N-30D 1 c62717n-30d.txt SEMIANNUAL REPORT 1 SECURITY FUNDS [Graphic] SEMI-ANNUAL REPORT MARCH 31, 2001 -- SECURITY EQUITY FUND -- ENHANCED INDEX SERIES (P. 16) -- EQUITY SERIES (P. 27) -- GLOBAL SERIES (P. 12) -- INTERNATIONAL SERIES (P. 32) -- LARGE CAP GROWTH SERIES (P. 53) -- MID CAP VALUE SERIES (P. 3) -- SELECT 25 SERIES (P. 45) -- SMALL CAP GROWTH SERIES (P. 57) -- SOCIAL AWARENESS SERIES (P. 37) -- TECHNOLOGY SERIES (P. 61) -- TOTAL RETURN SERIES (P. 41) -- SECURITY GROWTH AND INCOME FUND (P. 7) -- SECURITY ULTRA FUND (P. 48) [SECURITY DISTRIBUTORS INC. LOGO (R)] A MEMBER OF THE SECURITY BENEFIT GROUP OF COMPANIES 2 CHAIRMAN OF THE BOARD'S COMMENTARY [Graphic] MAY 15, 2001 [Picture] John Cleland TO OUR SHAREHOLDERS: The six months ended March 31, 2001 were trying for most equity market participants. In periods such as this it is worthwhile to look back over time to gain a historic perspective. Over roughly the last 100 years, markets as measured by large cap stock indexes such as the S&P500 Stock Index have averaged returns between 11% and 12%. There were a few periods such as the late 1990's when returns dramatically exceeded those averages, and others like the year 2000 when returns dramatically underperformed. Time, however, has proven to be on the side of the investor. We see no reason to believe things will be any different this time around. THE FEDERAL RESERVE REVERSES DIRECTION We have already seen a dramatic reversal in monetary policy on the part of the Federal Reserve Bank as it changed from a practice of raising its target interest rates in 1999 and 2000 to lowering rates sharply in the early months of 2001. We expect additional interest rate cuts over the coming months. At some point in the near future we believe this more accommodative monetary policy will create a climate of renewed economic growth, leading to increased investor optimism about the outlook for corporate earnings. Historically the stock markets have begun to move upward in advance of the actual reporting of improved earnings; for this reason we believe there will be more favorable results for equity investors in the second half of the fiscal year. THE GLOBAL ECONOMY The global economic picture for the first time in many years is weak across most countries. With the slowing of the U.S. economy and the weakness in Japan, the world's second largest economy, the world lacks an engine of any strength to drive economic growth. We expect interest rate cuts by the U.S.'s central bank as well as by central banks of other countries, to continue in coming months. At some point, this more accommodative policy on a global basis should ignite world economic growth, and in a manner similar to the U.S., we expect world stock markets to anticipate this renewed growth and rise accordingly. THE IMPORTANCE OF REGULAR INVESTMENT AND DIVERSIFICATION In the meantime, this is a period when the practice of dollar cost averaging(1), or investing a fixed amount of money on a regular basis, should produce favorable results for investors when viewed in a longer-term time horizon. We continue to advocate a strategy of diversifying one's investment portfolio across a broad array of asset classes. Such a strategy recognizes the sharply differing performances of a variety of market segments, a byproduct of the extreme market volatility we have experienced over the past several months. In the following pages our portfolio managers discuss the factors contributing to the performance of their various portfolios. As always, we invite your questions and comments, and we sincerely appreciate the confidence in us you have shown by allowing us to manage your investment funds. Sincerely, /s/ John Cleland ----------------- John Cleland, Chairman The Security Funds (1) Dollar cost averaging does not assure profits or protect against loss in a declining market. 1 3 PRESIDENT'S COMMENTARY [Graphic] MAY 15, 2001 [Picture] James Schmank TO OUR SHAREHOLDERS: The six month period just completed was difficult for investors and portfolio managers alike. Despite the sharp selloffs in most segments of the stock markets, we are optimistic about the outlook for equities. Although we are experiencing a slowdown in the rate of growth of the U.S. economy, the slowdown has occurred from historically high levels of activity. We believe that returning to average rates of growth, rather than spiking to new record highs, will allow the markets to move upward at a healthier, more sustainable pace over a longer period of time. The Federal Reserve Bank's policy-making Open Market Committee, through its series of interest rate cuts, is working to bring us back to these average rates of growth. EXPERIENCED MANAGERS ARE NO STRANGERS TO DOWN MARKETS Security Management Company's equity portfolio managers and strategists have an average of over twenty years of experience in the investment field. Unlike many investment professionals in the mutual fund industry today, they have experienced both positive and negative market cycles. They have learned the importance of maintaining a long-term investment horizon and of buying stocks that are reasonably valued. Although many managers during the lofty market periods of 1998 and 1999 maintained "it's different now," our managers were reluctant to adopt this philosophy. The selloff that has taken place since mid-2000 has reinforced our long-time practice of avoiding market sectors where stock prices seem to defy logic. WE WELCOME THE DREYFUS CORPORATION TO OUR SUBADVISOR GROUP We also appreciate the knowledge and experience that our subadvisors bring to our fund family with the portfolios they manage on our behalf. We have been pleased with the new funds we added in 2000, and welcome The Dreyfus Corporation to our stable of funds this year. Timothy M. Ghriskey, Senior Portfolio Manager and Head of Value Equities at Dreyfus, is the new portfolio manager for Security Growth & Income Fund. His letter to shareholders makes its first appearance in this report. KEEP YOUR LONG TERM INVESTMENT GOALS IN MIND We extend our congratulations to our shareholders who are "dollar cost averaging,"(1) investing a set amount of money on a regular basis regardless of the direction the stock markets are taking. In our opinion, this practice is one of the best ways to turn negative markets into long-term positive results for your investment portfolios. We believe the worst of the current market downdraft is now behind us. If you should be wondering whether to stay invested or move out of the markets until a definite upswing is apparent, we suggest that you consult your financial advisor before making any changes. Again we emphasize that it is most important to keep your long-term investment goals in mind. History has shown us that the stock markets invariably resume their upward trend after periods of falling prices; we see no reason why this time should be different. Sincerely, James Schmank, President Security Funds (1) Dollar cost averaging does not assure profits or protect against loss in a declining market. 2 4 MANAGER'S COMMENTARY [GRAPHIC] SECURITY EQUITY FUND - MID CAP VALUE SERIES MAY 15, 2001 [Picture] Jim Schier Portfolio Manager [SECURITY FUNDS(R) LOGO] ADVISOR, SECURITY MANAGEMENT COMPANY TO OUR SHAREHOLDERS: In the tumultuous market environment that predominated throughout the six months ended March 31, 2001, the midcap value sector was a bright spot. Security Mid Cap Value Fund returned +7.53% over the period, outperforming the benchmark S&P/Barra Midcap Value Index's return of +5.55%.(1) THE CONSUMER STAPLES SECTOR PERFORMED WELL Stocks in the consumer staples sector are considered defensive stocks in negative market periods, since they represent products such as food and drugs that consumers need and will continue to buy in any market environment. Our holdings in this sector made the largest positive contribution to total return during the six months, gaining over 54% compared with the +22% return of the corresponding sector in the benchmark index. Our best-performing stock among our consumer staples holdings was American Italian Pasta Company. The lowest cost spaghetti maker in the U.S., the company has made excellent progress in improving earnings, and benefited from the acquisition of the Mueller's pasta line from BestFoods. American Italian Pasta Company has manufactured the Mueller's line of pastas for BestFoods since 1998, but believes it can realize additional cost savings by marketing the brand itself. Other stocks in the sector which performed well in the portfolio included Archer-Daniels-Midland Company and Sylvan Inc. Archer-Daniels-Midland is generating consistent earnings as it benefits from pricing firmness in its sweetener line and in other products. Sylvan, which produces fresh mushrooms for sale to retailers, distributors, and processors of mushroom products, gained along with other stocks of a defensive nature. CONSUMER DISCRETIONARIES AND UTILITIES ADD VALUE ALSO Although returns were less stellar in the consumer discretionary stock sector overall, some of our holdings were strong performers. Brown Shoe Company, Inc., which markets shoe brands including Naturalizer, Life Stride, and Buster Brown, was one exception, gaining over 100% as sales exceeded plan and earnings were better than expected. Mattel, Inc., maker and marketer of a variety of children's products, rose over 58% as earnings exceeded expectations. Jones Apparel Group, Inc., which designs and markets brand name clothing including Jones New York, Evan-Picone, Nine West, and others, climbed about 42% over the period as its earnings also beat analysts' expectations. Our exposure to natural gas and electric utilities companies added value in the portfolio as utility costs soared during the winter months. El Paso Corporation and Kinder Morgan, Inc., produce and distribute natural gas. Unisource Energy Corporation, an electric utility company, benefited by selling its surplus power to the California market. TECHNOLOGY CONTINUES TO UNDERPERFORM The carnage that occurred in the semiconductor and telecommunication sectors finally reached the more defensive software and services sectors as well. The technology slowdown was reflected during the six months in the businesses and stock prices of Computer Sciences Corporation and Acxiom Corporation, down 56% and 34% respectively. These weak performers were offset in part by favorable returns on two of our holdings in the technology sector. Tier Technologies Inc., a small company which provides consulting and software engineering services for government agencies, rose 60% on strong earnings during the period. We bought Apple Computer, Inc. at a very depressed price during the six months and saw its value rise 28% as investors began to purchase undervalued issues in the personal computer industry. 3 5 MANAGER'S COMMENTARY (CONTINUED) [GRAPHIC] SECURITY EQUITY FUND - MID CAP VALUE SERIES MAY 15, 2001 THE MID CAP SECTOR STILL HAS GOOD CANDIDATES FOR PURCHASE The Mid Cap Value Fund has been the beneficiary of strong cash inflows in recent months. Because of the stock markets' recent substantial declines, we have been able to find many stocks which we consider to be excellent values. The recent rebound in defensive value stocks is making these "finds" more scarce, however. But with more than 10,000 stocks to choose from in the small-cap and midcap sectors of the market, we believe it is easier to find good buys there than it would be in the large cap markets. As the U.S. economy begins to strengthen, we expect returns on midcap stocks to continue to be very favorable. Sincerely, Jim Schier Senior Portfolio Manager (1) Performance figures are based on Class A shares and do not reflect deduction of the sales charge. PERFORMANCE TOP 5 HOLDINGS**
% OF NET ASSETS ---------- CryoLife, Inc. 3.7% Ocean Energy,Inc. 3.4% Maxwell Technologies, Inc. 3.1% Unisource Energy Corporation 3.1% Kinder Morgan, Inc. 2.7%
**At March 31, 2001 AVERAGE ANNUAL RETURNS AS OF MARCH 31, 2001
1 YEAR SINCE INCEPTION ------ ---------------- A Shares 18.11% 25.04% (5-1-97) A Shares with sales charge 11.34% 23.16% (5-1-97) B Shares 16.99% 23.80% (5-1-97) B Shares with CDSC 11.99% 23.39% (5-1-97) C Shares 16.84% 22.97% (1-29-99) C Shares with CDSC 15.84% 22.97% (1-29-99) S Shares N/A (1.27%) (2-01-01) S Shares with CDSC N/A (7.19%) (2-01-01)
The performance data above represents past performance which 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, 1% for Class C shares and 6% for Class S shares, as applicable, except where noted. For Class S shares, the returns have been calculated from February 1, 2001 (date of inception) to March 31, 2001 and are not annualized. Such figures would be lower if the maximum sales charge were deducted. 4 6 SCHEDULE OF INVESTMENTS [Graphic] MARCH 31, 2001 (UNAUDITED) SECURITY EQUITY FUND - MID CAP VALUE SERIES
NUMBER MARKET COMMON STOCKS OF SHARES VALUE ------------- --------- ------------ AEROSPACE & DEFENSE - 2.1% Alliant Techsystems, Inc.* .................... 12,900 $1,142,295 Raytheon Company (Cl. B) ...................... 10,000 293,800 ---------- 1,436,095 AGRICULTURAL PRODUCTS - 3.6% Archer-Daniels-Midland Company ..................................... 100,000 1,315,000 Sylvan, Inc.* ................................. 91,000 1,137,500 ---------- 2,452,500 APPAREL & ACCESSORIES - 3.1% Jones Apparel Group, Inc.*(1) ................. 20,000 756,000 Kellwood Company(1) ........................... 65,000 1,348,750 ---------- 2,104,750 APPLICATION SOFTWARE - 0.9% AVT Corporation* .............................. 83,500 234,844 JDA Software Group, Inc.* ..................... 35,000 400,313 ---------- 635,157 AUTO PARTS & EQUIPMENT - 1.6% Federal Signal Corporation .................... 33,000 644,490 Motorcar Parts & Accessories, Inc.* .......................... 50,000 70,000 TRW, Inc.(1) .................................. 11,000 374,000 ---------- 1,088,490 BANKS - 4.1% Bank of Montreal .............................. 26,000 653,380 First Midwest Bancorp, Inc .................... 22,000 619,300 Marshall & Ilsley Corporation ................. 21,000 1,109,010 Wilmington Trust Corporation .................. 8,000 472,640 ---------- 2,854,330 BROADCASTING & CABLE TV - 0.4% Cinar Corporation (Cl. B)* .................... 86,000 301,000 BUILDING PRODUCTS - 1.9% Crane Company ................................. 50,000 1,302,500 CATALOG RETAIL - 0.7% Coldwater Creek, Inc.* ........................ 21,200 475,728 COMMODITY CHEMICALS - 1.7% Lyondell Chemical Company ..................... 80,000 1,149,600 COMPUTER HARDWARE - 1.8% Apple Computer, Inc.* ......................... 55,000 1,213,850 CONSTRUCTION & ENGINEERING - 1.9% Chicago Bridge and Iron Company N.V. ................................ 55,000 1,306,250 DIVERSIFIED CHEMICALS - 1.5% Engelhard Corporation ......................... 40,000 1,034,400 DIVERSIFIED COMMERCIAL SERVICES - 3.1% Angelica Corporation .......................... 99,300 $1,151,880 Profit Recovery Group International, Inc.* ........................ 157,000 981,250 ---------- 2,133,130 DIVERSIFIED FINANCIAL SERVICES - 1.5% Franklin Resources, Inc. ...................... 27,000 1,055,970 ELECTRICAL COMPONENTS & EQUIPMENT - 4.2% Baldor Electric Company ....................... 32,800 690,440 Benchmark Electronics, Inc.* .................. 40,000 780,000 Brady Corporation ............................. 16,000 539,200 Energizer Holdings, Inc.* ..................... 34,000 850,000 ---------- 2,859,640 ELECTRIC UTILITIES - 3.1% Unisource Energy Corporation .................. 100,000 2,100,000 ELECTRONIC EQUIPMENT & INSTRUMENTS - 4.5% Maxwell Technologies, Inc.* ................... 111,000 2,136,750 Sawtek, Inc.* ................................. 42,000 748,125 Trimble Navigation Limited* ................... 10,300 195,056 ---------- 3,079,931 ENVIRONMENTAL SERVICES - 0.5% Casella Waste Systems, Inc.* .................. 36,700 328,006 FOOTWEAR - 2.4% Brown Shoe Company, Inc. ...................... 88,800 1,673,880 GAS UTILITIES - 4.2% El Paso Energy Corporation .................... 16,000 1,044,800 Kinder Morgan, Inc. ........................... 35,000 1,862,000 ---------- 2,906,800 GOLD - 0.9% Homestake Mining Company ...................... 70,000 368,200 Newmont Mining Corporation .................... 16,000 257,920 ---------- 626,120 HEALTH CARE DISTRIBUTORS & SERVICES - 5.2% CryoLife, Inc.* ............................... 99,000 2,567,070 Hooper Holmes, Inc. ........................... 120,000 1,030,800 ---------- 3,597,870 INDUSTRIAL MACHINERY - 0.6% Quixote Corporation ........................... 20,200 446,925 IT CONSULTING & SERVICES - 3.6% Acxiom Corporation*(1) ........................ 39,000 814,125 Computer Sciences Corporation* ................ 18,000 582,300 SunGard Data Systems, Inc.* ................... 6,000 295,380 Tier Technologies, Inc. (Cl.B)* ............... 70,000 822,500 ---------- 2,514,305
See accompanying notes. 5 7 SCHEDULE OF INVESTMENTS [GRAPHIC] MARCH 31, 2001 (UNAUDITED) SECURITY EQUITY FUND - MID CAP VALUE SERIES (CONTINUED)
NUMBER MARKET COMMON STOCKS (CONTINUED) OF SHARES VALUE ------------------------- --------- ------------ LEISURE PRODUCTS - 2.4% Mattel, Inc. ....................................... 75,000 $1,330,500 Midway Games, Inc.(*)............................... 48,000 350,400 ----------- 1,680,900 LIFE & HEALTH INSURANCE - 2.1% AFLAC, Inc.(1)...................................... 24,000 660,960 American General Corporation ....................... 20,000 765,000 ----------- 1,425,960 MULTI-UTILITIES - 1.5% Questar Corporation ................................ 37,000 1,013,800 NETWORKING EQUIPMENT - 1.6% Anixter International, Inc.(*)...................... 45,600 1,098,960 OIL & GAS DRILLING - 0.4% ENSCO International, Inc. .......................... 8,000 280,000 OIL & GAS EQUIPMENT & SERVICES - 1.8% Tidewater, Inc. .................................... 27,000 1,220,400 OIL & GAS EXPLORATION & PRODUCTION - 8.2% Apache Corporation ................................. 3,700 213,157 Callon Petroleum Company(*)......................... 50,000 617,500 Evergreen Resources, Inc.(*)........................ 15,000 567,150 Murphy Oil Corporation ............................. 18,500 1,231,730 Ocean Energy, Inc. ................................. 140,000 2,317,000 TransMontaigne, Inc.(*)............................. 197,000 699,350 ----------- 5,645,887 PACKAGED FOODS - 1.6% American Italian Pasta Company(*)................... 13,100 419,200 Hormel Foods Corporation ........................... 34,000 662,320 ----------- 1,081,520 PHARMACEUTICALS - 2.1% Mylan Laboratories, Inc. ........................... 56,000 1,447,600 PROPERTY & CASUAL INSURANCE - 3.4% Cincinnati Financial Corporation ................... 35,000 1,327,812 MBIA, Inc. ......................................... 12,500 1,008,500 ----------- 2,336,312 PUBLISHING & PRINTING - 1.1% E.W. Scripps Company ............................... 13,000 753,610 RAILROADS - 1.1% CSX Corporation .................................... 17,000 572,900 RailAmerica, Inc.(*)................................ 22,000 220,000 ----------- 792,900 SEMICONDUCTORS - 0.5% Power Integrations, Inc.(*)......................... 18,000 310,500
PRINCIPAL AMOUNT OR NUMBER MARKET COMMON STOCKS (CONTINUED) OF SHARES VALUE ------------------------- ----------- ----------- SPECIALTY CHEMICALS - 2.3% Material Sciences Corporation(*).................... 43,000 $ 346,150 Minerals Technologies, Inc. ........................ 20,000 699,000 Solutia, Inc. ...................................... 45,000 549,000 ----------- 1,594,150 TELECOMMUNICATIONS EQUIPMENT - 2.3% ADTRAN, Inc.(*)..................................... 63,000 1,547,438 Transcrypt International, Inc.(*)................... 25,000 5,750 ----------- 1,553,188 TEXTILES - 0.4% Unifi, Inc.(*)...................................... 43,000 304,870 TRUCKING - 1.9% Covenant Transport, Inc.(*)......................... 89,000 1,212,625 Motor Cargo Industries, Inc.(*)..................... 13,000 91,812 ----------- 1,304,437 ----------- Total common stocks - 93.8%......................... 64,522,221 PREFERRED STOCKS OIL & GAS EXPLORATION & PRODUCTION - 0.1% Callon Petroleum Company, Series A ................. 3,200 97,760 U.S. GOVERNMENT & GOVERNMENT AGENCY SECURITIES FEDERAL HOME LOAN MORTGAGE CORPORATION - 4.2% 4.74%, 04-03-01.................................... $1,600,000 2,895,800 REPURCHASE AGREEMENT - 2.2% United Missouri Bank, 5.03%, 04-02-01 (Collateralized by FHLMC, 04-04-01 with a value of $1,517,000)...................... $1,486,000 1,486,000 ----------- Total investments - 100.3% ........................ 69,001,781 Liabilities, less cash and other assets - (0.3%)... (203,214) ----------- Total net assets - 100.0% .......................... $68,798,567 ===========
The identified cost of investments owned at March 31, 2001 was the same for federal income tax and financial statement purposes. (*) Non-Income producing security. (1) Security is segregated as collateral for futures, forward contracts or options. See accompanying notes. 6 8 MANAGER'S COMMENTARY [Graphic] SECURITY GROWTH AND INCOME FUND MAY 15, 2001 [Picture] Timothy M. Ghriskey Senior Portfolio Manager [DREYFUS LOGO] Advisor, The Dreyfus Corporation TO OUR SHAREHOLDERS: The six-month period ended March 31, 2001 was weak for the broad stock market. Security Growth and Income Fund returned -7.21% during the period, while the total return for the benchmark Russell 1000 Value Index was -2.47%.(1) THE DREYFUS CORPORATION ASSUMES RESPONSIBILITIES AS SUBADVISOR The Dreyfus Corporation was selected as subadvisor for Security Growth and Income Fund and began portfolio management responsibilities in January of this year. As senior portfolio manager and head of value equities at Dreyfus, I will be overseeing management of the portfolios. We are managing the Fund in a disciplined value stock investment style, favoring stocks that are inexpensively valued on generally lower expectations for growth at the time of purchase. We seek out large company stocks that we believe will exceed consensus expectations for growth and should, therefore, rise significantly in value. We believe the value style of investing tends to be a lower-risk, more consistent style of equity investing. The Dreyfus value equity team constructs portfolios of securities that in their view attempt to maximize return while minimizing risk. The result is a relatively "blue chip" portfolio of value stocks, which generally will have a higher dividend yield than that of the broad stock market. VALUE INVESTING RETURNS TO FAVOR Value investing was decidedly in favor among investors during the six months just completed. Value stock indexes overwhelmingly outperformed broad stock market indexes. For example, the S&P 500 Stock Index dropped 18.74% for the six months. In the growth stock category the S&P/Barra Growth Index fell 31.23%, while the companion S&P/Barra Value Index lost 6.13%. One of the advantages of value investing is the tendency for this investment style to protect assets in the event of a broad stock market downturn such as the one experienced during this reporting period. Since Dreyfus assumed management of the portfolio, sector emphasis has been a positive contributor to the Fund's return. The best performing sectors relative to the corresponding sector in the benchmark index were technology, with Computer Associates International Inc. "bucking the trend" of most technology stocks and gaining over 25% during the time we held it in the portfolio, and consumer staples, with Philip Morris Companies Inc. leading the positive performance in the sector. The weakest sectors in the portfolio relative to the benchmark included financials, where GreenPoint Financial Corporation fell 13% during the holding period, and capital goods, with Tyco International Ltd. losing more than 18% over the six months. VALUE STOCKS SHOULD CONTINUE TO DO WELL The value managers at Dreyfus believe value investing has a high probability of remaining in favor, at least over the near term. Value stocks have historically performed well during an economic recovery, which we expect to be next in the chain of economic events. Regardless of the economy's direction, however, we believe value stocks should be a core part of any properly diversified investment portfolio. Currently, while the portfolio is generally well balanced across the economic spectrum, we hold overweight positions relative to the benchmark index in basic materials, consumer staples, financials, and technology sectors. Underweight sectors include capital goods, communication services, consumer cycles, transportation, and utilities. Sincerely, Timothy M. Ghriskey Senior Portfolio Manager (1) Performance figures are based on Class A shares and do not reflect deduction of the sales charge. 7 9 MANAGER'S COMMENTARY (CONTINUED) [Graphic] SECURITY GROWTH AND INCOME FUND MAY 15, 2001 PERFORMANCE TOP 5 HOLDINGS**
% OF NET ASSETS ---------- Exxon Mobil Corporation 4.8% Citigroup, Inc. 4.6% Wells Fargo & Company 2.9% Phillip Morris Companies,Inc. 2.8% American International Group, Inc. 2.6%
**At March 31, 2001 AVERAGE ANNUAL RETURNS AS OF MARCH 31, 2001
1 YEAR 5 YEARS 10 YEARS ------ ------- -------- A Shares (8.06%) 5.38% 7.59% A Shares with sales charge (13.41%) 4.16% 6.95% B Shares (9.05%) 4.28% 5.52% (10-19-93) (since inception) B Shares with CDSC (13.60%) 3.94% 5.52% (10-19-93) (since inception) C Shares (8.75%) (5.78%) N/A (1-29-99) (since inception) C Shares with CDSC (9.66%) (5.78%) N/A (1-29-99) (since inception) S Shares (7.66%) N/A N/A (2-01-01) (since inception) S Shares with CDSC (13.20%) N/A N/A (2-01-01) (since inception)
The performance data above represents past performance which 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, 1% for Class C shares and 6% for Class S shares, as applicable, except where noted. For Class S shares, the returns have been calculated from February 1, 2001 (date of inception) to March 31, 2001 and are not annualized. Such figures would be lower if the maximum sales charge were deducted. 8 10 SCHEDULE OF INVESTMENTS [Graphic] MARCH 31, 2001 (UNAUDITED) SECURITY GROWTH AND INCOME FUND
PRINCIPAL AMOUNT OR NUMBER MARKET CORPORATE BONDS OF SHARES VALUE -------------------------------------------------------------------------------- CONSUMER CYCLICAL - OTHER - 0.0% American Eco Corporation, 9.625% - 2008 ............................. $125,000 $ 1,250 HEALTHCARE - 0.0% Multicare Companies, Inc., 9.00% - 2007 .............................. $200,000 10,500 ENERGY - REFINING - 0.3% Crown Central Petroleum, 10.875% - 2005 ............................ $200,000 164,250 SERVICES - 0.0% Loewen Group, Inc., 6.70% - 2049 .............................. $75,000 28,500 ---------- Total corporate bonds - 0.3% .............. 204,500 COMMON STOCKS AEROSPACE & DEFENSE - 3.4% Boeing Company .............................. 13,700 763,227 General Dynamics Corporation ................ 3,800 238,412 Honeywell International, Inc................. 13,700 558,960 Raytheon Company (CL.B) ..................... 5,800 170,404 United Technologies Corporation 4,500 329,850 ---------- 2,060,853 AIRLINES - 0.4% Southwest Airlines Company .................. 13,500 239,625 ALUMINUM - 1.3% Alcoa, Inc. ................................. 21,000 754,950 APPAREL & ACCESSORIES - 1.1% Jones Apparel Group, Inc.* .................. 7,400 279,720 Liz Claiborne, Inc. ......................... 8,300 390,515 ---------- 670,235 AUTOMOBILE MANUFACTURERS - 1.3% General Motors Corporation .................. 14,900 772,565 BANKS - 10.9% Bank of America Corporation ................. 17,100 936,225 Bank of New York Company, Inc. .............. 14,600 718,904 Bank One Corporation ........................ 13,300 481,194 Comerica, Inc. .............................. 2,600 159,900 First Union Corporation ..................... 9,900 326,700 FleetBoston Financial Corporation ........... 15,700 592,675 Greenpoint Financial Corporation ............ 27,000 880,200 Keycorp ..................................... 6,000 154,800 Synovus Financial Corporation ............... 5,700 153,900 Washington Mutual, Inc. ..................... 6,700 366,825 Wells Fargo & Company ....................... 34,800 1,721,556 ---------- 6,492,879 BREWERS - 0.6% Anheuser-Busch Companies, Inc. .............. 8,000 367,440 BROADCASTING & CABLE TV - 2.0% AT&T Corporation - Liberty Media Corporation* ................ 33,700 471,800 Clear Channel Communications, Inc.* ..................... 3,800 206,910 Comcast Corporation* ........................ 12,100 507,444 ---------- 1,186,154 COMPUTER & ELECTRONICS RETAIL - 0.4% Radioshack Corporation ...................... 6,800 249,492 COMPUTER HARDWARE - 2.8% Compaq Computer Corporation ................. 14,100 256,620 Hewlett-Packard Company ..................... 10,400 325,208 International Business Machines Corporation.. 11,500 1,106,070 ---------- 1,687,898 CONSTRUCTION & FARM MACHINERY - 0.2% Deere & Company ............................. 3,600 130,824 CONSUMER FINANCE - 1.2% Household International, Inc. ............... 5,000 296,200 MBNA Corporation ............................ 12,300 407,130 ---------- 703,330 DEPARTMENT STORES - 2.1% May Department Stores Company ............... 11,500 408,020 Sears, Roebuck & Company .................... 24,800 874,696 ---------- 1,282,716 DIVERSIFIED CHEMICALS - 1.9% Dow Chemical Company ........................ 17,076 539,089 E.I. du Pont de Nemours & Company ........... 14,900 606,430 ---------- 1,145,519 DIVERSIFIED FINANCIAL SERVICES - 12.4% American Express Company .................... 16,600 685,580 Citigroup, Inc. ............................. 60,566 2,724,259 Fannie Mae .................................. 6,300 501,480 Freddie Mac ................................. 12,000 777,960 J.P. Morgan Chase & Company ................. 19,050 855,345 Merrill Lynch & Company, Inc. ............... 8,500 470,900 Morgan Stanley Dean Witter & Company ........ 11,500 615,250 USA Education, Inc. ......................... 10,800 784,620 ---------- 7,415,394 DRUG RETAIL - 0.3% CVS Corporation ............................ 2,900 169,621
See accompanying notes. 9 11 SCHEDULE OF INVESTMENTS [GRAPHIC] MARCH 31, 2001 (UNAUDITED) SECURITY GROWTH AND INCOME FUND (CONTINUED)
NUMBER MARKET COMMON STOCKS (CONTINUED) OF SHARES VALUE ------------------------------------------------------------------------------ ELECTRIC UTILITIES - 5.1% American Electric Power Company, Inc............. 3,200 $ 150,400 Dominion Resources, Inc.......................... 2,400 154,728 Duke Energy Corporation.......................... 7,600 324,824 Exelon Corporation............................... 11,500 754,400 Reliant Energy, Inc.............................. 3,800 171,950 Southern Company................................. 12,100 424,589 TXU Corporation.................................. 16,300 673,516 Xcel Energy...................................... 13,000 391,430 --------- 3,045,837 ELECTRICAL COMPONENTS & EQIUPMENT - 0.5% Emerson Electric Company......................... 4,600 285,016 ENVIRONMENTAL SERVICES - 0.3% Waste Management, Inc............................ 6,300 155,610 FERTILIZERS & AGRICULTURAL CHEMICALS - 0.3% Monsanto Company................................. 5,400 191,484 FOREST PRODUCTS - 0.3% Weyerhaeuser Company............................. 3,000 152,370 GAS UTILITIES - 0.3% El Paso Corporation.............................. 2,560 167,168 GENERAL MERCHANDISE STORES - 1.5% Costco Wholesale Corporation(*).................. 4,100 160,925 Target Corporation............................... 8,000 288,640 Wal-Mart Stores, Inc............................. 8,900 449,450 --------- 899,015 HEALTH CARE EQUIPMENT - 0.5% Baxter International, Inc....................... 2,900 273,006 HEALTH CARE FACILITIES - 0.5% Healthsouth Corporation(*)...................... 23,800 306,782 HEALTH CARE SUPPLIES - 0.8% Henry Schein, Inc.(*)........................... 13,000 477,750 HOUSEHOLD PRODUCTS - 2.5% Kimberly-Clark Corporation...................... 5,800 393,414 Procter & Gamble Company........................ 17,800 1,114,280 --------- 1,507,694 INDUSTRIAL CONGLOMERATES - 0.9% General Electric Company........................ 2,200 92,092 Minnesota Mining & Manufacturing Company........ 4,300 446,770 --------- 538,862 INSURANCE BROKERS - 0.5% Marsh & McLennan Companies, Inc................ 3,000 285,090 INTEGRATED OIL & GAS - 5.9% Conoco, Inc. (Cl. B)........................... 24,000 678,000 Exxon Mobil Corporation........................ 35,000 2,835,000 --------- 3,513,000 INTEGRATED TELECOMMUNICATION SERVICES - 8.4% AT&T Corporation............................... 42,900 913,770 BellSouth Corporation.......................... 18,800 769,296 SBC Communications, Inc........................ 34,100 1,521,883 Sprint Corporation (Fon Group)................. 7,400 162,726 Verizon Communications, Inc.................... 27,200 1,340,960 WorldCom, Inc.(*).............................. 17,600 328,900 --------- 5,037,535 IT CONSULTING & SERVICES - 0.7% Electronic Data Systems Corporation........... 7,700 430,122 LIFE & HEALTH INSURANCE - 1.1% American General Corporation.................. 6,600 252,450 John Hancock Financial Services, Inc.......... 9,800 376,810 --------- 629,260 MOVIES & ENTERTAINMENT - 1.6% AOLTime Warner, Inc.(*)....................... 3,000 120,450 Viacom, Inc. (Cl. B)(*)....................... 4,900 215,453 Walt Disney Company........................... 21,400 612,040 --------- 947,943 MULTI - LINE INSURANCE - 2.6% American International Group, Inc............. 19,400 1,561,700 MULTI - UTILITIES - 0.3% Williams Companies, Inc....................... 4,700 201,395 OIL & GAS DRILLING - 0.6% ENSCO International Corporation............... 5,500 192,500 Santa Fe International Corporation............ 5,600 182,000 --------- 374,500 OIL & GAS EQUIPMENT & SERVICES - 0.4% BJ Services Company(*)........................ 3,100 220,720 OIL & GAS EXPLORATION & PRODUCTION - 1.6% Anadarko Petroleum Corporation................ 6,300 395,514 Ocean Energy, Inc............................. 32,600 539,530 --------- 935,044 PACKAGED FOODS - 0.2% Heinz (H.J.) Company.......................... 3,600 144,720 PAPER PRODUCTS - 0.5% International Paper Company................... 9,100 328,328
See accompanying notes. 10 12 SCHEDULE OF INVESTMENTS [Graphics] MARCH 31, 2001 (UNAUDITED) SECURITY GROWTH AND INCOME FUND (CONTINUED)
NUMBER MARKET COMMON STOCKS (CONTINUED) OF SHARES VALUE ------------------------------------------------------------------------------------- PHARMACEUTICALS -- 8.3% Abbott Laboratories............................... 14,000 $ 660,660 American Home Products Corporation................ 4,500 264,375 Barr Laboratories, Inc.*.......................... 5,400 308,718 Bristol -- Myers Squibb Company................... 20,800 1,235,520 Johnson & Johnson................................. 13,100 1,145,857 Merck & Company, Inc.............................. 15,000 1,138,500 Pharmacia Corporation............................. 4,700 236,739 ---------- 4,990,369 PROPERTY & CASUALTY INSURANCE -- 1.1% Allstate Corporation.............................. 15,400 645,876 PUBLISHING & PRINTING -- 0.2% McGraw-Hill Companies, Inc. ...................... 1,900 113,335 RAILROADS -- 0.5% Union Pacific Corporation......................... 5,600 315,000 RESTAURANTS -- 0.6% McDonald's Corporation............................ 13,200 350,460 SOFT DRINKS -- 1.6% Coca-Cola Company................................. 6,300 284,508 Coca-Cola Enterprises, Inc. ...................... 27,300 485,394 PepsiCo, Inc. .................................... 4,900 215,355 ---------- 985,257 TELECOMMUNICATIONS EQUIPMENT -- 0.7% Motorola, Inc. ................................... 27,600 393,576 TOBACCO -- 4.0% Philip Morris Companies, Inc. .................... 35,300 1,674,985 Reynolds (R.J.) Tobacco Holdings, Inc. ........... 6,000 336,600 UST, Inc. ........................................ 12,000 360,600 ---------- 2,372,185 ---------- Total common stocks -- 97.2%...................... 58,105,504
PRINCIPAL MARKET U.S. GOVERNMENT & AGENCIES AMOUNT VALUE ------------------------------------------------------------------------------------- FEDERAL HOME LOAN BANKS -- 2.5% 5.13%, 04-02-01............................. 1,480,000 $ 1,479,789 ----------- Total investments -- 100.0%.................. 59,789,793 Cash and other assets, less liabilities -- 0.0%....................... 43,642 ----------- Total net assets -- 100.0%................... $59,746,150 ===========
The identified cost of investments owned at March 31, 2001 was the same for federal income tax and financial statement purposes. * Non-income producing security. See accompanying notes. 11 13 MANAGER'S COMMENTARY [GRAPHIC] SECURITY EQUITY FUND - GLOBAL SERIES MAY 15, 2001 [Picture] William L. Wilby Portfolio Manager [OPPENHEIMERFUNDS(R) Logo] SUBADVISOR, OPPENHEIMERFUNDS, INC. TO OUR SHAREHOLDERS: Over the six months ended March 31, 2001, global markets in general experienced tremendous pressure. The resulting downward momentum affected nearly all stocks, regardless of their individual merits. Security Global Fund returned -17.50% over the six-month period, slightly ahead of its benchmark index, the Morgan Stanley Capital International World Index, which returned -18.24%.(1) THE U.S. ECONOMIC SLOWDOWN AFFECTS THE WORLD The severe slowdown in the U.S. economy had a pronounced effect on global markets. Extreme volatility proved to be the norm, led by ongoing and often sharp declines in the technology, telecommunications, and media sectors. As these key drivers of economic growth faltered, investor confidence was badly shaken both at home and abroad. The threat of recession in the United States, rising energy prices and waning consumer confidence late in the period further exacerbated an already tenuous situation. Lower corporate earnings worldwide, a product of the sputtering U.S. economy, also added to the negative sentiment. Because stock prices tend to move in the same direction as earnings, downward earnings revisions or earnings warnings sparked heavy selling. Although earnings revisions are typically a normal occurrence in a contracting economy, the almost constant stream of negative reports seemed exaggerated due to the unsustainable valuations the stock market had reached in recent years. A MORE DEFENSIVE APPROACH IN A DIFFICULT ENVIRONMENT Despite this difficult environment, we continued to identify attractive individual companies that, in our view, stand to benefit from key worldwide growth trends--including new technologies, mass affluence, restructuring, and aging populations. Nonetheless, in light of overheated technology stock prices last year, we reduced our exposure and took a more defensive approach, increasing our holdings in consumer staples, industrial cyclicals, and health care. Two of the companies that exemplified this more defensive approach were Royal Bank of Scotland Group plc and Reckitt Benckiser plc. Although Royal Bank of Scotland was hurt late in the period due to the Japanese banking crisis, the company has successfully integrated strategic acquisitions that enabled it to profitably gain market share and enhance operating efficiencies. Likewise, Reckitt Benckiser, a leading pan-European household products concern, capitalized on weakness in the euro to win market share from American multinational competitors. GREAT COMPANIES CAN BE FOUND, EVEN IN BAD MARKETS We continue to believe that great companies can be found virtually anywhere in the world, regardless of market conditions. For example, despite continued economic and political uncertainty in Japan, as well as weakness in global technology and telecommunications stocks, we have added attractive positions in Japanese semiconductor, consumer electronics, and wireless communications companies. This ability to locate what we believe are compelling, yet out-of-favor opportunities goes to the heart of our investment approach, which is to invest in companies, not countries or industries. Sincerely, William L. Wilby Portfolio Manager (1) Performance figures are based on Class A shares and do not reflect deduction of the sales charge. Investing in foreign countries may involve risks, such as currency fluctuations and political instability, not associated with investing exclusively in the U.S. 12 14 MANAGER'S COMMENTARY (CONTINUED) [graphic] SECURITY EQUITY FUND -- GLOBAL SERIES MAY 15, 2001 PERFORMANCE TOP 5 HOLDINGS**
% OF NET ASSETS ---------- Cadence Design Systems, Inc. 3.8% Reckitt Benkiser plc 2.9% Porsche AG 2.3% Reed International plc 2.2% Electronic Arts, Inc. 2.2%
**At March 31, 2001 AVERAGE ANNUAL RETURNS AS OF MARCH 31, 2001
1 YEAR 5 YEARS 10 YEARS ------ ------- -------- A Shares (22.17%) 13.89% 12.09% (10-1-93) (since inception) A Shares with sales charge (26.64%) 12.54% 11.21% (10-1-93) (since inception) B Shares (22.07%) 13.02% 11.31% (10-19-93) (since inception) B Shares with CDSC (25.97%) 12.77% 11.31% (10-19-93) (since inception) C Shares (22.75%) 13.38% N/A (1-29-99) (since inception) C Shares with CDSC (23.53%) 13.38% N/A (1-29-99) (since inception) S Shares (15.01%) N/A N/A (2-01-01) (since inception) S Shares with CDSC (20.11%) N/A N/A (2-01-01) (since inception)
The performance data above represents past performance which 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, 1% for Class C shares and 6% for Class S shares, as applicable, except where noted. For Class S shares, the returns have been calculated from February 1, 2001 (date of inception) to March 31, 2001 and are not annualized. Such figures would be lower if the maximum sales charge were deducted. 13 15 SCHEDULE OF INVESTMENTS [Graphic] MARCH 31, 2001 (UNAUDITED) SECURITY EQUITY FUND - GLOBAL SERIES
NUMBER MARKET COMMON STOCKS OF SHARES VALUE ------------- --------- ------ AUSTRALIA -- 1.0% Australia & New Zealand Banking Group, Ltd... 118,900 $ 800,051 BERMUDA -- 0.1% Global Crossing, Ltd.(*)..................... 9,400 126,806 BRAZIL -- 2.5% Embraer -- Empresa Brasileira de Aeronautica S.A. ......................... 16,600 629,140 Tele Norte Leste Participacoes S.A. ......... 62,688,269 1,018,287 Telesp Celular Participacoes S.A. ........... 21,300 315,453 ---------- 1,962,880 CANADA -- 4.1% Alberta Energy Company, Ltd. ................ 9,400 417,287 Anderson Exploration, Ltd.(*)................ 22,500 510,129 Bombardier, Inc. (Cl.B)...................... 99,800 1,381,710 Husky Energy, Inc. .......................... 63,690 535,941 Manulife Financial Corporation............... 14,900 393,176 ---------- 3,238,243 FINLAND -- 0.3% Elisa Communications Oyj...................... 8,900 121,161 Nokia Oyj ADR................................. 4,400 105,600 ---------- 226,761 FRANCE -- 6.8% Alcatel S.A. ................................. 27,600 835,645 Axa........................................... 3,440 382,857 Cap Gemini S.A. .............................. 4,800 551,616 Essilor International S.A. ................... 700 201,110 Genset ADR(*)................................. 12,100 49,156 Sanofi-Synthelabo S.A. ....................... 28,800 1,609,021 Sidel S.A. ................................... 10,600 386,342 Societe BIC S.A. ............................. 23,830 923,942 Valeo S.A. ................................... 9,400 426,282 ---------- 5,365,971 GERMANY -- 7.1% Adidas-Salomon AG............................. 3,600 189,385 DePfa Deutsche Pfandbriefbank AG.............. 4,800 364,491 Fresenius AG.................................. 8,050 1,512,192 Porsche AG.................................... 605 1,790,577 ProSieben SAT.1 Media AG...................... 8,320 147,098 Wella AG...................................... 41,602 1,599,763 ---------- 5,603,506 HONG KONG -- 0.3% Television Broadcasts, Ltd. .................. 47,500 259,446 INDIA - 0.8% ICICI, Ltd. ADR............................... 53,900 633,325 IRELAND -- 1.2% Elan Corporation plc ADR(*).................... 19,000 992,750 JAPAN -- 6.0% Credit Saison Company, Ltd. ................... 28,100 594,199 Eisai Company, Ltd. ........................... 36,200 901,245 Hirose Electric Company, Ltd. ................. 4,100 376,237 Keyence Corporation............................ 100 18,513 Konami Company, Ltd. .......................... 5,000 235,796 NTT Docomo, Inc. .............................. 32 556,655 Sony Corporation............................... 12,000 852,218 Toshiba Corporation............................ 206,000 1,203,256 ---------- 4,738,119 MEXICO -- 0.7% Grupo Televisa S.A. GDR(*)..................... 15,920 531,887 NETHERLANDS -- 3.7% ASM Lithography Holding, N.V.(*)............... 15,400 333,988 Koninklijke (Royal) Philips Electronics N.V. .. 10,386 285,536 Royal Dutch Petroleum Company.................. 14,800 820,512 STMicroelectronics N.V. ....................... 4,150 141,806 United Pan-Europe Communications N.V.(*)....... 45,600 283,785 Wolters Kluwer N.V. ........................... 43,400 1,093,036 ---------- 2,958,663 SINGAPORE -- 1.0% Singapore Press Holdings, Ltd. ................ 70,900 777,524 SWEDEN -- 0.3% Telefonaktiebolaget LM Ericsson AB ADR......... 43,660 244,223 SWITZERLAND -- 1.8% Novartis AG.................................... 500 784,762 Zurich Financial Services AG................... 1,900 627,462 ---------- 1,412,224 UNITED KINGDOM -- 16.4% Bass plc....................................... 133,500 1,310,548 Boots Company plc.............................. 81,600 729,707 BPAmoco plc ADR................................ 18,600 922,932 Cadbury Schweppes plc.......................... 148,260 947,989 Hanson plc..................................... 139,400 801,658 Hilton Group plc............................... 106,300 308,298 Oxford Glycosciences plc(*).................... 14,248 232,442 P & O Princess Cruises plc..................... 120,400 469,869 Reckitt Benckiser plc.......................... 176,693 2,270,888 Reed International plc......................... 188,100 1,750,275 Rentokil Initial plc........................... 296,400 794,324 Royal Bank of Scotland Group plc............... 70,602 1,589,938 Telewest Communications plc(*)................. 219,900 357,963 WPPGroup plc................................... 45,850 485,628 ---------- 12,972,459
See accompanying notes. 14 16 SCHEDULE OF INVESTMENTS [GRAPHIC] MARCH 31, 2001 (UNAUDITED) SECURITY EQUITY FUND - GLOBAL SERIES (CONTINUED)
NUMBER MARKET COMMON STOCKS (CONTINUED) OF SHARES VALUE ------------------------------------------------------------------------------ UNITED STATES - 38.2% Affymetrix, Inc.*.............................. 6,200 172,438 ALZACorporation*............................... 24,400 988,200 American Express Company....................... 12,900 532,770 American Home Products Corporation.................................... 15,100 887,125 American International Group, Inc.............. 10,600 853,300 Amgen, Inc.*................................... 12,700 764,381 AOLTime Warner, Inc.*.......................... 15,800 634,370 Applied Materials, Inc.*....................... 8,900 387,150 Bank One Corporation........................... 36,700 1,327,806 Best Buy Company*.............................. 8,700 312,852 C.R. Bard, Inc................................. 28,100 1,275,740 Cabletron Systems, Inc.*....................... 25,900 334,110 Cadence Design Systems, Inc.*.................. 160,540 2,968,385 Circuit City Stores - Circuit City Group....... 77,100 817,260 Citigroup, Inc................................. 17,066 767,629 Electronic Arts, Inc.*......................... 31,500 1,708,875 EMC Corporation*............................... 10,700 314,580 Fannie Mae..................................... 21,300 1,695,480 First Union Corporation........................ 15,900 524,700 Gilead Sciences, Inc.*......................... 30,000 975,000 Hasbro, Inc.................................... 38,000 490,200 Human Genome Sciences, Inc.*................... 9,400 432,400 International Business Machines Corporation.... 8,600 827,148 International Flavors & Fragrances, Inc........ 19,800 436,788 International Game Technology*................. 15,500 780,425 Lehman Brothers Holdings, Inc.................. 8,400 526,680 Manpower, Inc.................................. 21,470 618,336 MBNACorporation................................ 19,200 635,520 Mentor Graphics Corporation*................... 18,900 389,813 Millennium Pharmaceuticals*.................... 6,880 209,565 National Semiconductor Corporation*............ 49,200 1,316,100 Novellus Systems, Inc.*........................ 11,000 446,188 Oracle Corporation*............................ 14,660 219,607 Pfizer, Inc.................................... 19,700 806,715 QUALCOMM, Inc.*................................ 12,220 691,958 Quintiles Transnational Corporation*........... 43,500 821,063 Scientific-Atlanta, Inc........................ 16,300 677,917 Sirius Satellite Radio, Inc.................... 19,800 246,263 Solectron Corporation*......................... 8,100 153,981 Sun Microsystems, Inc.*........................ 8,400 129,108 Sybase, Inc.*.................................. 45,300 702,150 Synopsys, Inc.*................................ 9,900 464,681 ---------- 30,264,757 ---------- Total common stocks - 92.3%.............................. 73,109,595
PRINCIPAL MARKET REPURCHASE AGREEMENT AMOUNT VALUE ------------------------------------------------------------------------------ REPURCHASE AGREEMENT - 7.6% State Street, 3.00%, 04-02-01 (Collateralized by FNMA- 03-19-04 with a value of $6,121,997).................... $5,999,112 $ 5,999,112 ----------- Total investments - 99.9%....................................... 79,108,707 Cash and other assets, less liabilities - 0.1%.................. 55,781 ----------- Total net assets - 100.0%....................................... $79,164,488 ===========
INVESTMENT CONCENTRATION At March 31, 2001, Global Series'investment concentration by industry was as follows:
Advertising.......................................... 0.6% Aerospace/Defense.................................... 0.8% Apparel.............................................. 0.2% Auto Parts and Supplies.............................. 0.5% Automobiles.......................................... 2.3% Banks & Credit....................................... 5.8% Beverages............................................ 1.7% Broadcast Media...................................... 2.3% Building & Construction.............................. 1.0% Communications....................................... 0.9% Computer Software.................................... 6.2% Computer Systems..................................... 4.1% Cosmetics............................................ 2.0% Electrical Equipment................................. 1.5% Electronics.......................................... 2.1% Entertainment........................................ 1.6% Financial Services................................... 7.3% Food Wholesalers..................................... 1.2% Healthcare........................................... 8.3% Hotel/Motel.......................................... 0.4% Household Products................................... 3.4% Insurance............................................ 2.4% Machinery............................................ 0.5% Manufacturing........................................ 1.8% Medical.............................................. 1.2% Natural Gas.......................................... 0.7% Office Equipment..................................... 1.2% Oil.................................................. 3.4% Pharmaceuticals...................................... 7.6% Publishing........................................... 3.6% Retail............................................... 2.3% Semiconductors....................................... 3.3% Services............................................. 2.7% Telecommunications................................... 6.8% Transportation....................................... 0.6% Repurchase agreement................................. 7.6% Cash and other assets, less liabilities.............. 0.1% ------ 100.0% ======
The identified cost of investments owned at March 31, 2001 was the same for federal income tax and financial statement purposes. (*) Non-Income producing security. ADR (American Depositary Receipt) See accompanying notes. 15 17 MANAGER'S COMMENTARY [Graphic] SECURITY EQUITY FUND - ENHANCED INDEX SERIES MAY 15, 2001 [Deutsche Asset Management Logo] A MEMBER OF THE DEUTSCHE BANK GROUP SUBADVISOR, DEUTSCHE ASSET MANAGEMENT,INC. TO OUR SHAREHOLDERS: As you know, the stock market environment for the six months ended March 31, 2001 was extremely difficult. Security Enhanced Index Fund returned -19.88% over the period, compared with the -18.74% return of the benchmark S&P 500 Stock Index.(1) MANAGING THE PORTFOLIO USING PROPRIETARY SCREENS The Enhanced Index Team at Deutsche Asset Management, Inc. uses several proprietary screens in deciding when to overweight or underweight stocks in the portfolio relative to their weightings in the benchmark index. Stocks are overweighted when one of the following occurs: the company reports a positive earnings surprise, the company becomes an acquisition target, it is announced that the company will be added to the S&P Index, the stock has a high dividend yield or a zero dividend yield (if further research shows that the company uses the funds for internal investment), or the stock's price shows significant value based on options pricing techniques. Conversely, stocks are underweighted if there is a negative earnings surprise, if the company issues a seasoned equity offering (as opposed to an initial public offering of stock), it is announced that the company will be deleted from the S&P 500 Index, or if financials show downward momentum. If none of these positive or negative screens applies, we will hold a neutral position in the stock. PERFORMANCE OF THE SCREENS DURING THE PERIOD During the six month period several of our quantitative screens did not add value. These included momentum, seasoned equity offerings and dividend yield. Conversely, earnings surprise and significant value screens did add value. Despite a slowdown in merger and acquisition activity in the first quarter of 2001, the Fund benefited from mergers and acquisitions. According to statistics released by Thomson Financial, announced mergers & acquisitions worldwide slowed to under $455 billion in total value on less than 7,300 transactions in the first quarter. That represents a nearly 62% decline in dollar volume from the record-setting first quarter of 2000, when volume reached $1.172 trillion. In the United States, merger and acquisition activity suffered a similar downturn as volume retreated to under $212 billion on fewer than 2,000 transactions. This 63% drop in dollar value of deals represents the slowest period since the third quarter of 1997, when activity was only $203 billion. During the six month period the Fund held stock involved in sixteen merger deals that closed successfully. Some of the companies acquired include BestFoods, Fort James Corporation, Nabisco Holdings Corporation, Rollins Truck Leasing Corporation, and Efficient Networks, Inc. The portfolio also received a boost when Applied Micro Circuits Corporation was added to the S&P 500 Index. THE OUTLOOK FOR THE ECONOMY AND STOCK MARKETS While as index fund managers we don't manage the portfolio according to a given outlook for the equity markets or the economy, we do monitor economic conditions and how they affect the financial markets. Josh Feinman, Chief Economist at Deutsche Asset Management, Inc., believes the equity markets will continue to contend with a sharply deteriorating profit outlook for the near term. Sluggish economic growth and narrowing profit margins (the latter owing to accelerating labor costs and slowing productivity growth) are weighing heavily on corporate profit margins. If activity begins to pick up later this year and into 2002, as we expect, equities may be close to discounting the bad news at this time and could firm later this year and next. Still, equity returns are unlikely to come close to those seen in the late 1990s boom. Indeed, if the U.S. is unable to return fully to the elevated growth rates of recent years, the revival in the equity markets could be limited to trend-like gains. Sincerely, The Enhanced Index Team Deutsche Asset Management, Inc. (1) Performance figures are based on Class A shares and do not reflect deduction of the sales charge. 16 18 MANAGER'S COMMENTARY (CONTINUED) [Graphic] SECURITY EQUITY FUND - ENHANCED INDEX SERIES MAY 15, 2001 PERFORMANCE TOP 5 HOLDINGS**
% OF NET ASSETS ---------- General Electric Company 3.3% Microsoft Corporation 2.5% Exxon Mobil Corporation 2.4% Pfizer, Inc. 2.2% Citigroup, Inc. 2.0%
**At March 31, 2000 AVERAGE ANNUAL RETURNS AS OF MARCH 31, 2001
1 YEAR SINCE INCEPTION ------- ----------------- A Shares (23.27%) (4.05%) (1-29-99) A Shares with sales charge (27.69%) (6.63%) (1-29-99) B Shares (23.90%) (4.78%) (1-29-99) B Shares with CDSC (27.71%) (6.11%) (1-29-99) C Shares (23.86%) (4.68%) (1-29-99) C Shares with CDSC (24.62%) (4.68%) (1-29-99) S Shares N/A (16.01%) (2-01-01) S Shares with CDSC N/A (21.05%) (2-01-01)
The performance data above represents past performance which 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, 1% for Class C shares and 6% for Class S shares, as applicable, except where noted. For Class S shares, the returns have been calculated from February 1, 2001 (date of inception) to March 31, 2001 and are not annualized. Such figures would be lower if the maximum sales charge were deducted. 17 19 SCHEDULE OF INVESTMENTS [GRAPHICS} MARCH 31, 2001 (UNAUDITED) SECURITY EQUITY FUND - ENHANCED INDEX SERIES
NUMBER MARKET COMMON STOCKS OF SHARES VALUE -------------------------------------------------------------------------------- ADVERTISING - 0.1% Interpublic Group of Companies, Inc. ............. 400 $ 13,740 Omnicom Group, Inc................................ 200 16,576 -------- 30,316 AEROSPACE & DEFENSE - 2.1% BF Goodrich Company .............................. 200 7,674 Boeing Company ................................... 1,500 83,565 General Dynamics Corporation ..................... 400 25,096 Honeywell International, Inc. .................... 2,600 106,080 Litton Industries, Inc. * ........................ 1,600 128,528 Lockheed Martin Corporation ...................... 700 24,955 Northrop Grumman Corporation ..................... 100 8,700 Raytheon Company (Cl.B) .......................... 600 17,628 United Technologies Corporation .................. 800 58,640 -------- 460,866 AGRICULTURAL PRODUCTS - 0.1% Archer-Daniels-Midland Company ................... 1,202 15,806 AIR FREIGHT & COURIERS - 0.1% FedEx Corporation* ............................... 600 25,008 AIRLINES - 0.3% AMR Corporation* ................................. 400 14,048 Delta Air Lines, Inc. ............................ 300 11,850 Southwest Airlines Company ....................... 1,700 30,175 U.S. Airways Group, Inc.* ........................ 300 10,635 -------- 66,708 ALTERNATIVE CARRIERS - 0.1% Global Crossing, Ltd.* ........................... 2,000 26,980 ALUMINUM - 0.3% Alcan Aluminum, Ltd. ............................. 300 10,800 Alcoa, Inc. ...................................... 1,600 57,520 -------- 68,320 APPAREL & ACCESSORIES - 0.1% Liz Claiborne, Inc. .............................. 300 14,115 V.F. Corporation ................................. 200 7,000 -------- 21,115 APPAREL RETAIL - 0.2% Gap, Inc. ........................................ 1,000 23,720 Limited, Inc. .................................... 900 14,148 TJX Companies, Inc. .............................. 300 9,600 -------- 47,468 APPLICATION SOFTWARE - 0.3% Citrix Systems, Inc.* ............................ 300 6,338 Intuit, Inc.* .................................... 400 11,100 Mercury Interactive Corporation* ................. 200 8,375 Parametric Technology Company* ................... 500 4,531 PeopleSoft, Inc.* ................................ 700 16,406 Siebel Systems, Inc.* ............................ 900 24,480 -------- 71,230 AUTO PARTS & EQUIPMENT - 0.2% Dana Corporation ................................. 300 5,154 Delphi Automotive Systems Corporation ............ 1,000 14,170 Johnson Controls, Inc. ........................... 100 6,246 Snap-On Tools .................................... 100 2,912 TRW, Inc. ........................................ 200 6,800 Visteon Corporation .............................. 200 3,008 -------- 38,290 AUTOMOBILE MANUFACTURERS - 0.7% Ford Motor Company ............................... 3,500 98,420 General Motors Corporation* ...................... 1,100 57,035 -------- 155,455 BANKS - 5.0% AmSouth Bancorporation ........................... 900 15,129 Bank of America Corporation ...................... 3,000 164,250 Bank of New York Company, Inc. ................... 1,300 64,012 Bank One Corporation ............................. 1,700 61,506 BB&T Corporation ................................. 700 24,619 Charter One Financial, Inc. ...................... 420 11,886 Comerica, Inc. ................................... 300 18,450 Fifth Third Bancorp .............................. 800 42,750 First Union Corporation .......................... 1,300 42,900 FleetBoston Financial Corporation ................ 1,918 72,405 Golden West Financial Corporation ................ 300 19,470 Huntington Bancshares, Inc. ...................... 700 9,975 KeyCorp .......................................... 900 23,220 Mellon Financial Corporation ..................... 900 36,468 National City Corporation ........................ 1,200 32,100 Northern Trust Corporation ....................... 400 25,000 Old Kent Financial Corporation ................... 100 3,800 PNC Bank Corporation ............................. 491 33,265 Regions Financial Corporation .................... 400 11,375 SunTrust Banks, Inc. ............................. 500 32,400 Synovus Financial Corporation .................... 534 14,418 U.S. Bancorp ..................................... 3,571 82,847 Union Planters Corporation ....................... 300 11,547 Wachovia Corporation ............................. 100 6,025 Washington Mutual, Inc. .......................... 1,000 54,750 Wells Fargo & Company ............................ 3,120 154,346 -------- 1,068,913 BIOTECHNOLOGY - 0.8% Amgen, Inc.* ..................................... 2,000 120,375 Biogen, Inc.* .................................... 300 18,994 Chiron Corporation* .............................. 400 17,550 Medimmune, Inc.* ................................. 500 17,937 -------- 174,856
See accompanying notes. 18 20 SCHEDULE OF INVESTMENTS [Graphic] MARCH 31, 2001 (UNAUDITED) SECURITY EQUITY FUND -- ENHANCED INDEX SERIES (CONTINUED)
NUMBER MARKET COMMON STOCKS (CONTINUED) OF SHARES VALUE ------------------------ --------- -------- BREWERS -- 0.3% Anheuser-Busch Companies, Inc. ................... 1,600 $ 73,488 BROADCASTING & CABLE TV -- 1.1% Citadel Communications Corporation* .............. 3,500 87,063 Clear Channel Communications, Inc. ............... 1,100 59,895 Comcast Corporation .............................. 1,900 79,681 General Motors Corporation (Cl. H) ............... 3 58 Univision Communications, Inc.* .................. 400 15,264 -------- 241,961 BUILDING PRODUCTS -- 0.1% Crane Company .................................... 100 2,605 Masco Corporation ................................ 800 19,312 -------- 21,917 CASINOS & GAMING -- 0.1% Harrah's Entertainment, Inc. ..................... 400 11,772 COMMERCIAL PRINTING -- 0.0% Donnelley (R.R.) & Sons Company .................. 300 7,866 COMPUTER & ELECTRONICS RETAIL -- 0.2% Best Buy Company, Inc.* .......................... 500 17,980 Circuit City Stores -- Circuit City Group ........ 400 4,240 RadioShack Corporation ........................... 300 11,007 -------- 33,227 COMPUTER HARDWARE -- 3.3% Apple Computer, Inc.* ............................ 700 15,449 Compaq Computer Corporation ...................... 3,100 56,420 Dell Computer Corporation* ....................... 4,700 120,731 Gateway, Inc.* ................................... 700 11,767 Hewlett-Packard Company .......................... 3,000 93,810 International Business Machines Corporation ...... 3,200 307,776 NCR Corporation* ................................. 300 11,709 Palm, Inc.* ...................................... 1,000 8,406 Sun Microsystems, Inc.* .......................... 6,000 92,220 -------- 718,288 COMPUTER STORAGE & PERIPHERALS -- 0.7% EMC Corporation* ................................. 4,099 120,510 Lexmark International, Inc.* ..................... 200 9,104 Network Appliance, Inc.* ......................... 700 11,769 -------- 141,383 CONSTRUCTION & ENGINEERING -- 0.0% Fluor Corporation ................................ 100 4,450 CONSTRUCTION & FARM MACHINERY -- 0.3% Caterpillar, Inc. ................................ 600 26,628 Cummins Engine Company, Inc. ..................... 200 7,508 Deer & Company ................................... 400 14,536 Navistar International Corporation ............... 300 6,840 Paccar, Inc. ..................................... 300 13,444 -------- 68,956 CONSTRUCTION MATERIALS -- 0.0% Vulcan Materials Company ......................... 100 4,683 CONSUMER FINANCE -- 0.7% Capital One Financial Corporation ................ 300 16,650 Countrywide Credit Industries, Inc. .............. 200 9,870 Household International, Inc. .................... 811 48,044 MBNA Corporation ................................. 1,500 49,650 Providian Financial Corporation .................. 500 24,525 -------- 148,739 DATA PROCESSING SERVICES -- 0.7% Automatic Data Processing, Inc. .................. 1,100 59,818 First Data Corporation ........................... 700 41,797 Fiserv, Inc. ..................................... 100 4,494 Paychex, Inc. .................................... 800 29,650 Sabre Holdings Corporation* ...................... 301 13,897 -------- 149,656 DEPARTMENT STORES -- 0.6% Dillard's Inc. ................................... 207 4,542 Federated Department Stores, Inc.* ............... 400 16,620 J.C. Penney Company, Inc. ........................ 800 12,792 Kohl's Corporation* .............................. 700 43,183 May Department Stores Company .................... 500 17,740 Nordstrom, Inc. .................................. 300 4,884 Sears, Roebuck & Company ......................... 800 28,216 -------- 127,977 DISTILLERS & VINTNERS -- 0.0% Brown-Forman Corporation (Cl. B) ................. 100 6,195 DIVERSIFIED CHEMICALS -- 0.6% Dow Chemical Company ............................. 1,200 37,884 E.I. du Pont de Nemours & Company ................ 1,800 73,260 Eastman Chemical Company ......................... 100 4,922 Engelhard Corporation ............................ 400 10,344 FMC Corporation* ................................. 100 7,372 Hercules, Inc. ................................... 201 2,611 -------- 136,393
See accompanying notes. 19 21 SCHEDULE OF INVESTMENTS [GRAPHIC} MARCH 31, 2001 (UNAUDITED) SECURITY EQUITY FUND - ENHANCED INDEX SERIES (CONTINUED)
NUMBER MARKET COMMON STOCKS (CONTINUED) OF SHARES VALUE -------------------------------------------------------------------------------- DIVERSIFIED COMMERCIAL SERVICES - 0.4% Block (H.R.), Inc .............................. 100 $ 5,006 Cendant Corporation* ........................... 1,500 21,885 Cintas Corporation ............................. 300 11,826 Concord EFS Inc ................................ 200 8,150 Convergys Corporation* ......................... 400 14,428 Deluxe Corporation ............................. 100 2,367 Ecolab, Inc .................................... 200 8,484 Equifax, Inc. .................................. 200 6,250 IMS Health, Inc ................................ 300 7,470 --------- 85,866 DIVERSIFIED FINANCIAL SERVICES - 6.7% American Express Company ....................... 2,500 103,250 Bear Stearns Companies, Inc. ................... 200 9,148 Charles Schwab Corporation ..................... 2,501 38,565 CIT Group, Inc. ................................ 1,745 50,396 Citigroup, Inc.(1).............................. 9,307 418,629 Efficient Networks, Inc.* ...................... 6,500 152,750 Fannie Mae ..................................... 1,800 143,280 Franklin Resources, Inc. ....................... 400 15,644 Freddie Mac .................................... 1,000 64,830 J.P. Morgan Chase & Company .................... 3,500 157,150 Lehman Brothers Holdings, Inc. ................. 500 31,350 Merrill Lynch & Company, Inc. .................. 1,500 83,100 Moody's Corporation ............................ 300 8,268 Morgan Stanley Dean Witter & Company ........... 1,800 96,300 State Street Corporation ....................... 300 28,020 Stilwell Financial, Inc ........................ 400 10,728 T.Rowe Price Associates ........................ 200 6,262 USAEducation, Inc .............................. 300 21,795 --------- 1,439,465 DIVERSIFIED METALS & MINING - 0.1% Arch Coal, Inc. ................................ 12 360 Freeport-McMoran Copper & Gold, Inc. (Cl. B)* .. 410 5,350 Inco, Ltd.* .................................... 300 4,449 Phelps Dodge Corporation ....................... 100 4,018 --------- 14,177 DRUG RETAIL - 0.6% CVS Corporation ................................ 700 40,943 Longs Drug Stores Corporation .................. 100 2,956 Walgreen Company ............................... 1,800 73,440 --------- 117,339 ELECTRIC UTILITIES - 2.7% AES Corporation* ................................. 900 44,964 Allegheny Energy, Inc ............................ 100 4,626 Ameren Corporation ............................... 300 12,285 American Electric Power Company, Inc. .................................... 700 32,900 CMS Energy Corporation ........................... 400 11,836 Calpine Corporation* ............................. 600 33,042 Cinergy Corporation .............................. 300 10,065 Consolidated Edison, Inc. ........................ 400 14,840 Constellation Energy Group ....................... 100 4,410 DTE Energy Company ............................... 300 11,940 Dominion Resources, Inc. ......................... 500 32,235 Duke Energy Corporation .......................... 1,300 55,562 Edison International ............................. 700 8,848 Entergy Corporation .............................. 500 19,000 Ecel Energy ...................................... 800 24,088 Exelon Corporation ............................... 600 39,360 FPLGroup, Inc. ................................... 300 18,390 FirstEnergy Corporation .......................... 600 16,752 GPU, Inc. ........................................ 100 3,249 Mirant Corporation ............................... 50 1,775 Niagra Mohawk Holdings, Inc. ..................... 500 8,450 PG&E Corporation ................................. 900 11,205 PPLCorporation ................................... 500 21,980 Pinnacle West Capital Corporation ................ 100 4,587 Progress Energy, Inc. ............................ 400 17,228 Public Service Enterprise Group, Inc ....................................... 400 17,264 Reliant Energy, Inc .............................. 700 31,675 Southern Company ................................. 1,500 52,635 TXU Corporation .................................. 500 20,660 --------- 585,851 ELECTRICAL COMPONENTS & EQUIPMENT - 0.5% American Power Conversion Corporation* ........... 400 5,156 Cooper Industries, Inc ........................... 209 6,991 Emerson Electric Company ......................... 800 49,568 Molex, Inc ....................................... 300 10,585 National Service Industries, Inc ................. 100 2,345 Power-One, Inc. * ................................ 300 4,347 Rockwell International Corporation ............... 300 10,905 Symbol Technologies, Inc. ........................ 100 3,490 Thermo Electron Corporation* ..................... 500 11,240 Thomas & Betts Corporation ....................... 100 1,736 --------- 106,363
See accompanying notes. 20 22 SCHEDULE OF INVESTMENTS [GRAPHIC] MARCH 31, 2001 (UNAUDITED) SECURITY EQUITY FUND - ENHANCED INDEX SERIES (CONTINUED)
NUMBER MARKET COMMON STOCKS (CONTINUED) OF SHARES VALUE -------------------------------------------------------------------------------- ELECTRONIC EQUIPMENT & INSTRUMENTS - 0.4% Agilent Technologies, Inc.(*)........................ 800 $ 24,584 Jabil Circuit, Inc.(*)............................... 400 8,648 Millipore Corporation ............................... 100 4,626 PerkinElmer, Inc. ................................... 100 5,245 Sanmina Corporation(*)............................... 700 13,694 Solectron Corporation(*)............................. 1,300 24,713 Tektronix, Inc. ..................................... 200 5,458 -------- 86,968 EMPLOYMENT SERVICES - 0.0% Robert Half International, Inc.(*)................... 400 8,940 ENVIRONMENTAL SERVICES - 0.2% Allied Waste Industries, Inc.(*)..................... 348 5,457 Waste Management, Inc. .............................. 1,200 29,640 -------- 35,097 FOOD DISTRIBUTORS - 0.2% SUPERVALU, Inc. ..................................... 400 5,332 SYSCO Corporation ................................... 1,400 37,114 -------- 42,446 FOOD RETAIL - 0.5% Albertson's, Inc. ................................... 200 6,364 Kroger Company(*).................................... 1,700 43,843 Safeway, Inc.(*)..................................... 1,000 55,150 Winn-Dixie Stores, Inc. ............................. 300 8,511 -------- 113,868 FOOTWEAR - 0.1% Nike, Inc. (Cl.B) ................................... 500 20,275 Reebok International, Ltd.(*)........................ 300 7,458 -------- 27,733 FOREST PRODUCTS - 0.0% Georgia-Pacific Group ............................... 1 29 Louisiana-Pacific Corporation ....................... 300 2,883 -------- 2,912 GAS UTILITIES - 0.5% El Paso Energy Corporation .......................... 892 58,247 Keyspan Corporation ................................. 300 11,439 Kinder Morgan, Inc. ................................. 210 11,172 NICOR, Inc. ......................................... 100 3,727 ONEOK, Inc. ......................................... 21 859 Peoples Energy Corporation .......................... 100 3,887 Sempra Energy ....................................... 700 16,296 -------- 105,627 GENERAL MERCHANDISE STORES - 2.5% Consolidated Stores Corporation(*)................... 700 $ 7,035 Costco Wholesale Corporation(*)...................... 800 31,400 Dollar General Corporation .......................... 600 12,264 Kmart Corporation(*)................................. 1,700 15,980 Target Corporation .................................. 1,600 57,728 Wal-Mart Stores, Inc.(1)............................. 8,200 414,100 -------- 538,507 GOLD - 0.1% Barrick Gold Corporation ............................ 740 10,575 Homestake Mining Company ............................ 497 2,614 Newmont Mining Corporation .......................... 300 4,836 Placer Dome, Inc. ................................... 624 5,397 -------- 23,422 HEALTH CARE DISTRIBUTORS & SERVICES - 0.3% Cardinal Health, Inc. ............................... 500 48,375 McKesson HBOC, Inc. ................................. 500 13,375 Quintiles Transnational Corporation(*)............... 400 7,550 -------- 69,300 HEALTH CARE EQUIPMENT - 1.2% Applera Corporation - Applied Biosystems Group ...... 400 11,100 Bard (C.R.), Inc. ................................... 100 4,540 Baxter International, Inc ........................... 505 47,541 Becton, Dickinson & Company ......................... 400 14,128 Biomet, Inc. ........................................ 300 11,817 Boston Scientific Corporation(*)..................... 700 14,126 Guidant Corporation(*)............................... 700 31,493 Medtronic, Inc. ..................................... 2,200 100,628 St. Jude Medical, Inc. .............................. 200 10,770 Stryker Corporation ................................. 400 20,900 -------- 267,043 HEALTH CARE FACILITIES - 0.4% HCA - The Healthcare Company......................... 1,000 40,270 Healthsouth Corporation(*)........................... 1,100 14,179 Manor Care, Inc.(*).................................. 500 10,200 Tenet Healthcare Corporation ........................ 700 30,800 -------- 95,449 HOME FURNISHINGS - 0.0% Leggett & Platt, Inc ................................ 400 7,692 HOME IMPROVEMENT RETAIL - 0.9% Home Depot, Inc. .................................... 4,200 181,020 Lowe's Companies, Inc.(*)............................ 200 11,690 Sherwin-Williams Company ............................ 300 7,644 -------- 200,354
See accompanying notes. 21 23 SCHEDULE OF INVESTMENTS [Graphic] MARCH 31, 2001 (UNAUDITED) SECURITY EQUITY FUND - ENHANCED INDEX SERIES (CONTINUED)
NUMBER MARKET COMMON STOCKS (CONTINUED) OF SHARES VALUE ------------------------- ----------- ---------- HOMEBUILDING - 0.1% Centex Corporation ........................... 100 $ 4,165 Kaufman & Broad Home Corporation ............. 200 6,528 Pulte Corporation ............................ 200 8,082 ---------- 18,775 HOTELS - 0.2% Carnival Corporation ......................... 100 2,767 Hilton Hotels Corporation .................... 694 7,252 Marriott International, Inc. ................. 400 16,472 Starwood Hotels & Resorts Worldwide, Inc. .... 300 10,203 --------- 36,694 HOUSEHOLD APPLIANCES - 0.1% Black & Decker Corporation ................... 100 3,675 Maytag Corporation ........................... 100 3,225 Stanley Works ................................ 200 6,590 Whirlpool Corporation ........................ 100 4,999 --------- 18,489 HOUSEHOLD PRODUCTS - 1.2% Clorox Company ............................... 400 12,580 Colgate-Palmolive Company .................... 900 49,734 Kimberly-Clark Corporation ................... 900 61,047 Procter & Gamble Company ..................... 2,100 131,460 --------- 254,821 HOUSEWARES & SPECIALTIES - 0.2% American Greetings Corporation ............... 400 4,240 Fortune Brands, Inc. ......................... 300 10,320 Newell Rubbermaid, Inc. ...................... 500 13,250 Tupperware Corporation ....................... 300 7,158 --------- 34,968 INDUSTRIAL CONGLOMERATES - 4.1% General Electric Company1 .................... 16,900 707,434 Minnesota Mining & Manufacturing Company ..... 706 73,353 Textron, Inc. ................................ 100 5,684 Tyco International, Ltd. ..................... 2,325 100,510 --------- 886,981 INDUSTRIAL GASES - 0.1% Air Products & Chemicals, Inc. ............... 400 15,360 Praxair, Inc. ................................ 300 13,395 --------- 28,755 INDUSTRIAL MACHINERY - 0.4% Danaher Corporation .............................. 207 11,294 Dover Corporation ................................ 300 10,752 Eaton Corporation ................................ 109 7,466 Illinois Tool Works, Inc. ........................ 500 28,420 Ingersoll-Rand Company ........................... 200 7,942 ITT Industries, Inc. ............................. 95 3,681 Pall Corporation ................................. 200 4,384 Parker-Hannifin Corporation ...................... 300 11,916 Timken Company ................................... 400 6,260 --------- 92,115 INSURANCE BROKERS - 0.3% Aon Corporation .................................. 400 14,200 Marsh & McLennan Companies, Inc. ................. 500 47,515 --------- 61,715 INTREGRATED OIL & GAS - 4.7% Amerada Hess Corporation ......................... 200 15,624 Chevron Corporation .............................. 1,200 105,360 Conoco, Inc. (CL. B) ............................. 1,399 39,522 Exxon Mobil Corporation1 ......................... 6,400 518,400 Occidental Petroleum Corporation ................. 800 19,800 Phillips Petroleum Company ....................... 100 5,505 Royal Dutch Petroleum Company .................... 3,900 216,216 Texaco, Inc. ..................................... 1,000 66,400 USX-Marathon Group ............................... 700 18,865 --------- 1,005,692 INTEGRATED TELECOMMUNICATION SERVICES - 5.1% AT&T Corporation ................................. 300 15,738 ALLTELCorporation ................................ 6,900 146,970 BellSouth Corporation ............................ 3,400 139,128 Centurytel, Inc. ................................. 300 8,625 Citizens Communications Company* ................. 500 6,325 Qwest Communications International, Inc.* ........ 3,300 115,665 SBC Communications, Inc. ......................... 6,199 276,661 Sprint Corporation (FON Group) ................... 1,600 35,184 Verizon Communications, Inc. ..................... 4,900 241,570 WorldCom, Inc.* .................................. 5,300 99,044 --------- 1,084,910 INTERNET SOFTWARE & SERVICES - 0.1% Broadvision, Inc.* ............................... 700 3,741 Yahoo! Inc.* ..................................... 1,100 17,325 --------- 21,066
See accompanying notes. 22 24 SCHEDULE OF INVESTMENTS [GRAPHIC] MARCH 31, 2001 (UNAUDITED) SECURITY EQUITY FUND - ENHANCED INDEX SERIES (CONTINUED)
NUMBER MARKET COMMON STOCKS (CONTINUED) OF SHARES VALUE -------------------------------------------------------------------------------- IT CONSULTING & SERVICES - 0.2% Computer Sciences Corporation* ................. 400 $ 12,940 Electronic Data Systems Corporation ............ 400 22,344 Sapient Corporation* ........................... 200 1,438 Unisys Corporation* ............................ 600 8,400 -------- 45,122 LEISURE PRODUCTS - 0.1% Brunswick Corporation .......................... 500 9,815 Hasbro, Inc. ................................... 500 6,450 Mattel, Inc. ................................... 804 14,263 -------- 30,528 LIFE & HEALTH INSURANCE - 0.7% AFLAC, Inc. .................................... 1,000 27,540 American General Corporation ................... 806 30,830 Conseco Inc. ................................... 622 10,014 Jefferson-Pilot Corporation .................... 200 13,578 Lincoln National Corporation ................... 285 12,104 Metlife, Inc ................................... 1,400 42,070 Torchmark Corporation .......................... 200 7,766 UnumProvident Corporation ...................... 400 11,688 -------- 155,590 MANAGED HEALTH CARE - 0.4% Aetna, Inc. * .................................. 200 7,184 Cigna Corporation .............................. 300 32,208 Humana, Inc. * ................................. 700 7,336 United Health Group, Inc. ...................... 600 35,556 Wellpoint Health Networks, Inc.* ............... 100 9,531 -------- 91,815 METAL & GLASS CONTAINERS - 0.0% Pactiv Corporation* ............................ 700 8,512 MOTORCYCLE MANUFACTURERS 0.1% Harley-Davidson, Inc ........................... 494 18,747 MOVIES & ENTERTAINMENT - 2.7% AOL Time Warner, Inc.*(1) ...................... 8,000 321,200 Viacom, Inc. (Cl.B)* ........................... 3,300 145,101 Walt Disney Company ............................ 3,800 108,680 -------- 574,981 MULTI-LINE INSURANCE - 1.8% American International Group, Inc.(1) .......... 4,300 346,150 Hartford Financial Services Group, Inc.(1) ..... 400 23,600 Loews Corporation .............................. 400 23,764 -------- 393,514 MULTI-UTILITIES - 0.8% Dynegy, Inc. ....................................... 500 25,505 Enron Corporation .................................. 1,400 81,340 Nisource, Inc ...................................... 500 15,560 Nisource, Inc.*(2) ................................. 69 190 Williams Companies, Inc. ........................... 1,000 42,850 -------- 165,445 NETWORKING EQUIPMENT - 1.1% Avaya Inc.* ........................................ 500 6,500 Cabletron Systems, Inc.* ........................... 700 9,030 Cisco Systems, Inc.* ............................... 13,450 212,678 -------- 228,208 OFFICE ELECTRONICS - 0.0% Xerox Corporation .................................. 1,200 7,188 OIL & GAS DRILLING - 0.3% Nabors Industries, Inc.* ........................... 400 20,736 Noble Drilling Corporation* ........................ 300 13,848 Rowan Companies, Inc.* ............................. 400 11,000 Transocean Sedco Forex, Inc ........................ 500 21,675 -------- 67,259 OIL & GAS EQUIPMENT & SERVICES - 0.5% Baker Hughes, Inc .................................. 600 21,786 Halliburton Company ................................ 800 29,400 Progress Energy, Inc.* ............................. 400 0 Schlumberger, Ltd. ................................. 1,000 57,610 -------- 108,796 OIL & GAS EXPLORATION & PRODUCTION - 0.7% Anadarko Petroleum Corporation ..................... 600 37,668 Apache Corporation ................................. 200 11,522 Burlington Resources, Inc. ......................... 600 26,850 Devon Energy Corporation ........................... 300 17,460 EOG Resources, Inc. ................................ 300 12,369 Kerr-Mcgee Corporation ............................. 300 19,470 Unocal Corporation ................................. 400 13,828 -------- 139,167 OIL & GAS REFINING & MARKETING - 0.2% Ashland, Inc. ...................................... 100 3,840 Sunoco, Inc. ....................................... 200 6,486 Tosco Corporation .................................. 700 29,932 -------- 40,258
See accompanying notes. 23 25 SCHEDULE OF INVESTMENTS [GRAPHIC] MARCH 31, 2001 (UNAUDITED) SECURITY EQUITY FUND - ENHANCED INDEX SERIES (CONTINUED)
NUMBER MARKET COMMON STOCKS (CONTINUED) OF SHARES VALUE --------------------------------------------------------------------------------- PACKAGED FOODS - 2.2% Agribrands International, Inc. ............. 1,300 $ 70,174 Campbell Soup Company ...................... 300 8,961 ConAgra, Inc. .............................. 1,000 18,240 General Mills, Inc. ........................ 500 21,505 Heinz (H.J.) Company ....................... 600 24,120 Hershey Foods Corporation .................. 200 13,864 Kellogg Company ............................ 300 8,109 Quaker Oats Company ........................ 200 19,600 Ralston-Ralston Purina Group ............... 6,100 190,015 Sara Lee Corporation ....................... 1,300 28,054 Unilever N.V. .............................. 1,000 52,640 Wm. Wrigley Jr. Company .................... 400 19,300 --------- 474,582 PAPER PACKAGING - 0.1% Sealed Air Corporation* .................... 200 6,666 Temple-Inland, Inc. ........................ 200 8,850 --------- 15,516 PAPER PRODUCTS - 0.2% Boise Cascade Corporation .................. 300 9,420 International Paper Company ................ 101 3,644 Mead Corporation ........................... 200 5,018 Potlatch Corporation ....................... 100 3,195 Westvaco Corporation ....................... 200 4,846 Willamette Industries, Inc. ................ 200 9,200 --------- 35,323 PERSONAL PRODUCTS - 0.4% Alberto-Culver Company (Cl.B) .............. 100 3,966 Avon Products, Inc. ........................ 400 15,996 Gillette Company ........................... 1,900 59,223 --------- 79,185 PHARMACEUTICALS - 9.0% Abbott Laboratories ........................ 2,500 117,975 Allergan, Inc. ............................. 201 14,904 ALZA Corporation* .......................... 1,500 60,750 American Home Products Corporation ................................ 2,400 141,000 Bristol-Myers Squibb Company ............... 3,500 207,900 Eli Lilly & Company ........................ 2,000 153,320 Forest Laboratories, Inc.* ................. 400 23,696 Johnson & Johnson .......................... 2,010 175,815 King Pharmaceuticals, Inc.* ................ 400 16,300 Merck & Company, Inc.(1) ................... 4,200 318,780 Pfizer, Inc.(1) ............................ 11,500 470,925 Pharmacia Corporation ...................... 2,400 120,888 Schering-Plough Corporation ................ 2,600 94,978 Watson Pharmaceuticals, Inc.* .............. 300 15,780 --------- 1,933,011 PHOTOGRAPHIC PRODUCTS - 0.1% Eastman Kodak Company ............................ 400 15,956 PROPERTY & CASUALTY INSURANCE - 0.7% Allstate Corporation ............................. 1,300 54,522 Ambac Financial Group, Inc. ...................... 200 12,686 Chubb Corporation ................................ 200 14,488 Cincinnati Financial Corporation ................. 300 11,381 MBIA, Inc. ....................................... 200 16,136 MGIC Investment Corporation ...................... 200 13,684 Progressive Corporation Ohio ..................... 100 9,705 SAFECO Corporation ............................... 300 8,456 St. Paul Companies, Inc. ......................... 200 8,810 --------- 149,868 PUBLISHING & PRINTING - 1.1% Dow Jones & Company, Inc. ........................ 100 5,235 Harcourt General, Inc. ........................... 3,400 189,278 Knight-Ridder, Inc. .............................. 100 5,371 McGraw-Hill Companies, Inc. ...................... 300 17,895 New York Times Company ........................... 200 8,194 Tribune Company .................................. 200 8,148 --------- 234,121 RAILROADS - 0.4% Burlington Northern Santa Fe Corporation .................................... 800 24,304 CSX Corporation .................................. 400 13,480 Norfolk Southern Corporation ..................... 900 15,066 Union Pacific Corporation ........................ 500 28,125 --------- 80,975 RESTAURANTS - 0.5% Darden Restaurants, Inc .......................... 600 14,250 McDonald's Corporation ........................... 2,000 53,100 Starbucks Corporation* ........................... 500 21,219 Tricon Global Restaurants, Inc.* ................. 284 10,846 Wendy's International, Inc. ...................... 200 4,464 --------- 103,879 SEMICONDUCTOR EQUIPMENT - 0.5% Applied Materials, Inc.* ......................... 1,600 69,600 KLA-Tencor Corporation* .......................... 300 11,812 Novellus Systems, Inc.* .......................... 300 12,169 Teradyne, Inc.* .................................. 300 9,900 --------- 103,481
See accompanying notes. 24 26 SCHEDULE OF INVESTMENTS [Graphic] MARCH 31, 2001 (UNAUDITED) SECURITY EQUITY FUND - ENHANCED INDEX SERIES (CONTINUED)
NUMBER MARKET COMMON STOCKS (CONTINUED) OF SHARES VALUE -------------------------------------------------------------------------------- SEMICONDUCTORS - 3.2% Adaptec, Inc* ............................. 200 $ 1,734 Advanced Micro Devices, Inc.* ............. 800 21,232 Altera Corporation* ....................... 900 19,294 Analog Devices, Inc.* ..................... 800 28,992 Applied Micro Circuits Corporation* ............................ 600 9,900 Broadcom Corporation* ..................... 500 14,450 Conexant Systems, Inc.* ................... 400 3,575 Intel Corporation(1)....................... 12,400 326,275 LSI Logic Corporation ..................... 500 20,531 Linear Technology Corporation ............. 800 12,584 Maxim Integrated Products, Inc.* .......... 600 24,954 Micron Technology, Inc.* .................. 1,300 53,989 National Semiconductor Corporation* ............................ 600 16,050 Qlogic Corporation* ....................... 200 4,500 Texas Instruments, Inc. .................. 2,800 86,744 Vitesse Semiconductor Corporation* ............................ 400 9,525 Xilinx, Inc.* ............................. 700 24,588 ---------- 678,917 SOFT DRINKS - 1.5% Coca-Cola Company ......................... 4,500 203,220 Coca-Cola Enterprises, Inc. ............... 800 14,224 PepsiCo, Inc. ............................. 2,600 114,270 ---------- 331,714 SPECIALTY CHEMICALS - 0.1% Great Lakes Chemical Company .............. 100 3,074 International Flavors & Fragrances, Inc. ........................ 200 4,412 PPG Industries, Inc. ...................... 200 9,218 Rohm & Haas Company ....................... 100 3,081 Sigma-Aldrich Corporation ................. 100 4,788 ---------- 24,573 SPECIALTY STORES - 0.4% AutoZone, Inc.* . ......................... 400 11,208 Bed Bath & Beyond, Inc.* .................. 700 17,194 Office Depot, Inc.* ....................... 1,200 10,500 Staples, Inc.* ............................ 800 11,900 Tiffany & Company ......................... 300 8,175 Toys 'R' Us, Inc.* ........................ 700 17,570 ---------- 76,547 STEEL - 0.1% Allegheny Technologies, Inc. .............. 200 3,482 Nucor Corporation ......................... 200 8,014 USX-U.S. Steel Group, Inc. ................ 400 5,876 Worthington Industries, Inc. .............. 400 3,720 ---------- 21,092 SYSTEMS SOFTWARE - 3.6% Adobe Systems, Inc. ....................... 392 13,708 BMC Software, Inc.* ....................... 500 10,750 Computer Associates International, Inc. ..................... 300 8,160 Compuware Corporation* .................... 700 6,825 Microsoft Corporation*(1) ................. 9,800 535,938 Novell, Inc.* ............................. 1,000 5,000 Oracle Corporation* ....................... 10,500 157,290 VERITAS Software Corporation* ............. 812 37,547 ---------- 775,218 TELECOMMUNICATIONS EQUIPMENT - 2.1% ADC Telecommunications, Inc.* ............. 1,700 14,450 Andrew Corporation* ....................... 400 5,750 Comverse Technology, Inc.* ................ 300 17,667 Corning, Inc. ............................. 1,700 35,173 JDS Uniphase Corporation* ................. 2,500 46,094 Lucent Technologies, Inc. ................. 6,100 60,817 Motorola, Inc. ............................ 3,999 57,026 Nortel Networks Corporation ............... 5,910 83,036 QUALCOMM, Inc.* ........................... 1,400 79,275 Scientific-Atlanta, Inc. .................. 500 20,795 Tellabs, Inc.* ............................ 800 32,550 ---------- 452,633 TIRES & RUBBER - 0.1% Cooper Tire & Rubber Company .............. 700 7,945 Goodyear Tire & Rubber Company ................................. 600 14,310 ---------- 22,255 TOBACCO - 1.0% Philip Morris Companies, Inc. ............. 4,100 194,545 UST, Inc. .................................. 400 12,020 ---------- 206,565 TRADING COMPANIES & DISTRIBUTORS - 0.1% Genuine Parts Company ...................... 400 10,364 Grainger (W.W.), Inc. ...................... 100 3,385 ---------- 13,749 TRUCKING - 0.0% Ryder System, Inc. ......................... 400 7,196 WIRELESS TELECOMMUNICATION SERVICES - 0.3% Nextel Communications, Inc.* ............... 1,500 21,563 Sprint Corporation (PCS Group)* ............ 1,800 34,200 ---------- 55,763 ---------- Total common stocks - 91.3% ................ 19,654,931
See accompanying notes. 25 27 SCHEDULE OF INVESTMENTS [Graphic] MARCH 31, 2001 (UNAUDITED) SECURITY EQUITY FUND -- ENHANCED INDEX SERIES (CONTINUED)
PRINCIPAL MARKET U.S. GOVERNMENT SECURITIES AMOUNT VALUE -------------------------- ---------- ----------- U.S. GOVERNMENT SECURITIES - 1.0% U.S. Treasury Bill, 5.12%, 04-19-01 ................ $ 210,000 $ 209,517 REPURCHASE AGREEMENT -- 8.2% United Missouri Bank, 5.03%, 04-02-01 (Collateralized by FHLMC, 05-15-01 with a value of $1,815,000) ............................. 1,769,000 1,769,000 ----------- Total investments -- 100.5% ...................... 21,633,448 Liabilities, less cash and other assets -- (0.5%) (110,445) ----------- Total net assets -- 100.0% ....................... $21,523,003 ===========
The identified cost of investments owned at March 31, 2001 was the same for federal income tax and financial statement purposes. * Non-Income producing security. (1) Security is segregated as collateral for futures, forward contracts or options. (2) SAILS -- Stock Appreciation Income Linked Security - is the term used for a unit consisting of a zero coupon debt security and a forward equity contract. See accompanying notes. 26 28 MANAGER'S COMMENTARY [Graphic] SECURITY EQUITY FUND - EQUITY SERIES MAY 15, 2001 [Picture] Terry Milberger Senior Portfolio Manager [Security Funds (R) Logo] Advisor, Security Management Company TO OUR SHAREHOLDERS: The turmoil in the stock markets in the six months ended March 31, 2001 had a severe negative impact on nearly all types of stocks. Security Equity Fund also felt the pain of the general market malaise, declining 20.26% over the period, while the benchmark S&P500 Stock Index fell 18.74%.(1) TECHNOLOGY STOCKS WERE THE WEAKEST PERFORMERS Some of the most severe declines occurred in the technology sector. At the beginning of the six month period the portfolio held an overweight position in technology compared to the corresponding sector in the benchmark index. Throughout the period we reduced holdings in the sector, bringing it in line with the benchmark by the end of the calendar year and reducing it further to an underweight position by the end of March. Within the technology grouping we reduced our holdings in telecommunications companies including Nortel and Lucent, which are dependent on spending by major telephone companies such as AT&T Corporation that were seeing a sharp reduction in their long distance revenues. We continue to hold personal computer oriented companies including Intel Corporation, Micron Technology, Inc., Dell Computer Corporation, and Compaq Computer Corporation, which we believe have the worst of the decline behind them. AWEAKENING ECONOMY HURT MANY SECTORS The economic slowdown in the U.S. played havoc with many sectors of the stock markets. Agreat deal of damage was done to advertising-related companies in the portfolio, including Viacom Inc., Clear Channel Communications, Inc., and Univision Communications Inc. As corporations saw their profit margins shrinking, advertising was one of the places where spending was reduced. Consequently, revenues declined in companies which depended in whole or in part on advertising as a source of income. SOME SECTORS BENEFITED FROM ECONOMIC DIFFICULTIES Still, there were some bright spots in an otherwise difficult market period. The energy sector provided favorable returns as petroleum and natural gas prices stayed at high levels longer than industry analysts expected. Our positions in integrated oil companies Exxon Mobil Corporation and Chevron Corporation performed well, as did natural gas provider El Paso Corporation. Oilfield service provider BJ Services Company saw strong revenues from its drilling-related operations as an anticipated shortage of petroleum brought renewed interest in oil exploration and production. Companies in the pharmaceuticals and related businesses held their value well. Stocks of these companies are considered defensive in times of market weakness, since their products are needed in good times and bad. Walgreen Company, an operator of retail drugstores, saw sales and earnings continue to rise despite the economic slowdown. The best-performing stock in the Equity Fund portfolio during the period was Baxter International Inc., a manufacturer of medical products related primarily to the blood and circulatory systems. Baxter's stock rose over 60% over the six months on the positive outlook for new products, better distribution systems for those products, and revenue growth. 27 29 MANAGER'S COMMENTARY (CONTINUED) [Graphic] SECURITY EQUITY FUND - EQUITY SERIES MAY 15, 2001 BETTER MARKET PERFORMANCE AHEAD Historically, when the Federal Reserve is lowering interest rates it has been a good time to be investing in the stock markets. The Fed has reduced interest rates three times in rapid succession since the beginning of 2001, the ninth time in the last thirty years they have made three successive rate cuts. In the previous eight times, in the three-month period following the third cut the Dow Jones Industrial Average rose an average of 7%; in the six months after the third cut the Dow rose an average of 12%; and in the twelve months following the third cut the Dow gained an average of 23%. Of course, there can be no guarantee that the same pattern will be repeated this time. We believe the stock markets are undervalued today. We expect that hindsight at the end of 2001 will show that this is an excellent time to own stocks. While corporate earnings in the first and second quarters of the calendar year are very likely to be weak, the results of the Federal Reserve's interest rate cuts should stimulate economic activity and bring improvement in earnings as the year progresses. Patience and long-term investment horizons should be rewarded over the coming months. Sincerely, Terry Milberger Senior Portfolio Manager (1) Performance figures are based on Class A shares and do not reflect deduction of the sales charge. PERFORMANCE TOP 5 HOLDINGS**
% OF NET ASSETS General Electric Company..................................... 5.0% Standard & Poor's 500 Index Fund............................. 4.0% Microsoft Corporation........................................ 3.3% Exxon Mobil Corporation...................................... 2.7% American International Group, Inc............................ 2.6% **At March 31, 2001
AVERAGE ANNUAL RETURNS AS OF MARCH 31, 2001
1 YEAR 5 YEARS 10 YEARS A Shares (24.32%) 9.56% 12.92% A Shares with sales charge (28.67%) 8.28% 12.25% B Shares (25.06%) 8.48% 11.00% (10-19-93) (since inception) B Shares with CDSC (28.81%) 8.19% 11.00% (10-19-93) (since inception) C Shares (25.06%) (8.91%) N/A (1-29-99) (since inception) C Shares with CDSC (25.81%) (8.91%) N/A (1-29-99) (since inception) S Shares (15.44%) N/A N/A (2-01-01) (since inception) S Shares with CDSC (20.51%) N/A N/A (2-01-01) (since inception)
The performance data above represents past performance which 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, 1% for Class C shares and 6% for Class S shares, as applicable, except where noted. For Class S shares, the returns have been calculated from February 1, 2001 (date of inception) to March 31, 2001 and are not annualized. Such figures would be lower if the maximum sales charge were deducted. 28 30 SCHEDULE OF INVESTMENTS [Graphic] MARCH 31, 2001 (UNAUDITED) SECURITY EQUITY FUND - EQUITY SERIES
NUMBER MARKET COMMON STOCKS (CONTINUED) OF SHARES VALUE ------------------------- --------- ----------- ADVERTISING - 1.0% Omnicom Group, Inc. ........................ 90,000 $ 7,459,201 AEROSPACE & DEFENSE - 1.5% Boeing Company ............................. 50,000 2,785,500 General Dynamics Corportation .............. 30,000 1,882,200 United Technologies Corporation ............ 90,000 6,597,000 ----------- 11,264,700 ALUMINUM - 0.5% Alcoa, Inc. ................................ 110,000 3,954,500 APPLICATION SOFTWARE - 0.4% Amdocs, Ltd.* .............................. 60,000 2,874,000 AUTOMOBILE MANUFACTURERS - 0.3% General Motors Corporation ................. 50,000 2,592,500 BANKS - 5.7% Bank of America Corporation ................ 80,000 4,380,000 Bank of New York Company, Inc. ............. 180,000 8,863,200 FleetBoston Financial Corporation .......... 120,000 4,530,000 Golden West Financial Corporation .......... 40,000 2,596,000 Mellon Financial Corporation ............... 100,000 4,052,000 Northern Trust Corporation ................. 90,000 5,625,000 Washington Mutual, Inc. .................... 70,000 3,832,500 Wells Fargo & Company ...................... 180,000 8,904,600 ----------- 42,783,300 BIOTECHNOLOGY - 0.8% Amgen, Inc.* ............................... 100,000 6,018,750 BREWERS - 0.3% Anheuser-Busch Companies, Inc. ............. 50,000 2,296,500 BROADCASTING & CABLE TV - 2.2% AT&T Corporation-Libery Media Corporation* . 150,000 2,100,000 Chapter Communications, Inc.* .............. 40,000 905,000 Clear Channel Communications, Inc.* ........ 145,700 7,933,365 Comcast Corpoaration* ...................... 60,000 2,516,250 Univision Communications, Inc.* ............ 80,000 3,052,800 ----------- 16,507,415 COMPUTER HARDWARE - 4.1% Compaq Computer Corporation ................ 140,000 2,548,000 Dell Computer Corporation* ................. 200,000 5,137,500 Hewlett-Packard Company .................... 150,000 4,690,500 International Business Machines Corporation 160,000 15,388,800 Sun Microsystems, Inc.* .................... 180,000 2,766,600 ----------- 30,531,400 COMPUTER STORAGE & PERIPHERALS - 0.7% EMC Corporation* ........................... 170,000 $ 4,998,000 CONSUMER FINANCE - 0.7% Capital One Financial Corporation .......... 20,000 1,110,000 MBNA Corporation ........................... 60,000 1,986,000 Providian Financial Corporation ............ 40,000 1,962,000 ----------- 5,058,000 DATA PROCESSING SERVICES - 1.1% Automatic Data Processing, Inc. ............ 100,000 5,438,000 First Data Corporation ..................... 50,000 2,985,500 ----------- 8,423,500 DEPARTMENT STORES - 0.6% Federated Department Stores, Inc.* ......... 25,000 1,038,750 Kohl's Corporation* ........................ 45,000 2,776,050 May Department Stores Company .............. 30,000 1,064,400 ----------- 4,879,200 DIVERSIFIED COMMERCIAL SERVICES - 0.7% Ecolab, Inc ................................ 125,000 5,302,500 DIVERSIFIED FINANCIAL SERVICES - 7.9% American Express Company ................... 120,000 4,956,000 Citigroup, Inc. ............................ 360,000 16,192,800 Fannie Mae ................................. 150,000 11,940,000 Freddie Mac ................................ 140,000 9,076,200 J.P. Morgan Chase & Company ................ 140,000 6,286,000 Merrill Lynch & Company, Inc. .............. 90,000 4,986,000 Morgan Stanley Dean Witter & Company .......................... 110,000 5,885,000 ----------- 59,322,000 DRUG RETAIL - 1.1% Walgreen Company ........................... 200,000 8,160,000 ELECTRONIC EQUIPMENT & INSTRUMENTS - 0.3% Sanmina Corporation* ....................... 120,000 2,347,500 FOOD RETAIL - 1.3% Safeway, Inc.* ............................. 180,000 9,927,000 GAS UTILITIES - 0.7% El Paso Corporation ........................ 86,100 5,622,330 GENERAL MERCHANDISE STORES - 3.1% Family Dollar Stores, Inc. ................. 70,000 1,799,000 Target Corporation ......................... 170,000 6,133,600 Wal-Mart Stores, Inc. ...................... 300,000 15,150,000 ----------- 23,082,600 HEALTH CARE DISTRIBUTORS & SERVICES - 0.8% Cardinal Health, Inc. ...................... 65,000 6,288,750
See accompanying notes. 29 31 SCHEDULE OF INVESTMENTS [Graphic] MARCH 31, 2001 (UNAUDITED) SECURITY EQUITY FUND - EQUITY SERIES (CONTINUED)
NUMBER MARKET COMMON STOCKS (CONTINUED) OF SHARES VALUE -------------------------------------------------------------------------------- HEALTH CARE EQUIPMENT - 2.2% Baxter International, Inc. ....................... 75,000 $ 7,060,500 Meditronic, Inc. ................................. 200,000 9,148,000 ----------- 16,208,500 HEALTH CARE FACILITIES - 0.4% HCA-The Healthcare Company ....................... 40,000 1,610,800 Tenet Healthcare Corporation ..................... 35,000 1,540,000 ----------- 3,150,800 HOME IMPROVEMENT RETAIL - 1.3% Home Depot, Inc. ................................. 180,000 7,758,000 Lowe's Companies, Inc. ........................... 40,000 2,338,000 ----------- 10,096,000 HOUSEHOLD PRODUCTS - 1.7% Colgate-Palmolive Company ........................ 75,000 4,144,500 Kimberly-Clark Corporation ....................... 55,000 3,730,650 Procter & Gamble Company ......................... 75,000 4,695,000 ----------- 12,570,150 INDUSTRIAL CONGLOMERATES - 7.2% General Electric Company(1)....................... 900,000 37,674,000 Minnesota Mining & Manufacturing Company .......................... 50,000 5,195,000 Textron, Inc. .................................... 48,600 2,762,424 Tyco International, Ltd. ......................... 200,000 8,646,000 ----------- 54,277,424 INDUSTRIAL GASES - 0.1% Air Products & Chemical, Inc ..................... 25,000 960,000 INDUSTRIAL MACHINERY - 0.3% Illinois Tool Works, Inc. ........................ 35,000 1,989,400 INSURANCE BROKERS - 0.4% Marsh & McLennan Companies, Inc. ................................ 30,000 2,850,900 INTEGRATED OIL & GAS - 5.2% Chevron Corporation .............................. 90,000 7,902,000 Exxon Mobil Corporation .......................... 250,000 20,250,000 Royal Dutch Petroleum Company .................... 200,000 11,088,000 ----------- 39,240,000 INTEGRATED TELECOMMUNICATIONS SERVICES - 3.3% AT&T Corporation ................................. 100,000 2,130,000 BellSouth Corporation ............................ 100,000 4,092,000 Qwest Communications International, Inc.* ........................... 120,000 4,206,000 SBC Communications, Inc........................... 220,000 9,818,600 Verizon Communications, Inc. ..................... 100,000 4,930,000 ----------- 25,176,600 IT CONSULTING & SERVICES - 0.8% Computer Sciences Corporation* ............... 90,000 $ 2,911,500 Electronic Data Systems Corporation ................................ 50,000 2,793,000 ----------- 5,704,500 LIFE & HEALTH INSURANCE - 0.5% American General Corporation ................. 100,000 3,825,000 Metlife, Inc.................................. 100,000 3,005,000 ----------- 6,830,000 MOTORCYLE MANUFACTURERS - 0.5% Harley-Davidson, Inc. ........................ 90,000 3,415,500 MOVIES & ENTERTAINMENT - 3.2% AOL Time Warner, Inc. ........................ 380,000 15,257,000 Viacom, Inc. (Cl. B)* ........................ 120,000 5,276,400 Walt Disney Company .......................... 130,000 3,718,000 ----------- 24,251,400 MULTI-LINE INSURANCE - 3.3% American International Group, Inc. ................................ 240,000 19,320,000 Hartford Financial Services Group, Inc. ................................ 100,000 5,900,000 ----------- 25,220,000 MULTI-UTILITIES - 0.8% Enron Corporation ............................ 60,000 3,486,000 Williams Companies, Inc. ..................... 60,000 2,571,000 ----------- 6,057,000 NETWORKING EQUIPMENT - 1.3% Cisco Systems, Inc.* ......................... 600,000 9,487,500 OFFICE SERVICES & SUPPLIES - 0.3% Avery Dennsion Corporation ................... 40,000 2,080,800 OIL & GAS EQUIPMENT & SERVICES - 0.4% BJ Services Company* ......................... 20,000 1,424,000 Halliburton Company .......................... 40,000 1,470,000 ----------- 2,894,000 PHARMACEUTICALS - 9.4% Allegran, Inc. ............................... 40,000 2,966,000 American Home Products Corporation ................................ 150,000 8,812,500 Bristol-Myers Squibb Company ................. 155,000 9,207,000 Forest Laboratories, Inc.* ................... 40,000 2,369,600 Johnson & Johnson ............................ 100,000 8,747,000 Merck & Company .............................. 130,000 9,867,000 Pfizer, Inc. ................................. 400,000 16,380,000 Pharmacia Corporation ........................ 100,000 5,037,000 Schering-Plough Corporation .................. 200,000 7,306,000 ----------- 70,692,100
See accompanying notes. 30 32 SCHEDULE OF INVESTMENTS [Graphic] MARCH 31, 2001 (UNAUDITED) SECURITY EQUITY FUND - EQUITY SERIES (CONTINUED)
PRINCIPAL AMOUNT OR NUMBER MARKET COMMON STOCKS (CONTINUED) OF SHARES VALUE -------------------------------------------------------------------------------- PROPERTY & CASUALTY INSURANCE - 0.2% Chubb Corporation ............................ 20,000 $ 1,448,800 PUBLISHING & PRINTING - 1.5% Gannett Company, Inc. ........................ 100,000 5,972,000 McGraw-Hill Companies, Inc.................... 85,000 5,070,250 ----------- 11,042,250 SEMICONDUCTOR EQUIPMENT - 0.5% Applied Materials, Inc.* ..................... 90,000 3,915,000 SEMICONDUCTORS - 3.2% Flextronics International, Ltd.* ............. 50,000 750,000 Intel Corporation ............................ 600,000 15,787,500 Micron Technology, Inc.* ..................... 60,000 2,491,800 Texas Instruments, Inc ....................... 120,000 3,717,600 Xilinx, Inc.* ................................ 40,000 1,405,000 ----------- 24,151,900 SOFT DRINKS - 1.2% Coca-Cola Company ............................ 100,000 4,516,000 PepsiCo, Inc. ................................ 100,000 4,395,000 ----------- 8,911,000 SYSTEMS SOFTWARE - 4.1% Microsoft Corporation* ....................... 450,000 24,609,375 Oracle Corporation* .......................... 400,000 5,992,000 ----------- 30,601,375 TELECOMMUNICATIONS EQUIPMENT - 0.3% Comverse Technology, Inc.* ................... 40,000 2,355,600 UNIT INVESTMENT TRUST - 6.3% S&P Mid-Cap 400 Depositary Receipts .......... 260,000 30,347,200 Standard & Poor's 500 Index Fund ............. 200,000 16,880,000 ----------- 47,227,200 ----------- Total common stocks - 95.7% ................................... 722,499,344 U.S. GOVERNMENT & AGENCIES Federal Home Loan Bank, 4.99%, 04-06-01 ............................ $ 2,200,000 2,198,475 4.86%, 04-16-01 ............................ $ 2,700,000 2,694,533 4.74%, 04-12-01 ............................ $ 4,700,000 4,693,193 ----------- 9,586,201 Federal National Mortgage Association, 4.78%, 04-02-01 ............................ $ 5,101,000 5,091,518 Federal Home Loan Mortgage Corporation, 5.00%, 04-10-01 ............................ $ 3,900,000 3,895,125 4.75%, 04-17-01 ............................ $ 6,200,000 6,186,911 4.78%, 04-24-01 ............................ $ 6,700,000 6,679,539 ----------- 16,761,575 ----------- Total U. S. government & agencies - 4.1% .................... 31,439,293
PRINCIPAL MARKET REPURCHASE AGREEMENT AMOUNT VALUE -------------------------------------------------------------------------------- REPURCHASE AGREEMENT - 0.1% United Missouri Bank, 5.03%, 04-02-01 (Collateralized by FHLB, 04-04-01, with a value of $551,000.) ................. $ 539,000 $ 539,000 ------------ Total investments - 99.9% ................................... 754,477,638 Cash and other assets, less liabilities - 0.1% .............. 344,400 ------------ Total net assets - 100.0% ................................... $754,822,038 ============
The identified cost of investments owned at March 31, 2001 was the same for federal income tax and financial statement purposes. * Non-Income producing security. (1) Security is segregated as collateral for futures, forward contracts or options. See accompanying notes. 31 33 MANAGER'S COMMENTARY [GRAPHIC] SECURITY EQUITY FUND - INTERNATIONAL SERIES MAY 15, 2001 [PHOTO] Michael Levy Portfolio Manager [PHOTO] Robert Reiner Portfolio Manager [PHOTO] Julie Wang Portfolio Manager [DEUTSCHE ASSET MANAGEMENT LOGO] A member of the DEUTSCHE BANK GROUP SUBADVISOR, DEUTSCHE ASSET MANAGEMENT, INC. TO OUR SHAREHOLDERS: The six month period ended March 31, 2001 proved to be exceptionally challenging for investors. The October through December period saw a continuation of global monetary tightening which began earlier in 2000. The U.S. Federal Reserve Bank continued its interest rate tightening policy in order to contain perceived inflationary pressures. The lagged effects of these interest rate increases, as well as global tightening in Europe and Japan, began to impact the global economy late in 2000. The Federal Reserve began easing on January 3, 2001 with a fifty basis point interest rate cut, followed by two more such cuts in January and March. Over the six months Security International Fund returned -20.35%, while the benchmark MSCI-EAFE Index returned -16.05%.(1) TECHNOLOGY STOCKS LED THE DECLINE High growth industries such as technology experienced the most severe declines around the world, evidenced by the drop of over 50% in the U.S.'s technology-laden Nasdaq Composite Index over the six months. This fall was precipitated by investors' sudden realization that valuations had become overextended. In response, investors sought more defensive sectors with stable earnings and cash flow. While the Fund had significant holdings in technology-related sectors, valuations which seemed excessive to us prevented our being overweighted in all of them. GLOBAL POLITICAL AND ECONOMIC CONDITIONS In Euroland, rising interest rates in 2000 combined with the prolonged oil price rise--fourfold in Euro currency terms--led consumer and business confidence to fall. After raising interest rates throughout 2000, the European Central Bank has refrained from lowering rates as inflation has remained above their targeted levels. Investors in Europe were concerned particularly about the telecommunications sector, primarily about the ability of companies in the sector to service the debt incurred with the recent acquisition of European third-generation licenses. Political and economic turmoil continued to hurt Japanese equity markets. As the Japanese economy slips further into recession, the central bank there appears to have realized that its ending of the zero interest rate policy was premature, and has since returned to that policy. Political uncertainty in the region continues even after Prime Minister Mori announced his resignation. Emerging markets also had a difficult year in 2000; however, improving liquidity conditions and more attractive stock valuations have made the region a positive contributor to Fund performance in 2001. Emerging markets should continue to benefit from easier monetary policy and expectations of an economic recovery in developed countries. OUR OUTLOOK FOR GLOBAL CONDITIONS Consensus forecasts for Euroland growth in 2001 have peaked and are likely to be revised downward further. However, lagged effects of a weak Euro and a move to fiscal expansion should be sufficient to offset slower demand growth in export markets. Profit growth should be supported and should compare favorably on an international basis, leading us to maintain our overweight position in European region stocks. The situation in Japan remains a concern. Japan recently revised its Gross Domestic Product for the third quarter of their fiscal year (our fourth calendar quarter 2000) to a 2.4% decline. We remain cautious about Japanese financial stocks as Japanese banks are in the process of writing off bad loans and continue to own cross-share holdings in each other. 32 34 MANAGER'S COMMENTARY (CONTINUED) [Graphic] SECURITY EQUITY FUND - INTERNATIONAL SERIES MAY 15, 2001 Overall, we expect slowing global economic growth to continue to cause concern in the near term, but the economic environment should become increasingly supportive of equity markets as the year progresses. Prompt central bank action is expected to improve liquidity conditions and lead to a bottoming of GDPand profit growth expectations, enabling equity markets to shift away from their defensive bias. Sincerely, Michael Levy, Robert Reiner, and Julie Wang Portfolio Managers (1) Performance figures are based on Class A shares and do not reflect deduction of the sales charge. Investing in foreign countries may involve risks, such as currency fluctuations and political instability, not associated with investing exclusively in the U.S. PERFORMANCE TOP 5 HOLDINGS**
% OF NET ASSETS ---------- Buhrmann, N.V. 2.6% ENI SpA 2.4% Total Fina Elf S.A. 2.1% Telecom Italia S.A. 2.0% Elan Corporation plc ADR 2.0%
**At March 31, 2001 AVERAGE ANNUAL RETURNS AS OF MARCH 31, 2001
1 YEAR SINCE INCEPTION ------ --------------- A Shares (31.54%) (5.87%) (1-29-99) A Shares with sales charge (35.47%) (8.41%) (1-29-99) B Shares (31.90%) (6.47%) (1-29-99) B Shares with CDSC (35.30%) (7.77%) (1-29-99) C Shares (32.01%) (6.37%) (1-29-99) C Shares with CDSC (32.69%) (6.37%) (1-29-99) S Shares N/A (13.11%) (2-01-01) S Shares with CDSC N/A (18.32%) (2-01-01)
The performance data above represents past performance which 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, 1% for Class C shares and 6% for Class S shares, as applicable, except where noted. For Class S shares, the returns have been calculated from February 1, 2001 (date of inception) to March 31, 2001 and are not annualized. Such figures would be lower if the maximum sales charge were deducted. 33 35 SCHEDULE OF INVESTMENTS [GRAPHIC] MARCH 31, 2001 (UNAUDITED) SECURITY EQUITY FUND - INTERNATIONAL SERIES
NUMBER MARKET FOREIGN STOCKS OF SHARES VALUE -------------------------------------------------------------------------------------- AUSTRALIA - 0.8% Australia & New Zealand Banking Group, Ltd........ 8,326 $ 56,024 Qantas Airways, Ltd. ............................. 11,592 13,755 --------- 69,779 BELGIUM - 1.3% Interbrew* ....................................... 4,093 104,892 BERMUDA - 0.7% Tyco International, Ltd. ......................... 1,400 60,522 BRAZIL - 0.8% Banco Bradesco S.A ............................... 4,359,729 23,539 Embraer-Empresa Basileira de Aeronautica S.A. ADR. 526 19,935 Tele Norte Leste Participacoes S.A. ADR .......... 1,584 25,788 --------- 69,262 CANADA - 6.1% Bank of Montreal ................................. 3,513 88,215 Bombardier, Inc. (Cl. B) ......................... 8,386 116,102 Canadian Imperial Bank of Commerce ............... 1,235 39,060 Manulife Financial Corporation ................... 3,501 92,383 Royal Bank of Canada ............................. 2,800 83,897 Sun Life Financial Services of Canada ............ 4,751 92,027 --------- 511,684 DENMARK - 0.8% Novo Nordisk A/S (Cl.B) .......................... 323 65,751 FRANCE - 13.6% Aventis S.A. ..................................... 1,774 137,846 Christian Dior S.A. .............................. 1,620 57,570 Lafarge S.A. ..................................... 1,430 126,412 Pinault-Printemps-Redoute S.A. ................... 200 34,476 PSAPeugeot Citroen ............................... 477 121,019 Schneider Electric S.A. .......................... 1,133 66,104 Societe Generale ................................. 2,355 145,727 Suez Lyonnaise des Eaux S.A. ..................... 706 104,225 Total Fina Elf S.A. .............................. 1,268 172,060 Usinor S.A. ...................................... 3,353 41,200 Vinci S.A. ....................................... 700 43,316 Vivendi Universal S.A. ........................... 1,448 88,130 --------- 1,138,085 GERMANY - 8.8% Bayer AG ......................................... 1,980 $ 84,260 Bayerische Motoren Werke (BMW) AG ................ 1,333 40,736 Deutsche Post AG* ................................ 4,132 70,862 Dresdner Bank AG ................................. 2,692 122,294 E.On AG .......................................... 2,899 137,746 Infineon Technologies AG* ........................ 2,303 86,524 Muenchener Rueckversicherungs-Gesellschaft AG..... 441 130,715 Porsche AG ....................................... 21 62,152 --------- 735,289 HONG KONG - 1.7% CNOOC Ltd.* ...................................... 57,500 50,870 CNOOC Ltd. ADR* .................................. 521 9,170 Legend Holdings, Ltd. ............................ 59,500 40,433 Sun Hung Kai Properties, Ltd. .................... 4,000 38,209 --------- 138,682 HUNGARY - 0.5% OTP Bank Rt. ..................................... 917 42,631 IRELAND - 4.8% Bank of Ireland .................................. 13,737 114,270 CRH plc .......................................... 7,434 114,347 CRH plc - Rights* ................................ 1,813 8,171 Elan Corporation plc ADR* ........................ 3,154 164,797 --------- 401,585 ITALY - 9.1% Assicurazioni Generali SpA ....................... 2,664 84,308 Banca Intesa SpA ................................. 22,374 85,839 ENI SpA .......................................... 31,130 203,640 Ruinione Adriatica di Sicurta SpA ................ 7,304 89,749 Saipem SpA ....................................... 7,177 43,206 Telecom Italia SpA ............................... 17,000 171,319 Unicredito Italiano SpA .......................... 19,605 84,921 --------- 762,982
See accompanying notes. 34 36 SCHEDULE OF INVESTMENTS [GRAPHIC] MARCH 31, 2001 (UNAUDITED) SECURITY EQUITY FUND - INTERNATIONAL SERIES (CONTINUED)
NUMBER MARKET FOREIGN STOCKS (CONTINUED) OF SHARES VALUE -------------------------------------------------------------------------------- JAPAN - 9.3% Capcom Company, Ltd. ......................... 800 $ 22,854 Chugai Pharmaceutical Company, Ltd. .......... 1,000 15,177 Eisai Company, Ltd ........................... 1,000 24,896 Fast Retailing Company, Ltd. ................. 600 99,585 Konami Corporation ........................... 600 28,296 Nintendo Company, Ltd ........................ 400 65,464 Nissan Motor Company, Ltd.* .................. 18,000 113,470 NTT DoCoMo, Inc .............................. 5 86,977 Pioneer Corporation .......................... 3,000 75,168 Sony Corporation ............................. 2,300 163,342 Takeda Chemical Industries, Ltd .............. 1,100 53,104 Yamanouchi Pharmaceutical Company, Ltd. ...... 1,000 34,472 -------- 782,805 MEXICO - 0.7% Cemex S.A. de C.V. ADR ....................... 1,333 28,660 Grupo Financiero Banamex Accival, S.A. de C.V 18,330 32,336 -------- 60,996 NETHERLANDS - 8.8% Buhrmann N.V ................................. 8,284 213,833 Fortis (NL) N.V .............................. 2,518 66,043 Hagemeyer N.V ................................ 2,830 59,966 ING Groep N.V ................................ 1,957 128,019 Koninklijke Ahold N.V ........................ 4,745 147,565 Koninklijke (Royal) Philips Electronics N.V .. 3,187 87,618 TNT Post Group N.V ........................... 1,856 38,885 -------- 741,929 POLAND - 0.9% Bank Polska Kasa Opieki S.A.* ................ 1,868 29,655 Telekomunikacja Polska S.A. ADR .............. 8,364 44,803 -------- 74,458 PORTUGAL - 1.0% Portugal Telecom, SGPS, S.A .................. 9,854 84,496 RUSSIA - 0.2% OAO Lukoil Holdings ADR ...................... 11 409 OAO Lukoil Holdings ADR 144A ................. 520 19,344 -------- 19,753 SOUTH KOREA - 1.1% Samsung Electronics .......................... 450 70,323 Samsung Electronics GDR 144A ................. 300 23,442 -------- 93,765 SPAIN - 4.4% Banco Bilbao Vizcaya Argentaria S.A .......... 6,142 83,886 Banco Popular Espanol S.A .................... 2,563 84,624 Iberdrola S.A ................................ 7,782 110,619 Telefonica S.A.* ............................. 5,699 91,690 -------- 370,819 SWITZERLAND - 1.6% Nestle S.A ................................... 66 138,309 TAIWAN - 0.6% Sunplus Technology Company, Ltd. GDR 144A* ... 2,300 24,955 Sunplus Technology Company, Ltd. GDR* ........ 100 1,085 Taiwan Semiconductor Manufacturing Company, Ltd.* 9,624 25,934 -------- 51,974 UNITED KINGDOM - 14.3% BPAmoco plc ADR(1)............................ 2,676 132,783 Barclays plc1 ................................ 3,755 116,913 BAE Systems plc1 ............................. 21,676 96,302 Celltech Group plc*(1)........................ 3,476 59,203 Diageo plc(1) ................................ 4,243 42,648 GlaxoSmithKline plc*(1) ...................... 5,670 148,404 Granada plc(1) ............................... 26,741 65,390 Dixons Group plc(1) .......................... 121 477 Powergen plc1 ................................ 3,950 40,461 Reckitt Benckiser plc1 ....................... 10,950 140,731 Royal Bank of Scotland Group plc(1) .......... 6,634 149,396 Shell Transport & Trading Company plc(1) ..... 15,852 123,164 Vodafone Group plc(1) ........................ 29,246 80,663 --------- 1,196,535 UNITED STATES - 1.0% Pharmacia Corporation ........................ 1,700 85,629 --------- Total foreign stocks - 92.9% ............... 7,802,612
See accompanying notes. 35 37 SCHEDULE OF INVESTMENTS [Graphic] MARCH 31, 2001 (UNAUDITED) SECURITY EQUITY FUND - INTERNATIONAL SERIES (CONTINUED)
PRINCIPAL AMOUNT OR NUMBER MARKET OPTIONS PURCHASED OF SHARES VALUE -------------------------------------------------------------------------------- OPTIONS PURCHASED - 0.8% JPYPut Option, expires 01-24-02 strike price 117.79 ............................... 250,000 $ 14,758 NIKKEI 225 Call Option 5%, expires 09-14-01 strike price 12,859.35 ............................ 28 30,544 NIKKEI 225 Call Option 5%, expires 11-09-01 strike price 13,994.31 ............................ 1,409 8,070 NIKKEI 225 Call Option 5%, expires 11-09-01 strike price 14,022.85 ............................ 2,123 11,998 --------- 65,370 REPURCHASE AGREEMENT - 5.4% State Street, 3.00%, 04-02-01 (Collateralized by FHLMC, 5.96%, 03-30-02 with a value of $460,693) ................................ $450,056 450,056 ---------- Total investments - 99.1% ...................................... 8,318,038 Cash and other assets, less liabilities - 0.9% .................. 76,105 ---------- Total net assets - 100.0%........................................ $8,394,143 ==========
The identified cost of investments owned at March 31, 2001 was the same for federal income tax and financial statement purposes. * Non-Income producing security. ADR (American Depositary Receipt) (1) Security is segregated as collateral for futures, forward contracts or options.
INVESTMENT CONCENTRATION ------------------------ At March 31, 2001, International Series(1) investment concentration, by industry, was as follows: Advertising Aerospace/Defense .................................. 1.4% Airlines ........................................... 0.2% Automobiles ........................................ 4.0% Banks & Credit ..................................... 18.0% Beverages .......................................... 1.8% Building & Construction ............................ 3.1% Building Materials ................................. 1.9% Chemicals .......................................... 1.0% Computer Software .................................. 0.3% Computer Systems ................................... 0.5% Cosmetics .......................................... 0.7% Electric Utilities ................................. 1.8% Electrical Equipment ............................... 0.8% Electronics ........................................ 5.3% Entertainment ...................................... 1.0% Financial Services ................................. 4.5% Food Processing .................................... 1.6% Food Wholesalers ................................... 1.8% Health Care ........................................ 2.7% Household Products ................................. 1.7% Insurance .......................................... 2.1% Manufacturing ...................................... 3.7% Medical ............................................ 0.6% Oil ................................................ 9.0% Pharmaceuticals .................................... 6.1% Real Estate Development ............................ 0.5% Retail ............................................. 2.3% Semiconductors ..................................... 1.3% Services ........................................... 4.9% Steel .............................................. 0.5% Telecommunications ................................. 7.0% Toys & Sporting Goods .............................. 0.8% Options ............................................ 0.8% Repurchase agreement ............................... 5.4% Cash & other assets, less liabilities .............. 0.9% ------ 100.0% ======
See accompanying notes. 36 38 MANAGER'S COMMENTARY [Graphic] SECURITY EQUITY FUND - SOCIAL AWARENESS SERIES MAY 15, 2001 [Picture] Cindy L. Shields Portfolio Manager [SECURITY FUNDS (R) LOGO] Advisor, Security Management Company TO OUR SHAREHOLDERS: The six months ended March 31, 2001 have been difficult for equity investors. Security Social Awareness Fund fell 20.47% over the period, slightly lagging the benchmark Domini Social Index's decline of 19.04%.(1) TECHNOLOGY STOCKS CONTINUE TO LEAD THE DOWNWARD MOVE Our technology stock holdings make up about 30% of the total portfolio, and were the weakest performers during the six months. Our holdings include Microsoft Corporation, IBM Corporation, Dell Computer Corporation, and Intel Corporation, companies which are related to the personal computer market. While these stocks declined sharply in the period just ended, we believe these companies are working down excess inventories and are seeing an improving balance between supply and demand for their products. We expect them to perform well when the markets begin to recover from their recent slump. CERTAIN UTILITIES AND INDUSTRIALS UNDERPERFORM In the utility sector we hold only one stock. Enron Corporation produces and delivers electricity and natural gas products and services, and fell 33% during the six months. Enron does business in California, and was hurt by the well-publicized utility problems in that state. Enron also suffered from a slowdown in prospects for its broadband communications services businesses. Molex Incorporated, a manufacturer of electronic and fiber optic products and systems, fell 35% largely because of its exposure to the telecommunications and information technology markets where it sells its products. Also in the industrial sector, Paychex, Inc., a provider of payroll and human resource services, lost 29% as business slowed for the small and mid-sized companies it serves. POSITIVE PERFORMANCE FROM CONSUMER-RELATED SECTORS On the brighter side, many of our holdings in the consumer discretionary sector performed very well. General merchandise retailers Target Corporation and Family Dollar Stores, Inc., and building materials retailer Lowe's Companies, Inc. all rose between 30% and 40% during the six month period. These stocks had come under pressure last year as the economy slowed and consumer spending was expected to fall sharply. When the spending slowdown was not as great as anticipated, however, these stock prices recovered nicely. Companies in the consumer staples sector are considered defensive because they supply products such as foods and drugs that consumers buy despite economic conditions. Drug store chain CVS Corporation gained 26% as it continued to generate consistent earnings from pharmaceutical products. General Mills, Inc., manufacturer of diversified food products, rose 22% in part because of a favorable outlook for its new products. Personal products manufacturer Kimberly-Clark Corporation was also up 22%, benefiting from the lower costs of paper pulp, a primary raw material used in its products. PROSPECTS FOR A MARKET RECOVERY IN THE SECOND HALF We expect the stock markets to improve over the course of the second half of the fiscal year. The Federal Reserve's interest rate cuts and the prospect of lower income taxes should boost consumer confidence and ultimately lead to an economic recovery. In the past, the stock markets have anticipated economic upturns, moving into positive territory several months prior to our seeing solid evidence of a recovery in the economic data. The market selloffs throughout the past year have returned stock valuations in many cases to more attractive, reasonable levels, setting the stage for more favorable performance in the months ahead. Sincerely, Cindy Shields Portfolio Manager (1) Performance figures are based on Class A shares and do not reflect deduction of the sales charge. 37 39 MANAGER'S COMMENTARY (CONTINUED) [Graphic] SECURITY EQUITY FUND - SOCIAL AWARENESS SERIES MAY 15, 2001 PERFORMANCE TOP 5 HOLDINGS**
% OF NET ASSETS ---------- Microsoft Corporation 5.5% American International Group, Inc. 3.3% Intel Corporation 3.2% Merck & Company, Inc. 3.1% Johnson & Johnson 2.2%
**At March 31, 2001 AVERAGE ANNUAL RETURNS AS OF MARCH 31, 2001
1 YEAR SINCE INCEPTION -------- ------------------ A Shares (26.79%) 8.38% (11-1-96) A Shares with sales charge (31.01%) 6.92% (11-1-96) B Shares (27.61%) 7.19% (11-1-96) B Shares with CDSC (31.23%) 6.83% (11-1-96) C Shares (27.53%) (7.85%) (1-29-99) C Shares with CDSC (28.26%) (7.85%) (1-29-99) S Shares N/A (15.71%) (2-01-01) S Shares with CDSC N/A (20.77%) (2-01-01)
The performance data above represents past performance which 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, 1% for Class C shares and 6% for Class S shares, as applicable, except where noted. For Class S shares, the returns have been calculated from February 1, 2001 (date of inception) to March 31, 2001 and are not annualized. Such figures would be lower if the maximum sales charge were deducted. 38 40 SCHEDULE OF INVESTMENTS [Graphic] MARCH 31, 2001 (UNAUDITED) SECURITY EQUITY FUND - SOCIAL AWARENESS SERIES
NUMBER MARKET COMMON STOCKS OF SHARES VALUE ------------- --------- ------ ADVERTISING - 1.2% Omnicom Group, Inc. ............................ 3,800 $ 314,944 AIR FREIGHT - 0.2% FedEx Corporation*.............................. 1,500 62,520 AIRLINES - 1.0% Southwest Airlines Company...................... 14,400 255,600 APPAREL RETAIL - 0.3 Talbots, Inc.................................... 2,200 93,456 BANKS - 6.8% Bank of America Corporation..................... 5,700 312,075 Bank of New York Company, Inc. ................. 7,700 379,148 Mellon Financial Corporation.................... 3,700 149,924 Northern Trust Corporation...................... 5,600 350,000 PNC Bank Corporation............................ 3,400 230,350 Wells Fargo & Company........................... 8,400 415,548 ---------- 1,837,045 BIOTECHNOLOGY - 1.1% Amgen, Inc.*.................................... 4,900 294,919 BROADCASTING & CABLE TV - 1.1% Clear Channel Communications, Inc.*............. 1,692 92,129 Comcast Corporation*............................ 5,000 209,688 ---------- 301,817 COMPUTER HARDWARE - 5.2% Compaq Computer Corporation..................... 8,000 145,600 Dell Computer Corporation*...................... 12,200 313,388 Hewlett-Packard Company......................... 5,600 175,112 International Business Machines Corporation..... 5,900 567,462 Sun Microsystems, Inc.*......................... 12,200 187,514 ---------- 1,389,076 COMPUTER STORAGE & PERIPHERALS - 1.1% EMC Corporation*................................ 10,400 305,760 CONSTRUCTION & FARM MACHINERY - 0.4% Deere & Company................................. 3,100 112,654 CONSUMER FINANCE - 1.7% Household International, Inc. .................. 3,600 213,264 MBNA Corporation................................ 7,200 238,320 ---------- 451,584 DATA PROCESSING SERVICES - 1.3% Paychex, Inc. .................................. 9,300 344,681 DEPARTMENT STORES - 0.9% Kohl's Corporation*............................. 3,700 228,253 DIVERSIFIED FINANCIAL SERVICES - 5.0% American Express Company........................ 6,300$ 260,190 Charles Schwab Corporation...................... 6,300 97,146 Fannie Mae...................................... 4,900 390,040 Freddie Mac..................................... 3,100 200,973 J.P. Morgan Chase & Company..................... 4,500 202,050 Merrill Lynch & Company, Inc. .................. 3,600 199,440 ---------- 1,349,839 DRUG RETAIL - 1.7% CVS Corporation................................. 5,000 292,450 Walgreen Company................................ 4,000 163,200 ---------- 455,650 ELECTRICAL COMPONENTS & EQUIPMENT - 0.9% Molex, Inc. .................................... 6,500 229,328 ELECTRONIC EQUIPMENT & INSTRUMENTS - 0.4% Sanmina Corporation*............................ 5,400 105,638 FOOD RETAIL - 1.0% Kroger Company*................................. 10,200 263,058 GENERAL MERCHANDISE STORES - 1.5% Family Dollar Stores, Inc. ..................... 10,000 257,000 Target Corporation.............................. 4,200 151,536 ---------- 408,536 HEALTH CARE DISTRIBUTORS & SERVICES - 1.0% Cardinal Health, Inc............................ 2,675 258,806 HEALTH CARE EQUIPMENT - 1.7% Guidant Corporation*............................ 4,200 188,958 Medtronic, Inc. ................................ 5,700 260,718 ---------- 449,676 HOME IMPROVEMENT RETAIL - 2.2% Home Depot, Inc. ............................... 11,300 487,030 Lowe's Companies, Inc. ......................... 2,000 116,900 ---------- 603,930 HOUSEHOLD PRODUCTS - 3.2% Clorox Company.................................. 2,800 88,060 Colgate-Palmolive Company....................... 2,700 149,202 Kimberly-Clark Corporation ..................... 3,300 223,839 Procter & Gamble Company........................ 6,200 388,120 ---------- 849,221 INDUSTRIAL GASES - 0.7% Praxair, Inc. .................................. 4,000 178,600 INDUSTRIAL MACHINERY - 0.5% Illinois Tool Works, Inc. ...................... 2,300 130,732 INSURANCE BROKERS - 0.5% Marsh & McLennan Companies, Inc. ............... 1,500 142,545
See accompanying notes. 39 41 SCHEDULE OF INVESTMENTS [GRAPHIC] MARCH 31, 2001 (UNAUDITED) SECURITY EQUITY FUND - SOCIAL AWARENESS SERIES (CONTINUED)
NUMBER MARKET COMMON STOCKS (CONTINUED) OF SHARES VALUE ------------------------------------------------------------------------------ INTEGRATED TELECOMMUNICATION SERVICE - 3.9% AT&T Corporation................................ 12,244 $ 260,797 BellSouth Corporation........................... 5,000 204,600 SBC Communications, Inc......................... 12,248 546,628 Sprint Corporation (FON Group).................. 2,200 48,378 ----------- 1,060,403 INTERNET SOFTWARE & SERVICES - 0.1% Yahoo!, Inc.*................................... 2,200 34,650 LIFE & HEALTH INSURANCE - 1.2% American General Corporation.................... 8,600 328,950 MOVIES & ENTERTAINMENT - 3.1% AOLTime Warner, Inc............................. 6,300 252,945 Viacom, Inc. (Cl. B)*........................... 7,300 320,981 Walt Disney Company............................. 8,800 251,680 ----------- 825,606 MULTI-LINE INSURANCE - 3.3% American International Group, Inc............... 11,080 891,940 MULTI-UTILITIES - 1.1% Enron Corporation............................... 4,900 284,690 NETWORKING EQUIPMENT - 2.1% Cisco Systems, Inc.*............................ 34,800 550,275 McData Corporation*............................. 382 7,210 ----------- 557,485 OIL & GAS EQUIPMENT & SERVICES - 0.9% BJ Services Company*............................ 3,200 227,840 PACKAGED FOODS - 0.5% General Mills, Inc.............................. 3,000 129,030 PHARMACEUTICALS - 7.9% Allergan, Inc................................... 3,200 237,280 ALZACorporation*................................ 5,200 210,600 Johnson & Johnson............................... 6,800 594,796 Merck & Company, Inc............................ 10,800 819,720 Schering-Plough Corporation..................... 7,500 273,975 ----------- 2,136,371 PROPERTY & CASUALTY INSURANCE - 1.0% Chubb Corporation............................... 3,700 268,028 PUBLISHING & PRINTING - 1.0% McGraw-Hill Companies, Inc...................... 1,800 107,370 New York Times Company.......................... 4,100 167,977 ----------- 275,347 RESTAURANTS - 0.5% McDonald's Corporation.......................... 5,500 146,025 SEMICONDUCTOR EQUIPMENT - 0.6% Applied Materials, Inc.......................... 3,800 165,300 PRINCIPAL AMOUNT OR NUMBER MARKET COMMON STOCKS (CONTINUED) OF SHARES VALUE -------------------------------------------------------------------------------- SEMICONDUCTORS - 5.5% Analog Devices, Inc.*........................... 2,700 $ 97,848 Intel Corporation............................... 33,000 868,312 Micron Technology, Inc.*........................ 4,500 186,885 Texas Instruments, Inc.......................... 7,900 244,742 Xilinx, Inc.*................................... 2,200 77,275 ----------- 1,475,062 SOFTDRINKS - 3.1% Coca-Cola Company............................... 11,600 523,856 PepsiCo, Inc.................................... 6,900 303,255 ----------- 827,111 SYSTEMS SOFTWARE - 6.1% Adobe Systems, Inc.............................. 5,200 181,844 Microsoft Corporation*.......................... 26,900 1,471,094 ----------- 1,652,938 TELECOMMUNICATIONS EQUIPMENT - 1.7% ADC Telecommunications, Inc.*................... 6,400 54,400 Comverse Technology, Inc.*...................... 3,800 223,782 Scientific-Atlanta, Inc......................... 4,200 174,678 ----------- 452,860 WIRELESS TELECOMMUNICATION SERVICES - 0.4% Sprint Corporation (PCS Group).................. 6,300 119,700 ----------- Total common stocks - 86.6%....................................... 23,277,204 U.S. GOVERNMENT & AGENCIES FEDERAL HOME LOAN BANK - 3.7% 4.74%, 04-12-01................................$1,000,000 998,552 FEDERAL HOME LOAN MORTGAGE CORPORATION - 5.9% 4.78%, 04-24-01................................$1,600,000 1,595,114 ----------- Total U.S. government & agencies - 9.6%........................... 2,593,666 REPURCHASE AGREEMENT - 4.0% United Missouri Bank, 5.03% - 04-02-01 (Collateralized by FHLMC, 04-04-01 with a value of $1,486,000)...........$1,084,000 1,084,000 ----------- Total investments - 100.2%........................................ 26,954,870 Liabilities, less cash and other assets - (0.2%)............................................. (63,365) Total net assets - 100%...........................................$26,891,505 =========== The identified cost of investments owned at March 31, 2001 was the same for federal income tax and financial statement purposes. * Non-Income producing security
See accompanying notes. 40 42 MANAGER'S COMMENTARY [GRAPHIC] SECURITY EQUITY FUND - TOTAL RETURN SERIES MAY 15, 2001 [PICTURE] Terry Milberger Senior Portfolio Manager SECURITY FUNDS (R) [LOGO] ADVISOR, SECURITY MANAGEMENT COMPANY TO OUR SHAREHOLDERS: The Security Total Return Fund was not exempt from the sharp market declines of the past six months. The Fund fell 20.47%, compared with a decline of 18.75% in the benchmark S&P 500 Stock Index.(1) TELECOMMUNICATIONS COMPANY STOCKS HIT HARD The stock of XO Communications, Inc. suffered the worst among portfolio holdings, falling sharply over the six month period. XO Communications provides broadband communications services, including local and long distance calling services, digital subscriber lines, dedicated Internet access services, and other communications-related services. Although the company reported favorable earnings results, they announced plans for additional spending in Europe. Investors interpreted this news as an indication that earnings would be slower to improve because of the expected increase in their debt load. The availability of funding for the telecommunications industry diminished as the markets slid, increasing investors' fears about these companies' ability to weather the storm of a weakening economy. While XO Communications appears to be on solid ground, it has been adversely affected by the negative sentiment toward the whole sector. Also in the telecommunications sector, Global Crossing Ltd. and Qwest Communications International Inc. lost 56% and 27% respectively. Investors appeared to prefer the larger and more defensive regional Bell operating companies in the telecommunications sector and shied away from the newer telecommunications services companies. Global Crossing and Qwest carry larger debt loads and are unlikely to have positive earnings in the near future. INDUSTRIAL COMPANIES SUFFER IN A WEAKENING ECONOMY In the industrial sector our overweight position in General Electric Company detracted as the stock lost about a quarter of its value during the six months. An apparent slowdown in the U.S. and global economies caused investors to worry about future earnings in the large conglomerates. A second holding in this sector, diversified manufacturing firm Tyco International Ltd., declined in value also. CONSUMER-ORIENTED STOCKS ADDED VALUE On the positive side, our overweighting in the consumer discretionary sector was beneficial, gaining from the perception that the Federal Reserve's interest rate cuts would be positive for the outlook for consumer spending. Retailers Target Corporation, Kohl's Corporation, and Wal-Mart Stores, Inc. were positives for total return. Target did especially well, gaining over 41% during the six months on the strength of favorable earnings news. Multimedia company Gannett Co., Inc. and advertising services company Omnicom Group Inc. were also favorable performers. The advertising sector lost value in the second half of 2000 when the weakening economy led investors to believe ad revenues would decline. In recent months many have rebounded as anticipations of improvement overcame fears of weakness. Gannett's stock rose over 13% and Omnicom was up 14% during the reporting period. PROSPECTS FOR THE SECOND HALF ARE IMPROVING We believe general market fears about the economic slowdown and its effects on corporate earnings are now just beginning to fade. We expect the next six months to bring convincing signs of an economic recovery, brought about by the series of interest rate cuts the Federal Reserve has put in place. Lower interest rates and the prospect for income tax cuts are positives for the outlook for consumer spending. History shows us that the stock markets anticipate economic recoveries, and we believe returns on investors' portfolios will be much more favorable as we move through the year. Sincerely, Terry Milberger Senior Portfolio Manager (1) Performance figures are based on Class A shares and do not reflect deduction of the sales charge. 41 43 MANAGER'S COMMENTARY (CONTINUED) [GRAPHIC] SECURITY EQUITY FUND - TOTAL RETURN SERIES MAY 15, 2001 PERFORMANCE TOP 5 HOLDINGS**
% OF NET ASSETS ---------- General Electric Company 4.7% Microsoft Corporation 3.8% Dell Computer Corporation 2.6% J.P. Morgan Chase & Company 2.5% Wal-Mart Stores, Inc. 2.3%
**At March 31, 2001 AVERAGE ANNUAL RETURNS AS OF MARCH 31, 2001
1 YEAR 5 YEARS SINCE INCEPTION ------- ------- --------------------- AShares (23.52%) 2.66% 4.30% (6-1-95) AShares with sales (27.92%) 1.46% 3.24% (6-1-95) charge B Shares (24.34%) 1.66% 3.28% (6-1-95) B Shares with CDSC (28.13%) 1.28% 3.28% (6-1-95) C Shares (24.20%) N/A (7.59%) (1-29-99) C Shares with CDSC (24.96%) N/A (7.59%) (1-29-99) S Shares N/A N/A (18.89%) (2-01-01) S Shares with CDSC N/A N/A (23.76%) (2-01-01)
The performance data above represents past performance which 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 Ashares or the contingent deferred sales charge of 5% for Class B shares, 1% for Class C shares and 6% for Class S shares, as applicable, except where noted. For Class S shares, the returns have been calculated from February 1, 2001 (date of inception) to March 31, 2001 and are not annualized. Such figures would be lower if the maximum sales charge were deducted. 42 44 SCHEDULE OF INVESTMENTS [Graphic} MARCH 31, 2001 (UNAUDITED) SECURITY EQUITY FUND - TOTAL RETURN SERIES
NUMBER MARKET COMMON STOCKS OF SHARES VALUE ------------- --------- ------ ADVERTISING - 2.0% Omnicom Group, Inc. ........................... 1,450 $120,176 AEROSPACE & DEFENSE - 0.9% General Dynamics Corporation .................. 850 53,329 ALTERNATIVE CARRIERS - 0.4% Global Crossing, Ltd.* ........................ 1,800 24,282 APPLICATION SOFTWARE - 1.6% Amdocs, Ltd.* ................................. 1,300 62,270 Check Point Software Technologies, Ltd.* .......................... 600 28,500 i2 Technologies, Inc.* ........................ 600 8,737 -------- 99,507 BANKS - 2.7% Bank of New York Company, Inc. ................. 1,450 71,398 FleetBoston Financial Corporation ............. 1,700 64,175 Northern Trust Corporation .................... 500 31,250 -------- 166,823 BREWERS - 0.4% Anheuser-Busch Companies, Inc. ................ 500 22,965 BROADCASTING & CABLE TV- 5.6% AT&T Corporation - Liberty Media Corporation* ................... 5,700 79,800 Clear Channel Communications, Inc.*......................... 2,625 142,931 Comcast Corporation* .......................... 1,800 75,488 Univision Communications, Inc.* ............... 1,200 45,792 -------- 344,011 COMPUTER HARDWARE - 3.3% Dell Computer Corporation* .................... 6,200 159,262 International Business Machines Corporation ......................... 400 38,472 Palm, Inc.* ................................... 800 6,725 -------- 204,459 COMPUTERS STORAGE & PERIPHERALS - 1.0% EMC Corporation* ............................. 1,900 55,860 Network Appliance, Inc.* ...................... 450 7,566 -------- 63,426 CONSUMER FINANCE - 0.6% Providian Financial Corporation ............... 700 34,335 DATA PROCESSING SERVICES - 1.2% Automatic Data Processing, Inc. ............... 1,350 73,413 DEPARTMENT STORES - 1.6% Kohl's Corporation* ........................... 1,600 98,704 DIVERSIFIED COMMERCIAL SERVICES - 0.7% Ecolab, Inc. .................................. 1,050 44,541 DIVERSIFIED FINANCIAL SERVICES - 9.4% American Express Company ...................... 1,850 76,405 Citigroup, Inc. ............................... 2,966 133,411 Fannie Mae .................................... 900 71,640 Goldman Sachs Group, Inc. ..................... 600 51,060 J.P. Morgan Chase & Company ................... 3,425 153,782 Merrill Lynch & Company, Inc. ................. 900 49,860 Morgan Stanley Dean Witter & Company .......... 800 42,800 -------- 578,958 DRUG RETAIL - 0.8% Walgreen Company .............................. 1,200 48,960 ELECTRICAL COMPONENTS & EQUIPMENT - 0.9% Molex, Inc. ................................... 1,550 54,686 ELECTRONIC EQUIPMENT & INSTRUMENTS - 1.0% Sanmina Corporation* .......................... 3,000 58,688 FOOD RETAIL - 1.2% Safeway, Inc.* ................................ 1,300 71,695 GAS UTILITIES - 1.2% El Paso Energy Corporation .................... 1,100 71,830 GENERAL MERCHANDISE STORES - 3.5% Target Corporation ............................ 2,000 72,160 Wal-Mart Stores, Inc. ......................... 2,850 143,925 -------- 216,085 HEALTH CARE DISTRIBUTORS & SERVICES - 0.7% Cardinal Health, Inc........................... 450 43,537 HEALTH CARE EQUIPMENT - 3.1% Baxter International, Inc. .................... 500 47,070 Guidant Corporation* .......................... 1,100 49,489 Medtronic, Inc. ............................... 2,000 91,480 -------- 188,039 HEALTH CARE FACILITIES - 0.4% Tenet Healthcare Corporation* ................. 600 26,400 HOME IMPROVEMENT RETAIL - 1.1% Home Depot, Inc. .............................. 1,600 68,960 HOUSEHOLD PRODUCTS - 1.3% Colgate-Palmolive Company ..................... 650 35,919 Kimberly-Clark Corporation .................... 600 40,698 -------- 76,617 INDUSTRIAL CONGLOMERATES - 6.5% General Electric Company ...................... 6,950 290,927 Tyco International, Ltd. ...................... 2,500 108,075 -------- 399,002 INDUSTRIAL GASES - 0.4% Praxair, Inc. ................................. 600 26,790
See accompanying notes. 43 45 SCHEDULE OF INVESTMENTS [Graphic] MARCH 31, 2001 (UNAUDITED) SECURITY EQUITY FUND - TOTAL RETURN SERIES (CONTINUED)
NUMBER MARKET COMMON STOCKS (CONTINUED) OF SHARES VALUE -------------------------------------------------------------------------------- INDUSTRIAL MACHINERY - 1.3% Illinois Tool Works, Inc. ................ 1,450 $ 82,418 INTEGRATED OIL & GAS - 4.6% Chevron Corporation ...................... 900 79,020 Exxon Mobil Corporation .................. 1,550 125,550 Royal Dutch Petroleum Company ............ 1,350 74,844 ---------- 279,414 INTEGRATED TELECOMMUNICATION SERVICES - 4.0% BellSouth Corporation .................... 1,100 45,012 Qwest Communications International, Inc.* ................... 1,550 54,327 SBC Communications, Inc. ................. 1,450 64,713 Verizon Communications, Inc. ............. 1,200 59,160 XO Communications, Inc.* ................. 2,900 20,300 ---------- 243,512 INTERNET RETAIL - 0.5% eBay, Inc.* .............................. 800 28,950 INTERNET SOFTWARE & SERVICES - 0.7% Openwave Systems, Inc.* .................. 400 7,936 Yahoo! Inc.* ............................. 2,200 34,650 ---------- 42,586 IT CONSULTING & SERVICES - 0.5% Computer Sciences Corporation* ........... 1,000 32,350 LIFE & HEALTH INSURANCE - 0.6% Metlife, Inc. ............................ 1,300 39,065 MOTORCYCLE MANUFACTURERS - 1.6% Harley-Davidson, Inc. .................... 2,650 100,568 MOVIES & ENTERTAINMENT - 2.9% AOL Time Warner, Inc.* ................... 2,650 106,398 Metro-Goldwyn-Mayer, Inc.* ............... 1,200 20,568 Viacom, Inc. (Cl. B)* .................... 1,200 52,764 ---------- 179,730 MULTI-LINE INSURANCE - 1.9% American International Group, Inc. ............................ 1,412 113,666 MULTI-UTILITIES - 1.5% Williams Companies, Inc. ................. 2,100 89,985 NETWORKING EQUIPMENT - 1.4% Cisco Systems, Inc.* ..................... 5,300 83,806 OFFICE SERVICES & SUPPLIES - 0.6% Avery Dennison Corporation ............... 750 39,015 OIL & GAS EQUIPMENT & SERVICES - 0.8% Schlumberger, Ltd. ....................... 850 48,969 PERSONAL PRODUCTS - 0.5% Estee Lauder Companies, Inc. ............. 900 32,778
PRINCIPAL AMOUNT OR NUMBER MARKET COMMON STOCKS (CONTINUED) OF SHARES VALUE -------------------------------------------------------------------------------- PHARMACEUTICALS - 7.1% Abbott Laboratories ...................... 1,000 $ 47,190 American Home Products Corporation ............................ 1,100 64,625 Bristol-Myers Squibb Company ............. 1,200 71,280 Johnson & Johnson ........................ 1,100 96,217 Merck & Company, Inc. .................... 1,000 75,900 Pfizer, Inc. ............................. 800 32,760 Schering-Plough Corporation .............. 1,300 47,489 ---------- 435,461 PUBLISHING & PRINTING - 2.7% Gannett Company, Inc. .................... 400 23,888 McGraw-Hill Companies, Inc. .............. 1,400 83,510 New York Times Company ................... 1,500 61,455 ---------- 168,853 SEMICONDUCTOR EQUIPMENT - 1.3% Applied Materials, Inc.* ................. 1,800 78,300 SEMICONDUCTORS - 2.6% Intel Corporation ........................ 4,500 118,406 Micron Technology, Inc.* ................. 1,000 41,530 ---------- 159,936 SPECIALTY STORES - 0.2% Tiffany & Company ........................ 500 13,625 SYSTEMS SOFTWARE - 4.3% Microsoft Corporation* ................... 4,300 235,156 Oracle Corporation* ...................... 2,000 29,960 ---------- 265,116 TELECOMMUNICATIONS EQUIPMENT - 2.8% Comverse Technology, Inc.* ............... 1,050 61,835 Nokia Oyj ADR ............................ 1,900 45,600 Nortel Networks Corporation .............. 2,000 28,100 Tellabs, Inc.* ........................... 900 36,619 ---------- 172,154 WIRELESS TELECOMMUNICATIONS SERVICES - 0.7% Sprint Corporation (PCS Group) ........... 2,400 45,600 ---------- Total common stocks - 98.6% ............................... 6,056,075 REPURCHASE AGREEMENT - 1.3% United Missouri Bank, 4.84%, 03-30-01 (Collateralized by FHLMC DN, 05-15-01 with a value of $83,000) $80,000 80,000 ---------- Total investments - 99.9% .................................. 6,136,075 Cash and other assets, less liabilities - 0.1% ............. 5,606 ---------- Total net assets - 100.0% .................................. $6,141,681 ==========
The identified cost of investments owned at March 31, 2001 was the same for federal income tax and financial statement purposes. * Non-Income producing security. ADR (American Depositary Receipt) See accompanying notes. 44 46 MANAGER'S COMMENTARY [Graphic] SECURITY EQUITY FUND - SELECT 25(R) SERIES MAY 15, 2001 [Picture] Terry Milberger Senior Portfolio Manager [SECURITY FUNDS LOGO] Advisor, Security Management Company TO OUR SHAREHOLDERS: The six-month period ended March 31, 2001 was a very difficult period for equity investors. Security Select 25 Fund was not immune to the market downturn, falling 23.02% during the period while its benchmark index, the S&P 500 Stock Index, lost 18.75%.(1) The concentrated nature of the portfolio, investing in only 20 to 30 stocks, makes it generally more volatile than more diversified portfolios. TECHNOLOGY STOCKS LED THE DECLINE; INDUSTRIALS UNDERPERFORMED ALSO While we focus on selection of individual stocks and don't generally emphasize sector weightings in this portfolio, the stocks we held which were technology-related were the largest detractors from total return. Networking company Cisco Systems, Inc. fell 71% as investors became concerned that an economic slowdown would damage business prospects for Cisco. When the company announced that its revenues and earnings would fall short of analysts' expectations, it confirmed investors' worries. EMC Corporation, the premier company in the computer storage arena, dropped 70% on the same kinds of concerns. Industrial conglomerates also came under fire as the economy weakened. Diversified manufacturers General Electric Company and Tyco International Ltd. were down 27% and 32% respectively, suffering from the perception that sales of their variety of products would weaken and earnings would decline. STILL, SOME POSITIVES AMID THE GENERAL GLOOM Kohl's Corporation, an operator of family-oriented specialty department stores, gained almost 7% during the six months and reported earnings that exceeded analysts' expectations. Retailing stocks fell at the beginning of the economic slowdown on fears that customers would sharply reduce spending. When the spending decline was less than initially expected, the stocks recovered nicely. Omnicom Group Inc. provides marketing communications and advertising services for its clients. As with Kohl's, investors perceived that an economic downturn would bring with it a reduction in spending--in this case for advertising, an area that frequently is the first to be trimmed back in a cost cutting process--but the stock rebounded in the first quarter of 2001 to produce a net gain of 14% for the six-month period. Another premier name in its industry, Colgate-Palmolive Company, rose nearly 18% during the period as it steadily reported better sales and earnings numbers than were expected. The company also benefited from its defensive nature, since it sells products that consumers buy through good economic times and bad. PREMIER COMPANY STOCKS SHOULD PERFORM WELL IN A RECOVERING ECONOMY In the Select 25 Fund we try to choose stocks which represent the premier companies in their industries with the expectation that over the long term, companies which produce consistent earnings streams will perform well. We believe the Federal Reserve will continue to cut interest rates as often as needed to get the U.S. economy solidly back on the recovery track. The combination of lower interest rates and expected income tax reductions should rebuild consumer confidence, as well. We look for equity returns to be more favorable in the second half of the calendar year, generating more positive results for shareholders. Sincerely, Terry Milberger Senior Portfolio Manager (1) Performance figures are based on Class A shares and do not reflect deduction of the sales charge. 45 47 MANAGER'S COMMENTARY (CONTINUED) SECURITY EQUITY FUND - SELECT 25(R) SERIES [Graphic] MAY 15, 2001 PERFORMANCE
TOP 5 HOLDINGS** ---------------- % OF NET ASSETS ---------- Home Depot,Inc. 5.3% Automatic Data Processing,Inc. 5.2% Omnicom Group, Inc. 5.1% General Electric Company 5.1% Pfizer, Inc. 5.0%
**At March 31, 2001
AVERAGE ANNUAL RETURNS AS OF MARCH 31, 2001 ---------------------- 1 YEAR SINCE INCEPTION ------ --------------- AShares (28.91%) (6.07%) (1-29-99) AShares with sales charge (33.00%) (8.60%) (1-29-99) B Shares (29.51%) (6.72%) (1-29-99) B Shares with CDSC (33.03%) (8.02%) (1-29-99) C Shares (29.49%) (6.57%) (1-29-99) C Shares with CDSC (30.20%) (6.57%) (1-29-99) S Shares N/A (19.23%) (2-01-01) S Shares with CDSC N/A (24.08%) (2-01-01)
The performance data above represents past performance which 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 Ashares or the contingent deferred sales charge of 5% for Class B shares, 1% for Class C shares and 6% for Class S shares, as applicable, except where noted. For Class S shares, the returns have been calculated from February 1, 2001 (date of inception) to March 31, 2001 and are not annualized. Such figures would be lower if the maximum sales charge were deducted. 46 48 SCHEDULE OF INVESTMENTS [Graphic] MARCH 31, 2001 (UNAUDITED) SECURITY EQUITY FUND - SELECT 25(R) SERIES
NUMBER MARKET COMMON STOCKS OF SHARES VALUE ------------- --------- ----- ADVERTISING - 5.1% Omnicom Group, Inc................................. 22,700 $1,881,376 BROADCASTING & CABLE TV- 9.1% Clear Channel Communications, Inc.*............................. 33,000 1,796,850 Univision Communications, Inc.*.................... 39,700 1,514,952 ---------- 3,311,802 COMPUTER STORGAGE & PERIPHERALS - 1.8% EMC Corporation*................................... 22,000 646,800 DATA PROCESSING SERVICES - 5.2% Automatic Data Processing, Inc. ................... 34,800 1,892,424 DEPARTMENT STORES - 2.5% Kohl's Corporation* ............................... 15,000 925,350 DIVERSIFIED FINANCIAL SERVICES - 4.9% Citigroup, Inc. ................................... 40,000 1,799,200 DRUG RETAIL - 5.0% Walgreen Company .................................. 45,000 1,836,000 GENERAL MERCHANDISE STORES - 4.9% Wal-Mart Stores, Inc. ............................. 35,500 1,792,750 HEALTH CARE EQUIPMENT - 4.7% Medtronic, Inc. ................................... 37,700 1,724,398 HOME IMPROVEMENT RETAIL - 5.3% Home Depot, Inc. .................................. 45,000 1,939,500 INDUSTRIAL CONGLOMERATES - 7.4% General Electric Company .......................... 44,300 1,854,398 Tyco International, Ltd. .......................... 20,000 864,600 ---------- 2,718,998 MOTORCYCLE MANUFACTURERS - 4.2% Harley-Davidson, Inc. ............................. 40,200 1,525,590 MOVIES & ENTERTAINMENT - 3.6% Viacom, Inc. (CLB)* ............................... 30,000 1,319,100 MULTI-LINE INSURANCE - 4.0% American International Group, Inc. ....................................... 18,000 1,449,000 NETWORKING EQUIPMENT - 1.5% Cisco Systems, Inc.* .............................. 35,000 553,438 PHARMACEUTICALS - 9.0% Pfizer, Inc. ...................................... 45,000 1,842,750 Schering-Plough Corporation ....................... 40,000 1,461,200 ---------- 3,303,950 SEMICONDUTOR EQUIPMENT - 2.5% Applied Materials, Inc.* .......................... 21,000 913,500 SEMICONDUCTORS - 2.9% Intel Corporation ................................. 40,000 1,052,500
PRINCIPAL AMOUNT OR NUMBER MARKET COMMON STOCKS (CONTINUED) OF SHARES VALUE ------------------------- --------- ------ SYSTEMS SOFTWARE - 3.7% Microsoft Corporation* ............................ 25,000 $ 1,367,187 TELECOMMUNICATIONS EQUIPMENT - 2.6% Comverse Technology, Inc.* ........................ 16,000 942,240 ----------- Total common stocks - 89.9% ................................ 32,895,103 U.S. GOVERNMENT & AGENCIES Federal Home Loan Bank Discount Corporation, 4.74% - 04-12-01 ................................. $1,100,000 1,196,335 Federal Home Loan Mortgage Corporation, 4.78% - 04-24-01 ................................. $1,200,000 1,098,407 ----------- Total U.S. government & agencies - 6.3% ..................... 2,294,742 REPURCHASE AGREEMENT - 3.9% United Missouri Bank, 5.03%, 04-02-01 (Collateralized by FHLMC, 05-15-01 with a value of $1,455,000) .................................. $1,418,000 1,418,000 ------------ Total investments - 100.1% ................................... 36,607,845 Liabilities, less cash and other assets - (0.1%) ............. (36,260) ------------ Total net assets - 100.0% ...................... $36,571,585 ============
The identified cost of investments owned at March 31, 2001 was the same for federal income tax and financial statement purposes. * Non-Income producing security. See accompanying notes. 47 49 \ MANAGER'S COMMENTARY [GRAPHIC] SECURITY ULTRA FUND MAY 15, 2001 [Security Funds LOGO] Advisor, Security Management Company [James P. Schier PHOTO] James P. Schier Portfolio Manager TO OUR SHAREHOLDERS: The six months ended March 31, 2001 were very difficult for many stock mutual funds, particularly those featuring growth stocks. Security Ultra Fund, while tumbling along with the broader stock markets, managed to outperform its benchmark index. The Fund generated a total return of -23.76% over the period, while the benchmark S&P/Barra Midcap Growth Index returned -30.21%.(1) CONSUMER-ORIENTED STOCKS HELD THEIR VALUE WELL The best performing sector in the Ultra Fund portfolio over the six months was consumer staples. Stocks in this sector are considered defensive in negative market periods, since they represent products such as food and drugs that consumers need and will continue to buy in any market environment. For example, the stock of CVS Corporation, which owns drug store chains CVS Pharmacy and Revco, gained 29% during the period we held it in the portfolio. In addition to its defensive characteristics, CVS continues to generate a stable earnings stream. Our holdings in the consumer discretionary sector were strong performers as well. Mattel, Inc., maker and marketer of a variety of children's products, rose over 58% as earnings exceeded expectations. Lands'End, Inc., which sells clothing, bedding, and other products primarily through mail order and Internet channels, gained 30% during the six-month period. The company reported higher than expected earnings after recently completing a restructuring of its back office operations and bringing its inventories into balance. While we only held one utility company in the portfolio, that stock performed well when compared with other utilities. Dynegy Inc. provides energy and communications services, and transmits and distributes electricity and natural gas. Dynegy was able to sell excess power into the struggling California market, and as a result its stock lost just over 10% while the benchmark utilities sector fell 36%. TECHNOLOGY AND BIOTECH STOCKS CONTINUE THEIR SLIDE The well-publicized selloff in the technology sector continued throughout the six months. While our technology holdings fell less than those in the corresponding benchmark sector, they still declined on average 40% compared with the benchmark tech sector's 49% loss. Rational Software Corporation fell 74%; Acxiom Corporation, which provides information management services, lost 34%; and telecommunications company Comverse Technology, Inc. declined 45% during the period. Many of the biotechnology companies that ran up to extremely high valuation levels in the 1999 and early 2000 "tech mania" markets reversed direction and slipped sharply. Applied Biosystems Group fell 76% after its earnings fell short of analysts' expectations. Additionally, investors fear that the company's customers may not be able to secure funding needed to support their growth, and consequently demand for its DNA sequencers might shrink. Millennium Pharmaceuticals, Inc. lost about 58% in value after a study suggested that getting new drugs through clinical trials in a timely fashion is increasingly difficult and may be a major barrier to getting new products to market. FINANCIAL STOCKS EXPERIENCE PROBLEMS ALSO Two holdings in the financial sector contributed to negative performance during the six months. AFLAC Incorporated fell almost 17% on investor concerns about Japan's continuing economic weakness. About two-thirds of AFLAC's business is selling cancer insurance in Japan. The company is now entering the U.S. supplemental insurance market, which should provide growth in the future. Northern Trust Corporation is a multi-bank holding company which provides trust and investment services as well as general banking services. The company derives a sizeable portion of its earnings from fee income, which has been hurt by falling stock prices. While their operations remain sound, their stock price reflects the general malaise in the equity markets. 48 50 MANAGER'S COMMENTARY (CONTINUED) [GRAPHIC] SECURITY ULTRA FUND MAY 15, 2001 WEAK MARKETS PROVIDE GOOD BUYING OPPORTUNITIES Although it may sound strange in a period when stock markets have exhibited extreme weakness, we believe this a much better time to invest than it was two or three years ago. Because of the market downturn, stock prices have reached more rational levels for investors who are long oriented. Market selloffs allow fund managers to reposition their portfolios so that they can capture gains once prices begin to rise. We are beginning to make some changes of this nature, having repositioned about 5% of portfolio assets in anticipation of a market turnaround. We undertake these moves cautiously, since we don't presume to know precisely when the market bottom has been reached, but we believe over the long term the portfolio will benefit from a slightly more aggressive positioning. Sincerely, Jim Schier Senior Portfolio Manager (1) Performance figures are based on Class A shares and do not reflect deduction of the sales charge. PERFORMANCE TOP 5 HOLDINGS**
% OF NET ASSETS ---------- Mattel, Inc......................................................... 4.0% Ocean Energy,Inc.................................................... 3.3% Acxiom Corporation.................................................. 3.1% Mylan Laboratories,Inc.............................................. 3.0% Teva Pharmaceutical Industries, Ltd. ADR............................ 3.0% **At March 31, 2001
AVERAGE ANNUAL RETURNS AS OF MARCH 31, 2001
1 YEAR 5 YEARS 10 YEARS --------- ------- -------- A Shares....................... (19.66%) 18.41% 14.41% A Shares with sales charge..... (24.25%) 17.02% 13.74% B Shares....................... (20.54%) 17.25% 13.80% (10-19-93) (since inception) B Shares with CDSC............. (24.51%) 17.04% 13.80% (10-19-93) (since inception) C Shares....................... (20.64%) 18.34% N/A (1-29-99) (since inception) C Shares with CDSC............. (21.43%) 18.34% N/A (1-29-99) (since inception) S Shares....................... (19.20%) N/A N/A (2-01-01) (since inception) S Shares with CDSC............. (24.04%) N/A N/A (2-01-01) (since inception)
The performance data above represents past performance which 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, 1% for Class C shares and 6% for Class S shares, as applicable, except where noted. For Class S shares, the returns have been calculated from February 1, 2001 (date of inception) to March 31, 2001 and are not annualized. Such figures would be lower if the maximum sales charge were deducted. 49 51 SCHEDULE OF INVESTMENTS [Graphic] MARCH 31, 2001 (UNAUDITED) SECURITY ULTRA FUND
NUMBER MARKET COMMON STOCKS OF SHARES VALUE ------------------------------------------------------------------------------ ADVERTISING - 0.4% TMP Worldwide, Inc.* ...................... 20,000 $ 751,250 AIR FREIGHT & COURIERS - 1.3% Expeditors International of Washington, Inc. 50,000 2,521,875 APPLICATION SOFTWARE - 10.1% AVT Corporation*.......................... 100,000 281,250 Cerner Corporation*....................... 48,900 1,674,825 Electronic Arts, Inc.*.................... 20,400 1,106,700 EPIQ Systems, Inc.* ...................... 37,500 759,375 EPIQ Systems, Inc.*(2).................... 114,000 2,273,559 HNC Software, Inc.*....................... 23,000 403,938 Hyperion Solutions Corporation*........... 145,400 2,344,575 Jack Henry & Associates, Inc.............. 178,900 4,237,694 Peregrine Systems, Inc.*.................. 154,575 3,014,213 Rational Software Corporation*............ 205,000 3,638,750 Take-Two Interactive Software, Inc.*...... 50,000 713,281 ----------- 20,448,160 AUTO PARTS & EQUIPMENT - 1.7% Federal Signal Corporation................ 58,600 1,144,458 Gentex Corporation*....................... 100,000 2,312,500 ----------- 3,456,958 BANKS - 1.6% Northern Trust Corporation................ 52,000 3,250,000 BIOTECHNOLOGY - 7.1% Alexion Pharmaceuticals, Inc.*............ 81,800 1,866,063 Arena Pharmaceuticals, Inc.*.............. 13,000 231,563 Biopure Corporation*...................... 31,500 419,344 Enzon, Inc.*.............................. 40,000 1,900,000 Gene Logic, Inc.*......................... 79,400 1,329,950 Ligand Pharmaceuticals, Inc. (Cl. B)*..... 200,000 1,956,250 Millennium Pharmaceuticals*............... 110,000 3,350,600 Progenics Pharmaceuticals, Inc.*.......... 6,500 74,344 Titan Pharmaceuticals, Inc.*.............. 140,000 3,108,000 ----------- 14,236,114 BROADCASTING & CABLE TV- 2.1% CINAR Corporation (Cl. B)*................ 349,600 1,223,600 Salem Communications Corporation*......... 125,200 2,034,500 Sirius Satellite Radio, Inc.*............. 40,500 503,719 XM Satellite Radio Holdings, Inc.*........ 63,100 437,756 ----------- 4,199,575 BUILDING PRODUCTS - 0.5% Crane Company............................. 40,200 1,047,210 CATALOG RETAIL - 1.2% Lands' End, Inc.*......................... 86,000 2,360,700 DIVERSIFIED COMMERCIAL SERVICES - 1.7% DeVry, Inc.*.............................. 115,000 3,455,750 DIVERSIFIED TELECOMMUNICATION SERVICES - 0.2% RCN Corporation*.......................... 75,000 452,344 ELECTRICAL COMPONENTS & EQUIPMENT - 0.7% Baldor Electric Company................... 8,600 181,030 Evercel, Inc.*............................ 150,000 1,228,125 ----------- 1,409,155 ELECTRONIC EQUIPMENT & INSTRUMENTS - 3.4% Lernout & Hauspie Speech Products N.V.*... 197,200 354,960 Maxwell Technologies, Inc.*............... 190,000 3,657,500 PerkinElmer, Inc.......................... 10,800 566,460 Sawtek, Inc.*............................. 32,000 570,000 Trimble Navigation, Ltd.*................. 84,600 1,602,113 ----------- 6,751,033 GOLD - 0.6% Placer Dome, Inc.......................... 145,000 1,254,250 HEALTH CARE DISTRIBUTORS & SERVICES - 3.2% Cardinal Health, Inc...................... 18,000 1,741,500 CryoLife, Inc.*........................... 78,450 2,034,208 Hooper Holmes, Inc........................ 300,000 2,577,000 ----------- 6,352,708 HEALTH CARE EQUIPMENT - 5.4% Applera Corporation - Applied Biosystems Group 58,900 1,634,475 Becton, Dickinson & Company............... 58,000 2,048,560 Bioject Medical Technologies, Inc.*....... 80,000 875,000 Closure Medical Corporation*.............. 168,000 2,856,000 INAMED Corporation*....................... 60,000 1,425,000 Micro Therapeutics, Inc.*................. 200,000 1,075,000 ORATEC Interventions, Inc.*............... 115,000 927,187 ----------- 10,841,222 HEALTH CARE SUPPLIES - 0.2% Akorn, Inc.*.............................. 217,500 441,797 INDUSTRIAL MACHINERY - 1.6% Catalytica Energy Systems, Inc.*.......... 11,913 249,428 Flowserve Corporation*.................... 74,000 1,660,560 Ingersoll-Rand Company.................... 33,500 1,330,285 ----------- 3,240,273 INTERNET SOFTWARE & SERVICES - 0.1% Liquid Audio, Inc.* ...................... 80,000 195,000
See accompanying notes. 50 52 SCHEDULE OF INVESTMENTS [GRAPHIC] MARCH 31, 2001 (UNAUDITED) SECURITY ULTRA FUND (CONTINUED)
NUMBER MARKET COMMON STOCKS (CONTINUED) OF SHARES VALUE ------------------------------------------------------------------------------ IT CONSULTING & SERVICES - 6.9% Acxiom Corporation*(1)......................... 301,800 $ 6,300,075 Computer Sciences Corporation*................. 60,000 1,941,000 Keane, Inc.*................................... 225,000 2,925,000 Safeguard Scientifics, Inc.*................... 250,000 1,397,500 SunGard Data Systems, Inc.*.................... 30,000 1,476,900 ----------- 14,040,475 LEISURE PRODUCTS - 4.0% Mattel, Inc................................... 450,000 7,983,000 LIFE & HEALTH INSURANCE - 2.2% AFLAC, Inc.(1)................................ 164,000 4,516,560 MULTI-UTILITIES - 2.0% Dynegy, Inc................................... 80,000 4,080,800 NETWORKING EQUIPMENT - 0.1% Packeteer, Inc.*.............................. 89,800 272,206 OIL & GAS DRILLING - 4.0% ENSCO International, Inc...................... 94,600 3,311,000 Nabors Industries, Inc.*...................... 46,250 2,397,600 Transocean Sedco Forex, Inc................... 56,150 2,434,102 ----------- 8,142,702 OIL & GAS EQUIPMENT & SERVICES - 1.1% Tidewater, Inc................................ 50,000 2,260,000 OIL & GAS EXPLORATION & PRODUCTION - 10.0% Anadarko Petroleum Corporation................ 17,800 1,117,484 Apache Corporation............................ 89,000 5,127,290 Callon Petroleum Company*..................... 105,000 1,296,750 Evergreen Resources, Inc.*.................... 61,500 2,325,315 Ocean Energy, Inc............................. 400,000 6,620,000 Triton Energy, Ltd.*.......................... 200,000 3,754,000 ----------- 20,240,839 PHARMACEUTICALS - 7.6% Guilford Pharmaceuticals, Inc.*............... 63,200 1,169,200 Mylan Laboratories, Inc....................... 237,300 6,134,205 Penwest Pharmaceuticals Company*.............. 60,000 742,500 Teva Pharmaceutical Industries, Ltd. ADR...... 110,000 6,008,750 United Therapeutics Corporation*.............. 80,000 1,395,000 ----------- 15,449,655 PUBLISHING & PRINTING - 2.8% E.W. Scripps Company(1)....................... 92,600 5,368,022 John Wiley & Sons, Inc........................ 13,600 257,040 ----------- 5,625,062 RAILROADS - 0.7% RailAmerica, Inc.*........................... 150,000 1,500,000 SEMICONDUCTORS - 4.3% Advanced Power Technology, Inc.*............................ 59,500$ 661,938 Alpha Industries, Inc.*...................... 55,000 866,250 Atmel Corporation*........................... 300,000 2,943,750 IXYS Corporation*............................ 120,000 1,890,000 Power Integrations, Inc.*.................... 107,500 1,854,375 SONICblue, Inc.*............................. 101,000 479,750 ----------- 8,696,063 SPECIALTY CHEMICALS - 0.8% Material Sciences Corporation*............... 105,200 846,860 Rentech, Inc.*............................... 553,000 829,500 ----------- 1,676,360 SYSTEMS SOFTWARE - 3.1% DST Systems, Inc.*........................... 27,280 1,314,623 Symantec Corporation*........................ 105,000 4,390,312 Wind River Systems, Inc.*.................... 24,000 558,000 ----------- 6,262,935 TELECOMMUNICATIONS EQUIPMENT - 3.5% ADTRAN, Inc.*................................ 80,000 1,965,000 Avici Systems, Inc.*......................... 144,900 1,159,200 Comverse Technology, Inc.*................... 58,000 3,415,620 Terayon Communication Systems, Inc.*......... 110,000 501,875 Transcrypt International, Inc.*.............. 166,500 38,295 ----------- 7,079,990 ----------- Total common stocks - 96.2%................ 194,492,021
See accompanying notes. 51 53 SCHEDULE OF INVESTMENTS [Graphic] MARCH 31, 2001 (UNAUDITED) SECURITY ULTRA FUND (CONTINUED)
PRINCIPAL MARKET U.S. GOVERNMENT & AGENCIES AMOUNT VALUE ------------------------------------------------------------------------------- FEDERAL HOME LOAN BANK - 2.0% Federal Home Loan Bank Corporation, 5.09%, 04-04-2001 ........................ $1,400,000 $ 1,399,434 4.99%, 04-06-2001 ........................ 2,500,000 2,498,267 ------------ 3,897,701 FEDERAL HOME LOAN MORTGAGE - 2.0% Federal Home Loan Mortgage Corporation, 5.10%, 04-03-2001 ........................ 2,000,000 1,999,433 4.78%, 04-24-2001 ........................ 2,100,000 2,093,587 ------------ 4,093,020 FEDERAL NATIONAL MORTGAGE ASSOCIATION - 0.8% Federal National Mortgage Association, 4.85%, 04-26-2001 ........................ 1,700,000 1,694,274 ------------ Total U.S. government & agencies - 4.8% .. 9,684,995 REPURCHASE AGREEMENT - 0.2% United Missouri Bank, 5.03% - 04-02-01 (Collateralized by FHLMC, 04-04-01 with a value of $478,000) ................ 468,000 468,000 ------------ Total investments - 101.2% ................................... 204,645,016 Liabilities, less cash and other assets - (1.2%) ............. (2,567,029) ------------ Total net assets - 100.0% .................................... $202,077,987 ============
The identified cost of investments owned at March 31, 2001 was the same for federal income tax and financial statement purposes. * Non-Income producing security ADR (American Depositary Receipt) (1) Security is segregated as collateral for futures, options or forward contracts. (2) PIPES - 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. See accompanying notes. 52 54 MANAGER'S COMMENTARY [Graphic] SECURITY EQUITY FUND - LARGE CAP GROWTH SERIES MAY 15, 2001 [Picture] Cindy L. Shields Portfolio Manager [SECURITY FUNDS LOGO] Advisor, Security Management Company TO OUR SHAREHOLDERS: The six months ended March 31, 2001 proved to be extremely difficult for equity investors, particularly in the growth stock realm. Security Large Cap Growth Fund outperformed its benchmark index, falling 31.00% compared with a decline of 31.23% in the S&P/Barra Growth Index.(1) TECHNOLOGY STOCKS CONTINUED THEIR DOWNWARD TREND A confluence of events drove prices of technology-related stocks skyward in 1999 and early 2000. Corporate America invested heavily to upgrade its systems prior to the "Y2K" century change event. At the same time, venture capital money was flowing freely into the "dot.com" startup companies and into telecommunication services stocks. This strong demand ran the prices of many companies up well beyond reasonable valuation levels. When the Federal Reserve stepped in with interest rate increases and signs of an economic slowdown emerged in the first half of 2000, these overvalued stocks began to slip. The price declines continued unabated through the year and into 2001, and had the greatest negative impact on the Large Cap Growth Fund's return over the six month period. Networking products provider Cisco Systems fell 71%, telecommunications equipment company Nortel Networks Corporation dropped 38% during the time we owned the stock, and applications software firm Siebel Systems, Inc. lost 75% during the period. FINANCIAL STOCKS ALSO UNDERPERFORMED In the financial sector, companies with a consumer orientation suffered as the market declined and consumers' debt burdens increased. The stock of financial service provider The Charles Schwab Corporation lost 56% in value as the markets declined and stock-related activity slowed sharply. Morgan Stanley Dean Witter & Company, the investment banking firm, suffered as well from market-related business slowdown as well as from a perception that its Discover Card business might be hurt by the economic weakness. POSITIVE RESULTS IN CONSUMER STAPLES, DISCRETIONARIES, AND HEALTH CARE Still, there were positives in an otherwise depressed market climate. The consumer staples sector, generally defensive in nature, provided favorable returns in the portfolio. Kimberly-Clark Corporation rose 22%, gaining market share and posting strong earnings resulting from innovative new product introductions. Colgate-Palmolive Company was up 17% as the company reaped the benefits of excellent cost controls. Retail food chain Safeway Inc. rose 18% over the six months as identical store sales increased. Safeway's management has been effective at growing the business; the company also has a good private label business. Two retailing companies in the consumer discretionary sector contributed favorably to total return. Kohl's Corporation operates a chain of specialty department stores featuring moderately priced apparel and housewares. Sales for Kohl's in stores that have been open at least twelve months rose 15% in December from the year-earlier figures; the stock gained 6% over the six months period. Wal-Mart Stores, Inc., a premier discount store operator, gained 5% as sales held up well despite the slowing economy. In the health care sector, another area which generally holds its value in down markets, American Home Products Corporation rose 4% after informing investors they had fully reserved for losses related to legal issues surrounding its diet products, now taken off the market. Bristol-Myers Squibb Company also gained 4% in a rebound from a pummeling it took in April of 2000 when it delayed seeking U.S. approval of its Vanlev blood pressure pill. A third pharmaceutical company, Forest Laboratories, Inc., was up 3% on excellent growth of its antidepressant drug Celexa. The drug is low cost, and has few side effects. 53 55 MANAGER'S COMMENTARY (CONTINUED) [GRAPHIC] SECURITY EQUITY FUND - LARGE CAP GROWTH SERIES MAY 15, 2001 GOOD PROSPECTS FOR A MARKET RECOVERY IN THE SECOND HALF We expect the stock markets to improve over the course of the second half of the fiscal year. The Federal Reserve's interest rate cuts and the prospect of lower income tax rates should boost consumer confidence and lead to an economic recovery. In the past, the stock markets have anticipated economic upturns, moving into positive territory several months prior to confirmation of a recovery through economic data. The market selloffs throughout the past year have returned stock valuations in many cases to more attractive, reasonable levels, setting the stage for more favorable performance in the months ahead. Sincerely, Cindy Shields Portfolio Manager (1) Performance figures are based on Class Ashares and do not reflect deduction of the sales charge. PERFORMANCE TOP 5 HOLDINGS**
% OF NET ASSETS ---------- General Electric Company 8.2% Microsoft Corporation 5.7% Pfizer, Inc. 5.4% American International Group, Inc. 3.9% International Business Machines Corporation 3.4%
**At March 31, 2001 AVERAGE ANNUAL RETURNS AS OF MARCH 31, 2001
SINCE INCEPTION ----------------------- AShares (33.00%) (5-1-00) AShares with sales charge (36.85%) (5-1-00) B Shares (33.70%) (5-1-00) B Shares with CDSC (37.02%) (5-1-00) C Shares (33.50%) (5-1-00) C Shares with CDSC (34.17%) (5-1-00) S Shares (20.62%) (2-1-01) S Shares with CDSC (25.38%) (2-1-01)
The performance data above represents past performance which is not predictive of future results. The returns have been calculated from May 1, 2000 (date of inception) to March 31, 2001 for Class A, Class B and Class C shares and are not annualized. For Class S shares, the returns have been calculated from February 1, 2001 (date of inception) to March 31, 2001 and are not annualized. 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 Ashares or the contingent deferred sales charge of 5% for Class B shares, 1% for Class C shares and 6% for Class S shares, as applicable, except where noted. Such figures would be lower if the maximum sales charge were deducted. 54 56 SCHEDULE OF INVESTMENTS [GRAPHIC] MARCH 31, 2001 (UNAUDITED) SECURITY EQUITY FUND - LARGE CAP GROWTH SERIES
NUMBER MARKET COMMON STOCKS OF SHARES VALUE ------------------------------------------------------------------------------ ADVERTISING - 0.4% Omnicom Group, Inc................................ 300 $ 24,864 APPLICATION SOFTWARE - 0.9% Check Point Software Technologies, LTD*........... 150 7,125 i2 Technologies, Inc.*............................ 600 8,738 Mercury Interactive Corporation*.................. 100 4,187 Rational Software Corporation*.................... 700 12,425 Siebel Systems, Inc.*............................. 1,000 27,200 -------- 59,675 BANKS - 1.1% Bank of New York Company, Inc..................... 1,000 49,240 Northern Trust Corporation........................ 300 18,750 -------- 67,990 BIOTECHNOLOGY - 1.0% Amgen, Inc........................................ 1,100 66,206 BREWERS - 0.8% Anheuser-Busch Companies, Inc..................... 1,200 55,116 BROADCASTING & CABLE TV- 1.0% Clear Channel Communications, Inc................. 376 20,473 Comcast Corporation............................... 700 29,356 Univision Communications, Inc.*................... 400 15,264 -------- 65,093 COMPUTER HARDWARE - 5.7% Celestica, Inc.*.................................. 700 19,306 Dell Computer Corporation*........................ 3,600 92,475 International Business Machines Corporation....... 2,300 221,214 Sun Microsystems, Inc.*........................... 2,800 43,036 Sycamore Networks, Inc.*.......................... 200 2,000 -------- 378,031 COMPUTER STORAGE & PERIPHERALS - 1.3% EMC Corporation................................... 2,600 76,440 McData Corporation*............................... 95 1,793 Network Appliance, Inc.*.......................... 500 8,406 -------- 86,639 DATA PROCESSING SERVICES - 0.6% Paychex, Inc...................................... 1,050 38,916 DEPARTMENT STORES - 1.0% Kohl's Corporation*............................... 500 30,845 May Department Stores Company..................... 900 31,932 -------- 62,777 DIVERSIFIED FINANCIAL SERVICES - 1.0% Charles Schwab Corporation........................ 1,100 16,962 Merrill Lynch & Company........................... 500 27,700 Morgan Stanley Dean Witter & Company.............. 400 21,400 -------- 66,062 DRUG RETAIL - 0.9% Walgreen Company.................................. 1,500 61,200 ELECTRONIC EQUIPMENT & INSTRUMENTS - 0.4% Sanmina Corporation*.............................. 1,200 23,475 FOOD RETAIL - 0.7% Safeway, Inc.*.................................... 800 44,120 GENERAL MERCHANDISE STORES - 3.1% Wal-Mart Stores, Inc.............................. 4,000 202,000 HEALTH CARE EQUIPMENT - 1.8% Applera Corporation - Applied Biosystems Group.......................... 300 8,325 Guidant Corporation............................... 800 35,992 Medtronic, Inc.................................... 1,600 73,184 -------- 117,501 HOME IMPROVEMENT RETAIL - 2.1% Home Depot, Inc................................... 3,200 137,920 HOUSEHOLD PRODUCTS - 2.6% Colgate-Palmolive Company......................... 700 38,682 Kimberly-Clark Corporation........................ 1,100 74,613 Procter & Gamble Company.......................... 900 56,340 -------- 169,635 INDUSTRIAL CONGLOMERATES - 9.0% General Electric Company.......................... 12,900 539,994 Tyco International, Ltd........................... 1,300 56,199 -------- 596,193 INSURANCE BROKERS - 0.6% Marsh & Mclennan Companies, Inc................... 400 38,012 INTEGRATED TELECOMMUNICATION SERVICES - 1.4% Qwest Communications, Inc*........................ 1,300 45,565 SBC Communications, Inc........................... 2,000 89,260 -------- 134,825 INTERNET & SOFTWARE SERVICES - 3.2% Yahoo! Inc.*...................................... 500 7,875 IT CONSULTING & SERVICES - 0.1% Sapient Corporation*.............................. 300 2,156
See accompanying notes. 55 57 SCHEDULE OF INVESTMENTS [Graphic] MARCH 31, 2001 (UNAUDITED) SECURITY EQUITY FUND - LARGE CAP GROWTH SERIES (CONTINUED)
NUMBER MARKET COMMON STOCKS (CONTINUED) OF SHARES VALUE ------------------------------------------------------------------------------ MOVIES & ENTERTAINMENT - 1.3% AOL Time Warner, Inc. ............................... 5,000 $200,750 Viacom, Inc. (Cl. B)* ............................... 1,900 83,543 -------- 284,293 MULTI-LINE INSURANCE - 3.9% American International Group, Inc.......................................... 3,200 257,600 NETWORKING EQUIPMENT - 2.5% Cisco Systems, Inc.* ................................ 9,400 148,638 Juniper Networks, Inc.* ............................. 200 7,592 -------- 156,230 PHARMACEUTICALS - 20.1% Allergan, Inc. ...................................... 700 51,905 ALZA Corporation* ................................... 1,500 60,750 American Home Products Corporation ........................................ 1,700 99,875 Bristol-Myers Squibb Company ........................ 2,800 166,320 Eli Lilly & Company ................................. 1,300 99,658 Forest Laboratories, Inc.* .......................... 700 41,468 Johnson & Johnson ................................... 1,800 157,446 Merck & Company, Inc. ............................... 2,300 174,570 Pfizer, Inc. ........................................ 8,650 354,218 Schering-Plough Corporation ......................... 2,300 84,019 Watson Pharmaceuticals, Inc.* ....................... 700 36,820 -------- 1,327,049 SEMICONDUCTOR EQUIPMENT - 0.7% Applied Materials, Inc.* ............................ 1,000 43,500 SEMICONDUCTORS - 4.7% Applied Micro Circuits Corporation* ....................................... 200 3,300 Broadcom Corporation* ............................... 300 8,670 Flextronics International, Ltd.* .................... 1,200 18,000 Intel Corporation ................................... 8,400 221,025 Micron Technology ................................... 1,000 41,530 PMC - Sierra, Inc.* ................................. 200 5,080 Xilinx, Inc.* ....................................... 300 10,538 -------- 308,143 SOFT DRINKS - 3.5% Coca-Cola Company ................................... 3,200 144,512 PepsiCo, Inc. ....................................... 2,000 87,900 -------- 232,412 SYSTEMS SOFTWARE - 8.5% Adobe Systems, Inc. ................................. 800 27,976 BEASystems, Inc.* ................................... 700 20,563 Microsoft Corporation* .............................. 6,900 377,343 Oracle Corporation* ................................. 6,600 98,868 VERITAS Software Corporation* ....................... 600 27,744 -------- 552,494
PRINCIPAL AMOUNT OR NUMBER MARKET COMMON STOCKS (CONTINUED) OF SHARES VALUE ------------------------------------------------------------------------------ TELECOMMUNICATIONS EQUIPMENT - 1.8% Comverse Technology, Inc.* .......................... 300 $ 17,667 Corning, Inc. ....................................... 1,000 20,690 Corvis Corporation* ................................. 100 703 JDS Uniphase Corporation* ........................... 1,000 18,438 QUALCOMM, Inc.* ..................................... 900 50,962 Scientific-Atlantic, Inc. ........................... 200 8,318 ---------- 116,778 WIRELESS TELECOMMUNICATION SERVICES - 0.4% Nextel Communications, Inc.* ........................ 700 10,062 Sprint Corporation (PCS Group)* ..................... 800 15,200 25,262 ---------- Total common stocks - 88.1% ................................... 5,810,042 ========== REPURCHASE AGREEMENT - 12.3% ---------------------------- State Street, 3.0%, 04-02-01 (Collateralized by FHLMC, 7.01%, 04-19-02 with a value of $831,129) ................................. $812,721 812,721 Total investments - 100.4% ................................... 6,622,763 Liabilities, less cash and other assets - (0.4%) ............. (30,383) ---------- Total net assets - 100.0% .................................... $6,592,380 ==========
The identified cost of investments owned at March 31, 2001 was the for federal income tax and financial statement purposes. * Non-Income producing security. See accompanying notes. 56 58 MANAGER'S COMMENTARY [Graphic] SECURITY EQUITY FUND - SMALL CAP GROWTH SERIES MAY 15, 2001 [Picture] Ronald C. Ognar Portfolio Manager [Picture] Brandon Nelson Portfolio Manager [STRONG LOGO] Subadvisor, Strong Capital Management TO OUR SHAREHOLDERS: The U.S. equity markets moved lower throughout the six-month period ended March 31, 2001, interrupted by a short lived rally in January. The primary cause of the correction was slowing earnings growth, brought on by a weaker economy and higher energy prices. The Security Small Cap Growth Fund fell 42.18% during the period, lagging its benchmark index, the Russell 2000 Growth Index, which declined 32.33%.(1) INVESTORS ABANDONED TECHNOLOGY STOCKS AND CHOSE DEFENSIVE ISSUES Technology stocks were the most negatively affected during the period as weakness in the personal computer sector and fears of a dramatic slowdown in telecommunications equipment spending pushed equity investors into more defensive categories such as health care and financial services. The markets moved upward briefly in January as the Federal Reserve showed a commitment to ease monetary policy by lowering its short-term interest rate targets. However, monetary policy takes time to work. The rally came under pressure as market participants worried that the Fed's actions were too little and too late. Several negative earnings announcements brought an end to the rally despite continued interest rate reductions. The portfolio was affected by the sharp selloff in telecommunications equipment and networking technology companies. During the first half of the six-month period (the fourth quarter of calendar 2000), the weightings in health care and financial services companies generated positive returns for the Fund and helped offset the technology correction. Financial companies benefited from the anticipation of lower interest rates, and health care companies rose as investors rotated into more defensive stable growth industries. THE LONG TERM POSITIVE OUTLOOK FOR TECHNOLOGY STOCKS As we moved into the first quarter of calendar 2001, our stronger relative performing stocks were found in utilities, consumer durables, and retail trade. Utility companies in particular benefited from energy prices, which were off their peaks but still relatively high. Overall, the portfolio's performance was hampered by holdings in various technology segments of the market. Continued concerns over slowing corporate information technology spending and excess inventory in the personal computer and wireless segments continued to bring these sectors lower. We continued to hold stocks in these segments because many remain fundamentally solid despite the sector-wide correction we have been experiencing. Investing for the long term sometimes requires patience as corrections work themselves out. This patience should be rewarded when the market resumes its upward course and the companies with the most promising long-run return potential have a chance to outperform. 57 59 MANAGER'S COMMENTARY (CONTINUED) [Graphic] SECURITY EQUITY FUND - SMALL CAP GROWTH SERIES MAY 15, 2001 MARKET VOLATILITY WILL CONTINUE Looking forward, we expect the market to remain volatile over the coming months. Before we can begin a sustainable recovery, earnings visibility will need to improve, especially for the more economically sensitive sectors of the market. We anticipate a market bottom sometime in the next three to six months as the added liquidity from the Federal Reserve begins to drive economic demand upward. Meanwhile, we are monitoring the conditions of many promising growth companies and are prepared to become more aggressive when the economic and market environments improve. In the current environment, we believe it is essential to focus on well-managed growth companies that are most levered to the benefits of lower interest rates and a reaccelerating economy. Sincerely, Ron Ognar and Brandon Nelson Portfolio Managers (1) Performance figures are based on Class Ashares and do not reflect deduction of the sales charge. PERFORMANCE TOP 5 HOLDINGS**
% OF NET ASSETS THQ,Inc...................................................... 2.7% Patterson Energy, Inc........................................ 2.3% Abercrombie & Fitch Company.................................. 1.9% Offshore Logistics, Inc...................................... 1.8% Genesco, Inc................................................. 1.7% **At March 31, 2001
AVERAGE ANNUAL RETURNS AS OF MARCH 31, 2001 1 YEAR SINCE INCEPTION A Shares................................ (48.04%) 8.14% (10-15-97) A Shares with sales charge.............. (51.03%) 6.31% (10-15-97) B Shares................................ (48.58%) 6.95% (10-15-97) B Shares with CDSC...................... (51.15%) 6.20% (10-15-97) C Shares................................ (48.64%) 6.57% (1-29-99) C Shares with CDSC...................... (49.15%) 6.57% (1-29-99) S Shares................................ N/A (20.28%) (2-01-01) S Shares with CDSC...................... N/A (25.07%) (2-01-01)
The performance data above represents past performance which 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 Ashares or the contingent deferred sales charge of 5% for Class B shares, 1% for Class C shares and 6% for Class S shares, as applicable, except where noted. For Class S shares, the returns have been calculated from February 1, 2001 (date of inception) to March 31, 2001 and are not annualized. Such figures would be lower if the maximum sales charge were deducted. 58 60 SCHEDULE OF INVESTMENTS [GRAPHIC] MARCH 31, 2001 (UNAUDITED) SECURITY EQUITY FUND - SMALL CAP GROWTH SERIES
NUMBER MARKET COMMON STOCKS OF SHARES VALUE ---------------------------------------------------------------------------------- AEROSPACE & DEFENSE - 1.4% BE Aerospace, Inc.*............................... 17,000 $ 312,375 Engineered Support Systems, Inc................... 6,250 121,093 ----------- 433,468 AIRLINES - 0.7% Atlantic Coast Airlines Holdings, Inc.*........... 10,000 210,000 APPAREL & ACCESSORIES - 1.0% Quicksilver, Inc.*................................ 11,500 305,325 APPAREL RETAIL - 8.5% Abercrombie & Fitch Company*...................... 18,500 604,950 American Eagle Outfitters, Inc.*.................. 13,500 388,125 Christopher & Banks Corporation*.................. 10,500 316,312 Genesco, Inc.*.................................... 19,500 534,300 Hot Topic, Inc.*.................................. 13,500 378,000 Pacific Sunwear of California, Inc.*.............. 6,500 178,750 Wet Seal, Inc.*................................... 10,500 269,062 ---------- 2,669,499 APPLICATION SOFTWARE - 7.5% Activision, Inc.*................................. 6,500 158,031 Advantage Learning Systems, Inc.*................. 6,500 187,687 Mentor Graphics Corporation*...................... 12,500 257,812 OPNET Technologies, Inc.*......................... 7,600 119,700 Peregrine Systems, Inc.*.......................... 16,000 312,000 Riverdeep Group plc*.............................. 6,500 133,656 Synopsys, Inc.*................................... 7,000 328,562 THQ, Inc.*........................................ 22,500 855,000 ---------- 2,352,448 BANKS - 3.3% Banknorth Group, Inc.............................. 16,500 327,937 Commerce Bancshares, Inc.......................... 1,800 67,050 Compass Bancshares, Inc........................... 11,000 235,125 Mercantile Bankshares Corporation................. 4,500 166,500 UCBH Holdings, Inc................................ 5,200 253,175 ---------- 1,049,787 BROADCASTING & CABLE TV- 1.9% Entercom Communications Corporation*.............. 4,000 157,200 Radio One, Inc.*.................................. 25,000 439,062 ---------- 596,262 CASINOS & GAMING - 3.0% Anchor Gaming*.................................... 8,000 490,000 GTECH Holdings Corporation*....................... 8,000 218,000 International Game Technology*.................... 5,000 251,750 ---------- 959,750 CONSUMER FINANCE - 2.8% AmeriCredit Corporation*.......................... 12,500 $ 405,375 Dorl Financial Corporation........................ 8,000 240,000 Nextcard, Inc.*................................... 21,500 221,719 ---------- 867,094 DIVERSIFIED COMMERCIAL SERVICES - 5.1% Allied Capital Corporation........................ 14,500 291,813 American Capital Strategies, Ltd.*................ 8,500 216,219 Corinthian Colleges, Inc.*........................ 13,000 523,250 eFunds Corporation*............................... 8,500 163,625 Sylvan Learning Systems, Inc.*.................... 12,000 247,500 Raymond James Financial, Inc...................... 5,500 152,900 ---------- 1,595,307 ELECTRICAL COMPONENTS & EQUIPMENT - 0.8% Active Power, Inc.*............................... 12,500 253,906 FOOD DISTRIBUTORS - 1.1% Performance Food Group Company*................... 6,500 341,250 FOOTWEAR - 1.0% Reebok International, Ltd.*....................... 12,500 310,750 GENERAL MERCHANDISE STORES - 0.8% Ross Stores, Inc.*................................ 13,000 243,750 HEALTH CARE DISTRIBUTORS & SERVICES - 6.6% Accredo Health, Inc............................... 8,300 271,306 AmeriSource Health Corporation*................... 6,500 318,825 Express Scripts, Inc.*............................ 4,000 346,720 Laboratory Corporation of America Holdings*....... 1,800 216,450 Lincare Holdings, Inc.*........................... 7,000 370,563 Priority Healthcare Corporation (Cl. B)*.......... 10,000 377,500 Ventiv Health, Inc.*.............................. 12,000 184,500 ---------- 2,085,864 HEALTH CARE EQUIPMENT - 1.6% ESC Medical Systems Ltd.*......................... 6,500 156,406 Respironics, Inc.*................................ 11,500 350,750 ---------- 507,156 HEALTH CARE FACILITIES - 2.9% Beverly Enterprises, Inc.*........................ 66,000 528,000 Manor Care, Inc.*................................. 19,500 397,800 ---------- 925,800 HEAVY ELECTRICAL EQUIPMENT - 0.5% Capstone Turbine Corporation*..................... 5,500 156,063
See accompanying notes. 59 61 SCHEDULE OF INVESTMENTS [GRAPHIC] MARCH 31, 2001 (UNAUDITED) SECURITY EQUITY FUND - SMALL CAP GROWTH SERIES (CONTINUED)
NUMBER MARKET COMMON STOCKS (CONTINUED) OF SHARES VALUE ------------------------------------------------------------------------------ HOMEBUILDING - 1.6% Centex Corporation................................ 7,500 $ 312,375 Lennar Corporation................................ 5,000 199,300 ----------- 511,675 HOTELS - 1.0% Extended Stay America, Inc.*...................... 10,000 150,000 Prime Hospitality Corporation*.................... 14,500 156,600 ----------- 306,600 HOUSEHOLD APPLIANCES - 0.5% Toro Company...................................... 3,500 161,000 INDUSTRIAL MACHINERY - 0.6% Roper Industries, Inc.*........................... 5,000 179,000 IT CONSULTING & SERVICES - 0.6% Perot Systems Corporation*........................ 16,000 175,200 LEISURE FACILITIES - 2.0% International Speedway Corporation................ 7,000 259,438 Six Flags, Inc.*.................................. 19,000 367,650 ----------- 627,088 LEISURE PRODUCTS - 2.4% Callaway Golf Company............................. 16,500 366,465 Speedway Motorsports, Inc.*....................... 14,500 377,000 ----------- 743,465 MANAGED HEALTH CARE - 3.8% Caremark Rx, Inc.*................................ 15,500 202,120 First Health Group Corporation*................... 12,000 526,500 Mid Atlantic Medical Services, Inc.*.............. 16,000 324,800 US Oncology, Inc.*................................ 18,500 150,313 ----------- 1,203,733 OIL & GAS - DRILLING - 3.0% Grey Wolf, Inc.*.................................. 37,000 240,500 Patterson Energy, Inc.*........................... 22,500 711,563 ----------- 952,063 OIL & GAS - EQUIPMENT & SERVICES - 7.5% Horizon Offshore, Inc.*........................... 7,000 173,250 Key Energy Group, Inc.*........................... 44,000 470,800 National-Oilwell, Inc.*........................... 14,000 484,820 Offshore Logistics, Inc.*......................... 23,000 570,688 Tidewater, Inc.................................... 3,500 158,200 Trico Marine Services, Inc.*...................... 33,000 495,000 ----------- 2,352,758 OIL & GAS EXPLORATION & PRODUCTION - 0.4% Houston Exploration Company*...................... 4,500 135,000 OIL & GAS REFINING & MARKETING - 0.8% Pennzoil-Quaker State Company..................... 19,000 266,000
PRINCIPAL AMOUNT OR NUMBER MARKET COMMON STOCKS (CONTINUED) OF SHARES VALUE ------------------------------------------------------------------------------ REINSURANCE - 0.9% Annuity and Life RE (Holdings), Ltd................ 9,000 $ 267,750 RESTAURANTS - 1.3% Panera Bread Company*.............................. 15,500 414,625 SEMICONDUCTOR EQUIPMENT - 3.5% Credence Systems Corporation*...................... 7,000 143,500 Mattson Technology, Inc.*.......................... 12,000 181,500 Phototronics, Inc.*................................ 7,000 172,813 Rudolph Technologies, Inc.*........................ 8,500 294,844 Varian Semiconductor Equipment Associates, Inc.*........................ 10,000 319,375 ----------- 1,112,032 SEMICONDUCTORS - 1.0% Semtech Corporation*............................... 11,000 323,813 SPECIALTY CHEMICALS - 1.1% Cambrex Corporation................................ 4,000 166,200 OM Group, Inc...................................... 3,500 186,375 ----------- 352,575 SPECIALTY STORES - 1.4% Guitar Center, Inc.*............................... 17,000 299,625 Linens 'n Things, Inc.*............................ 5,500 151,250 ----------- 450,875 STEEL - 0.5% Shaw Group, Inc.*.................................. 3,500 163,485 TELECOMMUNICATIONS EQUIPMENT - 1.3% UTStarcom, Inc.*................................... 24,700 410,638 ----------- Total common stocks - 85.7%........................ 26,972,854 REPURCHASE AGREEMENT - 23.7% United Missouri Bank, 5.03%, 04-02-01 (Collateralized by FHL, 04-04-01 with a value of $7,617,000)........$7,462,000 7,462,000 ----------- Total investments - 109.4%................................. 34,434,854 Liabilities, less cash & other assets - (9.4%)............. (2,953,167) ----------- Total net assets - 100.0%.................................... $31,481,687 ===========
The identified cost of investments owned at March 31, 2001 was the same for federal income tax and financial statement purposes. *Non-Income producing security. See accompanying notes. 60 62 MANAGER'S COMMENTARY [GRAPHIC] SECURITY EQUITY FUND - TECHNOLOGY SERIES MAY 15, 2001 WELLINGTON MANAGEMENT(R) [LOGO} SUBADVISOR, WELLINGTON MANAGEMENT COMPANY, LLP TO OUR SHAREHOLDERS: The past six months were extremely challenging for investors in the technology sector, as a combination of factors came together to dramatically slow the U.S. economy and deflate stock valuations. In a period when many broad market indexes descended into bear market territory for the first time in a decade, technology stocks fared even worse, losing 52.82% during the period as measured by the benchmark Goldman Sachs Technology Composite Index. Security Technology Fund performed slightly better, however, falling 47.91% over the six month period.(1) NOWHERE TO HIDE IN TECHNOLOGY The slowing economy precipitated a broad list of earnings misses and excessive inventories, causing the fundamental outlook for technology stocks to weaken faster than expected, and leaving few places to hide. We continued to see signs of the ongoing economic slowdown, combined with the demise of many of the "dot.com" companies, taking a toll on demand for technology products and services. Examples include weak consumer personal computer sales and lower than expected revenues from desktop applications. Further, subsector issues in areas such as wireless communications, where compelling new data applications have yet to emerge, have also exacerbated this general weakness. As the evidence of a significant slowdown in the U.S. economy continued to mount during the first quarter of 2001, a rally in January was quickly snuffed out and technology stocks posted one of the worst quarters on record. Given our concerns about valuations, expectations, and fundamentals, we maintained the portfolio in a conservative manner throughout the period. While our conservative position helped us on a relative basis, the environment remained extremely challenging. THE FUND'S POSITIONING AT THE END OF THE FIRST HALF At the end of the six month period the portfolio remained conservatively positioned with a significant overweight in services stocks, given their attractive combination of value and predictability during such volatile times. However, we continue to hold meaningful positions in all of the other technology subsectors. Key holdings in the communications sector included Ciena Corporation, Cisco Systems, Inc., and Handspring, Inc. Notable software investments included Microsoft Corporation, Rational Software Corporation, and VeriSign, Inc. Within the computer hardware sector we continue to own sizeable positions in Dell Computer Corporation and IBM Corporation. Significant holdings in the services sector include First Data Corporation and Sabre Holdings Corporation. In the volatile semiconductor sector, Intel Corporation and Micron Technology, Inc. are key holdings. THE TECHNOLOGY SECTOR REMAINS VERY WEAK As we enter the second calendar quarter of 2001, we do not believe the backdrop for a sustainable rally exists, despite interest rate reductions and momentum for tax cuts. While valuations are no longer stretched, fundamentals remain very weak. This weakness is widespread across all subsectors in the technology realm but for the most part has been concentrated in North America so far. However, we are starting to see signs of slowing in Europe as well. If Europe does catch the same economic "flu," the case for a second half recovery becomes much less likely and suggests that a meaningful improvement in fundamentals may not take place until early next year. Given this broad weakness, earnings expectations have been significantly reduced in recent weeks. However, while these reduced expectations are much more in line with reality, we believe that many still have further to go, and we expect yet more downward revisions over the next few weeks. WE REMAIN OPTIMISTIC FOR THE LONG TERM OUTLOOK In this environment, the portfolio remains conservatively positioned with a significant overweight in services stocks. While our immediate concerns suggest our current positioning is appropriate, it is unlikely we will get more conservative from here. Long term, we are as optimistic as ever, but in the short term we expect it will remain a very challenging environment. Sincerely, The Global Technology Portfolio Management Team Wellington Management Company, LLP (1) Performance figures are based on Class Ashares and do not reflect deduction of the sales charge. Fee waivers and/or reimbursements reduced Fund expenses and in the absence of such waivers, the performance quoted would be reduced. 61 63 MANAGER'S COMMENTARY (CONTINUED) [GRAPHIC] SECURITY EQUITY FUND - TECHNOLOGY SERIES MAY 15, 2001 PERFORMANCE TOP 5 HOLDINGS**
% OF NET ASSETS ---------- Microsoft Corporation 9.9% Dell Computer Corporation 8.6% Sabre Group Holdings 5.3% International Business Machines Corporation 5.2% Intel Corporation 4.7%
**At March 31, 2001 AVERAGE ANNUAL RETURNS AS OF MARCH 31, 2001
SINCE INCEPTION ----------------------- AShares (51.40%) (5-1-00) AShares with sales charge (54.19%) (5-1-00) B Shares (52.60%) (5-1-00) B Shares with CDSC (54.97%) (5-1-00) C Shares (52.70%) (5-1-00) C Shares with CDSC (53.17%) (5-1-00) S Shares (34.01%) (2-1-01) S Shares with CDSC (37.97%) (2-1-01)
The performance data above represents past performance which is not predictive of future results. The returns have been calculated from May 1, 2000 (date of inception) to March 31, 2001 for Class A, Class B and Class C shares and are not annualized. For Class S shares, the returns have been calculated from February 1, 2001 (date of inception) to March 31, 2001 and are not annualized. 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 Ashares or the contingent deferred sales charge of 5% for Class B shares, 1% for Class C shares and 6% for Class S shares, as applicable, except where noted. Such figures would be lower if the maximum sales charge were deducted. 62 64 SCHEDULE OF INVESTMENTS [Graphic] MARCH 31, 2001 (UNAUDITED) SECURITY EQUITY FUND - TECHNOLOGY SERIES
NUMBER MARKET COMMON STOCKS OF SHARES VALUE -------------------------------------------------------------------------------- APPLICATION SOFTWARE - 9.1% Agile Software Corporation* .............. 3,900 $ 42,961 i2 Technologies, Inc.* ................... 4,500 65,531 Macromedia, Inc.* ........................ 5,000 80,313 Rational Software Corporation* ........... 12,000 213,000 Verity, Inc.* ............................ 10,000 226,875 ---------- 628,680 COMPUTER HARDWARE - 16.1% Dell Computer Corporation* ............... 23,100 593,381 Handspring, Inc.* ........................ 13,500 156,938 International Business Machines Corporation ............................ 3,700 355,866 ---------- 1,106,185 COMPUTER STORAGE & PERIPHERALS - 11.3% Lexmark International, Inc.* ............. 6,800 309,536 Maxtor Corporation* ...................... 13,200 92,400 Network Appliance, Inc.* ................. 7,100 119,369 Quantum Corporation - Hard Disk Drive* ....................... 24,189 255,436 ---------- 776,741 DATA PROCESSING SERVICES - 12.2% CSG Systems International, Inc.* ......... 3,900 160,631 First Data Corporation ................... 5,200 310,492 Sabre Holdings Corporation* .............. 7,900 364,743 ---------- 835,866 IT CONSULTING & SERVICES - 4.8% Ceridian Corporation* .................... 4,600 85,100 SunGard Data Systems, Inc.* .............. 5,000 246,150 ---------- 331,250 INTERNET SOFTWARE & SERVICES - 4.7% Exodus Communications, Inc.* ............. 10,700 115,025 VeriSign, Inc.* .......................... 3,982 141,112 Vignette Corporation* .................... 10,600 68,238 ---------- 324,375 MOVIES & ENTERTAINMENT - 2.6% AOL Time Warner, Inc.* ................... 4,400 176,660 NETWORKING EQUIPMENT - 1.7% Cisco Systems, Inc.* ..................... 7,400 117,012 SEMICONDUCTOR EQUIPMENT - 2.6% Teradyne, Inc.* .......................... 1,100 36,300 Ultratech Stepper, Inc.* ................. 5,700 140,362 ---------- 176,662 SEMICONDUCTORS - 6.3% Intel Corporation ........................ 12,300 323,644 Micron Technology, Inc.* ................. 1,500 62,295 OmniVision Technologies, Inc.* ........... 13,200 45,375 ---------- 431,314
PRINCIPAL AMOUNT OR NUMBER MARKET COMMON STOCKS (CONTINUED) OF SHARES VALUE -------------------------------------------------------------------------------- SYSTEMS SOFTWARE - 9.9% Microsoft Corporation* ................... 12,400 $ 78,125 TELECOMMUNICATIONS EQUIPMENT - 9.1% CIENA Corporation* ....................... 6,100 253,913 Research In Motion, Ltd.* ................ 6,600 145,002 Sonus Networks, Inc.* .................... 9,300 185,564 Tellabs, Inc.* ........................... 1,100 44,756 ---------- 629,235 ---------- Total common stocks - 90.4% ............................. 6,212,105 FOREIGN STOCK JAPAN - 2.3% Sony Corporation ......................... 2,200 156,240 REPURCHASE AGREEMENT - 7.3.% State Street, 3.00% - 04-02-01 (Collateralized by Fannie Mae, 6.35%, 06-22-01, with a value of $510,555) ........................... $500,510 500,510 ---------- Total investments - 100.0% .............................. 6,868,855 Liabilities, less cash and other assets - 0.0% .......... (2,282) ---------- Total net assets - 100.0% ............................... $6,866,573 ==========
The identified cost of investments owned at March 31, 2001 was the same for federal income tax and financial statement purposes. * Non-Income producing security. See accompanying notes. 63 65 STATEMENTS OF ASSETS AND LIABILITIES
MARCH 31, 2001 SECURITY EQUITY FUND (Unaudited) --------------------------------------------------- SECURITY TOTAL SOCIAL GROWTH AND EQUITY GLOBAL RETURN AWARENESS INCOME FUND SERIES SERIES SERIES SERIES ASSETS Investments, at value (identified cost(1)).................... $59,789,793 $754,477,638 $79,108,707 $6,136,075 $26,954,870 Cash.......................................................... 1,403 693,869 12,203 988 1,236 Cash denominated in a foreign currency, at value (identified cost(2)).......................................... -- -- 6,402 -- -- Receivables: Fund shares sold.............................................. -- 56,510 40,094 -- -- Securities sold............................................... -- 825,945 19,500 -- 351,258 Interest...................................................... 3,545 -- -- -- -- Dividends..................................................... 73,397 505,777 130,671 3,689 13,964 Variation margin.............................................. -- 77,000 -- -- -- Foreign taxes recoverable..................................... -- -- 19,923 -- -- Prepaid expenses.............................................. -- -- -- 12,604 21,569 ----------- ------------ ----------- ---------- ----------- Total assets.................................................. 59,868,138 756,636,739 79,337,500 6,153,356 27,342,897 =========== ============ =========== ========== =========== LIABILITIES Payable for: Securities purchased.......................................... $ 45,377 $ 985,968 $ 30,701 $ -- $ 388,866 Fund shares redeemed.......................................... -- 28,508 -- -- 15,215 Management fees............................................... 69,053 681,881 134,268 4,077 23,422 Custodian fees................................................ -- -- -- 736 849 Transfer and administration fees.............................. -- -- -- 988 6,755 Professional fees............................................. -- -- -- 2,492 1,062 12b-1 distribution plan fees.................................. 7,558 118,344 8,043 2,868 11,873 Other payables................................................ -- -- -- 514 3,350 ----------- ------------ ----------- ---------- ----------- Total liabilities............................................. 121,988 1,814,701 173,012 11,675 451,392 ----------- ------------ ----------- ---------- ----------- NET ASSETS.................................................... $59,746,150 $754,822,038 $79,164,488 $6,141,681 $26,891,505 =========== ============ =========== ========== =========== NET ASSETS CONSIST OF: Paid in capital............................................... $70,927,812 $603,040,546 $86,598,636 $6,901,971 $27,196,954 Accumulated undistributed net investment income (loss)........ 118,636 (675,726) (620,128) (35,973) (103,634) Accumulated undistributed net realized gain (loss) on sale of investments, futures and foreign currency transactions........ (8,332,019) (12,210,562) (2,361,057) 139,385 (569,000) Net unrealized appreciation (depreciation) in value of investments, futures and translation of assets and liabilities in foreign currency........................................... (2,968,279) 164,667,780 (4,452,963) (863,702) 367,185 ----------- ------------ ----------- ---------- ----------- Total net assets.............................................. $59,746,150 $754,822,038 $79,164,488 $6,141,681 $26,891,505 =========== ============ =========== ========== =========== CLASS "A" SHARES Capital shares outstanding.................................... 8,896,942 91,093,379 3,989,728 331,933 773,837 Net assets.................................................... $52,549,725 $638,986,032 $50,201,334 $3,108,255 $15,717,231 Net asset value per share..................................... $ 5.91 $ 7.01 $ 12.58 $ 9.36 $ 20.31 =========== ============ =========== ========== =========== Offering price per share (net asset value divided by 94.25%).. $ 6.27 $ 7.44 $ 13.35 $ 9.93 $ 21.55 =========== ============ =========== ========== =========== CLASS "B" SHARES Capital shares outstanding.................................... 1,168,035 17,118,697 2,179,410 322,427 526,629 Net assets.................................................... $6,696,783 $111,108,742 $25,899,852 $2,934,879 $10,191,952 Net asset value per share..................................... $ 5.73 $ 6.49 $ 11.88 $ 9.10 $ 19.35 =========== ============ =========== ========== =========== CLASS "C" SHARES Capital shares outstanding.................................... 85,625 684,622 247,723 10,559 48,034 Net assets.................................................... $ 499,642 $ 4,670,791 $ 3,042,203 $ 96,532 $ 950,509 Net asset value per share..................................... $ 5.84 $ 6.82 $ 12.28 $ 9.14 $ 19.79 =========== ============ =========== ========== =========== CLASS "S" SHARES Capital shares outstanding.................................... -- 8,052 1,678 215 1,569 Net assets.................................................... $ -- $ 56,473 $ 21,099 $ 2,015 $ 31,813 Net asset value per share..................................... $ 5.91 $ 7.01 $ 12.57 $ 9.36 $ 20.28 =========== ============ =========== ========== =========== 1 Investments, at cost........................................ $62,758,072 $589,462,732 $83,557,474 $6,999,777 $26,587,685 2 Cash denominated in a foreign currency, at cost............. $ -- $ -- $ 6,462 $ -- $ --
See accompanying notes. 64 66 STATEMENTS OF ASSETS AND LIABILITIES (CONTINUED) [Graphic] MARCH 31, 2001 (UNAUDITED)
Security Equity Fund ---------------------------------------------------------------- MID CAP SMALL CAP ENHANCED VALUE GROWTH INDEX INTERNATIONAL SERIES SERIES SERIES SERIES ----------- ----------- ----------- ------------- ASSETS Investments, at value (identified cost(1)).................. $69,001,781 $34,434,854 $21,633,448 $8,318,038 Cash........................................................ 2,771 -- 238 426 Cash denominated in a foreign currency, at value (identified cost(2))...................................... -- -- -- 243,236 Net unrealized appreciation on forward foreign exchange contracts........................................ -- -- -- 25,642 Receivables: Fund shares sold.......................................... 116,400 40,000 -- -- Securities sold........................................... -- 241,887 63,291 1,095,629 Dividends................................................. 52,316 5,138 16,916 11,612 Variation margin.......................................... -- -- 18,595 -- Security Management Company................................. -- -- -- 8,279 Prepaid expenses............................................ 16,886 29,062 20,080 33,038 ----------- ----------- ----------- ---------- Total assets............................................ 69,190,154 34,750,941 21,752,568 9,735,900 =========== =========== =========== ========== LIABILITIES Net realized depreciation on forward foreign exchange contracts........................................ $ -- $ -- $ -- $ 26,942 Cash overdraft.............................................. -- 335 -- -- Payable for: Securities purchased...................................... -- 3,146,376 31,706 1,231,836 Fund shares redeemed...................................... 8,094 2,361 81,524 -- Written options........................................... 279,850 -- -- 12,275 Variation margin.......................................... -- -- 479 Management fees........................................... 57,560 27,801 14,146 8,021 Custodian fees............................................ 2,100 3,218 8,494 -- Transfer and administration fees.......................... 9,943 10,040 3,105 7,256 Professional fees......................................... 4,645 2,492 993 1,571 12b-1 distribution plan fees.............................. 26,799 76,590 89,118 53,064 Other payables............................................ 2,596 41 479 313 ----------- ----------- ----------- ---------- Total liabilities....................................... 391,587 3,269,254 229,565 1,341,757 ----------- ----------- ----------- ---------- NET ASSETS.................................................. $68,798,567 $31,481,687 $21,523,003 $8,394,143 =========== =========== =========== ========== NET ASSETS CONSIST OF: Paid in capital............................................. $54,159,932 $39,902,515 $24,856,881 $10,190,324 Accumulated undistributed net investment income (loss)...... (90,864) (270,700) (71,090) (108,099) Accumulated undistributed net realized gain (loss) on sale of investments, futures and foreign currency transactions............................................. 1,934,474 (9,151,146) (680,376) (1,335,913) Net unrealized appreciation (depreciation) in value of investments, futures and translation of assets and liabilities in foreign currency........................... 12,795,025 1,001,018 (2,582,412) (352,169) ----------- ----------- ----------- ---------- Total net assets........................................ $68,798,567 $31,481,687 $21,523,003 $8,394,143 =========== =========== =========== ========== CLASS "A" SHARES Capital shares outstanding.................................. 2,185,441 1,827,039 810,734 427,501 Net assets.................................................. $44,405,156 $21,547,954 $7,273,871 $3,601,417 Net asset value per share................................... $20.32 $11.79 $8.97 $8.42 ----------- ----------- ----------- ---------- Offering price per share (net asset value divided by 94.25%)................................................ $21.56 $12.51 $9.52 $8.93 =========== =========== =========== ========== CLASS "B" SHARES Capital shares outstanding.................................. 1,035,573 661,863 973,236 245,822 Net assets.................................................. $20,224,336 $7,488,793 $8,585,365 $2,039,924 Net asset value per share................................... $19.53 $11.31 $8.82 $8.30 =========== =========== =========== ========== CLASS "C" SHARES Capital shares outstanding.................................. 194,711 211,552 640,491 330,669 Net assets.................................................. $3,861,860 $2,435,873 $5,660,723 $2,752,802 Net asset value per share................................... $19.83 $11.51 $8.84 $8.32 =========== =========== =========== ========== CLASS "S" SHARES Capital shares outstanding.................................. 15,124 769 339 -- Net assets.................................................. $307,215 $9,067 $3,044 $ -- Net asset value per share................................... $20.31 $11.79 $8.97 $8.42 =========== =========== =========== ========== (1) Investments, at cost.................................... $56,314,708 $33,433,836 $24,028,054 $8,667,281 (2) Cash denominated in a foreign currency, at cost......... $ -- $ -- $ -- $244,047
See accompanying notes. 65 67 STATEMENTS OF ASSETS AND LIABILITIES (CONTINUED) [Graphic] MARCH 31, 2001 (UNAUDITED)
SECURITY EQUITY FUND ------------------------------------------------- LARGE CAP SECURITY SELECT 25(R) GROWTH TECHNOLOGY ULTRA SERIES SERIES SERIES FUND ---------------------------------------------------------------- ASSETS Investments, at value (identified cost (1))............. $36,607,845 $6,622,763 $6,868,855 204,645,016 Cash.................................................... 1,371 -- -- -- Rceivables: Fund shares sold...................................... -- -- -- 112,660 Securities sold....................................... -- -- 74,857 -- Dividends............................................. 17,362 4,148 282 37,967 Prepaid expenses........................................ 26,777 23,610 26,496 -- ----------- ---------- --------- ----------- Total assets.......................................... 36,653,355 6,650,521 6,970,490 204,795,724 =========== ========== ========= =========== LIABILITIES Net realized depreciation on forward foreign exchange contracts.................................... $ -- $ -- $ 218 $ -- Cash overdraft.......................................... -- 68 67,267 -- Security Management Company............................. -- -- 735 -- Payable for: Securities purchased.................................. -- 34,954 7,493 835,434 Fund shares redeemed.................................. 4,000 -- -- -- Written options....................................... -- -- -- 1,645,568 Management fees....................................... 24,029 5,829 6,167 197,322 Custodian fees........................................ 1,231 -- 32 -- Transfer and administration fees...................... 7,750 1,127 3,922 -- Professional fees..................................... 993 3,208 3,208 -- 12b-1 distribution plan fees.......................... 43,767 12,778 14,758 39,413 Other payables........................................ -- 177 117 -- ----------- ---------- ---------- ----------- Total liabilities................................... 81,770 58,141 103,917 2,717,737 ----------- ---------- ---------- ----------- NET ASSETS.............................................. $36,571,585 $6,592,380 $6,866,573 $202,077,987 =========== ========== ========== ============ NET ASSETS CONSIST OF: Paid in capital.......................................... $44,326,481 $9,448,252 $12,751,533 $171,107,063 Accumulated undistributed net investment income (loss)... (191,868) (56,403) (96,441) (856,265) Accumulated undistributed net realized gain (loss) on sale of investments, futures and foreign currency transactions.......................... (4,883,883) (275,696) (2,340,282) 13,318,659 Net unrealized appreciation (depreciation) in value of investments, futures and translation of assets and liabilities in foreign currency.......... (2,679,145) (2,523,773) (3,448,237) 18,508,530 ----------- ---------- ---------- ----------- Total net assets..................................... $36,571,585 $6,592,380 $6,866,573 $202,077,987 =========== ========== ========== ============ CLASS "A" SHARES Capital shares outstanding............................... 1,928,211 348,779 818,169 15,723,398 Net assets............................................... $16,824,465 $2,338,078 $3,975,659 $164,429,100 Net asset value per share................................ $8.73 $6.70 $4.86 $10.46 =========== ========== ========== ============ Offering price per share (net asset value divided by 94.25%)..................................... .$9.26 $7.11 $5.16 $11.10 =========== ========== ========== ============ CLASS "B" SHARES Capital shares outstanding............................... 1,627,424 313,904 248,850 3,611,411 Net assets............................................... $13,995,384 $2,082,295 $1,179,310 $34,104,025 Net asset value per share................................ $8.60 $6.63 $4.74 $9.44 =========== ========== ========== ============ CLASS "C" SHARES Capital shares outstanding............................... 665,215 326,670 357,589 340,961 Net assets............................................... $5,741,928 $2,170,992 $1,691,784 $3,470,952 Net asset value per share................................ $8.63 $6.65 $4.73 $10.18 =========== ========== ========== ============ CLASS "S" SHARES Capital shares outstanding............................... 1,134 151 4,083 7,077 Net assets............................................... $9,808 $1,015 $19,820 $73,910 Net asset value per share................................ $8.65 $6.70 $4.85 $10.44 =========== ========== ========== ============ (1) Investments, at cost................................. $39,286,990 $9,146,536 $10,317,087 $185,939,262
See accompanying notes. 66 68 STATEMENTS OF OPERATIONS [GRAPHIC] FOR THE SIX MONTHS ENDED MARCH 31, 2001 (UNAUDITED)
SECURITY EQUITY FUND -------------------------------------------------- SECURITY TOTAL SOCIAL GROWTH AND EQUITY GLOBAL RETURN AWARENESS INCOME FUND SERIES SERIES SERIES SERIES ----------- ------ ------ ------- --------- INVESTMENT INCOME: Dividends.................................................... $ 494,501 $ 3,732,053 $ 403,751 $ 27,876 $ 100,308 Interest..................................................... 107,198 881,439 153,368 5,163 65,233 ----------- ------------- ------------- ----------- ----------- 601,699 4,613,492 557,119 33,039 165,541 Less: foreign tax expense.................................... -- -- (48,137) (59) -- ----------- ------------- ------------- ----------- ----------- Total investment income..................................... 601,699 4,613,492 508,982 32,980 165,541 EXPENSES: Management fees.............................................. 423,418 4,577,878 827,131 26,829 148,877 Custodian fees............................................... -- -- -- 1,391 1,368 Transfer/maintenance fees.................................... -- -- -- 3,742 26,213 Administration fees.......................................... -- -- -- 3,219 13,399 Directors' fees.............................................. -- -- -- 33 138 Professional fees............................................ -- -- -- 2,992 626 Reports to shareholders...................................... -- -- -- 506 4,687 Registration fees............................................ -- -- -- 12,192 10,212 Other expenses............................................... -- -- -- 152 375 12b-(1) distribution plan fees............................... 38,284 711,340 14,587 17,897 63,280 ----------- ------------- ------------- ----------- ----------- Total expenses............................................... 461,702 5,289,218 841,718 68,953 269,175 ----------- ------------- ------------- ----------- ----------- Net investment income (loss)................................. 139,997 (675,726) (332,736) (35,973) (103,634) NET REALIZED AND UNREALIZED GAIN (LOSS): Net realized gain (loss) during the period on: Investments................................................... 411,769 (11,570,675) (2,157,511) 158,483 (568,611) Foreign currency transactions................................. -- -- (69,474) (77) -- ----------- ------------- ------------- ----------- ----------- Net realized gain (loss)..................................... 411,769 (11,570,675) (2,226,985) 158,406 (568,611) Net change in unrealized appreciation (depreciation) during the period on: Investments................................................... (5,396,859) (186,179,666) (14,025,087) (1,740,451) (6,159,522) Futures....................................................... -- (347,126) -- -- -- Translation of assets and liabilities in foreign currencies... -- -- 1,274 72 -- ----------- ------------- ------------- ----------- ----------- Net unrealized depreciation................................... (5,396,859) (186,526,792) (14,023,813) (1,740,379) (6,159,522) ----------- ------------- ------------- ----------- ----------- Net loss..................................................... (4,985,090) (198,097,467) (16,250,798) (1,581,973) (6,728,133) ----------- ------------- ------------- ----------- ----------- Net decrease in net assets resulting from operations........($4,845,093) ($198,773,193) ($16,583,534) ($1,617,946) ($6,831,767) =========== ============= ============ =========== ===========
See accompanying notes. 67 69 STATEMENTS OF OPERATIONS (CONTINUED) [Graphic] FOR THE SIX MONTHS ENDED MARCH 31, 2001 (UNAUDITED)
SECURITY EQUITY FUND ------------------------------------------------------------------- MID CAP SMALL CAP ENHANCED VALUE GROWTH INDEX INTERNATIONAL SERIES SERIES SERIES SERIES ------------------------------------------------------------------- INVESTMENT INCOME: Dividends ......................................... $ 330,586 $ 112,369 $ 124,984 $ 28,142 Interest ......................................... 56,925 30,818 42,089 2,692 ---------- ------------ ----------- ----------- 387,511 143,187 167,073 30,834 Less: foreign tax expense ......................... - - - (3,536) ---------- ------------ ----------- ----------- Total investment income .......................... 387,511 143,187 167,073 27,298 EXPENSES: Management fees ................................... 289,320 198,660 91,911 51,246 Custodian fees .................................... 3,680 7,431 12,917 46,895 Transfer/maintenance fees ......................... 28,723 71,680 10,973 4,428 Administration fees ............................... 26,039 17,879 11,030 27,097 Directors' fees ................................... 178 153 111 51 Professional fees ................................. 3,740 2,992 2,493 2,992 Reports to shareholders ........................... 3,512 997 948 400 Registration fees ................................. 25,535 16,536 14,490 12,352 Other expenses .................................... 867 280 320 131 12b-1 distribution plan fees ...................... 96,781 97,279 92,970 31,817 ---------- ------------ ----------- ----------- Total expenses 478,375 413,887 238,163 177,409 Less: Reimbursement of expenses ................... - - - (39,338) Earnings credits applied .................... - - - (2,140) ---------- ------------ ----------- ----------- Net expenses ...................................... 478,375 413,887 238,163 135,931 ---------- ------------ ----------- ----------- Net investment loss ............................... (90,864) (270,700) (71,090) (108,633) NET REALIZED AND UNREALIZED GAIN (LOSS): Net realized gain (loss) during the period on: Investments ....................................... 2,156,203 (9,033,506) 81,592 (886,058) Futures ........................................... - - (772,901) (2,661) Options written ................................... 147,202 - - (441,362) Foreign currency transactions ..................... - - - 3,957 ---------- ------------ ----------- ----------- Net realized gain (loss) ......................... 2,303,405 (9,033,506) (691,309) (1,326,124) Net change in unrealized appreciation (depreciation) during the period on: Investments ....................................... 1,660,040 (13,256,443) (4,640,599) (788,371) Futures ........................................... - - (26,323) 3,254 Options written ................................... 145,243 - - 76,562 Translation of assets and liabilities in foreign currencies ............................... - - - (1,378) ---------- ------------ ----------- ----------- Net unrealized appreciation (depreciation) ........ 1,805,283 (13,256,443) (4,666,922) (709,933) ---------- ------------ ----------- ----------- Net gain (loss) ................................... 4,108,688 (22,289,949) (5,358,231) (2,036,057) ---------- ------------ ----------- ----------- Net increase (decrease) in net assets resulting from operations ....................... $4,017,824 ($22,560,649) ($5,429,321) ($2,144,690) ========== ============ =========== ============
See accompanying notes. 68 70 STATEMENTS OF OPERATIONS (CONTINUED) [Graphic] FOR THE SIX MONTHS ENDED MARCH 31, 2001 (UNAUDITED)
SECURITY EQUITY FUND ------------------------------------------------------- LARGE CAP SECURITY SELECT 25(R) GROWTH TECHNOLOGY ULTRA SERIES SERIES SERIES FUND ------------------------------------------------------------------------------ INVESTMENT INCOME: Dividends................................... $ 90,401$ $ 17,636$ $ 2,563 $ 283,290 Interest.................................... 92,982 13,241 6,472 316,945 ------------ ------------- ------------ ------------- 183,383 30,877 9,035 600,235 Less: foreign tax expense..................... - - (32) - ------------ ------------- ------------ ------------- Total investment income................... 183,383 30,877 9,003 600,235 EXPENSES: Management fees............................. 161,267 35,195 40,801 1,253,617 Custodian fees.............................. 1,762 1,124 7,007 - Transfer/maintenance fees................... 30,967 2,431 6,211 - Administration fees......................... 19,352 3,168 16,836 - Directors' fees............................. 122 31 29 - Professional fees........................... 2,493 2,493 2,493 - Reports to shareholders..................... 1,072 124 95 - Registration fees........................... 16,840 16,966 12,400 - Other expenses.............................. 563 46 871 - 12b-1 distribution plan fees................ 140,813 25,702 24,262 202,883 ------------ ------------- ------------ ------------- Total expenses.............................. 375,251 87,280 111,005 1,456,500 Less: Reimbursement of expenses............. - - (5,048) - Earnings credits applied.............. - - (513) - ------------ ------------- ------------ ------------- Net expenses................................ 375,251 87,280 105,444 1,456,500 ------------ ------------- ------------ ------------- Net investment loss......................... (191,868) (56,403) (96,441) (856,265) NET REALIZED AND UNREALIZED GAIN (LOSS): Net realized gain (loss) during the period on: Investments................................. (3,559,524) (215,537) (2,146,732) 13,370,709 Options written............................. - - - 1,396,646 Foreign currency transactions............... - - 113 - ------------ ------------- ------------ ------------- Net realized gain (loss).................. (3,559,524) (215,537) (2,146,619) 14,767,355 Net change in unrealized appreciation......... (depreciation) during the period on: Investments................................. (7,342,758) (2,375,881) (3,035,486) (76,559,722) Options written............................. - - - 400,066 Translation of assets and liabilities in foreign currencies........................ - - (5) - ------------ ------------- ------------ ------------- Net unrealized depreciation................. (7,342,758) (2,375,881) (3,035,491) (76,159,656) ------------ ------------- ------------ ------------- Net loss.................................... (10,902,282) (2,591,418) (5,182,110) (61,392,301) ------------ ------------- ------------ ------------- Net decrease in net assets resulting from operations................. ($11,094,150) ($2,647,821) $(5,278,551) ($62,248,566) ------------ ------------- ------------ -------------
See accompanying notes. 69 71 STATEMENTS OF CHANGES IN NET ASSETS [GRAPHIC] FOR THE SIX MONTHS ENDED MARCH 31, 2001 (UNAUDITED)
SECURITY EQUITY FUND ------------------------------------------------------------ SECURITY TOTAL SOCIAL GROWTH AND EQUITY GLOBAL RETURN AWARENESS INCOME FUND SERIES SERIES SERIES SERIES ----------- ------ ------ ------ ------ INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: Net investment income (loss)......................... $ 139,997 $ (675,726) $ (332,736) $ (35,973) $ (103,634) Net realized gain (loss)............................. 411,769 (11,570,675) (2,226,985) 158,406 (568,611) Net unrealized appreciation (depreciation) during the period.................................... (5,396,859) (186,526,792) (14,023,813) (1,740,379) (6,159,522) ------------ ------------- ------------ ----------- ----------- Net decrease in net assets resulting from operations. (4,845,093) (198,773,193) (16,583,534) (1,617,946) (6,831,767) DISTRIBUTIONS TO SHAREHOLDERS FROM: Net Investment income Class A............................................. (462,844) - - - - Class B............................................. - - - - - Class C ............................................ - - - - - Net realized gain Class A............................................. - (115,245,942) (10,807,742) (12,471) (337,357) Class B............................................. - (22,115,364) (5,823,723) (12,484) (242,973) Class C............................................. - (781,455) (557,819) (267) (20,416) ----------- -------------- ------------ ----------- ----------- Total distributions to shareholders................. (462,844) (138,142,761) (17,189,284) (25,222) (600,746) NET INCREASE (DECREASE) FROM CAPITAL SHARE TRANSACTIONS................................... (3,028,678) 76,552,978 18,386,201 (104,806) 3,070,631 ----------- -------------- ------------ ----------- ----------- Total decrease in net assets........................ (8,336,615) (260,362,976) (15,386,617) (1,747,974) (4,361,882) ----------- -------------- ------------ ----------- ----------- NET ASSETS: Beginning of period................................. 68,082,765 1,015,185,014 94,551,105 7,889,655 31,253,387 ----------- -------------- ------------ ----------- ----------- End of period ...................................... $59,746,150 $ 754,822,038 $ 79,164,488 $ 6,141,681 $26,891,505 =========== ============== ============ =========== =========== Accumulated undistributed net investment income (loss) at end of period .................................... $118,636 ($675,726) ($620,128) ($35,973) ($103,634) =========== ============== ============ =========== ===========
See accompanying notes. 70 72 STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED) [GRAPHIC]
FOR THE SIX MONTHS ENDED MARCH 31, 2001 SECURITY EQUITY FUND ------------------------------------------------------------ (UNAUDITED) MID CAP SMALL CAP ENHANCED VALUE GROWTH INDEX INTERNATIONAL SERIES SERIES SERIES SERIES ----------- ------------ ------------- -------------- INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: Net investment loss..................................... $ (90,864) $ (270,700) $ (71,090) $ (108,633) Net realized gain (loss)................................ 2,303,405 (9,033,506) (691,309) (1,326,124) Net unrealized appreciation (depreciation) during the period...................................... 1,805,283 (13,256,443) (4,666,922) (709,933) ----------- ------------ ----------- ----------- Net increase (decrease) in net assets resulting from operations.............................. 4,017,824 (22,560,649) (5,429,321) (2,144,690) DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income Class A................................................. - - - - Class B................................................. - - - - Class C................................................. - - - - Net realized gain Class A................................................. (3,245,424) (2,057,113) (67,612) (160,805) Class B................................................. (1,316,702) (833,226) (87,740) (93,304) Class C................................................. (266,570) (236,166) (57,340) (129,401) ----------- ------------ ----------- ----------- Total distributions to shareholders..................... (4,828,696) (3,126,505) (212,692) (383,510) NET INCREASE FROM CAPITAL SHARE TRANSACTIONS............. 18,041,345 3,568,601 894,261 423,412 ----------- ------------ ----------- ----------- Total increase (decrease) in net assets................ 17,230,473 (22,118,553) (4,747,752) (2,104,788) ----------- ------------ ----------- ----------- NET ASSETS: Beginning of period..................................... 51,568,094 53,600,240 26,270,755 10,498,931 ----------- ------------ ----------- ----------- End of period........................................... $68,798,567 $ 31,481,687 $21,523,003 $ 8,394,143 =========== ============ =========== =========== Accumulated undistributed net investment income (loss) at end of period....................................... ($90,864) ($270,700) ($71,090) $108,099 =========== ============ =========== ===========
See accompanying notes. 71 73 STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED) [Graphic] FOR THE SIX MONTHS ENDED MARCH 31, 2001 (UNAUDITED)
SECURITY EQUITY FUND ------------------------------------------------ LARGE CAP SECURITY ELECT 25(R) GROWTH TECHNOLOGY ULTRA SERIES SERIES SERIES FUND ----------- ---------- ---------- ------------ INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: Net investment loss ...................................... ($191,868) ($56,403) ($96,441) ($856,265) Net realized gain (loss) ................................. (3,559,524) (215,537) (2,146,619) 14,767,355 Net unrealized depreciation during the period............. (7,342,758) (2,375,881) (3,035,491) (76,159,656) ----------- ---------- ---------- ------------ Net decrease in net assets resulting from operations.... (11,094,150) (2,647,821) (5,278,551) -(62,248,566) DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income Class A................................................. -- -- -- -- Class B................................................. -- -- -- -- Class C................................................. -- -- -- -- Net realized gain Class A................................................. -- -- -- (18,525,853) Class B................................................. -- -- -- (3,891,991) Class C................................................. -- -- -- (282,559) ----------- ---------- ---------- ------------ Total distributions to shareholders -- -- -- (22,700,403) NET INCREASE FROM CAPITAL SHARE TRANSACTIONS................ 167,104 2,694,297 3,558,436 40,410,936 ----------- ---------- ---------- ------------ Total increase (decrease) in net assets................. (10,927,046) 46,476 (1,720,115) (44,538,033) NET ASSETS: Beginning of period....................................... 47,498,631 6,545,904 8,586,688 246,616,020 ----------- ---------- ---------- ------------ End of period............................................. $36,571,585 $6,592,380 $6,866,573 $202,077,987 =========== ========== ========== ============ Accumulated undistributed net investment loss at end of period........................................ ($191,868) ($56,403) ($96,441) ($856,265) =========== ========== ========== ============
See accompanying notes. 72 74 STATEMENTS OF CHANGES IN NET ASSETS [GRAPHIC]
FOR THE YEAR ENDED SEPTEMBER 30, 2000 SECURITY EQUITY FUND ----------------------------------------------------------- SECURITY TOTAL SOCIAL GROWTH AND EQUITY GLOBAL RETURN AWARENESS INCOME FUND SERIES SERIES SERIES SERIES ------------- -------------- ----------- ---------- ----------- INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: Net investment income (loss)............ $ 650,516 $ (1,336,869) $ (609,978) $ (86,698) $ (271,425) Net realized gain (loss)................ (8,743,788) 151,372,066 18,845,699 10,594 607,076 Unrealized appreciation (depreciation) during the period....................... 1,703,197 (80,889,669) 2,740,790 502,498 1,627,369 ------------- -------------- ----------- ---------- ----------- Net increase (decrease) in net assets resulting from operations............... (6,390,075) 69,145,528 20,976,511 426,394 1,963,020 DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income Class A............................... (1,285,098) - - - - Class B............................... (75,787) - - - - Class C............................... (5,850) - - - - Net realized gain Class A............................... (1,172,179) (32,981,516) (2,782,654) (196,255) (229,880) Class B............................... (159,994) (6,354,341) (1,989,962) (202,329) (157,943) Class C............................... (5,955) (208,842) (27,301) (692) (7,240) ------------- -------------- ----------- ---------- ----------- Total distributions to shareholders..... (2,704,863) (39,544,699) (4,799,917) (399,276) (395,063) NET INCREASE (DECREASE) FROM CAPITAL SHARE TRANSACTIONS:..................... (7,744,010) (95,973,119) 29,289,332 615,238 6,742,570 ------------- -------------- ----------- ---------- ----------- Total increase (decrease) in net assets. $ (16,838,948) (66,372,290) 45,465,926 642,356 8,310,527 ------------- -------------- ----------- ---------- ----------- NET ASSETS: Beginning of period..................... 84,921,713 1,081,557,304 49,085,179 7,247,299 22,942,860 ------------- -------------- ----------- ---------- ----------- End of period........................... $ 68,082,765 $1,015,185,014 $94,551,105 $7,889,655 $31,253,387 ============= ============== =========== ========== =========== Accumulated undistributed net investment income (loss) at end of period.......... $ 441,483 $ - $ (287,392) $ - $ - ============= ============== =========== ========== ===========
See accompanying notes. 73 75 STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED) [GRAPHIC] FOR THE YEAR ENDED SEPTEMBER 30, 2000
SECURITY EQUITY FUND ------------------------------------------------------------- MID CAP SMALL CAP ENHANCED VALUE GROWTH INDEX INTERNATIONAL SERIES SERIES SERIES SERIES ------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: Net investment income (loss)..................................... $ (226,591) $ (473,319) $ (141,991) $ (157,595) Net realized gain (loss)......................................... 4,938,922 4,009,340 401,343 815,307 Unrealized appreciation (depreciation) during the period......... 5,813,437 9,887,451 2,723,770 41,665 ----------- ----------- ----------- ----------- Net increase (decrease) in net assets resulting from operations...................................... 10,525,768 13,423,472 2,983,122 699,377 DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income........................................... Class A........................................................ - - - - Class B........................................................ - - - - Class C........................................................ - - - - Net realized gain............................................... Class A........................................................ (939,549) (562,440) (95,114) - Class B........................................................ (379,149) (43,258) (118,324) - Class C........................................................ (48,048) (38,867) (63,100) - ----------- ----------- ----------- ----------- Total distributions to shareholders............................ (1,366,746) (644,565) (276,538) - NET INCREASE (DECREASE) FROM CAPITAL.SHARE TRANSACTIONS...................................... 8,785,203 20,624,275 1,178,896 2,351,127 ----------- ----------- ----------- ----------- Total increase (decrease) in net assets........................ 17,944,225 33,403,182 3,885,480 3,050,50 ----------- ----------- ----------- ----------- NET ASSETS: Beginning of period............................................. 33,623,869 20,197,058 22,385,275 7,448,427 ----------- ----------- ----------- ----------- End of period................................................... $51,568,094 $53,600,240 $26,270,755 $10,498,931 =========== =========== =========== =========== Accumulated undistributed net investment income (loss) at end of period............................................... $ - $ - $ - $ 534 =========== =========== =========== ===========
See accompanying notes. 74 76 STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED) [GRAPHIC] FOR THE YEAR ENDED SEPTEMBER 30, 2000, EXCEPT AS NOTED
------------------------------------------------------------- SECURITY EQUITY FUND ------------------------------------------- LARGE CAP SECURITY SELECT 25(R) GROWTH TECHNOLOGY ULTRA SERIES SERIES* SERIES* FUND ------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: Net investment income (loss)...................................... $ (495,437) $ (40,696) $ (73,158) $ (1,348,635) Net realized gain (loss).......................................... (955,892) (60,159) (193,663) 24,716,819 Unrealized appreciation (depreciation) during the period.......... 3,265,926 (147,892) (412,746) 62,103,213 ----------- ---------- ---------- ----------- Net increase (decrease) in net assets resulting from operations....................................... 1,814,597 (248,747) (679,567) 85,471,397 DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income............................................. Class A.......................................................... - - - - Class B.......................................................... - - - - Class C.......................................................... - - - - Net realized gain................................................. Class A.......................................................... - - - (4,644,959) Class B.......................................................... - - - (603,560) Class C.......................................................... - - - (7,207) ----------- ---------- ---------- ------------ Total distributions to shareholders.............................. - - - (5,255,726) NET INCREASE (DECREASE) FROM CAPITAL SHARE TRANSACTIONS........................................ 14,329,137 6,794,651 9,266,255 62,249,722 ----------- ---------- ---------- ------------ Total increase (decrease) in net assets.......................... 16,143,734 6,545,904 8,586,688 142,465,393 ----------- ---------- ---------- ------------ NET ASSETS: Beginning of period............................................... 31,354,897 - - 104,150,627 ----------- ---------- ---------- ------------ End of period..................................................... $47,498,631 $6,545,904 $8,586,688 $246,616,020 =========== ========== ========== ============ Accumulated undistributed net investment income (loss) at end of period................................................. $ - $ - $ - $ - =========== ========== ========== ============
*Period May 1, 2000 (inception) through September 30, 2000. See accompanying notes. 75 77 FINANCIAL HIGHLIGHTS [Graphic] SELECTED DATA FOR EACH SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD SECURITY GROWTH AND INCOME FUND (CLASS A)
FISCAL PERIOD ENDED SEPTEMBER 30 --------------------------------------------------------------------- 2001(C)(M) 2000(C) 1999(C) 1998(C) 1997(C) 1996(C) ---------- ------- ------- ------- ------- ------- PER SHARE DATA NET ASSET VALUE BEGINNING OF PERIOD .................... $ 6.42 $ 7.17 $ 7.68 $ 11.14 $ 9.05 $ 7.93 INCOME FROM INVESTMENT OPERATIONS: Net Investment Income (Loss)............................ 0.06 0.07 0.12 0.13 0.15 0.18 Net Gain (Loss) on Securities (realized and unrealized).............................. (0.52) (0.58) 0.75 (0.87) 2.81 1.37 ------- ------- ------- ------- ------- ------- Total from Investment Operations........................ (0.46) (0.51) 0.87 (0.74) 2.96 1.55 LESS DISTRIBUTIONS Dividends (from Net Investment Income).................. (0.05) (0.13) (0.04) (0.13) (0.16) (0.16) Distributions (from Realized Gains)..................... - (0.11) (1.34) (2.59) (0.71) (0.27) ------- ------- ------- ------- ------- ------- Total Distributions................................... (0.05) (0.24) (1.38) (2.72) (0.87) (0.43) ------- ------- ------- ------- ------- ------- NET ASSET VALUE END OF PERIOD........................... $5.91 $6.42 $7.17 $7.68 $11.14 $9.05 ======= ======= ======= ======= ======= ======= TOTAL RETURN (A)........................................ (7.21%) (7.28%) 12.00% (7.95%) 35.31% 20.31% RATIOS/SUPPLEMENTAL DATA Net Assets End of Period (thousands).................... $52,550 $60,448 $74,796 $76,371 $91,252 $73,273 Ratio of Expenses to Average Net Assets................. 1.31% 1.27% 1.22% 1.21% 1.24% 1.29% Ratio of Net Investment Income (Loss) to Average Net Assets............................................. 0.55% 0.99% 1.63% 1.49% 1.53% 2.09% Portfolio Turnover Rate................................. 166% 144% 98% 144% 124% 69% SECURITY GROWTH AND INCOME FUND (CLASS B)
FISCAL PERIOD ENDED SEPTEMBER 30 --------------------------------------------------------------------- 2001(C)(M) 2000(C) 1999(C) 1998(C) 1997(C) 1996(C) ---------- ------- ------- ------- ------- ------- PER SHARE DATA NET ASSET VALUE BEGINNING OF PERIOD..................... $6.21 $6.95 $7.54 $10.99 $8.94 $7.85 INCOME FROM INVESTMENT OPERATIONS: Net Investment Income................................... (0.06) - 0.05 0.05 0.05 0.09 Net Gain (Loss) on Securities (realized and unrealized).............................. (0.54) (0.58) 0.73 (0.88) 2.77 1.35 ------- ------- ------- ------- ------- ------- Total from Investment Operations........................ (0.48) (0.58) 0.78 (0.83) 2.82 1.44 LESS DISTRIBUTIONS Dividends (from Net Investment Income).................. - (0.05) (0.03) (0.03) (0.06) (0.08) Distributions (from Realized Gains)..................... - (0.11) (1.34) (2.59) (0.71) (0.27) ------- ------- ------- ------- ------- ------- Total Distributions................................... - (0.16) (1.37) (2.62) (0.77) (0.35) ------- ------- ------- ------- ------- ------- NET ASSET VALUE END OF PERIOD........................... $5.73 $6.21 $6.95 $7.54 $10.99 $8.94 ======= ======= ======= ======= ======= ======= TOTAL RETURN (A)........................................ (7.73%) (8.36%) 10.93% (8.95%) 34.01% 19.01% RATIOS/SUPPLEMENTAL DATA Net Assets End of Period (thousands).................... $6,697 $7,152 $9,829 $9,257 $6,737 $2,247 Ratio of Expenses to Average Net Assets................. 2.32% 2.27% 2.22% 2.21% 2.24% 2.29% Ratio of Net Investment Income (Loss) to Average Net Assets............................................. (0.45%) 0.01% 0.63% 0.59% 0.53% 1.09% Portfolio Turnover Rate................................. 166% 144% 98% 144% 124% 69%
See accompanying notes. 76 78 FINANCIAL HIGHLIGHTS (CONTINUED) SELECTED DATA FOR EACH SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD SECURITY GROWTH AND INCOME FUND (CLASS C)
FISCAL PERIOD ENDED SEPTEMBER 30 ----------------------------------------- 2001(c)(m) 2000(c) 1999(c)(i) ----------- ----------- ------------ PER SHARE DATA NET ASSET VALUE BEGINNING OF PERIOD............................ $6.32 $7.11 $6.87 INCOME FROM INVESTMENT OPERATIONS: Net Investment Income (Loss)................................... 0.02 (0.01) 0.03 Net Gain (Loss) on Securities (realized and unrealized)..................................... (0.50) (0.56) 0.21 ----------- ----------- ------------ Total from Investment Operations............................... (0.48) (0.57) 0.24 LESS DISTRIBUTIONS Dividends (from Net Investment Income)......................... - (0.11) - Distributions (from Realized Gains)............................ - (0.11) - ----------- ----------- ------------ Total Distributions.......................................... - (0.22) - ----------- ----------- ------------ NET ASSET VALUE END OF PERIOD.................................. $5.84 $6.32 $7.11 =========== =========== ============ TOTAL RETURN (A)............................................... (7.60%) (8.10%) 3.49% RATIOS/SUPPLEMENTAL DATA Net Assets End of Period (thousands)........................... $ 500 $ 483 $ 297 Ratio of Expenses to Average Net Assets........................ 2.32% 2.28% 2.22% Ratio of Net Investment Income (Loss) to Average Net Assets................................................... (0.45%) (0.10%) 0.62% Portfolio Turnover Rate........................................ 166% 144% 90%
See accompanying notces. 77 79 FINANCIAL HIGHLIGHTS (CONTINUED) SELECTED DATA FOR EACH SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD SECURITY EQUITY FUND - EQUITY SERIES (CLASS A)
FISCAL PERIOD ENDED SEPTEMBER 30 ---------------------------------------------------------------------- 2001(C)(M) 2000(C) 1999(C) 1998(C) 1997(C) 1996(C) ---------- --------- --------- ------- --------- --------- PER SHARE DATA NET ASSET VALUE BEGINNING OF PERIOD.............. $10.26 $ 9.96 $8.86 $9.09 $7.54 $6.55 INCOME FROM INVESTMENT OPERATIONS: Net Investment Income (Loss)..................... -- -- 0.02 0.04 0.04 0.05 Net Gain (Loss) on Securities (realized and unrealized)...................... (1.84) 0.66 1.80 0.56 2.20 1.48 ------ ------ ----- ----- ----- ----- Total from Investment Operations................. (1.84) 0.66 1.82 0.60 2.24 1.53 LESS DISTRIBUTIONS Dividends (from Net Investment Income)........... - -- (0.04) (0.03) (0.04) (0.06) Distributions (from Realized Gains).............. (1.41) (0.36) (0.68) (0.80) (0.65) (0.48) ------ ------ ----- ----- ----- ----- Total Distributions.......................... (1.41) (0.36) (0.72) (0.83) (0.69) (0.54) ------ ------ ----- ----- ----- ----- NET ASSET VALUE END OF PERIOD.................... $7.01 $10.26 $9.96 $8.86 $9.09 $7.54 ====== ====== ===== ===== ===== ===== TOTAL RETURN (a)................................. (20.26%) 6.64% 20.66% 7.38% 32.08% 24.90% RATIOS/SUPPLEMENTAL DATA Net Assets End of Period (thousands)............. $638,986 $853,126 $917,179 $773,606 $757,520 $575,680 Ratio of Expenses to Average Net Assets.......... 1.03% 1.02% 1.02% 1.02% 1.03% 1.04% Ratio of Net Investment Income (Loss) to Average Net Assets..................................... 0.01% 0.03% 0.19% 0.39% 0.46% 0.75% Portfolio Turnover Rate.......................... 33% 54% 36% 47% 66% 64%
SECURITY EQUITY FUND - EQUITY SERIES (CLASS B)
FISCAL PERIOD ENDED SEPTEMBER 30 ------------------------------------------------------------------------ 2001(C)(M) 2000(C) 1999(C) 1998(C) 1997(C) 1996(C) ---------- --------- --------- ------- --------- ---------- PER SHARE DATA NET ASSET VALUE BEGINNING OF PERIOD.............. $ 9.65 $ 9.47 $ 8.52 $ 8.82 $ 7.36 $ 6.43 INCOME FROM INVESTMENT OPERATIONS: Net Investment Income (Loss)..................... (0.04) (0.10) (0.08) (0.05) (0.04) (0.02) Net Gain (Loss) on Securities (realized and unrealized)...................... (1.71) 0.64 1.71 0.55 2.15 1.45 ------ ------ ------ ------ ------ ------ Total from Investment Operations................. (1.75) 0.54 1.63 0.50 2.11 1.43 LESS DISTRIBUTIONS Dividends (from Net Investment Income)........... - - - - - (0.02) Distributions (from Realized Gains).............. (1.41) (0.36) (0.68) (0.80) (0.65) (0.48) ------ ------ ------ ------ ------ ------ Total Distributions.......................... (1.41) (0.36) (0.68) (0.80) (0.65) (0.50) ------ ------ ------ ------ ------ ------ NET ASSET VALUE END OF PERIOD.................... $ 6.49 $ 9.65 $ 9.47 $ 8.52 $ 8.82 $ 7.36 ====== ====== ====== ====== ====== ====== TOTAL RETURN (A)................................. (20.64%) 5.69% 19.23% 6.38% 30.85% 23.57% RATIOS/SUPPLEMENTAL DATA Net Assets End of Period (thousands)............. $111,109 $156,633 $159,872 $112,978 $89,336 $38,822 Ratio of Expenses to Average Net Assets.......... 2.04% 2.02% 2.02% 2.02% 2.03% 2.04% Ratio of Net Investment Income (Loss) to Average Net Assets..................................... (1.00%) (0.97%) (0.82%) (0.61%) (0.54%) (0.25%) Portfolio Turnover Rate.......................... 33% 54% 36% 47% 66% 64%
See accompanying notes. 78 80 FINANCIAL HIGHLIGHTS (CONTINUED) SELECTED DATA FOR EACH SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD SECURITY EQUITY FUND - EQUITY SERIES (CLASS C)
FISCAL PERIOD ENDED SEPTEMBER 30 ----------------------------------------- 2001(C)(M) 2000(C) 1999(C)(I) ---------- -------- ----------- PER SHARE DATA NET ASSET VALUE BEGINNING OF PERIOD................... $10.07 $9.89 $10.13 INCOME FROM INVESTMENT OPERATIONS: Net Investment Income (Loss).......................... (0.04) (0.10) (0.05) Net Gain (Loss) on Securities (realized and unrealized)............................. (1.80) 0.64 (0.19) ---------- -------- ----------- Total from Investment Operations...................... (1.84) 0.54 (0.24) LESS DISTRIBUTIONS Dividends (from Net Investment Income) - - - Distributions (from Realized Gains)................... (1.41) (0.36) - ---------- -------- ----------- Total Distributions............................... (1.41) (0.36) - ---------- -------- ----------- NET ASSET VALUE END OF PERIOD......................... $6.82 $10.07 $9.89 ========== ======== =========== TOTAL RETURN (A)...................................... (20.67%) 5.55% (2.37%) RATIOS/SUPPLEMENTAL DATA Net Assets End of Period (thousands).................. $4,671 $5,426 $4,507 Ratio of Expenses to Average Net Assets............... 2.04% 2.02% 2.02% Ratio of Net Investment Income (Loss) to Average Net Assets.......................................... (1.00%) (0.96%) (0.89%) Portfolio Turnover Rate............................... 33% 54% 45%
SECURITY EQUITY FUND - EQUITY SERIES (CLASS S)
FISCAL PERIOD ENDED SEPTEMBER 30 -------------------------------- 2001(C)(N) ---------- PER SHARE DATA NET ASSET VALUE BEGINNING OF PERIOD.................... $7.10 INCOME FROM INVESTMENT OPERATIONS: Net Investment Income.................................. - Net Gain (Loss) on Securities (realized and unrealized)............................ (0.09) ---------- Total from Investment Operations....................... (0.09) LESS DISTRIBUTIONS Dividends (from Net Investment Income)................. - Distributions (from Realized Gains).................... - ---------- Total Distributions................................ - ---------- NET ASSET VALUE END OF PERIOD.......................... $7.01 ========== TOTAL RETURN (A)....................................... (15.44%) RATIOS/SUPPLEMENTAL DATA Net Assets End of Period (thousands)................... $56 Ratio of Expenses to Average Net Assets................ 2.28% Ratio of Net Income (Loss) to Average Net Assets....... (1.67%) Portfolio Turnover Rate................................ 165%
See accompanying notes. 79 81 FINANCIAL HIGHLIGHTS (CONTINUED) SELECTED DATA FOR EACH SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD SECURITY EQUITY FUND - GLOBAL SERIES (CLASS A)
FISCAL PERIOD ENDED SEPTEMBER 30 --------------------------------------------------------------------------- 2001(C)(M) 2000(C) 1999(C) 1998(C) 1997(C) 1996(C) ----------- -------- -------- -------- -------- ---------- PER SHARE DATA NET ASSET VALUE BEGINNING OF PERIOD................ $ 18.86 $ 13.99 $ 11.23 $ 13.56 $ 12.42 $ 10.94 INCOME FROM INVESTMENT OPERATIONS: Net Investment Income (Loss)....................... (0.06) (0.11) 0.01 0.02 0.01 0.01 Net Gain (Loss) on Securities (realized and unrealized).......................... (2.81) 6.47 3.71 (1.19) 2.29 1.87 ----------- -------- -------- -------- -------- ---------- Total from Investment Operations................... (2.87) 6.36 3.72 (1.17) 2.30 1.88 LESS DISTRIBUTIONS Dividends (from Net Investment Income)............. - - (0.01) (0.09) (0.38) (0.25) Distributions (from Realized Gains)................ (3.41) (1.49) (0.91) (1.07) (0.78) (0.15) In Excess of Net Investment Income................. - - (0.04) - - - ----------- -------- -------- -------- -------- ---------- Total Distributions.............................. (3.41) (1.49) (0.96) (1.16) (1.16) (0.40) ----------- -------- -------- -------- -------- ---------- NET ASSET VALUE END OF PERIOD...................... $ 12.58 $ 18.86 $ 13.99 $ 11.23 $ 13.56 $ 12.42 =========== ======== ======== ======== ======== ========== TOTAL RETURN (A)................................... (17.50%) 47.04% 34.39% (8.47%) 20.22% 17.73% RATIOS/SUPPLEMENTAL DATA Net Assets End of Period (thousands)............... $ 50,201 $60,909 $28,292 $18,941 $24,193 $19,644 Ratio of Expenses to Average Net Assets............ 1.90% 1.92% 2.00% 2.00% 2.00% 2.00% Ratio of Net Investment Income (Loss) to Average Net Assets....................................... (0.73%) (0.62%) 0.11% 0.15% 0.07% 0.07% Portfolio Turnover Rate............................ 32% 92% 141% 122% 132% 142%
SECURITY EQUITY FUND - GLOBAL SERIES (CLASS B)
FISCAL PERIOD ENDED SEPTEMBER 30 --------------------------------------------------------------------------- 2001(C)(M) 2000(C) 1999(C) 1998(C) 1997(C) 1996(C) ----------- -------- -------- -------- -------- ---------- PER SHARE DATA NET ASSET VALUE BEGINNING OF PERIOD................. $ 18.00 $ 13.45 $ 10.89 $ 13.22 $ 12.18 $ 10.74 INCOME FROM INVESTMENT OPERATIONS: Net Investment Income (Loss)........................ (0.05) (0.17) (0.11) (0.10) (0.11) (0.10) Net Gain (Loss) on Securities (realized and unrealized)........................... (2.66) 6.21 3.58 (1.16) 2.24 1.84 ----------- -------- -------- -------- -------- ---------- Total from Investment Operations.................... (2.71) 6.04 3.47 (1.26) 2.13 1.74 LESS DISTRIBUTIONS Dividends (from Net Investment Income).............. - - - - (0.31) (0.14) Distributions (from Realized Gains)................. (3.41) (1.49) (0.91) (1.07) (0.78) (0.16) ----------- -------- -------- -------- -------- ---------- Total Distributions............................... (3.41) (1.49) (0.91) (1.07) (1.09) (0.30) ----------- -------- -------- -------- -------- ---------- NET ASSET VALUE END OF PERIOD....................... $ 11.88 $ 18.00 $ 13.45 $ 10.89 $ 13.22 $ 12.18 =========== ======== ======== ======== ======== ========== TOTAL RETURN (A).................................... (17.44%) 46.53% 33.04% (9.43%) 19.01% 16.57% RATIOS/SUPPLEMENTAL DATA Net Assets End of Period (thousands)................ $ 25,900 $30,951 $20,591 $12,619 $13,061 $ 7,285 Ratio of Expenses to Average Net Assets............. 1.90% 2.29% 3.00% 3.00% 3.00% 3.00% Ratio of Net Investment Income (Loss) to Average Net Assets........................................ (0.73%) (0.96%) (0.87%) (0.85%) (0.93%) (0.93%) Portfolio Turnover Rate............................. 32% 92% 141% 122% 132% 142%
See accompanying notes. 80 82 FINANCIAL HIGHLIGHTS (CONTINUED) [Graphic] SELECTED DATA FOR EACH SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD SECURITY EQUITY FUND - GLOBAL SERIES (CLASS C)
FISCAL PERIOD ENDED SEPTEMBER 30 -------------------------------------- 2001(C)(M) 2000(C) 999(C)(I) ---------- ------- --------- PER SHARE DATA NET ASSET VALUE BEGINNING OF PERIOD................... $ 18.55 $ 13.90 $ 12.68 INCOME FROM INVESTMENT OPERATIONS: Net Investment Income (Loss).......................... (0.12) (0.26) (0.03) Net Gain (Loss) on Securities (realized and unrealized)............................ (2.74) 6.40 1.25 ------- ------- ------- Total from Investment Operations...................... (2.86) 6.14 1.22 LESS DISTRIBUTIONS Dividends (from Net Investment Income)................ - - - Distributions (from Realized Gains)................... (3.41) (1.49) - ------- ------- ------- Total Distributions................................. (3.41) (1.49) - ------- ------- ------- NET ASSET VALUE END OF PERIOD......................... $ 12.28 $ 18.55 $ 13.90 ======= ======= ======= TOTAL RETURN (A)...................................... (17.76%) 45.67% 9.62% RATIOS/SUPPLEMENTAL DATA Net Assets End of Period (thousands).................. $3,042 $2,691 $202 Ratio of Expenses to Average Net Assets............... 2.90% 2.92% 3.00% Ratio of Net Investment Income (Loss) to Average Net Assets........................................... (1.72%) (1.53%) (0.49%) Portfolio Turnover Rate............................... 32% 92% 90%
SECURITY EQUITY FUND - GLOBAL SERIES (CLASS S)
FISCAL PERIOD ENDED SEPTEMBER 30 -------------------------------------- 2001(C)(N) ---------- PER SHARE DATA NET ASSET VALUE BEGINNING OF PERIOD................... $ 14.26 INCOME FROM INVESTMENT OPERATIONS: Net Investment Income................................. (0.02) Net Gain (Loss) on Securities (realized and unrealized)............................ (1.67) ------- Total from Investment Operations...................... (1.69) LESS DISTRIBUTIONS Dividends (from Net Investment Income)................ - Distributions (from Realized Gains)................... - ------- Total Distributions................................. - ------- NET ASSET VALUE END OF PERIOD......................... $12.57 ======= TOTAL RETURN (A)...................................... (15.01%) RATIOS/SUPPLEMENTAL DATA Net Assets End of Period (thousands).................. $21 Ratio of Expenses to Average Net Assets............... 2.95% Ratio of Net Income (Loss) to Average Net Assets........................................... (1.26%) Portfolio Turnover Rate............................... 75%
See accompanying notes. 81 83 FINANCIAL HIGHLIGHTS (CONTINUED) SELECTED DATA FOR EACH SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD SECURITY EQUITY FUND - TOTAL RETURN SERIES (CLASS A)
FISCAL PERIOD ENDED SEPTEMBER 30 -------------------------------------------------------------------------- 2001(C)(M) 2000(C) 1999(B)(C)(J) 1998(B)(C) 1997(B)(C)(F) 1996(B)(C) ---------- ------- ------------- ---------- ------------- ---------- PER SHARE DATA NET ASSET VALUE BEGINNING OF PERIOD.................. $11.81 $11.69 $10.73 $12.58 $11.06 $10.54 INCOME FROM INVESTMENT OPERATIONS: Net Investment Income (Loss)......................... (0.02) (0.07) (0.03) 0.08 0.17 0.25 Net Gain (Loss) on Securities (realized and unrealized).......................... (2.39) 0.83 1.90 (0.98) 1.86 0.77 ------ ------ ------ ------ ------ ------ Total from Investment Operations..................... (2.41) 0.76 1.87 (0.90) 2.03 1.02 LESS DISTRIBUTIONS Dividends (from Net Investment Income)............... -- -- (0.16) (0.20) (0.26) (0.33) Distributions (from Realized Gains).................. (0.04) (0.64) (0.75) (0.75) (0.25) (0.17) ------ ------ ------ ------ ------ ------ Total Distributions.............................. (0.04) (0.64) (0.91) (0.95) (0.51) (0.50) ------ ------ ------ ------ ------ ------ NET ASSET VALUE END OF PERIOD........................ $9.36 $11.81 $11.69 $10.73 $12.58 $11.06 ====== ====== ====== ====== ====== ====== TOTAL RETURN (A)..................................... (20.47%) 6.49% 17.84% (7.19%) 19.00% 10.01% RATIOS/SUPPLEMENTAL DATA Net Assets End of Period (thousands)................. $3,108 $3,928 $3,587 $3,294 $3,906 $2,449 Ratio of Expenses to Average Net Assets.............. 1.43% 1.49% 2.00% 2.00% 1.68% 2.00% Ratio of Net Investment Income (Loss) to Average Net Assets....................................... (0.51%) (0.61%) (0.29%) 0.65% 1.52% 2.32% Portfolio Turnover Rate.............................. 46% 55% 121% 45% 79% 75%
SECURITY EQUITY FUND - TOTAL RETURN SERIES (CLASS B)
FISCAL PERIOD ENDED SEPTEMBER 30 ---------------------------------------------------------------------- 2001(C)(M) 2000(C) 1999(B)(C) 1998(B)(C) 1997(B)(C)(F) 1996(B)(C) ---------- ------- ---------- ---------- ------------- ---------- PER SHARE DATA NET ASSET VALUE BEGINNING OF PERIOD....................... $11.55 $11.56 $10.62 $12.45 $10.97 $10.50 INCOME FROM INVESTMENT OPERATIONS: Net Investment Income (Loss).............................. (0.07) (0.19) (0.14) (0.03) 0.07 0.14 Net Gain (Loss) on Securities (realized and unrealized)............................... (2.34) 0.82 1.88 (0.96) 1.84 0.77 ------ ------ ------ ------ ------ ------ Total from Investment Operations.......................... (2.41) 0.63 1.74 (0.99) 1.91 0.91 LESS DISTRIBUTIONS Dividends (from Net Investment Income).................... -- -- (0.05) (0.09) (0.18) (0.27) Distributions (from Realized Gains)....................... (0.04) (0.64) (0.75) (0.75) (0.25) (0.17) ------ ------ ------ ------ ------ ------ Total Distributions................................... (0.04) (0.64) (0.80) (0.84) (0.43) (0.44) ------ ------ ------ ------ ------ ------ NET ASSET VALUE END OF PERIOD............................. $9.10 $11.55 $11.56 $10.62 $12.45 $10.97 ====== ====== ====== ====== ====== ====== TOTAL RETURN (A).......................................... (20.94%) 5.39% 16.68% (7.99%) 17.95% 8.97% RATIOS/SUPPLEMENTAL DATA Net Assets End of Period (thousands)...................... $2,935 $3,903 $3,652 $3,304 $3,851 $2,781 Ratio of Expenses to Average Net Assets................... 2.43% 2.49% 2.94% 2.94% 2.58% 3.00% Ratio of Net Investment Income (Loss) to Average Net Assets.............................................. (1.51%) (1.61%) (1.23%) (0.29%) 0.61% 1.32% Portfolio Turnover Rate................................... 46% 55% 121% 45% 79% 75%
See accompanying notes. 82 84 FINANCIAL HIGHLIGHTS (CONTINUED) [Graphic] SELECTED DATA FOR EACH SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD SECURITY EQUITY FUND - TOTAL RETURN SERIES (CLASS C)
FISCAL PERIOD ENDED SEPTEMBER 30 -------------------------------------------- 2001(C)(M) 2000(C) 1999(B)(C)(I)(J) ---------- ------- ---------------- PER SHARE DATA NET ASSET VALUE BEGINNING OF PERIOD................... $ 11.60 $ 11.58 $ 11.48 INCOME FROM INVESTMENT OPERATIONS: Net Investment Income (Loss).......................... (0.07) (0.16) (0.11) Net Gain (Loss) on Securities (realized and unrealized)............................ (2.35) 0.82 0.21 ------- ------- ------- Total from Investment Operations...................... (2.42) 0.66 0.10 LESS DISTRIBUTIONS Dividends (from Net Investment Income)................ - - - Distributions (from Realized Gains)................... (0.04) (0.64) - ------- ------- ------- Total Distributions................................. (0.04) (0.64) - ------- ------- ------- NET ASSET VALUE END OF PERIOD......................... $ 9.14 $ 11.60 $ 11.58 ======= ======= ======= TOTAL RETURN (A)...................................... (20.93%) 5.65% 0.87% RATIOS/SUPPLEMENTAL DATA Net Assets End of Period (thousands).................. $97 $59 $8 Ratio of Expenses to Average Net Assets............... 2.46% 2.30% 2.93% Ratio of Net Investment Income (Loss) to Average Net Assets........................................... (1.54%) (1.45%) (1.84%) Portfolio Turnover Rate............................... 46% 55% 149%
SECURITY EQUITY FUND - TOTAL RETURN SERIES (CLASS S)
FISCAL PERIOD ENDED SEPTEMBER 30 -------------------------------------------- 2001(C)(N) ---------- PER SHARE DATA NET ASSET VALUE BEGINNING OF PERIOD................... $ 9.29 INCOME FROM INVESTMENT OPERATIONS: Net Investment Income................................. - Net Gain (Loss) on Securities (realized and unrealized)............................ 0.07 ------- Total from Investment Operations...................... 0.07 LESS DISTRIBUTIONS Dividends (from Net Investment Income)................ - Distributions (from Realized Gains)................... - ------- Total Distributions................................. - ------- NET ASSET VALUE END OF PERIOD......................... $9.36 ======= TOTAL RETURN (A)...................................... (18.89%) RATIOS/SUPPLEMENTAL DATA Net Assets End of Period (thousands).................. $2 Ratio of Expenses to Average Net Assets............... 2.03% Ratio of Net Income (Loss) to Average................. Net Assets........................................... (2.03%) Portfolio Turnover Rate............................... 140%
See accompanying notes. 83 85 FINANCIAL HIGHLIGHTS (CONTINUED) SELECTED DATA FOR EACH SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD SECURITY EQUITY FUND - SOCIAL AWARENESS SERIES (CLASS A)
FISCAL PERIOD ENDED SEPTEMBER 30 -------------------------------------------------------------- 2001(C)(M) 2000(C) 1999(C) 1998(B)(C) 1997(B)(C)(D) ---------- ------- ------- ---------- ------------- PER SHARE DATA NET ASSET VALUE BEGINNING OF PERIOD.................. $26.04 $24.05 $19.37 $17.99 $15.00 INCOME FROM INVESTMENT OPERATIONS: Net Investment Income (Loss)......................... (0.03) (0.13) (0.05) -- 0.08 Net Gain (Loss) on Securities (realized and unrealized).......................... (5.23) 2.50 5.09 1.42 2.91 ------ ------ ------ ------ ------ Total from Investment Operations..................... (5.26) 2.37 5.04 1.42 2.99 LESS DISTRIBUTIONS Dividends (from Net Investment Income)............... -- -- -- (0.04) -- Distributions (from Realized Gains).................. (0.47) (0.38) (0.36) -- -- ------ ------ ------ ------ ------ Total Distributions.............................. (0.47) (0.38) (0.36) (0.04) -- ------ ------ ------ ------ ------ NET ASSET VALUE END OF PERIOD........................ $20.31 $26.04 $24.05 $19.37 $17.99 ====== ====== ====== ====== ====== TOTAL RETURN (a)..................................... (20.47%) 9.88% 26.12% 7.89% 19.93% RATIOS/SUPPLEMENTAL DATA Net Assets End of Period (thousands)................. $15,717 $17,702 $13,403 $7,619 $6,209 Ratio of Expenses to Average Net Assets.............. 1.40% 1.42% 1.42% 1.22% 0.67% Ratio of Net Investment Income (Loss) to Average Net Assets......................................... (0.27%) (0.51%) (0.22%) -- 0.57% Portfolio Turnover Rate 18% 26% 26% 41% 38%
SECURITY EQUITY FUND - SOCIAL AWARENESS SERIES (CLASS B)
FISCAL PERIOD ENDED SEPTEMBER 30 -------------------------------------------------------------- 2001(C)(M) 2000(C) 1999(C) 1998(B)(C) 1997(B)(C)(D) ---------- ------- ------- ---------- ------------- PER SHARE DATA NET ASSET VALUE BEGINNING OF PERIOD.................. $24.96 $23.35 $19.01 $17.81 $15.00 INCOME FROM INVESTMENT OPERATIONS: Net Investment Income (Loss)......................... (0.14) (0.38) (0.30) (0.19) (0.08) Net Gain (Loss) on Securities (realized and unrealized).......................... (5.00) 2.37 5.00 1.39 2.89 ------ ------ ------ ------ ------ Total from Investment Operations..................... (5.14) 1.99 4.70 1.20 2.81 LESS DISTRIBUTIONS Dividends (from Net Investment Income) -- -- -- -- -- Distributions (from Realized Gains).................. (0.47) (0.38) (0.36) -- -- ------ ------ ------ ------ ------ Total Distributions.............................. (0.47) (0.38) (0.36) -- -- ------ ------ ------ ------ ------ NET ASSET VALUE END OF PERIOD........................ $19.35 $24.96 $23.35 $19.01 $17.81 ====== ====== ====== ====== ====== TOTAL RETURN (a)..................................... (20.88%) 8.53% 24.81% 6.74% 18.73% RATIOS/SUPPLEMENTAL DATA Net Assets End of Period (thousands)................. $10,192 $12,633 $9,136 $5,245 $3,641 Ratio of Expenses to Average Net Assets.............. 2.41% 2.43% 2.51% 2.20% 1.84% Ratio of Net Investment Income (Loss) to Average Net Assets......................................... (1.29%) (1.52%) (1.30%) (0.98%) (0.60%) Portfolio Turnover Rate.............................. 18% 26% 26% 41% 38%
See accompanying notes. 84 86 FINANCIAL HIGHLIGHTS (CONTINUED) [GRAPHIC] SELECTED DATA FOR EACH SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD SECURITY EQUITY FUND - SOCIAL AWARENESS SERIES (CLASS C)
FISCAL PERIOD ENDED SEPTEMBER 30 ---------------------------------- 2001(C)(M) 2000(C) 1999(C)(I) ---------- ------- ---------- PER SHARE DATA NET ASSET VALUE BEGINNING OF PERIOD................. $25.50 $23.87 $24.47 INCOME FROM INVESTMENT OPERATIONS: Net Investment Income (Loss)........................ (0.14) (0.41) (0.22) Net Gain (Loss) on Securities (realized and unrealized)......................... (5.10) 2.42 (0.38) ------- -------- -------- Total from Investment Operations.................... (5.24) 2.01 (0.60) LESS DISTRIBUTIONS Dividends (from Net Investment Income).............. -- -- -- Distributions (from Realized Gains)................. (0.47) (0.38) -- ------- -------- -------- Total Distributions............................. (0.47) (0.38) -- ------- -------- -------- NET ASSET VALUE END OF PERIOD....................... $19.79 $25.50 $23.87 ======= ======== ======== TOTAL RETURN (A)................................ (20.83%) 8.43% (2.45%) RATIOS/SUPPLEMENTAL DATA Net Assets End of Period (thousands)................ $ 951 $ 918 $ 405 Ratio of Expenses to Average Net Assets............. 2.40% 2.55% 2.66% Ratio of Net Investment Income (Loss) to Average Net Assets.......................................... (1.27%) (1.64%) (1.46%) Portfolio Turnover Rate............................. 17% 26% 33%
SECURITY EQUITY FUND - SOCIAL AWARENESS SERIES (CLASS S)
FISCAL PERIOD ENDED SEPTEMBER 30 ---------------------------------- 2001(C)(N) ---------- PER SHARE DATA NET ASSET VALUE BEGINNING OF PERIOD................. $ 22.93 INCOME FROM INVESTMENT OPERATIONS: Net Investment Income............................... (0.02) Net Gain (Loss) on Securities (realized and unrealized)......................... (2.63) ------- Total from Investment Operations.................... (2.65) LESS DISTRIBUTIONS Dividends (from Net Investment Income).............. -- Distributions (from Realized Gains)................. -- ------- Total Distributions............................. -- ------- NET ASSET VALUE END OF PERIOD....................... $ 20.28 ======= TOTAL RETURN (A).................................... (15.71%) RATIOS/SUPPLEMENTAL DATA Net Assets End of Period (thousands)................ $ 32 Ratio of Expenses to Average Net Assets............. 2.07% Ratio of Net Income (Loss) to Average Net Assets........................................ (0.64%) Portfolio Turnover Rate............................. 48%
See accompanying notes. 85 87 FINANCIAL HIGHLIGHTS (CONTINUED) [Graphic] SELECTED DATA FOR EACH SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD SECURITY EQUITY FUND - MID CAP VALUE SERIES (CLASS A)
FISCAL PERIOD ENDED SEPTEMBER 30 ------------------------------------------------------------------- 2001(C)(M) 2000(C) 1999(C) 1998(B)(C) 1997(B)(C)(E) ---------- ------- ------- ---------- ------------- PER SHARE DATA NET ASSET VALUE BEGINNING OF PERIOD...................... $20.75 $16.60 $12.07 $12.95 $10.00 INCOME FROM INVESTMENT OPERATIONS: Net Investment Income (Loss)............................. - (0.04) (0.07) (0.02) 0.05 Net Gain (Loss) on Securities............................ (realized and unrealized)............................... 1.38 4.89 4.65 (0.53) 2.90 ------- ------- ------- ------- ------ Total from Investment Operations......................... 1.38 4.85 4.58 (0.55) 2.95 LESS DISTRIBUTIONS Dividends (from Net Investment Income)................... - - - (0.05) - Distributions (from Realized Gains)...................... (1.81) (0.70) (0.05) (0.28) - ------- ------- ------- ------- ------ Total Distributions.................................... (1.81) (0.70) (0.05) (0.33) - ------- ------- ------- ------- ------ NET ASSET VALUE END OF PERIOD ........................... $20.32 $20.75 $16.60 $12.07 $12.95 ======= ======= ======= ======= ====== TOTAL RETURN (A)......................................... 7.53% 30.46% 38.06% (4.31%) 29.50% RATIOS/SUPPLEMENTAL DATA Net Assets End of Period (thousands)..................... $44,405 $34,458 $22,804 $10,901 $4,631 Ratio of Expenses to Average Net Assets.................. 1.32% 1.29% 1.33% 1.27% 1.10% Ratio of Net Investment Income (Loss) to Average Net Assets.............................................. 0.02% (0.25%) (0.44%) (0.13%) 1.43% Portfolio Turnover Rate.................................. 47% 69% 79% 98% 35%
SECURITY EQUITY FUND - MID CAP VALUE SERIES (CLASS B)
FISCAL PERIOD ENDED SEPTEMBER 30 ------------------------------------------------------------------- 2001(C)(M) 2000(C) 1999(C) 1998(B)(C) 1997(B)(C)(E) ---------- ------- ------- ---------- ------------- PER SHARE DATA NET ASSET VALUE BEGINNING OF PERIOD...................... $20.11 $16.26 $11.94 $12.91 $10.00 INCOME FROM INVESTMENT OPERATIONS: Net Investment Income (Loss)............................. (0.09) (0.22) (0.22) (0.15) 0.01 Net Gain (Loss) on Securities............................ (realized and unrealized)............................... 1.32 4.77 4.59 (0.54) 2.90 ------- ------- ------- ------- ------ Total from Investment Operations......................... 1.23 4.55 4.37 (0.69) 2.91 LESS DISTRIBUTIONS Dividends (from Net Investment Income)................... - - - - - Distributions (from Realized Gains)...................... (1.81) (0.70) (0.05) (0.28) - ------- ------- ------- ------- ------ Total Distributions.................................... (1.81) (0.70) (0.05) (0.28) - ------- ------- ------- ------- ------ NET ASSET VALUE END OF PERIOD............................ $19.53 $20.11 $16.26 $11.94 $12.91 ======= ======= ======= ======= ====== TOTAL RETURN (A) . 6.99% 29.21% 36.71% (5.38%) 29.10% RATIOS/SUPPLEMENTAL DATA Net Assets End of Period (thousands)..................... $20,224 $14,041 $9,682 $6,615 $3,572 Ratio of Expenses to Average Net Assets.................. 2.34% 2.32% 2.37% 2.33% 2.26% Ratio of Net Investment Income (Loss) to Average Net Assets.............................................. (0.98%) (1.27%) (1.50%) (1.19%) 0.27% Portfolio Turnover Rate.................................. 47% 69% 79% 98% 35%
See accompanying notes. 86 88 FINANCIAL HIGHLIGHTS (CONTINUED) [GRAPHIC] SELECTED DATA FOR EACH SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD SECURITY EQUITY FUND - MID CAPVALUE SERIES (CLASS C)
FISCAL PERIOD ENDED SEPTEMBER 30 ----------------------------------- PER SHARE DATA 2001(c)(m) 2000(c) 1999(c)(i) ---------- ------- ---------- NET ASSET VALUE BEGINNING OF PERIOD.................. $20.39 $16.51 $14.54 INCOME FROM INVESTMENT OPERATIONS: Net Investment Income (Loss)......................... (0.09) (0.22) (0.13) Net Gain (Loss) on Securities (realized and unrealized)........................... 1.34 4.80 2.10 ------- ------- ------- Total from Investment Operations..................... 1.25 4.58 1.97 LESS DISTRIBUTIONS Dividends (from Net Investment Income)............... -- -- -- Distributions (from Realized Gains).................. (1.81) (0.70) -- ------- ------- ------- Total Distributions................................. (1.81) (0.70) -- ------- ------- ------- NET ASSET VALUE END OF PERIOD........................ $19.83 $20.39 $16.51 ======= ======= ======= TOTAL RETURN (a)..................................... 6.99% 28.93% 13.55% RATIOS/SUPPLEMENTAL DATA Net Assets End of Period (thousands)................. $3,862 $3,069 $1,138 Ratio of Expenses to Average Net Assets.............. 2.33% 2.36% 2.38% Ratio of Net Investment Income (Loss) to Average Net Assets......................................... (0.99%) (1.28%) (1.36%) Portfolio Turnover Rate.............................. 47% 69% 92%
SECURITY EQUITY FUND - MID CAPVALUE SERIES (CLASS S)
FISCAL PERIOD ENDED SEPTEMBER 30 ----------------------------------- PER SHARE DATA 2001(c)(n) ---------- NET ASSET VALUE BEGINNING OF PERIOD.................... $20.90 INCOME FROM INVESTMENT OPERATIONS: Net Investment Income.................................. (0.01) Net Gain (Loss) on Securities (realized and unrealized)............................. (0.58) ------- Total from Investment Operations....................... (0.59) LESS DISTRIBUTIONS Dividends (from Net Investment Income)................. -- Distributions (from Realized Gains).................... -- ------- Total distributions.................................. -- ------- NET ASSET VALUE END OF PERIOD.......................... $20.31 ======= TOTAL RETURN (a)....................................... (1.27%) RATIOS/SUPPLEMENTAL DATA Net Assets End of Period (thousands)................... $ 307 Ratio of Expenses to Average Net Assets................ 3.16% Ratio of Net Income (Loss) to Average Net Assets........................................... (1.44%) Portfolio Turnover Rate................................ 90%
See accompanying notes. 87 89 FINANCIAL HIGHLIGHTS (CONTINUED) [GRAPHIC] Selected data for each share of capital stock outstanding throughout each period SECURITY EQUITY FUND - SMALL CAP GROWTH SERIES (CLASS A)
FISCAL PERIOD ENDED SEPTEMBER 30 ------------------------------------------------ 2001(C)(M) 2000(B)(C) 1999(B)(C) 1998(B)(C)(G) ---------- ---------- ---------- ------------- PER SHARE DATA NET ASSET VALUE BEGINNING OF PERIOD................................... $22.08 $12.98 $8.70 $10.00 INCOME FROM INVESTMENT OPERATIONS: Net Investment Income (Loss).......................................... (0.09) (0.19) -- (0.03) Net Gain (Loss) on Securities (realized and unrealized)............................................. (8.88) 9.75 4.28 (1.26) ------- -------- ------- ------- Total from Investment Operations...................................... (8.97) 9.56 4.28 (1.29) LESS DISTRIBUTIONS Dividends (from Net Investment Income)................................ -- -- -- (0.01) Distributions (from Realized Gains)................................... (1.32) (0.46) -- -- ------- -------- ------- ------- Total Distributions................................................... (1.32) (0.46) -- (0.01) ------- -------- ------- ------- NET ASSET VALUE END OF PERIOD......................................... $11.79 $22.08 $12.98 $ 8.70 ======= ======== ======= ======= TOTAL RETURN (A)...................................................... (42.18%) 74.58% 49.20% (12.95%) RATIOS/SUPPLEMENTAL DATA Net Assets End of Period (thousands).................................. $21,548 $38,172 $16,877 $2,677 Ratio of Expenses to Average Net Assets............................... 1.87% 1.55% 0.49% 1.39% Ratio of Net Investment Income (Loss) to Average Net Assets........... (1.14%) (0.97%) 0.03% (0.35%) Portfolio Turnover Rate............................................... 437% 318% 361% 366%
SECURITY EQUITY FUND - SMALL CAP GROWTH SERIES (CLASS B)
FISCAL PERIOD ENDED SEPTEMBER 30 ------------------------------------------------ 2001(C)(M) 2000(B)(C) 1999(B)(C) 1998(B)(C)(G) ---------- ---------- ---------- ------------- PER SHARE DATA NET ASSET VALUE BEGINNING OF PERIOD................................... $21.34 $12.69 $8.63 $10.00 INCOME FROM INVESTMENT OPERATIONS: Net Investment Income (Loss).......................................... (0.14) (0.31) (0.14) (0.13) Net Gain (Loss) on Securities (realized and unrealized)............................................. (8.57) 9.42 4.20 (1.24) ------ ------- ------ -------- Total from Investment Operations...................................... (8.71) 9.11 4.06 (1.37) LESS DISTRIBUTIONS Dividends (from Net Investment Income)................................ -- -- -- -- Distributions (from Realized Gains)................................... (1.32) (0.46) -- -- ------ ------- ------ ------- Total Distributions................................................... (1.32) (0.46) -- -- ------ ------- ------ ------- NET ASSET VALUE END OF PERIOD......................................... $11.31 $21.34 $12.69 $8.63 ====== ======= ====== ======= TOTAL RETURN (A)...................................................... (42.44%) 72.70% 47.05% (13.70%) RATIOS/SUPPLEMENTAL DATA Net Assets End of Period (thousands).................................. $7,489 $11,688 $2,430 $1,504 Ratio of Expenses to Average Net Assets............................... 2.64% 2.44% 1.94% 2.38% Ratio of Net Investment Income (Loss) to Average Net Assets........... (1.90%) (1.81%) (1.41%) (1.34%) Portfolio Turnover Rate............................................... 437% 318% 361% 366%
See accompanying notes. 88 90 FINANCIAL HIGHLIGHTS (CONTINUED) [Graphic] SELECTED DATA FOR EACH SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD SECURITY EQUITY FUND - SMALL CAP GROWTH SERIES (CLASS C)
FISCAL PERIOD ENDED SEPTEMBER 30 -------------------------------------- 2001(C)(M) 2000(C) 1999(C)(I) ---------- ------- --------- PER SHARE DATA NET ASSET VALUE BEGINNING OF PERIOD................... $ 21.74 $ 12.86 $ 11.16 INCOME FROM INVESTMENT OPERATIONS: Net Investment Income (Loss).......................... (0.14) (0.35) (0.07) Net Gain (Loss) on Securities (realized and unrealized)............................ (8.77) 9.69 1.77 ------- ------- ------- Total from Investment Operations...................... (8.91) 9.34 1.70 LESS DISTRIBUTIONS Dividends (from Net Investment Income)................ - - - Distributions (from Realized Gains)................... (1.32) (0.46) - ------- ------- ------- Total Distributions................................. (1.32) (0.46) - ------- ------- ------- NET ASSET VALUE END OF PERIOD......................... $11.51 $21.74 $12.86 ======= ======= ======= TOTAL RETURN (A)...................................... (42.59%) 73.54% 15.23% RATIOS/SUPPLEMENTAL DATA Net Assets End of Period (thousands).................. $2,436 $3,741 $890 Ratio of Expenses to Average Net Assets............... 2.63% 2.39% 1.47% Ratio of Net Investment Income (Loss) to Average Net Assets........................................... (1.90%) (1.81%) (0.95%) Portfolio Turnover Rate............................... 437% 318% 374%
SECURITY EQUITY FUND - SMALL CAP GROWTH SERIES (CLASS S)
FISCAL PERIOD ENDED SEPTEMBER 30 -------------------------------------- 2001(C)(N) ---------- PER SHARE DATA NET ASSET VALUE BEGINNING OF PERIOD................... $11.82 INCOME FROM INVESTMENT OPERATIONS: Net Investment Income................................. - Net Gain (Loss) on Securities (realized and unrealized)............................ (0.03) ------- Total from Investment Operations...................... (0.03) LESS DISTRIBUTIONS Dividends (from Net Investment Income)................ - Distributions (from Realized Gains)................... - ------- Total Distributions................................. - ------- NET ASSET VALUE END OF PERIOD......................... $11.79 ======= TOTAL RETURN (A)...................................... (20.28%) RATIOS/SUPPLEMENTAL DATA Net Assets End of Period (thousands).................. $9 Ratio of Expenses to Average Net Assets............... 3.07% Ratio of Net Income (Loss) to Average Net Assets........................................... (2.05%) Portfolio Turnover Rate............................... 1351%
See accompanying notes. 89 91 FINANCIAL HIGHLIGHTS (CONTINUED) [GRAPHIC] SELECTED DATA FOR EACH SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD SECURITY EQUITY FUND - ENHANCED INDEX SERIES (CLASS A)
FISCAL PERIOD ENDED SEPTEMBER 30 ---------------------------------- PER SHARE DATA 2001(c)(m) 2000(c) 1999(c)(h) ---------- ------- ---------- NET ASSET VALUE BEGINNING OF PERIOD.............. $11.29 $10.04 $10.00 INCOME FROM INVESTMENT OPERATIONS: Net Investment Income (Loss)..................... -- -- 0.03 Net Gain (Loss) on Securities (realized and unrealized)....................... (2.23) 1.37 0.01 ------- ------- ------- Total from Investment Operations................. (2.23) 1.37 0.04 LESS DISTRIBUTIONS Dividends (from Net Investment Income)........... -- -- -- Distributions (from Realized Gains).............. (0.09) (0.12) -- ------- ------- ------- Total Distributions............................ (0.09) (0.12) -- ------- ------- ------- NET ASSET VALUE END OF PERIOD.................... $8.97 $11.29 $10.04 ======= ======= ======= TOTAL RETURN (a)................................. (19.88%) 13.65% 0.40% RATIOS/SUPPLEMENTAL DATA Net Assets End of Period (thousands)............. $7,274 $8,219 $7,589 Ratio of Expenses to Average Net Assets.......... 0.71% 1.44% 1.48% Ratio of Net Investment Income (Loss) to Average Net Assets..................................... (0.03%) (0.05%) 0.39% Portfolio Turnover Rate.......................... 49% 73% 68%
SECURITY EQUITY FUND - ENHANCED INDEX SERIES (CLASS B)
FISCAL PERIOD ENDED SEPTEMBER 30 ---------------------------------- PER SHARE DATA 2001(c)(m) 2000(c) 1999(c)(h) ---------- ------- ---------- NET ASSET VALUE BEGINNING OF PERIOD.............. $11.15 $ 9.99 $10.00 INCOME FROM INVESTMENT OPERATIONS: Net Investment Income (Loss)..................... (0.04) (0.09) (0.02) Net Gain (Loss) on Securities (realized and unrealized)....................... (2.20) 1.37 0.01 ------- ------- ------- Total from Investment Operations................. (2.24) 1.28 (0.01) LESS DISTRIBUTIONS Dividends (from Net Investment Income)........... -- -- -- Distributions (from Realized Gains).............. (0.09) (0.12) -- ------- ------- ------- Total Distributions............................ (0.09) (0.12) -- ------- ------- ------- NET ASSET VALUE END OF PERIOD.................... $ 8.82 $11.15 $ 9.99 ======= ======= ======= TOTAL RETURN (a)................................. (20.22%) 12.82% (0.10%) RATIOS/SUPPLEMENTAL DATA Net Assets End of Period (thousands)............. $8,585 $10,960 $9,591 Ratio of Expenses to Average Net Assets.......... 1.09% 2.18% 2.20% Ratio of Net Investment Income (Loss) to Average Net Assets..................................... (0.41%) (0.79%) (0.33%) Portfolio Turnover Rate.......................... 49% 73% 68%
See accompanying notes. 90 92 FINANCIAL HIGHLIGHTS (CONTINUED) [GRAPHIC] Selected data for each share of capital stock outstanding throughout each period SECURITY EQUITY FUND - ENHANCED INDEX SERIES (CLASS C)
FISCAL PERIOD ENDED SEPTEMBER 30 -------------------------------------- 2001(C)(M) 2000(C) 1999(C)(H) ---------- ------- ---------- PER SHARE DATA NET ASSET VALUE BEGINNING OF PERIOD............................... $11.16 $10.00 $10.00 INCOME FROM INVESTMENT OPERATIONS: Net Investment Income (Loss)...................................... (0.04) (0.09) (0.01) Net Gain (Loss) on Securities (realized and unrealized)......................................... (2.19) 1.37 0.01 ------ ------ ------ Total from Investment Operations.................................. (2.23) 1.28 -- LESS DISTRIBUTIONS Dividends (from Net Investment Income)............................ -- -- -- Distributions (from Realized Gains)............................... (0.09) (0.12) -- ------ ------ ------ Total Distributions.............................................. (0.09) (0.12) -- ------ ------ ------ NET ASSET VALUE END OF PERIOD .................................... $8.84 $11.16 $10.00 ====== ====== ====== TOTAL RETURN (A).................................................. (20.11%) 12.69% 0.00% RATIOS/SUPPLEMENTAL DATA Net Assets End of Period (thousands).............................. $5,661 $7,092 $5,205 Ratio of Expenses to Average Net Assets........................... 1.09% 2.15% 2.05% Ratio of Net Investment Income (Loss) to Average Net Assets....................................................... (0.41%) (0.77%) (0.18%) Portfolio Turnover Rate........................................... 49% 73% 68%
SECURITY EQUITY FUND - ENHANCED INDEX SERIES (CLASS S)
FISCAL PERIOD ENDED SEPTEMBER 30 -------------------------------------- 2001(C)(N) ---------- PER SHARE DATA NET ASSET VALUE BEGINNING OF PERIOD............................... $8.84 INCOME FROM INVESTMENT OPERATIONS: Net Investment Income............................................. -- Net Gain (Loss) on Securities (realized and unrealized)........................................ 0.13 ------- Total from Investment Operations.................................. 0.13 LESS DISTRIBUTIONS Dividends (from Net Investment Income)............................ -- Distributions (from Realized Gains)............................... -- ------- Total Distributions............................................... -- NET ASSET VALUE END OF PERIOD..................................... $8.97 ======= TOTAL RETURN (A).................................................. (16.01%) RATIOS/SUPPLEMENTAL DATA Net Assets End of Period (thousands).............................. $3 Ratio of Expenses to Average Net Assets........................... 1.09% Ratio of Net Income (Loss) to Average Net Assets........................................................ (0.41%) Portfolio Turnover Rate........................................... 29%
See accompanying notes. 91 93 FINANCIAL HIGHLIGHTS (CONTINUED) [GRAPHIC] SELECTED DATA FOR EACH SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD SECURITY EQUITY FUND -- INTERNATIONAL SERIES (CLASS A)
FISCAL PERIOD ENDED SEPTEMBER 30 ---------------------------------------------- 2001(b)(c)(l)(m) 2000(b)(c) 1999(b)(c)(h) ---------------- ---------- ------------- PER SHARE DATA NET ASSET VALUE BEGINNING OF PERIOD................. $11.01 $ 9.69 $10.00 INCOME FROM INVESTMENT OPERATIONS: Net Investment Income (Loss)........................ (0.09) (0.13) (0.03) Net Gain (Loss) on Securities (realized and unrealized)......................... (2.10) 1.45 (0.28) ------ ------ ------ Total from Investment Operations.................... (2.19) 1.32 (0.31) LESS DISTRIBUTIONS Dividends (from Net Investment Income).............. -- -- -- Distributions (from Realized Gains)................. (0.40) -- -- ------ ------ ------ Total Distributions............................. (0.40) -- -- ------ ------ ------ NET ASSET VALUE END OF PERIOD....................... $ 8.42 $11.01 $ 9.69 ====== ====== ====== TOTAL RETURN (a).................................... (20.35%) 13.62% (3.10%) RATIOS/SUPPLEMENTAL DATA Net Assets End of Period (thousands)................ $3,601 $4,414 $2,928 Ratio of Expenses to Average Net Assets............. 2.54% 2.46% 2.50% Ratio of Net Investment Income (Loss) to Average Net Assets........................................ (1.91%) (1.08%) (0.41%) Portfolio Turnover Rate............................. 198% 116% 115%
SECURITY EQUITY FUND -- INTERNATIONAL SERIES (CLASS B)
FISCAL PERIOD ENDED SEPTEMBER 30 ---------------------------------------------- 2001(b)(c)(l)(m) 2000(b)(c) 1999(b)(c)(h) ---------------- ---------- ------------- PER SHARE DATA NET ASSET VALUE BEGINNING OF PERIOD................. $10.88 $9.65 $10.00 INCOME FROM INVESTMENT OPERATIONS: Net Investment Income (Loss)........................ (0.12) (0.22) (0.07) Net Gain (Loss) on Securities (realized and unrealized)......................... (2.06) 1.45 (0.28) ------ ------ ------ Total from Investment Operations.................... (2.18) 1.23 (0.35) LESS DISTRIBUTIONS Dividends (from Net Investment Income).............. -- -- -- Distributions (from Realized Gains)................. (0.40) -- -- ------ ------ ------ Total Distributions............................. (0.40) -- -- ------ ------ ------ NET ASSET VALUE END OF PERIOD....................... $ 8.30 $10.88 $ 9.65 ====== ====== ====== TOTAL RETURN (a).................................... (20.50%) 12.75% (3.50%) RATIOS/SUPPLEMENTAL DATA Net Assets End of Period (thousands)................ $2,040 $2,520 $2,028 Ratio of Expenses to Average Net Assets............. 3.29% 3.26% 3.19% Ratio of Net Investment Income (Loss) to Average Net Assets........................................ (2.65%) (1.92%) (1.09%) Portfolio Turnover Rate............................. 198% 116% 115%
See accompanying notes. 92 94 FINANCIAL HIGHLIGHTS (CONTINUED) [GRAPHIC] SELECTED DATA FOR EACH SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD SECURITY EQUITY FUND - INTERNATIONAL SERIES (CLASS C)
FISCAL PERIOD ENDED SEPTEMBER 30 ----------------------------------------- PER SHARE DATA 2001(b)(c)(l)(m) 2000(b)(c) 1999(b)(c)(h) ---------------- ---------- ------------- NET ASSET VALUE BEGINNING OF PERIOD.............. $10.92 $ 9.68 $10.00 INCOME FROM INVESTMENT OPERATIONS: Net Investment Income (Loss)..................... (0.13) (0.21) (0.04) Net Gain (Loss) on Securities (realized and unrealized)....................... (2.07) 1.45 (0.28) ------- ------- ------- Total from Investment Operations................. (2.20) 1.24 (0.32) LESS DISTRIBUTIONS Dividends (from Net Investment Income)........... -- -- -- Distributions (from Realized Gains).............. (0.40) -- -- ------- ------- ------- Total Distributions............................ (0.40) -- -- ------- ------- ------- NET ASSET VALUE END OF PERIOD.................... $ 8.32 $10.92 $ 9.68 ======= ======= ======= TOTAL RETURN (a)................................. (20.62%) 12.81% (3.20%) RATIOS/SUPPLEMENTAL DATA Net Assets End of Period (thousands)............. $2,753 $3,564 $2,493 Ratio of Expenses to Average Net Assets.......... 3.29% 3.11% 2.78% Ratio of Net Investment Income (Loss) to Average Net Assets..................................... (2.66%) (1.76%) (0.71%) Portfolio Turnover Rate.......................... 198% 116% 115%
See accompanying notes. 93 95 FINANCIAL HIGHLIGHTS (CONTINUED) [GRAPHIC] SELECTED DATA FOR EACH SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD SECURITY EQUITY FUND -- SELECT 25(R) SERIES (CLASS A)
FISCAL PERIOD ENDED SEPTEMBER 30 ----------------------------------- 2001(C)(M) 2000(C) 1999(C)(H) ---------- ------- ---------- PER SHARE DATA NET ASSET VALUE BEGINNING OF PERIOD................ $11.34 $10.53 $10.00 INCOME FROM INVESTMENT OPERATIONS: Net Investment Income (Loss)....................... (0.02) (0.09) (0.05) Net Gain (Loss) on Securities (realized and unrealized)........................ (2.59) 0.90 0.58 ------ ------ ------ Total from Investment Operations................... (2.61) 0.81 0.53 LESS DISTRIBUTIONS Dividends (from Net Investment Income)............. -- -- -- Distributions (from Realized Gains)................ -- -- -- ------ ------ ------ Total Distributions............................ -- -- -- ------ ------ ------ NET ASSET VALUE END OF PERIOD...................... $8.73 $11.34 $10.53 ====== ====== ====== TOTAL RETURN (a)................................... (23.02%) 7.69% 5.30% RATIOS/SUPPLEMENTAL DATA Net Assets End of Period (thousands)............... $16,825 $22,006 $13,975 Ratio of Expenses to Average Net Assets............ 1.34% 1.35% 1.48% Ratio of Net Investment Income (Loss) to Average Net Assets....................................... (0.49%) (0.74%) (0.75%) Portfolio Turnover Rate............................ 53% 89% 14%
SECURITY EQUITY FUND -- SELECT 25(R) SERIES (CLASS B)
FISCAL PERIOD ENDED SEPTEMBER 30 ----------------------------------- 2001(C)(M) 2000(C) 1999(C)(H) ---------- ------- ---------- PER SHARE DATA NET ASSET VALUE BEGINNING OF PERIOD................ $11.22 $10.52 $10.00 INCOME FROM INVESTMENT OPERATIONS: Net Investment Income (Loss)....................... (0.06) (0.17) (0.09) Net Gain (Loss) on Securities (realized and unrealized)........................ (2.56) 0.87 0.61 ------ ------ ------ Total from Investment Operations................... (2.62) 0.70 0.52 LESS DISTRIBUTIONS Dividends (from Net Investment Income)............. -- -- -- Distributions (from Realized Gains)................ -- -- -- ------ ------ ------ Total Distributions............................ -- -- -- ------ ------ ------ NET ASSET VALUE END OF PERIOD...................... $8.60 $11.22 $10.52 ====== ====== ====== TOTAL RETURN (a)................................... (23.35%) 6.65% 5.20% RATIOS/SUPPLEMENTAL DATA Net Assets End of Period (thousands)............... $13,995 $18,199 $12,938 Ratio of Expenses to Average Net Assets............ 2.10% 2.11% 2.19% Ratio of Net Investment Income (Loss) to Average Net Assets....................................... (1.24%) (1.49%) (1.47%) Portfolio Turnover Rate............................ 53% 89% 14%
See accompanying notes. 94 96 FINANCIAL HIGHLIGHTS (CONTINUED [GRAPHIC] SELECTED DATA FOR EACH SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD SECURITY EQUITY FUND - SELECT 25(R) SERIES (CLASS C)
FISCAL PERIOD ENDED SEPTEMBER 30 -------------------------------- 2001(c)(m) 2000(c) 1999(c)(h) ---------- ------- ----------- PER SHARE DATA NET ASSET VALUE BEGINNING OF PERIOD............... $11.26 $10.55 $10.00 INCOME FROM INVESTMENT OPERATIONS: Net Investment Income (Loss)...................... (0.06) (0.17) (0.09) Net Gain (Loss) on Securities (realized and unrealized)........................ (2.57) 0.88 0.64 ------- ------ ------- Total from Investment Operations.................. (2.63) 0.71 0.55 LESS DISTRIBUTIONS Dividends (from Net Investment Income)............ -- -- -- Distributions (from Realized Gains)............... -- -- -- ------- ------ ------- Total Distributions............................. -- -- -- ------- ------ ------- NET ASSET VALUE END OF PERIOD..................... $8.63 $11.26 $10.55 ======= ====== ======= TOTAL RETURN (A).................................. (23.36%) 6.73% 5.50% RATIOS/SUPPLEMENTAL DATA Net Assets End of Period (thousands).............. $5,742 $7,294 $4,442 Ratio of Expenses to Average Net Assets........... 2.10% 2.15% 2.07% Ratio of Net Investment Income (Loss) to Average Net Assets....................................... (1.24%) (1.49%) (1.34%) Portfolio Turnover Rate........................... 53% 89% 14%
SECURITY EQUITY FUND - SELECT 25(R) SERIES (CLASS S)
FISCAL PERIOD ENDED SEPTEMBER 30 -------------------------------- 2001(C)(N) ---------- PER SHARE DATA NET ASSET VALUE BEGINNING OF PERIOD............... $9.62 INCOME FROM INVESTMENT OPERATIONS: Net Investment Income............................. (0.01) Net Gain (Loss) on Securities (realized and unrealized)........................ (0.96) ------- Total from Investment Operations.................. (0.97) LESS DISTRIBUTIONS Dividends (from Net Investment Income)............ -- Distributions (from Realized Gains)............... -- ------- Total Distributions............................. -- ------- NET ASSET VALUE END OF PERIOD..................... $8.65 ------- TOTAL RETURN (A).................................. (19.23%) RATIOS/SUPPLEMENTAL DATA Net Assets End of Period (thousands).............. $10 Ratio of Expenses to Average Net Assets........... 2.33% Ratio of Net Income (Loss) to Average Net Assets....................................... (1.39%) Portfolio Turnover Rate........................... 48%
See accompanying notes. 95 97 FINANCIAL HIGHLIGHTS (CONTINUED) [GRAPHIC] SELECTED DATA FOR EACH SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD SECURITY EQUITY FUND - LARGE CAP GROWTH SERIES (CLASS A)
FISCAL PERIOD ENDED SEPTEMBER 30 -------------------------------- PER SHARE DATA 2001(c)(m) 2000(c)(k)(l) ---------- ------------- NET ASSET VALUE BEGINNING OF PERIOD.............. $ 9.71 $10.00 INCOME FROM INVESTMENT OPERATIONS: Net Investment Income (Loss)..................... (0.04) (0.05) Net Gain (Loss) on Securities (realized and unrealized)........................ (2.97) (0.24) ------- ------- Total from Investment Operations................. (3.01) (0.29) LESS DISTRIBUTIONS Dividends (from Net Investment Income)........... -- -- Distributions (from Realized Gains).............. -- -- ------- ------- Total Distributions.............................. -- -- ------- ------- NET ASSET VALUE END OF PERIOD.................... $6.70 $9.71 ======= ======= TOTAL RETURN (A)................................. (31.00%) (2.90%) RATIOS/SUPPLEMENTAL DATA Net Assets End of Period (thousands)............. $2,338 $2,405 Ratio of Expenses to Average Net Assets.......... 2.01% 1.92% Ratio of Net Investment Income (Loss) to Average Net Assets..................................... (1.13%) (1.25%) Portfolio Turnover Rate.......................... 10% 5%
SECURITY EQUITY FUND - LARGE CAP GROWTH SERIES (CLASS B)
FISCAL PERIOD ENDED SEPTEMBER 30 -------------------------------- PER SHARE DATA 2001(c)(m) 2000(c)(k)(l) ---------- ------------- NET ASSET VALUE BEGINNING OF PERIOD.............. $ 9.65 $10.00 INCOME FROM INVESTMENT OPERATIONS: Net Investment Income (Loss)..................... (0.07) (0.08) Net Gain (Loss) on Securities (realized and unrealized)........................ (2.95) (0.27) ------- ------- Total from Investment Operations................. (3.02) (0.38) LESS DISTRIBUTIONS Dividends (from Net Investment Income)........... -- -- Distributions (from Realized Gains).............. -- -- ------- ------- Total Distributions.............................. -- -- ------- ------- NET ASSET VALUE END OF PERIOD.................... $ 6.63 $ 9.65 ======= ======= TOTAL RETURN (A)................................. (31.30%) (3.50%) RATIOS/SUPPLEMENTAL DATA Net Assets End of Period (thousands)............. $2,082 $2,039 Ratio of Expenses to Average Net Assets.......... 2.76% 2.68% Ratio of Net Investment Income (Loss) to Average Net Assets..................................... (1.88%) (2.02%) Portfolio Turnover Rate.......................... 10% 5%
See accompanying notes. 96 98 FINANCIAL HIGHLIGHTS (CONTINUED) [GRAPHIC] SELECTED DATA FOR EACH SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD SECURITY EQUITY FUND -- LARGE CAPGROWTH SERIES (CLASS C)
FISCAL PERIOD ENDED SEPTEMBER 30 -------------------------------- 2001(C)(M) 2000(C)(K)(L) ---------- ------------- PER SHARE DATA NET ASSET VALUE BEGINNING OF PERIOD................ $ 9.65 $10.00 INCOME FROM INVESTMENT OPERATIONS: Net Investment Income (Loss)....................... (0.06) (0.08) Net Gain (Loss) on Securities (realized and unrealized)........................ (2.94) (0.27) ------ ------ Total from Investment Operations................... (3.00) (0.35) LESS DISTRIBUTIONS Dividends (from Net Investment Income)............. -- -- Distributions (from Realized Gains)................ -- -- ------ ------ Total Distributions............................ -- -- ------ ------ NET ASSET VALUE END OF PERIOD...................... $6.65 $9.65 ====== ====== TOTAL RETURN (a)................................... (31.09%) (3.50%) RATIOS/SUPPLEMENTAL DATA Net Assets End of Period (thousands)............... $2,171 $2,102 Ratio of Expenses to Average Net Assets............ 2.76% 2.66% Ratio of Net Investment Income (Loss) to Average Net Assets....................................... (1.87%) (2.00%) Portfolio Turnover Rate............................ 10% 5%
SECURITY EQUITY FUND -- LARGE CAPGROWTH SERIES (CLASS S)
FISCAL PERIOD ENDED SEPTEMBER 30 -------------------------------- 2001(C)(N) ---------- PER SHARE DATA NET ASSET VALUE BEGINNING OF PERIOD................ $ 6.60 INCOME FROM INVESTMENT OPERATIONS: Net Investment Income.............................. -- Net Gain (Loss) on Securities (realized and unrealized)........................ 0.10 ------ Total from Investment Operations................... 0.10 LESS DISTRIBUTIONS Dividends (from Net Investment Income)............. -- Distributions (from Realized Gains)................ -- ------ Total Distributions............................ -- ------ NET ASSET VALUE END OF PERIOD...................... $6.70 ====== TOTAL RETURN (a)................................... (20.62%) RATIOS/SUPPLEMENTAL DATA Net Assets End of Period (thousands)............... $1 Ratio of Expenses to Average Net Assets............ 2.76% Ratio of Net Income (Loss) to Average Net Assets... (1.87%) Portfolio Turnover Rate............................ 0%
See accompanying notes. 97 99 FINANCIAL HIGHLIGHTS (CONTINUED) [Graphic] SELECTED DATA FOR EACH SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD SECURITY EQUITY FUND - TECHNOLOGY SERIES (CLASS A)
FISCAL PERIOD ENDED SEPTEMBER 30 ----------------------------------------- 2001(B)(C)(L)(M) 2000(B)(C)(K)(L) PER SHARE DATA NET ASSET VALUE BEGINNING OF PERIOD.......................... $9.33 $10.00 INCOME FROM INVESTMENT OPERATIONS: Net Investment Income (Loss)................................. (0.07) (0.08) Net Gain (Loss) on Securities (realized and unrealized)................................... (4.40) (0.59) ------- ------- Total from Investment Operations............................. (4.47) (0.67) LESS DISTRIBUTIONS Dividends (from Net Investment Income)....................... -- -- Distributions (from Realized Gains).......................... -- -- ------- ------- Total Distributions........................................ -- -- ------- ------- NET ASSET VALUE END OF PERIOD................................ $4.86 $9.33 ======= ======= TOTAL RETURN (A)............................................. (47.91%) (6.70%) RATIOS/SUPPLEMENTAL DATA Net Assets End of Period (thousands)......................... $3,976 $4,340 Ratio of Expenses to Average Net Assets...................... 2.25% 2.28% Ratio of Net Investment Income (Loss) to Average Net Assets.................................................. (2.01%) (2.05%) Portfolio Turnover Rate...................................... 271% 148%
SECURITY EQUITY FUND - TECHNOLOGY SERIES (CLASS B)
FISCAL PERIOD ENDED SEPTEMBER 30 ----------------------------------------- 2001(B)(C)(L)(M) 2000(B)(C)(K)(L) PER SHARE DATA NET ASSET VALUE BEGINNING OF PERIOD.......................... $9.21 $10.00 INCOME FROM INVESTMENT OPERATIONS: Net Investment Income (Loss)................................. (0.09) (0.11) Net Gain (Loss) on Securities (realized and unrealized)................................... (4.38) (0.68) ------- ------- Total from Investment Operations............................. (4.47) (0.79) LESS DISTRIBUTIONS Dividends (from Net Investment Income)....................... -- -- Distributions (from Realized Gains).......................... -- -- ------- ------- Total Distributions........................................ -- -- ------- ------- NET ASSET VALUE END OF PERIOD................................ $4.74 $9.21 ======= ======= TOTAL RETURN (A)............................................. (48.53%) (7.90%) RATIOS/SUPPLEMENTAL DATA Net Assets End of Period (thousands)......................... $1,179 $1,971 Ratio of Expenses to Average Net Assets...................... 2.99% 3.03% Ratio of Net Investment Income (Loss) to Average Net Assets.................................................. (2.76%) (2.79%) Portfolio Turnover Rate...................................... 271% 148%
See accompanying notes. 98 100 FINANCIAL HIGHLIGHTS (CONTINUED) [GRAPHIC] SELECTED DATA FOR EACH SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD SECURITY EQUITY FUND - TECHNOLOGY SERIES (CLASS C)
FISCAL PERIOD ENDED SEPTEMBER 30 --------------------------------- PER SHARE DATA 2001(b)(c)(l)(m) 2000(b)(c)(k)(l) ---------------- ---------------- NET ASSET VALUE BEGINNING OF PERIOD............ $ 9.21 $10.00 INCOME FROM INVESTMENT OPERATIONS: Net Investment Income (Loss)................... (0.09) (0.11) Net Gain (Loss) on Securities (realized and unrealized)..................... (4.39) (0.68) ------- ------- Total from Investment Operations............... (4.48) (0.79) LESS DISTRIBUTIONS Dividends (from Net Investment Income)......... -- -- Distributions (from Realized Gains)............ -- -- ------- ------- Total Distributions.......................... -- -- NET ASSET VALUE END OF PERIOD.................. $ 4.73 $ 9.21 ======= ======= TOTAL RETURN (a)............................... (48.64%) (7.90%) RATIOS/SUPPLEMENTAL DATA Net Assets End of Period (thousands)........... $1,692 $2,276 Ratio of Expenses to Average Net Assets........ 3.00% 3.03% Ratio of Net Investment Income (Loss) to Average Net Assets................................... (2.76%) (2.79%) Portfolio Turnover Rate........................ 271% 148%
SECURITY EQUITY FUND - TECHNOLOGY SERIES (CLASS S)
FISCAL PERIOD ENDED SEPTEMBER 30 --------------------------------- PER SHARE DATA 2001(b)(c)(l)(n) ---------------- NET ASSET VALUE BEGINNING OF PERIOD............ $ 6.63 INCOME FROM INVESTMENT OPERATIONS: Net Investment Income.......................... (0.02) Net Gain (Loss) on Securities (realized and unrealized)..................... (1.76) ------- Total from Investment Operations............... (1.78) LESS DISTRIBUTIONS Dividends (from Net Investment Income)......... -- Distributions (from Realized Gains)............ -- ------- Total Distributions.......................... -- NET ASSET VALUE END OF PERIOD.................. $ 4.85 ======= TOTAL RETURN (a)............................... (34.01%) RATIOS/SUPPLEMENTAL DATA Net Assets End of Period (thousands)........... $20 Ratio of Expenses to Average Net Assets........ 3.00% Ratio of Net Income (Loss) to Average Net Assets................................... (2.77%) Portfolio Turnover Rate........................ 393%
See accompanying notes. 99 101 FINANCIAL HIGHLIGHTS (CONTINUED) [Graphic] SELECTED DATA FOR EACH SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD SECURITY ULTRA FUND (CLASS A)
FISCAL PERIOD ENDED SEPTEMBER 30 ------------------------------------------------------------------------- 2001(C)(M) 2000(C) 1999(C) 1998(C) 1997(C) 1996(C) ---------- =-------- ------- -------- ------- ------- PER SHARE DATA NET ASSET VALUE BEGINNING OF PERIOD.................... $15.28 $9.19 $7.65 $9.24 $8.25 $8.20 INCOME FROM INVESTMENT OPERATIONS: Net Investment Income (Loss)........................... (0.04) (0.08) (0.06) (0.06) (0.08) (0.05) Net Gain (Loss) on Securities (realized and unrealized)............................. (3.43) 6.60 3.51 (1.06) 1.65 1.10 -------- -------- ------- ------- ------- ------- Total from Investment Operations....................... (3.47) 6.52 3.45 (1.12) 1.57 1.05 LESS DISTRIBUTIONS Dividends (from Net Investment Income)................. -- -- -- -- -- -- Distributions (from Realized Gains) ................... (1.35) (0.43) (1.91) (0.47) (0.58) (1.00) -------- -------- ------- ------- ------- ------- Total Distributions.................................. (1.35) (0.43) (1.91) (0.47) (0.58) (1.00) -------- -------- ------- ------- ------- ------- NET ASSET VALUE END OF PERIOD.......................... $10.46 $15.28 $9.19 $7.65 $9.24 $8.25 ======== ======== ======= ======= ======= ======= TOTAL RETURN (A)....................................... (23.76%) 72.82% 50.91% (12.45%) 20.57% 15.36% RATIOS/SUPPLEMENTAL DATA Net Assets End of Period (thousands)................... $164,429 $204,787 $96,238 $67,554 $84,504 $74,230 Ratio of Expenses to Average Net Assets................ 1.09% 1.11% 1.21% 1.23% 1.71% 1.31% Ratio of Net Investment Income (Loss) to Average Net Assets............................................ (0.57%) (0.62%) (0.77%) (0.64%) (1.01%) (0.61%) Portfolio Turnover Rate................................ 46% 35% 54% 116% 68% 161%
SECURITY ULTRA FUND (CLASS B)
FISCAL PERIOD ENDED SEPTEMBER 30 ------------------------------------------------------------------------- 2001(C)(M) 2000(C) 1999(C) 1998(C) 1997(C) 1996(C) ---------- --------- ------- -------- ------- ------- PER SHARE DATA NET ASSET VALUE BEGINNING OF PERIOD.................... $14.02 $8.54 $7.28 $8.90 $8.03 $8.11 INCOME FROM INVESTMENT OPERATIONS: Net Investment Income (Loss)........................... (0.09) (0.19) (0.14) (0.14) (0.15) (0.13) Net Gain (Loss) on Securities (realized and unrealized)............................. (3.14) 6.10 3.31 (1.01) 1.60 1.05 -------- -------- ------- ------- ------- ------- Total from Investment Operations....................... (3.23) 5.91 3.17 (1.15) 1.45 0.92 LESS DISTRIBUTIONS Dividends (from Net Investment Income)................. -- -- -- -- -- -- Distributions (from Realized Gains).................... (1.35) (0.43) (1.91) (0.47) (0.58) (1.00) -------- -------- ------- ------- ------- ------- Total Distributions.................................. (1.35) (0.43) (1.91) (0.47) (0.58) (1.00) -------- -------- ------- ------- ------- ------- NET ASSET VALUE END OF PERIOD.......................... $9.44 $14.02 $8.54 $7.28 $8.90 $8.03 ======== ======== ======= ======= ======= ======= TOTAL RETURN (A)....................................... (24.22%) 71.17% 49.39% (13.30%) 19.58% 13.81% RATIOS/SUPPLEMENTAL DATA Net Assets End of Period (thousands)................... $34,104 $38,812 $7,818 $5,610 $5,964 $2,698 Ratio of Expenses to Average Net Assets................ 2.09% 2.11% 2.21% 2.23% 2.71% 2.31% Ratio of Net Investment Income (Loss) to Average Net Assets............................................ (1.57%) (1.61%) (1.77%) (1.64%) (2.01%) (1.61%) Portfolio Turnover Rate................................ 46% 35% 54% 116% 68% 161%
See accompanying notes. 100 102 FINANCIAL HIGHLIGHTS (CONTINUED) [GRAPHIC] SELECTED DATA FOR EACH SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD SECURITY ULTRAFUND (CLASS C)
FISCAL PERIOD ENDED SEPTEMBER 30 ----------------------------------------- 2001(C)(M) 2000(C) 1999(C)(I) ---------- ---------- ----------- PER SHARE DATA NET ASSET VALUE BEGINNING OF PERIOD.............................. $14.99 $9.11 $8.20 INCOME FROM INVESTMENT OPERATIONS: Net Investment Income (Loss)..................................... (0.09) (0.20) (0.07) Net Gain (Loss) on Securities (realized and unrealized).......... (3.37) 6.51 0.98 ---------- ---------- ----------- Total from Investment Operations................................. (3.46) 6.31 0.91 LESS DISTRIBUTIONS Dividends (from Net Investment Income)........................... -- -- -- Distributions (from Realized Gains).............................. (1.35) (0.43) -- ---------- ---------- ----------- Total Distributions.............................................. (1.35) (0.43) -- ---------- ---------- ----------- NET ASSET VALUE END OF PERIOD.................................... $10.18 $14.99 $9.11 ========== ========== =========== TOTAL RETURN (A)................................................. (24.18%) 71.10% 11.10% RATIOS/SUPPLEMENTAL DATA Net Assets End of Period (thousands)............................. $3,471 $3,017 $95 Ratio of Expenses to Average Net Assets.......................... 2.10% 2.11% 2.21% Ratio of Net Investment Income (Loss) to Average Net Assets...... (1.58%) (1.61%) (1.75%) Portfolio Turnover Rate.......................................... 46% 35% 54%
SECURITY ULTRAFUND (CLASS S)
FISCAL PERIOD ENDED SEPTEMBER 30 2001(C)(N) ----------------- PER SHARE DATA NET ASSET VALUE BEGINNING OF PERIOD.............................. $12.51 INCOME FROM INVESTMENT OPERATIONS: Net Investment Income............................................ (0.02) Net Gain (Loss) on Securities (realized and unrealized).......... (2.05) -------- Total from Investment Operations................................. (2.07) LESS DISTRIBUTIONS Dividends (from Net Investment Income)........................... -- Distributions (from Realized Gains).............................. -- -------- Total Distributions............................................ -- -------- NET ASSET VALUE END OF PERIOD.................................... $10.44 ======== TOTAL RETURN (A)................................................. (19.20%) RATIOS/SUPPLEMENTAL DATA Net Assets End of Period (thousands)............................. $74 Ratio of Expenses to Average Net Assets.......................... 2.20% Ratio of Net Income (Loss) to Average Net Assets................. (1.67%) Portfolio Turnover Rate.......................................... 56%
See accompanying notes. 101 103 FINANCIAL HIGHLIGHTS (CONTINUED) [GRAPHIC] SELECTED DATA FOR EACH SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD (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, C and S shares. (b) Fund expenses were reduced by the Investment Manager during the period and expense ratios absent such reimbursement would have been as follows:
2001 2000 1999 1998 1997 1996 ......................................... Total Return Series Class A N/A N/A 2.2% 2.5% 2.4% 3.1% Class B N/A N/A 3.2% 3.4% 3.3% 3.9% Class C N/A N/A 3.2% N/A N/A N/A Social Awareness Series Class A N/A N/A N/A 1.5% 1.7% N/A Class B N/A N/A N/A 2.5% 2.8% N/A Mid Cap Value Series Class A N/A N/A N/A 1.5% 1.9% N/A Class B N/A N/A N/A 2.6% 2.8% N/A Small Cap Growth Series Class A N/A 1.6% 1.5% 2.4% N/A N/A Class B N/A 2.5% 2.9% 3.4% N/A N/A Class C N/A 2.5% 2.5% N/A N/A N/A International Series Class A 3.4% 3.5% 4.7% N/A N/A N/A Class B 4.1% 4.3% 5.4% N/A N/A N/A Class C 4.1% 4.1% 5.0% N/A N/A N/A Technology Series Class A 2.4% 2.3% N/A N/A N/A N/A Class B 3.1% 3.0% N/A N/A N/A N/A Class C 3.1% 3.0% N/A N/A N/A N/A Class S 3.2% N/A N/A N/A N/A N/A
(c) Net investment income (loss) was computed using average shares outstanding throughout the period. (d) Security Social Awareness Series was initially capitalized on November 1, 1996, with a net asset value of $15 per share. Percentage amounts for the period, except for total return, have been annualized. (e) Security Mid Cap Value Series was initially capitalized on May 1, 1997, with a net asset value of $10 per share. Percentage amounts for the period, except for total return, have been annualized. (f) Meridian Investment Management Corporation (Meridian) became the sub-advisor of Total Return Series effective August 1, 1997. Prior to August 1, 1997 Security Management Company, LLC (SMC) paid Templeton/Franklin Investment Services, Inc. and Meridian for research services provided to Total Return Series. (g) Security Small Cap Growth Series was initially capitalized on October 15, 1997, with a net asset value of $10 per share. Percentage amounts for the period, except for total return, have been annualized. (h) Security Enhanced Index Series, Security International Series and Security Select 25(R) Series were initially capitalized on January 29, 1999, with a net asset value of $10 per share. Percentage amounts for the period, except for total return, have been annualized. (i) Class "C" Shares were initially offered for sale on January 29, 1999. Percentage amounts for the period, except total return, have been annualized. (j) Prior to May 15, 1999 SMC paid Meridian for sub-advisory services provided to Total Return Series. Effective May 15, 1999 the sub-advisory contract with Meridian was terminated and SMC continued to provide advisory services to the Total Return Series. (k) Security Large Cap Growth Series and Security Technology Series were initially capitalized on May 1, 2000, with a net asset value of $10 per share. Percentage amounts for the period, except total return, have been annualized. (l) Expense ratios, including reimbursements, were calculated without the reduction for custodian fees earnings credits beginning May 1, 2000 for Security Large Cap Growth Series, Security Technology Series and Security International Series. Expense ratios with such reductions would have been as follows:
2001 2000 ................... Large Cap Growth Series Class A N/A 1.85% Class B N/A 2.61% Class C N/A 2.60% Technology Series Class A 2.24% 2.25% Class B 2.98% 3.00% Class C 2.99% 3.00% Class S 2.92% N/A International Series Class A 2.50% N/A Class B 3.24% N/A Class C 3.24% N/A
(m) Unaudited figures for the six months ended March 31, 2001. Percentage amounts for the period, except total return, have been annualized. (n) Class "S" Shares were initially offered for sale on February 1, 2001. Percentage amounts for the period, except total return, have been annualized. The figures are unaudited. See accompanying notes. 102 104 NOTES TO FINANCIAL STATEMENTS [GRAPHIC] MARCH 31, 2001 1. SIGNIFICANT ACCOUNTING POLICIES Security Growth and Income, Equity and Ultra Funds (the Funds) are registered under the Investment Company Act of 1940, as amended, as diversified 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. Class A shares are generally sold with a sales charge at the time of purchase. Class A shares are not subject to a sales charge when they are redeemed, except that purchases of Class A shares of $1 million or more sold without a front-end sales charge are subject to a contingent deferred sales charge if redeemed within one year of purchase. Class "B" shares are offered without a front-end sales charge but incur additional class-specific expenses. Redemptions of the shares within five years of acquisition incur a contingent deferred sales charge. Class "C" shares are offered without a front-end sales charge but incur additional class-specific expenses. Redemptions of the shares within one year of acquisition incur a contingent deferred sales charge. The Funds began offering an additional class of shares ("S" shares) to the public on February 1, 2001. The shares are offered without a front-end sales charge but incur additional class-specific expenses. Redemptions of the shares within seven years 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 - Securities listed or traded on a national securities exchange are valued on the basis of the last sales price. If there are no sales on a particular day, then the securities are valued at the last bid price. If a security is traded on multiple exchanges, its value will be based on prices from the principal exchange where it is traded. All other securities for which market quotations are available are valued on the basis of the current bid price. If there is no bid price or if the bid price is deemed to be unsatisfactory by the Board of Directors or 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 market value. The Funds generally will value short-term debt securities at prices based on market quotations for 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. The Global Series' and International Series' investments in foreign securities may involve risks not present in domestic investments. 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 Global Series and International Series 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. 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. 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. C. FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS - Global Series and International 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. These funds 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 balance sheet. 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. D. FUTURES - Growth & Income Fund, Equity Series, Social Awareness Series, Small Cap Growth Series, Enhanced Index Series, International Series, and Ultra 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 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 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 103 105 NOTES TO FINANCIAL STATEMENTS (CONTINUED) [GRAPHIC} MARCH 31, 2001 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. Subsequent changes in the value of the contract, or variation margin, are recorded as unrealized gains or losses. The 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. E. SECURITY TRANSACTIONS AND INVESTMENT INCOME - Security transactions are accounted for on the date the securities are purchased or sold. Realized gains and losses are reported on an identified cost basis. Dividend income less foreign taxes withheld (if any) plus foreign taxes recoverable (if any) are recorded on the ex-dividend date. Interest income is recognized on the accrual basis. In November 2000, the American Institute of Certified Public Accountants (AICPA) issued a revised version of the AICPA Audit and Accounting Guide for Investment Companies (the Guide). The Guide is effective for annual financial statements issued for fiscal years beginning after December 15, 2000 and will require investment companies to amortize premiums and discounts on fixed income securities. The Funds currently do not amortize premiums on fixed income securities. Upon adoption, the Funds will be required to record a cumulative effect adjustment to reflect the amortization of premiums. The adjustment will reduce net investment income and increase unrealized appreciation on securities for each series affected and therefore will not impact total net assets. The Funds have completed their analysis of the impact of this accounting change, and found it to be immaterial. F. 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. These differences are primarily due to differing treatments relating to the expiration of net operating losses and the recharacterization of foreign currency gains and losses. G. 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. H. USE OF ESTIMATES - The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and 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. 2. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES Under terms of the investment advisory contract, Security Management Company, LLC (SMC) agrees to provide, or arrange for others to provide, all the services required by the Growth and Income Fund, Equity Series, Global Series, and Ultra Fund for a single fee, including investment advisory services, transfer agent services and certain other administrative services. For Growth and Income Fund, Equity Series and Ultra Fund this fee is equal to 2% of the first $10 million of the average daily closing value of each Fund's net assets, 1.5% of the next $20 million, and 1% of the remaining net assets of the fund for the fiscal year. For Global Series this fee is equal to 2% of the first $70 million of the average daily closing value of the series' net assets and 1.5% of the remaining average net assets of the series for the fiscal year. Additionally, SMC agrees to assume all of the Funds' expenses, except for its fee and the expenses of interest, taxes, brokerage commissions and extraordinary items and Class B, Class C and Class S distribution fees. Management fees are payable to SMC under an investment advisory contract at an annual rate of 0.75% of the average daily net assets for Total Return, Enhanced Index and Select 25 Series, 1.00% for Social Awareness, Mid Cap Value, Small Cap Growth Series, Large Cap Growth and Technology Series, and 1.10% for International Series. SMC also acts as the administrative agent and transfer agent for the funds, and as such performs administrative functions, transfer agency and dividend disbursing services, and the bookkeeping, accounting and pricing functions for each fund. For these services, the Investment Manager receives, from the International Series an administrative fee equal to .045% of the average daily net assets of the series plus the greater of .10% of the average net assets for (i) $30,000 for the year ended January 31, 2000, (ii) $45,000 for the year ended January 31, 2001 and (iii) $60,000 for the year ended January 31, 2002. For administrative services provided to the Total Return Series, Social Awareness Series, Mid Cap Value Series, Small Cap Growth Series, Enhanced Index Series, Select 25 Series and the Large Cap Growth Series, SMC receives an administrative fee equal to .09% of the average daily net assets of each series. For transfer agent services, SMC is paid an annual fixed charge per account as well as a transaction fee for all shareholder and dividend payments, except from Growth and Income Fund, Equity Series, Global Series and Ultra Fund. For the Technology Series, the administrative fee is equal to .045% of the average daily net assets of the Series plus the greater of .10% of the average net assets or (i) $30,000 in the year ending April 30, 2001; (ii) $45,000 in the year ending April 30, 2002 or (iii) $60,000 thereafter. SMC pays Oppenheimer Funds, Inc. an annual fee equal to a percentage of the average daily closing value of the combined average daily net assets of Global Series and another fund managed by SMC, SBL Series D, computed on a daily basis as follows: Combined Average Daily Net Assets Annual Fees --------------------------------- ----------- $0 to $300 Million ............................................. 35% $300 Million to $750 Million ................................... 30% $750 Million or more ........................................... 25% 104 106 NOTES TO FINANCIAL STATEMENTS (CONTINUED) [GRAPHIC] MARCH 31, 2001 SMC pays Strong Capital Management, Inc. ("Strong") with respect to Small Cap Growth Series, an annual fee based on the combined average net assets of the Series and another fund managed by SMC, SBLSeries X. The fee is equal to: Combined Average Daily Net Assets Annual Fees --------------------------------- ----------- Less Than $150 Million. . . . . . . . . . . . . . . . . . . . . . 50% $150 Million to $500 Million. . . . . . . . . . . . . . . . . . . 45% $500 Million or more. . . . . . . . . . . . . . . . . . . . . . . 40% Deutsche Asset Management, Inc. furnishes investment advisory services to Enhanced Index Series and International Series. Effective May 1, 2001 Bankers Trust Company changed its name to Deutsche Asset Management, Inc. For such services to the Enhanced Index Series SMC pays Deutsche Asset Management, Inc. an annual fee equal to a percentage of the average daily closing value of the combined net assets of Enhanced Index Series and another Fund, managed by SMC, SBLSeries H as follows: Combined Average Daily Net Assets Annual Fees --------------------------------- ----------- $0 to $100 Million. . . . . . . . . . . . . . . . . . . . . . . . 20% $100 Million to $300 Million. . . . . . . . . . . . . . . . . . . 15% $300 Million or more. . . . . . . . . . . . . . . . . . . . . . . 13% SMC will also pay Deutsche Asset Management, Inc.the following minimum fees with respect to the Enhanced Index Series: (i) no minimum fee in the first year the Enhanced Index begins operations; and (ii) $100,000 in the Series'second year of operations; and (iii) $200,000 in the third and following years of the Series'operations. For the services provided to the International Series, SMC pays Deutsche Asset Management, Inc.an annual fee equal to a percentage of the average daily closing value of the combined net assets of International Series and another Fund managed by SMC, SBLSeries I, computed on a daily basis as follows: Combined Average Daily Net Assets Annual Fees --------------------------------- ----------- $0 to $200 Million. . . . . . . . . . . . . . . . . . . . . . . . 60% $200 Million or more. . . . . . . . . . . . . . . . . . . . . . . 55% Wellington Management Company, LLPfurnishes investment advisory services to the Technology Series. For such services, SMC pays Wellington an annual fee equal to .50% of the average daily closing value of the combined net assets of Technology Series and Series T of SBLFund, another fund managed by SMC. SMC has agreed to limit the total expenses of the Enhanced Index Series and Select 25 Series to 1.75%, Total Return Series, Social Awareness Series, Mid Cap Value Series, Small Cap Growth Series and Large Cap Growth Series to 2.00%, and International Series and Technology Series to 2.25%, in each case exclusive of interest, taxes, extraordinary expenses, brokerage fees and commissions and 12b-1 fees. The expense limits other than those for Enhanced Index, Select 25 and International Series are voluntary limits which may be limited at any time without notice to shareholders. SMC waived management fees for the Small Cap Growth Series through November 30, 1999. The Funds have adopted Distribution Plans related to the offering of Class B and Class C shares pursuant to Rule 12b-1 under the Investment Company Act of 1940 and Small Cap Growth, Enhanced Index, International, Select 25, Large Cap Growth and the Technology Series have also adopted such a Plan with respect to their Class AShares. 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, and Class S shares and 0.25% of the average daily net assets of the Small Cap Growth, Enhanced Index, International, Select 25 Series, Large Cap Growth and the Technology Series Class Ashares. Security Distributors, Inc. (SDI), a wholly-owned subsidiary of Security Benefit Group, Inc. and the national distributor of the Funds, received net underwriting commissions on sales of Class Ashares and contingent deferred sales charges on redemptions occurring within 5 years of the date of purchase of Class B shares, within 1 year of the date of purchase for Class C shares and within seven years of the date of purchase of Class S Shares after allowances to brokers and dealers, all in the amounts presented in the following table:
SDI BROKER/ BROKER/ BROKER/ BROKER/ UNDERWRITING CDSC CDSC CDSC DEALER DEALER DEALER DEALER (CLASS A) (CLASS A) (CLASS B) (CLASS C) (CLASS A) (CLASS B) (CLASS C) (CLASS S) ------------ --------- --------- --------- -------- --------- --------- --------- Growth & Income Fund:................ $ 797 $ 30 $4,760 $ 47 $21,097 $15,296 $ 1,148 $-- Security Equity Fund: Equity Series...................... 6,615 702 125,402 303 385,819 463,465 5,867 2,280 Global Series...................... 248 1,360 12,496 566 29,914 45,604 2,436 960 Total Return Series................ 668 -- 1,366 5 4,866 5,477 146 80 Social Awareness Series............ 203 -- 8,331 159 22,916 29,467 2,076 1,440 Mid Cap Value Series............... 448 -- 5,022 329 38,673 64,844 3,748 15,847 Small Cap Growth Series............ 556 262 4,579 542 23,076 26,644 1,723 360 Enhanced Index Series.............. 1,182 46 10,856 199 6,676 12,146 1,467 120 International Series............... 581 -- 624 114 1,522 3,140 338 -- Select 25(R)Series................. 862 45 14,184 645 26,311 35,111 3,303 200 Large Cap Growth Series............ 170 -- 165 2,803 9,640 25,635 15,587 40 Technology Series.................. 601 -- 955 685 10,464 7,132 7,653 1,040 Security Ultra Fund:................. 3,893 1,876 12,088 193 60,464 89,577 4,119 3,625
Certain officers and directors of the Funds are also officers and/or directors of Security Benefit Life Insurance Company and its subsidiaries, which include SMC and SDI. 105 107 NOTES TO FINANCIAL STATEMENTS (CONTINUED) [GRAPHIC] MARCH 31, 2001 3. UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS For federal income tax purposes, the amounts of unrealized appreciation (depreciation) at March 31, 2001, were as follows:
GROSS GROSS NET UNREALIZED UNREALIZED UNREALIZED APPRECIATION APPRECIATION DEPRECIATION (DEPRECIATION) ------------- ------------- -------------- Growth & Income Fund................................. $ 2,494,811 $ (5,463,090) $ (2,968,279) Security Equity Fund: Equity Series...................................... 209,388,282 (44,373,376) 165,014,906 Global Series...................................... 6,962,901 (11,411,668) (4,448,767) Total Return Series................................ 393,806 (1,257,508) (863,702) Social Awareness Series............................ 4,114,849 (3,747,664) 367,185 Mid Cap Value Series............................... 15,392,364 (2,705,291) 12,687,073 Small Cap Growth Series............................ 2,099,425 (1,098,407) 1,001,018 Enhanced Index Series.............................. 1,619,023 (4,013,629) (2,394,606) International Series............................... 222,379 (585,401) (363,022) Select 25(R)Series................................. 1,738,785 (4,417,930) (2,679,145) Large Cap Growth Series............................ 95,463 (2,619,236) (2,523,773) Technology Series.................................. 111,176 (3,559,408) (3,448,232) Security Ultra Fund.................................. 52,307,700 (33,601,946) 18,705,754
4. INVESTMENT TRANSACTIONS Investment transactions for the six months ended March 31, 2001, (excluding overnight investments and short-term commercial paper) are as follows:
PROCEEDS PURCHASES FROM SALES ------------ ------------ Security Growth & Income Fund...................................... $ 51,371,760 $ 53,139,972 Security Equity Fund: Equity Series.................................................... 141,707,899 208,877,946 Global Series.................................................... 20,685,449 12,545,918 Total Return Series.............................................. 1,614,969 1,783,576 Social Awareness Series.......................................... 2,477,937 3,012,083 Mid Cap Value Series............................................. 23,336,543 13,097,023 Small Cap Growth Series........................................... 79,115,633 81,235,816 Enhanced Index Series.............................................. 5,609,956 6,879,904 International Series............................................... 8,571,711 8,972,795 Select 25(R)Series................................................. 10,714,600 12,729,810 Large Cap Growth Series............................................ 2,485,048 323,221 Technology Series.................................................. 13,556,467 10,491,449 Security Ultra Fund................................................ 72,249,392 50,372,752
106 108 NOTES TO FINANCIAL STATEMENTS (CONTINUED) [GRAPHIC] MARCH 31, 2001 5. FORWARD FOREIGN EXCHANGE CONTRACTS At March 31, 2001, International Series had the following open forward foreign exchange contracts to buy or sell currency (excluding foreign currency contracts used for purchase and sale settlements):
FOREIGN CURRENCY NET UNREALIZED CONTRACTS SETTLEMENT TO BE DELIVERED IN AMOUNT TO BE U.S. $ VALUE APPRECIATION TO BUY DATE U.S. $ PAID IN U.S. $ AS OF 03/31/01 (DEPRECIATION) --------- ------------ ------------------- -------------- -------------- -------------- INTERNATIONAL SERIES British Pound................ 4/9/01 171,058 $250,000 $243,160 $ (6,840) European Monetary Unit....... 4/12/01 - 4/17/01 549,384 500,000 485,644 (14,356) Japanese Yen................. 4/09/01 - 4/17/01 90,212,250 749,426 720,864 (28,562) -------- $(49,758) ========
FOREIGN CURRENCY NET UNREALIZED CONTRACTS SETTLEMENT TO BE DELIVERED IN AMOUNT TO BE U.S. $ VALUE APPRECIATION TO SELL DATE U.S. $ RECEIVED IN U.S. $ AS OF 03/31/01 (DEPRECIATION) --------- ------------ ------------------- ------------------ -------------- -------------- INTERNATIONAL SERIES British Pound................ 4/9/01 171,058 $251,965 $243,160 $ 8,805 European Monetary Unit....... 4/12/01 - 4/14/01 549,384 492,544 485,644 6,900 Japanese Yen................. 4/09/01 - 4/17/01 121,024,500 1,000,000 967,247 32,753 ------- $48,458 =======
6. OPEN FUTURES CONTRACTS
NUMBER OF CONTRACT MARKET UNREALIZED CURRENCY POSITION CONTRACTS EXPIRATION DATE AMOUNT VALUE GAIN/LOSS -------- -------- --------- --------------- ---------- ---------- ---------- ENHANCED INDEX SERIES S&P 500 E-Mini Future........ Long 8 6/15/01 $ 496,058 $ 467,700 $ (28,358) S&P 500 Index Future......... Long 8 6/15/01 2,497,847 2,338,400 (159,447) --------- $ 187,805 ========= EQUITY SERIES S&P 500 Index Future.......... Long 40 6/15/01 12,039,126 11,692,000 $(347,126) ========= INTERNATIONAL SERIES Topix Index Future............ Long 1 6/7/01 98,326 101,580 $3,254 =========
107 109 NOTES TO FINANCIAL STATEMENTS (CONTINUED) MARCH 31, 2001 7. CAPITAL SHARE TRANSACTIONS The Funds are authorized to issue unlimited number of shares in an unlimited number of classes. Transactions in the capital shares of the Funds were as follows:
2001 Total 2001 Total 2001 2001 2001 2001 2001 2001 Increase/ Increase/ Shares Amount Shares Amount Shares Amount (Decrease) (Decrease) Sold Sold Reinvested Reinvested Redeemed Redeemed Shares Amount --------- ----------- ---------- ----------- ----------- ------------ ----------- ------------ Growth & Income Fund Class A shares . . . . . 466,625 $ 2,930,854 67,314 $ 419,365 (1,057,556) $ (6,567,776) (523,617) $(3,217,557) Class B shares . . . . . 167,315 1,018,703 -- -- (150,431) (891,323) 16,884 127,380 Class C shares . . . . . 30,209 185,621 -- -- (20,998) (124,122) 9,211 61,499 Class S shares . . . . . -- -- -- -- -- -- -- -- --------- ----------- ---------- ------------ ---------- ------------ --------- ----------- Total. . . . . . . . . 664,149 $ 4,135,178 67,314 $ 419,365 (1,228,985) $ (7,583,221) (497,522) $(3,028,678) ========= =========== ========== ============ ========== ============ ========= =========== Security Equity Fund: Equity Series Class A shares . . . . . 5,310,921 $44,948,817 12,508,134 $105,568,784 (9,869,010) $(83,000,790) 7,950,045 $67,516,811 Class B shares . . . . . 2,135,962 16,631,570 2,779,841 21,766,157 (4,033,046) (30,598,086) 882,757 7,799,641 Class C shares . . . . . 135,056 1,080,850 81,178 668,094 (70,608) (569,418) 145,626 1,179,526 Class S shares . . . . . 8,052 57,000 -- -- -- -- 8,052 57,000 --------- ----------- ---------- ------------ ---------- ------------ --------- ----------- Total . . . . . . . . . 7,589,991 $62,718,237 15,369,153 $128,003,035 (13,972,664) $(114,168,294) 8,986,480 $76,552,978 ========= =========== ========== ============ ========== ============ ========= =========== Global Series Class A shares . . . . . 2,075,084 $31,758,807 715,978 $ 10,321,277 (2,030,498) $(31,435,786) 760,564 $10,644,298 Class B shares . . . . . 287,915 4,158,797 424,670 5,778,058 (252,232) (3,720,683) 460,353 6,216,172 Class C shares . . . . . 102,412 1,562,055 38,692 545,010 (38,427) (605,334) 102,677 1,501,731 Class S shares . . . . . 1,678 24,000 -- -- -- -- 1,678 24,000 --------- ----------- ---------- ------------ ---------- ------------ --------- ----------- Total . . . . . . . . 2,467,089 $37,503,659 1,179,340 $ 16,644,345 (2,321,157) $(35,761,803) 1,325,272 $18,386,201 ========= =========== ========== ============ ========== ============ ========= =========== Total Return Series Class A shares . . . . . 32,523 $ 349,867 1,101 $ 12,185 (34,270) $ (372,053) (646) $ (10,001) Class B shares . . . . . 12,747 138,063 1,140 12,322 (29,338) (304,248) (15,451) (153,863) Class C shares . . . . . 6,039 62,756 22 241 (560) (5,939) 5,501 57,058 Class S shares . . . . . 215 2,000 -- -- -- -- 215 2,000 --------- ----------- ---------- ------------ ---------- ------------ --------- ----------- Total . . . . . . . . 51,524 $ 552,686 2,263 $ 24,748 (64,168) $ (682,240) (10,381) $ (104,806) ========= =========== ========== ============ ========== ============ ========= =========== Social Awareness Series Class A shares . . . . . 135,326 $ 3,192,709 13,388 $ 321,010 (54,820) $ (1,257,776) 93,894 $ 2,255,943 Class B shares . . . . . 43,636 987,297 10,042 230,222 (33,109) (724,948) 20,569 492,571 Class C shares . . . . . 13,722 319,703 822 19,267 (2,498) (52,853) 12,046 286,117 Class S shares . . . . . 1,569 36,000 -- -- -- -- 1,569 36,000 --------- ----------- ---------- ------------ ---------- ------------ --------- ----------- Total . . . . . . . . 194,253 $ 4,535,709 24,252 $ 570,499 (90,427) $ (2,035,577) 128,078 $ 3,070,631 ========= =========== ========== ============ ========== ============ ========= =========== Mid Cap Value Series Class A shares . . . . . 495,001 $10,040,935 164,607 $ 3,043,509 (134,787) $ (2,695,443) 524,821 $10,389,001 Class B shares . . . . . 369,285 7,200,004 72,361 1,290,705 (104,374) (1,994,681) 337,272 6,496,028 Class C shares . . . . . 56,702 1,119,397 14,562 263,834 (27,044) (531,499) 44,220 851,732 Class S shares . . . . . 15,124 304,584 -- -- -- -- 15,124 304,584 --------- ----------- ---------- ------------ ---------- ------------ --------- ----------- Total . . . . . . . . 936,112 $18,664,920 251,530 $ 4,598,048 (266,205) $ (5,221,623) 921,437 $18,041,345 ========= =========== ========== ============ ========== ============ ========= =========== Small Cap Growth Series Class A shares . . . . . 624,017 $ 9,686,718 126,912 $ 2,027,550 (652,724) $(10,962,930) 98,205 $ 751,338 Class B shares . . . . . 374,579 5,883,629 54,070 831,385 (314,528) (4,523,596) 114,121 2,191,418 Class C shares . . . . . 59,597 929,813 14,767 231,639 (34,845) (544,607) 39,519 616,845 Class S shares . . . . . 769 9,000 -- -- -- -- 769 9,000 --------- ----------- ---------- ------------ ---------- ------------ --------- ----------- Total . . . . . . . . 1,058,962 $16,509,160 195,749 $ 3,090,574 (1,002,097) $(16,031,133) 252,614 $ 3,568,601 ========= =========== ========== ============ ========== ============ ========= =========== Enhanced Index Series Class A shares . . . . . 136,278 $ 1,400,435 6,171 $ 64,738 (59,831) $ (617,300) 82,618 $847,873 Class B shares . . . . . 95,412 975,810 8,285 85,677 (113,832) (1,094,029) (10,135) (32,542) Class C shares . . . . . 38,242 394,374 5,279 54,648 (38,265) (373,092) 5,256 75,930 Class S shares . . . . . 339 3,000 -- -- -- -- 339 3,000 --------- ----------- ---------- ------------ ---------- ------------ --------- ----------- Total . . . . . . . . 270,271 $ 2,773,619 19,735 $ 205,063 (211,928) $ (2,084,421) 78,078 $894,261 ========= =========== ========== ============ ========== ============ ========= =========== International Series Class A shares . . . . . 39,348 $ 368,628 16,680 $ 160,797 (29,295) $ (283,625) 26,733 $245,800 Class B shares . . . . . 10,243 96,804 9,712 92,360 (5,665) (54,280) 14,290 134,884 Class C shares . . . . . 9,184 87,214 13,101 124,980 (18,073) (169,466) 4,212 42,728 Class S shares . . . . . -- -- -- -- --------- ----------- ---------- ------------ ---------- ------------ --------- ----------- Total . . . . . . . . . 58,775 $ 552,646 39,493 $ 378,137 (53,033) $ (507,371) 45,235 $ 423,412 ========= =========== ========== ============ ========== ============ ========= =========== Select 25 Series Class A shares . . . . . 204,933 $ 2,072,546 -- $ -- (217,914) $ (2,200,454) (12,981) $ (127,908) Class B shares . . . . . 151,885 1,540,951 -- -- (146,431) (1,437,738) 5,454 103,213 Class C shares . . . . . 59,050 607,194 -- -- (41,678) (425,395) 17,372 181,799 Class S shares . . . . . 1,134 10,000 -- -- -- -- 1,134 10,000 --------- ----------- ---------- ------------ ---------- ------------ --------- ----------- Total . . . . . . . . 417,002 $ 4,230,691 -- $ -- (406,023) $ (4,063,587) 10,979 $ 167,104 ========= =========== ========== ============ ========== ============ ========= =========== Large Cap Growth Series Class A shares . . . . . 144,792 $ 1,232,132 (43,722) $ (362,463) 101,070 $ 869,669 Class B shares . . . . . 124,814 1,049,389 (22,200) (154,712) 102,614 894,677 Class C shares . . . . . 169,178 1,449,519 (60,352) (520,568) 108,826 928,951 Class S shares . . . . . 151 1,000 -- -- 151 1,000 --------- ----------- ---------- ------------ ---------- ------------ --------- ----------- Total . . . . . . . . 438,935 $ 3,732,040 -- $ -- (126,274) $ (1,037,743) 312,661 $ 2,694,297 ========= =========== ========== ============ ========== ============ ========= =========== Technology Series Class A shares . . . . . 464,808 $ 3,183,261 -- $ -- (111,885) $ (720,819) 352,923 $ 2,462,442 Class B shares . . . . . 57,051 414,949 -- -- (22,274) (133,049) 34,777 281,900 Class C shares . . . . . 121,935 859,582 -- -- (11,578) (71,488) 110,357 788,094 Class S shares . . . . . 4,083 26,000 -- -- -- -- 4,083 26,000 --------- ----------- ---------- ------------ ---------- ------------ --------- ----------- Total . . . . . . . . 647,877 $ 4,483,792 -- $ -- (145,737) $ (925,356) 502,140 $ 3,558,436 ========= =========== ========== ============ ========== ============ ========= =========== Security Ultra Fund Class A shares . . . . . 2,547,449 $32,648,805 1,505,804 $ 17,873,943 (1,734,105) $(21,648,826) 2,319,148 $28,873,922 Class B shares . . . . . 1,122,062 12,932,461 359,802 3,871,477 (638,895) (7,020,619) 842,969 9,783,319 Class C shares . . . . . 150,994 1,851,613 23,046 267,335 (34,317) (447,303) 139,723 1,671,645 Class S shares . . . . . 7,077 82,050 -- -- -- -- 7,077 82,050 --------- ----------- ---------- ------------ ---------- ------------ --------- ----------- Total . . . . . . . . 3,827,582 $47,514,929 1,888,652 $ 22,012,755 (2,407,317) $(29,116,748) 3,308,917 $40,410,936 ========= =========== ========== ============ ========== ============ ========= ===========
108 110 NOTES TO FINANCIAL STATEMENTS (CONTINUED) [GRAPHIC] MARCH 31, 2001
2000 Total 2000 Total 2000 2000 2000 2000 2000 2000 Increase/ Increase/ Shares Amount Shares Amount Shares Amount Decrease Decrease Sold Sold Reinvested Reinvested Redeemed Redeemed Shares Amount --------- ------------ ---------- ---------- --------- ------------- ---------- ------------ Growth & Income Fund Class A shares...... 1,009,210 $ 6,523,541 334,927 $ 2,254,392 (2,350,550) $ (15,151,767) (1,006,413) $ (6,373,834) Class B shares...... 278,673 1,787,298 35,504 232,977 (578,249) (3,612,927) (264,072) (1,592,652) Class C shares...... 72,069 460,165 1,771 11,805 (39,137) (249,494) 34,703 222,476 --------- ------------ --------- ----------- ---------- ------------- ---------- ------------ Total.............. 1,359,952 $ 8,771,004 372,202 $ 2,499,174 (2,967,936) $ (19,014,188) (1,235,782) $ (7,744,010) ========= ============ ========= =========== ========== ============= ========== ============ Equity Series Class A shares...... 15,238,098 $159,026,464 2,954,492 $30,481,483 (27,144,218) $(280,873,595) (8,951,628) $(91,365,648) Class B shares...... 6,501,463 64,250,119 643,490 6,291,400 (7,783,050) (76,002,989) (638,097) (5,461,470) Class C shares...... 387,617 4,006,316 77,916 814,389 (382,364) (3,966,706) 83,169 853,999 --------- ------------ --------- ----------- ---------- ------------- ---------- ------------ Total.............. 22,127,178 $227,282,899 3,675,898 $37,587,272 (35,309,632) $(360,843,290) (9,506,556) $(95,973,119) ========= ============ ========= =========== ========== ============= ========= ============ Global Series Class A shares...... 2,462,327 $ 46,229,349 168,184 $ 2,757,048 (1,423,899) $(25,970,043) 1,206,612 $ 23,016,354 Class B shares...... 1,144,475 20,285,235 126,914 1,989,121 (1,082,927) (18,443,388) 188,462 3,830,968 Class C shares...... 134,949 2,527,662 1,680 27,301 (6,103) (112,953) 130,526 2,442,010 --------- ------------ --------- ----------- ---------- ------------- --------- ------------ Total.............. 3,741,751 $ 69,042,246 296,778 $ 4,773,470 (2,512,929) $(44,526,384) 1,525,600 $ 9,289,332 ========= ============ ========= =========== ========== ============= ========= ============ Total Return Series Class A shares...... 65,822 $ 782,816 16,654 $ 196,238 (56,832) $ (675,711) 25,644 $ 303,343 Class B shares...... 37,266 439,913 17,284 200,891 (32,672) (380,528) 21,878 260,276 Class C shares...... 4,815 57,237 59 692 (525) (6,310) 4,349 51,619 --------- ------------ --------- ----------- ---------- ------------- --------- ------------ Total.............. 107,903 $ 1,279,966 33,997 $ 397,821 (90,029) $(1,062,549) 51,871 $ 615,238 ========= ============ ========= =========== ========== ============= ========= ============ Social Awareness Series Class A shares...... 290,347 $ 7,743,854 8,781 $ 225,141 (176,439) $(4,657,500) 122,689 $ 3,311,494 Class B shares...... 146,061 3,722,266 6,210 154,141 (37,406) (954,285) 114,865 2,922,122 Class C shares...... 27,842 737,958 286 7,240 (9,088) (236,244) 19,040 508,954 --------- ------------ --------- ----------- ---------- ------------- --------- ------------ Total.............. 464,250 $ 12,204,078 15,277 $ 386,522 (222,933) $(5,848,029) 256,594 $ 6,742,570 ========= ============ ========= =========== ========== ============= ========= ============ Mid Cap Value Series Class A shares...... 510,359 $ 9,287,405 56,965 $ 907,160 (280,317) $(4,827,525) 287,007 $ 5,367,040 Class B shares...... 221,880 3,957,700 24,284 377,734 (143,355) (2,401,680) 102,809 1,933,754 Class C shares...... 91,251 1,668,689 2,976 47,000 (12,680) (231,280) 81,547 1,484,409 --------- ------------ --------- ----------- ---------- ------------- --------- ------------ Total.............. 823,490 $ 14,913,794 84,225 $ 1,331,894 (436,352) $(7,460,485) 471,363 $ 8,785,203 ========= ============ ========= =========== ========== ============= ========= ============ Small Cap Growth Series Class A shares...... 1,022,035 $ 22,293,603 32,035 $ 561,850 (625,943) $(12,618,641) 428,127 $ 10,236,812 Class B shares...... 723,075 14,757,159 2,531 43,258 (369,326) (6,538,157) 356,280 8,262,260 Class C shares...... 128,771 2,639,962 2,240 38,867 (28,187) (553,626) 102,824 2,125,203 --------- ------------ --------- ----------- ---------- ------------- --------- ------------ Total.............. 1,873,881 $ 39,690,724 36,806 $ 643,975 (1,023,456) $(19,710,424) 887,231 $ 20,624,275 ========= ============ ========= =========== ========== ============= ========= ============ Enhanced Index Series Class A shares...... 237,263 $ 2,447,889 7,667 $ 84,510 (272,853) $(3,053,416) (27,923) $ (521,017) Class B shares...... 199,389 2,318,766 10,742 117,646 (186,972) (2,080,793) 23,159 355,619 Class C shares...... 137,050 1,592,783 5,675 62,264 (27,751) (310,753) 114,974 1,344,294 --------- ------------ --------- ----------- ---------- ------------- --------- ------------ Total.............. 573,702 $ 6,359,438 24,084 $ 264,420 (487,576) $(5,444,962) 110,210 $ 1,178,896 ========= ============ ========= =========== ========== ============= ========= ============ International Series Class A shares...... 140,827 $ 1,768,064 -- $ -- (42,180) $ (510,492) 98,647 $ 1,257,572 Class B shares...... 37,806 465,637 -- -- (16,359) (189,690) 21,447 275,947 Class C shares...... 70,866 840,265 -- -- (2,014) (22,657) 68,852 817,608 --------- ------------ --------- ----------- ---------- ------------- --------- ------------ Total.............. 249,499 $ 3,073,966 -- $ -- (60,553) $ (722,839) 188,946 $ 2,351,127 ========= ============ ========= =========== ========== ============= ========= ============ Select 25 Series Class A shares...... 1,189,517 $ 13,894,273 -- $ -- (574,931) $(6,684,023) 614,586 $ 7,210,250 Class B shares...... 783,600 9,067,246 -- -- (391,043) (4,535,961) 392,557 4,531,285 Class C shares...... 393,644 4,533,396 -- -- (166,703) (1,945,794) 226,941 2,587,602 --------- ------------ --------- ----------- ---------- ------------ --------- ----------- Total.............. 2,366,761 $ 27,494,915 -- $ -- (1,132,677) $(13,165,778) 1,234,084 $14,329,137 ========= ============ ========= =========== ========== ============ ========= =========== Large Cap Growth Series Class A shares...... 257,785 $ 2,590,226 -- $ -- (10,076) $ (103,394) 247,709 $ 2,486,832 Class B shares...... 212,322 2,140,185 -- -- (1,032) (10,357) 211,290 2,129,828 Class C shares...... 217,879 2,178,340 -- -- (35) (349) 217,844 2,177,991 --------- ------------ --------- ----------- ---------- ------------ --------- ----------- Total.............. 687,986 $ 6,908,751 -- $ -- (11,143) $ (114,100) 676,843 $ 6,794,651 ========= ============ ========= =========== ========== ============ ========= =========== Technology Series Class A shares...... 474,075 $ 4,740,692 -- $ -- (8,829) $ (86,896) 465,246 $ 4,653,796 Class B shares...... 221,002 2,208,003 -- -- (6,929) (70,401) 214,073 2,137,602 Class C shares...... 249,271 2,495,567 -- -- (2,039) (20,710) 247,232 2,474,857 --------- ------------ --------- ----------- ---------- ------------ --------- ----------- Total.............. 944,348 $ 9,444,262 -- $ -- (17,797) $ (178,007) 926,551 $ 9,266,255 ========= ============ ========= =========== ========== ============ ========= =========== Security Ultra Fund Class A shares...... 5,814,574 $ 74,604,827 411,416 $ 4,476,586 (3,296,864) $(41,794,421) 2,929,126 $37,286,992 Class B shares...... 2,510,768 30,361,621 59,870 602,354 (718,043) (8,615,115) 1,852,595 22,348,860 Class C shares...... 195,926 2,684,227 670 7,207 (5,811) (77,564) 190,785 2,613,870 --------- ------------ --------- ----------- ---------- ------------ --------- ----------- Total.............. 8,521,268 $107,650,675 471,956 $ 5,086,147 (4,020,718) $(50,487,100) 4,972,506 $62,249,722 ========= ============ ========= =========== ========== ============ ========= ===========
109 111 NOTES TO FINANCIAL STATEMENTS (CONTINUED) [GRAPHIC] MARCH 31, 2001 8. OPTIONS WRITTEN The following options written were outstanding for Mid Cap Value Series for the period ended March 31, 2001: PUT OPTIONS WRITTEN
EXPIRATION EXERCISE NUMBER OF MARKET COMMON STOCK DATE PRICE CONTRACTS VALUE ---------- -------- --------- ------- Acxiom Corporation....................................................... 4/20/01 25.00 140 $ 57,750 ADTRAN, Inc.............................................................. 5/18/01 22.50 152 29,450 Apple Computer, Inc...................................................... 4/20/01 17.50 190 6,650 Anixter International, Inc............................................... 4/20/01 22.50 155 6,200 Computer Sciences Corporation............................................ 4/20/01 35.00 100 33,000 Cross Timbers Oil Company................................................ 5/18/01 17.50 170 -- Maxwell Technologies, Inc................................................ 6/15/01 17.50 200 31,250 Newmont Mining Corporation............................................... 6/15/01 15.00 230 24,150 Solutia, Inc............................................................. 4/20/01 12.50 240 14,400 ----- -------- Total put options outstanding (premiums received, $254,583).............. 1,577 $202,850 ===== ========
CALL OPTIONS WRITTEN
EXPIRATION EXERCISE NUMBER OF MARKET COMMON STOCK DATE PRICE CONTRACTS VALUE ---------- -------- --------- ------- American General Corporation............................................. 4/20/01 42.50 70 $ 350 CSX Corporation.......................................................... 5/18/01 30.00 100 44,000 El Paso Energy Corporation............................................... 4/20/01 70.00 50 3,250 ENSCO International, Inc................................................. 6/15/01 40.00 80 16,400 Raytheon Company (Cl. B)................................................. 5/18/01 35.00 100 2,500 SunGard Data Systems, Inc................................................ 4/20/01 50.00 60 10,500 --- ------- Total call options outstanding (premiums received, $133,221)............. 460 $77,000 === =======
Transactions in options written for Mid Cap Value Series for the period ended March 31, 2001 were as follows: PUT OPTIONS WRITTEN
NUMBER OF MARKET CONTRACTS VALUE --------- --------- Balance at September 30, 2000..................................................................... 812 $ 92,801 Opened............................................................................................ 2,757 406,130 Bought Back -- -- Expired........................................................................................... (948) (115,864) Exercised......................................................................................... (1,044) (128,484) ------ --------- Balance at March 31, 2001......................................................................... 1,577 $ 254,583 ====== =========
CALL OPTIONS WRITTEN
NUMBER OF MARKET CONTRACTS VALUE --------- --------- Balance at September 30, 2000..................................................................... 139 $ 51,644 Opened............................................................................................ 983 204,697 Bought Back....................................................................................... (35) (18,269) Expired........................................................................................... (187) (47,858) Exercised......................................................................................... (440) (56,993) ------ -------- Balance at March 31, 2001......................................................................... 460 $133,221 ====== ========
110 112 NOTES TO FINANCIAL STATEMENTS (CONTINUED) [GRAPHIC] MARCH 31, 2001 The following options written were outstanding for International Series for the period ended March 31, 2001: PUT OPTIONS WRITTEN
EXPIRATION EXERCISE NUMBER OF MARKET CURRENCY DATE PRICE CONTRACTS VALUE ---------- -------- --------- ------- Japanese Yen................................................... 1/24/02 117.79 250,000 $12,275 ------- ------- Total put options outstanding (premiums received, $8,813)...... 250,000 $12,275 ======= =======
Transactions in options written for International Series for the period ended March 31, 2001 were as follows: PUT OPTIONS WRITTEN
NUMBER OF PREMIUM CONTRACTS AMOUNT ---------- -------- Balance at September 30, 2000..................... 250,000 $ 2,550 Opened............................................ 2,000,000 28,050 Bought Back ...................................... -- -- Expired........................................... (2,000,000) (21,787) Exercised......................................... -- -- ---------- -------- Balance at March 31, 2001......................... 250,000 $ 8,813 ========== ========
CALL OPTIONS WRITTEN
NUMBER OF PREMIUM CONTRACTS AMOUNT ---------- -------- Balance at September 30, 2000.................... -- $ -- Opened........................................... 750,000 3,000 Bought Back...................................... (250,000) (775) Expired.......................................... (500,000) (2,225) Exercised -- -- ---------- -------- Balance at March 31, 2001........................ -- $ -- ========== ========
The following options written were outstanding for Security Ultra Fund for the period ended March 31, 2001: PUT OPTIONS WRITTEN
EXPIRATION EXERCISE NUMBER OF MARKET COMMON STOCK DATE PRICE CONTRACTS VALUE ---------- -------- --------- ---------- Acxiom Corporation..................................................... 4/20/01 25.00 450 $ 185,625 Avici Systems, Inc..................................................... 4/20/01 12.50 610 305,000 Computer Sciences Corporation.......................................... 4/20/01 35.00 300 99,000 Global Marine, Inc..................................................... 4/20/01 25.00 480 50,400 IXYS Corporation....................................................... 4/20/01 15.00 750 98,438 Packeteer, Inc......................................................... 4/20/01 15.00 662 786,125 Sawtek, Inc............................................................ 4/20/01 15.00 682 34,100 ----- ---------- Total put options outstanding (premiums received, $ 954,614)........... 3,934 $1,558,688 ===== ==========
CALL OPTIONS WRITTEN
EXPIRATION EXERCISE NUMBER OF MARKET COMMON STOCK DATE PRICE CONTRACTS VALUE ---------- -------- --------- ---------- Anadarko Petroleum Corporation........................................ 5/18/01 65.00 178 $ 64,080 Cardinal Health, Inc.................................................. 4/20/01 100.00 120 22,800 Comverse Technology, Inc.............................................. 4/20/01 125.00 100 -- Rational Software Corporation......................................... 4/20/01 55.00 220 -- ----- ---------- Total call options outstanding (premiums received, $ 493,729)......... 618 $ 86,880 ===== ==========
111 113 NOTES TO FINANCIAL STATEMENTS (CONTINUED) [GRAPHIC] MARCH 31, 2001 8. OPTIONS WRITTEN (CONTINUED) Transactions in options written for Security Ultra Fund for the period ended March 31, 2001 were as follows: PUT OPTIONS WRITTEN
NUMBER OF PREMIUM CONTRACTS AMOUNT --------- ---------- Balance at September 30, 2000................. 1,822 $ 406,931 Opened........................................ 9,246 2,087,984 Bought Back................................... -- -- Expired....................................... (3,110) (567,806) Exercised..................................... (4,024) (972,495) --------- ---------- Balance at March 31, 2001..................... 3,934 $ 954,614 ========= ==========
CALL OPTIONS WRITTEN
NUMBER OF PREMIUM CONTRACTS AMOUNT --------- ---------- Balance at September 30, 2000................. 1,432 $ 475,364 Opened........................................ 1,970 1,279,223 Bought Back................................... -- -- Expired....................................... (1,078) (808,690) Exercised..................................... (1,706) (452,168) --------- ---------- Balance at March 31, 2001..................... 618 $ 493,729 ========= ----------
9. CAPITAL LOSSES At September 30, 2000, the Growth and Income Fund and Security Equity Fund Select 25 Series have capital loss carry-forwards of $727,563 (expires in 2008) and $368,467 (expires in 2008), respectively. These capital loss carryforwards are available as a reduction against future net realized capital gains. 112 114 THE SECURITY GROUP OF MUTUAL FUNDS Security Growth and Income Fund Security Equity Fund o Equity Series o Global Series o Total Return Series o Social Awareness Series o Mid Cap Value Series o Small Cap Growth Series o Enhanced Index Series o International Series o Select 25 Series o Large Cap Growth Series o Technology Series Security Ultra Fund Security Income Fund o Diversified Income Series o High Yield Series Security Municipal Bond Fund Security Cash Fund 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 FUNDS OFFICERS AND DIRECTORS DIRECTORS Donald A. Chubb, Jr. John D. Cleland Penny A. Lumpkin Mark L. Morris, Jr., D.V.M. Maynard F. Oliverius James R. Schmank OFFICERS John D. Cleland, Chairman of the Board James R. Schmank, President Terry A. Milberger, Vice President, Equity Fund James P. Schier, Vice President, Equity and Ultra Fund Cindy L. Shields, Vice President, Equity Fund Amy J. Lee, Secretary Christopher D. Swickard, Assistant Secretary Brenda M. Harwood, Treasurer [LOGO "SECURITY DISTRIBUTORS, INC."] 700 SW HARRISON ST. Topeka, Ks 66636-0001 ----------------- BULK RATE U.S. POSTAGE PAID PERMIT NO. 941 CHICAGO, IL -----------------