SECURITY FUNDS MULTIPLE CLASS PLAN
MAY 1, 2002
1. THE PLAN. This Plan is the written multiple class plan for each of the
open-end management investment companies (individually the "Fund" and
collectively the "Funds") named on Exhibit A hereto, which exhibit may be
revised from time to time, for Security Distributors, Inc. (the
"Distributor"), the general distributor of shares of the Funds, and
Security Management Company, LLC (the "Advisor"), the investment advisor
of the Funds. In instances where such investment companies issue shares
representing interests in different portfolios ("Series"), the term
"Fund" and "Funds" shall separately refer to each Series. It is the
written plan contemplated by Rule 18f-3 (the "Rule") under the Investment
Company Act of 1940 (the "1940 Act"), pursuant to which the Funds may
issue multiple classes of shares. The terms and provisions of this Plan
shall be interpreted and defined in a manner consistent with the
provisions and definitions contained in the Rule.
2. FEATURES OF THE CLASSES. Each class of a Fund shall represent an equal
pro rata interest in such Fund and generally shall have identical voting,
dividend, liquidation and other rights, preferences, powers,
restrictions, limitations, qualifications and terms and conditions,
except that each class:
(i) shall have a different designation;
(ii) shall bear any Class Expenses as defined below;
(iii) shall have exclusive voting rights on any matters that relate
solely to that class's arrangements, including, without limitation,
voting with respect to a 12b-1 Plan for that class; and
(iv) shall have separate voting rights on any matter submitted to
shareholders in which the interests of one class differ from the
interests of any other class.
Certain classes have adopted a service plan or distribution and service
plan ("12b-1 Plan"), and shall pay all of the expenses incurred pursuant
to that arrangement. Expenses incurred in connection with a class's 12b-1
Plan are referred to herein as "Class Expenses."
Because Class Expenses may be accrued at different rates for each class
of a Fund, dividends distributable to shareholders and net asset values
per share may differ for shares of different classes of the same Fund.
3. ALLOCATIONS OF INCOME AND EXPENSES. The gross income of each Fund, and
expenses of each Fund other than Class Expenses, are allocated among the
classes on the basis of the relative net assets of each class of such
Fund. Each class of shares may at the Directors' discretion also pay a
different share of expenses, not including advisory fees or other
expenses related to management of the Fund's assets, if such expenses are
actually incurred in a different amount by that class, or if the class
received services of a different kind or to a different degree than that
of other classes.
4. FEE WAIVERS AND REIMBURSEMENTS. The investment advisor may waive or
reimburse its management fee in whole or in part provided that the fee is
waived or reimbursed to all shares of a Fund in proportion to their
relative average daily net asset values.
The investment advisor, or an entity related to the investment advisor,
who charges a fee for a Class Expense may waive or reimburse that fee in
whole or in part only if the revised fee more accurately reflects the
relative costs of providing to each class the service for which the Class
Expense is charged.
A distributor of a Fund may waive or reimburse a Rule 12b-1 Plan fee in
whole or in part.
5. EXCHANGE PRIVILEGES. Shareholders may exchange shares of one class of a
Fund for shares of an identical class of any other Fund based upon each
Fund's relative net asset value per share. Shareholders may also exchange
shares of one class of a Fund for shares of the Security Cash Fund. Any
applicable contingent deferred sales charge will be calculated from the
date of initial purchase without regard to the time that shares are
invested in Security Cash Fund. Because Cash Fund does not impose a sales
charge, any exchange of Cash Fund shares acquired through direct purchase
will be based upon the respective net asset values of the shares involved
and subject to any applicable sales charges.
6. CONVERSIONS OF SHARES. Class B shares automatically convert to Class A
shares on the eighth anniversary of purchase. This is advantageous
because Class A shares are subject to a lower distribution fee than Class
B shares. A pro rata amount of Class B shares purchased through the
reinvestment of dividends or other distributions is also converted to
Class A shares each time that shares purchased directly are converted.
7. DISCLOSURE. The classes of shares to be offered by each Fund, and the
initial, asset-based or contingent deferred sales charges and other
material distribution arrangements with respect to such classes, shall be
disclosed in the prospectus and/or statement of additional information
used to offer that class of shares. Such prospectus or statement of
additional information shall be supplemented or amended to reflect any
change(s) in classes of shares to be offered or in the material
distribution arrangements with respect to such classes.
8. INDEPENDENT AUDIT. The methodology and procedures for calculating the net
asset value, dividends and distributions of each class shall be reviewed
by an independent auditing firm (the "Expert"). At least annually, the
Expert, or an appropriate substitute expert, will render a report to the
Funds on policies and procedures placed in operation and tests of
operating effectiveness as defined and described in SAS 70 of the AICPA.
9. RULE 12B-1 PAYMENTS. The Treasurer of each Fund shall provide to the
Directors of that Fund, and the Directors shall review, at least
quarterly, the written report required by that Fund's distribution and
service plan(s) and/or service plan (the "Plan"), if any, adopted
pursuant to 1940 Act Rule 12b-1. The report shall include information on
(i) the amounts expended pursuant to the Plan, (ii) the purposes for
which such expenditures were made and (iii) the amount of the
Distributor's unreimbursed distribution costs (if recovery of such costs
in future periods is permitted by that Plan), taking into account Plan
payments and contingent deferred sales charges paid to the Distributor.
10. CONFLICTS. On an ongoing basis, the Directors of the Funds, pursuant to
their fiduciary responsibilities under the 1940 Act and otherwise, will
monitor the Funds for the existence of any material conflicts among the
interests of the classes. The Advisor and the Distributor will be
responsible for reporting any potential or existing conflicts to the
Directors. In the event a conflict arises, the Directors shall take such
action as they deem appropriate.
11. EFFECTIVENESS AND AMENDMENT. This Plan, as amended, takes effect as of
the date first shown above. This Plan, as amended, has been approved by a
majority vote of the Board of each Fund and of each Fund's Board members
who are not "interested persons" (as defined in the 1940 Act) and who
have no direct or indirect financial interest in the operation of the
Plan or any agreements relating to the Plan (the "Independent Directors")
of each Fund at a meeting called for the Security Funds listed on Exhibit
A on July 23, 1999. Prior to that vote, (i) the Board was furnished by
Security Distributors, Inc. with information necessary to permit it to
evaluate the Plan, including without limitation the methodology used for
net asset value and dividend and distribution determinations for the
Funds, and (ii) a majority of each Board and its Independent Directors
determined that the Plan as proposed to be amended, including the expense
allocation, is in the best interests of each Fund as a whole and to each
class of each Fund individually. Prior to any material amendment to the
Plan, each Board shall request and evaluate, and Security Distributors,
Inc. shall furnish, such information as may be reasonably necessary to
evaluate such amendment, and a majority of each Board and its Independent
Directors shall find that the Plan as proposed to be amended, including
the expense allocation, is in the best interests of each class, each Fund
as a whole and each class of each Fund individually.
Adopted by the Board of Directors of the Funds on February 3, 2002.
AMY J. LEE
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Amy J. Lee, Secretary
Security Equity Fund
Security Growth and Income Fund
Security Ultra Fund
Security Income Fund
Security Municipal Bond Fund
EXHIBIT A
SECURITY FUNDS
Security Equity Fund Security Ultra Fund Security Municipal Bond Fund
Security Growth and Income Fund Security Income Fund
