485APOS

                                                       Registration No. 811-1136
                                                       Registration No. 2-19458
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                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933                      [_]
         Post-Effective Amendment No.  93                                    [X]
                                     ------

                                     and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940              [_]
                        Amendment No.  93                                    [X]
                                     ------

                        (Check appropriate box or boxes)

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

              ONE SECURITY BENEFIT PLACE, TOPEKA, KANSAS 66636-0001
                (Address of Principal Executive Offices/Zip Code)

               Registrant's Telephone Number, including area code:
                                 (785) 438-3000


   James R. Schmank, President                     Copies To:
   Security Equity Fund                            Amy J. Lee, Secretary
   One Security Benefit Place                      Security Equity Fund
   Topeka, KS 66636-0001                           One Security Benefit Place
   (Name and address of Agent for Service)         Topeka, KS 66636-0001

It is proposed that this filing will become effective (check appropriate box):

[_]  immediately upon filing pursuant to paragraph (b)
[_]  on January 31, 2003, pursuant to paragraph (b)
[_]  60 days after filing pursuant to paragraph (a)(1)
[_]  on January 31, 2003, pursuant to paragraph (a)(1)
[_]  75 days after filing pursuant to paragraph (a)(2)
[X]  on January 31, 2003, pursuant to paragraph (a)(2) of Rule 485

If appropriate, check the following box:

[_]  this  post-effective  amendment  designates  a  new  effective  date  for a
     previously filed post-effective amendment

                              SECURITY EQUITY FUND
                                    FORM N-1A

                   PART B. STATEMENT OF ADDITIONAL INFORMATION

ITEM 22.  FINANCIAL STATEMENTS

To be filed by amendment.

                            PART C. OTHER INFORMATION

ITEM 23.  EXHIBITS

(a)  Articles of Incorporation
(b)  Bylaws(2)
(c)  Specimen copy of share certificates for Fund's shares of capital stock(4)
(d)  (1)  Investment Management and Services Agreement
     (2)  Sub-Advisory Contract - Oppenheimer(1)
     (3)  Sub-Advisory Contract - RS Investment
     (4)  Sub-Advisory Contract - Deutsche Asset Management, Inc.(7)
     (5)  Sub-Advisory Contract - Wellington(3)
     (6)  Form of Sub-Advisory Contract - Mainstream
     (7)  Sub-Advisory Contract - Templeton
(e)  (1)  Distribution Agreement
     (2)  Class B Distribution Agreement
     (3)  Class C Distribution Agreement
     (5)  Underwriter-Dealer Agreement(5)
(f)  Not applicable
(g)  (1)  Custodian Agreement - UMB Bank(6)
     (2)  Custodian Agreement - State Street(7)
     (3)  Form of Custodian Agreement - Banc of America
(h)  Not applicable
(i)  Legal Opinion(7)
(j)  To be filed by amendment
(k)  Not applicable
(l)  Not applicable
(m)  (1)  Class A Distribution Plan
     (2)  Class B Distribution Plan
     (3)  Class C Distribution Plan
     (5)  Brokerage Enhancement Plan
     (6)  Form of Shareholder Service Agreement(6)
(n)  Multiple Class Plan
(o)  RESERVED
(p)  Code of Ethics
     (1)  Security Funds, Security Management Company, LLC ("SMC"), and Security
          Distributors, Inc.(5)
     (2)  Sub-Adviser Code of Ethics - Oppenheimer
     (3)  Sub-Adviser Code of Ethics - RS Investment
     (4)  Sub-Adviser Code of Ethics - Deutsche Asset Management, Inc.
     (5)  Sub-Adviser Code of Ethics - Wellington(5)
     (6)  Sub-Adviser Code of Ethics - Templeton
(q)  Power of Attorneys(5)


(1)  Incorporated   herein  by  reference   to  the  Exhibits   filed  with  the
     Registrant's  Post-Effective  Amendment  No. 83 to  Registration  Statement
     2-19458 (filed November 13, 1998).

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

(3)  Incorporated  herein by  reference  to the  Exhibits  filed with SBL Fund's
     Post-Effective  Amendment No. 41 to Registration  Statement  2-59353 (filed
     May 1, 2000).

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

(5)  Incorporated   herein  by  reference   to  the  Exhibits   filed  with  the
     Registrant's  Post-Effective  Amendment  No. 90 to  Registration  Statement
     2-19458 (filed November 20, 2000).

(6)  Incorporated herein by reference to the Exhibits filed with Security Income
     Fund's  Post-Effective  Amendment No. 71 to Registration  Statement 2-38414
     (filed January 11, 2002).

(7)  Incorporated   herein  by  reference   to  the  Exhibits   filed  with  the
     Registrant's  Post-Effective  Amendment  No. 92 to  Registration  Statement
     2-19458 (filed January 15, 2002).

ITEM 24.  PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH FUND

Not applicable.

ITEM 25.  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 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 26.  BUSINESS OR OTHER CONNECTIONS OF INVESTMENT ADVISER

Security Management Company,  LLC also acts as investment adviser to Diversified
Income and High Yield Series of Security  Income Fund,  SBL Fund,  Security Cash
Fund,  Security Large Cap Value Fund, Security Municipal Bond Fund, and Security
Mid Cap Growth Fund.

NAME, BUSINESS* AND OTHER CONNECTIONS OF THE EXECUTIVE OFFICERS AND DIRECTORS OF
REGISTRANT'S ADVISER

JAMES R. SCHMANK
- ----------------
PRESIDENT AND MANAGING MEMBER REPRESENTATIVE--Security Management Company, LLC
SENIOR VICE PRESIDENT--Security Benefit Life Insurance Company; Security Benefit
   Group, Inc.
PRESIDENT  AND  DIRECTOR--Security  Large Cap Value  Fund;  Security  Cash Fund;
   Security Municipal Bond Fund;  Security Mid Cap Growth Fund;  Security Equity
   Fund; Security Income Fund; SBL Fund
DIRECTOR--Security Distributors, Inc.
DIRECTOR,  VICE PRESIDENT AND  TREASURER--First  Security Benefit Life Insurance
   and Annuity Company of New York
DIRECTOR AND TREASURER--First Advantage Insurance Agency, Inc.
DIRECTOR--Security Financial Resources, Inc.
DIRECTOR--Stormont-Vail Foundation, 1500 SW 10th, Topeka, Kansas
DIRECTOR AND PAST PRESIDENT--Auburn-Washburn  Public Schools Foundation, 5928 SW
   53rd, Topeka, Kansas
TRUSTEE--Eugene P. Mitchell Charitable Remainder Unit Trust (Family Trust)
TRUSTEE AND INVESTMENT COMMITTEE CHAIRMAN--Topeka Community Foundation,  1315 SW
   Arrowhead Road, Topeka, Kansas
PAST  DIRECTOR--Business  Improvement  District,  906 S. Kansas Avenue,  Topeka,
   Kansas

JOHN D. CLELAND
- ---------------
SENIOR VICE PRESIDENT AND MANAGING  MEMBER  REPRESENTATIVE--Security  Management
   Company, LLC
CHAIRMAN OF THE BOARD AND  DIRECTOR--Security  Cash Fund;  Security Income Fund;
   Security  Municipal  Bond  Fund;  SBL Fund;  Security  Large Cap Value  Fund;
   Security Equity Fund; Security Mid Cap Growth Fund
SENIOR VICE PRESIDENT--Security Benefit Life Insurance Company; Security Benefit
   Group, Inc.
VICE PRESIDENT AND DIRECTOR--Security Distributors, Inc.
TRUSTEE AND TREASURER--Mount Hope Cemetery Company, 4700 SW 17th, Topeka, Kansas
CHAIRMAN, POOLED MONEY INVESTMENT BOARD--State of Kansas, Topeka, Kansas
TRUSTEE AND CHAIRMAN OF THE ENDOWMENT COMMITTEE--Jayhawk Area Council of the Boy
   Scouts of America, 1020 SE Monroe, Topeka, Kansas
PAST TRUSTEE AND INVESTMENT  COMMITTEE  CHAIRMAN--Topeka  Community  Foundation,
   1315 SW Arrowhead Road, Topeka, Kansas

DONALD J. SCHEPKER
- ------------------
SENIOR VICE PRESIDENT--Security Management Company, LLC
SENIOR VICE PRESIDENT,  CHIEF FINANCIAL OFFICER AND TREASURER--Security  Benefit
   Life Insurance Company; Security Benefit Group, Inc.
DIRECTOR AND TREASURER--Security Financial Resources, Inc.
VICE-PRESIDENT--Security Financial Resources Collective Investments, LLC
DIRECTOR AND TREASURER--Security Benefit Academy, Inc.
DIRECTOR AND  VICE-PRESIDENT--First  Security Benefit Life Insurance and Annuity
   Company of New York
DIRECTOR--United  Way of Greater Topeka,  1315 Arrowhead Road,  Topeka,  Kansas;
   Better Business Bureau of Northeast  Kansas,  Inc., 501 Jefferson,  Suite 24,
   Topeka, Kansas
DIRECTOR AND PAST PRESIDENT--Topeka Civic Theatre & Academy, 3028 SW 8th Avenue,
   Topeka, Kansas

TERRY A. MILBERGER
- ------------------
SENIOR VICE PRESIDENT AND SENIOR PORTFOLIO MANAGER--Security Management Company,
   LLC
SENIOR VICE PRESIDENT--Security Benefit Life Insurance Company; Security Benefit
   Group, Inc.
VICE PRESIDENT--Security Equity Fund; SBL Fund
BOARD MEMBER--Topeka Parks and Recreation  Foundation,  City Hall, 215 East 7th,
   Room 259, Topeka, Kansas

AMY J. LEE
- ----------
VICE PRESIDENT,  ASSOCIATE  GENERAL  COUNSEL AND  ASSISTANT  SECRETARY--Security
   Benefit Life Insurance Company; Security Benefit Group, Inc.
SECRETARY--Security  Management  Company,  LLC;  Security  Distributors,   Inc.;
   Security  Cash Fund;  Security  Equity Fund;  Security  Municipal  Bond Fund;
   Security  Mid Cap  Growth  Fund;  SBL Fund;  Security  Large Cap Value  Fund;
   Security Income Fund;  Security Financial Resources  Collective  Investments,
   LLC; First Advantage Insurance Agency, Inc.
DIRECTOR--Midland  Hospice Care,  Inc.,  200 SW Frazier  Court,  Topeka,  Kansas
   66606; YWCA, 225 SW 12th Street, Topeka, Kansas

BRENDA M. HARWOOD
- -----------------
ASSISTANT VICE PRESIDENT AND TREASURER--Security Management Company, LLC
TREASURER--Security  Equity Fund;  Security Mid Cap Growth Fund;  Security Large
   Cap Value Fund;  Security Income Fund; Security Cash Fund; SBL Fund; Security
   Municipal Bond Fund
ASSISTANT VICE  PRESIDENT--Security  Benefit Life  Insurance  Company;  Security
   Benefit Group, Inc.
VICE PRESIDENT AND DIRECTOR--Security Distributors, Inc.

STEVEN M. BOWSER
- ----------------
VICE PRESIDENT AND SENIOR PORTFOLIO  MANAGER--Security  Management Company, LLC;
   Security Benefit Life Insurance Company; Security Benefit Group, Inc.
VICE PRESIDENT--Security Income Fund; SBL Fund

CINDY L. SHIELDS
- ----------------
VICE PRESIDENT-HEAD  OF EQUITY  MANAGEMENT--Security  Management  Company,  LLC;
   Security Benefit Life Insurance Company; Security Benefit Group, Inc.
VICE PRESIDENT--SBL Fund; Security Equity Fund
DIRECTOR--ERC Resource and Referral, 1710 SW 10th, Topeka, Kansas

JAMES P. SCHIER
- ---------------
VICE PRESIDENT AND SENIOR PORTFOLIO  MANAGER--Security  Management Company, LLC;
   Security Benefit Life Insurance Company; Security Benefit Group, Inc.
VICE PRESIDENT--SBL Fund; Security Equity Fund; Security Mid Cap Growth Fund

CHRISTOPHER D. SWICKARD
- -----------------------
ASSISTANT  SECRETARY--Security  Management  Company,  LLC;  Security  Cash Fund;
   Security Equity Fund;  Security Municipal Bond Fund;  Security Mid Cap Growth
   Fund; SBL Fund; Security Large Cap Value Fund; Security Income Fund
SECOND VICE  PRESIDENT AND ASSISTANT  COUNSEL--Security  Benefit Life  Insurance
   Company; Security Benefit Group, Inc.
DIRECTOR AND SECRETARY--Security Benefit Academy, Inc.

DAVID G. TOUSSAINT
- ------------------
ASSISTANT VICE PRESIDENT AND PORTFOLIO  MANAGER--Security Benefit Life Insurance
   Company; Security Benefit Group, Inc.; Security Management Company, LLC
VICE PRESIDENT--Security Income Fund and SBL Fund
FORMER VICE PRESIDENT - ADMINISTRATION--AIG Life Companies, Wilmington, Delaware

CHRISTOPHER L. PHALEN
- ---------------------
ASSISTANT VICE PRESIDENT AND PORTFOLIO  MANAGER--Security Benefit Life Insurance
   Company; Security Benefit Group, Inc.; Security Management Company, LLC
VICE PRESIDENT--Security Income Fund and SBL Fund

FRANK D. MEMMO
- --------------
VICE PRESIDENT--Security Benefit Life Insurance Company; Security Benefit Group,
   Inc.; Security Management Company, LLC; Security Financial Resources, Inc.
DIRECTOR--Security Distributors, Inc.

GREGORY J. GARVIN
- -----------------
SENIOR VICE PRESIDENT--Security Benefit Life Insurance Company; Security Benefit
   Group, Inc.; Security Management Company, LLC
PRESIDENT AND DIRECTOR--Security  Distributors,  Inc.; First Advantage Insurance
   Agency, Inc.
DIRECTOR--YMCA, 421 Van Buren, Topeka, Kansas

MARK MITCHELL
- -------------
VICE PRESIDENT AND PORTFOLIO  MANAGER--Security  Benefit Life Insurance Company;
   Security Benefit Group, Inc.; Security Management Company, LLC
PAST VICE PRESIDENT AND PORTFOLIO MANAGER--GE Asset Management

*Located at One Security Benefit Place, Topeka, Kansas 66636-0001

OPPENHEIMERFUNDS, INC.

OppenheimerFunds, Inc. is a sub-adviser of the Registrant.

TIMOTHY L. ABBUHL
- -----------------
POSITION WITH OPPENHEIMER FUNDS, INC.--Assistant Vice President
OTHER AFFILIATIONS--None

AMY B. ADAMSHICK
- ----------------
POSITION WITH OPPENHEIMER FUNDS, INC.--Vice President
OTHER  AFFILIATIONS--Formerly  at Scudder  Kemper  Investments  (July 1998 - May
   2000)

CHARLES E. ALBERS
- -----------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Senior Vice President
OTHER AFFILIATIONS--None

EDWARD J. AMBERGER
- ------------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Assistant Vice President
OTHER AFFILIATIONS--None

JANETTE APRILANTE
- -----------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Assistant Vice President
OTHER AFFILIATIONS--None

HANY S. AYAD
- ------------
POSITION WITH OPPENHEIMER FUNDS, INC.--Assistant Vice President
OTHER AFFILIATIONS--None

VICTOR W. BABIN
- ---------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Senior Vice President
OTHER AFFILIATIONS--None

BRUCE L. BARTLETT
- -----------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Senior Vice President
OTHER AFFILIATIONS--None

VICTORIA BASKA
- --------------
POSITION WITH OPPENHEIMER FUNDS, INC.--Assistant Vice President
OTHER AFFILIATIONS--None

GEORGE BATEJAN
- --------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Executive Vice President/Chief Information
   Officer
OTHER AFFILIATIONS--None

KEVIN BAUM
- ----------
POSITION WITH OPPENHEIMER FUNDS, INC.--Assistant Vice President
OTHER AFFILIATIONS--None

CONNIE BECHTOLT
- ---------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Assistant Vice President
OTHER AFFILIATIONS--None

KATHLEEN BEICHERT
- -----------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Vice President
OTHER AFFILIATIONS--None

RAJEEV BHAMAN
- -------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Vice President
OTHER AFFILIATIONS--None

MARK BINNING
- ------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Assistant Vice President
OTHER AFFILIATIONS--None

ROBERT J. BISHOP
- ----------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Vice President
OTHER AFFILIATIONS--None

JOHN R. BLOMFIELD
- -----------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Vice President
OTHER AFFILIATIONS--None

CHAD BOLL
- ---------
POSITION WITH OPPENHEIMERFUNDS, INC.--Assistant Vice President
OTHER AFFILIATIONS--None

LOWELL SCOTT BROOKS
- -------------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Vice President
OTHER AFFILIATIONS--None

SCOTT BURROUGHS
- ---------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Vice President
OTHER AFFILIATIONS--None

ADELE A. CAMPBELL
- -----------------
POSITION WITH  OPPENHEIMERFUNDS,  INC.--Assistant  Vice  President  &  Assistant
   Treasurer: Rochester Division
OTHER AFFILIATIONS--None

MICHAEL A. CARBUTO
- ------------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Vice President
OTHER AFFILIATIONS--None

PETER V. COCUZZA
- -----------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Vice President
OTHER AFFILIATIONS--None

JULIE C. CUSKER
- ---------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Assistant Vice President: Rochester Division
OTHER AFFILIATIONS--None

O. LEONARD DARLING
- ------------------
POSITION WITH  OPPENHEIMERFUNDS,  INC.--Vice Chairman,  Executive Vice President
   and Chief Investment Officer and Director
OTHER  AFFILIATIONS--Chairman  of the Board and a director (since June 1999) and
   Senior  Managing   Director  (since  December  1998)  of  HarbourView   Asset
   Management   Corporation;   a  director  (since  July  2001)  of  Oppenheimer
   Acquisition Corp.; a director (since March 2000) of OFI Private  Investments,
   Inc.;  Chairman of the Board,  Senior  Managing  Director and Director (since
   February 2001) of OAM  Institutional,  Inc.; Trustee (since 1993) of Awhtolia
   College - Greece

JOHN M. DAVIS
- -------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Assistant Vice President
OTHER AFFILIATIONS--None

ROBERT A. DENSEN
- ----------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Senior Vice President
OTHER AFFILIATIONS--None

RUGGERO DE'ROSSI
- ----------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Vice President
OTHER  AFFILIATIONS--Formerly,  Chief Strategist at ING Barings (July 1998-March
   2000)

CRAIG P. DINSELL
- ----------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Executive Vice President
OTHER AFFILIATIONS--None

RANDALL C. DISHMON
- ------------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Assistant Vice President
OTHER AFFILIATIONS--None

STEVEN D. DOMBROWER
- -------------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Vice President
OTHER AFFILIATIONS--None

BRUCE C. DUNBAR
- ---------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Vice President
OTHER AFFILIATIONS--None

RICHARD EDMISTON
- ----------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Assistant Vice President
OTHER AFFILIATIONS--None

DANIEL R. ENGSTROM
- ------------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Assistant Vice President
OTHER AFFILIATIONS--None

ARMAND B. ERPF
- --------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Assistant Vice President
OTHER AFFILIATIONS--None

GEORGE R. EVANS
- ---------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Vice President
OTHER AFFILIATIONS--None

EDWARD N. EVERETT
- -----------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Assistant Vice President
OTHER AFFILIATIONS--None

GEORGE FAHEY
- ------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Vice President
OTHER AFFILIATIONS--None

LESLIE A. FALCONIO
- ------------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Vice President
OTHER AFFILIATIONS--None

SCOTT T. FARRAR
- ---------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Vice President
OTHER AFFILIATIONS--Assistant  Treasurer of Oppenheimer Millennium Funds plc; an
   officer of other Oppenheimer funds

KATHERINE P. FELD
- -----------------
POSITION  WITH  OPPENHEIMERFUNDS,   INC.--Vice  President,  Senior  Counsel  and
   Secretary
OTHER   AFFILIATIONS--Vice   President   and   Secretary   of   OppenheimerFunds
   Distributor,  Inc.;  Secretary  and Director of Centennial  Asset  Management
   Corporation;   Vice  President  and  Secretary  of  Oppenheimer   Partnership
   Holdings,   Inc.,  Shareholder  Financial  Services,   Inc.  and  Shareholder
   Services, Inc.

RONALD H. FIELDING
- ------------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Senior Vice President; Chairman: Rochester
   Division
OTHER  AFFILIATIONS--Director  of ICI Mutual Insurance Company;  Governor of St.
   John's  College;  Director of  International  Museum of Photography at George
   Eastman House;  An Officer and/or  Portfolio  Manager of certain  Oppenheimer
   funds

P. LYMAN FOSTER
- ---------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Senior Vice President
OTHER  AFFILIATIONS--Formerly  Vice President of Prudential  Investments (August
   1999 - April 2000)

DAVID J. FOXHOVEN
- -----------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Assistant Vice President
OTHER AFFILIATIONS--None

COLLEEN M. FRANCA
- -----------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Assistant Vice President
OTHER AFFILIATIONS--None

CRYSTAL FRENCH
- --------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Vice President
OTHER AFFILIATIONS--None

DAN P. GANGEMI
- --------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Vice President
OTHER AFFILIATIONS--None

SUBRATA GHOSE
- -------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Assistant Vice President
OTHER AFFILIATIONS--Formerly, Equity Analyst at Fidelity Investments (1995-March
   2000)

CHARLES W. GILBERT
- ------------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Assistant Vice President
OTHER AFFILIATIONS--None

ALAN C. GILSTON
- ---------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Vice President
OTHER AFFILIATIONS--None

JILL E. GLAZERMAN
- -----------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Vice President
OTHER AFFILIATIONS--None

PAUL M. GOLDENBERG
- ------------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Vice President
OTHER AFFILIATIONS--None

MIKHAIL Y. GOLDVERG
- -------------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Vice President
OTHER AFFILIATIONS--None

LAURA GRANGER
- -------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Vice President
OTHER  AFFILIATIONS--Formerly  Portfolio Manager at Fortis Advisors (July 1998 -
   October 2000)

JEREMY H. GRIFFITHS
- -------------------
POSITION WITH OPPENHEIMERFUNDS,  INC.--Executive Vice President, Chief Financial
   Officer and Director
OTHER   AFFILIATIONS--Chief   Financial  Officer,   Treasurer  and  director  of
   Oppenheimer  Acquisition Corp.; Executive Vice President of HarbourView Asset
   Management   Corporation;   President   and   director  of   OppenheimerFunds
   International Ltd.; President. Chief Executive Officer, Chairman of the Board
   and director of  Oppenheimer  Trust Company;  director of Trinity  Investment
   Management Corp., Secretary/Treasurer and director of OppenheimerFunds Legacy
   Program (a Colorado non-profit corporation);  Executive Vice President of OFI
   Private  Investments,  Inc.;  Executive Vice President of OAM  Institutional,
   Inc. and a Member and Fellow of the Institute of Chartered Accountants.

ROBERT GRILL
- ------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Senior Vice President
OTHER AFFILIATIONS--None

ROBERT GUY
- ----------
POSITION WITH OPPENHEIMERFUNDS, INC.--Senior Vice President
OTHER AFFILIATIONS--None

ROBERT HALEY
- ------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Assistant Vice President
OTHER AFFILIATIONS--None

KELLY HANEY
- -----------
POSITION WITH OPPENHEIMERFUNDS, INC.--Assistant Vice President
OTHER AFFILIATIONS--None

THOMAS B. HAYES
- ---------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Vice President
OTHER AFFILIATIONS--None

DOROTHY F. HIRSHMAN
- -------------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Vice President
OTHER AFFILIATIONS--None

MERRYL I. HOFFMAN
- -----------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Vice President and Senior Counsel
OTHER AFFILIATIONS--Secretary of Oppenheimer Trust Company

MERRELL I. HORA
- ---------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Vice President
OTHER AFFILIATIONS--None

SCOTT T. HUEBL
- --------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Vice President
OTHER AFFILIATIONS--None

MARGARET HUI
- ------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Assistant Vice President
OTHER  AFFILIATIONS--Formerly  Vice  President  -  Syndications  of  Sanwa  Bank
   California (January 1998 - September 1999)

JAMES G. HYLAND
- ---------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Assistant Vice President
OTHER AFFILIATIONS--None

STEVE P. ILNITZKI
- -----------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Senior Vice President
OTHER AFFILIATIONS--Formerly  Vice President of Product Management at Ameritrade
   (until March 2000)

KATHLEEN T. IVES
- ----------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Vice President and Assistant Counsel
OTHER AFFILIATIONS--None

WILLIAM JAUME
- -------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Vice President
OTHER  AFFILIATIONS--Senior  Vice  President  (since April 2000) of  HarbourView
   Asset Management  Corporation and of OAM Institutional,  Inc. (since February
   2001)

FRANK V. JENNINGS
- -----------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Vice President
OTHER AFFILIATIONS--None

LEWIS A. KAMMAN
- ---------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Vice President
OTHER AFFILIATIONS--None

JENNIFER E. KANE
- ----------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Assistant Vice President
OTHER AFFILIATIONS--None

LYNN O. KEESHAN
- ---------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Senior Vice President
OTHER AFFILIATIONS--None

THOMAS W. KEFFER
- ----------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Senior Vice President
OTHER AFFILIATIONS--None

KRISTINA J. KELLER
- ------------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Vice President
OTHER AFFILIATIONS--None

MICHAEL KEOGH
- -------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Vice President
OTHER AFFILIATIONS--None

MICHAEL KIRKPATRICK
- -------------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Assistant Vice President
OTHER AFFILIATIONS--None

WALTER G. KONOPS
- ----------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Assistant Vice President
OTHER AFFILIATIONS--None

AVRAM D. KORNBERG
- -----------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Senior Vice President
OTHER AFFILIATIONS--None

DIMITRIOS KOURKOULAKOS
- ----------------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Assistant Vice President
OTHER AFFILIATIONS--None

JOHN S. KOWALIK
- ---------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Senior Vice President
OTHER AFFILIATIONS--None

JOSEPH KRIST
- ------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Assistant Vice President
OTHER AFFILIATIONS--None

CHRISTOPHER M. LEAVY
- --------------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Senior Vice President
OTHER  AFFILIATIONS--Formerly  Vice  President and  Portfolio  Manager at Morgan
   Stanley Investment Management (1997-September 2000)

DINA C. LEE
- -----------
POSITION WITH  OPPENHEIMERFUNDS,  INC.--Assistant  Vice  President and Assistant
   Counsel
OTHER  AFFILIATIONS--Formerly  an attorney  and  Assistant  Secretary at Van Eck
   Global (until December 2000)

MICHAEL S. LEVINE
- -----------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Vice President
OTHER AFFILIATIONS--None

SHANQUAN LI
- -----------
POSITION WITH OPPENHEIMERFUNDS, INC.--Vice President
OTHER AFFILIATIONS--None

MITCHELL J. LINDAUER
- --------------------
POSITION WITH  OPPENHEIMERFUNDS,  INC.--Vice  President  and  Assistant  General
   Counsel
OTHER AFFILIATIONS--None

MALISSA B. LISCHIN
- ------------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Assistant Vice President
OTHER AFFILIATIONS--Formerly Associate Manager, Investment Management Analyst at
   Prudential (1996-March 2000)

DAVID P. LOLLI
- --------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Assistant Vice President
OTHER AFFILIATIONS--None

DANIEL G. LOUGHRAN
- ------------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Vice President: Rochester Division
OTHER AFFILIATIONS--None

DAVID M. MABRY
- --------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Vice President
OTHER AFFILIATIONS--None

STEVE MACCHIA
- -------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Vice President
OTHER AFFILIATIONS--None

MARIANNE MANZOLILLO
- -------------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Vice President
OTHER  AFFILIATIONS--Formerly   Vice  President  for  DLJ  High  Yield  Research
   Department (February 1993 - July 2000)

PHILIP T. MASTERSON
- -------------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Vice President and Associate Counsel
OTHER AFFILIATIONS--None

LISA MIGAN
- ----------
POSITION WITH OPPENHEIMERFUNDS, INC.--Assistant Vice President
OTHER AFFILIATIONS--None

ANDREW J. MIKA
- --------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Senior Vice President
OTHER AFFILIATIONS--None

JOY MILAN
- ---------
POSITION WITH OPPENHEIMERFUNDS, INC.--Vice President
OTHER AFFILIATIONS--None

DENIS R. MOLLEUR
- ----------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Vice President and Senior Counsel
OTHER AFFILIATIONS--None

NIKOLAOS D. MONOYIOS
- --------------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Vice President
OTHER AFFILIATIONS--None

JOHN MURPHY
- -----------
POSITION  WITH  OPPENHEIMERFUNDS,   INC.--Chairman,   Chief  Executive  Officer,
   President and Director
OTHER  AFFILIATIONS--  President and a director (since July 2001) of Oppenheimer
   Acquisition Corp.;  President,  Chief Executive Officer and a director (since
   July 2001) of OFI Private  Investments,  Inc.; Chairman and a director (since
   July  2001)  of  Shareholder  Services,  Inc.  and of  Shareholder  Financial
   Services,  Inc.;  President and a director  (since July 2001) of  Oppenheimer
   Partnership  Holdings,  Inc.;  a director  of  HarbourView  Asset  Management
   Corporation and of Oppenheimer Real Asset Management, Inc. (since July 2001);
   President  and a  director  (since  July  2001)  of  OppenheimerFunds  Legacy
   Program;  formerly  Trustee  (1999-2001)  of MML Series  Investment  Fund, an
   open-end  investment  company;  Chief  Operating  Officer (August 2000 - July
   2001) of OppenheimerFunds, Inc.

THOMAS J. MURRAY
- ----------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Vice President
OTHER AFFILIATIONS--None

KENNETH NADLER
- --------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Vice President
OTHER AFFILIATIONS--None

DAVID NEGRI
- -----------
POSITION WITH OPPENHEIMERFUNDS, INC.--Senior Vice President
OTHER AFFILIATIONS--None

BARBARA NIEDERBRACH
- -------------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Assistant Vice President
OTHER AFFILIATIONS--None

ROBERT A. NOWACZYK
- ------------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Vice President
OTHER AFFILIATIONS--None

RAYMOND C. OLSON
- ----------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Assistant Vice President
OTHER AFFILIATIONS--None

GINA M. PALMIERI
- ----------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Vice President
OTHER AFFILIATIONS--None

FRANK J. PAVLAK
- ---------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Vice President
OTHER AFFILIATIONS--None

DAVID P. PELLEGRINO
- -------------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Vice President
OTHER AFFILIATIONS--None

JAMES F. PHILLIPS
- -----------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Assistant Vice President
OTHER AFFILIATIONS--None

JANE C. PUTNAM
- --------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Vice President
OTHER AFFILIATIONS--None

MICHAEL E. QUINN
- ----------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Vice President
OTHER AFFILIATIONS--None

JULIE S. RADTKE
- ---------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Vice President
OTHER AFFILIATIONS--None

NAOMI J. RAPINI
- ---------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Assistant Vice President: Rochester Division
OTHER AFFILIATIONS--None

THOMAS P. REEDY
- ---------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Vice President
OTHER  AFFILIATIONS--Vice  President  (since  April 1999) of  HarbourView  Asset
   Management Corporation

JOHN REINHARDT
- --------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Vice President: Rochester Division
OTHER AFFILIATIONS--None

DAVID ROBERTSON
- ---------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Senior Vice President
OTHER AFFILIATIONS--Former  Director of Sales & Marketing at Schroder Investment
   Management North America (March 1998 - March 2000)

ANTOINETTE RODRIGUEZ
- --------------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Assistant Vice President
OTHER AFFILIATIONS--None

JEFFREY S. ROSEN
- ----------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Vice President
OTHER AFFILIATIONS--None

RICHARD H. RUBINSTEIN
- ---------------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Senior Vice President
OTHER AFFILIATIONS--None

LAWRENCE E. RUDNICK
- -------------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Assistant Vice President
OTHER AFFILIATIONS--None

JAMES H. RUFF
- -------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Executive Vice President
OTHER AFFILIATIONS--President and director of the OppenheimerFunds  Distributor,
   Inc.; Executive Vice President (since March 2000) of OFI Private Investments,
   Inc.

ANDREW RUOTOLO
- --------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Executive Vice President
OTHER  AFFILIATIONS--President  and  director  of  Shareholder  Services,  Inc.;
   formerly Chief Operations  Officer for American  International  Group (August
   1997-September 1999)

ROHIT SAH
- ---------
POSITION WITH OPPENHEIMERFUNDS, INC.--Assistant Vice President
OTHER AFFILIATIONS--None

VALERIE SANDERS
- ---------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Vice President
OTHER AFFILIATIONS--None

KENNETH SCHLUPP
- ---------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Vice President
OTHER  AFFILIATIONS--Assistant  Vice President (since March 2000) of OFI Private
   Investments, Inc.

JEFFREY R. SCHNEIDER
- --------------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Vice President
OTHER AFFILIATIONS--None

ELLEN P. SCHOENFELD
- -------------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Vice President
OTHER AFFILIATIONS--None

ALLAN P. SEDMAK
- ---------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Assistant Vice President
OTHER AFFILIATIONS--None

JENNIFER L. SEXTON
- ------------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Vice President
OTHER AFFILIATIONS--None

MARTHA A. SHAPIRO
- -----------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Vice President
OTHER AFFILIATIONS--None

STEVEN J. SHEERIN
- -----------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Vice President
OTHER  AFFILIATIONS--Formerly  Consultant with Pricewaterhouse Coopers (November
   2000 - May  2001  prior to which he was a Vice  President  of  Merrill  Lynch
   Pierce Fenner & Smith, Inc. (July 1998 - October 2000)

RICHARD A. SOPER
- ----------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Vice President
OTHER AFFILIATIONS--None

KEITH J. SPENCER
- ----------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Vice President
OTHER AFFILIATIONS--None

CATHLEEN R. STAHL
- -----------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Assistant Vice President
OTHER  AFFILIATIONS--Assistant  Vice  President  & Manager of Women &  Investing
   Program

RICHARD A. STEIN
- ----------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Vice President: Rochester Division
OTHER AFFILIATIONS--None

ARTHUR P. STEINMETZ
- -------------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Senior Vice President
OTHER AFFILIATIONS--None

JAYNE M. STEVLINGSON
- --------------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Vice President
OTHER AFFILIATIONS--None

GREGORY J. STITT
- ----------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Vice President
OTHER AFFILIATIONS--None

JOHN P. STOMA
- -------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Senior Vice President
OTHER AFFILIATIONS--None

DEBORAH A. SULLIVAN
- -------------------
POSITION WITH  OPPENHEIMERFUNDS,  INC.--Assistant  Vice  President and Assistant
   Counsel
OTHER  AFFILIATIONS--Formerly,   Associate  General  Counsel,  Chief  Compliance
   Officer,  Corporate  Secretary  and Vice  President  of  Winmill  & Co.  Inc.
   (formerly Bull & Bear Group, Inc.), CEF Advisers,  Inc. (formerly Bull & Bear
   Advisers,   Inc.),   Investor  Service  Center,  Inc.  and  Midas  Management
   Corporation (November 1997 - March 2000)

MARY SULLIVAN
- -------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Assistant Vice President
OTHER AFFILIATIONS--None

KEVIN L. SURRETT
- ----------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Assistant Vice President
OTHER AFFILIATIONS--None

JAMES C. SWAIN
- --------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Vice Chairman of the Board
OTHER  AFFILIATIONS--Chairman,  CEO and Trustee, Director or Managing Partner of
   the  Denver-based  Oppenheimer  Funds;  formerly,  President  and Director of
   Centennial  Asset  Management  Corporation  and  Chairman  of  the  Board  of
   Shareholder Services, Inc.

SUSAN B. SWITZER
- ----------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Vice President
OTHER AFFILIATIONS--None

ANTHONY A. TANNER
- -----------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Vice President: Rochester Division
OTHER AFFILIATIONS--None

PAUL E. TEMPLE
- --------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Vice President
OTHER AFFILIATIONS--Formerly (until May 2000) Director of Product Development at
   Prudential

MARK S. VANDEHEY
- ----------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Vice President
OTHER AFFILIATIONS--None

MAUREEN VANNORSTRAND
- --------------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Vice President
OTHER AFFILIATIONS--None

PHILLIP F. VOTTIERO
- -------------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Vice President
OTHER AFFILIATIONS--None

SAMUEL SLOAN WALKER
- -------------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Vice President
OTHER AFFILIATIONS--None

TERESA M. WARD
- --------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Vice President
OTHER AFFILIATIONS--None

JERRY A. WEBMAN
- ---------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Senior Vice President
OTHER AFFILIATIONS--None

CHRISTOPHER D. WEILER
- ---------------------
POSITION  WITH  OPPENHEIMERFUNDS,   INC.--Assistant  Vice  President:  Rochester
   Division
OTHER AFFILIATIONS--None

BARRY D. WEISS
- --------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Vice President
OTHER AFFILIATIONS--Formerly with Fitch IBCA (1996-January 2000)

CHRISTINE WELLS
- ---------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Vice President
OTHER AFFILIATIONS--None

JOSEPH J. WELSH
- ---------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Vice President
OTHER AFFILIATIONS--None

CATHERINE M. WHITE
- ------------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Assistant Vice President
OTHER  AFFILIATIONS--Formerly,  Assistant  Vice President with Gruntal & Co. LLC
   (September  1998 - October 2000);  member of the American  Society of Pension
   Actuaries (ASPA) since 1995

WILLIAM L. WILBY
- ----------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Senior Vice President
OTHER  AFFILIATIONS--Senior   Investment  Officer,   Director  of  International
   Equities; Senior Vice President of HarbourView Asset Management Corporation

DONNA M. WINN
- -------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Senior Vice President
OTHER  AFFILIATIONS--Senior  Vice  President  (since  March 2000) of OFI Private
   Investments, Inc.

KEITH WINSTON
- -------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Senior Vice President
OTHER AFFILIATIONS--Principal at Richards & Tierney, Inc. (until June 2001)

BRIAN W. WIXTED
- ---------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Senior Vice President and Treasurer
OTHER AFFILIATIONS--Treasurer (since March 1999) of HarbourView Asset Management
   Corporation,  Shareholder Services,  Inc.,  Oppenheimer Real Asset Management
   Corporation, Shareholder Financial Services, Inc. and Oppenheimer Partnership
   Holdings,  Inc., of OFI Private  Investments,  Inc. (since March 2000) and of
   OppenheimerFunds  International  Ltd. and  Oppenheimer  Millennium  Funds plc
   (since  May 2000)  and of OAM  Institutional,  Inc.  (since  February  2001);
   Treasurer and Chief  Financial  Officer (since May 2000) of  OppenheimerTrust
   Company;  Assistant  Treasurer (since March 1999) of Oppenheimer  Acquisition
   Corp. and of  OppenheimerFunds  Legacy Program (since April 2000); an Officer
   of other Oppenheimer funds

CAROL WOLF
- ----------
POSITION WITH OPPENHEIMERFUNDS, INC.--Senior Vice President
OTHER  AFFILIATIONS--An  officer and/or portfolio manager of certain Oppenheimer
   funds; serves on the Board of Chinese Children Adoption International Parents
   Council,  Supporters of Children, and the Advisory Board of Denver Children's
   Hospital Oncology Department

KURT WOLFGRUBER
- ---------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Senior Vice President
OTHER  AFFILIATIONS--Senior  Investment Officer,  Director of Domestic Equities;
   member of the Investment Product Review Committee and the Executive Committee
   of HarbourView Asset Management Corporation

CALEB C. WONG
- -------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Vice President
OTHER AFFILIATIONS--None

ROBERT G. ZACK
- --------------
POSITION WITH  OPPENHEIMERFUNDS,  INC.--Senior  Vice President,  Secretary,  and
   Acting General Counsel
OTHER   AFFILIATIONS--Assistant   Secretary  of  Shareholder   Services,   Inc.,
   Shareholder Financial Services, Inc., OppenheimerFunds International Ltd. and
   Oppenheimer  Millennium  Funds plc;  an officer of other  Oppenheimer  funds;
   formerly Associate General Counsel (May 1981 - October 2001)

JILL ZACHMAN
- ------------
POSITION  WITH  OPPENHEIMERFUNDS,   INC.--Assistant  Vice  President:  Rochester
   Division
OTHER AFFILIATIONS--None

NEAL A. ZAMORE
- --------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Vice President
OTHER AFFILIATIONS--Formerly (until May 2000) Vice President at GE Capital

MARK D. ZAVANELLI
- -----------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Vice President
OTHER AFFILIATIONS--None

ARTHUR J. ZIMMER
- ----------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Senior Vice President
OTHER  AFFILIATIONS--Senior  Vice  President  (since April 1999) of  HarbourView
   Asset Management Corporation

SUSAN ZIMMERMAN
- ---------------
POSITION WITH OPPENHEIMERFUNDS, INC.--Vice President
OTHER AFFILIATIONS--None

The  Oppenheimer  Funds  include  the  New  York-based  Oppenheimer  Funds,  the
Denver-based Oppenheimer Funds and the Oppenheimer Quest/Rochester Funds, as set
forth below:

                        NEW YORK-BASED OPPENHEIMER FUNDS

Oppenheimer California Municipal Fund      Oppenheimer International
Oppenheimer Capital Appreciation Fund        Small Company Fund
Oppenheimer Capital Preservation Fund      Oppenheimer Mid Cap Value Fund
Oppenheimer Concentrated Growth Fund       Oppenheimer Money Market Fund, Inc.
Oppenheimer Developing Markets Fund        Oppenheimer Multi-Sector Income Trust
Oppenheimer Discovery Fund                 Oppenheimer Multi-State
Oppenheimer Emerging Growth Fund             Municipal Trust
Oppenheimer Emerging                       Oppenheimer Multiple Strategies Fund
  Technologies Fund                        Oppenheimer Municipal Bond Fund
Oppenheimer Enterprise Fund                Oppenheimer New York Municipal Fund
Oppenheimer Europe Fund                    Oppenheimer Series Fund, Inc.
Oppenheimer Global Fund                    Oppenheimer Special Value Fund
Oppenheimer Global                         Oppenheimer Trinity Core Fund
  Growth & Income Fund                     Oppenheimer Trinity Large
Oppenheimer Gold &                           Cap Growth Fund
  Special Minerals Fund                    Oppenheimer Trinity Value Fund
Oppenheimer Growth Fund                    Oppenheimer U.S. Government Trust
Oppenheimer International Growth Fund

                              QUEST/ROCHESTER FUNDS

Limited Term New York Municipal Fund       Oppenheimer Quest For Value Funds
Oppenheimer Convertible                    Oppenheimer Quest Global
  Securities Fund                            Value Fund, Inc.
Oppenheimer Quest Capital                  Oppenheimer Quest Value Fund, Inc.
  Value Fund, Inc.                         Rochester Fund Municipals

                         DENVER-BASED OPPENHEIMER FUNDS

Centennial America Fund, L.P.              Oppenheimer Main Street
Centennial California Tax Exempt Trust       Opportunity Fund
Centennial Government Trust                Oppenheimer Main Street
Centennial Money Market Trust                Small Cap Fund
Centennial New York Tax Exempt Trust       Oppenheimer Main Street Funds, Inc.
Centennial Tax Exempt Trust                Oppenheimer Municipal Fund
Oppenheimer Cash Reserves                  Oppenheimer Real Asset Fund
Oppenheimer Champion Income Fund           Oppenheimer Select Managers
Oppenheimer Capital Income Fund            Oppenheimer Senior Floating Rate Fund
Oppenheimer High Yield Fund                Oppenheimer Strategic Income Fund
Oppenheimer Integrity Funds                Oppenheimer Total Return Fund, Inc.
Oppenheimer International Bond Fund        Oppenheimer Variable Account Funds
Oppenheimer Limited-Term                   Panorama Series Fund, Inc.
  Government Fund

The  address of  OppenheimerFunds,  Inc.,  OppenheimerFunds  Distributor,  Inc.,
HarbourView  Asset Management Corp.,  Oppenheimer  Partnership  Holdings,  Inc.,
Oppenheimer  Acquisition Corp. and OFI Private Investments,  Inc. is 498 Seventh
Avenue, New York, New York 10018.

The  address of the New  York-based  Oppenheimer  Funds,  the Quest  Funds,  the
Rochester-based Funds, the Denver-based Oppenheimer Funds, Shareholder Financial
Services,   Inc.,  Shareholder  Services,   Inc.,   OppenheimerFunds   Services,
Centennial  Asset  Management   Corporation,   Centennial   Capital  Corp.,  and
Oppenheimer  Real Asset  Management,  Inc. is 6803 South Tucson Way,  Englewood,
Colorado 80112.

WELLINGTON MANAGEMENT COMPANY, LLP

Wellington Management Company, LLP ("Wellington  Management") is the Sub-Adviser
for the Technology  Series of Equity Fund and Series K, Series M and Series T of
SBL Fund. The principal  business  address of Wellington  Management is 75 State
Street,  Boston,  Massachusetts  02109.  Wellington  Management is an investment
adviser registered under the Investment Advisers Act of 1940.

NAME,  BUSINESS AND OTHER CONNECTIONS OF THE EXECUTIVE OFFICERS AND DIRECTORS OF
THE SUB-ADVISER.

KENNETH LEE ABRAMS
- ------------------
PARTNER--Wellington Management Company, LLP

NICHOLAS CHARLES ADAMS
- ----------------------
PARTNER--Wellington Management Company, LLP

RAND LAWRENCE ALEXANDER
- -----------------------
PARTNER--Wellington Management Company, LLP

DEBORAH LOUISE ALLINSON
- -----------------------
PARTNER--Wellington Management Company, LLP
VICE PRESIDENT--Wellington Trust Company, NA

STEVEN C. ANGELI
- ----------------
PARTNER--Wellington Management Company, LLP

JAMES HALSEY AVERILL
- --------------------
PARTNER--Wellington Management Company, LLP

JOHN F. AVERILL
- ---------------
PARTNER--Wellington Management Company, LLP
VICE PRESIDENT--Wellington Hedge Management, Inc.

KARL E. BANDTEL
- ---------------
PARTNER--Wellington Management Company, LLP
SENIOR VICE  PRESIDENT--Wellington  Hedge  Management,  Inc.,  Wellington Global
   Holdings, Ltd., and Wellington Global Administrator, Ltd.

MARK JAMES BECKWITH
- -------------------
PARTNER--Wellington Management Company, LLP

KEVIN J. BLAKE
- --------------
PARTNER--Wellington Management Company, LLP

WILLIAM NICHOLAS BOOTH
- ----------------------
PARTNER--Wellington Management Company, LLP

MICHAEL J. BOUDENS
- ------------------
PARTNER--Wellington Management Company, LLP
SENIOR VICE  PRESIDENT--Wellington  Global  Administrator,  Ltd. and  Wellington
   Hedge Management, Inc.

PAUL BRAVERMAN
- --------------
PARTNER--Wellington Management Company, LLP
DIRECTOR--Wellington International Management Company Pte Ltd.
PARTNER AND CFO--Wellington Management International, LLP
PRESIDENT AND TREASURER--Wellington Sales Corporation
VICE PRESIDENT AND TREASURER/CASHIER--Wellington Trust Company, NA
TREASURER--Wellington Hedge Management,  Inc., Wellington Global Holdings, Ltd.,
   and Wellington Global Administrator, Ltd.

ROBERT A. BRUNO
- ---------------
PARTNER--Wellington Management Company, LLP

MARYANN EVELYN CARROLL
- ----------------------
PARTNER--Wellington Management Company, LLP

PAMELA DIPPEL
- -------------
PARTNER--Wellington Management Company, LLP
VICE PRESIDENT--Wellington Trust Company, NA

ROBERT LLOYD EVANS
- ------------------
PARTNER--Wellington Management Company, LLP

LISA DE LA FUENTE FINKEL
- ------------------------
PARTNER--Wellington Management Company, LLP
SENIOR VICE PRESIDENT AND DIRECTOR--Wellington Global Administrator, Ltd.
DIRECTOR--Wellington Global Holdings, Ltd.
SENIOR VICE PRESIDENT--Wellington Hedge Management, Inc.
SUPERVISORY BOARD--Wellington Luxembourg S.C.A.
DIRECTOR--Wellington Management Global Holdings, Ltd.
SENIOR VICE PRESIDENT AND DIRECTOR--Wellington Sales Corporation

MARK T. FLAHERTY
- ----------------
PARTNER--Wellington Management Company, LLP
VICE PRESIDENT--Wellington Trust Company, NA

CHARLES TOWNSEND FREEMAN
- ------------------------
PARTNER--Wellington Management Company, LLP

LAURIE ALLEN GABRIEL
- --------------------
MANAGING PARTNER--Wellington Management Company, LLP
SENIOR VICE PRESIDENT--Wellington Global Administrator, Ltd.
SENIOR VICE PRESIDENT AND DIRECTOR--Wellington Hedge Management, Inc.
VICE PRESIDENT--Wellington Trust Company, NA

JOHN HERRICK GOOCH
- ------------------
PARTNER--Wellington   Management   Company,   LLP  and   Wellington   Management
   International, LLP
DIRECTOR AND VICE PRESIDENT--Wellington Trust Company, NA
PRESIDENT--Wellington Hedge Management, Inc.
DIRECTOR AND  PRESIDENT--Wellington  Global Holdings,  Ltd.,  Wellington  Global
   Administrator, Ltd., and Wellington Management Global Holdings, Ltd.

NICHOLAS PETER GREVILLE
- -----------------------
PARTNER--Wellington   Management   Company,   LLP  and   Wellington   Management
   International, LLP
DIRECTOR--Wellington International Management Company Pte Ltd.
SENIOR VICE PRESIDENT--Wellington Global Administrator, Ltd.

PAUL J. HAMEL
- -------------
PARTNER--Wellington Management Company, LLP
VICE PRESIDENT--Wellington Trust Company, NA

LUCIUS TUTTLE HILL, III
- -----------------------
PARTNER--Wellington Management Company, LLP

JEAN M. HYNES
- -------------
PARTNER--Wellington Management Company, LLP

PAUL DAVID KAPLAN
- -----------------
PARTNER--Wellington Management Company, LLP
DIRECTOR--Wellington  Global Holdings,  Ltd.,  Wellington Global  Administrator,
   Ltd., and Wellington Management Global Holdings, Ltd.

JOHN CHARLES KEOGH
- ------------------
PARTNER--Wellington Management Company, LLP
VICE PRESIDENT--Wellington Trust Company, NA

GEORGE CABOT LODGE, JR.
- -----------------------
PARTNER--Wellington Management Company, LLP
SENIOR VICE PRESIDENT--Wellington  Hedge Management,  Inc. and Wellington Global
   Administrator, Ltd.

NANCY THERESE LUKITSH
- ---------------------
PARTNER--Wellington Management Company, LLP
DIRECTOR AND VICE PRESIDENT--Wellington Trust Company, NA
SENIOR VICE PRESIDENT--Wellington  Hedge Management,  Inc. and Wellington Global
   Administrator, Ltd.

MARK THOMAS LYNCH
- -----------------
PARTNER--Wellington Management Company, LLP

CHRISTINE SMITH MANFREDI
- ------------------------
PARTNER--Wellington Management Company, LLP
VICE PRESIDENT--Wellington Trust Company, NA
SENIOR VICE  PRESIDENT--Wellington  Hedge  Management,  Inc.,  Wellington Global
   Holdings, Ltd., and Wellington Global Administrator, Ltd.

EARL EDWARD MCEVOY
- ------------------
PARTNER--Wellington Management Company, LLP

DUNCAN MATHIEU MCFARLAND
- ------------------------
MANAGING PARTNER--Wellington Management Company, LLP
GENERAL PARTNER--Wellington Management International, LLP
DIRECTOR AND VICE PRESIDENT--Wellington Trust Company, NA.
DIRECTOR--Wellington  International  Management  Company  Pte  Ltd.,  Wellington
   Management  Global Holdings,  Ltd.,  Wellington  Global  Holdings,  Ltd., and
   Wellington Global Administrator, Ltd.
CHAIRMAN AND DIRECTOR--Wellington Hedge Management, Inc.

PAUL MULFORD MECRAY III
- -----------------------
PARTNER--Wellington Management Company, LLP

MATTHEW EDWARD MEGARGEL
- -----------------------
PARTNER--Wellington Management Company, LLP

JAMES NELSON MORDY
- ------------------
PARTNER--Wellington Management Company, LLP

DIANE CAROL NORDIN
- ------------------
PARTNER--Wellington Management Company, LLP
SENIOR VICE PRESIDENT--Wellington  Hedge Management,  Inc. and Wellington Global
   Administrator, Ltd.

STEPHEN T. O'BRIEN
- ------------------
PARTNER--Wellington Management Company, LLP

ANDREW S. OFFIT
- ---------------
PARTNER--Wellington Management Company, LLP

EDWARD PAUL OWENS
- -----------------
PARTNER--Wellington Management Company, LLP

SAUL JOSEPH PANNELL
- -------------------
PARTNER--Wellington Management Company, LLP

THOMAS LOUIS PAPPAS
- -------------------
PARTNER--Wellington Management Company, LLP

JONATHAN MARTIN PAYSON
- ----------------------
PARTNER--Wellington Management Company, LLP
DIRECTOR, PRESIDENT AND CHAIRMAN OF THE BOARD--Wellington Trust Company, NA
SENIOR VICE PRESIDENT--Wellington Sales Corporation
DIRECTOR AND  CHAIRMAN--Wellington  Global  Holdings,  Ltd.,  Wellington  Global
   Administrator, Ltd., and Wellington Management Global Holdings, Ltd.

PHILIP H. PERELMUTER
- --------------------
PARTNER--Wellington Management Company, LLP

ROBERT DOUGLAS RANDS
- --------------------
PARTNER--Wellington Management Company, LLP

EUGENE EDWARD RECORD, JR.
- -------------------------
PARTNER--Wellington Management Company, LLP
VICE PRESIDENT--Wellington Trust Company, NA

JAMES ALBERT RULLO
- ------------------
PARTNER--Wellington Management Company, LLP

JOHN ROBERT RYAN
- ----------------
MANAGING PARTNER--Wellington Management Company, LLP
DIRECTOR--Wellington Hedge Management, Inc.

JOSEPH HAROLD SCHWARTZ
- ----------------------
PARTNER--Wellington Management Company, LLP

JAMES H. SHAKIN
- ---------------
PARTNER--Wellington Management Company, LLP

THEODORE SHASTA
- ---------------
PARTNER--Wellington Management Company, LLP

BINKLEY CALHOUN SHORTS
- ----------------------
PARTNER--Wellington Management Company, LLP

SCOTT E. SIMPSON
- ----------------
PARTNER--Wellington Management Company, LLP

TROND SKRAMSTAD
- ---------------
PARTNER--Wellington Management Company, LLP

CATHERINE ANNE SMITH
- --------------------
PARTNER--Wellington Management Company, LLP

STEPHEN ALBERT SODERBERG
- ------------------------
PARTNER--Wellington Management Company, LLP

ERIC STROMQUIST
- ---------------
PARTNER--Wellington Management Company, LLP

BRENDAN JAMES SWORDS
- --------------------
PARTNER--Wellington Management Company, LLP
SENIOR VICE PRESIDENT--Wellington Hedge Management, Inc.
DIRECTOR AND PRESIDENT--Wellington Global Administrator, Ltd., Wellington Global
   Holdings, Ltd., and Wellington Management Global Holdings, Ltd.

HARRIETT TEE TAGGART
- --------------------
PARTNER--Wellington Management Company, LLP

PERRY MARQUES TRAQUINA
- ----------------------
PARTNER--Wellington Management Company, LLP

GENE ROGER TREMBLAY
- -------------------
PARTNER--Wellington Management Company, LLP

MICHAEL AARON TYLER
- -------------------
PARTNER--Wellington Management Company, LLP

MARY ANN TYNAN
- --------------
PARTNER--Wellington Management Company, LLP
PARTNER AND COMPLIANCE OFFICER--Wellington Management International, LLP
SENIOR VICE PRESIDENT, CLERK AND DIRECTOR--Wellington Sales Corporation
VICE PRESIDENT AND TRUST OFFICER--Wellington Trust Company, NA
SUPERVISORY BOARD--Wellington Luxembourg S.C.A.

CLARE VILLARI
- -------------
PARTNER--Wellington Management Company, LLP

ERNST HANS VON METZSCH
- ----------------------
PARTNER--Wellington Management Company, LLP
SENIOR VICE  PRESIDENT--Wellington  Hedge  Management,  Inc.,  Wellington Global
   Holdings, Ltd., and Wellington Global Administrator, Ltd.

JAMES LELAND WALTERS
- --------------------
PARTNER--Wellington Management Company, LLP
DIRECTOR AND TRUST COUNSEL--Wellington Trust Company, NA
DIRECTOR--Wellington International Management Company Pte Ltd.
SENIOR  VICE   PRESIDENT,   ASSISTANT  CLERK  AND   DIRECTOR--Wellington   Sales
   Corporation
DIRECTOR AND DEPUTY  CHAIRMAN--Wellington  Global Holdings,  Ltd. and Wellington
   Global Administrator, Ltd.
DIRECTOR,  SENIOR  VICE  PRESIDENT  AND DEPUTY  CHAIRMAN--Wellington  Management
   Global Holdings, Inc.
SUPERVISORY BOARD--Wellington Luxembourg S.C.A.

KIM WILLIAMS
- ------------
PARTNER--Wellington Management Company, LLP

Please note the principal  business  address for  Wellington  Hedge  Management,
Inc., Wellington Management International, LLP, Wellington Sales Corporation and
Wellington Trust Company, NA is the same as Wellington Management. The principal
business address for Wellington International Management Company Pte Ltd. is Six
Battery Road, Ste. 17-06,  Singapore 049909.  The principal business address for
Wellington Global  Administrator,  Ltd.,  Wellington  Global Holdings,  Ltd. and
Wellington Management Global Holdings, Ltd. is Clarendon House, 2 Church Street,
PO Box HM 666,  Hamilton  HMCX,  Bermuda.  The  principal  business  address for
Wellington Luxembourg S.C.A. is 33, Boulevard Prince Henri, L-2014 Luxembourg.

DEUTSCHE ASSET MANAGEMENT, INC.

Deutsche Asset Management, Inc. ("DAMI") serves as sub-adviser to Enhanced Index
Series and  International  Series.  DAMI, a New York banking  corporation,  is a
wholly-owned  subsidiary  of  Deutsche  Bank AG  which  conducts  a  variety  of
commercial  banking and trust  activities and is a major  wholesale  supplier of
financial services to the international institutional market.

To the knowledge of the Fund, none of the directors or officers of DAMI,  except
those set forth below, is engaged in any other business, profession, vocation or
employment of a substantial  nature,  except that certain directors and officers
also hold various  positions  with and engage in business for Deutsche  Bank AG.
Set forth below are the names and  principal  businesses  of the  directors  and
officers of DAMI who are engaged in any other business, profession,  vocation or
employment of a substantial nature.

NAME AND PRINCIPAL BUSINESS ADDRESS, PRINCIPAL OCCUPATION AND OTHER INFORMATION

DEAN BARR
- ---------
MANAGING  DIRECTOR--Bankers  Trust Company,  280 Park Avenue, New York, New York
   10017.
BOARD MEMBER--ISMD
BOARD MEMBER--Qtrade

JOSHUA WEINREICH
- ----------------
MANAGING  DIRECTOR--Bankers  Trust Company,  280 Park Avenue, New York, New York
   10017.
DIRECTOR--Pseudo Programs, Inc.

MAINSTREAM INVESTMENT ADVISERS, LLC

To be filed by amendment.

RS INVESTMENT MANAGEMENT, L.P.

To be filed by amendment.

TEMPLETON INVESTMENT COUNSEL, LLC

To be filed by amendment.

ITEM 27.  PRINCIPAL UNDERWRITERS

(a)  Security Mid Cap Growth Fund
     Security Income Fund
     Security Large Cap Value Fund
     Security Municipal Bond Fund
     SBL Fund
     Variflex Separate Account (Variflex)
     Variflex Separate Account (Variflex ES)
     SBL Variable Life Insurance Account (Varilife)
     SBL Variable Annuity Account VIII (Variflex LS)
     SBL Variable Annuity Account VIII (Variflex Signature)
     SBL Variable Annuity Account VIII (Variflex Extra Credit)
     SBL Variable Annuity Account XI (Scarborough Advantage Variable Annuity)
     SBL Variable Annuity Account XIV (SecureDesigns Variable Annuity)
     SBL Variable Annuity Account XIV (AdvisorDesigns Variable Annuity)
     SBL Variable Annuity Account XIV (NEA Valuebuilder)
     SBL Variable Annuity Account XIV (AdvanceDesigns Variable Annuity)
     SBL  Variable  Annuity  Account  XIV  (Security  Benefit  Advisor  Variable
       Annuity)

(b)         (1)                    (2)                            (3)
     NAME AND PRINCIPAL    POSITION AND OFFICES           POSITION AND OFFICES
     BUSINESS ADDRESS*       WITH UNDERWRITER                WITH REGISTRANT
     ------------------    --------------------           --------------------
     Gregory J. Garvin     President and Director         None
     John D. Cleland       Vice President and Director    Chairman of the
                                                            Board and Director
     James R. Schmank      Director                       President and Director
     Amy J. Lee            Secretary                      Secretary
     Tammy Brownfield      Treasurer                      None
     Brenda M. Harwood     Vice-President and Director    Treasurer
     Frank Memmo           Director                       None
     Richard J. Wells      Director                       None

     *One Security Benefit Place, Topeka, Kansas 66636-0001

(c)  Not applicable.

ITEM 28.  LOCATION OF ACCOUNTS AND RECORDS

Certain accounts, books and other documents required to be maintained by Section
31(a) of the 1940 Act and the rules  promulgated  thereunder  are  maintained by
Security Management  Company,  LLC, One Security Benefit Place,  Topeka,  Kansas
66636-0001;  Lexington Management  Corporation,  Park 80 West, Plaza Two, Saddle
Brook, New Jersey 07663; Meridian Investment Management Corporation,  12835 East
Arapahoe Road, Tower II, 7th Floor, Englewood,  Colorado,  80112; Strong Capital
Management,  Inc., 100 Heritage  Reserve,  Menomonee  Falls,  Wisconsin,  53051;
Templeton/Franklin Investment Services, Inc., 777 Mariners Island Boulevard, San
Mateo, California 94404;  OppenheimerFunds,  Inc., 498 Seventh Avenue, New York,
New York 10018;  Wellington  Management Company,  LLP, 75 State Street,  Boston,
Massachusetts  02109; and Deutsche Asset Management,  Inc., 280 Park Avenue, New
York,  New York  10017.  Records  relating  to the  duties  of the  Registrant's
custodian are  maintained  by UMB Bank,  N.A.,  928 Grand  Avenue,  Kansas City,
Missouri 64106;  Chase Manhattan Bank, 4 Chase MetroTech Center,  Brooklyn,  New
York 11245 and State Street Bank and Trust  Company,  801  Pennsylvania,  Kansas
City, Missouri 64105.

ITEM 29.  MANAGEMENT SERVICES

Not applicable.

ITEM 30.  UNDERTAKINGS

Not applicable.

                                   SIGNATURES

Pursuant to the  requirements  of the Securities Act and the Investment  Company
Act of 1940, the Registrant  has duly caused this  Registration  Statement to be
signed on its behalf by the undersigned,  thereunto duly authorized, in the City
of Topeka, and State of Kansas on the 15th day of November, 2002.


John D. Cleland                            SECURITY EQUITY FUND
Chairman of the Board and Director         (The Fund)

James R. Schmank                       By:           JAMES R. SCHMANK
President and Director                     -------------------------------------
                                           James R. Schmank, President and as
Donald A. Chubb, Jr.                       Attorney-In-Fact for the Officers and
Director                                   Directors Whose Names Appear Opposite

Penny A. Lumpkin
Director                                             BRENDA M. HARWOOD
                                           -------------------------------------
Mark L. Morris, Jr.                        Brenda M. Harwood, Treasurer
Director                                   (Principal Financial Officer)

Maynard Oliverius
Director

                               SECURITY FUNDS(SM)

                                   PROSPECTUS


                                FEBRUARY 1, 2003


               o  Security Large Cap Value Fund
                  (formerly Security Growth and Income Fund®)

               o  Security Equity Fund®

               o  Security Alpha Opportunity Fund(SM)

               o  Security Global Fund

               o  Security Mid Cap Value Fund

               o  Security Small Cap Growth Fund

               o  Security Enhanced Index Fund

               o  Security International Fund

               o  Security Select 25 Fund

               o  Security Large Cap Growth Fund

               o  Security Technology Fund

               o  Security Mid Cap Growth Fund
                  (formerly Security Ultra Fund)


     ---------------------------------------------------------------------
     The   Securities   and  Exchange   Commission  has  not  approved  or
     disapproved  these  securities  or passed  upon the  adequacy of this
     prospectus. Any representation to the contrary is a criminal offense.
     ---------------------------------------------------------------------




                                                [SDI LOGO]
                                                SECURITY DISTRIBUTORS, INC.
                                                A Member of The Security Benefit
                                                Group of Companies

                               TABLE OF CONTENTS
- --------------------------------------------------------------------------------


FUNDS' OBJECTIVES...........................................................   3
    Security Large Cap Value Fund...........................................   3
    Security Equity Fund....................................................   3
    Security Alpha Opportunity Fund.........................................   3
    Security Global Fund....................................................   3
    Security Mid Cap Value Fund.............................................   3
    Security Small Cap Growth Fund..........................................   3
    Security Enhanced Index Fund............................................   3
    Security International Fund.............................................   3
    Security Select 25 Fund.................................................   3
    Security Large Cap Growth Fund..........................................   3
    Security Technology Fund................................................   3
    Security Mid Cap Growth Fund............................................   3
FUNDS' PRINCIPAL INVESTMENT STRATEGIES......................................   3
    Security Large Cap Value Fund...........................................   3
    Security Equity Fund....................................................   3
    Security Alpha Opportunity Fund.........................................   4
    Security Global Fund....................................................   5
    Security Mid Cap Value Fund.............................................   5
    Security Small Cap Growth Fund..........................................   6
    Security Enhanced Index Fund............................................   6
    Security International Fund.............................................   6
    Security Select 25 Fund.................................................   7
    Security Large Cap Growth Fund..........................................   7
    Security Technology Fund................................................   8
    Security Mid Cap Growth Fund............................................   9
MAIN RISKS..................................................................   9
    Market Risk.............................................................  10
    Smaller Companies.......................................................  10
    Value Stocks............................................................  10
    Growth Stocks...........................................................  10
    Foreign Securities......................................................  10
    Emerging Markets........................................................  10
    Options and Futures.....................................................  10
    Fixed-Income Securities.................................................  10
    Focused Investment Strategy.............................................  11
    Non-Diversification.....................................................  11
    Investment in Investment Companies......................................  11
    Industry Concentration..................................................  11
    Restricted Securities...................................................  11
    Active Trading..........................................................  11
    Technology Stocks.......................................................  11
    Overweighting...........................................................  11
    Additional Information..................................................  11
PAST PERFORMANCE............................................................  11
    Related Performance.....................................................  23
FEES AND EXPENSES OF THE FUNDS..............................................  24
INVESTMENT MANAGER..........................................................  27

    Management Fees.........................................................  28
    Portfolio Managers......................................................  28

BUYING SHARES...............................................................  29
    Class A Shares..........................................................  29
    Class A Distribution Plan...............................................  30
    Class B Shares..........................................................  30
    Class B Distribution Plan...............................................  30
    Class C Shares..........................................................  30
    Class C Distribution Plan...............................................  30
    Brokerage Enhancement Plan..............................................  31
    Waiver of Deferred Sales Charge.........................................  31
    Confirmations and Statements............................................  31

SELLING SHARES..............................................................  31
    By Mail.................................................................  31
    By Telephone............................................................  32
    By Broker...............................................................  32
    Payment of Redemption Proceeds..........................................  32
DIVIDENDS AND TAXES.........................................................  32
    Tax on Distributions....................................................  32
    Taxes on Sales or Exchanges.............................................  33
    Backup Withholding......................................................  33
DETERMINATION OF NET ASSET VALUE............................................  33
SHAREHOLDER SERVICES........................................................  33
    Accumulation Plan.......................................................  33
    Systematic Withdrawal Program...........................................  33
    Exchange Privilege......................................................  34
    Retirement Plans........................................................  35
INVESTMENT POLICIES AND MANAGEMENT PRACTICES................................  35
    Foreign Securities......................................................  35
    Emerging Markets........................................................  36
    Smaller Companies.......................................................  36
    Convertible Securities and Warrants.....................................  36
    Restricted Securities...................................................  37
    Initial Public Offering.................................................  37
    High Yield Securities...................................................  37
    Cash Reserves...........................................................  37
    Borrowing...............................................................  37
    Futures and Options.....................................................  37
    Swaps, Caps, Floors and Collars.........................................  37
    Shares of Other Investment Companies....................................  38
    When-Issued Securities and Forward Commitment Contracts.................  38
    Securities Lending......................................................  38
GENERAL INFORMATION.........................................................  38
    Shareholder Inquiries...................................................  38
FINANCIAL HIGHLIGHTS........................................................  38
APPENDIX A - REDUCED SALES CHARGES..........................................  62
    Class A Shares..........................................................  62
    Rights of Accumulation..................................................  62
    Statement of Intention..................................................  62
    Reinstatement Privilege.................................................  62
    Purchases at Net Asset Value............................................  62


FUNDS' OBJECTIVES


Described below is the investment  objective for each Fund. Each Fund's Board of
Directors may change its investment objective without shareholder  approval.  As
with any  investment,  there can be no guarantee  the Funds will  achieve  their
investment objectives.

SECURITY LARGE CAP VALUE FUND -- The Large Cap Value Fund seeks long-term growth
of capital.


SECURITY EQUITY FUND -- The Equity Fund seeks long-term capital growth.


SECURITY ALPHA  OPPORTUNITY  FUND -- The Alpha  Opportunity Fund seeks long-term
growth of capital.


SECURITY  GLOBAL  FUND -- The  Global  Fund  seeks  long-term  growth of capital
primarily through investment in securities of companies in foreign countries and
the United States.


SECURITY MID CAP VALUE FUND -- The Mid Cap Value Fund seeks long-term  growth of
capital.

SECURITY  SMALL CAP  GROWTH  FUND -- The Small Cap Growth  Fund seeks  long-term
growth of capital.

SECURITY  ENHANCED INDEX FUND -- The Enhanced Index Fund seeks to outperform the
S&P 500 Index  through  stock  selection  resulting in different  weightings  of
common stocks relative to the index.


SECURITY  INTERNATIONAL  FUND -- The International  Fund seeks long-term capital
appreciation.


SECURITY  SELECT  25 FUND -- The  Select  25 Fund®  seeks  long-term  growth  of
capital.

SECURITY  LARGE CAP  GROWTH  FUND -- The Large Cap Growth  Fund seeks  long-term
capital growth.

SECURITY  TECHNOLOGY  FUND  --  The  Technology  Fund  seeks  long-term  capital
appreciation by investing in the equity securities of technology companies.


SECURITY  MID  CAP  GROWTH  FUND  -- The  Mid  Cap  Growth  Fund  seeks  capital
appreciation.


FUNDS' PRINCIPAL INVESTMENT STRATEGIES


SECURITY  LARGE CAP VALUE FUND -- The Fund pursues its  objective by  investing,
under   normal   circumstances,   at   least   80%  of   its   net   assets   in
large-capitalization  value  companies  (those  whose total  market  value is $5
billion or greater at the time of purchase).  The Fund's stock  investments  may
include common stocks,  preferred stocks and convertible securities of both U.S.
and U.S. dollar-denominated foreign issuers.


- --------------------------------------------------------------------------------
VALUE-ORIENTED   STOCKS  are  stocks  of  companies  that  are  believed  to  be
undervalued  in terms of price  or  other  financial  measurements  and that are
believed to have above average growth potential.
- --------------------------------------------------------------------------------


In choosing stocks, the Sub-Adviser,  The Dreyfus  Corporation,  looks for value
companies. The Sub-Adviser uses a blend of quantitative analysis and fundamental
research to identify  stocks that appear  favorably  priced and that may benefit
from the current market and economic  environment.  The Sub-Adviser then reviews
these stocks for factors that could signal a rise in price, such as:


o  New products or markets
o  Opportunities for greater market share
o  More effective management
o  Positive changes in corporate structure or market perception

The Fund may invest a portion of its assets in options  and  futures  contracts.
When employed,  these practices are used primarily to hedge the Fund's portfolio
but may be used to increase returns.

The  Fund  typically  sells a  stock  when it is no  longer  considered  a value
company,  appears  less likely to benefit  from the current  market and economic
environment,   shows   deteriorating   fundamentals   or  falls   short  of  the
Sub-Adviser's expectations.

Under adverse market conditions, the Fund could invest some or all of its assets
in cash, government bonds or money market securities. Although the Fund would do
this only in  seeking  to avoid  losses,  the Fund may be  unable to pursue  its
investment  objective during that time, and it could reduce the benefit from any
upswing in the market.

SECURITY  EQUITY FUND -- The Fund  pursues its  objective  by  investing,  under
normal  circumstances,  at least 80% of its net  assets in a  widely-diversified
portfolio of equity securities,  which may include American  Depositary Receipts
("ADRs") and convertible securities.

To choose equity  securities,  the Investment  Manager uses a blended  approach,
investing in growth stocks and value stocks.  The Investment  Manager  typically
chooses  larger,  growth-oriented  companies.  The Investment  Manager will also
invest in  value-oriented  stocks to  attempt  to reduce  the  Fund's  potential
volatility.  In choosing  the  balance of growth  stocks and value  stocks,  the
Investment Manager compares the potential risks and rewards of each category.

The Fund  typically  invests in the equity  securities of companies  whose total
market value is $5 billion or greater at the time of purchase.

The 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
maintain exposure to the equity markets or to increase returns.

The 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,  to
gain  exposure  to the  equity  markets,  or a  particular  sector of the equity
market, while maintaining liquidity.

- --------------------------------------------------------------------------------
GROWTH-ORIENTED STOCKS are stocks of established companies that typically have a
record of consistent earnings growth.
- --------------------------------------------------------------------------------

The 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.

Under adverse market conditions, the Fund could invest some or all of its assets
in cash or money  market  securities.  Although  the Fund  would do this only in
seeking  to avoid  losses,  the Fund may be  unable  to  pursue  its  investment
objective  during that time, and it could reduce the benefit from any upswing in
the market.


SECURITY  ALPHA  OPPORTUNITY  FUND -- The Fund pursues its objective by normally
investing  approximately  50% of its total  assets in an active  value  strategy
managed by the Fund's Sub-Adviser,  Mainstream Investment Advisers, LLC, and 50%
of its total  assets in a  passive  index  strategy  managed  by the  Investment
Manager.  All daily cash inflows and  outflows  will be allocated to the passive
index portion of the Fund in order to minimize the potential  negative impact of
daily cash flows to the  Sub-Adviser's  investment  strategy.  Once a month, the
portfolio  will be rebalanced to an  allocation  of  approximately  50% of total
assets to each strategy.  The  allocation  between the portions of the portfolio
upon rebalancing may range between 40% and 60% of total assets to each strategy.

The  Fund  pursues  its  active  value   strategy  by  investing   primarily  in
publicly-traded  equity  securities,  principally common stocks, but to a lesser
degree in convertible bonds,  convertible  preferred stocks,  stock warrants and
rights.  Further,  if there is an  insufficient  number of available  securities
meeting the purchase criteria of the Fund's  Sub-Adviser,  Mainstream,  the Fund
also may hold a portion  of its  assets in cash and  money  market  instruments,
which  holdings may be  substantial.  Dividend  and  interest  income will be an
incidental  consideration.  The Fund may  engage  in short  sales of  securities
believed to be undervalued.

Mainstream's strategies seek to identify individual stocks with solid underlying
financial  fundamentals,  trading at levels  representing  value relative to the
market generally.  Mainstream uses technical and fundamental methods of analysis
to choose stocks for the Fund's portfolio.  The continuous process begins with a
top-down  evaluation  of the stock and bond  markets,  primarily  based on their
relative strength indexes ("RSIs"). A high RSI indicates that the marketplace is
expensive or overbought;  conversely,  a low RSI represents that the marketplace
is inexpensive or oversold. Mainstream uses the top-down evaluation to determine
the overall stock-to-cash and long stock-to-short stock allocations.

Mainstream then uses bottom-up analysis by valuing the 2,000 or so most actively
traded stocks in the  marketplace.  The bottom-up  analysis  reviews their stock
prices in  relationship  to their stock price moving  averages and ranks them by
their RSIs. A purchase  candidate is identified as a stock that is at fair value
or  undervalued  to the  marketplace.  A sale candidate is identified as a stock
that is expensive or  overbought.  These action  candidates  are then grouped by
industry.  Mainstream  prefers that the  candidates  demonstrate  heavy industry
concentrations.  Mainstream then considers the industry and underlying financial
fundamentals of the action  candidates.  Where the fundamentals are encouraging,
the stocks may be purchased. Stocks with high RSIs may be sold. Stocks with high
RSIs and with deteriorating  fundamentals may be sold short. Mainstream actively
manages the active value  portion of the Fund's  portfolio and will buy and sell
securities  frequently.  This active  trading  will  increase the costs the Fund
incurs  and may  increase  the  amount  of tax an  investor  pays on the  Fund's
returns.

The Fund pursues its passive index  strategy by investing in equity  derivatives
backed by a portfolio of fixed income securities. The Fund may invest in futures
contracts,  options,  options on futures  contracts,  swaps and other derivative
instruments. The value of equity derivatives closely tracks changes in the value
of the index.  The equity  derivatives  may be purchased  with a fraction of the
assets that would be needed to purchase equity securities directly,  so that the
remainder  of the Fund's  assets  which are  allocated  to this  strategy may be
invested in fixed income securities. The Investment Manager actively manages the
fixed  income  securities  backing  the equity  derivatives  with a view  toward
enhancing  the Fund's total return.  The Fund's  overall  portfolio  duration is
normally not expected to exceed one year.

- --------------------------------------------------------------------------------
THE S&P 500 INDEX is  composed of 500  selected  common  stocks  that  represent
approximately two-thirds of the total market value of all U.S. common stocks.
- --------------------------------------------------------------------------------

Although this portion of the Fund's  portfolio does not normally invest directly
in S&P 500 securities,  when equity derivatives appear to be overvalued relative
to the S&P 500, the Fund may invest in a "basket" of S&P 500 stocks.  Individual
stocks are selected based on an analysis of the historical  correlation  between
the  return of every S&P 500 stock  and the  return of the S&P 500  itself.  The
Investment Manager may employ  fundamental  analysis of factors such as earnings
and earnings growth, price to earnings ratio, dividend growth, and cash flows to
choose among stocks that satisfy the  correlation  tests.  Stocks chosen for the
Fund are not limited to those with any particular  weighting in the S&P 500. The
Fund may also invest in  exchange  traded  funds  based on the S&P 500,  such as
Standard & Poor's Depositary Receipts.

The fixed income securities in which the Fund invests include  securities issued
or  guaranteed  by the  U.S.  Government,  its  agencies  or  instrumentalities;
corporate debt securities of U.S.  issuers,  including  convertible  securities;
mortgage  backed and other  asset-backed  securities;  and bank  certificates of
deposit, fixed time deposits and bankers' acceptances. The Fund may invest up to
10% of its total  assets in high  yield  securities  ("junk  bonds")  rated B or
higher by Moody's or S&P, or, if unrated,  determined by the Investment  Manager
to be of comparable quality.

Although the Fund invests principally in U.S.  securities,  it may, from time to
time,  invest in securities of companies  located outside the U.S.,  principally
through American Depositary Receipts traded on U.S. markets.

Under adverse or unstable market  conditions,  the Fund could invest some or all
of its assets in cash,  repurchase  agreements  and money market  instruments of
foreign or domestic issuers and the U.S. and foreign  governments.  Although the
Fund would do this only in seeking  to avoid  losses,  the Fund may be unable to
pursue  its  investment  objective  during  that time,  and it could  reduce the
benefit from any upswing in the market.


SECURITY  GLOBAL FUND -- The Fund  pursues its  objective  by  investing,  under
normal circumstances, in a diversified portfolio of securities with at least 65%
of its total assets in at least three countries,  one of which may be the United
States.  The Fund  primarily  invests in foreign and domestic  common  stocks or
convertible stocks of growth-oriented  companies considered to have appreciation
possibilities. While the Fund may invest in the United States, there is no limit
on its foreign investments.  The Fund may actively trade its investments without
regard to the  length of time they have been owned by the Fund.  Investments  in
debt securities may be made when market conditions are uncertain.  The Fund also
may invest some assets in options,  futures  contracts  and foreign  currencies,
which may be used to hedge the  Fund's  portfolio,  to  increase  returns  or to
maintain  exposure to the equity  markets.  The Fund may also invest in emerging
market countries.

The Sub-Adviser,  OppenheimerFunds,  Inc., uses a disciplined  theme approach to
choose securities in foreign and U.S. markets.  By considering the effect of key
worldwide  growth trends,  OppenheimerFunds  focuses on areas they believe offer
some of the best opportunities for long-term growth.  These trends include:  (1)
the growth of mass  affluence;  (2) the  development  of new  technologies;  (3)
corporate restructuring; and (4) demographics.

OppenheimerFunds currently looks for the following:

o  Stocks of small, medium and large growth-oriented companies worldwide

o  Companies that stand to benefit from one or more global growth trends

o  Businesses  with  strong  competitive  positions  and high  demand  for their
   products or services

o  Cyclical  opportunities  in the business cycle and sectors or industries that
   may benefit from those opportunities.

To  lower  the  risks  of  foreign  investing,  such as  currency  fluctuations,
OppenheimerFunds generally diversifies broadly across countries and industries.

Under adverse or unstable market  conditions,  the Fund could invest some or all
of its assets in cash,  repurchase  agreements  and money market  instruments of
foreign or domestic issuers and the U.S. and foreign  governments.  Although the
Fund would do this only in seeking  to avoid  losses,  the Fund may be unable to
pursue  its  investment  objective  during  that time,  and it could  reduce the
benefit from any upswing in the market.



SECURITY  MID CAP VALUE FUND -- The Fund  pursues its  objective  by  investing,
under  normal  circumstances,  at least 80% of its net  assets in a  diversified
portfolio of equity  securities  with market  capitalizations  of $10 billion or
less at the time of purchase.  Some of the companies in the S&P Midcap 400 Index
may have market  capitalizations below those of the S&P Smallcap Index and, as a
result,  the Fund is subject to the risks  associated  with  investing  in small
capitalization  companies.  Equity  securities  include  common  stock,  rights,
options, warrants and convertible debt securities.


The  Investment   Manager   typically  chooses  equity  securities  that  appear
undervalued relative to assets, earnings, growth potential or cash flows. Due to
the nature of value companies,  the securities  included in the Fund's portfolio
typically consist of small- to medium-sized companies.  The Fund may also invest
in ADRs.

The Fund may sell a security if it is no longer  considered  undervalued or when
the company begins to show deteriorating fundamentals.

The 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
maintain exposure to the equity markets or to increase returns.

The 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.  Certain  investment  company securities and other
securities  in which the Fund may invest are  restricted  securities,  which are
illiquid.

Under adverse market conditions, the Fund could invest some or all of its assets
in cash or money  market  securities.  Although  the Fund  would do this only in
seeking  to avoid  losses,  the Fund may be  unable  to  pursue  its  investment
objective  during that time, and it could reduce the benefit from any upswing in
the market.


SECURITY SMALL CAP GROWTH FUND --

The  Fund  pursues  its   investment   objective  by  investing,   under  normal
circumstances,  at least 80% of its net assets in equity securities of companies
with market  capitalizations  of $750 million or less at the time of  investment
that, in the opinion of the Sub-Adviser,  RS Investment  Management,  L.P., have
the potential for long-term capital growth. The Fund may invest the remainder of
its assets in securities  of companies of any size.  The Fund may also engage in
short sales of securities  it expects to decline in price.  The Fund will likely
invest a portion of its assets in  technology  and  Internet-related  companies.
Equity  securities  include  common  and  preferred  stocks,  and  warrants  and
securities convertible into common or preferred stocks.

In selecting  investments for the Fund, the Sub-Adviser looks for companies with
sustainable  revenue and  earnings  growth,  companies  that have a  sustainable
competitive   advantage,   superior   financial   characteristics,   and  strong
management;  and companies that are under-followed by Wall Street analysts.  The
Fund may sell a stock  when the  Sub-Adviser  believes  that a company no longer
provides  these  advantages  or that the stock's  price fully  reflects what the
Sub-Adviser believes to be the company's value.

Under adverse market conditions, the Fund could invest some or all of its assets
in  cash,  fixed-income  securities,   money  market  securities  or  repurchase
agreements.  Although the Fund would do this only in seeking to avoid losses, it
could reduce the benefit from any upswing in the market.



SECURITY  ENHANCED  INDEX FUND -- The Fund pursues its  objective by  investing,
under  normal  circumstances  in a  portfolio  of stocks  representative  of the
holdings in the S&P 500 Index. Using a quantitative discipline, the Sub-Adviser,
Deutsche Asset Management, Inc. ("DAMI"), determines whether the Fund should (1)
overweight - invest more in a particular stock, (2) underweight - invest less in
a  particular  stock,  or (3) hold a  neutral  position  in the stock - invest a
similar amount in a particular stock,  relative to the proportion of the S&P 500
Index that the stock  represents.  While the majority of issues held by the Fund
will be similar to those comprising the S&P 500, approximately 150 will be over-
or  underweighted  relative to the index.  In addition,  DAMI may determine that
certain  S&P 500  stocks  should  not be held by the Fund in any  amount.  Under
normal market conditions, the Fund will invest at least 80% of its net assets in
equity securities of companies in the index and futures contracts representative
of the stocks  which  make up the index.  DAMI  believes  that its  quantitative
criteria will result in a portfolio  with an overall risk similar to that of the
S&P 500.

- --------------------------------------------------------------------------------
THE S&P 500 INDEX is a well-known stock market index that includes common stocks
of  500  companies.   These  companies  are  from  several   industrial  sectors
representing  a  significant  portion of the market  value of all common  stocks
publicly  traded in the U.S.,  most of which  are  listed on the New York  Stock
Exchange.
- --------------------------------------------------------------------------------

The 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 return potential or to maintain exposure to the equity markets.

Under adverse market conditions, the Fund could invest some or all of its assets
in cash or money  market  securities.  Although  the Fund  would do this only in
seeking  to avoid  losses,  the Fund may be  unable  to  pursue  its  investment
objective  during that time, and it could reduce the benefit from any upswing in
the market.


SECURITY INTERNATIONAL FUND --

The Fund pursues its  objective by  investing,  under normal  circumstances,  at
least 65% of its assets in at least three  different  countries,  other than the
United States.  The Fund normally will invest primarily in equity  securities of
companies located outside the United States, including emerging markets.

- --------------------------------------------------------------------------------
EQUITY  SECURITIES  include  common  stock,  preferred  stock,  trust or limited
partnership   interests,   rights  and  warrants  and   convertible   securities
(consisting  of debt  securities or preferred  stock that may be converted  into
common stock or that carry the right to purchase common stock).
- --------------------------------------------------------------------------------

The Fund may invest a portion of its assets in smaller  companies.  For purposes
of  this  Fund,   smaller   company  stocks  are  generally  those  with  market
capitalizations  of less than $1  billion.  The Fund also  invests in  American,
European and Global Depositary Receipts, which are certificates typically issued
by a bank or trust  company  that  give  their  holders  the  right  to  receive
securities issued by a foreign or domestic company. The Fund, from time to time,
may have  significant  investments  in one or more  countries  or in  particular
sectors, such as financial institutions or industrial companies.

When  choosing  equity  investments  for the Fund,  the  Sub-Adviser,  Templeton
Investment  Counsel,  LLC,  applies  a  "bottom-up",  value-oriented,  long-term
approach, focusing on the market price of a company's securities relative to the
Sub-Adviser's  evaluation of the company's long-term  earnings,  asset value and
cash flow potential.  The Sub-Adviser also considers a company's  price/earnings
ratio, profit margins and liquidation value. In choosing investments, the Fund's
Sub-Adviser  strongly  believes  in on-site  visits to  issuers  of  prospective
investments  to assess  critical  factors such as management  strength and local
conditions.  In selecting  securities for the Fund, the Sub-Adviser  attempts to
identify those  companies  that offer  above-average  opportunities  for capital
appreciation  in various  countries and industries  where economic and political
factors, including currency movements, are favorable to capital growth.

The Fund may invest in futures contracts,  options, options on futures contracts
and other derivative strategies.  These investments,  when made, are for hedging
purposes.  If the Fund uses futures  contracts  for  non-hedging  purposes,  the
margin and premiums required to make those investments will not exceed 5% of the
Fund's net asset value after taking into account  unrealized  profits and losses
on the contracts.

The Fund typically  sells an investment when the reasons for buying it no longer
apply,  or when the issuer  begins to show  deteriorating  fundamentals  or poor
relative performance.

Under adverse market conditions, the Fund could invest some or all of its assets
in cash or money  market  securities.  Although  the Fund  would do this only in
seeking  to avoid  losses,  the Fund may be  unable  to  pursue  its  investment
objective  during that time, and it could reduce the benefit from any upswing in
the market.

SECURITY  SELECT 25 FUND -- The Fund  pursues  its  objective  by  focusing  its
investments in a core position of 20-30 common stocks of growth  companies which
have exhibited consistent above average earnings and/or revenue growth. The Fund
is non-diversified as defined in the Investment Company Act of 1940, which means
that it may hold a larger  position  in a smaller  number of  securities  than a
diversified fund. The Investment  Manager selects what it believes to be premier
growth companies as the core position for the Fund. The Investment  Manager uses
a "bottom-up"  approach in selecting growth stocks.  Portfolio  holdings will be
replaced when one or more of a company's  fundamentals  have changed and, in the
opinion of the Investment Manager, it is no longer a premier growth company.


- --------------------------------------------------------------------------------
BOTTOM-UP  APPROACH means that the  Investment  Manager  primarily  analyzes the
fundamentals of individual  companies  rather than focusing on broader market or
sector  themes.  When analyzing  individual  companies,  the Investment  Manager
considers   various  factors,   which  may  include  relative  earnings  growth,
profitability  trends, the company's financial strength,  valuation analysis and
strength of management.
- --------------------------------------------------------------------------------

The 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.

The Fund also 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.

Under adverse market conditions, the Fund could invest some or all of its assets
in cash or money  market  securities.  Although  the Fund  would do this only in
seeking  to avoid  losses,  the Fund may be  unable  to  pursue  its  investment
objective  during that time, and it could reduce the benefit from any upswing in
the market.

SECURITY  LARGE CAP GROWTH FUND -- The Fund pursues its  objective by investing,
under normal  circumstances,  at least 80% of its net assets in common stock and
other equity securities of large  capitalization  companies that, in the opinion
of the Investment  Manager,  have long-term capital growth  potential.  The Fund
invests  primarily in a portfolio of common  stocks,  which may include ADRs and
other  securities  with  common  stock   characteristics,   such  as  securities
convertible into common stocks. The Fund defines large capitalization  companies
as  those  whose  total  market  value is at  least  $5  billion  at the time of
purchase.  The Fund is  non-diversified as defined in the Investment Company Act
of 1940,  which means that it may hold a larger  position in a smaller number of
securities  than  a  diversified   fund.  The  Fund  may  also  concentrate  its
investments in a particular industry or group of related industries.

The  Investment  Manager  uses  a  growth-oriented  strategy  to  choose  equity
securities, which means that it invests in companies whose earnings are believed
to be in a  relatively  strong  growth  trend.  In  identifying  companies  with
favorable growth  prospects,  the Investment  Manager  considers factors such as
prospects for above-average  sales and earnings growth;  high return on invested
capital;   overall  financial  strength;   competitive   advantages,   including
innovative products and services;  effective  research,  product development and
marketing; and stable, effective management.

The 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.

The 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.

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

Under adverse market conditions, the Fund could invest some or all of its assets
in cash or money  market  securities.  Although  the Fund  would do this only in
seeking  to avoid  losses,  the Fund may be  unable  to  pursue  its  investment
objective  during that time, and it could reduce the benefit from any upswing in
the market.

SECURITY  TECHNOLOGY FUND -- The Fund pursues its objective by investing,  under
normal circumstances, at least 80% of its net assets in the equity securities of
technology   companies.   The  Fund  is  non-diversified  and  expects  to  hold
approximately  30 to 50  positions.  The Fund may  invest up to 40% of its total
assets in  foreign  securities.  The Fund may  actively  trade  its  investments
without regard to the length of time they have been owned by the Fund.

- --------------------------------------------------------------------------------
THE TECHNOLOGY SECTOR consists of companies that are engaged in the development,
production,  or distribution of technology-related  products or services.  These
include computer  software,  computer  hardware,  semiconductors  and equipment,
communication equipment, and Internet and new media companies.
- --------------------------------------------------------------------------------

The Sub-Adviser,  Wellington  Management,  uses  fundamental  analysis to choose
technology  securities  in  foreign  and U.S.  markets.  The  Fund's  investment
approach  is based on  analyzing  the  competitive  outlook  for the  technology
sector,  identifying  those  industries  likely to benefit  from the current and
expected future  environment,  and  identifying  individual  opportunities.  The
Sub-Adviser's evaluation of technology companies rests on its solid knowledge of
the overall competitive environment including supply and demand characteristics,
trends,  existing product  evaluations,  and new product developments within the
technology  sector.  Fundamental  research  is  focused on direct  contact  with
company management, suppliers, and competitors.

Asset  allocation  within the Fund  reflects  the  Sub-Adviser's  opinion of the
relative  attractiveness  of stocks  within  the  industries  of the  technology
sector, near term macroeconomic events that may detract or enhance an industry's
attractiveness,  and the number of undervalued  opportunities  in each industry.
Opportunities dictate the magnitude and frequency of changes in asset allocation
among industries,  but some representation typically is maintained in each major
industry,  including  computer software,  computer hardware,  semiconductors and
equipment, communications equipment, and internet and new media.

Stocks considered for purchase typically share the following attributes:

o  A positive change in operating results is anticipated
o  Unrecognized or undervalued capabilities are present
o  The quality of management  indicates  that these factors will be converted to
   shareholder values.

Stocks will be considered for sale from the Fund when:

o  Target prices are achieved
o  Earnings  and/or  return  expectations  are  marked  down due to  fundamental
   changes in the company's operating outlook
o  More attractive value in a comparable company is available.

The Fund may invest in  securities  denominated  in any  currency.  The Fund may
invest a  portion  of its  assets  in  options,  futures  and  forward  currency
contracts.  Generally,  these derivative instruments involve the obligation,  in
the case of futures  and  forwards,  or the right,  in the case of  options,  to
purchase or sell financial instruments in the present or at a future date. These
derivative strategies will be used:

o  To adjust the portfolio's exposure to a particular currency
o  To manage risk
o  As a substitute for purchasing or selling securities

Under adverse market conditions, the Fund could invest some or all of its assets
in  cash,  fixed-income  securities,   money  market  securities  or  repurchase
agreements.  Although the Fund would do this only in seeking to avoid losses, it
could reduce the benefit from any upswing in the market.


SECURITY  MID CAP GROWTH FUND -- The Fund pursues its  objective  by  investing,
under  normal  circumstances,  at least 80% of its net  assets in a  diversified
portfolio of equity  securities  with market  capitalizations  of $10 billion or
less at the time of purchase.  Some of the companies in the S&P Midcap 400 Index
may have market  capitalizations below those of the S&P Smallcap Index and, as a
result,  the Fund is subject to the risks  associated  with  investing  in small
capitalization  companies.  Equity  securities  include  common  stock,  rights,
options, warrants and convertible debt securities.

The  Investment   Manager  selects  equity   securities  that  it  believes  are
attractively  valued with the greatest potential for appreciation.  The Fund may
also invest in ADRs.


The  Investment  Manager  uses  a  "bottom-up"   approach  to  choose  portfolio
securities.  The Investment  Manager identifies the securities of companies that
are in the early to  middle  stages of  growth  and are  valued at a  reasonable
price. Equity securities  considered to have appreciation  potential may include
securities of smaller and less mature  companies  which have unique  proprietary
products or profitable market niches and the potential to grow very rapidly.

The 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.

The 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,  to
gain  exposure  to the  equity  markets,  or a  particular  sector of the equity
market, while maintaining  liquidity.  Certain investment company securities and
other securities in which the Fund may invest are restricted  securities,  which
are illiquid.

The Fund typically sells a stock if its growth prospects diminish,  or if better
opportunities become available.

Under adverse market conditions, the Fund could invest some or all of its assets
in cash or money  market  securities.  Although  the Fund  would do this only in
seeking  to avoid  losses,  the Fund may be  unable  to  pursue  its  investment
objective  during that time, and it could reduce the benefit from any upswing in
the market.

MAIN RISKS


The following chart indicates which main risks apply to which Fund. However, the
fact that a particular  risk is not indicated as a main risk for a Fund does not
mean that the Fund is prohibited  from investing its assets in securities  which
give rise to that  risk.  It simply  means  that the risk is not a main risk for
that Fund. For example, the risk of investing in smaller companies is not listed
as a main risk for Large Cap Value Fund. This does not mean that Large Cap Value
Fund is prohibited  from investing in smaller  companies,  only that the risk of
smaller  companies is not one of the main risks  associated with Large Cap Value
Fund.  The  Portfolio  Manager  for a Fund has  considerable  leeway in choosing
investment strategies and selecting securities that he or she believes will help
the Fund achieve its  investment  objective.  In seeking to meet its  investment
objective, a Fund's assets may be invested in any type of security or instrument
whose  investment  characteristics  are  consistent  with the Fund's  investment
program.

=================================================================================
                      Large                Alpha                  Mid      Small
                       Cap                 Oppor-                 Cap       Cap
                      Value     Equity     tunity     Global     Value     Growth
- ---------------------------------------------------------------------------------
Market Risk             X         X          X          X          X         X
- ---------------------------------------------------------------------------------
Smaller Companies                            X                     X         X
- ---------------------------------------------------------------------------------
Value Stocks            X         X          X                     X
- ---------------------------------------------------------------------------------
Growth Stocks                     X          X          X                    X
- ---------------------------------------------------------------------------------
Foreign Securities      X         X          X          X          X
- ---------------------------------------------------------------------------------
Emerging Markets                                        X
- ---------------------------------------------------------------------------------
Options and Futures     X         X          X          X          X
- ---------------------------------------------------------------------------------
Fixed-Income
Securities              X                    X
- ---------------------------------------------------------------------------------
Non-Diversification
- ---------------------------------------------------------------------------------
Investment in
Investment              X         X          X                     X
Companies
- ---------------------------------------------------------------------------------
Industry
Concentration
- ---------------------------------------------------------------------------------
Restricted
Securities              X                                          X         X
- ---------------------------------------------------------------------------------
Active Trading          X                    X          X                    X
- ---------------------------------------------------------------------------------
Focused Investment
Strategy
- ---------------------------------------------------------------------------------
Overweighting                                                                X
- ---------------------------------------------------------------------------------
Technology Stocks                                                            X
=================================================================================


==================================================================================
                                                        Large                Mid
                      Enhanced     Inter-     Select     Cap      Tech-      Cap
                       Index      national      25      Growth    nology    Growth
- ----------------------------------------------------------------------------------
Market Risk              X           X          X         X         X         X
- ----------------------------------------------------------------------------------
Smaller Companies                    X                              X         X
- ----------------------------------------------------------------------------------
Value Stocks                         X                              X
- ----------------------------------------------------------------------------------
Growth Stocks            X                      X         X         X         X
- ----------------------------------------------------------------------------------
Foreign Securities                   X          X         X         X         X
- ----------------------------------------------------------------------------------
Emerging Markets                     X                              X
- ----------------------------------------------------------------------------------
Options and Futures      X           X          X         X         X         X
- ----------------------------------------------------------------------------------
Fixed-Income
Securities
- ----------------------------------------------------------------------------------
Non-Diversification                             X         X         X
- ----------------------------------------------------------------------------------
Investment in
Investment                                      X         X                   X
Companies
- ----------------------------------------------------------------------------------
Industry
Concentration                                             X         X
- ----------------------------------------------------------------------------------
Restricted
Securities                           X                              X         X
- ----------------------------------------------------------------------------------
Active Trading                                                      X
- ----------------------------------------------------------------------------------
Focused Investment
Strategy                                         X                  X
- ----------------------------------------------------------------------------------
Overweighting                        X
- ----------------------------------------------------------------------------------
Technology Stocks                                                   X
==================================================================================


- --------------------------------------------------------------------------------
An  investment  in the Funds is not a deposit  of a bank and is not  insured  or
guaranteed by the Federal Deposit Insurance  Corporation or any other government
agency. The value of an investment in the Funds will go up and down, which means
investors could lose money.
- --------------------------------------------------------------------------------

MARKET RISK -- While equity  securities have  historically been a leading choice
of  long-term  investors,  they do  fluctuate  in price.  Their  prices  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.

SMALLER  COMPANIES  -- While  potentially  offering  greater  opportunities  for
capital growth than larger, more established companies, the equity securities of
smaller  companies may be particularly  volatile,  especially  during periods of
economic  uncertainty.  Securities of smaller  companies may present  additional
risks because their earnings are less predictable, their share prices tend to be
more  volatile  and their  securities  often are less liquid than  larger,  more
established companies, among other reasons.

VALUE STOCKS --  Investments  in value stocks are subject to the risk that their
intrinsic  values may never be realized by the market,  or that their prices may
go down.  While the Funds'  investments  in value stocks may limit downside risk
over time,  a Fund may, as a  trade-off,  produce more modest gains than riskier
stock funds.

GROWTH  STOCKS -- While  potentially  offering  greater  or more  rapid  capital
appreciation potential than value stocks,  investments in growth stocks may lack
the dividend  yield that can cushion  stock prices in market  downturns.  Growth
companies  often are expected to increase  their  earnings at a certain rate. If
expectations are not met,  investors can punish the stocks,  even if earnings do
increase.

FOREIGN SECURITIES -- Investing in foreign securities  involves additional risks
such as currency  fluctuations,  differences in financial reporting standards, a
lack of adequate company information and political instability.  These risks may
be particularly acute in underdeveloped capital markets.


EMERGING  MARKETS -- All of the risks of  investing  in foreign  securities  are
heightened  by investing in  developing  countries  and  emerging  markets.  The
markets of developing  countries  historically  have been more volatile than the
markets of developed  countries with mature economies.  These markets often have
provided higher rates of return, and greater risks, to investors.

OPTIONS  AND  FUTURES  --  Options  and  futures  may be used to  hedge a Fund's
portfolio,  to  increase  returns or to maintain  exposure  to a market  without
buying  individual  securities.  However,  there is the risk that such practices
sometimes may reduce returns or increase volatility. These practices also entail
transactional expenses.

FIXED-INCOME  SECURITIES -- Fixed-income investing may 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.

FOCUSED INVESTMENT  STRATEGY -- The typical  diversified stock mutual fund might
hold  between  80 and 120 stocks in its  portfolio.  A fund  which  focuses  its
investments  in fewer stocks than this can be expected to be more  volatile than
the typical diversified stock fund.

NON-DIVERSIFICATION  -- A  non-diversified  Fund may hold larger  positions in a
smaller  number of  securities  than a diversified  Fund. As a result,  a single
security's  increase or decrease in value may have a greater  impact on a Fund's
net asset value and total return. A non-diversified  Fund is expected to be more
volatile than a diversified Fund.


INVESTMENT IN INVESTMENT  COMPANIES -- Investment in other investment  companies
may 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 a 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.


INDUSTRY  CONCENTRATION  -- Concentrated  investment in  sector-specific  stocks
subjects  a Fund to  industry  concentration  risk,  which is the risk  that the
Fund's  return could be hurt  significantly  by problems  affecting a particular
sector.  Because a sector fund  concentrates  its  investments  in a  particular
industry or group of related  industries,  its performance can be  significantly
affected, for better or worse, by developments in that sector.

RESTRICTED  SECURITIES  --  Restricted  securities  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 the 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  ("Rule  144A
Securities").

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.

ACTIVE  TRADING -- Active trading will increase the costs a Fund incurs and as a
result, may lower a Fund's  performance.  It may also increase the amount of tax
an investor pays on the Fund's returns.

TECHNOLOGY  STOCKS -- Companies  in the rapidly  changing  fields of  technology
often face unusually high price  volatility,  both in terms of gains and losses.
The potential for wide  variation in  performance  is based on the special risks
common to these stocks.  For example,  products or services that at first appear
promising may not prove commercially  successful or may become obsolete quickly.
Earnings disappointments can result in sharp price declines. A portfolio focused
primarily on these stocks is therefore  likely to be much more volatile than one
with broader  diversification  that includes  investments  across industries and
sectors.

The level of risk will be increased to the extent that the Fund has  significant
exposure to smaller or unseasoned  companies  (those with less than a three-year
operating history),  which may not have established products or more experienced
management.


OVERWEIGHTING --  Overweighting  investments in certain sectors or industries of
the stock  market  increases  the risk that a Fund will suffer a loss because of
general declines in the prices of stocks in those sectors or industries.


ADDITIONAL  INFORMATION  -- For more  information  about the  Funds'  investment
program,  including  additional  information about the risks of certain types of
investments,  please see the  "Investment  Policies  and  Management  Practices"
section of this prospectus.

PAST PERFORMANCE


The charts and tables below and on the following  pages provide some  indication
of the risks of investing in the Funds by showing  changes in the Funds' Class A
share performance from year to year and by showing how the Funds' average annual
returns  have  compared to those of broad  measures of market  performance.  The
tables also show how the Funds'  average  annual  total  returns for the periods
indicated compare to those of broad measures of market performance. In addition,
some Funds may make a comparison to a narrower  index that more closely  mirrors
that Fund. As with all mutual  funds,  past  performance  is not a prediction of
future results.


The bar charts do not reflect  the sales  charges  applicable  to Class A shares
which, if reflected, would lower the returns shown. Average annual total returns
for each Fund's Class A shares include  deduction of the 5.75%  front-end  sales
charge, for Class B shares include the appropriate  deferred sales charge, which
is 5% in the first year  declining to 0% in the sixth and later  years,  and for
Class C shares include the deferred sales charge of 1% in the first year.


================================================================================
SECURITY LARGE CAP VALUE FUND - CLASS A
================================================================================


                  [BAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]

   1993   1994    1995    1996    1997    1998    1999   2000    2001    2002
   ----   ----    ----    ----    ----    ----    ----   ----    ----    ----
   8.2%   -7.9%   27.8%   12.0%   31.7%   -0.3%   2.5%   -7.2%   -5.6%      %


          ============================================================
          HIGHEST AND LOWEST RETURNS
          (QUARTERLY 1993-2002)
          ------------------------------------------------------------
                                                      QUARTER ENDED
          Highest                        _____%       ________________
          Lowest                         _____%       ________________
          ============================================================


================================================================================
AVERAGE ANNUAL TOTAL RETURNS
(THROUGH DECEMBER 31, 2002)
- --------------------------------------------------------------------------------
                                             PAST        PAST            PAST
                                            1 YEAR      5 YEARS        10 YEARS
Class A .................................   _____%      _____%         _____%
  Return Before Taxes ...................   _____%      _____%         _____%
  Return After Taxes on Distributions(1).   _____%      _____%         _____%
  Return After Taxes on Distributions
    and Sale of Fund Shares(1) ..........   _____%      _____%         _____%
Class B .................................   _____%      _____%         _____%(2)
Class C .................................   _____%      _____%(3)       N/A
S&P BARRA Value Index ...................   _____%      _____%(4)      _____%(3)
- --------------------------------------------------------------------------------
1  After-tax  returns are  calculated  using the historical  highest  individual
   federal  marginal income tax rates and do not reflect the impact of any state
   or  local  taxes.  Actual  after-tax  returns  depend  on an  investor's  tax
   situation  and may differ from those shown.  After-tax  returns shown are not
   relevant  to  investors  who hold  their  Fund  shares  through  tax-deferred
   arrangements,  such  as  401(k)  plans  or  individual  retirement  accounts.
   After-tax  returns are shown for Class A only.  After-tax returns for Class B
   and C will vary.

2  For the period beginning October 19, 1993 (date of inception) to December 31,
   2002.

3  For the period beginning January 29, 1999 (date of inception) to December 31,
   2002.

4  Index performance  information is only available to the Fund at the beginning
   of each month. The performance for the S&P BARRA Value for the period October
   1, 1993 to December  31,  2002 was __% and for the period  January 1, 1999 to
   December 31, 2002 was __%.
================================================================================



================================================================================
SECURITY EQUITY FUND - CLASS A
================================================================================



                  [BAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]

1993    1994    1995    1996    1997    1998    1999     2000     2001    2002
- ----    ----    ----    ----    ----    ----    ----     ----     ----    ----
14.6%   -2.5%   38.4%   22.7%   29.6%   26.5%   11.0%   -12.5%   -11.9%      %


          ============================================================
          HIGHEST AND LOWEST RETURNS
          (QUARTERLY 1993-2002)
          ------------------------------------------------------------
                                                      QUARTER ENDED
          Highest                        _____%       ________________
          Lowest                         _____%       ________________
          ============================================================


================================================================================
AVERAGE ANNUAL TOTAL RETURNS
(THROUGH DECEMBER 31, 2002)
- --------------------------------------------------------------------------------
                                             PAST        PAST            PAST
                                            1 YEAR      5 YEARS        10 YEARS
Class A .................................   _____%      _____%         _____%
  Return Before Taxes ...................   _____%      _____%         _____%
  Return After Taxes on Distributions(1).   _____%      _____%         _____%
  Return After Taxes on Distributions
    and Sale of Fund Shares(1) ..........   _____%      _____%         _____%
Class B .................................   _____%      _____%         _____%(1)
Class C .................................   _____%      _____%(2)       N/A
S&P 500 Index ...........................   _____%      _____%(3)      _____%(3)
- --------------------------------------------------------------------------------
1  After-tax  returns are  calculated  using the historical  highest  individual
   federal  marginal income tax rates and do not reflect the impact of any state
   or  local  taxes.  Actual  after-tax  returns  depend  on an  investor's  tax
   situation  and may differ from those shown.  After-tax  returns shown are not
   relevant  to  investors  who hold  their  Fund  shares  through  tax-deferred
   arrangements,  such  as  401(k)  plans  or  individual  retirement  accounts.
   After-tax  returns are shown for Class A only.  After-tax returns for Class B
   and C will vary.

1  For the period beginning October 19, 1993 (date of inception) to December 31,
   2002.

2  For the period beginning January 29, 1999 (date of inception) to December 31,
   2002.

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, 2002 was __% and for the period  January 1, 1999 to December
   31, 2002 was __%.
================================================================================




================================================================================
SECURITY GLOBAL FUND - CLASS A
================================================================================



                  [BAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]

   1994    1995     1996     1997    1998     1999     2000     2001     2002
   ----    ----     ----     ----    ----     ----     ----     ----     ----
   1.3%    10.4%    17.1%    6.9%    19.2%    54.8%    3.1%    -13.2%       %


          ============================================================
          HIGHEST AND LOWEST RETURNS
          (QUARTERLY 1994-2002)
          ------------------------------------------------------------
                                                      QUARTER ENDED
          Highest                        _____%       ________________
          Lowest                         _____%       ________________
          ============================================================


================================================================================
AVERAGE ANNUAL TOTAL RETURNS
(THROUGH DECEMBER 31, 2002)
- --------------------------------------------------------------------------------
                                             PAST     PAST        LIFE OF FUND
                                            1 YEAR   5 YEARS     (SINCE 10/1/93)
Class A .................................   _____%   _____%         _____%
  Return Before Taxes ...................   _____%   _____%         _____%
  Return After Taxes on Distributions(1).   _____%   _____%         _____%
  Return After Taxes on Distributions
    and Sale of Fund Shares(1) ..........   _____%   _____%         _____%
Class B .................................   _____%   _____%         _____%(1)
Class C .................................   _____%   _____%(2)       N/A
MSCI World Index ........................   _____%   _____%(3)      _____%
- --------------------------------------------------------------------------------
1  After-tax  returns are  calculated  using the historical  highest  individual
   federal  marginal income tax rates and do not reflect the impact of any state
   or  local  taxes.  Actual  after-tax  returns  depend  on an  investor's  tax
   situation  and may differ from those shown.  After-tax  returns shown are not
   relevant  to  investors  who hold  their  Fund  shares  through  tax-deferred
   arrangements,  such  as  401(k)  plans  or  individual  retirement  accounts.
   After-tax  returns are shown for Class A only.  After-tax returns for Class B
   and C will vary.

2  For the period beginning October 19, 1993 (date of inception) to December 31,
   2002.

3  For the period beginning January 29, 1999 (date of inception) to December 31,
   2002.

4  Index performance  information is only available to the Fund at the beginning
   of each month.  The  performance for the MSCI World for the period October 1,
   1993 to  December  31,  2002 was ____% and for the period  January 1, 1999 to
   December 31, 2002 was ____%.
================================================================================




================================================================================
SECURITY MID CAP VALUE FUND - CLASS A
================================================================================



                  [BAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]

                  1998      1999      2000      2001      2002
                  ----      ----      ----      ----      ----
                  16.1%     21.8%     26.7%     11.3%        %


          ============================================================
          HIGHEST AND LOWEST RETURNS
          (QUARTERLY 1998-2002)
          ------------------------------------------------------------
                                                      QUARTER ENDED
          Highest                        _____%       ________________
          Lowest                         _____%       ________________
          ============================================================


================================================================================
AVERAGE ANNUAL TOTAL RETURNS
(THROUGH DECEMBER 31, 2002)
- --------------------------------------------------------------------------------
                                             PAST        LIFE OF FUND
                                            1 YEAR      (SINCE 5/1/97)
Class A .................................   _____%         _____%
  Return Before Taxes ...................   _____%         _____%
  Return After Taxes on Distributions(1).   _____%         _____%
  Return After Taxes on Distributions
    and Sale of Fund Shares(1) ..........   _____%         _____%
Class B .................................   _____%         _____%
Class C .................................   _____%         _____%(1)
S&P Mid Cap Value Index..................   _____%         _____%(2)
- --------------------------------------------------------------------------------
1  After-tax  returns are  calculated  using the historical  highest  individual
   federal  marginal income tax rates and do not reflect the impact of any state
   or  local  taxes.  Actual  after-tax  returns  depend  on an  investor's  tax
   situation  and may differ from those shown.  After-tax  returns shown are not
   relevant  to  investors  who hold  their  Fund  shares  through  tax-deferred
   arrangements,  such  as  401(k)  plans  or  individual  retirement  accounts.
   After-tax  returns are shown for Class A only.  After-tax returns for Class B
   and C will vary.

1  For the period beginning January 29, 1999 (date of inception) to December 31,
   2002.

2  Index performance  information is only available to the Fund at the beginning
   of each  month.  The  performance  for the S&P Mid Cap Value  for the  period
   January 1, 1999 to December 31, 2002 was __%.
================================================================================



================================================================================
SECURITY SMALL CAP GROWTH FUND - CLASS A
================================================================================



                  [BAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]

                  1998      1999      2000       2001      2002
                  ----      ----      ----       ----      ----
                  10.4%     87.2%     -9.6%     -28.9%        %


          ============================================================
          HIGHEST AND LOWEST RETURNS
          (QUARTERLY 1998-2002)
          ------------------------------------------------------------
                                                      QUARTER ENDED
          Highest                        _____%       ________________
          Lowest                         _____%       ________________
          ============================================================


================================================================================
AVERAGE ANNUAL TOTAL RETURNS
(THROUGH DECEMBER 31, 2002)
- --------------------------------------------------------------------------------
                                             PAST         LIFE OF FUND
                                            1 YEAR      (SINCE 10/15/97)
Class A .................................   _____%         _____%
  Return Before Taxes ...................   _____%         _____%
  Return After Taxes on Distributions(1).   _____%         _____%
  Return After Taxes on Distributions
    and Sale of Fund Shares(1) ..........   _____%         _____%
Class B .................................   _____%         _____%
Class C .................................   _____%         _____%(1)
Russell 2000 Growth Index................   _____%         _____%(2)
- --------------------------------------------------------------------------------
1  After-tax  returns are  calculated  using the historical  highest  individual
   federal  marginal income tax rates and do not reflect the impact of any state
   or  local  taxes.  Actual  after-tax  returns  depend  on an  investor's  tax
   situation  and may differ from those shown.  After-tax  returns shown are not
   relevant  to  investors  who hold  their  Fund  shares  through  tax-deferred
   arrangements,  such  as  401(k)  plans  or  individual  retirement  accounts.
   After-tax  returns are shown for Class A only.  After-tax returns for Class B
   and C will vary.

1  For the period beginning January 29, 1999 (date of inception) to December 31,
   2002.

2  Index performance  information is only available to the Fund at the beginning
   of each month.  The  performance  for the Russell  2000 Growth for the period
   October 1, 1997 to December  31,  2002 was __% and for the period  January 1,
   1999 to December 31, 2002 was __%.
================================================================================



================================================================================
SECURITY ENHANCED INDEX - CLASS A
================================================================================



                  [BAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]

                            2000       2001      2002
                            ----       ----      ----
                           -10.1%     -13.5%        %


          ============================================================
          HIGHEST AND LOWEST RETURNS
          (QUARTERLY 1999-2002)
          ------------------------------------------------------------
                                                      QUARTER ENDED
          Highest                        _____%       ________________
          Lowest                         _____%       ________________
          ============================================================


================================================================================
AVERAGE ANNUAL TOTAL RETURNS
(THROUGH DECEMBER 31, 2002)
- --------------------------------------------------------------------------------
                                             PAST        LIFE OF FUND
                                            1 YEAR      (SINCE 1/29/99)
Class A .................................   _____%         _____%
  Return Before Taxes ...................   _____%         _____%
  Return After Taxes on Distributions(1).   _____%         _____%
  Return After Taxes on Distributions
    and Sale of Fund Shares(1) ..........   _____%         _____%
Class B .................................   _____%         _____%
Class C .................................   _____%         _____%
S&P 500 Index............................   _____%         _____%(2)
- --------------------------------------------------------------------------------
1  After-tax  returns are  calculated  using the historical  highest  individual
   federal  marginal income tax rates and do not reflect the impact of any state
   or  local  taxes.  Actual  after-tax  returns  depend  on an  investor's  tax
   situation  and may differ from those shown.  After-tax  returns shown are not
   relevant  to  investors  who hold  their  Fund  shares  through  tax-deferred
   arrangements,  such  as  401(k)  plans  or  individual  retirement  accounts.
   After-tax  returns are shown for Class A only.  After-tax returns for Class B
   and C will vary.

2  Index performance  information is only available to the Fund at the beginning
   of each month.  The S&P 500  performance is for the period January 1, 1999 to
   December 31, 2002.
================================================================================



================================================================================
SECURITY INTERNATIONAL FUND - CLASS A
================================================================================



                  [BAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]

                            2000       2001      2002
                            ----       ----      ----
                           -21.0%     -24.3%        %


          ============================================================
          HIGHEST AND LOWEST RETURNS
          (QUARTERLY 1999-2002)
          ------------------------------------------------------------
                                                      QUARTER ENDED
          Highest                        _____%       ________________
          Lowest                         _____%       ________________
          ============================================================


================================================================================
AVERAGE ANNUAL TOTAL RETURNS
(THROUGH DECEMBER 31, 2002)
- --------------------------------------------------------------------------------
                                             PAST        LIFE OF FUND
                                            1 YEAR      (SINCE 1/29/99)
Class A .................................   _____%         _____%
  Return Before Taxes ...................   _____%         _____%
  Return After Taxes on Distributions(1).   _____%         _____%
  Return After Taxes on Distributions
    and Sale of Fund Shares(1) ..........   _____%         _____%
Class B .................................   _____%         _____%
Class C .................................   _____%         _____%
MSCI EAFE Index..........................   _____%         _____%(2)
- --------------------------------------------------------------------------------
1  After-tax  returns are  calculated  using the historical  highest  individual
   federal  marginal income tax rates and do not reflect the impact of any state
   or  local  taxes.  Actual  after-tax  returns  depend  on an  investor's  tax
   situation  and may differ from those shown.  After-tax  returns shown are not
   relevant  to  investors  who hold  their  Fund  shares  through  tax-deferred
   arrangements,  such  as  401(k)  plans  or  individual  retirement  accounts.
   After-tax  returns are shown for Class A only.  After-tax returns for Class B
   and C will vary.

2  Index performance  information is only available to the Fund at the beginning
   of each month. The MSCI EAFE performance is for the period January 1, 1999 to
   December 31, 2002.
================================================================================



================================================================================
SECURITY SELECT 25 FUND - CLASS A
================================================================================



                  [BAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]

                            2000       2001      2002
                            ----       ----      ----
                           -17.7%     -10.9%        %


          ============================================================
          HIGHEST AND LOWEST RETURNS
          (QUARTERLY 1999-2002)
          ------------------------------------------------------------
                                                      QUARTER ENDED
          Highest                        _____%       ________________
          Lowest                         _____%       ________________
          ============================================================


================================================================================
AVERAGE ANNUAL TOTAL RETURNS
(THROUGH DECEMBER 31, 2002)
- --------------------------------------------------------------------------------
                                             PAST        LIFE OF FUND
                                            1 YEAR      (SINCE 1/29/99)
Class A .................................   _____%         _____%
  Return Before Taxes ...................   _____%         _____%
  Return After Taxes on Distributions(1).   _____%         _____%
  Return After Taxes on Distributions
    and Sale of Fund Shares(1) ..........   _____%         _____%
Class B .................................   _____%         _____%
Class C .................................   _____%         _____%
S&P 500 Index............................   _____%         _____%(2)
- --------------------------------------------------------------------------------
1  After-tax  returns are  calculated  using the historical  highest  individual
   federal  marginal income tax rates and do not reflect the impact of any state
   or  local  taxes.  Actual  after-tax  returns  depend  on an  investor's  tax
   situation  and may differ from those shown.  After-tax  returns shown are not
   relevant  to  investors  who hold  their  Fund  shares  through  tax-deferred
   arrangements,  such  as  401(k)  plans  or  individual  retirement  accounts.
   After-tax  returns are shown for Class A only.  After-tax returns for Class B
   and C will vary.

2  Index performance  information is only available to the Fund at the beginning
   of each month.  The S&P 500  performance is for the period January 1, 1999 to
   December 31, 2002.
================================================================================



================================================================================
SECURITY LARGE CAP GROWTH FUND - CLASS A
================================================================================



                  [BAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]

                                  2001      2002
                                  ----      ----
                                 -15.6%        %


          ============================================================
          HIGHEST AND LOWEST RETURNS
          (QUARTERLY 2000-2002)
          ------------------------------------------------------------
                                                      QUARTER ENDED
          Highest                        _____%       ________________
          Lowest                         _____%       ________________
          ============================================================


================================================================================
AVERAGE ANNUAL TOTAL RETURNS
(THROUGH DECEMBER 31, 2002)
- --------------------------------------------------------------------------------
                                             PAST        LIFE OF FUND
                                            1 YEAR      (SINCE 5/01/00)
Class A .................................   _____%         _____%
  Return Before Taxes ...................   _____%         _____%
  Return After Taxes on Distributions(1).   _____%         _____%
  Return After Taxes on Distributions
    and Sale of Fund Shares(1) ..........   _____%         _____%
Class B .................................   _____%         _____%
Class C .................................   _____%         _____%
S&P 500 Index............................   _____%         _____%
- --------------------------------------------------------------------------------
1  After-tax  returns are  calculated  using the historical  highest  individual
   federal  marginal income tax rates and do not reflect the impact of any state
   or  local  taxes.  Actual  after-tax  returns  depend  on an  investor's  tax
   situation  and may differ from those shown.  After-tax  returns shown are not
   relevant  to  investors  who hold  their  Fund  shares  through  tax-deferred
   arrangements,  such  as  401(k)  plans  or  individual  retirement  accounts.
   After-tax  returns are shown for Class A only.  After-tax returns for Class B
   and C will vary.
================================================================================



================================================================================
SECURITY TECHNOLOGY FUND - CLASS A
================================================================================



                  [BAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]

                                  2001      2002
                                  ----      ----
                                 -24.8%        %


          ============================================================
          HIGHEST AND LOWEST RETURNS
          (QUARTERLY 1999-2002)
          ------------------------------------------------------------
                                                      QUARTER ENDED
          Highest                        _____%       ________________
          Lowest                         _____%       ________________
          ============================================================


================================================================================
AVERAGE ANNUAL TOTAL RETURNS
(THROUGH DECEMBER 31, 2002)
- --------------------------------------------------------------------------------
                                             PAST        LIFE OF FUND
                                            1 YEAR      (SINCE 5/01/00)
Class A .................................   _____%         _____%
  Return Before Taxes ...................   _____%         _____%
  Return After Taxes on Distributions(1).   _____%         _____%
  Return After Taxes on Distributions
    and Sale of Fund Shares(1) ..........   _____%         _____%
Class B .................................   _____%         _____%
Class C .................................   _____%         _____%
S&P 500 Index............................   _____%         _____%
- --------------------------------------------------------------------------------
1  After-tax  returns are  calculated  using the historical  highest  individual
   federal  marginal income tax rates and do not reflect the impact of any state
   or  local  taxes.  Actual  after-tax  returns  depend  on an  investor's  tax
   situation  and may differ from those shown.  After-tax  returns shown are not
   relevant  to  investors  who hold  their  Fund  shares  through  tax-deferred
   arrangements,  such  as  401(k)  plans  or  individual  retirement  accounts.
   After-tax  returns are shown for Class A only.  After-tax returns for Class B
   andC will vary.
================================================================================




================================================================================
SECURITY MID CAP GROWTH FUND - CLASS A
================================================================================


                  [BAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]

  1993   1994    1995    1996    1997    1998    1999    2000     2001    2000
  ----   ----    ----    ----    ----    ----    ----    ----     ----    ----
  9.9%   -6.6%   19.3%   18.0%   17.8%   16.7%   59.7%   16.4%   -14.6%      %


          ============================================================
          HIGHEST AND LOWEST RETURNS
          (QUARTERLY 1993-2002)
          ------------------------------------------------------------
                                                      QUARTER ENDED
          Highest                        _____%       ________________
          Lowest                         _____%       ________________
          ============================================================


================================================================================
AVERAGE ANNUAL TOTAL RETURNS
(THROUGH DECEMBER 31, 2002)
- --------------------------------------------------------------------------------
                                             PAST       PAST           PAST
                                            1 YEAR     5 YEARS       10 YEARS
Class A .................................   _____%     _____%        _____%
  Return Before Taxes ...................   _____%     _____%        _____%
  Return After Taxes on Distributions(1).   _____%     _____%        _____%
  Return After Taxes on Distributions
    and Sale of Fund Shares(1) ..........   _____%     _____%        _____%
Class B .................................   _____%     _____%        _____%(2)
Class C .................................   _____%     _____%(3)      N/A
S&P MidCap Growth Index..................   _____%     _____%(4)     _____%(4,5)
- --------------------------------------------------------------------------------
1  After-tax  returns are  calculated  using the historical  highest  individual
   federal  marginal income tax rates and do not reflect the impact of any state
   or  local  taxes.  Actual  after-tax  returns  depend  on an  investor's  tax
   situation  and may differ from those shown.  After-tax  returns shown are not
   relevant  to  investors  who hold  their  Fund  shares  through  tax-deferred
   arrangements,  such  as  401(k)  plans  or  individual  retirement  accounts.
   After-tax  returns are shown for Class A only.  After-tax returns for Class B
   and C will vary.

2  For the period beginning October 19, 1993 (date of inception) to December 31,
   2002.

3  For the period beginning January 29, 1999 (date of inception) to December 31,
   2002.

4  Index performance  information is only available to the Fund at the beginning
   of each  month.  The  performance  for the S&P  MidCap  Growth for the period
   October 1, 1993 to December  31,  2002 was __% and for the period  January 1,
   1999 to December 31, 2002 was __%.

5  For the period  beginning  June 1, 1991 (date of inception of the S&P Mid Cap
   Growth Index) to December 31, 2002.
================================================================================




RELATED PERFORMANCE --

================================================================================
AVERAGE ANNUAL TOTAL RETURNS
(THROUGH DECEMBER 31, 2002)
- --------------------------------------------------------------------------------
                                             PAST         PAST           FROM
                                            1 YEAR       5 YEARS       INCEPTION
Mainstream Composite Data................   _____%       _____%        _____%(1)
S&P 500 Index............................   _____%       _____%        _____%(2)
- --------------------------------------------------------------------------------
1  For the period  beginning  ______,  1995 (date of  inception) to December 31,
   2002.  Results  prior to July 15, 1997,  were obtained  while the  Mainstream
   Portfolio Manager was employed by Providian Corporation.

2  Index  performance  information  is only  available at the  beginning of each
   month.  The  performance  for the S&P 500 for the period  _________,  1995 to
   December 31, 2002 was _______%.
================================================================================

The Alpha  Opportunity  Fund, which began operations on February 3, 2003, has no
performance record. The above table sets forth historical information for client
accounts with investment objectives and strategies similar to those of the Alpha
Opportunity Fund, which are managed by the Fund's Sub-Adviser,  Mainstream.  The
Mainstream client accounts are those of individuals and institutions.

This composite  performance  data is provided to illustrate the past performance
of  Mainstream  in managing  similar  accounts and does not represent the Fund's
performance. In reviewing this data, please keep in mind that Mainstream manages
under normal  circumstances only approximately 50% of the Fund's total assets in
its active value strategy, while the balance of the Fund's assets are managed by
the Investment Manager in a passive index strategy.  Mainstream's performance is
relevant  only  to  that  portion  of the  Fund's  assets  that  is  managed  by
Mainstream.  See the discussion of the Fund's  principal  investment  strategies
above for more information.

The  composite  performance  data is  computed  based  upon  Mainstream's  asset
weighted  "average"  performance  with regard to such  accounts.  The  composite
performance  information  is based on a  composite  of all  client  accounts  of
Mainstream having  substantially  similar  investment  objectives,  policies and
strategies to those of the Alpha  Opportunity  Fund.  The composite  performance
results reflect  deduction of the maximum advisory fee charged by Mainstream and
other expenses incurred by the client accounts.

Mainstream  has supplied the  composite  performance  data,  and the  Investment
Manager  believes it to be  reliable;  however,  such  information  has not been
audited or verified by the Investment Manager.

The accounts  included in the  composite  performance  data are not mutual funds
registered  under  the  Investment  Company  Act of 1940,  nor are the  accounts
subject  to  investment  limitations,  diversification  requirements  and  other
restrictions  imposed  by the  Act  and  the  Internal  Revenue  Code.  If  such
requirements  were applicable to the accounts,  the  performance  shown may have
been lower.

THE  PERFORMANCE  DATA  SHOULD NOT BE  CONSIDERED  A  SUBSTITUTE  FOR THE FUND'S
PERFORMANCE,  NOR SHOULD IT BE CONSIDERED AS AN INDICATION OF FUTURE PERFORMANCE
OF THE FUND OR MAINSTREAM.


FEES AND EXPENSES OF THE FUNDS

THIS TABLE  DESCRIBES THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY AND HOLD
SHARES OF THE FUNDS.


================================================================================
SHAREHOLDER FEES (ALL FUNDS) (fees paid directly from your investment)
- --------------------------------------------------------------------------------
                                                   CLASS A    CLASS B    CLASS C
                                                   SHARES    SHARES(1)   SHARES
- --------------------------------------------------------------------------------
Maximum Sales Charge Imposed on Purchases          5.75%       None       None
   (as a percentage of offering price)
- --------------------------------------------------------------------------------
Maximum Deferred Sales Charge (as a percentage
  of original purchase price or redemption
  proceeds, whichever is lower)                    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.
================================================================================


ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund assets)


================================================================================
                                                 CLASS A     CLASS B     CLASS C
- --------------------------------------------------------------------------------
LARGE CAP VALUE FUND
- --------------------------------------------------------------------------------
Management fee................................    0.75%       0.75%       0.75%
Distribution (12b-1) fees(1)..................    0.25%       1.00%       1.00%
Other expenses................................    0.33%       0.33%       0.33%
TOTAL ANNUAL FUND OPERATING EXPENSES(2).......    1.33%       2.08%       2.08%
- --------------------------------------------------------------------------------
EQUITY FUND
- --------------------------------------------------------------------------------
Management fee................................    0.75%       0.75%       0.75%
Distribution (12b-1) fees(1)..................    0.25%       1.00%       1.00%
Other expenses................................    0.20%       0.20%       0.20%
TOTAL ANNUAL FUND OPERATING EXPENSES(2).......    1.20%       1.95%       1.95%
- --------------------------------------------------------------------------------
ALPHA OPPORTUNITY FUND
- --------------------------------------------------------------------------------
Management fee................................    2.25%       2.25%       2.25%
Distribution (12b-1) fees(1)..................    0.25%       1.00%       1.00%
Other expenses(3).............................    0.45%       0.45%       0.45%
TOTAL ANNUAL FUND OPERATING EXPENSES .........    2.95%       3.70%       3.70%
- --------------------------------------------------------------------------------
GLOBAL FUND
- --------------------------------------------------------------------------------
Management fee................................    1.00%       1.00%       1.00%
Distribution (12b-1) fees(1)..................    0.25%       1.00%       1.00%
Other expenses................................    0.53%       0.53%       0.53%
TOTAL ANNUAL FUND OPERATING EXPENSES(2).......    1.78%       2.53%       2.53%
- --------------------------------------------------------------------------------
MID CAP VALUE FUND
- --------------------------------------------------------------------------------
Management fee................................    1.00%       1.00%       1.00%
Distribution (12b-1) fees(1)..................    0.25%       1.00%       1.00%
Other expenses................................    0.30%       0.30%       0.30%
TOTAL ANNUAL FUND OPERATING EXPENSES(2).......    1.55%       2.30%       2.30%
- --------------------------------------------------------------------------------
SMALL CAP GROWTH FUND
- --------------------------------------------------------------------------------
Management fee................................    1.00%       1.00%       1.00%
Distribution (12b-1) fees(1)..................    0.25%       1.00%       1.00%
Other expenses................................    0.66%       0.67%       0.68%
TOTAL ANNUAL FUND OPERATING EXPENSES..........    1.91%       2.67%       2.68%
- --------------------------------------------------------------------------------
ENHANCED INDEX FUND
- --------------------------------------------------------------------------------
Management fee................................    0.75%       0.75%       0.75%
Distribution (12b-1) fees(1)..................    0.25%       1.00%       1.00%
Other expenses................................    0.42%       0.42%       0.42%
TOTAL ANNUAL FUND OPERATING EXPENSES..........    1.42%       2.17%       2.17%
- --------------------------------------------------------------------------------
INTERNATIONAL FUND
- --------------------------------------------------------------------------------
Management fee................................    1.10%       1.10%       1.10%
Distribution (12b-1) fees(1)..................    0.25%       1.00%       1.00%
Other expenses................................    2.40%       2.40%       2.39%
TOTAL ANNUAL FUND OPERATING EXPENSES..........    3.75%       4.50%       4.49%
Total waivers and reductions..................    1.26%       1.27%       1.26%
TOTAL ANNUAL FUND OPERATING EXPENSES
  WITH WAIVERS AND REDUCTIONS(4)..............    2.49%       3.23%       3.23%
- --------------------------------------------------------------------------------
SELECT 25 FUND
- --------------------------------------------------------------------------------
Management fee................................    0.75%       0.75%       0.75%
Distribution (12b-1) fees(1)..................    0.25%       1.00%       1.00%
Other expenses................................    0.39%       0.39%       0.39%
TOTAL ANNUAL FUND OPERATING EXPENSES..........    1.39%       2.14%       2.14%
- --------------------------------------------------------------------------------
LARGE CAP GROWTH FUND
- --------------------------------------------------------------------------------
Management fee................................    1.00%       1.00%       1.00%
Distribution (12b-1) fees(1)..................    0.25%       1.00%       1.00%
Other expenses................................    0.90%       0.92%       0.92%
TOTAL ANNUAL FUND OPERATING EXPENSES..........    2.15%       2.92%       2.92%
Total waivers and reductions..................    0.16%       0.17%       0.17%
TOTAL ANNUAL FUND OPERATING EXPENSES
  WITH WAIVERS AND REDUCTIONS.................    1.99%       2.75%       2.75%
- --------------------------------------------------------------------------------
TECHNOLOGY FUND
- --------------------------------------------------------------------------------
Management fee................................    1.00%       1.00%       1.00%
Distribution (12b-1) fees(1)..................    0.25%       1.00%       1.00%
Other expenses................................    1.48%       1.44%       1.46%
TOTAL ANNUAL FUND OPERATING EXPENSES..........    2.73%       3.44%       3.46%
Total waivers and reductions..................    0.48%       0.44%       0.46%
TOTAL ANNUAL FUND OPERATING EXPENSES
  WITH WAIVERS AND REDUCTIONS.................    2.25%       3.00%       3.00%
- --------------------------------------------------------------------------------
MID CAP GROWTH FUND
- --------------------------------------------------------------------------------
Management fee................................    0.75%       0.75%       0.75%
Distribution (12b-1) fees(1)..................    0.25%       1.00%       1.00%
Other expenses................................    0.30%       0.30%       0.30%
TOTAL ANNUAL FUND OPERATING EXPENSES(2).......    1.30%       2.05%       2.05%
- --------------------------------------------------------------------------------
1  The Funds have  adopted a Brokerage  Enhancement  Plan under Rule 12b-1,  but
   have not yet  implemented  the Plan.  If the  Brokerage  Enhancement  Plan is
   implemented,  it is not  expected  that the  amounts  received  by the Fund's
   distributor  would  exceed  0.05% of any  Fund's  average  net  assets.  This
   additional  amount is not  reflected in the  "Distribution  (12b-1) fees" set
   forth in the table.

2  The expense  information for Large Cap Value,  Equity,  Global, Mid Cap Value
   and Mid Cap Growth  Funds has been  restated to reflect  each Fund's  current
   fees. Effective May 1, 2002, the Large Cap Value, Equity, Global, and Mid Cap
   Growth Funds have in place a new investment advisory fee and Large Cap Value,
   Equity,  Global,  Mid Cap Value and Mid Cap Growth  Funds have in place a new
   Class A Distribution fee.

3  Other  expenses  for the  Alpha  Opportunity  Fund are based  upon  estimated
   expenses.

4  The  Investment  Manager has  contractually  agreed to limit the total annual
   expenses of the International  Fund to 2.25% of its average daily net assets,
   exclusive of interest,  taxes,  extraordinary  expenses,  brokerage  fees and
   commissions and 12b-1 fees.
================================================================================


EXAMPLE

This  example is intended to help you compare the cost of investing in the Funds
with the cost of investing in other mutual funds.

Each  Example  assumes  that you invest  $10,000 in a Fund for the time  periods
indicated.  Each Example also assumes that your  investment has a 5% return each
year and that the  Funds'  operating  expenses  remain the same.  Although  your
actual costs may be higher or lower, based on these assumptions your costs would
be:

You would pay the  following  expenses if you redeemed your shares at the end of
each period.


       =================================================================
                                                     1 YEAR
                                         -------------------------------
                                         CLASS A     CLASS B     CLASS C
       -----------------------------------------------------------------
       Large Cap Value Fund ..........    $703        $711        $311
       Equity Fund ...................     690         698         298
       Alpha Opportunity Fund ........     856         872         472
       Global Fund ...................     745         756         356
       Mid Cap Value Fund ............     724         733         333
       Small Cap Growth Fund .........     758         770         371
       Enhanced Index Fund ...........     711         720         320
       International Fund ............     931         951         550
       Select 25 Fund ................     708         717         317
       Large Cap Growth Fund .........     780         795         395
       Technology Fund ...............     835         847         449
       Mid Cap Growth Fund ...........     700         708         308
       =================================================================




       =================================================================
                                                     3 YEARS
                                         -------------------------------
                                         CLASS A     CLASS B     CLASS C
       -----------------------------------------------------------------
       Large Cap Value Fund ..........   $  972      $  952      $  652
       Equity Fund ...................      934         912         612
       Alpha Opportunity Fund ........    1,435       1,432       1,132
       Global Fund ...................    1,103       1,088         788
       Mid Cap Value Fund ............    1,036       1,018         718
       Small Cap Growth Fund .........    1,041       1,029         832
       Enhanced Index Fund ...........      998         979         679
       International Fund ............    1,655       1,660       1,357
       Select 25 Fund ................      990         970         670
       Large Cap Growth Fund .........    1,209       1,204         904
       Technology Fund ...............    1,374       1,356       1,062
       Mid Cap Growth Fund ...........      963         943         642
       =================================================================




       =================================================================
                                                     5 YEARS
                                         -------------------------------
                                         CLASS A     CLASS B     CLASS C
       -----------------------------------------------------------------
       Large Cap Value Fund ..........   $1,262      $1,319      $1,119
       Equity Fund ...................    1,197       1,252       1,052
       Alpha Opportunity Fund ........    2,038       2,111       1,911
       Global Fund ...................    1,484       1,545       1,345
       Mid Cap Value Fund ............    1,371       1,430       1,230
       Small Cap Growth Fund .........    1,547       1,615       1,420
       Enhanced Index Fund ...........    1,307       1,364       1,164
       International Fund ............    2,398       2,478       2,274
       Select 25 Fund ................    1,292       1,349       1,149
       Large Cap Growth Fund .........    1,663       1,738       1,538
       Technology Fund ...............    1,937       1,988       1,798
       Mid Cap Growth Fund ...........    1,247       1,303       1,103
       =================================================================




       =================================================================
                                                    10 YEARS
                                         -------------------------------
                                         CLASS A     CLASS B     CLASS C
       -----------------------------------------------------------------
       Large Cap Value Fund ..........   $2,084      $2,219      $2,154
       Equity Fund ...................    1,946       2,080       2,275
       Alpha Opportunity Fund ........    3,658       3,731       3,950
       Global Fund ...................    2,549       2,682       2,866
       Mid Cap Value Fund ............    2,314       2,377       2,636
       Small Cap Growth Fund .........    2,679       2,800       3,012
       Enhanced Index Fund ...........    2,180       2,316       2,503
       International Fund ............    4,338       4,453       4,606
       Select 25 Fund ................    2,148       2,279       2,472
       Large Cap Growth Fund .........    2,915       3,063       3,242
       Technology Fund ...............    3,460       3,562       3,738
       Mid Cap Growth Fund ...........    2,053       2,187       2,379
       =================================================================


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


       =================================================================
                                                     1 YEAR
                                         -------------------------------
                                         CLASS A     CLASS B     CLASS C
       -----------------------------------------------------------------
       Large Cap Value Fund ..........    $703        $211        $211
       Equity Fund ...................     690         198         198
       Alpha Opportunity Fund ........     856         372         372
       Global Fund ...................     745         256         256
       Mid Cap Value Fund ............     724         233         233
       Small Cap Growth Fund .........     758         270         271
       Enhanced Index Fund ...........     711         220         220
       International Fund ............     931         451         450
       Select 25 Fund ................     708         217         217
       Large Cap Growth Fund .........     780         295         295
       Technology Fund ...............     835         347         349
       Mid Cap Growth Fund ...........     700         208         208
       =================================================================




       =================================================================
                                                     3 YEARS
                                         -------------------------------
                                         CLASS A     CLASS B     CLASS C
       -----------------------------------------------------------------
       Large Cap Value Fund ..........   $  972      $  652      $  652
       Equity Fund ...................      934         612         612
       Alpha Opportunity Fund ........    1,435       1,132       1,132
       Global Fund ...................    1,103         788         788
       Mid Cap Value Fund ............    1,036         718         718
       Small Cap Growth Fund .........    1,041         829         832
       Enhanced Index Fund ...........      998         679         679
       International Fund ............    1,655       1,360       1,357
       Select 25 Fund ................      990         670         670
       Large Cap Growth Fund .........    1,209         904         904
       Technology Fund ...............    1,374       1,056       1,062
       Mid Cap Growth Fund ...........      963         643         643
       =================================================================




       =================================================================
                                                     5 YEARS
                                         -------------------------------
                                         CLASS A     CLASS B     CLASS C
       -----------------------------------------------------------------
       Large Cap Value Fund ..........   $1,262      $1,119      $1,119
       Equity Fund ...................    1,197       1,052       1,052
       Alpha Opportunity Fund ........    2,038       1,911       1,911
       Global Fund ...................    1,484       1,345       1,345
       Mid Cap Value Fund ............    1,371       1,230       1,230
       Small Cap Growth Fund .........    1,547       1,415       1,420
       Enhanced Index Fund ...........    1,307       1,164       1,164
       International Fund ............    2,398       2,278       2,274
       Select 25 Fund ................    1,292       1,149       1,149
       Large Cap Growth Fund .........    1,663       1,538       1,538
       Technology Fund ...............    1,937       1,788       1,798
       Mid Cap Growth Fund ...........    1,247       1,103       1,103
       =================================================================




       =================================================================
                                                    10 YEARS
                                         -------------------------------
                                         CLASS A     CLASS B     CLASS C
       -----------------------------------------------------------------
       Large Cap Value Fund ..........   $2,084      $2,219      $2,154
       Equity Fund ...................    1,946       2,080       2,275
       Alpha Opportunity Fund ........    3,658       3,731       3,950
       Global Fund ...................    2,549       2,682       2,866
       Mid Cap Value Fund ............    2,314       2,377       2,636
       Small Cap Growth Fund .........    2,679       2,800       3,012
       Enhanced Index Fund ...........    2,180       2,316       2,503
       International Fund ............    4,338       4,453       4,606
       Select 25 Fund ................    2,148       2,279       2,472
       Large Cap Growth Fund .........    2,915       3,063       3,242
       Technology Fund ...............    3,460       3,562       3,738
       Mid Cap Growth Fund ...........    2,053       2,187       2,379
       =================================================================



INVESTMENT MANAGER


Security  Management  Company,  LLC (the  "Investment  Manager"),  One  Security
Benefit  Place,  Topeka,  Kansas 66636,  is the Funds'  investment  manager.  On
December 31,  2002,  the  aggregate  assets of all of the mutual funds under the
investment management of the Investment Manager were approximately $__ billion.

The Investment Manager has engaged The Dreyfus Corporation, 200 Park Avenue, New
York, New York 10166, to provide investment advisory services to Large Cap Value
Fund.  Founded in 1947,  The  Dreyfus  Corporation  manages  approximately  $181
billion in over 190 mutual fund portfolios.

The  Investment  Manager  has  engaged  Mainstream   Investment  Advisers,   LLC
("Mainstream")  to provide  investment  advisory  services to Alpha  Opportunity
Fund.  Mainstream,  101 West Spring Street,  Fourth Floor,  New Albany,  Indiana
47150, manages approximately $185 million in client assets.

The Investment Manager has engaged  OppenheimerFunds,  Inc., 498 Seventh Avenue,
New York,  New York 10018,  to provide  investment  advisory  services to Global
Fund. OppenheimerFunds, Inc. has operated as an investment adviser since January
1960.  OppenheimerFunds,  Inc.  (including  subsidiaries and affiliates) managed
more than $120 billion in assets as of October 31, 2002,  including other mutual
funds with more than 5 million shareholder accounts.

The  Investment  Manager has engaged RS Investment  Management,  L.P. to provide
investment  advisory  services to Small Cap Growth  Fund.  RS  Investments,  388
Market Street,  San Francisco,  California 94111, was established in 1993 and as
of September 30, 2002, managed over $5.1 billion in assets.

The Investment  Manager has engaged Deutsche Asset  Management,  Inc.  (formerly
Morgan Grenfell,  Inc.),  280 Park Avenue,  New York, New York 10017, to provide
investment  advisory services to Enhanced Index Fund. Deutsche Asset Management,
Inc.  was  founded  in 1838 as Morgan  Grenfell,  Inc.  and has  provided  asset
management  services  since 1953.  As of  September  30,  2001,  Deutsche  Asset
Management, Inc. had approximately $73.9 billion in assets under management.

Deutsche  Asset  Management,  Inc. is an indirect  wholly  owned  subsidiary  of
Deutsche Bank AG  ("Deutsche  Bank").  Deutsche  Bank is a major global  banking
institution  that is engaged in a wide range of  financial  services,  including
investment management,  mutual funds, retail and commercial banking,  investment
banking and insurance.

The  Investment   Manager  has  engaged  Templeton   Investment   Counsel,   LLC
("Templeton") to provide  investment  advisory  services to International  Fund.
Templeton, 500 East Broward Boulevard,  Ft. Lauderdale,  Florida 33394, together
with its affiliates, manages over $274 billion in assets.


The Investment Manager has engaged Wellington  Management Company, LLP, 75 State
Street, Boston, Massachusetts,  02109 to provide investment advisory services to
the Technology Fund.


Wellington  Management  is a limited  liability  partnership  which  traces  its
origins to 1928. As of September  30, 2002  Wellington  Management  managed over
$281  billion  in assets on behalf of  investment  companies,  employee  benefit
plans, endowments, foundations and other institutions.


The  Investment  Manager and the Funds have  received  from the  Securities  and
Exchange Commission an exemptive order for a multi-manager structure that allows
the Investment  Manager to hire, replace or terminate  sub-advisers  without the
approval of shareholders. The order also allows the Investment Manager to revise
a  sub-advisory  agreement  with the  approval  of Fund  Directors,  but without
shareholder approval.  If a new sub-adviser is hired,  shareholders will receive
information  about the new sub-adviser  within 90 days of the change.  The order
allows the Funds to operate more efficiently and with greater  flexibility.  The
Investment Manager provides the following  oversight and evaluation  services to
those Funds which use a sub-adviser:

o  performing initial due diligence on prospective sub-advisers for the Funds
o  monitoring the performance of the sub-advisers
o  communicating performance expectations to the sub-advisers
o  ultimately  recommending  to the Board of Directors  whether a  sub-adviser's
   contract should be renewed, modified or terminated.

The  Investment  Manager  does not  expect  to  recommend  frequent  changes  of
sub-advisers.  Although the Investment  Manager will monitor the  performance of
the sub-advisers, there is no certainty that any sub-adviser or Fund will obtain
favorable results at any given time.

MANAGEMENT FEES -- The following chart shows the investment management fees paid
by each Fund during the last fiscal year, except as otherwise indicated.


              ====================================================
              MANAGEMENT FEES
              (expressed as a percentage of average net assets)
              ----------------------------------------------------
              Large Cap Value Fund........................   0.75%
              Equity Fund.................................   0.75%
              Alpha Opportunity Fund*.....................   2.25%
              Global Fund.................................   1.00%
              Mid Cap Value Fund..........................   1.00%
              Small Cap Growth Fund.......................   1.00%
              Enhanced Index Fund.........................   0.75%
              International Fund..........................   1.10%
              Select 25 Fund..............................   0.75%
              Large Cap Growth Fund.......................   1.00%
              Technology Fund.............................   1.00%
              Mid Cap Growth Fund.........................   0.75%
              ----------------------------------------------------
              *This Fund was not available until February 3, 2003.
              ====================================================


The Investment  Manager may waive some or all of its management fee to limit the
total operating  expenses of a Fund to a specified level. The Investment Manager
also may  reimburse  expenses  of a Fund from  time to time to help it  maintain
competitive  expense  ratios.  These  arrangements  are  voluntary  and  may  be
terminated at any time. The fees without waivers or reimbursements  are shown in
the fee table on page 24.


PORTFOLIO MANAGERS --

DEAN S. BARR, Managing Director and Global Chief Investment Officer of DAMI, has
been  co-manager of Enhanced Index Fund since he joined DAMI in September  1999.
Prior to joining  the Company in 1999 he had 18 years of  experience,  including
Chief  Investment  Officer of active  quantitative  strategies  at State  Street
Global Advisors,  Chief Executive Officer at Advanced Investment  Technology and
in various  positions  at  Goldman  Sachs.  He has a B.A.  degree  from  Cornell
University  and a M.B.A.  degree  from  New York  University,  Stern  School  of
Business.

STEVEN M. BOWSER,  Vice President and Senior Portfolio Manager of the Investment
Manager, has been a co-manager of the Alpha Opportunity Fund since its inception
in February 2003. Mr. Bowser joined the Investment Manager in 1992. From 1989 to
1992,  Mr. Bowser was Assistant  Vice  President and Portfolio  Manager with the
Federal Home Loan Bank of Topeka. He was employed at the Federal Reserve Bank of
Kansas City in 1988 and began his career  with the Farm Credit  System from 1982
to 1987,  serving as a Senior  Financial  Analyst and Assistant  Controller.  He
graduated  with a bachelor of science  degree from Kansas  State  University  in
1982. He is a Chartered Financial Analyst charterholder.

ANTONIO T. DOCAL, Vice President of Templeton, has been manager of International
Fund since  September  2002.  Prior to joining  Templeton in 2001, Mr. Docal was
vice president and director at Evergreen Funds. Mr. Docal holds a M.B.A.  degree
from the Sloan School of Management at the Massachusetts Institute of Technology
and a B.A.  degree from  Trinity  College in  Connecticut.  Mr.  Docal is also a
Chartered Financial Analyst charterholder.

WILLIAM H. JENKINS,  Manager of  Mainstream,  has been a co-manager of the Alpha
Opportunity Fund since its inception in February 2003. He has more than 33 years
of  investment  experience.  Before  co-founding  Mainstream  in July 1997,  Mr.
Jenkins spent the prior 15 years with Providian Corporation as their sole equity
portfolio  manager.  From 1988 to 1991,  he was head of new asset and  liability
strategies  for  Providian,  in  addition  to his  equity  portfolio  management
responsibilities.  Prior to Providian, he worked as a portfolio  manager/analyst
at McGlinn Capital,  Delaware Investment Advisors and Mellon Bank and Trust. Mr.
Jenkins  holds a  bachelor's  degree from Grove City  College and a MBA from New
York University. He is a Chartered Financial Analyst charterholder.


MANISH KESHIVE,  Director DAMI, has been co-manager of Enhanced Index Fund since
September 1999. He joined DAMI in 1996.  Prior to joining DAMI, he was a student
earning a B.S. degree in Technology  from the Indian  Institute of Technology in
1993 and a M.S. degree from the Massachusetts Institute of Technology in 1995.


JEFF LOBO, Vice President of Quantitative  Strategies of the Investment Manager,
has been a  co-manager  of the Alpha  Opportunity  Fund since its  inception  in
February  2003.  Prior to joining the  Investment  Manager in 2002, Mr. Lobo was
employed by Keyport Life Insurance Company as Vice President of Risk Management.
Prior  to  joining  Keyport  in 19__,  he was  Vice  President  of  Equity  Risk
Management  for Credit  Suisse  Financial  Products in London.  Mr. Lobo holds a
bachelor's  degree  from MIT  Sloan  School  of  Management  and a MBA from York
University.

TERRY A. MILBERGER, Senior Portfolio Manager of the Investment Manager, has been
the manager of Equity Fund since 1981 and Select 25 Fund since its  inception in
January 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 the Investment Manager. He
was then  employed  as Vice  President  of Texas  Commerce  Bank and managed its
pension  assets  until he  returned  to the  Investment  Manager  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.

MARK MITCHELL,  Vice President and Portfolio Manager of the Investment  Manager,
has  managed  the Large Cap Growth  Fund  since  September  2002.  He joined the
Investment  Manager  in 2002.  Prior to  joining  the  Investment  Manager,  Mr.
Mitchell  worked  for GE  Asset  Management  as a  technology  sector  portfolio
manager.  Mr. Mitchell holds a bachelor of science degree from the University of
Nebraska,  with an  emphasis in finance.  He is a  Chartered  Financial  Analyst
charterholder.

JAMES P. SCHIER,  Senior Portfolio Manager of the Investment  Manager,  has been
the  manager of Mid Cap Value Fund since its  inception  in 1997 and has managed
Mid Cap Growth  Fund  since  January  1998.  He has 18 years  experience  in the
investment  field and is a  Chartered  Financial  Analyst  charterholder.  While
employed by the Investment Manager, he also served as a research analyst.  Prior
to joining  the  Investment  Manager in 1995,  he was a  portfolio  manager  for
Mitchell  Capital  Management  from 1993 to 1995. From 1988 to 1993 he served as
Vice President and Portfolio  Manager for Fourth  Financial.  Prior to 1988, Mr.
Schier served in various positions in the investment field for Stifel Financial,
Josepthal & Company and Mercantile  Trust Company.  Mr. Schier earned a bachelor
of  business  degree  from  the  University  of Notre  Dame  and a  M.B.A.  from
Washington University.

VALERIE  J. SILL was  named the  portfolio  manager  of Large Cap Value  Fund in
August 2001.  Ms. Sill has been a portfolio  manager for Dreyfus since 1996. She
is also a senior vice  president of The Boston  Company Asset  Management,  Inc.
(TBCAM), an affiliate of Dreyfus,  and is a member of the equity policy group of
TBCAM.  She  previously  served as director of equity  research and as an equity
research  analyst for TBCAM.  Currently,  she is the  Chairperson  of the Equity
Policy Group at TBCAM. Ms. Sill is a graduate of Wellesley  College and received
her M.B.A.  from Harvard Business School.  She is a Chartered  Financial Analyst
charterholder.

WELLINGTON   MANAGEMENT   COMPANY'S  GLOBAL  TECHNOLOGY  TEAM  has  managed  the
Technology  Fund since its inception in May 2000. The Global  Technology Team is
comprised  of  a  group  of  global  industry  analysts  who  focus  on  various
sub-sectors of the Technology industry.  The Global Technology Team is supported
by a significant number of specialized  fundamental,  quantitative and technical
analysts, macro-economic analysts and traders.

WILLIAM L. WILBY,  Senior Vice President and Director of International  Equities
of  OppenheimerFunds,  has been the manager of Global Fund since  November 1998.
Prior  to  joining  Oppenheimer  in  1991,  he was an  international  investment
strategist at Brown Brothers  Harriman & Co. Prior to Brown Brothers,  Mr. Wilby
was a managing director and portfolio manager at AIG Global Investors. He joined
AIG from Northern Trust Bank in Chicago,  where he was an international  pension
manager.  Before starting his career in portfolio  management,  Mr. Wilby was an
international  financial  economist  at  Northern  Trust Bank and at the Federal
Reserve Bank in Chicago.  Mr. Wilby is a graduate of the United States  Military
Academy and holds a M.A. and a Ph.D. in  International  Monetary  Economics from
the University of Colorado. He is a Chartered Financial Analyst charterholder.

WILLIAM  J.  WOLFENDEN  III has been  manager  of Small Cap  Growth  Fund  since
September of 2002 and has been with RS  Investments  since April 2001.  Prior to
that,  Mr.  Wolfenden had been at Dresdner RCM Global  Investors  since 1994. He
holds a B.A. from Southern  Methodist  University and a M.B.A.  from  Vanderbilt
University.


BUYING SHARES

Shares of the Funds  are  available  through  broker/dealers,  banks,  and other
financial  intermediaries  that have an agreement  with the Funds'  Distributor,
Security Distributors,  Inc. A broker/dealer or other financial intermediary may
charge fees in connection with an investment in the Fund. Fund shares  purchased
directly from the Fund do not contain such additional  charges but may contain a
front-end sales charge as noted under "Class A shares."


There are three different ways to buy shares of the Funds--Class A shares, Class
B shares or Class C shares.  The  different  classes of a Fund differ  primarily
with respect to the sales charges and Rule 12b-1 distribution fees to which they
are subject. The minimum initial investment is $100. Subsequent investments must
be $100 (or $20 under an  Accumulation  Plan).  The Funds  reserve  the right to
reject any order to purchase shares.

The  Funds  no  longer  issue  certificates;  all  Fund  shares  are  issued  in
non-certificate form.


CLASS A SHARES -- Class A shares are  subject  to a sales  charge at the time of
purchase. An order for Class A shares will be priced at a Fund's net asset value
per share (NAV),  plus the sales charge set forth below. The NAV, plus the sales
charge, is the "offering price." A Fund's NAV is generally  calculated as of the
close of trading on every day the New York Stock  Exchange is open. An order for
Class A shares is priced at the NAV next calculated  after the order is accepted
by the Fund, plus the sales charge.

================================================================================
                                                     SALES CHARGE
                                      ------------------------------------------
                                       AS A PERCENTAGE       AS A PERCENTAGE OF
AMOUNT OF ORDER                       OF OFFERING PRICE      NET AMOUNT INVESTED
- --------------------------------------------------------------------------------
Less than $50,000 ....................      5.75%                   6.10%
$50,000 to $99,999 ...................      4.75%                   4.99%
$100,000 to $249,999 .................      3.75%                   3.90%
$250,000 to $499,999 .................      2.75%                   2.83%
$500,000 to $999,999 .................      2.00%                   2.04%
$1,000,000 or more* ..................      None                    None
- --------------------------------------------------------------------------------
*Purchases of  $1,000,000  or more are not subject to a sales charge at the time
 of  purchase,  but are subject to a deferred  sales charge of 1.00% if redeemed
 within one year following  purchase.  The deferred sales charge is a percentage
 of the lesser of the NAV of the shares redeemed or the net cost of such shares.
 Shares that are not subject to a deferred sales charge are redeemed first.
================================================================================

Please see  Appendix A for options  that are  available  for  reducing the sales
charge applicable to purchases of Class A shares.


CLASS A DISTRIBUTION  PLAN -- The Funds have adopted Class A Distribution  Plans
that allow each of the Funds to pay distribution fees to the Funds' Distributor.
The Distributor uses the fees to pay for activities related to the sale of Class
A shares and services provided to shareholders. The distribution fee is equal to
0.25% of the average daily net assets of the Fund's Class A shares.  Because the
distribution  fees are paid out of the Fund's assets on an ongoing  basis,  over
time these fees will  increase the cost of a  shareholder's  investment  and may
cost an investor more than paying other types of sales charges.


CLASS B SHARES -- Class B shares are not  subject to a sales  charge at the time
of  purchase.  An order for Class B shares will be priced at the Fund's NAV next
calculated  after the order is accepted by the Fund.  A Fund's NAV is  generally
calculated  as of the close of trading on every day the New York Stock  Exchange
is open.

Class B shares are subject to a deferred sales charge if redeemed within 5 years
from the date of purchase.  The deferred sales charge is a percentage of the NAV
of the shares at the time they are  redeemed  or the  original  purchase  price,
whichever is less.  Shares that are not subject to the deferred sales charge are
redeemed first. Then, shares held the longest will be the first to be redeemed.

The amount of the deferred  sales charge is based upon the number of years since
the shares were purchased, as follows:

                        ================================
                        NUMBER OF YEARS       DEFERRED
                        SINCE PURCHASE      SALES CHARGE
                        --------------------------------
                              1                  5%
                              2                  4%
                              3                  3%
                              4                  3%
                              5                  2%
                          6 and more             0%
                        ================================

The   Distributor   will  waive  the  deferred   sales   charge  under   certain
circumstances. See "Waiver of the Deferred Sales Charge," page 41.

CLASS B DISTRIBUTION  PLAN -- The Funds have adopted Class B Distribution  Plans
that allow each of the Funds to pay distribution  fees to the  Distributor.  The
Distributor uses the fees to finance  activities  related to the sale of Class B
shares and services to  shareholders.  The distribution fee is equal to 1.00% of
the  average  daily  net  assets  of the  Fund's  Class B  shares.  Because  the
distribution  fees are paid out of the Fund's assets on an ongoing  basis,  over
time these fees will  increase the cost of a  shareholder's  investment  and may
cost an investor more than paying other types of sales charges.


Class B shares automatically convert to Class A shares on the eighth anniversary
of purchase.  This is advantageous to such  shareholders  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.


CLASS C SHARES -- Class C shares are not  subject to a sales  charge at the time
of  purchase.  An order for Class C shares  will be priced at a Fund's  NAV next
calculated  after the order is accepted by the Fund.  A Fund's NAV is  generally
calculated  as of the close of trading on every day the New York Stock  Exchange
is open.


Class C shares  are  subject  to a deferred  sales  charge of 1.00% if  redeemed
within  one year  from the date of  purchase.  The  deferred  sales  charge is a
percentage  of the NAV of the  shares  at the  time  they  are  redeemed  or the
original  purchase price,  whichever is less. Shares that are not subject to the
deferred sales charge are redeemed first.  Then, shares held the longest will be
the first to be redeemed.  The Distributor  will waive the deferred sales charge
under certain circumstances. See "Waiver of the Deferred Sales Charge," page 31.


CLASS C DISTRIBUTION  PLAN -- The Funds have adopted Class C Distribution  Plans
that allow each of the Funds to pay distribution  fees to the  Distributor.  The
Distributor uses the fees to finance  activities  related to the sale of Class C
shares and services to  shareholders.  The distribution fee is equal to 1.00% of
the  average  daily  net  assets  of the  Fund's  Class C  shares.  Because  the
distribution  fees are paid out of the Fund's assets on an ongoing  basis,  over
time these fees will  increase the cost of a  shareholder's  investment  and may
cost an investor more than paying other types of sales charges.


BROKERAGE  ENHANCEMENT  PLAN -- The Funds have  adopted a Brokerage  Enhancement
Plan (the  "Plan") in  accordance  with the  provisions  of Rule 12b-1 under the
Investment  Company  Act of  1940.  However,  to  date,  the  Plan  has not been
implemented. If implemented,  the Plan would use available brokerage commissions
to promote the sale and distribution of Fund shares.

Under the Plan, the Funds may direct the Investment  Manager or a sub-adviser to
use certain broker-dealers for securities  transactions,  subject to the duty of
best execution.  These broker-dealers have agreed either (1) to pay a portion of
their  commission from the sale and purchase of securities to the Distributor or
other introducing  brokers ("Brokerage  Payments"),  or (2) to provide brokerage
credits,  benefits or services ("Brokerage  Credits").  The Distributor will use
all Brokerage  Payments and Credits  (other than a minimal  amount to defray its
legal and  administrative  costs) to finance activities that are meant to result
in the sale of the Funds' shares, including:

o  holding or participating in seminars and sales meetings promoting the sale of
   the Funds' shares
o  paying marketing fees requested by broker-dealers who sell the Funds
o  training sales personnel
o  creating and mailing advertising and sales literature
o  financing  any other  activity  that is intended to result in the sale of the
   Funds' shares.

The Plan  permits the  Brokerage  Payments and Credits  generated by  securities
transactions  from one Fund to be used for the  benefit of other  Funds as well.
The Plan is not expected to increase the brokerage costs of the Funds.  For more
information about the Plan, please read the "Allocation of Portfolio  Brokerage"
section of the Statement of Additional Information.

WAIVER OF DEFERRED SALES CHARGE -- The Distributor will waive the deferred sales
charge under the following circumstances:

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), 401(k) or 403(b) 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)

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

   >  termination of employment of a participant in a plan

   >  any other permissible withdrawal under the terms of the plan.

CONFIRMATIONS AND STATEMENTS -- The Funds will send you a confirmation statement
after every  transaction  that  affects your  account  balance or  registration.
However,  certain  automatic  transactions may be confirmed on a quarterly basis
including systematic withdrawals,  automatic purchases and reinvested dividends.
Each shareholder will receive a quarterly  statement  setting forth a summary of
the transactions that occurred during the preceding quarter.

SELLING SHARES

Selling  your shares of a Fund is called a  "redemption,"  because the Fund buys
back its  shares.  A  shareholder  may sell  shares at any time.  Shares will be
redeemed  at the NAV next  determined  after the order is accepted by the Fund's
transfer  agent,  less any  applicable  deferred  sales charge.  A Fund's NAV is
generally  calculated as of the close of trading on every day the New York Stock
Exchange is open.  Any share  certificates  representing  Fund shares being sold
must be returned with a request to sell the shares.

When redeeming  recently purchased shares, if the Fund has not collected payment
for the  shares,  it may  delay  sending  the  proceeds  until it has  collected
payment, which may take up to 15 days.

BY MAIL -- To sell shares by mail, send a letter of instruction that includes:

o  The name and signature of the account owner(s)
o  The name of the Fund
o  The dollar amount or number of shares to sell
o  Where to send the proceeds
o  A signature guarantee if
   >  The check will be mailed to a payee or address  different than that of the
      account owner, or

   >  The sale of shares is more than $25,000.


- --------------------------------------------------------------------------------
A SIGNATURE  GUARANTEE  helps protect  against  fraud.  Banks,  brokers,  credit
unions, national securities exchanges and savings associations provide signature
guarantees.  A notary public is not an eligible signature  guarantor.  For joint
accounts, both signatures must be guaranteed.
- --------------------------------------------------------------------------------

Mail your request to:

                        Security Management Company, LLC
                        P.O. Box 750525
                        Topeka, KS 66675-9135

Signature requirements vary based on the type of account you have:

o  INDIVIDUAL  OR JOINT  TENANTS:  Written  instructions  must be  signed  by an
   individual  shareholder,  or in  the  case  of  joint  accounts,  all  of the
   shareholders, exactly as the name(s) appears on the account.

o  UGMA OR UTMA:  Written  instructions  must be signed by the  custodian  as it
   appears on the account.

o  SOLE PROPRIETOR OR GENERAL PARTNER: Written instructions must be signed by an
   authorized individual as it appears on the account.

o  CORPORATION  OR  ASSOCIATION:  Written  instructions  must be  signed  by the
   person(s)  authorized  to act on the account.  A certified  resolution  dated
   within six months of the date of receipt, authorizing the signer to act, must
   accompany the request if not on file with the Funds.

o  TRUST: Written instructions must be signed by the trustee(s).  If the name of
   the  current   trustee(s)  does  not  appear  on  the  account,  a  certified
   certificate of incumbency dated within 60 days must also be submitted.

o  RETIREMENT: Written instructions must be signed by the account owner.


BY TELEPHONE -- If you selected this option on your account application, you may
make redemptions from your account by calling 1-800-888-2461 on weekdays (except
holidays)  between 7:00 a.m. and 6:00 p.m.  Central time. The Funds require that
requests for redemptions over $25,000 be in writing with signatures  guaranteed.
You may not  close  your  account  by  telephone  or redeem  shares  for which a
certificate  has been issued.  If you would like to establish  this option on an
existing account, please call 1-800-888-2461. Shareholders may not redeem shares
held in an  Individual  Retirement  Account  ("IRA")  or  403(b)(7)  account  by
telephone.


BY BROKER -- You may redeem your shares through your broker.  Brokers may charge
a commission upon the redemption of shares.

PAYMENT OF  REDEMPTION  PROCEEDS  -- Payments  may be made by check.  Redemption
proceeds  will be sent to the  shareholder(s)  of record at the  address  on our
records generally within seven days after receipt of a valid redemption request.
For a charge of $20 deducted from redemption  proceeds,  the Investment  Manager
will provide a certified or cashier's check, or send the redemption  proceeds by
express  mail,  upon the  shareholder's  request  or send the  proceeds  by wire
transfer to the  shareholder's  bank account upon  receipt of  appropriate  wire
transfer instructions.

In addition,  redemption proceeds can be sent by electronic funds transfer, free
of charge, to the shareholder's bank account.

The Funds may suspend the right of redemption  during any period when trading on
the New York Stock  Exchange is  restricted or such Exchange is closed for other
than weekends or holidays, or any emergency is deemed to exist by the Securities
and Exchange Commission.

DIVIDENDS AND TAXES

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 the Fund, unless you instruct
the  Investment  Manager  otherwise.  There  are no fees  or  sales  charges  on
reinvestments.

TAX ON  DISTRIBUTIONS  --  Fund  dividends  and  distributions  are  taxable  to
shareholders  (unless  your  investment  is in an  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 DISTRIBUTION           TAX RATE FOR 15% BRACKET       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 years or more)               8%                        18%
================================================================================

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


The Fund has  "short-term  capital  gains" when it sells shares within 12 months
after buying them. The Fund has  "long-term  capital gains" when it sells shares
that it has owned for more than 12 months.


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

TAXES ON SALES OR  EXCHANGES -- You may be taxed on any sale or exchange of Fund
shares.  The amount of gain or loss will depend  primarily upon how much you pay
for the shares, how much you sell them for, and how long you hold them.

The previous  table can provide a guide for your  potential tax  liability  when
selling or exchanging  Fund shares.  "Short-term  capital gains" applies to Fund
shares sold or exchanged up to one year after  buying them.  "Long-term  capital
gains" applies to shares held for more than one year.

BACKUP  WITHHOLDING  -- As with all  mutual  funds,  a Fund may be  required  to
withhold U.S. federal income tax at the rate of 31% of all taxable distributions
payable  to you if you fail to  provide  the Fund  with  your  correct  taxpayer
identification  number or to make required  certifications,  or if you have been
notified  by the  Internal  Revenue  Service  that  you are  subject  to  backup
withholding. Backup withholding is not an additional tax; rather, it is a way in
which the Internal  Revenue Service ensures it will collect taxes otherwise due.
Any  amounts  withheld  may be credited  against  your U.S.  federal  income tax
liability.

You should  consult your tax  professional  about  federal,  state and local tax
consequences  to you of an investment  in the Fund.  Please see the Statement of
Additional Information for additional tax information.

DETERMINATION OF NET ASSET VALUE

The net asset  value per share (NAV) 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 each 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 the Investment Manager
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 the Investment Manager rather
than being determined by the market.

Foreign  securities  are valued based on quotations  from the primary  market in
which they are  traded,  and are  converted  from the local  currency  into U.S.
dollars using current  exchange  rates.  Foreign  securities  may trade in their
primary  markets  on  weekends  or other  days  when the Fund does not price its
shares.  Therefore,  the NAV of Funds holding  foreign  securities may change on
days when shareholders will not be able to buy or sell shares of the Funds.

SHAREHOLDER SERVICES

ACCUMULATION  PLAN -- An  investor  may  choose  to  invest  in one of the Funds
through a voluntary  Accumulation Plan. This allows for an initial investment of
$100  minimum  and  subsequent  investments  of  $20  minimum  at any  time.  An
Accumulation  Plan involves no obligation to make periodic  investments,  and is
terminable at will.

Payments are made by sending a check to the  Distributor who (acting as an agent
for the dealer) will purchase whole and fractional  shares of the Fund as of the
close of business  on such day as the payment is  received.  The  investor  will
receive a confirmation and statement after each investment.

Investors may also choose to use an Automatic  Investment  Plan  (automatic bank
draft) to make Fund purchases. There is no additional charge for choosing to use
an Automatic Investment Plan. Withdrawals from your bank account may occur up to
3  business  days  before  the  date  scheduled  to  purchase  Fund  shares.  An
application for an Automatic Investment Plan may be obtained from the Funds.

SYSTEMATIC  WITHDRAWAL  PROGRAM  --  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 Investment  Manager,  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 and 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.


EXCHANGE  PRIVILEGE --  Shareholders  of the Funds may exchange their shares for
shares of another of the Funds or for shares of other  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, SEP 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 the
Funds 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  contingent
deferred sales charge will be imposed upon  redemption  and calculated  from the
date of the  initial  purchase  without  regard to the time  shares were held in
Security Cash Fund.  For tax purposes,  an exchange is a sale of shares that 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.  Exchanges are made upon receipt of a properly
completed  Exchange  Authorization  form. A current  prospectus of the fund into
which an  exchange  is made will be given to each  shareholder  exercising  this
privilege.


The terms of an  employee-sponsored  retirement  plan may affect a shareholder's
right to  exchange  shares as  described  above.  Contact  your plan  sponsor or
administrator  to determine if all of the exchange  options  discussed above are
available under your plan.


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 the Investment Manager. Once authorization has been received by
the  Investment  Manager,  a  shareholder  may  exchange  shares by telephone by
calling the Funds at  1-800-888-2461,  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,  dollar cost averaging and
asset  rebalancing,  may be  changed or  discontinued  at any time by either the
Investment Manager or the Funds upon 60 days' notice to shareholders.


DOLLAR  COST  AVERAGING.  This option is  available  only to  shareholders  of a
403(b)(7)  account  sponsored by the  Investment  Manager and opened on or after
June 5, 2000. The option allows such shareholders to make periodic  exchanges of
shares from the  Security  Capital  Preservation  Fund (held in  non-certificate
form) to one or more of the funds  available  under the  exchange  privilege  as
described  above.  Such periodic  exchanges in which securities are purchased at
regular  intervals  are known as  "dollar  cost  averaging."  With  dollar  cost
averaging,  the cost of the securities gets averaged over time and possibly over
various market cycles.  Dollar cost  averaging does not guarantee  profits,  nor
does it assure that a shareholder will not have losses.

Shareholders may obtain a dollar cost averaging request form from the Investment
Manager.  Shareholders designate on the form whether amounts are to be exchanged
on the basis of a specific  dollar  amount or a specific  number of shares.  The
Investment  Manager will exchange  shares as requested on the first business day
of the month.

The Investment  Manager will make exchanges  until account value in the Security
Capital  Preservation  Fund is depleted  or until you  instruct  the  Investment
Manager to  terminate  dollar  cost  averaging.  Dollar  cost  averaging  may be
terminated at any time by written request to the Investment Manager.

ASSET REBALANCING.  This option is available only to shareholders of a 403(b)(7)
account sponsored by the Investment Manager and opened on or after June 5, 2000.
This option allows such  shareholders to automatically  exchange shares of those
funds available  under the exchange  privilege as described above on a quarterly
basis to maintain a particular  percentage allocation among the funds. Shares of
such funds must be held in  non-certificate  form.  Account value allocated to a
fund will grow or  decline  in value at  different  rates  during  the  selected
period, and asset rebalancing will automatically reallocate account value in the
funds to the allocation you select on a quarterly basis.

Shareholders  may obtain an asset  rebalancing  request form from the Investment
Manager.  You must designate on the form the applicable funds and the percentage
of account  value to be  maintained  in each fund.  Thereafter,  the  Investment
Manager will  exchange  shares of the funds to maintain  that  allocation on the
first business day of each calendar quarter. Asset rebalancing may be terminated
at any time by written request to the Investment Manager.

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.

INVESTMENT POLICIES AND MANAGEMENT PRACTICES


This section takes a detailed look at some of the types of securities  the Funds
may hold in their  respective  portfolios  and the various  kinds of  management
practices  that may be used in the  portfolios.  The Funds'  holdings of certain
types of  investments  cannot exceed a maximum  percentage of net assets.  These
percentage limitations are set forth in the Statement of Additional Information.
While the  percentage  limitations  provide a useful  level of detail  about the
Funds' investment program, they should not be viewed as an accurate gauge of the
potential  risk  of  the  investment.  For  example,  in a  given  period,  a 5%
investment in futures contracts could have  significantly more of an impact on a
Fund's  share price than its  weighting  in the  portfolio.  The net effect of a
particular  investment  depends on its  volatility  and the size of its  overall
return in relation  to the  performance  of the Fund's  other  investments.  The
Portfolio Managers of the Funds have considerable  leeway in choosing investment
strategies and selecting  securities they believe will help the Fund achieve its
objective. In seeking to meet its investment objective,  the Funds may invest in
any  type  of  security  or  instrument  whose  investment  characteristics  are
consistent with that Fund's investment program.


The Funds are subject to certain  investment policy  limitations  referred to as
"fundamental  policies."  The  fundamental  policies  cannot be changed  without
shareholder  approval.  Please refer to the Statement of Additional  Information
for a complete list of the fundamental policies applicable to each of the Funds.
Some of the more important  fundamental  policies are outlined below.  The Funds
will not:


o  with  respect to 75% of their  respective  assets  invest more than 5% of the
   value of their assets in any one issuer other than the U.S. Government or its
   instrumentalities  (this  limitation  does not apply to the Large Cap  Growth
   Fund, the Technology Fund or Select 25 Fund);

o  with respect to 75% of their respective  assets purchase more than 10% of the
   outstanding  voting  securities of any one issuer (this  limitation  does not
   apply to the Large Cap Growth Fund, the Technology Fund or Select 25 Fund);


o  invest 25% or more of its total assets in any one industry  (this  limitation
   does not apply to the Large Cap Growth Fund or the Technology Fund).

The following  pages describe some of the  investments  which may be made by the
Funds, as well as some of the management practices of the Funds.

FOREIGN  SECURITIES  --  Foreign  investments  involve  certain  special  risks,
including,  but not limited  to, (i)  unfavorable  changes in currency  exchange
rates;  (ii) adverse  political and economic  developments;  (iii) unreliable or
untimely information; (iv) limited legal recourse; (v) limited markets; and (vi)
higher operational expenses.

Foreign investments are normally issued and traded in foreign  currencies.  As a
result,  their values may be affected by changes in the exchange  rates  between
particular  foreign currencies and the U.S. dollar.  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.  Each of the Funds may
invest in foreign securities.

EMERGING MARKETS -- The risks associated with foreign  investments are typically
increased  in less  developed  and  developing  countries,  which are  sometimes
referred to as emerging markets. For example,  political and economic structures
in  these  countries  may be young  and  developing  rapidly,  which  can  cause
instability.  These  countries are also more likely to experience high levels of
inflation,  deflation or currency devaluation,  which could hurt their economies
and securities  markets.  For these and other  reasons,  investments in emerging
markets are often considered speculative. The Global,  International,  Small Cap
Growth and Technology Funds may invest in emerging market foreign securities.

SMALLER  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. Each of the funds may invest in small or medium-sized companies.

CONVERTIBLE  SECURITIES  AND WARRANTS -- Each of the Funds 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  --  Restricted  securities  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 the 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.  A dealer  registered under the Securities and
Exchange  Act of 1934 (the  "Exchange  Act"),  acting for its own account or the
accounts of other qualified institutional buyers, that in the aggregate owns and
invests on a  discretionary  basis at least $10 million in securities of issuers
not  affiliated  with the dealer may also  qualify as a qualified  institutional
buyer,  as well as an  Exchange  Act  registered  dealer  acting  in a  riskless
principal transaction on behalf of a qualified institutional buyer.

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. Each of the Funds may
invest in restricted securities.

INITIAL PUBLIC  OFFERING -- A Fund's  investment in securities  offered  through
initial public offerings (IPOs) may have a magnified  performance impact, either
positive  or  negative,  on any Fund and  particularly  those with a 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.  The Technology Fund and the Small Cap Growth Fund may be
particularly susceptible to IPO risk.


HIGH YIELD  SECURITIES -- Higher  yielding  debt  securities in the lower rating
(higher risk) categories of the recognized rating services 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 the Investment
Manager'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. The Large Cap Value, Alpha Opportunity,  Global,  International
and Small Cap Growth Funds may invest in high yield securities.


CASH RESERVES -- Cash reserves  maintained by a Fund may include  domestic,  and
for certain Funds, foreign money market instruments,  as well as certificates of
deposit, bank demand accounts and repurchase agreements. The Funds may establish
and  maintain  reserves as the  Investment  Manager or  Sub-Adviser  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 -- 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 of the Funds 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. Those Funds which invest in non-dollar  denominated foreign
securities  may also  engage  in  forward  foreign  currency  transactions.  The
instruments  listed  above  may be bought  or sold for any  number  of  reasons,
including:  to manage  exposure  to changes  in  securities  prices and  foreign
currencies,  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.

SWAPS,  CAPS,  FLOORS AND COLLARS -- Interest  rate and/or index swaps,  and the
purchase  or sale of related  caps,  floors and collars  are used  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 Fund anticipates  purchasing at a later date. To the
extent a Fund enters into these types of transactions,  it will be done to hedge
and not as a  speculative  investment,  and the Fund will not sell interest rate
caps or floors if it does not own securities or other instruments  providing the
income  the Fund may be  obligated  to pay.  Interest  rate  swaps  involve  the
exchange by the 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.

SHARES OF OTHER INVESTMENT  COMPANIES -- A Fund's  investment in shares of other
investment companies 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.  Each of the Funds may invest in the
shares of other investment companies.

WHEN-ISSUED  SECURITIES AND FORWARD  COMMITMENT  CONTRACTS -- The price of "when
issued," "forward  commitment" or "delayed delivery"  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.  Each of the
Funds may purchase or sell  securities on a when-issued,  forward  commitment or
delayed delivery basis.


SECURITIES  LENDING -- For purposes of realizing  additional  income,  the Alpha
Opportunity,  Global,  International,  Large Cap Growth and Technology Funds may
lend their  portfolio  securities  to certain  borrowers.  Any such loan will be
continuously  secured by  collateral at least equal to the value of the security
loaned. The risks in lending portfolio  securities,  as with other extensions of
credit,  consist of possible delay in receiving additional  collateral or in the
recovery of the securities or possible loss of rights in the  collateral  should
the borrower  fail  financially.  Loans will only be made to firms deemed by the
Investment  Manager to be of good  standing and will not be made unless,  in the
judgment of the Investment  Manager,  the  consideration  to be earned from such
loans would justify the risk.


GENERAL INFORMATION

SHAREHOLDER  INQUIRIES  --  Shareholders  who have  questions  concerning  their
account or wish to obtain additional  information,  may call the Funds (see back
cover for address and telephone numbers), or contact their securities dealer.

FINANCIAL HIGHLIGHTS


The financial  highlights table is intended to help you understand the financial
performance  of the  Funds'  Class A shares,  Class B shares  and Class C shares
during the past five years or, the period since  commencement of a Fund or share
class.  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 LARGE CAP VALUE FUND (CLASS A)
- -------------------------------------------------------------------------------------
                                             FISCAL YEAR ENDED SEPTEMBER 30
                                      -----------------------------------------------
                                      2002   2001(c)(m)   2000(c)   1999(c)   1998(c)
                                      ----   ----------   -------   -------   -------
PER SHARE DATA
Net asset value beginning of period            $ 6.42     $ 7.17    $ 7.68    $11.14

INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss).......              0.03       0.07      0.12      0.13
Net gain (loss) on securities
  (realized and unrealized)........             (1.03)     (0.58)     0.75     (0.87)
                                                -----      -----     -----     -----
Total from investment operations...             (1.00)     (0.51)     0.87     (0.74)

LESS DISTRIBUTIONS:
Dividends (from net
  investment income)...............             (0.05)     (0.13)    (0.04)    (0.13)
Distributions (from realized gains)             (0.00)     (0.11)    (1.34)    (2.59)
                                                -----      -----     -----     -----
Total distributions................             (0.05)     (0.24)    (1.38)    (2.72)
                                                -----      -----     -----     -----
NET ASSET VALUE END OF PERIOD......            $ 5.37     $ 6.42    $ 7.17    $ 7.68
                                                =====      =====     =====     =====
TOTAL RETURN (a)...................           (15.68)%    (7.28)%    12.00%   (7.95)%

RATIOS/SUPPLEMENTAL DATA
Net assets end of
  period (thousands)...............            $45,006    $60,448   $74,796   $76,371
Ratio of expenses to
  average net assets...............              1.32%      1.27%     1.22%     1.21%
Ratio of net investment income
  (loss) to average net assets.....              0.49%      0.99%     1.63%     1.49%
Portfolio turnover rate............               180%       144%       98%      144%
- -------------------------------------------------------------------------------------


- -------------------------------------------------------------------------------------
SECURITY LARGE CAP VALUE FUND (CLASS B)
- -------------------------------------------------------------------------------------
                                              FISCAL YEAR ENDED SEPTEMBER 30
                                      -----------------------------------------------
                                      2002   2001(c)(m)   2000(c)   1999(c)   1998(c)
                                      ----   ----------   -------   -------   -------
PER SHARE DATA
Net asset value beginning of period            $ 6.21     $ 6.95    $ 7.54    $10.99

INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss).......             (0.03)       ---      0.05      0.05
Net gain (loss) on securities
  (realized and unrealized)........             (1.00)     (0.58)     0.73     (0.88)
                                                -----      -----     -----     -----
Total from investment operations...             (1.03)     (0.58)     0.78     (0.83)

LESS DISTRIBUTIONS:
Dividends (from net
  investment income)...............               ---      (0.05)    (0.03)    (0.03)
Distributions (from realized gains)               ---      (0.11)    (1.34)    (2.59)
                                                -----      -----     -----     -----
Total distributions................               ---      (0.16)    (1.37)    (2.62)
                                                -----      -----     -----     -----
NET ASSET VALUE END OF PERIOD......            $ 5.18     $ 6.21    $ 6.95    $ 7.54
                                                =====      =====     =====     =====
TOTAL RETURN (a)...................           (16.59)%    (8.36)%    10.93%   (8.95)%

RATIOS/SUPPLEMENTAL DATA
Net assets end of
  period (thousands)...............             $5,657     $7,152    $9,829    $9,257
Ratio of expenses to
  average net assets...............              2.32%      2.27%     2.22%     2.21%
Ratio of net investment income
  (loss) to average net assets.....              0.51%      0.01%     0.63%     0.59%
Portfolio turnover rate............               180%       144%       98%      144%
- -------------------------------------------------------------------------------------


- ---------------------------------------------------------------------------------------
SECURITY LARGE CAP VALUE FUND (CLASS C)
- ---------------------------------------------------------------------------------------
                                                   FISCAL PERIOD ENDED SEPTEMBER 30
                                               ----------------------------------------
                                               2002   2001(c)(m)   2000(c)   1999(c)(h)
                                               ----   ----------   -------   ----------
PER SHARE DATA
Net asset value beginning of period.........            $ 6.32     $ 7.11      $6.87

INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)................             (0.03)     (0.01)      0.03
Net gain (loss) on securities
  (realized and unrealized).................             (1.01)     (0.56)      0.21
                                                         -----      -----       ----
Total from investment operations............             (1.04)     (0.57)      0.24

LESS DISTRIBUTIONS:
Dividends (from net investment income)......               ---      (0.11)       ---
Distributions (from realized gains).........               ---      (0.11)       ---
                                                         -----      -----       ----
Total distributions.........................               ---      (0.22)       ---
                                                         -----      -----       ----
NET ASSET VALUE END OF PERIOD...............            $ 5.28     $ 6.32      $7.11
                                                         =====      =====       ====
TOTAL RETURN (a)............................           (16.46)%    (8.10)%     3.49%

RATIOS/SUPPLEMENTAL DATA
Net assets end of period (thousands)........               $904       $483      $297
Ratio of expenses to average net assets.....              2.33%      2.28%     2.22%
Ratio of net investment income
  (loss) to average net assets..............            (0.55)%    (0.10)%     0.62%
Portfolio turnover rate.....................               180%       144%       90%
- ---------------------------------------------------------------------------------------


- ---------------------------------------------------------------------------------------
SECURITY LARGE CAP VALUE FUND (CLASS S)
- ---------------------------------------------------------------------------------------
                                                                      FISCAL PERIOD
                                                                    ENDED SEPTEMBER 30
                                                                   --------------------
                                                                   2002    2001(c)(l)
                                                                   ----    ----------
PER SHARE DATA
Net asset value beginning of period.............................             $ 6.08

INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)....................................              (0.02)
Net gain (loss) on securities (realized and unrealized).........              (0.72)
                                                                              -----
Total from investment operations................................              (0.74)

LESS DISTRIBUTIONS:
Dividends (from net investment income)..........................                ---
Distributions (from realized gains).............................                ---
                                                                              -----
Total distributions.............................................                ---
                                                                              -----
NET ASSET VALUE END OF PERIOD...................................             $ 5.34
                                                                              =====
TOTAL RETURN (a)................................................            (16.56)%

RATIOS/SUPPLEMENTAL DATA
Net assets end of period (thousands)............................                 $41
Ratio of expenses to average net assets.........................               2.36%
Ratio of net investment income (loss) to average net assets.....             (0.74)%
Portfolio turnover rate.........................................                225%
- ---------------------------------------------------------------------------------------


- --------------------------------------------------------------------------------------
SECURITY EQUITY FUND (CLASS A)
- --------------------------------------------------------------------------------------
                                               FISCAL YEAR ENDED SEPTEMBER 30
                                      ------------------------------------------------
                                      2002    2001(c)    2000(c)    1999(c)    1998(c)
                                      ----    -------    -------    -------    -------
PER SHARE DATA
Net asset value beginning of period           $10.26     $ 9.96     $ 8.86     $ 9.09

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

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

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


- --------------------------------------------------------------------------------------
SECURITY EQUITY FUND (CLASS B)
- --------------------------------------------------------------------------------------
                                               FISCAL YEAR ENDED SEPTEMBER 30
                                      ------------------------------------------------
                                      2002    2001(c)    2000(c)    1999(c)    1998(c)
                                      ----    -------    -------    -------    -------
PER SHARE DATA
Net asset value beginning of period           $ 9.65     $ 9.47     $ 8.52     $ 8.82

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

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

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


- --------------------------------------------------------------------------------------
SECURITY EQUITY FUND (CLASS C)
- --------------------------------------------------------------------------------------
                                                   FISCAL PERIOD ENDED SEPTEMBER 30
                                                --------------------------------------
                                                2002    2001(c)   2000(c)   1999(c)(h)
                                                ----    -------   -------   ----------
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%
- --------------------------------------------------------------------------------------


- -------------------------------------------------------------------------------------
SECURITY EQUITY FUND (CLASS S)
- -------------------------------------------------------------------------------------
                                                                     FISCAL PERIOD
                                                                   ENDED SEPTEMBER 30
                                                                   ------------------
                                                                   2002    2001(c)(l)
                                                                   ----    ----------
PER SHARE DATA
Net asset value beginning of period.............................             $ 7.10

INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)....................................              (0.04)
Net gain (loss) on securities (realized and unrealized).........              (0.73)
                                                                              -----
Total from investment operations................................              (0.77)

LESS DISTRIBUTIONS:
Dividends (from net investment income)..........................                ---
Distributions (from realized gains).............................                ---
                                                                              -----
Total distributions.............................................                ---
                                                                              -----
NET ASSET VALUE END OF PERIOD...................................             $ 6.33
                                                                              =====
TOTAL RETURN (a)................................................            (23.64)%

RATIOS/SUPPLEMENTAL DATA
Net assets end of period (thousands)............................                $112
Ratio of expenses to average net assets.........................               2.03%
Ratio of net investment income (loss) to average net assets.....             (0.95)%
Portfolio turnover rate.........................................                 22%
- -------------------------------------------------------------------------------------


- -----------------------------------------------------------------------------------
SECURITY GLOBAL FUND (CLASS A)
- -----------------------------------------------------------------------------------
                                             FISCAL YEAR ENDED SEPTEMBER 30
                                      ---------------------------------------------
                                      2002    2001(c)   2000(c)   1999(c)   1998(c)
                                      ----    -------   -------   -------   -------
PER SHARE DATA
Net asset value beginning of period           $18.86    $13.99    $11.23    $13.56

INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss).......            (0.08)    (0.11)     0.01      0.02
Net gain on securities
  (realized and unrealized)........            (4.33)     6.47      3.71     (1.19)
                                               -----     -----     -----     -----
Total from investment operations...            (4.41)     6.36      3.72     (1.17)

LESS DISTRIBUTIONS
Dividends (from net
  investment income)...............              ---       ---     (0.01)    (0.09)
In excess of net investment income.              ---       ---     (0.04)      ---
Distributions (from realized gains)            (3.41)    (1.49)    (0.91)    (1.07)
                                               -----     -----     -----     -----
Total distributions................            (3.41)    (1.49)    (0.96)    (1.16)
                                               -----     -----     -----     -----
NET ASSET VALUE END OF PERIOD......           $11.04    $18.86    $13.99    $11.23
                                               =====     =====     =====     =====
TOTAL RETURN (a)...................          (27.60)%    47.04%    34.39%   (8.47)%

RATIOS/SUPPLEMENTAL DATA
Net assets end of
  period (thousands)...............           $48,089   $60,909   $28,292   $18,941
Ratio of expenses to
  average net assets...............             1.90%     1.92%     2.00%     2.00%
Ratio of net investment income
  (loss) to average net assets.....           (0.57)%   (0.62)%     0.11%     0.15%
Portfolio turnover rate............               38%       92%      141%      122%
- -----------------------------------------------------------------------------------


- -----------------------------------------------------------------------------------
SECURITY GLOBAL FUND (CLASS B)
- -----------------------------------------------------------------------------------
                                             FISCAL YEAR ENDED SEPTEMBER 30
                                      ---------------------------------------------
                                      2002    2001(c)   2000(c)   1999(c)   1998(c)
                                      ----    -------   -------   -------   -------
PER SHARE DATA
Net asset value beginning of period           $18.00    $13.45    $10.89    $13.22

INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss).......            (0.14)    (0.17)    (0.11)    (0.10)
Net gain on securities
  (realized and unrealized)........            (4.07)     6.21      3.58     (1.16)
                                               -----     -----     -----     -----
Total from investment operations...            (4.21)     6.04      3.47     (1.26)

LESS DISTRIBUTIONS:
Dividends (from net
  investment income)...............              ---       ---       ---       ---
Distributions (from realized gains)            (3.41)    (1.49)    (0.91)    (1.07)
                                               -----     -----     -----     -----
Total distributions................            (3.41)    (1.49)    (0.91)    (1.07)
                                               -----     -----     -----     -----
NET ASSET VALUE END OF PERIOD......           $10.38    $18.00    $13.45    $10.89
                                               =====     =====     =====     =====
TOTAL RETURN (a)...................          (27.86)%    46.53%    33.04%   (9.43)%

RATIOS/SUPPLEMENTAL DATA
Net assets end of
  period (thousands)...............           $23,533   $30,951   $20,591   $12,619
Ratio of expenses to
  average net assets...............             2.39%     2.29%     3.00%     3.00%
Ratio of net investment income
  (loss) to average net assets.....           (1.07)%   (0.96)%   (0.87)%   (0.85)%
Portfolio turnover rate............               38%       92%      141%      122%
- -----------------------------------------------------------------------------------


- --------------------------------------------------------------------------------------
SECURITY GLOBAL FUND (CLASS C)
- --------------------------------------------------------------------------------------
                                                   FISCAL PERIOD ENDED SEPTEMBER 30
                                                --------------------------------------
                                                2002    2001(c)   2000(c)   1999(c)(h)
                                                ----    -------   -------   ----------
PER SHARE DATA
Net asset value beginning of period..........           $18.55    $13.90     $12.68

INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss).................            (0.21)    (0.26)     (0.03)
Net gain (loss) on securities
  (realized and unrealized)..................            (4.21)     6.40       1.25
                                                         -----     -----      -----
Total from investment operations.............            (4.42)     6.14       1.22

LESS DISTRIBUTIONS:
Dividends (from net investment income).......              ---       ---        ---
Distributions (from realized gains)..........            (3.41)    (1.49)       ---
                                                         -----     -----      -----
Total distributions..........................            (3.41)    (1.49)       ---
                                                         -----     -----      -----
NET ASSET VALUE END OF PERIOD................           $10.72    $18.55     $13.90
                                                         =====     =====      =====
TOTAL RETURN (a).............................          (28.20)%    45.67%      9.62%

RATIOS/SUPPLEMENTAL DATA
Net assets end of period (thousands).........            $3,569    $2,691       $202
Ratio of expenses to average net assets......             2.91%     2.92%      3.00%
Ratio of net investment income
  (loss) to average net assets...............           (1.57)%   (1.53)%    (0.49)%
Portfolio turnover rate......................               38%       92%        90%
- --------------------------------------------------------------------------------------


- -------------------------------------------------------------------------------------
SECURITY GLOBAL FUND (CLASS S)
- -------------------------------------------------------------------------------------
                                                                     FISCAL PERIOD
                                                                   ENDED SEPTEMBER 30
                                                                   ------------------
                                                                   2002    2001(c)(l)
                                                                   ----    ----------
PER SHARE DATA
Net asset value beginning of period.............................             $14.26

INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)....................................              (0.12)
Net gain (loss) on securities (realized and unrealized).........              (3.16)
                                                                              -----
Total from investment operations................................              (3.28)

LESS DISTRIBUTIONS:
Dividends (from net investment income)..........................                ---
Distributions (from realized gains).............................                ---
                                                                              -----
Total distributions.............................................                ---
                                                                              -----
NET ASSET VALUE END OF PERIOD...................................             $10.98
                                                                              =====
TOTAL RETURN (a)................................................            (25.76)%

RATIOS/SUPPLEMENTAL DATA
Net assets end of period (thousands)............................                 $59
Ratio of expenses to average net assets.........................               2.92%
Ratio of net investment income (loss) to average net assets.....             (1.40)%
Portfolio turnover rate.........................................                 51%
- -------------------------------------------------------------------------------------




- -------------------------------------------------------------------------------------
SECURITY MID CAP VALUE FUND (CLASS A)
- -------------------------------------------------------------------------------------
                                             FISCAL PERIOD ENDED SEPTEMBER 30
                                      -----------------------------------------------
                                      2002   2001(c)   2000(c)   1999(c)   1998(b)(c)
                                      ----   -------   -------   -------   ----------
PER SHARE DATA
Net asset value beginning of period          $20.75    $16.60    $12.07     $12.95

INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss).......             ---     (0.04)    (0.07)     (0.02)
Net gain (loss) on securities
  (realized and unrealized)........           (0.90)     4.89      4.65      (0.53)
                                              -----     -----     -----      -----
Total from investment operations...           (0.90)     4.85      4.58      (0.55)

LESS DISTRIBUTIONS:
Dividends (from net
  investment income)...............             ---       ---       ---      (0.05)
Distributions (from realized gains)           (1.81)    (0.70)    (0.05)     (0.28)
                                              -----     -----     -----      -----
Total distributions................           (1.81)    (0.70)    (0.05)     (0.33)
                                              -----     -----     -----      -----
NET ASSET VALUE END OF PERIOD......          $18.04    $20.75    $16.60     $12.07
                                              =====     =====     =====      =====
TOTAL RETURN (a)...................          (4.54)%    30.46%    38.06%    (4.31)%

RATIOS/SUPPLEMENTAL DATA
Net assets end of
  period (thousands)...............          $50,541   $34,458   $22,804    $10,901
Ratio of expenses to
  average net assets...............            1.30%     1.29%     1.33%      1.27%
Ratio of net investment income
  (loss) to average net assets.....            0.01%   (0.25)%   (0.44)%    (0.13)%
Portfolio turnover rate............              55%       69%       79%        98%
- -------------------------------------------------------------------------------------


- -------------------------------------------------------------------------------------
SECURITY MID CAP VALUE FUND (CLASS B)
- -------------------------------------------------------------------------------------
                                             FISCAL PERIOD ENDED SEPTEMBER 30
                                      -----------------------------------------------
                                      2002   2001(c)   2000(c)   1999(c)   1998(b)(c)
                                      ----   -------   -------   -------   ----------
PER SHARE DATA
Net asset value beginning of period          $20.11    $16.26    $11.94     $12.91

INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss).......           (0.19)    (0.22)    (0.22)     (0.15)
Net gain (loss) on securities
  (realized and unrealized)........           (0.85)     4.77      4.59      (0.54)
                                              -----     -----     -----      -----
Total from investment operations...           (1.04)     4.55      4.37      (0.69)

LESS DISTRIBUTIONS:
Dividends (from net
  investment income)...............             ---       ---       ---        ---
Distributions (from realized gains)           (1.81)    (0.70)    (0.05)     (0.28)
                                              -----     -----     -----      -----
Total distributions................           (1.81)    (0.70)    (0.05)     (0.28)
                                              -----     -----     -----      -----
NET ASSET VALUE END OF PERIOD......          $17.26    $20.11    $16.26     $11.94
                                              =====     =====     =====      =====
TOTAL RETURN (a)...................          (5.45)%    29.21%    36.71%    (5.38)%

RATIOS/SUPPLEMENTAL DATA
Net assets end of
  period (thousands)...............          $26,967   $14,041    $9,682     $6,615
Ratio of expenses to
  average net assets ..............            2.30%     2.32%     2.37%      2.33%
Ratio of net investment income
  (loss) to average net assets.....          (0.98)%   (1.27)%   (1.50)%    (1.19)%
Portfolio turnover rate............              55%       69%       79%        98%
- -------------------------------------------------------------------------------------


- -------------------------------------------------------------------------------------
SECURITY MID CAP VALUE FUND (CLASS C)
- -------------------------------------------------------------------------------------
                                                  FISCAL PERIOD ENDED SEPTEMBER 30
                                                -------------------------------------
                                                2002   2001(c)   2000(c)   1999(c)(h)
                                                ----   -------   -------   ----------
PER SHARE DATA
Net asset value beginning of period..........          $20.39    $16.51     $14.54

INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss).................           (0.19)    (0.22)     (0.13)
Net gain (loss) on securities
  (realized and unrealized)..................           (0.86)     4.80       2.10
                                                        -----     -----      -----
Total from investment operations.............           (1.05)     4.58       1.97

LESS DISTRIBUTIONS:
Dividends (from net investment income).......             ---       ---        ---
Distributions (from realized gains)..........           (1.81)    (0.70)       ---
                                                        -----     -----      -----
Total distributions..........................           (1.81)    (0.70)       ---
                                                        -----     -----      -----
NET ASSET VALUE END OF PERIOD................          $17.53    $20.39     $16.51
                                                        =====     =====      =====
TOTAL RETURN (a).............................          (5.42)%    28.93%     13.55%

RATIOS/SUPPLEMENTAL DATA
Net assets end of period (thousands).........           $6,976    $3,069     $1,138
Ratio of expenses to average net assets......            2.30%     2.36%      2.38%
Ratio of net investment income
  (loss) to average net assets...............          (0.98)%   (1.28)%    (1.36)%
Portfolio turnover rate......................              55%       69%        92%
- ---------------------------------------------------------------------------------------


- -------------------------------------------------------------------------------------
SECURITY MID CAP VALUE FUND (CLASS S)
- -------------------------------------------------------------------------------------
                                                                     FISCAL PERIOD
                                                                   ENDED SEPTEMBER 30
                                                                   ------------------
                                                                   2002    2001(c)(l)
                                                                   ----    ----------
PER SHARE DATA
Net asset value beginning of period.............................             $20.90

INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)....................................              (0.10)
Net gain (loss) on securities (realized and unrealized).........              (2.85)
                                                                              -----
Total from investment operations................................              (2.95)

LESS DISTRIBUTIONS:
Dividends (from net investment income)..........................                ---
Distributions (from realized gains).............................                ---
                                                                              -----
Total distributions.............................................                ---
                                                                              -----
NET ASSET VALUE END OF PERIOD...................................             $17.95
                                                                              =====
TOTAL RETURN (a)................................................            (12.74)%

RATIOS/SUPPLEMENTAL DATA
Net assets end of period (thousands)............................              $6,376
Ratio of expenses to average net assets.........................               2.29%
Ratio of net investment income (loss) to average net assets.....             (0.95)%
Portfolio turnover rate.........................................                 61%
- -------------------------------------------------------------------------------------


- ------------------------------------------------------------------------------------------
SECURITY SMALL CAP GROWTH FUND (CLASS A)
- ------------------------------------------------------------------------------------------
                                               FISCAL PERIOD ENDED SEPTEMBER 30
                                     -----------------------------------------------------
                                                                                   1998
                                     2002   2001(c)    2000(b)(c)   1999(b)(c)   (b)(c)(f)
                                     ----   -------    ----------   ----------   ---------
PER SHARE DATA
Net asset value beginning of period         $ 22.08     $12.98        $ 8.70      $10.00

INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss).......           (0.18)     (0.19)          ---       (0.03)
Net gain (loss) on securities
  (realized and unrealized)........          (10.78)      9.75          4.28       (1.26)
                                             ------      -----         -----       -----
Total from investment operations...          (10.96)      9.56          4.28       (1.29)

LESS DISTRIBUTIONS:
Dividends (from net
  investment income)...............             ---        ---           ---       (0.01)
Distributions (from realized gains)           (1.32)     (0.46)          ---         ---
                                             ------      -----         -----       -----
Total distributions................           (1.32)     (0.46)          ---       (0.01)
                                             ------      -----         -----       -----
NET ASSET VALUE END OF PERIOD......         $  9.80     $22.08        $12.98      $ 8.70
                                             ======      =====         =====       =====
TOTAL RETURN (a)...................         (51.94)%     74.58%       49.20%     (12.95)%

RATIOS/SUPPLEMENTAL DATA
Net assets end of
  period (thousands)...............          $17,235    $38,172      $16,877       $2,677
Ratio of expenses to
  average net assets ..............            1.91%      1.55%        0.49%        1.39%
Ratio of net investment income
  (loss) to average net assets.....          (1.32)%    (0.97)%        0.03%      (0.35)%
Portfolio turnover rate............             394%       318%         361%         366%
- ------------------------------------------------------------------------------------------


- ------------------------------------------------------------------------------------------
SECURITY SMALL CAP GROWTH FUND(CLASS B)
- ------------------------------------------------------------------------------------------
                                               FISCAL PERIOD ENDED SEPTEMBER 30
                                     -----------------------------------------------------
                                                                                   1998
                                     2002    2001(c)   2000(b)(c)   1999(b)(c)   (b)(c)(f)
                                     ----    -------   ----------   ----------   ---------
PER SHARE DATA
Net asset value beginning of period         $ 21.34     $12.69        $ 8.63      $10.00

INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss).......           (0.28)     (0.31)        (0.14)      (0.13)
Net gain (loss) on securities
  (realized and unrealized)........          (10.37)      9.42          4.20       (1.24)
                                             ------      -----         -----       -----
Total from investment operations...          (10.65)      9.11          4.06       (1.37)

LESS DISTRIBUTIONS:
Dividends (from net
  investment income)...............             ---        ---           ---         ---
Distributions (from realized gains)           (1.32)     (0.46)          ---         ---
                                             ------      -----         -----       -----
Total distributions................           (1.32)     (0.46)          ---         ---
                                             ------      -----         -----       -----
NET ASSET VALUE END OF PERIOD......         $  9.37     $21.34        $12.69      $ 8.63
                                             ======      =====         =====       =====
TOTAL RETURN (a)...................         (52.31)%     72.70%        47.05%    (13.70)%

RATIOS/SUPPLEMENTAL DATA
Net assets end of
  period (thousands)...............           $6,173    $11,688        $2,430      $1,504
Ratio of expenses to
  average net assets ..............            2.67%      2.44%         1.94%       2.38%
Ratio of net investment income
  (loss) to average net assets.....          (2.07)%    (1.81)%       (1.41)%     (1.34)%
Portfolio turnover rate............             394%       318%          361%        366%
- ------------------------------------------------------------------------------------------


- ---------------------------------------------------------------------------------------
SECURITY SMALL CAP GROWTH FUND (CLASS C)
- ---------------------------------------------------------------------------------------
                                                 FISCAL PERIOD ENDED SEPTEMBER 30
                                          ---------------------------------------------
                                          2002    2001(c)    2000(b)(c)   1999(b)(c)(h)
                                          ----    -------    ----------   -------------
PER SHARE DATA
Net asset value beginning of period.....          $ 21.74     $12.86         $11.16

INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)............            (0.28)     (0.35)         (0.07)
Net gain (loss) on securities
  (realized and unrealized).............           (10.61)      9.69           1.77
                                                   ------      -----          -----
Total from investment operations........           (10.89)      9.34           1.70

LESS DISTRIBUTIONS:
Dividends (from net investment income)..              ---        ---            ---
Distributions (from realized gains).....           (1.32)      (0.46)           ---
                                                   ------      -----          -----
Total distributions.....................           (1.32)      (0.46)           ---
                                                   ------      -----          -----
NET ASSET VALUE END OF PERIOD...........          $  9.53     $21.74         $12.86
                                                   ======      =====          =====
TOTAL RETURN (a)........................          (52.46)%     73.54%         15.23%

RATIOS/SUPPLEMENTAL DATA
Net assets end of period (thousands)....            $2,339     $3,741           $890
Ratio of expenses to average net assets.             2.68%      2.39%          1.47%
Ratio of net investment income
  (loss) to average net assets..........           (2.09)%    (1.81)%        (0.95)%
Portfolio turnover rate.................              394%       318%           374%
- ---------------------------------------------------------------------------------------


- -------------------------------------------------------------------------------------
SECURITY SMALL CAP GROWTH FUND (CLASS S)
- -------------------------------------------------------------------------------------
                                                                     FISCAL PERIOD
                                                                   ENDED SEPTEMBER 30
                                                                   ------------------
                                                                   2002    2001(c)(l)
                                                                   ----    ----------
PER SHARE DATA
Net asset value beginning of period.............................             $11.82

INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)....................................              (0.16)
Net gain (loss) on securities (realized and unrealized).........              (1.86)
                                                                              -----
Total from investment operations................................              (2.02)

LESS DISTRIBUTIONS:
Dividends (from net investment income)..........................                ---
Distributions (from realized gains).............................                ---
                                                                              -----
Total distributions.............................................                ---
                                                                              -----
NET ASSET VALUE END OF PERIOD...................................             $ 9.80
                                                                              =====
TOTAL RETURN (a)................................................            (33.74)%

RATIOS/SUPPLEMENTAL DATA
Net assets end of period (thousands)............................                 $56
Ratio of expenses to average net assets.........................               2.79%
Ratio of net investment income (loss) to average net assets.....             (2.34)%
Portfolio turnover rate.........................................                394%
- -------------------------------------------------------------------------------------


- --------------------------------------------------------------------------------------
SECURITY ENHANCED INDEX FUND (CLASS A)
- --------------------------------------------------------------------------------------
                                                   FISCAL PERIOD ENDED SEPTEMBER 30
                                                --------------------------------------
                                                2002    2001(c)   2000(c)   1999(c)(g)
                                                ----    -------   -------   ----------
PER SHARE DATA
Net asset value beginning of period..........           $11.29    $10.04      $10.00

INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss).................              ---       ---        0.03
Net gain (loss) on securities
  (realized and unrealized)..................            (3.17)     1.37        0.01
                                                         -----     -----       -----
Total from investment operations.............            (3.17)     1.37        0.04

LESS DISTRIBUTIONS:
Dividends (from net investment income).......              ---       ---         ---
Distributions (from realized gains)..........            (0.09)    (0.12)        ---
                                                         -----     -----       -----
Total distributions..........................            (0.09)    (0.12)        ---
                                                         -----     -----       -----
NET ASSET VALUE END OF PERIOD................           $ 8.03    $11.29      $10.04
                                                         =====     =====       =====
TOTAL RETURN (a).............................          (28.27)%    13.65%      0.40%

RATIOS/SUPPLEMENTAL DATA
Net assets end of period (thousands).........            $6,699    $8,219     $7,589
Ratio of expenses to average net assets......             1.42%     1.44%      1.48%
Ratio of net investment income
  (loss) to average net assets...............             0.02%   (0.05)%      0.39%
Portfolio turnover rate......................               40%       73%        68%
- --------------------------------------------------------------------------------------


- --------------------------------------------------------------------------------------
SECURITY ENHANCED INDEX FUND (CLASS B)
- --------------------------------------------------------------------------------------
                                                   FISCAL PERIOD ENDED SEPTEMBER 30
                                                --------------------------------------
                                                2002    2001(c)   2000(c)   1999(c)(g)
                                                ----    -------   -------   ----------
PER SHARE DATA
Net asset value beginning of period..........           $11.15    $ 9.99     $10.00

INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss).................            (0.08)    (0.09)     (0.02)
Net gain (loss) on securities
  (realized and unrealized)..................            (3.11)     1.37       0.01
                                                         -----     -----      -----
Total from investment operations.............            (3.19)     1.28      (0.01)

LESS DISTRIBUTIONS:
Dividends (from net investment income).......              ---       ---        ---
Distributions (from realized gains)..........            (0.09)    (0.12)       ---
                                                         -----     -----      -----
Total distributions..........................            (0.09)    (0.12)       ---
                                                         -----     -----      -----
NET ASSET VALUE END OF PERIOD................           $ 7.87    $11.15     $ 9.99
                                                         =====     =====      =====
TOTAL RETURN (a).............................          (28.81)%    12.82%    (0.10)%

RATIOS/SUPPLEMENTAL DATA
Net assets end of period (thousands).........            $7,360   $10,960     $9,591
Ratio of expenses to average net assets......             2.17%     2.18%      2.20%
Ratio of net investment income
  (loss) to average net assets...............           (0.74)%   (0.79)%    (0.33)%
Portfolio turnover rate......................               40%       73%        68%
- --------------------------------------------------------------------------------------


- --------------------------------------------------------------------------------------
SECURITY ENHANCED INDEX FUND (CLASS C)
- --------------------------------------------------------------------------------------
                                                   FISCAL PERIOD ENDED SEPTEMBER 30
                                                --------------------------------------
                                                2002    2001(c)   2000(c)   1999(c)(g)
                                                ----    -------   -------   ----------
PER SHARE DATA
Net asset value beginning of period..........           $11.16    $10.00     $10.00

INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss).................            (0.08)    (0.09)     (0.01)
Net gain (loss) on securities
  (realized and unrealized)..................            (3.11)     1.37       0.01
                                                         -----     -----      -----
Total from investment operations.............            (3.19)     1.28        ---

LESS DISTRIBUTIONS:
Dividends (from net investment income).......              ---       ---        ---
Distributions (from realized gains)..........            (0.09)    (0.12)       ---
                                                         -----     -----      -----
Total distributions..........................            (0.09)    (0.12)       ---
                                                         -----     -----      -----
NET ASSET VALUE END OF PERIOD................           $ 7.88    $11.16     $10.00
                                                         =====     =====      =====
TOTAL RETURN (a).............................          (28.78)%    12.69%      0.00%

RATIOS/SUPPLEMENTAL DATA
Net assets end of period (thousands).........            $4,840    $7,092     $5,205
Ratio of expenses to average net assets......             2.17%     2.15%      2.05%
Ratio of net investment income
  (loss) to average net assets...............           (0.74)%   (0.77)%    (0.18)%
Portfolio turnover rate......................               40%       73%        68%
- --------------------------------------------------------------------------------------


- -------------------------------------------------------------------------------------
SECURITY ENHANCED INDEX FUND (CLASS S)
- -------------------------------------------------------------------------------------
                                                                     FISCAL PERIOD
                                                                   ENDED SEPTEMBER 30
                                                                   ------------------
                                                                   2002    2001(c)(l)
                                                                   ----    ----------
PER SHARE DATA
Net asset value beginning of period.............................             $ 8.84

INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)....................................              (0.04)
Net gain (loss) on securities (realized and unrealized).........              (0.80)
                                                                              -----
Total from investment operations................................              (0.84)

LESS DISTRIBUTIONS:
Dividends (from net investment income)..........................                ---
Distributions (from realized gains).............................                ---
                                                                              -----
Total distributions.............................................                ---
                                                                              -----
NET ASSET VALUE END OF PERIOD...................................             $ 8.00
                                                                              =====
TOTAL RETURN (a)................................................            (25.09)%

RATIOS/SUPPLEMENTAL DATA
Net assets end of period (thousands)............................                  $3
Ratio of expenses to average net assets.........................               2.17%
Ratio of net investment income (loss) to average net assets.....             (0.71)%
Portfolio turnover rate.........................................                 30%
- -------------------------------------------------------------------------------------


- ---------------------------------------------------------------------------------------
SECURITY INTERNATIONAL FUND (CLASS A)
- ---------------------------------------------------------------------------------------
                                              FISCAL PERIOD ENDED SEPTEMBER 30
                                      -------------------------------------------------
                                      2002   2001(b)(c)(k)   2000(b)(c)   1999(b)(c)(g)
                                      ----   -------------   ----------   -------------
PER SHARE DATA
Net asset value beginning of period             $11.01        $ 9.69         $10.00

INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss).......              (0.09)        (0.13)         (0.03)
Net gain (loss) on securities
  (realized and unrealized)........              (3.65)         1.45          (0.28)
                                                 -----         -----          -----
Total from investment operations...              (3.74)         1.32          (0.31)

LESS DISTRIBUTIONS:
Dividends (from net
  investment income)...............                ---           ---            ---
Distributions (from realized gains)              (0.40)          ---            ---
                                                 -----         -----          -----
Total distributions................              (0.40)          ---            ---
                                                 -----         -----          -----
NET ASSET VALUE END OF PERIOD......             $ 6.87        $11.01         $ 9.69
                                                 =====         =====          =====
TOTAL RETURN (a)...................            (35.01)%        13.62%        (3.10)%

RATIOS/SUPPLEMENTAL DATA
Net assets end of
  period (thousands)...............              $2,934        $4,414         $2,928
Ratio of expenses to
  average net assets...............               2.51%         2.46%          2.50%
Ratio of net investment income
  (loss) to average net assets.....             (0.98)%       (1.08)%        (0.41)%
Portfolio turnover rate............                170%          116%           115%
- ---------------------------------------------------------------------------------------


- ---------------------------------------------------------------------------------------
SECURITY INTERNATIONAL FUND (CLASS B)
- ---------------------------------------------------------------------------------------
                                              FISCAL PERIOD ENDED SEPTEMBER 30
                                      -------------------------------------------------
                                      2002   2001(b)(c)(k)   2000(b)(c)   1999(b)(c)(g)
                                      ----   -------------   ----------   -------------
PER SHARE DATA
Net asset value beginning of period             $10.88        $ 9.65         $10.00

INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss).......              (0.15)        (0.22)         (0.07)
Net gain (loss) on securities
  (realized and unrealized)........              (3.59)         1.45          (0.28)
                                                 -----         -----          -----
Total from investment operations...              (3.74)         1.23          (0.35)

LESS DISTRIBUTIONS:
Dividends (from net
  investment income)...............                ---           ---            ---
Distributions (from realized gains)              (0.40)          ---            ---
                                                 -----         -----          -----
Total distributions................              (0.40)          ---            ---
                                                 -----         -----          -----
NET ASSET VALUE END OF PERIOD......             $ 6.74        $10.88         $ 9.65
                                                 =====         =====          =====
TOTAL RETURN (a)...................            (35.45)%        12.75%        (3.50)%

RATIOS/SUPPLEMENTAL DATA
Net assets end of
  period (thousands)...............              $1,685        $2,520         $2,028
Ratio of expenses to
  average net assets...............               3.25%         3.26%          3.19%
Ratio of net investment income
  (loss) to average net assets.....             (1.73)%       (1.92)%        (1.09)%
Portfolio turnover rate............                170%          116%           115%
- ---------------------------------------------------------------------------------------


- ---------------------------------------------------------------------------------------
SECURITY INTERNATIONAL FUND (CLASS C)
- ---------------------------------------------------------------------------------------
                                              FISCAL PERIOD ENDED SEPTEMBER 30
                                      -------------------------------------------------
                                      2002   2001(b)(c)(k)   2000(b)(c)   1999(b)(c)(g)
                                      ----   -------------   ----------   -------------
PER SHARE DATA
Net asset value beginning of period             $10.92        $ 9.68         $10.00

INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss).......              (0.15)        (0.21)         (0.04)
Net gain (loss) on securities
  (realized and unrealized)........              (3.61)         1.45          (0.28)
                                                 -----         -----          -----
Total from investment operations...              (3.76)         1.24          (0.32)

LESS DISTRIBUTIONS:
Dividends (from net
  investment income)...............                ---           ---            ---
Distributions (from realized gains)              (0.40)          ---            ---
                                                 -----         -----          -----
Total distributions................              (0.40)          ---            ---
                                                 -----         -----          -----
NET ASSET VALUE END OF PERIOD......             $ 6.76        $10.92         $ 9.68
                                                 =====         =====          =====
TOTAL RETURN (a)...................            (35.50)%        12.81%        (3.20)%

RATIOS/SUPPLEMENTAL DATA
Net assets end of
  period (thousands)...............              $2,244        $3,564         $2,493
Ratio of expenses to
  average net assets...............               3.25%         3.11%          2.78%
Ratio of net investment income
  (loss) to average net assets.....             (1.75)%       (1.76)%        (0.71)%
Portfolio turnover rate............                170%          116%           115%
- ---------------------------------------------------------------------------------------


- --------------------------------------------------------------------------------------
SECURITY SELECT 25 FUND (CLASS A)
- --------------------------------------------------------------------------------------
                                                   FISCAL PERIOD ENDED SEPTEMBER 30
                                                --------------------------------------
                                                2002    2001(c)   2000(c)   1999(c)(g)
                                                ----    -------   -------   ----------
PER SHARE DATA
Net asset value beginning of period..........           $11.34    $10.53     $10.00

INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss).................            (0.06)    (0.09)     (0.05)
Net gain (loss) on securities
  (realized and unrealized)..................            (3.70)     0.90       0.58
                                                         -----     -----      -----
Total from investment operations.............            (3.76)     0.81       0.53

LESS DISTRIBUTIONS:
Dividends (from net investment income).......              ---       ---        ---
Distributions (from realized gains)..........              ---       ---        ---
                                                         -----     -----      -----
Total distributions..........................              ---       ---        ---
                                                         -----     -----      -----
NET ASSET VALUE END OF PERIOD................           $ 7.58    $11.34     $10.53
                                                         =====     =====      =====
TOTAL RETURN (a).............................          (33.16)%     7.69%      5.30%

RATIOS/SUPPLEMENTAL DATA
Net assets end of period (thousands).........           $14,347   $22,006    $13,975
Ratio of expenses to average net assets......             1.39%     1.35%      1.48%
Ratio of net investment income
  (loss) to average net assets...............           (0.60)%   (0.74)%    (0.75)%
Portfolio turnover rate......................               44%       89%        14%
- --------------------------------------------------------------------------------------


- --------------------------------------------------------------------------------------
SECURITY SELECT 25 FUND (CLASS B)
- --------------------------------------------------------------------------------------
                                                   FISCAL PERIOD ENDED SEPTEMBER 30
                                                --------------------------------------
                                                2002    2001(c)   2000(c)   1999(c)(g)
                                                ----    -------   -------   ----------
PER SHARE DATA
Net asset value beginning of period..........           $11.22    $10.52     $10.00

INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss).................            (0.13)    (0.17)     (0.09)
Net gain (loss) on securities
  (realized and unrealized)..................            (3.65)     0.87       0.61
                                                         -----     -----      -----
Total from investment operations.............            (3.78)     0.70       0.52

LESS DISTRIBUTIONS:
Dividends (from net investment income).......              ---       ---        ---
Distributions (from realized gains)..........              ---       ---        ---
                                                         -----     -----      -----
Total distributions..........................              ---       ---        ---
                                                         -----     -----      -----
NET ASSET VALUE END OF PERIOD................           $ 7.44    $11.22     $10.52
                                                         =====     =====      =====
TOTAL RETURN (a).............................          (33.69)%     6.65%      5.20%

RATIOS/SUPPLEMENTAL DATA
Net assets end of period (thousands).........           $11,519   $18,199    $12,938
Ratio of expenses to average net assets......             2.14%     2.11%      2.19%
Ratio of net investment income
  (loss) to average net assets...............           (1.35)%   (1.49)%    (1.47)%
Portfolio turnover rate......................               44%       89%        14%
- --------------------------------------------------------------------------------------


- --------------------------------------------------------------------------------------
SECURITY SELECT 25 FUND (CLASS C)
- --------------------------------------------------------------------------------------
                                                   FISCAL PERIOD ENDED SEPTEMBER 30
                                                --------------------------------------
                                                2002    2001(c)   2000(c)   1999(c)(g)
                                                ----    -------   -------   ----------
PER SHARE DATA
Net asset value beginning of period..........           $11.26    $10.55     $10.00

INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss).................            (0.13)    (0.17)     (0.09)
Net gain (loss) on securities
  (realized and unrealized)..................            (3.66)     0.88       0.64
                                                         -----     -----      -----
Total from investment operations.............            (3.79)     0.71       0.55

LESS DISTRIBUTIONS:
Dividends (from net investment income).......              ---       ---        ---
Distributions (from realized gains)..........              ---       ---        ---
                                                         -----     -----      -----
Total distributions..........................              ---       ---        ---
                                                         -----     -----      -----
NET ASSET VALUE END OF PERIOD................           $ 7.47    $11.26     $10.55
                                                         =====    ======      =====
TOTAL RETURN (a).............................          (33.66)%     6.73%      5.50%

RATIOS/SUPPLEMENTAL DATA
Net assets end of period (thousands).........            $4,531    $7,294     $4,442
Ratio of expenses to average net assets......             2.14%     2.10%      2.07%
Ratio of net investment income
  (loss) to average net assets...............           (1.35)%   (1.49)%    (1.34)%
Portfolio turnover rate......................               44%       89%        14%
- --------------------------------------------------------------------------------------


- -------------------------------------------------------------------------------------
SECURITY SELECT 25 FUND (CLASS S)
- -------------------------------------------------------------------------------------
                                                                     FISCAL PERIOD
                                                                   ENDED SEPTEMBER 30
                                                                   ------------------
                                                                   2002    2001(c)(l)
                                                                   ----    ----------
PER SHARE DATA
Net asset value beginning of period.............................             $ 9.62

INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)....................................              (0.08)
Net gain (loss) on securities (realized and unrealized).........              (2.04)
                                                                              -----
Total from investment operations................................              (2.12)

LESS DISTRIBUTIONS:
Dividends (from net investment income)..........................                ---
Distributions (from realized gains).............................                ---
                                                                              -----
Total distributions.............................................                ---
                                                                              -----
NET ASSET VALUE END OF PERIOD...................................             $ 7.50
                                                                              =====
TOTAL RETURN (a)................................................            (29.97)%

RATIOS/SUPPLEMENTAL DATA
Net assets end of period (thousands)............................                 $12
Ratio of expenses to average net assets.........................               2.22%
Ratio of net investment income (loss) to average net assets.....             (1.47)%
Portfolio turnover rate.........................................                 36%
- -------------------------------------------------------------------------------------


- ---------------------------------------------------------------------------------------
SECURITY LARGE CAP GROWTH FUND (CLASS A)
- ---------------------------------------------------------------------------------------
                                                     FISCAL PERIOD ENDED SEPTEMBER 30
                                                   ------------------------------------
                                                   2002   2001(b)(c)(k)   2000(c)(j)(k)
                                                   ----   -------------   -------------
PER SHARE DATA
Net asset value beginning of period.............             $ 9.71          $10.00

INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)....................              (0.08)          (0.05)
Net gain (loss) on securities
  (realized and unrealized).....................              (3.63)          (0.24)
                                                              -----           -----
Total from investment operations................              (3.71)          (0.29)

LESS DISTRIBUTIONS:
Dividends (from net investment income)..........                ---             ---
Distributions (from realized gains).............                ---             ---
                                                              -----           -----
Total distributions.............................                ---             ---
                                                              -----           -----
NET ASSET VALUE END OF PERIOD...................             $ 6.00          $ 9.71
                                                              =====           =====
TOTAL RETURN (a)................................            (38.21)%         (2.90)%

RATIOS/SUPPLEMENTAL DATA
Net assets end of period (thousands)............              $2,436          $2,405
Ratio of expenses to average net assets.........               2.00%           1.92%
Ratio of net investment income
  (loss) to average net assets..................             (1.10)%         (1.25)%
Portfolio turnover rate.........................                  6%              5%
- ---------------------------------------------------------------------------------------


- ---------------------------------------------------------------------------------------
SECURITY LARGE CAP GROWTH FUND (CLASS B)
- ---------------------------------------------------------------------------------------
                                                      FISCAL PERIOD ENDED SEPTEMBER 30
                                                      ---------------------------------
                                                      2002   2001(b)(c)   2000(c)(j)(k)
                                                      ----   ----------   -------------
PER SHARE DATA
Net asset value beginning of period................            $ 9.65        $10.00

INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss).......................             (0.14)        (0.08)
Net gain (loss) on securities
  (realized and unrealized)........................             (3.59)        (0.27)
                                                                -----         -----
Total from investment operations...................             (3.73)        (0.35)

LESS DISTRIBUTIONS:
Dividends (from net investment income).............               ---           ---
Distributions (from realized gains)................               ---           ---
                                                                -----         -----
Total distributions................................               ---           ---
                                                                -----         -----
NET ASSET VALUE END OF PERIOD......................            $ 5.92        $ 9.65
                                                                =====         =====
TOTAL RETURN (a)...................................           (38.65)%       (3.50)%

RATIOS/SUPPLEMENTAL DATA
Net assets end of period (thousands)...............             $1,955        $2,039
Ratio of expenses to average net assets............              2.75%         2.68%
Ratio of net investment income
  (loss) to average net assets.....................            (1.85)%       (2.02)%
Portfolio turnover rate............................                 6%            5%
- ---------------------------------------------------------------------------------------


- ---------------------------------------------------------------------------------------
SECURITY LARGE CAP GROWTH FUND (CLASS C)
- ---------------------------------------------------------------------------------------
                                                      FISCAL PERIOD ENDED SEPTEMBER 30
                                                      ---------------------------------
                                                      2002   2001(b)(c)   2000(c)(j)(k)
                                                      ----   ----------   -------------
PER SHARE DATA
Net asset value beginning of period................            $ 9.65        $10.00

INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss).......................             (0.13)        (0.08)
Net gain (loss) on securities
  (realized and unrealized)........................             (3.59)        (0.27)
                                                                -----         -----
Total from investment operations...................             (3.72)        (0.35)

LESS DISTRIBUTIONS:
Dividends (from net investment income).............               ---           ---
Distributions (from realized gains)................               ---           ---
                                                                -----         -----
Total distributions................................               ---           ---
                                                                -----         -----
NET ASSET VALUE END OF PERIOD......................            $ 5.93        $ 9.65
                                                                =====         =====
TOTAL RETURN (a)...................................           (38.55)%       (3.50)%

RATIOS/SUPPLEMENTAL DATA
Net assets end of period (thousands)...............             $2,577        $2,102
Ratio of expenses to average net assets............              2.75%         2.66%
Ratio of net investment income
  (loss) to average net assets.....................            (1.85)%       (2.00)%
Portfolio turnover rate............................                 6%            5%
- ---------------------------------------------------------------------------------------


- ---------------------------------------------------------------------------------------
SECURITY LARGE CAP GROWTH FUND (CLASS S)
- ---------------------------------------------------------------------------------------
                                                                      FISCAL PERIOD
                                                                    ENDED SEPTEMBER 30
                                                                   --------------------
                                                                   2002   2001(b)(c)(l)
                                                                   ----   -------------
PER SHARE DATA
Net asset value beginning of period.............................             $ 6.60

INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)....................................              (0.08)
Net gain (loss) on securities (realized and unrealized).........              (0.55)
                                                                              -----
Total from investment operations................................              (0.63)

LESS DISTRIBUTIONS:
Dividends (from net investment income)..........................                ---
Distributions (from realized gains).............................                ---
                                                                              -----
Total distributions.............................................                ---
                                                                              -----
NET ASSET VALUE END OF PERIOD...................................             $ 5.97
                                                                              =====
TOTAL RETURN (a)................................................            (29.27)%

RATIOS/SUPPLEMENTAL DATA
Net assets end of period (thousands)............................                  $2
Ratio of expenses to average net assets.........................               2.75%
Ratio of net investment income (loss) to average net assets.....             (1.80)%
Portfolio turnover rate.........................................                  1%
- ---------------------------------------------------------------------------------------


- ---------------------------------------------------------------------------------------
SECURITY TECHNOLOGY FUND (CLASS A)
- ---------------------------------------------------------------------------------------
                                                   FISCAL PERIOD ENDED SEPTEMBER 30
                                                ---------------------------------------
                                                2002   2001(b)(c)(k)   2000(b)(c)(j)(k)
                                                ----   -------------   ----------------
PER SHARE DATA
Net asset value beginning of period..........             $ 9.33           $10.00

INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss).................              (0.11)           (0.08)
Net gain (loss) on securities
  (realized and unrealized)..................              (5.81)           (0.59)
                                                           -----            -----
Total from investment operations.............              (5.92)           (0.67)

LESS DISTRIBUTIONS:
Dividends (from net investment income).......                ---              ---
Distributions (from realized gains)..........                ---              ---
                                                           -----            -----
Total distributions..........................                ---              ---
                                                           -----            -----
NET ASSET VALUE END OF PERIOD................             $ 3.41           $ 9.33
                                                           =====            =====
TOTAL RETURN (a).............................            (63.45)%          (6.70)%

RATIOS/SUPPLEMENTAL DATA
Net assets end of period (thousands).........              $3,023           $4,340
Ratio of expenses to average net assets......               2.26%            2.28%
Ratio of net investment income
  (loss) to average net assets...............             (2.01)%          (2.05)%
Portfolio turnover rate......................                240%             148%
- ---------------------------------------------------------------------------------------


- ---------------------------------------------------------------------------------------
SECURITY TECHNOLOGY FUND (CLASS B)
- ---------------------------------------------------------------------------------------
                                                   FISCAL PERIOD ENDED SEPTEMBER 30
                                                ---------------------------------------
                                                2002   2001(b)(c)(k)   2000(b)(c)(j)(k)
                                                ----   -------------   ----------------
PER SHARE DATA
Net asset value beginning of period..........             $ 9.21           $10.00

INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss).................              (0.16)           (0.11)
Net gain (loss) on securities
  (realized and unrealized)..................              (5.75)           (0.68)
                                                           -----            -----
Total from investment operations.............              (5.91)           (0.79)

LESS DISTRIBUTIONS:
Dividends (from net investment income).......                ---              ---
Distributions (from realized gains)..........                ---              ---
                                                           -----            -----
Total distributions..........................                ---              ---
                                                           -----            -----
NET ASSET VALUE END OF PERIOD................             $ 3.30           $ 9.21
                                                           =====            =====
TOTAL RETURN (a).............................            (64.17)%          (7.90)%

RATIOS/SUPPLEMENTAL DATA
Net assets end of period (thousands).........                $870           $1,971
Ratio of expenses to average net assets......               3.01%            3.03%
Ratio of net investment income
  (loss) to average net assets...............             (2.76)%          (2.79)%
Portfolio turnover rate......................                240%             148%
- ---------------------------------------------------------------------------------------


- ---------------------------------------------------------------------------------------
SECURITY TECHNOLOGY FUND (CLASS C)
- ---------------------------------------------------------------------------------------
                                                   FISCAL PERIOD ENDED SEPTEMBER 30
                                                ---------------------------------------
                                                2002   2001(b)(c)(k)   2000(b)(c)(j)(k)
                                                ----   -------------   ----------------
PER SHARE DATA
Net asset value beginning of period..........             $ 9.21           $10.00

INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss).................              (0.16)           (0.11)
Net gain (loss) on securities
  (realized and unrealized)..................              (5.75)           (0.68)
                                                           -----            -----
Total from investment operations.............              (5.91)           (0.79)

LESS DISTRIBUTIONS:
Dividends (from net investment income).......                ---              ---
Distributions (from realized gains)..........                ---              ---
                                                           -----            -----
Total distributions..........................                ---              ---
                                                           -----            -----
NET ASSET VALUE END OF PERIOD................             $ 3.30           $ 9.21
                                                           =====            =====
TOTAL RETURN (a).............................            (64.17)%          (7.90)%

RATIOS/SUPPLEMENTAL DATA
Net assets end of period (thousands).........              $1,348           $2,276
Ratio of expenses to average net assets......               3.01%            3.03%
Ratio of net investment income
  (loss) to average net assets...............             (2.77)%          (2.79)%
Portfolio turnover rate......................                240%             148%
- ---------------------------------------------------------------------------------------


- ---------------------------------------------------------------------------------------
SECURITY TECHNOLOGY FUND (CLASS S)
- ---------------------------------------------------------------------------------------
                                                                    FISCAL PERIOD
                                                                  ENDED SEPTEMBER 30
                                                                -----------------------
                                                                2002   2001(b)(c)(k)(l)
                                                                ----   ----------------
PER SHARE DATA
Net asset value beginning of period..........................               $ 6.63

INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss).................................                (0.09)
Net gain (loss) on securities (realized and unrealized)......                (3.14)
                                                                             -----
Total from investment operations.............................                (3.23)

LESS DISTRIBUTIONS:
Dividends (from net investment income).......................                  ---
Distributions (from realized gains)..........................                  ---
                                                                             -----
Total distributions..........................................                  ---
                                                                             -----
NET ASSET VALUE END OF PERIOD................................               $ 3.40
                                                                             =====
TOTAL RETURN (a).............................................              (53.74)%

RATIOS/SUPPLEMENTAL DATA
Net assets end of period (thousands).........................                  $131
Ratio of expenses to average net assets......................                 3.01%
Ratio of net investment income (loss) to average net assets..               (2.75)%
Portfolio turnover rate......................................                  245%
- ---------------------------------------------------------------------------------------


- -------------------------------------------------------------------------------------
SECURITY MID CAP GROWTH FUND (CLASS A)
- -------------------------------------------------------------------------------------
                                              FISCAL YEAR ENDED SEPTEMBER 30
                                      -----------------------------------------------
                                      2002    2001(c)    2000(c)   1999(c)    1998(c)
                                      ----    -------    -------   -------    -------
PER SHARE DATA
Net asset value beginning of period           $15.28     $ 9.19    $ 7.65     $ 9.24

INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss).......            (0.07)     (0.08)    (0.06)     (0.06)
Net gain (loss) on securities
  (realized and unrealized)........            (5.38)      6.60      3.51      (1.06)
                                               -----      -----     -----      -----
Total from investment operations...            (5.45)      6.52      3.45      (1.12)

LESS DISTRIBUTIONS:
Dividends (from net
  investment income)...............              ---        ---       ---        ---
Distributions (from realized gains)            (1.35)     (0.43)    (1.91)     (0.47)
                                               -----      -----     -----      -----
Total distributions................            (1.35)     (0.43)    (1.91)     (0.47)
                                               -----      -----     -----      -----
NET ASSET VALUE END OF PERIOD......           $ 8.48     $15.28    $ 9.19     $ 7.65
                                               =====      =====     =====      =====
TOTAL RETURN (a)...................          (38.19)%     72.82%    50.91%   (12.45)%

RATIOS/SUPPLEMENTAL DATA
Net assets end of
  period (thousands)...............          $131,498   $204,787   $96,238    $67,554
Ratio of expenses to
  average net assets...............             1.09%      1.11%     1.21%      1.23%
Ratio of net investment income
  (loss) to average net assets.....           (0.64)%    (0.62)%   (0.77)%    (0.64)%
Portfolio turnover rate............               48%        35%       54%       116%
- -------------------------------------------------------------------------------------


- ------------------------------------------------------------------------------------
SECURITY MID CAP GROWTH FUND (CLASS B)
- ------------------------------------------------------------------------------------
                                              FISCAL YEAR ENDED SEPTEMBER 30
                                      ----------------------------------------------
                                      2002    2001(c)   2000(c)   1999(c)    1998(c)
                                      ----    -------   -------   -------    -------
PER SHARE DATA
Net asset value beginning of period           $14.02    $ 8.54    $ 7.28     $ 8.90

INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss).......            (0.17)    (0.19)    (0.14)     (0.14)
Net gain (loss) on securities
  (realized and unrealized)........            (4.88)     6.10      3.31      (1.01)
                                               -----     -----     -----      -----
Total from investment operations...            (5.05)     5.91      3.17      (1.15)

LESS DISTRIBUTIONS:
Dividends (from net
  investment income)...............              ---       ---       ---        ---
Distributions (from realized gains)            (1.35)    (0.43)    (1.91)     (0.47)
                                               -----     -----     -----      -----
Total distributions................            (1.35)    (0.43)    (1.91)     (0.47)
                                               -----     -----     -----      -----
NET ASSET VALUE END OF PERIOD......           $ 7.62    $14.02    $ 8.54     $ 7.28
                                               =====     =====     =====      =====
TOTAL RETURN (a)...................          (38.83)%    71.17%    49.39%   (13.30)%

RATIOS/SUPPLEMENTAL DATA
Net assets end of
  period (thousands)...............           $28,580   $38,812    $7,818     $5,610
Ratio of expenses to
  average net assets...............             2.09%     2.11%     2.21%      2.23%
Ratio of net investment income
  (loss) to average net assets.....           (1.64)%   (1.61)%   (1.77)%    (1.64)%
Portfolio turnover rate............               48%       35%       54%       116%
- ------------------------------------------------------------------------------------


- ---------------------------------------------------------------------------------------
SECURITY MID CAP GROWTH FUND (CLASS C)
- ---------------------------------------------------------------------------------------
                                                   FISCAL PERIOD ENDED SEPTEMBER 30
                                                ---------------------------------------
                                                2002    2001(c)    2000(c)   1999(c)(h)
                                                ----    -------    -------   ----------
PER SHARE DATA
Net asset value beginning of period..........           $14.99     $ 9.11     $ 8.20

INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss).................            (0.18)     (0.20)     (0.07)
Net gain (loss) on securities
  (realized and unrealized)..................            (5.24)      6.51       0.98
                                                         -----      -----      -----
Total from investment operations.............            (5.42)      6.31       0.91

LESS DISTRIBUTIONS:
Dividends (from net investment income).......              ---        ---        ---
Distributions (from realized gains)..........            (1.35)     (0.43)       ---
                                                         -----      -----      -----
Total distributions..........................            (1.35)     (0.43)       ---
                                                         -----      -----      -----
NET ASSET VALUE END OF PERIOD................           $ 8.22     $14.99     $ 9.11
                                                         =====      =====      =====
TOTAL RETURN (a).............................          (38.78)%     71.10%     11.10%

RATIOS/SUPPLEMENTAL DATA
Net assets end of period (thousands).........            $4,194     $3,017        $95
Ratio of expenses to average net assets......             2.09%      2.11%      2.21%
Ratio of net investment income
  (loss) to average net assets...............           (1.66)%    (1.61)%    (1.75)%
Portfolio turnover rate......................               48%        35%        54%
- ---------------------------------------------------------------------------------------


- -------------------------------------------------------------------------------------
SECURITY MID CAP GROWTH FUND (CLASS S)
- -------------------------------------------------------------------------------------
                                                                     FISCAL PERIOD
                                                                   ENDED SEPTEMBER 30
                                                                   ------------------
                                                                   2002    2001(c)(l)
                                                                   ----    ----------
PER SHARE DATA
Net asset value beginning of period.............................             $12.51

INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)....................................              (0.12)
Net gain (loss) on securities (realized and unrealized).........              (3.96)
                                                                              -----
Total from investment operations................................              (4.08)

LESS DISTRIBUTIONS:
Dividends (from net investment income)..........................                ---
Distributions (from realized gains).............................                ---
                                                                              -----
Total distributions.............................................                ---
                                                                              -----
NET ASSET VALUE END OF PERIOD...................................             $ 8.43
                                                                              =====
TOTAL RETURN (a)................................................            (34.75)%

RATIOS/SUPPLEMENTAL DATA
Net assets end of period (thousands)............................              $1,499
Ratio of expenses to average net assets.........................               2.10%
Ratio of net investment income (loss) to average net assets.....             (1.72)%
Portfolio turnover rate.........................................                 52%
- -------------------------------------------------------------------------------------


(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 and C 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     2002     2001     2000     1999     1998
     --------------------------------------------------------------------
     Mid Cap             A                ---      ---      ---      1.5%
     Value Fund          B                ---      ---      ---      2.6%
                         C                ---      ---      ---      ---
                         S                ---      ---      ---      ---
     --------------------------------------------------------------------
     Small Cap           A                ---      1.6%     1.5%     2.4%
     Growth Fund         B                ---      2.5%     2.9%     3.4%
                         C                ---      2.5%     2.5%     ---
                         S                ---      ---      ---      ---
     --------------------------------------------------------------------
     International       A                3.8%     3.5%     4.7%     ---
     Fund                B                4.5%     4.3%     5.4%     ---
                         C                4.5%     4.1%     5.0%     ---
                         S                ---      ---      ---      ---
     --------------------------------------------------------------------
     Large Cap           A                2.2%     ---      ---      ---
     Growth Fund         B                2.9%     ---      ---      ---
                         C                2.9%     ---      ---      ---
                         S                3.1%     ---      ---      ---
     --------------------------------------------------------------------
     Technology          A                2.7%     2.3%     ---      ---
     Fund                B                3.4%     3.0%     ---      ---
                         C                3.5%     3.0%     ---      ---
                         S                3.6%     ---      ---      ---
     ====================================================================


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


(d)  Security Mid Cap Value Fund was initially  capitalized  May 1, 1997, with a
     net asset value of $10 per share. Percentage amounts for the period, except
     for total return, have been annualized.


(e)  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.

(f)  Security  Small Cap Growth Fund was  initially  capitalized  on October 15,
     1997, with a net asset value of $10 per share.  Percentage  amounts for the
     period, except for total return, have been annualized.

(g)  Security  Enhanced Index Fund,  Security  International  Fund, and Security
     Select 25® Fund were initially  capitalized on January 29, 1999, with a net
     asset value of $10 per share. Percentage amounts for the period, except for
     total return, have been annualized.

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

(i)  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.

(j)  Security Large Cap Growth Fund and Security  Technology Fund were initially
     capitalized  on May 1,  2000,  with a net  asset  value  of $10 per  share.
     Percentage  amounts  for the  period,  except for total  return,  have been
     annualized.

(k)  Expense  ratios,  including  reimbursements,  were  calculated  without the
     reduction for custodian  fees  earnings  credits  beginning May 1, 2000 for
     Security  Large Cap Growth Fund,  Security  Technology  Fund,  and Security
     International  Fund. Expense ratios with such reductions would have been as
     follows:


          ============================================================
                                    CLASS     2002     2001       2000
          ------------------------------------------------------------
          International Fund          A                2.49%      ---
                                      B                3.23%      ---
                                      C                3.23%      ---
                                      S                 ---       ---
          ------------------------------------------------------------
          Large Cap Growth Fund       A                1.99%     1.85%
                                      B                 ---      2.61%
                                      C                 ---      2.60%
                                      S                 ---       ---
          ------------------------------------------------------------
          Technology Fund             A                2.25%     2.25%
                                      B                3.00%     3.00%
                                      C                3.00%     3.00%
                                      S                3.00%      ---
          ============================================================


(l)  Class "S" Shares  were  initially  offered  for sale on  February  1, 2001.
     Percentage  amounts  for  the  period,   except  total  return,  have  been
     annualized.  Total return has been  calculated  for the period  February 1,
     2001 through September 30, 2001.


(m)  The Dreyfus Corporation became sub-advisor of Security Large Cap Value Fund
     effective January 1, 2001. Prior to January 1, 2001, advisory services were
     provided by the Investment Manager.


                                   APPENDIX A
- --------------------------------------------------------------------------------

REDUCED SALES CHARGES

CLASS A SHARES -- Initial sales charges may be reduced or eliminated for persons
or organizations  purchasing Class A shares of the Funds alone or in combination
with Class A shares of other Security Funds.

For purposes of qualifying  for reduced sales charges on purchases made pursuant
to Rights of  Accumulation  or a Statement of  Intention,  the term  "Purchaser"
includes the following  persons:  an individual,  his or her spouse and children
under the age of 21; a trustee or other  fiduciary  of a single  trust estate or
single fiduciary account  established for their benefit;  an organization exempt
from federal income tax under Section  501(c)(3) or (13) of the Internal Revenue
Code; or a pension, profit-sharing or other employee benefit plan whether or not
qualified under Section 401 of the Internal Revenue Code.

RIGHTS OF ACCUMULATION -- To reduce sales charges on purchases of Class A shares
of a Fund, a Purchaser  may combine all  previous  purchases of the Funds with a
contemplated current purchase and receive the reduced applicable front-end sales
charge.  The  Distributor  must be notified  when a sale takes place which might
qualify for the reduced charge on the basis of previous purchases.

Rights of accumulation also apply to purchases representing a combination of the
Class A shares of the Funds,  and other  Security  Funds,  except  Security Cash
Fund, in those states where shares of the fund being purchased are qualified for
sale.

STATEMENT  OF  INTENTION  -- A  Purchaser  may  choose  to sign a  Statement  of
Intention  within 90 days after the first  purchase to be  included  thereunder,
which  will cover  future  purchases  of Class A shares of the Funds,  and other
Security Funds,  except Security Cash Fund. The amount of these future purchases
shall be specified and must be made within a 13-month period (or 36-month period
for  purchases  of $1  million  or  more) to  become  eligible  for the  reduced
front-end  sales charge  applicable  to the actual  amount  purchased  under the
Statement.  Shares  equal to five  percent  (5%) of the amount  specified in the
Statement of Intention  will be held in escrow until the  statement is completed
or  terminated.  These  shares may be redeemed by the Fund if the  Purchaser  is
required to pay additional sales charges.

A Statement of Intention may be revised  during the 13-month (or, if applicable,
36-month) period. Additional Class A shares received from reinvestment of income
dividends and capital gains  distributions are included in the total amount used
to determine  reduced  sales  charges.  A Statement of Intention may be obtained
from the Funds.

REINSTATEMENT  PRIVILEGE -- Shareholders  who redeem their Class A shares of the
Funds have a one-time  privilege (1) to reinstate  their  accounts by purchasing
Class A shares  without a sales charge up to the dollar amount of the redemption
proceeds;  or (2) to the extent the redeemed shares would have been eligible for
the exchange  privilege,  to purchase  Class A shares of another of the Security
Funds,  without  a  sales  charge  up to the  dollar  amount  of the  redemption
proceeds. To exercise this privilege,  a shareholder must provide written notice
and a check in the  amount of the  reinvestment  within  thirty  days  after the
redemption request; the reinstatement will be made at the net asset value on the
date received by the Fund or the Security Funds, as appropriate.

PURCHASES  AT NET ASSET VALUE -- Class A shares of the Funds may be purchased at
net asset value by (1)  directors,  officers  and  employees  of the Funds,  the
Funds' Investment Manager or Distributor;  directors,  officers and employees of
Security Benefit Life Insurance  Company and its  subsidiaries;  agents licensed
with Security Benefit Life Insurance  Company;  spouses or minor children of any
such agents; as well as the following relatives of any such directors,  officers
and employees (and their spouses):  spouses,  grandparents,  parents,  children,
grandchildren,  siblings,  nieces and nephews;  (2) any trust,  pension,  profit
sharing or other benefit plan  established by any of the foregoing  corporations
for  persons   described   above;   (3)  retirement   plans  where  third  party
administrators  of such plans have entered into  certain  arrangements  with the
Distributor  or its  affiliates  provided that no commission is paid to dealers;
and (4) officers,  directors,  partners or registered representatives (and their
spouses and minor children) of broker-dealers  who have a selling agreement with
the Distributor. Such sales are made upon the written assurance of the purchaser
that the purchase is made for investment  purposes and that the securities  will
not be transferred  or resold except  through  redemption or repurchase by or on
behalf of the Funds.

Class A shares  of the  Funds  may be  purchased  at net  asset  value  when the
purchase is made on the recommendation of (i) a registered  investment  adviser,
trustee or financial intermediary who has authority to make investment decisions
on behalf of the investor;  or (ii) a certified  financial planner or registered
broker-dealer  who either  charges  periodic fees to its customers for financial
planning,  investment  advisory or asset management  services,  or provides such
services in connection with the establishment of an investment account for which
a comprehensive  "wrap fee" is imposed.  Class A shares of the Funds may also be
purchased at net asset value when the purchase is made by retirement  plans that
(i) buy shares of the Security  Funds worth  $500,000 or more;  (ii) have 100 or
more  eligible  employees at the time of purchase;  (iii)  certify it expects to
have annual plan purchases of shares of Security Funds of $200,000 or more; (iv)
are provided administrative services by certain third-party  administrators that
have entered into a special service arrangement with the Security Funds relating
to such plans; or (v) have at the time of purchase, aggregate assets of at least
$1,000,000.  Purchases  made  pursuant  to this  provision  may be  subject to a
deferred  sales charge of up to 1% in the event of a redemption  within one year
of the purchase.

The  Distributor  must be notified when a purchase is made that qualifies  under
any of the above provisions.

FOR MORE INFORMATION

- --------------------------------------------------------------------------------
BY TELEPHONE-- Call 1-800-888-2461.


BY MAIL -- Write to:
Security Management Company, LLC
One Security Benefit Place
Topeka, KS 66636-0001


ON THE INTERNET -- Reports and other  information  about the Funds can be viewed
online or downloaded from:

SEC:  On the EDGAR Database at http://www.sec.gov

SMC, LLC:  http://www.securitybenefit.com

Additional  information  about the Funds  (including the Statement of Additional
Information)  can  be  reviewed  and  copied  at  the  Securities  and  Exchange
Commission's  Public  Reference Room in Washington,  DC.  Information  about the
operation of the Public Reference Room may be obtained by calling the Commission
at 1-202-942-8090. Copies may be obtained, upon payment of a duplicating fee, by
electronic  request at the following  e-mail address:  publicinfo@sec.gov  or by
writing  the  Public  Reference  Section  of  the  Commission,   Washington,  DC
20549-0102.
- --------------------------------------------------------------------------------

ANNUAL/SEMI-ANNUAL REPORT -- Additional information about the Funds' investments
is available in the Funds' annual and semi-annual  reports to  shareholders.  In
the Funds' annual reports,  you will find a discussion of the market  conditions
and investment  strategies that  significantly  affected each Fund's performance
during its last fiscal year.


STATEMENT  OF  ADDITIONAL  INFORMATION  -- The Funds'  Statement  of  Additional
Information and the Funds' annual or semi-annual reports are available,  without
charge  upon  request  by  calling  the  Funds'   toll-free   telephone   number
1-800-888-2461.  Shareholder  inquiries  should be  addressed  to SMC,  LLC, One
Security  Benefit Place,  Topeka,  Kansas  66636-0001,  or by calling the Funds'
toll-free  telephone  number  listed above.  The Funds'  Statement of Additional
Information is incorporated into this prospectus by reference.


Each Fund's Investment Company Act file number is listed below:


          Security Equity Fund ............................   811-1136
          o  Security Equity Series
          o  Security Alpha Opportunity Series
          o  Security Global Series
          o  Security Mid Cap Value Series
          o  Security Small Cap Growth Series
          o  Security Enhanced Index Series
          o  Security International Series
          o  Security Select 25 Series
          o  Security Large Cap Growth Series
          o  Security Technology Series

          Security Large Cap Value Fund ...................   811-0487

          Security Mid Cap Growth Fund ....................   811-1316


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


SECURITY LARGE CAP VALUE FUND
(FORMERLY SECURITY GROWTH AND INCOME FUND®)


SECURITY EQUITY FUND®
o  EQUITY SERIES

o  ALPHA OPPORTUNITY SERIES(SM)
o  GLOBAL SERIES
o  SOCIAL AWARENESS SERIES
o  MID CAP VALUE SERIES
o  SMALL CAP GROWTH SERIES

o  ENHANCED INDEX SERIES
o  INTERNATIONAL SERIES
o  SELECT 25 SERIES
o  LARGE CAP GROWTH SERIES
o  TECHNOLOGY SERIES


SECURITY MID CAP GROWTH FUND
(FORMERLY SECURITY ULTRA FUND)
Members of The Security Benefit Group of Companies
One Security Benefit Place, Topeka, Kansas 66636-0001
(785) 438-3000
(800) 888-2461


This Statement of Additional Information is not a prospectus.  It should be read
in  conjunction  with  the  prospectus  dated  February  1,  2003,  as it may be
supplemented from time to time. A prospectus may be obtained by writing Security
Distributors, Inc., One Security Benefit Place, Topeka, Kansas 66636-0001, or by
calling (785) 438-3000 or (800) 888-2461.  The Funds'  September 30, 2002 Annual
Report is incorporated herein by reference.


STATEMENT OF ADDITIONAL INFORMATION
FEBRUARY 1, 2003
RELATING TO THE PROSPECTUS DATED FEBRUARY 1, 2003,
AS IT MAY BE SUPPLEMENTED FROM TIME TO TIME
- -------------------------------------------------------------------------------------------------------------------------------------


INVESTMENT MANAGER
Security Management Company, LLC
One Security Benefit Place
Topeka, Kansas 66636-0001

UNDERWRITER
Security Distributors, Inc.
One Security Benefit Place
Topeka, Kansas 66636-0001


CUSTODIANS
UMB Bank, N.A.
928 Grand Avenue
Kansas City, Missouri 64106


Banc of America Securities, LLC
9 West 57th Street
New York, New York 10019


State Street Bank and Trust Company
225 Franklin
Boston, Massachusetts 02110

INDEPENDENT AUDITORS
Ernst & Young LLP
One Kansas City Place
1200 Main Street
Kansas City, Missouri 64105-2143

                                TABLE OF CONTENTS
- --------------------------------------------------------------------------------

GENERAL INFORMATION........................................................    3
INVESTMENT OBJECTIVE AND POLICIES OF THE FUNDS.............................    4

   Security Large Cap Value Fund...........................................    4
   Security Equity Fund....................................................    5
   Security Mid Cap Growth Fund............................................   15

INVESTMENT METHODS AND RISK FACTORS........................................   16
   Shares of Other Investment Companies....................................   16
   Repurchase Agreements...................................................   16
   When Issued and Forward Commitment Securities...........................   17
   American Depositary Receipts............................................   17
   Restricted Securities...................................................   17
   Real Estate Securities..................................................   18
   Zero Coupon Securities..................................................   18
   Foreign Investment Risks................................................   19

   Brady Bonds.............................................................   19
   Emerging Countries......................................................   19
   Political and Economic Risks............................................   19
   Religious and Ethnic Instability........................................   20
   Foreign Investment Restrictions.........................................   20
   Non-Uniform Corporate Disclosure Standards and Governmental Regulation..   20
   Adverse Market Characteristics..........................................   20
   Non-U.S. Withholding Taxes..............................................   20
   Currency Risk...........................................................   20
   Put and Call Options....................................................   21

   Trading in Futures......................................................   25
   Swaps, Caps, Floors and Collars.........................................   31
   Spread Transactions.....................................................   31
   Hybrid Instruments......................................................   32
   Lending of Portfolio Securities.........................................   32
   Leverage................................................................   32

INVESTMENT POLICY LIMITATIONS..............................................   32
   Fundamental Policies....................................................   33
   Operating Policies......................................................   33
OFFICERS AND DIRECTORS.....................................................   34
REMUNERATION OF DIRECTORS AND OTHERS.......................................   36
PRINCIPAL HOLDERS OF SECURITIES............................................   37
DIRECTORS' OWNERSHIP OF SECURITIES.........................................   38
HOW TO PURCHASE SHARES.....................................................   39
   Alternative Purchase Options............................................   40

   Class A Shares..........................................................   40
   Class B Shares..........................................................   40
   Class C Shares..........................................................   41
   Distribution Plans......................................................   41

   Calculation and Waiver of Contingent Deferred Sales Charges.............   42
   Arrangements With Broker-Dealers and Others.............................   43
   Purchases at Net Asset Value............................................   43
   Purchases for Employer-Sponsored Retirement Plans.......................   44
ACCUMULATION PLAN..........................................................   45
SYSTEMATIC WITHDRAWAL PROGRAM..............................................   45
INVESTMENT MANAGEMENT......................................................   45
   Portfolio Management....................................................   51
   Code of Ethics..........................................................   52
DISTRIBUTOR................................................................   53
ALLOCATION OF PORTFOLIO BROKERAGE..........................................   53
BROKERAGE ENHANCEMENT PLAN.................................................   56
HOW NET ASSET VALUE IS DETERMINED..........................................   56
HOW TO REDEEM SHARES.......................................................   57
   Telephone Redemptions...................................................   58
HOW TO EXCHANGE SHARES.....................................................   58
   Exchange by Telephone...................................................   59
DIVIDENDS AND TAXES........................................................   59
   Passive Foreign Investment Companies....................................   61
   Options, Futures and Forward Contracts and Swap Agreements..............   62
   Market Discount.........................................................   62
   Original Issue Discount.................................................   63
   Constructive Sales......................................................   63
   Foreign Taxation........................................................   63
   Foreign Currency Transactions...........................................   63
   Other Taxes.............................................................   63
ORGANIZATION...............................................................   63
CUSTODIAN, TRANSFER AGENT AND DIVIDEND-PAYING AGENT........................   64
INDEPENDENT AUDITORS.......................................................   64
PERFORMANCE INFORMATION....................................................   64
PERMISSIBLE ADVERTISING INFORMATION........................................   68
RETIREMENT PLANS...........................................................   69
INDIVIDUAL RETIREMENT ACCOUNTS (IRAS)......................................   69
ROTH IRAS..................................................................   70
COVERDELL EDUCATION SAVINGS ACCOUNTS.......................................   71
SIMPLE IRAS................................................................   71
PENSION AND PROFIT-SHARING PLANS...........................................   71
403(B) RETIREMENT PLANS....................................................   71
SIMPLIFIED EMPLOYEE PENSION (SEP) PLANS....................................   72
FINANCIAL STATEMENTS.......................................................   72
APPENDIX A.................................................................   73
APPENDIX B.................................................................   74

GENERAL INFORMATION


Security Large Cap Value Fund,  Security Equity Fund and Security Mid Cap Growth
Fund were  organized as Kansas  corporations  on February 2, 1944,  November 27,
1961 and April 20,  1965,  respectively.  The names of Security  Large Cap Value
Fund (formerly Security Growth and Income Fund) and Security Mid Cap Growth Fund
(formerly Security Ultra Fund) were changed effective October 1, 2002. The Funds
are registered with the Securities and Exchange Commission ("SEC") as investment
companies.  Such  registration  does not involve  supervision  by the SEC of the
management or policies of the Funds. The Funds are open-end investment companies
that,  upon the demand of the  investor,  must redeem  their  shares and pay the
investor the current net asset value thereof.  (See "How to Redeem Shares," page
58.)

Each of  Security  Large Cap Value Fund  ("Large  Cap Value  Fund"),  the Equity
Series ("Equity Fund"), the Alpha Opportunity Series ("Alpha Opportunity Fund"),
Global Series  ("Global  Fund"),  Social  Awareness  Series  ("Social  Awareness
Fund"),  Mid Cap Value Series ("Mid Cap Value  Fund"),  Small Cap Growth  Series
("Small Cap Growth  Fund"),  Enhanced  Index  Series  ("Enhanced  Index  Fund"),
International  Series  ("International  Fund"),  Select  25 Series  ("Select  25
Fund®"), Large Cap Growth Series ("Large Cap Growth Fund") and Technology Series
("Technology  Fund") of Security  Equity Fund,  and Security Mid Cap Growth Fund
("Mid Cap Growth  Fund")  (collectively,  the  "Funds")  has its own  investment
objective and policies which are described on the following  pages.  While there
is no present intention to do so, the investment  objective and policies of each
Fund,  unless otherwise noted, may be changed by its Board of Directors  without
the  approval  of  shareholders.  Each of the Funds is also  required to operate
within limitations imposed by its fundamental investment policies, which may not
be changed without shareholder  approval.  These limitations are set forth under
"Investment Policy  Limitations,"  beginning on page 32. An investment in one of
the Funds does not constitute a complete investment program.

The name of each of Large Cap Value Fund  (formerly  Security  Growth and Income
Fund) and Mid Cap  Growth  Fund  (formerly  Security  Ultra  Fund)  are  changed
effective October 1, 2002.


The value of the shares of each Fund fluctuates,  reflecting fluctuations in the
value of the portfolio  securities  and, to the extent it is invested in foreign
securities,  its net currency  exposure.  Each Fund may realize  losses or gains
when it sells  portfolio  securities  and will earn income to the extent that it
receives dividends or interest from its investments. (See "Dividends and Taxes,"
page 59.)


The  Funds'  shares  are sold to the  public  at net asset  value,  plus a sales
commission which is allocated between the principal  underwriter and dealers who
sell the shares  ("Class A  Shares"),  or at net asset  value with a  contingent
deferred  sales  charge  ("Class  B Shares  and Class C  Shares").  (See "How to
Purchase Shares," page 39.)

Professional  investment advice is provided to each Fund by Security  Management
Company, LLC (the "Investment Manager").  The Investment Manager has engaged The
Dreyfus Corporation ("Dreyfus") to provide investment advisory services to Large
Cap Value Fund,  Mainstream  Investment Advisers,  LLC ("Mainstream") to provide
investment advisory services to Alpha Opportunity Fund,  OppenheimerFunds,  Inc.
("Oppenheimer")  to provide  investment  advisory  services to Global  Fund,  RS
Investments  Management,  L.P. ("RS Investments") to provide investment advisory
services to Small Cap Growth Fund,  Deutsche Asset Management,  Inc. ("DAMI") to
provide  investment  advisory  services to Enhanced  Index Fund,  and  Templeton
Investment Counsel, LLC ("Templeton") to provide investment advisory services to
International  Fund and Wellington  Management  Company,  LLP  ("Wellington") to
provide investment advisory services to Technology Fund.

The Funds receive investment advisory, administrative,  accounting, and transfer
agency services from the Investment Manager for a fee. Separate fees are paid by
the Funds, to the Investment Manager for investment advisory, administrative and
transfer  agency  services.  The  investment  advisory  fee for  Global,  Social
Awareness,  Mid Cap Value,  Small Cap  Growth,  Large Cap Growth and  Technology
Funds on an annual basis is equal to 1% of the average  daily net assets of each
Fund,  calculated  daily and payable  monthly.  The investment  advisory fee for
Large Cap Value,  Equity, Mid Cap Growth,  Enhanced Index and Select 25 Funds is
equal to 0.75% of the average  daily net assets of each Fund,  calculated  daily
and payable monthly. The investment advisory fee for International Fund is equal
to 1.10% of the  average  daily net  assets of the  Fund,  calculated  daily and
payable monthly. The investment advisory fee for Alpha Opportunity Fund is equal
to 2.25% of the  average  daily net  assets of the  Fund,  calculated  daily and
payable monthly.

The administrative fee for the Large Cap Value,  Equity, Mid Cap Growth,  Social
Awareness,  Mid Cap Value, Small Cap Growth, Enhanced Index, Select 25 and Large
Cap Growth Funds on an annual  basis is equal to 0.09% of the average  daily net
assets  of  each  respective  Fund.  The   administrative  fee  for  Global  and
International  Funds on an annual basis is equal to 0.045% of the average  daily
net assets of each  respective Fund plus the greater of 0.10% of its average net
assets or $60,000. The administrative fee for Technology Fund on an annual basis
is equal to 0.045% of the average  daily net assets of the Fund plus the greater
of 0.10% of its average  net assets or (i) $45,000 in the year ending  April 30,
2002 or (ii) $60,000  thereafter.  The  administrative fee for Alpha Opportunity
Fund on an annual  basis is equal to 0.145% of the  average  daily net assets of
the Fund The transfer agency fee for the Total Return, Social Awareness, Mid Cap
Value,  Small Cap Growth,  Enhanced Index,  International,  Select 25, Large Cap
Growth and Technology each Funds consists of an annual  maintenance fee of $8.00
per account, and a transaction fee of $1.00 per transaction.  If the proposal to
amend  the  investment  management  and  services  agreement  is  approved,  the
administrative  fee for the Growth  and  Income,  Equity  and Ultra  Funds on an
annual  basis  would be equal to 0.09% of the  average  daily net assets of each
such Fund, and for Global Fund would be equal to 0.045% of the average daily net
assets  of the Fund  plus the  greater  of 0.10% of its  average  net  assets or
$60,000,  effective  May 1, 2002. If the proposal  were  approved,  the transfer
agency  fees for those  Funds  would be an annual  maintenance  fee of $8.00 per
account,  and a transaction fee of $1.00 per transaction,  also effective May 1,
2002.

Each Fund pays all of its  expenses  not  assumed by the  Investment  Manager or
Security  Distributors,  Inc. (the "Distributor") as described under "Investment
Management," page 45.

The Investment Manager has agreed that the total annual expenses of any class or
Series of a Fund (including the management fee and its other fees, but excluding
interest,  taxes, brokerage commissions,  extraordinary expenses and Class B and
Class C distribution fees) will not exceed any expense limitation imposed by any
state. See "Investment  Management,"  page 45 for a discussion of the Investment
Manager and the Investment Management and Services Agreements.

Under a  Distribution  Plan  adopted with respect to the Class A shares of Large
Cap Value,  Equity,  Mid Cap Growth,  Global,  Mid Cap Value,  Social Awareness,
Small Cap Growth, Enhanced Index, International, Select 25, Large Cap Growth and
Technologythe Funds,  pursuant to Rule 12b-1 under the Investment Company Act of
1940 ("1940 Act"), each such Fund is authorized to pay the Distributor an annual
fee of 0.25% of the  average  daily  net  assets  of the  Class A shares  of the
respective Funds to finance various distribution and service-related activities.
Under  Distribution Plans adopted with respect to the Class B shares and Class C
shares of the Funds,  pursuant to Rule 12b-1, each Fund is authorized to pay the
Distributor  an annual fee of 1.00% of the average daily net assets of the Class
B shares  and Class C shares,  respectively,  of the  Funds to  finance  various
distribution and  service-related  activities.  (See "Distribution  Plans," page
41.)


INVESTMENT OBJECTIVE AND POLICIES OF THE FUNDS


SECURITY LARGE CAP VALUE FUND (FORMERLY  SECURITY GROWTH AND INCOME FUND) -- The
investment  objective of Large Cap Value Fund is long-term  growth of capital by
investing,  under  normal  circumstances,  at least  80% of net  assets in large
capitalization  value companies (those whose total market value is $5 billion or
greater at the time of purchase.)  Assets of the Fund may be invested in various
types of  securities,  which may  include  (i) common  stocks;  (ii)  securities
convertible  into common stocks;  (iii)  preferred  stocks;  (iv) warrants;  (v)
securities  of  other  investment   companies;   and  (vi)  foreign   securities
denominated in U.S. dollars. See the discussion of ADRs and the risks associated
with investing in ADRs under "Investment Methods and Risk Factors." From time to
time,  the Fund may purchase  government  bonds or money market  securities on a
temporary  basis  for  defensive  purposes.


The Fund may enter into  futures  contracts (a type of  derivative)  (or options
thereon) to hedge all or a portion of the  portfolio,  as an efficient  means of
adjusting its exposure to the stock market or to increase returns. The Fund will
not use futures contracts for leveraging  purposes.  The Fund will limit its use
of futures  contracts  so that  initial  margin  deposits  or  premiums  on such
contracts  used for  non-hedging  purposes  will not  equal  more than 5% of the
Fund's  net asset  value.  The Fund may also  write  call and put  options  on a
covered  basis and  purchase put and call options on  securities  and  financial
indices.  Futures  contracts,   options  and  the  risks  associated  with  such
instruments are described in further detail under  "Investment  Methods and Risk
Factors."

The Fund may  engage in short  selling.  In these  transactions  a fund  sells a
security it does not own in anticipation of a decline in the market value of the
security. To complete the transaction, the fund must borrow the security to make
delivery to the buyer. The fund is obligated to replace the security borrowed by
purchasing it subsequently  at the market price at the time of replacement.  The
price at such time may be more or less than the price at which the  security was
sold by the fund, which would result in a loss or gain, respectively.

Securities  will not be sold short if,  after  effect is given to any such short
sale,  the total market value of all  securities  sold short would exceed 25% of
the value of a Fund's net assets.  The Fund may not make a short sale that would
result  in the Fund  having  sold  short in the  aggregate  more  than 5% of the
outstanding securities of any class of an issuer.

The Fund also may make short sales  "against  the box," in which the Fund enters
into a short  sale of a security  it owns.  At no time will more than 15% of the
value of the Fund's net assets be in deposits on short sales against the box.

Until the Fund closes its short position or replaces the borrowed security,  the
Fund will: (a) segregate  permissible liquid assets in an amount that,  together
with the amount  deposited  with the  broker as  collateral,  always  equals the
current  value of the  security  sold short;  or (b)  otherwise  cover its short
position.

The  Fund  also  may  enter  into  reverse  repurchase  agreements  with  banks,
broker/dealers or other financial institutions. See the discussion of repurchase
agreements and risks  associated with investing in repurchase  agreements  under
"Investment Methods and Risk Factors."

The Fund may purchase  securities on a forward  commitment or when-issued basis,
which means that delivery and payment take place a number of days after the date
of the  commitment  to  purchase.  For a  discussion  of  such  securities,  see
"Investment  Methods and Risk  Factors" -  "When-Issued  and Forward  Commitment
Securities."

The Fund may invest up to 15% of the value of its net assets in securities as to
which a liquid  trading  market does not exist,  provided such  investments  are
consistent with the Fund's  investment  objective.  See "Investment  Methods and
Risk Factors" - "Restricted Securities."


SECURITY  EQUITY FUND -- Security  Equity  Fund  currently  issues its shares in
eleven  series--Equity  Series ("Equity Fund"), Alpha Opportunity Series ("Alpha
Opportunity  Fund"),  Global  Series  ("GlobalFund"),  Social  Awareness  Series
("Social  Awareness Fund"),  Mid Cap Value Series ("Mid Cap Value Fund"),  Small
Cap Growth Series  ("Small Cap Growth Fund"),  Enhanced Index Series  ("Enhanced
Index Fund"),  International  Series  ("International  Fund"),  Select 25 Series
("Select  25  Fund"),  Large Cap Growth  Series  ("Large  Cap Growth  Fund") and
Technology  Series  ("Technology  Fund").  The  assets of each  Series  are held
separate  from the assets of the other Series and each Series has an  investment
objective which differs from that of the other Series. The investment  objective
and policies of each Series are described below. There are risks inherent in the
ownership of any security  and there can be no  assurance  that such  investment
objective will be achieved.


Although there is no present intention to do so, the investment objective of the
Funds  may be  altered  by the  Board  of  Directors  without  the  approval  of
shareholders of the Fund.

EQUITY FUND. The investment objective of Equity Fund is long-term capital growth
by  investing  in those  securities  which,  in the  opinion  of the  Investment
Manager, have the most long-term capital growth potential.  Equity Fund seeks to
achieve its objective by investing primarily in a broadly diversified  portfolio
of common  stocks  (which may include  American  Depositary  Receipts  (ADRs) or
securities  with common stock  characteristics,  such as securities  convertible
into common stocks.  Equity Fund may also invest in preferred stocks,  bonds and
other debt  securities.  Income potential will be considered to the extent doing
so is  consistent  with the Fund's  investment  objective of  long-term  capital
growth.

Equity Fund  ordinarily  will have at least 80% of its net assets  invested in a
broadly  diversified  portfolio of common  stocks  (which may include  ADRs) and
preferred stocks convertible into common stocks.  However, the Fund reserves the
right to invest  temporarily  in fixed  income  securities  or in cash and money
market  instruments.  The Fund may also  invest in any other type of security or
instrument  whose  investment  characteristics  are  consistent  with the Fund's
investment program. The Fund may invest in repurchase  agreements,  certificates
of deposit issued by banks or other bank demand accounts,  pending investment in
other  securities or to meet potential  redemptions  or expenses.  Equity Fund's
investment  policy,  with  emphasis on investing  in  securities  for  potential
capital enhancement  possibilities,  may involve a more rapid portfolio turnover
than other investment companies.

It is not the policy of Equity Fund to purchase securities for trading purposes.
Nevertheless, securities may be disposed of without regard to the length of time
held if such sales are deemed  advisable in order to meet the Fund's  investment
objective. Equity Fund does not intend to purchase restricted stock.

The Fund may invest in options,  futures and other investment companies (such as
index-based securities). See "Investment Methods and Risk Factors."


ALPHA OPPORTUNITY  FUND. The investment  objective of the Alpha Opportunity Fund
is  long-term  growth of capital.  The Fund  pursues its  objective  by normally
investing  approximately  50% of its total  assets in an active  value  strategy
managed by the Fund's Sub-Adviser,  Mainstream Investment Advisers, LLC, and 50%
of its total  assets in a  passive  index  strategy  managed  by the  Investment
Manager.  All daily  inflows and outflows will be allocated to the passive index
portion of the Fund in order to minimize the potential  negative impact of daily
cash flows to the Sub-Adviser's investment strategy. Once a month, the portfolio
will be rebalanced to an allocation of approximately 50% of total assets to each
strategy.  The allocation between the portions of the portfolio upon rebalancing
may range between 40% and 60% of total assets to each strategy.

The  Fund  pursues  its  active  value   strategy  by  investing   primarily  in
publicly-traded  equity  securities,  principally common stocks, but to a lesser
degree in convertible bonds,  convertible  preferred stocks,  stock warrants and
rights.  Further,  if there is an  insufficient  number of available  securities
meeting the purchase criteria of the Fund's  Sub-Adviser,  Mainstream,  the Fund
also may hold a portion  of its  assets in cash and  money  market  instruments,
which  holdings may be  substantial.  Dividend  and  interest  income will be an
incidental  consideration.  The Fund may  engage  in short  sales of  securities
believed to be undervalued.

Mainstream's strategies seek to identify individual stocks with solid underlying
financial  fundamentals,  trading at levels  representing  value relative to the
market generally.  Mainstream uses technical and fundamental methods of analysis
to choose stocks for the Fund's portfolio.  The continuous process begins with a
top-down  evaluation  of the stock and bond  markets,  primarily  based on their
relative strength indexes ("RSIs"). A high RSI indicates that the marketplace is
expensive or overbought;  conversely,  a low RSI represents that the marketplace
is inexpensive or oversold. Mainstream uses the top-down evaluation to determine
the overall stock-to-cash and long stock-to-short stock allocations.

Mainstream then uses bottom-up analysis by valuing the 2,000 or so most actively
traded stocks in the  marketplace.  The bottom-up  analysis  reviews their stock
prices in  relationship  to their stock price moving  averages and ranks them by
their RSIs. A purchase  candidate is identified as a stock that is at fair value
or  undervalued  to the  marketplace.  A sale candidate is identified as a stock
that is expensive or  overbought.  These action  candidates  are then grouped by
industry.  Mainstream  prefers that the  candidates  demonstrate  heavy industry
concentrations.  Mainstream then considers the industry and underlying financial
fundamentals of the action  candidates.  Where the fundamentals are encouraging,
the stocks may be purchased. Stocks with high RSIs may be sold. Stocks with high
RSIs and with deteriorating  fundamentals may be sold short. Mainstream actively
manages the active value  portion of the Fund's  portfolio and will buy and sell
securities  frequently.  This active  trading  will  increase the costs the Fund
incurs  and may  increase  the  amount  of tax an  investor  pays on the  Fund's
returns.

The Fund pursues its passive index  strategy by investing in equity  derivatives
backed by a portfolio of fixed income securities. The Fund may invest in futures
contracts,  options,  options on futures  contracts,  swaps and other derivative
instruments. The value of equity derivatives closely tracks changes in the value
of the index.  The equity  derivatives  may be purchased  with a fraction of the
assets that would be needed to purchase equity securities directly,  so that the
remainder  of the Fund's  assets  which are  allocated  to this  strategy may be
invested in fixed income securities. The Investment Manager actively manages the
fixed  income  securities  backing  the equity  derivatives  with a view  toward
enhancing  the Fund's total return.  The Fund's  overall  portfolio  duration is
normally not expected to exceed one year.

Although this portion of the Fund's  portfolio does not normally invest directly
in S&P 500 securities,  when equity derivatives appear to be overvalued relative
to the S&P 500, the Fund may invest in a "basket" of S&P 500 stocks.  Individual
stocks are selected based on an analysis of the historical  correlation  between
the  return of every S&P 500 stock  and the  return of the S&P 500  itself.  The
Investment Manager may employ  fundamental  analysis of factors such as earnings
and earnings growth, price to earnings ratio, dividend growth, and cash flows to
choose among stocks that satisfy the  correlation  tests.  Stocks chosen for the
Fund are not limited to those with any particular  weighting in the S&P 500. The
Fund may also invest in  exchange  traded  funds  based on the S&P 500,  such as
Standard & Poor's Depositary Receipts.

The fixed income securities in which the Fund invests include  securities issued
or  guaranteed  by the  U.S.  Government,  its  agencies  or  instrumentalities;
corporate debt securities of U.S.  issuers,  including  convertible  securities;
mortgage  backed and other  asset-backed  securities;  and bank  certificates of
deposit, fixed time deposits and bankers' acceptances, The Fund may invest up to
10% of its total  assets in high  yield  securities  ("junk  bonds")  rated B or
higher by Moody's or S&P, or, if unrated,  determined by the Investment  Manager
to be of comparable quality.

Although the Fund invests principally in U.S.  securities,  it may, from time to
time,  invest in securities of companies  located outside the U.S.,  principally
through American Depositary Receipts traded on U.S. markets.

Under adverse or unstable market  conditions,  the Fund could invest some or all
of its assets in cash,  repurchase  agreements  and money market  instruments of
foreign or domestic issuers and the U.S. and foreign  governments.  Although the
Fund would do this only in seeking  to avoid  losses,  the Fund may be unable to
pursue  its  investment  objective  during  that time,  and it could  reduce the
benefit from any upswing in the market.


GLOBAL FUND. The investment objective of Global Fund is to seek long-term growth
of capital primarily through investment in securities of companies  domiciled in
foreign  countries and the United  States.  Global Fund will seek to achieve its
objective  through  investment  in a diversified  portfolio of securities  which
under normal  circumstances  will consist  primarily of various  types of common
stocks and equivalents (the following constitute  equivalents:  convertible debt
securities,  REITs, warrants and options). The Fund may also invest in preferred
stocks, bonds and other debt obligations, which include money market instruments
of  foreign  and  domestic  companies  and  the  U.S.   Government  and  foreign
governments, governmental agencies and international organizations. The Fund may
also  invest  in any other  type of  security  or  instrument  whose  investment
characteristics  are consistent with the Fund's investment  program.  For a full
description of the Fund's investment objective and policies, see the prospectus.

In seeking to achieve its  investment  objective,  Global  Fund can,  but is not
required to, engage in the following investment practices:

SETTLEMENT  TRANSACTIONS.  Global Fund can, for a fixed amount of United  States
dollars, enter into a forward foreign exchange contract for the purchase or sale
of  the  amount  of  foreign  currency  involved  in the  underlying  securities
transactions.  In so doing,  the Fund will  attempt to insulate  itself  against
possible  losses and gains resulting from a change in the  relationship  between
the United States dollar and the foreign  currency during the period between the
date a security is  purchased  or sold and the date on which  payment is made or
received. This process is known as "transaction hedging."

To effect the  translation of the amount of foreign  currencies  involved in the
purchase and sale of foreign securities and to effect the "transaction  hedging"
described  above,  the Fund may purchase or sell foreign  currencies on a "spot"
(i.e.  cash) basis or on a forward basis  whereby the Fund  purchases or sells a
specific amount of foreign currency, at a price set at the time of the contract,
for receipt of delivery  at a  specified  date which may be any fixed  number of
days in the future.

Such spot and  forward  foreign  exchange  transactions  may also be utilized to
reduce the risk inherent in fluctuations in the exchange rate between the United
States  dollar and the relevant  foreign  currency when foreign  securities  are
purchased or sold for settlement beyond customary  settlement time (as described
below). Neither type of foreign currency transaction will eliminate fluctuations
in the prices of the Fund's portfolio or securities or prevent loss if the price
of such securities should decline.

PORTFOLIO HEDGING. When, in the opinion of the Fund's Sub-Adviser,  Oppenheimer,
it is  desirable to limit or reduce  exposure in a foreign  currency in order to
moderate  potential  changes in the United States dollar value of the portfolio,
Global Fund can enter into a forward foreign currency exchange contract by which
the United States dollar value of the underlying  foreign  portfolio  securities
can be approximately  matched by an equivalent  United States dollar  liability.
The Fund can also enter into forward currency exchange contracts to increase its
exposure to a foreign  currency  that  Oppenheimer  expects to increase in value
relative to the United States dollar.  The Fund will not attempt to hedge all of
its  portfolio  positions  and will  enter  into such  transactions  only to the
extent, if any, deemed appropriate by Oppenheimer.  Hedging against a decline in
the value of currency does not eliminate fluctuations in the prices of portfolio
securities or prevent losses if the prices of such securities decline.  The Fund
seeks  to limit  its  exposure  in  foreign  currency  exchange  contracts  in a
particular  foreign  currency  to the amount of its assets  denominated  in that
currency or a closely-correlated  currency.  The precise matching of the amounts
under  forward  contracts and the value of its  securities  involved will not be
possible  because  the  future  value  of  securities   denominated  in  foreign
currencies will change as a consequence of market movements between the date the
forward contract is entered into and the date it is sold.

FORWARD COMMITMENTS. Global Fund may make contracts to purchase securities for a
fixed  price  at a  future  date  beyond  customary  settlement  time  ("forward
commitments")  because  new  issues  of  securities  are  typically  offered  to
investors on that basis. Forward commitments involve a risk of loss if the value
of the security to be purchased declines prior to the settlement date. This risk
is in  addition  to the risk of  decline in value of the  Fund's  other  assets.
Although the Fund will enter into such contracts with the intention of acquiring
the  securities,  it  may  dispose  of  a  commitment  prior  to  settlement  if
Oppenheimer deems it appropriate to do so.

COVERED  CALL  OPTIONS.  Global  Fund may seek to  preserve  capital  by writing
covered  call  options  on  securities  which  it  owns.  Such an  option  on an
underlying  security  would obligate the Fund to sell, and give the purchaser of
the option the right to buy,  that  security at a stated  exercise  price at any
time until a stated expiration date of the option.

REPURCHASE  AGREEMENTS.  A repurchase agreement is a contract under which Global
Fund would  acquire a security for a relatively  short period  (usually not more
than seven days) subject to the  obligation of the seller to repurchase  and the
Fund to resell such security at a fixed time and price  (representing the Fund's
cost plus interest). Although the Fund may enter into repurchase agreements with
respect to any portfolio  securities  which it may acquire  consistent  with its
investment  policies and  restrictions,  it is the Fund's  present  intention to
enter into repurchase  agreements only with respect to obligations of the United
States  Government  or its  agencies or  instrumentalities  to meet  anticipated
redemptions or pending  investment or  reinvestment  of Fund assets in portfolio
securities.  The Fund will enter into  repurchase  agreements  only with  member
banks  of the  Federal  Reserve  System  and  with  "primary  dealers"  in  U.S.
Government  securities.  Repurchase  agreements  will  be  fully  collateralized
including  interest  earned thereon during the entire term of the agreement.  If
the  institution  defaults  on the  repurchase  agreement,  the Fund will retain
possession of the underlying securities. If bankruptcy proceedings are commenced
with respect to the seller,  realization on the collateral by Global Fund may be
delayed or limited and the Fund may incur  additional  costs.  In such case, the
Fund will be subject to risks  associated  with  changes in market  value of the
collateral  securities.  The Fund may enter into repurchase agreements only with
(a) securities dealers that have a total  capitalization of at least $40,000,000
and a ratio of aggregate indebtedness to net capital of no more than 4 to 1, or,
alternatively, net capital equal to 6% of aggregate debit balances, or (b) banks
that  have at  least  $1,000,000,000  in  assets  and a net  worth  of at  least
$100,000,000  as of its most recent annual  report.  In addition,  the aggregate
repurchase  price of all repurchase  agreements held by the Fund with any broker
shall not exceed 15% of the total assets of the Fund or $5,000,000, whichever is
greater.  The Fund will not enter into  repurchase  agreements  maturing in more
than  seven  days if the  aggregate  of such  repurchase  agreements  and  other
illiquid  investments  would  exceed  15% of the net  assets  of the  Fund.  The
operating  expenses of Global Fund can be expected to be higher than those of an
investment company investing exclusively in United States securities.

RULE 144A SECURITIES.  As an operating policy, the Fund may not invest more than
10% of its total assets in securities  which are  restricted  as to  disposition
under the federal  securities laws. The Fund may purchase without regard to this
limitation, restricted securities which are eligible for resale pursuant to Rule
144A under the  Securities Act of 1933 ("Rule 144A  Securities")  subject to the
Fund's  policy  that not more  than 15% of its net  assets  may be  invested  in
illiquid securities.


SOCIAL  AWARENESS FUND. The investment  objective of Social Awareness Fund is to
seek capital appreciation by investing in various types of securities which meet
certain social  criteria  established for the Fund.  Social  Awareness Fund will
invest in a diversified  portfolio of common  stocks  (which may include  ADRs),
convertible  securities,  preferred stocks and debt securities.  See "Investment
Methods and Risk Factors" - "American  Depositary  Receipts." From time to time,
the Fund may purchase  government bonds or commercial notes on a temporary basis
for defensive  purposes.  The Fund may also invest in any other type of security
or instrument  whose investment  characteristics  are consistent with the Fund's
investment program, including any company in the Domini 400 Social Index.

Securities  selected  for their  appreciation  possibilities  will be  primarily
common  stocks or other  securities  having the  investment  characteristics  of
common stocks,  such as securities  convertible  into common stocks.  Securities
will be  selected  on the  basis of their  appreciation  and  growth  potential.
Securities  considered to have capital  appreciation  and growth  potential will
often include  securities of smaller and less mature  companies.  Such companies
may  present  greater  opportunities  for capital  appreciation  because of high
potential  earnings  growth,  but may also involve  greater risk.  They may have
limited product lines, markets or financial resources, and they may be dependent
on a limited management group. Their securities may trade less frequently and in
limited volume, and only in the OTC market or on smaller  securities  exchanges.
As a result, the securities of smaller companies may have limited  marketability
and may be subject to more abrupt or erratic changes in value than securities of
larger, more established companies. The Fund may also invest in larger companies
where opportunities for above-average  capital appreciation appear favorable and
the Fund's social criteria are satisfied.

The  Social  Awareness  Fund  may  enter  into  futures  contracts  (a  type  of
derivative) (or options thereon) to hedge all or a portion of its portfolio,  as
an efficient  means of adjusting its exposure to the stock market or to increase
returns. The Fund will limit its use of futures contracts so that initial margin
deposits or premiums on such  contracts used for  non-hedging  purposes will not
equal more than 5% of the Fund's  net  assets.  The Fund may also write call and
put options on a covered  basis and purchase put and call options on  securities
and  financial  indices.  The value of all call and put options held by the Fund
will not exceed 5% of the Fund's total assets. Under normal  circumstances,  the
Fund will invest all of its assets in issuers  that meet its social  criteria as
set forth below and that offer investment potential.  Because of the limitations
on investment  imposed by the social  criteria,  the  availability of investment
opportunities  for the Fund may be limited as compared to those of similar funds
which do not impose such restrictions on investment.

The Social Awareness Fund will not invest in securities of companies that engage
in the production of nuclear energy, alcoholic beverages or tobacco products.

In  addition,  the  Fund  will  not  invest  in  securities  of  companies  that
significantly  engage in: (1) the manufacture of weapon  systems;  (2) practices
that,  on balance,  have a  detrimental  effect on the  environment;  or (3) the
gambling  industry.  The Fund will monitor the  activities  identified  above to
determine whether they are significant to an issuer's business. Significance may
be  determined on the basis of the  percentage  of revenue  generated by, or the
size of operations  attributable to, such activities.  The Fund may invest in an
issuer that engages in the activities  set forth above,  in a degree that is not
deemed significant by the Investment  Manager.  In addition,  the Fund will seek
out companies that have  contributed  substantially  to the communities in which
they  operate,  have a  positive  record  on  employment  relations,  have  made
substantial  progress  in  the  promotion  of  women  and  minorities  or in the
implementation  of benefit policies that support working parents,  or have taken
notably positive steps in addressing environmental challenges.

The Investment Manager will evaluate an issuer's activities to determine whether
it  engages  in any  practices  prohibited  by the Fund's  social  criteria.  In
addition  to its own  research  with  respect  to an  issuer's  activities,  the
Investment   Manager  will  also  rely  on  other   organizations  that  publish
information for investors concerning the social policy implications of corporate
activities.  The  Investment  Manager  may rely  upon  information  provided  by
advisory  firms that  provide  social  research  on U.S.  corporations,  such as
Kinder,  Lydenberg & Domini & Co.,  Inc.  Investment  selection  on the basis of
social  attributes is a relatively new practice and the sources for this type of
information are not well  established.  The Investment  Manager will continue to
identify and monitor sources of such  information to screen issuers which do not
meet the social investment restrictions of the Fund.

If after  purchase of an issuer's  securities  by Social  Awareness  Fund, it is
determined that such  securities do not comply with the Fund's social  criteria,
the securities will be eliminated from the Fund's  portfolio within a reasonable
time.  This  requirement  may cause the Fund to dispose of a security  at a time
when it may be disadvantageous to do so.


MID CAP VALUE FUND (FORMERLY  VALUE FUND).  The investment  objective of Mid Cap
Value Fund is to seek long-term growth of capital. The Fund will seek to achieve
its objective through investment in a diversified portfolio of securities. Under
normal  circumstances the Fund will consist primarily of various types of common
stock,  which may include ADRs,  and securities  convertible  into common stocks
which the  Investment  Manager  believes  are  undervalued  relative  to assets,
earnings,  growth  potential  or cash flows.  See the  discussion  of ADRs under
"Investment Methods and Risk Factors." Under normal circumstances, the Fund will
invest at least 80% of its net assets in the securities of companies with market
capitalizations of $10 billion or less at the time of purchase.


The Mid Cap Value Fund may also invest in (i) preferred  stocks;  (ii) warrants;
(iii)  investment  grade debt  securities  (or unrated  securities of comparable
quality);  (iv)  securities of other  investment  companies;  (v) futures;  (vi)
options;  and (vii) options on futures.  The Fund may also invest in convertible
securities  (in any  rating  category),  including  up to 10% of its  assets  in
instruments known as liquid yield option notes or "LYONS." The Fund may purchase
securities on a "when-issued,"  "forward commitment" or "delayed delivery" basis
in excess of customary settlement periods for the type of security involved.  As
an operating  policy,  the Fund may not invest more than 10% of its total assets
in  securities  which  are  restricted  as  to  disposition  under  the  federal
securities  laws.  The Fund may  purchase  without  regard  to this  limitation,
restricted  securities which are eligible for resale pursuant to Rule 144A under
the Securities Act of 1933 ("Rule 144A Securities") subject to the Fund's policy
that not more than 15% of its net assets may be invested in illiquid securities.
The Fund may also  invest in any other  type of  security  or  instrument  whose
investment  characteristics  are consistent with the Fund's investment  program.
The Fund reserves the right to invest its assets  temporarily  in cash and money
market  instruments  when,  in the  opinion  of the  Investment  Manager,  it is
advisable to do so on account of current or anticipated market  conditions.  The
Fund may utilize  repurchase  agreements  on an  overnight  basis or bank demand
accounts,  pending investment in securities or to meet potential  redemptions or
expenses.  See the discussion of when-issued  securities,  restricted securities
and repurchase agreements under "Investment Methods and Risk Factors."


SMALL CAP GROWTH FUND. The  investment  objective of Small Cap Growth Fund is to
seek long-term growth of capital.  The Fund pursues its investment  objective by
investing, under normal circumstances,  at least 80% of its net assets in equity
securities of companies with market  capitalizations  of $750 million or less at
the time of investment  that, in the opinion of the  Sub-Adviser,  RS Investment
Management,  L.P., have the potential for long-term capital growth. The Fund may
invest the remainder of its assets in  securities of companies of any size.  The
Fund may also  engage in short  sales of  securities  it  expects  to decline in
price.  The Fund will likely  invest a portion of its assets in  technology  and
Internet-related  companies.  While  there is  careful  selection  and  constant
supervision by the Fund's Sub-Adviser, there can be no guarantee that the Fund's
objective will be achieved. Investing in securities of small-sized companies may
involve greater risks than investing in larger,  more established  issuers since
these  securities may have limited  marketability  and,  thus,  they may be more
volatile than  securities of larger,  more  established  companies or the market
averages in general.  Because  small-sized  companies normally have fewer shares
outstanding than larger companies,  it may be more difficult for the Fund to buy
or sell  significant  numbers of such shares  without an  unfavorable  impact on
prevailing prices. Small-sized companies may have limited product lines, markets
or financial  resources and may lack management depth. In addition,  small-sized
companies  are  typically  subject to wider  variations in earnings and business
prospects than are larger, more established  companies.  There is typically less
publicly available information concerning small-sized companies than for larger,
more established ones.

Under adverse market conditions, the Fund could invest some or all of its assets
in  cash,  fixed-income  securities,   money  market  securities  or  repurchase
agreements.  Although the Fund would do this only in seeking to avoid losses, it
could reduce the benefit from any upswing in the market.

The Fund may also utilize the following  investments  and investment  techniques
and practices:  borrowing,  futures,  options,  options on futures,  convertible
securities,  debt obligations (including low rated and unrated debt securities),
American  Depositary  Receipts  ("ADRs"),  Global Depositary  Receipts ("GDRS"),
European  Depositary  Receipts ("EDRs"),  Rule 144A securities,  when-issued and
delayed deliver securities,  securities lending, repurchase agreements,  reverse
repurchase   agreements,   foreign   investments,   foreign  currency   exchange
transactions, zero coupon debt securities,  pay-in-kind securities and leverage.
See "Investment Methods and Risk Factors" for further information.

Should the Fund change its policy of investing at least 80% of its net assets in
the type of investment suggested by its name, the Fund will provide shareholders
at least 60 days notice prior to making the change.


ENHANCED INDEX FUND.  The investment  objective of the Enhanced Index Fund is to
outperform  the  Standard & Poor's 500  Composite  Stock  Price  index (the "S&P
500® Index") through stock selection resulting in different weightings of common
stocks relative to the index.

The Fund will include the common stock of companies included in the S&P 500. The
S&P 500 is an index of 500 common  stocks,  most of which  trade on the New York
Stock Exchange Inc. (the "NYSE").  The Sub-Adviser,  DAMI, believes that the S&P
500 is representative of the performance of publicly traded common stocks in the
U.S. in general.


In seeking to outperform the S&P 500, the Sub-Adviser starts with a portfolio of
stocks  representative  of the  holdings  of the  Index.  It then  uses a set of
quantitative  criteria that are designed to indicate  whether a particular stock
will  predictably  generate  returns  that  will  exceed  or be  less  than  the
performance of the S&P 500. Based on these criteria,  the Sub-Adviser determines
whether the Fund should  overweight,  underweight or hold a neutral  position in
the stock relative to the  proportion of the S&P 500 that the stock  represents.
While the majority of the issues held by the Fund will have  neutral  weightings
to the S&P 500,  approximately 150 will be over or underweighted relative to the
index. In addition,  the  Sub-Adviser  may determine  based on the  quantitative
criteria  that  certain  S&P 500  stocks  should  not be held by the Fund in any
amount. The Fund may invest in REITs. The Fund may also invest in any other type
of security or instrument whose investment  characteristics  are consistent with
the Fund's  investment  program.  As an operating  policy,  under normal  market
conditions,  the Fund  will  invest  at least  80% of its net  assets  in equity
securities of companies in the index and in futures contracts  representative of
the  stocks in the index.  The  Sub-Adviser  intends  to monitor  the sector and
security  weightings  of the Fund  relative  to the  composition  of the S&P 500
Index.  As  noted  in  the  prospectus,  the  Sub-Adviser  will  overweight  and
underweight  securities  in the index based on whether they believe a stock will
generate  returns  that will  exceed or be less than the  Index.  While the Fund
seeks to  modestly  outperform  the S&P 500  Index,  the Fund  expects  that its
returns will have a  coefficient  correlation  of 0.90% or better to the S&P 500
Index. The Sub-Adviser believes that the various  quantitative  criteria used to
determine  which issues to over or  underweight  will balance each other so that
the overall risk of the Fund will not be materially  different  than risk of the
S&P 500 itself.


ABOUT THE S&P 500. The S&P 500 is a well-known  stock market index that includes
common stocks of 500 companies from several  industrial  sectors  representing a
significant  portion of the market value of all common stocks publicly traded in
the United States,  most of which are listed on the NYSE.  Stocks in the S&P 500
are  weighted  according  to their market  capitalization  (i.e.,  the number of
shares outstanding  multiplied by the stock's current price). The composition of
the S&P 500 is  determined  by S&P and is based on such  factors  as the  market
capitalization  and  trading  activity  of  each  stock  and its  adequacy  as a
representation of stocks in a particular industry group, and may be changed from
time to time.  "Standard & Poor's®,"  "S&P 500®,"  "Standard & Poor's  500," and
"500"  are  trademarks  of the  McGraw-Hill  Companies,  Inc.  The  Fund  is not
sponsored,  endorsed,  sold or promoted by Standard & Poor's,  a division of the
McGraw-Hill Companies, Inc. ("S&P").

INVESTMENT  CONSIDERATIONS.  The Fund may be  appropriate  for investors who are
willing to endure stock market  fluctuations  in pursuit of  potentially  higher
long-term  returns.  The Fund invests primarily for growth. The Fund is intended
to be a long-term  investment  vehicle and is not designed to provide  investors
with a means of speculating on short-term market movements.

As a mutual fund investing  primarily in common  stocks,  the Fund is subject to
market  risk--i.e.,  the possibility  that common stock prices will decline over
short or even extended periods. The U.S. stock market tends to be cyclical, with
periods  when stock  prices  generally  rise and periods  when prices  generally
decline.

As a  diversified  mutual fund, no more than 5% of the assets of the Fund may be
invested  in  the   securities  of  one  issuer  (other  than  U.S.   Government
securities),  except that up to 25% of the Fund's assets may be invested without
regard to this limitation.  The Fund will not invest more than 25% of its assets
in the securities of issuers in any one industry. In the unlikely event that the
S&P 500 should  concentrate  to an extent  greater than that amount,  the Fund's
ability  to  achieve  its  objective  may be  impaired.  No more than 15% of the
Portfolio's  net assets may be invested  in  illiquid or not readily  marketable
securities (including repurchase agreements and time deposits with maturities of
more than seven days).

The Fund may maintain up to 25% of its assets in short-term  debt securities and
money market instruments to meet redemption requests or to facilitate investment
in the securities of the S&P 500. Securities index futures contracts and related
options, warrants and convertible securities may be used for several reasons: to
simulate  full  investment  in the S&P  500  while  retaining  a cash  fund  for
management  purposes,  to facilitate  trading, to reduce transaction costs or to
seek higher  investment  returns  when a futures  contract,  option,  warrant or
convertible  security is priced more  attractively  than the  underlying  equity
security  or S&P 500.  These  instruments  may be  considered  derivatives.  See
"Investment  Methods  and Risk  Factors"  for more  information  about  futures,
options and warrants.

The  following  discussion  contains more  detailed  information  about types of
instruments  in which the Fund may invest and  strategies  the  Sub-Adviser  may
employ in pursuit of the Fund's investment objective.

OTHER EQUITY SECURITIES. As part of one of the strategies used to outperform the
S&P 500, the Fund may invest in the equity  securities of companies that are not
included in the S&P 500.  These  equity  securities  may include  securities  of
companies that are the subject of publicly announced acquisitions or other major
corporate  transactions.  Securities of some of these companies may perform much
like  a  fixed  income  investment  because  the  market  anticipates  that  the
transaction  will likely be  consummated,  resulting  in a cash  payment for the
securities.  In such cases,  the Fund may enter into  securities  index  futures
contracts  and/or  related  options as described in this Statement of Additional
Information  in order to  maintain  its  exposure  to the  equity  markets  when
investing  in these  companies.  While this  strategy  is  intended  to generate
additional  gains for the Fund without  materially  increasing the risk to which
the Fund is subject,  there can be no assurance  that the strategy  will achieve
its intended results.

SHORT-TERM INSTRUMENTS. When the Fund experiences large cash inflows through the
sale of securities and desirable equity  securities that are consistent with the
Fund's  investment  objective are  unavailable  in  sufficient  quantities or at
attractive prices,  the Fund may hold short-term  investments for a limited time
pending availability of such equity securities.  Short-term  instruments consist
of: (i) short-term  obligations  issued or guaranteed by the U.S.  Government or
any of its  agencies or  instrumentalities  or by any of the states;  (ii) other
short-term debt securities  rated AA or higher by S&P or Aa or higher by Moody's
or, if unrated,  of comparable quality in the opinion of the Sub-Adviser;  (iii)
commercial paper; (iv) bank obligations,  including  negotiable  certificates of
deposit, time deposits and bankers' acceptances;  and (v) repurchase agreements.
At the time the Fund invests in commercial paper, bank obligations or repurchase
agreements,  the issuer or the issuer's parent must have  outstanding debt rated
AA or higher by S&P or Aa or higher by Moody's or outstanding  commercial  paper
or bank  obligations  rated A-1 by S&P or  Prime-1  by  Moody's;  or, if no such
ratings are  available,  the  instrument  must be of  comparable  quality in the
opinion of the Sub-Adviser.

U.S.  GOVERNMENT  OBLIGATIONS.  The Fund may  invest  in  obligations  issued or
guaranteed  by  U.S.  Government,  its  agencies  or  instrumentalities.   These
obligations  may or may not be  backed by the "full  faith  and  credit"  of the
United States. In the case of securities not backed by the full faith and credit
of the United  States,  the Fund must look  principally  to the  federal  agency
issuing or guaranteeing  the obligation for ultimate  repayment,  and may not be
able to assert a claim  against the United States itself in the event the agency
or instrumentality  does not meet its commitments.  Securities in which the Fund
may invest that are not backed by the full faith and credit of the United States
include,  but are not limited to, obligations of the Tennessee Valley Authority,
the Federal Home Loan Mortgage Corporation and the U.S. Postal Service,  each of
which has the right to borrow from the U.S.  Treasury  to meet its  obligations,
and  obligations  of the Federal  Farm Credit  System and the Federal  Home Loan
Banks, both of whose obligations may be satisfied only by the individual credits
of each issuing agency. Securities which are backed by the full faith and credit
of the United States include  obligations of the  Government  National  Mortgage
Association, the Farmers Home Administration, and the Export-Import Bank.

WHEN-ISSUED AND DELAYED DELIVERY SECURITIES. The Fund may purchase securities on
a  "when-issued"  or "delayed  delivery"  basis.  For  example,  delivery of and
payment  for these  securities  can take place a month or more after the date of
the purchase  commitment.  The purchase price and the interest rate payable,  if
any, on the securities are fixed on the purchase  commitment date or at the time
the settlement date is fixed.  The value of such securities is subject to market
fluctuation  and no interest  accrues to the Portfolio  until  settlement  takes
place. See "Investment  Methods and Risk Factors" - "When Issued Securities" for
more information.

EQUITY  INVESTMENTS.  The Fund may  invest  in equity  securities  listed on any
domestic  securities  exchange  or traded in the OTC  market as well as  certain
restricted  or unlisted  securities.  They may or may not pay dividends or carry
voting  rights.  Common stock  occupies the most junior  position in a company's
capital structure.

REVERSE  REPURCHASE  AGREEMENTS.  The Fund may  borrow  funds for  temporary  or
emergency purposes, such as meeting larger than anticipated redemption requests,
and  not for  leverage,  by  among  other  things,  agreeing  to sell  portfolio
securities to financial  institutions  such as banks and  broker-dealers  and to
repurchase  them at a  mutually  agreed  date and price (a  "reverse  repurchase
agreement").  At the time the Fund enters into a reverse repurchase agreement it
will place in a segregated  custodial account cash or other liquid assets having
a value equal to the  repurchase  price,  including  accrued  interest.  Reverse
repurchase  agreements  involve the risk that the market value of the securities
sold by the Fund may decline  below the  repurchase  price of those  securities.
Reverse repurchase agreements are considered to be borrowings by the Fund.

CONVERTIBLE  SECURITIES.  Convertible  securities  may  be  debt  securities  or
preferred stocks that may be converted into common stock or that carry the right
to purchase common stock.  Convertible securities entitle the holder to exchange
the securities for a specified number of shares of common stock,  usually of the
same company, at specified prices within a certain period of time.

The terms of any  convertible  security  determine  its  ranking in a  company's
capital  structure.  In the case of  subordinated  convertible  debentures,  the
holders'  claims on assets and earnings are  subordinated to the claims of other
creditors, and are senior to the claims of preferred and common shareholders. In
the case of  preferred  stock,  the  holders'  claims on assets and earnings are
subordinated  to the  claims of all  creditors  and are  senior to the claims of
common shareholders.

DERIVATIVES.  The Fund may invest in various instruments that are commonly known
as derivatives. Generally, a derivative is a financial arrangement, the value of
which is based on, or "derived" from, a traditional  security,  asset, or market
index.  Some  "derivatives"  such as  mortgage-related  and  other  asset-backed
securities are in many respects like any other investment,  although they may be
more volatile or less liquid than more traditional  debt securities.  There are,
in fact,  many  different  types of  derivatives  and many different ways to use
them. There are a range of risks associated with those uses. Futures and options
are commonly used for traditional  hedging purposes to attempt to protect a fund
from exposure to changing interest rates, securities prices or currency exchange
rates and as a low cost method of gaining  exposure to a  particular  securities
market without investing directly in those securities.

The Fund will only use derivatives for hedging  purposes.  While derivatives can
be used as leveraged investments,  the Fund may not use them to leverage its net
assets.  Derivatives will not be used to increase portfolio risk above the level
that  would be  achieved  using only  traditional  investment  securities  or to
acquire exposure to changes in the value of assets or indices that by themselves
would  not be  purchased  for  the  Fund.  The  Fund  will  not  invest  in such
instruments  as part of a  temporary  defensive  strategy  (in  anticipation  of
declining  stock  prices) to protect  against  potential  market  declines.  See
"Investment  Methods and Risk  Factors" for more  information  about options and
futures.


INTERNATIONAL  FUND. The investment  objective of the Fund is long-term  capital
appreciation.  The  Fund  pursues  its  objective  by  investing,  under  normal
circumstances, at least 65% of its assets in at least three different countries,
other than the United States.  The Fund normally will invest primarily in equity
securities of companies  located outside the United States,  including  emerging
markets.


There can be no  assurance  that the  investment  objective  of the Fund will be
achieved.  The  Fund is  designed  for  investors  who  are  willing  to  accept
short-term  domestic  and/or  foreign  stock market  fluctuations  in pursuit of
potentially higher long-term returns.

The Fund is not itself a balanced  investment  plan.  Investors  should consider
their  investment  objective  and  tolerance  for risk when making an investment
decision.


The value of the Fund's investments varies based upon many factors. Stock values
fluctuate,  sometimes dramatically,  in response to the activities of individual
companies  and general  market and  economic  conditions.  Because  many foreign
investments are denominated in foreign currencies, changes in the value of these
currencies can  significantly  affect the Fund's share price.  General  economic
factors in the various  world markets can also impact the value of an investor's
investment.  When an investor sells his or her shares, they may be worth more or
less than what the investor paid for them.


The  following  is a discussion  of the various  investments  of and  techniques
employed by the Fund.  Additional  information about the investment  policies of
the Fund appears in "Investment Methods and Risk Factors" herein.



The Fund may invest a portion of its assets in smaller  companies.  For purposes
of  this  Fund,   smaller   company  stocks  are  generally  those  with  market
capitalizations  of less than $1  billion.  The Fund also  invests in  American,
European and Global Depositary Receipts, which are certificates typically issued
by a bank or trust  company  that  give  their  holders  the  right  to  receive
securities issued by a foreign or domestic company. The Fund, from time to time,
may have  significant  investments  in one or more  countries  or in  particular
sectors, such as financial institutions or industrial companies.

The Fund may invest in futures contracts,  options, options on futures contracts
and other derivative strategies.  These investments,  when made, are for hedging
purposes.  If the Fund uses futures  contracts  for  non-hedging  purposes,  the
margin and premiums required to make those investments will not exceed 5% of the
Fund's net asset value after taking into account  unrealized  profits and losses
on the contracts.

Under adverse market conditions, the Fund could invest some or all of its assets
in cash or money  market  securities.  Although  the Fund  would do this only in
seeking  to avoid  losses,  the Fund may be  unable  to  pursue  its  investment
objective  during that time, and it could reduce the benefit from any upswing in
the market.

The Fund may also utilize the following  investments  and investment  techniques
and practices: borrowing, investment company securities, convertible securities,
debt   obligations   (including   low  rated  and  unrated   debt   securities),
mortgage-backed  securities,   American  Depositary  Receipts  ("ADRs"),  Global
Depositary Receipts ("GDRS"),  European Depositary Receipts ("EDRs"),  Rule 144A
securities,  when-issued and delayed  deliver  securities,  securities  lending,
repurchase  agreements,   and  foreign  currency  exchange  transactions  .  See
"Investment Methods and Risk Factors" for further information.

SELECT 25 FUND. The investment  objective of Select 25 Fund is to seek long-term
growth of capital. The Fund pursues its objective by focusing its investments in
a core position of 20-30 common stocks of growth companies, which have exhibited
consistent   above  average   earnings  and/or  revenue  growth.   The  Fund  is
non-diversified  as  defined  in the 1940 Act,  which  means  that it may hold a
larger position in a smaller number of securities  than a diversified  fund. The
Investment  Manager  selects as the core position for the Fund, what it believes
to be premier  growth  companies.  The  Investment  Manager  uses a  "bottom-up"
approach in selecting  growth stocks.  Portfolio  holdings will be replaced when
one or more of the companies'  fundamentals  have changed and, in the opinion of
the Investment Manager,  it is no longer a premier growth company.  There can be
no assurance that the Fund's objective will be achieved.


The Fund may invest in (i) common stocks;  (ii) preferred stocks;  (iii) foreign
securities  (including  ADRs); (iv) investment grade debt securities (or unrated
securities  of  comparable  quality);  and (v)  securities  of other  investment
companies.  The 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.

The Fund may purchase  securities on a "when-issued" or "delayed delivery" basis
in excess of customary settlement periods for the type of security involved.  As
an operating  policy,  the Fund may not invest more than 10% of its total assets
in  securities  which  are  restricted  as  to  disposition  under  the  federal
securities  laws.  The Fund may  purchase  without  regard  to this  limitation,
restricted  securities which are eligible for resale pursuant to Rule 144A under
the Securities Act of 1933 ("Rule 144A Securities") subject to the Fund's policy
that not more than 15% of its net assets may be invested in illiquid securities.
The Fund may also  invest in any other  type of  security  or  instrument  whose
investment characteristics are consistent with the Fund's investment program.

The Fund may enter into  futures  contracts (a type of  derivative)  (or options
thereon) to hedge all or a portion of its  portfolio,  as an efficient  means of
adjusting its exposure to the stock market or to increase returns. The Fund will
limit its use of futures  contracts so that initial margin  deposits or premiums
on such contracts used for  non-hedging  purposes will not equal more than 5% of
the Fund's net asset  value.  The Fund may also write call and put  options on a
covered basis and may purchase put and call options on securities  and financial
indices.  Futures  contracts,   options  and  the  risks  associated  with  such
instruments are described in further detail under  "Investment  Methods and Risk
Factors."

The Select 25 Fund reserves the right to invest its assets  temporarily  in cash
and money market instruments when, in the opinion of the Investment  Manager, it
is advisable to do so on account of current or  anticipated  market  conditions.
The Fund may utilize repurchase  agreements on an overnight basis or bank demand
accounts,  pending investment in securities or to meet potential  redemptions or
expenses.  See the  discussion of foreign  securities,  when issued  securities,
restricted  securities,  options and futures,  and repurchase  agreements  under
"Investment Methods and Risk Factors."


LARGE CAP GROWTH FUND. The investment  objective of the Large Cap Growth Fund is
long-term  capital  growth.  It pursues this  objective by primarily  investing,
under normal  circumstances,  at least 80% of its net assets in common stock and
other equity securities of large  capitalization  companies that, in the opinion
of the Investment  Manager,  have long-term capital growth  potential.  The Fund
invests  primarily in a portfolio of common stocks,  which may include  American
Depositary  Receipts  ("ADRs") or securities with common stock  characteristics,
such as securities  convertible  to common  stocks.  The Fund also may invest in
preferred  stocks,  bonds and other debt securities.  Since investments are made
based on their potential for long-term  capital growth,  any current income that
the Fund may earn is expected to be  incidental  to the  objective  of long-term
capital  growth.  The Fund invests for long-term  growth of capital and does not
intend to place emphasis upon short-term trading profits. The Fund defines large
capitalization  companies  as  those  whose  total  market  value is at least $5
billion at the time of purchase.  The Fund is non-diversified within the meaning
of the 1940 Act,  which  means that it may hold a larger  position  in a smaller
number of securities than a diversified  fund. The Fund may also concentrate its
investments in a particular industry or group of related industries.


The Investment Manager uses a growth-oriented  strategy to choose stocks,  which
means  that it invests in  companies  whose  earnings  are  believed  to be in a
relatively  strong growth trend. In identifying  companies with favorable growth
prospects,  the  Investment  Manager  considers  factors such as  prospects  for
above-average  sales and  earnings  growth;  high  return on  invested  capital;
overall  financial  strength;   competitive  advantages,   including  innovative
products and services;  effective  research,  product development and marketing;
and stable, capable management.

To manage risk in  declining or volatile  markets,  the  Investment  Manager may
invest more in cash,  fixed-income  securities  and stocks that provide  income.
Fixed-income  securities  include  U.S.  government  securities,   foreign  debt
securities that are denominated in U.S.  dollars and high yield securities (also
referred to as "junk bonds"). Although the Fund would do this only in seeking to
avoid losses,  the Fund may be unable to pursue its investment  objective during
that time, and it could reduce the benefit from any upswing in the market.

The Large Cap Growth Fund may purchase  securities that have not been registered
under the federal securities laws, provided that the securities are eligible for
resale pursuant to Rule 144A.

The  Large  Cap  Growth  Fund  may  enter  into  futures  contracts  (a  type of
derivative)  (or options  thereon) to hedge all or a portion of its portfolio or
as an  efficient  means of  adjusting  its  exposure  to the stock  market or to
increase  returns.  The Fund may also  write  call and put  options on a covered
basis and purchase put and call options on securities and financial indices.

The 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,  to
gain  exposure  to the  equity  markets,  or a  particular  sector of the equity
market, while maintaining liquidity.

From  time to time,  the Fund may  purchase  securities  on a  "when-issued"  or
"delayed delivery" basis in excess of customary  settlement periods for the type
of security involved. Securities purchased on a when-issued basis are subject to
market  fluctuation and no interest or dividends accrue to the Fund prior to the
settlement  date. The Fund will establish a segregated  account in which it will
maintain  cash or  liquid  securities  equal in value  to  commitments  for such
when-issued or delayed delivery  securities.  Such segregated account may either
be maintained with the Fund's  custodian bank or may simply be maintained on the
Fund's books. The Fund also may invest in warrants (other than those attached to
other  securities)  which  entitle  the  holder to buy  equity  securities  at a
specific price during or at the end of a particular  period. A warrant ceases to
have value if it is not exercised prior to its expiration date. For a discussion
of the risks associated with the securities and investment  techniques available
to the Large Cap Growth  Fund,  see the  "Investment  Methods and Risk  Factors"
section of this Statement of Additional Information.


TECHNOLOGY  FUND.  The  objective of the  Technology  Fund is long-term  capital
appreciation.  The  Fund  pursues  its  objective  by  investing,  under  normal
circumstances,  at least  80% of its net  assets  in the  equity  securities  of
technology  companies.  The  Fund  will  be  concentrated  and  expects  to hold
approximately 30 to 50 positions. The Fund is non-diversified within the meaning
of the 1940 Act.  The Fund may  invest up to 40% of its total  assets in foreign
securities.  The Fund may actively trade its  investments  without regard to the
length of time they have been owned by the Fund.


The  Sub-Adviser,  Wellington,  uses fundamental  analysis to choose  technology
securities in foreign and U.S. markets.  The Fund's investment approach is based
on analyzing the  competitive  outlook for the  technology  sector,  identifying
those  industries  likely  to  benefit  from the  current  and  expected  future
environment,   and  identifying  individual  opportunities.   The  Sub-adviser's
evaluation of technology  companies  rests on its solid knowledge of the overall
competitive  environment  including supply and demand  characteristics,  trends,
existing product evaluations, and new product developments within the technology
sector.   Fundamental  research  is  focused  on  direct  contact  with  company
management, suppliers, and competitors.

Asset  allocation  within the Fund  reflects  the  Sub-Adviser's  opinion of the
relative  attractiveness  of stocks  within  the  industries  of the  technology
sector, near term macroeconomic events that may detract or enhance an industry's
attractiveness,  and the number of undervalued  opportunities  in each industry.
Opportunities dictate the magnitude and frequency of changes in asset allocation
among industries,  but some representation typically is maintained in each major
industry,  including  computer software,  computer hardware,  semiconductors and
equipment, communications equipment, and internet and new media.

Stocks considered for purchase typically share the following attributes:

o  A positive change in operating results is anticipated
o  Unrecognized or undervalued capabilities are present
o  The quality of management  indicates  that these factors will be converted to
   shareholder values.

Stocks will be considered for sale from the Fund when:

o  Target prices are achieved
o  Earnings  and/or  return  expectations  are  marked  down due to  fundamental
   changes in the company's operating outlook
o  More attractive value in a comparable company is available.

The Fund may invest in  securities  denominated  in any  currency.  The Fund may
invest a  portion  of its  assets  in  options,  futures  and  forward  currency
contracts.  Generally,  these derivative instruments involve the obligation,  in
the case of futures  and  forwards,  or the right,  in the case of  options,  to
purchase or sell financial instruments in the present or at a future date. These
derivatives strategies will be used:

o  To adjust the portfolio's exposure to a particular currency
o  To manage risk
o  As a substitute for purchasing or selling securities

The Fund  intends  to enter  into  repurchase  agreements  only  with  banks and
broker/dealers  believed by the  Sub-Adviser to present  minimal credit risks in
accordance  with  guidelines  approved  by the Fund's  Board of  Directors.  The
Sub-Adviser will review and monitor the creditworthiness of such counterparties.
The Fund will not enter into a repurchase agreement with a maturity of more than
seven  days if, as a result,  more than 15% of the value of its total net assets
would be invested in such repurchase  agreements and other illiquid  investments
and securities for which no readily available market exists.

Under adverse market conditions, the Fund could invest some or all of its assets
in  cash,  fixed-income  securities,   money  market  securities  or  repurchase
agreements.  Although the Fund would do this only in seeking to avoid losses, it
could reduce the benefit from any upswing in the market. For a discussion of the
risks associated with the securities and investment  techniques available to the
Technology  Fund, see the "Investment  Methods and Risk Factors" section of this
Statement of Additional Information.


SECURITY MID CAP GROWTH FUND  (FORMERLY  SECURITY  ULTRA FUND) -- The investment
objective  of Mid Cap  Growth  Fund is to seek  capital  appreciation.  The Fund
pursues its objective by investing, under normal circumstances,  at least 80% of
its net assets in a  diversified  portfolio  of equity  securities  with  market
capitalizations  of $10  billion  or less at the time of  purchase.  Some of the
companies  in the S&P Midcap  400 Index may have  market  capitalizations  below
those of the S&P  Smallcap  Index and,  as a result,  the Fund is subject to the
risks  associated  with  investing in small  capitalization  companies.  Current
income will not be a factor in selecting  investments and any such income should
be considered incidental.

There can be no assurance that the  investment  objective of Mid Cap Growth Fund
will be  achieved.  Nevertheless,  the  Fund  hopes,  by  careful  selection  of
individual  securities  and by  supervision  of  the  investment  portfolio,  to
increase the value of the Fund's shares.

Stocks  considered to have growth  potential  will include  securities of newer,
unseasoned companies and may involve greater risks than investments in companies
with  demonstrated  earning  power.  At times Mid Cap Growth  Fund may invest in
warrants to purchase (or securities  convertible into) common stocks or in other
classes of securities  which the Investment  Manager believes will contribute to
the  attainment  of its  investment  objective.  The Fund may also invest in any
other type of  security  or  instrument  whose  investment  characteristics  are
consistent  with the Fund's  investment  program.  Securities  other than common
stock may be held,  but Mid Cap Growth  Fund will not  normally  invest in fixed
income  securities except for defensive  purposes or to employ  uncommitted cash
balances.  Mid  Cap  Growth  Fund  expects  that  it may  invest  in  repurchase
agreements or in  certificates  of deposit  issued by banks or other bank demand
accounts,   pending   investment  in  other  securities  or  to  meet  potential
redemptions  or  expenses.   Mid  Cap  Growth  Fund  will  not  concentrate  its
investments  in a particular  industry or group of  industries.  As an operating
policy,  the Fund may not invest more than 10% of its total assets in securities
which are restricted as to disposition  under the federal  securities  laws. The
Fund may purchase without regard to this limitation, restricted securities which
are eligible for resale  pursuant to Rule 144A under the  Securities Act of 1933
("Rule 144A Securities")  subject to the Fund's policy that not more than 15% of
its net assets may be invested in illiquid securities.


The Fund may enter into  futures  contracts (a type of  derivative)  (or options
thereon) to hedge all or a portion of its  portfolio,  as an efficient  means of
adjusting its exposure to the stock market or to increase returns. The Fund will
limit its use of futures  contracts so that initial margin  deposits or premiums
on such contracts used for  non-hedging  purposes will not equal more than 5% of
the Fund's net asset  value.  The Fund may also write call and put  options on a
covered basis and may purchase put and call options on securities  and financial
indices.  Futures  contracts,   options  and  the  risks  associated  with  such
instruments are described in further detail under  "Investment  Methods and Risk
Factors."

The 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,  to
gain  exposure  to the  equity  markets,  or a  particular  sector of the equity
market, while maintaining liquidity.


In  seeking  capital  appreciation,  Mid Cap Growth  Fund  expects to trade to a
substantial  degree in  securities  for the short term.  That is, Mid Cap Growth
Fund will be  engaged  essentially  in  trading  operations  based on short term
market  considerations,  as  distinct  from  long-term  investments,  based upon
fundamental evaluation of securities. Investments for long-term profits are made
when such action is  considered to be sound and helpful to Mid Cap Growth Fund's
overall  objective.  This  investment  policy is very  speculative  and involves
substantial  risk. An investor  should not consider a purchase of Mid Cap Growth
Fund's shares as equivalent to a complete investment program.

Since Mid Cap Growth Fund will trade  securities  for the short term, the annual
portfolio  turnover  rate  generally  may be expected  to be greater  than 100%.
Portfolio turnover is the percentage of the lower of security sales or purchases
to the average  portfolio  value and would be 100% if all  securities in Mid Cap
Growth Fund were  replaced  within a period of one year. A 100% turnover rate is
substantially  greater than that of most mutual  funds.  Short-term  investments
increase  portfolio turnover and brokerage costs to Mid Cap Growth Fund and thus
to its shareholders.  Moreover, to the extent short-term  transactions result in
the  realization  of net gains in  securities  held less than one year,  Mid Cap
Growth Fund's  shareholders  will be taxed on any such gains at ordinary  income
tax rates.

Mid Cap Growth Fund will not make short sales of  securities  unless at the time
of such sales it owns or has the right to acquire,  as a result of the ownership
of  convertible  or  exchangeable  securities and without the payment of further
consideration,  an equal  amount of such  securities,  and it will  retain  such
securities  so  long  as it is in a  short  position  as to  them.  Should  such
securities be sold short,  the  underlying  security will be valued at the asked
price. Such short sales will be used by Mid Cap Growth Fund only for the purpose
of deferring recognition of gain or loss for federal income tax purposes.

The  foregoing  investment  objective and policies of Mid Cap Growth Fund may be
altered by the Board of Directors without the approval of shareholders.


INVESTMENT METHODS AND RISK FACTORS

Some  of the  risk  factors  related  to  certain  securities,  instruments  and
techniques  that may be used by one or more of the  Funds are  described  in the
"Main Risks" and "Investment Policies and Management  Practices" sections of the
applicable  prospectus  and in this  Statement of  Additional  Information.  The
following is a description of certain additional risk factors related to various
securities,  instruments  and  techniques.  The risks so described only apply to
those Funds which may invest in such  securities  and  instruments  or which use
such  techniques.  Also  included  is a  general  description  of  some  of  the
investment instruments,  techniques and methods which may be used by one or more
of the Funds. The methods described only apply to those Funds which may use such
methods.  Although a Fund may employ the  techniques,  instruments  and  methods
described below,  consistent with its investment  objective and policies and any
applicable law, no Fund will be required to do so.

SHARES OF OTHER  INVESTMENT  COMPANIES -- Each of the Funds may invest in shares
of other  investment  companies.  Investment  in the shares of other  investment
companies has the effect of requiring shareholders to pay the operating expenses
of two mutual funds.

REPURCHASE  AGREEMENTS -- Each of the Funds may utilize repurchase agreements on
an overnight basis and in the case of Global, Small Cap Growth,  Enhanced Index,
International  and Technology  Funds may enter into  repurchase  agreements with
longer maturities. A repurchase agreement is a contract under which a Fund would
acquire a security  for a relatively  short period  (usually not more than seven
days)  subject to the  obligation  of the seller to  repurchase  and the Fund to
resell  such  security at a fixed time and price  (representing  the Fund's cost
plus  interest).  Each of the Funds may enter into  repurchase  agreements  with
respect to any  portfolio  securities  that it may acquire  consistent  with its
investment  policies  and  restrictions.  The Funds may  enter  into  repurchase
agreements to meet anticipated redemptions or pending investment or reinvestment
of Fund assets in portfolio securities.  The Board of Directors of each Fund has
delegated certain  responsibilities in connection with repurchase  agreements to
the Investment Manager or Sub-Adviser. Those responsibilities include monitoring
and   evaluating  a  Fund's  use  of  repurchase   agreements,   evaluating  the
creditworthiness  of repurchase  agreement  counterparties and taking steps that
are reasonably designed to ensure that a Fund's repurchase  agreements are fully
collateralized.  Repurchase  agreements  subject the Funds to the risks that (i)
they may not be able to liquidate the securities immediately upon the insolvency
of the other party,  or (ii) that  amounts  received in closing out a repurchase
transaction  might be deemed  voidable  preferences  upon the  bankruptcy of the
other party.

WHEN ISSUED AND FORWARD COMMITMENT  SECURITIES -- Purchase or sale of securities
on a "forward commitment" basis may be used to hedge against anticipated changes
in interest rates and prices. The price,  which is generally  expressed in yield
terms, is fixed at the time the commitment is made, but delivery and payment for
the securities  take place at a later date.  When issued  securities and forward
commitments  may be sold prior to the settlement  date, but the Funds will enter
into when issued and forward  commitments  only with the  intention  of actually
receiving or delivering the securities,  as the case may be; however, a Fund may
dispose of a commitment  prior to settlement if the Investment  Manager deems it
appropriate to do so. No income accrues on securities  which have been purchased
pursuant to a forward  commitment or on a when issued basis prior to delivery of
the  securities.  If a Fund  disposes  of the  right to  acquire  a when  issued
security prior to its acquisition or disposes of its right to deliver or receive
against a forward  commitment,  it may incur a gain or loss.  At the time a Fund
enters  into a  transaction  on a when  issued or forward  commitment  basis,  a
segregated account consisting of cash or liquid securities equal to the value of
the when  issued  or  forward  commitment  securities  will be  established  and
maintained  with its custodian  and will be marked to market  daily.  There is a
risk  that the  securities  may not be  delivered  and that the Fund may incur a
loss.

AMERICAN  DEPOSITARY  RECEIPTS -- Each of the Funds may purchase  ADRs which are
dollar-denominated  receipts issued  generally by U.S. banks and which represent
the deposit with the bank of a foreign company's  securities.  ADRs are publicly
traded on exchanges or over-the-counter  in the United States.  Investors should
consider  carefully the  substantial  risks  involved in investing in securities
issued by companies of foreign nations, which are in addition to the usual risks
inherent in domestic  investments.  ADRs,  European Depositary Receipts ("EDRs")
and Global  Depositary  Receipts  ("GDRs") or other securities  convertible into
securities of issuers based in foreign countries are not necessarily denominated
in the same  currency as the  securities  into which they may be  converted.  In
general,  ADRs, in registered  form,  are  denominated  in U.S.  dollars and are
designed for use in the U.S. securities markets, while EDRs (also referred to as
Continental Depositary Receipts ("CDRs")), in bearer form, may be denominated in
other currencies and are designed for use in European securities  markets.  ADRs
are  receipts  typically  issued  by a U.S.  bank or  trust  company  evidencing
ownership of the underlying securities.  EDRs are European receipts evidencing a
similar arrangement.  GDRs are global receipts evidencing a similar arrangement.
For purposes of the Fund's investment  policies,  ADRs, EDRs and GDRs are deemed
to have the same  classification  as the underlying  securities  they represent.
Thus, an ADR, EDR or GDR representing  ownership of common stock will be treated
as common stock.

Depositary receipts are issued through "sponsored" or "unsponsored"  facilities.
A sponsored  facility  is  established  jointly by the issuer of the  underlying
security and a depositary,  whereas a depositary  may  establish an  unsponsored
facility without participation by the issuer of the deposited security.  Holders
of  unsponsored  depositary  receipts  generally  bear  all  the  cost  of  such
facilities and the depositary of an unsponsored  facility frequently is under no
obligation to distribute shareholder  communications received from the issuer of
the deposited  security or to pass through  voting rights to the holders of such
receipts in respect of the deposited securities.

RESTRICTED  SECURITIES  --  Restricted  securities  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 the 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.  A dealer  registered  under  the  Securities
Exchange  Act of 1934 (the  "Exchange  Act"),  acting for its own account or the
accounts of other qualified institutional buyers, that in the aggregate owns and
invests on a  discretionary  basis at least $10 million in securities of issuers
not  affiliated  with the dealer may also  qualify as a qualified  institutional
buyer,  as well as an  Exchange  Act  registered  dealer  acting  in a  riskless
principal transaction on behalf of a qualified institutional buyer.

The Funds' Board of Directors is responsible  for  developing  and  establishing
guidelines and procedures for determining the liquidity of Rule 144A Securities.
As  permitted  by  Rule  144A,   the  Board  of  Directors  has  delegated  this
responsibility to the Investment Manager or relevant Sub-Adviser.  In making the
determination  regarding the liquidity of Rule 144A  Securities,  the Investment
Manager or relevant  Sub-Adviser  will consider trading markets for the specific
security taking into account the unregistered nature of a Rule 144A security. In
addition,  the Investment Manager or relevant Sub-Adviser may consider:  (1) the
frequency  of trades  and  quotes;  (2) the  number  of  dealers  and  potential
purchasers;  (3) dealer undertakings to make a market; and (4) the nature of the
security and of the market place trades (e.g., the time needed to dispose of the
security,  the method of  soliciting  offers  and the  mechanics  of  transfer).
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.

REAL ESTATE  SECURITIES -- Certain of the Funds may invest in equity  securities
of REITs and other real estate industry  companies or companies with substantial
real  estate  investments  and  therefore,  such Funds may be subject to certain
risks  associated with direct  ownership of real estate and with the real estate
industry in general. These risks include, among others: possible declines in the
value of real estate;  possible lack of availability of mortgage funds; extended
vacancies of properties; risks related to general and local economic conditions;
overbuilding;  increases in competition,  property taxes and operating expenses;
changes in zoning laws;  costs  resulting from the clean-up of, and liability to
third parties for damages resulting from,  environmental  problems;  casualty or
condemnation losses; uninsured damages from floods, earthquakes or other natural
disasters;  limitations  on and  variations  in rents;  and  changes in interest
rates.

REITs are pooled investment  vehicles which invest primarily in income producing
real estate or real  estate  related  loans or  interests.  REITs are  generally
classified as equity REITs,  mortgage REITs or hybrid REITs. Equity REITs invest
the  majority  of their  assets  directly  in real  property  and derive  income
primarily  from the collection of rents.  Equity REITs can also realize  capital
gains by selling  properties  that have  appreciated  in value.  Mortgage  REITs
invest the majority of their assets in real estate  mortgages  and derive income
from the  collection  of  interest  payments.  REITs  are not  taxed  on  income
distributed to  shareholders  provided they comply with several  requirements of
the Internal Revenue Code, as amended (the "Code").  Finally,  certain REITs may
be  self-liquidating in that a specific term of existence is provided for in the
trust  document.  Such  trusts run the risk of  liquidating  at an  economically
inopportune time.

ZERO COUPON SECURITIES -- Certain of the Funds may invest in certain zero coupon
securities that are "stripped" U.S.  Treasury notes and bonds.  These Funds also
may invest in zero coupon and other deep discount  securities  issued by foreign
governments and domestic and foreign corporations, including certain Brady Bonds
and other foreign debt and  payment-in-kind  securities.  Zero coupon securities
pay no interest to holders prior to maturity, and payment-in-kind securities pay
interest  in the  form of  additional  securities.  However,  a  portion  of the
original  issue  discount  on  zero  coupon  securities  and the  "interest"  on
payment-in-kind  securities  will be included in the  investing  Fund's  income.
Accordingly, for the Fund to qualify for tax treatment as a regulated investment
company and to avoid  certain  taxes,  the Fund may be required to distribute an
amount that is greater than the total amount of cash it actually receives. These
distributions  must be made from the Fund's cash assets or, if  necessary,  from
the  proceeds  of sales of  portfolio  securities.  The Fund will not be able to
purchase  additional  income-producing  securities  with  cash used to make such
distributions and its current income ultimately may be reduced as a result. Zero
coupon and  payment-in-kind  securities  usually  trade at a deep  discount from
their face or par value and will be subject  to greater  fluctuations  of market
value in response to changing interest rates than debt obligations of comparable
maturities that make current distributions of interest in cash.

FOREIGN INVESTMENT RISKS -- Investment in foreign securities  involves risks and
considerations not present in domestic investments.  Foreign companies generally
are  not  subject  to  uniform  accounting,  auditing  and  financial  reporting
standards,  practices and  requirements  comparable to those  applicable to U.S.
companies.  The securities of non-U.S. issuers generally are not registered with
the SEC,  nor are the issuers  thereof  usually  subject to the SEC's  reporting
requirements.  Accordingly,  there may be less  publicly  available  information
about  foreign  securities  and issuers than is  available  with respect to U.S.
securities and issuers.  Foreign  securities  markets,  while growing in volume,
have for the most part  substantially  less volume than United States securities
markets and  securities of foreign  companies  are generally  less liquid and at
times their prices may be more volatile than prices of comparable  United States
companies.  Foreign stock exchanges,  brokers and listed companies generally are
subject to less government supervision and regulation than in the United States.
The  customary  settlement  time for foreign  securities  may be longer than the
customary  settlement  time for United  States  securities.  A Fund's income and
gains from  foreign  issuers  may be subject to  non-U.S.  withholding  or other
taxes, thereby reducing its income and gains. In addition,  with respect to some
foreign  countries,  there is the  increased  possibility  of  expropriation  or
confiscatory  taxation,  limitations  on the removal of funds or other assets of
the Fund,  political or social  instability,  or diplomatic  developments  which
could  affect  the  investments  of  the  Fund  in  those  countries.  Moreover,
individual  foreign  economies may differ favorably or unfavorably from the U.S.
economy in such respects as growth of gross national product, rate of inflation,
rate of savings and capital reinvestment,  resource self-sufficiency and balance
of payments positions.


BRADY  BONDS --  Certain  Funds  may  invest in  "Brady  Bonds,"  which are debt
restructurings  that provide for the exchange of cash and loans for newly issued
bonds.  Brady Bonds are  securities  created  through  the  exchange of existing
commercial bank loans to public and private entities in certain emerging markets
for new bonds in connection with debt  restructuring  under a debt restructuring
plan  introduced by former U.S.  Secretary of the  Treasury,  Nicholas F. Brady.
Investors  should recognize that Brady Bonds have been issued only recently and,
accordingly,   do  not  have  a  long  payment  history.   Brady  Bonds  may  be
collateralized or uncollateralized,  are issued in various currencies (primarily
the U.S.  dollar)  and are  actively  traded in the  secondary  market for Latin
American debt.  The Salomon  Brothers Brady Bond Index provides a benchmark that
can be used to compare  returns of emerging  market  Brady Bonds with returns in
other bond markets, e.g., the U.S. bond market.

Some  Funds  invest  only in  collateralized  Brady  Bonds  denominated  in U.S.
dollars. U.S. dollar-denominated, collateralized Brady Bonds, which may be fixed
rate par bonds or floating rate discount bonds, are collateralized in full as to
principal by U.S.  Treasury  zero coupon  bonds having the same  maturity as the
bonds.  Interest payments on such bonds generally are  collateralized by cash or
securities  in an amount that,  in the case of fixed rate bonds,  is equal to at
least one year of rolling  interest  payments  or, in the case of floating  rate
bonds, initially is equal to at least one year's rolling interest payments based
on the applicable interest rate at the time and is adjusted at regular intervals
thereafter.

EMERGING  COUNTRIES  --  Certain  Funds may  invest in  securities  in  emerging
markets.  Investing in securities in emerging countries may entail greater risks
than  investing in  securities in developed  countries.  These risks include (i)
less social,  political and economic  stability;  (ii) the small current size of
the markets for such  securities and the currently low or nonexistent  volume of
trading,  which result in a lack of liquidity and in greater  price  volatility;
(iii)  certain  national  policies  which may  restrict  the  Fund's  investment
opportunities,  including  restrictions  on  investment in issuers or industries
deemed  sensitive  to national  interests;  (iv) foreign  taxation;  and (v) the
absence of  developed  structures  governing  private or foreign  investment  or
allowing for judicial redress for injury to private property.

POLITICAL AND ECONOMIC  RISKS -- Investing in  securities of non-U.S.  companies
may  entail  additional  risks  due  to the  potential  political  and  economic
instability   of   certain   countries   and   the   risks   of   expropriation,
nationalization,  confiscation  or the  imposition  of  restrictions  on foreign
investment  and on  repatriation  of  capital  invested.  In the  event  of such
expropriation,  nationalization  or other  confiscation  by any country,  a Fund
could lose its entire investment in any such country.

An  investment  in the Fund is  subject  to the  political  and  economic  risks
associated with investments in emerging markets.  Even though  opportunities for
investment  may exist in  emerging  markets,  any  change in the  leadership  or
policies of the  governments of those countries or in the leadership or policies
of any other  government  which  exercises a  significant  influence  over those
countries,  may halt the expansion of or reverse the  liberalization  of foreign
investment   policies  now  occurring  and  thereby   eliminate  any  investment
opportunities which may currently exist.

Investors should note that upon the accession to power of authoritarian regimes,
the governments of a number of emerging market countries previously expropriated
large  quantities of real and personal  property  similar to the property  which
will be  represented  by the  securities  purchased  by the Fund.  The claims of
property owners against those governments were never finally settled.  There can
be no assurance  that any property  represented  by securities  purchased by the
Fund will not also be expropriated,  nationalized,  or otherwise confiscated. If
such  confiscation  were to occur, the Fund could lose a substantial  portion of
its investments in such  countries.  The Fund's  investments  would similarly be
adversely affected by exchange control regulation in any of those countries.

RELIGIOUS  AND ETHNIC  INSTABILITY  -- Certain  countries in which the Funds may
invest  may  have  vocal   minorities   that  advocate   radical   religious  or
revolutionary  philosophies or support ethnic  independence.  Any disturbance on
the  part  of  such  individuals  could  carry  the  potential  for  wide-spread
destruction  or  confiscation  of property  owned by  individuals  and  entities
foreign to such  country  and could cause the loss of the Fund's  investment  in
those countries.

FOREIGN  INVESTMENT   RESTRICTIONS  --  Certain  countries  prohibit  or  impose
substantial  restrictions on investments in their capital markets,  particularly
their equity markets,  by foreign entities such as the Funds. As  illustrations,
certain countries require governmental  approval prior to investments by foreign
persons,  or limit the amount of investment  by foreign  persons in a particular
company, or limit the investments by foreign persons to only a specific class of
securities of a company that may have less advantageous terms than securities of
the company available for purchase by nationals. Moreover, the national policies
of  certain  countries  may  restrict  investment  opportunities  in  issuers or
industries deemed sensitive to national interests.  In addition,  some countries
require governmental approval for the repatriation of investment income, capital
or the  proceeds of  securities  sales by foreign  investors.  The Fund could be
adversely   affected  by  delays  in,  or  a  refusal  to  grant,  any  required
governmental  approval for repatriation,  as well as by the application to it of
other restrictions on investments.

NON-UNIFORM  CORPORATE  DISCLOSURE  STANDARDS  AND  GOVERNMENTAL  REGULATION  --
Foreign  companies are subject to accounting,  auditing and financial  standards
and requirements that differ, in some cases significantly, from those applicable
to U.S. companies. In particular,  the assets, liabilities and profits appearing
on the  financial  statements  of such a company may not  reflect its  financial
position or results of  operations  in the way they would be reflected  had such
financial  statements been prepared in accordance with U.S.  generally  accepted
accounting principles. Such securities will not be registered with the SEC or in
some cases  regulators of any foreign  country,  nor will the issuers thereof be
subject to the SEC's reporting requirements.  Thus, there will be less available
information  concerning  foreign  issuers of such  securities held by Funds that
invest in foreign  securities  than is available  concerning  U.S.  issuers.  In
instances where the financial  statements of an issuer are not deemed to reflect
accurately the financial  situation of the issuer, the Investment Manager or the
applicable  Sub-Adviser  will take  appropriate  steps to evaluate  the proposed
investment,  which may include  interviews with its management and consultations
with accountants,  bankers and other  specialists.  There is substantially  less
publicly  available  information  about foreign companies than there are reports
and ratings published about U.S. companies and the U.S. Government. In addition,
where  public  information  is  available,  it may be less  reliable  than  such
information regarding U.S. issuers.

ADVERSE MARKET CHARACTERISTICS -- Securities of many foreign issuers may be less
liquid and their  prices  more  volatile  than  securities  of  comparable  U.S.
issuers.  In addition,  foreign  securities  exchanges and brokers generally are
subject to less  governmental  supervision  and regulation than in the U.S., and
foreign  securities   exchange   transactions   usually  are  subject  to  fixed
commissions,  which  generally are higher than  negotiated  commissions  on U.S.
transactions.  In addition,  foreign  securities  exchange  transactions  may be
subject to  difficulties  associated  with the settlement of such  transactions.
Delays in settlement  could result in temporary  periods when assets of the Fund
are  uninvested  and no return is earned  thereon.  The inability of the Fund to
make intended  security  purchases due to settlement  problems could cause it to
miss attractive opportunities.  Inability to dispose of a portfolio security due
to  settlement  problems  either  could  result  in  losses  to the  Fund due to
subsequent  declines  in value of the  portfolio  security  or,  if the Fund has
entered into a contract to sell the security, could result in possible liability
to the purchaser.  The Investment Manager or relevant  Sub-Adviser will consider
such difficulties when determining the allocation of the Fund's assets.

NON-U.S.  WITHHOLDING TAXES -- A Fund's investment income and gains from foreign
issuers may be subject to non-U.S. withholding and other taxes, thereby reducing
the Fund's investment income and gains.

CURRENCY RISK -- Because certain Funds, under normal  circumstances,  may invest
substantial  portions of its total assets in the  securities of foreign  issuers
which are  denominated  in foreign  currencies,  the strength or weakness of the
U.S. dollar against such foreign  currencies will account for part of the Fund's
investment  performance.  A  decline  in the  value of any  particular  currency
against  the U.S.  dollar will cause a decline in the U.S.  dollar  value of the
Fund's holdings of securities denominated in such currency and, therefore,  will
cause an overall  decline in the Fund's net asset  value and any net  investment
income and capital gains to be distributed in U.S.  dollars to  shareholders  of
the Fund.

The rate of exchange  between the U.S. dollar and other currencies is determined
by several  factors  including the supply and demand for particular  currencies,
central bank efforts to support particular currencies,  the movement of interest
rates,  the pace of business  activity in certain other  countries and the U.S.,
and other economic and financial conditions affecting the world economy.

Although the Funds value assets daily in terms of U.S. dollars, the Funds do not
intend to convert  holdings of foreign  currencies into U.S.  dollars on a daily
basis. A Fund will do so from time to time, and investors should be aware of the
costs of currency conversion.  Although foreign exchange dealers do not charge a
fee for conversion,  they do realize a profit based on the difference ("spread")
between  the prices at which they are buying  and  selling  various  currencies.
Thus,  a dealer  may offer to sell a foreign  currency  to the Fund at one rate,
while  offering a lesser  rate of  exchange  should the Fund desire to sell that
currency to the dealer.

PUT AND CALL OPTIONS -- WRITING  (SELLING)  COVERED CALL OPTIONS.  A call option
gives the holder  (buyer)  the "right to  purchase"  a security or currency at a
specified  price  (the  exercise  price) at any time  until a certain  date (the
expiration  date).  So long as the  obligation  of the  writer of a call  option
continues,  he may be assigned an exercise notice by the  broker-dealer  through
whom such option was sold,  requiring him to deliver the underlying  security or
currency against payment of the exercise price. This obligation  terminates upon
the  expiration  of the call  option,  or such  earlier time at which the writer
effects a closing  purchase  transaction by repurchasing an option  identical to
that previously sold.

Certain Funds may write (sell)  "covered"  call options and purchase  options to
close out  options  previously  written  by the Fund.  In writing  covered  call
options,  the Fund expects to generate  additional  premium  income which should
serve to  enhance  the  Fund's  total  return and reduce the effect of any price
decline of the security or currency involved in the option. Covered call options
will generally be written on securities or currencies  which,  in the opinion of
the  Investment  Manager or relevant  Sub-Adviser,  are not expected to have any
major price increases or moves in the near future but which, over the long term,
are deemed to be attractive investments for the Fund.

The Fund will write only covered call options. This means that the Fund will own
the security or currency subject to the option or an option to purchase the same
underlying security or currency,  having an exercise price equal to or less than
the exercise price of the "covered"  option, or will establish and maintain with
its  custodian  for the term of the  option,  an account  consisting  of cash or
liquid  securities  having a value equal to the fluctuating  market value of the
optioned  securities or currencies.  Fund securities or currencies on which call
options  may be  written  will be  purchased  solely on the basis of  investment
considerations consistent with the Fund's investment objectives.  The writing of
covered call options is a conservative  investment technique believed to involve
relatively  little  risk (in  contrast  to the  writing  of  naked or  uncovered
options,  which the Fund will not do), but capable of enhancing the Fund's total
return. When writing a covered call option, the Fund, in return for the premium,
gives up the  opportunity  for profit from a price  increase  in the  underlying
security or currency above the exercise price, but conversely,  retains the risk
of loss should the price of the  security or  currency  decline.  Unlike one who
owns securities or currencies not subject to an option,  the Fund has no control
over when it may be required to sell the  underlying  securities or  currencies,
since it may be assigned an exercise  notice at any time prior to the expiration
of its  obligations  as a writer.  If a call  option  which the Fund has written
expires,  the Fund will  realize a gain in the amount of the  premium;  however,
such  gain may be  offset by a decline  in the  market  value of the  underlying
security or currency during the option period.  If the call option is exercised,
the Fund will realize a gain or loss from the sale of the underlying security or
currency.

Call options  written by the Fund will  normally have  expiration  dates of less
than nine months from the date written. The exercise price of the options may be
below, equal to, or above the current market values of the underlying securities
or currencies at the time the options are written.  From time to time,  the Fund
may purchase an underlying  security or currency for delivery in accordance with
an exercise  notice of a call option assigned to it, rather than delivering such
security or currency from its portfolio.  In such cases, additional costs may be
incurred.

The premium received is the market value of an option. The premium the Fund will
receive from writing a call option will reflect, among other things, the current
market price of the underlying  security or currency,  the  relationship  of the
exercise  price to such market price,  the  historical  price  volatility of the
underlying  security or currency,  and the length of the option period. Once the
decision  to write a call  option  has been  made,  the  Investment  Manager  or
relevant Sub-Adviser,  in determining whether a particular call option should be
written on a particular  security or currency,  will consider the reasonableness
of the  anticipated  premium and the likelihood that a liquid  secondary  market
will exist for those  options.  The  premium  received  by the Fund for  writing
covered call options will be recorded as a liability of the Fund. This liability
will be adjusted daily to the option's  current market value,  which will be the
latest sale price at the time at which the net asset value per share of the Fund
is computed (close of the New York Stock  Exchange),  or, in the absence of such
sale, the latest asked price.  The option will be terminated  upon expiration of
the option,  the purchase of an identical  option in a closing  transaction,  or
delivery of the underlying security or currency upon the exercise of the option.

The Fund will realize a profit or loss from a closing  purchase  transaction  if
the cost of the  transaction is less or more than the premium  received from the
writing of the option.  Because  increases  in the market price of a call option
will generally reflect increases in the market price of the underlying  security
or currency,  any loss  resulting from the repurchase of a call option is likely
to be offset in whole or in part by appreciation  of the underlying  security or
currency owned by the Fund.

WRITING (SELLING)  COVERED PUT OPTIONS.  A put option gives the purchaser of the
option the right to sell, and the writer (seller) has the obligation to buy, the
underlying  security or currency at the exercise  price during the option period
(American style) or at the expiration of the option (European style). So long as
the obligation of the writer continues, he may be assigned an exercise notice by
the  broker-dealer  through  whom such  option was sold,  requiring  him to make
payment of the exercise  price against  delivery of the  underlying  security or
currency.  The  operation  of put  options in other  respects,  including  their
related risks and rewards,  is substantially  identical to that of call options.
Certain  Funds may write  American  or  European  style  covered put options and
purchase options to close out options previously written by the Fund.

Certain  Funds may write put  options on a covered  basis,  which means that the
Fund would either (i) maintain in a segregated account cash or liquid securities
in an amount not less than the exercise  price at all times while the put option
is  outstanding;  (ii) sell short the  security or currency  underlying  the put
option at the same or higher price than the exercise price of the put option; or
(iii) purchase an option to sell the underlying  security or currency subject to
the option having an exercise  price equal to or greater than the exercise price
of the "covered"  option at all times while the put option is outstanding.  (The
rules of a clearing corporation  currently require that such assets be deposited
in escrow to secure  payment of the  exercise  price.) The Fund would  generally
write  covered  put options in  circumstances  where the  Investment  Manager or
relevant  Sub-Adviser wishes to purchase the underlying security or currency for
the Fund's  portfolio  at a price  lower than the  current  market  price of the
security  or  currency.  In such event the Fund  would  write a put option at an
exercise price which,  reduced by the premium  received on the option,  reflects
the lower price it is willing to pay. Since the Fund would also receive interest
on debt  securities or currencies  maintained to cover the exercise price of the
option, this technique could be used to enhance current return during periods of
market  uncertainty.  The risk in such a  transaction  would be that the  market
price of the  underlying  security or currency  would decline below the exercise
price less the premiums received. Such a decline could be substantial and result
in a significant  loss to the Fund. In addition,  the Fund,  because it does not
own the specific  securities or currencies  which it may be required to purchase
in the exercise of the put,  cannot  benefit  from  appreciation,  if any,  with
respect to such specific securities or currencies.

PREMIUM RECEIVED FROM WRITING CALL OR PUT OPTIONS. A Fund will receive a premium
from writing a put or call option,  which  increases  such Fund's  return in the
event the option expires unexercised or is closed out at a profit. The amount of
the premium will reflect,  among other things,  the  relationship  of the market
price of the underlying  security to the exercise price of the option,  the term
of the option and the volatility of the market price of the underlying security.
By writing a call  option,  a Fund  limits its  opportunity  to profit  from any
increase in the market value of the underlying security above the exercise price
of the option.  By writing a put option,  a Fund assumes the risk that it may be
required to purchase the  underlying  security for an exercise price higher than
its then current  market  value,  resulting  in a potential  capital loss if the
purchase price exceeds the market value plus the amount of the premium received,
unless the security subsequently appreciates in value.

CLOSING TRANSACTIONS. Closing transactions may be effected in order to realize a
profit on an  outstanding  call  option,  to prevent an  underlying  security or
currency from being called, or, to permit the sale of the underlying security or
currency.  A Fund may  terminate  an  option  that it has  written  prior to its
expiration by entering into a closing purchase transaction in which it purchases
an option  having the same terms as the option  written.  A Fund will  realize a
profit or loss from such  transaction if the cost of such transaction is less or
more than the premium received from the writing of the option. Because increases
in the market  price of a call option will  generally  reflect  increases in the
market price of the underlying security, any loss resulting from the purchase of
a call  option  is  likely  to be  offset  in  whole  or in part  by  unrealized
appreciation of the underlying security owned by such Fund.

Furthermore,  effecting  a closing  transaction  will  permit  the Fund to write
another  call  option on the  underlying  security  or  currency  with  either a
different exercise price or expiration date or both. If the Fund desires to sell
a particular  security or currency  from its portfolio on which it has written a
call  option,  it will  seek to  effect  a  closing  transaction  prior  to,  or
concurrently with, the sale of the security or currency. There is, of course, no
assurance  that the Fund will be able to effect such closing  transactions  at a
favorable  price.  If the Fund cannot enter into such a  transaction,  it may be
required to hold a security or currency that it might  otherwise have sold. When
the Fund  writes a covered  call  option,  it runs the risk of not being able to
participate in the appreciation of the underlying securities or currencies above
the  exercise  price,  as  well  as the  risk of  being  required  to hold on to
securities or currencies that are  depreciating  in value.  This could result in
higher transaction costs. The Fund will pay transaction costs in connection with
the writing of options to close out previously written options. Such transaction
costs are  normally  higher  than those  applicable  to  purchases  and sales of
portfolio securities.

PURCHASING  CALL OPTIONS.  Certain Funds may purchase  American or European call
options.  The Fund may enter into closing sale transactions with respect to such
options,  exercise  them or permit them to expire.  The Fund may  purchase  call
options for the purpose of increasing its current return.

Call options may also be  purchased  by a Fund for the purpose of acquiring  the
underlying securities or currencies for its portfolio. Utilized in this fashion,
the  purchase of call  options  enables the Fund to acquire  the  securities  or
currencies  at the exercise  price of the call option plus the premium  paid. At
times the net cost of acquiring  securities  or currencies in this manner may be
less than the cost of acquiring  the  securities or  currencies  directly.  This
technique may also be useful to a Fund in purchasing a large block of securities
or  currencies  that  would  be more  difficult  to  acquire  by  direct  market
purchases.  So long as it holds such a call option  rather  than the  underlying
security or currency itself, the Fund is partially protected from any unexpected
decline in the market price of the  underlying  security or currency and in such
event could allow the call option to expire, incurring a loss only to the extent
of the premium paid for the option.

As an  operating  policy,  the Funds will  purchase a put or call option only if
after such purchase, the value of all call and put options held by the Fund will
not  exceed 5% of the  Fund's  total  assets.  The Fund may also  purchase  call
options  on  underlying  securities  or  currencies  it owns in order to protect
unrealized gains on call options previously written by it. Call options may also
be purchased at times to avoid realizing losses. For example, where the Fund has
written a call option on an  underlying  security  or currency  having a current
market value below the price at which such security or currency was purchased by
the Fund,  an increase in the market  price could  result in the exercise of the
call option written by the Fund and the  realization of a loss on the underlying
security or currency with the same  exercise  price and  expiration  date as the
option previously written.

PURCHASING  PUT OPTIONS.  Certain  Funds may purchase put options.  The Fund may
enter into closing sale transactions with respect to such options, exercise them
or permit  them to expire.  A Fund may  purchase  a put option on an  underlying
security  or  currency  (a  "protective  put")  owned by the Fund as a defensive
technique in order to protect against an anticipated decline in the value of the
security or currency.  Such hedge protection is provided only during the life of
the put option when the Fund,  as the holder of the put option,  is able to sell
the underlying  security or currency at the put exercise price regardless of any
decline in the underlying  security's market price or currency's exchange value.
The premium paid for the put option and any  transaction  costs would reduce any
capital gain otherwise  available for distribution when the security or currency
is eventually sold.

A Fund may  purchase  put  options  at a time  when  the  Fund  does not own the
underlying  security or  currency.  By  purchasing  put options on a security or
currency it does not own, the Fund seeks to benefit from a decline in the market
price of the underlying security or currency. If the put option is not sold when
it has remaining  value,  and if the market price of the underlying  security or
currency  remains equal to or greater than the exercise price during the life of
the put option,  the Fund will lose its entire  investment in the put option. In
order for the purchase of a put option to be profitable, the market price of the
underlying  security or currency  must decline  sufficiently  below the exercise
price to cover the premium and transaction costs,  unless the put option is sold
in a closing sale transaction.

DEALER  OPTIONS.  Certain  Funds may  engage in  transactions  involving  dealer
options. Certain risks are specific to dealer options. While the Fund would look
to a clearing corporation to exercise  exchange-traded options, if the Fund were
to purchase a dealer option,  it would rely on the dealer from whom it purchased
the  option to perform if the option  were  exercised.  Exchange-traded  options
generally  have a  continuous  liquid  market  while  dealer  options have none.
Consequently,  the Fund will  generally be able to realize the value of a dealer
option it has purchased  only by exercising it or reselling it to the dealer who
issued it. Similarly, when the Fund writes a dealer option, it generally will be
able to close out the option  prior to its  expiration  only by entering  into a
closing purchase  transaction with the dealer to which the Fund originally wrote
the  option.  While the Fund will seek to enter into  dealer  options  only with
dealers who will agree to and which are expected to be capable of entering  into
closing transactions with the Fund, there can be no assurance that the Fund will
be able to liquidate a dealer  option at a favorable  price at any time prior to
expiration.  Failure  by the  dealer  to do so would  result  in the loss of the
premium  paid  by the  Fund as well  as  loss  of the  expected  benefit  of the
transaction.  Until the Fund, as a covered dealer call option writer, is able to
effect  a  closing  purchase  transaction,  it will  not be  able  to  liquidate
securities  (or other  assets)  used as cover  until the  option  expires  or is
exercised.  In the event of  insolvency  of the  contra  party,  the Fund may be
unable to  liquidate a dealer  option.  With  respect to options  written by the
Fund, the inability to enter into a closing  transaction  may result in material
losses to the Fund. For example, since the Fund must maintain a secured position
with  respect to any call option on a security it writes,  the Fund may not sell
the assets which it has  segregated to secure the position while it is obligated
under the  option.  This  requirement  may  impair  the  Fund's  ability to sell
portfolio securities at a time when such sale might be advantageous.

The Staff of the SEC has taken the position that  purchased  dealer  options and
the assets used to secure the written  dealer  options are illiquid  securities.
The Fund may treat the  cover  used for  written  OTC  options  as liquid if the
dealer agrees that the Fund may  repurchase  the OTC option it has written for a
maximum price to be calculated by a predetermined  formula.  In such cases,  the
OTC  option  would  be  considered  illiquid  only  to the  extent  the  maximum
repurchase price under the formula exceeds the intrinsic value of the option. To
this  extent,  the Fund will  treat  dealer  options  as  subject  to the Fund's
limitation  on  illiquid  securities.  If the SEC  changes  its  position on the
liquidity  of  dealer  options,  the Fund  will  change  its  treatment  of such
instrument accordingly.

CERTAIN  RISK FACTORS IN WRITING  CALL  OPTIONS AND IN  PURCHASING  CALL AND PUT
OPTIONS.  During the option  period,  a Fund, as writer of a call option has, in
return for the  premium  received on the option,  given up the  opportunity  for
capital  appreciation  above the  exercise  price should the market price of the
underlying security increase, but has retained the risk of loss should the price
of the underlying security decline. The writer has no control over the time when
it may be required to fulfill its obligation as a writer of the option. The risk
of purchasing a call or put option is that the Fund may lose the premium it paid
plus  transaction  costs. If the Fund does not exercise the option and is unable
to close out the position  prior to expiration  of the option,  it will lose its
entire investment.

An option  position  may be closed  out only on an  exchange  which  provides  a
secondary market.  There can be no assurance that a liquid secondary market will
exist for a particular  option at a particular time and that the Fund, can close
out its  position by effecting a closing  transaction.  If the Fund is unable to
effect a closing purchase  transaction,  it cannot sell the underlying  security
until the option expires or the option is exercised.  Accordingly,  the Fund may
not be able to sell the underlying security at a time when it might otherwise be
advantageous  to do so. Possible  reasons for the absence of a liquid  secondary
market  include the  following:  (i)  insufficient  trading  interest in certain
options; (ii) restrictions on transactions imposed by an exchange; (iii) trading
halts,  suspensions  or other  restrictions  imposed with respect to  particular
classes or series of options or underlying  securities;  (iv)  inadequacy of the
facilities of an exchange or the clearing  corporation to handle trading volume;
and (v) a  decision  by one or more  exchanges  to  discontinue  the  trading of
options or impose restrictions on orders. In addition,  the hours of trading for
options may not conform to the hours during which the underlying  securities are
traded.  To the extent that the options markets close before the markets for the
underlying  securities,  significant  price and rate movements can take place in
the  underlying  markets that cannot be reflected  in the options  markets.  The
purchase of options is a highly specialized  activity which involves  investment
techniques  and  risks  different  from  those  associated  with  ordinary  Fund
securities transactions.

Each exchange has established  limitations  governing the maximum number of call
options,  whether or not  covered,  which may be  written  by a single  investor
acting alone or in concert with others  (regardless  of whether such options are
written on the same or different exchanges or are held or written on one or more
accounts or through one or more brokers).  An exchange may order the liquidation
of  positions  found to be in  violation of these limits and it may impose other
sanctions or restrictions.

OPTIONS ON STOCK  INDICES.  Options on stock  indices  are similar to options on
specific  securities except that, rather than the right to take or make delivery
of the specific  security at a specific  price, an option on a stock index gives
the holder the right to receive,  upon exercise of the option, an amount of cash
if the closing level of that stock index is greater than, in the case of a call,
or less than,  in the case of a put,  the  exercise  price of the  option.  This
amount of cash is equal to such  difference  between  the  closing  price of the
index and the exercise price of the option expressed in dollars  multiplied by a
specified  multiple.  The writer of the option is  obligated,  in return for the
premium  received,  to make delivery of this amount.  Unlike options on specific
securities,  all settlements of options on stock indices are in cash and gain or
loss  depends on general  movements  in the stocks  included in the index rather
than price movements in particular  stocks. A stock index futures contract is an
agreement  in which one party  agrees to  deliver to the other an amount of cash
equal to a specific amount  multiplied by the difference  between the value of a
specific  stock index at the close of the last  trading day of the  contract and
the price at which the agreement is made. No physical  delivery of securities is
made.

RISK FACTORS IN OPTIONS ON INDICES. Because the value of an index option depends
upon the  movements in the level of the index rather than upon  movements in the
price of a particular  security,  whether the Fund will realize a gain or a loss
on the purchase or sale of an option on an index  depends upon the  movements in
the level of prices in the market  generally or in an industry or market segment
rather than upon movements in the price of the individual security. Accordingly,
successful  use of  positions  will depend  upon the  ability of the  Investment
Manager or relevant  Sub-Adviser to predict correctly movements in the direction
of the market  generally  or in the  direction of a  particular  industry.  This
requires  different skills and techniques than predicting  changes in the prices
of individual securities.

Index prices may be distorted if trading of securities  included in the index is
interrupted.  Trading  in index  options  also  may be  interrupted  in  certain
circumstances,  such as if  trading  were  halted  in a  substantial  number  of
securities in the index. If this occurred, a Fund would not be able to close out
options which it had written or purchased and, if  restrictions on exercise were
imposed, might be unable to exercise an option it purchased,  which would result
in substantial losses.

Price movements in Fund  securities will not correlate  perfectly with movements
in the level of the index and therefore, a Fund bears the risk that the price of
the  securities  may not  increase  as much as the level of the  index.  In this
event,  the Fund  would bear a loss on the call  which  would not be  completely
offset by movements in the prices of the  securities.  It is also  possible that
the index may rise when the value of the  Fund's  securities  does not.  If this
occurred,  a Fund would  experience a loss on the call which would not be offset
by an increase in the value of its securities  and might also  experience a loss
in the market value of its securities.

Unless a Fund has other  liquid  assets  which are  sufficient  to  satisfy  the
exercise  of a call on the  index,  the  Fund  will  be  required  to  liquidate
securities in order to satisfy the exercise.

When a Fund has  written  a call on an  index,  there is also the risk  that the
market may decline between the time the Fund has the call exercised  against it,
at a price  which is fixed as of the  closing  level of the index on the date of
exercise,  and the time the Fund is able to sell securities.  As with options on
securities, the Investment Manager or relevant Sub-Adviser will not learn that a
call has been exercised until the day following the exercise date, but, unlike a
call on  securities  where  the Fund  would be able to  deliver  the  underlying
security  in  settlement,  the Fund may have to sell part of its  securities  in
order to make settlement in cash, and the price of such securities might decline
before they could be sold.

If a Fund exercises a put option on an index which it has purchased before final
determination  of the closing index value for the day, it runs the risk that the
level of the underlying  index may change before closing.  If this change causes
the exercised option to fall "out-of-the-money" the Fund will be required to pay
the  difference  between the closing  index value and the exercise  price of the
option  (multiplied  by  the  applicable  multiplier)  to the  assigned  writer.
Although  the Fund may be able to  minimize  this risk by  withholding  exercise
instructions  until just before the daily cutoff time or by selling  rather than
exercising an option when the index level is close to the exercise price, it may
not be  possible to  eliminate  this risk  entirely  because the cutoff time for
index options may be earlier than those fixed for other types of options and may
occur before definitive closing index values are announced.


TRADING IN FUTURES -- Certain Funds may enter into futures contracts,  including
stock and bond index,  interest rate and currency futures ("futures" or "futures
contracts").  A futures  contract  provides for the future sale by one party and
purchase by another party of a specific  financial  instrument (e.g., units of a
stock index) for a specified price,  date, time and place designated at the time
the contract is made.  Brokerage  fees are incurred  when a futures  contract is
bought or sold and margin deposits must be maintained.  Entering into a contract
to buy is commonly  referred to as buying or  purchasing a contract or holding a
long  position.  Entering  into a contract  to sell is  commonly  referred to as
selling a contract or holding a short position.


An example of a stock index futures contract follows.  The Standard & Poor's 500
Stock Index ("S&P 500 Index") is composed of 500 selected common stocks, most of
which  are  listed on the New York  Stock  Exchange.  The S&P 500 Index  assigns
relative  weightings to the common stocks  included in the Index,  and the Index
fluctuates with changes in the market values of those common stocks. In the case
of the S&P 500 Index, contracts are to buy or sell 500 units. Thus, if the value
of the S&P 500 Index were $150, one contract would be worth $75,000 (500 units x
$150). The stock index futures contract specifies that no delivery of the actual
stock making up the index will take place.  Instead,  settlement in cash occurs.
Over the life of the contract,  the gain or loss realized by the Fund will equal
the  difference  between the  purchase  (or sale) price of the  contract and the
price at which the contract is terminated.  For example, if the Fund enters into
a futures  contract to buy 500 units of the S&P 500 Index at a specified  future
date at a contract price of $150 and the S&P 500 Index is at $154 on that future
date,  the Fund will gain  $2,000  (500 units x gain of $4).  If the Fund enters
into a futures  contract  to sell 500 units of the  stock  index at a  specified
future date at a contract price of $150 and the S&P 500 Index is at $152 on that
future date, the Fund will lose $1,000 (500 units x loss of $2).

Unlike when the Fund  purchases  or sells a security,  no price would be paid or
received  by the Fund  upon the  purchase  or sale of a futures  contract.  Upon
entering into a futures  contract,  and to maintain the Fund's open positions in
futures contracts, the Fund would be required to deposit with its custodian in a
segregated account in the name of the futures broker an amount of cash or liquid
securities  known as "initial  margin."  The margin  required  for a  particular
futures contract is set by the exchange on which the contract is traded, and may
be  significantly  modified from time to time by the exchange during the term of
the contract.  Futures  contracts are customarily  purchased and sold on margins
that may range  upward  from less  than 5% of the  value of the  contract  being
traded.

Margin  is the  amount  of funds  that  must be  deposited  by the Fund with its
custodian in a segregated account in the name of the futures commission merchant
(or, in some cases, may be held on deposit directly with the futures  commission
merchant) in order to initiate  futures  trading and to maintain the Fund's open
position in futures contracts. A margin deposit is intended to ensure the Fund's
performance  of the  futures  contract.  The margin  required  for a  particular
futures contract is set by the exchange on which the futures contract is traded,
and may be  significantly  modified from time to time by the exchange during the
term of the futures contract.

If the price of an open futures  contract  changes (by increase in the case of a
sale or by decrease  in the case of a purchase)  so that the loss on the futures
contract  reaches a point at which the margin on deposit does not satisfy margin
requirements, the broker will require an increase in the margin. However, if the
value of a position  increases because of favorable price changes in the futures
contract so that the margin deposit exceeds the required margin, the broker will
pay the excess to the Fund.

These subsequent  payments,  called "variation  margin," to and from the futures
broker,  are  made  on a daily  basis  as the  price  of the  underlying  assets
fluctuate  making the long and short  positions in the futures  contract more or
less  valuable,  a process known as "marking to the market." The Fund expects to
earn interest income on its margin deposits.

Although  certain  futures  contracts,  by their terms,  require  actual  future
delivery of and payment for the underlying instruments, in practice most futures
contracts are usually closed out before the delivery  date.  Closing out an open
futures  contract  sale or purchase is effected by entering  into an  offsetting
futures contract purchase or sale,  respectively,  for the same aggregate amount
of the  identical  securities  and the same  delivery  date.  If the  offsetting
purchase  price is less than the original sale price,  the Fund realizes a gain;
if it is more,  the Fund realizes a loss.  Conversely,  if the  offsetting  sale
price is more than the original  purchase price, the Fund realizes a gain; if it
is less, the Fund realizes a loss. The  transaction  costs must also be included
in these calculations. There can be no assurance, however, that the Fund will be
able to enter  into an  offsetting  transaction  with  respect  to a  particular
futures  contract at a particular time. If the Fund is not able to enter into an
offsetting  transaction,  the Fund will  continue to be required to maintain the
margin deposits on the futures contract.

Options on futures are similar to options on underlying  instruments except that
options on futures give the purchaser the right, in return for the premium paid,
to assume a position in a futures  contract (a long  position if the option is a
call and a short  position  if the option is a put),  rather than to purchase or
sell the futures contract,  at a specified exercise price at any time during the
period of the option.  The writer of an option on a futures contract is required
to deposit  margin  pursuant  to  requirements  similar to those  applicable  to
futures  contracts.  Upon  exercise of the option,  the  delivery of the futures
position  by the  writer of the  option  to the  holder  of the  option  will be
accompanied by the delivery of the accumulated  balance in the writer's  futures
margin  account  which  represents  the amount by which the market  price of the
futures contract,  at exercise,  exceeds (in the case of a call) or is less than
(in the case of a put) the exercise price of the option on the futures contract.
Alternatively, settlement may be made totally in cash. Purchasers of options who
fail to exercise  their  options prior to the exercise date suffer a loss of the
premium paid.

Commissions on financial futures contracts and related options  transactions may
be higher  than those which would  apply to  purchases  and sales of  securities
directly.  From  time to  time,  a  single  order to  purchase  or sell  futures
contracts  (or  options  thereon)  may be made on  behalf  of the Fund and other
mutual  funds or series of mutual  funds  for which the  Investment  Manager  or
relevant  Sub-Adviser  serves as  adviser  or  sub-adviser,  respectively.  Such
aggregated  orders would be allocated among the Fund and such other mutual funds
or series of mutual funds in a fair and non-discriminatory manner.

A public market exists in interest rate futures contracts covering primarily the
following  financial  instruments:  U.S.  Treasury bonds;  U.S.  Treasury notes;
Government  National  Mortgage   Association   ("GNMA")  modified   pass-through
mortgage-backed  securities;  three-month U.S. Treasury bills; 90-day commercial
paper; bank certificates of deposit; and Eurodollar  certificates of deposit. It
is expected that futures contracts trading in additional  financial  instruments
will be authorized. The standard contract size is generally $100,000 for futures
contracts in U.S.  Treasury bonds,  U.S.  Treasury notes, and GNMA  pass-through
securities and $1,000,000 for the other designated futures  contracts.  A public
market exists in futures contracts covering a number of indexes,  including, but
not  limited  to, the  Standard & Poor's  500 Index,  the  Standard & Poor's 100
Index,  the NASDAQ 100 Index,  the Value Line  Composite  Index and the New York
Stock Exchange Composite Index.

Stock index  futures  contracts  may be used to provide a hedge for a portion of
the Fund's portfolio,  as a cash management tool, or as an efficient way for the
Investment  Manager or relevant  Sub-Adviser to implement  either an increase or
decrease in portfolio market exposure in response to changing market conditions.
Stock index futures  contracts are currently  traded with respect to the S&P 500
Index and other broad stock market indices,  such as the New York Stock Exchange
Composite  Stock Index and the Value Line Composite  Stock Index.  The Fund may,
however,  purchase or sell  futures  contracts  with respect to any stock index.
Nevertheless,  to hedge the Fund's  portfolio  successfully,  the Fund must sell
futures  contracts  with respect to indexes or subindexes  whose  movements will
have a  significant  correlation  with  movements  in the  prices of the  Fund's
securities.

Interest  rate or  currency  futures  contracts  may be used as a hedge  against
changes in prevailing  levels of interest  rates or currency  exchange  rates in
order to  establish  more  definitely  the  effective  return on  securities  or
currencies held or intended to be acquired by the Fund. In this regard, the Fund
could sell interest rate or currency  futures as an offset against the effect of
expected  increases in interest  rates or currency  exchange  rates and purchase
such  futures as an offset  against the effect of expected  declines in interest
rates or currency exchange rates.

The Fund may enter  into  futures  contracts  which are  traded on  national  or
foreign  futures  exchanges  and  are  standardized  as  to  maturity  date  and
underlying  financial  instrument.  The principal financial futures exchanges in
the United  States are the Board of Trade of the City of  Chicago,  the  Chicago
Mercantile Exchange, the New York Futures Exchange, and the Kansas City Board of
Trade.  Futures  exchanges and trading in the United States are regulated  under
the Commodity Exchange Act by the Commodity Futures Trading Commission ("CFTC").
Futures  are  traded in London at the  London  International  Financial  Futures
Exchange,  in Paris at the  MATIF  and in Tokyo  at the  Tokyo  Stock  Exchange.
Although  techniques other than the sale and purchase of futures contracts could
be used for the above-referenced  purposes, futures contracts offer an effective
and relatively  low cost means of  implementing  the Fund's  objectives in these
areas.

CERTAIN  RISKS  RELATING TO FUTURES  CONTRACTS  AND RELATED  OPTIONS.  There are
special risks involved in futures transactions.

SPECIAL RISKS OF TRANSACTIONS IN FUTURES CONTRACTS. VOLATILITY AND LEVERAGE. The
prices of futures contracts are volatile and are influenced, among other things,
by actual and  anticipated  changes in the market and interest  rates,  which in
turn are affected by fiscal and monetary policies and national and international
policies and economic events.

Most  futures  exchanges  limit the amount of  fluctuation  permitted in futures
contract  prices during a single  trading day. The daily limit  establishes  the
maximum  amount that the price of a futures  contract may vary either up or down
from the previous day's settlement  price at the end of a trading session.  Once
the daily limit has been reached in a particular type of contract, no trades may
be made on that day at a price beyond that limit.  The daily limit  governs only
price  movement  during a particular  trading day and  therefore  does not limit
potential  losses,  because the limit may prevent the liquidation of unfavorable
positions.  Futures contract prices have  occasionally  moved to the daily limit
for  several  consecutive  trading  days  with  little  or no  trading,  thereby
preventing  prompt  liquidation of futures positions and subjecting some futures
traders to substantial losses.

Because  of the low  margin  deposits  required,  futures  trading  involves  an
extremely  high  degree of  leverage.  As a result,  a  relatively  small  price
movement in a futures  contract may result in immediate and substantial  loss or
gain, to the investor. For example, if at the time of purchase, 10% of the value
of the futures contract is deposited as margin, a subsequent 10% decrease in the
value  of the  futures  contract  would  result  in a total  loss of the  margin
deposit,  before any deduction for the  transaction  costs,  if the account were
then  closed  out. A 15%  decrease  would  result in a loss equal to 150% of the
original  margin  deposit,  if the contract were closed out. Thus, a purchase or
sale of a futures contract may result in losses in excess of the amount invested
in the futures  contract.  However,  the Fund would  presumably  have  sustained
comparable  losses if, instead of the futures  contract,  it had invested in the
underlying financial instrument and sold it after the decline.  Furthermore,  in
the case of a futures  contract  purchase,  in order to be certain that the Fund
has sufficient assets to satisfy its obligations  under a futures contract,  the
Fund earmarks to the futures  contract cash or liquid  securities equal in value
to the current value of the underlying instrument less the margin deposit.

LIQUIDITY.  The Fund may elect to close some or all of its futures  positions at
any time  prior to their  expiration.  The Fund  would do so to reduce  exposure
represented by long futures positions or increase exposure  represented by short
futures positions. The Fund may close its positions by taking opposite positions
which would operate to terminate the Fund's  position in the futures  contracts.
Final  determinations  of variation  margin would then be made,  additional cash
would be  required  to be paid by or  released  to the Fund,  and the Fund would
realize a loss or a gain.

Futures contracts may be closed out ONLY on the exchange or board of trade where
the contracts were initially traded. For example,  stock index futures contracts
can  currently  be  purchased  or sold with  respect to the S&P 500 Index on the
Chicago Mercantile  Exchange,  the New York Stock Exchange Composite Stock Index
on the New York Futures Exchange and the Value Line Composite Stock Index on the
Kansas  City  Board of Trade.  Although  the Fund  intends to  purchase  or sell
futures contracts only on exchanges or boards of trade where there appears to be
an active  market,  there is no assurance that a liquid market on an exchange or
board of trade will exist for any particular contract at any particular time. In
such event,  it might not be possible  to close a futures  contract,  and in the
event of adverse price movements, the Fund would continue to be required to make
daily cash payments of variation margin. However, in the event futures contracts
have been used to hedge  portfolio  securities,  the Fund would continue to hold
securities subject to the hedge until the futures contracts could be terminated.
In such circumstances, an increase in the price of the securities, if any, might
partially or  completely  offset  losses on the futures  contract.  However,  as
described below, there is no guarantee that the price of the securities will, in
fact,  correlate  with the price  movements  in the  futures  contract  and thus
provide an offset to losses on a futures contract.

HEDGING RISK. A decision of whether,  when,  and how to hedge involves skill and
judgment,  and even a  well-conceived  hedge may be  unsuccessful to some degree
because of unexpected market behavior or market trends.  There are several risks
in connection with the use by the Fund of futures contracts as a hedging device.
One risk arises because of the imperfect  correlation  between  movements in the
prices of the futures and movements in the prices of the underlying  instruments
which  are  the  subject  of the  hedge.  The  Investment  Manager  or  relevant
Sub-Adviser will, however,  attempt to reduce this risk by entering into futures
contracts whose movements,  in its judgment, will have a significant correlation
with movements in the prices of the Fund's underlying  instruments  sought to be
hedged.

Successful  use of futures  contracts  by the Fund for hedging  purposes is also
subject  to the  Investment  Manager's  or  relevant  Sub-Adviser's  ability  to
correctly predict movements in the direction of the market. It is possible that,
when the Fund has sold futures to hedge its  portfolio  against a decline in the
market, the index, indices, or instruments  underlying futures might advance and
the value of the  underlying  instruments  held in the  Fund's  portfolio  might
decline.  If this were to occur,  the Fund would lose money on the  futures  and
also would experience a decline in value in its underlying instruments. However,
while this might occur to a certain degree, the Investment Manager believes that
over  time  the  value of the  Fund's  portfolio  will  tend to move in the same
direction as the market indices used to hedge the portfolio. It is also possible
that if the Fund were to hedge  against  the  possibility  of a  decline  in the
market  (adversely  affecting the underlying  instruments held in its portfolio)
and prices instead increased,  the Fund would lose part or all of the benefit of
increased value of those underlying  instruments that it had hedged,  because it
would have  offsetting  losses in its futures  positions.  In addition,  in such
situations,  if the Fund had insufficient cash, it might have to sell underlying
instruments  to  meet  daily  variation  margin  requirements.   Such  sales  of
underlying  instruments  might be, but would not  necessarily  be, at  increased
prices  (which  would  reflect the rising  market).  The Fund might have to sell
underlying instruments at a time when it would be disadvantageous to do so.

In addition to the possibility that there might be an imperfect correlation,  or
no correlation at all, between price movements in the futures  contracts and the
portion of the portfolio being hedged,  the price movements of futures contracts
might not correlate perfectly with price movements in the underlying instruments
due to certain market distortions. First, all participants in the futures market
are subject to margin deposit and maintenance requirements.  Rather than meeting
additional margin deposit  requirements,  investors might close future contracts
through  offsetting  transactions  which could  distort the normal  relationship
between the  underlying  instruments  and futures  markets.  Second,  the margin
requirements in the futures market are less onerous than margin  requirements in
the  securities  markets,  and as a result the futures market might attract more
speculators  than  the  securities   markets  do.  Increased   participation  by
speculators in the futures market might also cause temporary price  distortions.
Due to the  possibility  of price  distortion  in the  futures  market  and also
because  of the  imperfect  correlation  between  movements  in  the  underlying
instruments  and  movements in the prices of futures  contracts,  even a correct
forecast  of  general  market  trends  by the  Investment  Manager  or  relevant
Sub-Adviser  might not result in a successful  hedging  transaction  over a very
short time period.

CERTAIN RISKS OF OPTIONS ON FUTURES CONTRACTS. The Fund may seek to close out an
option  position by writing or buying an  offsetting  option  covering  the same
index,  underlying  instruments,  or contract and having the same exercise price
and  expiration  date.  The ability to establish and close out positions on such
options will be subject to the maintenance of a liquid secondary market. Reasons
for the  absence  of a  liquid  secondary  market  on an  exchange  include  the
following:  (i) there may be insufficient  trading  interest in certain options;
(ii)  restrictions  may be imposed by an  exchange  on opening  transactions  or
closing  transactions  or  both;  (iii)  trading  halts,  suspensions  or  other
restrictions  may be imposed  with  respect to  particular  classes or series of
options, or underlying instruments; (iv) unusual or unforeseen circumstances may
interrupt normal operations on an exchange; (v) the facilities of an exchange or
a  clearing  corporation  may not at all times be  adequate  to  handle  current
trading  volume;  or (vi) one or more  exchanges  could,  for  economic or other
reasons,  decide or be compelled at some future date to discontinue  the trading
of options  (or a  particular  class or series of  options),  in which event the
secondary  market on that exchange (or in the class or series of options)  would
cease to exist,  although  outstanding  options  on the  exchange  that had been
issued by a clearing  corporation  as a result of trades on that exchange  would
continue to be exercisable in accordance with their terms. There is no assurance
that higher than anticipated  trading activity or other unforeseen  events might
not,  at  times,  render  certain  of the  facilities  of  any  of the  clearing
corporations inadequate, and thereby result in the institution by an exchange of
special  procedures  which may interfere with the timely execution of customers'
orders.

REGULATORY  LIMITATIONS.  The Funds  will  engage  in  transactions  in  futures
contracts and options thereon only for bona fide hedging,  yield enhancement and
risk  management  purposes,  in each  case in  accordance  with  the  rules  and
regulations of the CFTC.

The Funds may not enter into  futures  contracts  or options  thereon  if,  with
respect to positions which do not qualify as bona fide hedging under  applicable
CFTC  rules,  the sum of the  amounts of initial  margin  deposits on the Fund's
existing futures and premiums paid for options on futures would exceed 5% of the
net asset value of the Funds after  taking into account  unrealized  profits and
unrealized losses on any such contracts it has entered into; provided,  however,
that in the case of an option that is in-the-money at the time of purchase,  the
in-the-money amount may be excluded in calculating the 5% limitation.

To the extent  necessary  to comply with  applicable  regulations,  in instances
involving  the  purchase of futures  contracts  or call  options  thereon or the
writing  of put  options  thereon  by the  Fund,  an  amount  of cash or  liquid
securities,  equal to the market  value of the  futures  contracts  and  options
thereon (less any related margin deposits),  will be identified in an account on
the books of the Fund or with the Fund's  custodian  to cover the  position,  or
alternative cover will be employed.

In addition,  CFTC  regulations may impose  limitations on the Funds' ability to
engage in certain yield enhancement and risk management strategies.  If the CFTC
or other regulatory  authorities  adopt different  (including less stringent) or
additional restrictions, the Funds would comply with such new restrictions.

FORWARD  CURRENCY  CONTRACTS AND RELATED  OPTIONS.  A forward  foreign  currency
exchange contract involves an obligation to purchase or sell a specific currency
at a future  date,  which may be any  fixed  number of days from the date of the
contract agreed upon by the parties, at a price set at the time of the Contract.
These  contracts  are  principally  traded  in the  interbank  market  conducted
directly between currency  traders (usually large,  commercial  banks) and their
customers.  A forward  contract  generally  has no deposit  requirement,  and no
commissions are charged at any stage for trades.

Depending on the investment  policies and  restrictions  applicable to a Fund, a
Fund will generally enter into forward foreign currency exchange contracts under
two circumstances. First, when a Fund enters into a contract for the purchase or
sale of a security denominated in a foreign currency, it may desire to "lock in"
the U.S. dollar price of the security.  By entering into a forward  contract for
the purchase or sale,  for a fixed  amount of dollars,  of the amount of foreign
currency involved in the underlying security transactions, the Fund will be able
to protect  itself  against a possible loss  resulting from an adverse change in
the relationship between the U.S. dollar and the subject foreign currency during
the period  between the date the  security is  purchased or sold and the date on
which payment is made or received.

Second,  when the Investment Manager or relevant  Sub-Adviser  believes that the
currency  of a  particular  foreign  country  may suffer or enjoy a  substantial
movement against another currency,  including the U.S. dollar, it may enter into
a forward  contract  to sell or buy the amount of the former  foreign  currency,
approximating  the  value  of some  or all of the  Fund's  portfolio  securities
denominated in such foreign currency. Alternatively, where appropriate, the Fund
may hedge all or part of its  foreign  currency  exposure  through  the use of a
basket of currencies or a proxy currency  where such  currencies or currency act
as an effective proxy for other  currencies.  In such a case, the Fund may enter
into a forward  contract  where the amount of the  foreign  currency  to be sold
exceeds the value of the securities  denominated  in such  currency.  The use of
this basket hedging technique may be more efficient and economical than entering
into separate forward  contracts for each currency held in the Fund. The precise
matching  of the  forward  contract  amounts  and the  value  of the  securities
involved  will  not  generally  be  possible  since  the  future  value  of such
securities  in  foreign  currencies  will  change  as a  consequence  of  market
movements in the value of those securities between the date the forward contract
is entered into and the date it matures.  The projection of short-term  currency
market  movement is  extremely  difficult,  and the  successful  execution  of a
short-term hedging strategy is highly uncertain.

The Fund will also not enter  into such  forward  contracts  or  maintain  a net
exposure  to such  contracts  where  the  consummation  of the  contracts  would
obligate a Fund to deliver an amount of foreign  currency in excess of the value
of the Fund's portfolio securities or other assets denominated in that currency.
The Funds, however, in order to avoid excess transactions and transaction costs,
may maintain a net  exposure to forward  contracts in excess of the value of the
Fund's  portfolio  securities  or other  assets to which the  forward  contracts
relate  (including  accrued  interest to the maturity of the forward contract on
such securities)  provided the excess amount is "covered" by liquid  securities,
denominated  in any currency,  at least equal at all times to the amount of such
excess.  For these  purposes the securities or other assets to which the forward
contracts  relate may be securities or assets  denominated in a single currency,
or where  proxy  forwards  are  used,  securities  denominated  in more than one
currency. Under normal circumstances, consideration of the prospect for currency
parities will be  incorporated  into the longer term  investment  decisions made
with  regard to overall  diversification  strategies.  However,  the  Investment
Manager and  relevant  Sub-Advisers  believe  that it is  important  to have the
flexibility  to enter into such forward  contracts  when it determines  that the
best interests of the Fund will be served.

At the maturity of a forward  contract,  the Fund may either sell the  portfolio
security  and make  delivery  of the  foreign  currency,  or it may  retain  the
security  and  terminate  its  contractual  obligation  to deliver  the  foreign
currency by purchasing an "offsetting"  contract  obligating it to purchase,  on
the same maturity date, the same amount of the foreign currency.

As indicated  above,  it is impossible  to forecast with absolute  precision the
market value of portfolio  securities at the expiration of the forward contract.
Accordingly,  it may be  necessary  for a Fund to  purchase  additional  foreign
currency  on the spot  market  (and bear the  expense of such  purchase)  if the
market  value of the  security is less than the amount of foreign  currency  the
Fund is  obligated to deliver and if a decision is made to sell the security and
make delivery of the foreign currency.  Conversely,  it may be necessary to sell
on the spot market some of the foreign  currency  received  upon the sale of the
portfolio  security if its market value  exceeds the amount of foreign  currency
the Fund is obligated to deliver. However, as noted, in order to avoid excessive
transactions  and  transaction  costs,  the  Fund  may  use  liquid  securities,
denominated in any currency, to cover the amount by which the value of a forward
contract exceeds the value of the securities to which it relates.

If the  Fund  retains  the  portfolio  security  and  engages  in an  offsetting
transaction,  the Fund will incur a gain or a loss (as  described  below) to the
extent that there has been  movement  in forward  contract  prices.  If the Fund
engages  in an  offsetting  transaction,  it may  subsequently  enter into a new
forward  contract to sell the foreign  currency.  Should  forward prices decline
during the period between the Fund entering into a forward contract for the sale
of a foreign currency and the date it enters into an offsetting contract for the
purchase of the foreign currency, the Fund will realize a gain to the extent the
price of the currency it has agreed to sell exceeds the price of the currency it
has agreed to purchase.  Should forward prices increase,  the Fund will suffer a
loss to the extent the price of the  currency it has agreed to purchase  exceeds
the price of the currency it has agreed to sell.

The Funds dealing in forward foreign currency exchange  contracts will generally
be limited to the transactions  described above.  However, the Funds reserve the
right to enter into forward foreign  currency  contracts for different  purposes
and under  different  circumstances.  Of course,  the Funds are not  required to
enter into forward  contracts with regard to their foreign  currency-denominated
securities  and will  not do so  unless  deemed  appropriate  by the  Investment
Manager or relevant Sub-Adviser.  It also should be realized that this method of
hedging  against  a  decline  in the  value of a  currency  does  not  eliminate
fluctuations in the underlying prices of the securities. It simply establishes a
rate of exchange at a future date. Additionally, although such contracts tend to
minimize the risk of loss due to a decline in the value of the hedged  currency,
at the same time,  they tend to limit any potential gain which might result from
an increase in the value of that currency.

Although the Funds value their assets  daily in terms of U.S.  dollars,  they do
not intend to convert their holdings of foreign  currencies into U.S. dollars on
a daily basis.  They will do so from time to time, and investors should be aware
of the costs of currency  conversion.  Although  foreign exchange dealers do not
charge a fee for  conversion,  they do realize a profit based on the  difference
(the "spread")  between the prices at which they are buying and selling  various
currencies. Thus, a dealer may offer to sell a foreign currency to a Fund at one
rate,  while offering a lesser rate of exchange should the Fund desire to resell
that currency to the dealer.

PURCHASE AND SALE OF CURRENCY FUTURES  CONTRACTS AND RELATED  OPTIONS.  As noted
above,  a currency  futures  contract  sale creates an  obligation by a Fund, as
seller,  to deliver  the amount of  currency  called  for in the  contract  at a
specified  future  time for a  specified  price.  A  currency  futures  contract
purchase  creates an obligation by a Fund, as purchaser,  to take delivery of an
amount of currency at a specified future time at a specified price. Although the
terms of currency futures contracts specify actual delivery or receipt,  in most
instances the contracts  are closed out before the  settlement  date without the
making or taking of delivery of the currency.  Closing out of a currency futures
contract  is  effected  by  entering  into  an   offsetting   purchase  or  sale
transaction.  Unlike a currency futures contract,  which requires the parties to
buy and sell  currency on a set date, an option on a currency  futures  contract
entitles  its holder to decide on or before a future date  whether to enter into
such a  contract.  If the holder  decides  not to enter into the  contract,  the
premium paid for the option is fixed at the point of sale.


SWAPS,  CAPS,  FLOORS AND COLLARS -- Certain Funds may enter into interest rate,
securities  index,  commodity,  or  security  and  currency  exchange  rate swap
agreements  for  any  lawful  purpose  consistent  with  the  Fund's  investment
objective,  such as for the  purpose  of  attempting  to  obtain or  preserve  a
particular desired return or spread at a lower cost to the Fund than if the Fund
had invested  directly in an  instrument  that  yielded  that desired  return or
spread.  The Fund also may  enter  into  swaps in order to  protect  against  an
increase  in the  price  of,  or  the  currency  exchange  rate  applicable  to,
securities that the Fund anticipates purchasing at a later date. Swap agreements
are two-party  contracts  entered into primarily by institutional  investors for
periods  ranging  from a few  weeks  to  several  years.  In a  standard  "swap"
transaction,  two parties  agree to exchange  the returns (or  differentials  in
rates of return) earned or realized on particular  predetermined  investments or
instruments.  The gross returns to be exchanged or "swapped" between the parties
are  calculated  with  respect to a "notional  amount,"  i.e.,  the return on or
increase  in  value of a  particular  dollar  amount  invested  at a  particular
interest rate, in a particular foreign currency,  or in a "basket" of securities
representing a particular index. Swap agreements may include interest rate caps,
under which,  in return for a premium,  one party agrees to make payments to the
other to the extent that  interests  rates  exceed a specified  rate,  or "cap";
interest rate floors under which,  in return for a premium,  one party agrees to
make  payments  to the other to the  extent  that  interest  rates  fall below a
specified  level,  or "floor";  and interest rate  collars,  under which a party
sells a cap and  purchases  a floor,  or vice  versa,  in an  attempt to protect
itself  against  interest  rate  movements  exceeding  given  minimum or maximum
levels.


The  "notional  amount"  of the swap  agreement  is the  agreed  upon  basis for
calculating the obligations  that the parties to a swap agreement have agreed to
exchange.  Under most swap agreements entered into by the Funds, the obligations
of the parties  would be exchanged on a "net  basis."  Consequently,  the Fund's
obligation  (or rights) under a swap  agreement  will generally be equal only to
the net amount to be paid or received under the agreement  based on the relative
value of the positions  held by each party to the agreement  (the "net amount").
The Fund's  obligation  under a swap  agreement  will be accrued  daily  (offset
against amounts owed to the Fund) and any accrued but unpaid net amounts owed to
a swap counterparty  will be covered by the maintenance of a segregated  account
consisting of cash or liquid securities.

Whether a Fund's use of swap  agreements  will be successful  in furthering  its
investment objective will depend, in part, on the Investment Manager or relevant
Sub-Adviser's  ability to predict correctly whether certain types of investments
are likely to produce  greater returns than other  investments.  Swap agreements
may be considered to be illiquid.  Moreover,  the Fund bears the risk of loss of
the amount  expected to be received  under a swap  agreement in the event of the
default or bankruptcy of a swap  agreement  counterparty.  Certain  restrictions
imposed on the Funds by the Internal  Revenue Code may limit a Fund'  ability to
use swap agreements. The swaps market is largely unregulated.

The  Funds  will  enter  swap  agreements  only  with  counterparties  that  the
Investment Manager or relevant  Sub-Adviser  reasonably  believes are capable of
performing under the swap  agreements.  If there is a default by the other party
to such a transaction,  the Fund will have to rely on its  contractual  remedies
(which may be limited by bankruptcy, insolvency or similar laws) pursuant to the
agreements related to the transaction.


SPREAD  TRANSACTIONS  -- Certain Funds may purchase  covered spread options from
securities   dealers.   Such   covered   spread   options   are  not   presently
exchange-listed  or  exchange-traded.  The purchase of a spread option gives the
Fund the right to put, or sell, a security that it owns at a fixed dollar spread
or fixed yield spread in relationship to another security that the Fund does not
own,  but  which is used as a  benchmark.  The risk to the  Funds in  purchasing
covered spread options is the cost of the premium paid for the spread option and
any  transaction  costs.  In  addition,  there  is  no  assurance  that  closing
transactions  will be available.  The purchase of spread options will be used to
protect the Fund against adverse changes in prevailing  credit quality  spreads,
i.e., the yield spread between high quality and lower quality  securities.  Such
protection is only provided during the life of the spread option.

HYBRID  INSTRUMENTS  -- Hybrid  instruments  combine  the  elements  of  futures
contracts  or  options  with  those of debt,  preferred  equity or a  depositary
instrument ("Hybrid Instruments"). Often these Hybrid Instruments are indexed to
the price of a commodity or particular currency or a domestic or foreign debt or
equity  securities  index.  Hybrid  Instruments  may take a  variety  of  forms,
including,  but not limited  to, debt  instruments  with  interest or  principal
payments or redemption  terms determined by reference to the value of a currency
or commodity  at a future point in time,  preferred  stock with  dividend  rates
determined by reference to the value of a currency,  or  convertible  securities
with the  conversion  terms  related  to a  particular  commodity.  The risks of
investing  in  Hybrid  Instruments  reflect  a  combination  of the  risks  from
investing in securities,  futures and currencies,  including volatility and lack
of  liquidity.  Reference  is made to the  discussion  of  futures  and  forward
contracts in this Statement of Additional  Information for a discussion of these
risks. Further, the prices of the Hybrid Instrument and the related commodity or
currency  may  not  move in the  same  direction  or at the  same  time.  Hybrid
Instruments  may bear  interest or pay  preferred  dividends at below market (or
even relatively  nominal)  rates. In addition,  because the purchase and sale of
Hybrid  Instruments  could  take  place in an  over-the-counter  market  or in a
private transaction between a Fund and the seller of the Hybrid Instrument,  the
creditworthiness of the contract party to the transaction would be a risk factor
which  the Fund  would  have to  consider.  Hybrid  Instruments  also may not be
subject to  regulation  of the CFTC,  which  generally  regulates the trading of
commodity futures by U.S.  persons,  the SEC, which regulates the offer and sale
of  securities  by and to U.S.  persons,  or any other  governmental  regulatory
authority.

LENDING OF  PORTFOLIO  SECURITIES  -- For the  purpose of  realizing  additional
income,  the Funds may make secured  loans of Fund  securities  amounting to not
more  than  33  1/3%  of  its  total  assets.   Securities  loans  are  made  to
broker/dealers, institutional investors, or other persons pursuant to agreements
requiring that the loans be continuously secured by collateral at least equal at
all times to the value of the securities lent marked to market on a daily basis.
The  collateral  received  will  consist of cash,  U.S.  Government  securities,
letters  of  credit  or such  other  collateral  as may be  permitted  under its
investment program.  While the securities are being lent, the Fund will continue
to receive the equivalent of the interest or dividends paid by the issuer on the
securities,  as well as interest on the  investment  of the  collateral or a fee
from  the  borrower.  The  Fund has a right to call  each  loan and  obtain  the
securities  on five  business  days' notice or, in  connection  with  securities
trading on foreign  markets,  within such longer period of time which  coincides
with the normal  settlement period for purchases and sales of such securities in
such foreign markets.  The Fund will not have the right to vote securities while
they are being lent,  but it will call a loan in  anticipation  of any important
vote. The risks in lending  portfolio  securities,  as with other  extensions of
secured credit,  consist of possible delay in receiving additional collateral or
in the recovery of the  securities or possible loss of rights in the  collateral
should the borrower fail financially.  Loans will only be made to persons deemed
by the  Investment  Manager or relevant  Sub-Adviser  to be of good standing and
will not be made unless,  in the judgment of the Investment  Manager or relevant
Sub-Adviser,  the  consideration  to be earned from such loans would justify the
risk.

LEVERAGE -- Certain of the Funds may use leverage.  Leveraging a Fund creates an
opportunity for increased net income but, at the same time, creates special risk
considerations.  For example, leveraging may exaggerate changes in the net asset
value of a Fund's  shares and in the yield on a Fund's  portfolio.  Although the
principal of such  borrowings will be fixed, a Fund's assets may change in value
during the time the  borrowing is  outstanding.  Since any decline in value of a
Fund's investments will be borne entirely by the Fund's shareholders (and not by
those persons  providing the leverage to the Fund),  the effect of leverage in a
declining market would be a greater decrease in net asset value than if the Fund
were not so  leveraged.  Leveraging  will create  interest  expenses for a Fund,
which can exceed the investment  return from the borrowed  funds.  To the extent
the  investment  return  derived from  securities  purchased with borrowed funds
exceeds the interest a Fund will have to pay, the Fund's  investment return will
be greater  than if  leveraging  were not used.  Conversely,  if the  investment
return from the assets  retained with borrowed  funds is not sufficient to cover
the cost of leveraging,  the investment  return of the Fund will be less than if
leveraging were not used.


INVESTMENT POLICY LIMITATIONS

Each  of  the  Funds  operates  within  certain  fundamental   policies.   These
fundamental  policies  may not be changed  without the approval of the lesser of
(i) 67% or more of the Funds' shares present at a meeting of shareholders if the
holders of more than 50% of the  outstanding  shares of the Fund are  present or
represented  by proxy,  or (ii) more than 50% of the Fund's  outstanding  voting
shares.  Other  restrictions  in the form of  operating  policies are subject to
change by the  Fund's  Board of  Directors  without  shareholder  approval.  Any
investment  restrictions  that involve a maximum  percentage  of  securities  or
assets  shall  not be  considered  to be  violated  unless  an  excess  over the
percentage  occurs  immediately  after,  and is  caused  by, an  acquisition  of
securities  or assets of, or borrowing by, the Fund.  Calculation  of the Fund's
total assets for compliance  with any of the following  fundamental or operating
policies or any other investment restrictions set forth in the Fund's prospectus
or Statement of Additional  Information will not include cash collateral held in
connection with a Fund's securities lending activities.

FUNDAMENTAL POLICIES -- The fundamental policies of the Funds are:


1.  PERCENT  LIMIT ON ASSETS  INVESTED IN ANY ONE ISSUER Not to invest more than
    5% of its total  assets in the  securities  of any one  issuer  (other  than
    obligations  of, or  guaranteed  by, the U.S.  Government,  its agencies and
    instrumentalities);  provided that this limitation applies only with respect
    to 75% of the Fund's total assets.  (This fundamental policy number one does
    not apply to the Large Cap Growth Fund, Technology Fund or Select 25 Fund.)

2.  PERCENT  LIMIT  ON SHARE  OWNERSHIP  OF ANY ONE  ISSUER  Not to  purchase  a
    security  if, as a result,  with  respect  to 75% of the value of the Fund's
    total  assets,  more than 10% of the  outstanding  voting  securities of any
    issuer  would  be  held  by the  Fund  (other  than  obligations  issued  or
    guaranteed by the U.S. Government, its agencies or instrumentalities). (This
    fundamental  policy  number two does not apply to the Large Cap Growth Fund,
    Technology Fund or Select 25 Fund.)


3.  UNDERWRITING  Not to act as  underwriter  of  securities  issued by  others,
    except to the extent that a Fund may be considered an underwriter within the
    meaning  of the  Securities  Act of 1933 in the  disposition  of  restricted
    securities.

4.  INDUSTRY CONCENTRATION Not to invest in an amount equal to, or in excess of,
    25% or more of the Fund's total assets in a particular  industry (other than
    securities  of the U.S.  Government,  its  agencies  or  instrumentalities);
    provided however, that this fundamental policy number four does not apply to
    the Large Cap Growth  Fund or the  Technology  Fund which are  permitted  to
    invest  more  than 25% of their  respective  total  assets  in a  particular
    industry or group of industries.

5.  REAL ESTATE Not to purchase or sell real estate unless  acquired as a result
    of ownership of securities or other  instruments (but this shall not prevent
    a Fund from  investing in  securities  or other  instruments  backed by real
    estate or securities of companies engaged in the real estate business).

6.  COMMODITIES Not to purchase or sell physical commodities, except that a Fund
    may enter into futures contracts and options thereon.

7.  LOANS Not to lend any security or make any other loan if, as a result,  more
    than 33 1/3% of a  Fund's  total  assets  would  be lent to  other  parties,
    except, (i) through the purchase of a portion of an issue of debt securities
    in  accordance  with its  investment  objectives  and  policies,  or (ii) by
    engaging in repurchase agreements with respect to portfolio securities.

8.  BORROWING Not to borrow in excess of 33 1/3% of a Fund's total assets.


9.  SENIOR SECURITIES Not to issue senior securities,  except as permitted under
    the 1940 Act.


For the purposes of fundamental  policies two and four above,  each governmental
subdivision,  i.e.,  state,  territory,  possession  of the United States or any
political subdivision of any of the foregoing, including agencies,  authorities,
instrumentalities,  or similar entities, or of the District of Columbia shall be
considered a separate  issuer if its assets and revenues are separate from those
of the governmental  body creating it and the security is backed only by its own
assets and revenues.  Further, in the case of an industrial development bond, if
the  security  is backed only by the assets and  revenues of a  non-governmental
user, then such  non-governmental  user will be deemed to be the sole issuer. If
an industrial  development bond or government issued security is guaranteed by a
governmental  or other  entity,  such  guarantee  would be considered a separate
security  issued by the guarantor.  For the purpose of fundamental  policy four,
industries are determined by reference to the  classifications of industries set
forth in the Funds' semiannual and annual reports.

OPERATING POLICIES -- The operating policies of the Funds are:

1.  LOANS The Funds may not lend assets other than  securities to other parties.
    (This  limitation  does not  apply to  purchases  of debt  securities  or to
    repurchase agreements.)

2.  BORROWING  The Funds may not borrow  money or  securities  for any  purposes
    except that  borrowing up to 10% of the Fund's total assets from  commercial
    banks is permitted for emergency or temporary purposes.

3.  OPTIONS The Funds may buy and sell  exchange-traded and over-the-counter put
    and call options,  including  index options,  securities  options,  currency
    options and options on futures, provided that a call or put may be purchased
    only if after such purchase, the value of all call and put options held by a
    Fund will not exceed 5% of the Fund's total assets. The Funds may write only
    covered put and call options.

4.  OIL AND GAS PROGRAMS The Funds may not invest in oil, gas, or mineral leases
    or other mineral exploration, or development of programs.


5.  INVESTMENT  COMPANIES  Except in  connection  with a merger,  consolidation,
    acquisition,  or  reorganization,  the Funds may not invest in securities of
    other investment companies, except in compliance with the 1940 Act.


6.  CONTROL OF PORTFOLIO COMPANIES The Funds may not invest in companies for the
    purpose of exercising management or control.


7.  SHORT  SALES The Funds,  except  Large Cap Value Fund and Alpha  Opportunity
    Fund, may not sell securities  short,  unless the Fund owns or has the right
    to obtain  securities  equivalent in kind and amount to the securities  sold
    short, and provided that  transactions in futures  contracts and options are
    not deemed to constitute  selling securities short. Large Cap Value Fund and
    Alpha  Opportunity  Fund  may  sell  securities  short  as  described  under
    "Security  Large Cap Value Fund." and  "Security  Alpha  Opportunity  Fund,"
    respectively.


8.  MARGINS The Funds do not intend to  purchase  securities  on margin,  except
    that the Funds may obtain such  short-term  credits as are necessary for the
    clearance of  transactions,  and provided that margin payments in connection
    with futures contracts and options on futures contracts shall not constitute
    purchasing securities on margin.


9.  LIQUIDITY  The Funds may  invest up to 15% of their net  assets in  illiquid
    securities  which are securities  that may not be sold or disposed of in the
    ordinary course of business within seven days at approximately  the value at
    which the Fund was valuing the security.


OFFICERS AND DIRECTORS

The officers and directors of the Funds and their  principal  occupations for at
least the last five years are as follows.

NAME,  ADDRESS,  POSITIONS HELD WITH THE FUNDS AND PRINCIPAL  OCCUPATIONS DURING
THE PAST FIVE YEARS


DONALD A. CHUBB, JR.** (55)
- ---------------------------
(Birth Date:  December 14, 1946)
2222 SW 29th Street, Topeka, Kansas 66611
POSITION HELD WITH THE FUND--Director
TERM OF OFFICE--Until  the next annual meeting or until his successor shall have
   been duly elected and qualified
LENGTH OF TIME SERVED--since 1994
PRINCIPAL  OCCUPATIONS--Business  broker,  Griffith & Blair  Realtors.  Prior to
   1997, Manager, Star Sign, Inc.
NUMBER OF PORTFOLIOS OVERSEEN IN SECURITY FUNDS(SM) COMPLEX--37

PENNY A. LUMPKIN** (63)
- -----------------------
(Birth Date:  August 20, 1939)
3616 Canterbury Town Road, Topeka, Kansas 66610
POSITION HELD WITH THE FUND--Director
TERM OF OFFICE--Until  the next annual meeting or until her successor shall have
   been duly elected and qualified
LENGTH OF TIME SERVED--since 1993
PRINCIPAL  OCCUPATIONS--President,  Vivian's Gift Shop (Corporate Retail).  Vice
   President,  Palmer  Companies,  Inc.  (Small  Business  and  Shopping  Center
   Development),  and Bellairre Shopping Center (Managing and Leasing); Partner,
   Goodwin Enterprises (Retail),  PLB (Real Estate Equipment Leasing),  and Town
   Crier  (Retail).  Prior to 1999,  Vice President and Treasurer,  Palmer News,
   Inc.; Vice President, M/S News, Inc. and Secretary, Kansas City Periodicals.
NUMBER OF PORTFOLIOS OVERSEEN IN SECURITY FUNDS COMPLEX--37

MARK L. MORRIS, JR.** (68)
- --------------------------
(Birth Date:  February 3, 1934)
5500 SW 7th Street, Topeka, Kansas 66606
POSITION HELD WITH THE FUND--Director
TERM OF OFFICE--Until  the next annual meeting or until his successor shall have
   been duly elected and qualified
LENGTH OF TIME SERVED--since 1991
PRINCIPAL OCCUPATIONS--Independent  Investor, Morris Co. (personal investments).
   Former  General  Partner,  Mark Morris  Associates  (Veterinary  Research and
   Education).
NUMBER OF PORTFOLIOS OVERSEEN IN SECURITY FUNDS COMPLEX--37

MAYNARD F. OLIVERIUS (58)
- -------------------------
(Birth Date:  December 18, 1943)
1500 SW 10th Avenue, Topeka, Kansas 66604
POSITION HELD WITH THE FUND--Director
TERM OF OFFICE--Until  the next annual meeting or until his successor shall have
   been duly elected and qualified
LENGTH OF TIME SERVED--since 1998
PRINCIPAL  OCCUPATIONS--President  and Chief  Executive  Officer,  Stormont-Vail
   HealthCare.
NUMBER OF PORTFOLIOS OVERSEEN IN SECURITY FUNDS COMPLEX--37

The following  officers and directors are interested persons of the Fund. Unless
otherwise noted, the address of each of the following  officers and directors is
One Security Benefit Place, Topeka, Kansas 66636-0001.

JOHN D. CLELAND* (66)
- ---------------------
(Birth Date:  May 1, 1936)
POSITION HELD WITH THE FUND--Chairman of the Board and Director
TERM OF OFFICE--Until  the next annual meeting or until his successor shall have
   been duly elected and qualified
LENGTH OF TIME SERVED--since 1991 (Director) and since February,  2000 (Chairman
   of the Board)
PRINCIPAL OCCUPATIONS--Senior Vice President and Managing Member Representative,
   Security  Management  Company,  LLC; Senior Vice President,  Security Benefit
   Group,  Inc. and Security Benefit Life Insurance  Company,  Director and Vice
   President, Security Distributors, Inc.
NUMBER OF PORTFOLIOS OVERSEEN IN SECURITY FUNDS COMPLEX--37

JAMES R. SCHMANK* (49)
- ----------------------
(Birth Date:  February 21, 1953)
POSITION HELD WITH THE FUND--President and Director
TERM OF OFFICE--Until  the next annual meeting or until his successor shall have
   been duly elected and qualified
LENGTH  OF  TIME  SERVED--since   1997  (Director)  and  since  February,   2000
   (President)
PRINCIPAL  OCCUPATIONS--President  and Managing Member Representative,  Security
   Management Company, LLC; Senior Vice President,  Security Benefit Group, Inc.
   and Security Benefit Life Insurance Company, Director, Security Distributors,
   Inc.
NUMBER OF PORTFOLIOS OVERSEEN IN SECURITY FUNDS COMPLEX--37

TERRY A. MILBERGER (54)
- -----------------------
(Birth Date:  March 10, 1948)
POSITION HELD WITH THE FUND--Vice President (Equity Fund)
TERM OF OFFICE--Until  the next annual meeting or until his successor shall have
   been duly elected and qualified
LENGTH OF TIME SERVED--since 1982
PRINCIPAL  OCCUPATIONS--Senior  Vice  President  and Senior  Portfolio  Manager,
   Security  Management  Company,  LLC; Senior Vice President,  Security Benefit
   Group, Inc. and Security Benefit Life Insurance Company.

AMY J. LEE (41)
- ---------------
(Birth Date:  June 5, 1961)
POSITION HELD WITH THE FUND--Secretary
TERM OF OFFICE--Until  the next annual meeting or until her successor shall have
   been duly elected and qualified
LENGTH OF TIME SERVED--since 1987
PRINCIPAL OCCUPATIONS--Secretary,  Security Management Company, LLC and Security
   Distributors,  Inc., Vice President,  Associate General Counsel and Assistant
   Secretary,  Security Benefit Group,  Inc. and Security Benefit Life Insurance
   Company.

BRENDA M. HARWOOD (39)
- ----------------------
(Birth Date:  November 3, 1963)
POSITION HELD WITH THE FUND--Treasurer
TERM OF OFFICE--Until  the next annual meeting or until her successor shall have
   been duly elected and qualified
LENGTH OF TIME SERVED--since May, 1998
PRINCIPAL   OCCUPATIONS--Assistant   Vice  President  and  Treasurer,   Security
   Management  Company,  LLC; Assistant Vice President,  Security Benefit Group,
   Inc.  and  Security  Benefit  Life  Insurance  Company,  Vice  President  and
   Director, Security Distributors, Inc.

CINDY L. SHIELDS (35)
- ---------------------
(Birth Date:  June 5, 1967)
POSITION HELD WITH THE FUND--Vice President (Equity Fund only)
TERM OF OFFICE--Until  the next annual meeting or until her successor shall have
   been duly elected and qualified
LENGTH OF TIME SERVED--since May 1998
PRINCIPAL  OCCUPATIONS--Vice  President and Senior Portfolio  Manager,  Security
   Management  Company,  LLC;  Security Benefit Group, Inc. and Security Benefit
   Life Insurance Company.

JAMES P. SCHIER (44)
- --------------------
(Birth Date:  December 28, 1957)
POSITION HELD WITH THE FUND--Vice President (Equity Fund and Mid Cap Growth Fund
   only)
TERM OF OFFICE--Until  the next annual meeting or until his successor shall have
   been duly elected and qualified
LENGTH OF TIME SERVED--since May 1998
PRINCIPAL  OCCUPATIONS--Vice  President and Senior Portfolio  Manager,  Security
   Management  Company,  LLC; Vice President,  Security Benefit Group,  Inc. and
   Security Benefit Life Insurance  Company.  Prior to February 1997,  Assistant
   Vice President and Senior Research Analyst, Security Management Company, LLC.
   Prior to August 1995, Portfolio Manager,  Mitchell Capital Management.  Prior
   to March 1993, Vice President and Portfolio Manager, Fourth Financial.

CHRISTOPHER D. SWICKARD (37)
- ----------------------------
(Birth Date: October 9, 1965)
POSITION HELD WITH THE FUND--Assistant Secretary
TERM OF OFFICE--Until  the next annual meeting or until his successor shall have
   been duly elected and qualified
LENGTH OF TIME SERVED--since May 1996

PRINCIPAL  OCCUPATIONS--Assistant  Secretary,  Security Management Company, LLC;
   Second Vice President and Assistant Counsel, Security Benefit Group, Inc. and
   Security Benefit Life Insurance Company.

 *These  directors are deemed to be "interested  persons" of the Funds under the
  1940 Act, as amended,  by reason of their positions with the Funds' Investment
  Manager and/or the parent of the Investment Manager.


**These  directors  serve on the Funds'  joint audit  committee,  the purpose of
  which is to meet with the  independent  auditors,  to  review  the work of the
  auditors,  and to oversee the handling by Security Management Company,  LLC of
  the accounting functions for the Funds.


The  directors and officers of the Funds hold  identical  offices in each of the
other Funds managed by the Investment Manager,  with the exceptions noted below.
Mr.  Milberger is Vice President only of Security  Equity Fund and SBL Fund; Ms.
Shields is Vice  President  only of Security  Equity Fund and SBL Fund;  and Mr.
Schier is Vice President only of Security Equity Fund, SBL Fund and Security Mid
Cap Growth  Fund.  (See the table under  "Investment  Management,"  page 45, for
positions  held by such  persons  with the  Investment  Manager.)  Ms. Lee holds
identical offices for the Funds' distributor,  Security Distributors,  Inc., and
Mr.  Cleland  serves as Vice  President  and  Director,  Mr.  Schmank  serves as
Director,  and  Ms.  Harwood  serves  as  Director  and  Vice  President  of the
Distributor.


REMUNERATION OF DIRECTORS AND OTHERS


The Funds' directors, except those directors who are "interested persons" of the
Funds,  receive from each of Security Large Cap Value Fund, Security Equity Fund
and  Security  Mid Cap  Growth  Fund an annual  retainer  of $2,083 and a fee of
$3,500 per meeting,  plus reasonable travel costs, for each meeting of the board
attended.  In addition,  certain  directors  who are members of the Funds' joint
audit committee  receive a fee of $2,000 per meeting and reasonable travel costs
for each meeting of the Funds'  audit  committee  attended.  The Funds pay their
respective share of directors' fees, audit committee fees and travel costs based
on relative net assets. (See page 45, "Investment Management.")

The Funds do not pay any fees to, or reimburse  expenses of,  directors  who are
considered "interested persons" of the Funds. The aggregate compensation paid by
the Funds to each of the  directors  during the fiscal year ended  September 30,
2002,  and the  aggregate  compensation  paid to  each of the  directors  during
calendar year 2002 by all seven of the registered  investment companies to which
the Investment Manager provides investment advisory services (collectively,  the
"Security  Fund  Complex"),  are set forth  below.  Each of the  directors  is a
director of each of the other  registered  investment  companies in the Security
Fund Complex.

=======================================================================================
                                                                              TOTAL
                                                                          COMPENSATION
                             AGGREGATE COMPENSATION           ESTIMATED     FROM THE
                       -----------------------------------     ANNUAL       SECURITY
                        SECURITY    SECURITY    SECURITY      BENEFITS    FUND COMPLEX,
NAME OF DIRECTOR       LARGE CAP     EQUITY      MID CAP        UPON        INCLUDING
OF THE FUND            VALUE FUND     FUND     GROWTH FUND   RETIREMENT     THE FUNDS
- ---------------------------------------------------------------------------------------
Donald A. Chubb, Jr.     $4,640      $3,429      $3,395          $0          $35,238
John D. Cleland               0           0           0           0                0
Penny A. Lumpkin          4,640       3,429       3,395           0           35,238
Mark L. Morris, Jr.       4,640       3,429       3,395           0           35,238
Maynard Oliverius         3,140       3,179       3,145           0           29,738
James R. Schmank              0           0           0           0                0
=======================================================================================

The Investment Manager compensates its officers and directors who may also serve
as officers or directors of the Funds. On December 18, 2002, the Funds' officers
and directors (as a group) beneficially owned less than one percent of the total
outstanding  Class A shares of Large Cap Value Fund,  Equity Fund, Mid Cap Value
Fund, Small Cap Growth Fund,  Enhanced Index Fund,  International  Fund,  Global
Fund,  Mid Cap Growth Fund,  Technology  Fund,  Large Cap Growth Fund and Social
Awareness  Fund.  On December 18, 2002,  the officers and  directors of Security
Equity Fund (as a group)  beneficially  owned  approximately  1.04% of the total
outstanding Class A shares of the Select 25 Series.


PRINCIPAL HOLDERS OF SECURITIES


As of December 18, 2002,  Security Benefit Life Insurance  Company ("SBL"),  One
Security  Benefit  Place,  Topeka,  Kansas,  66636-0001,  owned,  of record  and
beneficially,  31.5% of the voting  securities of Large Cap Value Fund (36.8% of
the total  outstanding  Class A shares and 0% of the total  outstanding Class B,
Class C and Class S shares);  40.3% of the voting  securities of Enhanced  Index
Fund  (37.0%  of the  total  outstanding  Class A  shares,  34.7%  of the  total
outstanding Class B shares, 53.6% of the total outstanding Class C shares and 0%
of the total outstanding Class S shares),  and 52.2% of the voting securities of
International Fund (41.0% of the total outstanding Class A shares,  68.9% of the
total outstanding Class B shares,  53.9% of the total outstanding Class C shares
and 0% of the total outstanding Class S shares).  SBL's percentage  ownership of
Large Cap Value Fund,  Enhanced Index Fund and International Fund may permit SBL
to  effectively  control  the  outcome  of any  matters  submitted  to a vote of
shareholders  of these  funds.  SBL is a stock  life  insurance  company  and is
incorporated under the laws of Kansas. SBL is ultimately  controlled by Security
Benefit Mutual Holding  Company,  One Security  Benefit Place,  Topeka,  Kansas,
66636-0001, a mutual holding company organized under the laws of Kansas.

As of December 18, 2002,  Security  Benefit Group,  Inc.  ("SBG"),  One Security
Benefit Place, Topeka,  Kansas,  66636-0001,  owned, of record and beneficially,
50.0% of the  voting  securities  of  Total  Return  Fund  (51.4%  of the  total
outstanding Class A shares and 54.5% of the total outstanding Class B shares and
0% of the  total  outstanding  Class C and  Class S  shares).  SBG's  percentage
ownership of Total Return Fund may permit SBG to effectively control the outcome
of any matters submitted to a vote of shareholders of these two funds. SBG is an
insurance  and  financial  services  holding  company  wholly-owned  by Security
Benefit Life Insurance  Company  ("SBL"),  One Security  Benefit Place,  Topeka,
Kansas 66636-0001. SBG and SBL are incorporated under the laws of Kansas. SBG is
ultimately  controlled by Security Benefit Mutual Holding Company,  One Security
Benefit Place,  Topeka,  Kansas  66636-0001,  a mutual holding company organized
under the laws of Kansas.

As  of  December  18,  2002,  the  following   entities  owned,  of  record  and
beneficially  unless  otherwise  indicated,  5% or more of a class  of a  Fund's
outstanding securities:

================================================================================
                                                             CLASS    PERCENTAGE
NAME OF SHAREHOLDER                        FUND OWNED        OWNED      OWNED
- --------------------------------------------------------------------------------
Security Benefit Life                        Equity         Class A     17.29
Insurance Company                       Large Cap Value     Class A     34.22
                                       Diversified Income   Class A      5.72
                                         Enhanced Index     Class A     37.08
                                         Enhanced Index     Class B     34.74
                                         Enhanced Index     Class C     53.65
                                         Mid Cap Value      Class A     17.36
                                        Small Cap Growth    Class A     30.36
                                         International      Class B     68.90
                                         International      Class C     53.86
                                         Mid Cap Growth     Class A     11.97
                                        Large Cap Growth    Class A     33.41
                                        Large Cap Growth    Class B     45.96
                                        Large Cap Growth    Class C     36.04
                                           Technology       Class A     16.57
                                           Technology       Class B     60.00
                                           Technology       Class C     38.29
- --------------------------------------------------------------------------------
Security Benefit Life                    International      Class A     12.81
Employee Pension Plan
- --------------------------------------------------------------------------------
                                          Total Return      Class A     51.37
Security Benefit Group Inc.               Total Return      Class B     54.50
- --------------------------------------------------------------------------------
Security Financial Resources                 Global         Class A     18.59
                                             Global         Class C     25.62
                                       Diversified Income   Class A      5.51
                                        Social Awareness    Class A     21.01
                                        Social Awareness    Class C     19.77
                                         Mid Cap Value      Class A     12.87
                                         Mid Cap Value      Class C     18.44
                                        Small Cap Growth    Class A     22.04
                                        Small Cap Growth    Class C     26.42
                                         Enhanced Index     Class A     14.09
                                         Enhanced Index     Class C      7.73
                                         International      Class A     29.22
                                          Mid Cap Growth    Class A     11.19
                                          Mid Cap Growth    Class C     18.72
                                         Large Cap Value    Class A      9.38
                                         Large Cap Value    Class C     24.41
                                          Total Return      Class A     21.69
                                          Total Return      Class C     57.50
                                        Large Cap Growth    Class A     20.71
                                        Large Cap Growth    Class C     27.40
                                           Technology       Class A     50.24
                                           Technology       Class C     21.07
                                           Select 25        Class A     21.69
                                             Equity         Class C     10.62
- --------------------------------------------------------------------------------
Trust Company of America                 Enhanced Index     Class A      6.30
- --------------------------------------------------------------------------------
David G. and                              Total Return      Class B      6.10
Tammy S. Kotcher
- --------------------------------------------------------------------------------
James and Carol Sherman                  Enhanced Index     Class B      5.64
- --------------------------------------------------------------------------------
Allan R. Phillips                         Total Return      Class C     10.31
- --------------------------------------------------------------------------------
Raymond J. and
Linda Antonelli                            Technology       Class C      5.17
- --------------------------------------------------------------------------------
                                             Equity         Class S     37.21
Elaine M. Goodman                            Global         Class S     67.10
Revocable Living Trust                  Small Cap Growth    Class S     67.14
                                           Technology       Class S     25.24
- --------------------------------------------------------------------------------
James L. Ridenour                       Small Cap Growth    Class S      7.23
- --------------------------------------------------------------------------------
                                        Small Cap Growth    Class S      5.46
                                             Global         Class S      5.34
Janice Gramaglia                           Select 25        Class S     22.81
- --------------------------------------------------------------------------------
Wisconsin Muffler PSP                     Total Return      Class C     10.60
- --------------------------------------------------------------------------------
Susy L. Kingston                          Total Return      Class C      5.01
- --------------------------------------------------------------------------------
Alexander B. Giacobetti PSP FBO          Mid Cap Growth     Class S      5.43
Alexander B. Giacobetti
- --------------------------------------------------------------------------------
Marianne and                                 Equity         Class S     39.47
Thomas J. Billiard
- --------------------------------------------------------------------------------
Maryann and Renee C.                         Equity         Class S      6.30
and William Farley                       Large Cap Value    Class S     11.47
- --------------------------------------------------------------------------------
Mary Zadorozny                           Large Cap Value    Class S     26.45
- --------------------------------------------------------------------------------
Donaldson Lufkin Jenrette
Securities Corporation*                  Large Cap Value    Class S     59.41
- --------------------------------------------------------------------------------
LW l& JA Denison                             Global         Class S     25.26
Charitable Remainder Trust              Social Awareness    Class S    100.00
                                           Technology       Class S      7.99
- --------------------------------------------------------------------------------
Jack A. Delmoro                            Select 25        Class S     16.87
- --------------------------------------------------------------------------------
Donald Shannon                             Select 25        Class S     30.64
- --------------------------------------------------------------------------------
                                        Large Cap Growth    Class S     36.11
Carla Milnes                             Enhanced Index     Class S     33.33
                                           Select 25        Class S      6.22
- --------------------------------------------------------------------------------
Alice E. Delano                         Large Cap Growth    Class S     63.90
- --------------------------------------------------------------------------------
Angelo L. & Lorraine Scaricamazza          Technology       Class S      9.68
- --------------------------------------------------------------------------------
Michael L. & Annette L. Turner             Technology       Class S      8.33
- --------------------------------------------------------------------------------
Alexander B. Giacobetti                    Technology       Class S     15.82
- --------------------------------------------------------------------------------
                                         Enhanced Index     Class S     66.67
Elizabeth Davis                            Select 25        Class S     12.44
                                          Total Return      Class S    100.00
- --------------------------------------------------------------------------------
Clifton A. Barnes                          Select 25        Class S     11.01
- --------------------------------------------------------------------------------
Donald Furmanski                           Technology       Class S      5.73
- --------------------------------------------------------------------------------
Donna & Adam Zaccaria, Jr.                 Technology       Class S     10.25
- --------------------------------------------------------------------------------
Brian and Susan Rybarczyk               Small Cap Growth    Class S      6.77
- --------------------------------------------------------------------------------
*owned of record only
================================================================================


DIRECTORS' OWNERSHIP OF SECURITIES


As of December 31, 2002, the directors of the Funds beneficially owned shares of
the Funds in the  dollar  ranges  set forth  below and also  beneficially  owned
shares of other  mutual  funds in the  family of mutual  funds  overseen  by the
directors in the dollar ranges set forth below:

=========================================================================================
                                                                      AGGREGATE DOLLAR
                                                                       RANGE OF EQUITY
                                                                      SECURITIES IN ALL
                                                   DOLLAR RANGE     REGISTERED INVESTMENT
                                                    OF EQUITY       COMPANIES OVERSEEN BY
                                                    SECURITIES      DIRECTOR IN FAMILY OF
NAME OF DIRECTOR   NAME OF FUND                      IN FUND        INVESTMENT COMPANIES
- -----------------------------------------------------------------------------------------
Donald A.          Security Equity Fund,
Chubb, Jr.         Select 25 Series              $10,001-$50,000       over $100,000
                   ----------------------------------------------------------------------
                   Security Mid
                   Cap Growth Fund               $10,001-$50,000
                   ----------------------------------------------------------------------
                   Security Equity Fund,
                   Equity Series                 $10,001-$50,000
                   ----------------------------------------------------------------------
                   Security Large
                   Cap Value Fund                   $1-$10,000
                   ----------------------------------------------------------------------
                   Security Equity Fund,
                   Global Series                    $1-$10,000
                   ----------------------------------------------------------------------
                   Security Income Fund,
                   Diversified Income Series        $1-$10,000
                   ----------------------------------------------------------------------
                   Security Cash Fund            $10,001-$50,000
                   ----------------------------------------------------------------------
                   Security Equity Fund,
                   Total Return Series              $1-$10,000
                   ----------------------------------------------------------------------
                   SBL Fund, Large
                   Cap Value Series                 $1-$10,000
                   ----------------------------------------------------------------------
                   SBL Fund, Social
                   Awareness Series                 $1-$10,000
                   ----------------------------------------------------------------------
                   SBL Fund, Equity Series       $50,001-$100,000
- -----------------------------------------------------------------------------------------
Penny A.           Security Equity Fund,
Lumpkin            Select 25 Series                 $1-$10,000        $50,001-$100,000
                   ----------------------------------------------------------------------
                   Security Mid
                   Cap Growth Fund               $10,001-$50,000
                   ----------------------------------------------------------------------
                   Security Equity Fund,
                   Equity Series                 $10,001-$50,000
                   ----------------------------------------------------------------------
                   Security Large
                   Cap Value Fund                   $1-$10,000
                   ----------------------------------------------------------------------
                   Security Municipal
                   Bond Fund                        $1-$10,000
                   ----------------------------------------------------------------------
                   Security Equity Fund,
                   Global Series                 $10,001-$50,000
                   ----------------------------------------------------------------------
                   Security Income Fund,            $1-$10,000
                   Diversified Income Series
                   ----------------------------------------------------------------------
                   Security Cash Fund               $1-$10,000
                   ----------------------------------------------------------------------
                   Security Equity Fund,
                   Mid Cap Value Series             $1-10,000
                   ----------------------------------------------------------------------
                   SBL Fund, Large
                   Cap Value Series                 $1-$10,000
- -----------------------------------------------------------------------------------------
Mark L.            Security Income Fund,
Morris, Jr.        Diversified Income Series     $10,001-$50,000       over $100,000
                   ----------------------------------------------------------------------
                   Security Mid
                   Cap Growth Fund                over $100,000
- -----------------------------------------------------------------------------------------
Maynard            SBL Fund, Small
Oliverius          Cap Value Series              $50,001-$100,000      over $100,000
                   ----------------------------------------------------------------------
                   Security Income Fund,
                   Capital Preservation Series    over $100,000
=========================================================================================


The following  directors who are "interested  persons" of the Funds beneficially
owned  shares  of the  Funds in the  dollar  ranges  set  forth  below  and also
beneficially  owned  shares of other  mutual funds in the family of mutual funds
overseen by the directors in the dollar ranges set forth below:


=========================================================================================
                                                                      AGGREGATE DOLLAR
                                                                       RANGE OF EQUITY
                                                                      SECURITIES IN ALL
                                                   DOLLAR RANGE     REGISTERED INVESTMENT
                                                    OF EQUITY       COMPANIES OVERSEEN BY
                                                    SECURITIES      DIRECTOR IN FAMILY OF
NAME OF DIRECTOR   NAME OF FUND                      IN FUND        INVESTMENT COMPANIES
- -----------------------------------------------------------------------------------------
John D. Cleland    Security Equity Fund,
                   Equity Series                  over $100,000        over $100,000
                   ----------------------------------------------------------------------
                   Security Large
                   Cap Value Fund                $10,001-$50,000
                   ----------------------------------------------------------------------
                   Security Equity Fund,
                   Select 25 Series               over $100,000
                   ----------------------------------------------------------------------
                   Security Equity Fund,
                   Mid Cap Value Series           over $100,000
                   ----------------------------------------------------------------------
                   Security Mid
                   Cap Growth Fund               $50,001-$100,000
                   ----------------------------------------------------------------------
                   Security Equity Fund,
                   Global Series                 $10,001-$50,000
                   ----------------------------------------------------------------------
                   Security Cash Fund               $1-$10,000
                   ----------------------------------------------------------------------
                   Security Equity Fund,
                   Technology Series             $10,001-$50,000
                   ----------------------------------------------------------------------
                   Security Equity Fund,
                   Small Cap Growth Series       $50,001-$100,000
- -----------------------------------------------------------------------------------------
James R. Schmank   Security Mid
                   Cap Growth Fund                over $100,000        over $100,000
                   ----------------------------------------------------------------------
                   Security Equity Fund,
                   Equity Series                  over $100,000
                   ----------------------------------------------------------------------
                   Security Cash Fund            $10,001-$50,000
                   ----------------------------------------------------------------------
                   Security Equity Fund,
                   Global Series                  over $100,000
                   ----------------------------------------------------------------------
                   Security Equity Fund,
                   Mid Cap Value Series           over $100,000
                   ----------------------------------------------------------------------
                   Security Equity Fund,
                   Small Cap Growth Series       $50,001-$100,000
                   ----------------------------------------------------------------------
                   Security Equity Fund,
                   Select 25 Series              $50,001-$100,000
                   ----------------------------------------------------------------------
                   Security Equity Fund,
                   Large Cap Growth Series          $1-$10,000
                   ----------------------------------------------------------------------
                   Security Equity Fund,
                   Technology Series             $10,001-$50,000
=========================================================================================



HOW TO PURCHASE SHARES

Investors may purchase  shares of the Funds through  authorized  dealers who are
members of the National  Association  of  Securities  Dealers,  Inc. The minimum
initial  investment is $100.  The minimum  subsequent  investment is $100 unless
made through an  Accumulation  Plan which allows for  subsequent  investments of
$20. (See "Accumulation Plan," page 45.) An application may be obtained from the
Investment Manager.

Orders for the  purchase of shares of the Funds will be confirmed at an offering
price equal to the net asset value per share next  determined  after  receipt of
the order in proper  form by Security  Distributors,  Inc.  (the  "Distributor")
(generally as of the close of the Exchange on that day) plus the sales charge in
the case of Class A shares.  Orders  received by dealers or other firms prior to
the close of the Exchange and received by the Distributor  prior to the close of
its business day will be  confirmed  at the offering  price  effective as of the
close of the Exchange on that day.  Dealers and other  financial  services firms
are obligated to transmit orders promptly.

The Funds  reserve the right to withdraw all or any part of the offering made by
this prospectus and to reject purchase orders.

As a convenience to investors and to save operating  expenses,  the Funds do not
issue certificates for Fund shares.

ALTERNATIVE PURCHASE OPTIONS -- The Funds offer three classes of shares:


CLASS A SHARES -  FRONT-END  LOAD  OPTION.  Class A shares are sold with a sales
charge at the time of purchase. Class A shares are not subject to a sales charge
when they are redeemed  (except that shares sold in an amount of  $1,000,000  or
more without a front-end  sales charge will be subject to a contingent  deferred
sales charge of 1% for one year).  See Appendix B for a discussion of "Rights of
Accumulation"  and "Statement of  Intention,"  which options may serve to reduce
the front-end sales charge.

CLASS B SHARES - BACK-END  LOAD OPTION.  Class B shares are sold without a sales
charge at the time of  purchase,  but are subject to a deferred  sales charge if
they are redeemed within five years of the date of purchase. Class B shares will
automatically  convert  to  Class A  shares  at the  end of  eight  years  after
purchase.

CLASS C SHARES - LEVEL  LOAD  OPTION.  Class C shares  are sold  without a sales
charge at the time of purchase,  but are subject to a contingent  deferred sales
charge if they are redeemed within one year of the date of purchase.


CLASS A SHARES -- Class A shares are  offered at net asset value plus an initial
sales charge as follows:

================================================================================
                                                    SALES CHARGE
                                     -------------------------------------------
                                     PERCENTAGE OF   PERCENTAGE OF   PERCENTAGE
AMOUNT OF PURCHASE                     OFFERING       NET AMOUNT     REALLOWABLE
AT OFFERING PRICE                        PRICE         INVESTED      TO DEALERS
- --------------------------------------------------------------------------------
Less than $50,000                        5.75%           6.10%          5.00%
$50,000 but less than $100,000           4.75            4.99           4.00
$100, 000 but less than $250,000         3.75            3.90           3.00
$250,000 but less than $500,000          2.75            2.83           2.25
$500,000 but less than $1,000,000        2.00            2.04           1.75
$1,000,000 and over                      None            None        (See below)
================================================================================


The  Underwriter  will pay a commission to dealers on purchases of $1,000,000 or
more as  follows:  1.00%  on  sales  up to  $5,000,000,  plus  0.50% on sales of
$5,000,000 or more up to $10,000,000,  and 0.10% on any amount of $10,000,000 or
more.  The  Underwriter  may also pay a  commission  of up to 1% to dealers  who
initiate  or are  responsible  for  purchases  of  $500,000  or more by  certain
retirement  plans as  described  under  "Purchases  at Net  Asset  Value" in the
prospectus. Such purchases may be subject to a deferred sales charge of up to 1%
in the event of a redemption within one year of the purchase.


The  Investment  Manager may, at its  expense,  pay a service fee to dealers who
satisfy certain criteria established by the Investment Manager from time to time
relating to the volume of their sales of Class A shares of the Funds and certain
other Security  Funds during prior periods and certain other factors,  including
providing to their clients who are  shareholders of the Funds certain  services,
which  include  assisting  in  maintaining  records,   processing  purchase  and
redemption   requests   and   establishing   shareholder   accounts,   assisting
shareholders in changing  account  options or enrolling in specific  plans,  and
providing   shareholders  with  information  regarding  the  Funds  and  related
developments.  Service fees are paid  quarterly and may be  discontinued  at any
time.


As discussed in the prospectus, Funds have adopted a Distribution Plan for their
Class A shares  pursuant to Rule 12b-1 under the 1940 Act.  The Plan  authorizes
each such Fund to pay an annual fee to the  Distributor  of 0.25% of the average
daily net asset  value of the Class A shares of such  Funds to  finance  various
activities  relating  to the  distribution  of such shares to  investors.  These
expenses include, but are not limited to, the payment of compensation (including
compensation  to  securities  dealers  and  other  financial   institutions  and
organizations)  to obtain various  administrative  services for the Fund.  These
services  include,  among  other  things,  processing  new  shareholder  account
applications  and serving as the primary  source of  information to customers in
answering questions concerning the Fund and their transactions with the Fund.

Amounts paid by the Funds are currently used to pay dealers and other firms that
make Class A shares  available  to their  customers  a service  fee for  account
maintenance  and personal  service to  shareholders.  The service fee is payable
quarterly  in the amount of 0.25%,  on an annual  basis,  of  Aggregate  Account
Value. "Aggregate Account Value" is the average daily net asset value of Class A
accounts  opened  after July 31,  1990 that were sold by such  dealers and other
firms and remain  outstanding on the books of the Funds.  (Service fees are paid
only on Aggregate  Account  Value of $100,000 or more.) 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.


CLASS B SHARES -- Class B 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 five years 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
to you. The deferred sales charge is retained by the Distributor.

Whether a  contingent  deferred  sales  charge is imposed  and the amount of the
charge  will depend on the number of years  since the  investor  made a purchase
payment  from  which an amount is being  redeemed,  according  to the  following
schedule:

                  ===========================================
                  YEAR SINCE PURCHASE     CONTINGENT DEFERRED
                   PAYMENT WAS MADE          SALES CHARGE
                  -------------------------------------------
                         First                    5%
                        Second                    4%
                         Third                    3%
                        Fourth                    3%
                         Fifth                    2%
                  Sixth and Following             0%
                  ===========================================

Class B shares (except shares  purchased  through the  reinvestment of dividends
and other  distributions paid with respect to Class B shares) will automatically
convert,  on the eighth  anniversary of the date such shares were purchased,  to
Class A shares which are subject to a lower  distribution  fee.  This  automatic
conversion of Class B shares will take place  without  imposition of a front-end
sales charge or exchange fee. (Conversion of Class B shares represented by stock
certificates will require the return of the stock certificates to the Investment
Manager.)  All shares  purchased  through  reinvestment  of dividends  and other
distributions paid with respect to Class B shares  ("reinvestment  shares") will
be considered to be held in a separate subaccount.  Each time any Class B shares
(other than those held in the subaccount)  convert to Class A shares, a pro rata
portion of the  reinvestment  shares held in the subaccount will also convert to
Class A shares.  Class B shares so  converted  will no longer be  subject to the
higher  expenses borne by Class B shares.  Because the net asset value per share
of the Class A shares  may be higher or lower than that of the Class B shares at
the  time  of  conversion,  although  the  dollar  value  will  be the  same,  a
shareholder  may receive  more or less Class A shares than the number of Class B
shares  converted.  Under  current  law,  it is the Funds'  opinion  that such a
conversion  will not constitute a taxable event under federal income tax law. In
the event that this ceases to be the case,  the Board of Directors will consider
what action,  if any, is  appropriate  and in the best  interests of the Class B
shareholders.


Each  Fund  bears  some of the  costs of  selling  its  Class B  shares  under a
Distribution  Plan  adopted  with  respect  to its  Class  B  shares  ("Class  B
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 B shares.  Amounts  paid by the Funds are  currently  used to pay
dealers and other firms that make Class B shares  available  to their  customers
(1) a commission at the time of purchase normally equal to 4.00% of the value of
each share  sold and (2) a service  fee for  account  maintenance  and  personal
service to shareholders payable for the first year, initially, and for each year
thereafter, quarterly, in an amount equal to 0.25% annually of the average daily
net asset  value of Class B shares  sold by such  dealers  and  other  firms and
remaining  outstanding  on the books of the Funds.  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.


CLASS C SHARES -- 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
to you. 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 0.75% of the value of
each share sold, and for each year thereafter,  quarterly, in an amount equal to
0.75%  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 0.25% 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.

DISTRIBUTION  PLANS -- As discussed above,  the Funds have adopted  Distribution
Plans  pursuant  to Rule  12b-1  under the 1940  Act,  as set forth in the table
below.

                  ============================================
                     FUND                DISTRIBUTION PLAN
                  --------------------------------------------
                  All Funds          Class A Distribution Plan
                  All Funds          Class B Distribution Plan
                  All Funds          Class C Distribution Plan
                  ============================================

Under the Distribution  Plans, the Distributor is authorized to pay service fees
and  commissions  to dealers and other firms that sell shares of the  applicable
class, engage in advertising, prepare and distribute sales literature and engage
in other  promotional  activities  on  behalf of the Fund.  The  Distributor  is
required to report in writing to the Board of  Directors  of each Fund,  and the
board will review at least  quarterly  the  amounts and purpose of any  payments
made under each Plan. The Distributor is also required to furnish the board with
such other  information  as may  reasonably  be requested in order to enable the
board to make an informed determination of whether the Plan should be continued.

Each Plan will continue from year to year,  provided  that such  continuance  is
approved at least  annually by a vote of a majority of the Board of Directors of
the Fund, including a majority of the independent  directors cast in person at a
meeting  called for the  purpose of voting on such  continuance.  Any  agreement
relating to the  implementation  of the Plan terminates  automatically  if it is
assigned.  The Plan may not be  amended  to  increase  materially  the amount of
payments thereunder without approval of the shareholders of the applicable class
of the Fund.

Because  all amounts  paid  pursuant  to the  Distribution  Plan are paid to the
Distributor,  the Investment Manager and its officers,  directors and employees,
including Messrs. Cleland and Schmank (directors of the Fund), Messrs. Swickard,
Milberger,  Schier, Ms. Harwood, Ms. Lee and Ms. Shields (officers of the Fund),
all may be  deemed  to have a  direct  or  indirect  financial  interest  in the
operation of the  Distribution  Plan.  None of the  independent  directors has a
direct or indirect financial interest in the operation of the Distribution Plan.

Benefits from the Distribution  Plan may accrue to the Fund and its shareholders
from the growth in assets due to sales of shares to the public  pursuant  to the
Distribution Agreement with the Distributor.  Increases in the net assets of the
Funds from sales pursuant to their respective  Distribution Plans and Agreements
may benefit  shareholders by reducing per share expenses,  permitting  increased
investment   flexibility  and   diversification   of  such  Fund's  assets,  and
facilitating economies of scale (e.g., block purchases) in the Fund's securities
transactions.

Rules of the National Association of Securities Dealers, Inc. ("NASD") limit the
aggregate amount that a Fund may pay annually in distribution costs for the sale
of its  shares to 6.25% of gross  sales of shares  since  the  inception  of the
Distribution  Plan, plus interest at the prime rate plus 1% on such amount (less
any contingent  deferred sales charges paid by shareholders to the Distributor).
The  Distributor  monitors  this limit with  regard to each of the Fund's  share
classes. The Distributor  intends,  but is not obligated,  to continue to pay or
accrue  distribution  charges  incurred in connection  with a Distribution  Plan
which exceed current annual payments permitted to be received by the Distributor
from the Funds.  The  Distributor  intends to seek full  payment of such charges
from the Fund (together with annual interest  thereon at the prime rate plus 1%)
at such time in the future as, and to the extent  that,  payment  thereof by the
Funds would be within permitted limits.

A  Distribution  Plan may be terminated at any time by vote of its directors who
are not interested  persons of the Fund as defined in the 1940 Act or by vote of
a majority of the  outstanding  shares of the applicable  class.  In the event a
Distribution  Plan is  terminated  by the  shareholders  or the Fund's  Board of
Directors,  the payments made to the Distributor pursuant to the Plan up to that
time  would  be  retained  by the  Distributor.  Any  expenses  incurred  by the
Distributor in excess of those  payments  would be absorbed by the  Distributor.
The Funds make no payments in  connection  with the sales of their  shares other
than the distribution fee paid to the Distributor.

CALCULATION  AND WAIVER OF CONTINGENT  DEFERRED  SALES CHARGES -- Any contingent
deferred  sales charge imposed upon  redemption of Class A shares  (purchased in
amounts  of  $1,000,000  or  more),  Class B  shares  and  Class C  shares  is a
percentage  of the lesser of (1) the net asset  value of the shares  redeemed or
(2) the net cost of such shares. No contingent  deferred sales charge is imposed
upon redemption of amounts derived from (1) increases in the value above the net
cost of such  shares due to  increases  in the net asset  value per share of the
Fund; (2) shares acquired  through  reinvestment of income dividends and capital
gain distributions; or (3) Class A shares (purchased in amounts of $1,000,000 or
more),  or Class C shares,  held for more than one year,  or Class B shares held
for more than five years. Upon request for redemption, shares not subject to the
contingent deferred sales charge will be redeemed first. Thereafter, shares held
the longest will be the first to be redeemed.

The  contingent  deferred  sales charge is waived:  (1) following the death of a
shareholder  if  redemption  is made within one year after  death;  (2) upon the
disability  (as defined in section  72(m)(7) of the Internal  Revenue Code) of a
shareholder  prior to age 65 if  redemption  is made  within  one year after the
disability,  provided such disability  occurred after the shareholder opened the
account; (3) in connection with required minimum distributions in the case of an
IRA,  SAR-SEP or Keogh or any other  retirement  plan  qualified  under  Section
401(a),  401(k) or 403(b) of the Code; and (4) in the case of distributions from
retirement  plans  qualified  under  Section  401(a) or  401(k) of the  Internal
Revenue  Code due to (i)  returns  of excess  contributions  to the  plan,  (ii)
retirement of a participant in the plan,  (iii) a loan from the plan  (repayment
of loans,  however,  will  constitute  new sales for purposes of  assessing  the
contingent deferred sales charge), (iv) "financial hardship" of a participant in
the  plan,   as  that  term  is   defined   in   Treasury   Regulation   Section
1.401(k)-1(d)(2), as amended from time to time, (v) termination of employment of
a participant in the plan, (vi) any other permissible withdrawal under the terms
of the plan.  The  contingent  deferred  sales charge will also be waived in the
case of certain  redemptions  of Class B or Class C shares of the Funds pursuant
to a systematic withdrawal program.  (See "Systematic  Withdrawal Program," page
45.)

ARRANGEMENTS  WITH  BROKER-DEALERS  AND  OTHERS  -- The  Investment  Manager  or
Distributor,  from time to time,  will pay a bonus,  to  certain  dealers  whose
representatives  have sold or are  expected to sell  significant  amounts of the
Funds  and/or  certain  other funds  managed by the  Investment  Manager.  Bonus
compensation  may include  reallowance  of the entire  sales charge and may also
include,  with  respect to Class A shares,  an amount  which  exceeds the entire
sales  charge and,  with  respect to Class B or Class C shares,  an amount which
exceeds the maximum commission. The Distributor,  or the Investment Manager, may
also  provide  financial  assistance  to  certain  dealers  in  connection  with
conferences,  sales or training  programs for their employees,  seminars for the
public,  advertising,  sales campaigns, and/or shareholder services and programs
regarding  one or  more of the  Funds  managed  by the  Investment  Manager.  In
addition,  the  Investment  Manager  or  Distributor  may  sponsor  training  or
education meetings at various locations.  In connection with such meetings it is
expected  that the  Investment  Manager  or  Distributor  would pay the  travel,
lodging and other expenses of representatives of the dealers in attendance.  The
Fund  Administrator  or  Distributor  may also pay certain  transaction or order
processing  costs  incurred  by dealers who sell Fund  shares  through  clearing
dealers.  Certain of the foregoing  arrangements  may be financed by payments to
the Distributor under a Rule 12b-1  Distribution Plan. These arrangements do not
change the price an  investor  will pay for shares or the amount  that the Funds
will receive from such sale. No compensation will be offered to the extent it is
prohibited by the laws of any state or self-regulatory agency, such as the NASD.
A dealer to whom  substantially  the  entire  sales  charge of Class A shares is
reallowed may be deemed to be an "underwriter" under federal securities laws.


The  Distributor  also may pay banks and other  financial  services  firms  that
facilitate  transactions  in shares of the Funds for their clients a transaction
fee up to the level of the  payments  made  allowable to dealers for the sale of
such shares as described above.


The  Investment  Manager or  Distributor  also may pay a marketing  allowance to
dealers who meet  certain  eligibility  criteria.  This  allowance  is paid with
reference to new sales of Fund shares in a calendar year and may be discontinued
at any time.  To be eligible for this  allowance  in any given year,  the dealer
must sell a minimum of  $2,000,000 of Class A, Class B and Class C shares during
that year.  The  applicable  marketing  allowance  factors  are set forth in the
accompanying table.

        ===============================================================
                                                   APPLICABLE MARKETING
        AGGREGATE NEW SALES                         ALLOWANCE FACTOR*
        ---------------------------------------------------------------
        Less than $2 million.......................       0.00%
        $2 million but less than $5 million........       0.15%
        $5 million but less than $10 million.......       0.25%
        $10 million but less than $15 million......       0.35%
        $15 million but less than $20 million......       0.50%
        or $20 million or more.....................       0.75%
        ---------------------------------------------------------------
        *The maximum  marketing  allowance  factor  applicable per this
         schedule will be applied to all new sales in the calendar year
         to determine the marketing allowance payable for such year.
        ===============================================================


PURCHASES  AT NET ASSET VALUE -- Class A shares of the Funds may be purchased at
net asset value by (1)  directors,  officers  and  employees  of the Funds,  the
Funds' Investment Manager or Distributor;  directors,  officers and employees of
Security Benefit Life Insurance  Company and its  subsidiaries;  agents licensed
with Security Benefit Life Insurance  Company;  spouses or minor children of any
such agents; as well as the following relatives of any such directors,  officers
and employees (and their spouses):  spouses,  grandparents,  parents,  children,
grandchildren,  siblings,  nieces and nephews;  (2) any trust,  pension,  profit
sharing or other benefit plan  established by any of the foregoing  corporations
for  persons   described   above;   (3)  retirement   plans  where  third  party
administrators  of such plans have entered into  certain  arrangements  with the
Distributor  or its  affiliates  provided that no commission is paid to dealers;
and (4) officers,  directors,  partners or registered representatives (and their
spouses and minor children) of broker-dealers  who have a selling agreement with
the Distributor. Such sales are made upon the written assurance of the purchaser
that the purchase is made for investment  purposes and that the securities  will
not be transferred  or resold except  through  redemption or repurchase by or on
behalf of the Fund.

Class A shares  of the  Funds  may be  purchased  at net  asset  value  when the
purchase is made on the recommendation of (i) a registered  investment  adviser,
trustee or financial intermediary who has authority to make investment decisions
on behalf of the investor;  or (ii) a certified  financial planner or registered
broker-dealer  who either  charges  periodic fees to its customers for financial
planning,  investment  advisory or asset management  services,  or provides such
services in connection with the establishment of an investment account for which
a comprehensive  "wrap fee" is imposed.  Class A shares of the Funds may also be
purchased at net asset value when the purchase is made by retirement  plans that
(i) buy shares of the Security  Funds worth  $500,000 or more;  (ii) have 100 or
more  eligible  employees at the time of purchase;  (iii)  certify it expects to
have annual plan purchases of shares of Security Funds of $200,000 or more; (iv)
are provided administrative services by certain third-party  administrators that
have entered into a special service arrangement with the Security Funds relating
to such plans; or (v) have at the time of purchase, aggregate assets of at least
$1,000,000.  Purchases  made  pursuant  to this  provision  may be  subject to a
deferred  sales charge of up to 1% in the event of a redemption  within one year
of the purchase.

The  Distributor  must be notified when a purchase is made that qualifies  under
any of the above provisions.

A shareholder of Equity Fund who formerly  invested in the Bondstock  Investment
Plans or Life Insurance  Investors  Investment  Plans received Class A shares of
Equity Fund in liquidation of the Plans. Such a shareholder may purchase Class A
shares  of  Equity  Fund at net  asset  value  provided  that  such  shareholder
maintains his or her Equity Fund account.

PURCHASES  FOR   EMPLOYER-SPONSORED   RETIREMENT  PLANS  --  Security  Financial
Resources,  Inc.,  an  affiliated  company  of  the  Distributor,   offers  plan
recordkeeping  services on a fee basis to  employer-sponsored  retirement plans.
Employer-sponsored  retirement  plans that have  entered  into an  agreement  to
receive such services from Security Financial Resources, Inc. may purchase Class
A shares of the Funds at net asset value under certain circumstances. Such plans
would first  purchase  Class C shares of the Funds for an initial period of time
that would  vary with the size of the plan,  amount of assets  flowing  into the
plan and level of service  provided by the dealer.  After that initial period of
time has elapsed,  the plan would  exchange at net asset value  existing Class C
shares for Class A shares of the respective  funds,  and new purchases under the
plans would be made in Class A shares at net asset value.

The  schedule  below sets forth the amount of time that  retirement  plan assets
would  remain  invested  in Class C shares  before  they would be  eligible  for
exchange to Class A shares of the respective Funds. The schedule below also sets
forth the  commissions  paid to dealers in connection  with sales of Fund shares
with respect to such retirement plans, which commissions  replace those normally
paid in connection with sales of Class C shares.

================================================================================
                              NUMBER OF YEARS    COMMISSION BY YEAR OF PURCHASE*
                                INVESTED IN      -------------------------------
ELIGIBLE PLANS                 CLASS C SHARES    1        2      3      4     5+
- --------------------------------------------------------------------------------
Less than $1.5 mil. in
assets or $400,000 in flow       8 years         5%       4%     3%     2%    1%
- --------------------------------------------------------------------------------
Less than $1.5 mil. in
assets or $400,000 in flow       8 years         6%       4%     2%     1%    1%
- --------------------------------------------------------------------------------
Less than $5 mil. in
assets or $1 mil. in flow        6 years         4%       3%     2%     1%    1%
- --------------------------------------------------------------------------------
Less than $5 mil. in
assets or $1 mil. in flow        5 years         3%       2%     1%     1%    1%
- --------------------------------------------------------------------------------
Less than $10 mil. in
assets or $2 mil. in flow        3 years         2%       1%     1%     1%    1%
- --------------------------------------------------------------------------------
Less than $10 mil. in
assets or $2 mil. in flow        0 years**       1%++     1%     1%     1%    1%
- --------------------------------------------------------------------------------
 *The commission is a percentage of the amount invested. The year of purchase is
  measured  from  the  date  of the  plan's  initial  investment  in the  Funds.
  Notwithstanding  the  foregoing  schedule,  if 50% or more of the plan  assets
  allocated to the Funds is redeemed  within the four-year  period  beginning on
  the date of the plan's initial  investment in the Funds,  the commission  will
  immediately drop to 1% for all subsequent purchases.

**Amounts will be invested in Class A shares at net asset value.

 ‡Certain dealers may receive 1.25% in year 1.
================================================================================

The Distributor may also enter into  arrangements with dealers whereby it agrees
to "annualize" the first-year  commission expected to be paid on the purchase of
Fund shares by  retirement  plans  receiving  plan  recordkeeping  services from
Security Financial Resources,  Inc. Such arrangements will typically provide for
an up-front  payment by the Distributor to the dealer of a specified  percentage
of the first-year's expected commissions attributable to a particular retirement
plan.

In some circumstances,  a retirement plan that was not previously receiving plan
recordkeeping services from Security Financial Resources,  Inc. may transfer its
assets in an arrangement where it receives such services. In such circumstances,
the Distributor  may pay the dealer a commission on the transferred  assets that
is different  from the  commission  otherwise set forth in the table above,  but
typically not in excess of 1.25% of the transferred amount.

In addition to the commissions  set forth above,  dealers will receive a service
fee payable beginning in the 13th month following the plan's initial investment.
The  Distributor  pays  service  fees  quarterly,  in an  amount  equal to 0.25%
annually of the average  daily net asset value of Class C shares sold by dealers
in  connection  with such  employer-sponsored  retirement  plans  and  remaining
outstanding on the books of the Funds.

ACCUMULATION PLAN

Investors may purchase  shares on a periodic  basis under an  Accumulation  Plan
which  provides  for an  initial  investment  of  $100  minimum  and  subsequent
investments  of $20  minimum at any time.  An  Accumulation  Plan is a voluntary
program, involving no obligation to make periodic investments, and is terminable
at will.  Payments are made by sending a check to the Distributor who (acting as
an agent for the dealer) will purchase whole and  fractional  shares of the Fund
as of the close of business on the day such payment is received.  A confirmation
and statement of account will be sent to the investor following each investment.
Certificates for whole shares will be issued upon request.  No certificates will
be issued for  fractional  shares which may be withdrawn  only by redemption for
cash.  Investors may choose to use an Automatic  Investment Plan (automatic bank
draft) to make their Fund purchases.  There is no additional charge for choosing
to use an  Automatic  Investment  Plan.  Withdrawals  from your bank account may
occur up to 3 business  days before the date  scheduled to purchase Fund shares.
An application for an Automatic Investment Plan may be obtained from the Funds.

SYSTEMATIC WITHDRAWAL PROGRAM

A Systematic  Withdrawal  Program may be established by shareholders who wish to
receive regular monthly, bi-monthly, quarterly, semiannual or annual payments of
$25 or more. A shareholder may elect a payment that is a specified percentage of
the initial or current account value or a specified  dollar amount.  The Program
may also be based upon the  liquidation of a fixed or variable  number of shares
provided that the amount withdrawn monthly is at least $25.  However,  the Funds
do  not  recommend  this  (or  any  other  amount)  as  an  appropriate  monthly
withdrawal.  Shares with a current  aggregate  offering  price of $5,000 or more
must  be  deposited  with  the  Investment  Manager  acting  as  agent  for  the
shareholder under the Program. There is no service charge on the Program.

Sufficient  shares will be  liquidated  at net asset value to meet the specified
withdrawals.  Liquidation of shares may deplete the investment,  particularly in
the event of a market decline.  Payments cannot be considered as actual yield or
income  since part of such  payments  is a return of capital.  Such  withdrawals
constitute a taxable event to the  shareholder.  The maintenance of a Withdrawal
Program  concurrently  with purchases of additional  shares of the Fund would be
disadvantageous  because  of the sales  commission  payable  in  respect to such
purchases.  During the withdrawal  period, no payments will be accepted under an
Accumulation  Plan.  Income  dividends  and  capital  gains   distributions  are
automatically  reinvested at net asset value. If an investor has an Accumulation
Plan in effect, it must be terminated before a Systematic Withdrawal Program may
be initiated.


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 are 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 and  Class C  shares  requested  while  Free  Systematic
Withdrawals  are being made will be calculated as described  under  "Calculation
and Waiver of Contingent Deferred Sales Charges," page 42.


The shareholder receives  confirmation of each transaction showing the source of
the payment and the share  balance  remaining in the  Program.  A Program may be
terminated  on written  notice by the  shareholder  or by the Fund,  and it will
terminate  automatically  if all shares are  liquidated  or  withdrawn  from the
account.

INVESTMENT MANAGEMENT


The Investment Manager,  located at One Security Benefit Place, Topeka,  Kansas,
has served as  investment  adviser to  Security  Large Cap Value Fund  (formerly
Security  Growth and Income Fund),  Security  Equity Fund,  and Security Mid Cap
Growth Fund (formerly Security Ultra Fund),  respectively,  since April 1, 1964,
January  1,  1964,  and April 22,  1965.  The  Investment  Manager  also acts as
investment  adviser to Security  Income Fund,  Security Cash Fund, SBL Fund, and
Security  Municipal  Bond Fund. The  Investment  Manager is a limited  liability
company  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  66636-0001.  Security Benefit Life, a
stock  life  insurance  company,  incorporated  under  the  laws of  Kansas,  is
controlled by Security  Benefit Corp.  ("SBC").  SBC is wholly owned by Security
Benefit Mutual Holding Company,  which is in turn controlled by Security Benefit
Life  policyholders.  Security Benefit Life together with its subsidiaries,  has
approximately $9 billion of assets under management as of September 30, 2002.

The Investment  Manager serves as investment adviser to Security Large Cap Value
Fund, Security Equity Fund and Security Mid Cap Growth Fund, respectively, under
Investment  Management  and  Services  Agreements,  which were  approved  by the
shareholders  of the Funds on January 26, 2000,  and which  became  effective on
January 27, 2000. Pursuant to the Investment Management and Services Agreements,
the Investment Manager furnishes investment  advisory,  statistical and research
services to the Funds,  supervises  and  arranges  for the  purchase and sale of
securities  on  behalf  of the  Funds,  and  provides  for the  compilation  and
maintenance of records pertaining to the investment advisory function.

The  Investment  Manager  has entered  into a  sub-advisory  agreement  with The
Dreyfus  Corporation,  200 Park  Avenue,  New York,  New York 10166,  to provide
investment  advisory  services  to  Large  Cap  Value  Fund.  Pursuant  to  this
agreement,  Dreyfus  furnishes  investment  advisory  services,  supervises  and
arranges for the purchase  and sale of  securities  on behalf of Large Cap Value
Fund and provides for the compilation  and maintenance of records  pertaining to
such investment advisory services, subject to the control and supervision of the
Fund's Board of Directors and the Investment  Manager.  For such  services,  the
Investment  Manager  pays  Dreyfus an annual  fee equal to 0.25% of the  average
daily  closing  value of the net assets of Large Cap Value  Fund,  computed on a
daily  basis and paid  monthly.  Dreyfus  has  agreed to waive a portion  of its
annual fee in an amount equal to 0.10% of the average daily closing value of the
net assets of Large Cap Value Fund for the period beginning  January 2, 2002 and
terminating  on the date when the total amount of $2,750,000 has been waived but
in noevent earlier than December 31, 2006.  Dreyfus has agreed to this waiver in
connection  with  repayment  of an amount due Security  Benefit  Life  Insurance
Company  ("SBL")  under an agreement  between SBL and Mellon  Insurance  Agency,
Inc., an affiliate of Dreyfus.


Dreyfus  is  a  wholly-owned  subsidiary  of  Mellon  Bank,  N.A.,  which  is  a
wholly-owned subsidiary of Mellon Financial Corporation ("Mellon").  Mellon is a
global financial  services company  incorporated  under Pennsylvania law in 1971
and registered  under the Federal Bank Holding  Company Act of 1956, as amended.
Founded in 1947,  Dreyfus manages  approximately $181 billion in over 190 mutual
fund portfolios.


The Investment Manager has entered into a sub-advisory agreement with Mainstream
Investment Advisers, LLC, 101 West Spring Street, Suite 401, New Albany, Indiana
47150, to provide  investment  advisory services with regard to a portion of the
total  assets  of the  Alpha  Opportunity  Fund.  Pursuant  to  this  agreement,
Mainstream furnishes  investment advisory services,  supervises and arranges for
the  purchase and sale of  securities  on behalf of Alpha  Opportunity  Fund and
provides for the  compilation  and  maintenance  of records  pertaining  to such
investment  advisory  services,  subject to the control and  supervision  of the
Fund's Board of Directors and the Investment  Manager.  For such  services,  the
Investment  Manager pays  Mainstream an annual fee equal to 1.00% of the average
daily closing  value of the net assets of that portion of the Alpha  Opportunity
Fund managed by Mainstream, computed on a daily basis and paid monthly.

Under  the  sub-advisory  agreement,  at the  end of  each  calendar  year,  the
Investment  Manager will pay  Mainstream a performance  fee equal to ten percent
(10%) of any  cumulative  gain earned during the calendar year allocable to that
portion  of the  Fund  managed  by  Mainstream.  The  performance  fee  will  be
calculated  as of the end of each  calendar  year (the first  calendar year will
begin on the Fund's inception date and will end December 31, 2003).  "Cumulative
gain" is the aggregate  amount by which net profits  credited to that portion of
the portfolio during the calendar year exceeds the net losses of that portion of
the portfolio.  Cumulative gain will be increased by any interest earned that is
attributable  to  that  portion  of the  Fund's  portfolio  that is  managed  by
Mainstream;  will be reduced by the 1.00% advisory fee paid to  Mainstream;  and
will be adjusted for transfers to and from the other  portion of the  portfolio,
which is managed by the Investment Manager.

Cumulative gain will be reduced by any loss  carryforward  from a prior year for
that portion of the Fund's portfolio managed by Mainstream.  "Loss carryforward"
will be the sum of all prior years' net losses  allocable to that portion of the
Fund and not  subsequently  offset by subsequent  years' gains allocable to that
portion of the Fund. The  performance fee will be payable only if the applicable
portion of the Fund's  portfolio  attains a new high so that a  performance  fee
will not be  payable if the  Fund's  performance  falls  below  previous  highs.
Neither the Fund nor its shareholders have any obligation to pay the performance
fee that is payable by the Investment Manager to Mainstream.

The Alpha Opportunity  Fund's assets are reallocated  between Mainstream and the
Investment Manager on a monthly basis to an approximately equal allocation. This
procedure ensures that the Investment  Manager cannot make allocation  decisions
that favor the Investment Manager over Mainstream.  Since Mainstream  receives a
performance fee which, if the performance of its assets under management were to
be  quite  good,  could  exceed  the  management  fee  paid  by the  Fund to the
Investment  Manager (and from which  Mainstream's fees are paid), the Investment
Manager could limit the portion of the Fund's assets to be managed by Mainstream
so as to ensure  that the  Investment  Manager  received  what it believed to be
adequate compensation.  The process of rebalancing monthly avoids this potential
conflict of interest for the Investment Manager.

Mainstream is a limited  liability  company  controlled by its members,  William
Jenkins and William  Gernert.  Mainstream,  which focuses on providing  advisory
services to high net worth  individuals  and  institutional  investors,  manages
approximately $130 million in assets.


The  Investment   Manager  has  entered  into  a  sub-advisory   agreement  with
OppenheimerFunds,  Inc.,  498 Seventh  Avenue,  New York,  NY 10018,  to provide
investment  advisory  services  to  Global  Fund.  Pursuant  to this  agreement,
Oppenheimer furnishes investment advisory,  statistical and research facilities,
supervises  and arranges for the  purchase and sale of  securities  on behalf of
Global  Fund  and  provides  for the  compilation  and  maintenance  of  records
pertaining  to such  investment  advisory  services,  subject to the control and
supervision  of the Fund's Board of Directors and the  Investment  Manager.  For
such services,  the Investment Manager pays Oppenheimer an annual fee equal to a
percentage  of the average  daily  closing  value of the  combined net assets of
Global Fund and another Fund managed by the Investment Manager, SBL Fund, Series
D, computed on a daily basis as follows: 0.35% of the combined average daily net
assets up to $300  million,  plus 0.30% of such assets  over $300  million up to
$750 million and 0.25% of such assets over $750 million.


Oppenheimer is owned by Oppenheimer Acquisition Corp., a holding company that is
owned  in  part  by  senior  officers  of  OppenheimerFunds  and  controlled  by
Massachusetts  Mutual Life  Insurance  Company.  Oppenheimer  has operated as an
investment advisor since 1960. In addition, Oppenheimer and its subsidiaries and
affiliates  currently manage investment  companies with assets of more than $120
billion as of October 31, 2002, and more than 5 million shareholder accounts.

The  Investment  Manager  has  entered  into a  sub-advisory  agreement  with RS
Investment Management, L.P., 388 Market Street, San Francisco,  California 94111
to provide  investment  advisory services to the Small Cap Growth Fund. For such
services, the Investment Manager pays RS Investments, an annual fee based on the
combined  average net assets of Small Cap Growth Fund and another fund for which
the Investment  Manager has engaged RS Investments to provide advisory services.
The fee is equal  to  0.55%%  of the  combined  average  net  assets  up to $100
million,  0.50% of the  combined  average net assets  above $150 million to $400
million, and 0.45% of the combined average net assets above $400 million.

The Investment  Manager has retained Deutsche Asset  Management,  Inc., 280 Park
Avenue,  New York, New York 10017, to provide  investment  advisory  services to
Enhanced Index Fund. Pursuant to the agreement,  Deutsche Asset Management, Inc.
furnishes investment advisory,  statistical and research facilities,  supervises
and arranges for the purchase and sale of  securities  on behalf of the Fund and
provides for the  compilation  and  maintenance  of records  pertaining  to such
investment  advisory  services,  subject to the control and  supervision  of the
Fund's Board of Directors and the Investment  Manager..For the services provided
to Enhanced Index Fund, the Investment  Manager pays Deutsche Asset  Management,
Inc. an annual fee equal to a percentage  of the average  daily closing value of
the combined net assets of Enhanced  Index Fund and another fund,  computed on a
daily basis as follows:  0.20% of the combined  average daily net assets of $100
million or less; and 0.15% of the combined average daily net assets of more than
$100 million but less than $300 million; and 0.13% of the combined average daily
net  assets of more than $300  million.  The  Investment  Manager  also will pay
Deutsche Asset  Management,  Inc. the following minimum fees with respect to the
Enhanced  Index Fund:  (i) no minimum fee in the first year the  Enhanced  Index
Fund begins  operations;  (ii) $100,000 in the Fund's second year of operations;
and (iii) $200,000 in the third and following years of the Fund's operations.

Deutsche  Asset  Management,  Inc. is an indirect  wholly  owned  subsidiary  of
Deutsche Bank AG ("Deutsche Bank"). Deutsche Asset Management, Inc. has provided
asset  management  services  since 1953.  Deutsche Bank is split into 5 business
divisions, including Deutsche Asset Management, Inc., As of September 30, 20021,
in the U.S., Deutsche Asset Management, Inc. is responsible for $73.9 billion in
client assets.

The Investment Manager has entered into a sub-advisory  agreement with Templeton
Investment  Counsel,  LLC, 500 East Broward Boulevard,  Ft. Lauderdale,  Florida
33394, to provide investment  advisory services to International  Fund. For such
services,  the  Investment  Manager pays  Templeton,  an annual fee based on the
combined average net assets of International Fund and another fund for which the
Investment Manager has engaged Templeton to provide advisory  services.  The fee
is equal to 0.625%% of the combined average net assets up to $50 million, 0.465%
of the combined average net assets above $50 million to $200 million,  0.375% of
the combined average net assets above $200 million to $500 million and 0.350% of
the combined average net assets above $500 million.


The Investment Manager has engaged Wellington  Management Company, LLP, 75 State
Street, Boston, Massachusetts,  02109 to provide investment advisory services to
the Technology Fund.

Wellington is a limited liability  partnership which traces its origins to 1928.
It  currently  manages  over $281  billion  in  assets  on behalf of  investment
companies,   employee   benefit  plans,   endowments,   foundations   and  other
institutions.

For the services  provided to the Technology  Fund, the Investment  Manager pays
Wellington  an annual fee equal to 0.50% of the average  daily  closing value of
the combined  net assets of  Technology  Fund and Series T of SBL Fund,  another
fund managed by the Investment Manager.

Pursuant to the Investment  Management and Services  Agreements,  the Investment
Manager also performs administrative  functions and the bookkeeping,  accounting
and pricing  functions  for the Funds,  and 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.



Each Fund pays all of its  respective  expenses  not  assumed by the  Investment
Manager or the Distributor,  including organization  expenses;  directors' fees;
fees of the Fund's custodian; taxes and governmental fees; interest charges; any
membership dues; brokerage  commissions;  expenses of preparing and distributing
reports to shareholders; costs of shareholder and other meetings; Class A, Class
B and Class C distribution  fees; and legal,  auditing and accounting  expenses.
Each Fund also pays for the  preparation  and  distribution of the prospectus to
its shareholders and all expenses in connection with registration under the 1940
Act and the registration of its capital stock under federal and state securities
laws. Each Fund pays nonrecurring expenses that may arise,  including litigation
expenses affecting the Fund.

The  Investment  Manager has agreed to reimburse the Funds or waive a portion of
its  management  fee for any amount by which the total  annual  expenses  of the
Funds  (including  management  fees, but excluding  interest,  taxes,  brokerage
commissions,   extraordinary   expenses  and  Class  A,  Class  B  and  Class  C
distribution  fees) for any fiscal year that exceeds the level of expenses which
the Funds are permitted to bear under the most  restrictive  expense  limitation
imposed by any state in which shares of the Funds are then  qualified  for sale.
(The Investment  Manager is not aware of any state that currently imposes limits
on the level of mutual fund  expenses.) The Investment  Manager,  as part of the
investment  advisory  agreement with Security Equity Fund, has agreed to cap the
total  annual  expenses of  Enhanced  Index Fund and Select 25 Fund to 1.75% and
International  Fund to  2.25%,  in  each  case  exclusive  of  interest,  taxes,
extraordinary expenses, brokerage fees and commissions and 12b-1 fees.

Separate  fees are paid by each Fund to the  Investment  Manager for  investment
advisory,  administrative and transfer agency services.  The investment advisory
fee for Global,  Social Awareness,  Mid Cap Value,  Small Cap Growth,  Large Cap
Growth and Technology  Funds is, equal to 1%, on an annual basis, of the average
daily net  assets  of each  Fund,  calculated  daily and  payable  monthly.  The
investment  advisory fee for Large Cap Value,  Equity, Mid Cap Growth,  Enhanced
Index, and Select 25 Funds is equal to 0.75%, on an annual basis, of the average
daily net  assets  of each  Fund,  calculated  daily and  payable  monthly.  The
investment  advisory fee for International  Fund is equal to 1.10%, on an annual
basis, of the average daily net assets of the Fund, calculated daily and payable
monthly.  The  investment  advisory fee for Alpha  Opportunity  Fund is equal to
2.25%,  on an  annual  basis,  of the  average  daily  net  assets  of the Fund,
calculated daily and payable monthly.  The Investment Manager also receives,  on
an annual basis, an  administrative  fee equal to 0.09% of the average daily net
assets of the Large Cap Value, Equity, Mid Cap Growth, Social Awareness, Mid Cap
Value, Small Cap Growth,  Enhanced Index,  Select 25 and Large Cap Growth Funds.
The Investment manager receives, on an annual basis, an administrative fee equal
to 0.045% of the average daily net assets of the Global and International Funds,
plus the greater of 0.10% of its average net assets or $60,000.  The  Investment
manager receives,  on an annual basis, an administrative  fee equal to 0.145% of
the average daily net assets of the Alpha Opportunity  Fund. The  administrative
fee for  Technology  Fund on an annual  basis is equal to 0.045% of the  average
daily net  assets of the Fund,  plus the  greater  of 0.10% of its  average  net
assets or $60,000  thereafter.  For transfer  agency  services  provided to each
Fund, the Investment  Manager  receives an annual  maintenance  fee of $8.00 per
account,  and a  transaction  fee of $1.00  per  transaction.  For  purposes  of
calculating the annual maintenance fee, the shareholder transaction and dividend
transaction fee, the Investment  Manager is permitted to count as a shareholder,
each person  that holds a  beneficial  interest in the Funds  through an omnibus
account; provided that the Investment Manager is paying a third party, such as a
bank,  insurance company or third-party  administrator  for  sub-administration,
sub-accounting   and/or   sub-transfer   agency  fees  for  keeping   individual
shareholder records.

During the fiscal years ended September 30, 2002,  2001, and 2000 the Funds paid
the following amounts to the Investment Manager for its services:

=======================================================================================
                                                                             TRANSFER
                           INVESTMENT      INVESTMENT     ADMINISTRATIVE      AGENCY
                          ADVISORY FEES   ADVISORY FEES    SERVICE FEES    SERVICE FEES
                             PAID TO        WAIVED BY        PAID TO         PAID TO
                           INVESTMENT      INVESTMENT       INVESTMENT      INVESTMENT
FUND            YEAR         MANAGER         MANAGER         MANAGER         MANAGER
- ---------------------------------------------------------------------------------------
Large Cap       2002       $                $                $               $
Value Fund      2001           819,249             0               0                0
                2000           942,194             0               0                0
- ---------------------------------------------------------------------------------------
Equity          2002
Fund            2001         8,523,319             0               0                0
                2000        11,139,289             0               0                0
- ---------------------------------------------------------------------------------------
Global          2002
Fund            2001         1,648,290             0               0                0
                2000         1,532,893             0               0                0
- ---------------------------------------------------------------------------------------
Social          2002
Awareness       2001           276,531             0          24,888           47,997
Fund            2000           291,335             0          26,220           43,826
- ---------------------------------------------------------------------------------------
Mid Cap         2002
Value Fund      2001           748,052             0          67,326           79,775
                2000           393,950             0          35,455           39,655
- ---------------------------------------------------------------------------------------
Small Cap       2002
Growth Fund     2001           362,309             0          32,608          134,829
                2000           408,564        35,191          36,771           56,866
- ---------------------------------------------------------------------------------------
Enhanced        2002
Index Fund      2001           175,022             0          21,003           20,043
                2000           194,986             0          23,398           17,934
- ---------------------------------------------------------------------------------------
International   2002
Fund            2001            96,963       109,649          58,967            8,613
                2000           113,344       103,999          44,637            5,513
- ---------------------------------------------------------------------------------------
Select 25       2002
Fund            2001           301,879             0          36,226           60,759
                2000           323,864             0          38,864           56,873
- ---------------------------------------------------------------------------------------
Large Cap       2002
Growth Fund     2001            72,451        11,930           6,521            6,838
                2000            23,741             0           2,137              405
- ---------------------------------------------------------------------------------------
Technology      2002
Fund            2001            80,170        36,973          39,858           14,008
                2000            29,670         1,046          13,835            1,645
- ---------------------------------------------------------------------------------------
Mid Cap         2002
Growth Fund     2001         2,434,028             0               0                0
                2000         1,981,499             0               0                0
- ---------------------------------------------------------------------------------------
1  Enhanced Index,  International  and Select 25 Funds' figures are based on the period
   January 29, 1999 (date of inception) to September 30, 1999.  Percentage  amounts for
   the period have been annualized.
=======================================================================================


     =====================================================================
                                               TOTAL EXPENSE RATIO
                                        ----------------------------------
     FUND                      YEAR     CLASS A     CLASS B     CLASS C(1)
     ---------------------------------------------------------------------
                               2002
     Large Cap Value Fund      2001      1.32%       2.32%        2.33%
                               2000      1.27%       2.27%        2.28%
     ---------------------------------------------------------------------
                               2002
     Equity Fund               2001      1.02%       2.02%        2.02%
                               2000      1.02%       2.02%        2.02%
     ---------------------------------------------------------------------
                               2002
     Global Fund               2001      1.90%       2.39%        2.91%
                               2000      1.92%       2.29%        2.92%
     ---------------------------------------------------------------------
                               2002
     Social Awareness Fund     2001      1.43%       2.43%        2.45%
                               2000      1.42%       2.43%        2.55%
     ---------------------------------------------------------------------
                               2002
     Mid Cap Value Fund        2001      1.30%       2.30%        2.30%
                               2000      1.29%       2.32%        2.36%
     ---------------------------------------------------------------------
                               2002
     Small Cap Growth Fund     2001      1.91%       2.67%        2.68%
                               2000      1.55%       2.44%        2.39%
     ---------------------------------------------------------------------
                               2002
     Enhanced Index Fund       2001      1.42%       2.17%        2.17%
                               2000      1.44%       2.18%        2.15%
     ---------------------------------------------------------------------
                               2002
     International Fund        2001      2.51%       3.25%        3.25%
                               2000      2.46%       3.26%        3.11%
     ---------------------------------------------------------------------
                               2002
     Select 25 Fund            2001      1.39%       2.14%        2.14%
                               2000      1.35%       2.11%        2.10%
     ---------------------------------------------------------------------
                               2002
     Large Cap Growth Fund     2001      2.00%       2.75%        2.75%
                               2000      1.92%       2.68%        2.66%
     ---------------------------------------------------------------------
                               2002
     Technology Fund           2001      2.26%       3.01%        3.01%
                               2000      2.28%       3.03%        3.03%
     ---------------------------------------------------------------------
                               2002
     Mid Cap Growth Fund       2001      1.09%       2.09%        2.09%
                               2000      1.11%       2.11%        2.11%
     ---------------------------------------------------------------------
     1  Class C shares  were  initially  offered  for sale on January  29,
        1999. Percentage amounts for the period have been annualized.
     =====================================================================


The Funds' Investment  Management and Services Agreements are renewable annually
by each Fund's Board of  Directors or by a vote of a majority of the  individual
Fund's  outstanding  securities and, in either event, by a majority of the board
who are not parties to the  Agreement or  interested  persons of any such party.
The Agreements  provide that they may be terminated  without penalty at any time
by either party on 60 days' notice and are automatically terminated in the event
of assignment.

The  following  persons are  affiliated  with the Funds and also with the Funds'
investment adviser, Security Management Company, LLC, in these capacities:


==========================================================================================
                                                            POSITION(S) WITH SECURITY
NAME                      POSITION(S) WITH THE FUNDS        MANAGEMENT COMPANY, LLC
- ------------------------------------------------------------------------------------------
James R. Schmank          President and Director            President and Managing
                                                            Member Representative
- ------------------------------------------------------------------------------------------
John D. Cleland           Chairman of the                   Senior Vice President and
                          Board and Director                Managing Member Representative
- ------------------------------------------------------------------------------------------
Terry A. Milberger        Vice President (Equity Fund)      Senior Vice President and
                                                            Senior Portfolio Manager
- ------------------------------------------------------------------------------------------
Amy J. Lee                Secretary                         Secretary
- ------------------------------------------------------------------------------------------
Brenda M. Harwood         Treasurer                         Assistant Vice President
                                                            and Treasurer
- ------------------------------------------------------------------------------------------
Cindy L. Shields          Vice President                    Vice President and
                          (Equity Fund only)                Senior Portfolio Manager
- ------------------------------------------------------------------------------------------
Christopher D. Swickard   Assistant Secretary               Assistant Secretary
- ------------------------------------------------------------------------------------------
James P. Schier           Vice President (Equity Fund and   Vice President and
                          Mid Cap Growth Fund only)         Senior Portfolio Manager
==========================================================================================


PORTFOLIO MANAGEMENT --


DEAN S. BARR, Managing Director and Global Chief Investment Officer of DAMI, has
been  co-manager of Enhanced Index Fund since he joined DAMI in September  1999.
Prior to joining  the Company in 1999 he had 18 years of  experience,  including
Chief  Investment  Officer of active  quantitative  strategies  at State  Street
Global Advisors,  Chief Executive Officer at Advanced Investment  Technology and
in various  positions  at  Goldman  Sachs.  He has a B.A.  degree  from  Cornell
University  and a M.B.A.  degree  from  New York  University,  Stern  School  of
Business.

STEVEN M. BOWSER,  Vice President and Senior Portfolio Manager of the Investment
Manager, has been a co-manager of the Alpha Opportunity Fund since its inception
in February 2003. Mr. Bowser joined the Investment Manager in 1992. From 1989 to
1992,  Mr. Bowser was Assistant  Vice President and Portfolio He was employed at
the  Federal  Reserve  Bank of Kansas City in 1988 and began his career with the
Farm Credit System from 1982 to 1987,  serving as a Senior Financial Analyst and
Assistant Controller. He graduated with a bachelor of science degree from Kansas
State University in 1982. He is a Chartered Financial Analyst charterholder.

ANTONIO T. DOCAL, Vice President at Templeton, has been manager of International
Fund since  September  2002.  Prior to joining  Templeton in 2001, Mr. Docal was
vice president and director at Evergreen Funds. Mr. Docal holds a M.B.A.  degree
from the Sloan School of Management at the Massachusetts Institute of Technology
and a B.A. degree from Trinity College in Connecticut.  Mr. Docal is a Chartered
Financial Analyst charterholder.

WILLIAM H. JENKINS,  Manager of  Mainstream,  has been a co-manager of the Alpha
Opportunity Fund since its inception in February 2003. He has more than 33 years
of  investment  experience.  Before  co-founding  Mainstream  in July 1997,  Mr.
Jenkins spent the prior 15 years with Providian Corporation as their sole equity
portfolio  manager.  From 1988 to 1991,  he was head of new asset and  liability
strategies  for  Providian,  in  addition  to his  equity  portfolio  management
responsibilities.  Prior to Providian, he worked as a portfolio  manager/analyst
at McGlinn Capital,  Delaware Investment Advisors and Mellon Bank and Trust. Mr.
Jenkins  holds a  bachelor's  degree from Grove City  College and a MBA from New
York University. He is a Chartered Financial Analyst charterholder.


MANISH  KESHIVE,  Director of DAMI,  has been  co-manager of Enhanced Index Fund
since  September  1999. He joined DAMI in 1996.  Prior to joining DAMI, he was a
student  earning a B.S.  degree  in  Technology  from the  Indian  Institute  of
Technology  in 1993 and an M.S.  degree  from  the  Massachusetts  Institute  of
Technology in 1995.


JEFF LOBO, Vice President of Quantitative  Strategies of the Investment Manager,
has been a  co-manager  of the Alpha  Opportunity  Fund since its  inception  in
February  2003.  Prior to joining the  Investment  Manager in 2002, Mr. Lobo was
employed by Keyport Life Insurance Company as Vice President of Risk Management.
Prior  to  joining  Keyport  in 19__,  he was  Vice  President  of  Equity  Risk
Management  for Credit  Suisse  Financial  Products in London.  Mr. Lobo holds a
bachelor's  degree  from MIT  Sloan  School  of  Management  and a MBA from York
University.

TERRY A. MILBERGER,  Senior  Portfolio  Manager of the Investment  Manager,  has
managed  Equity Fund since 1981.  He has been the lead manager of Select 25 Fund
since its  inception in January  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 the  Investment  Manager.  He was then employed as Vice President of
Texas  Commerce  Bank and managed its  pension  assets  until he returned to the
Investment  Manager in 1981. Mr. Milberger holds a bachelor's degree in business
and an M.B.A. from the University of Kansas and is a Chartered Financial Analyst
charterholder.

MARK MITCHELL,  Vice President and Portfolio Manager of the Investment  Manager,
has managed the Large Cap Growth Fund and Social  Awareness Fund since September
2002. He joined the Investment  Manager in 2002. Prior to joining the Investment
Manager,  Mr.  Mitchell  worked for GE Asset  Management as a technology  sector
portfolio manager.  Mr. Mitchell holds a bachelor of science from the University
of Nebraska,  with an emphasis in finance.  He is a Chartered  Financial Analyst
charterholder.


WELLINGTON   MANAGEMENT   COMPANY'S  GLOBAL  TECHNOLOGY  TEAM  has  managed  the
Technology  Fund since its  inception  in May of 2000.  The  Technology  Team is
comprised of a group of global industry analysts who focus on various industries
of the  Technology  sector.  The  Technology  Team is supported by a significant
number of specialized  fundamental,  quantitative  and technical  analysts,  and
macro-economic analysts and traders.


JAMES P. SCHIER, Senior Portfolio Manager of the Investment Manager, has managed
Mid Cap Value Fund  since its  inception  in 1997 and Mid Cap Growth  Fund since
January 1998. He has 18 years of  experience  in the  investment  field and is a
Chartered  Financial  Analyst  charterholder.  While  employed by the Investment
Manager,  he also served as research  analyst.  Prior to joining the  Investment
Manager in 1995, he was a portfolio manager for Mitchell Capital Management from
1993 to 1995.  From  1988 to 1995 he  served  as Vice  President  and  Portfolio
Manager  for  Fourth  Financial.  Prior to 1988,  Mr.  Schier  served in various
positions in the investment field for Stifel Financial,  Josepthal & Company and
Mercantile  Trust  Company now part of Firstar.  Mr. Schier earned a Bachelor of
Business degree from the University of Notre Dame and an M.B.A.  from Washington
University.

VALERIE J. SILL was named the portfolio  manager of Large Cap Value Fund in July
2001. Ms. Sill has been a portfolio manager of Dreyfus since 1996. She is also a
senior vice president of The Boston Company Asset Management,  Inc. (TBCAM),  an
affiliate of Dreyfus and is a member of the equity  policy  group of TBCAM.  She
previously  served as  director  of equity  research  and as an equity  research
analyst for TBCAM. Ms. Sill is a graduate of Wellesley  College and received her
M.B.A.  from  Harvard  Business  School.  She is a Chartered  Financial  Analyst
charterholder.

FRANK  WHITSELL,  Portfolio  Manager of the Investment  Manager,  has co-managed
Select 25 Fund since February  2000. He joined the  Investment  Manager in 1994.
Mr.  Whitsell  graduated  from Washburn  University  with a bachelor of business
administration  degree,  majoring in accounting and finance, and an MBA. He is a
Chartered Financial Analyst charterholder.


WILLIAM L. WILBY,  Senior Vice President of  Oppenheimer,  became the manager of
Global Fund in November  1998.  Prior to joining  Oppenheimer in 1991, he was an
international  investment  strategist  at Brown  Brothers  Hamman & Co. Prior to
Brown Brothers,  Mr. Wilby was a managing  director and portfolio manager at AIG
Global  Investors.  He joined AIG from Northern Trust Bank in Chicago,  where he
was an international  pension  manager.  Before starting his career in portfolio
management, Mr. Wilby was an international financial economist at Northern Trust
Bank and at the Federal Reserve Bank in Chicago.  Mr. Wilby is a graduate of the
United States  Military  Academy and holds an M.A. and a Ph.D. in  International
Monetary Economics from the University of Colorado.  He is a Chartered Financial
Analyst charterholder.


WILLIAM  J.  WOLFENDEN  III has been  manager  of Small Cap  Growth  Fund  since
September 2002 and has been with RS Investments since April 2001. Prior to that,
Mr.  Wolfenden had been at Dresdner RCM Global  Investors since 1994. He holds a
B.A. from Southern Methodist University and a M.B.A. from Vanderbilt University.


CODE OF ETHICS -- The Funds, the Investment Manager and the Distributor each has
adopted a written  code of ethics  (the  "Code of  Ethics")  which  governs  the
personal  securities  transactions  of "access  persons"  of the  Funds.  Access
persons may invest in securities,  including securities that may be purchased or
held by the Funds;  provided that they obtain prior clearance before engaging in
securities  transactions,  or engage  only in  transactions  that do not  exceed
certain DE MINIMIS  amounts as set forth in the Code of Ethics.  Access  persons
include officers and directors of the Funds and Investment Manager and employees
that participate in, or obtain  information  regarding,  the purchase or sale of
securities   by  the  Funds  or  whose  job   relates   to  the  making  of  any
recommendations with respect to such purchases or sales. All access persons must
report their personal securities transactions within ten days of the end of each
calendar quarter.

Access persons will not be permitted to effect  transactions in a security above
certain DE MINIMIS  amounts if it: (a) is being  considered for purchase or sale
by the  Funds;  or (b) is  being  purchased  or  sold  by the  Funds.  Portfolio
managers,  research  analysts and traders are also prohibited from purchasing or
selling a security  within seven calendar days before or after a Fund that he or
she manages trades in that security (the "blackout  period").  The exception for
de minimis  transactions  is not  available  to such access  persons  during the
blackout period. Any material violation of the Code of Ethics is reported to the
Board of the Funds.  The Board also  reviews the  administration  of the Code of
Ethics on an annual basis.  In addition,  each  Sub-Adviser  has adopted its own
code of ethics to which the personal  securities  transactions  of its portfolio
managers and other access  persons are subject.  The Code of Ethics is on public
file  with  the  Securities  Exchange  Commission  and  is  available  from  the
Commission.

DISTRIBUTOR


The Distributor,  a Kansas  corporation and wholly-owned  subsidiary of Security
Benefit Group, Inc., serves as the principal underwriter for shares of the Fund,
Large Cap Value and Mid Cap Growth  Funds  pursuant to  Distribution  Agreements
with the Funds. The Distributor also acts as principal  underwriter for Security
Income Fund, Security Municipal Bond Fund and SBL Fund.


The  Distributor  receives  a maximum  commission  on sales of Class A shares of
5.75% and allows a maximum  discount of 5% from the offering price to authorized
dealers on the Fund shares sold.  The discount is the same for all dealers,  but
the  Distributor  at its  discretion  may  increase  the  discount  for specific
periods. Salespersons employed by dealers may also be licensed to sell insurance
with Security Benefit Life.


For the fiscal years ended  September 30, 2000,  2001 and 2002, the  Distributor
(i) received gross underwriting commissions on Class A shares, (ii) retained net
underwriting  commissions  on Class A  shares,  and  (iii)  received  contingent
deferred  sales  charges  on  redemptions  of Class B and  Class C shares in the
amounts set forth in the tables below.

================================================================================
GROSS UNDERWRITING COMMISSIONS
- --------------------------------------------------------------------------------
                                               2000            2001         2002
- --------------------------------------------------------------------------------
Large Cap Value Fund...................     $   42,847       $ 38,381
Equity Fund............................      1,258,870        728,119
Global Fund............................         73,749         60,470
Social Awareness Fund..................        100,910         45,974
Mid Cap Value Fund.....................         85,281        122,636
Small Cap Growth Fund..................         81,712         36,956
Enhanced Index Fund(1).................         40,632         13,282
International Fund(1)..................         13,072          4,142
Select 25 Fund(1)......................        300,739         51,860
Large Cap Growth Fund(2)...............          7,277         13,287
Technology Fund(2).....................         10,334         15,438
Mid Cap Growth Fund....................        157,766        123,290
- --------------------------------------------------------------------------------
1  For the period January 29, 1999 (date of inception) to September 30, 1999.
2  For the period May 1, 2000 (date of inception) to September 30, 2000.
================================================================================


================================================================================
NET UNDERWRITING COMMISSIONS
- --------------------------------------------------------------------------------
                                             2000            2001           2002
- --------------------------------------------------------------------------------
Large Cap Value Fund...................     $ 2,728         $ 1,288
Equity Fund............................      32,889          17,220
Global Fund............................       2,506             628
Social Awareness Fund..................       1,777             463
Mid Cap Value Fund.....................       2,131           1,900
Small Cap Growth Fund..................       6,617             905
Enhanced Index Fund(1).................       2,511           1,202
International Fund(1)..................       1,145             640
Select 25 Fund(1)......................      16,845           1,512
Large Cap Growth Fund(2)...............         233             588
Technology Fund(2).....................         453             863
Mid Cap Growth Fund....................      10,148           7,637
- --------------------------------------------------------------------------------
1  For the period January 29, 1999 (date of inception) to September 30, 1999.
2  For the period May 1, 2000 (date of inception) to September 30, 2000.
================================================================================


================================================================================
COMPENSATION ON REDEMPTIONS
- --------------------------------------------------------------------------------
                                              2000            2001          2002
- --------------------------------------------------------------------------------
Large Cap Value Fund...................     $ 23,918        $ 13,056
Equity Fund............................      368,103         252,651
Global Fund............................       27,344          33,559
Social Awareness Fund..................       15,950          18,511
Mid Cap Value Fund.....................       17,442          39,799
Small Cap Growth Fund..................        5,246          10,570
Enhanced Index Fund(1).................       22,639          21,853
International Fund(1)..................          569           1,740
Select 25 Fund(1)......................       43,327          32,777
Large Cap Growth Fund(2)...............           12           4,383
Technology Fund(2).....................          243           2,747
Mid Cap Growth Fund....................       17,901          39,883
- --------------------------------------------------------------------------------
1  For the period January 29, 1999 (date of inception) to September 30, 1999.
2  For the period May 1, 2000 (date of inception) to September 30, 2000.
================================================================================

The Distributor, on behalf of the Funds, may act as a broker in the purchase and
sale of  securities,  provided that any such  transactions  and any  commissions
shall comply with  requirements of the 1940 Act and all rules and regulations of
the SEC. The Distributor has not acted as a broker.


Each Fund's Distribution  Agreement is renewable annually either by its Board of
Directors  or by the vote of a majority  of the Fund's  outstanding  securities,
and,  in either  event,  by a majority  of the board who are not  parties to the
contract or interested persons of any such party. The contract may be terminated
by either party upon 60 days' written notice.

ALLOCATION OF PORTFOLIO BROKERAGE

Transactions in portfolio  securities shall be effected in such manner as deemed
to be in the best  interests  of the  respective  Funds.  In reaching a judgment
relative to the qualifications of a broker-dealer  ("broker") to obtain the best
execution of a particular  transaction,  all relevant factors and  circumstances
will be taken into account by the  Investment  Manager or relevant  Sub-Adviser,
including the overall reasonableness of commissions paid to a broker, the firm's
general  execution  and  operational  capabilities,   and  its  reliability  and
financial condition.  Subject to the foregoing considerations,  the execution of
portfolio  transactions  may be  directed  to  brokers  who  furnish  investment
information  or  research  services  to  the  Investment   Manager  or  relevant
Sub-Adviser. Such investment information and research services include advice as
to the value of  securities,  the  advisability  of investing in,  purchasing or
selling securities, and the availability of securities and purchasers or sellers
of  securities,   and  furnishing   analyses  and  reports   concerning  issues,
industries,  securities,  economic  factors and trends,  portfolio  strategy and
performance of accounts.  Such investment  information and research services may
be furnished by brokers in many ways, including:  (1) on-line data base systems,
the  equipment for which is provided by the broker,  that enable the  Investment
Manager to have real-time access to market  information,  including  quotations;
(2) economic research services, such as publications,  chart services and advice
from  economists  concerning  macroeconomic  information;   and  (3)  analytical
investment information concerning particular corporations.

In some cases, the computer and other equipment furnished by the broker may have
additional  uses that are not related to the  investment  services  and research
information.  In such cases, the Investment Manager or Sub-Adviser must allocate
the value of the computer and other  equipment  into  research and  non-research
categories.  Since that  portion  allocable  to  research  can be paid from Fund
brokerage  commissions  rather  than  being  paid by the  Investment  Manager or
Sub-Adviser,  the  Investment  Manager or  Sub-Adviser  will have a conflict  of
interest in making the allocation.  Finally, the investment services or research
information provided to the Investment Manager or Sub-Adviser may be produced by
parties other than the broker effecting the portfolio transaction.


If a  transaction  is  directed  to a broker  supplying  investment  services or
research  information,  the transaction  charges (i.e., a commission or a charge
that is deemed to be the equivalent of a commission)  paid for such  transaction
may be in excess of the  transaction  charges  another broker would have charged
for effecting that transaction  provided that the Investment Manager or relevant
Sub-Adviser shall have determined in good faith that the transaction charges are
reasonable  in  relation  to the  value  of the  investment  information  or the
research  services   provided,   viewed  in  terms  of  either  that  particular
transaction  or the  overall  responsibilities  of  the  Investment  Manager  or
relevant  Sub-Adviser  with  respect to all  accounts  as to which it  exercises
investment  discretion.  The Investment Manager or relevant  Sub-Adviser 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
the Funds.  Portfolio  transactions,  may also be placed with the Distributor or
with a Sub-Adviser's  affiliated  broker/dealer (including transactions in which
the security is being underwritten by an affiliated broker/dealer) to the extent
and in the manner permitted by applicable law.


In addition,  brokerage  transactions may be placed with broker-dealers who sell
shares of the Funds  managed by the  Investment  Manager  and who may or may not
also provide  investment  information  and  research  services.  The  Investment
Manager may, consistent with the NASD's Conduct Rules,  consider sales of shares
of the Funds in the selection of a broker.


The Funds may also buy securities from, or sell securities to, dealers acting as
principals  or market  makers.  Except as noted below,  the  Investment  Manager
generally  will not  purchase  investment  information  or research  services in
connection with such principal transactions. The Investment Manager and relevant
Sub-Adviser,  however, may purchase investment  information or research services
in connection with riskless principal transactions that are reported pursuant to
certain NASD rules that ensure transparency as to security price and transaction
charges,  or in connection with transactions in other markets having regulations
that ensure comparable transparency of security prices and charges. In addition,
the  Investment  Manager  and  relevant   Sub-Adviser  may  purchase  investment
information or research  services in connection with investments in underwritten
fixed price  offerings  consistent with the so-called  "Papilisky"  rules of the
National Association of Securities Dealers.


Securities  held by the  Funds  may  also be held by other  investment  advisory
clients of the Investment Manager and/or relevant  Sub-Adviser,  including other
investment  companies.  In addition,  Security  Benefit Life  Insurance  Company
("SBL"),  may also hold some of the same securities as the Funds. When selecting
securities for purchase or sale for a Fund,  the  Investment  Manager may at the
same time be purchasing or selling the same  securities  for one or more of such
other  accounts.  Subject to the  Investment  Manager's  obligation to seek best
execution,  such purchases or sales may be executed simultaneously or "bunched."
It is the policy of the  Investment  Manager not to favor one  account  over the
other.  Any  purchase or sale  orders  executed  simultaneously  (which may also
include  orders from SBL) are  allocated  at the average  price and as nearly as
practicable on a pro rata basis  (transaction costs will also 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 the
Fund's transaction,  it is believed that the procedure generally  contributes to
better overall execution of the Fund's portfolio  transactions.  With respect to
the allocation of initial public offerings ("IPOs"),  the Investment Manager may
determine not to purchase such  offerings for certain of its clients  (including
investment  company  clients)  due to the  limited  number of  shares  typically
available to the Investment Manager in an IPO.

The following  table sets forth the brokerage  fees paid by the Funds during the
last three fiscal years and certain other information:


==========================================================================================
                                                 FUND
                                               BROKERAGE      FUND TRANSACTIONS DIRECTED
                                              COMMISSIONS       TO AND COMMISSIONS PAID
                                                PAID TO          TO BROKER-DEALERS WHO
                               FUND TOTAL      SECURITY         ALSO PERFORMED SERVICES
                                BROKERAGE    DISTRIBUTORS,   -----------------------------
                               COMMISSIONS    INC., THE                         BROKERAGE
FUND                 YEAR         PAID        UNDERWRITER    TRANSACTIONS      COMMISSIONS
- ------------------------------------------------------------------------------------------
Security Large       2002      $                  $          $                 $
Cap Value Fund       2001         271,911          0           59,611,468        72,351
                     2000         285,101          0           71,612,604       123,228
- ------------------------------------------------------------------------------------------
Security Equity      2002
Fund - Equity Fund   2001         433,627          0          106,136,839        83,875
                     2000       1,178,755          0          261,455,213       315,992
- ------------------------------------------------------------------------------------------
Security Equity      2002
Fund - Global Fund   2001         112,850          0                  ---(3)        ---(3)
                     2000         197,126          0           17,492,348        44,752
- ------------------------------------------------------------------------------------------
Security Equity      2002
Fund - Social        2001           7,318          0                    0             0
Awareness Fund       2000          17,498          0            2,692,332         2,798
- ------------------------------------------------------------------------------------------
Security Equity      2002
Fund - Mid Cap       2001         203,466          0           11,764,066        34,635
Value Fund           2000         139,613          0            5,302,746        24,225
- ------------------------------------------------------------------------------------------
Security Equity      2002
Fund - Small Cap     2001         173,677          0           22,713,111        12,472
Growth Fund          2000         169,092          0                    0             0
- ------------------------------------------------------------------------------------------
Security Equity      2002
Fund - Enhanced      2001           9,937          0               31,446            54
Index Fund           2000          21,591          0                    0             0
- ------------------------------------------------------------------------------------------
Security Equity      2002
Fund -               2001          56,711          0            1,860,748         2,749
International        2000          53,222          0                    0             0
Fund
- ------------------------------------------------------------------------------------------
Security Equity      2002
Fund - Select 25     2001          23,744          0                    0             0
Fund                 2000          55,992          0           47,124,399        44,726
- ------------------------------------------------------------------------------------------
Security Equity      2002
Fund - Large         2001           3,328          0            3,375,993         3,328
Cap Growth Fund      2000(2)        3,521          0              145,108           132
- ------------------------------------------------------------------------------------------
Security Equity      2002
Fund - Technology    2001          26,656          0            1,870,579         2,056
Fund                 2000(2)        5,306          0              689,530           385
- ------------------------------------------------------------------------------------------
Security Mid         2002
Cap Growth Fund      2001         290,150          0           13,534,781        43,082
                     2000         262,807          0           18,345,008        68,651
- ------------------------------------------------------------------------------------------
1  Enhanced  Index,  International  and Select 25 Funds'  figures  are based on the period
   January 29, 1999 (date of inception) to September 30, 1999.
2  Large Cap  Growth  and  Technology  Funds are based on the  period May 1, 2000 (date of
   inception) to September 30, 2000.
3  These figures are not available.
==========================================================================================


BROKERAGE ENHANCEMENT PLAN


The Boards of Directors of the Funds, including all of the Directors who are not
"interested  persons" (as defined in the 1940 Act) of the Funds,  the Investment
Manager or the Distributor  (referred to as the  "Independent  Directors"),  and
each Fund's (or Series thereof, as applicable), shareholders have voted pursuant
to the  provisions  of Rule  12b-1  under  the  1940  Act to  adopt a  Brokerage
Enhancement  Plan (the "Plan") for the purpose of utilizing the Funds' brokerage
commissions,  to the extent  available,  to promote the sale and distribution of
the Funds' shares. However, to date, none of the Funds has implemented the Plan.


Under the Plan, the Distributor,  on behalf of the Funds is authorized to direct
the Investment  Manager or a Sub-Adviser  to effect  brokerage  transactions  in
portfolio  securities  through  certain  broker-dealers,   consistent  with  the
obligation to achieve best price and execution. These broker-dealers have agreed
either (i) to pay a portion of their  commission  from the  purchase and sale of
securities  to  the  Distributor  or  other  introducing   brokers   ("Brokerage
Payments") that provide distribution activities, or (ii) or to provide brokerage
credits,  benefits  or  other  services  ("Brokerage  Credits")  to be used  for
distribution  activities  in  addition  to  the  execution  of  the  trade.  The
Distributor  will use a part of the  Brokerage  Payments  to  defray  legal  and
administrative  costs associated with implementation of the Plan. These expenses
are expected to be minimal. The remainder of the Brokerage Payments or Brokerage
Credits  generated  will  be  used  by the  Distributor  to  finance  activities
principally  intended  to  result  in the  sale  of  the  Funds'  shares.  These
activities will include, but are not limited to:

o  holding or participating in seminars and sales meetings promoting the sale of
   the Funds' shares
o  paying  marketing  fees  requested by  broker-dealers  who sell shares of the
   Funds
o  training sales personnel
o  creating and mailing advertising and sales literature
o  financing  any other  activity  that is intended to result in the sale of the
   Funds' shares.

The  Distributor  is obligated to use all amounts  generated  under the Plan for
distribution  expenses,  except  for a small  amount  to be used to  defray  the
incidental  costs  associated  with  implementation  of the  Plan.  The Plan may
indirectly  benefit the Distributor in that amounts  expended under the Plan may
help defray, in whole or in part,  distribution expenses that otherwise might be
borne by the Distributor or an affiliate.

The  Plan  provides  (i)  that it will be  subject  to  annual  approval  by the
Directors and the Independent Directors;  (ii) that the Distributor must provide
the Directors a quarterly written report of payments made under the Plan and the
purpose of the  payments;  and (iii) that the Plan may be terminated at any time
by the vote of a  majority  of the  Independent  Directors.  The Plan may not be
amended to increase  materially the amount to be spent for distribution  without
shareholder  approval,  and all material Plan  amendments  must be approved by a
vote of the Independent Directors.  In addition, the selection and nomination of
the Independent Directors must be committed to the Independent Directors.

HOW NET ASSET VALUE IS DETERMINED

The per share net asset value of each Fund is  determined  by dividing the total
value of its securities and other assets, less liabilities,  by the total number
of shares outstanding.  The public offering price for each Fund is its net asset
value  per  share  plus,  in the case of Class A shares,  the  applicable  sales
charge. The net asset value and offering price are computed once daily as of the
close of regular  trading hours on the New York Stock  Exchange  (normally  3:00
p.m. Central time) on each day the Exchange is open for trading, which is Monday
through  Friday,  except for the following  dates when the exchange is closed in
observance of federal  holidays:  New Year's Day,  Martin Luther King,  Jr. Day,
President's  Day,  Good  Friday,  Memorial  Day,  Independence  Day,  Labor Day,
Thanksgiving Day and Christmas Day.

The  offering  price  determined  at the close of business on the New York Stock
Exchange  on each day on which the  Exchange is open will be  applicable  to all
orders for the  purchase  of Fund shares  received  by the dealer  prior to such
close of  business  and  transmitted  to the  Funds  prior to the close of their
business day (normally 5:00 p.m. Central time unless the Exchange closes early).
Orders  accepted by the dealer after the close of business of the Exchange or on
a day when the  Exchange is closed  will be filled on the basis of the  offering
price  determined as of the close of business of the Exchange on the next day on
which the Exchange is open. It is the  responsibility  of the dealer to promptly
transmit orders to the Funds.

In  determining  net asset  value,  securities  listed  or traded on a  national
securities exchange are valued on the basis of the last sale price. If there are
no sales on a particular  day, then the  securities  shall be valued at the last
bid price.  All other  securities for which market  quotations are available are
valued on the basis of the last current bid price.  If there is no bid price, or
if the bid price is deemed to be unsatisfactory by the Board of Directors or the
Investment  Manager,  then the securities  shall be valued in good faith by such
method as the Board of  Directors  determines  will  reflect  their fair  market
value.

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 the  Investment  Manager 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 the  Investment  Manager  rather than being
determined by the market.


Because  the  expenses  of  distribution  are borne by Class A shares  through a
front-end  sales  charge  and by Class B and Class C shares  through  an ongoing
distribution fee, the expenses attributable to each class of shares will differ,
resulting  in  different  net asset  values.  The net asset value of Class B and
Class C shares  will  generally  be lower  than the net  asset  value of Class A
shares  as a result  of the  distribution  fee  charged  to Class B and  Class C
shares. It is expected, however, that the net asset value per share will tend to
converge  immediately after the payment of dividends which will differ in amount
for  Class  A, B and C shares  by  approximately  the  amount  of the  different
distribution expenses attributable to Class A, B and C shares.


HOW TO REDEEM SHARES

Shareholders  may turn in their shares  directly to the  Investment  Manager for
redemption  at net asset  value  (which may be more or less than the  investor's
cost, depending upon the market value of the portfolio securities at the time of
redemption).  The  redemption  price in cash  will be the net asset  value  next
determined  after the time when such shares are tendered for redemption less any
applicable contingent deferred sales charge.


Shares  will be redeemed on request of the  shareholder  in proper  order to the
Investment Manager, which serves as the Funds' transfer agent. A request is made
in proper order by submitting the following items to the Investment Manager: (1)
a written request for redemption  signed by all registered owners exactly as the
account is registered,  including  fiduciary  titles, if any, and specifying the
account  number and the dollar amount or number of shares to be redeemed;  (2) a
guarantee of all signatures on the written  request or on the share  certificate
or accompanying  stock power; (3) any share  certificates  issued for any of the
shares to be redeemed; and (4) any additional documents which may be required by
the Investment  Manager for redemption by corporations  or other  organizations,
executors, administrators, trustees, custodians or the like. Transfers of shares
are subject to the same requirements.  A signature guarantee is not required for
redemptions of $25,000 or less,  requested by and payable to all shareholders of
record  for an  account,  to be sent to the  address of  record.  The  signature
guarantee must be provided by an eligible guarantor institution, such as a bank,
broker, credit union,  national securities exchange or savings association.  The
Investment Manager reserves the right to reject any signature guarantee pursuant
to its written  procedures which may be revised in the future. To avoid delay in
redemption  or  transfer,  shareholders  having  questions  should  contact  the
Investment Manager.


The Articles of  Incorporation of Security Equity Fund provide that the Board of
Directors, without the vote or consent of the shareholders,  may adopt a plan to
redeem at net asset value all shares in any  shareholder  account in which there
has been no  investment  (other than the  reinvestment  of income  dividends  or
capital  gains  distributions)  for the last six months  and in which  there are
fewer than 25 shares or such fewer  number of shares as may be  specified by the
Board of Directors.  Any plan of involuntary  redemption adopted by the Board of
Directors  shall provide that the plan is in the economic best  interests of the
Fund  or is  necessary  to  reduce  disproportionately  burdensome  expenses  in
servicing  shareholder  accounts.  Such plan shall  further  provide  that prior
notice of at least six months shall be given to a shareholder before involuntary
redemption, and that the shareholder will have at least six months from the date
of the notice to avoid  redemption by increasing  his or her account to at least
the minimum number of shares  established in the Articles of  Incorporation,  or
such fewer shares as are specified in the plan.

When  investing in the Funds,  shareholders  are  required to furnish  their tax
identification  number  and  to  state  whether  or  not  they  are  subject  to
withholding  for prior  underreporting,  certified under penalties of perjury as
prescribed by the Internal  Revenue  Code.  To the extent  permitted by law, the
redemption proceeds of shareholders who fail to furnish this information will be
reduced by $50 to  reimburse  for the IRS penalty  imposed for failure to report
the tax identification number on information reports.

Payment in cash of the amount due on redemption,  less any  applicable  deferred
sales charge,  for shares  redeemed will be made within seven days after tender,
except that the Funds may suspend the right of redemption during any period when
trading on the New York Stock  Exchange is restricted or such Exchange is closed
for other than weekends or holidays,  or any emergency is deemed to exist by the
Securities and Exchange Commission.  When a redemption request is received,  the
redemption  proceeds are deposited into a redemption account  established by the
Distributor  and the  Distributor  sends a check  in the  amount  of  redemption
proceeds  to the  shareholder.  The  Distributor  earns  interest on the amounts
maintained  in  the  redemption  account.  Conversely,  the  Distributor  causes
payments  to be made to the Funds in the case of  orders  for  purchase  of Fund
shares before it actually receives federal funds.

In addition to the foregoing redemption  procedure,  the Funds repurchase shares
from  broker-dealers  at the price determined as of the close of business on the
day such offer is confirmed.  The Distributor has been authorized,  as agent, to
make such repurchases for the Funds' account. Dealers may charge a commission on
the repurchase of shares.

The repurchase or redemption of shares held in a  tax-qualified  retirement plan
must be  effected  through the trustee of the plan and may result in adverse tax
consequences. (See "Retirement Plans," page 69.)

At various times the Funds may be requested to redeem shares for which they have
not yet received good payment. Accordingly, the Funds may delay the mailing of a
redemption  check  until  such time as they have  assured  themselves  that good
payment  (e.g.,  cash or certified  check on a U.S. bank) has been collected for
the purchase of such shares.

The Funds intend to pay  redemption  proceeds in cash.  However,  under  unusual
conditions  that make  payment in cash  unwise  (and for the  protection  of the
remaining shareholders of the Funds), the Funds reserve the right to pay all, or
part, of the redemption  proceeds in liquid securities with a market value equal
to the redemption price  ("redemption in kind"). In the event a shareholder were
to receive a redemption in kind of portfolio  securities of the Funds,  it would
be the  responsibility  of the  shareholder  to dispose of the  securities.  The
shareholder  would be at risk that the  value of the  securities  would  decline
prior to their sale, that it would be difficult to sell the securities, and that
brokerage fees could be incurred.


TELEPHONE  REDEMPTIONS  -- A  shareholder  may redeem  uncertificated  shares in
amounts  up to  $25,000 by  telephone  request,  provided  the  shareholder  has
completed the Telephone  Redemption  section of the  application  or a Telephone
Redemption form which may be obtained from the Investment Manager.  The proceeds
of a telephone  redemption will be sent to the shareholder at his or her address
as set forth in the application or in a subsequent written  authorization with a
signature  guarantee.  Once  authorization  has been received by the  Investment
Manager, a shareholder may redeem shares by calling the Funds at (800) 888-2461,
on  weekdays  (except  holidays)  between  the hours of 7:00 a.m.  and 6:00 p.m.
Central time.  Redemption  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.  Telephone  redemptions  are not accepted for
IRA and 403(b)(7) accounts. A shareholder who authorizes  telephone  redemptions
authorizes the  Investment  Manager to act upon the  instructions  of any person
identifying  themselves as the owner of the account or the owner's  broker.  The
Investment  Manager has  established  procedures  to confirm  that  instructions
communicated  by  telephone  are genuine and may be liable for any losses due to
fraudulent  or  unauthorized  instructions  if  it  fails  to  comply  with  its
procedures.   The  Investment  Manager's  procedures  require  that  any  person
requesting  a  redemption  by  telephone  provide the account  registration  and
number, the owner's tax  identification  number, and the dollar amount or number
of shares to be redeemed,  and such  instructions must be received on a recorded
line.  Neither the Fund, the Investment  Manager,  nor the  Distributor  will be
liable for any loss,  liability,  cost or expense  arising out of any redemption
request provided that the Investment Manager complied with its procedures. Thus,
a shareholder  who authorizes  telephone  redemptions  may bear the risk of loss
from a fraudulent or unauthorized  request.  The telephone  redemption privilege
may be  changed or  discontinued  at any time by the  Investment  Manager or the
Funds.


During periods of severe market or economic  conditions,  telephone  redemptions
may be difficult to implement and  shareholders  should make redemptions by mail
as described under "How to Redeem Shares," page 57.

HOW TO EXCHANGE SHARES

Shareholders of the Funds may exchange their shares for shares of another of the
Funds  or  for  shares  of  certain  other  mutual  funds,   including  Security
Diversified Income, High Yield, and Municipal Bond Funds.  Shareholders who hold
their shares in a tax-qualified  retirement plan may also exchange shares of the
Funds for shares of Security  Capital  Preservation  Fund,  but may not exchange
into Security  Municipal Bond Fund.  Shareholders may also 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. Exchanges may be made only in those states where
shares of the fund into which an exchange is to be made are available for sale.


Class A, Class B and Class C shares of the Funds may be  exchanged  for Class A,
Class B and Class C shares,  respectively,  of another of the available funds or
for shares of Security Cash Fund, a money market fund that offers a single class
of shares.  No exchanges of Class C shares are allowed with a Fund that does not
offer such Class of shares,  except that a shareholder  may exchange  Class C or
Class S shares for shares of Security Cash Fund. Any  contingent  deferred sales
charge  applicable  to such Class A,  Class B or Class C shares  will be imposed
upon  redemption and calculated  from the date of the initial  purchase  without
regard  to  the  time  such  shares  were  held  in  Security  Cash  Fund.  Such
transactions  generally  have the same tax  consequences  as ordinary  sales and
purchases. No service fee is presently imposed on such an exchange. They are not
tax-free exchanges.


Exchanges  are made  promptly  upon  receipt  of a properly  completed  Exchange
Authorization  form  and  (if  issued)  share  certificates  in good  order  for
transfer. If the shareholder is a corporation,  partnership, agent, fiduciary or
surviving joint owner, additional documentation of a customary nature, such as a
stock power and  guaranteed  signature,  will be  required.  (See "How to Redeem
Shares," page 57.)

This privilege may be changed or  discontinued  at any time at the discretion of
the  management  of the  Funds  upon 60  days'  notice  to  shareholders.  It is
contemplated,  however,  that the  privilege  will be extended in the absence of
objection by regulatory  authorities and provided shares of the respective funds
are  available  and  may be  legally  sold  in the  jurisdiction  in  which  the
shareholder  resides. A current prospectus of the Fund into which an exchange is
made will be given to each shareholder exercising this privilege.


EXCHANGE BY TELEPHONE -- To exchange  shares by telephone,  a  shareholder  must
have completed  either the Telephone  Exchange  section of the  application or a
Telephone Transfer  Authorization form which may be obtained from the Investment
Manager.  Authorization  must be on file  with  the  Investment  Manager  before
exchanges may be made by telephone.  Once authorization has been received by the
Investment  Manager,  a shareholder  may exchange shares by telephone by calling
the Funds at (800) 888-2461,  on weekdays (except holidays) between the hours of
7:00 a.m. and 6:00 p.m. Central time. Exchange requests received 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.  Shares which are held in  certificate
form may not be exchanged by telephone.


The  telephone  exchange  privilege  is only  permitted  between  accounts  with
identical  registrations.  The Investment Manager has established  procedures to
confirm  that  instructions  communicated  by  telephone  are genuine and may be
liable for any losses due to fraudulent or unauthorized instructions if it fails
to comply with its procedures.  The Investment Manager's procedures require that
any person requesting an exchange by telephone provide the account  registration
and number, the tax identification number, the dollar amount or number of shares
to be exchanged,  and the names of the Security  Funds from which and into which
the exchange is to be made, and such instructions must be received on a recorded
line.  Neither the Funds,  the Investment  Manager nor the  Distributor  will be
liable for any loss,  liability,  cost or expense  arising  out of any  request,
including any fraudulent  request provided the Investment  Manager complied with
its procedures.  Thus, a shareholder who authorizes telephone exchanges may bear
the risk of loss in the event of a  fraudulent  or  unauthorized  request.  This
telephone  exchange  privilege may be changed or discontinued at any time at the
discretion of the  management  of the Funds.  In  particular,  the Funds may set
limits on the amount and  frequency of such  exchanges,  in general or as to any
individual who abuses such privilege.

DIVIDENDS AND TAXES


It is each Fund's policy to pay  dividends  from net  investment  income as from
time to time  declared by the Board of  Directors,  and to  distribute  realized
capital  gains  (if any) in  excess  of any  capital  losses  and  capital  loss
carryovers,  at least once a year. Because Class A shares of the Funds bear most
of the costs of distribution of such shares through payment of a front-end sales
charge,  while Class B and Class C shares of the Funds bear such costs through a
higher  distribution fee,  expenses  attributable to Class B and Class C shares,
generally,  will be higher  and as a result,  income  distributions  paid by the
Funds with  respect to Class B and Class C shares  generally  will be lower than
those paid with respect to Class A shares. Because the value of a share is based
directly on the amount of the net assets  rather than on the principle of supply
and demand,  any  distribution of capital gains or payment of an income dividend
will result in a decrease in the value of a share equal to the amount paid.  All
such dividends and  distributions  are  automatically  reinvested on the payable
date in shares of the Funds at net asset value as of the record date (reduced by
an amount  equal to the  amount of the  dividend  or  distribution),  unless the
Investment  Manager is previously  notified in writing by the  shareholder  that
such dividends or  distributions  are to be received in cash. A shareholder  may
request  that such  dividends  or  distributions  be directly  deposited  to the
shareholder's  bank account. A shareholder who elected not to reinvest dividends
or distributions  paid with respect to Class A shares may, at any time within 30
days after the payment date,  reinvest a dividend check without  imposition of a
sales charge.


The following  summarizes  certain federal income tax  considerations  generally
affecting  the Funds and their  shareholders.  No  attempt  is made to present a
detailed  explanation  of the tax treatment of the Funds or their  shareholders,
and  the  discussion  here is not  intended  as a  substitute  for  careful  tax
planning.  The  discussion  is based upon present  provisions  of the Code,  the
regulations  promulgated  thereunder,  and  judicial and  administrative  ruling
authorities,   all  of  which  are  subject  to  change,  which  change  may  be
retroactive.  Prospective  investors  should consult their own tax advisors with
regard  to  the  federal  tax  consequences  of  the  purchase,  ownership,  and
disposition of Fund shares,  as well as the tax  consequences  arising under the
laws of any state, foreign country, or other taxing jurisdiction.

For federal income tax purposes, dividends paid by the Funds from net investment
income may qualify for the corporate  stockholder's dividends received deduction
to the  extent  the  Funds  designate  the  amount  distributed  as a  qualified
dividend.  The aggregate amount designated as a qualified  dividend by the Funds
cannot  exceed the  aggregate  amount of  dividends  received  by the Funds from
domestic  corporations  for the taxable year. The corporate  dividends  received
deduction  will be limited if the shares with respect to which the dividends are
received are treated as  debt-financed or are deemed to have been held less than
46 days. In addition, a corporate stockholder must hold Fund shares for at least
46 days to be eligible to claim the dividends received deduction.  All dividends
from net  investment  income,  together with  distributions  of any realized net
short-term  capital gains,  whether paid direct to the shareholder or reinvested
in shares of the Funds, are taxable as ordinary income.

The  excess of net  long-term  capital  gains  over  short-term  capital  losses
realized  and  distributed  by the  Funds  or  reinvested  in Fund  shares  will
generally be taxable to  shareholders  as long-term gain. Net capital gains from
assets held for one year or less will be taxed as ordinary income. Distributions
will  be  subject  to  these  capital  gains  rates  regardless  of  how  long a
shareholder  has held Fund  shares.  Advice as to the tax status of each  year's
dividends  and  distributions  will be mailed  annually.  A  purchase  of shares
shortly before payment of a dividend or distribution is disadvantageous  because
the dividend or distribution to the purchaser has the effect of reducing the per
share  net  asset  value  of the  shares  by the  amount  of  the  dividends  or
distributions.  In addition, all or a portion of such dividends or distributions
(although in effect a return of capital) may be taxable.

Each Fund intends to qualify  annually and to elect to be treated as a regulated
investment company under the Code.

To qualify as a  regulated  investment  company,  each Fund  must,  among  other
things:  (i) derive in each  taxable  year at least 90% of its gross income from
dividends,  interest,  payments with respect to certain  securities  loans,  and
gains  from  the sale or other  disposition  of  stock,  securities  or  foreign
currencies, or other income derived with respect to its business of investing in
such stock, securities, or currencies ("Qualifying Income Test"); (ii) diversify
its  holdings so that,  at the end of each quarter of the taxable  year,  (a) at
least 50% of the market value of the Fund's assets is represented by cash,  cash
items, U.S. Government securities,  the securities of other regulated investment
companies,  and other  securities,  with such other securities of any one issuer
limited for the purposes of this calculation to an amount not greater than 5% of
the  value  of the  Fund's  total  assets  and  10% of  the  outstanding  voting
securities  of such issuer,  and (b) not more than 25% of the value of its total
assets  is  invested  in the  securities  of any one  issuer  (other  than  U.S.
Government   securities  or  the  securities  of  other   regulated   investment
companies),  or of two or more issuers  which the Fund controls (as that term is
defined in the relevant  provisions of the Code) and which are  determined to be
engaged  in the same or  similar  trades  or  businesses  or  related  trades or
businesses;  and  (iii)  distribute  at least  90% of the sum of its  investment
company taxable income (which includes, among other items, dividends,  interest,
and net short-term  capital gains in excess of any net long-term capital losses)
and its net tax-exempt  interest each taxable year.  The Treasury  Department is
authorized to promulgate  regulations  under which foreign  currency gains would
constitute  qualifying income for purposes of the Qualifying Income Test only if
such gains are  directly  related to  investing  in  securities  (or options and
futures with respect to  securities).  To date,  no such  regulations  have been
issued.

Certain  requirements  relating  to the  qualification  of a Fund as a regulated
investment  company  may limit the extent to which a Fund will be able to engage
in certain investment practices, including transactions in futures contracts and
other types of derivative securities  transactions.  In addition, if a Fund were
unable to dispose of portfolio securities due to settlement problems relating to
foreign  investments  or due to the holding of illiquid  securities,  the Fund's
ability to qualify as a regulated investment company might be affected.

A Fund  qualifying  as a  regulated  investment  company  generally  will not be
subject to U.S. federal income tax on its investment  company taxable income and
net  capital  gains  (any  net  long-term  capital  gains in  excess  of the net
short-term  capital losses),  if any, that it distributes to shareholders.  Each
Fund intends to distribute to its shareholders, at least annually, substantially
all of its investment company taxable income and any net capital gains.

Generally,  regulated  investment  companies,  like the  Fund,  must  distribute
amounts  on a timely  basis in  accordance  with a  calendar  year  distribution
requirement in order to avoid a nondeductible 4% excise tax. Generally, to avoid
the tax, a regulated  investment  company must  distribute  during each calendar
year,  (i) at least 98% of its  ordinary  income (not  taking  into  account any
capital gains or losses) for the calendar year, (ii) at least 98% of its capital
gains in excess of its capital losses (adjusted for certain ordinary losses) for
the 12-month  period  ending on October 31 of the calendar  year,  and (iii) all
ordinary  income and capital gains for previous years that were not  distributed
during such years. To avoid  application of the excise tax, each Fund intends to
make its  distributions  in  accordance  with  the  calendar  year  distribution
requirement.  A  distribution  is treated as paid on December 31 of the calendar
year if it is declared  by a Fund in October,  November or December of that year
to  shareholders of record on a date in such a month and paid by the Fund during
January of the  following  calendar  year.  Such  distributions  are  taxable to
shareholders  in the  calendar  year in which the  distributions  are  declared,
rather than the calendar year in which the distributions are received.

If, as a result of  exchange  controls  or other  foreign  laws or  restrictions
regarding  repatriation  of capital,  a Fund was unable to  distribute an amount
equal  to  substantially  all of  its  investment  company  taxable  income  (as
determined for U.S. tax purposes) within applicable time periods, the Fund would
not qualify for the favorable  federal income tax treatment  afforded  regulated
investment companies,  or, even if it did so qualify, it might become liable for
federal taxes on  undistributed  income.  In addition,  the ability of a Fund to
obtain  timely  and  accurate  information  relating  to  its  investments  is a
significant  factor in complying with the  requirements  applicable to regulated
investment  companies in making tax-related  computations.  Thus, if a Fund were
unable to obtain  accurate  information on a timely basis, it might be unable to
qualify as a regulated  investment  company,  or its tax  computations  might be
subject to revisions  (which could result in the  imposition of taxes,  interest
and penalties).

Generally,  gain  or  loss  realized  upon  the  sale or  redemption  of  shares
(including  the  exchange of shares for shares of another  fund) will be capital
gain or loss if the shares are capital assets in the  shareholder's  hands,  and
will be taxable to  shareholders  as long-term  capital  gains if the shares had
been held for more than one year at the time of sale or redemption.  Net capital
gains on shares held for less than one year will be taxable to  shareholders  as
ordinary income.  Investors should be aware that any loss realized upon the sale
or  redemption  of  shares  held for six  months or less  will be  treated  as a
long-term  capital loss to the extent of any  distribution of long-term  capital
gain to the  shareholder  with  respect to such shares.  In  addition,  any loss
realized on a sale or exchange  of shares will be  disallowed  to the extent the
shares  disposed of are replaced  within a period of 61 days,  beginning 30 days
before and ending 30 days after the date the  shares are  disposed  of,  such as
pursuant to the reinvestment of dividends. In such case, the basis of the shares
acquired will be adjusted to reflect the disallowed loss.

Under  certain  circumstances,  the sales charge  incurred in acquiring  Class A
shares of the Funds may not be taken  into  account in  determining  the gain or
loss on the disposition of those shares. This rule applies in circumstances when
shares  of the Fund are  exchanged  within  90 days  after  the date  they  were
purchased and new shares in a regulated  investment company are acquired without
a sales  charge or at a reduced  sales  charge.  In that case,  the gain or loss
recognized on the exchange will be determined by excluding from the tax basis of
the shares  exchanged all or a portion of the sales charge incurred in acquiring
those shares. This exclusion applies to the extent that the otherwise applicable
sales charge with respect to the newly acquired shares is reduced as a result of
having incurred the sales charge  initially.  Instead,  the portion of the sales
charge  affected  by this rule  will be  treated  as an amount  paid for the new
shares.

The  Funds  are  required  by  law to  withhold  31% of  taxable  dividends  and
distributions  to  shareholders  who  do  not  furnish  their  correct  taxpayer
identification  numbers,  or are  otherwise  subject to the  backup  withholding
provisions of the Code.

Each Series of Security  Equity Fund will be treated  separately in  determining
the amounts of income and capital gains  distributions.  For this purpose,  each
Fund will reflect only the income and gains, net of losses of that Fund.

PASSIVE FOREIGN  INVESTMENT  COMPANIES -- Some of the Funds may invest in stocks
of foreign  companies  that are  classified  under the Code as  passive  foreign
investment companies ("PFICs"). In general, a foreign company is classified as a
PFIC if at least one half of its assets  constitutes  investment-type  assets or
75% or more of its gross income is investment-type income. Under the PFIC rules,
an  "excess  distribution"  received  with  respect  to PFIC stock is treated as
having been  realized  ratably over a period during which the Fund held the PFIC
stock.  The Fund  itself will be subject to tax on the  portion,  if any, of the
excess  distribution  that is  allocated to the Fund's  holding  period in prior
taxable  years (an  interest  factor will be added to the tax, as if the tax had
actually  been  payable  in such  prior  taxable  years)  even  though  the Fund
distributes  the  corresponding  income to  shareholders.  Excess  distributions
include  any gain from the sale of PFIC stock as well as  certain  distributions
from a PFIC. All excess distributions are taxable as ordinary income.

A Fund may be able to elect  alternative  tax  treatment  with  respect  to PFIC
stock. Under an election that currently may be available, a Fund generally would
be required to include in its gross  income its share of the  earnings of a PFIC
on a current basis,  regardless of whether any  distributions  are received from
the PFIC. If this election is made, the special rules, discussed above, relating
to the taxation of excess distributions,  would not apply. In addition,  another
election may be  available  that would  involve  marking to market a Fund's PFIC
stock at the end of each taxable year (and on certain other dates  prescribed in
the Code), with the result that unrealized gains are treated as though they were
realized. If this election were made, tax at the Fund level under the PFIC rules
would  be  eliminated,  but  a  Fund  could,  in  limited  circumstances,  incur
nondeductible  interest  charges.  A Fund's  intention to qualify  annually as a
regulated investment company may limit the Fund's elections with respect to PFIC
stock.

Because the  application of the PFIC rules may affect,  among other things,  the
character of gains, the amount of gain or loss and the timing of the recognition
of income with respect to PFIC stock, as well as subject a Fund itself to tax on
certain  income  from  PFIC  stock,  the  amount  that  must be  distributed  to
shareholders,  and which will be taxed to  shareholders  as  ordinary  income or
long-term capital gain, may be increased or decreased  substantially as compared
to a fund that did not invest in PFIC stock.

OPTIONS,  FUTURES AND FORWARD  CONTRACTS AND SWAP AGREEMENTS -- Certain options,
futures  contracts,  and  forward  contracts  in which a Fund may  invest may be
"Section 1256  contracts."  Gains or losses on Section 1256 contracts  generally
are  considered  60%  long-term  and 40%  short-term  capital  gains or  losses;
however,  foreign  currency  gains or losses  arising from certain  Section 1256
contracts  may be  treated  as  ordinary  income  or loss.  Also,  Section  1256
contracts  held by a Fund at the end of each taxable year (and at certain  other
times as prescribed pursuant to the Code) are "marked to market" with the result
that unrealized gains or losses are treated as though they were realized.

Generally,  the  hedging  transactions  undertaken  by  a  Fund  may  result  in
"straddles" for U.S. federal income tax purposes.  The straddle rules may affect
the  character  of gains (or losses)  realized by a Fund.  In  addition,  losses
realized  by a Fund on  positions  that are part of a straddle  may be  deferred
under the straddle  rules,  rather than being taken into account in  calculating
the  taxable  income for the  taxable  year in which such  losses are  realized.
Because  only a few  regulations  implementing  the  straddle  rules  have  been
promulgated,  the tax consequences of transactions in options,  futures, forward
contracts,  swap  agreements  and other  financial  contracts  to a Fund are not
entirely clear. The  transactions may increase the amount of short-term  capital
gain realized by a Fund which is taxed as ordinary  income when  distributed  to
shareholders.

A Fund may make one or more of the elections  available under the Code which are
applicable  to  straddles.  If a Fund makes any of the  elections,  the  amount,
character  and timing of the  recognition  of gains or losses from the  affected
straddle  positions  will be determined  under rules that vary  according to the
election(s)  made.  The rules  applicable  under  certain of the  elections  may
operate to  accelerate  the  recognition  of gains or losses  from the  affected
straddle positions.

Because  application  of the straddle rules may affect the character of gains or
losses,  defer losses and/or  accelerate the recognition of gains or losses from
the  affected  straddle  positions,  the  amount  which must be  distributed  to
shareholders,  and which will be taxed to  shareholders  as  ordinary  income or
long-term capital gain, may be increased or decreased as compared to a fund that
did not engage in such hedging transactions.

Because only a few regulations  regarding the treatment of swap agreements,  and
related caps, floors and collars, have been implemented, the tax consequences of
such  transactions  are not entirely clear. The Funds intend to account for such
transactions  in a manner  deemed by them to be  appropriate,  but the  Internal
Revenue Service might not necessarily accept such treatment.  If it did not, the
status of a Fund as a regulated investment company might be affected.

The requirements  applicable to a Fund's qualification as a regulated investment
company  may  limit  the  extent  to  which a Fund  will be  able to  engage  in
transactions in options, futures contracts,  forward contracts,  swap agreements
and other financial contracts.

MARKET DISCOUNT -- If a Fund purchases a debt security at a price lower than the
stated  redemption  price  of such  debt  security,  the  excess  of the  stated
redemption price over the purchase amount is "market discount." If the amount of
market  discount  is more than a DE MINIMIS  amount,  a portion  of such  market
discount  must be included as ordinary  income (not capital gain) by the Fund in
each taxable  year in which the Fund owns an interest in such debt  security and
receives a principal payment on it. In particular,  the Fund will be required to
allocate that principal payment first to a portion of the market discount on the
debt security that has accrued but has not previously been includable in income.
In general,  the amount of market discount that must be included for each period
is equal to the lesser of (i) the amount of market discount accruing during such
period (plus any accrued market discount for prior periods not previously  taken
into account) or (ii) the amount of the  principal  payment with respect to such
period.  Generally,  market  discount  accrues on a daily basis for each day the
debt  security is held by a Fund at a constant  rate over the time  remaining to
the debt  security's  maturity  or, at the  election of the Fund,  at a constant
yield to  maturity  which  takes into  account the  semi-annual  compounding  of
interest.  Gain realized on the disposition of a market discount obligation must
be  recognized as ordinary  interest  income (not capital gain) to the extent of
the "accrued market discount."

ORIGINAL ISSUE DISCOUNT -- Certain debt securities  acquired by the Funds may be
treated as debt  securities  that were  originally  issued at a  discount.  Very
generally,  original  issue  discount is defined as the  difference  between the
price  at  which a  security  was  issued  and its  stated  redemption  price at
maturity.  Although  no cash  income on account  of such  discount  is  actually
received by a Fund, original issue discount that accrues on a debt security in a
given year generally is treated for federal income tax purposes as interest and,
therefore,  such  income  would  be  subject  to the  distribution  requirements
applicable to regulated investment companies.

Some debt  securities  may be purchased by the Funds at a discount  that exceeds
the original issue  discount on such debt  securities,  if any. This  additional
discount represents market discount for federal income tax purposes (see above).

CONSTRUCTIVE  SALES -- Recently enacted rules may affect timing and character of
gain if a Fund engages in transactions that reduce or eliminate its risk of loss
with respect to appreciated financial positions. If the Fund enters into certain
transactions in property while holding  substantially  identical  property,  the
Fund would be treated as if it had sold and immediately repurchased the property
and would be taxed on any gain (but not loss) from the  constructive  sale.  The
character of gain from a constructive  sale would depend upon the Fund's holding
period in the property.  Loss from a constructive  sale would be recognized when
the property was subsequently disposed of, and its character would depend on the
Fund's holding period and the application of various loss deferral provisions of
the Code.

FOREIGN  TAXATION  -- Income  received by a Fund from  sources  within a foreign
country may be subject to  withholding  and other taxes imposed by that country.
Tax conventions  between certain  countries and the U.S. may reduce or eliminate
such taxes.

The payment of such taxes will reduce the amount of dividends and  distributions
paid to the Fund's  shareholders.  So long as a Fund  qualifies  as a  regulated
investment company,  certain distribution  requirements are satisfied,  and more
than 50% of such  Fund's  assets at the close of the  taxable  year  consists of
securities of foreign  corporations,  the Fund may elect, subject to limitation,
to pass through its foreign tax credits to its shareholders.

FOREIGN CURRENCY TRANSACTIONS -- Under the Code, gains or losses attributable to
fluctuations  in  exchange  rates which  occur  between the time a Fund  accrues
income or other receivables or accrues expenses or other liabilities denominated
in a  foreign  currency  and  the  time  that  a  Fund  actually  collects  such
receivables or pays such  liabilities,  generally are treated as ordinary income
or ordinary loss. Similarly,  on disposition of debt securities denominated in a
foreign  currency  and on  disposition  of certain  futures  contracts,  forward
contracts and options, gains or losses attributable to fluctuations in the value
of foreign  currency between the date of acquisition of the security or contract
and the date of  disposition  also are treated as ordinary  gain or loss.  These
gains or losses,  referred to under the Code as  "Section  988" gains or losses,
may  increase  or decrease  the amount of a Fund's  investment  company  taxable
income to be distributed to its shareholders as ordinary income.

OTHER TAXES -- The foregoing discussion is general in nature and is not intended
to provide an exhaustive  presentation of the tax consequences of investing in a
Fund.  Distributions may also be subject to additional state,  local and foreign
taxes, depending on each shareholder's particular situation.  Depending upon the
nature and extent of a Fund's contacts with a state or local  jurisdiction,  the
Fund may be subject to the tax laws of such jurisdiction if it is regarded under
applicable  law as doing  business in, or as having  income  derived  from,  the
jurisdiction.  Shareholders  are advised to consult  their own tax advisers with
respect to the particular tax  consequences  to them of an investment in a Fund.

ORGANIZATION


The  Articles  of  Incorporation  of each Fund  provide  for the  issuance of an
indefinite  number of shares of common  stock in one or more  classes or series.
Security  Equity  Fund has  authorized  capital  stock of $0.25  par  value  and
currently  issues its shares in eleven series,  Equity Fund,  Alpha  Opportunity
Fund,  Global Fund,  Social Awareness Fund, Mid Cap Value Fund, Small Cap Growth
Fund, Enhanced Index Fund,  International Fund, Select 25 Fund, Large Cap Growth
Fund and  Technology  Fund.  The shares of each series of  Security  Equity Fund
represent  a pro rata  beneficial  interest in that Fund's net assets and in the
earnings and profits or losses derived from the investment of such assets. Large
Cap Value and Mid Cap  Growth  Funds have not  issued  shares in any  additional
series at the present  time.  Large Cap Value and Mid Cap Growth Funds each have
authorized capital stock of $1.00 par value and $0.50 par value, respectively.

Each of the Funds  currently  issues three  classes of shares which  participate
proportionately  based on their  relative  net  asset  values in  dividends  and
distributions  and have equal voting,  liquidation  and other rights except that
(i)  expenses  related  to the  distribution  of each  class of  shares or other
expenses that the Board of Directors  may designate as class  expenses from time
to time, are borne solely by each class; (ii) each class of shares has exclusive
voting  rights with  respect to any  Distribution  Plan  adopted for that class;
(iii) each class has different  exchange  privileges;  and (iv) each class has a
different  designation.  When issued and paid for, the shares will be fully paid
and non-assessable by the Funds. Shares may be exchanged as described under "How
to Exchange  Shares,"  page 58, but will have no other  preference,  conversion,
exchange  or  preemptive  rights.   Shares  are  transferable,   redeemable  and
assignable and have cumulative voting privileges for the election of directors.

On certain matters, such as the election of directors,  all shares of the series
of Security  Equity Fund,  Equity Fund,  Alpha  Opportunity  Fund,  Global Fund,
Social Awareness Fund, Mid Cap Value Fund, Small Cap Growth Fund, Enhanced Index
Fund,  International  Fund, Select 25 Fund, Large Cap Growth Fund and Technology
Fund, vote together, with each share having one vote. On other matters affecting
a particular Fund, such as the investment  advisory  contract or the fundamental
policies,  only shares of that Fund are entitled to vote, and a majority vote of
the shares of that Fund is required for approval of the proposal.

The Funds do not generally hold annual meetings of  shareholders  and will do so
only when required by law. Shareholders may remove directors from office by vote
cast in person or by proxy at a meeting of shareholders.  Such a meeting will be
called at the written request of 10% of the outstanding shares of Security Large
Cap Value Fund, Security Equity Fund or Security Mid Cap Growth Fund.


CUSTODIANS, TRANSFER AGENT AND DIVIDEND-PAYING AGENT


State Street Bank and Trust Company, 225 Franklin, Boston,  Massachusetts 02110,
currently acts as custodian for the portfolio  securities of Alpha  Opportunity,
Large Cap Growth,  Technology,  Global and International Funds,  including those
held by foreign  banks and  foreign  securities  depositories  which  qualify as
eligible foreign custodians under the rules adopted by the SEC.

Banc of America  Securities,  LLC, 9 West 57th Street, New York, New York 10019,
also  currently  acts as custodian  for the  portfolio  securities  of the Alpha
Opportunity Fund,  including those held by foreign banks and foreign  securities
depositories  which  qualify  as  eligible  foreign  custodians  under the rules
adopted by the SEC.

UMB Bank,  N.A.,  928 Grand Avenue,  Kansas City,  Missouri  64106,  acts as the
custodian  for the portfolio  securities  of Large Cap Value Fund,  Equity Fund,
Social Awareness Fund, Mid Cap Value Fund, Small Cap Growth Fund, Enhanced Index
Fund, Select 25 Fund and Mid Cap Growth Fund. Security  Management Company,  LLC
acts as the Funds' transfer and dividend-paying agent.


INDEPENDENT AUDITORS

The firm of Ernst & Young LLP, One Kansas City Place,  1200 Main Street,  Kansas
City, Missouri  64105-2143,  has been selected by each Fund's Board of Directors
to serve as the Funds'  independent  auditors,  and as such,  will  perform  the
annual audit of the Funds' financial statements.

PERFORMANCE INFORMATION

The  Funds  may,  from  time  to  time,  include   performance   information  in
advertisements,  sales  literature  or reports to  shareholders  or  prospective
investors.  Performance information in advertisements or sales literature may be
expressed as average annual total return or aggregate total return.

Quotations  of average  annual  total  return will be  expressed in terms of the
average annual  compounded  rate of return of a  hypothetical  investment in the
Funds over periods of 1, 5 and 10 years (up to the life of the Fund), calculated
pursuant to the following formula:

                                P(1 + T)^n = ERV


(where P = a  hypothetical  initial  payment of $1,000,  T = the average  annual
total return, n = the number of years, and ERV = the ending  redeemable value of
a hypothetical  $1,000  payment made at the beginning of the period).  All total
return  figures will reflect the deduction of the maximum  initial sales load of
5.75%  in the  case of  quotations  of  performance  of  Class A  shares  or the
applicable  contingent  deferred  sales  charge  in the  case of  quotations  of
performance  of Class B and  Class C  shares  and a  proportional  share of Fund
expenses on an annual basis, and assume that all dividends and distributions are
reinvested when paid.

For the 1-, 5- and 10-year  periods ended  September 30, 2002 the average annual
total return for each Fund was the following:

================================================================================
                                                       1 YEAR
                                     -------------------------------------------
                                     CLASS A         CLASS B         CLASS C
- --------------------------------------------------------------------------------
Large Cap Value Fund .............   (20.51)%        (20.76)%        (17.29)%
Equity Fund ......................   (31.84)%        (31.92)%        (29.07)%
Global Fund ......................   (31.76)%        (31.47)%        (28.92)%
Social Awareness Fund ............   (33.75)%        (33.92)%        (31.08)%
Mid Cap Value Fund ...............   (10.05)%        (10.18)%         (6.37)%
Small Cap Growth Fund ............   (54.71)%        (54.70)%        (52.94)%
Enhanced Index Fund ..............   (32.40)%        (32.37)%        (29.50)%
International Fund ...............   (38.74)%        (38.67)%        (36.14)%
Select 25 Fund ...................   (36.99)%        (37.01)%        (34.32)%
Large Cap Growth Fund ............   (41.75)%        (41.72)%        (39.16)%
Technology Fund ..................   (65.56)%        (65.96)%        (64.53)%
Mid Cap Growth Fund ..............   (41.74)%        (41.89)%        (39.39)%
================================================================================


================================================================================
                                                       5 YEARS
                                     -------------------------------------------
                                     CLASS A         CLASS B         CLASS C
- --------------------------------------------------------------------------------
Large Cap Value Fund .............     0.56%           0.29%          (8.25)%(4)
Equity Fund ......................     4.47%           4.34%         (10.77)%(4)
Global Fund ......................     8.21%           8.39%           5.25%(4)
Social Awareness Fund ............     3.56%(1)        3.32%(1)      (10.83)%(4)
Mid Cap Value Fund ...............    17.09%(2)       17.25%(2)       12.96%(4)
Small Cap Growth Fund ............     0.68%(3)        0.38%(3)       (1.88)%(4)
Enhanced Index Fund ..............    (7.22)%(4)      (8.96)%(4)      (7.87)%(4)
International Fund ...............   (13.71)%(4)     (13.38)%(4)     (12.30)%(4)
Select 25 Fund ...................   (11.83)%(4)     (11.50)%(4)     (10.35)%(4)
Large Cap Growth Fund ............   (33.08)%(5)     (32.85)%(5)     (30.80)%(5)
Technology Fund ..................   (55.06)%(5)     (55.51)%(5)     (54.21)%(5)
Mid Cap Growth Fund ..............     9.92%           9.88%           5.84%(4)
- --------------------------------------------------------------------------------
1  From November 1, 1996 (date of inception) to September 30, 2002
2  From May 1, 1997 (date of inception) to September 30, 2002
3  From October 15, 1997 (date of inception) to September 30, 2002
4  From January 29, 1999 (date of inception) to September 30, 2002
5  From May 1, 2000 (date of inception) to September 30, 2002
================================================================================


================================================================================
                                                      10 YEARS
                                      ------------------------------------------
                                      CLASS A          CLASS B       CLASS C
- --------------------------------------------------------------------------------
Large Cap Value Fund .............     5.21%           3.84%(1)        ---
Equity Fund ......................    10.59%           8.87%(1)        ---
Global Fund ......................     8.68%(2)        8.70%(1)        ---
Social Awareness Fund ............     ---             ---             ---
Mid Cap Value Fund ...............     ---             ---             ---
Small Cap Growth Fund ............     ---             ---             ---
Enhanced Index Fund ..............     ---             ---             ---
International Fund ...............     ---             ---             ---
Select 25 Fund ...................     ---             ---             ---
Large Cap Growth Fund ............     ---             ---             ---
Technology Fund ..................     ---             ---             ---
Mid Cap Growth Fund ..............    10.91%           9.88%(1)        ---
- --------------------------------------------------------------------------------
1  From October 19, 1993 (date of inception) to September 30, 2002
2  From October 1, 1993 (date of inception) to September 30, 2002
================================================================================


Quotations of aggregate total return will be calculated for any specified period
pursuant to the following formula:

                                   ERV - P
                                   ------- = T
                                      P

(where P = a hypothetical  initial payment of $1,000, T = the total return,  and
ERV = the ending  redeemable value of a hypothetical  $1,000 payment made at the
beginning of the period). All total return figures assume that all dividends and
distributions  are  reinvested  when  paid.  The Funds  may,  from time to time,
include  quotations of aggregate  total return that do not reflect  deduction of
the sales load. The sales load, if reflected, would reduce the total return.


The  aggregate  total  return  on an  investment  for each  Fund  calculated  as
described above was as indicated in the  accompanying  table.  Unless  otherwise
noted,  the total return numbers are for the ten-year period ended September 30,
2002.

================================================================================
                                     CLASS A          CLASS B        CLASS C
- --------------------------------------------------------------------------------
Large Cap Value Fund .............    76.33%          34.92%(1)      (20.54)%(6)
Equity Fund ......................   190.59%          96.46%(1)      (26.24)%(6)
Global Fund ......................   106.55%(2)       94.13%(1)       14.65%(6)
Social Awareness Fund ............    26.04%(3)       19.41%(3)      (26.37)%(6)
Mid Cap Value Fund ...............   113.05%(4)      104.00%(4)       38.46%(6)
Small Cap Growth Fund ............     8.98%(5)        4.52%(5)       (4.94)%(6)
Enhanced Index Fund ..............   (18.15)%(6)     (19.77)%(6)     (19.67)%(6)
International Fund ...............   (28.45)%(6)     (29.77)%(6)     (29.57)%(6)
Select 25 Fund ...................   (24.20)%(6)     (25.60)%(6)     (25.30)%(6)
Large Cap Growth Fund ............   (40.00)%(7)     (40.80)%(7)     (40.70)%(7)
Technology Fund ..................   (65.90)%(7)     (67.00)%(7)     (67.00)%(7)
Mid Cap Growth Fund ..............   198.91%         111.49%(1)       16.37%(6)
- --------------------------------------------------------------------------------
1  From October 19, 1993 (date of inception)
2  From October 1, 1993 (date of inception)
3  From November 1, 1996 (date of inception)
4  From May 1, 1997 (date of inception)
5  From October 15, 1997 (date of inception)
6  From January 29, 1999 (date of inception)
7  From May 1, 2000 (date of inception)
================================================================================

These figures  reflect  deduction of the maximum sales load. Fee waivers for the
Social Awareness, Mid Cap Value, Small Cap Growth,  International and Technology
Funds  reduced  Fund  expenses  and in the absence of such  waiver,  the average
annual total return and aggregate total return would be reduced.


Quotations  of average  annual  total  return and  aggregate  total  return will
reflect only the  performance of a  hypothetical  investment in the Funds during
the particular time period shown.  Such quotations for the Funds will vary based
on changes in market  conditions  and the level of the Funds'  expenses,  and no
reported  performance  figure should be considered an indication of  performance
which may be expected in the future.


The Funds may also quote after-tax  total returns and tax efficiency.  After-tax
returns show the Funds'  annualized  after-tax total returns for the time period
specified.  After-tax  returns  with  redemptions  show  the  Funds'  annualized
after-tax  total  return for the time period  specified  plus the tax effects of
selling your shares of the Funds at the end of the period.  To  determine  these
figures,  all income,  short-term  capital  gain  distributions,  and  long-term
capital  gain  distributions  are  assumed  to have  been  taxed  at the  actual
historical  federal  maximum  tax rate.  Those  maximum tax rates are applied to
distributions prior to reinvestment and the after-tax portion is assumed to have
been reinvested in the Funds. State and local taxes are ignored.

Tax Efficiency is derived by dividing  after-tax returns by pretax returns.  The
highest  possible  score would be 100%,  which would apply to a Fund that had no
taxable distributions.  Because many interrelated factors affect tax efficiency,
it is difficult to predict tax efficiency.

Actual after-tax  returns depend on a shareholder's tax situation and may differ
from those advertised by the Funds.  After-tax  returns reflect past tax effects
and are not predictive of future tax effects.

Quotations of average annual total return (after taxes on distributions) will be
calculated pursuant to the following formula:

                                 P(1+T)^n = ATRD

Where P= hypothetical  initial payment of $1,000, T= average annual total return
(after  taxes on  distributions),  n= number of years,  ATRD = ending value of a
hypothetical  $1,000  payment  made at the  beginning  of the 1-, 5-, or 10-year
periods at the end of the 1-, 5-, or 10-year  periods (or  fractional  portion),
after taxes on fund distributions but not after taxes on redemption.

Quotations  of average  annual total return  (after taxes on  distributions  and
redemptions) will be calculated pursuant to the following formula:

                                 P(1+T)^n = ATRDR

Where P= hypothetical  initial payment of $1,000, T= average annual total return
(after  taxes on  distributions  and  redemptions,  n= number of years,  ATRDR =
ending value of a  hypothetical  $1,000 payment made at the beginning of the 1-,
5-,  or 10- year  periods  at the end of the 1-,  5-,  or  10-year  periods  (or
fractional portion), after taxes on fund distributions and redemptions.

For the 1-, 5- and 10-year  periods  ended  December  31,  2002,  the  after-tax
average annual total return for each Fund was the following:

- --------------------------------------------------------------------------------
1 YEAR
- --------------------------------------------------------------------------------
                                                                         CLASS A
- --------------------------------------------------------------------------------
Large Cap Value Fund
- --------------------------------------------------------------------------------
After-tax return on distributions.....................................
After-tax return on distributions and sale of fund shares.............
- --------------------------------------------------------------------------------
Equity Fund
- --------------------------------------------------------------------------------
After-tax return on distributions.....................................
After-tax return on distributions and sale of fund shares.............
- --------------------------------------------------------------------------------
Global Fund
- --------------------------------------------------------------------------------
After-tax return on distributions.....................................
After-tax return on distributions and sale of fund shares.............
- --------------------------------------------------------------------------------
Social Awareness Fund
- --------------------------------------------------------------------------------
After-tax return on distributions.....................................
After-tax return on distributions and sale of fund shares.............
- --------------------------------------------------------------------------------
Mid Cap Value Fund
- --------------------------------------------------------------------------------
After-tax return on distributions.....................................
After-tax return on distributions and sale of fund shares.............
- --------------------------------------------------------------------------------
Small Cap Growth Fund
- --------------------------------------------------------------------------------
After-tax return on distributions.....................................
After-tax return on distributions and sale of fund shares.............
- --------------------------------------------------------------------------------
Enhanced Index Fund
- --------------------------------------------------------------------------------
After-tax return on distributions.....................................
After-tax return on distributions and sale of fund shares.............
- --------------------------------------------------------------------------------
International Fund
- --------------------------------------------------------------------------------
After-tax return on distributions.....................................
After-tax return on distributions and sale of fund shares.............
- --------------------------------------------------------------------------------
Select 25 Fund
- --------------------------------------------------------------------------------
After-tax return on distributions.....................................
After-tax return on distributions and sale of fund shares.............
- --------------------------------------------------------------------------------
Large Cap Growth Fund
- --------------------------------------------------------------------------------
After-tax return on distributions.....................................
After-tax return on distributions and sale of fund shares.............
- --------------------------------------------------------------------------------
Technology Fund
- --------------------------------------------------------------------------------
After-tax return on distributions.....................................
After-tax return on distributions and sale of fund shares.............
- --------------------------------------------------------------------------------
Mid Cap Growth Fund
- --------------------------------------------------------------------------------
After-tax return on distributions.....................................
After-tax return on distributions and sale of fund shares.............
- --------------------------------------------------------------------------------


- --------------------------------------------------------------------------------
5 YEARS
- --------------------------------------------------------------------------------
                                                                         CLASS A
- --------------------------------------------------------------------------------
Large Cap Value Fund
- --------------------------------------------------------------------------------
After-tax return on distributions.....................................
After-tax return on distributions and sale of fund shares.............
- --------------------------------------------------------------------------------
Equity Fund
- --------------------------------------------------------------------------------
After-tax return on distributions.....................................
After-tax return on distributions and sale of fund shares.............
- --------------------------------------------------------------------------------
Global Fund
- --------------------------------------------------------------------------------
After-tax return on distributions.....................................
After-tax return on distributions and sale of fund shares.............
- --------------------------------------------------------------------------------
Social Awareness Fund
- --------------------------------------------------------------------------------
After-tax return on distributions.....................................
After-tax return on distributions and sale of fund shares.............
- --------------------------------------------------------------------------------
Mid Cap Value Fund
- --------------------------------------------------------------------------------
After-tax return on distributions.....................................
After-tax return on distributions and sale of fund shares.............
- --------------------------------------------------------------------------------
Small Cap Growth Fund
- --------------------------------------------------------------------------------
After-tax return on distributions.....................................
After-tax return on distributions and sale of fund shares.............
- --------------------------------------------------------------------------------
Enhanced Index Fund
- --------------------------------------------------------------------------------
After-tax return on distributions.....................................
After-tax return on distributions and sale of fund shares.............
- --------------------------------------------------------------------------------
International Fund
- --------------------------------------------------------------------------------
After-tax return on distributions.....................................
After-tax return on distributions and sale of fund shares.............
- --------------------------------------------------------------------------------
Select 25 Fund
- --------------------------------------------------------------------------------
After-tax return on distributions.....................................
After-tax return on distributions and sale of fund shares.............
- --------------------------------------------------------------------------------
Large Cap Growth Fund
- --------------------------------------------------------------------------------
After-tax return on distributions.....................................
After-tax return on distributions and sale of fund shares.............
- --------------------------------------------------------------------------------
Technology Fund
- --------------------------------------------------------------------------------
After-tax return on distributions.....................................
After-tax return on distributions and sale of fund shares.............
- --------------------------------------------------------------------------------
Mid Cap Growth Fund
- --------------------------------------------------------------------------------
After-tax return on distributions.....................................
After-tax return on distributions and sale of fund shares.............
- --------------------------------------------------------------------------------


- --------------------------------------------------------------------------------
10 YEARS
- --------------------------------------------------------------------------------
                                                                         CLASS A
- --------------------------------------------------------------------------------
Large Cap Value Fund
- --------------------------------------------------------------------------------
After-tax return on distributions.....................................
After-tax return on distributions and sale of fund shares.............
- --------------------------------------------------------------------------------
Equity Fund
- --------------------------------------------------------------------------------
After-tax return on distributions.....................................
After-tax return on distributions and sale of fund shares.............
- --------------------------------------------------------------------------------
Global Fund
- --------------------------------------------------------------------------------
After-tax return on distributions.....................................
After-tax return on distributions and sale of fund shares.............
- --------------------------------------------------------------------------------
Social Awareness Fund
- --------------------------------------------------------------------------------
After-tax return on distributions.....................................
After-tax return on distributions and sale of fund shares.............
- --------------------------------------------------------------------------------
Mid Cap Value Fund
- --------------------------------------------------------------------------------
After-tax return on distributions.....................................
After-tax return on distributions and sale of fund shares.............
- --------------------------------------------------------------------------------
Small Cap Growth Fund
- --------------------------------------------------------------------------------
After-tax return on distributions.....................................
After-tax return on distributions and sale of fund shares.............
- --------------------------------------------------------------------------------
Enhanced Index Fund
- --------------------------------------------------------------------------------
After-tax return on distributions.....................................
After-tax return on distributions and sale of fund shares.............
- --------------------------------------------------------------------------------
International Fund
- --------------------------------------------------------------------------------
After-tax return on distributions.....................................
After-tax return on distributions and sale of fund shares.............
- --------------------------------------------------------------------------------
Select 25 Fund
- --------------------------------------------------------------------------------
After-tax return on distributions.....................................
After-tax return on distributions and sale of fund shares.............
- --------------------------------------------------------------------------------
Large Cap Growth Fund
- --------------------------------------------------------------------------------
After-tax return on distributions.....................................
After-tax return on distributions and sale of fund shares.............
- --------------------------------------------------------------------------------
Technology Fund
- --------------------------------------------------------------------------------
After-tax return on distributions.....................................
After-tax return on distributions and sale of fund shares.............
- --------------------------------------------------------------------------------
Mid Cap Growth Fund
- --------------------------------------------------------------------------------
After-tax return on distributions.....................................
After-tax return on distributions and sale of fund shares.............
- --------------------------------------------------------------------------------

Quotations  of yield,  tax-equivalent  yield,  average  annual  total return and
aggregate  total  return will  reflect only the  performance  of a  hypothetical
investment  during the particular  time period shown.  Such quotations will vary
based on changes in market conditions and the level of the Fund's expenses,  and
no reported performance figure should be considered an indication of performance
which may be expected in the future.


PERMISSIBLE ADVERTISING INFORMATION

From  time to  time,  the  Funds  may,  in  addition  to any  other  permissible
information, include the following types of information in advertisements, sales
literature,   reports  to   shareholders   and  other  investor   communications
("advertisements"):  (1) discussions of general economic or financial principles
(such as the effects of compounding and the benefits of dollar-cost  averaging);
(2) discussions about past, current or possible  economic,  market and political
trends and events;  (3)  presentations  of statistical  data to supplement  such
discussions; (4) published evaluations by nationally recognized ranking services
and financial or business  publications or other media including reprints of, or
selections from, such publications;  (5) descriptions and updates concerning the
Funds' strategies,  and past or anticipated portfolio investments;  (6) analysis
of  their  investments  by  industry,   country,  credit  quality  and/or  other
characteristics;  (7) the general  biography or work experience of the portfolio
managers  of the  Funds  including  information  about  awards  received  by the
portfolio managers,  mentions of a manager in the media, or announcements of the
portfolio manager's appearance on television or radio programs, or presentations
at  conferences  or trade shows;  (8)  portfolio  manager  commentary  or market
updates; (9) investment philosophy and the research methodology underlying stock
selection  or  the  Funds'  investment  objective;  (10)  a  discussion  of  the
risk/return  continuum  relating to different  investments;  (11) discussions on
general  principles of investing such as asset allocation,  diversification  and
risk tolerance;  (12) testimonials describing the experience of persons who have
invested  in a  Fund;  (13)  discussions  about  retirement  and  investing  for
retirement;  (14) data  concerning the projected cost of a college  education in
future  years based on current or recent costs of college and an assumed rate of
increase for such costs;  (15)  information  regarding the relative  reliance in
recent years on personal savings for retirement income versus reliance on Social
Security  benefits  and  company  sponsored  retirement  plans;  and (16)  other
information of interest to investors.

Advertisements  also may  include  the  Funds'  performance,  goals,  risks  and
expenses  compared  with (a)  various  indexes so that  investors  may compare a
Fund's results with those of a group of unmanaged  securities widely regarded by
investors as  representative  of the  securities  markets in general;  (b) other
groups of mutual funds tracked by Lipper Analytical  Services Inc.,  Morningstar
or  another  independent  research  firm  which  ranks  mutual  funds by overall
performance,  investment  objectives,  and assets, or tracked by other services,
companies, publications, or persons who rank mutual funds on overall performance
or other  criteria;  (c) the Consumer  Price Index  (measure for  inflation)  to
assess  the real  rate of  return  from an  investment  in the  Fund;  (d) other
statistics  such as gross  national  product  or gross  domestic  product of the
United  States or other  countries  or  regions,  net import and export  figures
derived from governmental publications (e.g., The Survey of Current Business) or
other  independent  parties  (e.g.,  the  Investment  Company   Institute),   to
illustrate investment attributes to the Funds or the general economic, business,
investment,  or financial  environment  in which the Funds  operate;(e)  various
financial,  economic and market  statistics  developed  by brokers,  dealers and
other persons to illustrate aspects of a Fund's performance;  (f) the sectors or
industries  in which the Funds  invest  compared to relevant  indexes or surveys
(e.g.,  S&P  Industry   Surveys)  in  order  to  evaluate  the  Funds'  historic
performance  or  current or  potential  value  with  respect  to the  particular
industry or sector;  (g) a hypothetical or model portfolio;  or (h) other mutual
funds.  The Funds also may  discuss  and  compare in  advertising  the  relative
performance  of  various  types of  investment  instruments  including,  but not
limited to, certificates of deposit,  ordinary interest savings accounts,  other
forms of fixed or variable time deposits,  qualified  retirement plans,  stocks,
Treasury  securities,  and bonds, over various time periods and covering various
holding periods.  Such  comparisons may compare these  investment  categories to
each other or to changes in the Consumer Price Index. In addition, the Funds may
quote various  measures of volatility  and benchmark  correlation in advertising
and other  materials and may compare these  measures to those of indexes,  other
funds or types of investments.

The Funds'  advertisements  may also include rankings or ratings of its transfer
agent,  and  of  the  investor  services  provided  by  the  transfer  agent  to
shareholders  of the  Security  Funds  other than  performance  rankings  of the
Security Funds themselves. Those ratings or rankings of shareholder and investor
services by third  parties may include  comparisons  of their  services to those
provided  by other  mutual  fund  families  selected  by the  rating or  ranking
services.  They may be based upon the opinions of the rating or ranking  service
itself,  using its  research or judgment,  or based upon  surveys of  investors,
brokers, shareholders or others.

The Funds, in their  advertisements,  may refer to pending legislation from time
to time and the possible  effect of such  legislation  on investors,  investment
strategy and related  matters.  This would  include any tax  proposals and their
effect on marginal tax rates and tax-equivalent yields.

From time to time,  advertisements  may include  general  information  about the
services and  products  offered by the Security  Funds,  Security  Distributors,
Inc., and Security  Benefit Life  Insurance  Company and its  subsidiaries.  For
example,  such  advertisements may include  statistical  information about those
entities  including,  but not  limited  to, the  number of  current  shareholder
accounts,  the  amount  of  assets  under  management,  sales  information,  the
distribution  channels  through  which the  entities'  products  are  available,
marketing  efforts  and  statements  about  this  information  by the  entities'
officers, directors and employees.

All performance information that the Funds advertise is historical in nature and
is not  intended to  represent or  guarantee  future  results.  The value of the
Funds'  shares  when  redeemed  may be more or less than  their  original  cost.
Performance information may be quoted numerically or presented in a table, graph
or other illustration.  The Funds' returns and share price are not guaranteed or
insured by the FDIC or any other  agency and will  fluctuate  daily,  while bank
depository obligations may be insured by the FDIC and may provide fixed rates of
return.

In connection with a ranking, the Funds may provide additional information, such
as the  particular  category to which it is related,  the number of funds in the
category,  the criteria upon which the ranking is based, and the effect of sales
charges, fee waivers and/or expense reimbursements.  In assessing comparisons of
performance,  you should keep in mind that the composition of the investments in
the reported indexes and averages is not identical to any Fund's portfolios, the
indexes and  averages are  generally  unmanaged,  and the items  included in the
calculations  of the averages may not be identical to the formula used by a Fund
to calculate its figures. For example, unmanaged indexes may assume reinvestment
of dividends  but generally do not reflect  deductions  for  administrative  and
management  costs.  In addition,  there can be no assurance  that the Funds will
continue their performance as compared to these other averages.

RETIREMENT PLANS

Security  Financial  Resources,  Inc., an affiliate of the  Investment  Manager,
offers  tax-qualified  retirement plans for individuals  (Individual  Retirement
Accounts,   known  as  IRAs),   several  prototype   retirement  plans  for  the
self-employed (Keogh plans),  pension and profit-sharing plans for corporations,
and  custodial  account  plans  for  employees  of  public  school  systems  and
organizations  meeting the  requirements  of Section  501(c)(3)  of the Internal
Revenue Code.  Actual  documents and detailed  materials about the plans will be
provided upon request to the Distributor.

Purchases  of the Funds'  shares under any of these plans are made at the public
offering  price  next  determined  after   contributions  are  received  by  the
Distributor.  The Funds'  shares owned under any of the plans have full dividend
and  redemption  privileges.  Depending  on the  terms of the  particular  plan,
retirement benefits may be paid in a lump sum or in installment  payments over a
specified period. There are possible penalties for premature  distributions from
such plans.


Security Management Company,  LLC is available to act as custodian for the plans
on a fee basis.  In 2002,  UMB Bank,  n.a. began serving as the custodian of the
plans. For IRAs, SIMPLE IRAs, Roth IRAs,  Coverdell  Education Savings Accounts,
and  Simplified  Employee  Pension (SEP) plans,  service fee for such  custodial
services currently is: $10 for annual  maintenance of the account.  Service fees
for Section 403(b) Retirement Plans are set forth in "403(b)  Retirement Plans,"
page 71.  Service  fees for other  types of plans will vary.  These fees will be
deducted from the plan assets. Optional supplemental services are available from
Security Financial Resources, Inc. for additional charges.


Retirement  investment programs involve commitments covering future years. It is
important  that  the  investment  objectives  and  structure  of  the  Funds  be
considered by the investors for such plans. A brief description of the available
tax-qualified  retirement  plans  is  provided  below.  However  the  tax  rules
applicable to such  qualified  plans vary  according to the type of plan and the
terms and  conditions  of the plan  itself.  Therefore,  no  attempt  is made to
provide  more than  general  information  about the various  types of  qualified
plans.

Investors  are  urged to  consult  their  own  attorneys  or tax  advisers  when
considering the establishment and maintenance of any such plans.

INDIVIDUAL RETIREMENT ACCOUNTS (IRAS)

Individual  Retirement  Account  Custodial  Agreements  are available to provide
investment  in shares of the Funds or in other Funds in the Security  Group.  An
individual  may  initiate  an IRA  through  the  Underwriter  by  executing  the
custodial  agreement and making a minimum initial investment of at least $100. A
$10 annual fee is charged for maintaining the account.

An individual  may make a contribution  to a traditional  IRA each year of up to
the lesser of 100% of earned  income  under  current  tax law or the  applicable
dollar amount as shown in the table below:

                         ------------------------------
                              TAX YEAR           AMOUNT
                         ------------------------------
                              2002-2004          $3,000
                              2005-2007          $4,000
                         2008 and thereafter     $5,000
                         ------------------------------

The  IRAs  described  in  this  paragraph  are  called   "traditional  IRAs"  to
distinguish them from the "Roth IRAs," which are described  below.  Spousal IRAs
allow an  individual  and his or her spouse to  contribute  up to the maximum to
each of their  respective  IRAs (up to 100% of joint earned income) so long as a
joint tax return is filed. The maximum amount the higher  compensated spouse may
contribute  for the year is the  lesser of the  applicable  sum set forth in the
table  above  or 100% of that  spouse's  compensation.  The  maximum  the  lower
compensated  spouse may  contribute is the lesser of (i) the  applicable sum set
forth in the table  above or (ii) 100% of that  spouse's  compensation  plus the
amount by which the higher compensated spouse's  compensation exceeds the amount
the higher  compensated  spouse contributes to his or her IRA. If you are age 50
or over, you may make an additional  catch up contribution  to your  traditional
IRA of $500  during the tax years of  2002-2005,  or $1,000 for tax year 2006 or
any tax year thereafter.

Generally if a taxpayer is not covered by an employer-sponsored retirement plan,
the amount the taxpayer may deduct for federal income tax purposes in a year for
contributions  to an IRA is the  lesser of the  applicable  sum set forth in the
table above or the  taxpayer's  compensation  for the year.  If the  taxpayer is
covered  by  an   employer-sponsored   retirement   plan,   the  amount  of  IRA
contributions  the  taxpayer  may deduct in a year may be reduced or  eliminated
based on the  taxpayer's  adjusted gross income for the year. The adjusted gross
income  level at  which a  single  taxpayer's  deduction  for 2002 is  affected,
$34,000,  will increase annually to $50,000 in the year 2005. The adjusted gross
income level at which the  deduction  for 2002 for a married  taxpayer (who does
not file a separate  return) is affected,  $54,000,  will  increase  annually to
$80,000 in the year 2007.  If the  taxpayer  is  married,  files a separate  tax
return, and is covered by a qualified retirement plan, the taxpayer may not make
a deductible contribution to an IRA if the taxpayer's income exceeds $10,000. If
the taxpayer is not covered by an  employer-sponsored  retirement  plan, but the
taxpayer's  spouse is, the amount the taxpayer may deduct for IRA  contributions
will be phased out if the taxpayer's  adjusted gross income is between  $150,000
and $160,000.

Contributions must be made in cash no later than April 15 following the close of
the tax year.  No annual  contribution  is  permitted  for the year in which the
investor reaches age 70 1/2 or any year thereafter.

In addition to annual  contributions,  total  distributions  and certain partial
distributions from certain  employer-sponsored  retirement plans may be eligible
to be reinvested  into a traditional  IRA if the  reinvestment is made within 60
days of receipt of the distribution by the taxpayer. Such rollover contributions
are not subject to the limitations on annual IRA contributions described above.

ROTH IRAS

Section 408A of the Code permits  eligible  individuals to establish a Roth IRA.
Contributions  to a Roth  IRA are not  deductible,  but  withdrawals  that  meet
certain  requirements  are not subject to federal income tax. The maximum annual
contribution  amount is equal to the applicable dollar amount shown in the table
below:

                         ------------------------------
                              TAX YEAR           AMOUNT
                         ------------------------------
                              2002-2004          $3,000
                              2005-2007          $4,000
                         2008 and thereafter     $5,000
                         ------------------------------

However,  your ability to contribute to a Roth IRA will be reduced or eliminated
if your adjusted gross income exceeds certain amounts (currently  $150,000 for a
married couple filing a joint return and $95,000 for a single taxpayer).  If you
are age 50 or over,  you may make an additional  catch up  contribution  to your
Roth IRA of $500 during the tax years of 2002-2005 or $1,000 if it is during the
2006 tax year or any year  thereafter.  In  general,  Roth IRAs are  subject  to
certain required distribution requirements.  Unlike a traditional IRA, Roth IRAs
are not  subject to  minimum  required  distribution  rules  during the  owner's
lifetime.  Generally,  however,  the  amount  remaining  in a Roth  IRA  must be
distributed by the end of the fifth year after the death of the owner.

The owner of a traditional  IRA may convert the  traditional IRA into a Roth IRA
under certain  circumstances.  The conversion of a traditional IRA to a Roth IRA
will subject the amount of the converted  traditional IRA to federal income tax.
If a  traditional  IRA is  converted  to a Roth IRA,  the taxable  amount of the
owner's traditional IRA will be considered taxable income for federal income tax
purposes for the year of conversion. Generally, all amounts in a traditional IRA
are taxable  except for the owner's prior  non-deductible  contributions  to the
traditional IRA.

COVERDELL EDUCATION SAVINGS ACCOUNTS

Section 530 of the Code permits  eligible  individuals  to establish a Coverdell
Education  Savings  Account  on  behalf  of a  beneficiary.  Contributions  to a
Coverdell   Education   Savings  Account  are  not  deductible,   but  qualified
distributions  to the  beneficiary  are not subject to federal  income tax.  The
maximum annual  contribution amount of $2,000 is phased out if the individual is
single and has an adjusted gross income between $95,000 and $110,000,  or if the
individual  is  married  and the couple has a  combined  adjusted  gross  income
between $190,000 and $220,000.  Coverdell Education Savings Accounts are subject
to certain required distribution  requirements.  Generally, the amount remaining
in  a  Coverdell   Education   Savings   Account  must  be  distributed  by  the
beneficiary's  30th  birthday or rolled into a new Coverdell  Education  Savings
Account for another eligible beneficiary.

SIMPLE IRAS

The Small  Business Job  Protection  Act of 1996 created a retirement  plan, the
Savings  Incentive Match Plan for Employees of Small  Employers  (SIMPLE Plans).
SIMPLE  Plan   participants   must  establish  a  SIMPLE  IRA  into  which  plan
contributions will be deposited.

The  Investment  Manager makes  available  SIMPLE IRAs to provide  investment in
shares of the Funds.  Contributions  to a SIMPLE IRA will  include  both  salary
deferral contributions and employer contributions. Contributions must be made in
cash and cannot exceed the maximum  amount  allowed  under the Internal  Revenue
Code.  On a  pre-tax  basis,  compensation  (through  salary  deferrals)  may be
contributed to a SIMPLE IRA. Elective deferrals are based on a stated percentage
of the employee's compensation,  and are limited to the applicable dollar amount
per year as shown in the table below.


                    ---------------------------------------
                         TAX YEAR           DEFERRED AMOUNT
                    ---------------------------------------
                           2003                 $ 8,000
                           2004                 $ 9,000
                    2005 and thereafter         $10,000
                    ---------------------------------------


The $10,000  limit will be adjusted  for  inflation in $500  increments  for tax
years  beginning  after the 2005 tax year.  If you are age 50 or over,  catch up
contributions  can be made to your  SIMPLE  IRA  during the tax years and at the
rates set forth in the table below:


                    ----------------------------------------
                                            ADDITIONAL CATCH
                         TAX YEAR               UP AMOUNT
                    ----------------------------------------
                           2003                  $1,000
                           2004                  $1,500
                           2005                  $2,000
                    2006 and thereafter          $2,500
                    ----------------------------------------


The $2,500 limit will be adjusted for inflation in $500 increments for tax years
beginning  after the 2006 tax year. In addition,  employers are required to make
either  (1) a  dollar-for-dollar  matching  contribution  or  (2) a  nonelective
contribution  to each  participant's  account  each year.  In general,  matching
contributions   must  equal  up  to  3%  of  compensation,   but  under  certain
circumstances,  employers may make lower matching contributions.  Instead of the
match, employers may make a nonelective contribution equal to 2% of compensation
(compensation  for  purposes  of any  nonelective  contribution  is  limited  to
$200,000, as indexed).

Distributions from a SIMPLE IRA are (1) taxed as ordinary income; (2) includable
in gross income; and (3) subject to applicable state tax laws.

Distributions  prior to age 59 1/2 may be  subject  to a 10%  penalty  tax which
increases to 25% for distributions made before a participant has participated in
the  SIMPLE  Plan for at least two years.  An annual  fee of $10 is charged  for
maintaining the SIMPLE IRA.

PENSION AND PROFIT SHARING PLANS

Prototype corporate pension or profit-sharing  plans meeting the requirements of
Internal Revenue Code Section 401(a) are available. Information concerning these
plans may be obtained from the Distributor.

403(B) RETIREMENT PLANS


Employees of public  school  systems and  tax-exempt  organizations  meeting the
requirements of Internal  Revenue Code Section  501(c)(3) may purchase shares of
the Funds or of other funds in the Security Group,  which funds include Security
Social Awareness, Capital Preservation, Diversified Income and High Yield Funds,
under a Section  403(b)  Plan.  Class A shares may not be available to custodial
accounts of the Investment  Manager opened on or after June 5, 2000. The minimum
initial or subsequent  investment in a custodial  account under a Section 403(b)
Plan is $50. An annual  administration fee of $25 is required for each custodial
account with a balance less than $25,000 and a $5 withdrawal fee will be charged
when any custodial account is closed.


Section 403(b) Plans are subject to numerous restrictions on the amount that may
be  contributed,  the persons who are  eligible  to  participate,  the time when
distributions may commence, and the number and amount of any loans requested.

SIMPLIFIED EMPLOYEE PENSION (SEP) PLANS

A prototype SEP is available for corporations,  partnerships or sole proprietors
desiring  to  adopt  such a plan for  purchases  of IRAs  for  their  employees.
Employers  establishing  a SEP may  contribute a maximum of $40,000 a year to an
IRA for each employee. This maximum is subject to a number of limitations.

FINANCIAL STATEMENTS


The audited financial  statement of the Funds, which are contained in the Funds'
September 30, 2002 Annual Report, are incorporated  herein by reference.  Copies
of the Annual  Report are  provided to every  person  requesting  a Statement of
Additional Information.


                                   APPENDIX A
- --------------------------------------------------------------------------------

DESCRIPTION OF CORPORATE BOND RATINGS

MOODY'S INVESTORS SERVICE, INC. --

AAA. Bonds which are rated Aaa are judged to be of the best quality.  They carry
the  smallest  degree  of  investment  risk  and are  generally  referred  to as
"gilt-edge."  Interest  payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change,  such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.

AA. Bonds which are rated Aa are judged to be of high quality by all  standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds.  They are rated lower than the best bonds  because  margins of protection
may not be as large as in Aaa securities or  fluctuation of protective  elements
may be of greater  amplitude or there may be other  elements  present which make
the long-term risks appear somewhat larger than in Aaa securities.

A. Bonds which are rated A possess many favorable investment  attributes and are
to be considered as upper medium grade  obligations.  Factors giving security to
principal  and interest  are  considered  adequate,  but elements may be present
which suggest a susceptibility to impairment sometime in the future.

BAA. Bonds which are rated Baa are considered as medium grade obligations, i.e.,
they are neither  highly  protected nor poorly  secured.  Interest  payments and
principal  security  appear  adequate  for the present,  but certain  protective
elements may be lacking or may be  characteristically  unreliable over any great
length of time. Such bonds lack outstanding  investment  characteristics  and in
fact have speculative characteristics as well.

BA.  Bonds  which are rated Ba are judged to have  speculative  elements;  their
future cannot be considered  as well assured.  Often the  protection of interest
and  principal  payments may be very  moderate and thereby not well  safeguarded
during  both  good  and bad  times  over the  future.  Uncertainty  of  position
characterizes bonds in this class.

B. Bonds  which are rated B  generally  lack  characteristics  of the  desirable
investment.  Assurance of interest and principal  payments or of  maintenance of
other terms of the contract over any long period of time may be small.

CAA.  Bonds  which are rated Caa are of poor  standing.  Such  issues  may be in
default or there may be present  elements of danger with respect to principal or
interest.

CA. Bonds which are rated Ca represent  obligations  which are  speculative in a
high degree. Such issues are often in default or have other marked shortcomings.

C.  Bonds  which are rated C are the lowest  rated  class of bonds and issues so
rated can be regarded as having  extremely  poor prospects of ever attaining any
real investment standing.

STANDARD & POOR'S CORPORATION --

AAA. Bonds rated AAA have the highest rating  assigned by Standard & Poor's to a
debt  obligation.  Capacity to pay  interest  and repay  principal  is extremely
strong.

AA.  Bonds  rated AA have a very  strong  capacity  to pay  interest  and  repay
principal and differ from the highest rated issues only in small degree.

A. Bonds rated A have a strong  capacity  to pay  interest  and repay  principal
although they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than bonds in higher rated categories.

BBB. Bonds rated BBB are regarded as having an adequate capacity to pay interest
and  repay  principal.   Whereas  they  normally  exhibit  adequate   protection
parameters,  adverse  economic  conditions  or changing  circumstances  are more
likely to lead to a weakened  capacity to pay interest and repay  principal  for
bonds in this category than for bonds in higher rated categories.

BB, B, CCC,  CC.  Bonds rated BB, B, CCC and CC are  regarded,  on  balance,  as
predominately  speculative with respect to the issuer's capacity to pay interest
and repay principal in accordance with the terms of obligation. BB indicates the
lowest degree of  speculation  and CC the highest degree of  speculation.  While
such bonds will likely have some quality and protective  characteristics,  these
are  outweighed  by large  uncertainties  or major  risk  exposures  to  adverse
conditions.

C. The rating C is reserved for income bonds on which no interest is being paid.

D. Debt rated D is in  default  and  payment of  interest  and/or  repayment  of
principal is in arrears.

                                   APPENDIX B
- --------------------------------------------------------------------------------

REDUCED SALES CHARGES

CLASS A SHARES -- Initial sales charges may be reduced or eliminated for persons
or organizations  purchasing Class A shares of the Funds alone or in combination
with Class A shares of certain other Security Funds.

For purposes of qualifying  for reduced sales charges on purchases made pursuant
to Rights of  Accumulation  or a Statement of Intention  (also  referred to as a
"Letter of Intent"),  the term "Purchaser"  includes the following  persons:  an
individual,  his or her spouse and children under the age 21; a trustee or other
fiduciary of a single trust estate or single fiduciary  account  established for
their  benefit;  an  organization  exempt from federal  income tax under Section
501(c)(3) or (13) of the Internal Revenue Code; or a pension,  profit-sharing or
other  employee  benefit plan whether or not qualified  under Section 401 of the
Internal Revenue Code.

RIGHTS OF  ACCUMULATION  -- A Purchaser may combine all previous  purchases with
his or her contemplated  current  purchases of Class A Shares of a Fund, for the
purpose of determining the sales charge applicable to the current purchase.  For
example,  an  investor  who already  owns Class A shares of a Fund either  worth
$30,000 at the  applicable  current  offering price or purchased for $30,000 and
who invests an  additional  $25,000,  is entitled to a reduced  front-end  sales
charge of 4.75% on the latter purchase.  The Underwriter must be notified when a
sale takes  place which  would  qualify  for the reduced  charge on the basis of
previous purchases subject to confirmation of the investor's holding through the
Fund's records.  Rights of accumulation  apply also to purchases  representing a
combination of the Class A shares of the Funds, Security Income Fund or Security
Municipal Bond Fund in those states where shares of the Fund being purchased are
qualified for sale.

STATEMENT OF INTENTION -- A Purchaser may sign a Statement of  Intention,  which
may be signed within 90 days after the first purchase to be included thereunder,
in the form provided by the Underwriter  covering purchases of Class A shares of
the Funds,  Security  Income  Fund or  Security  Municipal  Bond Fund to be made
within a period of 13 months (or a 36-month  period for  purchases of $1 million
or more) and thereby  become  eligible  for the reduced  front-end  sales charge
applicable to the actual amount  purchased under the Statement.  Five percent of
the amount specified in the Statement of Intention will be held in escrow shares
until the  Statement  is  completed  or  terminated.  The  shares so held may be
redeemed  by the Funds if the  investor  is  required  to pay  additional  sales
charges which may be due if the amount of purchases made by the Purchaser during
the period the  Statement is  effective is less than the total  specified in the
Statement of Intention.

A  Statement  of  Intention  may be  revised  during the  13-month  period (or a
36-month period for purchases of $1 million or more).  Additional Class A shares
received from  reinvestment of income dividends and capital gains  distributions
are included in the total amount used to determine  reduced sales  charges.  The
Statement is not a binding  obligation upon the investor to purchase or any Fund
to sell the full indicated amount. A Statement of Intention form may be obtained
from the Funds. An investor  considering  signing such an agreement  should read
the Statement of Intention carefully.


REINSTATEMENT  PRIVILEGE -- Shareholders  who redeem their Class A shares of the
Funds have a one-time  privilege (1) to reinstate  their  accounts by purchasing
shares  without  a  sales  charge  up to the  dollar  amount  of the  redemption
proceeds,  or (2) to the extent the redeemed shares would have been eligible for
the  exchange  privilege,  to  purchase  Class A shares of another of the Funds,
Security Income Fund and Security Municipal Bond Fund, without a sales charge up
to the dollar amount of the redemption  proceeds.  Written notice and a check in
the amount of the reinvestment  from eligible  shareholders  wishing to exercise
this reinstatement privilege must be received by a fund within 30 days after the
redemption  request was received  (or such longer  period as may be permitted by
rules and  regulations  promulgated  under the 1940 Act). The  reinstatement  or
exchange  will  be made  at the  net  asset  value  next  determined  after  the
reinvestment  is  received  by  the  Fund.   Shareholders   making  use  of  the
reinstatement  privilege should note that any gains realized upon the redemption
will be taxable while any losses may be deferred under the "wash sale" provision
of the Internal Revenue Code.

EX-99.A

                            ARTICLES OF INCORPORATION
                                       OF
                           SECURITY EQUITY FUND, INC.


          We, the undersigned incorporators, hereby associate ourselves together
to form and  establish a  corporation  for profit under the laws of the State of
Kansas.

          FIRST:   The  name  of  the   corporation   (hereinafter   called  the
Corporation) is SECURITY EQUITY FUND, INC.

          SECOND:  The location of its  registered  office in Kansas is Security
Benefit Life Building, 700 Harrison Street, Topeka, Kansas.

          THIRD:  The name and address of its registered agent in Kansas is Dean
L. Smith, Security Benefit Life Building, 700 Harrison Street, Topeka, Kansas.

          FOURTH:  The  purposes  for which  the  corporation  is formed  are as
follows:

          (1) To engage in the  business of an  investment  company and to hold,
     invest and reinvest its funds, and in connection  therewith to hold part or
     all of its funds in cash,  and to purchase or otherwise  acquire,  hold for
     investment or otherwise,  sell, assign,  negotiate,  transfer,  exchange or
     otherwise dispose of or turn to account or realize upon,  securities (which
     term  "securities"  shall  for  the  purposes  of  this  Article,   without
     limitation  of the  generality  thereof,  be deemed to include  any stocks,
     shares, bonds, debentures,  notes, mortgages or other obligations,  and any
     certificates,  receipts,  warrants or other instruments representing rights
     to  receive,   purchase  or  subscribe  for  the  same,  or  evidencing  or
     representing any other rights or interests  therein,  or in any property or
     assets)   created   or  issued  by  any   persons,   firms,   associations,
     corporations,  syndicates,  combinations,   organizations,  governments  or
     subdivisions   thereof;  and  to  exercise,  as  owner  or  holder  of  any
     securities, all rights, powers and privileges in respect thereof; and to do
     any and all acts and things for the preservation,  protection,  improvement
     and enhancement in value of any and all such securities; provided, however,
     that the Corporation shall not:

               (a)  purchase any  securities  on margin  except such  short-term
     credits as are necessary for the clearance of transactions;

               (b) effect any short sales of securities;

               (c) purchase the  securities  of any person,  firm,  association,
     corporation,  syndicate,  combination  or  organization  for the purpose of
     gaining  or  exercising  control  or  management  of  such  person,   firm,
     association, corporation, syndicate, combination or organization;

               (d) purchase the  securities  of any person,  firm,  association,
     corporation, syndicate, combination,  organization,  government (other than
     the United States of America) or any subdivision  thereof,  if, immediately
     after and as a result of such purchase, more than five percent of its total
     assets,  determined  in such  manner  as may be  approved  by the  Board of
     Directors  of the  Corporation  and applied on a  consistent  basis,  would
     consist of the securities of such person, firm,  association,  corporation,
     syndicate, combination, organization, government or subdivision;

               (e) lend any of its funds or other  assets other than through the
     purchase  of  publicly  distributed  bonds,  debentures,  notes  and  other
     evidences of indebtedness as herein authorized;

               (f) purchase the  securities  of any person,  firm,  association,
     corporation,  syndicate,  combination,   organization,  government  or  any
     subdivision thereof, if, upon such purchase, the Corporation would own more
     than ten percent of any class of the outstanding securities of such person,
     firm,  association,  corporation,  syndicate,  combination,   organization,
     government or subdivision.  For the purposes of this restriction, all kinds
     of securities of a company  representing debt shall be deemed to constitute
     a single class, regardless of relative priorities,  maturities,  conversion
     rights and other differences, and all kinds of stock of a company preferred
     over the common stock as to dividends or in liquidation  shall be deemed to
     constitute  a  single  class  regardless  of  relative  priorities,  series
     designations, conversion rights and other differences;

               (g)  purchase  the  securities  of  any  investment   company  or
     investment  trust  (as such  terms  may  reasonably  be  understood  by the
     Corporation), other than the Corporation;

               (h) underwrite the sale of, or participate in any underwriting or
     selling group in connection with the public distribution of, any securities
     (other than the capital stock of the Corporation),  provided, however, that
     this provision shall not be construed to prevent or limit in any manner the
     right of the Corporation to purchase securities for investment purposes;

               (i)  purchase  or sell  any real  estate  or any  commodities  or
     commodity contracts; or

               (j) enter  into any loan  transaction  as  borrower  unless  such
     borrowing is undertaken only as a temporary  measure for  extraordinary and
     emergency  purposes and then only if,  immediately after and as a result of
     such transaction, the total loans outstanding against the Corporation shall
     be not more than ten percent of its total assets, determined in such manner
     as may be approved by the Board of Directors of the Corporation and applied
     on a consistent basis.

          (2) To issue and sell shares of its own capital  stock in such amounts
     and on such terms and conditions,  for such purposes and for such amount or
     kind of consideration (including,  without limitation thereof,  securities)
     now or  hereafter  permitted  by the laws of Kansas,  by these  Articles of
     Incorporation and the Bylaws of the Corporation,  as its Board of Directors
     may determine.

          (3) To purchase  or  otherwise  acquire,  hold,  dispose  of,  resell,
     transfer,  or reissue (all without any vote or consent of  stockholders  of
     the  Corporation)  shares of its  capital  stock,  in any manner and to the
     extent now or hereafter  permitted  by the laws of the State of Kansas,  by
     these Articles of Incorporation and by the Bylaws of the Corporation.

          (4) To conduct its business in all its branches at one or more offices
     in Kansas and elsewhere in any part of the world,  without  restriction  or
     limit as to extent.

          (5) To carry out all or any of the foregoing  purposes as principal or
     agent,  and alone or with  associates  or, to the extent  now or  hereafter
     permitted by the laws of Kansas,  as a member of, or as the owner or holder
     of any  stock  of,  or  shares  of  interest  in,  any  firm,  association,
     corporation,  trust or syndicate;  and in  connection  therewith to make or
     enter into such deeds or contracts with any persons,  firms,  associations,
     corporations,  syndicates,  governments or subdivisions  thereof, and to do
     such acts and things and to exercise such powers, as a natural person could
     lawfully make, enter into, do or exercise.

          (6) To do any and all such further acts and things and to exercise any
     and all such  further  powers as may be  necessary,  incidental,  relative,
     conducive, appropriate or desirable for the accomplishment, carrying out or
     attainment of all or any of the foregoing purposes.

It is the  intention  that  each  of the  purposes,  specified  in  each  of the
paragraphs of this Article FOURTH,  shall be in no wise limited or restricted by
reference to or inference  from the terms of any other  paragraph,  but that the
purposes  specified in each of the  paragraphs  of this Article  FOURTH shall be
regarded as independent  objects,  purposes and powers.  The  enumeration of the
specific  purposes of this Article  FOURTH shall not be construed to restrict in
any manner the general  objects,  purposes and powers of this  corporation,  nor
shall the expression of one thing be deemed to exclude  another,  although it be
of like  nature.  The  enumeration  of  purposes  herein  shall not be deemed to
exclude or in any way limit by inference  any objects,  purposes or powers which
this  corporation  has power to exercise,  whether  expressly or by force of the
laws of the State of Kansas,  now or  hereafter  in effect,  or impliedly by any
reasonable construction of such laws.

          FIFTH: The aggregate number of shares which the Corporation shall have
authority to issue shall be 1,000,000  shares of capital  stock of the par value
of $1.00 per share.

          The following provisions are hereby adopted for the purpose of setting
forth the powers,  rights,  qualifications,  limitations or  restrictions of the
capital stock of the Corporation:

               (1) At all  meetings  of  stockholders  each  stockholder  of the
Corporation  shall be entitled to one vote on each matter submitted to a vote at
such  meeting  for each share of stock  standing in his name on the books of the
Corporation on the date, fixed in accordance with the Bylaws,  for determination
of stockholders  entitled to vote at such meeting. At all elections of directors
each stockholder shall be entitled to as many votes as shall equal the number of
shares  of stock  multiplied  by the  number of  directors  to be  elected,  and
stockholders  may cast all of such votes for a single director or may distribute
them among the  number to be voted  for,  or any two or more of them as they may
see fit.

               (2) (a) Each  holder of capital  stock of the  corporation,  upon
request to the  Corporation  accompanied by surrender of the  appropriate  stock
certificate or  certificates  in proper form for transfer,  shall be entitled to
require the  Corporation  to repurchase all or any part of the shares of capital
stock  standing in the name of such holder on the books of the  Corporation,  at
the net asset value of such shares,  less a charge, not to exceed one percent of
such net asset value, if and as fixed by resolution of the Board of Directors of
the Corporation from time to time. The method of computing such net asset value,
the time as of which such net asset value shall be computed  and the time within
which the  Corporation  shall  make  payment  therefor  shall be  determined  as
hereinafter  provided  in  Article  TENTH of these  Articles  of  Incorporation.
Notwithstanding  the foregoing,  the Board of Directors of the  Corporation  may
suspend  the right of the  holders of the capital  stock of the  Corporation  to
require the Corporation to redeem shares of such capital stock:

                    (i) for any  period  (A)  during  which  the New York  Stock
          Exchange is closed other than customary  weekend and holiday closings,
          or (B)  during  which  trading  on the  New  York  Stock  Exchange  is
          restricted;

                    (ii) for any period during which an emergency, as defined by
          rules of the  Securities  and  Exchange  Commission  or any  successor
          thereto,  exists as a result of which (A) disposal by the  Corporation
          of securities  owned by it is not reasonably  practicable or (B) it is
          not reasonably practicable for the Corporation fairly to determine the
          value of its net assets; or

                    (iii) for such other periods as the  Securities and Exchange
          Commission  or any  successor  thereto  may by  order  permit  for the
          protection of security holders of the Corporation.

               (b) From and  after  the  close of  business  on the day when the
shares are properly  tendered for  repurchase  the owner shall,  with respect of
said shares,  cease to be a stockholder of the  Corporation  and shall have only
the right to receive the  repurchase  price in  accordance  with the  provisions
hereof. The shares so repurchased may, as the Board of Directors determines,  be
held in the treasury of the  Corporation  and may be resold,  or, if the laws of
Kansas shall permit,  may be retired.  Repurchase of shares is conditional  upon
the Corporation having funds or property legally available therefor.

          (3) No holder of stock of the Corporation shall, as such holder,  have
any right to purchase or  subscribe  for any shares of the capital  stock of the
Corporation  of any class or series  which it may issue or sell  (whether out of
the number of shares  authorized by these Articles of  Incorporation,  or out of
any shares of the  capital  stock of the  Corporation  acquired  by it after the
issue  thereof,  or  otherwise)  other than such right,  if any, as the Board of
Directors, in its discretion, may determine.

          (4) All  persons  who shall  acquire  stock in the  Corporation  shall
acquire the same subject to the provisions of these Articles of Incorporation.

          SIXTH:  The minimum amount of capital with which the Corporation  will
commence business is One Thousand Dollars.

          SEVENTH:   The  names  and  places  of   residence   of  each  of  the
incorporators are as follows:

          NAMES                             PLACES OF RESIDENCE

          Herbert F. Laing                  915 Buchanan
                                            Topeka, Kansas

          Dean L. Smith                     1800 W. 26th
                                            Topeka, Kansas

          Robert E. Jacoby                  5026 W. 23rd Terrace
                                            Topeka, Kansas

          EIGHTH: The duration of corporate  existence of the Corporation is one
hundred years.

          NINTH:  The number of  Directors  of the  Corporation  shall be seven.
Unless otherwise provided by the Bylaws of the Corporation, the Directors of the
Corporation need not be stockholders therein.

          TENTH:  (1) Except as may be  otherwise  specifically  provided by (i)
statute,  (ii) the Articles of  Incorporation of the corporation as from time to
time  amended  or  (iii)  bylaw  provisions  adopted  from  time  to time by the
stockholders  or  directors  of  the  corporation,  all  powers  of  management,
direction and control of the corporation shall be, and hereby are, vested in the
board of directors.

                  (2) If the  bylaws  so  provide,  the board of  directors,  by
resolution  adopted by a majority of the whole board,  may designate two or more
directors to constitute an executive committee,  which committee,  to the extent
provided in said resolution or in the bylaws of the corporation,  shall have and
exercise all of the authority of the board of directors in the management of the
corporation.

                  (3)  Shares of stock in other  corporations  shall be voted by
the  President  or a  Vice  President,  or  such  officer  or  officers  of  the
Corporation as the Board of Directors  shall from time to time designate for the
purpose,  or by a proxy or proxies  thereunto  duly  authorized  by the Board of
Directors,  except as otherwise  ordered by vote of the holders of a majority of
the shares of the capital stock of the  Corporation  outstanding and entitled to
vote in respect thereto.

                  (4) Subject only to the  provisions of the federal  Investment
Company Act of 1940,  any  Director,  officer or employee  individually,  or any
partnership of which any Director,  officer or employee may be a member,  or any
corporation or association of which any Director,  officer or employee may be an
officer, director,  trustee, employee or stockholder,  may be a party to, or may
be  pecuniarily  or otherwise  interested in, any contract or transaction of the
Corporation,  and in the absence of fraud no contract or other transaction shall
be thereby  affected or  invalidated;  provided  that in case a  Director,  or a
partnership,  corporation  or  association  of  which a  Director  is a  member,
officer, director,  trustee, employee or stockholder is so interested, such fact
shall be  disclosed  or shall  have been  known to the Board of  Directors  or a
majority thereof;  and any Director of the Corporation who is so interested,  or
who is also a director,  officer, trustee, employee or stockholder of such other
corporation  or  association  or a  member  of  such  partnership  which  is  so
interested,  may be  counted in  determining  the  existence  of a quorum at any
meeting of the Board of Directors of the  Corporation  which shall authorize any
such  contract  or  transaction,  and may vote  thereat  to  authorize  any such
contract  or  transaction,  with like  force  and  effect as if he were not such
director, officer, trustee, employee or stockholder of such other corporation or
association or not so interested or a member of a partnership so interested.

                  (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 the  settlement  of any such  action,  suit or
proceeding,  not exceed the costs and expenses (including attorney's 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
indemnifications shall not be exclusive of any other right to which the officers
and Directors may be entitled according to law.

                  (6) The Board of  Directors  is hereby  empowered to authorize
the issuance and sale,  from time to time, of shares of the capital stock of the
Corporation, whether for cash at not less than the par value thereof or for such
other  consideration  including  securities  as the Board of Directors  may deem
advisable,  in the manner and to the extent now or  hereafter  permitted  by the
Bylaws of the Corporation and by the laws of Kansas; provided, however, that the
consideration  per share to be received by the Corporation  upon the sale of any
shares of its capital stock shall not be less than the net asset value per share
of such capital stock  outstanding  at the time as of which the  computation  of
such net asset value shall be made. For purposes of the computation of net asset
value,  as in these Articles of  Incorporation  referred to, the following rules
shall apply:

                  (a) The net asset value of each share of capital  stock of the
               Corporation   surrendered  to  the   Corporation  for  repurchase
               pursuant to the  provisions of paragraph  (2)(a) of Article FIFTH
               of these Articles of Incorporation  shall be determined as of the
               close of business on the last full  business day on which the New
               York Stock  Exchange  is open next  succeeding  the date on which
               such capital stock is so surrendered.

                  (b) the net asset value of each share of capital  stock of the
               Corporation  for the purpose of issue of such capital stock shall
               be  determined  either  as of the close of  business  on the last
               business  day on which the New York Stock  Exchange was open next
               preceding  the date on which a  subscription  to such  stock  was
               accepted,  or in accordance  with any provision of the Investment
               Company Act of 1940, or any rule or regulation thereunder, or any
               rule or regulation made or adopted by any securities  association
               registered under the Securities Exchange Act of 1934.

                  (c) The net asset value of each share of capital  stock of the
               Corporation, as of the close of business on any day, shall be the
               quotient obtained by dividing the value, as at such close, of the
               net assets of the Corporation  (i.e.,  the value of the assets of
               the Corporation  less its liabilities  exclusive of capital stock
               and  surplus)  by the total  number of  shares of  capital  stock
               outstanding  at such  close.  The assets and  liabilities  of the
               Corporation  shall be  determined in  accordance  with  generally
               accepted  accounting  principles;   provided,  however,  that  in
               determining  the value of the assets of the  Corporation  for the
               purpose of obtaining the net asset value, each security listed on
               the New York Stock  Exchange  shall be valued on the basis of the
               closing  sale  thereof  on the New  York  Stock  Exchange  on the
               business day as of which such value is being determined. If there
               be no such sale on such day, then the security shall be valued on
               the basis of the mean  between the closing and asked  prices upon
               such day.  If no bid and asked  prices  are  quoted for such day,
               then the security  shall be valued by such method as the Board of
               Directors shall deem to reflect its fair market value. Securities
               not listed on the New York Stock Exchange shall be valued in like
               manner on the basis of  quotations  on any other  stock  exchange
               which the Board of  Directors  may from time to time  approve for
               that  purpose,  or by such other method as the Board of Directors
               shall deem to  reflect  their fair  market  value,  and all other
               assets of the Corporation  shall be valued by such method as they
               shall deem to reflect their fair market value.

               For the purposes hereof

               (A)  Capital  stock   subscribed   for  shall  be  deemed  to  be
               outstanding as of the time of acceptance of any  subscription and
               the entry  thereof  in the books of the  Corporation  and the net
               price thereof shall be deemed to be an asset of the  Corporation;
               and

               (B) Capital stock  surrendered  for repurchase by the Corporation
               pursuant to the  provisions of paragraph  (2)(a) of Article FIFTH
               of  these  Articles  of  Incorporation  shall  be  deemed  to  be
               outstanding  until the close of  business on the date as of which
               such value is being  determined as provided in paragraph  6(a) of
               this Article TENTH and thereupon and until paid the price thereof
               shall be deemed to be a liability of the Corporation.

                  (d)  The net asset value of each share of the capital stock of
                       the  Corporation,  as of any time other than the close of
                       business on any day, may be determined by applying to the
                       net  asset  value  as of the  close  of  business  on the
                       preceding business day, computed as provided in paragraph
                       6(c) of  this  Article  TENTH,  such  adjustments  as are
                       authorized by or pursuant to the  directions of the Board
                       of  Directors  and  designed  reasonably  to reflect  any
                       material  changes in the market value of  securities  and
                       other assets held and any other  material  changes in the
                       assets  or  liabilities  of  the  Corporation  and in the
                       number of its  outstanding  shares which shall have taken
                       place  since  the  close of  business  on such  preceding
                       business day.

                  (e)  In addition to the  foregoing,  the Board of Directors is
                       empowered, in its absolute discretion, to establish other
                       bases or times,  or both, for  determining  the net asset
                       value of each share of capital stock of the Corporation.

                  (f)  Payment of the net asset  value of  capital  stock of the
                       Corporation  surrendered to it for repurchase pursuant to
                       the  provisions of paragraph 2(a) of Article FIFTH of the
                       Articles   of   Incorporation   shall   be  made  by  the
                       Corporation  within  seven days after  surrender  of such
                       stock to the Corporation for such purposes, to the extent
                       permitted  by  law.  Any  such  payment  may be  made  in
                       portfolio securities of the Corporation or in cash, or in
                       both  portfolio  securities  and  cash,  as the  Board of
                       Directors, shall deem advisable, and no stockholder shall
                       have a right,  other than as  determined  by the Board of
                       Directors to have his shares repurchased in kind. For the
                       purpose of  determining  the amount of any  payment to be
                       made,  pursuant to paragraph  2(a) of Article  FIFTH,  in
                       portfolio securities,  such securities shall be valued as
                       provided  in  subdivision  (c)  of  paragraph  6 of  this
                       Article TENTH.

          ELEVENTH:  The  private  property  of the  stockholders  shall  not be
subject to the payment of the debts of the Corporation.

          TWELFTH:  The Board of  Directors  shall have power to make,  and from
time to time alter,  amend and repeal the Bylaws of the  Corporation;  provided,
however,  that the paramount power to make, alter,  amend and repeal the Bylaws,
or any provision thereof, or to adopt new Bylaws,  shall always be vested in the
stockholders,  which  power  may be  exercised  by the  affirmative  vote of the
holders  of a majority  of the  outstanding  shares of stock of the  Corporation
entitled  to  vote,  at any  annual  or  special  meeting  of the  stockholders;
provided,  further,  that  thereafter  the  directors  shall  have the  power to
suspend,  repeal,  amend or otherwise alter the Bylaws or any portion thereof so
enacted by the stockholders,  unless the stockholders in enacting such Bylaws or
portion thereof shall otherwise provide.

          THIRTEENTH:  In so far as  permitted  under  the laws of  Kansas,  the
stockholders  and  directors  shall have power to hold  their  meetings,  if the
bylaws so provide,  and to keep the books and records of the corporation outside
of the State of Kansas,  and to have one or more offices,  within or without the
State of Kansas,  at such places as may be from time to time  designated  in the
bylaws or by resolution of the stockholders or directors.

          FOURTEENTH:  Whenever a compromise or arrangement is proposed  between
this  Corporation and its creditors or any class of them,  secured or unsecured,
or between this  Corporation  and its  stockholders,  or any class of them,  any
court, state or federal,  of competent  jurisdiction  within the State of Kansas
may on the application in a summary way of this corporation, or of any creditor,
secured or unsecured, or stockholders thereof, or on the application of trustees
in dissolution, or on the application of any receiver or receivers appointed for
this corporation by any court, state or federal of competent jurisdiction, order
a meeting of the creditors or class of creditors  secured or unsecured or of the
stockholders or class of stockholders of this  corporation,  as the case may be,
to be  summoned in such  manner as said court  directs.  If a majority in number
representing  three fourths in value of the creditors or class of creditors,  or
of the stockholders,  or class of stockholders of this corporation,  as the case
may be, agree to any compromise or arrangement and to any reorganization of this
corporation  as a  consequence  of such  compromise  or  arrangement,  the  said
compromise or arrangement  and the said  reorganization  shall, if sanctioned by
the court to which the said  application  has been  made,  be binding on all the
creditors  or  class  of  creditors,  or on all the  stockholders  or  class  of
stockholders,  of  this  corporation,  as the  case  may  be,  and  also on this
corporation.

          FIFTEENTH:  This  corporation  reserves  the right to alter,  amend or
repeal any provision  contained in these Articles of Incorporation in the manner
now or hereafter prescribed by the statutes of Kansas, and all rights and powers
conferred  herein are granted subject to this  reservation;  and, in particular,
the  corporation  reserves  the right and  privilege  to amend its  Articles  of
Incorporation  from time to time so as to authorize other or additional  classes
of shares of stock, to increase or decrease the number of shares of stock of any
class now or hereafter  authorized and to vary the preferences,  qualifications,
limitations,   restrictions   and  the  special  or  relative  rights  or  other
characteristics  in respect of the shares of each class,  in the manner and upon
such  minimum  vote of the  stockholders  entitled to vote thereon as may at the
time be prescribed or be permitted by the laws of Kansas, or such larger vote as
may then be required by the Articles of Incorporation of the corporation.

          IN WITNESS  WHEREOF,  we have hereunto  subscribed our names this 27th
day of November, 1961.

                                                  HERBERT F. LAING
                                                  ------------------------------
                                                  Herbert F. Laing

                                                  DEAN L. SMITH
                                                  ------------------------------
                                                  Dean L. Smith

                                                  ROBERT E. JACOBY
                                                  ------------------------------
                                                  Robert E. Jacoby


STATE OF KANSAS  )
                 ) ss.
COUNTY OF SHAWNEE)


     Personally  appeared  before me, a notary public in and for Shawnee County,
Kansas,  the above named  HERBERT F. LAING,  DEAN L. SMITH and ROBERT E. JACOBY,
who are personally known to me to be the same persons who executed the foregoing
instrument of writing,  and such persons duly  acknowledged the execution of the
same.

     IN WITNESS  WHEREOF,  I have  hereunto  subscribed  my name and  affixed my
official seal this 27th day of November, 1961.

                                                  GERALDINE SKINNER
                                                  ------------------------------
                                                  Notary Public

(Notarial Seal)

My commission expires: December 31, 1961.

     Topeka, Kansas                                      November 27, 1961
                                                  ------------------------------
                                                               Date

                          OFFICE OF SECRETARY OF STATE


RECEIVED OF SECURITY EQUITY FUND, INC.

and deposited in the State Treasury,  fees on these Articles of Incorporation as
follows:

                 Application Fee                          $25.00
                 Filing and Recording Fee                 $2.50

                 Capitalization Fee                       $550.00


                                                  PAUL R. SHANAHAN
                                                  ------------------------------
                                                  Secretary of State

By:  JAMES L. GALBE
     ------------------------------
     Assistant Secretary of State

                            CERTIFICATE OF AMENDMENT
                       OF THE ARTICLES OF INCORPORATION OF
                           SECURITY EQUITY FUND, INC.


          We, DEAN L. SMITH,  President,  and WILLIAM J. MILLER, JR., Secretary,
of Security  Equity Fund,  Inc., a corporation  organized and existing under the
laws of the State of Kansas, ( hereinafter  sometimes for convenience called the
"Company"),  with its principal  office in the City of Topeka,  Shawnee  County,
Kansas, do hereby certify as follows:

          FIRST: That the board of directors of the Company at a meeting held on
October 16,  1962,  duly  adopted the  following  amendment  to the  Articles of
Incorporation  of the Company,  and declared the advisability of said amendment,
said resolution reading as follows:

          RESOLVED,  that the Articles of Incorporation of Security Equity Fund,
Inc.  be amended by  deleting  the  present  Article  NINTH of said  Articles of
Incorporation and inserting in lieu thereof the following Article NINTH:

          NINTH:  Directors of the corporation  shall be nine.  Unless otherwise
provided by the Bylaws of the corporation, the directors of the corporation need
not be stockholders therein.

          SECOND:  That the board of  directors of the Company also duly adopted
the  following  amendment  to the Articles of  Incorporation  of the Company and
declared the advisability of said amendment, said resolution reading as follows:

          RESOLVED that the Articles of  Incorporation  of Security Equity Fund,
Inc. be amended by deleting  the present  subdivision  (a) of  paragraph  (6) of
Article  TENTH of said Articles of  Incorporation  and inserting in lieu thereof
the following subdivision (a) of paragraph (6) of Article TENTH:

               (a) The net asset  value of each  share of  capital  stock of the
     corporation  surrendered to the corporation for repurchase  pursuant to the
     provisions  of  paragraph  (2)(a) of  Article  FIFTH of these  Articles  of
     Incorporation  shall be determined as of the close of business on the first
     full  business  day on  which  the New York  Stock  Exchange  is open  next
     succeeding the date on which such capital stock is so surrendered.

          THIRD:  That thereafter on the 4th day of December,  1962, upon notice
duly given as  provided  by law and the bylaws of the  Company to each holder of
shares  of  Capital  Stock  of the  Company  entitled  to vote  on the  proposed
amendments  of the  Articles  of  Incorporation,  the  annual  meeting  of  said
stockholders  was held and there were  present  at such  meeting in person or by
proxy the holders of more than a majority of the voting stock of the Company.

          FOURTH:  That  at  said  annual  meeting  of the  stockholders  of the
Company,  the aforesaid  resolutions,  set forth in Division  FIRST and Division
SECOND  hereof,  amending the  Articles of  Incorporation  of the Company,  were
presented  for  consideration  and a vote of the  stockholders  present  at said
meeting in person and by proxy was taken by ballot for and  against  each of the
proposed resolutions, which vote was conducted by two Judges, appointed for that
purpose by the officer  presiding at such meeting;  that the said Judges decided
upon the  qualifications  of the voters and  accepted  their  votes and when the
voting was completed  said Judges counted and  ascertained  the number of shares
voted  respectively  for and  against  each of the  proposed  amendments  to the
Articles of  Incorporation  and declared that the persons  holding a majority of
the Capital Stock of the Company had voted for each of the proposed  amendments;
and the said Judges made out a certificate accordingly that the number of shares
of Capital Stock issued and outstanding and entitled to vote on said resolutions
was 23,732 shares of Capital Stock,  that 23,533 shares of said stock were voted
for and 100 shares of said stock were voted  against the proposed  amendment set
forth in Division FIRST hereof,  that 23,633 shares of said stock were voted for
and 0 shares of said stock were voted  against the proposed  amendment set forth
in Division SECOND hereof, and the said Judges subscribed and delivered the said
certificate to the Secretary of the Company.

          FIFTH: That a certificate of said Judges having been made,  subscribed
and  delivered as aforesaid and it appearing by said  certificate  of the Judges
that the  holders of more than a majority  of the  Capital  Stock of the Company
entitled  to vote  thereon had voted in favor of each of the  amendments  to the
Articles  of  Incorporation  set forth in  Division  FIRST and  Division  SECOND
hereof, the said amendments were declared duly adopted.

          SIXTH: That,  accordingly,  the amendments to Articles NINTH and TENTH
of the Articles of  Incorporation  of Security Equity Fund,  Inc., as heretofore
set forth in Division FIRST and Division SECOND of this  certificate,  have been
duly adopted in accordance  with Article 42 of the General  Corporation  Code of
Kansas.

          SEVENTH:  That the capital of the Company will not be reduced under or
by reason of said amendment.

     IN WITNESS  WHEREOF we, Dean L. Smith,  President,  and William J.  Miller,
Jr.,  Secretary,  have hereunto severally set our hands and caused the corporate
seal of the Company to be hereto affixed this 4th day of December, 1962.

                                               DEAN L. SMITH
                                               ---------------------------------
                                               Dean L. Smith, President


                                               WILLIAM J. MILLER, JR.
                                               ---------------------------------
                                               William J. Miller, Jr., Secretary
[Corporate Seal]

STATE OF KANSAS  )
                 ) SS.
COUNTY OF SHAWNEE)


     BE IT  REMEMBERED,  that on this 4th day of  December,  1962,  before me, a
Notary Public in and for the county and state aforesaid, came Dean L. Smith, and
William J. Miller, Jr., President and Secretary respectively, of Security Equity
Fund,  Inc.,  a Kansas  corporation,  who are  personally  known to me to be the
President and Secretary,  respectively, of said corporation and the same persons
who executed the foregoing  instrument and they duly  acknowledged the execution
of the same.

     IN TESTIMONY  WHEREOF,  I have hereunto set my hand and affixed my notarial
seal on the day and year last above written.

                                                  FLORENCE MCKINSEY
                                                  ------------------------------
                                                  Notary Public

My commission expires:  November 21, 1965.


                          OFFICE OF SECRETARY OF STATE
                         Topeka, Kansas December 4, 1962


RECEIVED OF SECURITY EQUITY FUND, INC.

Two and fifty/100-------------------------------------------------------Dollars,
fee for filing the within Certificate of Amendment.


                                               PAUL R. SHANAHAN
                                               ------------------------------
                                               Secretary of State

                                               By:  Assistant Secretary of State

                            CERTIFICATE OF AMENDMENT
                       OF THE ARTICLES OF INCORPORATION OF
                           SECURITY EQUITY FUND, INC.


          We, DEAN L. SMITH,  President,  and WILL J. MILLER, JR., Secretary, of
Security Equity Fund, Inc., a corporation  organized and existing under the laws
of the State of  Kansas,  [hereinafter  sometimes  for  convenience  called  the
"Company"],  with its principal  office in the City of Topeka,  Shawnee  County,
Kansas, do hereby certify as follows:

          FIRST: That the board of directors of the Company at a meeting held on
December  2, 1963,  duly  adopted the  following  amendment  to the  Articles of
Incorporation  of the Company,  and declared the advisability of said amendment,
said resolution to read as follows:

          FURTHER  RESOLVED,  That the Articles of  Incorporation of the Fund be
amended by deleting  the present  subdivision  (a) of  paragraph  (6) of Article
TENTH of said  Articles  of  Incorporation  and  inserting  in lieu  thereof the
following subdivision (a) of paragraph (6) of Article TENTH:

          (a) The net  asset  value  of  each  share  of  capital  stock  of the
          Corporation tendered to the Corporation for repurchase pursuant to the
          provisions of paragraph  (2)(a) of Article FIFTH of these  Articles of
          Incorporation  shall be  determined as of the close of business on the
          date to which such capital stock is so tendered.

          SECOND:  That the board of  directors of the Company also duly adopted
the following  amendment to the Articles of  Incorporation  of the Company,  and
declared the advisability of said amendment, said resolution reading as follows:

          FURTHER  RESOLVED,  That the  Articles  of  Incorporation  of Security
     Equity Fund,  Inc., be amended by deleting the first  paragraph only of the
     present  subdivision (c) of paragraph (6) of Article TENTH of said Articles
     of  Incorporation  and  inserting  in  lieu  thereof  the  following  first
     paragraph of subdivision (c) of paragraph (6) of Article TENTH:

          (c) The net  asset  value  of  each  share  of  capital  stock  of the
          Corporation,  as of the  close of  business  on any day,  shall be the
          quotient  obtained by dividing the value, as at such close, of the net
          assets  of the  Corporation  (i.e.,  the  value of the  assets  of the
          Corporation  less its  liabilities  exclusive  of  capital  stock  and
          surplus) by the total number of shares of capital stock outstanding at
          such close.  The assets and  liabilities of the  Corporation  shall be
          determined   in  accordance   with   generally   accepted   accounting
          principles;  provided,  however,  that in determining the value of the
          assets of the  Corporation  for the purpose of obtaining the net asset
          value,  each security  listed on the New York Stock  Exchange shall be
          valued on the basis of the closing  sale thereof on the New York Stock
          Exchange  on  the  business  day  as of  which  such  value  is  being
          determined.  If there be no such sale on such day,  then the  security
          shall be valued on the basis of the  closing  bid price upon such day.
          If no bid price is quoted  for such day,  then the  security  shall be
          valued by such method as the Board of Directors  shall deem to reflect
          its fair  market  value.  Securities  not listed on the New York Stock
          Exchange  shall be valued in like manner on the basis of quotations on
          any other stock exchange which the Board of Directors may from time to
          time approve for that purpose, or by such other method as the Board of
          Directors shall deem to reflect their fair market value, and all other
          assets of the Corporation shall be valued by such method as they shall
          deem to reflect their fair market value.

          THIRD: That thereafter on the 20th day of December,  1963, upon notice
duly given as  provided  by law and the bylaws of the  Company to each holder of
shares  of  Capital  Stock  of the  Company  entitled  to vote  on the  proposed
amendments of the Articles of Incorporation, the deferred annual meeting of said
stockholders  was held and there were  present  at such  meeting in person or by
proxy the holders of more than a majority of the voting stock of the Company.

          FOURTH:  That at said deferred  annual meeting of the  stockholders of
the Company, the aforesaid resolutions, set forth in Division FIRST and Division
SECOND  hereof,  amending the  Articles of  Incorporation  of the Company,  were
presented  for  consideration  and a vote of the  stockholders  present  at said
meeting in person and by proxy was taken by ballot for and  against  each of the
proposed resolutions,  which vote was conducted by two Judges appointed for that
purpose by the officer  presiding at such meeting;  that the said Judges decided
upon the  qualifications  of the voters and  accepted  their  votes and when the
voting was completed  said Judges counted and  ascertained  the number of shares
voted  respectively  for and  against  each of the  proposed  amendments  to the
Articles of  Incorporation  and declared that the persons  holding a majority of
the Capital Stock of the Company had voted for each of the proposed  amendments;
and the said Judges made out a certificate accordingly that the number of shares
of Capital Stock issued and outstanding and entitled to vote on said resolutions
was 41,213 shares of Capital Stock,  that 30,185 shares of said stock were voted
for and 0 shares of said stock were voted  against the proposed  amendments  set
forth in Division FIRST hereof,  that 30,185 shares of said stock were voted for
and 30,18  shares of said stock were voted  against the proposed  amendment  set
forth in DIVISION  SECOND hereof,  and the said Judges  subscribed and delivered
the said certificate to the Secretary of the Company.

          FIFTH: That a certificate of said Judges having been made,  subscribed
and  delivered as aforesaid and it appearing by said  certificate  of the Judges
that the  holders of more than a majority  of the  Capital  Stock of the Company
entitled  to vote  thereon had voted in favor of each of the  amendments  to the
Articles  of  Incorporation  set forth in  Division  FIRST and  Division  SECOND
hereof, the said amendments were declared adopted.

          SIXTH:  That,  accordingly,  the  amendments  to Article  TENTH of the
Articles of Incorporation of Security Equity Fund, Inc., as heretofore set forth
in  Division  FIRST  and  Division  SECOND of this  certificate,  have been duly
adopted in accordance with Article 42 of the General Corporation Code of Kansas.

          SEVENTH:  That the capital of the Company will not be reduced under or
by reason of said amendment.

          IN WITNESS WHEREOF, we, Dean L. Smith, President,  and Will J. Miller,
Jr.,  Secretary,  have hereunto severally set our hands and caused the corporate
seal of the Company to be hereto affixed this 20th day of December, 1963.

[Corporate Seal]

                                                  DEAN L. SMITH
                                                  ------------------------------
                                                  Dean L. Smith, President


                                                  WILL J. MILLER, JR.
                                                  ------------------------------
                                                  Will J. Miller, Jr., Secretary

STATE OF KANSAS  )
                 ) ss.
COUNTY OF SHAWNEE)


          BE IT REMEMBERED,  that on this 20th day of December, 1963, before me,
a Notary Public in and for the county and state  aforesaid,  came Dean L. Smith,
and Will J. Miller,  Jr.,  President and  Secretary,  respectively,  of Security
Equity Fund, Inc. a Kansas corporation, who are personally known to me to be the
President and Secretary, respectively, of said corporation, and the same persons
who executed the foregoing  instrument and they duly  acknowledged the execution
of the same.

          IN  TESTIMONY  WHEREOF,  I have  hereunto  set my hand and  affixed my
notarial seal on the day and year last above written.

                                                  AMELIA F. LETUKS
                                                  ------------------------------
                                                  Notary Public

My commission expires:  June 4, 1967


                          OFFICE OF SECRETARY OF STATE
                        Topeka, Kansas December 20, 1963


RECEIVED OF SECURITY EQUITY FUND, INC.

Two and fifty/100-------------------------------------------------------Dollars,
fee for filing the within Certificate of Amendment.


                                                  PAUL R. SHANAHAN
                                                  ------------------------------
                                                  SECRETARY OF STATE


                                              By: WILLIAM R. STURS
                                                  ------------------------------
                                                  Assistant Secretary of State

                            CERTIFICATE OF AMENDMENT
                       OF THE ARTICLES OF INCORPORATION OF
                           SECURITY EQUITY FUND, INC.


          We, DEAN L. SMITH,  President,  and WILL J. MILLER, JR., Secretary, of
Security Equity Fund, Inc., a corporation  organized and existing under the laws
of the State of  Kansas,  (hereinafter  sometimes  for  convenience  called  the
"Company"),  with its principal  office in the City of Topeka,  Shawnee  County,
Kansas, do hereby certify as follows:

          FIRST: That the board of directors of the Company at a meeting held on
April  7,  1966,  duly  adopted  the  following  amendment  to the  Articles  of
Incorporation  of the Company,  and declared the advisability of said amendment,
said resolution reading as follows:

          "RESOLVED, That the Articles of Incorporation of Security Equity Fund,
          Inc., as heretofore  amended, be further amended by deleting the first
          paragraph  of the Article  Fifth and by  inserting in lieu thereof the
          following paragraph:

               "The aggregate number of shares which the Corporation  shall have
               authority to issue shall be 5,000,000  shares of capital stock of
               the par value of $1.00 per share.""

          SECOND: That thereafter on the 9th day of June, 1966, upon notice duly
given as  provided by law and the bylaws of the Company to each holder of shares
of Capital  Stock of the Company  entitled to vote on the proposed  amendment of
the Articles of Incorporation, the special meeting of said stockholders was held
and there were present at such meeting in person or by proxy the holders of more
than a majority of the voting stock of the Company.

          THIRD: That at the special meeting of the stockholders of the Company,
the  aforesaid  resolution,  set forth in division  FIRST  hereof,  amending the
Articles of Incorporation of the Company,  was presented for consideration and a
vote of the  stockholders  present  at said  meeting  in person and by proxy was
taken by ballot for and against each of the proposed resolution,  which vote was
conducted by two Judges  appointed for that purpose by the officer  presiding at
such meeting; that the said Judges decided upon the qualifications of the voters
and accepted  their votes and when the voting was completed  said Judges counted
and  ascertained  the number of shares  votes  respectively  for and against the
proposed  amendment  to the  Articles of  Incorporation  and  declared  that the
persons holding a majority of the Capital Stock of the Company had voted for the
proposed amendment;  and the said Judges made out a certificate accordingly that
the number of shares of Capital  Stock  issued and  outstanding  and entitled to
vote on said resolution was 578,333 shares of Capital Stock, that 335,865 shares
of stock  were  voted  for and 4,199  shares of stock  were  voted  against  the
proposed  amendment  set forth in  Division  FIRST  hereof,  and the said Judges
subscribed and delivered the said certificate to the Secretary of the Company.

          FOURTH: That a certificate of said Judges having been made, subscribed
and  delivered as aforesaid and it appearing by said  certificate  of the Judges
that the  holders of more than a majority  of the  Capital  Stock of the Company
entitled to vote thereon had voted in favor of the  amendment to the Articles of
Incorporation  set  forth in  Division  FIFTH  hereof,  the said  amendment  was
declared duly adopted.

          FIFTH:  That,  accordingly,  the  amendment  to  Article  FIFTH of the
Articles of Incorporation of Security Equity Fund, Inc., as heretofore set forth
in Division FIRST of this certificate, have been duly adopted in accordance with
Article 42 of the General Corporation Code of Kansas.

          SIXTH: That the capital of the Company will not be reduced under or by
reason of said amendment.

          IN WITNESS WHEREOF, we, Dean L. Smith,  President,  and Will J. Miller
Jr.,  Secretary,  have hereunto severally set our hands and caused the corporate
seal of the Company to be hereto affixed this 9th day of June, 1966.


                                                  DEAN L. SMITH
                                                  ------------------------------
                                                  Dean L. Smith, President


                                                  WILL J. MILLER, JR.
                                                  ------------------------------
                                                  Secretary
(Corporate Seal)

STATE OF KANSAS  )
                 ) ss.
COUNTY OF SHAWNEE)


     BE IT REMEMBERED,  that on this 9th day of June, 1966,  before me, a Notary
Public in and for the County and State aforesaid, came Dean L. Smith and Will J.
Miller,  Jr.,  President and Secretary,  respectively  of Security  Equity Fund,
Inc., a Kansas  corporation,  who are personally known to me to be the President
and  Secretary,  respectively,  of said  corporation,  and the same  persons who
executed the foregoing  instrument and they duly  acknowledged  the execution of
the same.

     IN TESTIMONY  WHEREOF,  I have hereunto set my hand and affixed my notarial
seal on the day and year last above written.


                                                  LOIS J. HEDRICK
                                                  ------------------------------
                                                  Notary Public

My commission expires January 8, 1968.


                          OFFICE OF SECRETARY OF STATE
                          Topeka, Kansas June 13, 1966


RECEIVED OF SECURITY EQUITY FUND, INC.

Two Thousand Fifty Two and  fifty/100-----------------------------------Dollars,
fee for filing the within Certificate of Amendment.


                                                  Elwill M. Shanahan
                                                  ------------------------------
                                                  Secretary of State

                                              By: William A. Stewart
                                                  Assistant Secretary of State

                            CERTIFICATE OF AMENDMENT
                       OF THE ARTICLES OF INCORPORATION OF
                           SECURITY EQUITY FUND, INC.


          We, DEAN L. SMITH,  President,  and WILL J. MILLER, JR., Secretary, of
Security Equity Fund, Inc., a corporation  organized and existing under the laws
of the State of  Kansas,  (hereinafter  sometimes  for  convenience  called  the
"Company"),  with its principal  office in the City of Topeka,  Shawnee  County,
Kansas, do hereby certify as follows:

          FIRST: That the board of directors of the Company at a meeting held on
July  6,  1967,  duly  adopted  the  following  amendment  to  the  Articles  of
Incorporation  of the Company,  and declared the advisability of said amendment,
said resolution reading as follows:

          "RESOLVED, That the Articles of Incorporation of Security Equity Fund,
          Inc., as heretofore  amended, be further amended by deleting the first
          paragraph  of the Article  Fifth and by  inserting in lieu thereof the
          following paragraph:

               "The aggregate number of shares which the Corporation  shall have
               authority to issue shall be 15,000,000 shares of capital stock of
               the par value of $1.00 per share.""

          SECOND:  That thereafter on the 30th day of August,  1967, upon notice
duly given as  provided  by law and the bylaws of the  Company to each holder of
shares  of  Capital  Stock  of the  Company  entitled  to vote  on the  proposed
amendment  of the  Articles  of  Incorporation,  the  special  meeting  of  said
stockholders  was held and there were  present  at such  meeting in person or by
proxy the holders of more than a majority of the voting stock of the Company.

          THIRD: That at the special meeting of the stockholders of the Company,
the  aforesaid  resolution,  set forth in division  FIRST  hereof,  amending the
Articles of Incorporation of the Company,  was presented for consideration and a
vote of the  stockholders  present  at said  meeting  in person and by proxy was
taken  by  ballot  for and  against  the  proposed  resolution,  which  vote was
conducted by two Judges  appointed for that purpose by the officer  presiding at
such meeting; that the said Judges decided upon the qualifications of the voters
and accepted  their votes and when the voting was completed  said Judges counted
and  ascertained  the number of shares  votes  respectively  for and against the
proposed  amendment  to the  Articles of  Incorporation  and  declared  that the
persons holding a majority of the Capital Stock of the Company had voted for the
proposed amendment;  and the said Judges made out a certificate accordingly that
the number of shares of Capital  Stock  issued and  outstanding  and entitled to
vote on said  resolution was 3,118,651  shares of Capital Stock,  that 1,613,533
shares of stock were voted for and 45,071 shares of stock were voted against the
proposed  amendment  set forth in  division  FIRST  hereof,  and the said Judges
subscribed and delivered the said certificate to the Secretary of the Company.

          FOURTH: That a certificate of said Judges having been made, subscribed
and  delivered as aforesaid and it appearing by said  certificate  of the Judges
that the  holders of more than a majority  of the  Capital  Stock of the Company
entitled to vote thereon had voted in favor of the  amendment to the Articles of
Incorporation  set  forth in  division  FIRST  hereof,  the said  amendment  was
declared duly adopted.

          FIFTH:  That,  accordingly,  the  amendment  to  Article  Fifth of the
Articles of Incorporation of Security Equity Fund, Inc., as heretofore set forth
in Division FIRST of this certificate, have been duly adopted in accordance with
Article 42 of the General Corporation Code of Kansas.

          SIXTH: That the capital of the Company will not be reduced under or by
reason of said amendment.

          IN WITNESS WHEREOF, we, Dean L. Smith,  President,  and Will J. Miller
Jr.,  Secretary,  have hereunto severally set our hands and caused the corporate
seal of the Company to be hereto affixed this 30th day of August, 1967.


                                                  DEAN L. SMITH
                                                  ------------------------------
                                                  Dean L. Smith, President


                                                  WILL J. MILLER, JR.
                                                  ------------------------------
                                                  Secretary
(Corporate Seal)


STATE OF KANSAS  )
                 ) ss.
COUNTY OF SHAWNEE)


     BE IT  REMEMBERED,  that on this 30th day of  August,  1967,  before  me, a
Notary Public in and for the County and State aforesaid, came Dean L. Smith, and
Will J. Miller, Jr., President and Secretary,  respectively,  of Security Equity
Fund,  Inc.,  a Kansas  corporation,  who are  personally  known to me to be the
President and Secretary, respectively, of said corporation, and the same persons
who executed the foregoing  instrument and they duly  acknowledged the execution
of the same.

     IN TESTIMONY  WHEREOF,  I have hereunto set my hand and affixed my notarial
seal on the day and year last above written.


                                                  LOIS J. HEDRICK
                                                  ------------------------------
                                                  Notary Public

My commission expires:  January 8, 1968


                          OFFICE OF SECRETARY OF STATE
                         Topeka, Kansas August 30, 1967


RECEIVED OF SECURITY EQUITY FUND, INC.

Five Thousand Fifty Two and  fifty/100----------------------------------Dollars,
Fee for filing the within Amendment.


                                                  ELWILL M. SHANAHAN
                                                  ------------------------------
                                                  Secretary of State


                                              By: WILLIAM A. STEWART
                                                  ------------------------------
                                                  Assistant Secretary of State

              CERTIFICATE OF AMENDMENT TO ARTICLES OF INCORPORATION
                                       OF
                           SECURITY EQUITY FUND, INC.


          We, DEAN L. SMITH,  President,  and WILL J. MILLER, JR., Secretary, of
Security Equity Fund, Inc., a corporation  organized and existing under the laws
of the State of  Kansas,  (hereinafter  sometimes  for  convenience  called  the
"Company"),  with its principal  office in the City of Topeka,  Shawnee  County,
Kansas, do hereby certify as follows:

          FIRST: That the board of directors of the Company at a meeting held on
October 10,  1968,  duly  adopted the  following  amendment  to the  Articles of
Incorporation  of the Company,  and declared the advisability of said amendment,
said resolution reading as follows:

               "RESOLVED,  That the Articles of Incorporation of Security Equity
          Fund,  Inc., as heretofore  amended,  be further amended  deleting the
          first  paragraph of the Article FIFTH and by inserting in lieu thereof
          the following paragraph:

                    "The aggregate number of shares which the Corporation  shall
                    have the authority to issue shall be  100,000,000  shares of
                    capital stock of the par value of $0.25 (twenty-five  cents)
                    per share. Upon the effectiveness of this amendment:

                    (a) Each share of capital stock,  par value $1.00 per share,
                    heretofore   issued  by  the   Corporation   and   presently
                    outstanding shall, without further act or deed, be deemed to
                    be changed and  converted  into four shares of capital stock
                    of the par value of $0.25 each; and

                    (b) Each stock  certificate  for shares of capital  stock of
                    the par  value of $1.00  per share  issued  and  outstanding
                    immediately  prior to this  amendment  evidencing  shares or
                    capital stock, par value $1.00 per share, shall be deemed to
                    evidence an identical  number of shares of capital  stock of
                    the par value of $0.25 each."

          SECOND: That thereafter on the 12th day of December,  1968 upon notice
duly given as  provided  by the law and the bylaws of the Company to each holder
of shares of  Capital  Stock of the  Company  entitled  to vote on the  proposed
amendment  of  the  Articles  of  Incorporation,  the  annual  meeting  of  said
stockholders  was held and there were  present  at such  meeting in person or by
proxy the holders of more than a majority of the voting stock of the Company.

          THIRD: That at said annual meeting of the stockholders of the Company,
the  foresaid  resolution,  set forth in division  FIRST  hereof,  amending  the
Articles of Incorporation of the Company,  was presented for consideration and a
vote of the  stockholders  present  at said  meeting  in person and by proxy was
taken  by  ballot  for and  against  the  proposed  resolution,  which  vote was
conducted by two Judges  appointed for that purpose by the officer  presiding at
such meeting; that the said Judges decided upon the qualifications of the voters
and accepted  their votes and when the voting was completed  said Judges counted
and  ascertained  the number of shares  votes  respectively  for and against the
proposed  amendment  to the  Articles of  Incorporation  and  declared  that the
persons holding a majority of the Capital Stock of the Company had voted for the
proposed amendment;  and the said Judges made out a certificate accordingly that
the number of shares of Capital  Stock  issued and  outstanding  and entitled to
vote on said  resolution was 7,683,768  shares of Capital Stock,  that 4,391,182
shares of stock were voted for, and 214,740  shares of stock were voted  against
the proposed  amendment set forth in division FIRST hereof,  and the said Judges
subscribed and delivered the said certificate to the Secretary of the Company.

          FOURTH: That a certificate of said Judges having been made, subscribed
and  delivered as aforesaid and it appearing by said  certificate  of the Judges
that the  holders of more than a majority  of the  Capital  Stock of the Company
entitled to vote thereon had voted in favor of the  amendment to the Articles of
Incorporation  set  forth in  division  FIRST  hereof,  the said  amendment  was
declared duly adopted.

          FIFTH:  That,  accordingly,  the  amendment  to  Article  Fifth of the
Articles of Incorporation of Security Equity Fund, Inc., as heretofore set forth
in Division FIRST of this certificate, have been duly adopted in accordance with
Article 42 of the General Corporation Code of Kansas.

          SIXTH: That the capital of the Company will not be reduced under or by
reason of said amendment.

          IN WITNESS WHEREOF, we, Dean L. Smith,  President,  and Will J. Miller
Jr.,  Secretary,  have hereunto severally set our hands and caused the corporate
seal of the Company to be hereto affixed this 31st day of December, 1968.


                                                  DEAN L. SMITH
                                                  ------------------------------
                                                  Dean L. Smith, President


                                                  WILL J. MILLER, JR.
                                                  ------------------------------
                                                  Secretary
(Corporate Seal)


STATE OF KANSAS  )
                 ) ss.
COUNTY OF SHAWNEE)


          BE IT REMEMBERED,  that on this 31st day of December, 1968, before me,
a Notary Public in and for the County and State  aforesaid,  came Dean L. Smith,
and Will J. Miller,  Jr.,  President and  Secretary,  respectively,  of Security
Equity Fund,  Inc., a Kansas  corporation,  who are personally known to me to be
the President and Secretary,  respectively,  of said  corporation,  and the same
persons who executed the foregoing  instrument  and they duly  acknowledged  the
execution of the same.

          IN  TESTIMONY  WHEREOF,  I have  hereunto  set my hand and  affixed my
notarial seal on the day and year last above written.


                                                  Lois J. Hedrick
                                                  ------------------------------
                                                  Notary Public

My commission expires:  January 8, 1972

                          OFFICE OF SECRETARY OF STATE
                        Topeka, Kansas December 31, 1968


RECEIVED OF SECURITY EQUITY FUND, INC.

Five Thousand  fifty-two and  50/100------------------------------------Dollars,
fee for filing the within Amendment.


                                                  ELWILL M. SHANAHAN
                                                  ------------------------------
                                                  Secretary of State

By:  HART WORKMAN
     ------------------------------------------
     Hart Workman, Assistant Secretary of State

              CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION
                                       OF
                           SECURITY EQUITY FUND, INC.


          We, Dean L. Smith,  president,  and Will J. Miller,  Jr., secretary of
Security Equity Fund, Inc., a corporation  organized and existing under the laws
of the  State of  Kansas,  (hereinafter  called  the  "Corporation"),  do hereby
certify as follows:

          FIRST:  That on  October  30,  1969,  the  board of  directors  of the
Corporation  duly adopted the following  resolution  setting forth the following
proposed  amendment to the Articles of  Incorporation  of the  Corporation,  and
declared the advisability of said amendment, said resolution reading as follows:

               "RESOLVED,  that the Articles of Incorporation of Security Equity
          Fund, Inc., a Kansas  corporation,  be amended by deleting the present
          first sentence of  subparagraph  (a) of paragraph (2) of Article FIFTH
          thereof in its entirety and substituting in lieu thereof the following
          new first  sentence of  subparagraph  (a) of paragraph  (2) of Article
          FIFTH:

                    (2)(a) Each holder of capital stock of the Corporation, upon
               request  to  the  Corporation  accompanied  by  surrender  of the
               appropriate  stock certificate or certificates in proper form for
               transfer,  shall  be  entitled  to  require  the  Corporation  to
               repurchase  all or  any  part  of the  shares  of  capital  stock
               standing  in  the  name  of  such  holder  on  the  books  of the
               Corporation, at the net asset value of such shares.

          SECOND:  That on  October  30,  1969,  the board of  directors  of the
Corporation  also  duly  adopted  the  following  resolution  setting  forth the
following   proposed   amendment  to  the  Articles  of   Incorporation  of  the
Corporation,  and declared the  advisability of said amendment,  said resolution
reading as follows:

               RESOLVED,  that the Articles of  Incorporation of Security Equity
          Fund, Inc., a Kansas  corporation,  be amended by deleting the present
          first  paragraph  and  subparagraphs  (a) and (b) of paragraph  (6) of
          Article  TENTH  thereof in their  entirety  and  substituting  in lieu
          thereof the following new first  paragraph and new  subparagraphs  (a)
          and (b) of paragraph (6) of Article TENTH:

                    (6) The Board of Directors is hereby  empowered to authorize
          the  issuance  and sale,  from time to time,  of shares of the capital
          stock of the  Corporation,  whether  for cash at not less than the par
          value thereof or for such other consideration  including securities as
          the Board of Directors  may deem  advisable,  in the manner and to the
          extent now or hereafter permitted by the Bylaws of the Corporation and
          by the laws of Kansas;  provided,  however, that the consideration per
          share to be received by the Corporation upon the sale of any shares of
          its capital stock shall not be less than the net asset value per share
          of  such  capital  stock  outstanding  at the  time  as of  which  the
          computation of such net asset value shall be made. For the purposes of
          the   computation  of  net  asset  value,  as  in  these  Articles  of
          Incorporation  referred  to,  such  computation  shall be  computed as
          provided in the Investment Company Act of 1940 or in any other statute
          administered  by  the  Securities  and  Exchange   Commission  or  any
          successor  thereto,  or in any rule,  regulation or order issued under
          any such  statute  and,  except as so  provided,  shall be computed in
          accordance with the following rules:

                    (a) the net asset  value of each share of  capital  stock of
          the Corporation surrendered to the Corporation for repurchase pursuant
          to the  provisions  of  paragraph  (2)(a)  of  Article  FIFTH of these
          Articles of  Incorporation  shall be the net asset value next computed
          after the time such share is tendered for redemption.

                    (b) the net asset  value of each share of  capital  stock of
          the  Corporation  for the purpose of issue of such capital stock shall
          be determined at the close of business on the New York Stock  Exchange
          (the  "Exchange")  on each  day on which  the  Exchange  is open  with
          respect to all orders  accepted prior to such close of business of the
          Exchange on that day.  Orders  accepted after the close of business of
          the  Exchange  will be  filled  on the  basis  of the  offering  price
          determined as of the close of business on the Exchange on the next day
          on which the Exchange is open.

          THIRD:  That on  December  30,  1969,  at the  annual  meeting  of the
stockholders of the  Corporation,  notice of which annual meeting was duly given
as provided by law and the bylaws of the Corporation to each holder of shares of
capital stock of the Corporation  entitled to vote on the proposed amendments of
the Articles of Incorporation,  the aforesaid  resolutions set forth in Division
FIRST and  Division  SECOND,  amending  the  Articles  of  Incorporation  of the
Corporation,  were presented for  consideration,  and a vote of the stockholders
present  at said  meeting  in person  and by proxy  was taken by ballot  for and
against  each of the  proposed  resolutions,  which votes were  conducted by two
judges appointed for that purpose by the officer presiding at such meeting; that
the said judges decided upon the qualifications of the voters and accepted their
votes and when the voting was completed said Judges counted and  ascertained the
number  of  shares  votes  respectively  for and  against  each of the  proposed
amendments  to the  Articles  of  Incorporation  and  declared  that the persons
holding a majority of the capital stock of the Corporation had voted for each of
the proposed amendments;  and the said judges made out a certificate accordingly
that the number of shares of capital stock issued and  outstanding  and entitled
to vote on  said  resolution  was  21,222,857  shares  of  capital  stock,  that
20,919,065 shares of stock were voted for and 281,869 shares of stock were voted
against  the  proposed  amendment  set  forth in  Division  FIRST  hereof,  that
20,976,162  shares of said stock were voted for and 224,772 shares of said stock
were voted against the proposed  amendment set forth in Division  SECOND hereof,
and the  said  judges  subscribed  and  delivered  the said  certificate  to the
secretary of the Corporation.

          FOURTH:  That  the  certificate  of  said  judges  having  been  made,
subscribed and delivered as aforesaid,  and it appearing by said  certificate of
the judges that the holders of more than a majority of the capital  stock of the
Corporation entitled to vote thereon had voted in favor of the amendments to the
Articles  of  Incorporation  set forth in  Division  FIRST and  Division  SECOND
thereof, the said amendments were declared duly adopted.

          FIFTH:   That,   accordingly,   the  amendments  of  the  Articles  of
Incorporation of the Corporation,  as heretofore set forth in Division FIRST and
Division SECOND of this  certificate,  have been duly adopted in accordance with
Article 42 of the General Corporation Code of Kansas.

          SIXTH: That the capital of the Company will not be reduced under or by
reason of said amendments.

          IN WITNESS WHEREOF, we, Dean L. Smith,  president,  and Will J. Miller
Jr.,  secretary,  have hereunto severally set our hands and caused the corporate
seal of the Company to be hereto affixed this 30th day of December, 1969.


                                                  DEAN L. SMITH
                                                  ------------------------------
                                                  Dean L. Smith, President


                                                  WILL J. MILLER, JR.
                                                  ------------------------------
                                                  Secretary
(Corporate Seal)


STATE OF KANSAS  )
                 ) ss.
COUNTY OF SHAWNEE)


          BE IT REMEMBERED,  that on this 30th day of December, 1969, before me,
a notary public in and for the County and State  aforesaid,  came DEAN L. SMITH,
President,  and WILL J. MILLER, JR., Secretary, of Security Equity Fund, Inc., a
Kansas  corporation,  who are  personally  known to me to be the  President  and
Secretary,  respectively, of said Corporation, and the same persons who executed
the foregoing instrument and they duly acknowledged the execution of the same.

          IN  TESTIMONY  WHEREOF,  I have  hereunto  set my hand and  affixed my
notarial seal on the day and year last above written.


                                                  LOIS J. HEDRICK
                                                  ------------------------------
                                                  Notary Public

My commission expires:  January 8, 1972

                          OFFICE OF SECRETARY OF STATE
                        Topeka, Kansas DECEMBER 30, 1969


Received of SECURITY EQUITY FUND, INC.

Two and 50/100----------------------------------------------------------Dollars,
fee for filing the within Amendment.


                                                  ELWILL M. SHANAHAN
                                                  ------------------------------
                                                  Secretary of State

By:  HART WORKMAN
     ------------------------------
     Assistant Secretary of State

                     CHANGE OF LOCATION OF REGISTERED OFFICE
                                     AND/OR
                            CHANGE OF RESIDENT AGENT


STATE OF KANSAS  )
                 ) ss.
COUNTY OF SHAWNEE)

     We, Dean L. Smith,  President  and Larry D.  Armel,  Secretary  of Security
Equity Fund,  Inc., a corporation  organized and existing under and by virtue of
the laws of the State of Kansas, do hereby certify that a regular meeting of the
Board of Directors of said  corporation  held on the 9th day of July,  1975, the
following resolution was duly adopted.

     Be it further  resolved that the RESIDENT AGENT of said  corporation in the
State of Kansas be changed from Dean L. Smith,  Security Benefit Life Bldg., 700
Harrison Street, Topeka,  Shawnee, Kansas the same being of record in the office
of Secretary of State of Kansas to Security Management  Company,  Inc., Security
Benefit Life Bldg.,  700 Harrison  Street,  Topeka,  Shawnee,  Kansas 66636.

     The President  and  Secretary are hereby  authorized to file and record the
same in the manner as required by law:


                                                  DEAN L. SMITH
                                                  ------------------------------
                                                  Dean L. Smith, President


                                                  LARRY D. ARMEL
                                                  ------------------------------
                                                  Larry D. Armel, Secretary


STATE OF KANSAS  )
                 ) ss.
COUNTY OF SHAWNEE)


     Be it remembered  that before me Lois J. Hedrick a Notary Public in and for
the  County and State  aforesaid,  came Dean L.  Smith  President,  and Larry D.
Armel, Secretary, of Security Equity Fund, Inc. a corporation,  personally known
to me to be the persons who  executed  the  foregoing  instrument  of writing as
president and secretary respectively, and duly acknowledged the execution of the
same this 9th day of July, 1975.


                                                  LOIS J. HEDRICK
                                                  ------------------------------
                                                  Notary Public

My commission expires January 8, 1976

     NOTE:  This form must be filed in duplicate.
            Address of Resident Agent and Registered Office, as set forth above,
            must be the same.
            The statutory fee for filing is $20.00 and must accompany this form.

            CERTIFICATE OF AMENDMENT TO THE ARTICLES OF INCORPORATION
                                       OF
                           SECURITY EQUITY FUND, INC.


STATE OF KANSAS  )
                 ) ss.
COUNTY OF Shawnee)


     We, Everett S. Gille, President , and Larry D. Armel, Secretary of Security
Equity Fund,  Inc., a corporation  organized and existing  under the laws of the
State of Kansas, and whose registered office is Security Benefit Life Bldg., 700
Harrison Street, Topeka,  Shawnee,  Kansas do hereby certify that at the regular
meeting of the Board of Directors of said  corporation,  held on the 13th day of
October,  1976,  said board  adopted a resolution  setting  forth the  following
amendment to the Articles of Incorporation  and declaring its  advisability,  to
wit:

     RESOLVED, that the Articles of Incorporation of Security Equity Fund, Inc.,
     a Kansas  corporation,  be amended by adding the following new subparagraph
     (2)(c)  to  Article  FIFTH  thereof,  such new  subparagraph  (2)(c)  to be
     inserted immediately  following  subparagraph (2)(b) and immediately before
     paragraph (3) thereof:

          (c)  The  Corporation,  pursuant  to a  resolution  by  the  Board  of
               Directors and without the vote or consent of  stockholders of the
               Corporation,  shall  have the right to redeem at net asset  value
               all shares of capital stock of the Corporation in any stockholder
               account in which  there has been no  investment  (other  than the
               reinvestment of income dividends or capital gains  distributions)
               for at least six  months  and in which  there  are fewer  than 25
               shares  or such  fewer  shares  as  shall  be  specified  in such
               resolution.  Such  resolution  shall set forth that redemption of
               shares in such accounts has been determined to be in the economic
               best  interests  of  the   Corporation  or  necessary  to  reduce
               disproportionally  burdensome  expenses in servicing  stockholder
               accounts.  Such resolution  shall provide that prior notice of at
               least six  months  shall be given to a  stockholder  before  such
               redemption  of  shares,  and that the  stockholder  will have six
               months (or such longer  period as  specified  in the  resolution)
               from  the  date  of  the  notice  to  avoid  such  redemption  by
               increasing  his  account  to at least 25  shares,  or such  fewer
               shares as is specified in the resolution.

     That  thereafter,  pursuant to said  resolution and in accordance  with the
by-laws and the laws of the State of Kansas,  said directors called a meeting of
stockholders for the consideration of said amendment,  and thereafter,  pursuant
to said notice and in  accordance  with the statutes of the State of Kansas,  on
the 9th day of December, 1976, said stockholders met and convened and considered
said proposed amendment.

     That at said meeting the  stockholders  entitled to vote did vote upon said
amendment,  and the majority of voting stockholders of the corporation had voted
for the proposed  amendment  certifying that the votes were 16,855,355  (common)
shares in favor of the proposed  amendment and 442,958  (common)  shares against
the amendment.

     That said  amendment was duly adopted in accordance  with the provisions of
K.S.A. 17-6602.

     That the capital of said corporation will not be reduced under or by reason
of said amendment.

     IN WITNESS WHEREOF,  we have hereunto set out hands and affixed the seal of
said corporation this 23rd day of December, 1976.


                                                  EVERETT S. GILLE
                                                  ------------------------------
                                                  Everett S. Gille, President


                                                  LARRY D. ARMEL
                                                  ------------------------------
                                                  Larry D. Armel, Secretary


STATE OF KANSAS  )
                 ) ss.
COUNTY OF Shawnee)


     Be it  remembered,  that before me, Lois J. Hedrick a Notary  Public in and
for the County and State, aforesaid, came Everett S. Gille, President, and Larry
D. Armel,  Secretary,  of Security Equity Fund,  Inc. a corporation,  personally
known to me to be the persons who executed the  foregoing  instrument of writing
as president and secretary respectively,  and duly acknowledged the execution of
the same this 23rd day of December, 1976.


                                                  Lois J. Hedrick
                                                  ------------------------------
                                                  Notary Public

My Commission Expires:  January 8, 1980

Submit to this office in duplicate.
A fee of $20.00 must accompany this form.

              CERTIFICATE OF AMENDMENT TO ARTICLES OF INCORPORATION
                                       OF
                           SECURITY EQUITY FUND, INC.
- --------------------------------------------------------------------------------

STATE OF KANSAS  )
                 ) ss
COUNTY OF Shawnee)


     We, Everett S. Gille,  President,  and Larry D. Armel Secretary of Security
Equity Fund,  Inc., a corporation  organized and existing  under the laws of the
State of Kansas,  and whose registered office is Security Benefit Life Building,
700 Harrison Street,  Topeka,  Shawnee County, Kansas, do hereby certify that at
the regular  meeting of the Board of Directors of said  corporation  held on the
12th day of October,  1979,  said board  adopted a resolution  setting forth the
following   amendment  to  the  Articles  of  Incorporation   and  declared  its
advisability, to wit:

     RESOLVED, that whereas the board of directors deems it advisable and in the
     best interests of the corporation to increase the authorized capitalization
     of the  corporation,  that the articles of incorporation of Security Equity
     Fund,  Inc.  be  amended  by  deleting  the  first   paragraph   [including
     sub-paragraphs  (a) and  (b)] of  Article  FIFTH  in its  entirety,  and by
     inserting,  in lieu thereof,  the following new first  paragraph of Article
     FIFTH:

          The total number of shares which the Corporation  shall have authority
     to issue  shall be  150,000,000  shares of capital  stock,  each of the par
     value of $0.25 (twenty-five cents)."

     FURTHER RESOLVED,  that the foregoing proposed amendment to the articles of
     incorporation  of the Fund be presented to the stockholders of the Fund for
     consideration  at the annual meeting of stockholders to be held on December
     13, 1979.

That thereafter,  pursuant to said resolution and in accordance with the by-laws
and the  laws of the  State of  Kansas,  said  directors  called  a  meeting  of
stockholders for the consideration of said amendment,  and thereafter,  pursuant
to said notice and in  accordance  with the statutes of the State of Kansas,  on
the  13th  day of  December,  1979,  said  stockholders  met  and  convened  and
considered said proposed amendment.

That at said  meeting  the  stockholders  entitled  to vote did vote  upon  said
amendment,  and the majority of voting stockholders of the corporation had voted
for the proposed  amendment  certifying that the votes were 11,600,855  (common)
shares in favor of the proposed  amendment and 691,585  (common)  shares against
the amendment.

That said amendment was duly adopted in accordance with the provisions of K.S.A.
17-6602, as amended.

That the capital of said  corporation  will not be reduced under or by reason of
said amendment.

     IN WITNESS  WHEREOF we have  hereunto set out hands and affixed the seal of
said corporation this 18th day of December, 1979.


                                                  EVERETT S. GILLE
                                                  ------------------------------
                                                  Everett S. Gille, President


                                                  LARRY D. ARMEL
                                                  ------------------------------
                                                  Larry D. Armel, Secretary


STATE OF KANSAS  )
                 ) ss
COUNTY OF Shawnee)


Be it remembered, that before me, Lois J. Hedrick a Notary Public in and for the
County and State aforesaid, came Everett S. Gille, President and Larry D. Armel,
Secretary of Security Equity Fund, Inc. a corporation, personally known to me to
be the persons who executed the foregoing instrument of writing as president and
assistant  secretary  respectively,  and duly  acknowledged the execution of the
same this 18th day of December, 1979.


                                                  LOIS J. HEDRICK
                                                  ------------------------------
                                                  Notary Public

My commission expires:  January 8, 1980.

Submit to this office in duplicate.
A fee of $20.00 must accompany this form.

              CERTIFICATE OF AMENDMENT TO ARTICLES OF INCORPORATION
                                       OF
                           SECURITY EQUITY FUND, INC.
- --------------------------------------------------------------------------------

STATE OF KANSAS  )
                 ) ss
COUNTY OF SHAWNEE)


     We, Everett S. Gille, President,  and Larry D. Armel, Secretary of Security
Equity Fund,  Inc., a corporation  organized and existing  under the laws of the
State of Kansas,  and whose registered office is Security Benefit Life Building,
700  Harrison  Street,  Topeka,  Kansas,  66636,  do hereby  certify that at the
regular  meeting of the Board of Directors of said  corporation  held on the 9th
day of  October,  1981,  said  board  adopted  a  resolution  setting  forth the
following   amendment  to  the  Articles  of  Incorporation   and  declared  its
advisability, to wit:

     RESOLVED,  that the Articles of Incorporation of Security Equity Fund, Inc.
as  heretofore  amended,  be further  amended by deleting  Article  FIRST in its
entirety and by inserting, in lieu thereof, the following new Article FIRST:

          "FIRST:   the  name  of  the  corporation   (hereinafter   called  the
     "Corporation") is SECURITY EQUITY FUND".

FURTHER  RESOLVED,  that  the  board of  directors  of this  corporation  hereby
declares  the  advisability  of  the  foregoing  amendment  to the  articles  of
incorporation of this corporation and hereby recommends that the stockholders of
this corporation adopt amendment.

FURTHER  RESOLVED,  that  at the  annual  meeting  of the  stockholders  of this
corporation to be held at the offices of the corporation in Topeka,  Kansas,  on
December  10,  1981,  beginning  at 10:00  A.M.  on that day,  the matter of the
aforesaid   proposed   amendment  to  the  articles  of  incorporation  of  this
corporation shall be submitted to the stockholders entitled to vote thereon.

FURTHER  RESOLVED,  that in the event the stockholders of this corporation shall
approve and adopt the proposed  amendment to the  articles of  incorporation  of
this  corporation  as  heretofore  adopted  and  recommended  by this  board  of
directors,  the appropriate officers of this corporation be, and they hereby are
authorized  and  directed,  for and in  behalf  of this  corporation,  to  make,
execute,  verify,  acknowledge  and file or  record  in any and all  appropriate
governmental offices any and all certificates and other instruments, and to take
any and all other  action as may be necessary to  effectuate  the said  proposed
amendment to the articles of incorporation of this corporation".

That thereafter,  pursuant to said resolution and in accordance with the by-laws
of the State of Kansas,  said directors called a meeting of stockholders for the
consideration of said amendment, and thereafter,  pursuant to said notice and in
accordance  with  the  statutes  of the  State  of  Kansas,  on the  10th day of
December,  1981, said stockholders met and convened and considered said proposed
amendment.

That at said  meeting  the  stockholders  entitled  to vote did vote  upon  said
amendment,  and the majority of voting stockholders of the corporation had voted
for the proposed  amendment  certifying that the votes were  15,967,961  (Common
Stock)  shares in favor of the proposed  amendment  and 842,670  (Common  Stock)
shares against the amendment.

That said amendment was duly adopted in accordance with the provisions of K.S.A.
17-6602, as amended.

That the capital of said  corporation  will not be reduced under or by reason of
said amendment.

IN WITNESS  WHEREOF we have  hereunto set out hands and affixed the seal of said
corporation this 14th day of December, 1981.


                                                  EVERETT S. GILLE
                                                  ------------------------------
                                                  Everett S. Gille, President


                                                  LARRY D. ARMEL
                                                  ------------------------------
                                                  Larry D. Armel, Secretary


STATE OF KANSAS  )
                 ) ss
COUNTY OF SHAWNEE)


Be it remembered, that before me, Lois J. Hedrick a Notary Public in and for the
County and State aforesaid, came Everett S. Gille, President, and Larry D. Armel
Secretary,  of Security Equity Fund, Inc. a corporation,  personally known to me
to be the persons who executed the foregoing  instrument of writing as president
and secretary respectively, and duly acknowledged the execution of the same this
14th day of December, 1981.


                                                  Lois J. Hedrick
                                                  ------------------------------
                                                  Notary Public

My commission expires January 8, 1984.

Submit to this office in duplicate.
A fee of $20.00 must accompany this form.

                         CERTIFICATE OF AMENDMENT TO THE
                          ARTICLES OF INCORPORATION OF
                              SECURITY EQUITY FUND
- --------------------------------------------------------------------------------

We, Michael J. Provines, President, and Amy J. Lee, Secretary of the above named
corporation  organized  and existing  under the laws of the State of Kansas,  do
hereby certify that at a meeting of the Board of Directors of said  corporation,
the board  adopted a resolution  setting  forth the  following  amendment to the
Articles of Incorporation and declaring its advisability:

     RESOLVED,  that  whereas  the  Corporation's  board of  directors  deems it
     advisable  and in the best  interest of the  corporation  to  increase  the
     authorized  capitalization  of  the  corporation,   that  the  articles  of
     incorporation  of Security  Equity  Fund be amended by  deleting  the first
     paragraph  of  Article  FIFTH in its  entirety,  and by  inserting  in lieu
     thereof, the following new first paragraph of Article FIFTH:

          "The total number of shares which the Corporation shall have authority
          to issue shall be 300,000,000 shares of capital stock, each of the par
          value of $0.25 (twenty-five cents) per share."

     We further certify that  thereafter,  pursuant to said  resolution,  and in
accordance  with the  by-laws  of the  corporation  and the laws of the State of
Kansas,   the  Board  of  Directors   called  a  meeting  of  stockholders   for
consideration of the proposed amendment, and thereafter,  pursuant to notice and
in  accordance  with the  statutes  of the  State of  Kansas,  the  stockholders
convened and considered the proposed amendment.

     We  further  certify  that at the  meeting a majority  of the  stockholders
entitled to vote voted in favor of the proposed amendment.

     We further  certify that said amendment was duly adopted in accordance with
the provisions of K.S.A. 17-6602, as amended.

     We further certify that the capital of said corporation will not be reduced
under or by reason of said amendment.

     IN WITNESS  WHEREOF we have  hereunto set out hands and affixed the seal of
said corporation this 15th day of July, 1987.


                                                  MICHAEL J. PROVINES
                                                  ------------------------------
                                                  Michael J. Provines, President


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

State of Kansas  )
                 ) ss
County of Shawnee)


Be it  remembered,  that  before  me, a Notary  Public in and for the county and
state  personally  appeared  Michael  J.  Provines,  President  and Amy J.  Lee,
Secretary of the corporation  named in this document,  who are known to me to be
the persons who executed the foregoing  certificate,  and duly  acknowledged the
execution of the same this 15th day of July, 1987.


                                                  GLENDA J. OVERSTREET
                                                  ------------------------------
                                                  Notary Public

My commission expires:  February 1, 1990.

                    PLEASE SUBMIT THIS DOCUMENT IN DUPLICATE,
                            WITH $20 FILING FEE, TO:
                               Secretary of State
                            2nd Floor, State Capitol
                              Topeka, KS 66612-1594
                                 (913) 296-2236

                         CERTIFICATE OF AMENDMENT TO THE
                          ARTICLES OF INCORPORATION OF
                              SECURITY EQUITY FUND


     We,  Michael J.  Provines,  President , and Amy J. Lee,  Secretary,  of the
above named corporation,  a corporation organized and existing under the laws of
the  State of  Kansas,  do  hereby  certify  that at a  meeting  of the Board of
Directors of said corporation,  the board adopted a resolution setting forth the
following   amendment  to  the  Articles  of  Incorporation  and  declaring  its
advisability;

     RESOLVED,  that  whereas  the  Corporation's  board of  directors  deems it
advisable  and in the best  interest  of the  corporation  that the  Articles of
Incorporation be amended by adopting the following Article Sixteenth:

          "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."

We  further  certify  that  thereafter,  pursuant  to  said  resolution,  and in
accordance  with the  by-laws  of the  corporation  and the laws of the State of
Kansas,   the  Board  of  Directors   called  a  meeting  of  stockholders   for
consideration of the proposed amendment, and thereafter,  pursuant to notice and
in  accordance  with the  statutes  of the  State of  Kansas,  the  stockholders
convened and considered the proposed  amendment.

We further certify that at the meeting a majority of the  stockholders  entitled
to vote voted in favor of the proposed  amendment.  We further  certify that the
amendment was duly adopted in accordance with the provisions of K.S.A.  17-6602,
as amended.

We further  certify  that the  capital of said  corporation  will not be reduced
under or by reason of said amendment.

In Witness Whereof,  we have hereunto set out hands and affixed the seal of said
corporation this 11th day of December, 1987.


                                                  MICHAEL J. PROVINES
                                                  ------------------------------
                                                  Michael J. Provines, President


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


State of Kansas  )
                 ) ss.
County of Shawnee)


     Be it remembered,  that before me, a Notary Public in and for the aforesaid
county and state, personally appeared Michael J. Provines, President, and Amy J.
Lee, Secretary,  of the corporation named in this document,  who are known to me
to be the  same  persons  who  executed  the  foregoing  certificate,  and  duly
acknowledged the execution of the same this 11th day of December, 1987.


                                                  GLENDA J. OVERSTREET
                                                  ------------------------------
                                                  Notary Public

My Commission Expires:  February 1, 1990.

                    PLEASE SUBMIT THIS DOCUMENT IN DUPLICATE,
                           WITH $20.00 FILING FEE, TO:

                               Secretary of State
                            2nd Floor, State Capitol
                              Topeka, KS 66612-1594
                                 (913) 296-2236

                         CERTIFICATE OF AMENDMENT TO THE
                          ARTICLES OF INCORPORATION OF
                              SECURITY EQUITY FUND


We, Michael J.  Provines,  President , and Amy J. Lee,  Secretary,  of the above
named  corporation,  corporation  organized  and existing  under the laws of the
State of Kansas,  do hereby  certify that at a meeting of the Board of Directors
of said corporation,  the board adopted a resolution setting forth the following
amendment to the Articles of Incorporation and declaring its advisability:

                             See attached amendment

We  further  certify  that  thereafter,  pursuant  to  said  resolution,  and in
accordance  with the  by-laws  of the  corporation  and the laws of the State of
Kansas,   the  Board  of  Directors   called  a  meeting  of  stockholders   for
consideration of the proposed amendment, and thereafter,  pursuant to notice and
in  accordance  with the  statutes  of the  State of  Kansas,  the  stockholders
convened and considered the proposed amendment.

We further certify that at a meeting a majority of the stockholders  entitled to
vote voted in favor of the proposed amendment.

We further  certify that the amendment  was duly adopted in accordance  with the
provisions of K.S.A. 17-6602, as amended.

IN WITNESS  WHEREOF,  we have hereunto set out hands and affixed the seal of the
corporation this 27th day of July, 1993.


                                                  MICHAEL J. PROVINES
                                                  ------------------------------
                                                  Michael J. Provines, President


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

STATE OF Kansas  )
                 ) ss.
COUNTY OF Shawnee)


     Be it  remembered  that before me, a Notary Public in and for the aforesaid
county and state, personally appeared Michael J. Provines, President, and Amy J.
Lee, Secretary,  of the corporation named in this document,  who are known to me
to be the  same  persons  who  executed  the  foregoing  certificate,  and  duly
acknowledged the execution of the same this 27th day of July, 1993.


                                                  PEGGY S. AVEY
                                                  ------------------------------
                                                  Peggy S. Avey Notary Public
(NOTARIAL SEAL)

My appointment or commission expires:  November 21, 1996.


                    PLEASE SUBMIT THIS DOCUMENT IN DUPLICATE,
                            WITH $20 FILING FEE, TO:
                               Secretary of State
                            2nd Floor, State Capitol
                              Topeka, KS 66612-1594
                                 (913) 296-4564

                              SECURITY EQUITY FUND


The Board of Directors of Security  Equity Fund  recommends that the Articles of
Incorporation  be amended  by  deleting  Article  Fifth in its  entirety  and by
inserting, in lieu therefor, the following new Article:

FIFTH:  The total  number of shares of stock  which the  corporation  shall have
authority to issue shall be 300,000,000 shares of capital stock, each of the par
value of $0.25 (twenty-five cents). The board of directors of the Corporation is
expressly  authorized  to cause  shares  of  capital  stock  of the  Corporation
authorized  herein  to be  issued  in one or more  classes  or  series as may be
established from time to time by setting or changing in one or more respects the
voting  powers,  rights,  qualifications,  limitations or  restrictions  of such
shares of stock and to increase or decrease  the number of shares so  authorized
to be issued in any such class or series.

The following provisions are hereby adopted for the purpose of setting forth the
powers, rights, qualifications, limitations or restrictions of the capital stock
of the  Corporation  (unless  provided  otherwise by the board of directors with
respect to any such additional  class or series at the time of establishing  and
designating such additional class or series):

(1)  At all meetings of stockholders  each stockholder of the Corporation of any
     class or series shall be entitled to one vote on each matter submitted to a
     vote at such  meeting  for each share of stock  standing in his name on the
     books of the Corporation on the date,  fixed in accordance with the Bylaws,
     for determination of stockholders  entitled to vote at such meeting. At all
     elections of  directors  each  stockholder  of any class or series shall be
     entitled  to as many  votes as shall  equal  the  number of shares of stock
     multiplied by the number of directors to be elected,  and  stockholders may
     cast all of such votes for a single  director or may distribute  them among
     the number to be voted for, or any two or more of them as they may see fit.

(2)  (a)  Each  holder  of  capital  stock of the  Corporation,  of any class or
          series,  upon request to the  Corporation  accompanied by surrender of
          the appropriate  stock  certificate or certificates in proper form for
          transfer,  shall be entitled to require the  Corporation to repurchase
          all or any part of the shares of capital stock standing in the name of
          such holder on the books of the Corporation, at the net asset value of
          such shares. The method of computing such net asset value, the time as
          of which such net asset value  shall be  computed  and the time within
          which the Corporation  shall make payment therefor shall be determined
          as  hereinafter  provided  in  Article  TENTH  of  these  Articles  of
          Incorporation.  Notwithstanding the foregoing,  the Board of Directors
          of the Corporation may suspend the right of the holders of the capital
          stock of the  Corporation to require the  Corporation to redeem shares
          of such capital stock:

                 (i)  for any period (A) during  which the New York  Exchange is
                      closed other than customary  weekend and holiday closings,
                      or (B) during which trading on the New York Stock Exchange
                      is restricted:

                (ii)  for any period  during which an  emergency,  as defined by
                      rules of the  Securities  and Exchange  Commission  or any
                      successor  thereto,  exists  as  a  result  of  which  (A)
                      disposal by the  Corporation of securities  owned by it is
                      not  reasonably  practicable  or (B) it is not  reasonably
                      practicable  for the  Corporation  fairly to determine the
                      value of its net assets; or

               (iii)  for such other  periods  as the  Securities  and  Exchange
                      Commission  or any  successor  thereto may by order permit
                      for the protection of security holders of the Corporation.

     (b)  From and after the close of  business  on the day when the  shares are
          properly tendered for repurchase the owner shall, with respect of said
          shares,  cease to be a stockholder of the  Corporation  and shall have
          only the right to receive the repurchase  price in accordance with the
          provisions  thereof.  The shares so  repurchased  may, as the Board of
          Directors  determines,  be held in the treasury of the Corporation and
          may be resold, or, if the laws of Kansas shall permit, may be retired.
          Repurchase of shares is conditional upon the Corporation  having funds
          or property legally available therefor.

     (c)  The  Corporation,  pursuant to a resolution  by the Board of Directors
          and without the vote or consent of  stockholders  of the  Corporation,
          shall  have the  right to redeem  at net  asset  value  all  shares of
          capital stock of the Corporation in any  stockholder  account in which
          there  has been no  investment  (other  than  reinvestment  of  income
          dividends or capital gains  distributions) for at least six months and
          in which there are fewer than 25 shares or such fewer  shares as shall
          be specified in such resolution.  Such resolution shall set forth that
          redemption of shares in such accounts has been determined to be in the
          economic  best  interests  of the  Corporation  or necessary to reduce
          disproportionately  burdensome  expenses  in that  prior  notice of at
          least  six  months  shall  be  given  to  a  stockholder  before  such
          redemption of shares,  and that the  stockholder  will have six months
          (or such longer period as specified in the  resolution)  from the date
          of the notice to avoid such redemption by increasing his account to at
          least  25  shares,  or  such  fewer  shares  as is  specified  in  the
          resolution

(3)  No holder of stock of the Corporation of any class or series shall, as such
     holder,  have any rights to  purchase  or  subscribe  for any shares of the
     capital stock of the  Corporation of any class or series which it may issue
     or sell (whether out of the number of shares  authorized by these  Articles
     of  Incorporation,  or out of  any  shares  of  the  capital  stock  of the
     Corporation,  acquired by it after the issue thereof,  or otherwise)  other
     than such right, if any, as the Board of Directors, in its discretion,  may
     determine.

(4)  All persons who shall  acquire stock in the  Corporation  shall acquire the
     same subject to the provisions of these Articles of Incorporation.

                           CERTIFICATE OF DESIGNATION
                      OF SERIES AND CLASSES OF COMMON STOCK
                                       OF
                              SECURITY EQUITY FUND


STATE OF KANSAS  )
                 ) ss.
COUNTY OF SHAWNEE)


We,  Michael J.  Provines,  President,  and Amy J. Lee,  Secretary,  of Security
Equity Fund, a corporation organized and existing under the laws of the State of
Kansas,  and whose  registered  office is Security  Benefit Life  Building,  700
Harrison Street,  Topeka,  Shawnee,  Kansas,  do hereby certify that pursuant to
authority  expressly  vested in the Board of Directors by the  provisions of the
corporation's  Articles  of  Incorporation,  the  Board  of  Directors  of  said
corporation  at a meeting duly convened and held on the 23rd day of July,  1993,
adopted  resolutions  setting  forth the  preferences,  rights,  privileges  and
restrictions  of the separate  series of stock of Security  Equity  Fund,  which
resolutions are provided in their entirety as follows:

RESOLVED,  that,  pursuant to the authority  vested in the Board of Directors of
Security Equity Fund by its Articles of Incorporation,  the officers of the Fund
are hereby  directed and authorized to establish four separate  series of common
stock of the corporation, effective October 5, 1993. The first such series shall
be known as the  Equity  Series A and  shall  consist  of that  series  of stock
currently  being  issued by the Fund.  The other  series shall be new series and
shall be known as Equity  Series B,  Global  Series A and  Global  Series B. The
officers of the Fund are hereby directed and authorized to establish such series
of  common  stock  allocating   265,000,000   $0.25  par  value  shares  of  the
corporation's  authorized  capital  stock of  300,000,000  shares to the  Equity
Series A;  20,000,000  $0.25 par value shares to the Equity Series B;  7,500,000
$0.25 par value shares to the Global Series A; and the remaining 7,500,000 $0.25
par value shares to the Global Series B.

FURTHER RESOLVED, that the preferences,  rights,  privileges and restrictions of
the shares of each series of Security Equity Fund shall be as follows:

 1.  Except as set forth below and as may be hereafter  established by the Board
     of Directors of the corporation all shares of the  corporation,  regardless
     of series, shall be equal.

 2.  At all meetings of stockholders  each stockholder of the corporation  shall
     be entitled to one vote in person or by proxy on each matter submitted to a
     vote at such meeting for each share of common stock  standing in his or her
     name on the books of the corporation on the date,  fixed in accordance with
     the bylaws,  for  determination  of  stockholders  entitled to vote at such
     meeting.  At all elections of directors each stockholder  shall be entitled
     to as many votes as shall equal the number of shares of stock multiplied by
     the number of directors  to be elected,  and he or she may cast all of such
     votes for a single  director or may distribute  them among the number to be
     voted  for,  or  any  two  or  more  of  them  as he or she  may  see  fit.
     Notwithstanding  the  foregoing,  (i) if any  matter  is  submitted  to the
     stockholders  which does not affect the interests of all series,  then only
     stockholders  of the affected  series shall be entitled to vote and (ii) in
     the event the Investment Company Act of 1940, as amended,  or the rules and
     regulations  promulgated  thereunder  shall  require a greater or different
     vote  than  would  otherwise  be  required  herein  or by the  Articles  of
     Incorporation  of  the  corporation,   such  greater  or  different  voting
     requirement shall also be satisfied.

 3.  (a)  The  corporation  shall  redeem  any of its  shares  for  which it has
          received  payment in full that may be presented to the  corporation on
          any date  after  the  issue  date of any such  shares at the net asset
          value  thereof,  such  redemption  and the  valuation  and  payment in
          connection  therewith to be made in compliance  with the provisions of
          the  Investment  Company  Act of 1940 and the  Rules  and  Regulations
          promulgated  thereunder  and with the  Rules of Fair  Practice  of the
          National Association of Securities Dealers, Inc., as from time to time
          amended.

     (b)  From and after the close of  business  on the day when the  shares are
          properly tendered for repurchase the owner shall, with respect of said
          shares,  cease to be a stockholder of the  corporation  and shall have
          only the right to receive the repurchase  price in accordance with the
          provisions  hereof.  The shares so  repurchased  may,  as the Board of
          Directors  determines,  be held in the treasury of the corporation and
          may be resold, or, if the laws of Kansas shall permit, may be retired.
          Repurchase of shares is conditional upon the corporation  having funds
          or property legally available therefor.

 4.  The  corporation,  pursuant to a resolution  by the Board of Directors  and
     without the vote or consent of stockholders of the corporation,  shall have
     the right to redeem at net asset  value all shares of capital  stock of the
     corporation  in  any  stockholder  account  in  which  there  has  been  no
     investment (other than the reinvestment of income dividend or capital gains
     distributions) for at least six months and in which there are fewer than 25
     shares or such few shares as shall be  specified in such  resolution.  Such
     resolution  shall set forth that  redemption of shares in such accounts has
     been  determined to be in the economic best interests of the corporation or
     necessary  to reduce  disproportionately  burdensome  expenses in servicing
     stockholder accounts. Such resolution shall provide that prior notice of at
     least six months shall be given to a stockholder  before such redemption of
     shares,  and that the  stockholder  shall have six  months (or such  longer
     period as specified in the resolution) from the date of the notice to avoid
     such redemption by increasing his or her account to at least 25 shares,  or
     such fewer shares as is specified in the resolution.

 5.  All shares of the corporation, upon issuance and sale, shall be fully paid,
     nonassessable   and  redeemable.   Within  the  respective  series  of  the
     corporation,  all shares have equal voting,  participation  and liquidation
     rights, but have no subscription or preemptive rights.

 6.  (a)  Outstanding  shares  of  Equity  Series  A and  B  shall  represent  a
     stockholder interest in a particular fund of assets held by the corporation
     which fund shall be invested and reinvested in accordance with policies and
     objectives  established  by  the  Board  of  Directors  for  these  series.
     Outstanding  shares of Global Series A and B shall  represent a stockholder
     interest in a particular fund of assets held by the corporation  which fund
     shall be invested and reinvested in accordance with policies and objectives
     established by the Board of Directors for these series.

     (b) All cash and other property  received by the corporation  from the sale
     of shares of Equity Series A and B and Global Series A and B, respectively,
     all  securities  and other  property held as a result of the investment and
     reinvestment  of such cash and other  property,  all  revenues  and  income
     received  or  receivable  with  respect  to  such  cash,   other  property,
     investments  and  reinvestments,  and all  proceeds  derived from the sale,
     exchange,  liquidation or other disposition of any of the foregoing,  shall
     be allocated to the Equity Series A and B or Global Series A and B to which
     they relate and held for the benefit of the  stockholders  owning shares of
     such series.

     (c) All losses,  liabilities  and  expenses of the  corporation  (including
     accrued  liabilities  and  expenses  and  such  reserves  as the  Board  of
     Directors may determine are appropriate)  shall be allocated and charged to
     the series to which  such loss,  liability  or expense  relates.  Where any
     loss,  liability or expense  relates to more than one series,  the Board of
     Directors  shall  allocate  the same  between or among such series pro rata
     based on the  respective  net asset  values of such series or on such other
     basis as the Board of Directors deems appropriate.

     (d) All  allocations  made  hereunder  by the Board of  Directors  shall be
     conclusive and binding upon all stockholders and upon the corporation.

 7.  Each share of stock of a series  shall have the same  preferences,  rights,
     privileges  and  restrictions  as each other share of stock of that series.
     Each fractional share of stock of a series  proportionately  shall have the
     same preferences, rights, privileges and restrictions as a whole share.

 8.  Dividends  may be paid when,  as and if declared by the Board of  Directors
     out of funds legally  available  therefor.  Shares of Equity Series A and B
     represent a stockholder interest in a particular fund of assets held by the
     corporation  and,  accordingly,  dividends shall be calculated and declared
     for these series in the same manner, at the same time, on the same day, and
     will be paid at the same dividend rate except that expenses attributable to
     Equity  Series  A or B and  payments  made  pursuant  to a  12b-1  Plan  or
     Shareholder Services Plan shall be borne exclusively by the affected Equity
     Series. Stockholders of the Equity Series shall share in dividends declared
     and paid with  respect to such series pro rata based on their  ownership of
     shares  of such  series.  Shares  of  Global  Series  A and B  represent  a
     stockholder interest in a particular fund of assets held by the corporation
     and,  accordingly,  dividends  shall be  calculated  and declared for these
     series in the same manner,  at the same time, on the same day, and shall be
     paid at the same  dividend  rate,  except that expenses  attributable  to a
     particular series and payments made pursuant to a 12b-1 Plan or Shareholder
     Services Plan shall be borne  exclusively  by the affected  Global  Series.
     Stockholders  of the Global  Series shall share in  dividends  declared and
     paid with  respect  to such  series pro rata  based on their  ownership  of
     shares  of such  series.  Whenever  dividends  are  declared  and paid with
     respect  to the  Equity  Series A and B or the  Global  Series A and B, the
     holders  of shares of the other  series  shall have no rights in or to such
     dividends.

 9.  In the event of liquidation,  stockholders of each series shall be entitled
     to share in the assets of the corporation that are allocated to such series
     and that are available for distribution to the stockholders of such series.
     Liquidating  distributions shall be made to the stockholders of each series
     pro rata based on their share ownership of such series.

10.  On the eighth anniversary of the purchase of shares of the Equity Series B,
     or the Global Series B, those shares  (except those  purchased  through the
     reinvestment  of dividends and other  distributions),  shall  automatically
     convert to Equity Series A or Global Series A shares  respectively,  at the
     relative net asset values of each of the series  without the  imposition of
     any sales load, fee or other charge. All shares in a stockholder's  account
     that  were  purchased  through  the  reinvestment  of  dividends  and other
     distributions paid with respect to Series B shares will be considered to be
     held in a separate sub-account.  Each time Series B shares are converted to
     Series A shares,  a pro rata  portion  of the  Series B shares  held in the
     sub-account will also convert to Series A shares.

IN WITNESS WHEREOF, we have hereunto set our hands this 5th day of October 1993.


                                                  MICHAEL J. PROVINES
                                                  ------------------------------
                                                  Michael J. Provines, President


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

[SEAL]

STATE OF KANSAS  )
                 ) ss.
COUNTY OF SHAWNEE)


Be it  remembered,  that before me Judith M. Ralston a Notary  Public in and for
the County and State aforesaid, came Michael J. Provines,  President, and Amy J.
Lee, Secretary, of Security Equity Fund, a Kansas corporation,  personally known
to me to be the persons who  executed  the  foregoing  instrument  of writing as
President and Secretary,  respectively,  and duly  acknowledged the execution of
the same this 5th day of October, 1993.


                                                  JUDITH M. RALSTON
                                                  ------------------------------
                                                  Notary Public

(NOTARIAL SEAL)

My commission expires:  January 1, 1995.

                         CERTIFICATE OF AMENDMENT TO THE
                          ARTICLES OF INCORPORATION OF
                              SECURITY EQUITY FUND


We, John D. Cleland,  President , and Amy J. Lee, Secretary,  of Security Equity
Fund,  a  corporation  organized  and  existing  under  the laws of the State of
Kansas,  do hereby  certify  that at a meeting of the Board of Directors of said
corporation,  the  board  adopted  a  resolution  setting  forth  the  following
amendment to the Articles of Incorporation and declaring its advisability:

                             See attached amendment

We  further  certify  that  thereafter,  pursuant  to  said  resolution,  and in
accordance  with the  by-laws  of the  corporation  and the laws of the State of
Kansas,   the  Board  of  Directors   called  a  meeting  of  stockholders   for
consideration of the proposed amendment, and thereafter,  pursuant to notice and
in  accordance  with the  statutes  of the  State of  Kansas,  the  stockholders
convened and considered the proposed amendment.

We further certify that at a meeting a majority of the stockholders  entitled to
vote, voted in favor of the proposed amendment.

We further  certify that the amendment  was duly adopted in accordance  with the
provisions of K.S.A. 17-6602, as amended.

IN WITNESS  WHEREOF,  we have hereunto set out hands and affixed the seal of the
corporation this 21st day of December, 1994.


                                                  JOHN D. CLELAND
                                                  ------------------------------
                                                  John D. Cleland, President


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

STATE OF KANSAS  )
                 ) ss.
COUNTY OF SHAWNEE)


BE IT  REMEMBERED,  that  before  me, a Notary  Public in and for the  aforesaid
county and state,  personally  appeared John D. Cleland,  President,  and Amy J.
Lee,  Secretary,  of Security  Equity  Fund,  who are known to me to be the same
persons who  executed  the  foregoing  certificate,  and duly  acknowledged  the
execution, of the same this 21st day of December, 1994


                                                  JUDITH M. RALSTON
                                                  ------------------------------
                                                  Judith M. Ralston, Notary

(NOTARIAL SEAL)

My commission expires:  January 1, 1995.

PLEASE SUBMIT THIS DOCUMENT IN DUPLICATE, WITH $20 FILING FEE TO:

                               Secretary of State
                            2nd Floor, State Capitol
                              Topeka, KS 66612-1594
                                 (913) 296-4564

                              SECURITY EQUITY FUND


The Board of Directors of Security  Equity Fund  recommends that the Articles of
Incorporation be amended by deleting the first paragraph of Article Fifth and by
inserting, in lieu thereof, the following new Article:

FIFTH: The total number of shares which this Corporation shall have authority to
issue shall be (5,000,000,000) shares of capital stock, each of the par value of
$0.25  (twenty-five  cents).  The  board  of  directors  of the  Corporation  is
expressly  authorized  to cause  shares  of  capital  stock  in the  Corporation
authorized  herein  to be  issued  in one or more  classes  or  series as may be
established from time to time by setting or changing in one or more respects the
voting  powers,  rights,  qualifications,  limitations or  restrictions  of such
shares of stock and to increase or decrease  the number of shares so  authorized
to be issued in any such class or series.

                                 CERTIFICATE OF
                              CHANGE OF DESIGNATION
                               OF COMMON STOCK OF
                              SECURITY EQUITY FUND


STATE OF KANSAS  )
                 ) ss.
COUNTY OF SHAWNEE)


     We, John D.  Cleland,  President,  and Amy J. Lee,  Secretary,  of Security
Equity Fund, a corporation organized and existing under the laws of the State of
Kansas,  and whose  registered  office is Security  Benefit Life  Building,  700
Harrison Street, Topeka, Shawnee County, Kansas, do hereby certify that pursuant
to the authority expressly vested in the Board of Directors by the provisions of
the  corporation's  Articles of  Incorporation,  the Board of  Directors of said
corporation  at its regular  meeting  duly  convened and held on the 22nd day of
July,  1994,  adopted  resolutions  reallocating  the number of existing  shares
authorized  to be issued  in the four  separate  series  of common  stock of the
corporation.  Resolutions  were also adopted which  reaffirmed the  preferences,
rights,  privileges and restrictions of the separate series of stock of Security
Equity Fund, which resolutions are provided in their entirety as follows:

     WHEREAS  Security  Equity  Fund  issues its common  stock in four  separate
     series  designated as Equity Series A, Equity Series B, Global Series A and
     Global Series B.

     WHEREAS,  the Board of  Directors  wishes to  reallocate  the  300,000,000,
     shares of authorized capital stock among the series.

     NOW,  THEREFORE,  BE IT RESOLVED,  that the officers of the corporation are
     hereby directed and authorized to allocate the Fund's  existing  authorized
     capital stock of 300,000,000 shares as follows: 290,000,000 $0.25 par value
     shares to Equity Series A,  5,000,000  $0.25 par value shares to the Equity
     Series B; 3,000,000  $0.25 par value shares to the Global Series A; and the
     remaining 2,000,000 $0.25 par value shares to the Global Series B.

     FURTHER   RESOLVED,   that,  the   preferences,   rights,   privileges  and
     restrictions  of the shares of each of the  corporation's  series of common
     stock,  as set forth in the minutes of the July 23,  1993,  meeting of this
     Board of Directors,  are hereby  reaffirmed and  incorporated  by reference
     into the minutes of this meeting.

     FURTHER RESOLVED, that, the appropriate officers of the corporation be, and
     they  hereby  are,  authorized  and  directed to take such action as may be
     necessary under the laws of the State of Kansas or as they deem appropriate
     to cause the foregoing resolutions to become effective.

IN WITNESS  WHEREOF,  we have hereunto set our hands and affixed the seal of the
corporation this 22nd day of July, 1994.


                                                  JOHN D. CLELAND
                                                  ------------------------------
                                                  John D. Cleland, President


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


STATE OF KANSAS  )
                 ) ss.
COUNTY OF SHAWNEE)


     Be it remembered, that before me, Judith M. Ralston, a Notary Public in and
for the County and State aforesaid,  came JOHN D CLELAND,  President, and AMY J.
LEE, Secretary, of Security Equity Fund, a Kansas corporation,  personally known
to me to be the persons who  executed  the  foregoing  instrument  of writing as
President and Secretary,  respectively,  and duly  acknowledged the execution of
the same this 22nd day of July, 1994.


                                                JUDITH M. RALSTON
                                                --------------------------------
                                                Judith M. Ralston, Notary Public

(NOTARIAL SEAL)

My commission expires:  January 1, 1995.

                            CERTIFICATE OF CHANGE OF
                           DESIGNATION OF COMMON STOCK
                                       OF
                              SECURITY EQUITY FUND


STATE OF KANSAS  )
                 ) ss.
COUNTY OF SHAWNEE)


We, John D. Cleland,  President,  and Amy J. Lee, Secretary,  of Security Equity
Fund,  a  corporation  organized  and  existing  under  the laws of the State of
Kansas,  and whose  registered  office is Security  Benefit Life  Building,  700
Harrison Street,  Topeka,  Shawnee,  Kansas,  do hereby certify that pursuant to
authority  expressly  vested in the Board of Directors by the  provisions of the
corporation's  Articles  of  Incorporation,  the  Board  of  Directors  of  said
corporation  at a meeting  duly  convened and held on the 3rd day of April 1995,
adopted  resolutions (i) establishing two new series of common stock in addition
to those four series of common stock currently being issued by the  corporation,
and (ii)  allocating the  corporation's  authorized  capital stock among the six
series of common stock of the  corporation.  Resolutions were also adopted which
reaffirmed the preferences,  rights, privileges and restrictions of the separate
series of stock of Security Equity Fund, which resolutions are provided in their
entirety as follows:

     WHEREAS,  the Board of Directors has approved the  establishment of two new
     series of common  stock of  Security  Equity  Fund in  addition to the four
     separate series of common stock presently  issued by the fund designated as
     Equity Series A, Equity Series B, Global Series A and Global Series B;

     WHEREAS,  the Board of Directors  wishes to  reallocate  the  5,000,000,000
     shares of authorized capital stock among the series.

     NOW, THEREFORE,  BE IT RESOLVED,  that, the officers of the corporation are
     hereby  directed and authorized to establish two new series of the Security
     Equity Fund designated as Asset  Allocation  Series A and Asset  Allocation
     Series B.

     FURTHER RESOLVED, that, the officers of the corporation are hereby directed
     and authorized to allocate the  corporation's  authorized  capital stock of
     5,000,000,000  shares as follows:  1,500,000,000  $0.25 par value shares of
     the  corporation's  authorized  capital  stock  to  the  Equity  Series  A;
     500,000,000  $0.25 par value  shares to the  Equity  Series B;  750,000,000
     $0.25 par value shares to each of the Global Series A and Asset  Allocation
     Series A; 250,000,000 $0.25 par value shares to each of the Global Series B
     and  Asset  Allocation  Series  B; and  1,000,000,00  shares  shall  remain
     unallocated.

     FURTHER   RESOLVED,   that,  the   preferences,   rights,   privileges  and
     restrictions  of the shares of each of the series of  Security  Equity Fund
     shall be as follows.

 1.  Except as set forth below and as may be hereafter  established by the Board
     of Directors of the corporation all shares of the  corporation,  regardless
     of series, shall be equal.

 2.  At all meetings of stockholders,  each stockholder of the corporation shall
     be entitled to one vote in person or by proxy on each matter submitted to a
     vote at such meeting for each share of common stock  standing in his or her
     name on the books of the corporation on the date,  fixed in accordance with
     the bylaws,  for  determination  of  stockholders  entitled to vote at such
     meeting.  At all elections of directors each stockholder  shall be entitled
     to as many votes as shall equal the number of shares of stock multiplied by
     the number of directors  to be elected,  and he or she may cast all of such
     votes for a single  director or may distribute  them among the number to be
     voted  for,  or  any  two  or  more  of  them  as he or she  may  see  fit.
     Notwithstanding  the  foregoing,  (i) if any  matter  is  submitted  to the
     stockholders  which does not affect the interests of all series,  then only
     stockholders  of the affected  series shall be entitled to vote and (ii) in
     the event the Investment Company Act of 1940, as amended,  or the rules and
     regulations  promulgated  thereunder  shall  require a greater or different
     vote  than  would  otherwise  be  required  herein  or by the  Articles  of
     Incorporation  of  the  corporation,   such  greater  or  different  voting
     requirement shall also be satisfied.

 3.  (a)  The  corporation  shall  redeem  any of its  shares  for  which it has
          received  payment in full that may be presented to the  corporation on
          any date  after  the  issue  date of any such  shares at the net asset
          value  thereof,  such  redemption  and the  valuation  and  payment in
          connection  therewith to be made in compliance  with the provisions of
          the  Investment  Company  Act of 1940 and the  Rules  and  Regulations
          promulgated  thereunder  and with the  Rules of Fair  Practice  of the
          National Association of Securities Dealers, Inc., as from time to time
          amended.

     (b)  From and after the close of  business  on the day when the  shares are
          properly tendered for repurchase the owner shall, with respect of said
          shares,  cease to be a stockholder of the  corporation  and shall have
          only the right to receive the repurchase  price in accordance with the
          provisions  hereof.  The shares so  repurchased  may,  as the Board of
          Directors  determines,  be held in the treasury of the corporation and
          may be resold, or, if the laws of Kansas shall permit, may be retired.
          Repurchase of shares is conditional upon the corporation  having funds
          or property legally available therefor.

 4.  The  corporation,  pursuant to a resolution  by the Board of Directors  and
     without the vote or consent of stockholders of the corporation,  shall have
     the right to redeem at net asset  value all shares of capital  stock of the
     corporation  in  any  stockholder  account  in  which  there  has  been  no
     investment (other than the reinvestment of income dividend or capital gains
     distributions) for at least six months and in which there are fewer than 25
     shares or such few shares as shall be  specified in such  resolution.  Such
     resolution  shall set forth that  redemption of shares in such accounts has
     been  determined to be in the economic best interests of the corporation or
     necessary  to reduce  disproportionately  burdensome  expenses in servicing
     stockholder accounts. Such resolution shall provide that prior notice of at
     least six months shall be given to a stockholder  before such redemption of
     shares,  and that the  stockholder  will have six  months  (or such  longer
     period as specified in the resolution) from the date of the notice to avoid
     such redemption by increasing his or her account to at least 25 shares,  or
     such fewer shares as is specified in the resolution.

 5.  All shares of the corporation, upon issuance and sale, shall be fully paid,
     nonassessable   and  redeemable.   Within  the  respective  series  of  the
     corporation,  all shares have equal voting,  participation  and liquidation
     rights, but have no subscription or preemptive rights.

 6.  (a)  Outstanding  shares  of  Equity  Series  A and  B  shall  represent  a
          stockholder  interest  in a  particular  fund  of  assets  held by the
          corporation  which fund shall be invested and reinvested in accordance
          with policies and objectives established by the Board of Directors for
          these  series.  Outstanding  shares  of  Global  Series  A and B shall
          represent a stockholder  interest in a particular  fund of assets held
          by the  corporation  which fund shall be invested  and  reinvested  in
          accordance  with policies and  objectives  established by the Board of
          Directors for these  series.  Outstanding  shares of Asset  Allocation
          Series A and B shall represent a stockholder  interest in a particular
          fund of assets  held by the  corporation  which fund shall be invested
          and reinvested in accordance with policies and objectives  established
          by the Board of Directors for these series.

     (b)  All cash and other property  received by the corporation from the sale
          of shares of the  Equity  Series A and B,  Global  Series A and B, and
          Asset  Allocation  Series A and B,  respectively,  all  securities and
          other property held as a result of the investment and  reinvestment of
          such cash and other  property,  all  revenues  and income  received or
          receivable with respect to such cash, other property,  investments and
          reinvestments,  and all  proceeds  derived  from the  sale,  exchange,
          liquidation or other  disposition  of any of the  foregoing,  shall be
          allocated  to the  Equity  Series A and B,  Global  Series A and B, or
          Asset Allocation Series A and B, to which they relate and held for the
          benefit of the stockholders owning shares of such series.

     (c)  All losses,  liabilities  and expenses of the  corporation  (including
          accrued  liabilities  and expenses  and such  reserves as the Board of
          Directors  may  determine  are  appropriate)  shall be  allocated  and
          charged  to the  series  to which  such  loss,  liability  or  expense
          relates. Where any loss, liability or expense relates to more than one
          series,  the Board of  Directors  shall  allocate  the same between or
          among such series pro rata based on the respective net asset values of
          such  series or on such other  basis as the Board of  Directors  deems
          appropriate.

     (d)  All  allocations  made  hereunder by the Board of  Directors  shall be
          conclusive and binding upon all stockholders and upon the corporation.

 7.  Each share of stock of a series  shall have the same  preferences,  rights,
     privileges  and  restrictions  as each other share of stock of that series.
     Each fractional share of stock of a series  proportionately  shall have the
     same preferences, rights, privileges and restrictions as a whole share.

 8.  Dividends  may be paid when,  as and if declared by the Board of  Directors
     out of funds legally  available  therefor.  Shares of Global Series A and B
     represent a stockholder interest in a particular fund of assets held by the
     corporation  and,  accordingly,  dividends shall be calculated and declared
     for these series in the same manner, at the same time, on the same day, and
     will be paid at the same dividend rate except that expenses attributable to
     Equity  Series  A or B and  payments  made  pursuant  to a  12b-1  Plan  or
     Shareholder Services Plan shall be borne exclusively by the affected Equity
     Series. Stockholders of the Equity Series shall share in dividends declared
     and paid with  respect to such series pro rata based on their  ownership of
     shares  of such  series.  Shares  of  Global  Series  A and B  represent  a
     stockholder interest in a particular fund of assets held by the corporation
     and,  accordingly,  dividends  shall be  calculated  and declared for these
     series in the same manner,  at the same time, on the same day, and shall be
     paid at the same  dividend  rate,  except that expenses  attributable  to a
     particular series and payments made pursuant to a 12b-1 Plan or Shareholder
     Services Plan shall be borne  exclusively  by the affected  Global  Series.
     Stockholders  of the Global  Series shall share in  dividends  declared and
     paid with  respect  to such  series pro rata  based on their  ownership  of
     shares of such series.  Shares of Asset Allocation Series A and B represent
     a  stockholder  interest  in a  particular  fund  of  assets  held  by  the
     corporation  and,  accordingly,  dividends shall be calculated and declared
     for these series in the same manner, at the same time, on the same day, and
     shall be paid at the same dividend rate, except that expenses  attributable
     to a  particular  series  and  payments  made  pursuant  to a 12b-1 Plan or
     Shareholder  Services Plan shall be borne exclusively by the affected Asset
     Allocation Series.  Stockholders of the Asset Allocation Series shall share
     in  dividends  declared and paid with respect to such series pro rata based
     on their  ownership  of  shares  of such  series.  Whenever  dividends  are
     declared  and paid with  respect to the  Equity  Series A and B, the Global
     Series A and B, or the  Asset  Allocation  Series A and B, the  holders  of
     shares of the other series shall have no rights in or to such dividends.

 9.  In the event of liquidation,  stockholders of each series shall be entitled
     to share in the assets of the corporation that are allocated to such series
     and that are available for distribution to the stockholders of such series.
     Liquidating  distributions shall be made to the stockholders of each series
     pro rata based on their share ownership of such series.

10.  On the eighth anniversary of the purchase of shares of the Equity Series B,
     the Global  Series B, or Asset  Allocation  Series B, those shares  (except
     those   purchased   through  the   reinvestment   of  dividends  and  other
     distributions)  shall  automatically  convert  to Equity  Series A,  Global
     Series  A, or  Asset  Allocation  Series  A  shares,  respectively,  at the
     relative net asset values of each of the series  without the  imposition of
     any sales load, fee or other charge. All shares in a stockholder's  account
     that  were  purchased  through  the  reinvestment  of  dividends  and other
     distributions paid with respect to Series B shares will be considered to be
     held in a separate sub-account.  Each time Series B shares are converted to
     Series A shares,  a pro rata  portion  of the  Series B shares  held in the
     sub-account will also convert to Series A shares.

IN WITNESS  WHEREOF,  we have hereunto set our hands and affixed the seal of the
corporation this 3rd day of April, 1995.


                                                  JOHN D. CLELAND
                                                  ------------------------------
                                                  John D. Cleland, President


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

STATE OF KANSAS  )
                 ) ss.
COUNTY OF SHAWNEE)


Be it remembered,  that before me Connie  Brungardt,  a Notary Public in and for
the County and State aforesaid, came John D. Cleland, President, and Amy J. Lee,
Secretary, of Security Equity Fund, a Kansas corporation, personally known to me
to be the persons who executed the foregoing  instrument of writing as President
and Secretary,  respectively,  and duly  acknowledged  the execution of the same
this 3rd day of April, 1995.


                                                  CONNIE BRUNGARDT
                                                  ------------------------------
                                                  Notary Public

(NOTARIAL SEAL)

My commission expires:  November 30, 1998.

                         CERTIFICATE OF AMENDMENT TO THE
                            ARTICLES OF INCORPORATION
                                       OF
                              SECURITY EQUITY FUND


We, John D. Cleland,  President , and Amy J. Lee,  Secretary of Security  Equity
Fund,  a  corporation  organized  and  existing  under  the laws of the State of
Kansas, do hereby certify that at a regular meeting of the Board of Directors of
said  corporation,  held on the 2nd day of February,  1996,  the board adopted a
resolution   setting   forth  the   following   amendment  to  the  Articles  of
Incorporation and declaring its advisability:

                                    RESOLVED

The Board of Directors of Security  Equity Fund  recommends that the Articles of
Incorporation be amended by deleting the first paragraph of Article Fifth in its
entirety and by inserting, in lieu thereof, the following new Article:

FIFTH:  The  corporation  shall have authority to issue an indefinite  number of
shares of common stock, of the par value of twenty-five cents ($0.25) per share.
The board of  directors of the  Corporation  is  expressly  authorized  to cause
shares of capital stock of the Corporation authorized herein to be issued in one
or more series as may be established from time to time by setting or changing in
one or more respects the voting powers, rights,  qualifications,  limitations or
restrictions  of such shares of stock and to increase or decrease  the number of
shares so authorized to be issued in any such series.

We further  certify that the amendment  was duly adopted in accordance  with the
provisions of K.S.A. 17-6602, as amended.

IN WITNESS WHEREOF,  we have hereunto set our hands and affixed the seal of said
corporation this 2nd day of February, 1996.


                                                  JOHN D. CLELAND
                                                  ------------------------------
                                                  John D. Cleland, President


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

[SEAL]

STATE OF KANSAS  )
                 ) ss.
COUNTY OF SHAWNEE)


BE IT REMEMBERED, that before me, L. Charmaine Lucas, a Notary Public in and for
the aforesaid county and state, personally appeared John D. Cleland,  President,
and Amy J. Lee,  Secretary,  of Security  Equity Fund, who are known to me to be
the same persons who executed the foregoing  certificate  and duly  acknowledged
the execution of the same this 2nd day of February, 1996.


                                                  L. CHARMAINE LUCAS
                                                  ------------------------------
                                                  L. Charmaine Lucas, Notary

(NOTARIAL SEAL)

My commission expires:  April 1, 1998

        PLEASE SUBMIT THIS DOCUMENT IN DUPLICATE, WITH $20 FILING FEE TO:

                               Secretary of State
                            2nd Floor, State Capitol
                              Topeka, KS 66612-1594
                                 (913) 296-4564

                           CERTIFICATE OF DESIGNATIONS
                                 OF COMMON STOCK
                                       OF
                              SECURITY EQUITY FUND


STATE OF KANSAS  )
                 ) ss.
COUNTY OF SHAWNEE)


We, John D. Cleland,  President,  and Amy J. Lee,  Secretary of Security  Equity
Fund,  a  corporation  organized  and  existing  under  the laws of the State of
Kansas,  and whose  registered  office is Security  Benefit Life  Building,  700
Harrison Street, Topeka, Shawnee County, Kansas, do hereby certify that pursuant
to authority expressly vested in the Board of Directors by the provisions of the
corporation's  Articles  of  Incorporation,  the  Board  of  Directors  of  said
corporation  at a meeting  duly  convened  and held on the 2nd day of  February,
1996,  adopted  resolutions  authorizing  the corporation to issue an indefinite
number of shares of capital  stock of each of the six series of common  stock of
the corporation. Resolutions were also adopted which reaffirmed the preferences,
rights,  privileges  and  restrictions  of separate  series of stock of Security
Equity Fund, which resolutions are provided in their entirety as follows:

     WHEREAS, K.S.A. 17-6602 has been amended to allow the board of directors of
     a corporation  that is registered as an open-end  investment  company under
     the  Investment  Company  Act of 1940  (the  "1940  Act")  to  approve,  by
     resolution, an amendment of the corporation's Articles of Incorporation, to
     allow the issuance of an  indefinite  number of shares of the capital stock
     of the corporation;

     WHEREAS,  the corporation is registered as an open-end  investment  company
     under the 1940 Act; and

     WHEREAS,  the Board of  Directors  desire to  authorize  the issuance of an
     indefinite  number of shares of capital  stock of each of the six series of
     common stock of the corporation;

     NOW THEREFORE BE IT RESOLVED,  that,  the officers of the  corporation  are
     hereby  directed and authorized to issue an indefinite  number of $0.25 par
     value  shares of capital  stock of each  series of the  corporation,  which
     consist of Equity Series A; Equity Series B; Global Series A; Global Series
     B; Asset Allocation Series A; and Asset Allocation Series B.

     FURTHER   RESOLVED,   that,  the   preferences,   rights,   privileges  and
     restrictions  of the shares of each of the  corporation's  series of common
     stock,  as set forth in the  minutes of the April 3, 1995,  meeting of this
     Board of Directors,  are hereby  reaffirmed and  incorporated  by reference
     into the minutes of this meeting; and

     FURTHER RESOLVED, that, the appropriate officers of the corporation be, and
     they  hereby  are,  authorized  and  directed to take such action as may be
     necessary under the laws of the State of Kansas or as they deem appropriate
     to cause the foregoing resolutions to become effective.

The  undersigned  do  hereby  certify  that  the  foregoing   amendment  to  the
corporation's Articles of Incorporation has been duly adopted in accordance with
the provisions of K.S.A. 17-6602.

IN WITNESS  WHEREOF,  we have hereunto set our hands and affixed the seal of the
corporation this 2nd day of February, 1996.


                                                  JOHN D. CLELAND
                                                  ------------------------------
                                                  John D. Cleland, President


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

[SEAL]

STATE OF KANSAS  )
                 ) ss.
COUNTY OF SHAWNEE)


Be it remembered, that before me, L. Charmaine Lucas, a Notary Public in and for
the aforesaid County and State aforesaid,  came John D. Cleland,  President, and
Amy J. Lee, Secretary, of Security Equity Fund, a Kansas corporation, personally
known to me to be the same  persons who  executed the  foregoing  instrument  of
writing as President and  Secretary,  respectively,  and duly  acknowledged  the
execution of the same this 2nd day of February, 1996.


                                               L. CHARMAINE LUCAS
                                               ---------------------------------
                                               L. Charmaine Lucas, Notary Public

(NOTARIAL SEAL)

My commission expires:  April 1, 1998

                          CERTIFICATE OF DESIGNATION OF
                       SERIES AND CLASSES OF COMMON STOCK
                                       OF
                              SECURITY EQUITY FUND


STATE OF KANSAS  )
                 ) ss.
COUNTY OF SHAWNEE)


We, John D. Cleland,  President,  and Amy J. Lee, Secretary,  of Security Equity
Fund,  a  corporation  organized  and  existing  under  the laws of the State of
Kansas,  and whose  registered  office is Security  Benefit Life  Building,  700
Harrison Street, Topeka, Shawnee County, Kansas, do hereby certify that pursuant
to authority expressly vested in the Board of Directors by the provisions of the
corporation's  Articles  of  Incorporation,  the  Board  of  Directors  of  said
corporation  at a meeting duly convened and held on the 26th day of July,  1996,
adopted  resolutions (i) establishing two new series of common stock in addition
to those six series of common stock currently  being issued by the  corporation,
and (ii) allocating the corporation's  authorized  capital stock among the eight
series of common stock of the  corporation.  Resolutions were also adopted which
reaffirmed the preferences,  rights, privileges and restrictions of the separate
series of stock of Security Equity Fund, which resolutions are provided in their
entirety as follows:

     WHEREAS,  the Board of Directors has approved the  establishment of two new
     series of common  stock of  Security  Equity  Fund in  addition  to the six
     separate series of common stock presently  issued by the fund designated as
     Equity  Series A, Equity  Series B, Global Series A, Global Series B, Asset
     Allocation Series A and Asset Allocation Series B;

     WHEREAS,  the Board of  Directors  desire to  authorize  the issuance of an
     indefinite number of shares of capital stock of each of the eight series of
     common stock of the corporation.

     NOW, THEREFORE,  BE IT RESOLVED,  that, the officers of the corporation are
     hereby  directed and authorized to establish two new series of the Security
     Equity Fund designated as Social  Awareness  Series A and Social  Awareness
     Series B.

     FURTHER RESOLVED, that, the officers of the corporation are hereby directed
     and  authorized to issue an indefinite  number of $0.25 par value shares of
     capital  stock of each series of the  corporation,  which consist of Equity
     Series  A,  Equity  Series  B,  Global  Series A,  Global  Series B,  Asset
     Allocation  Series A, Asset Allocation  Series B, Social Awareness Series A
     and Social Awareness Series B.

     FURTHER   RESOLVED,   that,  the   preferences,   rights,   privileges  and
     restrictions  of the shares of each of the series of  Security  Equity Fund
     shall be as follows.

 1.  Except as set forth below and as may be hereafter  established by the Board
     of Directors of the corporation all shares of the  corporation,  regardless
     of series, shall be equal.

 2.  At all meetings of stockholders,  each stockholder of the corporation shall
     be entitled to one vote in person or by proxy on each matter submitted to a
     vote at such meeting for each share of common stock  standing in his or her
     name on the books of the corporation on the date,  fixed in accordance with
     the bylaws,  for  determination  of  stockholders  entitled to vote at such
     meeting.  At all elections of directors each stockholder  shall be entitled
     to as many votes as shall equal the number of shares of stock multiplied by
     the number of directors  to be elected,  and he or she may cast all of such
     votes for a single  director or may distribute  them among the number to be
     voted  for,  or  any  two  or  more  of  them  as he or she  may  see  fit.
     Notwithstanding  the  foregoing,  (i) if any  matter  is  submitted  to the
     stockholders  which does not affect the interests of all series,  then only
     stockholders  of the affected  series shall be entitled to vote and (ii) in
     the event the Investment Company Act of 1940, as amended,  or the rules and
     regulations  promulgated  thereunder  shall  require a greater or different
     vote  than  would  otherwise  be  required  herein  or by the  Articles  of
     Incorporation  of  the  corporation,   such  greater  or  different  voting
     requirement shall also be satisfied.

 3.  (a)  The  corporation  shall  redeem  any of its  shares  for  which it has
          received  payment in full that may be presented to the  corporation on
          any date  after  the  issue  date of any such  shares at the net asset
          value  thereof,  such  redemption  and the  valuation  and  payment in
          connection  therewith to be made in compliance  with the provisions of
          the  Investment  Company  Act of 1940 and the  Rules  and  Regulations
          promulgated  thereunder  and with the  Rules of Fair  Practice  of the
          National Association of Securities Dealers, Inc., as from time to time
          amended.

     (b)  From and after the close of  business  on the day when the  shares are
          properly tendered for repurchase the owner shall, with respect of said
          shares,  cease to be a stockholder of the  corporation  and shall have
          only the right to receive the repurchase  price in accordance with the
          provisions  hereof.  The shares so  repurchased  may,  as the Board of
          Directors  determines,  be held in the treasury of the corporation and
          may be resold, or, if the laws of Kansas shall permit, may be retired.
          Repurchase of shares is conditional upon the corporation  having funds
          or property legally available therefor.

 4.  The  corporation,  pursuant to a resolution  by the Board of Directors  and
     without the vote or consent of stockholders of the corporation,  shall have
     the right to redeem at net asset  value all shares of capital  stock of the
     corporation  in  any  stockholder  account  in  which  there  has  been  no
     investment (other than the reinvestment of income dividend or capital gains
     distributions) for at least six months and in which there are fewer than 25
     shares or such few shares as shall be  specified in such  resolution.  Such
     resolution  shall set forth that  redemption of shares in such accounts has
     been  determined to be in the economic best interests of the corporation or
     necessary  to reduce  disproportionately  burdensome  expenses in servicing
     stockholder accounts. Such resolution shall provide that prior notice of at
     least six months shall be given to a stockholder  before such redemption of
     shares,  and that the  stockholder  will have six  months  (or such  longer
     period as specified in the resolution) from the date of the notice to avoid
     such redemption by increasing his or her account to at least 25 shares,  or
     such fewer shares as is specified in the resolution.

 5.  All shares of the corporation, upon issuance and sale, shall be fully paid,
     nonassessable   and  redeemable.   Within  the  respective  series  of  the
     corporation,  all shares have equal voting,  participation  and liquidation
     rights, but have no subscription or preemptive rights.

 6.  (a)  Outstanding  shares  of  Equity  Series  A and  B  shall  represent  a
          stockholder  interest  in a  particular  fund  of  assets  held by the
          corporation  which fund shall be invested and reinvested in accordance
          with policies and objectives established by the Board of Directors for
          these  series.  Outstanding  shares  of  Global  Series  A and B shall
          represent a stockholder  interest in a particular  fund of assets held
          by the  corporation  which fund shall be invested  and  reinvested  in
          accordance  with policies and  objectives  established by the Board of
          Directors for these  series.  Outstanding  shares of Asset  Allocation
          Series A and B shall represent a stockholder  interest in a particular
          fund of assets  held by the  corporation  which fund shall be invested
          and reinvested in accordance with policies and objectives  established
          by the Board of  Directors  for these  series.  Outstanding  shares of
          Social Awareness Series A and B shall represent a stockholder interest
          in a  particular  fund of assets  held by the  corporation  which fund
          shall be invested  and  reinvested  in  accordance  with  policies and
          objectives established by the Board of Directors for these Series.

     (b)  All cash and other property  received by the corporation from the sale
          of shares of the Equity  Series A and B, Global  Series A and B, Asset
          Allocation  Series  A and B,  and  Social  Awareness  Series  A and B,
          respectively,  all  securities  and other property held as a result of
          the investment and  reinvestment of such cash and other property,  all
          revenues and income  received or receivable with respect to such cash,
          other  property,  investments  and  reinvestments,  and  all  proceeds
          derived from the sale,  exchange,  liquidation or other disposition of
          any of the foregoing, shall be allocated to the Equity Series A and B,
          Global  Series A and B,  Asset  Allocation  Series A and B, or  Social
          Awareness  Series  A and B, to  which  they  relate  and  held for the
          benefit of the stockholders owning shares of such series.

     (c)  All losses,  liabilities  and expenses of the  corporation  (including
          accrued  liabilities  and expenses  and such  reserves as the Board of
          Directors  may  determine  are  appropriate)  shall be  allocated  and
          charged  to the  series  to which  such  loss,  liability  or  expense
          relates. Where any loss, liability or expense relates to more than one
          series,  the Board of  Directors  shall  allocate  the same between or
          among such series pro rata based on the respective net asset values of
          such  series or on such other  basis as the Board of  Directors  deems
          appropriate.

     (d)  All  allocations  made  hereunder by the Board of  Directors  shall be
          conclusive and binding upon all stockholders and upon the corporation.

 7.  Each share of stock of a series  shall have the same  preferences,  rights,
     privileges  and  restrictions  as each other share of stock of that series.
     Each fractional share of stock of a series  proportionately  shall have the
     same preferences, rights, privileges and restrictions as a whole share.

 8.  Dividends  may be paid when,  as and if declared by the Board of  Directors
     out of funds legally  available  therefor.  Shares of Equity Series A and B
     represent a stockholder interest in a particular fund of assets held by the
     corporation  and,  accordingly,  dividends shall be calculated and declared
     for these series in the same manner, at the same time, on the same day, and
     shall be paid at the same dividend  rate except that expenses  attributable
     to a  particular  series  and  payments  made  pursuant  to a 12b-1 Plan or
     Shareholder Services Plan shall be borne exclusively by the affected Equity
     Series. Stockholders of the Equity Series shall share in dividends declared
     and paid with  respect to such series pro rata based on their  ownership of
     shares  of such  series.  Shares  of  Global  Series  A and B  represent  a
     stockholder interest in a particular fund of assets held by the corporation
     and,  accordingly,  dividends  shall be  calculated  and declared for these
     series in the same manner,  at the same time, on the same day, and shall be
     paid at the same  dividend  rate except  that  expenses  attributable  to a
     particular series and payments made pursuant to a 12b-1 Plan or Shareholder
     Services Plan shall be borne  exclusively  by the affected  Global  Series.
     Stockholders  of the Global  Series shall share in  dividends  declared and
     paid with  respect  to such  series pro rata  based on their  ownership  of
     shares of such series.  Shares of Asset Allocation Series A and B represent
     a  stockholder  interest  in a  particular  fund  of  assets  held  by  the
     corporation  and,  accordingly,  dividends shall be calculated and declared
     for these series in the same manner, at the same time, on the same day, and
     shall be paid at the same dividend rate, except that expenses  attributable
     to a  particular  series  and  payments  made  pursuant  to a 12b-1 Plan or
     Shareholder  Services Plan shall be borne exclusively by the affected Asset
     Allocation Series.  Stockholders of the Asset Allocation Series shall share
     in  dividends  declared and paid with respect to such series pro rata based
     on their  ownership  of shares of such series.  Shares of Social  Awareness
     Series A and B represent a  stockholder  interest in a  particular  fund of
     assets  held  by the  corporation  and,  accordingly,  dividends  shall  be
     calculated  and declared  for these series in the same manner,  at the same
     time, on the same day, and shall be paid at the same dividend rate,  except
     that  expenses  attributable  to a  particular  series  and  payments  made
     pursuant  to a 12b-1  Plan or  Shareholder  Services  Plan  shall  be borne
     exclusively by the affected Social  Awareness  Series.  Stockholders of the
     Social  Awareness  Series shall share in  dividends  declared and paid with
     respect to such series pro rata based on their  ownership of shares of such
     series. Whenever dividends are declared and paid with respect to the Equity
     Series A and B, the Global  Series A and B, the Asset  Allocation  Series A
     and B, or the Social Awareness Series A and B, the holders of shares of the
     other series shall have no rights in or to such dividends.

 9.  In the event of liquidation,  stockholders of each series shall be entitled
     to share in the assets of the corporation that are allocated to such series
     and that are available for distribution to the stockholders of such series.
     Liquidating  distributions shall be made to the stockholders of each series
     pro rata based on their share ownership of such series.

10.  On the eighth anniversary of the purchase of shares of the Equity Series B,
     the Global Series B, the Asset Allocation Series B, or the Social Awareness
     Series B, those shares (except those purchased  through the reinvestment of
     dividends and other  distributions)  shall automatically  convert to Equity
     Series A, Global Series A, Asset  Allocation  Series A or Social  Awareness
     Series A shares  respectively,  at the relative net asset values of each of
     the series  without the  imposition of any sales load, fee or other charge.
     All shares in a  stockholder's  account  that were  purchased  through  the
     reinvestment  of  dividends  and other  distributions  paid with respect to
     Series B shares will be  considered  to be held in a separate  sub-account.
     Each time  Series B shares  are  converted  to Series A shares,  a pro rata
     portion of the Series B shares held in the sub-account will also convert to
     Series A shares.

IN WITNESS  WHEREOF,  we have hereunto set our hands and affixed the seal of the
corporation this 1st day of August, 1996.


                                                  JOHN D. CLELAND
                                                  ------------------------------
                                                  John D. Cleland, President


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


STATE OF KANSAS  )
                 ) ss.
COUNTY OF SHAWNEE)


Be it remembered,  that before me Jana R. Selley, a Notary Public in and for the
County and State  aforesaid,  came John D. Cleland,  President,  and Amy J. Lee,
Secretary, of Security Equity Fund, a Kansas corporation, personally known to me
to be the persons who executed the foregoing  instrument of writing as President
and Secretary,  respectively,  and duly  acknowledged  the execution of the same
this 1st day of August, 1996.

                                                  JANA SELLEY
                                                  ------------------------------
                                                  Notary Public

My commission expires:  June 14, 2000

                          CERTIFICATE OF DESIGNATION OF
                       SERIES AND CLASSES OF COMMON STOCK
                                       OF
                              SECURITY EQUITY FUND


STATE OF KANSAS  )
                 ) ss.
COUNTY OF SHAWNEE)

We, John D. Cleland,  President,  and Amy J. Lee, Secretary,  of Security Equity
Fund,  a  corporation  organized  and  existing  under  the laws of the State of
Kansas,  and whose  registered  office is Security  Benefit Life  Building,  700
Harrison Street, Topeka, Shawnee County, Kansas, do hereby certify that pursuant
to authority expressly vested in the Board of Directors by the provisions of the
corporation's  Articles  of  Incorporation,  the  Board  of  Directors  of  said
corporation  at a meeting  duly  convened  and held on the 7th day of  February,
1997,  adopted  resolutions (i)  establishing  two new series of common stock in
addition to those eight  series of common  stock  currently  being issued by the
corporation,  and (ii)  allocating the  corporation's  authorized  capital stock
among the ten series of common stock of the  corporation.  Resolutions were also
adopted which reaffirmed the preferences, rights, privileges and restrictions of
the separate  series of stock of Security  Equity Fund,  which  resolutions  are
provided in their entirety as follows:

          WHEREAS,  the Board of Directors has approved the establishment of two
     new series of common stock of Security Equity Fund in addition to the eight
     separate series of common stock presently  issued by the fund designated as
     Equity  Series A, Equity  Series B, Global Series A, Global Series B, Asset
     Allocation  Series A, Asset Allocation  Series B, Social Awareness Series A
     and Social Awareness Series B;

          WHEREAS,  the Board of Directors  desires to authorize the issuance of
     an  indefinite  number of shares of capital stock of each of the ten series
     of common stock of the corporation.

          NOW, THEREFORE, BE IT RESOLVED,  that, the officers of the corporation
     are hereby  directed  and  authorized  to  establish  two new series of the
     Security Equity Fund designated as Value Series A and Value Series B.

          FURTHER  RESOLVED,  that, the officers of the  corporation  are hereby
     directed and  authorized to issue an  indefinite  number of $0.25 par value
     shares of capital stock of each series of the corporation, which consist of
     Equity  Series A, Equity  Series B, Global Series A, Global Series B, Asset
     Allocation  Series A, Asset Allocation Series B, Social Awareness Series A,
     Social Awareness Series B, Value Series A and Value Series B.

          FURTHER  RESOLVED,  that,  the  preferences,  rights,  privileges  and
     restrictions  of the shares of each of the series of  Security  Equity Fund
     shall be as follows.

1.   Except as set forth below and as may be hereafter  established by the Board
     of Directors of the corporation all shares of the  corporation,  regardless
     of series, shall be equal.

 2.  At all meetings of stockholders,  each stockholder of the corporation shall
     be entitled to one vote in person or by proxy on each matter submitted to a
     vote at such meeting for each share of common stock  standing in his or her
     name on the books of the corporation on the date,  fixed in accordance with
     the bylaws,  for  determination  of  stockholders  entitled to vote at such
     meeting.  At all elections of directors each stockholder  shall be entitled
     to as many votes as shall equal the number of shares of stock multiplied by
     the number of directors  to be elected,  and he or she may cast all of such
     votes for a single  director or may distribute  them among the number to be
     voted  for,  or  any  two  or  more  of  them  as he or she  may  see  fit.
     Notwithstanding  the  foregoing,  (i) if any  matter  is  submitted  to the
     stockholders  which does not affect the interests of all series,  then only
     stockholders  of the affected  series shall be entitled to vote and (ii) in
     the event the Investment Company Act of 1940, as amended,  or the rules and
     regulations  promulgated  thereunder  shall  require a greater or different
     vote  than  would  otherwise  be  required  herein  or by the  Articles  of
     Incorporation  of  the  corporation,   such  greater  or  different  voting
     requirement shall also be satisfied.

3.   (a)  The  corporation  shall  redeem  any of its  shares  for  which it has
          received  payment in full that may be presented to the  corporation on
          any date  after  the  issue  date of any such  shares at the net asset
          value  thereof,  such  redemption  and the  valuation  and  payment in
          connection  therewith to be made in compliance  with the provisions of
          the  Investment  Company  Act of 1940 and the  Rules  and  Regulations
          promulgated  thereunder  and with the  Rules of Fair  Practice  of the
          National Association of Securities Dealers, Inc., as from time to time
          amended.

     (b)  From and after the close of  business  on the day when the  shares are
          properly tendered for repurchase the owner shall, with respect of said
          shares,  cease to be a stockholder of the  corporation  and shall have
          only the right to receive the repurchase  price in accordance with the
          provisions  hereof.  The shares so  repurchased  may,  as the Board of
          Directors  determines,  be held in the treasury of the corporation and
          may be resold, or, if the laws of Kansas shall permit, may be retired.
          Repurchase of shares is conditional upon the corporation  having funds
          or property legally available therefor.

4.   The  corporation,  pursuant to a resolution  by the Board of Directors  and
     without the vote or consent of stockholders of the corporation,  shall have
     the right to redeem at net asset  value all shares of capital  stock of the
     corporation  in  any  stockholder  account  in  which  there  has  been  no
     investment (other than the reinvestment of income dividend or capital gains
     distributions) for at least six months and in which there are fewer than 25
     shares or such fewer shares as shall be specified in such resolution.  Such
     resolution  shall set forth that  redemption of shares in such accounts has
     been  determined to be in the economic best interests of the corporation or
     necessary  to reduce  disproportionately  burdensome  expenses in servicing
     stockholder accounts. Such resolution shall provide that prior notice of at
     least six months shall be given to a stockholder  before such redemption of
     shares,  and that the  stockholder  will have six  months  (or such  longer
     period as specified in the resolution) from the date of the notice to avoid
     such redemption by increasing his or her account to at least 25 shares,  or
     such fewer shares as is specified in the resolution.

5.   All shares of the corporation, upon issuance and sale, shall be fully paid,
     nonassessable   and  redeemable.   Within  the  respective  series  of  the
     corporation,  all shares have equal voting,  participation  and liquidation
     rights, but have no subscription or preemptive rights.

6.   (a)  Outstanding  shares  of  Equity  Series  A and  B  shall  represent  a
          stockholder  interest  in a  particular  fund  of  assets  held by the
          corporation  which fund shall be invested and reinvested in accordance
          with policies and objectives established by the Board of Directors for
          these  series.  Outstanding  shares  of  Global  Series  A and B shall
          represent a stockholder  interest in a particular  fund of assets held
          by the  corporation  which fund shall be invested  and  reinvested  in
          accordance  with policies and  objectives  established by the Board of
          Directors for these  series.  Outstanding  shares of Asset  Allocation
          Series A and B shall represent a stockholder  interest in a particular
          fund of assets  held by the  corporation  which fund shall be invested
          and reinvested in accordance with policies and objectives  established
          by the Board of  Directors  for these  series.  Outstanding  shares of
          Social Awareness Series A and B shall represent a stockholder interest
          in a  particular  fund of assets  held by the  corporation  which fund
          shall be invested  and  reinvested  in  accordance  with  policies and
          objectives  established  by the Board of Directors  for these  Series.
          Outstanding  shares  of  Values  Series  A and  B  shall  represent  a
          stockholder  interest  in a  particular  fund  of  assets  held by the
          corporation  which fund shall be invested and reinvested in accordance
          with policies and objectives established by the Board of Directors for
          these Series.

     (b)  All cash and other property  received by the corporation from the sale
          of shares of the Equity  Series A and B, Global  Series A and B, Asset
          Allocation  Series A and B, Social Awareness Series A and B, and Value
          Series A and B,  respectively,  all securities and other property held
          as a result of the investment and  reinvestment of such cash and other
          property,  all revenues and income received or receivable with respect
          to such cash, other property,  investments and reinvestments,  and all
          proceeds  derived  from  the  sale,  exchange,  liquidation  or  other
          disposition of any of the foregoing,  shall be allocated to the Equity
          Series A and B, Global Series A and B, Asset  Allocation  Series A and
          B, Social  Awareness Series A and B, or Value Series A and B, to which
          they relate and held for the benefit of the stockholders owning shares
          of such series.

     (c)  All losses,  liabilities  and expenses of the  corporation  (including
          accrued  liabilities  and expenses  and such  reserves as the Board of
          Directors  may  determine  are  appropriate)  shall be  allocated  and
          charged  to the  series  to which  such  loss,  liability  or  expense
          relates. Where any loss, liability or expense relates to more than one
          series,  the Board of  Directors  shall  allocate  the same between or
          among such series pro rata based on the respective net asset values of
          such  series or on such other  basis as the Board of  Directors  deems
          appropriate.

     (d)  All  allocations  made  hereunder by the Board of  Directors  shall be
          conclusive and binding upon all stockholders and upon the corporation.

7.   Each share of stock of a series  shall have the same  preferences,  rights,
     privileges  and  restrictions  as each other share of stock of that series.
     Each fractional share of stock of a series  proportionately  shall have the
     same preferences, rights, privileges and restrictions as a whole share.

 8.  Dividends  may be paid when,  as and if declared by the Board of  Directors
     out of funds legally  available  therefor.  Shares of Equity Series A and B
     represent a stockholder interest in a particular fund of assets held by the
     corporation  and,  accordingly,  dividends shall be calculated and declared
     for these series in the same manner, at the same time, on the same day, and
     shall be paid at the same dividend  rate except that expenses  attributable
     to a  particular  series  and  payments  made  pursuant  to a 12b-1 Plan or
     Shareholder Services Plan shall be borne exclusively by the affected Equity
     Series. Stockholders of the Equity Series shall share in dividends declared
     and paid with  respect to such series pro rata based on their  ownership of
     shares  of such  series.  Shares  of  Global  Series  A and B  represent  a
     stockholder interest in a particular fund of assets held by the corporation
     and,  accordingly,  dividends  shall be  calculated  and declared for these
     series in the same manner,  at the same time, on the same day, and shall be
     paid at the same  dividend  rate except  that  expenses  attributable  to a
     particular series and payments made pursuant to a 12b-1 Plan or Shareholder
     Services Plan shall be borne  exclusively  by the affected  Global  Series.
     Stockholders  of the Global  Series shall share in  dividends  declared and
     paid with  respect  to such  series pro rata  based on their  ownership  of
     shares of such series.  Shares of Asset Allocation Series A and B represent
     a  stockholder  interest  in a  particular  fund  of  assets  held  by  the
     corporation  and,  accordingly,  dividends shall be calculated and declared
     for these series in the same manner, at the same time, on the same day, and
     shall be paid at the same dividend rate, except that expenses  attributable
     to a  particular  series  and  payments  made  pursuant  to a 12b-1 Plan or
     Shareholder  Services Plan shall be borne exclusively by the affected Asset
     Allocation Series.  Stockholders of the Asset Allocation Series shall share
     in  dividends  declared and paid with respect to such series pro rata based
     on their  ownership  of shares of such series.  Shares of Social  Awareness
     Series A and B represent a  stockholder  interest in a  particular  fund of
     assets  held  by the  corporation  and,  accordingly,  dividends  shall  be
     calculated  and declared  for these series in the same manner,  at the same
     time, on the same day, and shall be paid at the same dividend rate,  except
     that  expenses  attributable  to a  particular  series  and  payments  made
     pursuant  to a 12b-1  Plan or  Shareholder  Services  Plan  shall  be borne
     exclusively by the affected Social  Awareness  Series.  Stockholders of the
     Social  Awareness  Series shall share in  dividends  declared and paid with
     respect to such series pro rata based on their  ownership of shares of such
     series.  Shares of Value Series A and B represent a stockholder interest in
     a  particular  fund of assets  held by the  corporation  and,  accordingly,
     dividends  shall be  calculated  and  declared for these series in the same
     manner,  at the same time,  on the same day,  and shall be paid at the same
     dividend rate, except that expenses attributable to a particular series and
     payments made pursuant to a 12b-1 Plan or  Shareholder  Services Plan shall
     be borne  exclusively  by the affected  Value Series.  Stockholders  of the
     Value  Series  shall share in  dividends  declared and paid with respect to
     such  series pro rata based on their  ownership  of shares of such  series.
     Whenever  dividends are declared and paid with respect to the Equity Series
     A and B, the Global  Series A and B, the Asset  Allocation  Series A and B,
     the  Social  Awareness  Series  A and B, or the  Value  Series A and B, the
     holders  of shares of the other  series  shall have no rights in or to such
     dividends.

9.   In the event of liquidation,  stockholders of each series shall be entitled
     to share in the assets of the corporation that are allocated to such series
     and that are available for distribution to the stockholders of such series.
     Liquidating  distributions shall be made to the stockholders of each series
     pro rata based on their share ownership of such series.

10.  On the eighth anniversary of the purchase of shares of the Equity Series B,
     the Global Series B, the Asset  Allocation  Series B, the Social  Awareness
     Series B, or the Value  Series B,  those  shares  (except  those  purchased
     through  the  reinvestment  of  dividends  and other  distributions)  shall
     automatically convert to Equity Series A, Global Series A, Asset Allocation
     Series A, Social Awareness Series A, or Value Series A shares respectively,
     at the  relative  net  asset  values  of each  of the  series  without  the
     imposition  of any  sales  load,  fee or  other  charge.  All  shares  in a
     stockholder's  account  that were  purchased  through the  reinvestment  of
     dividends and other distributions paid with respect to Series B shares will
     be  considered  to be held in a separate  sub-account.  Each time  Series B
     shares are converted to Series A shares, a pro rata portion of the Series B
     shares held in the sub-account will also convert to Series A shares.

IN WITNESS  WHEREOF,  we have hereunto set our hands and affixed the seal of the
corporation this 12th day of March, 1997.

                                                  JOHN D. CLELAND
                                                  ------------------------------
                                                  John D. Cleland, President


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

STATE OF KANSAS  )
                 ) ss.
COUNTY OF SHAWNEE)

Be it remembered,  that before me L. Charmaine Lucas, a Notary Public in and for
the County and State aforesaid, came John D. Cleland, President, and Amy J. Lee,
Secretary, of Security Equity Fund, a Kansas corporation, personally known to me
to be the persons who executed the foregoing  instrument of writing as President
and Secretary,  respectively,  and duly  acknowledged  the execution of the same
this 12th day of March, 1997.

                                                  L. CHARMAINE LUCAS
                                                  ------------------------------
                                                  Notary Public

My commission expires:  April 1, 1998

                          CERTIFICATE OF DESIGNATION OF
                       SERIES AND CLASSES OF COMMON STOCK
                                       OF
                              SECURITY EQUITY FUND


STATE OF KANSAS  )
                 ) ss.
COUNTY OF SHAWNEE)

We, John D. Cleland,  President,  and Amy J. Lee, Secretary,  of Security Equity
Fund,  a  corporation  organized  and  existing  under  the laws of the State of
Kansas,  and whose  registered  office is Security  Benefit Life  Building,  700
Harrison Street, Topeka, Shawnee County, Kansas, do hereby certify that pursuant
to authority expressly vested in the Board of Directors by the provisions of the
corporation's  Articles  of  Incorporation,  the  Board  of  Directors  of  said
corporation  at a meeting duly convened and held on the 25th day of July,  1997,
adopted  resolutions (i) establishing two new series of common stock in addition
to those ten series of common stock currently  being issued by the  corporation,
and (ii) allocating the corporation's  authorized capital stock among the twelve
series of common stock of the  corporation.  Resolutions were also adopted which
reaffirmed the preferences,  rights, privileges and restrictions of the separate
series of stock of Security Equity Fund, which resolutions are provided in their
entirety as follows:

          WHEREAS,  the Board of Directors has approved the establishment of two
     new series of common  stock of Security  Equity Fund in addition to the ten
     separate series of common stock presently  issued by the fund designated as
     Equity  Series A, Equity  Series B, Global Series A, Global Series B, Asset
     Allocation  Series A, Asset Allocation Series B, Social Awareness Series A,
     Social Awareness Series B, Value Series A and Value Series B;

          WHEREAS,  the Board of Directors  desires to authorize the issuance of
     an  indefinite  number  of shares of  capital  stock of each of the  twelve
     series of common stock of the corporation.

          NOW, THEREFORE, BE IT RESOLVED,  that, the officers of the corporation
     are hereby  directed  and  authorized  to  establish  two new series of the
     Security Equity Fund designated as Small Company Series A and Small Company
     Series B.

          FURTHER  RESOLVED,  that, the officers of the  corporation  are hereby
     directed and  authorized to issue an  indefinite  number of $0.25 par value
     shares of capital stock of each series of the corporation, which consist of
     Equity  Series A, Equity  Series B, Global Series A, Global Series B, Asset
     Allocation  Series A, Asset Allocation Series B, Social Awareness Series A,
     Social  Awareness  Series B, Value Series A, Value Series B, Small  Company
     Series A and Small Company Series B.

          FURTHER  RESOLVED,  that,  the  preferences,  rights,  privileges  and
     restrictions  of the shares of each of the series of  Security  Equity Fund
     shall be as follows.

 1.  Except as set forth below and as may be hereafter  established by the Board
     of Directors of the corporation all shares of the  corporation,  regardless
     of series, shall be equal.

 2.  At all meetings of stockholders,  each stockholder of the corporation shall
     be entitled to one vote in person or by proxy on each matter submitted to a
     vote at such meeting for each share of common stock  standing in his or her
     name on the books of the corporation on the date,  fixed in accordance with
     the bylaws,  for  determination  of  stockholders  entitled to vote at such
     meeting.  At all elections of directors each stockholder  shall be entitled
     to as many votes as shall equal the number of shares of stock multiplied by
     the number of directors  to be elected,  and he or she may cast all of such
     votes for a single  director or may distribute  them among the number to be
     voted  for,  or  any  two  or  more  of  them  as he or she  may  see  fit.
     Notwithstanding  the  foregoing,  (i) if any  matter  is  submitted  to the
     stockholders  which does not affect the interests of all series,  then only
     stockholders  of the affected  series shall be entitled to vote and (ii) in
     the event the Investment Company Act of 1940, as amended,  or the rules and
     regulations  promulgated  thereunder  shall  require a greater or different
     vote  than  would  otherwise  be  required  herein  or by the  Articles  of
     Incorporation  of  the  corporation,   such  greater  or  different  voting
     requirement shall also be satisfied.

 3.  (a)  The  corporation  shall  redeem  any of its  shares  for  which it has
          received  payment in full that may be presented to the  corporation on
          any date  after  the  issue  date of any such  shares at the net asset
          value  thereof,  such  redemption  and the  valuation  and  payment in
          connection  therewith to be made in compliance  with the provisions of
          the  Investment  Company  Act of 1940 and the  Rules  and  Regulations
          promulgated  thereunder  and with the  Rules of Fair  Practice  of the
          National Association of Securities Dealers, Inc., as from time to time
          amended.

     (b)  From and after the close of  business  on the day when the  shares are
          properly tendered for repurchase the owner shall, with respect of said
          shares,  cease to be a stockholder of the  corporation  and shall have
          only the right to receive the repurchase  price in accordance with the
          provisions  hereof.  The shares so  repurchased  may,  as the Board of
          Directors  determines,  be held in the treasury of the corporation and
          may be resold, or, if the laws of Kansas shall permit, may be retired.
          Repurchase of shares is conditional upon the corporation  having funds
          or property legally available therefor.

 4.  The  corporation,  pursuant to a resolution  by the Board of Directors  and
     without the vote or consent of stockholders of the corporation,  shall have
     the right to redeem at net asset  value all shares of capital  stock of the
     corporation  in  any  stockholder  account  in  which  there  has  been  no
     investment (other than the reinvestment of income dividend or capital gains
     distributions) for at least six months and in which there are fewer than 25
     shares or such fewer shares as shall be specified in such resolution.  Such
     resolution  shall set forth that  redemption of shares in such accounts has
     been  determined to be in the economic best interests of the corporation or
     necessary  to reduce  disproportionately  burdensome  expenses in servicing
     stockholder accounts. Such resolution shall provide that prior notice of at
     least six months shall be given to a stockholder  before such redemption of
     shares,  and that the  stockholder  will have six  months  (or such  longer
     period as specified in the resolution) from the date of the notice to avoid
     such redemption by increasing his or her account to at least 25 shares,  or
     such fewer shares as is specified in the resolution.

 5.  All shares of the corporation, upon issuance and sale, shall be fully paid,
     nonassessable   and  redeemable.   Within  the  respective  series  of  the
     corporation,  all shares have equal voting,  participation  and liquidation
     rights, but have no subscription or preemptive rights.

 6.  (a)  Outstanding  shares  of  Equity  Series  A and  B  shall  represent  a
          stockholder  interest  in a  particular  fund  of  assets  held by the
          corporation  which fund shall be invested and reinvested in accordance
          with policies and objectives established by the Board of Directors for
          these  series.  Outstanding  shares  of  Global  Series  A and B shall
          represent a stockholder  interest in a particular  fund of assets held
          by the  corporation  which fund shall be invested  and  reinvested  in
          accordance  with policies and  objectives  established by the Board of
          Directors for these  series.  Outstanding  shares of Asset  Allocation
          Series A and B shall represent a stockholder  interest in a particular
          fund of assets  held by the  corporation  which fund shall be invested
          and reinvested in accordance with policies and objectives  established
          by the Board of  Directors  for these  series.  Outstanding  shares of
          Social Awareness Series A and B shall represent a stockholder interest
          in a  particular  fund of assets  held by the  corporation  which fund
          shall be invested  and  reinvested  in  accordance  with  policies and
          objectives  established  by the Board of Directors  for these  Series.
          Outstanding  shares  of  Values  Series  A and  B  shall  represent  a
          stockholder  interest  in a  particular  fund  of  assets  held by the
          corporation  which fund shall be invested and reinvested in accordance
          with policies and objectives established by the Board of Directors for
          these Series. Outstanding shares of Small Company Series A and B shall
          represent a stockholder  interest in a particular  fund of assets held
          by the  corporation  which fund shall be invested  and  reinvested  in
          accordance  with policies and  objectives  established by the Board of
          Directors for these Series

     (b)  All cash and other property  received by the corporation from the sale
          of shares of the Equity  Series A and B, Global  Series A and B, Asset
          Allocation  Series A and B,  Social  Awareness  Series A and B,  Value
          Series A and B, and Small Company  Series A and B,  respectively,  all
          securities  and other  property held as a result of the investment and
          reinvestment of such cash and other property,  all revenues and income
          received or  receivable  with  respect to such cash,  other  property,
          investments and reinvestments, and all proceeds derived from the sale,
          exchange,  liquidation  or other  disposition of any of the foregoing,
          shall be allocated to the Equity  Series A and B, Global  Series A and
          B, Asset  Allocation  Series A and B, Social Awareness Series A and B,
          Value Series A and B, or Small  Company  Series A and B, to which they
          relate and held for the benefit of the  stockholders  owning shares of
          such series.

     (c)  All losses,  liabilities  and expenses of the  corporation  (including
          accrued  liabilities  and expenses  and such  reserves as the Board of
          Directors  may  determine  are  appropriate)  shall be  allocated  and
          charged  to the  series  to which  such  loss,  liability  or  expense
          relates. Where any loss, liability or expense relates to more than one
          series,  the Board of  Directors  shall  allocate  the same between or
          among such series pro rata based on the respective net asset values of
          such  series or on such other  basis as the Board of  Directors  deems
          appropriate.

     (d)  All  allocations  made  hereunder by the Board of  Directors  shall be
          conclusive and binding upon all stockholders and upon the corporation.

 7.  Each share of stock of a series  shall have the same  preferences,  rights,
     privileges  and  restrictions  as each other share of stock of that series.
     Each fractional share of stock of a series  proportionately  shall have the
     same preferences, rights, privileges and restrictions as a whole share.

 8.  Dividends  may be paid when,  as and if declared by the Board of  Directors
     out of funds legally  available  therefor.  Shares of Equity Series A and B
     represent a stockholder interest in a particular fund of assets held by the
     corporation  and,  accordingly,  dividends shall be calculated and declared
     for these series in the same manner, at the same time, on the same day, and
     shall be paid at the same dividend  rate except that expenses  attributable
     to a  particular  series  and  payments  made  pursuant  to a 12b-1 Plan or
     Shareholder Services Plan shall be borne exclusively by the affected Equity
     Series. Stockholders of the Equity Series shall share in dividends declared
     and paid with  respect to such series pro rata based on their  ownership of
     shares  of such  series.  Shares  of  Global  Series  A and B  represent  a
     stockholder interest in a particular fund of assets held by the corporation
     and,  accordingly,  dividends  shall be  calculated  and declared for these
     series in the same manner,  at the same time, on the same day, and shall be
     paid at the same  dividend  rate except  that  expenses  attributable  to a
     particular series and payments made pursuant to a 12b-1 Plan or Shareholder
     Services Plan shall be borne  exclusively  by the affected  Global  Series.
     Stockholders  of the Global  Series shall share in  dividends  declared and
     paid with  respect  to such  series pro rata  based on their  ownership  of
     shares of such series.  Shares of Asset Allocation Series A and B represent
     a  stockholder  interest  in a  particular  fund  of  assets  held  by  the
     corporation  and,  accordingly,  dividends shall be calculated and declared
     for these series in the same manner, at the same time, on the same day, and
     shall be paid at the same dividend rate, except that expenses  attributable
     to a  particular  series  and  payments  made  pursuant  to a 12b-1 Plan or
     Shareholder  Services Plan shall be borne exclusively by the affected Asset
     Allocation Series.  Stockholders of the Asset Allocation Series shall share
     in  dividends  declared and paid with respect to such series pro rata based
     on their  ownership  of shares of such series.  Shares of Social  Awareness
     Series A and B represent a  stockholder  interest in a  particular  fund of
     assets  held  by the  corporation  and,  accordingly,  dividends  shall  be
     calculated  and declared  for these series in the same manner,  at the same
     time, on the same day, and shall be paid at the same dividend rate,  except
     that  expenses  attributable  to a  particular  series  and  payments  made
     pursuant  to a 12b-1  Plan or  Shareholder  Services  Plan  shall  be borne
     exclusively by the affected Social  Awareness  Series.  Stockholders of the
     Social  Awareness  Series shall share in  dividends  declared and paid with
     respect to such series pro rata based on their  ownership of shares of such
     series.  Shares of Value Series A and B represent a stockholder interest in
     a  particular  fund of assets  held by the  corporation  and,  accordingly,
     dividends  shall be  calculated  and  declared for these series in the same
     manner,  at the same time,  on the same day,  and shall be paid at the same
     dividend rate, except that expenses attributable to a particular series and
     payments made pursuant to a 12b-1 Plan or  Shareholder  Services Plan shall
     be borne  exclusively  by the affected  Value Series.  Stockholders  of the
     Value  Series  shall share in  dividends  declared and paid with respect to
     such  series pro rata based on their  ownership  of shares of such  series.
     Shares of Small Company Series A and B represent a stockholder  interest in
     a  particular  fund of assets  held by the  corporation  and,  accordingly,
     dividends  shall be  calculated  and  declared for these series in the same
     manner,  at the same time,  on the same day,  and shall be paid at the same
     dividend rate, except that expenses attributable to a particular series and
     payments made pursuant to a 12b-1 Plan or  Shareholder  Services Plan shall
     be borne exclusively by the affected Small Company Series.  Stockholders of
     the Small  Company  Series shall share in dividends  declared and paid with
     respect to such series pro rata based on their  ownership of shares of such
     series. Whenever dividends are declared and paid with respect to the Equity
     Series A and B, the Global  Series A and B, the Asset  Allocation  Series A
     and B, the Social  Awareness  Series A and B, the Value  Series A and B, or
     the Small Company Series A and B, the holders of shares of the other series
     shall have no rights in or to such dividends.

 9.  In the event of liquidation,  stockholders of each series shall be entitled
     to share in the assets of the corporation that are allocated to such series
     and that are available for distribution to the stockholders of such series.
     Liquidating  distributions shall be made to the stockholders of each series
     pro rata based on their share ownership of such series.

10.  On the eighth anniversary of the purchase of shares of the Equity Series B,
     the Global Series B, the Asset  Allocation  Series B, the Social  Awareness
     Series B, the Value Series B, or the Small  Company  Series B, those shares
     (except those  purchased  through the  reinvestment  of dividends and other
     distributions)  shall  automatically  convert  to Equity  Series A,  Global
     Series A,  Asset  Allocation  Series A,  Social  Awareness  Series A, Value
     Series A or Small Company Series A shares respectively, at the relative net
     asset  values of each of the series  without  the  imposition  of any sales
     load, fee or other charge. All shares in a stockholder's  account that were
     purchased  through the  reinvestment  of dividends and other  distributions
     paid with  respect to Series B shares  will be  considered  to be held in a
     separate  sub-account.  Each time Series B shares are converted to Series A
     shares,  a pro rata portion of the Series B shares held in the  sub-account
     will also convert to Series A shares.

IN WITNESS  WHEREOF,  we have hereunto set our hands and affixed the seal of the
corporation this 15th day of September, 1997.

                                              JOHN D. CLELAND
                                              ----------------------------------
                                              John D. Cleland, President

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

STATE OF KANSAS  )
                 ) ss.
COUNTY OF SHAWNEE)

Be it remembered,  that before me Jana R. Selley, a Notary Public in and for the
County and State  aforesaid,  came John D. Cleland,  President,  and Amy J. Lee,
Secretary, of Security Equity Fund, a Kansas corporation, personally known to me
to be the persons who executed the foregoing  instrument of writing as President
and Secretary,  respectively,  and duly  acknowledged  the execution of the same
this 15th day of September, 1997.

                                              JANA R. SELLEY
                                              ----------------------------------
                                              Notary Public

My commission expires:  June 14, 2000

                               CERTIFICATE OF DESIGNATION OF
                            SERIES AND CLASSES OF COMMON STOCK
                                            OF
                                    SECURITY EQUITY FUND


STATE OF KANSAS    )
                   ) ss.
COUNTY OF SHAWNEE  )

We, James R. Schmank,  Vice President,  and Amy J. Lee,  Secretary,  of Security
Equity Fund, a corporation organized and existing under the laws of the State of
Kansas,  and whose  registered  office is Security  Benefit Life  Building,  700
Harrison Street, Topeka, Shawnee County, Kansas, do hereby certify that pursuant
to authority expressly vested in the Board of Directors by the provisions of the
corporation's  Articles  of  Incorporation,  the  Board  of  Directors  of  said
corporation at a meeting duly convened and held on the 6th day of November 1998,
adopted resolutions  establishing fifteen new series of common stock in addition
to  those  twelve  series  of  common  stock   currently  being  issued  by  the
corporation.  Resolutions  were also adopted which  reaffirmed the  preferences,
rights,  privileges and restrictions of the separate series of stock of Security
Equity Fund, which resolutions are provided in their entirety as follows:

        WHEREAS,  the Board of  Directors  has  approved  the  establishment  of
     fifteen new series of common  stock of Security  Equity Fund in addition to
     the twelve  separate  series of common stock  presently  issued by the fund
     designated  as Equity  Series A, Equity  Series B, Global  Series A, Global
     Series B, Asset  Allocation  Series A, Asset  Allocation  Series B,  Social
     Awareness Series A, Social Awareness Series B, Value Series A, Value Series
     B, Small Company Series A and Small Company Series B;

        WHEREAS,  the Board of Directors desires to authorize the issuance of an
     indefinite  number of shares of capital  stock of each of the  twenty-seven
     series of common stock of the corporation.

        NOW,  THEREFORE,  BE IT RESOLVED,  that, the officers of the corporation
     are hereby  directed and authorized to establish  fifteen new series of the
     Security  Equity Fund designated as Equity Series C, Global Series C, Asset
     Allocation  Series C,  Social  Awareness  Series C,  Value  Series C, Small
     Company  Series C,  Enhanced  Index  Series  A,  Enhanced  Index  Series B,
     Enhanced Index Series C, International  Series A,  International  Series B,
     International  Series C,  Select 25 Series A, Select 25 Series B and Select
     25 Series C.

        FURTHER  RESOLVED,  that,  the  officers of the  corporation  are hereby
     directed and  authorized to issue an  indefinite  number of $0.25 par value
     shares of capital stock of each series of the corporation, which consist of
     Equity  Series A, Equity Series B, Equity Series C, Global Series A, Global
     Series B,  Global  Series C, Asset  Allocation  Series A, Asset  Allocation
     Series B, Asset  Allocation  Series C,  Social  Awareness  Series A, Social
     Awareness Series B, Social Awareness Series C, Value Series A, Value Series
     B, Value Series C, Small Company  Series A, Small  Company  Series B, Small
     Company  Series C,  Enhanced  Index  Series  A,  Enhanced  Index  Series B,
     Enhanced Index Series C, International  Series A,  International  Series B,
     International  Series C,  Select 25 Series A, Select 25 Series B and Select
     25 Series C.

        FURTHER  RESOLVED,  that,  the  preferences,   rights,   privileges  and
     restrictions  of the shares of each of the series of  Security  Equity Fund
     shall be as follows.

1.   Except as set forth below and as may be hereafter  established by the Board
     of Directors of the corporation all shares of the  corporation,  regardless
     of series, shall be equal.

2.   At all meetings of stockholders,  each stockholder of the corporation shall
     be entitled to one vote in person or by proxy on each matter submitted to a
     vote at such meeting for each share of common stock  standing in his or her
     name on the books of the corporation on the date,  fixed in accordance with
     the bylaws,  for  determination  of  stockholders  entitled to vote at such
     meeting.  At all elections of directors each stockholder  shall be entitled
     to as many votes as shall equal the number of shares of stock multiplied by
     the number of directors  to be elected,  and he or she may cast all of such
     votes for a single  director or may distribute  them among the number to be
     voted  for,  or  any  two  or  more  of  them  as he or she  may  see  fit.
     Notwithstanding  the  foregoing,  (i) if  any  matter is  submitted  to the
     stockholders  which does not affect the interests of all series,  then only
     stockholders  of the affected  series shall be entitled to vote and (ii) in
     the event the Investment Company Act of 1940, as amended,  or the rules and
     regulations  promulgated  thereunder  shall  require a greater or different
     vote  than  would  otherwise  be  required  herein  or by the  Articles  of
     Incorporation  of  the  corporation,   such  greater  or  different  voting
     requirement shall also be satisfied.

3.   (a) The  corporation  shall  redeem  any of its  shares  for  which  it has
         received  payment in full that may be presented to the  corporation  on
         any date after the issue date of any such shares at the net asset value
         thereof,  such  redemption  and the valuation and payment in connection
         therewith  to  be  made  in  compliance  with  the  provisions  of  the
         Investment   Company  Act  of  1940  and  the  Rules  and   Regulations
         promulgated  thereunder  and with the  Rules  of Fair  Practice  of the
         National Association of Securities Dealers,  Inc., as from time to time
         amended.

     (b) From and after the close of  business  on the day when the  shares  are
         properly  tendered for repurchase the owner shall, with respect of said
         shares,  cease to be a stockholder  of the  corporation  and shall have
         only the right to receive the repurchase  price in accordance  with the
         provisions  hereof.  The  shares so  repurchased  may,  as the Board of
         Directors  determines,  be held in the treasury of the  corporation and
         may be resold,  or, if the laws of Kansas shall permit, may be retired.
         Repurchase of shares is conditional  upon the corporation  having funds
         or property legally available therefor.

4.   The  corporation,  pursuant to a resolution  by the Board of Directors  and
     without the vote or consent of stockholders of the corporation,  shall have
     the right to redeem at net asset  value all shares of capital  stock of the
     corporation  in  any  stockholder  account  in  which  there  has  been  no
     investment (other than the reinvestment of income dividend or capital gains
     distributions) for at least six months and in which there are fewer than 25
     shares or such fewer shares as shall be specified in such resolution.  Such
     resolution  shall set forth that  redemption of shares in such accounts has
     been  determined to be in the economic best interests of the corporation or
     necessary  to reduce  disproportionately  burdensome  expenses in servicing
     stockholder accounts. Such resolution shall provide that prior notice of at
     least six months shall be given to a stockholder  before such redemption of
     shares,  and that the  stockholder  will have six  months  (or such  longer
     period as specified in the resolution) from the date of the notice to avoid
     such redemption by increasing his or her account to at least 25 shares,  or
     such fewer shares as is specified in the resolution.

5.   All shares of the corporation, upon issuance and sale, shall be fully paid,
     nonassessable   and  redeemable.   Within  the  respective  series  of  the
     corporation,  all shares have equal voting,  participation  and liquidation
     rights, but have no subscription or preemptive rights.

6.   (a) Outstanding  shares  of  Equity  Series A,  B and C shall  represent  a
         stockholder  interest  in a  particular  fund  of  assets  held  by the
         corporation  which fund shall be invested and  reinvested in accordance
         with policies and objectives  established by the Board of Directors for
         these  series.  Outstanding  shares of Global  Series A,  B and C shall
         represent a stockholder interest in a particular fund of assets held by
         the  corporation  which  fund  shall  be  invested  and  reinvested  in
         accordance  with policies and  objectives  established  by the Board of
         Directors  for these  series.  Outstanding  shares of Asset  Allocation
         Series A,  B  and  C  shall  represent  a  stockholder  interest  in  a
         particular fund of assets held by the  corporation  which fund shall be
         invested and  reinvested  in accordance  with  policies and  objectives
         established  by the Board of Directors  for these  series.  Outstanding
         shares  of  Social  Awareness  Series  A,  B and C  shall  represent  a
         stockholder  interest  in a  particular  fund  of  assets  held  by the
         corporation  which fund shall be invested and  reinvested in accordance
         with policies and objectives  established by the Board of Directors for
         these  Series.  Outstanding  shares of  Values  Series A, B and C shall
         represent a stockholder interest in a particular fund of assets held by
         the  corporation  which  fund  shall  be  invested  and  reinvested  in
         accordance  with policies and  objectives  established  by the Board of
         Directors for these Series.  Outstanding shares of Small Company Series
         A, B and C shall represent a stockholder  interest in a particular fund
         of assets  held by the  corporation  which fund shall be  invested  and
         reinvested in accordance  with policies and  objectives  established by
         the Board of Directors for these Series. Outstanding shares of Enhanced
         Index  Series A, B and C shall  represent a  stockholder  interest in a
         particular fund of assets held by the  corporation  which fund shall be
         invested and  reinvested  in accordance  with  policies and  objectives
         established  by the Board of Directors  for these  series.  Outstanding
         shares of  International  Series A, B and C shall repsent a stockholder
         interest in a particular fund of assets held by the  corporation  which
         fund shall be invested and  reinvested in accordance  with policies and
         objectives  established  by the Board of  Directors  for these  Series.
         Outstanding  shares of Select  25 Series A, B and C shall  represent  a
         stockholder  interest  in a  particular  fund  of  assets  held  by the
         corporation  which fund shall be invested and  reinvested in accordance
         with policies and objectives  established by the Board of Directors for
         these Series.

     (b) All cash and other property  received by the corporation  from the sale
         of shares of the Equity  Series A, B and C,  Global  Series A, B and C,
         Asset Allocation Series A, B and C, Social Awareness Series A, B and C,
         Value  Series A, B and C,  Small  Company  Series A, B and C,  Enhanced
         Index Series A, B and C, International Series A, B and C, and Select 25
         Series A, B and C, respectively, all securities and other property held
         as a result of the investment and  reinvestment  of such cash and other
         property,  all revenues and income  received or receivable with respect
         to such cash, other property,  investments and  reinvestments,  and all
         proceeds  derived  from  the  sale,  exchange,   liquidation  or  other
         disposition of any of the  foregoing,  shall be allocated to the Equity
         Series A, B and C, Global Series A, B and C, Asset Allocation Series A,
         B and C, Social  Awareness  Series A, B and C, Value Series A, B and C,
         Small  Company  Series A, B and C,  Enhanced  Index  Series A, B and C,
         International  Series  A, B and C or  Select  25  Series A, B and C, to
         which they relate and held for the benefit of the  stockholders  owning
         shares of such series.

     (c) All losses,  liabilities  and  expenses of the  corporation  (including
         accrued  liabilities  and  expenses  and such  reserves as the Board of
         Directors may determine are appropriate) shall be allocated and charged
         to the series to which such loss,  liability or expense relates.  Where
         any loss,  liability  or expense  relates to more than one series,  the
         Board of Directors shall allocate the same between or among such series
         pro rata based on the  respective net asset values of such series or on
         such other basis as the Board of Directors deems appropriate.

     (d) All  allocations  made  hereunder  by the Board of  Directors  shall be
         conclusive and binding upon all stockholders and upon the corporation.

7.   Each share of stock of a series  shall have the same  preferences,  rights,
     privileges  and  restrictions  as each other share of stock of that series.
     Each fractional share of stock of a series  proportionately  shall have the
     same preferences, rights, privileges and restrictions as a whole share.

8.   Dividends  may be paid when,  as and if declared by the Board of  Directors
     out of funds legally available therefor. Shares of Equity Series A, B and C
     represent a stockholder interest in a particular fund of assets held by the
     corporation  and,  accordingly,  dividends shall be calculated and declared
     for these series in the same manner, at the same time, on the same day, and
     shall be paid at the same dividend  rate except that expenses  attributable
     to a  particular  series  and  payments  made  pursuant  to a 12b-1 Plan or
     Shareholder Services Plan shall be borne exclusively by the affected Equity
     Series. Stockholders of the Equity Series shall share in dividends declared
     and paid with  respect to such series pro rata based on their  ownership of
     shares  of such  series.  Shares of Global  Series A, B and C  represent  a
     stockholder interest in a particular fund of assets held by the corporation
     and,  accordingly,  dividends  shall be  calculated  and declared for these
     series in the same manner,  at the same time, on the same day, and shall be
     paid at the same  dividend  rate except  that  expenses  attributable  to a
     particular series and payments made pursuant to a 12b-1 Plan or Shareholder
     Services Plan shall be borne  exclusively  by the affected  Global  Series.
     Stockholders  of the Global  Series shall share in  dividends  declared and
     paid with  respect  to such  series pro rata  based on their  ownership  of
     shares  of such  series.  Shares  of  Asset  Allocation  Series A,  B and C
     represent a stockholder interest in a particular fund of assets held by the
     corporation  and,  accordingly,  dividends shall be calculated and declared
     for these series in the same manner, at the same time, on the same day, and
     shall be paid at the same dividend rate, except that expenses  attributable
     to a  particular  series  and  payments  made  pursuant  to a 12b-1 Plan or
     Shareholder  Services Plan shall be borne exclusively by the affected Asset
     Allocation Series.  Stockholders of the Asset Allocation Series shall share
     in  dividends  declared and paid with respect to such series pro rata based
     on their  ownership  of shares of such series.  Shares of Social  Awareness
     Series A,  B and C represent a stockholder interest in a particular fund of
     assets  held  by the  corporation  and,  accordingly,  dividends  shall  be
     calculated  and declared  for these series in the same manner,  at the same
     time, on the same day, and shall be paid at the same dividend rate,  except
     that  expenses  attributable  to a  particular  series  and  payments  made
     pursuant  to a 12b-1  Plan or  Shareholder  Services  Plan  shall  be borne
     exclusively by the affected Social  Awareness  Series.  Stockholders of the
     Social  Awareness  Series shall share in  dividends  declared and paid with
     respect to such series pro rata based on their  ownership of shares of such
     series.  Shares of Value Series A, B and C represent a stockholder interest
     in a particular  fund of assets held by the corporation  and,  accordingly,
     dividends  shall be  calculated  and  declared for these series in the same
     manner,  at the same time,  on the same day,  and shall be paid at the same
     dividend rate, except that expenses attributable to a particular series and
     payments made pursuant to a 12b-1 Plan or  Shareholder  Services Plan shall
     be borne  exclusively  by the affected  Value Series.  Stockholders  of the
     Value  Series  shall share in  dividends  declared and paid with respect to
     such  series pro rata based on their  ownership  of shares of such  series.
     Shares of Small Company Series A, B and C represent a stockholder  interest
     in a particular  fund of assets held by the corporation  and,  accordingly,
     dividends  shall be  calculated  and  declared for these series in the same
     manner,  at the same time,  on the same day,  and shall be paid at the same
     dividend rate, except that expenses attributable to a particular series and
     payments made pursuant to a 12b-1 Plan or  Shareholder  Services Plan shall
     be borne exclusively by the affected Small Company Series.  Stockholders of
     the Small  Company  Series shall share in dividends  declared and paid with
     respect to such series pro rata based on their  ownership of shares of such
     series.  Shares of Enhanced Index Series A, B and C represent a stockholder
     interest  in a  particular  fund of  assets  held by the  corporation  and,
     accordingly, dividends shall be calculated and declared for these series in
     the same  manner,  at the same time,  on the same day, and shall be paid at
     the same dividend rate,  except that expenses  attributable to a particular
     series and payments made pursuant to a 12b-1 Plan or  Shareholder  Services
     Plan shall be borne  exclusively  by the affected  Enhanced  Index  Series.
     Stockholders of the Enhanced Index Series shall share in dividends declared
     and paid with  respect to such series pro rata based on their  ownership of
     shares of such series.  Shares of International Series A, B and C represent
     a  stockholder  interest  in a  particular  fund  of  assets  held  by  the
     corporation  and,  accordingly,  dividends shall be calculated and declared
     for these series in the same manner, at the same time, on the same day, and
     shall be paid at the same dividend rate, except that expenses  attributable
     to a  particular  series  and  payments  made  pursuant  to a 12b-1 Plan or
     Shareholder  Services  Plan  shall be  borne  exclusively  by the  affected
     International Series.  Stockholders of the International Series shall share
     in  dividends  declared and paid with respect to such series pro rata based
     on their ownership of shares of such series.  Shares of Select 25 Series A,
     B and C represent a  stockholder  interest in a  particular  fund of assets
     held by the corporation and, accordingly, dividends shall be calculated and
     declared for these series in the same manner, at the same time, on the same
     day,  and shall be paid at the same  dividend  rate,  except that  expenses
     attributable  to a particular  series and payments made pursuant to a 12b-1
     Plan or  Shareholder  Services  Plan  shall  be  borne  exclusively  by the
     affected Select 25 Series. Stockholders of the Select 25 Series shall share
     in  dividends  declared and paid with respect to such series pro rata based
     on their  ownership  of  shares  of such  series.  Whenever  dividends  are
     declared and paid with respect to the Equity  Series A, B and C, the Global
     Series  A, B and C, the  Asset  Allocation  Series  A, B and C, the  Social
     Awareness Series A, B and C, the Value Series A, B and C, the Small Company
     Series A, B and C, the Enhanced Index Series A, B and C, the  International
     Series  A, B and C, or the  Select 25  Series  A, B and C, the  holders  of
     shares of the other series shall have no rights in or to such dividends.

9.   In the event of liquidation,  stockholders of each series shall be entitled
     to share in the assets of the corporation that are allocated to such series
     and that are available for distribution to the stockholders of such series.
     Liquidating  distributions shall be made to the stockholders of each series
     pro rata based on their share ownership of such series.

10.  On the eighth anniversary of the purchase of shares of the Equity Series B,
     the Global Series B,  the Asset  Allocation  Series B, the Social Awareness
     Series B, the Value  Series B, the  Small  Company  Series B, the  Enhanced
     Index Series B, the International Series B or the Select 25 Series B, those
     shares (except those  purchased  through the  reinvestment of dividends and
     other distributions) shall automatically convert to Equity Series A, Global
     Series A,  Asset  Allocation  Series A,  Social  Awareness  Series A, Value
     Series A, Small Company  Series A,  Enhanced Index Series A,  International
     Series A or Select 25 Series A shares  respectively,  at the  relative  net
     asset  values of each of the series  without  the  imposition  of any sales
     load, fee or other charge. All shares in a stockholder's  account that were
     purchased  through the  reinvestment  of dividends and other  distributions
     paid with  respect to Series B  shares will be  considered  to be held in a
     separate  sub-account.  Each time Series B shares are converted to Series A
     shares,  a pro rata portion of the Series B  shares held in the sub-account
     will also convert to Series A shares.

IN WITNESS  WHEREOF,  we have hereunto set our hands and affixed the seal of the
corporation this 27th day of January, 1999.

                                                JAMES R. SCHMANK
                                                --------------------------------
                                                James R. Schmank, Vice President


                                                AMY J. LEE
                                                --------------------------------
                                                Amy J. Lee, Secretary
STATE OF KANSAS  )
                 ) ss.
COUNTY OF SHAWNEE)

Be it remembered,  that before me Jana R. Selley, a Notary Public in and for the
County and State aforesaid,  came James R. Schmank,  Vice President,  and Amy J.
Lee, Secretary, of Security Equity Fund, a Kansas corporation,  personally known
to me to be the persons who  executed  the  foregoing  instrument  of writing as
President and Secretary,  respectively,  and duly  acknowledged the execution of
the same this 27th day of January, 1999.


                                                JANA R. SELLEY
                                                --------------------------------
                                                Notary Public

My commission expires:  June 14, 2000

                       AMENDED CERTIFICATE OF DESIGNATION
                                CHANGING NAME OF
                                 SERIES OF STOCK
                                       OF
                              SECURITY EQUITY FUND


STATE OF KANSAS  )
                 ) ss.
COUNTY OF SHAWNEE)

We, James R. Schmank,  Vice President,  and Amy J. Lee,  Secretary,  of Security
Equity Fund, a corporation organized and existing under the laws of the State of
Kansas,  and whose  registered  office is Security  Benefit Life  Building,  700
Harrison Street, Topeka, Shawnee County, Kansas, do hereby certify that pursuant
to authority expressly vested in the Board of Directors by the provisions of the
corporation's  Articles  of  Incorporation,  the  Board  of  Directors  of  said
corporation  at a meeting duly  convened  and held on the 7th day of May,  1999,
adopted  resolutions  changing  the name of Asset  Allocation  Series  A,  Asset
Allocation  Series B and Asset  Allocation  Series C, existing  series of common
stock of Security Equity Fund, which  resolutions are provided in their entirety
as follows:

     WHEREAS,  the Board of  Directors  has  approved  the  change in name of an
     existing series of common stock, from Asset Allocation Series A, B and C to
     Total Return Series A, B and C to more  accurately  reflect the  investment
     objectives of the series;

     WHEREAS,  there  are  no  changes  in  the  voting  powers,   designations,
     preferences and relative, participating,  optional or other rights, if any,
     or the qualifications,  limitations or restrictions of the series requiring
     stockholder approval;

     NOW, THEREFORE,  BE IT RESOLVED,  that, the name of Asset Allocation Series
     A, Asset  Allocation  Series B and Asset  Allocation  Series C of  Security
     Equity Fund is hereby changed to Total Return Series A, Total Return Series
     B and Total Return Series C, respectively;

     FURTHER RESOLVED, that, the appropriate officers of the corporation be, and
     they  hereby  are,  authorized  and  directed to take such action as may be
     necessary under the laws of the State of Kansas or as they deem appropriate
     to cause the foregoing resolutions to become effective.

IN WITNESS  WHEREOF,  we have hereunto set our hands and affixed the seal of the
corporation this 7th day of May, 1999.

                                                JAMES R. SCHMANK
                                                --------------------------------
                                                James R. Schmank, Vice President


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

STATE OF KANSAS  )
                 ) ss.
COUNTY OF SHAWNEE)

Be it remembered,  that before me Annette E. Cripps,  a Notary Public in and for
the County and State aforesaid,  came James R. Schmank, Vice President,  and Amy
J. Lee,  Secretary,  of Security Equity Fund, a Kansas  corporation,  personally
known to me to be the persons who executed the  foregoing  instrument of writing
as President and Secretary, respectively, and duly acknowledged the execution of
the same this 7th day of May, 1999.

                                                ANNETTE E. CRIPPS
                                                --------------------------------
                                                Notary Public

My commission expires:  7/8/2001

                          CERTIFICATE OF DESIGNATION OF
                       SERIES AND CLASSES OF COMMON STOCK
                                       OF
                              SECURITY EQUITY FUND


STATE OF KANSAS  )
                 ) ss.
COUNTY OF SHAWNEE)

We, James R. Schmank,  President,  and Amy J. Lee, Secretary, of Security Equity
Fund,  a  corporation  organized  and  existing  under  the laws of the State of
Kansas,  and whose  registered  office is Security  Benefit Life  Building,  700
Harrison Street, Topeka, Shawnee County, Kansas, do hereby certify that pursuant
to authority expressly vested in the Board of Directors by the provisions of the
corporation's  Articles  of  Incorporation,  the  Board  of  Directors  of  said
corporation at a meeting duly convened and held on the 4th day of February 2000,
adopted  resolutions  establishing six new series of common stock in addition to
those  twenty-seven  series  of  common  stock  currently  being  issued  by the
corporation.  Resolutions  were also adopted which  reaffirmed the  preferences,
rights,  privileges and restrictions of the separate series of stock of Security
Equity Fund, which resolutions are provided in their entirety as follows:

   WHEREAS,  the Board of Directors has approved the establishment of six new
   series  of  common  stock  of  Security  Equity  Fund in  addition  to the
   twenty-seven  separate series of common stock presently issued by the fund
   designated  as Equity  Series A, Equity  Series B, Equity Series C, Global
   Series A, Global  Series B, Global  Series C, Total Return Series A, Total
   Return Series B, Total Return Series C, Social  Awareness Series A, Social
   Awareness  Series B,  Social  Awareness  Series C,  Value  Series A, Value
   Series B, Value Series C, Small Company  Series A, Small Company Series B,
   Small Company  Series C, Enhanced Index Series A, Enhanced Index Series B,
   Enhanced Index Series C, International  Series A, International  Series B,
   International  Series C, Select 25 Series A, Select 25 Series B, Select 25
   Series C;

   WHEREAS,  the Board of Directors  desires to authorize  the issuance of an
   indefinite  number  of shares of  capital  stock of each the  thirty-three
   series of common stock of Security Equity Fund;

   NOW, THEREFORE, BE IT RESOLVED,  that, the officers of the corporation are
   hereby directed and authorized to establish six new series of the Security
   Equity  Fund  designated  as Large Cap  Growth  Series A, Large Cap Growth
   Series B,  Large Cap  Growth  Series C,  Technology  Series A,  Technology
   Series B, and Technology Series C.

   FURTHER  RESOLVED,  that,  the  officers  of the  corporation  are  hereby
   directed and  authorized to issue an indefinite  number of $0.25 par value
   shares of capital stock of each series of the  corporation,  which consist
   of Equity  Series A, Equity  Series B, Equity  Series C, Global  Series A,
   Global  Series B, Global  Series C, Total  Return  Series A, Total  Return
   Series  B,  Total  Return  Series C,  Social  Awareness  Series A,  Social
   Awareness  Series B,  Social  Awareness  Series C,  Value  Series A, Value
   Series B, Value Series C, Small Company  Series A, Small Company Series B,
   Small Company  Series C, Enhanced Index Series A, Enhanced Index Series B,
   Enhanced Index Series C, International  Series A, International  Series B,
   International  Series C, Select 25 Series A, Select 25 Series B, Select 25
   Series C, Large Cap Growth  Series A, Large Cap Growth Series B, Large Cap
   Growth Series C, Technology  Series A, Technology Series B, and Technology
   Series C.

   FURTHER   RESOLVED,   that,  the  preferences,   rights,   privileges  and
   restrictions  of the shares of each of the series of Security  Equity Fund
   shall be as set forth in the minutes of the  November  6, 1998  meeting of
   this  Board  of  Directors,  which  preferences,  rights,  privileges  and
   restrictions are hereby reaffirmed into the minutes of this meeting.

   FURTHER  RESOLVED,  that, the appropriate  officers of the Corporation be,
   and they hereby are, authorized and directed to take such action as may be
   necessary  under  the  laws  of  the  State  of  Kansas  or as  they  deem
   appropriate to cause the foregoing resolutions to become effective.

IN WITNESS  WHEREOF,  we have hereunto set our hands and affixed the seal of the
corporation this 1st day of May, 2000.

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

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

STATE OF KANSAS  )
                 ) ss.
COUNTY OF SHAWNEE)

Be it remembered,  that before me Marcia J. Johnson,  a Notary Public in and for
the County and State  aforesaid,  came James R. Schmank,  President,  and Amy J.
Lee, Secretary, of Security Equity Fund, a Kansas corporation,  personally known
to me to be the persons who  executed  the  foregoing  instrument  of writing as
President and Secretary,  respectively,  and duly  acknowledged the execution of
the same this 1st day of May, 2000.

                                                 MARCIA J. JOHNSON
                                                 -------------------------------
                                                 Notary Public

My commission expires:  March 23, 2001

                      AMENDED CERTIFICATE OF DESIGNATION
                               CHANGING NAME OF
                               SERIES OF STOCK
                                      OF
                             SECURITY EQUITY FUND


STATE OF KANSAS  )
                 ) ss.
COUNTY OF SHAWNEE)

We, James R. Schmank,  Vice President,  and Amy J. Lee,  Secretary,  of Security
Equity Fund, a corporation organized and existing under the laws of the State of
Kansas,  and whose  registered  office is Security  Benefit Life  Building,  700
Harrison Street, Topeka, Shawnee County, Kansas, do hereby certify that pursuant
to authority expressly vested in the Board of Directors by the provisions of the
corporation's  Articles  of  Incorporation,  the  Board  of  Directors  of  said
corporation  at a meeting  duly  convened  and held on the 4th day of  February,
2000,  adopted  resolutions  changing the name of Small Company  Series A, Small
Company  Series B, Small  Company  Series C, Value Series A, Value Series B, and
Value Series C, existing series of common stock of Security  Equity Fund,  which
resolutions are provided in their entirety as follows:

   WHEREAS,  the Board of Directors of Security Equity Fund desires to change
   the name of its existing series of common stock, from Small Company Series
   A, B and C to Small Cap Growth Series A, B and C and Value Series A, B and
   C to Mid Cap  Value  Series  A, B and C to  more  accurately  reflect  the
   investment objective of the series;

   WHEREAS,  there  are  no  changes  in  the  voting  powers,  designations,
   preferences and relative, participating, optional or other rights, if any,
   or the qualifications, limitations or restrictions of the series requiring
   stockholder approval;

   NOW, THEREFORE, BE IT RESOLVED,  that, the name of Small Company Series A,
   Small Company Series B and Small Company Series C of Security  Equity Fund
   is hereby  changed to Small Cap Growth Series A, Small Cap Growth Series B
   and Small Cap  Growth  Series C,  respectively  and Value  Series A, Value
   Series B and Value  Series C is hereby  changed to Mid Cap Value Series A,
   Mid Cap Value Series B and Mid Cap Value Series C, respectively;

   FURTHER  RESOLVED,  that the appropriate  officers of Security Equity Fund
   be, and they hereby are,  authorized  and  directed to take such action as
   may be  necessary  under  the laws of the  State of Kansas or as they deem
   appropriate  to cause  the  foregoing  resolutions  to  become  effective,
   including  filing an amended  certificate of  designation  with the Kansas
   Secretary of State's Office.

IN WITNESS  WHEREOF,  we have hereunto set our hands and affixed the seal of the
corporation this 1st day of May, 2000.

                                                JAMES R. SCHMANK
                                                --------------------------------
                                                James R. Schmank, Vice President

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

STATE OF KANSAS  )
                 ) ss.
COUNTY OF SHAWNEE)

Be it remembered,  that before me Marcia J. Johnson,  a Notary Public in and for
the County and State aforesaid,  came James R. Schmank, Vice President,  and Amy
J. Lee,  Secretary,  of Security Equity Fund, a Kansas  corporation,  personally
known to me to be the persons who executed the  foregoing  instrument of writing
as President and Secretary, respectively, and duly acknowledged the execution of
the same this 1st day of May, 2000.

                                                MARCIA J. JOHNSON
                                                --------------------------------
                                                Notary Public

My commission expires:  March 23, 2001

                          CERTIFICATE OF DESIGNATION OF
                       SERIES AND CLASSES OF COMMON STOCK
                                       OF
                              SECURITY EQUITY FUND


STATE OF KANSAS  )
                 ) ss.
COUNTY OF SHAWNEE)

We, James R. Schmank,  President,  and Amy J. Lee, Secretary, of Security Equity
Fund,  a  corporation  organized  and  existing  under  the laws of the State of
Kansas,  and whose  registered  office is Security  Benefit Life  Building,  700
Harrison Street, Topeka, Shawnee County, Kansas, do hereby certify that pursuant
to authority expressly vested in the Board of Directors by the provisions of the
corporation's  Articles  of  Incorporation,  the  Board  of  Directors  of  said
corporation  at a meeting duly convened and held on the 21st day of July,  2000,
adopted  resolutions  establishing eleven new series of common stock in addition
to those  series of common  stock  currently  being  issued by the  corporation.
Resolutions  were  also  adopted  which  reaffirmed  the  preferences,   rights,
privileges and  restrictions  of the separate series of stock of Security Equity
Fund, which resolutions are provided in their entirety as follows:

   WHEREAS,  the Board of Directors has approved the  establishment of eleven
   new series of common  stock of  Security  Equity  Fund in  addition to the
   separate series of common stock presently issued by the corporation;

   WHEREAS, Security Equity Fund presently issues its shares in the following
   Series: Equity Series A, B, C and S ("Equity Fund"), Global Series A, B, C
   and S ("Global  Fund"),  Total Return Series A, B, C and S ("Total  Return
   Fund"),  Social Awareness Series A, B, C and S ("Social  Awareness Fund"),
   Mid Cap  Value  Series A, B, C and S ("Mid  Cap  Value  Fund"),  Small Cap
   Growth  Series A, B, C and S ("Small  Cap Growth  Fund"),  Enhanced  Index
   Series A, B, C and S ("Enhanced Index Fund"), International Series A, B, C
   and S ("International  Fund"),  Select 25 Series A, B, C and S ("Select 25
   Fund"),  Large Cap Growth Series A, B, C and S ("Large Cap Growth  Fund"),
   and Technology Series A, B, C and S ("Technology  Fund") (each referred to
   herein as a "Fund" and collectively the "Funds"); and

   WHEREAS,  the Board of Directors  desires to authorize  the issuance of an
   indefinite  number of shares of capital stock of each of the new series of
   common stock of the corporation.

   NOW, THEREFORE, BE IT RESOLVED,  that, the officers of the corporation are
   hereby  directed  and  authorized  to  establish  eleven new series of the
   Security Equity Fund designated as Equity Series S, Global Series S, Total
   Return Series S, Social  Awareness Series S, Mid Cap Value Series S, Small
   Cap Growth  Series S,  Enhanced  Index Series S,  International  Series S,
   Select 25 Series S, Large Cap Growth Series S, and Technology Series S.

   FURTHER  RESOLVED,  that,  the  officers  of the  corporation  are  hereby
   directed and  authorized to issue an indefinite  number of $0.25 par value
   shares of capital stock of each new series of the corporation.

   FURTHER   RESOLVED,   that,  the  preferences,   rights,   privileges  and
   restrictions  of the shares of each of the series of Security  Equity Fund
   shall be as follows:

    1.  Except as set forth below and as may be hereafter  established by the
        Board of Directors of the corporation all shares of the  corporation,
        regardless of series, shall be equal.

    2.  At all meetings of stockholders,  each stockholder of the corporation
        shall be  entitled  to one vote in person or by proxy on each  matter
        submitted  to a vote at such  meeting for each share of common  stock
        standing  in his or her name on the books of the  corporation  on the
        date,  fixed in  accordance  with the bylaws,  for  determination  of
        stockholders  entitled to vote at such  meeting.  At all elections of
        directors  each  stockholder  shall be  entitled  to as many votes as
        shall equal the number of shares of stock multiplied by the number of
        directors to be elected, and he or she may cast all of such votes for
        a single director or may distribute them among the number to be voted
        for,  or  any  two  or  more  of  them  as he or  she  may  see  fit.
        Notwithstanding the foregoing,  (i) if any matter is submitted to the
        stockholders which does not affect the interests of all series,  then
        only  stockholders  of the affected  series shall be entitled to vote
        and (ii) in the event the Investment Company Act of 1940, as amended,
        or the rules and regulations  promulgated  thereunder shall require a
        greater or different vote than would  otherwise be required herein or
        by the Articles of Incorporation of the corporation,  such greater or
        different voting requirement shall also be satisfied.

    3.  (a)  The corporation  shall redeem any of its shares for which it has
             received   payment  in  full  that  may  be   presented  to  the
             corporation  on any date after the issue date of any such shares
             at  the  net  asset  value  thereof,  such  redemption  and  the
             valuation  and  payment in  connection  therewith  to be made in
             compliance with the provisions of the Investment  Company Act of
             1940 and the Rules and  Regulations  promulgated  thereunder and
             with the NASD Conduct Rules, as from time to time amended.

        (b)  From and after the close of  business on the day when the shares
             are properly  tendered  for  repurchase  the owner  shall,  with
             respect  of  said  shares,  cease  to be a  stockholder  of  the
             corporation  and  shall  have  only  the  right to  receive  the
             repurchase price in accordance with the provisions  hereof.  The
             shares so repurchased may, as the Board of Directors determines,
             be held in the  treasury of the  corporation  and may be resold,
             or,  if the  laws  of  Kansas  shall  permit,  may  be  retired.
             Repurchase of shares is conditional upon the corporation  having
             funds or property legally available therefor.

    4.  The  corporation,  pursuant to a resolution by the Board of Directors
        and without the vote or consent of stockholders  of the  corporation,
        shall  have the  right to redeem  at net  asset  value all  shares of
        capital stock of the corporation in any stockholder  account in which
        there has been no investment  (other than the  reinvestment of income
        dividend or capital gains  distributions) for at least six months and
        in which there are fewer than 25 shares or such fewer shares as shall
        be specified in such resolution. Such resolution shall set forth that
        redemption  of shares in such  accounts has been  determined to be in
        the economic best interests of the corporation or necessary to reduce
        disproportionately   burdensome  expenses  in  servicing  stockholder
        accounts. Such resolution shall provide that prior notice of at least
        six months shall be given to a stockholder  before such redemption of
        shares, and that the stockholder will have six months (or such longer
        period as specified in the resolution) from the date of the notice to
        avoid such redemption by increasing his or her account to at least 25
        shares, or such fewer shares as is specified in the resolution.

    5.  All shares of the corporation, upon issuance and sale, shall be fully
        paid,  nonassessable and redeemable.  Within the respective series of
        the  corporation,  all shares have equal  voting,  participation  and
        liquidation rights, but have no subscription or preemptive rights.

    6.  (a)  Outstanding  shares of each Fund shall  represent a  stockholder
             interest in a particular  fund of assets held by the corporation
             which fund shall be invested and  reinvested in accordance  with
             policies and  objectives  established  by the Board of Directors
             for that series.

        (b)  All cash and other property received by the corporation from the
             sale of shares of a Fund, all securities and other property held
             as a result of the investment and  reinvestment of such cash and
             other  property,  all revenues and income received or receivable
             with  respect  to such cash,  other  property,  investments  and
             reinvestments, and all proceeds derived from the sale, exchange,
             liquidation or other disposition of any of the foregoing,  shall
             be allocated to the Fund,  to which they relate and held for the
             benefit of the stockholders owning shares of such Fund.

        (c)  All  losses,   liabilities   and  expenses  of  the  corporation
             (including accrued liabilities and expenses and such reserves as
             the Board of Directors may determine are  appropriate)  shall be
             allocated  and  charged  to  the  series  to  which  such  loss,
             liability  or  expense  relates.  Where any loss,  liability  or
             expense relates to more than one series,  the Board of Directors
             shall  allocate  the same  between or among such series pro rata
             based on the  respective  net asset  values of such series or on
             such other basis as the Board of Directors deems appropriate.

        (d)  All  allocations  made hereunder by the Board of Directors shall
             be  conclusive  and binding upon all  stockholders  and upon the
             corporation.

    7.  Each  share of stock of a  series  shall  have the same  preferences,
        rights,  privileges and  restrictions as each other share of stock of
        that   series.   Each   fractional   share   of  stock  of  a  series
        proportionately shall have the same preferences,  rights,  privileges
        and restrictions as a whole share.

    8.  Dividends  may be paid  when,  as and if  declared  by the  Board  of
        Directors out of funds legally available  therefor.  Shares of a Fund
        represent a stockholder  interest in a particular fund of assets held
        by the corporation  and,  accordingly,  dividends shall be calculated
        and declared for each series of that Fund in the same manner,  at the
        same time,  on the same day,  and shall be paid at the same  dividend
        rate except that  expenses  attributable  to a particular  series and
        payments made pursuant to a 12b-1 Plan or  Shareholder  Services Plan
        shall be borne  exclusively by the affected  series.  Stockholders of
        each Fund shall share in dividends  declared and paid with respect to
        such Fund pro rata based on their ownership of shares of such Fund.

    9.  In the event of  liquidation,  stockholders  of each series  shall be
        entitled to share in the assets of the corporation that are allocated
        to such  series  and  that  are  available  for  distribution  to the
        stockholders of such series.  Liquidating distributions shall be made
        to the  stockholders  of each  series pro rata  based on their  share
        ownership of such series.

   10.  On the eighth  anniversary  of the  purchase  of shares of the Equity
        Series B, the Global  Series B, the Total Return Series B, the Social
        Awareness  Series B, the Mid Cap Value Series B, the Small Cap Growth
        Series B, the Enhanced  Index Series B, the  International  Series B,
        the  Select  25  Series  B, the  Large  Cap  Growth  Series B and the
        Technology Series B, those shares (except those purchased through the
        reinvestment   of   dividends   and   other    distributions)   shall
        automatically  convert  to Equity  Series A,  Global  Series A, Total
        Return Series A, Social  Awareness  Series A, Mid Cap Value Series A,
        Small Cap Growth  Series A,  Enhanced  Index Series A,  International
        Series A, Select 25 Series A, Large Cap Growth Series A or Technology
        Series A shares,  respectively,  at the  relative net asset values of
        each of the series  without the  imposition of any sales load, fee or
        other  charge.  All  shares  in a  stockholder's  account  that  were
        purchased   through  the   reinvestment   of   dividends   and  other
        distributions paid with respect to Series B shares will be considered
        to be held in a separate  sub-account.  Each time Series B shares are
        converted  to Series A shares,  a pro rata  portion  of the  Series B
        shares held in the sub-account will also convert to Series A shares.

IN WITNESS  WHEREOF,  we have hereunto set our hands and affixed the seal of the
corporation this 14th day of August, 2000.

                                                JAMES R. SCHMANK
                                                --------------------------------
                                                James R. Schmank, Vice President

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

STATE OF KANSAS  )
                 ) ss.
COUNTY OF SHAWNEE)

Be it remembered,  that before me Marcia J. Johnson,  a Notary Public in and for
the County and State  aforesaid,  came James R. Schmank,  President,  and Amy J.
Lee, Secretary, of Security Equity Fund, a Kansas corporation,  personally known
to me to be the persons who  executed  the  foregoing  instrument  of writing as
President and Secretary,  respectively,  and duly  acknowledged the execution of
the same this 14th day of August, 2000.

                                                MARCIA J. JOHNSON
                                                --------------------------------
                                                Notary Public

My commission expires:  March 23, 2001

                CORPORATION CHANGE OF REGISTERED OFFICE OR AGENT


1.  Name of corporation: Security Equity Fund

2.  State of organization: Kansas

3.  The  registered  office in the state of Kansas is changed  to: One  Security
    Benefit Place, Topeka, Kansas 66636.

4.  The resident agent in Kansas is changed to: Security Benefit Group, Inc.

I declare  under  penalty of perjury  under the laws of the state of Kansas that
the foregoing is true and correct. Executed on the 22nd day of April, 2002.


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


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

                       AMENDED CERTIFICATE OF DESIGNATION
                                       OF
                              SECURITY EQUITY FUND


STATE OF KANSAS  )
                 ) ss.
COUNTY OF SHAWNEE)


We, James R. Schmank,  President,  and Amy J. Lee,  Secretary of Security Equity
Fund (the "Fund"),  a corporation  organized and existing  under the laws of the
State of Kansas,  and whose  registered  office is One Security  Benefit  Place,
Topeka,  Shawnee County, Kansas, file this Amended Certificate of Designation in
accordance with Section 17-6401 of the Kansas  Statutes  Annotated,  as amended,
and do hereby declare the following:

     WHEREAS,  the Board of Directors of Security  Equity Fund approved the
     liquidation  and  dissolution  of the Total Return  Series of the Fund
     pursuant to the Plan of Reorganization for the Series; and

     WHEREAS,  the Plan of  Reorganization  was approved by the vote of the
     holders of a majority of outstanding voting securities of Total Return
     Series of  Security  Equity  Fund at the  Fund's  special  meeting  of
     stockholders held on August 26, 2002; and

     WHEREAS,  the assets of the Total Return Series of the Security Equity
     Fund were liquidated on August 27, 2002; and

     WHEREAS, a pro rata share of the Equity Series of Security Equity Fund
     was issued to each  shareholder of record of the Series as of the date
     of liquidation;

     NOW, THEREFORE, BE IT RESOLVED,  that, there are no shares outstanding
     of Total Return Series and no shares of the Series will be issued.

     FURTHER RESOLVED,  that the officers of the Fund are hereby authorized
     to file an  Amended  Certificate  of  Designation  pursuant  to K.S.A.
     17-6401 in order to eliminate Total Return Series from Security Equity
     Fund's Articles of Incorporation.

IN  WITNESS  WHEREOF,  we have  hereunto  set our hands this 29th day of August,
2002.

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


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


STATE OF KANSAS  )
                 ) ss.
COUNTY OF SHAWNEE)

   Be it remembered,  that before me, Glenda D. Van Syoc, a Notary Public in and
for the County and State aforesaid, came JAMES R. SCHMANK, President, and AMY J.
LEE, Secretary,  of the Security Equity Fund, a Kansas  corporation,  personally
known to me to be the persons who executed the  foregoing  instrument of writing
as President and Secretary, respectively, and duly acknowledged the execution of
the same this 29th day of August, 2002.


                                                        GLENDA D. VAN SYOC
                                                  ------------------------------
                                                          Notary Public

My commission expires:  1-11-04

                                     FORM OF
                          CERTIFICATE OF DESIGNATION OF
                       SERIES AND CLASSES OF COMMON STOCK
                                       OF
                              SECURITY EQUITY FUND


STATE OF KANSAS  )
                 ) ss.
COUNTY OF SHAWNEE)

We, James R. Schmank,  President,  and Amy J. Lee, Secretary, of Security Equity
Fund,  a  corporation  organized  and  existing  under  the laws of the State of
Kansas,  and whose  registered  office is One Security  Benefit  Place,  Topeka,
Shawnee County,  Kansas, do hereby certify that pursuant to authority  expressly
vested in the Board of Directors by the provisions of the corporation's Articles
of  Incorporation,  the Board of Directors of said corporation at a meeting duly
convened  and  held  on  the  8th  day of  November  2002,  adopted  resolutions
establishing  three new series of common  stock in addition  to those  series of
common stock currently being issued by the  corporation.  Resolutions  were also
adopted which reaffirmed the preferences, rights, privileges and restrictions of
the separate  series of stock of Security  Equity Fund,  which  resolutions  are
provided in their entirety as follows:

        WHEREAS,  the Board of Directors has approved the  establishment of
     three new series of common  stock of Security  Equity Fund in addition
     to the  separate  series  of  common  stock  presently  issued  by the
     corporation; and

        WHEREAS,  Security  Equity Fund presently  issues its shares in the
     following  Series:  Equity Series A, Equity Series B, Equity Series C,
     Global Series A, Global  Series B, Global  Series C, Social  Awareness
     Series A, Social  Awareness  Series B, Social  Awareness Series C, Mid
     Cap Value  Series A, Mid Cap Value  Series B, Mid Cap Value  Series C,
     Small Cap Growth Series A, Small Cap Growth Series B, Small Cap Growth
     Series C, Enhanced  Index Series A, Enhanced  Index Series B, Enhanced
     Index  Series  C,  International  Series  A,  International  Series B,
     International Series C, Select 25 Series A, Select 25 Series B, Select
     25 Series C,  Large Cap Growth  Series A,  Large Cap Growth  Series B,
     Large Cap Growth Series C, Technology  Series A, Technology  Series B,
     and Technology Series C; and

        WHEREAS,  the Board of Directors  desires to authorize the issuance
     of an indefinite  number of shares of capital stock of each of the new
     series of common stock of the corporation.

        NOW,  THEREFORE,  BE IT  RESOLVED,  that,  the officers of Security
     Equity Fund are hereby  directed and authorized to establish three new
     series of the Security  Equity Fund  designated  as Alpha  Opportunity
     Series A, Alpha Opportunity Series B, and Alpha Opportunity Series C.

        FURTHER  RESOLVED,  that, the officers of Security  Equity Fund are
     hereby directed and authorized to issue an indefinite  number of $0.25
     par value shares of capital stock of Alpha Opportunity Series A, Alpha
     Opportunity Series B, and Alpha Opportunity Series C.

        FURTHER  RESOLVED,  that, the preferences,  rights,  privileges and
     restrictions  of the shares of each  series of  Security  Equity  Fund
     shall be as set forth in the minutes of the  November 6, 1998  meeting
     of this Board of Directors, which preferences,  rights, privileges and
     restrictions are hereby reaffirmed into the minutes of this meeting.

        FURTHER  RESOLVED,  that the  officers of Security  Equity Fund are
     hereby authorized and directed to take such action as may be necessary
     under  the laws of the  State of  Kansas  or  otherwise  as they  deem
     appropriate to cause the foregoing resolutions to become effective.

IN WITNESS  WHEREOF,  we have hereunto set our hands and affixed the seal of the
corporation this _______ day of January, 2003.


                                                  ------------------------------
                                                  James R. Schmank, President

                                                  ------------------------------
                                                  Amy J. Lee, Secretary


STATE OF KANSAS  )
                 ) ss.
COUNTY OF SHAWNEE)

Be it  remembered,  that  before  me, a Notary  Public in and for the County and
State aforesaid, came James R. Schmank, President, and Amy J. Lee, Secretary, of
Security  Equity Fund, a Kansas  corporation,  personally  known to me to be the
persons who  executed  the  foregoing  instrument  of writing as  President  and
Secretary,  respectively,  and duly  acknowledged the execution of the same this
______ day of January, 2003.

                                                  ------------------------------
                                                  Notary Public

My commission expires:

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

EX-99.D1

                  INVESTMENT MANAGEMENT AND SERVICES AGREEMENT


This  Agreement,  made and entered into this 27th day of January,  2000,  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.  SMC shall bear the expense of providing  such other
     services  to the Equity and Global  Series.  Total  Return  Series,  Social
     Awareness Series, Value Series, Small Company Series, International Series,
     Enhanced  Index  Series and Select 25 Series shall bear the expense of such
     other services and all other expenses of the Series. 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,  including  with
          respect to the Equity and Global Series, all fees and charges of third
          parties providing  services to the Fund,  whether or not such expenses
          are billed to SMC or the Fund, 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 and
                 Class C Distribution Plans.

          and, in addition  to those  expenses  set forth  above,  Total  Return
          Series,  Social Awareness Series,  Value Series, Small Company Series,
          International Series, Enhanced Index Series and Select 25 Series shall
          pay all expenses of the Series  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  Investment
          Company  Act of 1940  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.  Notwithstanding the foregoing,  SMC shall pay all expenses
          related to the initial  registration and  qualification of the Class C
          shares of Total Return Series,  Social Awareness Series, Value Series,
          Small Company Series,  International Series, Enhanced Index Series and
          Select 25  Series,  under the Blue Sky laws of the  states  where such
          class of stock is offered.

     (c)  EXPENSE CAP.  For each of the Fund's full fiscal years 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 or
          Class C  Distribution  Plans,  but  inclusive  of SMC's  compensation,
          exceeds  the amount  set forth  below (the  "Expense  Cap"),  SMC will
          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  will 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 and C shares - 2.25%
             Enhanced Index Series, Class A, B and C shares - 1.75%
             Select 25 Series, Class A, B and C shares - 1.75%

 3.  COMPENSATION OF SMC.

     (a)  As  compensation  for the  services  to be  rendered  by SMC to Equity
          Series and Global Series as provided for herein, for each of the years
          this  Agreement  is in  effect,  the Fund  shall pay SMC an annual fee
          equal to (1) 2 percent of the first $10 million of the  average  daily
          net assets, 1 1/2 percent of the next $20 million of the average daily
          net assets, and 1 percent of the remaining average daily net assets of
          the Equity  Series of the Fund for any fiscal year,  and (2) 2 percent
          of the first $70  million  of the  average  daily net assets and 1 1/2
          percent of the remaining average daily net assets of the Global Series
          of the Fund for any fiscal year.  Such fees shall be determined  daily
          and payable  monthly.  As  compensation  for the  investment  advisory
          services  to be  rendered  by SMC to Social  Awareness  Series,  Value
          Series and Small Company Series,  for each of the years this Agreement
          is in effect,  the Social  Awareness  Series,  Value  Series and Small
          Company  Series  shall each pay SMC an annual fee equal to 1% of their
          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 Total Return
          Series,  Enhanced  Index  Series  and Select 25 Series for each of the
          years this Agreement is in effect,  the Total Return Series,  Enhanced
          Index  Series  and  Select 25 Series  shall each pay SMC an annual fee
          equal to .75% of their 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 International Series,
          the International  Series shall pay SMC an annual fee equal to .05% of
          the average daily net assets of International Series, plus the greater
          of .10% of its  average  daily net  assets or (i)  $30,000 in the year
          ended  January 31, 2000;  (ii) $45,000 in the year ending  January 31,
          2001 and (iii) $60,000 thereafter. Such fees shall be calculated daily
          and payable monthly.  As compensation for the administrative  services
          to be rendered by SMC to Total Return Series, Social Awareness Series,
          Value Series,  Small Company Series,  Enhanced Index Series and Select
          25 Series,  each such Series shall pay SMC an annual fee equal to .09%
          of their  respective  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 Total Return Series,
          Social  Awareness   Series,   Value  Series,   Small  Company  Series,
          International  Series,  Enhanced  Index Series,  and Select 25 Series,
          each such Series shall pay a Maintenance  Fee of $8.00 per account,  a
          Transaction  Fee of $1.00 per account and a Dividend  Fee of $1.00 per
          account.

     (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 and Class C 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 paragraph 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 effected
          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 paragraph 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  paragraph  4. As used in this  paragraph  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  diversified  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 paragraph 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  paragraph  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 its own  accounts  or for the  accounts  of  others  for whom it 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 January 27, 2000,  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  January  27,  2002,  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 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     JOHN D. CLELAND
                                               ---------------------------------
                                        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 ADVISORY, ADMINISTRATIVE SERVICES
                          AND TRANSFER AGENCY 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.  Maintenance of Fund, General Ledger and Journal.
     b.  Preparing and recording disbursements for direct Fund expenses.
     c.  Preparing daily money transfers.
     d.  Reconciliation of all Fund bank and custodian accounts.
     e.  Assisting 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 Investment
         Company  Act of 1940  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.  Reports  to  the  Audit  Committee  of  the  Board  of  Directors,   if
         applicable.

 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 Investment  Company
         Act of 1940 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, prospectus 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 and 1933 Acts.


           SCHEDULE OF SHARE TRANSFER AND DIVIDEND DISBURSING SERVICES


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

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

 2.  Posting  address  changes  and  other  file   maintenance  for  shareholder
     accounts.

 3.  Posting 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  reconciliation's 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.  Issuing all checks and stopping and replacing lost checks.

 8.  Draft clearing services.

     a.  Maintenance of signature cards and appropriate corporate resolutions.
     b.  Comparison  of 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.  Receiving  checks  presented for payment and  liquidating  shares after
         verifying account balance.
     d.  Ordering checks in quantity specified by the Fund for the shareholder.

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

10.  Performing 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.  Answering all service related  telephone  inquiries from  shareholders  and
     others, including:

     a.  General and policy inquiries (research and resolve problems);
     b.  Fund yield inquiries;
     c.  Taking shareholder  processing requests and account maintenance changes
         by telephone as described above;
     d.  Submit pending requests to correspondence;
     e.  Monitor on-line statistical performance of unit; and
     f.  Develop 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.  Maintaining and retrieving all required past history for  shareholders  and
     provide research capabilities as follows:

     a.  Daily   monitoring  of  all  processing   activity  to  verify  back-up
         documentation;
     b.  Provide exception reports;
     c.  Microfilming; and
     d.  Storage, retrieval and archive.

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 escheat requirements.

Approved:  Fund       JOHN D. CLELAND            SMC      JAMES R. SCHMANK
               -----------------------------        ----------------------------

                                  AMENDMENT TO
                  INVESTMENT MANAGEMENT AND SERVICES AGREEMENT


WHEREAS,  Security Equity Fund (the "Fund") and Security Management Company, LLC
("SMC") are parties to an Investment  Management and Services  Agreement,  dated
January  27,  2000,  (the  "Agreement"),  under  which  SMC,  agrees to  provide
investment  research  and  advice,  general  administrative,   fund  accounting,
transfer agency and dividend  disbursing  services to the Fund in return for the
compensation specified in the Agreement;

WHEREAS,  on February 4, 2000, the Board of Directors of the Fund authorized the
Fund to offer its  common  stock in two new series  designated  as the Large Cap
Growth Series and  Technology  Series,  with each series  representing  separate
interests in a separate portfolio of securities and other assets;

WHEREAS,  on  February  4,  2000,  the Board of  Directors  of the Fund  further
authorized  the  Fund to  offer  shares  of the  Large  Cap  Growth  Series  and
Technology Series in three classes,  designated Class A shares,  Class B shares,
and Class C shares;

WHEREAS,  on February 4, 2000,  the Board of Directors of the Fund  approved the
amendment  of the  Agreement  to  provide  that SMC,  would  provide  investment
advisory and business  management  services to each class of common stock of the
Large Cap Growth  Series and  Technology  Series of the Fund under the terms and
conditions of the Agreement; and

WHEREAS,  this  amendment  to the  Agreement  is subject to the  approval of the
initial shareholder of the Large Cap Growth Series and Technology Series;

NOW,  THEREFORE  BE IT  RESOLVED,  that  the  Fund and  SMC,  hereby  amend  the
Agreement,  effective  May 1,  2000,  to provide  that SMC,  shall  provide  all
investment advisory services, general administrative,  fund accounting, transfer
agency and  dividend  disbursing  services  to the Large Cap  Growth  Series and
Technology  Series of the Fund pursuant to the terms set forth in the Agreement,
as follows.

Paragraph 1 is deleted in its entirety and the following  paragraph  inserted in
lieu thereof:

   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.  SMC shall bear the expense of  providing
       such other services to the Equity and Global Series.  All other Series of
       the Fund shall bear the  expense  of such  other  services  and all other
       expenses  of such  Series.  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.

Paragraph  2(b) shall be deleted in its  entirety  and the  following  paragraph
shall be inserted in lieu thereof:

   2.  ALLOCATION OF EXPENSES AND CHARGES.

       (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 and
                   Class C Distribution Plans;

            and, in addition to those  expenses  set forth  above,  Total Return
            Series,  Social Awareness  Series,  Mid Cap Value Series,  Small Cap
            Growth Series,  International Series,  Enhanced Index Series, Select
            25 Series,  Large Cap Growth Series, and Technology Series shall pay
            all expenses of the Series 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
            Investment  Company Act of 1940 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.

Paragraph  3(a) shall be deleted in its  entirety  and the  following  paragraph
inserted in lieu thereof:

   3.  COMPENSATION OF SMC.

       (a)  As  compensation  for the  services  to be rendered by SMC to Equity
            Series and Global  Series as provided  for  herein,  for each of the
            years this Agreement is in effect,  the Fund shall pay SMC an annual
            fee equal to (1) 2 percent of the first $10  million of the  average
            daily net  assets,  1 1/2  percent  of the next $20  million  of the
            average  daily net assets,  and 1 percent of the  remaining  average
            daily net  assets of the  Equity  Series of the Fund for any  fiscal
            year,  and (2) 2 percent  of the first $70  million  of the  average
            daily net assets and 1 1/2 percent of the  remaining  average  daily
            net  assets of the Global  Series of the Fund for any  fiscal  year.
            Such  fees  shall  be  determined  daily  and  payable  monthly.  As
            compensation for the investment  advisory services to be rendered by
            SMC to Total  Return  Series,  Enhanced  Index  Series and Select 25
            Series  for each of the years  this  Agreement  is in  effect,  such
            Series  shall  each  pay SMC an  annual  fee  equal to .75% of their
            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 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,  such Series shall each pay SMC an annual fee equal to
            1% of their 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 administrative  services to
            be rendered by SMC to the  International  Series,  the International
            Series  shall  pay SMC an annual  fee equal to .045% of the  average
            daily net assets of International  Series,  plus the greater of .10%
            of its  average  daily net assets or (i)  $45,000 in the year ending
            January 31,  2001 and (ii)  $60,000  thereafter.  Such fees shall be
            calculated  daily  and  payable  monthly.  As  compensation  for the
            administrative  services  to be  rendered  by SMC to the  Technology
            Series,  the Technology  Series shall pay SMC an annual fee equal to
            .045% of the average daily net assets of International  Series, plus
            the greater of .10% of its  average  daily net assets or (i) $30,000
            in the year ending April 30,  2001,  (ii) $45,000 in the year ending
            April 30,  2002 and (iii)  $60,000  thereafter.  Such fees  shall be
            calculated  daily  and  payable  monthly.  As  compensation  for the
            administrative  services  to be  rendered  by  SMC to  Total  Return
            Series,  Social Awareness  Series,  Mid Cap Value Series,  Small Cap
            Growth Series,  Enhanced Index Series,  Select 25 Series,  and Large
            Cap  Growth  Series,  each such  Series  shall pay SMC an annual fee
            equal to .09% of their  respective  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 other
            than Equity and Global  Series,  such Series shall pay a Maintenance
            Fee of $8.00 per account, a Transaction Fee of $1.00 per account and
            a Dividend Fee of $1.00 per account.

IN WITNESS  WHEREOF,  the parties  hereto have  executed  this  Amendment to the
Investment Management and Services Agreement this 1st day of May, 2000.


                                              SECURITY EQUITY FUND

                                              By: JOHN D. CLELAND
                                                  ------------------------------
                                                  John D. Cleland, President

ATTEST:

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

                                              SECURITY MANAGEMENT COMPANY, LLC

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

ATTEST:

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

                                   SCHEDULE A
                  INVESTMENT ADVISORY, ADMINISTRATIVE SERVICES
                          AND TRANSFER AGENCY 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.  Maintenance of Fund, General Ledger and Journal.
     b.  Preparing and recording disbursements for direct Fund expenses.
     c.  Preparing daily money transfers.
     d.  Reconciliation of all Fund bank and custodian accounts.
     e.  Assisting 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 Investment
         Company  Act of 1940  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.  Reports  to  the  Audit  Committee  of  the  Board  of  Directors,   if
         applicable.

 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 Investment  Company
         Act of 1940 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, prospectus 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 and 1933 Acts.

           SCHEDULE OF SHARE TRANSFER AND DIVIDEND DISBURSING SERVICES

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

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

 2.  Posting  address  changes  and  other  file   maintenance  for  shareholder
     accounts.

 3.  Posting 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.  Issuing all checks and stopping and replacing lost checks.

 8.  Draft clearing services.

     a.  Maintenance of signature cards and appropriate corporate resolutions.
     b.  Comparison  of 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.  Receiving  checks  presented for payment and  liquidating  shares after
         verifying account balance.
     d.  Ordering checks in quantity specified by the Fund for the shareholder.

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

10.  Performing 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.  Answering all service related  telephone  inquiries from  shareholders  and
     others, including:

     a.  General and policy inquiries (research and resolve problems);
     b.  Fund yield inquiries;
     c.  Taking shareholder  processing requests and account maintenance changes
         by telephone as described above;
     d.  Submit pending requests to correspondence;
     e.  Monitor on-line statistical performance of unit; and
     f.  Develop 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.  Maintaining and retrieving all required past history for  shareholders  and
     provide research capabilities as follows:

     a.  Daily   monitoring  of  all  processing   activity  to  verify  back-up
         documentation;
     b.  Provide exception reports;
     c.  Microfilming; and
     d.  Storage, retrieval and archive.

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 escheat requirements.


Approved:  Fund       JOHN D. CLELAND            SMC      JAMES R. SCHMANK
               -----------------------------        ----------------------------

                                  AMENDMENT TO
                  INVESTMENT MANAGEMENT AND SERVICES AGREEMENT


   WHEREAS,  Security Equity Fund (the "Fund") and Security  Management Company,
LLC ("SMC") are parties to an  Investment  Management  and  Services  Agreement,
dated January 27, 2000,  (the  "Agreement"),  under which SMC, agrees to provide
investment  research  and  advice,  general  administrative,   fund  accounting,
transfer agency and dividend  disbursing  services to the Fund in return for the
compensation specified in the Agreement;

   WHEREAS,  on July 21, 2000, the Board of Directors of the Fund authorized the
Fund to offer shares of its Series in a new class of shares  designated as Class
S shares; and

   WHEREAS,  this  amendment to the  Agreement is subject to the approval of the
initial shareholder of the Class S shares of each Series;

   NOW,  THEREFORE  BE IT  RESOLVED,  that  the Fund and SMC  hereby  amend  the
Investment Advisory Contract, effective July 21, 2000, as follows:

   Paragraph  2(b) and (c) shall be deleted in their  entirety and the following
paragraphs shall be inserted in lieu thereof:

   2.  ALLOCATION OF EXPENSES AND CHARGES.

       (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,  Total Return
            Series,  Social Awareness  Series,  Mid Cap Value Series,  Small Cap
            Growth Series,  International Series,  Enhanced Index Series, Select
            25 Series,  Large Cap Growth Series, and Technology Series shall pay
            all expenses of the Series 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
            Investment  Company Act of 1940 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.  Notwithstanding the foregoing,  SMC
            shall pay all  expenses  related  to the  initial  registration  and
            qualification  of the  Class C and  Class S shares  of Total  Return
            Series,  Social Awareness  Series,  Mid Cap Value Series,  Small Cap
            Growth Series,  International Series,  Enhanced Index Series, Select
            25 Series, Large Cap Growth Series, and Technology Series, under the
            Blue Sky laws of the states where such class of stock is offered.

       (c)  EXPENSE CAP. For each of the Fund's full fiscal years 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 will  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  will 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%

   Paragraph  3(b) shall be deleted in its entirety and the following  paragraph
inserted in lieu thereof:

   3.  COMPENSATION OF SMC.

       (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).

   IN WITNESS  WHEREOF,  the parties  hereto have executed this Amendment to the
Investment Management and Services Agreement this 21st day of July, 2000.

                                              SECURITY EQUITY FUND

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

By: AMY J. LEE
    ------------------------------
    Amy J. Lee, Secretary
                                              SECURITY MANAGEMENT COMPANY, LLC

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

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

                                   SCHEDULE A
                  INVESTMENT ADVISORY, ADMINISTRATIVE SERVICES
                          AND TRANSFER AGENCY 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.  Maintenance of Fund, General Ledger and Journal.
     b.  Preparing and recording disbursements for direct Fund expenses.
     c.  Preparing daily money transfers.
     d.  Reconciliation of all Fund bank and custodian accounts.
     e.  Assisting 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 Investment
         Company  Act of 1940  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.  Reports  to  the  Audit  Committee  of  the  Board  of  Directors,   if
         applicable.

 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 Investment  Company
         Act of 1940 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, prospectus 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 and 1933 Acts.

           SCHEDULE OF SHARE TRANSFER AND DIVIDEND DISBURSING SERVICES

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

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

 2.  Posting  address  changes  and  other  file   maintenance  for  shareholder
     accounts.

 3.  Posting 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.  Issuing all checks and stopping and replacing lost checks.

 8.  Draft clearing services.

     a.  Maintenance of signature cards and appropriate corporate resolutions.
     b.  Comparison  of 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.  Receiving  checks  presented for payment and  liquidating  shares after
         verifying account balance.
     d.  Ordering checks in quantity specified by the Fund for the shareholder.

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

10.  Performing 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.  Answering all service related  telephone  inquiries from  shareholders  and
     others, including:

     a.  General and policy inquiries (research and resolve problems);
     b.  Fund yield inquiries;
     c.  Taking shareholder  processing requests and account maintenance changes
         by telephone as described above;
     d.  Submit pending requests to correspondence;
     e.  Monitor on-line statistical performance of unit; and
     f.  Develop 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.  Maintaining and retrieving all required past history for  shareholders  and
     provide research capabilities as follows:

     a.  Daily   monitoring  of  all  processing   activity  to  verify  back-up
         documentation;
     b.  Provide exception reports;
     c.  Microfilming; and
     d.  Storage, retrieval and archive.

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 escheat requirements.


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

                                  AMENDMENT TO
                  INVESTMENT MANAGEMENT AND SERVICES AGREEMENT


WHEREAS,  Security Equity Fund (the "Fund") and Security Management Company, LLC
("SMC,  LLC") are parties to an Investment  Management  and Services  Agreement,
dated  December 8, 1988,  as amended  (the  "Agreement"),  under which SMC,  LLC
agrees to provide investment research and advice, general  administrative,  fund
accounting,  transfer  agency and  dividend  disbursing  services to the Fund in
return for the compensation specified in the Agreement;

WHEREAS,  on May 3,  2002  the  Board of  Directors  of the  Fund  approved  the
reorganization  and  liquidation  of the  Total  Return  Series  so  that it was
acquired by the Equity Series effective August 28, 2002; and

WHEREAS,  on November 8, 2002, the Board of Directors of the Fund authorized the
Fund  to  offer  its  common  stock  in a new  series  designated  as the  Alpha
Opportunity Series, in addition to its presently offered series of common stock,
with each series  representing  separate  interests  in a separate  portfolio of
securities and other assets; and

WHEREAS,  on  November  8,  2002,  the Board of  Directors  of the Fund  further
authorized  the Fund to offer  shares of the Alpha  Opportunity  Series in three
classes, designated as Class A shares, Class B shares, and Class C shares; and

WHEREAS,  on November 8, 2002,  the Board of Directors of the Fund  approved the
amendment of the  Agreement to provide  that SMC, LLC would  provide  investment
advisory and business  management  services to each class of common stock of the
Alpha  Opportunity  Series of the Fund  under the  terms and  conditions  of the
Agreement.

NOW, THEREFORE,  IT IS BY THE PARTIES HERETO AGREED that the Agreement is hereby
amended  effective  February 1, 2003, to provide that SMC, LLC shall provide all
investment advisory services, general administrative,  fund accounting, transfer
agency and dividend  disbursing  services to the Alpha Opportunity Series of the
Fund pursuant to the terms set forth in the Agreement, as follows:

   Paragraphs 3(a) and 3(b) shall be deleted in their entirety and the following
   paragraphs inserted in lieu thereof:

   3.  COMPENSATION OF SMC, LLC.

       (a)  As compensation for the investment  advisory services to be rendered
            by SMC, LLC 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, LLC 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, LLC to
            International  Series  for each of the years  this  Agreement  is in
            effect,  the  International  Series shall pay SMC, LLC 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,  LLC to Equity
            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,  LLC 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  investment  advisory
            services to be rendered by SMC, LLC to Alpha Opportunity  Series for
            each of the years this Agreement is in effect, the Alpha Opportunity
            Series  shall  pay  SMC,  LLC an  annual  fee  equal to 2.25% of its
            average  daily net assets.  Such fee shall be  calculated  daily and
            payable monthly. As compensation for the administrative  services to
            be  rendered by SMC,  LLC to Global,  International  and  Technology
            Series,  each of the  foregoing  Series shall pay SMC, LLC 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 $60,000.00. Such
            fees shall be calculated daily and payable monthly.  As compensation
            for the administrative  services to be rendered by SMC, LLC to Alpha
            Opportunity  Series, the Alpha Opportunity Series shall pay SMC, LLC
            an annual fee equal to 0.145% of its average daily net assets.  Such
            fees shall be calculated daily and payable monthly.  As compensation
            for the  administrative  services to be rendered by SMC, LLC to each
            of the other Series of the Fund, each such Series shall pay SMC, LLC
            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,
            LLC'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, LCC 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,  LLC may  count as a  shareholder
            account each person that holds a  beneficial  interest in an omnibus
            account  maintained  on  SMC,  LLC's  transfer  agency  system  by a
            third-party administrator, broker/dealer, bank, insurance company or
            other  entity;  provided  that SMC,  LLC 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, LLC 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 and Class C Distribution  Plans, but inclusive of SMC, LLC'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, LLC 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).

IN WITNESS  WHEREOF,  the parties  hereto have  executed  this  Amendment to the
Investment Management and Services Agreement this 8th day of November, 2002.

                                              SECURITY EQUITY FUND

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

ATTEST:

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

                                              SECURITY MANAGEMENT COMPANY, LLC

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

ATTEST:

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

EX-99.D3

                             SUB-ADVISORY AGREEMENT


   THIS AGREEMENT is made and entered into as of the 3rd day of September,  2002
between  SECURITY  MANAGEMENT  COMPANY,  LLC (the  "Adviser"),  a Kansas limited
liability  company,  registered  under the  Investment  Advisers Act of 1940, as
amended (the "Investment  Advisers Act"),  and RS Investment  Management LP (the
"Subadviser"),  a California limited partnership registered under the Investment
Advisers Act.

                                   WITNESSETH:

   WHEREAS,  SBL Fund and Security Equity Fund,  Kansas  corporations,  are each
registered  with the Securities and Exchange  Commission (the  "Commission")  as
open-end  management  investment  companies under the Investment  Company Act of
1940, as amended (the "Investment Company Act");

   WHEREAS,  SBL Fund is  authorized  to issue  shares of  Series X, a  separate
series of SBL Fund and Security Equity Fund is authorized to issue shares of the
Small Cap Growth Series, a separate series of Security Equity Fund (Series X and
the Small Cap Growth Series are referred to herein  individually as a "Fund" and
collectively as the "Funds");

   WHEREAS,  each of the Funds has,  pursuant to an Advisory  Agreement with the
Adviser (the  "Advisory  Agreement"),  retained the Adviser to act as investment
adviser for and to manage its assets;

   WHEREAS,  the Advisory  Agreements  permit the Adviser to delegate certain of
its duties under the Advisory Agreement to other investment advisers, subject to
the requirements of the Investment Company Act; and

   WHEREAS, the Adviser desires to retain the Subadviser as subadviser to act as
investment  adviser  for and to manage the  Funds'  respective  Investments  (as
defined below) and the Subadviser desires to render such services.

   NOW,  THEREFORE,  the Adviser and Subadviser do mutually agree and promise as
follows:

   1.  APPOINTMENT AS  SUBADVISER.  The Adviser hereby retains the Subadviser to
act as  investment  adviser for and to manage the assets of each Fund subject to
the  supervision  of the  Adviser  and the Board of  Directors  of such Fund and
subject to the terms of this Agreement;  and the Subadviser  hereby accepts such
employment.  In such  capacity,  the Subadviser  shall be  responsible  for each
Fund's Investments.

   2.  DUTIES OF SUBADVISER.

       (a)  INVESTMENTS.  The  Subadviser is hereby  authorized and directed and
   hereby agrees,  subject to the stated investment policies and restrictions of
   each Fund as set forth in such Fund's  prospectus and statement of additional
   information as currently in effect and as  supplemented  or amended from time
   to time  (collectively  referred  to  hereinafter  as the  "Prospectus")  and
   subject to the  directions  of the Adviser and such Fund's Board of Directors
   to  purchase,  hold  and  sell  investments  for the  account  of  such  Fund
   (hereinafter  "Investments")  and  to  monitor  on  a  continuous  basis  the
   performance  of such  Investments.  The  Subadviser  shall give the Funds the
   benefit of its best efforts in  rendering  its  services as  Subadviser.  The
   Subadviser  may contract  with or consult with such banks,  other  securities
   firms, brokers or other parties,  without additional expense to the Funds, as
   it may deem appropriate regarding investment advice, research and statistical
   data, clerical assistance or otherwise.

       (b)  BROKERAGE.  The Subadviser is authorized, subject to the supervision
   of the Adviser and the  respective  Fund's  Board to  establish  and maintain
   accounts on behalf of each Fund with,  and place  orders for the purchase and
   sale of each Fund's  Investments  with or through,  such persons,  brokers or
   dealers as Subadviser may select which may include,  to the extent  permitted
   by the Adviser and the respective Fund's Board, brokers or dealers affiliated
   with the Subadviser or Adviser, and negotiate  commissions to be paid on such
   transactions. The Subadviser agrees that in placing such orders for a Fund it
   shall attempt to obtain best execution, provided that, the Subadviser may, on
   behalf of such Fund,  pay brokerage  commissions  to a broker which  provides
   brokerage  and research  services to the  Subadviser  in excess of the amount
   another broker would have charged for effecting the transaction, provided (i)
   the  Subadviser  determines  in good faith that the amount is  reasonable  in
   relation to the value of the brokerage and research  services provided by the
   executing  broker in terms of the  particular  transaction or in terms of the
   Subadviser's  overall  responsibilities  with  respect  to such  Fund and the
   accounts as to which the Subadviser  exercises  investment  discretion,  (ii)
   such  payment is made in  compliance  with  Section  28(e) of the  Securities
   Exchange  Act of  1934,  as  amended,  and  any  other  applicable  laws  and
   regulations,   and  (iii)  in  the  opinion  of  the  Subadviser,  the  total
   commissions  paid by such Fund will be reasonable in relation to the benefits
   to the  Fund  over  the  long  term.  In  reaching  such  determination,  the
   Subadviser  will not be  required  to place or  attempt  to place a  specific
   dollar value on the  brokerage  and/or  research  services  provided or being
   provided by such broker.  It is recognized that the services provided by such
   brokers may be useful to the Subadviser in connection  with the  Subadviser's
   services  to other  clients.  On  occasions  when the  Subadviser  deems  the
   purchase  or sale of a security  to be in the best  interests  of the Fund as
   well as other  clients  of the  Subadviser,  the  Subadviser,  to the  extent
   permitted  by  applicable  laws and  regulations,  may, but shall be under no
   obligation  to,  aggregate the securities to be sold or purchased in order to
   obtain the most favorable price or lower brokerage  commissions and efficient
   execution.  In such event,  allocation of securities so sold or purchased, as
   well  as the  expenses  incurred  in the  transaction,  will  be  made by the
   Subadviser in the manner the  Subadviser  considers to be the most  equitable
   and consistent  with its fiduciary  obligations to the Fund or Funds involved
   and to such other clients.  The Subadviser will report on such allocations at
   the request of the Adviser,  or the respective  Fund's Board,  providing such
   information  as the number of aggregated  trades to which a Fund was a party,
   the  broker(s)  to whom  such  trades  were  directed  and the  basis  of the
   allocation for the aggregated trades.  Subject to the foregoing provisions of
   this  subsection  2(b) and at the  direction of the Adviser or the Fund,  the
   Subadviser  may also  consider  sales of the Funds' shares as a factor in the
   selection of brokers or dealers for a Fund's portfolio transactions.

       (c)  SECURITIES TRANSACTIONS. The Subadviser and any affiliated person of
   the Subadviser will not purchase securities or other instruments from or sell
   securities  or  other  instruments  to  a  Fund  ("Principal  Transactions");
   PROVIDED,  HOWEVER,  the Subadviser or an affiliated person of the Subadviser
   may enter into a Principal  Transaction with a Fund if (i) the transaction is
   permissible  under  applicable  laws  and  regulations,   including,  without
   limitation,  the Investment  Company Act and the Investment  Advisers Act and
   the rules and regulations promulgated thereunder, and (ii) the transaction or
   category  of  transactions  receives  the  express  written  approval  of the
   Adviser.

            The  Subadviser  agrees to observe  and comply with Rule 17j-1 under
   the Investment Company Act and its Code of Ethics, as the same may be amended
   from time to time. The Subadviser agrees to provide the Adviser and the Funds
   with a copy of such Code of Ethics.

       (d) BOOKS AND RECORDS. The Subadviser will maintain all books and records
   required  to be  maintained  pursuant to the  Investment  Company Act and the
   rules  and  regulations   promulgated   thereunder  solely  with  respect  to
   transactions made by it on behalf of the Funds including, without limitation,
   the books and records  required by  Subsections  (b)(1),  (5), (6), (7), (9),
   (10) and (11) and Subsection  (f) of Rule 31a-1 under the Investment  Company
   Act and shall timely furnish to the Adviser all  information  relating to the
   Subadviser's  services  hereunder  needed by the  Adviser  to keep such other
   books and records of the Funds  required  by Rule 31a-1 under the  Investment
   Company Act. The Subadviser will also preserve all such books and records for
   the periods prescribed in part (e) of Rule 31a-2 under the Investment Company
   Act, and agrees that such books and records shall remain the sole property of
   the respective  Fund and shall be immediately  surrendered to the appropriate
   Fund upon request.  The Subadviser  further agrees that all books and records
   maintained  hereunder  shall be made available to the respective  Fund or the
   Adviser at any time upon reasonable request and notice,  including  telecopy,
   during any business day.

       (e)  INFORMATION CONCERNING INVESTMENTS AND SUBADVISER. From time to time
   as the  Adviser  or a Fund may  request,  the  Subadviser  will  furnish  the
   requesting party reports on portfolio transactions and reports on Investments
   held in the  portfolios,  all in such detail as the Adviser or the applicable
   Fund may reasonably request.  The Subadviser will make available its officers
   and  employees  to meet with the Board of  Directors  of a Fund at the Fund's
   principal  place of business on due notice to review the  Investments  of the
   Fund.

            The Subadviser will also provide such  information as is customarily
   provided by a subadviser  and may be required for each Fund or the Adviser to
   comply with their respective  obligations  under applicable laws,  including,
   without  limitation,  the  Internal  Revenue  Code of 1986,  as amended  (the
   "Code"),  the  Investment  Company  Act,  the  Investment  Advisers  Act, the
   Securities  Act of 1933,  as  amended  (the  "Securities  Act") and any state
   securities laws, and any rule or regulation thereunder.

            During the term of this Agreement, the Adviser agrees to furnish the
   Subadviser  at  its  principal  office  all  registration  statements,  proxy
   statements,  reports to  stockholders,  sales  literature or other  materials
   prepared for  distribution  to  stockholders of each Fund, or the public that
   refer to the Subadviser for Subadviser's review and approval.  The Subadviser
   shall be deemed to have  approved all such  materials  unless the  Subadviser
   reasonably  objects by giving  notice to the  Adviser in writing  within five
   business days (or such other period as may be mutually  agreed) after receipt
   thereof. The Subadviser's right to object to such materials is limited to the
   portions of such  materials  that  expressly  relate to the  Subadviser,  its
   services  and its  clients.  The  Adviser  agrees to use its best  efforts to
   ensure that  materials  prepared by its employees or agents or its affiliates
   that refer to the  Subadviser or its clients in any way are  consistent  with
   those materials  previously  approved by the Subadviser as referenced in this
   paragraph.  Sales  literature  may be furnished to the  Sub-Adviser  by first
   class or overnight mail, facsimile transmission equipment or hand delivery.

       (f)  CUSTODY  ARRANGEMENTS.  The  Subadviser  shall  provide  each Fund's
   custodian, on each business day with information relating to all transactions
   concerning the Fund's assets.

       (g)  COMPLIANCE  WITH  APPLICABLE  LAWS AND GOVERNING  DOCUMENTS.  In all
   matters relating to the performance of this Agreement, the Subadviser and its
   directors,  officers, partners, employees and interested persons shall act in
   conformity with each Fund's Articles of Incorporation, By-Laws, and currently
   effective  registration  statement  and with  the  written  instructions  and
   directions  of each  Fund's  Board and the  Adviser,  after  receipt  of such
   documents,  from the relevant Fund, and shall comply with the requirements of
   the  Investment  Company  Act, the  Investment  Advisers  Act, the  Commodity
   Exchange  Act (the "CEA"),  the rules  thereunder,  and all other  applicable
   federal and state laws and regulations.

            In carrying out its obligations under this Agreement, the Subadviser
   shall  ensure  that,  each Fund  complies  with all  applicable  statutes and
   regulations  necessary to qualify such Fund as a Regulated Investment Company
   under Subchapter M of the Code (or any successor provision), and shall notify
   the Adviser  immediately  upon having a reasonable basis for believing that a
   Fund has ceased to so qualify or that it might not so qualify in the future.

            In carrying out its obligations under this Agreement, the Subadviser
   shall invest the assets of Series X of SBL Fund in such a manner as to ensure
   that Series X complies with the diversification  provisions of Section 817(h)
   of  the  Code  (or  any  successor  provision)  and  the  regulations  issued
   thereunder  relating  to  the   diversification   requirements  for  variable
   insurance   contracts  and  any  prospective   amendments  or  other  enacted
   modifications  to Section 817 or  regulations  thereunder.  Subadviser  shall
   notify the Adviser  immediately  upon having a reasonable basis for believing
   that  Series X has  ceased to comply  and will take all  reasonable  steps to
   adequately  diversify Series X so as to achieve  compliance  within the grace
   period afforded by Regulation 1.817-5.

            The Adviser has furnished the Subadviser  with copies of each of the
   following  documents and will furnish the Subadviser at its principal  office
   all future  amendments and supplements to such documents,  if any, as soon as
   practicable  after such  documents  become  available:  (i) the  Articles  of
   Incorporation  of each Fund, (ii) the By-Laws of each Fund, (iii) each Fund's
   registration  statement  under the Investment  Company Act and the Securities
   Act of 1933, as amended,  as filed with the Commission,  and (iv) any written
   instructions of the respective Fund's Board and the Adviser.

       (h)  VOTING OF PROXIES.  The Subadviser  shall direct the custodian as to
   how to vote such proxies as may be necessary or advisable in connection  with
   any matters submitted to a vote of shareholders of securities held by a Fund.

   3. INDEPENDENT  CONTRACTOR.  In the performance of its duties hereunder,  the
Subadviser  is and  shall be an  independent  contractor  and  unless  otherwise
expressly  provided  herein or otherwise  authorized  in writing,  shall have no
authority  to act  for or  represent  the  Funds  or the  Adviser  in any way or
otherwise be deemed an agent of the Funds or the Adviser.

   4.  COMPENSATION.  The Adviser shall pay to the Subadviser,  for the services
rendered hereunder, the fees set forth in Exhibit A to this Agreement.

   5.  EXPENSES.  The  Subadviser  shall  bear all  expenses  incurred  by it in
connection  with its services under this Agreement and will,  from time to time,
at its sole expense employ or associate  itself with such persons as it believes
to be particularly fitted to assist it in the execution of its duties hereunder.
However,  the  Subadviser  shall not assign or  delegate  any of its  investment
management  duties under this Agreement  without the approval of the Adviser and
the appropriate Fund's Board.

   6.  REPRESENTATIONS AND WARRANTIES OF SUBADVISER.  The Subadviser  represents
and warrants to the Adviser and the Funds as follows:

       (a)  The Subadviser  is  registered  as an  investment  adviser under the
   Investment Advisers Act;

       (b)  The Subadviser will immediately notify the Adviser of the occurrence
   of any  event  that  would  disqualify  the  Subadviser  from  serving  as an
   investment  adviser of an investment  company pursuant to Section 9(a) of the
   Investment Company Act;

       (c)  The Subadviser has filed a notice of exemption pursuant to Rule 4.14
   under the CEA with the Commodity Futures Trading  Commission (the "CFTC") and
   the National Futures Association

       (d)  The Subadviser is fully authorized under all applicable law to serve
   as Subadviser to the Funds and to perform the services  described  under this
   Agreement.;

       (e)  The Subadviser is a limited  partnership  duly organized and validly
   existing under the laws of the state of California  with the power to own and
   possess its assets and carry on its business as it is now being conducted;

       (f)  The execution,  delivery and  performance  by the Subadviser of this
   Agreement are within the Subadviser's powers and have been duly authorized by
   all necessary action on the part of its shareholders,  and no action by or in
   respect of, or filing  with,  any  governmental  body,  agency or official is
   required  on the  part of the  Subadviser  for the  execution,  delivery  and
   performance by the Subadviser of this Agreement, and the execution,  delivery
   and  performance  by the  Subadviser of this  Agreement do not  contravene or
   constitute a default  under (i) any  provision  of  applicable  law,  rule or
   regulation,  (ii)  the  Subadviser's  governing  instruments,  or  (iii)  any
   agreement,  judgment,  injunction,  order, decree or other instrument binding
   upon the Subadviser;

       (g)  This Agreement is a valid and binding agreement of the Subadviser;

       (h)  The Form ADV of the Subadviser previously provided to the Adviser is
   a true and  complete  copy of the form  filed  with  the  Commission  and the
   information  contained  therein is  accurate  and  complete  in all  material
   respects as of its filing date,  and does not omit to state any material fact
   necessary in order to make the statements made, in light of the circumstances
   under which they were made, not misleading;

   7.  NON-EXCLUSIVITY. The services of the Subadviser with respect to the Funds
are not deemed to be exclusive,  and the  Subadviser  and its officers  shall be
free to render  investment  advisory  and  administrative  or other  services to
others (including other investment  companies) and to engage in other activities
so long as its duties hereunder are not impaired thereby.

   8.  REPRESENTATIONS  AND  WARRANTIES OF ADVISER.  The Adviser  represents and
warrants to the Subadviser as follows:

       (a)  The  Adviser  is  registered  as an  investment  adviser  under  the
   Investment Advisers Act;

       (b)  The Adviser  has filed a notice of  exemption  pursuant to Rule 4.14
   under the CEA with the Commodity Futures Trading  Commission (the "CFTC") and
   the National Futures Association;

       (c) The Adviser is a limited liability company duly organized and validly
   existing  under  the laws of the  State of  Kansas  with the power to own and
   possess its assets and carry on its business as it is now being conducted;

       (d)  The execution,  delivery  and  performance  by the  Adviser  of this
   Agreement and the Advisory Agreement are within the Adviser's powers and have
   been duly authorized by all necessary action on the part of its members,  and
   no action by or in respect of, or filing with, any governmental  body, agency
   or  official  is  required  on the  part of the  Adviser  for the  execution,
   delivery and performance by the Adviser of this Agreement, and the execution,
   delivery and  performance  by the Adviser of this Agreement do not contravene
   or constitute a default  under (i) any  provision of applicable  law, rule or
   regulation, (ii) the Adviser's governing instruments, or (iii) any agreement,
   judgment,  injunction,  order,  decree or other  instrument  binding upon the
   Adviser;

       (e)  This Agreement  and the  Advisory  Agreement  are valid and  binding
   agreements of the Adviser;

       (f)  The Form ADV of the Adviser previously provided to the Subadviser is
   a true and  complete  copy of the form  filed  with  the  Commission  and the
   information  contained  therein is  accurate  and  complete  in all  material
   respects as of its filing date and does not omit to state any  material  fact
   necessary in order to make the statements made, in light of the circumstances
   under which they were made, not misleading;

       (g)  The Adviser acknowledges that it received a copy of the Subadviser's
   Form ADV at least 48 hours prior to the execution of this Agreement.

   9.  SURVIVAL OF REPRESENTATIONS AND WARRANTIES;  DUTY TO UPDATE  INFORMATION.
All  representations  and  warranties  made by the  Subadviser  and the  Adviser
pursuant  to  Sections 6 and 8 hereof  shall  survive  for the  duration of this
Agreement  and the parties  hereto shall  promptly  notify each other in writing
upon becoming aware that any of the foregoing representations and warranties are
no longer true.

   10. LIABILITY AND INDEMNIFICATION.

       (a)  LIABILITY. In the absence of willful misfeasance, bad faith or gross
   negligence on the part of the Subadviser or a breach of its duties hereunder,
   the  Subadviser  shall not be subject to any  liability  to the  Adviser,  to
   either Fund,  or any of either  Fund's  shareholders,  and, in the absence of
   willful misfeasance, bad faith or gross negligence on the part of the Adviser
   or a breach of its duties hereunder,  the Adviser shall not be subject to any
   liability  to the  Subadviser,  for any act or  omission  in the case of,  or
   connected with,  rendering  services  hereunder or for any losses that may be
   sustained in the purchase, holding or sale of Investments; PROVIDED, HOWEVER,
   that nothing herein shall relieve the Adviser and the Subadviser  from any of
   their  respective  obligations  under  applicable  law,  including,   without
   limitation, the federal and state securities laws and the CEA

       (b)  INDEMNIFICATION.  The Subadviser shall indemnify the Adviser and the
   Funds,  and their  respective  officers and directors,  for any liability and
   expenses,  including  attorneys' fees, which may be sustained by the Adviser,
   or the Funds, as a result of the Subadviser's willful misfeasance, bad faith,
   or  gross  negligence,  breach  of  its  duties  hereunder  or  violation  of
   applicable  law,  including,   without  limitation,  the  federal  and  state
   securities  laws or the CEA. The Adviser shall  indemnify the  Subadviser and
   its  officers  and  partners,  for  any  liability  and  expenses,  including
   attorneys' fees, which may be sustained as a result of the Adviser's,  or the
   Funds' willful  misfeasance,  bad faith, or gross  negligence,  breach of its
   duties  hereunder  or  violation  of  applicable  law,   including,   without
   limitation, the federal and state securities laws or the CEA.

   11. DURATION AND TERMINATION.

       (a)  DURATION. This Agreement shall become  effective upon the date first
   above  written,  provided  that this  Agreement  shall not take  effect  with
   respect  to the  Funds  unless  it has  first  been  approved  by a vote of a
   majority  of those  directors  of SBL  Fund  and  Security  Equity  Fund,  as
   applicable,  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
   on such approval. This Agreement shall continue in effect for a period of two
   years from the date hereof,  subject  thereafter to being  continued in force
   and  effect  from year to year  with  respect  to each  Fund if  specifically
   approved  each year by the Board of  Directors  of the  applicable  Fund.  In
   addition to the  foregoing,  each renewal of this  Agreement  with respect to
   each Fund must be approved by the vote of a majority of the applicable Fund's
   directors 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 on
   such approval. Prior to voting on the renewal of this Agreement, the Board of
   Directors of the applicable Fund may request and evaluate, and the Subadviser
   shall furnish,  such information as may reasonably be necessary to enable the
   Fund's Board of Directors to evaluate the terms of this Agreement.

       (b)  TERMINATION. Notwithstanding  whatever may be provided herein to the
   contrary,  this Agreement may be terminated at any time,  without  payment of
   any penalty:

            (i)    By vote of a  majority  of  the  Board  of  Directors  of the
       applicable  Fund,  or by vote of a  majority  of the  outstanding  voting
       securities of the applicable Fund, or by the Adviser,  in each case, upon
       sixty (60) days' written notice to the Subadviser;

            (ii)   By the  Adviser  upon  breach  by  the   Subadviser   of  any
       representation or warranty contained in Section 6 hereof, which shall not
       have been cured within  twenty (20) days of the  Subadviser's  receipt of
       written notice of such breach;

            (iii)  By  the  Adviser  immediately  upon  written  notice  to  the
       Subadviser if the  Subadviser  becomes unable to discharge its duties and
       obligations under this Agreement; or

            (iv)   By the Subadviser upon 120 days written notice to the Adviser
       and the applicable Fund.

            This Agreement shall not be assigned (as such term is defined in the
   Investment  Company  Act)  without the prior  written  consent of the parties
   hereto.  This Agreement  shall  terminate  automatically  in the event of its
   assignment  without  such  consent or upon the  termination  of the  Advisory
   Agreement.

   12. DUTIES OF THE ADVISER.  The Adviser shall continue to have responsibility
for all services to be provided to the Funds pursuant to the Advisory  Agreement
and shall oversee and review the  Subadviser's  performance  of its duties under
this Agreement.

   13. AMENDMENT.  This  Agreement  may  be  amended  by mutual  consent  of the
parties,  provided that the terms of each such  amendment with respect to a Fund
shall be approved by the Board of Directors of the applicable  Fund or by a vote
of a majority of the outstanding voting securities of the applicable Fund.

   14. NOTICE.  Any  notice  that is required to be given by the parties to each
other (or to the Fund)  under the terms of this  Agreement  shall be in writing,
delivered,  or mailed  postpaid to the other party,  or transmitted by facsimile
with  acknowledgment  of receipt,  to the parties at the following  addresses or
facsimile  numbers,  which may from time to time be  changed  by the  parties by
notice to the other party:

       (a)  If to the Subadviser:

            RS Investment Management LP
            388 Market Street
            San Francisco, CA 94111
            Attention:  Steve Cohen, CFO
            Facsimile:  (415) 591-2858

       (b)  Copy to:

            RS Investment Management LP
            388 Market Street
            San Francisco, CA 94111
            Attention:  Clay Smudsky
            Facsimile:  (415) 591-2855

       (c)  If to the Adviser:

            Security Management Company, LLC
            One Security Benefit Place
            Topeka, Kansas 66636-0001
            Attention:  James R. Schmank, President
            Facsimile:  (785) 438-3080

       (d)  If to SBL Fund:

            SBL Fund
            One Security Benefit Place
            Topeka, Kansas 66636-0001
            Attention:  Amy J. Lee, Secretary
            Facsimile:  (785) 438-3080

       (d)  If to Security Equity Fund:

            Security Equity Fund
            One Security Benefit Place
            Topeka, Kansas 66636-0001
            Attention:  Amy J. Lee, Secretary
            Facsimile:  (785) 438-3080

   15. GOVERNING LAW; JURISDICTION. Except as indicated in Section 19(b) of this
Agreement,  this Agreement shall be governed by and construed in accordance with
the laws of the State of  California,  without  regard to its  conflicts  of law
provisions.

   16. COUNTERPARTS. This Agreement may be executed in one or more counterparts,
all of which shall together constitute one and the same instrument.

   17. CAPTIONS.  The captions herein are included  for convenience of reference
only and shall be ignored in the construction or interpretation hereof.

   18. SEVERABILITY.  If any provision of  this Agreement  shall be held or made
invalid by a court  decision or  applicable  law, the remainder of the Agreement
shall not be affected adversely and shall remain in full force and effect.

   19. CERTAIN DEFINITIONS.

       (a)  "BUSINESS  DAY." As used herein,  business  day means any  customary
   business  day in the United  States on which the New York Stock  Exchange  is
   open.

       (b)  MISCELLANEOUS.  As used herein,  "investment  company,"  "affiliated
   person,"   "interested   person,"   "assignment,"   "broker,"   "dealer"  and
   "affirmative  vote  of  the  majority  of  the  Fund's   outstanding   voting
   securities"  shall all have such meaning as such terms have in the Investment
   Company Act. The term  "investment  adviser"  shall have such meaning as such
   term has in the Investment  Advisers Act and the Investment  Company Act, and
   in the event of a conflict  between such Acts, the most expansive  definition
   shall  control.  In  addition,  where  the  effect  of a  requirement  of the
   Investment  Company Act  reflected  in any  provision  of this  Agreement  is
   relaxed by a rule, regulation or order of the Commission,  whether of special
   or general  application,  such provision  shall be deemed to incorporate  the
   effect of such rule, regulation or order.

   IN WITNESS  WHEREOF,  the parties  hereto have executed this Agreement on the
day and year first written above.


                                       SECURITY MANAGEMENT COMPANY, LLC

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


                                       Attest:  AMY J. LEE
                                                --------------------------------
                                       Name:    Amy J. Lee
                                       Title:   Secretary


                                       RS INVESTMENT MANAGEMENT LP

                                       By:      STEVEN H. COHEN
                                                --------------------------------
                                       Name:    Steven H. Cohen
                                       Title:   Chief Financial Officer


                                       Attest:  THANH TRANG
                                                --------------------------------
                                       Name:    Thanh Trang
                                       Title:   Executive Assistant

                                    EXHIBIT A

                                  Compensation


   For all services rendered by the Subadviser  hereunder,  Adviser shall pay to
Subadviser a fee (the "Subadvisory Fee") as follows:

   An annual rate of 0.55% (55 basis points) of the combined  averaged daily net
assets of the Funds of $100 million or less; plus

   An annual rate of 0.50% (50 basis  points) of the combined  average daily net
assets of the Funds of more than $100 million, up to $400 million; plus

   An annual rate of 0.45% (45 basis  points) of the combined  average daily net
assets of the Funds of more than $400 million.

   For purposes of calculating the compensation to be paid hereunder,  the value
of the net assets of a Fund 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 then current prospectus for the applicable Fund.

   The  Subadvisory  Fee shall be accrued for each  calendar day the  Subadviser
renders  subadvisory  services  hereunder  and the sum of the daily fee accruals
shall be paid monthly to the  Subadviser  as soon as  practicable  following the
last day of each month, by wire transfer if so requested by the Subadviser,  but
no later than ten (10)  calendar days  thereafter.  If this  Agreement  shall be
effective for only a portion of a year, then the  Subadviser's fee for said year
shall be prorated for such portion.

EX-99.D6

                                     FORM OF
                             SUB-ADVISORY AGREEMENT


   THIS AGREEMENT is made and entered into as of this 3rd day of February, 2003,
between  SECURITY  MANAGEMENT  COMPANY,  LLC (the  "Adviser"),  a Kansas limited
liability  company,  registered  under the  Investment  Advisers Act of 1940, as
amended (the "Investment Advisers Act") and MAINSTREAM INVESTMENT ADVISERS,  LLC
(the "Subadviser"),  a Kentucky limited liability company,  registered under the
Investment Advisers Act.

                                   WITNESSETH:

   WHEREAS,  SBL Fund and Security Equity Fund,  Kansas  corporations,  are each
registered  with the Securities and Exchange  Commission (the  "Commission")  as
open-end  management  investment  companies under the Investment  Company Act of
1940, as amended (the "Investment Company Act");

   WHEREAS,  SBL Fund is  authorized  to issue  shares of  Series Z, a  separate
series of SBL Fund,  and Security  Equity Fund is  authorized to issue shares of
Alpha  Opportunity  Series,  a separate series of Security Equity Fund (Series Z
and Alpha Opportunity Series are referred to herein individually as a "Fund" and
collectively as the "Funds");

   WHEREAS,  each of the Funds has,  pursuant to an Advisory  Agreement with the
Adviser (the  "Advisory  Agreement"),  retained the Adviser to act as investment
adviser for and to manage its assets;

   WHEREAS,  the Advisory  Agreements  permit the Adviser to delegate certain of
its duties under the Advisory Agreement to other investment advisers, subject to
the requirements of the Investment Company Act;

   WHEREAS, the Adviser desires to retain the Subadviser as subadviser to act as
investment  adviser  for and to manage a portion of each  Fund's  assets and the
Subadviser desires to render such services; and

   WHEREAS,  the  Adviser  shall  have  the sole  discretion  to  determine  the
percentage of each Fund's assets to be managed by the Subadviser.

   NOW, THEREFORE,  the Adviser and the Subadviser do mutually agree and promise
as follows:

   1.  APPOINTMENT AS  SUBADVISER.  The Adviser hereby retains the Subadviser to
act as investment adviser for and to manage assets of the Funds,  subject to the
supervision of the Adviser, the Board of Directors of such Fund and the terms of
this  Agreement,  and the  Subadviser  hereby accepts such  employment.  In such
capacity,  the Subadviser  shall be responsible  for the Investments (as defined
herein) of the Funds;  provided  that the  Adviser  reserves  the  authority  to
review, modify or reject Subadviser's investment recommendations with respect to
the management of the Funds' Investments.

   2.  DUTIES OF SUBADVISER.

       (a)  INVESTMENTS. Subject to the instructions of the Adviser from time to
   time,  the  Subadviser is hereby  authorized  and directed and hereby agrees,
   subject to the stated  investment  policies and  restrictions of each Fund as
   set forth in the Fund's prospectus and statement of additional information as
   currently  in  effect  and as  supplemented  or  amended  from  time  to time
   (collectively referred to hereinafter as the "Prospectus") to purchase,  hold
   and sell investments for the account of the Fund (hereinafter  "Investments")
   and to monitor on a continuous  basis the  performance  of such  Investments.
   "Investments" when referred to in this Agreement shall mean those investments
   included  in the  portion  of each  Fund's  total  assets  that  Adviser  has
   allocated to Subadviser for  management.  Subject to the  instructions of the
   Adviser from time to time,  the  Subadviser may contract with or consult with
   such  banks,  other  securities  firms,  brokers  or other  parties,  without
   additional  expense  to the  Adviser,  as it may deem  appropriate  regarding
   investment  advice,  research and statistical  data,  clerical  assistance or
   otherwise.

       (b)  BROKERAGE. The Subadviser is authorized,  subject to the supervision
   of the Adviser and the respective Fund's Board of Directors, to establish and
   maintain  accounts  on behalf of each Fund  with,  and place  orders  for the
   purchase and sale of each Fund's  Investments with or through,  such persons,
   brokers or dealers as Subadviser may select which may include,  to the extent
   permitted by the Adviser or the respective Fund's Board of Directors, brokers
   or dealers affiliated with the Subadviser. The Subadviser is also authorized,
   subject to the supervision of the Adviser and the respective  Fund's Board of
   Directors  to  negotiate  commissions  to be paid on such  transactions.  The
   Subadviser shall make sales, exchanges,  commitments,  contracts, investments
   or reinvestments, or take any action which it deems necessary or desirable in
   connection  with the  Investments,  in  accordance  with its own judgment and
   discretion.   Specifically,  the  Subadviser  shall  have  the  authority  to
   purchase, sell, sell short, transfer, deal in or otherwise invest in publicly
   traded common stocks,  convertible bonds, convertible preferred stocks, stock
   warrants and rights.  The Subadviser agrees that in placing such orders for a
   Fund it shall attempt to obtain best execution, provided that, the Subadviser
   may,  on behalf of such Fund,  pay  brokerage  commissions  to a broker  that
   provides  brokerage and research  services to the Subadviser in excess of the
   amount  another  broker would have  charged for  effecting  the  transaction,
   provided  (i) the  Subadviser  determines  in good  faith  that the amount is
   reasonable in relation to the value of the  brokerage  and research  services
   provided by the executing broker in terms of the particular transaction or in
   terms of the Subadviser's overall  responsibilities with respect to such Fund
   and the accounts as to which the Subadviser exercises investment  discretion,
   (ii) such payment is made in compliance  with Section 28(e) of the Securities
   Exchange  Act of  1934,  as  amended,  and  any  other  applicable  laws  and
   regulations,   and  (iii)  in  the  opinion  of  the  Subadviser,  the  total
   commissions  paid by such Fund will be reasonable in relation to the benefits
   to the  Fund  over  the  long  term.  In  reaching  such  determination,  the
   Subadviser  will not be  required  to place or  attempt  to place a  specific
   dollar value on the  brokerage  and/or  research  services  provided or being
   provided by such broker.  It is recognized that the services provided by such
   brokers may be useful to the Subadviser in connection  with the  Subadviser's
   services  to other  clients.  On  occasions  when the  Subadviser  deems  the
   purchase  or sale of a security  to be in the best  interests  of the Fund as
   well as other  clients  of the  Subadviser,  the  Subadviser,  to the  extent
   permitted  by  applicable  laws and  regulations,  may, but shall be under no
   obligation  to,  aggregate the securities to be sold or purchased in order to
   obtain the most favorable price or lower brokerage  commissions and efficient
   execution.  In such event,  allocation of securities so sold or purchased, as
   well  as the  expenses  incurred  in the  transaction,  shall  be made by the
   Subadviser in the manner the  Subadviser  considers to be the most  equitable
   and consistent  with its fiduciary  obligations to the Fund or Funds involved
   and to such other clients. The Subadviser shall report on such allocations at
   the request of the Adviser,  or the  respective  Fund's  Board of  Directors,
   providing such information as the number of aggregated trades to which a Fund
   was a party, the broker(s) to whom such trades were directed and the basis of
   the allocation for the aggregated trades. Subject to the foregoing provisions
   of this  Subsection 2(b) and at the direction of the Adviser or the Fund, the
   Subadviser  may also  consider  sales of the Funds' shares as a factor in the
   selection of brokers or dealers for a Fund's portfolio transactions.

       (c)  SECURITIES TRANSACTIONS. The Subadviser and any affiliated person of
   the Subadviser  shall not purchase  securities or other  instruments  from or
   sell securities or other  instruments to a Fund  ("Principal  Transactions");
   PROVIDED, HOWEVER, the Subadviser may enter into a Principal Transaction with
   a Fund if (i) the  transaction  is  permissible  under  applicable  laws  and
   regulations,  including,  without limitation, the Investment Advisers Act and
   the rules and regulations promulgated thereunder, and (ii) the transaction or
   category  of  transactions  receives  the  express  written  approval  of the
   Adviser.

            The Subadviser agrees to observe and comply in all material respects
   with Rule 17j-1 under the Investment  Company Act and its Code of Ethics,  as
   the same may be amended from time to time. The  Subadviser  agrees to provide
   the Adviser with a copy of such Code of Ethics.

       (d)  BOOKS AND  RECORDS.  The  Subadviser  shall  maintain  all books and
   records required to be maintained  pursuant to the Investment Company Act and
   the rules and  regulations  promulgated  thereunder  solely  with  respect to
   transactions made by it on behalf of the Funds including, without limitation,
   the books and records  required by  Subsections  (b)(1),  (5), (6), (7), (9),
   (10) and (11) and Subsection  (f) of Rule 31a-1 under the Investment  Company
   Act and shall timely furnish to the Adviser all  information  relating to the
   Subadviser's  services  hereunder  needed by the  Adviser  to keep such other
   books and records of the Funds  required  by Rule 31a-1 under the  Investment
   Company Act. The  Subadviser  shall also  preserve all such books and records
   for the periods  prescribed  in part (e) of Rule 31a-2  under the  Investment
   Company  Act,  and agrees that such books and records  shall  remain the sole
   property of the respective  Fund and shall be immediately  surrendered to the
   appropriate Fund upon request.  The Subadviser  further agrees that all books
   and records  maintained  hereunder  shall be made available to the respective
   Fund or the Adviser at any time upon reasonable request and notice during any
   business day.

       (e)  INFORMATION CONCERNING INVESTMENTS AND SUBADVISER. From time to time
   as the Adviser or a Fund may reasonably request, the Subadviser shall furnish
   the requesting  party reports on transactions and reports on Investments held
   in the Fund  portfolios,  all in such detail as the Adviser or the applicable
   Fund may reasonably  request.  From time to time as the Adviser or a Fund may
   reasonably  request,  the  Subadviser  will make  available  its officers and
   employees  to meet  with  the  Board  of  Directors  of a Fund at the  Fund's
   principal  place of business on due notice to review the  Investments  of the
   Fund.

            The Subadviser shall also provide such information as is customarily
   provided by a subadviser  and as may be required for each Fund or the Adviser
   to comply with their respective obligations under applicable laws, including,
   without  limitation,  the  Internal  Revenue  Code of 1986,  as amended  (the
   "Code"),  the  Investment  Company  Act,  the  Investment  Advisers  Act, the
   Securities  Act of 1933,  as  amended  (the  "Securities  Act") and any state
   securities laws, and any rule or regulation thereunder.

            During the term of this Agreement, the Adviser agrees to furnish the
   Subadviser  at  its  principal  office  all  registration  statements,  proxy
   statements,  reports to  stockholders,  sales  literature or other  materials
   prepared for  distribution  to  stockholders of each Fund, or the public that
   refer to the Subadviser for Subadviser's review and approval.  The Subadviser
   shall be deemed to have  approved all such  materials  unless the  Subadviser
   reasonably  objects by giving  notice to the  Adviser in writing  within five
   business days (or such other period as may be mutually  agreed) after receipt
   thereof. The Subadviser's right to object to such materials is limited to the
   portions of such  materials  that  expressly  relate to the  Subadviser,  its
   services  and its  clients.  The  Adviser  agrees to use its best  efforts to
   ensure that  materials  prepared by its employees or agents or its affiliates
   that refer to the  Subadviser or its clients in any way are  consistent  with
   those materials  previously  approved by the Subadviser as referenced in this
   paragraph.  Sales  literature  may be furnished to the  Sub-Adviser  by first
   class or overnight mail, facsimile transmission equipment or hand delivery.

       (f)  CUSTODY  ARRANGEMENTS.  The  Subadviser  shall  provide  each Fund's
   custodian (the "Custodian"),  on each business day,  information  relating to
   all transactions made by it on behalf of the Funds.

       (g)  COMPLIANCE  WITH  APPLICABLE  LAWS AND GOVERNING  DOCUMENTS.  In all
   matters relating to the performance of this Agreement, the Subadviser and its
   members,  officers,  partners,  employees and interested persons shall act in
   conformity   in  all  material   respects   with  each  Fund's   Articles  of
   Incorporation,  By-Laws, and currently effective  registration  statement and
   with  the  written  instructions  and  directions  of each  Fund's  Board  of
   Directors and the Adviser, after receipt of such documents, from the relevant
   Fund, and shall comply in all material  respects with the requirements of the
   Investment  Company Act, the Investment  Advisers Act, the Commodity Exchange
   Act (the "CEA"),  the rules thereunder,  and all other applicable federal and
   state laws and regulations.

            In carrying out its obligations under this Agreement, the Subadviser
   shall,  solely with regard to those  matters  within its control and based on
   information  available  to it (i)  invest  the  assets  of the Fund in such a
   manner that each Fund complies with Section  851(b)(2) and Section  851(b)(3)
   of Subchapter M of the Code (or any successor provision), and (ii) invest the
   assets of Series Z of SBL Fund in such a manner that  Series Z complies  with
   the  diversification  provisions  of  Section  817(h)  of the  Code  (or  any
   successor  provision) and the regulations  issued thereunder  relating to the
   diversification   requirements  for  variable  insurance  contracts  and  any
   prospective  amendments or other  modifications to Section 817 or regulations
   thereunder.  Subadviser  shall notify the Adviser  immediately  upon having a
   reasonable  basis  for  believing  that a Fund has  ceased  to  qualify  as a
   Regulated  Investment Company under Subchapter M of the Internal Revenue Code
   (or any successor or similar provision) or Series Z has ceased to comply with
   Section 817(h) and, with respect to Section 817(h), shall take all reasonable
   steps to adequately diversify Series Z so as to achieve compliance within the
   grace period afforded by Regulation 1.817-5.

            The Adviser has furnished the Subadviser  with copies of each of the
   following  documents and will furnish the Subadviser at its principal  office
   all future  amendments and supplements to such documents,  if any, as soon as
   practicable  after such  documents  become  available:  (i) the  Articles  of
   Incorporation  of each Fund, (ii) the By-Laws of each Fund, (iii) each Fund's
   registration  statement  under the Investment  Company Act and the Securities
   Act, as filed with the Commission,  and (iv) any written  instructions of the
   respective  Fund's Board of Directors and the Adviser.  The Subadviser  shall
   not be held  responsible  for compliance  with any document  described  above
   unless and until such document has been received by the Subadviser.

       (h)  VOTING OF PROXIES. The  Subadviser  shall direct the Custodian as to
   how to vote such proxies as may be necessary or advisable in connection  with
   any matters  submitted to a vote of  shareholders  of  Investments  held by a
   Fund.

   3.  INDEPENDENT CONTRACTOR.  In the performance of its duties hereunder,  the
Subadviser  is and  shall be an  independent  contractor  and  unless  otherwise
expressly  provided  herein or otherwise  authorized  in writing,  shall have no
authority to act for or  represent  the Funds or Adviser in any way or otherwise
be deemed an agent of the Funds or Adviser.

   4.  COMPENSATION.  The Adviser  shall pay to the  Subadviser  an Advisory Fee
computed  in  accordance  with  Schedule A attached  hereto,  which fee shall be
payable as provided  therein.  The parties hereby disclaim any obligation on the
part of the Funds or their  shareholders  to pay any portion of the Advisory Fee
payable by the Adviser to the Subadviser.

   5.  EXPENSES.  The  Subadviser  shall  bear all  expenses  incurred  by it in
connection with its services under this Agreement and shall,  from time to time,
at its sole expense employ or associate  itself with such persons as it believes
to be particularly fitted to assist it in the execution of its duties hereunder.
However,  the  Subadviser  shall not assign or  delegate  any of its  investment
management  duties  under this  Agreement  without the  written  approval of the
Adviser and the respective Fund's Board of Directors.

   6.  REPRESENTATIONS AND WARRANTIES OF SUBADVISER.  The Subadviser  represents
and warrants to the Adviser as follows:

       (a)  The Subadviser  is  registered  as an  investment  adviser under the
   Investment Advisers Act;

       (b)  The Subadviser shall immediately notify the Adviser of the existence
   or occurrence of any event that would  disqualify the Subadviser from serving
   as an investment adviser of an investment company pursuant to Section 9(a) of
   the Investment Company Act;

       (c)  The Subadviser is fully authorized under all applicable law to serve
   as Subadviser to the Funds and to perform the services  described  under this
   Agreement;

       (d)  The Subadviser  is a limited  liability  company duly  organized and
   validly  existing  under the laws of the State of Kentucky  with the power to
   own and  possess  its  assets  and carry on its  business  as it is now being
   conducted;

       (e)  The execution,  delivery and  performance  by the Subadviser of this
   Agreement are within the Subadviser's powers and have been duly authorized by
   all  necessary  action of the members,  and no action by or in respect of, or
   filing with,  any  governmental  body,  agency or official is required on the
   part of the  Subadviser for the  execution,  delivery and  performance by the
   Subadviser of this Agreement, and the execution,  delivery and performance by
   the  Subadviser of this  Agreement do not  contravene or constitute a default
   under (i) any  provision of  applicable  law,  rule or  regulation,  (ii) the
   Subadviser's  governing  instruments,  or  (iii)  any  agreement,   judgment,
   injunction, order, decree or other instrument binding upon the Subadviser;

       (f)  This Agreement is a valid and binding  agreement of the  Subadviser;
   and

       (g)  The Form ADV of the Subadviser previously provided to the Adviser is
   accurate and complete in all  material  respects,  and does not omit to state
   any material fact necessary in order to make the statements made, in light of
   the circumstances under which they were made, not misleading.

   7.  NON-EXCLUSIVITY. The services of the Subadviser with respect to the Funds
are not deemed to be exclusive,  and the  Subadviser  and its officers  shall be
free to render  investment  advisory  and  administrative  or other  services to
others and to engage in other activities.  Nothing in this Agreement shall limit
or restrict the Subadviser or any of its officers, managers, members, employees,
affiliates or agents from buying,  selling or trading in any  securities for its
or their own account or accounts, except as set forth in Subsection 2(c) herein.
The  Adviser  acknowledges  that  the  Subadviser  and its  officers,  managers,
members,  employees,  affiliates or agents and its other clients may at any time
have, acquire,  increase,  decrease or dispose of positions in investments which
are at the same time being  acquired or  disposed of for the Funds.  The Adviser
agrees that the  Subadviser  may give advice and take action with respect to any
of its other  clients which may differ from advice given or the timing or nature
of action  taken with  respect to the Funds,  so long as it is the  Subadviser's
policy, to the extent  practical,  to allocate  investment  opportunities to the
Funds  over a period of time on a fair and  equitable  basis  relative  to other
clients.

   8.  REPRESENTATIONS  AND  WARRANTIES OF ADVISER.  The Adviser  represents and
warrants to the Subadviser as follows:

       (a)  The  Adviser  is  registered  as an  investment  adviser  under  the
   Investment Advisers Act;

       (b)  The Adviser  has filed a notice of  exemption  pursuant to Rule 4.14
   under the CEA with the Commodity Futures Trading  Commission (the "CFTC") and
   the National Futures Association;

       (c) The Adviser is a limited liability company duly organized and validly
   existing  under  the laws of the  State of  Kansas  with the power to own and
   possess its assets and carry on its business as it is now being conducted;

       (d)  The execution,  delivery  and  performance  by the  Adviser  of this
   Agreement  are within the Adviser's  powers and have been duly  authorized by
   all  necessary  action  on the part of its  members,  and no  action by or in
   respect of, or filing  with,  any  governmental  body,  agency or official is
   required  on  the  part  of the  Adviser  for  the  execution,  delivery  and
   performance by the Adviser of this Agreement, and the execution, delivery and
   performance  by the Adviser of this Agreement do not contravene or constitute
   a default under (i) any provision of applicable law, rule or regulation, (ii)
   the  Adviser's  governing  instruments,  or (iii)  any  agreement,  judgment,
   injunction, order, decree or other instrument binding upon the Adviser;

       (e)  This Agreement is a valid and binding agreement of the Adviser; and

       (f)  The Adviser acknowledges that it received a copy of the Subadviser's
   Form ADV at least 48 hours prior to the execution of this Agreement.

   9.  SURVIVAL OF REPRESENTATIONS AND WARRANTIES;  DUTY TO UPDATE  INFORMATION.
All  representations  and  warranties  made by the  Subadviser  and the  Adviser
pursuant  to  Sections 6 and 8 hereof  shall  survive  for the  duration of this
Agreement  and the parties  hereto shall  promptly  notify each other in writing
upon becoming aware that any of the foregoing representations and warranties are
no longer true.

   10. DUTY OF CARE AND INDEMNIFICATION.

       (a)  LIABILITY. In the absence of willful misfeasance, bad faith or gross
   negligence on the part of the  Subadviser or a material  breach of its duties
   hereunder,  the  Subadviser  shall not be  subject  to any  liability  to the
   Adviser,  to either Fund, or any of either Fund's  shareholders,  and, in the
   absence of willful misfeasance,  bad faith or gross negligence on the part of
   the Adviser or a material breach of its duties  hereunder,  the Adviser shall
   not be subject to any liability to the Subadviser, for any act or omission in
   the case of, or  connected  with,  rendering  services  hereunder  or for any
   losses that may be sustained in the purchase, holding or sale of Investments;
   PROVIDED,  HOWEVER,  that nothing  herein  shall  relieve the Adviser and the
   Subadviser from any of their  respective  obligations  under  applicable law,
   including,  without limitation, the federal and state securities laws and the
   CEA

       (b)  INDEMNIFICATION.  The Subadviser shall indemnify the Adviser and the
   Funds,  and their  respective  officers and directors,  for any liability and
   expenses,  including  attorneys' fees, which may be sustained by the Adviser,
   or the Funds, as a result of the Subadviser's willful misfeasance, bad faith,
   or gross  negligence,  material  breach of its duties  hereunder  or material
   violation of applicable law, including,  without limitation,  the federal and
   state  securities laws or the CEA. The Adviser shall indemnify the Subadviser
   and its officers and partners,  for any  liability  and  expenses,  including
   attorneys' fees, which may be sustained as a result of the Adviser's,  or the
   Funds' willful misfeasance,  bad faith, or gross negligence,  material breach
   of its duties hereunder or material  violation of applicable law,  including,
   without limitation, the federal and state securities laws or the CEA.

   12. DURATION AND TERMINATION.

       (a)  DURATION. This Agreement shall become  effective upon the date first
   above  written,  provided  that this  Agreement  shall not take  effect  with
   respect  to the  Funds,  unless it has  first  been  approved  by a vote of a
   majority  of those  directors  of SBL  Fund  and  Security  Equity  Fund,  as
   applicable,  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
   on such approval. This Agreement shall continue in effect for a period of two
   years from the date hereof,  subject  thereafter to being  continued in force
   and  effect  from year to year  with  respect  to each  Fund if  specifically
   approved  each year by the Board of  Directors  of the  applicable  Fund.  In
   addition to the  foregoing,  each renewal of this  Agreement  with respect to
   each Fund must be approved by the vote of a majority of the applicable Fund's
   directors 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 on
   such approval. Prior to voting on the renewal of this Agreement, the Board of
   Directors of the applicable Fund may request and evaluate, and the Subadviser
   shall furnish,  such information as reasonably may be necessary to enable the
   Fund's Board of Directors to evaluate the terms of this Agreement.

       (b)  TERMINATION. Notwithstanding  whatever may be provided herein to the
   contrary,  this Agreement may be terminated at any time,  without  payment of
   any penalty:

              (i)  By vote  of a  majority  of the  Board  of  Directors  of the
       applicable  Fund,  or by vote of a  majority  of the  outstanding  voting
       securities of the applicable Fund, or by the Adviser,  in each case, upon
       sixty (60) days' written notice to the Subadviser;

             (ii)  By the Adviser upon material breach by the  Subadviser of any
       representation or warranty contained in Section 6 hereof, which shall not
       have been cured within  twenty (20) days of the  Subadviser's  receipt of
       written notice of such breach;

            (iii)  By  the  Adviser  immediately  upon  written  notice  to  the
       Subadviser if the  Subadviser  becomes unable to discharge its duties and
       obligations under this Agreement; or

             (iv)  By the Subadviser upon 120 days written notice to the Adviser
       and the applicable Fund.

            This Agreement shall not be assigned (as such term is defined in the
   Investment  Company  Act)  without the prior  written  consent of the parties
   hereto.  This Agreement  shall  terminate  automatically  in the event of its
   assignment  without  such  consent or upon the  termination  of the  Advisory
   Agreement.

   13. DUTIES OF THE ADVISER.  The Adviser shall continue to have responsibility
for all services to be provided to the Funds pursuant to the Advisory  Agreement
and shall oversee and review the  Subadviser's  performance  of its duties under
this Agreement.

   14. AMENDMENT.  This Agreement may be amended in writing by mutual consent of
the parties;  provided that the terms of each such  amendment  with respect to a
Fund shall be approved by the Board of Directors of the applicable  Fund or by a
vote of a majority of the outstanding voting securities of the applicable Fund.

   15.  NOTICE.  Any notice  that is required to be given by the parties to each
other  under the terms of this  Agreement  shall be in  writing,  delivered,  or
mailed   postpaid  to  the  other  party,   or  transmitted  by  facsimile  with
acknowledgment  of  receipt,  to the  parties  at  the  following  addresses  or
facsimile  numbers,  which may from time to time be  changed  by the  parties by
notice to the other party:

       (a)  If to the Subadviser:

            Mainstream Investment Advisers, LLC
            101 W. Spring Street
            Fourth Floor
            New Albany, IN 47150
            Attention: Diane J. Hulls, Director
            Facsimile: (812) 981-7069

       (b)  If to the Adviser:

            Security Management Company, LLC
            One Security Benefit Place
            Topeka, Kansas 66636-0001
            Attention: James R. Schmank, President
            Facsimile: (785) 438-3080

       (c)  If to SBL Fund:

            SBL Fund
            One Security Benefit Place
            Topeka, Kansas 66636-0001
            Attention:  Amy J. Lee, Secretary
            Facsimile:  (785) 438-3080

       (d)  If to Security Equity Fund:

            Security Equity Fund
            One Security Benefit Place
            Topeka, Kansas 66636-0001
            Attention:  Amy J. Lee, Secretary
            Facsimile:  (785) 438-3080

   16. GOVERNING LAW;  JURISDICTION.  This  Agreement  shall  be governed by and
construed in accordance with the internal laws of the State of Kansas.

   17. COUNTERPARTS. This Agreement may be executed in one or more counterparts,
all of which shall together constitute one and the same instrument.

   18. CAPTIONS.  The captions herein are included  for convenience of reference
only and shall be ignored in the construction or interpretation hereof.

   19. SEVERABILITY.  If any  provision of this Agreement  shall be held or made
invalid by a court  decision or  applicable  law, the remainder of the Agreement
shall not be affected adversely and shall remain in full force and effect.

   20. DEFINITIONS.  As used herein, "business day" means any customary business
day in the United  States on which the New York Stock  Exchange is open. As used
herein,   "investment   company,"   "affiliated  person,"  "interested  person,"
"assignment,"  "broker," and "dealer"  shall all have such meaning as such terms
have in the  Investment  Company Act. The term  "investment  adviser" shall have
such meaning as such term has in the Investment  Advisers Act and the Investment
Company  Act,  and in the  event  of a  conflict  between  such  Acts,  the most
expansive  definition  shall  control.  In  addition,  where  the  effect  of  a
requirement  of  the  Investment  Advisers  Act or the  Investment  Company  Act
reflected in any provision of this Agreement is relaxed by a rule, regulation or
order of the  Commission,  whether  of  special  or  general  application,  such
provision shall be deemed to incorporate the effect of such rule,  regulation or
order.

   IN WITNESS  WHEREOF,  the parties  hereto have executed this Agreement on the
day and year first written above.

                                     MAINSTREAM INVESTMENT ADVISERS, LLC

                                     By:
                                             -----------------------------------
                                     Name:   ________________________,
                                     Title:

                                     Attest:
                                             -----------------------------------
                                     Name:
                                     Title:


                                     SECURITY MANAGEMENT COMPANY, LLC

                                     By:
                                             -----------------------------------
                                     Name:   James R. Schmank
                                     Title:  President

                                     Attest:
                                             -----------------------------------
                                     Name:   Amy J. Lee
                                     Title:  Secretary

                                   SCHEDULE A

                             INVESTMENT ADVISORY FEE


   1. BASE ADVISORY FEE. The Adviser shall pay the Subadviser at the end of each
calendar  month, an advisory fee (the "Base Advisory Fee") equal to 1.00%, on an
annual  basis,  of the average  daily net assets of that  portion of each Fund's
assets  that  Adviser has  allocated  to  Subadviser  for  management.  The Base
Advisory  Fee shall be paid  regardless  of whether the Fund has had Net Capital
Appreciation  (as defined below) for the period.  If the Subadviser  shall serve
for less than the whole of any calendar  month,  the Base  Advisory Fee shall be
calculated  on a pro rata  basis for the  portion  of the month for which it has
served as Subadviser.

   2.  VALUATION.  For  purposes  of  calculating  the  compensation  to be paid
hereunder,  the value of the  Fund's net assets  shall be  computed  in the same
manner  at the end of each  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 ("Net Asset Value") as described in the then current  registration
statement for the applicable Fund.

   3. INCENTIVE  FEE. For a period  beginning with the date hereof and ending on
December  31, 2003 and for each year ending  December 31  thereafter  (each such
period being referred to herein as a "Valuation Period"), for which there is Net
Capital Appreciation (as defined below), the Adviser shall pay to the Subadviser
an incentive fee (the "Incentive Fee") equal to ten percent (10%) of the excess,
if any, of the Net Capital  Appreciation  of the Fund for such Valuation  Period
over any Accumulated Net Capital  Depreciation (as defined below). The Incentive
Fee shall be  calculated  on the basis of  performance  of that  portion of each
Fund's assets that Adviser has allocated to Subadviser for management.

   "Net Capital  Appreciation"  means the excess, if any, of the Net Asset Value
of the applicable portion of the Fund's assets at the end of a Valuation Period,
after  reduction  for the Base  Advisory  Fee,  over the Net Asset Value of that
portion of the Fund's assets at the beginning of such Valuation Period, adjusted
for  intervening  transfers to and from the other  portion of the Fund's  assets
during the Valuation Period.  However,  in the event that the applicable portion
of the Fund's Net Asset  Value is less on the last day of the  Valuation  Period
than  that  portion  of the Net Asset  Value as of the last day of the  previous
Valuation  Period in  respect of which an  Incentive  Fee was paid (or as of the
commencement  of  trading  in the  Fund,  whichever  is  higher),  adjusted  for
intervening  transfers to and from the other portion of the Fund's assets,  then
no  Incentive  Fee shall be  payable in respect  of that  Valuation  Period.  An
Incentive  Fee  would  next  be  payable  only  if the Net  Asset  Value  of the
applicable  portion of a Fund attains a new high, so that no Incentive Fee would
be chargeable should current performance fall below previous highs. No Incentive
Fee would become payable until the Net Asset Value of the applicable  portion of
the Fund as of the end of a Valuation Period exceeds the Net Asset Value of that
portion of the Fund  immediately  after the previous  Incentive Fee was paid and
such  Incentive  Fee  shall  be  equal  to ten  percent  (10%)  of that  excess.
"Accumulated  Net  Capital  Depreciation"  means  the  sum  of the  Net  Capital
Depreciation (as defined below) amounts for all Valuation  Periods for which Net
Capital  Depreciation  exists,  reduced,  but not below zero, at the end of each
subsequent   Valuation  Period  by  the  Net  Capital   Appreciation,   if  any,
attributable to such subsequent  Valuation  Period.  "Net Capital  Depreciation"
means the excess,  if any, of the Net Asset Value of the  applicable  portion of
the Fund at the beginning of a Valuation Period over the Net Asset Value of that
portion of the Fund at the end of such Valuation Period.

   For  purposes  of  calculating  Net  Capital  Appreciation  and  Net  Capital
Depreciation,  all realized and  unrealized  gains and losses during a Valuation
Period,  as well as income  received during a Valuation  Period,  shall be taken
into account. In addition,  any funds added from time to time to that portion of
the Fund managed by Subadviser  during a Valuation Period shall be deducted from
the Net Asset Value of that portion of the Fund, and any funds  transferred from
that  portion of the Fund during a Valuation  Period  shall be added back to the
Net Asset Value of that portion of the Fund, in computing Net Asset Value at the
end of such  Valuation  Period.  If this Agreement is terminated by either party
prior to the end of any Valuation Period, the Subadviser shall be entitled to an
Incentive  Fee for the  period  commencing  with the first day of the  Valuation
Period and ending on the effective date of such  termination.  In no event shall
the  Subadviser  be required to refund any  portion of the  Incentive  Fee for a
prior Valuation Period.

   4. PAYMENT OF FEES. All fees due Subadviser  shall be remitted by the Adviser
within thirty (30) days after the applicable calendar month end and/or Valuation
Period.

EX-99.D7

                             SUB-ADVISORY AGREEMENT


   THIS AGREEMENT is made and entered into as of the 3rd day of September,  2002
between  SECURITY  MANAGEMENT  COMPANY,  LLC (the  "Adviser"),  a Kansas limited
liability  company,  registered  under the  Investment  Advisers Act of 1940, as
amended (the "Investment  Advisers Act"), and Templeton  Investment Counsel, LLC
(the  "Subadviser"),  a Delaware limited liability company  registered under the
Investment Advisers Act.

                                   WITNESSETH:

   WHEREAS,  SBL Fund and Security Equity Fund,  Kansas  corporations,  are each
registered  with the Securities and Exchange  Commission (the  "Commission")  as
open-end  management  investment  companies under the Investment  Company Act of
1940, as amended (the "Investment Company Act");

   WHEREAS,  SBL Fund is  authorized  to issue  shares of  Series I, a  separate
series of SBL Fund and Security Equity Fund is authorized to issue shares of the
International  Series,  a separate  series of Security Equity Fund (Series I and
the  International  Series are referred to herein  individually  as a "Fund" and
collectively as the "Funds");

   WHEREAS,  each of the Funds has,  pursuant to an Advisory  Agreement with the
Adviser (the  "Advisory  Agreement"),  retained the Adviser to act as investment
adviser for and to manage its assets;

   WHEREAS,  the Advisory  Agreements  permit the Adviser to delegate certain of
its duties under the Advisory Agreement to other investment advisers, subject to
the requirements of the Investment Company Act; and

   WHEREAS, the Adviser desires to retain the Subadviser as subadviser to act as
investment  adviser  for and to manage the  Funds'  respective  Investments  (as
defined below) and the Subadviser desires to render such services.

   NOW,  THEREFORE,  the Adviser and Subadviser do mutually agree and promise as
follows:

   1.  APPOINTMENT AS  SUBADVISER.  The Adviser hereby retains the Subadviser to
act as  investment  adviser for and to manage the assets of each Fund subject to
the  supervision  of the  Adviser  and the Board of  Directors  of such Fund and
subject to the terms of this Agreement;  and the Subadviser  hereby accepts such
employment.  In such  capacity,  the Subadviser  shall be  responsible  for each
Fund's Investments.

   2.  DUTIES OF SUBADVISER.

        (a)  INVESTMENTS.  The Subadviser is hereby  authorized and directed and
   hereby agrees,  subject to the stated investment policies and restrictions of
   each Fund as set forth in such Fund's  prospectus and statement of additional
   information as currently in effect and as  supplemented  or amended from time
   to time  (collectively  referred  to  hereinafter  as the  "Prospectus")  and
   subject to the  directions  of the Adviser and such Fund's Board of Directors
   to  purchase,  hold  and  sell  investments  for the  account  of  such  Fund
   (hereinafter  "Investments")  and  to  monitor  on  a  continuous  basis  the
   performance  of such  Investments.  The  Subadviser  shall give the Funds the
   benefit of its best efforts in  rendering  its  services as  Subadviser.  The
   Subadviser  may contract  with or consult with such banks,  other  securities
   firms, brokers or other parties,  without additional expense to the Funds, as
   it may deem appropriate regarding investment advice, research and statistical
   data, clerical assistance or otherwise.

        (b) BROKERAGE. The Subadviser is authorized,  subject to the supervision
   of the Adviser and the  respective  Fund's  Board to  establish  and maintain
   accounts on behalf of each Fund with,  and place  orders for the purchase and
   sale of each Fund's  Investments  with or through,  such persons,  brokers or
   dealers as Subadviser may select which may include,  to the extent  permitted
   by the Adviser and the respective Fund's Board, brokers or dealers affiliated
   with the Subadviser or Adviser, and negotiate  commissions to be paid on such
   transactions. The Subadviser agrees that in placing such orders for a Fund it
   shall attempt to obtain best execution, provided that, the Subadviser may, on
   behalf of such Fund,  pay brokerage  commissions  to a broker which  provides
   brokerage  and research  services to the  Subadviser  in excess of the amount
   another broker would have charged for effecting the transaction, provided (i)
   the  Subadviser  determines  in good faith that the amount is  reasonable  in
   relation to the value of the brokerage and research  services provided by the
   executing  broker in terms of the  particular  transaction or in terms of the
   Subadviser's  overall  responsibilities  with  respect  to such  Fund and the
   accounts as to which the Subadviser  exercises  investment  discretion,  (ii)
   such  payment is made in  compliance  with  Section  28(e) of the  Securities
   Exchange  Act of  1934,  as  amended,  and  any  other  applicable  laws  and
   regulations,   and  (iii)  in  the  opinion  of  the  Subadviser,  the  total
   commissions  paid by such Fund will be reasonable in relation to the benefits
   to the  Fund  over  the  long  term.  In  reaching  such  determination,  the
   Subadviser  will not be  required  to place or  attempt  to place a  specific
   dollar value on the  brokerage  and/or  research  services  provided or being
   provided by such broker.  It is recognized that the services provided by such
   brokers may be useful to the Subadviser in connection  with the  Subadviser's
   services  to other  clients.  On  occasions  when the  Subadviser  deems  the
   purchase  or sale of a security  to be in the best  interests  of the Fund as
   well as other  clients  of the  Subadviser,  the  Subadviser,  to the  extent
   permitted  by  applicable  laws and  regulations,  may, but shall be under no
   obligation  to,  aggregate the securities to be sold or purchased in order to
   obtain the most favorable price or lower brokerage  commissions and efficient
   execution.  In such event,  allocation of securities so sold or purchased, as
   well  as the  expenses  incurred  in the  transaction,  will  be  made by the
   Subadviser in the manner the  Subadviser  considers to be the most  equitable
   and consistent  with its fiduciary  obligations to the Fund or Funds involved
   and to such other clients.  The Subadviser  will provide  information on such
   allocations  at the  reasonable  request of the  Adviser,  or the  respective
   Fund's Board, which information may include the broker(s) to whom such trades
   were  directed and the basis of the  allocation  for the  aggregated  trades.
   Subject  to the  foregoing  provisions  of this  subsection  2(b)  and at the
   direction of the Adviser or the Fund,  the Subadviser may also consider sales
   of the Funds' shares as a factor in the selection of brokers or dealers for a
   Fund's portfolio transactions.

        (c) SECURITIES TRANSACTIONS. The Subadviser and any affiliated person of
   the Subadviser will not purchase securities or other instruments from or sell
   securities  or  other  instruments  to  a  Fund  ("Principal  Transactions");
   PROVIDED, HOWEVER, the Subadviser may enter into a Principal Transaction with
   a Fund if (i) the  transaction  is  permissible  under  applicable  laws  and
   regulations,  including,  without limitation,  the Investment Company Act and
   the  Investment  Advisers  Act  and the  rules  and  regulations  promulgated
   thereunder, and (ii) the transaction or category of transactions receives the
   express written approval of the Adviser.

            The  Subadviser  agrees to observe  and comply with Rule 17j-1 under
   the Investment Company Act and its Code of Ethics, as the same may be amended
   from time to time. The Subadviser agrees to provide the Adviser and the Funds
   with a copy of such Code of Ethics.

        (d)  BOOKS AND  RECORDS.  The  Subadviser  will  maintain  all books and
   records required to be maintained  pursuant to the Investment Company Act and
   the rules and  regulations  promulgated  thereunder  solely  with  respect to
   transactions made by it on behalf of the Funds including, without limitation,
   the books and records  required by  Subsections  (b)(1),  (5), (6), (7), (9),
   (10) and (11) and Subsection  (f) of Rule 31a-1 under the Investment  Company
   Act and shall timely furnish to the Adviser all  information  relating to the
   Subadviser's  services  hereunder  needed by the  Adviser  to keep such other
   books and records of the Funds  required  by Rule 31a-1 under the  Investment
   Company Act. The Subadviser will also preserve all such books and records for
   the periods prescribed in part (e) of Rule 31a-2 under the Investment Company
   Act,  and agrees to provide the Adviser or Fund with copies of such books and
   records upon the Adviser's  reasonable request. The Subadviser further agrees
   that all books and records  maintained  hereunder  shall be made available to
   the respective  Fund or the Adviser at any time upon  reasonable  request and
   notice, including telecopy, during any business day.

        (e) INFORMATION CONCERNING INVESTMENTS AND SUBADVISER. From time to time
   as the  Adviser  or a Fund may  request,  the  Subadviser  will  furnish  the
   requesting party reports on portfolio transactions and reports on Investments
   held in the  portfolios,  all in such detail as the Adviser or the applicable
   Fund may reasonably request.  The Subadviser will make available its officers
   and  employees  to meet with the Board of  Directors  of a Fund at the Fund's
   principal place of business upon reasonable request to review the Investments
   of the Fund.

            The Subadviser will also provide such  information as is customarily
   provided by a subadviser  and may be required for each Fund or the Adviser to
   comply with their respective  obligations  under applicable laws,  including,
   without  limitation,  the  Internal  Revenue  Code of 1986,  as amended  (the
   "Code"),  the  Investment  Company  Act,  the  Investment  Advisers  Act, the
   Securities  Act of 1933,  as  amended  (the  "Securities  Act") and any state
   securities laws, and any rule or regulation thereunder.

            During the term of this Agreement, the Adviser agrees to furnish the
   Subadviser  at  its  principal  office  all  registration  statements,  proxy
   statements,  reports to  stockholders,  sales  literature or other  materials
   prepared for  distribution  to  stockholders of each Fund, or the public that
   refer to the Subadviser for Subadviser's review and approval.  The Subadviser
   shall be deemed to have  approved all such  materials  unless the  Subadviser
   reasonably  objects by giving  notice to the  Adviser in writing  within five
   business days (or such other period as may be mutually  agreed) after receipt
   thereof. The Subadviser's right to object to such materials is limited to the
   portions of such  materials that relate to the  Subadviser,  its services and
   its  clients.  The  Adviser  agrees to use its best  efforts  to ensure  that
   materials prepared by its employees or agents or its affiliates that refer to
   the Subadviser or its clients in any way are consistent  with those materials
   previously approved by the Subadviser as referenced in this paragraph.  Sales
   literature  may be furnished to the  Sub-Adviser  by first class or overnight
   mail, facsimile transmission equipment or hand delivery.

        (f) CUSTODY  ARRANGEMENTS.  The  Subadviser  shall  provide  each Fund's
   custodian, on each business day with information relating to all transactions
   concerning the Fund's assets.

        (g) COMPLIANCE  WITH  APPLICABLE  LAWS AND GOVERNING  DOCUMENTS.  In all
   matters relating to the performance of this Agreement, the Subadviser and its
   directors,  officers, partners, employees and interested persons shall act in
   conformity with each Fund's Articles of Incorporation, By-Laws, and currently
   effective  registration  statement  and with  the  written  instructions  and
   directions  of each Fund's Board and the  Adviser,  and shall comply with the
   requirements of the Investment Company Act, the Investment  Advisers Act, the
   Commodity  Exchange  Act (the  "CEA"),  the rules  thereunder,  and all other
   applicable federal and state laws and regulations.

            In carrying out its obligations under this Agreement, the Subadviser
   shall,  solely with regard to those  matters  within its control and based on
   information  available  to it (i)  invest  the  assets  of the Fund in such a
   manner that each Fund complies with Section  851(b)(2) and Section  851(b)(3)
   of Subchapter M of the Code (or any successor  provision) and (ii) invest the
   assets of Series I of SBL Fund in such a manner that  Series I complies  with
   the  diversification  provisions  of  Section  817(h)  of the  Code  (or  any
   successor  provision) and the regulations  issued thereunder  relating to the
   diversification   requirements  for  variable  insurance  contracts  and  any
   prospective  amendments or other  modifications to Section 817 or regulations
   thereunder.  Subadviser  shall notify the Adviser  immediately  upon having a
   reasonable  basis  for  believing  that a Fund has  ceased  to  qualify  as a
   Regulated  Investment  Company or Series I has ceased to comply with  Section
   817(h) and, with respect to Section 817(h), will take all reasonable steps to
   adequately  diversify Series I so as to achieve  compliance  within the grace
   period afforded by Regulation 1.817-5.

            The Adviser has furnished the Subadviser  with copies of each of the
   following  documents and will furnish the Subadviser at its principal  office
   all future  amendments and supplements to such documents,  if any, as soon as
   practicable  after such  documents  become  available:  (i) the  Articles  of
   Incorporation  of each Fund, (ii) the By-Laws of each Fund, (iii) each Fund's
   registration  statement  under the Investment  Company Act and the Securities
   Act of 1933, as amended,  as filed with the Commission,  and (iv) any written
   instructions of the respective  Fund's Board and the Adviser.  The Subadviser
   shall not be held  responsible  for  compliance  with any document  described
   above unless and until such document has been provided to the Subadviser.

        (h) VOTING OF PROXIES.  The Subadviser  shall direct the custodian as to
   how to vote such proxies as may be necessary or advisable in connection  with
   any matters submitted to a vote of shareholders of securities held by a Fund.
   The Adviser will instruct the custodian and other parties providing  services
   to the Fund promptly to forward to the  Subadviser  copies of all proxies and
   shareholder  communications  relating to securities  held by each Fund (other
   than  materials  relating  to Legal  Proceedings).  The  Adviser  agrees that
   Subadviser  will not be  responsible  or liable  for  failing  to direct  the
   custodian  to vote any  proxies  where  it has not  received  copies  of such
   proxies  or  related  shareholder  communications  on  a  timely  basis.  The
   Subadviser  will not be expected or required to advise or act for the Adviser
   or a Fund in any Legal Proceedings,  including bankruptcies or class actions,
   involving  securities held or previously held by a Fund or the issuers of the
   securities  ("Legal  Proceedings").  The Subadviser may undertake  litigation
   against an issuer on behalf of a Fund,  provided that the Subadviser  obtains
   the Fund's prior consent to being a named plaintiff in such  litigation,  and
   the Fund will pay its portion of any applicable outside legal fees associated
   with the action. If the Fund does not consent to being a named plaintiff in a
   litigation,  it shall forfeit any claim to any assets  Subadviser may recover
   and,  in such  case,  the  Adviser  agrees to hold  Subadviser  harmless  for
   excluding a Fund from such action.  In the case of class action  settlements,
   and/or upon the final  disposition of a class action suit  involving  issuers
   held in a Fund,  Subadviser  shall  include  information  about  the Fund for
   purposes  of  participating  in  any  distribution   made  pursuant  to  such
   settlement  and/or  final  disposition.  The Fund will pay its  proportionate
   share of any outside legal fees incurred in completing  required  claim forms
   in such cases.

   3. INDEPENDENT  CONTRACTOR.  In the performance of its duties hereunder,  the
Subadviser  is and  shall be an  independent  contractor  and  unless  otherwise
expressly  provided  herein or otherwise  authorized  in writing,  shall have no
authority  to act  for or  represent  the  Funds  or the  Adviser  in any way or
otherwise be deemed an agent of the Funds or the Adviser.

   4.  COMPENSATION.  The Adviser shall pay to the Subadviser,  for the services
rendered hereunder, the fees set forth in Exhibit A to this Agreement.

   5.  EXPENSES.  The  Subadviser  shall  bear all  expenses  incurred  by it in
connection  with  its  services  under  this  Agreement  (other  than  brokerage
commissions,  mark ups and other expenses  relating to transactions  effected on
behalf of a Fund) and will,  from time to time,  at its sole  expense  employ or
associate  itself with such persons as it believes to be particularly  fitted to
assist it in the  execution of its duties  hereunder.  However,  the  Subadviser
shall not assign or delegate any of its investment  management duties under this
Agreement without the approval of the Adviser and the appropriate Fund's Board.

   6.  REPRESENTATIONS AND WARRANTIES OF SUBADVISER.  The Subadviser  represents
and warrants to the Adviser and the Funds as follows:

        (a) The  Subadviser is  registered  as an  investment  adviser under the
   Investment Advisers Act;

        (b) The Subadviser will immediately notify the Adviser of the occurrence
   of any  event  that  would  disqualify  the  Subadviser  from  serving  as an
   investment  adviser of an investment  company pursuant to Section 9(a) of the
   Investment Company Act;

        (c) The Subadviser is fully authorized under all applicable law to serve
   as Subadviser to the Funds and to perform the services  described  under this
   Agreement.;

        (d) The  Subadviser is a limited  liability  company duly  organized and
   validly  existing  under the laws of the state of Delaware  with the power to
   own and  possess  its  assets  and carry on its  business  as it is now being
   conducted;

        (e) The  execution,  delivery and  performance by the Subadviser of this
   Agreement are within the Subadviser's powers and have been duly authorized by
   all necessary action on the part of its shareholders,  and no action by or in
   respect of, or filing  with,  any  governmental  body,  agency or official is
   required  on the  part of the  Subadviser  for the  execution,  delivery  and
   performance by the Subadviser of this Agreement, and the execution,  delivery
   and  performance  by the  Subadviser of this  Agreement do not  contravene or
   constitute a default  under (i) any  provision  of  applicable  law,  rule or
   regulation,  (ii)  the  Subadviser's  governing  instruments,  or  (iii)  any
   agreement,  judgment,  injunction,  order, decree or other instrument binding
   upon the Subadviser;

        (f) This Agreement is a valid and binding agreement of the Subadviser;

        (g) The Form ADV of the Subadviser previously provided to the Adviser is
   a true and  complete  copy of the form  filed  with  the  Commission  and the
   information  contained  therein is  accurate  and  complete  in all  material
   respects as of its filing date,  and does not omit to state any material fact
   necessary in order to make the statements made, in light of the circumstances
   under which they were made, not misleading;

   7. NON-EXCLUSIVITY.  The services of the Subadviser with respect to the Funds
are not deemed to be exclusive,  and the  Subadviser  and its officers  shall be
free to render  investment  advisory  and  administrative  or other  services to
others (including other investment  companies) and to engage in other activities
so  long  as  its  duties  hereunder  are  not  impaired  thereby.  The  Adviser
understands  that  the  Subadviser  provides  investment  advisory  services  to
numerous  other  funds and  accounts.  The  Adviser  also  understands  that the
Subadviser  may give  advice and take  action  with  respect to any of its other
clients or for its own  account  which may  differ  from the timing or nature of
action  taken by the  Subadviser  with  respect  to the  Funds.  Nothing in this
Agreement shall impose upon the Subadviser any obligation to purchase or sell or
to recommend for purchase or sale,  with respect to a Fund,  any security  which
the  Subadviser,  or  its  shareholders,   directors,   officers,  employees  or
affiliates  may  purchase  or sell for its or their  own  account(s)  or for the
account of any other client, provided, however, that this provision shall not be
construed to relieve the  Subadviser of any fiduciary  duty it owes to the Funds
in selecting Investments for the Funds.

   8.  REPRESENTATIONS  AND  WARRANTIES OF ADVISER.  The Adviser  represents and
warrants to the Subadviser as follows:

        (a) The  Adviser  is  registered  as an  investment  adviser  under  the
   Investment Advisers Act;

        (b) The  Adviser has filed a notice of  exemption  pursuant to Rule 4.14
   under the CEA with the Commodity Futures Trading  Commission (the "CFTC") and
   the National Futures Association;

        (c) The  Adviser  is a limited  liability  company  duly  organized  and
   validly  existing under the laws of the State of Kansas with the power to own
   and  possess  its  assets  and  carry  on its  business  as it is  now  being
   conducted;

        (d) The  execution,  delivery  and  performance  by the  Adviser of this
   Agreement and the Advisory Agreement are within the Adviser's powers and have
   been duly authorized by all necessary action on the part of its members,  and
   no action by or in respect of, or filing with, any governmental  body, agency
   or  official  is  required  on the  part of the  Adviser  for the  execution,
   delivery and performance by the Adviser of this Agreement, and the execution,
   delivery and  performance  by the Adviser of this Agreement do not contravene
   or constitute a default  under (i) any  provision of applicable  law, rule or
   regulation, (ii) the Adviser's governing instruments, or (iii) any agreement,
   judgment,  injunction,  order,  decree or other  instrument  binding upon the
   Adviser;

        (e) This  Agreement  and the  Advisory  Agreement  are valid and binding
   agreements of the Adviser;

        (f) The Form ADV of the Adviser previously provided to the Subadviser is
   a true and  complete  copy of the form  filed  with  the  Commission  and the
   information  contained  therein is  accurate  and  complete  in all  material
   respects as of its filing date and does not omit to state any  material  fact
   necessary in order to make the statements made, in light of the circumstances
   under which they were made, not misleading;

        (g) The Adviser acknowledges that it received a copy of the Subadviser's
   Form ADV at least 48 hours prior to the execution of this Agreement.

   9. SURVIVAL OF REPRESENTATIONS  AND WARRANTIES;  DUTY TO UPDATE  INFORMATION.
All  representations  and  warranties  made by the  Subadviser  and the  Adviser
pursuant  to  Sections 6 and 8 hereof  shall  survive  for the  duration of this
Agreement  and the parties  hereto shall  promptly  notify each other in writing
upon becoming aware that any of the foregoing representations and warranties are
no longer true.

   10. LIABILITY AND INDEMNIFICATION.

        (a) LIABILITY. In the absence of willful misfeasance, bad faith or gross
   negligence on the part of the Subadviser or a breach of its duties hereunder,
   the  Subadviser  shall not be subject to any  liability  to the  Adviser,  to
   either Fund,  or any of either  Fund's  shareholders,  and, in the absence of
   willful misfeasance, bad faith or gross negligence on the part of the Adviser
   or a breach of its duties hereunder,  the Adviser shall not be subject to any
   liability  to the  Subadviser,  for any act or  omission  in the case of,  or
   connected with,  rendering  services  hereunder or for any losses that may be
   sustained in the purchase, holding or sale of Investments; PROVIDED, HOWEVER,
   that nothing herein shall relieve the Adviser and the Subadviser  from any of
   their  respective  obligations  under  applicable  law,  including,   without
   limitation, the federal and state securities laws and the CEA

        (b) INDEMNIFICATION.  The Subadviser shall indemnify the Adviser and the
   Funds,  and their  respective  officers and directors,  for any liability and
   expenses,  including  attorneys' fees, which may be sustained by the Adviser,
   or the Funds, as a result of the Subadviser's willful misfeasance, bad faith,
   gross  negligence,  breach of its duties hereunder or violation of applicable
   law, including,  without limitation, the federal and state securities laws or
   the CEA. The Adviser  shall  indemnify  the  Subadviser  and its officers and
   partners,  for any liability and expenses,  including  attorneys' fees, which
   may be  sustained  as a  result  of the  Adviser's,  or  the  Funds'  willful
   misfeasance,  bad faith, gross negligence,  breach of its duties hereunder or
   violation of applicable law, including,  without limitation,  the federal and
   state securities laws or the CEA.

   11. DURATION AND TERMINATION.

        (a) DURATION.  This Agreement shall become effective upon the date first
   above  written,  provided  that this  Agreement  shall not take  effect  with
   respect  to the  Funds  unless  it has  first  been  approved  by a vote of a
   majority  of those  directors  of SBL  Fund  and  Security  Equity  Fund,  as
   applicable,  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
   on such approval. This Agreement shall continue in effect for a period of two
   years from the date hereof,  subject  thereafter to being  continued in force
   and  effect  from year to year  with  respect  to each  Fund if  specifically
   approved  each year by the Board of  Directors  of the  applicable  Fund.  In
   addition to the  foregoing,  each renewal of this  Agreement  with respect to
   each Fund must be approved by the vote of a majority of the applicable Fund's
   directors 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 on
   such approval. Prior to voting on the renewal of this Agreement, the Board of
   Directors of the applicable Fund may request and evaluate, and the Subadviser
   shall furnish,  such information as may reasonably be necessary to enable the
   Fund's Board of Directors to evaluate the terms of this Agreement.

        (b) TERMINATION.  Notwithstanding whatever may be provided herein to the
   contrary,  this Agreement may be terminated at any time,  without  payment of
   any penalty:

              (i) By  vote  of a  majority  of the  Board  of  Directors  of the
        applicable  Fund,  or by vote of a majority  of the  outstanding  voting
        securities of the applicable Fund, or by the Adviser, in each case, upon
        sixty (60) days' written notice to the Subadviser;

             (ii)  By  the  Adviser  upon  breach  by  the   Subadviser  of  any
        representation  or warranty  contained in Section 6 hereof,  which shall
        not have been cured within twenty (20) days of the Subadviser's  receipt
        of written notice of such breach;

            (iii)  By  the  Adviser  immediately  upon  written  notice  to  the
        Subadviser if the Subadviser  becomes unable to discharge its duties and
        obligations under this Agreement; or

             (iv) By the  Subadviser  upon 90 days written notice to the Adviser
        and the applicable Fund.

            This Agreement shall not be assigned (as such term is defined in the
   Investment  Company  Act)  without the prior  written  consent of the parties
   hereto.  This Agreement  shall  terminate  automatically  in the event of its
   assignment  without  such  consent or upon the  termination  of the  Advisory
   Agreement.

   12. DUTIES OF THE ADVISER.  The Adviser shall continue to have responsibility
for all services to be provided to the Funds pursuant to the Advisory  Agreement
and shall oversee and review the  Subadviser's  performance  of its duties under
this Agreement.

   13.  AMENDMENT.  This  Agreement  may be  amended  by mutual  consent  of the
parties,  provided that the terms of each such  amendment with respect to a Fund
shall be approved by the Board of Directors of the applicable  Fund or by a vote
of a majority of the outstanding voting securities of the applicable Fund.

   14.  NOTICE.  Any notice  that is required to be given by the parties to each
other (or to the Fund)  under the terms of this  Agreement  shall be in writing,
delivered,  or mailed  postpaid to the other party,  or transmitted by facsimile
with  acknowledgment  of receipt,  to the parties at the following  addresses or
facsimile  numbers,  which may from time to time be  changed  by the  parties by
notice to the other party:

        (a) If to the Subadviser:

            Templeton Investment Counsel, LLC
            500 E. Broward Blvd., Suite 2100
            Ft. Lauderdale, FL 33394
            Attention:  Gary Motyl

        (b) Copy to:

            Franklin Templeton Investments
            One Franklin Parkway
            San Mateo, CA  94403-1906
            Attention:  General Counsel

        (c) If to the Adviser:

            Security Management Company, LLC
            One Security Benefit Place
            Topeka, Kansas 66636-0001
            Attention:  James R. Schmank, President
            Facsimile:  (785) 438-3080

        (d) If to SBL Fund:

            SBL Fund
            One Security Benefit Place
            Topeka, Kansas 66636-0001
            Attention:  Amy J. Lee, Secretary
            Facsimile:  (785) 438-3080

        (d) If to Security Equity Fund:

            Security Equity Fund
            One Security Benefit Place
            Topeka, Kansas 66636-0001
            Attention:  Amy J. Lee, Secretary
            Facsimile:  (785) 438-3080

   15. GOVERNING LAW; JURISDICTION. Except as indicated in Section 19(b) of this
Agreement,  this Agreement shall be governed by and construed in accordance with
the laws of the  State of New  York,  without  regard  to its  conflicts  of law
provisions.

   16. COUNTERPARTS. This Agreement may be executed in one or more counterparts,
all of which shall together constitute one and the same instrument.

   17.  CAPTIONS.  The captions herein are included for convenience of reference
only and shall be ignored in the construction or interpretation hereof.

   18.  SEVERABILITY.  If any provision of this Agreement  shall be held or made
invalid by a court  decision or  applicable  law, the remainder of the Agreement
shall not be affected adversely and shall remain in full force and effect.

   19. CERTAIN DEFINITIONS.

        (a)  "BUSINESS  DAY." As used herein,  business day means any  customary
   business  day in the United  States on which the New York Stock  Exchange  is
   open.

        (b)  MISCELLANEOUS.  Any  question  of  interpretation  of any  term  or
   provision of this Agreement having a counterpart in or otherwise derived from
   a term or  provision  of the  Investment  Company  Act shall be  resolved  by
   reference  to such term or  provision  of the  Investment  Company Act and to
   interpretations thereof, if any, by the U.S. courts or, in the absence of any
   controlling decisions of any such court, by rules, regulation or order of the
   Commission   validly  issued   pursuant  to  the   Investment   Company  Act.
   Specifically,  as used herein,  "investment  company,"  "affiliated  person,"
   "interested person,"  "assignment,"  "broker," "dealer" and "affirmative vote
   of the majority of the Fund's  outstanding  voting securities" shall all have
   such  meaning as such  terms have in the  Investment  Company  Act.  The term
   "investment  adviser"  shall  have  such  meaning  as  such  term  has in the
   Investment Advisers Act and the Investment Company Act, and in the event of a
   conflict between such Acts, the most expansive  definition shall control.  In
   addition,  where the effect of a requirement  of the  Investment  Company Act
   reflected in any provision of this Agreement is relaxed by a rule, regulation
   or order of the Commission,  whether of special or general application,  such
   provision shall be deemed to incorporate the effect of such rule,  regulation
   or order.

   IN WITNESS  WHEREOF,  the parties  hereto have executed this Agreement on the
day and year first written above.

                                         SECURITY MANAGEMENT COMPANY, LLC

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


                                         Attest: AMY J. LEE
                                                 -------------------------------
                                         Name:   Amy J. Lee
                                         Title:  Secretary


                                         TEMPLETON INVESTMENT COUNSEL, LLC

                                         By:     GARY PAUL MOTYL
                                                 -------------------------------
                                         Name:   Gary Paul Motyl
                                         Title:  President


                                         Attest: ROBERT R. W. KAMEDA
                                                 -------------------------------
                                         Name:   Robert R. W. Kameda
                                         Title:  Associate General Counsel

                                    EXHIBIT A

                                  Compensation


   For all services rendered by the Subadviser  hereunder,  Adviser shall pay to
Subadviser an annual fee (the "Subadvisory Fee") as follows:

   An annual rate of 0.625% (62.5 basis points) of the combined  averaged  daily
net assets of the Funds of $50 million or less; plus

   An annual rate of 0.465% (46.5 basis  points) of the combined  average  daily
net assets of the Funds of more than $50 million, up to $200 million; plus

   An annual rate of 0.375% (37.5 basis  points) of the combined  average  daily
net assets of the Funds of more than $200 million, up to $500 million; plus

   An annual rate of 0.350% (35 basis points) of the combined  average daily net
assets of the Funds of more than $500 million.

   For purposes of calculating the compensation to be paid hereunder,  the value
of the net assets of a Fund 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 then current prospectus for the applicable Fund.

   The  Subadvisory  Fee shall be accrued for each  calendar day the  Subadviser
renders  subadvisory  services  hereunder  and the sum of the daily fee accruals
shall be paid monthly to the  Subadviser  as soon as  practicable  following the
last day of each month, by wire transfer if so requested by the Subadviser,  but
no later than ten (10)  calendar days  thereafter.  If this  Agreement  shall be
effective for only a portion of a year, then the  Subadviser's fee for said year
shall be prorated for such portion.

EX-99.E1

                             DISTRIBUTION AGREEMENT


     THIS AGREEMENT,  dated as of 1 January 1964,  between SECURITY EQUITY FUND,
INC., a Kansas  corporation with offices in Topeka,  Kansas,  Party of the First
Part (hereinafter  sometimes called the "Company"),  and SECURITY  DISTRIBUTORS,
INC., a Kansas corporation with offices in Topeka,  Kansas,  Party of the Second
Part (hereinafter sometimes called the "Distributor").

     WITNESSETH:

     1. The  Company  hereby  covenants  and agrees that during the term of this
Agreement,  and any renewal or extension thereof, or until any prior termination
thereof, the Distributor shall have the exclusive right to offer for sale and to
distribute  any and all  shares of capital  stock  issued or to be issued by the
Company.

     2. The Distributor hereby covenants and agrees to act as the distributor of
the  shares  issued  or to be issued  by the  Company  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  governmental
law or regulation.

     3. Prior to the  issuance  of any  shares by the  Company  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 Company 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 Company of the sale of such  shares.  The  Distributor  shall be entitled to
charge a  commission  on each such sale of shares in the amount set forth in the
prospectus  of  the  Company,  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 Company.  All shares of the Company shall be sold to the public
only at their public  offering  price at the time of such sale,  and the Company
shall receive not less than the full net asset value thereof.

     4. The  Distributor  agrees  that,  during the period this  Agreement is in
effect  and to the  extent  hereinafter  in this  Section  4  provided,  it will
reimburse the Company for or pay -

     (a)  All  Costs,   expenses  and  fees  incurred  in  connection  with  the
     registration  and  qualification  of the Company's shares under the Federal
     Securities  Act of 1933 and under  the  applicable  "Blue  Sky" laws of the
     states in which the Company wishes to distribute its shares;

     (b) All costs and expenses of all prospectuses, advertising material, sales
     literature,  circulars and other  material used or to be used in connection
     with the offering for sale of the shares of the Company;

     (c) All  costs,  expenses  and  fees in  connection  with the  printing  of
     application and confirmation forms; and

     (d) All clerical and  administrative  costs in processing the  applications
     for and in connection with the sale of shares of the Company.

     The Distributor  agrees to submit to the Company 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 the
Company's shares.

     5. Notwithstanding any other provisions of this Agreement, it is understood
and agreed that the Distributor  may act as a broker,  on behalf of the Company,
in the purchase and sale of  securities  not effected on a securities  exchange,
provided  that any  such  transactions  and any  commission  paid in  connection
herewith  shall  comply in every  respect with the  requirements  of the Federal
Investment  Company Act of 1940 and in  particular  with  Section  17(e) of said
statute and the Rules and Regulations of the Securities and Exchange  Commission
promulgated thereunder.

     6. The parties  hereto agree that all  provisions of this Agreement will be
performed in strict  accordance with the requirements of the Investment  Company
Act of 1940, the  Securities  Act of 1933, the Securities  Exchange Act of 1934,
and the rules and  regulations of the Securities and Exchange  Commission  under
said statutes,  in strict  accordance with all applicable  state "Blue Sky" laws
and the rules and  regulations  thereunder,  and in strict  accordance  with the
provisions of the Articles of Incorporation and Bylaws of the Company.

     7. This  Agreement  shall become  effective on January 1, 1964,  or as soon
thereafter  as  an  amendment  to  the  Company's  prospectus,   reflecting  the
underwriting  arrangements  provided by this Agreement,  shall become  effective
under the Securities Act of 1933.

     8. Upon  becoming  effective as provided in the  preceding  Section 7, this
Agreement  shall  continue in effect until the close of business on December 31,
1964, and thereafter from year to year,  provided that such continuance for each
successive year after December 31, 1964, is specifically  approved in advance at
least  annually by the board of directors  (including  approval by a majority of
the directors who are not parties to the Agreement or affiliated  persons of any
such party) or by the vote of a majority of the outstanding voting securities of
the Company. 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 Company
shall be given promptly to the Distributor.

     9. This  Agreement  may be  terminated by the Company at any time 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 Company at least sixty (60) days previous  written notice
of such intention to terminate.

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

     10. No provision of this  Agreement is intended to or shall be construed as
protecting  the  Distributor  against  any  liability  to the  Company or to the
Company'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 or by reason of the Distributor's  reckless  disregard
of its obligations and duties under this Agreement.

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

     12. The  Distributor  shall be deemed to be an independent  contractor and,
except as  expressly  provided  or  authorized  by the  Company,  shall  have no
authority to act for or represent the Company.

     13. 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, Inc.
                              Security Benefit Life Building
                              700 Harrison Street
                              Topeka, Kansas

                              Security Distributors, Inc.
                              Security Benefit Life Building
                              700 Harrison Street
                              Topeka, Kansas

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day
and year first above written.

                                                  SECURITY EQUITY FUND, INC.

                                                  By:  Dean L. Smith
                                                       -------------------------
                                                       President
ATTEST:

Will J. Miller, Jr.
- -------------------------
Secretary

(SEAL)
                                                  SECURITY DISTRIBUTORS, INC.

                                                  By:  Robert E. Jacoby
                                                       -------------------------
                                                       President
ATTEST:

Will J. Miller, Jr.
- -------------------------
Secretary

(SEAL)

                       AMENDMENT TO DISTRIBUTION AGREEMENT


     WHEREAS,   Security   Equity  Fund,   Inc.  (the  "Company")  and  Security
Distributors,  Inc. (the "Distributor") are parties to a Distribution  Agreement
dated as of January 1, 1964,  (the  "Distribution  Agreement")  under  which the
Distributor  agrees to act as principal  underwriter in connection with sales of
the shares of the Company's capital stock; and

     WHEREAS,  certain  provisions of the Federal Investment Company Act of 1940
have been amended,  and those  amendments  have an effect upon the  relationship
between the Company and the Distributor, and the Distribution Agreement; and

     WHEREAS,  the Company and the  Distributor  wish to amend the  Distribution
Agreement to conform to the requirements of the Federal  Investment  Company Act
of 1940, as amended;

     NOW,  THEREFORE,  the Company and Distributor hereby amend the Distribution
Agreement, effective immediately, as follows:

     1.  Section 8 of the  Distribution  Agreement  is  amended  to  provide  as
follows:

         "8. Upon  becoming  effective as provided in the  preceding  Section 7,
     this  Agreement  shall  continue  in effect  until the close of business on
     December 31, 1964,  and  thereafter  from year to year,  provided that such
     continuance   for  each   successive  year  after  December  31,  1964,  is
     specifically approved in advance at least annually by the vote of the board
     of directors (including approval by the vote of a majority of the directors
     of the Company who are not parties to the Agreement or  interested  persons
     of any such  party)  cast in person at a meeting  called for the purpose of
     voting upon such approval,  or by the vote of a majority (as defined in the
     Investment Company Act of 1940) of the outstanding voting securities of the
     Company  and by  such a vote  of the  board  of  directors.  As used in the
     preceding sentence,  the words "interested  persons" shall have the meaning
     set forth in  Section  2(a)  (19) of the  Investment  Company  Act of 1940.
     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 Company
     shall be given promptly to the Distributor."

     2. The second  paragraph  of  Section 9 of the  Distribution  Agreement  is
amended to provide as follows:

         "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  Investment  Company
     Act of 1940."

     IN WITNESS  WHEREOF,  the parties  hereto have made this  Amendment  to the
Distribution Agreement this 9th day of December, 1971.

                                                SECURITY EQUITY FUND, INC.

                                                By:  Dean L. Smith
                                                     ---------------------------
                                                     Dean L. Smith, President
ATTEST:

Will J. Miller, Jr.
- -------------------------
Will J. Miller, Jr., Secretary

(SEAL)
                                                SECURITY DISTRIBUTORS, INC.

                                                By:  Dave E. Davidson
                                                     ---------------------------
                                                     Dave E. Davidson, President
ATTEST:

Will J. Miller, Jr.
- -------------------------
Will J. Miller, Jr., Secretary

                    AMENDMENT NO. 2 TO DISTRIBUTION AGREEMENT


     WHEREAS,  Security Equity Fund, Inc., a Kansas corporation (the "Company"),
and Security Distributors,  Inc., a Kansas corporation (the "Distributor"),  are
parties to a Distribution Agreement dated as of January 1, 1964, under which the
Distributor has agreed to act as principal  underwriter in connection with sales
of shares of the Company's stock,  which  Distribution  Agreement has heretofore
been amended on December 9, 1971; and

     WHEREAS  the  Company  and  the  Distributor  wish  to  further  amend  the
Distribution  Agreement  to  omit  the  provision  that  the  Distributor  shall
reimburse  the  Company  for or pay all costs,  expenses  and fees  incurred  in
connection with the  registration  of the Company's  shares under the Securities
Act of 1933;

     NOW,  THEREFORE,  the Company and the Distributor hereby amend Section 4(a)
of the Distribution Agreement as follows:

          "4.  The Distributor  agrees that, during the period this Agreement is
               in  effect  and to the  extent  hereinafter  in  this  Section  4
               provided, it will reimburse the Company for or pay -

               (a)  All costs, expenses and fees incurred in connection with the
                    registration and qualification of the Company's shares under
                    the  applicable  "Blue  Sky" laws of the states in which the
                    Company wishes to distribute its shares;"

     IN WITNESS WHEREOF,  the parties hereto have caused this Amendment No. 2 to
the Distribution Agreement to be duly executed this 9th day of October, 1974.

     (Corporate Seal)

                                             SECURITY EQUITY FUND, INC.

                                             By:  Dean L. Smith
                                                  ------------------------------
                                                  Dean L. Smith, President
ATTEST:

Will J. Miller, Jr.
- ------------------------------
Will J. Miller, Jr., Secretary

(Corporate Seal)
                                             SECURITY DISTRIBUTORS, INC.

                                             By:  Dave E. Davidson
                                                  ------------------------------
                                                  Dave E. Davidson, President
ATTEST:

Will J. Miller, Jr.
- ------------------------------
Will J. Miller, Jr., Secretary

                       AMENDMENT TO DISTRIBUTION AGREEMENT


     WHEREAS,  Security Equity Fund (the  "Company") and Security  Distributors,
Inc. (the  "Distributor")  are parties to a Distribution  Agreement  dated as of
January 1, 1964 and amended as of  December  9, 1971 and  October 9, 1974,  (the
"Distribution Agreement") under which the Distributor agrees to act as principal
underwriter  in  connection  with sales of the shares of the  Company's  capital
stock; and,

     WHEREAS,  The Company and the  Distributor  wish to amend  Section 4 of the
Distribution Agreement pertaining to the allocation of expenses and charges.

     NOW, THEREFORE,  The Company and Distributor hereby amend said Section 4 of
the Distribution Agreement, effective as of January 31, 1984, as follows:

     4.   During the period this  Agreement is in effect,  the Company shall pay
          all costs and expenses in connection  with the  registration of shares
          under the Securities Act of 1933, 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 company  will 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 Company 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
               application for and in connection with the sale of shares.

               The  Distributor  agrees to submit to the  Company  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.

        IN WITNESS  WHEREOF,  the parties hereto have made this Amendment to the
Distribution Agreement this 31st day of January, 1984.

                                            SECURITY EQUITY FUND, INC.

                                            By:  Everett S. Gille
                                                 -------------------------------
                                                 Everett S. Gille, President
ATTEST:

Tad Patton
- -------------------------------
Tad Patton, Assistant Secretary

(SEAL)
                                            SECURITY DISTRIBUTORS, INC.

                                            By:  Gordon Evans
                                                 -------------------------------
                                                 Gordon Evans, President
ATTEST:

Tad Patton
- -------------------------------
Tad Patton, Assistant Secretary

                       AMENDMENT TO DISTRIBUTION AGREEMENT


WHEREAS,  Security Equity Fund (the "Company") and Security  Distributors,  Inc.
(the  "Distributor")  are parties to a Distribution  Agreement  dated January 1,
1964, as amended (the "Distribution Agreement"), under which the Distributor has
agreed to act as principal underwriter in connection with sales of the shares of
the Company's capital stock; and

WHEREAS,  the Company  expects to receive an exemptive order from the Securities
and Exchange  Commission allowing the Company to issue and offer for sale two or
more classes of the Company's capital stock; and

WHEREAS,  the  Company  and the  Distributor  wish  to  amend  the  Distribution
Agreement to clarify that the Distribution Agreement applies only to the sale of
Class A shares of the capital  stock of the Equity  Series and Global  Series of
the Company and the Class A shares of all other Series subsequently  established
by the Company:

NOW  THEREFORE,  the  Company  and  Distributor  hereby  amend the  Distribution
Agreement, effective immediately, as follows:

1.   The term "Shares" as referred to in the Distribution  Agreement shall refer
     to the Class A Shares of the Company's $.25 par value stock.

IN  WITNESS  WHEREOF,  the  parties  hereto  have  made  this  Amendment  to the
Distribution Agreement this 1st day of October, 1993.

                                            SECURITY EQUITY FUND

                                            By:  M. J. Provines
                                                 -------------------------------
                                                 President
ATTEST:

By:  Amy J. Lee
     -------------------------------
     Secretary

(SEAL)
                                            SECURITY DISTRIBUTORS, INC.

                                            By:  Howard R. Fricke
                                                 -------------------------------
                                                 President
ATTEST:

By:  Amy J. Lee
     -------------------------------
     Secretary

(SEAL)

                       AMENDMENT TO DISTRIBUTION AGREEMENT


WHEREAS, Security Equity Fund (the "Fund") and Security Distributors,  Inc. (the
"Distributor") are parties to a Distribution Agreement dated January 1, 1964, as
amended (the "Distribution  Agreement"),  under which the Distributor has agreed
to act as principal  underwriter  in connection  with sales of the shares of the
Fund's Class A common stock;

WHEREAS,  on April 3, 1995,  the Board of Directors of the Fund  authorized  the
Fund  to  offer  its  common  stock  in a new  series  designated  as the  Asset
Allocation  Series,  in addition to its presently offered series of common stock
of Equity Series and Global Series;

WHEREAS, on April 3, 1995, the Board of Directors of the Fund further authorized
the  Fund to  offer  shares  of the  Asset  Allocation  Series  in two  classes,
designated Class A shares and Class B shares; and

WHEREAS,  on April 3,  1995,  the Board of  Directors  of the Fund  approved  an
amendment to the Distribution  Agreement between the Fund and the Distributor to
include the sale of Class A shares of the Asset Allocation Series;

NOW,  THEREFORE BE IT RESOLVED,  that the Fund and Distributor  hereby amend the
Distribution  Agreement  to  include  the sale of Class A  shares  of the  Asset
Allocation Series of the Fund.

IN WITNESS  WHEREOF,  the parties  hereto have  executed  this  Amendment to the
Distribution Agreement this 18th day of April, 1995.

                                           SECURITY EQUITY FUND

                                           By:  James R. Schmank
                                                --------------------------------
                                                James R. Schmank, Vice President
                                                and Treasurer
ATTEST:

By:  Amy J. Lee
     -------------------------------
     Amy J. Lee, Secretary
                                           SECURITY DISTRIBUTORS, INC.

                                           By:  Richard K Ryan
                                                --------------------------------
                                                Richard K Ryan, President
ATTEST:

By:   Amy J. Lee
      -------------------------------
      Amy J. Lee, Secretary

                       AMENDMENT TO DISTRIBUTION AGREEMENT


WHEREAS, Security Equity Fund (the "Fund") and Security Distributors,  Inc. (the
"Distributor") are parties to a Distribution Agreement dated January 1, 1964, as
amended (the "Distribution  Agreement"),  under which the Distributor has agreed
to act as principal  underwriter  in connection  with sales of the shares of the
Fund's Class A common stock;

WHEREAS,  on July 26, 1996,  the Board of Directors of the Fund  authorized  the
Fund to  offer  its  common  stock  in a new  series  designated  as the  Social
Awareness Series, in addition to its presently offered series of common stock of
Equity Series, Global Series and Asset Allocation Series;

WHEREAS, on July 26, 1996, the Board of Directors of the Fund further authorized
the  Fund to  offer  shares  of the  Social  Awareness  Series  in two  classes,
designated Class A shares and Class B shares; and

WHEREAS,  on July 26,  1996,  the Board of  Directors  of the Fund  approved  an
amendment to the Distribution  Agreement between the Fund and the Distributor to
include the sale of Class A shares of the Social Awareness Series;

NOW,  THEREFORE BE IT RESOLVED,  that the Fund and Distributor  hereby amend the
Distribution  Agreement  to  include  the sale of Class A shares  of the  Social
Awareness Series of the Fund.

IN WITNESS  WHEREOF,  the parties  hereto have  executed  this  Amendment to the
Distribution Agreement this 1st day of August, 1996.

                                          SECURITY EQUITY FUND

                                          By:   James R. Schmank
                                                --------------------------------
                                                James R. Schmank, Vice President
                                                and Treasurer
ATTEST:

By:  Amy J. Lee
     -------------------------------
     Amy J. Lee, Secretary
                                           SECURITY DISTRIBUTORS, INC.

                                           By:  Richard K Ryan
                                                --------------------------------
                                                Richard K Ryan, President
ATTEST:

By:  Amy J. Lee
     -------------------------------
     Amy J. Lee, Secretary

                       AMENDMENT TO DISTRIBUTION AGREEMENT


WHEREAS, Security Equity Fund (the "Fund") and Security Distributors,  Inc. (the
"Distributor") are parties to a Distribution Agreement dated January 1, 1964, as
amended (the "Distribution  Agreement"),  under which the Distributor has agreed
to act as principal  underwriter  in connection  with sales of the shares of the
Fund's Class A common stock;

WHEREAS,  on February 7, 1997, the Board of Directors of the Fund authorized the
Fund to offer its common stock in a new series  designated  as the Value Series,
in addition to its presently  offered  series of common stock of Equity  Series,
Global Series, Asset Allocation Series and Social Awareness Series;

WHEREAS,  on  February  7,  1997,  the Board of  Directors  of the Fund  further
authorized  the  Fund to  offer  shares  of the  Value  Series  in two  classes,
designated Class A shares and Class B shares; and

WHEREAS,  on February 7, 1997,  the Board of Directors  of the Fund  approved an
amendment to the Distribution  Agreement between the Fund and the Distributor to
include the sale of Class A shares of the Value Series;

NOW,  THEREFORE BE IT RESOLVED,  that the Fund and Distributor  hereby amend the
Distribution Agreement to include the sale of Class A shares of the Value Series
of the Fund.

IN WITNESS  WHEREOF,  the parties  hereto have  executed  this  Amendment to the
Distribution Agreement this 12th day of March, 1997.

                                           SECURITY EQUITY FUND

                                           By:  James R. Schmank
                                                --------------------------------
                                                James R. Schmank, Vice President
                                                and Treasurer
ATTEST:

By:  Amy J. Lee
     -------------------------------
     Amy J. Lee, Secretary
                                           SECURITY DISTRIBUTORS, INC.

                                           By:  Richard K Ryan
                                                --------------------------------
                                                Richard K Ryan, President
ATTEST:

By:  Amy J. Lee
     -------------------------------
     Amy J. Lee, Secretary

                     AMENDMENT TO DISTRIBUTION AGREEMENT


WHEREAS, Security Equity Fund (the "Fund") and Security Distributors,  Inc. (the
"Distributor") are parties to a Distribution Agreement dated January 1, 1964, as
amended (the "Distribution  Agreement"),  under which the Distributor has agreed
to act as principal  underwriter  in connection  with sales of the shares of the
Fund's Class A common stock;

WHEREAS,  on July 25, 1997,  the Board of Directors of the Fund  authorized  the
Fund to offer its common stock in a new series  designated  as the Small Company
Series,  in addition to its presently  offered  series of common stock of Equity
Series,  Global Series,  Asset  Allocation  Series,  Social Awareness Series and
Value Series;

WHEREAS, on July 25, 1997, the Board of Directors of the Fund further authorized
the Fund to offer shares of the Small Company Series in two classes,  designated
Class A shares and Class B shares; and

WHEREAS,  on July 25,  1997,  the Board of  Directors  of the Fund  approved  an
amendment to the Distribution  Agreement between the Fund and the Distributor to
include the sale of Class A shares of the Small Company Series.

WHEREAS, on July 25, 1997, the Board of Directors of the Fund approved a Class A
Distribution  Plan (the "Class A Plan") with respect to the Small Company Series
pursuant to Rule 12b-1 under the Investment  Company Act of 1940, the provisions
of  which  have an  effect  upon  the  relationship  between  the  Fund  and the
Distributor, and the Distribution Agreement; and

WHEREAS,  the Fund and Distributor wish to amend the  Distribution  Agreement to
incorporate the necessary provisions of the Class A Plan into the Agreement.

NOW, THEREFORE, the Fund and Distributor hereby amend the Distribution Agreement
to include the sale of Class A shares of the Small Company Series of the Fund.

The Fund and  Distributor  hereby  further  amend  the  Distribution  Agreement,
effective October 15, 1997, by adding new Section 5A, which provides as follows:

     5A. (a)  Pursuant to a Class A  Distribution  Plan adopted by the Fund
     with  respect to the Small  Company  Series (the  "Series"),  the Fund
     agrees  to make  monthly  payments  to the  Distributor  in an  amount
     computed at an annual rate of .25 of 1% of the Series'  average  daily
     net assets,  to finance  activities  undertaken by the Distributor for
     the purpose of  distributing  the  Series'  shares to  investors.  The
     Distributor is obligated to and hereby agrees to use the entire amount
     of said fee to finance the following distribution-related activities:

            (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 for use by the  Distributor
                 as sales literature,  of reports and other  communications
                 which  were  prepared  by the  Fund  for  distribution  to
                 existing shareholders;

          (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)  Any fees paid by the Distributor to securities dealers who
                 have executed a Dealer's  Distribution  Agreement with the
                 Distributor for account  maintenance and personal  service
                 to shareholders of the Series (a "Service Fee");

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

          (vii)  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 the Series
                 shares by dealers.

     (b)  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;

     (c)  The   Dealer's    Distribution    Agreement   (the   "Agreement")
          contemplated by paragraph 5A(a)(v) above shall permit payments to
          securities dealers by the Distributor 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 any  Dealer's  Distribution  Agreement a quarterly
          fee for  distribution  and  marketing  services  provided by such
          other party. Such quarterly fee shall be payable in arrears in an
          amount  equal to such  percentage  (not in excess of .000685% per
          day) 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 distribution and marketing services contemplated
          hereby shall include, but are not limited to, answering inquiries
          regarding  the  Series,   account   designations  and  addresses,
          maintaining  the  investment of such other  party's  customers or
          clients in the Series and similar  services.  In determining  the
          extent of such  other  party's  assistance  in  maintaining  such
          investment by its customers or clients,  the Distributor may take
          into  account  the  possibility  that  the  shares  held  by such
          customer  or client  would be  redeemed  in the  absence  of such
          quarterly fee.

     (d)  The provisions of the Distribution  Plan approved by the Board of
          Directors  of the Fund on July 25, 1997,  are fully  incorporated
          herein by reference.  In the event the Class A Distribution  Plan
          is  terminated by the Board of Directors or  Shareholders  of the
          Series as provided  therein,  this  paragraph  shall no longer be
          effective.

IN WITNESS  WHEREOF,  the parties  hereto have  executed  this  Amendment to the
Distribution Agreement this 15th day of September, 1997.

                                       SECURITY EQUITY FUND

                                       By: JAMES R. SCHMANK
                                           -------------------------------------
                                           James R. Schmank,
                                           Vice President and Treasurer
ATTEST:

By: AMY J. LEE
    -----------------------------------
    Amy J. Lee, Secretary
                                       SECURITY DISTRIBUTORS, INC.

                                       By: RICHARD K RYAN
                                           -------------------------------------
                                           Richard K Ryan, President
ATTEST:

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

                       AMENDMENT TO DISTRIBUTION AGREEMENT

WHEREAS, Security Equity Fund (the "Fund") and Security Distributors,  Inc. (the
"Distributor") are parties to a Distribution Agreement dated January 1, 1964, as
amended (the "Distribution  Agreement"),  under which the Distributor has agreed
to act as principal  underwriter  in connection  with sales of the shares of the
Fund's Class A common stock;

WHEREAS,  on November 6, 1998, the Board of Directors of the Fund authorized the
Fund  to  offer  its  common  stock  in  three  new  series  designated  as  the
International Series, Enhanced Index Series and Select 25 Series, in addition to
its presently  offered series of common stock of Equity  Series,  Global Series,
Asset  Allocation  Series,  Social  Awareness  Series,  Value Series,  and Small
Company Series;

WHEREAS,  on  November  6,  1998,  the Board of  Directors  of the Fund  further
authorized the Fund to offer shares of the International Series,  Enhanced Index
Series and Select 25 Series in three classes, designated Class A shares, Class B
shares, and Class C shares; and

WHEREAS,  on November 6, 1998,  the Board of Directors  of the Fund  approved an
amendment to the Distribution  Agreement between the Fund and the Distributor to
include the sale of Class A shares of the International  Series,  Enhanced Index
Series and Select 25 Series.

WHEREAS,  on November 6, 1998,  the Board of  Directors  of the Fund  approved a
Class A Distribution  Plan (the"Class A Plan") with respect to the International
Series,  Enhanced Index Series and Select 25 Series pursuant to Rule 12b-1 under
the Investment Company Act of 1940 (the "Rule"), the provisions of which have an
effect  upon the  relationship  between  the Fund and the  Distributor,  and the
Distribution Agreement; and

WHEREAS,  the Fund and Distributor wish to amend the  Distribution  Agreement to
incorporate the necessary  provisions of the Class A Plan into the  Distribution
Agreement.

NOW, THEREFORE, the Fund and Distributor hereby amend the Distribution Agreement
to  include  the sale of Class A shares of the  International  Series,  Enhanced
Index Series and Select 25 Series of the Fund.

The Fund and  Distributor  hereby  further  amend  the  Distribution  Agreement,
effective January 28, 1999, by deleting Section 5A in its entirety and replacing
it with the following new Section 5A:

     5A. (a)  Pursuant to a Class A  Distribution  Plan adopted by the Fund with
     respect to the Small Company Series,  International Series,  Enhanced Index
     Series and Select 25 Series (the "Series"), 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.  The  Distributor is obligated to and hereby agrees to
     use  the   entire   amount   of  said   fee  to   finance   the   following
     distribution-related activities:

          (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 for use by the  Distributor  as
                 sales  literature,  of reports and other  communications  which
                 were  prepared  by  the  Fund  for   distribution  to  existing
                 shareholders;

          (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)    Any fees paid by the Distributor to securities dealers who have
                 executed a Dealer's Distribution Agreement with the Distributor
                 for account maintenance and personal service to shareholders of
                 the Series (a "Service Fee");

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

          (vii)  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 the Series shares by dealers.

     (b) 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;

     (c) The Dealer's Distribution  Agreement (the "Agreement")  contemplated by
         paragraph 5A(a)(v) above shall permit payments to securities dealers by
         the  Distributor  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 any  Dealer's  Distribution  Agreement a
         quarterly fee for distribution and marketing  services provided by such
         other  party.  Such  quarterly  fee shall be  payable  in arrears in an
         amount equal to such  percentage (not in excess of .000685% per day) 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 distribution and
         marketing  services  contemplated  hereby  shall  include,  but are not
         limited  to,  answering   inquiries   regarding  the  Series,   account
         designations  and addresses,  maintaining  the investment of such other
         party's  customers  or clients in the Series and similar  services.  In
         determining the extent of such other party's  assistance in maintaining
         such  investment by its customers or clients,  the Distributor may take
         into account the  possibility  that the shares held by such customer or
         client would be redeemed in the absence of such quarterly fee.

     (d) The  provisions  of the  Distribution  Plan  approved  by the  Board of
         Directors  of the Fund on  November  6,  1998,  are fully  incorporated
         herein by  reference.  In the event  the Class A  Distribution  Plan is
         terminated by the Board of Directors or  Shareholders  of the Series as
         provided therein, this paragraph shall no longer be effective.

IN WITNESS  WHEREOF,  the parties  hereto have  executed  this  Amendment to the
Distribution Agreement this 28th day of January, 1999.

                                           SECURITY EQUITY FUND

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

By: AMY J. LEE
    ---------------------------
    Amy J. Lee, Secretary
                                           SECURITY DISTRIBUTORS, INC.

                                           By: RICHARD K RYAN
                                               ---------------------------------
                                               Richard K Ryan, President
ATTEST:

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

                       AMENDMENT TO DISTRIBUTION AGREEMENT


WHEREAS,  Security  Equity  Fund  (the  "Fund")  is  an  open-end,   diversified
management  investment  company  registered under the Investment  Company Act of
1940, as amended (the "1940 Act"); and

WHEREAS,  the  Fund  is  authorized  to  issue  shares  of  beneficial  interest
("Shares") in separate series (the "Series") with each such Series  representing
interests in a separate portfolio of securities and other assets; and

WHEREAS,  the Fund is further  authorized  to issues the Shares of the Series in
multiple classes; and

WHEREAS,  Security Distributors,  Inc. is the principal underwriter of each such
Series and class  thereof  pursuant  to  agreements  dated  January 1, 1964,  as
amended,  for the Class A shares,  October 1, 1993, as amended,  for the Class B
shares and January 28, 1999 for the Class C shares (collectively  referred to as
the "Agreements"); and

WHEREAS,  pursuant  to Rule  12b-1  under the 1940 Act,  the Fund has  adopted a
Brokerage Enhancement Plan (the "Brokerage Plan" or the "Plan"), under which the
Fund may,  subject to the  requirement to seek best price and execution,  direct
Security  Management  Company,  LLC or  any  sub-adviser  of a  Series  (each  a
"Sub-Advisor")  to allocate  brokerage  in a manner  intended  to  increase  the
distribution of the Fund's shares; and

WHEREAS, the Brokerage Plan applies to the Fund and the Series and the effect of
the Plan does not vary based upon a class of a Series; and

WHEREAS,  the Board of Directors of the Fund deem it to be in the best  interest
of the Fund and its shareholders to amend the Agreements by adding the following
provisions  to each such  agreement  in order to  implement  the purposes of the
Brokerage Plan;

NOW  THEREFORE,   the  Agreements  are  hereby  amended  to  add  the  following
provisions:

1.  Brokerage Plan.

    (a)  The Fund may  direct  SDI to take  appropriate  actions  to effect  the
         purposes of the  Brokerage  Plan,  as may be amended from time to time,
         and SDI, 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, 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.

    (b)  In accordance with the terms of the Brokerage Plan, the Fund, on behalf
         of a  Series,  shall  make  available  to  SDI,  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 SDI,  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 SDI to
         finance the distribution related activities described in the Plan.

2.  Reports. SDI 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.

IN WITNESS  WHEREOF,  the  parties  hereto have  caused  this  amendment  to the
Agreements to be executed by their officers  designated  below as of the day and
year indicated below.

                                           SECURITY EQUITY FUND

                                           By:     JAMES R. SCHMANK
                                                   -----------------------------
                                           Name:   James R. Schmank
                                           Title:  Vice President
                                           Date:   January 27, 2000
ATTEST:

By:  AMY J. LEE
     --------------------------
     Amy J. Lee, Secretary
                                           SECURITY DISTRIBUTORS, INC.

                                           By:     RICHARD K RYAN
                                                   -----------------------------
                                           Name:   Richard K Ryan
                                           Title:  President
                                           Date:   January 27, 2000
ATTEST:

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

                       AMENDMENT TO DISTRIBUTION AGREEMENT


WHEREAS, Security Equity Fund (the "Fund") and Security Distributors,  Inc. (the
"Distributor") are parties to a Distribution Agreement dated January 1, 1964, as
amended (the "Distribution  Agreement"),  under which the Distributor has agreed
to act as principal  underwriter  in connection  with sales of the shares of the
Fund's Class A common stock;

WHEREAS,  on February 4, 2000, the Board of Directors of the Fund authorized the
Fund to offer its  common  stock in two new series  designated  as the Large Cap
Growth Series and Technology Series;

WHEREAS,  on  February  4,  2000,  the Board of  Directors  of the Fund  further
authorized  the  Fund to  offer  shares  of the  Large  Cap  Growth  Series  and
Technology Series in three classes,  designated Class A shares,  Class B shares,
and Class C shares; and

WHEREAS,  on February 4, 2000,  the Board of Directors  of the Fund  approved an
amendment to the Distribution  Agreement between the Fund and the Distributor to
include the sale of Class A shares of the Large Cap Growth Series and Technology
Series.

WHEREAS,  on February 4, 2000,  the Board of  Directors  of the Fund  approved a
Class A  Distribution  Plan (the "Class A Plan")  with  respect to the Large Cap
Growth Series and Technology  Series pursuant to Rule 12b-1 under the Investment
Company Act of 1940 (the  "Rule"),  the  provisions of which have an effect upon
the  relationship  between the Fund and the  Distributor,  and the  Distribution
Agreement; and

WHEREAS,  the Fund and Distributor wish to amend the  Distribution  Agreement to
incorporate the necessary  provisions of the Class A Plan into the  Distribution
Agreement.

NOW, THEREFORE, the Fund and Distributor hereby amend the Distribution Agreement
to  include  the sale of Class A shares  of the  Large  Cap  Growth  Series  and
Technology Series of the Fund.

The Fund and  Distributor  hereby  further  amend  the  Distribution  Agreement,
effective May 1, 2000,  by deleting  Section 5A in its entirety and replacing it
with the following new Section 5A:

    5A. (a)  Pursuant to a Class A  Distribution  Plan  adopted by the Fund with
    respect to the Small Cap Growth Series, International Series, Enhanced Index
    Series,  Select 25 Series,  Large Cap Growth Series,  and Technology  Series
    (the "Series"),  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.  The  Distributor  is
    obligated  to and  hereby  agrees  to use the  entire  amount of said fee to
    finance the following  distribution-related  or shareholder  service related
    activities:

             (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 for use by the  Distributor as
                   sales literature,  of reports and other  communications which
                   were  prepared  by the  Fund  for  distribution  to  existing
                   shareholders;

             (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)   Any fees paid by the  Distributor  to securities  dealers who
                   have  executed a  Dealer's  Distribution  Agreement  with the
                   Distributor for account  maintenance and personal  service to
                   shareholders of the Series (a "Service Fee");

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

             (vii) 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 the Series shares by dealers.

        (b)  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;

        (c)  The Dealer's Distribution Agreement (the "Agreement")  contemplated
             by paragraph  5A(a)(v)  above shall permit  payments to  securities
             dealers by the  Distributor  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 any
             Dealer's  Distribution  Agreement a quarterly fee for distribution,
             marketing,  and/or  shareholder  services  provided  by such  other
             party.  Such quarterly fee shall be payable in arrears in an amount
             equal to such percentage (not in excess of .000685% per day) 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 distribution,
             marketing,  and  shareholder  services  contemplated  hereby  shall
             include,  but are not limited to, answering inquiries regarding the
             Series,   account  designations  and  addresses,   maintaining  the
             investment of such other party's customers or clients in the Series
             and  similar  services.  In  determining  the  extent of such other
             party's  assistance in maintaining such investment by its customers
             or clients,  the  Distributor may take into account the possibility
             that the shares held by such  customer or client  would be redeemed
             in the absence of such quarterly fee.

        (d)  The  provisions of the  Distribution  Plan approved by the Board of
             Directors of the Fund on February 4, 2000,  are fully  incorporated
             herein by reference.  In the event the Class A Distribution Plan is
             terminated by the Board of Directors or  Shareholders of the Series
             as provided therein, this paragraph shall no longer be effective.

IN WITNESS  WHEREOF,  the parties  hereto have  executed  this  Amendment to the
Distribution Agreement this 1st day of May, 2000.

                                            SECURITY EQUITY FUND

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

By: AMY J. LEE
    -----------------------------
    Amy J. Lee, Secretary
                                            SECURITY DISTRIBUTORS, INC.

                                            By: GREGORY J. GARVIN
                                                --------------------------------
                                                Gregory J. Garvin, President
ATTEST:

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

EX-99.E2

                                     CLASS B
                             DISTRIBUTION AGREEMENT


THIS AGREEMENT, made this 1st day of October 1993, between Security Equity Fund,
a Kansas corporation  (hereinafter  referred to as the "Company"),  and Security
Distributors,  Inc.,  a  Kansas  corporation  (hereinafter  referred  to as  the
"Distributor").

                                   WITNESSETH:

WHEREAS,  the  Company  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
Company to offer for sale,  sell and deliver  after sale,  the Class B Shares of
the  Company's  $.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 Company hereby employs the Distributor to
act as principal  underwriter for the Company with respect to its Class B Shares
and hereby  agrees  that during the term of this  Agreement,  and any renewal or
extension thereof, or until any prior termination thereof, the Distributor shall
have the exclusive  right to offer for sale and to distribute any and all of its
Class B Shares  issued or to be issued by the Company.  The  Distributor  hereby
accepts  such  employment  and agrees to act as the  distributor  of the Class B
Shares issued or to be issued by the Company 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 Company 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 Company 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 Company 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  Company  shall  receive  not less than the full net
asset value thereof.

     3. ALLOCATION OF EXPENSES AND CHARGES. During this period this Agreement is
in effect,  the Company 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 Company will 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 Company 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  Company  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 CHARGES.  A contingent  deferred sales charge shall be retained by
the  Distributor  from the net  asset  value of  Shares  of the Fund that it has
redeemed,  it being  understood  that such amounts will not be in excess of that
set forth in the then-current  registration statement of the Fund.  Furthermore,
the  Distributor  may retain any amounts  authorized for payment to it under the
Fund's Distribution Plan.

     6. 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 Company,  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.

     7. 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 Company.

     8. DURATION AND  TERMINATION  OF  AGREEMENT.  This  Agreement  shall become
effective at the date and time that the  Company'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 Company and, in either event,  by the vote of a majority of the directors of
the Company 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  Company  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  Company by giving the  Distributor  at least  sixty (60) days'  previous
written notice of such intention to terminate. This Agreement must be terminated
by the  Distributor  at any time by giving the Company 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.

     9. CONSTRUCTION OF AGREEMENT. No provision of this Agreement is intended to
or shall be construed as protecting the Distributor against any liability to the
Company or to the  Company'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 Company,  shall have the same meaning  herein as
given to such terms or words in the Articles of  Incorporation  or Bylaws of the
Company.

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

     11.  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 Harrison
                         Topeka, Kansas

                         Security Distributors, Inc.
                         Security Benefit Group Building
                         700 Harrison
                         Topeka, Kansas

     12.  AMENDMENT  OF  AGREEMENT.  No  amendment  to this  Agreement  shall be
effective  until  approved  by (a) a majority of the Board of  Directors  of the
Company  and a majority of the  directors  of the Company 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 Company.

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:  M. J. Provines
                                                       -------------------------
                                                       President

ATTEST:

Amy J. Lee
- -------------------------
Amy J. Lee, Secretary

                                                  SECURITY DISTRIBUTORS, INC.

                                                  By:  Howard R. Fricke
                                                       -------------------------
                                                       President

ATTEST:

Amy J. Lee
- -------------------------
Secretary

(SEAL)

                   AMENDMENT TO CLASS B DISTRIBUTION AGREEMENT


WHEREAS, Security Equity Fund (the "Fund") and Security Distributors,  Inc. (the
"Distributor") are parties to a Class B Distribution  Agreement dated October 1,
1993 (the "Distribution  Agreement"),  under which the Distributor has agreed to
act as  principal  underwriter  in  connection  with  sales of the shares of the
Fund's Class B common stock;

WHEREAS,  on April 3, 1995,  the Board of Directors of the Fund  authorized  the
Fund  to  offer  its  common  stock  in a new  series  designated  as the  Asset
Allocation  Series,  in addition to its presently offered series of common stock
of Equity Series and Global Series;

WHEREAS, on April 3, 1995, the Board of Directors of the Fund further authorized
the  Fund to  offer  shares  of the  Asset  Allocation  Series  in two  classes,
designated Class A shares and Class B shares; and

WHEREAS,  on April 3,  1995,  the Board of  Directors  of the Fund  approved  an
amendment  to the  Class B  Distribution  Agreement  between  the  Fund  and the
Distributor  to  include  the  sale of Class B shares  of the  Asset  Allocation
Series;

NOW,  THEREFORE BE IT RESOLVED,  that the Fund and Distributor  hereby amend the
Class B  Distribution  Agreement  to  include  the sale of Class B shares of the
Asset Allocation Series of the Fund.

IN WITNESS WHEREOF, the parties hereto have executed this Amendment to the Class
B Distribution Agreement this 18th day of April, 1995.

                                           SECURITY EQUITY FUND

                                           By:  James R. Schmank
                                                --------------------------------
                                                James R. Schmank, Vice President
                                                and Treasurer

ATTEST:

By:  Amy J. Lee
     -------------------------
     Amy J. Lee, Secretary

                                           SECURITY DISTRIBUTORS, INC.

                                           By:  Richard K Ryan
                                                --------------------------------
                                                Richard K Ryan, President

ATTEST:

By:  Amy J. Lee
     -------------------------
     Amy J. Lee, Secretary

                   AMENDMENT TO CLASS B DISTRIBUTION AGREEMENT


WHEREAS, Security Equity Fund (the "Fund") and Security Distributors,  Inc. (the
"Distributor") are parties to a Class B Distribution  Agreement dated October 1,
1993 (the "Distribution  Agreement"),  under which the Distributor has agreed to
act as  principal  underwriter  in  connection  with  sales of the shares of the
Fund's Class B common stock;

WHEREAS,  on July 26, 1996,  the Board of Directors of the Fund  authorized  the
Fund to  offer  its  common  stock  in a new  series  designated  as the  Social
Awareness Series, in addition to its presently offered series of common stock of
Equity Series, Global Series and Asset Allocation Series;

WHEREAS, on July 26, 1996, the Board of Directors of the Fund further authorized
the  Fund to  offer  shares  of the  Social  Awareness  Series  in two  classes,
designated Class A shares and Class B shares; and

WHEREAS,  on July 26,  1996,  the Board of  Directors  of the Fund  approved  an
amendment  to the  Class B  Distribution  Agreement  between  the  Fund  and the
Distributor  to  include  the  sale of Class B shares  of the  Social  Awareness
Series;

NOW,  THEREFORE BE IT RESOLVED,  that the Fund and Distributor  hereby amend the
Class B  Distribution  Agreement  to  include  the sale of Class B shares of the
Social Awareness Series of the Fund.

IN WITNESS WHEREOF, the parties hereto have executed this Amendment to the Class
B Distribution Agreement this 1st day of August, 1996.

                                           SECURITY EQUITY FUND

                                           By:  James R. Schmank
                                                --------------------------------
                                                James R. Schmank, Vice President
                                                and Treasurer

ATTEST:

By:  Amy J. Lee
     --------------------------------
     Amy J. Lee, Secretary

                                           SECURITY DISTRIBUTORS, INC.

                                           By:  Richard K Ryan
                                                --------------------------------
                                                Richard K Ryan, President

ATTEST:

By:  Amy J. Lee
     --------------------------------
     Amy J. Lee, Secretary

                   AMENDMENT TO CLASS B DISTRIBUTION AGREEMENT


WHEREAS, Security Equity Fund (the "Fund") and Security Distributors,  Inc. (the
"Distributor") are parties to a Class B Distribution  Agreement dated October 1,
1993 (the "Distribution  Agreement"),  under which the Distributor has agreed to
act as  principal  underwriter  in  connection  with  sales of the shares of the
Fund's Class B common stock;

WHEREAS,  on February 7, 1997, the Board of Directors of the Fund authorized the
Fund to offer its common stock in a new series  designated  as the Value Series,
in addition to its presently  offered  series of common stock of Equity  Series,
Global Series, Asset Allocation Series and Social Awareness Series;

WHEREAS,  on  February  7,  1997,  the Board of  Directors  of the Fund  further
authorized  the  Fund to  offer  shares  of the  Value  Series  in two  classes,
designated Class A shares and Class B shares; and

WHEREAS,  on February 7, 1997,  the Board of Directors  of the Fund  approved an
amendment  to the  Class B  Distribution  Agreement  between  the  Fund  and the
Distributor to include the sale of Class B shares of the Value Series;

NOW,  THEREFORE BE IT RESOLVED,  that the Fund and Distributor  hereby amend the
Class B  Distribution  Agreement  to  include  the sale of Class B shares of the
Value Series of the Fund.

IN WITNESS WHEREOF, the parties hereto have executed this Amendment to the Class
B Distribution Agreement this 12th day of March, 1997.

                                           SECURITY EQUITY FUND

                                           By:  James R. Schmank
                                                --------------------------------
                                                James R. Schmank, Vice President
                                                and Treasurer

ATTEST:

By:  Amy J. Lee
     --------------------------------
     Amy J. Lee, Secretary

                                           SECURITY DISTRIBUTORS, INC.

                                           By:  Richard K Ryan
                                                --------------------------------
                                                Richard K Ryan, President

ATTEST:

By:  Amy J. Lee
     --------------------------------
     Amy J. Lee, Secretary

                   AMENDMENT TO CLASS B DISTRIBUTION AGREEMENT


WHEREAS, Security Equity Fund (the "Fund") and Security Distributors,  Inc. (the
"Distributor") are parties to a Class B Distribution  Agreement dated October 1,
1993 (the "Distribution  Agreement"),  under which the Distributor has agreed to
act as  principal  underwriter  in  connection  with  sales of the shares of the
Fund's Class B common stock;

WHEREAS,  on July 25, 1997,  the Board of Directors of the Fund  authorized  the
Fund to offer its common stock in a new series  designated  as the Small Company
Series,  in addition to its presently  offered  series of common stock of Equity
Series,  Global Series,  Asset  Allocation  Series,  Social Awareness Series and
Value Series;

WHEREAS, on July 25, 1997, the Board of Directors of the Fund further authorized
the Fund to offer shares of the Small Company Series in two classes,  designated
Class A shares and Class B shares; and

WHEREAS,  on July 25,  1997,  the Board of  Directors  of the Fund  approved  an
amendment  to the  Class B  Distribution  Agreement  between  the  Fund  and the
Distributor to include the sale of Class B shares of the Small Company Series;

NOW,  THEREFORE BE IT RESOLVED,  that the Fund and Distributor  hereby amend the
Class B  Distribution  Agreement  to  include  the sale of Class B shares of the
Small Company Series of the Fund.

IN WITNESS WHEREOF, the parties hereto have executed this Amendment to the Class
B Distribution Agreement this 15th day of September, 1997.

                                        SECURITY EQUITY FUND

                                        By: JAMES R. SCHMANK
                                            ------------------------------------
                                            James R. Schmank,
                                            Vice President and Treasurer

ATTEST:

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

                                        SECURITY DISTRIBUTORS, INC.

                                        By: RICHARD K RYAN
                                            ------------------------------------
                                            Richard K Ryan, President

ATTEST:

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

                   AMENDMENT TO CLASS B DISTRIBUTION AGREEMENT


WHEREAS, Security Equity Fund (the "Fund") and Security Distributors,  Inc. (the
"Distributor") are parties to a Class B Distribution  Agreement dated October 1,
1993 (the "Distribution  Agreement"),  under which the Distributor has agreed to
act as  principal  underwriter  in  connection  with  sales of the shares of the
Fund's Class B common stock;

WHEREAS,  on November 6, 1998, the Board of Directors of the Fund authorized the
Fund  to  offer  its  common  stock  in  three  new  series  designated  as  the
International Series, Enhanced Index Series and Select 25 Series, in addition to
its presently  offered series of common stock of Equity  Series,  Global Series,
Asset Allocation Series, Social Awareness Series, Value Series and Small Company
Series; and

WHEREAS,  on  November  6,  1998,  the Board of  Directors  of the Fund  further
authorized the Fund to offer shares of the International Series,  Enhanced Index
Series and Select 25 Series in three classes, designated Class A shares, Class B
shares, and Class C shares; and

WHEREAS,  on November 6, 1998,  the Board of Directors  of the Fund  approved an
amendment  to the  Class B  Distribution  Agreement  between  the  Fund  and the
Distributor to include the sale of Class B shares of the  International  Series,
Enhanced Index Series and Select 25 Series;

NOW,  THEREFORE BE IT RESOLVED,  that the Fund and Distributor  hereby amend the
Class B  Distribution  Agreement  to  include  the sale of Class B shares of the
International Series, Enhanced Index Series and Select 25 Series of the Fund.

IN WITNESS WHEREOF, the parties hereto have executed this Amendment to the Class
B Distribution Agreement this 28th day of January, 1999.

                                   SECURITY EQUITY FUND

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

ATTEST:

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

                                   SECURITY DISTRIBUTORS, INC.

                                   By: RICHARD K RYAN
                                       -----------------------------------------
                                       Richard K Ryan, President

ATTEST:

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

                   AMENDMENT TO CLASS B DISTRIBUTION AGREEMENT


WHEREAS, Security Equity Fund (the "Fund") and Security Distributors,  Inc. (the
"Distributor") are parties to a Class B Distribution  Agreement dated October 1,
1993, as amended,  (the "Distribution  Agreement"),  under which the Distributor
has  agreed to act as  principal  underwriter  in  connection  with sales of the
shares of the Fund's Class B common stock;

WHEREAS,  on February 4, 2000, the Board of Directors of the Fund authorized the
Fund to offer its  common  stock in two new series  designated  as the Large Cap
Growth Series and Technology Series; and

WHEREAS,  on  February  4,  2000,  the Board of  Directors  of the Fund  further
authorized  the  Fund to  offer  shares  of the  Large  Cap  Growth  Series  and
Technology Series in three classes,  designated Class A shares,  Class B shares,
and Class C shares; and

WHEREAS,  on February 4, 2000,  the Board of Directors  of the Fund  approved an
amendment  to the  Class B  Distribution  Agreement  between  the  Fund  and the
Distributor to include the sale of Class B shares of the Large Cap Growth Series
and Technology Series;

NOW,  THEREFORE BE IT RESOLVED,  that the Fund and Distributor  hereby amend the
Class B  Distribution  Agreement  to  include  the sale of Class B shares of the
Large Cap Growth Series and Technology Series of the Fund.

IN WITNESS WHEREOF, the parties hereto have executed this Amendment to the Class
B Distribution Agreement this 1st day of May, 2000.

                                   SECURITY EQUITY FUND

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

ATTEST:

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

                                   SECURITY DISTRIBUTORS, INC.

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

ATTEST:

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

                   AMENDMENT TO CLASS B DISTRIBUTION AGREEMENT


WHEREAS, Security Equity Fund (the "Fund") and Security Distributors,  Inc. (the
"Distributor") are parties to a Class B Distribution  Agreement dated October 1,
1993 (the "Distribution  Agreement"),  under which the Distributor has agreed to
act as  principal  underwriter  in  connection  with  sales of the shares of the
Fund's Class B common stock;

WHEREAS,  on May 3,  2002  the  Board of  Directors  of the  Fund  approved  the
reorganization  and  liquidation  of the  Total  Return  Series  so  that it was
acquired by the Equity Series effective August 28, 2002; and

WHEREAS,  on November 8, 2002, the Board of Directors of the Fund authorized the
Fund  to  offer  its  common  stock  in a new  series  designated  as the  Alpha
Opportunity Series effective February 1, 2003; and

WHEREAS,  on  November  8,  2002,  the Board of  Directors  of the Fund  further
authorized  the Fund to offer  shares of the Alpha  Opportunity  Series in three
classes, designated Class A shares, Class B shares, and Class C shares effective
February 1, 2003; and

WHEREAS,  on November 8, 2002,  the Board of Directors  of the Fund  approved an
amendment  to the  Class B  Distribution  Agreement  between  the  Fund  and the
Distributor  to  include  the sale of Class B shares  of the  Alpha  Opportunity
Series.

NOW,  THEREFORE IT IS BY THE PARTIES HERETO AGREED that the Class B Distribution
Agreement  is hereby  amended to delete  the Class B shares of the Total  Return
Series of the Fund and to  include  the Class B shares of the Alpha  Opportunity
Series of the Fund effective February 1, 2003.

IN WITNESS WHEREOF, the parties hereto have executed this Amendment to the Class
B Distribution Agreement this 8th day of November, 2002.


                                              SECURITY EQUITY FUND

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

ATTEST:

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

                                              SECURITY DISTRIBUTORS, INC.

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

ATTEST:

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

EX-99.E3

                                     CLASS C
                             DISTRIBUTION AGREEMENT

THIS AGREEMENT,  made this 28th day of January,  1999,  between  Security Equity
Fund,  a Kansas  corporation  (hereinafter  referred to as the  "Company"),  and
Security  Distributors,  Inc., a Kansas corporation  (hereinafter referred to as
the "Distributor").

                                   WITNESSETH:

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

WHEREAS, the Company issues its stock in several series; and

WHEREAS,  the  Distributor  is willing to act as principal  underwriter  for the
Company to offer for sale,  sell and deliver  after sale,  the Class C Shares of
each of the  Company's  Series of 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 Company hereby employs the  Distributor to
     act as  principal  underwriter  for the Company with respect to its Class C
     Shares and hereby  agrees that during the term of this  Agreement,  and any
     renewal or extension thereof, or until any prior termination  thereof,  the
     Distributor  shall  have  the  exclusive  right  to  offer  for sale and to
     distribute  any and all of the Class C Shares issued or to be issued by the
     Company.  The Distributor  hereby accepts such employment and agrees to act
     as the  distributor  of the  Class C Shares  issued  or to be issued by the
     Company  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
     Company 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 Company 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 Company 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 Company 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 Company 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  Company  also  will  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 Company 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 Company 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  then-current
     registration  statement  of the Fund)  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 CHARGES. A contingent  deferred sales charge shall be retained by the
     Distributor  from the net  asset  value of  Shares  of the Fund that it has
     redeemed,  it being  understood  that such amounts will not be in excess of
     that set  forth in the  then-current  registration  statement  of the Fund.
     Furthermore,  the Distributor may retain any amounts authorized for payment
     to it under the Fund's Distribution Plan.

 6.  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 Company,  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.

 7.  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 Company.

 8.  DURATION  AND  TERMINATION  OF  AGREEMENT.   This  Agreement  shall  become
     effective at the date and time that the  Company'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 Class C shares of the Series and, in
     either event, by the vote of a majority of the directors of the Company 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.

     This  Agreement  may be  terminated  at any time without the payment of any
     penalty by the Company 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 Company 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.

 9.  CONSTRUCTION OF AGREEMENT. No provision of this Agreement is intended to or
     shall be construed as protecting the  Distributor  against any liability to
     the Company or to the Company'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 Company,  shall have the same meaning herein
     as given to such terms or words in the Articles of  Incorporation or Bylaws
     of the Company.

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

11.  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 Harrison
                           Topeka, Kansas

                           Security Distributors, Inc.
                           Security Benefit Group Building
                           700 Harrison
                           Topeka, Kansas

12.  AMENDMENT OF AGREEMENT.  No amendment to this Agreement  shall be effective
     until  approved by (a) a majority of the Board of  Directors of the Company
     and a majority of the  directors of the Company 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 Class C
     shares of the Series.

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, Vice President
ATTEST:

AMY J. LEE
- ------------------------------
Secretary
                                            SECURITY DISTRIBUTORS, INC.

                                            BY: RICHARD K RYAN
                                                --------------------------------
                                                Richard K Ryan, President
ATTEST:

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

                   AMENDMENT TO CLASS C DISTRIBUTION AGREEMENT


WHEREAS, Security Equity Fund (the "Fund") and Security Distributors,  Inc. (the
"Distributor") are parties to a Class C Distribution Agreement dated January 28,
1999, as amended,  (the "Distribution  Agreement"),  under which the Distributor
has  agreed to act as  principal  underwriter  in  connection  with sales of the
shares of the Fund's Class C common stock;

WHEREAS,  on February 4, 2000, the Board of Directors of the Fund authorized the
Fund to offer its  common  stock in two new series  designated  as the Large Cap
Growth Series and Technology Series; and

WHEREAS,  on  February  4,  2000,  the Board of  Directors  of the Fund  further
authorized  the  Fund to  offer  shares  of the  Large  Cap  Growth  Series  and
Technology Series in three classes,  designated Class A shares,  Class B shares,
and Class C shares; and

WHEREAS,  on February 4, 2000,  the Board of Directors  of the Fund  approved an
amendment  to the  Class C  Distribution  Agreement  between  the  Fund  and the
Distributor to include the sale of Class C shares of the Large Cap Growth Series
and Technology Series;

NOW,  THEREFORE BE IT RESOLVED,  that the Fund and Distributor  hereby amend the
Class C  Distribution  Agreement  to  include  the sale of Class C shares of the
Large Cap Growth Series and Technology Series of the Fund.

IN WITNESS WHEREOF, the parties hereto have executed this Amendment to the Class
C Distribution Agreement this 1st day of May, 2000.

                                            SECURITY EQUITY FUND

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

By: AMY J. LEE
    -----------------------------
    Amy J. Lee, Secretary
                                            SECURITY DISTRIBUTORS, INC.

                                            By: GREGORY J. GARVIN
                                                --------------------------------
                                                Gregory J. Garvin, President
ATTEST:

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

                   AMENDMENT TO CLASS C DISTRIBUTION AGREEMENT


WHEREAS, Security Equity Fund (the "Fund") and Security Distributors,  Inc. (the
"Distributor") are parties to a Class C Distribution Agreement dated January 28,
1999 (the "Distribution  Agreement"),  under which the Distributor has agreed to
act as  principal  underwriter  in  connection  with  sales of the shares of the
Fund's Class C common stock;

WHEREAS,  on May 3,  2002  the  Board of  Directors  of the  Fund  approved  the
reorganization  and  liquidation  of the  Total  Return  Series  so  that it was
acquired by the Equity Series effective August 28, 2002; and

WHEREAS,  on November 8, 2002, the Board of Directors of the Fund authorized the
Fund  to  offer  its  common  stock  in a new  series  designated  as the  Alpha
Opportunity Series effective February 1, 2003; and

WHEREAS,  on  November  8,  2002,  the Board of  Directors  of the Fund  further
authorized  the Fund to offer  shares of the Alpha  Opportunity  Series in three
classes, designated Class A shares, Class B shares, and Class C shares effective
February 1, 2003; and

WHEREAS,  on November 8, 2002,  the Board of Directors  of the Fund  approved an
amendment  to the  Class C  Distribution  Agreement  between  the  Fund  and the
Distributor  to  include  the sale of Class C shares  of the  Alpha  Opportunity
Series.

NOW, THEREFORE, IT IS BY THE PARTIES HERETO AGREED that the Class C Distribution
Agreement  is hereby  amended to delete  the Class C shares of the Total  Return
Series  of the Fund and to  include  the  sale of  Class C shares  of the  Alpha
Opportunity Series of the Fund effective February 1, 2003.

IN WITNESS WHEREOF, the parties hereto have executed this Amendment to the Class
C Distribution Agreement this 8th day of November, 2002.


                                              SECURITY EQUITY FUND

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

ATTEST:

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

                                              SECURITY DISTRIBUTORS, INC.

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

ATTEST:

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

EX-99.G3

                                    FORM OF
                               CUSTODIAN AGREEMENT


      THIS CUSTODIAN  AGREEMENT (the "Agreement") is made as of _______________,
2002, between each registered investment company having executed this Agreement,
each a corporation  organized and existing under the laws of the state of Kansas
(each a "Fund" and collectively,  the "Funds"),  and Banc of America  Securities
LLC, a Delaware limited liability company (the "Custodian").

      WHEREAS, each Fund is a management investment company registered under the
Investment Company Act of 1940, as amended (the "1940 Act"); and

      WHEREAS,  each Fund is authorized to issue its shares in separate  series,
with  each  such  series  representing  interests  in a  separate  portfolio  of
securities and other assets; and

      WHEREAS,  each Fund desires to retain the  Custodian to serve as custodian
of each series of the Funds listed on Schedule 1 (such series listed on Schedule
1 as the same may be amended from time to time in  accordance  with the terms of
this Agreement,  being referred to herein as the  "Portfolio(s)")  in compliance
with the  requirements of the 1940 Act, and the Custodian is willing to so serve
as custodian, on the terms and conditions set forth herein.

      NOW,  THEREFORE,  in  consideration of the mutual covenants and agreements
hereinafter contained, the parties hereto agree as follows:

      1.  EMPLOYMENT  OF CUSTODIAN  AND PROPERTY TO BE HELD BY IT. (a) Each Fund
hereby  employs the  Custodian  as the  custodian  of all monies and  securities
received or owned by the Portfolios,  including  securities to be held in places
within the United States ("Domestic  Securities") and foreign assets, as defined
in Rule  17f-5(a)(2)  promulgated  under the 1940 Act,  to be held  outside  the
United States ("Foreign Securities").

      (b) Each Fund, on behalf of its respective Portfolios, will deliver to the
Custodian all securities  and monies  received or owned by the Portfolios at any
time. The Custodian shall not be responsible for such securities or monies until
it shall actually receive them.

      2.  DUTIES OF THE  CUSTODIAN  WITH  RESPECT  TO ASSETS  HELD IN THE UNITED
STATES.

      2.1.  HOLDING  ASSETS.  (a) Except for Domestic  Securities  deposited and
maintained in a Securities System pursuant to paragraph (b) of this Section 2.1,
the Custodian shall hold all Domestic  Securities  physically  segregated at all
times from those of any other  person or  persons  and shall mark such  Domestic
Securities  in such manner as to clearly  identify  them as the  property of the
applicable Portfolio.

      (b) The  Custodian  may  deposit and  maintain  Domestic  Securities  in a
clearing  agency  registered with the Securities and Exchange  Commission  under
Section 17A of the Securities  Exchange Act of 1934 (the "Exchange Act"),  which
acts as a securities  depository,  or in the book-entry system authorized by the
U.S. Department of the Treasury and the Board of Governors (the "Federal Reserve
Board") of the Federal Reserve System (collectively, the "Securities System") in
accordance  with  applicable  rules and regulations of the Federal Reserve Board
and the  Securities and Exchange  Commission.  The Domestic  Securities  will be
represented in an account of the Custodian ("Account") in the Securities System,
which shall  include  only those assets  which the  Custodian  shall hold in its
capacity as a fiduciary or otherwise for customers,  and the Domestic Securities
shall be  identified  by book-entry in the records of the Custodian as belonging
to the applicable Portfolio.  Each Fund, on behalf of its respective Portfolios,
will provide to the Custodian, as required by Rule 17f-4(d)(5) promulgated under
the 1940 Act,  (i) prior to the initial  deposit of Domestic  Securities  in the
Securities  System,  with evidence that the Board of Directors  (the "Board") of
that Fund on behalf of the relevant Portfolio has adopted a resolution approving
the initial use of a particular Securities System, and (ii) any time thereafter,
with evidence that the Board has adopted a resolution  approving any  subsequent
changes in the use of a Securities System for a Portfolio.

      (c) The Custodian shall upon receipt of Proper Instructions (as defined in
Article 4 hereof)  establish  and maintain a segregated  account or accounts for
and on  behalf  of  each  Portfolio,  into  which  account  or  accounts  may be
transferred  cash  or  Domestic   Securities,   including  Domestic   Securities
maintained  by the  Custodian  in an Account with the  Securities  System (i) in
accordance  with the provisions of any agreement  between a Fund, the Custodian,
any other  broker-dealer  registered  under the Exchange Act and a member of the
National  Association  of  Securities  Dealers,  Inc.  ("NASD")  or any  futures
commission  merchant  registered under the Commodity  Exchange Act,  relating to
compliance with the rules of The Options  Clearing  Corporation,  any registered
national  securities  exchange,  the Commodity Futures Trading  Commission,  any
registered contract market ("Contract  Market"),  or of any similar organization
or  organizations,  regarding  escrow or other  arrangements  in connection with
transactions by a Portfolio, (ii) for purposes of segregating cash or government
securities  in  connection  with  options  purchased,  sold or  written  by such
Portfolio or commodity  futures contracts or options thereon or forward currency
contracts  purchased  or sold by  such  Portfolio,  (iii)  for the  purposes  of
compliance by the Portfolio with the procedures  required by Investment  Company
Act Release No. 10666,  or any subsequent  release or releases of the Securities
and Exchange  Commission  relating to the maintenance of segregated  accounts by
registered  investment  companies,  and (iv) for other proper business purposes,
but only, in the case of this clause (iv),  upon receipt of Proper  Instructions
and a certified  copy of a  resolution  or consent of the Board of the  relevant
Fund  setting  forth the  purpose or  purposes  of such  segregated  account and
declaring such purposes to be proper business purposes.

      (d) The  Custodian  shall open and  maintain a  separate  bank  account or
account in the United  States in the name of each  Portfolio of a Fund,  subject
only to draft or order by the  Custodian  acting  pursuant  to the terms of this
Agreement, and shall hold in such account or accounts, subject to the provisions
hereof,  all monies  received  by it from or for the  account of the  applicable
Portfolio.  Monies held by the Custodian for a Portfolio may be deposited by the
Custodian to its credit as Custodian in such banks or trust  companies as it may
in its discretion  deem necessary or desirable;  provided,  however,  that every
such bank or trust  company  shall be qualified to act as a custodian  under the
1940 Act and that each such bank or trust  company and the funds to be deposited
with each  such  bank or trust  company  shall be  approved  by the Board of the
relevant  Fund.  Such monies shall be deposited by the Custodian in its capacity
as such and shall be  withdrawable  by the Custodian only in such capacity.  The
Custodian shall, upon receipt of Proper Instructions,  invest monies received in
and other instruments as may be set forth in such Proper Instructions.

      2.2.  DELIVERY OF  SECURITIES.  The  Custodian  shall  release and deliver
Domestic  Securities  held by the  Custodian  or in a  Securities  System  for a
Portfolio  upon  receipt  of  Proper  Instructions,   which  may  be  continuing
instructions  when deemed  appropriate  by the  parties,  only in the  following
cases:

      (i) upon the  sale of such  Domestic  Securities  for the  account  of the
   Portfolio  and (A) upon the receipt of payment  registered  form,  in "street
   name" or in other  good  delivery  form  therefor;  (B) in the case of a sale
   effected  through a  Securities  System,  upon (a) receipt of advice from the
   Securities  System  that  payment  for  such  Domestic  Securities  has  been
   transferred  to the  Account and (b) the making of an entry on the records of
   the Custodian to reflect such transfer and payment; or (C) to a broker or its
   clearing agent, against receipt therefor,  for examination in accordance with
   "street delivery" custom;

      (ii)  upon the  receipt  of  payment  in  connection  with any  repurchase
   agreement related to such Domestic Securities entered into by the Portfolio;

      (iii) to a  depository  agent  or  other  person  in  connection  with the
   reorganization, refinancing, merger, consolidation,  recapitalization or sale
   of  assets  of an  issuer or the  tender  or other  similar  offers  for such
   Domestic Securities,  and the Custodian shall obtain and hold under the terms
   of this Agreement such  certificates  of deposit,  interim  receipts or other
   instruments or documents as may be issued to it to evidence such delivery;

      (iv) to the issuer thereof,  or its agent,  when such Domestic  Securities
   are called, redeemed, retired or otherwise become payable; PROVIDED, HOWEVER,
   that, in any such case, the cash or other consideration is to be delivered to
   the Custodian;

      (v) to the issuer thereof, or its agent, for transfer into the name of the
   Portfolio   or  into  the  name  of  any  nominee  or  nominee  name  of  any
   sub-custodian  or agent  appointed  pursuant to Section  2.8  hereof,  or for
   exchange  for a different  number of bonds,  certificates  or other  evidence
   representing  the same  aggregate  face  amount or  number  of such  Domestic
   Securities; PROVIDED, HOWEVER, that, in any such case, the new securities are
   to be delivered to the Custodian;

      (vi) in exchange for other  securities  issued or cash paid in  connection
   with the merger, consolidation, recapitalization, reorganization, refinancing
   or liquidation of the issuer of such Domestic Securities,  or the exercise of
   any conversion privilege or pursuant to any deposit agreement;

      (vii) in the case of  warrants,  rights or  similar  securities,  upon the
   surrender  thereof  in the  exercise  of such  warrants,  rights  or  similar
   securities or, in the case of interim receipts or temporary  securities,  the
   surrender thereof for definitive securities;  PROVIDED, HOWEVER, that, in any
   such case,  the new  securities  and cash, if any, are to be delivered to the
   Custodian;

      (viii) in connection  with any loans of securities  made by the Portfolio,
   but only against  receipt of adequate  collateral as agreed upon from time to
   time by the Custodian and the Portfolio,  which may be in the form of cash or
   obligations,  issued  by  the  United  States  government,  its  agencies  or
   instrumentalities;

      (ix) as  security  in  connection  with any  borrowings  by the  Portfolio
   requiring a pledge of assets by the  Portfolio,  but only against  receipt of
   amounts borrowed;

      (x)  in  accordance  with  the  provisions  of  any  agreement  among  the
   Portfolio,  the Custodian and/or any other broker/dealer registered under the
   Exchange Act and a member of the NASD,  relating to compliance with the rules
   of The Options Clearing  Corporation,  of any registered  national securities
   exchange,  or of any similar organization or organizations,  regarding escrow
   or other arrangements in connection with transactions by the Portfolio;

      (xi)  in  accordance  with  the  provisions  of any  agreement  among  the
   Portfolio,  the Custodian and a futures commission  merchant registered under
   the  Commodity  Exchange Act,  relating to  compliance  with the rules of the
   Commodity  Futures  Trading  Commission,  a Contract  Market,  or any similar
   organization or organizations,  regarding account deposits in connection with
   transactions by the Portfolio;

      (xii)  upon  receipt  of  instructions  from the  transfer  agent  for the
   Portfolio  (the "Transfer  Agent"),  for delivery to the Transfer Agent or to
   the holders of shares in the Portfolio in connection  with  distributions  in
   kind upon any repurchases of such shares; and

      (xiii) for any other  proper  business  purpose,  but only upon receipt of
   Proper  Instructions  specifying  the Domestic  Securities  to be  delivered,
   setting forth the purposes for which such  delivery is to be made,  declaring
   such  purposes  to be proper  business  purposes,  and  naming  the person or
   persons to whom delivery of such Domestic Securities shall be made.

      2.3. REGISTRATION OF SECURITIES. Domestic Securities held by the Custodian
(other than bearer  securities)  shall be registered in the name of the relevant
Portfolio or in the name of any nominee of the Fund on behalf of a Portfolio, or
of any nominee of the Custodian which nominee shall be assigned exclusively to a
Portfolio,  unless the Portfolio has authorized in writing the  appointment of a
nominee to be used in common  with other  investment  companies  having the same
investment  adviser  as the  Portfolio,  or in the name or  nominee  name of any
sub-custodian  or agent appointed  pursuant to Section 2.8 hereof or in the name
of a Securities System, or its successor.  All Domestic  Securities  accepted by
the Custodian on behalf of a Portfolio  under the terms of this Agreement  shall
be in registered form, in "street name" or in other good delivery form.

      2.4  COLLECTION OF INCOME.  The Custodian  shall collect on a timely basis
all income and other  payments  with respect to registered  Domestic  Securities
held hereunder to which a Portfolio  shall be entitled either by law or pursuant
to custom in the  securities  business,  and shall collect on a timely basis all
income and other payments with respect to bearer Domestic  Securities if, on the
date  of  payment  by the  issuer,  such  Domestic  Securities  are  held by the
Custodian  or agent  thereof  and  shall  credit  such  income or  payments,  as
collected,  to the Portfolio's  account. The Custodian shall present for payment
all Domestic  Securities held hereunder which may mature or be called,  redeemed
or retired or otherwise become payable, and shall detach and present for payment
all coupons  and other  income  items  requiring  presentation  as and when they
become due, and shall  collect the amount  payable on Domestic  Securities  held
hereunder.

      2.5. PAYMENT OF FUND MONIES.  Upon receipt of Proper  Instructions,  which
may be  continuing  instructions  when deemed  appropriate  by the parties,  the
Custodian shall pay out monies of a Portfolio only in the following cases:

      (i)  upon  the  purchase  of  Domestic  Securities,  or  options,  futures
   contracts, options on futures contracts or forward currency contracts for the
   account of the  Portfolio,  but only (A) upon the  delivery of such  Domestic
   Securities, or evidence of title to such options, futures contracts,  options
   on futures or forward currency contracts, to the Custodian or a sub-custodian
   or agent  appointed  pursuant  to Section  2.8  hereof;  (B) in the case of a
   purchase  effected through a Securities  System,  upon receipt of advice from
   the Securities System that such Domestic  Securities have been transferred to
   the Account; or (C) in the case of repurchase agreements entered into between
   the Portfolio and the Custodian,  or a bank, or any other broker-dealer which
   is a member of NASD, upon such delivery of such Domestic Securities either in
   certificate form or through an entry crediting the Custodian's account at the
   Federal  Reserve  Bank of New York  with  such  Domestic  Securities  or upon
   delivery of the receipt evidencing purchase by the Portfolio of such Domestic
   Securities  owned  by  the  Custodian  along  with  written  evidence  of the
   agreement by the Custodian to repurchase  such Domestic  Securities  from the
   Portfolio;

      (ii) in payment for repurchase of shares issued by the Portfolio;

      (iii) in payment of any expense or  liability  incurred by the  Portfolio,
   including,  but not limited to, the following payments for the account of the
   Portfolio: interest, taxes, management,  accounting, transfer agent and legal
   fees and  other  operating  expenses  of the  Portfolio  whether  or not such
   expenses  are to be in whole  or part  capitalized  or  treated  as  deferred
   expenses;

      (iv) in payment of any  distributions  to shareholders or other holders of
   interests or shares in the Portfolio;

      (v) in payment of the amount of dividends  received in respect of Domestic
   Securities sold short;

      (vi) in connection  with the dissolution and liquidation of the Portfolio;
   or

      (vii) for any  other  proper  purpose,  but only  upon  receipt  of Proper
   Instructions  setting forth the amount of such payment, the purpose for which
   such  payment  is to be made and  naming  the  person or persons to whom such
   payment is to be made.

      2.6. LIABILITY FOR PAYMENT IN ADVANCE OF RECEIPT OF SECURITIES  PURCHASED.
In any and every case where payment for purchase of Domestic  Securities for the
account of a Portfolio  is made by the  Custodian  in advance of receipt of such
Domestic  Securities in the absence of specific  written  instructions  from the
Portfolio to pay in advance,  the Custodian  shall be  absolutely  liable to the
Portfolio  for such  Domestic  Securities to the same extent as if such Domestic
Securities  had been  received by the  Custodian,  except  that,  in the case of
repurchase  agreements entered into by a Portfolio with a bank which is a member
of the Federal Reserve  System,  the Custodian may transfer funds to the account
of such  bank  prior to the  receipt  of  written  evidence  that  the  Domestic
Securities  subject  to such  repurchase  agreement  have  been  transferred  by
book-entry into a segregated non-proprietary account of the Custodian maintained
with  the  Federal  Reserve  Bank  of New  York or of the  safekeeping  receipt,
provided  that such  Domestic  Securities  have in fact been so  transferred  by
book-entry.

      2.7. RESTRICTIONS ON THE CUSTODIAN. During the term of this Agreement, the
Custodian:

      (i) shall not permit any other  person or persons  to,  subject any of the
   Domestic Securities or other investments it holds on behalf of a Portfolio to
   any lien,  encumbrance or charge of any kind in favor of the Custodian or any
   person claiming through it; or

      (ii) shall permit the Domestic  Securities and other  investments it holds
   on behalf of a Portfolio to be subject,  at all times,  to  inspection by the
   Securities and Exchange Commission, through its employees or agents.

      2.8.  APPOINTMENT OF AGENTS AND  SUB-CUSTODIANS.  The Custodian may at any
time and from time to time  appoint  (and may at any time  remove)  any  banking
institution  located in the United  States and  qualified  under the 1940 Act or
Futures Commission Merchant to act (i) as a sub-custodian of Domestic Securities
and monies owned by a Portfolio,  upon terms and conditions  specified in Proper
Instructions,  or (ii) as its agent to carry out such of the  provisions of this
Article 2 as the Custodian of its responsibilities or liabilities  hereunder and
the Custodian shall hold the Portfolio and Fund harmless from, and indemnify the
Portfolio  and  Fund  against,  any loss  that  occurs  as a  result  of (a) the
negligence  of such  sub-custodian  or  agent  or (b) the  failure  of any  such
sub-custodian  or  agent  to  exercise  reasonable  care  with  respect  to  the
safekeeping of the Domestic Securities and monies of the Portfolio.

      2.9. OWNERSHIP  CERTIFICATES FOR TAX PURPOSES. The Custodian shall execute
any necessary declarations or certificates of ownership under the Federal income
tax  laws  or  regulations,  or the  laws or  regulations  of any  other  taxing
authority,  in connection  with receipt of income or other payments with respect
to Domestic  Securities  of a Portfolio  held by the Custodian and in connection
with transfers of such Domestic Securities.

      2.10.  PROXIES AND EVIDENCE OF  AUTHORITY.  The Custodian  shall,  without
indication of the manner in which any proxies are to be voted or authority is to
be exercised, promptly execute and deliver, or cause to be promptly executed and
delivered by the registered holder of Domestic Securities  registered  otherwise
than in the name of a Portfolio or a nominee of a Portfolio,  to such Portfolio,
or to such persons as may be  designated  in Proper  Instructions,  all proxies,
consents,  authorizations and any other instruments whereby the authority of the
Fund on behalf of the  Portfolio  to vote or consent  as owner of such  Domestic
Securities may be exercised.

      2.11. COMMUNICATIONS RELATING TO SECURITIES.  The Custodian shall transmit
promptly to the Fund on behalf of its relevant Portfolio all written information
(including,  without  limitation,  pendency of calls and  maturities of Domestic
Securities  and  expirations  of rights in  connection  therewith and notices of
exercise of put and call options  written by the  Portfolio  and the maturity of
futures  or  forward  currency  contracts  purchased  or sold by the  Portfolio)
received by the Custodian from issuers of the Domestic Securities being held for
the Portfolio.  With respect to tender or exchange  offers,  the Custodian shall
transmit  promptly  to a  Portfolio  all  written  information  received  by the
Custodian  from issuers of the Domestic  Securities  whose tender or exchange is
sought and from the party (or its agents)  making the tender or exchange  offer.
If a Portfolio  shall  desire to take action with  respect to any tender  offer,
exchange offer or any other similar transaction,  the Portfolio shall notify the
Custodian at least two business days prior to the date on which the Custodian is
to take such action.

      2.12.  INSPECTION BY INDEPENDENT PUBLIC  ACCOUNTANTS.  The Custodian shall
permit  an  independent  public  accountant  chosen by the Fund on behalf of the
relevant  Portfolio to verify by actual  examination,  at the end of each fiscal
year of the  Portfolio,  at the end of the first six months of each such  fiscal
year,  and at  least  one  other  time  during  each  such  fiscal  year as such
accountant may choose, the Domestic  Securities,  futures contracts,  options on
futures  contracts,  forward currency  contracts,  and other  investments of the
Portfolio held by the Custodian,  including  Domestic  Securities  deposited and
maintained  in the  Securities  System,  and  the  accounting  system,  internal
accounting control and procedures for safeguarding all such investments.

      3. DUTIES OF THE  CUSTODIAN  WITH  RESPECT TO ASSETS  HELD  OUTSIDE OF THE
UNITED STATES.

      3.1. APPOINTMENT OF FOREIGN  SUB-CUSTODIANS.  Subject to the 1940 Act, the
Custodian is authorized to employ,  in  accordance  with Section 3.5 hereof,  as
sub-custodians  ("Foreign  Sub-Custodians")  for  the  Foreign  Securities  of a
Portfolio   maintained  outside  of  the  United  States,  the  foreign  banking
institutions and foreign securities  depositories as may be designated in Proper
Instructions, each of which shall be an "Eligible Foreign Custodian" (as defined
in the 1940 Act). Upon the receipt of Proper  Instructions,  the Custodian shall
terminate the employment of any one or more of such  Sub-Custodians  maintaining
custody of a Portfolio's Foreign Securities.

      3.2. ASSETS TO BE HELD. The Custodian shall limit the securities and other
assets  maintained  in  the  custody  of  a  Foreign  Sub-Custodian  to  Foreign
Securities.

      3.3. FOREIGN SECURITIES DEPOSITORIES. Except as may otherwise be agreed in
writing by the Custodian and the Fund,  Foreign  Securities of a Portfolio shall
be  maintained  in  a  foreign  securities  depositories  that  is  an  Eligible
Securities  Depository as defined by Rule  17f-7(b)(1)  of the 1940 Act and only
through arrangements  implemented by the foreign banking institutions serving as
Foreign Sub-Custodians pursuant to the terms hereof.

      3.4. SEGREGATION OF SECURITIES.  The Custodian shall identify on its books
as belonging to each relevant Portfolio the Foreign Securities of that Portfolio
held by each  Foreign  Sub-Custodian.  Each  agreement  pursuant  to  which  the
Custodian  employs  a  foreign  banking  institution  shall  require  that  such
institution  establish  a  custody  account  for the  Custodian  on  behalf of a
Portfolio and  physically  segregate in that account  Foreign  Securities of the
Portfolio,  and, in the event that such institution  deposits Foreign Securities
in a foreign securities depository,  that such institution shall identify on its
books as belonging to the  Custodian,  as agent for the  Portfolio,  the Foreign
Securities so deposited.

      3.5. AGREEMENTS WITH FOREIGN BANKING  INSTITUTIONS.  Each agreement with a
Foreign  Sub-Custodian  shall provide that (a) a Portfolio's  Foreign Securities
will not be subject to any right,  charge,  security interest,  lien of claim of
any kind in favor of the Foreign Sub-Custodian or its creditors,  except a claim
of payment  for their safe  custody  or  administration  or, in the case of cash
deposits,  liens or rights in favor of  creditors  of the Foreign  Sub-Custodian
arising under bankruptcy,  insolvency or similar laws; (b) beneficial  ownership
of a Portfolio's  Foreign  Securities  will be freely  transferable  without the
payment of money or value  other than for safe  custody or  administration;  (c)
adequate  records  will be  maintained  identifying  the assets  belonging  to a
Portfolio or as being held by a third party for the benefit of a Portfolio;  (d)
officers of or auditors employed by, or other  representatives of, the Custodian
including,  to the extent permitted under applicable law, the Fund's independent
public accountants, will be given access to the books and records of the Foreign
Sub-Custodian  relating to its actions under its agreement  with the  Custodian;
(e) Foreign Securities of a Portfolio held by the Foreign  Sub-Custodian will be
subject  only to the  instructions  of the  Custodian  or its agents;  and (f) a
Portfolio will receive  periodic  reports with respect to the safekeeping of the
Portfolio's Foreign Securities,  including, without limitation,  notification of
any  transfer to or from the  custodial  account or accounts  maintained  by the
Foreign Sub-Custodian for the Custodian on behalf of a Portfolio.

      3.6.  ACCESS OF  INDEPENDENT  ACCOUNTANTS  OF THE FUND.  Upon request of a
Portfolio,  the  Custodian  will  use  its  best  efforts  to  arrange  for  the
independent  public  accountants of such Portfolio to be afforded  access to the
books and  records of any  foreign  banking  institution  employed  as a Foreign
Sub-Custodian  to  the  extent  that  such  books  and  records  relate  to  the
performance of any such foreign  banking  institution  under its agreements with
the Custodian.

      3.7.  REPORTS BY CUSTODIAN.  The Custodian  will supply to the  Portfolios
from time to time, as mutually agreed upon, statements in respect of the Foreign
Securities of the Portfolio  held by Foreign  Sub-Custodians,  including but not
limited to an  identification  of entities  having  possession  of such  Foreign
Securities and  notification  of any transfers of such Foreign  Securities to or
from  each  custodial  account  maintained  by a Foreign  Sub-Custodian  for the
Custodian on behalf of a Portfolio indicating, as to Foreign Securities acquired
for the Portfolio, the identity of the entity having physical possession of such
Foreign Securities.

      3.8. TRANSACTIONS IN FOREIGN CUSTODY ACCOUNTS.  (a) Upon receipt of Proper
Instructions,  which may be continuing  instructions when deemed  appropriate by
the parties, the Custodian shall, or shall cause each Foreign  Sub-Custodian to,
transfer,  exchange or deliver  Foreign  Securities  owned by a Portfolio,  but,
except as otherwise provided herein, only as set forth in Section 2.2 hereof.

      (b)  Upon  receipt  of  Proper  Instructions,   which  may  be  continuing
instructions when deemed appropriate by the parties, the Custodian shall pay out
or cause the  Foreign  Sub-Custodians  to pay out  monies of a  Portfolio,  but,
except as otherwise provided herein, only as set forth in Section 2.5 hereof.

      (c)   Foreign   Securities   maintained   in  the  custody  of  a  Foreign
Sub-Custodian may be maintained in the name of such entity's nominee to the same
extent as set forth in Section 2.3 hereof.

      3.9. LIABILITY OF FOREIGN SUB-CUSTODIANS. Each agreement pursuant to which
the Custodian employs a Foreign  Sub-Custodian shall require such institution to
exercise  reasonable  care in the performance of its duties and (i) to indemnify
and hold  harmless  the  Custodian  and each  Fund and its  Portfolios  from and
against any loss, damage, cost, expense, liability or claim arising out of or in
connection with the Foreign Sub-Custodian's  performance of such obligations and
(ii) provide adequate insurance in the event of a loss of a Portfolio's  assets.
At the election of the Fund, a Portfolio  shall be entitled to be  subrogated to
the rights of the  Custodian  with  respect to any claim  against a Foreign  Sub
Custodian as a consequence of any such loss, damage, cost, expense, liability or
claim,  if and to the extent  that a  Portfolio  has not been made whole for any
such loss, damage, cost, expense, liability or claim.

      3.10.  LIABILITY OF CUSTODIAN.  The Custodian shall be liable for the acts
or  omissions  of a Foreign  Sub-Custodian  to the same  extent  set forth  with
respect to  sub-custodians  generally in Section 2.8 hereof and,  regardless  of
whether assets are maintained in the custody of a foreign banking institution, a
foreign  securities  depository or a branch of a U.S. bank, the Custodian  shall
not be liable for any loss, damage, cost, expense,  liability or claim resulting
from, or caused by, the  direction by a Fund on behalf of one of its  Portfolios
to maintain  custody of any Foreign  Securities of the Portfolio in a particular
foreign  country   including,   but  not  limited  to,  losses   resulting  from
nationalization,  expropriation,  currency  restrictions,  or  acts  of  war  or
terrorism.

      3.11. MONITORING RESPONSIBILITIES. The Custodian shall furnish annually to
the Portfolios, during the month of July, all information concerning any Foreign
Sub-Custodians  employed  by the  Custodian  required  under the 1940 Act and/or
reasonably requested by the Portfolios. In addition, the Custodian will promptly
inform  the Fund in the  event  that the  Custodian  shall  learn of a  material
adverse change in the financial or other condition of a Foreign Sub-Custodian or
shall be  notified  by a  foreign  banking  institution  employed  as a  Foreign
Sub-Custodian  that  there  appears  to be a  substantial  likelihood  that  its
shareholders'  equity  will  decline  below $200  million  (U.S.  dollars or the
equivalent  thereof) or that its  shareholders'  equity has declined  below $200
million (in each case  computed  in  accordance  with  generally  accepted  U.S.
accounting principles).

      4. PROPER INSTRUCTIONS. Proper Instructions as used herein means a writing
signed  or  initialed  by one or  more  persons  (which  may  include  a  Fund's
investment   adviser  and  or  subadviser   and  their   respective   authorized
representatives)  whom the  Board of that  Fund  shall  have  from  time to time
authorized by written formal resolution to give such  instructions.  Each Proper
Instruction  shall set forth the  specific  transaction  or type of  transaction
involved, including a specific statement of the purpose for which such action is
requested.  Oral  instructions  will be considered  Proper  Instructions  if the
Custodian  shall  reasonably  believe  them  to  have  been  given  by a  person
authorized  as set forth  above to give such  instructions  with  respect to the
transaction  involved.  Each  Fund  shall  cause  all  oral  instructions  to be
confirmed in writing.  Proper Instructions may include  communications  effected
directly  between  electro-mechanical  or electronic  devices  provided that the
Board of the  relevant  Fund and the  Custodian  shall have  agreed to  security
procedures reasonably designed to safeguard the Portfolio's assets.

      5. ACTIONS PERMITTED WITHOUT EXPRESS  AUTHORITY.  The Custodian may in its
discretion, without express authority from a Portfolio:

      (i) make payments to others for minor  expenses of handling  securities or
   other similar items  relating to its duties under this  Agreement;  PROVIDED,
   HOWEVER, that all such payments shall be accounted for to the Portfolio;

      (ii)  surrender  securities in temporary form for securities in definitive
   form;

      (iii) endorse for collection, in the name of the Portfolio, checks, drafts
   and other orders for the payment of money  received by the  Custodian for the
   account of the Portfolio; and

      (iv) in general,  attend to all  non-discretionary  details in  connection
   with the sale, exchange, substitution,  purchase, transfer and other dealings
   with the  securities  and  property  of the  Portfolio,  except as  otherwise
   directed by the Board.

      6. EVIDENCE OF AUTHORITY. The Custodian shall be entitled to rely upon any
instructions,  notice,  request,  consent,  certificate  or other  instrument in
writing  reasonably  believed  by it to be  genuine  and to have  been  properly
executed by or on behalf of a Portfolio.  The Custodian may receive and accept a
certified  copy of  resolutions or consents of the Board of the relevant Fund as
conclusive evidence of (i) the authority of any person to act in accordance with
such  resolutions  or  consents or (ii) any  determination  or any action by the
Board  of that  Fund as  described  in  such  resolution  or  consent  and  such
resolutions  or consents  may be  considered  as in full force and effect  until
receipt by the Custodian of written notice to the contrary.

      7. DUTIES OF CUSTODIAN WITH RESPECT TO THE BOOKS OF ACCOUNT. The Custodian
shall  cooperate  and supply  necessary  information  to the entity or  entities
appointed by a Fund to keep the books of account of its applicable Portfolios.

      8.  RECORDS.  (a) The Custodian  shall  create,  maintain and preserve all
records  relating to its activities and  obligations  under this Agreement for a
Portfolio in such manner as will meet the  obligations of that  Portfolio  under
the 1940 Act, including, without limitation,  Section 31 thereof and Rules 31a-1
and 31a-2 promulgated thereunder,  applicable Federal and state tax laws and any
other law or  administrative  rules or procedures  which maybe applicable to the
Portfolio.  All such records shall be the property of the Portfolio and shall at
all  times  during  the  regular  business  hours of the  Custodian  be open for
inspection  by duly  authorized  officers,  employees or agents of the Portfolio
(including the Portfolio's  investment  adviser) and employees and agents of the
Securities and Exchange Commission.

      (b) The Custodian shall, at the Portfolio's request, supply each Portfolio
with a tabulation of securities  owned by each of its Portfolios and held by the
Custodian and shall,  when requested to do so by the Fund,  include  certificate
numbers in such  tabulations.  Copies of all  notifications  from the Securities
System of transfers of securities  for the account of each Fund on behalf of its
Portfolios  shall be  maintained by the Custodian and be provided to the Fund at
its request. Upon request, the Custodian shall furnish each Fund confirmation of
each  transfer to or from the account of one of its  Portfolios in the form of a
written notice and shall furnish to the Fund copies of daily transaction  sheets
reflecting each day's  transactions in the Securities  System for the account of
the Portfolio.

      9.  OPINIONS AND REPORTS OF  INDEPENDENT  ACCOUNTANTS.  (a) The  Custodian
shall take all reasonable  action, as a Portfolio may from time to time request,
to obtain from year to year favorable opinions from the Portfolio's  independent
accountants  with respect to its  activities  hereunder in  connection  with the
Fund's Form N-1A and Form N-SAR or other reports to the  Securities and Exchange
Commission and with respect to any other requirements of such Commission.

      (b) The  Custodian  shall  provide  each  Fund,  on  behalf of each of its
Portfolios  at such times as the Fund may  reasonably  require,  with reports by
independent  public accountants on the accounting  system,  internal  accounting
controls and  procedures  for  safeguarding  securities,  futures  contracts and
options on futures contracts,  including  securities deposited and/or maintained
in a Securities System, relating to the services provided by the Custodian under
this  Agreement;  such reports,  shall be of sufficient  scope and in sufficient
detail,  as may  reasonably  be  required  by the  Fund  to  provide  reasonable
assurance that any material inadequacies would be disclosed by such examination,
and, if there are no such inadequacies, the reports shall so state.

      10.  RESPONSIBILITY  OF  CUSTODIAN.  So long as and to the extent  that it
shall exercise  reasonable  care, the Custodian shall not be responsible for the
title,  validity or  genuineness  of any  property or evidence of title  thereto
received  by it or  delivered  by it  pursuant  to this  Agreement  and shall be
entitled  to rely  upon  any  notice,  request,  consent,  certificate  or other
instrument  reasonably  believed  by it to be  genuine  and to be  signed by the
proper  party  or  parties.  The  Custodian  shall  be held to the  exercise  of
reasonable  care  and due  diligence  in  carrying  out the  provisions  of this
Agreement  and  shall not be liable  for any loss or damage  arising  out of any
action  taken or  omitted to be taken by it without  negligence.  The  Custodian
shall be entitled to rely on and may act upon advice of counsel  with respect to
questions or matters of law,  and shall not be liable for any action  reasonably
taken or omitted to be taken pursuant to such advice.

      11.  EFFECTIVE  PERIOD,  TERMINATION  AND AMENDMENT.  This Agreement shall
become  effective upon  execution,  shall continue in full force and effect with
respect to a Portfolio  until the Portfolio  shall  liquidate in accordance with
applicable law (unless earlier terminated as herein provided), may be amended at
any time by mutual  agreement of the parties hereto,  as may be permitted by the
1940 Act,  and may be  terminated,  as set forth  herein,  by a Portfolio or the
Custodian by an instrument in writing delivered or mailed,  postage prepaid,  to
the other party, such termination to take effect not sooner than sixty (60) days
after  the  date of such  delivery  or  mailing.  A  Portfolio  may at any  time
terminate this Agreement and substitute a bank or trust company  qualified under
the 1940 Act as a successor  custodian  for the  Custodian  by giving  notice as
described above to the Custodian.  In addition,  a Portfolio may (without giving
the above-described notice) terminate this Agreement immediately up the event of
the  appointment  of a  conservator  or receiver  for the  Custodian or upon the
happening of a like event at the direction of an appropriate  regulatory  agency
or court of  competent  jurisdiction.  Notwithstanding  anything to the contrary
contained herein,  the Custodian may terminate this Agreement upon its selection
of a successor  custodian to provide the services  required  hereunder  which is
qualified under the 1940 Act and is reasonably satisfactory to the Portfolios.

      12. SUCCESSOR  CUSTODIAN.  (a) If a successor custodian shall be appointed
pursuant to Section 11 hereof,  the  Custodian  shall  promptly  deliver to such
successor  custodian at the office of the  Custodian,  duly  endorsed and in the
form for transfer,  all  securities  then held by it  hereunder,  along with the
funds and other  properties  held by the  Custodian on behalf of the  Portfolios
under  this  Agreement,  and  shall  transfer  to an  account  of the  successor
custodian all of the Portfolios' securities held in a Securities System.

      (b) If this Agreement shall terminate and/or no successor  custodian shall
be appointed as provided  herein,  the  Custodian  shall,  in like manner,  upon
receipt of a certified copy of the  resolutions or consents of the Boards of the
Funds,  deliver at the office of the  Custodian  and transfer  such  securities,
funds and other properties in accordance with such  resolutions or consents.  In
the event that no written order  designating a successor  custodian or certified
copy of  resolutions  or consents of a Board  shall have been  delivered  to the
Custodian on or before the date when the  termination  of this  Agreement  shall
become  effective,  then the Custodian shall have the right to deliver to a bank
or trust  company,  which is a "Bank" as defined in the 1940 Act, doing business
in New York of the  Custodian's  own  selection,  having an  aggregate  capital,
surplus,  and undivided  profits,  as shown by its last published report, of not
less than  $25,000,000,  all securities,  funds,  and other  properties (and all
instruments  relating  thereto) held by the Custodian  under this Agreement with
respect  to that  Fund,  and to  transfer  to an  account  of such bank or trust
company all of that Fund's Portfolios' securities held in any Securities System.
Any bank or trust company  selected to be the  successor of the Custodian  under
this Agreement shall enter into an agreement with a Fund substantially identical
in substance hereto.

      13.  ARBITRATION.  The parties  shall  determine and settle any dispute or
controversy  which shall arise out of or relate to this Agreement by arbitration
in the City of New York  pursuant to the rules and  procedures  of the  American
Arbitration Association's Securities Arbitration Rules.

      14. PRIOR  CONTRACTS,  ETC. This Agreement sets forth the entire agreement
and  understanding  of the parties  hereto with  respect to the matters  covered
hereby and the relationship  between the Funds, the Portfolios and the Custodian
(in its capacity as custodian for the Portfolios). This Agreement shall inure to
the benefit of and be binding upon the Funds,  the Portfolios and the Custodian,
and their respective successors, legal representatives and permitted assigns.

      15. NOTICES.  All  communications  hereunder,  except as herein  otherwise
specifically provided, shall be in writing and, if sent to the Custodian,  shall
be mailed,  delivered, sent by facsimile or telegraphed and confirmed to Banc of
America  Securities,  9 West 57th Street,  New York, New York 10019,  Attention:
Glen C. Dailey,  Managing  Director,  Fax number (212) 583-8638 and if sent to a
Fund, shall be mailed, delivered, sent by facsimile or telegraphed and confirmed
to Security Funds, One Security Benefit Place, Topeka, Kansas,66636,  Attention:
James R. Schmank,  President, Fax number (785) 438-3080, with a copy to Security
Funds, One Security Benefit Place, Topeka, Kansas 66636S, Attention: Amy J. Lee,
Secretary, Fax number (785) 438-3080.

      16.  GOVERNING LAW. This Agreement  shall be construed in accordance  with
the  laws  of  the  State  of New  York,  without  regard  to  conflicts  of law
principles.  To the extent that the applicable laws of the State of New York, or
any of the provisions  herein,  conflict with the  applicable  provisions of the
1940 Act, the latter shall  control,  and nothing herein shall be construed in a
manner inconsistent with the 1940 Act or any rule or order of the Securities and
Exchange Commission thereunder.

      17.  TRANSMISSION  OF  AGREEMENT.  An executed  copy of this  Agreement as
approved  pursuant  to Rule  17f-1(c)  promulgated  under  the 1940 Act shall be
transmitted to the Securities  and Exchange  Commission  promptly after the date
hereof.

      IN WITNESS  WHEREOF,  each of the parties has caused this instrument to be
executed in its name and on its behalf by its duly authorized  representative as
of the date first above written.

ATTEST:                                    SECURITY EQUITY FUND

- -------------------------------------      -------------------------------------
Amy J. Lee                                 James R. Schmank
Secretary                                  President

ATTEST:                                    SBL FUND

- -------------------------------------      -------------------------------------
Amy J. Lee                                 James R. Schmank
Secretary                                  President


ATTEST:                                    BANC OF AMERICA SECURITIES LLC

- -------------------------------------      -------------------------------------
[TYPED NAME AND TITLE]                     Glen C. Dailey - Managing Director

                                   SCHEDULE 1
                   Series of Funds to which Agreement Applies


Security Equity Fund
o  Alpha Plus Series

SBL Fund
o  Series Z (Alpha Plus)

EX-99.M1

                          AMENDED AND RESTATED CLASS A
                                DISTRIBUTION PLAN
                              SECURITY EQUITY FUND


WHEREAS,  the Security Equity Fund,  Small Company Series adopted a Distribution
Plan under Rule 12b-1 of the Investment  Company Act of 1940 with respect to its
Class A shares; and

WHEREAS, the Distribution Plan was initially entered into on September 15, 1997;
and

WHEREAS, on November 6, 1998, the Board of Directors of the Security Equity Fund
authorized  the issuance of three  additional  series of Class A common stock of
the Fund,  designated as the  International  Series,  Enhanced  Index Series and
Select 25 Series; and

WHEREAS, on November 6, 1998, the Board of Directors of the Security Equity Fund
determined  that  extending  the  Fund's  Class  A  Distribution   Plan  to  the
International Series,  Enhanced Index Series and Select 25 Series was reasonably
likely to benefit each such series and their respective shareholders; and

WHEREAS, in order to extend the Class A Distribution Plan to each such series of
Security Equity Fund, the Board of Directors has determined to amend and restate
the Class A Distribution Plan as follows:

1.  THE PLAN. This Distribution Plan (the "Plan"), provides for the financing by
    Security Equity Fund (the "Fund") of activities  which are, or may be deemed
    to be,  primarily  intended  to  result in the sale of Class A shares of the
    series of the Fund (hereinafter  called  "distribution-related  activities")
    set forth in Appendix A to the Plan (collectively  referred to herein as the
    "Series").  Appendix  A,  as  it  may  be  amended  from  time  to  time  is
    incorporated herein by this reference. 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-related  activities.  This Plan is  intended to comply with the
    requirements of Rule 12b-1 (the "Rule") under the Investment  Company Act of
    1940 (the "1940 Act").

    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 Fund 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  the  Series  and  their  respective
    shareholders.

2.  COVERED EXPENSES.

    (a)  The Fund may make payments  under this Plan, or any agreement  relating
         to the  implementation  of this Plan, in connection with any activities
         or expenses  primarily intended to result in the sale of Class A shares
         of  the  Fund,   including,   but  not   limited   to,  the   following
         distribution-related activities:

           (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 for use by the  Distributor  as
                sales literature, of reports and other communications which were
                prepared by the Fund for distribution to existing shareholders;

         (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)  Any fees paid by the Distributor to securities  dealers who have
                executed a Dealer's Distribution  Agreement with the Distributor
                for account  maintenance and personal service to shareholders of
                the Series (a "Service Fee");

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

         (vii)  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-related activities 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 7 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-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.

4.  DEALER'S DISTRIBUTION  AGREEMENT.  The Dealer's Distribution  Agreement (the
    "Agreement")  contemplated  by Section 2(a)(v) above shall permit payment of
    Service Fees to  securities  dealers by the  Distributor  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  the  affirmative
    vote of a majority of those Directors who are not interested  persons of the
    Fund and who have no direct or indirect  financial interest in the operation
    of the Plan or any agreement related to the Plan ("Independent  Directors"),
    as required by the Rule. The  Distributor  may pay to the other party to any
    Agreement a Service Fee for distribution and marketing  services provided by
    such other party.  Such Service Fee shall be payable (a) for the first year,
    initially,  in an amount equal to .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
    .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.  The  distribution  and
    marketing services  contemplated  hereby shall include,  but are not limited
    to,  answering  inquiries  regarding  the  Fund,  account  designations  and
    addresses,  maintaining  the  investment of such other party's  customers or
    clients in the Series and similar  services.  In  determining  the extent of
    such  other  party's  assistance  in  maintaining  such  investment  by  its
    customers or clients,  the Distributor may take into account the possibility
    that the shares  held by such  customer  or client  would be redeemed in the
    absence of such fee.

5.  LIMITATIONS  ON  COVERED  EXPENSES.  The basic  limitation  on the  expenses
    incurred by the Fund under Section 2 of this Plan  (including  Service Fees)
    in any fiscal year of the Fund shall be one-quarter of one percent (.25%) of
    the Fund's average daily net assets for such fiscal year. 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.

6.  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.

7.  EFFECTIVENESS,  CONTINUATION,  TERMINATION AND AMENDMENT. This Plan and each
    Agreement  relating to the  implementation of this Plan 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;

    (b)  By a vote of holders of at least a majority of the  outstanding  voting
         securities of each Series; and

    (c)  Upon the  effectiveness  of an  amendment  to the  Fund's  registration
         statement, reflecting this Plan, filed with the Securities and Exchange
         Commission under the Securities Act of 1933.

    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, 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
    Fund.  Any  Agreement  relating  to the  implementation  of this Plan  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 and, if such  amendment  materially  increases the  limitations on
    expenses payable under the Plan, it shall also require approval by a vote of
    holders of at least a majority of the outstanding  voting  securities of the
    Fund. As applied to the Fund the phrase "majority of the outstanding  voting
    securities"  shall have the meaning  specified  in Section  2(a) of the 1940
    Act.

    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.

8.  RECORDS.  The Fund  shall  preserve  copies  of this  Plan  and any  related
    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.

                                           SECURITY EQUITY FUND



Date:  January 28, 1999                     By: AMY J. LEE
       ------------------------------           --------------------------------

                                   Appendix A

1.    Small Company Series

2.    International Series

3.    Enhanced Index Series

4.    Select 25 Series


                              AMENDMENT TO CLASS A
                                DISTRIBUTION PLAN
                              SECURITY EQUITY FUND

WHEREAS,  the Security Equity Fund, adopted a Distribution Plan under Rule 12b-1
of the  Investment  Company  Act of 1940 with  respect to certain of its Class A
shares; and

WHEREAS,  the Class A Distribution  Plan was initially entered into on September
15, 1997; and

WHEREAS, on February 4, 2000, the Board of Directors of the Security Equity Fund
authorized the Fund to offer two new series of Class A common stock of the Fund,
designated as the Large Cap Growth Series and Technology Series; and

WHEREAS, on February 4, 2000, the Board of Directors of the Fund determined that
extending  the  Fund's  Class A  Distribution  Plan to the Class A shares of the
Large Cap Growth  Series and the  Technology  Series of the Fund was  reasonably
likely to benefit each such Series and their respective shareholders; and

WHEREAS, the Class A Distribution Plan provides that it may be amended from time
to time by adding or removing a Series of the Fund by an amended Appendix A;

NOW  THEREFORE  BE IT  RESOLVED,  that  the  Fund  hereby  amends  the  Class  A
Distribution Plan, effective May 1, 2000 as follows:

   1.  Appendix A shall be deleted in its entirety  and the attached  Appendix A
       inserted in lieu thereof.

                                              SECURITY EQUITY FUND

Date:         May 1, 2000                  By:            AMY J. LEE
     ------------------------------           ----------------------------------

                                   APPENDIX A

1.  Small Cap Growth Series

2.  International Series

3.  Enhanced Index Series

4.  Select 25 Series

5.  Large Cap Growth Series

6.  Technology Series


Dated:        May 1, 2000
      ----------------------------

                     AMENDMENT TO CLASS A DISTRIBUTION PLAN

WHEREAS,  Security  Equity Fund (the "Fund") has adopted an Amended and Restated
Class A  Distribution  Plan dated  January 28, 1999 (the  "Distribution  Plan"),
under which the Fund supplements the expenditures of its principal  underwriter,
Security  Distributors,   Inc.  (the  "Distributor")  for  distribution  related
activities with respect to Fund shares; and

WHEREAS,  on November  2, 2001 the Board of  Directors  of the Fund  approved an
amendment to the Distribution Plan;

NOW,  THEREFORE BE IT RESOLVED,  that the Fund amends its  Distribution  Plan as
follows:

1.  Paragraph  2(a)(v)  shall be deleted in its entirety  and replaced  with the
    following new Paragraph 2(a)(v):

       v) Any  Shareholder  Service Fees paid by the  Distributor  to securities
    dealers  who  have  executed  a  Dealer's  Distribution  Agreement  with the
    Distributor,  or any  Shareholder  Service  Fees paid to entities  that have
    executed  a  Security   Funds   Shareholder   Service   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  Fund's  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;

2.  Paragraph 4 shall be deleted in its entirety and replaced with the following
    new Paragraph 4.

       4. DEALER'S DISTRIBUTION  AGREEMENT.  The Dealer's Distribution Agreement
    and the Security Funds  Shareholder  Service  Agreement  (collectively,  the
    "Agreement") contemplated by paragraph 2(a)(v) above shall permit payment of
    Shareholder  Service Fees 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 the affirmative vote of a majority of those
    Directors who are not interested  persons of the Fund and who have no direct
    or indirect financial interest in the operation of the Plan or any agreement
    related to the Plan ("Independent Directors"),  as required by the Rule. The
    Distributor  may pay to the  other  party  to any  Agreement  a  Shareholder
    Service Fee for  services  provided by such other  party.  Such  Shareholder
    Service  Fee shall be  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.  The shareholder services contemplated
    hereby shall include,  but are 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  Fund's  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.

IN WITNESS  WHEREOF,  the Security Equity Fund has adopted this Amendment to the
Distribution Plan this 2nd day of November, 2001.


                                                  SECURITY EQUITY FUND

                                                  By:    AMY J. LEE
                                                         -----------------------

                                                  Title: Secretary

                        AMENDMENT TO SECURITY EQUITY FUND
                                     CLASS A
                                DISTRIBUTION PLAN


WHEREAS,  the Security Equity Fund adopted a Distribution  Plan under Rule 12b-1
of the Investment Company Act of 1940 with respect to its Class A shares; and

WHEREAS,  the Class A Distribution  Plan was amended and restated on the 8th day
of November, 2002; and

WHEREAS,  on May 3,  2002  the  Board of  Directors  of the  Fund  approved  the
reorganization  and  liquidation  of the  Total  Return  Series  so  that it was
acquired by the Equity Series effective August 28, 2002; and

WHEREAS, on November 8, 2002, the Board of Directors of the Security Equity Fund
authorized  the Fund to offer a new series of Class A common  stock of the Fund,
designated as the Alpha Opportunity Series; and

WHEREAS, on November 8, 2002, the Board of Directors of the Security Equity Fund
determined  that extending the Fund's Class A  Distribution  Plan to the Class A
shares of the Alpha  Opportunity  Series was  reasonably  likely to benefit  the
Series and its shareholders; and

WHEREAS, the Class A Distribution Plan provides that it may be amended from time
to time by adding or removing a Series of the Fund by an amended Exhibit A.

NOW,  THEREFORE,  IT IS HERETO  AGREED  that the Amended  and  Restated  Class A
Distribution Plan is hereby amended, effective February 1, 2003, as follows:

   1.  Exhibit A shall be deleted in its  entirety  and the  attached  Exhibit A
inserted in lieu thereof.

IN WITNESS  WHEREOF,  the parties hereto have executed this Amendment to Class A
Distribution Plan this 8th day of November, 2002.

                                       SECURITY EQUITY FUND


Date: 11/8/02                          By: JAMES R. SCHMANK
      ----------------------------         -------------------------------------
                                           James R. Schmank, President

                                    EXHIBIT A


Series of Security Equity Fund:

   Equity Series
   Global Series
   Social Awareness Series
   Mid Cap Value Series
   Small Cap Growth Series
   Enhanced Index Series
   International Series
   Select 25 Series
   Large Cap Growth Series
   Technology Series
   Alpha Opportunity Series

Dated:  November 8, 2002

EX-99.M2

                              SECURITY EQUITY FUND
                                     CLASS B
                                DISTRIBUTION PLAN

1.     THE PLAN. This Distribution Plan (the "Plan"), provides for the financing
       by Security  Equity Fund (the "Fund") of activities  which are, or may be
       deemed to be, primarily  intended to result in the sale of class B shares
       of the Fund (hereinafter called "distribution-related  activities").  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-related activities. This Plan
       is intended to comply with the  requirements  of Rule 12b-1 (the  "Rule")
       under the Investment Company Act of 1940 (the "1940 Act").

       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 Fund 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 the Fund and its shareholders.

2.     COVERED EXPENSES.

       (a)    The Fund may make  payments  under  this  Plan,  or any  agreement
              relating to the  implementation  of this Plan, in connection  with
              any  activities  or expenses  primarily  intended to result in the
              sale of class B shares of the Fund, including, but not limited to,
              the following distribution-related activities:

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

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

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

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

              (v)   Any fees paid by the  Distributor to securities  dealers who
                    have  executed a Dealer's  Distribution  Agreement  with the
                    Distributor for account  maintenance and personal service to
                    shareholders (a "Service Fee");

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

              (vii) Expenses  incurred in promoting  sales of shares of the Fund
                    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 Fund shares by dealers.

       (b)    Any payments  for  distribution-related  activities  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 7 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-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.

4.     DEALER'S DISTRIBUTION AGREEMENT. The Dealer's Distribution Agreement (the
       "Agreement")  contemplated  by Section 2(a)(v) above shall permit payment
       of  Service  Fees  to  securities  dealers  by the  Distributor  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
       the  affirmative  vote  of a  majority  of  those  Directors  who are not
       interested  persons  of the  Fund  and who  have no  direct  or  indirect
       financial  interest in the operation of the Plan or any agreement related
       to the Plan  ("Independent  Directors"),  as  required  by the Rule.  The
       Distributor may pay to the other party to any Agreement a Service Fee for
       distribution and marketing  services  provided by such other party.  Such
       Service Fee shall be payable (a) for the first  year,  initially,  in any
       amount equal to .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 .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.  The  distribution  and
       marketing services contemplated hereby shall include, but are not limited
       to,  answering  inquiries  regarding the Fund,  account  designations and
       addresses,  maintaining the investment of such other party's customers or
       clients in the Fund and similar  services.  In determining  the extent of
       such other  party's  assistance  in  maintaining  such  investment by its
       customers  or  clients,   the  Distributor  may  take  into  account  the
       possibility  that the shares  held by such  customer  or client  would be
       redeemed in the absence of such fee.

5.     LIMITATIONS  ON COVERED  EXPENSES.  The basic  limitation on the expenses
       incurred  by the Fund  under  Section 2 of this Plan  (including  Service
       Fees) in any fiscal year of the Fund shall be one percent  (1.00%) of the
       Fund's  average daily net assets for such fiscal year. 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.

6.     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.

7.     EFFECTIVENESS,  CONTINUATION,  TERMINATION  AND AMENDMENT.  This Plan and
       each Agreement  relating to the implementation of this Plan 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;

       (b)    By a vote of  holders of at least a  majority  of the  outstanding
              voting securities of the Fund; and

       (c)    Upon the effectiveness of an amendment to the Fund's  registration
              statement,  reflecting  this Plan,  filed with the  Securities and
              Exchange Commission under the Securities Act of 1933.

       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,  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  Fund.   Any   Agreement   relating  to  the
       implementation of this Plan 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  and,  if such  amendment
       materially  increases the limitations on expenses payable under the Plan,
       it  shall  also  require  approval  by a vote of  holders  of at  least a
       majority of the outstanding  voting securities of the Fund. As applied to
       the Fund the phrase "majority of the outstanding voting securities" shall
       have the meaning specified in Section 2(a) of the 1940 Act.

       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.

8.     RECORDS.  The Fund  shall  preserve  copies of this Plan and any  related
       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.

                                         SECURITY EQUITY FUND

Date:  September 24, 1993            By: AMY J. LEE
       ---------------------             -----------------------------


                              AMENDMENT TO CLASS B
                                DISTRIBUTION PLAN
                              SECURITY EQUITY FUND

WHEREAS,  the Security Equity Fund, adopted a Distribution Plan under Rule 12b-1
of the Investment Company Act of 1940 with respect to its Class B shares; and

WHEREAS,  the Class B Distribution  Plan was initially entered into on September
24, 1993; and

WHEREAS, on February 4, 2000, the Board of Directors of the Security Equity Fund
authorized the issuance of two additional  series of Class B common stock of the
Fund, designated as the Large Cap Growth Series and Technology Series; and

WHEREAS,  on February 4, 2000,  the Board of Directors  of Security  Equity Fund
determined that extending the Fund's Class B Distribution  Plan to the Large Cap
Growth Series and Technology  Series was reasonably  likely to benefit each such
series and their respective shareholders; and

WHEREAS, the Board determined that it was appropriate and desirable to amend the
Plan by adding an Exhibit A and  attaching it to the Plan,  which Exhibit may be
amended from time to time;

NOW  THEREFORE,  BE IT RESOLVED  that the Fund's  Class B  Distribution  Plan is
hereby amended effective May 1, 2000 as follows:

   1.  The accompanying  Exhibit A shall specify the Series which are subject to
       the Class B  Distribution  Plan and such Exhibit is hereby made a part of
       the Plan for all purposes.

                                                  SECURITY EQUITY FUND

Date:           May 1, 2000                    By:          AMY J. LEE
     --------------------------------             ------------------------------

                                    EXHIBIT A

Series of Security Equity Fund:

     Equity Series
     Global Series
     Total Return Series
     Social Awareness Series
     Mid Cap Value Series
     Small Cap Growth Series
     Enhanced Index Series
     International Series
     Select 25 Series
     Large Cap Growth Series
     Technology Series

Dated:        May 1, 2000
      ----------------------------

                     AMENDMENT TO CLASS B DISTRIBUTION PLAN


WHEREAS,  Security  Equity Fund (the "Fund") has adopted a Class B  Distribution
Plan dated September 24, 1993 (the  "Distribution  Plan"),  under which the Fund
supplements   the   expenditures   of  its   principal   underwriter,   Security
Distributors,  Inc. (the "Distributor") for distribution related activities with
respect to Fund shares; and

WHEREAS,  on November  2, 2001 the Board of  Directors  of the Fund  approved an
amendment to the Distribution Plan;

NOW,  THEREFORE BE IT RESOLVED,  that the Fund amends its  Distribution  Plan as
follows:

1.  Paragraph  2(a)(v)  shall be deleted in its entirety  and replaced  with the
    following new Paragraph 2(a)(v):

       v) Any  Shareholder  Service Fees paid by the  Distributor  to securities
    dealers  who  have  executed  a  Dealer's  Distribution  Agreement  with the
    Distributor,  or any  Shareholder  Service  Fees paid to entities  that have
    executed  a  Security   Funds   Shareholder   Service   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  Fund's  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;

2.  Paragraph 4 shall be deleted in its entirety and replaced with the following
    new Paragraph 4.

       4. DEALER'S DISTRIBUTION  AGREEMENT.  The Dealer's Distribution Agreement
    and the Security Funds  Shareholder  Service  Agreement  (collectively,  the
    "Agreement") contemplated by paragraph 2(a)(v) above shall permit payment of
    Shareholder  Service Fees 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 the affirmative vote of a majority of those
    Directors who are not interested  persons of the Fund and who have no direct
    or indirect financial interest in the operation of the Plan or any agreement
    related to the Plan ("Independent Directors"),  as required by the Rule. The
    Distributor  may pay to the  other  party  to any  Agreement  a  Shareholder
    Service Fee for  services  provided by such other  party.  Such  Shareholder
    Service  Fee shall be  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.  The shareholder services contemplated
    hereby shall include,  but are 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  Fund's  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.

IN WITNESS  WHEREOF,  the Security Equity Fund has adopted this Amendment to the
Distribution Plan this 2nd day of November, 2001.


                                                  SECURITY EQUITY FUND

                                                  By:    AMY J. LEE
                                                         -----------------------

                                                  Title: Secretary

                        AMENDMENT TO SECURITY EQUITY FUND
                                     CLASS B
                                DISTRIBUTION PLAN


WHEREAS,  the Security Equity Fund adopted a Distribution  Plan under Rule 12b-1
of the Investment Company Act of 1940 with respect to its Class B shares; and

WHEREAS,  the Class B Distribution  Plan was initially entered into on September
24, 1993; and

WHEREAS,  on May 3,  2002  the  Board of  Directors  of the  Fund  approved  the
reorganization  and  liquidation  of the  Total  Return  Series  so  that it was
acquired by the Equity Series effective August 28, 2002; and

WHEREAS, on November 8, 2002, the Board of Directors of the Security Equity Fund
authorized  the Fund to offer a new series of Class B common  stock of the Fund,
designated as the Alpha Opportunity Series; and

WHEREAS, on November 8, 2002, the Board of Directors of the Security Equity Fund
determined  that extending the Fund's Class B  Distribution  Plan to the Class B
shares of the Alpha  Opportunity  Series was  reasonably  likely to benefit  the
Series and its shareholders; and

WHEREAS, the Class B Distribution Plan provides that it may be amended from time
to time by adding or removing a Series of the Fund by an amended Exhibit A.

NOW, THEREFORE, IT IS HERETO AGREED that the Class B Distribution Plan is hereby
amended, effective February 1, 2003, as follows:

   1.  Exhibit A shall be deleted in its  entirety  and the  attached  Exhibit A
inserted in lieu thereof.

IN WITNESS  WHEREOF,  the parties hereto have executed this Amendment to Class B
Distribution Plan this 8th day of November, 2002.

                                       SECURITY EQUITY FUND


Date: 11-8-02                          By: JAMES R. SCHMANK
      ----------------------------         -------------------------------------
                                           James R. Schmank, President

                                    EXHIBIT A


Series of Security Equity Fund:

  Equity Series
  Global Series
  Social Awareness Series
  Mid Cap Value Series
  Small Cap Growth Series
  Enhanced Index Series
  International Series
  Select 25 Series
  Large Cap Growth Series
  Technology Series
  Alpha Opportunity Series

Dated:  November 8, 2002

EX-99.M3

                              SECURITY EQUITY FUND
                                     CLASS C
                                DISTRIBUTION PLAN

1.  THE PLAN. This Distribution Plan (the "Plan"), provides for the financing by
    Security Equity Fund (the "Fund") of activities  which are, or may be deemed
    to be,  primarily  intended  to  result in the sale of class C shares of the
    Series of the Fund (hereinafter called  "distribution-related  activities").
    The  Fund's  Series are  listed on  Exhibit A to this  Plan.  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-related activities. This Plan is intended to
    comply with the requirements of Rule 12b-1 (the "Rule") under the Investment
    Company Act of 1940 (the "1940 Act").

    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 Fund 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 the Fund and its shareholders.

2.  COVERED EXPENSES.

    (a)  The Fund may make payments  under this Plan, or any agreement  relating
         to the  implementation  of this Plan, in connection with any activities
         or expenses  primarily intended to result in the sale of class C shares
         of  the  Fund,   including,   but  not   limited   to,  the   following
         distribution-related activities:

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

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

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

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

           (v)  Any fees paid by the Distributor to securities  dealers who have
                executed a Dealer's Distribution  Agreement with the Distributor
                for account  maintenance and personal service to shareholders (a
                "Service Fee");

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

         (vii)  Expenses  incurred in  promoting  sales of shares of the Fund 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 Fund shares by dealers.

    (b)  Any payments for distribution-related activities 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 7 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-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.

4.  DEALER'S DISTRIBUTION  AGREEMENT.  The Dealer's Distribution  Agreement (the
    "Agreement")  contemplated  by Section 2(a)(v) above shall permit payment of
    Service Fees to  securities  dealers by the  Distributor  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  the  affirmative
    vote of a majority of those Directors who are not interested  persons of the
    Fund and who have no direct or indirect  financial interest in the operation
    of the Plan or any agreement related to the Plan ("Independent  Directors"),
    as required by the Rule. The  Distributor  may pay to the other party to any
    Agreement a Service Fee for account  maintenance  and  shareholder  services
    provided by such other party.  Such Service Fee shall be payable (a) for the
    first year,  initially,  in an 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. The
    distribution and marketing services  contemplated hereby shall include,  but
    are  not  limited  to,  answering  inquiries  regarding  the  Fund,  account
    designations and addresses, maintaining the investment of such other party's
    customers or clients in the Fund and similar  services.  In determining  the
    extent of such other party's  assistance in maintaining  such  investment by
    its  customers  or  clients,  the  Distributor  may take  into  account  the
    possibility  that  the  shares  held by such  customer  or  client  would be
    redeemed in the absence of such fee.

5.  LIMITATIONS  ON  COVERED  EXPENSES.  The basic  limitation  on the  expenses
    incurred by the Fund under Section 2 of this Plan  (including  Service Fees)
    in any fiscal  year of the Fund shall be one  percent  (1.00%) of the Fund's
    average  daily net assets for such  fiscal  year.  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.

6.  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.

7.  EFFECTIVENESS,  CONTINUATION,  TERMINATION AND AMENDMENT. This Plan and each
    Agreement  relating to the  implementation of this Plan 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;

    (b)  By a vote of holders of at least a majority of the  outstanding  voting
         securities of the Series' Class C shares; and

    (c)  Upon the  effectiveness  of an  amendment  to the  Fund's  registration
         statement, reflecting this Plan, filed with the Securities and Exchange
         Commission under the Securities Act of 1933.

    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, 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
    Series' Class C shares. Any Agreement relating to the implementation of this
    Plan 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 and, if such amendment  materially  increases the limitations
    on expenses payable under the Plan, it shall also require approval by a vote
    of holders of at least a majority of the  outstanding  voting  securities of
    the Series' Class C shares.  As applied to the Fund the phrase  "majority of
    the  outstanding  voting  securities"  shall have the meaning  specified  in
    Section 2(a) of the 1940 Act.

    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.

8.  RECORDS.  The Fund  shall  preserve  copies  of this  Plan  and any  related
    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.

                                                    SECURITY EQUITY FUND

Date: January 28, 1999                              By:     AMY J. LEE
      ---------------------                            -------------------------

                                    EXHIBIT A

Series of Security Equity Fund:

     Equity Series
     Global Series
     Asset Allocation Series
     Social Awareness Series
     Value Series
     Small Company Series
     Enhanced Index Series
     International Series
     Select 25 Series

                        AMENDMENT TO SECURITY EQUITY FUND
                                     CLASS C
                                DISTRIBUTION PLAN

WHEREAS,  the Security Equity Fund, adopted a Distribution Plan under Rule 12b-1
of the Investment Company Act of 1940 with respect to its Class C shares; and

WHEREAS, the Class C Distribution Plan was initially entered into on January 28,
1999; and

WHEREAS, on February 4, 2000, the Board of Directors of the Security Equity Fund
authorized the Fund to offer two new series of Class C common stock of the Fund,
designated as the Large Cap Growth Series and Technology Series; and

WHEREAS, on February 4, 2000, the Board of Directors of the Fund determined that
extending  the  Fund's  Class C  Distribution  Plan to the Class C shares of the
Large Cap Growth  Series and the  Technology  Series of the Fund was  reasonably
likely to benefit each such Series and their respective shareholders; and

WHEREAS, the Class C Distribution Plan provides that it may be amended from time
to time by adding or removing a Series of the fund by an amended Exhibit A;

NOW  THEREFORE  BE IT  RESOVLED,  that  the  Fund  hereby  amends  the  Class  C
Distribution Plan, effective May 1, 2000 as follows:

   1.  Exhibit A shall be deleted in its  entirety  and the  attached  Exhibit A
       inserted in lieu thereof.

                                                SECURITY EQUITY FUND

Date:          May 1, 2000                   By:           AMY J. LEE
     --------------------------------           --------------------------------

                                    EXHIBIT A

Series of Security Equity Fund:

     Equity Series
     Global Series
     Total Return Series
     Social Awareness Series
     Mid Cap Value Series
     Small Cap Growth Series
     Enhanced Index Series
     International Series
     Select 25 Series
     Large Cap Growth Series
     Technology Series

Dated:        May 1, 2000
      ----------------------------

                     AMENDMENT TO CLASS C DISTRIBUTION PLAN


WHEREAS,  Security  Equity Fund (the "Fund") has adopted a Class C  Distribution
Plan dated  January 28,  1999 (the  "Distribution  Plan"),  under which the Fund
supplements   the   expenditures   of  its   principal   underwriter,   Security
Distributors,  Inc. (the "Distributor") for distribution related activities with
respect to Fund shares; and

WHEREAS,  on November  2, 2001 the Board of  Directors  of the Fund  approved an
amendment to the Distribution Plan;

NOW,  THEREFORE BE IT RESOLVED,  that the Fund amends its  Distribution  Plan as
follows:

1.  Paragraph  2(a)(v)  shall be deleted in its entirety  and replaced  with the
    following new Paragraph 2(a)(v):

       v) Any  Shareholder  Service Fees paid by the  Distributor  to securities
    dealers  who  have  executed  a  Dealer's  Distribution  Agreement  with the
    Distributor,  or any  Shareholder  Service  Fees paid to entities  that have
    executed  a  Security   Funds   Shareholder   Service   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  Fund's  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;

2.  Paragraph 4 shall be deleted in its entirety and replaced with the following
    new Paragraph 4.

       4. DEALER'S DISTRIBUTION  AGREEMENT.  The Dealer's Distribution Agreement
    and the Security Funds  Shareholder  Service  Agreement  (collectively,  the
    "Agreement") contemplated by paragraph 2(a)(v) above shall permit payment of
    Shareholder  Service Fees 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 the affirmative vote of a majority of those
    Directors who are not interested  persons of the Fund and who have no direct
    or indirect financial interest in the operation of the Plan or any agreement
    related to the Plan ("Independent Directors"),  as required by the Rule. The
    Distributor  may pay to the  other  party  to any  Agreement  a  Shareholder
    Service Fee for  services  provided by such other  party.  Such  Shareholder
    Service  Fee shall be  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.  The shareholder services contemplated
    hereby shall include,  but are 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  Fund's  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.

IN WITNESS  WHEREOF,  the Security Equity Fund has adopted this Amendment to the
Distribution Plan this 2nd day of November, 2001.


                                                  SECURITY EQUITY FUND

                                                  By:    AMY J. LEE
                                                         -----------------------

                                                  Title: Secretary

                        AMENDMENT TO SECURITY EQUITY FUND
                                     CLASS C
                                DISTRIBUTION PLAN


WHEREAS,  the Security Equity Fund adopted a Distribution  Plan under Rule 12b-1
of the Investment Company Act of 1940 with respect to its Class C shares; and

WHEREAS, the Class C Distribution Plan was initially entered into on January 28,
1999; and

WHEREAS,  on May 3,  2002  the  Board of  Directors  of the  Fund  approved  the
reorganization  and  liquidation  of the  Total  Return  Series  so  that it was
acquired by the Equity Series effective August 28, 2002; and

WHEREAS, on November 8, 2002, the Board of Directors of the Security Equity Fund
authorized  the Fund to offer a new series of Class C common  stock of the Fund,
designated as the Alpha Opportunity Series; and

WHEREAS, on November 8, 2002, the Board of Directors of the Security Equity Fund
determined  that extending the Fund's Class C  Distribution  Plan to the Class C
shares of the Alpha  Opportunity  Series was  reasonably  likely to benefit  the
Series and its shareholders; and

WHEREAS, the Class C Distribution Plan provides that it may be amended from time
to time by adding or removing a Series of the Fund by an amended Exhibit A.

NOW, THEREFORE, IT IS HERETO AGREED that the Class C Distribution Plan is hereby
amended, effective February 1, 2003, as follows:

   1.  Exhibit A shall be deleted in its  entirety  and the  attached  Exhibit A
inserted in lieu thereof.

IN WITHESS WHEREOF, the parties hereto have executed this Amendment to the Class
C Distribution Plan this 8th day of November, 2002.

                                       SECURITY EQUITY FUND


Date: 11/8/02                          By: JAMES R. SCHMANK
      ----------------------------         -------------------------------------
                                           James R. Schmank, President

                                    EXHIBIT A


Series of Security Equity Fund:

  Equity Series
  Global Series
  Social Awareness Series
  Mid Cap Value Series
  Small Cap Growth Series
  Enhanced Index Series
  International Series
  Select 25 Series
  Large Cap Growth Series
  Technology Series
  Alpha Opportunity Series

Dated:  November 8, 2002

EX-99.M4

                              SECURITY EQUITY FUND
                           BROKERAGE ENHANCEMENT PLAN


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

WHEREAS,  shares of common stock of the Fund are currently  divided into series,
listed on Schedule A hereto (the "Series"), which Schedule can be amended to add
or remove a series by an amended schedule;

WHEREAS,  shares of common stock of the Series are divided into multiple classes
of  shares,  and this Plan  applies to the Fund and the Series and the effect of
the Plan does not vary based upon a class of a Series;

WHEREAS,  the Fund employs Security  Distributors,  Inc. (the  "Distributor") as
distributor of the securities of which the Fund is the issuer;

WHEREAS,  the Board of Directors of the Fund (the "Board") has determined  that,
subject to the  requirement to seek best price and execution,  it is appropriate
and desirable for the Fund to use certain brokerage commissions generated on the
purchase  and  sale of  portfolio  securities  to  finance  activities  that are
primarily  intended  to  result  in the  sale  of  its  shares  (the  "Brokerage
Enhancement Plan" or the "Plan");

WHEREAS, any benefits that may be obtained from brokerage commissions are assets
of the Fund,  and the Fund  wishes,  pursuant  to Rule 12b-1  under the Act,  to
utilize such assets in furtherance of the distribution of the Fund's shares; and

WHEREAS,  the Board has  determined  that,  to the extent  that the use of these
benefits   earned  by  a  Series  under  this  Plan  results  in  the  increased
distribution of the Fund's shares, a benefit in the form of potential  economies
of scale  should  inure to that  Series and to the other  Series  offered by the
Fund;

NOW, THEREFORE, this Brokerage Enhancement Plan is adopted by the Fund on behalf
of the Series,  in  accordance  with Rule 12b-l under the Act, on the  following
terms and conditions:

 1.  The Fund is authorized to enter into agreements or arrangements pursuant to
     which the Fund may direct Security Management Company,  LLC ("SMC"), in its
     capacity as the Fund's  investment  adviser,  and each of the  sub-advisors
     retained by SMC (and approved by the Fund) to manage  certain of the Series
     (each a "Sub-Advisor"), acting as agents for the Fund or its Series:

     a.  To place orders for the purchase or sale of portfolio  securities  with
         the Distributor or other introducing  broker-dealers who will receive a
         portion  of  the   brokerage   commission   paid  by  the  Series  from
         broker-dealers executing such portfolio transactions for the benefit of
         the  Series  ("Brokerage  Payments")  that  can  be  used  directly  or
         indirectly to finance the distribution of the Fund's shares; or

     b.  To  allocate  transactions  for  the  purchase  or  sale  of  portfolio
         securities or other assets to broker-dealers,  and receive, in addition
         to execution of the brokerage transaction,  credits,  benefits or other
         services from the broker-dealer  ("Brokerage Credits") that can be used
         directly  or  indirectly  to  promote  the  distribution  of the Fund's
         shares;

     in each case,  provided that SMC or the Sub-Advisor must reasonably believe
     that the  Distributor or  broker-dealer  (or the clearing broker of either)
     will execute the transaction in a manner  consistent with standards of best
     execution,  as described in the  Registration  Statement  for the Fund,  as
     amended from time to time.

 2.  The Fund is authorized to expend Brokerage  Credits and Brokerage  Payments
     to compensate the  Distributor  and other  broker-dealers  for the cost and
     expense of certain  distribution-related  activities or to procure from, or
     otherwise  induce,  the  Distributor  and other  broker-dealers  to provide
     services,  where such  activities  or services  are intended to promote the
     sale of the Fund's shares.  Such  activities or services may be provided by
     the Distributor or  broker-dealer  to which a purchase or sale  transaction
     has been allocated (the directed broker-dealer) or by another broker-dealer
     or  other  party  at  the   direction  of  the   Distributor   or  directed
     broker-dealer.  The  activities  or  services  which may be  procured  with
     Brokerage Credits and Brokerage  Payments  include,  but are not limited to
     (i) developing,  preparing, printing, and mailing of advertisements,  sales
     literature and other promotional material describing and/or relating to the
     Fund or the  Series;  (ii)  printing  and  mailing  of  Fund  prospectuses,
     statements  of  additional   information,   any  supplements   thereto  and
     shareholder  reports  for  existing  and  prospective  shareholders;  (iii)
     holding or participating in seminars and sales meetings designed to promote
     the distribution of shares of the Fund or the Series,  including  materials
     intended  either  for  broker-dealer  only  use or  for  retail  use;  (iv)
     providing  information  about  the Fund,  its  Series,  or mutual  funds in
     general,  to registered  representatives of  broker-dealers;  (v) providing
     assistance to broker-dealers  that are conducting due diligence on the Fund
     or its Series;  (vi) payment or reimbursement  of legal and  administrative
     costs associated with implementing the Plan; (vii) marketing fees requested
     by broker-dealers who sell shares of the Fund; (viii) obtaining information
     and  providing   explanations   to   shareholders   regarding  the  Series'
     investments  and  policies  and  other  information  about the Fund and its
     Series,  including  the  performance  of the Series;  (ix)  training  sales
     personnel;  (x) personal  service  and/or  maintenance  of the  shareholder
     accounts;  (xi) payment of commissions to broker-dealers who sell shares of
     the Fund; and (xii) financing any other activity that is intended to result
     in the sale of Fund shares.

 3.  The Fund may direct the Distributor to take  appropriate  actions to effect
     the purposes of this Plan, including,  but not limited to, (a) directing on
     behalf  of the Fund or a Series  and  subject  to the  standards  described
     above,  SMC or a Sub-Advisor to allocate  transactions  for the purchase or
     sale of  portfolio  securities  in the manner  described  in the Plan;  (b)
     compensating  a   broker-dealer   for  the  cost  and  expense  of  certain
     distribution-related  activities  or  procuring  from  a  broker-dealer  or
     otherwise  inducing  a  broker-dealer  to  provide  services,   where  such
     activities  or services  are  intended to promote the sale of shares of the
     Fund or a Series,  all on behalf  of the Fund or a Series.  Subject  to the
     standards set forth in Section 1, and subject to applicable  law, SMC and a
     Sub-Advisor may also direct brokerage  transactions to a broker-dealer that
     is an affiliated person of the Distributor, SMC or a Sub-Advisor.  Provided
     that any  Brokerage  Credits or Brokerage  Payments  directly or indirectly
     inure to the  benefit  of  those  Series  which  generated  the  particular
     Brokerage  Credit or  Brokerage  Payment,  any such credits or payments may
     also inure to the benefit of other Series of the Fund.

 4.  This Plan shall not take effect with  respect to a Series until it has been
     approved by (a) a vote of a majority of the outstanding  voting  securities
     of that  Series;  and,  together  with  any  related  agreements,  has been
     approved by (a) the Fund's Board of Directors,  and (b) those  Directors of
     the Fund who are not  "interested  persons"  of the Fund (as defined in the
     Act) and who have no direct or indirect financial interest in the operation
     of this Plan or any agreements  related to it (the "Rule 12b-l Directors"),
     cast in person at a meeting (or meetings) called, at least in part, for the
     purpose of voting on this Plan and such related  agreements.  As additional
     Series of the Fund are  established,  this Plan shall not take  effect with
     respect  to  such  Series  until  the  Plan,   together  with  any  related
     agreements, has been approved by votes of a majority of both (a) the Fund's
     Board of  Directors  and (b) the Rule 12b-1  Directors  cast in person at a
     meeting  called,  at least in  part,  for the  purpose  of  voting  on such
     approval.

 5.  After  approval  as set  forth  in  paragraph  4, and any  other  approvals
     required  pursuant  to the Act and Rule 12b-1  thereunder,  this Plan shall
     take effect at the time specified by the Fund's Board of Directors,  or, if
     no such time is specified by the Directors,  at the time that all approvals
     necessary  have been  obtained.  The Plan shall  continue in full force and
     effect  as to a  Series  for so long as such  continuance  is  specifically
     approved at least  annually by votes of a majority of both (a) the Board of
     Directors and (b) the Rule 12b-1 Directors of the Fund, cast in person at a
     meeting called, at least in part, for the purpose of voting on this Plan.

 6.  The Distributor shall provide to the Directors of the Fund a written report
     of the amounts  expended or benefits  received  and the  purposes for which
     such expenditures were made at such frequency as may be required under Rule
     12b-1 of the Act.

 7.  This  Plan may be  terminated  as to the Fund or each  Series  at any time,
     without  payment of any penalty,  by vote of the  Directors of the Fund, by
     vote of a majority of the Rule 12b-l Directors,  or by a vote of a majority
     of the  outstanding  voting  securities  of the  Series on not more than 30
     days'  written  notice to any other  party to the Plan.  In  addition,  all
     Agreements shall provide that such Agreement shall terminate  automatically
     in the event of its assignment.

 8.  This Plan may not be amended in any material  respect unless such amendment
     is  approved  by a vote of a  majority  of both  (a) the  Fund's  Board  of
     Directors  and (b) the Rule  12b-1  Directors  cast in  person at a meeting
     called,  at least in part, for the purpose of voting on such approval.  The
     Plan may not be amended to increase  materially  the amount to be spent for
     distribution  unless  such  amendment  is  approved  by a  majority  of the
     outstanding  voting securities of the pertinent Series and by a majority of
     both (a) the Fund's  Board of  Directors  and (b) the Rule 12b-1  Directors
     cast in person at a meeting  called,  at least in part,  for the purpose of
     voting on such approval;  PROVIDED HOWEVER, that increases in amounts spent
     for  distribution  by virtue of a greater  amount of  Brokerage  Credits or
     Brokerage  Payments generated by the Fund shall not be deemed to constitute
     a material increase in the amount to be spent for distribution.

 9.  While this Plan is in effect, the selection and nomination of Directors who
     are not  "interested  persons" (as defined in the Act) of the Fund shall be
     committed  to the  discretion  of the  Directors  who  are  not  interested
     persons.

10.  The Fund shall  preserve  copies of this Plan and related  agreements for a
     period of not less than six years from the date of  termination of the Plan
     or related  agreements,  the first two years in an easily accessible place;
     and shall  preserve all reports  made  pursuant to paragraph 6 hereof for a
     period of not less than  six,  the first two years in an easily  accessible
     place.

11.  The provisions of this Plan are severable as to each Series, and any action
     to be taken with  respect to this Plan shall be taken  separately  for each
     Series affected by the matter.

Date:  January 27, 2000

                                   SCHEDULE A

                            Equity Series
                            Global Series
                            Total Return Series
                            Value Series
                            Social Awareness Series
                            Small Company Series
                            Enhanced Index Series
                            International Series
                            Select 25 Series

                                  AMENDMENT TO
                           BROKERAGE ENHANCEMENT PLAN


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

WHEREAS,  the Fund adopted a Brokerage  Enhancement Plan (the "Plan") on January
27,  2000,  which  Plan may be  amended to add or remove a Series of the Fund by
amending Schedule A of the Plan;

WHEREAS,  on February 4, 2000, the Board of Directors of the Fund authorized the
Fund to offer its common stock in two new series  designated as Large Cap Growth
Series and Technology Series;

WHEREAS, on February 4, 2000, the Board of Directors  authorized the addition of
Large Cap Growth Series and Technology Series to the Plan;

NOW,  THEREFORE  BE IT  RESOLVED,  that the Fund  hereby  amends  the  Brokerage
Enhancement Plan, dated January 27, 2000, as follows, effective May 1, 2000:

     Schedule A shall be deleted in its  entirety  and the  attached  Schedule A
     inserted in lieu thereof.

IN WITNESS  WHEREOF,  the Fund has  executed  this  Amendment  to the  Brokerage
Enhancement Plan this 1st day of May, 2000.

                                             SECURITY EQUITY FUND

                                             By: JOHN D. CLELAND
                                                 -------------------------------
                                                 John D. Cleland, President
ATTEST:

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

                              SECURITY EQUITY FUND
                           BROKERAGE ENHANCEMENT PLAN

                                   SCHEDULE A


                            Equity Series
                            Global Series
                            Total Return Series
                            Social Awareness Series
                            Mid Cap Value Series
                            Small Cap Growth Series
                            Enhanced Index Series
                            International Series
                            Select 25 Series
                            Large Cap Growth Series
                            Technology Series




DATED:  May 1, 2000

                                  AMENDMENT TO
                           BROKERAGE ENHANCEMENT PLAN


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

WHEREAS,  the Fund adopted a Brokerage  Enhancement Plan (the "Plan") on January
27,  2000,  which  Plan may be  amended to add or remove a Series of the Fund by
amending Schedule A of the Plan;

WHEREAS,  on May 3,  2002,  the  Board of  Directors  of the Fund  approved  the
reorganization  and  liquidation  of the  Total  Return  Series  so  that it was
acquired by Equity Series effective August 28, 2002; and

WHEREAS,  on May 3, 2002,  the Board of Directors  approved the amendment of the
Plan to delete said Total  Return  Series from the terms and  conditions  of the
Plan; and

WHEREAS,  on November 8, 2002, the Board of Directors of the Fund authorized the
Fund to offer its common stock in a new series  designated as Alpha  Opportunity
Series effective February 1, 2003; and

WHEREAS, on November 8, 2002, the Board of Directors  authorized the addition of
the Alpha Opportunity Series to the Plan.

NOW,  THEREFORE,  IT IS HERETO  AGREED that the  Brokerage  Enhancement  Plan is
hereby amended, as follows, effective February 1, 2003:

   1.  Schedule A shall be deleted in its entirety  and the attached  Schedule A
       inserted in lieu thereof.

IN WITNESS  WHEREOF,  the Fund has  executed  this  Amendment  to the  Brokerage
Enhancement Plan this 8th day of November, 2002.

                                              SBL FUND

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

ATTEST:

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

                              SECURITY EQUITY FUND
                           BROKERAGE ENHANCEMENT PLAN

                                   SCHEDULE A


                            Equity Series
                            Global Series
                            Social Awareness Series
                            Mid Cap Value Series
                            Small Cap Growth Series
                            Enhanced Index Series
                            International Series
                            Select 25 Series
                            Large Cap Growth Series
                            Technology Series
                            Alpha Opportunity Series


Date:  November 8, 2002

EX-99.N

                       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.P2

                              AMENDED AND RESTATED
                                 CODE OF ETHICS
                                     OF THE
                                OPPENHEIMER FUNDS

                            DATED AS OF MAY 15, 2002


   This Code of Ethics has been adopted by each of the investment  companies for
which  OppenheimerFunds,  Inc. ("OFI") or its subsidiaries or affiliates acts as
investment  adviser  (the  "Oppenheimer   funds");   by  OFI  and  each  of  its
subsidiaries;  and also by  OppenheimerFunds  Distributor,  Inc.  ("OFDI"),  the
principal  underwriter of the  Oppenheimer  funds, in compliance with Rule 17j-1
(the "Rule") under the  Investment  Company Act of 1940, as amended (the "Act"),
to establish  standards  and  procedures  for the  detection  and  prevention of
activities by which persons  having  knowledge of  recommended  investments  and
investment  intentions of the Oppenheimer funds, other investment  companies and
other clients for which OFI or its  subsidiaries or affiliates act as adviser or
sub-adviser (collectively,  "Advisory Clients") may abuse their fiduciary duties
and otherwise to deal with the type of conflict of interest  situations to which
the rule is addressed.

   In  general,   the  fiduciary  principles  that  govern  personal  investment
activities reflect, at the minimum, the following:  (1) the duty at all times to
place the interests of Advisory  Clients  first;  (2) the  requirement  that all
personal securities transactions be conducted consistent with the Code of Ethics
and in such a manner as to avoid any actual or potential conflict of interest or
any abuse of an individual's  position of trust and responsibility;  and (3) the
fundamental   standard  that   Advisory   Client   personnel   should  not  take
inappropriate advantage of their positions.

   1.   IMPORTANT GENERAL PROHIBITIONS

        The  specific  provisions  and  reporting  requirements  of this Code of
Ethics are concerned  primarily  with those  investment  activities of a Covered
Person (as defined below) who may benefit from or interfere with the purchase or
sale of portfolio  securities by Advisory  Clients.  However,  both the Rule and
this Code of Ethics  prohibit  any officer or director of an Advisory  Client as
well as any Affiliate (as defined below) from using  information  concerning the
investment  intentions of Advisory  Clients,  or their ability to influence such
investment  intentions,  for  personal  gain or in a manner  detrimental  to the
interests of any Advisory Client.  Specifically,  the Rule makes it unlawful for
any such person,  directly or indirectly in connection with the purchase or sale
of a "security held or to be acquired" by any Advisory Client to:

          (i)  employ any device,  scheme or artifice to defraud  such  Advisory
               Client;

         (ii)  make to such Advisory  Client any untrue  statement of a material
               fact or omit to state to such  Advisory  Client a  material  fact
               necessary in order to make the  statements  made, in light of the
               circumstances under which they are made, not misleading;

        (iii)  engage in any act, practice, or course of business which operates
               or would  operate  as a fraud or  deceit  upon any such  Advisory
               Client; or

         (iv)  engage in any manipulative practice with respect to such Advisory
               Client.

   2.   DEFINITIONS - As used herein:

        "ADVISORY CLIENT" means any Oppenheimer  fund, other investment  company
        or other  client  for  which OFI or its  affiliates  act as  adviser  or
        sub-adviser.

        "AFFILIATE"  means any  officer,  director,  trustee or employee of OFI,
        OFDI,   Centennial   Asset   Management    Corporation   ("CAMC"),   OAM
        Institutional,    Inc.,   HarbourView   Asset   Management   Corporation
        ("HarbourView") or Trinity Investment Management Corporation ("Trinity")
        as well as any persons who directly or indirectly control (as defined in
        the Act) their  activities.  It includes  but is not limited to "Covered
        Persons," other than Independent Directors.

        "BENEFICIAL  INTEREST"  means  any  interest  by which an  Affiliate  or
        Covered Person,  or any member of his or her immediate  family (relative
        by blood or  marriage)  living in the same  household,  can  directly or
        indirectly  derive  a  monetary  benefit  from  the  purchase,  sale  or
        ownership  of a security  except  such  interests  as a majority  of the
        Independent   Directors  of  the  affected   Oppenheimer  fund(s)  shall
        determine to be too remote for the purpose of this Code of Ethics.

        "COVERED  PERSONS"  means,  in addition to the officers and directors of
        OFI, OFDI, CAMC, OAM Institutional,  HarbourView,  Trinity and/or any of
        the Oppenheimer funds (1) any person who, in connection with his regular
        functions  or duties,  participates  in the  selection  of, or regularly
        obtains information regarding, the Securities currently being purchased,
        sold or considered for purchase or sale by any Advisory Client,  and who
        is also  an  employee  of OFI,  CAMC,  OAM  Institutional,  HarbourView,
        Trinity  or any other  entity  adopting  this Code of Ethics or, for the
        purposes of Paragraph 5(j) solely, the Sub-Adviser;  and (2) any natural
        person in a control relationship to an Advisory Client or its investment
        adviser who obtains information  concerning  recommendations made to the
        Advisory Client with regard to the purchase or sale of Securities by the
        Advisory Client.

        "INDEPENDENT  DIRECTOR"  means any director or trustee of an  investment
        company who is not an "interested  person" of OFI, any of its parents or
        subsidiaries,  or any of the  Oppenheimer  funds as  defined  by Section
        2(a)(19) of the Act.

        "INITIAL  PUBLIC  OFFERING"  means an offering of securities  registered
        under the Securities Act of 1933, the issuer of which immediately before
        the  registration,  was not  subject to the  reporting  requirements  of
        sections 13 or 15(d) of the Securities Exchange Act of 1934.

        "INVESTMENT  PERSON"  means (1) a Portfolio  Manager,  (2) a  securities
        analyst  or trader who  provides  information  and  advice to  Portfolio
        Managers or who helps execute a Portfolio Manager's  decisions,  (3) any
        other  person  who,  in  connection  with  his/her   duties,   makes  or
        participates in making  recommendations  regarding an Advisory  Client's
        purchase or sale of securities,  and (4) any natural person in a control
        relationship to an Advisory Client or its investment adviser who obtains
        information concerning  recommendations made to the Advisory Client with
        regard to the purchase or sale of Securities by the Advisory Client.

        "OPPENHEIMER  FUND"  for  purposes  of this  Code of  Ethics  means  any
        investment company registered under the Investment Company Act for which
        OFI,  CAMC,  HarbourView,  or  Trinity  is  the  investment  adviser  or
        sub-adviser.

        "PORTFOLIO  MANAGER"  means an  individual  entrusted  with  the  direct
        responsibility  and authority to make investment  decisions  affecting a
        particular Advisory Client.

        "PRIVATE  PLACEMENT" means an offering that is exempt from  registration
        under the  Securities  Act of 1933  pursuant to section  4(2) or section
        4(6) or pursuant to rule 504, rule 505 or rule 506 under the  Securities
        Act of 1933.

        "SECURITY"  includes any warrant or option to acquire or sell a security
        and financial futures contracts,  BUT EXCLUDES  securities issued by the
        U.S. government or its agencies, bankers' acceptances, bank certificates
        of deposit,  commercial paper, high quality  short-term debt instruments
        including repurchase agreements,  and shares of any open-end mutual fund
        not  traded  on an  exchange  which  is not  affiliated  with OFI or any
        affiliate of OFI. "High quality  short-term debt instrument"  shall mean
        an instrument  that has a maturity at issuance of less than 366 days and
        that  is  rated  in  one of  the  two  highest  rating  categories  by a
        Nationally Recognized Statistical Rating Organization (NRSRO).

        References  to a  "Security"  in the Code of Ethics  shall  include  any
        warrant  for,  option in, or  security or other  instrument  immediately
        convertible  into or whose value is derived from that "Security" and any
        instrument or right which is equivalent to that "Security."

        "SECURITY  HELD OR TO BE  ACQUIRED"  by an  Advisory  Client  means  any
        Security  which,  within the most recent 15 days (1) is or has been held
        by the Advisory Client or (2) is being considered by the Advisory Client
        or its investment adviser for purchase by the Advisory Client.

        A security is "being  considered  for purchase or sale" from the time an
        order is given by or on behalf  of the  Portfolio  Manager  to the order
        room of an  Advisory  Client  until  all  orders  with  respect  to that
        security are completed or withdrawn.

        "SUB-ADVISER"  means an investment adviser that acts as a sub-adviser to
        a portfolio advised by OFI or its affiliates.

   3.   PROHIBITED TRANSACTIONS

        (a)  No  Affiliate  or  Independent  Director  may  purchase or sell any
             Security  in which he or she has or thereby  acquires a  Beneficial
             Interest  with actual  knowledge  that a decision to place an order
             for the purchase or sale of the same Security by an Advisory Client
             had been made or proposed.

        (b)  No Covered  Person may purchase or sell any Security in which he or
             she has or  thereby  acquires a  Beneficial  Interest  with  actual
             knowledge   that,  at  the  same  time,  such  security  is  "being
             considered for purchase or sale" by an Advisory Client or that such
             security is the subject of an outstanding purchase or sale order by
             an Advisory Client.

        (c)  No Investment Person may purchase any Security in an Initial Public
             Offering.

        (d)  No  Investment  Person  may,  without  the  express  prior  written
             pre-approval  of the  Administrator  of this Code of  Ethics  which
             shall set forth the rationale supporting such pre-approval, acquire
             any  security in a Private  Placement,  and if a Private  Placement
             security is acquired,  such  Investment  Person must  disclose that
             investment  when  he/she  plays  a  part  in an  Advisory  Client's
             subsequent  consideration of any investment in that issuer,  and in
             such  circumstances,  an  independent  review shall be conducted by
             Investment Persons who do not have an interest in the issuer and by
             the Administrator.

        (e)  A Portfolio  Manager may not purchase or sell any  Security  within
             seven  (7)  days  before  or  after  the  purchase  or sale of that
             Security  by an  Advisory  Client of which  he/she  is a  Portfolio
             Manager.

             Notwithstanding  the  foregoing,   if  the  Advisory  Client  is  a
             newly-established  separate  account with assets of $100 million or
             more for which the Securities purchased by the Portfolio Manager to
             open the separate  account are as directed by a "buy list" compiled
             by OFI (or a subsidiary of OFI), the seven (7) day personal trading
             prohibition  shall not apply on the date the  separate  account  is
             opened to  Securities  that were on the "buy list" during the seven
             (7) days  preceding  the  opening of the  separate  account IF such
             Securities  are in the S&P 500  Index  and  the  Portfolio  Manager
             limits  personal  trades in any such Security  during the seven (7)
             days  before or after the  opening of the  separate  account to the
             greater of 100 shares or $10,000.

             Any profits  realized on trades  prohibited  by this section  3.(e)
             shall be disgorged.

        (f)  An Investment Person may not purchase and sell or sell and purchase
             any Security  within any sixty (60) day period,  with the exception
             of (i) the  instruments  listed in section  3(k) when used for bona
             fide hedging purposes and with prior approval of the  Administrator
             of the Code of  Ethics,  or (ii) a Security  traded at a loss.  Any
             profits  realized on trades  prohibited by this section 3.(f) shall
             be disgorged.

        (g)  An  Investment  Person may not accept any gifts or anything else of
             more than a  de-minimis  value from any person or entity  that does
             business with or on behalf of an Advisory Client.

        (h)  A purchase  or sale of a Security by an  Investment  Person that is
             otherwise  permitted  by this  Code of Ethics  may not be  effected
             until the  Investment  Person first obtains  written  pre-clearance
             from the Administrator or the Administrator's designee and, if such
             pre-clearance is obtained from the Administrator's designee, a copy
             of  the  written   pre-clearance   is  promptly   received  by  the
             Administrator.

        (i)  No  Investment  Person  may  serve  on the  board of  directors  or
             trustees of a publicly-traded  corporation or other business entity
             without the prior written approval of the Administrator.

        (j)  No Covered  Person  other than an  Independent  Director may sell a
             security short, except, with prior approval of the Administrator of
             the Code of Ethics, a short sale as a hedge against a long position
             in the same security.

        (k)  A Covered  Person,  with the exception of an Independent  Director,
             may not purchase or sell options or futures, other than options and
             futures related to broad-based  indices,  U.S. Treasury securities,
             currencies  and  long   portfolio   positions  in  the  same  or  a
             substantially similar security.  When used as a bona fide hedge and
             with prior approval of the Administrator of the Code of Ethics, the
             instruments  listed in this  section  3(k) are not  subject  to the
             60-day hold requirement of section 3(f).

   4.   EXEMPT TRANSACTIONS

        Neither the  prohibitions  nor the reporting  requirements  of this Code
apply to:

        (a)  Purchases  or sales of  Securities  for an  account  over  which an
             Affiliate  or  Covered  Person has no direct  control  and does not
             exercise indirect control.

        (b)  Involuntary  purchases  or sales  made by  either an  Affiliate  or
             Covered Person or any Fund.

        (c)  Purchases  which  are part of an  automatic  dividend  reinvestment
             plan.

        (d)  Purchases  resulting  from the exercise of rights  acquired from an
             issuer as part of a pro rata distribution to all holders of a class
             of securities of such issuer and the sale of such rights.

        (e)  Purchases or sales which receive the express  written  approval and
             pre-clearance  of the  Administrator of this Code of Ethics because
             the  purchase  or sale will not  occasion  the  improper  use of an
             Advisory  Client's  proprietary  information  or an  abuse  of  the
             individual's  position of trust and  responsibility  to an Advisory
             Client and because:

               (i)  their potential harm to an Advisory Client is remote;

              (ii)  they  would be  unlikely  to  affect a highly  institutional
                    market; or

             (iii)  they are  clearly  not related  economically  to  securities
                    being considered for purchase or sale by an Advisory Client.

   5.   REPORTING REQUIREMENTS

        (a)  Within ten (10) days after the end of each  calendar  quarter,  all
             Covered Persons shall make a written report to the Administrator of
             this  Code of  Ethics  of all  non-exempt  securities  transactions
             occurring  in the  quarter by which they  acquired or disposed of a
             Beneficial   Interest  in  any  security   and  if  no   non-exempt
             transaction in a security occurred during the quarter,  the written
             report shall so state.

             However,  a Covered  Person shall not be considered in violation of
             this Code of Ethics for not making a  quarterly  report if all such
             information   required  by  that  report  is   contained  in  trade
             confirmations  and account  statements  previously  provided to the
             Administrator of this Code of Ethics for the time period covered by
             that quarterly report.

        (b)  An Independent  Director need only report  non-exempt  transactions
             (in which he or she has had a  Beneficial  Interest)  in a Security
             (excluding,  for purposes of this subparagraph (b), open-end mutual
             funds  affiliated  with OFI or any affiliate of OFI) which,  at the
             time,  such Director knew, or in the ordinary  course of fulfilling
             his or her duties,  should have known was  purchased or sold or was
             being or had been  considered  for  purchase or sale by an Advisory
             Client during the fifteen (15) day period immediately  preceding or
             after the date of the Independent  Director's transaction and if no
             non-exempt  transaction in a security  occurred during the quarter,
             the written  report,  if any, shall so state. A written report will
             not be required  for any quarter in which an  Independent  Director
             has only exempt transactions to report.

        (c)  Transactions in an account  identified to the Administrator of this
             Code of Ethics need not be otherwise reported if the Covered Person
             shall have authorized disclosure of all securities  transactions in
             the account to the Administrator  and furnished such  Administrator
             copies of all  confirmations and monthly  statements  pertaining to
             such account.

        (d)  Such QUARTERLY  REPORT must contain the following  information with
             respect to each reportable transaction:

               (i)  Name(s) in which the account is registered  and the date the
                    account was established;

              (ii)  Date and nature of the  transaction  (purchase,  sale or any
                    other type of acquisition or disposition);

             (iii)  Title, number of shares, principal amount, interest rate and
                    maturity (as  applicable)  of each security and the price at
                    which the transaction was effected;

              (iv)  Name of the broker,  dealer or bank with or through whom the
                    transaction was effected; and

               (v)  the date the report is submitted.

        (e)  Any  such  report  may  contain  a  statement  that it is not to be
             construed as an admission  that the person making it has or had any
             direct or indirect Beneficial Interest in any security to which the
             report relates.

        (f)  All Covered Persons other than Independent  Directors shall arrange
             for copies of confirmations of all personal securities transactions
             and periodic  statements of securities accounts to be sent directly
             to the Administrator.

        (g)  All  Covered  Persons  other  than   Independent   Directors  shall
             INITIALLY,  within ten (10) days of becoming a Covered Person,  AND
             AT LEAST ANNUALLY  THEREAFTER make a WRITTEN HOLDINGS REPORT to the
             Administrator of the Code of Ethics with the following  information
             (such information, as to the annual report, must be current as of a
             date no more than 30 days before the report is submitted):

               (i)  Name(s) in which the account is registered  and the date the
                    account was established;

              (ii)  Title, number of shares, principal amount, interest rate and
                    maturity (as applicable) of each security;

             (iii)  Name of the broker,  dealer or bank with whom the account is
                    maintained; and

              (iv)  the date the report is submitted.

        (h)  All Covered  Persons shall,  at least  annually,  certify that they
             have read and understand the Code of Ethics and recognize that they
             are subject thereto.

        (i)  All Covered Persons other than Independent  Directors shall certify
             annually, that they have complied with the requirements of the Code
             of Ethics and that they have  disclosed  or reported  all  personal
             securities  transactions  and holdings  required to be disclosed or
             reported pursuant thereto.

        (j)  (1)  The Sub-Adviser  shall,  within thirty (30) days after the end
                  of each  calendar  quarter,  submit a  written  report  to the
                  Administrator of the Code of Ethics setting forth all personal
                  securities transactions by all Covered Persons employed by the
                  Sub-Adviser  which  occurred  within  fifteen  (15)  days of a
                  transaction in the same security by an Advisory Client advised
                  by the Sub-Adviser; or

             (2)  Alternatively,  where a Sub-Advisor for an Oppenheimer fund or
                  portfolio  thereof has adopted its own Code of Ethics which is
                  acceptable  to the  Independent  Directors of the  Oppenheimer
                  funds  and which  complies  with the  provisions  of the Rule,
                  then,   if  acceptable  to  the  Board  of  Directors  of  the
                  Oppenheimer fund involved:

                    (i)  the  Sub-Adviser's  Code of  Ethics  shall  govern  the
                         activities of the Sub-Adviser and its access persons;

                   (ii)  the Administrator of the  Sub-Adviser's  Code of Ethics
                         shall,  within  thirty  (30)  days  of the  end of each
                         quarter,  submit a report to the Board of  Directors of
                         each Oppenheimer fund of which it is a Sub-Adviser:

                         (a)  certifying   that  within  the  last   quarter  no
                              violations  of such Code of Ethics  have  occurred
                              with respect to Covered Persons of the Oppenheimer
                              funds affiliated with the Sub-Adviser; or

                         (b)  if  any   such   violations   have   occurred,   a
                              description of the violation,  the identity of the
                              individual(s)  involved and the sanction,  if any,
                              imposed;

                  (iii)  the Administrator of the  Sub-Adviser's  Code of Ethics
                         shall submit a report, at least annually,  to the Board
                         of Directors of each  Oppenheimer  fund  sub-advised by
                         Sub-Adviser, which:

                         (a)  summarizes any changes in the  Sub-Adviser's  Code
                              of Ethics made during the past year;

                         (b)  identifies  any  violations  of the  Sub-Adviser's
                              Code  of  Ethics  requiring  significant  remedial
                              action  during  the past  year and  describes  the
                              remedial action taken;

                         (c)  identifies  any  recommended  changes in  existing
                              restrictions  or procedures  based upon experience
                              under the Sub-Adviser's  Code of Ethics,  evolving
                              industry  practices or  developments in applicable
                              laws or regulations;

                         (d)  certifies  that the  procedures  set  forth in the
                              Sub-Adviser's  Code of Ethics  were as  reasonably
                              necessary   to  prevent   Covered   Persons   from
                              violating the Code of Ethics; and

                   (iv)  the Administrator of this Code of Ethics shall not have
                         responsibility for overseeing the Code of Ethics of the
                         Sub-Adviser  but shall request,  on behalf of the Board
                         of Directors of the Oppenheimer funds, that Sub-Adviser
                         submit the reports required by this Section 5(j).

   6.   CONFIDENTIALITY OF ADVISORY CLIENT TRANSACTIONS

        Until  disclosed in a public report to shareholders or to the SEC in the
normal course,  all information  concerning the securities "being considered for
purchase  or sale" by any  Advisory  Client  shall be kept  confidential  by all
Covered Persons and disclosed by them only on a need to know basis in accordance
with  practices  and  policies  developed  and  periodically  reviewed for their
continuing  appropriateness  by an officer of OFI designated for this purpose by
its Chairman or President.  Any questions  regarding  confidentiality  are to be
directed  to the  Administrator  of this  Code of  Ethics  or to  OFI's  General
Counsel.  It shall be the  responsibility  of the  Administrator of this Code of
Ethics to be  familiar  with  such  practices  and  policies  and to report  any
inadequacy found by him to OFI and the directors of the Oppenheimer funds or any
committee appointed by them to deal with such information.

   7.   SANCTIONS

        Any violation of this Code of Ethics shall be subject to the  imposition
of such sanctions by OFI as may be deemed appropriate under the circumstances to
achieve  the  purposes  of the Rule  and this  Code of  Ethics  and may  include
suspension or termination of employment,  a letter of censure and/or restitution
of an amount equal to the  difference  between the price paid or received by the
affected Advisory  Client(s) and the more advantageous price paid or received by
the offending  person except that sanctions for violation of this Code of Ethics
by an  Independent  Director  of an  Oppenheimer  fund will be  determined  by a
majority vote of its other Independent Directors.

   8.   ADMINISTRATION AND CONSTRUCTION

        (a)  The   administration   of  this  Code  of   Ethics   shall  be  the
             responsibility  of a person  nominated  by OFI and  approved by the
             Independent  Directors  of each  of the  Oppenheimer  funds  as the
             "Administrator" of this Code of Ethics.

        (b)  The duties of such Administrator will include:

                (i)  Continuous  maintenance  of a current  list of the names of
                     all Covered  Persons  with an  appropriate  description  of
                     their title or employment;

               (ii)  Furnishing  all  Covered  Persons  a copy of  this  Code of
                     Ethics and initially  and  periodically  informing  them of
                     their duties and obligations thereunder;

              (iii)  Designating,  as desired,  appropriate  personnel to review
                     transaction  and  holdings  reports  submitted  by  Covered
                     Persons;

               (iv)  Maintaining or supervising  the  maintenance of all records
                     required by the Code of Ethics;

                (v)  Preparing  listings  of all  transactions  effected  by any
                     Covered  Person  within  fifteen  (15)  days of the date on
                     which the same  security was held,  purchased or sold by an
                     Advisory Client;

               (vi)  Determining whether any particular  securities  transaction
                     should be exempted  pursuant to the provisions of Paragraph
                     4(e) of this Code of Ethics;

              (vii)  Issuing either personally or with the assistance of counsel
                     as may be appropriate,  any  interpretation of this Code of
                     Ethics which may appear  consistent  with the objectives of
                     the Rule and this Code of Ethics.

             (viii)  Conducting such  inspections or  investigations,  including
                     scrutiny of the  listings  referred to in the  subparagraph
                     (v) above,  as shall  reasonably  be required to detect and
                     report,   with   his/her   recommendations,   any  apparent
                     violations  of  this  Code  of  Ethics  to  OFI  and to the
                     directors  of  the  affected   Oppenheimer   funds  or  any
                     committee appointed by them to deal with such information;

               (ix)  Submitting a quarterly  report to the Board of Directors of
                     each Oppenheimer fund  potentially  affected,  containing a
                     description  of any  violation  and the  sanction  imposed;
                     transactions  which suggest the possibility of a violation;
                     interpretations  issued by and any  exemptions  or  waivers
                     found  appropriate  by the  Administrator;  and  any  other
                     significant  information  concerning the appropriateness of
                     this Code of Ethics.

                (x)  Submitting a written  report at least annually to the Board
                     of Directors or Trustees of each Oppenheimer fund which:

                     (a)  summarizes  existing  procedures  concerning  personal
                          investing  and  any  changes  in the  procedures  made
                          during the past year;

                     (b)  identifies   any  violations   requiring   significant
                          remedial action during the past year and describes the
                          remedial action taken;

                     (c)  identifies   any   recommended   changes  in  existing
                          restrictions or procedures based upon experience under
                          the Code of Ethics,  evolving  industry  practices  or
                          developments in applicable laws or regulations;

                     (d)  reports  with  respect to the  implementation  of this
                          Code  of  Ethics  through   orientation  and  training
                          programs and on-going reminders; and

                     (e)  certifies  that the  procedures set forth in this Code
                          of Ethics  were as  reasonably  necessary  to  prevent
                          Covered Persons from violating the Code of Ethics.

               (xi)  Maintaining periodic educational conferences to explain and
                     reinforce the terms of this Code of Ethics.

   9.   REQUIRED RECORDS

        The Administrator shall maintain and cause to be maintained in an easily
accessible place, the following records:

        (a)  A copy of any Code of Ethics adopted pursuant to the Rule which has
             been in effect during the most recent five (5) year period;

        (b)  A record of any  violation  of any such Code of Ethics,  and of any
             action taken as a result of such  violation,  within five (5) years
             from  the end of the  fiscal  year of OFI in which  such  violation
             occurred;

        (c)  A copy of each  report made by a Covered  Person,  as well as trade
             confirmations and account  statements that contain  information not
             duplicated in such  reports,  within five (5) years from the end of
             the fiscal year of OFI in which such report is made or  information
             is provided, the first two (2) years in an easily accessible place;

        (d)  A copy of each  report  made by the  Administrator  within five (5)
             years from the end of the fiscal  year of OFI in which such  report
             is made or issued,  the first two (2) years in an easily accessible
             place;

        (e)  A list, in an easily  accessible  place, of all persons who are, or
             within the most recent five (5) year period have been,  required to
             make  reports  pursuant  to the Rule and this Code of Ethics or who
             are or were responsible for reviewing these reports; and

        (f)  A record of any decision,  and the reasons supporting the decision,
             to  permit an  Investment  Person  to  acquire a Private  Placement
             security,  for at least five (5) years  after the end of the fiscal
             year in which permission was granted.

   10.  AMENDMENTS AND MODIFICATIONS

        This Code of Ethics may not be amended or  modified  except in a written
form  which  is  specifically  approved  by  majority  vote  of the  Independent
Directors of each of the Oppenheimer funds.

Dated as of: May 15, 2002

                                      Adopted by the Board of Trustees/Board I
                                      April 11, 2002


                                      /s/ KATHERINE P. FELD
                                      ------------------------------------------
                                      Katherine P. Feld, Assistant Secretary

                                      Adopted by the Board of Trustees/Board II
                                      April 23, 2002


                                      /s/ KATHERINE P. FELD
                                      ------------------------------------------
                                      Katherine P. Feld, Assistant Secretary

                                      Adopted by the Board of Trustees/Board III
                                      April 8, 2002


                                      /s/ KATHERINE P. FELD
                                      ------------------------------------------
                                      Katherine P. Feld, Assistant Secretary

EX-99.P3

                                   APPENDIX II

                                  July 1, 2000
                             (Amended March 8, 2001)

                        RS INVESTMENT MANAGEMENT CO. LLC
                         RS INVESTMENT MANAGEMENT, L.P.
                         RS INVESTMENT MANAGEMENT, INC.
                               RS GROWTH GROUP LLC
                               RS VALUE GROUP LLC
                               RS INVESTMENT TRUST

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

                                 CODE OF ETHICS
                                    including
                         RSIM POLICY ON PERSONAL TRADING

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


I.  SCOPE AND SUMMARY

(a)  Rule 17j-1 under the Investment  Company Act of 1940, as amended (the "1940
Act"), requires every investment company, as well as every investment adviser to
and principal  underwriter of an investment  company,  to have a written Code of
Ethics  which  specifically  deals with trading  practices by "Access  Persons."
Access Persons are defined to include (1) officers,  directors, general partners
and Advisory Persons of the two mutual fund advisers (RS Investment  Management,
Inc. and RS Investment  Management,  L.P.--collectively  "RSIM"), as well as (2)
employees  of RSIM  and  officers,  directors,  partners  who  have  substantial
responsibility  for  or  knowledge  of  the  investments  of  the  mutual  funds
constituting  series of the RS Investment  Trust (each, a "Fund"),  and (3) each
member of the Funds' Board of Trustees.  The Rule also requires that  reasonable
diligence is used and procedures  instituted to prevent  violations of this Code
of Ethics.

(b)  Sections  21A and 15(f) of the Securities  Exchange Act and Section 204A of
the Investment  Advisers Act further require all  broker-dealers  and investment
advisers to establish,  maintain and enforce written  policies and procedures to
prevent the misuse of material nonpublic information.

(c)  Common law fiduciary  principles  require that an investment  adviser (like
RSIM) avoid  placing  itself in a position  of  conflict  of  interest  with its
clients. Likewise, RSIM as a general partner to various partnerships,  stands in
a  fiduciary   relationship   to  the  limited   partners   investing  in  those
partnerships.

(d)  The "Blue Ribbon" Advisory Group on Personal Investing in its report to the
Investment  Company  Institute  also  articulated  the  following  three general
fiduciary  principles  which the  Group  believes  should  govern  the  personal
investment activities of mutual fund advisory and distributor personnel:

       (i)  the duty at all times to place the  interests  of Fund  shareholders
            first;

      (ii)  the  requirement  that  all  personal  securities   transactions  be
            conducted consistent with the Code of Ethics and in such a manner as
            to avoid any actual or  potential  conflict of interest or any abuse
            of an individual's position of trust and responsibility; and

     (iii)  the  fundamental  standard that mutual fund advisory and distributor
            personnel   should  not  take   inappropriate   advantage  of  their
            positions.

(e)  This  Code of Ethics is  designed  to satisfy  the  above-referenced  legal
requirements  and ethical  principles  as  applicable  to RSIM in their roles as
adviser  to the  RSIM  Funds.  It is  important  that  all  partners,  officers,
directors and employees of RSIM to whom this Code of Ethics applies  observe the
ethical standards set forth in the Code.

(f)  This  Code of  Ethics  is not  intended  to  cover  all  possible  areas of
potential  liability under the 1940 Act or under the federal  securities laws in
general.  For example,  other  provisions of Section 17 of the 1940 Act prohibit
various  transactions  between a registered  investment  company and  affiliated
persons,  including  the  knowing  sale or  purchase  of  property  to or from a
registered  investment  company on a  principal  basis,  and joint  transactions
(E.G.,  combining  to achieve a  substantial  position in a security,  concerted
market activity,  or commingling of funds) between an investment  company and an
affiliated person.

(g)  It is  expected  that  Access  Persons  will be  sensitive  to all areas of
potential conflict, even if this Code of Ethics does not address specifically an
area of fiduciary responsibility.

(h)  Exceptions to specific  provisions of this Code of Ethics may be granted by
the compliance  officer or an alternate if warranted by circumstances and if the
exception is requested in a timely manner.

(i)  This  Code of Ethics has been  approved  by the Board of Trustees of the RS
Investment Trust, including a majority of disinterested  directors. Any material
change to the Code must be  approved  by the  Board,  including  a  majority  of
disinterested  directors,  within 6 months of the change. The standard for Board
approval is a finding that the Code contains provisions  reasonably necessary to
prevent Access Persons from violating the anti-fraud provisions of Rule 17j-1.

(j)  SUMMARY.  Under the Code of Ethics, all Access Persons,  EXCEPT INDEPENDENT
TRUSTEES of the Funds, are required to:

        (i)  Pre-clear  all  trades in  individual  securities.  [Note:  certain
             securities are excepted:  mutual funds, stock index options, SPDR's
             and money market instruments are "excepted securities."]

       (ii)  Reverse trades that involve  securities  subsequently  purchased or
             sold by a Fund within the applicable blackout period.

      (iii)  Observe a minimum 60 day holding period for all securities  (except
             "excepted securities").

       (iv)  Avoid IPO's.

        (v)  Receive special clearance for private placements.

       (vi)  Avoid  directorships  of  companies  in which  Fund  assets  may be
             invested. (Unless permission is obtained from the CEO.)

      (vii)  Promptly  disclose all  security  transactions  and file  quarterly
             transaction reports and annual ownership reports.

     (viii)  Avoid  security   transactions  in  which  they  possess   material
             non-public information with regard to the particular security.

II.  DEFINITIONS

(a)  "ACCESS  PERSON"  means:  (i)  officers,  directors,  general  partners and
Advisory  Persons of the four  Registered  Investment  Advisers  (RS  Investment
Management, Inc. and RS Investment Management,  L.P., RS Growth Group LLC and RS
Value Group  LLC--collectively  "RSIM"),  as well as (ii)  employees of RSIM and
officers,  directors,  partners  who  have  substantial  responsibility  for  or
knowledge of the investments of the mutual funds  constituting  series of the RS
Trust (each,  a "Fund"),  hedge funds  managed by RSIM,  institutional  accounts
where RSIM acts as a sub-adviser,  separate  accounts  managed by RSIM and (iii)
each member of the Funds' Board of Trustees.  Members of the immediate family of
an Access Person living in the same household are covered by this Code of Ethics
to the same extent as the Access Person.

(b)  "ADVISORY  PERSON" means with respect to (i) the Funds,  (ii) an investment
adviser to a Fund or (iii) any company in a control relationship to the Funds or
the investment  adviser (I.E.,  RSIM),  (A) any employee who, in connection with
his regular functions or duties, makes,  participates in, or obtains information
regarding,  the  purchase  or sale of a security by a Fund,  or whose  functions
relate to the making of any  recommendations  with respect to such  purchases or
sales;  and (B) any natural person in a control  relationship to the Funds or an
investment adviser who obtains information concerning  recommendations made to a
Fund with regard to the purchase or sale of a security.

(c)  A security is "BEING CONSIDERED FOR PURCHASE OR SALE" when a recommendation
to purchase or sell a security has been made and communicated, and, with respect
to a person making a recommendation, when such person seriously considers making
such a recommendation.

(d)  "BENEFICIAL  OWNERSHIP" shall be interpreted in the same manner as it would
be in determining whether a person is subject to the provisions of Section 16 of
the Securities  Exchange Act of 1934, as amended,  and the rules and regulations
thereunder,  with the  exception  that the  determination  of direct or indirect
beneficial ownership shall apply to all securities which an Access Person has or
acquires.

(e)  "CONTROL"  means the power to  exercise a  controlling  influence  over the
management  or policies of a company,  unless such power is solely the result of
an official position, as further defined in Section 2(a)(9) of the 1940 Act.

(f)  "PURCHASE  OR SALE OF A  SECURITY"  includes  the  writing  of an option to
purchase or sell a security.

(g)  "SECURITY" shall have the meaning set forth in Section 2(a)(36) of the 1940
Act, and shall include  options and  warrants,  except that it shall not include
excepted securities (as defined below).

(h)  "EXCEPTED  SECURITIES"  include  shares of registered  open-end  investment
companies  (except the RSIM Funds),  securities  issued by the Government of the
United States (including Government agencies),  short term debt securities which
are "government  securities"  within the meaning of Section 2(a)(16) of the 1940
Act, stock index options,  SPDRs,  bankers'  acceptances,  bank  certificates of
deposit, commercial paper and other money market instruments.

(i)  "MATERIAL  NON-PUBLIC  INFORMATION"  is  information  relating  to dividend
increases or  decreases,  earnings  estimates,  changes in  previously  released
earnings  estimates,  significant  expansion or  curtailment  of  operations,  a
significant  increase or decline of orders,  significant  merger or  acquisition
proposals or agreements, significant new products or discoveries,  extraordinary
borrowing,  major  litigation,   liquidity  problems,  extraordinary  management
developments,  purchase  or sale of  substantial  assets  or any  information  a
reasonable  investor  might consider to be of importance in making an investment
decision to buy, sell or hold. Information should be deemed non-public if it has
not been widely  disseminated  by wire  service,  in one or more  newspapers  of
general  circulation,  or by  communication  from the  company  involved  to its
shareholders or in a press release.

III.  PROHIBITED TRADING PRACTICES

(a)  GENERAL ANTI-FRAUD PROHIBITION. If a security:

       (i)  is being considered for purchase or sale by a Fund;

      (ii)  is in the process of being purchased or sold by a Fund; or

     (iii)  is or has been held by a Fund within the most recent 15 day period;

no Access  Person  shall  knowingly  purchase,  sell or  otherwise  directly  or
indirectly  acquire or dispose of any direct or  indirect  beneficial  ownership
interest in that  security if such action by such Access  Person would defraud a
Fund,  operate as a fraud or deceit upon a Fund,  or  constitute a  manipulative
practice with respect to a Fund.

(b)  PRE-CLEARANCE.  No Access  Person  shall  purchase  or sell any  individual
security  (I.E.,   any   security--except   an  "excepted   security")   without
pre-clearance.  Once pre-clearance has been obtained, the trade must be executed
by the end of the business day or new clearance must be obtained.  (See attached
Pre-clearance Form).

(c)  BLACKOUT PERIOD. An Access Person may not execute a securities  transaction
(other than an "excepted security") on any day during which any Fund in the RSIM
Funds  complex has a pending  "buy" or "sell"  order in that same  security or a
related security of the same issuer (e.g., common stock is a related security to
an option on common  stock).  However,  it is not always  possible to  determine
which orders were executed  until the following  day. The fact of  pre-clearance
does  not  mean  that a trade  will  not end up  being  unwound  if it is  later
ascertained  that one of the  Funds  traded  in that  security  on the same day.
Blackout periods may be extended for certain securities.  This policy applies to
all Access Persons.

Additionally,  portfolio managers and others who make investment  decisions with
respect to a Fund are  prohibited  for seven (7)  calendar  days  PRECEDING  AND
FOLLOWING any Fund purchase or sale of that security and will include the entire
business  day on which the last  Fund  purchase  or sale  activity  occurs.  Any
profits  realized on a trade effected  during the blackout period by a portfolio
manager or other  individual with investment  decision-making  authority will be
disgorged  to  the  appropriate  Fund.  The  blackout  period  only  applies  to
securities  traded  by a Fund or  Funds  over  which  the  individual  exercises
investment  decision-making  authority.  It does not  apply to all  Funds in the
complex.  The  fact of  pre-clearance  and  execution  within  the  same  day of
pre-clearance  is not  relevant.  Blackout  periods may be extended  for certain
securities

(d)  TRADES  IN SHARES OF RSIM FUNDS.  Please note that  purchases  and sales of
shares  of an RS  Fund  do  NOT  need  pre-clearance,  but  the  possibility  of
appearance of conflict of interest in such  transactions  is high.  Accordingly,
all purchases and sales of shares of an RS Fund:

      (i)  should be made well in advance of the closing price  calculation each
           day, and

     (ii)  should  not  be  made  when  in  possession  of  material   nonpublic
           information.

(e)  NO  IPOS.  No Access  Person  shall  acquire any  securities  offered in an
initial public offering.

(f)  PRIVATE  PLACEMENTS.  No Access  Person shall  acquire any  securities in a
private  placement  without both  pre-clearance and special approval by the CEO.
The  Compliance  Department  shall maintain a record of the approval of, and the
rationale supporting, any acquisition of securities in a private placement.

(g)  OTHER RESTRICTIONS.  No Access Person shall engage in short term trading or
make other  investments  in  contravention  of the general  policies that may be
established  from  time to time as set  forth.  An  Access  Person  must  hold a
security (other than an "excepted security") for a minimum of 60 days.

IV.  EXEMPTED TRANSACTIONS/SECURITIES

The prohibitions of Section III of this Code shall not apply to:

(a)  Purchases or sales effected in any account over which the Access Person has
no direct or indirect influence or control.

(b)  Purchases  or sales of  securities  which are not  eligible for purchase or
sale by any Fund.

(c)  Purchases  or sales  which are  non-volitional  on the part of  either  the
Access Person or the Trust (E.G.,--receipt of gifts).

(d)  Purchases that are part of an automatic dividend reinvestment plan.

(e)  Purchases effected upon the exercise of rights issued by an issuer pro rata
to all  holders of a class of its  securities,  to the extent  such  rights were
acquired from such issuer, and sales of such rights so acquired.

(f)  Purchases  and  sales  which  have  received  the  prior  approval  of  the
Compliance Officer.

(g)  Purchases and sales of securities, which are not included in the definition
of "Security" in Section II.g or are "excepted securities" as defined in Section
II.h.--I.E., mutual fund shares (but not RS Fund--shares),  stock index options,
SPDRs, government securities and money market instruments.

V.  REPORTING

(a)  PRE-CLEARANCE  AND IMMEDIATE  REPORTING.  All RSIM  employees are currently
required to report all individual  security  transactions (and purchase/sales of
RSIM Funds) under rules  specifically  applicable to advisory and  broker-dealer
organizations.  Access  persons  must  also  seek  pre-clearance  of  individual
security  transactions and are required to have a duplicate  confirmation of the
transaction  sent  to  the  RSIM  compliance   officer  promptly  following  the
transaction.  The only  securities  for which such  pre-clearance  and immediate
reporting  is not  required  are  "excepted  securities"  and shares of the RSIM
Funds.

(b)  QUARTERLY  REPORTS.  In addition to contemporaneous  reporting,  all Access
Persons are required to review,  and if necessary,  correct or make additions to
quarterly  reports generated within 10 days of the end of each calendar quarter,
listing  all   securities   transactions   except   transactions   in  "excepted
securities."  See subsection (c) below.  Please note that purchases and sales of
shares  of  an  RSIM  Fund,   which  are  not  subject  to   pre-clearance   and
contemporaneous reporting, are subject to quarterly reporting.

(c)  Every quarterly report shall be made not later than ten (10) days after the
end of each calendar quarter and shall contain the following information:

       (i)  The date of the transaction, the title and the number of shares, and
            the principal amount of each security involved;

      (ii)  The nature of the transaction  (I.E.,  purchase,  sale, or any other
            type of acquisition or disposition);

     (iii)  The price at which the transaction was effected; and

      (iv)  The name of the  broker,  dealer,  or bank with or through  whom the
            transaction was effected.

(d)  Copies of statements or confirmations  containing the information specified
in paragraph  (c) above may be  submitted  in lieu of listing the  transactions.
Persons  submitting  statements  will be deemed to have satisfied this reporting
requirement, and need only sign off quarterly on having complied.

(e)  For  periods  in  which  no  reportable  transactions  were  effected,  the
quarterly report shall contain a representation that no transactions  subject to
the reporting requirements were effected during the relevant time period.

(f)  ANNUAL REPORT.  Annually,  in conjunction with the quarterly report for the
quarter  ending June 30, each Access Person shall be required to review,  and if
necessary,  correct or make  additions  to, an annual  report,  which  lists all
security  positions  in  which  such  Access  Person  has a direct  or  indirect
beneficial interest.

(g)  Any  quarterly  or annual  report may contain a  statement  that the report
shall not be construed as an admission by the person  making such report that he
has any direct or indirect  beneficial  ownership  in the  security to which the
report relates.

(h)  An  initial  holdings report of all securities  beneficially  owned by such
person  and the name of the  broker  with whom the Access  Person  maintained  a
securities account must be submitted to Scott Smith or Marianne Clark for review
no later than 10 days after an employee of RSIM becomes an Access Person.

VI.  EXCEPTIONS TO REPORTING REQUIREMENTS

(a)  An INDEPENDENT  TRUSTEE,  I.E., a Trustee of the RS Investment Trust who is
not an "interested  person" (as defined in Section  2(a)(19) of the 1940 Act) of
the  Funds,  is NOT  required  to file a report on a  transaction  in a security
provided such Trustee neither knew nor, in the ordinary course of fulfilling his
or her official duties as a trustee of the Funds, should have known that, during
the 15-day period immediately  preceding or after the date of the transaction by
the Trustee,  such  security is or was  purchased or sold by a Fund or is or was
being considered for purchase or sale by a Fund by its investment adviser.

(b)  Although an independent  Trustee is exempt from the reporting  requirements
of  this  Code,  such  Trustee  may  nevertheless   voluntarily  file  a  report
representing that he or she did not engage in any securities transactions which,
to his or her knowledge,  involved  securities that were being purchased or sold
or  considered  for purchase by any Fund during the 15-day  period  preceding or
after the date(s) of any  transaction(s)  by such  Trustee.  The failure to file
such a report,  however,  shall not be  considered  a violation  of this Code of
Ethics.

(c)  Access  Persons  are not  required  to make a  report  with  respect  to an
exempted transactions/securities as described in Section V of this Code.

(d)  Access  Persons do not need to file  multiple  reports.  Copies of a single
report can be used to satisfy the personal trading reports required by RSIM.

VII.  IMPLEMENTATION

(a)  In order to implement this Code of Ethics,  a compliance  officer and three
alternates have been designated for RSIM and the Funds. These individuals are:

                 Scott R. Smith
                 Marianne E. Clark (alternate)
                 Steven M. Cohen (alternate)
                 G. Randy Hecht - President and CEO (alternate)

(b)  The  compliance  officer  shall  create a list of all "Access  Persons" and
update the list with reasonable frequency.

(c)  The  compliance  officer  shall  circulate a copy of this Code of Ethics to
each Access Person,  together with an acknowledgment of receipt,  which shall be
signed and  returned to the  Compliance  Officer by each Access  Person at least
once each year.

(d)  The  compliance  officer or a compliance  officer  delegate is charged with
responsibility for ensuring that the pre-clearance and reporting requirements of
this Code of Ethics are adhered to by all Access Persons. The compliance officer
or compliance officer delegate shall be responsible for ensuring that the review
requirements of this Code of Ethics (see Section VIII) are performed in a prompt
manner.  The compliance  officer shall be responsible for enforcing the policies
set forth herein.

VIII.  REVIEW

(a)  The  compliance  officer  shall  review all  quarterly  reports of personal
securities  transactions  and annual  holdings  reports and compare such reports
with  pre-clearance   forms  and  with  completed  and  contemplated   portfolio
transactions of each Fund to determine  whether  noncompliance  with the Code of
Ethics  and/or  other  applicable  trading  procedures  may have  occurred.  The
compliance officer may delegate this function to one or more persons.

(b)  No  person  shall  review  his  or  her  own  reports.  Before  making  any
determination that a non-compliant transaction may have been made by any person,
the  compliance  officer  shall  give  such  person  an  opportunity  to  supply
additional  explanatory material. If a securities  transaction of the compliance
officer is under  consideration,  an alternate  shall act in all respects in the
manner prescribed herein for the designated compliance officer.

(c)  If the compliance  officer  determines that  noncompliance with the Code of
Ethics has or may have occurred,  he or she shall,  following  consultation with
counsel, submit his or her written determination,  together with the transaction
report,  if  any,  and  any  additional  explanatory  material  provided  by the
individual,  to G. Randall Hecht, who shall make an independent determination of
whether a violation has occurred.

(d)  The  Compliance  Department will provide to the Board of Trustees of the RS
Investment Trust, no less than annually, a written report that

      (i)  details issues that have arisen under the Code of Ethics,  including,
           but not  limited to,  information  about  violations  of the Code and
           sanctions imposed in response to such violations, and

     (ii)  certifies  to the Board that RSIM has adopted  procedures  reasonably
           necessary to prevent its Access Persons from violating the Code.

(e)  The  compliance officer shall be responsible for maintaining a current list
of all Access  Persons  (including all Fund  Trustees) and for  identifying  all
reporting  Access  Persons on such list, and shall take steps to ensure that all
reporting  Access  Persons  have  submitted  reports  in a  timely  manner.  The
compliance   officer  may  delegate  the  compilation  of  this  information  to
appropriate persons. Failure to submit timely reports will be communicated to G.
Randall Hecht and to the Funds' Board of Trustees.

IX.  SANCTIONS

(a)  If a material violation of this Code occurs or a preliminary  determination
is made that a violation may have  occurred,  a report of the alleged  violation
shall be made to the Board of Trustees.

(b)  The  Board of Trustees may impose such  sanctions as it deems  appropriate,
including, a letter of censure, suspension, or termination of employment, and/or
a disgorging of any profits made.

                     Please sign and date the attached form.
                      Detach and return to RSIM Compliance.

- --------------------------------------------------------------------------------
|        I FULLY UNDERSTAND AND HEREBY SUBSCRIBE TO THIS CODE OF ETHICS.       |
|                                                                              |
|         ------------------------------------------------------------         |
|                                     NAME                                     |
|                                                                              |
|         ------------------------------------------------------------         |
|                                   SIGNATURE                                  |
|                                                                              |
|         ------------------------------------------------------------         |
|                                     DATE                                     |
- --------------------------------------------------------------------------------

                                  APPENDIX III

                                  July 1, 2000

                        RS INVESTMENT MANAGEMENT CO. LLC
                         RS INVESTMENT MANAGEMENT, L.P.
                         RS INVESTMENT MANAGEMENT, INC.
                               RS GROWTH GROUP LLC
                               RS VALUE GROUP LLC
                               RS INVESTMENT TRUST

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

                           POLICY ON PERSONAL TRADING

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


SUMMARY

The  following  policy on personal  trading,  together with the enclosed Code of
Ethics,  outlines all existing restrictions on personal securities  transactions
for Access  Persons of RS Mutual  Funds.  While it is our belief  that  personal
investing can lead an individual to be a better,  more  knowledgeable  investor,
these  guidelines have been written not only to ensure  compliance with relevant
securities laws, but also to protect our investors and prevent any perception of
a potential conflict of interest.

Access  Persons are defined as (i)  officers,  directors,  general  partners and
Advisory Persons of the two mutual fund advisers (RS Investment Management, Inc.
and RS  Investment  Management,  L.P.--collectively  "RSIM"),  as  well  as (ii)
employees  of RSIM  and  officers,  directors,  partners  who  have  substantial
responsibility  for  or  knowledge  of  the  investments  of  the  mutual  funds
constituting  series of the RS (each,  a "Fund"),  and (iii) each  member of the
Funds' Board of Trustees.  Members of the  immediate  family of an Access Person
living in the same  household  are  covered by this policy to the same extent as
the Access Person.  The policy also applies to the immediate  families living in
the same  household of all Access  Persons.  The highlights of the policy are as
follows:

1)  PERSONAL ACCOUNTS

All personal  brokerage  accounts  must be  maintained  at  Robertson  Stephens,
Charles  Schwab or Fidelity  Investments.  Any exceptions to this policy must be
approved by the Compliance Department.

2)  PRE-CLEARANCE

All personal  trades for  individual  securities  for all Access Persons must be
pre-cleared  by  the  Compliance  Department  using  the  attached  form.  After
pre-clearance  has been  granted,  the trade must be completed by the end of the
business day, or the approval is void and the form must be  resubmitted.  Trades
for which  pre-clearance  is required  include ALL SECURITIES  EXCEPT,  open-end
mutual funds,  stock index  options,  SPDR's,  government  securities  and money
market securities.  Obtaining  pre-clearance for a trade does not guarantee that
the trade will not be later reversed should a Fund effect a subsequent  trade in
the same security.

3)  BLACKOUT PERIODS

An  Access  Person  may not  execute a  securities  transaction  (other  than an
"excepted  securities")  on any day  during  which  any Fund in the  RSIM  Funds
complex has a pending  "buy" or "sell" order in that same  security or a related
security  of the same issuer  (e.g.,  common  stock is a related  security to an
option on common stock).  However,  it is not always possible to determine which
orders were executed until the following day. The fact of pre-clearance does not
mean that a trade will not end up being unwound if it is later  ascertained that
one of the Funds traded in that security on the same day.  Blackout  periods may
be extended for certain securities. This policy applies to all Access people.

 Additionally,  portfolio managers and others who make investment decisions with
respect to a Fund are  prohibited  for seven (7)  calendar  days  PRECEDING  AND
FOLLOWING any Fund purchase or sale of that security and will include the entire
business  day on which the last  Fund  purchase  or sale  activity  occurs.  Any
profits  realized on a trade effected  during the blackout period by a portfolio
manager or other  individual with investment  decision-making  authority will be
disgorged to the Fund. The blackout period only applies to securities  traded by
a Fund or Funds over which the individual exercises investment-making authority.
It does not apply to all Funds in the  complex.  The fact of  pre-clearance  and
execution within the same day of pre-clearance is not relevant. Blackout periods
may be extended for certain securities.

4)  RESTRICTIONS ON SHORT-TERM TRADING

Access  Persons  are  strongly   discouraged   from  entering  into   securities
transactions for the purpose of achieving  short-term  gains. In addition to the
general prohibition  against acquiring  securities in the blackout period before
and  immediately  following  Fund  transactions,  an Access  Person  must hold a
security  (other than an excepted  security,  E.G., a stock index  option) for a
minimum  of 60 days.  Exceptions  may be made in the case of a medical  or other
emergency,  provided  that  relevant  details  are  communicated  at the time of
pre-clearance.

5)  INITIAL PUBLIC OFFERINGS

All Access  Persons are strictly  prohibited  from  acquiring  securities in any
initial public offering.

6)  PRIVATE PLACEMENTS

Investments by Access Persons in private  placements  require both pre-clearance
and special approval from the CEO.

7)  SERVICE AS A DIRECTOR

Portfolio Managers and Access Persons will be permitted to serve as directors of
publicly  traded  companies and private  companies in which the Funds may invest
only if the CEO determines that doing so would be in the best interest and would
not  present a conflict  of  interest.  All Fund  investment  decisions  made or
participated in by such Director/Access  Persons require  pre-clearance from the
CEO.

8)  DISCLOSURE

To the  extent  an Access  Person  maintains  permitted  brokerage  accounts  at
broker/dealers other than FleetBoston Robertson Stephens,  Charles Schwab & Co.,
or  Fidelity  Investments  that  Access  Person must ensure that copies of trade
confirmations  for their  brokerage  accounts and  accounts of immediate  family
living in the same household, are forwarded to the Compliance Department.  Trade
confirmations will be  cross-referenced  against  pre-clearance  forms to ensure
that approval had been granted.  In addition,  Access Persons must make required
quarterly reports of securities  transactions (or furnish brokerage  statements)
and must sign off, at least annually, on receipt of and compliance with the Code
of Ethics.

                         [LOGO] RS INVESTMENT MANAGEMENT

                      PRE-AUTHORIZATION FOR PERSONAL TRADES


To:     RSIM Compliance
Phone:  (415) 591-2779
        (415) 591-2728
Fax:    (415) 591-2851

From:_______________________________________________  Date:_____________________

________________________________________________________________________________

I wish to effect the  following  trade for my  personal  account,  an account in
which  I  have a  beneficial  interest,  or an  account  belonging  to one of my
immediate relatives living in the same household.

NAME of Security___________________________________  TICKER_____________________

# OF SHARES__________________  BUY  SELL  (CIRCLE ONE)  PRICE___________________

BROKERAGE FIRM_______________________________  & ACCOUNT #______________________

THE PURCHASE/SALE IS BASED ON PERSONAL RESEARCH             YES [  ]     NO [  ]

(You may be  required  to  provide  documentation  should  there be a  potential
conflict).

I AM AWARE OF AN INTENDED OR POSSIBLE MUTUAL FUND TRADE IN THIS SECURITY

                                 YES [ ]  NO [ ]

I AGREE THAT IF I DO NOT EFFECT THE ABOVE TRADE ON THE DAY INDICATED  BELOW, THE
APPROVAL IS NULL AND VOID AND THE REQUEST MUST BE RESUBMITTED. I REALIZE THAT IF
I AM AN EMPLOYEE WITH  INVESTMENT  DECISION MAKING  AUTHORITY,  AND ANY RS FUNDS
TRANSACTIONS  OCCUR  WITHIN 7 DAYS OF MY  TRANSACTION  THAT  INVOLVE A FUND OVER
WHICH I HAVE  AUTHORITY AND THE ABOVE  SECURITY,  THE TRADE WILL BE BROKEN AT MY
EXPENSE.  I  REALIZE  THAT  IF I DO  NOT  HAVE  SUCH  AUTHORITY,  AND  ANY  FUND
TRANSACTIONS  OCCUR ON THE SAME DAY AS MY TRANSACTION,  THE TRADE WILL BE BROKEN
AT MY EXPENSE.  FURTHERMORE,  I AFFIRM  THAT IF THIS IS A SALE OF STOCK,  I HAVE
EITHER HELD IT FOR AT LEAST 60 DAYS.


                                             ___________________________________
                                                         AUTHORIZED


___________________________________          ___________________________________
SIGNED                                                      DATE

EX-99.P4

                            DEUTSCHE ASSET MANAGEMENT

                                 CODE OF ETHICS








                                             EFFECTIVE DATE: SEPTEMBER 3, 2002

                                             A Member of the
                                             DEUTSCHE BANK GROUP [DEUTSCHE LOGO]

                            DEUTSCHE ASSET MANAGEMENT

                                 CODE OF ETHICS


   I.  OVERVIEW............................................................    1

  II.  GENERAL RULE........................................................    1

 III.  DEFINITIONS.........................................................    2

  IV.  RESTRICTIONS........................................................    4
         General...........................................................    4
         Specific Blackout Period Restrictions.............................    4
         New Issues (IPOs).................................................    6
         Short-Term Trading................................................    6
         Restricted List...................................................    6
         Private Placements................................................    7

   V.  COMPLIANCE PROCEDURES...............................................    7
         Designated Brokerage Accounts.....................................    7
         Pre-Clearance.....................................................    7
         Reporting Requirements............................................    8
         Confirmation of Compliance with Policies..........................    8

  VI.  OTHER PROCEDURES/RESTRICTIONS.......................................    9
         Service on Boards of Directors....................................    9
         Outside Business Affiliations.....................................    9
         Executorships.....................................................    9
         Trusteeships......................................................   10
         Custodianships and Powers of Attorney.............................   10
         Gifts.............................................................   10
         Rules for Dealing with Governmental Officials
           and Political Candidates........................................   12
         Confidentiality...................................................   13

 VII.  SANCTIONS ..........................................................   13

VIII.  INTERPRETATIONS AND EXCEPTIONS......................................   13

APPENDIX:

|_|  Schedule A............................................................   15
|_|  Personal Securities Holdings Report...................................   16
|_|  Quarterly Personal Securities Trading Report..........................   17
|_|  Annual Acknowledgement of Obligations Under the Code of Ethics........   19
|_|  Request For Approval of Fiduciary, Corporate Or Other Outside Activity   21
|_|  Gift And Entertainment Form...........................................   22
|_|  Annual Review of Personal Activities Form.............................   23

                        DEUTSCHE ASSET MANAGEMENT - U.S.

                                 CODE OF ETHICS
- --------------------------------------------------------------------------------

I.     OVERVIEW

This Code of Ethics  ("Code")  sets  forth the  specialized  rules for  business
conduct and guidelines for the personal investing  activities that generally are
required of employees involved in the United States investment  management areas
of the Deutsche  Bank Group and its  affiliates  (collectively  "Deutsche  Asset
Management" or "DeAM").(1)

The provisions of this Code shall apply to all DeAM employees, as categorized in
the  Definition  Section  on the  next  page  and such  other  employees  as the
Compliance  Department  ("Compliance")(2)  may determine from time to time. This
Code  supplements the Deutsche Bank CODE OF PROFESSIONAL  CONDUCT and COMPLIANCE
POLICIES   AND   PROCEDURES   MANUAL   ("COMPLIANCE   MANUAL")   (available   at
HTTP://DOCBASE.BACKOFF.NYC.DBNA.COM/POLICY:/GENERAL/CODE     OF     PROFESSIONAL
CONDUCT/CODE           OF           PROFESSIONAL           CONDUCT           and
HTTP://DOCBASE.BACKOFF.NYC.DBNA.COM/POLICY:/COMPLIANCE/DEUTSCHE            ASSET
MANAGEMENT/DEUTSCHE ASSET MANAGEMENT. Each Employee must observe those policies,
as well as abide by the additional  principles and rules set forth in this Code,
and any other  applicable  legal  vehicle  or  division  specific  policies  and
obligations.

II.    GENERAL RULE

DeAM employees will, in varying degrees, participate in or be aware of fiduciary
and   investment   services   provided  to  registered   investment   companies,
institutional  investment  clients,  employee  benefit trusts and other types of
investment advisory accounts.  The fiduciary  relationship mandates adherence to
the highest  standards of conduct and  integrity.  We will at all times  conduct
ourselves  with  integrity and  distinction,  putting first the interests of our
clients.

Accordingly,  personnel  acting in a  fiduciary  capacity  must  carry out their
duties for the EXCLUSIVE  BENEFIT of the client  accounts.  Consistent with this
fiduciary  duty, the interests of DeAM clients take priority over the investment
desires of DeAM and DeAM personnel.  All DeAM personnel must conduct  themselves
in a manner  consistent with the  requirements  and procedures set forth in this
Code.


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

(1)  Deutsche  Asset  Management is the  marketing  name in the US for the asset
     management  activities  of Deutsche  Bank AG,  Deutsche  Bank Trust Company
     Americas  (formerly  Bankers  Trust Co.),  Deutsche Bank  Securities  Inc.,
     Deutsche  Asset  Management  Inc.,  Deutsche  Asset  Management  Investment
     Services  Ltd.,  Deutsche  Investment  Management  Americas  Inc.  (and its
     affiliates,  including Scudder Investor  Services and Scudder  Distributors
     Inc.) and Scudder Trust Company.

(2)  "Compliance"  refers  to  the  DB  Americas  centralized   Compliance  Unit
     (generally  referred  to herein as  "Central  Compliance,"  and/or its unit
     specifically designated to the DeAM business unit: "DeAM Compliance").

|_|  There  must  be  no  conflict,  or  appearance  of  conflict,  between  the
     self-interest  of any employee and the  responsibility  of that employee to
     Deutsche Bank, its shareholders or its clients.(3)

|_|  Employees  must never  improperly use their position with Deutsche Bank for
     personal or private gain to themselves, their family or any other person.

DeAM  employees  may also be  required to comply  with other  policies  imposing
separate requirements.  Specifically, they may be subject to laws or regulations
that  impose  restrictions  with  respect to personal  securities  transactions,
including, but not limited to, Section 17(j) and Rule 17j-1 under the Investment
Company Act of 1940 (the "Act"). The purpose of this Code of Ethics is to ensure
that, in connection  with his or her personal  trading,  no Employee (as defined
below) shall conduct any of the following acts upon a client account:

|_|  To employ any device, scheme or artifice to defraud;

|_|  To make  any  untrue  statement  of a  material  fact,  or omit to  state a
     material fact necessary in order to make the statement not misleading;

|_|  To engage in any act, practice or course of business that operates or would
     operate as a fraud or deceit; or

|_|  To engage in any manipulative practice.

III.   DEFINITIONS

A.     "Investment Personnel" shall mean and include:

       Portfolio  Managers,  traders,  analysts  (and other  employees  who work
       directly  with  Portfolio  Managers in an assistant  capacity).  As those
       responsible for making  investment  decisions (or  participating  in such
       decisions)  in client  accounts  or  providing  information  or advice to
       Portfolio  Managers  or  otherwise  helping to execute or  implement  the
       Portfolio  Managers'  recommendations,   Investment  Personnel  occupy  a
       comparatively  sensitive  position,  and thus  additional  rules outlined
       herein apply to such individuals.

B.     "Access Person" shall mean:

        (i)  Officers and  directors of DeAM entities and officers and directors
             of DeAM-sponsored  investment  companies who are affiliated persons
             of DeAM entities. Also included are employees of these entities who
             have access to timely information relating to investment management
             activities,  research and/or client  portfolio  holdings as well as
             those who in the course of their job  regularly  receive  access to
             client trading  activity (this would  generally  include members of
             the Investment  Operations and Mutual Fund Accounting groups). Also
             included here are persons in a control  relationship (as defined in
             Section  2(a)(9)  of  the  Act)  to  DeAM  who  obtain  information
             concerning investment recommendations made to any client account.

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

(3)  The rules  herein  cannot  anticipate  all  situations  which may involve a
     possible  conflict of interest.  If an employee becomes aware of a personal
     interest  that is, or might be, in conflict  with the interest of a client,
     that person should  disclose the potential  conflict to DeAM  Compliance or
     Legal prior to executing any such transaction.

       (ii)  Any other  personnel  with  responsibilities  related  to the asset
             management business or frequent  interaction with Access Persons or
             Investment  Personnel as  determined by  Compliance  (e.g.,  Legal,
             Compliance, Risk, Operations, Sales & Marketing, as well as certain
             long-term temporary employees and consultants).

C.     "Non-Access Person" shall mean and include:

       DeAM  personnel who are not defined in Section III A or B above,  and who
       have access to neither client trading activity nor  recommendations  made
       in relation to any client  account.  Examples  include  employees  of the
       Transfer  Agency in  Kansas  City and the  Mutual  Funds  Call  Center in
       Chicago.

D.     "Employees"  is a general  term which shall  include all DeAM  employees,
       including Investment Personnel,  Access Persons and Non-Access Persons as
       well as those  non-DeAM  employees who are subject to this Code of Ethics
       (see III.B.(ii) above).

E.     "Accounts"  shall mean all  securities  accounts,  whether  brokerage  or
       otherwise,  and securities held directly  outside of accounts,  but shall
       not  include   open-end   mutual  fund   accounts  in  which   securities
       transactions cannot be effected.

F.     "Employee Related Account" of any person subject to this Code shall mean:

         (i)  The Employee's own Accounts;

        (ii)  The  Employee's   spouse's/domestic  partner's  Accounts  and  the
              Accounts  of minor  children  and  other  relatives  living in the
              Employee's home;

       (iii)  Accounts in which the Employee,  his/her spouse/domestic  partner,
              minor  children  or other  relatives  living in their  home have a
              beneficial  interest (i.e.,  share in the profits even if there is
              no influence on voting or disposition of the shares); and

        (iv)  Accounts  (including  corporate  Accounts and trust Accounts) over
              which the Employee or his/her  spouse/domestic  partner  exercises
              investment discretion or direct or indirect influence or control.

       NOTE:  ANY PERSON SUBJECT TO THIS CODE IS RESPONSIBLE FOR COMPLIANCE WITH
              THESE  RULES WITH  RESPECT TO ANY  EMPLOYEE  RELATED  ACCOUNT,  AS
              APPLICABLE.

G.     "Securities"  shall include  equity or debt  securities,  derivatives  of
       securities  (such as  options,  warrants,  and ADRs),  closed-end  mutual
       funds, futures, commodities and similar instruments, but DO NOT INCLUDE:

         (i)  Shares of open-end  mutual  funds  (unless  otherwise  directed by
              Compliance);

        (ii)  Direct obligations of the United States government; or

       (iii)  Bankers'  acceptances,  bank  certificates of deposit,  commercial
              paper and high  quality  short-term  debt  instruments,  including
              repurchase agreements.

IV.    RESTRICTIONS

For  purposes of this Code,  a  prohibition  or  requirement  applicable  to any
Employee  applies also to  transactions in securities for any of that Employee's
personal accounts,  including transactions executed by that Employee's spouse or
relatives living in that Employee's household (see definition under III.F).

A.     GENERAL

         (i)  THE BASIC POLICY:  Employees have a personal obligation to conduct
              their  investing  activities and related  securities  transactions
              lawfully and in a manner that avoids actual or potential conflicts
              between their own  interests  and the interests of Deutsche  Asset
              Management and its clients.  Employees must carefully consider the
              nature  of  their  DeAM   responsibilities   -  and  the  type  of
              information  that he or she might be deemed to possess in light of
              any particular  securities  transaction - BEFORE  engaging in that
              transaction.

        (ii)  MATERIAL  NONPUBLIC   INFORMATION:   Employees  in  possession  of
              material nonpublic information about or affecting  securities,  or
              their  issuer,   are  prohibited   from  buying  or  selling  such
              securities,  or  advising  any  other  person  to buy or sell such
              securities. See also COMPLIANCE MANUAL -- CONFIDENTIAL,  MATERIAL,
              NON-PUBLIC INFORMATION, CHINESE WALLS, INSIDER TRADING AND RELATED
              MATTERS POLICY.

       (iii)  CORPORATE AND  DEPARTMENTAL  RESTRICTED  LISTS:  Employees are not
              permitted to buy or sell any  securities  that are included on the
              Corporate Restricted List (available on the intranet) and/or other
              applicable departmental restricted lists.

        (iv)  "FRONTRUNNING:"  Employees are  prohibited  from buying or selling
              securities or other instruments in their Employee Related Accounts
              so as to benefit from the employee's  knowledge of the Firm's or a
              client's trading  positions,  plans or strategies,  or forthcoming
              research recommendations.

B.     SPECIFIC BLACKOUT PERIOD RESTRICTIONS

         (i)  Investment Personnel and Access Persons shall not knowingly effect
              the purchase or sale of a Security for an Employee Related Account
              on a day  during  which any client  account  has a "buy" or "sell"
              order for the same  Security,  until  that  order is  executed  or
              withdrawn;

        (ii)  Investment  Personnel  shall not effect the  purchase or sale of a
              Security for an Employee  Related  Account  within SEVEN  CALENDAR
              DAYS  BEFORE OR SEVEN  CALENDAR  DAYS AFTER the same  Security  is
              traded (or  contemplated  to be traded) by a client  account  with
              which the individual is associated.

       (iii)  Investment  Personnel and other persons with REAL TIME access to a
              global research  sharing system platform (e.g.,  "GERP"(4))  shall
              not effect the  purchase  or sale of a  Security  for an  Employee
              Related  Account  within  SEVEN  CALENDAR  DAYS  BEFORE  OR  SEVEN
              CALENDAR DAYS AFTER the same Security (a) is added to/deleted from
              or has its weighting changed in the "Model" Portfolio;  or (b) has
              its internal  rating  upgraded or downgraded;  or (c) has research
              coverage initiated.

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

(4)  GERP (Global Equity  Research  Portal) is a web-based  application  (Active
     Equity  businesses)  allowing  for  the  publishing  and  dissemination  of
     research and model  portfolios  in real-time  by the Global  Sector  Teams,
     Portfolio  Selection Teams,  Local Research Teams,  designated PIC/PB users
     and Small Cap Teams to Portfolio Managers, who will use GERP for investment
     recommendations and portfolio construction for clients.

        (iv)  Employees  must  always  act to  avoid  any  actual  or  potential
              conflict   of   interest    between    their   DeAM   duties   and
              responsibilities,  and their personal  investment  activities.  To
              avoid potential  conflicts,  absent specific written approval from
              their Managing  Officer(5) and  Compliance,  Employees  should not
              personally  invest in  securities  issued by companies  with which
              they have significant dealings on behalf of DeAM, or in investment
              vehicles  sponsored by the companies.  Additional rules that apply
              to securities transactions by Employees, including the requirement
              for Employees to pre-clear  personal  securities  transactions and
              rules regarding how Employee  Related Accounts must be maintained,
              are described in more detail later in this Code.

         (v)  DEUTSCHE BANK  SECURITIES:  During  certain times of the year, all
              Deutsche   Bank   employees   are   prohibited   from   conducting
              transactions  in the equity and debt  securities of Deutsche Bank,
              which  affect  their  beneficial  interest  in the  firm.  Central
              Compliance  generally imposes these "blackout"  periods around the
              fiscal reporting of corporate earnings.  Blackouts typically begin
              two days  prior  to the  expected  quarterly  or  annual  earnings
              announcement,  and  end  after  earnings  are  released  publicly.
              Additional   restricted   periods  may  be  required  for  certain
              individuals  and events,  and  Compliance  will announce when such
              additional restricted periods are in effect.

        (vi)  EXCEPTIONS TO BLACKOUT  PERIODS  (ABOVE ITEMS I, II, AND III ONLY)
              The following  Securities  are exempt from the specified  blackout
              periods:

              |_|  Securities that are within the S&P 100 Index;

              |_|  Futures and options transactions on indexes;

              |_|  ETF's (Exchange  Traded Funds - e.g., SPDRs or "Spiders" (S&P
                   500  Index),   DIAs  or  "Diamonds"  (Dow  Jones   Industrial
                   Average), etc.);

              |_|  Shares   purchased   under  an  issuer   sponsored   Dividend
                   Reinvestment Plan ("DRIPs"), other than optional purchases;

              |_|  To the extent  acquired from the issuer,  purchases  effected
                   upon the  exercise of rights  issued pro rata to holders of a
                   class of securities; and

              |_|  Securities   purchased  under  an  employer  sponsored  stock
                   purchase plan or upon the exercise of employee stock options.

       NOTE:  Transactions  in Securities in derivative  instruments,  including
       warrants,  convertible  Securities,  futures and options,  etc.  shall be
       restricted in the same manner as the underlying Security.

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

(5)  FOR PURPOSES OF THIS POLICY, "MANAGING OFFICER" IS DEFINED AS AN OFFICER OF
     AT LEAST THE  MANAGING  DIRECTOR  LEVEL TO WHOM THE  EMPLOYEE  DIRECTLY  OR
     INDIRECTLY  REPORTS,  WHO IS IN  CHARGE OF THE  EMPLOYEE'S  UNIT  (E.G.,  A
     DEPARTMENT HEAD, DIVISION HEAD, FUNCTION HEAD, GROUP HEAD, GENERAL MANAGER,
     ETC).

C.     NEW ISSUES (IPOS)

       Investment   Personnel,   Access  Persons  and  Non-Access   Persons  are
       prohibited from  purchasing or subscribing for Securities  pursuant to an
       initial public offering.  This prohibition  applies even if Deutsche Bank
       (or any affiliate of Deutsche  Bank) has no  underwriting  role and/or is
       not involved with the distribution.

D.     SHORT-TERM TRADING

       Employees must always conduct their personal trading activities lawfully,
       properly  and   responsibly,   and  are  encouraged  to  adopt  long-term
       investment  strategies that are consistent with their financial resources
       and objectives.  Deutsche Bank generally  discourages  short-term trading
       strategies,   and  employees  are  cautioned  that  such  strategies  may
       inherently  carry a higher risk of regulatory and other scrutiny.  In any
       event,  excessive  or  inappropriate  trading  that  interferes  with job
       performance,  or  compromises  the duty  that  Deutsche  Bank owes to its
       clients and shareholders, will not be tolerated.

       Employees are  prohibited  from  transacting in the purchase and sale, or
       sale and  purchase,  of the same (or  equivalent)  Securities  within  30
       calendar days. Therefore, for purposes of this section, the assumption is
       a last-in,  first out order of transaction in a particular Security.  The
       following Securities are exempted from this restriction:

       |_|  Futures and options transactions on indexes;

       |_|  ETF's  (Exchange  Traded Funds - e.g.,  SPDRs or "Spiders"  (S&P 500
            Index), DIAs or "Diamonds" (Dow Jones Industrial Average), etc.);

       |_|  Shares  purchased under an issuer  sponsored  Dividend  Reinvestment
            Plan ("DRIPs"), other than optional purchases;

       |_|  To the extent acquired from the issuer,  purchases effected upon the
            exercise  of  rights  issued  pro  rata to  holders  of a  class  of
            securities;

       |_|  Securities  purchased  under an employer  sponsored  stock  purchase
            plan; and

       |_|  Securities  pre-cleared  and  purchased  with a specific  stop-limit
            provision attached.

E.     RESTRICTED LIST

       All Deutsche  Bank  employees are  prohibited  from buying or selling any
       securities that are included on the Corporate  Restricted List (available
       on                   the                   intranet                   at:
       HTTP://CCT-GRL-PRD.SVC.BTCO.COM/CORP/CCT/GRL/GRL_INIT.HTM      or     the
       "Americas Portal"  (HTTP://AMERICASPORTAL.CC.DB.COM/) listed under "Quick
       Links.") and/or other applicable  departmental  restricted lists.  Please
       see COMPLIANCE MANUAL -- RESTRICTED LIST: OVERVIEW & INSTRUCTIONS POLICY.

F.     PRIVATE PLACEMENTS

       Prior to effecting a transaction in private securities (i.e.,  Securities
       not requiring  registration with the Securities and Exchange  Commission,
       and  sold  directly  to the  investor),  all  Employees  must  first,  in
       accordance  with  Deutsche  Bank  policy,  obtain the approval of his/her
       supervisor and then pre-clear the transaction with the Central Compliance
       Department,  including  completing  the  questionnaire  (attached  in the
       Appendix).  Any  person  who has  previously  purchased  privately-placed
       Securities  must disclose  such  purchases to the  Compliance  Department
       before  he or  she  participates  in a  Fund's  or an  advisory  client's
       subsequent  consideration  of an investment in the Securities of the same
       or a related issuer.

V.     COMPLIANCE PROCEDURES

A.     DESIGNATED BROKERAGE ACCOUNTS

       All  Employees  must  obtain  the  explicit  permission  of  the  Central
       Compliance  Department  prior to opening a new Employee  Related Account.
       Upon joining Deutsche Bank, new Employees are required to disclose all of
       their  Employee  Related  Accounts  (as  previously  defined)  to Central
       Compliance and must carry out the  instructions  provided to conform such
       accounts, if necessary, to the Firm's policies.

       UNDER NO  CIRCUMSTANCE  IS AN EMPLOYEE  PERMITTED TO OPEN OR MAINTAIN ANY
       EMPLOYEE  RELATED  ACCOUNT THAT IS UNDISCLOSED  TO COMPLIANCE.  ALSO, THE
       POLICIES,  PROCEDURES AND RULES  DESCRIBED  THROUGHOUT THIS CODE APPLY TO
       ALL EMPLOYEE RELATED ACCOUNTS.

       Accordingly,  all  Employees  are  required  to open and  maintain  their
       Employee  Related  Accounts in accordance  with the COMPLIANCE  MANUAL --
       EMPLOYEE/EMPLOYEE-RELATED  TRADING, PROCEDURES FOR ESTABLISHING BROKERAGE
       ACCOUNTS and  PROCEDURES  FOR  PRE-CLEARING  PERSONAL  TRADES,  including
       directing  their  brokers  to  supply  duplicate  copies  of  transaction
       confirmations  and periodic  account  statements,  as well as  additional
       division-specific requirements, if any.

B.     PRE-CLEARANCE

       Proposed  Securities  transactions  must be  pre-cleared by all Employees
       with the Central Compliance  Department (and approved by a Supervisor) in
       accordance  with  the  COMPLIANCE  MANUAL  --   EMPLOYEE/EMPLOYEE-RELATED
       TRADING  POLICY via the intranet  based  Employee  Trade Request  ("ETR")
       system prior to their being placed with the broker.  Such  approvals  are
       good only for the day on which they are issued.  Employees are personally
       responsible for ensuring that the proposed  transaction  does not violate
       the Firm's  policies or applicable  securities  laws and  regulations  by
       virtue of the employee's Deutsche Bank responsibilities or information he
       or she may possess about the securities or their issuer.

       The following Securities are exempted from the preclearance requirement:

       |_|  Futures and options transactions on indexes;

       |_|  ETF's  (Exchange  Traded Funds - e.g.,  SPDRs or "Spiders"  (S&P 500
            Index), DIAs or "Diamonds" (Dow Jones Industrial Average), etc.);

       |_|  Shares  purchased under an issuer  sponsored  Dividend  Reinvestment
            Plan ("DRIPs"), other than optional purchases;

       |_|  Accounts  expressly exempted by Central Compliance which are managed
            under the exclusive direction of an outside money manager;

       |_|  Securities  pre-cleared  and  purchased  with a specific  stop-limit
            provision attached do not require  additional  preclearance prior to
            execution.

       |_|  To the extent acquired from the issuer,  purchases effected upon the
            exercise  of  rights  issued  pro  rata to  holders  of a  class  of
            securities; and

       |_|  Securities  purchased  under an employer  sponsored  stock  purchase
            plan.

C.     REPORTING REQUIREMENTS

         (i)  DISCLOSURE OF EMPLOYEE RELATED ACCOUNTS/PROVISION OF STATEMENTS

              As stated in section V.A. above,  upon joining  Deutsche Bank, new
              employees are required to disclose all of their  Employee  Related
              Accounts   to   Central   Compliance,   and  must  carry  out  the
              instructions provided to conform such accounts,  if necessary,  to
              Deutsche Bank policies. In addition, pursuant to Rule 17j-1 of the
              Act,  no later  than  ten days  after  an  individual  becomes  an
              Employee (i.e.,  joining/transferring  into DeAM, etc.), he or she
              must also  complete  and return a  "Personal  Securities  Holdings
              Report" (see Appendix) to DeAM Compliance.

        (ii)  QUARTERLY PERSONAL SECURITIES TRADING REPORTS ("PSTS")

              Pursuant to Rule 17j-1 of the Act, within ten (10) days of the end
              of each  calendar  quarter,  all  Employees  must  submit  to DeAM
              Compliance a PST report,  unless  exempted by a  division-specific
              requirement,  if any.  All  PSTs  that  have  reportable  personal
              Securities  transactions  for the quarter  will be reviewed by the
              appropriate supervisory and/or Compliance person.

       (iii)  ANNUAL HOLDINGS REPORT

              Once each year, at a date to be specified by DeAM Compliance, each
              Employee must provide to DeAM Compliance an Annual Holdings Report
              current  as of a date not more  than 30 days  prior to the date of
              the report.

D.     CONFIRMATION OF COMPLIANCE WITH POLICIES

       Annually,  each  Employee is  required to sign a statement  acknowledging
       that he or she has received this Code, as amended or updated, and confirm
       his or her adherence to it.  Understanding  and complying with this Code,
       and truthfully  completing the  Acknowledgment  is the obligation of each
       Employee (see Appendix - "Annual Acknowledgement of Obligations Under the
       Cod of  Ethics").  Failure  to  perform  this  obligation  may  result in
       disciplinary action,  including dismissal,  as well as possible civil and
       criminal penalties.

VI.    OTHER PROCEDURES/RESTRICTIONS

A.     SERVICE ON BOARDS OF DIRECTORS

       Service on Boards of  publicly  traded  companies  should be limited to a
       small number of instances.  However, such service may be undertaken after
       approval from the regional head of Asset Management and Compliance, based
       upon a  determination  that  these  activities  are  consistent  with the
       interests of DeAM and its clients.  Employees  serving as directors  will
       not be  permitted  to  participate  in the  process of making  investment
       decisions on behalf of clients which involve the subject company.

       DeAM Compliance will periodically  present updates on such information to
       the DeAM Investment Committee for review and approval.

B.     OUTSIDE BUSINESS AFFILIATIONS

       Employees may not maintain outside business  affiliations (e.g.,  officer
       or director,  governor, trustee, part-time employment,  etc.) without the
       prior  written  approval  of the  appropriate  senior  officer  of  their
       respective business units after consultation with Compliance (see request
       form in the  Appendix),  and disclosure to the Office of the Secretary as
       required.

C.     EXECUTORSHIPS

       The duties of an executor are often  arduous,  time  consuming  and, to a
       considerable  extent,  foreign to our business.  As a general rule,  DeAM
       discourages  acceptance of executorships by members of the  organization.
       However,  business  considerations  or family  relationships  may make it
       desirable  to accept  executorships  under  certain  wills.  In all cases
       (other than when acting as Executor for one's own spouse,  or parent,  or
       spouse's parent),  it is necessary for the individual to have the written
       authorization  of the firm to act as an  executor.  All such  existing or
       prospective   relationships   should  be  reported  in  writing  to  DeAM
       Compliance.

       When DeAM  Employees  accept  executorships  under  clients'  wills,  the
       organization  considers these  individuals to be acting for DeAM and that
       fees received for executors'  services rendered while associated with the
       firm are  exclusively  DeAM  income.  In such  instances,  the firm  will
       indemnify the individual, and the individual will be required at the time
       of qualifying as executor to make a written assignment to DeAM Compliance
       of any  executor's  fees due  under  such  executorship.  Copies  of this
       assignment  and DeAM's  authorization  to act as executor (see Appendix -
       "Request For Approval of Fiduciary, Corporate Or Other Outside Activity")
       are to be filed in the client's file.

       Generally  speaking,  it is not desirable for members of the organization
       to accept executorships under the wills of persons other than a client, a
       spouse,  or a  parent.  Authorization  may be given  in other  situations
       assuming  that  arrangements  for the  anticipated  workload  can be made
       without undue  interference  with the  individual's  responsibilities  to
       DeAM. For example,  this may require the employment of an agent to handle
       the large amount of detail which is usually involved. In such a case, the
       firm would expect the individual to retain the  commission.  There may be
       other  exceptions  which will be determined  based upon the facts of each
       case.

D.     TRUSTEESHIPS

       It can be desirable for members of the  organization to act  individually
       as trustees for clients' trusts.  Such relationships are not inconsistent
       with the nature of our business.  As a general rule, DeAM does not accept
       trustee's commissions where it acts as investment counsel. As in the case
       of most executorships, all trusteeships must have the written approval of
       the Firm (see Appendix).

       It is  recognized  that  Employees  may be asked to serve as  trustees of
       trusts  which do not  employ  DeAM.  The  Firm  will  normally  authorize
       Employees to act as trustees for trusts of their immediate family.  Other
       non-client  trusteeships can conflict with our clients' interests so that
       acceptance  of such  trusteeships  will  be  authorized  only in  unusual
       circumstances.

E.     CUSTODIANSHIPS AND POWERS OF ATTORNEY

       It is  expected  that  most  custodianships  will  be  for  minors  of an
       individual's  immediate family. These will be considered as automatically
       authorized and do not require written approval of the Firm. However,  the
       written  approval  of DeAM  (see  Appendix)  is  required  for all  other
       custodianships.

       Entrustment with a Power of Attorney to execute  Securities  transactions
       on behalf of another requires written approval of the Firm. Authorization
       will only be granted if DeAM believes such a role will not be unduly time
       consuming or create conflicts of interest.

F.     GIFTS

         (i)  ACCEPTING GIFTS

              Employees are prohibited from  soliciting any personal  payment or
              gift to influence,  support or reward any service,  transaction or
              business  involving  Deutsche  Bank, or that appears to be made or
              offered in  anticipation  of any future  service,  transaction  or
              business  opportunity.   A  payment  or  gift  includes  any  fee,
              compensation, remuneration or thing of value.(6)

              Subject to the prerequisites of honesty,  absolute  fulfillment of
              fiduciary  duty to Deutsche Bank,  relevant laws and  regulations,
              and reasonable conduct on the part of the employee,  however,  the
              acceptance of some types of unsolicited, reasonable business gifts
              may be permissible. The rules are as follows:

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

(6)  UNDER THE BANK  BRIBERY  ACT AND  OTHER  APPLICABLE  LAWS AND  REGULATIONS,
     SEVERE  PENALTIES  MAY BE IMPOSED  ON ANYONE  WHO  OFFERS OR  ACCEPTS  SUCH
     IMPROPER  PAYMENTS  OR GIFTS.  IF YOU  RECEIVE OR ARE  OFFERED AN  IMPROPER
     PAYMENT OR GIFT,  OR IF YOU HAVE ANY  QUESTIONS  AS TO THE  APPLICATION  OR
     INTERPRETATION  OF DEUTSCHE BANK'S RULES REGARDING THE ACCEPTANCE OF GIFTS,
     YOU MUST BRING THE MATTER TO THE ATTENTION OF THE COMPLIANCE DEPARTMENT.

              o  Cash gifts of any amount are  prohibited.  This  includes  cash
                 equivalents  such as gift  certificates,  bonds,  securities or
                 other items that may be readily converted to cash.

              o  Acceptance of non-cash gifts, momentos, tickets for sporting or
                 entertainment events, and other items that are not excessive in
                 value,  is generally  permitted WITH  SUPERVISOR  APPROVAL (see
                 Appendix  - "Gift and  Entertainment  Form"),  when it is clear
                 that they are  unsolicited,  unrelated to a transaction and the
                 donor  is  not   attempting  to  influence  the  employee.   In
                 accordance   with   regulations   and   practices   in  various
                 jurisdictions,  as well as the  rules  of the  New  York  Stock
                 Exchange and the National  Association  of Securities  Dealers,
                 certain  employees may be subject to more stringent gift giving
                 and  receiving  guidelines.  For  example,  employees  who  are
                 "associated  persons" of Deutsche Bank  Securities  Inc.  (NASD
                 licensed)  or  other  NYSE/NASD   broker-dealer  affiliate  are
                 generally  not  permitted to offer or accept gifts with a value
                 greater than U.S.  $100.  Compliance  should be consulted  with
                 questions.

              o  Acceptance of gifts,  other than cash, given in connection with
                 special occasions (e.g.,  promotions,  retirements,  weddings),
                 that  are  of  reasonable  value  in  the   circumstances   are
                 permissible, WITH SUPERVISORY APPROVAL.

              o  Employees  may  accept  reasonable  and  conventional  business
                 courtesies,  such as  joining a client  or vendor in  attending
                 sporting events,  golf outings or concerts,  provided that such
                 activities involve no more than the customary amenities.

              o  The  cost  of  working  session  meals  or  reasonable  related
                 expenses involving the discussion or review of business matters
                 related to Deutsche  Bank may be paid by the client,  vendor or
                 others,  provided  that such costs  would have  otherwise  been
                 reimbursable  to the  employee by Deutsche  Bank in  accordance
                 with its travel and  entertainment  and  expense  reimbursement
                 policies.

        (ii)  GIFT GIVING (TO PERSONS OTHER THAN GOVERNMENT OFFICIALS)

              In appropriate  circumstances,  it may be acceptable and customary
              for DeAM to extend gifts to clients or others who do business with
              Deutsche Bank.  Employees should be certain that the gift will not
              give rise to a conflict of interest,  or  appearance  of conflict,
              and that there is no reason to believe  that the gift will violate
              applicable  codes of  conduct  of the  recipient.  Employees  with
              appropriate  authority to do so may make business  gifts at DeAM's
              expense, provided that the following requirements are met:

              o  Gifts in the form of cash or cash  equivalents may not be given
                 regardless of amount.

              o  The gift must be of reasonable value in the circumstances,  and
                 should not  exceed a value of U.S.  $100  unless  the  specific
                 prior  approval  of  the  appropriate  Managing  Officer(7)  is
                 obtained.

              o  The gift must be lawful and in accordance  with NYSE/NASD rules
                 and  generally  accepted  business  practices of the  governing
                 jurisdictions.

       (iii)  GIFTS TO GOVERNMENT OFFICIALS

              The Compliance  Department  must be contacted  prior to making any
              gift to a governmental employee or official.  Various governmental
              agencies,  legislative bodies and jurisdictions may have rules and
              regulations  regarding the receipt of gifts by their  employees or
              officials. In some cases, government employees or officials may be
              prohibited  from  accepting  any  gifts.  (SEE  NEXT  SECTION  FOR
              ADDITIONAL RULES REGARDING POLITICAL CONTRIBUTIONS.)

G.     RULES FOR DEALING WITH GOVERNMENTAL OFFICIALS AND POLITICAL CANDIDATES

         (i)  CORPORATE PAYMENTS OR POLITICAL CONTRIBUTIONS

              No corporate payments or gifts of value may be made to any outside
              party, including any government official or political candidate or
              official,  for the purpose of securing or  retaining  business for
              Deutsche Bank, or influencing any decision on its behalf.

              o  The Federal  Election  Campaign Act prohibits  corporations and
                 labor  organizations from using their general treasury funds to
                 make  contributions  or expenditures in connection with federal
                 elections, and therefore DEUTSCHE BANK DEPARTMENTS MAY NOT MAKE
                 CONTRIBUTIONS TO U.S. FEDERAL POLITICAL PARTIES OR CANDIDATES.

              o  Corporate  contributions to political  parties or candidates in
                 jurisdictions   not  involving  U.S.   Federal   elections  are
                 permitted only when such  contributions  are made in accordance
                 with  applicable  local  laws and  regulations,  and the  prior
                 approval of a member of the DeAM  Executive  Committee has been
                 obtained,   and  the  Deutsche  Bank  Americas   Regional  Cost
                 Committee has been notified.

              UNDER  THE  FOREIGN  CORRUPT  PRACTICES  ACT,  BANK  BRIBERY  LAW,
              ELECTIONS LAW AND OTHER APPLICABLE  REGULATIONS,  SEVERE PENALTIES
              MAY BE IMPOSED ON  DEUTSCHE  BANK AND ON  INDIVIDUALS  WHO VIOLATE
              THESE LAWS AND REGULATIONS.  SIMILAR LAWS AND REGULATIONS MAY ALSO
              APPLY IN VARIOUS COUNTRIES AND LEGAL  JURISDICTIONS WHERE DEUTSCHE
              BANK DOES BUSINESS.

        (ii)  PERSONAL POLITICAL CONTRIBUTIONS

              No personal  payments or gifts of value may be made to any outside
              party, including any government official or political candidate or
              official,  for the purpose of securing  business for Deutsche Bank
              or influencing any decision on its behalf. Employees should always
              exercise  care and good  judgment  to avoid  making any  political
              contribution that may give rise to a conflict of interest,  or the
              appearance  of conflict.  For  example,  if a DeAM  business  unit
              engages  in  business  with a  particular  governmental  entity or
              official,  DeAM employees  should avoid making personal  political
              contributions to officials or candidates who may appear to be in a
              position to influence the award of business to Deutsche Bank.

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

(7)  FOR PURPOSES OF THIS POLICY, "MANAGING OFFICER" IS DEFINED AS AN OFFICER OF
     AT LEAST THE  MANAGING  DIRECTOR  LEVEL TO WHOM THE  EMPLOYEE  DIRECTLY  OR
     INDIRECTLY  REPORTS,  WHO IS IN  CHARGE OF THE  EMPLOYEE'S  UNIT  (E.G.,  A
     DEPARTMENT HEAD, DIVISION HEAD, FUNCTION HEAD, GROUP HEAD, GENERAL MANAGER,
     ETC).

       (iii)  ENTERTAINMENT OF GOVERNMENT OFFICIALS

              Entertainment  and other acts of hospitality  toward government or
              political   officials   should  never   compromise  or  appear  to
              compromise the integrity or reputation of the official or Deutsche
              Bank.  When  hospitality  is  extended,  it  should  be  with  the
              expectation that it will become a matter of public knowledge.

H.     CONFIDENTIALITY

       Employees  must  not  divulge   contemplated   or  completed   securities
       transactions or trading strategies of DeAM clients to any person,  except
       as required by the  performance  of such person's  duties,  and only on a
       need-to-know basis. In addition, the Deutsche Bank standards contained in
       the COMPLIANCE MANUAL -- CONFIDENTIAL,  MATERIAL, NON-PUBLIC INFORMATION,
       CHINESE WALLS,  INSIDER TRADING AND RELATED  MATTERS  POLICY,  as well as
       those within the CODE OF PROFESSIONAL CONDUCT must be observed.

VII.   SANCTIONS

Any  Employee  who violates  this Code may be subject to  disciplinary  actions,
including possible dismissal.  In addition, any Securities transactions executed
in violation of this Code, such as short-term trading or trading during blackout
periods,  may subject the  employee to  sanctions,  ranging  from  warnings  and
trading privilege suspensions, to financial penalties, including but not limited
to, unwinding the trade and/or  disgorging of the profits.  Finally,  violations
and suspected  violations  of criminal laws will be reported to the  appropriate
authorities as required by applicable laws and regulations.

VIII.  INTERPRETATIONS AND EXCEPTIONS

Compliance  shall have the right to make final and  binding  interpretations  of
this Code, and may grant an exception to certain of the above  restrictions,  as
long as no abuse or  potential  abuse is  involved.  Each  Employee  must obtain
approval from DeAM Compliance  before taking action regarding such an exception.
Any questions  regarding the  applicability,  meaning or  administration of this
Code  shall be  referred  in advance of any  contemplated  transaction,  to DeAM
Compliance.

In addition,  DeAM has an Ethics  Committee  that is  empowered  to  administer,
apply, interpret, and enforce the Code.

                                   SCHEDULE A


The following  entities(8)  have adopted the Deutsche Asset  Management  Code of
Ethics:

                         Deutsche Fund Management, Inc.
                          DB Investment Managers, Inc.
         Deutsche Asset Management Inc. (formerly Morgan Grenfell Inc.)
              Deutsche Asset Management Investment Services Limited




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

(8)  The references in the document to DeAM employees  include  employees of the
     entities that have adopted the Deutsche Asset Management Code of Ethics.

                                                       DEUTSCHE ASSET MANAGEMENT


PERSONAL SECURITIES HOLDINGS REPORT
Return to DeAM Compliance NYC20-2401


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| Employee Name_______________________ Department__________ Location__________ |
|                      (print)                                                 |
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| Social Security Number____________________ Contact Number___________________ |
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           |         |          |           |           |         |         | Name in
           |         |          |           |           | Name of |         | which
 Ticker    |         |          |           |           | Broker/ |         | Security/
 Symbol    | Issuer/ | Security | Principal |  Number   | Dealer  | Account | Acct.
(or CUSIP) | Company |   Type   |  Amount   | of Shares | or Bank | Number  | is held
- -----------|---------|----------|-----------|-----------|---------|---------|----------
           |         |          |           |           |         |         |
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           |         |          |           |           |         |         |
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           |         |          |           |           |         |         |
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           |         |          |           |           |         |         |
- -----------|---------|----------|-----------|-----------|---------|---------|----------
           |         |          |           |           |         |         |
- -----------|---------|----------|-----------|-----------|---------|---------|----------
           |         |          |           |           |         |         |
- -----------|---------|----------|-----------|-----------|---------|---------|----------
           |         |          |           |           |         |         |
- -----------|---------|----------|-----------|-----------|---------|---------|----------
           |         |          |           |           |         |         |
- -----------|---------|----------|-----------|-----------|---------|---------|----------
           |         |          |           |           |         |         |
- ---------------------------------------------------------------------------------------


THE  UNDERSIGNED  DOES NOT BY THIS  REPORT  ADMIT  THAT  HE/SHE  HAS ANY  DIRECT
BENEFICIAL OWNERSHIP IN THE SECURITIES LISTED.

|_|  I certify that the securities  listed above and/or the holdings  statements
     attached  reflect ALL my  Reportable  Securities  holdings as of the date I
     submit this Form.

|_| I currently have no Reportable Securities holdings to report.

NOT ALL SECURITIES ARE REQUIRED TO BE REPORTED.  REPORTABLE  SECURITIES HOLDINGS
DO NOT INCLUDE  DIRECT  OBLIGATIONS OF THE U.S.  GOVERNMENT,  SHARES OF OPEN-END
INVESTMENT COMPANIES (MUTUAL FUNDS), BANKERS' ACCEPTANCES,  BANK CERTIFICATES OF
DEPOSIT,   COMMERCIAL  PAPER  AND  HIGH  QUALITY  SHORT-TERM  DEBT  INSTRUMENTS,
INCLUDING REPURCHASE AGREEMENTS.


              Signature ____________________________  Date _____________________

                                                       DEUTSCHE ASSET MANAGEMENT


QUARTERLY PERSONAL SECURITIES TRADING REPORT

CONFIDENTIAL  -  COMPLETE  FORM ON PCAM  NEWS  INTRANET  BY 10TH DAY OF START OF
SUBSEQUENT QUARTER


                ____________________________________, 20________
                              QUARTER


- --------------------   -------------------   ----------   --------   -----------
Print Name             Social Security No.   Department   Location   Contact No.


This form must be filed quarterly, whether or not you have had any transactions,
by the 10th day of the  start  of the  subsequent  quarter  and must  cover  all
Employee  Related  Accounts  in which you have a direct or  indirect  beneficial
interest. These would include any accounts, including those of clients, in which
you have a beneficial  interest,  including  those of your spouse and  relatives
living in your  household  (unless you obtain  written  permission  from Central
Compliance to exclude these  accounts),  and all non-client  accounts over which
you act in an advisory capacity.  Refer to Code of Ethics for a full explanation
of reporting requirements.

Please answer the questions.  Check the appropriate answer.

1.  I had had no REPORTABLE  TRANSACTIONS*  during the above quarter.  (List all
    Reportable Transactions on the reverse.) If any such purchases or sales were
    transacted without obtaining preclearance, so indicate.

2.  I received did not receive any gifts or entertainment from brokers, dealers,
    investment  bankers,  vendors or other  service  providers  during the above
    quarter with a value in excess of $100;  if any such gifts or  entertainment
    (as defined in Code of Ethics,  Part 6) were  received,  complete and attach
    Form 6.

3.  Did you establish any brokerage accounts during the quarter?

    |_|  Yes  |_|  No

    Name of Brokerage Firm______________________________________________________

    Account Number______________________________________________________________

    Date Account was opened_____________________________________________________


                                                  ______________________________
                                                            Signature


*Reportable Transactions are all transactions, regardless of size, in Securities
 or Derivatives (including futures & options), except transactions in (a) direct
 obligations of the U.S. Government, (b) bankers' acceptances, bank certificates
 of deposit,  commercial  paper and high quality  short-term  debt  instruments,
 including  repurchase  agreements,   and  (c)  shares  of  registered  open-end
 investment  companies  (mutual  funds).  Non-volitional  transactions  are  not
 required  to be  reported.  The  following  types  of  trades  will  be  deemed
 non-volitional:  stock split, automatic tender offer, stock gained from mergers
 or spin-off companies,  dividends received in shares,  demutualizations,  trust
 distributions and dividend reinvestment plans.

SALES

- ----------------------------------------------------------------------------------------
        |     |       |       |     |     |      |       |    |        |        | Gift/
        |     |       |       |     |     |Prin- |Broker/|    |        |        |Waiver/
Security|     |Ticker/|Issuer/|Trade|     |cipal |Dealer/|Acct|Interest|Maturity| AIP/
  Type  |Units| Cusip |Company|Date |Price|Amount|Bank(3)| #  |Rate(1) |Date(1) |NBI(2)
========|=====|=======|=======|=====|=====|======|=======|====|========|========|=======
        |     |       |       |     |     |      |       |    |        |        |
- --------|-----|-------|-------|-----|-----|------|-------|----|--------|--------|-------
        |     |       |       |     |     |      |       |    |        |        |
- --------|-----|-------|-------|-----|-----|------|-------|----|--------|--------|-------
        |     |       |       |     |     |      |       |    |        |        |
- --------|-----|-------|-------|-----|-----|------|-------|----|--------|--------|-------
        |     |       |       |     |     |      |       |    |        |        |
- --------|-----|-------|-------|-----|-----|------|-------|----|--------|--------|-------
        |     |       |       |     |     |      |       |    |        |        |
- --------|-----|-------|-------|-----|-----|------|-------|----|--------|--------|-------
        |     |       |       |     |     |      |       |    |        |        |
- --------|-----|-------|-------|-----|-----|------|-------|----|--------|--------|-------
        |     |       |       |     |     |      |       |    |        |        |
- ----------------------------------------------------------------------------------------

PURCHASES

- ----------------------------------------------------------------------------------------
        |     |       |       |     |     |      |       |    |        |        | Gift/
        |     |       |       |     |     |Prin- |Broker/|    |        |        |Waiver/
Security|     |Ticker/|Issuer/|Trade|     |cipal |Dealer/|Acct|Interest|Maturity| AIP/
  Type  |Units| Cusip |Company|Date |Price|Amount|Bank(3)| #  |Rate(1) |Date(1) |NBI(2)
========|=====|=======|=======|=====|=====|======|=======|====|========|========|=======
        |     |       |       |     |     |      |       |    |        |        |
- --------|-----|-------|-------|-----|-----|------|-------|----|--------|--------|-------
        |     |       |       |     |     |      |       |    |        |        |
- --------|-----|-------|-------|-----|-----|------|-------|----|--------|--------|-------
        |     |       |       |     |     |      |       |    |        |        |
- --------|-----|-------|-------|-----|-----|------|-------|----|--------|--------|-------
        |     |       |       |     |     |      |       |    |        |        |
- --------|-----|-------|-------|-----|-----|------|-------|----|--------|--------|-------
        |     |       |       |     |     |      |       |    |        |        |
- --------|-----|-------|-------|-----|-----|------|-------|----|--------|--------|-------
        |     |       |       |     |     |      |       |    |        |        |
- --------|-----|-------|-------|-----|-----|------|-------|----|--------|--------|-------
        |     |       |       |     |     |      |       |    |        |        |
- ----------------------------------------------------------------------------------------


FOOTNOTES (Use additional forms if necessary to report all transactions.)

(1)  For Fixed Income securities only.

(2)  Indicate here if transaction is a Gift, Waiver,  Automatic Investment Plan,
     or No  Beneficial  Interest  (you  do  not  have  any  direct  or  indirect
     beneficial ownership in such transactions).

(3)  If you have made a direct  issuer  trade  (i.e.  traded  directly  with the
     company) enter N/A in this column

                                                       DEUTSCHE ASSET MANAGEMENT

ANNUAL ACKNOWLEDGEMENT OF OBLIGATIONS UNDER THE CODE OF ETHICS

Complete Form on PCAM news intranet


- --------------------   -------------------   ----------   --------   -----------
Print  Name            Social Security No.   Department   Location   Contact No.



1.  CODE OF ETHICS

    I HAVE READ/REREAD the Code of Ethics and attachments thereto and understand
    them and recognize that I am subject to them.  Further,  I have disclosed or
    reported  all  personal  transactions  required to be  disclosed or reported
    pursuant to the  requirements of the Code and I certify that I complied with
    the provisions of the Code of Ethics applicable to me over the past year.

    (a)  CHECK THE APPROPRIATE STATEMENT (CHECK ONLY ONE):

         [ ] I have  arranged  for  provision to DeAM  Compliance  of a complete
         report of all my holdings  information in the form of duplicate account
         statements for all of my Employee  Related  Accounts.  I have disclosed
         the  existence  of  all  brokerage  accounts  to  Central   Compliance.
         (Holdings  of  direct  obligations  of the U.S.  Government,  shares of
         open-end  investment  companies (mutual funds),  bankers'  acceptances,
         bank  certificates  of  deposit,  commercial  paper  and  high  quality
         short-term debt instruments,  including repurchase agreements,  are not
         required to be reported to the DeAM Compliance); OR

         [ ] I have not arranged for  provision to DeAM  Compliance of all of my
         holdings,  so I have  submitted  a  supplemental  report of all current
         holdings which DeAM Compliance has not thus far received,  concurrently
         herewith (Use "Personal  Securities Holdings Report" to list additional
         holdings not on file with DeAM Compliance); OR

         [ ] I am an  Employee  who has no  holdings  and no  bank/broker/dealer
         accounts.

    (b)  The following is a complete list of all my Employee Related Accounts:

                   ACCOUNT NUMBER                        BROKER NAME

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

2.  INSIDER TRADING

    I HAVE READ the material on Insider  Trading in the Deutsche Bank COMPLIANCE
    POLICIES  AND  PROCEDURES  MANUAL  and  CODE  OF  PROFESSIONAL   CONDUCT.  I
    understand and agree to conform with the policies and procedures.

3.  POLITICAL CONTRIBUTIONS

    I have not made any political  contributions in connection with obtaining or
    maintaining advisory contracts to governmental entities.

4.  EMPLOYEE COMPLIANCE QUESTIONNAIRE

    I HAVE READ the Compliance  Questionnaire regarding disciplinary,  legal, or
    administrative  matters.  There have been no changes to answers  that I have
    previously reported.


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

                                                       DEUTSCHE ASSET MANAGEMENT

                  REQUEST FOR APPROVAL OF FIDUCIARY, CORPORATE
                            OR OTHER OUTSIDE ACTIVITY


Return to DeAM Compliance NYC20-2401


- --------------------   -------------------   ----------   --------   -----------
Print Name             Social Security No.   Department   Location   Contact No.


1.  I believe  that the  activity  described  below is not in conflict  with the
    interests of the firm or its clients and I request that it be approved.

2.  ACTIVITY (check one and include the start date of the Activity)*

    [  ] Trustee__________________________________   [  ] Business Consultant___
    [  ] Executor_________________________________   [  ] Director______________
    [  ] Custodian________________________________   [  ] Other (describe)______
    [  ] Power of Attorney (over investments)_____

3.  NAME OF TRUST, ESTATE, ACCOUNT, CORPORATION OR OTHER ENTITY

4.  TIMING/STATUS (check one)

    [_]  I am currently serving.
    [_]  I anticipate  serving.  (Must be reviewed and  re-approved  when actual
         service begins.)

5.  SALIENT FACTS (relationship,  nature of duties,  client status and any facts
    indicating possible conflict or lack thereof):

6.  ASSIGNMENT STATUS (check one)

    [_]  I hereby assign any income from this activity to the firm.
    [_]  I believe any income should appropriately be retained by me.
    [_]  No income is expected from this activity.


- ---------------                                   ------------------------------
Date                                                   Employee's Signature


I have reviewed and approved the above activity.  The Firm reserves the right to
withdraw this approval at any time.


- ---------------                                   ------------------------------
Date                                                   Manager's Signature


*If applicable,  I have provided account  information to Central  Compliance for
 the account(s) I oversee.

                                                       DEUTSCHE ASSET MANAGEMENT

GIFT AND ENTERTAINMENT FORM
Return to DeAM Compliance NYC20-2401


1)  _____________________________                  2)  _________________________
          Name of Employee                             Provider/Receiver of gift
                                                             (circle one)

3)  GIFT/BUSINESS MEAL/ENTERTAINMENT
              (circle one)

4)  __________________________
    Date of gift/entertainment

5)  Description  of   gift/entertainment   (include  restaurant  name,  address,
    business reason, etc.):

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

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

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

6)  Other attendees (if any)                       7)  $________________________
                                                          Approximate value of
    -----------------------------------                    gift/entertainment

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

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


8)  I ATTEST THAT THE GIFT AND/OR  ENTERTAINMENT  ACTIVITY LISTED ABOVE COMPLIES
    WITH ALL  COMPANY  RULES AND  REGULATIONS  CONCERNING  GIVING AND  RECEIVING
    GIFTS.


    ------------------------------                               ---------------
          Employee Signature                                          Date


    Reminder:  This form  must be  submitted  within  ten  business  days of the
    activity, gift, etc.
    ----------------------------------------------------------------------------


                                    APPROVAL

    ------------------------------                               ---------------
         Supervisor Signature                                         Date
    (Must be a Senior Vice President or Managing Director)

                                                       DEUTSCHE ASSET MANAGEMENT


ANNUAL REVIEW OF PERSONAL ACTIVITIES FORM

Complete Form on PCAM news intranet




- --------------------   -------------------   ----------   --------   -----------
Print Name             Social Security No.   Department   Location   Contact No.


As  required  annually  of all  members of  Deutsche  Asset  Management,  please
indicate all  fiduciary,  corporate  and outside  relationships,  positions  and
responsibilities.  Below you are asked to refer to Code of Ethics, Part VI where
your reporting  obligations are examined in greater detail. This report includes
all  activities  covered  in Code of Ethics,  Part VI whether or not  previously
authorized by the firm.

IF NECESSARY,  ATTACH EXTRA SHEETS FOR CATEGORIES  REQUIRING LENGTHY ANSWERS AND
USE HEADING AS OUTLINED BELOW.

1.  EXECUTORSHIPS*:  (including those in which you are currently serving and all
    known future appointments as Executor.)

                                           CLIENT OF FIRM     AUTHORIZED BY FIRM
    ESTATE                                     YES/NO               YES/NO




    *REPORTING  UNNECESSARY IF POSITION HELD WITH RESPECT TO THE ESTATE OF ONE'S
     SPOUSE OR PARENT.

2.  TRUSTEESHIPS: (including T-1, T-10 and DB Directed Trusts (Internal Trusts)*
    and other client Trusteeships and all known future appointments as Trustee

                                           CLIENT OF FIRM     AUTHORIZED BY FIRM
    TRUST TITLE                                YES/NO               YES/NO




    *Please  indicate under Section 2 the account numbers of any INTERNAL TRUSTS
     WITH WHICH YOU ARE ASSOCIATED.

3.  CUSTODIANSHIPS *

                                            RELATIONSHIP     AUTHORIZED BY FIRM*
    NAME OF MINOR                           TO CUSTODIAN           YES/NO




    *Reporting unnecessary in the case of members of one's family

4.  DIRECTORSHIPS*

                       AUTHORIZED       YEAR                          ARE FEES
      NAME OF           BY FIRM         FIRST        ESTIMATED       TURNED OVER
    ORGANIZATION        YES/NO         ELECTED      ANNUAL FEES       TO FIRM?




*Other than DeAM Funds or affiliated corporations.

5.  BUSINESS CONSULTING POSITIONS

                         AUTHORIZED      YEAR
    CORPORATION           BY FIRM        FIRST        ESTIMATED       ARE FEES
    OR INSTITUTION        YES/NO        RETAINED     ANNUAL FEES     TURNED OVER




6.  PUBLIC  AND  CHARITABLE  POSITIONS  -  Describe  position  and  organization
    briefly. Also indicate whether authorized by the Firm or not.



7.  POWERS  OF  ATTORNEY  OVER  INVESTMENTS-  Describe  position  briefly.  Also
    indicate whether authorized by the Firm or not.



8.  OUTSIDE  ACTIVITIES - For additional  information  about rules applicable to
    outside activities refer to Code of Ethics - Part VI.


- ---------------                                   ------------------------------
     Date                                                   Signature
(Attach extra sheets if needed)

EX-99.P6

                          THE FRANKLIN TEMPLETON GROUP
                                 CODE OF ETHICS
                                       AND
                       POLICY STATEMENT ON INSIDER TRADING

                                TABLE OF CONTENTS


THE FRANKLIN TEMPLETON GROUP CODE OF ETHICS....................................1

PART 1 - STATEMENT OF PRINCIPLES...............................................1
PART 2 - PURPOSES, AND CONSEQUENCES OF NON-COMPLIANCE..........................2
PART 3 - COMPLIANCE REQUIREMENTS FOR ALL ACCESS PERSONS........................3
PART 4 - ADDITIONAL COMPLIANCE REQUIREMENTS
         APPLICABLE TO PORTFOLIO PERSONS......................................10
PART 5 - REPORTING REQUIREMENTS FOR ALL ACCESS PERSONS........................13
PART 6 - PRE-CLEARANCE REQUIREMENTS...........................................17
PART 7 - PENALTIES FOR VIOLATIONS OF THE CODE.................................22
PART 8 - A REMINDER ABOUT THE FRANKLIN TEMPLETON
         GROUP INSIDER TRADING POLICY.........................................23

FOREIGN COUNTRY SUPPLEMENTS...................................................24

PART 1 - SUPPLEMENTARY STATEMENT OF REQUIREMENTS FOR CANADIAN EMPLOYEES.......24

APPENDIX A:  COMPLIANCE PROCEDURES, DEFINITIONS, AND OTHER ITEMS..............26

  I.  RESPONSIBILITIES OF EACH DESIGNATED COMPLIANCE OFFICER..................27
 II.  COMPILATION OF DEFINITIONS OF IMPORTANT TERMS...........................33
III.  SECURITIES EXEMPT FROM THE PROHIBITED,
      REPORTING, AND PRE-CLEARANCE PROVISIONS.................................34
 IV.  LEGAL REQUIREMENT.......................................................35

APPENDIX B:  FORMS AND SCHEDULES..............................................36

ACKNOWLEDGMENT FORM...........................................................37
SCHEDULE A:  LEGAL AND COMPLIANCE OFFICERS AND
             PRECLEARANCE DESK TELEPHONE & FAX NUMBERS........................38
SCHEDULE B:  SECURITIES TRANSACTION REPORT....................................39
SCHEDULE C:  INITIAL, ANNUAL & UPDATED DISCLOSURE OF
             ACCESS PERSONS SECURITIES HOLDINGS...............................40
SCHEDULE D:  NOTIFICATION OF SECURITIES ACCOUNT OPENING.......................41
SCHEDULE E:  NOTIFICATION OF DIRECT OR INDIRECT BENEFICIAL INTEREST...........42
SCHEDULE F:  INITIAL, ANNUAL & UPDATED DISCLOSURE OF SECURITIES ACCOUNTS......43
SCHEDULE G:  INITIAL AND ANNUAL CERTIFICATION OF DISCRETIONARY AUTHORITY......44
SCHEDULE H:  CHECKLIST FOR PARTNERSHIPS AND SECURITIES
             ISSUED IN PRIVATE PLACEMENTS.....................................45

APPENDIX C:  INVESTMENT ADVISOR AND BROKER-DEALER AND OTHER
             SUBSIDIARIES OF FRANKLIN RESOURCES, INC. - FEBRUARY 2001.........47

THE FRANKLIN TEMPLETON GROUP POLICY STATEMENT ON INSIDER TRADING...............1

A.  LEGAL REQUIREMENT..........................................................1
B.  WHO IS AN INSIDER?.........................................................2
C.  WHAT IS MATERIAL INFORMATION?..............................................2
D.  WHAT IS NON-PUBLIC INFORMATION?............................................2
E.  BASIS FOR LIABILITY........................................................3
F.  PENALTIES FOR INSIDER TRADING..............................................3
G.  INSIDER TRADING PROCEDURES.................................................4


                                                                           12/01

THE FRANKLIN TEMPLETON GROUP CODE OF ETHICS

     Franklin Resources, Inc. and all of its subsidiaries,  and the funds in the
Franklin  Templeton  Group of Funds (the "Funds")  (collectively,  the "Franklin
Templeton  Group")  will  follow  this Code of Ethics  (the  "Code")  and Policy
Statement on Insider Trading (the "Insider Trading Policy").  Additionally,  the
subsidiaries  listed  in  Appendix  C  of  this  Code,  together  with  Franklin
Resources,  Inc.,  the  Funds,  the Fund's  investment  advisers  and  principal
underwriter, have adopted the Code and Insider Trading Policy.

PART 1 - STATEMENT OF PRINCIPLES

     The Franklin Templeton Group's policy is that the interests of shareholders
and clients are paramount and come before the interests of any director, officer
or employee of the Franklin Templeton Group.(1)

     Personal investing  activities of ALL directors,  officers and employees of
the Franklin  Templeton Group should be conducted in a manner to avoid actual OR
potential  conflicts  of  interest  with  the  Franklin  Templeton  Group,  Fund
shareholders, and other clients of any Franklin Templeton adviser.

     Directors, officers and employees of the Franklin Templeton Group shall use
their  positions  with  the  Franklin   Templeton   Group,  and  any  investment
opportunities  they  learn of  because  of  their  positions  with the  Franklin
Templeton  Group, in a manner  consistent  with their  fiduciary  duties for the
benefit of Fund shareholders, and clients.


- ----------

 1  "Director" includes trustee.

PART 2 - PURPOSES, AND CONSEQUENCES OF NON-COMPLIANCE

     It is important  that you read and understand  this  document,  because its
overall  purpose is to help all of us comply  with the law and to  preserve  and
protect  the  outstanding  reputation  of the  Franklin  Templeton  Group.  This
document was adopted to comply with  Securities  and Exchange  Commission  rules
under the Investment  Company Act of 1940 ("1940 Act"), the Investment  Advisers
Act  of  1940  ("Advisers  Act"),  the  Insider  Trading  and  Securities  Fraud
Enforcement Act of 1988 ("ITSFEA"),  industry  practice and the  recommendations
contained in the ICI's REPORT OF THE ADVISORY GROUP ON PERSONAL  INVESTING.  Any
violation  of the  Code or  Insider  Trading  Policy,  including  engaging  in a
prohibited  transaction  or  failing  to file  required  reports,  may result in
disciplinary  action,  and, when  appropriate,  termination of employment and/or
referral to appropriate governmental agencies.

PART 3 - COMPLIANCE REQUIREMENTS FOR ALL ACCESS PERSONS

3.1  WHO IS COVERED BY THE CODE AND HOW DOES IT WORK?

     The  principles  contained  in the Code must be observed by ALL  directors,
officers and employees(2) of the Franklin  Templeton Group.  However,  there are
different  categories of  restrictions  on personal  investing  activities.  The
category in which you have been placed  generally  depends on your job function,
although  unique  circumstances  may result in you being  placed in a  different
category.

The Code covers the following categories of employees who are described below:

   (1)  ACCESS  PERSONS:  Access Persons are those employees who have "ACCESS TO
        INFORMATION"  concerning  recommendations  made to a Fund or client with
        regard to the  purchase  or sale of a  security.  Examples of "ACCESS TO
        INFORMATION"  would include having access to trading systems,  portfolio
        accounting  systems,  research  data  bases or  settlement  information.
        Access Persons would typically include employees,  including  Management
        Trainees, in the following departments:

        o  fund accounting;
        o  investment operations;
        o  information services & technology;
        o  product management;
        o  legal and legal compliance
        o  and anyone else designated by the Director of Compliance

        In addition, you are an Access Person if you are any of the following:

        o  an officer or and directors of funds;
        o  an officer or  director  of an  investment  advisor or  broker-dealer
           subsidiary in the Franklin Templeton Group;
        o  a person that controls those entities; and
        o  any   Franklin   Resources'    Proprietary   Account    ("Proprietary
           Account")(3)

   (2)  PORTFOLIO PERSONS:  Portfolio Persons are a subset of Access Persons and
        are those employees of the Franklin  Templeton Group, who, in connection
        with his or her regular  functions or duties,  makes or  participates in
        the  decision to  purchase or sell a security by a Fund in the  Franklin
        Templeton  Group, or any other client or if his or her functions  relate
        to the making of any  recommendations  about those  purchases  or sales.
        Portfolio Persons include:


- ----------

 2  The term "employee or employees"  includes management  trainees,  as well as
    regular employees of the Franklin Templeton Group.

 3  SEE Appendix A. II., for definition of "Proprietary Accounts."

        o  portfolio managers;
        o  research analysts;
        o  traders;
        o  employees  serving  in  equivalent  capacities  (such  as  Management
           Trainees);
        o  employees supervising the activities of Portfolio Persons; and
        o  anyone else designated by the Director of Compliance

   (3)  NON-ACCESS  PERSONS:  If you are an employee in the  Franklin  Templeton
        Group  AND you do not fit into any of the  above  categories,  you are a
        Non-Access  Person.  Because you do not  normally  receive  confidential
        information  about  Fund  portfolios,   you  are  subject  only  to  the
        prohibited  transaction provisions described in 3.4 of this Code and the
        Franklin  Resources,  Inc.'s Standards of Business Conduct  contained in
        the Employee Handbook.

     Please contact the Legal Compliance Department if you are unsure as to what
category you fall in or whether you should be  considered to be an Access Person
or Portfolio Person.

     The Code works by prohibiting some transactions and requiring pre-clearance
and reporting of most others.  NON-ACCESS PERSONS do not have to pre-clear their
security  transactions,  and,  in  most  cases,  do not  have  to  report  their
transactions. "INDEPENDENT DIRECTORS" need not report any securities transaction
unless you knew,  or should have known that,  during the 15-day period before or
after the  transaction,  the security was  purchased or sold or  considered  for
purchase or sale by a Fund or Franklin  Resources for a Fund. (SEE Section 5.2.B
below.) HOWEVER,  PERSONAL INVESTING ACTIVITIES OF ALL EMPLOYEES AND INDEPENDENT
DIRECTORS ARE TO BE CONDUCTED IN  COMPLIANCE  WITH THE  PROHIBITED  TRANSACTIONS
PROVISIONS  CONTAINED IN 3.4 BELOW.  If you have any  questions  regarding  your
personal securities activity, contact the Legal Compliance Department.

3.2  WHAT ACCOUNTS AND TRANSACTIONS ARE COVERED?

     The Code covers all of your personal  securities accounts and transactions,
as well as transactions by any of Franklin Resource's  Proprietary  Accounts. It
also  covers  all  securities  and  accounts  in  which  you  have   "beneficial
ownership."(4) A transaction by or for the account of your spouse,  or any other
family  member living in your home is considered to be the same as a transaction
by you.  Also,  a  transaction  for any  account in which you have any  economic
interest (other than the account of an unrelated  client for which advisory fees
are received) and have or share investment  control is generally  considered the
same as a transaction by you. For example,  if you invest in a corporation  that
invests in securities and you have or share control over its  investments,  that
corporation's securities transactions are considered yours.


- ----------

 4  Generally,  a person has "beneficial  ownership" in a security if he or she,
    directly or indirectly,  through any contract,  arrangement,  understanding,
    relationship  or  otherwise,  has or shares a direct or  indirect  pecuniary
    interest in the security.  There is a presumption of a pecuniary interest in
    a  security  held or  acquired  by a member of a person's  immediate  family
    sharing the same household.

     However,  you are not deemed to have a pecuniary interest in any securities
held by a partnership,  corporation, trust or similar entity unless you control,
or share control of such entity, or have, or share control over its investments.
For example,  securities  transactions  of a trust or foundation in which you do
not have an economic interest (i.e., you are not the trustor or beneficiary) but
of which you are a trustee are not  considered  yours  unless you have voting or
investment  control of its  assets.  Accordingly,  each time the words  "you" or
"your"  are  used  in this  document,  they  apply  not  only  to your  personal
transactions  and accounts,  but also to all  transactions and accounts in which
you have any direct or indirect beneficial interest.  If it is not clear whether
a particular account or transaction is covered,  ask a Preclearance  Officer for
guidance.

3.3  WHAT SECURITIES ARE EXEMPT FROM THE CODE OF ETHICS?

     You do not  need to  pre-clear  OR  report  transactions  of the  following
securities:

     (1)  securities that are direct  obligations of the U. S. Government (i.e.,
          issued or guaranteed by the U.S.  Government,  such as Treasury bills,
          notes  and  bonds,   including  U.S.  Savings  Bonds  and  derivatives
          thereof);

     (2)  high  quality  short-term  instruments,  including  but not limited to
          bankers' acceptances,  bank certificates of deposit,  commercial paper
          and repurchase agreements;

     (3)  shares of registered open-end  investment  companies ("mutual funds");
          and

     (4)  commodity  futures,  currencies,  currency  forwards  and  derivatives
          thereof.

     Such  transactions  are also exempt from:  (i) the  prohibited  transaction
provisions  contained  in Part 3.4 such as  front-running;  (ii) the  additional
compliance requirements applicable to portfolio persons contained in Part 4; and
(iii) the applicable reporting requirements contained in Part 5.

3.4  PROHIBITED TRANSACTIONS FOR ALL ACCESS PERSONS

     A.  "INTENT" IS IMPORTANT

     Certain transactions described below have been determined by the courts and
the SEC to be  prohibited  by law.  The  Code  reiterates  that  these  types of
transactions  are a violation of the Statement of Principals and are prohibited.
Preclearance,  which is a cornerstone of our compliance  efforts,  cannot detect
transactions  which are dependent upon INTENT,  or which by their nature,  occur
before any order has been placed for a fund or client.  A Preclearance  Officer,
who is there to assist you with compliance with the Code,  CANNOT  guarantee any
transaction or transactions  comply with the Code or the law. The fact that your
transaction receives  preclearance,  shows evidence of good faith, but depending
upon  all  the  facts,  may not  provide  a full  and  complete  defense  to any
accusation of violation of the Code or of the law. For example,  if you executed
a transaction for which you received approval,  or if the transaction was exempt
from  preclearance  (e.g.,  a  transaction  for 100  shares or less),  would not
preclude a subsequent  finding that  front-running or scalping  occurred because
such activity are dependent upon your intent.  Intent cannot be detected  during
preclearance, but only after a review of all the facts.

     In the  final  analysis,  compliance  remains  the  responsibility  of EACH
individual effecting personal securities transactions.

     B.  FRONT-RUNNING:  TRADING AHEAD OF A FUND OR CLIENT

     You cannot  front-run any trade of a Fund or client.  The term  "front-run"
means knowingly trading before a contemplated transaction by a Fund or client of
any  Franklin  Templeton  adviser,  whether  or not your trade and the Fund's or
client's trade take place in the same market. Thus, you may not:

     (1)  purchase a  security  if you  intend,  or know of  Franklin  Templeton
          Group's intention,  to purchase that security or a related security on
          behalf of a Fund or client, or

     (2)  sell a security if you intend,  or know of Franklin  Templeton Group's
          intention,  to sell that security or a related security on behalf of a
          Fund or client.

     C.  SCALPING.

     You cannot  purchase  a  security  (or its  economic  equivalent)  with the
intention of recommending  that the security be purchased for a Fund, or client,
or sell short a security  (or its  economic  equivalent)  with the  intention of
recommending  that  the  security  be sold  for a Fund or  client.  Scalping  is
prohibited whether or not you realize a profit from such transaction.

     D.  TRADING PARALLEL TO A FUND OR CLIENT

     You cannot buy a security  if you know that the same or a related  security
is being bought contemporaneously by a Fund or client, or sell a security if you
know that the same or a related  security is being sold  contemporaneously  by a
Fund or client.

     E.  TRADING AGAINST A FUND OR CLIENT

         You cannot:

     (1)  buy a security  if you know that a Fund or client is selling  the same
          or a  related  security,  or has sold the  security,  until  seven (7)
          calendar  days after the  Fund's or  client's  order has  either  been
          executed or withdrawn, or

     (2)  sell a  security  if you know that a Fund or client is buying the same
          or a related  security,  or has bought the  security  until  seven (7)
          calendar  days after the  Fund's or  client's  order has  either  been
          executed or withdrawn.

     Refer to Section I.A., "Pre-Clearance Standards," of Appendix A of the Code
for more details regarding the preclearance of personal securities transactions.

     F.  USING PROPRIETARY INFORMATION FOR PERSONAL TRANSACTIONS

     You  cannot  buy or sell a  security  based on  Proprietary  Information(5)
without disclosing the information and receiving written  authorization.  If you
wish to purchase or sell a security  about which you obtained such  information,
you must report all of the  information  you obtained  regarding the security to
the   Appropriate   Analyst(s)(6),   or  to  the  Director  of  Compliance   for
dissemination to the Appropriate Analyst(s).


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 5  Proprietary  Information:  Information  that is obtained or developed during
    the ordinary course of employment with the Franklin Templeton Group, whether
    by you or someone else, and is not available to persons outside the Franklin
    Templeton Group.  Examples of such Proprietary  Information  include,  among
    other things, internal research reports,  research materials supplied to the
    Franklin  Templeton  Group  by  vendors  and  broker-dealers  not  generally
    available  to the  public,  minutes of  departmental/research  meetings  and
    conference  calls,  and  communications  with  company  officers  (including
    confidentiality agreements). Examples of non-Proprietary Information include
    mass  media  publications  (e.g.,  The  Wall  Street  Journal,  Forbes,  and
    Fortune),  certain specialized  publications  available to the public (e.g.,
    Morningstar, Value Line, Standard and Poors), and research reports available
    to the general public.

 6  The Director of Compliance  is  designated  on Schedule A. The  "Appropriate
    Analyst" means any securities analyst or portfolio manager,  other than you,
    making  recommendations  or  investing  funds on  behalf  of any  associated
    client, who may be reasonably expected to recommend or consider the purchase
    or sale of the security in question.

     You will be permitted to purchase or sell such security if the  Appropriate
Analyst(s)  confirms  to the  Preclearance  Desk that there is no  intention  to
engage in a transaction regarding the security within seven (7) calendar days on
behalf of an Associated Client(7) and you subsequently preclear such security in
accordance with Part 6 below.

     G.  CERTAIN  TRANSACTIONS  IN SECURITIES OF FRANKLIN  RESOURCES,  INC., AND
         AFFILIATED CLOSED-END FUNDS, AND REAL ESTATE INVESTMENT TRUSTS

     If  you  are  an  employee  of  Franklin  Resources,  Inc.  or  any  of its
affiliates,  including the Franklin  Templeton  Group, you cannot effect a short
sale of the  securities,  including  "short  sales  against the box" of Franklin
Resources,  Inc., or any of the Franklin or Templeton closed-end funds, Franklin
real  estate  investment  trusts  or  any  other  security  issued  by  Franklin
Resources,  Inc.  or its  affiliates.  This  prohibition  would  also  apply  to
effecting economically equivalent  transactions,  including,  but not limited to
sales of any option to buy (i.e.,  a call  option) or purchases of any option to
sell (i.e., a put option) and "swap" transactions or other derivatives. Officers
and directors of the Franklin  Templeton  Group who may be covered by Section 16
of the  Securities  Exchange Act of 1934,  are reminded  that their  obligations
under that section are in addition to their obligations under this Code.


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 7  Associated  Client:  A Fund or client  whose  trading  information  would be
    available  to the access  person  during  the  course of his or her  regular
    functions or duties.

PART 4 - ADDITIONAL COMPLIANCE REQUIREMENTS APPLICABLE TO PORTFOLIO PERSONS(8)

4.1  REQUIREMENT TO DISCLOSE INTEREST AND METHOD OF DISCLOSURE

     As a Portfolio  Person,  you must promptly disclose your direct or indirect
beneficial  interest in a security whenever you learn that the security is under
consideration  for  purchase  or sale by an  Associated  Client in the  Franklin
Templeton Group and you;

     (1)  Have or share investment control of the Associated Client;

     (2)  Make any  recommendation  or participate in the determination of which
          recommendation shall be made on behalf of the Associated Client; or

     (3)  Have  functions  or duties that relate to the  determination  of which
          recommendation shall be made to the Associated Client.

     In such instances,  you must initially  disclose that  beneficial  interest
orally to the primary portfolio  manager (or other  Appropriate  Analyst) of the
Associated  Client(s)  considering  the  security,  the Director of Research and
Trading or the Director of Compliance.  Following that oral disclosure, you must
send a written  acknowledgment  of that  interest  on  Schedule  E (or on a form
containing  substantially  similar information) to the primary portfolio manager
(or other Appropriate Analyst), with a copy to the Legal Compliance Department.

4.2  SHORT SALES OF SECURITIES

     You  cannot  sell  short  ANY  security  held by your  Associated  Clients,
including  "short  sales  against  the  box".  Additionally,  Portfolio  Persons
associated  with the Templeton  Group of Funds and clients cannot sell short any
security on the Templeton  "Bargain List".  This prohibition would also apply to
effecting economically equivalent  transactions,  including, but not limited to,
sales of uncovered  call options,  purchases of put options while not owning the
underlying  security and short sales of bonds that are  convertible  into equity
positions.


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 8  You  are a  "Portfolio  Person"  if you  are  an  employee  of the  Franklin
    Templeton Group,  and, in connection with your regular  functions or duties,
    make or participate in the decision to purchase or sell a security by a Fund
    in the Franklin  Templeton  Group,  or any other client or if your functions
    relate to the making of any recommendations  about those purchases or sales.
    Portfolio Persons include portfolio  managers,  research analysts,  traders,
    persons  serving in equivalent  capacities  (such as  Management  Trainees),
    persons supervising the activities of Portfolio Persons,  and anyone else so
    designated by the Compliance Officer.

4.3  SHORT SWING TRADING

     Portfolio  Persons  cannot  profit from the  purchase  and sale or sale and
purchase  within sixty  calendar  days of any security,  including  derivatives.
Portfolio  Persons are responsible for transactions that may occur in margin and
option accounts and all such transactions must comply with this restriction.(9)

This restriction does NOT apply to:

     (1)  trading  within a shorter period if you do not realize a profit and if
          you do not violate any other provisions of this Code; AND

     (2)  profiting on the  purchase and sale or sale and purchase  within sixty
          calendar days of the following securities:

          o  securities that are direct obligations of the U.S. Government, such
             as Treasury  bills,  notes and bonds,  and U.S.  Savings  Bonds and
             derivatives thereof;

          o  high quality short-term  instruments  ("money market  instruments")
             including  but not limited to (i) bankers'  acceptances,  (ii) U.S.
             bank  certificates of deposit;  (iii)  commercial  paper;  and (iv)
             repurchase agreements;

          o  shares of registered open-end investment companies; and

          o  commodity  futures,  currencies,  currency forwards and derivatives
             thereof.

     Calculation of profits during the 60 calendar day holding period  generally
will be based on "last-in,  first-out" ("LIFO").  Portfolio Persons may elect to
calculate  their 60 calendar  day  profits on either a LIFO or FIFO  ("first-in,
first-out") basis when there has not been any activity in such security by their
Associated Clients during the previous 60 calendar days.


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 9  This  restriction  applies equally to  transactions  occurring in margin and
    option  accounts  which may not be due to direct  actions  by the  Portfolio
    Person.  For example,  a stock held less than 60 days that is sold to meet a
    margin call or the underlying  stock of a covered call option held less than
    60 days that is called  away,  would be a violation of this  restriction  if
    these transactions resulted in a profit for the Portfolio Person.

4.4  SERVICE AS A DIRECTOR

     As a Portfolio  Person,  you cannot serve as a director,  trustee,  or in a
similar capacity for any company (excluding not-for-profit companies, charitable
groups,  and  eleemosynary  organizations)  unless you receive approval from the
Chief Executive  Officer of the principal  investment  adviser to the Fund(s) of
which you are a  Portfolio  Person and he/she  determines  that your  service is
consistent with the interests of the Fund(s) and its shareholders.

4.5  SECURITIES SOLD IN A PUBLIC OFFERING

     Portfolio Persons cannot buy securities in any initial public offering,  or
a  secondary  offering  by an issuer,  INCLUDING  initial  public  offerings  of
securities made by closed-end funds and real estate investment trusts advised by
the Franklin  Templeton  Group.  Purchases of open-end mutual funds are excluded
from this prohibition.

4.6  INTERESTS IN PARTNERSHIPS AND SECURITIES ISSUED IN PRIVATE PLACEMENTS

     Portfolio  Persons cannot acquire  limited  partnership  interests or other
securities in private placements unless they:

     (1)  complete the Private Placement Checklist (Schedule H);
     (2)  provide  supporting  documentation  (e.g.,  a  copy  of  the  offering
          memorandum); and
     (3)  obtain approval of the appropriate Chief Investment Officer; and
     (4)  submit all documents to the Legal Compliance Department

Approval will only be granted after the Director of Compliance  consults with an
executive officer of Franklin Resources, Inc.

PART 5 - REPORTING REQUIREMENTS FOR ALL ACCESS PERSONS

5.1  REPORTING OF BENEFICIAL OWNERSHIP AND SECURITIES TRANSACTIONS

     Compliance with the following  personal  securities  transaction  reporting
procedures is essential to enable us to meet our  responsibilities  to Funds and
other clients and to comply with  regulatory  requirements.  You are expected to
comply  with  both  the  letter  and  spirit  of these  requirements,  including
completing and filing all reports required under the Code in a timely manner.

5.2  INITIAL HOLDINGS AND BROKERAGE ACCOUNT REPORTS

     A.  ALL ACCESS PERSONS  (EXCEPT INDEPENDENT DIRECTORS)

         Every  employee (new or transfer) of the Franklin  Templeton  Group who
         becomes an Access Person, must file:

         (1)  An Acknowledgement Form;

         (2)  Schedule C:  Initial,  Annual & Updated  Disclosure  of Securities
              Holdings; and

         (3)  Schedule F:  Initial,  Annual & Updated  Disclosure  of Securities
              Accounts

         The  Acknowledgement  Form, Schedule C and Schedule F MUST be completed
         and returned to the Legal Compliance Department within 10 CALENDAR DAYS
         of the date the employee becomes an access person.

5.3  QUARTERLY TRANSACTION REPORTS

     A.  ALL ACCESS PERSONS  (EXCEPT INDEPENDENT DIRECTORS)

     You MUST report ALL  securities  transactions  by; (i)  providing the Legal
Compliance  Department with copies of ALL broker's  confirmations and statements
within 10 calendar days after the end of the calendar quarter (which may be sent
under separate  cover by the broker)  showing ALL  transactions  and holdings in
securities  AND (ii)  certifying  by  January  30th of each  year  that you have
disclosed  all such  brokerage  accounts on  Schedule F to the Legal  Compliance
Department.   The  brokerage  statements  and  confirmations  must  include  all
transactions  in securities  in which you have, or by reason of the  transaction
acquire any direct or indirect beneficial ownership, including transactions in a
discretionary  account  and  transactions  for any account in which you have any
economic  interest AND have or share  investment  control.  Also, if you acquire
securities  by any  other  method  which  is not  being  reported  to the  Legal
Compliance Department by a duplicate  confirmation statement at or near the time
of the  acquisition,  you must report that  acquisition to the Legal  Compliance
Department  on Schedule B within 10 calendar  days after you are notified of the
acquisition.  Such acquisitions include, among other things, securities acquired
by gift, inheritance, vesting,(10) stock splits, merger or reorganization of the
issuer of the security.

     You must file these  documents  with the Legal  Compliance  Department  not
later than 10 calendar days after the end of each quarter, but you need not show
or report  transactions for any account over which you had no direct or indirect
influence or control.(11)  Failure to timely report  transactions is a violation
of Rule 17j-1 as well as the Code,  and may be reported  to the Fund's  Board of
Directors and may also result,  among other things, in denial of future personal
security transaction requests.

     B.  INDEPENDENT DIRECTORS

     If you are a director of the  Franklin  Templeton  Group but you are not an
"interested  person"  of the  Fund,  you are not  required  to file  transaction
reports  unless you knew or should  have known  that,  during the 15-day  period
before or after a transaction, the security was purchased or sold, or considered
for purchase or sale, by a Fund or by Franklin Resources on behalf of a Fund.


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10  You are not required to  separately  report the vesting of shares or options
    of Franklin Resources,  Inc.,  received pursuant to a deferred  compensation
    plan as such information is already maintained.

11  See Sections 3.2 and 4.6 of the Code. Also,  confirmations and statements of
    transactions in open-end mutual funds,  including  mutual funds sponsored by
    the Franklin  Templeton Group are not required.  See Section 3.3 above for a
    list of  other  securities  that  need  not be  reported.  If you  have  any
    beneficial  ownership  in a  discretionary  account,  transactions  in  that
    account  are  treated as yours and must be  reported  by the manager of that
    account (see Section 6.1.C below).

5.4  ANNUAL REPORTS - ALL ACCESS PERSONS

     A.  SECURITIES ACCOUNTS REPORTS (EXCEPT INDEPENDENT DIRECTORS)

     As an access  person,  you must file a report  of all  personal  securities
accounts  on  Schedule  F, with the Legal  Compliance  Department,  annually  by
January  30th.  You must  report  the name and  description  of each  securities
account in which you have a direct or indirect  beneficial  interest,  including
securities  accounts  of a spouse and minor  children.  You must also report any
account in which you have any  economic  interest  AND have or share  investment
control (e.g., trusts,  foundations,  etc.) other than an account for a Fund in,
or a client of, the Franklin Templeton Group.

     B.  SECURITIES HOLDINGS REPORTS (EXCEPT INDEPENDENT DIRECTORS)

     You must file a report of personal  securities holdings on Schedule C, with
the Legal  Compliance  Department,  by January  30th of each year.  This  report
should include ALL of your securities holdings,  including any security acquired
by a transaction,  gift,  inheritance,  vesting, merger or reorganization of the
issuer of the  security,  in which you have any  direct or  indirect  beneficial
ownership,  including securities holdings in a discretionary account and for any
account in which you have any  economic  interest  AND have or share  investment
control.  Your securities  holding  information  must be current as of a date no
more than 30 days  before the  report is  submitted.  You may  attach  copies of
year-end brokerage statements to the Schedule C in lieu of listing each security
position on the schedule.

     C.  CERTIFICATION  OF  COMPLIANCE  WITH  THE  CODE  OF  ETHICS   (INCLUDING
         INDEPENDENT DIRECTORS)

     All  access  persons,  including  independent  directors,  will be asked to
certify that they will comply with the FRANKLIN TEMPLETON GROUP'S CODE OF ETHICS
AND POLICY STATEMENT ON INSIDER TRADING by filing the  Acknowledgment  Form with
the Legal Compliance  Department within 10 business days of receipt of the Code.
Thereafter,  you will be asked to certify that you have  complied  with the Code
during the preceding year by filing a similar  Acknowledgment Form by January 30
of each year.

5.5  BROKERAGE  ACCOUNTS AND  CONFIRMATIONS OF SECURITIES  TRANSACTIONS  (EXCEPT
     INDEPENDENT DIRECTORS)

     If you are an access person , in the Franklin Templeton Group, before or at
a time  contemporaneous  with  opening a  brokerage  account  with a  registered
broker-dealer,  or a bank,  or placing an initial order for the purchase or sale
of securities with that broker-dealer or bank, you must:

     (1)  notify the Legal  Compliance  Department,  in writing,  by  completing
          Schedule D or by providing substantially similar information; and

     (2)  notify the institution  with which the account is opened,  in writing,
          of your association with the Franklin Templeton Group.

     The Compliance  Department  will request the institution in writing to send
to it duplicate  copies of  confirmations  and statements  for all  transactions
effected in the account simultaneously with their mailing to you.

     If you have an existing  account on the effective date of this Code or upon
becoming an access  person,  you must comply within 10 days with  conditions (1)
and (2) above.

PART 6 - PRE-CLEARANCE REQUIREMENTS

6.1  PRIOR APPROVAL OF SECURITIES TRANSACTIONS

     A.  LENGTH OF APPROVAL

     Unless you are  covered by  Paragraph  D below,  you cannot buy or sell any
security,  without first  contacting a Preclearance  Officer by fax,  phone,  or
e-mail and obtaining his or her approval. A clearance is good until the close of
the business day  following  the day clearance is granted but may be extended in
special circumstances, shortened or rescinded, as explained in Appendix A.

     B.  SECURITIES NOT REQUIRING PRECLEARANCE

     The securities enumerated below do not require preclearance under the Code.
However, all other provisions of the Code apply, including,  but not limited to:
(i)  the  prohibited  transaction  provisions  contained  in  Part  3.4  such as
front-running;   (ii)  the  additional  compliance  requirements  applicable  to
portfolio  persons   contained  in  Part  4,  (iii)  the  applicable   reporting
requirements contained in Part 5; and (iv) insider trading prohibitions.

You need NOT pre-clear transactions in the following securities:

      (1)  MUTUAL  FUNDS.  Transactions  in  shares of any  registered  open-end
           mutual fund;

      (2)  FRANKLIN RESOURCES, INC., AND ITS AFFILIATES.  Purchases and sales of
           securities  of  Franklin  Resources,  Inc.,  closed-end  funds of the
           Franklin Templeton Group, or real estate investment trusts advised by
           Franklin  Properties Inc., as these securities cannot be purchased on
           behalf of our advisory clients.(12)

      (3)  SMALL QUANTITIES.

           o  Transactions that do not result in purchases or sales of more than
              100 shares of any one security,  regardless of where it is traded,
              in any 30 day period; or

           o  Transactions  of 500 shares or less of any security  listed on the
              NYSE or NASDAQ NMS in any 30 day period; or

           o  Transactions  of 1000 shares or less of the top 50  securities  by
              volume during the previous  calendar quarter on the NYSE or NASDAQ
              NMS in any 30 day period.


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12  Officers,  directors and certain other key management  personnel who perform
    significant  policy-making  functions  of  Franklin  Resources,   Inc.,  the
    closed-end  funds,  and/or real estate  investment trusts may have ownership
    reporting requirements in addition to these reporting requirements.  Contact
    the Legal  Compliance  Department for additional  information.  SEE also the
    "Insider Trading Policy" attached.

           HOWEVER, YOU MAY NOT EXECUTE ANY TRANSACTION, REGARDLESS OF QUANTITY,
           IF YOU LEARN  THAT THE FUNDS ARE ACTIVE IN THE  SECURITY.  IT WILL BE
           PRESUMED THAT YOU HAVE KNOWLEDGE OF FUND ACTIVITY IN THE SECURITY IF,
           AMONG OTHER  THINGS,  YOU ARE DENIED  APPROVAL  TO GO FORWARD  WITH A
           TRANSACTION   REQUEST.   Transactions   made   pursuant  to  dividend
           reinvestment plans ("DRIPs") do not require  preclearance  regardless
           of quantity or Fund activity.

      (4)  GOVERNMENT   OBLIGATIONS.   Transactions  in  securities   issued  or
           guaranteed  by the  governments  of the United  States,  Canada,  the
           United Kingdom,  France,  Germany,  Switzerland,  Italy and Japan, or
           their agencies or instrumentalities, or derivatives thereof;

      (5)  PAYROLL DEDUCTION PLANS. Securities purchased by an employee's spouse
           pursuant to a payroll  deduction  program,  provided  the  Compliance
           Department  has been  previously  notified  in  writing by the access
           person that the spouse will be participating in the payroll deduction
           program.

      (6)  EMPLOYER STOCK OPTION PROGRAMS.  Transactions  involving the exercise
           and/or  purchase by an access person or an access  person's spouse of
           securities pursuant to a program sponsored by a corporation employing
           the access person or spouse.

      (7)  PRO RATA DISTRIBUTIONS.  Purchases effected by the exercise of rights
           issued pro rata to all holders of a class of  securities  or the sale
           of rights so received.

      (8)  TENDER  OFFERS.  Transactions  in securities  pursuant to a bona fide
           tender offer made for any and all such  securities  to all  similarly
           situated  shareholders  in  conjunction  with mergers,  acquisitions,
           reorganizations  and/or similar corporate actions.  However,  tenders
           pursuant  to offers  for less than all  outstanding  securities  of a
           class of securities of an issuer must be precleared.

      (9)  NOT ELIGIBLE FOR FUNDS AND CLIENTS.  Transactions  in any  securities
           that are prohibited  investments for all Funds and clients advised by
           the entity employing the access person.

     (10)  NO INVESTMENT CONTROL. Transactions effected for an account or entity
           over  which you do not have or share  investment  control  (i.e.,  an
           account where someone else exercises complete investment control).

     (11)  NO BENEFICIAL OWNERSHIP.  Transactions in which you do not acquire or
           dispose of direct or indirect beneficial  ownership (i.e., an account
           where in you have no financial interest).

     Although  an access  person's  securities  transaction  may be exempt  from
pre-clearing,  such  transactions  must comply with the  prohibited  transaction
provisions of Section 3.4 above. Additionally,  you may not trade any securities
as to which you have "inside  information" (see attached THE FRANKLIN  TEMPLETON
GROUP POLICY STATEMENT ON INSIDER TRADING). If you have any questions, contact a
Preclearance  Officer before engaging in the transaction.  If you have any doubt
whether you have or might  acquire  direct or indirect  beneficial  ownership or
have or share  investment  control  over an  account  or entity in a  particular
transaction,  or whether a transaction  involves a security covered by the Code,
you  should  consult  with  a  Preclearance   Officer  before  engaging  in  the
transaction.

     C.  DISCRETIONARY ACCOUNTS

     You need not pre-clear  transactions in any discretionary account for which
a registered broker-dealer, a registered investment adviser, or other investment
manager acting in a similar fiduciary capacity, which is not affiliated with the
Franklin Templeton Group, exercises sole investment discretion, if the following
conditions are met:(13)

     (1)  The  terms  of  each  account  relationship  ("Agreement")  must be in
          writing  and  filed  with  a   Preclearance   Officer   prior  to  any
          transactions.

     (2)  Any  amendment  to each  Agreement  must be filed  with  aPreclearance
          Officer prior to its effective date.

     (3)  The Portfolio  Person  certifies to the  Compliance  Department at the
          time such account relationship commences, and annually thereafter,  as
          contained  in Schedule G of the Code that such  Portfolio  Person does
          not have direct or indirect  influence  or control  over the  account,
          other than the right to terminate the account.

     (4)  Additionally, any discretionary account that you open or maintain with
          a registered broker-dealer,  a registered investment adviser, or other
          investment manager acting in a similar fiduciary capacity must provide
          duplicate copies of confirmations  and statements for all transactions
          effected in the account simultaneously with their delivery to you., If
          your discretionary  account acquires securities which are not reported
          to  a  Preclearance   Officer  by  a  duplicate   confirmation,   such
          transaction  must be reported to a Preclearance  Officer on Schedule B
          within 10 days after you are notified of the acquisition.(14)

     However,  if you make ANY request that the  discretionary  account  manager
enter into or refrain from a specific transaction or class of transactions,  you
must first  consult  with  aPreclearance  Officer and obtain  approval  prior to
making such request.


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13  Please  note that these  conditions  apply to any  discretionary  account in
    existence prior to the effective date of this Code or prior to your becoming
    an  access  person.  Also,  the  conditions  apply  to  transactions  in any
    discretionary  account,  including  pre-existing accounts, in which you have
    any direct or indirect beneficial ownership, even if it is not in your name.

14  Any  pre-existing  agreement  must be  promptly  amended to comply with this
    condition.  The  required  reports  may be  made in the  form of an  account
    statement if they are filed by the applicable deadline.

     D.  DIRECTORS WHO ARE NOT ADVISORY PERSONS OR ADVISORY REPRESENTATIVES

         You need not pre-clear any securities if:

         (1)  You are a director of a Fund in the Franklin Templeton Group and a
              director of the fund's advisor;

         (2)  You are not an  "advisory  person"(15)  of a Fund in the  Franklin
              Templeton Group; and

         (3)  You are not an employee of any Fund,

              or

         (1)  You are a director of a Fund in the Franklin Templeton Group;

         (2)  You are not an "advisory representative"(16) of Franklin Resources
              or any subsidiary; and

         (3)  You are not an employee of any Fund,

unless  you know or should  know  that,  during  the  15-day  period  before the
transaction,  the security was purchased or sold, or considered  for purchase or
sale, by a Fund or by Franklin Resources on behalf of a Fund or other client.

     Directors,   other  than  independent  Directors,   qualifying  under  this
paragraph  are  required to comply with all  applicable  provisions  of the Code
including  reporting their initial holdings and brokerage accounts in accordance
with 5.2, personal  securities  transactions and accounts in accordance with 5.3
and 5.5, and annual reports in accordance with 5.4 of the Code.


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15  An "advisory  person" of a registered  investment  company or an  investment
    adviser is any employee, who in connection with his or her regular functions
    or duties,  makes,  participates  in, or obtains  information  regarding the
    purchase or sale of a security by an  advisory  client , or whose  functions
    relate to the making of any  recommendations  with respect to such purchases
    or sales.  Advisory  person also  includes  any natural  person in a control
    relationship to such company or investment  adviser who obtains  information
    concerning  recommendations made to such company with regard to the purchase
    or sale of a security.

16  Generally,  an  "advisory  representative"  is  any  person  who  makes  any
    recommendation,   who   participates   in   the   determination   of   which
    recommendation  shall be made,  or whose  functions or duties  relate to the
    determination of which  recommendation  shall be made, or who, in connection
    with his duties,  obtains any information  concerning  which  securities are
    being   recommended   prior   to  the   effective   dissemination   of  such
    recommendations or of the information  concerning such recommendations.  See
    Section  II  of   Appendix  A  for  the  legal   definition   of   "Advisory
    Representative."

     E.  LIMITED EXCEPTION FOR CERTAIN PROPRIETARY ACCOUNTS

     Franklin  Resources and/or its affiliates may sponsor private  partnerships
and other  pooled  investment  accounts  intended  for  distribution  to persons
unaffiliated with the Franklin Templeton Group ("affiliated  accounts").  At the
outset of  operations of such  affiliated  accounts,  Franklin  Resources or its
affiliates will likely have a significant  ownership  interest,  thereby causing
the  affiliated  account  to  be a  Proprietary  Account.  Though  considered  a
Proprietary  Account for all other purposes of this Code, an affiliated  account
need not pre-clear  any  securities  transaction  during the first full 12 month
period after its commencement of operations.

PART 7 - PENALTIES FOR VIOLATIONS OF THE CODE

     The Code is  designed  to  assure  compliance  with  applicable  law and to
maintain shareholder confidence in the Franklin Templeton Group.

     In   adopting   this  Code,   it  is  the   intention   of  the  Boards  of
Directors/Trustees,  to attempt to achieve 100% compliance with all requirements
of the Code - but it is  recognized  that this may not be  possible.  Incidental
failures to comply with the Code are not  necessarily  a violation of the law or
the  Franklin  Templeton  Group's  Statement  of  Principles.  Such  isolated or
inadvertent  violations  of the Code not  resulting in a violation of law or the
Statement of Principles  will be referred to the Director of  Compliance  and/or
management  personnel,  and disciplinary action commensurate with the violation,
if warranted, will be imposed.

     However,  if you  violate  any of the  enumerated  prohibited  transactions
contained  in Parts 3 and 4 of the  Code,  you will be  expected  to give up ANY
profits realized from these  transactions to Franklin  Resources for the benefit
of the affected Funds or other clients.  If Franklin  Resources cannot determine
which  Fund(s) or client(s)  were  affected,  the proceeds  will be donated to a
charity chosen by Franklin Resources. Failure to disgorge profits when requested
may  result  in  additional   disciplinary  action,   including  termination  of
employment.

     Further,  a pattern of violations that  individually do not violate the law
or Statement  of  Principles,  but which taken  together  demonstrate  a lack of
respect  for the Code of Ethics,  may result in  disciplinary  action  including
termination of  employment.  A violation of the Code resulting in a violation of
the law will be severely sanctioned, with disciplinary action including, but not
limited to,  referral of the matter to the board of  directors  of the  affected
Fund,  termination  of employment  or referral of the matter to the  appropriate
regulatory agency for civil and/or criminal investigation.

PART 8 - A REMINDER ABOUT THE FRANKLIN TEMPLETON GROUP INSIDER TRADING POLICY

     The Code of Ethics is primarily  concerned with  transactions in securities
held or to be  acquired  by any of the  Funds or  Franklin  Resources'  clients,
regardless  of whether those  transactions  are based on inside  information  or
actually harm a Fund or a client.

     The Insider  Trading  Policy  (attached  to this  document)  deals with the
problem of insider  trading in securities that could result in harm to a Fund, a
client,  or members of the public,  and applies to all  directors,  officers and
employees  of  any  entity  in  the  Franklin  Templeton  Group.   Although  the
requirements  of the Code and the Insider  Trading Policy are similar,  you must
comply with both.

FOREIGN COUNTRY SUPPLEMENTS

PART 1 - SUPPLEMENTARY STATEMENT OF REQUIREMENTS FOR CANADIAN EMPLOYEES

The Investment  Funds  Institute of Canada  ("IFIC") has implemented a new Model
Code of Ethics for  Personal  Investing  (the "IFIC  Code") to be adopted by all
IFIC members.  Certain provisions in the IFIC Code differ from the provisions of
the Franklin Templeton Group Code of Ethics (the "FT Code").  This Supplementary
Statement of  Requirements  for Canadian  Employees (the "Canadian  Supplement")
describes  certain further specific  requirements  that govern the activities of
Franklin Templeton  Investments Corp. ("FTIC"). It is important to note that the
Canadian  Supplement does not replace the FT Code but adds certain  restrictions
on trading activities which must be read in conjunction with the Code.

All  capitalized  terms in this  Canadian  Supplement,  unless  defined  in this
Canadian Supplement, have the meaning set forth in the FT Code.

INITIAL PUBLIC AND SECONDARY OFFERINGS

Access  Persons  cannot buy  securities  in any initial  public  offering,  or a
secondary  offering by an issuer.  Public  offerings of  securities  made by the
Franklin  Templeton Group,  including open-end and closed-end mutual funds, real
estate investment trusts and securities of Franklin Resources, Inc, are excluded
from this prohibition.

NOTE: THE FT CODE PRESENTLY  PROHIBITS  PORTFOLIO PERSONS FROM BUYING SECURITIES
IN ANY  INITIAL  PUBLIC  OFFERING,  OR A  SECONDARY  OFFERING  BY AN ISSUER (SEE
SECTION 4.5 OF THE FT CODE).  THIS PROVISION  EXTENDS SECTION 4.5 OF THE FT CODE
TO ALL ACCESS PERSONS.

INTERESTS IN PARTNERSHIPS AND SECURITIES ISSUED IN PRIVATE PLACEMENTS

Access  Persons  and  Portfolio  Persons  cannot  acquire  limited   partnership
interests or other securities in private  placements unless they obtain approval
of the Compliance  Officer after he or she consults with an executive officer of
Franklin  Resources,  Inc. Purchases of limited  partnership  interests or other
securities in private placements will not be approved, unless in addition to the
requirements for the approval of other trades and such other requirements as the
executive  officer of Franklin  Resources,  Inc.  may  require,  the  Compliance
Officer is  satisfied  that the issuer is a "private  company" as defined in the
SECURITIES ACT (Ontario) and the Access Person has no reason to believe that the
issuer will make a public offering of its securities in the foreseeable future.

NOTE: THE FT CODE PRESENTLY  PROHIBITS AS A GENERAL RULE PORTFOLIO  PERSONS FROM
BUYING LIMITED  PARTNERSHIP  INTERESTS OR OTHER SECURITIES IN PRIVATE PLACEMENTS
(SEE  SECTION  4.6 OF THE FT  CODE).  THIS  SECTION  EXTENDS  THE  AMBIT  OF THE
PROHIBITION  TO ACCESS  PERSONS AND LIMITS THE  EXCEPTION  TO THE  GENERAL  RULE
CONTAINED IN SECTION 4.6 OF THE FT CODE.

ADDITIONAL REQUIREMENTS TO OBTAIN APPROVAL FOR PERSONAL TRADES

Prior to an Access Person obtaining approval for a personal trade he or she must
advise the Compliance Officer that he or she:

o  Does not possess material non-public information relating to the security;

o  Is not aware of any proposed  trade or  investment  program  relating to that
   security by any of the Franklin Templeton Group of Funds;

o  Believes that the proposed  trade has not been offered  because of the Access
   Person's  position in the  Franklin  Templeton  Group and is available to any
   market participant on the same terms;

o  Believes that the proposed  trade does not  contravene  any of the prohibited
   activities  set  out  in  Section  3.4 of the FT  Code,  and in the  case  of
   Portfolio Persons does not violate any of the additional requirements set out
   in Part 4 of the FT Code; and

o  Will  provide  any other  information  requested  by the  Compliance  Officer
   concerning the proposed personal trade.

An Access Person may contact the  Compliance  Officer by fax, phone or e-mail to
obtain his or her approval.

NOTE:  THE METHOD OF OBTAINING  APPROVAL IS PRESENTLY SET OUT IN SECTION 6.1A OF
THE FT CODE AND  PROVIDES  THAT AN ACCESS  PERSON  MAY  CONTACT  THE  COMPLIANCE
OFFICER BY FAX, PHONE OR E-MAIL.  THE  ADDITIONAL  REQUIREMENT  DESCRIBED  ABOVE
MAKES IT CLEAR THAT AN ACCESS  PERSON MAY  CONTINUE  TO CONTACT  THE  COMPLIANCE
OFFICER IN THE SAME MANNER AS BEFORE. THE ACCESS PERSON WILL HAVE DEEMED TO HAVE
CONFIRMED  COMPLIANCE WITH THE ABOVE  REQUIREMENTS  PRIOR TO OBTAINING  APPROVAL
FROM THE COMPLIANCE OFFICER.

APPOINTMENT OF INDEPENDENT REVIEW PERSON

FTIC shall  appoint an  independent  review person who will be  responsible  for
approval of all personal  trading rules and other provisions of the FT Code with
respect to FTIC and for monitoring the  administration  of the FT Code from time
to time with respect to FTIC  employees.  The Compliance  Officer will provide a
written report to the Independent Review Person, at least annually, summarizing:

o  Compliance with the FT Code for the period under review
o  Violations of the FT Code for the period under review
o  Sanctions imposed by the Franklin Templeton Group for the period under review
o  Changes in procedures recommended by the FT Code
o  Any other information requested by the Independent Review Person

APPENDIX A:  COMPLIANCE PROCEDURES, DEFINITIONS, AND OTHER ITEMS

     This appendix sets forth the additional responsibilities and obligations of
Compliance   Officers,   and  the   Legal/Administration   and  Legal/Compliance
Departments,  under the  Franklin  Templeton  Group  Code of Ethics  and  Policy
Statement on Insider Trading.

  I.  RESPONSIBILITIES OF EACH DESIGNATED COMPLIANCE OFFICER

      A.  PRE-CLEARANCE STANDARDS

          1.  GENERAL PRINCIPLES

     The Director of Compliance, or a Preclearance Officer, shall only permit an
access person to go forward with a proposed  security(17)  transaction  if he or
she  determines  that,  considering  all of the  facts  and  circumstances,  the
transaction  does not violate the provisions of Rule 17j-1,  or of this Code and
there is no likelihood of harm to a client.

          2.  ASSOCIATED CLIENTS

      Unless  there  are  special  circumstances  that  make it  appropriate  to
disapprove a personal  securities  transaction  request, a Preclearance  Officer
shall consider only those securities transactions of the "Associated Clients" of
the access person,  including open and executed orders and  recommendations,  in
determining  whether to approve such a request.  "Associated  Clients" are those
Funds or clients  whose  trading  information  would be  available to the access
person during the course of his or her regular  functions or duties.  Currently,
there are three groups of  Associated  Clients:  (i) the Franklin  Mutual Series
Funds and clients advised by Franklin Mutual Advisers,  LLC ("Mutual  Clients");
(ii) the Franklin Group of Funds and the clients advised by the various Franklin
investment advisers ("Franklin Clients"); and (iii) the Templeton Group of Funds
and the clients advised by the various Templeton investment advisers ("Templeton
Clients").  Thus,  persons who have access to the trading  information of Mutual
Clients generally will be precleared solely against the securities  transactions
of the Mutual Clients,  including open and executed orders and  recommendations.
Similarly,  persons  who have  access to the  trading  information  of  Franklin
Clients or Templeton  Clients  generally  will be precleared  solely against the
securities   transactions  of  Franklin   Clients  or  Templeton   Clients,   as
appropriate.

      Certain officers of Franklin Resources, as well as legal, compliance, fund
accounting,  investment operations and other personnel who generally have access
to trading  information of the funds and clients of the Franklin Templeton Group
during  the  course of their  regular  functions  and  duties,  will have  their
personal securities transactions precleared against executed transactions,  open
orders and recommendations of the entire Franklin Templeton Group.


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17  Security  includes any option to purchase or sell,  and any security that is
    exchangeable  for or  convertible  into,  any security that is held or to be
    acquired by a fund.

          3.  SPECIFIC STANDARDS

              (a)  SECURITIES TRANSACTIONS BY FUNDS OR CLIENTS

      No clearance shall be given for any transaction in any security on any day
during  which an  Associated  Client of the access  person has executed a buy or
sell order in that  security,  until seven (7) calendar days after the order has
been  executed.  Notwithstanding  a  transaction  in the  previous  seven  days,
clearance  may be granted to sell if the  security  has been  disposed of by all
Associated Clients.

              (b)  SECURITIES UNDER CONSIDERATION

                   OPEN ORDERS

      No clearance shall be given for any transaction in any security on any day
which an Associated  Client of the access person has a pending buy or sell order
for such  security,  until  seven  (7)  calendar  days  after the order has been
executed.

                   RECOMMENDATIONS

      No clearance shall be given for any transaction in any security on any day
on which a  recommendation  for such  security  was made by a Portfolio  Person,
until seven (7) calendar  days after the  recommendation  was made and no orders
have subsequently been executed or are pending.

              (c)  PRIVATE PLACEMENTS

      In  considering  requests by Portfolio  Personnel  for approval of limited
partnerships and other private placement securities  transactions,  the Director
of  Compliance  shall consult with an executive  officer of Franklin  Resources,
Inc. In deciding whether to approve the transaction,  the Director of Compliance
and the executive officer shall take into account, among other factors,  whether
the investment  opportunity  should be reserved for a Fund or other client,  and
whether the investment  opportunity is being offered to the Portfolio  Person by
virtue  of his  or her  position  with  the  Franklin  Templeton  Group.  If the
Portfolio Person receives  clearance for the  transaction,  an investment in the
same  issuer  may only be made for a Fund or client if an  executive  officer of
Franklin  Resources,  Inc.,  who has been  informed  of the  Portfolio  Person's
pre-existing  investment  and who has no interest in the  issuer,  approves  the
transaction.

              (d)  DURATION OF CLEARANCE

      If a Preclearance Officer approves a proposed securities transaction,  the
order for the  transaction  must be placed and effected by the close of the next
business day following the day approval was granted.  The Director of Compliance
may, in his or her discretion,  extend the clearance period up to seven calendar
days, beginning on the date of the approval, for a securities transaction of any
access  person who  demonstrates  that special  circumstances  make the extended
clearance period necessary and  appropriate.(18) The Director of Compliance may,
in his or her discretion,  after consultation with a member of senior management
for Franklin  Resources,  Inc., renew the approval for a particular  transaction
for up to an additional  seven  calendar days upon a similar  showing of special
circumstances  by the access  person.  The Director of Compliance may shorten or
rescind any  approval or renewal of approval  under this  paragraph if he or she
determines it is appropriate to do so.


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18  Special   circumstances  include  but  are  not  limited  to,  for  example,
    differences  in time zones,  delays due to travel,  and the unusual  size of
    proposed  trades or limit  orders.  Limit  orders  must  expire  within  the
    applicable clearance period.

      B.  WAIVERS BY THE DIRECTOR OF COMPLIANCE

      The  Director  of  Compliance  may,  in  his  or  her  discretion,   after
consultation  with an  executive  officer of  Franklin  Resources,  Inc.,  waive
compliance  by any access  person with the  provisions of the Code, if he or she
finds that such a waiver:

      (1)  is  necessary to alleviate  undue  hardship or in view of  unforeseen
           circumstances  or is  otherwise  appropriate  under all the  relevant
           facts and circumstances;

      (2)  will not be  inconsistent  with the  purposes and  objectives  of the
           Code;

      (3)  will not adversely  affect the  interests of advisory  clients of the
           Franklin  Templeton  Group,  the interests of the Franklin  Templeton
           Group or its affiliates; and

      (4)  will not  result in a  transaction  or  conduct  that  would  violate
           provisions of applicable laws or regulations.

      Any waiver shall be in writing, shall contain a statement of the basis for
it, and a copy shall be  promptly  sent by the  Director  of  Compliance  to the
General Counsel of Franklin Resources, Inc.

      C.  CONTINUING RESPONSIBILITIES OF THE LEGAL COMPLIANCE DEPARTMENT

      A   Preclearance   Officer  shall  make  a  record  of  all  requests  for
pre-clearance  regarding the purchase or sale of a security,  including the date
of the  request,  the name of the access  person,  the  details of the  proposed
transaction,  and  whether the  request  was  approved or denied.  APreclearance
Officer shall keep a record of any waivers given, including the reasons for each
exception  and a  description  of any  potentially  conflicting  Fund or  client
transactions.

      A   Preclearance   Officer   shall  also   collect   the  signed   initial
acknowledgments  of receipt  and the  annual  acknowledgments  from each  access
person of receipt of a copy of the Code and Insider Trading  Policy,  as well as
reports, as applicable,  on Schedules B, C, D, E and F of the Code. In addition,
a  Preclearance  Officer shall request  copies of all  confirmations,  and other
information   with  respect  to  an  account  opened  and  maintained  with  the
broker-dealer  by  any  access  person  of  the  Franklin   Templeton  Group.  A
Preclearance  Officer shall  preserve  those  acknowledgments  and reports,  the
records  of  consultations  and  waivers,  and  the  confirmations,   and  other
information for the period required by applicable regulation.

      A Preclearance Officer shall review brokerage  transaction  confirmations,
account statements,  Schedules B, C, D, E, F and Private Placement Checklists of
Access Persons for compliance with the Code. The reviews shall include,  but are
not limited to;

      (1)  Comparison of brokerage confirmations,  Schedule Bs, and/or brokerage
           statements  to  preclearance  request  worksheets  or,  if a  private
           placement, the Private Placement Checklist;

      (2)  Comparison  of  brokerage  statements  and/or  Schedule Fs to current
           securities holding information;

      (3)  Comparison of Schedule C to current securities account information;

      (4)  Conducting  periodic  "back-testing"  of access person  transactions,
           Schedule  Es and/or  Schedule  Gs in  comparison  to fund and  client
           transactions;

      A Preclearance  Officer shall evidence review by initialing and dating the
appropriate  document.  Any  apparent  violations  of  the  Code  detected  by a
Preclearance  Officer during his or her review shall be promptly  brought to the
attention of the Director of Compliance.

      D.  PERIODIC RESPONSIBILITIES OF THE LEGAL COMPLIANCE DEPARTMENT

      The Legal Compliance Department shall consult with the General Counsel and
the Human Resources Department, as the case may be, to assure that:

      (1)  Adequate reviews and audits are conducted to monitor  compliance with
           the  reporting,  pre-clearance,   prohibited  transaction  and  other
           requirements of the Code.

      (2)  Adequate reviews and audits are conducted to monitor  compliance with
           the  reporting,  pre-clearance,   prohibited  transaction  and  other
           requirements of the Code.

      (3)  All access persons and new employees of the Franklin  Templeton Group
           are  adequately  informed  and  receive  appropriate   education  and
           training as to their duties and obligations under the Code.

      (4)  There are adequate educational,  informational and monitoring efforts
           to ensure  that  reasonable  steps are taken to  prevent  and  detect
           unlawful  insider  trading by access persons and to control access to
           inside information.

      (5)  Written compliance reports are submitted to the Board of Directors of
           Franklin  Resources,  Inc.,  and the Board of each  relevant  Fund at
           least  annually.  Such reports will describe any issues arising under
           the Code or  procedures  since the last  report,  including,  but not
           limited to,  information  about  material  violations  of the Code or
           procedures  and  sanctions   imposed  in  response  to  the  material
           violations.

      (6)  The Legal Compliance Department will certify at least annually to the
           Fund's  board of  directors  that the  Franklin  Templeton  Group has
           adopted  procedures  reasonably  necessary to prevent  Access Persons
           from violating the Code, and

      (7)  Appropriate records are kept for the periods required by law.

      E.  APPROVAL BY FUND'S BOARD OF DIRECTORS

      (1)  Basis for Approval

      The Board of  Directors/Trustees  must base its  approval of the Code on a
determination that the Code contains provisions  reasonably necessary to prevent
access persons from engaging in any conduct prohibited by rule 17j-1.

      (2)  New Funds

      At the time a new fund is organized,  the Legal Compliance Department will
provide the Fund's  board of  directors,  a  certification  that the  investment
adviser and principal  underwriter have adopted procedures  reasonably necessary
to prevent Access Persons from violating the Code. Such certification will state
that the Code contains provisions reasonably necessary to prevent Access Persons
from violating the Code.

      (3)  Material Changes to the Code of Ethics

      The Legal Compliance Department will provide the Fund's board of directors
a written  description  of all  material  changes  to the Code no later than six
months after adoption of the material change by the Franklin Templeton Group.

 II.  COMPILATION OF DEFINITIONS OF IMPORTANT TERMS

      For purposes of the Code of Ethics and Insider Trading  Policy,  the terms
below have the following meanings:

1934 ACT - The Securities Exchange Act of 1934, as amended.

1940 ACT - The Investment Company Act of 1940, as amended.

ACCESS PERSON - Each  director,  trustee,  general  partner or officer,  and any
     other person that  directly or indirectly  controls  (within the meaning of
     Section 2(a)(9) of the 1940 Act) the Franklin  Templeton Group or a person,
     including  an  Advisory  Representative,  who  has  access  to  information
     concerning  recommendations  made to a Fund or  client  with  regard to the
     purchase or sale of a security.

ADVISORY  REPRESENTATIVE  - Any officer or director of Franklin  Resources;  any
     employee   who  makes  any   recommendation,   who   participates   in  the
     determination of which  recommendation shall be made, or whose functions or
     duties relate to the determination of which  recommendation  shall be made;
     any  employee  who,  in  connection  with his or her  duties,  obtains  any
     information  concerning which securities are being recommended prior to the
     effective  dissemination  of  such  recommendations  or of the  information
     concerning  such  recommendations;  and any of the  following  persons  who
     obtain  information  concerning  securities  recommendations  being made by
     Franklin   Resources   prior  to  the  effective   dissemination   of  such
     recommendations or of the information concerning such recommendations:  (i)
     any  person in a  control  relationship  to  Franklin  Resources,  (ii) any
     affiliated  person of such  controlling  person,  and (iii) any  affiliated
     person of such affiliated person.

AFFILIATED PERSON - same meaning as Section  2(a)(3) of the  Investment  Company
     Act of 1940.  An  "affiliated  person" of an  investment  company  includes
     directors, officers, employees, and the investment adviser. In addition, it
     includes  any person  owning 5% of the  company's  voting  securities,  any
     person  in  which  the  investment  company  owns 5% or more of the  voting
     securities,  and any person directly or indirectly controlling,  controlled
     by, or under common control with the company.

APPROPRIATE ANALYST - With respect to any access person,  any securities analyst
     or portfolio manager making investment  recommendations  or investing funds
     on behalf of an  Associated  Client and who may be  reasonably  expected to
     recommend or consider the purchase or sale of a security.

ASSOCIATED  CLIENT  - A Fund  or  client  whose  trading  information  would  be
     available  to the access  person  during  the course of his or her  regular
     functions or duties.

BENEFICIAL  OWNERSHIP - Has the same  meaning as in Rule  16a-1(a)(2)  under the
     1934 Act. Generally,  a person has a beneficial  ownership in a security if
     he or she,  directly  or  indirectly,  through any  contract,  arrangement,
     understanding,  relationship  or  otherwise,  has or  shares  a  direct  or
     indirect  pecuniary  interest in the security.  There is a presumption of a
     pecuniary interest in a security held or acquired by a member of a person's
     immediate family sharing the same household.

FUNDS - Investment companies in the Franklin Templeton Group of Funds.

HELD OR TO BE  ACQUIRED - A security is "held or to be  acquired"  if within the
     most recent 15 days it (i) is or has been held by a Fund,  or (ii) is being
     or has been considered by a Fund or its investment  adviser for purchase by
     the Fund.

PORTFOLIO  PERSON - Any  employee  of the  Franklin  Templeton  Group,  who,  in
     connection  with  his  or  her  regular  functions  or  duties,   makes  or
     participates  in the  decision  to purchase or sell a security by a Fund in
     the  Franklin  Templeton  Group,  or  any  other  client  or if  his or her
     functions relate to the making of any recommendations about those purchases
     or sales. Portfolio Persons include portfolio managers,  research analysts,
     traders,  persons  serving in  equivalent  capacities  (such as  Management
     Trainees),  persons  supervising the activities of Portfolio  Persons,  and
     anyone else designated by the Director of Compliance

PROPRIETARY ACCOUNTS - Any corporate account or other account including, but not
     limited  to, a limited  partnership,  a  corporate  hedge  fund,  a limited
     liability company or any other pooled investment  vehicle in which Franklin
     Resources  or its  affiliates,  owns 25 percent or more of the  outstanding
     capital  or is  entitled  to 25% or more of the  profits  or  losses in the
     account  (excluding  any asset based  investment  management  fees based on
     average periodic net assets in accounts).

SECURITY - Any stock,  note, bond,  evidence of  indebtedness,  participation or
     interest  in any  profit-sharing  plan or limited  or general  partnership,
     investment  contract,  certificate  of deposit for a  security,  fractional
     undivided  interest in oil or gas or other mineral  rights,  any put, call,
     straddle,  option, or privilege on any security (including a certificate of
     deposit),  guarantee  of, or warrant or right to subscribe  for or purchase
     any of the  foregoing,  and in general any interest or instrument  commonly
     known as a  security,  except  commodity  futures,  currency  and  currency
     forwards. For the purpose of this Code, "security" does not include:

     (1)  Direct obligations of the Government of the United States;

     (2)  Bankers' acceptances,  bank certificates of deposit,  commercial paper
          and high quality  short-term debt  instruments,  including  repurchase
          agreements; and

     (3)  Shares issued by open-end funds.

SEE  Section  III of  Appendix A for a summary  of  different  requirements  for
different types of securities.

III.  SECURITIES EXEMPT FROM THE PROHIBITED , REPORTING, AND PRE-CLEARANCE PROVISIONS

      A.  PROHIBITED TRANSACTIONS

      Securities that are EXEMPT from the prohibited  transaction  provisions of
Section 3.4 include:

      (1)  securities that are direct obligations of the U.S.  Government,  such
           as  Treasury  bills,  notes and  bonds,  and U.S.  Savings  Bonds and
           derivatives thereof;

      (2)  high quality  short-term  instruments  ("money  market  instruments")
           including but not limited to (i) bankers' acceptances, (ii) U.S. bank
           certificates of deposit;  (iii) commercial paper; and (iv) repurchase
           agreements;

      (3)  shares of registered open-end investment companies;

      (4)  commodity  futures,  currencies,  currency  forwards and  derivatives
           thereof;

      (5)  securities that are prohibited  investments for all Funds and clients
           advised by the entity employing the access person; and

      (6)  transactions in securities issued or guaranteed by the governments or
           their agencies or  instrumentalities  of Canada,  the United Kingdom,
           France,  Germany,  Switzerland,   Italy  and  Japan  and  derivatives
           thereof.

      B.  REPORTING AND PRECLEARANCE

      Securities that are EXEMPT from both the reporting requirements of Section
5 and preclearance requirements of Section 6 of the Code include:

      (1)  securities that are direct obligations of the U.S.  Government,  such
           as  Treasury  bills,  notes and  bonds,  and U.S.  Savings  Bonds and
           derivatives thereof;

      (2)  high quality  short-term  instruments  ("money  market  instruments")
           including but not limited to (i) bankers' acceptances, (ii) U.S. bank
           certificates of deposit;  (iii) commercial paper; and (iv) repurchase
           agreements;

      (3)  shares of registered open-end investment companies; and

      (4)  commodity  futures,  currencies,  currency  forwards and  derivatives
           thereof.

 IV.  LEGAL REQUIREMENT

      Rule 17j-1 under the Investment  Company Act of 1940 ("1940 Act") makes it
unlawful for any affiliated person of the Franklin Templeton Group in connection
with the  purchase  or sale of a security,  including  any option to purchase or
sell, and any security  convertible into or exchangeable  for, any security that
is "held or to be acquired" by a Fund in the Franklin Templeton Group:

      A.  To employ any device, scheme or artifice to defraud a Fund;

      B.  To make to a Fund any untrue  statement of a material  fact or omit to
          state  to a Fund a  material  fact  necessary  in  order  to make  the
          statements  made, in light of the  circumstances  under which they are
          made, not misleading;

      C.  To engage in any act,  practice,  or course of business which operates
          or would operate as a fraud or deceit upon a Fund; or

      D.  To engage in any manipulative practice with respect to a Fund.

      A security is "held or to be  acquired"  if within the most recent 15 days
it (i) is or has been held by a Fund, or (ii) is being or has been considered by
a Fund or its investment adviser for purchase by the Fund. .

                         APPENDIX B: FORMS AND SCHEDULES

                               ACKNOWLEDGMENT FORM
             CODE OF ETHICS AND POLICY STATEMENT ON INSIDER TRADING


To:  DIRECTOR OF COMPLIANCE, LEGAL COMPLIANCE DEPARTMENT


I hereby acknowledge receipt of a copy of the Franklin Templeton Group's CODE OF
ETHICS AND POLICY STATEMENT ON INSIDER TRADING,  AMENDED AND RESTATED,  DECEMBER
2001, which I have read and understand.  I will comply fully with all provisions
of the Code and the Insider Trading Policy to the extent they apply to me during
the period of my employment.  Additionally, I authorize any broker-dealer,  bank
or investment adviser with whom I have securities accounts and accounts in which
I have beneficial ownership,  to provide brokerage  confirmations and statements
as required for compliance  with the Code. I further  understand and acknowledge
that any violation of the Code or Insider Trading Policy,  including engaging in
a prohibited  transaction  or failure to file reports as required (see Schedules
B,  C,  D,  E, F and  G),  may  subject  me to  disciplinary  action,  including
termination of employment.

================================================================================
SIGNATURE:
- --------------------------------------------------------------------------------
PRINT NAME:
- --------------------------------------------------------------------------------
TITLE:
- --------------------------------------------------------------------------------
DEPARTMENT:
- --------------------------------------------------------------------------------
LOCATION:
- --------------------------------------------------------------------------------
DATE ACKNOWLEDGMENT WAS SIGNED:
================================================================================


     RETURN TO: LEGAL COMPLIANCE DEPARTMENT, ONE FRANKLIN PARKWAY, SAN MATEO

SCHEDULE A: LEGAL AND COMPLIANCE  OFFICERS AND PRECLEARANCE DESK TELEPHONE & FAX
NUMBERS(19)

LEGAL OFFICER
- -------------
MURRAY SIMPSON
EXECUTIVE VICE PRESIDENT & GENERAL COUNSEL
FRANKLIN TEMPLETON INVESTMENTS
ONE FRANKLIN PARKWAY
SAN MATEO, CA 94403-1906
(650) 525 -7331

COMPLIANCE OFFICERS
- -------------------

================================================================================
DIRECTOR, GLOBAL COMPLIANCE          PRECLEARANCE OFFICERS
James M. Davis                       Stephanie Harwood, Supervisor
Franklin Templeton Investments       Lisa Del Carlo
One Franklin Parkway                 Darlene Nisby
San Mateo, CA 94403-1906             Legal Compliance Department
(650) 312-2832                       Franklin Templeton Investments
                                     One Franklin Parkway
                                     San Mateo, CA 94403-1906 (650)
                                     312-3693 (telephone) (650)
                                     312-5646 (facsimile)
                                     Preclear, Legal (internal e-mail address)
                                     Lpreclear@frk.com (external e-mail address)
================================================================================


- ----------

19  As of August 2001

SCHEDULE B: SECURITIES TRANSACTION REPORT

This report of  personal  securities  transactions  NOT  reported  by  duplicate
confirmations  and brokerage  statements  pursuant to Section 5.3 of the Code is
required  pursuant to Rule  204-2(a) of the  Investment  Advisers Act of 1940 or
Rule  17j-1(c)  of the  Investment  Company  Act of  1940.  The  report  must be
completed and submitted to the  Compliance  Department no later than 10 calendar
days after the end of the calendar quarter.  Refer to Section 5.3 of the Code of
Ethics for further instructions.

=======================================================================================
     |         |                  |Type of |           |     |       |
     |         |     Security     |Security|           |     |       |
     |         |   Description,   |(Stock, |           |     |       |
     |         |including interest| Bond,  |Quantity or|     |Broker-|Date Preclearance
Trade|Buy, Sell|rate and maturity |Option, | Principal |     |Dealer |  obtained from
Date |or Other | (if appropriate) | etc.)  |  Amount   |Price|or Bank|Compliance Dept.
- -----|---------|------------------|--------|-----------|-----|-------|-----------------
     |         |                  |        |           |     |       |
- -----|---------|------------------|--------|-----------|-----|-------|-----------------
     |         |                  |        |           |     |       |
- -----|---------|------------------|--------|-----------|-----|-------|-----------------
     |         |                  |        |           |     |       |
- -----|---------|------------------|--------|-----------|-----|-------|-----------------
     |         |                  |        |           |     |       |
- -----|---------|------------------|--------|-----------|-----|-------|-----------------
     |         |                  |        |           |     |       |
- -----|---------|------------------|--------|-----------|-----|-------|-----------------
     |         |                  |        |           |     |       |
- -----|---------|------------------|--------|-----------|-----|-------|-----------------
     |         |                  |        |           |     |       |
- -----|---------|------------------|--------|-----------|-----|-------|-----------------
     |         |                  |        |           |     |       |
=======================================================================================

THE REPORT OR  RECORDING OF ANY  TRANSACTION  ABOVE SHALL NOT BE CONSTRUED AS AN
ADMISSION THAT I HAVE ANY DIRECT OR INDIRECT OWNERSHIP IN THE SECURITIES.


- --------------------------------------------------------------------------------
(PRINT NAME)            (SIGNATURE)            (DATE)           (QUARTER ENDING)


RETURN TO: LEGAL COMPLIANCE DEPARTMENT, FRANKLIN TEMPLETON INVESTMENTS
ONE FRANKLIN PARKWAY, SAN MATEO, CA 94403-1906

SCHEDULE C: INITIAL,  ANNUAL & UPDATED  DISCLOSURE OF ACCESS PERSONS  SECURITIES
HOLDINGS

This report shall set forth the security name or description  and security class
of each  security  holding  in which  you have a direct or  indirect  beneficial
interest,  including holdings by a spouse, minor children, trusts,  foundations,
and any account for which  trading  authority has been  delegated to you,  other
than  authority  to trade  for a Fund in or a client of the  Franklin  Templeton
Group..  In lieu of listing each security position below, you may instead attach
copies of brokerage  statements,  sign below and return Schedule C and brokerage
statements  to the Legal  Compliance  Department  within  10 days if an  initial
report or by January  30th of each year if an annual  report.  Refer to Sections
5.2.A and 5.4.A of the Code for additional filing instructions.

================================================================================
Security Description,|                |           |             |
 including interest  |Type of Security|Quantity or|             |
  rate and maturity  | (Stock, Bond,  | Principal |Broker-Dealer|
  (if appropriate)   | Option, etc.)  |  Amount   |   or Bank   |Account Number
- ---------------------|----------------|-----------|-------------|---------------
                     |                |           |             |
- ---------------------|----------------|-----------|-------------|---------------
                     |                |           |             |
- ---------------------|----------------|-----------|-------------|---------------
                     |                |           |             |
- ---------------------|----------------|-----------|-------------|---------------
                     |                |           |             |
- ---------------------|----------------|-----------|-------------|---------------
                     |                |           |             |
- ---------------------|----------------|-----------|-------------|---------------
                     |                |           |             |
- ---------------------|----------------|-----------|-------------|---------------
                     |                |           |             |
================================================================================

|_|  I  DID  NOT  HAVE  ANY   PERSONAL   SECURITIES   HOLDINGS  FOR  YEAR  ENDED
     _____________


|_|  I HAVE ATTACHED  STATEMENTS  CONTAINING ALL MY PERSONAL SECURITIES HOLDINGS
     FOR THE YEAR ENDED ______

TO THE BEST OF MY  KNOWLEDGE  I HAVE  DISCLOSED  ALL OF MY  SECURITIES  ACCOUNTS
AND/OR  INVESTMENTS  IN WHICH I HAVE A DIRECT OR INDIRECT  BENEFICIAL  INTEREST,
INCLUDING SECURITY ACCOUNTS OF A SPOUSE,  MINOR CHILDREN,  TRUSTS,  FOUNDATIONS,
AND ANY ACCOUNT FOR WHICH TRADING  AUTHORITY HAS BEEN DELEGATED AN  UNAFFILIATED
PARTY.


- --------------------------------------------------------------------------------
PRINT NAME                SIGNATURE                DATE               YEAR ENDED


*Securities  that are EXEMPT  from being  reported  on  Schedule C include:  (i)
 securities that are direct obligations of the U.S. Government, such as Treasury
 bills,  notes and bonds, and U.S. Savings Bonds and derivatives  thereof;  (ii)
 high quality short-term instruments ("money market instruments")  including but
 not  limited to  bankers'  acceptances,  U.S.  bank  certificates  of  deposit;
 commercial  paper;  and  repurchase  agreements;  (iii)  shares  of  registered
 open-end investment companies; and (iv) commodity futures, currencies, currency
 forwards and derivatives thereof.

SCHEDULE D: NOTIFICATION OF SECURITIES ACCOUNT OPENING

DATE:  ___________________________

TO:    Preclearance Desk
       Legal Compliance Department
       One Franklin Parkway
       San Mateo, CA 94403-1906
       (650) 312-3693
       FAX:  (650) 312-5646

FROM:  NAME:        ___________________________________
       DEPARTMENT:  ___________________________________
       LOCATION:    ___________________________________
       EXTENSION:   ___________________________________

       ARE YOU A REG. REPRESENTATIVE?     YES |_|     NO |_|
       ARE YOU AN ACCESS PERSON?          YES |_|     NO |_|

This is to advise you that I will be opening or have opened a securities account
with the following firm:

                PLEASE FILL OUT COMPLETELY TO EXPEDITE PROCESSING

NAME ON ACCOUNT:  ______________________________________________________________
                  (If other  than  employee,  please  state  relationship  i.e.,
                  spouse, son, daughter, trust, etc.)

ACCT # OR SSN #:  ______________________________________________________________

NAME OF FIRM:     ______________________________________________________________

ATTN:             ______________________________________________________________

ADDRESS OF FIRM:  ______________________________________________________________

CITY/STATE/ZIP:   ______________________________________________________________

*All Franklin registered  representatives and Access Persons, PRIOR TO OPENING A
 BROKERAGE ACCOUNT OR PLACING AN INITIAL ORDER, are required to notify the Legal
 Compliance Department and the executing broker-dealer in writing. This includes
 accounts in which the  registered  representative  or access person has or will
 have a financial interest (e.g., a spouse's account) or discretionary authority
 (e.g., a trust account for a minor child).

Upon receipt of the  NOTIFICATION OF SECURITIES  ACCOUNT OPENING form, the Legal
Compliance  Department  will  contact  the  broker-dealer  identified  above and
request that it receive duplicate confirmations and statements of your brokerage
account.

SCHEDULE E: NOTIFICATION OF DIRECT OR INDIRECT BENEFICIAL INTEREST

If you have any  beneficial  ownership  in a security  and you  recommend to the
Appropriate  Analyst that the security be considered  for purchase or sale by an
Associated  Client,  or if you carry out a purchase or sale of that security for
an Associated Client,  you must disclose your beneficial  ownership to the Legal
Compliance  Department and the Appropriate  Analyst in writing on Schedule E (or
an equivalent form containing similar  information) before the purchase or sale,
or before or simultaneously with the recommendation.

=========================================================================================
           |          |        |            |Date and Method|  Primary  |        |
           |Ownership |        | Method of  | Learned that  | Portfolio |        |Date of
           |   Type   |        |Acquisition |Security Under |Manager or |Name of |Verbal
 Security  |(Direct or|  Year  |(Purch/Gift/| Consideration |Appropriate| Person |Notifi-
Description|Indirect) |Acquired|   Other)   |   by Funds    |  Analyst  |Notified|cation
- -----------|----------|--------|------------|---------------|-----------|--------|-------
           |          |        |            |               |           |        |
- -----------|----------|--------|------------|---------------|-----------|--------|-------
           |          |        |            |               |           |        |
- -----------|----------|--------|------------|---------------|-----------|--------|-------
           |          |        |            |               |           |        |
=========================================================================================


- --------------------------------------------------------------------------------
(PRINT NAME)                         (SIGNATURE)                          (DATE)


RETURN TO: LEGAL  COMPLIANCE  DEPARTMENT,  FRANKLIN  TEMPLETON  INVESTMENTS  ONE
FRANKLIN PARKWAY, SAN MATEO, CA 94403-1906

SCHEDULE F: INITIAL, ANNUAL & UPDATED DISCLOSURE OF SECURITIES ACCOUNTS

This report shall set forth the name and description of each securities  account
in which you have a direct or indirect beneficial interest, including securities
accounts of a spouse, minor children, trusts,  foundations,  and any account for
which trading authority has been delegated to you, other than authority to trade
for a Fund in, or a client of, the Franklin  Templeton Group. In lieu of listing
each  securities  account below,  you may instead attach copies of the brokerage
statements,  sign below and return  Schedule F and  brokerage  statements to the
Compliance Department.

===================================================================================
                   |                  |ADDRESS OF BROKERAGE|       |
                   |                  |BROKERAGE FIRM, BANK|       |
 NAME(S) ON ACCOUNT|NAME OF BROKERAGE | OR INVEST. ADVISER |       |NAME OF ACCOUNT
(REGISTRATION SHOWN|  FIRM, BANK OR   |(STREET, CITY, STATE|ACCOUNT|  EXECUTIVE/
   ON STATEMENT)   |INVESTMENT ADVISER|   AND CIP CODE)    |NUMBER |REPRESENTATIVE
- -------------------|------------------|--------------------|-------|---------------
                   |                  |                    |       |
- -------------------|------------------|--------------------|-------|---------------
                   |                  |                    |       |
- -------------------|------------------|--------------------|-------|---------------
                   |                  |                    |       |
- -------------------|------------------|--------------------|-------|---------------
                   |                  |                    |       |
===================================================================================

TO THE BEST OF MY KNOWLEDGE I HAVE  DISCLOSED ALL OF MY  SECURITIES  ACCOUNTS IN
WHICH I HAVE A  DIRECT  OR  INDIRECT  BENEFICIAL  INTEREST,  INCLUDING  SECURITY
ACCOUNTS OF A SPOUSE, MINOR CHILDREN, TRUSTS,  FOUNDATIONS,  AND ANY ACCOUNT FOR
WHICH TRADING AUTHORITY HAS BEEN DELEGATED TO ME.


- --------------------------------------------------------------------------------
PRINT NAME                SIGNATURE                DATE               YEAR ENDED

RETURN TO: LEGAL  COMPLIANCE  DEPARTMENT,  FRANKLIN  TEMPLETON  INVESTMENTS  ONE
FRANKLIN PARKWAY, SAN MATEO, CA 94403-1906

SCHEDULE G: INITIAL AND ANNUAL CERTIFICATION OF DISCRETIONARY AUTHORITY

This report shall set forth the account name or  description in which you have a
direct or indirect beneficial  interest,  including holdings by a spouse,  minor
children,  trusts,  foundations,  and as to  which  trading  authority  has been
delegated  by  you  to  an  unaffiliated  registered  broker-dealer,  registered
investment  adviser,  or other investment  manager acting in a similar fiduciary
capacity, who exercises sole investment discretion.

===================================================================================
                     |                     |                       |
                     |  NAME/DESCRIPTION   |                       |
                     | OF BROKERAGE FIRM,  |   TYPE OF OWNERSHIP   |
 NAME(S) AS SHOWN ON |  BANK, INVESTMENT   | DIRECT OWNERSHIP (DO) |ACCOUNT NUMBER
ACCOUNT OR INVESTMENT|ADVISER OR INVESTMENT|INDIRECT OWNERSHIP (IO)|(IF APPLICABLE)
- ---------------------|---------------------|-----------------------|---------------
                     |                     |                       |
- ---------------------|---------------------|-----------------------|---------------
                     |                     |                       |
- ---------------------|---------------------|-----------------------|---------------
                     |                     |                       |
- ---------------------|---------------------|-----------------------|---------------
                     |                     |                       |
===================================================================================

TO THE BEST OF MY  KNOWLEDGE  I HAVE  DISCLOSED  ALL OF MY  SECURITIES  ACCOUNTS
AND/OR  INVESTMENTS  IN WHICH I HAVE A DIRECT OR INDIRECT  BENEFICIAL  INTEREST,
INCLUDING SECURITY ACCOUNTS OF A SPOUSE,  MINOR CHILDREN,  TRUSTS,  FOUNDATIONS,
AND ANY ACCOUNT FOR WHICH TRADING  AUTHORITY HAS BEEN DELEGATED AN  UNAFFILIATED
PARTY. FURTHER, I CERTIFY THAT I DO NOT HAVE ANY DIRECT OR INDIRECT INFLUENCE OR
CONTROL OVER THE ACCOUNTS LISTED ABOVE.


- --------------------------------------------------------------------------------
PRINT NAME                SIGNATURE                DATE               YEAR ENDED


RETURN TO: LEGAL  COMPLIANCE  DEPARTMENT,  FRANKLIN  TEMPLETON  INVESTMENTS  ONE
FRANKLIN PARKWAY, SAN MATEO, CA 94403-190

SCHEDULE  H:  CHECKLIST  FOR  PARTNERSHIPS  AND  SECURITIES  ISSUED  IN  PRIVATE
PLACEMENTS

GENERAL INSTRUCTIONS:  In considering requests by Access Persons for approval of
limited  partnerships and other private placement securities  transactions,  the
Director of  Compliance  shall  consult  with an  executive  officer of Franklin
Resources, Inc. In deciding whether to approve the transaction,  the Director of
Compliance  and the  executive  officer  shall take into  account,  among  other
factors,  whether the  investment  opportunity  should be reserved for a Fund or
other client,  and whether the  investment  opportunity  is being offered to the
access  person by  virtue of his or her  position  with the  Franklin  Templeton
Group.  IF  THE  ACCESS  PERSON  RECEIVES  CLEARANCE  FOR  THE  TRANSACTION,  AN
INVESTMENT  IN THE  SAME  ISSUER  MAY ONLY BE MADE  FOR A FUND OR  CLIENT  IF AN
EXECUTIVE  OFFICER OF FRANKLIN  RESOURCES,  INC.,  WHO HAS BEEN  INFORMED OF THE
ACCESS PERSON'S  PRE-EXISTING  INVESTMENT AND WHO HAS NO INTEREST IN THE ISSUER,
APPROVES THE TRANSACTION.

IN ORDER TO PROCESS YOUR REQUEST, PLEASE PROVIDE THE FOLLOWING INFORMATION:

1)  Name/Description of proposed investment:  __________________________________

2)  Proposed Investment Amount:               __________________________________

3)  Please  attach  pages  of  the  offering  memorandum  (or  other  documents)
    summarizing the investment opportunity, including:

    a)  Name of the partnership/hedge fund/issuer;
    b)  Name of the general partner, location & telephone number;
    c)  Summary of the offering; including the total amount the offering/issuer;
    d)  Percentage your investment will represent of the total offering;
    e)  Plan of distribution; and
    f)  Investment objective and strategy,

PLEASE RESPOND TO THE FOLLOWING QUESTIONS:

4)  Was this  investment  opportunity  presented  to you in your  capacity  as a
    portfolio  manager,  trader or research  analyst?  If no, please explain the
    relationship, if any, you have to the issuer or principals of the issuer.

5)  Is this investment opportunity suitable for any fund/client that you advise?
    If yes, why isn't the investment being made on behalf of the fund/client? If
    no, why isn't the investment opportunity suitable for the fund/clients?

6)  Do any of the fund/clients  that you advise presently hold securities of the
    issuer of this proposed  investment  (e.g.,  common stock,  preferred stock,
    corporate debt, loan participations,  partnership  interests,  etc)? If yes,
    please provide the names of the funds/clients and security description.

7)  Do you  presently  have or will  you  have  any  managerial  role  with  the
    company/issuer  as a result of your  investment?  If yes,  please explain in
    detail your responsibilities, including any compensation you will receive.

8)  Will you have any  investment  control or input to the  investment  decision
    making process?

9)  If applicable,  will you receive reports of portfolio holdings? If yes, when
    and how frequently will these be provided?


Reminder:  Personal  securities  transactions  that  do not  generate  brokerage
confirmations must be reported to the Legal Compliance  Department on Schedule B
within 10 calendar days after you are notified.

             __________________________________
                   Name of Access Person


             __________________________________          _______________________
                  Access Person Signature                         Date


Approved by: __________________________________          _______________________
             Chief Investment Officer Signature                   Date



|------------------------------------------------------------------------------|
|                          LEGAL COMPLIANCE USE ONLY                           |
|------------------------------------------------------------------------------|

|------------------------------------------------------------------------------|
|Date Received:  ________________________________________________              |
|                                                                              |
|Date Entered in Lotus Notes:  __________________________________              |
|                                                                              |
|Date Forwarded FRI Executive Officer:  _________________________              |
|                                                                              |
|Precleared:  [_]   [_]     (attach E-Mail) Date:  ______________              |
|                                                                              |
|Date Entered in APII:  ___________________                                    |
|                                                                              |
|------------------------------------------------------------------------------|

APPENDIX C:  INVESTMENT  ADVISOR AND  BROKER-DEALER  AND OTHER  SUBSIDIARIES  OF
FRANKLIN RESOURCES, INC. - FEBRUARY 2001

==========================================================================================
                                     |      |Franklin Templeton                 |
Franklin Advisers, Inc.              |IA    |Investments Corp. (Canada)         |IA
- -------------------------------------|------|-----------------------------------|---------
                                     |      |Templeton/Franklin                 |
Franklin Advisory Services, LLC      |IA    |Investment Services, Inc.          |IA/BD
- -------------------------------------|------|-----------------------------------|---------
Franklin Investment                  |      |                                   |
Advisory Services, Inc.              |IA    |Templeton Investment Counsel, LLC  |IA
- -------------------------------------|------|-----------------------------------|---------
Franklin Private Client Group, Inc.  |IA    |Templeton Asset Management, Ltd.   |IA/FIA
- -------------------------------------|------|-----------------------------------|---------
                                     |      |Franklin Templeton                 |
Franklin Mutual Advisers, LLC        |IA    |Investments Japan Ltd.             |FIA
- -------------------------------------|------|-----------------------------------|---------
                                     |      |Closed Joint-Stock Company         |
Franklin Properties, Inc.            |REA   |Templeton (Russia)                 |FIA
- -------------------------------------|------|-----------------------------------|---------
                                     |      |Templeton Unit Trust               |
Franklin/Templeton Distributors, Inc.|BD    |Management Ltd. (UK)               |FBD
- -------------------------------------|------|-----------------------------------|---------
Franklin Asset Management            |      |                                   |
(Proprietary) Ltd.                   |IA    |Orion Fund Management Ltd.         |FIA
- -------------------------------------|------|-----------------------------------|---------
                                     |      |Templeton Global                   |
Templeton (Switzerland), Ltd.        |FBD   |Advisors Ltd. (Bahamas)            |IA
- -------------------------------------|------|-----------------------------------|---------
Franklin Templeton                   |      |Templeton Asset Management         |
Investments (Asia) Ltd.              |FBD   |(India) Pvt. Ltd.                  |FIA/FBD
- -------------------------------------|------|-----------------------------------|---------
Franklin Templeton                   |      |                                   |
Investments Corp. (UK)               |IA/FIA|Templeton Italia SIM S.p.A. (Italy)|FBD
- -------------------------------------|------|-----------------------------------|---------
Franklin Templeton International     |      |Franklin Templeton Investment      |
Services S.A. (Luxembourg)           |FBD   |Services GmbH (Germany)            |FBD
- -------------------------------------|------|-----------------------------------|---------
Franklin Templeton Investments       |      |                                   |
(Australia) Limited                  |FIA   |Templeton Funds Annuity Company    |INS
- -------------------------------------|------|-----------------------------------|---------
Franklin/Templeton                   |      |                                   |
Investor Services, LLC               |TA    |FTTrust Company                    |Trust Co.
- -------------------------------------|------|-----------------------------------|---------
Franklin Templeton                   |      |                                   |
Alternative Strategies, LLC          |IA    |Franklin Templeton Services, LLC   |BM
==========================================================================================

Codes:
IA:     US registered investment adviser
BD:     US registered broker-dealer
FIA:    Foreign equivalent investment adviser
FBD:    Foreign equivalent broker-dealer
TA:     US registered transfer agent
BM:     Business manager to the funds
REA:    Real estate adviser
INS:    Insurance company
Trust:  Trust company

THE FRANKLIN TEMPLETON GROUP POLICY STATEMENT ON INSIDER TRADING

A.  LEGAL REQUIREMENT

    Pursuant to the Insider  Trading and  Securities  Fraud  Enforcement  Act of
1988,  it is the policy of the Franklin  Templeton  Group to forbid any officer,
director,  employee,  consultant acting in a similar  capacity,  or other person
associated with the Franklin Templeton Group from trading,  either personally or
on behalf of clients, including all client assets managed by the entities in the
Franklin  Templeton Group, on material  non-public  information or communicating
material non-public  information to others in violation of the law. This conduct
is frequently  referred to as "insider  trading." The Franklin Templeton Group's
Policy Statement on Insider Trading applies to every officer, director, employee
or other  person  associated  with the Franklin  Templeton  Group and extends to
activities  within and outside their duties with the Franklin  Templeton  Group.
Every officer, director and employee must read and retain this policy statement.
Any  questions  regarding the Franklin  Templeton  Group's  Policy  Statement on
Insider  Trading or the  Compliance  Procedures  should be referred to the Legal
Department.

    The term "insider  trading" is not defined in the federal  securities  laws,
but generally is used to refer to the use of material non-public  information to
trade in securities (whether or not one is an "insider") or to communications of
material non-public information to others.

    While the law  concerning  insider  trading is not static,  it is  generally
understood that the law prohibits:

    (1)  trading by an  insider,  while in  possession  of  material  non-public
         information; or

    (2)  trading by a  non-insider,  while in possession of material  non-public
         information,   where  the  information  either  was  disclosed  to  the
         non-insider in violation of an insider's  duty to keep it  confidential
         or was misappropriated; or

    (3)  communicating material non-public information to others.

    The elements of insider trading and the penalties for such unlawful  conduct
are discussed  below.  If, after reviewing this policy  statement,  you have any
questions, you should consult the Legal Department.

B.  WHO IS AN INSIDER?

    The concept of  "insider"  is broad.  It includes  officers,  directors  and
employees of a company. In addition, a person can be a "temporary insider" if he
or she  enters  into a special  confidential  relationship  in the  conduct of a
company's affairs and as a result is given access to information  solely for the
company's purposes.  A temporary insider can include,  among others, a company's
outside  attorneys,  accountants,  consultants,  bank lending officers,  and the
employees of such organizations. In addition, an investment adviser may become a
temporary  insider  of a  company  it  advises  or for which it  performs  other
services.  According  to the U.S.  Supreme  Court,  the company  must expect the
outsider  to keep the  disclosed  non-public  information  confidential  and the
relationship  must at  least  imply  such a duty  before  the  outsider  will be
considered an insider.

C.  WHAT IS MATERIAL INFORMATION?

    Trading  on inside  information  is not a basis  for  liability  unless  the
information  is  material.   "Material  information"  generally  is  defined  as
information  for  which  there is a  substantial  likelihood  that a  reasonable
investor would consider it important in making his or her investment  decisions,
or information  that is reasonably  certain to have a substantial  effect on the
price of the company's  securities.  Information  that  officers,  directors and
employees  should consider  material  includes,  but is not limited to: dividend
changes, earnings estimates,  changes in previously released earnings estimates,
significant  merger or acquisition  proposals or agreements,  major  litigation,
liquidation problems, and extraordinary management developments.

    Material  information does not have to relate to a company's  business.  For
example, in CARPENTER V. U.S., 108 U.S. 316 (1987), the Supreme Court considered
as material certain  information  about the contents of a forthcoming  newspaper
column that was expected to affect the market price of a security. In that case,
a WALL STREET  JOURNAL  reporter was found  criminally  liable for disclosing to
others the dates that  reports on  various  companies  would  appear in the WALL
STREET JOURNAL and whether those reports would be favorable or not.

D.  WHAT IS NON-PUBLIC INFORMATION?

    Information is non-public until it has been effectively  communicated to the
marketplace. One must be able to point to some fact to show that the information
is generally public.  For example,  information found in a report filed with the
Securities and Exchange Commission  ("SEC"), or appearing in Dow Jones,  Reuters
Economic  Services,  THE WALL STREET  JOURNAL or other  publications  of general
circulation would be considered public.

E.  BASIS FOR LIABILITY

    1.  FIDUCIARY DUTY THEORY

    In 1980,  the Supreme  Court found that there is no general duty to disclose
before trading on material non-public  information,  but that such a duty arises
only  where  there  is a  fiduciary  relationship.  That  is,  there  must  be a
relationship  between the parties to the  transaction  such that one party has a
right to expect that the other party will not disclose  any material  non-public
information or refrain from trading. CHIARELLA V. U.S., 445 U.S. 22 (1980).

    In DIRKS V. SEC, 463 U.S.  646 (1983),  the Supreme  Court stated  alternate
theories under which  non-insiders can acquire the fiduciary duties of insiders.
They can enter into a confidential  relationship  with the company through which
they gain  information  (E.G.,  attorneys,  accountants),  or they can acquire a
fiduciary duty to the company's  shareholders  as "tippees" if they are aware or
should have been aware that they have been given confidential  information by an
insider who has violated his fiduciary duty to the company's shareholders.

    However,  in the  "tippee"  situation,  a breach of duty  occurs only if the
insider personally benefits,  directly or indirectly,  from the disclosure.  The
benefit does not have to be pecuniary but can be a gift, a reputational  benefit
that will  translate  into future  earnings,  or even evidence of a relationship
that suggests a quid pro quo.

    2.  MISAPPROPRIATION THEORY

    Another  basis  for  insider  trading  liability  is the  "misappropriation"
theory,  under which  liability is  established  when trading occurs on material
non-public information that was stolen or misappropriated from any other person.
In U.S. V. CARPENTER, SUPRA, the Court found, in 1987, a columnist defrauded THE
WALL STREET JOURNAL when he stole  information  from the WALL STREET JOURNAL and
used it for  trading  in the  securities  markets.  It should be noted  that the
misappropriation  theory  can be used to  reach a  variety  of  individuals  not
previously thought to be encompassed under the fiduciary duty theory.

F.  PENALTIES FOR INSIDER TRADING

    Penalties for trading on or communicating  material  non-public  information
are severe,  both for  individuals  involved in such unlawful  conduct and their
employers. A person can be subject to some or all of the penalties below even if
he or she does not personally benefit from the violation. Penalties include:

    o  civil injunctions;
    o  treble damages;
    o  disgorgement of profits;
    o  jail sentences;
    o  fines for the person who committed the violation of up to three times the
       profit  gained  or  loss  avoided,  whether  or not the  person  actually
       benefited; and
    o  fines for the employer or other  controlling  person of up to the greater
       of  $1,000,000  or three  times the amount of the  profit  gained or loss
       avoided.

    In addition,  any  violation of this policy  statement can result in serious
sanctions by the Franklin  Templeton  Group,  including  dismissal of any person
involved.

G.  INSIDER TRADING PROCEDURES

    Each access person, Compliance Officer, the Risk Management Department,  and
the  Legal  Department,  as the case may be,  shall  comply  with the  following
procedures.

    1.  IDENTIFYING INSIDE INFORMATION

    Before  trading for yourself or others,  including  investment  companies or
private accounts managed by the Franklin Templeton Group, in the securities of a
company about which you may have potential inside information,  ask yourself the
following questions:

    o  Is the information material?

    o  Is this information  that an investor would consider  important in making
       his or her investment decisions?

    o  Is this information that would  substantially  affect the market price of
       the securities if generally disclosed?

    o  Is the information non-public?

    o  To whom has this information been provided?

    o  Has the  information  been  effectively  communicated  to the marketplace
       (e.g.,   published  in  REUTERS,   THE  WALL  STREET   JOURNAL  or  other
       publications of general circulation)?

If, after consideration of these questions, you believe that the information may
be  material  and  non-public,  or if  you  have  questions  as to  whether  the
information is material and non-public, you should take the following steps:

      (i)  Report the matter immediately to the designated  Compliance  Officer,
           or if he or she is not available, to the Legal Department.

     (ii)  Do not  purchase  or sell the  securities  on behalf of  yourself  or
           others, including investment companies or private accounts managed by
           the Franklin Templeton Group.

    (iii)  Do not  communicate  the  information  inside or outside the Franklin
           Templeton  Group,  other than to the Compliance  Officer or the Legal
           Department.

     (iv)  The Compliance Officer shall immediately contact the Legal Department
           for advice concerning any possible material, non-public information.

      (v)  After the Legal  Department has reviewed the issue and consulted with
           the Compliance Officer, you will be instructed either to continue the
           prohibitions  against  trading  and  communication  noted in (ii) and
           (iii),   or  you  will  be  allowed  to  trade  and  communicate  the
           information.

     (vi)  In the event the  information in your possession is determined by the
           Legal  Department  or  the  Compliance  Officer  to be  material  and
           non-public,  it may not be communicated to anyone,  including persons
           within the Franklin Templeton Group, except as provided in (i) above.
           In addition,  care should be taken so that the information is secure.
           For example,  files  containing the information  should be sealed and
           access to computer files containing material  non-public  information
           should be restricted to the extent practicable.

    2.  RESTRICTING ACCESS TO OTHER SENSITIVE INFORMATION

    All Franklin  Templeton  Group personnel also are reminded of the need to be
careful to protect from  disclosure  other types of sensitive  information  that
they may obtain or have access to as a result of their employment or association
with the Franklin Templeton Group.

        (i)  GENERAL ACCESS CONTROL PROCEDURES

    The Franklin  Templeton  Group has  established a process by which access to
company files that may contain  sensitive or non-public  information such as the
Bargain  List and the Source of Funds List is carefully  limited.  Since most of
the Franklin  Templeton  Group files which  contain  sensitive  information  are
stored in computers,  personal  identification  numbers,  passwords  and/or code
access numbers are  distributed  to Franklin  Templeton  Group  computer  access
persons  only.  This  activity is  monitored on an ongoing  basis.  In addition,
access to certain  areas  likely to contain  sensitive  information  is normally
restricted by access codes.