-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RSz+oRGrEY9r9AzfHbvY+Z642qhBjYsGNtuHt5kYa9PknpqRUmoogKiju82Us7iQ 6QlSGpaewlzkYkv+ZOWAWg== 0000950124-98-007129.txt : 19981203 0000950124-98-007129.hdr.sgml : 19981203 ACCESSION NUMBER: 0000950124-98-007129 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19980930 FILED AS OF DATE: 19981202 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SECURITY EQUITY FUND CENTRAL INDEX KEY: 0000088525 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 486104426 FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-01136 FILM NUMBER: 98762637 BUSINESS ADDRESS: STREET 1: 700 HARRISON ST CITY: TOPEKA STATE: KS ZIP: 66636 BUSINESS PHONE: 9132953127 MAIL ADDRESS: STREET 1: 700 HARRISON ST CITY: TOPEKA STATE: KS ZIP: 66636 N-30D 1 ANNUAL REPORT EQUITY FUND 9/30/98 1 SECURITY FUNDS =============================================================================== ANNUAL REPORT SEPTEMBER 30, 1998 - Security Growth and Income Fund - Security Equity Fund -Equity Series -Global Series -Asset Allocation Series -Social Awareness Series -Value Series -Small Company Series - Security Ultra Fund SECURITY DISTRIBUTORS, INC. A Member of The Security Benefit Group of Companies 2 PRESIDENT'S COMMENTARY ............................................................................... NOVEMBER 15, 1998 To Our Shareholders: The twelve months ended September 30, 1998 reintroduced an element of reality to the financial markets. The total return of 9.05% from the large-cap Standard & Poor's 500 Stock Index more closely approximates historical rates of return than the unrealistic 20% to 30% gains of the previous three years. Most other equity markets produced negative returns for the year. The small cap and midcap markets were adversely impacted as investors moved to the larger stocks in a search for quality and liquidity, perceiving that the world is still a troubled place. [John Cleland PHOTO] THE EXOGENOUS SHOCKS FINALLY ARRIVE The meltdown in Russia, followed in short order by the collapse of the Long Term Capital Management Fund, proved to be the exogenous shocks to the system that changed the psychological climate in the equity markets dramatically. We do not believe, however, that the current climate of gloom and doom is any more warranted than the excessive euphoria that prevailed a year ago. There are still some strong positive factors at work that should favorably impact the markets once the global climate quiets. The U.S. economy, while clearly slowing its growth rate, remains an enormously powerful engine driven by the consumer. Consumer confidence and disposable income continue to be at high levels because inflationary pressures have largely disappeared and unemployment remains low. We expect further cuts by the Federal Reserve Bank in short term interest rates over the coming months, which should allow long term rates to continue to decline. VOLATILITY WILL REMAIN HIGH, BUT MARKETS WILL FINALLY STABILIZE While we believe market volatility will continue at historically high levels, once global events settle down and the political uncertainty in our nation's capital is resolved investors' psychological attitudes should improve dramatically and the equity markets can resume their upward climb. We continue to encourage the ratcheting down of return expectations to levels closer to their historical norms for holders of equities as we expect markets in coming years to perform closer to those averages. In the following pages our portfolio managers discuss the performance of their respective funds as well as their outlooks for the months ahead. As always, we appreciate your continuing investments in Security products. We invite your questions and comments at any time. Sincerely, /s/ John Cleland - ----------------------- John Cleland, President The Security Funds - ------------------------------------------------------------------------------- 1 3 MANAGER'S COMMENTARY - ------------------------------------------------------------------------------- SECURITY GROWTH AND INCOME FUND NOVEMBER 15, 1998 To Our Shareholders: The fiscal year ended September 30, 1998 was a difficult year overall for the equity markets, and especially so for income oriented stocks in general. A large portion of the price appreciation over the course of the year occurred in the large-cap growth names, while those sectors and companies which traditionally provide the higher dividends that are typical holdings in growth and income portfolios lagged the markets. Our portfolio was no exception to this trend, generating a negative 7.95% total return for the year versus the Standard and Poor's 500 Stock Index return of +9.05%1. The average return for our Lipper peer group was -1.08%. [Michael A. Petersen Portfolio Manager PHOTO] RESTRUCTURING EARLY IN THE FISCAL YEAR We entered the fiscal year with a portfolio invested approximately 90% in equities and 10% in high yield corporate bonds and still maintain that balance. At the beginning of the period the orientation of the stocks was primarily midcap value. Over the last nine months, however, we have shifted more toward the large-cap issues with higher dividend yields that are more typical of growth and income funds. We have also concentrated on lower risk, more defensive names and have diversified well across a broad spectrum of sectors. The percentage of assets invested in the utility and energy sectors, the standard growth and income havens, has been increased. During the first half of calendar year 1998 our moves into more defensive stocks worked against us as the environment at that time favored aggressive growth companies. In the July through September quarter, however, these same stocks helped us outperform our peers as the markets turned negative. An underweighting in the financial sector in this later quarter also was a positive as money center banks and brokerage houses fell 30% to 60% from their summer highs. PRICE SWINGS CREATE BUYING OPPORTUNITIES As a result of the downturn in the stock markets in recent months, a number of industries have accompanied the financial sector in price declines. These include many commodity-oriented companies which suffered as demand for commodities around the world slowed. The prices now appear to have fully discounted a coming recession, and are looking very attractive at current levels. We are now looking in the financial, capital goods, consumer cyclicals, and basic materials sectors for issues which appear to offer excellent investment opportunities at current prices. THE GLOBAL SLOWDOWN WILL BE WITH US AWHILE We expect the global slowdown to continue for several more months. This slowing could continue to put pressure on corporate earnings for the next two quarters. We therefore plan to maintain our current defensive posture until earnings growth appears to be turning positive again. We expect equity total returns in the coming year to once again be closer to historical norms than in the past three years. In this environment a high dividend yield becomes a more important component of total return. We will focus on those companies that exhibit above-average earnings and dividend growth potential. /s/ Michael A. Petersen - ----------------------- Michael A. Petersen Portfolio Manager (1) Performance figures are based on Class A shares and do not reflect deduction of the sales charge. - ------------------------------------------------------------------------------- 2 4 MANAGER'S COMMENTARY (CONTINUED) - ------------------------------------------------------------------------------- SECURITY GROWTH AND INCOME FUND NOVEMBER 15, 1998 - -------------------------------------------------------------PERFORMANCE------- SECURITY GROWTH AND INCOME FUND VS. S&P 500 [GRAPH] $10,000 OVER TEN YEARS This chart assumes a $10,000 investment in Class A shares of Growth and Income Fund on September 30, 1988, and reflects deduction of the 5.75% sales load. On September 30, 1998, the value of your investment in Class A shares of the fund (with dividends reinvested) would have grown to $26,515. By comparison, the same $10,000 investment would have grown to $48,691 based on the S&P's performance. The performance illustrated above is based on the performance of Class A shares. The performance of Class B shares, which were first offered on October 19, 1993, will be greater or less than the performance shown for Class A shares as a result of the different loads and fees associated with an investment in Class B shares. - ------------------------------------------------------------------------------- TOP 5 HOLDINGS** % of Net Assets ---------- SBC Communications, Inc. 1.8% Royal Dutch Petroleum Company ADR 1.8% Schlumberger, Ltd. 1.8% AT&T Corporation 1.8% Philip Morris Companies, Inc. 1.7% **At September 30, 1998 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- AVERAGE ANNUAL RETURNS As of September 30, 1998 1 year 5 years 10 years ------ ------- -------- A Shares (7.95%) 10.73% 10.90% A Shares with sales charge (13.24%) 9.42% 10.24% B Shares (8.95%) 9.84% N/A (10-19-93) (since inception) B Shares with CDSC (13.50%) 9.41% N/A (10-19-93) (since inception) - ------------------------------------------------------------------------------- The performance data above represents past performance which is not predictive of future results. The investment return and principal value of an investment in the fund will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. The figures above do not reflect deduction of the maximum front-end sales charge of 5.75% for Class A shares or contingent deferred sales charge of 5% for Class B shares, as applicable, except where noted. Such figures would be lower if the maximum sales charge were deducted. - ------------------------------------------------------------------------------- 3 5 MANAGER'S COMMENTARY - ------------------------------------------------------------------------------- SECURITY EQUITY FUND - EQUITY SERIES NOVEMBER 15, 1998 To Our Shareholders: The fiscal year ended September 30, 1998 was a rewarding one for shareholders in the Equity Series of Security Equity Fund. The Series returned a positive 7.38% for the twelve months, outpacing the -1.44% average return of its Lipper peer group.1 [Terry Milberger Portfolio Manager PHOTO] A YEAR CONTAINING TWO DISTINCT MARKET CYCLES Two distinct market cycles were apparent over the course of the fiscal year. The first half was strong, with a six-month rise of 17.22% for the Standard and Poor's 500 Stock Index. The subsequent six months, however, produced a decline of 6.97% in the index. Our portfolio performance was helped in the early months by our financial weighting, including such insurance companies as American International Group, Inc. and Lincoln National Corporation. Our large health care weighting also contributed to favorable returns during the period. Such issues as Bristol-Myers Squibb Company and Shering-Plough Corporation did very well during the up-market cycle, but also declined less than the average stock during the down months. Another positive factor in the negative-performance months was our underweighting versus the benchmark S&P Index in money center banks. These institutions suffered as their large international exposure hurt their performance when overseas countries' economies weakened. In general we held a low percentage of issues which were impacted by the difficulties in Japan, Southeast Asia, and Latin America. Our orientation toward companies which derive most of their earnings from domestic operations--companies such as Kroger Company, Safeway, Inc., and various telephone companies--proved to be a strong advantage. We held about 10% of our assets in cash through the latter months of the fiscal year as well, which also lessened the negative impact of weak markets. MORE DIVERSIFICATION DURING PERIODS OF TURMOIL The financial turmoil in Southeast Asia began in the late summer of 1997. Because we expected the ensuing fiscal year to be a period of higher volatility, we diversified the portfolio to include more names and smaller positions than during normal economic conditions. Now as stock markets appear to be bottoming we must reassess our strategy. We believe that the recent declines in the markets have created some buying opportunities. We are examining individual sectors and companies to get a sense of where earnings risks now lie and how to avoid them. As earnings reports for the third calendar quarter are released, we will study them carefully for hints of weakness or strength. OUR PLANS FOR THE BETTER MARKETS THAT LIE AHEAD Historically in periods of financial crisis the markets reach their lows for the cycle. We want to take advantage of the buying opportunities during these cyclical lows because we have learned that stock markets traditionally begin their move upward before all the economic problems are resolved. We are, in fact, trying to take advantage of today's "maximum uncertainty." Although the risk is not completely out of the picture, in keeping with our long-term investment horizon we plan to purchase those stocks we believe are bargains in today's markets and wait for them to prove their worth. We expect that the Federal Reserve under the able leadership of Alan Greenspan will stand ready to help stabilize the markets if conditions call for action. We will seek the rewards that can come from companies with consistent above average earnings growth and high quality balance sheets. /s/ Terry Milberger - ---------------------- Terry Milberger Portfolio Manager (1) Performance figures are based on Class A shares and do not reflect deduction of the sales charge. - ------------------------------------------------------------------------------- 4 6 MANAGER'S COMMENTARY (CONTINUED) - ------------------------------------------------------------------------------- SECURITY EQUITY FUND - EQUITY SERIES NOVEMBER 15, 1998 - -------------------------------------------------------------PERFORMANCE------- SECURITY EQUITY SERIES VS. S&P 500 [GRAPH] $10,000 OVER TEN YEARS This chart assumes a $10,000 investment in Class A shares of Equity Series on September 30, 1988, and reflects deduction of the 5.75% sales load. On September 30, 1998, the value of your investment in Class A shares of the Series (with dividends reinvested) would have grown to $46,953. By comparison, the same $10,000 investment would have grown to $48,691 based on the S&P's performance. The performance illustrated above is based on the performance of Class A shares. The performance of Class B shares, which were first offered on October 19, 1993, will be greater or less than the performance shown for Class A shares as a result of the different loads and fees associated with an investment in Class B shares. - ------------------------------------------------------------------------------- TOP 5 HOLDINGS** % of Net Assets ---------- Microsoft Corporation 2.2% Schering-Plough Corporation 2.2% General Electric Company 1.8% Safeway, Inc. 1.8% Bristol-Myers Squibb Company 1.8% **At September 30, 1998 - ------------------------------------------------------------------------------- AVERAGE ANNUAL RETURNS As of September 30, 1998 1 year 5 years 10 years ------ ------- -------- A Shares 7.38% 18.20% 17.42% A Shares with sales charge 1.25% 16.81% 16.73% B Shares 6.38% 17.00% N/A (10-19-93) (since inception) B Shares with CDSC 1.38% 16.67% N/A (10-19-93) (since inception) - ------------------------------------------------------------------------------- The performance data above represents past performance which is not predictive of future results. The investment return and principal value of an investment in the fund will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. The figures above do not reflect deduction of the maximum front-end sales charge of 5.75% for Class A shares or contingent deferred sales charge of 5% for Class B shares, as applicable, except where noted. Such figures would be lower if the maximum sales charge were deducted. - ------------------------------------------------------------------------------- 5 7 MANAGER'S COMMENTARY - ------------------------------------------------------------------------------- SECURITY EQUITY FUND - GLOBAL SERIES NOVEMBER 15, 1998 Subadvisor - LEXINGTON MANAGEMENT CORPORATION To Our Shareholders: For the fiscal year ended September 30, 1998 the Global Equity Series of Security Equity Fund returned -8.47%.(1) The average global fund fell 7.57% over the same period, according to Lipper Analytical Services, Inc. The Morgan Stanley World Index dropped 1.15% in the year. [Richard Saler Portfolio Manager PHOTO] GLOBAL ECONOMIES HEAD TOWARD RECESSION [Alan Wapnick Portfolio Manager PHOTO] The global economic environment continues to head dangerously toward recession. Although many of the world's economies have been in decline for well over a year, western financial markets have only now begun to take notice. Interest rates continue to fall rapidly. The thirty-year U.S. Treasury bond ended 1997 with a yield of 5.93% and by the end of September this year had fallen to 4.98%. German ten-year bond yields now stand at 3.84%, down from 5.16% just nine months ago. Unfortunately, falling interest rates are not enough to propel stocks higher. Corporate profits are expected to come under increasingly strong negative pressure. The world faces the greatest economic challenge perhaps since the Great Depression. Asia is awash with too much debt and excess capacity in manufacturing and real estate. Making matters worse, much of this debt is U.S. dollar denominated and Asian currencies have collapsed versus the dollar. A large portion of an estimated $1.5 trillion in Asian debt is unlikely to be repaid. Ultimately, western banks and investors to whom this debt is owed may have to write off a portion and convert some debt to equity. Investors have rapidly sought safe havens such as U.S. Treasury bonds and cash equivalents. Equities which provide visible earnings streams even in weak economies will continue to be favored. LOOKING FOR POSITIVE LEGISLATIVE EVENTS IN JAPAN Failure by global leaders to address the world's economic ills could lead to a more severe economic contraction. Japan, a key player, finds its economy in a deep recession with a financial system teetering on collapse. Time is running out on timid government policies: strong action is urgently needed to recapitalize banks. Positive events are likely over the next several months to help counter global doom. Interest rates around the world should continue to move lower. The International Monetary Fund is likely to gain additional funding and provide support to countries in need, such as Brazil. Finally, in our view it is unthinkable that Japan will not get more aggressive in solving its banking problems. A TIME TO BE DEFENSIVE Given this difficult economic outlook, we believe an emphasis on defensive stocks and sectors is appropriate. Value is developing rapidly, however, particularly in many emerging markets which have been decimated. These emerging markets should be the main beneficiaries as global solutions are ultimately implemented. In effect, a transfer of wealth from developed economies to emerging countries will have to take place to cure the global economy. /s/ Richard Saler - ----------------------- Richard Saler Portfolio Manager /s/ Alan Wapnick - ----------------------- Alan Wapnick Portfolio Manager (1) Performance figures are based on Class A shares and do not reflect deduction of the sales charge. Investing in foreign countries may involve risks, such as currency fluctuations and political instability, not associated with investing exclusively in the U.S. - ------------------------------------------------------------------------------- 6 8 MANAGER'S COMMENTARY (CONTINUED) - ------------------------------------------------------------------------------- SECURITY EQUITY FUND - GLOBAL SERIES NOVEMBER 15, 1998 - -------------------------------------------------------------PERFORMANCE------- SECURITY GLOBAL SERIES VS. MORGAN STANLEY CAPITAL INTERNATIONAL WORLD INDEX [GRAPH] This chart assumes a $10,000 investment in Class A shares of Global Series on October1, 1993, and reflects deduction of the 5.75% sales load. On September30, 1998, the value of your investment in ClassA shares of the Series (with dividends reinvested) would have grown to $13,620. By comparison, the same $10,000 investment would have grown to $17,771 based on the MSCI's performance. The performance illustrated above is based on the performance of Class A shares. The performance of Class B shares, which were first offered on October 19, 1993, will be greater or less than the performance shown for Class A shares as a result of the different loads and fees associated with an investment in Class B shares. - ------------------------------------------------------------------------------- TOP 5 HOLDINGS** % of Net Assets ---------- Elan Corporation PLC ADR 2.6% Imax Corporation ADR 2.2% Novartis AG 2.1% Teva Pharmaceutical, Industries Ltd. ADR 2.0% Roche Holdings AG 1.9% **At September 30, 1998 - ------------------------------------------------------------------------------- AVERAGE ANNUAL RETURNS As of September 30, 1998 1 year Since Inception ------ --------------- A Shares (8.47%) 7.62% (10-1-93) A Shares with sales charge (13.75%) 6.35% (10-1-93) B Shares (9.43%) 6.73% (10-19-93) B Shares with CDSC (13.96%) 6.26% (10-19-93) - ------------------------------------------------------------------------------- The performance data above represents past performance which is not predictive of future results. The investment return and principal value of an investment in the fund will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. The figures above do not reflect deduction of the maximum front-end sales charge of 5.75% for Class A shares or contingent deferred sales charge of 5% for Class B shares, as applicable, except where noted. Such figures would be lower if the maximum sales charge were deducted. - ------------------------------------------------------------------------------- 7 9 MANAGER'S COMMENTARY - ------------------------------------------------------------------------------- SECURITY EQUITY FUND - ASSET ALLOCATION SERIES NOVEMBER 15, 1998 [MERIDIAN LOGO] SUBADVISOR: MERIDIAN INVESTMENT MANAGEMENT CORPORATION To Our Shareholders: Recent financial market turmoil has highlighted the importance of a diversified investment strategy. From their highs, domestic stock indices have fallen nearly 20%, the level which defines a bear market. Many international market returns have been much worse. The biggest losses, however, have been sustained by investors in emerging markets and hedge funds. The Asset Allocation Series of Security Equity Fund returned -7.19% in the fiscal year just completed, compared with the average -3.96% of the Lipper peer group of similar funds. (1) The disruption in the advance of world financial markets is an unpleasant reminder that investing is a long term process. [Patrick Boyle Portfolio Manager PHOTO] MARKET SELLOFFS CREATE BUYING OPPORTUNITIES We view the recent price declines as a buying opportunity and believe that emotional overreactions are primarily responsible for the sharp selloff in equity markets. Global worries have focused on economic troubles in Asia, Russia, and Latin America. Domestically, investors have been distracted by the potential impeachment of President Clinton. What started as isolated concern for Japan and emerging markets has transformed into global pessimism. Despite the general health of the U.S. and European economies, these stock markets have experienced sizeable rapid declines. Our quantitative model, which includes earnings, growth, risk, and interest rates, currently indicates that the U.S. stock market and many international markets are extremely undervalued. Our domestic investments have targeted three sectors: technology, consumer cyclicals, and leisure. As investors' concerns about the overall level of the stock market increased, they sold technology stocks. The crisis in Asia has also put downward pressure on these issues. As value investors we realize that often the best buying opportunities are in an atmosphere of fear and uncertainty. This certainly characterizes current investor sentiment toward technology stocks and reinforces our belief in this sector. VOLATILITY IN THE INTERNATIONAL MARKETS International equity markets have been more volatile than the U.S. stock market. European markets led the global rally in early 1998; however, their recent declines have erased most gains. Our decision to sell the Italian shares in late April has thus far proven correct, as that market has fallen more than 30% from its peak. We continue to hold stocks in Germany, Belgium, Denmark, and Japan. Our Japanese position was a drag on the portfolio in 1997 and early 1998; however, during the recent global market volatility Japanese stocks have behaved defensively. We expect that market's next major move will be higher. The U.S. bond market has benefited from the global volatility. Investors fearing a broad bear market have reduced equity holdings and purchased U.S. Treasuries as a safe haven. This, coupled with a cooling domestic economy, has pushed long term bond yields to record lows. STOCK MARKETS LEAD THE ECONOMY The stock market has a long history of leading the economy by approximately six to nine months. When markets rally, they do so in advance of an economic turnaround, while news is still quite pessimistic. The old adage that "markets climb a wall of worry" is quite appropriate to define current times. We believe that the current period of uncertainty will likely be followed by a strong global stock rally. /s/ Patrick Boyle - -------------------- Patrick Boyle Portfolio Manager (1) Performance figures are based on Class A shares and do not reflect deduction of the sales charge. Management fee waivers reduced Fund expenses and in the absence of such waivers the performance quoted would be reduced. Investing in foreign countries may involve risks, such as currency fluctuations and political instability, not associated with investing exclusively in the U.S. - ------------------------------------------------------------------------------- 8 10 MANAGER'S COMMENTARY (CONTINUED) - ------------------------------------------------------------------------------- SECURITY EQUITY FUND - ASSET ALLOCATION SERIES NOVEMBER 15, 1998 - -------------------------------------------------------------PERFORMANCE------- SECURITY ASSET ALLOCATION SERIES VS. S&P 500 MERIDIAN BLENDED INDEX [GRAPH] This chart assumes a $10,000 investment in Class A shares of Asset Allocation Series on June 1, 1995, and reflects deduction of the 5.75% sales load. On September30, 1998, the value of your investment in Class A shares of the Series (with dividends reinvested) would have grown to $12,071. By comparison, the same $10,000 investment would have grown to $20,138, based on the S&P's performance. Comparison is also made to a blend of market indexes which reflect the asset classes in which the Series has invested over the past fiscal year. The blended index consists of 40% S&P 500, 5% U.S. 30-day Treasury, 20% Lehman Brothers Aggregate Bond, 25% Financial Times World Index (excluding U.S.), 10% Wilshire Real Estate Securities. The same $10,000 investment in the blended index would have grown to $15,307. The performance illustrated above is based on the performance of Class A shares. The performance of Class B shares will be greater or less than the performance shown for Class A shares as a result of the different loads and fees associated with an investment in Class B shares. - -------------------------------------------------------------------------------- TOP 5 EQUITY HOLDINGS** % of Net Assets ---------- Tele-Communications, Inc. 1.4% MediaOne Group, Inc. 1.3% Cisco Systems, Inc. 1.1% EMC Corporation 0.9% Lexmark International Group, Inc. 0.8% **At September 30, 1998 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- AVERAGE ANNUAL RETURNS As of September 30, 1998 1 year Since Inception ------ --------------- A Shares (7.19%) 7.70% (6-1-95) A Shares with sales charge (12.52%) 5.81% (6-1-95) B Shares (7.99%) 6.71% (6-1-95) B Shares with CDSC (12.59%) 5.93% (6-1-95) - ------------------------------------------------------------------------------- The performance data above represents past performance which is not predictive of future results. The investment return and principal value of an investment in the fund will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. The figures above do not reflect deduction of the maximum front-end sales charge of 5.75% for Class A shares or contingent deferred sales charge of 5% for Class B shares, as applicable, except where noted. In addition, the investment manager waived a portion of the management fee for the Series for the period ended January 31, 1998 and began charging management fees February 1, 1998. Performance figures would be lower if the maximum sales charge and advisory fee were deducted. - -------------------------------------------------------------------------------- 9 11 MANAGER'S COMMENTARY - ------------------------------------------------------------------------------ SECURITY EQUITY FUND - SOCIAL AWARENESS SERIES NOVEMBER 15, 1998 To Our Shareholders: The Social Awareness Series had an excellent year, returning 7.89% versus the Lipper peer group average of -3.57% in the twelve months ended September 30, 1998. (1) The benchmark Domini Social Index, which is highly concentrated in large cap stocks such as Microsoft Corporation, Coca-Cola Company, Merck & Company, Inc., and Johnson & Johnson, increased 12.54% over the same period. [Cindy Shields Portfolio Manager PHOTO] ELEMENTS OF A STRONG PERFORMANCE The key element to our positive results over the past twelve months was the timing of our move to more defensive stocks early in the calendar year. In assuming a defensive posture we focused on large cap companies, adding to sectors such as food companies, cable providers, long distance phone companies, and regional Bell telephone operating companies. Our technology sector was a strong contributor to the positive total return. Microsoft Corporation, our largest holding at approximately 3.6% of the total portfolio, climbed 67% during the fiscal year. Our general practice is to hold much smaller positions, restricting block size in most names to about 1.5% of assets in times when the markets seem confused. This is in contrast to the benchmark Domini Social Index. As noted above, it is highly concentrated in large cap stocks, with the top ten in size making up about 28% of the total index. A DEFENSIVE POSTURE IS APPROPRIATE AWHILE LONGER We plan to maintain our defensive orientation while the market continues to be concerned about global economic conditions. We believe that excellent valuations are developing in many small-cap and midcap companies and economically sensitive stocks. When we sense that a market recovery is in sight we plan to move cautiously into some of these companies. Currently we believe analysts' estimates for 1999 earnings are too high. We are hesitant to shift the portfolio holdings until these estimates have been adjusted downward. WHEN THE GLOBAL ECONOMY STARTS TO IMPROVE When world conditions begin to improve, investors will be willing to move back into the cyclical sectors. History has proven that the best time to own these cyclicals, as well as small-cap and midcap stocks, is when the economy begins its climb out of an economic downturn. Stock selection for social awareness portfolios can become more difficult as markets rise. In the cyclical industries which are expected to perform well after an economic slowdown, many companies can find themselves facing environmental and other problems. Traditional cyclical companies in industries such as chemicals, machinery, manufacturing, and auto parts and equipment as well as others require careful screening before being included in portfolios such as ours. We take seriously our obligations to the shareholders in the Social Awareness Series. As usual, our stock selection process will focus first on financial soundness. We realize, however, that the next step, the social screening process, is of prime importance to you. We appreciate your trust and will use utmost care in choosing the companies in which we invest. /s/ Cindy Shields - -------------------- Cindy Shields Portfolio Manager (1) Performance figures are based on Class A shares and do not reflect deduction of the sales charge. Management fee waivers reduced fund expenses and in the absence of such waiver the performance quoted would be reduced. - ------------------------------------------------------------------------------- 10 12 MANAGER'S COMMENTARY (CONTINUED) - ------------------------------------------------------------------------------- SECURITY EQUITY FUND - SOCIAL AWARENESS SERIES NOVEMBER 15, 1998 - -------------------------------------------------------------PERFORMANCE------- SECURITY SOCIAL AWARENESS SERIES VS. S&P 500 AND DOMINI SOCIAL INDEX [GRAPH] This chart assumes a $10,000 investment in Class A shares of Social Awareness Series on November 1, 1996, and reflects deduction of the 5.75% sales load. On September30, 1998, the value of your investment in Class A shares of the Series (with dividends reinvested) would have grown to $12,192. By comparison, the same $10,000 investment would have grown to $14,743 based on the S&P 500 Index's performance and $15,687 based on the Domini Social Index. The performance illustrated above is based on the performance of Class A shares. The performance of Class B shares will be greater or less than the performance shown for Class A shares as a result of the different loads and fees associated with an investment in Class B shares. - ------------------------------------------------------------------------------- TOP 5 HOLDINGS** % of Net Assets ---------- Microsoft Corporation 3.6% Intel Corporation 3.1% International Business Machines Corporation 2.6% Merck & Company, Inc. 2.5% Schering-Plough Corporation 2.4% **At September 30, 1998 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- AVERAGE ANNUAL RETURNS As of September 30, 1998 1 Year Since Inception ------ --------------- A Shares 7.89% 14.40% (11-1-96) A Shares with sales charge 1.67% 10.90% (11-1-96) B Shares 6.74% 13.17% (11-1-96) B Shares with CDSC 1.74% 11.29% (11-1-96) - ------------------------------------------------------------------------------- The performance data above represents past performance which is not predictive of future results. The returns have been calculated from November 1, 1996 (date of inception) to September 30, 1998 and are not annualized. The investment return and principal value of an investment in the fund will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. The figures above do not reflect deduction of the maximum front-end sales charge of 5.75% for Class A shares or contingent deferred sales charge of 5% for Class B shares, as applicable, except where noted. In addition, the investment manager waived the management fee for the Series for the period ended January 31, 1998 and began charging management fees February 1, 1998. Performance figures would be lower if the maximum sales charge and advisory fee were deducted. - ------------------------------------------------------------------------------- 11 13 MANAGER'S COMMENTARY - ------------------------------------------------------------------------------- SECURITY EQUITY FUND - VALUE SERIES NOVEMBER 15, 1998 To Our Shareholders: In the fiscal year ended September 30, 1998 the Value Series of Security Equity Fund produced a -4.31% return, underperforming its Lipper peer group average of - -1.08% and the S&P Barra Value Index return of -0.27% (1) The midcap orientation of the fund which distinguishes it from the larger-cap average of the peer group has been the most significant negative factor. To illustrate, the S&P 400 Midcap Stock Index returned -6.33% for the twelve-month period. [Jim Schier Portfolio Manager PHOTO] MIDCAP STOCKS SUFFER IN THE FLIGHT TO SAFETY AND LIQUIDITY The portfolio performed reasonably well, given its midcap characteristics. The recent preference on the part of investors for recession-resistant stocks has driven them away from the midcaps to the larger issues perceived to have a higher degree of safety and liquidity. This was perhaps most evident in the energy sector where the large multinational oil companies were perceived as safe havens. The smaller issues which we held fared much worse. For example, Tuboscope, Inc., which provides pipeline and technical services and engineered products to the oil and gas industry, declined nearly 60% over the twelve months. Oil exploration and development company Apache Corporation fell 33% in the same period. Consumer staples and consumer cyclicals sectors were also punished in the midcap area of the market. THERE WERE POSITIVES ALSO DURING THE YEAR There were positives in the portfolio during the year, however. We held some health care issues which performed extremely well. Mylan Laboratories, Inc., a generic drug manufacturer, rose 41.5% during the time we owned it as generic drug prices rebounded and the company reported strong earnings. Allegiance Corporation, a company that provides health care products and services to hospitals and other health care providers, also exhibited favorable earnings and rose over 70% during our holding period. Our underweighting in the financial sector versus the benchmark index was also a positive as this group suffered under a cloud of weakening international conditions. We held about a 5.5% weighting, while the index contains 26.4% in financial stocks. We also received good performance from three software and technology services companies which we purchased early in the fund's existence. These were Computer Sciences Corporation, Rational Software Corporation, and American Management Systems, Inc. OPPORTUNITIES ABOUND IN DEPRESSED MARKETS Much has changed in the stock markets over the last year. The perception of midcaps as more value-oriented than their large cap counterparts continues to grow. It is now easy to find midcap stocks with valuation levels not seen since the mid-1980s, despite the fact that interest rates are about half of what they were at that time. We continue to seek attractively priced stocks that should be only minimally negatively impacted by a barrage of Asian and emerging market imports, such as computer service companies and other industries with high entry barriers. We also believe there are excellent bargains in less well-known names that have been undeservedly depressed by investors' preference for defensive issues. /s/ Jim Schier - ----------------------- Jim Schier Portfolio Manager (1) Performance figures are based on Class A shares and do not reflect deduction of the sales charge. Management fee waivers reduced fund expenses and in the absence of such waiver the performance quoted would be reduced. - ------------------------------------------------------------------------------- 12 14 MANAGER'S COMMENTARY (CONTINUED) - ------------------------------------------------------------------------------- SECURITY EQUITY FUND - VALUE SERIES NOVEMBER 15, 1998 - -------------------------------------------------------------PERFORMANCE------- SECURITY VALUE SERIES VS. S&P 500 AND S&P500/BARRA VALUE INDEX [GRAPH] This chart assumes a $10,000 investment in Class A shares of Value Series on May 1, 1997, and reflects deduction of the 5.75% sales load. On September 30, 1998, the value of your investment in Class A shares of the Series (with dividends reinvested) would have been $11,680. By comparison, the same $10,000 investment would have been $12,853, based on the S&P 500 Index performance. Comparison is also made to the S&P 500/BARRA Value Index. The same $10,000 investment in the S&P 500/BARRA Value Index would have been $11,668. The performance illustrated above is based on the performance of Class A shares. The performance of Class B shares will be greater or less than the performance shown for Class A shares as a result of the different loads and fees associated with an investment in Class B shares. - ------------------------------------------------------------------------------- TOP 5 HOLDINGS** % of Net Assets Mylan Laboratories, Inc. 4.4% Comverse Technology, Inc. 3.7% Equitable Resources, Inc. 3.2% Angelica Corporation 2.9% RailAmerica, Inc. 2.9% **At September 30, 1998 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- AVERAGE ANNUAL RETURNS As of September 30, 1998 1 Year Since Inception ------ --------------- A Shares (4.31%) 16.31% (5-1-97) A Shares with sales charge (9.81%) 11.56% (5-1-97) B Shares (5.38%) 15.14% (5-1-97) B Shares with CDSC (10.11%) 12.47% (5-1-97) - ------------------------------------------------------------------------------- The performance data above represents past performance which is not predictive of future results. The returns have been calculated from May 1, 1997 (date of inception) to September 30, 1998. The investment return and principal value of an investment in the fund will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. The figures above do not reflect deduction of the maximum front-end sales charge of 5.75% for Class A shares or contingent deferred sales charge of 5% for Class B shares, as applicable, except where noted. In addition, the investment manager waived the management fee for the Series for the period ended January 31, 1998, and began charging management fees February 1, 1998. Performance figures would be lower if the maximum sales charge and advisory fee were deducted. - ------------------------------------------------------------------------------- 13 15 MANAGER'S COMMENTARY - ------------------------------------------------------------------------------- SECURITY EQUITY FUND - SMALL COMPANY SERIES NOVEMBER 15, 1998 [STRONG LOGO] To Our Shareholders: The quarter from July 1, 1998 through September 30, 1998 was witness to some of the most turbulent markets in recent history. Many of the concerns existing since the beginning of the Asian crisis last year have come to the forefront. What appeared at first to be confined to Asia spread throughout the world's financial markets. Many global economies are now in recession, and others are teetering on the brink. In financial markets investors are fleeing from risk, triggering a credit crunch that further threatens growth. [Ronald C. Ognar Portfolio Manager PHOTO] SMALL CAP STOCKS SUFFERED MORE THAN THEIR LARGE CAP COUNTERPARTS U.S. equities fell sharply as investors lowered earnings expectations. Many stocks, both large and small, have experienced declines in excess of 20% from their 1998 highs. The declines in the average stock resemble those that occurred in 1987 and 1990. While the declines in the large-cap stocks have been severe, mid- and small-caps have suffered greater losses in the flight to quality. For the period from inception of the fund, October 15, 1997, through September 30 of this year, the Small Company Series of Security Equity Fund returned - -12.95% (1) As bad as this sounds, it was really quite favorable when compared with the benchmark Russell 2000 Index which declined 20.49% over the same period. The portfolio outperformed its benchmark primarily because of its larger-than-normal cash position and advantageous stock selection in commercial services and retail sectors of the market. SECTOR SHIFTS BASED ON INCREASED RISK During the fourth quarter of the fiscal year (the third calendar quarter) we shifted away from the most cyclical issues, particularly retailers and other consumer cyclicals, as high valuations and recession fears increased the risk in those groups. We also reduced our holdings in financials. A portion of the proceeds from these sales went into stocks with more dependable earnings, and we raised cash reserves with the remainder. Health care exposure was significantly increased as we sought safe havens where consumer spending will likely remain stable during an economic slowdown. Later in the quarter we began cautiously to redeploy cash reserves into technology and health care issues that had been severely depressed. VOLATILITY AND INTERNATIONAL INSTABILITY EXPECTED TO CONTINUE Looking ahead, we expect continued volatility in equities. A great deal of negative news has been priced into the market so far, but more may be forthcoming. We are especially concerned about earnings reductions over the next several months, additional negative news regarding President Clinton, and continued international instability. Because of their relatively low current valuations, we believe small cap stocks may do better in the months ahead. The Federal Reserve now seems willing to lower interest rates in an effort to maintain healthy economic growth in the U.S. It may take several more Fed rate cuts and a coordinated effort by the G7 countries before the market will be in the position to start a new up phase. We will continue to invest in the highest quality growth companies with capable managements, selling at reasonable valuations. /s/ Ronald C. Ognar - ------------------------ Ronald C. Ognar Portfolio Manager (1) Performance figures are based on Class A shares, are not annualized and do not reflect deduction of the sales charge. The Investment Manager waived the Fund's management fee for the fiscal period ended September 30, 1998 and in the absence of such waiver the performance quoted would be reduced. - ------------------------------------------------------------------------------- 14 16 MANAGER'S COMMENTARY (CONTINUED) - ------------------------------------------------------------------------------- SECURITY EQUITY FUND - SMALL COMPANY SERIES NOVEMBER 15, 1998 - -------------------------------------------------------------PERFORMANCE------- SMALL COMPANY SERIES VS. RUSSELL 2000 INDEX, AND RUSSELL 2000 GROWTH INDEX [GRAPH] This chart assumes a $10,000 investment in Class A shares of Small Company Series on October 15, 1997, and reflects deduction of the 5.75% sales load. On September 30, 1998, the value of your investment in Class A shares of the Series (with dividends reinvested) would have been $8,205. By comparison, the same $10,000 investment would have been $7,912, based on the Russell 2000 index performance. Comparison is also made to the S&P Russell 2000 Growth Index. The same $10,000 investment in the Russell 2000 Growth Index would have been $7,342 over the same period. The performance illustrated above is based on the performance of Class A shares. The performance of Class B shares will be greater or less than the performance shown for Class A shares as a result of the different loads and fees associated with an investment in Class B shares. - ------------------------------------------------------------------------------- TOP 5 HOLDINGS** % of Net Assets ---------- Lason, Inc. 3.7% Profit Recovery Group International, Inc. 3.0% 99 Cents Only Stores 2.8% ResMed, Inc. 2.5% Province Healthcare Company 2.4% **At September 30, 1998 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- AVERAGE ANNUAL RETURNS As of September 30, 1998 Since Inception --------------- A Shares (12.95%) (10-15-97) A Shares with sales charge (17.95%) (10-15-97) B Shares (13.70%) (10-15-97) B Shares with CDSC (18.02%) (10-15-97) - ------------------------------------------------------------------------------- The performance data above represents past performance which is not predictive of future results. The returns have been calculated from October 15, 1997 (date of inception) to September 30, 1998. The investment return and principal value of an investment in the fund will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. The figures above do not reflect deduction of the maximum front-end sales charge of 5.75% for Class A shares or contingent deferred sales charge of 5% for Class B shares, as applicable, except where noted. In addition, the investment manager waived the management fee for the Series for the period ended September 30, 1998. Performance figures would be lower if the maximum sales charge and advisory fee were deducted. - ------------------------------------------------------------------------------- 15 17 MANAGER'S COMMENTARY - ------------------------------------------------------------------------------- SECURITY ULTRA FUND NOVEMBER 15, 1998 To Our Shareholders: The year ended September 30, 1998 was difficult for all but the largest stocks. Security Ultra Fund generated a -12.45% total return for the fiscal year, while the Lipper peer group average dropped 11.95% (1) The benchmark Standard & Poor's Midcap 400 Index returned -6.1% while the small-cap Russell 2000 Index lost 18.9%. SOME BRIGHT SPOTS IN AN OTHERWISE GLOOMY PICTURE Despite the weak markets, there were some positive factors in the portfolio. Our overweightings versus the benchmark S&P Midcap 400 Index in the technology and health care sectors, two sectors which performed favorably versus the overall index results, lent some stability. A strong stock selection in the financial industry allowed that sector of the portfolio to generate a slightly positive return while the parallel sector in the benchmark was down nearly 8%. In the health care arena we also benefited from takeovers in three stocks in the portfolio. R.P. Scherer Corporation, a developer and producer of drug delivery systems, agreed to merge with Cardinal Health, Inc. ATL Ultrasound, Inc., which develops, manufactures, and markets diagnostic medical ultrasound systems and supplies, was acquired by Philips Electronics NV. Depuy, Inc., a manufacturer of orthopedic devices and supplies, was purchased by Johnson & Johnson. Among the financial stocks in the portfolio the strongest performer was AFLAC Inc., whose principal subsidiary is American Family Life Assurance Company. The stock rose 11.77% over the fiscal year as it generated strong growth despite the difficult economic conditions in Japan, one of the primary countries in which it does business. AREAS WHICH FARED LESS WELL Even though the decision to overweight the technology sector helped overall performance, some names among the portfolio holdings underperformed their peers in the benchmark index. Chief among these was the stock of Transcrypt International, Inc., which designs and manufactures information security products and wireless communications equipment. Transcrypt suffered under the cloud of alleged irregularities in accounting practices. Three other tech issues, ADC Telecommunications, Inc., Cambridge Technology, Inc., and Sawtek, Inc., all lost ground because of investors' fears of slowing earnings growth in the companies. In the portfolio our utility sector weighting was low at about 1% compared with the benchmark index's 11%. This sector turned in a strong performance after mid-July because these companies' operations and earnings are largely U.S.-oriented. When the developing global economic crisis began to weigh heavily on companies with international exposure, those firms such as the utilities with domestic orientations outperformed. COMPANIES WITH LITTLE INTERNATIONAL EXPOSURE SHOULD PERFORM FAVORABLY We believe that the midcap sector of the stock market is poised for a powerful rally once market participants begin to believe that 1999 earnings will not decline precipitously. We are acutely aware that the world is a much different place today than a year ago, and we seek to emphasize companies with unique products and competitive strengths that are not directly negatively influenced by a more competitive international marketplace. We expect that the technology service, health care, and media companies will be among this group and plan to emphasize them in the coming months. /s/ Jim Schier - -------------------------- Jim Schier Portfolio Manager (1) Performance figures are based on Class A shares and do not reflect deduction of the sales charge. - ------------------------------------------------------------------------------- 16 18 MANAGER'S COMMENTARY (CONTINUED) - ------------------------------------------------------------------------------- SECURITY ULTRA FUND NOVEMBER 15, 1998 - -------------------------------------------------------------PERFORMANCE------- SECURITY ULTRA FUND VS.S&P MIDCAP 400 [GRAPH] $10,000 OVER TEN YEARS This chart assumes a $10,000 investment in Class A shares of Ultra Fund on September 30, 1988, and reflects deduction of the 5.75% sales load. On September 30, 1998, the value of your investment in Class A shares of the fund (with dividends reinvested) would have grown to $20,952. In comparison, the same $10,000 investment would have grown to $46,759 based on the S&P Midcap 400's performance. The performance illustrated above is based on the performance of Class A shares. The performance of Class B shares, which were first offered on October 19, 1993, will be greater or less than the performance shown for Class A shares as a result of the different loads and fees associated with an investment in Class B shares. - ------------------------------------------------------------------------------- TOP 5 HOLDINGS** % of Net Assets ---------- Mylan Laboratories, Inc. 6.5% Comverse Technology, Inc. 5.0% Rational Software Corporation 3.2% AFLAC, Inc. 3.2% American Management Systems, Inc. 3.1% **At September 30, 1998 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- AVERAGE ANNUAL RETURNS As of September 30, 1998 1 year 5 years 10 years ------ ------- -------- A Shares (12.45%) 7.57% 8.32% A Shares with sales charge (17.45%) 6.29% 7.68% B Shares (13.30%) 6.28% N/A (10-19-93) (since inception) B Shares with CDSC (17.64%) 5.80% N/A (10-19-93) (since inception) - ------------------------------------------------------------------------------- The performance data above represents past performance which is not predictive of future results. The investment return and principal value of an investment in the fund will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. The figures above do not reflect deduction of the maximum front-end sales charge of 5.75% for Class A shares or contingent deferred sales charge of 5% for Class B shares, as applicable, except where noted. Such figures would be lower if the maximum sales charge were deducted. - ------------------------------------------------------------------------------- 17 19 SCHEDULE OF INVESTMENTS - -------------------------------------------------------------------------------- SEPTEMBER 30, 1998 SECURITY GROWTH AND INCOME FUND PRINCIPAL AMOUNT OR NUMBER MARKET PREFERRED STOCKS OF SHARES VALUE - ---------------------------------------------------------------------------- BANKING - 0.2% California Federal Bank.......................... 7,000 $178,938 CONSUMER CYCLICAL - 0.5% CSC Holdings, Inc................................ 1,888 202,498 Primedia, Inc.................................... 2,500 255,000 ------------ 457,498 ------------ Total preferred stocks - 0.7%............................ 636,436 CORPORATE BONDS - --------------- AEROSPACE - 0.2% Burke Industries, Inc., 10.00% - 2007................................. $175,000 174,563 BANKING - 0.4% Bay View Capital Corporation, 9.125% - 2007................................. $100,000 97,875 BF Saul REIT, 9.75% - 2008....................... $100,000 87,500 Homeside, Inc., 11.25% - 2003.................... $121,000 140,511 ------------ 325,886 BEVERAGE - 0.2% Delta Beverage Group, 9.75% - 2003.................................. $200,000 200,000 BROKERAGE - 0.2% SI Financing Trust I, 9.50% - 2026(1)............................... 7,500 200,625 BUILDING MATERIALS - 0.2% Nortek, Inc., 8.875% - 2008...................... $150,000 144,750 CHEMICALS - 0.0% Envirodyne Industries, Inc., 12.00% - 2000................................. $34,000 34,128 CONSTRUCTION MACHINERY - 0.3% AGCO Corporation, 8.50% - 2006.................................. $150,000 146,625 Columbus McKinnon Corporation, 8.50% - 2008.................................. $150,000 143,437 ------------ 290,062 CONSUMER CYCLICAL - OTHER - 0.1% American ECO Corporation, 9.625% - 2008................................. $125,000 108,125 CONSUMER PRODUCTS - 0.2% Revlon Consumer Products, 8.125% - 2006................................. $175,000 172,813 PRINCIPAL MARKET CORPORATE BONDS (CONTINUED) AMOUNT VALUE - ---------------------------------------------------------------------------- ELECTRIC UTILITY - 0.4% AES Corporation, 10.25% - 2006................... $200,000 $207,500 Cal Energy Company, Inc., 9.50% - 2006.................................. 100,000 109,000 ------------ 316,500 ENERGY - OTHER - 0.1% P&L Coal Holdings Corporation, 8.875% - 2008................................. 75,000 76,125 ENERGY - REFINING - 0.3% Crown Central Petroleum, 10.875% - 2005................................ 200,000 206,750 ENTERTAINMENT - 0.1% Empress Entertainment, Inc., 8.125% - 2006................................. 75,000 74,625 FINANCE - 0.4% Dollar Financial Group, Inc., 10.875% - 2006................................ 300,000 294,750 FOOD - 0.6% Carrolls Corporation, 11.50% - 2003................................. 425,000 444,125 Nash Finch Company, 8.50% - 2008.................................. 100,000 94,000 ------------ 538,125 GAMING - 0.3% MGM Grand, Inc., 6.95% - 2005.................... 125,000 127,812 Mirage Resorts, Inc., 6.625% - 2005................................. 125,000 126,094 ------------ 253,906 HEALTH CARE - 0.4% Multicare Companies, Inc., 9.00% - 2007.................................. 200,000 188,500 Prime Medical Services, Inc., 8.75% - 2008.................................. 75,000 69,000 Tenet Healthcare Corporation, 8.125% - 2008................................. 100,000 102,375 ------------ 359,875 HOME CONSTRUCTION - 0.2% Hovnanian Enterprise, 9.75% - 2005.................................. 100,000 91,750 Toll Corporation, 7.75% - 2007................... 100,000 98,750 ------------ 190,500 INSURANCE - 0.1% General American Life Insurance Company, 8.525% - 2027........................ 75,000 83,906 See accompanying notes. - ----------------------------------------------------------------------------- 18 20 SCHEDULE OF INVESTMENTS - ----------------------------------------------------------------------------- SEPTEMBER 30, 1998 SECURITY GROWTH AND INCOME FUND (CONTINUED)
PRINCIPAL MARKET CORPORATE BONDS (CONTINUED) AMOUNT VALUE - --------------------------------------------------------------- LODGING - 0.2% Properties, 7.875% - 2008 $175,000 $ 172,812 MEDIA - CABLE - 1.6% Adelphia Communication Corporation, 8.125% - 2003 175,000 175,875 Century Communications Corporation, 9.50% - 2005 100,000 108,500 8.375% - 2007 100,000 103,000 CF Cable T.V., Inc., 11.625% - 2005 150,000 166,312 CSC Holdings, Ltd., 7.625% - 2018 75,000 72,375 7.875% - 2018 25,000 24,688 Diamond Holdings, Inc., 9.125% - 2008 125,000 122,187 Jones Intercable, Inc., 7.625% - 2008 100,000 103,000 Lenfest Communications, Inc., 10.50% - 2006 125,000 141,875 Rogers Cablesystems, Inc., 9.625% - 2002 175,000 184,844 Rogers Communications, Inc., 9.125% - 2006 200,000 199,500 ------------ 1,402,156 MEDIA - NONCABLE - 0.6% Albritton Communications Company, 9.75% - 2007 125,000 128,438 Golden Books Publishing, Inc., 7.65% - 2002 200,000 62,500 Heritage Media Corporation, 8.75% - 2006 100,000 104,500 Hollinger International, Inc., 9.25% - 2006 200,000 208,000 ------------ 503,438 METALS - 0.4% Ameristeel Corporation, 8.75% - 2008 100,000 96,875 Simcala, Inc., 9.625% - 2006 75,000 59,813 Wheeling-Pittsburgh Corporation, 9.25% - 2007 100,000 92,500 WHX Corporation, 10.50% - 2005 75,000 68,812 ------------ 318,000 PACKAGING - 0.2% Indesco International, Inc., 9.75% - 2008 175,000 162,750 RETAILERS - 0.3% Specialty Retailers, Inc., 8.50% - 2005 $125,000 $ 115,938 Zale Corporation, 8.50% - 2007 $100,000 97,750 ------------ 213,688 SERVICES - 0.3% Loewen Group, Inc., 6.70% - 1999 $75,000 73,781 Protection One, Inc., 7.375% - 2005 $200,000 209,000 ------------ 282,781 TELECOMMUNICATIONS - 1.1% Comcast Cellular Holdings, Inc., 9.50% - 2007 $200,000 205,250 Mastec, Inc., 7.75% - 2008 $75,000 69,844 Mcleodusa, Inc., 8.375% - 2008 $175,000 172,375 MJD Communications, Inc., 9.50% - 2008 $175,000 175,875 RCN Corporation, 10.00% - 2007 $225,000 210,937 Satelites Mexicanos, Inc., 10.125% - 2004 $200,000 135,500 ------------ 969,781 TEXTILES - 0.2% Delta Mills, Inc., 9.625% - 2007 $100,000 92,250 Westpoint Stevens, Inc., 7.875% - 2008 $75,000 76,312 ------------ 168,562 ------------ Total corporate bonds - 9.6% 8,239,982 COMMON STOCKS - ------------- AEROSPACE/DEFENSE - 1.4% Boeing Company 20,000 686,250 Precision Castparts Corporation 12,000 495,000 ------------ 1,181,250 AUTOMOBILES - 0.8% General Motors Corporation 13,000 710,937 AUTO PARTS & EQUIPMENT - 1.7% Genuine Parts Company 20,000 601,250 TRW, Inc. 20,000 887,500 ------------ 1,488,750 BANKS - MAJOR REGIONAL - 2.6% Banc One Corporation 16,000 682,000 Bankers Trust Corporation 12,000 708,000 J.P. Morgan & Company, Inc. 10,000 846,250 ------------ 2,236,250
See accompanying notes. - ------------------------------------------------------------------------------- 19 21 SCHEDULE OF INVESTMENTS - ----------------------------------------------------------------------------- SEPTEMBER 30, 1998 SECURITY GROWTH AND INCOME FUND (CONTINUED)
NUMBER MARKET COMMON STOCK (CONTINUED) OF SHARES VALUE - --------------------------------------------------------------- BEVERAGES - ALCOHOLIC - 1.1% Anheuser-Busch Companies, Inc........... 18,000 $ 972,000 BEVERAGES - SOFT DRINK - 0.5% PepsiCo, Inc............................ 14,000 412,125 CHEMICALS - BASIC - 1.4% E.I. du Pont de Nemours & Company 12,000 673,500 Praxair, Inc............................ 16,000 523,000 ------------ 1,196,500 COMMUNICATION EQUIPMENT - 0.6% Motorola, Inc........................... 12,000 512,250 CONTAINERS & PACKAGING - 1.8% Bemis Company, Inc...................... 20,000 701,250 Crown Cork & Seal Company, Inc. 16,000 428,000 Union Camp Corporation.................. 10,000 393,750 ------------ 1,523,000 ELECTRICAL EQUIPMENT - 1.1% Emerson Electric Company................ 6,000 373,500 Hubbell, Inc. (Cl.B).................... 15,000 532,500 ------------ 906,000 ELECTRIC COMPANIES - 6.5% Allegheny Energy, Inc................... 13,000 410,313 Baltimore Gas & Electric Company........ 10,000 333,750 Cinergy Corporation..................... 20,000 765,000 Kansas City Power & Light Company....... 30,000 913,125 LG&E Energy Corporation................. 10,000 278,750 Northern States Power Company........... 16,000 449,000 Peco Energy Company..................... 24,000 877,500 Potomac Electric Power Company.......... 20,000 530,000 Public Service Enterprise Group, Inc.... 13,000 511,062 Texas Utilities Company................. 10,000 465,625 ------------ 5,534,125 ELECTRONICS - DEFENSE - 1.3% Raytheon Company (Cl.B)................. 20,200 1,089,537 ELECTRONICS - DISTRIBUTION - 0.5% W.W. Grainger, Inc...................... 10,000 421,250 ELECTRONICS - INSTRUMENTATION - 0.3% Tektronix, Inc.......................... 15,000 232,500 FOODS - 2.2% ConAgra, Inc............................ 10,000 269,375 General Mills, Inc...................... 12,700 889,000 Tyson Foods, Inc. (Cl.A)................ 34,700 689,662 ------------ 1,848,037 FOOTWEAR - 0.2% Nike, Inc. (Cl.B)....................... 4,000 147,250 GAMING & LOTTERY - 0.4% Mirage Resorts, Inc..................... 20,000 $ 335,000 HEALTH CARE - DRUGS (MAJOR) - 1.3% Mylan Laboratories, Inc................. 8,000 236,000 Teva Pharmaceutical Industries, Ltd. ADR................. 22,200 840,825 ------------ 1,076,825 HEALTH CARE - LONG TERM CARE - 0.6% Integrated Health Services, Inc......... 30,500 512,781 HEALTH CARE - MANAGED CARE - 1.8% Humana, Inc.*........................... 44,600 730,325 United Healthcare Corporation........... 22,800 798,000 ------------ 1,528,325 HEALTH CARE - SPECIALIZED SERVICES - 0.4% Alza Corporation*....................... 8,000 347,000 HOUSEHOLD FURNISHINGS & APPLIANCES - 0.5% Whirlpool Corporation................... 9,000 423,000 HOUSEHOLD PRODUCTS - 0.9% Kimberly-Clark Corporation.............. 18,000 729,000 INSURANCE - LIFE/HEALTH - 0.6% Aetna, Inc.............................. 8,000 556,000 INSURANCE - PROPERTY & CASUALTY - 3.5% Chubb Corporation....................... 10,000 630,000 Leucadia National Corporation........... 30,000 879,375 SAFECO Corporation...................... 15,000 625,313 St. Paul Companies, Inc................. 26,700 867,750 ------------ 3,002,438 MACHINERY - DIVERSE - 1.4% Deere & Company......................... 20,000 605,000 Ingersoll-Rand Company.................. 16,000 607,000 ------------ 1,212,000 MANUFACTURING - DIVERSIFIED - 1.1% Tenneco, Inc............................ 28,000 920,500 MEDICAL PRODUCTS & SUPPLIES - 2.5% Baxter International, Inc............... 20,000 1,190,000 Dentsply International, Inc............. 8,000 179,000 St. Jude Medical, Inc.*................. 32,000 740,000 ------------ 2,109,000 METALS - MINING - 1.3% Asarco, Inc............................. 60,000 1,147,500
See accompanying notes. - ----------------------------------------------------------------------------- 20 22 SCHEDULE OF INVESTMENTS - ----------------------------------------------------------------------------- SEPTEMBER 30, 1998 SECURITY GROWTH AND INCOME FUND (CONTINUED)
NUMBER MARKET COMMON STOCKS OF SHARES VALUE - --------------------------------------------------------------- NATURAL GAS - 2.8% Consolidated Natural Gas Company....... 15,000 $ 817,500 Equitable Resources, Inc............... 20,000 508,750 People's Energy Corporation............ 30,000 1,080,000 ------------ 2,406,250 OFFICE EQUIPMENT & SUPPLIES - 1.4% Corporate Express, Inc.*............. 100,000 1,193,750 OIL - DOMESTIC - 0.6% Unocal Corporation................... 15,000 543,750 OIL - INTERNATIONAL - 2.7% Mobil Corporation.................... 10,000 759,375 Royal Dutch Petroleum Company ADR....................... 32,600 1,552,575 ------------ 2,311,950 OIL & GAS - DRILLING & EQUIPMENT - 2.8% Halliburton Company.................... 32,000 914,000 Schlumberger, Ltd...................... 30,300 1,524,469 ------------ 2,438,469 OIL & GAS - EXPLORATION & PRODUCTION -.3.6% Apache Corporation..................... 25,000 670,313 Burlington Resources, Inc.............. 19,000 710,125 Kerr-McGee Corporation................. 18,000 819,000 Phillips Petroleum Company............. 19,000 857,375 ------------ 3,056,813 OIL & GAS - REFINING & MARKETING - 0.8% Ultramar Diamond Shamrock Corporation................ 30,000 682,500 PAPER & FOREST PRODUCTS - 2.3% Boise Cascade Corporation.............. 20,000 506,250 Champion International Corporation......................... 10,000 313,125 International Paper Company............ 8,000 373,000 Louisiana-Pacific Corporation.......... 40,000 815,000 ------------ 2,007,375 PERSONAL CARE - 0.5% Alberto-Culver Company................. 20,000 467,500 PHOTOGRAPHY - IMAGING - 0.9% Eastman Kodak Company.................. 10,000 773,125 PUBLISHING - 0.9% Dow Jones & Company, Inc............... 16,000 744,000 RAILROADS - 2.2% Burlington Northern Santa Fe Corporation......................... 21,000 672,000 Norfolk Southern Corporation........... 18,000 523,125 Union Pacific Corporation.............. 16,000 682,000 ------------ 1,877,125 REAL ESTATE INVESTMENT TRUSTS - 3.5% Camden Property Trust.................. 20,000 $ 558,750 HRPT Properties Trust.................. 20,000 322,500 Highwoods Properties, Inc.............. 10,000 277,500 Hospitality Properties Trust........... 20,000 595,000 Liberty Property Trust................. 24,000 571,500 Simon Property Group, Inc.............. 12,000 357,000 United Dominion Realty Trust, Inc...... 30,000 341,250 ------------ ....................................... 3,023,500 RESTAURANTS - 1.8% Landry's Seafood Restaurants, Inc.*.... 60,000 405,000 McDonald's Corporation................. 8,000 477,500 Wendy's International, Inc............. 30,000 665,625 ------------ 1,548,125 RETAIL - DEPARTMENT STORES - 0.7% Dillard's Inc.......................... 20,000 566,250 RETAIL - FOOD CHAINS - 1.0% Giant Food, Inc........................ 20,000 863,750 RETAIL - SPECIALTY - 0.4% Toys "R" Us, Inc.*..................... 20,000 323,750 SERVICES - COMMERCIAL & CONSUMER - 1.4% Angelica Corporation................... 43,800 703,538 Laidlaw, Inc........................... 49,000 462,437 ------------ 1,165,975 SERVICES - DATA PROCESSING - 1.6% Electronic Data System Corporation..... 20,000 663,750 First Data Corporation................. 30,000 705,000 ------------ 1,368,750 TELECOMMUNICATION - 6.1% Alltel Corporation..................... 24,000 1,137,000 Bell Atlantic Corporation.............. 26,000 1,259,375 GTE Corporation........................ 24,000 1,320,000 SBC Communications, Inc................ 35,000 1,555,312 ------------ 5,271,687 TELECOMMUNICATION - LONG DISTANCE - 1.8% AT&T Corporation....................... 26,000 1,519,375 TEXTILES - APPAREL - 0.5% The Warnaco Group, Inc................. 20,000 462,500 TOBACCO - 2.5% Philip Morris Companies, Inc........... 31,000 1,427,938 UST, Inc............................... 24,000 709,500 ------------ 2,137,438
See accompanying notes - ----------------------------------------------------------------------------- 21 23 SCHEDULE OF INVESTMENTS - ----------------------------------------------------------------------------- SEPTEMBER 30, 1998 SECURITY GROWTH AND INCOME FUND (CONTINUED)
PRINCIPAL MARKET COMMON STOCK (CONTINUED) AMOUNT VALUE - --------------------------------------------------------------- TRUCKING - 0.4% Werner Enterprises, Inc................ 24,000 $ 378,000 WASTE MANAGEMENT - 0.8% Browning-Ferris Industries, Inc........ 23,000 695,750 ------------ Total common stocks - 84.3%................... 72,138,587 ------------ Total investments - 94.6%..................... 81,015,005 Cash and other assets, less liabilities - 5.4% 4,613,119 ------------ Total net assets - 100.0%..................... $85,628,124 ============ SECURITY EQUITY FUND-EQUITY SERIES - ------------------------------------------------------------------------------ COMMON STOCKS AEROSPACE/DEFENSE - 1.0% Lockheed Martin Corporation. . . . . . . 85,000 $ 8,569,062 AUTOMOBILES - 0.5% Chrysler Corporation. . . . . . . . . . 90,000 4,308,750 BANKS - MAJOR REGIONAL - 3.7% Bank of New York Company, Inc.. . . . . 400,000 10,950,000 Northern Trust Corporation. . . . . . . 200,000 13,650,000 Norwest Corporation . . . . . . . . . . 240,000 8,595,000 ------------ 33,195,000 BANKS - MONEY CENTER - 0.9% Chase Manhattan Corporation . . . . . . 190,000 8,217,500 BEVERAGES - SOFT DRINK - 0.7% Whitman Corporation . . . . . . . . . . 400,000 6,375,000 BROADCAST MEDIA - 0.6% Chancellor Media Corporation* . . . . . 150,000 5,006,250 BUILDING MATERIALS - 0.4% Masco Corporation . . . . . . . . . . . 150,000 3,693,750 CHEMICALS - BASIC - 0.6% Praxair, Inc. . . . . . . . . . . . . . 80,000 2,615,000 Solutia, Inc. . . . . . . . . . . . . . 120,000 2,707,500 ------------ 5,322,500 COMPUTER HARDWARE - 2.2% Compaq Computer Corporation . . . . . . 200,000 6,325,000 International Business Machines Corporation. . . . . . . . . . . . . 60,000 7,680,000 Sun Microsystems, Inc.* . . . . . . . . 120,000 5,977,500 ------------ 19,982,500 COMPUTERS - NETWORKING - 1.0% Cisco Systems, Inc.* . . . . . . . . . 150,000 $ 9,271,875 COMPUTER SOFTWARE/SERVICES - 4.7% BMC Software, Inc.* . . . . . . . . . . 250,000 15,015,625 Computer Sciences Corporation* . . . . 120,000 6,540,000 Microsoft Corporation* . . . . . . . . 180,000 19,811,250 Wang Laboratories, Inc. Warrants* . . . 2,369 12,807 ------------ 41,379,682 ELECTRICAL EQUIPMENT - 2.8% Emerson Electric Company . . . . . . . 150,000 9,337,500 General Electric Company . . . . . . . 200,000 15,912,500 ------------ 25,250,000 ELECTRONICS - SEMICONDUCTORS - 0.6% Intel Corporation . . . . . . . . . . . 60,000 5,145,000 ENTERTAINMENT - 0.8% Time Warner, Inc. . . . . . . . . . . . 80,000 7,005,000 FINANCIAL - DIVERSE - 4.3% American General Corporation . . . . . 150,000 9,581,250 Fannie Mae . . . . . . . . . . . . . . 230,000 14,777,500 Freddie Mac. . . . . . . . . . . . . . 270,000 13,348,125 ------------ 37,706,875 FOODS - 3.1% Bestfoods . . . . . . . . . . . . . . 240,000 11,625,000 ConAgra, Inc. . . . . . . . . . . . . 320,000 8,620,000 Ralston-Ralston Purina Group. . . . . 255,000 7,458,750 ------------ 27,703,750 HEALTH CARE - DIVERSE - 4.2% American Home Products Corporation . . . . . . . . . . . . 260,000 13,617,500 Bristol-Myers Squibb Company . . . . . 150,000 15,581,250 Johnson & Johnson. . . . . . . . . . . 100,000 7,825,000 ------------ 37,023,750 HOUSEHOLD FURNISHINGS & APPLIANCES - 1.1% Leggett & Platt, Inc.. . . . . . . . . 461,000 9,565,750 HOUSEHOLD PRODUCTS - 3.0% Colgate-Palmolive Company. . . . . . . 100,000 6,850,000 Fort James Corporation . . . . . . . . 280,000 9,187,500 Procter & Gamble Company, The. . . . . 150,000 10,640,625 ------------ 26,678,125 INSURANCE - LIFE/HEALTH - 1.4% Protective Life Corporation. . . . . . 130,000 4,680,000 Unum Corporation . . . . . . . . . . . 150,000 7,453,125 ------------ 12,133,125
See accompanying notes. - ----------------------------------------------------------------------------- 22 24 SCHEDULE OF INVESTMENTS - ----------------------------------------------------------------------------- SEPTEMBER 30, 1998 SECURITY EQUITY FUND - GLOBAL SERIES (CONTINUED)
NUMBER MARKET COMMON STOCKS (CONTINUED) OF SHARES VALUE - --------------------------------------------------------------- INSURANCE - MULTI-LINE - 3.6% American International Group, Inc...... 150,000 $11,550,000 Hartford Financial Services Group, Inc.......................... 200,000 9,487,500 Lincoln National Corporation........... 135,000 11,103,750 ------------ 32,141,250 INSURANCE - PROPERTY & CASUALTY - 1.3% Allstate Corporation.................. 270,000 11,255,625 LODGING - HOTELS - 1.3% Carnival Corporation (Cl. A).......... 370,000 11,770,625 MANUFACTURING - DIVERSIFIED - 6.1% AlliedSignal, Inc..................... 320,000 11,320,000 Crane Company......................... 300,000 7,050,000 Textron, Inc.......................... 105,000 6,365,625 Tyco International, Ltd............... 240,000 13,260,000 U.S. Industries, Inc.................. 470,000 7,079,375 United Technologies Corporation....... 115,000 8,790,312 ------------ 53,865,312 MEDICAL PRODUCTS & SUPPLIES - 4.0% Baxter International, Inc............. 200,000 11,900,000 Becton, Dickinson & Company........... 300,000 12,337,500 Medtronic, Inc........................ 200,000 11,575,000 ------------ 35,812,500 NATURAL GAS - 1.3% Coastal Corporation................... 340,000 11,475,000 OIL - DOMESTIC - 0.6% USX - Marathon Group.................. 155,000 5,492,812 OIL - INTERNATIONAL - 4.4% Chevron Corporation................... 90,000 7,565,625 Mobil Corporation..................... 140,000 10,631,250 Royal Dutch Petroleum Company ADR........................ 200,000 9,525,000 Texaco, Inc........................... 180,000 11,283,750 ------------ 39,005,625 OIL & GAS - REFINING & MARKETING - 1.0% Williams Companies, Inc., The.......... 300,000 8,625,000 PHARMACEUTICALS - 3.4% Schering-Plough Corporation............ 185,000 19,159,063 SmithKline Beecham PLC ADR............. 200,000 10,950,000 ------------ 30,109,063 PHOTOGRAPHY/IMAGING - 1.0% Xerox Corporation...................... 100,000 8,475,000 PUBLISHING - 1.0% McGraw-Hill Companies, Inc............ 110,000 8,717,500 PUBLISHING - NEWSPAPER - 1.9% Gannett Company, Inc.................. 160,000 $ 8,570,000 Tribune Company....................... 165,000 8,301,563 ------------ 16,871,563 RETAIL - APPAREL - 0.9% TJX Companies, Inc..................... 440,000 7,837,500 RETAIL - BUILDING SUPPLIES - 1.3% Lowes Companies, Inc.................. 125,000 3,976,563 Sherwin-Williams Company.............. 350,000 7,568,750 ------------ 11,545,313 RETAIL - DEPARTMENT STORES - 1.6% Federated Department Stores, Inc.*.... 200,000 7,275,000 Saks, Inc.*........................... 300,000 6,731,250 ------------ 14,006,250 RETAIL - DRUG STORES - 2.6% Rite Aid Corporation.................. 340,000 12,070,000 Walgreen Company...................... 250,000 11,015,625 ------------ 23,085,625 RETAIL - FOOD CHAINS - 2.8% Kroger Company*....................... 175,000 8,750,000 Safeway, Inc.*........................ 340,000 15,767,500 ------------ 24,517,500 RETAIL - GENERAL MERCHANDISE - 0.6% Dayton Hudson Corporation.............. 160,000 5,720,000 RETAIL - SPECIALTY - 1.0% Payless ShoeSource, Inc.*.............. 225,000 9,309,375 SERVICES - ADVERTISING/MARKETING - 1.2% Omnicom Group, Inc..................... 240,000 10,800,000 SERVICES - COMMERCIAL & CONSUMER - 1.4% Viad Corporation....................... 450,000 12,065,625 TELECOMMUNICATIONS - 2.6% GTE Corporation........................ 100,000 5,500,000 MCI Worldcom, Inc.*.................... 250,000 12,218,750 SBC Communications, Inc................ 125,000 5,554,688 ------------ 23,273,438 TELECOMMUNICATIONS - LONG DISTANCE - 1.4% Sprint Corporation.................... 170,000 12,240,000 WASTE MANAGEMENT - 0.9% Waste Management, Inc................. 160,000 7,690,000 ------------ Total common stocks - 86.8%.................... 769,240,745 Cash and other assets, less liabilities - 13.2%..................... 117,343,812 ------------ Total net assets - 100.0%...................... $886,584,557 ============
See accompanying notes. - ----------------------------------------------------------------------------- 23 25 SCHEDULE OF INVESTMENTS - ----------------------------------------------------------------------------- SEPTEMBER 30, 1998 SECURITY EQUITY FUND - GLOBAL SERIES (CONTINUED)
NUMBER MARKET COMMON STOCKS (CONTINUED) OF SHARES VALUE - --------------------------------------------------------------- AUSTRALIA - 1.1% Telestra Corporation....................119,600 $ 334,856 BRAZIL - 0.5% Telecomunicacoes Brasileiras S.A.*...... 2,500 176,094 CANADA - 2.8% Imax Corporation ADR*................... 34,500 690,000 Lowen Group, Inc., The.................. 4,300 63,425 Yogen Fruz World-Wide, Inc.*............ 27,830 119,438 ------------ 872,863 DENMARK - 1.3% Tele Danmark A/S........................ 4,100 407,097 FRANCE - 6.9% Alcatel Alsthom......................... 1,420 126,170 AXA-UAP................................. 2,840 259,941 Banque Nationale De Paris............... 2,400 128,461 Elf Aquitaine S.A. ADR.................. 6,900 429,094 SEITA................................... 6,000 346,846 Sidel S.A............................... 4,720 323,380 Vivendi................................. 2,760 549,558 ------------ 2,163,450 GERMANY - 2.5% Allianz AG............................. 960 296,949 Kamps AG*.............................. 700 36,646 Rhoen-Klinikum AG...................... 5,050 453,213 ------------ 786,808 GREECE - 2.1% Aktor S.A.*............................ 14,700 132,196 Commercial Bank of Greece S.A.......... 4,200 328,119 Ergo Bank S.A.......................... 2,600 209,441 ------------ 669,756 HONG KONG - 0.2% JCG Holdings, Ltd...................... 320,000 57,818 IRELAND - 3.8% Allied Irish Banks PLC................. 19,500 285,599 Elan Corporation PLC ADR............... 11,500 828,719 Ryanair Holdings PLC................... 13,640 75,832 ------------ 1,190,150 ITALY - 3.2% Banca Nazionale del Lavoro*........... 89,000 226,210 Instituto Nazionale delle Assicurazioni...................... 88,300 224,430 Mediolanum SpA........................ 9,000 206,421 Telecom Italia SpA.................... 52,900 364,149 ------------ 1,021,210 JAPAN - 7.7% Amway Japan, Ltd...................... 13,300 $ 97,708 Asahi Diamond Industry Company, Ltd....................... 49,000 196,907 Benesse Corporation................... 2,000 79,929 Bunka Shutter Company, Ltd............ 24,000 49,368 Doutor Coffee Company, Ltd............ 7,000 194,902 House Foods Corporation............... 12,000 150,749 Mos Food Service, Inc................. 18,000 218,190 National House Industrial Company, Ltd....................... 46,000 324,420 Nippon Flour Mills.................... 65,000 138,481 Nisshin Flour Milling Company, Ltd.... 23,000 167,448 Paris Miki, Inc....................... 3,600 48,398 Rinnai Corporation.................... 9,500 149,353 Snow Brand Milk Products Company, Ltd....................... 70,000 212,386 Sumitomo Forestry Company............. 33,000 162,188 Tiemco, Ltd........................... 3,300 20,607 York-Benimaru Company, Ltd............ 9,900 232,736 ------------ 2,443,770 LUXEMBOURG - 0.6% Espirito Santo Financial Group ADR.... 12,900 200,756 NETHERLANDS - 2.4% Koninklijke Ahold NV.................. 18,600 555,504 Koninklijke KPN LV.................... 6,600 203,766 ------------ 759,270 NORWAY - 1.9% Saga Petroleum ASA "A"................ 30,300 311,109 Storebrand ASA*....................... 41,200 283,873 ------------ 594,982 PHILIPPINES - 0.0% C&P Homes, Inc........................1,397,450 7,506 SINGAPORE - 1.8% Keppel Fels, Ltd...................... 21,000 23,310 Mandarin Oriental International, Ltd.. 60,000 28,200 Singapore Press Holdings, Ltd......... 21,000 174,512 Singapore Telecommunications, Ltd..... 203,000 339,799 ------------ 565,821 SPAIN - 2.2% Mapfre Vida Seguros................... 4,949 191,599 Tabacalera S.A........................ 22,500 493,348 ------------ 684,947
See accompanying notes. - ----------------------------------------------------------------------------- 24 26 SCHEDULE OF INVESTMENTS - ----------------------------------------------------------------------------- SEPTEMBER 30, 1998 SECURITY EQUITY FUND - GLOBAL SERIES (CONTINUED)
NUMBER MARKET COMMON STOCKS (CONTINUED) OF SHARES VALUE - --------------------------------------------------------------- SWEDEN - 2.6% Castellum AB*........................... 55,000 $ 544,068 Swedish Match AB........................ 87,224 271,653 ------------ 815,721 SWITZERLAND - 5.8% Nestle S.A.............................. 202 401,870 Novartis AG............................. 414 663,632 Roche Holdings AB....................... 56 602,759 Schweizerische Lebensversicherungs- und Rentenstalt...................... 342 153,422 ------------ 1,821,683 UNITED KINGDOM - 13.1% Aegis Group PLC.........................339,000 486,802 BritishTelecommunications PLC........... 20,500 273,824 Cadbury Schweppes PLC................... 22,300 289,909 Capita Group PLC........................ 35,900 369,711 D.F.S. Furniture Company PLC............ 55,800 188,705 George Wimpey PLC.......................108,000 177,112 Glaxo Wellcome PLC...................... 12,600 371,078 Oriflame International S.A.............. 12,000 27,224 Polypipe PLC............................ 65,500 114,650 Provident Financial PLC................. 32,161 431,223 Regent Inns PLC......................... 72,700 174,200 Rio Tinto PLC........................... 25,600 307,578 Royal Bank of Scotland Group PLC........ 11,400 131,738 SmithKline Beecham PLC.................. 47,800 527,597 Vodafone Group PLC...................... 22,900 266,966 ------------ 4,138,317 UNITED STATES - 24.1% Ace, Ltd................................ 3,900 117,000 Adaptec, Inc.*.......................... 11,800 112,100 BJ Services Company*.................... 8,800 143,000 Bristol-Myers Squibb Company............ 1,700 176,588 Caribiner International, Inc.*.......... 5,400 45,900 Chevron Corporation..................... 2,100 176,531 Comcast Corporation..................... 2,700 126,731 Consolidated Edison, Inc................ 2,700 140,738 Costco Companies, Inc.*................. 2,300 108,963 Cymer, Inc.*............................ 10,500 95,812 Data General Corporation*............... 14,900 162,037 Dominion Resources, Inc................. 2,900 129,412 EMC Corporation*........................ 2,300 131,531 Emerson Electric Company................ 2,900 180,525 EXEL, Ltd............................... 1,800 113,400 Fannie Mae.............................. 2,700 173,475 Federal-Mogul Corporation............... 3,000 140,250 Fort James Corporation.................. 5,600 183,750 NUMBER MARKET COMMON STOCKS (CONTINUED) OF SHARES VALUE - --------------------------------------------------------------- UNITED STATES (CONTINUED) Gap, Inc................................ 1,950 $ 102,863 General Electric Company................ 1,900 151,169 GTE Corporation......................... 2,600 143,000 Hershey Foods Corporation............... 2,700 184,781 Home Depot, Inc......................... 2,600 102,700 Johnson & Johnson....................... 2,000 156,500 Lucent Technologies, Inc................ 1,400 96,688 Marsh & Mclennan Companies, Inc....................... 2,250 111,937 Martin Marietta Materials, Inc.......... 3,700 159,794 Merrill Lynch & Company, Inc............ 1,200 56,850 Millennium Chemicals, Inc............... 7,100 132,237 Mobil Corporation....................... 2,600 197,438 Motorola, Inc........................... 2,300 98,181 NationsBank Corporation................. 1,900 101,650 Network Associates, Inc.*............... 3,000 106,500 Newell Company.......................... 2,800 128,975 Pfizer, Inc............................. 1,200 127,125 Pharmacia & Upjohn, Inc................. 4,200 210,788 Philip Morris Companies, Inc............ 3,300 152,006 Procter & Gamble Company, The........... 2,000 141,875 Rite Aid Corporation.................... 4,200 149,100 Rubbermaid, Inc......................... 5,900 141,231 Safeway, Inc.*.......................... 3,400 157,675 Structural Dynamics Research Corporation*................ 14,400 162,000 Sungard Data Systems, Inc.*............. 4,800 151,200 Teva Pharmaceutical Industries, Ltd. ADR................. 17,000 643,875 Texaco, Inc............................. 2,800 175,525 Time Warner, Inc........................ 1,100 96,319 TJX Companies, Inc...................... 5,200 92,625 Tyco International, Ltd................. 1,500 82,875 U.S. Foodservice, Inc.*................. 4,700 195,638 Warner-Lambert Company.................. 2,400 181,200 Williams Companies, Inc., The........... 5,300 152,375 Zale Corporation*....................... 4,500 115,312 ------------ 7,617,750 ------------ Total common stocks - 86.6%................. 27,330,625 PREFERRED STOCKS - ---------------- GERMANY - 1.5% Fielman AG.............................. 7,400 285,569 Sto Ag Vorzug........................... 578 186,742 ------------ Total preferred stocks - 1.5% 472,311
See accompanying notes. - ----------------------------------------------------------------------------- 25 27 SCHEDULE OF INVESTMENTS - ----------------------------------------------------------------------------- SEPTEMBER 30, 1998 SECURITY EQUITY FUND - ASSET ALLOCATION SERIES (CONTINUED)
PRINCIPAL MARKET U.S. GOVERNMENT SECURITIES AMOUNT VALUE - --------------------------------------------------------------- U.S. Treasury Strip, 0.00% - 2023..................... $1,915,000 $ 530,090 U.S. Treasury Strip, 0.00% - 2023..................... 4,337,000 1,184,825 ------------ Total U.S. government securities - 5.4%..... 1,714,915 ------------ Total investments - 93.5%................... 29,517,851 Cash and other assets, less liabilities - 6.5%................... 2,042,095 ------------ Total net assets - 100.0%................... $31,559,946 ============ INVESTMENT CONCENTRATION - ------------------------ At September 30, 1998, Global Series' investment concentration, by industry, was as follows: Banking.............................................. 5.9% Building Materials................................... 5.0% Electric Equipment................................... 2.4% Chemicals............................................ 0.5% Computer Software/Services........................... 3.4% Entertainment........................................ 3.7% Financial Services................................... 11.4% Foods/Beverages...................................... 7.7% Government........................................... 5.4% Health Care/Drugs.................................... 15.8% Household Products................................... 6.3% Machinery............................................ 1.1% Manufacturing........................................ 4.0% Oil & Gas............................................ 4.1% Retail............................................... 5.5% Services............................................. 3.4% Telecommunications................................... 7.6% Transportation....................................... 0.3% Cash, short-term instruments and other assets, less liabilities................ 6.5% --------- 100.0% ========= SECURITY EQUITY FUND - ASSET ALLOCATION SERIES PRINCIPAL AMOUNT OR NUMBER MARKET CORPORATE BONDS OF SHARES VALUE - --------------------------------------------------------------- BANKING - 0.8% Bank of New York Co., Inc., 6.50% - 2003........................ $25,000 $ 26,375 Washington Mutual Capital I, 8.375% - 2027(1).................... $25,000 27,469 ------------ 53,844 BROKERAGE - 0.8% Merrill Lynch & Company, Inc., 8.00% - 2007........................ $25,000 28,625 SI Financing Trust I, 9.50% - 2026(1).. 910 24,342 ------------ 52,967 CAPITAL GOODS - 0.4% Lafarge Corporation, 6.375% - 2005....................... $25,000 26,094 CONSUMER CYCLICAL - 3.1% Lowe's Companies, Inc., 6.70% - 2007........................ $25,000 26,625 MGM Grand, Inc., 6.95% - 2005.......... $10,000 10,225 Mirage Resorts, Inc., 6.625% - 2005....................... $10,000 10,087 NewsAmerican Holdings, 8.625% - 2003....................... $25,000 27,969 Rite Aid Corporation, 6.70% - 2001.....$125,000 129,688 ------------ 204,594 CONSUMER NONCYCLICAL - 0.9% Archer-Daniels-Midland Company, 8.875% - 2011....................... $25,000 32,344 Cargill, Inc., 6.15% - 2008............ $25,000 26,687 ------------ 59,031 INSURANCE - 0.4% Hartford Life, Inc., 7.10% - 2007...... $25,000 27,594 NATURAL GAS - 0.4% MCN Investment Corporation, 6.32% - 2003........................ $25,000 26,000 TECHNOLOGY - 0.4% Dell Computer Corporation, 6.55% - 2008........................ $25,000 26,500 TELECOMMUNICATIONS.- 0.8% SBC Communications, Inc., 6.625% - 2007....................... $25,000 27,281 MCI Worldcom, Inc., 6.4% - 2005......................... $25,000 26,375 ------------ 53,656
See accompanying notes. - ---------------------------------------------------------------------------- 26 28 SCHEDULE OF INVESTMENTS - -------------------------------------------------------------------------------- SEPTEMBER 30, 1998 SECURITY EQUITY FUND - ASSET ALLOCATION SERIES (CONTINUED)
PRINCIPAL AMOUNT OR NUMBER MARKET CORPORATE BONDS (CONTINUED) OF SHARES VALUE - --------------------------------------------------------------- TRANSPORTATION - 2.5% Hertz Corporation, 7.00% - 2004....... $150,000 $162,000 YANKEE - CORPORATES - 0.4% Abbey National PLC, 6.69% - 2005...... $25,000 26,281 ------------ Total corporate bonds - 10.9%............... 718,561 COMMON STOCKS BROADCAST MEDIA - 2.8% MediaOne Group, Inc.*................. 2,000 88,875 TCI Satellite Entertainment, Inc.*.... 240 690 Tele-Communications, Inc.*............ 2,400 93,900 ------------ 183,465 COMMUNICATION EQUIPMENT - 2.2% ADC Telecommunications, Inc.*......... 800 16,900 Allen Telecom, Inc.*.................. 900 6,019 Andrew Corporation*................... 700 9,275 Leap Wireless International, Inc.*.... 75 351 Lucent Technologies, Inc.............. 400 27,625 Motorola, Inc......................... 400 17,075 Northern Telecom, Ltd................. 1,300 41,600 QUALCOMM, Inc.*....................... 300 14,381 Tellabs, Inc.*........................ 300 11,944 ------------ 145,170 COMPUTERS - NETWORKING - 1.8% Cabletron Systems, Inc.*.............. 1,500 16,875 Cisco Systems, Inc.*.................. 1,125 69,539 3Com Corporation*..................... 1,000 30,063 ------------ 116,477 COMPUTERS - PERIPHERALS - 2.9% EMC Corporation*...................... 1,000 57,188 Iomega Corporation*................... 2,000 7,500 Lexmark International Group, Inc.*.... 800 55,450 Quantum Corporation*.................. 800 12,700 Read-Rite Corporation*................ 700 5,469 Seagate Technology, Inc.*............. 800 20,050 Storage Technology Corporation*....... 1,200 30,525 ------------ 188,882 CONSUMER FINANCE - 1.2% Capital One Financial Corporation..... 200 20,700 ContiFinancial Corporation*........... 800 6,000 Household International, Inc.......... 600 22,500 MBNA Corporation...................... 900 25,763 ------------ 74,963 NUMBER MARKET COMMON STOCKS (CONTINUED) OF SHARES VALUE - --------------------------------------------------------------- ENTERTAINMENT - 1.5% Time Warner, Inc...................... 600 $ 52,537 Viacom, Inc. (CI.A)*.................. 600 34,500 Walt Disney Company, The.............. 600 15,187 ------------ 102,224 EQUIPMENT - SEMICONDUCTORS - 0.9% Applied Materials, Inc.*.............. 700 17,675 KLA-Tencor Corporation*............... 600 14,925 Novellus Systems, Inc.*............... 700 18,375 Teradyne, Inc.*....................... 600 10,950 ------------ 61,925 FOOTWEAR - 2.0% Nike, Inc. (CI.B)..................... 1,500 55,219 Nine West Group, Inc.*................ 2,400 22,950 Reebok International, Ltd.*........... 2,300 31,194 Wolverine World Wide, Inc............. 2,300 25,012 ------------ 134,375 GAMING & LOTTERY - 1.2% Circus Circus Enterprises, Inc.*...... 1,400 13,212 Harrah's Entertainment, Inc.*......... 1,400 18,638 International Game Technology, Inc.... 1,300 24,131 Mirage Resorts, Inc.*................. 1,550 25,963 ------------ 81,944 GOLD COMPANIES - 3.2% Barrick Gold Corporation.............. 1,700 34,000 Battle Mountain Gold Company.......... 5,700 34,556 Hecla Mining Company*................. 3,600 18,225 Homestake Mining Company.............. 3,100 37,587 Newmont Mining Corporation............ 1,100 26,675 Placer Dome, Inc...................... 2,800 38,675 Stillwater Mining Company*............ 700 22,094 ------------ 211,812 LONG TERM HEALTH CARE - 1.1% Beverly Enterprises, Inc.*............ 1,100 8,800 Genesis Health Ventures, Inc.*........ 1,000 12,250 HCR Manor Care, Inc.*................. 500 14,656 HEALTHSOUTH Corporation*.............. 1,551 16,382 Integrated Health Services, Inc....... 700 11,769 Mariner Post-Acute Network, Inc.*..... 1,450 7,431 ------------ 71,288 INSURANCE - PROPERTY & CASUALTY - 1.8% Allstate Corporation.................. 700 29,181 Chubb Corporation..................... 500 31,500 Cincinnati Financial Corporation...... 1,000 30,750 St. Paul Companies, Inc............... 900 29,250 ------------ 120,681
See accompanying notes. - ----------------------------------------------------------------------------- 27 29 SCHEDULE OF INVESTMENTS - ----------------------------------------------------------------------------- SEPTEMBER 30, 1998 SECURITY EQUITY FUND - ASSET ALLOCATION SERIES (CONTINUED)
NUMBER MARKET COMMON STOCKS (CONTINUED) OF SHARES VALUE - ----------------------------------------------------------------- MEDICAL PRODUCTS & SUPPLIES - 2.3% Baxter International, Inc.............. 600 $ 35,700 Becton, Dickinson & Company............ 800 32,900 Boston Scientific Corporation*......... 400 20,550 Guidant Corporation.................... 400 29,700 Medtronic, Inc......................... 500 28,938 ------------ 147,788 OIL & GAS - DRILLING & EQUIPMENT - 1.2% Baker Hughes, Inc...................... 800 16,750 Halliburton Company.................... 700 19,994 Schlumberger, Ltd...................... 400 20,125 Transocean Offshore, Inc............... 700 24,281 ------------ 81,150 RESTAURANTS - 1.7% Applebee's International, Inc.......... 600 12,525 Brinker International, Inc.*........... 900 16,875 CKE Restaurants, Inc................... 470 13,983 Cracker Barrel Old Country Store, Inc.. 600 13,650 McDonald's Corporation................. 400 23,875 Outback Steakhouse, Inc.*.............. 400 10,550 Wendy's International, Inc............. 1,000 22,187 ------------ 113,645 RETAIL - BUILDING SUPPLIES - 1.3% Fastenal Company....................... 700 17,500 Hughes Supply, Inc..................... 900 25,650 Lowe's Companies, Inc.................. 700 22,269 Sherwin-Williams Company............... 1,000 21,625 ------------ 87,044 RETAIL - SPECIALTY - 3.1% AutoZone, Inc.*........................ 1,100 27,088 Claire's Stores........................ 1,600 28,800 Home Depot, Inc........................ 700 27,650 Office Depot, Inc.*.................... 1,000 22,438 OfficeMax, Inc.*....................... 2,100 20,606 The Pep Boys - Manny, Moe & Jack....... 1,200 16,050 Staples, Inc.*......................... 1,550 45,531 Toys "R" Us, Inc.*..................... 900 14,569 ------------ 202,732 SERVICES - ADVERTISING/MARKETING - 2.0% Acxiom Corporation*.................... 1,200 29,775 Gartner Group, Inc.*................... 1,000 20,875 Interpublic Group of Companies, Inc.... 500 26,969 Omnicom Group, Inc..................... 600 27,000 True North Communications, Inc......... 1,100 24,406 ------------ 129,025 PRINCIPAL AMOUNT OR NUMBER MARKET COMMON STOCKS (CONTINUED) OF SHARES VALUE - ----------------------------------------------------------------- TELECOMMUNICATIONS - 1.1% Ameritech Corporation.................. 300 $ 14,212 Bell Atlantic Corporation.............. 214 10,366 BellSouth Corporation.................. 200 15,050 GTE Corporation........................ 200 11,000 SBC Communications, Inc................ 384 17,064 U S West, Inc.......................... 54 2,832 ------------ 70,524 TOBACCO - 1.9% Philip Morris Companies, Inc........... 1,000 46,063 RJR Nabisco Holdings Corporation....... 1,500 37,781 UST, Inc............................... 1,500 44,344 ------------ 128,188 TRUCKING - 1.2% Rollins Truck Leasing Corporation...... 2,250 25,171 Ryder System, Inc...................... 650 16,169 USFreightways Corporation.............. 800 15,900 Werner Enterprises, Inc................ 1,375 21,656 ------------ 78,896 ------------ Total common stocks - 38.4%......... 2,532,198 U.S. GOVERNMENT & GOVERNMENT AGENCIES - --------------------------------------- FEDERAL HOME LOAN MORTGAGES - 2.1% 7.00% - 2020........................ $100,000 100,954 7.00% - 2021........................ $39,685 40,370 ------------ 141,324 FEDERAL NATIONAL MORTGAGE ASSOCIATION - 3.3% 6.50% - 2018........................ $48,451 48,560 6.95% - 2020........................ $130,000 135,839 7.50% - 2020........................ $32,750 33,793 ------------ 218,192 U.S. TREASURY NOTES - 6.5% 6.50% - 2006........................ $375,000 425,415 U.S. TREASURY BONDS - 1.7% 6.00% - 2026........................ $100,000 111,697 ------------ Total U.S. government & government agencies - 13.6%.................. 896,628
See accompanying notes. - ----------------------------------------------------------------------------- 28 30 SCHEDULE OF INVESTMENTS - -------------------------------------------------------------------------------- SEPTEMBER 30, 1998 SECURITY EQUITY FUND - ASSET ALLOCATION SERIES (CONTINUED)
NUMBER MARKET REAL ESTATE INVESTMENT TRUSTS OF SHARES VALUE - --------------------------------------------------------------- American Health Properties, Inc.......... 700 $ 16,450 Archstone Communities Trust.............. 800 16,300 Avalon Bay Communities, Inc.............. 460 15,669 CBL & Associates Properties, Inc......... 700 18,025 Duke Realty Investments, Inc............. 900 20,869 Equity Residential Properties Trust...... 400 16,875 Federal Realty Investment Trust.......... 650 14,706 General Growth Properties, Inc........... 550 19,594 Glimcher Realty Trust.................... 850 14,556 Health Care Property Investors, Inc...... 500 16,500 Kimco Realty Corporation................. 600 22,800 Merry Land & Investment Company.......... 800 17,900 New Plan Excel Realty Trust.............. 800 18,650 Post Properties, Inc..................... 450 17,353 Public Storage, Inc...................... 600 16,087 Simon Property Group, Inc................ 600 17,850 Spieker Properties, Inc.................. 500 18,375 United Realty Trust Dominion............. 1,200 13,650 Washington Real Estate Investment Trust................................. 1,000 16,188 Weingarten Realty Investors.............. 400 16,400 ------------ Total real estate investment trusts - 5.2%....................... 344,797 FOREIGN STOCKS - -------------- BELGIUM - 4.1% Cementbedrijven Cimenteries.............. 200 15,396 Delhaize - Le Lion....................... 300 22,659 Electrabel SA............................ 150 59,147 Fortis AG................................ 200 49,290 Gevaert NV............................... 200 12,409 Petrofina SA............................. 150 55,016 Solvay SA................................ 800 53,349 ------------ 267,266 DENMARK - 3.8% A/S Dampskibsselskabet Svendborg......... 5 48,781 A/S Forsikringsselskabet Codan........... 45 5,671 Akieselskabet Potagua.................... 140 3,179 Bang & Olufsen Holding A/S............... 82 5,548 BG Bank A/S.............................. 133 6,906 Carlsberg A/S............................ 197 11,458 Cheminova Holding A/S.................... 214 4,041 D/S Norden A/S........................... 35 3,194 Danisco A/S.............................. 244 16,510 Danske Traelast.......................... 54 4,674 Den Danske Bank.......................... 245 27,758 NUMBER MARKET FOREIGN STOCKS (CONTINUED) OF SHARES VALUE - --------------------------------------------------------------- DENMARK (CONTINUED) Finansierings Institutte for Industri og Handvaerk A/S...................... 189 $ 4,035 Finansieringsselskabet Gefion A/S ....... 240 3,985 FLS Industries A/S....................... 212 4,470 ISS International Service System A/S*........................... 148 7,802 J. Lauritzen Holdings A/S*............... 89 7,563 Jyske Bank A/S........................... 61 4,991 Korn-OG Foderstof Kompagniet A/S........................ 153 3,491 Novo Nordisk A/S......................... 263 31,659 Radiometer A/S........................... 94 4,148 Ratin A/S*............................... 88 15,301 Sophus Berendsen A/S*.................... 88 3,407 Sydbank A/S.............................. 108 4,928 Tele Danmark A/S......................... 94 9,333 Topdanmark A/S*.......................... 30 4,390 Tryg-Baltica Forsikring A/S.............. 128 3,323 ------------ 250,546 GERMANY - 10.4% Allianz AG............................... 360 111,356 BASF AG.................................. 1,081 41,781 Bayer AG................................. 735 29,067 Bayerische Motoren Werke (BMW) AG.............................. 100 66,411 Bayerische Motoren Werke (Bonus Issue)......................... 20 13,103 Continental AG........................... 202 4,895 Daimler-Benz AG.......................... 450 38,231 Degussa AG............................... 140 6,031 Deutsche Bank AG......................... 692 36,724 Deutsche Telekom AG...................... 2,900 90,050 Dresdner Bank AG......................... 611 23,213 Friedrich Grohe AG-Vorzugsak............. 7 1,927 Heidelberger Zement AG................... 86 5,686 Hochtief AG.............................. 180 5,277 Linde AG................................. 14 8,326 Merck KGAA............................... 187 7,664 Muenchener Rueckversicherungs- Gesellschaft AG....................... 70 30,573 Preussag AG.............................. 72 25,330 SAP AG................................... 122 54,306 Siemens AG............................... 1,038 56,701 Veba AG.................................. 634 32,849 ------------ 689,501
See accompanying notes. - ----------------------------------------------------------------------------- 29 31 SCHEDULE OF INVESTMENTS - -------------------------------------------------------------------------------- SEPTEMBER 30, 1998 SECURITY EQUITY FUND - ASSET ALLOCATION SERIES (CONTINUED)
NUMBER MARKET FOREIGN STOCKS (CONTINUED) OF SHARES VALUE - --------------------------------------------------------------- JAPAN - 8.8% All Nippon Airways Company, Ltd......... 2,000 $ 6,465 Asahi Glass Company, Ltd................ 2,000 9,697 Bank of Tokyo-Mitsubishi, Ltd........... 3,000 19,285 Chubu Electric Power Company, Inc....... 400 6,421 Fuji Bank, Ltd.......................... 1,000 2,020 Fujitsu, Ltd............................ 2,000 17,338 Hitachi, Ltd............................ 3,000 13,224 Industrial Bank of Japan, Ltd........... 2,000 7,347 Kansai Electric Power Company........... 1,400 24,221 Kawasaki Heavy Industries............... 4,000 8,081 Kawasaki Steel Corporation.............. 5,000 5,877 Kinki Nippon Railway Company, Ltd......................... 2,000 8,684 Kirin Brewery Company, Ltd.............. 1,000 8,022 Kyocera Corporation..................... 100 4,379 Marubeni Corporation.................... 3,000 3,548 Marui Company, Ltd...................... 1,000 14,546 Matsushita Electric Industrial Company, Ltd......................... 2,000 27,255 Mitsubishi Corporation.................. 4,000 19,395 Mitsubishi Estate Company, Ltd.......... 1,000 6,560 Mitsubishi Heavy Industrial, Ltd........ 4,000 13,723 Mitsubishi Motors Corporation........... 2,000 3,306 Mitsubishi Trust & Banking Corporation.......................... 1,000 3,526 Mitsui Fudosan Company, Ltd............. 1,000 5,135 NEC Corporation......................... 2,000 13,003 Nippon Steel Corporation................ 6,000 8,640 Nissan Motor Company, Ltd............... 2,000 5,583 Nomura Securities Company, Ltd.......... 2,000 14,399 NSK Ltd................................. 4,000 13,811 Sekisui House, Ltd...................... 4,000 32,589 Sharp Corporation....................... 2,000 11,945 Shin-Etsu Chemical Company.............. 1,000 15,905 Sony Corporation........................ 100 6,972 Sumitomo Bank, Ltd...................... 4,000 27,917 Sumitomo Chemical Company............... 6,000 17,940 Tokio Marine & Fire Insurance Company.............................. 2,000 17,925 Tokyo Electric Power Company............ 2,700 51,771 Tokyu Corporation....................... 4,000 8,933 Toshiba Corporation..................... 3,000 10,821 Toyoda Automatic Loom Works, Ltd........ 1,000 15,428 Toyota Motor Corporation................ 3,000 67,220 ------------ 578,857 ------------ Total foreign stocks - 27.1%................ 1,786,170 PRINCIPAL AMOUNT OR NUMBER MARKET TEMPORARY CASH INVESTMENTS OF SHARES VALUE - --------------------------------------------------------------- MONEY MARKET FUND - 3.8% Chase Master Note Program........ $ 253,700 $ 253,700 ------------ Total temporary cash investments - 3.8%... 253,700 ------------ Total investments - 99.0%................. 6,532,054 Cash and other assets, less liabilities - 1.0%................. 66,431 ------------ Total net assets - 100%................... $6,598,485 ============ SECURITY EQUITY FUND - SOCIAL AWARENESS SERIES COMMON STOCKS - ------------- AIRLINES - 0.5% AMR Corporation*........................ 1,100 $ 60,981 AUTO PARTS & EQUIPMENT - 0.7% Snap-On, Inc............................ 2,900 89,356 BANKS - MAJOR REGIONAL - 5.1% Banc One Corporation.................... 2,640 112,530 Bank of New York Company, Inc........... 5,800 158,775 First Chicago NBD Corporation........... 1,500 102,750 Northern Trust Corporation.............. 2,600 177,450 Wachovia Corporation.................... 1,300 110,825 ------------ 662,330 BANKS - MONEY CENTER - 0.7% Chase Manhattan Corporation............. 2,000 86,500 BEVERAGES - SOFT DRINK - 2.1% Coca-Cola Company....................... 4,800 276,600 BROADCAST MEDIA - 3.0% Comcast Corporation (CI.A).............. 2,500 117,344 Tele-Communications, Inc.*.............. 2,900 113,463 Viacom, Inc., (CI.B)*................... 2,600 150,800 ------------ 381,607 CHEMICALS - SPECIALTY - 0.5% Fuller (H.B.) Company................... 900 34,087 Nalco Chemical Company.................. 1,200 35,400 ------------ 69,487
See accompanying notes. - ----------------------------------------------------------------------------- 30 32 SCHEDULE OF INVESTMENTS - -------------------------------------------------------------------------------- SEPTEMBER 30, 1998 SECURITY EQUITY FUND - SOCIAL AWARENESS SERIES (CONTINUED)
NUMBER MARKET COMMON STOCKS OF SHARES VALUE - --------------------------------------------------------------- COMMUNICATIONS - EQUIPMENT - 1.2% ADC Telecommunications, Inc.*........... 1,900 $ 40,137 Tellabs, Inc.*.......................... 1,200 47,775 Scientific-Atlanta, Inc................. 3,100 65,487 ------------ 153,399 COMPUTER SOFTWARE/SERVICES - 7.1% Affiliated Computer Services, Inc. (Cl.A)*............... 3,100 94,550 American Management Systems, Inc.*...... 4,600 125,925 BMC Software, Inc.*..................... 3,800 228,237 Microsoft Corporation*.................. 4,200 462,262 ------------ 910,974 COMPUTER HARDWARE - 4.4% Compaq Computer Corporation............. 4,200 132,825 Hewlett-Packard Company................. 2,000 105,875 International Business Machines Corporation.......................... 2,600 332,800 ------------ 571,500 COMPUTERS - NETWORKING - 2.0% Ascend Communications, Inc.*........... 600 27,300 Cisco Systems, Inc.*................... 3,825 236,433 ------------ 263,733 DISTRIBUTION - FOOD & HEALTH - 0.5% Cardinal Health, Inc.................. 650 67,112 ELECTRIC COMPANIES - 0.4% New Century Energies, Inc............. 1,000 48,687 ELECTRICAL EQUIPMENT - 0.4% Hubbell, Inc. (CI.B).................. 1,500 53,250 ELECTRONICS - DISTRIBUTION - 0.5% W.W. Grainger, Inc.................... 1,600 67,400 ELECTRONICS - SEMICONDUCTORS - 3.5% Analog Devices, Inc.*................. 3,200 51,400 Intel Corporation..................... 4,700 403,025 ------------ 454,425 ENTERTAINMENT - 1.1% Time Warner, Inc...................... 1,700 148,856 FINANCIAL - DIVERSE - 7.4% American Express Company.............. 1,600 124,200 American General Corporation.......... 2,500 159,687 Fannie Mae............................ 2,600 167,050 Freddie Mac........................... 3,500 173,031 Finova Group, Inc..................... 2,800 139,825 SunAmerica, Inc....................... 3,000 183,000 ------------ 946,793 NUMBER MARKET COMMON STOCKS (CONTINUED) OF SHARES VALUE - --------------------------------------------------------------- FOODS - 2.6% General Mills, Inc.................... 1,500 $105,000 Interstate Bakeries Corporation....... 4,000 124,000 Ralston-Ralston Purina Group.......... 3,600 105,300 ------------ 334,300 HARDWARE & TOOLS - 0.4% Black & Decker Corporation.............. 1,200 49,950 HEALTH CARE - DIVERSE - 2.3% Johnson & Johnson....................... 3,700 289,525 HEALTH CARE - MANAGED CARE - 0.5% Wellpoint Health Networks, Inc.*........ 1,200 67,275 HEALTH CARE - SPECIALIZED SERVICES - 0.5% ALZA Corporation*....................... 1,400 60,725 HOUSEHOLD FURNISHINGS & APPLIANCES - 1.1% Leggett & Platt, Inc.................... 6,800 141,100 HOUSEHOLD PRODUCTS - 4.4% Clorox Company.......................... 1,800 148,500 Colgate-Palmolive Company............... 1,800 123,300 Kimberly-Clark Corporation.............. 2,000 81,000 Procter & Gamble Company, The........... 3,000 212,812 ------------ 565,612 INSURANCE - LIFE/HEALTH - 1.1% UNUM Corporation........................ 2,800 139,125 INSURANCE - MULTI-LINE - 1.6% American International Group, Inc....... 2,700 207,900 INSURANCE - PROPERTY & CASUALTY - 1.0% Chubb Corporation....................... 2,000 126,000 LEISURE TIME PRODUCTS - 0.6% Mattel, Inc............................. 2,700 75,600 MANUFACTURING - DIVERSIFIED - 0.8% Illinois Tool Works, Inc................ 1,900 103,550 MANUFACTURING - SPECIALIZED - 0.2% Avery Dennison Corporation.............. 600 26,213 MEDICAL PRODUCTS & SUPPLIES - 0.5% Guidant Corporation..................... 800 59,400 NATURAL GAS - 0.5% Consolidated Natural Gas Company........ 1,100 59,950 OFFICE EQUIPMENT & SUPPLIES - 0.8% Pitney Bowes, Inc....................... 1,800 98,213 OIL - INTERNATIONAL - 1.6% Amoco Corporation....................... 3,800 204,725
See accompanying notes. - ----------------------------------------------------------------------------- 31 33 SCHEDULE OF INVESTMENTS - -------------------------------------------------------------------------------- SEPTEMBER 30, 1998 SECURITY EQUITY FUND - SOCIAL AWARENESS SERIES (CONTINUED)
NUMBER MARKET COMMON STOCKS (CONTINUED) OF SHARES VALUE - --------------------------------------------------------------- OIL & GAS - DRILLING & EQUIPMENT - 0.2% ENSCO International, Inc................ 1,100 $ 11,894 Smith International, Inc.*.............. 600 16,463 ------------ 28,357 OIL & GAS - EXPLORATION PRODUCTION - 1.4% Anadarko Petroleum Corporation.......... 2,800 110,075 Apache Corporation...................... 2,600 69,713 ------------ 179,788 PAPER & FOREST PRODUCTS - 0.2% Mead Corporation........................ 800 23,550 PHARMACEUTICALS - 5.4% Forest Laboratories, Inc.*.............. 1,800 61,875 Merck & Company, Inc.................... 2,500 323,906 Schering-Plough Corporation............. 3,000 310,688 ------------ 696,469 PHOTOGRAPHY/IMAGING - 0.8% Xerox Corporation...................... 1,200 101,700 PUBLISHING - 0.6% McGraw-Hill Companies, Inc............. 900 71,325 RAILROADS - 0.4% Norfolk Southern Corporation........... 1,700 49,406 RESTAURANTS - 0.8% McDonald's Corporation................. 1,800 107,438 RETAIL - APPAREL - 1.4% TJX Companies, Inc..................... 6,800 121,125 Talbots, Inc........................... 3,000 53,625 ------------ 174,750 RETAIL - BUILDING SUPPLIES - 0.6% Lowes Companies, Inc................... 2,600 82,713 RETAIL - DEPARTMENT STORES - 1.3% Kohl's Corporation*.................... 1,600 62,400 Saks, Inc.*............................ 4,400 98,725 ------------ 161,125 RETAIL - DRUG STORES - 1.5% Rite Aid Corporation................... 5,600 198,800 RETAIL - FOOD CHAINS - 1.2% Kroger Company*........................ 3,000 150,000 RETAIL - GENERAL MERCHANDISE - 1.3% Dayton Hudson Corporation.............. 4,800 171,600 NUMBER MARKET COMMON STOCKS (CONTINUED) OF SHARES VALUE - --------------------------------------------------------------- SAVINGS & LOAN - 0.4% Ahmanson (H.F.) & Company.............. 1,000 $ 55,500 SERVICES - ADVERTISING/MARKETING - 1.4% Omnicom Group, Inc..................... 4,000 180,000 SERVICES - COMMERCIAL & CONSUMER - 0.5% Service Corporation International...... 1,900 60,563 SERVICES - COMPUTER SYSTEMS - 0.8% Sungard Data Systems, Inc.*............ 3,500 110,250 TELECOMMUNICATIONS - 7.4% Ameritech Corporation.................. 3,000 142,125 Bell Atlantic Corporation.............. 4,200 203,438 BellSouth Corporation.................. 2,700 203,175 MCI Worldcom, Inc.*.................... 4,000 195,500 SBC Communications, Inc................ 4,600 204,413 ------------ 948,651 TELECOMMUNICATIONS - LONG DISTANCE - 2.7% AT&T Corporation....................... 4,600 268,813 Sprint Corporation..................... 1,100 79,200 ------------ 348,013 TRUCKING - 0.2% FDX Corporation*....................... 500 22,562 ------------ Total common stocks - 92.1%................. 11,844,713 Cash and other assets, less liabilities - 7.9%................... 1,019,107 ------------ Total net assets - 100.0%................... $12,863,820 ============
See accompanying notes. - ----------------------------------------------------------------------------- 32 34 SCHEDULE OF INVESTMENTS - -------------------------------------------------------------------------------- SEPTEMBER 30, 1998 SECURITY FUND - VALUE SERIES
NUMBER MARKET COMMON STOCKS OF SHARES VALUE - --------------------------------------------------------------- AUTO PARTS & EQUIPMENT - 1.3% Motorcar Parts & Accessories, Inc.*.. 19,000 $ 220,875 BANKS - MAJOR REGIONAL - 2.0% Banc One Corporation................. 5,700 242,962 Northern Trust Corporation........... 1,600 109,200 ------------ 352,162 BIOTECHNOLOGY - 1.4% Ligand Pharmaceuticals, Inc. (CI.B)*.. 26,000 237,250 CHEMICALS - SPECIALTY - 4.0% Bush Boake Allen, Inc.*............... 5,200 139,100 M.A. Hanna Company.................... 26,600 299,250 Material Sciences Corporation*........ 30,000 262,500 ------------ 700,850 COMMUNICATION EQUIPMENT - 7.1% ANTEC Corporation*.................... 24,300 373,613 Comverse Technology, Inc.*............ 15,800 645,825 Motorola, Inc......................... 3,800 162,213 Transcrypt International, Inc.*....... 25,000 65,500 ------------ 1,247,151 COMPUTER HARDWARE - 1.0% CHS Electronics, Inc.*................ 15,400 167,475 COMPUTER SOFTWARE/SERVICES - 8.9% American Management Systems, Inc.*.... 12,000 328,500 Computer Sciences Corporation*........ 8,800 479,600 DST Systems, Inc.*.................... 5,400 284,850 Rational Software Corporation*........ 28,000 470,750 ------------ 1,563,700 ELECTRICAL EQUIPMENT - 6.7% Benchmark Electronics, Inc.*.......... 19,000 433,437 Cooper Cameron Corporation*........... 5,000 140,625 Maxwell International Corporation*....................... 16,000 336,000 Rockwell International Corporation........................ 7,200 260,100 ------------ 1,170,162 ELECTRONICS - INSTRUMENTATION - 3.8% E G & G, Inc.......................... 9,700 219,463 Perkin-Elmer Corporation.............. 6,400 439,600 ------------ 659,063 ENTERTAINMENT - 0.6% Metromedia International Group, Inc.*. 26,000 100,750 HEALTH CARE - LONG TERM CARE - 1.9% Integrated Health Services, Inc....... 20,000 336,250 NUMBER MARKET COMMON STOCKS OF SHARES VALUE - --------------------------------------------------------------- HOUSEHOLD FURNISHINGS & APPLIANCES - 2.5% Meadowcraft, Inc.*.................... 11,000 $ 110,687 O'Sullivan Industries Holdings, Inc.*. 33,000 319,688 ------------ 430,375 INSURANCE - LIFE/HEALTH - 4.0% AFLAC, Inc............................ 12,000 342,750 UNUM Corporation...................... 7,400 367,688 ------------ 710,438 INSURANCE - PROPERTY & CASUALTY - 1.5% Horace Mann Educators Corporation..... 9,000 270,000 IRON & STEEL - 1.1% Cleveland-Cliffs, Inc................. 5,000 195,000 LEISURE TIME PRODUCTS - 2.2% Hasbro, Inc........................... 13,000 383,500 MANUFACTURING - DIVERSIFIED - 1.2% AEP Industries, Inc.*................. 10,200 214,200 MEDICAL PRODUCTS & SUPPLIES - 3.4% Dentsply International, Inc........... 7,200 161,100 Sunrise Medical, Inc.*................ 43,600 436,000 ------------ 597,100 NATURAL GAS - 3.2% Equitable Resources, Inc.............. 22,000 559,625 OIL - INTERNATIONAL - 1.7% Tesoro Petroleum Corporation*......... 23,000 300,438 OIL & GAS - EXPLORATION & PRODUCTION - 6.9% Chieftain International, Inc.*........ 18,000 307,125 Forcenergy, Inc.*..................... 35,000 203,438 Kerr-McGee Corporation................ 4,000 182,000 MCN Energy Group, Inc................. 7,200 122,850 Ocean Energy, Inc.*................... 30,000 393,750 ------------ 1,209,163 PHARMACEUTICALS - 7.5% Dura Pharmaceuticals, Inc.*........... 19,000 207,812 Mylan Laboratories, Inc............... 26,000 767,000 Teva Pharmaceutical Industries, Ltd. ADR........................... 8,900 337,087 ------------ 1,311,899 PUBLISHING - NEWSPAPER - 3.2% E.W. Scripps Company (Cl.A)........... 7,000 304,500 News Corporation, Ltd. ADR............ 10,000 256,250 ------------ 560,750 RAILROADS - 2.9% RailAmerica, Inc.*.................... 86,100 505,837
See accompanying notes. - ----------------------------------------------------------------------------- 33 35 SCHEDULE OF INVESTMENTS - -------------------------------------------------------------------------------- SEPTEMBER 30, 1998 SECURITY EQUITY FUND - VALUE SERIES (CONTINUED)
NUMBER MARKET COMMON STOCK (CONTINUED) OF SHARES VALUE - --------------------------------------------------------------- RESTAURANTS - 6.0% The Cheesecake Factory*............... 16,500 $ 255,750 Morrison Health Care, Inc............. 21,000 372,750 Sonic Corporation*.................... 24,000 420,000 ------------ 1,048,500 RETAIL - APPAREL - 2.2% Stage Stores, Inc.*................... 16,000 195,000 Talbots, Inc.......................... 11,000 196,625 ------------ 391,625 RETAIL - DEPARTMENT STORES - 1.5% Elder-Beerman Stores Corporation, Inc.* 15,400 267,575 RETAIL - SPECIALTY - 1.2% Keystone Automotive Industries, Inc.* 10,500 207,375 SERVICES - COMMERCIAL & CONSUMER - 6.1% Angelica Corporation.................. 32,000 514,000 FTI Consulting, Inc.*................. 20,000 103,750 Pinkerton's, Inc.*.................... 32,500 448,906 ------------ 1,066,656 ------------ Total common stocks - 97.0%................. 16,985,744 Cash and other assets, less liabilities - 3.0%................... 529,838 ------------ Total net assets - 100.0%................... $17,515,582 ============ SECURITY EQUITY FUND - SMALL COMPANY SERIES COMMON STOCKS - ------------- AIRLINES - 1.5% Midwest Express Holdings, Inc.*.......... 1,900 $ 63,650 BEVERAGES - ALCOHOLIC - 1.2% Adolph Coors Company..................... 400 18,375 Beringer Wine Estates Holdings, Inc. (CI.B)*.......................... 800 30,650 ------------ 49,025 BIOTECHNOLOGY - 1.1% IDEXX Laboratories, Inc.*................ 2,000 47,750 COMMUNICATION EQUIPMENT - 3.6% Cellular Communication International, Inc.*.................. 1,200 65,100 GeoTel Communications Corporation*.......................... 1,500 40,312 L-3 Communication Holdings, Inc.*........ 1,000 39,687 ------------ 145,099 SECURITY EQUITY FUND - SMALL COMPANY SERIES (CONTINUED) NUMBER MARKET COMMON STOCK (CONTINUED) OF SHARES VALUE - --------------------------------------------------------------- COMPUTER HARDWARE - 1.7% Cybex Computer Products Corporation*......................... 700 $ 17,587 Jack Henry & Associates, Inc............ 100 4,776 Network Appliance, Inc.*................ 1,000 50,625 ------------ 72,988 COMPUTER SOFTWARE/SERVICES - 12.5% Advantage Learning Systems, Inc.*....... 600 22,800 Best Software, Inc.*.................... 600 14,400 Concord Communications, Inc.*........... 2,500 99,375 Dendrite International, Inc.*........... 2,500 59,687 Inktomi Corporation*.................... 600 45,150 Insight Enterprises, Inc.*.............. 600 16,950 Legato Systems, Inc.*................... 400 20,550 Mercury Interactive Corporation*........ 1,500 59,531 Nova Corporation*....................... 400 12,275 Peregrine Systems, Inc.*................ 600 24,150 PSINet, Inc.*........................... 3,200 44,600 TSI International Software, Ltd.*....... 1,000 34,625 Visio Corporation*...................... 800 19,250 Wind River Systems*..................... 1,000 47,250 ------------ 520,593 COMPUTERS - NETWORKING - 0.6% International Network Services*......... 600 24,900 COMPUTERS - PERIPHERALS - 1.1% Xircom, Inc.*........................... 1,800 44,100 DISTRIBUTION - FOOD & HEALTH - 1.1% Hain Food Group, Inc.".................. 2,200 33,000 Patterson Dental Company................ 400 14,800 ------------ 47,800 ELECTRIC COMPANIES - 2.8% Montana Power Company................... 200 8,938 Philadelphia Suburban Corporation....... 1,000 26,812 WPS Resources Corporation............... 2,300 82,225 ------------ 117,975 ELECTRICAL EQUIPMENT - 1.7% QLogic Corporation*...................... 1,100 71,775 ELECTRONICS - DEFENSE - 0.4% Symbol Technologies, Inc................. 300 15,394 ELECTRONICS - DISTRIBUTION - 1.6% Power Integrations, Inc.*................ 4,000 54,250 Superior Telecom, Inc.................... 300 14,512 ------------ 68,762
See accompanying notes. - ----------------------------------------------------------------------------- 34 36 SCHEDULE OF INVESTMENTS - -------------------------------------------------------------------------------- SEPTEMBER 30, 1998 SECURITY EQUITY FUND - SMALL COMPANY SERIES (CONTINUED)
NUMBER MARKET COMMON STOCKS (CONTINUED) OF SHARES VALUE - --------------------------------------------------------------- ENTERTAINMENT - 0.4% Gemstar International Group, Ltd.*..... 400 $ 18,550 FINANCIAL - DIVERSE - 2.0% LandAmerica Financial Group, Inc....... 1,600 82,000 FOODS - 0.4% American Italian Pasta Company (CI.A)*.... 500 13,125 Worthington Foods, Inc.................... 200 3,875 ------------ 17,000 HEALTH CARE - LONG TERM CARE - 1.3% Hanger Orthopedic Group, Inc.*........... 3,000 55,875 HEALTH CARE - MANAGED CARE - 1.2% Express Scripts, Inc.*................... 600 49,350 HEALTH CARE - SPECIALIZED SERVICES - 4.5% Clark/Bardes Holdings, Inc.*............. 1,100 9,350 Covance, Inc.*........................... 900 23,344 Parexel International*................... 1,700 66,300 Pediatrix Medical Group, Inc.*........... 1,500 67,313 Pharmaceutical Product Development, Inc.*.................... 800 22,400 ------------ 188,707 HOSPITAL MANAGEMENT - 2.4% Province Healthcare Company*............. 3,000 102,188 HOUSEHOLD FURNISHINGS & APPLIANCES - 1.0% La-Z-Boy, Inc............................ 2,200 43,175 INSURANCE - PROPERTY & CASUALTY - 0.5% Fidelity National Financial, Inc......... 600 20,287 LODGING - HOTELS - 0.7% ResortQuest International, Inc.*......... 3,400 29,963 MEDICAL PRODUCTS & SUPPLIES - 5.2% ADAC Laboratories........................ 2,500 60,000 MiniMed, Inc.*........................... 800 52,800 ResMed, Inc.*............................ 2,000 104,000 ------------ 216,800 MISCELLANEOUS BUSINESS SERVICES - 1.6% META Group, Inc.*........................ 2,000 65,375 OFFICE EQUIPMENT & SUPPLIES - 0.5% National Computer Systems, Inc........... 700 20,650 OIL & GAS - DRILLING & EQUIPMENT - 0.8% BJ Services Company*..................... 1,100 17,875 Smith International, Inc.*............... 500 13,719 ------------ 31,594 NUMBER MARKET COMMON STOCKS (CONTINUED) OF SHARES VALUE - --------------------------------------------------------------- OIL & GAS - EXPLORATION & PRODUCTION - 1.2% Cross Timbers Oil Company................ 700 $ 10,544 Devon Energy Corporation................. 300 9,881 Houston Exploration Company*............. 600 11,700 Newfield Exploration Company*............ 400 9,000 Snyder Oil Corporation................... 600 9,562 ------------ 50,687 PHARMACEUTICALS - 1.8% Alpharma, Inc............................ 900 23,625 Amerisource Health Corporation*.......... 700 38,106 Sepracor, Inc.*.......................... 200 13,150 ------------ 74,881 RESTAURANTS - 1.2% Ryan's Family Steak House, Inc.*......... 4,200 50,138 RETAIL - BUILDING SUPPLIES - 0.1% Rental Service Corporation*.............. 300 5,400 RETAIL - DEPARTMENT STORES - 2.8% 99 Cents Only Stores*.................... 3,000 118,688 RETAIL - DRUG STORES - 2.2% CVS Trust Automatic Common Exchange Securities................... 200 16,300 Duane Reade, Inc.*....................... 1,000 37,937 Longs Drug Stores Corporation............ 900 36,169 ------------ 90,406 RETAIL - FOOD CHAINS - 0.7% Dominick's Supermarkets, Inc.*........... 700 29,925 RETAIL - GENERAL MERCHANDISE - 1.0% Linens `N Things, Inc.*.................. 1,500 41,250 RETAIL - SPECIALTY - 1.5% School Specialty, Inc.*.................. 2,500 38,437 United Auto Group, Inc*.................. 1,700 24,119 ------------ 62,556 SERVICES - ADVERTISING/MARKETING - 3.8% Acxiom Corporation*..................... 1,500 37,219 Boron, Lepore & Associates, Inc.*....... 1,700 64,387 Lamar Advertising Company*.............. 2,000 56,000 ------------ 157,606 SERVICES - COMMERCIAL & CONSUMER - 7.5% Century Business Services, Inc.*........ 1,500 30,563 International Telecommunication Data Systems, Inc.*.................. 1,100 31,900 Market Facts, Inc.*..................... 800 22,200 Profit Recovery Group International,Inc.* 4,000 125,000 Rent-Way, Inc.*......................... 1,000 24,625 Romac International, Inc.*.............. 4,500 81,000 ------------ 315,288
See accompanying notes. - ----------------------------------------------------------------------------- 35 37 SCHEDULE OF INVESTMENTS - -------------------------------------------------------------------------------- SEPTEMBER 30, 1998
SECURITY EQUITY FUND - SMALL COMPANY SERIES (CONTINUED) NUMBER MARKET COMMON STOCK (CONTINUED) OF SHARES VALUE - --------------------------------------------------------------- SERVICES - DATA PROCESSING - 3.7% Lason, Inc.*............................. 3,000 $ 153,750 SERVICES - FACILITIES/ENVIRONMENTAL - 1.4% Metzler Group, Inc.*..................... 1,700 58,225 TELECOMMUNICATIONS - CELLULAR - 0.3% COMSAT Corporation....................... 300 10,575 TELECOMMUNICATIONS - LONG DISTANCE - 1.1% Excite, Inc.*............................ 400 16,325 Lycos, Inc.*............................. 900 30,431 ------------ 46,756 TEXTILES - APPAREL - 0.2% OshKosh B'Gosh, Inc...................... 400 8,300 WASTE MANAGEMENT - 1.2% Eastern Environmental Services, Inc.*.... 1,700 51,425 ------------ Total common stocks - 85.1%................. 3,557,181 Cash and other assets, less liabilities - 14.9%.................. 623,776 ------------ Total net assets - 100.0%................... $4,180,957 ============ SECURITY ULTRA FUND COMMON STOCKS - --------------------------------------------------------------- AIR FREIGHT - 1.3% Expeditors International of Washington, Inc...................... 34,000 $ 943,500 BANKS - MAJOR REGIONAL - 4.7% Northern Trust Corporation.............. 26,000 1,774,500 State Street Corporation................ 31,000 1,691,437 ------------ 3,465,937 BIOTECHNOLOGY - 3.9% Ligand Pharmaceuticals, Inc., (CI.B)*.. 180,000 1,642,500 Millennium Pharmaceutical*............. 70,000 1,216,250 ------------ 2,858,750 CHEMICALS - SPECIALTY - 2.4% Bush Boake Allen, Inc.*................ 32,000 856,000 Material Sciences Corporation*......... 105,200 920,500 ------------ 1,776,500 SECURITY ULTRA FUND (CONTINUED) NUMBER MARKET COMMON STOCKS (CONTINUED) OF SHARES VALUE - --------------------------------------------------------------- COMMUNICATION EQUIPMENT - 7.0% Comverse Technology, Inc.*............. 90,000 $3,678,750 General Instrument Corporation*........ 45,000 973,125 Transcrypt International, Inc.*........ 166,500 436,230 ------------ ....................................... 5,088,105 COMPUTER HARDWARE - 1.0% CHS Electronics, Inc.*................. 68,500 744,938 COMPUTER SOFTWARE/SERVICES - 13.5% American Management Systems, Inc.*..... 83,000 2,272,125 Cambridge Technology, Inc.*............ 60,000 1,338,750 Computer Sciences Corporation*......... 22,000 1,199,000 Electronic Processing, Inc.*........... 35,000 402,500 Electronics for Imaging, Inc.*......... 18,000 380,250 Network Associates, Inc.*.............. 34,500 1,224,750 Rational Software Corporation*......... 140,000 2,353,750 USCS International, Inc.*.............. 22,000 706,750 ------------ 9,877,875 DISTRIBUTION - FOOD & HEALTH - 0.3% Cardinal Health, Inc................... 2,000 206,500 ELECTRICAL EQUIPMENT - 4.1% Cooper Cameron Corporation*............ 28,000 787,500 Maxwell Technologies, Inc.*............ 103,300 2,169,300 ------------ 2,956,800 ELECTRONICS - INSTRUMENTATION - 4.0% E G & G, Inc........................... 44,000 995,500 Perkin-Elmer Corporation............... 28,000 1,923,250 ------------ 2,918,750 ELECTRONICS - SEMI-CONDUCTORS - 0.6% Uniphase Corporation*.................. 11,100 455,100 ENTERTAINMENT - 0.6% Metromedia International Group, Inc.*.. 120,000 465,000 FOODS - 2.0% Chiquita Brands International, Inc..... 132,000 1,394,250 HEALTH CARE - LONG TERM CARE - 1.1% Integrated Health Services, Inc........ 46,000 773,375 HEALTH CARE - SPECIALIZED SERVICES - 6.1% ALZA Corporation*...................... 36,000 1,561,500 CryoLife, Inc.*........................ 31,000 488,250 Quintiles Transnational Corporation*... 22,200 971,250 Shire Pharmaceuticals Group, PLC*...... 65,000 1,421,875 ------------ 4,442,875
See accompanying notes. - ----------------------------------------------------------------------------- 36 38 SCHEDULE OF INVESTMENTS - -------------------------------------------------------------------------------- SEPTEMBER 30, 1998
SECURITY ULTRA FUND (CONTINUED) NUMBER MARKET COMMON STOCKS (CONTINUED) OF SHARES VALUE - --------------------------------------------------------------- HOUSEHOLD FURNISHINGS & APPLIANCES - 3.0% Leggett & Platt, Inc.................... 39,800 $ 825,850 Meadowcraft, Inc.*...................... 70,000 704,375 O'Sullivan Industries Holdings, Inc.*... 70,000 678,125 ------------ 2,208,350 INSURANCE - LIFE & HEALTH - 3.2% AFLAC, Inc............................. 82,000 2,342,125 LEISURE TIME PRODUCTS - 1.5% Hasbro, Inc............................ 38,000 1,121,000 MANUFACTURING - SPECIALIZED - 0.8% Ionics, Inc.*.......................... 21,000 556,500 MEDICAL PRODUCTS & SUPPLIES - 3.4% Dentsply International, Inc............ 32,000 716,000 Stryker Corporation.................... 22,000 748,000 Sunrise Medical, Inc.*................. 100,000 1,000,000 ------------ ....................................... 2,464,000 OFFICE EQUIPMENT & SUPPLIES - 1.8% Corporate Express, Inc.*............... 110,000 1,313,125 OIL - INTERNATIONAL - 1.4% Tesoro Petroleum Corporation*.......... 80,100 1,046,306 OIL & GAS - EXPLORATION & PRODUCTION - 3.6% ForceEnergy, Inc.*..................... 100,000 581,250 Kerr-McGee Corporation................. 17,000 773,500 MCN Energy Group, Inc.................. 35,000 597,188 Ocean Energy, Inc.*.................... 54,000 708,750 ------------ 2,660,688 PHARMACEUTICALS - 9.6% Dura Pharmaceuticals, Inc.*............ 85,000 929,688 Mylan Laboratories, Inc................ 160,000 4,720,000 Teva Pharmaceutical Industries, Ltd. ADR ............... 36,500 1,382,438 ------------ 7,032,126 PUBLISHING - NEWSPAPER - 2.0% E.W. Scripps Company, (CI.A)........... 34,000 1,479,000 RAILROADS - 1.2% RailAmerica, Inc.*..................... 150,000 881,250 RESTAURANTS - 0.9% The Cheesecake Factory*................ 42,000 651,000 RETAIL - APPAREL - 0.8% Stage Stores, Inc.*.................... 49,000 597,187 NUMBER MARKET COMMON STOCKS (CONTINUED) OF SHARES VALUE - --------------------------------------------------------------- RETAIL - DEPARTMENT STORES - 0.5% Family Dollar Stores, Inc.............. 21,000 $ 330,750 RETAIL - GENERAL MERCHANDISE - 0.6% Consolidated Stores Corporation*....... 24,000 471,000 RETAIL - SPECIALTY - 0.5% Keystone Automotive Industries, Inc.*.. 20,000 395,000 SERVICES - ADVERTISING/MARKETING - 7.1% Acxiom Corporation*.................... 70,000 1,736,875 CKS Group, Inc.*....................... 27,100 479,331 DoubleClick, Inc.*..................... 10,800 257,850 Omnicom Group, Inc..................... 38,000 1,710,000 True North Communications, Inc......... 45,000 998,437 ------------ 5,182,493 SERVICES - COMMERCIAL & CONSUMER - 1.7% Angelica Corporation................... 20,000 321,250 FTI Consulting, Inc.*.................. 53,500 277,531 Pinkerton's, Inc.*..................... 46,000 635,375 ------------ 1,234,156 SERVICES - COMPUTER SYSTEMS - 0.7% Sungard Data Systems, Inc.*........... 17,000 535,500 ------------ Total common stocks - 96.9%................. 70,869,811 Cash and other assets, less liabilities - 3.1%................... 2,294,710 ------------ Total net assets - 100.0%................... $73,164,521 ============
The identified cost of investments owned at September 30, 1998 was the same for book and tax purposes, except for Growth and Income Fund, Global Series, Asset Allocation Series, and Ultra Fund for which the identified cost for federal income tax purposes was $87,565,358, $30,410,442, $6,875,143, and $72,249,937, respectively. * Securities on which no cash dividend was paid during the preceding twelve months. ADR (American Depositary Receipt) (1) Trust preferred securities - Securities issued by financial institutions to augment their Tier 1 capital base. Issued on a subordinate basis relative to senior notes or debentures. Institutions may defer cash payments for up to 10 pay periods. See accompanying notes. - ----------------------------------------------------------------------------- 37 39 BALANCE SHEETS - -------------------------------------------------------------------------------- SEPTEMBER 30, 1998
SECURITY EQUITY FUND ---------------------------------------------------- SECURITY ASSET GROWTH AND EQUITY GLOBAL ALLOCATION INCOME FUND SERIES SERIES SERIES Assets Investments, at value (identified cost: $87,392,841, $489,769,337, $30,315,512 and $6,875,073, respectively)............................................ $81,015,005 $769,240,745 $29,517,851 $6,532,054 Cash....................................................... 3,707,875 119,661,583 2,111,570 37 Receivables: Fund shares sold......................................... 101,350 658,349 2,378 33,037 Securities sold.......................................... 557,079 320,939 -- 1,339 Forward foreign exchange contracts....................... -- -- 32,513 -- Interest................................................. 215,137 436,055 7,316 27,208 Dividends................................................ 200,017 731,737 51,108 8,108 Foreign taxes recoverable................................ -- -- 33,184 1,684 Security Management Company.............................. -- -- -- 6,539 Prepaid expenses........................................... -- -- -- 8,878 ----------- ------------ ----------- ---------- Total assets........................................... $85,796,463 $891,049,408 $31,755,920 $6,618,884 =========== ============ =========== ========== Liabilities and Net Assets Liabilities: Payable for: Securities purchased..................................... $ -- $ 3,401,906 $ 109,107 $ -- Fund shares redeemed..................................... 74,470 232,171 24,221 -- Other liabilities: Management fees.......................................... 86,387 740,546 52,277 5,403 Custodian fees........................................... -- -- -- 173 Transfer and administration fees......................... -- -- -- 6,124 Professional fees........................................ -- -- -- 5,000 12b-1 distribution plan fees............................. 7,482 90,228 10,369 2,726 Other payables........................................... -- -- -- 973 ----------- ------------ ----------- ---------- Total liabilities...................................... 168,339 4,464,851 195,974 20,399 Net Assets: Paid in capital............................................ 77,362,763 539,625,718 29,921,708 6,427,676 Undistributed net investment income (loss) ................ 160,376 2,411,996 (122,744) 61,017 Accumulated undistributed net realized gain on sale of investments and foreign currency transactions.................................... 14,482,821 65,075,435 2,524,727 452,729 Net unrealized appreciation (depreciation) in value of investments and translation of assets and liabilities in foreign currency............ (6,377,836) 279,471,408 (763,745) (342,937) ----------- ------------ ----------- ---------- Net assets............................................. 85,628,124 886,584,557 31,559,946 6,598,485 ----------- ------------ ----------- ---------- Total liabilities and net assets..................... $85,796,463 $891,049,408 $31,755,920 $6,618,884 =========== ============ =========== ========== Class "A" Shares Capital shares outstanding................................. 9,948,830 87,294,217 1,687,311 306,981 Net assets................................................. $76,370,950 $773,606,316 $18,940,723 $3,294,479 Net asset value per share (net assets divided by shares outstanding)...................................... $7.68 $8.86 $11.23 $10.73 Add: Selling commission (5.75% of the offering price).......................................... 0.47 0.54 0.69 0.65 ----------- ------------ ----------- ---------- Offering price per share (net asset value divided by 94.25%)....................................... $8.15 $9.40 $11.92 $11.38 =========== ============ =========== ========== Class "B" Shares Capital shares outstanding................................. 1,228,069 13,267,776 1,158,945 311,145 Net assets................................................. $9,257,174 $112,978,241 $12,619,223 $3,304,006 Net asset value per share (net assets divided by shares outstanding)...................................... $7.54 $8.52 $10.89 $10.62 =========== ============ =========== ==========
See accompanying notes. - -------------------------------------------------------------------------------- 38 40 BALANCE SHEETS - -------------------------------------------------------------------------------- SEPTEMBER 30, 1998
SECURITY EQUITY FUND ------------------------------------------- SOCIAL SMALL SECURITY AWARENESS VALUE COMPANY ULTRA SERIES SERIES SERIES FUND Assets Investments, at value (identified cost: $9,958,208, $17,806,004, $3,418,984 and $72,062,782, respectively)............................................ $11,844,713 $16,985,744 $3,557,181 $70,869,811 Cash....................................................... 1,011,115 669,232 1,132,601 1,134,507 Receivables: Fund shares sold......................................... 10,663 54,799 -- 20,457 Securities sold.......................................... -- -- 93,525 1,765,004 Interest................................................. 3,299 690 3,257 5,022 Dividends................................................ 9,984 11,942 28 39,610 Prepaid expenses........................................... 6,168 7,924 5,431 -- ----------- ------------ ----------- ----------- Total assets........................................... $12,885,942 $17,730,331 $4,792,023 $73,834,411 =========== ============ =========== =========== Liabilities and Net Assets Liabilities: Payable for: Securities purchased..................................... $ -- $ 184,350 $ 601,840 $ 565,435 Fund shares redeemed..................................... -- -- -- 23,526 Other liabilities: Management fees.......................................... 10,614 13,860 -- 76,393 Custodian fees........................................... 680 953 2,435 -- Transfer and administration fees......................... 2,454 3,545 911 -- Professional fees........................................ 2,487 6,000 -- -- 12b-1 distribution plan fees............................. 4,222 5,339 1,225 4,536 Other payables........................................... 1,665 702 4,655 -- ----------- ------------ ----------- ----------- Total liabilities...................................... 22,122 214,749 611,066 669,890 Net Assets: Paid in capital............................................ 10,711,122 18,313,385 4,685,111 55,429,438 Undistributed net investment loss ......................... -- -- -- -- Accumulated undistributed net realized gain (loss) on sale of investments and foreign currency transactions............................ 266,193 22,457 (642,351) 18,928,054 Net unrealized appreciation (depreciation) in value of investments and translation of assets and liabilities in foreign currency............ 1,886,505 (820,260) 138,197 (1,192,971) ----------- ------------ ----------- ----------- Net assets............................................. 12,863,820 17,515,582 4,180,957 73,164,521 ----------- ------------ ----------- ----------- Total liabilities and net assets..................... $12,885,942 $17,730,331 $4,792,023 $73,834,411 =========== ============ =========== =========== Class "A" Shares Capital shares outstanding................................. 393,357 903,422 307,649 8,831,863 Net assets................................................. $7,618,508 $10,901,036 $2,676,895 $67,554,143 Net asset value per share (net assets divided by shares outstanding)...................................... $19.37 $12.07 $8.70 $7.65 Add: Selling commission (5.75% of the offering price).......................................... 1.18 0.74 0.53 0.47 ----------- ------------ ----------- ----------- Offering price per share (net asset value divided by 94.25%)....................................... $20.55 $12.81 $9.23 $8.12 =========== ============ =========== =========== Class "B" Shares Capital shares outstanding................................. 275,857 554,061 174,329 770,616 Net assets................................................. $5,245,312 $6,614,546 $1,504,062 $5,610,378 Net asset value per share (net assets divided by shares outstanding)...................................... $19.01 $11.94 $8.63 $7.28 =========== ============ =========== ===========
See accompanying notes. - -------------------------------------------------------------------------------- 39 41 STATEMENTS OF OPERATIONS - ------------------------------------------------------------------------------- FOR THE YEAR ENDED SEPTEMBER 30, 1998
SECURITY EQUITY FUND ---------------------------------------------------- SECURITY ASSET GROWTH AND EQUITY GLOBAL ALLOCATION INCOME FUND SERIES SERIES SERIES Investment Income: Dividends................................................ $1,764,997 $10,325,189 $ 589,288 $ 78,776 Interest................................................. 856,440 2,453,906 182,467 118,225 ----------- ------------ ----------- ---------- 2,621,437 12,779,095 771,755 197,001 Less foreign tax expense............................... -- -- (51,034) (4,670) ----------- ------------ ----------- ---------- Total investment income................................ 2,621,437 12,779,095 720,721 192,331 Expenses: Management fees.......................................... 1,168,375 9,261,209 670,488 72,662 Custodian fees........................................... -- -- -- 4,681 Transfer/maintenance fees................................ -- -- -- 12,372 Administration fees...................................... -- -- -- 63,270 Directors' fees.......................................... -- -- -- 74 Professional fees........................................ -- -- -- 5,837 Reports to shareholders.................................. -- -- -- 590 Registration fees........................................ -- -- -- 19,738 Other expenses........................................... -- -- -- 425 12b-1 distribution plan fees (Class B)................... 88,110 1,026,720 122,163 36,063 ----------- ------------ ----------- ---------- 1,256,485 10,287,929 792,651 215,712 Less: Reimbursement of expenses........................ -- -- -- (36,703) ----------- ------------ ----------- ---------- Total expenses....................................... 1,256,485 10,287,929 792,651 179,009 ----------- ------------ ----------- ---------- Net investment income (loss)......................... 1,364,952 2,491,166 (71,930) 13,322 Net Realized and Unrealized Gain: Net realized gain (loss) during the period on: Investments.............................................. 16,026,155 74,934,557 2,543,979 522,251 Foreign currency transactions............................ -- -- (20,654) (706) ----------- ------------ ----------- ---------- Net realized gain ..................................... 16,026,155 74,934,557 2,523,325 521,545 Net change in unrealized appreciation (depreciation) during the period on: Investments.............................................. (25,050,350) (19,967,302) (5,346,047) (1,088,938) Translation of assets and liabilities in foreign currencies.................................. -- -- (4,541) 165 ----------- ------------ ----------- ---------- Net unrealized depreciation ............................. (25,050,350) (19,967,302) (5,350,588) (1,088,773) ----------- ------------ ----------- ---------- Net gain (loss) ....................................... (9,024,195) 54,967,255 (2,827,263) (567,228) ----------- ------------ ----------- ---------- Net increase (decrease) in net assets resulting from operations.......................... ($7,659,243) $57,458,421 ($2,899,193) ($553,906) =========== ============ =========== ==========
See accompanying notes. - -------------------------------------------------------------------------------- 40 42 STATEMENT OF OPERATIONS - -------------------------------------------------------------------------------- FOR THE YEAR ENDED SEPTEMBER 30, 1998, EXCEPT AS NOTED.
SECURITY EQUITY FUND ------------------------------------------- SOCIAL SMALL SECURITY AWARENESS VALUE COMPANY ULTRA SERIES SERIES SERIES* FUND Investment Income: Dividends................................................ $116,364 $ 145,147 $ 7,614 $ 381,759 Interest................................................. 30,903 19,676 27,349 132,043 ----------- ------------ ----------- ----------- Total investment income................................ 147,267 164,823 34,963 513,802 Expenses: Management fees.......................................... 120,016 144,005 33,554 1,068,177 Custodian fees........................................... 3,635 3,873 10,041 -- Transfer/maintenance fees................................ 14,440 19,523 4,672 -- Administration fees...................................... 10,801 12,984 3,020 -- Directors' fees.......................................... 128 183 33 -- Professional fees........................................ 4,887 12,208 5,350 -- Reports to shareholders.................................. 722 954 189 -- Registration fees........................................ 24,117 28,630 22,240 -- Other expenses........................................... 1,291 -- 1,121 -- 12b-1 distribution plan fees (Class B)................... 45,580 55,844 14,745 62,235 ----------- ------------ ----------- ---------- 225,617 278,204 94,965 1,130,412 Less: Reimbursement of expenses........................ (34,388) (35,151) (33,554) -- ----------- ------------ ----------- ----------- Total expenses........................................ 191,229 243,053 61,411 1,130,412 ----------- ------------ ----------- ----------- Net investment (loss)................................ (43,962) (78,230) (26,448) (616,610) Net Realized and Unrealized Gain (Loss): Net realized gain (loss) during the period on investments ........................... 478,803 254,031 (642,351) 21,894,442 Net change in unrealized appreciation (depreciation) during the period on investments......................... 245,900 (1,677,229) 138,197 (31,503,654) ------------ ------------ ------------ ------------ Net gain (loss) ....................................... 724,703 (1,423,198) (504,154) (9,609,212) ------------ ------------ ------------ ------------ Net increase (decrease) in net assets resulting from operations......................... $680,741 ($1,501,428) ($530,602) ($10,225,822) =========== ============ =========== ============
*Period October 15, 1997 (inception) through September 30, 1998. See accompanying notes. - -------------------------------------------------------------------------------- 41 43 STATEMENTS OF CHANGES IN NET ASSETS - -------------------------------------------------------------------------------- FOR THE YEAR ENDED SEPTEMBER 30, 1998
SECURITY EQUITY FUND ---------------------------------------------------- SECURITY ASSET GROWTH AND EQUITY GLOBAL ALLOCATION INCOME FUND SERIES SERIES SERIES INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: Net investment income (loss)............................. $ 1,364,952 $ 2,491,166 $ (71,930) $ 13,322 Net realized gain ....................................... 16,026,155 74,934,557 2,523,325 521,545 Unrealized depreciation during the period.................................. (25,050,350) (19,967,302) (5,350,588) (1,088,773) ----------- ------------ ----------- ---------- Net increase (decrease) in net assets resulting from operations............................ (7,659,243) 57,458,421 (2,899,193) (553,906) DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income Class A................................................ (1,262,953) (2,345,453) (149,975) (58,957) Class B................................................ (37,978) -- -- (28,111) Net realized gain Class A................................................ (20,855,139) (64,378,392) (1,839,513) (224,701) Class B................................................ (1,779,733) (7,895,986) (1,085,880) (230,756) ----------- ------------ ----------- ---------- Total distributions to shareholders.................. (23,935,803) (74,619,831) (3,075,368) (542,525) CAPITAL SHARE TRANSACTIONS (a): Proceeds from sales of shares Class A................................................ 8,039,594 136,274,032 6,756,901 477,764 Class B................................................ 6,982,465 87,126,289 7,257,866 273,444 Dividends reinvested Class A................................................ 20,461,757 62,161,314 1,961,738 281,349 Class B................................................ 1,801,115 7,737,823 1,084,862 257,508 Shares redeemed Class A................................................ (14,689,087) (169,188,732) (10,210,710) (834,386) Class B................................................ (3,361,102) (67,220,998) (6,570,649) (518,143) ----------- ------------ ----------- ---------- Net increase (decrease) from capital share transactions...................... 19,234,742 56,889,728 280,008 (62,464) ----------- ------------ ----------- ---------- Total increase (decrease) in net assets.............. (12,360,304) 39,728,318 (5,694,553) (1,158,895) NET ASSETS: Beginning of period...................................... 97,988,428 846,856,239 37,254,499 7,757,380 ----------- ------------ ----------- ---------- End of period............................................ $85,628,124 $886,584,557 $31,559,946 $6,598,485 =========== ============ =========== ========== Undistributed net investment income (loss) at end of period.......................................... $160,376 $2,411,996 ($122,744) $61,017 =========== ============ =========== ========== (a) Shares issued and redeemed Shares sold Class A................................................ 897,930 14,708,089 550,745 40,767 Class B................................................ 777,100 9,679,948 609,174 23,179 Dividends reinvested Class A................................................ 2,491,694 7,660,051 178,892 26,301 Class B................................................ 224,071 983,955 101,172 24,152 Shares redeemed Class A................................................ (1,631,465) (18,384,656) (826,479) (70,566) Class B................................................ (386,154) (7,521,486) (539,145) (45,400) ----------- ------------ ----------- ---------- Net increase (decrease) ............................... 2,373,176 7,125,901 74,359 (1,567) =========== ============ =========== ==========
See accompanying notes. - -------------------------------------------------------------------------------- 42 44 STATEMENTS OF CHANGES IN NET ASSETS - -------------------------------------------------------------------------------- FOR THE YEAR ENDED SEPTEMBER 30, 1998, EXCEPT AS NOTED.
SECURITY EQUITY FUND ------------------------------------------- SOCIAL SMALL SECURITY AWARENESS VALUE COMPANY ULTRA SERIES SERIES SERIES FUND INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: Net investment loss................................... $ (43,962) $ (78,230) $ (26,448) $ (616,610) Net realized gain (loss)................................. 478,803 254,031 (642,351) 21,894,442 Unrealized appreciation (depreciation) during the period...................................... 245,900 (1,677,229) 138,197 (31,503,654) ----------- ------------ ---------- ----------- Net increase (decrease) in net assets resulting from operations............................. 680,741 (1,501,428) (530,602) (10,225,822) DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income Class A................................................ (13,294) (23,776) (1,066) -- Class B................................................ -- -- -- -- Net realized gain Class A................................................ -- (148,467) -- (4,076,926) Class B................................................ -- (99,378) -- (303,165) ----------- ------------ ----------- ----------- Total distributions to shareholders.................... (13,294) (271,621) (1,066) (4,380,091) CAPITAL SHARE TRANSACTIONS (a): Proceeds from sales of shares Class A................................................ 1,947,642 8,620,440 3,335,436 15,549,214 Class B................................................ 1,754,799 4,903,668 1,815,706 5,484,993 Dividends reinvested Class A................................................ 12,614 169,124 1,049 3,906,218 Class B................................................ -- 87,953 -- 296,771 Shares redeemed Class A................................................ (1,015,030) (1,448,635) (357,569) (22,820,668) Class B................................................ (353,596) (1,246,510) (81,997) (5,113,365) ----------- ------------ ----------- ----------- Net increase (decrease) from capital share transactions....................... 2,346,429 11,086,040 4,712,625 (2,696,837) ----------- ------------ ----------- ----------- Total increase (decrease) in net assets.............. 3,013,876 9,312,991 4,180,957 (17,302,750) NET ASSETS: Beginning of period...................................... 9,849,944 8,202,591 -- 90,467,271 ----------- ------------ ----------- ----------- End of period............................................ $12,863,820 $17,515,582 $4,180,957 $73,164,521 =========== ============ =========== =========== Undistributed net investment income at end of period.......................................... $-- $-- $-- $-- =========== ============ =========== =========== (a) Shares issued and redeemed Shares sold Class A................................................ 99,548 638,717 342,821 1,810,198 Class B................................................ 89,089 368,016 182,081 652,253 Dividends reinvested Class A................................................ 705 13,847 113 479,762 Class B................................................ -- 7,210 -- 37,989 Shares redeemed Class A................................................ (52,024) (106,666) (35,285) (2,607,409) Class B................................................ (17,598) (97,738) (7,752) (589,552) ----------- ------------ ----------- ----------- Net increase (decrease) ............................... 119,720 823,386 481,978 (216,759) =========== ============ =========== ===========
*Period October 15, 1997 (inception) through September 30, 1998. See accompanying notes. - -------------------------------------------------------------------------------- 43 45 STATEMENTS OF CHANGES IN NET ASSETS - -------------------------------------------------------------------------------- FOR THE YEAR ENDED SEPTEMBER 30, 1997
SECURITY EQUITY FUND ---------------------------------------------------- SECURITY ASSET GROWTH AND EQUITY GLOBAL ALLOCATION INCOME FUND SERIES SERIES SERIES INCREASE IN NET ASSETS FROM OPERATIONS: Net investment income (loss)............................. $ 1,221,015 $ 2,692,742 $ (77,044) $ 70,250 Net realized gain ....................................... 21,245,450 70,480,807 3,427,527 461,093 Unrealized appreciation during the period................ 3,450,512 126,763,115 2,563,891 619,758 ----------- ------------ ----------- ---------- Net increase in net assets resulting from operations............................ 25,916,977 199,936,664 5,914,374 1,151,101 DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income Class A................................................ (1,278,257) (3,155,322) (597,023) (63,009) Class B................................................ (29,101) -- (199,976) (52,830) Net realized gain Class A................................................ (5,648,284) (49,869,431) (1,243,269) (61,070) Class B................................................ (232,550) (4,463,901) (515,069) (73,554) ----------- ------------ ----------- ---------- Total distributions to shareholders.................. (7,188,192) (57,488,654) (2,555,337) (250,463) CAPITAL SHARE TRANSACTIONS (a): Proceeds from sales of shares Class A................................................ 5,721,292 221,241,550 6,304,969 1,478,803 Class B................................................ 3,688,134 110,104,405 6,613,460 1,009,991 Dividends reinvested Class A................................................ 6,351,214 49,656,213 1,808,607 122,613 Class B................................................ 253,502 4,431,044 714,502 124,004 Shares redeemed Class A................................................ (11,732,659) (219,339,034) (5,834,526) (595,393) Class B................................................ (542,134) (76,188,625) (2,640,062) (513,448) ----------- ------------ ----------- ---------- Net increase from capital share transactions........... 3,739,349 89,905,553 6,966,950 1,626,570 ----------- ------------ ----------- ---------- Total increase in net assets......................... 22,468,134 232,353,563 10,325,987 2,527,208 NET ASSETS: Beginning of year........................................ 75,520,294 614,502,676 26,928,512 5,230,172 ----------- ------------ ----------- ---------- End of year.............................................. $97,988,428 $846,856,239 $37,254,499 $7,757,380 =========== ============ =========== ========== Undistributed net investment income at end of year............................................ $96,355 $2,266,283 $105,784 $67,914 =========== ============ =========== ========== (a) Shares issued and redeemed Shares sold Class A................................................ 602,485 27,937,552 503,842 128,634 Class B................................................ 388,324 14,249,362 537,435 89,049 Dividends reinvested Class A................................................ 721,721 6,886,178 157,805 11,078 Class B................................................ 29,373 628,340 63,438 11,246 Shares redeemed Class A................................................ (1,232,959) (27,902,983) (459,717) (50,647) Class B................................................ (56,091) (10,027,869) (211,371) (44,492) ----------- ------------ ----------- ---------- Net increase........................................... 452,853 11,770,580 591,432 144,868 =========== ============ =========== ==========
See accompanying notes. - -------------------------------------------------------------------------------- 44 46 STATEMENTS OF CHANGES IN NET ASSETS - ------------------------------------------------------------------------------- FOR THE YEAR ENDED SEPTEMBER 30, 1997, EXCEPT AS NOTED.
SECURITY EQUITY FUND ---------------------------------- SOCIAL SECURITY AWARENESS VALUE ULTRA SERIES* SERIES** FUND INCREASE IN NET ASSETS FROM OPERATIONS: Net investment income (loss)............................. $ 5,542 $ 11,189 $ (832,436) Net realized gain (loss)................................. (204,858) 107,088 2,802,288 Unrealized appreciation during the period................ 1,640,605 856,969 13,191,840 ----------- ------------ ----------- Net increase in net assets resulting from operations............................. 1,441,289 975,246 15,161,692 DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income Class A................................................ -- -- -- Class B................................................ -- -- -- Net realized gain Class A................................................ -- -- (5,180,781) Class B................................................ -- -- (326,156) ----------- ------------ ----------- Total distributions to shareholders.................... -- -- (5,506,937) CAPITAL SHARE TRANSACTIONS (a): Proceeds from sales of shares Class A................................................ 5,535,748 4,177,778 22,311,821 Class B................................................ 3,185,475 3,087,104 6,072,670 Dividends reinvested Class A................................................ -- -- 4,973,701 Class B................................................ -- -- 326,142 Shares redeemed Class A................................................ (306,673) (23,359) (26,312,322) Class B................................................ (5,895) (14,178) (3,487,931) ----------- ------------ ----------- Net increase from capital share transactions........... 8,408,655 7,227,345 3,884,081 ----------- ------------ ----------- Total increase in net assets......................... 9,849,944 8,202,591 13,538,836 NET ASSETS: Beginning of period...................................... -- -- 76,928,435 ----------- ------------ ----------- End of period............................................ $9,849,944 $8,202,591 $90,467,271 =========== ============ =========== Undistributed net investment income at end of period.......................................... $5,542 $11,189 $-- =========== ============ =========== (a) Shares issued and redeemed Shares sold Class A................................................ 363,334 359,432 2,872,813 Class B................................................ 204,698 277,836 766,245 Dividends reinvested Class A................................................ -- -- 656,941 Class B................................................ -- -- 44,428 Shares redeemed Class A................................................ (18,206) (1,908) (3,375,134) Class B................................................ (332) (1,263) (476,747) ----------- ------------ ----------- Net increase........................................... 549,494 634,097 488,546 =========== ============ ===========
*Period November 1, 1996 (inception) through September 30, 1997. **Period May 1, 1997 (inception) through September 30, 1997. See accompanying notes. - -------------------------------------------------------------------------------- 45 47 FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- SELECTED DATA FOR EACH SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
SECURITY GROWTH AND INCOME FUND (CLASS A) FISCAL PERIOD ENDED SEPTEMBER 30 ------------------------------------------------------- 1998(f) 1997(f) 1996(f) 1995(f) 1994(b) -------- -------- -------- -------- -------- PER SHARE DATA NET ASSET VALUE BEGINNING OF PERIOD $11.14 $9.05 $7.93 $6.96 $7.84 INCOME FROM INVESTMENT OPERATIONS: Net Investment Income (Loss) 0.13 0.15 0.18 0.16 0.13 Net Gain (Loss) on Securities (realized and unrealized) (0.87) 2.81 1.37 1.18 (0.71) ------- ------- ------- -------- -------- Total from Investment Operations (0.74) 2.96 1.55 1.34 (0.58) LESS DISTRIBUTIONS Dividends (from Net Investment Income) (0.13) (0.16) (0.16) (0.16) (0.13) Distributions (from Capital Gains) (2.59) (0.71) (0.27) (0.21) (0.17) ------- ------- ------- -------- -------- Total Distributions (2.72) (0.87) (0.43) (0.37) (0.30) ------- ------- ------- -------- -------- NET ASSET VALUE END OF PERIOD $7.68 $11.14 $9.05 $7.93 $6.96 ======= ======= ======= ======== ======== TOTAL RETURN (a) (7.95%) 35.31% 20.31% 20.25% (7.6%) RATIOS/SUPPLEMENTAL DATA Net Assets End of Period (thousands) $76,371 $91,252 $73,273 $67,430 $65,328 Ratio of Expenses to Average Net Assets 1.21% 1.24% 1.29% 1.31% 1.28% Ratio of Net Investment Income (Loss) to Average Net Assets 1.49% 1.53% 2.09% 2.21% 1.70% Portfolio Turnover Rate 144% 124% 69% 130% 163% SECURITY GROWTH AND INCOME FUND (CLASS B) FISCAL PERIOD ENDED SEPTEMBER 30 ------------------------------------------------------- 1998(f) 1997(f) 1996(f) 1995(f) 1994(b) -------- -------- -------- -------- -------- PER SHARE DATA NET ASSET VALUE BEGINNING OF PERIOD $10.99 $8.94 $7.85 $6.90 $7.83 INCOME FROM INVESTMENT OPERATIONS: Net Investment Income (Loss) 0.05 0.05 0.09 0.08 0.05 Net Gain (Loss) on Securities (realized and unrealized) (0.88) 2.77 1.35 1.18 (0.69) -------- -------- -------- -------- -------- Total from Investment Operations (0.83) 2.82 1.44 1.26 (0.64) LESS DISTRIBUTIONS Dividends (from Net Investment Income) (0.03) (0.06) (0.08) (0.09) (0.12) Distributions (from Capital Gains) (2.59) (0.71) (0.27) (0.22) (0.17) -------- -------- -------- -------- -------- Total Distributions (2.62) (0.77) (0.35) (0.31) (0.29) -------- -------- -------- -------- -------- NET ASSET VALUE END OF PERIOD $7.54 $10.99 $8.94 $7.85 $6.90 ======== ======== ======== ======== ======== TOTAL RETURN (a) (8.95%) 34.01% 19.01% 19.07% (8.0%) RATIOS/SUPPLEMENTAL DATA Net Assets End of Period (thousands) $9,257 $6,737 $2,247 $1,130 $668 Ratio of Expenses to Average Net Assets 2.21% 2.24% 2.29% 2.31% 2.27% Ratio of Net Investment Income (Loss) to Average Net Assets 0.59% 0.53% 1.09% 1.21% 1.03% Portfolio Turnover Rate 144% 124% 69% 130% 178%
See accompanying notes. - -------------------------------------------------------------------------------- 46 48 FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- SELECTED DATA FOR EACH SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
SECURITY EQUITY FUND - EQUITY SERIES (CLASS A) FISCAL PERIOD ENDED SEPTEMBER 30 ------------------------------------------------------- 1998(f) 1997(f) 1996(f) 1995(f) 1994(b) -------- -------- -------- -------- -------- PER SHARE DATA NET ASSET VALUE BEGINNING OF PERIOD....................... $9.09 $7.54 $6.55 $5.54 $6.73 INCOME FROM INVESTMENT OPERATIONS: Net Investment Income (Loss).............................. 0.04 0.04 0.05 0.04 0.05 Net Gain (Loss) on Securities (realized and unrealized)................................ 0.56 2.20 1.48 1.38 0.09 -------- -------- -------- -------- -------- Total from Investment Operations.......................... 0.60 2.24 1.53 1.42 0.14 LESS DISTRIBUTIONS Dividends (from Net Investment Income).................... (0.03) (0.04) (0.06) -- (0.12) Distributions (from Capital Gains) (0.80) (0.65) (0.48) (0.41) (1.21) -------- -------- -------- -------- -------- Total Distributions.................................... (0.83) (0.69) (0.54) (0.41) (1.33) -------- -------- -------- -------- -------- NET ASSET VALUE END OF PERIOD............................. $8.86 $9.09 $7.54 $6.55 $5.54 ======== ======== ======== ======== ======== TOTAL RETURN (a).......................................... 7.38% 32.08% 24.90% 27.77% 1.95% RATIOS/SUPPLEMENTAL DATA Net Assets End of Period (thousands)...................... $773,606 $757,520 $575,680 $440,339 $358,237 Ratio of Expenses to Average Net Assets................... 1.02% 1.03% 1.04% 1.05% 1.06% Ratio of Net Investment Income (Loss) to Average Net Assets.............................................. 0.39% 0.46% 0.75% 0.87% 0.86% Portfolio Turnover Rate................................... 47% 66% 64% 95% 79% SECURITY EQUITY FUND - EQUITY SERIES (CLASS B) FISCAL PERIOD ENDED SEPTEMBER 30 ------------------------------------------------------- 1998(f) 1997(f) 1996(f) 1995(f) 1994(b) -------- -------- -------- -------- -------- PER SHARE DATA NET ASSET VALUE BEGINNING OF PERIOD....................... $8.82 $7.36 $6.43 $5.49 $6.81 INCOME FROM INVESTMENT OPERATIONS: Net Investment Income (Loss).............................. (0.05) (0.04) (0.02) (0.01) 0.01 Net Gain (Loss) on Securities (realized and unrealized)................................ 0.55 2.15 1.45 1.36 -- -------- -------- -------- -------- -------- Total from Investment Operations.......................... 0.50 2.11 1.43 1.35 0.01 LESS DISTRIBUTIONS Dividends (from Net Investment Income).................... -- -- (0.02) -- (0.12) Distributions (from Capital Gains) (0.80) (0.65) (0.48) (0.41) (1.21) -------- -------- -------- -------- -------- Total Distributions.................................... (0.80) (0.65) (0.50) (0.41) (1.33) -------- -------- -------- -------- -------- NET ASSET VALUE END OF PERIOD............................. $8.52 $8.82 $7.36 $6.43 $5.49 ======== ======== ======== ======== ======== TOTAL RETURN (a).......................................... 6.38% 30.85% 23.57% 26.69% (0.15%) RATIOS/SUPPLEMENTAL DATA Net Assets End of Period (thousands)...................... $112,978 $89,336 $38,822 $19,288 $7,452 Ratio of Expenses to Average Net Assets................... 2.02% 2.03% 2.04% 2.05% 2.07% Ratio of Net Investment Income (Loss) to Average Net Assets.............................................. (0.61%) (0.54%) (0.25%) (0.13%) (0.01%) Portfolio Turnover Rate................................... 47% 66% 64% 95% 80%
See accompanying notes. - -------------------------------------------------------------------------------- 47 49 FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- SELECTED DATA FOR EACH SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
SECURITY EQUITY FUND - GLOBAL SERIES (CLASS A) FISCAL PERIOD ENDED SEPTEMBER 30 ------------------------------------------------------- 1998(F) 1997(F) 1996(F) 1995(F) 1994(B) -------- -------- -------- -------- -------- PER SHARE DATA NET ASSET VALUE BEGINNING OF PERIOD....................... $13.56 $12.42 $10.94 $10.84 $10.00 INCOME FROM INVESTMENT OPERATIONS: Net Investment Income (Loss).............................. 0.02 0.01 0.01 (0.02) (0.03) Net Gain (Loss) on Securities (realized and unrealized)................................ (1.19) 2.29 1.87 0.31 0.87 -------- -------- -------- -------- -------- Total from Investment Operations.......................... (1.17) 2.30 1.88 0.29 0.84 LESS DISTRIBUTIONS Dividends (from Net Investment Income).................... (0.09) (0.38) (0.25) -- -- Distributions (from Capital Gains) (1.07) (0.78) (0.15) (0.19) -- -------- -------- -------- -------- -------- Total Distributions.................................... (1.16) (1.16) (0.40) (0.19) -- -------- -------- -------- -------- -------- NET ASSET VALUE END OF PERIOD............................. $11.23 $13.56 $12.42 $10.94 $10.84 ======== ======== ======== ======== ======== TOTAL RETURN (a).......................................... (8.47%) 20.22% 17.73% 2.80% 8.40% RATIOS/SUPPLEMENTAL DATA Net Assets End of Period (thousands)...................... $18,941 $24,193 $19,644 $16,261 $20,128 Ratio of Expenses to Average Net Assets................... 2.00% 2.00% 2.00% 2.00% 2.00% Ratio of Net Investment Income (Loss) to Average Net Assets.............................................. 0.15% 0.07% 0.07% (0.17%) (0.01%) Portfolio Turnover Rate................................... 122% 132% 142% 141% 73% SECURITY EQUITY FUND - GLOBAL SERIES (CLASS B) FISCAL PERIOD ENDED SEPTEMBER 30 ------------------------------------------------------- 1998(f) 1997(f) 1996(f) 1995(f) 1994(b) -------- -------- -------- -------- -------- PER SHARE DATA NET ASSET VALUE BEGINNING OF PERIOD....................... $13.22 $12.18 $10.74 $10.75 $9.96 INCOME FROM INVESTMENT OPERATIONS: Net Investment Income (Loss).............................. (0.10) (0.11) (0.10) (0.12) (0.12) Net Gain (Loss) on Securities (realized and unrealized)................................ (1.16) 2.24 1.84 0.30 0.91 -------- -------- -------- -------- -------- Total from Investment Operations.......................... (1.26) 2.13 1.74 0.18 0.79 LESS DISTRIBUTIONS Dividends (from Net Investment Income).................... -- (0.31) (0.14) -- -- Distributions (from Capital Gains) (1.07) (0.78) (0.16) (0.19) -- -------- -------- -------- -------- -------- Total Distributions.................................... (1.07) (1.09) (0.30) (0.19) -- -------- -------- -------- -------- -------- NET ASSET VALUE END OF PERIOD............................. $10.89 $13.22 $12.18 $10.74 $10.75 ======== ======== ======== ======== ======== TOTAL RETURN (a).......................................... (9.43%) 19.01% 16.57% 1.79% 7.90% RATIOS/SUPPLEMENTAL DATA Net Assets End of Period (thousands)...................... $12,619 $13,061 $7,285 $5,433 $3,960 Ratio of Expenses to Average Net Assets................... 3.00% 3.00% 3.00% 3.00% 3.00% Ratio of Net Investment Income (Loss) to Average Net Assets.............................................. (0.85%) (0.93%) (0.93%) (1.17%) (0.01%) Portfolio Turnover Rate................................... 122% 132% 142% 141% 73%
See accompanying notes. - -------------------------------------------------------------------------------- 48 50 FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- SELECTED DATA FOR EACH SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
SECURITY EQUITY FUND - ASSET ALLOCATION SERIES (CLASS A) FISCAL PERIOD ENDED SEPTEMBER 30 ------------------------------------------------------------- 1998(e)(f) 1997(e)(f)(i) 1996(e)(f) 1995(d)(e)(f) ---------- ------------- ---------- ------------- PER SHARE DATA NET ASSET VALUE BEGINNING OF PERIOD....................... $12.58 $11.06 $10.54 $10.00 INCOME FROM INVESTMENT OPERATIONS: Net Investment Income (Loss).............................. 0.08 0.17 0.25 0.04 Net Gain (Loss) on Securities (realized and unrealized)................................ (0.98) 1.86 0.77 0.50 -------- -------- -------- -------- Total from Investment Operations.......................... (0.90) 2.03 1.02 0.54 LESS DISTRIBUTIONS Dividends (from Net Investment Income).................... (0.20) (0.26) (0.33) -- Distributions (from Capital Gains) (0.75) (0.25) (0.17) -- -------- -------- -------- -------- Total Distributions.................................... (0.95) (0.51) (0.50) -- -------- -------- -------- -------- NET ASSET VALUE END OF PERIOD............................. $10.73 $12.58 $11.06 $10.54 ======== ======== ======== ======== TOTAL RETURN (a).......................................... (7.19%) 19.00% 10.01% 5.40% RATIOS/SUPPLEMENTAL DATA Net Assets End of Period (thousands)...................... $3,294 $3,906 $2,449 $1,906 Ratio of Expenses to Average Net Assets................... 2.00% 1.68% 2.00% 2.00% Ratio of Net Investment Income (Loss) to Average Net Assets.............................................. 0.65% 1.52% 2.32% 1.33% Portfolio Turnover Rate................................... 45% 79% 75% 129% SECURITY EQUITY FUND - ASSET ALLOCATION SERIES (CLASS B) FISCAL PERIOD ENDED SEPTEMBER 30 ------------------------------------------------------------- 1998(e)(f) 1997(e)(f)(i) 1996(e)(f) 1995(d)(e)(f) ---------- ------------- ---------- ------------- PER SHARE DATA NET ASSET VALUE BEGINNING OF PERIOD....................... $12.45 $10.97 $10.50 $10.00 INCOME FROM INVESTMENT OPERATIONS: Net Investment Income (Loss).............................. (0.03) 0.07 0.14 0.01 Net Gain (Loss) on Securities (realized and unrealized)................................ (0.96) 1.84 0.77 0.49 -------- -------- -------- -------- Total from Investment Operations.......................... (0.99) 1.91 0.91 0.50 LESS DISTRIBUTIONS Dividends (from Net Investment Income).................... (0.09) (0.18) (0.27) -- Distributions (from Capital Gains) (0.75) (0.25) (0.17) -- -------- -------- -------- -------- Total Distributions.................................... (0.84) (0.43) (0.44) -- -------- -------- -------- -------- NET ASSET VALUE END OF PERIOD............................. $10.62 $12.45 $10.97 $10.50 ======== ======== ======== ======== TOTAL RETURN (a).......................................... (7.99%) 17.95% 8.97% 5.00% RATIOS/SUPPLEMENTAL DATA Net Assets End of Period (thousands)...................... $3,304 $3,851 $2,781 $1,529 Ratio of Expenses to Average Net Assets................... 2.94% 2.58% 3.00% 3.00% Ratio of Net Investment Income (Loss) to Average Net Assets.............................................. (0.29%) 0.61% 1.32% 0.31% Portfolio Turnover Rate................................... 45% 79% 75% 129% Portfolio Turnover Rate
See accompanying notes. - -------------------------------------------------------------------------------- 49 51 FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- SELECTED DATA FOR EACH SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
SECURITY EQUITY FUND - SOCIAL AWARENESS SERIES (CLASS A) FISCAL PERIOD ENDED SEPTEMBER 30 -------------------------------- 1998(e)(f) 1997(e)(f)(g) ------------ ------------ PER SHARE DATA NET ASSET VALUE BEGINNING OF PERIOD....................... $17.99 $15.00 INCOME FROM INVESTMENT OPERATIONS: Net Investment Income (Loss).............................. -- 0.08 Net Gain (Loss) on Securities (realized and unrealized)................................ 1.42 2.91 -------- -------- Total from Investment Operations.......................... 1.42 2.99 LESS DISTRIBUTIONS Dividends (from Net Investment Income).................... (0.04) -- Distributions (from Capital Gains) -- .-- -------- -------- Total Distributions.................................... (0.04) -- -------- -------- NET ASSET VALUE END OF PERIOD............................. $19.37 $17.99 ======== ======== TOTAL RETURN (a).......................................... 7.89% 19.93% RATIOS/SUPPLEMENTAL DATA Net Assets End of Period (thousands)...................... $7,619 $6,209 Ratio of Expenses to Average Net Assets................... 1.22% 0.67% Ratio of Net Investment Income (Loss) to Average Net Assets.............................................. -- 0.57% Portfolio Turnover Rate................................... 41% 38% SECURITY EQUITY FUND - SOCIAL AWARENESS SERIES (CLASS B) FISCAL PERIOD ENDED SEPTEMBER 30 -------------------------------- 1998(e)(f) 1997(e)(f)(g) ------------ ------------ PER SHARE DATA NET ASSET VALUE BEGINNING OF PERIOD....................... $17.81 $15.00 INCOME FROM INVESTMENT OPERATIONS: Net Investment Income (Loss).............................. (0.19) (0.08) Net Gain (Loss) on Securities (realized and unrealized)................................ 1.39 2.89 -------- -------- Total from Investment Operations.......................... 1.20 2.81 LESS DISTRIBUTIONS Dividends (from Net Investment Income) -- -- Distributions (from Capital Gains) -- -- -------- -------- Total Distributions -- -- -------- -------- NET ASSET VALUE END OF PERIOD............................. $19.01 $17.81 ======== ======== TOTAL RETURN (a).......................................... 6.74% 18.73% RATIOS/SUPPLEMENTAL DATA Net Assets End of Period (thousands)...................... $5,245 $3,641 Ratio of Expenses to Average Net Assets................... 2.20% 1.84% Ratio of Net Investment Income (Loss) to Average Net Assets.............................................. (0.98%) (0.60%) Portfolio Turnover Rate................................... 41% 38%
See accompanying notes. - -------------------------------------------------------------------------------- 50 52 FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- SELECTED DATA FOR EACH SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
SECURITY EQUITY FUND - VALUE SERIES (CLASS A) FISCAL PERIOD ENDED SEPTEMBER 30 -------------------------------- 1998(e)(f) 1997(e)(f)(g) ------------ ------------ PER SHARE DATA NET ASSET VALUE BEGINNING OF PERIOD....................... $12.95 $10.00 INCOME FROM INVESTMENT OPERATIONS: Net Investment Income (Loss).............................. (0.02) 0.05 Net Gain (Loss) on Securities (realized and unrealized)................................ (0.53) 2.90 --------- --------- Total from Investment Operations.......................... (0.55) 2.95 LESS DISTRIBUTIONS Dividends (from Net Investment Income).................... (0.05) -- Distributions (from Capital Gains)........................ (0.28) -- --------- --------- Total Distributions.................................... (0.33) -- --------- --------- NET ASSET VALUE END OF PERIOD............................. $12.07 $12.95 ========= ========= TOTAL RETURN (a).......................................... (4.31%) 29.50% RATIOS/SUPPLEMENTAL DATA Net Assets End of Period (thousands)...................... $10,901 $4,631 Ratio of Expenses to Average Net Assets................... 1.27% 1.10% Ratio of Net Investment Income (Loss) to Average Net Assets.............................................. (0.13%) 1.43% Portfolio Turnover Rate................................... 98% 35% SECURITY EQUITY FUND - VALUE SERIES (CLASS B) FISCAL PERIOD ENDED SEPTEMBER 30 -------------------------------- 1998(e)(f) 1997(e)(f)(g) ------------ ------------ PER SHARE DATA NET ASSET VALUE BEGINNING OF PERIOD....................... $12.91 $10.00 INCOME FROM INVESTMENT OPERATIONS: Net Investment Income (Loss).............................. (0.15) 0.01 Net Gain (Loss) on Securities (realized and unrealized)................................ (0.54) 2.90 --------- --------- Total from Investment Operations.......................... (0.69) 2.91 LESS DISTRIBUTIONS Dividends (from Net Investment Income) -- -- Distributions (from Capital Gains)........................ (0.28) -- --------- --------- Total Distributions.................................... (0.28) -- --------- --------- NET ASSET VALUE END OF PERIOD............................. $11.94 $12.91 ========= ========= TOTAL RETURN (a).......................................... (5.38%) 29.10% RATIOS/SUPPLEMENTAL DATA Net Assets End of Period (thousands)...................... $6,615 $3,572 Ratio of Expenses to Average Net Assets................... 2.33% 2.26% Ratio of Net Investment Income (Loss) to Average Net Assets.............................................. (1.19%) 0.27% Portfolio Turnover Rate................................... 98% 35%
See accompanying notes. - -------------------------------------------------------------------------------- 51 53 FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- SELECTED DATA FOR EACH SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
SECURITY EQUITY FUND - SMALL COMPANY SERIES (CLASS A) FISCAL PERIOD ENDED SEPTEMBER 30 -------------------------------------- 1998(e)(f)(j) ------------ PER SHARE DATA NET ASSET VALUE BEGINNING OF PERIOD.......................... $10.00 INCOME FROM INVESTMENT OPERATIONS: Net Investment Income (Loss)................................. (0.03) Net Gain (Loss) on Securities (realized and unrealized)................................... (1.26) -------- Total from Investment Operations............................. (1.29) LESS DISTRIBUTIONS Dividends (from Net Investment Income)....................... (0.01) Distributions (from Capital Gains) -- -------- Total Distributions....................................... (0.01) -------- NET ASSET VALUE END OF PERIOD $8.70 ======== TOTAL RETURN (a)............................................. (12.95%) RATIOS/SUPPLEMENTAL DATA Net Assets End of Period (thousands)......................... $2,677 Ratio of Expenses to Average Net Assets...................... 1.39% Ratio of Net Investment Income (Loss) to Average Net Assets................................................. (0.35%) Portfolio Turnover Rate...................................... 366% SECURITY EQUITY FUND - SMALL COMPANY SERIES (CLASS B) FISCAL PERIOD ENDED SEPTEMBER 30 -------------------------------------- 1998(e)(f)(j) ------------ PER SHARE DATA NET ASSET VALUE BEGINNING OF PERIOD.......................... $10.00 INCOME FROM INVESTMENT OPERATIONS: Net Investment Income (Loss)................................. (0.13) Net Gain (Loss) on Securities (realized and unrealized)................................... (1.24) -------- Total from Investment Operations............................. (1.37) LESS DISTRIBUTIONS Dividends (from Net Investment Income) -- Distributions (from Capital Gains) -- -------- Total Distributions - -------- NET ASSET VALUE END OF PERIOD................................ $8.63 ======== TOTAL RETURN (a)............................................. (13.70%) RATIOS/SUPPLEMENTAL DATA Net Assets End of Period (thousands)......................... $1,504 Ratio of Expenses to Average Net Assets...................... 2.38% Ratio of Net Investment Income (Loss) to Average Net Assets................................................. (1.34%) Portfolio Turnover Rate...................................... 366%
See accompanying notes. - -------------------------------------------------------------------------------- 52 54 FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- SELECTED DATA FOR EACH SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
SECURITY ULTRA FUND (CLASS A) FISCAL PERIOD ENDED SEPTEMBER 30 ------------------------------------------------------- 1998(f) 1997(f) 1996(f) 1995(f) 1994(b) -------- -------- -------- -------- -------- PER SHARE DATA NET ASSET VALUE BEGINNING OF PERIOD....................... $9.24 $8.25 $8.20 $6.82 $8.13 INCOME FROM INVESTMENT OPERATIONS: Net Investment Income (loss).............................. (0.06) (0.08) (0.05) (0.02) (0.05) Net Gain (Loss) on Securities (realized and unrealized)................................ (1.06) 1.65 1.10 1.54 (0.19) -------- -------- -------- -------- -------- Total from Investment Operations.......................... (1.12) 1.57 1.05 1.52 (0.24) LESS DISTRIBUTIONS Dividends (from Net Investment Income) -- -- -- -- -- Distributions (from Capital Gains)........................ (0.47) (0.58) (1.00) (0.14) (1.07) -------- -------- -------- -------- -------- Total Distributions.................................... (0.47) (0.58) (1.00) (0.14) (1.07) -------- -------- -------- -------- -------- NET ASSET VALUE END OF PERIOD............................. $7.65 $9.24 $8.25 $8.20 $6.82 ======== ======== ======== ======== ======== TOTAL RETURN (a).......................................... (12.45%) 20.57% 15.36% 22.69% (3.6%) RATIOS/SUPPLEMENTAL DATA Net Assets End of Period (thousands)...................... $67,554 $84,504 $74,230 $66,052 $60,695 Ratio of Expenses to Average Net Assets................... 1.23% 1.71% 1.31% 1.32% 1.33% Ratio of Net Investment Income (Loss) to Average Net Assets.............................................. (0.64%) (1.01%) (0.61%) (0.31%) (0.80%) Portfolio Turnover Rate................................... 116% 68% 161% 180% 111% SECURITY ULTRA FUND (CLASS B) FISCAL PERIOD ENDED SEPTEMBER 30 ------------------------------------------------------- 1998(f) 1997(f) 1996(f) 1995(f) 1994(b) -------- -------- -------- -------- -------- PER SHARE DATA NET ASSET VALUE BEGINNING OF PERIOD....................... $8.90 $8.03 $8.11 $6.81 $8.30 INCOME FROM INVESTMENT OPERATIONS: Net Investment Income (loss).............................. (0.14) (0.15) (0.13) (0.09) (0.10) Net Gain (Loss) on Securities (realized and unrealized)................................ (1.01) 1.60 1.05 1.53 (0.32) -------- -------- -------- -------- -------- Total from Investment Operations.......................... (1.15) 1.45 0.92 1.44 (0.42) LESS DISTRIBUTIONS Dividends (from Net Investment Income) -- -- -- - -- Distributions (from Capital Gains)........................ (0.47) (0.58) (1.00) (0.14) (1.07) -------- -------- -------- -------- -------- Total Distributions.................................... (0.47) (0.58) (1.00) (0.14) (1.07) -------- -------- -------- -------- -------- NET ASSET VALUE END OF PERIOD............................. $7.28 $8.90 $8.03 $8.11 $6.81 ======== ======== ======== ======== ======== TOTAL RETURN (a).......................................... (13.30%) 19.58% 13.81% 21.53% (5.70%) RATIOS/SUPPLEMENTAL DATA Net Assets End of Period (thousands)...................... $5,610 $5,964 $2,698 $5,428 $1,254 Ratio of Expenses to Average Net Assets................... 2.23% 2.71% 2.31% 2.32% 2.36% Ratio of Net Investment Income (Loss) to Average Net Assets.............................................. (1.64%) (2.01%) (1.61%) (1.31%) (1.76%) Portfolio Turnover Rate................................... 116% 68% 161% 180% 110%
See accompanying notes. - -------------------------------------------------------------------------------- 53 55 FINANCIAL HIGHLIGHTS - ------------------------------------------------------------------------------- SELECTED DATA FOR EACH SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD (a) Total return information does not reflect deduction of any sales charges imposed at the time of purchase for Class A shares or upon redemption for Class B shares. (b) Class "B" Shares were initially capitalized on October 19, 1993. Percentage amounts for the period, except total return, have been annualized. Per share data has been calculated using the average month-end shares outstanding. (c) Security Global Series was initially capitalized on October 1, 1993, with a net asset value of $10 per share. Percentage amounts for the period, except for total return, have been annualized. (d) Security Asset Allocation Series was initially capitalized on June 1, 1995, with a net asset value of $10 per share. Percentage amounts for the period have been annualized, except for total return. Per share data has been calculated using average month-end shares outstanding. (e) Fund expenses were reduced by the Investment Manager during the period and expense ratios absent such reimbursement would have been as follows: 1995 1996 1997 1998 Asset Allocation Series Class A 3.6% 3.1% 2.4% 2.5% Class B 4.7% 3.9% 3.3% 3.4% Social Awareness Series Class A N/A N/A 1.7% 1.5% Class B N/A N/A 2.8% 2.5% Value Series Class A N/A N/A 1.9% 1.5% Class B N/A N/A 2.8% 2.6% Small Company Series Class A N/A N/A N/A 2.4% Class B N/A N/A N/A 3.4% (f) Net investment income (loss) was computed using average shares outstanding throughout the period. (g) Security Social Awareness Series was initially capitalized on November 1, 1996, with a net asset value of $15 per share. Percentage amounts for the period, except for total return, have been annualized. (h) Security Value Series was initially capitalized on May 1, 1997, with a net asset value of $10 per share. Percentage amounts for the period, except for total return, have been annualized. (i) Meridian Investment Management Corporation (Meridian) became the sub-advisor of Asset Allocation Series effective August 1, 1997. Prior to August 1, 1997 SMC paid Templeton/Franklin Investment Services, Inc. and Meridian for research services provided to Asset Allocation Series. (j) Security Small Company Series 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. - -------------------------------------------------------------------------------- 54 56 NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- SEPTEMBER 30, 1998 1. SIGNIFICANT ACCOUNTING POLICIES Security Growth and Income, Equity and Ultra Funds (the Funds) are registered under the Investment Company Act of 1940, as amended, as diversified open-end management investment companies. The shares of Security Equity Fund are currently issued in six Series, the Equity Series, the Global Series, the Asset Allocation Series, the Social Awareness Series, the Value Series, and the Small Company Series with each Series, in effect, representing a separate Fund. 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. The Funds began offering an additional class of shares ("B" shares) to the public on October 19, 1993. The shares are offered without a front-end sales charge but incur additional class-specific expenses. Redemptions of the shares within five years of acquisition incur a contingent deferred sales charge. The following is a summary of the significant accounting policies followed by the Funds in the preparation of their financial statements. A. SECURITY VALUATION - Securities listed or traded on a national securities exchange are valued on the basis of the last sales price. If there are no sales on a particular day, then the securities are valued at the last bid price. If a security is traded on multiple exchanges, its value will be based on prices from the principal exchange where it is traded. All other securities for which market quotations are available are valued on the basis of the current bid price. If there is no bid price or if the bid price is deemed to be unsatisfactory by the Board of Directors or the Funds' investment manager, then the securities are valued in good faith by such method as the Board of Directors determines will reflect the fair market value. The Funds generally will value short-term debt securities at prices based on market quotations for securities of similar type, yield, quality and duration, except those securities purchased with 60 days or less to maturity are valued on the basis of amortized cost which approximates market value. Generally, trading in foreign securities markets is substantially completed each day at various times prior to the close of the New York Stock Exchange. The values of foreign securities are determined as of the close of such foreign markets or the close of the New York Stock Exchange, if earlier. All investments quoted in foreign currency are valued in U.S. dollars on the basis of the foreign currency exchange rates prevailing at the close of business. The Global Series' and Asset Allocation Series' investments in foreign securities may involve risks not present in domestic investments. Since foreign securities may be denominated in a foreign currency and involve settlement and pay interest or dividends in foreign currencies, changes in the relationship of these foreign currencies to the U.S. dollar can significantly affect the value of the investments and earnings of the Funds. Foreign investments may also subject the Global Series and Asset Allocation Series to foreign government exchange restrictions, expropriation, taxation or other political, social or economic developments, all of which could affect the market and/or credit risk of the investments. B. FOREIGN CURRENCY TRANSACTIONS - The accounting records of the Funds are maintained in U.S. dollars. All assets and liabilities initially expressed in foreign currencies are converted into U.S. dollars at prevailing exchange rates. Purchases and sales of investment securities, dividend and interest income, and certain expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. The Funds do not isolate that portion of the results of operations resulting from changes in the foreign exchange rates on investments from the fluctuations arising from changes in the market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss on investments. Net realized foreign exchange gains or losses arise from sales of portfolio securities, sales of foreign currencies, and the difference between asset and liability amounts initially stated in foreign currencies and the U.S. dollar value of the amounts actually received or paid. Net unrealized foreign exchange gains or losses arise from changes in the value of portfolio securities and other assets and liabilities at the end of the reporting period, resulting from changes in the exchange rates. C. FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS - Global Series and Asset Allocation Series may enter into forward foreign exchange contracts in order to manage foreign currency risk from purchase or sale of securities denominated in foreign currency. These funds may also enter into such contracts to manage changes in foreign currency exchange rates on portfolio positions. These contracts are marked to market daily, by recognizing the difference between the contract exchange rate and the current market rate as unrealized gains or losses. Realized gains or losses are recognized when contracts are settled and are reflected in the statement of operations. These contracts involve market risk in excess of the amount reflected in the balance sheet. The face or contract amount in U.S. dollars reflects the total exposure these funds have in that particular currency contract. Losses may arise due to changes in the value of the foreign currency or if the counterparty does not perform under the contract. D. FUTURES - Growth & Income Fund, Asset Allocation Series, Social Awareness Series and Ultra Fund utilize futures contracts to a limited extent, with the objectives of maintaining full exposure to the underlying stock market, enhancing returns, maintaining liquidity, and minimizing transaction costs. These funds may purchase futures contracts to immediately position incoming cash in the market, thereby simulating a fully invested position in the underlying index while maintaining a cash balance for liquidity. In the event of redemptions, the Funds may pay departing shareholders from its cash balances and reduce their futures positions accordingly. Returns may be enhanced by purchasing futures contracts instead of the underlying securities when futures are believed to be priced more attractively than the underlying securities. The primary risks associated with the use of futures contracts are imperfect correlation between changes in market values of stocks contained in the indexes and the prices of futures contracts, and the possibility of an illiquid market. Futures contracts are valued based upon their quoted daily settlement prices. Upon entering into a futures contract, the Funds are required to deposit either cash or securities, representing the initial margin, equal to a certain percentage of the contract value. Subsequent changes in the value of the contract, or variation margin, are recorded as unrealized gains or losses. The variation - ----------------------------------------------------------------------------- 55 57 NOTES TO FINANCIAL STATEMENTS (CONTINUED) - -------------------------------------------------------------------------------- margin is paid or received in cash daily by the Funds. The Funds realize a gain or loss when the contract is closed or expires. There were no futures contracts held by the Funds at September 30, 1998. E. SECURITY TRANSACTIONS AND INVESTMENT INCOME - Security transactions are accounted for on the date the securities are purchased or sold. Realized gains and losses are reported on an identified cost basis. Dividend income less foreign taxes withheld (if any) plus foreign taxes recoverable (if any) are recorded on the ex-dividend date. Interest income is recognized on the accrual basis. Premium and discounts (except original issue discounts) on debt securities are not amortized. F. DISTRIBUTIONS TO SHAREHOLDERS - Distributions to shareholders are recorded on the ex-dividend date. The character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences are primarily due to differing treatments relating to the expiration of net operating losses and the recharacterization of foreign currency gains and losses. G. TAXES - The Funds complied with the requirements of the Internal Revenue Code applicable to regulated investment companies and distributed all of their taxable net income and net realized gains sufficient to relieve them from all, or substantially all, federal income, excise and state income taxes. Therefore, no provision for federal or state income tax is required. 2. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES Under terms of the investment advisory contract, Security Management Company, LLC (SMC) agrees to provide, or arrange for others to provide, all the services required by the Funds for a single fee (except for the Asset Allocation, Social Awareness, Value and Small Company Series of Security Equity Fund), including investment advisory services, transfer agent services and certain other administrative services. For Growth and Income Fund, Equity Series and Ultra Fund this fee is equal to 2% of the first $10 million of the average daily closing value of each Fund's net assets, 1 1/2% of the next $20 million, and 1% of the remaining net assets of the Fund for the fiscal year. For Global Series this fee is equal to 2% of the first $70 million of the average daily closing value of the Series' net assets and 1 1/2% of the remaining average net assets of the Series for the fiscal year. Additionally, SMC agrees to assume all of the Funds' expenses, except for its fee and the expenses of interest, taxes, brokerage commissions and extraordinary items and Class B distribution fees. SMC also serves as Investment Advisor to the Asset Allocation, Social Awareness, Value and Small Company Series, and accordingly receives a fee equal to 1% of the average net assets of these Series. SMC also acts as the administrative agent and transfer agent for the Asset Allocation, Social Awareness, Value and Small Company Series, and as such performs administrative functions, transfer agency and dividend disbursing services, and the bookkeeping, accounting and pricing functions for each Series. For these services, the Investment Manager receives, from Asset Allocation Series, an administrative fee equal to .045% of the average daily net assets of the Series plus, the greater of .10% of its average net assets or (i) $60,000. For administrative services provided to the Social Awareness Series, Value Series and the Small Company Series, SMC receives an administrative fee equal to .09% of the average daily net assets of each Series. For transfer agent services, SMC is paid an annual fixed charge per account as well as a transaction fee for all shareholder and dividend payments. SMC pays a Sub-Advisor, Lexington Management Corporation (LMC), an annual fee in an amount equal to .50% of the average daily net assets of Global Series, for investment advisory and certain administrative services provided to the Global Series. SMC pays Meridian Investment Management Corporation for subadvisory services provided to the Asset Allocation Series, an annual fee equal to the following schedule: Average Daily Net Assets of the Series Annual Fees Less Than $100 Million......................... 40%, plus $100 Million but less than $200 Million... 35%, plus $200 Million but less than $400 Million... 30%, plus $400 Million or more...................... 25% SMC pays Strong Capital Management, Inc. ("Strong") with respect to Small Company Series, an annual fee based on the combined average net assets of the Series and another fund within the Security Funds for which Strong provides advisory services. The fee is equal to .50% of the combined average net assets under $150,000,000, .45% of the combined average net assets at or above $150,000,000 but less than $500,000,000, and .40% of the combined average net assets at or above $500,000,000. SMC has agreed to limit the total expenses of the Asset Allocation Series, Social Awareness Series, Value Series and the Small Company Series to 2% of the average net assets, excluding 12b-1 fees. SMC waived management fees on the Asset Allocation Series, Social Awareness Series and Value Series until February 1, 1998. SMC has also waived the management fees for the Small Company Series until September 30, 1998. The Funds have adopted Distribution Plans related to the offering of Class B shares pursuant to Rule 12b-1 under the Investment Company Act of 1940 and the Small Company Series has also adopted such a plan with repect to its Class A shares. ThePlans provide for payments at an annual rate of 1.0% of the average net assets of each Fund's Class B shares and .25% of the net assets of the Small Company Series' Class A shares. Security Distributors, Inc. (SDI), a wholly-owned subsidiary of Security Benefit Group, Inc. and the national distributor of the Funds, received net underwriting commissions on sales of Class A shares and contingent deferred sales charges on redemptions occurring within 5 years of the date of purchase of Class B shares after allowances to brokers and dealers in the amounts presented in the following table: SDI BROKER/ BROKER/ UNDERWRITING CDSC DEALER DEALER (CLASS A) (CLASS B) (CLASS A) (CLASS B) Growth & Income Fund $11,930 $12,982 $149,153 $214,268 Security Equity Fund: Equity Series 137,516 123,648 1,449,073 1,639,476 Global Series 66 24,076 16,744 58,103 Asset Allocation Series 728 7,197 13,572 10,531 Social Awareness Series 4,310 4,833 69,520 59,703 Value Series 4,530 5,438 171,982 183,293 Small Company Series 28 2,250 29,762 15,283 Ultra Fund 3,908 19,376 47,718 32,808 Certain officers and directors of the Funds are also officers and/or directors of Security Benefit Life Insurance Company and its subsidiaries, which include SMC and SDI. 58 NOTES TO FINANCIAL STATEMENTS (CONTINUED) - ------------------------------------------------------------------------------- 3. FEDERAL INCOME TAX MATTERS For federal income tax purposes, the amounts of unrealized appreciation (depreciation) at September 30, 1998, were as follows: GROSS GROSS NET UNREALIZED UNREALIZED UNREALIZED APPRECIATION APPRECIATION DEPRECIATION (DEPRECIATION) Growth & Income Fund $2,969,808 ($9,520,161) ($6,550,353) Security Equity Fund: Equity Series 292,259,977 (12,788,569) 279,471,408 Global Series 3,093,345 (3,984,533) (891,188) Asset Allocation Series 799,720 (1,142,727) (343,007) Social Awareness Series 2,453,107 (566,602) 1,886,505 Value Series 1,462,992 (2,283,252) (820,260) Small Company Series 237,534 (99,337) 138,197 Ultra Fund 9,136,169 (10,516,295) (1,380,126) The Growth and Income Fund, Equity Series, Global Series, Asset Allocation Series and Ultra Fund hereby respectively designate $15,391,976, $65,468,053, $1,414,896, $336,558, and $4,380,091 as capital gain dividends paid during the fiscal year ended September 30, 1998 for the purpose of the dividends paid deduction on each Fund's federal income tax return. The Small Company Series has a capital loss camiforward of $83,808, which is available to offset future taxable gains and expires in 2006. 4. INVESTMENT TRANSACTIONS Investment transactions for the year ended September 30, 1998, (excluding overnight investments and short-term commercial paper) are as follows: PROCEEDS PURCHASES FROM SALES Growth & Income Fund $135,939,311 $143,767,512 Security Equity Fund: Equity Series 393,619,848 473,548,883 Global Series 38,494,344 41,606,702 Asset Allocation Series 3,080,169 3,436,269 Social Awareness Series 6,534,238 4,637,172 Value Series 23,910,139 13,647,800 Small Company Series 14,722,414 10,661,079 Ultra Fund 96,136,753 101,175,598 5. FORWARD FOREIGN EXCHANGE CONTRACTS At September 30, 1998, Global Series had the following open forward foreign exchange contracts to buy or sell currency (excluding foreign currency contracts used for purchase and sale settlements):
NET FOREIGN AMOUNT TO BE UNREALIZED SETTLEMENT CURRENCY (RECEIVED)/PAID U.S. $ VALUE APPRECIATION CURRENCY TYPE DATE TO BE DELIVERED IN U.S.$ AS OF 9/30/98 (DEPRECIATION) Australian Dollar Sell 11/05/98 1,189,825 ($772,818) ($706,010) $ 66,808 Australian Dollar Sell 11/05/98 188,961 (112,753) (112,090) 663 Australian Dollar Buy 11/05/98 936,458 553,787 555,669 1,882 British Pound Sell 10/06/98 1,194,832 (1,967,654) (2,030,104) (62,450) British Pound Buy 10/06/98 1,194,832 1,993,330 2,030,104 36,774 Canadian Dollar Sell 11/30/98 1,414,840 (973,804) (924,369) 49,435 Canadian Dollar Buy 11/30/98 1,204,857 821,723 787,180 (34,543) German Deutsche Mark Sell 10/01/98 1,902,027 (1,039,984) (1,137,984) (98,000) German Deutsche Mark Buy 10/01/98 1,902,027 1,069,050 1,137,984 68,934 Japanese Yen Sell 03/15/99 125,819,846 (963,251) (942,920) 20,331 Swedish Krona Sell 10/01/98 5,481,412 (693,323) (699,650) (6,327) Swedish Krona Buy 10/01/98 5,481,412 710,644 699,650 (10,994) ---------- $ 32,513 ==========
6. FEDERAL TAX STATUS OF DIVIDENDS The income dividends paid by the Funds are taxable as ordinary income on the shareholder's tax return. The portion of ordinary income of dividends (including net short-term capital gains) attributed to fiscal year ended September 30, 1998, that qualified for the dividends received deductions for corporate shareholders was 18%, 100%, 100%, 100%, 100%, 57%, 0% and 44% of the amount taxable as ordinary income for Growth and Income Fund, Equity Series, Global Series, Asset Allocation Series, Social Awareness Series, Value Series, Small Company Series and Ultra Fund respectively, in accordance with the provisions of the Internal Revenue Code. - ------------------------------------------------------------------------------- 57 59 REPORT OF ERNST & YOUNG LLP INDEPENDENT AUDITORS - ------------------------------------------------------------------------------- THE SHAREHOLDERS AND BOARD OF DIRECTORS SECURITY GROWTH AND INCOME FUND, SECURITY EQUITY FUND, AND SECURITY ULTRA FUND We have audited the accompanying balance sheets, including the schedule of investments of Security Growth and Income Fund, Security Equity Fund (comprised of the Equity, Global, Asset Allocation, Social Awareness, Value and Small Company Series) and Security Ultra Fund (the Funds) as of September 30, 1998, and the related statements of operations, changes in net assets and financial highlights for the periods indicated therein. These financial statements and financial highlights are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights. Our procedures included confirmation of securities owned as of September 30, 1998, by correspondence with the custodian. As to securities relating to uncompleted transactions, we performed other audit procedures. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Funds at September 30, 1998, and the results of their operations, changes in their net assets and financial highlights for the periods indicated above in conformity with generally accepted accounting principles. /S/ Ernst & Young llp - ----------------------------- Ernst & Young llp Kansas City, Missouri October 30,1998 - ----------------------------------------------------------------------------- 58 60 THIS PAGE LEFT BLANK INTENTIONALLY. 61 THE SECURITY GROUP OF MUTUAL FUNDS - ------------------------------- Security Growth and Income Fund Security Equity Fund - Equity Series - Global Series - Asset Allocation Series - Social Awareness Series - Value Series - Small Company Series Security Ultra Fund Security Income Fund - Corporate Bond Series - U.S. Government Series - Limited Maturity Bond Series - High Yield Series Security Municipal Bond Fund Security Cash Fund This report is submitted for the general information of the shareholders of the Funds. The report is not authorized for distribution to prospective investors in the Funds unless preceded or accompanied by an effective prospectus which contains details concerning the sales charges and other pertinent information. SECURITY FUNDS OFFICERS AND DIRECTORS - ---------------------- DIRECTORS - --------- Donald A. Chubb, Jr. John D. Cleland Penny A. Lumpkin Mark L. Morris, Jr., D.V.M. Maynard F. Oliverius James R. Schmank OFFICERS - -------- John D. Cleland, President James R. Schmank, Vice President Mark E. Young, Vice President Steven M. Bowser, Vice President, Equity Fund David Eshnaur, Vice President, Equity Fund Terry A. Milberger, Vice President, Equity Fund Michael A. Petersen, Vice President, Growth and Income Fund James P. Schier, Vice President, Equity Fund Cindy L. Shields, Vice President, Ultra and Equity Fund Jane A. Tedder, Vice President, Equity Fund Amy J. Lee, Secretary Christopher D. Swickard, Assistant Secretary Brenda M. Harwood, Treasurer - --------------------------- ------------------ SECURITY DISTRIBUTORS, INC. BULKRATE - --------------------------- U.S. POSTAGE PAID PERMIT NO. 941 700 SW Harrison St. CHICAGO, IL Topeka, KS 66636-0001 ------------------ (785) 431-3127 (800) 888-2461 SDI 604 (R11-98) 46-06048-00 -----END PRIVACY-ENHANCED MESSAGE-----