UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-01136
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)
MICHAEL G. ODLUM, PRESIDENT
SECURITY EQUITY FUND
ONE SECURITY BENEFIT PLACE
TOPEKA, KANSAS 66636-0001
(Name and address of agent for service)
Registrant's telephone number, including area code: (785) 438-3000
Date of fiscal year end: September 30
Date of reporting period: March 31, 2005
Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. Section 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
[PICTURE]
[SECURITY FUNDS LOGO]
SEMI-ANNUAL REPORT
MARCH 31, 2005
- - SECURITY EQUITY FUND
- ALPHA OPPORTUNITY SERIES
- ENHANCED INDEX SERIES
- EQUITY SERIES
- GLOBAL SERIES
- LARGE CAP GROWTH SERIES
- MID CAP VALUE SERIES
- SELECT 25(R) SERIES
- SMALL CAP GROWTH SERIES
- SOCIAL AWARENESS SERIES
- SECURITY LARGE CAP VALUE FUND
- - SECURITY LARGE CAP VALUE FUND
- - SECURITY MID CAP GROWTH FUND
[SECURITY DISTRIBUTORS, INC. LOGO]
A Member of The Security Benefit Group of Companies
SECURITY EQUITY FUND
SECURITY LARGE CAP VALUE FUND
SECURITY MID CAP GROWTH FUND
MARCH 31, 2005
SEMI-ANNUAL REPORT
(unaudited)
TABLE OF CONTENTS
Chairman's Letter..................................................... 2
Security Equity Fund
Alpha Opportunity Series.......................................... 3
Enhanced Index Series............................................. 13
Equity Series..................................................... 27
Global Series..................................................... 37
Large Cap Growth Series........................................... 47
Mid Cap Value Series.............................................. 57
Select 25(R) Series............................................... 67
Small Cap Growth Series........................................... 75
Social Awareness Series........................................... 85
Security Large Cap Value Fund......................................... 95
Security Mid Cap Growth Fund.......................................... 105
Notes to Financial Statements......................................... 114
Director's Disclosure................................................. 122
Directors and Officers................................................ 124
1
Chairman's Letter
May 15, 2005
[PHOTO OF JOHN CLELAND CHAIRMAN OF THE BOARD]
TO OUR SHAREHOLDERS:
Once again the markets demonstrated their fickle nature over the short run, as
seen in the contrasting investment returns in the 4th quarter 2004 as compared
to the 1st quarter of 2005. Although equity returns averaged out to be
reasonably good over the six-month period ended March 31, 2005, bond market
returns were anemic over this same time frame. In addition, the strong positive
returns the equity markets experienced overall in the 4th quarter 2004 did not
extend into the 1st quarter of 2005, and in fact turned negative for both stocks
and bonds. It appears that the positive investor sentiment that had helped the
markets in the post-federal election period at the end of 2004 began to wane
during the 1st quarter 2005 as new inflation fears emerged, spurred by a run-up
in oil prices.
The market returns are illustrated in the following table, which shows the
performance of some of the major indexes in each quarter and for the six-month
period as a whole.
RETURN %
------------------------------
4TH Q 1ST Q SIX MONTHS
INDEX 2004 2005 ENDED 3/31/05
- --------------------- ----- ----- -------------
S&P 500 9.23 -2.15 6.88
S&P Midcap 400 12.15 -.40 11.70
Russell 2000 14.09 -5.34 8.00
MSCI EAFE ($US) 14.98 -.77 14.10
Lehman Aggregate Bond .95 -.48 .47
Interest rates generally rose in shorter term securities, while the longest
dated bond rates remained flat. As a result, the difference in interest rates
between the shorter maturity securities and the longer maturity securities
narrowed significantly. This can be seen in the following table which shows
interest rates on US Treasury Securities of varying maturities.
% RATES
--------------------------
US TREASURY MATURITY 9/30/04 12/31/04 3/31/05
- --------------------- ------- -------- -------
3 Month 1.68 2.22 2.80
1 Year 2.12 2.67 3.30
10 Year 4.13 4.23 4.50
Long Term (20+ Years) 4.89 4.88 4.89
As we look ahead to the remainder of the current fiscal year, the potential for
a continuation of rising short-term rates as a result of a Federal Reserve
tightening policy appears to be the general expectation of the market. The
outlook for longer-term rates as well as for stocks is less clear, however. How
these play out over the next two quarters will depend to a great extent on the
direction of inflation as well as the strength of the economy and corporate
earnings.
Overall, through the use of disciplined and professional management, the
Security Funds are intended to provide shareholders over the long run the
benefits of well-defined and diversified investment strategies. We appreciate
your investment in the Funds and welcome any comments or questions you may have.
Sincerely,
/s/ John Cleland
John Cleland
Chairman, The Security Funds
2
SECURITY EQUITY FUND
Alpha Opportunity Series
[SECURITY FUNDS LOGO]
ADVISOR,
SECURITY MANAGEMENT COMPANY, LLC
AND
[MAINSTREAM INVESTMENT ADVISERS LOGO]
SUBADVISOR,
MAINSTREAM INVESTMENT ADVISERS
3
SECURITY EQUITY FUND
Performance Summary ALPHA OPPORTUNITY SERIES
May 15, 2005 (unaudited)
PERFORMANCE
SECURITY ALPHA OPPORTUNITY SERIES VS. S&P 500 INDEX
[PERFORMANCE GRAPH]
ALPHA OPPORTUNITY INVESTMENT
DATE value
07/07/03 9,425
9/30/03 9,632
12/31/03 11,153
03/31/04 11,381
06/30/04 11,610
09/30/04 11,709
12/31/04 12,529
03/31/05 12,486
S&P 500
DATE value
- ------------------- -------
INCEPTION 7/07/03 10,000
09/30/03 10,265
12/31/03 11,515
03/31/04 11,711
06/30/04 11,913
09/30/04 11,689
12/31/04 12,769
03/31/05 12,494
$10,000 SINCE INCEPTION
This chart assumes a $10,000 investment in Class A shares of Alpha Opportunity
Series on July 7, 2003 (date of inception), reflects deduction of the 5.75%
sales load and assumes all dividends reinvested. The chart does not reflect the
deduction of taxes that a shareholder would pay on distributions or the
redemption of fund shares.
PORTFOLIO COMPOSITION BY SECTOR
Consumer Discretionary 3.43%
Consumer Staples 0.08
Energy 5.80
Financials 0.78
Health Care 1.82
Industrials 11.77
Information Technology 4.83
Materials 24.07
Exchange Traded Funds 1.76
U.S. Government Sponsored Agencies 39.64
Asset Backed Securities 1.73
Cash & other assets, less liabilities 4.29
AVERAGE ANNUAL RETURNS
PERIODS ENDED 3-31-05 1 YEAR SINCE INCEPTION
A Shares 9.71% 17.61% (7-07-03)
A Shares with sales charge 3.39% 13.66% (7-07-03)
B Shares 8.87% 16.75% (7-07-03)
B Shares with CDSC 3.87% 14.67% (7-07-03)
C Shares 8.87% 16.75% (7-07-03)
C Shares with CDSC 7.87% 16.75% (7-07-03)
The performance data above represent past performance that is not predictive
of future results. The investment return and principal value of an investment
in the Series will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than their original cost. The figures above do not
reflect deduction of the maximum front-end sales charge of 5.75% for Class A
shares or the contingent deferred sales charge of 5% for Class B shares and
1% for Class C shares, as applicable, except where noted. The figures do not
reflect the deduction of taxes that a shareholder would pay on distributions
or redemption of shares. Such figures would be lower if the maximum sales
charge and any applicable taxes were deducted. Fee waivers reduced expenses
of the Series and in the absence of such waiver, the performance quoted would
be reduced.
4 See accompanying notes.
SECURITY EQUITY FUND
Performance Summary ALPHA OPPORTUNITY SERIES
May 15, 2005 (unaudited)
PERFORMANCE
INFORMATION ABOUT YOUR SERIES EXPENSES
CALCULATING YOUR ONGOING SERIES EXPENSES
EXAMPLE
As a shareholder of the Series, you incur two types of costs: (1) transaction
costs, which may include sales charges (loads) on purchase payments; contingent
deferred sales charges on redemptions; and redemption fees, if any; and (2)
ongoing costs, including management fees; distribution and/or service fees
(12b-1); and other Series expenses. This Example is intended to help you
understand your ongoing costs (in dollars) of investing in the Series and to
compare these costs with ongoing costs of investing in other mutual funds. The
Example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period, October 1, 2004 -March 31, 2005.
ACTUAL EXPENSES
The first line for each class of shares in the table provides information about
actual account values and actual expenses. You may use the information in this
table, together with the amount you invested, to estimate the expenses that you
paid over the period. Simply divide your account value by $1,000 (for example,
an $8,600 account value divided by $1,000 = 8.6), then multiply the result by
the number in the table under the heading entitled "Expenses Paid During Period"
to estimate the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line for each class of shares in the table provides information about
hypothetical account values and hypothetical expenses based on the Series actual
expense ratio and an assumed rate of return of 5% per year before expenses,
which is not the Series actual return. The hypothetical account values and
expenses may not be used to estimate the actual ending account balance or
expenses you paid for the period. You may use this information to compare the
ongoing costs of investing in the Series and other funds. To do so, compare this
5% hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads) on purchase payments, contingent deferred sales charges on
redemptions, and redemption fees, if any. Therefore, the second line for each
class of shares is useful in comparing ongoing costs only, and will not help you
determine the relative total costs of owning different funds. In addition, if
these transactional costs were included, your costs would have been higher.
FUND EXPENSES
BEGINNING ENDING EXPENSES PAID
ACCOUNT VALUE ACCOUNT VALUE DURING
10-01-04 3-31-05(1) PERIOD(2)
------------- ------------- -------------
Alpha Opportunity
Series - Class A
Actual $1,000.00 $1,066.40 $14.53
Hypothetical 1,000.00 1,010.87 14.14
Alpha Opportunity
Series - Class B
Actual 1,000.00 1,062.60 18.31
Hypothetical 1,000.00 1,007.18 17.81
Alpha Opportunity
Series - Class C
Actual 1,000.00 1,062.60 18.31
Hypothetical 1,000.00 1,007.18 17.81
(1) The actual ending account value is based on the actual total return of the
Series for the period October 1, 2004 to March 31, 2005 after actual
expenses and will differ from the hypothetical ending account value which
is based on the Series expense ratio and a hypothetical annual return of 5%
before expenses. The actual cumulative return at net asset value for the
period October 1, 2004 to March 31, 2005 was 6.64%, 6.26% and 6.26%, for
Class A, B and C class shares, respectively.
(2) Expenses are equal to the Series annualized expense ratio (2.82%, 3.56% and
3.56% for Class A, B and C class shares, respectively), net of any
applicable fee waivers or earnings credits, multiplied by the average
account value over the period, multiplied by 182/365 (to reflect the
one-half year period).
5
SECURITY EQUITY FUND
Schedule of Investments ALPHA OPPORTUNITY SERIES
March 31, 2005 (unaudited)
NUMBER MARKET
OF SHARES VALUE
COMMON STOCKS - 54.5%
AGRICULTURAL PRODUCTS - 0.1%
Archer-Daniels-Midland Company 700 $ 17,206
---------
AIRLINES - 1.3%
Alaska Air Group, Inc.* 5,600 164,864
Continental Airlines, Inc. (Cl.B)* 10,800 130,032
---------
294,896
---------
ALUMINUM - 1.4%
Alcan, Inc. 3,300 125,136
Alcoa, Inc. 2,700 82,053
Century Aluminum Company* 3,600 108,491
---------
315,680
---------
BUILDING PRODUCTS - 0.0%
Armstrong Holdings, Inc.* 3,400 6,358
---------
COMMUNICATIONS EQUIPMENT - 0.3%
Emulex Corporation* 3,600 67,824
---------
COMPUTER STORAGE & PERIPHERALS - 3.5%
Hutchinson Technology, Inc.* 4,500 156,510
Imation Corporation 4,400 152,900
Komag, Inc.* 4,500 100,575
Maxtor Corporation* 10,100 53,732
Overland Storage, Inc.* 2,500 36,700
Quantum Corporation* 9,000 26,190
Seagate Technology* 3,600 70,380
Storage Technology Corporation* 3,300 101,640
Western Digital Corporation* 5,600 71,400
Xyratex, Ltd.* 1,800 33,963
---------
803,990
---------
CONSTRUCTION & ENGINEERING - 0.8%
Chicago Bridge & Iron Company N.V. 1,300 57,239
Granite Construction, Inc. 2,700 70,929
URS Corporation* 2,300 66,125
---------
194,293
---------
CONSTRUCTION & FARM MACHINERY - 0.6%
Bucyrus International, Inc. 2,300 89,838
Wabash National Corporation 1,700 41,480
---------
131,318
---------
CONSTRUCTION MATERIALS - 2.0%
Headwaters, Inc.* 1,900 62,358
Lafarge S.A. ADR 700 17,010
Martin Marietta Materials, Inc. 900 50,328
Texas Industries, Inc. 4,000 215,000
Vulcan Materials Company 2,000 113,660
---------
458,356
---------
DIVERSIFIED CHEMICALS - 4.1%
BASF AG ADR 5,400 380,970
Dow Chemical Company 3,300 164,505
Engelhard Corporation 2,600 78,078
Olin Corporation 10,300 229,690
Pioneer Companies, Inc.* 3,700 83,990
---------
937,233
---------
DIVERSIFIED COMMERCIAL SERVICES - 0.6%
Cendant Corporation 4,500 92,430
Equifax, Inc. 1,500 46,035
---------
138,465
---------
DIVERSIFIED METALS & MINING - 7.6%
Alumina, Ltd. ADR 12,800 235,520
Anglo American plc ADR 3,300 78,870
Arch Coal, Inc. 600 25,806
Brush Engineered Materials, Inc.* 2,900 55,187
Cameco Corporation 1,900 84,056
Consol Energy, Inc. 8,400 394,968
Freeport-McMoRan Copper & Gold,
Inc. (Cl.B) 2,800 110,908
Inco, Ltd.* 5,100 202,980
Mining & Metallurgical Company
Norilsk Nickel 2,700 157,950
Phelps Dodge Corporation 1,900 193,287
Southern Peru Copper Corporation 700 38,822
Titanium Metals Corporation* 700 25,013
Westmoreland Coal Company* 3,700 93,055
Yanzhou Coal Mining Company, Ltd. ADR 800 54,688
---------
1,751,110
---------
ELECTRICAL COMPONENTS & EQUIPMENT - 1.4%
Cooper Industries, Ltd. 3,400 243,168
Thomas & Betts Corporation* 2,200 71,060
---------
314,228
---------
EXCHANGE TRADED FUNDS - 1.8%
Materials Select Sector Trust 5,300 159,848
Semiconductor HOLDRS Trust 7,500 243,975
---------
403,823
---------
FERTILIZERS & AGRICULTURAL CHEMICALS - 0.2%
Mosaic Company* 1,900 32,414
Syngenta AG ADR* 700 14,700
---------
47,114
---------
FOREST PRODUCTS - 1.6%
Deltic Timber Corporation 1,800 70,380
Louisiana-Pacific Corporation 12,100 304,194
---------
374,574
---------
HEALTH CARE EQUIPMENT - 1.2%
Hillenbrand Industries, Inc. 3,800 210,786
Waters Corporation* 2,000 71,580
---------
282,366
---------
HEALTH CARE FACILITIES - 0.6%
Manor Care, Inc. 3,700 134,532
---------
HOME FURNISHINGS - 0.3%
Kimball International, Inc. (Cl.B) 4,062 58,899
---------
HOTELS, RESORTS & CRUISE LINES - 3.0%
Fairmont Hotels & Resorts, Inc. 2,100 69,594
Great Wolf Resorts, Inc.* 1,200 29,940
La Quinta Corporation* 6,700 56,950
Starwood Hotels & Resorts Worldwide, Inc. 8,800 528,264
---------
684,748
---------
6 See accompanying notes.
SECURITY EQUITY FUND
Schedule of Investments ALPHA OPPORTUNITY SERIES
March 31, 2005 (unaudited)
NUMBER MARKET
OF SHARES VALUE
COMMON STOCKS (CONTINUED)
INDUSTRIAL MACHINERY - 4.8%
Crane Company 4,000 $ 115,160
Donaldson Company, Inc. 2,500 80,700
Global Power Equipment Group, Inc.* 6,400 61,312
Harsco Corporation 1,200 71,532
Joy Global, Inc. 700 24,542
Kennametal, Inc. 10,100 479,649
Portec Rail Products, Inc. 2,300 28,750
Timken Company 6,700 183,178
Watts Waters Technologies, Inc. 1,400 45,654
----------
1,090,477
----------
INTEGRATED OIL & GAS - 1.2%
Braskem S.A. ADR 4,700 190,350
Tesoro Corporation* 2,300 85,146
----------
275,496
----------
INTERNET SOFTWARE & SERVICES - 0.1%
Sohu.com, Inc.* 1,800 31,644
----------
INVESTMENT BANKING & BROKERAGE - 0.3%
Morgan Stanley 1,400 80,150
----------
MARINE - 0.5%
Kirby Corporation* 2,700 113,481
----------
MOVIES & ENTERTAINMENT - 0.2%
WPT Enterprises, Inc.* 2,300 43,010
----------
OFFICE SERVICES & SUPPLIES - 1.0%
Avery Dennison Corporation 3,600 222,948
Steelcase, Inc. 1,000 13,800
----------
236,748
----------
OIL & GAS DRILLING - 0.5%
Precision Drilling Corporation* 1,500 111,990
----------
OIL & GAS EQUIPMENT & SERVICES - 3.8%
Baker Hughes, Inc. 3,300 146,817
FMC Technologies, Inc.* 2,600 86,268
Halliburton Company 10,200 441,150
Technip S.A. ADR 4,700 195,943
----------
870,178
----------
OIL & GAS EXPLORATION & PRODUCTION - 0.3%
Tatneft ADR 1,400 44,828
Vintage Petroleum, Inc. 900 28,314
----------
73,142
----------
OTHER DIVERSIFIED FINANCIAL SERVICES - 0.6%
Brascan Corporation 3,700 139,675
----------
PAPER PACKAGING - 2.1%
Longview Fibre Company 2,700 50,652
Sealed Air Corporation* 7,300 379,162
Sonoco Products Company 1,600 46,160
----------
475,974
----------
PAPER PRODUCTS - 1.6%
Aracruz Celulose S.A. ADR 3,300 118,140
Potlatch Corporation 3,000 141,210
Votorantim Celulose e Papel S.A. ADR 9,100 118,300
----------
377,650
----------
PRECIOUS METALS & MINING - 0.7%
Aber Diamond Corporation 4,400 134,200
Silver Standard Resources, Inc.* 3,300 38,214
----------
172,414
----------
RAILROADS - 0.3%
Norfolk Southern Corporation 1,900 70,395
----------
SEMICONDUCTOR EQUIPMENT - 0.2%
Mykrolis Corporation* 3,800 54,340
----------
SEMICONDUCTORS - 0.4%
Marvell Technology Group, Ltd.* 2,200 84,348
----------
SPECIALTY CHEMICALS - 1.2%
Imperial Chemical Industries plc 1,100 22,306
MacDermid, Inc. 2,500 81,250
OM Group, Inc.* 3,300 100,386
Westlake Chemical Corporation 2,200 71,170
----------
275,112
----------
STEEL - 1.5%
Allegheny Technologies, Inc. 2,700 65,097
Gibraltar Industries, Inc. 1,400 30,716
NN, Inc. 6,500 80,080
Quanex Corporation 1,000 53,320
Worthington Industries, Inc. 5,400 104,112
----------
333,325
----------
TECHNOLOGY DISTRIBUTORS - 0.3%
Avnet, Inc.* 3,600 66,312
----------
TRADING COMPANIES & DISTRIBUTORS - 0.5%
Hughes Supply, Inc. 700 20,825
W.W. Grainger, Inc. 1,400 87,178
----------
108,003
----------
TOTAL COMMON STOCKS
(cost $12,816,302) 12,500,877
----------
7 See accompanying notes.
SECURITY EQUITY FUND
Schedule of Investments ALPHA OPPORTUNITY SERIES
March 31, 2005 (unaudited)
PRINCIPAL
AMOUNT OR
NUMBER MARKET
OF SHARES VALUE
U.S. GOVERNMENT SPONSORED AGENCIES - 39.7%
Federal Farm Credit Bank,
2.663%, 4-27-05 $1,345,000 $ 1,342,377
Federal Home Loan Bank,
2.819%, 6-06-05 $ 500,000 497,388
Federal Home Loan Mortgage Corporation:
2.493%, 4-05-05 $ 400,000 399,880
2.602%, 4-19-05(2) $ 600,000 599,190
2.674%, 5-10-05 $ 525,000 523,413
2.859%, 5-31-05 $ 300,000 298,605
2.908%, 6-13-05 $ 175,000 173,989
2.931%, 6-14-05 $ 500,000 497,071
Federal National Mortgage Association:
2.506%, 4-01-05 $ 500,000 500,000
2.542%, 4-13-05 $ 450,000 449,595
2.567%, 4-14-05 $ 125,000 124,878
2.643%, 4-27-05 $ 250,000 249,513
2.745%, 5-02-05 $ 200,000 199,535
2.662%, 5-04-05 $ 200,000 199,488
2.726%, 5-18-05 $ 975,000 971,449
2.787%, 5-25-05 $ 825,000 821,547
2.915%, 6-27-05 $ 250,000 248,278
2.926%, 6-30-05 $ 400,000 397,150
2.988%, 7-05-05 $ 600,000 595,313
-----------
TOTAL U.S. GOVERNMENT SPONSORED AGENCIES
(cost $9,089,262) 9,088,659
-----------
ASSET BACKED SECURITIES - 1.7%
AUTO - 1.7%
Ford Credit Auto Owner Trust,
2002-D A4B, 2.93% - 2006(1) $ 396,226 396,435
-----------
TOTAL ASSET BACKED SECURITIES
(cost $396,590) 396,435
-----------
TOTAL INVESTMENTS - 95.9%
(cost $22,302,154) 21,985,971
-----------
SHORT POSITIONS - (0.2%)
DIVERSIFIED BANKS - (0.2%)
Wells Fargo & Company (700) (41,860)
-----------
TOTAL SHORT POSITIONS
(proceeds $41,944) (41,860)
-----------
CASH & OTHER ASSETS, LESS LIABILITIES - 4.3% 984,389
-----------
TOTAL NET ASSETS - 100.0% $22,928,500
===========
For federal income tax purposes, the identified cost of investments owned at
March 31, 2005 was $22,351,771.
*Non-income producing security
ADR (American Depositary Receipt)
plc (public limited company)
(1) Variable rate security. Rate indicated is rate effective at March 31, 2005.
(2) Security is segregated as collateral for open futures contracts.
8 See accompanying notes.
SECURITY EQUITY FUND
ALPHA OPPORTUNITY SERIES
(unaudited)
Statement of Assets and Liabilities
March 31, 2005
ASSETS:
Investments, at value(1)..................................................... $21,985,971
Cash......................................................................... 1,506,124
Receivables:
Fund shares sold......................................................... 94,747
Securities sold.......................................................... 1,746,317
Due from broker for proceeds on securities sold short.................... 41,944
Interest................................................................. 477
Dividends................................................................ 8,483
Prepaid expenses............................................................. 18,457
-----------
Total assets................................................................. 25,402,520
-----------
LIABILITIES:
Securities sold short, at value(2)........................................... 41,860
Payable for:
Securities purchased..................................................... 2,344,288
Fund shares redeemed..................................................... 14,045
Variation margin......................................................... 12,750
Management fees.......................................................... 40,248
Custodian fees........................................................... 881
Transfer agent and administration fees................................... 5,484
Professional fees........................................................ 2,515
12b-1 distribution plan fees............................................. 11,800
Security Management Company.............................................. 101
Other.................................................................... 48
-----------
Total liabilities............................................................ 2,474,020
-----------
NET ASSETS................................................................... $22,928,500
===========
NET ASSETS CONSIST OF:
Paid in capital.............................................................. $21,984,247
Accumulated net investment loss.............................................. (128,190)
Accumulated undistributed net realized gain on sale of investments, futures
and short positions...................................................... 1,747,838
Net unrealized depreciation in value of
investments, futures and short positions................................. (675,395)
-----------
Net assets................................................................... $22,928,500
===========
CLASS A:
Capital shares outstanding
(unlimited number of shares authorized).................................. 1,034,220
Net assets................................................................... $12,153,498
Net asset value and redemption price per share............................... $ 11.75
===========
Maximum offering price per share (net asset value divided by 94.25%)......... $ 12.47
===========
CLASS B:
Capital shares outstanding
(unlimited number of shares authorized).................................. 297,397
Net assets................................................................... $ 3,446,485
Net asset value, offering and redemption price per share (excluding any
applicable contingent deferred sales charge)............................. $ 11.59
===========
CLASS C:
Capital shares outstanding
(unlimited number of shares authorized).................................. 632,294
Net assets................................................................... $ 7,328,517
Net asset value, offering and redemption price per share (excluding any
applicable contingent deferred sales charge)............................. $ 11.59
===========
(1) Investments, at cost..................................................... $22,302,154
(2) Securites sold short, at proceeds........................................ 41,944
Statement of Operations
For the Six Months Ended March 31, 2005
INVESTMENT INCOME:
Dividends................................................................ $ 61,702
Interest................................................................. 97,827
-----------
Total investment income.................................................. 159,529
-----------
EXPENSES:
Management fees.......................................................... 186,658
Custodian fees........................................................... 1,660
Transfer agent/maintenance fees.......................................... 13,783
Administration fees...................................................... 16,501
Directors' fees.......................................................... 163
Professional fees........................................................ 6,716
Reports to shareholders.................................................. 527
Registration fees........................................................ 15,054
Other expenses........................................................... 448
12b-1 distribution plan fees - Class A................................... 11,623
12b-1 distribution plan fees - Class B................................... 14,857
12b-1 distribution plan fees - Class C................................... 29,255
-----------
Total expenses........................................................... 297,245
Less:
Reimbursement of expenses - Class A............................... (5,053)
Reimbursement of expenses - Class B............................... (1,734)
Reimbursement of expenses - Class C............................... (3,007)
-----------
Net expenses............................................................. 287,451
-----------
Net investment loss...................................................... (127,922)
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) during the period on:
Investments.............................................................. 1,309,170
Securities sold short.................................................... (28,457)
Futures.................................................................. 592,875
-----------
Net realized gain........................................................ 1,873,588
-----------
Unrealized appreciation (depreciation) during the period on:
Investments.............................................................. (494,012)
Securities sold short.................................................... 193
Futures.................................................................. (304,723)
-----------
Net unrealized depreciation.............................................. (798,542)
-----------
Net gain................................................................. 1,075,046
-----------
Net increase in net assets resulting from operations..................... $ 947,124
===========
9 See accompanying notes.
SECURITY EQUITY FUND
Statement of Changes in Net Assets ALPHA OPPORTUNITY SERIES
SIX MONTHS ENDED
MARCH 31, 2005 YEAR ENDED
(unaudited) SEPTEMBER 30, 2004
---------------- ------------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment loss......................................................... $ (127,922) $ (174,094)
Net realized gain during the period on investments, futures,
and securities sold short................................................ 1,873,588 1,473,623
Unrealized appreciation (depreciation) during the period on
investments, futures and securities sold short........................... (798,542) 288,945
---------------- ------------------
Net increase in net assets resulting from operations........................ 947,124 1,588,474
---------------- ------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net realized gain
Class A.................................................................. (604,730) (199,700)
Class B.................................................................. (202,618) (101,286)
Class C.................................................................. (478,033) (121,452)
---------------- ------------------
Total distributions to shareholders...................................... (1,285,381) (422,438)
---------------- ------------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from sale of shares
Class A.................................................................. 8,026,807 3,466,497
Class B.................................................................. 987,249 224,035
Class C.................................................................. 4,222,532 1,024,036
Distributions reinvested
Class A.................................................................. 591,209 199,093
Class B.................................................................. 202,336 101,286
Class C.................................................................. 269,335 120,826
Cost of shares redeemed
Class A.................................................................. (2,893,290) (633,085)
Class B.................................................................. (29,572) (400)
Class C.................................................................. (133,187) (34,197)
---------------- ------------------
Net increase from capital share transactions................................ 11,243,419 4,468,091
---------------- ------------------
Net increase in net assets.................................................. 10,905,162 5,634,127
---------------- ------------------
NET ASSETS:
Beginning of period......................................................... 12,023,338 6,389,211
---------------- ------------------
End of period............................................................... $ 22,928,500 $ 12,023,338
================ ==================
Accumulated net investment loss at end of period............................ $ (128,190) $ (268)
================ ==================
CAPITAL SHARE ACTIVITY:
Shares sold
Class A.................................................................. 678,845 306,745
Class B.................................................................. 83,518 19,998
Class C.................................................................. 351,294 92,100
Shares reinvested
Class A.................................................................. 50,402 18,034
Class B.................................................................. 17,458 9,208
Class C.................................................................. 23,238 10,984
Shares redeemed
Class A.................................................................. (250,932) (56,279)
Class B.................................................................. (2,522) (35)
Class C.................................................................. (11,260) (3,051)
10 See accompanying notes.
SECURITY EQUITY FUND
ALPHA OPPORTUNITY SERIES
Financial Highlights
Selected data for each share of capital stock outstanding throughout each period
SIX MONTHS ENDED YEAR ENDED
MARCH 31, SEPTEMBER 30,
CLASS A 2005(f) 2004 2003(e)
- ---------- ---------------- ---------- -------------
PER SHARE DATA
Net asset value, beginning of period $ 11.79 $ 10.21 $ 10.00
---------- ---------- ---------
Income (loss) from investment operations:
Net investment income (loss)(c) (0.06) (0.16) (0.03)
Net gain (loss) on securities (realized and unrealized) 0.84 2.33 0.24
---------- ---------- ---------
Total from investment operations 0.78 2.17 0.21
---------- ---------- ---------
Less distributions:
Dividends from net investment income - - -
Distributions from realized gains (0.82) (0.59) -
---------- ---------- ---------
Total distributions (0.82) (0.59) -
---------- ---------- ---------
Net asset value, end of period $ 11.75 $ 11.79 $ 10.21
========== ========== =========
TOTAL RETURN(a) 6.64% 21.68% 2.10%
---------- ---------- ---------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $ 12,153 $ 6,556 $ 2,935
---------- ---------- ---------
Ratios to average net assets:
Net investment income (loss) (1.06%) (1.48%) (1.35%)
Total expenses 2.82% 2.79% 2.75%
Gross expenses(b) 2.93% 3.57% 3.25%
Net expenses(d) 2.82% 2.78% 2.75%
---------- ---------- ---------
Portfolio turnover rate 1,289% 1,175% 867%
SIX MONTHS ENDED YEAR ENDED
MARCH 31, SEPTEMBER 30,
CLASS B 2005(f) 2004 2003(e)
- --------- ---------------- ------------ -------------
PER SHARE DATA
Net asset value, beginning of period $ 11.68 $ 10.20 $ 10.00
------------ ------------ ----------
Income (loss) from investment operations:
Net investment income (loss)(c) (0.10) (0.25) (0.05)
Net gain (loss) on securities (realized and unrealized) 0.83 2.32 0.25
------------ ------------ ----------
Total from investment operations 0.73 2.07 0.20
------------ ------------ ----------
Less distributions:
Dividends from net investment income - - -
Distributions from realized gains (0.82) (0.59) -
------------ ------------ ----------
Total distributions (0.82) (0.59) -
------------ ------------ ----------
Net asset value, end of period $ 11.59 $ 11.68 $ 10.20
============ ============ ==========
TOTAL RETURN(a) 6.26% 20.68% 2.00%
------------ ------------ ----------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $ 3,446 $ 2,324 $ 1,731
------------ ------------ ----------
Ratios to average net assets:
Net investment income (loss) (1.82%) (2.25%) (2.11%)
Total expenses 3.56% 3.53% 3.50%
Gross expenses(b) 3.68% 4.29% 4.01%
Net expenses(d) 3.56% 3.53% 3.50%
------------ ------------ ----------
Portfolio turnover rate 1,289% 1,175% 867%
11 See accompanying notes.
SECURITY EQUITY FUND
ALPHA OPPORTUNITY SERIES
Financial Highlights
Selected data for each share of capital stock outstanding throughout each period
SIX MONTHS ENDED YEAR ENDED
MARCH 31, SEPTEMBER 30,
CLASS C 2005(f) 2004 2003(e)
- ----------- ---------------- ------------ ------------
PER SHARE DATA
Net asset value, beginning of period $ 11.68 $ 10.20 $ 10.00
------------ ------------ ------------
Income (loss) from investment operations:
Net investment income (loss)(c) (0.10) (0.25) (0.05)
Net gain (loss) on securities (realized and unrealized) 0.83 2.32 0.25
------------ ------------ ------------
Total from investment operations 0.73 2.07 0.20
------------ ------------ ------------
Less distributions:
Dividends from net investment income - - -
Distributions from realized gains (0.82) (0.59) -
------------ ------------ ------------
Total distributions (0.82) (0.59) -
------------ ------------ ------------
Net asset value, end of period $ 11.59 $ 11.68 $ 10.20
============ ============ ============
TOTAL RETURN(a) 6.26% 20.68% 2.00%
------------ ------------ ------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $ 7,329 $ 3,143 $ 1,723
------------ ------------ ------------
Ratios to average net assets:
Net investment income (loss) (1.78%) (2.24%) (2.11%)
Total expenses 3.56% 3.53% 3.50%
Gross expenses(b) 3.67% 4.30% 4.01%
Net expenses(d) 3.56% 3.53% 3.50%
------------ ------------ ------------
Portfolio turnover rate 1,289% 1,175% 867%
(a) Total return information does not reflect deduction of any sales charges
imposed at the time of purchase for Class A shares or upon redemption for
Class B and C.
(b) Gross expense information reflects expense ratios absent fund expense
reductions by the Investment Manager.
(c) Net investment income (loss) was computed using average shares outstanding
throughout the period.
(d) Net expense information reflects expense ratios after expense reductions
or fee waivers and custodian fee earnings credits.
(e) Security Alpha Opportunity Series was initially capitalized on July 7,
2003 with a net asset value of $10 per share. Percentage amounts for the
period, except total return, have been annualized.
(f) Unaudited figures for the six months ended March 31, 2005. Percentage
amounts for the period, except total return, have been annualized.
12 See accompanying notes.
SECURITY EQUITY FUND
Enhanced Index Series
[NORTHERN TRUST LOGO]
SUBADVISOR,
NORTHERN TRUST
13
SECURITY EQUITY FUND
Performance Summary ENHANCED INDEX SERIES
May 15, 2005 (unaudited)
PERFORMANCE
SECURITY ENHANCED INDEX SERIES VS. S&P 500 INDEX
[PERFORMANCE GRAPH]
ENHANCED INDEX
DATE value
---- -----
01/29/99 9,425
03/31/99 9,444
06/30/99 10,104
09/30/99 9,463
12/31/99 10,955
3/31/00 11,231
6/30/00 10,879
9/30/00 10,755
12/31/00 9,847
03/31/01 8,617
06/30/01 9,098
09/30/01 7,714
12/31/01 8,521
03/31/02 8,521
06/30/02 7,340
09/30/02 6,052
12/31/02 6,523
03/31/03 6,292
06/30/03 7,224
09/30/03 7,388
12/31/03 8,281
03/31/04 8,406
06/30/04 8,512
09/30/04 8,291
12/31/04 9,030
03/31/05 8,829
S&P 500
DATE value
---- -----
INCEPTION 1/29/99 10,000
3/31/99 10,076
6/30/99 10,786
9/30/99 10,112
12/31/99 11,616
3/31/00 11,883
06/30/00 11,568
09/30/00 11,456
12/31/00 10,561
03/31/01 9,309
06/30/01 9,854
09/30/01 8,409
12/31/01 9,308
03/31/02 9,333
06/30/02 8,083
09/30/02 6,687
12/31/02 7,252
03/31/03 7,023
06/30/03 8,105
09/30/03 8,319
12/31/03 9,333
03/31/04 9,491
06/30/04 9,655
09/30/04 9,474
12/31/04 10,349
03/31/05 10,126
$10,000 SINCE INCEPTION
This chart assumes a $10,000 investment in Class A shares of Enhanced Index
Series on January 29, 1999 (date of inception), reflects deduction of the 5.75%
sales load and assumes all dividends reinvested. The chart does not reflect the
deduction of taxes that a shareholder would pay on distributions or the
redemption of fund shares.
PORTFOLIO COMPOSITION BY SECTOR
Consumer Discretionary 11.26%
Consumer Staples 10.30
Energy 8.57
Financials 19.22
Health Care 12.63
Industrials 11.99
Information Technology 14.65
Materials 3.31
Telecommunication Services 3.05
Utilities 3.32
U.S. Government Securities 0.32
Repurchase Agreement 1.41
Liabilities, less cash & other assets (0.03)
AVERAGE ANNUAL RETURNS
PERIODS ENDED 3-31-05 1 YEAR 5 YEARS SINCE INCEPTION
- --------------------- ------ ------- -----------------
A Shares 5.03% (4.70%) (1.05%) (1-29-99)
A Shares with sales charge (0.97%) (5.82%) (2.00%) (1-29-99)
B Shares 4.30% (5.49%) (1.85%) (1-29-99)
B Shares with CDSC (0.70%) (5.87%) (1.85%) (1-29-99)
C Shares 4.16% (5.48%) (1.82%) (1-29-99)
C Shares with CDSC 3.16% (5.48%) (1.82%) (1-29-99)
The performance data above represent past performance that is not predictive of
future results. The investment return and principal value of an investment in
the Series will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost. The figures above do not reflect
deduction of the maximum front-end sales charge of 5.75% for Class A shares or
the contingent deferred sales charge of 5% for Class B shares and 1% for Class C
shares, as applicable, except where noted. The figures do not reflect the
deduction of taxes that a shareholder would pay on distributions or redemption
of shares. Such figures would be lower if the maximum sales charge and any
applicable taxes were deducted. Fee waivers reduced expenses of the Series and
in the absence of such waiver, the performance quoted would be reduced.
14 See accompanying notes.
SECURITY EQUITY FUND
Performance Summary ENHANCED INDEX SERIES
May 15, 2005 (unaudited)
PERFORMANCE
INFORMATION ABOUT YOUR SERIES EXPENSES
CALCULATING YOUR ONGOING SERIES EXPENSES
EXAMPLE
As a shareholder of the Series, you incur two types of costs: (1) transaction
costs, which may include sales charges (loads) on purchase payments; contingent
deferred sales charges on redemptions; and redemption fees, if any; and (2)
ongoing costs, including management fees; distribution and/or service fees
(12b-1); and other Series expenses. This Example is intended to help you
understand your ongoing costs (in dollars) of investing in the Series and to
compare these costs with ongoing costs of investing in other mutual funds. The
Example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period, October 1, 2004 - March 31, 2005.
ACTUAL EXPENSES
The first line for each class of shares in the table provides information about
actual account values and actual expenses. You may use the information in this
table, together with the amount you invested, to estimate the expenses that you
paid over the period. Simply divide your account value by $1,000 (for example,
an $8,600 account value divided by $1,000 = 8.6), then multiply the result by
the number in the table under the heading entitled "Expenses Paid During Period"
to estimate the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line for each class of shares in the table provides information about
hypothetical account values and hypothetical expenses based on the Series actual
expense ratio and an assumed rate of return of 5% per year before expenses,
which is not the Series actual return. The hypothetical account values and
expenses may not be used to estimate the actual ending account balance or
expenses you paid for the period. You may use this information to compare the
ongoing costs of investing in the Series and other funds. To do so, compare this
5% hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads) on purchase payments, contingent deferred sales charges on
redemptions, and redemption fees, if any. Therefore, the second line for each
class of shares is useful in comparing ongoing costs only, and will not help you
determine the relative total costs of owning different funds. In addition, if
these transactional costs were included, your costs would have been higher.
FUND EXPENSES
BEGINNING ENDING EXPENSES PAID
ACCOUNT VALUE ACCOUNT VALUE DURING
10-01-04 03-31-05(1) PERIOD(2)
-------- ----------- ---------
Enhanced Index
Series - Class A
Actual $ 1,000.00 $1,064.90 $ 7.88
Hypothetical 1,000.00 1,017.30 7.70
Enhanced Index
Series - Class B
Actual 1,000.00 1,059.40 11.76
Hypothetical 1,000.00 1,013.51 11.50
Enhanced Index
Series - Class C
Actual 1,000.00 1,059.30 11.76
Hypothetical 1,000.00 1,013.51 11.50
(1) The actual ending account value is based on the actual total return of the
Series for the period October 1, 2004 to March 31, 2005 after actual
expenses and will differ from the hypothetical ending account value which is
based on the Series expense ratio and a hypothetical annual return of 5%
before expenses. The actual cumulative return at net asset value for the
period October 1, 2004 to March 31, 2005 was 6.49%, 5.94% and 5.93%, for
Class A, B and C class shares, respectively.
(2) Expenses are equal to the Series annualized expense ratio (1.53%, 2.29% and
2.29% for Class A, B and C class shares, respectively), net of any
applicable fee waivers or earnings credits, multiplied by the average
account value over the period, multiplied by 182/365 (to reflect the
one-half year period).
15
SECURITY EQUITY FUND
Schedule of Investments ENHANCED INDEX SERIES
March 31, 2005 (unaudited)
NUMBER MARKET
OF SHARES VALUE
COMMON STOCKS - 98.3%
AEROSPACE & DEFENSE - 2.3%
Boeing Company 1,647 $ 96,284
General Dynamics Corporation 591 63,267
Honeywell International, Inc. 385 14,326
Lockheed Martin Corporation 1,088 66,433
Northrop Grumman Corporation 1,080 58,298
Raytheon Company 400 15,480
United Technologies Corporation 440 44,730
--------
358,818
--------
AGRICULTURAL PRODUCTS - 0.3%
Archer-Daniels-Midland Company 2,066 50,782
--------
AIR FREIGHT & LOGISTICS - 1.2%
FedEx Corporation 558 52,424
Ryder System, Inc. 200 8,340
United Parcel Service, Inc. (Cl.B) 1,658 120,603
--------
181,367
--------
ALUMINUM - 0.2%
Alcoa, Inc. 1,174 35,678
--------
APPAREL RETAIL - 0.3%
Limited Brands, Inc. 1,800 43,740
TJX Companies, Inc. 300 7,389
--------
51,129
--------
APPAREL, ACCESSORIES & LUXURY GOODS - 0.2%
Jones Apparel Group, Inc. 1,100 36,839
--------
APPLICATION SOFTWARE - 0.4%
Intuit, Inc.* 900 39,393
Parametric Technology Corporation* 3,293 18,408
--------
57,801
--------
ASSET MANAGEMENT & CUSTODY BANKS - 1.3%
Bank of New York Company, Inc. 2,136 62,051
Federated Investors, Inc. (Cl.B) 1,200 33,972
Mellon Financial Corporation 1,711 48,832
State Street Corporation 1,158 50,628
--------
195,483
--------
AUTO PARTS & EQUIPMENT - 0.1%
Dana Corporation 100 1,279
Delphi Corporation 800 3,584
Visteon Corporation 2,800 15,988
--------
20,851
--------
AUTOMOBILE MANUFACTURERS - 0.3%
Ford Motor Company 3,607 40,867
General Motors Corporation 259 7,612
--------
48,479
--------
BIOTECHNOLOGY - 1.1%
Amgen, Inc.* 1,264 73,577
Applera Corporation - Applied
Biosystems Group 1,800 35,532
Biogen Idec, Inc.* 100 3,451
Gilead Sciences, Inc.* 1,500 53,700
--------
166,260
--------
BREWERS - 0.3%
Anheuser-Busch Companies, Inc. 824 39,049
--------
BROADCASTING & CABLE TV - 0.9%
Clear Channel Communications, Inc. 1,636 56,393
Comcast Corporation* 2,179 73,607
Univision Communications, Inc.* 500 13,845
--------
143,845
--------
BUILDING PRODUCTS - 0.3%
Masco Corporation 1,504 52,144
--------
CASINOS & GAMING - 0.2%
International Game Technology 1,300 34,658
--------
COMMERCIAL PRINTING - 0.1%
R.R. Donnelley & Sons Company 700 22,134
--------
COMMUNICATIONS EQUIPMENT - 2.4%
Cisco Systems, Inc.* 10,802 193,248
Lucent Technologies, Inc.* 5,900 16,225
Motorola, Inc. 5,453 81,631
Qualcomm, Inc. 1,758 64,431
Tellabs, Inc.* 2,200 16,060
--------
371,595
--------
COMPUTER & ELECTRONICS RETAIL - 0.4%
Best Buy Company, Inc. 400 21,604
Circuit City Stores, Inc. 2,200 35,310
--------
56,914
--------
COMPUTER HARDWARE - 3.1%
Apple Computer, Inc.* 900 37,503
Dell, Inc.* 2,784 106,961
Hewlett-Packard Company 2,908 63,802
International Business Machines
Corporation 2,663 243,345
NCR Corporation* 70 2,362
Sun Microsystems, Inc.* 4,765 19,251
--------
473,224
--------
COMPUTER STORAGE & PERIPHERALS - 0.8%
EMC Corporation* 5,910 72,811
Lexmark International, Inc.* 600 47,982
--------
120,793
--------
CONSTRUCTION & FARM MACHINERY - 1.0%
Caterpillar, Inc. 193 17,648
Cummins, Inc. 400 28,140
Deere & Company 700 46,991
Navistar International Corporation* 100 3,640
Paccar, Inc. 698 50,528
--------
146,947
--------
CONSUMER FINANCE - 1.2%
American Express Company 2,223 114,196
MBNA Corporation 3,048 74,828
--------
189,024
--------
16 See accompanying notes.
SECURITY EQUITY FUND
Schedule of Investments ENHANCED INDEX SERIES
March 31, 2005 (unaudited)
NUMBER MARKET
OF SHARES VALUE
COMMON STOCKS (CONTINUED)
DATA PROCESSING & OUTSOURCED SERVICES - 0.8%
Affiliated Computer Services, Inc.* 300 $ 15,972
Automatic Data Processing, Inc. 317 14,249
Computer Sciences Corporation* 900 41,265
Convergys Corporation* 200 2,986
First Data Corporation 549 21,581
Sabre Holdings Corporation 1,600 35,008
--------
131,061
--------
DEPARTMENT STORES - 0.8%
Dillard's, Inc. 700 18,830
Federated Department Stores, Inc. 682 43,402
J.C. Penney Company, Inc. 600 31,152
Nordstrom, Inc. 400 22,152
Sears Holdings Corporation* 100 13,317
--------
128,853
--------
DISTILLERS & VINTNERS - 0.2%
Brown-Forman Corporation (Cl.B) 600 32,850
--------
DIVERSIFIED BANKS - 4.0%
Bank of America Corporation 6,192 273,067
Comerica, Inc. 800 44,064
U.S. Bancorp 1,534 44,210
Wachovia Corporation 1,697 86,394
Wells Fargo & Company 2,806 167,799
--------
615,534
--------
DIVERSIFIED CHEMICALS - 0.8%
Dow Chemical Company 741 36,939
E.I. du Pont de Nemours & Company 874 44,784
Eastman Chemical Company 600 35,400
Hercules, Inc.* 700 10,136
--------
127,259
--------
DIVERSIFIED COMMERCIAL SERVICES - 0.2%
Cendant Corporation 1,317 27,051
--------
DIVERSIFIED METALS & MINING - 0.2%
Phelps Dodge Corporation 300 30,519
--------
DRUG RETAIL - 0.2%
Walgreen Company 755 33,537
--------
ELECTRIC UTILITIES - 2.3%
CenterPoint Energy, Inc. 1,900 22,857
Consolidated Edison, Inc. 300 12,654
Entergy Corporation 746 52,712
Exelon Corporation 294 13,492
FirstEnergy Corporation 1,200 50,340
Pinnacle West Captial Corporation 800 34,008
Progress Energy, Inc. 1,070 44,886
Progress Energy, Inc. - Contingent
Value Obligation*(2) 400 48
Southern Company 2,061 65,602
TXU Corporation 700 55,741
--------
352,340
--------
ELECTRICAL COMPONENTS & EQUIPMENT - 0.3%
Emerson Electric Company 738 47,918
--------
ELECTRONIC EQUIPMENT MANUFACTURERS - 0.2%
Tektronix, Inc. 1,200 29,436
--------
ELECTRONIC MANUFACTURING SERVICES - 0.2%
Molex, Inc. (Voting) 1,000 26,360
Sanmina-SCI Corporation* 900 4,698
Solectron Corporation* 1,400 4,858
--------
35,916
--------
EMPLOYMENT SERVICES - 0.2%
Robert Half International, Inc. 1,344 36,234
--------
ENVIRONMENTAL SERVICES - 0.5%
Allied Waste Industries, Inc.* 2,300 16,813
Waste Management, Inc. 1,873 54,036
--------
70,849
--------
FOOD DISTRIBUTORS - 0.0%
Sysco Corporation 100 3,580
--------
FOOD RETAIL - 0.7%
Albertson's, Inc. 1,800 37,170
Kroger Company* 100 1,603
Safeway, Inc.* 1,798 33,317
Supervalu, Inc. 1,100 36,685
--------
108,775
--------
FOOTWEAR - 0.1%
Nike, Inc. (Cl.B) 100 8,331
--------
FOREST PRODUCTS - 0.2%
Louisiana-Pacific Corporation 1,213 30,495
--------
GAS UTILITIES - 0.3%
KeySpan Corporation 1,000 38,970
Nicor, Inc. 200 7,418
--------
46,388
--------
GENERAL MERCHANDISE STORES - 0.2%
Target Corporation 706 35,314
--------
GOLD - 0.3%
Newmont Mining Corporation 1,000 42,250
--------
HEALTH CARE DISTRIBUTORS - 0.3%
AmerisourceBergen Corporation 700 40,103
Cardinal Health, Inc. 82 4,576
--------
44,679
--------
HEALTH CARE EQUIPMENT - 1.9%
Becton, Dickinson & Company 899 52,520
Biomet, Inc. 1,200 43,560
Boston Scientific Corporation* 1,399 40,977
Medtronic, Inc. 2,293 116,828
Thermo Electron Corporation* 1,399 35,381
Waters Corporation* 100 3,579
--------
292,845
--------
17 See accompanying notes.
SECURITY EQUITY FUND
Schedule of Investments ENHANCED INDEX SERIES
March 31, 2005 (unaudited)
NUMBER MARKET
OF SHARES VALUE
COMMON STOCKS (CONTINUED)
HEALTH CARE FACILITIES - 0.2%
Manor Care, Inc. 948 $ 34,469
--------
HEALTH CARE SERVICES - 0.8%
IMS Health, Inc. 1,189 29,000
Laboratory Corporation of America Holdings* 800 38,560
Medco Health Soulutions, Inc.* 200 9,914
Quest Diagnostics, Inc. 400 42,052
--------
119,526
--------
HEALTH CARE SUPPLIES - 0.2%
Millipore Corporation* 600 26,040
--------
HOME FURNISHINGS - 0.2%
Leggett & Platt, Inc. 1,300 37,544
--------
HOME IMPROVEMENT RETAIL - 1.5%
Home Depot, Inc. 3,908 149,442
Lowe's Companies, Inc. 1,572 89,745
--------
239,187
--------
HOTELS, RESORTS & CRUISE LINES - 0.3%
Carnival Corporation 200 10,362
Hilton Hotels Corporation 1,900 42,465
--------
52,827
--------
HOUSEHOLD APPLIANCES - 0.2%
Stanley Works 800 36,216
--------
HOUSEHOLD PRODUCTS - 1.9%
Clorox Company 664 41,825
Colgate-Palmolive Company 143 7,460
Kimberly-Clark Corporation 1,096 72,040
Procter & Gamble Company 3,324 176,172
--------
297,497
--------
HOUSEWARES & SPECIALTIES - 0.3%
Newell Rubbermaid, Inc. 1,800 39,492
--------
HYPERMARKETS & SUPERCENTERS - 2.1%
Costco Wholesale Corporation 1,153 50,940
Wal-Mart Stores, Inc. 5,383 269,742
--------
320,682
--------
INDUSTRIAL CONGLOMERATES - 4.6%
3M Company 727 62,297
General Electric Company 14,041 506,318
Textron, Inc. 300 22,386
Tyco International, Ltd. 3,679 124,350
--------
715,351
--------
INDUSTRIAL GASES - 0.3%
Air Products & Chemicals, Inc. 800 50,632
--------
INDUSTRIAL MACHINERY - 0.6%
Dover Corporation 1,000 37,790
Illinois Tool Works, Inc. 692 61,955
--------
99,745
--------
INSURANCE BROKERS - 0.0%
Marsh & McLennan Companies, Inc. 225 6,844
--------
INTEGRATED OIL & GAS - 6.2%
Amerada Hess Corporation 400 38,484
ChevronTexaco Corporation 3,464 201,986
ConocoPhillips 949 102,340
Exxon Mobil Corporation 9,515 567,094
Marathon Oil Corporation 1,100 51,612
Occidental Petroleum Corporation 100 7,117
--------
968,633
--------
INTEGRATED TELECOMMUNICATION SERVICES - 2.9%
AT&T Corporation 1,100 20,625
BellSouth Corporation 3,621 95,196
CenturyTel, Inc. 400 13,136
Citizens Communications Company 800 10,352
Qwest Communications International, Inc.* 2,238 8,281
SBC Communications, Inc. 5,044 119,492
Sprint Corporation 689 15,675
Verizon Communications, Inc. 4,730 167,915
--------
450,672
--------
INTERNET RETAIL - 0.5%
eBay, Inc.* 1,872 69,751
--------
INTERNET SOFTWARE & SERVICES - 0.2%
Yahoo!, Inc.* 1,084 36,748
--------
INVESTMENT BANKING & BROKERAGE - 1.5%
Bear Sterns Companies, Inc. 400 39,960
E*Trade Financial Corporation* 3,000 36,000
Goldman Sachs Group, Inc. 338 37,177
Lehman Brothers Holdings, Inc. 100 9,416
Merrill Lynch & Company, Inc. 825 46,695
Morgan Stanley 982 56,219
--------
225,467
--------
IT CONSULTING & OTHER SERVICES - 0.1%
Unisys Corporation* 2,500 17,650
--------
LEISURE PRODUCTS - 0.2%
Brunswick Corporation 800 37,480
--------
LIFE & HEALTH INSURANCE - 1.3%
AFLAC, Inc. 1,071 39,905
Jefferson-Pilot Corporation 532 26,095
Lincoln National Corporation 426 19,230
MetLife, Inc. 1,413 55,248
Prudential Financial, Inc. 667 38,286
Torchmark Corporation 400 20,880
--------
199,644
--------
18 See accompanying notes.
SECURITY EQUITY FUND
Schedule of Investments ENHANCED INDEX SERIES
March 31, 2005 (unaudited)
NUMBER MARKET
OF SHARES VALUE
COMMON STOCKS (CONTINUED)
MANAGED HEALTH CARE - 1.1%
Cigna Corporation 500 $ 44,650
Humana, Inc.* 1,200 38,328
UnitedHealth Group, Inc. 616 58,754
WellPoint, Inc.* 219 27,452
----------
169,184
----------
METAL & GLASS CONTAINERS - 0.2%
Pactiv Corporation* 1,500 35,025
----------
MOTORCYCLE MANUFACTURERS - 0.3%
Harley-Davidson, Inc. 847 48,923
----------
MOVIES & ENTERTAINMENT - 2.0%
News Corporation 2,300 38,916
Time Warner, Inc.* 5,913 103,773
Viacom, Inc. (Cl.B) 3,113 108,426
Walt Disney Company 1,833 52,662
----------
303,777
----------
MULTI-LINE INSURANCE - 1.5%
American International Group, Inc. 3,919 217,152
Hartford Financial Services Group, Inc. 200 13,712
Loews Corporation 100 7,354
----------
238,218
----------
MULTI-UTILITIES & UNREGULATED POWER - 0.8%
Calpine Corporation* 5,500 15,400
Dominion Resources, Inc. 400 29,772
Duke Energy Corporation 1,900 53,219
Dynegy, Inc.* 4,400 17,204
----------
115,595
----------
OFFICE ELECTRONICS - 0.1%
Xerox Corporation* 594 8,999
----------
OFFICE SERVICES & SUPPLIES - 0.0%
Pitney Bowes, Inc. 100 4,512
----------
OIL & GAS DRILLING - 0.3%
Nabors Industries, Ltd.* 300 17,742
Rowan Companies, Inc.* 900 26,937
----------
44,679
----------
OIL & GAS EQUIPMENT & SERVICES - 1.0%
BJ Services Company 773 40,103
Baker Hughes, Inc. 1,200 53,388
Schlumberger, Ltd. 783 55,186
----------
148,677
----------
OIL & GAS EXPLORATION & PRODUCTION - 1.0%
Anadarko Petroleum Corporation 700 53,270
Burlington Resources, Inc. 862 43,160
Devon Energy Corporation 1,300 62,075
----------
158,505
----------
OIL & GAS REFINING, MARKETING & TRANSPORTATION - 0.1%
Williams Companies, Inc. 500 9,405
----------
OTHER DIVERSIFIED FINANCIAL SERVICES - 3.5%
Citigroup, Inc. 7,827 351,745
JP Morgan Chase & Company 4,133 143,002
Principal Financial Group, Inc. 1,192 45,880
----------
540,627
----------
PACKAGED FOODS & MEATS - 0.8%
ConAgra Foods, Inc. 1,900 51,338
H.J. Heinz Company 400 14,736
Sara Lee Corporation 2,419 53,605
----------
119,679
----------
PAPER PACKAGING - 0.1%
Sealed Air Corporation* 300 15,582
----------
PAPER PRODUCTS - 0.3%
Georgia-Pacific Corporation 639 22,678
International Paper Company 540 19,867
MeadWestvaco Corporation 100 3,182
----------
45,727
----------
PERSONAL PRODUCTS - 0.5%
Avon Products, Inc. 300 12,882
Gillette Company 1,367 69,006
----------
81,888
----------
PHARMACEUTICALS - 7.1%
Abbott Laboratories 2,803 130,676
Bristol-Myers Squibb Company 1,587 40,405
Eli Lilly & Company 1,943 101,230
Forest Laboratories, Inc.* 1,238 45,744
Hospira, Inc.* 200 6,454
Johnson & Johnson 4,647 312,093
Merck & Company, Inc. 3,076 99,570
Pfizer, Inc. 10,980 288,445
Schering-Plough Corporation 427 7,750
Wyeth 1,760 74,237
----------
1,106,604
----------
PROPERTY & CASUALTY INSURANCE - 1.1%
Ace, Ltd. 100 4,127
Allstate Corporation 710 38,383
Ambac Financial Group, Inc. 100 7,475
Chubb Corporation 100 7,927
Cincinnati Financial Corporation 540 23,549
MBIA, Inc. 500 26,140
Progressive Corporation 400 36,704
St. Paul Travelers Companies, Inc. 483 17,741
XL Capital, Ltd. 100 7,237
----------
169,283
----------
PUBLISHING - 1.1%
Gannett Company, Inc. 420 33,214
Knight-Ridder, Inc. 430 28,917
Meredith Corporation 600 28,050
New York Times Company 1,100 40,238
Tribune Company 1,000 39,870
----------
170,289
----------
19 See accompanying notes.
SECURITY EQUITY FUND
Schedule of Investments ENHANCED INDEX SERIES
March 31, 2005 (unaudited)
NUMBER MARKET
OF SHARES VALUE
COMMON STOCKS (CONTINUED)
RAILROADS - 0.4%
Burlington Northern Santa Fe Corporation 524 $ 28,259
CSX Corporation 100 4,165
Norfolk Southern Corporation 900 33,345
------------
65,769
------------
REAL ESTATE INVESTMENT TRUSTS - 0.4%
Archstone-Smith Trust 300 10,233
Equity Office Properties Trust 1,104 33,264
Equity Residential 500 16,105
------------
59,602
------------
REGIONAL BANKS - 1.9%
AmSouth Bancorporation 300 7,785
BB&T Corporation 400 15,632
Fifth Third Bancorp 1,289 55,401
First Horizon National Corporation 807 32,918
Huntington Bancshares, Inc. 1,600 38,240
KeyCorp 1,000 32,450
National City Corporation 1,762 59,027
North Fork Bancorporation, Inc. 1,700 47,158
SunTrust Banks, Inc. 7 504
------------
289,115
------------
RESTAURANTS - 0.8%
Darden Restaurants, Inc. 1,200 36,816
McDonald's Corporation 2,687 83,673
------------
120,489
------------
SEMICONDUCTOR EQUIPMENT - 0.1%
Applied Materials, Inc.* 543 8,824
------------
SEMICONDUCTORS - 2.8%
Advanced Micro Devices, Inc.* 1,000 16,120
Analog Devices, Inc. 1,158 41,850
Applied Micro Circuits Corporation* 400 1,316
Freescale Semiconductor, Inc. (Cl.B)* 2,337 40,313
Intel Corporation 10,123 235,157
Maxim Integrated Products, Inc. 100 4,087
Micron Technology, Inc.* 2,400 24,816
Texas Instruments, Inc. 2,925 74,558
------------
438,217
------------
SOFT DRINKS - 1.9%
Coca-Cola Company 3,915 163,138
Pepsi Bottling Group, Inc. 1,400 38,990
PepsiCo, Inc. 1,736 92,060
------------
294,188
------------
SPECIALIZED FINANCE - 0.1%
CIT Group, Inc. 500 19,000
------------
SPECIALTY CHEMICALS - 0.5%
Rohm & Haas Company 900 43,200
Sigma-Aldrich Corporation 517 31,666
------------
74,866
------------
SPECIALTY STORES - 0.2%
Bed Bath & Beyond, Inc.* 700 25,578
------------
PRINCIPAL
AMOUNT OR
NUMBER MARKET
OF SHARES VALUE
STEEL - 0.2%
Allegheny Technologies, Inc. 600 14,466
Nucor Corporation 200 11,512
------------
25,978
------------
SYSTEMS SOFTWARE - 3.5%
BMC Software, Inc.* 2,300 34,500
Computer Associates International, Inc. 410 11,111
Microsoft Corporation 15,005 362,671
Novell, Inc.* 600 3,576
Oracle Corporation* 6,306 78,699
Symantec Corporation* 2,400 51,192
------------
541,749
------------
THRIFTS & MORTGAGE FINANCE - 1.5%
Countrywide Financial Corporation 1,700 55,182
Fannie Mae 1,321 71,928
Freddie Mac 755 47,716
MGIC Investment Corporation 600 37,002
Washington Mutual, Inc. 525 20,738
------------
232,566
------------
TOBACCO - 1.4%
Altria Group, Inc. 2,881 188,389
Reynolds American, Inc. 200 16,118
UST, Inc. 200 10,340
------------
214,847
------------
TRADING COMPANIES & DISTRIBUTORS - 0.2%
W.W. Grainger, Inc. 500 31,135
------------
WIRELESS TELECOMMUNICATION SERVICE - 0.1%
Nextel Communications, Inc.* 762 21,656
------------
TOTAL COMMON STOCKS
(cost $14,287,622) 15,246,682
------------
U.S. GOVERNMENT SECURITIES - 0.3%
U.S. Treasury Bill, 2.869% - 2005(1) $ 50,000 49,603
------------
TOTAL U.S. GOVERNMENT SECURITIES
(cost $49,595) 49,603
------------
REPURCHASE AGREEMENT - 1.4%
United Missouri Bank, 2.34%, dated 03-31-05,
matures 04-01-05; repurchase amount of
$219,014 (Collateralized by FHLMC, 4.00%,
11-01-08 with a value of $223,380) $ 219,000 219,000
------------
TOTAL REPURCHASE AGREEMENT
(cost $219,000) 219,000
------------
TOTAL INVESTMENTS - 100.0%
(cost $14,556,217) 15,515,285
LIABILITIES, LESS CASH & OTHER ASSETS - 0.0% (5,825)
------------
TOTAL NET ASSETS - 100.0% $ 15,509,460
============
20 See accompanying notes.
SECURITY EQUITY FUND
Schedule of Investments ENHANCED INDEX SERIES
March 31, 2005 (unaudited)
For federal income tax purposes the identified cost of investments owned at
March 31, 2005 was $15,240,606.
*Non-income producing security
(1) Security is segragated as collateral for futures contracts.
(2) Security is restricted. The total market value of restricted securities is
$48 (cost $190), or 0.0% of total net assets. The acquisition dates range
from November 8, 1999 to September 28, 2000.
21 See accompanying notes.
SECURITY EQUITY FUND
ENHANCED INDEX SERIES
(unaudited)
Statement of Assets and Liabilities
March 31, 2005
ASSETS:
Investments, at value(1) ........................ $ 15,515,285
Cash ............................................ 100,821
Receivables:
Fund shares sold ............................. 6,043
Securities sold .............................. 472,400
Dividends .................................... 20,068
Prepaid expenses ................................ 21,922
------------
Total assets .................................... 16,136,539
------------
LIABILITIES:
Payable for:
Securities purchased ......................... 483,961
Fund shares redeemed ......................... 9,581
Variation margin ............................. 382
Management fees .............................. 6,666
Transfer agent and administration fees ....... 4,209
Professional fees ............................ 5,019
12b-1 distribution plan fees ................. 116,429
Other ........................................ 832
------------
Total liabilities ............................... 627,079
------------
NET ASSETS ...................................... $ 15,509,460
============
NET ASSETS CONSIST OF:
Paid in capital ................................. $ 19,639,699
Accumulated undistributed net investment
income ....................................... 45,483
Accumulated net realized loss
on sale of investments and futures ........... (5,130,081)
Net unrealized appreciation in value of
investments and futures ...................... 954,358
------------
Net assets ...................................... $ 15,509,460
============
CLASS A:
Capital shares outstanding
(unlimited number of shares authorized) ...... 750,659
Net assets ...................................... $ 6,895,439
Net asset value and redemption price
per share .................................... $ 9.19
============
Maximum offering price per share (net asset value
divided by 94.25%) ........................... $ 9.75
============
CLASS B:
Capital shares outstanding
(unlimited number of shares authorized) ...... 585,132
Net assets ...................................... $ 5,112,528
Net asset value, offering and redemption price
per share (excluding any applicable contingent
deferred sales charge) ....................... $ 8.74
============
CLASS C:
Capital shares outstanding
(unlimited number of shares authorized) ...... 399,618
Net assets ...................................... $ 3,501,493
Net asset value, offering and redemption price
per share (excluding any applicable
contingent deferred sales charge) ............ $ 8.76
============
(1)Investments, at cost ......................... $ 14,556,217
Statement of Operations
For the Six Months Ended March 31, 2005
INVESTMENT INCOME:
Dividends .................................... $ 198,344
Interest ..................................... 3,161
---------
Total investment income ...................... 201,505
---------
EXPENSES:
Management fees .............................. 60,301
Custodian fees ............................... 6,181
Transfer agent/maintenance fees .............. 19,887
Administration fees .......................... 13,966
Directors' fees .............................. 177
Professional fees ............................ 4,634
Reports to shareholders ...................... 459
Registration fees ............................ 16,318
Other expenses ............................... 793
12b-1 distribution plan fees - Class A ....... 8,999
12b-1 distribution plan fees - Class B ....... 27,092
12b-1 distribution plan fees - Class C ....... 17,315
---------
Total expenses ............................... 176,122
Less: Expenses waived ........................ (20,100)
---------
Net expenses ................................. 156,022
---------
Net investment income ........................ 45,483
---------
NET REALIZED AND UNREALIZED GAIN:
Net realized gain during the period on:
Investments .................................. 697,309
Futures ...................................... 21,245
---------
Net realized gain ............................ 718,554
---------
Unrealized appreciation (depreciation)
during the period on:
Investments .................................. 212,398
Futures ...................................... (1,384)
---------
Net unrealized appreciation .................. 211,014
---------
Net gain ..................................... 929,568
---------
Net increase in net assets
resulting from operations .................. $ 975,051
=========
22 See accompanying notes.
SECURITY EQUITY FUND
Statement of Changes in Net Assets ENHANCED INDEX SERIES
SIX MONTHS ENDED
MARCH 31, 2005 YEAR ENDED
(unaudited) SEPTEMBER 30, 2004
---------------- -------------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income (loss)............................................ $ 45,483 $ (35,469)
Net realized gain during the period on investments and futures.......... 718,554 1,114,969
Unrealized appreciation during the period on investments and futures.... 211,014 612,275
------------ -------------
Net increase in net assets resulting from operations.................... 975,051 1,691,775
------------ -------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from sale of shares
Class A................................................................ 751,931 1,834,103
Class B................................................................ 239,187 912,388
Class C................................................................ 404,529 1,337,801
Cost of shares redeemed
Class A................................................................ (1,331,438) (1,977,745)
Class B................................................................ (754,715) (1,094,636)
Class C................................................................ (378,394) (1,397,756)
------------ -------------
Net decrease from capital share transactions............................ (1,068,900) (385,845)
------------ -------------
Net increase (decrease) in net assets................................... (93,849) 1,305,930
------------ -------------
NET ASSETS:
Beginning of period..................................................... 15,603,309 14,297,379
------------ -------------
End of period........................................................... $ 15,509,460 $ 15,603,309
============ =============
Accumulated undistributed net investment income at end of period........ $ 45,483 $ -
============ =============
CAPITAL SHARE ACTIVITY:
Shares sold
Class A................................................................ 82,391 214,183
Class B................................................................ 27,162 110,168
Class C................................................................ 46,313 163,235
Shares redeemed
Class A................................................................ (144,375) (230,862)
Class B................................................................ (85,424) (132,909)
Class C................................................................ (43,572) (169,518)
23 See accompanying notes.
SECURITY EQUITY FUND
Financial Highlights ENHANCED INDEX SERIES
Selected data for each share of capital stock
outstanding throughout each period
SIX MONTHS ENDED
MARCH 31, YEAR ENDED SEPTEMBER 30,
CLASS A 2005(g) 2004 2003(f) 2002 2001 2000
- ------- ---------------- ---- ------- ---- ---- ------
PER SHARE DATA
Net asset value, beginning of period $ 8.63 $ 7.69 $ 6.30 $ 8.03 $ 11.29 $10.04
------- ------- ------- ------- ------- ------
Income (loss) from investment operations:
Net investment income (loss)(c) 0.05 0.02 - (0.01) - -
Net gain (loss) on securities (realized
and unrealized) 0.51 0.92 1.39 (1.72) (3.17) 1.37
------- ------- ------- ------- ------- ------
Total from investment operations 0.56 0.94 1.39 (1.73) (3.17) 1.37
------- ------- ------- ------- ------- ------
Less distributions:
Dividends from net investment income - - - - - -
Distributions from realized gains - - - - (0.09) (0.12)
------- ------- ------- ------- ------- ------
Total distributions - - - - (0.09) (0.12)
------- ------- ------- ------- ------- ------
Net asset value, end of period $ 9.19 $ 8.63 $ 7.69 $ 6.30 $ 8.03 $11.29
======= ======= ======= ======= ======= ======
TOTAL RETURN(a) 6.49% 12.22% 22.06% (21.54%) (28.27%) 13.65%
------- ------- ------- ------- ------- ------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $ 6,895 $ 7,017 $ 6,377 $ 7,171 $ 6,699 $8,219
------- ------- ------- ------- ------- ------
Ratios to average net assets:
Net investment income (loss) 0.99% 0.19% 0.00% (0.10%) 0.02% (0.05%)
Total expenses 1.53% 1.55% 1.73% 1.61% 1.42% 1.44%
Gross expenses(b) 1.78% 1.80% 1.83% 1.61% 1.42% 1.44%
Net expenses(d) 1.53% 1.54% 1.73% 1.61% 1.42% 1.44%
------- ------- ------- ------- ------- ------
Portfolio turnover rate 106% 79% 60% 62% 40% 73%
SIX MONTHS ENDED
MARCH 31, YEAR ENDED SEPTEMBER 30,
CLASS B 2005(g) 2004 2003(f) 2002 2001 2000
- ------- ------- ---- ------- ---- ---- ----
PER SHARE DATA
Net asset value, beginning of period $ 8.25 $ 7.40 $ 6.11 $ 7.87 $ 11.15 $ 9.99
------- ------- ------ ------- ------- --------
Income (loss) from investment operations:
Net investment income (loss)(c) 0.01 (0.05) (0.05) (0.07) (0.08) (0.09)
Net gain (loss) on securities (realized
and unrealized) 0.48 0.90 1.34 (1.69) (3.11) 1.37
------- ------- ------ ------- ------- --------
Total from investment operations 0.49 0.85 1.29 (1.76) (3.19) 1.28
------- ------- ------ ------- ------- --------
Less distributions:
Dividends from net investment income - - - - - -
Distributions from realized gains - - - - (0.09) (0.12)
------- ------- ------ ------- ------- --------
Total distributions - - - - (0.09) (0.12)
------- ------- ------ ------- ------- --------
Net asset value, end of period $ 8.74 $ 8.25 $ 7.40 $ 6.11 $ 7.87 $ 11.15
======= ======= ====== ======= ======= ========
TOTAL RETURN(a) 5.94% 11.49% 21.11% (22.36%) (28.81%) 12.82%
------- ------- ------ ------- ------- --------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $ 5,113 $ 5,305 $4,929 $ 6,125 $ 7,360 $ 10,960
------- ------- ------ ------- ------- --------
Ratios to average net assets:
Net investment income (loss) 0.23% (0.56%) (0.75%) (0.84%) (0.74%) (0.79%)
Total expenses 2.29% 2.30% 2.48% 2.35% 2.17% 2.18%
Gross expenses(b) 2.54% 2.55% 2.58% 2.35% 2.17% 2.18%
Net expenses(d) 2.29% 2.29% 2.48% 2.35% 2.17% 2.18%
------- ------- ------ ------- ------- --------
Portfolio turnover rate 106% 79% 60% 62% 40% 73%
------- ------- ------ ------- ------- --------
24 See accompanying notes.
Financial Highlights
Selected data for each share of capital stock SECURITY EQUITY FUND
outstanding throughout each period ENHANCED INDEX SERIES
SIX MONTHS
ENDED MARCH 31, YEAR ENDED SEPTEMBER 30,
CLASS C 2005(g) 2004 2003(f) 2002(e) 2001 2000
- ------------------------------------------------------- ---------------- -------- ---------- ---------- --------- ----------
PER SHARE DATA
Net asset value, beginning of period $ 8.27 $ 7.42 $ 6.12 $ 7.88 $ 11.16 $ 10.00
-------- ------ -------- -------- ------- -------
Income (loss) from investment operations:
Net investment income (loss)(c) 0.01 (0.05) (0.05) (0.07) (0.08) (0.09)
Net gain (loss) on securities (realized and unrealized) 0.48 0.90 1.35 (1.69) (3.11) 1.37
-------- ------ -------- -------- ------- -------
Total from investment operations 0.49 0.85 (1.30) (1.76) (3.19) 1.28
-------- ------ -------- -------- ------- -------
Less distributions:
Dividends from net investment income - - - - - -
Distributions from realized gains - - - - (0.09) (0.12)
-------- ------ -------- -------- ------- -------
Total distributions - - - - (0.09) (0.12)
-------- ------ -------- -------- ------- -------
Net asset value, end of period $ 8.76 $ 8.27 $ 7.42 $ 6.12 $ 7.88 $ 11.16
======== ====== ======== ======== ======= =======
TOTAL RETURN(a) 5.93% 11.46% 21.24% (22.34%) (28.78%) 12.69%
-------- ------ -------- -------- ------- -------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $ 3,501 $3,281 $ 2,991 $ 4,129 $ 4,840 $ 7,092
-------- ------ -------- -------- ------- -------
Ratios to average net assets:
Net investment income (loss) 0.21% (0.56%) (0.74%) (0.85%) (0.74%) (0.77%)
Total expenses 2.29% 2.30% 2.47% 2.35% 2.17% 2.15%
Gross expenses(b) 2.54% 2.55% 2.57% 2.35% 2.17% 2.15%
Net expenses(d) 2.29% 2.29% 2.47% 2.35% 2.17% 2.15%
-------- ------ -------- -------- ------- -------
Portfolio turnover rate 106% 79% 60% 62% 40% 73%
(a) Total return information does not reflect deduction of any sales charges
imposed at the time of purchase for Class A shares or upon redemption for
Class B and C.
(b) Gross expense information reflects expense ratios absent fund expense
reductions by the Investment Manager.
(c) Net investment income (loss) was computed using average shares outstanding
throughout the period.
(d) Net expense information reflects expense ratios after expense reductions
or fee waivers and reduction to custodian expenses.
(e) The financial highlights for Class C shares exclude the historical
financial highlights of Class S shares. Class S shares were exchanged for
Class C shares on June 3, 2002.
(f) Northern Trust became the sub-adviser for Enhanced Index Series effective
May 1, 2003. Prior to May 1, 2003 Security Management Company, LLC (SMC)
paid Deutsch Asset Management, Inc. for sub-advisory services.
(g) Unaudited figures for the six months ended March 31, 2005. Percentage
amounts for the period, except total return, have been annualized.
25 See accompanying notes.
This page left blank intentionally.
26
SECURITY EQUITY FUND
Equity Series
[SECURITY FUNDS LOGO]
ADVISOR,
SECURITY MANAGEMENT COMPANY, LLC
27
SECURITY EQUITY FUND
Performance Summary EQUITY SERIES
May 15, 2005 (unaudited)
PERFORMANCE
SECURITY EQUITY SERIES VS. S&P 500 INDEX
[PERFORMANCE GRAPH]
EQUITY
DATE value
03/31/95 9,425
06/30/95 10,358
09/30/95 11,158
12/31/95 11,885
03/31/96 12,846
06/30/96 13,401
09/30/96 13,937
12/31/96 14,580
03/31/97 14,681
06/30/97 17,172
09/30/97 18,407
12/31/97 18,895
03/31/98 21,594
06/30/98 22,264
09/30/98 19,765
12/31/98 23,896
03/31/99 24,136
06/30/99 25,476
09/30/99 23,848
12/31/99 26,522
3/31/00 26,794
6/30/00 26,026
9/30/00 25,431
12/31/00 23,200
03/31/01 20,278
06/30/01 21,638
09/30/01 18,398
12/31/01 20,452
03/31/02 20,336
06/30/02 17,356
09/30/02 14,724
12/31/02 15,621
03/31/03 15,187
06/30/03 17,067
09/30/03 17,299
12/31/03 18,890
03/31/04 19,093
06/30/04 19,354
09/30/04 18,832
12/31/04 20,284
03/31/05 19,633
S& P 500 - EQUITY
DATE value
- ---------------------- ------
INCEPTION 3/31/95 10,000
6/30/95 10,955
9/30/95 11,826
12/31/95 12,538
3/31/96 13,211
6/30/96 13,803
9/30/96 14,230
12/31/96 15,416
3/31/97 15,829
6/30/97 18,593
9/30/97 19,987
12/31/97 20,562
3/31/98 23,430
6/30/98 24,204
9/30/98 21,796
12/31/98 26,436
3/31/99 27,757
6/30/99 29,713
9/30/99 27,857
12/31/99 32,002
3/31/00 32,737
06/30/00 31,869
09/30/00 31,561
12/31/00 29,094
03/31/01 25,646
06/30/01 27,148
09/30/01 23,165
12/31/01 25,642
03/31/02 25,712
06/30/02 22,268
09/30/02 18,422
12/31/02 19,978
03/31/03 19,349
06/30/03 22,327
09/30/03 22,918
12/31/03 25,711
03/31/04 26,147
06/30/04 26,598
09/30/04 26,099
12/31/04 28,509
03/31/05 27,895
$10,000 OVER TEN YEARS
This chart assumes a $10,000 investment in Class A shares of Equity Series on
March 31, 1995, reflects deduction of the 5.75% sales load and assumes all
dividends reinvested. The chart does not reflect the deduction of taxes that a
shareholder would pay on distributions or the redemption of fund shares.
PORTFOLIO COMPOSITION BY SECTOR
Consumer Discretionary 14.38%
Consumer Staples 9.97
Energy 7.99
Financials 18.69
Health Care 13.69
Industrials 15.49
Information Technology 14.05
Materials 2.84
Telecommunication Services 1.78
Exchange Traded Funds 1.02
Commercial Paper 0.35
Repurchase Agreement 0.21
Liabilities, less cash & other assets (0.46)
AVERAGE ANNUAL RETURNS
SINCE
PERIODS ENDED 3-31-05 1 YEAR 5 YEARS 10 YEARS INCEPTION
- -------------------------- ------- ------- -------- ----------
A Shares 2.83% (6.03%) 7.62% -
A Shares with sales charge (3.05%) (7.14%) 6.98% -
B Shares 1.93% (6.88%) 6.79% -
B Shares with CDSC (3.07%) (7.25%) 6.79% -
C Shares 2.01% (6.84%) N/A (4.26%)
(1-29-99)
C Shares with CDSC 1.01% (6.84%) N/A (4.26%)
(1-29-99)
The performance data above represent past performance that is not predictive of
future results. The investment return and principal value of an investment in
the Series will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost. The figures above do not reflect
deduction of the maximum front-end sales charge of 5.75% for Class A shares or
the contingent deferred sales charge of 5% for Class B shares and 1% for Class C
shares, as applicable, except where noted. The figures do not reflect the
deduction of taxes that a shareholder would pay on distributions or redemption
of shares. Such figures would be lower if the maximum sales charge and any
applicable taxes were deducted.
28 See accompanying notes.
SECURITY EQUITY FUND
Performance Summary EQUITY SERIES
May 15, 2005 (unaudited)
PERFORMANCE
INFORMATION ABOUT YOUR SERIES EXPENSES
CALCULATING YOUR ONGOING SERIES EXPENSES
EXAMPLE
As a shareholder of the Series, you incur two types of costs: (1) transaction
costs, which may include sales charges (loads) on purchase payments; contingent
deferred sales charges on redemptions; and redemption fees, if any; and (2)
ongoing costs, including management fees; distribution and/or service fees
(12b-1); and other Series expenses. This Example is intended to help you
understand your ongoing costs (in dollars) of investing in the Series and to
compare these costs with ongoing costs of investing in other mutual funds. The
Example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period, October 1, 2004 - March 31, 2005.
ACTUAL EXPENSES
The first line for each class of shares in the table provides information about
actual account values and actual expenses. You may use the information in this
table, together with the amount you invested, to estimate the expenses that you
paid over the period. Simply divide your account value by $1,000 (for example,
an $8,600 account value divided by $1,000 = 8.6), then multiply the result by
the number in the table under the heading entitled "Expenses Paid During Period"
to estimate the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line for each class of shares in the table provides information about
hypothetical account values and hypothetical expenses based on the Series actual
expense ratio and an assumed rate of return of 5% per year before expenses,
which is not the Series actual return. The hypothetical account values and
expenses may not be used to estimate the actual ending account balance or
expenses you paid for the period. You may use this information to compare the
ongoing costs of investing in the Series and other funds. To do so, compare this
5% hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads) on purchase payments, contingent deferred sales charges on
redemptions, and redemption fees, if any. Therefore, the second line for each
class of shares is useful in comparing ongoing costs only, and will not help you
determine the relative total costs of owning different funds. In addition, if
these transactional costs were included, your costs would have been higher.
FUND EXPENSES
BEGINNING ENDING EXPENSES
ACCOUNT ACCOUNT PAID
VALUE VALUE DURING
10-01-04 03-31-05(1) PERIOD(2)
---------- ----------- ---------
Equity Series - Class A
Actual $ 1,000.00 $ 1,042.50 $ 6.72
Hypothetical 1,000.00 1,018.35 6.64
Equity Series - Class B
Actual 1,000.00 1,036.70 10.51
Hypothetical 1,000.00 1,014.61 10.40
Equity Series - Class C
Actual 1,000.00 1,036.60 10.51
Hypothetical 1,000.00 1,014.61 10.40
(1) The actual ending account value is based on the actual total return of the
Series for the period October 1, 2004 to March 31, 2005 after actual
expenses and will differ from the hypothetical ending account value which
is based on the Series expense ratio and a hypothetical annual return of
5% before expenses. The actual cumulative return at net asset value for
the period October 1, 2004 to March 31, 2005 was 4.25%, 3.67% and 3.66%,
for Class A, B and C class shares, respectively.
(2) Expenses are equal to the Series annualized expense ratio (1.32%, 2.07%
and 2.07% for Class A, B and C class shares, respectively) multiplied by
the average account value over the period, multiplied by 182/365 (to
reflect the one-half year period).
29
SECURITY EQUITY FUND
Schedule of Investments EQUITY SERIES
March 31, 2005 (unaudited)
NUMBER MARKET
OF SHARES VALUE
--------- -----------
COMMON STOCKS - 99.9%
AEROSPACE & DEFENSE - 4.9%
General Dynamics Corporation 88,400 $ 9,463,220
L-3 Communications Holdings, Inc. 42,000 2,982,840
United Technologies Corporation 84,400 8,580,104
-----------
21,026,164
-----------
AIR FREIGHT & LOGISTICS - 2.2%
FedEx Corporation 99,000 9,301,050
-----------
AIRLINES - 1.1%
Southwest Airlines Company 327,800 4,667,872
-----------
ALUMINUM - 1.0%
Alcoa, Inc. 145,000 4,406,550
-----------
ASSET MANAGEMENT & CUSTODY BANKS - 1.4%
Bank of New York Company, Inc. 200,000 5,810,000
-----------
BIOTECHNOLOGY - 1.2%
Amgen, Inc.* 89,500 5,209,795
-----------
BREWERS - 1.6%
Anheuser-Busch Companies, Inc. 140,000 6,634,600
-----------
BROADCASTING & CABLE TV - 1.6%
Comcast Corporation* 94,900 3,205,722
Univision Communications, Inc.* 122,000 3,378,180
-----------
6,583,902
-----------
COMMUNICATIONS EQUIPMENT - 2.9%
ADC Telecommunications, Inc.* 2,094,100 4,167,259
Cisco Systems, Inc.* 464,100 8,302,749
-----------
12,470,008
-----------
COMPUTER HARDWARE - 2.9%
Dell, Inc.* 141,100 5,421,062
International Business Machines Corporation 77,000 7,036,260
-----------
12,457,322
-----------
CONSUMER FINANCE - 1.4%
MBNA Corporation 239,000 5,867,450
-----------
DATA PROCESSING & OUTSOURCED SERVICES - 2.7%
Computer Sciences Corporation* 55,000 2,521,750
First Data Corporation 230,000 9,041,300
-----------
11,563,050
-----------
DEPARTMENT STORES - 1.3%
Kohl's Corporation* 103,400 5,338,542
-----------
DIVERSIFIED BANKS - 3.5%
Bank of America Corporation 120,000 5,292,000
Wells Fargo & Company 160,000 9,568,000
-----------
14,860,000
-----------
DRUG RETAIL - 2.3%
CVS Corporation 183,800 9,671,556
-----------
EXCHANGE TRADED FUNDS - 1.0%
iShares S&P 500 Index Fund 36,900 4,348,296
-----------
GENERAL MERCHANDISE STORES - 0.8%
Target Corporation 63,700 3,186,274
-----------
HEALTH CARE EQUIPMENT - 3.4%
Boston Scientific Corporation* 242,800 7,111,612
Medtronic, Inc. 90,600 4,616,070
Zimmer Holdings, Inc.* 36,300 2,824,503
-----------
14,552,185
-----------
HOME IMPROVEMENT RETAIL - 3.0%
Home Depot, Inc. 270,700 10,351,568
Lowe's Companies, Inc. 43,000 2,454,870
-----------
12,806,438
-----------
HOTELS, RESORTS & CRUISE LINES - 1.9%
Carnival Corporation 155,000 8,030,550
-----------
HOUSEHOLD PRODUCTS - 1.5%
Procter & Gamble Company 120,400 6,381,200
-----------
HYPERMARKETS & SUPERCENTERS - 2.6%
Wal-Mart Stores, Inc. 220,000 11,024,200
-----------
INDUSTRIAL CONGLOMERATES - 7.3%
3M Company 52,700 4,515,863
General Electric Company 550,000 19,833,000
Tyco International, Ltd. 192,100 6,492,980
-----------
30,841,843
-----------
INDUSTRIAL GASES - 1.8%
Praxair, Inc. 160,000 7,657,600
-----------
INTEGRATED OIL & GAS - 4.7%
ChevronTexaco Corporation 120,000 6,997,200
Exxon Mobil Corporation 221,100 13,177,560
-----------
20,174,760
-----------
INTEGRATED TELECOMMUNICATION SERVICES - 1.8%
SBC Communications, Inc. 170,000 4,027,300
Verizon Communications, Inc. 100,000 3,550,000
-----------
7,577,300
-----------
INTERNET RETAIL - 0.7%
eBay, Inc.* 82,400 3,070,224
-----------
INVESTMENT BANKING & BROKERAGE - 2.5%
Goldman Sachs Group, Inc. 50,000 5,499,500
Merrill Lynch & Company, Inc. 90,500 5,122,300
-----------
10,621,800
-----------
LIFE & HEALTH INSURANCE - 0.9%
AFLAC, Inc. 101,800 3,793,068
-----------
MANAGED HEALTH CARE - 2.9%
UnitedHealth Group, Inc. 58,200 5,551,116
WellPoint, Inc.* 54,500 6,831,575
-----------
12,382,691
-----------
MOTORCYCLE MANUFACTURERS - 1.1%
Harley-Davidson, Inc. 79,100 4,568,816
-----------
30 See accompanying notes.
SECURITY EQUITY FUND
Schedule of Investments EQUITY SERIES
March 31, 2005 (unaudited)
PRINCIPAL
AMOUNT OR
NUMBER MARKET
OF SHARES VALUE
------------ --------------
COMMON STOCKS (CONTINUED)
MOVIES & ENTERTAINMENT - 4.1%
Time Warner, Inc.* 460,000 $ 8,073,000
Viacom, Inc. (Cl.B) 271,700 9,463,311
-------------
17,536,311
-------------
MULTI-LINE INSURANCE - 2.6%
American International Group, Inc. 200,200 11,093,082
-------------
OIL & GAS EQUIPMENT & SERVICES - 2.1%
BJ Services Company 62,700 3,252,876
Halliburton Company 133,500 5,773,875
-------------
9,026,751
-------------
OIL & GAS EXPLORATION & PRODUCTION - 1.1%
Anadarko Petroleum Corporation 62,500 4,756,250
-------------
OTHER DIVERSIFIED FINANCIAL SERVICES - 4.8%
Citigroup, Inc. 360,500 16,200,870
JP Morgan Chase & Company 118,700 4,107,020
-------------
20,307,890
-------------
PHARMACEUTICALS - 6.1%
Abbott Laboratories 130,000 6,060,600
Eli Lilly & Company 141,700 7,382,570
Johnson & Johnson 187,300 12,579,068
-------------
26,022,238
-------------
PROPERTY & CASUALTY INSURANCE - 1.7%
Chubb Corporation 89,200 7,070,884
-------------
SEMICONDUCTOR EQUIPMENT - 0.3%
Applied Materials, Inc.* 73,900 1,200,875
-------------
SEMICONDUCTORS - 1.8%
Intel Corporation 323,400 7,512,582
-------------
SOFT DRINKS - 2.0%
PepsiCo, Inc. 163,300 8,659,799
-------------
SYSTEMS SOFTWARE - 3.4%
Microsoft Corporation 600,900 14,523,753
-------------
TOTAL COMMON STOCKS
(cost $ 352,095,153) 424,595,521
-------------
WARRANTS - 0.0%
Lucent Technologies, Inc. 4,647 3,113
-------------
TOTAL WARRANTS
(cost $ 0) 3,113
-------------
COMMERCIAL PAPER - 0.4%
METALS & MINING - 0.4%
Alcoa, Inc., 2.80%, 04-06-05 $ 1,500,000 1,499,417
-------------
TOTAL COMMERCIAL PAPER
(cost $ 1,499,417) 1,499,417
-------------
PRINCIPAL MARKET
AMOUNT VALUE
------------ -------------
REPURCHASE AGREEMENT - 0.2%
United Missouri Bank, 2.34%,
dated 3-31-05, matures 04-01-05;
repurchase amount of
$ 878,057 (Collateralized by GNMA,
4.00%, 04-28-08 with a
value of $ 895,561) $ 878,000 $ 878,000
-------------
TOTAL REPURCHASE AGREEMENT
(cost $ 878,000) 878,000
-------------
TOTAL INVESTMENTS - 100.5%
(cost $ 354,472,570) 426,976,051
LIABILITIES, LESS CASH & OTHER ASSETS - (0.5%) (1,947,738)
-------------
TOTAL NET ASSETS - 100.0% $ 425,028,313
=============
The identified cost of investments owned at March 31, 2005 was the same for
federal income tax and financial statement purposes.
*Non-income producing security
31
SECURITY EQUITY FUND
EQUITY SERIES
(unaudited)
Statement of Assets and Liabilities
March 31, 2005
ASSETS:
Investments, at value(1) .......................... $ 426,976,051
Cash .............................................. 273
Receivables:
Fund shares sold ................................ 55,303
Dividends ....................................... 325,177
Prepaid expenses .................................. 37,803
-------------
Total assets ...................................... 427,394,607
-------------
LIABILITIES:
Payable for:
Securities purchased ............................ 1,526,203
Fund shares redeemed ............................ 255,503
Management fees ................................. 277,259
Custodian fees .................................. 1,522
Transfer agent and administration fees .......... 73,310
Professional fees ............................... 23,343
12b-1 distribution plan fees .................... 161,565
Other ........................................... 47,589
-------------
Total liabilities ................................. 2,366,294
-------------
NET ASSETS ........................................ $ 425,028,313
=============
NET ASSETS CONSIST OF:
Paid in capital ................................... $ 351,706,169
Accumulated undistributed net investment
income .......................................... 1,901,864
Accumulated net realized loss
on sale of investments .......................... (1,083,201)
Net unrealized appreciation
in value of investments ......................... 72,503,481
-------------
Net assets ........................................ $ 425,028,313
=============
CLASS A:
Capital shares outstanding
(unlimited number of shares authorized) ......... 59,317,582
Net assets ........................................ $ 375,780,903
Net asset value and redemption price
per share ....................................... $ 6.34
=============
Maximum offering price per share
(net asset value divided by 94.25%) ............. $ 6.73
=============
CLASS B:
Capital shares outstanding
(unlimited number of shares authorized) ......... 7,642,410
Net assets ........................................ $ 43,054,885
Net asset value, offering and redemption price
per share (excluding any applicable contingent
deferred sales charge) .......................... $ 5.63
=============
CLASS C:
Capital shares outstanding
(unlimited number of shares authorized) ......... 1,040,863
Net assets ........................................ $ 6,192,525
Net asset value, offering and redemption price
per share (excluding any applicable contingent
deferred sales charge) .......................... $ 5.95
=============
(1)Investments, at cost ........................... $ 354,472,570
Statement of Operations
For the Six Months Ended March 31, 2005
INVESTMENT INCOME:
Dividends ....................................... $ 4,955,967
Interest ........................................ 75,726
-------------
Total investment income ......................... 5,031,693
-------------
EXPENSES:
Management fees ................................. 1,676,014
Custodian fees .................................. 13,017
Transfer agent/maintenance fees ................. 366,343
Administration fees ............................. 201,377
Directors' fees ................................. 5,252
Professional fees ............................... 39,916
Reports to shareholders ......................... 31,379
Registration fees ............................... 25,580
Other expenses .................................. 11,375
12b-1 distribution plan fees - Class A .......... 491,703
12b-1 distribution plan fees - Class B .......... 236,779
12b-1 distribution plan fees - Class C .......... 31,094
-------------
Total expenses .................................. 3,129,829
-------------
Net investment income ........................... 1,901,864
-------------
NET REALIZED AND UNREALIZED GAIN:
Net realized gain during the period on:
Investments ..................................... 272,066
-------------
Net realized gain ............................... 272,066
-------------
Unrealized appreciation during the period on:
Investments ..................................... 16,386,160
-------------
Net unrealized appreciation ..................... 16,386,160
-------------
Net gain ........................................ 16,658,226
-------------
Net increase in net assets
resulting from operations ..................... $ 18,560,090
=============
32 See accompanying notes.
SECURITY EQUITY FUND
Statement of Changes in Net Assets EQUITY SERIES
SIX MONTHS ENDED
MARCH 31, 2005 YEAR ENDED
(unaudited) SEPTEMBER 30, 2004
---------------- ------------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income (loss) ............................................. $ 1,901,864 $ (100,598)
Net realized gain during the period on investments ....................... 272,066 53,906,512
Unrealized appreciation (depreciation) during the period on investments... 16,386,160 (10,398,098)
--------------- -------------
Net increase in net assets resulting from operations ..................... 18,560,090 43,407,816
--------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A ................................................................ - (684,512)
Class B ................................................................ - -
Class C ................................................................ - -
Net realized gain
Class A ................................................................ (26,380,427) -
Class B ................................................................ (3,538,521) -
Class C ................................................................ (441,249) -
--------------- -------------
Total distributions to shareholders ...................................... (30,360,197) (684,512)
--------------- -------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from sale of shares
Class A ................................................................ 10,599,722 34,438,875
Class B ................................................................ 3,250,211 8,956,642
Class C ................................................................ 920,458 2,153,270
Distributions reinvested
Class A ................................................................ 24,060,268 627,027
Class B ................................................................ 3,490,102 -
Class C ................................................................ 436,622 -
Cost of shares redeemed
Class A ................................................................ (40,298,929) (111,058,761)
Class B ................................................................ (11,667,764) (26,061,410)
Class C ................................................................ (1,275,671) (3,010,496)
--------------- -------------
Net decrease from capital share transactions ............................. (10,484,981) (93,954,853)
--------------- -------------
Net decrease in net assets ............................................... (22,285,088) (51,231,549)
--------------- -------------
NET ASSETS:
Beginning of period ...................................................... 447,313,401 498,544,950
--------------- -------------
End of period ............................................................ $ 425,028,313 $ 447,313,401
=============== =============
Accumulated undistributed net investment income (loss) at end of period... $ 1,901,864 $ -
=============== =============
CAPITAL SHARE ACTIVITY:
Shares sold
Class A ................................................................ 1,613,939 5,383,103
Class B ................................................................ 551,409 1,534,595
Class C ................................................................ 148,757 351,499
Shares reinvested
Class A ................................................................ 3,673,323 97,974
Class B ................................................................ 597,620 -
Class C ................................................................ 70,880 -
Shares redeemed
Class A ................................................................ (6,139,060) (17,251,738)
Class B ................................................................ (1,982,804) (4,466,840)
Class C ................................................................ (206,658) (491,760)
33 See accompanying notes.
Financial Highlights
Selected data for each share of capital stock SECURITY EQUITY FUND
outstanding throughout each period EQUITY SERIES
SIX MONTHS ENDED
MARCH 31, YEAR ENDED SEPTEMBER 30,
CLASS A 2005(h) 2004 2003 2002(e,g) 2001 2000
- ------------------------------------------------------- ---------------- --------- -------- --------- ---------- -------------
PER SHARE DATA
Net asset value, beginning of period $ 6.50 $ 5.98 $ 5.09 $ 6.36 $ 10.26 $ 9.96
-------- -------- -------- -------- -------- ---------
Income (loss) from investment operations:
Net investment income (loss)(c) 0.03 0.01 0.01 0.01 - -
Net gain (loss) on securities (realized and unrealized) 0.26 0.52 0.88 (1.28) (2.49) 0.66
-------- -------- -------- -------- -------- ---------
Total from investment operations 0.29 0.53 0.89 (1.27) (2.49) 0.66
-------- -------- -------- -------- -------- ---------
Less distributions:
Dividends from net investment income - (0.01) - - - -
Distributions from realized gains (0.45) - - - (1.40) (0.36)
Return of capital - - - - (0.01) -
-------- -------- -------- -------- -------- ---------
Total distributions (0.45) (0.01) - - (1.41) (0.36)
-------- -------- -------- -------- -------- ---------
Net asset value, end of period $ 6.34 $ 6.50 $ 5.98 $ 5.09 $ 6.36 $ 10.26
======== ======== ======== ======== ======== =========
TOTAL RETURN(a) 4.25% 8.87% 17.49% (19.97%) (27.66%) 6.64%
-------- -------- -------- -------- -------- ---------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $375,781 $391,384 $430,161 $412,791 $563,553 $ 853,126
Ratios to average net assets:
Net investment income (loss) 0.94% 0.08% 0.23% 0.13% 0.03% 0.03%
Total expenses 1.32% 1.28% 1.25% 1.11% 1.02% 1.02%
Gross expenses(b) 1.32% 1.28% 1.25% 1.11% 1.02% 1.02%
Net expenses(d) 1.32% 1.28% 1.25% 1.11% 1.02% 1.02%
-------- -------- -------- -------- -------- ---------
Portfolio turnover rate 24% 28% 54% 30% 23% 54%
SIX MONTHS ENDED YEAR ENDED
MARCH 31, SEPTEMBER 30,
CLASS B 2005(h) 2004 2003 2002(e,g) 2001 2000
- ------------------------------------------------------- ---------------- ---------- ---------- ---------- ---------- -------------
PER SHARE DATA
INet asset value, beginning of period $ 5.85 $ 5.41 $ 4.64 $ 5.86 $ 9.65 $ 9.47
-------- -------- -------- -------- -------- ---------
Income (loss) from investment operations:
Net investment income (loss)(c) 0.01 (0.04) (0.03) (0.05) (0.07) (0.10)
Net gain (loss) on securities (realized and unrealized) 0.22 0.48 0.80 (1.17) (2.31) 0.64
-------- -------- -------- -------- -------- ---------
Total from investment operations 0.23 0.44 0.77 (1.22) (2.38) 0.54
-------- -------- -------- -------- -------- ---------
Less distributions:
Dividends from net investment income - - - - - -
Distributions from realized gains (0.45) - - - (1.40) (0.36)
Return of capital - - - - (0.01) -
-------- -------- -------- -------- -------- ---------
Total distributions (0.45) - - - (1.41) (0.36)
-------- -------- -------- -------- -------- ---------
Net asset value, end of period $ 5.63 $ 5.85 $ 5.41 $ 4.64 $ 5.86 $ 9.65
======== ======== ======== ======== ======== =========
TOTAL RETURN(a) 3.67% 8.13% 16.59% (20.82%) (28.34%) 5.69%
-------- -------- -------- -------- -------- ---------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $ 43,055 $ 49,600 $ 61,733 $ 66,267 $ 96,067 $ 156,633
-------- -------- -------- -------- -------- ---------
Ratios to average net assets:
Net investment income (loss) 0.21% (0.67%) (0.52%) (0.78%) (0.97%) (0.97%)
Total expenses 2.07% 2.03% 2.00% 2.02% 2.02% 2.02%
Gross expenses(b) 2.07% 2.03% 2.00% 2.02% 2.02% 2.02%
Net expenses(d) 2.07% 2.03% 2.00% 2.02% 2.02% 2.02%
-------- -------- -------- -------- -------- ---------
Portfolio turnover rate 24% 28% 54% 30% 23% 54%
-------- -------- -------- -------- -------- ---------
34 See accompanying notes.
Financial Highlights
Selected data for each share of capital stock SECURITY EQUITY FUND
outstanding throughout each period EQUITY SERIES
SIX MONTHS ENDED
MARCH 31, YEAR ENDED SEPTEMBER 30,
CLASS C 2005(h) 2004 2003 2002(e,g) 2001 2000
- ------------------------------------------------------- ---------------- ---------- ---------- ---------- ---------- -------------
PER SHARE DATA
Net asset value, beginning of period $ 6.16 $ 5.69 $ 4.88 $ 6.16 $ 10.07 $ 9.89
-------- -------- -------- -------- -------- -------
Income (loss) from investment operations:
Net investment income (loss)(c) 0.01 (0.04) (0.03) (0.05) (0.07) (0.10)
Net gain (loss) on securities (realized and unrealized) 0.23 0.51 0.84 (1.23) (2.43) 0.64
-------- -------- -------- -------- -------- -------
Total from investment operations 0.24 0.47 0.81 (1.28) (2.50) 0.54
-------- -------- -------- -------- -------- -------
Less distributions:
Dividends from net investment income - - - - - -
Distributions from realized gains (0.45) - - - (1.40) (0.36)
Return of capital - - - - (0.01) -
-------- -------- -------- -------- -------- -------
Total distributions (0.45) - - - (1.41) (0.36)
-------- -------- -------- -------- -------- -------
Net asset value, end of period $ 5.95 $ 6.16 $ 5.69 $ 4.88 $ 6.16 $ 10.07
======== ======== ======== ======== ======== =======
TOTAL RETURN(a) 3.66% 8.26% 16.60% (20.78%) (28.35%) 5.55%
-------- -------- -------- -------- -------- -------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $ 6,193 $ 6,329 $ 6,651 $ 4,979 $ 4,230 $ 5,426
-------- -------- -------- -------- -------- -------
Ratios to average net assets:
Net investment income (loss) 0.18% (0.67%) (0.52%) (0.76%) (0.97%) (0.96%)
Total expenses 2.07% 2.03% 2.00% 2.02% 2.02% 2.02%
Gross expenses(b) 2.07% 2.03% 2.00% 2.02% 2.02% 2.02%
Net expenses(d) 2.07% 2.03% 2.00% 2.02% 2.02% 2.02%
-------- -------- -------- -------- -------- -------
Portfolio turnover rate 24% 28% 54% 30% 23% 54%
(a) Total return information does not reflect deduction of any sales charges
imposed at the time of purchase for Class A shares or upon redemption for
Class B and C.
(b) Gross expense information reflects expense ratios absent fund expense
reductions by the Investment Manager.
(c) Net investment income (loss) was computed using average shares outstanding
throughout the period.
(d) Net expense information reflects expense ratios after expense reductions
or fee waivers and reduction to custodian expenses.
(e) The financial highlights for the Equity Series exclude the historical
financial highlights of the Total Return Series Class A, B and C shares.
The assets of the Total Return Series were acquired by the Equity Series
on August 27, 2002.
(f) The financial highlights for Class C shares exclude the historical
financial highlights of Class S shares. Class S shares were exchanged for
Class C shares on June 3, 2002.
(g) Effective May 1, 2002 the fee structure for Equity Series changed. Per
share information reflects this change.
(h) Unaudited figures for the six months ended March 31, 2005. Percentage
amounts for the period, except total return, have been annualized.
35 See accompanying notes.
This page left blank intentionally.
36
SECURITY EQUITY FUND
Global Series
[OPPENHEIMERFUNDS(R) LOGO]
SUBADVISOR,
OPPENHEIMERFUNDS, INC.
37
SECURITY EQUITY FUND
Performance Summary GLOBAL SERIES
May 15, 2005 (unaudited)
PERFORMANCE
SECURITY GLOBAL SERIES VS. MORGAN STANLEY CAPITAL INTERNATIONAL WORLD INDEX
[PERFORMANCE GRAPH]
GLOBAL INVESTMENT
DATE value
- ---------- ------
03/31/95 9,425
06/30/95 9,628
09/30/95 10,167
12/31/95 10,534
03/31/96 11,209
06/30/96 11,816
09/30/96 11,970
12/31/96 12,332
03/31/97 12,629
06/30/97 13,903
09/30/97 14,391
12/31/97 13,184
03/31/98 15,201
06/30/98 14,873
09/30/98 13,172
12/31/98 15,715
03/31/99 16,006
06/30/99 17,424
09/30/99 17,702
12/31/99 24,331
3/31/00 27,588
6/30/00 26,581
9/30/00 26,029
12/31/00 25,075
03/31/01 21,473
06/30/01 22,993
09/30/01 18,845
12/31/01 21,764
03/31/02 22,071
06/30/02 19,988
09/30/02 16,199
12/31/02 16,506
03/31/03 15,124
06/30/03 18,264
09/30/03 19,937
12/31/03 23,368
03/31/04 24,324
06/30/04 24,017
09/30/04 23,778
12/31/04 27,567
03/31/05 26,594
MSCI WORLD
DATE value
- --------------------------- ------
INCEPTION 3/31/95 10,000
6/30/95 10,439
9/30/95 11,035
12/31/95 11,572
3/31/96 12,058
06/30/96 12,420
09/30/96 12,599
12/31/96 13,192
03/31/97 13,244
06/30/97 15,253
09/30/97 15,705
12/31/97 15,333
03/31/98 17,544
06/30/98 17,917
09/30/98 15,784
12/31/98 19,134
03/31/99 19,833
06/30/99 20,797
09/30/99 20,505
12/31/99 23,983
03/31/00 24,244
06/30/00 23,401
09/30/00 22,242
12/31/00 20,882
03/31/01 18,214
06/30/01 18,720
09/30/01 16,042
12/31/01 17,432
03/31/02 17,506
06/30/02 15,931
09/30/02 13,015
12/31/02 14,023
03/31/03 13,329
06/30/03 15,628
09/30/03 16,398
12/31/03 18,737
03/31/04 19,227
06/30/04 19,393
09/30/04 19,200
12/31/04 21,494
03/31/05 21,258
$10,000 OVER TEN YEARS
This chart assumes a $10,000 investment in Class A shares of Global Series on
March 31, 1995, reflects deduction of the 5.75% sales load and assumes all
dividends reinvested. The chart does not reflect the deduction of taxes that a
shareholder would pay on distributions or the redemption of fund shares.
PORTFOLIO COMPOSITION BY SECTOR
Consumer Discretionary 19.30%
Consumer Staples 6.81
Energy 7.42
Financials 18.37
Health Care 12.99
Industrials 5.82
Information Technology 15.99
Materials 1.05
Telecommunication Services 8.34
Utilities 1.09
Repurchase Agreement 2.72
Cash & other assets, less liabilities 0.10
AVERAGE ANNUAL RETURNS
SINCE
PERIODS ENDED 3-31-05 1 YEAR 5 YEARS 10 YEARS INCEPTION
- -------------------------- ------ ------- -------- ---------
A Shares 9.33% (0.73%) 10.93% -
A Shares with sales charge 3.04% (1.90%) 10.28% -
B Shares 8.43% (1.12%) 10.33% -
B Shares with CDSC 3.43% (1.52%) 10.33% -
C Shares 8.47% (1.51%) N/A 7.64%
(1-29-99)
C Shares with CDSC 7.47% (1.51%) N/A 7.64%
(1-29-99)
The performance data above represent past performance that is not predictive of
future results. The investment return and principal value of an investment in
the Series will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost. The figures above do not reflect
deduction of the maximum front-end sales charge of 5.75% for Class A shares or
the contingent deferred sales charge of 5% for Class B shares and 1% for Class C
shares, as applicable, except where noted. The figures do not reflect the
deduction of taxes that a shareholder would pay on distributions or redemption
of shares. Such figures would be lower if the maximum sales charge and any
applicable taxes were deducted.
38 See accompanying notes.
SECURITY EQUITY FUND
Performance Summary GLOBAL SERIES
May 15, 2005 (unaudited)
PERFORMANCE
INFORMATION ABOUT YOUR SERIES EXPENSES
CALCULATING YOUR ONGOING SERIES EXPENSES
EXAMPLE
As a shareholder of the Series, you incur two types of costs: (1) transaction
costs, which may include sales charges (loads) on purchase payments; contingent
deferred sales charges on redemptions; and redemption fees, if any; and (2)
ongoing costs, including management fees; distribution and/or service fees
(12b-1); and other Series expenses. This Example is intended to help you
understand your ongoing costs (in dollars) of investing in the Series and to
compare these costs with ongoing costs of investing in other mutual funds. The
Example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period, October 1, 2004 - March 31, 2005.
ACTUAL EXPENSES
The first line for each class of shares in the table provides information about
actual account values and actual expenses. You may use the information in this
table, together with the amount you invested, to estimate the expenses that you
paid over the period. Simply divide your account value by $1,000 (for example,
an $8,600 account value divided by $1,000 = 8.6), then multiply the result by
the number in the table under the heading entitled "Expenses Paid During Period"
to estimate the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line for each class of shares in the table provides information about
hypothetical account values and hypothetical expenses based on the Series actual
expense ratio and an assumed rate of return of 5% per year before expenses,
which is not the Series actual return. The hypothetical account values and
expenses may not be used to estimate the actual ending account balance or
expenses you paid for the period. You may use this information to compare the
ongoing costs of investing in the Series and other funds. To do so, compare this
5% hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads) on purchase payments, contingent deferred sales charges on
redemptions, and redemption fees, if any. Therefore, the second line for each
class of shares is useful in comparing ongoing costs only, and will not help you
determine the relative total costs of owning different funds. In addition, if
these transactional costs were included, your costs would have been higher.
FUND EXPENSES
BEGINNING ENDING EXPENSES PAID
ACCOUNT VALUE ACCOUNT VALUE DURING
10-01-04 03-31-05(1) PERIOD(2)
------------- ------------- -------------
Global Series - Class A
Actual $1,000.00 $1,118.40 $ 9.14
Hypothetical 1,000.00 1,016.31 8.70
Global Series - Class B
Actual 1,000.00 1,114.50 13.13
Hypothetical 1,000.00 1,012.52 12.49
Global Series - Class C
Actual 1,000.00 1,114.20 13.12
Hypothetical 1,000.00 1,012.52 12.49
(1) The actual ending account value is based on the actual total return of the
Series for the period October 1, 2004 to March 31, 2005 after actual
expenses and will differ from the hypothetical ending account value which
is based on the Series expense ratio and a hypothetical annual return of
5% before expenses. The actual cumulative return at net asset value for
the period October 1, 2004 to March 31, 2005 was 11.84%, 11.45% and
11.42%, for Class A, B and C class shares, respectively.
(2) Expenses are equal to the Series annualized expense ratio (1.73%, 2.49%
and 2.49% for Class A, B and C class shares, respectively) multiplied by
the average account value over the period, multiplied by 182/365 (to
reflect the one-half year period).
39
SECURITY EQUITY FUND
Schedule of Investments GLOBAL SERIES
March 31, 2005 (unaudited)
NUMBER MARKET
OF SHARES VALUE
--------- -----------
COMMON STOCKS - 96.0%
AUSTRALIA - 0.7%
Australia & New Zealand Banking
Group, Ltd. 39,881 $ 635,720
Macquarie Airports** 154,800 391,323
-----------
1,027,043
-----------
BERMUDA - 0.8%
Ace, Ltd. 31,040 1,281,021
-----------
BRAZIL - 1.5%
Companhia de Bebidas das
Americas ADR 27,357 790,344
Empresa Brasileira de Aeronautica
S.A. ADR 46,268 1,448,188
Tele Norte Leste Participacoes S.A 3 57
-----------
2,238,589
-----------
CANADA - 2.3%
EnCana Corporation 16,008 1,130,031
Husky Energy, Inc. 48,780 1,464,367
Manulife Financial Corporation 18,073 862,432
-----------
3,456,830
-----------
FINLAND - 0.3%
Fortum Oyj 21,300 414,761
-----------
FRANCE - 7.2%
Essilor International S.A 8,480 612,899
European Aeronautic Defence &
Space Company 15,050 449,929
France Telecom S.A 44,165 1,322,631
JC Decaux S.A.* 23,850 651,171
Louis Vuitton Moet Hennessy S.A 20,920 1,564,898
Sanofi-Aventis 33,385 2,815,446
Societe Generale 13,620 1,415,237
Technip S.A 8,420 1,408,155
Total S.A 2,825 661,065
-----------
10,901,431
-----------
GERMANY - 3.0%
Allianz AG 10,646 1,351,884
Bayerische Hypo-Und Vereinsbank AG* 15,496 379,088
SAP AG 8,174 1,317,314
Siemens AG 19,043 1,507,195
-----------
4,555,481
-----------
HONG KONG - 2.7%
HSBC Holdings plc 97,393 1,548,438
Hong Kong & China Gas Company, Ltd. 382,400 752,611
Hutchison Whampoa, Ltd. 68,082 578,313
Television Broadcasts, Ltd. 228,991 1,153,866
-----------
4,033,228
-----------
INDIA - 3.2%
Gail India, Ltd. 14,490 70,242
Hindustan Lever, Ltd. 271,300 817,711
ITC, Ltd. 5,800 178,298
Icici Bank, Ltd. ADR 52,350 1,084,692
Infosys Technologies, Ltd. 35,532 1,831,021
Oil & Natural Gas Corporation, Ltd. 9,450 190,840
Zee Telefilms, Ltd. 229,600 729,581
-----------
4,902,385
-----------
IRELAND - 0.6%
Anglo Irish Bank Corporation plc 36,267 908,379
-----------
ITALY - 0.5%
Eni SpA 26,189 680,062
-----------
JAPAN - 9.0%
Canon, Inc. 10,000 536,356
Chugai Pharmaceutical Company, Ltd. 35,900 551,535
Credit Saison Company, Ltd. 23,300 838,935
Hoya Corporation 7,300 803,507
JGC Corporation 23,000 251,014
KDDI Corporation 416 2,060,501
Keyence Corporation 3,200 741,458
Murata Manufacturing Company, Ltd. 10,700 573,901
Nidec Corporation 2,400 298,867
Nikon Corporation 57,114 656,887
Omron Corporation 7,000 152,791
Resona Holdings, Inc.* 293,000 587,613
Seven-Eleven Japan Company, Ltd. 16,000 468,635
Shionogi & Company, Ltd. 61,000 840,987
Shiseido Company, Ltd. 34,000 448,766
Sony Corporation 38,100 1,517,532
Toyota Motor Corporation 32,200 1,198,433
Trend Micro, Inc. 16,500 709,528
Yahoo Japan Corporation* 76 177,939
Yahoo Japan Corporation
(Deferred Settlement)* 76 178,648
-----------
13,593,833
-----------
KOREA - 2.6%
Hyundai Heavy Industries Company, Ltd.* 17,369 869,586
Samsung Electronics Company, Ltd. 3,165 1,562,778
SK Telecom Company, Ltd. 2,040 343,120
SK Telecom Company, Ltd. ADR 57,400 1,131,928
-----------
3,907,412
-----------
MEXICO - 1.6%
Fomento Economico Mexicano,
S.A. de C.V 138,400 742,380
Grupo Modelo, S.A. de C.V. (Cl.C) 191,700 564,783
Grupo Televisa S.A. ADR 19,864 1,168,003
-----------
2,475,166
-----------
40 See accompanying notes.
SECURITY EQUITY FUND
Schedule of Investments GLOBAL SERIES
March 31, 2005 (unaudited)
NUMBER MARKET
OF SHARES VALUE
COMMON STOCKS (CONTINUED)
NETHERLANDS - 1.9%
ABN Amro Holding N.V. 25,600 $ 635,229
Koninklijke (Royal) Philips
Electronics N.V.* 59,200 1,630,907
Wolters Kluwer N.V. 29,928 546,685
-----------
2,812,821
-----------
NORWAY - 0.5%
Tandberg ASA 67,500 705,588
-----------
PORTUGAL - 0.3%
Energias de Portugal S.A. 170,482 475,188
-----------
SINGAPORE - 0.5%
Singapore Press Holdings, Ltd. 284,848 786,883
-----------
SWEDEN - 5.0%
Hennes & Mauritz AB (Cl.B) 94,600 3,250,813
Investor AB (Cl.B)** 38,294 517,165
Telefonaktiebolaget LM Ericsson
(Cl.B)* 1,337,600 3,764,211
-----------
7,532,189
-----------
SWITZERLAND - 2.2%
Credit Suisse Group* 18,607 798,620
Novartis AG 19,253 897,958
Roche Holding AG 14,895 1,596,071
-----------
3,292,649
-----------
TAIWAN - 0.8%
Taiwan Semiconductor Manufacturing
Company, Ltd. ADR 138,387 1,173,522
-----------
UNITED KINGDOM - 13.8%
3i Group plc 43,654 554,644
BP plc ADR 19,667 1,227,221
Cadbury Schweppes plc 158,690 1,590,498
Dixons Group plc 431,583 1,245,500
Pearson plc 94,570 1,153,315
Peninsular & Oriental Steam
Navigation Company 66,530 362,942
Prudential plc 121,150 1,158,169
Reckitt Benckiser plc 94,902 3,015,779
Reed Elsevier plc 69,225 717,361
Royal Bank of Scotland Group plc 88,209 2,808,089
Smith & Nephew plc 128,690 1,209,584
Vodafone Group plc 1,972,940 5,246,388
WPP Group plc 52,380 595,250
-----------
20,884,740
-----------
UNITED STATES - 35.0%
Advanced Micro Devices, Inc.* 92,400 1,489,488
Affymetrix, Inc.* 20,000 856,800
Altera Corporation* 20,200 399,556
Altria Group, Inc. 6,400 418,496
Amazon.com, Inc.* 13,800 472,926
American Express Company 28,200 1,448,634
Amgen, Inc.* 22,100 1,286,441
Applera Corporation - Applied
Biosystems Group 23,600 465,864
Berkshire Hathaway, Inc. (Cl.B)* 350 999,600
Boeing Company 13,600 795,056
Burlington Resources, Inc. 15,900 796,113
Cadence Design Systems, Inc.* 43,064 643,807
Charles Schwab Corporation 42,400 445,624
ChevronTexaco Corporation 22,666 1,321,654
Circuit City Stores, Inc. 61,471 986,610
Cisco Systems, Inc.* 44,600 797,894
Citigroup, Inc. 9,966 447,872
Coach, Inc.* 14,100 798,483
Corning, Inc.* 108,400 1,206,492
eBay, Inc.* 44,800 1,669,248
Electronic Arts, Inc.* 3,828 198,214
Eli Lilly & Company 7,700 401,170
Everest Re Group, Ltd. 6,200 527,682
Express Scripts, Inc.* 7,900 688,801
Gap, Inc. 25,200 550,368
Genentech, Inc.* 12,900 730,269
Genzyme Corporation* 11,900 681,156
Gilead Sciences, Inc.* 33,900 1,213,620
Gillette Company 24,800 1,251,904
GlobalSantaFe Corporation 43,000 1,592,720
Human Genome Sciences, Inc.* 15,300 141,066
IMS Health, Inc. 25,600 624,384
International Business Machines
Corporation 16,267 1,486,479
International Game Technology 36,300 967,758
International Rectifier Corporation* 8,500 386,750
Intuit, Inc.* 9,600 420,192
JP Morgan Chase & Company 38,769 1,341,407
Juniper Networks, Inc.* 20,800 458,848
Lockheed Martin Corporation 11,300 689,978
MBNA Corporation 46,500 1,141,575
Medtronic, Inc. 7,100 361,745
Millennium Pharmaceuticals, Inc.* 14,500 122,090
Morgan Stanley 27,700 1,585,825
National Semiconductor Corporation 52,000 1,071,720
Nektar Therapeutics* 3,000 41,820
Nektar Therapeutics*(1) 10,308 114,959
Northern Trust Corporation 9,600 417,024
Northrop Grumman Corporation 12,100 653,158
Novell, Inc.* 129,900 774,204
Pfizer, Inc. 31,838 836,384
Qualcomm, Inc. 33,140 1,214,581
Quest Diagnostics, Inc. 13,200 1,387,716
Raytheon Company 27,800 1,075,860
Silicon Laboratories, Inc.* 7,900 234,709
Sirius Satellite Radio, Inc.* 642,900 3,613,098
Starbucks Corporation* 16,300 842,058
Sun Microsystems, Inc.* 166,600 673,064
Symantec Corporation* 30,400 648,432
Transocean, Inc.* 43,800 2,253,948
Veritas Software Corporation* 15,000 348,300
Wachovia Corporation 20,908 1,064,426
Wyeth 8,200 345,876
-----------
52,921,996
TOTAL COMMON STOCKS -----------
(cost $115,489,503) 144,961,197
-----------
41 See accompanying notes.
SECURITY EQUITY FUND
Schedule of Investments GLOBAL SERIES
March 31, 2005 (unaudited)
PRINCIPAL
AMOUNT OR
NUMBER MARKET
OF SHARES VALUE
PREFERRED STOCKS - 1.2%
BRAZIL - 0.7%
Tele Norte Leste Participacoes S.A. 67,840 $ 1,049,371
------------
GERMANY - 0.5%
Porsche AG 1,097 796,422
------------
TOTAL PREFERRED STOCKS
(cost $1,652,004) 1,845,793
------------
REPURCHASE AGREEMENT - 2.7%
State Street, 1.10%, dated 3-31-05,
matures 4-01-05; repurchase
amount of $4,105,781
(Collateralized by FHLMC,
2.125%, 11-15-05 with
a value of $4,188,940) $4,105,656 4,105,656
------------
TOTAL REPURCHASE AGREEMENT
(cost $4,105,656) 4,105,656
------------
TOTAL INVESTMENTS - 99.9%
(cost $121,247,163) 150,912,646
CASH & OTHER ASSETS, LESS LIABILITIES - 0.1% 149,574
------------
TOTAL NET ASSETS - 100.0% $151,062,220
============
INVESTMENT CONCENTRATION
At March 31, 2005, Global Series' investment concentration by
industry was as follows:
Aerospace & Defense ..................................... 0.3%
Air Freight & Logistics ................................. 3.1%
Automobiles ............................................. 1.3%
Beverages ............................................... 2.4%
Biotechnology ........................................... 3.3%
Capital Markets ......................................... 1.5%
Commercial Banks ........................................ 2.5%
Commercial Services & Supplies .......................... 0.4%
Communications Equipment ................................ 4.6%
Computers & Peripherals ................................. 1.4%
Construction & Engineering .............................. 0.2%
Consumer Finance ........................................ 2.3%
Diversified Financial Services .......................... 8.0%
Diversified Telecommunications .......................... 3.9%
Electric Utilities ...................................... 0.3%
Electrical Equipment .................................... 0.1%
Electronic Equipment & Instruments ...................... 1.1%
Energy Equipment & Services ............................. 0.9%
Food & Staples Retailing ................................ 0.3%
Gas Utilities ........................................... 0.5%
Health Care Equipment & Services ........................ 2.3%
Health Care Providers & Services ........................ 1.8%
Hotels, Restaurants & Leisure Products .................. 1.2%
Household Durables ...................................... 3.9%
Household Products ...................................... 2.5%
Industrial Conglomerates ................................ 1.0%
Insurance ............................................... 4.1%
Internet & Catalog Retail ............................... 0.3%
Internet Software & Services ............................ 2.3%
IT Services ............................................. 1.2%
Leisure Equipment & Products ............................ 0.4%
Machinery ............................................... 0.6%
Marine .................................................. 0.2%
Media ................................................... 7.4%
Multi-Utilities & Unregulated Power ..................... 0.3%
Oil & Gas ............................................... 6.5%
Paper & Forest Products ................................. 1.1%
Personal Products ....................................... 1.1%
Pharmaceuticals ......................................... 5.6%
Semiconductors & Semiconductor Equipment ................ 3.0%
Software ................................................ 2.4%
Specialty Retail ........................................ 0.7%
Textiles, Apparel & Luxury Goods ........................ 4.1%
Tobacco ................................................. 0.4%
Wireless Telecommunications ............................. 4.4%
Repurchase agreement .................................... 2.7%
Cash & other assets, less liabilities ................... 0.1%
-----
100.0%
=====
For federal income tax purposes the identified cost of investments owned at
March 31, 2005 was $122,813,277.
* Non-income producing security
** Passive Foreign Investment Company
ADR (American Depositary Receipt)
plc (public limited company)
(1) Security is restricted. The total market value of restricted securities is
$114,959 (cost $117,000), or 0.0% of total net assets. The acquisition date
was August 5, 2004.
42 See accompanying notes.
SECURITY EQUITY FUND
GLOBAL SERIES
(unaudited)
Statement of Assets and Liabilities
March 31, 2005
ASSETS:
Investments, at value(1) ................................. $ 150,912,646
Cash ..................................................... 47,645
Cash denominated in a foreign currency, at value(2)....... 221,138
Receivables:
Fund shares sold ................................... 76,286
Securities sold .................................... 1,685,303
Interest ........................................... 17,832
Dividends .......................................... 266,510
Foreign taxes recoverable ................................ 10,979
Prepaid expenses ......................................... 27,269
--------------
Total assets ............................................. 153,265,608
--------------
LIABILITIES:
Payable for:
Securities purchased ............................... 1,739,484
Fund shares redeemed ............................... 95,853
Management fees .................................... 129,284
Custodian fees .................................... 10,614
Transfer agent and administration fees ............. 36,746
Professional fees .................................. 3,494
12b-1 distribution plan fees ....................... 185,889
Other .............................................. 2,024
--------------
Total liabilities ........................................ 2,203,388
--------------
NET ASSETS ............................................... $ 151,062,220
==============
NET ASSETS CONSIST OF:
Paid in capital .......................................... $ 134,781,545
Accumulated net investment loss .......................... (812,801)
Accumulated net realized loss on sale of investments
and foreign currency transactions .................. (12,565,582)
Net unrealized appreciation in value of investments
and translation of assets and liabilities in
foreign currency.................................... 29,659,058
--------------
Net assets ............................................... $ 151,062,220
--------------
CLASS A:
Capital shares outstanding
(unlimited number of shares authorized) ............ 7,325,817
Net assets ............................................... $ 114,146,656
Net asset value per share ................................ $ 15.58
==============
Maximum offering price per share
(net asset value divided by 94.25%) ................ $ 16.53
==============
CLASS B:
Capital shares outstanding
(unlimited number of shares authorized) ............ 1,993,672
Net assets ............................................... $ 28,737,606
Net asset value, offering and redemption price
per share (excluding any applicable contingent
deferred sales charge) ............................. $ 14.41
==============
CLASS C:
Capital shares outstanding
(unlimited number of shares authorized) ............ 555,051
Net assets ............................................... $ 8,177,958
Net asset value, offering and redemption
price per share (excluding any applicable
contingent charge) ................................. $ 14.73
==============
(1) Investments, at cost ............................... $ 121,247,163
(2) Cash denominated in a foreign currency,
at cost ............................................ 226,871
Statement of Operations
For the Six Months Ended March 31, 2005
INVESTMENT INCOME:
Dividends .......................................... $ 936,706
Interest ........................................... 50,758
--------------
987,464
Less: Foreign tax expense .......................... (71,735)
--------------
Total investment income ............................ 915,729
--------------
EXPENSES:
Management fees .................................... 736,518
Custodian fees ..................................... 44,657
Transfer agent/maintenance fees .................... 144,997
Administration fees ................................ 115,328
Directors' fees ................................... 1,530
Professional fees ................................. 16,377
Reports to shareholders ............................ 5,579
Registration fees .................................. 19,947
Other expenses ..................................... 3,610
12b-1 distribution plan fees - Class A ............. 136,924
12b-1 distribution plan fees - Class B ............. 147,844
12b-1 distribution plan fees - Class C ............. 40,978
--------------
Total expenses ..................................... 1,414,289
Less: Earnings credits ............................. (781)
--------------
Net expenses ...................................... 1,413,508
--------------
Net investment loss ................................ (497,779)
--------------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain during the period on:
Investments ........................................ 5,728,187
Foreign currency transactions ...................... 9,278
--------------
Net realized gain .................................. 5,737,465
--------------
Unrealized appreciation (depreciation)
during the period on:
Investments ........................................ 10,569,114
Translation of assets and liabilities in
foreign currencies ............................... (9,853)
--------------
Net unrealized appreciation ........................ 10,559,261
--------------
Net gain ........................................... 16,296,726
--------------
Net increase in net assets
resulting from operations ........................ $ 15,798,947
==============
43 See accompanying notes.
SECURITY EQUITY FUND
Statement of Changes in Net Assets GLOBAL SERIES
SIX MONTHS
ENDED
MARCH 31, 2005 YEAR ENDED
(unaudited) SEPTEMBER 30, 2004
-------------- ------------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment loss .................................................................... $ (497,779) $ (487,547)
Net realized gain during the period on investments
and foreign currency transactions ..................................................... 5,737,465 4,015,387
Unrealized appreciation during the period on investments and
translation of assets and liabilities in foreign currencies ........................... 10,559,261 13,434,399
------------- -------------
Net increase in net assets resulting from operations ................................... 15,798,947 16,962,239
------------- -------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from sale of shares
Class A .............................................................................. 15,625,741 62,153,125
Class B .............................................................................. 1,452,679 13,008,655
Class C .............................................................................. 928,752 2,011,154
Issuance of shares in connection with International Series merger (Note 8)
Class A .............................................................................. - 4,450,969
Class B .............................................................................. - 2,248,383
Class C .............................................................................. - 2,646,183
Cost of shares redeemed
Class A .............................................................................. (11,664,537) (22,537,310)
Class B .............................................................................. (4,284,532) (7,327,595)
Class C .............................................................................. (1,162,296) (3,745,740)
------------- -------------
Net increase from capital share transactions ........................................... 895,807 52,907,824
------------- -------------
Net increase in net assets ............................................................. 16,694,754 69,870,063
------------- -------------
NET ASSETS:
Beginning of period .................................................................... 134,367,466 64,497,403
------------- -------------
End of period .......................................................................... $ 151,062,220 $ 134,367,466
============= =============
Accumulated net investment loss at end of period ....................................... $ (812,801) $ (315,022)
============= =============
CAPITAL SHARE ACTIVITY:
Shares sold
Class A .............................................................................. 1,020,085 4,739,362
Class B .............................................................................. 101,839 10,722,788
Class C .............................................................................. 63,621 162,899
Shares issued in connection with International Series merger
Class A .............................................................................. - 366,909
Class B .............................................................................. - 198,022
Class C .............................................................................. - 228,231
Shares redeemed
Class A .............................................................................. (763,349) (1,693,741)
Class B .............................................................................. (301,204) (584,090)
Class C .............................................................................. (80,290) (296,232)
44 See accompanying notes.
Financial Highlights SECURITY EQUITY FUND
Selected data for each share of capital stock GLOBAL SERIES
outstanding throughout each period
SIX MONTHS ENDED
MARCH 31, YEAR ENDED SEPTEMBER 30,
CLASS A 2005(i) 2004(h) 2003 2002(e,g) 2001 2000
- ----------------------------------------- ---------------- ----------- ----------- ----------- --------- -------------
PER SHARE DATA
Net asset value, beginning of period $ 13.93 $ 11.68 $ 9.49 $ 11.04 $ 18.86 $ 13.99
----------- ----------- ----------- ----------- --------- -----------
Income (loss) from investment operations:
Net investment income (loss)(c) (0.04) (0.03) (0.03) (0.05) (0.08) (0.11)
Net gain (loss) on securities
(realized and unrealized) 1.69 2.28 2.22 (1.50) (4.33) 6.47
----------- ----------- ----------- ----------- --------- -----------
Total from investment operations 1.65 2.25 2.19 (1.55) (4.41) 6.36
----------- ----------- ----------- ----------- --------- -----------
Less distributions:
Dividends from net investment income - - - - - -
Distributions from realized gains - - - - (3.41) (1.49)
----------- ----------- ----------- ----------- --------- -----------
Total distributions - - - - (3.41) (1.49)
----------- ----------- ----------- ----------- --------- -----------
Net asset value, end of period $ 15.58 $ 13.93 $ 11.68 $ 9.49 $ 11.04 $ 18.86
=========== =========== =========== =========== ========= ===========
TOTAL RETURN(a) 11.84% 19.26% 23.08% (14.04%) (27.60%) 47.04%
----------- ----------- ----------- ----------- --------- -----------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $ 114,147 $ 98,450 $ 42,711 $ 50,893 $ 48,089 $ 60,909
----------- ----------- ----------- ----------- --------- -----------
Ratios to average net assets:
Net investment income (loss) (0.48%) (0.20%) (0.26%) (0.46%) (0.57%) (0.62%)
Total expenses 1.73% 1.79% 2.00% 1.85% 1.90% 1.92%
Gross expenses(b) 1.73% 1.79% 2.00% 1.85% 1.90% 1.92%
Net expenses(d) 1.73% 1.79% 2.00% 1.85% 1.90% 1.92%
----------- ----------- ----------- ----------- --------- -----------
Portfolio turnover rate 31% 25% 62% 36% 38% 92%
SIX MONTHS ENDED
MARCH 31, YEAR ENDED SEPTEMBER 30,
CLASS B 2005(i) 2004(h) 2003 2002(e,g) 2001 2000
- ----------------------------------------- ---------------- --------- --------- ---------- ---------- -------------
PER SHARE DATA
Net asset value, beginning of period $ 12.93 $ 10.93 $ 8.89 $ 10.38 $ 18.00 $ 13.45
---------- --------- --------- ---------- ---------- ----------
Income (loss) from investment operations:
Net investment income (loss)(c) (0.09) (0.13) (0.04) (0.10) (0.14) (0.17)
Net gain (loss) on securities (realized
and unrealized) 1.57 2.13 2.08 (1.39) (4.07) 6.21
---------- --------- --------- ---------- ---------- ----------
Total from investment operations 1.48 2.00 2.04 (1.49) (4.21) 6.04
---------- --------- --------- ---------- ---------- ----------
Less distributions:
Dividends from net investment income - - - - - -
Distributions from realized gains - - - - (3.41) (1.49)
---------- --------- --------- ---------- ---------- ----------
Total distributions - - - - (3.41) (1.49)
---------- --------- --------- ---------- ---------- ----------
Net asset value, end of period $ 14.41 $ 12.93 $ 10.93 $ 8.89 $ 10.38 $ 18.00
========== ========= ========= ========== ========== ==========
TOTAL RETURN(a) 11.45% 18.30% 22.95% (14.35%) (27.86%) 46.53%
---------- --------- --------- ---------- ---------- ----------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $ 28,738 $ 28,360 $ 16,461 $ 19,021 $ 23,533 $ 30,951
---------- --------- --------- ---------- ---------- ----------
Ratios to average net assets:
Net investment income (loss) (1.25%) (1.00%) (0.42%) (0.89%) (1.07%) (0.96%)
Total expenses 2.49% 2.54% 2.18% 2.28% 2.39% 2.29%
Gross expenses(b) 2.49% 2.54% 2.18% 2.28% 2.39% 2.29%
Net expenses(d) 2.49% 2.54% 2.18% 2.28% 2.39% 2.29%
---------- --------- --------- ---------- ---------- ----------
Portfolio turnover rate 31% 25% 62% 36% 38% 92%
---------- --------- --------- ---------- ---------- ----------
45 See accompanying notes.
Financial Highlights SECURITY EQUITY FUND
Selected data for each share of capital stock GLOBAL SERIES
outstanding throughout each period
SIX MONTHS ENDED
MARCH 31, YEAR ENDED SEPTEMBER 30,
CLASS C 2005(i) 2004(h) 2003 2002(e,f,g) 2001 2000
- ----------------------------------------- ---------------- --------- --------- ----------- --------- -------------
PER SHARE DATA
Net asset value, beginning of period $ 13.22 $ 11.17 $ 9.14 $ 10.72 $ 18.55 $ 13.90
--------- --------- --------- --------- --------- ---------
Income (loss) from investment operations:
Net investment income (loss)(c) (0.09) (0.13) (0.09) (0.15) (0.21) (0.26)
Net gain (loss) on securities (realized
and unrealized) 1.60 2.18 2.12 (1.43) (4.21) 6.40
--------- --------- --------- --------- --------- ---------
Total from investment operations 1.51 2.05 2.03 (1.58) (4.42) 6.14
--------- --------- --------- --------- --------- ---------
Less distributions:
Dividends from net investment income - - - - - -
Distributions from realized gains - - - - (3.41) (1.49)
--------- --------- --------- --------- --------- ---------
Total distributions - - - - (3.41) (1.49)
--------- --------- --------- --------- --------- ---------
Net asset value, end of period $ 14.73 $ 13.22 $ 11.17 $ 9.14 $ 10.72 $ 18.55
========= ========= ========= ========= ========= =========
TOTAL RETURN(a) 11.42% 18.35% 22.21% (14.74%) (28.20%) 45.67%
--------- --------- --------- --------- --------- ---------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $ 8,178 $ 7,557 $ 5,326 $ 4,076 $ 3,569 $ 2,691
--------- --------- --------- --------- --------- ---------
Ratios to average net assets:
Net investment income (loss) (1.24%) (1.02%) (0.96%) (1.33%) (1.57%) (1.53%)
Total expenses 2.49% 2.54% 2.77% 2.74% 2.91% 2.92%
Gross expenses(b) 2.49% 2.54% 2.77% 2.74% 2.91% 2.92%
Net expenses(d) 2.49% 2.54% 2.77% 2.74% 2.91% 2.92%
--------- --------- --------- --------- --------- ---------
Portfolio turnover rate 31% 25% 62% 36% 38% 92%
(a) Total return information does not reflect deduction of any sales charges
imposed at the time of purchase for Class A shares or upon redemption for
Class B and C.
(b) Gross expense information reflects expense ratios absent fund expense
reductions by the Investment Manager.
(c) Net investment income (loss) was computed using average shares outstanding
throughout the period.
(d) Net expense information reflects expense ratios after expense reductions or
fee waivers and reduction to custodian expenses.
(e) As required, effective October 1, 2001, the Funds adopted the provisions of
the AICPA Audit and Accounting Guide for Investment Companies and began
amortizing premiums on fixed income securities. The effect of this change
for the period ended September 30, 2002, was to increase net investment
income per share by less than 1/2 of a cent, decrease net realized and
unrealized gains and losses per share by less than 1/2 of a cent and
increase the ratio of net investment income to average net assets from
0.06% to 0.07%. Per share, ratios and supplemental data for periods prior
to October 1, 2001 have not been restated to reflect this change in
presentation.
(f) The financial highlights for Class C shares exclude the historical
financial highlights of Class S shares. Class S shares were exchanged for
Class C shares on June 3, 2002.
(g) Effective May 1, 2002 the fee structure for Global Series changed. Per
share information reflects this change.
(h) The financial highlights for the Global Series exclude the historical
financial highlights of the International Series Class A, B and C shares.
The assets of the International Series were acquired by the Global Series
on October 3, 2003.
(i) Unaudited figures for the six months ended March 31, 2005. Percentage
amounts for the period, except total return, have been annualized.
46 See accompanying notes.
SECURITY EQUITY FUND
Large Cap Growth Series
[SECURITY FUNDS LOGO]
ADVISOR,
SECURITY MANAGEMENT COMPANY, LLC
47
SECURITY EQUITY FUND
Performance Summary LARGE CAP GROWTH SERIES
May 15, 2005 (unaudited)
PERFORMANCE
Security Large Cap Growth Series vs.
Russell 1000 Growth Index
[PERFORMANCE GRAPH]
LARGE CAP GROWTH
DATE value
- ---------- -----
05/01/00 9,425
6/30/00 9,642
9/30/00 9,152
12/31/00 7,559
03/31/01 6,315
06/30/01 6,767
09/30/01 5,655
12/31/01 6,381
03/31/02 6,164
06/30/02 5,024
09/30/02 4,336
12/31/02 4,647
03/31/03 4,618
06/30/03 5,221
09/30/03 5,297
12/31/03 5,740
03/31/04 5,740
06/30/04 5,825
09/30/04 5,523
12/31/04 5,891
03/31/05 5,542
RUSSELL 1000 GROWTH
DATE value
- ----------------------- ------
INCEPTION 5/01/00 10,000
06/30/00 10,216
09/30/00 9,666
12/31/00 7,603
03/31/01 6,014
06/30/01 6,520
09/30/01 5,255
12/31/01 6,051
03/31/02 5,894
06/30/02 4,794
09/30/02 4,072
12/31/02 4,363
03/31/03 4,316
06/30/03 4,934
09/30/03 5,127
12/31/03 5,662
03/31/04 5,706
06/30/04 5,816
09/30/04 5,513
12/31/04 6,018
03/31/05 5,773
$10,000 SINCE INCEPTION
This chart assumes a $10,000 investment in Class A shares of Large Cap Growth
Series on May 1, 2000 (date of inception), reflects deduction of the 5.75% sales
load and assumes all dividends reinvested. The chart does not reflect the
deduction of taxes that a shareholder would pay on distributions or the
redemption of fund shares.
PORTFOLIO COMPOSITION BY SECTOR
Consumer Discretionary 18.62%
Consumer Staples 13.12
Energy 2.38
Financials 7.61
Health Care 19.59
Industrials 14.05
Information Technology 21.82
Exchange Traded Funds 2.35
Cash & other assets, less liabilities 0.46
AVERAGE ANNUAL RETURNS
PERIODS ENDED 3-31-05 1 YEAR SINCE INCEPTION
- --------------------- ------- -----------------
A Shares (3.45%) (10.24%) (5-1-00)
A Shares with sales charge (8.98%) (11.31%) (5-1-00)
B Shares (4.24%) (10.99%) (5-1-00)
B Shares with CDSC (9.03%) (11.36%) (5-1-00)
C Shares (4.22%) (10.90%) (5-1-00)
C Shares with CDSC (5.18%) (10.90%) (5-1-00)
The performance data above represent past performance that is not predictive of
future results. The investment return and principal value of an investment in
the Series will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost. The figures above do not reflect
deduction of the maximum front-end sales charge of 5.75% for Class A shares or
the contingent deferred sales charge of 5% for Class B shares and 1% for Class C
shares, as applicable, except where noted. The figures do not reflect the
deduction of taxes that a shareholder would pay on distributions or redemption
of shares. Such figures would be lower if the maximum sales charge and any
applicable taxes were deducted. Fee waivers reduced expenses of the Series and
in the absence of such waiver, the performance quoted would be reduced.
48 See accompanying notes.
SECURITY EQUITY FUND
Performance Summary LARGE CAP GROWTH SERIES
May 15, 2005 (unaudited)
PERFORMANCE
INFORMATION ABOUT YOUR SERIES EXPENSES
CALCULATING YOUR ONGOING SERIES EXPENSES
EXAMPLE
As a shareholder of the Series, you incur two types of costs: (1) transaction
costs, which may include sales charges (loads) on purchase payments; contingent
deferred sales charges on redemptions; and redemption fees, if any; and (2)
ongoing costs, including management fees; distribution and/or service fees
(12b-1); and other Series expenses. This Example is intended to help you
understand your ongoing costs (in dollars) of investing in the Series and to
compare these costs with ongoing costs of investing in other mutual funds. The
Example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period, October 1, 2004 - March 31, 2005.
ACTUAL EXPENSES
The first line for each class of shares in the table provides information about
actual account values and actual expenses. You may use the information in this
table, together with the amount you invested, to estimate the expenses that you
paid over the period. Simply divide your account value by $1,000 (for example,
an $8,600 account value divided by $1,000 = 8.6), then multiply the result by
the number in the table under the heading entitled "Expenses Paid During Period"
to estimate the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line for each class of shares in the table provides information about
hypothetical account values and hypothetical expenses based on the Series actual
expense ratio and an assumed rate of return of 5% per year before expenses,
which is not the Series actual return. The hypothetical account values and
expenses may not be used to estimate the actual ending account balance or
expenses you paid for the period. You may use this information to compare the
ongoing costs of investing in the Series and other funds. To do so, compare this
5% hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads) on purchase payments, contingent deferred sales charges on
redemptions, and redemption fees, if any. Therefore, the second line for each
class of shares is useful in comparing ongoing costs only, and will not help you
determine the relative total costs of owning different funds. In addition, if
these transactional costs were included, your costs would have been higher.
FUND EXPENSES
BEGINNING ENDING EXPENSES PAID
ACCOUNT VALUE ACCOUNT VALUE DURING
10-01-04 03-31-05(1) PERIOD(2)
------------- ------------- -------------
Large Cap Growth
Series - Class A
Actual $1,000.00 $1,003.40 $ 11.24
Hypothetical 1,000.00 1,013.71 11.30
Large Cap Growth
Series - Class B
Actual 1,000.00 998.20 14.95
Hypothetical 1,000.00 1,009.97 15.03
Large Cap Growth
Series - Class C
Actual 1,000.00 1,000.00 14.96
Hypothetical 1,000.00 1,009.97 15.03
(1) The actual ending account value is based on the actual total return of the
Series for the period October 1, 2004 to March 31, 2005 after actual
expenses and will differ from the hypothetical ending account value which
is based on the Series expense ratio and a hypothetical annual return of 5%
before expenses. The actual cumulative return at net asset value for the
period October 1, 2004 to March 31, 2005 was 0.34%, -0.18% and 0.00%, for
Class A, B and C class shares, respectively.
(2) Expenses are equal to the Series annualized expense ratio (2.25%, 3.00% and
3.00% for Class A, B and C class shares, respectively), net of any
applicable fee waivers or earnings credits, multiplied by the average
account value over the period, multiplied by 182/365 (to reflect the
one-half year period).
49
SECURITY EQUITY FUND
Schedule of Investments LARGE CAP GROWTH SERIES
March 31, 2005 (unaudited)
NUMBER MARKET
OF SHARES VALUE
COMMON STOCKS - 99.5%
AEROSPACE & DEFENSE - 4.8%
General Dynamics Corporation 2,900 $ 310,445
United Technologies Corporation 3,600 365,976
----------
676,421
----------
AIR FREIGHT & LOGISTICS - 2.3%
FedEx Corporation 3,500 328,825
----------
AIRLINES - 1.6%
Southwest Airlines Company 16,200 230,688
----------
BIOTECHNOLOGY - 2.1%
Amgen, Inc.* 5,100 296,871
----------
BREWERS - 1.9%
Anheuser-Busch Companies, Inc. 5,600 265,384
----------
BROADCASTING & CABLE TV - 4.2%
Univision Communications, Inc.* 21,400 592,566
----------
COMMUNICATIONS EQUIPMENT - 6.2%
3Com Corporation* 40,000 142,400
ADC Telecommunications, Inc.* 140,600 279,794
Cisco Systems, Inc.* 25,400 454,406
----------
876,600
----------
COMPUTER HARDWARE - 2.1%
Dell, Inc.* 7,900 303,518
----------
DATA PROCESSING & OUTSOURCED SERVICES - 3.6%
First Data Corporation 12,900 507,099
----------
DEPARTMENT STORES - 0.8%
Kohl's Corporation* 2,250 116,168
----------
DRUG RETAIL - 3.5%
CVS Corporation 9,500 499,890
----------
ELECTRICAL COMPONENTS & EQUIPMENT - 1.2%
Power-One, Inc.* 34,800 169,128
----------
EXCHANGE TRADED FUNDS - 2.4%
iShares Russell 1000 Growth Index Fund 7,100 333,345
----------
GENERAL MERCHANDISE STORES - 1.4%
Target Corporation 4,100 205,082
----------
HEALTH CARE EQUIPMENT - 7.3%
Boston Scientific Corporation* 14,000 410,060
Medtronic, Inc. 4,900 249,655
Zimmer Holdings, Inc.* 4,900 381,269
----------
1,040,984
----------
HOME IMPROVEMENT RETAIL - 5.2%
Home Depot, Inc. 11,400 435,936
Lowe's Companies, Inc. 5,200 296,868
----------
732,804
----------
HOTELS, RESORTS & CRUISE LINES - 1.6%
Carnival Corporation 4,300 222,783
----------
HOUSEHOLD PRODUCTS - 1.3%
Procter & Gamble Company 3,500 185,500
----------
HYPERMARKETS & SUPERCENTERS - 3.7%
Wal-Mart Stores, Inc. 10,400 521,144
----------
INDUSTRIAL CONGLOMERATES - 4.1%
3M Company 1,200 102,828
General Electric Company 13,400 483,204
----------
586,032
----------
INTERNET RETAIL - 0.8%
eBay, Inc.* 3,000 111,780
----------
INVESTMENT BANKING & BROKERAGE - 1.3%
Goldman Sachs Group, Inc. 1,700 186,983
----------
MANAGED HEALTH CARE - 2.2%
UnitedHealth Group, Inc. 3,200 305,216
----------
MOTORCYCLE MANUFACTURERS - 0.8%
Harley-Davidson, Inc. 1,900 109,744
----------
MOVIES & ENTERTAINMENT - 3.9%
Viacom, Inc. (CI.B) 15,700 546,831
----------
MULTI-LINE INSURANCE - 3.2%
American International Group, Inc. 8,300 459,903
----------
OIL & GAS EQUIPMENT & SERVICES - 2.4%
BJ Services Company 6,500 337,220
----------
OTHER DIVERSIFIED FINANCIAL SERVICES - 3.0%
Citigroup, Inc. 9,600 431,424
----------
PHARMACEUTICALS - 8.0%
Eli Lilly & Company 6,100 317,810
Johnson & Johnson 8,300 557,428
Pfizer, Inc. 9,800 257,446
----------
1,132,684
----------
SEMICONDUCTOR EQUIPMENT - 0.5%
Applied Materials, Inc.* 4,500 73,125
----------
SEMICONDUCTORS - 3.9%
Applied Micro Circuits Corporation* 51,300 168,777
Intel Corporation 16,300 378,649
----------
547,426
----------
SOFT DRINKS - 2.7%
PepsiCo, Inc. 7,300 387,119
----------
SYSTEMS SOFTWARE - 5.5%
Microsoft Corporation 25,200 609,084
Veritas Software Corporation* 7,500 174,150
----------
783,234
----------
TOTAL COMMON STOCKS
(cost $13,677,325) 14,103,521
----------
50 See accompanying notes.
SECURITY EQUITY FUND
Schedule of Investments LARGE CAP GROWTH SERIES
March 31, 2005 (unaudited)
NUMBER MARKET
OF SHARES VALUE
WARRANTS - 0.0%
Lucent Technologies, Inc. 566 $ 379
-----------
TOTAL WARRANTS
(cost $0) 379
-----------
TOTAL INVESTMENTS - 99.5%
(cost $13,677,325) 14,103,900
CASH & OTHER ASSETS, LESS LIABILITIES - 0.5% 65,180
-----------
TOTAL NET ASSETS - 100.0% $14,169,080
===========
For federal income tax purposes the identified cost of investments owned at
March 31, 2005 was $13,959,747.
*Non-income producing security
51 See accompanying notes.
SECURITY EQUITY FUND
LARGE CAP GROWTH SERIES
(unaudited)
Statement of Assets and Liabilities
March 31, 2005
ASSETS:
Investments, at value(1)............................ $ 14,103,900
Cash................................................ 182,948
Receivables:
Fund shares sold................................. 11,775
Dividends........................................ 7,652
Prepaid expenses.................................... 14,318
------------
Total assets ....................................... 14,320,593
------------
LIABILITIES:
Payable for:
Securities purchased............................. 45,623
Fund shares redeemed............................. 3,160
Management fees.................................. 9,180
Custodian fees................................... 1,500
Transfer agent and administration fees........... 6,872
Professional fees................................ 4,891
12b-1 distribution plan fees..................... 78,961
Security Management Company...................... 228
Other............................................ 1,098
------------
Total liabilities................................... 151,513
------------
NET ASSETS.......................................... $ 14,169,080
============
NET ASSETS CONSIST OF:
Paid in capital..................................... $ 16,317,981
Accumulated net investment loss..................... (43,901)
Accumulated net realized loss
on sale of investments........................... (2,531,575)
Net unrealized appreciation in value
of investments................................... 426,575
------------
Net assets.......................................... $ 14,169,080
============
CLASS A:
Capital shares outstanding
(unlimited number of shares authorized).......... 1,352,744
Net assets.......................................... $ 7,950,466
Net asset value per share........................... $ 5.88
============
Maximum offering price per share (net asset value
divided by 94.25%)............................... $ 6.24
============
CLASS B:
Capital shares outstanding
(unlimited number of shares authorized).......... 576,392
Net assets.......................................... $ 3,252,579
Net asset value, offering and redemption price
per share (excluding any applicable contingent
deferred sales charge)........................... $ 5.64
============
CLASS C:
Capital shares outstanding
(unlimited number of shares authorized).......... 523,317
Net assets.......................................... $ 2,966,035
Net asset value, offering and redemption price
per share (excluding any applicable contingent
deferred sales charge)........................... $ 5.67
============
(1)Investments, at cost............................. $ 13,677,325
Statement of Operations
For the Six Months Ended March 31, 2005
INVESTMENT INCOME:
Dividends........................................ $ 143,880
Interest......................................... 707
------------
Total investment income.......................... 144,587
------------
EXPENSES:
Management fees.................................. 73,268
Custodian fees................................... 5,399
Transfer agent/maintenance fees.................. 59,244
Administration fees.............................. 12,377
Directors' fees.................................. 199
Professional fees................................ 4,960
Reports to shareholders.......................... 1,333
Registration fees................................ 16,856
Other expenses................................... 1,013
12b-1 distribution plan fees - Class A........... 10,109
12b-1 distribution plan fees - Class B........... 17,443
12b-1 distribution plan fees - Class C........... 15,388
------------
Total expenses................................... 217,589
Less:
Expenses waived................................ (18,317)
Earnings credits............................... (569)
Reimbursement of expenses - Class A............ (5,714)
Reimbursement of expenses - Class B............ (2,390)
Reimbursement of expenses - Class C............ (2,111)
------------
Net expenses..................................... 188,488
------------
Net investment loss.............................. (43,901)
------------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain during the period on:
Investments...................................... 149,671
------------
Net realized gain................................ 149,671
------------
Unrealized depreciation during the period on:
Investments...................................... (11,564)
------------
Net unrealized depreciation...................... (11,564)
------------
Net gain......................................... 138,107
------------
Net increase in net assets
resulting from operations...................... $ 94,206
============
52 See accompanying notes.
SECURITY EQUITY FUND
Statement of Changes in Net Assets LARGE CAP GROWTH SERIES
SIX MONTHS
ENDED
MARCH 31, 2005 YEAR ENDED
(unaudited) SEPTEMBER 30, 2004
-------------- ------------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment loss............................................ $ (43,901) $ (289,297)
Net realized gain during the period on investments............. 149,671 1,338,820
Unrealized depreciation during the period on investments....... (11,564) (146,746)
-------------- ------------------
Net increase in net assets resulting from operations........... 94,206 902,777
-------------- ------------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from sale of shares
Class A...................................................... 2,632,127 11,629,566
Class B...................................................... 335,840 2,089,630
Class C...................................................... 213,240 906,174
Cost of shares redeemed
Class A...................................................... (6,233,288) (16,966,073)
Class B...................................................... (640,557) (5,250,568)
Class C...................................................... (334,823) (1,376,326)
-------------- ------------------
Net decrease from capital share transactions................... (4,027,461) (8,967,597)
-------------- ------------------
Net decrease in net assets..................................... (3,933,255) (8,064,820)
-------------- ------------------
NET ASSETS:
Beginning of period............................................ 18,102,335 26,167,155
-------------- ------------------
End of period.................................................. $ 14,169,080 $ 18,102,335
============== ==================
Accumulated net investment loss at end of period............... $ (43,901) $ -
============== ==================
CAPITAL SHARE ACTIVITY:
Shares sold
Class A...................................................... 437,478 1,956,772
Class B...................................................... 57,431 358,069
Class C...................................................... 36,673 153,643
Shares redeemed
Class A...................................................... (1,039,768) (2,880,964)
Class B...................................................... (111,322) (930,168)
Class C...................................................... (57,663) (235,580)
53 See accompanying notes.
SECURITY EQUITY FUND
LARGE CAP GROWTH SERIES
Financial Highlights
Selected data for each share of capital
stock outstanding throughout each period
SIX MONTHS ENDED YEAR ENDED
MARCH 31, SEPTEMBER 30,
CLASS A 2005(g) 2004 2003 2002 2001 2000(d)
- ------- ---------------- -------- ------- ------- --------- -------------
PER SHARE DATA
Net asset value, beginning of period $ 5.86 $ 5.62 $ 4.60 $ 6.00 $ 9.71 $ 10.00
-------- -------- ------- ------- --------- -------
Income (loss) from investment operations:
Net investment income (loss)(c) (0.01) (0.05) (0.04) (0.05) (0.08) (0.05)
Net gain (loss) on securities (realized and
unrealized) 0.03 0.29 1.06 (1.35) (3.63) (0.24)
-------- -------- ------- ------- --------- -------
Total from investment operations 0.02 0.24 1.02 (1.40) (3.71) (0.29)
-------- -------- ------- ------- --------- -------
Less distributions:
Dividends from net investment income - - - - - -
Distributions from realized gains - - - - - -
-------- -------- ------- ------- --------- -------
Total distributions - - - - - -
-------- -------- ------- ------- --------- -------
Net asset value, end of period $ 5.88 $ 5.86 $ 5.62 $ 4.60 $ 6.00 $ 9.71
======== ======== ======= ======= ========= =======
TOTAL RETURN(a) 0.34% 4.27% 22.17% (22.33%) (38.21%) (2.90%)
-------- -------- ------- ------- --------- -------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $ 7,950 $ 11,455 $16,179 $ 9,243 $ 2,436 $ 2,405
-------- -------- ------- ------- --------- -------
Ratios to average net assets:
Net investment income (loss) (0.29%) (0.81%) (0.71%) (1.00%) (1.10%) (1.25%)
Total expenses 2.26% 1.84% 1.83% 1.99% 2.00% 1.92%
Gross expenses (b) 2.65% 2.00% 1.83% 1.99% 2.15% 1.92%
Net expenses (e) 2.25% 1.83% 1.83% 1.99% 1.99% 1.85%
-------- -------- ------- ------- --------- -------
Portfolio turnover rate 48% 44% 39% 12% 6% 5%
SIX MONTHS ENDED YEAR ENDED
MARCH 31, SEPTEMBER 30,
CLASS B 2005(g) 2004 2003 2002 2001 2000(d)
- ------- ---------------- -------- ------- ------- --------- -------------
PER SHARE DATA
Net asset value, beginning of period $ 5.65 $ 5.45 $ 4.50 $ 5.92 $ 9.65 $ 10.00
-------- -------- ------- ------- --------- -------
Income (loss) from investment operations:
Net investment income (loss)(c) (0.03) (0.09) (0.07) (0.11) (0.14) (0.08)
Net gain (loss) on securities (realized and
unrealized) 0.02 0.29 1.02 (1.31) (3.59) (0.27)
-------- -------- ------- ------- --------- -------
Total from investment operations (0.01) 0.20 0.95 (1.42) (3.73) (0.35)
-------- -------- ------- ------- --------- -------
Less distributions:
Dividends from net investment income - - - - - -
Distributions from realized gains - - - - - -
-------- -------- ------- ------- --------- -------
Total distributions - - - - - -
-------- -------- ------- ------- --------- -------
Net asset value, end of period $ 5.64 $ 5.65 $ 5.45 $ 4.50 $ 5.92 $ 9.65
======== ======== ======= ======= ========= =======
TOTAL RETURN(a) (0.18%) 3.67% 21.11% (23.99%) (38.65%) (3.50%)
-------- -------- ------- ------- --------- -------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $ 3,253 $ 3,559 $ 6,557 $ 1,949 $ 1,955 $ 2,039
-------- -------- ------- ------- --------- -------
Ratios to average net assets:
Net investment income (loss) (1.00%) (1.55%) (1.49%) (1.88%) (1.85%) (2.02%)
Total expenses 3.01% 2.56% 2.59% 2.82% 2.75% 2.68%
Gross expenses (b) 3.40% 2.72% 2.59% 2.82% 2.92% 2.68%
Net expenses (e) 3.00% 2.56% 2.59% 2.82% 2.75% 2.61%
-------- -------- ------- ------- --------- -------
Portfolio turnover rate 48% 44% 39% 12% 6% 5%
54 See accompanying notes.
SECURITY EQUITY FUND
Financial Highlights LARGE CAP GROWTH SERIES
Selected data for each share of capital stock
outstanding throughout each period
SIX MONTHS ENDED YEAR ENDED
MARCH 31, SEPTEMBER 30,
CLASS C 2005(g) 2004 2003 2002(f) 2001 2000(d)
- ------- ---------------- -------- ------- ------- --------- -------------
PER SHARE DATA
Net asset value, beginning of period $ 5.67 $ 5.48 $ 4.52 $ 5.93 $ 9.65 $ 10.00
-------- -------- ------- ------- --------- -------
Income (loss) from investment operations:
Net investment income (loss)(c) (0.03) (0.09) (0.07) (0.11) (0.13) (0.08)
Net gain (loss) on securities (realized and
unrealized) 0.03 0.28 1.03 (1.30) (3.59) (0.27)
-------- -------- ------- ------- --------- -------
Total from investment operations - 0.19 0.96 (1.41) (3.72) (0.35)
-------- -------- ------- ------- --------- -------
Less distributions:
Dividends from net investment income - - - - - -
Distributions from realized gains - - - - - -
-------- -------- ------- ------- --------- -------
Total distributions - - - - - -
-------- -------- ------- ------- --------- -------
Net asset value, end of period $ 5.67 $ 5.67 $ 5.48 $ 4.52 $ 5.93 $ 9.65
======== ======== ======= ======= ========= =======
Total Return(a) 0.00% 3.47% 21.24% (23.78%) (38.55%) (3.50%)
-------- -------- ------- ------- --------- -------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $ 2,966 $ 3,088 $ 3,432 $ 2,547 $ 2,577 $ 2,102
-------- -------- ------- ------- --------- -------
Ratios to average net assets:
Net investment income (loss) (1.01%) (1.58%) (1.44%) (1.88%) (1.85%) (2.00%)
Total expenses 3.01% 2.61% 2.58% 2.82% 2.75% 2.66%
Gross expenses(b) 3.40% 2.77% 2.58% 2.82% 2.92% 2.66%
Net expenses(e) 3.00% 2.61% 2.58% 2.82% 2.75% 2.60%
-------- -------- ------- ------- --------- -------
Portfolio turnover rate 48% 44% 39% 12% 6% 5%
(a) Total return information does not reflect deduction of any sales charges
imposed at the time of purchase for Class A shares or upon redemption for
Class B and C.
(b) Gross expense information reflects expense ratios absent fund expense
reductions by the Investment Manager.
(c) Net investment income (loss) was computed using average shares outstanding
throughout the period.
(d) Security Large Cap Growth Series was initially capitalized on May 1, 2000,
with a net asset value of $10 per share. Percentage amounts for the
period, except total return, have been annualized.
(e) Net expense information reflects expense ratios after expense reductions
or fee waivers and reduction to custodian expenses.
(f) The financial highlights for Class C shares exclude the historical
financial highlights of Class S shares. Class S shares were exchanged for
Class C shares on June 3, 2002.
(g) Unaudited figures for the six months ended March 31, 2005. Percentage
amounts for the period, except total return, have been annualized.
55 See accompanying notes.
This page left blank intentionally.
56
SECURITY EQUITY FUND
Mid Cap Value Series
[SECURITY FUNDS LOGO]
ADVISOR,
SECURITY MANAGEMENT COMPANY, LLC
57
SECURITY EQUITY FUND
Performance Summary MID CAP VALUE SERIES
May 15, 2005 (unaudited)
PERFORMANCE
SECURITY MID CAP VALUE SERIES VS. S&P MIDCAP 400/BARRA VALUE INDEX & RUSSELL
2500 VALUE INDEX
[PERFORMANCE GRAPH]
MID CAP VALUE
DATE value
- ---------- ------
05/01/97 9,425
06/30/97 10,386
09/30/97 12,205
12/31/97 12,202
03/31/98 13,983
06/30/98 13,915
09/30/98 11,680
12/31/98 14,172
03/31/99 13,968
06/30/99 16,873
09/30/99 16,125
12/31/99 17,264
3/31/00 19,150
6/30/00 18,998
9/30/00 21,035
12/31/00 21,873
03/31/01 22,618
06/30/01 24,689
09/30/01 20,081
12/31/01 24,342
03/31/02 26,772
06/30/02 24,636
09/30/02 19,099
12/31/02 20,726
03/31/03 20,229
06/30/03 25,732
09/30/03 27,665
12/31/03 31,468
03/31/04 33,864
06/30/04 34,754
09/30/04 34,743
12/31/04 37,276
03/31/05 37,196
S&P MIDCAP 400/BARRA VALUE INDEX
DATE value
- ----------------- ------
INCEPTION 5/01/97 10,000
06/30/97 10,925
09/30/97 12,471
12/31/97 13,146
03/31/98 14,440
06/30/98 13,842
09/30/98 11,933
12/31/98 13,762
03/31/99 12,653
06/30/99 14,543
09/30/99 13,127
12/31/99 14,082
03/31/00 14,965
06/30/00 14,567
09/30/00 16,467
12/31/00 18,001
03/31/01 17,382
06/30/01 19,361
09/30/01 16,840
12/31/01 19,287
03/31/02 21,201
06/30/02 19,956
09/30/02 16,269
12/31/02 17,338
03/31/03 16,331
06/30/03 19,463
09/30/03 20,863
12/31/03 24,306
03/31/04 25,647
06/30/04 25,966
09/30/04 25,763
12/31/04 28,918
03/31/05 28,713
RUSSELL 2500 VALUE INDEX
DATE value
- ----------------- ------
INCEPTION 5/01/97 10,000
06/30/97 11,201
09/30/97 12,594
12/31/97 12,953
03/31/98 14,188
06/30/98 13,681
09/30/98 11,428
12/31/98 12,705
03/31/99 11,687
06/30/99 13,559
09/30/99 12,386
12/31/99 12,892
03/31/00 13,495
06/30/00 13,414
09/30/00 14,336
12/31/00 15,572
03/31/01 15,264
06/30/01 16,788
09/30/01 14,698
12/31/01 17,089
03/31/02 18,542
06/30/02 17,895
09/30/02 14,609
12/31/02 15,402
03/31/03 14,667
06/30/03 17,788
09/30/03 19,169
12/31/03 22,319
03/31/04 23,698
06/30/04 23,818
09/30/04 23,877
12/31/04 27,134
03/31/05 26,556
$10,000 SINCE INCEPTION
This chart assumes a $10,000 investment in Class A shares of Mid Cap Value
Series on May 1, 1997 (date of inception), reflects deduction of the 5.75% sales
load and assumes all dividends reinvested. The chart does not reflect the
deduction of taxes that a shareholder would pay on distributions or the
redemption of fund shares. The Mid Cap Value Series changed its benchmark index
to the Russell 2500 Value Index. The Investment Adviser has determined that the
Russell 2500 Value Index is a more appropriate index than the S&P MidCap
400/Barra Value Index, which is created by Standard & Poor's and Barra by
dividing the S&P MidCap 400 Index equally between growth and value based upon a
price-to-book value calculation, because the Russell 2500 Value Index more
closely reflects the types of securities in which the Series invests and thus
provides shareholders with a more appropriate benchmark against which to compare
the Series' performance.
AVERAGE ANNUAL RETURNS
PERIODS ENDED 3-31-05 1 YEAR 5 YEARS SINCE INCEPTION
- -------------------------- ------ ------- ---------------
A Shares 17.59% 15.77% 19.96% (5-1-97)
A Shares with sales charge 10.83% 14.41% 19.07% (5-1-97)
B Shares 16.70% 14.78% 18.87% (5-1-97)
B Shares with CDSC 11.70% 14.55% 18.87% (5-1-97)
C Shares 16.75% 14.78% 17.25% (1-29-99)
C Shares with CDSC 15.75% 14.78% 17.25% (1-29-99)
The performance data above represent past performance that is not predictive of
future results. The investment return and principal value of an investment in
the Series will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost. The figures above do not reflect
deduction of the maximum front-end sales charge of 5.75% for Class A shares or
the contingent deferred sales charge of 5% for Class B shares and 1% for Class C
shares, as applicable, except where noted. The figures do not reflect the
deduction of taxes that a shareholder would pay on distributions or redemption
of shares. Such figures would be lower if the maximum sales charge and any
applicable taxes were deducted.
PORTFOLIO COMPOSITION BY SECTOR
Consumer Discretionary 3.85%
Consumer Staples 7.63
Energy 10.63
Financials 9.65
Health Care 6.66
Industrials 20.47
Information Technology 14.18
Materials 12.95
Telecommunication Services 0.90
Utilities 6.94
Exchange Traded Funds 1.95
Commercial Paper 3.63
Asset Backed Securities 1.76
Repurchase Agreement 0.19
Liabilities, less cash & other assets (1.39)
58 See accompanying notes.
SECURITY EQUITY FUND
Performance Summary MID CAP VALUE SERIES
May 15, 2005 (unaudited)
PERFORMANCE
INFORMATION ABOUT YOUR SERIES EXPENSES
CALCULATING YOUR ONGOING SERIES EXPENSES
EXAMPLE
As a shareholder of the Series, you incur two types of costs: (1) transaction
costs, which may include sales charges (loads) on purchase payments; contingent
deferred sales charges on redemptions; and redemption fees, if any; and (2)
ongoing costs, including management fees; distribution and/or service fees
(12b-1); and other Series expenses. This Example is intended to help you
understand your ongoing costs (in dollars) of investing in the Series and to
compare these costs with ongoing costs of investing in other mutual funds. The
Example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period, October 1, 2004 - March 31, 2005.
ACTUAL EXPENSES
The first line for each class of shares in the table provides information about
actual account values and actual expenses. You may use the information in this
table, together with the amount you invested, to estimate the expenses that you
paid over the period. Simply divide your account value by $1,000 (for example,
an $8,600 account value divided by $1,000 = 8.6), then multiply the result by
the number in the table under the heading entitled "Expenses Paid During Period"
to estimate the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR
COMPARISON PURPOSES
The second line for each class of shares in the table provides information about
hypothetical account values and hypothetical expenses based on the Series actual
expense ratio and an assumed rate of return of 5% per year before expenses,
which is not the Series actual return. The hypothetical account values and
expenses may not be used to estimate the actual ending account balance or
expenses you paid for the period. You may use this information to compare the
ongoing costs of investing in the Series and other funds. To do so, compare this
5% hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads) on purchase payments, contingent deferred sales charges on
redemptions, and redemption fees, if any. Therefore, the second line for each
class of shares is useful in comparing ongoing costs only, and will not help you
determine the relative total costs of owning different funds. In addition, if
these transactional costs were included, your costs would have been higher.
FUND EXPENSES
BEGINNING ENDING EXPENSES PAID
ACCOUNT VALUE ACCOUNT VALUE DURING
10-01-04 03-31-05(1) PERIOD(2)
------------- ------------- -------------
Mid Cap Value
Series - Class A
Actual $ 1,000.00 $ 1,146.20 $ 7.65
Hypothetical 1,000.00 1,017.80 7.19
Mid Cap Value
Series - Class B
Actual 1,000.00 1,141.90 11.69
Hypothetical 1,000.00 1,014.01 11.00
Mid Cap Value
Series - Class C
Actual 1,000.00 1,142.00 11.70
Hypothetical 1,000.00 1,014.01 11.00
(1) The actual ending account value is based on the actual total return of the
Series for the period October 1, 2004 to March 31, 2005 after actual
expenses and will differ from the hypothetical ending account value
which is based on the Series expense ratio and a hypothetical annual
return of 5% before expenses. The actual cumulative return at net asset
value for the period October 1, 2004 to March 31, 2005 was 14.62%, 14.19%
and 14.20%, for Class A, B and C class shares, respectively.
(2) Expenses are equal to the Series annualized expense ratio (1.43%, 2.19%
and 2.19% for Class A, B and C class shares, respectively) multiplied by
the average account value over the period, multiplied by 182/365 (to
reflect the one-half year period).
59
SECURITY EQUITY FUND
Schedule of Investments MID CAP VALUE SERIES
March 31, 2005 (unaudited)
PRINCIPAL
AMOUNT OR
NUMBER MARKET
OF SHARES VALUE
CONVERTIBLE BOND - 0.3%
PHARMACEUTICALS - 0.3%
Ligand Pharmaceuticals, Inc.,
6.00% - 2007(2) $ 1,250,000 $ 1,378,125
-----------
TOTAL CONVERTIBLE BOND
(cost $1,250,000) 1,378,125
-----------
PREFERRED STOCK- 0.1%
DIVERSIFIED METALS & MINING - 0.1%
Arch Coal, Inc. 4,600 494,500
-----------
TOTAL PREFERRED STOCK
(cost $230,000) 494,500
-----------
COMMON STOCKS - 95.4%
AEROSPACE & DEFENSE - 1.0%
Curtiss-Wright Corporation 80,000 4,560,000
-----------
AGRICULTURAL PRODUCTS - 3.7%
Archer-Daniels-Midland Company 420,000 10,323,600
Corn Products International, Inc. 255,000 6,627,450
-----------
16,951,050
-----------
AIR FREIGHT & LOGISTICS - 0.3%
AirNet Systems, Inc.* 168,000 794,640
Stonepath Group, Inc.* 480,000 518,400
-----------
1,313,040
-----------
APPAREL, ACCESSORIES & LUXURY GOODS - 0.6%
Kellwood Company 98,700 2,841,573
-----------
APPLICATION SOFTWARE - 1.0%
Epiq Systems, Inc.* 184,200 2,390,916
Plato Learning, Inc.* 276,200 2,154,360
Ulticom, Inc.* 12,000 133,560
-----------
4,678,836
-----------
BIOTECHNOLOGY - 0.4%
Millennium Pharmaceuticals, Inc.*(1) 240,000 2,020,800
-----------
BUILDING PRODUCTS - 0.1%
Aaon, Inc.* 19,650 323,439
-----------
COMMUNICATIONS EQUIPMENT - 2.7%
3Com Corporation* 2,717,600 9,674,656
Avanex Corporation* 2,236,000 2,906,800
-----------
12,581,456
-----------
COMPUTER STORAGE & PERIPHERALS - 0.3%
Adaptec, Inc.* 312,600 1,497,354
-----------
CONSTRUCTION & ENGINEERING - 10.4%
Dycom Industries, Inc.* 100,000 2,299,000
Granite Construction, Inc. 76,900 2,020,163
MasTec, Inc.* 601,000 4,934,210
McDermott International, Inc.* 451,000 8,537,430
Quanta Services, Inc.* 1,000,000 7,630,000
Shaw Group, Inc.* 1,020,000 22,236,000
-----------
47,656,803
-----------
NUMBER
OF MARKET
SHARES VALUE
COMMON STOCKS (CONTINUED)
DATA PROCESSING & OUTSOURCED SERVICES - 2.5%
Computer Sciences Corporation* 250,000 $11,462,500
-----------
DIVERSIFIED COMMERCIAL SERVICES - 1.7%
FTI Consulting, Inc.* 374,000 7,719,360
-----------
DIVERSIFIED METALS & MINING - 9.0%
Arch Coal, Inc. 185,100 7,961,151
Consol Energy, Inc. 54,300 2,553,186
Inco, Ltd.*(1) 360,000 14,328,000
Phelps Dodge Corporation(1) 69,200 7,039,716
Usec, Inc. 580,000 9,442,400
-----------
41,324,453
-----------
ELECTRIC UTILITES - 6.4%
Cinergy Corporation 130,000 5,267,600
Great Plains Energy, Inc. 140,000 4,281,200
KFx, Inc.* 1,480,000 19,832,000
-----------
29,380,800
-----------
ELECTRICAL COMPONENTS & EQUIPMENT - 2.5%
Electric City Corporation* 1,518,000 1,442,100
Power-One, Inc.* 1,087,500 5,285,250
Preformed Line Products Company 1,900 56,981
Thomas & Betts Corporation* 140,000 4,522,000
-----------
11,306,331
-----------
ELECTRONIC EQUIPMENT MANUFACTURERS - 3.3%
Maxwell Technologies, Inc.* 468,500 4,296,145
Merix Corporation* 782,900 8,776,309
Powell Industries, Inc.* 117,300 2,172,396
-----------
15,244,850
-----------
ENVIRONMENTAL SERVICES - 0.8%
Republic Services, Inc. 59,000 1,975,320
TRC Companies, Inc.* 120,000 1,764,000
-----------
3,739,320
-----------
EXCHANGE TRADED FUNDS - 1.9%
iShares Russell 2000 Value Index Fund 19,000 3,488,400
iShares S&P MidCap 400/
Barra Value Index Fund 43,000 5,464,010
-----------
8,952,410
-----------
FERTILIZERS & AGRICULTURAL CHEMICALS - 0.6%
Potash Corporation of Saskatchewan, Inc.(1) 30,000 2,625,300
-----------
FOOTWEAR - 0.9%
Brown Shoe Company, Inc. 115,000 3,941,050
-----------
GAS UTILITIES - 0.5%
Southern Union Company* 100,000 2,511,000
-----------
HEALTH CARE FACILITIES - 4.4%
Community Health Systems, Inc.* 130,000 4,538,300
Triad Hospitals, Inc.* 210,000 10,521,000
Universal Health Services, Inc. 100,000 5,240,000
-----------
20,299,300
-----------
60 See accompanying notes.
SECURITY EQUITY FUND
Schedule of Investments MID CAP VALUE SERIES
March 31, 2005 (unaudited)
NUMBER MARKET
OF SHARES VALUE
COMMON STOCKS (CONTINUED)
HEALTH CARE SERVICES - 1.1%
Hooper Holmes, Inc. 1,076,900 $ 4,113,758
NDCHealth Corporation 62,600 1,000,348
-----------
5,114,106
-----------
HOUSEWARES & SPECIALTIES - 0.4%
Newell Rubbermaid, Inc. 82,000 1,799,080
-----------
INDUSTRIAL CONGLOMERATES - 0.9%
Alleghany Corporation* 15,300 4,238,100
-----------
INDUSTRIAL MACHINERY - 1.1%
Capstone Turbine Corporation* 1,350,000 2,092,500
Quixote Corporation 123,300 2,671,911
Valmont Industries, Inc. 12,900 287,928
-----------
5,052,339
-----------
INSURANCE BROKERS - 0.3%
Hub International, Ltd. 64,000 1,235,200
-----------
INTEGRATED OIL & GAS - 2.5%
Murphy Oil Corporation 116,000 11,452,680
-----------
INTEGRATED TELECOMMUNICATION SERVICE - 0.3%
Global Crossing, Ltd.* 101,900 1,583,526
-----------
IT CONSULTING & OTHER SERVICES - 0.8%
Acxiom Corporation(1) 102,100 2,136,953
Keane, Inc.* 125,000 1,628,750
-----------
3,765,703
-----------
MARINE - 0.8%
Frontline, Ltd. 53,000 2,597,000
Ship Finance International, Ltd. 44,167 896,583
-----------
3,493,583
-----------
MULTI-LINE INSURANCE - 1.0%
American Financial Group, Inc. 155,000 4,774,000
-----------
OIL & GAS DRILLING - 0.7%
Nabors Industries, Ltd.* 53,000 3,134,420
-----------
OIL & GAS EQUIPMENT & SERVICES - 1.1%
Key Energy Services, Inc.* 438,000 5,023,860
-----------
OIL & GAS EXPLORATION & PRODUCTION - 3.8%
Denbury Resources, Inc.* 264,600 9,321,858
Pioneer Natural Resources Company 188,869 8,068,484
-----------
17,390,342
-----------
OIL & GAS REFINING, MARKETING & TRANSPORTATION - 2.6%
Williams Companies, Inc. 630,000 11,850,300
-----------
PACKAGED FOODS & MEATS - 3.9%
American Italian Pasta Company(1) 92,000 2,520,800
Hain Celestial Group, Inc.* 110,000 2,050,400
Hormel Foods Corporation 220,000 6,844,200
Tyson Foods, Inc. 400,000 6,672,000
-----------
18,087,400
-----------
PAPER PACKAGING - 2.2%
Bemis Company, Inc. 160,000 $ 4,979,200
Sonoco Products Company 174,000 5,019,900
-----------
9,999,100
-----------
PHARMACEUTICALS - 0.4%
Hollis-Eden Pharmaceuticals, Inc.* 192,403 1,355,479
Ligand Pharmaceuticals, Inc. (Cl.B)* 72,200 413,706
-----------
1,769,185
-----------
PROPERTY & CASUALTY INSURANCE - 4.1%
First American Corporation 238,500 7,856,190
United America Indemnity, Ltd.* 100,000 1,884,000
W.R. Berkley Corporation 180,000 8,928,000
-----------
18,668,190
-----------
REAL ESTATE INVESTMENT TRUSTS - 2.5%
Bimini Mortgage Management, Inc. 203,300 2,815,705
HomeBanc Corporation 434,400 3,840,096
MortgageIt Holdings, Inc. 291,800 4,654,210
-----------
11,310,011
-----------
REGIONAL BANKS - 1.8%
Corus Bankshares, Inc. 13,600 648,584
Mercantile Bankshares Corporation 67,000 3,407,620
Wilmington Trust Corporation 48,200 1,691,820
Zions Bancorporation 38,000 2,622,760
-----------
8,370,784
-----------
SEMICONDUCTOR EQUIPMENT - 1.0%
Ultratech, Inc.* 331,000 4,832,600
-----------
SEMICONDUCTORS - 2.4%
Applied Micro Circuits Corporation* 760,000 2,500,400
IXYS Corporation* 594,100 6,796,504
MIPS Technologies, Inc.* 6,300 72,450
Stats Chippac, Ltd. ADR* 261,000 1,725,210
-----------
11,094,564
-----------
SPECIALTY CHEMICALS - 1.1%
H.B. Fuller Company 100,000 2,900,000
Material Sciences Corporation* 85,700 1,152,665
Minerals Technologies, Inc. 15,000 986,700
-----------
5,039,365
-----------
SPECIALTY STORES - 0.5%
Bombay Company, Inc.* 400,400 2,122,120
-----------
TIRES & RUBBER - 1.5%
Bandag, Inc. 148,500 6,976,530
-----------
TRUCKING - 1.0%
SCS Transportation, Inc.* 11,000 204,490
Werner Enterprises, Inc. 225,000 4,371,750
-----------
4,576,240
-----------
61 See accompanying notes.
SECURITY EQUITY FUND
Schedule of Investments MID CAP VALUE SERIES
March 31, 2005 (unaudited)
PRINCIPAL
AMOUNT OR
NUMBER MARKET
OF SHARES VALUE
COMMON STOCKS (CONTINUED)
WIRELESS TELECOMMUNICATION SERVICES - 0.6%
Wireless Facilities, Inc.* 411,400 $ 2,571,250
-----------
TOTAL COMMON STOCKS
(cost $329,629,443) 438,255,603
-----------
WARRANTS - 0.0%
Electric City Corporation 442,750 103,081
-----------
TOTAL WARRANTS
(cost $414,564) 103,081
-----------
COMMERICAL PAPER - 3.6%
BANKING - 1.2%
UBS Finance (DE), Inc.:
2.63%, 04-04-05 $ 1,500,000 1,499,671
2.75%, 04-28-05 $ 3,000,000 2,993,812
2.81%, 05-06-05 $ 1,200,000 1,196,733
-----------
5,690,216
-----------
BROKERAGE - 1.0%
Goldman Sachs Group, Inc.,
2.77%, 04-29-05 $ 2,000,000 1,995,691
Morgan Stanley,
2.78%, 04-05-05 $ 2,500,000 2,499,228
-----------
4,494,919
-----------
FINANCIAL COMPANIES - NONCAPTIVE DIVERSIFIED - 1.4%
CIT Group, Inc.,
2.68%, 04-15-05 $ 1,000,000 998,958
Citigroup Global Markets:
2.75%, 04-01-05 $ 4,000,000 4,000,000
2.78%, 04-08-05 $ 1,500,000 1,499,189
-----------
6,498,147
-----------
TOTAL COMMERCIAL PAPER
(cost $16,683,283) 16,683,282
-----------
ASSET BACKED SECURITIES - 1.8%
FINANCIAL COMPANIES - DIVERSIFIED - 1.8%
Amsterdam Funding Corporation:
2.68%, 04-13-05 $ 2,000,000 1,998,213
2.70%, 04-19-05 $ 2,000,000 1,997,300
2.78%, 04-21-05 $ 1,000,000 998,456
2.79%, 04-26-05 $ 3,100,000 3,093,994
-----------
TOTAL ASSET BACKED SECURITIES
(cost $8,087,963) 8,087,963
-----------
PRINCIPAL MARKET
AMOUNT VALUE
REPURCHASE AGREEMENT - 0.2%
United Missouri Bank, 2.34%, 4-01-05
(Collateralized by GNMA,
4-20-28 with a value of $891,481
and a repurchase amount of
$874,057) $ 874,000 874,000
------------
TOTAL REPURCHASE AGREEMENT
(cost $874,000) 874,000
------------
TOTAL INVESTMENTS - 101.4%
(cost $357,169,253) 465,876,554
LIABILITIES, LESS CASH & OTHER ASSETS - (1.4%) (6,384,640)
------------
TOTAL NET ASSETS - 100.0% $459,491,914
============
For federal income tax purposes the identified cost of investments owned at
March 31, 2005 was $357,403,230.
*Non-income producing security
ADR (American Depositary Receipt)
(1) Security is segregated as collateral for written option contracts.
(2) Security is a 144A Series. The total market value of 144A securities is
$1,378,125 (cost $1,250,000), or 0.3% of total net assets.
62 See accompanying notes.
SECURITY EQUITY FUND
MID CAP VALUE SERIES
Statement of Assets and Liabilities (unaudited)
March 31, 2005
ASSETS:
Investments, at value(1)............................... $ 465,876,554
Cash................................................... 4,195
Receivables:
Fund shares sold................................. 2,300,546
Securities sold.................................. 361,719
Interest......................................... 28,177
Dividends........................................ 453,135
Prepaid expenses....................................... 45,042
--------------
Total assets........................................... 469,069,368
--------------
LIABILITIES:
Payable for:
Securities purchased............................. 7,366,014
Fund shares redeemed............................. 325,901
Written options, at value........................ 977,985
Management fees.................................. 333,023
Custodian fees................................... 2,421
Transfer agent and administration fees........... 74,818
Professional fees................................ 10,464
12b-1 distribution plan fees..................... 480,334
Other............................................ 6,494
--------------
Total liabilities...................................... 9,577,454
--------------
NET ASSETS............................................. $ 459,491,914
==============
NET ASSETS CONSIST OF:
Paid in capital........................................ $ 341,691,513
Accumulated net investment loss ....................... (434,285)
Accumulated undistributed net realized gain
on sale of investments and options .............. 9,535,242
Net unrealized appreciation in value of
investments and options ......................... 108,699,444
-------------
Net assets ............................................ $ 459,491,914
==============
CLASS A:
Capital shares outstanding
(unlimited number of shares authorized) ......... 9,131,630
Net assets ............................................ $ 297,730,584
Net asset value per share ............................. $ 32.60
==============
Maximum offering price per share
(net asset value divided by 94.25%).............. $ 34.59
==============
CLASS B:
Capital shares outstanding
(unlimited number of shares authorized) ......... 2,950,994
Net assets ............................................ $ 88,833,986
Net asset value, offering and redemption price
per share (excluding any applicable contingent
deferred sales charge) .......................... $ 30.10
==============
CLASS C:
Capital shares outstanding
(unlimited number of shares authorized) ......... 2,379,310
Net assets ............................................ $ 72,927,344
Net asset value, offering and redemption price
per share (excluding any applicable contingent
deferred sales charge) .......................... $ 30.65
==============
(1) Investments at cost ............................. $ 357,169,253
Statement of Operations
For the Six Months Ended March 31, 2005
INVESTMENT INCOME:
Dividends ....................................... $ 2,706,424
Interest ........................................ 304,005
--------------
Total investment income ......................... 3,010,429
--------------
EXPENSES:
Management fees ................................. 1,767,714
Custodian fees .................................. 15,655
Transfer agent/maintenance fees ................. 337,434
Administration fees ............................. 183,474
Directors' fees ................................. 4,044
Professional fees ............................... 27,676
Reports to shareholders ......................... 14,762
Registration fees ............................... 30,421
Other expenses .................................. 7,189
12b-1 distribution plan fees - Class A .......... 322,882
12b-1 distribution plan fees - Class B .......... 416,625
12b-1 distribution plan fees - Class C .......... 316,838
--------------
Total expenses .................................. 3,444,714
--------------
Net investment loss ............................. (434,285)
--------------
NET REALIZED AND UNREALIZED GAIN:
Net realized gain during the period on:
Investments ..................................... 9,515,095
Options written and purchased ................... 310,175
--------------
Net realized gain ............................... 9,825,270
--------------
Unrealized appreciation during the period on:
Investments ..................................... 42,144,538
Options written and purchased ................... 288,086
--------------
Net unrealized appreciation ..................... 42,432,624
--------------
Net gain ........................................ 52,257,894
--------------
Net increase in net assets
resulting from operations .................... $ 51,823,609
==============
63 See accompanying notes.
SECURITY EQUITY FUND
Statement of Changes in Net Assets MID CAP VALUE SERIES
SIX MONTHS
ENDED
MARCH 31,
2005 YEAR ENDED
(unaudited) SEPTEMBER 30, 2004
------------- ------------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment loss .................................................................. $ (434,285) $ (1,798,025)
Net realized gain during the period on investments and options written ............... 9,825,270 29,936,556
Unrealized appreciation during the period on investments and options written ......... 42,432,624 29,361,262
------------- ---------------
Net increase in net assets resulting from operations ................................. 51,823,609 57,499,793
------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net realized gain
Class A ........................................................................... (17,531,092) (1,473,564)
Class B ........................................................................... (6,133,050) (633,167)
Class C ........................................................................... (4,546,382) (407,446)
------------- ---------------
Total distributions to shareholders .................................................. (28,210,524) (2,514,177)
------------- ---------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from sale of shares
Class A ........................................................................... 77,599,050 132,501,639
Class B ........................................................................... 9,594,515 19,430,639
Class C ........................................................................... 17,837,824 21,596,162
Distributions reinvested
Class A ........................................................................... 16,302,405 1,356,918
Class B ........................................................................... 5,863,317 610,765
Class C ........................................................................... 4,260,542 381,240
Cost of shares redeemed
Class A ........................................................................... (27,436,597) (65,062,200)
Class B ........................................................................... (5,831,814) (12,576,287)
Class C ........................................................................... (6,752,021) (9,550,640)
------------- ---------------
Net increase from capital share transactions ......................................... 91,437,221 88,688,236
------------- ---------------
Net increase in net assets ........................................................... 115,050,306 143,673,852
------------- ---------------
NET ASSETS:
Beginning of period .................................................................. 344,441,608 200,767,756
------------- ---------------
End of period ........................................................................ $ 459,491,914 $ 344,441,608
============= ===============
Accumulated net investment loss at end of period ..................................... $ (434,285) $ _
============= ===============
CAPITAL SHARE ACTIVITY:
Shares sold
Class A ........................................................................... 2,392,748 4,668,091
Class B ........................................................................... 319,448 736,445
Class C ........................................................................... 584,651 801,556
Shares reinvested
Class A ........................................................................... 505,031 50,089
Class B ........................................................................... 196,294 24,065
Class C ........................................................................... 140,103 14,771
Shares redeemed
Class A ........................................................................... (849,581) (2,285,236)
Class B ........................................................................... (196,340) (475,742)
Class C ........................................................................... (222,099) (351,589)
64 See accompanying notes.
SECURITY EQUITY FUND
Financial Highlights MID CAP VALUE SERIES
Selected data for each share of capital stock
outstanding throughout each period
SIX MONTHS ENDED YEAR ENDED
MARCH 31, SEPTEMBER 30,
CLASS A 2005(f) 2004 2003 2002 2001 2000
- ------------------------------------------- ---------------- --------- -------- ----------- -------- ------------
PER SHARE DATA
Net asset value, beginning of period $ 30.45 $ 24.48 $ 16.90 $ 18.04 $ 20.75 $ 16.60
---------- --------- -------- ----------- -------- ---------
Income (loss) from investment operations:
Net investment income (loss)(c) 0.01 (0.09) (0.07) (0.04) - (0.04)
Net gain (loss) on securities (realized and
unrealized) 4.42 6.32 7.65 (0.78) (0.90) 4.89
---------- --------- -------- ----------- -------- ---------
Total from investment operations 4.43 6.23 7.58 (0.82) (0.90) 4.85
---------- --------- -------- ----------- -------- ---------
Less distributions:
Dividends from net investment income - - - - - -
Distributions from realized gains (2.28) (0.26) - 0.21) (1.81) (0.70)
Return of capital - - - (0.11) - -
---------- --------- -------- ----------- -------- ---------
Total distributions (2.28) (0.26) - (0.32) (1.81) (0.70)
---------- --------- -------- ----------- -------- ---------
Net asset value, end of period $ 32.60 $ 30.45 $ 24.48 $ 16.90 $ 18.04 $ 20.75
========== ========= ======== =========== ======== =========
TOTAL RETURN(a) 14.62% 25.59% 44.85% (4.89%) (4.54%) 30.46%
---------- --------- -------- ----------- -------- ---------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $ 297,731 $ 215,659 $113,822 $ 68,544 $ 50,541 $ 34,458
---------- --------- -------- ----------- -------- ---------
Ratios to average net assets:
Net investment income (loss) 0.06% (0.31%) (0.33%) (0.20%) 0.01% (0.25%)
Total expenses 1.43% 1.48% 1.65% 1.45% 1.30% 1.29%
Gross expenses(b) 1.43% 1.48% 1.65% 1.45% 1.30% 1.29%
Net expenses(d) 1.43% 1.48% 1.65% 1.45% 1.30% 1.29%
---------- --------- -------- ----------- -------- ---------
Portfolio turnover rate 19% 45% 52% 51% 55% 69%
SIX MONTHS ENDED YEAR ENDED
MARCH 31, SEPTEMBER 30,
CLASS B 2005(f) 2004 2003 2002 2001 2000
- ------------------------------------------- ---------------- --------- -------- ----------- -------- ------------
PER SHARE DATA
Net asset value, beginning of period $ 28.37 $ 22.99 $ 15.99 $ 17.26 $ 20.11 $ 16.26
---------- --------- -------- ----------- -------- ---------
Income (loss) from investment operations:
Net investment income (loss)(c) (0.10) (0.28) (0.20) (0.21) (0.19) (0.22)
Net gain (loss) on securities (realized
and unrealized) 4.11 5.92 7.20 (0.74) (0.85) 4.77
---------- --------- -------- ----------- -------- ---------
Total from investment operations 4.01 5.64 7.00 (0.95) (1.04) 4.55
---------- --------- -------- ----------- -------- ---------
Less distributions:
Dividends from net investment income - - - - - -
Distributions from realized gains (2.28) (0.26) - (0.21) (1.81) (0.70)
Return of capital - - - (0.11) - -
---------- --------- -------- ----------- -------- ---------
Total distributions (2.28) (0.26) - (0.32) (1.81) (0.70)
---------- --------- -------- ----------- -------- ---------
Net asset value, end of period $ 30.10 $ 28.37 $ 22.99 $ 15.99 $ 17.26 $ 20.11
========== ========= ======== =========== ======== =========
TOTAL RETURN(a) 14.19% 24.67% 43.78% (5.88%) (5.45%) 29.21%
---------- --------- -------- ----------- -------- ---------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $ 88,834 $ 74,650 $ 53,947 $ 37,136 $ 26,967 $ 14,041
---------- --------- -------- ----------- -------- ---------
Ratios to average net assets:
Net investment income (loss) (0.70%) (1.07%) (1.08%) (1.09%) (0.98%) (1.27%)
Total expenses 2.19% 2.23% 2.40% 2.34% 2.30% 2.32%
Gross expenses(b) 2.19% 2.23% 2.40% 2.34% 2.30% 2.32%
Net expenses(d) 2.19% 2.23% 2.40% 2.34% 2.30% 2.32%
---------- --------- -------- ----------- -------- ---------
Portfolio turnover rate 19% 45% 52% 51% 55% 69%
---------- --------- -------- ----------- -------- ---------
65 See accompanying notes.
SECURITY EQUITY FUND
MID CAP VALUE SERIES
Financial Highlights
Selected data for each share of capital stock outstanding throughout each period
SIX MONTHS ENDED YEAR ENDED
MARCH 31, SEPTEMBER 30,
CLASS C 2005(f) 2004 2003 2002(e) 2001 2000
- ------------------------------------------- ---------------- ------- ------- -------- --------- --------------
PER SHARE DATA
Net asset value, beginning of period $ 28.85 $ 23.37 $ 16.26 $ 17.53 $ 20.39 $ 16.51
---------- ------- ------- -------- --------- -------
Income (loss) from investment operations:
Net investment income (loss)(c) (0.10) (0.29) (0.21) (0.21) (0.19) (0.22)
Net gain (loss) on securities (realized and
unrealized) 4.18 6.03 7.32 (0.74) (0.86) 4.80
---------- ------- ------- -------- --------- -------
Total from investment operations 4.08 5.74 7.11 (0.95) (1.05) 4.58
---------- ------- ------- -------- --------- -------
Less distributions:
Dividends from net investment income - - - - -
Distributions from realized gains (2.28) (0.26) - (0.21) (1.81) (0.70)
Return of capital - - (0.11) - -
---------- ------- ------- -------- --------- -------
Total distributions (2.28) (0.26) - (0.32) (1.81) (0.70)
---------- ------- ------- -------- --------- -------
Net asset value, end of period $ 30.65 $ 28.85 $ 23.37 $ 16.26 $ 17.53 $ 20.39
========== ======= ======= ======== ========= =======
TOTAL RETURN(a) 14.20% 24.70% 43.73% (5.79%) (5.42%) 28.93%
---------- ------- ------- -------- --------- -------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $ 72,927 $54,133 $32,999 $ 18,785 $ 6,976 $ 3,069
---------- ------- ------- -------- --------- -------
Ratios to average net assets:
Net investment income (loss) (0.69%) (1.06%) (1.08%) (1.06%) (0.98%) (1.28%)
Total expenses 2.19% 2.23% 2.40% 2.35% 2.30% 2.36%
Gross expenses(b) 2.19% 2.23% 2.40% 2.35% 2.30% 2.36%
Net expenses(d) 2.19% 2.23% 2.40% 2.35% 2.30% 2.36%
---------- ------- ------- -------- --------- -------
Portfolio turnover rate 19% 45% 52% 51% 55% 69%
(a) Total return information does not reflect deduction of any sales charges
imposed at the time of purchase for Class A shares or upon redemption for
Class B and C.
(b) Gross expense information reflects expense ratios absent fund expense
reductions by the Investment Manager.
(c) Net investment income (loss) was computed using average shares outstanding
throughout the period.
(d) Net expense information reflects expense ratios after expense reductions
or fee waivers and reduction to custodian expenses.
(e) The financial highlights for Class C shares exclude the historical
financial highlights of Class S shares. Class S shares were exchanged for
Class C shares on June 3, 2002.
(f) Unaudited figures for the six months ended March 31, 2005. Percentage
amounts for the period, except total return, have been annualized.
66 See accompanying notes.
SECURITY EQUITY FUND
Select 25(R) Series
[SECURITY FUNDS LOGO]
ADVISOR,
SECURITY MANAGEMENT COMPANY, LLC
67
SECURITY EQUITY FUND
Performance Summary SELECT 25(R) SERIES
May 15, 2005 (unaudited)
PERFORMANCE
SECURITY SELECT 25(R) SERIES VS. S&P 500
INDEX & RUSSELL 1000 GROWTH INDEX
[PERFORMANCE GRAPH]
SELECT 25
DATE value
01/29/99 9,425
03/31/99 9,802
06/30/99 9,915
09/30/99 9,925
12/31/99 11,734
03/31/00 11,574
06/30/00 11,065
09/30/00 10,688
12/31/00 9,661
03/31/01 8,228
06/30/01 8,794
09/30/01 7,144
12/31/01 8,605
03/31/02 8,539
06/30/02 7,003
09/30/02 6,145
12/31/02 6,343
03/31/03 6,173
06/30/03 6,777
09/30/03 6,852
12/31/03 7,418
03/31/04 7,719
06/30/04 7,776
09/30/04 7,361
12/31/04 8,228
03/31/05 7,955
RUSSELL 1000 GROWTH INDEX
DATE value
- ----------------- ------
INCEPTION 1/29/99 10,000
3/31/99 10,046
6/30/99 10,433
9/30/99 10,050
12/31/99 12,577
3/31/00 13,474
06/30/00 13,109
09/30/00 12,404
12/31/00 9,757
03/31/01 7,718
06/30/01 8,367
09/30/01 6,743
12/31/01 7,765
03/31/02 7,564
06/30/02 6,151
09/30/02 5,226
12/31/02 5,599
03/31/03 5,539
06/30/03 6,331
09/30/03 6,579
12/31/03 7,265
03/31/04 7,322
06/30/04 7,464
09/30/04 7,074
12/31/04 7,723
03/31/05 7,408
S&P 500
DATE value
- ----------------- ------
INCEPTION 1/29/99 10,000
3/31/99 10,076
6/30/99 10,786
9/30/99 10,112
12/31/99 11,616
3/31/00 11,883
06/30/00 11,568
09/30/00 11,456
12/31/00 10,561
03/31/01 9,309
06/30/01 9,854
09/30/01 8,409
12/31/01 9,308
03/31/02 9,333
06/30/02 8,083
09/30/02 6,687
12/31/02 7,252
03/31/03 7,023
06/30/03 8,105
09/30/03 8,319
12/31/03 9,333
03/31/04 9,491
06/30/04 9,655
09/30/04 9,474
12/31/04 10,349
03/31/05 10,126
$10,000 SINCE INCEPTION
This chart assumes a $10,000 investment in Class A shares of Select 25(R) Series
on January 29, 1999 (date of inception), reflects deduction of the 5.75% sales
load and assumes all dividends reinvested. The chart does not reflect the
deduction of taxes that a shareholder would pay on distributions or the
redemption of fund shares. The Select 25(R) Series changed its benchmark to the
Russell 1000 Growth Index. The Investment Manager has determined that the
Russell 1000 Growth Index is a more appropriate index than the S&P 500 Index,
which is a capitalization-weighted index composed of 500 selected common stocks
that represent the broad domestic economy and is widely recognized unmanaged
index of market performance, because the Russell 1000 Growth Index more closely
reflects the types of securities in which the Series invests and thus provides
shareholders with a more appropriate benchmark against which to compare the
Series' performance.
AVERAGE ANNUAL RETURNS
PERIODS ENDED 3-31-05 1 YEAR 5 YEARS SINCE INCEPTION
- -------------------------- ------ ------- ----------------
A Shares 3.05% (7.23%) (2.71%) (1-29-99)
A Shares with sales charge (2.88%) (8.32%) (3.64%) (1-29-99)
B Shares 2.28% (7.91%) (3.40%) (1-29-99)
B Shares with CDSC (2.72%) (8.28%) (3.40%) (1-29-99)
C Shares 2.27% (7.93%) (3.36%) (1-29-99)
C Shares with CDSC 1.27% (7.93%) (3.36%) (1-29-99)
The performance data above represent past performance that is not predictive of
future results. The investment return and principal value of an investment in
the Series will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost. The figures above do not reflect
deduction of the maximum front-end sales charge of 5.75% for Class A shares or
the contingent deferred sales charge of 5% for Class B shares and 1% for Class C
shares, as applicable, except where noted. The figures do not reflect the
deduction of taxes that a shareholder would pay on distributions or redemption
of shares. Such figures would be lower if the maximum sales charge and any
applicable taxes were deducted.
PORTFOLIO COMPOSITION BY SECTOR
Consumer Discretionary 16.15%
Consumer Staples 12.19
Energy 12.50
Financials 7.68
Health Care 10.68
Industrials 17.35
Information Technology 12.53
Materials 4.43
Utilities 6.46
Cash & other assets, less liabilities 0.03
68 See accompanying notes.
SECURITY EQUITY FUND
SELECT 25(R) SERIES
(unaudited)
Performance Summary
May 15, 2005
PERFORMANCE
INFORMATION ABOUT YOUR SERIES EXPENSES
CALCULATING YOUR ONGOING SERIES EXPENSES
EXAMPLE
As a shareholder of the Series, you incur two types of costs: (1) transaction
costs, which may include sales charges (loads) on purchase payments; contingent
deferred sales charges on redemptions; and redemption fees, if any; and (2)
ongoing costs, including management fees; distribution and/or service fees
(12b-1); and other Series expenses. This Example is intended to help you
understand your ongoing costs (in dollars) of investing in the Series and to
compare these costs with ongoing costs of investing in other mutual funds. The
Example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period, October 1, 2004 - March 31, 2005.
ACTUAL EXPENSES
The first line for each class of shares in the table provides information about
actual account values and actual expenses. You may use the information in this
table, together with the amount you invested, to estimate the expenses that you
paid over the period. Simply divide your account value by $1,000 (for example,
an $8,600 account value divided by $1,000 = 8.6), then multiply the result by
the number in the table under the heading entitled "Expenses Paid During Period"
to estimate the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line for each class of shares in the table provides information about
hypothetical account values and hypothetical expenses based on the Series actual
expense ratio and an assumed rate of return of 5% per year before expenses,
which is not the Series actual return. The hypothetical account values and
expenses may not be used to estimate the actual ending account balance or
expenses you paid for the period. You may use this information to compare the
ongoing costs of investing in the Series and other funds. To do so, compare this
5% hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads) on purchase payments, contingent deferred sales charges on
redemptions, and redemption fees, if any. Therefore, the second line for each
class of shares is useful in comparing ongoing costs only, and will not help you
determine the relative total costs of owning different funds. In addition, if
these transactional costs were included, your costs would have been higher.
FUND EXPENSES
BEGINNING ENDING EXPENSES PAID
ACCOUNT VALUE ACCOUNT VALUE DURING
10-01-04 03-31-05(1) PERIOD(2)
------------- ------------- -------------
Select 25(R)
Series - Class A
Actual $1,000.00 $1,080.70 $ 8.66
Hypothetical 1,000.00 1,016.60 8.40
Select 25(R)
Series - Class B
Actual 1,000.00 1,077.30 12.53
Hypothetical 1,000.00 1,012.86 12.14
Select 25(R)
Series - Class C
Actual 1,000.00 1,077.10 12.53
Hypothetical 1,000.00 1,012.86 12.14
(1) The actual ending account value is based on the actual total return of the
Series for the period October 1, 2004 to March 31, 2005 after actual
expenses and will differ from the hypothetical ending account value which
is based on the Series expense ratio and a hypothetical annual return of
5% before expenses. The actual cumulative return at net asset value for
the period October 1, 2004 to March 31, 2005 was 8.07%,7.73% and 7.71%,
for Class A, B and C class shares, respectively.
(2) Expenses are equal to the Series annualized expense ratio (1.67%, 2.42%
and 2.42% for Class A, B and C class shares, respectively) multiplied by
the average account value over the period, multiplied by 182/365 (to
reflect the one-half year period).
69
SECURITY EQUITY FUND
SELECT 25(R) SERIES
(unaudited)
Schedule of Investments
March 31, 2005
NUMBER MARKET
OF SHARES VALUE
---------- ----------
COMMON STOCKS - 100.0%
AEROSPACE & DEFENSE - 4.9%
L-3 Communications Holdings, Inc. 15,000 $ 1,065,300
-----------
AIR FREIGHT & LOGISTICS - 5.6%
FedEx Corporation 12,800 1,202,560
-----------
BIOTECHNOLOGY - 4.2%
Amgen, Inc.* 15,500 902,255
-----------
BREWERS - 3.9%
Anheuser-Busch Companies, Inc. 18,000 853,020
-----------
BROADCASTING & Cable TV - 2.7%
Univision Communications, Inc.* 21,000 581,490
-----------
COMMUNICATIONS EQUIPMENT - 7.9%
3Com Corporation* 123,000 437,880
ADC Telecommunications, Inc.* 292,800 582,672
Cisco Systems, Inc.* 38,000 679,820
-----------
1,700,372
-----------
CONSTRUCTION & ENGINEERING - 6.9%
Shaw Group, Inc.* 68,000 1,482,400
-----------
DATA PROCESSING & OUTSOURCED SERVICES - 3.6%
First Data Corporation 20,000 786,200
-----------
ELECTRIC UTILITIES - 6.5%
KFx, Inc.* 104,300 1,397,620
-----------
HEALTH CARE EQUIPMENT - 2.0%
Medtronic, Inc. 8,500 433,075
-----------
HOME IMPROVEMENT RETAIL - 2.7%
Home Depot, Inc. 15,000 573,600
-----------
HOTELS, RESORTS & CRUISE LINES - 4.5%
Carnival Corporation 19,000 984,390
-----------
HYPERMARKETS & SUPERCENTERS - 3.7%
Wal-Mart Stores, Inc. 16,000 801,760
-----------
INDUSTRIAL GASES - 4.4%
Praxair, Inc. 20,000 957,200
-----------
MOTORCYCLE MANUFACTURERS - 2.2%
Harley-Davidson, Inc. 8,100 467,856
-----------
MOVIES & ENTERTAINMENT - 4.1%
Viacom, Inc. (Cl.B) 25,400 884,682
-----------
MULTI-LINE INSURANCE - 3.5%
American International Group, Inc. 13,500 748,035
-----------
OIL & GAS EQUIPMENT & SERVICES - 5.8%
BJ Services Company 24,000 1,245,120
-----------
OIL & GAS REFINING, MARKETING & TRANSPORTATION - 6.7%
Williams Companies, Inc. 77,500 1,457,775
-----------
OTHER DIVERSIFIED FINANCIAL SERVICES - 4.2%
Citigroup, Inc. 20,300 912,282
-----------
PHARMACEUTICALS - 4.5%
Johnson & Johnson 14,500 973,820
----------
SEMICONDUCTOR EQUIPMENT - 1.0%
Mindspeed Technologies, Inc.* 100,000 $ 223,000
-----------
SOFT DRINKS - 4.5%
PepsiCo, Inc. 18,500 981,055
TOTAL COMMON STOCKS
(cost $18,213,656) 21,614,867
-----------
TOTAL INVESTMENTS - 100.0%
(cost $18,213,656) 21,614,867
CASH & OTHER ASSETS, LESS LIABILITIES - 0.0% 5,271
-----------
TOTAL NET ASSETS - 100.0% $21,620,138
===========
The identified cost of investments owned at March 31, 2005 was the same for
federal income tax and financial statement purposes.
*Non-income producing security
70 See accompanying notes.
SECURITY EQUITY FUND
SELECT 25(R) SERIES
(unaudited)
Statement of Assets and Liabilities
March 31, 2005
ASSETS:
Investments, at value(1) ........................... $ 21,614,867
Cash ............................................... 12,795
Receivables:
Fund shares sold ................................. 2,711
Dividends ........................................ 8,906
Prepaid expenses ................................... 22,122
------------
Total assets ....................................... 21,661,401
------------
LIABILITIES:
Payable for:
Fund shares redeemed ............................. 318
Management fees .................................. 14,301
Custodian fees ................................... 198
Transfer agent and administration fees ........... 5,804
Professional fees ................................ 4,813
12b-1 distribution plan fees ..................... 13,328
Other ............................................ 2,501
------------
Total liabilities .................................. 41,263
------------
NET ASSETS ......................................... $ 21,620,138
============
NET ASSETS CONSIST OF:
Paid in capital .................................... $ 30,665,229
Accumulated net investment loss .................... (136,454)
Accumulated net realized loss
on sale of investments ........................... (12,309,848)
Net unrealized appreciation in value
of investments ................................... 3,401,211
------------
Net assets ......................................... $ 21,620,138
============
CLASS A:
Capital shares outstanding
(unlimited number of shares authorized) .......... 1,061,615
Net assets ......................................... $ 8,964,259
Net asset value per share .......................... $ 8.44
============
Maximum offering price per share
(net asset value divided by 94.25%) .............. $ 8.95
============
CLASS B:
Capital shares outstanding
(unlimited number of shares authorized) .......... 898,614
Net assets ......................................... $ 7,259,157
Net asset value, offering and redemption price
per share (excluding any applicable contingent
deferred sales charge) ........................... $ 8.08
============
CLASS C:
Capital shares outstanding
(unlimited number of shares authorized) .......... 666,090
Net assets ......................................... $ 5,396,722
Net asset value, offering and redemption price
per share (excluding any applicable contingent
deferred sales charge) ........................... $ 8.10
============
(1) Investments, at cost ........................... $ 18,213,656
Statement of Operations
For the Six Months Ended March 31, 2005
INVESTMENT INCOME:
Dividends .......................................... $ 95,402
Interest ........................................... 4,544
-----------
Total investment income ............................ 99,946
-----------
EXPENSES:
Management fees .................................... 84,653
Custodian fees ..................................... 2,121
Transfer agent/maintenance fees .................... 35,256
Administration fees ................................ 12,422
Directors' fees .................................... 277
Professional fees .................................. 5,161
Reports to shareholders ............................ 1,668
Registration fees .................................. 16,466
Other expenses ..................................... 1,133
12b-1 distribution plan fees - Class A ............. 11,876
12b-1 distribution plan fees - Class B ............. 37,651
12b-1 distribution plan fees - Class C ............. 27,716
-----------
Total expenses ..................................... 236,400
-----------
Net investment loss ................................ (136,454)
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized loss during the period on:
Investments ........................................ (306,235)
-----------
Net realized loss .................................. (306,235)
-----------
Unrealized appreciation during the period on:
Investments ........................................ 2,155,500
-----------
Net unrealized appreciation ........................ 2,155,500
-----------
Net gain ........................................... 1,849,265
-----------
Net increase in net assets
resulting from operations .......................... $ 1,712,811
===========
71 See accompanying notes.
SECURITY EQUITY FUND
SELECT 25(R) SERIES
Statement of Changes in Net Assets
SIX MONTHS
ENDED YEAR ENDED
MARCH 31, 2005 SEPTEMBER 30, 2004
-------------- ------------------
(unaudited)
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment loss......................................................... $ (136,454) $ (296,848)
Net realized gain (loss) during the period on investments................... (306,235) 369,019
Unrealized appreciation during the period on investments.................... 2,155,500 1,699,912
------------ -----------
Net increase in net assets resulting from operations........................ 1,712,811 1,772,083
------------ -----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from sale of shares
Class A.................................................................... 619,822 1,637,921
Class B.................................................................... 417,455 715,600
Class C.................................................................... 234,366 833,037
Cost of shares redeemed
Class A.................................................................... (1,637,192) (3,579,210)
Class B.................................................................... (1,048,355) (2,158,912)
Class C.................................................................... (1,106,267) (1,616,683)
------------ -----------
Net decrease from capital share transactions................................ (2,520,171) (4,168,247)
------------ -----------
Net decrease in net assets ................................................. (807,360) (2,396,164)
------------ -----------
NET ASSETS:
Beginning of period......................................................... 22,427,498 24,823,662
------------ -----------
End of period............................................................... $ 21,620,138 $22,427,498
============ ===========
Accumulated net investment loss at end of period............................ $ (136,454) $ -
============ ===========
CAPITAL SHARE ACTIVITY:
Shares sold
Class A.................................................................... 73,086 204,861
Class B.................................................................... 51,557 93,954
Class C.................................................................... 28,261 108,652
Shares redeemed
Class A.................................................................... (192,854) (452,794)
Class B.................................................................... (130,594) (282,274)
Class C.................................................................... (142,013) (210,959)
72 See accompanying notes.
SECURITY EQUITY FUND
SELECT 25(R) SERIES
Financial Highlights
Selected data for each share of capital stock
outstanding throughout each period
SIX MONTHS ENDED YEAR ENDED
MARCH 31, SEPTEMBER 30,
CLASS A 2005(f) 2004 2003 2002 2001 2000
- ------- ---------------- ---------- ---------- ---------- ---------- -------------
PER SHARE DATA
Net asset value, beginning of period $ 7.81 $ 7.27 $ 6.52 $ 7.58 $ 11.34 $ 10.53
---------- ---------- ---------- ---------- ---------- ----------
Income (loss) from investment operations:
Net investment income (loss)(c) (0.03) (0.06) (0.05) (0.07) (0.06) (0.09)
Net gain (loss) on securities (realized and
unrealized) 0.66 0.60 0.80 (0.99) (3.70) 0.90
---------- ---------- ---------- ---------- ---------- ----------
Total from investment operations 0.63 0.54 0.75 (1.06) (3.76) 0.81
---------- ---------- ---------- ---------- ---------- ----------
Less distributions:
Dividends from net investment income - - - - - -
Distributions from realized gains - - - - - -
---------- ---------- ---------- ---------- ---------- ----------
Total distributions - - - - - -
---------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 8.44 $ 7.81 $ 7.27 $ 6.52 $ 7.58 $ 11.34
========== ========== ========== ========== ========== ==========
TOTAL RETURN(a) 8.07% 7.43% 11.50% (13.98%) (33.16%) 7.69%
---------- ---------- ---------- ---------- ---------- ----------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $ 8,964 $ 9,228 $ 10,396 $ 11,933 $ 14,347 $ 22,006
---------- ---------- ---------- ---------- ---------- ----------
Ratios to average net assets:
Net investment income (loss) (0.78%) (0.75%) (0.70%) (0.81%) (0.60%) (0.74%)
Total expenses 1.67% 1.56% 1.63% 1.46% 1.39% 1.35%
Gross expenses(b) 1.67% 1.56% 1.63% 1.46% 1.39% 1.35%
Net expenses(d) 1.67% 1.56% 1.63% 1.46% 1.39% 1.35%
---------- ---------- ---------- ---------- ---------- ----------
Portfolio turnover rate 17% 44% 54% 33% 44% 89%
SIX MONTHS ENDED YEAR ENDED
MARCH 31, SEPTEMBER 30,
CLASS B 2005(f) 2004 2003 2002 2001 2000
- ------- ---------------- ---------- ---------- ---------- ---------- -------------
PER SHARE DATA
Net asset value, beginning of period $ 7.50 $ 7.04 $ 6.36 $ 7.44 $ 11.22 $ 10.52
---------- ---------- ---------- ---------- ---------- ----------
Income (loss) from investment operations:
Net investment income (loss)(c) (0.06) (0.11) (0.10) (0.13) (0.13) (0.17)
Net gain (loss) on securities (realized and
unrealized) 0.64 0.57 0.78 (0.95) (3.65) 0.87
---------- ---------- ---------- ---------- ---------- ----------
Total from investment operations 0.58 0.46 0.68 (1.08) (3.78) 0.70
---------- ---------- ---------- ---------- ---------- ----------
Less distributions:
Dividends from net investment income - - - - - -
Distributions from realized gains - - - - - -
---------- ---------- ---------- ---------- ---------- ----------
Total distributions - - - - - -
---------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 8.08 $ 7.50 $ 7.04 $ 6.36 $ 7.44 $ 11.22
========== ========== ========== ========== ========== ==========
TOTAL RETURN(a) 7.73% 6.53% 10.69% (14.52%) (33.69%) 6.65%
---------- ---------- ---------- ---------- ---------- ----------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $ 7,259 $ 7,333 $ 8,203 $ 8,566 $ 11,519 $ 18,199
---------- ---------- ---------- ---------- ---------- ----------
Ratios to average net assets:
Net investment income (loss) (1.53%) (1.50%) (1.45%) (1.56%) (1.35%) (1.49%)
Total expenses 2.42% 2.31% 2.38% 2.21% 2.14% 2.11%
Gross expenses(b) 2.42% 2.31% 2.38% 2.21% 2.14% 2.11%
Net expenses(d) 2.42% 2.31% 2.38% 2.21% 2.14% 2.11%
---------- ---------- ---------- ---------- ---------- ----------
Portfolio turnover rate 17% 44% 54% 33% 44% 89%
73 See accompanying notes.
SECURITY EQUITY FUND
SELECT 25(R) SERIES
Financial Highlights
Selected data for each share of capital stock outstanding throughout each period
SIX MONTHS ENDED YEAR ENDED
MARCH 31, SEPTEMBER 30,
CLASS C 2005(f) 2004 2003 2002(e) 2001 2000
- ------- ---------------- --------- --------- --------- --------- -------------
PER SHARE DATA
Net asset value, beginning of period $ 7.52 $ 7.06 $ 6.38 $ 7.47 $ 11.26 $ 10.55
--------- --------- --------- --------- --------- ---------
Income (loss) from investment operations:
Net investment income (loss)(c) (0.06) (0.11) (0.10) (0.13) (0.13) (0.17)
Net gain (loss) on securities (realized and
unrealized) 0.64 0.57 0.78 (0.96) (3.66) 0.88
--------- --------- --------- --------- --------- ---------
Total from investment operations 0.58 0.46 0.68 (1.09) (3.79) 0.71
--------- --------- --------- --------- --------- ---------
Less distributions:
Dividends from net investment income - - - - - -
Distributions from realized gains - - - - - -
--------- --------- --------- --------- --------- ---------
Total distributions - - - - - -
--------- --------- --------- --------- --------- ---------
Net asset value, end of period $ 8.10 $ 7.52 $ 7.06 $ 6.38 $ 7.47 $ 11.26
========= ========= ========= ========= ========= =========
TOTAL RETURN(a) 7.71% 6.52% 10.66% (14.59%) (33.66%) 6.73%
--------- --------- --------- --------- --------- ---------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $ 5,397 $ 5,866 $ 6,225 $ 3,954 $ 4,531 $ 7,294
--------- --------- --------- --------- --------- ---------
Ratios to average net assets:
Net investment income (loss) (1.53%) (1.50%) (1.44%) (1.56%) (1.35%) (1.49%)
Total expenses 2.42% 2.31% 2.37% 2.21% 2.14% 2.10%
Gross expenses(b) 2.42% 2.31% 2.37% 2.21% 2.14% 2.10%
Net expenses(d) 2.42% 2.31% 2.37% 2.21% 2.14% 2.10%
--------- --------- --------- --------- --------- ---------
Portfolio turnover rate 17% 44% 54% 33% 44% 89%
(a) Total return information does not reflect deduction of any sales charges
imposed at the time of purchase for Class A shares or upon redemption for
Class B and C.
(b) Gross expense information reflects expense ratios absent fund expense
reductions by the Investment Manager.
(c) Net investment income (loss) was computed using average shares outstanding
throughout the period.
(d) Net expense information reflects expense ratios after expense reductions
or fee waivers and reduction to custodian expenses.
(e) The financial highlights for Class C shares exclude the historical
financial highlights of Class S shares. Class S shares were exchanged for
Class C shares on June 3, 2002.
(f) Unaudited figures for the six months ended March 31, 2005. Percentage
amounts for the period, except total return, have been annualized.
74 See accompanying notes.
SECURITY EQUITY FUND
Small Cap Growth Series
[RS INVESTMENTS LOGO]
SUBADVISOR,
RS INVESTMENTS
75
SECURITY EQUITY FUND
SMALL CAP GROWTH SERIES
(unaudited)
Performance Summary
May 15, 2005
PERFORMANCE
Security Small Cap Growth Series vs. Russell 2000 Growth Index
[PERFORMANCE GRAPH]
SMALL CAP GROWTH
DATE value
10/15/97 9,425
12/31/97 9,063
03/31/98 10,129
06/30/98 9,921
09/30/98 8,205
12/31/98 10,006
03/31/99 10,016
06/30/99 10,572
09/30/99 12,241
12/31/99 18,728
3/31/00 23,781
6/30/00 20,742
9/30/00 21,371
12/31/00 16,927
03/31/01 12,357
06/30/01 13,573
09/30/01 10,271
12/31/01 12,043
03/31/02 11,665
06/30/02 10,428
09/30/02 8,259
12/31/02 8,752
03/31/03 8,248
06/30/03 10,523
09/30/03 12,189
12/31/03 13,573
03/31/04 14,453
06/30/04 14,223
09/30/04 13,740
12/31/04 15,763
03/31/05 14,757
RUSSELL 2000 GROWTH
DATE value
- -------------------------- ------
INCEPTION 10/15/97 10,000
12/31/97 9,181
03/31/98 10,272
06/30/98 9,681
09/30/98 7,517
12/31/98 9,294
03/31/99 9,138
06/30/99 10,485
09/30/99 9,970
12/31/99 13,300
03/31/00 14,535
06/30/00 13,463
09/30/00 12,928
12/31/00 10,316
03/31/01 8,747
06/30/01 10,320
09/30/01 7,421
12/31/01 9,363
03/31/02 9,180
06/30/02 7,739
09/30/02 6,074
12/31/02 6,529
03/31/03 6,276
06/30/03 7,791
09/30/03 8,606
12/31/03 9,698
03/31/04 10,240
06/30/04 10,250
09/30/04 9,634
12/31/04 11,086
03/31/05 10,330
$10,000 SINCE INCEPTION
This chart assumes a $10,000 investment in Class A shares of Small Cap Growth
Series on October 15, 1997 (date of inception), reflects deduction of the 5.75%
sales load and assumes all dividends reinvested. The chart does not reflect the
deduction of taxes that a shareholder would pay on distributions or the
redemption of fund shares.
PORTFOLIO COMPOSITION BY SECTOR
Consumer Discretionary 14.60%
Consumer Staples 1.00
Energy 6.76
Financials 6.97
Health Care 21.93
Industrials 15.67
Information Technology 24.54
Materials 1.27
Repurchase Agreement 7.67
Liabilities, less cash & other assets (0.41)
AVERAGE ANNUAL RETURNS
PERIODS ENDED 3-31-05 1 YEAR 5 YEARS SINCE INCEPTION
- --------------------- ------ ------- ---------------
A Shares 2.10% (9.10%) 6.19% (10-15-97)
A Shares with sales charge (3.76%) (10.17%) 5.35% (10-15-97)
B Shares 1.31% (9.85%) 5.22% (10-15-97)
B Shares with CDSC (3.69%) (10.21%) 5.22% (10-15-97)
C Shares 1.29% (9.85%) 4.74% (1-29-99)
C Shares with CDSC 0.29% (9.85%) 4.74% (1-29-99)
The performance data above represent past performance that is not predictive of
future results. The investment return and principal value of an investment in
the Series will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost. The figures above do not reflect
deduction of the maximum front-end sales charge of 5.75% for Class A shares or
the contingent deferred sales charge of 5% for Class B shares and 1% for Class C
shares, as applicable, except where noted. The figures do not reflect the
deduction of taxes that a shareholder would pay on distributions or redemption
of shares. Such figures would be lower if the maximum sales charge and any
applicable taxes were deducted. Fee waivers reduced expenses of the Series and
in the absence of such waiver, the performance quoted would be reduced.
76 See accompanying notes.
SECURITY EQUITY FUND
SMALL CAP GROWTH SERIES
(unaudited)
Performance Summary
May 15, 2005
PERFORMANCE
INFORMATION ABOUT YOUR SERIES EXPENSES
CALCULATING YOUR ONGOING SERIES EXPENSES
EXAMPLE
As a shareholder of the Series, you incur two types of costs: (1) transaction
costs, which may include sales charges (loads) on purchase payments; contingent
deferred sales charges on redemptions; and redemption fees, if any; and (2)
ongoing costs, including management fees; distribution and/or service fees
(12b-1); and other Series expenses. This Example is intended to help you
understand your ongoing costs (in dollars) of investing in the Series and to
compare these costs with ongoing costs of investing in other mutual funds. The
Example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period, October 1, 2004 - March 31, 2005.
ACTUAL EXPENSES
The first line for each class of shares in the table provides information about
actual account values and actual expenses. You may use the information in this
table, together with the amount you invested, to estimate the expenses that you
paid over the period. Simply divide your account value by $1,000 (for example,
an $8,600 account value divided by $1,000 = 8.6), then multiply the result by
the number in the table under the heading entitled "Expenses Paid During Period"
to estimate the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line for each class of shares in the table provides information about
hypothetical account values and hypothetical expenses based on the Series actual
expense ratio and an assumed rate of return of 5% per year before expenses,
which is not the Series actual return. The hypothetical account values and
expenses may not be used to estimate the actual ending account balance or
expenses you paid for the period. You may use this information to compare the
ongoing costs of investing in the Series and other funds. To do so, compare this
5% hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads) on purchase payments, contingent deferred sales charges on
redemptions, and redemption fees, if any. Therefore, the second line for each
class of shares is useful in comparing ongoing costs only, and will not help you
determine the relative total costs of owning different funds. In addition, if
these transactional costs were included, your costs would have been higher.
FUND EXPENSES
BEGINNING ENDING EXPENSES PAID
ACCOUNT VALUE ACCOUNT VALUE DURING
10-01-04 03-31-05(1) PERIOD(2)
------------- ------------- -------------
Small Cap Growth
Series - Class A
Actual $1,000.00 $1,074.00 $ 10.60
Hypothetical 1,000.00 1,014.71 10.30
Small Cap Growth
Series - Class B
Actual 1,000.00 1,070.30 14.45
Hypothetical 1,000.00 1,010.92 14.04
Small Cap Growth
Series - Class C
Actual 1,000.00 1.069.80 14.45
Hypothetical 1,000.00 1,010.97 14.04
(1) The actual ending account value is based on the actual total return of the
Series for the period October 1, 2004 to March 31, 2005 after actual
expenses and will differ from the hypothetical ending account value which
is based on the Series expense ratio and a hypothetical annual return of
5% before expenses. The actual cumulative return at net asset value for
the period October 1, 2004 to March 31, 2005 was 7.40%, 7.03% and 6.98%,
for Class A, B and C class shares, respectively.
(2) Expenses are equal to the Series annualized expense ratio (2.05%, 2.80%
and 2.80% for Class A, B and C class shares, respectively), net of any
applicable fee waivers or earnings credits, multiplied by the average
account value over the period, multiplied by 182/365 (to reflect the
one-half year period).
77
SECURITY EQUITY FUND
SMALL CAP GROWTH SERIES
(unaudited)
Schedule of Investments
March 31, 2005
NUMBER MARKET
OF SHARES VALUE
---------- ----------
COMMON STOCKS - 92.7%
AEROSPACE & DEFENSE - 3.8%
DRS Technologies, Inc.* 11,920 $ 506,600
Engineered Support Systems, Inc. 8,390 449,033
Mercury Computer Systems, Inc.* 16,120 444,590
----------
1,400,223
----------
AIR FREIGHT & LOGISTICS - 0.8%
Forward Air Corporation 6,850 291,673
----------
APPAREL RETAIL - 2.3%
Charlotte Russe Holding, Inc.* 24,650 318,478
Jos. A. Bank Clothiers, Inc.* 18,147 531,707
----------
850,185
----------
APPAREL, ACCESSORIES & LUXURY GOODS - 1.2%
Ashworth, Inc.* 39,410 448,880
----------
APPLICATION SOFTWARE - 3.9%
Epicor Software Corporation* 28,870 378,197
SafeNet, Inc.* 16,940 496,511
Sonic Solutions* 18,000 270,900
Synplicity, Inc.* 55,030 308,718
----------
1,454,326
----------
AUTO PARTS & EQUIPMENT - 0.8%
IMPCO Technologies, Inc.* 54,850 294,819
----------
BIOTECHNOLOGY - 2.7%
Alexion Pharmaceuticals, Inc.* 13,520 292,911
OraSure Technologies, Inc.* 10,300 75,808
QLT, Inc.* 26,350 338,861
Rigel Pharmaceuticals, Inc.* 17,270 277,011
----------
984,591
----------
BUILDING PRODUCTS - 1.8%
NCI Building Systems, Inc.* 9,430 363,998
Trex Company, Inc.* 7,130 316,643
----------
680,641
----------
CASINOS & GAMING - 2.8%
Century Casinos, Inc.* 10,200 92,514
Mikohn Gaming Corporation* 12,400 155,744
Scientific Games Corporation* 33,710 770,273
----------
1,018,531
----------
COMMUNICATIONS EQUIPMENT - 0.9%
Symmetricom, Inc.* 29,580 328,042
----------
COMPUTER STORAGE & PERIPHERALS - 0.8%
M-Systems Flash Disk Pioneers, Ltd.* 13,150 289,826
----------
CONSTRUCTION MATERIALS - 1.3%
Headwaters, Inc.* 14,270 468,341
----------
CONSUMER FINANCE - 0.8%
Cash America International, Inc. 13,920 305,266
----------
DISTRIBUTORS - 1.1%
Beacon Roofing Supply, Inc.* 17,930 392,398
----------
DIVERSIFIED COMMERCIAL SERVICES - 5.0%
FirstService Corporation 8,800 $ 177,672
Laureate Education, Inc.* 10,910 466,839
McGrath Rentcorp 27,240 636,871
Navigant Consulting, Inc.* 12,550 341,737
Rollins, Inc. 12,000 223,200
----------
1,846,319
----------
ELECTRICAL COMPONENTS & EQUIPMENT - 0.9%
Artesyn Technologies, Inc.* 37,660 328,019
----------
ELECTRONIC EQUIPMENT MANUFACTURERS - 2.7%
BEI Technologies, Inc. 13,950 334,382
Optimal Group, Inc.* 19,360 351,965
X-Rite, Inc. 20,430 307,267
----------
993,614
----------
ELECTRONIC MANUFACTURING SERVICES - 1.1%
RadiSys Corporation* 29,800 421,968
----------
EMPLOYMENT SERVICES - 1.4%
Kforce, Inc.* 45,590 501,034
----------
HEALTH CARE DISTRIBUTORS - 1.0%
Priority Healthcare Corporation (Cl.B)* 17,510 378,741
----------
HEALTH CARE EQUIPMENT - 3.6%
Encore Medical Corporation* 69,630 374,609
Laserscope* 12,390 393,259
Spectranetics Corporation* 68,500 356,200
Syneron Medical, Ltd.* 6,960 221,746
----------
1,345,814
----------
HEALTH CARE FACILITIES - 1.1%
Kindred Healthcare, Inc.* 11,350 398,385
----------
HEALTH CARE SERVICES - 8.1%
Amedisys, Inc.* 10,870 328,817
America Service Group, Inc.* 16,640 368,243
Chemed Corporation 7,860 601,133
LabOne, Inc.* 14,920 514,442
Lifeline Systems, Inc.* 15,900 482,088
Merge Technologies, Inc.* 22,580 396,279
Providence Service Corporation* 12,840 298,592
----------
2,989,594
----------
HEALTH CARE SUPPLIES - 1.9%
Orthovita, Inc.* 71,400 242,760
PolyMedica Corporation 14,420 457,979
----------
700,739
----------
HOTELS, RESORTS & CRUISE LINES - 0.8%
Kerzner International, Ltd.* 4,920 301,252
----------
78 See accompanying notes.
SECURITY EQUITY FUND
SMALL CAP GROWTH SERIES
(unaudited)
Schedule of Investments
March 31, 2005
NUMBER MARKET
OF SHARES VALUE
--------- ----------
COMMON STOCKS (CONTINUED)
INTERNET SOFTWARE & SERVICES - 10.2%
Digitas, Inc.* 55,290 $ 558,429
Equinix, Inc.* 9,830 416,202
Infocrossing, Inc.* 27,020 427,997
InfoSpace, Inc.* 9,880 403,400
j2 Global Communications, Inc.* 16,170 554,793
Keynote Systems, Inc.* 45,170 536,168
RADVision, Ltd.* 25,970 328,780
Radware, Ltd.* 12,360 290,089
ValueClick, Inc.* 24,600 261,006
----------
3,776,864
----------
LEISURE PRODUCTS - 1.3%
K2, Inc.* 35,690 490,738
----------
MOVIES & ENTERTAINMENT - 0.3%
Image Entertainment, Inc.* 19,050 104,203
----------
OIL & GAS DRILLING - 3.1%
Grey Wolf, Inc.* 52,420 344,924
Patterson-UTI Energy, Inc. 17,140 428,843
Unit Corporation* 7,880 355,940
----------
1,129,707
----------
OIL & GAS EQUIPMENT & SERVICES - 3.7%
Cal Dive International, Inc.* 6,910 313,023
Maverick Tube Corporation* 9,860 320,549
Oil States International, Inc.* 17,660 362,913
Superior Energy Services, Inc.* 21,660 372,552
----------
1,369,037
----------
OTHER DIVERSIFIED FINANCIAL SERVICES - 0.0%
Online Resources Corporation* 1,200 10,572
----------
PERSONAL PRODUCTS - 1.0%
Steiner Leisure, Ltd.* 11,270 368,416
----------
PHARMACEUTICALS - 3.5%
AtheroGenics, Inc.* 18,070 236,536
Connetics Corporation* 15,150 383,143
Salix Pharmaceuticals, Ltd.* 25,410 419,011
VaxGen, Inc.* 20,930 263,718
----------
1,302,408
----------
PROPERTY & CASUALTY INSURANCE - 3.3%
Affirmative Insurance Holdings, Inc. 21,650 319,337
Infinity Property & Casualty Corporation 11,600 362,616
Tower Group, Inc. 40,000 533,600
----------
1,215,553
----------
REAL ESTATE INVESTMENT TRUSTS - 0.6%
Saxon Capital, Inc. 13,480 231,182
----------
REGIONAL BANKS - 2.2%
Nara Bancorp, Inc. 5,200 73,060
PrivateBancorp, Inc. 12,720 399,535
Southwest Bancorporation of Texas, Inc. 18,510 339,658
----------
812,253
----------
PRINCIPAL
AMOUNT OR
NUMBER MARKET
OF SHARES VALUE
---------- ------------
COMMON STOCKS (CONTINUED)
RESTAURANTS - 2.1%
Cosi, Inc.* 47,790 $ 324,972
Rare Hospitality International, Inc.* 14,270 440,658
------------
765,630
------------
SEMICONDUCTOR EQUIPMENT - 0.8%
Ultratech, Inc.* 20,550 300,030
------------
SEMICONDUCTORS - 3.7%
Microsemi Corporation* 20,960 341,438
O2Micro International, Ltd.* 43,420 446,792
SiRF Technology Holdings, Inc.* 32,080 358,013
SRS Labs, Inc.* 59,420 237,086
------------
1,383,329
------------
SPECIALTY STORES - 2.0%
Aaron Rents, Inc. 14,895 297,900
Guitar Center, Inc.* 7,790 427,126
------------
725,026
------------
SYSTEMS SOFTWARE - 0.3%
Faro Technologies, Inc.* 4,960 116,758
------------
TRUCKING - 2.0%
Old Dominion Freight Line, Inc.* 9,290 289,383
Vitran Corporation, Inc.* 30,230 448,915
------------
738,298
------------
TOTAL COMMON STOCKS
(cost $29,812,575) 34,253,225
------------
REPURCHASE AGREEMENT - 7.7%
United Missouri Bank, 2.34%, dated 03-31-05,
matures 04-01-05; repurchase amount
of $2,834,185 (collateralized by FNMA,
4.00%, 01-26-09 with a value of
$2,891,236) $2,834,000 2,834,000
------------
TOTAL REPURCHASE AGREEMENT
(cost $2,834,000) 2,834,000
------------
TOTAL INVESTMENTS - 100.4%
(cost $32,646,575) 37,087,225
LIABILITIES, LESS CASH & OTHER ASSETS - (0.4%) (150,168)
------------
TOTAL NET ASSETS - 100.0% $ 36,937,057
============
For federal income tax purposes the identified cost of investments owned at
March 31, 2005 was $32,793,087.
*Non-income producing security
79 See accompanying notes.
SECURITY EQUITY FUND
SMALL CAP GROWTH SERIES
(unaudited)
Statement of Assets and Liabilities
March 31, 2005
ASSETS:
Investments, at value(1).................................... $ 37,087,225
Cash........................................................ 685
Receivables:
Fund shares sold.......................................... 11,782
Securities sold........................................... 440,599
Dividends................................................. 1,097
Prepaid expenses............................................ 21,421
------------
Total assets................................................ 37,562,809
------------
LIABILITIES:
Payable for:
Securities purchased...................................... 545,873
Fund shares redeemed...................................... 7,208
Management fees........................................... 32,264
Custodian fees............................................ 3,257
Transfer agent and administration fees.................... 14,140
Professional fees......................................... 4,759
12b-1 distribution plan fees.............................. 17,068
Other..................................................... 1,183
------------
Total liabilities........................................... 625,752
------------
NET ASSETS.................................................. $ 36,937,057
============
NET ASSETS CONSIST OF:
Paid in capital............................................. $ 38,583,689
Accumulated net investment loss............................. (344,510)
Accumulated net realized loss
on sale of investments.................................... (5,742,772)
Net unrealized appreciation in value
of investments............................................ 4,440,650
------------
Net assets.................................................. $ 36,937,057
============
CLASS A:
Capital shares outstanding
(unlimited number of shares authorized)................... 1,662,330
Net assets.................................................. $ 23,404,701
Net asset value per share................................... $ 14.08
============
Maximum offering price per share
(net asset value divided by 94.25%)....................... $ 14.94
============
CLASS B:
Capital shares outstanding
(unlimited number of shares authorized)................... 740,036
Net assets.................................................. $ 9,690,800
Net asset value, offering and redemption price
per share (excluding any applicable contingent
deferred sales charge).................................... $ 13.10
============
CLASS C:
Capital shares outstanding
(unlimited number of shares authorized)................... 287,946
Net assets.................................................. $ 3,841,556
Net asset value, offering and redemption price
per share (excluding any applicable contingent
deferred sales charge).................................... $ 13.34
============
(1)Investments, at cost..................................... $ 32,646,575
Statement of Operations
For the Six Months Ended March 31, 2005
INVESTMENT INCOME:
Dividends................................................. $ 69,401
Interest.................................................. 27,352
------------
Total investment income................................... 96,753
------------
EXPENSES:
Management fees........................................... 189,471
Custodian fees............................................ 11,858
Transfer agent/maintenance fees........................... 93,942
Administration fees....................................... 18,129
Directors' fees........................................... 411
Professional fees......................................... 5,834
Reports to shareholders................................... 2,111
Registration fees......................................... 17,168
Other expenses............................................ 1,219
12b-1 distribution plan fees - Class A.................... 29,371
12b-1 distribution plan fees - Class B.................... 50,278
12b-1 distribution plan fees - Class C.................... 21,710
------------
Total expenses............................................ 441,502
Less: Earnings credits.................................... (239)
------------
Net expenses.............................................. 441,263
------------
Net investment loss....................................... (344,510)
------------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain during the period on:
Investments............................................... 3,164,994
------------
Net realized gain......................................... 3,164,994
------------
Unrealized depreciation during the period on:
Investments............................................... (294,686)
------------
Net unrealized depreciation............................... (294,686)
------------
Net gain.................................................. 2,870,308
------------
Net increase in net assets
resulting from operations................................ $ 2,525,798
============
80 See accompanying notes.
SECURITY EQUITY FUND
SMALL CAP GROWTH SERIES
Statement of Changes in Net Assets
SIX MONTHS ENDED
MARCH 31, 2005 YEAR ENDED
(unaudited) SEPTEMBER 30, 2004
---------------- ------------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment loss................................................... $ (344,510) $ (673,012)
Net realized gain during the period on investments.................... 3,164,994 4,201,550
Unrealized depreciation during the period on investments.............. (294,686) (49,010)
------------ ------------
Net increase in net assets resulting from operations.................. 2,525,798 3,479,528
------------ ------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from sale of shares
Class A.............................................................. 4,014,761 12,131,835
Class B.............................................................. 1,153,457 4,066,427
Class C.............................................................. 577,889 2,162,637
Cost of shares redeemed
Class A.............................................................. (3,631,401) (7,250,354)
Class B.............................................................. (1,331,526) (2,615,904)
Class C.............................................................. (1,193,568) (1,929,569)
------------ ------------
Net increase (decrease) from capital share transactions .............. (410,388) 6,565,072
------------ ------------
Net increase in net assets ........................................... 2,115,410 10,044,600
------------ ------------
NET ASSETS:
Beginning of period................................................... 34,821,647 24,777,047
------------ ------------
End of period......................................................... $ 36,937,057 $ 34,821,647
============ ============
Accumulated net investment loss at end of period....................... $ (344,510) $ -
============ ============
CAPITAL SHARE ACTIVITY:
Shares sold
Class A.............................................................. 281,368 956,806
Class B.............................................................. 86,824 342,362
Class C.............................................................. 42,605 172,645
Shares redeemed
Class A.............................................................. (254,661) (559,729)
Class B.............................................................. (99,961) (214,052)
Class C.............................................................. (88,279) (155,932)
81 See accompanying notes.
SECURITY EQUITY FUND
SMALL CAP GROWTH SERIES
Financial Highlights
Selected data for each share of capital stock outstanding throughout each period
SIX MONTHS ENDED YEAR ENDED
MARCH 31, SEPTEMBER 30,
CLASS A 2005(g) 2004 2003 2002(f) 2001 2000
- ------- ---------------- ---------- ---------- --------- ---------- -------------
PER SHARE DATA
Net asset value, beginning of period $ 13.11 $ 11.63 $ 7.88 $ 9.80 $ 22.08 $ 12.98
---------- ---------- ---------- --------- ---------- ----------
Income (loss) from investment operations:
Net investment income (loss)(c) (0.11) (0.25) (0.18) (0.20) (0.18) (0.19)
Net gain (loss) on securities (realized
and unrealized) 1.08 1.73 3.93 (1.72) (10.78) 9.75
---------- ---------- ---------- --------- ---------- ----------
Total from investment operations 0.97 1.48 3.75 (1.92) (10.96) 9.56
---------- ---------- ---------- --------- ---------- ----------
Less distributions:
Dividends from net investment income - - - - - -
Distributions from realized gains - - - - (1.32) (0.46)
---------- ---------- ---------- --------- ---------- ----------
Total distributions - - - - (1.32) (0.46)
---------- ---------- ---------- --------- ---------- ----------
Net asset value, end of period $ 14.08 $ 13.11 $ 11.63 $ 7.88 $ 9.80 $ 22.08
========== ========== ========== ========= ========== ==========
TOTAL RETURN(a) 7.40% 12.73% 47.59% (19.59%) (51.94%) 74.58%
---------- ---------- ---------- --------- ---------- ----------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $ 23,405 $ 21,443 $ 14,406 $ 8,350 $ 17,235 $ 38,172
---------- ---------- ---------- --------- ---------- ----------
Ratios to average net assets:
Net investment income (loss) (1.54%) (1.95%) (2.01%) (1.93%) (1.32%) (0.97%)
Total expenses 2.05% 2.09% 2.25% 2.14% 1.91% 1.55%
Gross expenses(b) 2.05% 2.09% 2.51% 2.14% 1.91% 1.64%
Net expenses(d) 2.05% 2.09% 2.25% 2.14% 1.91% 1.55%
---------- ---------- ---------- --------- ---------- ----------
Portfolio turnover rate 144% 157% 206% 302% 394% 318%
SIX MONTHS ENDED YEAR ENDED
MARCH 31, SEPTEMBER 30,
CLASS B 2005(g) 2004 2003 2002(f) 2001 2000
- ------- ---------------- ---------- ---------- --------- ---------- -------------
PER SHARE DATA
Net asset value, beginning of period $ 12.24 $ 10.94 $ 7.47 $ 9.37 $ 21.34 $ 12.69
---------- ---------- ---------- --------- ---------- ----------
Income (loss) from investment operations:
Net investment income (loss)(c) (0.15) (0.33) (0.24) (0.26) (0.28) (0.31)
Net gain (loss) on securities (realized
and unrealized) 1.01 1.63 3.71 (1.64) (10.37) 9.42
---------- ---------- ---------- --------- ---------- ----------
Total from investment operations 0.86 1.30 3.47 (1.90) (10.65) 9.11
---------- ---------- ---------- --------- ---------- ----------
Less distributions:
Dividends from net investment income - - - - - -
Distributions from realized gains - - - - (1.32) (0.46)
---------- ---------- ---------- --------- ---------- ----------
Total distributions - - - - (1.32) (0.46)
---------- ---------- ---------- --------- ---------- ----------
Net asset value, end of period $ 13.10 $ 12.24 $ 10.94 $ 7.47 $ 9.37 $ 21.34
========== ========== ========== ========= ========== ==========
TOTAL RETURN(a) 7.03% 11.88% 46.45% (20.28%) (52.31%) 72.70%
---------- ---------- ---------- --------- ---------- ----------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $ 9,691 $ 9,218 $ 6,838 $ 4,292 $ 6,173 $ 11,688
---------- ---------- ---------- --------- ---------- ----------
Ratios to average net assets:
Net investment income (loss) (2.29%) (2.69%) (2.76%) (2.69%) (2.07%) (1.81%)
Total expenses 2.80% 2.84% 3.00% 2.90% 2.67% 2.44%
Gross expenses(b) 2.80% 2.84% 3.23% 2.90% 2.67% 2.48%
Net expenses(d) 2.80% 2.83% 3.00% 2.90% 2.67% 2.44%
---------- ---------- ---------- --------- ---------- ----------
Portfolio turnover rate 144% 157% 206% 302% 394% 318%
---------- ---------- ---------- --------- ---------- ----------
82 See accompanying notes.
SECURITY EQUITY FUND
SMALL CAP GROWTH SERIES
Financial Highlights
Selected data for each share of capital stock outstanding throughout each period
SIX MONTHS ENDED YEAR ENDED
MARCH 31, SEPTEMBER 30,
CLASS C 2005(g) 2004 2003 2002(e,f) 2001 2000
- ------- ---------------- ---------- ---------- --------- ---------- -------------
PER SHARE DATA
Net asset value, beginning of period $ 12.47 $ 11.15 $ 7.61 $ 9.53 $ 21.74 $ 12.86
---------- ---------- ---------- --------- ---------- ----------
Income (loss) from investment operations:
Net investment income (loss)(c) (0.16) (0.33) (0.24) (0.26) (0.28) (0.35)
Net gain (loss) on securities (realized
and unrealized) 1.03 1.65 3.78 (1.66) (10.61) 9.69
---------- ---------- ---------- --------- ---------- ----------
Total from investment operations 0.87 1.32 3.54 (1.92) (10.89) 9.34
---------- ---------- ---------- --------- ---------- ----------
Less distributions:
Dividends from net investment income - - - - - -
Distributions from realized gains - - - - (1.32) (0.46)
---------- ---------- ---------- --------- ---------- ----------
Total distributions - - - - (1.32) (0.46)
---------- ---------- ---------- --------- ---------- ----------
Net asset value, end of period $ 13.34 $ 12.47 $ 11.15 $ 7.61 $ 9.53 $ 21.74
========== ========== ========== ========= ========== ==========
TOTAL RETURN(a) 6.98% 11.84% 46.52% (20.15%) (52.46%) 73.54%
---------- ---------- ---------- --------- ---------- ----------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $ 3,842 $ 4,160 $ 3,533 $ 2,164 $ 2,339 $ 3,741
---------- ---------- ---------- --------- ---------- ----------
Ratios to average net assets:
Net investment income (loss) (2.29%) (2.69%) (2.76%) (2.69%) (2.09%) (1.81%)
Total expenses 2.80% 2.83% 3.00% 2.91% 2.68% 2.39%
Gross expenses(b) 2.80% 2.83% 3.23% 2.91% 2.68% 2.47%
Net expenses(d) 2.80% 2.82% 3.00% 2.91% 2.68% 2.39%
---------- ---------- ---------- --------- ---------- ----------
Portfolio turnover rate 144% 157% 206% 302% 394% 318%
(a) Total return information does not reflect deduction of any sales charges
imposed at the time of purchase for Class A shares or upon redemption for
Class B and C.
(b) Gross expense information reflects expense ratios absent fund expense
reductions by the Investment Manager.
(c) Net investment income (loss) was computed using average shares outstanding
throughout the period.
(d) Net expense information reflects expense ratios after expense reductions or
fee waivers and reduction to custodian expenses.
(e) The financial highlights for Class C shares exclude the historical financial
highlights of Class S shares. Class S shares were exchanged for Class C
shares on June 3, 2002.
(f) RS Investments, Inc. became the sub-adviser of Small Cap Growth Series
effective September 3, 2002. Prior to September 3, 2002, Security Management
Company, LLC (SMC) paid Strong Capital Management, Inc. for sub-advisory
services.
(g) Unaudited figures for the six months ended March 31, 2005. Percentage
amounts for the period, except total return, have been annualized.
83 See accompanying notes.
This page left blank intentionally.
84
SECURITY EQUITY FUND
Social Awareness Series
[SECURITY FUNDS LOGO]
ADVISOR,
SECURITY MANAGEMENT COMPANY, LLC
85
SECURITY EQUITY FUND
SOCIAL AWARENESS SERIES
(unaudited)
Performance Summary
May 15, 2005
PERFORMANCE
SECURITY SOCIAL AWARENESS SERIES VS. DOMINI SOCIAL INDEX & S&P 500 INDEX
[PERFORMANCE GRAPH]
SOCIAL AWARENESS INVESTMENT
DATE value
- ---------- ------
11/01/96 9,425
12/31/96 9,441
03/31/97 9,008
06/30/97 10,433
09/30/97 11,300
12/31/97 11,544
03/31/98 13,048
06/30/98 13,337
09/30/98 12,192
12/31/98 15,057
03/31/99 15,472
06/30/99 16,444
09/30/99 15,376
12/31/99 17,395
3/31/00 18,355
6/30/00 17,784
9/30/00 16,895
12/31/00 15,224
03/31/01 13,438
06/30/01 14,026
09/30/01 11,876
12/31/01 13,233
03/31/02 13,193
06/30/02 11,466
09/30/02 9,759
12/31/02 10,480
03/31/03 10,189
06/30/03 11,545
09/30/03 11,803
12/31/03 12,822
03/31/04 12,888
06/30/04 13,047
09/30/04 12,399
12/31/04 13,352
03/31/05 12,763
S& P 500 - SOCIAL AWARENESS SERIES
DATE value
- ------------------------ ------
INCEPTION 11/1/96 10,000
12/31/96 10,543
3/31/97 10,825
6/30/97 12,715
9/30/97 13,669
12/31/97 14,062
3/31/98 16,024
6/30/98 16,553
9/30/98 14,906
12/31/98 18,079
3/31/99 18,982
6/30/99 20,320
9/30/99 19,051
12/31/99 21,886
3/31/00 22,389
06/30/00 21,795
09/30/00 21,584
12/31/00 19,897
03/31/01 17,539
06/30/01 18,566
09/30/01 15,842
12/31/01 17,536
03/31/02 17,584
06/30/02 15,229
09/30/02 12,599
12/31/02 13,663
03/31/03 13,232
06/30/03 15,269
09/30/03 15,673
12/31/03 17,583
03/31/04 17,881
06/30/04 18,190
09/30/04 17,849
12/31/04 19,497
03/31/05 19,077
DOMINI SOCIAL 400 - SOCIAL AWARENESS SERIES
DATE value
- ------------------------ ------
INCEPTION 11/01/96 10,000
12/31/96 10,553
3/31/97 10,913
6/30/97 12,858
9/30/97 13,937
12/31/97 14,591
3/31/98 16,693
6/30/98 17,353
9/30/98 15,687
12/31/98 19,632
3/31/99 20,653
6/30/99 22,055
9/30/99 20,722
12/31/99 24,443
3/31/00 25,224
06/30/00 23,868
09/30/00 22,758
12/31/00 20,948
03/31/01 18,427
06/30/01 19,421
09/30/01 16,666
12/31/01 18,416
03/31/02 18,453
06/30/02 16,227
09/30/02 13,470
12/31/02 14,715
03/31/03 14,220
06/30/03 16,407
09/30/03 16,969
12/31/03 18,906
03/31/04 19,704
06/30/04 20,157
09/30/04 19,447
12/31/04 21,293
03/31/05 20,313
$10,000 SINCE INCEPTION
This chart assumes a $10,000 investment in Class A shares of Social Awareness
Series on November 1, 1996 (date of inception), reflects deduction of the 5.75%
sales load and assumes all dividends reinvested. The chart does not reflect the
deduction of taxes that a shareholder would pay on distributions or the
redemption of fund shares. The Social Awareness Series is changing its benchmark
to the S&P 500 because, among other reasons, the Domini Social 400 is not as
widely utilized and reported an index as the S&P 500, performance attribution
analysis of the Domini Social 400 is no longer available to the Series and the
change to the S&P 500 allows shareholders to compare the Series' performance to
that of a broader measure of the stock markets overall performance as compared
to the Domini 400.
AVERAGE ANNUAL RETURNS
PERIODS ENDED 3-31-05 1 YEAR 5 YEARS SINCE INCEPTION
- --------------------- ------ ------- ----------------
A Shares (0.98%) (7.01%) 3.67% (11-1-96)
A Shares with sales charge (6.68%) (8.11%) 2.94% (11-1-96)
B Shares (1.71%) (7.83%) 2.71% (11-1-96)
B Shares with CDSC (6.63%) (8.20%) 2.71% (11-1-96)
C Shares (1.73%) (7.81%) (4.15%)(1-29-99)
C Shares with CDSC (2.71%) (7.81%) (4.15%)(1-29-99)
The performance data above represent past performance that is not predictive of
future results. The investment return and principal value of an investment in
the Series will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost. The figures above do not reflect
deduction of the maximum front-end sales charge of 5.75% for Class A shares or
the contingent deferred sales charge of 5% for Class B shares and 1% for Class C
shares, as applicable, except where noted. The figures do not reflect the
deduction of taxes that a shareholder would pay on distributions or redemption
of shares. Such figures would be lower if the maximum sales charge and any
applicable taxes were deducted. Fee waivers reduced expenses of the Series and
in the absence of such waiver, the performance quoted would be reduced.
PORTFOLIO COMPOSITION BY SECTOR
Consumer Discretionary 16.40%
Consumer Staples 10.85
Energy 2.49
Financials 20.22
Health Care 13.77
Industrials 8.40
Information Technology 16.09
Materials 2.12
Telecommunication Services 3.99
Commercial Paper 4.78
Warrants 0.01
Repurchase Agreement 1.26
Liabilities, less cash & other assets (0.38)
86 See accompanying notes.
SECURITY EQUITY FUND
Performance Summary SOCIAL AWARENESS SERIES
May 15, 2005 (unaudited)
PERFORMANCE
INFORMATION ABOUT YOUR SERIES EXPENSES
CALCULATING YOUR ONGOING SERIES EXPENSES
EXAMPLE
As a shareholder of the Series, you incur two types of costs: (1) transaction
costs, which may include sales charges (loads) on purchase payments; contingent
deferred sales charges on redemptions; and redemption fees, if any; and (2)
ongoing costs, including management fees; distribution and/or service fees
(12b-1); and other Series expenses. This Example is intended to help you
understand your ongoing costs (in dollars) of investing in the Series and to
compare these costs with ongoing costs of investing in other mutual funds. The
Example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period, October 1, 2004 - March 31, 2005.
ACTUAL EXPENSES
The first line for each class of shares in the table provides information about
actual account values and actual expenses. You may use the information in this
table, together with the amount you invested, to estimate the expenses that you
paid over the period. Simply divide your account value by $1,000 (for example,
an $8,600 account value divided by $1,000 = 8.6), then multiply the result by
the number in the table under the heading entitled "Expenses Paid During Period"
to estimate the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line for each class of shares in the table provides information about
hypothetical account values and hypothetical expenses based on the Series actual
expense ratio and an assumed rate of return of 5% per year before expenses,
which is not the Series actual return. The hypothetical account values and
expenses may not be used to estimate the actual ending account balance or
expenses you paid for the period. You may use this information to compare the
ongoing costs of investing in the Series and other funds. To do so, compare this
5% hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads) on purchase payments, contingent deferred sales charges on
redemptions, and redemption fees, if any. Therefore, the second line for each
class of shares is useful in comparing ongoing costs only, and will not help you
determine the relative total costs of owning different funds. In addition, if
these transactional costs were included, your costs would have been higher.
FUND EXPENSES
BEGINNING ENDING EXPENSES PAID
ACCOUNT VALUE ACCOUNT VALUE DURING
10-01-04 03-31-05(1) PERIOD(2)
------------- ------------- --------------
Social Awareness
Series - Class A
Actual $ 1,000.00 $ 1,029.30 $ 9.11
Hypothetical 1,000.00 1,015.96 9.05
Social Awareness
Series - Class B
Actual 1,000.00 1,025.40 12.93
Hypothetical 1,000.00 1,012.17 12.84
Social Awareness
Series - Class C
Actual 1,000.00 1,025.40 12.93
Hypothetical 1,000.00 1,012.17 12.84
(1) The actual ending account value is based on the actual total return of the
Series for the period October 1, 2004 to March 31, 2005 after actual
expenses and will differ from the hypothetical ending account value which
is based on the Expenses expense ratio and a hypothetical annual return of
5% before expenses. The actual cumulative return at net asset value for
the period October 1, 2004 to March 31, 2005 was 2.93%, 2.54% and 2.54%,
for Class A, B and C class shares, respectively.
(2) Expenses are equal to the Series annualized expense ratio (1.80%, 2.56%
and 2.56% for Class A, B and C class shares, respectively), net of any
applicable fee waivers or earnings credits, multiplied by the average
account value over the period, multiplied by 182/365 (to reflect the
one-half year period).
87
SECURITY EQUITY FUND
Schedule Of Investments SOCIAL AWARENESS SERIES
March 31, 2005 (unaudited)
NUMBER MARKET
OF SHARES VALUE
COMMON STOCKS - 94.3%
AIR FREIGHT & LOGISTICS - 2.4%
FedEx Corporation 4,200 $ 394,590
----------
AIRLINES - 1.5%
Southwest Airlines Company 17,800 253,472
----------
ASSET MANAGEMENT & CUSTODY BANKS - 0.8%
Bank of New York Company, Inc. 4,700 136,535
----------
BIOTECHNOLOGY - 2.0%
Amgen, Inc.* 5,900 343,439
----------
BROADCASTING & CABLE TV - 3.4%
Comcast Corporation* 6,537 220,820
Univision Communications, Inc.* 12,800 354,432
----------
575,252
----------
COMMUNICATIONS EQUIPMENT - 4.7%
ADC Telecommunications, Inc.* 165,800 329,942
Cisco Systems, Inc.* 25,400 454,406
----------
784,348
----------
COMPUTER HARDWARE - 1.5%
Dell, Inc.* 6,500 249,730
----------
CONSTRUCTION & ENGINEERING - 2.0%
Shaw Group, Inc.* 15,000 327,000
----------
CONSUMER FINANCE - 3.9%
American Express Company 6,200 318,494
MBNA Corporation 13,300 326,515
----------
645,009
----------
DATA PROCESSING & OUTSOURCED SERVICES - 2.0%
First Data Corporation 8,500 334,135
----------
DEPARTMENT STORES - 0.9%
Kohl's Corporation* 3,000 154,890
----------
DIVERSIFIED BANKS - 4.5%
Bank of America Corporation 6,000 264,600
Wells Fargo & Company 8,200 490,360
----------
754,960
----------
DRUG RETAIL - 2.6%
CVS Corporation 8,300 436,746
----------
ELECTRICAL COMPONENTS & EQUIPMENT - 1.1%
Power-One, Inc.* 39,300 190,998
----------
GENERAL MERCHANDISE STORES - 1.5%
Target Corporation 5,100 255,102
----------
HEALTH CARE EQUIPMENT - 6.1%
Boston Scientific Corporation* 13,400 392,486
Medtronic, Inc. 6,200 315,890
Zimmer Holdings, Inc.* 4,000 311,240
----------
1,019,616
----------
HOME IMPROVEMENT RETAIL - 4.4%
Home Depot, Inc. 12,900 $ 493,296
Lowe's Companies, Inc. 4,300 245,487
----------
738,783
----------
HOUSEHOLD PRODUCTS - 2.8%
Procter & Gamble Company 9,000 477,000
----------
INDUSTRIAL CONGLOMERATES - 1.4%
3M Company 2,800 239,932
----------
INDUSTRIAL GASES - 2.1%
Praxair, Inc. 7,400 354,164
----------
INTEGRATED TELECOMMUNICATION SERVICES - 4.0%
SBC Communications, Inc. 10,948 259,358
Verizon Communications, Inc. 11,500 408,250
----------
667,608
----------
INTERNET RETAIL - 0.7%
eBay, Inc.* 3,000 111,780
----------
INVESTMENT BANKING & BROKERAGE - 2.0%
Goldman Sachs Group, Inc. 1,800 197,982
Merrill Lynch & Company, Inc. 2,500 141,500
----------
339,482
----------
LIFE & HEALTH INSURANCE - 1.0%
AFLAC, Inc. 4,400 163,944
----------
MANAGED HEALTH CARE - 2.6%
UnitedHealth Group, Inc. 2,800 267,064
WellPoint, Inc.* 1,300 162,955
----------
430,019
----------
MOTORCYCLE MANUFACTURERS - 0.8%
Harley-Davidson, Inc. 2,200 127,072
----------
MOVIES & ENTERTAINMENT - 4.7%
Time Warner, Inc.* 18,500 324,675
Viacom, Inc. (CI.B) 13,100 456,273
----------
780,948
----------
MULTI-LINE INSURANCE - 3.8%
American International Group, Inc. 11,354 629,125
----------
OIL & GAS EQUIPMENT & SERVICES - 1.2%
BJ Services Company 4,000 207,520
----------
OIL & GAS EXPLORATION & PRODUCTION - 0.2%
Anadarko Petroleum Corporation 500 38,050
----------
OIL & GAS REFINING, MARKETING & TRANSPORTATION - 1.0%
Williams Companies, Inc. 9,100 171,171
----------
OTHER DIVERSIFIED FINANCIAL SERVICES - 1.1%
JP Morgan Chase & Company 5,300 183,380
----------
PHARMACEUTICALS - 3.1%
Johnson & Johnson 7,604 510,685
----------
88 See accompanying notes.
SECURITY EQUITY FUND
Schedule of Investments SOCIAL AWARENESS SERIES
March 31, 2005 (unaudited)
PRINCIPAL
AMOUNT OR
NUMBER MARKET
OF SHARES VALUE
COMMON STOCKS (CONTINUED)
PROPERTY & CASUALTY INSURANCE - 3.2%
Chubb Corporation 6,700 $ 531,109
-------------
SEMICONDUCTOR EQUIPMENT - 0.4%
Applied Materials, Inc.* 4,600 74,750
-------------
SEMICONDUCTORS - 2.7%
Intel Corporation 19,500 452,985
-------------
SOFT DRINKS - 5.4%
Coca-Cola Company 9,300 387,531
PepsiCo, Inc. 9,700 514,391
-------------
901,922
-------------
SYSTEMS SOFTWARE - 4.8%
Microsoft Corporation 26,500 640,505
Veritas Software Corporation* 6,700 155,574
-------------
796,079
-------------
TOTAL COMMON STOCKS
(cost $16,419,411) 15,783,330
-------------
WARRANTS - 0.0%
Lucent Technologies, Inc. 3,435 2,301
-------------
TOTAL WARRANTS
(cost $0) 2,301
-------------
COMMERCIAL PAPER - 4.8%
MEDIA - NONCABLE - 4.8%
Tribune Company, 2.82%, 04-05-05 $ 800,000 799,749
-------------
TOTAL COMMERCIAL PAPER
(cost $799,749) 799,749
-------------
REPURCHASE AGREEMENT - 1.3%
United Missouri Bank, 2.34%, dated
03-31-05 matures 04-01-05; repurchase
amount of $210,014 (collateralized by
FHLMC, 4.00%, 11-01-08 with a
value of $214,201) $ 210,000 210,000
-------------
TOTAL REPURCHASE AGREEMENT
(cost $210,000) 210,000
-------------
TOTAL INVESTMENTS - 100.4%
(cost $17,429,160) 16,795,380
LIABILITIES, LESS CASH & OTHER ASSETS - (0.4%) (63,650)
-------------
TOTAL NET ASSETS - 100.0% $ 16,731,730
=============
For federal income tax purposes the identified cost of investments owned at
March 31, 2005 was $17,429,965.
*Non-income producing security
89 See accompanying notes.
SECURITY EQUITY FUND
SOCIAL AWARENESS SERIES
(unaudited)
Statement of Assets and Liabilities
March 31, 2005
ASSETS:
Investments, at value(1)............................. $ 16,795,380
Cash................................................. 883
Receivables:
Fund shares sold.................................. 5,359
Dividends......................................... 10,735
Prepaid expenses..................................... 21,712
------------
Total assets......................................... 16,834,069
------------
LIABILITIES:
Payable for:
Securities purchased.............................. 68,448
Fund shares redeemed.............................. 2,928
Management fees................................... 10,824
Custodian fees.................................... 528
Transfer agent and administration fees............ 4,842
Professional fees................................. 4,684
12b-1 distribution plan fees...................... 7,899
Other............................................. 2,186
------------
Total liabilities.................................... 102,339
------------
NET ASSETS........................................... $ 16,731,730
============
NET ASSETS CONSIST OF:
Paid in capital...................................... $ 19,183,834
Accumulated undistributed net investment
income............................................ 56,221
Accumulated net realized loss
on sale of investments............................ (1,874,545)
Net unrealized depreciation in value
of investments.................................... (633,780)
------------
Net assets........................................... $ 16,731,730
============
CLASS A:
Capital shares outstanding
(unlimited number of shares authorized)........... 527,758
Net assets........................................... $ 10,178,089
Net asset value per share............................ $ 19.29
============
Maximum offering price per share
(net asset value divided by 94.25%)............... $ 20.47
============
CLASS B:
Capital shares outstanding
(unlimited number of shares authorized)........... 275,951
Net assets $ 4,907,696
Net asset value, offering and redemption price
per share (excluding any applicable contingent
deferred sales charge)............................ $ 17.78
============
CLASS C:
Capital shares outstanding
(unlimited number of shares authorized)........... 90,484
Net assets $ 1,645,945
Net asset value, offering and redemption price
per share (excluding any applicable contingent
deferred sales charge)............................ $ 18.19
============
(1)Investments, at cost.............................. $ 17,429,160
Statement of Operations
For the Six Months Ended March 31, 2005
INVESTMENT INCOME:
Dividends......................................... $ 224,734
Interest.......................................... 11,666
------------
Total investment income........................... 236,400
------------
EXPENSES:
Management fees................................... 85,597
Custodian fees.................................... 2,301
Transfer agent/maintenance fees................... 27,697
Administration fees............................... 12,664
Directors' fees................................... 203
Professional fees................................. 4,845
Reports to shareholders........................... 1,390
Registration fees................................. 18,050
Other expenses.................................... 970
12b-1 distribution plan fees - Class A............ 12,578
12b-1 distribution plan fees - Class B............ 27,273
12b-1 distribution plan fees - Class C............ 8,010
------------
Total expenses.................................... 201,578
Less: Expenses waived............................. (21,399)
------------
Net expenses...................................... 180,179
------------
Net investment income............................. 56,221
------------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized loss during the period on:
Investments....................................... (413,204)
------------
Net realized loss................................. (413,204)
------------
Unrealized appreciation during the period on:
Investments....................................... 834,555
------------
Net unrealized appreciation....................... 834,555
------------
Net gain.......................................... 421,351
------------
Net increase in net assets
resulting from operations....................... $ 477,572
============
90
SECURITY EQUITY FUND
Statement of Changes in Net Assets SOCIAL AWARENESS SERIES
SIX MONTHS ENDED
MARCH 31, 2005 YEAR ENDED
(unaudited) SEPTEMBER 30, 2004
---------------- ------------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income (loss)..................................... $ 56,221 $ (155,216)
Net realized gain (loss) during the period on investments........ (413,204) 798,923
Unrealized appreciation during the period on investments......... 834,555 188,654
---------------- ------------------
Net increase in net assets resulting from operations............. 477,572 832,361
---------------- ------------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from sale of shares
Class A........................................................ 1,395,659 2,812,864
Class B........................................................ 211,186 544,989
Class C........................................................ 378,930 321,631
Cost of shares redeemed
Class A........................................................ (1,201,247) (2,826,052)
Class B........................................................ (1,103,454) (1,343,364)
Class C........................................................ (387,752) (326,581)
---------------- ------------------
Net decrease from capital share transactions..................... (706,678) (816,513)
---------------- ------------------
Net increase (decrease) in net assets............................ (229,106) 15,848
---------------- ------------------
NET ASSETS:
Beginning of period.............................................. 16,960,836 16,944,988
---------------- ------------------
End of period.................................................... $ 16,731,730 $ 16,960,836
================ ==================
Accumulated undistributed net investment income at end of period. $ 56,221 $ -
================ ==================
CAPITAL SHARE ACTIVITY:
Shares sold
Class A........................................................ 71,190 146,627
Class B........................................................ 11,610 30,639
Class C........................................................ 20,481 17,701
Shares redeemed
Class A........................................................ (61,486) (146,827)
Class B........................................................ (60,840) (75,487)
Class C........................................................ (21,000) (17,726)
91 See accompanying notes.
SECURITY EQUITY FUND
Financial Highlights SOCIAL AWARENESS SERIES
Selected data for each share of capital stock outstanding throughout each period
SIX MONTHS ENDED
MARCH 31, YEAR ENDED SEPTEMBER 30,
CLASS A 2005(f) 2004 2003 2002 2001 2000
- ------------------------------------------------------- ---------------- ------ ------ ------ ------- -------------
PER SHARE DATA
Net asset value, beginning of period $ 18.74 $17.84 $14.75 $17.95 $ 26.04 $ 24.05
---------------- ------ ------ ------ ------- ---------
Income (loss) from investment operations:
Net investment income (loss)(c) 0.09 (0.10) (0.13) (0.11) (0.07) (0.13)
Net gain (loss) on securities (realized and unrealized) 0.46 1.00 3.22 (3.09) (7.55) 2.50
---------------- ------ ------ ------ ------- ---------
Total from investment operations 0.55 0.90 3.09 (3.20) (7.62) 2.37
---------------- ------ ------ ------ ------- ---------
Less distributions:
Dividends from net investment income - - - - - -
Distributions from realized gains - - - - (0.47) (0.38)
---------------- ------ ------ ------ ------- ---------
Total distributions - - - - (0.47) (0.38)
---------------- ------ ------ ------ ------- ---------
Net asset value, end of period $ 19.29 $18.74 $17.84 $14.75 $ 17.95 $ 26.04
================ ====== ====== ====== ======= =========
TOTAL RETURN(a) 2.93% 5.04 % 20.95% (17.83%) (29.71%) 9.88%
---------------- ------ ------ ------ ------- ---------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $ 10,178 $9,708 $9,243 $7,355 $10,909 $ 17,702
---------------- ------ ------ ------ ------- ---------
Ratios to average net assets:
Net investment income (loss) 0.95% (0.55%) (0.76%) (0.58%) (0.30%) (0.51%)
Total expenses 1.80% 1.77% 2.05% 1.66% 1.43% 1.42%
Gross expenses(b) 2.05% 1.93% 2.05% 1.66% 1.43% 1.42%
Net expenses(d) 1.80% 1.76% 2.05% 1.66% 1.43% 1.42%
---------------- ------ ------ ------ ------- ---------
Portfolio turnover rate 30% 28% 26% 3% 17% 26%
SIX MONTHS ENDED
MARCH 31, YEAR ENDED SEPTEMBER 30,
CLASS B 2005(f) 2004 2003 2002 2001 2000
- ------------------------------------------- ---------------- ------ ------ -------- ------- -------------
PER SHARE DATA
Net asset value, beginning of period $ 17.34 $16.63 $13.85 $ 17.01 $ 24.96 $ 23.35
---------------- ------ ------ -------- ------- -------------
Income (loss) from investment operations:
Net investment income (loss)(c) 0.02 (0.23) (0.24) (0.26) (0.28) (0.38)
Net gain (loss) on securities (realized and
unrealized) 0.42 0.94 3.02 (2.90) (7.20) 2.37
---------------- ------ ------ -------- ------- -------------
Total from investment operations 0.44 0.71 2.78 (3.16) (7.48) 1.99
---------------- ------ ------ -------- ------- -------------
Less distributions:
Dividends from net investment income - - - - - -
Distributions from realized gains - - - - (0.47) (0.38)
---------------- ------ ------ -------- ------- -------------
Total distributions - - - - (0.47) (0.38)
---------------- ------ ------ -------- ------- -------------
Net asset value, end of period $ 17.78 $17.34 $16.63 $ 13.85 $ 17.01 $ 24.96
================ ====== ====== ======== ======= =============
TOTAL RETURN(a) 2.54% 4.27% 20.07% (18.58%) (30.44%) 8.53%
---------------- ------ ------ -------- ------- -------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $ 4,908 $5,639 $6,153 $ 5,999 $ 8,969 $ 12,633
---------------- ------ ------ -------- ------- -------------
Ratios to average net assets:
Net investment income (loss) 0.24% (1.30%) (1.51%) (1.49%) (1.31%) (1.52%)
Total expenses 2.56% 2.52% 2.80% 2.57% 2.43% 2.43%
Gross expenses(b) 2.81% 2.68% 2.80% 2.57% 2.43% 2.43%
Net expenses(d) 2.56% 2.51% 2.80% 2.57% 2.43% 2.43%
---------------- ------ ------ -------- ------- -------------
Portfolio turnover rate 30% 28% 26% 3% 17% 26%
---------------- ------ ------ -------- ------- -------------
92 See accompanying notes.
SECURITY EQUITY FUND
Financial Highlights SOCIAL AWARENESS SERIES
Selected data for each share of capital stock outstanding throughout each period
SIX MONTHS ENDED
MARCH 31, YEAR ENDED SEPTEMBER 30,
CLASS C 2005(f) 2004 2003 2002(e) 2001 2000
- ------------------------------------------- ---------------- ------ ------ -------- ------- -------------
PER SHARE DATA
Net asset value, beginning of period $ 17.74 $17.01 $14.17 $ 17.40 $ 25.50 $ 23.87
---------------- ------ ------ -------- ------- -------------
Income (loss) from investment operations:
Net investment income (loss)(c) 0.02 (0.24) (0.24) (0.26) (0.28) (0.41)
Net gain (loss) on securities (realized and
unrealized) 0.43 0.97 3.08 (2.97) (7.35) 2.42
---------------- ------ ------ -------- ------- -------------
Total from investment operations 0.45 0.73 2.84 (3.23) (7.63) 2.01
---------------- ------ ------ -------- ------- -------------
Less distributions:
Dividends from net investment income - - - - - -
Distributions from realized gains - - - - (0.47) (0.38)
---------------- ------ ------ -------- ------- -------------
Total distributions - - - - (0.47) (0.38)
---------------- ------ ------ -------- ------- -------------
Net asset value, end of period $ 18.19 $17.74 $17.01 $ 14.17 $ 17.40 $ 25.50
================ ====== ====== ======== ======= =============
TOTAL RETURN(a) 2.54% 4.29% 20.04% (18.56%) (30.39%) 8.43%
---------------- ------ ------ -------- ------- -------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $ 1,646 $1,614 $1,548 $ 1,123 $ 1,126 $ 918
---------------- ------ ------ -------- ------- -------------
Ratios to average net assets:
Net investment income (loss) 0.23% (1.30%) (1.51%) (1.48%) (1.33%) (1.64%)
Total expenses 2.56% 2.52% 2.80% 2.57% 2.45% 2.55%
Gross expenses(b) 2.81% 2.68% 2.80% 2.57% 2.45% 2.55%
Net expenses(d) 2.56% 2.51% 2.80% 2.57% 2.45% 2.55%
---------------- ------ ------ -------- ------- -------------
Portfolio turnover rate 30% 28% 26% 3% 17% 26%
(a) Total return information does not reflect deduction of any sales charges
imposed at the time of purchase for Class A shares or upon redemption for
Class B and C.
(b) Gross expense information reflects expense ratios absent fund expense
reductions by the Investment Manager.
(c) Net investment income (loss) was computed using average shares outstanding
throughout the period.
(d) Net expense information reflects expense ratios after expense reductions
or fee waivers and reduction to custodian expenses.
(e) The financial highlights for Class C shares exclude the historical
financial highlights of Class S shares. Class S shares were exchanged for
Class C shares on June 3, 2002.
(f) Unaudited figures for the six months ended March 31, 2005. Percentage
amounts for the period, except total return, have been annualized.
93 See accompanying notes.
This page left blank intentionally.
94
SECURITY LARGE CAP
VALUE FUND
YOU, YOUR ADVISOR AND
[DREYFUS LOGO]
A MELLON FINANCIAL COMPANY
SUBADVISOR,
THE DREYFUS CORPORATION
95
SECURITY
Performance Summary LARGE CAP VALUE FUND
May 15, 2005 (unaudited)
PERFORMANCE
[PERFORMANCE GRAPH]
LARGE CAP VALUE INVESTMENT
DATE value
03/31/95 9,425
06/30/95 10,319
09/30/95 10,936
12/31/95 11,376
03/31/96 12,149
06/30/96 12,629
09/30/96 13,092
12/31/96 13,504
03/31/97 13,470
06/30/97 15,337
09/30/97 17,714
12/31/97 17,783
03/31/98 19,228
06/30/98 18,598
09/30/98 16,306
12/31/98 17,728
03/31/99 17,728
06/30/99 20,275
09/30/99 18,263
12/31/99 18,173
3/31/00 17,091
6/30/00 16,168
9/30/00 16,933
12/31/00 16,856
03/31/01 15,713
06/30/01 16,351
09/30/01 14,277
12/31/01 15,915
03/31/02 15,728
06/30/02 14,019
09/30/02 11,349
12/31/02 12,070
03/31/03 11,455
06/30/03 13,164
09/30/03 13,645
12/31/03 15,360
03/31/04 15,842
06/30/04 15,654
09/30/04 15,280
12/31/04 16,912
03/31/05 16,725
S& P 500 - BARRA VALUE
DATE value
- ----------------- ------
INCEPTION 3/31/95 10,000
6/30/95 10,871
9/30/95 11,735
12/31/95 12,494
3/31/96 13,292
6/30/96 13,565
9/30/96 13,923
12/31/96 15,243
3/31/97 15,513
6/30/97 17,757
9/30/97 19,384
12/31/97 19,812
3/31/98 22,101
6/30/98 22,214
9/30/98 19,346
12/31/98 22,718
3/31/99 23,366
6/30/99 25,888
9/30/99 23,502
12/31/99 25,609
3/31/00 25,670
06/30/00 24,567
09/30/00 26,734
12/31/00 27,170
3/31/01 25,395
06/30/01 26,514
09/30/01 22,217
12/31/01 23,987
03/31/02 24,303
06/30/02 21,716
09/30/02 17,273
12/31/02 18,980
03/31/03 17,935
06/30/03 21,314
09/30/03 21,855
12/31/03 25,016
03/31/04 25,855
06/30/04 26,060
09/30/04 26,329
12/31/04 28,945
03/31/05 28,241
$10,000 OVER TEN YEARS
This chart assumes a $10,000 investment in Class A shares of Large Cap Value
Fund on March 31, 1995, reflects deduction of the 5.75% sales load and assumes
all dividends reinvested. The chart does not reflect the deduction of taxes that
a shareholder would pay on distributions or the redemption of fund shares.
PORTFOLIO COMPOSITION BY SECTOR
Consumer Discretionary 12.64%
Consumer Staples 5.92
Energy 13.57
Financials 29.23
Health Care 4.59
Industrials 10.15
Information Technology 9.67
Materials 3.13
Telecommunication Services 4.96
Utilities 4.35
U.S. Government Sponsored Agencies 1.55
Cash & other assets, less liabilities 0.24
AVERAGE ANNUAL RETURNS
SINCE
PERIODS ENDED 3-31-05 1 YEAR 5 YEARS 10 YEARS INCEPTION
- --------------------- ------ ------- -------- ---------
A Shares 5.57% (0.43%) 5.88% -
A Shares with sales charge (0.48%) (1.62%) 5.26% -
B Shares 4.61% (1.30%) 4.87% -
B Shares with CDSC (0.39%) (1.70%) 4.87% -
C Shares 4.70% (1.25%) N/A (1.61%)
(1-29-99)
C Shares with CDSC 3.70% (1.25%) N/A (1.61%)
(1-29-99)
The performance data above represent past performance that is not predictive of
future results. The investment return and principal value of an investment in
the Fund will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost. The figures above do not reflect
deduction of the maximum front-end sales charge of 5.75% for Class A shares or
the contingent deferred sales charge of 5% for Class B shares and 1% for Class C
shares, as applicable, except where noted. The figures do not reflect the
deduction of taxes that a shareholder would pay on distributions or redemption
of Fund shares. Such figures would be lower if the maximum sales charge and any
applicable taxes were deducted.
96 See accompanying notes.
SECURITY
Performance Summary LARGE CAP VALUE FUND
May 15, 2005 (unaudited)
PERFORMANCE
INFORMATION ABOUT YOUR FUND'S EXPENSES
CALCULATING YOUR ONGOING FUND EXPENSES
EXAMPLE
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, which may include sales charges (loads) on purchase payments; contingent
deferred sales charges on redemptions; and redemption fees, if any; and (2)
ongoing costs, including management fees; distribution and/or service fees
(12b-1); and other Fund expenses. This Example is intended to help you
understand your ongoing costs (in dollars) of investing in the Fund and to
compare these costs with ongoing costs of investing in other mutual funds. The
Example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period, October 1, 2004 - March 31, 2005.
ACTUAL EXPENSES
The first line for each class of shares in the table provides information about
actual account values and actual expenses. You may use the information in this
table, together with the amount you invested, to estimate the expenses that you
paid over the period. Simply divide your account value by $1,000 (for example,
an $8,600 account value divided by $1,000 = 8.6), then multiply the result by
the number in the table under the heading entitled "Expenses Paid During Period"
to estimate the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line for each class of shares in the table provides information about
hypothetical account values and hypothetical expenses based on the Fund's actual
expense ratio and an assumed rate of return of 5% per year before expenses,
which is not the Fund's actual return. The hypothetical account values and
expenses may not be used to estimate the actual ending account balance or
expenses you paid for the period. You may use this information to compare the
ongoing costs of investing in the Fund and other funds. To do so, compare this
5% hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads) on purchase payments, contingent deferred sales charges on
redemptions, and redemption fees, if any. Therefore, the second line for each
class of shares is useful in comparing ongoing costs only, and will not help you
determine the relative total costs of owning different funds. In addition, if
these transactional costs were included, your costs would have been higher.
FUND EXPENSES
BEGINNING ENDING EXPENSES PAID
ACCOUNT VALUE ACCOUNT VALUE DURING
10-01-04 03-31-05(1) PERIOD(2)
------------- ------------- -------------
Large Cap Value Fund
- - Class A
Actual $ 1,000.00 $ 1,094.60 $ 8.30
Hypothetical 1,000.00 1,017.00 8.00
---------- ----------- -----------
Large Cap Value Fund
- - Class B
Actual 1,000.00 1,088.60 12.18
Hypothetical 1,000.00 1,013.26 11.75
---------- ----------- -----------
Large Cap Value Fund
- - Class C
Actual 1,000.00 1,088.80 12.19
Hypothetical 1,000.00 1,013.26 11.75
---------- ----------- -----------
- ---------
(1) The actual ending account value is based on the actual total return of the
Fund for the period October 1, 2004 to March 31, 2005 after actual
expenses and will differ from the hypothetical ending account value which
is based on the Fund expense ratio and a hypothetical annual return of 5%
before expenses. The actual cumulative return at net asset value for the
period October 1, 2004 to March 31, 2005 was 9.46%, 8.86% and 8.88%, for
Class A, B and C class shares, respectively.
(2) Expenses are equal to the Fund's annualized expense ratio (1.59%, 2.34%
and 2.34% for Class A, B and C class shares, respectively) multiplied by
the average account value over the period, multiplied by 182/365 (to
reflect the one-half year period).
97
SECURITY
Schedule of Investments LARGE CAP VALUE FUND
March 31, 2005 (unaudited)
NUMBER MARKET
OF SHARES VALUE
----------- -------------
COMMON STOCKS - 98.3%
ADVERTISING - 1.5%
Omnicom Group, Inc. 9,400 $ 832,088
-------------
AEROSPACE & DEFENSE - 3.1%
Boeing Company 10,700 625,522
United Technologies Corporation 11,100 1,128,426
-------------
1,753,948
-------------
APPAREL RETAIL - 0.5%
Gap, Inc. 13,900 303,576
-------------
APPAREL, ACCESSORIES & LUXURY GOODS - 0.4%
Jones Apparel Group, Inc. 7,300 244,477
-------------
BROADCASTING & CABLE TV - 4.0%
Clear Channel Communications, Inc. 29,500 1,016,865
Comcast Corporation* 17,400 587,772
Liberty Media Corporation* 62,400 647,088
-------------
2,251,725
-------------
COMMUNICATIONS EQUIPMENT - 1.0%
Nokia Oyj ADR 36,000 555,480
COMPUTER HARDWARE - 2.0%
Hewlett-Packard Company 26,800 587,992
International Business Machines
Corporation 5,900 539,142
-------------
1,127,134
-------------
DATA PROCESSING & OUTSOURCED SERVICES - 3.2%
Automatic Data Processing, Inc. 21,800 979,910
DST Systems, Inc.* 10,600 489,508
Fiserv, Inc.* 9,500 378,100
-------------
1,847,518
-------------
DIVERSIFIED BANKS - 6.7%
Bank of America Corporation 37,950 1,673,595
U.S. Bancorp 18,200 524,524
Wachovia Corporation 20,200 1,028,382
Wells Fargo & Company 9,600 574,080
-------------
3,800,581
-------------
DIVERSIFIED CHEMICALS - 1.8%
Dow Chemical Company 11,400 568,290
E.I. du Pont de Nemours & Company 9,200 471,408
-------------
1,039,698
-------------
DRUG RETAIL - 0.5%
CVS Corporation 5,800 305,196
-------------
ELECTRIC UTILITIES - 3.8%
Edison International 10,000 347,200
Entergy Corporation 4,100 289,706
Exelon Corporation 13,900 637,871
PG&E Corporation* 9,600 327,360
PPL Corporation 6,200 334,738
TXU Corporation 2,800 222,964
-------------
2,159,839
-------------
ELECTRICAL COMPONENTS & EQUIPMENT - 0.5%
Emerson Electric Company 4,700 305,171
-------------
FOOD RETAIL - 0.8%
Safeway, Inc.* 25,900 479,927
-------------
GENERAL MERCHANDISE STORES - 0.6%
Dollar General Corporation 16,200 354,942
-------------
HEALTH CARE DISTRIBUTORS - 0.5%
Cardinal Health, Inc. 5,000 279,000
-------------
HEALTH CARE EQUIPMENT - 0.6%
Boston Scientific Corporation* 11,700 342,693
-------------
HEALTH CARE SERVICES - 1.3%
Caremark Rx, Inc.* 9,900 393,822
Medco Health Soulutions, Inc.* 7,100 351,947
-------------
745,769
-------------
HOUSEHOLD PRODUCTS - 1.2%
Colgate-Palmolive Company 13,300 693,861
-------------
HOUSEWARES & SPECIALTIES - 0.5%
Newell Rubbermaid, Inc. 12,700 278,638
-------------
INDUSTRIAL CONGLOMERATES - 5.7%
General Electric Company 47,200 1,702,032
Tyco International, Ltd. 45,600 1,541,280
-------------
3,243,312
-------------
INDUSTRIAL MACHINERY - 0.6%
Eaton Corporation 4,800 313,920
-------------
INTEGRATED OIL & GAS - 11.5%
BP plc ADR 16,200 1,010,880
ChevronTexaco Corporation 18,900 1,102,059
ConocoPhillips 9,400 1,013,696
Exxon Mobil Corporation 44,300 2,640,280
Total S.A. ADR 6,700 785,441
-------------
6,552,356
-------------
INTEGRATED TELECOMMUNICATION SERVICES - 4.4%
Alltel Corporation 8,600 471,710
Sprint Corporation 42,200 960,050
Verizon Communications, Inc. 30,600 1,086,300
-------------
2,518,060
-------------
INVESTMENT BANKING & BROKERAGE - 5.1%
Goldman Sachs Group, Inc. 11,000 1,209,890
Merrill Lynch & Company, Inc. 14,500 820,700
Morgan Stanley 15,200 870,200
-------------
2,900,790
-------------
LIFE & HEALTH INSURANCE - 2.8%
Genworth Financial, Inc. 28,300 778,816
Prudential Financial, Inc. 13,900 797,860
-------------
1,576,676
-------------
98 See accompanying notes.
SECURITY
Schedule of Investments LARGE CAP VALUE FUND
March 31, 2005 (unaudited)
NUMBER MARKET
OF SHARES VALUE
----------- ------------
COMMON STOCKS (CONTINUED)
MANAGED HEALTH CARE - 1.0%
PacifiCare Health Systems, Inc.* 2,600 $ 147,992
WellPoint, Inc.* 3,500 438,725
-----------
586,717
-----------
MOVIES & ENTERTAINMENT - 3.5%
News Corporation 25,100 424,692
Time Warner, Inc.* 48,500 851,175
Viacom, Inc. (Cl.B) 19,800 689,634
-----------
1,965,501
-----------
MULTI-LINE INSURANCE - 2.2%
American International Group, Inc. 17,300 958,593
Hartford Financial Services Group, Inc. 4,200 287,952
-----------
1,246,545
-----------
MULTI-UTILITIES & UNREGULATED POWER - 0.6%
Dominion Resources, Inc. 4,300 320,049
-----------
OIL & GAS EQUIPMENT & SERVICES - 1.2%
Cooper Cameron Corporation* 5,100 291,771
Schlumberger, Ltd. 5,500 387,640
-----------
679,411
-----------
OIL & GAS EXPLORATION & PRODUCTION - 0.9%
Apache Corporation 8,200 502,086
-----------
OTHER DIVERSIFIED FINANCIAL SERVICES - 5.8%
Citigroup, Inc. 42,266 1,899,434
JP Morgan Chase & Company 40,700 1,408,220
-----------
3,307,654
-----------
PACKAGED FOODS & MEATS - 1.3%
General Mills, Inc. 6,300 309,645
Kraft Foods, Inc. 12,600 416,430
-----------
726,075
-----------
PAPER PRODUCTS - 1.3%
Bowater, Inc. 6,600 248,622
International Paper Company 13,500 496,665
-----------
745,287
-----------
PHARMACEUTICALS - 1.2%
IVAX Corporation* 7,600 150,252
Pfizer, Inc. 9,000 236,430
Schering-Plough Corporation 15,100 274,065
-----------
660,747
-----------
PROPERTY & CASUALTY INSURANCE - 1.2%
Allstate Corporation 6,800 367,608
Chubb Corporation 3,800 301,226
-----------
668,834
-----------
RAILROADS - 0.3%
Union Pacific Corporation 2,400 167,280
-----------
REGIONAL BANKS - 1.0%
PNC Financial Services Group, Inc. 5,600 288,288
SunTrust Banks, Inc. 4,300 309,901
-----------
598,189
-----------
RESTAURANTS - 0.9%
McDonald's Corporation 15,900 495,126
-----------
PRINCIPAL
AMOUNT OR
NUMBER MARKET
OF SHARES VALUE
------------ -------------
COMMON STOCKS (CONTINUED)
SEMICONDUCTORS - 1.0%
Fairchild Semiconductor International, Inc.* 17,600 $ 269,808
Texas Instruments, Inc. 11,500 293,135
-------------
562,943
-------------
SOFT DRINKS - 0.5%
Coca-Cola Company 7,100 295,857
-------------
SPECIALTY STORES - 0.8%
Advance Auto Parts, Inc.* 9,400 474,230
-------------
SYSTEMS SOFTWARE - 2.5%
Computer Associates International, Inc. 121 3,279
Microsoft Corporation 37,200 899,124
Oracle Corporation* 41,400 516,672
-------------
1,419,075
-------------
THRIFTS & MORTGAGE FINANCE - 4.5%
Countrywide Financial Corporation 10,800 350,568
Fannie Mae 7,000 381,150
Freddie Mac 12,800 808,960
PMI Group, Inc. 16,600 630,966
Washington Mutual, Inc. 9,700 383,150
-------------
2,554,794
-------------
TOBACCO - 1.5%
Altria Group, Inc. 13,300 869,687
-------------
WIRELESS TELECOMMUNICATION SERVICE - 0.5%
Vodafone Group plc ADR 11,600 308,096
-------------
TOTAL COMMON STOCKS
(cost $50,897,105) 55,960,558
-------------
CORPORATE BONDS - 0.0%
SERVICES - 0.0%
American Eco Corporation,
9.625% - 2008*(1),(2) $125,000 -
-------------
TOTAL CORPORATE BONDS
(cost $206,671) -
-------------
U.S. GOVERNMENT SPONSORED AGENCIES - 1.5%
Federal Home Loan Bank,
2.55%, 04-01-05 $881,000 881,000
-------------
TOTAL U.S. GOVERNMENT SPONSORED AGENCIES
(cost $881,000) 881,000
-------------
TOTAL INVESTMENTS
(cost $51,984,776) - 99.8% 56,841,558
CASH & OTHER ASSETS, LESS LIABILITIES - 0.2% 133,727
-------------
TOTAL NET ASSETS - 100.0% $ 56,975,285
=============
99 See accompanying notes.
SECURITY
Schedule of Investments LARGE CAP VALUE FUND
March 31, 2005 (unaudited)
For federal income tax purposes the identified cost of investments owned at
March 31, 2005 was $52,245,755.
*Non-income producing security
ADR (American Depositary Receipt)
plc (public limited company)
(1) Security is in default due to bankruptcy.
(2) Security is fair valued by the Board of Directors. The total market value
of fair valued securities amounts to $0 or 0.0% of total assets
100 See accompanying notes.
SECURITY
LARGE CAP VALUE FUND
(unaudited)
Statement of Assets and Liabilities
March 31, 2005
ASSETS:
Investments, at value(1) ............................ $ 56,841,558
Cash ................................................ 140
Receivables:
Fund shares sold ................................... 8,753
Securities sold .................................... 201,722
Dividends .......................................... 76,272
Prepaid expenses .................................... 27,705
--------------
Total assets ........................................ 57,156,150
--------------
LIABILITIES:
Payable for:
Securities purchased ............................... 73,367
Fund shares redeemed ............................... 22,958
Management fees .................................... 36,734
Custodian fees ..................................... 295
Transfer agent and administration fees ............. 13,712
Professional fees .................................. 5,574
12b-1 distribution plan fees ....................... 20,348
Other .............................................. 7,877
--------------
Total liabilities 180,865
--------------
NET ASSETS .......................................... $ 56,975,285
==============
NET ASSETS CONSIST OF:
Paid in capital ..................................... $ 64,041,829
Accumulated undistributed net
investment income .................................. 256,113
Accumulated net realized loss
on sale of investments ............................. (12,179,439)
Net unrealized appreciation
in value of investments ............................ 4,856,782
--------------
Net assets .......................................... $ 56,975,285
==============
CLASS A:
Capital shares outstanding
(unlimited number of shares authorized) ............ 7,123,987
Net assets .......................................... $ 44,490,744
Net asset value per share ........................... $ 6.25
==============
Maximum offering price per share
(net asset value divided by 94.25%) ................ $ 6.63
==============
CLASS B:
Capital shares outstanding
(unlimited number of shares authorized) ............ 1,656,450
Net assets .......................................... $ 9,772,796
Net asset value, offering and redemption price
per share (excluding any applicable contingent
deferred sales charge) ............................. $ 5.90
==============
CLASS C:
Capital shares outstanding
(unlimited number of shares authorized) ............ 451,531
Net assets .......................................... $ 2,711,745
Net asset value, offering and redemption price
per share (excluding any applicable contingent
deferred sales charge) ............................. $ 6.01
==============
(1)Investments, at cost ............................. $ 51,984,776
Statement of Operations
For the Six Months Ended March 31, 2005
INVESTMENT INCOME:
Dividends .......................................... $ 692,658
Interest ........................................... 10,222
--------------
Total investment income ............................ 702,880
--------------
EXPENSES:
Management fees .................................... 215,552
Custodian fees ..................................... 7,551
Transfer agent/maintenance fees .................... 85,021
Administration fees ................................ 26,434
Directors' fees .................................... 11,362
Professional fees .................................. 7,761
Reports to shareholders ............................ 3,700
Registration fees .................................. 20,437
Other expenses ..................................... 5,129
12b-1 distribution plan fees - Class A ............. 55,695
12b-1 distribution plan fees - Class B ............. 50,720
12b-1 distribution plan fees - Class C ............. 13,904
--------------
Total expenses ..................................... 503,266
--------------
Net investment income .............................. 199,614
--------------
NET REALIZED AND UNREALIZED GAIN:
Net realized gain during the period on:
Investments ........................................ 2,535,887
--------------
Net realized gain .................................. 2,535,887
--------------
Unrealized appreciation during the period on:
Investments ........................................ 2,323,547
--------------
Net unrealized appreciation ........................ 2,323,547
--------------
Net gain ........................................... 4,859,434
--------------
Net increase in net assets
resulting from operations ......................... $ 5,059,048
==============
101 See accompanying notes.
SECURITY
Statement of Changes in Net Assets LARGE CAP VALUE FUND
SIX MONTHS ENDED
MARCH 31, 2005 YEAR ENDED
(unaudited) SEPTEMBER 30, 2004
---------------- ------------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income ............................................. $ 199,614 $ 3,750
Net realized gain during the period on investments ................ 2,535,887 5,850,836
Unrealized appreciation during the period on investments .......... 2,323,547 1,248,889
------------ -------------
Net increase in net assets resulting from operations .............. 5,059,048 7,103,475
------------ -------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A .......................................................... - (112,367)
Class B .......................................................... - -
Class C .......................................................... - -
------------ -------------
Total distributions to shareholders ............................... - (112,367)
------------ -------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from sale of shares
Class A .......................................................... 3,221,701 9,899,761
Class B .......................................................... 568,807 4,542,029
Class C .......................................................... 570,379 1,821,834
Distributions reinvested
Class A .......................................................... - 105,691
Class B .......................................................... - -
Class C .......................................................... - -
Cost of shares redeemed
Class A .......................................................... (5,744,975) (18,334,145)
Class B .......................................................... (1,841,142) (7,295,608)
Class C .......................................................... (654,129) (1,609,840)
------------ -------------
Net decrease from capital share transactions ...................... (3,879,359) (10,870,278)
------------ -------------
Net increase (decrease) in net assets ............................. 1,179,689 (3,879,170)
------------ -------------
NET ASSETS:
Beginning of period ............................................... 55,795,596 59,674,766
------------ -------------
End of period ..................................................... $ 56,975,285 $ 55,795,596
============ =============
Accumulated undistributed net investment income at end of period .. $ 256,113 $ 56,499
============ =============
Capital Share Activity:
Shares sold
Class A ......................................................... 523,342 1,736,330
Class B ......................................................... 97,533 832,794
Class C ......................................................... 96,915 324,573
Shares reinvested
Class A ......................................................... - 18,840
Class B ......................................................... - -
Class C ......................................................... - -
Shares redeemed
Class A ......................................................... (937,987) (3,197,972)
Class B ......................................................... (317,128) (1,357,469)
Class C ......................................................... (109,729) (290,056)
102 See accompanying notes.
SECURITY
Financial Highlights LARGE CAP VALUE FUND
Selected data for each share of capital stock outstanding throughout each period
SIX MONTHS ENDED YEAR ENDED
MARCH 31, SEPTEMBER 30,
CLASS A 2005(i) 2004 2003 2002(f,h) 2001(e) 2000
- ------- ---------------- ------- ------- --------- -------- -------------
PER SHARE DATA
Net asset value, beginning of period $ 5.71 $ 5.11 $ 4.25 $ 5.37 $ 6.42 $ 7.17
------- ------- ------- --------- -------- --------
Income (loss) from investment operations:
Net investment income (loss)(c) 0.03 0.01 0.02 0.01 0.03 0.07
Net gain (loss) on securities (realized and unrealized) 0.51 0.60 0.84 (1.10) (1.03) (0.58)
------- ------- ------- --------- -------- --------
Total from investment operations 0.54 0.61 0.86 (1.09) (1.00) (0.51)
------- ------- ------- --------- -------- --------
Less distributions:
Dividends from net investment income - (0.01) - (0.03) (0.05) (0.13)
Distributions from realized gains - - - - - (0.11)
------- ------- ------- --------- -------- --------
Total distributions - (0.01) - (0.03) (0.05) (0.24)
------- ------- ------- --------- -------- --------
Net asset value, end of period $ 6.25 $ 5.71 $ 5.11 $4.25 $ 5.37 $ 6.42
======= ======= ======= ========= ======== ========
TOTAL RETURN(a) 9.46% 11.98% 20.24% (20.51%) (15.68%) (7.28%)
------- ------- ------- --------- -------- --------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $44,491 $43,071 $45,858 $ 32,997 $ 45,006 $ 60,448
------- ------- ------- --------- -------- --------
Ratios to average net assets:
Net investment income (loss) 0.86% 0.19% 0.41% 0.20% 0.49% 0.99%
Total expenses 1.59% 1.52% 1.45% 1.37% 1.32% 1.27%
Gross expenses(b) 1.59% 1.52% 1.45% 1.37% 1.32% 1.27%
Net expenses(d) 1.59% 1.52% 1.45% 1.37% 1.32% 1.27%
------- ------- ------- --------- -------- --------
Portfolio turnover rate 54% 75% 76% 68% 180% 144%
SIX MONTHS ENDED YEAR ENDED
MARCH 31, SEPTEMBER 30,
CLASS B 2005(i) 2004 2003 2002(f,h) 2001(e) 2000
- ------- ---------------- ------- ------- --------- -------- -------------
PER SHARE DATA
Net asset value, beginning of period $ 5.42 $ 4.87 $ 4.08 $ 5.18 $ 6.21 $ 6.95
------- ------- ------- ---------- -------- ---------
Income (loss) from investment operations:
Net investment income (loss)(c) - (0.03) (0.02) (0.04) (0.03) -
Net gain (loss) on securities (realized and unrealized) 0.48 0.58 0.81 (1.06) (1.00) (0.58)
------- ------- ------- ---------- -------- ---------
Total from investment operations 0.48 0.55 0.79 (1.10) (1.03) (0.58)
------- ------- ------- ---------- -------- ---------
Less distributions:
Dividends from net investment income - - - - - (0.05)
Distributions from realized gains - - - - - (0.11)
------- ------- ------- ---------- -------- ---------
Total distributions - - - - - (0.16)
------- ------- ------- ---------- -------- ---------
Net asset value, end of period $ 5.90 $ 5.42 $ 4.87 $ 4.08 $ 5.18 $ 6.21
======= ======= ======= ========== ======== =========
TOTAL RETURN(a) 8.86% 11.29% 19.36% (21.24%) (16.59%) (8.36%)
------- ------- ------- ---------- -------- ---------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $ 9,773 $10,164 $11,687 $ 4,905 $ 5,657 $ 7,152
------- ------- ------- ---------- -------- ---------
Ratios to average net assets:
Net investment income (loss) 0.13% (0.57%) (0.42%) (0.71%) (0.51%) 0.01%
Total expenses 2.34% 2.27% 2.20% 2.27% 2.32% 2.27%
Gross expenses(b) 2.34% 2.27% 2.20% 2.27% 2.32% 2.27%
Net expenses(d) 2.34% 2.27% 2.20% 2.27% 2.32% 2.27%
------- ------- ------- ---------- -------- ---------
Portfolio turnover rate 54% 75% 76% 68% 180% 144%
------- ------- ------- ---------- -------- ---------
103 See accompanying notes.
SECURITY
Financial Highlights LARGE CAP VALUE FUND
Selected data for each share of capital stock outstanding throughout each period
SIX MONTHS ENDED YEAR ENDED
MARCH 31, SEPTEMBER 30,
CLASS C 2005(i) 2004 2003 2002(f,g,h) 2001(e) 2000
- ------- ---------------- ------- ------- ----------- -------- -------------
PER SHARE DATA
Net asset value, beginning of period $ 5.52 $ 4.96 $ 4.16 $ 5.28 $ 6.32 $ 7.11
------- ------- ------- ---------- -------- ----------
Income (loss) from investment operations:
Net investment income (loss)(c) - (0.03) (0.02) (0.04) (0.03) (0.01)
Net gain (loss) on securities (realized and unrealized) 0.49 0.59 0.82 (1.08) (1.01) (0.56)
------- ------- ------- ---------- -------- ----------
Total from investment operations 0.49 0.56 0.80 (1.12) (1.04) (0.57)
------- ------- ------- ---------- -------- ----------
Less distributions:
Dividends from net investment income - - - - - (0.11)
Distributions from realized gains - - - - - (0.11)
------- ------- ------- ---------- -------- ----------
Total distributions - - - - - (0.22)
------- ------- ------- ---------- -------- ----------
Net asset value, end of period $ 6.01 $ 5.52 $ 4.96 $ 4.16 $ 5.28 $ 6.32
======= ======= ======= ========== ======== ==========
TOTAL RETURN(a) 8.88% 11.29% 19.23% (21.21%) (16.46%) (8.10%)
------- ------- ------- ---------- -------- ----------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $ 2,712 $ 2,561 $ 2,130 $ 1,510 $ 904 $ 483
------- ------- ------- ---------- -------- ----------
Ratios to average net assets:
Net investment income (loss) 0.09% (0.57%) (0.33%) (0.72%) (0.55%) (0.10%)
Total expenses 2.34% 2.28% 2.20% 2.25% 2.33% 2.28%
Gross expenses(b) 2.34% 2.28% 2.20% 2.25% 2.33% 2.28%
Net expenses(d) 2.34% 2.28% 2.20% 2.25% 2.33% 2.28%
------- ------- ------- ---------- -------- ----------
Portfolio turnover rate 54% 75% 76% 68% 180% 144%
(a) Total return information does not reflect deduction of any sales charges
imposed at the time of purchase for Class A shares or upon redemption for
Class B and C.
(b) Gross expense information reflects expense ratios absent fund expense
reductions by the Investment Manager.
(c) Net investment income (loss) was computed using average shares outstanding
throughout the period.
(d) Net expense information reflects expense ratios after expense reductions
or fee waivers and reduction to custodian expenses.
(e) The Dreyfus Corporation became sub-adviser of Security Large Cap Value
Fund effective January 1, 2001. Prior to January 1, 2001, advisory
services were provided by the Investment Manager.
(f) As required, effective October 1, 2001, the Funds adopted the provisions
of the AICPA Audit and Accounting Guide for Investment Companies and began
amortizing premiums on fixed income securities. The effect of this
change for the period ended September 30, 2002, was to increase net
investment income per share by less than 1/2 of a cent, decrease net
realized and unrealized gains and losses per share by less than 1/2 of a
cent and increase the ratio of net investment income to average net assets
from 0.06% to 0.07%. Per share, ratios and supplemental data for periods
prior to October 1, 2001 have not been restated to reflect this change in
presentation.
(g) The financial highlights for Class C shares exclude the historical
financial highlights of Class S shares. Class S shares were exchanged for
Class C shares on June 3, 2002.
(h) Effective May 1, 2002 the fee structure for Security Large Cap Value Fund
changed. Per share information reflects this change.
(i) Unaudited figures for the six months ended March 31, 2005. Percentage
amounts for the period, except total return, have been annualized.
104 See accompanying notes.
SECURITY MID CAP
GROWTH FUND
(SECURITY FUNDS LOGO)
ADVISOR,
SECURITY MANAGEMENT COMPANY, LLC
105
SECURITY
Performance Summary MID CAP GROWTH FUND
May 15, 2005 (unaudited)
PERFORMANCE
SECURITY MID CAP GROWTH FUND VS. S&P MIDCAP 400/BARRA GROWTH INDEX & RUSSELL
2500 GROWTH INDEX
[PERFORMANCE GRAPH]
MID CAP GROWTH
DATE value
03/31/95 9,425
06/30/95 10,055
09/30/95 11,187
12/31/95 10,872
03/31/96 11,638
06/30/96 12,592
09/30/96 12,905
12/31/96 12,831
03/31/97 11,821
06/30/97 13,488
09/30/97 15,559
12/31/97 15,118
03/31/98 16,685
06/30/98 16,347
09/30/98 13,622
12/31/98 17,649
03/31/99 17,604
06/30/99 20,468
09/30/99 20,557
12/31/99 28,180
3/31/00 33,714
6/30/00 31,877
9/30/00 35,528
12/31/00 32,809
03/31/01 27,087
06/30/01 30,194
09/30/01 21,959
12/31/01 28,016
03/31/02 28,719
06/30/02 23,616
09/30/02 18,304
12/31/02 20,283
03/31/03 20,049
06/30/03 25,829
09/30/03 28,224
12/31/03 31,642
03/31/04 33,420
06/30/04 33,340
09/30/04 29,701
12/31/04 34,676
03/31/05 32,103
S& P MIDCAP 400 BARRA GROWTH INDEX
DATE value
- ----------------- ------
INCEPTION 3/31/95 10,000
6/30/95 10,870
9/30/95 12,015
12/31/95 11,765
3/31/96 12,621
6/30/96 12,975
9/30/96 13,495
12/31/96 13,931
3/31/97 13,558
6/30/97 16,013
9/30/97 18,891
12/31/97 18,145
3/31/98 20,361
6/30/98 20,315
9/30/98 17,232
12/31/98 24,469
3/31/99 23,091
6/30/99 26,191
9/30/99 24,370
12/31/99 31,167
3/31/00 37,076
06/30/00 35,824
09/30/00 39,895
12/31/00 34,021
03/31/01 27,846
06/30/01 32,174
09/30/01 25,689
12/31/01 31,308
03/31/02 32,389
06/30/02 28,175
09/30/02 24,073
12/31/02 25,307
03/31/03 24,544
06/30/03 28,475
09/30/03 30,186
12/31/03 33,147
03/31/04 34,666
06/30/04 34,931
09/30/04 33,737
12/31/04 37,798
03/31/05 37,769
RUSSELL 2500 GROWTH INDEX
DATE value
- ----------------- ------
INCEPTION 3/31/95 10,000
6/30/95 10,891
9/30/95 12,100
12/31/95 12,312
3/31/96 13,173
6/30/96 13,848
9/30/96 14,039
12/31/96 14,170
3/31/97 13,037
6/30/97 15,157
9/30/97 17,678
12/31/97 16,263
3/31/98 18,073
6/30/98 17,191
9/30/98 13,374
12/31/98 16,765
3/31/99 16,589
6/30/99 19,377
9/30/99 18,705
12/31/99 26,069
3/31/00 30,015
06/30/00 27,944
09/30/00 27,122
12/31/00 21,875
03/31/01 17,520
06/30/01 21,245
09/30/01 15,494
12/31/01 19,506
03/31/02 18,931
06/30/02 15,783
09/30/02 12,775
12/31/02 13,833
03/31/03 13,390
06/30/03 16,433
09/30/03 18,069
12/31/03 20,238
03/31/04 21,352
06/30/04 21,382
09/30/04 20,182
12/31/04 23,192
03/31/05 22,188
$10,000 OVER TEN YEARS
This chart assumes a $10,000 investment in Class A shares of Security Mid Cap
Growth Fund on March 31, 1995, reflects deduction of the 5.75% sales load and
assumes all dividends reinvested. The chart does not reflect the deduction of
taxes that a shareholder would pay on distributions or the redemption of fund
shares. The Security Mid Cap Growth Fund changed its benchmark index to the
Russell 2500 Growth Index. The Investment Adviser has determined that the
Russell 2500 Growth Index is a more appropriate index than the S&P MidCap
400/Barra Growth Index, which is created by Standard and Poor's and Barra by
dividing the S&P MidCap 400 Index equally between growth and value based upon a
price to book value calculation, because the Russell 2500 Growth Index more
closely reflects the types of securities in which the Series invests and thus
provides shareholders with a more appropriate benchmark against which to compare
the Fund's performance.
AVERAGE ANNUAL RETURNS
SINCE
PERIODS ENDED 3-31-05 1 YEAR 5 YEARS 10 YEARS INCEPTION
- --------------------- ------ ------- -------- ---------
A Shares (3.94%) (0.97%) 13.04% -
A Shares with sales charge (9.49%) (2.13%) 12.37% -
B Shares (4.60%) (1.81%) 12.13% -
B Shares with CDSC (9.37%) (2.21%) 12.13% -
C Shares (4.67%) (1.81%) N/A 8.54%
(1-29-99)
C Shares with CDSC (5.62%) (1.81%) N/A 8.54%
(1-29-99)
The performance data above represent past performance that is not predictive of
future results. The investment return and principal value of an investment in
the Fund will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost. The figures above do not reflect
deduction of the maximum front-end sales charge of 5.75% for Class A shares or
the contingent deferred sales charge of 5% for Class B shares and 1% for Class C
shares, as applicable, except where noted. The figures do not reflect the
deduction of taxes that a shareholder would pay on distributions or redemption
of shares. Such figures would be lower if the maximum sales charge and any
applicable taxes were deducted.
PORTFOLIO COMPOSITION BY SECTOR
Consumer Discretionary 14.24%
Energy 15.04
Financials 3.00
Health Care 10.14
Industrials 13.58
Information Technology 28.08
Materials 3.88
Utilities 6.97
Exchange Traded Funds 4.68
Warrants 0.12
Commercial Paper 1.14
Liabilities, less cash & other assets (0.87)
106 See accompanying notes.
SECURITY
Performance Summary MID CAP GROWTH FUND
May 15, 2005 (unaudited)
PERFORMANCE
INFORMATION ABOUT YOUR FUND'S EXPENSES
CALCULATING YOUR ONGOING FUND EXPENSES
EXAMPLE
As a shareholder of the Series, you incur two types of costs: (1) transaction
costs, which may include sales charges (loads) on purchase payments; contingent
deferred sales charges on redemptions; and redemption fees, if any; and (2)
ongoing costs, including management fees; distribution and/or service fees
(12b-1); and other Fund expenses. This Example is intended to help you
understand your ongoing costs (in dollars) of investing in the Fund and to
compare these costs with ongoing costs of investing in other mutual funds. The
Example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period, October 1, 2004 - March 31, 2005.
ACTUAL EXPENSES
The first line for each class of shares in the table provides information about
actual account values and actual expenses. You may use the information in this
table, together with the amount you invested, to estimate the expenses that you
paid over the period. Simply divide your account value by $1,000 (for example,
an $8,600 account value divided by $1,000 = 8.6), then multiply the result by
the number in the table under the heading entitled "Expenses Paid During Period"
to estimate the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line for each class of shares in the table provides information about
hypothetical account values and hypothetical expenses based on the Fund's actual
expense ratio and an assumed rate of return of 5% per year before expenses,
which is not the Fund's actual return. The hypothetical account values and
expenses may not be used to estimate the actual ending account balance or
expenses you paid for the period. You may use this information to compare the
ongoing costs of investing in the Fund and other funds. To do so, compare this
5% hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads) on purchase payments, contingent deferred sales charges on
redemptions, and redemption fees, if any. Therefore, the second line for each
class of shares is useful in comparing ongoing costs only, and will not help you
determine the relative total costs of owning different funds. In addition, if
these transactional costs were included, your costs would have been higher.
FUND EXPENSES
BEGINNING ENDING EXPENSES PAID
ACCOUNT VALUE ACCOUNT VALUE DURING
10-01-04 03-31-05(1) PERIOD(2)
------------- ------------- -------------
Mid Cap Growth Fund
- - Class A
Actual $1,000.00 $ 1,080.90 $ 7.52
Hypothetical 1,000.00 1,017.70 7.29
Mid Cap Growth Fund
- - Class B
Actual 1,000.00 1,078.10 11.40
Hypothetical 1,000.00 1,013.96 11.05
Mid Cap Growth Fund
- - Class C
Actual 1,000.00 1,076.70 11.39
Hypothetical 1,000.00 1,013.96 11.05
(1) The actual ending account value is based on the actual total return of the
Fund for the period October 1, 2004 to March 31, 2005 after actual expenses
and will differ from the hypothetical ending account value which is based on
the Fund expense ratio and a hypothetical annual return of 5% before
expenses. The actual cumulative return at net asset value for the period
October 1, 2004 to March 31, 2005 was 8.09%, 7.81% and 7.67%, for Class A, B
and C class shares, respectively.
(2) Expenses are equal to the Fund's annualized expense ratio (1.45%, 2.20% and
2.20% for Class A, B and C class shares, respectively) multiplied by the
average account value over the period, multiplied by 182/365 (to reflect the
one-half year period).
107
SECURITY
Schedule of Investments MID CAP GROWTH FUND
March 31, 2005 (unaudited)
NUMBER MARKET
OF SHARES VALUE
--------- -------------
COMMON STOCKS - 99.7%
APPLICATION SOFTWARE - 1.5%
InteliData Technologies Corporation* 393,250 $ 114,043
Tibco Software, Inc.* 289,600 2,157,520
Tyler Technologies, Inc.* 102,000 776,220
-------------
3,047,783
-------------
ASSET MANAGEMENT & CUSTODY BANKS - 2.2%
Northern Trust Corporation 104,000 4,517,760
-------------
BIOTECHNOLOGY - 3.7%
Cell Genesys, Inc.* 47,600 215,628
Charles River Laboratories International, Inc.* 34,000 1,599,360
Human Genome Sciences, Inc.* 69,900 644,478
Incyte Corporation* 112,000 764,960
Kosan Biosciences, Inc.* 169,100 693,310
Novavax, Inc.* 126,000 177,660
SciClone Pharmaceuticals, Inc.* 339,367 963,802
Strategic Diagnostics, Inc.* 206,300 616,837
Vasogen, Inc.* 285,925 1,157,996
Vical, Inc.* 156,000 624,000
-------------
7,458,031
-------------
CASINOS & GAMING - 1.5%
GTech Holdings Corporation 130,000 3,058,900
-------------
COMMUNICATIONS EQUIPMENT - 6.3%
ADC Telecommunications, Inc.* 1,200,000 2,388,000
Adtran, Inc. 136,600 2,409,624
Avici Systems, Inc.* 121,500 522,329
Extreme Networks, Inc.* 250,000 1,472,500
Finisar Corporation* 1,255,900 1,569,875
Harris Corporation(1) 90,000 2,938,500
Symmetricom, Inc.* 126,000 1,397,340
-------------
12,698,168
-------------
COMPUTER STORAGE & PERIPHERALS - 1.5%
Adaptec, Inc.* 213,500 1,022,665
Mobility Electronics, Inc.* 127,300 889,827
M-Systems Flash Disk Pioneers, Ltd.* 50,000 1,102,000
-------------
3,014,492
-------------
CONSTRUCTION & ENGINEERING - 2.7%
Shaw Group, Inc.* 253,700 5,530,660
-------------
CONSTRUCTION MATERIALS - 1.6%
Headwaters, Inc.* 100,000 3,282,000
-------------
DATA PROCESSING & OUTSOURCED SERVICES - 3.0%
Computer Sciences Corporation* 85,000 3,897,250
Hewitt Associates, Inc.* 36,000 957,600
Per-Se Technologies, Inc.* 74,100 1,137,435
-------------
5,992,285
-------------
DIVERSIFIED COMMERCIAL SERVICES - 2.4%
ChoicePoint, Inc.* 47,000 1,885,170
Equifax, Inc. 41,390 1,270,259
Navigant Consulting, Inc.* 64,800 1,764,504
-------------
4,919,933
-------------
ELECTRIC UTILITIES - 7.0%
KFx, Inc.* 1,050,000 14,070,000
-------------
ELECTRICAL COMPONENTS & EQUIPMENT - 6.1%
Electric City Corporation* 1,068,000 1,014,600
Millennium Cell, Inc.* 141,500 292,905
Plug Power, Inc.* 504,000 3,326,400
Power-One, Inc.* 961,800 4,674,348
Roper Industries, Inc. 46,000 3,013,000
-------------
12,321,253
-------------
ELECTRONIC EQUIPMENT MANUFACTURERS - 2.7%
Aeroflex, Inc.* 180,000 1,679,400
Identix, Inc.* 59,400 299,970
Maxwell Technologies, Inc.* 322,700 2,959,159
Universal Display Corporation* 75,000 524,250
-------------
5,462,779
-------------
EXCHANGE TRADED FUNDS - 4.7%
iShares Russell 2000 Growth Index Fund 42,000 2,625,000
iShares S&P MidCap 400/Barra Growth Index Fund 33,000 4,420,680
S & P MidCap 400 Depositary Receipts 20,000 2,407,200
-------------
9,452,880
-------------
GENERAL MERCHANDISE STORES - 2.3%
Fred's, Inc. 275,000 4,721,750
-------------
HEALTH CARE EQUIPMENT - 0.2%
Bioject Medical Technologies, Inc.* 300,000 402,000
-------------
HEALTH CARE FACILITIES - 2.6%
LifePoint Hospitals, Inc.*(1) 36,000 1,578,240
U.S. Physical Therapy, Inc.* 97,000 1,356,060
United Surgical Partners International, Inc.* 50,000 2,288,500
-------------
5,222,800
-------------
HEALTH CARE SERVICES - 2.2%
NDCHealth Corporation 59,400 949,212
Providence Service Corporation* 78,900 1,834,804
Orthovita, Inc.* 375,000 1,275,000
Staar Surgical Company* 99,400 388,654
-------------
4,447,670
-------------
HOME FURNISHINGS - 0.3%
Kirkland's, Inc.* 50,425 557,701
-------------
INDUSTRIAL MACHINERY - 0.3%
Tennant Company 17,100 661,599
-------------
INTERNET SOFTWARE & SERVICES - 1.0%
RADVision, Ltd.* 151,500 1,917,990
-------------
108 See accompanying notes.
SECURITY
Schedule of Investments MID CAP GROWTH FUND
March 31, 2005 (unaudited)
NUMBER MARKET
OF SHARES VALUE
--------- ------------
COMMON STOCKS (CONTINUED)
IT CONSULTING & OTHER SERVICES - 4.8%
Acxiom Corporation 350,000 $ 7,325,500
Keane, Inc.* 182,000 2,371,460
------------
9,696,960
------------
LEISURE PRODUCTS - 1.2%
Mattel, Inc. 115,000 2,455,250
------------
METAL & GLASS CONTAINERS - 2.3%
Pactiv Corporation* 195,000 4,553,250
------------
MOVIES & ENTERTAINMENT - 2.8%
Lions Gate Entertainment Corporation* 507,000 5,602,350
------------
OIL & GAS DRILLING - 1.5%
Ensco International, Inc. 82,300 3,099,418
------------
OIL & GAS EQUIPMENT & SERVICES - 1.8%
BJ Services Company 43,000 2,230,840
Superior Energy Services, Inc.* 80,000 1,376,000
------------
3,606,840
------------
OIL & GAS EXPLORATION & PRODUCTION - 8.7%
EOG Resources, Inc. 132,000 6,433,680
Pioneer Natural Resources Company 135,668 5,795,737
Rentech, Inc.* 1,692,000 2,216,520
Syntroleum Corporation* 254,450 3,114,468
------------
17,560,405
------------
OIL & GAS REFINING, MARKETING & TRANSPORTATION - 3.0%
Western Gas Resources, Inc. 72,900 2,511,405
Williams Companies, Inc. 190,000 3,573,900
------------
6,085,305
------------
PHARMACEUTICALS - 1.5%
Hollis-Eden Pharmaceuticals, Inc.* 257,744 1,815,806
Ligand Pharmaceuticals, Inc. (Cl.B)* 196,900 1,128,237
------------
2,944,043
------------
PUBLISHING - 2.1%
E.W. Scripps Company(1) 86,000 4,192,500
------------
REGIONAL BANKS - 0.8%
Boston Private Financial Holdings, Inc. 65,000 1,543,750
------------
RESTAURANTS - 0.9%
Rare Hospitality International, Inc.* 60,000 1,852,800
------------
SEMICONDUCTOR EQUIPMENT - 1.0%
Mindspeed Technologies, Inc.* 900,000 2,007,000
------------
SEMICONDUCTORS - 4.8%
Applied Micro Circuits Corporation* 500,000 1,645,000
hi/fn, Inc.* 152,800 1,107,800
Intersil Corporation 116,000 2,009,120
IXYS Corporation* 429,200 4,910,048
------------
9,671,968
------------
PRINCIPAL
AMOUNT OR
NUMBER MARKET
OF SHARES VALUE
---------- ------------
COMMON STOCKS (CONTINUED)
SPECIALTY STORES - 3.1%
Cost Plus, Inc.* 19,250 517,440
Hibbett Sporting Goods, Inc.* 103,500 3,109,140
Tractor Supply Company*(1) 61,000 2,662,650
------------
6,289,230
------------
SYSTEMS SOFTWARE - 1.6%
BEA Systems, Inc.* 360,000 2,869,200
Wind River Systems, Inc.* 19,500 294,060
------------
3,163,260
------------
TRADING COMPANIES & DISTRIBUTORS - 2.0%
MSC Industrial Direct Company, Inc. 130,000 3,972,800
------------
TOTAL COMMON STOCKS
(cost $165,935,126) 201,055,563
------------
WARRANTS - 0.1%
Bioject Medical Technologies, Inc. 5,625 174
Electric City Corporation 311,500 72,523
Hollis-Eden Pharmaceuticals, Inc. 8,143 5,491
Orthovita, Inc. 75,000 74,690
Syntroleum Corporation 14,100 97,431
------------
250,309
------------
TOTAL WARRANTS
(cost $479,124) 250,309
------------
COMMERCIAL PAPER - 1.1%
FINANCIAL - OTHER - 1.1%
Countrywide Home Loan,
2.87%, 04-01-05 $2,300,000 2,300,000
------------
TOTAL COMMERCIAL PAPER
(cost $2,300,000) 2,300,000
------------
TOTAL INVESTMENTS - 100.9%
(cost $168,714,250) 203,605,872
LIABILITIES, LESS CASH & OTHER ASSETS - (0.9%) (1,784,983)
------------
TOTAL NET ASSETS - 100.0% $201,820,889
============
For federal income tax purposes the identified cost of investments owned at
March 31, 2005 was $169,790,906.
* Non-income producing security
(1) Security is segregated as collateral for written options contracts.
109 See accompanying notes.
SECURITY
MID CAP GROWTH FUND
(unaudited)
Statement of Assets and Liabilities
March 31, 2005
ASSETS:
Investments, at value(1) ........................................................... $ 203,605,872
Cash ............................................................................... 156,698
Receivables:
Fund shares sold ................................................................. 137,169
Securities sold .................................................................. 1,827,074
Dividends ........................................................................ 73,044
Prepaid expenses ................................................................... 40,102
---------------
Total assets ....................................................................... 205,839,959
---------------
LIABILITIES:
Payable for:
Securities purchased ............................................................. 2,762,675
Fund shares redeemed ............................................................. 390,004
Written options, at value ........................................................ 454,630
Management fees .................................................................. 132,950
Custodian fees ................................................................... 837
Transfer agent and administration fees ........................................... 43,237
Professional fees ................................................................ 7,950
12b-1 distribution plan fees ..................................................... 202,890
Other ............................................................................ 23,897
---------------
Total liabilities .................................................................. 4,019,070
---------------
NET ASSETS ......................................................................... $ 201,820,889
===============
NET ASSETS CONSIST OF:
Paid in capital .................................................................... $ 163,654,455
Accumulated net investment loss .................................................... (1,093,402)
Accumulated undistributed net realized gain on sale of investments and options ..... 4,544,483
Net unrealized appreciation in value of investments and written options ............ 34,715,353
---------------
Net assets ......................................................................... $ 201,820,889
===============
CLASS A:
Capital shares outstanding
(unlimited number of shares authorized) .......................................... 14,244,408
Net assets ......................................................................... $ 159,974,289
Net asset value per share .......................................................... $ 11.23
===============
Maximum offering price per share
(net asset value divided by 94.25%) .............................................. $ 11.92
===============
CLASS B:
Capital shares outstanding
(unlimited number of shares authorized) .......................................... 2,792,254
Net assets ......................................................................... $ 27,017,343
Net asset value, offering and redemption price per share
(excluding any applicable contingent deferred sales charge) ...................... $ 9.68
===============
CLASS C:
Capital shares outstanding
(unlimited number of shares authorized) .......................................... 1,404,992
Net assets ......................................................................... $ 14,829,257
Net asset value, offering and redemption price per share
(excluding any applicable contingent deferred sales charge) ...................... $ 10.55
===============
(1)Investments, at cost ............................................................ $ 168,714,250
Statement of Operations
For the Six Months Ended March 31, 2005
INVESTMENT INCOME:
Dividends ........................................................................ $ 523,343
Interest ......................................................................... 49,567
-------------
Total investment income .......................................................... 572,910
-------------
EXPENSES:
Management fees .................................................................. 782,132
Custodian fees ................................................................... 8,597
Transfer agent/maintenance fees .................................................. 271,408
Administration fees .............................................................. 94,836
Directors' fees .................................................................. 11,944
Professional fees ................................................................ 19,475
Reports to shareholders .......................................................... 13,210
Registration fees ................................................................ 29,211
Other expenses ................................................................... 7,837
12b-1 distribution plan fees - Class A ........................................... 205,060
12b-1 distribution plan fees - Class B ........................................... 142,945
12b-1 distribution plan fees - Class C ........................................... 79,657
-------------
Total expenses ................................................................... 1,666,312
-------------
Net investment loss .............................................................. (1,093,402)
-------------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain during the period on:
Investments ...................................................................... 8,903,867
Options written and purchased .................................................... 134,997
-------------
Net realized gain ................................................................ 9,038,864
-------------
Unrealized appreciation (depreciation) during the period on:
Investments ...................................................................... 8,048,540
Options written and purchased .................................................... (262,860)
-------------
Net unrealized appreciation ...................................................... 7,785,680
-------------
Net gain ......................................................................... 16,824,544
-------------
Net increase in net assets resulting from operations ............................. $ 15,731,142
=============
110 See accompanying notes.
SECURITY
Statement of Changes in Net Assets MID CAP GROWTH FUND
SIX MONTHS ENDED YEAR ENDED
MARCH 31, 2005 SEPTEMBER 30,
(unaudited) 2004
---------------- ---------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment loss ............................................................... $ (1,093,402) $ (2,662,895)
Net realized gain during the period on investments and options
written and purchased ........................................................... 9,038,864 15,609,370
Unrealized appreciation (depreciation) during the period on
investments and options written and purchased ................................... 7,785,680 (2,850,662)
-------------- --------------
Net increase in net assets resulting from operations ................................ 15,731,142 10,095,813
-------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net realized gain
Class A ......................................................................... (9,956,179) (5,436,898)
Class B ......................................................................... (2,023,315) (1,171,101)
Class C ......................................................................... (1,044,883) (553,046)
-------------- --------------
Total distributions to shareholders ............................................... (13,024,377) (7,161,045)
-------------- --------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from sale of shares
Class A ......................................................................... 17,023,065 56,721,885
Class B ......................................................................... 2,414,549 7,305,168
Class C ......................................................................... 2,206,772 6,528,566
Distributions reinvested
Class A ......................................................................... 9,564,512 5,189,647
Class B ......................................................................... 1,981,156 1,150,087
Class C ......................................................................... 955,740 519,780
Issuance of shares in connection with Technology Series merger (Note 9)
Class A ......................................................................... - 7,786,451
Class B ......................................................................... - 1,764,789
Class C ......................................................................... - 2,411,529
Cost of shares redeemed
Class A ......................................................................... (18,828,865) (56,580,537)
Class B ......................................................................... (3,997,697) (10,368,864)
Class C ......................................................................... (3,256,694) (6,258,847)
-------------- --------------
Net increase from capital share transactions ...................................... 8,062,538 16,169,654
-------------- --------------
Net increase in net assets ........................................................ 10,769,303 19,104,422
-------------- --------------
NET ASSETS:
Beginning of period ............................................................... 191,051,586 171,947,164
-------------- --------------
End of period ..................................................................... $ 201,820,889 $ 191,051,586
============== ==============
Accumulated undistributed net investment income (loss) at end of period ........... $ (1,093,402) $ -
============== ==============
CAPITAL SHARE ACTIVITY:
Shares sold
Class A ......................................................................... 1,462,608 4,917,993
Class B ......................................................................... 234,722 723,937
Class C ......................................................................... 201,450 615,289
Shares reinvested
Class A ......................................................................... 797,044 458,045
Class B ......................................................................... 191,231 115,703
Class C ......................................................................... 84,579 48,173
Shares issued in connection with Technology Series merger
Class A ......................................................................... - 694,178
Class B ......................................................................... - 177,910
Class C ......................................................................... - 225,079
Shares redeemed
Class A ......................................................................... (1,606,532) (4,857,485)
Class B ......................................................................... (398,525) (1,016,474)
Class C ......................................................................... (296,306) (563,683)
111 See accompanying notes.
SECURITY
Financial Highlights MID CAP GROWTH FUND
Selected data for each share of capital stock outstanding throughout each period
SIX MONTHS
ENDED
MARCH 31, YEAR ENDED SEPTEMBER 30,
CLASS A 2005(h) 2004(g) 2003 2002(f) 2001 2000
- ------- ---------- -------- -------- ------- -------- -------------
PER SHARE DATA
Net asset value, beginning of period $ 11.02 $ 10.84 $ 7.03 $ 8.48 $ 15.28 $ 9.19
-------- -------- -------- ------- -------- --------
Income (loss) from investment operations:
Net investment income (loss)(c) (0.05) (0.13) (0.10) (0.09) (0.07) (0.08)
Net gain (loss) on securities (realized and unrealized) 0.99 0.71 3.91 (1.30) (5.38) 6.60
-------- -------- -------- ------- -------- --------
Total from investment operations 0.94 0.58 3.81 (1.39) (5.45) 6.52
-------- -------- -------- ------- -------- --------
Less distributions:
Dividends from net investment income - - - - - -
Distributions from realized gains (0.73) (0.40) - (0.06) (1.35) (0.43)
-------- -------- -------- ------- -------- --------
Total distributions (0.73) (0.40) - (0.06) (1.35) (0.43)
-------- -------- -------- ------- -------- --------
Net asset value, end of period $ 11.23 $ 11.02 $ 10.84 $ 7.03 $ 8.48 $ 15.28
======== ======== ======== ======= ======== ========
TOTAL RETURN(a) 8.09% 5.23% 54.20% (16.64%) (38.19%) 72.82%
-------- -------- -------- ------- -------- --------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $159,974 $149,715 $134,208 $90,948 $131,498 $204,787
-------- -------- -------- ------- -------- --------
Ratios to average net assets:
Net investment income (loss) (0.89%) (1.11%) (1.14%) (0.92%) (0.64%) (0.62%)
Total expenses 1.45% 1.41% 1.41% 1.20% 1.09% 1.11%
Gross expenses(b) 1.45% 1.41% 1.41% 1.20% 1.09% 1.11%
Net expenses(d) 1.45% 1.41% 1.41% 1.20% 1.09% 1.11%
-------- -------- -------- ------- -------- --------
Portfolio turnover rate 29% 50% 57% 47% 48% 35%
SIX MONTHS
ENDED
MARCH 31, YEAR ENDED SEPTEMBER 30,
CLASS B 2005(h) 2004(g) 2003 2002(f) 2001 2000
- ------- ---------- -------- -------- ------- -------- -------------
PER SHARE DATA
Net asset value, beginning of period $ 9.61 $ 9.57 $ 6.26 $ 7.62 $ 14.02 $ 8.54
------- ------- ------- ------- ------- -------
Income (loss) from investment operations:
Net investment income (loss)(c) (0.08) (0.19) (0.15) (0.16) (0.17) (0.19)
Net gain (loss) on securities (realized and unrealized) 0.88 0.63 3.46 (1.14) (4.88) 6.10
------- ------- ------- ------- ------- -------
Total from investment operations 0.80 0.44 3.31 (1.30) (5.05) 5.91
------- ------- ------- ------- ------- -------
Less distributions:
Dividends from net investment income - - - - - -
Distributions from realized gains (0.73) (0.40) - (0.06) (1.35) (0.43)
------- ------- ------- ------- ------- -------
Total distributions (0.73) (0.40) - (0.06) (1.35) (0.43)
------- ------- ------- ------- ------- -------
Net asset value, end of period $ 9.68 $ 9.61 $ 9.57 $ 6.26 $ 7.62 $ 14.02
======= ======= ======= ======= ======= =======
TOTAL RETURN(a) 7.81% 4.44% 52.88% (17.35%) (38.83%) 71.17%
------- ------- ------- ------- ------- -------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $27,017 $26,578 $26,459 $17,502 $28,580 $38,812
------- ------- ------- ------- ------- -------
Ratios to average net assets:
Net investment income (loss) (1.65%) (1.86%) (1.89%) (1.84%) (1.64%) (1.61%)
Total expenses 2.20% 2.16% 2.16% 2.11% 2.09% 2.11%
Gross expenses(b) 2.20% 2.16% 2.16% 2.11% 2.09% 2.11%
Net expenses(d) 2.20% 2.16% 2.16% 2.11% 2.09% 2.11%
------- ------- ------- ------- ------- -------
Portfolio turnover rate 29% 50% 57% 47% 48% 35%
------- ------- ------- ------- ------- -------
112 See accompanying notes.
SECURITY
Financial Highlights MID CAP GROWTH FUND
Selected data for each share of capital stock
outstanding throughout each period
SIX MONTHS ENDED
MARCH 31, YEAR ENDED SEPTEMBER 30,
CLASS C 2005(h) 2004(g) 2003 2002(e), (f) 2001 2000
- ------- ---------------- --------- --------- ------------- ---------- -------------
PER SHARE DATA
Net asset value, beginning of period $ 10.43 $ 10.34 $ 6.76 $ 8.22 $ 14.99 $ 9.11
-------- --------- --------- --------- ---------- ---------
Income (loss) from investment operations:
Net investment income (loss)(c) (0.09) (0.21) (0.16) (0.16) (0.18) (0.20)
Net gain (loss) on securities (realized and
unrealized) 0.94 0.70 3.74 (1.24) (5.24) 6.51
-------- --------- --------- --------- ---------- ---------
Total from investment operations 0.85 0.49 3.58 (1.40) (5.42) 6.31
-------- --------- --------- --------- ---------- ---------
Less distributions:
Dividends from net investment income - - - - - -
Distributions from realized gains (0.73) (0.40) - (0.06) (1.35) (0.43)
-------- --------- --------- --------- ---------- ---------
Total distributions (0.73) (0.40) - (0.06) (1.35) (0.43)
-------- --------- --------- --------- ---------- ---------
Net asset value, end of period $ 10.55 $ 10.43 $ 10.34 $ 6.76 $ 8.22 $ 14.99
======== ========= ========= ========= ========== =========
TOTAL RETURN(a) 7.67% 4.59% 52.96% (17.30%) (38.78%) 71.10%
-------- --------- --------- --------- ---------- ---------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $ 14,829 $ 14,759 $ 11,279 $ 5,883 $ 4,194 $ 3,017
-------- --------- --------- --------- ---------- ---------
Ratios to average net assets:
Net investment income (loss) (1.64%) (1.86%) (1.89%) (1.85%) (1.66%) (1.61%)
Total expenses 2.20% 2.16% 2.16% 2.12% 2.09% 2.11%
Gross expenses(b) 2.20% 2.16% 2.16% 2.12% 2.09% 2.11%
Net expenses(d) 2.20% 2.16% 2.16% 2.12% 2.09% 2.11%
-------- --------- --------- --------- ---------- ---------
Portfolio turnover rate 29% 50% 57% 47% 48% 35%
(a) Total return information does not reflect deduction of any sales charges
imposed at the time of purchase for Class A shares or upon redemption for
Class B and C.
(b) Gross expense information reflects expense ratios absent fund expense
reductions by the Investment Manager.
(c) Net investment income (loss) was computed using average shares outstanding
throughout the period.
(d) Net expense information reflects expense ratios after expense reductions or
fee waivers and reduction to custodian expenses.
(e) The financial highlights for Class C shares exclude the historical financial
highlights of Class S shares. Class S shares were exchanged for Class C
shares on June 3, 2002.
(f) Effective May 1, 2002 the fee structure for Security Mid Cap Growth Fund
changed. Per share information reflects this change.
(g) The financial highlights for the Mid Cap Growth Fund exclude the historical
financial highlights of the Technology Series Class A, B and C shares. The
assets of the Technology Series were acquired by the Mid Cap Growth Fund on
October 3, 2003.
(h) Unaudited figures for the six months ended March 31, 2005. Percentage
amounts for the period, except total return, have been annualized.
113 See accompanying notes.
Notes to Financial Statements
March 31, 2005
(unaudited)
1.SIGNIFICANT ACCOUNTING POLICIES
Security Large Cap Value, Equity and Mid Cap Growth Funds (the Funds) are
registered under the Investment Company Act of 1940, as amended, as open-end
management investment companies. The shares of Security Equity Fund are
currently issued in multiple Series, with each Series, in effect, representing a
separate fund. The Equity Fund accounts for the assets of each Series
separately. Class "A" shares are generally sold with a sales charge at the time
of purchase. Class "A" shares are not subject to a sales charge when they are
redeemed, except that purchases of Class "A" shares of $1 million or more sold
without a front-end sales charge are subject to a contingent deferred sales
charge if redeemed within one year of purchase. Class "B" shares are offered
without a front-end sales charge but incur additional class-specific expenses.
Class B shares may be subject to a contingent deferred sales charge for six
years and automatically convert to Class A shares after eight years. Redemptions
of the shares within five years of acquisition incur a contingent deferred sales
charge. Class "C" shares are offered without a front-end sales charge but incur
additional class-specific expenses. Redemptions of the shares within one year of
acquisition incur a contingent deferred sales charge. The following is a summary
of the significant accounting policies followed by the Funds in the preparation
of their financial statements.
A. SECURITY VALUATION - Valuations of the Funds' securities are supplied by
pricing services approved by the Board of Directors. The Funds' officers, under
the general supervision of the Board of Directors, regularly review procedures
used by, and valuations provided by, the pricing services. Each security owned
by the Funds that is listed on a securities exchange is valued at its last sale
price on that exchange on the date as of which assets are valued. Where the
security is listed on more than one exchange, the Funds will use the price of
that exchange that it generally considers to be the principal exchange on which
the stock is traded. Securities listed on the Nasdaq Stock Market, Inc.
("Nasdaq") will be valued at the Nasdaq Official Closing Price. Securities for
which market quotations are not readily available are valued by a pricing
service considering securities with similar yields, quality, type of issue,
coupon, duration and rating. If there is no bid price or if the bid price is
deemed to be unsatisfactory by the Board of Directors or by the Funds'
investment manager, then the securities are valued in good faith by such method
as the Board of Directors determines will reflect the fair value. If events
occur that will affect the value of a fund's portfolio securities before the NAV
has been calculated (a "significant event"), the security will generally be
priced using a fair value procedure. If the Valuation Committee determines a
significant event has occurred, it will evaluate the impact of that event on an
affected security or securities, to determine whether a fair value adjustment
would materially affect the fund's NAV per share. Some of the factors which may
be considered by the Board of Directors in determining fair value are
fundamental analytical data relating to the investment; the nature and duration
of any restrictions on disposition; trading in similar securities of the same
issuer or comparable companies; information from broker-dealers; and an
evaluation of the forces that influence the market in which the securities are
purchased and sold. The Funds generally will value short-term debt securities at
prices based on market quotations for such securities or securities of similar
type, yield, quality and duration, except those securities purchased with 60
days or less to maturity are valued on the basis of amortized cost which
approximates market value.
Generally, trading in foreign securities markets is substantially completed
each day at various times prior to the close of the New York Stock Exchange. The
values of foreign securities are determined as of the close of such foreign
markets or the close of the New York Stock Exchange, if earlier. All investments
quoted in foreign currency are valued in U.S. dollars on the basis of the
foreign currency exchange rates prevailing at the close of business. Investments
in foreign securities may involve risks not present in domestic investments. The
Valuation Committee will determine the current value of such foreign securities
by taking into consideration certain factors which may include those discussed
above, as well as the following factors, among others: the value of the
securities traded on other foreign markets, ADR trading, closed-end fund
trading, foreign currency exchange activity, and the trading prices of financial
products that are tied to foreign securities such as WEBS(R). In addition, the
Board of Directors has authorized the Valuation Committee and Administrator to
use prices and other information supplied by IDC's Fair Value Information
Service in valuing such securities. Since foreign securities may be denominated
in a foreign currency and involve settlement and pay interest or dividends in
foreign currencies, changes in the relationship of these foreign currencies to
the U.S. dollar can significantly affect the value of the investments and
earnings of the Funds. Foreign investments may also subject the Series/Fund to
foreign government exchange restrictions, expropriation, taxation or other
political, social or economic developments, all of which could affect the market
and/or credit risk of the investments.
B. REPURCHASE AGREEMENTS - In connection with transactions in repurchase
agreements, it is the Funds' policy that its custodian take possession of the
underlying collateral and that the fair value of the collateral exceed the
principal amount of the repurchase transaction, including accrued interest, at
all times. If the seller defaults, and the fair value of the collateral
declines, realization of the collateral by the Funds may be delayed or limited.
C. FOREIGN CURRENCY TRANSACTIONS - The accounting records of the Funds are
maintained in U.S. dollars. All assets and liabilities initially expressed in
foreign currencies are converted into U.S. dollars at prevailing exchange rates.
Purchases and sales of investment securities, dividend and interest income, and
certain expenses are translated at the rates of exchange prevailing on the
respective dates of such transactions.
The Funds do not isolate that portion of the results of operations resulting
from changes in the foreign exchange rates on investments from the fluctuations
arising from changes in the market prices of securities held. Such fluctuations
are included with the net realized and unrealized gain or loss on investments.
114
Notes to Financial Statements
March 31, 2005
(unaudited)
Net realized foreign exchange gains or losses arise from sales of portfolio
securities, sales of foreign currencies, and the difference between asset and
liability amounts initially stated in foreign currencies and the U.S. dollar
value of the amounts actually received or paid. Net unrealized foreign exchange
gains or losses arise from changes in the value of portfolio securities and
other assets and liabilities at the end of the reporting period, resulting from
changes in the exchange rates.
D. FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS - Global Series may enter into
forward foreign exchange contracts in order to manage foreign currency risk from
purchase or sale of securities denominated in foreign currency. The Series may
also enter into such contracts to manage changes in foreign currency exchange
rates on portfolio positions. These contracts are marked to market daily, by
recognizing the difference between the contract exchange rate and the current
market rate as unrealized gains or losses. Realized gains or losses are
recognized when contracts are settled and are reflected in the Statement of
Operations. These contracts involve market risk in excess of the amount
reflected in the Statement of Assets and Liabilities. The face or contract
amount in U.S. dollars reflects the total exposure these funds have in that
particular currency contract. Losses may arise due to changes in the value of
the foreign currency or if the counterparty does not perform under the contract.
E. FUTURES - Large Cap Value Fund, Equity Series, Social Awareness Series,
Small Cap Growth Series, Enhanced Index Series, Alpha Opportunity Series and Mid
Cap Growth Fund utilize futures contracts to a limited extent, with the
objectives of maintaining full exposure to the underlying stock market,
enhancing returns, maintaining liquidity, and minimizing transaction costs.
These Funds or Series, as applicable, may purchase futures contracts to
immediately position incoming cash in the market, thereby simulating a fully
invested position in the underlying index while maintaining a cash balance for
liquidity. In the event of redemptions, the Funds or Series, as applicable, may
pay departing shareholders from its cash balances and reduce their futures
positions accordingly. Returns may be enhanced by purchasing futures contracts
instead of the underlying securities when futures are believed to be priced more
attractively than the underlying securities. The primary risks associated with
the use of futures contracts are imperfect correlation between changes in market
values of stocks contained in the indexes and the prices of futures contracts,
and the possibility of an illiquid market. Futures contracts are valued based
upon their quoted daily settlement prices. Upon entering into a futures
contract, the Funds are required to deposit and maintain as collateral either
cash or securities, representing the initial margin, equal to a certain
percentage of the contract value. Cash deposits are shown as restricted cash on
the Statement of Assets and Liabilities; securities held as collateral are noted
in the Schedule of Investments. Subsequent changes in the value of the contract
are recorded as unrealized gains or losses. Variation margin is paid or received
in cash daily by the Funds. The Funds realize a gain or loss when the contract
is closed or expires.
F. OPTIONS WRITTEN - The Funds may purchase put and call options and write
such options on a covered basis on securities that are traded on recognized
securities exchanges and over-the-counter markets. Call and put options on
securities give the holder the right to purchase or sell (and the writer the
obligation to sell or purchase), respectively, a security at a specified price,
until a certain date. Options may be used to hedge the Funds' portfolio, to
increase returns or to maintain exposure to the equity markets. The primary
risks associated with the use of options are an imperfect correlation between
the change in market value of the securities held by the series and the price of
the option, the possibility of an illiquid market, and the inability of the
counterparty to meet the terms of the contract.
The premium received for a written option is recorded as an asset with an
equal liability which is marked to market based on the option's quoted daily
settlement price. Fluctuations in the value of such instruments are recorded as
unrealized appreciation (depreciation) until terminated, at which time realized
gains and losses are recognized.
G. SECURITY TRANSACTIONS AND INVESTMENT INCOME - Security transactions are
accounted for on the date the securities are purchased or sold (trade date).
Realized gains and losses are reported on an identified cost basis. Dividend
income less foreign taxes withheld (if any) plus foreign taxes recoverable (if
any) are recorded on the ex-dividend date. Interest income is recognized on the
accrual basis including the amortization of premiums and accretion of discounts
on debt securities.
H. EXPENSES - Expenses that are directly related to one of the Funds are
charged directly to that Fund or Series. Other operating expenses are allocated
to the Funds on the basis of relative net assets. Class specific expenses, such
as 12b-1 fees, are borne by that class. Income, other expenses and realized and
unrealized gains and losses of a Fund are allocated to each respective class in
proportion to the relative net assets of each class.
I. DISTRIBUTIONS TO SHAREHOLDERS - Distributions to shareholders are recorded
on the ex-dividend date. The character of distributions made during the year
from net investment income or net realized gains may differ from their ultimate
characterization for federal income tax purposes.
J. TAXES - The Funds complied with the requirements of the Internal Revenue
Code applicable to regulated investment companies and distributed all of their
taxable net income and net realized gains sufficient to relieve them from all,
or substantially all, federal income, excise and state income taxes. Therefore,
no provision for federal or state income tax is required.
K. EARNINGS CREDITS - Under the fee schedule with the custodian, the Funds
earn credits based on overnight custody cash balances. These credits are
utilized to reduce related custodial expenses. The custodian fees disclosed in
the Statement of Operations are before the reduction in expense from the related
earnings credits.
L. USE OF ESTIMATES - The preparation of financial statements in conformity
with U.S. generally accepted accounting principles requires management to make
estimates and
115
Notes to Financial Statements
March 31, 2005
(unaudited)
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of increases and
decreases in net assets from operations during the reporting period. Actual
results could differ from those estimates.
M. SHORT SALES - Certain Funds or Series may make short sales "against the
box," in which the Fund enters into a short sale of a security it owns. At no
time will more than 15% of the value of the Funds' net assets be in deposits on
short sales against the box. In a short sale that is not "against the box," a
Fund or Series sells a security which it does not own, in anticipation of a
decline in the market value of the security. To complete the sale, the Fund or
Series must borrow the security generally from the broker through which the
short sale is made in order to make delivery to the buyer. The Fund or Series
must replace the security borrowed by purchasing it at the market price at the
time of replacement. The Fund or Series is said to have a "short position" in
securities sold until it delivers them to the broker. For financial statement
purposes, an amount equal to the settlement amount is included in the Statement
of Assets and Liabilities as an asset and an equivalent liability. The amount of
the liability is subsequently marked-to-market to reflect the current value of
the short position. Subsequent fluctuations in the market prices of securities
sold, but not yet purchased, may require purchasing the securities at prices
which differ from the market value reflected on the Statement of Assets and
Liabilities. The Funds are liable for any dividends or interest payable on
securities while those securities are in a short position. As collateral for its
short positions, the Funds are required under the Investment Company Act of 1940
to maintain segregated assets consisting of cash, cash equivalents or liquid
securities. These segregated assets are valued consistent with Note 1a above.
These segregated assets are required to be adjusted daily to reflect changes in
the market value of the securities sold short.
N. INDEMNIFICATIONS - Under the Funds' organizational documents, its Officers
and Directors are indemnified against certain liabilities arising out of the
performance of their duties to the Funds. In addition, in the normal course of
business, the Funds enter into contracts that provide general indemnification to
other parties. The Funds' maximum exposure under these arrangements is unknown
as this would involve future claims that may be made against the Funds that have
not yet occurred, and may not occur. However, the Funds have not had prior
claims or losses pursuant to these contracts and expect the risk of loss to be
remote.
2. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Management fees are payable to Security Management Company, LLC (SMC or
Investment Manager) as follows:
MANAGEMENT
MANAGEMENT FEE WAIVERS
FEES (AS A % (AS A % OF
OF NET ASSETS) OF NET ASSETS)
-------------- -------------
Security Equity Fund:
Alpha Opportunity Series* 2.00%(1) N/A
Enhanced Index Series 0.75% 0.25%
Equity Series 0.75% N/A
Global Series 1.00% N/A
Large Cap Growth Series 1.00% 0.25%
Mid Cap Value Series 1.00%(2) N/A
Select 25(R) Series 0.75% N/A
Small Cap Growth Series 1.00% N/A
Social Awareness Series 1.00% 0.25%
Security Large Cap Value Fund 0.75% N/A
Security Mid Cap Growth Fund 0.75% N/A
*Alpha Opportunity Fund's management fee will range from 1.25% to 2.75% of
average daily net assets as discussed below.
(1)SMC receives a management fee from the Alpha Opportunity Series that is
composed of two components. The first component is an annual base fee equal to
2.00% of Alpha Opportunity Series average daily net assets. The second component
is a performance adjustment that either increases or decreases the base fee,
depending on how Alpha Opportunity Series performed relative to the S&P 500
Index. The Investment Manager will receive a management fee based on the
investment performance of the S&P Index over the prior 12 month period. If the
investment performance of the Series' Class A shares exceeds the investment
record of the S&P 500 Index, the performance adjustment increases the fee paid
to the Investment Manager proportionately, reaching a maximum annual fee of
2.75% if the Series outperforms the investment record of the S&P 500 Index by 15
percentage points over the measuring period (and the Series' average daily net
assets remain constant during the period). If the investment performance of the
Series' Class A shares trails the investment record of the S&P 500 Index, the
performance adjustment decreases the fee paid to the Investment Manager
proportionately, reaching a minimum annual fee of 1.25% if the Series
underperforms the investment record of the S&P 500 Index by 15 percentage points
over the measurement period (and the Series' average daily net assets remain
constant during the period). The performance adjustment is calculated on the
basis of a "rolling" 12 month measurement period, so that a fee rate calculated
on the basis of investment performance over a 12 month period will apply only
for the next succeeding month, and then will be subject to recalculation for the
following month on the basis of the Series' investment performance over the
prior 12 month period. The pro rata adjustment is allocated to each respective
class in proportion to the relative net assets of each class.
(2)Management fees are payable at an annual rate of 1.00% of the average
daily net assets of $200 million or less, plus an additional annual rate of
0.75% of the average daily net assets of the Series in excess of $200 million.
116
Notes to Financial Statements
March 31, 2005
(unaudited)
SMC also acts as the administrative agent and transfer agent for the Funds,
and as such performs administrative functions, transfer agency and dividend
disbursing services, and the bookkeeping, accounting and pricing functions for
each fund. For these services, the Investment Manager receives the following:
ADMINISTRATIVE FEES
(AS A % OF NET ASSETS)*
-----------------------------------
Security Equity Fund:
Alpha Opportunity Series 0.145%
Enhanced Index Series 0.09%
Equity Series 0.09%
Global Series 0.045% + greater of 0.10% or 60,000
Large Cap Growth Series 0.09%
Mid Cap Value Series 0.09%
Select 25 Series 0.09%
Small Cap Growth Series 0.09%
Social Awareness Series 0.09%
Security Large Cap Value Fund 0.09%
Security Mid Cap Growth Fund 0.09%
* The minimum annual charge for administrative fees is $ 25,000 for each Series
or Fund.
SMC is paid the following for providing transfer agent services to the Funds:
EFFECTIVE
FEBRUARY 1, 2004
----------------
Annual per account charge $ 5.00 - $ 8.00
Transaction fee $ 0.60 - $ 1.10
Annual minimum charge
(per Series or Fund) $ 25,000
Certain out-of-pocket charges Varies
SMC pays the Dreyfus Corporation an annual fee equal to .25% of the average
daily closing value of the combined net assets of Large Cap Value Fund and
another fund managed by SMC, SBL Series B, computed on a daily basis. Beginning
January 1, 2002, the Dreyfus Corporation agreed to waive .10% of the average
daily closing value of the combined net assets of these funds, computed on a
daily basis, until December 31, 2006.
SMC pays OppenheimerFunds, Inc. an annual fee equal to a percentage of the
average daily closing value of the combined average daily net assets of Global
Series and another fund managed by SMC, SBL Series D, computed on a daily basis
as follows:
COMBINED AVERAGE DAILY NET ASSETS ANNUAL FEES
- ------------------------------------------------ -----------
$0 to $300 Million ............................. .35%
$300 Million to $750 Million ................... .30%
$750 Million or more ........................... .25%
SMC pays RS Investments an annual fee equal to a percentage of the average
daily closing value of the combined net assets of Small Cap Growth Series and
another fund managed by SMC, SBL Series X, computed on a daily basis as follows:
COMBINED AVERAGE DAILY NET ASSETS ANNUAL FEES
- ------------------------------------------------ -----------
$0 to $100 Million ............................. .55%
$100 Million to $400 Million ................... .50%
Over $400 Million .............................. .45%
SMC pays Northern Trust an annual fee equal to a percentage of the average
daily closing value of the combined net assets of Security Equity Fund Enhanced
Index Series and SBL Series H, computed on a daily basis as follows:
COMBINED AVERAGE DAILY NET ASSETS ANNUAL FEES
- ------------------------------------------------ -----------
$0 to $100 Million ............................. .20%
$100 Million to $300 Million ................... .15%
$300 Million or more ........................... .13%
SMC pays Mainstream Investment Advisers, LLC an annual fee equal to 2.50% of
that portion of the Alpha Opportunity Fund's assets managed by Mainstream. The
sub-advisory fee will be adjusted upward or downward, depending on how that
portion of Alpha Opportunity Series' assets performed relative to the S&P 500
Index. The pro rata adjustment will be determined based upon the investment
performance of that portion of Alpha Opportunity Series' assets managed by
Mainstream relative to the investment record of the S&P 500 Index. The amount of
any upward adjustment in the Base Fee will be equal to 1.50% (a) multiplied by
the number of percentage points by which the investment performance of the Alpha
Opportunity Series assets managed by Mainstream exceeds the investment record of
the S&P 500 Index (b) divided by .30, up to a maximum of 4.00% or a minimum of
1.00% in annual sub-advisory fees (assuming the Series' average daily net assets
remain constant during the period).
During its first 12 months of operations, the Investment Manager paid
Mainstream the base fee of 2.50% without any adjustment for performance.
Performance adjustments began on August 1, 2004 based upon the performance
during the 12 months ended July 1, 2004 of that portion of Alpha Opportunity
Series assets managed by Mainstream. Thereafter, the Investment Manager will
calculate the performance adjustment at the end of each calendar month based
upon the investment performance of the assets managed by Mainstream during the
twelve-month period ending on the last day of the prior month compared to the
investment record of the S&P 500 Index during the same period.
The Alpha Opportunity Series assets are reallocated between Mainstream and
the Investment Manager on a monthly basis to an approximately equal allocation.
This procedure ensures that the Investment Manager cannot make allocation
decisions that favor the Investment Manager over Mainstream.
SMC has agreed to limit the total expenses for each class of the Enhanced
Index and Select 25 Series to 1.75%, Social Awareness, Mid Cap Value, Small Cap
Growth and Large Cap Growth Series to 2.00% exclusive of interest, taxes,
extraordinary expenses, brokerage fees and commissions and 12b-1 fees for the
aforementioned Series. SMC has agreed to limit the total other expenses of Alpha
Opportunity to 0.50%. The expense limits other than those for Enhanced Index and
Select 25 Series are voluntary limits that may be terminated at any time without
notice to shareholders.
117
Notes to Financial Statements
March 31, 2005
(unaudited)
The Funds have adopted Distribution Plans related to the offering of Class A,
Class B and Class C shares pursuant to Rule 12b-1 under the Investment Company
Act of 1940. The plans provide for payments at an annual rate of 1.00% of the
average daily net assets of each Fund's Class B, Class C shares, and 0.25% of
the average daily net assets of each Fund's Class A shares.
Security Distributors, Inc. (SDI), a wholly-owned subsidiary of Security
Benefit Corporation and the distributor of the Funds, received net underwriting
commissions on sales of shares after allowances to brokers and dealers as
follows:
SDI
UNDERWRITING
COMMISSIONS
------------
Security Equity Fund:
Alpha Opportunity Series $ 17,032
Enhanced Index Series 600
Equity Series 25,845
Global Series 38,797
Large Cap Growth Series 3,510
Mid Cap Value Series 140,699
Select 25(R) Series 1,840
Small Cap Growth Series 8,671
Social Awareness Series 3,599
Security Large Cap Value Fund 4,761
Security Mid Cap Growth Fund 38,447
Certain officers and directors of the Funds are also officers and/or
directors of Security Benefit Life Insurance Company and its affiliates, which
include SMC and SDI.
At March 31, 2005, Security Benefit Corporation and its subsidiaries owned
over five percent of the outstanding shares of the Funds or Series, as follows:
FUND OR SERIES PERCENT OF OUTSTANDING SHARES OWNED
- ----------------------------- -----------------------------------
Security Equity Fund:
Alpha Opportunity Series 42.07%
Enhanced Index Series 18.09%
Equity Series 14.11%
Global Series 9.15%
Large Cap Growth Series 37.93%
Select 25(R) Series 8.85%
Small Cap Growth Series 17.34%
Social Awareness Series 9.30%
Security Large Cap Value Fund 27.31%
Security Mid Cap Growth Fund 9.50%
3. UNREALIZED APPRECIATION/DEPRECIATION
For federal income tax purposes, the amounts of unrealized appreciation
(depreciation) on investments at March 31, 2005, were as follows:
GROSS GROSS NET UNREALIZED
UNREALIZED UNREALIZED APPRECIATION
APPRECIATION (DEPRECIATION) (DEPRECIATION)
------------ -------------- --------------
Security Equity Fund:
Alpha Opportunity Series $ 55,130 $ (420,930) $ (365,800)
Enhanced Index Series 740,693 (466,014) 274,679
Equity Series 90,128,967 (17,625,486) 72,503,481
Global Series 30,833,266 (2,733,897) 28,099,369
Large Cap Growth Series 874,184 (730,031) 144,153
Mid Cap Value Series 122,357,413 (13,884,089) 108,473,324
Select 25(R) Series 4,806,050 (1,404,839) 3,401,211
Small Cap Growth Series 5,856,644 (1,562,506) 4,294,138
Social Awareness Series 2,030,644 (2,665,229) (634,585)
Security Large Cap Value Fund 6,232,820 (1,637,017) 4,595,803
Security Mid Cap Growth Fund 55,369,681 (21,554,715) 33,814,966
4. INVESTMENT TRANSACTIONS
Investment transactions for the six months ended March 31, 2005, (excluding
overnight investments and short-term commercial paper) were as follows:
PROCEEDS
PURCHASES FROM SALES
------------ ------------
Security Equity Fund:
Alpha Opportunity Series $ 73,102,303 $068,228,404
Enhanced Index Series 8,325,720 9,245,715
Equity Series 52,534,839 83,240,463
Global Series 21,848,255 22,009,256
Large Cap Growth Series 3,495,136 7,155,463
Mid Cap Value Series 94,762,081 36,816,776
Select 25(R) Series 1,883,529 3,763,386
Small Cap Growth Series 24,963,127 25,257,687
Social Awareness Series 2,381,362 3,229,023
Security Large Cap Value Fund 15,102,712 19,007,303
Security Mid Cap Growth Fund 29,467,521 35,405,542
5. OPEN FUTURES CONTRACTS
Open futures contracts for Alpha Opportunity Series and Enhanced Index Series
as of March 31, 2005, were as follows:
ALPHA OPPORTUNITY SERIES ENHANCED INDEX SERIES
S&P 500 Index Futures S&P 500 E-Mini Futures
------------------------ ----------------------
POSITION Long Long
NUMBER OF CONTRACTS 34 4
EXPIRATION DATE 6-17-2005 6-17-2005
CONTRACT AMOUNT $ 10,422,446 $ 241,489
MARKET VALUE $ 10,063,150 $ 236,780
UNREALIZED LOSS $ (359,296) $ (4,709)
118
Notes to Financial Statements
March 31, 2005
(unaudited)
6. OPTIONS WRITTEN
The following options written were outstanding for Mid Cap Value Series at
March 31, 2005:
MID CAP VALUE SERIES CALL OPTIONS WRITTEN OUTSTANDING
EXPIRATION EXERCISE NUMBER OF MARKET
COMMON STOCK DATE PRICE CONTRACTS VALUE
- ------------------------------ ---------- -------- --------- ---------
American Italian Pasta
Company 6-20-05 $ 25.00 587 $ 164,360
American Italian Pasta
Company 6-20-05 30.00 113 4,520
Inco, LTD. 4-18-05 40.00 540 48,600
Millennium Pharmaceuticals,
Inc. 5-23-05 10.00 1,143 17,145
Phelps Dodge Corporation 7-18-05 100.00 328 288,640
Phelps Dodge Corporation 7-18-05 110.00 36 15,840
Potash Corporation of
Saskatchewan, Inc. 6-20-05 85.00 300 186,000
----- ---------
Total call options outstanding
(premiums received, $ 734,758) 3,047 $ 725,105
===== =========
MID CAP VALUE SERIES PUT OPTIONS WRITTEN OUTSTANDING
EXPIRATION EXERCISE NUMBER OF MARKET
COMMON STOCK DATE PRICE CONTRACTS VALUE
- ------------------------------ ---------- -------- --------- ---------
Avanex Corporation 5-23-05 $ 2.50 1,169 $ 118,900
McDermott International, Inc. 5-23-05 17.50 203 8,120
Millennium Pharmaceuticals,
Inc. 5-23-05 7.50 1,143 22,860
Quanta Services, Inc. 5-23-05 7.50 3,000 105,000
----- ---------
Total put options outstanding
(premiums received, $ 235,370) 5,515 $ 252,880
===== =========
Transactions in options written for Mid Cap Value Series for the year ended
March 31, 2005 were as follows:
MID CAP VALUE SERIES CALL OPTIONS WRITTEN
NUMBER OF PREMIUM
CONTRACTS AMOUNT
--------- ------------
Balance at September 30, 2004 250 $ 144,246
Opened 4,728 1,150,118
Bought Back (192) (110,781)
Expired (1,081) (210,773)
Exercised (658) (238,052)
----- ------------
Balance at March 31, 2005 3,047 $ 734,758
===== ============
MID CAP VALUE SERIES PUT OPTIONS WRITTEN
NUMBER OF PREMIUM
CONTRACTS AMOUNT
--------- ------------
Balance at September 30, 2004 2,015 $ 219,161
Opened 7,060 406,100
Bought Back - -
Expired (2,310) (237,283)
Exercised (1,250) (152,608)
----- ------------
Balance at March 31, 2005 5,515 $ 235,370
===== ============
The following options written were outstanding for Mid Cap Growth Fund at
March 31, 2005:
MID CAP GROWTH FUND CALL OPTIONS WRITTEN OUTSTANDING
EXPIRATION EXERCISE NUMBER OF MARKET
COMMON STOCK DATE PRICE CONTRACTS VALUE
- ------------------------------- ---------- -------- --------- ----------
Harris Corporation 5-23-05 $ 65.00 150 $ 24,000
LifePoint Hospitals, Inc. 5-23-05 40.00 231 99,330
Tractor Supply Company 7-18-05 45.00 250 52,500
--- ----------
Total call options outstanding
(premiums received, $ 182,424) 631 $ 175,830
=== ==========
MID CAP GROWTH FUND PUT OPTIONS WRITTEN OUTSTANDING
EXPIRATION EXERCISE NUMBER OF MARKET
COMMON STOCK DATE PRICE CONTRACTS VALUE
- ------------------------------- ---------- -------- --------- ----------
Human Genome Sciences,
Inc. 4-18-05 $ 12.50 820 $ 278,800
--- ----------
Total put options outstanding
(premiums received, $95,937) 820 $ 278,800
=== ==========
Transactions in options written for Security Mid Cap Growth Fund for the period
ended March 31, 2005 were as follows:
MID CAP GROWTH FUND CALL OPTIONS WRITTEN
NUMBER OF PREMIUM
CONTRACTS AMOUNT
--------- ----------
Balance at September 30, 2004 1,058 $ 217,053
Opened 2,234 395,516
Bought Back - -
Expired (590) (103,708)
Exercised (2,071) (326,437)
----- ----------
Balance at March 31, 2005 631 $ 182,424
===== ==========
MID CAP GROWTH FUND PUT OPTIONS WRITTEN
NUMBER OF PREMIUM
CONTRACTS AMOUNT
--------- ----------
Balance at September 30, 2004 2,789 $ 248,993
Opened 820 95,937
Bought Back - -
Expired (500) (31,289)
Exercised (2,289) (217,704)
----- ----------
Balance at March 31, 2005 820 $ 95,937
===== ==========
119
Notes to Financial Statements
March 31, 2005
(unaudited)
7. FEDERAL TAX MATTERS
The tax character of distributions paid during the fiscal years ended
September 30, 2004 and 2003, was the same as that reported in the Statement of
Changes in Net Assets, except as follows:
ORDINARY CAPITAL
2004 INCOME GAIN TOTAL
- ------------------------ --------- -------- ---------
Equity Series $ 607,081 $ 77,431 $ 684,512
Alpha Opportunity Series 341,942 80,496 422,438
All tax distributions for 2003 were the same as those reported in the Statement
of Changes in Net Assets.
Note: For federal income tax purposes, short term capital gain distributions are
treated as ordinary income distributions.
As of September 30, 2004 the components of accumulated earnings/(deficit) on a
tax basis were the same as those reported in the Statement of Assets and
Liabilities, except as follows:
CAPITAL LOSSES
UNDISTRIBUTED UNDISTRIBUTED ACCUMULATED UNREALIZED AND UNREALIZED
ORDINARY LONG-TERM ACCUMULATED CAPITAL AND APPRECIATION APPRECIATION/
INCOME GAIN EARNINGS OTHER LOSSES* (DEPRECIATION)** (DEPRECIATION)
------------- ------------- ------------ ------------- ---------------- --------------
Security Large Cap Value Fund $ 1,644 $ - $ 1,644 $ (14,399,492) $ 2,272,256 $ (12,125,592)
Security Equity Fund:
Global Series - - - (17,051,955) 17,533,683 481,728
Social Awareness Series - - - (1,460,537) (1,469,139) (2,929,676)
Mid Cap Value Series 1,509,480 26,644,993 28,154,473 - 66,032,843 94,187,316
Small Cap Growth Series - - - (8,761,254) 4,588,824 (4,172,430)
Enhanced Index Series - - - (5,167,570) 62,280 (5,105,290)
Large Cap Growth Series - - - (2,398,825) 155,717 (2,243,108)
Alpha Opportunity Series 1,008,366 146,042 1,154,408 - 128,102 1,282,510
Security Mid Cap Growth Fund - 13,025,807 13,025,807 (3,419,154) 25,853,016 35,459,669
*Certain Funds had net capital loss carryovers and deferred post October losses
as identified elsewhere in the Notes.
**The differences between book-basis and tax-basis unrealized appreciation
(depreciation) is attributable primarily to the tax deferral of wash sale
losses, the differences between book and tax basis passive foreign investment
companies and bond discount accretion.
In accordance with the provisions of the Internal Revenue Code, the
percentage of ordinary dividends (including short-term capital gains)
attributable to the fiscal year ended September 30, 2004, which qualify for the
dividends received deduction for corporate shareholders is 100% for the Security
Large Cap Value Fund and Mid Cap Value Series and 4% for the Alpha Opportunity
Series.
As of September 30, 2004, the accumulated net realized loss on sales of
investments for federal income tax purposes which are available to offset future
taxable gains and post-October losses that are deferred to the first day of the
next fiscal year are as follows:
120
Notes to Financial Statements
March 31, 2005
(unaudited)
CAPITAL LOSS DEFERRED POST-
CARRYOVERS EXPIRES IN OCTOBER LOSSES
----------- ---------- ---------------
Security Large Cap Value Fund $ 5,190,501 2009 $ -
56,003 2010
9,152,988 2011
------------
14,399,492
Global Series 286,251 2008
1,719,360 2009 64,170
5,895,542 2010
6,689,272 2011
2,397,360 2012
------------
16,987,785
Social Awareness Series 309,787 2009 -
132,011 2010
1,018,739 2011
------------
1,460,537
Small Cap Growth Series 8,761,254 2010 -
Enhanced Index Series 138,713 2009 -
976,489 2010
1,591,954 2011
2,460,414 2012
------------
5,167,570
Select 25(R) Series 368,467 2008 -
2,259,072 2009
3,363,943 2010
2,960,418 2011
3,051,714 2012
------------
12,003,614
Large Cap Growth Series 58,405 2009 -
296,393 2010
1,736,216 2011
307,811 2012
------------
2,398,825
Security Mid Cap Growth Fund 2,835,175 2009 -
567,035 2010
16,944 2011
------------
3,419,154
The Security Equity Fund - Global Series obtained approximately $2,885,458 of
capital losses (included above) from its merger with Security Equity Fund -
International Series (see Note 8), which may be applied against realized net
taxable capital gains in future years or until September 30, 2010, subject to
certain limitations imposed by Section 382 of the Internal Revenue Code.
Security Mid Cap Growth fund obtained approximately $3,419,154 of capital
losses (included above) from its merger with Security Equity Fund - Technology
Series (see Note 9), which may be applied against realized net taxable capital
gains in future years or until September 30, 2011, subject to certain
limitations imposed by Section 382 of the Internal Revenue Code.
Net investment income and net realized gains (losses) may differ for
financial statement and tax purposes because of temporary or permanent book/tax
differences. These differences are primarily due to post-October losses, losses
deferred due to wash sales, foreign currency gains and losses, and the
"mark-to-market" of certain passive foreign investment companies (PFICs) for
tax purposes. To the extent these differences are permanent, reclassifications
are made to the appropriate equity accounts in the period that the differences
arise.
8. ACQUISITION OF SECURITY EQUITY FUND - INTERNATIONAL SERIES
Pursuant to a plan of reorganization approved by Security Equity Fund
International Series shareholders, Security Equity Fund Global Series acquired
all the net assets of International Series, which totalled $9,345,535 on the
closing date of the reorganization, October 3, 2003. In exchange for the assets
of International Series 793,162 shares of Global Series were distributed to
International shareholders of record as of immediately after the closing date.
This exchange qualified as a tax-free reorganization under Section 368(a)(1)(c)
of the Internal Revenue Code. International Series net assets included $432,828
of unrealized appreciation, $3,042 of accumulated net investment income and
$3,019,816 of accumulated realized loss on sale of investments. The aggregate
net assets of Global Series immediately before the acquisition totalled
$68,353,149. Following the acquisition, the combined net assets of Global Series
totalled $77,698,684.
9. ACQUISITION OF SECURITY EQUITY FUND-TECHNOLOGY SERIES
Pursuant to a plan of reorganization approved by Security Equity Fund
Technology Series shareholders, Security Mid Cap Growth Fund acquired all the
net assets of Technology Series, which totalled $11,962,769 on the closing date
of the reorganization October 3, 2003. In exchange for the assets of Technology
Series 1,097,167 shares of Mid Cap Growth Fund were distributed to Technology
shareholders of record as of immediately after the closing date. This exchange
qualified as a tax-free reorganization under Section 368(a)(1)(c) of the
Internal Revenue Code. Technology Series net assets included $1,703,882 of
unrealized appreciation, $3,694 of accumulated net investment loss and
$7,442,356 of accumulated realized loss on sale of investments. The aggregate
net assets of Mid Cap Growth Fund immediately before the acquisition totalled
$178,458,228. Following the acquisition, the combined net assets of Mid Cap
Growth Fund totalled $190,420,997.
10. SUBSEQUENT EVENT
At a meeting held on April 15, 2005, the Board of Directors of Security Large
Cap Value Fund (the "Fund"), upon the recommendation of Fund management,
approved the termination of the Investment sub-advisory agreement between the
Fund's investment adviser, Security Management Company, LLC (the "Investment
Manager"), and the Fund's current investment sub-adviser, The Dreyfus
Corporation, effective on or about the close of business on June 30, 2005.
Accordingly, after the termination of the sub-advisory agreement, the Investment
Manager will assume responsibility for the daily investment management of the
Fund's assets. The Board also approved, effective upon termination of the
sub-advisory agreement and the Investment Manager's assumption of portfolio
management responsibilities with respect to the Fund: (a) a reduction of the
investment advisory fee payable to the Investment Manager from 0.75% to 0.65% of
the Fund's average daily net assets on an annual basis, (b) changes to the
Fund's principal investment strategies; and (c) replacement of the Fund's
current benchmark, the S&P Barra Value Index, with Russell 1000 Value Index.
121
Director's Disclosure
DIRECTOR APPROVAL OF INVESTMENT ADVISORY AGREEMENT
At an in-person meeting of the Funds' Boards of Directors held on November
18-19, 2004, called for the purpose of, among other things, voting on the
renewal of the investment advisory and sub-advisory agreements applicable to the
Funds, each Fund's Board of Directors, including the Independent Directors,
unanimously approved the continuation for a one-year period of the investment
advisory agreement between the Fund and Security Management Company, LLC
("SMC"), as well as each investment sub-advisory agreement applicable to the
Fund. In reaching this conclusion, the Directors requested and obtained from SMC
and each investment sub-adviser such information as the Directors deemed
reasonably necessary to evaluate the proposed renewal of the agreements. Each
Fund's Board of Directors carefully evaluated this information, and was advised
by legal counsel with respect to its deliberations.
In considering the proposed continuation of the investment advisory and
sub-advisory agreements, the Independent Directors evaluated a number of
considerations, including, among others, (1) the nature, extent, and quality of
the advisory services to be provided by SMC and the investment sub-advisers; (2)
the investment performance of the Funds, SMC and the various investment
sub-advisers; (3) the costs of the services to be provided and profits to be
realized by SMC and its affiliates from the relationship with the Funds; (4) the
extent to which economies of scale would be realized as the Funds grow; and (5)
whether advisory and sub-advisory fee levels reflect these economies of scale
for the benefit of Fund investors. Each Board of Directors also took into
account other considerations that it believed, in light of the legal advice
furnished to the Independent Directors by their independent legal counsel and
the Directors' own business judgment, to be relevant. Following its review, each
Fund's Board of Directors determined that the investment advisory agreement and
each investment sub-advisory agreement applicable to the Fund (if any) will
enable Fund shareholders to obtain high quality services at a cost that is
appropriate, reasonable, and in the best interests of shareholders. Accordingly,
the Directors, including the Independent Directors, unanimously approved the
renewal of the investment advisory and investment sub-advisory agreements based
upon the following considerations, among others:
- THE NATURE, EXTENT AND QUALITY OF THE ADVISORY SERVICES TO BE PROVIDED.
Each Board of Directors concluded that SMC and the investment sub-advisers
retained to provide portfolio management services with respect to certain
of the Funds are capable of providing high quality services to each Fund,
as indicated by the nature and quality of services provided in the past,
SMC's management capabilities demonstrated with respect to the Funds and
other mutual funds managed by SMC, the professional qualifications and
experience of SMC's and the various sub-advisers' portfolio managers, and
SMC's investment and management oversight processes. The Directors also
determined that SMC and the sub-advisers proposed to provide investment
and related services that were of the same quality and quantity as
services provided to the Funds in the past, and that these services are
appropriate in scope and extent in light of the Funds' operations, the
competitive landscape of the investment company business and investor
needs.
- THE INVESTMENT PERFORMANCE OF THE FUNDS. With respect to each Fund, the
Directors concluded on the basis of information supplied by Lipper that
SMC and the investment sub-advisers had achieved investment performance
that was acceptable, and competitive or superior relative to comparable
funds over trailing periods. With respect to the Large Cap Value Fund, the
Independent Directors recommended changes to the Fund's portfolio
management arrangements in light of the Fund's performance, and renewed
the investment sub-advisory agreement with respect to that Fund pending
implementation of alternative portfolio management arrangements. In
renewing the investment advisory agreement with respect to Security Equity
Fund Social Awareness Series, the Board concluded that SMC's addition of
experienced research analysts was an appropriate response to that Fund's
below-median performance. On the basis of the Directors' assessment of the
nature, extent and quality of advisory services to be provided or procured
by SMC, the Directors concluded that SMC is capable of generating a level
of long-term investment performance that is appropriate in light of the
Funds' investment objectives, policies and strategies and competitive with
many other investment companies.
- THE COST OF ADVISORY SERVICES PROVIDED AND THE LEVEL OF PROFITABILITY. On
the basis of each Board's review of the fees to be charged by SMC for
investment advisory and other services, and the estimated profitability of
SMC's relationship with each Fund, each Board concluded that the level of
investment advisory fees and SMC's profitability are appropriate in light
of the management fees and overall expense ratios of comparable investment
companies and the anticipated profitability of the relationship between
each Fund and SMC and its affiliates. On the basis of comparative
information supplied by Lipper the Directors determined that the advisory
fees and estimated overall expense ratio of each Fund are consistent with,
and often below, industry medians, particularly with respect to mutual
funds of comparable size. With respect to the Alpha Opportunity Series and
Small Cap Growth Series of Security Equity Fund, the Directors noted that
each of these Funds had a strong performance record, which helped to
compensate for each such Fund's higher-than-median expense ratio. Further,
the Directors noted that the Alpha Opportunity Series' investment advisory
fee and expense ratio were above median due, at least in part, to its
strong performance relative to its benchmark index, which increased the
advisory fee payable under that Fund's "fulcrum" advisory fee arrangement.
122
Director's Disclosure
- WHETHER THE ADVISORY FEES REFLECT ECONOMIES OF SCALE. The Directors
concluded that the Funds' investment advisory fees appropriately reflect
the current economic environment for SMC and the competitive nature of the
mutual fund market. The Directors further determined that the Funds have
yet to achieve meaningful economies of scale, which, therefore, cannot be
reflected in the investment advisory fees.
- THE EXTENT TO WHICH ECONOMIES OF SCALE WILL BE REALIZED AS THE FUNDS GROW.
While the Funds' investment advisory fees do not reduce should Fund assets
grow meaningfully, the Directors determined that the investment advisory
fees payable by the Funds other than Security Equity Fund Alpha
Opportunity Series (whose investment advisory fee varies depending on that
Fund's performance relative to its benchmark index) already reflect
potential future economies of scale to some extent by virtue of their
competitive levels (determined with reference to industry standards as
reported by Lipper and SMC's estimated profitability at current or
foreseeable asset levels. The Directors also considered that they will
have the opportunity to periodically re-examine whether a Fund has
achieved economies of scale, and the appropriateness of investment
advisory fees payable to SMC and fees payable by SMC to the investment
sub-advisers, in the future.
- BENEFITS (SUCH AS SOFT DOLLARS) TO SMC FROM ITS RELATIONSHIP WITH THE
FUNDS (AND ANY CORRESPONDING BENEFITS TO THE FUNDS). The Directors
concluded that other benefits described by SMC and the investment
sub-advisers from their relationships with the Funds, including "soft
dollar" benefits in connection with Fund brokerage transactions, are
reasonable and fair, and consistent with industry practice and the best
interests of the Funds and their shareholders. In addition, the Directors
determined that the administration, transfer agency and fund accounting
fees paid by the Funds to SMC are reasonable, fair and in the best
interests of Fund shareholders in light of the nature and quality of the
services provided, the associated costs, and the necessity of the services
for the Funds' operations.
- OTHER CONSIDERATIONS: In approving the investment advisory and
sub-advisory agreements, the Directors determined that SMC has made a
substantial commitment to the recruitment and retention of high quality
personnel, and maintains the financial, compliance and operational
resources reasonably necessary to manage the Funds in a professional
manner that is consistent with the best interests of the Funds and their
shareholders. In this regard, the Directors favorably considered the
compliance track record of the Funds and SMC. The Directors also concluded
that SMC has made a significant entrepreneurial commitment to the
management and success of the Funds, which entails a substantial financial
and professional commitment, including investment advisory fee waivers and
expense limitation arrangements with respect to several of the Funds to
the benefit of Fund shareholders.
123
Directors and Officers (unaudited)
The business address of each director and officer is One Security Benefit Place,
Topeka, KS 66636-0001.
DIRECTORS
NAME
(DATE OF BIRTH)
YEAR ELECTED*** PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS
- ---------------------------- ----------------------------------------------------------------------------------------
Donald A. Chubb, Jr.** Business broker, Griffith & Blair Realtors
(12-14-46)
1994
Harry W. Craig, Jr.** Chairman, CEO, Secretary & Director, Martin Tractor Company, Inc.
(04-11-39)
2004
Penny A. Lumpkin** Partner, Vivians' Gift Shop
(08-20-39) Vice President, Palmer Companies, Inc.
1993 Vice President, PLB
Vice President, Town Crier
Vice President & Treasurer, Palmer News, Inc.
Vice President, M/S News, Inc.
Secretary, Kansas City Periodicals
Vice President, Bellaire Shopping Center
Partner, Goodwin Enterprises
Maynard F. Oliverius** President & Chief Executive Officer, Stormont-Vail HealthCare
(12-18-43)
1998
John D. Cleland* Retired. Prior to January 1, 2003, Senior Vice President, Security Benefit Group, Inc. &
(05-01-36) Security Benefit Life Insurance Company
1991 (Director)
2000 (Chairman of the Board)
Michael G. Odlum* President & Managing Member Representative, Security Management Company, LLC
(01-12-52) President & Chief Operating Officer, Allied Investment Advisors, Inc.
2004 (President) Principal, Vanguard Group
2004 (Director)
*These directors are deemed to be "interested persons" of the Funds under the
Investment Company Act of 1940, as amended, by reason of their positions with
the Funds' Investment Manager and/or the parent of the Investment Manager.
**These directors serve on the Funds' joint audit committee, the purpose of
which is to meet with the independent auditors, to review the work of the
auditors, and to oversee the handling by Security Management Company, LLC of the
accounting function for the Funds.
***Each director oversees 35 Security Fund portfolios and serves until the next
annual meeting, or until a successor has been duly elected and qualified.
124
Directors and Officers (unaudited) (continued)
OFFICERS
NAME
(DATE OF BIRTH)
TITLE
YEAR ELECTED* PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS
- ---------------------------- ------------------------------------------------------------------------------------------------
Steven M. Bowser Vice President & Senior Portfolio Manager, Security Management Company, LLC;
(02-11-60) Vice President & Senior Portfolio Manager, Security Benefit Life Insurance Company
Vice President
2003
Brenda M. Harwood Assistant Vice President, Chief Compliance Officer & Treasurer, Security Management Company, LLC;
(11-03-63) Assistant Vice President, Security Benefit Life Insurance Company
Treasurer Vice President & Director, Security Distributors, Inc.
1988
Mark Lamb Vice President, Security Management Company, LLC,
(02-03-60) Security Benefit Life Insurance Company
Vice President
2003
Amy J. Lee Secretary, Security Management Company, LLC & Security Distributors, Inc.;
(06-05-61) Vice President, Associate General Counsel & Assistant Secretary, Secretary
Security Benefit Life Insurance Company
1987
Mark Mitchell Vice President & Portfolio Manager, Security Management Company, LLC
(08-24-64)
Vice President
2003
James P. Schier Vice President & Senior Portfolio Manager, Security Management Company, LLC;
(12-28-57) Vice President, Security Benefit Life Insurance Company
Vice President
1998
Cindy L. Shields Vice President & Head of Equity Asset Management, Security Management Company, LLC,
(06-05-67) Security Benefit Life Insurance Company
Vice President
1988
Christopher D. Swickard Assistant Secretary, Security Management Company, LLC
(10-09-65) Second Vice President & Counsel, Security Benefit Life Insurance Company
Assistant Secretary
1996
* Officers serve until the next annual meeting or until a successor has been
duly elected and qualified.
Each of the Security Funds files a complete schedule of portfolio holdings with
the U.S. Securities and Exchange Commission for the second and fourth quarters
of each fiscal year on Form N-Q. The Forms N-Q of each such Fund are available
on the Commission's website at www.sec.gov. The Forms N-Q may be reviewed and
copied at the Commission's Public Reference Room in Washington, DC. Information
on the operation of the Public Reference Room may be obtained by calling
1-800-SEC-0330. The portfolio holdings of each of the Security Funds are
available on their website, www.securitybenefit.com or by calling
1-800-888-2461.
A description of the policies and procedures that the Security Funds use to
determine how to vote proxies relating to portfolio securities is available upon
request, free of charge by calling 1-800-888-2461, or accessing the U.S.
Securities and Exchange Commission website at www.sec.gov. Information regarding
how the Security Funds voted proxies relating to portfolio securities during the
12 month period ended June 30, 2004 is available upon request, free of charge by
calling 1-800-888-2461, or accessing the U.S. Securities and Exchange Commission
website at www.sec.gov.
The statement of additional information ("SAI") includes additional information
about the Funds' Directors and is available upon request without charge by
calling 1-800-888-2461.
125
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126
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127
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128
THE SECURITY GROUP OF MUTUAL FUNDS
Security Equity Fund
- Alpha Opportunity Series
- Enhanced Index Series
- Equity Series
- Global Series
- Large Cap Growth Series
- Mid Cap Value Series
- Select 25(R) Series
- Small Cap Growth Series
- Social Awareness Series
Security Large Cap Value Fund
Security Mid Cap Growth Fund
Security Income Fund
- Diversified Income Series
- High Yield Series
- Income Opportunity Series
- Capital Preservation Series
Security Municipal Bond Fund
Security Cash Fund
SECURITY FUNDS OFFICERS AND DIRECTORS
DIRECTORS
Donald A. Chubb, Jr.
John D. Cleland
Harry W. Craig, Jr.
Penny A. Lumpkin
Michael G. Odlum
Maynard F. Oliverius
OFFICERS
John D. Cleland, Chairman of the Board
Michael G. Odlum, President
Steve M. Bowser, Vice President
Mark Lamb, Vice President
Mark Mitchell, Vice President
James P. Schier, Vice President
Cindy L. Shields, Vice President
Amy J. Lee, Secretary
Christopher D. Swickard, Assistant Secretary
Brenda M. Harwood, Chief Compliance Officer & Treasurer
This report is submitted for the general information of the shareholders of the
Funds. The report is not authorized for distribution to prospective investors in
the Funds unless preceded or accompanied by an effective prospectus which
contains details concerning the sales charges and other pertinent information.
[SECURITY DISTRIBUTORS, INC. LOGO]
One Security Benefit Place
Topeka, KS 66636-0001
ITEM 2. CODE OF ETHICS.
Not required at this time.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not required at this time.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not required at this time.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS.
The Schedule of Investments is included under Item 1 of this form.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The registrant does not currently have in place procedures by which shareholders
may recommend nominees to the registrant's board.
There have been no changes to the procedures by which shareholders may recommend
nominees to the registrant's board.
ITEM 10. CONTROLS AND PROCEDURES.
(a) The registrant's President and Treasurer have concluded that
the registrant's disclosure controls and procedures (as
defined in rule 30a-3(c) under the Investment Company Act of
1940) are effective based on their evaluation of these
disclosure controls and procedures within 90 days of the
filing date of this report on Form N-CSR.
(b) There were no significant changes in the registrant's internal
controls, or in other factors that could significantly affect
these controls subsequent to the date of their evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
ITEM 11. EXHIBITS.
(a) (1) Not required at this time.
(2) Certifications pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 and required by Rule 30a-2(a)
under the Investment Company Act of 1940, are attached
hereto.
(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002 and required by Rule 30a-2(a) under the Investment
Company Act of 1940, are attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
SECURITY EQUITY FUND
By: MICHAEL G. ODLUM
----------------------------
Michael G. Odlum, President
Date: May 27, 2005
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: MICHAEL G. ODLUM
---------------------------
Michael G. Odlum, President
Date: May 27, 2005
By: BRENDA M. HARWOOD
----------------------------
Brenda M. Harwood, Treasurer
Date: May 27, 2005