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, 2006
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.
SECURITY FUNDS(SM)
SEMI-ANNUAL REPORT
MARCH 31, 2006
- - SECURITY EQUITY FUND(R)
- ALPHA OPPORTUNITY SERIES
- ENHANCED INDEX SERIES
- EQUITY SERIES
- GLOBAL SERIES
- LARGE CAP GROWTH SERIES
- MID CAP VALUE SERIES
- SELECT 25 SERIES
- SMALL CAP GROWTH SERIES
- SOCIAL AWARENESS SERIES
- - SECURITY LARGE CAP VALUE FUND
- - SECURITY MID CAP GROWTH FUND
(SECURITY BENEFIT(SM) LOGO)
Security Distributors, Inc.
SECURITY EQUITY FUND(R)
SECURITY LARGE CAP VALUE FUND
SECURITY MID CAP GROWTH FUND
MARCH 31, 2006
SEMI-ANNUAL REPORT
(unaudited)
TABLE OF CONTENTS
Chairman's Letter ........................................................ 2
Security Equity Fund
Alpha Opportunity Series .............................................. 3
Enhanced Index Series ................................................. 13
Equity Series ......................................................... 25
Global Series ......................................................... 35
Large Cap Growth Series ............................................... 45
Mid Cap Value Series .................................................. 53
Select 25 Series ...................................................... 63
Small Cap Growth Series ............................................... 71
Social Awareness Series ............................................... 81
Security Large Cap Value Fund ............................................ 89
Security Mid Cap Growth Fund ............................................. 99
Notes to Financial Statements ............................................ 109
Director's Disclosure .................................................... 117
Directors and Officers ................................................... 119
1
Chairman's Letter
May 15, 2006
(PHOTO OF JOHN CLELAND)
John Cleland
Chairman of the Board
TO OUR SHAREHOLDERS:
Equities across most major stock index categories posted strong returns for
investors over the first six months of this fiscal year (from September 2005
through March 2006), as illustrated in the following table of selected index
returns for each quarter and over the entire six-month period. Bonds, on the
other hand, did not fare as well and posted slightly negative returns as
interest rates rose all along the maturity spectrum. In the domestic fixed
income markets, only very short-term bonds, including money markets and high
yield bonds, enjoyed decent returns over this period.
Despite a backdrop of increasing economic uncertainty, as well as the Federal
Reserve continuing its tightening policy, investor expectations were positively
influenced by tame overall inflation, continued earnings expansion, and
historically reasonable equity valuations. As has been the case over recent
years, mid and small cap stocks once again outperformed the large caps over this
period with most of that relative move occurring in the first quarter of 2006.
RETURN %
--------------------------
SIX MONTHS
4TH Q 1ST Q 9/30/05-
INDEX 2005 2006 3/31/06
- ----- ----- ----- ----------
S&P 500 2.08 4.21 6.38
Russell 2500 1.81 11.14 13.15
Russell 2000 1.13 13.94 15.23
MSCI EAFE ($US) 3.79 8.78 12.90
Lehman Aggregate Bond 0.59 (0.65) (0.10)
Interest rates were up over the six-month period, with short rates rising faster
than long-term rates. The influence of Fed policy had its expected effect, but
during this period two additional noteworthy events happened. The shape of yield
curve turned negative (short-term rates were higher than long-term rates) for a
short period, and long term rates, which had remained stubbornly low over the
past several quarters of Fed tightening, were now beginning to rise. This can be
seen in the following table showing interest rates on U.S. Treasury Securities
of varying maturities at the beginning, middle and end of the six-month
timeframe.
% RATES
----------------------------
U.S. TREASURY MATURITY 9/30/05 12/31/05 3/31/06
- ---------------------- ------- -------- -------
3 Month 3.47 3.99 4.52
1 Year 4.01 4.38 4.82
10 Year 4.34 4.39 4.86
Long Term (20+ Years) 4.62 4.61 5.07
Over the remainder of the fiscal year investors face a number of possible risk
factors including a slowing housing market, the potential for commodity price
increases to spill over into general inflation, rising interest rates, a
deceleration in corporate earnings growth, and a little less certainty about how
the new Fed Chairman, Ben Bernanke, will manage monetary policy in this
environment. To the extent that earnings continue to grow at a reasonable pace
and if inflation remains subdued, the outlook may continue to be positive for
investors.
As a general rule, because there is always uncertainty about how the markets
will perform, particularly over specific time frames, investors are well advised
to consider the benefits of well-defined and diversified investment strategies
that the Security Funds are intended to provide shareholders over the long run.
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 BENEFIT(SM) LOGO)
Security Management Company, LLC
ADVISER,
SECURITY MANAGEMENT COMPANY, LLC
AND
(MAINSTREAM INVESTMENT ADVISERS LOGO)
SUBADVISER,
MAINSTREAM INVESTMENT ADVISERS
3
SECURITY EQUITY FUND
Performance Summary ALPHA OPPORTUNITY SERIES
May 15, 2006 (unaudited)
PERFORMANCE
ALPHA OPPORTUNITY SERIES VS. S&P 500 INDEX
(PERFORMANCE GRAPH)
ALPHA OPPORTUNITY SERIES
7/7/03 9,425.00
9/30/03 9,632.35
12/31/03 11,152.80
3/31/04 11,381.22
6/30/04 11,609.63
9/30/04 11,708.95
12/31/04 12,528.47
3/31/05 12,485.97
6/30/05 12,358.45
9/30/05 13,144.80
12/31/05 13,423.47
3/31/06 14,727.73
S&P 500 INDEX
INCEPTION 7/01/03 10,000.00
9/30/2003 10,264.66
12/31/2003 11,515.49
3/31/2004 11,710.84
6/30/2004 11,912.75
9/30/2004 11,689.41
12/31/2004 12,768.79
3/31/2005 12,493.71
6/30/2005 12,663.78
9/30/2005 13,120.77
12/31/2005 13,393.36
3/31/2006 13,956.34
$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. The S&P 500 Index is a capitalization weighted index
composed of 500 selected common stocks that represent the broad domestic economy
and is a widely recognized unmanaged index of market performance.
AVERAGE ANNUAL RETURNS
PERIODS ENDED 3-31-06 1 YEAR SINCE INCEPTION
- --------------------- ------ ----------------
A Shares 17.95% 17.73% (7-07-03)
A Shares with sales charge 11.14% 15.21% (7-07-03)
B Shares 17.06% 16.86% (7-07-03)
B Shares with CDSC 12.06% 16.02% (7-07-03)
C Shares 17.06% 16.86% (7-07-03)
C Shares with CDSC 16.06% 16.86% (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 and/or reimbursements reduced
expenses of the Series and in the absence of such waiver, the performance quoted
would be reduced.
PORTFOLIO COMPOSITION BY SECTOR
Consumer Discretionary 0.08%
Consumer Staples 0.78
Energy 0.48
Financials 0.50
Health Care (0.14)
Industrials 25.73
Information Technology 5.34
Materials 7.84
Exchange Traded Funds 4.95
U.S. Government Sponsored Agencies 39.09
Asset Backed Securities 0.52
Cash & other assets, less liabilities 14.83
------
Total net assets 100.00%
======
4 See accompanying notes.
SECURITY EQUITY FUND
Performance Summary ALPHA OPPORTUNITY SERIES
May 15, 2006 (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, 2005 - March 31, 2006.
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 mutual 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.
SERIES EXPENSES
BEGINNING ENDING EXPENSES PAID
ACCOUNT VALUE ACCOUNT VALUE DURING
10-01-05 3-31-06(1) PERIOD(2)
------------- ------------- -------------
Alpha Opportunity
Series - Class A
Actual $1,000.00 $1,120.40 $15.07
Hypothetical 1,000.00 1,010.72 14.29
Alpha Opportunity
Series - Class B
Actual 1,000.00 1,116.60 19.00
Hypothetical 1,000.00 1,006.98 18.01
Alpha Opportunity
Series - Class C
Actual 1,000.00 1,116.60 19.00
Hypothetical 1,000.00 1,006.98 18.01
(1) The actual ending account value is based on the actual total return of the
Series for the period October 1, 2005 to March 31, 2006 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, 2005 to March 31, 2006 was 12.04%, 11.66% and 11.66%, for
Class A, B and C shares, respectively.
(2) Expenses are equal to the Series annualized expense ratio (2.85%, 3.60% and
3.60% for Class A, B and C 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, 2006 (unaudited)
NUMBER MARKET
OF SHARES VALUE
---------- -----------
COMMON STOCKS - 47.2%
AEROSPACE & DEFENSE - 1.9%
Empresa Brasileira de Aeronautica S.A. ADR 3,700 $ 136,345
Hexcel Corporation* 3,500 76,895
K&F Industries Holdings, Inc.* 1,000 16,600
United Technologies Corporation 5,500 318,835
-----------
548,675
-----------
AGRICULTURAL PRODUCTS - 0.1%
Archer-Daniels-Midland Company 500 16,825
-----------
AIRLINES - 1.3%
AirTran Holdings, Inc.* 11,700 211,887
Lan Airlines S.A. ADR 2,500 97,975
Republic Airways Holdings, Inc.* 3,200 47,392
SkyWest, Inc. 900 26,343
-----------
383,597
-----------
ALUMINUM - 1.7%
Aluminum Corporation of China, Ltd. ADR 4,600 481,712
-----------
AUTO PARTS & EQUIPMENT - 0.1%
Sauer-Danfoss, Inc. 1,200 27,540
-----------
COMMODITY CHEMICALS - 0.1%
Spartech Corporation 1,500 36,000
-----------
COMMUNICATIONS EQUIPMENT - 0.5%
Belden CDT, Inc. 3,500 95,305
Harris Corporation 900 42,561
-----------
137,866
-----------
CONSTRUCTION & ENGINEERING - 2.9%
Fluor Corporation 2,700 231,660
Infrasource Services, Inc.* 8,500 146,285
Insituform Technologies, Inc.* 6,300 167,580
Michael Baker Corporation* 3,100 87,823
Washington Group International, Inc. 3,100 177,909
-----------
811,257
-----------
CONSTRUCTION & FARM MACHINERY - 4.2%
Cascade Corporation 8,600 454,510
Caterpillar, Inc. 1,900 136,439
Deere & Company 2,400 189,720
Federal Signal Corporation 1,000 18,500
Gehl Company* 1,000 33,120
JLG Industries, Inc. 4,600 141,634
Trinity Industries, Inc. 2,000 108,780
Wabtec Corporation 3,700 120,620
-----------
1,203,323
-----------
CONSTRUCTION MATERIALS - 1.0%
Florida Rock Industries, Inc. 5,300 297,966
-----------
DATA PROCESSING & OUTSOURCED SERVICES - 0.6%
Electronic Data Systems Corporation 6,000 160,980
-----------
DIVERSIFIED CHEMICALS - 0.4%
BASF AG ADR 1,600 125,440
-----------
DIVERSIFIED COMMERCIAL & PROFESSIONAL SERVICES - 0.4%
Ritchie Brothers Auctioneers, Inc. 2,300 $ 113,850
-----------
DIVERSIFIED METALS & MINING - 0.1%
Cameco Corporation 500 18,000
-----------
ELECTRICAL COMPONENTS & EQUIPMENT - 2.9%
Emerson Electric Company 9,800 819,574
-----------
ELECTRONIC EQUIPMENT MANUFACTURERS - 3.0%
Agilent Technologies, Inc.* 3,700 138,935
Amphenol Corporation 6,300 328,734
Mettler-Toledo International, Inc.* 6,400 386,176
-----------
853,845
-----------
ELECTRONIC MANUFACTURING SERVICES - 0.3%
Kemet Corporation* 5,100 48,297
Molex, Inc. 1,300 43,160
-----------
91,457
-----------
EXCHANGE TRADED FUNDS - 5.0%
Consumer Discretionary Select Sector Spdr Fund 7,000 235,480
iShares FTSE/Xinhua China 25 Index Fund 2,800 207,844
iShares MSCI Hong Kong Index Fund 19,800 267,102
iShares MSCI Japan Index Fund 14,600 210,240
iShares MSCI Singapore Index Fund 2,600 22,828
Materials Select Sector Index 9,500 307,325
Technology Select Sector Spdr Fund 7,900 175,064
-----------
1,425,883
-----------
FERTILIZERS & AGRICULTURAL CHEMICALS - 1.2%
Agrium, Inc. 7,600 191,976
Mosaic Company* 1,400 20,090
Sociedad Quimica y Minera de Chile S.A. ADR 800 90,800
Terra Industries, Inc.* 7,000 49,350
-----------
352,216
-----------
HOME FURNISHINGS - 0.2%
Ethan Allen Interiors, Inc. 1,100 46,222
-----------
INDUSTRIAL CONGLOMERATES - 3.1%
ABB, Ltd. ADR* 2,500 31,375
General Electric Company 4,000 139,120
Siemens AG ADR 7,500 698,775
-----------
869,270
-----------
INDUSTRIAL MACHINERY - 5.8%
Barnes Group, Inc. 1,500 60,750
Esco Technologies, Inc.* 4,200 212,730
Harsco Corporation 1,100 90,882
Ingersoll-Rand Company, Ltd. 4,200 175,518
Kennametal, Inc. 11,400 696,996
Nordson Corporation 1,000 49,860
Parker Hannifin Corporation 1,000 80,610
Pentair, Inc. 2,900 118,175
RBC Bearings, Inc.* 2,200 45,100
Watts Waters Technologies, Inc. 2,800 101,752
-----------
1,632,373
-----------
6 See accompanying notes.
SECURITY EQUITY FUND
Schedule of Investments ALPHA OPPORTUNITY SERIES
March 31, 2006 (unaudited)
NUMBER MARKET
OF SHARES VALUE
---------- -----------
COMMON STOCKS (CONTINUED)
IT CONSULTING & OTHER SERVICES - 0.7%
Gartner, Inc.* 13,700 $ 191,115
-----------
LIFE & HEALTH INSURANCE - 0.6%
Prudential Financial, Inc. 2,100 159,201
-----------
MARINE - 0.1%
Sea Containers, Ltd. 2,300 16,583
-----------
METAL & GLASS CONTAINERS - 0.2%
Silgan Holdings, Inc. 1,600 64,272
-----------
OIL & GAS DRILLING - 0.1%
GlobalSantaFe Corporation 400 24,300
-----------
OIL & GAS EQUIPMENT & SERVICES - 1.1%
Technip S.A. ADR 4,600 312,524
-----------
OIL & GAS REFINING & MARKETING - 0.3%
Sasol, Ltd. ADR 2,300 87,009
Xethanol Corporation* 600 4,080
-----------
91,089
-----------
PACKAGED FOODS & MEATS - 0.1%
Cresud S.A. ADR 2,600 37,518
-----------
PAPER PACKAGING - 1.3%
Smurfit-Stone Container Corporation* 28,200 382,674
-----------
PAPER PRODUCTS - 0.7%
Abitibi-Consolidated, Inc. 8,600 35,690
International Paper Company 4,400 152,108
-----------
187,798
-----------
PERSONAL PRODUCTS - 0.6%
Estee Lauder Companies, Inc. 4,500 167,355
-----------
SEMICONDUCTOR EQUIPMENT - 0.1%
Credence Systems Corporation* 2,600 19,084
-----------
SEMICONDUCTORS - 0.2%
Cypress Semiconductor Corporation* 3,400 57,630
-----------
SPECIALIZED FINANCE - 0.2%
CBOT Holdings, Inc.* 400 47,760
-----------
SPECIALTY CHEMICALS - 0.3%
Ferro Corporation 3,800 76,000
-----------
STEEL - 0.7%
Companhia Siderurgica Nacional S.A. ADR 3,000 94,260
Gerdau S.A. ADR 4,000 90,080
NN, Inc. 1,000 12,910
-----------
197,250
-----------
TRADING COMPANIES & DISTRIBUTORS - 2.5%
Applied Industrial Technology, Inc. 1,300 57,980
GATX Corporation 11,900 491,351
United Rentals, Inc.* 3,700 127,650
W.W. Grainger, Inc. 500 37,675
-----------
714,656
-----------
PRINCIPAL
AMOUNT OR
NUMBER MARKET
OF SHARES VALUE
---------- -----------
COMMON STOCKS (CONTINUED)
TRUCKING - 0.6%
YRC Worldwide, Inc.* 4,600 $ 175,076
-----------
TOTAL COMMON STOCKS
(cost $13,223,589) 13,375,756
-----------
U.S. GOVERNMENT SPONSORED AGENCIES - 39.1%
Federal Home Loan Bank:
4.445%, 04-12-06(2) $ 550,000 549,361
4.549%, 04-17-06(2) $ 125,000 124,774
4.48%, 04-19-06(2) $1,400,000 1,397,106
4.60%, 04-25-06(3) $ 700,000 698,011
4.575%, 05-12-06(2) $ 950,000 945,143
4.59%, 05-17-06(2) $ 300,000 298,269
4.59%, 05-31-06(2) $ 600,000 595,438
4.67%, 06-14-06(2) $ 750,000 742,875
4.755%, 06-30-06(2) $ 450,000 444,775
Federal Home Loan Mortgage Corporation:
4.36%, 04-11-06(2) $ 600,000 599,380
4.52%, 05-01-06(2) $ 600,000 597,797
4.53%, 05-02-06(2) $ 225,000 224,145
Federal National Mortgage Assocation:
4.43%, 04-05-06(2) $1,500,000 1,499,613
4.65%, 04-12-06(2) $ 40,000 39,943
4.47%, 04-28-06(2) $ 650,000 647,901
4.55%, 05-08-06(2) $ 700,000 696,788
4.64%, 05-24-06(2) $ 975,000 968,480
-----------
TOTAL U.S. GOVERNMENT SPONSORED AGENCIES
(cost $11,068,102) 11,069,799
-----------
ASSET BACKED SECURITIES - 0.5%
OTHER - 0.5%
Credit-Based Asset Servicing & Securitization,
2005-CB2 AV1, 4.918% - 2036(1,2) $ 147,059 147,085
-----------
TOTAL ASSET BACKED SECURITIES
(cost $147,060) 147,085
-----------
TOTAL INVESTMENTS - 86.8%
(cost $24,438,751) 24,592,640
-----------
SHORT POSITIONS - (1.6%)
EXCHANGE TRADED FUNDS - (0.1%)
Semiconductor Holders Trust (700) (25,424)
-----------
HOMEBUILDING - (0.2%)
D.R. Horton, Inc. (700) (23,254)
Pulte Homes, Inc. (700) (26,894)
-----------
(50,148)
-----------
MANAGED HEALTH CARE - (0.1%)
UnitedHealth Group, Inc. (700) (39,102)
-----------
7 See accompanying notes.
SECURITY EQUITY FUND
Schedule of Investments ALPHA OPPORTUNITY SERIES
March 31, 2006 (unaudited)
NUMBER MARKET
OF SHARES VALUE
---------- -----------
SHORT POSITIONS (CONTINUED)
OIL & GAS EXPLORATION & PRODUCTION - (1.0%)
Apache Corporation (1,200) $ (78,612)
Encore Acquisition Company* (400) (12,400)
Newfield Exploration Company* (1,100) (46,090)
Pioneer Natural Resources Company (1,100) (48,675)
Pogo Producing Company (700) (35,175)
Quicksilver Resources, Inc.* (700) (27,062)
Whiting Petroleum Corporation* (1,100) (45,089)
-----------
(293,103)
-----------
OTHER DIVERSIFIED FINANCIAL SERVICES - (0.1%)
St. Joe Company (600) (37,704)
-----------
REGIONAL BANKS - (0.1%)
Synovus Financial Corporation (1,000) (27,090)
-----------
TOTAL SHORT POSITIONS
(proceeds $470,753) (472,571)
CASH & OTHER ASSETS, LESS LIABILITIES(2) - 14.8% 4,200,373
-----------
TOTAL NET ASSETS - 100.0% $28,320,442
===========
For federal income tax purposes, the identified cost of investments owned at
March 31, 2006 was $24,000,324.
* Non-income producing security
ADR (American Depositary Receipt)
(1) Variable rate security. Rate indicated is rate effective at March 31, 2006.
(2) Security is segregated as collateral for open futures contracts.
(3) Security is segregated as collateral for short positions.
8 See accompanying notes.
SECURITY EQUITY FUND
ALPHA OPPORTUNITY SERIES
(unaudited)
Statement of Assets and Liabilities
March 31, 2006
ASSETS:
Investments, at value (1) ....................................... $24,592,640
Cash ............................................................ 2,450,104
Receivables:
Fund shares sold ............................................. 8,887
Securities sold .............................................. 4,532,294
Interest ..................................................... 141
Dividends .................................................... 13,269
Prepaid expenses ................................................ 19,064
-----------
Total assets .................................................... 31,616,399
-----------
LIABILITIES:
Securities sold short, at value (2) ............................. 472,571
Payable for:
Securities purchased ......................................... 2,694,170
Fund shares redeemed ......................................... 6,792
Variation margin ............................................. 38,850
Management fees .............................................. 49,456
Custodian fees ............................................... 3,301
Transfer agent and administration fees ....................... 6,578
Professional fees ............................................ 8,290
12b-1 distribution plan fees ................................. 15,894
Director's fees .............................................. 55
-----------
Total liabilities ............................................... 3,295,957
-----------
NET ASSETS ...................................................... $28,320,442
===========
NET ASSETS CONSIST OF:
Paid in capital ................................................. $25,194,005
Accumulated net investment loss ................................. (82,847)
Accumulated undistributed net realized gain
on sale of investments, futures and short
positions .................................................... 3,003,679
Net unrealized appreciation in value of investments, futures and
short positions .............................................. 205,605
-----------
Net assets ...................................................... $28,320,442
===========
CLASS A:
Capital shares outstanding
(unlimited number of shares authorized) ...................... 1,436,095
Net assets ...................................................... $18,326,116
Net asset value and redemption price per share .................. $ 12.76
===========
Maximum offering price per share
(net asset value divided by 94.25%) .......................... $ 13.54
===========
CLASS B:
Capital shares outstanding
(unlimited number of shares authorized) ...................... 379,154
Net assets ...................................................... $ 4,728,639
Net asset value, offering and redemption price per share
(excluding any applicable contingent deferred sales charge) .. $ 12.47
===========
CLASS C:
Capital shares outstanding
(unlimited number of shares authorized) ...................... 422,195
Net assets ...................................................... $ 5,265,687
Net asset value, offering and redemption price per share
(excluding any applicable contingent deferred sales charge) .. $ 12.47
===========
(1) Investments, at cost ........................................ $24,438,751
(2) Securities sold short, at proceeds .......................... 470,753
Statement of Operations
For the Six Months Ended March 31, 2006
INVESTMENT INCOME:
Dividends .................................................... $ 114,404
Interest ..................................................... 209,071
----------
Total investment income ...................................... 323,475
----------
EXPENSES:
Management fees .............................................. 270,870
Transfer agent/maintenance fees .............................. 14,643
Administration fees .......................................... 21,174
Custodian fees ............................................... 15,758
Directors' fees .............................................. 301
Professional fees ............................................ 22,351
Reports to shareholders ...................................... 3,426
Registration fees ............................................ 15,920
Other expenses ............................................... 970
12b-1 distribution plan fees - Class A ....................... 19,268
12b-1 distribution plan fees - Class B ....................... 21,465
12b-1 distribution plan fees - Class C ....................... 30,300
----------
Total expenses ............................................... 436,446
Less: Reimbursement of expenses - Class A .................... (16,055)
Reimbursement of expenses - Class B .................... (4,494)
Reimbursement of expenses - Class C .................... (6,235)
Earnings credits ....................................... (3,340)
----------
Net expenses ................................................. 406,322
----------
Net investment loss .......................................... (82,847)
----------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) during the period on:
Investments .................................................. 2,635,191
Securities sold short ........................................ (2,249)
Futures ...................................................... 417,723
----------
Net realized gain ............................................ 3,050,665
----------
Net unrealized depreciation during the period on:
Investments .................................................. (57,057)
Securities sold short ........................................ (1,818)
Futures ...................................................... (3,195)
----------
Net unrealized depreciation .................................. (62,070)
----------
Net realized and unrealized gain ............................. 2,988,595
----------
Net increase in net assets
resulting from operations ................................. $2,905,748
==========
9 See accompanying notes.
SECURITY EQUITY FUND
Statement of Changes in Net Assets ALPHA OPPORTUNITY SERIES
SIX MONTHS
ENDED
MARCH 31, YEAR ENDED
2006 SEPTEMBER 30,
(unaudited) 2005
----------- -------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment loss ................................. $ (82,847) $ (252,493)
Net realized gain during the period on investments,
futures and securities sold short ................ 3,050,665 2,310,074
Net unrealized appreciation (depreciation) during the
period on investments, futures and securities sold
short ............................................ (62,070) 144,528
----------- -----------
Net increase in net assets resulting from
operations ....................................... 2,905,748 2,202,109
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net realized gain
Class A .......................................... (1,193,077) (604,730)
Class B .......................................... (346,674) (202,618)
Class C .......................................... (438,798) (478,033)
----------- -----------
Total distributions to shareholders ................. (1,978,549) (1,285,381)
----------- -----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from sale of shares
Class A .......................................... 3,497,793 11,459,073
Class B .......................................... 524,828 1,533,972
Class C .......................................... 455,392 4,544,101
Distributions reinvested
Class A .......................................... 1,170,684 591,209
Class B .......................................... 343,297 202,336
Class C .......................................... 380,745 269,335
Cost of shares redeemed
Class A .......................................... (1,577,902) (4,559,666)
Class B .......................................... (384,462) (107,116)
Class C .......................................... (3,557,670) (332,772)
----------- -----------
Net increase from capital share transactions ........ 852,705 13,600,472
----------- -----------
Net increase in net assets .......................... 1,779,904 14,517,200
----------- -----------
NET ASSETS:
Beginning of period ................................. 26,540,538 12,023,338
----------- -----------
End of period ....................................... $28,320,442 $26,540,538
=========== ===========
Accumulated net investment income (loss) at end of
period ........................................... $ (82,847) $ --
=========== ===========
CAPITAL SHARE ACTIVITY:
Shares sold
Class A .......................................... 283,047 970,012
Class B .......................................... 43,048 130,674
Class C .......................................... 37,962 378,831
Shares reinvested
Class A .......................................... 99,888 50,401
Class B .......................................... 29,904 17,458
Class C .......................................... 33,166 23,238
Shares redeemed
Class A .......................................... (129,254) (393,904)
Class B .......................................... (31,762) (9,111)
Class C .......................................... (291,905) (28,119)
10 See accompanying notes.
Financial Highlights
Selected data for each share of capital stock SECURITY EQUITY FUND
outstanding throughout each period ALPHA OPPORTUNITY SERIES
SIX MONTHS YEAR ENDED
ENDED SEPTEMBER 30,
MARCH 31, ----------------------------
CLASS A 2006(g) 2005 2004 2003(e)
- ------- ---------- ------- ------ -------
PER SHARE DATA
Net asset value, beginning of period $ 12.37 $ 11.79 $10.21 $10.00
Income (loss) from investment operations:
Net investment loss(c) (0.02) (0.10) (0.16) (0.03)
Net gain on securities (realized and unrealized) 1.42 1.50 2.33 0.24
------- ------- ------ ------
Total from investment operations 1.40 1.40 2.17 0.21
------- ------- ------ ------
Less distributions:
Distributions from realized gains (1.01) (0.82) (0.59) --
------- ------- ------ ------
Total distributions (1.01) (0.82) (0.59) --
------- ------- ------ ------
Net asset value, end of period $ 12.76 $ 12.37 $11.79 $10.21
======= ======= ====== ======
TOTAL RETURN(a) 12.04% 12.26% 21.68% 2.10%
------- ------- ------ ------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $18,326 $14,622 $6,556 $2,935
------- ------- ------ ------
Ratios to average net assets:
Net investment loss (0.36%) (0.83%) (1.48%) (1.35%)
Total expenses(b) 3.09% 2.94% 3.57% 3.25%
Net expenses(d) 2.85% 2.86% 2.78% 2.75%
Expenses prior to custodian earnings credits and net of
expense waivers 2.88% 2.86% 2.79% 2.75%
Net expenses prior to performance fee adjustment(f) 2.75% 2.78% 2.78% 2.75%
------- ------- ------ ------
Portfolio turnover rate 1,456% 1,502% 1,175% 867%
SIX MONTHS YEAR ENDED
ENDED SEPTEMBER 30,
MARCH 31, --------------------------
CLASS B 2006(g) 2005 2004 2003(e)
- ------- ---------- ------ ------ ------
PER SHARE DATA
Net asset value, beginning of period $12.15 $11.68 $10.20 $10.00
Income (loss) from investment operations:
Net investment loss(c) (0.07) (0.18) (0.25) (0.05)
Net gain on securities (realized and unrealized) 1.40 1.47 2.32 0.25
------ ------ ------ ------
Total from investment operations 1.33 1.29 2.07 0.20
------ ------ ------ ------
Less distributions:
Distributions from realized gains (1.01) (0.82) (0.59) --
------ ------ ------ ------
Total distributions (1.01) (0.82) (0.59) --
------ ------ ------ ------
Net asset value, end of period $12.47 $12.15 $11.68 $10.20
====== ====== ====== ======
TOTAL RETURN(a) 11.66% 11.39% 20.68% 2.00%
------ ------ ------ ------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $4,729 $4,106 $2,324 $1,731
------ ------ ------ ------
Ratios to average net assets:
Net investment loss (1.11%) (1.60%) (2.25%) (2.11%)
Total expenses(b) 3.84% 3.69% 4.29% 4.01%
Net expenses(d) 3.60% 3.61% 3.53% 3.50%
Expenses prior to custodian earnings credits and net of
expense waivers(d) 3.63% 3.61% 3.53% 3.50%
Net expenses prior to performance fee adjustment(f) 3.50% 3.53% 3.53% 3.50%
------ ------ ------ ------
Portfolio turnover rate 1,456% 1,502% 1,175% 867%
11 See accompanying notes.
Financial Highlights
Selected data for each share of capital stock SECURITY EQUITY FUND
outstanding throughout each period ALPHA OPPORTUNITY SERIES
SIX MONTHS YEAR ENDED
ENDED SEPTEMBER 30,
MARCH 31, ---------------------------
CLASS C 2006(g) 2005 2004 2003(e)
- ------- ---------- ------ ------ -------
PER SHARE DATA
Net asset value, beginning of period $12.15 $11.68 $10.20 $10.00
Income (loss) from investment operations:
Net investment loss(c) (0.06) (0.18) (0.25) (0.05)
Net gain on securities (realized and unrealized) 1.39 1.47 2.32 0.25
------ ------ ------ ------
Total from investment operations 1.33 1.29 2.07 0.20
------ ------ ------ ------
Less distributions:
Distributions from realized gains (1.01) (0.82) (0.59) --
------ ------ ------ ------
Total distributions (1.01) (0.82) (0.59) --
------ ------ ------ ------
Net asset value, end of period $12.47 $12.15 $11.68 $10.20
====== ====== ====== ======
TOTAL RETURN(a) 11.66% 11.39% 20.68% 2.00%
------ ------ ------ ------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $5,266 $7,813 $3,143 $1,723
------ ------ ------ ------
Ratios to average net assets:
Net investment loss (1.02%) (1.58%) (2.24%) (2.11%)
Total expenses(b) 3.84% 3.68% 4.30% 4.01%
Net expenses(d) 3.60% 3.61% 3.53% 3.50%
Expenses prior to custodian earnings credits and net of
expense waivers 3.63% 3.61% 3.53% 3.50%
Net expenses prior to performance fee adjustment(f) 3.50% 3.53% 3.53% 3.50%
------ ------ ------ ------
Portfolio turnover rate 1,456% 1,502% 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) Total expense information reflects expense ratios absent fund expense
reductions by the Investment Manager, and custodian earnings credits.
(c) Net investment loss was computed using average shares outstanding
throughout the period.
(d) Net expense information reflects the expense ratios after voluntary expense
waivers, reimbursements, and custodian earnings credits, as applicable.
(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) Net expenses prior to performance fee adjustment reflect ratios after
voluntary expense waivers, reimbursements, custodian earnings credits, and
before performance fee adjustments, as applicable.
(g) Unaudited figures for the six months ended March 31, 2006. Percentage
amounts for the period, except total return, have been annualized.
12 See accompanying notes.
SECURITY EQUITY FUND
Enhanced Index Series
(NORTHERN TRUST LOGO)
SUBADVISER,
NORTHERN TRUST
13
SECURITY EQUITY FUND
Performance Summary ENHANCED INDEX SERIES
May 15, 2006 (unaudited)
PERFORMANCE
ENHANCED INDEX SERIES VS. S&P 500 INDEX
(PERFORMANCE GRAPH)
ENHANCED INDEX SERIES
1/29/99 9,425.00
3/31/99 9,443.85
6/30/99 10,103.60
9/30/99 9,462.70
12/31/99 10,954.79
3/31/00 11,231.04
6/30/00 10,878.58
9/30/00 10,754.74
12/31/00 9,846.88
3/31/01 8,617.22
6/30/01 9,097.56
9/30/01 7,714.19
12/31/01 8,521.16
3/31/02 8,521.16
6/30/02 7,339.53
9/30/02 6,052.23
12/31/02 6,522.96
3/31/03 6,292.40
6/30/03 7,224.25
9/30/03 7,387.56
12/31/03 8,280.99
3/31/04 8,405.88
6/30/04 8,511.55
9/30/04 8,290.60
12/31/04 9,030.31
3/31/05 8,828.57
6/30/05 8,895.82
9/30/05 9,203.23
12/31/05 9,407.34
3/31/06 9,755.04
S&P 500 INDEX
INCEPTION 1/29/99 10,000.00
3/31/99 10,075.52
6/30/99 10,785.58
9/30/99 10,111.95
12/31/99 11,616.46
3/31/00 11,883.45
06/30/00 11,568.33
09/30/00 11,456.43
12/31/00 10,560.83
3/31/2001 9,309.30
6/30/2001 9,854.43
9/30/2001 8,408.85
12/31/2001 9,307.93
3/31/2002 9,333.23
6/30/2002 8,083.12
9/30/2002 6,687.10
12/31/2002 7,251.86
3/31/2003 7,023.47
6/30/2003 8,104.60
9/30/2003 8,319.10
12/31/2003 9,332.84
3/31/2004 9,491.17
6/30/2004 9,654.81
9/30/2004 9,473.80
12/31/2004 10,348.59
3/31/2005 10,125.65
6/30/2005 10,263.49
9/30/2005 10,633.86
12/31/2005 10,854.78
3/31/2006 11,311.05
$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. The S&P 500 Index is a capitalization weighted index
composed of 500 selected common stocks that represent the broad domestic economy
and is a widely recognized unmanaged index of market performance.
AVERAGE ANNUAL RETURNS
PERIODS ENDED 3-31-06 1 YEAR 5 YEARS SINCE INCEPTION
- --------------------- ------ ------- ----------------
A Shares 10.49% 2.51% 0.48% (1-29-99)
A Shares with sales charge 4.15% 1.30% (0.35%) (1-29-99)
B Shares 9.73% 1.69% (0.31%) (1-29-99)
B Shares with CDSC 4.73% 1.31% (0.31%) (1-29-99)
C Shares 9.70% 1.68% (0.29%) (1-29-99)
C Shares with CDSC 8.70% 1.68% (0.29%) (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 and/or reimbursements reduced
expenses of the Series and in the absence of such waiver, the performance quoted
would be reduced.
PORTFOLIO COMPOSITION BY SECTOR
Consumer Discretionary 10.08%
Consumer Staples 8.95
Energy 9.57
Financials 20.44
Health Care 12.77
Industrials 11.38
Information Technology 16.00
Materials 3.22
Telecommunication Services 3.27
Utilities 3.28
U.S. Government Securities 0.35
Repurchase Agreement 2.01
Liabilities, less cash & other assets (1.32)
------
Total net assets 100.00%
======
14 See accompanying notes.
SECURITY EQUITY FUND
Performance Summary ENHANCED INDEX SERIES
May 15, 2006 (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, 2005 - March 31, 2006.
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 mutual 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.
SERIES EXPENSES
BEGINNING ENDING EXPENSES PAID
ACCOUNT VALUE ACCOUNT VALUE DURING
10-01-05 03-31-06(1) PERIOD(2)
------------- ------------- -------------
Enhanced Index
Series - Class A
Actual $1,000.00 $1,060.00 $ 8.42
Hypothetical 1,000.00 1,016.75 8.25
Enhanced Index
Series - Class B
Actual 1,000.00 1,056.20 12.25
Hypothetical 1,000.00 1,013.01 11.99
Enhanced Index
Series - Class C
Actual 1,000.00 1,056.00 12.25
Hypothetical 1,000.00 1,013.01 11.99
(1) The actual ending account value is based on the actual total return of the
Series for the period October 1, 2005 to March 31, 2006 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, 2005 to March 31, 2006 was 6.00%, 5.62% and 5.60%, for
Class A, B and C shares, respectively.
(2) Expenses are equal to the Series annualized expense ratio (1.64%, 2.39% and
2.39% for Class A, B and C 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, 2006 (unaudited)
NUMBER MARKET
OF SHARES VALUE
--------- --------
COMMON STOCKS - 99.0%
AEROSPACE & DEFENSE - 2.1%
Boeing Company 1,447 $112,765
General Dynamics Corporation 1,000 63,980
Honeywell International, Inc. 400 17,108
Lockheed Martin Corporation 688 51,689
Northrop Grumman Corporation 580 39,608
United Technologies Corporation 380 22,029
--------
307,179
--------
AIR FREIGHT & LOGISTICS - 0.8%
United Parcel Service, Inc. (Cl.B) 1,458 115,736
--------
APPAREL, ACCESSORIES & LUXURY GOODS - 0.1%
V.F. Corporation 200 11,380
--------
APPLICATION SOFTWARE - 0.3%
Autodesk, Inc.* 100 3,852
Compuware Corporation* 1,500 11,745
Parametric Technology Corporation* 1,800 29,394
--------
44,991
--------
ASSET MANAGEMENT & CUSTODY BANKS - 1.0%
Ameriprise Financial, Inc. 1,204 54,252
Franklin Resources, Inc. 700 65,968
Mellon Financial Corporation 611 21,752
--------
141,972
--------
AUTOMOBILE MANUFACTURERS - 0.0%
Ford Motor Company 400 3,184
--------
AUTOMOTIVE RETAIL - 0.3%
AutoNation, Inc.* 2,000 43,100
--------
BIOTECHNOLOGY - 1.5%
Amgen, Inc.* 2,164 157,431
Applera Corporation - Applied
Biosystems Group 100 2,714
Biogen Idec, Inc.* 1,100 51,810
--------
211,955
--------
BROADCASTING & CABLE TV - 0.7%
CBS Corporation (Cl.B)* 2,906 69,686
Clear Channel Communications, Inc. 400 11,604
Comcast Corporation* 779 20,379
--------
101,669
--------
BUILDING PRODUCTS - 0.3%
Masco Corporation 1,404 45,616
--------
COMMERCIAL PRINTING - 0.3%
R.R. Donnelley & Sons Company 1,300 42,536
--------
COMMUNICATIONS EQUIPMENT - 3.0%
Ciena Corporation* 700 3,647
Cisco Systems, Inc.* 9,802 212,409
Comverse Technology, Inc.* 1,000 23,530
Corning, Inc.* 100 2,691
Motorola, Inc. 3,653 83,690
Qualcomm, Inc. 1,058 53,545
Tellabs, Inc.* 3,600 57,240
--------
436,752
--------
COMPUTER HARDWARE - 3.4%
Apple Computer, Inc.* 500 $ 31,360
Dell, Inc.* 3,084 91,780
Hewlett-Packard Company 4,908 161,473
International Business Machines Corporation 2,563 211,371
NCR Corporation* 70 2,925
--------
498,909
--------
COMPUTER STORAGE & PERIPHERALS - 0.4%
EMC Corporation* 3,910 53,293
Lexmark International, Inc.* 100 4,538
--------
57,831
--------
CONSTRUCTION & FARM MACHINERY - 0.8%
Caterpillar, Inc. 200 14,362
Deere & Company 400 31,620
Paccar, Inc. 898 63,291
--------
109,273
--------
CONSUMER FINANCE - 0.8%
American Express Company 1,123 59,014
Capital One Financial Corporation 700 56,364
--------
115,378
--------
DATA PROCESSING & OUTSOURCED SERVICES - 1.0%
Automatic Data Processing, Inc. 1,217 55,593
Computer Sciences Corporation* 700 38,885
Fiserv, Inc.* 1,300 55,315
--------
149,793
--------
DEPARTMENT STORES - 0.5%
J.C. Penney Company, Inc. 900 54,369
Sears Holding Corporation* 100 13,224
--------
67,593
--------
DIVERSIFIED BANKS - 4.4%
Bank of America Corporation 6,718 305,938
Comerica, Inc. 1,100 63,767
U.S. Bancorp 3,134 95,587
Wachovia Corporation 1,097 61,487
Wells Fargo & Company 1,806 115,349
--------
642,128
--------
DIVERSIFIED CHEMICALS - 0.3%
Dow Chemical Company 141 5,725
Engelhard Corporation 100 3,961
PPG Industries, Inc. 500 31,675
--------
41,361
--------
DIVERSIFIED COMMERCIAL & PROFESSIONAL SERVICES - 0.3%
Cendant Corporation 2,217 38,465
--------
DIVERSIFIED METALS & MINING - 0.3%
Freeport-McMoRan Copper & Gold, Inc. (Cl.B) 800 47,816
--------
16 See accompanying notes.
SECURITY EQUITY FUND
Schedule of Investments ENHANCED INDEX SERIES
March 31, 2006 (unaudited)
NUMBER MARKET
OF SHARES VALUE
--------- --------
COMMON STOCKS (CONTINUED)
DRUG RETAIL - 0.0%
Walgreen Company 155 $ 6,685
--------
ELECTRIC UTILITIES - 1.2%
American Electric Power Company, Inc. 1,900 64,638
Edison International 1,600 65,888
Entergy Corporation 346 23,853
FPL Group, Inc. 500 20,070
Progress Energy, Inc. -
Contingent Value Obligation*(2) 400 128
--------
174,577
--------
ELECTRICAL COMPONENTS & EQUIPMENT - 0.2%
American Power Conversion Corporation 300 6,933
Emerson Electric Company 338 28,267
--------
35,200
--------
ELECTRONIC EQUIPMENT MANUFACTURERS - 0.1%
Agilent Technologies, Inc.* 300 11,265
--------
ELECTRONIC MANUFACTURING SERVICES - 0.2%
Molex, Inc. 800 26,560
Sanmina-SCI Corporation* 700 2,870
--------
29,430
--------
ENVIRONMENTAL & FACILITIES SERVICES - 0.4%
Waste Management, Inc. 1,700 60,010
--------
FERTILIZERS & AGRICULTURAL CHEMICALS - 0.2%
Monsanto Company 300 25,425
--------
FOOD RETAIL - 1.3%
Kroger Company* 3,300 67,188
Safeway, Inc. 2,500 62,800
Supervalu, Inc. 1,700 52,394
--------
182,382
--------
FOOTWEAR - 0.2%
Nike, Inc. (Cl.B) 400 34,040
--------
FOREST PRODUCTS - 0.4%
Louisiana-Pacific Corporation 1,113 30,274
Weyerhaeuser Company 300 21,729
--------
52,003
--------
GENERAL MERCHANDISE STORES - 0.8%
Dollar General Corporation 1,400 24,738
Target Corporation 1,806 93,930
--------
118,668
--------
GOLD - 0.3%
Newmont Mining Corporation 900 46,701
--------
HEALTH CARE DISTRIBUTORS - 0.5%
AmerisourceBergen Corporation 200 9,654
Cardinal Health, Inc. 882 65,727
--------
75,381
--------
HEALTH CARE EQUIPMENT - 1.8%
Becton, Dickinson & Company 899 $ 55,360
Guidant Corporation 400 31,224
Hospira, Inc.* 1,300 51,298
Medtronic, Inc. 1,693 85,920
Thermo Electron Corporation* 200 7,418
Waters Corporation* 301 12,988
Zimmer Holdings, Inc.* 200 13,520
--------
257,728
--------
HEALTH CARE FACILITIES - 0.6%
HCA, Inc. 1,600 73,264
Tenet Healthcare Corporation* 1,800 13,284
--------
86,548
--------
HEALTH CARE SERVICES - 0.6%
Caremark Rx, Inc.* 500 24,590
IMS Health, Inc. 100 2,577
Laboratory Corporation of America Holdings* 1,000 58,480
--------
85,647
--------
HOME IMPROVEMENT RETAIL - 1.7%
Home Depot, Inc. 3,108 131,468
Lowe's Companies, Inc. 1,672 107,744
--------
239,212
--------
HOMEBUILDING - 0.6%
D.R. Horton, Inc. 1,100 36,542
KB Home 600 38,988
Lennar Corporation 200 12,076
Pulte Homes, Inc. 100 3,842
--------
91,448
--------
HOMEFURNISHING RETAIL - 0.3%
Bed Bath & Beyond, Inc.* 1,200 46,080
--------
HOTELS, RESORTS & CRUISE LINES - 0.7%
Carnival Corporation 200 9,474
Hilton Hotels Corporation 2,400 61,104
Marriott International, Inc. 500 34,300
--------
104,878
--------
HOUSEHOLD APPLIANCES - 0.2%
Black & Decker Corporation 300 26,067
--------
HOUSEHOLD PRODUCTS - 1.9%
Clorox Company 164 9,815
Kimberly-Clark Corporation 1,396 80,689
Procter & Gamble Company 3,272 188,533
--------
279,037
--------
HYPERMARKETS & SUPERCENTERS - 1.0%
Wal-Mart Stores, Inc. 2,983 140,917
--------
17 See accompanying notes.
SECURITY EQUITY FUND
Schedule of Investments ENHANCED INDEX SERIES
March 31, 2006 (unaudited)
NUMBER
OF MARKET
SHARES VALUE
------- -----------
COMMON STOCKS (CONTINUED)
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS - 0.8%
Duke Energy Corporation 2,700 $ 78,705
TXU Corporation 806 36,077
-----------
114,782
-----------
INDUSTRIAL CONGLOMERATES - 4.4%
3M Company 1,027 77,734
General Electric Company 12,741 443,132
Tyco International, Ltd. 4,079 109,644
-----------
630,510
-----------
INDUSTRIAL GASES - 0.1%
Air Products & Chemicals, Inc. 300 20,157
-----------
INDUSTRIAL MACHINERY - 0.8%
Illinois Tool Works, Inc. 800 77,048
Ingersoll-Rand Company, Ltd. 1,100 45,969
-----------
123,017
-----------
INTEGRATED OIL & GAS - 5.0%
Chevron Corporation 2,131 123,534
ConocoPhillips 1,198 75,654
Exxon Mobil Corporation(1) 8,315 506,051
Murphy Oil Corporation 200 9,964
Occidental Petroleum Corporation 42 3,891
-----------
719,094
-----------
INTEGRATED TELECOMMUNICATION SERVICES - 2.7%
AT&T, Inc. 5,852 158,238
BellSouth Corporation 1,521 52,703
Citizens Communications Company 2,900 38,483
Qwest Communications International, Inc.* 9,438 64,178
Verizon Communications, Inc. 2,130 72,548
-----------
386,150
-----------
INTERNET RETAIL - 0.2%
Amazon.com, Inc.* 800 29,208
-----------
INTERNET SOFTWARE & SERVICES - 1.0%
eBay, Inc.* 872 34,060
Google, Inc.* 200 78,000
Yahoo!, Inc.* 1,184 38,196
-----------
150,256
-----------
INVESTMENT BANKING & BROKERAGE - 2.1%
E*Trade Financial Corporation* 1,700 45,866
Goldman Sachs Group, Inc. 738 115,837
Lehman Brothers Holdings, Inc. 700 101,171
Merrill Lynch & Company, Inc. 525 41,349
-----------
304,223
-----------
LEISURE PRODUCTS - 0.3%
Mattel, Inc. 2,300 41,699
-----------
LIFE & HEALTH INSURANCE - 1.8%
AFLAC, Inc. 100 $ 4,513
Jefferson-Pilot Corporation 132 7,384
Lincoln National Corporation 26 1,419
MetLife, Inc. 1,913 92,532
Principal Financial Group, Inc. 1,292 63,050
Prudential Financial, Inc. 1,167 88,470
-----------
257,368
-----------
MANAGED HEALTH CARE - 1.4%
Cigna Corporation 500 65,310
Coventry Health Care, Inc.* 300 16,194
Humana, Inc.* 1,100 57,915
UnitedHealth Group, Inc. 832 46,476
WellPoint, Inc.* 238 18,428
-----------
204,323
-----------
METAL & GLASS CONTAINERS - 0.2%
Ball Corporation 700 30,681
-----------
MOTORCYCLE MANUFACTURERS - 0.3%
Harley-Davidson, Inc. 947 49,130
-----------
MOVIES & ENTERTAINMENT - 2.1%
News Corporation 5,400 89,694
Time Warner, Inc. 8,413 141,254
Viacom, Inc. (Cl.B)* 1,406 54,553
Walt Disney Company 533 14,865
-----------
300,366
-----------
MULTI-LINE INSURANCE - 1.3%
American International Group, Inc. 2,419 159,872
Genworth Financial, Inc. 500 16,715
Hartford Financial Services Group, Inc. 200 16,110
-----------
192,697
-----------
MULTI-UTILITIES - 1.3%
CMS Energy Corporation* 1,000 12,950
CenterPoint Energy, Inc. 2,400 28,632
Dominion Resources, Inc. 700 48,321
PG&E Corporation 1,200 46,680
Teco Energy, Inc. 3,100 49,972
-----------
186,555
-----------
OIL & GAS DRILLING - 1.4%
Nabors Industries, Ltd.* 1,000 71,580
Noble Corporation 800 64,880
Rowan Companies, Inc. 1,200 52,752
Transocean, Inc.* 100 8,030
-----------
197,242
-----------
OIL & GAS EQUIPMENT & SERVICES - 0.3%
BJ Services Company 200 6,920
Schlumberger, Ltd. 283 35,819
-----------
42,739
-----------
18 See accompanying notes.
SECURITY EQUITY FUND
Schedule of Investments ENHANCED INDEX SERIES
March 31, 2006 (unaudited)
NUMBER
OF MARKET
SHARES VALUE
------- -----------
COMMON STOCKS (CONTINUED)
OIL & GAS EXPLORATION & PRODUCTION - 1.6%
Anadarko Petroleum Corporation 600 $ 60,606
Burlington Resources, Inc. 462 42,462
Devon Energy Corporation 1,100 67,287
XTO Energy, Inc. 1,400 60,998
-----------
231,353
-----------
OIL & GAS REFINING & MARKETING - 0.5%
Valero Energy Corporation 1,302 77,825
-----------
OIL & GAS STORAGE & TRANSPORTATION - 0.8%
Kinder Morgan, Inc. 600 55,194
Williams Companies, Inc. 3,000 64,170
-----------
119,364
-----------
OTHER DIVERSIFIED FINANCIAL SERVICES - 3.5%
Citigroup, Inc. 6,927 327,232
JP Morgan Chase & Company 3,033 126,294
Morgan Stanley 882 55,407
-----------
508,933
-----------
PACKAGED FOODS & MEATS - 1.2%
Campbell Soup Company 1,700 55,080
ConAgra Foods, Inc. 2,200 47,212
General Mills, Inc. 1,300 65,884
-----------
168,176
-----------
PAPER PACKAGING - 0.2%
Temple-Inland, Inc. 700 31,185
-----------
PHARMACEUTICALS - 6.4%
Abbott Laboratories 1,903 80,820
Barr Pharmaceuticals, Inc.* 100 6,298
Bristol-Myers Squibb Company 287 7,063
Eli Lilly & Company 2,243 124,038
Johnson & Johnson 4,447 263,351
King Pharmaceuticals, Inc.* 2,900 50,025
Merck & Company, Inc. 2,676 94,275
Pfizer, Inc. 10,380 258,670
Schering-Plough Corporation 427 8,109
Watson Pharmaceuticals, Inc.* 200 5,748
Wyeth 660 32,023
-----------
930,420
-----------
PROPERTY & CASUALTY INSURANCE - 1.7%
Allstate Corporation 1,310 68,264
Chubb Corporation 600 57,264
Cincinnati Financial Corporation 367 15,440
Progressive Corporation 200 20,852
Safeco Corporation 500 25,105
St. Paul Travelers Companies, Inc. 1,483 61,975
-----------
248,900
-----------
PUBLISHING - 0.2%
Gannett Company, Inc. 420 25,166
-----------
RAILROADS - 1.0%
Burlington Northern Santa Fe Corporation 924 $ 76,997
Union Pacific Corporation 700 65,345
-----------
142,342
-----------
REAL ESTATE INVESTMENT TRUSTS - 0.5%
Archstone-Smith Trust 500 24,385
Equity Office Properties Trust 104 3,492
Simon Property Group, Inc. 600 50,484
-----------
78,361
-----------
REGIONAL BANKS - 1.4%
First Horizon National Corporation 707 29,447
KeyCorp 1,800 66,240
PNC Financial Services Group, Inc. 700 47,117
SunTrust Banks, Inc. 7 509
Synovus Financial Corporation 2,100 56,889
-----------
200,202
-----------
RESTAURANTS - 0.5%
Darden Restaurants, Inc. 1,400 57,442
McDonald's Corporation 287 9,861
Yum! Brands, Inc. 200 9,772
-----------
77,075
-----------
SEMICONDUCTOR EQUIPMENT - 0.1%
KLA-Tencor Corporation 300 14,508
-----------
SEMICONDUCTORS - 3.1%
Advanced Micro Devices, Inc.* 400 13,264
Analog Devices, Inc. 300 11,487
Freescale Semiconductor, Inc. (Cl.B)* 2,237 62,122
Intel Corporation 8,323 161,050
LSI Logic Corporation* 2,500 28,900
Linear Technology Corporation 100 3,508
National Semiconductor Corporation 2,100 58,464
Texas Instruments, Inc. 3,325 107,963
-----------
446,758
-----------
SOFT DRINKS - 2.2%
Coca-Cola Company 3,715 155,547
Coca-Cola Enterprises, Inc. 100 2,034
Pepsi Bottling Group, Inc. 1,800 54,702
PepsiCo, Inc. 1,936 111,881
-----------
324,164
-----------
SPECIALIZED FINANCE - 0.5%
CIT Group, Inc. 1,200 64,224
Moody's Corporation 100 7,146
-----------
71,370
-----------
SPECIALTY CHEMICALS - 0.7%
International Flavors & Fragrances, Inc. 200 6,864
Rohm & Haas Company 800 39,096
Sigma-Aldrich Corporation 800 52,632
-----------
98,592
-----------
19 See accompanying notes.
SECURITY EQUITY FUND
Schedule of Investments ENHANCED INDEX SERIES
March 31, 2006 (unaudited)
PRINCIPAL
AMOUNT OR
NUMBER OF MARKET
SHARES VALUE
--------- -----------
COMMON STOCKS (CONTINUED)
SPECIALTY STORES - 0.2%
Office Depot, Inc.* 700 $ 26,068
-----------
STEEL - 0.5%
Nucor Corporation 700 73,353
-----------
SYSTEMS SOFTWARE - 3.3%
BMC Software, Inc.* 2,500 54,150
CA, Inc. 700 19,047
Microsoft Corporation 11,705 318,493
Oracle Corporation* 3,706 50,735
Symantec Corporation* 2,186 36,790
-----------
479,215
-----------
THRIFTS & MORTGAGE FINANCE - 1.4%
Countrywide Financial Corporation 500 18,350
Federal Home Loan Mortgage Corporation 155 9,455
Federal National Mortgage Association 321 16,499
Golden West Financial Corporation 100 6,790
MGIC Investment Corporation 900 59,967
Washington Mutual, Inc. 2,121 90,397
-----------
201,458
-----------
TIRES & RUBBER - 0.2%
Goodyear Tire & Rubber Company* 1,800 26,064
-----------
TOBACCO - 1.4%
Altria Group, Inc. 2,381 168,718
Reynolds American, Inc. 100 10,550
UST, Inc. 400 16,640
-----------
195,908
-----------
WIRELESS TELECOMMUNICATION SERVICE - 0.6%
Sprint Nextel Corporation 3,400 87,856
-----------
TOTAL COMMON STOCKS
(cost $13,234,413) 14,348,759
-----------
U.S. GOVERNMENT SECURITIES - 0.3%
U.S. Treasury Bill, 4.048%, 04-06-06(1) $ 50,000 49,982
-----------
TOTAL U.S. GOVERNMENT SECURITIES
(cost $49,973) 49,982
-----------
REPURCHASE AGREEMENT - 2.0%
United Missouri Bank, 4.36%, dated 03-31-06,
matures 04-03-06; repurchase amount of
$291,106 (Collateralized by GNMA, 4.50%,
11-16-31 with a value of $297,325) $291,000 291,000
-----------
TOTAL REPURCHASE AGREEMENT
(cost $291,000) 291,000
-----------
TOTAL INVESTMENTS - 101.3%
(cost $13,575,386) 14,689,741
LIABILITIES, LESS CASH & OTHER ASSETS - (1.3%) (190,964)
-----------
TOTAL NET ASSETS - 100.0% $14,498,777
===========
For federal income tax purposes, the identified cost of investments owned at
March 31, 2006 was $14,015,326.
* Non-income producing security
(1) Security is segregated as collateral for open futures contracts.
(2) Security is restricted. The total market value of restricted securities is
$128 (cost $190), or 0.0% of total net The acquisition dates range from
assets. November 8, 1999 to September 28, 2000.
20 See accompanying notes.
SECURITY EQUITY FUND
ENHANCED INDEX SERIES
(unaudited)
Statement of Assets and Liabilities
March 31, 2006
ASSETS:
Investments, at value(1) ......................................... $14,689,741
Cash ............................................................. 266
Receivables:
Fund shares sold .............................................. 15,414
Securities sold ............................................... 128,032
Dividends ..................................................... 17,680
Prepaid expenses ................................................ 22,027
-----------
Total assets ..................................................... 14,873,160
-----------
LIABILITIES:
Payable for:
Securities purchased .......................................... 206,112
Fund shares redeemed .......................................... 18,974
Variation margin on futures contracts ......................... 420
Management fees ............................................... 6,158
Custodian fees ................................................ 6,000
Transfer agent and administration fees ........................ 4,167
Professional fees ............................................. 6,105
12b-1 distribution plan fees .................................. 126,308
Director's fees ............................................... 139
-----------
Total liabilities ................................................ 374,383
-----------
NET ASSETS ....................................................... $14,498,777
===========
NET ASSETS CONSIST OF:
Paid in capital .................................................. $17,247,979
Accumulated undistributed net investment income .................. 2,901
Accumulated net realized loss on sale of investments and
futures ....................................................... (3,864,882)
Net unrealized appreciation in value of investments
and futures ................................................... 1,112,779
-----------
Net assets ....................................................... $14,498,777
===========
CLASS A:
Capital shares outstanding (unlimited number of shares
authorized) ................................................... 577,040
Net assets ....................................................... $ 5,828,711
Net asset value and redemption price per share ................... $ 10.10
===========
Maximum offering price per share
(net asset value divided by 94.25%) ........................... $ 10.72
===========
CLASS B:
Capital shares outstanding (unlimited number of shares
authorized) ................................................... 477,600
Net assets ....................................................... $ 4,578,616
Net asset value, offering and redemption price per share
(excluding any applicable contingent deferred sales charge) ... $ 9.59
===========
CLASS C:
Capital shares outstanding (unlimited number of shares
authorized) ................................................... 425,581
Net assets ....................................................... $ 4,091,450
Net asset value, offering and redemption price per share
(excluding any applicable contingent deferred sales charge) ... $ 9.61
===========
(1) Investments, at cost ......................................... $13,575,386
Statement of Operations
For the Six Months Ended March 31, 2006
INVESTMENT INCOME:
Dividends ........................................................ $144,162
Interest ......................................................... 8,504
--------
Total investment income .......................................... 152,666
--------
EXPENSES:
Management fees .................................................. 54,306
Transfer agent/maintenance fees .................................. 17,723
Administration fees .............................................. 14,327
Custodian fees ................................................... 9,070
Directors' fees .................................................. 223
Professional fees ................................................ 5,042
Reports to shareholders .......................................... 1,811
Registration fees ................................................ 15,019
Other expenses ................................................... 819
12b-1 distribution plan fees - Class A ........................... 7,549
12b-1 distribution plan fees - Class B ........................... 23,010
12b-1 distribution plan fees - Class C ........................... 19,204
--------
Total expenses ................................................... 168,103
Less: Expenses waived ............................................ (18,102)
--------
Net expenses ..................................................... 150,001
--------
Net investment income ............................................ 2,665
--------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain during the period on:
Investments ...................................................... 677,396
Futures .......................................................... 8,161
--------
Net realized gain ................................................ 685,557
--------
Net unrealized appreciation (depreciation) during the period on:
Investments ...................................................... 122,285
Futures .......................................................... (1,125)
--------
Net unrealized appreciation ...................................... 121,160
--------
Net realized and unrealized gain ................................. 806,717
--------
Net increase in net assets resulting from operations ............. $809,382
========
21 See accompanying notes.
SECURITY EQUITY FUND
Statement of Changes in Net Assets ENHANCED INDEX SERIES
SIX MONTHS
ENDED
MARCH 31, YEAR ENDED
2006 SEPTEMBER 30,
(unaudited) 2005
----------- -------------
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income ........................................... $ 2,665 $ 33,715
Net realized gain during the period on investments and futures .. 685,557 1,298,196
Net unrealized appreciation during the period on investments and
futures ...................................................... 121,160 248,274
----------- -----------
Net increase in net assets resulting from operations ............ 809,382 1,580,185
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A ...................................................... (33,479) --
----------- -----------
Total distributions to shareholders ............................. (33,479) --
----------- -----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from sale of shares
Class A ...................................................... 686,874 1,413,314
Class B ...................................................... 115,844 370,568
Class C ...................................................... 457,241 771,325
Distributions reinvested
Class A ...................................................... 32,223 --
Cost of shares redeemed
Class A ...................................................... (1,457,109) (2,918,252)
Class B ...................................................... (503,864) (1,464,112)
Class C ...................................................... (347,839) (616,833)
----------- -----------
Net decrease from capital share transactions .................... (1,016,630) (2,443,990)
----------- -----------
Net decrease in net assets ...................................... (240,727) (863,805)
----------- -----------
NET ASSETS:
Beginning of period ............................................. 14,739,504 15,603,309
----------- -----------
End of period ................................................... $14,498,777 $14,739,504
=========== ===========
Accumulated undistributed net investment income
at end of period ............................................. $ 2,901 $ 33,715
=========== ===========
CAPITAL SHARE ACTIVITY:
Shares sold
Class A ...................................................... 69,668 153,265
Class B ...................................................... 12,394 41,963
Class C ...................................................... 48,943 87,531
Shares reinvested
Class A ...................................................... 3,275 --
Shares redeemed
Class A ...................................................... (148,052) (313,759)
Class B ...................................................... (54,457) (165,694)
Class C ...................................................... (37,729) (70,041)
22 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 YEAR ENDED SEPTEMBER 30,
MARCH 31, ----------------------------------------------
CLASS A 2006(h) 2005 2004 2003(f) 2002 2001
- ------- ---------------- ------ ------ ------- ------- -------
PER SHARE DATA
Net asset value, beginning of period $ 9.58 $ 8.63 $ 7.69 $ 6.30 $ 8.03 $ 11.29
Income (loss) from investment operations:
Net investment income (loss)(c) 0.02 0.06 0.02 -- (0.01) --
Net gain (loss) on securities (realized
and unrealized) 0.55 0.89 0.92 1.39 (1.72) (3.17)
------ ------ ------ ------ ------- -------
Total from investment operations 0.57 0.95 0.94 1.39 (1.73) (3.17)
------ ------ ------ ------ ------- -------
Less distributions:
Dividends from net investment income (0.05) -- -- -- -- --
Distributions from realized gains -- -- -- -- -- (0.09)
------ ------ ------ ------ ------- -------
Total distributions (0.05) -- -- -- -- (0.09)
------ ------ ------ ------ ------- -------
Net asset value, end of period $10.10 $ 9.58 $ 8.63 $ 7.69 $ 6.30 $ 8.03
====== ====== ====== ====== ======= =======
TOTAL RETURN(a) 6.00% 11.01% 12.22% 22.06% (21.54%) (28.27%)
------ ------ ------ ------ ------- -------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $5,829 $6,248 $7,017 $6,377 $ 7,171 $ 6,699
------ ------ ------ ------ ------- -------
Ratios to average net assets:
Net investment income (loss) 0.47% 0.64% 0.19% 0.00% (0.10%) 0.02%(g)
Total expenses(b) 1.89% 1.81% 1.80% 1.83% 1.61% 1.42%
Net expenses(d) 1.64% 1.56% 1.54% 1.73% 1.61% 1.42%
Expenses prior to custodian earnings
credits and net expense waivers 1.64% 1.56% 1.55% 1.73% 1.61% 1.42%
------ ------ ------ ------ ------- -------
Portfolio turnover rate 96% 104% 79% 60% 62% 40%
SIX MONTHS ENDED YEAR ENDED SEPTEMBER 30,
MARCH 31, ----------------------------------------------
CLASS B 2006(h) 2005 2004 2003(f) 2002 2001
- ------- ---------------- ------ ------ ------- ------- -------
PER SHARE DATA
Net asset value, beginning of period $ 9.08 $ 8.25 $ 7.40 $ 6.11 $ 7.87 $ 11.15
------ ------ ------ ------ ------- -------
Income (loss) from investment operations:
Net investment loss(c) (0.01) (0.01) (0.05) (0.05) (0.07) (0.08)
Net gain (loss) on securities (realized
and unrealized) 0.52 0.84 0.90 1.34 (1.69) (3.11)
------ ------ ------ ------ ------- -------
Total from investment operations 0.51 0.83 0.85 1.29 (1.76) (3.19)
------ ------ ------ ------ ------- -------
Less distributions:
Distributions from realized gains -- -- -- -- -- (0.09)
------ ------ ------ ------ ------- -------
Total distributions -- -- -- -- -- (0.09)
------ ------ ------ ------ ------- -------
Net asset value, end of period $ 9.59 $ 9.08 $ 8.25 $ 7.40 $ 6.11 $ 7.87
====== ====== ====== ====== ======= =======
TOTAL RETURN(a) 5.62% 10.06% 11.49% 21.11% (22.36%) (28.81%)
------ ------ ------ ------ ------- -------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $4,579 $4,718 $5,305 $4,929 $ 6,125 $ 7,360
------ ------ ------ ------ ------- -------
Ratios to average net assets:
Net investment loss (0.28%) (0.11%) (0.56%) (0.75%) (0.84%) (0.74%)
Total expenses(b) 2.64% 2.56% 2.55% 2.58% 2.35% 2.17%
Net expenses(d) 2.39% 2.31% 2.29% 2.48% 2.35% 2.17%
Expenses prior to custodian earnings
credits and net expense waivers 2.39% 2.31% 2.30% 2.48% 2.35% 2.17%
------ ------ ------ ------ ------- -------
Portfolio turnover rate 96% 104% 79% 60% 62% 40%
23 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 YEAR ENDED SEPTEMBER 30,
MARCH 31, ----------------------------------------------
CLASS C 2006(h) 2005 2004 2003(f) 2002(e) 2001
- ------- ---------------- ------ ------ ------- ------- -------
PER SHARE DATA
Net asset value, beginning of period $ 9.10 $ 8.27 $ 7.42 $ 6.12 $ 7.88 $ 11.16
Income (loss) from investment operations:
Net investment loss(c) (0.01) (0.01) (0.05) (0.05) (0.07) (0.08)
Net gain (loss) on securities (realized
and unrealized) 0.52 0.84 0.90 1.35 (1.69) (3.11)
------ ------ ------ ------ ------- -------
Total from investment operations 0.51 0.83 0.85 1.30 (1.76) (3.19)
------ ------ ------ ------ ------- -------
Less distributions:
Distributions from realized gains -- -- -- -- -- (0.09)
------ ------ ------ ------ ------- -------
Total distributions -- -- -- -- -- (0.09)
------ ------ ------ ------ ------- -------
Net asset value, end of period $ 9.61 $ 9.10 $ 8.27 $ 7.42 $ 6.12 $ 7.88
====== ====== ====== ====== ======= =======
TOTAL RETURN(a) 5.60% 10.04% 11.46% 21.24% (22.34%) (28.78%)
------ ------ ------ ------ ------- -------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $4,091 $3,773 $3,281 $2,991 $ 4,129 $ 4,840
------ ------ ------ ------ ------- -------
Ratios to average net assets:
Net investment loss (0.28%) (0.15%) (0.56%) (0.74%) (0.85%) (0.74%)
Total expenses(b) 2.64% 2.56% 2.55% 2.57% 2.35% 2.17%
Net expenses(d) 2.39% 2.31% 2.29% 2.47% 2.35% 2.17%
Expenses prior to custodian earnings
credits and net expense waivers 2.39% 2.31% 2.30% 2.47% 2.35% 2.17%
------ ------ ------ ------ ------- -------
Portfolio turnover rate 96% 104% 79% 60% 62% 40%
(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) Total expense information reflects expense ratios absent fund expense
reductions by the Investment Manager, and custodian earnings credits.
(c) Net investment income (loss) was computed using average shares outstanding
throughout the period.
(d) Net expense information reflects expense ratios after voluntary expense
waivers, reimbursements, and custodian earnings credits, as applicable.
(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 Deutsche Asset Management, Inc. for sub-advisory services.
(g) Net investment income is less than $0.01 per share.
(h) Unaudited figures for the six months ended March 31, 2006. Percentage
amounts for the period, except total return, have been annualized.
24 See accompanying notes.
SECURITY EQUITY FUND
Equity Series
(SECURITY BENEFIT(SM) LOGO)
Security Management Company, LLC
ADVISER,
SECURITY MANAGEMENT COMPANY, LLC
25
SECURITY EQUITY FUND
Performance Summary EQUITY SERIES
May 15, 2006 (unaudited)
PERFORMANCE
EQUITY SERIES VS. S&P 500 INDEX
(PERFORMANCE GRAPH)
EQUITY SERIES
3/31/96 9,425.00
6/30/96 9,831.83
9/30/96 10,225.11
12/31/96 10,696.97
3/31/97 10,771.25
6/30/97 12,598.65
9/30/97 13,504.92
12/31/97 13,863.11
3/31/98 15,843.55
6/30/98 16,334.57
9/30/98 14,501.43
12/31/98 17,532.39
3/31/99 17,708.07
6/30/99 18,691.85
9/30/99 17,497.26
12/31/99 19,458.63
3/31/00 19,658.67
6/30/00 19,094.92
9/30/00 18,658.46
12/31/00 17,021.45
3/31/01 14,877.85
6/30/01 15,875.37
9/30/01 13,498.31
12/31/01 15,005.20
3/31/02 14,920.30
6/30/02 12,734.25
9/30/02 10,802.89
12/31/02 11,460.83
3/31/03 11,142.47
6/30/03 12,522.02
9/30/03 12,691.81
12/31/03 13,859.51
3/31/04 14,008.31
6/30/04 14,199.62
9/30/04 13,817.00
12/31/04 14,881.97
3/31/05 14,404.84
6/30/05 14,518.44
9/30/05 14,950.13
12/31/05 15,445.86
3/31/06 16,010.95
S&P 500 INDEX
3/31/1996 10,000.00
6/30/96 10,448.35
9/30/96 10,771.35
12/31/96 11,669.70
3/31/97 11,982.19
6/30/97 14,074.30
9/30/97 15,129.75
12/31/97 15,564.72
3/31/98 17,736.01
6/30/98 18,321.85
9/30/98 16,498.67
12/31/98 20,010.98
3/31/99 21,010.92
6/30/99 22,491.65
9/30/99 21,086.90
12/31/99 24,224.31
3/31/00 24,781.07
06/30/00 24,123.94
09/30/00 23,890.59
12/31/00 22,022.97
3/31/2001 19,413.09
6/30/2001 20,549.87
9/30/2001 17,535.34
12/31/2001 19,410.23
3/31/2002 19,462.98
6/30/2002 16,856.08
9/30/2002 13,944.90
12/31/2002 15,122.63
3/31/2003 14,646.35
6/30/2003 16,900.88
9/30/2003 17,348.18
12/31/2003 19,462.18
3/31/2004 19,792.34
6/30/2004 20,133.60
9/30/2004 19,756.13
12/31/2004 21,580.37
3/31/2005 21,115.46
6/30/2005 21,402.90
9/30/2005 22,175.26
12/31/2005 22,635.95
3/31/2006 23,587.44
$10,000 OVER TEN YEARS
This chart assumes a $10,000 investment in Class A shares of Equity Series on
March 31, 1996, 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 S&P
500 Index is a capitalization weighted index composed of 500 selected common
stocks that represent the broad domestic economy and is a widely recognized
unmanaged index of market performance.
AVERAGE ANNUAL RETURNS
SINCE
PERIODS ENDED 3-31-06 1 YEAR 5 YEARS 10 YEARS INCEPTION
- --------------------- ------ ------- -------- ---------
A Shares 11.15% 1.48% 5.44% --
A Shares with sales charge 4.71% 0.28% 4.83% --
B Shares 10.41% 0.63% 4.48% --
B Shares with CDSC 5.41% 0.23% 4.48% --
C Shares 10.36% 0.66% N/A (2.34%)
(1-29-99)
C Shares with CDSC 9.36% 0.66% N/A (2.34%)
(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 10.33%
Consumer Staples 9.58
Energy 8.30
Financials 17.53
Health Care 12.88
Industrials 18.93
Information Technology 13.03
Materials 3.82
Telecommunication Services 2.19
Utilities 0.42
Exchange Traded Funds 2.74
Repurchase Agreement 0.20
Cash & other assets, less liabilities 0.05
------
Total net assets 100.00%
======
26 See accompanying notes.
SECURITY EQUITY FUND
Performance Summary EQUITY SERIES
May 15, 2006 (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, 2005 - March 31, 2006.
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 mutual 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.
SERIES EXPENSES
BEGINNING ENDING EXPENSES PAID
ACCOUNT VALUE ACCOUNT VALUE DURING
10-01-05 03-31-06(1) PERIOD(2)
------------- ------------- -------------
Equity Series - Class A
Actual $1,000.00 $1,071.00 $ 6.82
Hypothetical 1,000.00 1,018.35 6.64
Equity Series - Class B
Actual 1,000.00 1,066.20 10.66
Hypothetical 1,000.00 1,014.61 10.40
Equity Series - Class C
Actual 1,000.00 1,065.90 10.66
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, 2005 to March 31, 2006 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, 2005 to March 31, 2006 was 7.10%, 6.62% and 6.59%, for
Class A, B and C 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 shares, respectively) multiplied by the average
account value over the period, multiplied by 182/365 (to reflect the
one-half year period).
27
SECURITY EQUITY FUND
Schedule of Investments EQUITY SERIES
March 31, 2006 (unaudited)
NUMBER MARKET
OF SHARES VALUE
--------- ------------
COMMON STOCKS - 99.7%
AEROSPACE & DEFENSE - 6.4%
General Dynamics Corporation 178,000 $ 11,388,440
L-3 Communications Holdings, Inc. 42,000 3,603,180
United Technologies Corporation 202,900 11,762,113
------------
26,753,733
------------
AIR FREIGHT & LOGISTICS - 2.9%
FedEx Corporation 107,700 12,163,638
------------
ALUMINUM - 1.7%
Alcoa, Inc. 232,000 7,089,920
------------
BIOTECHNOLOGY - 2.4%
Amgen, Inc.* 139,100 10,119,525
------------
BROADCASTING & CABLE TV - 2.0%
CBS Corporation (Cl.B)* 137,500 3,297,250
Univision Communications, Inc.* 142,200 4,901,634
------------
8,198,884
------------
COMMUNICATIONS EQUIPMENT - 3.8%
ADC Telecommunications, Inc.* 224,657 5,748,973
Cisco Systems, Inc.* 469,400 10,171,898
------------
15,920,871
------------
CONSTRUCTION & ENGINEERING - 1.9%
Shaw Group, Inc.* 265,800 8,080,320
------------
CONSUMER FINANCE - 2.7%
American Express Company 178,900 9,401,195
PHH Corporation* 71,800 1,917,060
------------
11,318,255
------------
DATA PROCESSING & OUTSOURCED SERVICES - 3.0%
First Data Corporation 270,200 12,650,764
------------
DRUG RETAIL - 2.7%
CVS Corporation 371,600 11,099,692
------------
ELECTRIC UTILITIES - 0.4%
KFx, Inc.* 97,000 1,765,400
------------
ELECTRICAL COMPONENTS & EQUIPMENT - 0.6%
Power-One, Inc.* 369,000 2,656,800
------------
EXCHANGE TRADED FUNDS - 2.8%
S & P Depositary Receipts Trust 88,000 11,425,040
------------
HEALTH CARE EQUIPMENT - 4.1%
Medtronic, Inc. 162,400 8,241,800
Zimmer Holdings, Inc.* 128,200 8,666,320
------------
16,908,120
------------
HEALTH CARE SERVICES - 1.2%
Medco Health Solutions, Inc.* 86,150 4,929,503
------------
HOME IMPROVEMENT RETAIL - 2.8%
Home Depot, Inc. 273,100 11,552,130
------------
HOTELS, RESORTS & CRUISE LINES - 2.5%
Carnival Corporation 216,500 10,255,605
------------
HYPERMARKETS & SUPERCENTERS - 5.4%
Costco Wholesale Corporation 206,900 $ 11,205,704
Wal-Mart Stores, Inc. 240,200 11,347,048
------------
22,552,752
------------
INDUSTRIAL CONGLOMERATES - 7.0%
General Electric Company 552,800 19,226,384
Tyco International, Ltd. 373,000 10,026,240
------------
29,252,624
------------
INDUSTRIAL GASES - 2.1%
Praxair, Inc. 160,000 8,824,000
------------
INTEGRATED OIL & GAS - 4.9%
Chevron Corporation 120,000 6,956,400
Exxon Mobil Corporation 221,100 13,456,146
------------
20,412,546
------------
IT CONSULTING & OTHER SERVICES - 2.2%
Unisys Corporation* 1,343,300 9,255,337
------------
MANAGED HEALTH CARE - 2.5%
WellPoint, Inc.* 136,100 10,538,223
------------
MOVIES & ENTERTAINMENT - 3.1%
Time Warner, Inc. 460,000 7,723,400
Viacom, Inc. (Cl.B)* 137,500 5,335,000
------------
13,058,400
------------
MULTI-LINE INSURANCE - 4.5%
American International Group, Inc. 282,500 18,670,425
------------
OIL & GAS EQUIPMENT & SERVICES - 3.4%
BJ Services Company 128,200 4,435,720
Halliburton Company 133,500 9,748,170
------------
14,183,890
------------
OTHER DIVERSIFIED FINANCIAL SERVICES - 7.5%
Citigroup, Inc. 285,600 13,491,744
First Marblehead Corporation(1) 274,700 11,880,775
JP Morgan Chase & Company 143,800 5,987,832
------------
31,360,351
------------
PACKAGED FOODS & MEATS - 1.5%
Tyson Foods, Inc. 458,000 6,292,920
------------
PHARMACEUTICALS - 2.7%
Johnson & Johnson 189,000 11,192,580
------------
PROPERTY & CASUALTY INSURANCE - 2.8%
Berkshire Hathaway, Inc.* 130 11,745,500
------------
SYSTEMS SOFTWARE - 4.0%
Microsoft Corporation 606,200 16,494,702
------------
WIRELESS TELECOMMUNICATION SERVICE - 2.2%
Sprint Nextel Corporation 353,200 9,126,688
------------
TOTAL COMMON STOCKS
(cost $320,007,160) 415,849,138
------------
28 See accompanying notes.
SECURITY EQUITY FUND
Schedule of Investments EQUITY SERIES
March 31, 2006 (unaudited)
PRINCIPAL MARKET
AMOUNT VALUE
--------- ------------
REPURCHASE AGREEMENT - 0.2%
United Missouri Bank, 4.36%, dated 03-31-06,
matures 04-03-06; repurchase amount of
$816,296 (Collateralized by FHLMC, 4.35%,
06-02-08 with a value of $833,175) $816,000 $ 816,000
------------
TOTAL REPURCHASE AGREEMENT
(cost $816,000) 816,000
------------
TOTAL INVESTMENTS - 99.9%
(cost $320,823,160) 416,665,138
CASH & OTHER ASSETS, LESS LIABILITIES - 0.1% 262,383
------------
TOTAL NET ASSETS - 100.0% $416,927,521
============
The identified cost of investments owned at March 31, 2006 was the same for
federal income tax and financial statement purposes.
* Non-income producing security
(1) Security is segregated as collateral for open written option contracts.
29 See accompanying notes.
SECURITY EQUITY FUND
EQUITY SERIES
(unaudited)
Statement of Assets and Liabilities
March 31, 2006
ASSETS:
Investments, at value(1) ....................................... $416,665,138
Cash ........................................................... 240
Receivables:
Securities sold ............................................. 10,188,517
Fund shares sold ............................................ 37,926
Dividends ................................................... 277,802
Prepaid expenses ............................................... 41,532
------------
Total assets ................................................... 427,211,155
------------
LIABILITIES:
Payable for:
Securities purchased ........................................ 9,229,276
Fund shares redeemed ........................................ 359,730
Written options, at value (premiums received, $152,571) ..... 194,560
Management fees ............................................. 266,984
Custodian fees .............................................. 6,400
Transfer agent and administration fees ...................... 55,840
Professional fees ........................................... 36,397
12b-1 distribution plan fees ................................ 121,842
Director's fees ............................................. 2,211
Other ....................................................... 10,394
------------
Total liabilities .............................................. 10,283,634
------------
NET ASSETS ..................................................... $416,927,521
------------
NET ASSETS CONSIST OF:
Paid in capital ................................................ $314,065,127
Accumulated undistributed net investment loss .................. (254,312)
Accumulated undistributed net realized gain on sale of
investments and options written ............................. 7,316,717
Net unrealized appreciation in value of investments and options
written ..................................................... 95,799,989
------------
Net assets ..................................................... $416,927,521
============
CLASS A:
Capital shares outstanding (unlimited number of shares
authorized) ................................................. 54,896,280
Net assets ..................................................... $373,125,529
Net asset value and redemption price per share ................. $ 6.80
============
Maximum offering price per share (net asset value divided by
94.25%) ..................................................... $ 7.21
============
CLASS B:
Capital shares outstanding (unlimited number of shares
authorized) ................................................. 6,273,124
Net assets ..................................................... $ 37,708,647
Net asset value, offering and redemption price per share
(excluding any applicable contingent deferred sales
charge)...................................................... $ 6.01
============
CLASS C:
Capital shares outstanding (unlimited number of shares
authorized) ................................................. 958,050
Net assets ..................................................... $ 6,093,345
Net asset value, offering and redemption price per share
(excluding any applicable contingent deferred sales
charge) ..................................................... $ 6.36
============
(1) Investments, at cost ....................................... $320,823,160
Statement of Operations
For the Six Months Ended March 31, 2006
INVESTMENT INCOME:
Dividends .................................................... $ 2,532,449
Interest ..................................................... 184,228
-----------
Total investment income ...................................... 2,716,677
-----------
EXPENSES:
Management fees .............................................. 1,565,892
Transfer agent/maintenance fees .............................. 354,133
Administration fees .......................................... 196,111
Custodian fees ............................................... 8,380
Directors' fees .............................................. 5,539
Professional fees ............................................ 28,609
Reports to shareholders ...................................... 49,365
Registration fees ............................................ 20,693
Other expenses ............................................... 11,636
12b-1 distribution plan fees - Class A ....................... 466,090
12b-1 distribution plan fees - Class B ....................... 194,445
12b-1 distribution plan fees - Class C ....................... 29,053
-----------
Total expenses ............................................... 2,929,946
-----------
Net investment loss .......................................... (213,269)
-----------
NET REALIZED AND UNREALIZED GAIN:
Net realized gain during the period on:
Investments .................................................. 14,664,518
Options written .............................................. 591,964
-----------
Net realized gain ............................................ 15,256,482
-----------
Net unrealized appreciation (depreciation) during the period on:
Investments .................................................. 13,033,943
Options written .............................................. (77,792)
-----------
Net unrealized appreciation .................................. 12,956,151
-----------
Net realized and unrealized gain ............................. 28,212,633
-----------
Net increase in net assets resulting from operations ......... $27,999,364
===========
30 See accompanying notes.
SECURITY EQUITY FUND
Statement of Changes in Net Assets EQUITY SERIES
SIX MONTHS
ENDED
MARCH 31, YEAR ENDED
2006 SEPTEMBER 30,
(unaudited) 2005
------------ -------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income (loss) ................................. $ (213,269) $ 2,106,508
Net realized gain during the period on investments and options
written ................................................... 15,256,482 5,986,078
Net unrealized appreciation during the period on investments
and options written ....................................... 12,956,151 26,726,517
------------ ------------
Net increase in net assets resulting from operations ......... 27,999,364 34,819,103
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A ................................................... (2,147,551) --
Net realized gain
Class A ................................................... (11,068,147) (26,380,459)
Class B ................................................... (1,320,160) (3,538,521)
Class C ................................................... (182,232) (441,254)
------------ ------------
Total distributions to shareholders .......................... (14,718,090) (30,360,234)
------------ ------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from sale of shares
Class A ................................................... 11,467,279 27,211,499
Class B ................................................... 3,713,847 7,524,651
Class C ................................................... 620,581 1,434,117
Distributions reinvested
Class A ................................................... 12,004,929 24,060,300
Class B ................................................... 1,296,700 3,490,102
Class C ................................................... 180,424 436,627
Cost of shares redeemed
Class A ................................................... (37,584,390) (71,972,519)
Class B ................................................... (8,403,144) (20,528,055)
Class C ................................................... (597,977) (2,480,994)
------------ ------------
Net decrease from capital share transactions ................. (17,301,751) (30,824,272)
------------ ------------
Net decrease in net assets ................................... (4,020,477) (26,365,403)
------------ ------------
NET ASSETS:
Beginning of period .......................................... 420,947,998 447,313,401
------------ ------------
End of period ................................................ $416,927,521 $420,947,998
============ ============
Accumulated undistributed net investment income (loss) at end of
period ....................................................... $ (254,312) $ 2,106,508
============ ============
CAPITAL SHARE ACTIVITY:
Shares sold
Class A ................................................... 1,708,865 4,214,004
Class B ................................................... 623,647 1,306,540
Class C ................................................... 99,198 233,732
Shares reinvested
Class A ................................................... 1,816,177 3,673,328
Class B ................................................... 221,280 597,620
Class C ................................................... 29,101 70,881
Shares redeemed
Class A ................................................... (5,627,072) (11,058,402)
Class B ................................................... (1,422,596) (3,529,552)
Class C ................................................... (96,378) (406,368)
31 See accompanying notes.
Financial Highlights
Selected data for each share of capital SECURITY EQUITY FUND
stock outstanding throughout each period EQUITY SERIES
SIX MONTHS YEAR ENDED SEPTEMBER 30,
ENDED -------------------------------------------------
MARCH 31, 2002
CLASS A 2006(g) 2005 2004 2003 (c, e) 2001
- ------- ---------- -------- -------- -------- -------- --------
PER SHARE DATA
Net asset value, beginning of period $ 6.58 $ 6.50 $ 5.98 $ 5.09 $ 6.36 $ 10.26
-------- -------- -------- -------- -------- --------
Income (loss) from investment operations:
Net investment income(b) -- 0.04 0.01 0.01 0.01 --
Net gain (loss) on securities (realized and unrealized) 0.46 0.49 0.52 0.88 (1.28) (2.49)
-------- -------- -------- -------- -------- --------
Total from investment operations 0.46 0.53 0.53 0.89 (1.27) (2.49)
-------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income (0.04) -- (0.01) -- -- --
Distributions from realized gains (0.20) (0.45) -- -- -- (1.40)
Return of capital -- -- -- -- -- (0.01)
-------- -------- -------- -------- -------- --------
Total distributions (0.24) (0.45) (0.01) -- -- (1.41)
-------- -------- -------- -------- -------- --------
Net asset value, end of period $ 6.80 $ 6.58 $ 6.50 $ 5.98 $ 5.09 $ 6.36
======== ======== ======== ======== ======== ========
TOTAL RETURN(a) 7.10% 8.20% 8.87% 17.49% (19.97%) (27.66%)
-------- -------- -------- -------- -------- --------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $373,126 $375,280 $391,384 $430,161 $412,791 $563,553
-------- -------- -------- -------- -------- --------
Ratios to average net assets:
Net investment income (loss) (0.02%)(f) 0.57% 0.08% 0.23% 0.13% 0.03%(f)
Total expenses 1.32% 1.30% 1.28% 1.25% 1.11% 1.02%
-------- -------- -------- -------- -------- --------
Portfolio turnover rate 36% 32% 28% 54% 30% 23%
SIX MONTHS YEAR ENDED SEPTEMBER 30,
ENDED ---------------------------------------------------
MARCH 31, 2002
CLASS B 2006(g) 2005 2004 2003 (c, e) 2001
- ------- ---------- ------- ------- ------- -------- -------
PER SHARE DATA
Net asset value, beginning of period $ 5.83 $ 5.85 $ 5.41 $ 4.64 $ 5.86 $ 9.65
------- ------- ------- ------- ------- -------
Income (loss) from investment operations:
Net investment loss(b) (0.02) (0.01) (0.04) (0.03) (0.05) (0.07)
Net gain (loss) on securities (realized and unrealized) 0.40 0.44 0.48 0.80 (1.17) (2.31)
------- ------- ------- ------- ------- -------
Total from investment operations 0.38 0.43 0.44 0.77 (1.22) (2.38)
------- ------- ------- ------- ------- -------
Less distributions:
Distributions from realized gains (0.20) (0.45) -- -- -- (1.40)
Return of capital -- -- -- -- -- (0.01)
------- ------- ------- ------- ------- -------
Total distributions (0.20) (0.45) -- -- -- (1.41)
------- ------- ------- ------- ------- -------
Net asset value, end of period $ 6.01 $ 5.83 $ 5.85 $ 5.41 $ 4.64 $ 5.86
======= ======= ======= ======= ======= =======
TOTAL RETURN(a) 6.62% 7.35% 8.13% 16.59% (20.82%) (28.34%)
------- ------- ------- ------- ------- -------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $37,709 $39,962 $49,600 $61,733 $66,267 $96,067
------- ------- ------- ------- ------- -------
Ratios to average net assets:
Net investment loss (0.77%) (0.16%) (0.67%) (0.52%) (0.78%) (0.97%)
Total expenses 2.07% 2.05% 2.03% 2.00% 2.02% 2.02%
------- ------- ------- ------- ------- -------
Portfolio turnover rate 36% 32% 28% 54% 30% 23%
32 See accompanying notes.
Financial Highlights
Selected data for each share of capital SECURITY EQUITY FUND
stock outstanding throughout each period EQUITY SERIES
SIX MONTHS YEAR ENDED SEPTEMBER 30,
ENDED ------------------------------------------------
MARCH 31, 2002
CLASS C 2006(g) 2005 2004 2003 (c, d, e) 2001
- ------- ---------- ------ ------ ------ --------- -------
PER SHARE DATA
Net asset value, beginning of period $ 6.16 $ 6.16 $ 5.69 $ 4.88 $ 6.16 $ 10.07
------ ------ ------ ------ ------- -------
Income (loss) from investment operations:
Net investment loss(b) (0.02) (0.01) (0.04) (0.03) (0.05) (0.07)
Net gain (loss) on securities (realized and unrealized) 0.42 0.46 0.51 0.84 (1.23) (2.43)
------ ------ ------ ------ ------- -------
Total from investment operations 0.40 0.45 0.47 0.81 (1.28) (2.50)
------ ------ ------ ------ ------- -------
Less distributions:
Distributions from realized gains (0.20) (0.45) -- -- -- (1.40)
Return of capital -- -- -- -- -- (0.01)
------ ------ ------ ------ ------- -------
Total distributions (0.20) (0.45) -- -- -- (1.41)
------ ------ ------ ------ ------- -------
Net asset value, end of period $ 6.36 $ 6.16 $ 6.16 $ 5.69 $ 4.88 $ 6.16
====== ====== ====== ====== ======= =======
TOTAL RETURN(a) 6.59% 7.32% 8.26% 16.60% (20.78%) (28.35%)
------ ------ ------ ------ ------- -------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $6,093 $5,706 $6,329 $6,651 $ 4,979 $ 4,230
------ ------ ------ ------ ------- -------
Ratios to average net assets:
Net investment loss (0.77%) (0.18%) (0.67%) (0.52%) (0.76%) (0.97%)
Total expenses 2.07% 2.05% 2.03% 2.00% 2.02% 2.02%
------ ------ ------ ------ ------- -------
Portfolio turnover rate 36% 32% 28% 54% 30% 23%
(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) Net investment income (loss) was computed using average shares outstanding
throughout the period.
(c) 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.
(d) 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.
(e) Effective May 1, 2002 the fee structure for Equity Series changed. Per
share information reflects this change.
(f) Net investment income is less than $0.01 per share.
(g) Unaudited figures for the six months ended March 31, 2006. Percentage
amounts for the period, except total return, have been annualized.
33 See accompanying notes.
This page left blank intentionally.
34
SECURITY EQUITY FUND
Global Series
(OPPENHEIMER FUNDS(R) LOGO)
SUBADVISER,
OPPENHEIMERFUNDS, INC.
35
SECURITY EQUITY FUND
Performance Summary GLOBAL SERIES
May 15, 2006 (unaudited)
PERFORMANCE
GLOBAL SERIES VS. MORGAN STANLEY
CAPITAL INTERNATIONAL WORLD INDEX
(PERFORMANCE GRAPH)
GLOBAL SERIES
3/31/96 9,425.00
6/30/96 9,935.55
9/30/96 10,065.22
12/31/96 10,369.18
3/31/97 10,619.04
6/30/97 11,689.87
9/30/97 12,100.36
12/31/97 11,085.60
3/31/98 12,781.97
6/30/98 12,505.82
9/30/98 11,075.74
12/31/98 13,214.27
3/31/99 13,458.98
6/30/99 14,650.61
9/30/99 14,884.68
12/31/99 20,458.94
3/31/00 23,197.63
6/30/00 22,350.49
9/30/00 21,886.31
12/31/00 21,084.30
3/31/01 18,055.85
6/30/01 19,333.25
9/30/01 15,845.52
12/31/01 18,299.85
3/31/02 18,558.20
6/30/02 16,807.16
9/30/02 13,620.83
12/31/02 13,879.18
3/31/03 12,716.60
6/30/03 15,357.52
9/30/03 16,764.10
12/31/03 19,649.02
3/31/04 20,452.77
6/30/04 20,194.42
9/30/04 19,993.48
12/31/04 23,179.81
3/31/05 22,361.70
6/30/05 23,007.58
9/30/05 25,074.38
12/31/05 26,208.26
3/31/06 28,059.77
MSCI WORLD INDEX
3/31/1996 10,000.00
6/30/1996 10,300.52
9/30/1996 10,449.35
12/31/1996 10,940.43
3/31/1997 10,983.88
6/30/1997 12,649.90
9/30/1997 13,024.76
12/31/1997 12,716.37
3/31/1998 14,550.59
6/30/1998 14,859.28
9/30/1998 13,090.91
12/31/1998 15,869.11
3/31/1999 16,448.41
6/30/1999 17,248.47
9/30/1999 17,006.09
12/31/1999 19,890.57
3/31/2000 20,106.67
6/30/2000 19,407.38
9/30/2000 18,446.40
12/31/2000 17,318.66
3/31/2001 15,105.81
6/30/2001 15,525.45
9/30/2001 13,304.44
12/31/2001 14,457.33
3/31/2002 14,518.77
6/30/2002 13,212.39
9/30/2002 10,793.95
12/31/2002 11,629.65
3/31/2003 11,054.54
6/30/2003 12,960.72
9/30/2003 13,599.90
12/31/2003 15,539.36
3/31/2004 15,945.71
6/30/2004 16,083.90
9/30/2004 15,923.40
12/31/2004 17,825.87
3/31/2005 17,630.20
6/30/2005 17,703.73
9/30/2005 18,938.94
12/31/2005 19,537.11
3/31/2006 20,846.66
$10,000 OVER TEN YEARS
This chart assumes a $10,000 investment in Class A shares of Global Series on
March 31, 1996, 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
MSCI World Index is an unmanaged capitalization-weighted index that is designed
to measure global developed market equity performance.
PORTFOLIO COMPOSITION BY SECTOR
Consumer Discretionary 18.14%
Consumer Staples 8.64
Energy 6.41
Financials 15.86
Health Care 13.56
Industrials 8.89
Information Technology 19.85
Materials 1.17
Telecommunication Services 5.25
Utilities 1.37
Repurchase Agreement 0.65
Cash & other assets, less liabilities 0.21
------
Total net assets 100.00%
======
AVERAGE ANNUAL RETURNS
SINCE
PERIODS ENDED 3-31-06 1 YEAR 5 YEARS 10 YEARS INCEPTION
- --------------------- ------ ------- -------- ---------
A Shares 25.48% 9.22% 11.53% --
A Shares with sales charge 18.27% 7.93% 10.87% --
B Shares 25.33% 8.74% 10.86% --
B Shares with CDSC 20.33% 8.45% 10.86% --
C Shares 24.58% 8.37% N/A 9.86%
(1-29-99)
C Shares with CDSC 23.58% 8.37% N/A 9.86%
(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 and/or reimbursements reduced
expenses of the Series and in the absence of such waivers, the performance
quoted would be reduced.
36 See accompanying notes.
SECURITY EQUITY FUND
Performance Summary GLOBAL SERIES
May 15, 2006 (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, 2005 - March 31, 2006.
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 mutual 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.
SERIES EXPENSES
BEGINNING ENDING EXPENSES PAID
ACCOUNT VALUE ACCOUNT VALUE DURING
10-01-05 03-31-06(1) PERIOD(2)
------------- ------------- -------------
Global Series - Class A
Actual $1,000.00 $1,119.10 $ 9.09
Hypothetical 1,000.00 1,016.36 8.65
Global Series - Class B
Actual 1,000.00 1,120.40 7.82
Hypothetical 1,000.00 1,017.55 7.44
Global Series - Class C
Actual 1,000.00 1,114.80 13.08
Hypothetical 1,000.00 1,012.57 12.44
(1) The actual ending account value is based on the actual total return of the
Series for the period October 1, 2005 to March 31, 2006 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, 2005 to March 31, 2006 was 11.91%, 12.04% and 11.48%, for
Class A, B and C shares, respectively.
(2) Expenses are equal to the Series annualized expense ratio (1.72%, 1.48% and
2.48% for Class A, B and C shares, respectively), net of any applicable fee
waivers, multiplied by the average account value over the period,
multiplied by 182/365 (to reflect the one-half year period).
37
SECURITY EQUITY FUND
Schedule of Investments GLOBAL SERIES
March 31, 2006 (unaudited)
NUMBER MARKET
OF SHARES VALUE
--------- -----------
COMMON STOCKS - 98.6%
AUSTRALIA - 0.3%
Macquarie Airports 173,602 $ 418,483
-----------
BERMUDA - 0.6%
Ace, Ltd. 17,740 922,657
-----------
BRAZIL - 1.5%
Companhia de Bebidas das Americas ADR 21,357 917,497
Empresa Brasileira de Aeronautica S.A. ADR 36,568 1,347,531
-----------
2,265,028
-----------
CANADA - 1.7%
Husky Energy, Inc. 30,080 1,819,791
Manulife Financial Corporation 12,673 795,020
-----------
2,614,811
-----------
CAYMAN ISLANDS - 0.3%
XL Capital, Ltd. 8,300 532,113
-----------
DENMARK - 0.3%
Novo Nordisk A/S (Cl.B) 6,300 391,685
-----------
FINLAND - 0.7%
Fortum Oyj 34,300 865,135
Neste Oil Oyj 5,325 183,016
-----------
1,048,151
-----------
FRANCE - 6.8%
European Aeronautic Defence & Space Company 39,810 1,676,896
JC Decaux S.A.* 18,760 507,494
LVMH Moet Hennessy Louis Vuitton S.A 18,350 1,798,431
Sanofi-Aventis 26,585 2,528,224
Societe Generale 10,880 1,635,724
Technip S.A 26,470 1,790,962
Total S.A 2,525 665,931
-----------
10,603,662
-----------
GERMANY - 4.2%
Allianz AG 10,437 1,742,092
Bayerische Motoren Werke (BMW) AG 24,869 1,369,309
SAP AG 7,918 1,717,125
Siemens AG 17,817 1,662,877
-----------
6,491,403
-----------
HONG KONG - 1.8%
HSBC Holdings plc 89,489 1,498,173
Hong Kong & China Gas Company, Ltd. 305,400 737,995
Hutchison Whampoa, Ltd. 55,082 505,089
-----------
2,741,257
-----------
INDIA - 3.1%
Hindustan Lever, Ltd. 216,100 1,319,028
ICICI Bank, Ltd. ADR 19,750 546,680
Infosys Technologies, Ltd. 27,087 1,812,223
Zee Telefilms, Ltd. 210,700 1,130,038
-----------
4,807,969
-----------
IRELAND - 0.4%
Anglo Irish Bank Corporation plc 39,413 $ 649,363
-----------
ITALY - 0.2%
Bulgari SpA 19,700 236,987
-----------
JAPAN - 11.1%
Canon, Inc. 8,000 529,369
Chugai Pharmaceutical Company, Ltd. 29,300 531,370
Credit Saison Company, Ltd. 18,200 1,006,430
Fanuc, Ltd. 4,800 461,958
Hoya Corporation 25,700 1,036,951
JGC Corporation 18,000 353,960
KDDI Corporation 288 1,538,773
Kao Corporation 21,000 552,984
Keyence Corporation 3,190 829,170
Kyocera Corporation 4,600 407,152
Murata Manufacturing Company, Ltd. 19,000 1,286,303
Nidec Corporation 6,300 516,951
Nintendo Company, Ltd. 4,100 612,954
Resona Holdings, Inc.* 238 818,773
Shionogi & Company, Ltd. 72,000 1,180,990
Shiseido Company, Ltd. 37,000 688,299
Sony Corporation 43,300 2,004,544
Square Enix Corporation, Ltd. 26,500 684,307
Takeda Pharmaceutical Company, Ltd. 12,800 729,565
Toyota Motor Corporation 25,400 1,387,318
-----------
17,158,121
-----------
KOREA - 2.4%
Hyundai Heavy Industries Company, Ltd. 9,049 789,663
SK Telecom Company, Ltd. ADR 60,160 1,419,174
Samsung Electronics Company, Ltd. 2,421 1,569,570
-----------
3,778,407
-----------
MEXICO - 1.9%
Fomento Economico Mexicano, S.A. de C.V 109,500 1,008,776
Grupo Modelo, S.A. de C.V. (Cl.C) 150,300 548,752
Grupo Televisa S.A. ADR 66,656 1,326,454
-----------
2,883,982
-----------
NETHERLANDS - 1.1%
Koninklijke (Royal) Philips
Electronics N.V 52,200 1,763,714
-----------
NORWAY - 0.3%
Tandberg ASA 53,600 484,470
-----------
PANAMA - 0.9%
Carnival Corporation 30,100 1,425,837
-----------
PORTUGAL - 0.3%
Energias de Portugal S.A 134,182 526,682
-----------
SINGAPORE - 0.4%
Singapore Press Holdings, Ltd. 223,848 623,262
-----------
38 See accompanying notes.
SECURITY EQUITY FUND
Schedule of Investments GLOBAL SERIES
March 31, 2006 (unaudited)
NUMBER MARKET
OF SHARES VALUE
--------- ------------
COMMON STOCKS (CONTINUED)
SPAIN - 0.7%
Industria de Diseno Textil S.A 29,200 $ 1,126,682
------------
SWEDEN - 4.7%
Hennes & Mauritz AB (Cl.B) 65,200 2,377,027
Investor AB (Cl.B)** 31,734 576,434
Telefonaktiebolaget LM Ericsson (Cl.B) 1,142,400 4,340,882
------------
7,294,343
------------
SWITZERLAND - 3.1%
Credit Suisse Group 32,917 1,846,037
Novartis AG 15,321 851,591
Roche Holding AG 11,835 1,761,163
Syngenta AG* 2,102 295,232
------------
4,754,023
------------
TAIWAN - 0.6%
Taiwan Semiconductor Manufacturing Company, Ltd. ADR 97,735 983,214
------------
UNITED KINGDOM - 11.2%
3i Group plc** 42,636 696,226
BP plc ADR 19,367 1,335,161
Burberry Group plc 59,971 482,100
Cadbury Schweppes plc 154,604 1,536,779
Diageo plc 10,030 157,864
Gus plc 26,090 478,358
Pearson plc 64,990 901,025
Prudential plc 114,339 1,325,137
Reckitt Benckiser plc 77,294 2,718,945
Royal Bank of Scotland Group plc 69,889 2,274,017
Smith & Nephew plc 102,102 905,879
Tesco plc 131,150 752,015
Vodafone Group plc 1,602,300 3,352,325
WPP Group plc 41,880 502,458
------------
17,418,289
------------
UNITED STATES - 38.0%
3M Company 20,500 1,551,645
Adobe Systems, Inc. 23,900 834,588
Advanced Micro Devices, Inc.* 89,300 2,961,188
Affymetrix, Inc.* 14,700 484,071
Altera Corporation* 33,600 693,504
Altria Group, Inc. 5,100 361,386
Amazon.com, Inc.* 10,900 397,959
American Express Company 16,900 888,095
Amgen, Inc.* 17,300 1,258,575
AtheroGenics, Inc.* 6,100 99,552
Automatic Data Processing, Inc. 20,800 950,144
Avon Products, Inc. 23,000 716,910
Berkshire Hathaway, Inc. (Cl.B)* 270 813,240
Biomet, Inc. 25,900 919,968
Boeing Company 12,800 997,504
Boston Scientific Corporation* 51,600 1,189,380
Burlington Resources, Inc. 13,300 1,222,403
Cendant Corporation 50,800 $ 881,380
Chevron Corporation 15,766 913,955
Cisco Systems, Inc.* 42,700 925,309
Citigroup, Inc. 7,866 371,590
Coach, Inc.* 22,700 784,966
Conor Medsystems, Inc.* 9,400 276,360
Corning, Inc.* 67,700 1,821,807
Cree, Inc.* 26,100 856,341
eBay, Inc.* 52,600 2,054,556
Emerson Electric Company 11,900 995,197
Everest Re Group, Ltd. 4,800 448,176
Express Scripts, Inc.* 8,200 720,780
First Data Corporation 4,700 220,054
Genentech, Inc.* 8,500 718,335
Gilead Sciences, Inc.* 20,600 1,281,732
GlobalSantaFe Corporation 25,000 1,518,750
Guidant Corporation 1,000 78,060
ImClone Systems, Inc.* 8,800 299,376
International Business Machines Corporation 12,867 1,061,141
International Game Technology 29,000 1,021,380
International Rectifier Corporation* 19,300 799,599
Intuit, Inc.* 24,000 1,276,560
JP Morgan Chase & Company 29,269 1,218,761
Johnson & Johnson 6,400 379,008
Juniper Networks, Inc.* 24,600 470,352
Lockheed Martin Corporation 10,100 758,813
Medtronic, Inc. 8,500 431,375
Microsoft Corporation 78,500 2,135,985
Morgan Stanley 26,600 1,671,012
Nektar Therapeutics*(1, 2) 10,308 168,062
Northern Trust Corporation 26,400 1,386,000
Northrop Grumman Corporation 11,200 764,848
Novell, Inc.* 102,400 786,432
Nuvelo, Inc.* 4,000 71,280
Pfizer, Inc. 24,938 621,455
Procter & Gamble Company 9,727 560,470
Qualcomm, Inc. 26,240 1,328,006
Quest Diagnostics, Inc. 20,800 1,067,040
Raytheon Company 22,200 1,017,648
Sirius Satellite Radio, Inc.* 262,100 1,331,468
Starbucks Corporation* 22,400 843,136
Theravance, Inc.* 12,800 358,912
Tiffany & Company 9,100 341,614
Transocean, Inc.* 24,900 1,999,470
Wal-Mart Stores, Inc. 33,000 1,558,920
Walt Disney Company 33,800 942,682
Wyeth 13,900 674,428
Yahoo!, Inc.* 11,200 361,312
------------
58,914,005
------------
TOTAL COMMON STOCKS
(cost $111,480,195) 152,858,600
------------
39 See accompanying notes.
SECURITY EQUITY FUND
Schedule of Investments GLOBAL SERIES
March 31, 2006 (unaudited)
PRINCIPAL
AMOUNT OR
NUMBER MARKET
OF SHARES VALUE
---------- ------------
PREFERRED STOCK - 0.5%
GERMANY - 0.5%
Porsche AG 870 $ 832,637
------------
TOTAL PREFERRED STOCK
(cost $363,292) 832,637
------------
REPURCHASE AGREEMENT - 0.7%
State Street Bank, 1.75%, dated 03-31-06, matures
04-03-06; repurchase amount of $1,000,240
(Collateralized by FNMA, 3.00%, 08-15-07 with a
value of $1,024,822) $1,000,094 1,000,094
------------
TOTAL REPURCHASE AGREEMENT
(cost $1,000,094) 1,000,094
------------
TOTAL INVESTMENTS - 99.8%
(cost $112,843,581) 154,691,331
CASH & OTHER ASSETS, LESS LIABILITIES - 0.2% 324,796
------------
TOTAL NET ASSETS - 100.0% $155,016,127
============
INVESTMENT CONCENTRATION
At March 31, 2006, Global Series' investment concentration by industry
was as follows:
Aerospace & Defense ................................................... 1.1%
Air Freight & Logistics ............................................... 3.1%
Automobiles ........................................................... 2.3%
Beverages ............................................................. 2.7%
Biotechnology ......................................................... 2.7%
Capital Markets ....................................................... 2.0%
Chemicals ............................................................. 0.2%
Commercial Banks ...................................................... 2.0%
Commercial Services & Supplies ........................................ 0.9%
Communications Equipment .............................................. 4.9%
Computers & Peripherals ............................................... 0.7%
Construction & Engineering ........................................... 0.2%
Consumer Finance ...................................................... 1.2%
Diversified Financial Services ........................................ 6.4%
Diversified Telecommunications ........................................ 2.2%
Electric Utilities .................................................... 0.3%
Electrical Equipment .................................................. 0.6%
Electronic Equipment & Instruments .................................... 2.0%
Energy Equipment & Services ........................................... 1.2%
Food & Staples Retailing .............................................. 1.5%
Gas Utilities ......................................................... 0.5%
Health Care Equipment & Services ...................................... 3.1%
Health Care Providers & Services ...................................... 1.1%
Hotels, Restaurants & Leisure Products ................................ 2.1%
Household Durables .................................................... 3.4%
Household Products .................................................... 3.0%
Industrial Conglomerates .............................................. 2.1%
Insurance ............................................................. 4.2%
Internet & Catalog Retail ............................................. 0.6%
Internet Software & Services .......................................... 2.1%
IT Services ........................................................... 1.9%
Leisure Equipment & Products .......................................... 0.4%
Machinery ............................................................. 0.8%
Media ................................................................. 4.6%
Multi-Utilities ....................................................... 0.6%
Oil, Gas & Consumable Fuels ........................................... 5.2%
Paper & Forest Products ............................................... 1.0%
Personal Products ..................................................... 1.3%
Pharmaceuticals ....................................................... 6.6%
Semiconductors & Semiconductor Equipment .............................. 4.1%
Software .............................................................. 4.3%
Specialty Retail ...................................................... 0.2%
Textiles, Apparel & Luxury Goods ...................................... 4.4%
Tobacco ............................................................... 0.2%
Wireless Telecommunications ........................................... 3.1%
Repurchase agreement .................................................. 0.7%
Cash & other assets, less liabilities ................................. 0.2%
-----
100.0%
=====
For federal income tax purposes the identified cost of investments owned at
March 31, 2006 was $114,244,819.
* 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
$168,062 (cost $116,996), or 0.1% of total net assets. The acquisition date
was August 5, 2004.
(2) Security is fair valued by the Board of Directors. The total market value
of fair valued securities amounts to $168,062, or 0.1% of total net assets.
40 See accompanying notes.
SECURITY EQUITY FUND
GLOBAL SERIES
(unaudited)
Statement of Assets and Liabilities
March 31, 2006
ASSETS:
Investments, at value(1) ....................................... $154,691,331
Cash denominated in a foreign currency, at value(2) ............ 348,289
Receivables:
Fund shares sold ............................................ 82,904
Securities sold ............................................. 213,519
Dividends ................................................... 239,593
Interest .................................................... 16,406
Foreign taxes recoverable ...................................... 14,556
Prepaid expenses ............................................... 34,210
------------
Total assets ................................................... 155,640,808
------------
LIABILITIES:
Cash overdraft ................................................. 48,141
Payable for:
Securities purchased ........................................ 81,801
Fund shares redeemed ........................................ 188,650
Management fees ............................................. 129,869
Custodian fees .............................................. 13,999
Transfer agent and administration fees ...................... 37,825
Professional fees ........................................... 9,731
12b-1 distribution plan fees ................................ 114,479
Director's fees ............................................. 186
------------
Total liabilities .............................................. 624,681
------------
NET ASSETS ..................................................... $155,016,127
============
NET ASSETS CONSIST OF:
Paid in capital ................................................ $102,664,192
Accumulated net investment loss ................................ (1,226,668)
Accumulated undistributed net realized gain on sale of
investments, foreign currency translations and options
purchased ................................................... 11,733,473
Net unrealized appreciation in value of investments and
translation of assets and liabilities in foreign currency ... 41,845,130
------------
Net assets ..................................................... $155,016,127
============
CLASS A:
Capital shares outstanding (unlimited number of shares
authorized) ................................................. 5,824,481
Net assets ..................................................... $113,889,099
Net asset value and redemption price per share ................. $ 19.55
============
Maximum offering price per share (net asset value divided by
94.25%) ..................................................... $ 20.74
============
CLASS B:
Capital shares outstanding (unlimited number of shares
authorized) ................................................. 1,712,119
Net assets ..................................................... $ 30,924,701
Net asset value, offering and redemption price per share
(excluding any applicable contingent deferred sales
charge) ..................................................... $ 18.06
============
CLASS C:
Capital shares outstanding (unlimited number of shares
authorized) ................................................. 555,910
Net assets ..................................................... $ 10,202,327
Net asset value, offering and redemption price per share
(excluding any applicable contingent deferred sales
charge) ..................................................... $ 18.35
============
(1) Investments, at cost ....................................... $112,843,581
(2) Cash denominated in a foreign currency, at cost ............ 350,935
Statement of Operations
For the Six Months Ended March 31, 2006
INVESTMENT INCOME:
Dividends (net of foreign withholding tax $69,058) ........... $ 900,053
Interest ..................................................... 31,523
-----------
Total investment income ...................................... 931,576
-----------
EXPENSES:
Management fees .............................................. 805,793
Transfer agent/maintenance fees .............................. 138,951
Administration fees .......................................... 125,818
Custodian fees ............................................... 63,516
Directors' fees .............................................. 1,624
Professional fees ............................................ 10,617
Reports to shareholders ...................................... 16,763
Registration fees ............................................ 20,331
Other expenses ............................................... 4,236
12b-1 distribution plan fees - Class A ....................... 152,815
12b-1 distribution plan fees - Class C ....................... 46,121
-----------
Total expenses ............................................... 1,386,585
Less: Earnings credits ....................................... (1,167)
-----------
Net expenses ................................................. 1,385,418
-----------
Net investment loss .......................................... (453,842)
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) during the period on:
Investments .................................................. 21,266,560
Foreign currency transactions ................................ (4,342,991)
Options purchased ............................................ 2,910
-----------
Net realized gain ............................................ 16,926,479
-----------
Net unrealized appreciation (depreciation) during the period on:
Investments .................................................. 2,022,423
Translation of assets and liabilities in foreign currencies .. (3,849)
-----------
Net unrealized appreciation .................................. 2,018,574
-----------
Net realized and unrealized gain ............................. 18,945,053
-----------
Net increase in net assets resulting from operations ......... $18,491,211
===========
41 See accompanying notes.
SECURITY EQUITY FUND
Statement of Changes in Net Assets GLOBAL SERIES
SIX MONTHS
ENDED
MARCH 31, YEAR ENDED
2006 SEPTEMBER 30,
(unaudited) 2005
------------ -------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment loss .......................................... $ (453,842) $ (466,732)
Net realized gain during the period on investments, options
purchased and foreign currency transactions ............... 16,926,479 13,103,309
Net unrealized appreciation during the period on
investments and translation of assets and liabilities in
foreign currencies ........................................ 2,018,574 20,726,759
------------ ------------
Net increase in net assets resulting from operations ......... 18,491,211 33,363,336
------------ ------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from sale of shares
Class A ................................................... 17,954,846 31,692,774
Class B ................................................... 2,646,258 3,283,116
Class C ................................................... 1,356,306 1,610,608
Cost of shares redeemed
Class A ................................................... (46,088,862) (27,395,260)
Class B ................................................... (4,142,214) (8,996,589)
Class C ................................................... (1,011,427) (2,115,442)
------------ ------------
Net decrease from capital share transactions ................. (29,285,093) (1,920,793)
------------ ------------
Net increase (decrease) in net assets ........................ (10,793,882) 31,442,543
------------ ------------
NET ASSETS:
Beginning of period .......................................... 165,810,009 134,367,466
------------ ------------
End of period ................................................ $155,016,127 $165,810,009
============ ============
Accumulated net investment loss at end of period ............. $ (1,226,668) $ (772,826)
============ ============
CAPITAL SHARE ACTIVITY:
Shares sold
Class A ................................................... 984,848 2,004,496
Class B ................................................... 158,224 225,028
Class C ................................................... 78,237 107,909
Shares redeemed
Class A ................................................... (2,485,223) (1,748,721)
Class B ................................................... (245,293) (618,877)
Class C ................................................... (59,513) (142,443)
42 See accompanying notes.
Financial Highlights
Selected data for each share of capital stock SECURITY EQUITY FUND
outstanding throughout each period GLOBAL SERIES
SIX YEAR ENDED
MONTHS ENDED SEPTEMBER 30,
MARCH 31, ------------------------------------------------------
CLASS A 2006(j) 2005 2004(h) 2003 2002(e, g) 2001
- ------- ------------ -------- ------- ------- ---------- -------
PER SHARE DATA
Net asset value, beginning of period $ 17.47 $ 13.93 $ 11.68 $ 9.49 $ 11.04 $ 18.86
-------- -------- ------- ------- ------- -------
Income (loss) from investment operations:
Net investment loss(c) (0.05) (0.02) (0.03) (0.03) (0.05) (0.08)
Net gain (loss) on securities
(realized and unrealized) 2.13 3.56 2.28 2.22 (1.50) (4.33)
-------- -------- ------- ------- ------- -------
Total from investment operations 2.08 3.54 2.25 2.19 (1.55) (4.41)
-------- -------- ------- ------- ------- -------
Less distributions:
Distributions from realized gains -- -- -- -- -- (3.41)
Total distributions -- -- -- -- -- (3.41)
-------- -------- ------- ------- ------- -------
Net asset value, end of period $ 19.55 $ 17.47 $ 13.93 $ 11.68 $ 9.49 $ 11.04
======== ======== ======= ======= ======= =======
TOTAL RETURN(a) 11.91% 25.41% 19.26% 23.08% (14.04%) (27.60%)
-------- -------- ------- ------- ------- -------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $113,889 $127,970 $98,450 $42,711 $50,893 $48,089
-------- -------- ------- ------- ------- -------
Ratios to average net assets:
Net investment loss (0.57%) (0.14%) (0.20%) (0.26%) (0.46%) (0.57%)
Total expenses(b) 1.72% 1.73% 1.79% 2.00% 1.85% 1.90%
Net expenses(d) 1.72% 1.73% 1.79% 2.00% 1.85% 1.90%
Expenses prior to custodian earnings
credits and net of expense waivers 1.72% 1.73% 1.79% 2.00% 1.85% 1.90%
-------- -------- ------- ------- ------- -------
Portfolio turnover rate 28% 31% 25% 62% 36% 38%
SIX MONTHS YEAR ENDED
ENDED SEPTEMBER 30,
MARCH 31, -----------------------------------------------------
CLASS B 2006(j) 2005(i) 2004(h) 2003 2002(e, g) 2001
- ------- ------------ ------- ------- ------- ---------- -------
PER SHARE DATA
Net asset value, beginning of period $ 16.12 $ 12.93 $ 10.93 $ 8.89 $ 10.38 $ 18.00
------- ------- ------- ------- ------- -------
Income (loss) from investment operations:
Net investment loss(c) (0.03) (0.12) (0.13) (0.04) (0.10) (0.14)
Net gain (loss) on securities
(realized and unrealized) 1.97 3.31 2.13 2.08 (1.39) (4.07)
------- ------- ------- ------- ------- -------
Total from investment operations 1.94 3.19 2.00 2.04 (1.49) (4.21)
------- ------- ------- ------- ------- -------
Less distributions:
Distributions from realized gains -- -- -- -- -- (3.41)
------- ------- ------- ------- ------- -------
Total distributions -- -- -- -- -- (3.41)
------- ------- ------- ------- ------- -------
Net asset value, end of period $ 18.06 $ 16.12 $ 12.93 $ 10.93 $ 8.89 $ 10.38
======= ======= ======= ======= ======= =======
TOTAL RETURN(a) 12.04% 24.67% 18.30% 22.95% (14.35%) (27.86%)
------- ------- ------- ------- ------- -------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $30,925 $28,999 $28,360 $16,461 $19,021 $23,533
------- ------- ------- ------- ------- -------
Ratios to average net assets:
Net investment loss (0.30%) (0.80%) (1.00%) (0.42%) (0.89%) (1.07%)
Total expenses(b) 1.48% 2.38% 2.54% 2.18% 2.28% 2.39%
Net expenses(d) 1.48% 2.38% 2.54% 2.18% 2.28% 2.39%
Expenses prior to custodian earnings
credits and net of expense waivers 1.48% 2.38% 2.54% 2.18% 2.28% 2.39%
------- ------- ------- ------- ------- -------
Portfolio turnover rate 28% 31% 25% 62% 36% 38%
43 See accompanying notes.
Financial Highlights
Selected data for each share of capital stock SECURITY EQUITY FUND
outstanding throughout each period GLOBAL SERIES
SIX YEAR ENDED
MONTHS ENDED SEPTEMBER 30,
MARCH 31, -----------------------------------------------------
CLASS C 2006(j) 2005 2004(h) 2003 2002(e, f, g) 2001
- ------- ------------ ------ ------- ------ -------------- -------
PER SHARE DATA
Net asset value, beginning of period $ 16.46 $13.22 $11.17 $ 9.14 $ 10.72 $ 18.55
------- ------ ------ ------ ------- -------
Income (loss) from investment operations:
Net investment loss(c) (0.11) (0.13) (0.13) (0.09) (0.15) (0.21)
Net gain (loss) on securities
(realized and unrealized) 2.00 3.37 2.18 2.12 (1.43) (4.21)
------- ------ ------ ------ ------- -------
Total from investment operations 1.89 3.24 2.05 2.03 (1.58) (4.42)
------- ------ ------ ------ ------- -------
Less distributions:
Distributions from realized gains -- -- -- -- -- (3.41)
------- ------ ------ ------ ------- -------
Total distributions -- -- -- -- -- (3.41)
------- ------ ------ ------ ------- -------
Net asset value, end of period $ 18.35 $16.46 $13.22 $11.17 $ 9.14 $ 10.72
======= ====== ====== ====== ======= =======
TOTAL RETURN(a) 11.48% 24.51% 18.35% 22.21% (14.74%) (28.20%)
------- ------ ------ ------ ------- -------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $10,202 $8,841 $7,557 $5,326 $ 4,076 $ 3,569
------- ------ ------ ------ ------- -------
Ratios to average net assets:
Net investment loss (1.29%) (0.90%) (1.02%) (0.96%) (1.33%) (1.57%)
Total expenses(b) 2.48% 2.48% 2.54% 2.77% 2.74% 2.91%
Net expenses(d) 2.48% 2.48% 2.54% 2.77% 2.74% 2.91%
Expenses prior to custodian earnings
credits and net of expense waivers 2.48% 2.48% 2.54% 2.77% 2.74% 2.91%
------- ------ ------ ------ ------- -------
Portfolio turnover rate 28% 31% 25% 62% 36% 38%
(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) Total expense information reflects expense ratios absent fund expense
reductions by the Investment Manager.
(c) Net investment loss was computed using average shares outstanding
throughout the period.
(d) Net expense information reflects expense ratios after voluntary expense
waivers, reimbursements and custodian earnings credits, as applicable.
(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) Effective August 25, 2005, Class B shares ceased charging 12b-1 fees in
accordance with the NASD sales cap regulations. Per share information
reflects this change. This fee may be reinstated at any time.
(j) Unaudited figures for the six months ended March 31, 2006. Percentage
amounts for the period, except total return, have been annualized.
44 See accompanying notes.
SECURITY EQUITY FUND
Large Cap Growth Series
(SECUIRTY BENEFIT(SM) (LOGO)
Security Management Company, LLC
ADVISER,
SECURITY MANAGEMENT COMPANY, LLC
45
SECURITY EQUITY FUND
Performance Summary LARGE CAP GROWTH SERIES
May 15, 2006 (unaudited)
PERFORMANCE
LARGE CAP GROWTH SERIES VS.
RUSSELL 1000 GROWTH INDEX
(PERFORMANCE GRAPH)
LARGE CAP GROWTH SERIES
5/1/00 9,425.00
6/30/00 9,641.78
9/30/00 9,151.68
12/31/00 7,558.85
3/31/01 6,314.75
6/30/01 6,767.15
9/30/01 5,655.00
12/31/01 6,380.73
3/31/02 6,163.95
6/30/02 5,023.53
9/30/02 4,335.50
12/31/02 4,646.53
3/31/03 4,618.25
6/30/03 5,221.45
9/30/03 5,296.85
12/31/03 5,739.83
3/31/04 5,739.83
6/30/04 5,824.65
9/30/04 5,523.05
12/31/04 5,890.63
3/31/05 5,541.90
6/30/05 5,655.00
9/30/05 5,805.80
12/31/05 6,022.58
3/31/06 6,239.35
RUSSELL 1000 GROWTH INDEX
INCEPTION 5/01/00 10,000.00
06/30/00 10,215.80
09/30/00 9,665.85
12/31/00 7,603.20
3/31/2001 6,014.12
6/30/2001 6,520.45
9/30/2001 5,254.83
12/31/2001 6,050.69
3/31/2002 5,894.05
6/30/2002 4,793.50
9/30/2002 4,072.29
12/31/2002 4,363.25
3/31/2003 4,316.46
6/30/2003 4,933.91
9/30/2003 5,127.23
12/31/2003 5,661.58
3/31/2004 5,705.90
6/30/2004 5,816.42
9/30/2004 5,512.78
12/31/2004 6,018.40
3/31/2005 5,772.65
6/30/2005 5,915.09
9/30/2005 6,152.47
12/31/2005 6,335.69
3/31/2006 6,532.15
$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. The Russell 1000 Growth Index is an unmanaged
capitalization-weighted index which includes stocks incorporated in the United
States and its territories and measures the performance of those Russell 1000
companies with higher price-to-book ratios and higher forecasted growth values.
PORTFOLIO COMPOSITION BY SECTOR
Consumer Discretionary 13.51%
Consumer Staples 8.43
Energy 5.89
Financials 10.67
Health Care 16.13
Industrials 23.75
Information Technology 19.04
Exchange Traded Funds 1.93
Cash & other assets, less liabilities 0.65
------
Total net assets 100.00%
======
AVERAGE ANNUAL RETURNS
PERIODS ENDED 3-31-06 1 YEAR 5 YEARS SINCE INCEPTION
- --------------------- ------ ------- ---------------
A Shares 12.59% (0.24%) (6.73%) (5-1-00)
A Shares with sales charge 6.09% (1.42%) (7.66%) (5-1-00)
B Shares 11.88% (0.98%) (7.49%) (5-1-00)
B Shares with CDSC 6.88% (1.38%) (7.49%) (5-1-00)
C Shares 11.82% (0.95%) (7.41%) (5-1-00)
C Shares with CDSC 10.82% (0.95%) (7.41%) (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 and/or reimbursements reduced
expenses of the Series and in the absence of such waiver, the performance quoted
would be reduced.
46 See accompanying notes.
SECURITY EQUITY FUND
Performance Summary LARGE CAP GROWTH SERIES
May 15, 2006 (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, 2005 - March 31, 2006.
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 mutual 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.
SERIES EXPENSES
BEGINNING ENDING EXPENSES PAID
ACCOUNT VALUE ACCOUNT VALUE DURING
10-01-05 03-31-06(1) PERIOD(2)
------------- ------------- -------------
Large Cap Growth
Series - Class A
Actual $1,000.00 $1,074.70 $ 9.62
Hypothetical 1,000.00 1,015.66 9.35
Large Cap Growth
Series - Class B
Actual 1,000.00 1,069.50 13.47
Hypothetical 1,000.00 1,011.92 13.09
Large Cap Growth
Series - Class C
Actual 1,000.00 1,071.00 13.48
Hypothetical 1,000.00 1,011.92 13.09
(1) The actual ending account value is based on the actual total return of the
Series for the period October 1, 2005 to March 31, 2006 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, 2005 to March 31, 2006 was 7.47%, 6.95% and 7.10%, for
Class A, B and C shares, respectively.
(2) Expenses are equal to the Series annualized expense ratio (1.86%, 2.61% and
2.61% for Class A, B and C 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).
47
SECURITY EQUITY FUND
Schedule of Investments LARGE CAP GROWTH SERIES
March 31, 2006 (unaudited)
NUMBER MARKET
OF SHARES VALUE
--------- -----------
COMMON STOCKS - 99.3%
AEROSPACE & DEFENSE - 6.3%
General Dynamics Corporation 7,200 $ 460,656
United Technologies Corporation 9,200 533,324
-----------
993,980
-----------
AIR FREIGHT & LOGISTICS - 3.8%
FedEx Corporation 5,400 609,876
-----------
BIOTECHNOLOGY - 3.4%
Amgen, Inc.* 7,400 538,350
-----------
BROADCASTING & CABLE TV - 3.3%
CBS Corporation (Cl.B)* 7,100 170,258
Univision Communications, Inc.* 10,100 348,147
-----------
518,405
-----------
COMMUNICATIONS EQUIPMENT - 6.6%
3Com Corporation* 35,000 179,200
ADC Telecommunications, Inc.* 14,157 362,281
Cisco Systems, Inc.* 23,600 511,412
-----------
1,052,893
-----------
CONSUMER FINANCE - 2.3%
American Express Company 6,800 357,340
-----------
DATA PROCESSING & OUTSOURCED SERVICES - 3.8%
First Data Corporation 12,800 599,296
-----------
DRUG RETAIL - 3.9%
CVS Corporation 20,600 615,322
-----------
ELECTRICAL COMPONENTS & EQUIPMENT - 2.8%
Power-One, Inc.* 61,100 439,920
-----------
EXCHANGE TRADED FUNDS - 1.9%
iShares Russell 1000 Growth Index Fund 5,800 305,428
-----------
GENERAL MERCHANDISE STORES - 0.8%
Target Corporation 2,500 130,025
-----------
HEALTH CARE EQUIPMENT - 6.8%
Medtronic, Inc. 10,300 522,725
Zimmer Holdings, Inc.* 8,200 554,320
-----------
1,077,045
-----------
HEALTH CARE SERVICES - 3.3%
Covance, Inc.* 8,900 522,875
-----------
HOME IMPROVEMENT RETAIL - 3.9%
Home Depot, Inc. 14,700 621,810
-----------
HOTELS, RESORTS & CRUISE LINES - 3.8%
Carnival Corporation 12,600 596,862
-----------
HYPERMARKETS & SUPERCENTERS - 3.1%
Wal-Mart Stores, Inc. 10,500 496,020
-----------
INDUSTRIAL CONGLOMERATES - 4.3%
General Electric Company 19,600 681,688
-----------
MOVIES & ENTERTAINMENT - 1.7%
Viacom, Inc. (Cl.B)* 7,100 $ 275,480
-----------
MULTI-LINE INSURANCE - 4.3%
American International Group, Inc. 10,400 687,336
-----------
OIL & GAS EQUIPMENT & SERVICES - 2.9%
BJ Services Company 13,200 456,720
-----------
OIL & GAS STORAGE & TRANSPORTATION - 3.0%
Williams Companies, Inc. 22,300 476,997
-----------
OTHER DIVERSIFIED FINANCIAL SERVICES - 4.1%
Citigroup, Inc. 6,400 302,336
First Marblehead Corporation 8,000 346,000
-----------
648,336
-----------
PHARMACEUTICALS - 2.7%
Johnson & Johnson 7,100 420,462
-----------
SEMICONDUCTORS - 4.4%
Analog Devices, Inc. 6,700 256,543
Applied Micro Circuits Corporation* 47,200 192,104
Intel Corporation 12,900 249,615
-----------
698,262
-----------
SOFT DRINKS - 1.4%
PepsiCo, Inc. 3,900 225,381
-----------
SYSTEMS SOFTWARE - 4.2%
Microsoft Corporation 24,600 669,366
-----------
TRADING COMPANIES & DISTRIBUTORS - 3.1%
W.W. Grainger, Inc. 6,600 497,310
-----------
TRUCKING - 3.4%
J.B. Hunt Transport Services, Inc. 25,300 544,962
-----------
TOTAL COMMON STOCKS
(cost $13,946,487) 15,757,747
-----------
TOTAL INVESTMENTS - 99.3%
(cost $13,946,487) 15,757,747
CASH & OTHER ASSETS, LESS LIABILITIES - 0.7% 103,434
-----------
TOTAL NET ASSETS - 100.0% $15,861,181
===========
For federal income tax purposes the identified cost of investments owned at
March 31, 2006 was $14,022,639.
* Non-income producing security
48 See accompanying notes.
SECURITY EQUITY FUND
LARGE CAP GROWTH SERIES
(unaudited)
Statement of Assets and Liabilities
March 31, 2006
ASSETS:
Investments, at value(1) ........................................ $15,757,747
Cash ............................................................ 87,695
Receivables:
Fund shares sold ............................................. 58,813
Dividends .................................................... 9,655
Prepaid expenses ................................................ 16,530
-----------
Total assets .................................................... 15,930,440
-----------
LIABILITIES:
Payable for:
Fund shares redeemed ......................................... 7,425
Management fees .............................................. 13,470
Custodian fees ............................................... 21
Transfer agent and administration fees ....................... 5,118
Professional fees ............................................ 6,262
12b-1 distribution plan fees ................................. 36,866
Director's fees .............................................. 97
-----------
Total liabilities ............................................... 69,259
-----------
NET ASSETS ...................................................... $15,861,181
===========
NET ASSETS CONSIST OF:
Paid in capital ................................................. $16,182,815
Accumulated net investment loss ................................. (86,057)
Accumulated net realized loss on sale of investments ............ (2,046,837)
Net unrealized appreciation in value of investments ............. 1,811,260
-----------
Net assets ...................................................... $15,861,181
===========
CLASS A:
Capital shares outstanding (unlimited number of shares
authorized) .................................................. 1,387,563
Net assets ...................................................... $ 9,187,415
Net asset value and redemption price per share .................. $ 6.62
===========
Maximum offering price per share (net asset value divided
by 94.25%) ................................................... $ 7.02
===========
CLASS B:
Capital shares outstanding (unlimited number of shares
authorized) .................................................. 433,647
Net assets ...................................................... $ 2,736,507
Net asset value, offering and redemption price per share
(excluding any applicable contingent deferred sales
charge) ...................................................... $ 6.31
===========
CLASS C:
Capital shares outstanding (unlimited number of shares
authorized) .................................................. 621,170
Net assets ...................................................... $ 3,937,259
Net asset value, offering and redemption price per share
(excluding any applicable contingent deferred sales
charge) ...................................................... $ 6.34
===========
(1) Investments, at cost ........................................ $13,946,487
Statement of Operations
For the Six Months Ended March 31, 2006
INVESTMENT INCOME:
Dividends ..................................................... $ 76,662
Interest ...................................................... 11,954
----------
Total investment income ....................................... 88,616
----------
EXPENSES:
Management fees ............................................... 80,121
Transfer agent/maintenance fees ............................... 29,431
Administration fees ........................................... 12,906
Custodian fees ................................................ 1,602
Directors' fees ............................................... 223
Professional fees ............................................. 8,019
Reports to shareholders ....................................... 1,708
Registration fees ............................................. 16,206
Other expenses ................................................ 837
12b-1 distribution plan fees - Class A ........................ 11,631
12b-1 distribution plan fees - Class B ........................ 13,960
12b-1 distribution plan fees - Class C ........................ 19,639
----------
Total expenses ................................................ 196,283
Less: Expenses waived ......................................... (20,030)
Earnings credits ........................................ (1,580)
----------
Net expenses .................................................. 174,673
----------
Net investment loss ........................................... (86,057)
----------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain during the period on:
Investments ................................................... 341,685
----------
Net realized gain ............................................. 341,685
----------
Net unrealized appreciation during the period on:
Investments ................................................... 873,217
----------
Net unrealized appreciation ................................... 873,217
----------
Net realized and unrealized gain .............................. 1,214,902
----------
Net increase in net assets resulting from operations .......... $1,128,845
==========
49 See accompanying notes.
SECURITY EQUITY FUND
Statement of Changes in Net Assets LARGE CAP GROWTH SERIES
SIX MONTHS
ENDED
MARCH 31, YEAR ENDED
2006 SEPTEMBER 30,
(unaudited) 2005
----------- -------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment loss ........................................... $ (86,057) $ (152,601)
Net realized gain during the period on investments ............ 341,685 292,724
Net change in unrealized appreciation during the period on
investments ................................................ 873,217 499,904
----------- -----------
Net increase in net assets resulting from operations .......... 1,128,845 640,027
----------- -----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from sale of shares
Class A .................................................... 3,146,368 5,885,757
Class B .................................................... 304,009 943,562
Class C .................................................... 1,356,775 935,616
Cost of shares redeemed
Class A .................................................... (2,885,574) (9,484,442)
Class B .................................................... (409,383) (1,955,914)
Class C .................................................... (840,981) (1,005,819)
----------- -----------
Net increase (decrease) from capital share transactions ....... 671,214 (4,681,240)
----------- -----------
Net increase (decrease) in net assets ......................... 1,800,059 (4,041,213)
----------- -----------
NET ASSETS:
Beginning of period ........................................... 14,061,122 18,102,335
----------- -----------
End of period ................................................. $15,861,181 $14,061,122
=========== ===========
Accumulated net investment loss at end of period .............. $ (86,057) $ --
=========== ===========
CAPITAL SHARE ACTIVITY:
Shares sold
Class A .................................................... 494,723 973,824
Class B .................................................... 49,820 162,302
Class C .................................................... 224,704 160,117
Shares redeemed
Class A .................................................... (447,649) (1,588,369)
Class B .................................................... (66,288) (342,470)
Class C .................................................... (134,957) (173,001)
50 See accompanying notes.
Financial Highlights
Selected data for each share of capital SECURITY EQUITY FUND
stock outstanding throughout each period LARGE CAP GROWTH SERIES
SIX MONTHS YEAR ENDED SEPTEMBER 30,
ENDED MARCH 31, --------------------------------------------------
CLASS A 2006(f) 2005 2004 2003 2002 2001
- ------- --------------- ------ ------- ------- ------- -------
PER SHARE DATA
Net asset value, beginning of period $ 6.16 $ 5.86 $ 5.62 $ 4.60 $ 6.00 $ 9.71
------ ------ ------- ------- ------- -------
Income (loss) from investment operations:
Net investment loss(c) (0.02) (0.05) (0.05) (0.04) (0.05) (0.08)
Net gain (loss) on securities (realized
and unrealized) 0.48 0.35 0.29 1.06 (1.35) (3.63)
------ ------ ------- ------- ------- -------
Total from investment operations 0.46 0.30 0.24 1.02 (1.40) (3.71)
------ ------ ------- ------- ------- -------
Net asset value, end of period $ 6.62 $ 6.16 $ 5.86 $ 5.62 $ 4.60 $ 6.00
====== ====== ======= ======= ======= =======
TOTAL RETURN(a) 7.47% 5.12% 4.27% 22.17% (23.33%) (38.21%)
------ ------ ------- ------- ------- -------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $9,187 $8,261 $11,455 $16,179 $ 9,243 $ 2,436
------ ------ ------- ------- ------- -------
Ratios to average net assets:
Net investment loss (0.76%) (0.76%) (0.81%) (0.71%) (1.00%) (1.10%)
Total expenses(b) 2.13% 2.57% 2.00% 1.83% 1.99% 2.15%
Net expenses(d) 1.86% 2.25% 1.83% 1.83% 1.99% 1.99%
Expenses prior to custodian earnings
credits and net of expense waivers 1.88% 2.26% 1.84% 1.83% 1.99% 2.00%
------ ------ ------- ------- ------- -------
Portfolio turnover rate 34% 59% 44% 39% 12% 6%
SIX MONTHS YEAR ENDED SEPTEMBER 30,
ENDED MARCH 31, ------------------------------------------------
CLASS B 2006(f) 2005 2004 2003 2002 2001
- ------- --------------- ------ ------ ------ ------- -------
PER SHARE DATA
Net asset value, beginning of period $ 5.89 $ 5.65 $ 5.45 $ 4.50 $ 5.92 $ 9.65
------ ------ ------ ------ ------- -------
Income (loss) from investment operations:
Net investment loss(c) (0.05) (0.09) (0.09) (0.07) (0.11) (0.14)
Net gain (loss) on securities (realized
and unrealized) 0.47 0.33 0.29 1.02 (1.31) (3.59)
------ ------ ------ ------ ------- -------
Total from investment operations 0.42 0.24 0.20 0.95 (1.42) (3.73)
------ ------ ------ ------ ------- -------
Net asset value, end of period $ 6.31 $ 5.89 $ 5.65 $ 5.45 $ 4.50 $ 5.92
====== ====== ====== ====== ======= =======
TOTAL RETURN(a) 6.95% 4.25% 3.67% 21.11% (23.99%) (38.65%)
------ ------ ------ ------ ------- -------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $2,737 $2,653 $3,559 $6,557 $ 1,949 $ 1,955
------ ------ ------ ------ ------- -------
Ratios to average net assets:
Net investment loss (1.51%) (1.45%) (1.55%) (1.49%) (1.88%) (1.85%)
Total expenses(b) 2.88% 3.32% 2.72% 2.59% 2.82% 2.92%
Net expenses(d) 2.61% 3.00% 2.56% 2.59% 2.82% 2.75%
Expenses prior to custodian earnings
credits and net of expense waivers 2.63% 3.01% 2.56% 2.59% 2.82% 2.75%
------ ------ ------ ------ ------- -------
Portfolio turnover rate 34% 59% 44% 39% 12% 6%
51 See accompanying notes.
Financial Highlights
Selected data for each share of capital SECURITY EQUITY FUND
stock outstanding throughout each period LARGE CAP GROWTH SERIES
SIX MONTHS YEAR ENDED SEPTEMBER 30,
ENDED MARCH 31, ------------------------------------------------
CLASS C 2006(f) 2005 2004 2003 2002(e) 2001
- ------- --------------- ------ ------- ------- ------- -------
PER SHARE DATA
Net asset value, beginning of period $ 5.92 $ 5.67 $ 5.48 $ 4.52 $ 5.93 $ 9.65
------ ------ ------ ------ ------- -------
Income (loss) from investment operations:
Net investment loss(c) (0.05) (0.09) (0.09) (0.07) (0.11) (0.13)
Net gain (loss) on securities (realized
and unrealized) 0.47 0.34 0.28 1.03 (1.30) (3.59)
------ ------ ------ ------ ------- -------
Total from investment operations 0.42 0.25 0.19 0.96 (1.41) (3.72)
------ ------ ------ ------ ------- -------
Net asset value, end of period $ 6.34 $ 5.92 $ 5.67 $ 5.48 $ 4.52 $ 5.93
====== ====== ====== ====== ======= =======
TOTAL RETURN(a) 7.10% 4.41% 3.47% 21.24% (23.78%) (38.55%)
------ ------ ------ ------ ------- -------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $3,937 $3,147 $3,088 $3,432 $ 2,547 $ 2,577
------ ------ ------ ------ ------- -------
Ratios to average net assets:
Net investment loss (1.51%) (1.52%) (1.58%) (1.44%) (1.88%) (1.85%)
Total expenses(b) 2.88% 3.32% 2.77% 2.58% 2.82% 2.92%
Net expenses(d) 2.61% 3.00% 2.61% 2.58% 2.82% 2.75%
Expenses prior to custodian earnings
credits and net of expense waivers 2.63% 3.01% 2.61% 2.58% 2.82% 2.75%
------ ------ ------ ------ ------- -------
Portfolio turnover rate 34% 59% 44% 39% 12% 6%
(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) Total expense information reflects expense ratios absent fund expense
reductions by the Investment Manager.
(c) Net investment loss was computed using average shares outstanding
throughout the period.
(d) Net expense information reflects the expense ratios after voluntary expense
waivers, reimbursements and custodian earnings credits, as applicable.
(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, 2006. Percentage
amounts for the period, except total return, have been annualized.
52 See accompanying notes.
SECURITY EQUITY FUND
Mid Cap Value Series
(SECURITY BENEFIT(SM) LOGO)
Security Management Company, LLC
ADVISER,
SECURITY MANAGEMENT COMPANY, LLC
53
SECURITY EQUITY FUND
Performance Summary MID CAP VALUE SERIES
May 15, 2006 (unaudited)
PERFORMANCE
MID CAP VALUE SERIES VS.
RUSSELL 2500 VALUE INDEX
(PERFORMANCE GRAPH)
MID CAP VALUE SERIES
5/1/97 9,425.00
6/30/97 10,386.35
9/30/97 12,205.38
12/31/97 12,202.14
3/31/98 13,982.63
6/30/98 13,914.89
9/30/98 11,679.61
12/31/98 14,172.02
3/31/99 13,968.04
6/30/99 16,872.38
9/30/99 16,124.44
12/31/99 17,264.05
3/31/00 19,149.61
6/30/00 18,997.55
9/30/00 21,035.18
12/31/00 21,872.54
3/31/01 22,618.32
6/30/01 24,688.70
9/30/01 20,080.44
12/31/01 24,341.98
3/31/02 26,771.65
6/30/02 24,635.80
9/30/02 19,098.39
12/31/02 20,725.71
3/31/03 20,228.48
6/30/03 25,731.98
9/30/03 27,664.42
12/31/03 31,467.96
3/31/04 33,864.00
6/30/04 34,753.95
9/30/04 34,742.54
12/31/04 39,907.19
3/31/05 39,821.68
6/30/05 40,921.05
9/30/05 44,390.18
12/31/05 46,184.87
3/31/06 51,316.52
RUSSELL 2500 VALUE INDEX
INCEPTION 5/01/97 10,000.00
6/30/1997 11,200.83
9/30/1997 12,594.49
12/31/1997 12,952.70
3/31/1998 14,188.46
6/30/1998 13,681.09
9/30/1998 11,427.77
12/31/1998 12,705.04
3/31/1999 11,687.40
6/30/1999 13,558.89
9/30/1999 12,386.34
12/31/1999 12,892.04
3/31/2000 13,494.60
6/30/2000 13,413.75
9/30/2000 14,336.43
12/31/2000 15,571.76
3/31/2001 15,264.14
6/30/2001 16,787.57
9/30/2001 14,698.15
12/31/2001 17,088.66
3/31/2002 18,542.23
6/30/2002 17,895.20
9/30/2002 14,608.72
12/31/2002 15,401.82
3/31/2003 14,666.86
6/30/2003 17,788.08
9/30/2003 19,169.13
12/31/2003 22,319.49
3/31/2004 23,698.49
6/30/2004 23,817.52
9/30/2004 23,877.08
12/31/2004 27,134.02
3/31/2005 26,556.13
6/30/2005 27,969.20
9/30/2005 28,963.85
12/31/2005 29,232.64
3/31/2006 32,291.66
$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 Russell 2500 Value Index is an unmanaged index
that measures the performance of securities of small-to-mid cap U.S. companies
with greater-than-average value orientation.
AVERAGE ANNUAL RETURNS
PERIODS ENDED 3-31-06 1 YEAR 5 YEARS SINCE INCEPTION
- --------------------- ------ ------- -----------------
A Shares 28.87% 17.80% 20.93% (5-1-97)
A Shares with sales charge 21.45% 16.42% 20.13% (5-1-97)
B Shares 27.93% 16.85% 19.85% (5-1-97)
B Shares with CDSC 22.93% 16.63% 19.85% (5-1-97)
C Shares 27.91% 16.87% 18.69% (1-29-99)
C Shares with CDSC 26.91% 16.87% 18.69% (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 4.44%
Consumer Staples 8.15
Energy 9.24
Financials 14.40
Health Care 3.02
Industrials 23.82
Information Technology 14.51
Materials 6.01
Telecommunication Services 0.73
Utilities 6.48
Exchange Traded Funds 2.57
Convertible Bond 0.34
Commercial Paper 2.04
Asset Backed Commercial Paper 2.17
Warrants 0.05
Repurchase Agreement 2.40
Liabilities, less cash &
other assets (0.37)
------
Total net assets 100.00%
======
54 See accompanying notes.
SECURITY EQUITY FUND
Performance Summary MID CAP VALUE SERIES
May 15, 2006 (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, 2005 - March 31, 2006.
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 mutual 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.
SERIES EXPENSES
BEGINNING ENDING EXPENSES PAID
ACCOUNT VALUE ACCOUNT VALUE DURING
10-01-05 03-31-06(1) PERIOD(2)
------------- ------------- -------------
Mid Cap Value
Series - Class A
Actual $1,000.00 $1,156.00 $ 7.31
Hypothetical 1,000.00 1,018.15 6.84
Mid Cap Value
Series - Class B
Actual 1,000.00 1,151.80 11.32
Hypothetical 1,000.00 1,014.41 10.60
Mid Cap Value
Series - Class C
Actual 1,000.00 1,152.10 11.32
Hypothetical 1,000.00 1,014.41 10.60
(1) The actual ending account value is based on the actual total return of the
Series for the period October 1, 2005 to March 31, 2006 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, 2005 to March 31, 2006 was 15.60%, 15.18% and 15.21%, for
Class A, B and C shares, respectively.
(2) Expenses are equal to the Series annualized expense ratio (1.36%, 2.11% and
2.11% for Class A, B and C shares, respectively) multiplied by the average
account value over the period, multiplied by 182/365 (to reflect the
one-half year period).
55
SECURITY EQUITY FUND
Schedule of Investments MID CAP VALUE SERIES
March 31, 2006 (unaudited)
PRINCIPAL
AMOUNT OR
NUMBER MARKET
OF SHARES VALUE
---------- ------------
CONVERTIBLE BOND - 0.3%
PHARMACEUTICALS - 0.3%
Ligand Pharmaceuticals, Inc., 6.00% - 2007 $1,250,000 $ 2,614,063
------------
TOTAL CONVERTIBLE BOND
(cost $1,250,000) 2,614,063
------------
PREFERRED STOCKS - 0.2%
DIVERSIFIED METALS & MINING - 0.1%
Arch Coal, Inc. 4,600 842,375
------------
ENVIRONMENTAL & FACILITIES SERVICES - 0.1%
ThermoEnergy Corporation PIPE(2, 3, 4, 5, 6) 1,745,000 791,532
------------
TOTAL PREFERRED STOCKS
(cost $1,876,500) 1,633,907
------------
COMMON STOCKS - 93.2%
AEROSPACE & DEFENSE - 2.0%
Curtiss-Wright Corporation 80,000 5,296,000
Orbital Sciences Corporation* 627,500 9,927,050
------------
15,223,050
------------
AGRICULTURAL PRODUCTS - 2.9%
Archer-Daniels-Midland Company(1) 420,000 14,133,000
Corn Products International, Inc. 255,000 7,540,350
------------
21,673,350
------------
AIR FREIGHT & LOGISTICS - 0.1%
AirNet Systems, Inc.* 168,000 586,320
Stonepath Group, Inc.* 480,000 374,400
------------
960,720
------------
APPAREL, ACCESSORIES & LUXURY GOODS - 0.5%
Kellwood Company 117,600 3,691,464
------------
APPLICATION SOFTWARE - 0.9%
Epiq Systems, Inc.* 200,500 3,809,500
Plato Learning, Inc.* 285,000 2,704,650
------------
6,514,150
------------
COAL & CONSUMABLE FUELS - 3.0%
Arch Coal, Inc. 198,000 15,036,120
Consol Energy, Inc. 65,000 4,820,400
Hydrogen Corporation*(4, 6) 547,442 3,065,675
------------
22,922,195
------------
COMMUNICATIONS EQUIPMENT - 3.3%
3Com Corporation* 3,200,000 16,384,000
Dycom Industries, Inc.* 220,000 4,675,000
Oplink Communications, Inc.* 228,571 3,963,421
------------
25,022,421
------------
COMPUTER & ELECTRONICS RETAIL - 1.3%
RadioShack Corporation 530,000 10,191,900
------------
COMPUTER STORAGE & PERIPHERALS - 1.2%
Hutchinson Technology, Inc.* 300,000 9,051,000
------------
NUMBER MARKET
OF SHARES VALUE
---------- ------------
COMMON STOCKS (CONTINUED)
CONSTRUCTION & ENGINEERING - 13.5%
Granite Construction, Inc.(1) 84,900 $ 4,132,932
Insituform Technologies, Inc.* 239,600 6,373,360
MasTec, Inc.* 774,900 10,980,333
McDermott International, Inc.*(1) 515,000 28,041,750
Quanta Services, Inc.* 1,050,000 16,821,000
Shaw Group, Inc.*(1) 1,190,000 36,176,000
------------
102,525,375
------------
CONSUMER FINANCE - 0.7%
PHH Corporation* 199,000 5,313,300
------------
DATA PROCESSING & OUTSOURCED SERVICES - 1.9%
Computer Sciences Corporation*(1) 260,000 14,443,000
------------
DIVERSIFIED COMMERCIAL & PROFESSIONAL SERVICES -
1.4%
FTI Consulting, Inc.* 374,000 10,670,220
------------
DIVERSIFIED METALS & MINING - 2.5%
Inco, Ltd.*(1) 240,000 11,973,600
Usec, Inc. 580,000 6,989,000
------------
18,962,600
------------
ELECTRIC UTILITIES - 6.1%
Cinergy Corporation(1) 130,000 5,903,300
Great Plains Energy, Inc. 360,000 10,134,000
KFx, Inc.* 1,645,000 29,939,000
Westar Energy, Inc. 1,400 29,134
------------
46,005,434
------------
ELECTRICAL COMPONENTS & EQUIPMENT - 1.6%
Electric City Corporation*(4) 1,518,000 971,520
Power-One, Inc.* 1,556,900 11,209,680
------------
12,181,200
------------
ELECTRONIC EQUIPMENT MANUFACTURERS - 3.1%
Maxwell Technologies, Inc.* 564,000 11,003,640
Merix Corporation* 828,600 10,191,780
Powell Industries, Inc.* 117,300 2,554,794
------------
23,750,214
------------
EXCHANGE TRADED FUNDS - 2.6%
iShares Russell 2000 Value Index Fund 57,000 4,255,050
iShares S&P MidCap 400/Barra Value Index Fund 199,500 15,291,675
------------
19,546,725
------------
GAS UTILITIES - 0.4%
Southern Union Company* 130,000 3,227,900
------------
HEALTH CARE EQUIPMENT - 0.5%
HealthTronics, Inc.* 430,000 3,556,100
------------
HEALTH CARE FACILITIES - 2.1%
Community Health Systems, Inc.*(1) 130,000 4,699,500
Triad Hospitals, Inc.*(1) 155,000 6,494,500
Universal Health Services, Inc. (Cl.B.)(1) 100,000 5,079,000
------------
16,273,000
------------
56 See accompanying notes.
SECURITY EQUITY FUND
Schedule of Investments MID CAP VALUE SERIES
March 31, 2006 (unaudited)
NUMBER MARKET
OF SHARES VALUE
--------- ------------
COMMON STOCKS (CONTINUED)
HEALTH CARE SERVICES - 0.4%
Hooper Holmes, Inc. 1,076,900 $ 3,112,241
------------
HOUSEWARES & SPECIALTIES - 0.3%
Newell Rubbermaid, Inc. 82,000 2,065,580
------------
INDUSTRIAL CONGLOMERATES - 0.7%
Alleghany Corporation* 17,136 4,960,872
------------
INDUSTRIAL MACHINERY - 0.4%
Quixote Corporation 123,300 3,051,675
------------
INSURANCE BROKERS - 0.2%
Hub International, Ltd. 64,000 1,793,280
------------
INTEGRATED OIL & GAS - 1.6%
Murphy Oil Corporation 247,000 12,305,540
------------
INTEGRATED TELECOMMUNICATION SERVICES - 0.4%
Global Crossing, Ltd.* 101,900 2,700,350
------------
IT CONSULTING & OTHER SERVICES - 0.3%
Keane, Inc.*(1) 154,000 2,425,500
------------
LIFE & HEALTH INSURANCE - 0.6%
KMG America Corporation* 549,000 4,699,440
------------
MARINE - 1.4%
Double Hull Tankers, Inc. 578,700 7,667,775
Frontline, Ltd. 87,000 2,913,630
------------
10,581,405
------------
MULTI-LINE INSURANCE - 0.8%
American Financial Group, Inc.(1) 155,000 6,449,550
------------
OIL & GAS EQUIPMENT & SERVICES - 1.2%
Key Energy Services, Inc.* 620,000 9,448,800
------------
OIL & GAS EXPLORATION & PRODUCTION - 0.6%
Newfield Exploration Company* 110,800 4,642,520
------------
OIL & GAS STORAGE & TRANSPORTATION - 2.7%
Williams Companies, Inc. 976,000 20,876,640
------------
OTHER DIVERSIFIED FINANCIAL SERVICES - 1.7%
First Marblehead Corporation 293,600 12,698,200
------------
PACKAGED FOODS & MEATS - 4.0%
Hain Celestial Group, Inc.* 110,000 2,880,900
Hormel Foods Corporation(1) 300,000 10,140,000
J.M. Smucker Company 260,000 10,322,000
Tyson Foods, Inc. 539,700 7,415,478
------------
30,758,378
------------
PAPER PACKAGING - 2.4%
Bemis Company, Inc. 350,000 11,053,000
Sonoco Products Company 215,000 7,282,050
------------
18,335,050
------------
PERSONAL PRODUCTS - 1.3%
Alberto-Culver Company 80,000 3,538,400
Playtex Products, Inc.* 572,800 5,997,216
------------
9,535,616
------------
PROPERTY & CASUALTY INSURANCE - 4.1%
First American Corporation 238,500 $ 9,339,660
North Pointe Holdings Corporation*(4) 259,300 3,241,250
United America Indemnity, Ltd. ADR* 117,000 2,679,300
W.R. Berkley Corporation(1) 270,000 15,676,200
------------
30,936,410
------------
REAL ESTATE INVESTMENT TRUSTS - 3.5%
HomeBanc Corporation 508,000 4,465,320
MortgageIT Holdings, Inc. 960,700 10,404,381
Opteum, Inc.(4, 6) 1,400,000 11,984,000
------------
26,853,701
------------
REGIONAL BANKS - 1.8%
Mercantile Bankshares Corporation 127,000 4,883,150
Wilmington Trust Corporation 97,900 4,243,965
Zions Bancorporation 53,000 4,384,690
------------
13,511,805
------------
SEMICONDUCTOR EQUIPMENT - 1.8%
Ultratech, Inc.* 550,000 13,464,000
------------
SEMICONDUCTORS - 2.1%
Applied Micro Circuits Corporation* 760,000 3,093,200
IXYS Corporation* 764,100 7,045,002
Stats ChipPAC, Ltd. ADR* 700,000 5,495,000
------------
15,633,202
------------
SPECIALIZED CONSUMER SERVICES - 0.5%
Regis Corporation 105,850 3,649,708
------------
SPECIALTY CHEMICALS - 1.0%
H.B. Fuller Company(1) 100,000 5,134,000
Material Sciences Corporation* 85,700 1,035,256
Minerals Technologies, Inc. 23,000 1,343,430
------------
7,512,686
------------
SPECIALTY STORES - 0.4%
Bombay Company, Inc.* 990,000 3,267,000
------------
THRIFTS & MORTGAGE FINANCE - 0.9%
BankAtlantic Bancorp, Inc. 500,000 7,195,000
------------
TIRES & RUBBER - 1.4%
Bandag, Inc. 260,000 10,886,200
------------
TRADING COMPANIES & DISTRIBUTORS - 2.1%
United Rentals, Inc.*(1) 450,000 15,525,000
------------
TRUCKING - 0.6%
Werner Enterprises, Inc. 250,000 4,592,500
------------
WIRELESS TELECOMMUNICATION SERVICE - 0.4%
Wireless Facilities, Inc.* 700,000 2,814,000
------------
TOTAL COMMON STOCKS
(cost $495,666,355) 707,987,167
------------
WARRANTS - 0.1%
Electric City Corporation, $0.40, 03-19-09(4, 5) 442,750 134,696
ThermoEnergy Corporation, $1.50, 07-14-08
(3, 4, 5, 6) 1,745,000 228,770
------------
TOTAL WARRANTS
(cost $862,064) 363,466
------------
57 See accompanying notes.
SECURITY EQUITY FUND
Schedule of Investments MID CAP VALUE SERIES
March 31, 2006 (unaudited)
PRINCIPAL MARKET
AMOUNT VALUE
----------- ------------
COMMERCIAL PAPER - 2.0%
AUTOMOTIVE - 0.2%
American Honda Finance,
4.60%, 04-10-06 $ 1,550,000 $ 1,548,218
------------
BANKING - 0.6%
Ing (U.S.) Funding LLC,
4.69%, 04-19-06 1,000,000 997,655
UBS Finance (De) LLC:
4.72%, 04-28-06 1,000,000 996,460
4.77%, 05-01-06 1,950,000 1,942,249
Westpac Banking Corporation,
4.73%, 04-17-06 1,000,000 997,898
------------
4,934,262
------------
BROKERAGE - 0.8%
Goldman Sachs Group, Inc.,
4.78%, 04-04-06 2,000,000 1,999,198
Merrill Lynch & Company, Inc.:
4.68%, 04-03-06 1,000,000 999,738
4.65%, 04-05-06 1,000,000 999,483
4.69%, 04-11-06 1,000,000 998,697
4.71%, 04-27-06 1,000,000 996,598
------------
5,993,714
------------
ELECTRIC - 0.3%
Florida Power & Light Company:
4.68%, 04-13-06 1,000,000 998,440
4.72%, 04-24-06 1,000,000 996,985
------------
1,995,425
------------
NON U.S. BANKING - 0.1%
Danske Corporation,
4.62%, 04-04-06 1,000,000 999,615
------------
TOTAL COMMERCIAL PAPER (cost $15,471,234) 15,471,234
------------
ASSET BACKED COMMERCIAL PAPER - 2.2%
FINANCIAL COMPANIES - DIVERSIFIED - 0.2%
Amsterdam Funding Corporation,
4.76%, 05-16-06 1,000,000 994,050
------------
FINANCIAL COMPANIES -
MISCELLANEOUS RECEIVABLES - 0.9%
Falcon Asset Securitization Corporation:
4.75%, 04-25-06 1,000,000 996,833
4.75%, 04-26-06 1,000,000 996,701
Jupiter Securitization Corporation:
4.60%, 04-03-06 1,000,000 999,745
4.63%, 04-07-06 1,500,000 1,498,843
4.65%, 04-10-06 1,000,000 998,838
4.66%, 04-12-06 1,540,000 1,537,774
------------
7,028,734
------------
FINANCIAL COMPANIES - SECURITIES - 0.4%
Asset One Securitization:
4.69%, 04-06-06 $ 1,000,000 $ 999,349
4.76%, 04-18-06 1,000,000 997,752
Perry Global Funding LLC,
4.75%, 04-20-06 1,000,000 997,493
------------
2,994,594
------------
FINANCIAL COMPANIES - TRADE RECEIVABLES - 0.7%
Eureka Securitization:
4.74%, 04-26-06 1,000,000 996,708
4.76%, 05-11-06 1,500,000 1,492,067
4.77%, 05-17-06 1,000,000 993,892
Old Line Funding LLC,
4.74%, 04-25-06 1,000,000 996,840
Sheffield Receivables Corporation,
4.73%, 04-21-06 1,000,000 997,372
------------
5,476,879
------------
TOTAL ASSET BACKED COMMERCIAL PAPER
(cost $16,494,257) 16,494,257
------------
REPURCHASE AGREEMENT - 2.4%
United Missouri Bank, 4.36%, dated 03-31-06,
matures 04-03-06; repurchase amount of
$18,271,636 (Collateralized by FHLB, 5.375%,
05-15-06 with a value of $18,632,757) 18,265,000 18,265,000
------------
TOTAL REPURCHASE AGREEMENT (cost $18,265,000) 18,265,000
------------
TOTAL INVESTMENTS - 100.4% (cost $549,885,410) 762,829,094
LIABILITIES, LESS CASH & OTHER ASSETS - (0.4%) (2,770,077)
------------
TOTAL NET ASSETS - 100.0% $760,059,017
============
For federal income tax purposes, the identified cost of investments owned at
March 31, 2006 was $550,119,388.
* Non-income producing security
ADR (American Depositary Receipt)
(1) Security is segregated as collateral for open written option contracts.
(2) PIPE (Private Investment in Public Equity) - Stock issued by a company in
the secondary market as a means of raising capital more quickly and less
expensively than through registration on a secondary public offering.
(3) Security is restricted. The total market value securities is of restricted
$1,020,302 (cost $2,094,000), or 0.1% of total net assets. The acquisition
date was July 14, 2005.
(4) Security is illiquid. The total market value of illiquid securities is
$20,417,443 (cost $26,366,694), or 2.7% of total net assets.
(5) Security is fair valued by the Board of Directors. The total market value
of fair valued securities is $1,154,998 (cost $2,508,564), or 0.2% of total
net assets.
(6) Investment in an affiliated issuer. See Note 8 to the financial statements.
58 See accompanying notes.
SECURITY EQUITY FUND
MID CAP VALUE SERIES
(unaudited)
Statement of Assets and Liabilities
March 31, 2006
ASSETS:
Investments in unaffiliated issues, at value(1) ................. $758,743,117
Investments in affiliated issues, at value(1) ................... 4,085,977
Cash ............................................................ 4,811
Receivables:
Fund shares sold ............................................. 4,143,671
Interest ..................................................... 28,177
Dividends .................................................... 579,645
Prepaid expenses ............................................. 100,290
------------
Total assets ................................................. 767,685,688
------------
LIABILITIES:
Payable for:
Securities purchased ......................................... 2,540,944
Fund shares redeemed ......................................... 555,290
Written options, at value (premiums received $3,232,465) ..... 3,496,725
Management fees .............................................. 499,510
Custodian fees ............................................... 9,000
Transfer agent and administration fees ....................... 112,949
Professional fees ............................................ 14,939
12b-1 distribution plan fees ................................. 397,314
------------
Total liabilities ............................................... 7,626,671
------------
NET ASSETS ...................................................... $760,059,017
============
NET ASSETS CONSIST OF:
Paid in capital ................................................. $527,481,188
Accumulated net investment loss ................................. (891,134)
Accumulated undistributed net realized gain on sale of
investments and options written .............................. 20,789,539
Net unrealized appreciation in value of investments and options
written ...................................................... 212,679,424
------------
Net assets ...................................................... $760,059,017
============
CLASS A:
Capital shares outstanding (unlimited number of shares
authorized) .................................................. 12,871,721
Net assets ...................................................... $511,030,298
Net asset value and redemption price per share .................. $ 39.70
============
Maximum offering price per share (net asset value divided by
94.25%) ...................................................... $ 42.12
============
CLASS B:
Capital shares outstanding (unlimited number of shares
authorized) .................................................. 3,144,273
Net assets ...................................................... $113,810,233
Net asset value, offering and redemption price per share
(excluding any applicable contingent deferred sales charge) .. $ 36.20
============
CLASS C:
Capital shares outstanding (unlimited number of shares
authorized) .................................................. 3,664,503
Net assets ...................................................... $135,218,486
Net asset value, offering and redemption price per share
(excluding any applicable contingent deferred sales charge) .. $ 36.90
============
(1)Investments, at cost ......................................... $549,885,410
Statement of Operations
For the Six Months Ended March 31, 2006
INVESTMENT INCOME:
Dividends from securities of unaffiliated issuers ............ $ 3,591,711
Interest ..................................................... 558,775
-----------
Total investment income ...................................... 4,150,486
-----------
EXPENSES:
Management fees .............................................. 2,590,076
Custodian fees ............................................... 18,575
Transfer agent/maintenance fees .............................. 409,368
Administration fees .......................................... 294,267
Directors' fees .............................................. 5,658
Professional fees ............................................ 39,931
Reports to shareholders ...................................... 61,608
Registration fees ............................................ 37,567
Other expenses ............................................... 12,338
12b-1 distribution plan fees - Class A ....................... 516,257
12b-1 distribution plan fees - Class B ....................... 513,414
12b-1 distribution plan fees - Class C ....................... 542,573
-----------
Total expenses ............................................... 5,041,632
Less: Earnings credits ....................................... (12)
-----------
Net expenses ................................................. 5,041,620
-----------
Net investment loss .......................................... (891,134)
-----------
NET REALIZED AND UNREALIZED GAIN:
Net realized gain during the period on:
Investment transactions of unaffiliated issuers .............. 25,759,608
Options written .............................................. 2,337,178
-----------
Net realized gain ............................................ 28,096,786
-----------
Net unrealized appreciation (depreciation)
during the period on:
Investment transaction of unaffiliated issuers ............... 64,791,041
Investment transactions of affiliated issuers ................ 429,190
Options written .............................................. (377,809)
-----------
Net unrealized appreciation .................................. 64,842,422
-----------
Net realized and unrealized gain ............................. 92,939,208
-----------
Net increase in net assets resulting from operations ......... $92,048,074
===========
59 See accompanying notes.
SECURITY EQUITY FUND
Statement of Changes in Net Assets MID CAP VALUE SERIES
SIX MONTHS
ENDED
MARCH 31, 2006 YEAR ENDED
(unaudited) SEPTEMBER 30, 2005
-------------- ------------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment loss ....................................... $ (891,134) $ (1,019,140)
Net realized gain during the period on investments and
options written ........................................ 28,096,786 27,789,769
Net unrealized appreciation during the period on
investments and options written ........................ 64,842,422 81,570,182
------------ ------------
Net increase in net assets resulting from operations ...... 92,048,074 108,340,811
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net realized gain
Class A ................................................ (21,770,226) (17,531,136)
Class B ................................................ (5,997,238) (6,133,150)
Class C ................................................ (6,154,241) (4,546,382)
------------ ------------
Total distributions to shareholders ....................... (33,921,705) (28,210,668)
------------ ------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from sale of shares
Class A ................................................ 150,793,172 161,215,930
Class B ................................................ 11,782,489 17,972,042
Class C ................................................ 32,660,663 36,990,088
Distributions reinvested
Class A ................................................ 20,081,173 16,302,449
Class B ................................................ 5,715,440 5,863,417
Class C ................................................ 5,766,876 4,260,542
Cost of shares redeemed
Class A ................................................ (72,211,382) (73,348,101)
Class B ................................................ (10,220,907) (15,202,832)
Class C ................................................ (7,016,768) (14,043,393)
------------ ------------
Net increase from capital share transactions .............. 137,350,756 140,010,142
------------ ------------
Net increase in net assets ................................ 195,477,124 220,140,285
------------ ------------
NET ASSETS:
Beginning of period ....................................... 564,581,893 344,441,608
------------ ------------
End of period ............................................. $760,059,017 $564,581,893
============ ============
Accumulated net investment loss at end of period .......... $ (891,134) $ --
============ ============
CAPITAL SHARE ACTIVITY:
Shares sold
Class A ................................................ 4,015,240 4,912,125
Class B ................................................ 345,566 597,004
Class C ................................................ 933,428 1,196,717
Shares reinvested
Class A ................................................ 565,348 505,033
Class B ................................................ 176,130 196,298
Class C ................................................ 174,331 140,103
Shares redeemed
Class A ................................................ (1,974,058) (2,235,399)
Class B ................................................ (299,246) (503,071)
Class C ................................................ (201,967) (454,764)
60 See accompanying notes.
Financial Highlights
Selected data for each share of capital stock SECURITY EQUITY FUND
outstanding throughout each period MID CAP VALUE SERIES
SIX YEAR ENDED
MONTHS ENDED SEPTEMBER 30,
MARCH 31, -----------------------------------------------------
CLASS A 2006(e) 2005 2004 2003 2002 2001
- ------- ------------ -------- -------- -------- ------- -------
PER SHARE DATA
Net asset value, beginning of period $ 36.34 $ 30.45 $ 24.48 $ 16.90 $ 18.04 $ 20.75
-------- -------- -------- -------- ------- -------
Income (loss) from investment operations:
Net investment income (loss)(b) (0.01) 0.01 (0.09) (0.07) (0.04) --
Net gain (loss) on securities
(realized and unrealized) 5.44 8.16 6.32 7.65 (0.78) (0.90)
-------- -------- -------- -------- ------- -------
Total from investment operations 5.43 8.17 6.23 7.58 (0.82) (0.90)
-------- -------- -------- -------- ------- -------
Less distributions:
Distributions from realized gains (2.07) (2.28) (0.26) -- (0.21) (1.81)
Return of capital -- -- -- -- (0.11) --
-------- -------- -------- -------- ------- -------
Total distributions (2.07) (2.28) (0.26) -- (0.32) (1.81)
-------- -------- -------- -------- ------- -------
Net asset value, end of period $ 39.70 $ 36.34 $ 30.45 $ 24.48 $ 16.90 $ 18.04
======== ======== ======== ======== ======= =======
TOTAL RETURN(a) 15.60% 27.77% 25.59% 44.85% (4.89%) (4.54%)
-------- -------- -------- -------- ------- -------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $511,030 $373,031 $215,659 $113,822 $68,544 $50,541
-------- -------- -------- -------- ------- -------
Ratios to average net assets:
Net investment income (loss) (0.03%) 0.04% (0.31%) (0.33%) (0.20%) 0.01%(d)
Total expenses 1.36% 1.41% 1.48% 1.65% 1.45% 1.30%
-------- -------- -------- -------- ------- -------
Portfolio turnover rate 22% 19% 45% 52% 51% 55%
SIX YEAR ENDED
MONTHS ENDED SEPTEMBER 30,
MARCH 31, ---------------------------------------------------
CLASS B 2006(e) 2005 2004 2003 2002 2001
- ------- ------------ ------- ------- ------- ------- -------
PER SHARE DATA
Net asset value, beginning of period $ 33.43 $ 28.37 $ 22.99 $ 15.99 $ 17.26 $ 20.11
-------- ------- ------- ------- ------- -------
Income (loss) from investment operations:
Net investment loss(b) (0.13) (0.22) (0.28) (0.20) (0.21) (0.19)
Net gain (loss) on securities
(realized and unrealized) 4.97 7.56 5.92 7.20 (0.74) (0.85)
-------- ------- ------- ------- ------- -------
Total from investment operations 4.84 7.34 5.64 7.00 (0.95) (1.04)
-------- ------- ------- ------- ------- -------
Less distributions:
Distributions from realized gains (2.07) (2.28) (0.26) -- (0.21) (1.81)
Return of capital -- -- -- -- (0.11) --
-------- ------- ------- ------- ------- -------
Total distributions (2.07) (2.28) (0.26) -- (0.32) (1.81)
-------- ------- ------- ------- ------- -------
Net asset value, end of period $ 36.20 $ 33.43 $ 28.37 $ 22.99 $ 15.99 $ 17.26
======== ======= ======= ======= ======= =======
TOTAL RETURN(a) 15.18% 26.83% 24.67% 43.78% (5.88%) (5.45%)
-------- ------- ------- ------- ------- -------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $113,810 $97,664 $74,650 $53,947 $37,136 $26,967
-------- ------- ------- ------- ------- -------
Ratios to average net assets:
Net investment loss (0.80%) (0.72%) (1.07%) (1.08%) (1.09%) (0.98%)
Total expenses 2.11% 2.16% 2.23% 2.40% 2.34% 2.30%
-------- ------- ------- ------- ------- -------
Portfolio turnover rate 22% 19% 45% 52% 51% 55%
61 See accompanying notes.
Financial Highlights
Selected data for each share of capital stock SECURITY EQUITY FUND
outstanding throughout each period MID CAP VALUE SERIES
SIX YEAR ENDED
MONTHS ENDED SEPTEMBER 30,
MARCH 31, -------------------------------------------------
CLASS C 2006(e) 2005 2004 2003 2002(c) 2001
- ------- ------------ ------- ------- ------- ------- ------
PER SHARE DATA
Net asset value, beginning of period $ 34.03 $ 28.85 $ 23.37 $ 16.26 $ 17.53 $20.39
-------- ------- ------- ------- ------- ------
Income (loss) from investment operations:
Net investment loss(b) (0.13) (0.21) (0.29) (0.21) (0.21) (0.19)
Net gain (loss) on securities
(realized and unrealized) 5.07 7.67 6.03 7.32 (0.74) (0.86)
-------- ------- ------- ------- ------- ------
Total from investment operations 4.94 7.46 5.74 7.11 (0.95) (1.05)
-------- ------- ------- ------- ------- ------
Less distributions:
Distributions from realized gains (2.07) (2.28) (0.26) -- (0.21) (1.81)
Return of capital -- -- -- -- (0.11) --
-------- ------- ------- ------- ------- ------
Total distributions (2.07) (2.28) (0.26) -- (0.32) (1.81)
-------- ------- ------- ------- ------- ------
Net asset value, end of period $ 36.90 $ 34.03 $ 28.85 $ 23.37 $ 16.26 $17.53
======== ======= ======= ======= ======= ======
TOTAL RETURN(a) 15.21% 26.80% 24.70% 43.73% (5.79%) (5.42%)
-------- ------- ------- ------- ------- ------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $135,219 $93,887 $54,133 $32,999 $18,785 $6,976
-------- ------- ------- ------- ------- ------
Ratios to average net assets:
Net investment loss (0.78%) (0.71%) (1.06%) (1.08%) (1.06%) (0.98%)
Total expenses 2.11% 2.16% 2.23% 2.40% 2.35% 2.30%
-------- ------- ------- ------- ------- ------
Portfolio turnover rate 22% 19% 45% 52% 51% 55%
(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) Net investment income (loss) was computed using average shares outstanding
throughout the period.
(c) The financial highlights for Class C shares exclude the historical
financial highlights of Class S shares. Class S shares were exchanged for
Class C shares on June 3, 2002.
(d) Net investment income is less than $0.01 per share.
(e) Unaudited figures for the six months ended March 31, 2006. Percentage
amounts for the period, except total return, have been annualized.
62 See accompanying notes.
SECURITY EQUITY FUND
Select 25 Series
(SECURITY BENEFIT(SM) LOGO)
Security Management Company, LLC
ADVISER,
SECURITY MANAGEMENT COMPANY, LLC
63
SECURITY EQUITY FUND
Performance Summary SELECT 25 SERIES
May 15, 2006 (unaudited)
PERFORMANCE
SELECT 25 SERIES VS.
RUSSELL 1000 GROWTH INDEX
(PERFORMANCE GRAPH)
SELECT 25 SERIES
1/29/99 9,425.00
3/31/99 9,802.00
6/30/99 9,915.10
9/30/99 9,924.53
12/31/99 11,734.13
3/31/00 11,573.90
6/30/00 11,064.95
9/30/00 10,687.95
12/31/00 9,660.63
3/31/01 8,228.03
6/30/01 8,793.53
9/30/01 7,144.15
12/31/01 8,605.03
3/31/02 8,539.05
6/30/02 7,002.78
9/30/02 6,145.10
12/31/02 6,343.03
3/31/03 6,173.38
6/30/03 6,776.58
9/30/03 6,851.98
12/31/03 7,417.48
3/31/04 7,719.08
6/30/04 7,775.63
9/30/04 7,360.93
12/31/04 8,228.03
3/31/05 7,954.70
6/30/05 8,048.95
9/30/05 8,821.80
12/31/05 9,189.38
3/31/06 9,641.78
RUSSELL 1000 GROWTH INDEX
INCEPTION 1/29/99 10,000.00
3/31/99 10,045.92
6/30/99 10,432.68
9/30/99 10,049.99
12/31/99 12,577.25
3/31/00 13,473.82
06/30/00 13,109.39
09/30/00 12,403.67
12/31/00 9,756.78
3/31/2001 7,717.61
6/30/2001 8,367.35
9/30/2001 6,743.24
12/31/2001 7,764.53
3/31/2002 7,563.52
6/30/2002 6,151.25
9/30/2002 5,225.76
12/31/2002 5,599.12
3/31/2003 5,539.08
6/30/2003 6,331.43
9/30/2003 6,579.50
12/31/2003 7,265.20
3/31/2004 7,322.08
6/30/2004 7,463.91
9/30/2004 7,074.26
12/31/2004 7,723.10
3/31/2005 7,407.74
6/30/2005 7,590.52
9/30/2005 7,895.14
12/31/2005 8,130.26
3/31/2006 8,382.36
$10,000 SINCE INCEPTION
This chart assumes a $10,000 investment in Class A shares of Select 25 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 Russell 1000 Growth Index is an unmanaged capitalization-weighted
index which includes stocks incorporated in the United States and its
territories and measures the performance of the Russell 1000 companies with
higher price-to-book ratios and higher forecasted growth values.
AVERAGE ANNUAL RETURNS
PERIODS ENDED 3-31-06 1 YEAR 5 YEARS SINCE INCEPTION
- --------------------- ------ ------- -----------------
A Shares 21.21% 3.22% 0.32% (1-29-99)
A Shares with sales charge 14.30% 2.01% (0.51%) (1-29-99)
B Shares 20.30% 2.48% (0.40%) (1-29-99)
B Shares with CDSC 15.30% 2.11% (0.40%) (1-29-99)
C Shares 20.37% 2.47% (0.35%) (1-29-99)
C Shares with CDSC 19.37% 2.47% (0.35%) (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 11.05%
Consumer Staples 4.87
Energy 8.00
Financials 9.37
Health Care 12.59
Industrials 20.57
Information Technology 15.64
Materials 3.77
Utilities 5.62
Exchange Traded Funds 2.60
Commercial Paper 4.20
Repurchase Agreement 1.80
Liabilities, less cash &
other assets (0.08)
------
Total net assets 100.00%
======
64 See accompanying notes.
SECURITY EQUITY FUND
Performance Summary SELECT 25 SERIES
May 15, 2006 (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, 2005 - March 31, 2006.
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 mutual 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.
SERIES EXPENSES
BEGINNING ENDING EXPENSES PAID
ACCOUNT VALUE ACCOUNT VALUE DURING
10-01-05 03-31-06(1) PERIOD(2)
------------- ------------- -------------
Select 25
Series - Class A
Actual $1,000.00 $1,093.00 $ 9.55
Hypothetical 1,000.00 1,015.81 9.20
Select 25
Series - Class B
Actual 1,000.00 1,089.70 13.44
Hypothetical 1,000.00 1,012.07 12.94
Select 25
Series - Class C
Actual 1,000.00 1,090.60 13.45
Hypothetical 1,000.00 1,012.07 12.94
(1) The actual ending account value is based on the actual total return of the
Series for the period October 1, 2005 to March 31, 2006 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, 2005 to March 31, 2006 was 9.30%, 8.97% and 9.06%, for
Class A, B and C shares, respectively.
(2) Expenses are equal to the Series annualized expense ratio (1.83%, 2.58% and
2.58% for Class A, B and C shares, respectively) multiplied by the average
account value over the period, multiplied by 182/365 (to reflect the
one-half year period).
65
SECURITY EQUITY FUND
Schedule of Investments SELECT 25 SERIES
March 31, 2006 (unaudited)
NUMBER MARKET
OF SHARES VALUE
---------- ------------
COMMON STOCKS - 94.1%
AEROSPACE & DEFENSE - 4.5%
L-3 Communications Holdings, Inc. 13,800 $ 1,183,902
-----------
AIR FREIGHT & LOGISTICS - 5.5%
FedEx Corporation 12,800 1,445,632
-----------
BIOTECHNOLOGY - 3.1%
Amgen, Inc.* 11,200 814,800
-----------
BROADCASTING & CABLE TV - 2.6%
CBS Corporation (Cl.B)* 11,950 286,561
Univision Communications, Inc.* 11,800 406,746
-----------
693,307
-----------
COMMUNICATIONS EQUIPMENT - 10.1%
3Com Corporation* 136,500 698,880
ADC Telecommunications, Inc.* 44,628 1,142,031
Cisco Systems, Inc.* 38,000 823,460
-----------
2,664,371
-----------
CONSTRUCTION & ENGINEERING - 7.3%
Shaw Group, Inc.* 63,500 1,930,400
-----------
DATA PROCESSING & OUTSOURCED SERVICES - 4.0%
First Data Corporation 22,600 1,058,132
-----------
ELECTRIC UTILITIES - 5.6%
KFx, Inc.* 81,300 1,479,660
-----------
EXCHANGE TRADED FUNDS - 2.6%
iShares Russell 1000 Growth Index Fund 13,000 684,580
-----------
HEALTH CARE EQUIPMENT - 3.6%
Medtronic, Inc. 18,600 943,950
-----------
HEALTH CARE SERVICES - 2.9%
Covance, Inc.* 12,900 757,875
-----------
HOME IMPROVEMENT RETAIL - 2.8%
Home Depot, Inc. 17,600 744,480
-----------
HOTELS, RESORTS & CRUISE LINES - 3.8%
Carnival Corporation 21,300 1,008,981
-----------
HYPERMARKETS & SUPERCENTERS - 3.2%
Wal-Mart Stores, Inc. 17,500 826,700
-----------
INDUSTRIAL GASES - 3.8%
Praxair, Inc. 18,000 992,700
-----------
MOVIES & ENTERTAINMENT - 1.8%
Viacom, Inc. (Cl.B)* 11,950 463,660
-----------
MULTI-LINE INSURANCE - 3.9%
American International Group, Inc. 15,500 1,024,395
-----------
OIL & GAS EQUIPMENT & SERVICES - 4.2%
BJ Services Company 32,100 1,110,660
-----------
OIL & GAS STORAGE & TRANSPORTATION - 3.8%
Williams Companies, Inc. 46,600 996,774
-----------
PRINCIPAL
AMOUNT OR
NUMBER MARKET
OF SHARES VALUE
---------- ------------
COMMON STOCKS (CONTINUED)
OTHER DIVERSIFIED FINANCIAL SERVICES - 5.5%
Citigroup, Inc. 9,300 $ 439,332
First Marblehead Corporation 23,200 1,003,400
-----------
1,442,732
-----------
PHARMACEUTICALS - 3.0%
Johnson & Johnson 13,500 799,470
-----------
SEMICONDUCTOR EQUIPMENT - 1.5%
Mindspeed Technologies, Inc.* 100,000 398,000
-----------
SOFT DRINKS - 1.7%
PepsiCo, Inc. 7,900 456,541
-----------
TRUCKING - 3.3%
J.B. Hunt Transport Services, Inc. 39,800 857,292
-----------
TOTAL COMMON STOCKS
(cost $19,001,724) 24,778,994
-----------
COMMERCIAL PAPER - 4.2%
BROKERAGE - 4.2%
Goldman Sachs Group, Inc.,
4.80%, 04-05-06 $1,100,000 1,099,413
-----------
TOTAL COMMERCIAL PAPER (cost $1,099,413) 1,099,413
-----------
REPURCHASE AGREEMENT - 1.8%
United Missouri Bank, 4.36%, dated 03-31-06, matures
04-03-06; repurchase amount of $487,177
(Collateralized by FHLMC, 4.35%, 06-02-08 with a
value of $497,507) $ 487,000 487,000
-----------
TOTAL REPURCHASE AGREEMENT
(cost $487,000) 487,000
-----------
TOTAL INVESTMENTS - 100.1%
(cost $20,588,137) 26,365,407
LIABILITIES, LESS CASH & OTHER ASSETS - (0.1%) (24,403)
-----------
TOTAL NET ASSETS - 100.0% $26,341,004
===========
The identified cost of investments owned at March 31, 2006 was the same for
federal income tax and financial statement purposes.
* Non-income producing security
66 See accompanying notes.
SECURITY EQUITY FUND
SELECT 25 SERIES
(unaudited)
Statement of Assets and Liabilities
March 31, 2006
ASSETS:
Investments, at value(1) ....................................... $ 26,365,407
Cash ........................................................... 600
Receivables:
Fund shares sold ............................................ 1,975
Dividends ................................................... 8,828
Prepaid expenses ............................................... 22,441
------------
Total assets ................................................... 26,399,251
------------
LIABILITIES:
Payable for:
Fund shares redeemed ........................................ 8,892
Management fees ............................................. 16,744
Custodian fees .............................................. 1,300
Transfer agent and administration fees ...................... 5,129
Professional fees ........................................... 6,370
12b-1 distribution plan fees ................................ 19,352
Director's fees ............................................. 103
Other ....................................................... 357
------------
Total liabilities .............................................. 58,247
============
NET ASSETS ..................................................... $ 26,341,004
============
NET ASSETS CONSIST OF:
Paid in capital ................................................ $ 31,006,917
Accumulated net investment loss ................................ (155,163)
Accumulated net realized loss
on sale of investments and options written .................. (10,288,020)
Net unrealized appreciation in value of investments ............ 5,777,270
------------
Net assets ..................................................... $ 26,341,004
============
CLASS A:
Capital shares outstanding (unlimited number of shares
authorized) ................................................. 1,144,973
Net assets ..................................................... $ 11,717,550
Net asset value and redemption price per share ................. $ 10.23
============
Maximum offering price per share
(net asset value divided by 94.25%) ......................... $ 10.85
============
CLASS B:
Capital shares outstanding (unlimited number of shares
authorized) ................................................. 911,418
Net assets ..................................................... $ 8,856,804
Net asset value, offering and redemption price per share
(excluding any applicable contingent deferred sales
charge) ..................................................... $ 9.72
============
CLASS C:
Capital shares outstanding (unlimited number of shares
authorized) ................................................. 591,675
Net assets ..................................................... $ 5,766,650
Net asset value, offering and redemption price per share
(excluding any applicable contingent deferred sales
charge) ..................................................... $ 9.75
============
(1)Investments, at cost ........................................ $ 20,588,137
Statement of Operations
For the Six Months Ended March 31, 2006
INVESTMENT INCOME:
Dividends ................................................... $ 89,630
Interest .................................................... 23,174
------------
Total investment income ..................................... 112,804
------------
EXPENSES:
Management fees ............................................. 88,910
Custodian fees .............................................. 1,538
Transfer agent/maintenance fees ............................. 60,300
Administration fees ......................................... 13,056
Directors' fees ............................................. 295
Professional fees ........................................... 5,113
Reports to shareholders ..................................... 2,499
Registration fees ........................................... 15,146
Other expenses .............................................. 1,104
12b-1 distribution plan fees - Class A ...................... 12,847
12b-1 distribution plan fees - Class B ...................... 40,149
12b-1 distribution plan fees - Class C ...................... 27,010
------------
Total expenses .............................................. 267,967
------------
Net investment loss ......................................... (155,163)
------------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain during the period on:
Investments ................................................. 1,144,437
Options written ............................................. 27,146
------------
Net realized gain ........................................... 1,171,583
------------
Net unrealized appreciation during the period on:
Investments ................................................. 1,050,760
------------
Net unrealized appreciation ................................. 1,050,760
------------
Net realized and unrealized gain ............................ 2,222,343
------------
Net increase in net assets resulting from operations ........ $ 2,067,180
============
67 See accompanying notes.
SECURITY EQUITY FUND
Statement of Changes in Net Assets SELECT 25 SERIES
SIX MONTHS
ENDED
MARCH 31, YEAR ENDED
2006 SEPTEMBER 30,
(unaudited) 2005
------------ -------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment loss .......................................... $ (155,163) $ (265,585)
Net realized gain during the period on investments and options
written ................................................... 1,171,583 544,010
Net unrealized appreciation during the period on
investments ............................................... 1,050,760 3,480,799
----------- -----------
Net increase in net assets resulting from operations ......... 2,067,180 3,759,224
----------- -----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from sale of shares
Class A ................................................... 2,867,574 1,492,556
Class B ................................................... 1,960,024 666,322
Class C ................................................... 629,354 610,317
Cost of shares redeemed
Class A ................................................... (973,180) (3,447,276)
Class B ................................................... (792,846) (2,219,476)
Class C ................................................... (358,032) (2,348,235)
----------- -----------
Net increase (decrease) from capital share transactions ...... 3,332,894 (5,245,792)
----------- -----------
Net increase (decrease) in net assets ........................ 5,400,074 (1,486,568)
----------- -----------
NET ASSETS:
Beginning of period .......................................... 20,940,930 22,427,498
----------- -----------
End of period ................................................ $26,341,004 $20,940,930
=========== ===========
Accumulated net investment loss at end of period ............. $ (155,163) $ --
=========== ===========
CAPITAL SHARE ACTIVITY:
Shares sold
Class A ................................................... 291,904 174,623
Class B ................................................... 210,224 82,316
Class C ................................................... 67,852 73,575
Shares redeemed
Class A ................................................... (99,411) (403,526)
Class B ................................................... (83,858) (274,915)
Class C ................................................... (38,408) (291,186)
68 See accompanying notes.
Financial Highlights
Selected data for each share of capital stock SECURITY EQUITY FUND
outstanding throughout each period SELECT 25 SERIES
SIX YEAR ENDED
MONTHS ENDED SEPTEMBER 30,
MARCH 31, -------------------------------------------------
CLASS A 2006(d) 2005 2004 2003 2002 2001
- ------- ------------ ------ ------ ------- ------- -------
PER SHARE DATA
Net asset value, beginning of period $ 9.36 $ 7.81 $ 7.27 $ 6.52 $ 7.58 $ 11.34
------- ------ ------ ------- ------- -------
Income (loss) from investment operations:
Net investment loss(b) (0.04) (0.07) (0.06) (0.05) (0.07) (0.06)
Net gain (loss) on securities
(realized and unrealized) 0.91 1.62 0.60 0.80 (0.99) (3.70)
------- ------ ------ ------- ------- -------
Total from investment operations 0.87 1.55 0.54 0.75 (1.06) (3.76)
------- ------ ------ ------- ------- -------
Net asset value, end of period $ 10.23 $ 9.36 $ 7.81 $ 7.27 $ 6.52 $ 7.58
======= ====== ====== ======= ======= =======
TOTAL RETURN(a) 9.30% 19.85% 7.43% 11.50% (13.98%) (33.16%)
------- ------ ------ ------- ------- -------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $11,717 $8,912 $9,228 $10,396 $11,933 $14,347
------- ------ ------ ------- ------- -------
Ratios to average net assets:
Net investment loss (0.88%) (0.79%) (0.75%) (0.70%) (0.81%) (0.60%)
Total expenses 1.83% 1.67% 1.56% 1.63% 1.46% 1.39%
------- ------ ------ ------- ------- -------
Portfolio turnover rate 23% 13% 44% 54% 33% 44%
SIX YEAR ENDED
MONTHS ENDED SEPTEMBER 30,
MARCH 31, ------------------------------------------------
CLASS B 2006(d) 2005 2004 2003 2002 2001
- ------- ------------ ------ ------ ------- ------- -------
PER SHARE DATA
Net asset value, beginning of period $ 8.92 $ 7.50 $ 7.04 $ 6.36 $ 7.44 $ 11.22
------ ------ ------ ------ ------- -------
Income (loss) from investment operations:
Net investment loss(b) (0.08) (0.13) (0.11) (0.10) (0.13) (0.13)
Net gain (loss) on securities
(realized and unrealized) 0.88 1.55 0.57 0.78 (0.95) (3.65)
------ ------ ------ ------ ------- -------
Total from investment operations 0.80 1.42 0.46 0.68 (1.08) (3.78)
------ ------ ------ ------ ------- -------
Net asset value, end of period $ 9.72 $ 8.92 $ 7.50 $ 7.04 $ 6.36 $ 7.44
====== ====== ====== ====== ======= =======
TOTAL RETURN(a) 8.97% 18.93% 6.53% 10.69% (14.52%) (33.69%)
------ ------ ------ ------ ------- -------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $8,857 $7,000 $7,333 $8,203 $ 8,566 $11,519
------ ------ ------ ------ ------- -------
Ratios to average net assets:
Net investment loss (1.64%) (1.54%) (1.50%) (1.45%) (1.56%) (1.35%)
Total expenses 2.58% 2.42% 2.31% 2.38% 2.21% 2.14%
------ ------ ------ ------ ------- -------
Portfolio turnover rate 23% 13% 44% 54% 33% 44%
69 See accompanying notes.
Financial Highlights
Selected data for each share of capital stock SECURITY EQUITY FUND
outstanding throughout each period SELECT 25 SERIES
SIX YEAR ENDED
MONTHS ENDED SEPTEMBER 30,
MARCH 31, ------------------------------------------------
CLASS C 2006(d) 2005 2004 2003 2002(c) 2001
- ------- ------------ ------ ------ ------ ------- -------
PER SHARE DATA
Net asset value, beginning of period $ 8.94 $ 7.52 $ 7.06 $ 6.38 $ 7.47 $ 11.26
------ ------ ------ ------ ------- -------
Income (loss) from investment operations:
Net investment loss(b) (0.08) (0.13) (0.11) (0.10) (0.13) (0.13)
Net gain (loss) on securities
(realized and unrealized) 0.89 1.55 0.57 0.78 (0.96) (3.66)
------ ------ ------ ------ ------- -------
Total from investment operations 0.81 1.42 0.46 0.68 (1.09) (3.79)
------ ------ ------ ------ ------- -------
Net asset value, end of period $ 9.75 $ 8.94 $ 7.52 $ 7.06 $ 6.38 $ 7.47
====== ====== ====== ====== ======= =======
TOTAL RETURN(a) 9.06% 18.88% 6.52% 10.66% (14.59%) (33.66%)
------ ------ ------ ------ ------- -------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $5,767 $5,029 $5,866 $6,225 $ 3,954 $ 4,531
------ ------ ------ ------ ------- -------
Ratios to average net assets:
Net investment loss (1.62%) (1.54%) (1.50%) (1.44%) (1.56%) (1.35%)
Total expenses 2.58% 2.42% 2.31% 2.37% 2.21% 2.14%
------ ------ ------ ------ ------- -------
Portfolio turnover rate 23% 13% 44% 54% 33% 44%
(a) Total return information does not reflect deduction of any sales charges
imposed at the time of purchase for Class A shares or upon redemption for
Class B and C.
(b) Net investment loss was computed using average shares outstanding
throughout the period.
(c) 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.
(d) Unaudited figures for the six months ended March 31, 2006. Percentage
amounts for the period, except total return, have been annualized.
70 See accompanying notes.
SECURITY EQUITY FUND
Small Cap Growth Series
(RS INVESTMENTS LOGO)
SUBADVISER,
RS INVESTMENTS
71
SECURITY EQUITY FUND
Performance Summary SMALL CAP GROWTH SERIES
May 15, 2006 (unaudited)
PERFORMANCE
SMALL CAP GROWTH SERIES VS.
RUSSELL 2000 GROWTH INDEX
(PERFORMANCE GRAPH)
SMALL CAP GROWTH SERIES
10/15/97 9,425.00
12/31/97 9,063.00
3/31/98 10,128.68
6/30/98 9,921.20
9/30/98 8,204.80
12/31/98 10,006.08
3/31/99 10,015.51
6/30/99 10,571.93
9/30/99 12,241.18
12/31/99 18,728.25
3/31/00 23,780.52
6/30/00 20,741.41
9/30/00 21,370.53
12/31/00 16,926.48
3/31/01 12,356.86
6/30/01 13,572.63
9/30/01 10,271.18
12/31/01 12,042.43
3/31/02 11,665.12
6/30/02 10,428.39
9/30/02 8,258.87
12/31/02 8,751.46
3/31/03 8,248.39
6/30/03 10,522.72
9/30/03 12,189.16
12/31/03 13,572.63
3/31/04 14,453.02
6/30/04 14,222.44
9/30/04 13,740.32
12/31/04 15,763.12
3/31/05 14,756.96
6/30/05 15,658.31
9/30/05 16,517.73
12/31/05 16,821.68
3/31/06 18,551.01
RUSSELL 2000 GROWTH INDEX
INCEPTION 10/15/97 10,000.00
12/31/97 9,180.81
03/31/98 10,271.66
06/30/98 9,680.76
09/30/98 7,516.68
12/31/98 9,294.11
03/31/99 9,137.79
06/30/99 10,485.49
09/30/99 9,970.23
12/31/99 13,299.60
03/31/00 14,534.92
06/30/00 13,462.59
09/30/00 12,927.63
12/31/00 10,315.79
3/31/2001 8,747.02
6/30/2001 10,319.67
9/30/2001 7,421.14
12/31/2001 9,363.46
3/31/2002 9,179.82
6/30/2002 7,739.04
9/30/2002 6,073.63
12/31/2002 6,529.39
3/31/2003 6,275.55
6/30/2003 7,790.90
9/30/2003 8,606.49
12/31/2003 9,698.35
3/31/2004 10,240.11
6/30/2004 10,249.93
9/30/2004 9,633.73
12/31/2004 11,085.85
3/31/2005 10,329.58
6/30/2005 10,688.99
9/30/2005 11,363.97
12/31/2005 11,545.56
3/31/2006 13,204.61
$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. The Russell 2000 Growth Index measures the
performance of those Russell 2000 companies with higher price-to-book ratios and
higher forecasted growth values.
PORTFOLIO COMPOSITION BY SECTOR
Consumer Discretionary 13.89%
Consumer Staples 1.49
Energy 6.28
Financials 8.96
Health Care 19.66
Industrials 17.96
Information Technology 28.07
Materials 0.95
Repurchase Agreement 2.30
Cash & other assets, less liabilities 0.44
------
Total net assets 100.00%
======
AVERAGE ANNUAL RETURNS
PERIODS ENDED 3-31-06 1 YEAR 5 YEARS SINCE INCEPTION
- --------------------- ------ ------- ---------------
A Shares 25.71% 8.47% 8.33% (10-15-97)
A Shares with sales charge 18.47% 7.19% 7.58% (10-15-97)
B Shares 24.73% 7.64% 7.35% (10-15-97)
B Shares with CDSC 19.73% 7.34% 7.35% (10-15-97)
C Shares 24.81% 7.66% 7.33% (1-29-99)
C Shares with CDSC 23.81% 7.66% 7.33% (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 waivers, the performance quoted would be reduced.
72 See accompanying notes.
SECURITY EQUITY FUND
Performance Summary SMALL CAP GROWTH SERIES
May 15, 2006 (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, 2005 - March 31, 2006.
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 mutual 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.
SERIES EXPENSES
BEGINNING ENDING EXPENSES
ACCOUNT ACCOUNT PAID
VALUE VALUE DURING
10-01-05 03-31-06(1) PERIOD(2)
--------- ----------- ---------
Small Cap Growth
Series - Class A
Actual $1,000.00 $1,123.10 $10.75
Hypothetical 1,000.00 1,014.81 10.20
Small Cap Growth
Series - Class B
Actual 1,000.00 1,119.20 14.69
Hypothetical 1,000.00 1,011.07 13.94
Small Cap Growth
Series - Class C
Actual 1,000.00 1,119.00 14.69
Hypothetical 1,000.00 1,011.07 13.94
(1) The actual ending account value is based on the actual total return of the
Series for the period October 1, 2005 to March 31, 2006 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, 2005 to March 31, 2006 was 12.31%, 11.92% and 11.90%, for
Class A, B and C shares, respectively.
(2) Expenses are equal to the Series annualized expense ratio (2.03%, 2.78% and
2.78% for Class A, B and C 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).
73
SECURITY EQUITY FUND
Schedule of Investments SMALL CAP GROWTH SERIES
March 31, 2006 (unaudited)
NUMBER MARKET
OF SHARES VALUE
--------- -----------
COMMON STOCKS - 97.2%
AEROSPACE & DEFENSE - 1.7%
Dynamic Materials Corporation 5,400 $ 192,456
Hexcel Corporation* 23,410 514,318
-----------
706,774
-----------
AGRICULTURAL PRODUCTS - 1.5%
Central Garden & Pet Company* 11,960 635,554
-----------
APPAREL RETAIL - 2.2%
Cache, Inc.* 29,780 546,165
Jos. A. Bank Clothiers, Inc.* 7,986 382,929
-----------
929,094
-----------
APPLICATION SOFTWARE - 5.2%
Bottomline Technologies, Inc.* 21,590 296,431
Concur Technologies, Inc.* 19,630 363,744
Retalix, Ltd.* 16,360 404,419
Synplicity, Inc.* 57,240 369,770
Ultimate Software Group, Inc.* 16,920 437,382
Witness Systems, Inc.* 13,510 343,154
-----------
2,214,900
-----------
BIOTECHNOLOGY - 4.3%
Adeza Biomedical Corporation* 20,210 427,037
Illumina, Inc.* 8,450 200,687
LifeCell Corporation* 23,780 536,239
Solexa, Inc.* 27,240 271,855
United Therapeutics Corporation* 5,590 370,505
-----------
1,806,323
-----------
CASINOS & GAMING - 3.9%
Century Casinos, Inc.* 41,040 436,666
Mikohn Gaming Corporation* 42,820 409,787
Scientific Games Corporation* 23,350 820,286
-----------
1,666,739
-----------
COMPUTER HARDWARE - 1.0%
Neoware, Inc.* 14,430 427,417
-----------
COMPUTER STORAGE & PERIPHERALS - 0.9%
M-Systems Flash Disk Pioneers, Ltd.* 14,630 378,332
-----------
CONSTRUCTION & FARM MACHINERY - 1.2%
Gehl Company* 14,760 488,851
-----------
CONSTRUCTION MATERIALS - 1.0%
U.S. Concrete, Inc.* 27,940 404,012
-----------
DIVERSIFIED COMMERCIAL & PROFESSIONAL SERVICES - 3.9%
FirstService Corporation* 24,280 597,045
McGrath Rentcorp 18,320 550,699
Nutri/Systems, Inc.* 10,750 510,840
-----------
1,658,584
-----------
EDUCATION SERVICES - 1.1%
Laureate Education, Inc.* 8,340 445,189
-----------
ELECTRICAL COMPONENTS & EQUIPMENT - 1.0%
Regal-Beloit Corporation 10,550 $ 445,949
-----------
ELECTRONIC EQUIPMENT MANUFACTURERS - 4.3%
I.D. Systems, Inc.* 15,640 391,000
Intevac, Inc.* 16,320 469,690
Itron, Inc.* 7,830 468,625
Optimal Group, Inc.* 33,880 492,276
-----------
1,821,591
-----------
ENVIRONMENTAL & FACILITIES SERVICES - 1.8%
Rollins, Inc. 29,950 606,188
Team, Inc.* 5,200 172,952
-----------
779,140
-----------
FOOTWEAR - 1.0%
Iconix Brand Group, Inc.* 28,550 415,403
-----------
HEALTH CARE EQUIPMENT - 7.1%
AngioDynamics, Inc.* 11,320 340,279
Encore Medical Corporation* 8,140 41,677
I-Flow Corporation* 25,410 338,461
Neurometrix, Inc.* 5,520 214,949
NuVasive, Inc.* 22,210 418,659
ResMed, Inc.* 5,540 243,649
SonoSite, Inc.* 7,410 301,142
Spectranetics Corporation* 42,700 504,714
Vital Signs, Inc 11,230 616,864
-----------
3,020,394
-----------
HEALTH CARE FACILITIES - 2.2%
Five Star Quality Care, Inc.* 46,460 505,949
Health Grades, Inc.* 25,130 133,940
LCA-Vision, Inc. 6,100 305,671
-----------
945,560
-----------
HEALTH CARE SERVICES - 1.9%
AMN Healthcare Services, Inc.* 24,580 460,138
Providence Service Corporation* 10,660 346,663
-----------
806,801
-----------
HEALTH CARE SUPPLIES - 3.0%
Immucor, Inc.* 14,180 406,824
Orthovita, Inc.* 79,180 327,805
PolyMedica Corporation 12,482 528,738
-----------
1,263,367
-----------
HOME IMPROVEMENT RETAIL - 0.8%
Building Materials Holding Corporation 9,980 355,687
-----------
HOMEBUILDING - 0.9%
Champion Enterprises, Inc.* 26,120 390,755
-----------
HOTELS, RESORTS & CRUISE LINES - 1.1%
Steiner Leisure, Ltd.* 12,040 487,620
-----------
74 See accompanying notes.
SECURITY EQUITY FUND
Schedule of Investments SMALL CAP GROWTH SERIES
March 31, 2006 (unaudited)
NUMBER MARKET
OF SHARES VALUE
--------- -----------
COMMON STOCKS (CONTINUED)
HUMAN RESOURCE & EMPLOYMENT SERVICES - 1.5%
Barrett Business Services, Inc.* 22,770 $ 614,790
-----------
INDUSTRIAL MACHINERY - 2.0%
Flow International Corporation* 14,500 190,965
GSI Group, Inc.* 30,100 332,605
Gardner Denver, Inc.* 5,230 340,996
-----------
864,566
-----------
INTERNET RETAIL - 2.0%
Ctrip.com International, Ltd. ADR* 4,880 403,576
Netflix, Inc.* 15,740 456,303
-----------
859,879
-----------
INTERNET SOFTWARE & SERVICES - 9.1%
CyberSource Corporation* 26,580 296,633
Digitas, Inc.* 33,770 486,288
Equinix, Inc.* 7,560 485,503
j2 Global Communications, Inc.* 14,160 665,520
Marchex, Inc. (Cl.B)* 8,380 180,170
Online Resources Corporation* 41,250 536,250
Openwave Systems, Inc.* 19,810 427,500
RADVision, Ltd.* 24,780 442,323
Radware, Ltd.* 19,670 346,782
-----------
3,866,969
-----------
INVESTMENT BANKING & BROKERAGE - 1.1%
GFI Group, Inc.* 9,120 473,419
-----------
LEISURE PRODUCTS - 0.8%
The9, Ltd. ADR* 11,900 354,025
-----------
MARINE - 1.6%
American Commercial Lines, Inc.* 14,250 672,600
-----------
MULTI-LINE INSURANCE - 1.4%
Amerisafe, Inc.* 49,040 588,480
-----------
OIL & GAS DRILLING - 1.7%
Grey Wolf, Inc.* 43,040 320,218
Unit Corporation* 7,550 420,913
-----------
741,131
-----------
OIL & GAS EQUIPMENT & SERVICES - 4.5%
Dril-Quip, Inc.* 600 42,510
Hydril* 5,540 431,843
Maverick Tube Corporation* 8,890 471,081
Oil States International, Inc.* 12,500 460,625
Superior Energy Services, Inc.* 19,510 522,673
-----------
1,928,732
-----------
PHARMACEUTICALS - 1.2%
Adolor Corporation* 8,500 202,300
Matrixx Initiatives, Inc.* 13,450 313,385
-----------
515,685
-----------
PROPERTY & CASUALTY INSURANCE - 1.4%
Navigators Group, Inc.* 11,820 586,272
-----------
PRINCIPAL
AMOUNT OR
NUMBER MARKET
OF SHARES VALUE
--------- -----------
COMMON STOCKS (CONTINUED)
RAILROADS - 0.9%
American Railcar Industries, Inc. 10,500 $ 368,235
-----------
REAL ESTATE INVESTMENT TRUSTS - 1.3%
KKR Financial Corporation 23,880 535,628
-----------
REGIONAL BANKS - 2.7%
Boston Private Financial Holdings, Inc. 15,630 528,138
PrivateBancorp, Inc. 15,240 632,308
-----------
1,160,446
-----------
SEMICONDUCTOR EQUIPMENT - 1.6%
PDF Solutions, Inc.* 25,390 480,379
Ultratech, Inc.* 8,760 214,445
-----------
694,824
-----------
SEMICONDUCTORS - 5.1%
Anadigics, Inc.* 28,400 224,360
Microsemi Corporation* 10,620 309,148
02Micro International, Ltd. ADR* 42,890 455,921
SRS Labs, Inc.* 62,850 378,357
Supertex, Inc.* 10,760 404,791
Volterra Semiconductor Corporation* 21,840 416,926
-----------
2,189,503
-----------
SPECIALIZED FINANCE - 1.1%
Portfolio Recovery Associates, Inc.* 9,930 465,022
-----------
SYSTEMS SOFTWARE - 0.8%
Radiant Systems, Inc.* 25,400 343,408
-----------
TRUCKING - 2.4%
Old Dominion Freight Line, Inc.* 19,200 517,440
Vitran Corporation, Inc.* 25,870 519,211
-----------
1,036,651
-----------
TOTAL COMMON STOCKS (cost $31,913,068) 41,354,301
-----------
REPURCHASE AGREEMENT - 2.3%
United Missouri Bank, 4.36%, dated 03-31-06,
matures 04-03-06; repurchase amount of
$964,350 (Collateralized by FHLMC, 4.35%,
06-02-08 with a value of $984,026) $ 964,000 964,000
-----------
TOTAL REPURCHASE AGREEMENT (cost $964,000) 964,000
-----------
TOTAL INVESTMENTS - 99.5% (cost $32,877,068) 42,318,301
CASH & OTHER ASSETS, LESS LIABILITIES - 0.5% 202,937
-----------
TOTAL NET ASSETS - 100.0% $42,521,238
===========
For federal income tax purposes the identified cost of investments owned at
March 31, 2006 was $33,007,965.
* Non-income producing security
ADR (American Depositary Receipt)
75 See accompanying notes.
SECURITY EQUITY FUND
SMALL CAP GROWTH SERIES
(unaudited)
Statement of Assets and Liabilities
March 31, 2006
ASSETS:
Investments, at value(1) ......................................... $42,318,301
Cash ............................................................. 497
Receivables:
Fund shares sold .............................................. 139,712
Securities sold ............................................... 494,723
Dividends ..................................................... 2,555
Prepaid expenses ................................................. 22,605
-----------
Total assets ..................................................... 42,978,393
-----------
LIABILITIES:
Payable for:
Securities purchased .......................................... 343,219
Fund shares redeemed .......................................... 33,955
Management fees ............................................... 34,869
Custodian fees ................................................ 6,800
Transfer agent and administration fees ........................ 9,995
Professional fees ............................................. 6,696
12b-1 distribution plan fees .................................. 21,470
Director's fees ............................................... 151
-----------
Total liabilities ................................................ 457,155
-----------
NET ASSETS ....................................................... $42,521,238
===========
NET ASSETS CONSIST OF:
Paid in capital .................................................. $35,385,818
Accumulated net investment loss .................................. (361,534)
Accumulated net realized loss on sale of investments ............. (1,944,279)
Net unrealized appreciation in value of investments .............. 9,441,233
-----------
Net assets ....................................................... $42,521,238
===========
CLASS A:
Capital shares outstanding
(unlimited number of shares authorized) ....................... 1,567,592
Net assets ....................................................... $27,745,142
Net asset value and redemption price per share ................... $ 17.70
===========
Maximum offering price per share
(net asset value divided by 94.25%) ........................... $ 18.78
===========
CLASS B:
Capital shares outstanding
(unlimited number of shares authorized) ....................... 594,922
Net assets ....................................................... $ 9,720,099
Net asset value, offering and redemption price per share
(excluding any applicable contingent deferred sales charge) ... $ 16.34
===========
CLASS C:
Capital shares outstanding
(unlimited number of shares authorized) ....................... 303,753
Net assets ....................................................... $ 5,055,997
Net asset value, offering and redemption price per share
(excluding any applicable contingent deferred sales charge) ... $ 16.65
===========
(1) Investments, at cost ......................................... $32,877,068
Statement of Operations
For the Six Months Ended March 31, 2006
INVESTMENT INCOME:
Dividends ...................................................... $ 39,364
Interest ....................................................... 38,372
----------
Total investment income ........................................ 77,736
----------
EXPENSES:
Management fees ................................................ 191,191
Transfer agent/maintenance fees ................................ 93,472
Administration fees ............................................ 19,026
Custodian fees ................................................. 10,258
Directors' fees ................................................ 450
Professional fees .............................................. 5,391
Reports to shareholders ........................................ 3,383
Registration fees .............................................. 16,606
Other expenses ................................................. 1,407
12b-1 distribution plan fees - Class A ......................... 30,985
12b-1 distribution plan fees - Class B ......................... 44,254
12b-1 distribution plan fees - Class C ......................... 22,997
----------
Total expenses ................................................. 439,420
Less: Earnings credits ......................................... (150)
----------
Net expenses ................................................... 439,270
----------
Net investment loss ............................................ (361,534)
----------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain during the period on:
Investments .................................................... 2,112,086
----------
Net realized gain .............................................. 2,112,086
----------
Net unrealized appreciation during the period on:
Investments .................................................... 2,785,249
----------
Net unrealized appreciation .................................... 2,785,249
----------
Net realized and unrealized gain ............................... 4,897,335
----------
Net increase in net assets resulting from operations ........... $4,535,801
==========
76 See accompanying notes.
SECURITY EQUITY FUND
Statement of Changes in Net Assets SMALL CAP GROWTH SERIES
SIX MONTHS
ENDED MARCH YEAR ENDED
31, 2006 SEPTEMBER
(unaudited) 30, 2005
----------- ------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment loss ............................ $ (361,534) $ (703,494)
Net realized gain during the period on
investments ................................. 2,112,086 4,851,401
Net unrealized appreciation during the period on
investments ................................. 2,785,249 1,920,648
----------- ------------
Net increase in net assets resulting from
operations .................................. 4,535,801 6,068,555
----------- ------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from sale of shares
Class A ..................................... 6,265,022 8,144,188
Class B ..................................... 1,636,567 1,848,399
Class C ..................................... 538,265 1,278,043
Cost of shares redeemed
Class A ..................................... (4,139,837) (10,786,990)
Class B ..................................... (1,217,938) (4,281,215)
Class C ..................................... (436,322) (1,752,947)
----------- ------------
Net increase (decrease) from capital share
transactions ................................ 2,645,757 (5,550,522)
----------- ------------
Net increase in net assets ..................... 7,181,558 518,033
----------- ------------
NET ASSETS:
Beginning of period ............................ 35,339,680 34,821,647
----------- ------------
End of period .................................. $42,521,238 $ 35,339,680
=========== ============
Accumulated net investment loss at end of
period ...................................... $ (361,534) $ --
=========== ============
CAPITAL SHARE ACTIVITY:
Shares sold
Class A ..................................... 383,082 560,063
Class B ..................................... 107,752 138,265
Class C ..................................... 34,784 91,558
Shares redeemed
Class A ..................................... (251,795) (759,381)
Class B ..................................... (80,029) (324,239)
Class C ..................................... (28,103) (128,106)
77 See accompanying notes.
Financial Highlights
Selected data for each share of capital stock SECURITY EQUITY FUND
outstanding throughout each period SMALL CAP GROWTH SERIES
SIX YEAR ENDED
MONTHS ENDED SEPTEMBER 30,
MARCH 31, ---------------------------------------------------
CLASS A 2006(g) 2005 2004 2003 2002(f) 2001
- ------- ------------ ------- ------- ------- ------- -------
PER SHARE DATA
Net asset value, beginning of period $ 15.76 $ 13.11 $ 11.63 $ 7.88 $ 9.80 $ 22.08
------- ------- ------- ------- ------- -------
Income (loss) from investment operations:
Net investment loss(c) (0.13) (0.24) (0.25) (0.18) (0.20) (0.18)
Net gain (loss) on securities
(realized and unrealized) 2.07 2.89 1.73 3.93 (1.72) (10.78)
------- ------- ------- ------- ------- -------
Total from investment operations 1.94 2.65 1.48 3.75 (1.92) (10.96)
------- ------- ------- ------- ------- -------
Less distributions:
Distributions from realized gains -- -- -- -- -- (1.32)
------- ------- ------- ------- ------- -------
Total distributions -- -- -- -- -- (1.32)
------- ------- ------- ------- ------- -------
Net asset value, end of period $ 17.70 $ 15.76 $ 13.11 $ 11.63 $ 7.88 $ 9.80
======= ======= ======= ======= ======= =======
TOTAL RETURN(a) 12.31% 20.21% 12.73% 47.59% (19.59%) (51.94%)
------- ------- ------- ------- ------- -------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $27,745 $22,637 $21,443 $14,406 $ 8,350 $17,235
------- ------- ------- ------- ------- -------
Ratios to average net assets:
Net investment loss (1.63%) (1.67%) (1.95%) (2.01%) (1.93%) (1.32%)
Total expenses(b) 2.03% 2.10% 2.09% 2.51% 2.14% 1.91%
Net expenses(d) 2.03% 2.10% 2.09% 2.25% 2.14% 1.91%
Expenses prior to custodian earnings
credits and net of expense waivers 2.03% 2.10% 2.09% 2.25% 2.14% 1.91%
------- ------- ------- ------- ------- -------
Portfolio turnover rate 139% 134% 157% 206% 302% 394%
SIX YEAR ENDED
MONTHS ENDED SEPTEMBER 30,
MARCH 31, ------------------------------------------------
CLASS B 2006(g) 2005 2004 2003 2002(f) 2001
- ------- ------------ ------- ------ ------ ------- -------
PER SHARE DATA
Net asset value, beginning of period $14.60 $12.24 $10.94 $ 7.47 $ 9.37 $ 21.34
------ ------ ------ ------ ------- -------
Income (loss) from investment operations:
Net investment loss(c) (0.18) (0.33) (0.33) (0.24) (0.26) (0.28)
Net gain (loss) on securities
(realized and unrealized) 1.92 2.69 1.63 3.71 (1.64) (10.37)
------ ------ ------ ------ ------- -------
Total from investment operations 1.74 2.36 1.30 3.47 (1.90) (10.65)
------ ------ ------ ------ ------- -------
Less distributions:
Distributions from realized gains -- -- -- -- -- (1.32)
------ ------ ------ ------ ------- -------
Total distributions -- -- -- -- -- (1.32)
------ ------ ------ ------ ------- -------
Net asset value, end of period $16.34 $14.60 $12.24 $10.94 $ 7.47 $ 9.37
====== ====== ====== ====== ======= =======
TOTAL RETURN(a) 11.92% 19.28% 11.88% 46.45% (20.28%) (52.31%)
------ ------ ------ ------ ------- -------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $9,720 $8,283 $9,218 $6,838 $ 4,292 $ 6,173
------ ------ ------ ------ ------- -------
Ratios to average net assets:
Net investment loss (2.38%) (2.41%) (2.69%) (2.76%) (2.69%) (2.07%)
Total expenses(b) 2.78% 2.85% 2.84% 3.23% 2.90% 2.67%
Net expenses(d) 2.78% 2.85% 2.83% 3.00% 2.90% 2.67%
Expenses prior to custodian earnings
credits and net of expense waivers 2.78% 2.85% 2.84% 3.00% 2.90% 2.67%
------ ------ ------ ------ ------- -------
Portfolio turnover rate 139% 134% 157% 206% 302% 394%
78 See accompanying notes.
Financial Highlights
Selected data for each share of capital stock SECURITY EQUITY FUND
outstanding throughout each period SMALL CAP GROWTH SERIES
SIX YEAR ENDED
MONTHS ENDED SEPTEMBER 30,
MARCH 31, --------------------------------------------------
CLASS C 2006(g) 2005 2004 2003 2002(e, f) 2001
- ------- ------------ ------ ------ ------ ---------- -------
PER SHARE DATA
Net asset value, beginning of period $14.88 $12.47 $11.15 $ 7.61 $ 9.53 $ 21.74
------ ------ ------ ------ ------- -------
Income (loss) from investment operations:
Net investment loss(c) (0.18) (0.33) (0.33) (0.24) (0.26) (0.28)
Net gain (loss) on securities
(realized and unrealized) 1.95 2.74 1.65 3.78 (1.66) (10.61)
------ ------ ------ ------ ------- -------
Total from investment operations 1.77 2.41 1.32 3.54 (1.92) (10.89)
------ ------ ------ ------ ------- -------
Less distributions:
Distributions from realized gains -- -- -- -- -- (1.32)
------ ------ ------ ------ ------- -------
Total distributions -- -- -- -- -- (1.32)
Net asset value, end of period $16.65 $14.88 $12.47 $11.15 $ 7.61 $ 9.53
====== ====== ====== ====== ======= =======
TOTAL RETURN(a) 11.90% 19.33% 11.84% 46.52% (20.15%) (52.46%)
------ ------ ------ ------ ------- -------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $5,056 $4,420 $4,160 $3,533 $ 2,164 $ 2,339
------ ------ ------ ------ ------- -------
Ratios to average net assets:
Net investment loss (2.38%) (2.42%) (2.69%) (2.76%) (2.69%) (2.09%)
Total expenses(b) 2.78% 2.85% 2.83% 3.23% 2.91% 2.68%
Net expenses(d) 2.78% 2.85% 2.82% 3.00% 2.91% 2.68%
Expenses prior to custodian earnings
credits and net of expense waivers 2.78% 2.85% 2.83% 3.00% 2.91% 2.68%
------ ------ ------ ------ ------- -------
Portfolio turnover rate 139% 134% 157% 206% 302% 394%
(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) Total expense information reflects expense ratios absent fund expense
reductions by the Investment Manager.
(c) Net investment loss was computed using average shares outstanding
throughout the period.
(d) Net expense information reflects expense ratios after voluntary expense
waivers, reimbursements and custodian earnings credits, as applicable.
(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, 2006. Percentage
amounts for the period, except total return, have been annualized.
79 See accompanying notes.
This page left blank intentionally.
80
SECURITY EQUITY FUND
Social Awareness Series
(SECURITY BENEFIT(SM) LOGO)
SECURITY MANAGEMENT COMPANY, LLC
ADVISER,
SECURITY MANAGEMENT COMPANY, LLC
81
SECURITY EQUITY FUND
Performance Summary SOCIAL AWARENESS SERIES
May 15, 2006 (unaudited)
PERFORMANCE
SOCIAL AWARENESS SERIES VS.
S&P 500 INDEX
(PERFORMANCE GRAPH)
SOCIAL AWARENESS SERIES
11/1/96 9,425.00
12/31/96 9,443.85
3/31/97 9,010.30
6/30/97 10,436.62
9/30/97 11,303.72
12/31/97 11,547.06
3/31/98 13,051.83
6/30/98 13,341.45
9/30/98 12,195.56
12/31/98 15,061.35
3/31/99 15,477.05
6/30/99 16,449.17
9/30/99 15,381.12
12/31/99 17,400.39
3/31/00 18,360.95
6/30/00 17,789.81
9/30/00 16,900.64
12/31/00 15,228.70
3/31/01 13,441.76
6/30/01 14,030.79
9/30/01 11,879.84
12/31/01 13,236.59
3/31/02 13,196.88
6/30/02 11,469.51
9/30/02 9,761.99
12/31/02 10,483.38
3/31/03 10,192.18
6/30/03 11,548.93
9/30/03 11,807.04
12/31/03 12,826.26
3/31/04 12,892.44
6/30/04 13,051.28
9/30/04 12,402.69
12/31/04 13,355.72
3/31/05 12,766.69
6/30/05 13,051.28
9/30/05 13,435.14
12/31/05 13,924.89
3/31/06 14,494.07
S&P 500
INCEPTION 11/1/96 10,000.00
12/31/96 10,543.03
3/31/97 10,825.35
6/30/97 12,715.48
9/30/97 13,669.03
12/31/97 14,062.00
3/31/98 16,023.66
6/30/98 16,552.94
9/30/98 14,905.78
12/31/98 18,078.99
3/31/99 18,982.39
6/30/99 20,320.16
9/30/99 19,051.03
12/31/99 21,885.54
3/31/00 22,388.55
06/30/00 21,794.86
09/30/00 21,584.04
12/31/00 19,896.73
3/31/2001 17,538.83
6/30/2001 18,565.85
9/30/2001 15,842.36
12/31/2001 17,536.24
3/31/2002 17,583.90
6/30/2002 15,228.68
9/30/2002 12,598.57
12/31/2002 13,662.59
3/31/2003 13,232.30
6/30/2003 15,269.15
9/30/2003 15,673.27
12/31/2003 17,583.18
3/31/2004 17,881.46
6/30/2004 18,189.77
9/30/2004 17,848.74
12/31/2004 19,496.86
3/31/2005 19,076.84
6/30/2005 19,336.53
9/30/2005 20,034.31
12/31/2005 20,450.52
3/31/2006 21,310.15
$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 S&P 500 Index is a capitalization-weighted index
composed of 500 selected common stocks that represent the broad domestic economy
and is a widely recognized unmanaged index of market performance.
AVERAGE ANNUAL RETURNS
PERIODS ENDED 3-31-06 1 YEAR 5 YEARS SINCE INCEPTION
- --------------------- ------ ------- ----------------
A Shares 13.53% 1.52% 4.68% (11-1-96)
A Shares with sales charge 6.99% 0.32% 4.02% (11-1-96)
B Shares 12.71% 0.70% 3.69% (11-1-96)
B Shares with CDSC 7.71% 0.31% 3.69% (11-1-96)
C Shares 12.70% 0.71% (1.96%) (1-29-99)
C Shares with CDSC 11.70% 0.71% (1.96%) (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 waivers, the performance quoted would be reduced.
PORTFOLIO COMPOSITION BY SECTOR
Consumer Discretionary 12.78%
Consumer Staples 10.99
Energy 2.76
Financials 12.22
Health Care 19.49
Industrials 14.36
Information Technology 19.53
Materials 2.39
Telecommunication Services 2.12
Repurchase Agreement 3.40
Liabilities, less cash & other assets (0.04)
------
Total net assets 100.00%
======
82 See accompanying notes.
SECURITY EQUITY FUND
Performance Summary SOCIAL AWARENESS SERIES
May 15, 2006 (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, 2005 - March 31, 2006.
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 mutual 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.
SERIES EXPENSES
BEGINNING ENDING EXPENSES
ACCOUNT ACCOUNT PAID
VALUE VALUE DURING
10-01-05 03-31-06(1) PERIOD(2)
--------- ----------- ---------
Social Awareness
Series - Class A
Actual $1,000.00 $1,078.80 $ 9.23
Hypothetical 1,000.00 1,016.06 8.95
Social Awareness
Series - Class B
Actual 1,000.00 1,074.50 13.09
Hypothetical 1,000.00 1,012.32 12.69
Social Awareness
Series - Class C
Actual 1,000.00 1,075.00 13.09
Hypothetical 1,000.00 1,012.32 12.69
(1) The actual ending account value is based on the actual total return of the
Series for the period October 1, 2005 to March 31, 2006 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, 2005 to March 31, 2006 was 7.88%, 7.45% and 7.50%, for
Class A, B and C shares, respectively.
(2) Expenses are equal to the Series annualized expense ratio (1.78%, 2.53% and
2.53% for Class A, B and C 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).
83
SECURITY EQUITY FUND
Schedule of Investments SOCIAL AWARENESS SERIES
March 31, 2006 (unaudited)
NUMBER MARKET
OF SHARES VALUE
--------- -----------
COMMON STOCKS - 96.6%
AIR FREIGHT & LOGISTICS - 4.2%
FedEx Corporation 6,400 $ 722,816
----------
BIOTECHNOLOGY - 2.6%
Amgen, Inc.* 6,100 443,775
----------
BROADCASTING & CABLE TV - 3.4%
CBS Corporation (Cl.B)* 7,800 187,044
Univision Communications, Inc.* 11,300 389,511
----------
576,555
----------
COMMUNICATIONS EQUIPMENT - 6.0%
ADC Telecommunications, Inc.* 17,685 452,559
Cisco Systems, Inc.* 26,700 578,589
----------
1,031,148
----------
CONSTRUCTION & ENGINEERING - 3.3%
Shaw Group, Inc.* 18,500 562,400
----------
CONSUMER FINANCE - 2.5%
American Express Company 8,150 428,282
----------
DATA PROCESSING & OUTSOURCED SERVICES - 3.0%
First Data Corporation 10,850 507,997
----------
DRUG RETAIL - 3.4%
CVS Corporation 19,600 585,452
----------
ELECTRICAL COMPONENTS & EQUIPMENT - 2.1%
Power-One, Inc.* 49,000 352,800
----------
GENERAL MERCHANDISE STORES - 1.4%
Target Corporation 4,500 234,045
----------
HEALTH CARE EQUIPMENT - 8.6%
Fisher Scientific International, Inc.* 5,500 374,275
Medtronic, Inc. 11,300 573,475
Zimmer Holdings, Inc.* 7,600 513,760
----------
1,461,510
----------
HEALTH CARE SERVICES - 3.4%
Covance, Inc.* 10,000 587,500
----------
HOME IMPROVEMENT RETAIL - 3.4%
Home Depot, Inc. 13,800 583,740
----------
HYPERMARKETS & SUPERCENTERS - 2.9%
Costco Wholesale Corporation 9,200 498,272
----------
INDUSTRIAL GASES - 2.4%
Praxair, Inc. 7,400 408,110
----------
IT CONSULTING & OTHER SERVICES - 2.2%
Unisys Corporation* 53,700 369,993
----------
MANAGED HEALTH CARE - 2.3%
WellPoint, Inc.* 5,000 387,150
----------
MOVIES & ENTERTAINMENT - 4.6%
Time Warner, Inc. 29,000 486,910
Viacom, Inc. (Cl.B)* 7,800 302,640
----------
789,550
----------
PRINCIPAL
AMOUNT OR
NUMBER MARKET
OF SHARES VALUE
--------- ------------
COMMON STOCKS (CONTINUED)
MULTI-LINE INSURANCE - 4.6%
American International Group, Inc. 11,854 $ 783,431
-----------
OIL & GAS EQUIPMENT & SERVICES - 1.6%
BJ Services Company 8,000 276,800
-----------
OIL & GAS STORAGE & TRANSPORTATION - 1.1%
Williams Companies, Inc. 9,100 194,649
-----------
OTHER DIVERSIFIED FINANCIAL SERVICES - 5.1%
First Marblehead Corporation 13,700 592,525
JP Morgan Chase & Company 6,800 283,152
-----------
875,677
-----------
PHARMACEUTICALS - 2.6%
Johnson & Johnson 7,604 450,309
-----------
SEMICONDUCTORS - 4.1%
Analog Devices, Inc. 8,600 329,294
Intel Corporation 19,500 377,325
-----------
706,619
-----------
SOFT DRINKS - 4.7%
Coca-Cola Company 9,300 389,391
PepsiCo, Inc. 7,000 404,530
-----------
793,921
-----------
SYSTEMS SOFTWARE - 4.2%
Microsoft Corporation 26,500 721,065
-----------
TRADING COMPANIES & DISTRIBUTORS - 2.1%
W.W. Grainger, Inc. 4,700 354,145
-----------
TRUCKING - 2.7%
J.B. Hunt Transport Services, Inc. 21,400 460,956
-----------
WIRELESS TELECOMMUNICATION SERVICE - 2.1%
Sprint Nextel Corporation 14,000 361,760
-----------
TOTAL COMMON STOCKS
(cost $15,748,823) 16,510,427
-----------
REPURCHASE AGREEMENT - 3.4%
United Missouri Bank, 4.36%, dated 03-31-06, matures
04-03-06; repurchase amount of $578,210
(Collateralized by FHLMC, 4.35%, 06-02-08 with a
value of $590,416) $ 578,000 578,000
-----------
TOTAL REPURCHASE AGREEMENT
(cost $578,000) 578,000
-----------
TOTAL INVESTMENTS - 100.0%
(cost $16,326,823) 17,088,427
LIABILITIES, LESS CASH & OTHER ASSETS - (0.0%) (5,191)
-----------
TOTAL NET ASSETS - 100.0% $17,083,236
===========
The identified cost of investments owned at March 31, 2006 was the same for
federal income tax and financial statement purposes.
* Non-income producing security
84 See accompanying notes.
SECURITY EQUITY FUND
SOCIAL AWARENESS SERIES
(unaudited)
Statement of Assets and Liabilities
March 31, 2006
ASSETS:
Investments, at value(1) ........................................ $17,088,427
Cash ............................................................ 387
Receivables:
Fund shares sold ............................................. 5,194
Dividends .................................................... 5,694
Prepaid expenses ................................................ 20,150
-----------
Total assets .................................................... 17,119,852
-----------
LIABILITIES:
Payable for:
Fund shares redeemed ......................................... 5,522
Management fees .............................................. 11,019
Custodian fees ............................................... 1,400
Transfer agent and administration fees ....................... 3,649
Professional fees ............................................ 6,115
12b-1 distribution plan fees ................................. 8,678
Director's fees .............................................. 88
Other ........................................................ 145
-----------
Total liabilities ............................................... 36,616
-----------
NET ASSETS ...................................................... $17,083,236
===========
NET ASSETS CONSIST OF:
Paid in capital ................................................. $17,412,211
Accumulated net investment loss ................................. (94,011)
Accumulated net realized loss on sale of investments ............ (996,568)
Net unrealized appreciation in value of investments ............. 761,604
-----------
Net assets ...................................................... $17,083,236
===========
CLASS A:
Capital shares outstanding
(unlimited number of shares authorized) ...................... 514,461
Net assets ...................................................... $11,266,301
Net asset value and redemption price per share .................. $ 21.90
===========
Maximum offering price per share
(net asset value divided by 94.25%) .......................... $ 23.24
===========
CLASS B:
Capital shares outstanding
(unlimited number of shares authorized) ...................... 207,741
Net assets ...................................................... $ 4,163,968
Net asset value, offering and redemption price per share
(excluding any applicable contingent deferred sales
charge) ...................................................... $ 20.04
===========
CLASS C:
Capital shares outstanding
(unlimited number of shares authorized) ...................... 80,628
Net assets ...................................................... $ 1,652,967
Net asset value, offering and redemption price per share
(excluding any applicable contingent deferred sales
charge) ...................................................... $ 20.50
===========
(1)Investments, at cost ......................................... $16,326,823
Statement of Operations
For the Six Months Ended March 31, 2006
INVESTMENT INCOME:
Dividends ..................................................... $ 66,179
Interest ...................................................... 12,954
----------
Total investment income ....................................... 79,133
----------
EXPENSES:
Management fees ............................................... 84,845
Custodian fees ................................................ 2,128
Transfer agent/maintenance fees ............................... 24,000
Administration fees ........................................... 12,826
Directors' fees ............................................... 230
Professional fees ............................................. 8,392
Reports to shareholders ....................................... 2,235
Registration fees ............................................. 15,559
Other expenses ................................................ 988
12b-1 distribution plan fees - Class A ........................ 13,898
12b-1 distribution plan fees - Class B ........................ 21,020
12b-1 distribution plan fees - Class C ........................ 8,234
----------
Total expenses ................................................ 194,355
Less: Expenses waived ......................................... (21,211)
----------
Net expenses .................................................. 173,144
----------
Net investment loss ........................................... (94,011)
----------
NET REALIZED AND UNREALIZED GAIN:
Net realized gain during the period on:
Investments ................................................... 554,863
----------
Net realized gain ............................................. 554,863
----------
Net unrealized appreciation during the period on:
Investments ................................................... 804,847
----------
Net unrealized appreciation ................................... 804,847
----------
Net realized and unrealized gain .............................. 1,359,710
----------
Net increase in net assets resulting from operations .......... $1,265,699
==========
85 See accompanying notes.
SECURITY EQUITY FUND
Statement of Changes in Net Assets SOCIAL AWARENESS SERIES
SIX MONTHS
ENDED
MARCH 31, YEAR ENDED
2006 SEPTEMBER 30,
(unaudited) 2005
----------- -------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment loss ........................................... $ (94,011) $ (10,128)
Net realized gain (loss) during the period on investments ..... 554,863 (90,090)
Net unrealized appreciation during the period on investments .. 804,847 1,425,092
----------- -----------
Net increase in net assets resulting from operations .......... 1,265,699 1,324,874
----------- -----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from sale of shares
Class A .................................................... 1,060,726 2,732,571
Class B .................................................... 200,651 383,674
Class C .................................................... 86,539 446,322
Cost of shares redeemed
Class A .................................................... (1,362,904) (2,543,663)
Class B .................................................... (629,226) (2,114,208)
Class C .................................................... (163,845) (564,810)
----------- -----------
Net decrease from capital share transactions .................. (808,059) (1,660,114)
----------- -----------
Net increase (decrease) in net assets ......................... 457,640 (335,240)
----------- -----------
NET ASSETS:
Beginning of period ........................................... 16,625,596 16,960,836
----------- -----------
End of period ................................................. $17,083,236 $16,625,596
=========== ===========
Accumulated net investment loss at end of period .............. $ (94,011) $ --
=========== ===========
CAPITAL SHARE ACTIVITY:
Shares sold
Class A .................................................... 50,295 139,285
Class B .................................................... 10,338 21,066
Class C .................................................... 4,377 24,090
Shares redeemed
Class A .................................................... (64,207) (128,966)
Class B .................................................... (32,661) (116,183)
Class C .................................................... (8,202) (30,640)
86 See accompanying notes.
Financial Highlights
Selected data for each share of capital SECURITY EQUITY FUND
stock outstanding throughout each period SOCIAL AWARENESS SERIES
SIX MONTHS
ENDED YEAR ENDED SEPTEMBER 30,
MARCH 31, -------------------------------------------------
CLASS A 2006(f) 2005 2004 2003 2002 2001
- ------- ---------- ------- ------ ------ ------- -------
PER SHARE DATA
Net asset value, beginning of period $ 20.30 $ 18.74 $17.84 $14.75 $ 17.95 $ 26.04
------- ------- ------ ------ ------- -------
Income (loss) from investment operations:
Net investment income (loss)(c) (0.09) 0.04 (0.10) (0.13) (0.11) (0.07)
Net gain (loss) on securities (realized
and unrealized) 1.69 1.52 1.00 3.22 (3.09) (7.55)
------- ------- ------ ------ ------- -------
Total from investment operations 1.60 1.56 0.90 3.09 (3.20) (7.62)
------- ------- ------ ------ ------- -------
Less distributions:
Distributions from realized gains -- -- -- -- -- (0.47)
------- ------- ------ ------ ------- -------
Total distributions -- -- -- -- -- (0.47)
------- ------- ------ ------ ------- -------
Net asset value, end of period $ 21.90 $ 20.30 $18.74 $17.84 $ 14.75 $ 17.95
======= ======= ====== ====== ======= =======
TOTAL RETURN(a) 7.88% 8.32% 5.04% 20.95% (17.83%) (29.71%)
------- ------- ------ ------ ------- -------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $11,266 $10,725 $9,708 $9,243 $ 7,355 $10,909
------- ------- ------ ------ ------- -------
Ratios to average net assets:
Net investment income (loss) (0.85%) 0.20% (0.55%) (0.76%) (0.58%) (0.30%)
Total expenses(b) 2.03% 2.04% 1.93% 2.05% 1.66% 1.43%
Net expenses(d) 1.78% 1.79% 1.76% 2.05% 1.66% 1.43%
Expenses prior to custodian earnings
credits and net of expense waivers 1.78% 1.79% 1.77% 2.05% 1.66% 1.43%
------- ------- ------ ------ ------- -------
Portfolio turnover rate 24% 42% 28% 26% 3% 17%
SIX MONTHS
ENDED YEAR ENDED SEPTEMBER 30,
MARCH 31, ------------------------------------------------
CLASS B 2006(f) 2005 2004 2003 2002 2001
- ------- ---------- ------ ------ ------ ------- -------
PER SHARE DATA
Net asset value, beginning of period $18.65 $17.34 $16.63 $13.85 $ 17.01 $ 24.96
------ ------ ------ ------ ------- -------
Income (loss) from investment operations:
Net investment loss(c) (0.16) (0.08) (0.23) (0.24) (0.26) (0.28)
Net gain (loss) on securities (realized
and unrealized) 1.55 1.39 0.94 3.02 (2.90) (7.20)
------ ------ ------ ------ ------- -------
Total from investment operations 1.39 1.31 0.71 2.78 (3.16) (7.48)
------ ------ ------ ------ ------- -------
Less distributions:
Distributions from realized gains -- -- -- -- -- (0.47)
------ ------ ------ ------ ------- -------
Total distributions -- -- -- -- -- (0.47)
------ ------ ------ ------ ------- -------
Net asset value, end of period $20.04 $18.65 $17.34 $16.63 $ 13.85 $ 17.01
====== ====== ====== ====== ======= =======
TOTAL RETURN(a) 7.45% 7.56% 4.27% 20.07% (18.58%) (30.44%)
------ ------ ------ ------ ------- -------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $4,164 $4,290 $5,639 $6,153 $ 5,999 $ 8,969
------ ------ ------ ------ ------- -------
Ratios to average net assets:
Net investment loss (1.60%) (0.44%) (1.30%) (1.51%) (1.49%) (1.31%)
Total expenses(b) 2.78% 2.79% 2.68% 2.80% 2.57% 2.43%
Net expenses(d) 2.53% 2.54% 2.51% 2.80% 2.57% 2.43%
Expenses prior to custodian earnings
credits and net of expense waivers 2.53% 2.54% 2.52% 2.80% 2.57% 2.43%
------ ------ ------ ------ ------- -------
Portfolio turnover rate 24% 42% 28% 26% 3% 17%
87 See accompanying notes.
Financial Highlights
Selected data for each share of capital SECURITY EQUITY FUND
stock outstanding throughout each period SOCIAL AWARENESS SERIES
SIX MONTHS
ENDED YEAR ENDED SEPTEMBER 30,
MARCH 31, ------------------------------------------------
CLASS A 2006(f) 2005 2004 2003 2002(e) 2001
- ------- ---------- ------ ------ ------ ------- -------
PER SHARE DATA
Net asset value, beginning of period $19.07 $17.74 $17.01 $14.17 $ 17.40 $ 25.50
------ ------ ------ ------ ------- -------
Income (loss) from investment operations:
Net investment loss(c) (0.16) (0.10) (0.24) (0.24) (0.26) (0.28)
Net gain (loss) on securities (realized
and unrealized) 1.59 1.43 0.97 3.08 (2.97) (7.35)
------ ------ ------ ------ ------- -------
Total from investment operations 1.43 1.33 0.73 2.84 (3.23) (7.63)
------ ------ ------ ------ ------- -------
Less distributions:
Distributions from realized gains -- -- -- -- -- (0.47)
------ ------ ------ ------ ------- -------
Total distributions -- -- -- -- -- (0.47)
------ ------ ------ ------ ------- -------
Net asset value, end of period $20.50 $19.07 $17.74 $17.01 $ 14.17 $ 17.40
====== ====== ====== ====== ======= =======
TOTAL RETURN(a) 7.50% 7.50% 4.29% 20.04% (18.56%) (30.39%)
------ ------ ------ ------ ------- -------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $1,653 $1,611 $1,614 $1,548 $ 1,123 $ 1,126
------ ------ ------ ------ ------- -------
Ratios to average net assets:
Net investment loss (1.60%) (0.51%) (1.30%) (1.51%) (1.48%) (1.33%)
Total expenses(b) 2.78% 2.79% 2.68% 2.80% 2.57% 2.45%
Net expenses(d) 2.53% 2.54% 2.51% 2.80% 2.57% 2.45%
Expenses prior to custodian earnings
credits and net of expense waivers 2.53% 2.54% 2.52% 2.80% 2.57% 2.45%
------ ------ ------ ------ ------- -------
Portfolio turnover rate 24% 42% 28% 26% 3% 17%
(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) Total 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 voluntary expense
waivers, reimbursements and custodian earnings credits, as applicable.
(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, 2006. Percentage
amounts for the period, except total return, have been annualized.
88 See accompanying notes.
SECURITY LARGE CAP VALUE FUND
(SECURITY BENEFIT(SM) LOGO)
Security Management Company, LLC
ADVISER,
SECURITY MANAGEMENT COMPANY, LLC
89
SECURITY
Performance Summary LARGE CAP VALUE FUND
May 15, 2006 (unaudited)
PERFORMANCE
SECURITY LARGE CAP VALUE FUND VS.
RUSSELL 1000 VALUE INDEX
(PERFORMANCE GRAPH)
LARGE CAP VALUE INVESTMENT
3/31/96 9,425.00
6/30/96 9,796.99
9/30/96 10,206.97
12/31/96 10,528.26
3/31/97 10,502.11
6/30/97 11,957.15
9/30/97 13,810.55
12/31/97 13,864.25
3/31/98 14,990.97
6/30/98 14,499.61
9/30/98 12,712.91
12/31/98 13,821.28
3/31/99 13,821.28
6/30/99 15,807.10
9/30/99 14,238.30
12/31/99 14,168.09
3/31/00 13,325.00
6/30/00 12,605.29
9/30/00 13,201.62
12/31/00 13,141.75
3/31/01 12,250.43
6/30/01 12,747.91
9/30/01 11,131.10
12/31/01 12,407.69
3/31/02 12,261.97
6/30/02 10,929.60
9/30/02 8,847.77
12/31/02 9,409.86
3/31/03 8,931.04
6/30/03 10,263.41
9/30/03 10,638.14
12/31/03 11,975.25
3/31/04 12,350.78
6/30/04 12,204.74
9/30/04 11,912.66
12/31/04 13,185.30
3/31/05 13,039.26
6/30/05 13,060.12
9/30/05 14,144.99
12/31/05 14,453.53
3/31/06 15,397.52
RUSSELL 1000 VALUE INDEX
3/31/1996 10,000.00
6/30/96 10,171.61
9/30/96 10,467.70
12/31/96 11,511.81
3/31/97 11,806.66
6/30/97 13,547.53
9/30/97 14,896.23
12/31/97 15,562.19
3/31/98 17,375.74
6/30/98 17,453.86
9/30/98 15,433.01
12/31/98 17,995.72
3/31/99 18,254.11
6/30/99 20,311.94
9/30/99 18,322.72
12/31/99 19,319.25
3/31/00 19,411.52
06/30/00 18,501.78
09/30/00 19,956.53
12/31/00 20,675.28
3/31/2001 19,464.64
6/30/2001 20,414.34
9/30/2001 18,177.93
12/31/2001 19,518.67
3/31/2002 20,316.96
6/30/2002 18,586.36
9/30/2002 15,097.11
12/31/2002 16,489.30
3/31/2003 15,687.27
6/30/2003 18,397.46
9/30/2003 18,777.02
12/31/2003 21,441.32
3/31/2004 22,089.49
6/30/2004 22,284.10
9/30/2004 22,627.24
12/31/2004 24,976.38
3/31/2005 24,996.60
6/30/2005 25,414.83
9/30/2005 26,401.39
12/31/2005 26,736.80
3/31/2006 28,320.85
$10,000 OVER TEN YEARS
This chart assumes a $10,000 investment in Class A shares of Security Large Cap
Value Fund on March 31, 1996, 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 Russell 1000 Value Index is an unmanaged index representing the
performance of those Russell 1000 Index companies with lower price-to-book
ratios and lower forecasted growth values.
AVERAGE ANNUAL RETURNS
SINCE
PERIODS ENDED 3-31-06 1 YEAR 5 YEARS 10 YEARS INCEPTION
- --------------------- ------ ------- -------- ---------
A Shares 18.09% 4.68% 5.03% --
A Shares with sales charge 11.32% 3.45% 4.42% --
B Shares 17.29% 3.85% 4.06% --
B Shares with CDSC 12.29% 3.50% 4.06% --
C Shares 17.30% 3.84% N/A 0.83%
(1-29-99)
C Shares with CDSC 16.30% 3.84% N/A 0.83%
(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 maxi- mum 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 share- holder 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.
PORTFOLIO COMPOSITION BY SECTOR
Consumer Discretionary 7.76%
Consumer Staples 12.94
Energy 13.43
Financials 15.34
Health Care 7.52
Industrials 18.49
Information Technology 5.88
Materials 6.04
Telecommunication Services 3.01
Utilities 1.56
Exchange Traded Funds 5.94
Commercial Paper 1.60
Repurchase Agreement 0.60
Liabilities, less cash & other assets (0.11)
------
Total net assets 100.00%
======
90 See accompanying notes.
SECURITY
Performance Summary LARGE CAP VALUE FUND
May 15, 2006 (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, 2005 - March 31, 2006.
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 mutual 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
10-01-05 03-31-06(1) PERIOD(2)
------------- ------------- -------------
Security Large Cap Value Fund
- Class A
Actual $1,000.00 $1,088.60 $ 7.97
Hypothetical 1,000.00 1,017.30 7.70
Security Large Cap Value Fund
- Class B
Actual 1,000.00 1,084.60 11.85
Hypothetical 1,000.00 1,013.56 11.45
Security Large Cap Value Fund
- Class C
Actual 1,000.00 1,086.30 11.86
Hypothetical 1,000.00 1,013.56 11.45
(1) The actual ending account value is based on the actual total return of the
Fund for the period October 1, 2005 to March 31, 2006 after actual expenses
and will differ from the hypothetical ending account value which is based
on the Fund's expense ratio and a hypothetical annual return of 5% before
expenses. The actual cumulative return at net asset value for the period
October 1, 2005 to March 31, 2006 was 8.86%, 8.46% and 8.63%, for Class A,
B and C shares, respectively.
(2) Expenses are equal to the Fund's annualized expense ratio (1.53%, 2.28% and
2.28% for Class A, B and C shares, respectively) multiplied by the average
account value over the period, multiplied by 182/365 (to reflect the
one-half year period).
91
SECURITY
Schedule of Investments LARGE CAP VALUE FUND
March 31, 2006 (unaudited)
NUMBER MARKET
OF SHARES VALUE
---------- -----------
COMMON STOCKS - 97.9%
AEROSPACE & DEFENSE - 3.0%
United Technologies Corporation 32,800 $ 1,901,416
-----------
AGRICULTURAL PRODUCTS - 2.5%
Archer-Daniels-Midland Company 47,100 1,584,915
-----------
ALUMINUM - 0.7%
Alcoa, Inc. 14,800 452,288
-----------
BROADCASTING & CABLE TV - 2.0%
CBS Corporation (Cl.B)* 15,100 362,098
Clear Channel Communications, Inc. 31,800 922,518
-----------
1,284,616
-----------
COMMUNICATIONS EQUIPMENT - 2.1%
3Com Corporation* 260,000 1,331,200
-----------
COMPUTER HARDWARE - 2.1%
Hewlett-Packard Company 40,900 1,345,610
-----------
CONSTRUCTION & ENGINEERING - 7.0%
McDermott International, Inc.* 47,700 2,597,265
Shaw Group, Inc.* 61,400 1,866,560
-----------
4,463,825
-----------
CONSUMER FINANCE - 0.4%
PHH Corporation* 9,500 253,650
-----------
DIVERSIFIED CHEMICALS - 3.4%
Dow Chemical Company 30,100 1,222,060
E.I. du Pont de Nemours & Company 22,100 932,841
-----------
2,154,901
-----------
DRUG RETAIL - 3.2%
CVS Corporation 69,400 2,072,978
-----------
ELECTRIC UTILITIES - 1.6%
Edison International 24,300 1,000,674
-----------
EXCHANGE TRADED FUNDS - 5.9%
iShares Russell 1000 Value Index Fund 25,900 1,891,218
iShares S&P 500 Value Index Fund 27,800 1,909,860
-----------
3,801,078
-----------
HEALTH CARE EQUIPMENT - 3.0%
Fisher Scientific International, Inc.* 27,900 1,898,595
-----------
HEALTH CARE SERVICES - 2.1%
Medco Health Solutions, Inc.* 23,500 1,344,670
-----------
HYPERMARKETS & SUPERCENTERS - 3.2%
Costco Wholesale Corporation 38,100 2,063,496
-----------
INDUSTRIAL CONGLOMERATES - 6.0%
General Electric Company 57,000 1,982,460
Tyco International, Ltd. 68,900 1,852,032
-----------
3,834,492
-----------
INTEGRATED OIL & GAS - 6.3%
Chevron Corporation 21,700 $ 1,257,949
ConocoPhillips 15,400 972,510
Exxon Mobil Corporation 29,300 1,783,198
-----------
4,013,657
-----------
IT CONSULTING & OTHER SERVICES - 1.7%
Unisys Corporation* 157,400 1,084,486
-----------
MANAGED HEALTH CARE - 2.5%
WellPoint, Inc.* 20,300 1,571,829
-----------
MOVIES & ENTERTAINMENT - 5.7%
News Corporation 74,100 1,230,801
Time Warner, Inc. 111,100 1,865,369
Viacom, Inc. (Cl.B)* 15,100 585,880
-----------
3,682,050
-----------
MULTI-LINE INSURANCE - 4.0%
American International Group, Inc. 39,100 2,584,119
-----------
OIL & GAS EQUIPMENT & SERVICES - 2.6%
Halliburton Company 22,400 1,635,648
-----------
OIL & GAS REFINING & MARKETING - 2.6%
Sasol, Ltd. ADR 44,600 1,687,218
-----------
OIL & GAS STORAGE & TRANSPORTATION - 2.0%
Williams Companies, Inc. 58,800 1,257,732
-----------
OTHER DIVERSIFIED FINANCIAL SERVICES - 7.8%
Citigroup, Inc. 34,000 1,606,160
First Marblehead Corporation(3) 45,000 1,946,250
JP Morgan Chase & Company 34,500 1,436,580
-----------
4,988,990
-----------
PACKAGED FOODS & MEATS - 2.0%
Tyson Foods, Inc. 95,600 1,313,544
-----------
PROPERTY & CASUALTY INSURANCE - 3.1%
Berkshire Hathaway, Inc.* 22 1,987,700
-----------
RAILROADS - 2.5%
Union Pacific Corporation 17,500 1,633,625
-----------
SPECIALTY CHEMICALS - 2.0%
Rohm & Haas Company 25,800 1,260,846
-----------
TOBACCO - 1.9%
Altria Group, Inc. 17,600 1,247,136
-----------
WIRELESS TELECOMMUNICATION SERVICE - 3.0%
Alltel Corporation 7,400 479,150
Sprint Nextel Corporation 56,000 1,447,040
-----------
1,926,190
-----------
TOTAL COMMON STOCKS
(cost $55,048,865) 62,663,174
-----------
92 See accompanying notes.
SECURITY
Schedule of Investments LARGE CAP VALUE FUND
March 31, 2006 (unaudited)
NUMBER MARKET
OF SHARES VALUE
---------- -----------
CORPORATE BOND - 0.0%
SERVICES - 0.0%
American Eco Corporation, 9.625% - 2008*(1,2) $ 125,000 $ --
-----------
TOTAL CORPORATE BOND (cost $125,000) --
-----------
COMMERCIAL PAPER - 1.6%
BROKERAGE - 1.6%
Morgan Stanley, 4.75%, 04-03-06 1,000,000 999,736
-----------
TOTAL COMMERCIAL PAPER (cost $999,736) 999,736
-----------
REPURCHASE AGREEMENT - 0.6%
United Missouri Bank, 4.36%, dated 03-31-06,
matures 04-03-06; repurchase amount of
$398,145 (Collateralized by GNMA,
4.50%, 11-16-31 with a value of $405,997) 398,000 398,000
-----------
TOTAL REPURCHASE AGREEMENT (cost $398,000) 398,000
-----------
TOTAL INVESTMENTS - 100.1% (cost $56,571,601) 64,060,910
LIABILITIES, LESS CASH & OTHER ASSETS - (0.1%) (71,920)
-----------
TOTAL NET ASSETS - 100.0% $63,988,990
===========
For federal income tax purposes the identified cost of investments owned at
March 31, 2006 was $56,626,325.
* Non-income producing security
ADR (American Depositary Receipt)
(1) Security is in default due to bankruptcy.
(2) Security is fair valued by the Board of Directors and is illiquid. The
total mar- ket value of fair valued and illiquid securities amounts to $0
or 0.0% of total assets.
(3) Security is segregated as collateral for open written option contracts.
93 See accompanying notes.
SECURITY LARGE
CAP VALUE FUND
(unaudited)
Statement of Assets and Liabilities
March 31, 2006
ASSETS:
Investments, at value(1) ......................................... $64,060,910
Cash ............................................................. 709
Receivables:
Fund shares sold .............................................. 22,142
Dividends ..................................................... 67,337
Prepaid expenses ................................................. 51,674
-----------
Total assets ..................................................... 64,202,772
-----------
LIABILITIES:
Payable for:
Fund shares redeemed .......................................... 100,651
Written options, at value (premiums received, $23,243) ........ 29,640
Management fees ............................................... 32,241
Custodian fees ................................................ 3,200
Transfer agent and administration fees ........................ 10,556
Professional fees ............................................. 14,015
12b-1 distribution plan fees .................................. 20,909
Director's fees ............................................... 2,570
-----------
Total liabilities ................................................ 213,782
-----------
NET ASSETS ....................................................... $63,988,990
===========
NET ASSETS CONSIST OF:
Paid in capital .................................................. $62,280,035
Accumulated net investment loss .................................. (21,493)
Accumulated net realized loss on sale of investments and written
options ....................................................... (5,752,464)
Net unrealized appreciation in value of investments and options
written ....................................................... 7,482,912
-----------
Net assets ....................................................... $63,988,990
===========
CLASS A:
Capital shares outstanding
(unlimited number of shares authorized) ....................... 7,443,040
Net assets ....................................................... $54,666,451
Net asset value and redemption price per share ................... $ 7.34
===========
Maximum offering price per share
(net asset value divided by 94.25%) ........................... $ 7.79
===========
CLASS B:
Capital shares outstanding
(unlimited number of shares authorized) ....................... 904,109
Net assets ....................................................... $ 6,258,656
Net asset value, offering and redemption price per share
(excluding any applicable contingent deferred sales charge) ... $ 6.92
===========
CLASS C:
Capital shares outstanding
(unlimited number of shares authorized) ....................... 434,588
Net assets ....................................................... $ 3,063,883
Net asset value, offering and redemption price per share
(excluding any applicable contingent deferred sales charge) ... $ 7.05
===========
(1)Investments, at cost .......................................... $56,571,601
Statement of Operations
For the Six Months Ended March 31, 2006
INVESTMENT INCOME:
Dividends ..................................................... $ 414,830
Interest ...................................................... 24,586
----------
Total investment income ....................................... 439,416
----------
EXPENSES:
Management fees ............................................... 177,466
Transfer agent/maintenance fees ............................... 82,136
Administration fees ........................................... 25,691
Custodian fees ................................................ 2,194
Directors' fees ............................................... 14,478
Professional fees ............................................. 8,859
Reports to shareholders ....................................... 12,171
Registration fees ............................................. 19,448
Other expenses ................................................ 8,317
12b-1 distribution plan fees - Class A ........................ 56,147
12b-1 distribution plan fees - Class B ........................ 35,380
12b-1 distribution plan fees - Class C ........................ 13,057
----------
Total expenses ................................................ 455,344
Less: Earnings credits ........................................ (29)
----------
Net expenses .................................................. 455,315
----------
Net investment loss ........................................... (15,899)
----------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain during the period on:
Investments ................................................... 2,019,359
Options written ............................................... 65,271
----------
Net realized gain ............................................. 2,084,630
----------
Net unrealized appreciation (depreciation)
during the period on:
Investments ................................................... 2,529,131
Options written ............................................... (9,973)
----------
Net unrealized appreciation ................................... 2,519,158
----------
Net realized and unrealized gain .............................. 4,603,788
----------
Net increase in net assets resulting from operations .......... $4,587,889
==========
94 See accompanying notes.
SECURITY
Statement of Changes in Net Assets LARGE CAP VALUE FUND
SIX MONTHS
ENDED MARCH YEAR ENDED
31, 2006 SEPTEMBER
(unaudited) 30, 2005
----------- ------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income (loss) .................. $ (15,899) $ 226,529
Net realized gain during the period on
investments and options written ............ 2,084,630 6,823,643
Net unrealized appreciation during the period
on investments and options written ......... 2,519,158 2,430,519
----------- ------------
Net increase in net assets resulting from
operations ................................. 4,587,889 9,480,691
----------- ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A .................................... (232,389) --
----------- ------------
Total distributions to shareholders ........... (232,389) --
----------- ------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from sale of shares
Class A .................................... 14,364,497 6,416,077
Class B .................................... 445,078 1,294,323
Class C .................................... 740,110 1,300,122
Distributions reinvested
Class A .................................... 214,200 --
Cost of shares redeemed
Class A .................................... (8,801,884) (11,718,072)
Class B .................................... (3,252,406) (4,481,711)
Class C .................................... (770,082) (1,393,049)
----------- ------------
Net increase (decrease) from capital share
transactions ............................... 2,939,513 (8,582,310)
----------- ------------
Net increase in net assets .................... 7,295,013 898,381
----------- ------------
NET ASSETS:
Beginning of period ........................... 56,693,977 55,795,596
----------- ------------
End of period ................................. $63,988,990 $ 56,693,977
=========== ============
Accumulated undistributed net investment income
(loss) at end of period .................... $ (21,493) $ 226,795
=========== ============
CAPITAL SHARE ACTIVITY:
Shares sold
Class A .................................... 1,992,219 1,026,323
Class B .................................... 67,430 220,087
Class C .................................... 108,557 213,510
Shares reinvested
Class A .................................... 30,999 --
Shares redeemed
Class A .................................... (1,261,588) (1,883,545)
Class B .................................... (495,678) (763,775)
Class C .................................... (120,403) (231,421)
95 See accompanying notes.
Financial Highlights
Selected data for each share of capital stock outstanding SECURITY
throughout each period LARGE CAP VALUE FUND
SIX MONTHS ENDED YEAR ENDED SEPTEMBER 30,
MARCH 31, --------------------------------------------------
CLASS A 2006(i) 2005(g) 2004 2003 2002(d, f) 2001(c)
- -------- ---------------- ------- ------- ------- ---------- -------
PER SHARE DATA
Net asset value, beginning of period $ 6.78 $ 5.71 $ 5.11 $ 4.25 $ 5.37 $ 6.42
------- ------- ------- ------- ------- -------
Income (loss) from investment operations:
Net investment income(b) -- 0.03 0.01 0.02 0.01 0.03
Net gain (loss) on securities (realized
and unrealized) 0.60 1.04 0.60 0.84 (1.10) (1.03)
------- ------- ------- ------- ------- -------
Total from investment operations 0.60 1.07 0.61 0.86 (1.09) (1.00)
------- ------- ------- ------- ------- -------
Less distributions:
Dividends from net investment income (0.04) -- (0.01) -- (0.03) (0.05)
------- ------- ------- ------- ------- -------
Total distributions (0.04) -- (0.01) -- (0.03) (0.05)
------- ------- ------- ------- ------- -------
Net asset value, end of period $ 7.34 $ 6.78 $ 5.71 $ 5.11 $ 4.25 $ 5.37
======= ======= ======= ======= ======= =======
TOTAL RETURN(a) 8.86% 18.74% 11.98% 20.24% (20.51%) (15.68%)
------- ------- ------- ------- ------- -------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $54,666 $45,295 $43,071 $45,858 $32,997 $45,006
------- ------- ------- ------- ------- -------
Ratios to average net assets:
Net investment income 0.08%(h) 0.56% 0.19% 0.41% 0.20% 0.49%
Total expenses 1.53% 1.61% 1.52% 1.45% 1.37% 1.32%
------- ------- ------- ------- ------- -------
Portfolio turnover rate 44% 110% 75% 76% 68% 180%
SIX MONTHS ENDED YEAR ENDED SEPTEMBER 30,
MARCH 31, ---------------------------------------------------
CLASS B 2006(i) 2005(g) 2004 2003 2002(d, f) 2001(c)
- ------- ---------------- ------- ------- ------- ---------- -------
PER SHARE DATA
Net asset value, beginning of period $ 6.38 $ 5.42 $ 4.87 $ 4.08 $ 5.18 $ 6.21
------ ------- ------- ------- ------- -------
Income (loss) from investment operations:
Net investment loss(b) (0.02) (0.01) (0.03) (0.02) (0.04) (0.03)
Net gain (loss) on securities (realized
and unrealized) 0.56 0.97 0.58 0.81 (1.06) (1.00)
------ ------- ------- ------- ------- -------
Total from investment operations 0.54 0.96 0.55 0.79 (1.10) (1.03)
------ ------- ------- ------- ------- -------
Net asset value, end of period $ 6.92 $ 6.38 $ 5.42 $ 4.87 $ 4.08 $ 5.18
====== ====== ======= ======= ======= =======
TOTAL RETURN(a) 8.46% 17.71% 11.29% 19.36% (21.24%) (16.59%)
------ ------- ------- ------- ------- -------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $6,259 $8,500 $10,164 $11,687 $ 4,905 $ 5,657
------ ------- ------- ------- ------- -------
Ratios to average net assets:
Net investment loss (0.71%) (0.16%) (0.57%) (0.42%) (0.71%) (0.51%)
Total expenses 2.28% 2.36% 2.27% 2.20% 2.27% 2.32%
------ ------- ------- ------- ------- -------
Portfolio turnover rate 44% 110% 75% 76% 68% 180%
96 See accompanying notes.
Financial Highlights
Selected data for each share of capital stock SECURITY
outstanding throughout each period LARGE CAP VALUE FUND
SIX MONTHS ENDED YEAR ENDED SEPTEMBER 30,
MARCH 31, -----------------------------------------------------
CLASS C 2006(i) 2005(g) 2004 2003 2002(d, e, f) 2001(c)
- ------- ---------------- ------- ------- ------- ------------- -------
PER SHARE DATA
Net asset value, beginning of period $ 6.49 $ 5.52 $ 4.96 $ 4.16 $ 5.28 $ 6.32
------ ------ ------ ------ ------- -------
Income (loss) from investment operations:
Net investment loss(b) (0.02) (0.01) (0.03) (0.02) (0.04) (0.03)
Net gain (loss) on securities (realized
and unrealized) 0.58 0.98 0.59 0.82 (1.08) (1.01)
------ ------ ------ ------ ------- -------
Total from investment operations 0.56 0.97 0.56 0.80 (1.12) (1.04)
------ ------ ------ ------ ------- -------
Net asset value, end of period $ 7.05 $ 6.49 $ 5.52 $ 4.96 $ 4.16 $ 5.28
====== ====== ====== ====== ======= =======
TOTAL RETURN(a) 8.63% 17.57% 11.29% 19.23% (21.21%) (16.46%)
------ ------ ------ ------ ------- -------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $3,064 $2,899 $2,561 $2,130 $ 1,510 $ 904
------ ------ ------ ------ ------- -------
Ratios to average net assets:
Net investment loss (0.67%) (0.18%) (0.57%) (0.33%) (0.72%) (0.55%)
Total expenses 2.28% 2.36% 2.28% 2.20% 2.25% 2.33%
------ ------ ------ ------ ------- -------
Portfolio turnover rate 44% 110% 75% 76% 68% 180%
(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) Net investment income (loss) was computed using average shares outstanding
throughout the period.
(c) 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 Security Management Company, LLC (SMC).
(d) 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.
(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 Large Cap Value Fund
changed. Per share information reflects this change.
(g) Security Management Company, LLC (SMC) became the advisor of Security Large
Cap Value Fund effective June 30, 2005. Prior to June 30, 2005, SMC paid
Dreyfus Corporation for sub-advisory services.
(h) Net investment income is less than $0.01 per share.
(i) Unaudited figures for the six months ended March 31, 2006. Percentage
amounts for the period, except total return, have been annualized.
97 See accompanying notes.
This page left blank intentionally.
98
SECURITY MID CAP
GROWTH FUND
(SECURITY BENEFIT(SM) LOGO)
Security Management Company, LLC
ADVISER,
SECURITY MANAGEMENT COMPANY, LLC
99
SECURITY
Performance Summary MID CAP GROWTH FUND
May 15, 2006 (unaudited)
PERFORMANCE
SECURITY MID CAP GROWTH FUND VS.
RUSSELL 2500 GROWTH INDEX
(PERFORMANCE GRAPH)
MID CAP GROWTH FUND
3/31/96 9,425.00
6/30/96 10,197.75
9/30/96 10,451.11
12/31/96 10,391.25
3/31/97 9,573.04
6/30/97 10,923.08
9/30/97 12,600.41
12/31/97 12,243.13
3/31/98 13,512.15
6/30/98 13,238.16
9/30/98 11,031.80
12/31/98 14,293.07
3/31/99 14,256.84
6/30/99 16,575.61
9/30/99 16,648.07
12/31/99 22,821.53
3/31/00 27,302.99
6/30/00 25,815.45
9/30/00 28,771.70
12/31/00 26,570.49
3/31/01 21,935.86
6/30/01 24,452.40
9/30/01 17,783.56
12/31/01 22,688.67
3/31/02 23,257.99
6/30/02 19,125.11
9/30/02 14,823.54
12/31/02 16,426.09
3/31/03 16,236.31
6/30/03 20,917.43
9/30/03 22,857.36
12/31/03 25,624.71
3/31/04 27,065.28
6/30/04 26,999.80
9/30/04 24,053.17
12/31/04 28,082.16
3/31/05 25,998.57
6/30/05 27,202.42
9/30/05 29,286.01
12/31/05 30,058.38
3/31/06 33,787.52
RUSSELL 2500 GROWTH INDEX
3/31/1996 10,000.00
6/30/96 10,512.03
9/30/96 10,656.76
12/31/96 10,756.72
3/31/97 9,896.09
6/30/97 11,505.44
9/30/97 13,419.54
12/31/97 12,345.05
3/31/98 13,719.44
6/30/98 13,050.06
9/30/98 10,152.32
12/31/98 12,726.02
3/31/99 12,592.58
6/30/99 14,708.76
9/30/99 14,198.98
12/31/99 19,789.04
3/31/00 22,784.72
06/30/00 21,211.95
09/30/00 20,588.05
12/31/00 16,605.50
3/31/2001 13,299.44
6/30/2001 16,127.16
9/30/2001 11,761.36
12/31/2001 14,806.65
3/31/2002 14,370.28
6/30/2002 11,980.54
9/30/2002 9,697.38
12/31/2002 10,500.30
3/31/2003 10,164.50
6/30/2003 12,474.01
9/30/2003 13,716.53
12/31/2003 15,362.63
3/31/2004 16,208.62
6/30/2004 16,230.82
9/30/2004 15,320.38
12/31/2004 17,604.79
3/31/2005 16,843.24
6/30/2005 17,443.56
9/30/2005 18,540.14
12/31/2005 19,044.31
3/31/2006 21,296.64
$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, 1996, 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 Russell 2500 Growth Index is an unmanaged index that measures the
performance of securities of small-to-mid U.S. companies with
greater-than-average growth orientation.
AVERAGE ANNUAL RETURNS
SINCE
PERIODS ENDED 3-31-06 1 YEAR 5 YEARS 10 YEARS INCEPTION
- --------------------- ------ ------- -------- ---------
A Shares 29.96% 9.02% 13.62% --
A Shares with sales charge 22.44% 7.74% 12.95% --
B Shares 29.06% 8.19% 12.63% --
B Shares with CDSC 24.06% 7.89% 12.63% --
C Shares 29.12% 8.23% N/A 11.20%
(1-29-99)
C Shares with CDSC 28.12% 8.23% N/A 11.20%
(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 4.26%
Consumer Staples 1.47
Energy 10.78
Financials 3.29
Health Care 9.22
Industrials 22.93
Information Technology 30.50
Materials 4.65
Utilities 6.65
Exchange Traded Funds 2.01
Warrants 0.10
Commercial Paper 3.00
Asset Backed Commercial Paper 4.10
Repurchase Agreement 0.30
Liabilities, less cash & other assets (3.26)
------
Total net assets 100.00%
======
100 See accompanying notes.
SECURITY
Performance Summary MID CAP GROWTH FUND
May 15, 2006 (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, 2005 - March 31, 2006.
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 mutual 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
10-01-05 03-31-06(1) PERIOD(2)
------------- ------------- -------------
Security Mid Cap Growth Fund
- Class A
Actual $1,000.00 $1,153.70 $ 7.46
Hypothetical 1,000.00 1,018.00 6.99
Security Mid Cap Growth Fund
- Class B
Actual 1,000.00 1,150.40 11.47
Hypothetical 1,000.00 1,014.26 10.75
Security Mid Cap Growth Fund
- Class C
Actual 1,000.00 1,150.50 11.47
Hypothetical 1,000.00 1,014.26 10.75
(1) The actual ending account value is based on the actual total return of the
Fund for the period October 1, 2005 to March 31, 2006 after actual expenses
and will differ from the hypothetical ending account value which is based
on the Fund's expense ratio and a hypothetical annual return of 5% before
expenses. The actual cumulative return at net asset value for the period
October 1, 2005 to March 31, 2006 was 15.37%, 15.04% and 15.05%, for Class
A, B and C shares, respectively.
(2) Expenses are equal to the Fund's annualized expense ratio (1.39%, 2.14% and
2.14% for Class A, B and C shares, respectively) multiplied by the average
account value over the period, multiplied by 182/365 (to reflect the
one-half year period).
101
SECURITY
Schedule of Investments MID CAP GROWTH FUND
March 31, 2006 (unaudited)
NUMBER MARKET
OF SHARES VALUE
--------- -----------
COMMON STOCKS - 95.6%
APPLICATION SOFTWARE - 2.3%
Tibco Software, Inc.* 307,000 $ 2,566,520
Tyler Technologies, Inc.* 325,000 3,575,000
6,141,520
-----------
ASSET MANAGEMENT & CUSTODY BANKS - 2.3%
Northern Trust Corporation 116,000 6,090,000
-----------
BIOTECHNOLOGY - 3.5%
Cell Genesys, Inc.* 178,000 1,420,440
Charles River Laboratories
International, Inc.* 34,000 1,666,680
Human Genome Sciences, Inc.* 159,800 1,737,026
Incyte Corporation* 255,000 1,535,100
Kosan Biosciences, Inc.* 169,100 995,999
Strategic Diagnostics, Inc.* 206,300 684,916
ZymoGenetics, Inc.* 55,900 1,208,558
-----------
9,248,719
-----------
BROADCASTING & CABLE TV - 0.4%
WorldSpace, Inc.* 146,300 1,104,565
-----------
COAL & CONSUMABLE FUELS - 0.5%
Hydrogen Corporation* (2) 233,722 1,308,843
-----------
COMMUNICATIONS EQUIPMENT - 8.2%
ADC Telecommunications, Inc.* 171,428 4,386,842
Adtran, Inc. 154,000 4,031,720
Extreme Networks, Inc.* 290,000 1,455,800
Finisar Corporation* 1,565,900 7,751,205
PC-Tel, Inc.* 136,700 1,301,384
Symmetricom, Inc.* 360,000 3,078,000
-----------
22,004,951
-----------
COMPUTER STORAGE & PERIPHERALS - 1.9%
Mobility Electronics, Inc.* 127,300 1,060,409
M-Systems Flash Disk Pioneers, Ltd.* 100,000 2,586,000
Novatel Wireless, Inc.* 159,300 1,425,735
-----------
5,072,144
-----------
CONSTRUCTION & ENGINEERING - 4.6%
Insituform Technologies, Inc.* 168,000 4,468,800
Shaw Group, Inc.* 253,700 7,712,480
-----------
12,181,280
-----------
CONSTRUCTION MATERIALS - 1.5%
Headwaters, Inc.* 100,000 3,979,000
-----------
DATA PROCESSING & OUTSOURCED SERVICES - 0.4%
Hewitt Associates, Inc.* 36,000 1,070,640
-----------
DEPARTMENT STORES - 0.4%
Maidenform Brands, Inc.* 87,500 963,375
-----------
DIVERSIFIED COMMERCIAL & PROFESSIONAL SERVICES - 2.6%
ChoicePoint, Inc.* 70,000 3,132,500
Equifax, Inc. 41,390 1,541,364
Navigant Consulting, Inc.* 110,000 2,348,500
-----------
7,022,364
-----------
ELECTRIC UTILITIES - 6.6%
KFx, Inc.* 976,100 $17,765,020
-----------
ELECTRICAL COMPONENTS & EQUIPMENT - 7.9%
Electric City Corporation*(2) 1,068,000 683,520
Millennium Cell, Inc.* 141,500 226,400
Plug Power, Inc.* 504,000 2,520,000
Power-One, Inc.* 1,335,800 9,617,760
Roper Industries, Inc. 117,000 5,689,710
UQM Technologies, Inc.*(2) 477,816 2,145,394
Ultralife Batteries, Inc.* 6,800 87,380
-----------
20,970,164
-----------
ELECTRONIC EQUIPMENT MANUFACTURERS - 6.5%
Aeroflex, Inc.* 230,700 3,167,511
FLIR Systems, Inc.* 239,000 6,789,990
Identix, Inc.* 59,400 472,824
Maxwell Technologies, Inc.* 360,700 7,037,257
-----------
17,467,582
-----------
EXCHANGE TRADED FUNDS - 2.0%
iShares Russell 200 Growth Index Fund 33,900 2,701,830
iShares S&P MidCap 400/
Barra Growth Index Fund 33,200 2,672,600
-----------
5,374,430
-----------
GENERAL MERCHANDISE STORES - 0.7%
Fred's, Inc. 133,400 1,768,884
-----------
HEALTH CARE FACILITIES - 1.6%
U.S. Physical Therapy, Inc.* 97,000 1,659,670
United Surgical Partners
International, Inc.* 75,000 2,655,750
-----------
4,315,420
-----------
HEALTH CARE SERVICES - 1.0%
Providence Service Corporation* 78,900 2,565,828
-----------
HEALTH CARE SUPPLIES - 0.6%
Orthovita, Inc.* 375,000 1,552,500
-----------
HOME FURNISHINGS - 0.3%
Kirkland's, Inc.* 118,825 839,202
-----------
HOUSEWARES & SPECIALTIES - 0.3%
Jarden Corporation* 24,100 791,685
-----------
INDUSTRIAL MACHINERY - 0.8%
Quixote Corporation 50,100 1,239,975
Tennant Company 17,100 894,672
-----------
2,134,647
-----------
INTERNET SOFTWARE & SERVICES - 0.7%
RealNetworks, Inc.* 230,000 1,897,500
-----------
IT CONSULTING & OTHER SERVICES - 2.8%
Acxiom Corporation 175,000 4,522,000
Keane, Inc.* 182,000 2,866,500
-----------
7,388,500
-----------
102 See accompanying notes.
SECURITY
Schedule of Investments MID CAP GROWTH FUND
March 31, 2006 (unaudited)
NUMBER MARKET
OF SHARES VALUE
--------- -----------
COMMON STOCKS (CONTINUED)
METAL & GLASS CONTAINERS - 3.1%
Pactiv Corporation* 340,000 $ 8,343,600
-----------
MOVIES & ENTERTAINMENT - 1.3%
Lions Gate Entertainment Corporation*(1) 346,700 3,519,005
-----------
OIL & GAS DRILLING - 1.6%
Ensco International, Inc. 82,300 4,234,335
-----------
OIL & GAS EQUIPMENT & SERVICES - 1.2%
BJ Services Company 80,000 2,768,000
Superior Energy Services, Inc.* 15,700 420,603
-----------
3,188,603
-----------
OIL & GAS EXPLORATION & PRODUCTION - 4.5%
Rentech, Inc.*(2) 2,166,800 9,425,580
Syntroleum Corporation* 320,000 2,646,400
-----------
12,071,980
-----------
OIL & GAS REFINING & MARKETING - 1.5%
Western Gas Resources, Inc.(1) 81,000 3,908,250
-----------
OIL & GAS STORAGE & TRANSPORTATION - 1.5%
Williams Companies, Inc. 190,000 4,064,100
-----------
PACKAGED FOODS & MEATS - 1.5%
Hormel Foods Corporation(1) 116,000 3,920,800
-----------
PHARMACEUTICALS - 2.6%
Combinatorx, Inc.* 152,000 1,808,800
Hollis-Eden Pharmaceuticals, Inc.* 257,744 1,587,703
Iomai Corporation* 174,000 1,010,940
Ligand Pharmaceuticals, Inc. (Cl.B)* 196,900 2,530,165
-----------
6,937,608
-----------
RAILROADS - 1.3%
Kansas City Southern* 141,000 3,482,700
-----------
REGIONAL BANKS - 1.0%
Boston Private Financial Holdings, Inc. 80,000 2,703,200
-----------
SEMICONDUCTOR EQUIPMENT - 1.7%
Mindspeed Technologies, Inc.* 1,150,000 4,577,000
-----------
SEMICONDUCTORS - 3.7%
Applied Micro Circuits Corporation* 750,000 3,052,500
hi/fn, Inc.* 152,800 1,191,840
IXYS Corporation* 610,000 5,624,200
QuickLogic Corporation* 6,600 37,884
-----------
9,906,424
-----------
SPECIALTY STORES - 0.9%
Tractor Supply Company*(1) 36,000 2,388,240
-----------
SYSTEMS SOFTWARE - 2.2%
BEA Systems, Inc.* 384,000 5,041,920
Sybase, Inc.* 40,800 861,696
-----------
5,903,616
-----------
PRINCIPAL
AMOUNT OR
NUMBER MARKET
OF SHARES VALUE
----------- ----------
COMMON STOCKS (CONTINUED)
TRADING COMPANIES & DISTRIBUTORS - 2.6%
MSC Industrial Direct Company, Inc. 130,000 $ 7,022,600
------------
TRUCKING - 3.0%
J.B. Hunt Transport Services, Inc.(1) 240,000 5,169,600
Old Dominion Freight Line, Inc.* 92,500 2,492,875
Universal Truckload Services, Inc.* 18,300 458,415
------------
8,120,890
------------
TOTAL COMMON STOCKS
(cost $180,700,105) 255,311,714
------------
PREFERRED STOCK - 0.1%
ENVIRONMENTAL & FACILITIES SERVICES - 0.1%
ThermoEnergy Corporation PIPE (2, 3, 4) 745,000 337,932
------------
TOTAL PREFERRED STOCK
(cost $702,947) 337,932
------------
WARRANTS - 0.1%
Bioject Medical Technologies, Inc.,
$11.00, 05-23-06(3) 5,625 --
Electric City Corporation,
$0.40, 03-19-09(2, 3) 311,500 94,767
Hollis-Eden Pharmaceuticals, Inc.,
$15.45, 06-19-07(3) 8,143 1,293
Orthovita, Inc., $4.00, 06-26-08(3) 75,000 77,387
Syntroleum Corporation,
$7.60, 05-26-08 14,100 49,632
ThermoEnergy Corporation,
$1.50, 07-14-08 (2, 3 ,4) 745,000 97,670
------------
320,749
------------
TOTAL WARRANTS
(cost $670,177) 320,749
------------
COMMERCIAL PAPER - 3.0%
BANKING - 0.6%
Westpac Banking Corporation,
4.73%, 04-17-06 $1,500,000 1,496,847
------------
BROKERAGE - 0.7%
Merrill Lynch & Company, Inc.:
4.65%, 04-05-06 $1,000,000 999,480
4.69%, 04-10-06 $1,000,000 998,828
------------
1,998,308
------------
ELECTRIC - 0.4%
Florida Power & Light Company,
4.72%, 04-24-06 $1,000,000 996,984
------------
103 See accompanying notes.
SECURITY
Schedule of Investments MID CAP GROWTH FUND
March 31, 2006 (unaudited)
PRINCIPAL MARKET
AMOUNT VALUE
---------- ------------
COMMERCIAL PAPER (CONTINUED)
NON U.S. BANKING - 1.3%
Danske Corporation:
4.62%, 04-04-06 $1,000,000 $ 999,615
4.63%, 04-06-06 1,200,000 1,199,220
Societe Generale, 4.72%, 05-02-06 1,194,000 1,189,147
------------
3,387,982
------------
TOTAL COMMERCIAL PAPER
(cost $7,880,121) 7,880,121
------------
ASSET BACKED COMMERCIAL PAPER - 4.1%
FINANCIAL COMPANIES - DIVERSIFIED - 0.8%
Amsterdam Funding Corporation:
4.75%, 04-19-06 1,000,000 997,625
4.75%, 04-21-06 1,000,000 997,361
------------
1,994,986
------------
FINANCIAL COMPANIES - MISCELLANEOUS
RECEIVABLES - 2.2%
Falcon Asset Securitization Corporation,
4.75%, 04-25-06 1,000,000 996,833
Jupiter Securitization Corporation:
4.60%, 04-03-06 1,000,000 999,745
4.63%, 04-07-06 1,000,000 999,213
4.76%, 04-11-06 1,000,000 998,678
4.66%, 04-12-06 1,000,000 998,555
4.75%, 04-18-06 1,000,000 997,757
------------
5,990,781
------------
FINANCIAL COMPANIES - TRADE RECEIVABLES - 1.1%
Eureka Securitization,
4.71%, 04-13-06 912,000 910,568
Old Line Funding Corporation,
4.64%, 04-20-06 1,000,000 997,498
Sheffield Receivables Corporation,
4.76%, 04-27-06 1,000,000 996,562
------------
2,904,628
------------
TOTAL ASSET BACKED COMMERCIAL PAPER
(cost $10,890,395) 10,890,395
------------
REPURCHASE AGREEMENT - 0.3%
United Missouri Bank, 4.36%, dated 03-31-06,
matures 04-03-06; repurchase amount of
$705,256 (Collateralized by FHLMC,
4.35% 06-02-08 with a value of $719,288) 705,000 705,000
------------
TOTAL REPURCHASE AGREEMENT
(cost $705,000) 705,000
------------
TOTAL INVESTMENTS - 103.2%
(cost $201,548,745) 275,445,911
LIABILITIES, LESS CASH & OTHER ASSETS - (3.2%) (8,501,525)
------------
TOTAL NET ASSETS - 100.0% $266,944,386
============
For federal income tax purposes the identified cost of investments owned at
March 31, 2006 was $202,441,284.
* Non-income producing security
PIPE-Private Investment in Public Equity - is the term used for stock issued by
a company in the secondary market as a means of raising capital more quickly and
less expensively than through registration in a secondary public offering.
(1) Security is segregated as collateral for open written option contracts.
(2) Security is illiquid. The total market value of illiquid securities is
$14,093,706 (cost $9,408,749), or 5.3% of total net assets.
(3) Security is fair valued by the Board of Directors. The total market value
is $609,049 (cost $1,372,983), or 0.2% of total net assets.
(4) Security is restricted. The total market value of restricted securities is
$435,602 (cost $894,000), or 0.2% of total net assets. The acquisition date
is July 14, 2005.
104
SECURITY
MID CAP GROWTH FUND
(unaudited)
Statement of Assets and Liabilities
March 31, 2006
ASSETS:
Investments, at value(1) ........................................ $275,445,911
Cash ............................................................ 695
Receivables:
Fund shares sold ............................................. 112,366
Dividends .................................................... 33,995
Prepaid expenses ................................................ 62,674
------------
Total assets .................................................... 275,655,641
------------
LIABILITIES:
Payable for:
Securities purchased ......................................... 7,842,695
Fund shares redeemed ......................................... 291,796
Written options, at value
(premiums received, $397,101) ............................. 222,765
Management fees .............................................. 158,635
Custodian fees ............................................... 6,000
Transfer agent and administration fees ....................... 34,666
Professional fees ............................................ 18,365
12b-1 distribution plan fees ................................. 134,090
Director's fees .............................................. 2,243
------------
Total liabilities ............................................... 8,711,255
------------
NET ASSETS ...................................................... $266,944,386
============
NET ASSETS CONSIST OF:
Paid in capital ................................................. $184,342,591
Accumulated net investment loss ................................. (1,252,193)
Accumulated undistributed net realized
gain on sale of investments and
options written .............................................. 9,782,486
Net unrealized appreciation in value of
investments and options written .............................. 74,071,502
------------
Net assets ...................................................... $266,944,386
============
CLASS A:
Capital shares outstanding
(unlimited number of shares authorized) ...................... 16,472,336
Net assets ...................................................... $222,457,894
Net asset value and redemption price per share .................. $ 13.50
============
Maximum offering price per share
(net asset value divided by 94.25%) .......................... $ 14.32
============
CLASS B:
Capital shares outstanding
(unlimited number of shares authorized) ...................... 2,387,371
Net assets ...................................................... $ 27,212,568
Net asset value, offering and redemption price
per share (excluding any applicable contingent
deferred sales charge) ....................................... $ 11.40
============
CLASS C:
Capital shares outstanding
(unlimited number of shares authorized) ...................... 1,378,605
Net assets ...................................................... $ 17,273,924
Net asset value, offering and redemption price
per share (excluding any applicable contingent
deferred sales charge) ....................................... $ 12.53
============
(1)Investments, at cost ......................................... $201,548,745
Statement of Operations
For the Six Months Ended March 31, 2006
INVESTMENT INCOME:
Dividends .................................................... $ 325,302
Interest ..................................................... 178,718
------------
Total investment income ...................................... 504,020
------------
EXPENSES:
Management fees .............................................. 859,941
Transfer agent/maintenance fees .............................. 226,018
Administration fees .......................................... 108,591
Custodian fees ............................................... 9,854
Directors' fees .............................................. 14,173
Professional fees ............................................ 25,073
Reports to shareholders ...................................... 31,021
Registration fees ............................................ 24,847
Other expenses ............................................... 11,347
12b-1 distribution plan fees - Class A ....................... 233,747
12b-1 distribution plan fees - Class B ....................... 130,263
12b-1 distribution plan fees - Class C ....................... 81,338
------------
Total expenses ............................................... 1,756,213
------------
Net investment loss .......................................... (1,252,193)
------------
NET REALIZED AND UNREALIZED GAIN:
Net realized gain during the period on:
Investments .................................................. 17,504,813
Options written .............................................. 661,708
------------
Net realized gain ............................................ 18,166,521
------------
Net unrealized appreciation during the period on:
Investments .................................................. 16,296,147
Options written .............................................. 473,448
------------
Net unrealized appreciation .................................. 16,769,595
------------
Net realized and unrealized gain ................................ 34,936,116
------------
Net increase in net assets
resulting from operations .................................... $ 33,683,923
============
105 See accompanying notes.
SECURITY
Statement of Changes in Net Assets MID CAP GROWTH FUND
SIX MONTHS
ENDED
MARCH 31, YEAR ENDED
2006 SEPTEMBER 30,
(unaudited) 2005
------------ -------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment loss ................................ $ (1,252,193) $ (2,111,085)
Net realized gain during the period
on investments and options written .............. 18,166,521 12,943,161
Net unrealized appreciation during the period on
investments and options written ................. 16,769,595 30,372,234
------------ ------------
Net increase in net assets resulting from operations 33,683,923 41,204,310
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net realized gain
Class A ......................................... (13,404,927) (9,955,799)
Class B ......................................... (2,137,907) (2,023,316)
Class C ......................................... (1,288,551) (1,044,883)
------------ ------------
Total distributions to shareholders ................ (16,831,385) (13,023,998)
------------ ------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from sale of shares
Class A ......................................... 43,833,488 39,688,683
Class B ......................................... 1,867,337 4,639,146
Class C ......................................... 1,626,840 3,851,285
Distributions reinvested
Class A ......................................... 12,899,625 9,564,132
Class B ......................................... 2,106,540 1,981,156
Class C ......................................... 1,195,749 955,741
Cost of shares redeemed
Class A ......................................... (32,293,155) (38,532,269)
Class B ......................................... (5,367,047) (9,060,461)
Class C ......................................... (2,898,652) (5,198,188)
------------ ------------
Net increase from capital share transactions ....... 22,970,725 7,889,225
------------ ------------
Net increase in net assets ......................... 39,823,263 36,069,537
------------ ------------
NET ASSETS:
Beginning of period ................................ 227,121,123 191,051,586
------------ ------------
End of period ...................................... $266,944,386 $227,121,123
============ ============
Accumulated net investment loss at end of period ... $ (1,252,193) $ --
============ ============
CAPITAL SHARE ACTIVITY:
Shares sold
Class A ......................................... 3,426,637 3,433,535
Class B ......................................... 172,494 459,016
Class C ......................................... 137,251 352,361
Shares reinvested
Class A ......................................... 1,075,865 797,012
Class B ......................................... 207,746 191,231
Class C ......................................... 107,242 84,579
Shares redeemed
Class A ......................................... (2,550,062) (3,301,939)
Class B ......................................... (490,151) (917,791)
Class C ......................................... (244,721) (473,376)
106 See accompanying notes.
Financial Highlights
Selected data for each share of capital stock SECURITY
outstanding throughout each period MID CAP GROWTH FUND
SIX MONTHS
ENDED YEAR ENDED SEPTEMBER 30,
MARCH 31, -------------------------------------------------------
CLASS A 2006(f) 2005 2004(e) 2003 2002(d) 2001
- ------- ---------- -------- -------- -------- ------- --------
PER SHARE DATA
Net asset value, beginning of period $ 12.65 $ 11.02 $ 10.84 $ 7.03 $ 8.48 $ 15.28
-------- -------- -------- -------- ------- --------
Income (loss) from investment operations:
Net investment loss(b) (0.06) (0.10) (0.13) (0.10) (0.09) (0.07)
Net gain (loss) on securities (realized and unrealized) 1.88 2.46 0.71 3.91 (1.30) (5.38)
-------- -------- -------- -------- ------- --------
Total from investment operations 1.82 2.36 0.58 3.81 (1.39) (5.45)
-------- -------- -------- -------- ------- --------
Less distributions:
Distributions from realized gains (0.97) (0.73) (0.40) -- (0.06) (1.35)
-------- -------- -------- -------- ------- --------
Total distributions (0.97) (0.73) (0.40) -- (0.06) (1.35)
-------- -------- -------- -------- ------- --------
Net asset value, end of period $ 13.50 $ 12.65 $ 11.02 $ 10.84 $ 7.03 $ 8.48
======== ======== ======== ======== ======= ========
TOTAL RETURN(a) 15.37% 21.76% 5.23% 54.20% (16.64%) (38.19%)
-------- -------- -------- -------- ------- --------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $222,458 $183,676 $149,715 $134,208 $90,948 $131,498
-------- -------- -------- -------- ------- --------
Ratios to average net assets:
Net investment loss (0.95%) (0.85%) (1.11%) (1.14%) (0.92%) (0.64%)
Total expenses 1.39% 1.42% 1.41% 1.41% 1.20% 1.09%
-------- -------- -------- -------- ------- --------
Portfolio turnover rate 38% 31% 50% 57% 47% 48%
SIX MONTHS
ENDED YEAR ENDED SEPTEMBER 30,
MARCH 31, ---------------------------------------------------
CLASS B 2006(f) 2005 2004(e) 2003 2002(d) 2001
- ------- ---------- ------- ------- ------- ------- -------
PER SHARE DATA
Net asset value, beginning of period $ 10.86 $ 9.61 $ 9.57 $ 6.26 $ 7.62 $ 14.02
------- ------- ------- ------- ------- -------
Income (loss) from investment operations:
Net investment loss(b) (0.09) (0.16) (0.19) (0.15) (0.16) (0.17)
Net gain (loss) on securities (realized and unrealized) 1.60 2.14 0.63 3.46 (1.14) (4.88)
------- ------- ------- ------- ------- -------
Total from investment operations 1.51 1.98 0.44 3.31 (1.30) (5.05)
------- ------- ------- ------- ------- -------
Less distributions:
Distributions from realized gains (0.97) (0.73) (0.40) -- (0.06) (1.35)
------- ------- ------- ------- ------- -------
Total distributions (0.97) (0.73) (0.40) -- (0.06) (1.35)
------- ------- ------- ------- ------- -------
Net asset value, end of period $ 11.40 $ 10.86 $ 9.61 $ 9.57 $ 6.26 $ 7.62
======= ======= ======= ======= ======= =======
TOTAL RETURN(a) 15.04% 20.95% 4.44% 52.88% (17.35%) (38.83%)
-------- -------- -------- -------- ------- --------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $27,213 $27,115 $26,578 $26,459 $17,502 $28,580
------- ------- ------- ------- ------- -------
Ratios to average net assets:
Net investment loss (1.70%) (1.61%) (1.86%) (1.89%) (1.84%) (1.64%)
Total expenses 2.14% 2.17% 2.16% 2.16% 2.11% 2.09%
------- ------- ------- ------- ------- -------
Portfolio turnover rate 38% 31% 50% 57% 47% 48%
107 See accompanying notes.
Financial Highlights
Selected data for each share of capital stock SECURITY
outstanding throughout each period MID CAP GROWTH FUND
SIX MONTHS
ENDED YEAR ENDED SEPTEMBER 30,
MARCH 31, -----------------------------------------------------
CLASS C 2006(f) 2005 2004(e) 2003 2002(c, d) 2001
- ------- ---------- ------- ------- ------- ---------- -------
PER SHARE DATA
Net asset value, beginning of period $ 11.84 $ 10.43 $ 10.34 $ 6.76 $ 8.22 $ 14.99
------- ------- ------- ------- ------- -------
Income (loss) from investment operations:
Net investment loss(b) (0.10) (0.18) (0.21) (0.16) (0.16) (0.18)
Net gain (loss) on securities (realized and unrealized) 1.76 2.32 0.70 3.74 (1.24) (5.24)
------- ------- ------- ------- ------- -------
Total from investment operations 1.66 2.14 0.49 3.58 (1.40) (5.42)
------- ------- ------- ------- ------- -------
Less distributions:
Distributions from realized gains (0.97) (0.73) (0.40) -- (0.06) (1.35)
------- ------- ------- ------- ------- -------
Total distributions (0.97) (0.73) (0.40) -- (0.06) (1.35)
------- ------- ------- ------- ------- -------
Net asset value, end of period $ 12.53 $ 11.84 $ 10.43 $ 10.34 $ 6.76 $ 8.22
======= ======= ======= ======= ======= =======
TOTAL RETURN(a) 15.05% 20.83% 4.59% 52.96% (17.30%) (38.78%)
------- ------- ------- ------- ------- -------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $17,274 $16,330 $14,759 $11,279 $ 5,883 $ 4,194
------- ------- ------- ------- ------- -------
Ratios to average net assets:
Net investment loss (1.70%) (1.60%) (1.86%) (1.89%) (1.85%) (1.66%)
Total expenses 2.14% 2.17% 2.16% 2.16% 2.12% 2.09%
------- ------- ------- ------- ------- -------
Portfolio turnover rate 38% 31% 50% 57% 47% 48%
(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) Net investment loss was computed using average shares outstanding
throughout the period.
(c) 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.
(d) Effective May 1, 2002 the fee structure for Security Mid Cap Growth Fund
changed. Per share information reflects this change.
(e) The financial highlights for the Security 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 Security
Mid Cap Growth Fund on October 3, 2003.
(f) Unaudited figures for the six months ended March 31, 2006. Percentage
amounts for the period, except total return, have been annualized.
108 See accompanying notes.
Notes to Financial Statements
March 31, 2006
(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 for purchases of $1 million or more. Class "A" shares 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 Class "B" 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.
109
Notes to Financial Statements
March 31, 2006
(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 is accrued as of ex-dividend date, except that certain dividends for
foreign securities where the ex-dividend date may have passed are recorded as
soon as the Fund is informed of the dividend in the exercise of reasonable
diligence. 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
110
Notes to Financial Statements
March 31, 2006
(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 - The Funds or Series may make short sales "against the
box," in which a Fund or Series enters into a short sale of a security it owns.
At no time will more than 15% of the value of a Fund's net assets be in deposits
on short sales against the box. If a Fund makes a short sale, the Fund does not
immediately deliver from its own account the securities sold and does not
receive the proceeds from the sale. 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 or delivering the security from its own portfolio. The Fund or
Series is said to have a "short position" in securities sold until it delivers
them to the broker, at which time it receives the proceeds of the sale. Certain
Funds or Series may make short sales that are not "against the box," which
create opportunities to increase the Fund's return but, at the same time,
involve specific risk considerations and may be considered a speculative
technique. Such short sales theoretically involve unlimited loss potential, as
the market price of securities sold short may continually increase, although a
Fund may mitigate such losses by replacing the securities sold short before the
market price has increased significantly. 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* 2.10%(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 0.83%(2) N/A
Select 25 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 0.65% N/A
Security Mid Cap Growth Fund 0.75% N/A
* Alpha Opportunity Series' 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
consists 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 base fee adjustment that either increases or decreases the base fee,
depending on how Alpha Opportunity Series (calculated by reference to its Class
A shares) performed relative to the S&P 500 Index over the prior 12-month period
(the "Measuring Period"). SMC will receive the base fee of 2.00% without
adjustment if the performance of Alpha Opportunity Series (calculated by
reference to its Class A shares) matches the performance of the S&P500 Index.
The maximum base fee adjustment at each calculation period is 0.75% up or down
in the event that Alpha Opportunity Series outperforms or underperforms the S&P
500 Index by 15% or more. SMC calculates the base fee adjustment each month
based upon Alpha Opportunity Series' performance relative to the S&P500 Index
over the Measuring Period ending on the last day of the month. If Alpha
Opportunity Series outperforms the S&P 500 Index over the Measuring Period, the
base fee is adjusted upward. The upward adjustment is equal to the amount by
which Alpha Opportunity Series' performance exceeds that of the S&P 500 Index
divided by 15 and multiplied by the average daily net assets of Alpha
Opportunity Series during the Measuring Period to determine the base fee
adjustment for the month. If Alpha Opportunity Series underperforms the Index,
the base fee is adjusted downward on the same basis. SMC will determine the
dollar amount of any performance adjustment each month by multiplying the
adjustment percentage by the average daily net assets of the Alpha Opportunity
Series during the Measuring Period and dividing that number by the number of
days in the Measuring Period and then multiplying that amount by the number of
days in the current month.
(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 Mid Cap Value Series in excess of
$200 million.
111
Notes to Financial Statements
March 31, 2006
(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 or Series. At a meeting held on November 18, 2005, the Board of
Directors approved a new administrative fee schedule. This new fee schedule was
effective December 1, 2005. For these services, the Investment Manager receives
the following:
ADMINISTRATIVE FEES
(AS A % OF NET ASSETS)*
-----------------------
EFFECTIVE PRIOR TO
12-1-05* 12-1-05*
--------- --------
Security Equity Fund:
Alpha Opportunity Series 0.15% 0.145%
Enhanced Index Series 0.095% 0.09%
Equity Series 0.095% 0.09%
Global Series 0.05%+ 0.045%+
greater of 0.10%
or $60,000
Large Cap Growth Series 0.095% 0.09%
Mid Cap Value Series 0.095% 0.09%
Select 25 Series 0.095% 0.09%
Small Cap Growth Series 0.095% 0.09%
Social Awareness Series 0.095% 0.09%
Security Large Cap Value Fund 0.095% 0.09%
Security Mid Cap Growth Fund 0.095% 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 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 Series 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.
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. Effective
August 25, 2005, Global Series ceased charging 12b-1 fees on Class B shares in
accordance with the NASD sales cap regulations. This fee may be reinstated at
any time.
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 $ 3,351
Enhanced Index Series 420
Equity Series 16,084
Global Series 35,519
Large Cap Growth Series 1,441
Mid Cap Value Series 217,908
Select 25 Series 1,757
Small Cap Growth Series 4,460
Social Awareness Series 2,232
Security Large Cap Value Fund 3,617
Security Mid Cap Growth Fund 20,434
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, 2006, Security Benefit Corporation and its subsidiaries owned
over five percent of the outstanding shares of the Funds or Series, as follows:
PERCENT OF OUTSTANDING
FUND OR SERIES SHARES OWNED
- -------------- ----------------------
Security Equity Fund:
Alpha Opportunity Series 43.06%
Enhanced Index Series 24.77%
Equity Series 13.39%
Global Series 9.41%
Large Cap Growth Series 38.88%
Select 25 Series 9.31%
Small Cap Growth Series 19.28%
Social Awareness Series 9.80%
Security Large Cap Value Fund 26.44%
Security Mid Cap Growth Fund 5.87%
112
Notes to Financial Statements
March 31, 2006
(unaudited)
3. UNREALIZED APPRECIATION/DEPRECIATION
For federal income tax purposes, the amounts of unrealized appreciation
(depreciation) on investments at March 31, 2006, were as follows:
GROSS GROSS NET UNREALIZED
UNREALIZED UNREALIZED APPRECIATION
APPRECIATION (DEPRECIATION) (DEPRECIATION)
------------ -------------- --------------
Security Equity Fund:
Alpha Opportunity Series $ 238,793 $ (119,048) $ 119,745
Enhanced Index Series 1,009,491 (335,076) 674,415
Equity Series 104,567,436 (8,725,458) 95,841,978
Global Series 41,624,207 (1,177,695) 40,446,512
Large Cap Growth Series 2,143,153 (408,045) 1,735,108
Mid Cap Value Series 231,676,479 (18,966,773) 212,709,706
Select 25 Series 6,518,459 (741,189) 5,777,270
Small Cap Growth Series 9,554,952 (244,616) 9,310,336
Social Awareness Series 2,903,613 (2,142,009) 761,604
Security Large Cap Value Fund 8,753,085 (1,318,500) 7,434,585
Security Mid Cap
Growth Fund 80,975,083 (7,970,456) 73,004,627
4. INVESTMENT TRANSACTIONS
Investment transactions for the six months ended March 31, 2006, (excluding
overnight investments and short-term commercial paper) were as follows:
PROCEEDS
PURCHASES FROM SALES
------------ ------------
Security Equity Fund:
Alpha Opportunity Series $106,491,128 $111,836,869
Enhanced Index Series 6,815,563 7,620,947
Equity Series 74,348,554 100,545,627
Global Series 22,203,366 55,242,203
Large Cap Growth Series 3,703,661 2,599,271
Mid Cap Value Series 148,529,000 68,282,201
Select 25 Series 4,360,093 2,678,609
Small Cap Growth Series 28,421,509 25,310,198
Social Awareness Series 1,962,768 3,246,807
Security Large Cap Value Fund 14,932,692 11,915,875
Security Mid Cap Growth Fund 42,357,726 46,760,924
5. OPEN FUTURES CONTRACTS
Open futures contracts for Alpha Opportunity Series and Enhanced Index
Series as of March 31, 2006, 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 37 2
EXPIRATION DATE 6-16-2006 6-16-2006
CONTRACT AMOUNT $12,001,991 $131,906
MARKET VALUE $12,055,525 $130,330
UNREALIZED GAIN (LOSS) $ 53,534 $ (1,576)
6. OPTIONS WRITTEN
The following options written were outstanding for Equity Series at March
31, 2006:
EQUITY SERIES PUT OPTIONS WRITTEN OUTSTANDING
EXPIRATION EXERCISE NUMBER OF MARKET
COMMON STOCK DATE PRICE CONTRACTS VALUE
- ------------ ---------- -------- --------- --------
Transocean, Inc. 5-19-06 $80.00 512 $194,560
--- --------
Total put options outstanding
(premiums received, $152,571) 512 $194,560
=== ========
Transactions in options written for Equity Series for the six months ended
March 31, 2006 were as follows:
EQUITY SERIES CALL OPTIONS WRITTEN
NUMBER OF PREMIUM
CONTRACTS AMOUNT
--------- ---------
Balance at September 30, 2005 1,194 $ 240,933
Opened 1,282 106,743
Bought Back (2,476) (347,676)
------ ---------
Balance at March 31, 2006 -- $ --
====== =========
EQUITY SERIES PUT OPTIONS WRITTEN
NUMBER OF PREMIUM
CONTRACTS AMOUNT
--------- ---------
Balance at September 30, 2005 -- $ --
Opened 3,745 396,860
Expired (3,233) (244,289)
------ ---------
Balance at March 31, 2006 512 $ 152,571
====== =========
The following options written were outstanding for Mid Cap Value Series at
March 31, 2006:
MID CAP VALUE SERIES CALL OPTIONS WRITTEN OUTSTANDING
EXPIRATION EXERCISE NUMBER OF MARKET
COMMON STOCK DATE PRICE CONTRACTS VALUE
- ------------ ---------- -------- --------- ----------
Archer-Daniels-Midland Company 9-18-06 $35.00 1,050 $ 241,500
Community Health Systems, Inc. 4-24-06 40.00 885 4,425
Computer Sciences Corporation 6-19-06 60.00 600 60,000
Computer Sciences Corporation 9-18-06 55.00 630 258,300
Duke Energy Corporation 4-24-06 45.00 1,300 130,000
Granite Construction, Inc. 6-19-06 45.00 849 526,380
H.B. Fuller Company 5-22-06 45.00 633 455,760
Inco, Ltd. 4-24-06 45.00 600 306,000
Inco, Ltd. 5-22-06 50.00 600 138,000
Keane, Inc. 8-21-06 15.00 1,540 223,300
McDermott International, Inc. 8-21-06 55.00 650 318,500
Shaw Group, Inc. 4-24-06 35.00 880 4,400
Triad Hospitals, Inc. 5-22-06 45.00 600 21,000
United Rentals, Inc. 5-22-06 35.00 259 36,260
Universal Health Services, Inc. 7-24-06 50.00 1,000 290,000
W.R. Berkley Corporation 4-24-06 36.63 550 181,500
------ ----------
Total call options outstanding
(premiums received, $2,651,433) 12,626 $3,195,325
====== ==========
113
Notes to Financial Statements
March 31, 2006
(unaudited)
6. OPTIONS WRITTEN (CONTINUED)
MID CAP VALUE SERIES PUT OPTIONS WRITTEN OUTSTANDING
EXPIRATION EXERCISE NUMBER OF MARKET
COMMON STOCK DATE PRICE CONTRACTS VALUE
- ------------ ---------- -------- --------- --------
Epiq Systems, Inc. 5-22-06 $17.50 2,100 $ 52,500
Newfield Exploration Company 6-19-06 35.00 1,010 40,400
Regis Corporation 5-22-06 35.00 1,050 136,500
Williams Companies, Inc. 5-22-06 20.00 1,800 72,000
----- --------
Total put options outstanding
(premiums received, $581,032) 5,960 $301,400
===== ========
Transactions in options written for Mid Cap Value Series for the six months
ended March 31, 2006 were as follows:
MID CAP VALUE SERIES CALL OPTIONS WRITTEN
NUMBER OF PREMIUM
CONTRACTS AMOUNT
--------- ----------
Balance at September 30, 2005 6,504 $1,134,237
Opened 15,010 3,042,407
Expired (6,488) (928,611)
Exercised (2,400) (596,600)
------ ----------
Balance at March 31, 2006 12,626 $2,651,433
====== ==========
MID CAP VALUE SERIES PUT OPTIONS WRITTEN
NUMBER OF PREMIUM
CONTRACTS AMOUNT
--------- -----------
Balance at September 30, 2005 4,066 $ 523,507
Opened 12,380 1,607,447
Expired (8,966) (1,408,567)
Exercised (1,520) (141,355)
------ -----------
Balance at March 31, 2006 5,960 $ 581,032
====== ===========
The following options written were outstanding for Security Large Cap Value
Fund at March 31, 2006:
SECURITY LARGE CAP VALUE FUND PUT OPTIONS WRITTEN OUTSTANDING
EXPIRATION EXERCISE NUMBER OF MARKET
COMMON STOCK DATE PRICE CONTRACTS VALUE
- ------------ ---------- -------- --------- -------
Transocean, Inc. 5-19-06 $80.00 78 $29,640
--- -------
Total put options outstanding
(premiums received, $23,243) 78 $29,640
=== =======
Transactions in options written for Security Large Cap Value Fund for the
six months ended March 31, 2006 were as follows:
SECURITY LARGE CAP VALUE FUND CALL OPTIONS WRITTEN
NUMBER OF PREMIUM
CONTRACTS AMOUNT
--------- --------
Balance at September 30, 2005 264 $ 23,375
Opened 586 53,405
Expired (507) (42,329)
Exercised (343) (34,451)
---- --------
Balance at March 31, 2006 -- $ --
==== ========
SECURITY LARGE CAP VALUE FUND PUT OPTIONS WRITTEN
NUMBER OF PREMIUM
CONTRACTS AMOUNT
--------- --------
Balance at September 30, 2005 -- $ --
Opened 188 46,185
Expired (110) (22,942)
---- --------
Balance at March 31, 2006 78 $ 23,243
==== ========
The following options written were outstanding for Security Mid Cap Growth
Fund at March 31, 2006:
SECURITY MID CAP GROWTH FUND CALL OPTIONS WRITTEN OUTSTANDING
EXPIRATION EXERCISE NUMBER OF MARKET
COMMON STOCK DATE PRICE CONTRACTS VALUE
- ------------ ---------- -------- --------- --------
J.B. Hunt Transportation
Services, Inc. 4-21-06 $25.00 500 $ 2,500
Lions Gate Enertainment
Corporation 6-16-06 10.00 1,167 87,525
Tractor Supply Company 7-21-06 65.00 180 97,200
Western Gas Resources, Inc. 4-21-06 50.00 249 14,940
----- --------
Total call options outstanding
(premiums received, $281,979) 2,096 $202,165
===== ========
Transactions in options written for Security Mid Cap Growth Fund for the
six months ended March 31, 2006 were as follows:
SECURITY MID CAP GROWTH FUND PUT OPTIONS WRITTEN OUTSTANDING
EXPIRATION EXERCISE NUMBER OF MARKET
COMMON STOCK DATE PRICE CONTRACTS VALUE
- ------------ ---------- -------- --------- -------
Transocean, Inc. 5-19-06 $70.00 200 $14,000
Trex Company, Inc. 4-21-06 25.00 264 6,600
--- -------
Total put options outstanding
(premiums received, $115,122) 464 $20,600
=== =======
Transactions in options written for Security Mid Cap Growth Fund for the
six months ended March 31, 2006 were as follows:
SECURITY MID CAP GROWTH FUND CALL OPTIONS WRITTEN
NUMBER OF PREMIUM
CONTRACTS AMOUNT
--------- ---------
Balance at September 30, 2005 1,555 $ 412,720
Opened 3,470 571,133
Expired (1,749) (317,047)
Exercised (1,180) (384,827)
------ ---------
Balance at March 31, 2006 2,096 $ 281,979
====== =========
SECURITY MID CAP GROWTH FUND PUT OPTIONS WRITTEN
NUMBER OF PREMIUM
CONTRACTS AMOUNT
--------- ---------
Balance at September 30, 2005 1,227 $ 81,323
Opened 2,062 407,193
Expired (2,403) (344,661)
Exercised (422) (28,733)
------ ---------
Balance at March 31, 2006 464 $ 115,122
====== =========
114
Notes to Financial Statements
March 31, 2006
(unaudited)
7. FEDERAL TAX MATTERS
The tax character of distributions paid during the fiscal years ended
September 30, 2005 and 2004, was the same as that reported in the Statement of
Changes in Net Assets, except as follows:
ORDINARY CAPITAL
INCOME GAIN TOTAL
---------- -------- ----------
2005
Security Equity Fund:
Alpha Opportunity Series $1,099,071 $186,310 $1,285,381
2004
Security Equity Fund:
Alpha Opportunity Series 341,942 80,496 422,438
Equity Series 607,081 77,431 684,512
Note: For federal income tax purposes, short term capital gain distributions are
treated as ordinary income distributions.
As of September 30, 2005 the components of distributable earnings on a tax basis
were:
UNDISTRIBUTED UNDISTRIBUTED ACCUMULATED UNREALIZED
ORDINARY LONG-TERM CAPITAL AND APPRECIATION DISTRIBUTABLE
INCOME GAIN OTHER LOSSES* (DEPRECIATION)** EARNINGS
------------- ------------- ------------- ---------------- -------------
Security Equity Fund:
Alpha Opportunity Series $1,709,969 $ 310,649 $ -- $ 178,620 $ 2,199,238
Enhanced Index Series 33,715 -- (4,110,950) 552,130 (3,525,105)
Equity Series 2,106,508 4,630,774 -- 82,843,838 89,581,120
Global Series -- -- (4,564,594) 38,425,318 33,860,724
Large Cap Growth Series -- -- (2,312,370) 861,891 (1,450,479)
Mid Cap Value Series -- 26,848,438 -- 147,603,023 174,451,461
Select 25 Series -- -- (11,459,603) 4,726,510 (6,733,093)
Small Cap Growth Series -- -- (3,925,468) 6,525,087 2,599,619
Social Awareness Series -- -- (1,551,431) (43,243) (1,594,674)
Security Large Cap Value Fund 226,795 -- (7,782,370) 4,909,030 (2,646,545)
Security Mid Cap Growth Fund -- 12,192,009 (2,852,119) 56,409,367 65,749,257
* 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.
As of September 30, 2005, 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:
115
Notes to Financial Statements
March 31, 2006
(unaudited)
CAPITAL LOSS DEFERRED POST-
CARRYOVERS EXPIRES IN OCTOBER LOSSES
------------ ---------- --------------
Security Equity Fund:
Enhanced Index Series $ 58,582 2010 $ --
1,591,954 2011
2,460,414 2012
-----------
4,110,950
Global Series 1,094,503 2009 67,499
908,640 2010
96,592 2011
2,397,360 2012
-----------
4,497,095
Large Cap Growth Series 268,343 2010 --
1,736,216 2011
307,811 2012
-----------
2,312,370
Select 25 Series 2,083,530 2009 --
3,363,943 2010
2,960,418 2011
3,051,712 2012
-----------
11,459,603
SmallCap Growth Series 3,925,468 2010 --
Social Awareness Series 309,787 2009 52,255
132,011 2010
1,018,739 2011
38,639 2012
-----------
1,499,176
Security Large Cap Value Fund 7,782,370 2011 --
Security Mid Cap Growth Fund 2,268,140 2009 --
567,035 2010
16,944 2011
-----------
2,852,119
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, 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. AFFILIATED TRANSACTIONS*
Investments representing 5% or more of the outstanding voting securities of
a portfolio company of a fund result in that portfolio company being considered
an affiliated company of such fund, as defined in the 1940 Act. The aggregate
market value of all securities of affiliated companies held in the Mid Cap Value
Series of the Security Equity Fund as of March 31, 2006 amounted to $16,069,977
which represents 2.11% of net assets. There were no affiliated companies held in
any other Fund or Series. Transactions in the Mid Cap Value Series during the
six months ended March 31, 2006 in which the portfolio company is an "affiliated
person" are as follows:
HYDROGEN THERMOENERGY THERMOENERGY
CORPORATION, CORPORATION CORPORATION OPTEUM,
LLC PIPES WARRANTS INC.
------------ ------------ ------------ -----------
SEPTEMBER 30, 2005
Balance
Shares 547,442 1,745,000 1,745,000 --
Cost $2,443,018 $1,646,500 $ 447,500 $ --
Gross Additions
Shares -- -- -- 1,400,000
Cost $ -- $ -- $ -- $15,682,076
Gross Reductions
Shares -- -- -- --
Cost $ -- $ -- $ -- $ --
MARCH 31, 2006
Balance
Shares 547,442 1,745,000 1,745,000 --
Cost $2,443,018 $1,646,500 $ 447,500 $ --
Gross Additions
Shares 547,442 1,745,000 1,745,000 1,400,000
Cost $2,443,018 $1,646,500 $ 447,500 $15,682,076
Realized Gain/(Loss) -- -- -- --
Investment Income -- -- -- --
* As a result of the Mid Cap Values Series' beneficial ownership of the
common stock of these portfolio companies, applicable regulations require
that the Series state that it may be deemed an affiliate of the respective
portfolio company. The Series disclaims that the "affiliated persons" are
affiliates of the Distributor, Advisor, Series or any other client of the
Advisor.
9. SUBSEQUENT EVENT
At a meeting held on November 18, 2005, the Board of Directors of the
Security Equity Fund (the "Fund") approved a plan of reorganization for the
Security Equity Fund, Enhanced Index Series, Large Cap Growth Series and Social
Awareness Series. Under the proposed plan of reorganization, all the assets and
liabilities of the Enhanced Index Series, Large Cap Growth Series and Social
Awareness Series would be merged into the Security Equity Fund Select 25 Series
on approximately June 16, 2006. The plan of reorganization is contingent upon
the approval of shareholders of record in Enhanced Index Series, Large Cap
Growth Series and Social Awareness Series as of April 3, 2006.
116
Director's Disclosure
DIRECTOR APPROVAL OF INVESTMENT ADVISORY AGREEMENT
At an in-person meeting of the Funds' Boards of Directors held on November
17-18, 2005, 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
and Morningstar 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 Directors noted significantly
improved performance concluding that the fund's performance fell
within a range that was reasonable and competitive with comparable
funds. 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 and Morningstar, 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.
- 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
117
Director's Disclosure
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.
118
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) Director - Jayhawk Area Boy Scouts Council
1994
Harry W. Craig, Jr.** Chairman, CEO, Secretary & Director,
(05-11-39) The Martin Tractor Company, Inc.;
2004 Director - Stormont Vail Corporation
Director - Concerned Citizens for Topeka
Director - Oscar S. Stauffer Executive in Residence
Jerry B. Farley** President, Washburn University
(09-20-46) President, J&J Bonanza
2005
Penny A. Lumpkin** Partner, Vivians' Gift Shop (Corporate Retail)
(08-20-39) Vice President, Palmer Companies, Inc.
1993 (Small Business and Shopping Center Development)
Vice President, PLB (Real Estate Equipment Leasing)
Vice President, Town Crier (Retail)
Prior to 2002:
Vice President, Bellaire Shopping Center
(Managing and Leasing)
Partner, Goodwin Enterprises (Retail)
Maynard F. Oliverius** President & Chief Executive Officer,
(12-18-43) Stormont-Vail HealthCare
1998 Director - VHA Mid-America
Director - Go Topeka
John D. Cleland* Retired. Prior to January 1, 2003, Senior Vice
(05-01-36) President, Security Benefit Group, Inc. &
1991 (Director) Security Benefit Life Insurance Company
2000 (Chairman of the Board)
Michael G. Odlum* President & Managing Member Representative,
(01-12-52) Security Management Company, LLC
2004 (President) Senior Vice President and Chief Investment Officer,
2004 (Director) Security Corporation and
Security Benefit Life Insurance Company
Director, Security Distributors, Inc.
Director, Vice President and Chief Investment Officer,
First Security Benefit Life Insurance and Annuity
Company of New York
* 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 Fund's 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 Fund.
*** Each director oversees 34 Security Fund portfolios and serves until the
next annual meeting, or until a successor has been duly elected and
qualified.
119
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
(02-11-60) Management Company, LLC;
Vice President Vice President & Senior Portfolio Manager, Security
2003 Benefit Life Insurance Company
Christina Fletcher Portfolio Manager, Security Management Company, LLC
(07-25-72) Credit Analyst/Portfolio Manager, Horizon Cash
Vice President Management
2005 Senior Money Market Trader, Scudder Investments
Brenda M. Harwood Assistant Vice President, Chief Compliance Officer &
(11-03-63) Treasurer, Security Management Company, LLC;
Treasurer Assistant Vice President, Security Benefit Life
1988 Insurance Company
Vice President & Director, Security Distributors, Inc.
Richard J. King Vice President & Head of Fixed Income Asset
(03-59) Management, Security Management Company, LLC;
Vice President Partner, Head of Portfolio Management, INVESCO
2005
Mark Lamb Vice President, Security Management Company, LLC,
(02-03-60) Vice President, Security Benefit Life Insurance
Vice President Company
2003
Amy J. Lee Secretary, Security Management Company, LLC & Security
(06-05-61) Distributors, Inc.;
Secretary Secretary, Security Distributors, Inc.
1987 Vice President, Associate General Counsel & Assistant
Secretary,
Security Benefit Life Insurance Company
Mark Mitchell Vice President & Portfolio Manager, Security
(08-24-64) Management Company, LLC
Vice President
2003
Christopher Phalen Vice President & Portfolio Manager, Security Management
(11-9-70) Company, LLC;
Vice President Vice President, Security Benefit Life Insurance Company
2002
James P. Schier Vice President & Senior Portfolio Manager, Security
(12-28-57) Management Company, LLC;
Vice President Vice President, Security Benefit Life Insurance Company
1998
Cindy L. Shields Vice President & Head of Equity Asset Management,
(06-05-67) Security Management Company, LLC,
Vice President Vice President, Security Benefit Life Insurance Company
1988
Christopher D. Swickard Assistant Secretary, Security Management Company, LLC;
(10-09-65) Second Vice President & Counsel,
Assistant Secretary Security Benefit Life Insurance Company
1996
David G. Toussaint Assistant Vice President & Portfolio Manager,
(10-10-66) Security Management Company, LLC;
Vice President Assistant Vice President, Security Benefit Lfe
2001 Insurance Company
* Officers serve until the next annual meeting or until a successor has been
duly elected and qualified.
120
Each of the Security Funds files a complete schedule of portfolio holdings with
the U.S. Securities and Exchange Commission for the first and third 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, 2005 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.
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 Series
- Small Cap Growth Series
- Social Awareness Series
Security Large Cap Value Fund
Security Mid Cap Growth Fund
Security Income Fund
- Capital Preservation Series
- Diversified Income Series
- High Yield Series
- Income Opportunity Series
Security Cash Fund
SECURITY FUNDS OFFICERS AND DIRECTORS
DIRECTORS
Donald A. Chubb, Jr.
John D. Cleland
Harry W. Craig, Jr.
Jerry B. Farley
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
Christina Fletcher, Vice President
Richard J. King, Vice President
Mark Lamb, Vice President
Mark Mitchell, Vice President
Christopher Phalen, Vice President
James P. Schier, Vice President
Cindy L. Shields, Vice President
David G. Toussaint, 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 BENEFIT(SM) LOGO)
Security Distributors, Inc.
One Security Benefit Place - Topeka, Kansas 66636-0001 - securitybenefit.com
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 26, 2006
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 26, 2006
By: BRENDA M. HARWOOD
------------------------------------
Brenda M. Harwood, Treasurer
Date: May 26, 2006