Securities Act File No. 333-132032
As filed with the Securities and Exchange Commission on February 24, 2006
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. [ ]
SECURITY EQUITY FUND
(Exact Name of Registrant as Specified in Charter)
One Security Benefit Place, Topeka, Kansas 66636-0001
(Address of Principal Executive Offices) (Zip Code)
(785) 438-3000
(Registrant’s Area Code and Telephone Number)
Amy J. Lee
Security Management Company, LLC
One Security Benefit Place
Topeka, Kansas 66636-0001
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering: As soon as practicable after this Registration Statement becomes effective.
It is proposed that this filing will become effective on March 24, 2006 pursuant to Rule 488 under the Securities Act of 1933.
No filing fee is required because an indefinite number of shares has previously been registered pursuant to Rule 24f-2 under the Investment Company Act of 1940, as amended.
Pursuant to Rule 429 under the Securities Act of 1933, this registration statement relates to shares of common stock previously registered on Form N-1A (File No. 2-19458).
One Security Benefit Place
Topeka, KS 66636-0001
(Toll Free) (800) 888-2461
![](https://capedge.com/proxy/N-14A/0001188112-06-001253/michaelgodlumsig.jpg)
President
One Security Benefit Place
Topeka, KS 66636-0001
(Toll Free) (800) 888-2461
Large Cap Growth Fund, Enhanced Index Fund and Social Awareness Fund
to be held June 1, 2006
1. | To approve a Plan of Reorganization providing for the acquisition of all of the assets and liabilities of each Acquired Fund by Select 25 Fund (the “Acquiring Fund”), a series of Security Equity Fund, solely in exchange for shares of the Acquiring Fund, followed by the complete liquidation of the Acquired Fund; and |
2. | To transact such other business as may properly come before the Special Meeting or any adjournments thereof. |
![](https://capedge.com/proxy/N-14A/0001188112-06-001253/amyjleesig.jpg)
Secretary
Introduction | 2 | |||||
Summary | 4 | |||||
The Proposed Reorganization | 4 | |||||
Comparison of Investment Objectives, Principal Investment Strategies, Risks and Management of the Acquired and Acquiring Funds | 5 | |||||
Principal Risks of Investing in the Funds | 14 | |||||
Comparison of Portfolio Characteristics | 17 | |||||
Comparison of Fees and Expenses for Acquired and Acquiring Funds | 19 | |||||
Shareholder Fees | 20 | |||||
Comparison of Operating Expenses | 21 | |||||
Example | 24 | |||||
Additional Information about the Acquiring Fund | 28 | |||||
Performance of the Acquiring Fund | 28 | |||||
Select 25 Fund — Class A | 28 | |||||
Investment Manager | 29 | |||||
Portfolio Manager | 30 | |||||
Form of Organization | 30 | |||||
Information about the Reorganization | 30 | |||||
The Reorganization Plan | 30 | |||||
Reasons for the Reorganization | 31 | |||||
Board Considerations | 31 | |||||
Tax Considerations | 32 | |||||
Expenses of the Reorganization | 33 | |||||
Dividends and Other Distributions | 33 | |||||
Capitalization of the Funds | 34 | |||||
General Information | 34 | |||||
More Information Regarding the Acquiring Fund | 38 | |||||
Management of the Acquiring Fund | 51 | |||||
Financial Highlights for the Acquiring Fund | 55 | |||||
Appendix A — Plan of Reorganization | A-1 | |||||
Appendix B — Additional Investment Techniques and Associated Risks | B-1 | |||||
Appendix C — Performance Update | C-1 | |||||
Appendix D — Ownership Information | D-1 |
One Security Benefit Place
Topeka, Kansas 66636-0001
(Toll Free) (800) 888-2461
Acquired Funds | Acquiring Fund | |||||
---|---|---|---|---|---|---|
Large Cap Growth Fund | ||||||
Enhanced Index Fund | Select 25 Fund | |||||
Social Awareness Fund |
• | the transfer of all of the assets of the Acquired Funds to the Acquiring Fund, in exchange for shares of the Acquiring Fund; |
• | the assumption by the Acquiring Fund of all of the liabilities of the Acquired Funds; |
• | the distribution of shares of the Acquiring Fund to the shareholders of the Acquired Funds; and |
• | the complete liquidation of the Acquired Funds. |
• | As described below, each Acquired Fund has investment objectives and investment policies that are comparable in many respects to the investment objective and investment policies of the Acquiring Fund. The Acquiring Fund’s investment objectives and investment policies do, however, differ in certain material respects, including the Acquiring Fund’s relatively lower level of diversification and its “bottom-up” approach to stock selection. |
• | The Funds have the same investment manager, Security Management Company, LLC (the “Investment Manager” or “SMC”), One Security Benefit Place, Topeka, Kansas 66636-0001. |
• | The proposed Reorganization offers reductions in gross operating expenses, and comparable or lower operating expenses net of voluntary reimbursements and waivers by SMC, for shareholders of each of the Acquired Funds. SMC is expected to benefit from the Reorganization because it will be relieved of its voluntary undertaking to limit the total operating expenses of each Acquired Fund. |
• | The share purchase, exchange and redemption provisions for each Fund are the same. For additional information on purchase and redemption provisions, see “More Information Regarding the Acquiring Fund.” |
• | The Funds expect that the Reorganization will be considered a tax-free reorganization within the meaning of section 368(a)(1) of the Internal Revenue Code of 1986 (the “Code”). As such, shareholders of the Funds will not recognize gain or loss as a result of the Reorganization. See “Information About the Reorganization — Tax Considerations.” |
have similar investment objectives and investment policies, the principal investment strategies and principal risks of an investment in the Funds are generally comparable, although there are certain differences. The chart below summarizes the similarities and differences, between the Funds’ investment objectives, principal investment strategies and principal risks. There can be no assurance that a Fund will achieve its stated objective.
Large Cap Growth Fund | | Select 25 Fund | | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Investment Objective | Long-term growth of capital | Long-term growth of capital | |||||||||||||
Principal Investment Strategies | Large Cap Growth Fund pursues its objective by investing, under normal market conditions, at least 80% of its net assets (plus borrowings for investment purposes) in common stock and other equity securities of large capitalization companies, and principally invests in companies that, in the opinion of the Investment Manager, have long-term capital growth potential. | Select 25 Fund pursues its objective by focusing its investments in a core position of 20–30 common stocks of growth companies which have exhibited consistent above average earnings and/or revenue growth. | |||||||||||||
Investment Manager | Security Management Company, LLC | Security Management Company, LLC | |||||||||||||
Sub-Adviser | None | None | |||||||||||||
Portfolio Manager | Mark Mitchell | Mark Mitchell | |||||||||||||
Comparison of Principal Investment Strategies | Similar Strategies | • Each Fund may invest a portion of its assets in options and futures contracts, which may be used to hedge each Fund’s portfolio, maintain exposure to the equity markets or to increase returns. • Each Fund may invest in a variety of investment vehicles, including those that seek to track the composition and performance of a specific index. Each Fund may use these index-based investments as a way of managing its cash position or to gain exposure to the equity markets or a particular sector of the equity market, while maintaining liquidity. |
Large Cap Growth Fund | | Select 25 Fund | | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Differences in Strategy | • Large Cap Growth Fund may concentrate its investments in a particular industry that represents 20% or more of the Fund’s benchmark index, the Russell 1000 Growth Index. Concentration means investment of more than 25% of the value of the Fund’s assets in any one industry. This policy would allow the Fund to overweight an industry relative to the index even if such overweighting resulted in investment of more than 25% of the Large Cap Growth Fund’s assets in that industry. Currently, no industry represents 20% or more of the index. • The Investment Manager uses a growth-oriented strategy to choose equity securities, which means that it invests in companies whose earnings are believed to be in a relatively strong growth trend. In identifying companies with favorable growth prospects, the Investment Manager considers many factors including, but not limited to: prospects for above-average sales and earnings growth; high return on invested capital; overall financial strength; competitive advantages, including innovative products and services; effective research, product development and marketing; and stable, effective management. • Large Cap Growth Fund typically sells a stock when the reasons for buying it no longer apply, or when the company begins to show deteriorating fundamentals or poor relative performance. | • Select 25 Fund pursues its objective by focusing its investments in a core position of 20–30 common stocks of growth companies which have exhibited consistent above average earnings and/or revenue growth. The Fund is non-diversified, which means that it may invest a larger portion of its assets in a limited number of companies than a diversified fund. • The Investment Manager selects what it believes to be premier growth companies as the core position for the Select 25 Fund using a “bottom-up” approach in selecting growth stocks. A bottom-up approach means that the Investment Manager primarily analyzes the fundamentals of individual companies rather than focusing on broader market or sector themes. When analyzing individual companies, the Investment Manager considers various factors, which may include relative earnings growth, profitability trends, the company’s financial strength, valuation analysis and strength of management. Portfolio holdings will be replaced when one or more of a company’s fundamentals have changed and, in the opinion of the Investment Manager, it is no longer a premier growth company. |
Large Cap Growth Fund | | Select 25 Fund | | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Comparison of Principal Risks | Similar Risks | • Under adverse or unstable market conditions, each Fund’s policies allow it to invest some or all of its assets in cash or money market securities for the purpose of avoiding losses, in which case each Fund may be unable to pursue its investment objective during that time or benefit from any market upswings. • Each Fund also shares the following principal investment risks: • market risk • growth stock risk • equity derivatives risk • non-diversification risk • investment in investment companies risk A summary description of each of these risks, as well as other principal investment risks associated with an investment in the Funds, is provided below under “Principal Risks of Investing in the Funds.” In addition, Appendix B contains additional information regarding other investment strategies and risk considerations of the Funds. | |||||||||||||
Differences in Risks | • In addition to the above risks, Large Cap Growth Fund is also subject to the following principal investment risks: • Industry Concentration Risk • Leverage Risk A summary description of each of these risks is provided below under “Principal Risks of Investing in the Funds.” | • In addition to the above risks, Select 25 Fund is also subject to the following principal investment risks: • Focused Investment Strategy Risk • Overweighting Risk A summary description of each of these risks is provided below under “Principal Risks of Investing in the Funds.” |
Enhanced Index Fund | | Select 25 Fund | | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Investment Objective | Outperform the S&P 500 Index through stock selection resulting in different weightings of common stocks relative to the index | Long-term growth of capital | |||||||||||||
Principal Investment Strategies | Enhanced Index Fund pursues its objective by investing, under normal market conditions, at least 80% of its net assets (plus borrowings for investment purposes) in equity securities of companies in the S&P 500 Index and futures contracts representative of the stocks which make up the index. | Select 25 Fund pursues its objective by focusing its investments in a core position of 20–30 common stocks of growth companies which have exhibited consistent above average earnings and/or revenue growth. | |||||||||||||
Investment Manager | Security Management Company, LLC | Security Management Company, LLC | |||||||||||||
Sub-Adviser | Northern Trust Investments, N.A. (“NTI”) | None | |||||||||||||
Portfolio Manager(s) | Robert H. Bergson and Gail Grove | Mark Mitchell | |||||||||||||
Comparison of Principal Investment Strategies | Similar Strategies | • Each Fund may invest a portion of its assets in options and futures contracts, which may be used to hedge each Fund’s portfolio, maintain exposure to the equity markets or to increase return potential. |
Enhanced Index Fund | | Select 25 Fund | | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Differences in Strategy | • Enhanced Index Fund employs a quantitative discipline to determine which S&P 500 stocks should be overweighted, underweighted, or held in a neutral position relative to the proportion of the S&P 500 Index that the stock represents. Approximately 150 issues will be over- or underweighted relative to the index, and certain securities represented in the index will not be held by the Fund. The Fund also may invest a limited portion of its assets in equity securities that are not included in the S&P 500 Index. • NTI may invest up to 25% of the Fund’s assets in short-term debt securities and money market instruments to meet redemption requests or to facilitate investment in the securities of the S&P 500 Index. | • Select 25 Fund pursues its objective by focusing its investments in a core position of 20–30 common stocks of growth companies which have exhibited consistent above average earnings and/or revenue growth. The Fund is non-diversified, which means that it may invest a larger portion of its assets in a limited number of companies than a diversified fund. • The Investment Manager selects what it believes to be premier growth companies as the core position for the Select 25 Fund using a “bottom-up” approach in selecting growth stocks. A bottom-up approach means that the Investment Manager primarily analyzes the fundamentals of individual companies rather than focusing on broader market or sector themes. When analyzing individual companies, the Investment Manager considers various factors, which may include relative earnings growth, profitability trends, the company’s financial strength, valuation analysis and strength of management. Portfolio holdings will be replaced when one or more of a company’s fundamentals have changed and, in the opinion of the Investment Manager, it is no longer a premier growth company. • Select 25 Fund may invest in a variety of investment companies, including those that seek to track the composition and performance of a specific index. The Fund may use these index-based investments as a way of managing its cash position, to gain exposure to the equity markets, or a particular sector of the equity market, while maintaining liquidity. |
Enhanced Index Fund | | Select 25 Fund | | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Comparison of Principal Risks | Similar Risks | • Under adverse or unstable market conditions, each Fund’s policies allows it to invest some or all of its assets in cash or money market securities for the purpose of avoiding losses, in which case each Fund may be unable to pursue its investment objective during that time or benefit from any market upswings. • Each Fund also shares the following principal investment risks: • market risk • growth stock risk • equity derivatives risk • overweighting risk A summary description of each of these risks, as well as other principal investment risks associated with an investment in the Funds, is provided below under “Principal Risks of Investing in the Funds.” In addition, Appendix B contains additional information regarding other investment strategies and risk considerations of the Funds. | |||||||||||||
Differences in Risks | • In addition to the above risks, Enhanced Index Fund is also subject to the following principal investment risk: • Leverage Risk A summary description of this risk is provided below under “Principal Risks of Investing in the Funds.” | • In addition to the above risks, Select 25 Fund is also subject to the following principal investment risks: • Focused Investment Strategy Risk • Non-Diversification Risk • Investment in Investment Companies Risk A summary description of each of these risks is provided below under “Principal Risks of Investing in the Funds.” |
Social Awareness Fund | | Select 25 Fund | | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Investment Objective | Capital appreciation | Long-term growth of capital | |||||||||||||
Principal Investment Strategies | Social Awareness Fund pursues its objective by investing, under normal market conditions, in a well-diversified portfolio of equity securities that the Investment Manager believes have above-average earnings potential and which meet certain established social criteria. The Fund typically invests in the common stock of companies whose total market value is $5 billion or greater at the time of purchase. | Select 25 Fund pursues its objective by focusing its investments in a core position of 20–30 common stocks of growth companies which have exhibited consistent above average earnings and/or revenue growth. | |||||||||||||
Investment Manager | Security Management Company, LLC | Security Management Company, LLC | |||||||||||||
Portfolio Managers | Mark Mitchell | Mark Mitchell | |||||||||||||
Comparison of Principal Investment Strategies | Similar Strategies | • Each Fund may invest a portion of its assets in options and futures contracts, which may be used to hedge each Fund’s portfolio, maintain exposure to the equity markets or to increase returns. |
Social Awareness Fund | | Select 25 Fund | | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Comparison of Principal Strategies (continued) | Differences in Strategy | • Social Awareness Fund seeks to hold a portfolio of equity securities that have above-average earnings potential and meets established social criteria. The fund typically invests in the common stock of securities whose total market value is $5 billion or greater at the time of purchase. • Social Awareness Fund may also invest in companies that are included in the Domini 400 Social Index (DSI). (The DSI is not the benchmark against which the Fund measures its performance.) • The Investment Manager uses a “bottom-up” approach, which analyzes the fundamentals of individual companies instead of focusing on broad market or sector themes. • The Social Awareness Fund seeks to invest in companies that contribute substantially to the communities in which they operate, demonstrate a positive record on employment relations, demonstrate substantial progress in the promotion of women and minorities or in the implementation of policies that support working parents and take notably positive steps in addressing environmental challenges. Thus, the Fund will not invest in companies that engage in: nuclear energy production, alcoholic beverages, tobacco products, weapons manufacturing, practices that detrimentally affect the environment, and the gambling industry. | • Select 25 Fund pursues its objective by focusing its investments in a core position of 20-30 common stocks of growth companies which have exhibited consistent above average earnings and/or revenue growth. The Fund is non-diversified, which means that it may invest a larger portion of its assets in a limited number of companies than a diversified fund. • The Investment Manager selects what it believes to be premier growth companies as the core position for the Select 25 Fund using a “bottom-up” approach in selecting growth stocks. A bottom-up approach means that the Investment Manager primarily analyzes the fundamentals of individual companies rather than focusing on broader market or sector themes. When analyzing individual companies, the Investment Manager considers various factors, which may include relative earnings growth, profitability trends, the company’s financial strength, valuation analysis and strength of management. Portfolio holdings will be replaced when one or more of a company’s fundamentals have changed and, in the opinion of the Investment Manager, it is no longer a premier growth company. • Select 25 Fund may invest in a variety of investment companies, including those that seek to track the composition and performance of a specific index. The Fund may use these index-based investments as a way of managing its cash position, to gain exposure to the equity markets, or a particular sector of the equity market, while maintaining liquidity. |
Social Awareness Fund | | Select 25 Fund | | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Comparison of Principal Risks | Similar Risks | • Under adverse or unstable market conditions, each Fund’s policies allow it to invest some or all of its assets in cash or money market securities for the purpose of avoiding losses, in which case each Fund may be unable to pursue its investment objective during that time or benefit from any market upswings. • Each Fund also shares the following principal investment risks: • market risk • growth stock risk A summary description of each of these risks, as well as other principal investment risks associated with an investment in the Funds, is provided below under “Principal Risks of Investing in the Funds.” In addition, Appendix B contains additional information regarding other investment strategies and risk considerations of the Funds. | |||||||||||||
Differences in Risks | • In addition to the above risks, Social Awareness Fund is also subject to the following principal investment risk: • Social Investing Risk A summary description of this risk is provided below under “Principal Risks of Investing in the Funds.” | • In addition to the above risks, Select 25 Fund is also subject to the following principal investment risks: • Equity Derivatives Risk • Focused Investment Strategy Risk • Non-Diversification Risk • Investment in Investment Companies Risk • Overweighting Risk A summary description of each of these risks is provided below under “Principal Risks of Investing in the Funds.” |
companies, or from broader influences like changes in interest rates, market conditions, investor confidence or changes in economic, political or financial market conditions.
(based on sectors or industries of the S&P 500 Index), Nasdaq-100 Index Tracking Stocks (based on the Nasdaq-100 Index) and DIAMONDS (based on the Dow Jones Industrial Average). Such index-based investments are securities issued by an investment company or investment vehicle whose shares are intended to closely track the performance of the applicable index. To the extent a Fund invests in other investment companies or investment vehicles, it will incur its pro rata share of the underlying investment companies’ or investment vehicles’ expenses, such as investment advisory and other management expenses, and shareholders will be required to pay the operating expenses of two investment companies or investment vehicles. In addition, a Fund will be subject to the effects of business and regulatory developments that affect an underlying investment company or investment vehicle or the investment company industry generally.
| Acquired Funds | | Acquiring Fund | ||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Large Cap Growth Fund | | Enhanced Index Fund | | Social Awareness Fund | | Select 25 Fund | ||||||||||||
Net Assets (thousands) | $16,881.60 | $14,305.90 | $16,954.30 | $25,127.70 | |||||||||||||||
Number of Holdings | 38 | 249 | 38 | 27 | |||||||||||||||
Portfolio Turnover Rate (12 months ended 12/31/05) | 58% | 101% | 52% | 30% | |||||||||||||||
As a percentage of Net Assets | |||||||||||||||||||
— U.S. Government Obligations | — | — | — | — | |||||||||||||||
— U.S. Government Agency Obligations | — | — | — | — | |||||||||||||||
— Foreign Government Obligations | — | — | — | — | |||||||||||||||
— Corporate Debt Securities | — | — | — | — | |||||||||||||||
— Convertible Bonds | — | — | — | — | |||||||||||||||
— Convertible Preferred Stocks | — | — | — | — | |||||||||||||||
— Preferred Stocks | — | — | — | — | |||||||||||||||
— Common Stocks | 97.14% | 96.86% | 97.36% | 95.81% |
Acquired Funds | Acquiring Fund | ||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Large Cap Growth Fund | % | Enhanced Index Fund | % | Social Awareness Fund | % | Select 25 Fund | % | ||||||||||||||||||||||||
American International Group, Inc. | 4.20 | Exxon Mobil Corporation | 3.26 | American International Group, Inc. | 4.77 | Shaw Group, Inc. | 7.35 | ||||||||||||||||||||||||
General Electric Company | 4.07 | General Electric Company | 2.93 | Microsoft Corporation | 4.09 | KFX, Inc. | 5.54 | ||||||||||||||||||||||||
Carnival Corporation | 3.99 | Microsoft Corporation | 2.12 | Fedex Corporation | 3.90 | Fedex Corporation | 5.27 | ||||||||||||||||||||||||
Microsoft Corporation | 3.81 | Bank of America Corporation | 1.97 | Univision Communications, Inc. | 3.87 | BJ Services Company | 4.69 | ||||||||||||||||||||||||
Univision Communications, Inc. | 3.67 | Johnson & Johnson | 1.83 | Medtronic, Inc. | 3.84 | Carnival Corporation | 4.53 | ||||||||||||||||||||||||
Home Depot, Inc. | 3.52 | Citigroup, Inc. | 1.81 | Home Depot, Inc. | 3.29 | Williams Companies, Inc. | 4.30 | ||||||||||||||||||||||||
Medtronic, Inc. | 3.51 | Pfizer, Inc. | 1.77 | Shaw Group, Inc. | 3.17 | Medtronic, Inc. | 4.26 | ||||||||||||||||||||||||
J.B. Hunt Transport Services, Inc. | 3.39 | Intel Corporation | 1.59 | CVS Corporation | 3.05 | American International Group, Inc. | 4.21 | ||||||||||||||||||||||||
Fedex Corporation | 3.31 | International Business Machines Corporation | 1.47 | Zimmer Holdings, Inc. | 3.02 | L-3 Communications Holding, Inc. | 4.08 | ||||||||||||||||||||||||
Zimmer Holdings, Inc. | 3.28 | Proctor & Gamble Company | 1.36 | Viacom, Inc. (CL B) | 3.00 | ADC Telecommunications, Inc. | 3.97 |
Class A Shares | Class B Shares(1) | Class C Shares | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Maximum Sales Charge Imposed on Purchases (as a percentage of offering price) | 5.75 | % | None | None | ||||||||||
Maximum Deferred Sales Charge (as a percentage of original purchase price or redemption proceeds, whichever is lower) | None | (2) | 5%(3) | 1%(4) |
(1) | Class B shares convert tax-free to Class A shares automatically after eight years. |
(2) | Purchases of Class A shares in amounts of $1,000,000 or more are not subject to an initial sales load; however, a deferred sales charge of 1% is imposed in the event of redemption within one year of purchase. |
(3) | 5% during the first year, decreasing to 0% in the sixth and following years. |
(4) | A deferred sales charge of 1% is imposed in the event of redemption within one year of purchase. |
Class A | Class B and Class C | |||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Large Cap Growth | Enhanced Index Fund | Social Awareness | Select 25 | Pro Forma | Large Cap Growth | Enhanced Index Fund | Social Awareness | Select 25 | Pro Forma | |||||||||||||||||||||||||||||||||||||
Management Fees | 1.00 | % | 0.75 | % | 1.00 | % | 0.75 | % | 0.75 | % | 1.00 | % | 0.75 | % | 1.00 | % | 0.75 | % | 0.75 | % | ||||||||||||||||||||||||||
Distribution (12b-1) Fees | 0.25 | % | 0.25 | % | 0.25 | % | 0.25 | % | 0.25 | % | 1.00 | % | 1.00 | % | 1.00 | % | 1.00 | % | 1.00 | % | ||||||||||||||||||||||||||
Other expenses | 1.32 | % | 0.81 | % | 0.79 | % | 0.67 | % | 0.50 | % | 1.32 | % | 0.81 | % | 0.79 | % | 0.67 | % | 0.50 | % | ||||||||||||||||||||||||||
Total annual fund operating expenses(1) | 2.57 | % | 1.81 | % | 2.04 | % | 1.67 | % | 1.50 | % | 3.32 | % | 2.56 | % | 2.79 | % | 2.42 | % | 2.25 | % |
(1) | During the fiscal year ended September 30, 2005, SMC voluntarily waived management fees and/or reimbursed expenses in order to limit the net annual fund operating expenses of each Acquired Fund to the indicated levels (as a percentage of average daily net assets): (1) Large Cap Growth Fund — Class A (2.25%), Class B (3.00%) and Class C (3.00%); Enhanced Index Fund — Class A (1.56%), Class B (2.31%) and Class C (2.31%); and Social Awareness Fund — Class A (1.79%), Class B (2.54%) and Class C (2.54%). SMC currently continues this voluntary undertaking, which may be discontinued at any time. |
Large Cap Growth Class A | Select 25 | Pro Forma | Large Cap Growth Class B and Class C | Select 25 | Pro Forma | |||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Management Fees | 1.00 | % | 0.75 | % | 0.75 | % | 1.00 | % | 0.75 | % | 0.75 | % | ||||||||||||||
Distribution (12b-1) Fees | 0.25 | % | 0.25 | % | 0.25 | % | 1.00 | % | 1.00 | % | 1.00 | % | ||||||||||||||
Other expenses | 1.32 | % | 0.67 | % | 0.68 | % | 1.32 | % | 0.67 | % | 0.68 | % | ||||||||||||||
Total annual fund operating expenses(1) | 2.57 | % | 1.67 | % | 1.68 | % | 3.32 | % | 2.42 | % | 2.43 | % |
(1) | During the fiscal year ended September 30, 2005, SMC voluntarily waived management fees and/or reimbursed expenses in order to limit the net annual fund operating expenses of the Acquired Fund to the indicated levels (as a percentage of average daily net assets): Large Cap Growth Fund — Class A (2.25%), Class B (3.00%) and Class C (3.00%). SMC currently continues this voluntary undertaking, which may be discontinued at any time. |
Enhanced Index Class A | Select 25 | Pro Forma | Enhanced Index Class B and Class C | Select 25 | Pro Forma | |||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Management Fees | 0.75 | % | 0.75 | % | 0.75 | % | 0.75 | % | 0.75 | % | 0.75 | % | ||||||||||||||
Distribution (12b-1) Fees | 0.25 | % | 0.25 | % | 0.25 | % | 1.00 | % | 1.00 | % | 1.00 | % | ||||||||||||||
Other expenses | 0.81 | % | 0.67 | % | 0.52 | % | 0.81 | % | 0.67 | % | 0.52 | % | ||||||||||||||
Total annual fund operating expenses(1) | 1.81 | % | 1.67 | % | 1.52 | % | 2.56 | % | 2.42 | % | 2.27 | % |
(1) | During the fiscal year ended September 30, 2005, SMC voluntarily waived management fees and/or reimbursed expenses in order to limit the net annual fund operating expenses of the Acquired Fund to the indicated levels (as a percentage of average daily net assets): Enhanced Index Fund — Class A (1.56%), Class B (2.31%) and Class C (2.31%). SMC currently continues this voluntary undertaking, which may be discontinued at any time. |
Social Awareness Class A | Select 25 | Pro Forma | Social Awareness Class B and Class C | Select 25 | Pro Forma | |||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Management Fees | 1.00 | % | 0.75 | % | 0.75 | % | 1.00 | % | 0.75 | % | 0.75 | % | ||||||||||||||
Distribution (12b-1) Fees | 0.25 | % | 0.25 | % | 0.25 | % | 1.00 | % | 1.00 | % | 1.00 | % | ||||||||||||||
Other expenses | 0.79 | % | 0.67 | % | 0.54 | % | 0.79 | % | 0.67 | % | 0.54 | % | ||||||||||||||
Total annual fund operating expenses(1) | 2.04 | % | 1.67 | % | 1.54 | % | 2.79 | % | 2.42 | % | 2.29 | % |
(1) | During the fiscal year ended September 30, 2005, SMC voluntarily waived management fees and/or reimbursed expenses in order to limit the net annual fund operating expenses of the Acquired Fund to the indicated levels (as a percentage of average daily net assets): Social Awareness Fund — Class A (1.79%), Class B (2.54%) and Class C (2.54%). SMC currently continues this voluntary undertaking, which may be discontinued at any time. |
Class A | Class B | Class C | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Large Cap Growth | Enhanced Index | Social Awareness | Select 25 | Pro Forma | Large Cap Growth | Enhanced Index | Social Awareness | Select 25 | Pro Forma | Large Cap Growth | Enhanced Index | Social Awareness | Select 25 | Pro Forma | |||||||||||||||||||||||||||||||||||||||||||||||||
1 Year | $ | 820 | $ | 748 | $ | 770 | $ | 735 | $ | 719 | $ | 835 | $ | 759 | $ | 782 | $ | 745 | $ | 728 | $ | 435 | $ | 359 | $ | 382 | $ | 345 | $ | 328 | |||||||||||||||||||||||||||||||||
3 Years | $ | 1,329 | $ | 1,112 | $ | 1,178 | $ | 1,071 | $ | 1,022 | $ | 1,321 | $ | 1,096 | $ | 1,165 | $ | 1,055 | $ | 1,003 | $ | 1,021 | $ | 796 | $ | 865 | $ | 755 | $ | 703 | |||||||||||||||||||||||||||||||||
5 Years | $ | 1,862 | $ | 1,499 | $ | 1,610 | $ | 1,430 | $ | 1,346 | $ | 1,931 | $ | 1,560 | $ | 1,674 | $ | 1,491 | $ | 1,405 | $ | 1,731 | $ | 1,360 | $ | 1,474 | $ | 1,291 | $ | 1,205 | |||||||||||||||||||||||||||||||||
10 Years | $ | 3,313 | $ | 2,579 | $ | 2,808 | $ | 2,438 | $ | 2,263 | $ | 3,440 | $ | 2,712 | $ | 2,940 | $ | 2,571 | $ | 2,396 | $ | 3,612 | $ | 2,895 | $ | 3,119 | $ | 2,756 | $ | 2,585 |
Class A | Class B | Class C | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Large Cap Growth | Enhanced Index | Social Awareness | Select 25 | Pro Forma | Large Cap Growth | Enhanced Index | Social Awareness | Select 25 | Pro Forma | Large Cap Growth | Enhanced Index | Social Awareness | Select 25 | Pro Forma | |||||||||||||||||||||||||||||||||||||||||||||||||
1 Year | $ | 820 | $ | 748 | $ | 770 | $ | 735 | $ | 719 | $ | 335 | $ | 259 | $ | 282 | $ | 245 | $ | 228 | $ | 335 | $ | 259 | $ | 282 | $ | 245 | $ | 228 | |||||||||||||||||||||||||||||||||
3 Years | $ | 1,329 | $ | 1,112 | $ | 1,178 | $ | 1,071 | $ | 1,022 | $ | 1,021 | $ | 796 | $ | 865 | $ | 755 | $ | 703 | $ | 1,021 | $ | 796 | $ | 865 | $ | 755 | $ | 703 | |||||||||||||||||||||||||||||||||
5 Years | $ | 1,862 | $ | 1,499 | $ | 1,610 | $ | 1,430 | $ | 1,346 | $ | 1,731 | $ | 1,360 | $ | 1,474 | $ | 1,291 | $ | 1,205 | $ | 1,731 | $ | 1,360 | $ | 1,474 | $ | 1,291 | $ | 1,205 | |||||||||||||||||||||||||||||||||
10 Years | $ | 3,313 | $ | 2,579 | $ | 2,808 | $ | 2,438 | $ | 2,263 | $ | 3,440 | $ | 2,712 | $ | 2,940 | $ | 2,571 | $ | 2,396 | $ | 3,612 | $ | 2,895 | $ | 3,119 | $ | 2,756 | $ | 2,585 |
of each period. The Examples also assume that your investment has a 5% return each year and that each Fund’s operating expenses remain the same. The 5% return is an assumption and is not intended to portray past or future investment results. Based on the above assumptions, you would pay the following expenses if you redeemed your shares at the end of each period shown.
Class A | Class B | Class C | |||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Large Cap Growth | Select 25 | Pro Forma | Large Cap Growth | Select 25 | Pro Forma | Large Cap Growth | Select 25 | Pro Forma | |||||||||||||||||||||||||||||||
1 Year | $ | 820 | $ | 735 | $ | 736 | $ | 835 | $ | 745 | $ | 746 | $ | 435 | $ | 345 | $ | 346 | |||||||||||||||||||||
3 Years | $ | 1,329 | $ | 1,071 | $ | 1,074 | $ | 1,321 | $ | 1,055 | $ | 1,058 | $ | 1,021 | $ | 755 | $ | 758 | |||||||||||||||||||||
5 Years | $ | 1,862 | $ | 1,430 | $ | 1,435 | $ | 1,931 | $ | 1,491 | $ | 1,496 | $ | 1,731 | $ | 1,291 | $ | 1,296 | |||||||||||||||||||||
10 Years | $ | 3,313 | $ | 2,438 | $ | 2,448 | $ | 3,440 | $ | 2,571 | $ | 2,581 | $ | 3,612 | $ | 2,756 | $ | 2,766 |
Class A | Class B | Class C | |||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Large Cap Growth | Select 25 | Pro Forma | Large Cap Growth | Select 25 | Pro Forma | Large Cap Growth | Select 25 | Pro Forma | |||||||||||||||||||||||||||||||
1 Year | $ | 820 | $ | 735 | $ | 36 | $ | 335 | $ | 245 | $ | 246 | $ | 335 | $ | 245 | 758 | ||||||||||||||||||||||
3 Years | $ | 1,329 | $ | 1,071 | $ | 1,074 | $ | 1,021 | $ | 755 | $ | 758 | $ | 1,021 | $ | 755 | $ | 703 | |||||||||||||||||||||
5 Years | $ | 1,862 | $ | 1,430 | $ | 1,435 | $ | 1,731 | $ | 1,291 | $ | 1,296 | $ | 1,731 | $ | 1,291 | $ | 1,296 | |||||||||||||||||||||
10 Years | $ | 3,313 | $ | 2,438 | $ | 2,448 | $ | 3,440 | $ | 2,571 | $ | 2,581 | $ | 3,612 | $ | 2,756 | $ | 2,766 |
Class A | Class B | Class C | |||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Enhanced Index | Select 25 | Pro Forma | Enhanced Index | Select 25 | Pro Forma | Enhanced Index | Select 25 | Pro Forma | |||||||||||||||||||||||||||||||
1 Year | $ | 748 | $ | 735 | $ | 721 | $ | 759 | $ | 745 | $ | 730 | $ | 359 | $ | 345 | $ | 330 | |||||||||||||||||||||
3 Years | $ | 1,112 | $ | 1,071 | $ | 1,028 | $ | 1,096 | $ | 1,055 | $ | 1,009 | $ | 796 | $ | 755 | $ | 709 | |||||||||||||||||||||
5 Years | $ | 1,499 | $ | 1,430 | $ | 1,356 | $ | 1,560 | $ | 1,491 | $ | 1,415 | $ | 1,360 | $ | 1,291 | $ | 1,215 | |||||||||||||||||||||
10 Years | $ | 2,579 | $ | 2,438 | $ | 2,283 | $ | 2,712 | $ | 2,571 | $ | 2,417 | $ | 2,895 | $ | 2,756 | $ | 2,605 |
Class A | Class B | Class C | |||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Enhanced Index | Select 25 | Pro Forma | Enhanced Index | Select 25 | Pro Forma | Enhanced Index | Select 25 | Pro Forma | |||||||||||||||||||||||||||||||
1 Year | $ | 748 | $ | 735 | $ | 721 | $ | 259 | $ | 245 | $ | 230 | $ | 259 | $ | 245 | $ | 230 | |||||||||||||||||||||
3 Years | $ | 1,112 | $ | 1,071 | $ | 1,028 | $ | 796 | $ | 755 | $ | 709 | $ | 796 | $ | 755 | $ | 709 | |||||||||||||||||||||
5 Years | $ | 1,499 | $ | 1,430 | $ | 1,356 | $ | 1,360 | $ | 1,291 | $ | 1,215 | $ | 1,360 | $ | 1,291 | $ | 1,215 | |||||||||||||||||||||
10 Years | $ | 2,579 | $ | 2,438 | $ | 2,283 | $ | 2,712 | $ | 2,571 | $ | 2,417 | $ | 2,895 | $ | 2,756 | $ | 2,605 |
Class A | Class B | Class C | |||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Social Awareness | Select 25 | Pro Forma | Social Awareness | Select 25 | Pro Forma | Social Awareness | Select 25 | Pro Forma | |||||||||||||||||||||||||||||||
1 Year | $ | 770 | $ | 735 | $ | 723 | $ | 782 | $ | 745 | $ | 732 | $ | 382 | $ | 345 | $ | 332 | |||||||||||||||||||||
3 Years | $ | 1,178 | $ | 1,071 | $ | 1,033 | $ | 1,165 | $ | 1,055 | $ | 1,015 | $ | 865 | $ | 755 | $ | 715 | |||||||||||||||||||||
5 Years | $ | 1,610 | $ | 1,430 | $ | 1,366 | $ | 1,674 | $ | 1,491 | $ | 1,425 | $ | 1,474 | $ | 1,291 | $ | 1,225 | |||||||||||||||||||||
10 Years | $ | 2,808 | $ | 2,438 | $ | 2,304 | $ | 2,940 | $ | 2,571 | $ | 2,438 | $ | 3,119 | $ | 2,756 | $ | 2,626 |
Class A | Class B | Class C | |||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Social Awareness | Select 25 | Pro Forma | Social Awareness | Select 25 | Pro Forma | Social Awareness | Select 25 | Pro Forma | |||||||||||||||||||||||||||||||
1 Year | $ | 770 | $ | 735 | $ | 723 | $ | 282 | $ | 245 | $ | 232 | $ | 282 | $ | 245 | $ | 232 | |||||||||||||||||||||
3 Years | $ | 1,178 | $ | 1,071 | $ | 1,033 | $ | 865 | $ | 755 | $ | 715 | $ | 865 | $ | 755 | $ | 715 | |||||||||||||||||||||
5 Years | $ | 1,610 | $ | 1,430 | $ | 1,366 | $ | 1,474 | $ | 1,291 | $ | 1,225 | $ | 1,474 | $ | 1,291 | $ | 1,225 | |||||||||||||||||||||
10 Years | $ | 2,808 | $ | 2,438 | $ | 2,304 | $ | 2,940 | $ | 2,571 | $ | 2,438 | $ | 3,119 | $ | 2,756 | $ | 2,626 |
Highest Quarter | ||||||
Q4 ended December 31, 2001 | 20.45 | % | ||||
Lowest Quarter | ||||||
Q3 ended September 30, 2001 | –18.76 | % |
![](https://capedge.com/proxy/N-14A/0001188112-06-001253/d18803bar.jpg)
1 Year | 5 Years | Since Inception(2) | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Class A | ||||||||||||||
Return Before Taxes | 5.29 | % | –2.17 | % | –1.21 | % | ||||||||
Return After Taxes on Distributions(1) | 5.29 | % | –2.17 | % | –1.21 | % | ||||||||
Return After Taxes on Distributions and Sale of Fund Shares(1) | 3.44 | % | –1.83 | % | –1.03 | % | ||||||||
Class B | 5.75 | % | –2.14 | % | –1.09 | % | ||||||||
Class C | 9.85 | % | –1.75 | % | –1.04 | % | ||||||||
Russell 1000 Growth Index (reflects no deduction for fees, expenses or taxes)(3) | 5.26 | % | –3.58 | % | –2.95 | % |
(1) | After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of any state or local taxes. Actual after-tax returns depend on an investor’s tax situation and may differ from those shown. After-tax returns shown are not relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts. After-tax returns are shown for Class A only. After-tax returns for Class B and C will vary. |
(2) | For the period beginning January 29, 1999 (date of inception) to December 31, 2005. |
(3) | The Russell 1000 Growth Index is an unmanaged index which includes stocks incorporated in the United States and its territories and measures the performance of those Russell 1000 companies with higher price-to-book ratios and higher forecasted growth values. Index performance assumes reinvestment of dividends and distributions. |
advisable to consummate and make effective the transactions contemplated by the Reorganization Plan. The Reorganization Plan may be terminated by mutual agreement of the parties or on certain other grounds. For a complete description of the terms and conditions of the Reorganization, see the Reorganization Plan at Appendix A, which qualifies in its entirety the foregoing summary of the Reorganization Plan.
1. | expense ratios and information regarding fees and expenses of the Acquired Funds and the Acquiring Fund, which indicate that current shareholders of the Acquired Funds will benefit from the Reorganization by getting a comparable investment at a lower cost than their current investment, and at a lower cost before taking voluntary expense limitations or reimbursements into account; |
2. | the Reorganization would not dilute the interests of any Fund’s current shareholders; |
3. | the stronger relative investment performance of the Acquiring Fund as compared to the Acquired Funds over most measuring periods; |
4. | the similarity of the Acquired Funds’ investment objectives, policies and restrictions and share class structure to those of the Acquiring Fund, which indicates that Acquired Fund shareholders will continue in a comparable investment vehicle; |
5. | elimination of duplication of costs and inefficiencies of having four similar Funds; and |
6. | the tax-free nature of the Reorganization to each Fund and its shareholders. |
that the Acquiring Fund may not be able to use these losses as rapidly as the Acquired Funds might have, and part or all of these losses may not be useable at all. The ability of the Acquiring Fund to absorb losses in the future depends upon a variety of factors that cannot be known in advance, including the existence of capital gains against which these losses may be offset. In addition, the benefits of any capital loss carryforwards currently are available only to shareholders of the respective Acquired Funds. After the Reorganization, however, these benefits will inure to the benefit of all shareholders of the Acquiring Fund.
Acquired Funds | Acquiring Fund | ||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Large Cap Growth Fund | Social Awareness Fund | Enhanced Index Fund | Select 25 Fund | Select 25 Fund shares issued to Acquired Fund Shareholders at Reorganization | Pro forma Select 25 Fund shares outstanding | ||||||||||||||||||||||
Net Assets | $ | 16,881,647 | $ | 16,954,332 | $ | 14,305,893 | $ | 25,124,744 | — | $ | 73,266,616 | ||||||||||||||||
Net Assets Per Share | $ | 6.27 | $ | 20.45 | $ | 9.46 | $ | 9.48 | — | $ | 9.48 | ||||||||||||||||
Shares Outstanding | 2,691,878 | 828,969 | 1,512,423 | 2,649,264 | 5,078,257 | 7,727,521 |
Select 25 Fund shares issued to shareholders of Acquired Funds at Reorganization | Select 25 Fund Shares | Pro forma Select 25 Fund shares outstanding | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Large Cap Growth Fund | 1,780,764 | 2,649,264 | 4,430,028 | ||||||||||
Social Awareness Fund | 1,788,432 | 2,649,264 | 4,437,696 | ||||||||||
Enhanced Index Fund | 1,509,061 | 2,649,264 | 4,158,325 | ||||||||||
Total | 5,078,257 | 2,649,264 | 7,727,521 |
on any proposal for which there are sufficient votes for approval, even though the Special Meeting is adjourned as to other proposals.
![](https://capedge.com/proxy/N-14A/0001188112-06-001253/amyjleesig.jpg)
Security Equity Fund
One Security Benefit Place
Topeka, Kansas 66636-0001
• | Name; |
• | Date of birth (for individuals); |
• | Residential or business street address (although post office boxes are still permitted for mailing); and |
• | Social security number, taxpayer identification number, or other identifying number. |
• | the total dollar amount being transferred; |
• | the number of transfers made within the previous 12 months; |
• | transfers to and from (or from and to) the same Fund; |
• | whether a shareholder’s transfers appear to follow a pattern designed to take advantage of short-term market fluctuations; and |
• | whether a shareholder’s transfers appear to be part of a group of transfers made by a third party on behalf of individual shareholders in the group. |
Sales Charge | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Amount of Order (Offering Price) | As a Percentage of Offering Price | As a Percentage of Net Amount Invested | |||||||||
Less than $50,000 | 5.75 | % | 6.10 | % | |||||||
$50,000 to $99,999 | 4.75 | % | 4.99 | % | |||||||
$100,000 to $249,999 | 3.75 | % | 3.90 | % | |||||||
$250,000 to $499,999 | 2.75 | % | 2.83 | % | |||||||
$500,000 to $999,999 | 2.00 | % | 2.04 | % | |||||||
$1,000,000 or more* | None | None |
* | Purchases of $1,000,000 or more are not subject to a sales charge at the time of purchase, but are subject to a deferred sales charge of 1.00% if redeemed within one year following purchase. The deferred sales charge is a percentage of the lesser of the NAV of the shares redeemed or the net cost of such shares. Shares that are not subject to a deferred sales charge are redeemed first. |
Number of Years Since Purchase | Deferred Sales Charge | |||||
---|---|---|---|---|---|---|
1 | 5 | % | ||||
2 | 4 | % | ||||
3 | 3 | % | ||||
4 | 3 | % | ||||
5 | 2 | % | ||||
6 and more | 0 | % |
shareholders. The distribution and service fee is equal to 1.00% of the average daily net assets of the Acquiring Fund’s Class C shares. Because the distribution fees are paid out of the Acquiring Fund’s assets on an ongoing basis, over time these fees will increase the cost of a shareholder’s investment and may cost an investor more than paying other types of sales charges.
• | Upon the death of the shareholder if shares are redeemed within one year of the shareholder’s death; |
• | Upon the disability of the shareholder prior to age 65 if shares are redeemed within one year of the shareholder becoming disabled and the shareholder was not disabled when the shares were purchased; |
• | In connection with required minimum distributions from a retirement plan qualified under Section 401(a), 401(k), 403(b) or 408 of the Internal Revenue Code (“Code”); |
• | In connection with distributions from retirement plans qualified under Section 401(a) or 401(k) of the Code for (i) returns of excess contributions to the plan; (ii) retirement of a participant in the plan; (iii) a loan from the plan (loan repayments are treated as new sales for purposes of the deferred sales charge); (iv) financial hardship (as defined in regulations under the Code) of a participant in a plan; (v) termination of employment of a participant in a plan; or (vi) any other permissible withdrawal under the terms of the plan. |
• | The name and signature of the account owner(s) |
• | The name of the Fund |
• | The dollar amount or number of shares to sell |
• | Where to send the proceeds |
• | A signature guarantee if |
— | The check will be mailed to a payee or address different than that of the account owner, or |
— | The sale of shares is more than $25,000. |
Security Management Company, LLC P.O. Box 750525 Topeka, KS 66675-9135 |
• | Individual or Joint Tenants: Written instructions must be signed by an individual shareholder, or in the case of joint accounts, all of the shareholders, exactly as the name(s) appears on the account. |
• | UGMA or UTMA: Written instructions must be signed by the custodian as it appears on the account. |
• | Sole Proprietor or General Partner: Written instructions must be signed by an authorized individual as it appears on the account. |
• | Corporation or Association: Written instructions must be signed by the person(s) authorized to act on the account. A certified resolution dated within six months of the date of receipt, authorizing the signer to act, must accompany the request if not on file with Security Equity Fund. |
• | Trust: Written instructions must be signed by the trustee(s). If the name of the current trustee(s) does not appear on the account, a certified certificate of incumbency dated within 60 days must also be submitted. |
• | Retirement: Written instructions must be signed by the account owner. |
using current exchange rates. Foreign securities may trade in their primary markets on weekends or other days when the Acquiring Fund does not price its shares. Therefore, the NAV of the Acquiring Fund may change on days when shareholders will not be able to buy or sell shares of the Fund if it is holding foreign securities.
on the first business day of each calendar quarter. Asset rebalancing may be terminated at any time by written request to the Investment Manager.
transactions and acts as the dividend disbursing agent. For this service, SMC receives the following fees with respect to the Funds:
1. | Account Set-Up Charge — A fee of $4 to open an account on the transfer agency system to hold shares of the Funds. |
2. | Annual Maintenance Charge — An annual per account fee of (i) $8 per open account for regular accounts; (ii) $6.50 per open account with respect to accounts which are Matrix Level III pursuant to the National Securities Clearing Corporation networking systems; and (iii) $5 per account for closed accounts that remain outstanding on the transfer agency system (regardless of whether such accounts are regular or Matrix Level III). |
3. | Transaction Charge — A per transaction charge of (i) $1.10 per transaction for regular accounts; and (ii) $0.60 per transaction for accounts that are Matrix Level III. |
transaction charges are reasonable in relation to the value of the investment information or the research services provided.
• | Distributions of earnings from qualifying dividends and qualifying long-term capital gains will be taxed at a maximum rate of 15%. |
• | Distributions of earnings from dividends paid by certain “qualified foreign corporations” can also qualify for the lower tax rates on qualifying dividends. |
• | A shareholder will also have to satisfy a more than 60-day holding period with respect to any distributions of qualifying dividends in order to obtain the benefit of the lower tax rate. |
• | Distributions of earnings from non-qualifying dividends, interest income, other types of ordinary income and short-term capital gains will be taxed at the ordinary income tax rate applicable to the taxpayer. |
Fiscal period ended September 30 | |||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2005(b) | 2004(b) | 2003(b) | 2002(b) | 2001(b) | |||||||||||||||||||
Per Share Data | |||||||||||||||||||||||
Net asset value beginning of period | $ | 7.81 | $ | 7.27 | $ | 6.52 | $ | 7.58 | $ | 11.34 | |||||||||||||
Income from Investment Operations: | |||||||||||||||||||||||
Net investment income (loss) | (0.07 | ) | (0.06 | ) | (0.05 | ) | (0.07 | ) | (0.06 | ) | |||||||||||||
Net gain (loss) on securities (realized and unrealized) | 1.62 | 0.60 | 0.80 | (0.99 | ) | (3.70 | ) | ||||||||||||||||
Total from investment operations | 1.55 | 0.54 | 0.75 | (1.06 | ) | (3.76 | ) | ||||||||||||||||
Less Distributions: | |||||||||||||||||||||||
Dividends (from net investment income) | — | — | — | — | — | ||||||||||||||||||
Distributions (from realized gains) | — | — | — | — | — | ||||||||||||||||||
Total distributions | — | — | — | — | — | ||||||||||||||||||
Net asset value end of period | $ | 9.36 | $ | 7.81 | $ | 7.27 | $ | 6.52 | $ | 7.58 | |||||||||||||
Total return(a) | 19.85 | % | 7.43 | % | 11.50 | % | (13.98 | )% | (33.16 | )% | |||||||||||||
Ratios/Supplemental Data | |||||||||||||||||||||||
Net assets end of period (thousands) | $ | 8,912 | $ | 9,228 | $ | 10,396 | $ | 11,933 | $ | 14,347 | |||||||||||||
Ratio of expenses to average net assets | 1.67 | % | 1.56 | % | 1.63 | % | 1.46 | % | 1.39 | % | |||||||||||||
Ratio of net investment income (loss) to average net assets | (0.79 | )% | (0.75 | )% | (0.70 | )% | (0.81 | )% | (0.60 | )% | |||||||||||||
Portfolio turnover rate | 13 | % | 44 | % | 54 | % | 33 | % | 44 | % |
Fiscal period ended September 30 | |||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2005(b) | 2004(b) | 2003(b) | 2002(b) | 2001(b) | |||||||||||||||||||
Per Share Data | |||||||||||||||||||||||
Net asset value beginning of period | $ | 7.50 | $ | 7.04 | $ | 6.36 | $ | 7.44 | $ | 11.22 | |||||||||||||
Income from Investment Operations: | |||||||||||||||||||||||
Net investment income (loss) | (0.13 | ) | (0.11 | ) | (0.10 | ) | (0.13 | ) | (0.13 | ) | |||||||||||||
Net gain (loss) on securities (realized and unrealized) | 1.55 | 0.57 | 0.78 | (0.95 | ) | (3.65 | ) | ||||||||||||||||
Total from investment operations | 1.42 | 0.46 | 0.68 | (1.08 | ) | (3.78 | ) | ||||||||||||||||
Less Distributions: | |||||||||||||||||||||||
Dividends (from net investment income) | — | — | — | — | — | ||||||||||||||||||
Distributions (from realized gains) | — | — | — | — | — | ||||||||||||||||||
Total distributions | — | — | — | — | — | ||||||||||||||||||
Net asset value end of period | $ | 8.92 | $ | 7.50 | $ | 7.04 | $ | 6.36 | $ | 7.44 | |||||||||||||
Total return(a) | 18.93 | % | 6.53 | % | 10.69 | % | (14.52 | )% | (33.69 | )% | |||||||||||||
Ratios/Supplemental Data | |||||||||||||||||||||||
Net assets end of period (thousands) | $ | 7,000 | $ | 7,333 | $ | 8,203 | $ | 8,566 | $ | 11,519 | |||||||||||||
Ratio of expenses to average net assets | 2.42 | % | 2.31 | % | 2.38 | % | 2.21 | % | 2.14 | % |
Fiscal period ended September 30 | |||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2005(b) | 2004(b) | 2003(b) | 2002(b) | 2001(b) | |||||||||||||||||||
Ratio of net investment income (loss) to average net assets | (1.54 | )% | (1.50 | )% | (1.45 | )% | (1.56 | )% | (1.35 | )% | |||||||||||||
Portfolio turnover rate | 13 | % | 44 | % | 54 | % | 33 | % | 44 | % |
Fiscal period ended September 30 | |||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2005(b) | 2004(b) | 2003(b) | 2002(b) | 2001(b) | |||||||||||||||||||
Per Share Data | |||||||||||||||||||||||
Net asset value beginning of period | $ | 7.52 | $ | 7.06 | $ | 6.38 | $ | 7.47 | $ | 11.26 | |||||||||||||
Income from Investment Operations: | |||||||||||||||||||||||
Net investment income (loss) | (0.13 | ) | (0.11 | ) | (0.10 | ) | (0.13 | ) | (0.13 | ) | |||||||||||||
Net gain (loss) on securities (realized and unrealized) | 1.55 | 0.57 | 0.78 | (0.96 | ) | (3.66 | ) | ||||||||||||||||
Total from investment operations | 1.42 | 0.46 | 0.68 | (1.09 | ) | (3.79 | ) | ||||||||||||||||
Less Distributions: | |||||||||||||||||||||||
Dividends (from net investment income) | — | — | — | — | — | ||||||||||||||||||
Distributions (from realized gains) | — | — | — | — | — | ||||||||||||||||||
Total distributions | — | — | — | — | — | ||||||||||||||||||
Net asset value end of period | $ | 8.94 | $ | 7.52 | $ | 7.06 | $ | 6.38 | $ | 7.47 | |||||||||||||
Total return(a) | 18.88 | % | 6.52 | % | 10.66 | % | (14.59 | )% | (33.66 | )% | |||||||||||||
Ratios/Supplemental Data | |||||||||||||||||||||||
Net assets end of period (thousands) | $ | 5,029 | $ | 5,866 | $ | 6,225 | $ | 3,954 | $ | 4,531 | |||||||||||||
Ratio of expenses to average net assets | 2.42 | % | 2.31 | % | 2.37 | % | 2.21 | % | 2.14 | % | |||||||||||||
Ratio of net investment income (loss) to average net assets | (1.54 | )% | (1.50 | )% | (1.44 | )% | (1.56 | )% | (1.35 | )% | |||||||||||||
Portfolio turnover rate | 13 | % | 44 | % | 54 | % | 33 | % | 44 | % |
(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 A, Class B and Class C shares. |
(b) | Net investment income (loss) was computed using average shares outstanding throughout the period. |
(c) | The financial highlights for Class C Shares exclude the historical financial highlights of the Class S shares. Class S shares were exchanged for Class C shares on June 3, 2002. |
Acquired Fund | Acquiring Fund | |||||
---|---|---|---|---|---|---|
Large Cap Growth Fund | ||||||
Enhanced Index Fund | Select 25 Fund | |||||
Social Awareness Fund |
1.1. | Subject to the requisite approvals of the shareholders of the Acquired Fund and the other terms and conditions herein set forth and on the basis of the representations and warranties contained herein, the Company will transfer all of the Acquired Fund’s assets, as set forth in paragraph 1.2, to the Acquiring Fund, and the Acquiring Fund agrees in exchange therefor: (i) to deliver to the Acquired Fund the number of full and fractional Acquiring Fund Shares determined by dividing the value of an Acquired Fund’s net assets, computed in the manner and as of the time and date set forth in paragraph 2.1, by the net asset value of one Acquiring Fund Share, computed in the manner and as of the time and date set forth in paragraph 2.2; and (ii) to assume all liabilities of the Acquired Fund. Such transactions shall take place at the closing provided for in paragraph 3.1 (the “Closing”). |
1.2. | The assets of the Acquired Fund to be acquired by the Acquiring Fund shall consist of all assets and property, including, without limitation, all cash, securities, commodities and futures interests and dividends or interests receivable that are owned by the Acquired Fund and any deferred or prepaid expenses shown as an asset on the books of the Acquired Fund on the closing date provided for in paragraph 3.1 (the “Closing Date”). |
1.3. | The Acquired Fund will endeavor to discharge all of its known liabilities and obligations prior to the Closing Date. The Acquiring Fund shall also assume all of the liabilities of the Acquired Fund, whether accrued or contingent, known or unknown, existing at the Valuation Date. On or as soon as practicable prior to the Closing Date, the Acquired Fund will declare and pay to its shareholders of record one or more dividends and/or other distributions that, together with all previous distributions, shall have the effect of distributing to its shareholders (i) all of its investment company taxable income and all of its net realized capital gains, if any, for the period from the close of its last taxable year to the end of the business day on the Closing; and (ii) any undistributed investment company taxable income and net capital gain from any period to the extent not otherwise distributed. |
1.4. | Immediately after the transfer of assets provided for in paragraph 1.1, the Acquired Fund will distribute to the Acquired Fund’s shareholders of record, determined as of immediately after the close of business on the Closing Date (the “Acquired Fund Shareholders”), on a pro rata basis, the |
Acquiring Fund Shares received by the Acquired Fund pursuant to paragraph 1.1, and will completely liquidate. Such distribution and liquidation will be accomplished, with respect to the Acquired Fund’s shares, by the transfer of the Acquiring Fund Shares then credited to the account of the Acquired Fund on the books of the Acquiring Fund to open accounts on the share records of the Acquiring Fund in the names of the Acquired Fund Shareholders. The aggregate net asset value of Acquiring Fund Shares to be so credited to Acquired Fund Shareholders shall be equal to the aggregate net asset value of the Acquired Fund shares owned by such shareholders on the Closing Date. All issued and outstanding shares of the Acquired Fund will simultaneously be canceled on the books of the Acquired Fund, although share certificates representing interests in shares of the Acquired Fund will represent a number of the Acquiring Fund Shares after the Closing Date, as determined in accordance with Section 2.3. The Acquiring Fund shall not issue certificates representing the Acquiring Fund Shares in connection with such exchange. |
1.5. | Ownership of Acquiring Fund Shares will be shown on the books of the Acquiring Fund’s transfer agent. Shares of the Acquiring Fund will be issued in the manner described in the Acquiring Fund’s then-current prospectus and statement of additional information. |
1.6. | Any reporting responsibility of the Acquired Fund including, but not limited to, the responsibility for filing of regulatory reports, tax returns, or other documents with the Securities and Exchange Commission (the “Commission”), any state securities commission, and any federal, state or local tax authorities or any other relevant regulatory authority, is and shall remain the responsibility of the Acquired Fund. |
2.1. | The value of the Acquired Fund’s assets to be acquired by the Acquiring Fund hereunder shall be the value of such assets computed as of the close of business of the New York Stock Exchange (NYSE) and after the declaration of any dividends on the Closing Date (such time and date being hereinafter called the “Valuation Date”), using the valuation procedures set forth in the Company’s Articles of Incorporation, as amended (the “Articles of Incorporation”), the then-current prospectus or statement of additional information with respect to the Acquiring Fund, and valuation procedures established by the Company’s Board of Directors. |
2.2. | The net asset value of an Acquiring Fund Share shall be the net asset value per share computed as of the close of business of the NYSE and after the declaration of any dividends on the Valuation Date, using the valuation procedures set forth in the Company’s Articles of Incorporation, the then-current prospectus or statement of additional information with |
respect to the Acquiring Fund, and valuation procedures established by the Company’s Board of Directors. |
2.3. | The number of Acquiring Fund Shares to be issued (including fractional shares, if any) in exchange for the Acquired Fund’s assets shall be determined by dividing the value of the net assets of the Acquired Fund determined using the same valuation procedures referred to in paragraph 2.1, by the net asset value of an Acquiring Fund Share, determined in accordance with paragraph 2.2. |
2.4. | All computations of value shall be made by the Acquiring Fund’s designated record keeping agent. |
3.1. | The Closing Date shall be May 5, 2006, or such other date as the parties may agree to in writing. All acts taking place at the Closing shall be deemed to take place simultaneously as of immediately after the close of business on the Closing Date unless otherwise agreed to by the parties. The close of business on the Closing Date shall be as of 4:00 p.m., Eastern Time. The Closing shall be held at the offices of the Company or at such other time and/or place as the Board of Directors or officers of the Company may designate. |
3.2. | The Company shall direct the Custodian of the Acquired Fund (the “Custodian”), to deliver, at the Closing, a certificate of an authorized officer stating that (i) the Acquired Fund’s portfolio securities, cash, and any other assets (“Assets”) shall have been delivered in proper form to the Acquiring Fund within two business days prior to or on the Closing Date, and (ii) all necessary taxes in connection with the delivery of the Assets, including all applicable federal and state stock transfer stamps, if any, have been paid or provision for payment has been made. The Acquired Fund’s portfolio securities represented by a certificate or other written instrument shall be transferred and delivered by the Acquired Fund as of the Closing Date for the account of the Acquiring Fund duly endorsed in proper form for transfer in such condition as to constitute good delivery thereof. The Acquired Fund shall direct the Custodian to deliver portfolio securities and instruments deposited with a securities depository, as defined in Rule 17f-4 under the Investment Company Act of 1940, as amended (the “1940 Act”), as of the Closing Date by book entry in accordance with the customary practices of such depositories and the custodian for Acquiring Fund. |
3.3. | Security Management Company, LLC, as transfer agent for the Acquired Fund (the “Transfer Agent”), shall deliver, on behalf of the Acquired Fund, at the Closing a certificate of an authorized officer stating that its |
records contain the names and addresses of the Acquired Fund Shareholders and the number and percentage ownership of outstanding shares owned by each such shareholder immediately prior to the Closing. |
3.4. | In the event that on the Valuation Date (a) the NYSE or another primary trading market for portfolio securities of the Acquiring Fund or the Acquired Fund shall be closed to trading or trading thereupon shall be restricted, or (b) trading or the reporting of trading on the NYSE or elsewhere shall be disrupted so that, in the judgment of the Board of Directors of the Company, accurate appraisal of the value of the net assets of the Acquiring Fund or the Acquired Fund is impracticable, the Closing Date shall be postponed until the first business day after the day when trading shall have been fully resumed and reporting shall have been restored. |
4.1. | The Company, on behalf of the Acquired Fund, represents and warrants to the Acquiring Fund as follows: |
(a) | The Acquired Fund is duly organized as a series of the Company, which is a corporation duly organized and validly existing under the laws of the State of Kansas, with power under the Company’s Articles of Incorporation to own all of its properties and assets and to carry on its business as it is now being conducted; |
(b) | The Company is a registered investment company classified as a management company of the open-end type, and its registration with the Commission as an investment company under the 1940 Act, and the registration of its shares under the Securities Act of 1933, as amended (“1933 Act”), are in full force and effect; |
(c) | No consent, approval, authorization, or order of any court or governmental authority is required for the consummation by the Acquired Fund of the transactions contemplated herein, except such as have been obtained under the 1933 Act, the Securities Exchange Act of 1934, as amended (the “1934 Act”), and the 1940 Act, and such as may be required by state securities laws; |
(d) | The current prospectus and statement of additional information of the Acquired Fund and each prospectus and statement of additional information of the Acquired Fund used during the three years previous to the date of this Reorganization Plan conforms or conformed at the time of its use in all material respects to the applicable requirements of the 1933 Act and the 1940 Act and the rules and regulations of the Commission thereunder and does not or did not at the time of its use include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the |
statements therein, in light of the circumstances under which they were made, not materially misleading; |
(e) | On the Closing Date, the Acquired Fund will have good and marketable title to the Acquired Fund’s assets to be transferred to the Acquiring Fund pursuant to paragraph 1.2 and full right, power, and authority to sell, assign, transfer and deliver such assets hereunder free of any liens or other encumbrances, and upon delivery and payment for such assets, the Acquiring Fund will acquire good and marketable title thereto, subject to no restrictions on the full transfer thereof, including such restrictions as might arise under the 1933 Act, other than as disclosed to the Acquiring Fund; |
(f) | The Acquired Fund is not engaged currently, and the execution, delivery and performance of this Reorganization Plan will not result, in (i) a material violation of the Company’s Articles of Incorporation or By-Laws or of any agreement, indenture, instrument, contract, lease or other undertaking to which the Acquired Fund is a party or by which it is bound, or (ii) the acceleration of any obligation, or the imposition of any penalty, under any agreement, indenture, instrument, contract, lease, judgment or decree to which the Acquired Fund is a party or by which it is bound; |
(g) | The Acquired Fund has no material contracts or other commitments (other than this Reorganization Plan) that will be terminated with liability to it prior to the Closing Date; |
(h) | Except as otherwise disclosed in writing to and accepted by the Acquiring Fund, no litigation or administrative proceeding or investigation of or before any court or governmental body is presently pending or, to its knowledge, threatened against the Acquired Fund or any of its properties or assets that, if adversely determined, would materially and adversely affect its financial condition or the conduct of its business. The Acquired Fund knows of no facts which might form the basis for the institution of such proceedings and is not a party to or subject to the provisions of any order, decree or judgment of any court or governmental body which materially and adversely affects its business or its ability to consummate the transactions herein contemplated; |
(i) | The financial statements of the Acquired Fund as of and for the year ended September 30, 2005 have been audited by Ernst & Young, LLP, independent registered public accounting firm. Such statements are in accordance with U.S. generally accepted accounting principles (“GAAP”) consistently applied, and such statements (copies of which have been furnished to the Acquiring Fund) present fairly, in |
all material respects, the financial condition of the Acquired Fund as of such date in accordance with GAAP, and there are no known contingent liabilities of the Acquired Fund required to be reflected on the balance sheet or in the notes thereto; |
(j) | Since September 30, 2005, there has not been any material adverse change in the Acquired Fund’s financial condition, assets, liabilities or business, other than changes occurring in the ordinary course of business, or any incurrence by the Acquired Fund of indebtedness maturing more than one year from the date such indebtedness was incurred, except as otherwise disclosed to and accepted by the Acquiring Fund. For the purposes of this subparagraph (j), a decline in net asset value per share of the Acquired Fund due to declines in market values of securities in the Acquired Fund’s portfolio, the discharge of Acquired Fund liabilities, or the redemption of Acquired Fund shares by shareholders of the Acquired Fund shall not constitute a material adverse change; |
(k) | On the Closing Date, all Federal and other tax returns and reports of the Acquired Fund required by law to have been filed by such date (including any extensions) shall have been filed and are or will be correct in all material respects, and all Federal and other taxes shown as due or required to be shown as due on said returns and reports shall have been paid or provision shall have been made for the payment thereof, and to the best of the Acquired Fund’s knowledge, no such return is currently under audit and no assessment has been asserted with respect to such returns; |
(l) | For each taxable year of its operation (including the taxable year ending on the Closing Date), the Acquired Fund has met the requirements of Subchapter M of the Code for qualification as a regulated investment company and has elected to be treated as such, has been eligible to and has computed its Federal income tax under Section 852 of the Code, and will have distributed all of its investment company taxable income and net capital gain (as defined in the Code) that has accrued through the Closing Date, and before the Closing Date will have declared dividends sufficient to distribute all of its investment company taxable income and net capital gain for the period ending on the Closing Date; |
(m) | All issued and outstanding shares of the Acquired Fund are, and on the Closing Date will be, duly and validly issued and outstanding, fully paid and non-assessable by the Company and have been offered and sold in every state and the District of Columbia in compliance in all material respects with applicable registration requirements of the 1933 Act and state securities laws. All of the issued and outstanding shares of |
the Acquired Fund will, at the time of Closing, be held by the persons and in the amounts set forth in the records of the Transfer Agent, on behalf of the Acquired Fund, as provided in paragraph 3.3. The Acquired Fund does not have outstanding any options, warrants or other rights to subscribe for or purchase any of the shares of the Acquired Fund, nor is there outstanding any security convertible into any of the Acquired Fund shares; |
(n) | The adoption and performance of this Reorganization Plan will have been duly authorized prior to the Closing Date by all necessary action, if any, on the part of the Directors of the Company, and, subject to the approval of the shareholders of the Acquired Fund, this Reorganization Plan will constitute a valid and binding obligation of the Acquired Fund, enforceable in accordance with its terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization, moratorium and other laws relating to or affecting creditors’ rights and to general equity principles; |
(o) | The information to be furnished by the Acquired Fund for use in registration statements, proxy materials and other documents filed or to be filed with any federal, state or local regulatory authority (including the National Association of Securities Dealers, Inc.), which may be necessary in connection with the transactions contemplated hereby, shall be accurate and complete in all material respects and shall comply in all material respects with Federal securities and other laws and regulations thereunder applicable thereto. |
4.2. | The Company, on behalf of the Acquiring Fund, represents and warrants to the Acquired Fund as follows: |
(a) | The Acquiring Fund is duly organized as a series of the Company, which is a corporation duly organized and validly existing under the laws of the State of Kansas, with power under the Company’s Articles of Incorporation to own all of its properties and assets and to carry on its business as it is now being conducted; |
(b) | The Company is a registered investment company classified as a management company of the open-end type, and its registration with the Commission as an investment company under the 1940 Act and the registration of its shares under the 1933 Act, including the shares of the Acquiring Fund, are in full force and effect; |
(c) | No consent, approval, authorization, or order of any court or governmental authority is required for the consummation by the Acquiring Fund of the transactions contemplated herein, except such as have been obtained under the 1933 Act, the 1934 Act and the 1940 Act and such as may be required by state securities laws; |
(d) | The current prospectus and statement of additional information of the Acquiring Fund and each prospectus and statement of additional information of the Acquiring Fund used during the three years previous to the date of this Reorganization Plan conforms or conformed at the time of its use in all material respects to the applicable requirements of the 1933 Act and the 1940 Act and the rules and regulations of the Commission thereunder and does not or did not at the time of its use include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not materially misleading; |
(e) | On the Closing Date, the Acquiring Fund will have good and marketable title to the Acquiring Fund’s assets, free of any liens of other encumbrances, except those liens or encumbrances as to which the Acquired Fund has received notice and necessary documentation at or prior to the Closing; |
(f) | The Acquiring Fund is not engaged currently, and the execution, delivery and performance of this Reorganization Plan will not result, in (i) a material violation of the Company’s Articles of Incorporation or By-Laws or of any agreement, indenture, instrument, contract, lease or other undertaking to which the Acquiring Fund is a party or by which it is bound, or (ii) the acceleration of any obligation, or the imposition of any penalty, under any agreement, indenture, instrument, contract, lease, judgment or decree to which the Acquiring Fund is a party or by which it is bound; |
(g) | Except as otherwise disclosed in writing to and accepted by the Acquired Fund, no litigation or administrative proceeding or investigation of or before any court or governmental body is presently pending or, to its knowledge, threatened against the Acquiring Fund or any of its properties or assets that, if adversely determined, would materially and adversely affect its financial condition or the conduct of its business. The Acquiring Fund knows of no facts which might form the basis for the institution of such proceedings and is not a party to or subject to the provisions of any order, decree or judgment of any court or governmental body which materially and adversely affects its business or its ability to consummate the transactions herein contemplated; |
(h) | The financial statements of the Acquiring Fund as of and for the year ended September 30, 2005 have been audited by Ernst & Young LLP, independent registered public accounting firm. Such statements are in accordance with GAAP consistently applied, and such statements (copies of which have been furnished to the Acquired |
Fund) present fairly, in all material respects, the financial condition of the Acquiring Fund as of such date in accordance with GAAP, and there are no known contingent liabilities of the Acquiring Fund required to be reflected on the balance sheet or in the notes thereto; |
(i) | Since September 30, 2005, there has not been any material adverse change in the Acquiring Fund’s financial condition, assets, liabilities or business, other than changes occurring in the ordinary course of business, or any incurrence by the Acquiring Fund of indebtedness maturing more than one year from the date such indebtedness was incurred, except as otherwise disclosed to and accepted by the Acquired Fund. For purposes of this subparagraph (i), a decline in net asset value per share of the Acquiring Fund due to declines in market values of securities in the Acquiring Fund’s portfolio, the discharge of Acquiring Fund liabilities, or the redemption of Acquiring Fund Shares by shareholders of the Acquiring Fund, shall not constitute a material adverse change; |
(j) | On the Closing Date, all Federal and other tax returns and reports of the Acquiring Fund required by law to have been filed by such date (including any extensions) shall have been filed and are or will be correct in all material respects, and all Federal and other taxes shown as due or required to be shown as due on said returns and reports shall have been paid or provision shall have been made for the payment thereof, and to the best of the Acquiring Fund’s knowledge no such return is currently under audit and no assessment has been asserted with respect to such returns; |
(k) | For each taxable year of its operation, the Acquiring Fund has met the requirements of Subchapter M of the Code for qualification as a regulated investment company and has elected to be treated as such, has been eligible to and has computed its Federal income tax under Section 852 of the Code, has distributed all of its investment company taxable income and net capital gain (as defined in the Code) for periods ending prior to the Closing Date, and will do so for the taxable year including the Closing Date; |
(l) | All issued and outstanding Acquiring Fund Shares are, and on the Closing Date will be, duly and validly issued and outstanding, fully paid and non-assessable by the Company and have been offered and sold in every state and the District of Columbia in compliance in all material respects with applicable registration requirements of the 1933 Act and state securities laws. The Acquiring Fund does not have outstanding any options, warrants or other rights to subscribe for or purchase any Acquiring Fund Shares, nor is there outstanding any security convertible into any Acquiring Fund Shares; |
(m) | The adoption and performance of this Reorganization Plan will have been fully authorized prior to the Closing Date by all necessary action, if any, on the part of the Directors of the Company on behalf of the Acquiring Fund and this Reorganization Plan will constitute a valid and binding obligation of the Acquiring Fund, enforceable in accordance with its terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization, moratorium and other laws relating to or affecting creditors’ rights and to general equity principles; |
(n) | The Acquiring Fund Shares to be issued and delivered to the Acquired Fund, for the account of the Acquired Fund Shareholders, pursuant to the terms of this Reorganization Plan, will on the Closing Date have been duly authorized and, when so issued and delivered, will be duly and validly issued Acquiring Fund Shares, and will be fully paid and non-assessable by the Company; |
(o) | The information to be furnished by the Acquiring Fund for use in the registration statements, proxy materials and other documents that may be necessary in connection with the transactions contemplated hereby shall be accurate and complete in all material respects and shall comply in all material respects with Federal securities and other laws and regulations applicable thereto; and |
(p) | That insofar as it relates to Company or the Acquiring Fund, the Registration Statement relating to the Acquiring Fund Shares issuable hereunder, and the proxy materials of the Acquired Fund to be included in the Registration Statement, and any amendment or supplement to the foregoing, will, from the effective date of the Registration Statement through the date of the meeting of shareholders of the Acquired Fund contemplated therein (i) not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which such statements were made, not materially misleading provided, however, that the representations and warranties in this subparagraph (p) shall not apply to statements in or omissions from the Registration Statement made in reliance upon and in conformity with information that was furnished by the Acquired Fund for use therein, and (ii) comply in all material respects with the provisions of the 1933 Act, the 1934 Act and the 1940 Act and the rules and regulations thereunder. |
5.1. | The Acquiring Fund and the Acquired Fund each will operate its business in the ordinary course between the date hereof and the Closing Date, it being understood that such ordinary course of business will include the declaration and payment of customary dividends and distributions, and any other distribution that may be advisable. |
5.2. | To the extent required by applicable law, the Company will call a meeting of the shareholders of the Acquired Fund to consider and act upon this Reorganization Plan and to take all other action necessary to obtain approval of the transactions contemplated herein. |
5.3. | The Acquired Fund covenants that the Acquiring Fund Shares to be issued hereunder are not being acquired for the purpose of making any distribution thereof, other than in accordance with the terms of this Reorganization Plan. |
5.4. | The Acquired Fund will assist the Acquiring Fund in obtaining such information as the Acquiring Fund reasonably requests concerning the beneficial ownership of the Acquired Fund shares. |
5.5. | Subject to the provisions of this Reorganization Plan, the Acquiring Fund and the Acquired Fund will each take, or cause to be taken, all action, and do or cause to be done, all things reasonably necessary, proper or advisable to consummate and make effective the transactions contemplated by this Reorganization Plan. |
5.6. | As soon as is reasonably practicable after the Closing, the Acquired Fund will make a liquidating distribution to its shareholders consisting of the Acquiring Fund Shares received at the Closing. |
5.7. | The Acquiring Fund and the Acquired Fund shall each use its reasonable best efforts to fulfill or obtain the fulfillment of the conditions precedent to effect the transactions contemplated by this Reorganization Plan as promptly as practicable. |
5.8. | The Acquired Fund covenants that it will, from time to time, as and when reasonably requested by the Acquiring Fund, execute and deliver or cause to be executed and delivered all such assignments and other instruments, and will take or cause to be taken such further action as the Acquiring Fund may reasonably deem necessary or desirable in order to vest in and confirm the Acquiring Fund’s title to and possession of all the assets and otherwise to carry out the intent and purpose of this Reorganization Plan. |
5.9. | The Acquiring Fund will use all reasonable efforts to obtain the approvals and authorizations required by the 1933 Act, the 1940 Act and such of the |
state blue sky or securities laws as may be necessary in order to continue its operations after the Closing Date. |
6.1. | All representations and warranties of the Acquiring Fund and the Company contained in this Reorganization Plan shall be true and correct in all material respects as of the date hereof and, except as they may be affected by the transactions contemplated by this Reorganization Plan, as of the Closing Date, with the same force and effect as if made on and as of the Closing Date; |
6.2. | The Company and the Acquiring Fund shall have performed all of the covenants and complied with all of the provisions required by this Reorganization Plan to be performed or complied with by the Company and the Acquiring Fund on or before the Closing Date; and |
6.3. | The Acquired Fund and the Acquiring Fund shall have agreed on the number of full and fractional Acquiring Fund Shares to be issued in connection with the Reorganization after such number has been calculated in accordance with paragraph 1.1. |
7.1. | All representations and warranties of the Company and the Acquired Fund contained in this Reorganization Plan shall be true and correct in all material respects as of the date hereof and, except as they may be affected by the transactions contemplated by this Reorganization Plan, as of the Closing Date, with the same force and effect as if made on and as of the Closing Date; |
7.2. | The Company and the Acquired Fund shall have performed all of the covenants and complied with all of the provisions required by this Reorganization Plan to be performed or complied with by the Company or the Acquired Fund on or before the Closing Date; |
7.3. | The Acquired Fund and the Acquiring Fund shall have agreed on the number of full and fractional Acquiring Fund Shares to be issued in connection with the Reorganization after such number has been calculated in accordance with paragraph 1.1; |
7.4. | The Acquired Fund shall have declared and paid a distribution or distributions prior to the Closing that, together with all previous distributions, shall have the effect of distributing to its shareholders (i) all of its investment company taxable income and all of its net realized capital gains, if any, for the period from the close of its last taxable year to 4:00 p.m. Eastern Time on the Closing; and (ii) any undistributed investment company taxable income and net realized capital gains from any period to the extent not otherwise already distributed. |
8.1. | The Reorganization Plan and the transactions contemplated herein shall have been approved by the requisite vote, if any, of the holders of the outstanding shares of the Acquired Fund in accordance with the provisions of the Company’s Articles of Incorporation, By-Laws, applicable Kansas law and the 1940 Act, and certified copies of the resolutions evidencing such approval shall have been delivered to the Acquiring Fund. Notwithstanding anything herein to the contrary, neither the Acquiring Fund nor the Acquired Fund may waive the conditions set forth in this paragraph 8.1; |
8.2. | On the Closing Date, no action, suit or other proceeding shall be pending or, to its knowledge, threatened before any court or governmental agency in which it is sought to restrain or prohibit, or obtain damages or other relief in connection with, this Reorganization Plan or the transactions contemplated herein; |
8.3. | All consents of other parties and all other consents, orders and permits of Federal, state and local regulatory authorities deemed necessary by the Acquiring Fund or the Acquired Fund to permit consummation, in all material respects, of the transactions contemplated hereby shall have been obtained, except where failure to obtain any such consent, order or permit would not involve a risk of a material adverse effect on the assets or properties of the Acquiring Fund or the Acquired Fund, provided that either party hereto may for itself waive any of such conditions; |
8.4. | The Registration Statement shall have become effective under the 1933 Act and no stop orders suspending the effectiveness thereof shall have been issued and, to the best knowledge of the parties hereto, no investigation or proceeding for that purpose shall have been instituted or be pending, threatened or contemplated under the 1933 Act; and |
8.5. | Dechert LLP shall deliver an opinion addressed to the Company substantially to the effect that, based upon certain facts, assumptions, and representations, the transaction contemplated by this Reorganization Plan shall constitute a tax-free reorganization for Federal income tax purposes, unless, based on the circumstances existing at the time of the Closing, Dechert LLP determines that the transaction contemplated by this Reorganization Plan does not qualify as such. The delivery of such opinion is conditioned upon receipt by Dechert LLP of representations it shall request of the Company. Notwithstanding anything herein to the contrary, the Company may not waive the condition set forth in this paragraph 8.5. |
9.1. | The Acquiring Fund represents and warrants to the other that there are no brokers or finders entitled to receive any payments in connection with the transactions provided for herein. |
9.2. | The Acquired Fund shall bear one-half of the expenses relating to the proposed Reorganization. The costs of the Reorganization shall include, but not be limited to, costs associated with obtaining any necessary order of exemption from the 1940 Act, preparation of the Registration Statement, printing and distributing the Acquiring Fund’s prospectus and the Acquired Fund’s proxy materials, legal fees, accounting fees, securities registration fees, and expenses of holding the shareholders’ meeting. Notwithstanding any of the foregoing, expenses will in any event be paid by the party directly incurring such expenses if and to the extent that the payment by the other party of such expenses would result in the disqualification of such party as a “regulated investment company” within the meaning of Section 851 of the Code. |
13.1. | The Article and paragraph headings contained in this Reorganization Plan are for reference purposes only and shall not affect in any way the meaning or interpretation of this Reorganization Plan. |
13.2. | This Reorganization Plan shall be governed by and construed in accordance with the laws of the State of Kansas without regard to its principles of conflicts of laws. |
13.3. | This Reorganization Plan shall bind and inure to the benefit of the parties hereto and their respective successors and assigns, but no assignment or transfer hereof or of any rights or obligations hereunder shall be made by any party without the written consent of the other party. Nothing herein expressed or implied is intended or shall be construed to confer upon or give any person, firm or corporation, other than the parties hereto and their respective successors and assigns, any rights or remedies under or by reason of this Reorganization Plan. |
13.4. | It is expressly agreed that the obligations of the parties hereunder shall not be binding upon any of the Directors, shareholders, nominees, officers, agents, or employees of the Company personally, but shall bind only property of such party. The execution and delivery by such officers shall not be deemed to have been made by any of them individually or to impose any liability on any of them personally, but shall bind only the property of each party. |
![](https://capedge.com/proxy/N-14A/0001188112-06-001253/michaelgodlumsig.jpg)
Name: Michael G. Odlum
Title: President
Traditionally, convertible securities have paid dividends or interest at rates higher than common stocks but lower than nonconvertible securities. They generally participate in the appreciation or depreciation of the underlying stock into which they are convertible, but to a lesser degree. In recent years, convertible securities have been developed which combine higher or lower current income with options and other features. Warrants are options to buy a stated number of shares of common stock at a specified price anytime during the life of the warrants (generally, two or more years).
investor the right (where the investor purchases the options), or the obligation (where the investor writes (sells) the options), to buy or sell an asset at a predetermined price in the future. If a Fund invests in non-dollar denominated foreign securities, it may also engage in forward foreign currency transactions. The instruments listed above may be bought or sold for any number of reasons, including: to manage exposure to changes in securities prices and foreign currencies, to manage exposure to changes in interest rates, and bond prices; as an efficient means of adjusting overall exposure to certain markets; in an effort to enhance income; to protect the value of portfolio securities; and to adjust portfolio duration. Futures contracts and options may not always be successful hedges; their prices can be highly volatile. Using them could lower a Fund’s total return, and the potential loss from the use of futures can exceed the Fund’s initial investment in such contracts.
establish and maintain reserves as SMC or NTI believes is advisable to facilitate a Fund’s cash flow needs (e.g., redemptions, expenses and, purchases of portfolio securities) or for temporary, defensive purposes.
Manager’s Commentary
SELECT 25(R) SERIES
November 15, 2005
(unaudited)
Senior Portfolio Manager
S&P 500 Index & Russell 1000 Growth Index
![](https://capedge.com/proxy/N-14A/0001188112-06-001253/d18803line.jpg)
Periods Ended 9-30-05 | 1 Year | 5 Years | Since Inception | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
A Shares | 19.85 | % | (3.77 | )% | (0.99)% (1-29-99) | |||||||||
A Shares with sales charge | 12.91 | % | (4.90 | )% | (1.86)% (1-29-99) | |||||||||
B Shares | 18.93 | % | (4.48 | )% | (1.70)% (1-29-99) | |||||||||
B Shares with CDSC | 13.93 | % | (4.87 | )% | (1.70)% (1-29-99) | |||||||||
C Shares | 18.88 | % | (4.51 | )% | (1.67)% (1-29-99) | |||||||||
C Shares with CDSC | 17.88 | % | (4.51 | )% | (1.67)% (1-29-99) |
Shareholder and Address | Shares Owned | % Owned | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
Security Benefit Life Insurance Company | 587,119.766 | 24 | % |
Shareholder and Address | Shares Owned | % Owned | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
None |
Shareholder and Address | Shares Owned | % Owned | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
None |
Security Equity Fund
One Security Benefit Place
Topeka, KS 66636-0001
(Toll-Free) 1-800-888-2461
PROXY FOR THE SPECIAL MEETING OF SHAREHOLDERS
June 1, 2006
The undersigned hereby appoint(s) Amy J. Lee, Donald A. Chubb, Jr. and Brenda M. Harwood, or any one of them, proxies, each of them with full power of substitution, to vote and act with respect to all shares of the Security [ ] Fund (the “Acquired Fund”) which the undersigned is entitled to vote at the Special Meeting of Security Equity Fund shareholders to be held at the executive offices of Security Equity Fund, One Security Benefit Place, Topeka, Kansas 66636, June 1, 2006 at 1:00 p.m. (Central time) and at any adjournment(s) or postponements thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. This proxy card will be voted as instructed. If no specification is made, the proxy card will be voted “FOR” Proposal 1.
« FOLD AND DETACH HERE »
[LASER FUND NAME HERE]
(the “Acquired Fund”)
Special Meeting of Shareholders to be held June 1, 2006
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE FOLLOWING PROPOSAL
Please vote, date and sign this proxy card and return it promptly in the enclosed envelope. Please indicate your vote by an “x” in the appropriate box below:
1. | To approve a Plan of Reorganization providing for the acquisition of all of the assets and liabilities of the Acquired Fund by Security Select 25 Fund (the “Acquiring Fund”), a series of Security Equity Fund, solely in exchange for shares of the Acquiring Fund, followed by the complete liquidation of the Acquired Fund. | ||||
| FOR o | AGAINST o | ABSTAIN o |
| |
PLEASE VOTE BY CHECKING THE APPROPRIATE BOX AS IN THIS EXAMPLE | x |
Date: ____________________________ |
_________________________________ Signature |
PROXY VOTING INSTRUCTIONS
Your mailed proxy statement provides details on important issues relating to your Fund. The board of directors of Security Equity Fund recommends that you vote “FOR” the proposal.
To make voting faster and more convenient for you, we are offering a variety of ways to vote your proxy. You may vote using the Internet or by telephone instead of completing and mailing the enclosed proxy card. The Internet and telephone are generally available 24 hours a day and your vote will be confirmed and posted immediately. Use whichever method is most convenient for you! If you choose to vote via the Internet or by phone, you should not mail your proxy card.
Ways to Vote Your Shares
Your vote is important no matter how many shares you own. Voting your shares early will avoid costly follow-up mail and telephone solicitation.
Online | 1. Click on www.myproxyonline.com. 2. Enter the 12 digit control number. 3. Follow the instructions on the Web site. 4. Once you have voted, you do not need to mail your proxy card.
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By Phone | 1. Call toll-free 1-866-437-4675. 2. Enter the 12 digit control number. 3. Follow the recorded instructions. 4. Once you have voted, you do not need to mail your proxy card
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By Mail | Complete and sign your proxy card and mail it in the postage-paid envelope received with your shareholder mailing. To ensure your vote is validated properly, please sign your proxy card as described in the “Instructions for Signing Proxy Cards” section of your proxy materials.
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In Person | The Shareholder Meeting will take place June 1, 2006, at 1:00 p.m., Central time, at the office of Security Equity Fund, located at One Security Benefit Place, Topeka, Kansas 66636. |
« FOLD AND DETACH HERE »
Questions?
We urge you to spend time reviewing your proxy statement and the proposal included in the package. Should you have any questions, we encourage you to call 1-866-304-2059 toll-free Monday through Friday from 9:30 a.m. to 10:00 p.m. Eastern time. We have retained InvestorConnect to assist our shareholders in the voting process. If we have not received your proxy card by May__, 2006, representatives from InvestorConnect may call you to remind you to exercise your vote.
YOUR PROXY VOTE IS IMPORTANT! PLEASE VOTE TODAY