SECURITY EQUITY FUND
FILE NO. 811-1136
CIK NO. 0000088525
EXHIBIT 77B: Accountant's Report on Internal Control
Report of Independent Auditors
The Shareholders and Board of Directors
Security Equity Fund
In planning and performing our audit of the financial statements of Security
Equity Fund for the year ended September 30, 2000, we considered its internal
control, including control activities for safeguarding securities, to determine
our auditing procedures for the purpose of expressing our opinion on the
financial statements and to comply with the requirement of Form N-SAR, and not
to provide assurance on the internal control.
The management of Security Equity Fund is responsible for establishing and
maintaining internal control. In fulfilling this responsibility, estimates and
judgments by management are required to assess the expected benefits and related
costs of internal control. Generally, internal controls that are relevant to an
audit pertain to the entity's objective of preparing financial statements for
external purposes that are fairly presented in conformity with accounting
principles generally accepted in the United States. Those internal controls
include the safeguarding of assets against unauthorized acquisition, use or
disposition.
Because of inherent limitations in internal control, misstatements due to errors
or fraud may occur and not be detected. Also, projections of any evaluation of
internal control to future periods are subject to the risk that internal control
may become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.
Our consideration of internal control would not necessarily disclose all matters
in internal control that might be material weaknesses under standards
established by the American Institute of Certified Public Accountants. A
material weakness is a condition in which the design or operation of one or more
of the specific internal control components does not reduce to a relatively low
level the risk that errors or fraud in amounts that would be material in
relation to the financial statements being audited may occur and not be detected
within a timely period by employees in the normal course of performing their
assigned functions. However, we noted no matters involving internal control,
including control activities for safeguarding securities, and its operation that
we consider to be material weaknesses as defined above as of September 30, 2000.
This report is intended solely for the information and use of the Board of
Directors and management of Security Equity Fund and the Securities and Exchange
Commission and is not intended to be and should not be used by anyone other than
these specified parties.
Ernst & Young LLP
Kansas City, Missouri
November 10, 2000
