Guggenheim Alpha Opportunity Fund Class C (SAOCX)
Filed: 10 Jul 07, 12:00am
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Equity Fund
One Security Benefit Place
Topeka, Kansas 66636-0001
Supplement Dated July 10, 2007
to Prospectus Dated February 1, 2007
The following information supplements and amends the information in the Prospectus regardingSecurity Equity Fund Global Series (the "Fund"):
At a meeting held on May 10-11, 2007, the Board of Directors approved a sub-advisory agreement between 6th Avenue Investment Management Company, LLC (the "Investment Manager") and Security Global Investors, LLC ("SGI") on behalf of the Fund (the "SGI Sub-Advisory Agreement"), under which, subject to shareholder approval, SGI is proposed to be appointed as investment sub-adviser for the Fund. If shareholders of the Fund approve the SGI Sub-Advisory Agreement, effective on or about July 31, 2007, SGI will replace the current sub-adviser and begin service as investment sub-adviser to the Fund. The Fund's investment objective and risks will remain substantially the same under the SGI Sub-Advisory Agreement.
If the shareholders approve the appointment of SGI as investment sub-adviser for the Fund, the Prospectus will be updated by replacing the discussion of the Fund's principal investment strategies with the following:
The Fund pursues its objective by investing, under normal market conditions, in at least three countries, one of which may be the United States. The Fund invests primarily in foreign and domestic common stocks or convertible stocks of companies considered to have appreciation possibilities. While the Fund may invest in the United States, there is no limit on its foreign investments. Investments in debt securities may be made when market conditions are uncertain.
The Fund may also invest a portion of its assets in options, futures contracts and foreign currencies, which may be used to hedge the Fund's portfolio, to increase returns or to maintain exposure to the equity markets. The Fund may also invest in emerging market countries.
The Fund may actively trade its investments without regard to the length of time they have been owned by the Fund. This active trading may increase the costs the Fund incurs and entail negative tax consequences by generating short-term capital gains.
The Fund's sub-adviser, Security Global Investors, Inc. ("SGI"), manages Fund assets pursuant to a Global Equity strategy that seeks consistent alpha in all market environments. Using a proprietary database comprised of 5,000 companies from around the world, SGI employs a bottom-up stock selection process designed to generate alpha through stock selection while maintaining a globally diversified portfolio.
To lower the risks of foreign investing, such as currency fluctuations, SGI generally diversifies the Fund's investments broadly across countries and industries.
Under adverse or unstable market conditions, the Fund may invest some or all of its assets in cash, repurchase agreements or money market instruments. Although the Fund would do this only in seeking to avoid losses, the Fund may be unable to pursue its investment objective during that time, and such a defensive strategy could reduce the benefit to the Fund of any upswing in the market.
SGI Performance Information
SGI is a newly-created investment adviser formed for the purpose of acquiring the assets of Avera Global Partners LP ("Avera"). The key personnel of Avera have become the key personnel of SGI.
The following information shows how accounts managed by Avera and its portfolio managers who are now employees of SGI have performed in the past. It does not show how the Fund has performed or will perform. The information reflects the performance of a composite of accounts formerly managed by Avera whose investment objectives, policies, and strategies are substantially similar to those of the Fund. SGI has represented that any accounts not included in the composite would not cause the performance presentation to differ materially from the presentation shown below. For example, the information may exclude accounts that are too small, have too short an investment time horizon to accurately reflect SGI's performance, or do not meet other established criteria for the published composite. Total return information represents past performance of the composite, and not the Fund. The information does not reflect fees and expenses of the Fund, which would lower returns.
Composite results are asset weighted and calculated monthly. Quarterly and annual composite performance figures are computed by linking monthly returns. Monthly market values include income accruals.
Performance information has been provided by SGI and is not within the control of the Investment Manager. None of the performance or expense information regarding comparable accounts or the composite has been independently verified by the Investment Manager.
The charts below do not show the performance of the Fund—they show the performance of similar accounts managed by SGI.
The charts show the historical performance of the SGI Global Long Only composite. The accounts in the composite have investment objectives, policies and strategies that are substantially similar to those of the Fund. As of June 29, 2007, the composite consisted of three advisory accounts formerly managed by Avera, which accounts are now managed by SGI.
Average Annual Returns1
| Year To Date | 1 Year | 3 Years | 5 Years | Since Inception* | |
|---|---|---|---|---|---|
| SGI Global Long Only | 15.90% | 30.91% | 18.41% | 17.35% | 14.76% |
| MSCI World Index2 | 9.16% | 23.58% | 16.72% | 13.99% | 10.77% |
| *For the period beginning December 31, 2001 (date of inception) to June 29, 2007. | |||||
Annual Returns1
[BAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]
| 2002 | 2003 | 2004 | 2005 | 2006 | |
|---|---|---|---|---|---|
| SGI Global Long Only | -12.79% | 42.33% | 8.20% | 15.24% | 18.85% |
| MSCI World Index2 | -19.89% | 33.11% | 14.72% | 9.49% | 20.07% |
Growth of $10,000 (December 31, 2001 - June 29, 2007)1
[LINE GRAPH PLOTTED FROM DATA IN TABLE BELOW]
| SGI Global Long Only | MSCI World Index2 | |
|---|---|---|
| January 2002 | $10,000 | $10,000 |
| February 2002 | $10,208 | $ 9,912 |
| March 2002 | $10,420 | $10,349 |
| April 2002 | $10,440 | $ 9,997 |
| May 2002 | $10,427 | $10,014 |
| June 2002 | $10,009 | $ 9,404 |
| July 2002 | $ 9,313 | $ 8,611 |
| August 2002 | $ 9,448 | $ 8,625 |
| September 2002 | $ 9,038 | $ 7,676 |
| October 2002 | $ 9,240 | $ 8,241 |
| November 2002 | $ 9,244 | $ 8,684 |
| December 2002 | $ 9,110 | $ 8,262 |
| January 2003 | $ 9,060 | $ 8,011 |
| February 2003 | $ 9,087 | $ 7,870 |
| March 2003 | $ 9,149 | $ 7,844 |
| April 2003 | $ 9,791 | $ 8,540 |
| May 2003 | $10,624 | $ 9,026 |
| June 2003 | $10,967 | $ 9,181 |
| July 2003 | $11,144 | $ 9,366 |
| August 2003 | $11,599 | $ 9,568 |
| September 2003 | $11,821 | $ 9,625 |
| October 2003 | $12,285 | $10,195 |
| November 2003 | $12,510 | $10,350 |
| December 2003 | $12,967 | $10,998 |
| January 2004 | $13,227 | $11,175 |
| February 2004 | $13,332 | $11,362 |
| March 2004 | $13,511 | $11,286 |
| April 2004 | $13,182 | $11,055 |
| May 2004 | $13,270 | $11,156 |
| June 2004 | $13,417 | $11,385 |
| July 2004 | $12,843 | $11,013 |
| August 2004 | $12,925 | $11,062 |
| September 2004 | $12,977 | $11,271 |
| October 2004 | $13,130 | $11,547 |
| November 2004 | $13,595 | $12,153 |
| December 2004 | $14,030 | $12,617 |
| January 2005 | $13,838 | $12,333 |
| February 2005 | $14,390 | $12,724 |
| March 2005 | $14,213 | $12,477 |
| April 2005 | $13,959 | $12,205 |
| May 2005 | $14,019 | $12,422 |
| June 2005 | $14,369 | $12,529 |
| July 2005 | $15,003 | $12,967 |
| August 2005 | $15,193 | $13,065 |
| September 2005 | $15,670 | $13,404 |
| October 2005 | $14,931 | $13,079 |
| November 2005 | $15,342 | $13,515 |
| December 2005 | $16,168 | $13,814 |
| January 2006 | $17,294 | $14,431 |
| February 2006 | $17,216 | $14,410 |
| March 2006 | $17,729 | $14,726 |
| April 2006 | $18,249 | $15,174 |
| May 2006 | $17,498 | $14,655 |
| June 2006 | $17,014 | $14,651 |
| July 2006 | $16,797 | $14,742 |
| August 2006 | $17,141 | $15,125 |
| September 2006 | $17,066 | $15,305 |
| October 2006 | $17,829 | $15,867 |
| November 2006 | $18,545 | $16,256 |
| December 2006 | $19,217 | $16,586 |
| January 2007 | $19,585 | $16,782 |
| February 2007 | $19,375 | $16,695 |
| March 2007 | $20,259 | $17,000 |
| April 2007 | $21,557 | $17,750 |
| May 2007 | $22,312 | $18,247 |
| June 2007 | $22,272 | $18,107 |
Monthly Returns1
| 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | |
|---|---|---|---|---|---|---|
| January | -4.28% | -0.55% | 2.00% | -1.37% | 6.96% | 1.92% |
| February | 2.08% | 0.29% | 0.79% | 3.99% | -0.46% | -1.07% |
| March | 2.07% | 0.69% | 1.34% | -1.23% | 2.98% | 4.57% |
| April | 0.20% | 7.01% | -2.43% | -1.78% | 2.93% | 6.41% |
| May | -0.13% | 8.50% | 0.66% | 0.43% | -4.12% | 3.50% |
| June | -4.01% | 3.23% | 1.11% | 2.50% | -2.77% | -0.18% |
| July | -6.95% | 1.62% | -4.28% | 4.41% | -1.28% | N/A |
| August | 1.45% | 4.08% | 0.64% | 1.26% | 2.05% | N/A |
| September | -4.34% | 1.92% | 0.40% | 3.14% | -0.44% | N/A |
| October | 2.23% | 3.92% | 1.18% | -4.72% | 4.47% | N/A |
| November | 0.05% | 1.83% | 3.54% | 2.76% | 4.02% | N/A |
| December | -1.45% | 3.66% | 3.20% | 5.38% | 3.62% | N/A |
1Composite performance for the tables reflects performance after actual advisory fees and other expenses charged to accounts in the Global Long Only Composite have been deducted. The actual advisory fee charged by SGI for each account has been deducted from the gross performance of the accounts. The Fund's fees and expenses may be higher than those reflected in this composite, which would reduce performance. Accounts in the composite were not subject to the investment limitations, diversification requirements and other restrictions of the Investment Company Act of 1940 or Subchapter M of the Internal Revenue Code of 1986, as amended, which, if imposed, could have adversely affected performance. The composite reflects investment advisory fees and transaction costs but does not include custody fees or other expenses normally paid by mutual funds. If these costs were included, performance would have been lower.
2The MSCI Net USD World Index is an unmanaged capitalization-weighted index that is designed to measure global developed market equity performance. Results include reinvested dividends.
Advisory Fees
Advisory fees paid by the Fund to the Investment Manager will not change if the SGI Sub-Advisory Agreement is approved. SGI will receive monthly compensation from the Investment Manager at the following annual rates (expressed as a percentage of average daily net assets) based on a percentage of the average daily closing value of the combined net assets of the Fund and another fund in the Security Fund complex, as follows: 0.32% of the combined average daily net assets up to $300 million, plus 0.27% of such assets over $300 million up to $750 million and 0.22% of such assets over $750 million. SGI is proposed to serve as the co-investment sub-adviser to the other Security Fund, subject to approval by that fund's shareholders. With respect to the other fund, the Investment Manager will pay this fee to SGI only with respect to the portion of that fund managed by SGI.
About SGI
SGI, Two Embarcadero Center, Suite 2350, San Francisco, California 94111, is an investment adviser registered as such with the U.S. Securities and Exchange Commission. As of May 31, 2007, SGI had approximately $64 million in assets under management. SGI is a wholly owned subsidiary of Security Benefit Life Insurance Company, which in turn is controlled by Security Benefit Corporation. Security Benefit Corporation is a wholly owned subsidiary of Security Benefit Mutual Holding Company.
If shareholders of the Fund approve the SGI Sub-Advisory Agreement, it is planned that the following portfolio managers would oversee day-to-day operations of the Fund:
John Boich, Head of Global Equity of SGI, has a track record in global equity investing that dates back to 1990. Prior to joining SGI in June 2007, Mr. Boich founded Avera Global Partners, L.P. ("Avera") in August 2001, where he served as Chief Investment Officer until June 2007. Prior to founding Avera, he was a founding partner and senior portfolio manager in the global equities division of Montgomery Asset Management. In this capacity, Mr. Boich spent eight years directing research and investment decisions for Montgomery Asset Management's $4 billion global and international mandates. Prior to joining Montgomery in March 1993, he was an analyst and portfolio manager at The Boston Company Institutional Investor Inc. where he led the development and subsequent management of the flagship international equity product. Mr. Boich holds a Bachelor of Arts degree in Economics from the University of Colorado and is a Chartered Financial Analyst charterholder.
Scott F. Klimo, Portfolio Manager at SGI, joined SGI in June 2007. Mr. Klimo was a portfolio manager of Avera from October 2001 until he joined SGI in June 2007. Prior to joining Avera, he worked as a senior international analyst for Founders Asset Management in Denver from December 1999 to September 2001, focusing on consumer durables and non-durables, telecommunications and telecom equipment. Before joining Founders, Mr. Klimo was an assistant portfolio manager for the State of Wisconsin Investment Board from May 1998 to November 1999, where he helped manage a $4 billion international portfolio with a value-oriented investment style. He began his investment career in 1987 as an analyst for Crosby Securities in Hong Kong, before progressing to Thailand Research Director for Smith New Court Far East. Mr. Klimo graduated from Hamilton College with a Bachelor of Arts degree in Asian Studies and immediately left for Asia where he spent the next eleven years. He is a Chartered Financial Analyst charterholder.
David Whittall, Portfolio Manager at SGI, joined SGI in June 2007. Mr. Whittall was a portfolio manager of Avera from March 2004 until June 2007. Prior to joining Avera, Mr. Whittall was senior vice president and the senior international equity salesman at HSBC in San Francisco from January 2003. Prior to HSBC, he was a vice president at JP Morgan and their senior European equity salesman in San Francisco from May 2001 to October 2002. Before his work in international equity sales, Mr. Whittall spent seven years at Montgomery Asset Management where he was a senior analyst, portfolio manager and principal. Mr. Whittall graduated from UC Berkeley with a Bachelor of Arts degree in Asian Studies. He spent one year as a UC Regent's scholar at Beijing University in the People's Republic of China.
Please Retain This Supplement For Future Reference