  (where the investor writes
(sells) the options),  to buy or sell an asset at a  predetermined  price in the
future.  The  instruments  listed  above may be bought or sold for any number of
reasons,  including:  to manage  exposure to changes in  securities  prices,  to
manage  exposure to changes in interest  rates and bond prices,  as an efficient
means of adjusting overall exposure to certain markets,  in an effort to enhance
income,  to protect the value of portfolio  securities,  and to adjust portfolio
duration.  Futures  contracts and options may not always be  successful  hedges;
their  prices can be highly  volatile.  Using them  could  lower a Fund's  total
return,  and the  potential  loss from the use of futures  can exceed the Fund's
initial investment in such contracts.

SHARES OF OTHER  INVESTMENT  COMPANIES.  Each Fund may invest in shares of other
investment companies.  Such investment may not exceed immediately after purchase
10% of the Fund's total  assets,  and no more than 5% of its total assets may be
invested in the shares of any one investment  company.  Investment in the shares
of other  investment  companies has the effect of requiring  shareholders to pay
the operating expenses of two mutual funds.

SWAPS,  CAPS, FLOORS AND COLLARS.  Each Fund may enter into interest rate, total
return and index swaps. The Funds would enter into these transactions  primarily
to  preserve  a return or spread on a  particular  investment  or portion of its
portfolio as a technique for managing the portfolio's  duration (i.e., the price
sensitivity to changes in interest  rates) or to protect against any increase in
the price of securities the Funds anticipate  purchasing at a later date. To the
extent the Funds  enters  into these types of  transactions,  it will be done to
hedge and not as a speculative investment,  and the Funds will not sell interest
rate caps or floors if they do not own securities or other instruments providing
the income the Funds may be obligated to pay.  Interest  rate swaps  involve the
exchange by a Fund with another party of their respective  commitments to pay or
receive  interest  on a notional  amount of  principal.  The  purchase  of a cap
entitles the purchaser to receive  payments on a notional  principal amount from
the  party  selling  the cap to the  extent  that a  specified  index  exceeds a
predetermined interest rate. The purchase of an interest rate floor entitles the
purchaser  to receive  payments  on a notional  principal  amount from the party
selling  the  floor  to  the  extent  that  a  specified  index  falls  below  a
predetermined  interest rate or amount. A collar is a combination of a cap and a
floor that preserves a certain return within a  predetermined  range of interest
rates or values.

WHEN-ISSUED SECURITIES AND FORWARD COMMITMENT CONTRACTS.  Each Fund may purchase
and  sell  securities  on a "when  issued,"  "forward  commitment"  or  "delayed
delivery"  basis.  The  price  of these  securities  is fixed at the time of the
commitment  to buy,  but  delivery  and  payment  can take place a month or more
later.  During the  interim  period,  the  market  value of the  securities  can
fluctuate,  and no interest  accrues to the purchaser.  At the time of delivery,
the value of the securities may be more or less than the purchase or sale price.
When a Fund  purchases  securities  on this  basis,  there  is a risk  that  the
securities may not be delivered and that the Fund may incur a loss.

COMPARISON OF FEES AND EXPENSES

The  following  describes and compares the fees and expenses that you may pay if
you buy and hold shares of the Funds.  It is expected  that  combining the Funds
would allow shareholders to realize economies of scale. For further  information
on the fees and expenses of Equity Fund,  see "More  Information  Regarding  the
Funds," page 20.

OPERATING  EXPENSES -- The total fund operating  expenses of each class of Total
Return  Fund,  expressed  as a ratio of  expenses  to  average  daily net assets
("expense  ratio),  currently are higher than the expenses of the  corresponding
classes of Equity Fund."

o    The net  expense  ratio for the Class A shares of Equity  Fund for the year
     ended  September  30,  2001,  was  lower by 0.31%  than that of the Class A
     shares of the Total Return Fund.

o    The net  expense  ratio for the Class B shares of Equity  Fund for the year
     ended  September  30,  2001,  was  lower by 0.56%  than that of the Class B
     shares of the Total Return Fund.

o    The net  expense  ratio for the Class C shares of Equity  Fund for the year
     ended  September  30,  2001,  was  lower by 0.61%  than that of the Class C
     shares of the Total Return Fund.

o    The  management  fee for the  Equity  Fund is the same as that of the Total
     Return Fund.

o    The fee for  distribution  and shareholder  servicing for Class A shares of
     Equity Fund is higher by 0.25% than that of the Total Return Fund.

o    The fee for distribution and shareholder  servicing for Class B and Class C
     shares of Equity Fund is the same as that for Total Return Fund.

It is expected that combining the Funds will adjust the operating  expense ratio
to a lower level for Total Return Fund and the same level for Equity Fund.  With
respect to Class A shares,  the operating  expense ratio of Total Return Fund is
currently  1.51% and the PRO FORMA expense  ratio  assuming  combination  of the
Funds would be 1.20%,  or a decrease of 0.31% for Class A shareholders  of Total
Return Fund.  With respect to Class B shares,  the  operating  expense  ratio of
Total Return Fund is currently  2.51% and the PRO FORMA expense  ratio  assuming
combination  of the Funds  would be 1.95%,  or a  decrease  of 0.56% for Class B
shareholders of Total Return Fund. With respect to Class C shares, the operating
expense ratio of Total Return Fund is currently  2.56% and the PRO FORMA expense
ratio assuming  combination of the Funds would be 1.95%,  or a decrease of 0.61%
for  Class C  shareholders  of Total  Return  Fund.  For more  information,  see
estimated PRO FORMA expenses in the table, "Annual Fund Operating Expenses."

The current expenses of each Fund and estimated PRO FORMA expenses giving effect
to the proposed  Reorganization  are shown in the table below.  Expenses for the
Funds are based on the operating  expenses incurred for the year ended September
30, 2001. PRO FORMA fees and expenses show estimated fees and expenses of Equity
Fund after giving effect to the proposed  Reorganization.  PRO FORMA numbers are
estimated in good faith and are hypothetical.

- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from Fund assets, shown as a ratio of expenses to
average daily net assets)(1)
- -----------------------------------------------------------------------------------------
                                              DISTRIBUTION
                                                  AND
                                              SHAREHOLDER                      TOTAL
                                               SERVICING                        FUND
                              MANAGEMENT        (12b-1)          OTHER       OPERATING
                                 FEES            FEES(2)        EXPENSES      EXPENSES
- -------------------------- ---------------- ---------------- ------------- --------------
CLASS A
- -------------------------- ---------------- ---------------- ------------- --------------
Total Return Fund              0.75%            0.00%           0.76%          1.51%
- -------------------------- ---------------- ---------------- ------------- --------------
Equity Fund                    0.75%(3)         0.25%(3)        0.20%          1.20%
- -------------------------- ---------------- ---------------- ------------- --------------
PRO FORMA - Equity
 including Total Return        0.75%(3)         0.25%(3)        0.20%          1.20%
- -------------------------- ---------------- ---------------- ------------- --------------

CLASS B
- -------------------------- ---------------- ---------------- ------------- --------------
Total Return Fund              0.75%            1.00%           0.76%          2.51%
- -------------------------- ---------------- ---------------- ------------- --------------
Equity Fund                    0.75%(3)         1.00%           0.20%          1.95%
- -------------------------- ---------------- ---------------- ------------- --------------
PRO FORMA - Equity
 including Total Return        0.75%(3)         1.00%           0.20%          1.95%
- -------------------------- ---------------- ---------------- ------------- --------------

CLASS C
- -------------------------- ---------------- ---------------- ------------- --------------
Total Return Fund              0.75%            1.00%           0.71%          2.56%
- -------------------------- ---------------- ---------------- ------------- --------------
Equity Fund                    0.75%(3)         1.00%           0.20%          1.95%
- -------------------------- ---------------- ---------------- ------------- --------------
PRO FORMA - Equity
 including Total Return        0.75%(3)         1.00%           0.20%          1.95%
- ------------------------------------------ ------------------------------ ---------------
1.   Expenses  are shown for each  Fund,  and on a pro forma  basis,  based upon
     expenses incurred by each Fund for the 12 months ended September 30, 2001.
2.   As a result of distribution (Rule 12b-1) fees, a long term investor may pay
     more than the economic  equivalent of the maximum  sales charge  allowed by
     the Rules of the National Association of Securities Dealers, Inc. (NASD).
3.   The expense  information  for Equity Fund has been  restated to reflect its
     new investment  advisory fee and new Class A  distribution  fee, which fees
     were effective May 1, 2002.
- --------------------------------------------------------------------------------

EXAMPLE.

This  example is intended to help you compare the cost of investing in the Funds
and in the  combined  Funds on a PRO FORMA basis.  The example  assumes that you
invest $10,000 in each Fund and in the surviving  Fund after the  Reorganization
for the time periods  indicated.  The Example also assumes that your  investment
has a 5% return  each year and that the  Fund's  operating  expenses  remain the
same.  The 5% return is an  assumption  and is not  intended to portray  past or
future investment  results.  Based on the above  assumptions,  you would pay the
following  expenses if you redeemed your shares at the end of such period shown;
your actual costs may be higher or lower.

- -------------------------- ------------------------- --------------------------
                                    1 YEAR                    3 YEARS
- -------------------------- ------------------------- --------------------------
                            CLASS   CLASS B   CLASS   CLASS    CLASS B  CLASS
                              A                 C       A                 C
- -------------------------- -------- -------- ------- -------- -------- --------
Total Return Fund            720      754     359     1025     1082      796
- -------------------------- -------- -------- ------- -------- -------- --------
Equity Fund                  690      698     298      934      912      612
- -------------------------- -------- -------- ------- -------- -------- --------
PRO FORMA - Equity           690      698     298      934      912      612
including Total Return
- -------------------------- -------- -------- ------- -------- -------- --------

- -------------------------- ------------------------- -------------------------
                                   5 YEARS                   10 YEARS
- -------------------------- ------------------------- -------------------------
                            CLASS   CLASS B  CLASS    CLASS   CLASS B   CLASS
                              A                C        A                 C
- -------------------------- -------- ------- -------- -------- -------- -------
Total Return Fund           1351     1535    1360     2273     2600     2895
- -------------------------- -------- ------- -------- -------- -------- -------
Equity Fund                 1197     1252    1052     1946     2080     2275
- -------------------------- -------- ------- -------- -------- -------- -------
PRO FORMA - Equity          1197     1252    1052     1946     2080     2275
including Total Return
- -------------------------- -------- ------- -------- -------- -------- -------

You would pay the following expenses if you did not redeem your shares:

- -------------------------- ------------------------- --------------------------
                                    1 YEAR                    3 YEARS
- -------------------------- ------------------------- --------------------------
                            CLASS   CLASS B   CLASS   CLASS    CLASS B  CLASS
                              A                 C       A                 C
- -------------------------- -------- -------- ------- -------- -------- --------
Total Return Fund            720      254     259     1025      782      796
- -------------------------- -------- -------- ------- -------- -------- --------
Equity Fund                  690      198     198      934      612      612
- -------------------------- -------- -------- ------- -------- -------- --------
PRO FORMA - Equity           690      198     198      934      612      612
including Total Return
- -------------------------- -------- -------- ------- -------- -------- --------

- -------------------------- ------------------------- -------------------------
                                   5 YEARS                   10 YEARS
- -------------------------- ------------------------- -------------------------
                            CLASS   CLASS B  CLASS    CLASS   CLASS B   CLASS
                              A                C        A                 C
- -------------------------- -------- ------- -------- -------- -------- -------
Total Return Fund           1351     1335    1360     2273     2600     2895
- -------------------------- -------- ------- -------- -------- -------- -------
Equity Fund                 1197     1052    1052     1946     2080     2275
- -------------------------- -------- ------- -------- -------- -------- -------
PRO FORMA - Equity          1197     1052    1052     1946     2080     2275
including Total Return
- -------------------------- -------- ------- -------- -------- -------- -------



GENERAL  INFORMATION  -- Class A,  Class B, and Class C shares  of  Equity  Fund
issued to a shareholder in connection with the Reorganization will be subject to
the  same  contingent   deferred  sales  charge,  if  any,   applicable  to  the
corresponding  shares of Total Return Fund held by that shareholder  immediately
prior to the Reorganization.

In addition,  the period that the  shareholder  held shares of Total Return Fund
would be included in the  holding  period of Equity Fund shares for  purposes of
calculating any contingent deferred sales charge.  Purchases of shares of Equity
Fund  after the  Reorganization  will be  subject  to the sales  load  structure
described  in the table  below.  This is the same sales load  structure  that is
currently in effect for the Total Return Fund.

- --------------------------------------------------------------------------------------
TRANSACTION FEES ON NEW INVESTMENTS (fees paid directly from your investment)
- --------------------------------------------------- ----------- ----------- ----------
                                                     CLASS A     CLASS B(1)   CLASS C
- --------------------------------------------------- ----------- ----------- ----------
Maximum sales charge (load) imposed on purchases      5.75%        None        None
(as a percentage of offering price)
- --------------------------------------------------- ----------- ----------- ----------
Maximum deferred sales charge (load) (as a
 percentage of the lower of original purchase
 price or redemption proceeds)                        None(2)      5%(3)       1%(4)
- --------------------------------------------------- ----------- ----------- ----------
1.   Class B shares convert tax-free to Class A shares automatically after eight
     years.
2.   Purchases  of Class A  shares  in  amounts  of  $1,000,000  or more are not
     subject to an initial sales load; however, a deferred sales charge of 1% is
     imposed in the event of redemption within one year of purchase.
3.   5%  during  the first  year,  decreasing  to 0% in the sixth and  following
     years.
4.   A deferred sales charge of 1% is imposed in the event of redemption  within
     one year of purchase.
- --------------------------------------------------------------------------------

Neither  Fund  has any  redemption  fees,  exchange  fees or  sales  charges  on
reinvested dividends.

ADDITIONAL INFORMATION ABOUT EQUITY FUND

INVESTMENT MANAGER -- Security Management,  Equity Fund's investment manager, is
a Kansas limited liability  company.  On December 31, 2001, the aggregate assets
of  all of  the  mutual  funds  under  the  investment  management  of  Security
Management  were  approximately  $7.9 billion.  Security  Management has overall
responsibility  for the  management  of the  Funds.  Security  Equity  Fund  and
Security  Management  have  entered  into an agreement  that  requires  Security
Management to provide investment advisory,  statistical and research services to
the Equity Fund,  supervise  and arrange for the purchase and sale of securities
on behalf of the Fund,  and  provide  for the  maintenance  and  compilation  of
records  pertaining to the  investment  advisory  function.  The agreement  with
Security Management can be canceled by the Board of Directors of Security Equity
Fund upon 60 days' written notice.  Investment  management fees are computed and
accrued daily and paid monthly.

INVESTMENT  PERSONNEL -- The following  individual  has  responsibility  for the
day-to-day management of Equity Fund:

o    TERRY A. MILBERGER,  Senior Portfolio Manager of Security  Management,  has
     been the  manager of Equity Fund since  1981and of Total  Return Fund since
     May 1999. He has more than 25 years of investment experience.  He began his
     career as an investment  analyst in the insurance  industry,  and from 1974
     through  1978,  he served as an  assistant  portfolio  manager for Security
     Management.  He was then employed as Vice  President of Texas Commerce Bank
     and managed its pension assets until he returned to Security  Management in
     1981. Mr. Milberger holds a bachelor's degree in business and a M.B.A. from
     the   University   of  Kansas  and  is  a   Chartered   Financial   Analyst
     charterholder.

PERFORMANCE  OF EQUITY FUND -- The bar chart and table  shown  below  provide an
indication  of the  risks of  investing  in the  Equity  Fund by  showing  (on a
calendar year basis)  changes in the Equity Fund's annual total return from year
to year and by showing  (on a calendar  year  basis) how Equity  Fund's  average
annual  returns  for one year,  five  years and ten years  compare to those of a
broad-based  securities  market index--the S&P 500 Index. The information in the
bar chart and table reflects the Fund's performance.  The information in the bar
chart is based on the performance of the Class A shares of Equity Fund, although
the bar chart  does not  reflect  the  deduction  of the  sales  load on Class A
shares.  If the bar chart  included the sales load,  returns  would be less than
those shown.  The Fund's past  performance  is not an indication of how the Fund
will perform in the future.

               [BAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]

1992    1993    1994    1995    1996    1997    1998    1999     2000     2001
- ----    ----    ----    ----    ----    ----    ----    ----     ----     ----
10.7%   14.6%   -2.5%   38.4%   22.7%   29.6%   26.5%   11.0%   -12.5%   -11.9%

*During the period shown in the chart, the Fund's best quarterly performance was
 20.90% for the quarter ended December 31, 1998, and the Fund's worst  quarterly
 performance was -14.97% for the quarter ended September 30, 2001.


The table  below shows the average  annual  total  returns of Equity Fund if you
average out actual performance over various lengths of time, compared to the S&P
500 Index. An index has an inherent  performance  advantage over the Equity Fund
since it has no cash in its  portfolio,  imposes no sales  charges and incurs no
operating  expenses.  An investor cannot invest directly in an index. The Equity
Fund's  performance  reflected in the table assumes the deduction of the maximum
sales charge in all cases.

- ------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS (through December 31, 2001)
- ------------------------------------------------------------------------------
- -------------------------- ---------------- ----------------- ----------------
                             PAST 1 YEAR      PAST 5 YEARS     PAST 10 YEARS
- -------------------------- ---------------- ----------------- ----------------
Class A                        -16.92%            5.74%            10.74%
- -------------------------- ---------------- ----------------- ----------------
Class B                        -17.13%            5.59%             9.94%(1)
- -------------------------- ---------------- ----------------- ----------------
Class C                        -13.41%           -6.60%(2)          N/A
- -------------------------- ---------------- ----------------- ----------------
S&P 500 Index                  -11.88%           10.70%(3)         12.93%(3)
- -------------------------- ---------------- ----------------- ----------------
- ------------------------------------------------------------------------------
1.   For the period  beginning  October 19, 1993 (date of inception) to December
     31, 2001.
2.   For the period  beginning  January 29, 1999 (date of inception) to December
     31, 2001.
3.   Index  performance  information  is  only  available  to  the  Fund  at the
     beginning  of each month.  The  performance  for the S&P 500 for the period
     October 1, 1993 to December 31, 2001 was 13.84% and for the period  January
     1, 1999 to December 31, 2001 was -1.03%.
- --------------------------------------------------------------------------------

The table below shows the  non-standardized  performance  of Equity Fund,  which
does not reflect  deduction of sales charges.  If sales charges were  reflected,
the  performance  figures  would be lower than  those  shown.  The  Fund's  past
performance is not an indication of how the Fund will perform in the future.

- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS for the periods ended December 31, 2001
- ------------------------ ------------- ------------- ------------- -------------
                                                                      SINCE
                            1 YEAR       5 YEARS       10 YEARS     INCEPTION
- ------------------------ ------------- ------------- ------------- -------------
Equity, Class A            -11.85%        7.00%         11.41%         ---
- ------------------------ ------------- ------------- ------------- -------------
Equity, Class B            -12.77%        3.91%          ---          9.94%(1)
- ------------------------ ------------- ------------- ------------- -------------
Equity, Class C            -12.53%         ---           ---         -6.60%(2)
- ------------------------ ------------- ------------- ------------- -------------
1.   Since October 19, 1993  (inception  date of Class B shares) to December 31,
     2001.
2.   Since January 29, 1999  (inception  date of Class C shares) to December 31,
     2001.
- --------------------------------------------------------------------------------

Additional  information  about  Equity Fund is included  in the  section,  "More
Information Regarding the Funds," page 20.

INFORMATION ABOUT THE REORGANIZATION

THE REORGANIZATION  PLAN -- The Reorganization Plan provides for the transfer of
all of the assets and  liabilities of Total Return Fund to Equity Fund solely in
exchange  for Class A, B, and C shares of Equity  Fund.  Total  Return Fund will
distribute   the  shares  of  Equity  Fund  received  in  the  exchange  to  its
shareholders, and then Total Return Fund will be liquidated.

After the Reorganization,  each shareholder of Total Return Fund will own shares
in Equity Fund having an aggregate  value equal to the  aggregate  value of each
respective  class of shares of Total Return Fund held by that  shareholder as of
the close of business on the business day preceding the Closing. Shareholders of
Class  A, B, and C shares  of Total  Return  Fund  will  receive  shares  of the
corresponding  class of Equity Fund. In the interest of economy and convenience,
shares  of  Equity  Fund   generally   will  not  be   represented  by  physical
certificates.

Until the Closing, shareholders of Total Return Fund will continue to be able to
redeem their  shares.  Redemption  requests  received  after the Closing will be
treated as requests received by the Equity Fund for the redemption of its shares
received by the shareholder in the Reorganization.

The  obligations  of the Funds  under the  Reorganization  Plan are  subject  to
various  conditions,  including approval of the shareholders of the Total Return
Fund. The Reorganization  Plan also requires that the Funds take, or cause to be
taken, all actions, and do or cause to be done, all things reasonably necessary,
proper  or  advisable  to  consummate  and  make   effective  the   transactions
contemplated  by  the  Reorganization  Plan.  The  Reorganization  Plan  may  be
terminated by mutual agreement of the parties or on certain other grounds. For a
complete description of the terms and conditions of the Reorganization,  see the
Reorganization Plan at Appendix A.

REASONS FOR THE REORGANIZATION -- The Funds have similar investment  objectives,
strategies and risks,  and Total Return Fund is relatively  small in asset size.
Because  the Total  Return  Fund may invest in  substantially  the same types of
securities as Equity Fund, the Funds are duplicative in the same group of funds.
In addition, the reorganization would create a larger Fund, which should benefit
shareholders  of the Funds by spreading  costs across a larger,  combined  asset
base. Also, a larger fund offers the benefit of a more diversified  portfolio of
securities and may improve trading efficiency.  Based upon these considerations,
the Board of Directors of Security  Equity Fund determined that the Funds should
be reorganized.

The proposed  Reorganization was presented to the Board of Directors of Security
Equity Fund for  consideration  and approval at a meeting held May 3, 2002.  For
the reasons  discussed below, the Directors,  including all of the Directors who
are not "interested  persons" (as defined in the Investment Company Act of 1940)
of Security Equity Fund,  determined  that the interests of the  shareholders of
the  respective  Funds  would  not  be  diluted  as a  result  of  the  proposed
Reorganization,  and that the proposed  Reorganization was in the best interests
of each of the Funds and its shareholders.

The Reorganization  would allow shareholders of Total Return Fund to continue to
participate in a  professionally-managed  portfolio  which invests  primarily in
equity securities of U.S. companies. As Class A, B, and C shareholders of Equity
Fund, these shareholders would continue to be able to exchange into other mutual
funds in the larger  Security Group of Mutual Funds that offer the same class of
shares in which such  shareholder is currently  invested.  A list of the current
Security  Group of Mutual Funds,  and their  available  classes,  is attached as
Appendix B.

BOARD  CONSIDERATION  -- The Board of  Directors  of Security  Equity  Fund,  in
recommending the proposed transaction, considered a number of factors, including
the following:

1.   expense ratios and information  regarding fees and expenses of Total Return
     Fund and Equity Fund;

2.   estimates that show that combining the Funds should result in lower expense
     ratios because of economies of scale;

3.   elimination  of  duplication  of costs and  inefficiencies  of  having  two
     similar funds;

4.   the  Reorganization  would not dilute the  interests of the Funds'  current
     shareholders;

5.   the relative investment performance and risks of Equity Fund as compared to
     Total Return Fund;

6.   the  similarity  of  Equity  Fund's  investment  objectives,  policies  and
     restrictions  to those of Total Return Fund and the fact that the Funds are
     duplicative within the overall group of funds;

7.   the  tax-free  nature of the  Reorganization  to Total  Return Fund and its
     shareholders.


THE BOARD OF DIRECTORS OF SECURITY EQUITY FUND  RECOMMENDS THAT  SHAREHOLDERS OF
THE TOTAL RETURN FUND APPROVE THE REORGANIZATION.

TAX  CONSIDERATIONS  -- The  Reorganization  is  intended to qualify for Federal
income  tax  purposes  as a tax-free  reorganization  under  Section  368 of the
Internal Revenue Code of 1986, as amended (the "Code"). Accordingly, pursuant to
this treatment,  neither the Total Return Fund, nor its respective shareholders,
nor the Equity Fund is expected to recognize any gain or loss for federal income
tax purposes from the transactions contemplated by the Reorganization Plan. As a
condition  to the  closing  of the  Reorganization,  the Funds  will  receive an
opinion from the law firm of Dechert to the effect that the Reorganization  will
qualify as a tax-free  reorganization  for  Federal  income tax  purposes.  That
opinion  will be  based  in part  upon  certain  assumptions  and  upon  certain
representations made by the Funds.

Immediately  prior to the  Reorganization,  the  Total  Return  Fund  will pay a
dividend or dividends which, together with all previous dividends, will have the
effect of distributing to their respective  shareholders all of the Total Return
Fund's investment company taxable income for taxable years ending on or prior to
the Reorganization (computed without regard to any deduction for dividends paid)
and all of its net capital gains, if any, realized in taxable years ending on or
prior to the  Reorganization  (after  reduction for any  available  capital loss
carryforward).  Such  dividends  will be included  in the taxable  income of the
Total Return Fund's shareholders.

As of  September  30,  2001,  Total  Return Fund had  accumulated  capital  loss
carryforwards in the amount of approximately  $40,498. After the Reorganization,
these  losses will be  available  to Equity  Fund to offset its  capital  gains,
although the amount of these losses which may offset Equity Fund's capital gains
in any given year may be limited. As a result of this limitation, it is possible
that Equity Fund may not be able to use these  losses as rapidly as Total Return
Fund might have, and part of these losses may not be useable at all. The ability
of Equity Fund to absorb losses in the future  depends upon a variety of factors
that  cannot be known in  advance,  including  the  existence  of capital  gains
against  which these  losses may be offset.  In  addition,  the  benefits of any
capital loss carryforwards currently are available only to shareholders of Total
Return Fund. After the Reorganization, however, these benefits will inure to the
benefit of all shareholders of Equity Fund.

EXPENSES OF THE REORGANIZATION -- Security  Management will bear one-third,  and
the Funds will bear  two-thirds,  of the expenses  relating the  Reorganization,
including  but not  limited to the costs of the proxy  solicitation.  The Funds'
share of the expenses will be allocated  ratably on the basis of their  relative
net asset values immediately before Closing.

ADDITIONAL INFORMATION ABOUT THE FUNDS

FORM OF ORGANIZATION -- Each of the Funds is a series of Security Equity Fund, a
Kansas  corporation.  Security  Equity Fund is governed by a Board of Directors,
which consists of six directors.

DIVIDENDS  AND  OTHER  DISTRIBUTIONS  --  Each  Fund  pays  dividends  from  net
investment income, and distributes net capital gains, if any, at least annually.
Dividends  and  distributions  of each  Fund  are  automatically  reinvested  in
additional  shares of the respective class of that Fund,  unless the shareholder
elects to receive distributions in cash.

If the  Reorganization  Plan is approved by  shareholders  of Total Return Fund,
then as soon as practicable  before the Closing,  Total Return Fund will pay its
shareholders a cash distribution of all undistributed 2002 net investment income
and undistributed realized net capital gains.

CAPITALIZATION   --  The  following  table  shows  on  an  unaudited  basis  the
capitalization of each Fund as of September 30, 2001 and on a PRO FORMA basis as
of September 30, 2001, giving effect to the Reorganization:

- ----------------------- -------------------- -------------------- -----------------
                                NET               NET ASSET            SHARES
                              ASSETS            VALUE PER SHARE      OUTSTANDING
- ----------------------- -------------------- -------------------- -----------------
EQUITY FUND
- ----------------------- -------------------- -------------------- -----------------
   Class A                   $563,553,120           $6.36             88,597,232
- ----------------------- -------------------- -------------------- -----------------
   Class B                     96,066,781            5.86             16,407,703
- ----------------------- -------------------- -------------------- -----------------
   Class C                      4,230,396            6.16                686,429
- ----------------------- -------------------- -------------------- -----------------

TOTAL RETURN FUND
- ----------------------- -------------------- -------------------- -----------------
   Class A                      2,797,290            8.07                346,616
- ----------------------- -------------------- -------------------- -----------------
   Class B                      2,518,893            7.81                322,742
- ----------------------- -------------------- -------------------- -----------------
   Class C                        157,250            7.83                 20,077
- ----------------------- -------------------- -------------------- -----------------

PRO FORMA -
EQUITY INCLUDING
 TOTAL RETURN
- ----------------------- -------------------- -------------------- -----------------
   Class A                    564,972,843            6.36             88,820,459
- ----------------------- -------------------- -------------------- -----------------
   Class B                     97,290,518            5.86             16,616,826
- ----------------------- -------------------- -------------------- -----------------
   Class C                      4,387,599            6.16                711,949
- ----------------------- -------------------- -------------------- -----------------

GENERAL INFORMATION ABOUT THE PROXY STATEMENT

SOLICITATION  OF PROXIES -- Proxies  are being  solicited  at the request of the
Board of Directors of Security  Equity  Fund.  Solicitation  of proxies is being
made  primarily  by the  mailing  of this  Notice and Proxy  Statement  with its
enclosures on or about _______,  2002.  Shareholders  of Total Return Fund whose
shares  are held by  nominees,  such as  brokers,  can  vote  their  proxies  by
contacting their respective  nominee. In addition to the solicitation of proxies
by mail, employees of Security Management and its affiliates, without additional
compensation,  may  solicit  proxies  in  person  or  by  telephone,  telegraph,
facsimile, or oral communication.

A shareholder may revoke the accompanying  proxy at any time prior to its use by
filing  with Total  Return  Fund a written  revocation  or duly  executed  proxy
bearing a later date. In addition,  any  shareholder  who attends the meeting of
Total  Return  Fund  shareholders  in person may vote by ballot at the  Meeting,
thereby  canceling any proxy previously  given.  The cost of soliciting  proxies
will  be  borne  by  Security  Management,  two-thirds  of  which  cost  will be
reimbursed by the Funds. The persons named in the  accompanying  proxy will vote
as directed by the proxy,  but in the absence of voting  directions in any proxy
that is  signed  and  returned,  they  intend to vote  "FOR" the  Reorganization
proposal and may vote in their  discretion with respect to other matters not now
known to the Board of Directors of Security Equity Fund that may be presented at
the meeting.

VOTING RIGHTS -- Shares of the Funds entitle their holders to one vote per share
as to any matter on which the holder is  entitled to vote,  and each  fractional
share  shall  be  entitled  to a  proportionate  fractional  vote.  Shares  have
cumulative voting rights and no preemptive or subscription rights.

Shareholders  of the Total Return Fund at the close of business on June 24, 2002
(the "Record Date") will be entitled to be present and give voting  instructions
for the Fund at the meeting with respect to their shares owned as of that Record
Date.  As of the Record  Date,  __________  shares of the Total Return Fund were
outstanding and entitled to vote. Approval of the Reorganization with respect to
Total Return Fund requires the affirmative vote of a majority of the outstanding
shares of the Fund.

Total Return Fund must have a quorum to conduct its business at the meeting. The
holders of a MAJORITY of outstanding  shares present in person or by proxy shall
constitute  a quorum.  In the  absence of a quorum,  a majority  of  outstanding
shares of the Fund  entitled  to vote,  in person or by proxy,  may  adjourn the
meeting from time to time until a quorum shall be present.

If a shareholder abstains from voting as to any matter, or if a broker returns a
"non-vote" proxy, indicating a lack of authority to vote on a matter, the shares
represented  by the abstention or non-vote will be deemed present at the meeting
for purposes of determining a quorum. However,  abstentions and broker non-votes
will not be deemed  represented at the meeting for purposes of  calculating  the
vote on any matter.  As a result, an abstention or broker non-vote will have the
same effect as a vote against the Reorganization. Prior to the meeting, the Fund
expects that  broker-dealer  firms  holding  their shares of the Fund in "street
name" for their customers will request voting  instructions from their customers
and beneficial owners.

To the  knowledge of Security  Equity Fund,  as of June 24, 2002, no Director of
Security  Equity  Fund  owns 1% or more of the  outstanding  shares of the Total
Return Fund,  and the officers and  Directors of Security  Equity Fund own, as a
group, less than 1% of the shares of Total Return Fund.

Appendix  C  hereto  lists  the  persons  that,  as  of  June  24,  2002,  owned
beneficially or of record 5% or more of the  outstanding  shares of Total Return
Fund.

OTHER  MATTERS  TO COME  BEFORE  THE  MEETING  -- The Fund  does not know of any
matters to be presented at the Meeting other than those  described in this Proxy
Statement/Prospectus. If other business should properly come before the Meeting,
the proxy holders will vote thereon in accordance with their best judgment.

SHAREHOLDER  PROPOSALS  -- The Funds are not  required  to hold  regular  annual
meetings and, in order to minimize  their costs,  do not intend to hold meetings
of  shareholders  unless so required by applicable law,  regulation,  regulatory
policy or if otherwise deemed advisable by the Funds'  management.  Therefore it
is not  practicable  to specify a date by which  shareholder  proposals  must be
received in order to be  incorporated  in an  upcoming  proxy  statement  for an
annual meeting or to be submitted to shareholders of the Funds.

INFORMATION  ABOUT THE FUNDS -- Proxy materials,  reports and other  information
filed  by the  Funds  can be  inspected  and  copied  at  the  Public  Reference
Facilities maintained by the SEC at 450 Fifth Street, NW, Washington,  DC 20549.
The SEC maintains an Internet World Wide Web site (at http://www.sec.gov)  which
contains other information about the Funds.

REPORTS TO SHAREHOLDERS -- Security  Management will furnish,  without charge, a
copy of the most recent Annual Report regarding the Funds upon request. Requests
for such  reports  should be  directed to Security  Management  at One  Security
Benefit Place, Topeka, KS 66636 or at (800) 888-2461.

IN ORDER THAT THE  PRESENCE OF A QUORUM AT THE  MEETING  MAY BE ASSURED,  PROMPT
EXECUTION  AND RETURN OF THE  ENCLOSED  PROXY IS  REQUESTED.  A  SELF-ADDRESSED,
POSTAGE-PAID ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE.

                                                           Amy J. Lee, Secretary

_______, 2002

One Security Benefit Place
Topeka, KS 66636



                      MORE INFORMATION REGARDING THE FUNDS

SHAREHOLDER GUIDE

PURCHASE  OPTIONS -- This  Proxy  Statement/Prospectus  relates to the  separate
classes of Equity Fund: Class A, B, and C, each of which represents an identical
interest in the Fund's investment portfolio, but is offered with different sales
charges and distribution fee (Rule 12b-1)  arrangements.  As described below and
elsewhere in this Proxy Statement/Prospectus, the contingent deferred sales load
structure and conversion characteristics of the Equity Fund shares issued to you
in the Reorganization will be the same as those that applied to the Total Return
Fund shares held by you immediately prior to the Reorganization,  and the period
that you held the Total  Return  Fund  shares  will be  included  in the holding
period of the Equity Fund shares for purposes of calculating contingent deferred
sales  charges and  determining  conversion  rights.  Purchases of the shares of
Equity Fund after the Reorganization will be subject to the sales load structure
and conversion rights discussed below.

The sales charges and fees for Class A, B, and C shares are shown and contrasted
in the chart below.

- ---------------------------------- -------------- ------------- -------------
                                      CLASS A       CLASS B(1)    CLASS C
- ---------------------------------- -------------- ------------- -------------
Maximum Initial Sales
 Charge on Purchases                   5.75%          None          None
- ---------------------------------- -------------- ------------- -------------
Contingent Deferred
 Sales Charge ("CDSC")                None(2)        5%(3)         1%(4)
- ---------------------------------- -------------- ------------- -------------
Annual Distribution (12b-1)
 Fee and Service Fee                   0.25%         1.00%         1.00%
- ---------------------------------- -------------- ------------- -------------
Automatic Conversion
 to Class A                             N/A         8 years(5)      N/A
- ---------------------------------- -------------- ------------- -------------
- -----------------------------------------------------------------------------
1.   Class B shares convert tax-free to Class A shares automatically after eight
     years.
2.   Purchases  of Class A  shares  in  amounts  of  $1,000,000  or more are not
     subject to an initial sales load; however, a deferred sales charge of 1% is
     imposed in the event of redemption within one year of purchase.
3.   5%  during  the first  year,  decreasing  to 0% in the sixth and  following
     years.
4.   A deferred sales charge of 1% is imposed in the event of redemption  within
     one year of purchase.
5.   Class B shares  of the  Equity  Fund  issued to  shareholders  of the Total
     Return  Fund in the  Reorganization  will  convert to Class A shares in the
     eighth year from the original date of purchase of the Class B shares of the
     Total Return Fund.
- --------------------------------------------------------------------------------
The relative  impact of the initial  sales charges and ongoing  annual  expenses
will depend on the length of time a share is held.

CLASS A SHARES.

INITIAL  SALES CHARGE  ALTERNATIVE.  Class A shares of the Funds are sold at the
net asset value  ("NAV") per share in effect plus a sales charge as described in
the  following  table.  For waivers or  reductions  of the Class A shares  sales
charges,  see "Special  Purchases  without a Sales  Charge" and  "Reduced  Sales
Charges."

- ----------------------- ------------------ ----------------- -----------------------
                                                                      DEALERS'
                                                                    REALLOWANCE
                            AS A % OF           AS A %                 AS A %
YOUR INVESTMENT          OFFERING PRICE         OF NAV            OF OFFERING PRICE
- ----------------------- ------------------ ----------------- -----------------------
Less than $50,000             5.75%             6.10%                   5.00%
- ----------------------- ------------------ ----------------- -----------------------
$50,000 - $99,999             4.75%             4.99%                   4.00%
- ----------------------- ------------------ ----------------- -----------------------
$100,000 - $249,999           3.75%             3.90%                   3.00%
- ----------------------- ------------------ ----------------- -----------------------
$250,000 - $499,999           2.75%             2.04%                   2.25%
- ----------------------- ------------------ ----------------- -----------------------
$500,000 but less
 than $1,000,000              2.00%             2.04%                   1.75%
- ----------------------- ------------------ ----------------- -----------------------
$1,000,000 or more            None               None                (See below)
- ----------------------- ------------------ ----------------- -----------------------

There is no initial sales charge on purchases of  $1,000,000  or more.  However,
the Funds'  Distributor  will pay  Authorized  Dealers of record  commissions as
follows:  1.00% on  purchases  of  $1,000,000  up to  $5,000,000,  plus 0.50% on
amounts  above  $5,000,000  up to  $10,000,000,  plus 0.10% for any amount above
$10,000,000. If shares are redeemed within one year of purchase, a CDSC of 1.00%
will be  imposed.  Class A shares  of the Funds are  subject  to a  distribution
(12b-1) fee at an annual  rate of 0.25% of the  average  daily net assets of the
Class. The Distributor uses the fee to pay for activities related to the sale of
Class A shares and services provided to shareholders.

REDUCED SALES CHARGES.  An investor may immediately  qualify for a reduced sales
charge  on a  purchase  of Class A  shares  of the  Funds or other  funds in the
Security  Group of Mutual  Funds  which offer Class A shares,  by  completing  a
Statement of  Intention to purchase  Fund  shares.  Executing  the  Statement of
Intention  expresses  an  intention  to invest  during the next 13 months (or 36
months for purchases of $1,000,000 or more) a specified  amount,  which, if made
at one time,  would qualify for a reduced sales charge.  An amount equal to five
percent of the amount specified in the Statement of Intention will be restricted
within your account to cover  additional  sales  charges that may be due if your
actual total investment fails to qualify for the reduced sales charges.  See the
Statement of Additional  Information  for the Funds for details on the Statement
of Intention  option or contact  Security  Management at (800) 888-2461 for more
information.

A sales  charge  may also be  reduced  by  taking  into  account  your  previous
purchases  of Class A shares  of the Funds or any  other  funds in the  Security
Group of Mutual Funds (excluding Security Cash Fund) ("Rights of Accumulation").
The reduced sales charges apply to quantity  purchases  made at one time or on a
cumulative  basis  over any  period of time.  See the  Statement  of  Additional
Information  for the Funds for details or contact  Security  Management at (800)
888-2461 for more information.

SPECIAL PURCHASE WITHOUT A SALES CHARGE.  Class A shares may be purchased at NAV
without a sales charge by certain  individuals and institutions.  For additional
information,  contact Security  Management at (800) 888-2461,  or see the Funds'
Statement of Additional Information.

CLASS B SHARES.

DEFERRED SALES CHARGE ALTERNATIVE.  Class B shares may be purchased at their NAV
per share  without  an initial  sales  charge at the time of  purchase.  Class B
shares that are redeemed within five years of purchase, however, will be subject
to a CDSC as  described in the table that  follows.  Class B shares of the Funds
are  subject to a  distribution  (12b-1)  fee at an annual  rate of 1.00% of the
average  daily net assets of the Class,  which is higher  than the  distribution
fees of Class A  shares.  The  higher  distribution  (12b-1)  fees mean a higher
expense ratio,  so Class B shares pay  correspondingly  lower  dividends and may
have a lower  NAV than  Class A  shares.  In  connection  with  sales of Class B
shares,  the  Distributor  compensates  Authorized  Dealers  at a rate  of 4% of
purchase  payments  subject to a CDSC. The amount of the CDSC is determined as a
percentage  of the  lesser  of the NAV of the  Class  B  shares  at the  time of
original purchase or redemption.  No charge will be imposed for any net increase
in the value of shares purchased during the preceding six years in excess of the
purchase price of such shares or for shares  acquired  either by reinvestment of
net investment  income dividends or capital gain  distributions.  The percentage
used to calculate the CDSC will depend on the number of years since you invested
the dollar amount being redeemed according to the following table:

- --------------------------------------------- ----------
     YEAR OF REDEMPTION AFTER PURCHASE          CDSC
- --------------------------------------------- ----------
                   First                         5%
- --------------------------------------------- ----------
                   Second                        4%
- --------------------------------------------- ----------
                   Third                         3%
- --------------------------------------------- ----------
                   Fourth                        3%
- --------------------------------------------- ----------
                   Fifth                         2%
- --------------------------------------------- ----------
            Sixth and following                  0%
- --------------------------------------------- ----------

Class B shares will automatically  convert into Class A shares eight years after
purchase,  except that Class B shares of the Equity  Fund  issued in  connection
with the Reorganization  with respect to Class B shares of the Total Return Fund
will  convert to Class A shares  eight years after the  purchase of the original
shares of the Total Return Fund, as applicable.  For  additional  information on
the CDSC and the  conversion  of Class B shares,  see the  Funds'  Statement  of
Additional Information.

CLASS C SHARES.

LOW LOAD ALTERNATIVE.  Class C shares are offered at net asset value, without an
initial sales charge. With certain  exceptions,  the Funds may impose a deferred
sales  charge on shares  redeemed  within one year of the date of  purchase.  No
deferred sales charge is imposed on amounts redeemed thereafter. If imposed, the
deferred  sales  charge  is  deducted  from the  redemption  proceeds  otherwise
payable. The deferred sales charge is retained by the Distributor.

Each  Fund  bears  some of the  costs of  selling  its  Class C  shares  under a
Distribution  Plan  adopted  with  respect  to its  Class  C  shares  ("Class  C
Distribution  Plan")  pursuant  to Rule  12b-1  under  the 1940  Act.  This Plan
provides for payments at an annual rate of 1.00% of the average  daily net asset
value of Class C  shares.  Amounts  paid by the Fund are  currently  used to pay
dealers and other firms that make Class C shares  available  to their  customers
(1) a commission at the time of purchase  normally equal to .75% of the value of
each share sold, and for each year thereafter,  quarterly, in an amount equal to
...75%  annually  of the  average  daily net asset value of Class C shares sold by
such dealers and other firms and remaining  outstanding on the books of the Fund
and (2) a service fee payable  for the first year  initially,  and for each year
thereafter,  quarterly, in an amount equal to .25% annually of the average daily
net asset  value of Class C shares  sold by such  dealers  and  other  firms and
remaining outstanding on the books of the Fund. The service fee may also be used
to pay for  sub-administration  and/or sub-transfer agency services provided for
the benefit of the Fund.

WAIVERS  OF CDSC.  The CDSC on Class A and Class B shares  will be waived in the
following cases. In determining whether a CDSC is applicable, it will be assumed
that  shares  held in the  shareholder's  account  that are not  subject to such
charge are redeemed first.

o    Upon the death of the shareholder if shares are redeemed within one year of
     the shareholder's death

o    Upon  the  disability  of the  shareholder  prior to age 65 if  shares  are
     redeemed  within  one year of the  shareholder  becoming  disabled  and the
     shareholder was not disabled when the shares were purchased

o    In connection with required  minimum  distributions  from a retirement plan
     qualified  under  Section  401(a),  401(k),  403(b) or 408 of the  Internal
     Revenue Code

o    In connection  with  distributions  from  retirement  plans qualified under
     Section 401(a) or 401(k) of the Internal Revenue Code for:

     >>   returns of excess contributions to the plan

     >>   retirement of a participant in the plan

     >>   a loan from the plan  (loan  repayments  are  treated as new sales for
          purposes of the deferred sales charge)

o    Upon the financial hardship (as defined in regulations under the Code) of a
     participant in a plan

o    Upon termination of employment of a participant in a plan

o    Upon any other permissible withdrawal under the terms of the plan.

If you think you may be eligible for a CDSC waiver,  contact Security Management
at (800) 888-2461.

REINSTATEMENT PRIVILEGE.  Class A shareholders who have redeemed their shares in
any fund in the Security  Group of Mutual Funds may reinvest  some or all of the
proceeds in the same share class within 30 days without a sales charge.  See the
Statement  of  Additional  Information  for the Funds  for  details  or  contact
Security Management at (800) 888-2461.

RULE 12B-1  PLAN.  Each Fund has a Class B and Class C  distribution  plan,  and
Equity Fund has a Class A  distribution  plan,  pursuant to Rule 12b-1 under the
1940 Act ("Rule 12b-1 Plan").  Under the Rule 12b-1 Plans,  the  Distributor may
receive from each Fund an annual fee in connection  with the offering,  sale and
shareholder servicing of the Fund's Class A, Class B and Class C shares.

OTHER  EXPENSES.  In addition  to the  management  fee and other fees  described
previously, each Fund pays other expenses, such as legal, audit, transfer agency
and custodian fees, proxy solicitation  costs, and the compensation of Directors
who  are not  affiliated  with  Security  Management.  Most  Fund  expenses  are
allocated  proportionately  among  all of the  outstanding  shares  of the Fund.
However,  the Rule  12b-1  Plan  fees  for each  class  of  shares  are  charged
proportionately only to the outstanding shares of that class.

PURCHASING  SHARES  -- The  minimum  initial  investment  in the  Funds is $100.
Subsequent  investments  must be $100 (or $20 under an Accumulation  Plan).  The
Funds and the  Distributor  reserve  the right to reject  any order to  purchase
shares. Purchase and sale requests are executed at the NAV next determined after
the order is received in proper form by the  Transfer  Agent or the  Distributor
plus any applicable sales charge.

PRICE OF SHARES.  When you buy shares, you pay the NAV plus any applicable sales
charge.  When you sell shares,  you receive the NAV minus any  applicable  CDSC.
Exchange orders are effected at NAV.

RETIREMENT  PLANS. The Funds have available  tax-qualified  retirement plans for
individuals,  prototype plans for the self-employed,  pension and profit sharing
plans for  corporations  and  custodial  accounts for employees of public school
systems and  organizations  meeting the requirements of Section 501(c)(3) of the
Internal Revenue Code. Further  information  concerning these plans is contained
in the Funds'  Statement of  Additional  Information.  For further  information,
contact Security Management at (800) 888-2461.

DETERMINATION  OF NET ASSET VALUE. The NAV per share of each Fund is computed as
of the close of regular trading hours on the New York Stock Exchange (normally 3
p.m.  Central  time) on days when the  Exchange  is open.  The  Exchange is open
Monday through  Friday,  except on observation  of the following  holidays:  New
Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday,  Memorial
Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.

Each Fund's NAV is generally  based upon the market value of securities  held in
the Fund's  portfolio.  If market  prices are not  available,  the fair value of
securities  is  determined  using  procedures  approved  by the Fund's  Board of
Directors.  In  addition,  if  between  the time  trading  ends on a  particular
security and the close of trading on the New York Stock  Exchange,  events occur
that  materially  affect  the  value of the  security,  the  Funds may value the
security at its fair value as  determined  in good faith by Security  Management
under procedures approved by the Board of Directors.  In such a case, the Fund's
net asset value will be subject to the  judgment of Security  Management  rather
than being determined by the market.

EXCHANGE  PRIVILEGES AND RESTRICTIONS.  Shareholders who own shares of the Funds
may  exchange  those  shares for shares of another of the funds in the  Security
Group of Mutual Funds, including Security Social Awareness,  Diversified Income,
Municipal Bond and High Yield Funds.

Shareholders  who hold  their  shares  in a  tax-qualified  retirement  plan may
exchange shares of the Funds for shares of Security Capital  Preservation  Fund,
but may not exchange into Security  Municipal Bond Fund.  Shareholders  also may
exchange  their shares of the Funds for shares of Security  Cash Fund,  provided
that exchanges to Security Cash Fund are not available to shareholders  who have
purchased through the following  custodial  accounts of the Investment  Manager:
403(b)(7)  accounts,  SEPP accounts and SIMPLE plans.  All exchanges are made at
the relative net asset values of the Funds on the date of the exchange.

Exchanges  may be made only in those  states where shares of the fund into which
an exchange is to be made are qualified for sale. No service fee or sales charge
is presently imposed on such an exchange. Shares of a particular class of a Fund
may be exchanged only for shares of the same class of another  available fund or
for Class A shares of Security Cash Fund, if  available.  At present,  Municipal
Bond Fund does not offer  Class C shares.  Any  applicable  CDSC will be imposed
upon  redemption and calculated  from the date of the initial  purchase  without
regard to the time shares were held in Cash Fund.

For tax purposes,  an exchange is a sale of shares which may result in a taxable
gain or loss. Special rules may apply to determine the amount of gain or loss on
an exchange occurring within ninety days after purchase of the exchanged shares.

To  exchange   shares  by  telephone,   a   shareholder   must  hold  shares  in
non-certificate  form and must  either have  completed  the  Telephone  Exchange
section of the application or a Telephone Transfer  Authorization form which may
be obtained from Security  Management.  Once  authorization has been received by
Security  Management,  a shareholder may exchange shares by telephone by calling
the Funds at  1-800-888-2461,  extension  3127,  on weekdays  (except  holidays)
between the hours of 7:00 a.m. and 6:00 p.m.  Central  time.  Exchange  requests
received by telephone  after the close of the New York Stock Exchange  (normally
3:00 p.m. Central time) will be treated as if received on the next business day.
The  exchange  privilege,  including  telephone  exchanges,  may be  changed  or
discontinued at any time by either Security Management or the Fund upon 60 days'
notice to shareholders.

SELLING  SHARES -- Shares of the  Funds  will be  redeemed  at the NAV (less any
applicable CDSC and/or federal income tax  withholding)  next  determined  after
receipt  of a  redemption  request  in good  form on any day the New York  Stock
Exchange is open for business.  Any share certificates  representing fund shares
sold must be returned with a request to sell the shares.

SYSTEMATIC  WITHDRAWAL  PLAN.  Shareholders who wish to receive regular monthly,
bi-monthly,  quarterly,  semiannual,  or  annual  payments  of $25 or  more  may
establish a Systematic  Withdrawal  Program.  A shareholder  may elect a payment
that is a  specified  percentage  of the initial or current  account  value or a
specified dollar amount. A Systematic Withdrawal Program will be allowed only if
shares with a current  aggregate net asset value of $5,000 or more are deposited
with the Security Management,  which will act as agent for the shareholder under
the  Program.  Shares are  liquidated  at net asset  value.  The  Program may be
terminated on written notice,  or it will terminate  automatically if all shares
are liquidated or redeemed from the account.

A  shareholder  may  establish a Systematic  Withdrawal  Program with respect to
Class B or Class C shares without the  imposition of any  applicable  contingent
deferred  sales charge,  provided that such  withdrawals  do not in any 12-month
period,  beginning  on the date the  Program is  established,  exceed 10% of the
value  of the  account  on  that  date  ("Free  Systematic  Withdrawals").  Free
Systematic  Withdrawals are not available if a Program  established with respect
to Class B or Class C shares  provides for  withdrawals  in excess of 10% of the
value of the account in any Program year and, as a result, all withdrawals under
such a Program  would be subject to any  applicable  contingent  deferred  sales
charge. Free Systematic Withdrawals will be made first by redeeming those shares
that  are not  subject  to the  contingent  deferred  sales  charge  and then by
redeeming  shares  held  the  longest.  The  contingent  deferred  sales  charge
applicable  to a redemption  of Class B or Class C shares  requested  while Free
Systematic  Withdrawals  are being made will be  calculated  as described  under
"Class B Shares" or "Class C Shares," as  applicable.  A  Systematic  Withdrawal
form may be obtained from the Funds.

PAYMENTS. Payments may be made by check. Redemption proceeds will be sent to the
shareholder(s)  of record at the  address  of record  within  seven  days  after
receipt  of a valid  redemption  request.  For a  charge  of $15  deducted  from
redemption  proceeds,  Security Management will provide a certified or cashier's
check, or send the redemption  proceeds by express mail, upon the  shareholder's
request.

MANAGEMENT OF THE FUNDS

INVESTMENT MANAGER -- Security Management,  each Fund's investment manager, is a
Kansas limited liability company.  On December 31, 2001, the aggregate assets of
all of the mutual funds under the investment  management of Security  Management
were approximately $7.9 billion.  Security Management has overall responsibility
for the management of the Funds.  Security  Equity Fund and Security  Management
have entered into an agreement  that  requires  Security  Management  to provide
investment advisory,  statistical and research services to the Funds,  supervise
and arrange for the purchase and sale of securities on behalf of the Funds,  and
provide  for the  maintenance  and  compilation  of  records  pertaining  to the
investment  advisory  function.  The agreement  with Security  Management can be
canceled by the Board of Directors of Security Equity Fund upon 60 days' written
notice.  Investment  management  fees are  computed  and accrued  daily and paid
monthly.  For the year ended  September  30, 2001,  Equity Fund paid  investment
management fees of $8,523,319 to Security Management.

PARENT  COMPANY AND  DISTRIBUTOR  -- Security  Management  is  controlled by its
members,  Security  Benefit Life Insurance  Company and Security  Benefit Group,
Inc.  ("SBG").  SBG is an  insurance  and  financial  services  holding  company
wholly-owned by Security  Benefit Life Insurance  Company,  One Security Benefit
Place, Topeka, Kansas 66636. Security Benefit Life, a life insurance company, is
incorporated under the laws of Kansas.  Security Management is a direct, and the
Distributor,  the Fund's  principal  underwriter,  is an indirect,  wholly-owned
subsidiary of Security Benefit Life Insurance Company ("Security Benefit").

ADMINISTRATIVE  AGENT --  Security  Management  also acts as the  administrative
agent  for  the  Fund  and as such  performs  administrative  functions  and the
bookkeeping,  accounting and pricing functions for the Funds. For these services
Security Management receives,  on an annual basis, a fee of 0.09% of the average
net assets of each Fund, calculated daily and payable monthly.

Security  Management  also acts as the  transfer  agent for the Funds.  As such,
Security  Management  performs all shareholder  servicing  functions,  including
transferring record ownership,  processing purchase and redemption transactions,
answering  inquiries,  mailing  shareholder  communications  and  acting  as the
dividend  disbursing agent. For these services,  the Investment Manager receives
an annual  maintenance fee of $8.00 per account,  a fee of $1.00 per shareholder
transaction, and a fee of $1.00 per dividend transaction.

PORTFOLIO  TRANSACTIONS  --  Security  Management  will place  orders to execute
securities  transactions  that are designed to implement each Fund's  investment
objectives and policies.  Security  Management  uses its  reasonable  efforts to
place all purchase and sale  transactions  with brokers and dealers  ("brokers")
that provide  "best  execution" of these  orders.  In placing  purchase and sale
transactions,  Security  Management may consider brokerage and research services
provided by a broker to Security Management or its affiliates,  and the Fund may
pay a commission for effecting a securities transaction that is in excess of the
amount  another broker would have charged if Security  Management  determines in
good faith that the amount of  commission is reasonable in relation to the value
of the brokerage and research services provided by the broker viewed in terms of
either that particular  transaction or the overall  responsibilities of Security
Management  with  respect to all  accounts as to which it  exercises  investment
discretion.  Security  Management may use all, none, or some of such information
and services in  providing  investment  advisory  services to each of the mutual
funds  under  its  management,   including  each  Fund.  In  addition,  Security
Management  also  may  consider  a  broker's  sale of Fund  shares  if  Security
Management  is  satisfied  that the Fund would  receive  best  execution  of the
transaction from that broker.

Securities  held by the  Funds  may  also be held by other  investment  advisory
clients  of  Security  Management,  including  other  investment  companies.  In
addition,  Security Management's parent company, Security Benefit, may also hold
some of the same securities as the Funds. When selecting securities for purchase
or sale for a Fund,  Security  Management  may at the same time be purchasing or
selling the same securities for one or more of such other  accounts.  Subject to
Security Management's obligation to seek best execution, such purchases or sales
may be  executed  simultaneously  or  "bunched."  It is the  policy of  Security
Management not to favor one account over the other.  Any purchase or sale orders
executed  simultaneously  (which may also include orders from Security  Benefit)
are  allocated at the average price and as nearly as  practicable  on a pro rata
basis  (transaction  costs will also generally be shared on a pro rata basis) in
proportion to the amounts  desired to be purchased or sold by each  account.  In
those instances where it is not practical to allocate purchase or sale orders on
a pro  rata  basis,  then the  allocation  will be made on a  rotating  or other
equitable  basis.  While  it is  conceivable  that  in  certain  instances  this
procedure  could  adversely  affect the price or number of shares  involved in a
Fund's transaction,  it is believed that the procedure generally  contributes to
better overall execution of the Funds' portfolio transactions.

DIVIDENDS, DISTRIBUTIONS AND TAXES

DIVIDENDS AND  DISTRIBUTIONS -- Each Fund pays its  shareholders  dividends from
its net investment  income,  and  distributes  any net capital gains that it has
realized, at least annually. Your dividends and distributions will be reinvested
in shares of the Fund, unless you instruct Security Management otherwise.  There
are no fees or sales charges on reinvestments.

FEDERAL TAXES -- Fund dividends and  distributions  are taxable to  shareholders
(unless your investment is in an Individual  Retirement Account ("IRA") or other
tax-advantaged  retirement  account)  whether you  reinvest  your  dividends  or
distributions or take them in cash.

In addition to federal tax,  dividends and distributions may be subject to state
and local  taxes.  If a Fund  declares a dividend  or  distribution  in October,
November or December but pays it in January,  you may be taxed on that  dividend
or  distribution  as if  you  received  it in the  previous  year.  In  general,
dividends and distributions from the Funds are taxable as follows:

- ------------------------------- --------------------------- -------------------------
                                                                     TAX RATE
                                                                      FOR 28%
  TYPE OF                              TAX RATE FOR                   BRACKET
DISTRIBUTION                           15% BRACKET                   OR ABOVE
- ------------------------------- --------------------------- -------------------------
Income dividends                   Ordinary Income rate        Ordinary Income rate
- ------------------------------- --------------------------- -------------------------
Short-term capital gains           Ordinary Income rate        Ordinary Income rate
- ------------------------------- --------------------------- -------------------------
Long-term capital gains                     10%                         20%
- ------------------------------- --------------------------- -------------------------
Long-term capital gains (held
for 5 or more years)                        8%                          18%
- ------------------------------- --------------------------- -------------------------

A Fund has "short-term  capital gains" when it sells a security within 12 months
after buying it. A Fund has  "long-term  capital gains" when it sells a security
that it has owned for more than 12 months. When a Fund earns interest from bonds
and other debt securities and distributes  these earnings to  shareholders,  the
Fund has  "ordinary  income."  The Funds  expect that their  distributions  will
consist  primarily of capital  gains.  You  generally are required to report all
Fund distributions on your federal income tax return.

Tax-deferred  retirement accounts do not generate a tax liability unless you are
taking a distribution or making a withdrawal.

The Funds mail information  concerning the tax status of the  distributions  for
each calendar year on or before January 31 of the following year.

This is a brief  summary of some of the tax laws that affect your  investment in
the Funds.  Please see the Funds'  Statement of Additional  Information and your
tax adviser for further information.



           FINANCIAL HIGHLIGHTS FOR TOTAL RETURN FUND AND EQUITY FUND

                 FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD

- --------------------------------------------------------------------------------
  The financial  highlights  table is intended to help you understand the Funds'
  financial  performance for their Class A, B, and C shares during the past five
  years,  or the  period  since  commencement  of a  Fund.  Certain  information
  reflects  financial  results for a single Fund share. The total returns in the
  table  represent  the rate that an investor  would have earned (or lost) on an
  investment   in  the  Fund   assuming   reinvestment   of  all  dividends  and
  distributions.  This  information  has been derived from financial  statements
  that have been  audited by Ernst & Young  LLP,  whose  report,  along with the
  Funds'  financial  statements,  are  included in the annual  report,  which is
  available upon request.

- ------------------------------------------------------------------------------------------

- ------------------------------------------------------------------------------------------
SECURITY TOTAL RETURN FUND (CLASS A)
- ------------------------------------------------------------------------------------------
                                             FISCAL PERIOD ENDED SEPTEMBER 30
                         -----------------------------------------------------------------
                            2001(c)     2000(c)   1999(b)(c)(f)  1998(b)(c)  1997(b)(c)(d)
                            -------     -------   -------------  ----------  -------------
PER SHARE DATA
Net asset value
 beginning of period.....   $11.81       $11.69       $10.73        $12.58       $11.06

INCOME FROM INVESTMENT
 OPERATIONS:
Net investment
 income (loss)...........   (0.06)        (0.07)       (0.03)         0.08         0.17
Net gain (loss)
 on securities
  (realized and
   unrealized)...........   (3.64)         0.83         1.90         (0.98)        1.86
                           -------       -------      -------       -------       ------
Total from investment
 operations..............   (3.70)         0.76         1.87         (0.90)        2.03

LESS DISTRIBUTIONS:
Dividends (from net
 investment income)......     ---          ---         (0.16)        (0.20)       (0.26)
Distributions
 (from realized gains)...   (0.04)        (0.64)       (0.75)        (0.75)       (0.25)
                           -------       -------      -------       -------       -------
Total distributions......   (0.04)        (0.64)       (0.91)        (0.95)       (0.51)
                           -------       -------      -------       -------       -------
NET ASSET VALUE END
 OF PERIOD...............  $ 8.07        $11.81        $11.69        $10.73       $12.58
                           =======        ======       ======        ======        =====
TOTAL RETURN (a).........  (31.43)%        6.49%        17.84%       (7.19)%       19.00%

RATIOS/SUPPLEMENTAL
 DATA
Net assets end of
 period (thousands)......   $2,797       $3,928        $3,587        $3,294       $3,906
Ratio of expenses
 to average net assets...    1.51%         1.49%         2.00%         2.00%        1.68%
Ratio of net investment
 income (loss) to
 average net assets......   (0.58)%      (0.61)%       (0.29)%         0.65%        1.52%
Portfolio turnover rate..       35%          55%          121%           45%          79%
- ------------------------------------------------------------------------------------------

- ------------------------------------------------------------------------------------------
SECURITY TOTAL RETURN FUND (CLASS B)
- ------------------------------------------------------------------------------------------
                                            FISCAL PERIOD ENDED SEPTEMBER 30
                         -----------------------------------------------------------------
                           2001(c)     2000(c)    1999(b)(c)(f))  1998(b)(c) 1997(b)(c)(d)
                           -------     -------    --------------  ---------- -------------
PER SHARE DATA
Net asset value
 beginning of period......  $11.55       $11.56       $10.62        $12.45      $10.97

INCOME FROM INVESTMENT
 OPERATIONS:
Net investment
 income (loss)............   (0.16)       (0.19)       (0.14)        (0.03)       0.07
Net gain (loss)
 on securities
  (realized and
   unrealized)............   (3.54)        0.82         1.88         (0.96)       1.84
                            -------      -------      -------       -------     ------
Total from investment
 operations...............   (3.70)        0.63         1.74         (0.99)       1.91

LESS DISTRIBUTIONS:
Dividends (from net
 investment income).......     ---          ---        (0.05)        (0.09)      (0.18)
Distributions
 (from realized gains)....   (0.04)       (0.64)       (0.75)        (0.75)      (0.25)
                            -------      -------      -------       -------     -------
Total distributions.......   (0.04)       (0.64)       (0.80)        (0.84)      (0.43)
                            -------      -------      -------       -------     -------
NET ASSET VALUE END
 OF PERIOD................ $  7.81       $11.55       $11.56        $10.62      $12.45
                            =======       ======       ======        ======      =====
TOTAL RETURN (a).......... (32.14)%        5.39%       16.68%       (7.99)%      17.95%

RATIOS/SUPPLEMENTAL
 DATA
Net assets end of
 period (thousands).......   $2,519       $3,903       $3,652        $3,304      $3,851
Ratio of expense
 to average net assets ...    2.51%        2.49%        2.94%         2.94%       2.58%
Ratio of net investment
 income (loss) to
 average net assets.......  (1.58)%      (1.61)%      (1.23)%       (0.29)%       0.61%
Portfolio turnover rate...      35%          55%         121%           45%         79%
- ------------------------------------------------------------------------------------------

- ------------------------------------------------------------------------------------------
SECURITY TOTAL RETURN FUND (CLASS C)
- ------------------------------------------------------------------------------------------
                                                    FISCAL PERIOD ENDED SEPTEMBER 30
                                          --  --------------------------------------------
                                                2001(c)        2000(c)    1999(b)(c)(d)(e)
                                                -------        -------    ----------------
PER SHARE DATA
Net asset value beginning of period......        $11.60          $11.58         $11.48

INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss).............         (0.15)          (0.16)         (0.11)
Net gain (loss) on securities
   (realized and unrealized).............         (3.58)           0.82           0.21
                                                 -------         -------        -------
Total from investment operations.........         (3.73)           0.66           0.10

LESS DISTRIBUTIONS:
Dividends (from net investment income)...           ---             ---            ---
Distributions (from realized gains)......         (0.04)          (0.64)           ---
                                                 -------         -------      --------
Total distributions......................         (0.04)          (0.64)           ---
                                                 -------         -------      --------
NET ASSET VALUE END OF PERIOD............       $  7.83          $11.60         $11.58
                                                 =======          ======         =====
TOTAL RETURN (a).........................       (32.26)%           5.65%          0.87%

RATIOS/SUPPLEMENTAL DATA
Net assets end of period (thousands).....           $157             $59             $8
Ratio of expenses to average net assets..          2.56%           2.30%          2.93%
Ratio of net investment income
   (loss) to average net assets..........        (1.62)%         (1.45)%        (1.84)%
Portfolio turnover rate..................            35%             55%           149%
- ------------------------------------------------------------------------------------------

- ------------------------------------------------------------------------------------------
SECURITY EQUITY FUND (CLASS A)
- ------------------------------------------------------------------------------------------
                                         FISCAL YEAR ENDED SEPTEMBER 30
                           ---------------------------------------------------------------
                            2001(c)       2000(c)      1999(c)       1998(c)      1997(c)
                            -------       -------      -------       -------      -------
PER SHARE DATA
Net asset value
 beginning of period.....   $10.26       $  9.96       $ 8.86        $ 9.09       $ 7.54

INCOME FROM INVESTMENT
 OPERATIONS:
Net investment
 income (loss)...........      ---           ---         0.02          0.04         0.04
Net gain (loss)
 on securities
  (realized and
   unrealized)...........    (2.49)         0.66         1.80          0.56         2.20
                            -------       -------       ------        ------       -----
Total from investment
 operations..............    (2.49)         0.66         1.82          0.60         2.24

LESS DISTRIBUTIONS:
Dividends (from net
 investment income)......      ---           ---        (0.04)        (0.03)       (0.04)
Distributions
 (from realized gains)...    (1.40)        (0.36)       (0.68)        (0.80)       (0.65)
Return of Capital........    (0.01)          ---          ---           ---          ---
                            -------      --------      -------       -------      ------
Total distributions......    (1.41)        (0.36)       (0.72)        (0.83)       (0.69)
                            -------       -------       ------        ------       ------
NET ASSET VALUE END
 OF PERIOD...............  $  6.36        $10.26       $ 9.96        $ 8.86       $ 9.09
                           ========        ======       ======        ======       =====
TOTAL RETURN (a).........  (27.66)%         6.64%       20.66%         7.38%       32.08%

RATIOS/SUPPLEMENTAL
 DATA
Net assets end of
 period (thousands)......  $563,553      $853,126     $917,179      $773,606     $757,520
Ratio of expenses
 to average net assets...     1.02%         1.02%        1.02%         1.02%        1.03%
Ratio of net investment
 income (loss) to
 average net assets......     0.03%         0.03%        0.19%         0.39%        0.46%
Portfolio turnover rate..       23%           54%          36%           47%          66%
- ------------------------------------------------------------------------------------------

- ------------------------------------------------------------------------------------------
SECURITY EQUITY FUND (CLASS B)
- ------------------------------------------------------------------------------------------
                                           FISCAL YEAR ENDED SEPTEMBER 30
                         -----------------------------------------------------------------
                           2001(c)        2000(c)      1999(c)       1998(c)     1997(c)
                           -------        -------      -------       -------     -------
PER SHARE DATA
Net asset value
 beginning of period.....   $ 9.65        $ 9.47       $ 8.52        $ 8.82      $ 7.36

INCOME FROM INVESTMENT
 OPERATIONS:
Net investment
 income (loss)...........    (0.07)        (0.10)       (0.08)        (0.05)      (0.04)
Net gain (loss)
 on securities
  (realized and
   unrealized)...........    (2.31)         0.64         1.71          0.55        2.15
                             ------        -----        ------        ------      -----
Total from investment
 operations..............    (2.38)         0.54         1.63          0.50        2.11

LESS DISTRIBUTIONS:
Dividends (from net
 investment income)......      ---           ---          ---           ---         ---
Distributions
 (from realized gains)...    (1.40)        (0.36)       (0.68)        (0.80)      (0.65)
Return of Capital........    (0.01)          ---          ---           ---         ---
                             ------       -------      -------       -------     ------
Total distributions......    (1.41)        (0.36)       (0.68)        (0.80)      (0.65)
                             ------        ------       ------        ------      ------
NET ASSET VALUE END
 OF PERIOD...............   $ 5.86        $ 9.65       $ 9.47        $ 8.52      $ 8.82
                             ======        ======       ======        ======      =====
TOTAL RETURN (a).........  (28.34)%         5.69%       19.23%         6.38%      30.85%

RATIOS/SUPPLEMENTAL
 DATA
Net assets end of
 period (thousands)......   $96,067      $156,633     $159,872      $112,978     $89,336
Ratio of expenses
 to average net assets...     2.02%         2.02%        2.02%         2.02%       2.03%
Ratio of net investment
 income (loss) to
 average net assets......   (0.97)%       (0.97)%      (0.82)%       (0.61)%     (0.54)%
Portfolio turnover rate..       23%           54%          36%           47%         66%
- ------------------------------------------------------------------------------------------

- ------------------------------------------------------------------------------------------
SECURITY EQUITY FUND (CLASS C)
- ------------------------------------------------------------------------------------------
                                                   FISCAL PERIOD ENDED SEPTEMBER 30
                                            ----------------------------------------------
                                                2001(c)        2000(c)       1999(c)(e)
                                                -------        -------       ----------
PER SHARE DATA
Net asset value beginning of period......        $10.07         $  9.89         $10.13

INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss).............         (0.07)          (0.10)         (0.05)
Net gain (loss) on securities
   (realized and unrealized).............         (2.43)           0.64          (0.19)
                                                 -------         -------        -------
Total from investment operations.........         (2.50)           0.54          (0.24)

LESS DISTRIBUTIONS:
Dividends (from net investment income)...           ---             ---            ---
Distributions (from realized gains)......         (1.40)          (0.36)           ---
Return of Capital                                 (0.01)            ---            ---
                                                 -------       ---------      --------
Total distributions......................         (1.41)          (0.36)           ---
                                                 -------         -------      --------
NET ASSET VALUE END OF PERIOD............       $  6.16          $10.07        $  9.89
                                                 =======          ======        ======
TOTAL RETURN (a).........................       (28.35)%           5.55%        (2.37)%

RATIOS/SUPPLEMENTAL DATA
Net assets end of period (thousands).....         $4,230          $5,426         $4,507
Ratio of expenses to average net assets..          2.02%           2.02%          2.02%
Ratio of net investment income
   (loss) to average net assets..........        (0.97)%         (0.96)%        (0.89)%
Portfolio turnover rate..................            23%             54%            45%
- ------------------------------------------------------------------------------------------

(a)  Total  return  information  does  reflect  deduction  of any sales  charges
     imposed at the time of purchase for Class A shares or upon  redemption  for
     Class B, C and S shares.

(b)  Fund expenses were reduced by the Investment Manager during the period, and
     expense ratios absent such reimbursement would have been as follows:

- --------------------------------------------------------------------------------------
                          CLASS     2001      2000       1999      1998       1997
- --------------------------------------------------------------------------------------
Total Return Fund           A                  ---       2.3%      2.5%       2.4%
- --------------------------------------------------------------------------------------
                            B                  ---       3.2%      3.4%       3.3%
- --------------------------------------------------------------------------------------
                            C                  ---       3.2%       ---       ---
- --------------------------------------------------------------------------------------
                            S       ---        ---       ---        ---       ---
- --------------------------------------------------------------------------------------

(c)  Net investment income (loss) was computed using average shares  outstanding
     throughout the period.

(d)  Meridian   Investment   Management   Corporation   (Meridian)   became  the
     sub-advisor of Total Return Fund effective  August 1, 1997. Prior to August
     1, 1997  Security  Management  Company,  LLC (SMC) paid  Templeton/Franklin
     Investment  Services,  Inc. and Meridian for research  services provided to
     Total Return Fund.

(e)  Class "C" Shares  were  initially  offered  for sale on January  29,  1999.
     Percentage  amounts  for  the  period,   except  total  return,  have  been
     annualized.

(f)  Prior to May 15, 1999 SMC paid Meridian for sub-advisory  services provided
     to Total Return Fund. Effective May 15, 1999 the sub-advisory contract with
     Meridian was terminated and SMC continued to provide  advisory  services to
     the Total Return Fund.



                                   APPENDIX A

                         FORM OF PLAN OF REORGANIZATION

THIS PLAN OF  REORGANIZATION  (the "Plan") is adopted as of this 3rd day of May,
2002,  by  Security  Equity Fund (the  "Company")  with its  principal  place of
business at One Security  Benefit  Place,  Topeka,  Kansas  66636,  on behalf of
Equity Series (the  "Acquiring  Fund"),  a separate  series of the Company,  and
Total  Return  Series (the  "Acquired  Fund"),  another  separate  series of the
Company.

This Plan is  intended  to be and is  adopted  as a plan of  reorganization  and
liquidation  within  the  meaning  of Section  368(a)(1)  of the  United  States
Internal Revenue Code of 1986, as amended (the "Code").  The reorganization (the
"Reorganization")  will  consist  of the  transfer  of all of the  assets of the
Acquired  Fund to the  Acquiring  Fund in exchange  solely for Class A, B, and C
voting shares ($0.25 par value per share) of the Acquiring Fund (the  "Acquiring
Fund Shares"),  the  assumption by the Acquiring Fund of all  liabilities of the
Acquired  Fund,  and  the  distribution  of the  Acquiring  Fund  Shares  to the
shareholders  of the Acquired Fund in complete  liquidation of the Acquired Fund
as provided herein,  all upon the terms and conditions  hereinafter set forth in
this Plan.

WHEREAS,  the  Company  is an  open-end,  registered  investment  company of the
management type and the Acquired Fund owns securities which generally are assets
of the character in which the Acquiring Fund is permitted to invest;

WHEREAS,  the Directors of the Company have  determined that the exchange of all
of the assets of the Acquired Fund for Acquiring  Fund Shares and the assumption
of all  liabilities  of the Acquired Fund by the  Acquiring  Fund is in the best
interests of the Acquiring Fund and its  shareholders  and that the interests of
the existing shareholders of the Acquiring Fund would not be diluted as a result
of this transaction; and

WHEREAS, the Directors of the Company also have determined,  with respect to the
Acquired  Fund,  that the exchange of all of the assets of the Acquired Fund for
Acquiring Fund Shares and the assumption of all liabilities of the Acquired Fund
by the  Acquiring  Fund is in the best  interests of the  Acquired  Fund and its
shareholders and that the interests of the existing  shareolders of the Acquired
Fund would not be diluted as a result of this transaction;

NOW,  THEREFORE,  the Company,  on behalf of the Acquiring Fund and the Acquired
Fund separately, hereby approves the Plan on the following terms and conditions:

1.     TRANSFER OF ASSETS OF THE ACQUIRED FUND TO THE ACQUIRING FUND IN EXCHANGE
       FOR THE  ACQUIRING  FUND SHARES,  THE  ASSUMPTION  OF ALL  ACQUIRED  FUND
       LIABILITIES AND THE LIQUIDATION OF THE ACQUIRED FUND

       1.1    Subject to the  requisite  approvals  of the  shareholders  of the
              Acquired  Fund  and  Acquiring   Fund  and  the  other  terms  and
              conditions   herein   set   forth   and  on  the   basis   of  the
              representations and warranties  contained herein, the Company will
              transfer  all of the  Acquired  Fund's  assets,  as set  forth  in
              paragraph  1.2, to the  Acquiring  Fund,  and the  Acquiring  Fund
              agrees in exchange  therefor:  (i) to deliver to the Acquired Fund
              the number of full and fractional Class A, B, and C Acquiring Fund
              Shares determined by dividing the value of the Acquired Fund's net
              assets with  respect to each class,  computed in the manner and as
              of the time and date set forth in paragraph  2.1, by the net asset
              value of one Acquiring  Fund Share of the same class,  computed in
              the manner and as of the time and date set forth in paragraph 2.2;
              and (ii) to assume all  liabilities  of the  Acquired  Fund.  Such
              transactions  shall  take  place at the  closing  provided  for in
              paragraph 3.1 (the "Closing").

       1.2    The assets of the  Acquired  Fund to be acquired by the  Acquiring
              Fund shall consist of all assets and property,  including, without
              limitation,   all  cash,   securities,   commodities  and  futures
              interests and dividends or interests  receivable that are owned by
              the Acquired Fund and any deferred or prepaid expenses shown as an
              asset  on the  books  of the  Acquired  Fund on the  closing  date
              provided for in paragraph 3.1 (the "Closing Date").

       1.3    The  Acquired  Fund will  endeavor to  discharge  all of its known
              liabilities  and  obligations  prior  to  the  Closing  Date.  The
              Acquiring  Fund shall also  assume all of the  liabilities  of the
              Acquired Fund,  whether  accrued or contingent,  known or unknown,
              existing at the Valuation Date. On or as soon as practicable prior
              to the Closing Date, the Acquired Fund will declare and pay to its
              shareholders  of  record  one  or  more  dividends   and/or  other
              distributions  that,  together  with all  previous  distributions,
              shall have the effect of distributing to its  shareholders (i) all
              of its  investment  company  taxable  income  and  all of its  net
              realized  capital gains,  if any, for the period from the close of
              its  last  taxable  year  to the  end of the  business  day on the
              Closing;  and (ii) any  undistributed  investment  company taxable
              income  and net  capital  gain from any  period to the  extent not
              otherwise distributed.

       1.4    Immediately after the transfer of assets provided for in paragraph
              1.1,  the Acquired  Fund will  distribute  to the Acquired  Fund's
              shareholders  of record with  respect to each class of its shares,
              determined  as of  immediately  after the close of business on the
              Closing Date (the  "Acquired  Fund  Shareholders"),  on a pro rata
              basis  within that class,  the  Acquiring  Fund Shares of the same
              class received by the Acquired Fund pursuant to paragraph 1.1, and
              will completely liquidate.  Such distribution and liquidation will
              be accomplished, with respect to each class of the Acquired Fund's
              shares, by the transfer of the Acquiring Fund Shares then credited
              to the account of the Acquired  Fund on the books of the Acquiring
              Fund to open accounts on the share  records of the Acquiring  Fund
              in the names of the Acquired Fund Shareholders.  The aggregate net
              asset  value of Class A, B, and C  Acquiring  Fund Shares to be so
              credited to Class A, B, and C Acquired  Fund  Shareholders  shall,
              with respect to each class,  be equal to the  aggregate  net asset
              value of the Acquired Fund shares of that same class owned by such
              shareholders  on the  Closing  Date.  All issued  and  outstanding
              shares of the Acquired Fund will simultaneously be canceled on the
              books  of  the  Acquired   Fund,   although   share   certificates
              representing interests in Class A, B, and C shares of the Acquired
              Fund will  represent a number of the same class of Acquiring  Fund
              Shares after the Closing Date,  as  determined in accordance  with
              Section  2.3.  The  Acquiring  Fund  shall not issue  certificates
              representing  the  Class  A, B, and C  Acquiring  Fund  Shares  in
              connection with such exchange.

       1.5    Ownership of  Acquiring  Fund Shares will be shown on the books of
              the Acquiring Fund's transfer agent.  Shares of the Acquiring Fund
              will be issued in the manner  described  in the  Acquiring  Fund's
              then-current prospectus and statement of additional information.

       1.6    Any reporting  responsibility of the Acquired Fund including,  but
              not  limited  to,  the  responsibility  for  filing of  regulatory
              reports,  tax returns,  or other documents with the Securities and
              Exchange  Commission  (the  "Commission"),  any  state  securities
              commission, and any federal, state or local tax authorities or any
              other  relevant  regulatory  authority,  is and shall  remain  the
              responsibility of the Acquired Fund.

2.     VALUATION

       2.1    The value of the  Acquired  Fund's  assets to be  acquired  by the
              Acquiring  Fund  hereunder  shall  be the  value  of  such  assets
              computed as of immediately  after the close of business of the New
              York Stock Exchange and after the  declaration of any dividends on
              the Closing Date (such time and date being hereinafter  called the
              "Valuation Date"), using the valuation procedures set forth in the
              Company's Articles of Incorporation,  as amended (the "Articles of
              Incorporation"),  and the then-current  prospectus or statement of
              additional  information  with respect to the Acquiring  Fund,  and
              valuation  procedures   established  by  the  Company's  Board  of
              Directors.

       2.2    The net asset  value of a Class A, B, and C  Acquiring  Fund Share
              shall be the net asset value per share  computed  with  respect to
              that class as of  immediately  after the close of  business of the
              New York Stock Exchange and after the declaration of any dividends
              on the Valuation Date, using the valuation procedures set forth in
              the  Company's  Articles  of  Incorporation  and the  then-current
              prospectus or statement of additional  information with respect to
              the Acquiring  Fund, and valuation  procedures  established by the
              Company's Board of Directors.

       2.3    The number of the Class A, B, and C  Acquiring  Fund  Shares to be
              issued (including  fractional  shares, if any) in exchange for the
              Acquired  Fund's assets shall be  determined  with respect to each
              such class by dividing the value of the net assets with respect to
              the Class A, B, and C shares of the Acquired Fund, as the case may
              be, determined using the same valuation  procedures referred to in
              paragraph  2.1, by the net asset value of an Acquiring Fund Share,
              determined in accordance with paragraph 2.2.

       2.4    All  computations  of  value  shall  be  made  by   the  Acquiring
              Fund's designated record keeping agent.

3.     CLOSING AND CLOSING DATE

       3.1    The Closing Date shall be August 31,  2002,  or such other date as
              the parties may agree to in writing.  All acts taking place at the
              Closing  shall  be  deemed  to  take  place  simultaneously  as of
              immediately after the close of business on the Closing Date unless
              otherwise  agreed to by the parties.  The close of business on the
              Closing Date shall be as of 4:00 p.m.,  Eastern Time.  The Closing
              shall be held at the  offices of the Company or at such other time
              and/or  place as the Board of Directors or officers of the Company
              may designate.

       3.2    The Company  shall direct UMB Bank,  N.A.,  as  custodian  for the
              Acquired Fund (the  "Custodian"),  to deliver,  at the Closing,  a
              certificate of an authorized officer stating that (i) the Acquired
              Fund's portfolio securities, cash, and any other assets ("Assets")
              shall have been  delivered  in proper form to the  Acquiring  Fund
              within two business days prior to or on the Closing Date, and (ii)
              all necessary taxes in connection with the delivery of the Assets,
              including all applicable  federal and state stock transfer stamps,
              if any, have been paid or provision for payment has been made. The
              Acquired Fund's portfolio securities  represented by a certificate
              or other written  instrument shall be transferred and delivered by
              the  Acquired  Fund as of the Closing  Date for the account of the
              Acquiring  Fund duly  endorsed in proper form for transfer in such
              condition as to  constitute  good delivery  thereof.  The Acquired
              Fund shall direct the  Custodian to deliver  portfolio  securities
              and instruments deposited with a securities depository, as defined
              in Rule 17f-4 under the Investment Company Act of 1940, as amended
              (the  "1940  Act")  as of  the  Closing  Date  by  book  entry  in
              accordance with the customary  practices of such  depositories and
              the custodian for Acquiring Fund.

       3.3    Security  Management  Company,  LLC,  as  transfer  agent  for the
              Acquired Fund (the "Transfer Agent"),  shall deliver, on behalf of
              the Acquired  Fund, at the Closing a certificate  of an authorized
              officer  stating that its records  contain the names and addresses
              of the Acquired Fund  Shareholders  and the number and  percentage
              ownership  of  outstanding  Class A, B, and C shares owned by each
              such shareholder immediately prior to the Closing.

       3.4    In the event  that on the  Valuation  Date (a) the New York  Stock
              Exchange  or  another   primary   trading   market  for  portfolio
              securities  of the  Acquiring  Fund or the Acquired  Fund shall be
              closed to trading or trading thereupon shall be restricted, or (b)
              trading or the  reporting of trading on such Exchange or elsewhere
              shall  be  disrupted  so that,  in the  judgment  of the  Board of
              Directors of the Company,  accurate  appraisal of the value of the
              net  assets  of  the  Acquiring  Fund  or  the  Acquired  Fund  is
              impracticable, the Closing Date shall be postponed until the first
              business  day after the day when  trading  shall  have been  fully
              resumed and reporting shall have been restored.

4.     REPRESENTATIONS AND WARRANTIES

       4.1    The  Company,  on  behalf  of  the  Acquired  Fund, represents and
              warrants to the Acquiring Fund as follows:

              (a)    The  Acquired  Fund is duly  organized  as a series  of the
                     Company,  which is a corporation duly organized and validly
                     existing under the laws of the State of Kansas,  with power
                     under the Company's Articles of Incorporation to own all of
                     its  properties  and assets and to carry on its business as
                     it is now being conducted;

              (b)    The Company is a registered  investment  company classified
                     as a  management  company  of the  open-end  type,  and its
                     registration  with the Commission as an investment  company
                     under  the 1940 Act,  and the  registration  of its  shares
                     under the  Securities Act of 1933, as amended ("1933 Act"),
                     are in full force and effect;

              (c)    No consent, approval,  authorization, or order of any court
                     or governmental  authority is required for the consummation
                     by  the  Acquired  Fund  of the  transactions  contemplated
                     herein,  except such as have been  obtained  under the 1933
                     Act, the  Securities  Exchange Act of 1934, as amended (the
                     "1934  Act") and the 1940 Act,  and such as may be required
                     by state securities laws;

              (d)    The  current   prospectus   and   statement  of  additional
                     information  of the Acquired Fund and each  prospectus  and
                     statement of  additional  information  of the Acquired Fund
                     used  during the three  years  previous to the date of this
                     Plan  conforms or  conformed  at the time of its use in all
                     material  respects to the  applicable  requirements  of the
                     1933 Act and the 1940 Act and the rules and  regulations of
                     the  Commission  thereunder  and does not or did not at the
                     time of its use include any untrue  statement of a material
                     fact or omit to state  any  material  fact  required  to be
                     stated therein or necessary to make the statements therein,
                     in light of the  circumstances  under which they were made,
                     not materially misleading;

              (e)    On the Closing  Date,  the Acquired Fund will have good and
                     marketable  title  to  the  Acquired  Fund's  assets  to be
                     transferred to the Acquiring Fund pursuant to paragraph 1.2
                     and full  right,  power,  and  authority  to sell,  assign,
                     transfer  and  deliver  such assets  hereunder  free of any
                     liens or other encumbrances,  and upon delivery and payment
                     for such assets,  the Acquiring  Fund will acquire good and
                     marketable title thereto, subject to no restrictions on the
                     full transfer thereof, including such restrictions as might
                     arise under the 1933 Act,  other than as  disclosed  to the
                     Acquiring Fund;

              (f)    The  Acquired  Fund  is  not  engaged  currently,  and  the
                     execution,  delivery and  performance of this Plan will not
                     result,  in  (i) a  material  violation  of  the  Company's
                     Articles of  Incorporation  or By-Laws or of any agreement,
                     indenture, instrument, contract, lease or other undertaking
                     to  which  the  Acquired  Fund is a party or by which it is
                     bound, or (ii) the  acceleration of any obligation,  or the
                     imposition of any penalty, under any agreement,  indenture,
                     instrument,  contract,  lease,  judgment or decree to which
                     the Acquired Fund is a party or by which it is bound;

              (g)    The  Acquired  Fund  has no  material  contracts  or  other
                     commitments  (other than this Plan) that will be terminated
                     with liability to it prior to the Closing Date;

              (h)    Except as otherwise disclosed in writing to and accepted by
                     the  Acquiring   Fund,  no  litigation  or   administrative
                     proceeding  or  investigation  of or  before  any  court or
                     governmental   body  is   presently   pending  or,  to  its
                     knowledge,  threatened  against the Acquired Fund or any of
                     its  properties  or assets that,  if adversely  determined,
                     would   materially  and  adversely   affect  its  financial
                     condition or the conduct of its business. The Acquired Fund
                     knows of no  facts  which  might  form  the  basis  for the
                     institution  of such  proceedings  and is not a party to or
                     subject to the provisions of any order,  decree or judgment
                     of any court or  governmental  body  which  materially  and
                     adversely affects its business or its ability to consummate
                     the transactions herein contemplated;

              (i)    The financial statements of the Acquired Fund as of and for
                     the year  ended  September  30,  2001 have been  audited by
                     Ernst  &  Young,   LLP,   independent   accountants.   Such
                     statements  are in accordance  with  accounting  principles
                     generally   accepted   in  the   United   States   ("GAAP")
                     consistently  applied, and such statements (copies of which
                     have been furnished to the Acquiring  Fund) present fairly,
                     in all material  respects,  the financial  condition of the
                     Acquired Fund as of such date in accordance  with GAAP, and
                     there are no known  contingent  liabilities of the Acquired
                     Fund  required to be reflected  on the balance  sheet or in
                     the notes thereto;

              (j)    Since  September 30, 2001,  there has not been any material
                     adverse change in the Acquired Fund's financial  condition,
                     assets,   liabilities  or  business,   other  than  changes
                     occurring  in  the  ordinary  course  of  business,  or any
                     incurrence  by the Acquired Fund of  indebtedness  maturing
                     more  than one year  from the date  such  indebtedness  was
                     incurred,  except as otherwise disclosed to and accepted by
                     the Acquiring  Fund. For the purposes of this  subparagraph
                     (j), a decline in net asset value per share of the Acquired
                     Fund due to declines in market  values of securities in the
                     Acquired Fund's  portfolio,  the discharge of Acquired Fund
                     liabilities,  or the  redemption of Acquired Fund shares by
                     shareholders  of the Acquired  Fund shall not  constitute a
                     material adverse change;

              (k)    On the Closing Date,  all Federal and other tax returns and
                     reports of the Acquired  Fund  required by law to have been
                     filed by such date  (including any  extensions)  shall have
                     been  filed  and  are or will be  correct  in all  material
                     respects,  and all  Federal and other taxes shown as due or
                     required  to be shown as due on said  returns  and  reports
                     shall have been paid or provision  shall have been made for
                     the payment thereof, and to the best of the Acquired Fund's
                     knowledge,  no such return is currently  under audit and no
                     assessment has been asserted with respect to such returns;

              (l)    For  each  taxable  year of its  operation  (including  the
                     taxable year ending on the Closing Date), the Acquired Fund
                     has met the  requirements  of  Subchapter M of the Code for
                     qualification  as a  regulated  investment  company and has
                     elected to be treated as such, has been eligible to and has
                     computed  its Federal  income tax under  Section 852 of the
                     Code,  and  will  have  distributed  all of its  investment
                     company  taxable income and net capital gain (as defined in
                     the Code) that has accrued  through the Closing  Date,  and
                     before  the  Closing  Date  will  have  declared  dividends
                     sufficient  to  distribute  all of its  investment  company
                     taxable  income and net capital gain for the period  ending
                     on the Closing Date;

              (m)    All issued and outstanding shares of the Acquired Fund are,
                     and on the Closing  Date will be,  duly and validly  issued
                     and  outstanding,  fully  paid  and  non-assessable  by the
                     Company  and have been  offered and sold in every state and
                     the  District  of Columbia in  compliance  in all  material
                     respects with applicable  registration  requirements of the
                     1933 Act and state  securities  laws. All of the issued and
                     outstanding  shares of the Acquired  Fund will, at the time
                     of  Closing,  be held by the persons and in the amounts set
                     forth in the records of the  Transfer  Agent,  on behalf of
                     the  Acquired  Fund,  as provided  in  paragraph  3.3.  The
                     Acquired  Fund  does  not  have  outstanding  any  options,
                     warrants or other rights to  subscribe  for or purchase any
                     of  the  shares  of  the  Acquired   Fund,   nor  is  there
                     outstanding  any  security  convertible  into  any  of  the
                     Acquired Fund shares;

              (n)    The  adoption and  performance  of this Plan will have been
                     duly authorized  prior to the Closing Date by all necessary
                     action,  if  any,  on  the  part  of the  Directors  of the
                     Company,  and,  subject to the approval of the shareholders
                     of the Acquired Fund, this Plan will constitute a valid and
                     binding  obligation of the Acquired  Fund,  enforceable  in
                     accordance with its terms,  subject, as to enforcement,  to
                     bankruptcy,  insolvency,  reorganization,   moratorium  and
                     other laws relating to or affecting  creditors'  rights and
                     to general equity principles;

              (o)    The  information  to be furnished by the Acquired  Fund for
                     use in registration  statements,  proxy materials and other
                     documents  filed or to be filed with any federal,  state or
                     local   regulatory   authority   (including   the  National
                     Association  of  Securities  Dealers,  Inc.),  which may be
                     necessary in connection with the transactions  contemplated
                     hereby,  shall be accurate  and  complete  in all  material
                     respects  and shall comply in all  material  respects  with
                     Federal   securities   and  other   laws  and   regulations
                     thereunder applicable thereto.

       4.2    The  Company,  on  behalf  of  the  Acquiring Fund, represents and
              warrants to the Acquired Fund as follows:

              (a)    The  Acquiring  Fund is duly  organized  as a series of the
                     Company,  which is a corporation duly organized and validly
                     existing under the laws of the State of Kansas,  with power
                     under the Company's Articles of Incorporation to own all of
                     its  properties  and assets and to carry on its business as
                     it is now being conducted;

              (b)    The Company is a registered  investment  company classified
                     as a  management  company  of the  open-end  type,  and its
                     registration  with the Commission as an investment  company
                     under the 1940 Act and the registration of its shares under
                     the 1933 Act,  including the shares of the Acquiring  Fund,
                     are in full force and effect;

              (c)    No consent, approval,  authorization, or order of any court
                     or governmental  authority is required for the consummation
                     by the  Acquiring  Fund  of the  transactions  contemplated
                     herein,  except such as have been  obtained  under the 1933
                     Act,  the  1934  Act and the  1940  Act and  such as may be
                     required by state securities laws;

              (d)    The  current   prospectus   and   statement  of  additional
                     information of the Acquiring  Fund and each  prospectus and
                     statement of additional  information  of the Acquiring Fund
                     used  during the three  years  previous to the date of this
                     Plan  conforms or  conformed  at the time of its use in all
                     material  respects to the  applicable  requirements  of the
                     1933 Act and the 1940 Act and the rules and  regulations of
                     the  Commission  thereunder  and does not or did not at the
                     time of its use include any untrue  statement of a material
                     fact or omit to state  any  material  fact  required  to be
                     stated therein or necessary to make the statements therein,
                     in light of the  circumstances  under which they were made,
                     not materially misleading;

              (e)    On the Closing Date,  the Acquiring Fund will have good and
                     marketable  title to the Acquiring  Fund's assets,  free of
                     any  liens of other  encumbrances,  except  those  liens or
                     encumbrances  as to which the  Acquired  Fund has  received
                     notice  and  necessary  documentation  at or  prior  to the
                     Closing;

              (f)    The  Acquiring  Fund  is not  engaged  currently,  and  the
                     execution,  delivery and  performance of this Plan will not
                     result,  in  (i) a  material  violation  of  the  Company's
                     Articles of  Incorporation  or By-Laws or of any agreement,
                     indenture, instrument, contract, lease or other undertaking
                     to which  the  Acquiring  Fund is a party or by which it is
                     bound, or (ii) the  acceleration of any obligation,  or the
                     imposition of any penalty, under any agreement,  indenture,
                     instrument,  contract,  lease,  judgment or decree to which
                     the Acquiring Fund is a party or by which it is bound;

              (g)    Except as otherwise disclosed in writing to and accepted by
                     the  Acquired   Fund,  no   litigation  or   administrative
                     proceeding  or  investigation  of or  before  any  court or
                     governmental   body  is   presently   pending  or,  to  its
                     knowledge,  threatened against the Acquiring Fund or any of
                     its  properties  or assets that,  if adversely  determined,
                     would   materially  and  adversely   affect  its  financial
                     condition  or the conduct of its  business.  The  Acquiring
                     Fund knows of no facts  which  might form the basis for the
                     institution  of such  proceedings  and is not a party to or
                     subject to the provisions of any order,  decree or judgment
                     of any court or  governmental  body  which  materially  and
                     adversely affects its business or its ability to consummate
                     the transactions herein contemplated;

              (h)    The financial  statements  of the Acquiring  Fund as of and
                     for the year ended  September 30, 2001 have been audited by
                     Ernst & Young LLP, independent accountants. Such statements
                     are in accordance with GAAP consistently  applied, and such
                     statements  (copies  of which  have been  furnished  to the
                     Acquired Fund) present  fairly,  in all material  respects,
                     the financial  condition of the  Acquiring  Fund as of such
                     date in  accordance  with  GAAP,  and  there  are no  known
                     contingent liabilities of the Acquiring Fund required to be
                     reflected on the balance sheet or in the notes thereto;

              (i)    Since  September 30, 2001,  there has not been any material
                     adverse change in the Acquiring Fund's financial condition,
                     assets,   liabilities  or  business,   other  than  changes
                     occurring  in  the  ordinary  course  of  business,  or any
                     incurrence by the Acquiring Fund of  indebtedness  maturing
                     more  than one year  from the date  such  indebtedness  was
                     incurred,  except as otherwise disclosed to and accepted by
                     the Acquired Fund. For purposes of this subparagraph (i), a
                     decline in net asset value per share of the Acquiring  Fund
                     due to  declines  in  market  values of  securities  in the
                     Acquiring Fund's portfolio, the discharge of Acquiring Fund
                     liabilities,  or the redemption of Acquiring Fund Shares by
                     shareholders of the Acquiring Fund,  shall not constitute a
                     material adverse change;

              (j)    On the Closing Date,  all Federal and other tax returns and
                     reports of the Acquiring  Fund required by law to have been
                     filed by such date  (including any  extensions)  shall have
                     been  filed  and  are or will be  correct  in all  material
                     respects,  and all  Federal and other taxes shown as due or
                     required  to be shown as due on said  returns  and  reports
                     shall have been paid or provision  shall have been made for
                     the  payment  thereof,  and to the  best  of the  Acquiring
                     Fund's  knowledge no such return is  currently  under audit
                     and no  assessment  has been  asserted with respect to such
                     returns;

              (k)    For each taxable year of its operation,  the Acquiring Fund
                     has met the  requirements  of  Subchapter M of the Code for
                     qualification  as a  regulated  investment  company and has
                     elected to be treated as such, has been eligible to and has
                     computed  its Federal  income tax under  Section 852 of the
                     Code, has distributed all of its investment company taxable
                     income and net  capital  gain (as  defined in the Code) for
                     periods  ending prior to the Closing  Date,  and will do so
                     for the taxable year including the Closing Date;

              (l)    All issued and  outstanding  Acquiring Fund Shares are, and
                     on the Closing  Date will be,  duly and validly  issued and
                     outstanding,  fully paid and  non-assessable by the Company
                     and have  been  offered  and sold in  every  state  and the
                     District of Columbia in compliance in all material respects
                     with applicable  registration  requirements of the 1933 Act
                     and state securities laws. The Acquiring Fund does not have
                     outstanding  any  options,  warrants  or  other  rights  to
                     subscribe for or purchase any Acquiring Fund Shares, nor is
                     there   outstanding  any  security   convertible  into  any
                     Acquiring Fund Shares;

              (m)    The  adoption and  performance  of this Plan will have been
                     fully authorized prior to the Closing Date by all necessary
                     action, if any, on the part of the Directors of the Company
                     on  behalf  of  the  Acquiring  Fund  and  this  Plan  will
                     constitute a valid and binding  obligation of the Acquiring
                     Fund, enforceable in accordance with its terms, subject, as
                     to enforcement, to bankruptcy, insolvency,  reorganization,
                     moratorium   and  other  laws   relating  to  or  affecting
                     creditors' rights and to general equity principles;

              (n)    The Class A, B, and C  Acquiring  Fund  Shares to be issued
                     and delivered to the Acquired  Fund, for the account of the
                     Acquired Fund  Shareholders,  pursuant to the terms of this
                     Plan,  will on the Closing  Date have been duly  authorized
                     and, when so issued and delivered, will be duly and validly
                     issued  Acquiring  Fund Shares,  and will be fully paid and
                     non-assessable by the Company;

              (o)    The  information  to be furnished by the Acquiring Fund for
                     use in the  registration  statements,  proxy  materials and
                     other  documents  that may be necessary in connection  with
                     the transactions  contemplated hereby shall be accurate and
                     complete in all  material  respects and shall comply in all
                     material  respects with Federal  securities  and other laws
                     and regulations applicable thereto; and

              (p)    That  insofar as it  relates  to  Company or the  Acquiring
                     Fund, the Registration  Statement relating to the Acquiring
                     Fund Shares issuable hereunder,  and the proxy materials of
                     the  Acquired  Fund  to be  included  in  the  Registration
                     Statement,   and  any   amendment  or   supplement  to  the
                     foregoing,   will,   from   the   effective   date  of  the
                     Registration  Statement  through the date of the meeting of
                     shareholders of the Acquired Fund contemplated  therein (i)
                     not contain any untrue statement of a material fact or omit
                     to state a material fact  required to be stated  therein or
                     necessary to make the statements  therein,  in light of the
                     circumstances  under which such  statements  were made, not
                     materially   misleading   provided,   however,   that   the
                     representations  and  warranties in this  subparagraph  (p)
                     shall  not apply to  statements  in or  omissions  from the
                     Registration   Statement  made  in  reliance  upon  and  in
                     conformity  with  information  that  was  furnished  by the
                     Acquired  Fund  for use  therein,  and (ii)  comply  in all
                     material  respects with the provisions of the 1933 Act, the
                     1934  Act and the 1940 Act and the  rules  and  regulations
                     thereunder.

5.     COVENANTS OF THE ACQUIRING FUND AND THE ACQUIRED FUND

       5.1    The  Acquiring  Fund and the  Acquired  Fund each will operate its
              business in the  ordinary  course  between the date hereof and the
              Closing Date,  it being  understood  that such ordinary  course of
              business  will  include the  declaration  and payment of customary
              dividends and  distributions,  and any other distribution that may
              be advisable.

       5.2    To the extent  required by applicable law, the Company will call a
              meeting of the  shareholders  of the Acquired Fund to consider and
              act upon  this  Plan and to take all  other  action  necessary  to
              obtain approval of the transactions contemplated herein.

       5.3    The Acquired Fund  covenants  that the Class A, B, and C Acquiring
              Fund Shares to be issued  hereunder are not being acquired for the
              purpose  of  making  any  distribution  thereof,   other  than  in
              accordance with the terms of this Plan.

       5.4    The Acquired Fund will assist the Acquiring Fund in obtaining such
              information as the Acquiring Fund reasonably  requests  concerning
              the beneficial ownership of the Acquired Fund shares.

       5.5    Subject to the provisions of this Plan, the Acquiring Fund and the
              Acquired  Fund will each take,  or cause to be taken,  all action,
              and do or cause  to be  done,  all  things  reasonably  necessary,
              proper  or  advisable  to  consummate   and  make   effective  the
              transactions contemplated by this Plan.

       5.6    As  soon as is  reasonably  practicable  after  the  Closing,  the
              Acquired  Fund  will  make  a  liquidating   distribution  to  its
              shareholders  consisting  of the Class A, B, and C Acquiring  Fund
              Shares received at the Closing.

       5.7    The  Acquiring  Fund  and the  Acquired  Fund  shall  each use its
              reasonable  best efforts to fulfill or obtain the  fulfillment  of
              the conditions  precedent to effect the transactions  contemplated
              by this Plan as promptly as practicable.

       5.8    The Acquired Fund  covenants  that it will,  from time to time, as
              and when reasonably  requested by the Acquiring Fund,  execute and
              deliver or cause to be executed and delivered all such assignments
              and other  instruments,  and will  take or cause to be taken  such
              further action as the Acquiring Fund may reasonably deem necessary
              or desirable in order to vest in and confirm the Acquiring  Fund's
              title to and  possession  of all the assets and otherwise to carry
              out the intent and purpose of this Plan.

       5.9    The Acquiring Fund will use all  reasonable  efforts to obtain the
              approvals  and  authorizations  required by the 1933 Act, the 1940
              Act and such of the state  blue sky or  securities  laws as may be
              necessary  in order to continue its  operations  after the Closing
              Date.

6.     CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRED FUND

       The  obligations  of the Acquired  Fund to  consummate  the  transactions
       provided for herein shall be subject, at the Acquired Fund's election, to
       the  performance  by the  Acquiring  Fund  of all the  obligations  to be
       performed by it hereunder on or before the Closing Date, and, in addition
       thereto, the following further conditions:

       6.1    All  representations  and warranties of the Acquiring Fund and the
              Company  contained  in this Plan shall be true and  correct in all
              material respects as of the date hereof and, except as they may be
              affected by the transactions  contemplated by this Plan, as of the
              Closing Date,  with the same force and effect as if made on and as
              of the Closing Date;

       6.2    The Company and the Acquiring Fund shall have performed all of the
              covenants and complied with all of the provisions required by this
              Plan to be  performed  or  complied  with by the  Company  and the
              Acquiring Fund on or before the Closing Date; and

       6.3    The Acquired Fund and the Acquiring  Fund shall have agreed on the
              number of full and fractional  Acquiring Fund Shares of each Class
              to be issued in  connection  with the  Reorganization  after  such
              number has been calculated in accordance with paragraph 1.1.

7.     CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND

       The  obligations  of the  Acquiring  Fund to  complete  the  transactions
       provided for herein shall be subject,  at the Acquiring  Fund's election,
       to the  performance by the Acquired Fund of all of the  obligations to be
       performed  by it hereunder on or before the Closing Date and, in addition
       thereto, the following conditions:

       7.1    All representations and warranties of the Company and the Acquired
              Fund  contained  in this  Plan  shall be true and  correct  in all
              material respects as of the date hereof and, except as they may be
              affected by the transactions  contemplated by this Plan, as of the
              Closing Date,  with the same force and effect as if made on and as
              of the Closing Date;

       7.2    The Company and the Acquired Fund shall have  performed all of the
              covenants and complied with all of the provisions required by this
              Plan  to be  performed  or  complied  with by the  Company  or the
              Acquired Fund on or before the Closing Date;

       7.3    The Acquired Fund and the Acquiring  Fund shall have agreed on the
              number of full and fractional  Acquiring Fund Shares of each Class
              to be issued in  connection  with the  Reorganization  after  such
              number has been calculated in accordance with paragraph 1.1;

       7.4    The Acquired Fund shall have declared and paid a  distribution  or
              distributions  prior  to  the  Closing  that,  together  with  all
              previous  distributions,  shall have the effect of distributing to
              its shareholders (i) all of its investment  company taxable income
              and all of its net realized  capital gains, if any, for the period
              from the close of its last taxable year to 4:00 p.m.  Eastern Time
              on the  Closing;  and (ii) any  undistributed  investment  company
              taxable  income and net realized  capital gains from any period to
              the extent not otherwise already distributed.

8.     FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND AND THE
       ACQUIRED FUND

       If any of the  conditions  set forth  below do not exist on or before the
       Closing Date with respect to the Acquired Fund or the Acquiring Fund, the
       other  party to this  Plan  shall,  at its  option,  not be  required  to
       consummate the transactions contemplated by this Plan:

       8.1    The Plan and the transactions  contemplated herein shall have been
              approved  by the  requisite  vote,  if any,  of the holders of the
              outstanding  shares of the Acquired  Fund in  accordance  with the
              provisions of the Company's  Articles of  Incorporation,  By-Laws,
              applicable  Kansas law and the 1940 Act, and  certified  copies of
              the resolutions evidencing such approval shall have been delivered
              to the  Acquiring  Fund.  Notwithstanding  anything  herein to the
              contrary,  neither the  Acquiring  Fund nor the Acquired  Fund may
              waive the conditions set forth in this paragraph 8.1;

       8.2    On the Closing Date, no action,  suit or other proceeding shall be
              pending  or,  to its  knowledge,  threatened  before  any court or
              governmental agency in which it is sought to restrain or prohibit,
              or obtain damages or other relief in connection with, this Plan or
              the transactions contemplated herein;

       8.3    All consents of other parties and all other  consents,  orders and
              permits of Federal,  state and local regulatory authorities deemed
              necessary by the  Acquiring  Fund or the  Acquired  Fund to permit
              consummation,  in  all  material  respects,  of  the  transactions
              contemplated hereby shall have been obtained, except where failure
              to obtain any such  consent,  order or permit  would not involve a
              risk of a material  adverse  effect on the assets or properties of
              the  Acquiring  Fund or the Acquired  Fund,  provided  that either
              party hereto may for itself waive any of such conditions;

       8.4    The  Registration  Statement shall have become effective under the
              1933 Act and no stop orders suspending the  effectiveness  thereof
              shall have been issued and, to the best  knowledge  of the parties
              hereto, no investigation or proceeding for that purpose shall have
              been instituted or be pending,  threatened or  contemplated  under
              the 1933 Act; and

       8.5    Dechert  shall  deliver  an  opinion   addressed  to  the  Company
              substantially  to the  effect  that,  based  upon  certain  facts,
              assumptions, and representations,  the transaction contemplated by
              this Plan shall constitute a tax-free  reorganization  for Federal
              income tax purposes,  unless, based on the circumstances  existing
              at  the  time  of  the  Closing,   Dechert   determines  that  the
              transaction  contemplated  by this Plan does not  qualify as such.
              The  delivery  of such  opinion  is  conditioned  upon  receipt by
              Dechert  of  representations  it  shall  request  of the  Company.
              Notwithstanding  anything herein to the contrary,  the Company may
              not waive the condition set forth in this paragraph 8.5.

9.     BROKERAGE FEES AND EXPENSES

       9.1    The Acquiring Fund represents and warrants to the other that there
              are no brokers or finders  entitled  to receive  any  payments  in
              connection with the transactions provided for herein.

       9.2    The expenses relating to the proposed  Reorganization will be paid
              by the Acquired  Fund and the  Acquiring  Fund pro rata based upon
              the  relative  net assets of the Funds as of the close of business
              on  the  record  date  for  determining  the  shareholders  of the
              Acquired Fund entitled to vote on the Reorganization. The costs of
              the  Reorganization  shall  include,  but not be limited to, costs
              associated  with  obtaining any necessary  order of exemption from
              the 1940 Act, preparation of the Registration Statement,  printing
              and distributing the Acquiring Fund's  prospectus and the Acquired
              Fund's proxy materials,  legal fees,  accounting fees,  securities
              registration  fees,  and  expenses  of holding  the  shareholders'
              meeting.  Notwithstanding  any of the foregoing,  expenses will in
              any event be paid by the party directly incurring such expenses if
              and to the  extent  that the  payment  by the other  party of such
              expenses would result in the  disqualification  of such party as a
              "regulated  investment  company" within the meaning of Section 851
              of the Code.

10.    ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES

       The  representations,  warranties and covenants contained in this Plan or
       in any document delivered pursuant hereto or in connection herewith shall
       survive the consummation of the transactions  contemplated hereunder. The
       covenants to be performed after the Closing shall survive the Closing.

11.    TERMINATION

       This Plan and the transactions  contemplated hereby may be terminated and
       abandoned by resolution  of the Board of Directors,  at any time prior to
       the Closing Date, if circumstances should develop that, in the opinion of
       the Board, make proceeding with the Plan inadvisable.

12.    AMENDMENTS

       This Plan may be amended,  modified or supplemented in such manner as may
       be set  forth in  writing  by the  authorized  officers  of the  Company;
       provided,  however, that following any meeting of the shareholders called
       by the  Acquired  Fund  pursuant to paragraph  5.2 of this Plan,  no such
       amendment may have the effect of changing the provisions for  determining
       the number of the Class A, B, or C Acquiring  Fund Shares to be issued to
       the Acquired Fund  Shareholders  under this Plan to the detriment of such
       shareholders without their further approval.

13.    HEADINGS; GOVERNING LAW; ASSIGNMENT; LIMITATION OF LIABILITY

       13.1   The Article and paragraph  headings contained in this Plan are for
              reference  purposes  only  and  shall  not  affect  in any way the
              meaning or interpretation of this Plan.

       13.2   This Plan shall be governed by and  construed in  accordance  with
              the laws of the State of Kansas  without  regard to its principles
              of conflicts of laws.

       13.3   This Plan  shall  bind and  inure to the  benefit  of the  parties
              hereto  and  their  respective  successors  and  assigns,  but  no
              assignment  or  transfer  hereof or of any  rights or  obligations
              hereunder  shall be made by any party without the written  consent
              of the  other  party.  Nothing  herein  expressed  or  implied  is
              intended or shall be  construed to confer upon or give any person,
              firm or  corporation,  other  than the  parties  hereto  and their
              respective successors and assigns, any rights or remedies under or
              by reason of this Plan.

       13.4   It is  expressly  agreed  that  the  obligations  of  the  parties
              hereunder  shall  not  be  binding  upon  any  of  the  Directors,
              shareholders,  nominees,  officers,  agents,  or  employees of the
              Company  personally,  but shall bind only  property of such party.
              The execution and delivery by such officers shall not be deemed to
              have  been  made  by any of them  individually  or to  impose  any
              liability  on any of them  personally,  but  shall  bind  only the
              property of each party.

IN WITNESS  WHEREOF,  the Board of Directors of the Company has caused this Plan
to be approved on behalf of the Acquiring Fund and the Acquired Fund.

                                        SECURITY EQUITY FUND


                                        By:
                                           -------------------------------------
                                        Name:
                                        Title:



                                   APPENDIX B

The  following is a list of the current  funds in the  Security  Group of Mutual
Funds and the classes of shares that are currently offered by each fund:

- --------------------------------------------- -------------------
FUND                                           CLASSES OFFERED
- --------------------------------------------- -------------------
Security Equity Fund                             A, B, and C
- --------------------------------------------- -------------------
Security Global Fund                             A, B, and C
- --------------------------------------------- -------------------
Security International Fund                      A, B, and C
- --------------------------------------------- -------------------
Security Mid Cap Value Fund                      A, B, and C
- --------------------------------------------- -------------------
Security Small Cap Growth Fund                   A, B, and C
- --------------------------------------------- -------------------
Security Enhanced Index Fund                     A, B, and C
- --------------------------------------------- -------------------
Security Select 25 Fund                          A, B, and C
- --------------------------------------------- -------------------
Security Social Awareness Fund                   A, B, and C
- --------------------------------------------- -------------------
Security Technology Fund                         A, B, and C
- --------------------------------------------- -------------------
Security Ultra Fund                              A, B, and C
- --------------------------------------------- -------------------
Security Growth and Income Fund                  A, B, and C
- --------------------------------------------- -------------------
Security Diversified Income Fund                 A, B, and C
- --------------------------------------------- -------------------
Security Municipal Bond Fund                     A, B, and C
- --------------------------------------------- -------------------
Security High Yield Fund                         A, B, and C
- --------------------------------------------- -------------------
Security Cash Fund                                    A
- --------------------------------------------- -------------------
Security Capital Preservation Fund               A, B, and C
- --------------------------------------------- -------------------



                                   APPENDIX C

As of June 24, 2002, the following persons owned beneficially or of record 5% or
more of the outstanding shares of the Equity Fund:

- ------------------------------- ------- ---------------------- -------------------------
                                           % OF EQUITY FUND         % OF EQUITY FUND
    NAME AND ADDRESS             CLASS   BEFORE REORGANIZATION    AFTER REORGANIZATION
- ------------------------------- ------- ---------------------- -------------------------

- ------------------------------- ------- ---------------------- -------------------------

- ------------------------------- ------- ---------------------- -------------------------

- -------------------------------------- ------- ------------------------ ----------------

As of June 24, 2002, the following persons owned beneficially or of record 5% or
more of the outstanding shares of the Total Return Fund:

- ------------------------------- ------- ---------------------- -------------------------
                                           % OF RETURN FUND         % OF RETURN FUND
    NAME AND ADDRESS             CLASS   BEFORE REORGANIZATION    AFTER REORGANIZATION
- ------------------------------- ------- ---------------------- -------------------------

- ------------------------------- ------- ---------------------- -------------------------

- ------------------------------- ------- ---------------------- -------------------------

- -------------------------------------- ------- ------------------------ ----------------



                    SECURITY EQUITY FUND, TOTAL RETURN SERIES

         PROXY FOR A SPECIAL MEETING OF SHAREHOLDERS ON AUGUST 20, 2002
           THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned  hereby  appoint(s)  James R. Schmank,  Donald Chubb and John D.
Cleland or any one or more of them, proxies, with full power of substitution, to
vote all shares of the Security  Equity Fund,  Total Return  Series (the "Fund")
which the undersigned is entitled to vote at the Special Meeting of Shareholders
of the Fund to be held at the offices of the Fund at One Security Benefit Place,
Topeka,  Kansas 66636,  on August 20, 2002 at 9:30 a.m.,  local time, and at any
adjournment thereof.

This proxy will be voted as instructed.  If no  specification is made, the proxy
will be voted "FOR" the proposals.

Please  vote,  date and sign this proxy and return it promptly  in the  enclosed
envelope.

Please indicate your vote by an "x" in the appropriate box below.

PROXY VOTING INSTRUCTIONS

THE SECURITY  BENEFIT GROUP OF COMPANIES  ENCOURAGES  ALL  SHAREHOLDERS  TO VOTE
THEIR PROXIES. WE NOW PROVIDE THREE CONVENIENT METHODS OF VOTING:

1.   PROXY CARD:  COMPLETE, SIGN, DATE AND RETURN THE PROXY CARD ATTACHED BELOW
                  IN THE ENCLOSED POSTAGE-PAID ENVELOPE;
- --------------------------------------------------------------------------------

2.   TELEPHONE:  CALL TOLL-FREE ON A TOUCH-TONE PHONE 1-800-690-6903, 7 DAYS A
                 WEEK, 24 HOURS A DAY; OR
- --------------------------------------------------------------------------------

3.   INTERNET:  LOG ON TO THE WEB SITE www.proxyvote.com.
- --------------------------------------------------------------------------------

IF YOU CHOOSE TO VOTE BY TELEPHONE OR INTERNET,  YOU WILL BE GIVEN  INSTRUCTIONS
AND ASKED TO ENTER THE  TWELVE-DIGIT  CONTROL  NUMBER LOCATED ON THE PROXY CARD.
CHOOSING EITHER OF THESE OPTIONS ELIMINATES THE NEED TO RETURN YOUR PROXY CARD.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE FOLLOWING PROPOSAL:

1.   To approve a Plan of Reorganization providing for the acquisition of all of
     the assets and  liabilities  of the Total Return Fund by the Equity Fund of
     Security  Equity  Fund solely in  exchange  for shares of the Equity  Fund,
     followed by the complete liquidation of the Total Return Fund.

            For __            Against __              Abstain __

This  proxy must be signed  exactly as your  name(s)  appears  hereon.  If as an
attorney, executor, guardian or in some representative capacity or as an officer
of a corporation, please add titles as such. Joint owners must each sign.

- -----------------------------------        ------------------------------------
Signature                                  Date

- -----------------------------------        ------------------------------------
Signature (if held jointly)                Date



                                     PART B
                              SECURITY EQUITY FUND

- --------------------------------------------------------------------------------

                       Statement of Additional Information
                                ___________, 2002

- --------------------------------------------------------------------------------

Acquisition of the Assets and Liabilities of   By and in Exchange for Shares of
Total Return Series ("Total Return Fund") of   Equity Series ("Equity Fund") of
Security Equity Fund                           Security Equity Fund
One Security Benefit Place                     One Security Benefit Place
Topeka, Kansas 66636                           Topeka, Kansas 66636

This  Statement of Additional  Information is available to the  Shareholders  of
Total Return Fund in connection with a proposed  transaction  whereby all of the
assets and  liabilities  of Total Return Fund will be transferred to Equity Fund
in exchange for shares of Equity Fund.

This  Statement of  Additional  Information  of the Equity Fund consists of this
cover page and the following  documents,  each of which was filed electronically
with the Securities and Exchange  Commission  and is  incorporated  by reference
herein:

1.   The  Statement of Additional  Information  for Equity Fund and Total Return
     Fund dated February 1, 2002, as supplemented May 1, 2002.

2.   The Financial  Statements of Equity Fund and Total Return Fund are included
     in the  Funds'  Annual  Report  filed  on Form  N-30D  for the  year  ended
     September 30, 2001, Registration No. 2-19458 (filed December 7, 2001).

This Statement of Additional Information is not a prospectus. A Prospectus/Proxy
Statement dated ________,  2002 relating to the  reorganization  of Total Return
Fund may be obtained,  without charge, by writing to Security  Management at One
Security  Benefit Place,  Topeka,  Kansas 66636 or calling (800) 888-2461.  This
Statement  of  Additional  Information  should be read in  conjunction  with the
Prospectus/Proxy Statement.

Pro forma financial  statements of the Funds are not presented as the net assets
of Total  Return  Fund are less than 10 percent of the net assets of Equity Fund
and will represent less than 10 percent of the net assets of the combined Fund.



                                     PART C

                                OTHER INFORMATION

ITEM 15.      INDEMNIFICATION

A policy of insurance covering Security Management  Company,  LLC, its affiliate
Security  Distributors,  Inc.,  and all of the registered  investment  companies
advised by Security Management Company,  LLC insures the Registrant's  directors
and officers  against  liability  arising by reason of an alleged breach of duty
caused by any negligent act, error or accidental  omission in the scope of their
duties.

Article Tenth of Registrant's Articles of Incorporation  provides in provides in
relevant part as follows:

"(5) Each  director and officer (and his heirs,  executors  and  administrators)
shall be indemnified by the Corporation  against  reasonable  costs and expenses
incurred by him in connection with any action, suit or proceeding to which he is
made a party by reason of his being or having  been a Director or officer of the
Corporation,  except in relation to any action,  suit or  proceeding in which he
has been  adjudged  liable  because of  willful  misfeasance,  bad faith,  gross
negligence  or reckless  disregard of the duties  involved in the conduct of his
office. In the absence of an adjudication  which expressly absolves the Director
or officer of  liability  to the  Corporation  or its  stockholders  for willful
misfeasance,  bad faith,  gross  negligence or reckless  disregard of the duties
involved  in the conduct of his office,  or in the event of a  settlement,  each
Director  and officer (and his heirs,  executors  and  administrators)  shall be
indemnified by the Corporation against payment made,  including reasonable costs
and expenses,  provided that such indemnity shall be conditioned  upon a written
opinion of independent  counsel that the Director or officer has no liability by
reason of willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties  involved  in the conduct of his office.  The  indemnity  provided
herein shall, in the event of settlement of any such action, suit or proceeding,
not  exceed the costs and  expenses  (including  attorneys'  fees)  which  would
reasonably  have been  incurred  if such  action,  suit or  proceeding  had been
litigated to a final conclusion. Such a determination by independent counsel and
the payment of amounts by the Corporation on the basis thereof shall not prevent
a  stockholder  from  challenging  such  indemnification  by  appropriate  legal
proceeding  on the grounds  that the officer or Director  was liable  because of
willful  misfeasance,  bad faith,  gross negligence or reckless disregard of the
duties  involved  in the  conduct  of  his  office.  The  foregoing  rights  and
indemnification shall not be exclusive of any other rights to which the officers
and Directors may be entitled according to law."

Article Sixteenth of Registrant's Articles of Incorporation, as amended December
10, 1987, provides as follows:

"A  director  shall  not  be  personally  liable  to the  corporation  or to its
stockholders  for monetary  damages for breach of fiduciary  duty as a director,
provided  that this  sentence  shall not  eliminate nor limit the liability of a
director:

A.   for any breach of his or her duty of loyalty to the  corporation  or to its
     stockholders;
B.   for  acts or  omissions  not in good  faith or  which  involve  intentional
     misconduct or a knowing violation of law;
C.   for an unlawful dividend, stock purchase or redemption under the provisions
     of Kansas Statutes Annotated (K.S.A.) 17-6424 and amendments thereto; or
D.   for any transaction  from which the director  derived an improper  personal
     benefit."

Item  Thirty of  Registrant's  Bylaws,  dated  February  3, 1995,  provides,  in
relevant part, as follows:

"Each person who is or was a Director or officer of the Corporation or is or was
serving at the  request of the  Corporation  as a Director or officer of another
corporation (including the heirs,  executors,  administrators and estate of such
person) shall be indemnified  by the  Corporation as of right to the full extent
permitted or authorized by the laws of the State of Kansas, as now in effect and
is hereafter  amended,  against any liability,  judgment,  fine,  amount paid in
settlement,  cost and expense (including attorneys' fees) asserted or threatened
against and  incurred  by such  person in his/her  capacity as or arising out of
his/her status as a Director or officer of the Corporation or, if serving at the
request of the Corporation, as a Director or officer of another corporation. The
indemnification  provided by this bylaw  provision shall not be exclusive of any
other rights to which those  indemnified  may be entitled  under the Articles of
Incorporation,   under  any  other  bylaw  or  under  any  agreement,   vote  of
stockholders or disinterested directors or otherwise, and shall not limit in any
way any right  which  the  Corporation  may have to make  different  or  further
indemnification  with  respect  to the same or  different  persons or classes of
persons.

No person shall be liable to the Corporation for any loss, damage,  liability or
expense  suffered by it on account of any action taken or omitted to be taken by
him/her as a Director or officer of the Corporation or of any other  corporation
which (s)he  serves as a Director or officer at the request of the  Corporation,
if such  person  (a)  exercised  the same  degree of care and skill as a prudent
person would have exercised  under the  circumstances  in the conduct of his/her
own affairs,  or (b) took or omitted to take such action in reliance upon advice
of counsel for the Corporation, or for such other corporation, or upon statement
made or information furnished by Directors, officers, employees or agents of the
Corporation, or of such other corporation, which (s)he had no reasonable grounds
to disbelieve.

In the event any  provision  of this  section  30 shall be in  violation  of the
Investment  Company  Act of 1940,  as amended,  or of the rules and  regulations
promulgated  thereunder,  such  provisions  shall be void to the  extent of such
violations."

Insofar as  indemnification  for liability  arising under the  Securities Act of
1933 may be permitted to  directors,  officers  and  controlling  persons of the
Registrant pursuant to the foregoing  provisions,  or otherwise,  the Registrant
has been advised that in the opinion of the Securities  and Exchange  Commission
such  indemnification  is against  public policy as expressed in the Act and is,
therefore,  unenforceable. In the event that a claim for indemnification against
such liabilities  (other than the payment by the Registrant of expenses incurred
or paid by a director,  officer or  controlling  person of the Registrant in the
successful  defense of any  action,  suit or  proceeding)  is  asserted  by such
director,  officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been  settled by  controlling  precedent,  submit to a court of  appropriate
jurisdiction the question whether such  indemnification  by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

ITEM 16.      EXHIBITS

  (1)  Articles of Incorporation(a)
  (2)  Bylaws(b)
  (3)  Not Applicable
  (4)  See Appendix A - Form of Plan of Reorganization(c)
  (5)  Certificate of Designation of Series and Classes of Common Stock(a)
  (6)  Investment Management and Services Agreement
  (7)  (a)    Distribution Agreement
       (b)    Class B Distribution Agreement(d)
       (c)    Class C Distribution Agreement(d)
       (d)    Underwriter-Dealer Agreement(a)
  (8)  Not Applicable
  (9)  Form of Custodian Agreement(f)
 (10)  (a)    Class A Distribution Plan
       (b)    Class B Distribution Plan(e)
       (c)    Class C Distribution Plan(e)
       (d)    Brokerage Enhancement Plan(d)
       (e)    Form of Shareholder Service Agreement(f)
       (f)    Security Funds Multiple Class Plan
 (11)  Opinion of Counsel
 (12)  Opinion and Consent of Counsel supporting tax matters and consequences
       (to be filed by amendment)
 (13)  Not applicable.
 (14)  Consent of Independent Auditors
 (15)  Not Applicable
 (16)  Not Applicable
 (17)  Not Applicable

(a)    Incorporated   herein  by  reference  to  the  Exhibits  filed  with  the
       Registrant's  Post-Effective  Amendment No. 90 to Registration  Statement
       No. 2-19458 on Form N-1A as filed on November 20, 2000.

(b)    Incorporated   herein  by  reference  to  the  Exhibits  filed  with  the
       Registrant's  Post-Effective  Amendment No. 86 to Registration  Statement
       No. 2-19458 on Form N-1A as filed on November 29, 1999.

(c)    See Appendix A to the prospectus.

(d)    Incorporated   herein  by  reference  to  the  Exhibits  filed  with  the
       Registrant's  Post-Effective  Amendment No. 89 to Registration  Statement
       No. 2-19458 on Form N-1A as filed on May 1, 2000.

(e)    Incorporated   herein  by  reference  to  the  Exhibits  filed  with  the
       Registrant's  Post-Effective  Amendment No. 92 to Registration  Statement
       No. 2-19458 on Form N-1A as filed on January 15, 2002.

(f)    Incorporated  herein by  reference to the  Exhibits  filed with  Security
       Income Fund's Post-Effective  Amendment No. 71 to Registration  Statement
       No. 2-38414 on Form N-1A as filed on January 11, 2002.

ITEM 17.      UNDERTAKINGS

1.     The undersigned  registrant agrees that prior to any public reoffering of
       the securities registered through the use of a prospectus which is a part
       of this registration statement by any person or party who is deemed to be
       an underwriter within the meaning of Rule 145(c) of the Securities Act 17
       CFR  230.145(c),  the reoffering  prospectus will contain the information
       called for by the applicable registration form for reofferings by persons
       who may be deemed underwriters, in addition to the information called for
       by the other items of the applicable form.

2.     The  undersigned  registrant  agrees that every  prospectus that is filed
       under  paragraph (1) above will be filed as a part of an amendment to the
       registration  statement  and  will not be used  until  the  amendment  is
       effective,  and that, in  determining  any liability  under the 1933 Act,
       each  post-effective  amendment shall be deemed to be a new  registration
       statement for the  securities  offered  therein,  and the offering of the
       securities  at that  time  shall be deemed  to be the  initial  bona fide
       offering of them.

3.     The undersigned registrant undertakes to file a post-effective  amendment
       to this  registration  statement  upon the closing of the  Reorganization
       described  in this  registration  statement  that  contains an opinion of
       counsel  supporting  the  tax  matters  discussed  in  this  registration
       statement.



                                   SIGNATURES

Pursuant to the  requirements  of the  Securities  Act of 1933, as amended,  the
Registrant has duly caused this Registration Statement on Form N-14 to be signed
on its behalf by the  undersigned,  thereunto  duly  authorized,  in the City of
Topeka and State of Kansas on the 3rd day of May, 2002.

SECURITY EQUITY FUND


By:     JAMES R. SCHMANK
        ----------------------------------------------
        James R. Schmank
        President

Pursuant to the  requirements  of the Securities  Act of 1933, as amended,  this
Registration  Statement  has been signed below by the  following  persons in the
capacities and on the date indicated.

             SIGNATURE                                 TITLE                       DATE

JAMES R. SCHMANK                              Director and President
                                           (Principal Executive Officer)       May 3, 2002
- -------------------------------------
James R. Schmank

JOHN D. CLELAND                                       Director                 May 3, 2002
- -------------------------------------
John D. Cleland

DONALD A. CHUBB, JR.                                  Director                 May 3, 2002
- -------------------------------------
Donald A. Chubb, Jr.


PENNY A. LUMPKIN                                      Director                 May 3, 2002
- -------------------------------------
Penny A. Lumpkin

MARK L. MORRIS, JR.                                   Director                 May 3, 2002
- -------------------------------------
Mark L. Morris, Jr.


MAYNARD OLIVERIUS                                     Director                 May 3, 2002
- -------------------------------------
Maynard Oliverius



                                  EXHIBIT INDEX

  (1)  None
  (2)  None
  (3)  None
  (4)  None
  (5)  None
  (6)  Investment Management and Services Agreement
  (7)  (a)    Distribution Agreement
       (b)    None
       (c)    None
       (d)    None
  (8)  None
  (9)  None
 (10)  (a)    Class A Distribution Plan
       (b)    None
       (c)    None
       (d)    None
       (e)    None
       (f)    Security Funds Multiple Class Plan
 (11)  Opinion of Counsel
 (12)  None
 (13)  None
 (14)  Consent of Independent Auditors
 (15)  None
 (16)  None
 (17)  None

EX-99.6

                  INVESTMENT MANAGEMENT AND SERVICES AGREEMENT

This  Agreement,  made and  entered  into this 27th day of  January,  2000,  and
amended and restated  effective as of the 1st day of May,  2002,  by and between
SECURITY  EQUITY  FUND,  a Kansas  corporation  (hereinafter  referred to as the
"Fund"),  and  SECURITY  MANAGEMENT  COMPANY,  LLC, a Kansas  limited  liability
company (hereinafter referred to as "SMC");

WITNESSETH:

WHEREAS, the Fund is engaged in business as an open-end,  management  investment
company registered under the Investment Company Act of 1940 ("1940 Act"); and

WHEREAS,  SMC is willing to provide  investment  research  and  advice,  general
administrative,  fund  accounting,  transfer  agency,  and  dividend  disbursing
services to the Fund on the terms and  conditions  hereinafter  set forth and to
arrange for the  provision  of all other  services  (except  for those  services
specifically  excluded  in  this  Agreement)  required  by the  Fund,  including
custodial, legal, auditing and printing;

NOW,  THEREFORE,  in  consideration  of the premises and mutual  agreements made
herein, the parties agree as follows:

  1.     EMPLOYMENT OF SMC. The Fund hereby employs SMC to (a) act as investment
         adviser to the Fund with respect to the investment of its assets and to
         supervise  and arrange for the purchase of  securities  of the Fund and
         the sales of  securities  held in the  portfolio  of the Fund,  subject
         always to the  supervision  of the Board of Directors of the Fund (or a
         duly  appointed  committee  thereof),  during  the  period and upon and
         subject to the terms and conditions  described herein;  (b) provide the
         Fund with general administrative, fund accounting, transfer agency, and
         dividend  disbursing  services  described  and set forth in  Schedule A
         attached hereto and made a part of this Agreement by reference; and (c)
         arrange  for,  and  monitor,  the  provision  to the Fund of all  other
         services required by the Fund, including but not limited to services of
         independent   accountants,   legal  counsel,   custodial  services  and
         printing.   SMC  may,  in   accordance   with  all   applicable   legal
         requirements,  engage  the  services  of  other  persons  or  entities,
         regardless of any affiliation with SMC, to provide services to the Fund
         under this  Agreement.  The Fund  shall bear the  expense of such other
         services  and all other  expenses  of the Fund.  SMC agrees to maintain
         sufficient  trained personnel and equipment and supplies to perform its
         responsibilities  under  this  Agreement  and in  conformity  with  the
         current  Prospectus of the Fund and such other reasonable  standards of
         performance  as the Fund may from  time to time  specify  and shall use
         reasonable  care in selecting and monitoring  the  performance of third
         parties, who perform services for the Fund. SMC shall not guarantee the
         performance of such persons.

         SMC hereby  accepts such  employment and agrees to perform the services
         required by this Agreement for the compensation herein provided.

  2.     ALLOCATION OF EXPENSES AND CHARGES.

         (a)    EXPENSES OF SMC. SMC shall pay all expenses in  connection  with
                the performance of its services under this Agreement,  except as
                provided otherwise herein.

         (b)    EXPENSES OF THE FUND. Anything in this Agreement to the contrary
                notwithstanding,  the Fund  shall pay or  reimburse  SMC for the
                payment of the following  described expenses of the Fund whether
                or not billed to the Fund, SMC or any related entity:

                  (i) brokerage fees and commissions;
                 (ii) taxes;
                (iii) interest expenses;
                 (iv) any  extraordinary  expenses  approved  by  the  Board  of
                      Directors of the Fund; and
                  (v) distribution  fees paid under the Fund's Class A, Class B,
                      Class C and Class S Distribution Plans;

                and, in addition to those  expenses  set forth  above,  the Fund
                shall pay all of its expenses whether or not billed to the Fund,
                SMC or any  related  entity,  including,  but not limited to the
                following:   Board  of  Directors'  fees;  legal,  auditing  and
                accounting expenses;  insurance premiums;  broker's commissions;
                taxes and  governmental  fees and any membership  dues;  fees of
                custodian;  expenses  of  obtaining  quotations  on  the  Fund's
                portfolio securities and pricing of the Fund's shares; costs and
                expenses  in  connection  with the  registration  of the  Fund's
                capital stock under the Securities Act of 1933 and qualification
                of the  Fund's  capital  stock  under  the  Blue Sky laws of the
                states  where  such  stock is  offered;  costs and  expenses  in
                connection with the  registration of the Fund under the 1940 Act
                and all periodic and other reports required thereunder; expenses
                of  preparing,   printing  and   distributing   reports,   proxy
                statements, prospectuses,  statements of additional information,
                notices and distributions to stockholders;  costs of stockholder
                and other  meetings;  and  expenses  of  maintaining  the Fund's
                corporate existence.

         (c)    EXPENSE  CAP. For each of the Fund's full fiscal years that this
                Agreement  remains  in force,  SMC agrees  that if total  annual
                expenses of each Series of the Fund identified below,  exclusive
                of interest, taxes, extraordinary expenses (such as litigation),
                brokerage  fees and  commissions,  and 12b-1  fees paid  under a
                Fund's Class A, Class B, Class C or Class S Distribution  Plans,
                but  inclusive  of SMC's  compensation,  exceeds  the amount set
                forth below (the "Expense  Cap"),  SMC shall  contribute to such
                Series  such  funds or waive such  portion of its fee,  adjusted
                monthly,  as may be  required  to insure  that the total  annual
                expenses of the Series shall not exceed the Expense Cap. If this
                Agreement  shall be  effective  for only a portion  of a Series'
                fiscal year,  then the maximum annual expenses shall be prorated
                for such portion.

                                 EXPENSE CAP

International  Series, Class A, B, C and S shares - 2.25% Enhanced Index Series,
Class A, B, C and S shares - 1.75% Select 25 Series,  Class A, B, C and S shares
- - 1.75%

  3.     COMPENSATION OF SMC.

         (a)    As  compensation  for the  investment  advisory  services  to be
                rendered by SMC to Global Series,  Social Awareness Series,  Mid
                Cap Value  Series,  Small Cap  Growth  Series,  Large Cap Growth
                Series  and  Technology  Series,  for  each  of the  years  this
                Agreement is in effect,  each of the foregoing  Series shall pay
                SMC an annual fee equal to 1.00% of its respective average daily
                net  assets.  Such fee shall be  calculated  daily  and  payable
                monthly. As compensation for the investment advisory services to
                be rendered by SMC to International Series for each of the years
                this Agreement is in effect, the International  Series shall pay
                SMC an  annual  fee  equal  to 1.10% of its  average  daily  net
                assets.  Such fee shall be calculated daily and payable monthly.
                As  compensation  for the  investment  advisory  services  to be
                rendered by SMC to Equity Series, Total Return Series,  Enhanced
                Index  Series  and  Select 25 Series  for each of the years this
                Agreement is in effect,  each of the foregoing  Series shall pay
                SMC an annual fee equal to 0.75% of its respective average daily
                net  assets.  Such fee shall be  calculated  daily  and  payable
                monthly.  As compensation for the administrative  services to be
                rendered by SMC to Global,  International and Technology Series,
                each of the  foregoing  Series shall pay SMC an annual fee equal
                to 0.045% of its average  daily net assets,  plus the greater of
                0.10% of its  average  daily net  assets or  $60,000.  Such fees
                shall be calculated daily and payable  monthly.  As compensation
                for the administrative services to be rendered by SMC to each of
                the other Series of the Fund,  each such Series shall pay SMC an
                annual fee equal to 0.09% of its average daily net assets.  Such
                fees shall be  calculated  daily and  payable  monthly.  If this
                Agreement  shall be effective for only a portion of a year, then
                SMC's  compensation  for said year  shall be  prorated  for such
                portion.  For  purposes of this  Section 3, the value of the net
                assets of each  Series  shall be  computed in the same manner at
                the end of the  business  day as the value of such net assets is
                computed in connection with the  determination  of the net asset
                value  of  the  Fund's   shares  as   described  in  the  Fund's
                prospectus.

                For transfer agency  services  provided by SMC to each Series of
                the Fund,  each Series shall pay a Maintenance  Fee of $8.00 per
                account,  a Transaction Fee of $1.00 per transaction per account
                and a Dividend Fee of $1.00 per  dividend  per account.  For the
                purpose of calculating the Maintenance, Transaction and Dividend
                Fees  applicable to each Series,  SMC may count as a shareholder
                account  each  person  that holds a  beneficial  interest  in an
                omnibus account  maintained on SMC's transfer agency system by a
                third-party   administrator,   broker/dealer,   bank,  insurance
                company  or  other  entity;  provided  that SMC is  paying  such
                third-party   administrator,   broker/dealer,   bank,  insurance
                company  or  other  entity  sub-administrative,   sub-accounting
                and/or   sub-transfer   agency  fees  for   keeping   individual
                shareholder  records in  connection  with an  investment  in the
                Fund.

         (b)    For each of the Fund's  fiscal years this  Agreement  remains in
                force, SMC agrees that if total annual expenses of any Series of
                the  Fund,  exclusive  of  interest  and  taxes,   extraordinary
                expenses (such as litigation) and  distribution  fees paid under
                the Fund's  Class A,  Class B, Class C and Class S  Distribution
                Plans, but inclusive of SMC's  compensation,  exceed any expense
                limitation  imposed by state securities law or regulation in any
                state  in  which  shares  of such  Series  of the  Fund are then
                qualified for sale, as such regulations may be amended from time
                to time, SMC will  contribute to such Series such funds or waive
                such portion of its fee, adjusted  monthly,  as may be requisite
                to insure  that such  annual  expenses  will not exceed any such
                limitation.  If this  Agreement  shall be  effective  for only a
                portion of any Series'  fiscal  year,  then the  maximum  annual
                expenses shall be prorated for such portion.  Brokerage fees and
                commissions  incurred in connection with the purchase or sale of
                any  securities  by a Series  shall not be deemed to be expenses
                within the meaning of this paragraph (b).

  4.     INVESTMENT ADVISORY DUTIES.

         (a)    INVESTMENT  ADVICE.  SMC shall  regularly  provide the Fund with
                investment  research,   advice  and  supervision,   continuously
                furnish an investment program,  recommend which securities shall
                be purchased and sold and what portion of the assets of the Fund
                shall  be  held  uninvested  and  arrange  for the  purchase  of
                securities  and other  investments  for the Fund and the sale of
                securities  and other  investments  held in the portfolio of the
                Fund. All investment  advice  furnished by SMC to the Fund under
                this  Section 4 shall at all times  conform to any  requirements
                imposed   by  the   provisions   of  the  Fund's   Articles   of
                Incorporation and Bylaws, the 1940 Act, the Investment  Advisors
                Act  of  1940  and  the   rules  and   regulations   promulgated
                thereunder,  and other  applicable  provisions  of law,  and the
                terms  of the  registration  statements  of the Fund  under  the
                Securities  Act of 1933 ("1933 Act") and/or the 1940 Act, as may
                be applicable at the time, all as from time to time amended. SMC
                shall advise and assist the officers or other agents of the Fund
                in taking such steps as are  necessary or  appropriate  to carry
                out the decisions of the Board of Directors of the Fund (and any
                duly appointed  committee  thereof) with regard to the foregoing
                matters and the general account of the Fund's business.

         (b)    SUBADVISERS.  Subject to the  provisions of the 1940 Act and any
                applicable  exemptions thereto, SMC is authorized,  but is under
                no  obligation,  to  enter  into  sub-advisory  agreements  (the
                "Sub-Advisory  Agreements") with one or more subadvisers (each a
                "Subadviser")  to provide  investment  advisory  services to any
                series  of the  Fund.  Each  Subadviser  shall  have  investment
                discretion  with respect to the assets of the series assigned to
                that  Subadviser by SMC.  Consistent  with the provisions of the
                1940 Act and any  applicable  exemption  thereto,  SMC may enter
                into Sub-Advisory  Agreements or amend  Sub-Advisory  Agreements
                without the approval of the shareholders of the affected series.

         (c)    PORTFOLIO TRANSACTIONS AND BROKERAGE.

                  (i) Transactions in portfolio  securities shall be effected by
                      SMC,  through brokers or otherwise  (including  affiliated
                      brokers), in the manner permitted in this Section 4 and in
                      such manner as SMC shall deem to be in the best  interests
                      of the Fund after  consideration  is given to all relevant
                      factors.

                 (ii) In reaching a judgment  relative to the qualification of a
                      broker  to  obtain  the  best  execution  of a  particular
                      transaction,  SMC  may  take  into  account  all  relevant
                      factors  and  circumstances,  including  the  size  of any
                      contemporaneous market in such securities;  the importance
                      to the Fund of speed and efficiency of execution;  whether
                      the particular  transaction  is part of a larger  intended
                      change of portfolio  position in the same securities;  the
                      execution  capabilities  required by the  circumstances of
                      the particular  transaction;  the capital  required by the
                      transaction;  the overall capital  strength of the broker;
                      the broker's  apparent  knowledge of or  familiarity  with
                      sources from or to whom such  securities  may be purchased
                      or  sold;  as  well  as the  efficiency,  reliability  and
                      confidentiality  with  which the broker  has  handled  the
                      execution of prior similar transactions.

                (iii) Subject to any  statements  concerning  the  allocation of
                      brokerage  contained in the Fund's Prospectus or Statement
                      of Additional Information, SMC is authorized to direct the
                      execution  of  portfolio  transactions  for  the  Fund  to
                      brokers who  furnish  investment  information  or research
                      service  to the  SMC.  Such  allocations  shall be in such
                      amounts  and  proportions  as SMC  may  determine.  If the
                      transaction  is directed to a broker  providing  brokerage
                      and research services to SMC, the commission paid for such
                      transaction  may be in  excess of the  commission  another
                      broker would have charged for effecting that  transaction,
                      if SMC  shall  have  determined  in good  faith  that  the
                      commission  is  reasonable in relation to the value of the
                      brokerage and research services provided,  viewed in terms
                      of  either  that  particular  transaction  or the  overall
                      responsibilities of SMC with respect to all accounts as to
                      which it now or hereafter exercises investment discretion.
                      For  purposes  of  the  immediately   preceding  sentence,
                      "providing brokerage and research services" shall have the
                      meaning  generally given such terms or similar terms under
                      Section  28(e)(3) of the Securities  Exchange Act of 1934,
                      as amended.

                (iv)  In the  selection  of a broker  for the  execution  of any
                      transaction  not subject to fixed  commission  rates,  SMC
                      shall  have  no  duty  or   obligation   to  seek  advance
                      competitive  bidding  for the  most  favorable  negotiated
                      commission rate to be applicable to such  transaction,  or
                      to select any broker  solely on the basis of its purported
                      or "posted" commission rates.

                 (v)  In  connection  with  transactions  on markets  other than
                      national or regional securities  exchanges,  the Fund will
                      deal directly  with the selling  principal or market maker
                      without  incurring charges for the services of a broker on
                      its behalf  unless,  in the best  judgment of SMC,  better
                      price  or  execution  can be  obtained  by  utilizing  the
                      services of a broker.

         (d)    LIMITATION  OF  LIABILITY  OF  SMC  WITH  RESPECT  TO  RENDERING
                INVESTMENT ADVISORY SERVICES. So long as SMC shall give the Fund
                the  benefit  of its  best  judgment  and  effort  in  rendering
                investment advisory services hereunder,  SMC shall not be liable
                for any errors of  judgment  or mistake of law,  or for any loss
                sustained by reason of the adoption of any investment  policy or
                the  purchase,   sale  or  retention  of  any  security  on  its
                recommendation  shall have been based upon its own investigation
                and  research or upon  investigation  and  research  made by any
                other individual,  firm or corporation,  if such  recommendation
                shall  have  been  made  and  such  other  individual,  firm  or
                corporation  shall have been  selected with due care and in good
                faith. Nothing herein contained shall,  however, be construed to
                protect  SMC  against   any   liability   to  the  Fund  or  its
                shareholders  by reason  of  willful  misfeasance,  bad faith or
                gross  negligence in the  performance of its duties or by reason
                of its reckless  disregard of its  obligations  and duties under
                this Section 4. As used in this  Section 4, "SMC" shall  include
                directors, officers and employees of SMC, as well as SMC itself.

  5.     ADMINISTRATIVE AND TRANSFER AGENCY SERVICES.

         (a)    RESPONSIBILITIES  OF SMC. SMC will provide the Fund with general
                administrative,  fund accounting,  transfer agency, and dividend
                disbursing  services  described  and set  forth  in  Schedule  A
                attached  hereto and made a part of this Agreement by reference.
                SMC  agrees  to  maintain   sufficient   trained  personnel  and
                equipment  and supplies to perform such  services in  conformity
                with  the  current   Prospectus  of  the  Fund  and  such  other
                reasonable standards of performance as the Fund may from time to
                time  specify,   and  otherwise  perform  such  services  in  an
                accurate, timely, and efficient manner.

         (b)    INSURANCE.  The Fund  and SMC  agree to  procure  and  maintain,
                separately  or  as  joint   insureds  with   themselves,   their
                directors,  employees,  agents and others,  and other investment
                companies for which SMC acts as investment  adviser and transfer
                agent,  a policy or policies of  insurance  against loss arising
                from  breaches of trust,  errors and  omissions,  and a fidelity
                bond  meeting the  requirements  of the 1940 Act, in the amounts
                and with such  deductibles  as may be  agreed  upon from time to
                time.  SMC  shall  be  solely  responsible  for the  payment  of
                premiums due for such policies.

         (c)    REGISTRATION AND COMPLIANCE.

                 (i)  SMC represents that as of the date of this Agreement it is
                      registered  as a transfer  agent with the  Securities  and
                      Exchange  Commission ("SEC") pursuant to Subsection 17A of
                      the  Securities and Exchange Act of 1934 and the rules and
                      regulations  thereunder,   and  agrees  to  maintain  said
                      registration  and comply with all of the  requirements  of
                      said Act, rules and  regulations so long as this Agreement
                      remains in force.

                (ii)  The Fund  represents  that it is a  management  investment
                      company  registered  with the SEC in  accordance  with the
                      1940 Act and the rules  and  regulations  thereunder,  and
                      authorized  to sell its shares  pursuant to said Act,  the
                      1933 Act and the rules and regulations thereunder.

         (d)    LIABILITY   AND   INDEMNIFICATION   WITH  RESPECT  TO  RENDERING
                ADMINISTRATIVE AND TRANSFER AGENCY SERVICES. SMC shall be liable
                for any actual losses,  claims,  damages or expenses  (including
                any reasonable  counsel fees and expenses)  resulting from SMC's
                bad  faith,  willful  misfeasance,  reckless  disregard  of  its
                obligations  and  duties,  negligence  or  failure  to  properly
                perform any of its responsibilities or duties under this Section
                5. SMC  shall not be liable  and shall be  indemnified  and held
                harmless by the Fund,  for any claim,  demand or action  brought
                against it arising out of or in connection with:

                 (i)  The bad faith, willful misfeasance,  reckless disregard of
                      its duties or  negligence by the Board of Directors of the
                      Fund,  or  SMC's  acting  upon any  instructions  properly
                      executed or and  authorized  by the Board of  Directors of
                      the Fund;

                (ii)  SMC acting in reliance  upon advice  given by  independent
                      counsel retained by the Board of Directors of the Fund.

                In the event that SMC  requests the Fund to indemnify or hold it
                harmless hereunder, SMC shall use its best efforts to inform the
                Fund of the relevant  facts  concerning  the matter in question.
                SMC shall use  reasonable  care to identify and promptly  notify
                the Fund concerning any matter which presents, or appears likely
                to present, a claim for indemnification against the Fund.

                The Fund shall have the  election of  defending  SMC against any
                claim which may be the subject of indemnification  hereunder. In
                the  event  the  Fund  so  elects,  it will  so  notify  SMC and
                thereupon the Fund shall take over defenses of the claim, and if
                so  requested by the Fund,  SMC shall incur no further  legal or
                other claims  related  thereto for which it would be entitled to
                indemnity  hereunder  provided,  however,  that  nothing  herein
                contained shall prevent SMC from retaining,  at its own expense,
                counsel  to defend  any  claim.  Except  with the  Fund's  prior
                consent,  SMC  shall in no event  confess  any claim or make any
                compromise  in any  matter  in which  the Fund  will be asked to
                indemnify or hold SMC harmless hereunder.

                PUNITIVE  DAMAGES.  SMC shall not be liable to the Fund,  or any
                third  party,  for  punitive,  exemplary,  indirect,  special or
                consequential  damages  (even  if SMC has  been  advised  of the
                possibility of such damage) arising from its obligations and the
                services  provided  under  this  Section  5,  including  but not
                limited  to loss  of  profits,  loss  of use of the  shareholder
                accounting  system,  cost of capital and expenses of  substitute
                facilities, programs or services.

                FORCE  MAJEURE.  Anything  in  this  Section  5 to the  contrary
                notwithstanding,  SMC shall not be liable  for  delays or errors
                occurring  by  reason  of  circumstances   beyond  its  control,
                including   but  not  limited  to  acts  of  civil  or  military
                authority,  national emergencies,  work stoppages,  fire, flood,
                catastrophe,  earthquake, acts of God, insurrection,  war, riot,
                failure of communication or interruption.

         (e)    DELEGATION  OF DUTIES.  SMC may,  at its  discretion,  delegate,
                assign or subcontract  any of the duties,  responsibilities  and
                services governed by this agreement,  to an affiliated  company,
                whether  or not by  formal  written  agreement,  or to any third
                party,  provided  that such  arrangement  with a third party has
                been approved by the Board of Directors of the Fund.  SMC shall,
                however,  retain ultimate  responsibility  to the Fund and shall
                implement  such  reasonable  procedures  as may be necessary for
                assuring  that  any  duties,  responsibilities  or  services  so
                assigned, subcontracted or delegated are performed in conformity
                with the terms and conditions of this Agreement.

  6.     OTHER  ACTIVITIES  NOT  RESTRICTED.  Nothing  in this  Agreement  shall
         prevent SMC or any officer  thereof from acting as investment  adviser,
         administrator  or  transfer  agent  for  any  other  person,   firm  or
         corporation,  nor shall it in any way limit or  restrict  SMC or any of
         its  directors,  officers,   stockholders  or  employees  from  buying,
         selling,  or trading any  securities  for their own accounts or for the
         accounts of others for whom they may be acting; provided, however, that
         SMC expressly represents that it will undertake no activities which, in
         its judgment,  will conflict with the performance of its obligations to
         the Fund under this Agreement.  The Fund  acknowledges that SMC acts as
         investment   adviser,   administrator   and  transfer  agent  to  other
         investment companies,  and it expressly consents to SMC acting as such;
         provided, however, that if in the opinion of SMC, particular securities
         are  consistent  with  the  investment  objectives  of,  and  desirable
         purchases  or sales  for the  portfolios  of one or more of such  other
         investment  companies or series of such companies at approximately  the
         same time,  such  purchases  or sales  will be made on a  proportionate
         basis if  feasible,  and if not  feasible,  then on a rotating or other
         equitable basis.

  7.     AMENDMENT.  This Agreement and the schedules  forming a part hereof may
         be  amended at any time,  without  shareholder  approval  to the extent
         permitted by applicable law, by a writing signed by each of the parties
         hereto.  Any  change in the  Fund's  registration  statements  or other
         documents of compliance or in the forms  relating to any plan,  program
         or service  offered by its current  Prospectus  which  would  require a
         change  in  SMC's  obligations  hereunder  shall  be  subject  to SMC's
         approval, which shall not be unreasonably withheld.

  8.     DURATION AND  TERMINATION  OF AGREEMENT.  This  Agreement  shall become
         effective on May 1, 2002,  provided  that on or before that date it has
         been  approved by the holders of a majority of the  outstanding  voting
         securities of each series of the Fund. This Agreement shall continue in
         force  until  May  1,  2004,  and  for  successive   12-month   periods
         thereafter,  unless  terminated,  provided  each  such  continuance  is
         specifically  approved at least  annually by (a) the vote of a majority
         of the  entire  Board  of  Directors  of the  Fund,  and the  vote of a
         majority  of the  directors  of the  Fund who are not  parties  to this
         Agreement  or  interested  persons  (as such  terms are  defined in the
         Investment  Company  Act of 1940) of any such party cast in person at a
         meeting of such  directors  called for the  purpose of voting upon such
         approval,  or (b) by the  vote  of the  holders  of a  majority  of the
         outstanding voting securities of each series of the Fund (as defined in
         the 1940 Act). In the event a majority of the outstanding shares of one
         series vote for continuance of the Agreement,  it will be continued for
         that  series  even  though the  Agreement  is not  approved by either a
         majority of the outstanding shares of any other series or by a majority
         of outstanding shares of the Fund.

         Upon this Agreement becoming effective,  any previous Agreement between
         the Fund and SMC  providing  for  investment  advisory,  administrative
         and/or transfer agency services shall  concurrently  terminate,  except
         that such termination  shall not affect any fees accrued and guarantees
         of expenses with respect to any period prior to termination.

         This  Agreement  may be  terminated at any time as to any series of the
         Fund  without  payment of any  penalty,  by the Fund upon the vote of a
         majority  of the Fund's  Board of  Directors  or, by a majority  of the
         outstanding  voting securities of the applicable series of the Fund, or
         by SMC,  in each case on sixty (60) days'  written  notice to the other
         party. This Agreement shall automatically terminate in the event of its
         assignment (as such term is defined in the 1940 Act).

  9.     SEVERABILITY.   If  any  clause  or  provision  of  this  Agreement  is
         determined  to be illegal,  invalid or  unenforceable  under present or
         future  laws  effective  during the term  hereof,  then such  clause or
         provision  shall be  considered  severed  herefrom and the remainder of
         this Agreement shall continue in full force and effect.

  10.    APPLICABLE  LAW.  This  Agreement  shall be subject to and construed in
         accordance with the laws of the State of Kansas.

IN WITNESS  WHEREOF,  the parties  hereto have caused this  Agreement to be duly
executed by their respective  officers thereto duly authorized on the day, month
and year first above written.

                                        SECURITY EQUITY FUND

                                        By   JAMES R. SCHMANK
                                           -------------------------------------
                                        Title:  President

ATTEST:

     AMY J. LEE
- ----------------------------------
Secretary

                                        SECURITY MANAGEMENT COMPANY, LLC

                                        By   JAMES R. SCHMANK
                                           -------------------------------------
                                        Title:  President

ATTEST:

     AMY J. LEE
- ----------------------------------
Secretary



                                   SCHEDULE A
                       INVESTMENT MANAGEMENT AND SERVICES
                                    AGREEMENT

     SCHEDULE OF ADMINISTRATIVE AND FUND ACCOUNTING FACILITIES AND SERVICES

Security  Management  Company,  LLC  agrees to  provide  the Fund the  following
administrative facilities and services.

  1.   FUND AND PORTFOLIO ACCOUNTING

       a.     Maintain Fund General Ledger and Journal.
       b.     Prepare and record disbursements for direct Fund expenses.
       c.     Prepare daily money transfers.
       d.     Reconcile all Fund bank and custodian accounts.
       e.     Assist Fund independent auditors as appropriate.
       f.     Prepare daily projection of available cash balances.
       g.     Record  trading  activity  for purposes of  determining  net asset
              values and daily dividend.
       h.     Prepare  daily  portfolio  evaluation  report  to value  portfolio
              securities and determine daily accrued income.
       i.     Determine the daily net asset value per share.
       j.     Determine  the daily,  monthly,  quarterly,  semiannual  or annual
              dividend per share.
       k.     Prepare  monthly,  quarterly,   semiannual  and  annual  financial
              statements.
       l.     Provide  financial  information  for reports to the Securities and
              Exchange  Commission in compliance with the provisions of the 1940
              Act and the Securities Act of 1933, the Internal  Revenue  Service
              and any other regulatory agencies as required.
       m.     Provide  financial,  yield, net asset value,  etc.  information to
              NASD and other survey and  statistical  agencies as  instructed by
              the Fund.
       n.     Report to the Audit Committee of the Board of Directors.

  2.   LEGAL

       a.     Provide registration and other  administrative  services necessary
              to qualify the shares of the Fund for sale in those  jurisdictions
              determined  from  time to time by the  Fund's  Board of  Directors
              (commonly known as "Blue Sky Registration").
       b.     Provide  registration  with  and  reports  to the  Securities  and
              Exchange  Commission in compliance with the provisions of the 1940
              Act and the Securities Act of 1933.
       c.     Prepare and review Fund  Prospectus  and  Statement of  Additional
              Information.
       d.     Prepare proxy  statements and oversee proxy  tabulation for annual
              meetings.
       e.     Prepare  Board  materials  and  maintain   minutes  of  the  Board
              meetings.
       f.     Draft, review and maintain contractual agreements between Fund and
              Investment Adviser, Custodian, Distributor and Transfer Agent.
       g.     Oversee  printing  of  proxy  statements,   financial  reports  to
              shareholders,    prospectuses   and   Statements   of   Additional
              Information.
       h.     Provide   legal  advice  and   oversight   regarding   shareholder
              transactions, administrative services, compliance with contractual
              agreements  and the  provisions of the 1940 Act and the Securities
              Act of 1933.

           SCHEDULE OF SHARE TRANSFER AND DIVIDEND DISBURSING SERVICES

Security  Management  Company,  LLC  agrees to  provide  the Fund the  following
transfer agency and dividend disbursing services.

  1.   Maintain shareholder accounts, including processing of new accounts.

  2.   Post address  changes and perform other file  maintenance for shareholder
       accounts.

  3.   Post all transactions to the shareholder file, including:

       a.     Direct purchases;
       b.     Wire order purchases;
       c.     Direct redemptions;
       d.     Wire order redemptions;
       e.     Draft redemptions;
       f.     Direct exchanges;
       g.     Transfers;
       h.     Certificate issuances; and
       i.     Certificate deposits.

  4.   Monitor fiduciary processing, insuring accuracy and deduction of fees.

  5.   Prepare daily reconciliations of shareholder processing to money movement
       instructions.

  6.   Handle bounced check collections.  Immediately liquidate shares purchased
       and  return  to  the  shareholder  the  check  and  confirmation  of  the
       transaction.

  7.   Issue all checks and stop and replace lost checks.

  8.   Draft clearing services.

       a.     Maintain signature cards and appropriate corporate resolutions.
       b.     Compare  the  signature  on the  check  to the  signatures  on the
              signature  card for the  purpose of paying the face  amount of the
              check only.
       c.     Receive  checks  presented for payment and liquidate  shares after
              verifying account balance.
       d.     Order   checks  in  quantity   specified   by  the  Fund  for  the
              shareholder.

9.     Mail confirmations, checks and/or certificates resulting from transaction
       requests to shareholders.

10.    Perform all of the Fund's other mailings, including:

       a.     Dividend and capital gain distributions;
       b.     Semiannual and annual reports;
       c.     1099/year-end shareholder reporting;
       d.     Systematic withdrawal plan payments; and
       e.     Daily confirmations.

11.    Answer  all service-related  telephone  inquiries  from  shareholders and
       others, including:

       a.     General and policy inquiries (research and resolve problems);
       b.     Fund yield inquiries;
       c.     Shareholder processing requests and account maintenance changes by
              telephone as described above;
       d.     Pending requests to correspondence;
       e.     On-line statistical performance of unit; and
       f.     Reports on telephone activity.

12.    Respond to written inquiries (research and resolve problems), including:

       a.     Initiate  shareholder  account   reconciliation   proceeding  when
              appropriate;
       b.     Notify shareholder of bounced investment checks;
       c.     Respond  to  financial   institutions  regarding  verification  of
              deposit;
       d.     Initiate proceedings regarding lost certificates;
       e.     Respond to complaints and log activities; and
       f.     Correspondence control.

13.    Maintain and  retrieve all  required past  history  for  shareholders and
       provide research capabilities as follows:

       a.     Monitor   daily  all   processing   activity  to  verify   back-up
              documentation;
       b.     Provide exception reports;
       c.     Provide microfilming services; and
       d.     Provide storage, retrieval and archive services.

14.    Prepare materials for annual meetings.

       a.     Address and mail annual proxy and related material.
       b.     Prepare and submit to Fund an affidavit of mailing.
       c.     Furnish  certified list of  shareholders  (hard copy or microfilm)
              and inspectors of elections.

15.    Report and remit as necessary for state escheatment requirements.



Approved:  Fund    JAMES R. SCHMANK            SMC       JAMES R. SCHMANK
                -------------------------           ----------------------------

EX-99.7A

                             DISTRIBUTION AGREEMENT

THIS AGREEMENT,  dated as of January 1, 1964, and amended and restated effective
as of the 3rd day of  February,  2002,  between  Security  Equity Fund, a Kansas
corporation  (hereinafter referred to as the "Fund"), and Security Distributors,
Inc., a Kansas corporation (hereinafter referred to as the "Distributor").

                                   WITNESSETH:

WHEREAS, the Fund is engaged in business as an open-end,  management  investment
company  registered under the federal  Investment Company Act of 1940 (the "1940
Act"); and

WHEREAS, the Distributor is willing to act as principal underwriter for the Fund
to offer for sale, sell and deliver after sale, the Class A Shares of the Fund's
$0.25 par value common stock  (hereinafter  referred to as the  "Shares") on the
terms and conditions hereinafter set forth;

NOW,  THEREFORE,  in consideration of the mutual covenants and agreements herein
set forth, the parties hereto agree as follows:

         1. EMPLOYMENT OF  DISTRIBUTOR.  The Fund hereby employs the Distributor
to act as principal  underwriter for the Fund with respect to its Class A Shares
and hereby  agrees  that during the term of this  Agreement,  and any renewal or
extension hereof, or until any prior termination  hereof,  the Distributor shall
have the exclusive  right to offer for sale and to distribute any and all of the
Fund's Class A Shares issued or to be issued by the Fund. The Distributor hereby
accepts  such  employment  and agrees to act as the  distributor  of the Class A
Shares issued or to be issued by the Fund during the period this Agreement is in
effect and agrees  during  such  period to offer for sale such Shares as long as
such Shares remain available for sale,  unless the Distributor is unable legally
to make such offer for sale as the result of any law or governmental regulation.

         2. OFFERING PRICE AND COMMISSIONS.  Prior to the issuance of any Shares
by the Fund pursuant to any subscription  tendered by or through the Distributor
and confirmed for sale to or through the Distributor,  the Distributor shall pay
or cause to be paid to the custodian of the Fund in cash, an amount equal to the
net  asset  value  of such  Shares  at the  time  of  acceptance  of  each  such
subscription and confirmation by the Fund of the sale of such Shares. All Shares
shall be sold to the public only at their public  offering  price at the time of
such sale,  and the Fund shall  receive  not less than the full net asset  value
thereof.

         3. ALLOCATION OF EXPENSES AND CHARGES. During the period this Agreement
is in effect,  the Fund shall pay all costs and expenses in connection  with the
registration  of Shares  under the  Securities  Act of 1933  (the  "1933  Act"),
including all expenses in connection  with the  preparation  and printing of any
registration  statements and prospectuses necessary for registration  thereunder
but  excluding any  additional  costs and expenses  incurred in  furnishing  the
Distributor with prospectuses.

The Fund shall also pay all costs, expenses and fees incurred in connection with
the qualification of the Shares under the applicable Blue Sky laws of the states
in which the Shares are offered.

During the period  this  Agreement  is in effect,  the  Distributor  will pay or
reimburse the Fund for:

         (a)      All costs and  expenses of printing  and mailing  prospectuses
                  (other than to existing  shareholders) and confirmations,  and
                  all costs and  expenses  of  preparing,  printing  and mailing
                  advertising    material,    sales    literature,    circulars,
                  applications,  and  other  materials  used  or to be  used  in
                  connection  with the offering for sale and the sale of Shares;
                  and

         (b)      All  clerical  and  administrative  costs  in  processing  the
                  applications for and in connection with the sale of Shares.

The  Distributor  agrees  to  submit  to the Fund  for its  prior  approval  all
advertising material,  sales literature,  circulars and any other material which
the  Distributor  proposes to use in  connection  with the  offering for sale of
Shares.

         4.  REDEMPTION  OF  SHARES.  The  Distributor,  as agent of and for the
account of the Fund,  may redeem  Shares of the Fund offered for resale to it at
the net asset value of such Shares  (determined  as provided in the  Articles of
Incorporation  or Bylaws)  and not in excess of such  maximum  amounts as may be
fixed from time to time by an officer of the Fund.  Whenever the officers of the
Fund deem it advisable for the protection of the  shareholders of the Fund, they
may suspend or cancel such authority.

         5. SALES  COMMISSIONS.  The  Distributor  shall be entitled to charge a
commission  on each sale of Shares in the amount set forth in the  prospectus of
the Fund,  such  commission to be an amount equal to the difference  between the
net asset value and the offering price of the shares, as such offering price may
from time to time be  determined  by the  board of  directors  of the Fund.  All
shares of the Fund shall be sold to the  public  only at their  public  offering
price at the time of such  sale,  and the Fund shall  receive  not less than the
full net asset value thereof.

         6. CLASS A DISTRIBUTION  PLAN.  Pursuant to a Class A Distribution Plan
adopted by the Fund with respect to certain  Series of the Fund (the  "Series"),
which Series are set forth on Schedule A to this  Agreement,  the Fund agrees to
make monthly payments to the Distributor in an amount computed at an annual rate
of .25 of 1% of each Series'  average  daily net assets,  to finance  activities
undertaken by the Distributor for the purpose of distributing the Series' shares
to investors and/or providing  shareholder services to the Series' shareholders.
All payments to the  Distributor  pursuant to this  paragraph are subject to the
following conditions being met by the Distributor. The Distributor shall furnish
the Fund with quarterly  reports of its expenditures and such other  information
relating  to  expenditures  or  to  the  other  distribution-related  activities
undertaken or proposed to be undertaken  by the  Distributor  during such fiscal
year under its  Distribution  Agreement with the Fund as the Fund may reasonably
request.

         7. SHAREHOLDER  SERVICE FEES. The Shareholder  Service Fees paid by the
Distributor  to  securities  dealers and other  entities  that have  executed an
Agreement  with the  Distributor  shall permit such  payments only in accordance
with the  provisions  of this  paragraph  and  shall  have the  approval  of the
majority  of the Board of  Directors  of the Fund  including  a majority  of the
directors  who are not  interested  persons of the Fund as required by the Rule.
The Distributor may pay to the other party to an Agreement a fee (a "Shareholder
Service  Fee") for  Shareholder  Services  provided  by such other  party.  Such
quarterly fee shall be payable in arrears in an amount equal to such  percentage
of the  aggregate  net asset  value of the  Series'  Shares  held by such  other
party's  customers  or clients at the close of business  each day as  determined
from time to time by the  Distributor.  The  Shareholder  Services  contemplated
hereby  shall  include  fees for account  maintenance  and  personal  service to
shareholders,   including,  but  not  limited  to,  answering  routine  customer
inquiries regarding the Fund,  assisting customers in changing dividend options,
account designations and addresses, and in enrolling into any of several special
investment  plans offered in connection with the purchase of the Series' Class A
shares,  assisting in the establishment and maintenance of customer accounts and
records and in the processing of purchase and redemption transactions, investing
dividends and capital gains  distributions  automatically  in shares,  providing
sub-administration  and/or  sub-transfer  agency services for the benefit of the
Fund  and  providing  such  other  services  as the  Fund  or the  customer  may
reasonably request.

         8.   DISTRIBUTOR   MAY  ACT  AS   BROKER   AND   RECEIVE   COMMISSIONS.
Notwithstanding  any other  provisions of this  Agreement,  it is understood and
agreed that the Distributor  may act as a broker,  on behalf of the Fund, in the
purchase and sale of securities not effected on a securities exchange,  provided
that any such transactions and any commission paid in connection therewith shall
comply in every respect with the  requirements of the 1940 Act and in particular
with Section 17(e) of that Act and the rules and  regulations  of the Securities
and Exchange Commission promulgated thereunder.

         9.  BROKERAGE  PLAN.  The  Fund  may  direct  the  Distributor  to take
appropriate  actions to effect the purposes of the Fund's  Brokerage Plan, as it
may be amended from time to time, and the  Distributor,  when so directed by the
Fund,  shall  take such  actions,  which may  include,  but are not  necessarily
limited to, directing, on behalf of the Fund or a Series thereof, and subject to
the standards described in the Brokerage Plan, Security Management Company,  LLC
or a Sub-Advisor to allocate  transactions for the purchase or sale of portfolio
securities  in a manner  intended to  increase  the  distribution  of the Fund's
shares.

      In accordance with the terms of the Brokerage Plan, the Fund, on behalf of
a  Series,  shall  make  available  to the  Distributor,  amounts  derived  from
brokerage  commissions  paid by the  Series  in  connection  with its  portfolio
transactions.   Such   amounts   shall  be   expended  by  SDI  to  finance  the
distribution-related  activities described in the Plan. The Fund, on behalf of a
Series,  shall also make available to the  Distributor,  the brokerage  credits,
benefits or other  services  received from  broker-dealers  executing  portfolio
transactions  on behalf of a Series.  Such credits,  benefits or other  services
shall be used by the Distributor to finance the distribution-related  activities
described in the Plan. The  Distributor  shall prepare  reports for the Board of
Directors of the Fund on a quarterly basis showing such  information as shall be
reasonably requested by the Board from time to time.

         10. AGREEMENTS  SUBJECT TO APPLICABLE LAW AND REGULATIONS.  The parties
hereto agree that all  provisions of this  Agreement will be performed in strict
accordance with the  requirements of: the 1940 Act, the 1933 Act, the Securities
Exchange Act of 1934,  the rules and  regulations of the Securities and Exchange
Commission under said statutes, all applicable state Blue Sky laws and the rules
and regulations thereunder,  the rules of the National Association of Securities
Dealers, Inc., and, in strict accordance with, the provisions of the Articles of
Incorporation and Bylaws of the Fund.

         11. DURATION AND TERMINATION OF AGREEMENT.  This Agreement shall become
effective  at the date  and time  that the  Fund's  prospectus,  reflecting  the
underwriting  arrangements  provided by this Agreement,  shall become  effective
under the 1933 Act, and shall, unless terminated as provided herein, continue in
force for two years from that date, and from year to year  thereafter,  provided
that such  continuance  for each  successive  year is  specifically  approved in
advance at least  annually by either the Board of  Directors or by the vote of a
majority (as defined in the 1940 Act) of the  outstanding  voting  securities of
the Fund and, in either event, by the vote of a majority of the directors of the
Fund who are not parties to this  Agreement  or  interested  persons of any such
party,  cast in person at a meeting  called for the  purpose of voting upon such
approval.  As used in the preceding  sentence,  the words  "interested  persons"
shall have the  meaning set forth in Section  2(a)(19) of the 1940 Act.  Written
notice of any such  approval  by the Board of  Directors  or by the holders of a
majority of the outstanding  voting  securities of the Fund and by the directors
who are not such interested persons shall be given promptly to the Distributor.

This  Agreement may be terminated at any time without the payment of any penalty
by the Fund by giving the Distributor at least sixty (60) days' previous written
notice of such  intention to terminate.  This Agreement may be terminated by the
Distributor  at any time by giving the Fund at least  sixty (60) days'  previous
written notice of such intention to terminate.

This Agreement shall terminate automatically in the event of its assignment.  As
used in the preceding sentence, the word "assignment" shall have the meaning set
forth in Section 2(a)(4) of the 1940 Act.

         12.  CONSTRUCTION  OF  AGREEMENT.  No  provision  of this  Agreement is
intended to or shall be  construed as  protecting  the  Distributor  against any
liability to the Fund or to the Fund's security holders to which the Distributor
would otherwise be subject by reason of willful misfeasance,  bad faith or gross
negligence in the performance of its duties under this Agreement.

Terms or words  used in the  Agreement,  which  also  occur in the  Articles  of
Incorporation or Bylaws of the Fund, shall have the same meaning herein as given
to such terms or words in the Articles of Incorporation or Bylaws of the Fund.

         13.  DISTRIBUTOR AN INDEPENDENT  CONTRACTOR.  The Distributor  shall be
deemed to be an  independent  contractor  and,  except as expressly  provided or
authorized  by the Fund,  shall have no authority  to act for or  represent  the
Fund.

         14. NOTICE.  Any notice  required or permitted to be given hereunder to
either of the  parties  hereto  shall be deemed to have been  given if mailed by
certified mail in a postage-prepaid  envelope  addressed to the respective party
as  follows,  unless any such party has  notified  the other  party  hereto that
notices  thereafter  intended  for such  party  shall be  mailed  to some  other
address,  in which event notices  thereafter shall be addressed to such party at
the address designated in such request:

                         Security Equity Fund
                         Security Benefit Group Building
                         700 SW Harrison Street
                         Topeka, Kansas 66636-0001

                         Security Distributors, Inc.
                         Security Benefit Group Building
                         700 SW Harrison Street
                         Topeka, Kansas 66636-0001

         15.  AMENDMENT OF AGREEMENT.  No amendment to this  Agreement  shall be
effective until approved by (a) a majority of the Board of Directors of the Fund
and a  majority  of the  directors  of the  Fund  who  are not  parties  to this
Agreement or affiliated  persons of any such party, or (B) a vote of the holders
of a majority of the outstanding voting securities of the Fund.

IN WITNESS  WHEREOF,  the parties have caused this Agreement to be duly executed
by their respective corporate officers thereto duly authorized on the day, month
and year first above written.

                                 SECURITY EQUITY FUND

                                 By:    JAMES R. SCHMANK
                                     -------------------------------------------
                                     James R. Schmank, President

ATTEST:

        AMY J. LEE
- ------------------------------
Amy J. Lee, Secretary

                                 SECURITY DISTRIBUTORS, INC.

                                 By:    GREGORY J. GARVIN
                                     -------------------------------------------
                                     Greg Garvin, President

ATTEST:

        AMY J. LEE
- ------------------------------
Amy J. Lee, Secretary



                                   SCHEDULE A

                     SERIES WITH A CLASS A DISTRIBUTION PLAN

                                     Equity

                                     Global

                                  Mid Cap Value

                                Social Awareness

                                Small Cap Growth

                                 Enhanced Index

                                   Technology

                                  International

                                    Select 25

                                Large Cap Growth

EX-99.10A

                           CLASS A DISTRIBUTION PLAN

                              SECURITY EQUITY FUND

                                   MAY 1, 2002

This  Distribution  Plan (the "Plan")  constitutes the plan adopted  pursuant to
Rule 12b-1  under the  Investment  Company  Act of 1940,  as amended  (the "1940
Act"), to the extent applicable,  on behalf of the Class A shares of each series
of the  Security  Equity Fund (the  "Fund")  set forth on  Schedule A,  attached
hereto, as such schedule may be amended from time to time (the "Series").

1.     THE  PLAN.  This  Plan  provides  for the  financing  by the  Fund of the
       services  and  activities  described  in  Section 2  (hereinafter  called
       "distribution  services") on behalf of the Class A shares of each Series.
       The  principal  purpose of this Plan is to enable the Fund to  supplement
       expenditures  by Security  Distributors,  Inc.,  the  Distributor  of its
       shares (the "Distributor"), for distribution services with respect to the
       Class A shares of the Series.

       The Board of Directors,  in considering whether the Fund should implement
       the Plan,  has  requested  and evaluated  such  information  as it deemed
       necessary to make an informed determination as to whether the Plan should
       be  implemented  and has considered  such pertinent  factors as it deemed
       necessary  to form the basis for a  decision  to use assets of the Series
       for such purposes.

       In voting to approve the  implementation  of the Plan, the Directors have
       concluded,  in the exercise of their reasonable  business judgment and in
       light of their respective  fiduciary  duties,  that there is a reasonable
       likelihood  that the Plan  will  benefit  each of the  Series  and  their
       respective shareholders.

2.     DISTRIBUTION SERVICES.

       (a)    The Fund may make  payments  under  this  Plan,  or any  agreement
              relating  to this  Plan  ("Agreement"),  in  connection  with  any
              distribution  services,   including,   but  not  limited  to,  the
              following distribution services:

              (i)    Preparation,  printing and  distribution  of the Prospectus
                     and Statement of Additional  Information and any supplement
                     thereto used in connection with the offering of the Series'
                     shares to the public;

              (ii)   Printing  of   additional   copies  of  reports  and  other
                     communications   which  were   prepared  by  the  Fund  for
                     distribution  to  existing  shareholders  for  use  by  the
                     Distributor as sales literature;

              (iii)  Preparation,  printing and  distribution of any other sales
                     literature  used in  connection  with the  offering  of the
                     Series' shares to the public;

              (iv)   Expenses  incurred in  advertising,  promoting  and selling
                     shares of the Series to the public;

              (v)    Payment or reimbursement of legal and administrative  costs
                     associated with implementing the Plan;

              (vi)   Any  Shareholder  Service Fees paid by the  Distributor  to
                     securities  dealers or other entities that have executed an
                     Agreement with the  Distributor.  Shareholder  Service Fees
                     shall  include  fees for account  maintenance  and personal
                     service to  shareholders,  including,  but not  limited to,
                     answering  routine customer  inquiries  regarding the Fund,
                     assisting  customers in changing dividend options,  account
                     designations  and  addresses,  and in enrolling into any of
                     several special investment plans offered in connection with
                     the  purchase of the Series'  Class A shares,  assisting in
                     the  establishment and maintenance of customer accounts and
                     records and in the  processing  of purchase and  redemption
                     transactions,   investing   dividends   and  capital  gains
                     distributions    automatically    in   shares,    providing
                     sub-administration  and/or sub-transfer agency services for
                     the benefit of the Fund and providing  such other  services
                     as the Fund or the customer may reasonably request;

              (vii)  Commissions  to sales  personnel for selling  shares of the
                     Series and interest expenses related thereto; and

              (viii) Expenses  incurred  in  promoting  sales of  shares  of the
                     Series  by  securities  dealers,  including  the  costs  of
                     preparation   of  materials   for   presentations,   travel
                     expenses,  costs  of  entertainment,   and  other  expenses
                     incurred  in  connection  with  promoting  sales of  Series
                     shares by dealers.

       (b)    Any payments for  distribution  services shall be made pursuant to
              an Agreement.  As required by the Rule, each Agreement relating to
              the implementation of this Plan shall be in writing and subject to
              approval and  termination  pursuant to the provisions of Section 6
              of this Plan.  However,  this Plan shall not  obligate the Fund or
              any other party to enter into such Agreement.

3.     AGREEMENT WITH DISTRIBUTOR.  All payments to the Distributor  pursuant to
       this Plan shall be subject  to and be made in  compliance  with a written
       agreement  between the Fund and the  Distributor  containing  a provision
       that the  Distributor  shall  furnish  the Fund  with  quarterly  written
       reports  of  the  amounts  expended  and  the  purposes  for  which  such
       expenditures  were made,  and such  other  information  relating  to such
       expenditures or to the other distribution services undertaken or proposed
       to be  undertaken  by the  Distributor  during such fiscal year under its
       Distribution Agreement with the Fund as the Fund may reasonably request.

4.     LIMITATIONS ON COVERED EXPENSES.  Each Series may pay as compensation for
       distribution  services  provided under Section 2 of this Plan  (including
       Shareholder Service Fees), or as reimbursement for distribution  services
       rendered  and/or  expenses  borne, in any fiscal year of the Series a fee
       equal to one-quarter of one percent  (0.25%) of the Series' average daily
       net assets for such fiscal year. Except as provided in the next sentence,
       the  payments to be paid  pursuant to this Plan shall be  calculated  and
       accrued  daily  and  paid  monthly  or at  such  other  intervals  as the
       Directors shall determine,  subject to any applicable restriction imposed
       by rules of the National  Association  of  Securities  Dealers,  Inc. The
       Distributor  may pay to the other party to any  Agreement  a  Shareholder
       Service  Fee payable  (a) for the first  year,  initially,  in any amount
       equal to 0.25 percent  annually of the  aggregate  net asset value of the
       shares purchased by such other party's customers or clients,  and (b) for
       each year  thereafter,  quarterly,  in arrears in an amount equal to such
       percentage  (not in excess of  .000685  percent  per day or 0.25  percent
       annually)  of the  aggregate  net asset  value of the shares held by such
       other  party's  customers or clients at the close of business each day as
       determined from time to time by the Distributor.

       Payment of fees as compensation  or  reimbursement  for any  distribution
       service shall not: (1) duplicate  payments for the same service under any
       other  agreement or plan  applicable  to a Series;  or (2)  constitute an
       admission   that   such   distribution    service   is   a   Rule   12b-1
       distribution-related service. In accordance with Conduct Rule 2830 of the
       National Association of Securities Dealers, Inc., as amended from time to
       time,  the entire fee payable  under the Plan may  constitute  a "service
       fee" as that term is defined in Conduct Rule 2830.

5.     INDEPENDENT  DIRECTORS.  While this Plan is in effect,  the selection and
       nomination of Independent Directors of the Fund shall be committed to the
       discretion of the Independent Directors. Nothing herein shall prevent the
       involvement  of  others in such  selection  and  nomination  if the final
       decision on any such  selection and  nomination is approved by a majority
       of the Independent Directors.

6.     EFFECTIVENESS,  CONTINUATION,  TERMINATION  AND AMENDMENT.  This Plan and
       each Agreement  shall go into effect when approved.

       (a)    By vote of the Fund's Directors, including the affirmative vote of
              a  majority  of the  Independent  Directors,  cast in  person at a
              meeting  called  for the  purpose  of  voting  on the  Plan or the
              Agreement; and

       (b)    If adopted with  respect to a Series after any public  offering of
              the  Series'  Class A shares  or the sale of the  Series'  Class A
              shares to  persons  who are not  affiliated  persons  of the Fund,
              affiliated  persons of such  persons,  promoters  of the Fund,  or
              affiliated persons of such persons,  the Plan (solely with respect
              to Rule 12b-1  distribution-related  activities  and/or  services)
              must be approved by a vote of a majority of the outstanding voting
              securities of the Class A shares of the Series.

       This Plan and any Agreements  relating to the implementation of this Plan
       shall, unless terminated as hereinafter provided, continue in effect from
       year to year only so long as such continuance is specifically approved at
       least annually by vote of the Fund's Directors, including the affirmative
       vote of a  majority  of its  Independent  Directors,  cast in person at a
       meeting called for the purpose of voting on such  continuance.  This Plan
       and any  Agreements  relating to the  implementation  of this Plan may be
       terminated with respect to a Series, in the case of the Plan, at any time
       or, in the case of any  Agreements,  upon not more than  sixty (60) days'
       written  notice to any other party to the Agreement by vote of a majority
       of the Independent  Directors or by the vote of the holders of a majority
       of the  outstanding  voting  securities  of the  Class A  shares  of such
       Series.  Any Agreement shall terminate  automatically  in the event it is
       assigned.  Any material  amendment to this Plan shall require approval by
       vote  of the  Fund's  Directors,  including  the  affirmative  vote  of a
       majority of the Independent Directors, cast in person at a meeting called
       for the  purpose  of  voting  on such  amendment.  The Plan  shall not be
       amended  to   materially   increase  the  amount  spent  for  Rule  12b-1
       distribution-related  activities  or  services  with  respect to a Series
       without  approval  by a vote  of a  majority  of the  outstanding  voting
       securities of the Class A shares of the Series.

       In the  event  this Plan  should be  terminated  by the  shareholders  or
       Directors of the Fund, the payments paid to the  Distributor  pursuant to
       the  Plan  up to  the  date  of  termination  shall  be  retained  by the
       Distributor.  Any expenses incurred by the Distributor in excess of those
       payments will be the sole responsibility of the Distributor.

7.     RECORDS.  The Fund shall preserve  copies of this Plan and any Agreements
       and all reports  made  pursuant to Section 3 hereof,  for a period of not
       less than six (6) years from the date of this Plan, any such Agreement or
       any such  report,  as the case may be,  the  first two years in an easily
       accessible place.

8.     DEFINITIONS.  As used in the Plan, (a) the term  "Independent  Directors"
       shall mean those Directors of the Fund who are not interested  persons of
       the  Fund  and have no  direct  or  indirect  financial  interest  in the
       operation  of the  Plan  or any  Agreement,  (b)  the  term  "Rule  12b-1
       distribution-related" shall mean primarily intended to result in the sale
       of Class A shares of a Series for  purposes of Rule 12b-1,  (c) the terms
       "affiliated person",  "assignment",  "interested person",  "promoter" and
       "majority of the outstanding voting securities" shall have the respective
       meanings  specified  in the  1940  Act  and  the  rules  and  regulations
       thereunder,  subject  to  such  exemptions  as  may  be  granted  by  the
       Securities and Exchange Commission.



                                                                February 3, 2002

                                   SCHEDULE A

1.     Equity Series

2.     Global Series

3.     Mid Cap Value Series

4.     Social Awareness Series

EX-99.10F

                       SECURITY FUNDS MULTIPLE CLASS PLAN

                                   MAY 1, 2002

  1.   THE PLAN.  This Plan is the written  multiple  class plan for each of the
       open-end  management  investment  companies  (individually the "Fund" and
       collectively the "Funds") named on Exhibit A hereto, which exhibit may be
       revised  from  time  to  time,  for  Security  Distributors,   Inc.  (the
       "Distributor"),  the  general  distributor  of shares of the  Funds,  and
       Security Management Company, LLC (the "Advisor"),  the investment advisor
       of the Funds. In instances  where such investment  companies issue shares
       representing  interests  in  different  portfolios  ("Series"),  the term
       "Fund" and  "Funds"  shall  separately  refer to each  Series.  It is the
       written plan contemplated by Rule 18f-3 (the "Rule") under the Investment
       Company  Act of 1940 (the "1940  Act"),  pursuant  to which the Funds may
       issue multiple  classes of shares.  The terms and provisions of this Plan
       shall  be  interpreted  and  defined  in a  manner  consistent  with  the
       provisions and definitions contained in the Rule.

  2.   FEATURES OF THE  CLASSES.  Each class of a Fund shall  represent an equal
       pro rata interest in such Fund and generally shall have identical voting,
       dividend,   liquidation   and   other   rights,   preferences,    powers,
       restrictions,  limitations,  qualifications  and  terms  and  conditions,
       except that each class:

             (i) shall have a different designation;

             (ii) shall bear any Class Expenses as defined below;

             (iii) shall have exclusive voting rights on any matters that relate
             solely to that class's arrangements, including, without limitation,
             voting with respect to a 12b-1 Plan for that class; and

             (iv) shall have separate  voting rights on any matter  submitted to
             shareholders  in which the  interests  of one class differ from the
             interests of any other class.

       Certain classes have adopted a service plan or  distribution  and service
       plan ("12b-1 Plan"),  and shall pay all of the expenses incurred pursuant
       to that arrangement. Expenses incurred in connection with a class's 12b-1
       Plan are referred to herein as "Class Expenses."

       Because Class  Expenses may be accrued at different  rates for each class
       of a Fund,  dividends  distributable to shareholders and net asset values
       per share may differ for shares of different classes of the same Fund.

  3.   ALLOCATIONS  OF INCOME AND EXPENSES.  The gross income of each Fund,  and
       expenses of each Fund other than Class Expenses,  are allocated among the
       classes  on the basis of the  relative  net  assets of each class of such
       Fund.  Each class of shares may at the Directors'  discretion  also pay a
       different  share  of  expenses,  not  including  advisory  fees or  other
       expenses related to management of the Fund's assets, if such expenses are
       actually  incurred in a different  amount by that class,  or if the class
       received  services of a different kind or to a different degree than that
       of other classes.

  4.   FEE  WAIVERS  AND  REIMBURSEMENTS.  The  investment  advisor may waive or
       reimburse its management fee in whole or in part provided that the fee is
       waived  or  reimbursed  to all  shares of a Fund in  proportion  to their
       relative average daily net asset values.

       The investment  advisor,  or an entity related to the investment advisor,
       who charges a fee for a Class Expense may waive or reimburse  that fee in
       whole or in part only if the revised  fee more  accurately  reflects  the
       relative costs of providing to each class the service for which the Class
       Expense is charged.

       A  distributor  of a Fund may waive or reimburse a Rule 12b-1 Plan fee in
       whole or in part.

  5.   EXCHANGE  PRIVILEGES.  Shareholders may exchange shares of one class of a
       Fund for shares of an  identical  class of any other Fund based upon each
       Fund's relative net asset value per share. Shareholders may also exchange
       shares of one class of a Fund for shares of the Security  Cash Fund.  Any
       applicable  contingent  deferred sales charge will be calculated from the
       date of  initial  purchase  without  regard to the time that  shares  are
       invested in Security Cash Fund. Because Cash Fund does not impose a sales
       charge, any exchange of Cash Fund shares acquired through direct purchase
       will be based upon the respective net asset values of the shares involved
       and subject to any applicable sales charges.

  6.   CONVERSIONS OF SHARES.  Class B shares  automatically  convert to Class A
       shares  on the  eighth  anniversary  of  purchase.  This is  advantageous
       because Class A shares are subject to a lower distribution fee than Class
       B shares.  A pro rata  amount  of Class B shares  purchased  through  the
       reinvestment  of dividends or other  distributions  is also  converted to
       Class A shares each time that shares purchased directly are converted.

  7.   DISCLOSURE.  The  classes of shares to be  offered by each Fund,  and the
       initial,  asset-based  or  contingent  deferred  sales  charges and other
       material distribution arrangements with respect to such classes, shall be
       disclosed in the prospectus  and/or  statement of additional  information
       used to offer that class of  shares.  Such  prospectus  or  statement  of
       additional  information  shall be  supplemented or amended to reflect any
       change(s)  in  classes  of  shares  to  be  offered  or in  the  material
       distribution arrangements with respect to such classes.

  8.   INDEPENDENT AUDIT. The methodology and procedures for calculating the net
       asset value,  dividends and distributions of each class shall be reviewed
       by an independent  auditing firm (the "Expert").  At least annually,  the
       Expert, or an appropriate  substitute expert, will render a report to the
       Funds on  policies  and  procedures  placed  in  operation  and  tests of
       operating effectiveness as defined and described in SAS 70 of the AICPA.

  9.   RULE 12B-1  PAYMENTS.  The  Treasurer  of each Fund shall  provide to the
       Directors  of that  Fund,  and  the  Directors  shall  review,  at  least
       quarterly,  the written report required by that Fund's  distribution  and
       service  plan(s)  and/or  service  plan  (the  "Plan"),  if any,  adopted
       pursuant to 1940 Act Rule 12b-1. The report shall include  information on
       (i) the amounts  expended  pursuant to the Plan,  (ii) the  purposes  for
       which  such   expenditures   were  made  and  (iii)  the  amount  of  the
       Distributor's  unreimbursed distribution costs (if recovery of such costs
       in future  periods is permitted  by that Plan),  taking into account Plan
       payments and contingent deferred sales charges paid to the Distributor.

10.    CONFLICTS.  On an ongoing basis, the Directors of the Funds,  pursuant to
       their fiduciary  responsibilities under the 1940 Act and otherwise,  will
       monitor the Funds for the existence of any material  conflicts  among the
       interests  of the  classes.  The  Advisor  and  the  Distributor  will be
       responsible  for  reporting  any  potential or existing  conflicts to the
       Directors.  In the event a conflict arises, the Directors shall take such
       action as they deem appropriate.

  11.  EFFECTIVENESS  AND AMENDMENT.  This Plan, as amended,  takes effect as of
       the date first shown above. This Plan, as amended, has been approved by a
       majority  vote of the Board of each Fund and of each Fund's Board members
       who are not  "interested  persons"  (as  defined in the 1940 Act) and who
       have no direct or indirect  financial  interest in the  operation  of the
       Plan or any agreements relating to the Plan (the "Independent Directors")
       of each Fund at a meeting called for the Security Funds listed on Exhibit
       A on July 23, 1999.  Prior to that vote,  (i) the Board was  furnished by
       Security  Distributors,  Inc. with information  necessary to permit it to
       evaluate the Plan,  including without limitation the methodology used for
       net asset value and  dividend  and  distribution  determinations  for the
       Funds,  and (ii) a majority of each Board and its  Independent  Directors
       determined that the Plan as proposed to be amended, including the expense
       allocation,  is in the best interests of each Fund as a whole and to each
       class of each Fund  individually.  Prior to any material amendment to the
       Plan, each Board shall request and evaluate,  and Security  Distributors,
       Inc. shall furnish,  such  information as may be reasonably  necessary to
       evaluate such amendment, and a majority of each Board and its Independent
       Directors  shall find that the Plan as proposed to be amended,  including
       the expense allocation, is in the best interests of each class, each Fund
       as a whole and each class of each Fund individually.

Adopted by the Board of Directors of the Funds on February 3, 2002.

                                   AMY J. LEE
                                   --------------------------------
                                   Amy J. Lee, Secretary
                                   Security Equity Fund
                                   Security Growth and Income Fund
                                   Security Ultra Fund
                                   Security Income Fund
                                   Security Municipal Bond Fund



                                    EXHIBIT A

                                 SECURITY FUNDS

Security Equity Fund                Security Ultra Fund    Security Municipal Bond Fund
Security Growth and Income Fund     Security Income Fund

EX-99.12

[SBG LOGO] The Security Benefit
           Group of Companies
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May 30, 2002


Security Equity Fund
One Security Benefit Place
Topeka, KS 66636


Subj:  Security Equity Fund, Equity Series


Dear Sir or Madam:

As  counsel  to  Security  Management  Company,   LLC,  Security  Equity  Fund's
investment  manager, I am familiar with the business  operations,  practices and
procedures  of Security  Equity Fund (the  "Company").  In  connection  with the
acquisition  of Total  Return  Series of the Company by Equity  Series,  another
Series of the Company,  the Company will issue shares of its common stock.  Such
shares  will  be  registered  on  a  Form  N-14   registration   statement  (the
"Registration  Statement")  to be filed by the Company with the  Securities  and
Exchange Commission.

I have  examined  various  corporate  records of the  Company  as I have  deemed
necessary to give this opinion. On the basis of the foregoing,  it is my opinion
that the  shares of  common  stock of the  Company  being  registered  under the
Securities Act of 1933 in the  Registration  Statement have been duly authorized
and will be legally and validly issued,  fully paid, and  non-assessable  by the
Company upon transfer of the assets of Total Return Series pursuant to the terms
of the Plan of Reorganization included in the Registration Statement.

I hereby consent to the filing of this opinion as an exhibit to the Registration
Statement.

Sincerely,



Amy J. Lee



   One Security Benefit Place * Topeka, Kansas 66636-0001 * (785) 438-3000 *
                             www.securitybenefit.com

EX-99.14

               CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS


We  consent  to the  references  to  our  firm  under  the  captions  "Financial
Highlights for Total Return Fund and Equity Fund" and Sections 4.1(i) and 4.2(h)
of  "Representations  and  Warranties"  in  Appendix  A in  the  Combined  Proxy
Statement/Prospectus of the Total Return Series of Security Equity Fund relating
to the  reorganization  into Equity  Series of  Security  Equity Fund and to the
incorporation  by  reference  of  our  report  dated  November  2,  2001  in the
Registration  Statement  (Form  N-14)  filed with the  Securities  and  Exchange
Commission in this Registration Statement on Form N-14.

                                                           /s/ Ernst & Young LLP

Kansas City, Missouri
May 30, 2002