Guggenheim Variable Funds Trust NCSR Certified annual shareholder report (management investment company)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED

MANAGEMENT INVESTMENT COMPANIES


Investment Company Act file number		811-02753

SBL FUND


(Exact name of registrant as specified in charter)


ONE SECURITY BENEFIT PLACE, TOPEKA, KANSAS		66636-0001
(Address of principal executive offices)		(Zip code)

RICHARD M. GOLDMAN, PRESIDENT

SBL FUND

ONE SECURITY BENEFIT PLACE

TOPEKA, KANSAS 66636-0001

(Name and address of agent for service)

Registrant’s telephone number, including area code: (785) 438-3000

Date of fiscal year end: December 31

Date of reporting period: December 31, 2009

Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles.

A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget (“OMB”) control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. §3507.

Item 1.

Reports to Stockholders.

LOGO

SBL Fund

December 31, 2009

Annual Report

Table of Contents


Information about your Series expenses		2

Series A (Equity Series)		3

Series B (Large Cap Value Series)		11

Series C (Money Market Series)		19

Series D (Global Series)		27

Series E (U.S. Intermediate Bond Series)		35

Series H (Enhanced Index Series)		43

Series J (Mid Cap Growth Series)		53

Series N (Managed Asset Allocation Series)		61

Series O (All Cap Value Series)		89

Series P (High Yield Series)		97

Series Q (Small Cap Value Series)		107

Series V (Mid Cap Value Series)		114

Series X (Small Cap Growth Series)		123

Series Y (Select 25 Series)		131

Series Z (Alpha Opportunity Series)		137

Notes to Financial Statements		149

Directors and Officers		170

Information About Your Series Expenses

December 31, 2009 (unaudited)

Calculating your ongoing Series expenses

As a shareholder of the Series, you incur ongoing costs, including management fees and other series expenses. Performance figures and expense ratios do not reflect fees and expenses associated with an investment in variable insurance products. Shares of a Series of SBL Fund are available only through the purchase of such products. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Series and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period, July 1, 2009 through December 31, 2009.

Actual Expenses

The first table provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Expenses Paid During the Period” to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The second table provides information about hypothetical account values and hypothetical expenses based on the Series actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Series actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Series and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other mutual funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any fees and expenses associated with an investment in variable insurance products. Therefore, the second table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these fees and expenses associated with an investment in variable insurance products were included, your costs would have been higher.


	Expense Ratio¹		Fund Return		Beginning Account Value 7/1/2009		Ending Account Value 12/31/2009		Expenses Paid During Period²
Table 1. Based on actual Series return³
Series A (Equity Series)	0.91	%	22.82	%	$	1,000.00	$	1,228.17	$	5.11
Series B (Large Cap Value Series)	0.80	%	21.58	%		1,000.00		1,215.77		4.47
Series C (Money Market Series)	0.68	%	(0.29	)%		1,000.00		997.06		3.42
Series D (Global Series)	1.26	%	16.73	%		1,000.00		1,167.33		6.88
Series E (U.S. Intermediate Bond Series)	0.76	%	3.82	%		1,000.00		1,038.17		3.90
Series H (Enhanced Index Series)	0.76	%	22.95	%		1,000.00		1,229.49		4.27
Series J (Mid Cap Growth Series)	0.91	%	20.64	%		1,000.00		1,206.38		5.06
Series N (Managed Asset Allocation Series)	1.67	%	16.36	%		1,000.00		1,163.65		9.11
Series O (All Cap Value Series)	0.85	%	22.61	%		1,000.00		1,226.14		4.77
Series P (High Yield Series)	0.92	%	23.67	%		1,000.00		1,236.67		5.19
Series Q (Small Cap Value Series)	1.12	%	25.57	%		1,000.00		1,255.69		6.37
Series V (Mid Cap Value Series)	0.91	%	23.37	%		1,000.00		1,233.65		5.12
Series X (Small Cap Growth Series)	1.07	%	26.26	%		1,000.00		1,262.61		6.10
Series Y (Select 25 Series)	0.98	%	23.80	%		1,000.00		1,238.03		5.53
Series Z (Alpha Opportunity Series)	1.65	%	25.49	%		1,000.00		1,254.92		9.38

Table 2. Based on hypothetical 5% return (before expenses)
Series A (Equity Series)	0.91	%	5.00	%	$	1,000.00	$	1,020.62	$	4.63
Series B (Large Cap Value Series)	0.80	%	5.00	%		1,000.00		1,021.17		4.08
Series C (Money Market Series)	0.68	%	5.00	%		1,000.00		1,021.78		3.47
Series D (Global Series)	1.26	%	5.00	%		1,000.00		1,018.85		6.41
Series E (U.S. Intermediate Bond Series)	0.76	%	5.00	%		1,000.00		1,021.37		3.87
Series H (Enhanced Index Series)	0.76	%	5.00	%		1,000.00		1,021.37		3.87
Series J (Mid Cap Growth Series)	0.91	%	5.00	%		1,000.00		1,020.62		4.63
Series N (Managed Asset Allocation Series)	1.67	%	5.00	%		1,000.00		1,016.79		8.49
Series O (All Cap Value Series)	0.85	%	5.00	%		1,000.00		1,020.92		4.33
Series P (High Yield Series)	0.92	%	5.00	%		1,000.00		1,020.57		4.69
Series Q (Small Cap Value Series)	1.12	%	5.00	%		1,000.00		1,019.56		5.70
Series V (Mid Cap Value Series)	0.91	%	5.00	%		1,000.00		1,020.62		4.63
Series X (Small Cap Growth Series)	1.07	%	5.00	%		1,000.00		1,019.81		5.45
Series Y (Select 25 Series)	0.98	%	5.00	%		1,000.00		1,020.27		4.99
Series Z (Alpha Opportunity Series)	1.65	%	5.00	%		1,000.00		1,016.89		8.39

¹	Annualized

²	Expenses are equal to the Series annualized expense ratio, net of any applicable fee waivers, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period).

³	Actual cumulative return at net asset value for the period July 1, 2009 to December 31, 2009.

Managers’ Commentary

February 15, 2010


		Advised by:

To Our Shareholders:

Series A of the SBL Fund – Equity Series returned 29.84% during the year, outperforming the benchmark S&P 500 Index’s return of 26.46% and the Series’ peer group median return of 27.77%.

The Series’ strategy uses a blended approach, investing in growth and value stocks. Growth oriented stocks are securities of established companies that typically have a record of consistent earnings growth greater than the overall market. Value oriented stocks are securities of companies that are believed to be trading well below their intrinsic value.

Our strategy is to buy companies that are trading at a significant discount to their intrinsic value. Our investment approach is a defined and disciplined process of three clear philosophical tenants that drive our investment decisions: a valuation focus, a long-term perspective and an opportunistic approach.

This investment process is fundamentally driven and quantitatively aided. We use proprietary screens to identify potential companies for investment and then perform rigorous fundamental analysis to identify the best ideas. Through this fundamental research, we determine an estimate of intrinsic value and thus a valuation target for each idea. We construct the portfolios based on the level of conviction generated by this bottom-up analysis and the upside/downside profile associated with each company.

Health Care and Industrials Top Performers

While the health care sector was an underweighted position, portfolio holdings nearly doubled that of the S&P 500 Index, 39% to 20%. Schering-Plough Corporation and Hospira, Inc. led the sector for the portfolio with gains of 67% and 90%, respectively, due to the larger weight based on our conviction. Other health care holdings that were of benefit to the strategy were Amgen, Inc., Pfizer, Inc., and Medco Health Solutions, Inc.

Superior stock selection boosted performance in the industrials sector as the portfolio holdings increased 35% compared to a 21% gain for the Index. Underweighting General Electric Company, which produced a negative return for the year, helped portfolio performance. Adding to returns for the strategy were Union Pacific Corporation Parker Hannifin Corporation and Goodrich Corporation.

Financials and Consumer Discretionary Disappoint

The largest detractor for the Series was the financials sector due to stock selection, gaining just 7% against the 13% return posted by the benchmark. The sector was a close weight to the Index. Capital One Financial Corporation declined 68% in the portfolio while MetLife, Inc. lost 61%.

Stock selection in the consumer discretionary sector also hurt strategy performance. Gains for the portfolio were 20%, which was well below the 42% increase for the benchmark. Best Buy Company, Inc. and Coach, Inc. were the biggest losers for the strategy. If held during the entire period, Coach, Inc. would have generated a gain of 77%. Instead, the position lost 32% while held in the portfolio. Darden Restaurants, Inc. and Lowe’s Companies, Inc. were other holdings in the sector that hurt overall performance.

Market Outlook

Our bottom-up approach looks at market uncertainty in the context of the potential long-term impact on individual companies. It is in times as these when our core philosophy and disciplined process becomes paramount. We continue to use a rigorous fundamental research process to identify strong companies from a risk perspective. Our focus is on identifying companies with the ability to be substantially better over the next three to five years or have the potential to maintain their return on capital at current levels in a difficult economic environment. We are confident in our ability to find these companies.

We believe that investing is a long-term pursuit that requires patience and a consistent approach. We recognize there are many investment fund alternatives available today and thank you for the confidence you place in us.

Sincerely,

Mark A. Mitchell, Portfolio Manager

Mark P. Bronzo, Portfolio Manager

Performance Summary

Series A

(Equity Series)

December 31, 2009

(unaudited)

PERFORMANCE

LOGO

$10,000 Over 10 Years

The chart above assumes a hypothetical $10,000 investment in Series A (Equity Series) on December 31, 1999 and reflects the fees and expenses of Series A. The S&P 500 Index is a capitalization-weighted index composed of 500 selected common stocks that represent the broad domestic economy and is a widely recognized unmanaged index of market performance.

Average Annual Returns


Periods Ended 12-31-09¹	1 Year		5 Years		10 Years
Series A	29.84	%	(1.86	)%	(3.49	)%

Performance figures do not reflect fees and expenses associated with an investment in variable insurance products offered by Security Benefit Life Insurance Company. If returns had taken into account these fees and expenses, performance would have been lower. Shares of a Series of SBL Fund are available only through the purchase of such products.

The performance data quoted above represents past performance. Past performance is not predictive of future performance. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost.

Portfolio Composition by Sector


Consumer Discretionary	11.39	%
Consumer Staples	7.22
Energy	11.72
Financials	11.12
Health Care	11.45
Industrials	17.95
Information Technology	20.93
Materials	4.11
Telecommunication Services	0.58
Utilities	2.14
Cash & Other Assets, Less Liabilities	1.39
Total Net Assets	100.00	%

The accompanying notes are an integral part of the financial statements


Schedule of Investments		Series A
December 31, 2009		(Equity Series)


	Shares	Value
COMMON STOCKS—98.6%
Advertising—1.7%
Omnicom Group, Inc.	81,000	$	3,171,150

Aerospace & Defense—5.1%
Boeing Company	57,600		3,117,888
Goodrich Corporation	51,260		3,293,454
Precision Castparts Corporation	1,333		147,097
United Technologies Corporation	39,400		2,734,754

			9,293,193

Air Freight & Logistics—1.4%
FedEx Corporation	31,500		2,628,675

Apparel Retail—1.6%
TJX Companies, Inc.	82,000		2,997,100

Application Software—0.5%
Synopsys, Inc.*	41,800		931,304

Asset Management & Custody Banks—0.7%
Bank of New York Mellon Corporation	46,900		1,311,793

Biotechnology—1.7%
Amgen, Inc.*	56,700		3,207,519

Building Products—1.2%
USG Corporation*	163,200		2,292,960

Coal & Consumable Fuels—1.6%
Peabody Energy Corporation	64,260		2,905,195

Communications Equipment—3.4%
Cisco Systems, Inc.*	127,700		3,057,138
Qualcomm, Inc.	66,265		3,065,419

			6,122,557

Computer Hardware—3.8%
Apple, Inc.*	20,720		4,369,018
Hewlett-Packard Company	47,900		2,467,329

			6,836,347

Computer Storage & Peripherals—2.1%
EMC Corporation*	226,760		3,961,497

Construction Materials—0.2%
Vulcan Materials Company	7,900		416,093

Consumer Finance—0.1%
First Marblehead Corporation*	103,452		220,353

Data Processing & Outsourced Services—2.3%
Western Union Company	231,100		4,356,235

Department Stores—2.4%
JC Penney Company, Inc.	61,400		1,633,854
Kohl’s Corporation*	50,950		2,747,734

			4,381,588

Diversified Banks—2.0%
U.S. Bancorp	85,875		1,933,047
Wells Fargo & Company	66,564		1,796,562

			3,729,609

Diversified Chemicals—0.8%
Dow Chemical Company	52,500		1,450,575

Diversified Metals & Mining—1.5%
Freeport-McMoRan Copper & Gold, Inc. (CI.B)	35,500		2,850,295

Drug Retail—1.0%
CVS Caremark Corporation	58,000		1,868,180

Electric Utilities—1.6%
Edison International	86,300		3,001,514

Electrical Components & Equipment—3.3%
Cooper Industries plc	72,780		3,103,338
Emerson Electric Company	70,690		3,011,394

			6,114,732

Electronic Manufacturing Services—1.1%
Tyco Electronics, Ltd.	85,200		2,091,660

Fertilizers & Agricultural Chemicals—1.6%
Potash Corporation of Saskatchewan, Inc.	26,905		2,919,193

Health Care Equipment—4.1%
Covidien plc	105,670		5,060,536
Hospira, Inc.*	48,400		2,468,400

			7,528,936

Health Care Services—0.9%
Medco Health Solutions, Inc.*	27,300		1,744,743

Home Improvement Retail—1.5%
Lowe’s Companies, Inc.	117,500		2,748,325

Hotels, Resorts & Cruise Lines—1.5%
Carnival Corporation*	89,900		2,848,931

Household Products—1.7%
Colgate-Palmolive Company	38,050		3,125,808

Hypermarkets & Super Centers—2.8%
Costco Wholesale Corporation	45,100		2,668,567
Wal-Mart Stores, Inc.	47,800		2,554,910

			5,223,477

Independent Power Producers & Energy Traders—0.5%
NRG Energy, Inc.*	41,600		982,176

Industrial Conglomerates—3.2%
3M Company	39,000		3,224,130
McDermott International, Inc.*	117,000		2,809,170

			6,033,300

The accompanying notes are an integral part of the financial statements


Schedule of Investments		Series A
December 31, 2009		(Equity Series)


	Shares	Value
COMMON STOCKS—98.6% (continued)
Industrial Machinery—1.0%
Parker Hannifin Corporation	33,603	$	1,810,530

Insurance Brokers—0.9%
AON Corporation	45,700		1,752,138

Integrated Oil & Gas—5.0%
Chevron Corporation	31,700		2,440,583
ConocoPhillips	15,200		776,264
Exxon Mobil Corporation	48,400		3,300,396
Occidental Petroleum Corporation	36,000		2,928,600

			9,445,843

Integrated Telecommunication Services—0.6%
Windstream Corporation	98,200		1,079,218

Internet Software & Services—2.5%
AOL, Inc.*	5,945		138,400
Google, Inc.*	7,235		4,485,555

			4,623,955

Investment Banking & Brokerage—1.6%
Morgan Stanley	100,500		2,974,800

IT Consulting & Other Services—1.6%
Cognizant Technology Solutions Corporation*	67,440		3,055,032

Managed Health Care—0.8%
Aetna, Inc.	49,600		1,572,320

Movies & Entertainment—1.0%
Time Warner, Inc.	65,400		1,905,756

Oil & Gas Drilling—1.9%
Transocean, Ltd.*	41,840		3,464,352

Oil & Gas Equipment & Services—1.2%
Halliburton Company	74,200		2,232,678

Oil & Gas Exploration & Production—0.9%
Chesapeake Energy Corporation	64,200		1,661,496

Oil & Gas Storage & Transportation—1.1%
Williams Companies, Inc.	99,500		2,097,460

Other Diversified Financial Services—2.4%
JPMorgan Chase & Company	104,106		4,338,096

Pharmaceuticals—3.9%
Merck & Company, Inc.	17,358		634,261
Pfizer, Inc.	169,900		3,090,481
Teva Pharmaceutical Industries, Ltd. ADR	62,490		3,510,689

			7,235,431

Property & Casualty Insurance—2.2%
Berkshire Hathaway, Inc.*	42		4,166,400

Railroads—1.3%
Union Pacific Corporation	37,200		2,377,080

Regional Banks—1.2%
BB&T Corporation	33,700		854,969
Fifth Third Bancorp	41,000		399,750
Regions Financial Corporation	178,000		941,620

			2,196,339

Research & Consulting Services—1.5%
Equifax, Inc.	91,900		2,838,791

Semiconductor Equipment—1.6%
Lam Research Corporation*	75,750		2,970,158

Semiconductors—2.1%
Intel Corporation	195,050		3,979,020

Soft Drinks—2.1%
PepsiCo, Inc.	63,810		3,879,648

Tobacco—1.3%
Altria Group, Inc.	50,500		991,315
Philip Morris International, Inc.	30,500		1,469,795

			2,461,110

TOTAL COMMON STOCKS (cost $172,811,350)		$	183,412,664

Total Investments—98.6%¹ (cost $172,811,350)		$	183,412,664
Cash & Other Assets, Less Liabilities—1.4%			2,594,781

Total Net Assets—100.0%		$	186,007,445

For federal income tax purposes the identified cost of investments owned at December 31, 2009 was $173,165,753.

*	Non-income producing security

¹	Unless otherwise indicated, the values of the securities of the Portfolio are determined based on Level 1 inputs.

The accompanying notes are an integral part of the financial statements


		Series A
		(Equity Series)

Statement of Assets and Liabilities

December 31, 2009


Assets:
Investments, at value*	$	183,412,664
Cash		2,932,270
Receivables:
Fund shares sold		391,256
Securities sold		296,724
Dividends		243,233
Prepaid expenses		3,665

Total assets		187,279,812


Liabilities:

Payable for:
Fund shares redeemed		395,157
Securities purchased		643,830
Management fees		118,522
Administration fees		15,133
Transfer agent/maintenance fees		2,083
Custodian fees		1,176
Directors’ fees		5,478
Professional fees		33,350
Other fees		57,638

Total liabilities		1,272,367

Net assets	$	186,007,445


Net assets consist of:
Paid in capital	$	230,763,789
Undistributed net investment income		1,140,095
Accumulated net realized loss on sale of investments		(56,497,753	)
Net unrealized appreciation in value of investments		10,601,314

Net assets	$	186,007,445


Capital shares authorized		unlimited
Capital shares outstanding		9,314,012
Net asset value per share (net assets divided by shares outstanding)	$	19.97


* Investments, at cost	$	172,811,350

Statement of Operations

For Year Ended December 31, 2009


Investment Income:
Dividends	$	2,678,032
Interest		4,423

Total investment income		2,682,455


Expenses:
Management fees		1,253,402
Administration fees		159,095
Transfer agent/maintenance fees		25,315
Custodian fees		7,740
Directors’ fees		15,695
Professional fees		41,123
Reports to shareholders		28,002
Other		11,988

Total expenses		1,542,360

Net investment income		1,140,095


Net Realized and Unrealized Gain (Loss):
Net realized gain (loss) during the year on:
Investments		(27,019,679	)
Options written		7,098

Net realized loss		(27,012,581	)

Net unrealized appreciation (depreciation) during the year on:
Investments		69,815,569

Net unrealized appreciation		69,815,569

Net realized and unrealized gain		42,802,988

Net increase in net assets resulting from operations	$	43,943,083

The accompanying notes are an integral part of the financial statements


		Series A
Statement of Changes in Net Assets		(Equity Series)


	Year Ended December 31, 2009			Year Ended December 31, 2008
Increase (decrease) in net assets from operations:
Net investment income	$	1,140,095		$	1,665,710
Net realized loss during the year on investments		(27,012,581	)		(21,709,270	)
Net unrealized appreciation (depreciation) during the year on investments		69,815,569			(85,457,350	)

Net increase (decrease) in net assets resulting from operations		43,943,083			(105,500,910	)


Capital share transactions:
Proceeds from sale of shares		17,506,604			24,426,853
Cost of shares redeemed		(40,551,126	)		(82,812,481	)

Net decrease from capital share transactions		(23,044,522	)		(58,385,628	)

Net increase (decrease) in net assets		20,898,561			(163,886,538	)


Net assets:
Beginning of year		165,108,884			328,995,422

End of year	$	186,007,445		$	165,108,884

Undistributed net investment income at end of year	$	1,140,095		$	1,665,710


Capital share activity:
Shares sold		1,102,467			1,174,494
Shares redeemed		(2,524,592	)		(3,831,105	)

Total capital share activity		(1,422,125	)		(2,656,611	)

The accompanying notes are an integral part of the financial statements


Financial Highlights		Series A
Selected data for each share of capital stock outstanding throughout each year		(Equity Series)


	2009			2008			2007			2006			Year Ended December 31, 2005
Per Share Data
Net asset value, beginning of period	$	15.38		$	24.57		$	25.83		$	22.88		$	21.93

Income (loss) from investment operations:
Net investment income^a		0.11			0.14			0.14			0.11			0.16
Net gain (loss) on securities (realized and unrealized)		4.48			(9.33	)		(1.40	)		2.84			0.79

Total from investment operations		4.59			(9.19	)		(1.26	)		2.95			0.95

Net asset value, end of period	$	19.97		$	15.38		$	24.57		$	25.83		$	22.88

Total Return^b		29.84	%		(37.40	)%		(4.88	)%		12.89	%		4.33	%


Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	186,007		$	165,109		$	328,995		$	441,788		$	466,931

Ratios to average net assets:
Net investment income		0.68	%		0.66	%		0.52	%		0.33	%		0.55	%
Total expenses^c		0.92	%		0.90	%		0.89	%		0.90	%		0.89	%
Net expenses^d		0.92	%		0.90	%		0.89	%		0.90	%		0.89	%
Net expenses prior to custodian earnings credits and net of expense waivers		0.92	%		0.90	%		0.89	%		0.90	%		0.89	%

Portfolio turnover rate		78	%		142	%^e		14	%		26	%		37	%

^a	Net investment income (loss) was computed using average shares outstanding throughout the period.

Total return does not take into account any of the expenses associated with an investment in variable insurance products offered by Security Benefit Life Insurance Company. If total return had taken into account these expenses, performance would have been lower. Shares of a series of SBL Fund are available only through the purchase of such products.

^c	Total expense information reflects the expense ratios absent expense reductions by the Investment Manager and custodian earnings credits, as applicable.

^d	Net expense information reflects the expense ratios after voluntary expense waivers, reimbursements and custodian earnings credits, as applicable.

^e	Significant variation in the portfolio turnover rate is due to Investment Manager’s appointment of new portfolio manager for the Series.

The accompanying notes are an integral part of the financial statements

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Manager’s Commentary

February 15, 2010


		Advised by:

To Our Shareholders:

Series B of the SBL Fund – Large Cap Value Series returned 26.50% during the year, leading the benchmark Russell 1000 Value Index’s return of 19.69%. The Series outperformed its peer group median return of 24.28%.

Our strategy is to buy companies that are trading at a significant discount to their intrinsic value. Our investment approach is a defined and disciplined process with three clear philosophical tenets that drive our investment decisions: a valuation focus, a long-term perspective and an opportunistic approach.

Our investment process is fundamentally driven and quantitatively aided. We use proprietary screens to identify potential companies for investment and then perform rigorous fundamental analysis to identify the best ideas. Through this fundamental research, we determine an estimate of intrinsic value and thus a valuation target for each idea. We construct the portfolios based on the level of conviction generated by this bottom-up analysis and the upside/downside profile associated with each company. For Series B, we apply this philosophy to a broad range of value names.

Health Care and Industrials Top Performers

The Series’ health care sector led the portfolio due to superior security selection. While a slightly underweight position, holdings in the strategy increased 67% compared to a 23% return for the benchmark. Schering-Plough Corporation added the largest relative return to the sector while returns for Hospira, Inc. were 90%. Another contributor for the portfolio in the sector was Medco Health Solutions, Inc.

The Series has a significant overweight position in the industrials sector at 22%, more than double the 9% weight of the benchmark. Holdings in the sector for the portfolio outdistanced that of the Index 40% to 15%, respectively. Leaders for the portfolio were USG Corporation and Union Pacific Corporation, which increased 75% and 37%, respectively. Other contributing performers in the sector were General Electric Company and FedEx Corporation.

Financials and Consumer Discretionary Disappoint

The largest detractor from the portfolio was the financials sector due to underperforming stock selection. Capital One Financial Corporation dropped 71% during the period causing it to the be largest drag on performance for the sector. While JPMorgan Chase & Company gained 34% during the year, it was a significant underweight against the benchmark allowing the Index to increase its relative return. Finally, AON Corporation was a drag on portfolio performance due to its large relative overweight in a security that had negative returns.

The strategy’s consumer discretionary sector was an even weight position but held the portfolio back due to security selection. While the sector in the portfolio gained 27%, it was well short of the 47% return for the benchmark. Portfolio securities in the sector that detracted from performance were Lowe’s Companies, Inc., CBS Corporation (Cl B), and News Corporation (Cl A). Had the portfolio held CBS Corporation and News Corporation during the entire year, it would have realized the Index’s gains of 77% and 53%, respectively, rather than the actual 7% and 3% returns.

Market Outlook

Our bottom-up approach looks at market uncertainty in the context of the potential long-term impact on individual companies. Often times, volatility provides opportunity. We are maintaining flexibility in the portfolios to take advantage of these opportunities as they arise. Our focus is on identifying companies with the ability to be substantially better over the next three to five years or have the potential to maintain their return on capital at current levels in a difficult economic environment. We are confident in our ability to find these companies.

Sincerely,

Mark A. Mitchell, Portfolio Manager


		Series B
Performance Summary		(Large Cap Value Series)
December 31, 2009		(unaudited)

PERFORMANCE

LOGO

$10,000 Over 10 Years

The chart above assumes a hypothetical $10,000 investment in Series B (Large Cap Value Series) on December 31, 1999 and reflects the fees and expenses of Series B. The Russell 1000 Value Index is an unmanaged index representing the performance of those Russell 1000 Index companies with lower price-to-book ratios and lower forecasted growth values.

Average Annual Returns


Periods Ended 12-31-09¹	1 Year		5 Years		10 Years
Series B	26.50	%	2.54	%	0.78	%

Portfolio Composition by Sector


Consumer Discretionary	7.22	%
Consumer Staples	10.17
Energy	13.68
Financials	16.68
Health Care	8.96
Industrials	20.07
Information Technology	11.13
Materials	2.22
Telecommunication Services	1.30
Utilities	4.62
Exchange Traded Funds	1.01
Commercial Paper	1.25
Cash & Other Assets, Less Liabilities	1.69
Total Net Assets	100.00	%

The accompanying notes are an integral part of the financial statements


Schedule of Investments		Series B
December 31, 2009		(Large Cap Value Series)


	Shares		Value
COMMON STOCKS—97.1%
Aerospace & Defense—3.1%
Precision Castparts Corporation	4,180		$	461,263
United Technologies Corporation	117,300			8,141,793

				8,603,056

Air Freight & Logistics—3.0%
FedEx Corporation	101,643			8,482,108

Application Software—1.1%		��
Synopsys, Inc.*	134,800			3,003,344

Asset Management & Custody Banks—1.5%
Bank of New York Mellon Corporation	151,400			4,234,658

Building Products—2.6%
USG Corporation*	528,000			7,418,400

Computer Hardware—2.5%
Hewlett-Packard Company	137,300			7,072,323

Construction Materials—0.5%
Vulcan Materials Company	25,400			1,337,818

Consumer Finance—0.2%
First Marblehead Corporation*	317,112			675,449

Data Processing & Outsourced Services—4.9%
Western Union Company	737,500			13,901,875

Department Stores—1.9%
JC Penney Company, Inc.	198,800			5,290,068

Diversified Banks—4.6%
U.S. Bancorp	277,806			6,253,413
Wells Fargo & Company	242,405			6,542,511

				12,795,924

Diversified Chemicals—1.7%
Dow Chemical Company	176,400			4,873,932

Drug Retail—2.1%
CVS Caremark Corporation	186,200			5,997,502

Electric Utilities—3.5%
Edison International	282,400			9,821,872

Electronic Manufacturing Services—2.4%
Tyco Electronics, Ltd.	273,950			6,725,473

Exchange Traded Funds—1.0%
iShares Russell 1000 Value Index Fund	49,500			2,840,805

Health Care Equipment—4.5%
Covidien plc	101,650			4,868,019
Hospira, Inc.*	148,000			7,547,999

				12,416,018

Health Care Services—2.0%
Medco Health Solutions, Inc.*	88,200			5,636,862

Home Improvement Retail—2.8%
Lowe’s Companies, Inc.	343,500			8,034,465

Hypermarkets & Super Centers—5.7%
Costco Wholesale Corporation	126,400			7,479,088
Wal-Mart Stores, Inc.	154,500			8,258,025

				15,737,113

Independent Power Producers & Energy Traders—1.1%
NRG Energy, Inc.*	133,500			3,151,935

Industrial Conglomerates—3.3%
McDermott International, Inc.*	379,900			9,121,399

Industrial Machinery—2.1%
Parker Hannifin Corporation	109,810			5,916,563

Insurance Brokers—2.0%
AON Corporation	147,900			5,670,486

Integrated Oil & Gas—7.1%
Chevron Corporation	98,600			7,591,214
ConocoPhillips	41,200			2,104,084
Exxon Mobil Corporation	151,700			10,344,423

				20,039,721

Integrated Telecommunication Services—1.3%
Windstream Corporation	331,932			3,647,933

Internet Software & Services—0.2%
AOL, Inc.*	21,593			502,685

Managed Health Care—1.8%
Aetna, Inc.	158,000			5,008,600

Movies & Entertainment—2.5%
Time Warner, Inc.	237,533			6,921,712

Oil & Gas Equipment & Services—2.6%
Halliburton Company	244,000			7,341,960

Oil & Gas Exploration & Production—1.7%
Chesapeake Energy Corporation	179,200			4,637,696

Oil & Gas Storage & Transportation—2.3%
Williams Companies, Inc.	300,700			6,338,756

Other Diversified Financial Services—1.0%
JPMorgan Chase & Company	69,469			2,894,773

The accompanying notes are an integral part of the financial statements


Schedule of Investments		Series B
December 31, 2009		(Large Cap Value Series)


	Shares		Value
COMMON STOCKS—97.1% (continued)
Pharmaceuticals—0.7%
Merck & Company, Inc.		56,170	$	2,052,452

Property & Casualty Insurance—4.9%
Berkshire Hathaway, Inc.*		135		13,392,000

Railroads—2.7%
Union Pacific Corporation		120,000		7,668,000

Regional Banks—2.5%
BB&T Corporation		109,200		2,770,404
Fifth Third Bancorp		133,000		1,296,750
Regions Financial Corporation		575,500		3,044,395

				7,111,549

Research & Consulting Services—3.3%
Equifax, Inc.		295,500		9,127,994

Tobacco—2.4%
Altria Group, Inc.		108,000		2,120,040
Philip Morris International, Inc.		97,100		4,679,249

				6,799,289

TOTAL COMMON STOCKS (cost $262,147,025)			$	272,244,568


	Principal Amount		Value
COMMERCIAL PAPER—1.2%
Automotive—1.2%
Toyota Motor Credit Corporation
0.03%, 01/04/2010¹	$	3,500,000	$	3,499,991

TOTAL COMMERCIAL PAPER (cost $3,499,991)			$	3,499,991

Total Investments—98.3%² (cost $265,647,016)			$	275,744,559
Cash & Other Assets, Less Liabilities—1.7%				4,728,827

Total Net Assets—100.0%			$	280,473,386

For federal income tax purposes the identified cost of investments owned at December 31, 2009 was $265,859,070.

plc	Public Limited Company

*	Non-income producing security

¹	Value determined based on Level 2 inputs.

²	Unless otherwise indicated, the values of the securities of the Portfolio are determined based on Level 1 inputs.

The accompanying notes are an integral part of the financial statements

Series B

(Large Cap Value Series)

Statement of Assets and Liabilities

December 31, 2009


Assets:
Investments, at value*	$	275,744,559
Cash		5,589,947
Receivables:
Fund shares sold		204,743
Securities sold		959,225
Dividends		457,031
Prepaid expenses		5,473

Total assets		282,960,978

Liabilities:

Payable for:
Fund shares redeemed		133,054
Securities purchased		2,074,253
Management fees		155,170
Administration fees		22,768
Transfer agent/maintenance fees		2,083
Custodian fees		556
Directors’ fees		4,182
Professional fees		43,600
Other fees		51,926

Total liabilities		2,487,592

Net assets	$	280,473,386

Net assets consist of:
Paid in capital	$	441,314,284
Undistributed net investment income		2,616,829
Accumulated net realized loss on sale of investments		(173,555,270	)
Net unrealized appreciation in value of investments		10,097,543

Net assets	$	280,473,386


Capital shares authorized		unlimited
Capital shares outstanding		12,635,575
Net asset value per share (net assets divided by shares outstanding)	$	22.20


* Investments, at cost	$	265,647,016

Statement of Operations For Year Ended December 31, 2009
Investment Income:
Dividends	$	4,664,091
Interest		11,183

Total investment income		4,675,274


Expenses:
Management fees		1,647,391
Administration fees		241,019
Transfer agent/maintenance fees		25,352
Custodian fees		10,111
Directors’ fees		23,688
Professional fees		48,545
Reports to shareholders		44,240
Other		18,099

Total expenses		2,058,445

Net investment income		2,616,829


Net Realized and Unrealized Gain (Loss):
Net realized gain (loss) during the year on:
Investments		(21,745,604	)
Options written		22,775

Net realized loss		(21,722,829	)


Net unrealized appreciation (depreciation) during the year on:
Investments		77,753,258

Net unrealized appreciation		77,753,258

Net realized and unrealized gain		56,030,429

Net increase in net assets resulting from operations	$	58,647,258

The accompanying notes are an integral part of the financial statements


Series B
Statement of Changes in Net Assets		(Large Cap Value Series)


	Year Ended December 31, 2009			Year Ended December 31, 2008
Increase (decrease) in net assets from operations:
Net investment income	$	2,616,829		$	4,509,471
Net realized loss during the year on investments		(21,722,829	)		(35,097,727	)
Net unrealized appreciation (depreciation) during the year on investments		77,753,258			(128,705,287	)

Net increase (decrease) in net assets resulting from operations		58,647,258			(159,293,543	)


Capital share transactions:
Proceeds from sale of shares		40,712,808			97,567,905
Cost of shares redeemed		(69,858,540	)		(167,274,870	)

Net decrease from capital share transactions		(29,145,732	)		(69,706,965	)

Net increase (decrease) in net assets		29,501,526			(229,000,508	)


Net assets:
Beginning of year		250,971,860			479,972,368

End of year	$	280,473,386		$	250,971,860


Undistributed net investment income at end of year	$	2,616,829		$	4,509,471


Capital share activity:
Shares sold		2,258,834			3,899,132
Shares redeemed		(3,921,822	)		(6,778,642	)

Total capital share activity		(1,662,988	)		(2,879,510	)

The accompanying notes are an integral part of the financial statements


Financial Highlights		Series B
Selected data for each share of capital stock outstanding throughout each year		(Large Cap Value Series)


	2009			2008			2007			2006			Year Ended December 31, 2005^a
Per Share Data
Net asset value, beginning of period	$	17.55		$	27.94		$	26.40		$	21.64		$	19.58

Income (loss) from investment operations:
Net investment income^b		0.19			0.29			0.25			0.20			0.24
Net gain (loss) on securities (realized and unrealized)		4.46			(10.68	)		1.29			4.56			1.82

Total from investment operations		4.65			(10.39	)		1.54			4.76			2.06

Net asset value, end of period	$	22.20		$	17.55		$	27.94		$	26.40		$	21.64


Total Return^c		26.50	%		(37.19	)%		5.83	%		22.00	%		10.52	%

Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	280,473		$	250,972		$	479,972		$	480,683		$	410,692

Ratios to average net assets:
Net investment income		1.03	%		1.21	%		0.90	%		0.80	%		0.98	%
Total expenses^d		0.81	%		0.80	%		0.79	%		0.79	%		0.84	%
Net expenses^e		0.81	%		0.80	%		0.79	%		0.79	%		0.84	%
Net expenses prior to custodian earnings credits and net of expense waivers		0.81	%		0.80	%		0.79	%		0.79	%		0.84	%

Portfolio turnover rate		16	%		32	%		29	%		20	%		99	%

^a	Security Global Investors (SGI), formerly Security Management Company, LLC, became the advisor of Series B effective June 30, 2005. Prior to June 30, 2005, SGI paid Dreyfus Corporation for sub-advisory services.

^b	Net investment income (loss) was computed using average shares outstanding throughout the period.

^d	Total expense information reflects the expense ratios absent expense reductions by the Investment Manager and custodian earnings credits, as applicable.

^e	Net expense information reflects the expense ratios after voluntary expense waivers, reimbursements and custodian earnings credits, as applicable.

The accompanying notes are an integral part of the financial statements

This page left blank intentionally.

Manager’s Commentary

February 15, 2010


		Advised by:

To Our Shareholders:

Series C of the SBL Fund – Money Market Series returned -0.37% for the year ended December 31, 2009, less than the benchmark I-Money Net Retail Tier 1 of 0.18% and the 0.13% performance of its peer group for the same period.

The Federal Reserve Board continues to hold rates near 0%, making it a challenge to maintain a positive yield. The Fed has signaled that it will continue to keep rates low in the near future.

Composition of Portfolio Assets

At December 31, 2009, the average maturity of the holdings in the Series was 84 days.

The Series’ assets were concentrated in commercial paper and U.S. government sponsored agency bonds and notes. At year-end, approximately 52% of the Series consisted of commercial paper and 48% in U.S. government/ agency obligations, less liabilities.

Market Review

A Federal Funds rate near 0% continued to be challenging for money market portfolios, as there was very little yield available. Bond markets were choppy in the first half of 2009 while the last half of the year was better due to less headline volatility. Unlike some peer competitors, the Series did not experience any security defaults that required firm backing.

While earnings were stronger and the economy improved in the third and fourth quarters, it remained necessary to manage the portfolio in a conservative manner since the economy was unable to gain a strong foothold. Adding to uncertainty were newly proposed SEC regulations regarding average weighted maturity, floating NAVs, liquidity constraints, and additional reporting requirements.

The Money Market Series does not invest in SIVs, or Structured Investment Vehicles securities. The manager remained focused on liquidity and credit quality, and the sub-prime mortgage securities never passed these tests. While a small portion of the portfolio was invested in asset-backed commercial paper, which posed no risk to the portfolio, we chose to take the conservative approach and keep exposure to this type of investment low.

Market Outlook

The upcoming year should prove to be another challenging year with respect to yields as the Federal Reserve has stated its intention to keep rates low for the foreseeable future. Our philosophy in managing the Money Market Series is to take a conservative approach that doesn’t add risk to the portfolio by reaching for marginal gains in yield. With the yield environment likely to remain as is for the time being, we will continue to manage the Series’ conservatively with expectations of low returns. As always, we will continue to monitor the economic and market conditions when deciding portfolio strategies and will adjust the asset mix and maturity structure in the portfolio accordingly.

Thank you for your investment in the Money Market Series.

We appreciate the confidence that you have placed in us and continue to focus on achieving the Series’ investment goals.

Sincerely,

Christina Fletcher, Portfolio Manager

Performance Summary

Series C

(Money Market Series)

December 31, 2009

(unaudited)

PERFORMANCE

Portfolio Composition by Quality Ratings


Tier 1 Investments	99.43	%
Cash & Other Assets, Less Liabilities	0.57
Total Net Assets	100.00	%

Average Annual Returns


Periods Ended 12-31-09¹	1 Year		5 Years		10 Years
Series C	(0.37	)%	2.70	%	2.56	%

The accompanying notes are an integral part of the financial statements


Schedule of Investments		Series C
December 31, 2009		(Money Market Series)


	Principal Amount		Value
ASSET BACKED SECURITIES—0.3%
Other Non-Agency—0.3%
Small Business Administration Pools
#503308, 0.75%, 2010^1,2,3	$	64,007	$	64,007
#503343, 0.88%, 2010^1,2,3		123,168		123,168
#503347, 0.88%, 2010^1,2,3		72,840		72,839
#502353, 1.00%, 2010^1,2,3		31,163		31,163
#503295, 0.75%, 2010^1,2,3		67,972		67,189
#503303, 0.75%, 2010^1,2,3		123,627		122,204

			$	480,570

TOTAL ASSET BACKED SECURITIES (cost $482,896)			$	480,570


	Principal Amount		Value
U.S. GOVERNMENT SPONSORED AGENCY BONDS & NOTES—51.4%
Federal Farm Credit Bank
0.17%, 5/26/2010^1,2	$	2,000,000	$	1,999,988
0.50%, 6/1/2010¹		2,000,000		2,002,938
0.22%, 7/9/2010¹		2,000,000		1,997,934
0.20%, 8/3/2010¹		3,120,000		3,115,610
0.40%, 10/1/2010¹		3,000,000		2,996,451
0.45%, 10/21/2010¹		2,000,000		1,998,098
0.39%, 12/1/2010¹		2,500,000		2,495,658
0.38%, 12/1/2010¹		3,000,000		2,994,519
Federal Home Loan Mortgage Corporation
0.57%, 1/8/2010¹^,2		1,000,000		1,000,035
0.13%, 1/27/2010¹		2,300,000		2,299,970
0.03%, 2/22/2010¹		2,200,000		2,199,905
0.17%, 3/16/2010¹		2,000,000		1,999,802
0.17%, 5/4/2010¹		2,000,000		1,999,200
0.15%, 5/24/2010¹		2,389,000		2,387,884
Federal Home Loan Bank
0.17%, 1/8/2010¹^,2		1,000,000		1,000,002
0.50%, 8/24/2010^1,4		1,500,000		1,500,062
0.51%, 10/28/2010¹		3,035,000		3,033,491
0.55%, 11/3/2010¹		2,000,000		1,999,638
0.40%, 12/27/2010¹		2,000,000		1,996,228
0.45%, 12/29/2010¹		2,000,000		1,996,964
0.41%, 12/29/2010¹		2,000,000		1,996,178
0.45%, 12/30/2010¹		2,000,000		1,996,950
0.16%, 1/14/2011^1,2		2,000,000		1,998,946
Federal National Mortgage Association
0.20%, 1/22/2010¹		2,000,000		1,999,980
0.21%, 2/8/2010^1,2		3,000,000		3,000,651
0.17%, 2/24/2010¹		1,300,000		1,299,945
0.05%, 4/1/2010¹		1,154,000		1,153,721
0.18%, 5/12/2010¹		2,000,000		1,999,146
0.18%, 5/26/2010¹		1,528,000		1,527,277
0.17%, 7/13/2010^1,2		1,800,000		1,799,809
0.20%, 8/2/2010¹		2,000,000		1,997,200
0.30%, 9/13/2010¹		2,000,000		1,996,500
0.31%, 10/1/2010¹		1,100,000		1,097,608
0.34%, 11/1/2010¹		3,500,000		3,490,344
0.38%, 12/1/2010¹		3,600,000		3,587,753
0.40%, 12/2/2010¹		4,900,000		4,883,280

TOTAL U.S. GOVERNMENT SPONSORED AGENCY BONDS & NOTES (cost $78,862,983)			$	78,839,665


	Principal Amount		Value
COMMERCIAL PAPER—47.7%
Automotive—8.9%
American Honda Finance
0.20%, 01/05/2010¹	$	2,000,000	$	1,999,955
0.17%, 01/13/2010¹		2,600,000		2,599,854
0.15%, 01/26/2010¹		2,000,000		1,999,792
0.15%, 01/27/2010¹		1,000,000		999,892
Toyota Motor Credit Corporation
0.04%, 01/06/2010¹		1,500,000		1,499,969
0.15%, 01/14/2010¹		2,500,000		2,499,865
0.15%, 01/15/2010¹		2,000,000		1,999,891

				13,599,218

Banking—3.7%
JP Morgan Chase & Company
0.14%, 01/19/2010¹		2,000,000		1,999,860
JP Morgan Chase Funding
018% 01/19/2010^1,5		2,500,000		2,499,776
0.17%, 01/26/2010^1,5		1,200,000		1,199,843

				5,699,479

Brokerage—3.1%
Goldman Sachs Group, Inc.
0.15%, 01/21/2010¹		2,000,000		1,999,801
0.11%, 01/22/2010¹		1,500,000		1,499,904
0.11%, 01/25/2010¹		1,300,000		1,299,905

				4,799,610

Electric—6.6%
FPL Group Capital, Inc.
0.14%, 01/11/2010^1,5		1,700,000		1,699,934
0.15%, 01/13/2010^1,5		1,200,000		1,199,940
0.12%, 01/15/2010^1,5		1,200,000		1,199,944
0.15%, 01/20/2010^1,5		3,500,000		3,499,715
Southern Company Funding Corporation
0.12%, 01/12/2010^1,5		2,500,000		2,499,908

				10,099,441

Food & Beverage—8.1%
Cargill, Inc.
0.13%, 01/05/2010^1,5		2,000,000		1,999,971
0.13%, 01/12/2010^1,5		1,800,000		1,799,929
0.15%, 02/01/2010^1,5		2,000,000		1,999,742
0.13%, 02/08/2010^1,5		1,500,000		1,499,794
Coca-Cola Company
0.11%, 01/13/2010¹		1,100,000		1,099,960
0.10%, 01/28/2010¹		2,000,000		1,999,850
0.13%, 02/03/2010¹		2,000,000		1,999,739

				12,398,985

Life Insurance—2.9%
General Reinsurance Corporation
0.12%, 01/21/2010¹		3,000,000		2,999,795
Swiss Re Treasury U.S. Corporation
0.19%, 01/29/2010^1,5		1,400,000		1,399,793

				4,399,588

Non U.S. Banking—3.3%
BNP Paribas Finance, Inc.
0.16%, 01/14/2010¹		2,000,000		1,999,884


0.18%, 01/26/2010¹	1,600,000	1,599,800
0.12%, 01/29/2010¹	1,500,000	1,499,860

		5,099,544

Pharmaceuticals—11.1%
Abbott Laboratories
0.10%, 01/11/2010^1,5	2,000,000	1,999,944

The accompanying notes are an integral part of the financial statements


Schedule of Investments		Series C
December 31, 2009		(Money Market Series)


	Principal Amount		Value
COMMERCIAL PAPER—47.7% (continued)
Pharmaceuticals—11.1% (continued)
Abbott Laboratories, Inc.
0.10%, 02/08/2010^1,5	$	1,985,000	$	1,984,790
GlaxoSmithKline Finance plc
0.11%, 01/06/2010^1,5		2,500,000		2,499,962
0.11%, 01/20/2010^1,5		2,000,000		1,999,884
0.12%, 01/27/2010^1,5		1,800,000		1,799,844
Johnson & Johnson, Inc.
0.16%, 04/19/2010^1,5		2,000,000		1,998,898
0.15%, 04/20/2010^1,5		2,200,000		2,198,770
0.20%, 05/25/2010^1,5		2,500,000		2,497,563

				16,979,655

TOTAL COMMERCIAL PAPER (cost $73,076,385)			$	73,075,520

Total Investments—99.4%⁶ (cost $152,422,264)			$	152,395,755
Cash & Other Assets, Less Liabilities—0.6%				865,881

Total Net Assets—100.0%			$	153,261,636

For federal income tax purposes the identified cost of investments owned at December 31, 2009 was $152,422,264.

plc	Public Limited Company

¹	Value determined based on Level 2 inputs.

²	Variable rate security. Rate indicated is rate effective at December 31, 2009.

³	Maturity date indicated is next interest reset date.

⁴	Security is a step up/step down bond. The coupon increases or decreases at regular intervals until the bond reaches full maturity.

⁵	Security is a 144A or Section 4(2) security. The total market value of 144A or Section 4(2) securities is $39,477,944 (cost $39,478,768), or 25.8% of total net assets.

⁶	Unless otherwise indicated, the values of the securities of the Portfolio are determined based on Level 1.

The accompanying notes are an integral part of the financial statements

Series C

(Money Market Series)

Statement of Assets and Liabilities

December 31, 2009


Assets:
Investments, at value*	$	152,395,755
Cash		849,412
Receivables:
Fund shares sold		438,914
Securities sold		3,983
Interest		19,539
Prepaid expenses		3,540

Total assets		153,711,143

Liabilities:

Payable for:
Fund shares redeemed		324,292
Management fees		65,323
Administration fees		15,711
Transfer agent/maintenance fees		2,083
Custodian fees		438
Directors’ fees		2,285
Professional fees		15,375
Other fees		24,000

Total liabilities		449,507

Net assets	$	153,261,636

Net assets consist of:
Paid in capital	$	153,288,145
Net unrealized depreciation in value of investments		(26,509	)

Net assets	$	153,261,636


Capital shares authorized		unlimited
Capital shares outstanding		11,298,797
Net asset value per share (net assets divided by shares outstanding)	$	13.56


* Investments, at cost	$	152,422,264

Statement of Operations For Year Ended December 31, 2009
Investment Income:
Interest		923,773

Total investment income		923,773


Expenses:
Management fees		1,043,540
Administration fees		213,547
Transfer agent/maintenance fees		25,381
Custodian fees		18,350
Directors’ fees		21,611
Professional fees		24,398
Reports to shareholders		46,298
Other		10,618

Total expenses		1,403,743

Net investment loss		(479,970	)


Net Unrealized Gain (Loss):
Net unrealized appreciation (depreciation) during the year on:
Investments		(209,951	)

Net decrease in net assets resulting from operations	$	(689,921	)

The accompanying notes are an integral part of the financial statements


		Series C
Statement of Changes in Net Assets		(Money Market Series)


	Year Ended December 31, 2009			Year Ended December 31, 2008
Increase (decrease) in net assets from operations:
Net investment income (loss)	$	(479,970	)	$	4,249,459
Net unrealized appreciation (depreciation) during the year on investments		(209,951	)		190,920

Net increase (decrease) in net assets resulting from operations		(689,921	)		4,440,379


Capital share transactions:
Proceeds from sale of shares		191,606,637			533,443,332
Cost of shares redeemed		(305,973,233	)		(438,227,047	)

Net increase (decrease) from capital share transactions		(114,366,596	)		95,216,285

Net increase (decrease) in net assets		(115,056,517	)		99,656,664


Net assets:
Beginning of year		268,318,153			168,661,489

End of year	$	153,261,636		$	268,318,153

Undistributed net investment income at end of year	$	—		$	4,249,459


Capital share activity:
Shares sold		14,085,993			39,510,948
Shares redeemed		(22,496,450	)		(32,452,086	)

Total capital share activity		(8,410,457	)		7,058,862

The accompanying notes are an integral part of the financial statements


Financial Highlights	Series C
Selected data for each share of capital stock outstanding throughout each year	(Money Market Series	)


	2009			2008			2007			2006			Year Ended December 31, 2005
Per Share Data
Net asset value, beginning of period	$	13.61		$	13.33		$	12.73		$	12.19		$	11.87

Income (loss) from investment operations:
Net investment income (loss)^a		(0.03	)		0.26			0.60			0.45			0.33
Net gain (loss) on securities (realized and unrealized)		(0.02	)		0.02			—			0.09			(0.01	)

Total from investment operations		(0.05	)		0.28			0.60			0.54			0.32

Net asset value, end of period	$	13.56		$	13.61		$	13.33		$	12.73		$	12.19


Total Return^b		(0.37	)%		2.10	%		4.71	%		4.43	%		2.70	%

Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	153,262		$	268,318		$	168,661		$	99,044		$	71,655

Ratios to average net assets:
Net investment income (loss)		(0.23	)%		1.94	%		4.59	%		4.43	%		2.63	%
Total expenses^c		0.67	%		0.65	%		0.66	%		0.68	%		0.69	%
Net expenses^d		0.67	%		0.65	%		0.66	%		0.68	%		0.69	%
Net expenses prior to custodian earnings credits and net of expense waivers		0.67	%		0.65	%		0.66	%		0.68	%		0.69	%

^a	Net investment income (loss) was computed using average shares outstanding throughout the period.

^c	Total expense information reflects the expense ratios absent expense reductions by the Investment Manager and custodian earnings credits, as applicable.

^d	Net expense information reflects the expense ratios after voluntary expense waivers, reimbursements and custodian earnings credits, as applicable.

The accompanying notes are an integral part of the financial statements

This page left blank intentionally.

Managers’ Commentary

February 15, 2010


		Advised by:

To Our Shareholders

Series D of the SBL Fund – Global Series returned 19.73%, underperforming the benchmark, Morgan Stanley Capital International, Inc. (MSCI) World Index return of 29.99% and the peer group median return of 33.23%.

The SGI global team believes that excess return opportunities exist in global stock markets and that those opportunities are best identified and captured at the security level. Investing globally offers the greatest exposure to excess return opportunities while enhancing the ability to diversify risk. Successfully identifying and exploiting these opportunities requires thorough fundamental research. Superior stock selection continues to be the trademark for the team’s performance as selection effect accounts for nearly all the return of the portfolio.

The investment team employs a bottom-up approach to the global equity universe to identify and invest in the best opportunities around the world. The team melds sophisticated screening techniques, input from management meetings, and insights into global/regional trends to identify investment opportunities from around the world. Relative valuation and relative business momentum is a specific focus of the screening criteria. The team’s fundamental research is original and uses primary sources to substantiate forecasts and investment theses.

Energy and Information Technology Top Performers

The Global Series held an underweight position in energy during the year however, the sector was the best performing sector in the portfolio due to stock selection that generated 46% returns. A significant weight in Oil Search, Ltd. generated a return of 72%. Avoiding Exxon Mobil Corporation benefited performance as the stock dropped 13% during the period. Other gainers in the sector for the strategy included CNOOC, Ltd. and Transocean, Ltd.

As an even weight, the portfolio benefited from superior stock selection in the information technology sector, gaining 64% over the year. Check Point Software Technologies, Ltd., a significant holding during the period, gained 55% while Gree, Inc. soared 108%. Other sector holdings that contributed to performance include Google, Inc. (Cl A) and Tandberg ASA.

Consumer Staples, Consumer Discretionary, and Industrials Disappoint

The Series’ performance was especially hurt in the consumer staples, consumer discretionary, and industrials sectors, mainly due to security selection. As an over-weight position, the consumer staples holdings underperformed with a return of 10%. Holdings in Spartan Stores, Inc. and Winn-Dixie Stores, Inc. detracted from portfolio performance as both lost more than 40%. Other holdings hurting returns were Cal-Maine Foods, Inc. and Kirin Holdings Company, Ltd.

Performance in the strategy’s consumer discretionary sector did not keep pace with the benchmark even though it was up 19°%. Ubisoft Entertainment S.A., William Hill PLC, and Harley-Davidson, Inc. all posted negative returns for the strategy, even though two of the three were up significantly over the full period.

The largest industrials sector detractor was Foster Wheeler AG, which lost 56% during the year. Other holdings in the sector that pulled down performance include Brink’s Company, JGC Corporation, and Watson Wyatt Worldwide, Inc.

Market Outlook

The Series’ core strategy continues to focus on identifying companies with sustainable long-term earnings and cash flow, strong economic returns on invested capital, and healthy balance sheets. Our approach remains to identify the best possible investments in all phases of the market and economic cycle. The day-in day-out work of our analysts is speaking with companies around the world, interviewing their customers, suppliers and regulators and generating excess risk-adjusted returns through superior stock selection.

As we anticipated in last year’s report, unemployment did continue to rise and reached double digits. While global banking systems and economies appear to have stabilized, significant challenges remain. Foremost among these will be removal of the extraordinary measures taken by central banks and governments around the world to stimulate and re-liquefy economies. While growth has re-emerged in many areas of the world, the recovery remains fragile and measurement somewhat suspect.

We recognize there are many investment alternatives available today and thank you for your business and the confidence you place in us.

Sincerely,

David Whittall, Portfolio Manager

Scott Klimo, Portfolio Manager

Performance Summary

Series D

(Global Series)

December 31, 2009

(unaudited)

PERFORMANCE

LOGO

$10,000 Over Ten Years

The chart above assumes a hypothetical $10,000 investment in Series D (Global Series) on December 31, 1999 and reflects the fees and expenses of Series D. The MSCI World Index is an unmanaged capitalization-weighted index that is designed to measure global developed market equity performance.

Average Annual Returns


Periods Ended 12-31-09¹	1 Year		5 Years		10 Years
Series D	19.73	%	1.36	%	2.50	%

Portfolio Composition by Sector


Consumer Discretionary	10.17	%
Consumer Staples	15.30
Energy	9.63
Financials	15.56
Health Care	8.73
Industrials	12.32
Information Technology	15.19
Materials	5.63
Telecommunication Services	0.46
Utilities	5.23
Exchange Traded Funds	0.77
Short Term Investments	0.78
Cash & Other Assets, Less Liabilities	0.23
Total Net Assets	100	%

The accompanying notes are an integral part of the financial statements


Schedule of Investments		Series D
December 31, 2009		(Global Series)


	Shares		Value
COMMON STOCKS—54.3%
Airlines—2.8%
Alaska Air Group, Inc.*	64,400		$	2,225,664
Allegiant Travel Company*	112,415			5,302,616

				7,528,280

Automotive Retail—0.8%
AutoNation, Inc.*	106,800			2,045,220


Cable & Satellite—1.7%
Time Warner Cable, Inc.	110,363			4,567,925


Communications Equipment—2.2%
Polycom, Inc.*	238,400			5,952,848


Computer Hardware—2.0%
Apple, Inc.*	26,117			5,507,031


Construction & Farm Machinery & Heavy Trucks—0.5%
Trinity Industries, Inc.	76,663			1,337,003


Data Processing & Outsourced Services—0.9%
Hewitt Associates, Inc.*	56,200			2,375,012


Diversified Banks—2.1%
ICICI Bank, Ltd. ADR	150,625			5,680,069


Education Services—2.3%
Corinthian Colleges, Inc.*	120,800			1,663,416
ITT Educational Services, Inc.*	46,705			4,481,812

				6,145,228

Electric Utilities—1.4%
Allegheny Energy, Inc.	68,800			1,615,424
Northeast Utilities	89,000			2,295,310

				3,910,734

Electrical Components & Equipment—1.7%
Suntech Power Holdings Company, Ltd. ADR*	272,503			4,531,725


Exchange Traded Funds—0.8%
iShares MSCI EAFE Index Fund	37,400			2,068,220
		��

Gas Utilities—1.0%
UGI Corporation	109,300			2,643,967


General Merchandise Stores—0.8%
Dollar Tree, Inc.*	43,000			2,076,900


Health Care Services—4.1%
Express Scripts, Inc.*	92,200			7,970,689
Medco Health Solutions, Inc.*	44,800			2,863,168

				10,833,857

Home Entertainment Software—2.3%
Perfect World Company, Ltd. ADR*	95,700			3,774,408
Shanda Interactive Entertainment, Ltd. ADR*	44,900			2,362,189

				6,136,597

Home Improvement Retail—0.8%
Home Depot, Inc.	77,100			2,230,503


Household Products—1.9%
Kimberly-Clark Corporation	82,074			5,228,935


Independent Power Producers & Energy Traders—0.3%
Mirant Corporation*	61,900			945,213


Integrated Oil & Gas—1.3%
Occidental Petroleum Corporation	43,600			3,546,860


Life Sciences Tools & Services—3.1%
Life Technologies Corporation*	161,100			8,414,253


Multi-Line Insurance—0.7%
Hartford Financial Services Group, Inc.	77,400			1,800,324


Multi-Utilities—0.8%
Xcel Energy, Inc.	107,000			2,271,610


Oil & Gas Exploration & Production—1.3%
Forest Oil Corporation*	152,740			3,398,465


Oil & Gas Refining & Marketing—0.8%
World Fuel Services Corporation	77,600			2,078,904


Other Diversified Financial Services—1.8%
JPMorgan Chase & Company	118,878			4,953,646


Packaged Foods & Meats—0.8%
Campbell Soup Company	64,500			2,180,100


Paper Packaging—0.7%
Rock-Tenn Company	39,700			2,001,277


Pharmaceuticals—0.7%
Endo Pharmaceuticals Holdings, Inc.*	89,600			1,837,696


Property & Casualty Insurance—4.0%
ACE, Ltd.	124,135			6,256,404
Old Republic International Corporation	171,800			1,724,872
Tower Group, Inc.	32,400			758,484
W.R. Berkley Corporation	84,000			2,069,760

				10,809,520

Security & Alarm Services—0.6%
Brink’s Company	66,300			1,613,742


Specialty Stores—1.3%
Cabela’s, Inc.*	99,700			1,421,722
Tractor Supply Company*	40,200			2,128,992

				3,550,714

The accompanying notes are an integral part of the financial statements


Schedule of Investments				Series D
December 31, 2009				(Global Series)


	Shares		Value
COMMON STOCKS—54.3% (continued)
Systems Software—2.3%
Check Point Software Technologies *		187,067	$	6,337,830


Tobacco—3.7%
Altria Group, Inc.		278,232		5,461,693
Philip Morris International, Inc.		94,861		4,571,352

				10,033,045

TOTAL COMMON STOCKS (cost $129,000,402)			$	146,573,253


FOREIGN STOCKS—44.7%
Aerospace & Defense—2.6%
BAE Systems plc^1,2		1,213,196		7,004,281


Automobile Manufacturers—2.5%
Honda Motor Company, Ltd.^1,2		120,000		4,073,631
Renault S.A.^1,2		54,036		2,768,542

				6,842,173

Diversified Banks—3.8%
DBS Group Holdings, Ltd.^1,2		576,000		6,260,571
Standard Chartered plc^1,2		164,678		4,140,113

				10,400,684

Electric Utilities—0.6%
Endesa S.A.^1,2		47,182		1,625,075


Electrical Components & Equipment—2.8%
Prysmian SpA^1,2		421,212		7,343,079


Fertilizers & Agricultural Chemicals—2.0%
Syngenta AG^1,2		19,163		5,406,296


Food Retail—1.0%
Empire Company, Ltd.		29,804		1,352,408
Metro, Inc.		37,543		1,400,719

				2,753,127

Gold—1.4%
Randgold Resources, Ltd.^1,2		48,145		3,836,118


Health Care Equipment—0.9%
Smith & Nephew plc^1,2		242,798		2,499,005


Human Resources & Employment Services—1.4%
Seek, Ltd.^1,2		634,078		3,915,615


Integrated Oil & Gas—1.9%
BG Group plc^1,2		153,372		2,773,449
ENI SpA^1,2		36,454		927,160
Repsol YPF S.A.^1,2		61,074		1,636,829

				5,337,438

Integrated Telecommunication Services—0.5%
Telstra Corporation, Ltd.^1,2		401,946		1,235,764


Internet Software & Services—2.6%
Gree, Inc.^1,2		111,984		6,927,655


Life & Health Insurance—0.6%
CNP Assurances^1,2		16,221		1,568,786


Multi-Utilities—1.0%
Veolia Environnement^1,2		82,959		2,731,141


Office Electronics—0.5%
Neopost S.A.^1,2		16,387		1,350,802


Oil & Gas Exploration & Production—3.8%
CNOOC, Ltd.^1.,2		2,243,322		3,494,515
Oil Search, Ltd.^1,2		1,244,315		6,822,460

				10,316,975

Oil & Gas Refining & Marketing—0.5%
Neste Oil Oyj^1,2		75,521		1,340,320


Packaged Foods & Meats—5.7%
Marine Harvest^1,2^*		7,616,260		5,517,097
Parmalat SpA^1,2		1,780,174		4,970,586
Toyo Suisan Kaisha, Ltd.^1,2		220,703		5,092,286

				15,579,969

Property & Casualty Insurance—1.3%
Lancashire Holdings, Ltd.^1,2		483,997		3,479,933


Regional Banks—0.6%
Seven Bank, Ltd.^1,2		772		1,542,014


Semiconductor Equipment—2.4%
Tokyo Electron, Ltd.^1,2		100,100		6,428,675


Specialized Finance—0.7%
Bolsas y Mercados Espanoles S.A.^1,2		23,944		771,304
Osaka Securities Exchange Company, Ltd.^1,2		213		1,015,813

				1,787,117

Steel—1.5%
Voestalpine AG^1,2		108,959		3,975,640


Tobacco—2.1%
Imperial Tobacco Group plc^1,2		176,120		5,550,923

TOTAL FOREIGN STOCKS (cost $109,375,770)			$	120,778,605


	Principal Amount		Value
SHORT TERM INVESTMENTS—0.8%
State Street General Account U.S. Government Fund¹	$	2,109,842	$	2,109,842

TOTAL SHORT TERM INVESTMENTS (cost $2,109,842)			$	2,109,842

Total Investments—99.8%³ (cost $240,486,014)			$	269,461,700
Cash & Other Assets, Less Liabilities—0.2%				619,743

Total Net Assets—100.0%			$	270,081,443

The accompanying notes are an integral part of the financial statements


Schedule of Investments		Series D
December 31, 2009		(Global Series)

INVESTMENT CONCENTRATION

At December 31, 2009, the investment diversification of the Series was as follows:


Country	% of Net Assets		Value
United States	44.4	%	$	119,740,470
Japan	9.4			25,080,074
United Kingdom	8.1			21,967,771
Italy	4.9			13,240,825
Switzerland	4.3			11,662,700
Cayman Islands	4.0			10,668,322
France	3.1			8,419,271
Papua New Guinea	2.5			6,822,460
Israel	2.3			6,337,830
Singapore	2.3			6,260,571
India	2.1			5,680,069
Norway	2.0			5,517,097
Australia	1.9			5,151,379
Spain	1.5			4,033,208
Austria	1.5			3,975,640
Jersey	1.4			3,836,118
Hong Kong	1.3			3,494,515
Bermuda	1.3			3,479,933
Canada	1.0			2,753,127
Finland	0.5			1,340,320

Total Investments	99.8		$	269,461,700

For federal income tax purposes the identified cost of investments owned at December 31, 2009 was $241,875,662.


ADR		American Depositary Receipt
plc		Public Limited Company

*	Non-income producing security

¹	Value determined based on Level 2 inputs.

²	Security was subject to the fair value trigger at December 31, 2009. The total market value off air valued securities amounts to $118,025,478 (cost $107,000,295) or 43.7% of total net assets.

³	Unless otherwise indicated, the values of the securities of the Portfolio are determined based on Level 1 inputs.

The accompanying notes are an integral part of the financial statements

Series D

(Global Series)

Statement of Assets and Liabilities

December 31, 2009


Assets:
Investments, at value*	$	269,461,700
Cash denominated in a foreign currency, at value**		679
Receivables:
Fund shares sold		309,922
Dividends		945,192
Foreign taxes recoverable		182,385
Prepaid expenses		5,452

Total assets		270,905,330


Liabilities:
Payable for:
Fund shares redeemed		421,821
Management fees		228,664
Administration fees		35,499
Transfer agent/maintenance fees		2,083
Custodian fees		4,279
Directors’ fees		3,710
Professional fees		57,250
Other fees		70,581

Total liabilities		823,887

Net assets	$	270,081,443


Net assets consist of:
Paid in capital	$	350,560,600
Undistributed net investment income		1,919,749
Accumulated net realized loss on sale of investments and foreign currency transactions		(111,362,797	)
Net unrealized appreciation in value of investments and translation of assets and liabilities in foreign currencies		28,963,891

Net assets	$	270,081,443

Capital shares authorized		unlimited
Capital shares outstanding		30,474,571
Net asset value per share (net assets divided by shares outstanding)	$	8.86


* investments, at cost	$	240,486,014
** Cash denominated in a foreign currency, at cost		678

Statement of Operations For Year Ended December 31, 2009


Investment Income:
Dividends (net of foreign withholding tax $347,423)	$	6,138,630
Interest		2,148

Total investment income		6,140,778


Expenses:
Management fees		2,566,995
Administration fees		390,656
Transfer agent/maintenance fees		25,352
Custodian fees		83,950
Directors’ fees		27,362
Professional fees		90,708
Reports to shareholders		54,090
Other		20,010

Total expenses		3,259,123

Net investment income		2,881,655


Net Realized and Unrealized Gain (Loss):
Net realized gain (loss) during the year on:
Investments		1,024,997
Foreign currency transactions		(961,906	)

Net realized gain		63,091

Net unrealized appreciation (depreciation) during the year on:
Investments		42,167,814
Translation of assets and liabilities in foreign currencies		(1,636	)

Net unrealized appreciation		42,166,178

Net realized and unrealized gain		42,229,269

Net increase in net assets resulting from operations	$	45,110,924

The accompanying notes are an integral part of the financial statements

Statement of Changes in Net Assets

Series D

(Global Series)


	Year Ended December 31, 2009			Year Ended December 31, 2008
Increase (decrease) in net assets from operations:
Net investment income	$	2,881,655		$	4,539,604
Net realized gain (loss) during the year on investments and foreign currency transactions		63,091			(107,176,596	)
Net unrealized appreciation (depreciation) during the year on investments and translation of assets and liabilities in foreign currencies		42,166,178			(87,984,897	)

Net increase (decrease) in net assets resulting from operations		45,110,924			(190,621,889	)


Capital share transactions:
Proceeds from sale of shares		26,124,600			71,253,122
Cost of shares redeemed		(77,119,578	)		(154,842,547	)

Net decrease from capital share transactions		(50,994,978	)		(83,589,425	)

Net decrease in net assets		(5,884,054	)		(274,211,314	)


Net assets:
Beginning of year		275,965,497			550,176,811

End of year	$	270,081,443		$	275,965,497

Undistributed net investment income at end of year	$	1,919,749		$	7,455,215


Capital share activity:
Shares sold		3,505,475			7,091,222
Shares redeemed		(10,300,582	)		(15,639,694	)

Total capital share activity		(6,795,107	)		(8,548,472	)

The accompanying notes are an integral part of the financial statements


Financial Highlights	Series D
Selected data for each share of capital stock outstanding throughout each year	(Global Series	)


	2009			2008^a			2007^b			2006			Year Ended December 31, 2005
Per Share Data
Net asset value, beginning of period	$	7.40		$	12.01		$	11.03		$	9.40		$	8.28

Income (loss) from investment operations:
Net investment income^c		0.09			0.11			0.08			0.03			0.03
Net gain (loss) on securities (realized and unrealized)		1.37			(4.72	)		0.90			1.60			1.09

Total from investment operations		1.46			(4.61	)		0.98			1.63			1.12

Net asset value, end of period	$	8.86		$	7.40		$	12.01		$	11.03		$	9.40


Total Return^d		19.73	%		(38.38	%)		8.88	%		17.34	%		13.53	%

Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	270,081		$	275,965		$	550,177		$	571,006		$	516,213

Ratios to average net assets:
Net investment income		1.12	%		1.09	%		0.67	%		0.32	%		0.30	%
Total expenses^e		1.27	%		1.26	%		1.26	%		1.24	%		1.24	%
Net expenses^f		1.27	%		1.25	%		1.26	%		1.24	%		1.24	%
Net expenses prior to custodian earnings credits and net of expense waivers		1.27	%		1.26	%		1.26	%		1.24	%		1.24	%

Portfolio turnover rate		317	%		302	%^g		115	%		23	%		33	%

^a	SGI became the sub-advisor of Series D effective May 1, 2008. Prior to May 1, 2008, Security Investors (SI) paid Oppenheimer Funds for sub-advising 50% of Series D. SGI sub-advised the remaining 50%.

^b	Security Global Investors, LLC (SGI) became sub-advisor of 50% of Series D effective August 1, 2007. OppenheimerFunds sub-advised the remaining 50%. Prior to August 1, 2007, OppenheimerFunds sub-advised the entire Series.

^c	Net investment income (loss) was computed using average shares outstanding throughout the period.

^e	Total expense information reflects the expense ratios absent expense reductions by the Investment Manager and custodian earnings credits, as applicable.

^f	Net expense information reflects the expense ratios after voluntary expense waivers, reimbursements and custodian earnings credits, as applicable.

^g	Significant variation in the portfolio turnover rate is due to the re-alignment of the Series portfolio following the appointment of SGI as sub-advisor.

The accompanying notes are an integral part of the financial statements

Manager’s Commentary

February 15, 2010


		Advised by:

To Our Shareholders:

Series E of the SBL Fund – U.S. Intermediate Bond Series earned a return of 8.41%¹ for the year ended December 31, 2009, outperforming the benchmark Barclays Capital Intermediate U.S. Government/Credit Index return of 5.24%.

The U.S. Intermediate Bond Series will primarily invest in a diversified portfolio of investment grade debt securities and maintain a dollar-weighted average duration of 3 to 10 years. The Series’ investment approach uses a bottom-up process in selecting asset classes and securities. We emphasize rigorous credit analysis and relative value in selecting securities. Credit analysis includes assessing factors such as an issuer’s management experience, cash flow, position in its market, capital structure, and general economic and market factors. Relative value analysis includes earnings growth, profitability trends, the issuer’s financial strength, and valuation analysis. Relative valuation also compares the credit risk and yield of a security to that of other securities of the same or another asset class.

Composition of Portfolio Assets

At the end of the year, the Series held 44% in corporate issues, 5% in mortgage-backed securities, 30% in U.S. government securities, and 16% in U.S. government sponsored agency bonds and notes. Other securities, such as asset-backed securities, preferred stock, and cash constituted 5% of the portfolio.

U.S. Intermediate Bond Market Review

Turbulent does not begin to describe 2009 in the fixed income markets. U.S. treasuries had their worst total return in thirty years after starting the year as the global investor’s safe haven of choice. U.S. investment grade bond issuance was approximately $1 trillion, a remarkable 30% improvement from 2008. Corporate bonds performed extremely well as supply served to strengthen the balance sheets of many financial institutions and also to extend the maturities of many high yield issuers, lessening their near-term principal repayment risk.

The U.S. Treasury and Federal Reserve each played a key role in unlocking what were once frozen credit markets in 2009. At the height of the credit freeze, investors were fearful that impending corporate debt maturities would go unpaid for fear of companies not being able to roll over their debt. Through a variety of programs and security purchases, the U.S. Treasury, FDIC, and Federal Reserve enabled corporations to once again issue debt and meet near-term obligations. Because this served to reduce implied default rates, corporations were then able to tender for other debt and amend covenants to their benefit, leaving many issuers with less onerous debt covenants and reduced near-term maturities.

Fixed-income factors we follow point to improving economic growth as the yield curve remains historically steep and monetary policy remains accommodative. The cost of capital is cheap, as interest rates remain very low with no sign of inflation. Therefore, companies are able to expand but it is through merger and acquisition activity rather than organic growth.

Market Outlook

Increased government bond issuance, particularly of longer duration securities, combined with the removal of a buyer (the Federal Reserve) that purchased approximately 20% of total new cash raised by the U.S. treasury in 2009, caused us to be underweight U.S. treasuries and agencies in 2010. We expect the trend of corporate out-performance versus U.S. treasuries to continue as we enter 2010. Therefore, we will continue to overweight corporate bonds and underweight U.S. treasuries as the improving credit trend plays out over the next 12 months.

The Federal Reserve’s U.S. treasury purchases have ended and its agency purchases are scheduled to end early in 2010, removing a significant source of demand from both markets. However, government bond supply will remain robust as JP Morgan forecasts nearly a 20% increase in gross issuance of coupon treasury securities in 2010. The U.S. treasury has also stated its intention to lengthen the average maturity of its debt. We will continue to monitor the economic and market conditions and will adjust the asset mix and maturity structure in the portfolio accordingly.

Thank you for your investment in the U.S. Intermediate Bond Series.

We recognize there are many investment fund alternatives available today and appreciate the confidence you place in us.

Sincerely,

Daniel Portanova, Portfolio Manager

¹	Fee waivers and/or reimbursements reduce Series expenses and in the absence of such waivers, the performance quoted would be reduced.


		Series E
Performance Summary		(U.S. Intermediate Bond Series)
December 31, 2009		(unaudited)

PERFORMANCE

LOGO

$10,000 Over 10 Years

The chart above assumes a hypothetical $10,000 investment in Series E (U.S. Intermediate Bond Series) on December 31, 1999 and reflects the fees and expenses of Series E. The Barclays Capital Intermediate U.S. Government Credit Index is an unmanaged Index that tracks U.S. dollar denominated U.S. treasuries, government-related and investment grade U.S. corporate securities that have a remaining maturing of greater than or equal to 1 year and less than 10 years.

Average Annual Returns


Periods Ended 12-31-09¹	1 Year		5 Years		10 Years
Series E	8.41	%	1.50	%	3.91	%

Portfolio Composition by Quality Ratings

(Based on Standard and Poor’s Ratings)


AAA	52.07	%
AA	12.01
A	16.58
BBB	15.52
CCC	0.35
CC	0.21
Preferred Stock	0.17
Cash & Other Assets, Less Liabilities	3.09
Total Net Assets	100.00	%

The accompanying notes are an integral part of the financial statements


Performance Summary		Series E
December 31, 2009		(U.S. Intermediate Bond Series)


	Principal Amount		Value
CORPORATE BONDS—48.4%
Banking—6.5%
BOI Capital Funding No. 2, LP
5.57%, 2049^1,2,3,4	$	650,000	$	273,000
Citigroup, Inc.
6.38%, 2014¹		500,000		523,454
8.50%, 2019¹		1,000,000		1,154,753
JPMorgan Chase & Company
4.65%, 2014¹		2,000,000		2,106,877
6.30%, 2019¹		1,000,000		1,100,077
Standard Chartered plc
6.41%, 2049^1,2,3,4		1,750,000		1,389,019
Wells Fargo & Company
4.38%, 2013¹		2,000,000		2,077,360

				8,624,540

Brokerage—2.9%
BlackRock, Inc.
6.25%, 2017¹		1,500,000		1,612,835
Raymond James Financial, Inc.
8.60%, 2019¹		2,000,000		2,163,710

				3,776,545

Building Materials—0.5%
CRH America, Inc.
6.95%, 2012¹		600,000		649,926

Chemicals—4.2%
Airgas, Inc.
4.50%, 2014¹		1,000,000		1,015,150
PPG Industries, Inc.
7.40%, 2019¹		650,000		724,718
Praxair, Inc.
4.38%, 2014¹		1,000,000		1,054,449
4.63%, 2015¹		1,500,000		1,595,330
5.20%, 2017¹		1,000,000		1,048,576

				5,438,223

Diversified Manufacturing—2.7%
Amphenol Corporation
4.75%, 2014¹		2,000,000		2,000,702
ITT Corporation
4.90%, 2014¹		1,500,000		1,571,783

				3,572,485

Electric—4.0%
American Water Capital Corporation
6.09%, 2017¹		3,000,000		3,134,711
Arizona Public Service Company
6.38%, 2011¹		600,000		642,293
Cincinnati Gas & Electric
5.70%, 2012¹		600,000		650,716
East Coast Power LLC
7.07%, 2012¹		77,467		80,425
Oncor Electric Delivery Company
6.38%, 2015¹		600,000		654,503

				5,162,648

Entertainment—0.6%
Walt Disney Company
4.50%, 2013¹		700,000		743,572

Financial Companies—Noncaptive
Consumer—0.3%
Residential Capital LLC
8.50%, 2012¹		650,000		455,000

Financial Companies—Noncaptive Diversified—1.7%
General Electric Capital Corporation
6.00%, 2012¹		2,000,000		2,155,814

Food & Beverage—3.4%
Brown-Forman Corporation
5.00%, 2014¹		2,000,000		2,101,968
General Mills, Inc.
5.25%, 2013¹		1,000,000		1,078,840
5.70%, 2017¹		1,200,000		1,297,744

				4,478,552

Independent Energy—1.3%
Devon Financing Corporation ULC
6.88%, 2011¹		1,600,000		1,738,104

Industrial—Other—1.2%
Johns Hopkins University
5.25%, 2019¹		1,500,000		1,560,225

Insurance—Life—0.8%
RenaissanceRe Holdings, Ltd.
5.88%, 2013¹		1,000,000		1,014,986

Insurance—Property & Casualty—1.5%
Berkshire Hathaway Finance Corporation
4.75%, 2012¹		1,800,000		1,918,919

Integrated Energy—2.8%
BP Capital Markets plc
5.25%, 2013¹		2,000,000		2,178,458
Statoil ASA
2.90%, 2014¹		1,500,000		1,493,796

				3,672,254

Media—Cable—3.7%
Omnicom Group, Inc.
6.25%, 2019¹		4,500,000		4,854,821

Natural Gas Pipelines—0.1%
Express Pipeline, LP
6.47%, 2013^1,3,4		136,000		137,550

Pharmaceuticals—4.3%
AstraZeneca plc
5.90%, 2017¹		1,750,000		1,944,549
GlaxoSmithKline Capital, Inc.
4.85%, 2013¹		500,000		536,725
Novartis Securities Investment, Ltd.
5.13%, 2019¹		1,000,000		1,050,526
Wyeth
5.50%,2013¹		2,000,000		2,174,575

				5,706,375

The accompanying notes are an integral part of the financial statements


Schedule of Investments		Series E
December 31, 2009		(U.S. Intermediate Bond Series)


	Principal Amount		Value
CORPORATE BONDS—48.4% (continued)
Restaurants—1.6%
Starbucks Corporation
6.25%, 2017¹	$	2,000,000	$	2,115,316

Technology—0.8%
Microsoft Corporation
2.95%, 2014¹		1,000,000		1,010,712

Telecommunications—Wireless—1.1%
AT&T, Inc.
4.85%, 2014¹		1,300,000		1,382,284

Transportation Services—0.8%
United Parcel Service, Inc.
3.88%, 2014¹		1,000,000		1,038,974

U.S. Banking—1.6%
American Express Bank FSB
3.15%, 2011¹		2,000,000		2,066,936

TOTAL CORPORATE BOND (cost $61,144,860)			$	63,274,761


	Principal Amount		Value
PREFERRED STOCK—0.2%
Insurance Brokers—0.2%
Woodbourne Capital Trust I
1.53%, 2049^2,3,5,6		300,000		56,176
Woodbourne Capital Trust II
1.57%, 2049^2,3,5,6		300,000		56,177
Woodbourne Capital Trust III
1.58%, 2049^2,3,5,6		300,000		56,177
Woodbourne Capital Trust IV
1.58%, 2049^2,3,5,6		300,000		56,176

				224,706

TOTAL PREFERRED STOCK (cost $1,205,796)			$	224,706


	Principal Amount		Value
MORTGAGE BACKED SECURITIES—2.8%
Other Non-Agency—2.8%
C.M.O.’s—2.8%
Chase Mortgage Finance Corporation
2005-A1 2A2, 5.23%, 2035^1,2	$	998,286	$	921,927
Homebanc Mortgage Trust
2006-1, 3.74%, 2037^1,2		1,176,297		722,395
JP Morgan Alternative Loan Trust
2006-S3, 6.00%, 2036¹		3,000,000		1,775,543
JP Morgan Mortgage Trust
2006-A3, 3.97%, 2036^1,2		307,927		260,922

				3,680,787

				3,680,787

U.S. Government Sponsored Agencies—0.0%
C.M.O.’s—0.0%
Federal Home Loan Mortgage Corporation
FHR 188 H, 7.00%, 2021¹		996		1,086
Federal National Mortgage Association
FNR 1990-68 J, 6.95%, 2020 ¹		2,442		2,675
FNR 1990-103 K, 7.50%, 2020¹		919		984

				4,745

				4,745

U.S. Government Sponsored Securities—0.0%
Pass Through’s—0.0%
Government National Mortgage Association
#518436, 7.25%, 2029¹		18,389		20,595

				20,595

TOTAL MORTGAGE BACKED SECURITIES (cost $5,500,927)			$	3,706,127


	Principal Amount		Value
ASSET BACKED SECURITIES—0.3%
Home Equity Loans—0.3%
Credit-Based Asset Servicing and Securitization LLC
2005-CB5, 0.49%, 2035^1,2	$	427,933	$	396,870

TOTAL ASSET BACKED SECURITIES (cost $427,933)			$	396,870


	Principal Amount		Value
U.S. GOVERNMENT SPONSORED AGENCY BONDS & NOTES—15.7%
Federal Home Loan Bank
0.80%, 4/30/2010¹	$	4,000,000	$	4,008,500
1.63%, 3/16/2011¹		9,000,000		9,095,876
3.63%, 10/18/2013¹		1,500,000		1,571,306
5.25%, 6/18/2014¹		1,500,000		1,666,367
5.00%, 12/21/2015¹		2,000,000		2,156,182
Federal Home Loan Mortgage Corporation
3.75%, 3/27/2019¹		2,000,000		1,960,842

TOTAL U.S. GOVERNMENT SPONSORED AGENCY BONDS & NOTES (cost $20,463,714)			$	20,459,073


Schedule of Investments		Series E
December 31, 2009		(U.S. Intermediate Bond Series)


	Principal Amount		Value
U.S. GOVERNMENT SECURITIES—29.5%
U.S. Treasury Notes
2.00%, 2/28/2010	$	7,500,000	$	7,521,390
0.88%, 5/31/2011		2,250,000		2,252,725
1.38%, 4/15/2012		4,500,000		4,504,221
1.50%, 7/15/2012		6,500,000		6,510,152
3.63%, 12/31/2012		2,000,000		2,114,844
2.50%, 3/31/2013		5,500,000		5,625,037
3.25%, 6/30/2016		4,500,000		4,513,010
2.75%, 2/15/2019		3,250,000		2,992,031
3.13%, 5/15/2019		1,600,000		1,515,250
3.38%, 11/15/2019		1,000,000		961,880

TOTAL U.S. GOVERNMENT SECURITIES (cost $38,645,707)			$	38,510,540

Total Investments—96.9%⁷ (cost $127,388,937)			$	126,572,077
Cash & Other Assets, Less Liabilities—3.1%				3,996,558

Total Net Assets—100.0%			$	130,568,635

For federal income tax purposes the identified cost of investments owned at December 31, 2009 was $128,623,894.

plc	Public Limited Company

¹	Value determined based on Level 2 inputs.

²	Variable rate security. Rate indicated is rate effective at December 31, 2009.

³	Security was acquired through a private placement.

⁴	Security is a 144A or Section 4(2) security. The total market value of 144A or Section 4(2) securities is $1,799,569 (cost $2,526,889), or 1.4% of total net assets.

⁵	Value determined based on Level 3 inputs.

⁶	Security was fair valued by the Valuation Committee at December 31, 2009. The total market value of fair valued securities amounts to $224,706, (cost $1,205,796) or 0.2% of total net assets.

⁷	Unless otherwise indicated, the values of the securities of the Portfolio are determined based on Level 1 inputs.

The accompanying notes are an integral part of the financial statements


		Series E
		(U.S. Intermediate Bond Series)

Statement of Assets and Liabilities

December 31, 2009


Assets:
Investments, at value*		$	126,572,077
Cash			2,430,992
Receivables:
Fund shares sold			398,535
Securities sold			75,875
Interest			1,264,277
Prepaid expenses			2,746

Total assets			130,744,502


Liabilities:

Payable for:
Fund shares redeemed			63,602
Management fees			66,763
Administration fees	��		12,671
Transfer agent/maintenance fees			2,083
Custodian fees			941
Directors’ fees			1,762
Professional fees			13,762
Other fees			14,283

Total liabilities			175,867

Net assets		$	130,568,635


Net assets consist of:
Paid in capital		$	146,756,551
Undistributed net investment income			2,568,703
Accumulated net realized loss on sale of investments			(17,939,759	)
Net unrealized depreciation in value of investments			(816,860	)

Net assets		$	130,568,635


Capital shares authorized			unlimited
Capital shares outstanding			10,671,548
Net asset value per share (net assets divided by shares outstanding)		$	12.24


* Investments, at cost		$	127,388,937

Statement of Operations

For Year Ended December 31, 2009


Investment Income:
Dividends	$	59,471
Interest		4,308,293

Total investment income		4,367,764


Expenses:
Management fees		850,765
Administration fees		115,030
Transfer agent/maintenance fees		25,321
Custodian fees		6,337
Directors’ fees		12,063
Professional fees		16,989
Reports to shareholders		14,667
Other		5,552

Total expenses		1,046,724
Expenses waived		(170,154	)

Net expenses		876,570

Net investment income		3,491,194


Net Realized and Unrealized Gain (Loss):
Net realized gain (loss) during the year on:
Investments		(9,761,362	)

Net realized loss		(9,761,362	)


Net unrealized appreciation (depreciation) during the year on:
Investments		15,320,180

Net unrealized appreciation		15,320,180

Net realized and unrealized gain		5,558,818

Net increase in net assets resulting from operations	$	9,050,012

The accompanying notes are an integral part of the financial statements


		Series E
Statement of Changes in Net Assets		(U.S. Intermediate Bond Series)


	Year Ended December 31, 2009			Year Ended December 31, 2008
Increase (decrease) in net assets from operations:
Net investment income	$	3,491,194		$	5,515,405
Net realized loss during the year on investments		(9,761,362	)		(3,305,573	)
Net unrealized appreciation (depreciation) during the year on investments		15,320,180			(12,398,639	)

Net increase (decrease) in net assets resulting from operations		9,050,012			(10,188,807	)


Capital share transactions:
Proceeds from sale of shares		71,807,375			46,877,829
Cost of shares redeemed		(49,358,471	)		(59,271,743	)

Net increase (decrease) from capital share transactions		22,448,904			(12,393,914	)

Net increase (decrease) in net assets		31,498,916			(22,582,721	)


Net assets:
Beginning of year		99,069,719			121,652,440

End of year	$	130,568,635		$	99,069,719


Undistributed net investment income at end of year	$	2,568,703		$	4,539,597


Capital share activity:
Shares sold		6,109,866			3,844,656
Shares redeemed		(4,215,010	)		(4,911,549	)

Total capital share activity		1,894,856			(1,066,893	)

The accompanying notes are an integral part of the financial statements


Financial Highlights		Series E
Selected data for each share of capital stock outstanding throughout each year		(U.S. Intermediate Bond Series)


	2009			2008^a			2007			2006			Year Ended December 31, 2005
Per Share Data
Net asset value, beginning of period	$	11.29		$	12.36		$	12.01		$	11.57		$	11.36

Income (loss) from investment operations:
Net investment income^b		0.37			0.58			0.60			0.63			0.49
Net gain (loss) on securities (realized and unrealized)		0.58			(1.65	)		(0.25	)		(0.19	)		(0.28	)

Total from investment operations		0.95			(1.07	)		0.35			0.44			0.21

Net asset value, end of period	$	12.24		$	11.29		$	12.36		$	12.01		$	11.57


Total Return^c		8.41	%		(8.66	)%		2.91	%		3.80	%		1.85	%

Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	130,569		$	99,070		$	121,652		$	151,311		$	159,386

Ratios to average net assets:
Net investment income		3.08	%		4.80	%		4.90	%		4.67	%		4.23	%
Total expenses^d		0.92	%		0.93	%		0.91	%		0.93	%		0.92	%
Net expenses^e		0.77	%		0.78	%		0.76	%		0.78	%		0.77	%
Net expenses prior to custodian earnings credits and net of expense waivers		0.77	%		0.78	%		0.76	%		0.78	%		0.77	%

Portfolio turnover rate		76	%^f		34	%		31	%		64	%		60	%

^a	Effective November 24, 2008 the Series name became U.S. Intermediate Bond Series. Prior to November 24, 2008 the Series was known as the Diversified Income Series.

^b	Net investment income (loss) was computed using average shares outstanding throughout the period.

^d	Total expense information reflects the expense ratios absent expense reductions by the Investment Manager and custodian earnings credits, as applicable.

^e	Net expense information reflects the expense ratios after voluntary expense waivers, reimbursements and custodian earnings credits, as applicable.

^f	Significant variation in the portfolio turnover rate is due to Investment Manager’s appointment of new portfolio manager for the Series.

The accompanying notes are an integral part of the financial statements

Manager’s Commentary

February 15, 2010


				Advised by:

To Our Shareholders:

Series H of the SBL Fund – Enhanced Index Series returned 26.65%¹ for the year ended December 31, 2009, in line with the S&P 500 Index gain of 26.46% but less than the peer group of 27.77%.

Our investment strategy is predicated on the philosophy that, over the long-term, intrinsic value is an anchor for stock prices, but behavioral biases, trends, bubbles, and busts can cause significant short-term deviations.

Market Overview

The U.S. market rose more than 25% in 2009, providing a significant rebound from the 2008 drop. On March 9, 2009 the market fell to a valuation first reached 13 years prior, in 1996. Since 1996, the U.S. GDP had grown by more than 6 trillion dollars, more than 75%, yet the market capitalization of the S&P 500 was unchanged. Equity values conveyed expectations as low as we had recorded since our data starting point in 1963. On a normalized earnings basis we calculated a risk premium above 20%. Valuations didn’t matter; investors would not hold risky assets, so prices fell regardless of underlying assets and earning potential. Risk played a dominant role to valuations and capital preservation superseded all other motivations.

Fund Review

Accordingly, our process is anchored with our value model and incorporates other factors to measure the strength and legitimacy of different market waves and currents. In February 2009 most empirical evidence clearly pointed towards a significant dislocation of intrinsic value from stock price. We observed the largest spread between valuations and earnings power than at any point in our research, dating back to 1963. The empirical evidence supported our view that value stocks were, inexpensive and presented a significant opportunity. Meanwhile, our other alpha factors intended to provide sentiment indications appeared relatively expensive, arguing higher quality and momentum stocks were significantly overpriced relative to riskier stocks. We positioned our portfolio to take advantage of the dislocation by increasing our exposure to inexpensive stocks and decreasing our exposure to the high quality positive momentum stocks. In hindsight our timing looks fortuitous; however through March 9, 2009, it looked disastrously early. Despite early underperformance, we trusted (with verification) the empirical evidence and remained relatively over-exposed to the market rally, which led to our outperformance over the final 9 months of the year.

Calendar year 2009 presented a market with enormous risk and commensurate price dislocations exploitable primarily through factor rotation or market timing. To our benefit we realized significant positive performance from our value model but with it came disastrous performance of our other factors. While we certainly could not have predicted the magnitudes of performance spreads, we expected the divergent factor performance because the signals had reached all-time price dislocations and correlation between value and the other factors was at an all-time low, meaning virtually no attractively valued stocks exhibited improving fundamentals, quality or momentum characteristics in January 2009.

Market Outlook

We have now transitioned to a more normal environment; correlations and factor prices are not at severe dislocations. Accordingly, we expect a more normal outcome for 2010, where stocks exhibiting value characteristics along with improving fundamentals outperform the market.

Thank you for your business and the confidence you place in us.

Sincerely,

Peter C. Stournaras, Portfolio Manager,

Northern Trust Investments

¹	Fee waivers and/or reimbursements reduce Series expenses and in the absence of such waivers, the performance quoted would be reduced.


		Series H
Performance Summary		(Enhanced Index Series)
December 31, 2009		(unaudited)

PERFORMANCE

LOGO

$10,000 Over 10 Years

The chart above assumes a hypothetical $10,000 investment in Series H (Enhanced Index Series) on December 31, 1999 and reflects the fees and expenses of Series H. The S&P 500 Index is a capitalization-weighted index composed of 500 selected common stocks that represent the broad domestic economy and is a widely recognized unmanaged index of market performance.

Average Annual Returns


Periods Ended 12-31-09¹	1 Year		5 Years		10 Years
Series H	26.65	%	(0.62	)%	(1.98	)%

Portfolio Composition by Sector


Consumer Discretionary	9.38	%
Consumer Staples	11.02
Energy	11.22
Financials	13.09
Health Care	12.44
Industrials	10.01
Information Technology	19.12
Materials	3.52
Telecommunication Services	3.15
Utilities	3.79
Preferred Stock	0.73
U.S. Government Sponsored Securities	0.23
Cash & Other Assets, Less Liabilities	2.30
Total Net Assets	100.00	%

The accompanying notes are an integral part of the financial statements


Schedule of Investments		Series H
December 31, 2009		(Enhanced Index Series)


	Shares	Value
COMMON STOCKS—96.8%
Advertising—0.6%
Interpublic Group of Companies, Inc.*	6,848	$	50,538
Omnicom Group, Inc.	5,867		229,693

			280,231

Aerospace & Defense—3.2%
Boeing Company	222		12,017
General Dynamics Corporation	4,163		283,792
Honeywell International, Inc.	1,809		70,913
ITT Corporation	3,935		195,727
L-3 Communications Holdings, Inc.	1,796		156,162
Lockheed Martin Corporation	1,177		88,687
Raytheon Company	5,174		266,564
United Technologies Corporation	6,353		440,961

			1,514,823

Agricultural Products—0.3%
Archer-Daniels-Midland Company	3,831		119,949

Air Freight & Logistics—0.5%
FedEx Corporation	1,595		133,103
United Parcel Service, Inc. (Cl.B)	1,908		109,462

			242,565

Apparel Retail—1.1%
Gap, Inc.	9,701		203,236
Ltd. Brands, Inc.	10,887		209,466
TJX Companies, Inc.	2,286		83,553

			496,255

Apparel, Accessories & Luxury Goods—0.2%
V.F. Corporation	1,482		108,542

Asset Management & Custody Banks—0.5%
Ameriprise Financial, Inc.	3,379		131,173
Franklin Resources, Inc.	28		2,950
Legg Mason, Inc.	3,138		94,642

			228,765

Automobile Manufacturers—0.3%
Ford Motor Company*	14,309		143,090

Biotechnology—1.3%
Amgen, Inc.*	7,773		439,719
Gilead Sciences, Inc.*	4,366		188,960

			628,679

Broadcasting—0.1%
CBS Corporation (CI.B)	2,498		35,097

Building Products—0.1%
Masco Corporation	3,751		51,801

Cable & Satellite—0.3%
Comcast Corporation	3,728		62,854
DIRECTV*	2,713		90,479

			153,333

Coal & Consumable Fuels—0.1%
Peabody Energy Corporation	1,526		68,990

Commercial Printing—0.4%
RR Donnelley & Sons Company	9,040		201,321

Communications Equipment—2.5%
Cisco Systems, Inc.*	33,891		811,350
Harris Corporation	4,238		201,517
Motorola, Inc.	551		4,276
Qualcomm, Inc.	4,225		195,449

			1,212,592

Computer & Electronics Retail—0.4%
Best Buy Company, Inc.	1,919		75,724
RadioShack Corporation	6,806		132,717

			208,441

Computer Hardware—5.7%
Apple, Inc.*	3,373		711,231
Dell, Inc.*	17,992		258,365
Hewlett-Packard Company	13,698		705,584
International Business Machines Corporation	7,494		980,964
Sun Microsystems, Inc.*	907		8,499

			2,664,643

Computer Storage & Peripherals—0.7%
EMC Corporation*	10,722		187,313
Western Digital Corporation*	3,119		137,704

			325,017

Construction & Engineering—0.1%
Fluor Corporation	964		43,418
Jacobs Engineering Group, Inc.*	162		6,093

			49,511

Construction & Farm Machinery & Heavy Trucks—0.0%
Caterpillar, Inc.	292		16,641

Consumer Finance—0.9%
American Express Company	3,382		137,039
Capital One Financial Corporation	6,351		243,497
SLM Corporation*	3,300		37,191

			417,727

Data Processing & Outsourced Services—0.8%
Computer Sciences Corporation*	3,827		220,167
Convergys Corporation*	267		2,870
Fidelity National Information Services, Inc.	5,811		136,210
Total System Services, Inc.	1,073		18,531
Western Union Company	761		14,345

			392,123

Department Stores—0.7%
JC Penney Company, Inc.	6,032		160,512
Sears Holdings Corporation*	2,326		194,104

			354,616

Distributors—0.1%
Genuine Parts Company	1,518		57,623

Diversified Banks—2.1%
Comerica, Inc.	5,309		156,987
U.S. Bancorp	2,052		46,191
Wells Fargo & Company	29,626		799,605

			1,002,783

Diversified Chemicals—0.8%
Eastman Chemical Company	3,134		188,792

The accompanying notes are an integral part of the financial statements


Schedule of Investments		Series H
December 31, 2009		(Enhanced Index Series)


	Shares	Value
COMMON STOCKS—96.8% (continued)
Diversified Chemicals—0.8% (continued)
PPG Industries, Inc.	3,453	$	202,139

			390,931

Diversified Metals & Mining—0.3%
Freeport-McMoRan Copper & Gold, Inc. (CI.B)	1,567		125,814

Drug Retail—0.9%
CVS Caremark Corporation	8,054		259,419
Walgreen Company	4,973		182,609

			442,028

Electric Utilities—1.5%
American Electric Power Company, Inc.	3,535		122,983
Edison International	6,300		219,114
Exelon Corporation	892		43,592
FirstEnergy Corporation	5,121		237,871
PPL Corporation	2,893		93,473

			717,033

Electrical Components & Equipment—0.7%
Emerson Electric Company	7,326		312,088

Electronic Manufacturing Services—0.4%
Jabil Circuit, Inc.	10,615		184,383

Fertilizers & Agricultural Chemicals—0.5%
CF Industries Holdings, Inc.	2,207		200,351
Monsanto Company	578		47,252

			247,603

Food Retail—0.2%
Safeway, Inc.	4,649		98,977

Gas Utilities—0.4%
Nicor, Inc.	4,292		180,693

General Merchandise Stores—0.6%
Big Lots, Inc.*	7,050		204,309
Target Corporation	2,140		103,512

			307,821

Health Care Distributors—0.9%
AmerisourceBergen Corporation	7,932		206,787
McKesson Corporation	3,896		243,500

			450,287

Health Care Equipment—1.9%
Baxter International, Inc.	24		1,408
CR Bard, Inc.	342		26,642
Hospira, Inc.*	3,771		192,321
Intuitive Surgical, Inc.*	254		77,043
Medtronic, Inc.	9,280		408,135
Stryker Corporation	2,793		140,683

			846,232

Health Care Services—0.6%
Medco Health Solutions, Inc.*	4,774		305,106

Health Care Technology—0.0%
IMS Health, Inc.	881		18,554

Home Improvement Retail—0.9%
Home Depot, Inc.	14,015		405,454

Hotels, Resorts & Cruise Lines—0.1%
Carnival Corporation*	1,578		50,007

Household Appliances—0.4%
Whirlpool Corporation	2,513		202,699

Household Products—2.1%
Colgate-Palmolive Company	362		29,738
Kimberly-Clark Corporation	4,644		295,869
Procter & Gamble Company	11,912		722,225

			1,047,832

Hypermarkets & Super Centers—1.5%
Wal-Mart Stores, Inc.	13,073		698,752

Independent Power Producers & Energy Traders—0.4%
Constellation Energy Group, Inc.	5,897		207,397

Industrial Conglomerates—2.4%
3M Company	5,554		459,149
General Electric Company	46,364		701,488

			1,160,637

Industrial Machinery—1.4%
Dover Corporation	4,882		203,140
Eaton Corporation	2,875		182,908
Illinois Tool Works, Inc.	3,579		171,756
Parker Hannifin Corporation	341		18,373
Stanley Works	1,569		80,819

			656,996

Industrial REIT’s—0.4%
ProLogis	14,766		202,147

Integrated Oil & Gas—7.6%
Chevron Corporation	11,527		887,464
ConocoPhillips	9,408		480,467
Exxon Mobil Corporation¹	24,898		1,697,795
Marathon Oil Corporation	2,517		78,581
Occidental Petroleum Corporation	5,864		477,036

			3,621,343

Integrated Telecommunication Services—3.1%
AT&T, Inc.	33,954		951,731
Qwest Communications International, Inc.	49,367		207,835
Verizon Communications, Inc.	10,140		335,938

			1,495,504

Internet Retail—0.3%
Amazon.com, Inc.*	1,234		165,998

Internet Software & Services—2.3%
AOL, Inc.*	138		3,213
eBay, Inc.*	9,403		221,347

The accompanying notes are an integral part of the financial statements


Schedule of Investments		Series H
December 31, 2009		(Enhanced Index Series)


	Shares	Value
COMMON STOCKS—96.8% (continued)
Internet Software & Services—2.3% (continued)
Google, Inc.*	1,232	$	763,815
Yahoo!, Inc.*	7,272		122,024

			1,110,399

Investment Banking & Brokerage—1.2%
Goldman Sachs Group, Inc.	3,339		563,757

Life & Health Insurance—0.7%
Lincoln National Corporation	3,021		75,162
MetLife, Inc.	3,062		108,242
Prudential Financial, Inc.	248		12,340
Torchmark Corporation	81		3,560
Unum Group	6,294		122,859

			322,163

Life Sciences Tools & Services—0.4%
Thermo Fisher Scientific, Inc.*	2,008		95,761
Waters Corporation*	1,512		93,684

			189,445

Managed Health Care—0.7%
Coventry Health Care, Inc.*	1,173		28,492
UnitedHealth Group, Inc.	6,595		201,016
WellPoint, Inc.*	2,120		123,575

			353,083

Metal & Glass Containers—0.0%
Ball Corporation	125		6,463

Movies & Entertainment —1.4%
News Corporation*	8,591		117,611
Time Warner, Inc.	1,528		44,526
Viacom, Inc. (CI.B)*	8,074		240,039
Walt Disney Company	6,931		223,524

			625,700

Multi-Line Insurance—0.6%
Genworth Financial, Inc.*	2,755		31,269
Loews Corporation*	6,572		238,892

			270,161

Multi-Utilities—1.5%
CenterPoint Energy, Inc.	13,027		189,022
DTE Energy Company	4,819		210,059
Public Service Enterprise Group, Inc.	3,694		122,826
Sempra Energy	3,071		171,915

			693,822

Office Services & Supplies—0.4%
Avery Dennison Corporation	4,590		167,489

Oil & Gas Drilling—1.0%
Ensco International plc ADR	4,221		168,587
Nabors Industries, Ltd.*	9,074		198,630
Rowan Companies, Inc.	4,610		104,370

			471,587

Oil & Gas Equipment & Services—1.1%
FMC Technologies, Inc.*	525		30,366
National Oilwell Varco, Inc.	5,737		252,944
Schlumberger, Ltd.	3,399		221,241

			504,551

Oil & Gas Exploration & Production—0.9%
Anadarko Petroleum Corporation	484		30,211
Chesapeake Energy Corporation	4,337		112,242
XTO Energy, Inc.	6,534		304,027

			446,480

Oil & Gas Storage & Transportation—0.5%
El Paso Corporation	975		9,584
Williams Companies, Inc.	10,638		224,249

			233,833

Other Diversified Financial Services—3.9%
Bank of America Corporation	33,863		509,976
Citigroup, Inc.	52,093		172,428
JPMorgan Chase & Company	21,159		881,695
Morgan Stanley	11,291		334,214

			1,898,313

Packaged Foods & Meats—1.8%
Campbell Soup Company	5,433		183,635
Kellogg Company	4,178		222,270
Kraft Foods, Inc.	3,224		87,628
Sara Lee Corporation	16,687		203,248
Tyson Foods, Inc.	13,084		160,541

			857,322

Paper Packaging—0.5%
Bemis Company, Inc.	2,468		73,176
Sealed Air Corporation	7,895		172,585

			245,761

Paper Products—0.8%
International Paper Company	9,076		243,055
MeadWestvaco Corporation	4,189		119,931

			362,986

Personal Products—0.1%
Avon Products, Inc.	763		24,035
Mead Johnson Nutrition Company	876		38,291

			62,326

Pharmaceuticals—6.6%
Abbott Laboratories	5,858		316,273
Bristol-Myers Squibb Company	1,188		29,997
Eli Lilly & Company	7,560		269,968
Forest Laboratories, Inc.*	3,647		117,105
Johnson & Johnson	15,489		997,646
Merck & Company, Inc.	13,783		503,631
Pfizer, Inc.	47,240		859,296

			3,093,916

Property & Casualty Insurance—1.3%
Allstate Corporation	805		24,182
Chubb Corporation	2,735		134,507
Travelers Companies, Inc.	5,687		283,555
XL Capital, Ltd.	10,483		192,153

			634,397

Publishing—0.8%
Gannett Company, Inc.	14,545		215,993
McGraw-Hill Companies, Inc.	4,356		145,970

			361,963

Railroads—0.2%
CSX Corporation	1,591		77,148

The accompanying notes are an integral part of the financial statements


Schedule of Investments		Series H
December 31, 2009		(Enhanced Index Series)


	Shares		Value
COMMON STOCKS—96.8% (continued)
Regional Banks—0.5%
Fifth Third Bancorp		6,145	$	59,914
PNC Financial Services Group, Inc.		2,469		130,338
SunTrust Banks, Inc.		1,278		25,931

				216,183

Restaurants—0.9%
Darden Restaurants, Inc.		2,709		95,005
McDonald’s Corporation		5,109		319,006

				414,011

Semiconductors—2.3%
Intel Corporation		34,632		706,492
Texas Instruments, Inc.		12,675		330,311
Xilinx, Inc.		2,317		58,064

				1,094,867

Soft Drinks—2.2%
Coca-Cola Company		8,117		462,669
Coca-Cola Enterprises, Inc.		9,511		201,633
Dr Pepper Snapple Group, Inc.		1,829		51,761
Pepsi Bottling Group, Inc.		673		25,238
PepsiCo, Inc.		4,753		288,982

				1,030,283

Specialized Consumer Services—0.2%
H&R Block, Inc.		4,299		97,243

Specialized Finance—0.2%
CME Group, Inc.		286		96,082

Specialized REIT’s—0.8%
HCP, Inc.		5,183		158,289
Host Hotels & Resorts, Inc.		18,982		221,520

				379,809

Specialty Chemicals—0.4%
International Flavors & Fragrances, Inc.		4,338		178,465

Steel—0.2%
Nucor Corporation		2,505		116,858

Systems Software—4.5%
BMC Software, Inc.*		4,949		198,455
Microsoft Corporation		42,338		1,290,885
Oracle Corporation		25,746		631,807

				2,121,147

Tobacco—2.0%
Altria Group, Inc.		16,317		320,303
Philip Morris International, Inc.		8,288		399,398
Reynolds American, Inc.		4,037		213,840

				933,541

Trading Companies & Distributors—0.3%
W.W. Grainger, Inc.		1,693		163,933

Trucking—0.3%
Ryder System, Inc.		3,813		156,981

Wireless Telecommunication Services—0.0%
Sprint Nextel Corporation*		747		2,734

TOTAL COMMON STOCKS (cost $42,532,216)			$	46,072,676


	Shares		Value
PREFERRED STOCK—0.7%
Other Diversified Financial Services—0.7%
Bank of America Corporation
10.00%,^2,*		23,191	$	346,010

TOTAL PREFERRED STOCK (cost $370,691)			$	346,010


	Principal Amount		Value
U.S. GOVERNMENT SECURITIES—0.2%
U.S. Treasury Bill
0.12%, 5/6/2010	$	110,000	$	109,958

TOTAL U.S. GOVERNMENT SECURITIES (cost $109,963)			$	109,958

Total Investments—97.7%³ (cost $43,012,870)			$	46,528,644
Cash & Other Assets, Less Liabilities—2.3%				1,095,943

Total Net Assets—100.0%			$	47,624,587

For federal income tax purposes the identified cost of investments owned at December 31, 2009 was $45,346,126.

ADR	American Depositary Receipt

plc	Public Limited Company

*	Non-income producing security

¹	Security is segregated as collateral for open futures contracts.

²	Variable rate security. Rate indicated is rate effective at December 31, 2009.

³	Unless otherwise indicated, the values of the securities of the Portfolio are determined based on Level 1 inputs.

The accompanying notes are an integral part of the financial statements


		Series H
		(Enhanced Index Series)

Statement of Assets and Liabilities

December 31, 2009


Assets:
Investments, at value*	$	46,528,644
Cash		798,208
Receivables:
Fund shares sold		311,671
Dividends		68,510
Prepaid expenses		820

Total assets		47,707,853


Liabilities:

Payable for:
Fund shares redeemed		26,427
Variation margin on futures		8,889
Management fees		18,838
Administration fees		5,079
Transfer agent/maintenance fees		2,083
Custodian fees		477
Directors’ fees		637
Professional fees		12,336
Other fees		8,500

Total liabilities		83,266

Net assets	$	47,624,587


Net assets consist of:
Paid in capital	$	64,157,232
Undistributed net investment income		681,706
Accumulated net realized loss on sale of investments		(20,737,076	)
Net unrealized appreciation in value of investments		3,522,725

Net assets	$	47,624,587


Capital shares authorized		unlimited
Capital shares outstanding		5,388,280
Net asset value per share (net assets divided by shares outstanding)	$	8.84


* Investments, at cost	$	43,012,870

Statement of Operations

For Year Ended December 31, 2009


Investment Income:
Dividends	$	1,009,875
Interest		749

Total investment income		1,010,624


Expenses:
Management fees		313,871
Administration fees		45,484
Transfer agent/maintenance fees		25,185
Custodian fees		12,376
Directors’ fees		4,590
Professional fees		20,664
Reports to shareholders		8,038
Other		3,334

Total expenses		433,542
Expenses waived		(104,624	)

Net expenses		328,918

Net investment income		681,706


Net Realized and Unrealized Gain (Loss):
Net realized gain (loss) during the year on:
Investments		(6,964,266	)
Futures		205,203

Net realized loss		(6,759,063	)


Net unrealized appreciation (depreciation) during the year on:
Investments		16,159,591
Futures		(11,247	)

Net unrealized appreciation		16,148,344

Net realized and unrealized gain		9,389,281

Net increase in net assets resulting from operations	$	10,070,987

The accompanying notes are an integral part of the financial statements


		Series H
Statement of Changes in Net Assets		(Enhanced Index Series)


	Year Ended December 31, 2009			Year Ended December 31, 2008
Increase (decrease) in net assets from operations:
Net investment income	$	681,706		$	994,450
Net realized loss during the year on investments		(6,759,063	)		(12,878,004	)
Net unrealized appreciation (depreciation) during the year on investments		16,148,344			(15,946,663	)

Net increase (decrease) in net assets resulting from operations		10,070,987			(27,830,217	)


Capital share transactions:
Proceeds from sale of shares		7,182,261			15,012,095
Cost of shares redeemed		(13,266,072	)		(27,073,231	)

Net decrease from capital share transactions		(6,083,811	)		(12,061,136	)

Net increase (decrease) in net assets		3,987,176			(39,891,353	)


Net assets:
Beginning of year		43,637,411			83,528,764

End of year	$	47,624,587		$	43,637,411

Undistributed net investment income at end of year	$	681,706		$	994,450


Capital share activity:
Shares sold		1,001,402			1,623,139
Shares redeemed		(1,867,536	)		(2,843,320	)

Total capital share activity		(866,134	)		(1,220,181	)

The accompanying notes are an integral part of the financial statements


Financial Highlights		Series H
Selected data for each share of capital stock outstanding throughout each year		(Enhanced Index Series)


	2009			2008			2007			2006^a			Year Ended December 31, 2005
Per Share Data
Net asset value, beginning of period	$	6.98		$	11.18		$	11.07		$	9.58		$	9.12

Income (loss) from investment operations:
Net investment income^b		0.12			0.15			0.14			0.03			0.11
Net gain (loss) on securities (realized and unrealized)		1.74			(4.35	)		(0.03	)		1.46			0.35

Total from investment operations		1.86			(4.20	)		0.11			1.49			0.46

Net asset value, end of period	$	8.84		$	6.98		$	11.18		$	11.07		$	9.58


Total Return^c		26.65	%		(37.57	%)		0.99	%		15.55	%		5.04	%

Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	47,625		$	43,637		$	83,529		$	110,030		$	40,101

Ratios to average net assets:
Net investment income		1.61	%		1.60	%		1.25	%		1.23	%		1.15	%
Total expenses^d		1.03	%		0.99	%		0.94	%		0.98	%		1.04	%
Net expenses^e		0.78	%		0.74	%		0.69	%		0.73	%		0.79	%
Net expenses prior to custodian earnings credits and net of expense waivers		0.78	%		0.74	%		0.69	%		0.73	%		0.79	%

Portfolio turnover rate		85	%		106	%		89	%		119	%		106	%

The financial highlights for Series H exclude the historical financial highlights for Series W. The assets of Series W were acquired by Series H on June 16, 2006. A total of $53,926,052 was excluded from purchases in the portfolio turnover calculation, which represents the cost of the securities Series H received as a result of the merger,

^b	Net investment income (loss) was computed using average shares outstanding throughout the period.

^d	Total expense information reflects the expense ratios absent expense reductions by the Investment Manager and custodian earnings credits, as applicable,

^e	Net expense information reflects the expense ratios after voluntary expense waivers, reimbursements and custodian earnings credits, as applicable.

The accompanying notes are an integral part of the financial statements

This page left blank intentionally.

Managers’ Commentary

February 15, 2010


		Advised by:

To Our Shareholders:

Series J of the SBL Fund - Mid Cap Growth Series posted a return of 43.96% for the year, underperforming its benchmark, the Russell MidCap Growth, which gained 46.29%. However, the portfolio exceeded the Series’ peer group median return of 42.07%.

Our approach to the Series is to seek securities of companies that are able to grow and/or reinvest in increasingly profitable ventures and hold them over three to five years to capture the best part of the improvements in profits. We focus on investing in securities of companies that appear likely to generate above average profitability at prices that, as of yet, do not reflect that potential.

We use a bottom-up approach to choose portfolio securities that we believe are attractively valued with the greatest potential for appreciation. We attempt to identify companies that are in the early to middle stages of growth and are valued at a reasonable price.

Information Technology, Industrials, and Consumer Discretionary Top Performers

Good stock selection allowed the portfolio to benefit from holdings in the information technology, industrials, and consumer discretionary sectors.

While an even weight, holdings in the information technology sector gained 90% against a 68% increase for the Index. Cognizant Technology Solutions Corporation and ON Semiconductor Corporation both soared over 150%. Other top holdings for the portfolio were Fairchild Semiconductor International, Inc. and Skyworks Solutions, Inc.

The industrials sector was a significant underweight position, 11% to 16%, but the holdings outperformed those in the Index 48% to 29%. Top positions for the portfolio included Precision Castparts Corporation, up 100%, and Goodrich Corporation, which gained 77% over the period.

The consumer discretionary sector was a slight overweight position that returned 54% against 49% for the benchmark. Jarden Corporation was up 144% while Life Time Fitness, Inc. increased 100%. Both companies were active positions not held in the Index. Other leading companies in the portfolio were Starwood Hotels & Resorts Worldwide, Inc. and Bed Bath & Beyond, Inc.

Health Care, Consumer Staples, and Materials Disappoint

As with the top performing sectors, those that hurt performance did so due to stock selection. Holdings in health care gained only about half that of the Index, 18% to 40%. Genzyme Corporation stock dropped 27% over the period while Gilead Sciences, Inc. lost 8%.

The portfolio positioned consumer staples as a half weighted sector but its picks lost 7% during the year compared to a gain of 31%. Kroger Company lost 15% and J.M. Smucker Company gave up 21% of its value.

The materials sector also fell short of the benchmark. Even though the portfolio gained 43% in the sector, it was outpaced by the 54% increased for the Index. Holdings detracting from portfolio performance included Airgas Inc., Ball Corporation, and Praxair, Inc.

Market Outlook

We continue to pursue opportunities with a focus on bottom-up research rather than a macro forecast. We believe that investing is a long-term pursuit that requires patience and a consistent approach. As always, we will continue to do our best to seek the potential available in mid capitalization growth companies.

On behalf of Security Global Investors, I would like to thank you for placing your trust in us.

Sincerely,

Joe O’Connor, Portfolio Manager


		Series J
Performance Summary		(Mid Cap Growth Series)
December 31, 2009		(unaudited)

PERFORMANCE

LOGO

$10,000 Over 10 Years

The chart above assumes a hypothetical $10,000 investment in Series J (Mid Cap Growth Series) on December 31, 1999 and reflects the fees and expenses of Series J. The Russell MidCap Growth Index is an unmanaged capitalization-weighted Index that is designed to measure the performance of the 800 smallest companies in the Russell 1000 Index with higher price-to-book ratios and higher forecasted growth values.

Average Annual Returns


Periods Ended 12-31-09¹	1 Year		5 Years		10 Years
Series J	43.96	%	(2.62	)%	0.55	%

Portfolio Composition by Sector


Consumer Discretionary	17.59	%
Consumer Staples	1.89
Energy	7.25
Financials	5.32
Health Care	10.52
Industrials	14.53
Information Technology	27.82
Materials	8.86
Exchange Traded Funds	3.04
Cash & Other Assets, Less Liabilities	3.18
Total Net Assets	100.00	°%

The accompanying notes are an integral part of the financial statements


Schedule of Investments		Series J
December 31, 2009		(Mid Cap Growth Series)


	Shares	Value
COMMON STOCKS—96.8%
Advertising—2.3%
Omnicom Group, Inc.	92,120	$	3,606,498

Aerospace & Defense—4.0%
Goodrich Corporation	55,780		3,583,865
Precision Castparts Corporation	23,395		2,581,638

			6,165,503

Apparel Retail—3.4%
Gap, Inc.	126,980		2,660,231
TJX Companies, Inc.	69,420		2,537,301

			5,197,532

Apparel, Accessories & Luxury Goods—2.2%
Phillips-Van Heusen Corporation	84,400		3,433,392

Application Software—2.2%
Nuance Communications, Inc.*	216,570		3,365,498

Asset Management & Custody Banks—3.7%
BlackRock, Inc.	10,830		2,514,726
T. Rowe Price Group, Inc.	60,300		3,210,975

			5,725,701

Casinos & Gaming—1.9%
WMS Industries, Inc.*	72,385		2,895,400

Coal & Consumable Fuels—2.2%
Peabody Energy Corporation	72,700		3,286,766

Communications Equipment—0.7%
Juniper Networks, Inc.*	43,000		1,146,810

Computer Storage & Peripherals—2.4%
QLogic Corporation*	193,580		3,652,855

Data Processing & Outsourced Services—4.3%
Alliance Data Systems Corporation*	25,310		1,634,773
Global Payments, Inc.	44,475		2,395,424
Western Union Company	138,750		2,615,437

			6,645,634

Electrical Components & Equipment—3.3%
Baldor Electric Company	57,400		1,612,366
Roper Industries, Inc.	65,170		3,412,953

			5,025,319

Exchange Traded Funds—3.0%
iShares Russell Midcap Growth Index Fund	103,285		4,682,942

Health Care Equipment—5.6%
Beckman Coulter, Inc.	62,710		4,103,742
Zimmer Holdings, Inc.*	75,200		4,445,072

			8,548,814

Home Entertainment Software—1.3%
Activision Blizzard, Inc.*	175,750		1,952,583

Homefurnishing Retail—2.0%
Bed Bath & Beyond, Inc.*	79,100		3,055,633

Hotels, Resorts & Cruise Lines—1.3%
Royal Caribbean Cruises, Ltd.*	81,500		2,060,320

Household Products—1.9%
Clorox Company	47,900		2,921,900

Housewares & Specialties—4.5%
Fortune Brands, Inc.	63,900		2,760,480
Jarden Corporation	133,325		4,121,076

			6,881,556

Industrial Gases—4.3%
AirGas, Inc.	65,075		3,097,570
Praxair, Inc.	44,130		3,544,080

			6,641,650

Industrial Machinery—5.3%
Dover Corporation	120,200		5,001,522
Gardner Denver, Inc.	22,450		955,248
Ingersoll-Rand plc	66,100		2,362,414

			8,319,184

IT Consulting & Other Services—4.1%
Amdocs, Ltd.*	68,460		1,953,164

Cognizant Technology Solutions Corporation*	97,300		4,407,690

			6,360,854

Life Sciences Tools & Services—2.1%
Thermo Fisher Scientific, Inc.*	69,385		3,308,971

Metal & Glass Containers—2.1%
Ball Corporation	61,526		3,180,894

Multi-Line Insurance—1.6%
HCC Insurance Holdings, Inc.	88,775		2,483,037

Oil & Gas Drilling—1.4%
Noble Corporation	54,535		2,219,575

Oil & Gas Equipment & Services—2.1%
Cameron International Corporation*	78,300		3,272,940

Oil & Gas Storage & Transportation—1.6%
Williams Companies, Inc.	114,185		2,407,020

Pharmaceuticals—2.8%
Teva Pharmaceutical Industries, Ltd. ADR	78,005		4,382,321

Railroads—1.9%
Union Pacific Corporation	45,440		2,903,616

Semiconductor Equipment—1.8%
Lam Research Corporation*	69,400		2,721,174

The accompanying notes are an integral part of the financial statements


Schedule of Investments		Series J
December 31, 2009		(Mid Cap Growth Series)


	Shares	Value
COMMON STOCKS—96.8% (continued)
Semiconductors—4.8%
ON Semiconductor Corporation*	368,305	$	3,244,767
Skyworks Solutions, Inc.*	292,315		4,147,949

			7,392,716

Specialty Chemicals—1.4%
International Flavors & Fragrances, Inc.	51,050		2,100,197

Steel—1.1%
Steel Dynamics, Inc.	98,740		1,749,673

Systems Software—6.2%
Check Point Software Technologies*	95,365		3,230,965
McAfee, Inc.*	49,750		2,018,358
Rovi Corporation*	65,600		2,090,672
Sybase, Inc.*	53,620		2,327,108

			9,667,103

TOTAL COMMON STOCKS (cost $126,275,838)		$	149,361,581


	Shares	Value
WARRANTS—0.0%
Nova Biosource Fuels, Inc.
$2.40, 7/5/2011¹	358,100		795

TOTAL WARRANTS (cost $369,900)		$	795

Total Investments—96.8%² (cost $126,645,738)		$	149,362,376
Cash & Other Assets, Less Liabilities—3.2%			4,910,893

Total Net Assets—100.0%		$	154,273,269

For federal income tax purposes the identified cost of investments owned at December 31, 2009 was $127,843,396.


ADR		American Depositary Receipt
plc		Public Limited Company

^*	Non-income producing security

¹	Value determined based on Level 2 inputs.

²	Unless otherwise indicated, the values of the securities of the Portfolio are determined based on Level 1 inputs.

The accompanying notes are an integral part of the financial statements


		Series J
		(Mid Cap Growth Series)

Statement of Assets and Liabilities

December 31, 2009


Assets:
Investments, at value*	$	149,362,376
Cash		4,150,943
Receivables:
Fund shares sold		581,622
Securities sold		966,464
Dividends		92,478
Prepaid expenses		3,170

Total assets		155,157,053

Liabilities:

Payable for:
Fund shares redeemed		52,287
Securities purchased		667,910
Management fees		97,147
Administration fees		12,605
Transfer agent/maintenance fees		2,083
Custodian fees		684
Directors’ fees		2,059
Professional fees		21,509
Other fees		27,500

Total liabilities		883,784

Net assets	$	154,273,269


Net assets consist of:
Paid in capital	$	212,290,288
Accumulated net realized loss on sale of investments		(80,733,657	)
Net unrealized appreciation in value of investments		22,716,638

Net assets	$	154,273,269


Capital shares authorized		unlimited
Capital shares outstanding		6,374,410
Net asset value per share (net assets divided by shares outstanding)	$	24.20


* investments, at cost	$	126,645,738

Statement of Operations

For Year Ended December 31, 2009



Investment Income:
Dividends	$	1,062,851
Interest		4,550

Total investment income		1,067,401


Expenses:
Management fees		1,023,840
Administration fees		130,109
Transfer agent/maintenance fees		25,280
Custodian fees		3,991
Directors’ fees		14,751
Professional fees		23,631
Reports to shareholders		21,364
Other		8,576
Total expenses		1,251,542

Net investment loss		(184,141	)


Net Realized and Unrealized Gain (Loss):
Net realized gain (loss) during the year on:
Investments		(10,016,613	)

Net realized loss		(10,016,613	)


Net unrealized appreciation (depreciation) during the year on:
Investments		59,381,654

Net unrealized appreciation		59,381,654

Net realized and unrealized gain		49,365,041

Net increase in net assets resulting from operations	$	49,180,900

The accompanying notes are an integral part of the financial statements


		Series J
Statement of Changes in Net Assets		(Mid Cap Growth Series)


	Year Ended December 31, 2009			Year Ended December 31, 2008
Increase (decrease) in net assets from operations:
Net investment loss	$	(184,141	)	$	(105,176	)
Net realized loss during the year on investments		(10,016,613	)		(46,515,676	)
Net unrealized appreciation (depreciation) during the year on investments		59,381,654			(40,063,644	)

Net increase (decrease) in net assets resulting from operations		49,180,900			(86,684,496	)


Capital share transactions:
Proceeds from sale of shares		25,347,942			37,579,885
Cost of shares redeemed		(42,285,359	)		(80,932,084	)

Net decrease from capital share transactions		(16,937,417	)		(43,352,199	)

Net increase (decrease) in net assets		32,243,483			(130,036,695	)


Net assets:
Beginning of year		122,029,786			252,066,481
End of year	$	154,273,269		$	122,029,786

Undistributed net investment income at end of year	$	—		$	—


Capital share activity:
Shares sold		1,288,966			1,587,753
Shares redeemed		(2,174,470	)		(3,329,065	)

Total capital share activity		(885,504	)		(1,741,312	)

The accompanying notes are an integral part of the financial statements


Financial Highlights		Series J
Selected data for each share of capital stock outstanding throughout each year		(Mid Cap Growth Series)


	2009			2008			2007			2006			Year Ended December 31, 2005
Per Share Data
Net asset value, beginning of period	$	16.81		$	28.00		$	31.26		$	29.79		$	27.63

Income (loss) from investment operations:
Net investment loss^a		(0.03	)		(0.01	)		(0.04	)		(0.16	)		(0.13	)
Net gain (loss) on securities (realized and unrealized)		7.42			(11.18	)		(3.22	)		1.63			2.29

Total from investment operations		7.39			(11.19	)		(3.26	)		1.47			2.16

Net asset value, end of period	$	24.20		$	16.81		$	28.00		$	31.26		$	29.79


Total Return^b		43.96	%		(39.96	%)		(10.43	%)		4.93	%		7.82	%

Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	154,273		$	122,030		$	252,066		$	380,664		$	420,798

Ratios to average net assets:
Net investment loss		(0.13	%)		(0.06	%)		(0.14	%)		(0.48	%)		(0.47	%)
Total expenses^c		0.92	%		0.91	%		0.90	%		0.90	%		0.90	%
Net expenses^d		0.92	%		0.91	%		0.90	%		0.90	%		0.90	%
Net expenses prior to custodian earnings credits and net of expense waivers		0.92	%		0.91	%		0.90	%		0.90	%		0.90	%

Portfolio turnover rate		136	%		203	%^e		34	%		29	%		29	%

^a	Net investment income (loss) was computed using average shares outstanding throughout the period.

^c	Total expense information reflects the expense ratios absent expense reductions by the Investment Manager and custodian earnings credits, as applicable,

^d	Net expense information reflects the expense ratios after voluntary expense waivers, reimbursements and custodian earnings credits, as applicable.

^e	Significant variation in the portfolio turnover rate is due to Investment Manager’s appointment of new portfolio manager for the Series.

The accompanying notes are an integral part of the financial statements

This page left blank intentionally.

Managers’ Commentary

February 15, 2009


		Advised by:

To Our Shareholders:

The SBL Fund – Series N, Managed Asset Allocation Series, returned 25.72% for the year ended December 31, 2009, outperforming its 60% S&P 500/40% Barclays Capital U.S. Aggregate Bond Index benchmark, which returned 18.25%. The S&P 500 returned 26.46% over the period, and the Barclays Capital U.S. Aggregate Index returned 5.93%.

Market Environment

U.S. stocks produced strong gains in 2009 - the best year for U.S. equities since 2003. In the first quarter, major indexes extended 2008’s decline and plunged to 12-year lows as the economy contracted, unemployment surged, and the U.S. federal government intervened aggressively to provide liquidity to the credit markets, stabilize the banking sector, and stimulate the economy. From early March through the end of the year, share prices soared as credit market conditions improved, corporate earnings were generally better than expected, and the economy showed signs that it was emerging from the longest and deepest recession since the Great Depression.

Equities in many non-U.S. markets far surpassed domestic shares in 2009, as global economies improved and weakness in the U.S. dollar versus other currencies enhanced returns to U.S. investors. The MSCI EAFE Index, which measures the performance of mostly large-cap equities in Europe, Australia, and the Far East, returned 32.46% versus 79.02% for the MSCI Emerging Markets Index.

Most U.S. bond sectors produced excellent returns in 2009 as non-Treasury sectors, which had collapsed in the closing months of 2008, rebounded briskly and money market yields near 0% prompted yield-hungry investors to seek riskier securities with an income advantage. High yield bonds produced the strongest annual gains in the history of the sector as credit spreads narrowed significantly. Investment-grade companies and municipal bonds were less robust but still did very well. Agency mortgage-backed securities produced relatively mild gains. U.S. Treasury securities, which performed best during the flight to quality in 2008, declined as longer-term interest rates rebounded from their lowers levels amid signs of an economic recovery and heavy new issuance.

Portfolio Review

The portfolio’s outperformance relative to its blended benchmark can be attributed to strong security selection across all of the underlying strategies. The largest positive contributor to the portfolio’s relative outperformance was the strong security selection within out investment-grade bond and large-cap equity strategies. The non-U.S. equity strategy also provided a relative boost to performance, outperforming its respective benchmark, the MSCI EAFE Index. Exposure to non-U.S. equities and small-cap stocks provided a positive impact to performance as these sectors outperformed the large-cap S&P 500 Index. Additionally, the allocation to high yield bonds also aided relative returns as the high yield sector significantly outperformed the Barclays Capital U.S. Aggregate Index. Our allocation decision to overweight equities throughout the period also positively contributed to relative performance as the S&P 500 Index outperformed the Barclays Capital U.S. Aggregate Index for the year.

Outlook

We are currently overweight stocks relative to bonds but have moderated our overweight as valuations are less attractive following the equity rally from March 9, 2009, market lows. While yields on U.S. government bonds remain supported near historically low levels by the U.S. Federal Reserve’s quantitative easing program, elevated levels of new U.S. Treasury supply could provide upward pressure on interest rates. We are underweight to small-cap stocks as valuations favor large-cap stocks. We are modestly overweight in non-U.S. equity markets, based on attractive valuations in non-U.S. markets. We have increased our weighting in high yield relative to investment-grade bonds, given a gradually improving economy and expectations for a lower default rate. Within the high yield sector, spread levels remain attractive relative to their historical average. Fundamental credit research remains a critical part of the security selection process in the context of uncertainty in the current environment.

We continue to believe that our commitment to broad diversification across asset classes and our emphasis on strong fundamental research in seeking investment opportunities will continue to serve our clients well over the long term.

Sincerely,

Edmond M. Notzon, Portfolio Manager, T. Rowe Price


		Series N
Performance Summary		(Managed Asset Allocation Series)
December 31, 2009		(unaudited)

PERFORMANCE

LOGO

$10,000 Over 10 Years

The chart above assumes a hypothetical $10,000 investment in Series N (Managed Asset Allocation Series) on December 31, 1999 and reflects the fees and expenses of Series N. The blended index is 60% S&P 500 Index and 40% Barclays Capital U.S. Aggregate Bond Index. The S&P 500 Index is a capitalization-weighted index composed of 500 selected common stocks that represent the broad domestic economy and is a widely recognized unmanaged index of market performance. The Barclays Capital U.S. Aggregate Bond Index is an unmanaged index that tracks investment grade bonds including U.S. Treasury and agency issues, corporate bond issues, asset-backed, commercial mortgage-backed and mortgage-backed securities and Yankee issues.

Average Annual Returns


Periods Ended 12-31-09¹	1 Year		5 Years		10 Years
Series N	25.72	%	2.55	%	2.84	%

Portfolio Composition by Sector for Equity Holdings & Quality Ratings (Based on Standard and Poor’s Ratings) for Fixed Income Holdings


Consumer Discretionary	6.96	%
Consumer Staples	6.50
Energy	6.90
Financials	10.37
Health Care	7.56
Industrials	6.99
Information Technology	10.82
Materials	2.82
Telecommunication Services	2.38
Utilities	2.35
AAA	17.85
AA	0.86
A	4.07
BBB	5.98
BB	1.72
B	1.41
CCC	0.45
C	0.02
Not Rated	0.18
Short Term Investments	2.97
Cash & Other Assets, Less Liabilities	0.84
Total Net Assets	100.00	%

The accompanying notes are an integral part of the financial statements


Schedule of Investment		Series N
December 31, 2009		(Managed Asset Allocation Series)


	Shares	Value
COMMON STOCKS—51.1%
Advertising—0.1%
Lamar Advertising Company*	950	$	29,536
Omnicom Group, Inc.	1,600		62,640

			92,176

Aerospace & Defense—1.4%
American Science & Engineering, Inc.	300		22,752
Boeing Company	2,790		151,023
General Dynamics Corporation	1,200		81,804
Goodrich Corporation	1,000		64,250
Honeywell International, Inc.	2,700		105,840
Lockheed Martin Corporation	1,900		143,165
Northrop Grumman Corporation	1,200		67,020
Precision Castparts Corporation	700		77,245
Raytheon Company	1,200		61,824
Rockwell Collins, Inc.	500		27,680
Teledyne Technologies, Inc.*	400		15,344
Triumph Group, Inc.	400		19,300
United Technologies Corporation	4,210		292,216

			1,129,463

Agricultural Products—0.1%
Archer-Daniels-Midland Company	1,400		43,834
Bunge, Ltd.	400		25,532

			69,366

Air Freight & Logistics—0.4%
CH Robinson Worldwide, Inc.	700		41,111
Expeditors International of Washington, Inc.	800		27,784
FedEx Corporation	900		75,105
United Parcel Service, Inc. (CI.B)	3,200		183,584
UTi Worldwide, Inc.	1,200		17,184

			344,768

Airlines—0.1%
AirTran Holdings, Inc.*	1,300		6,786
AMR Corporation*	1,600		12,368
Skywest, Inc.	500		8,460
Southwest Airlines Company	5,100		58,293

			85,907

Apparel Retail—0.2%
American Eagle Outfitters, Inc.*	900		15,282
Dress Barn, Inc.*	188		4,343
Gap, Inc.	5,300		111,035
J Crew Group, Inc.*	400		17,896

			148,556

Apparel, Accessories & Luxury Goods—0.1%
Anvil Holdings, Inc.^1,2^,*	30		23
Coach, Inc.	2,400		87,672
Fossil, Inc.*	600		20,136

			107,831

Application Software—0.4%
Autodesk, Inc.*	7,100		180,411
Cadence Design Systems, Inc.*	2,300		13,777
Factset Research Systems, Inc.	320		21,078
Intuit, Inc.*	2,800		85,988
Jack Henry & Associates, Inc.	1,000		23,120
Salary.com, Inc.*	2,400		5,640
Symyx Technologies, Inc.*	1,600		8,800
Taleo Corporation*	600		14,112

			352,926

Asset Management & Custody Banks—0.7%
Bank of New York Mellon Corporation	3,800		106,286
BlackRock, Inc.	50		11,610
Eaton Vance Corporation	600		18,246
Invesco, Ltd.	2,900		68,121
Janus Capital Group, Inc.	3,500		47,075
Northern Trust Corporation	1,500		78,600
State Street Corporation	2,200		95,788
Waddell & Reed Financial, Inc.	600		18,324

			444,050

Auto Parts & Equipment—0.2%
BorgWarner, Inc.	200		6,644
Gentex Corporation	1,500		26,775
Johnson Controls, Inc.	3,200		87,168

			120,587

Automobile Manufacturers—0.1%
Ford Motor Company*	3,600		36,000
Thor Industries, Inc.	300		9,420
Winnebago Industries*	600		7,320

			52,740

Automotive Retail—0.1%
Advance Auto Parts, Inc.	200		8,096
AutoZone, Inc.*	500		79,035
CarMax, Inc.*	1,000		24,250

			111,381

Biotechnology—0.9%
Alexion Pharmaceuticals, Inc.*	150		7,323
Alkermes, Inc.*	1,000		9,410
Amgen, Inc.*	3,610		204,217
Biogen Idec, Inc.*	1,100		58,850
BioMarin Pharmaceutical, Inc.*	600		11,286
Celgene Corporation*	2,400		133,632
Cephalon, Inc.*	500		31,205
Gilead Sciences, Inc.*	4,000		173,120
Human Genome Sciences, Inc.*	1,900		58,140
Incyte Corporation, Ltd.*	700		6,377
Martek Biosciences Corporation*	400		7,576
Maxygen, Inc.*	1,500		9,135
Vertex Pharmaceuticals, Inc.*	970		41,565

			751,836

Brewers—0.0%
Boston Beer Company, Inc.*	500		23,300
Compania Cervecerias Unidas S.A. ADR*	900		35,118

			58,418

Broadcasting—0.1%
Discovery Communications, Inc.*	1,083		33,216
Discovery Communications, Inc. (CI. C)*	2,483		65,849

			99,065

Building Products—0.1%
Masco Corporation	3,800		52,478
Universal Forest Products, Inc.	500		18,405
USG Corporation*	500		7,025

			77,908

Cable & Satellite—0.4%
Cablevision Systems Corporation	3,300		85,206
DIRECTV*	1,200		40,020
DISH Network Corporation	700		14,539

The accompanying notes are an integral part of the financial statements


Schedule of Investments		Series N
December 31, 2008		(Managed Asset Allocation Series)


		Shares	Value
COMMON STOCKS—51.1% (continued)
Cable & Satellite—0.4% (continued)
Liberty Global, Inc.*		975	$	21,362
Time Warner Cable, Inc.		4,739		196,147

				357,274

Casinos & Gaming—0.2%
International Game Technology		1,500		28,155
MGM Mirage*		9,601		87,561
Wynn Resorts, Ltd.*		300		17,469

				133,185

Catalog Retail—0.1%
Liberty Media Corporation - Interactive*		4,800		52,032

Coal & Consumable Fuels—0.3%
Alpha Natural Resources, Inc.*		350		15,183
Arch Coal, Inc.		700		15,575
Consol Energy, Inc.		1,500		74,700
Massey Energy Company		400		16,804
Peabody Energy Corporation		1,600		72,336
Westmoreland Coal Company*		900		8,019

				202,617

Commodity Chemicals—0.0%
Koppers Holdings, Inc.		700		21,308

Communications Equipment—1.3%
Blue Coat Systems, Inc.*		500		14,270
Cisco Systems, Inc.*		15,500		371,070
F5 Networks, Inc.*		800		42,384
Finisar Corporation*		1,213		10,816
Ixia*		1,900		14,136
JDS Uniphase Corporation*		5,300		43,725
Juniper Networks, Inc.*		4,300		114,681
Motorola, Inc.		8,700		67,512
Palm, Inc.*		2,400		24,096
Qualcomm, Inc.		6,800		314,568

				1,017,258

Computer & Electronics Retail—0.0%
Rent-A-Center, Inc.*		1,000		17,720

Computer Hardware—2.3%
Apple, Inc.*		3,500		738,010
Avid Technology, Inc.*		700		8,932
Dell, Inc.*		5,600		80,416
Hewlett-Packard Company		7,800		401,778
International Business Machines Corporation		4,820		630,938

				1,860,074

Computer Storage & Peripherals—0.3%
EMC Corporation*		7,700		134,519
Isilon Systems, Inc.*		1,900		13,034
NetApp, Inc.*		1,200		41,268
SanDisk Corporation*		900		26,091

				214,912

Construction & Engineering—0.1%
Fluor Corporation		1,100		49,544
Foster Wheeler AG*		900		26,496
Insituform Technologies, Inc.*		900		20,448
Quanta Services, Inc.*		600		12,504

				108,992

Construction & Farm Machinery & Heavy Trucks—0.3%
Deere & Company		2,000		108,180
Joy Global, Inc.		500		25,795
Oshkosh Corporation		440		16,293
Paccar, Inc.		2,900		105,183

				255,451

Construction Materials—0.1%
Martin Marietta Materials, Inc.		130		11,623
Vulcan Materials Company		1,200		63,204

				74,827

Consumer Finance—0.2%
American Express Company		2,800		113,456
SLM Corporation*		3,700		41,699

				155,155

Data Processing & Outsourced Services—0.9%
Automatic Data Processing, Inc.		2,200		94,204
Computer Sciences Corporation*		900		51,777
Fidelity National Information Services, Inc.		1,000		23,440
Fiserv, Inc.*		800		38,784
Global Payments, Inc.		500		26,930
Heartland Payment Systems, Inc.		1,000		13,130
Mastercard, Inc.		400		102,392
Paychex, Inc.		900		27,576
Visa, Inc.		2,700		236,142
Western Union Company		3,800		71,630

				686,005

Department Stores—0.2%	��
Kohl's Corporation*		2,470		133,207

Distributors—0.0%
Genuine Parts Company		500		18,980

Diversified Banks—1.0%
Barclays plc ADR		6,100		107,360
U.S. Bancorp		8,200		184,582
Wells Fargo & Company		20,391		550,353

				842,295

Diversified Chemicals—0.2%
Cabot Corporation		730		19,148
Dow Chemical Company		1,800		49,734
E.I. Du Pont de Nemours & Company		3,651		122,929

				191,811

Diversified Metals & Mining—0.2%
Freeport-McMoRan Copper & Gold, Inc. (CI.B)		1,869		150,062

Diversified Real Estate Activities—0.0%
St. Joe Company*		600		17,334

Diversified Support Services—0.0%
Cintas Corporation		1,200		31,260

The accompanying notes are an integral part of the financial statements


Schedule of Investments		Series N
December 31, 2009		(Management Asset Allocation Series)


	Shares	Value
COMMON STOCKS—51.1% (continued)
Drug Retail—0.5%
CVS Caremark Corporation	6,768	$	217,997
Walgreen Company	3,900		143,208

			361,205

Education Services—0.1%
Apollo Group, Inc.*	800		48,464
Corinthian Colleges, Inc.*	1,200		16,524
DeVry, Inc.	200		11,346
Education Management Corporation*	300		6,603

			82,937

Electric Utilities—1.0%
Allegheny Energy, Inc.	1,700		39,916
American Electric Power Company, Inc.	3,600		125,244
Duke Energy Corporation	1,600		27,536
Edison International	1,300		45,214
Entergy Corporation	1,400		114,576
Exelon Corporation	2,500		122,175
FirstEnergy Corporation	1,500		69,675
FPL Group, Inc.	700		36,974
Great Plains Energy, Inc.	1,400		27,146
Pepco Holdings, Inc.	2,000		33,700
Pinnacle West Capital Corporation	800		29,264
PPL Corporation	2,500		80,775
Progress Energy, Inc.	400		16,404

			768,599

Electrical Components & Equipment—0.4%
A123 Systems, Inc.*	200		4,488
AO Smith Corporation	600		26,034
Baldor Electric Company	500		14,045
Belden, Inc.	280		6,138
BTU International, Inc.*	1,200		7,620
Cooper Industries plc	1,500		63,960
Emerson Electric Company	1,900		80,940
First Solar, Inc.*	100		13,540
General Cable Corporation*	400		11,768
Rockwell Automation, Inc.	2,000		93,959
Roper Industries, Inc.	50		2,619

			325,111

Electronic Components—0.1%
AVX Corporation	1,300		16,471
Corning, Inc.	4,800		92,688

			109,159

Electronic Equipment & Instruments—0.1%
Agilent Technologies, Inc.*	1,500		46,605

Electronic Manufacturing Services—0.1%
Cyberoptics Corporation*	1,300		8,723
Plexus Corporation*	500		14,250
Tyco Electronics, Ltd.	2,875		70,581

			93,554

Environmental & Facilities Services—0.3%
Covanta Holding Corporation*	1,000		18,090
Republic Services, Inc.	5,200		147,212
Stericycle, Inc.*	1,200		66,204
Waste Connections, Inc.*	500	$	16,660

			248,166

Fertilizers & Agricultural Chemicals—0.3%
American Vanguard Corporation	1,400		11,620
Monsanto Company	2,400		196,200
Mosaic Company	450		26,879
Potash Corporation of Saskatchewan, Inc.	200		21,700

			256,399

Food Distributors—0.1%
Sysco Corporation	2,900		81,026

Food Retail—0.1%
Casey’s General Stores, Inc.	600		19,152
Pantry, Inc.*	400		5,436
Whole Foods Market, Inc.*	1,300		35,685

			60,273

Footwear—0.1%
Nike, Inc. (CI.B)	1,280		84,570

Forest Products—0.1%
Weyerhaeuser Company	1,400		60,396

Gas Utilities—0.1%
National Fuel Gas Company	300		15,000
Southwest Gas Corporation	900		25,677

			40,677

General Merchandise Stores—0.0%
Dollar Tree, Inc.*	400		19,320

Gold—0.1%
Allied Nevada Gold Corporation*	1,400		21,112
Eldorado Gold Corporation*	2,000		28,340
Newmont Mining Corporation	1,300		61,503

			110,955

Health Care Distributors—0.1%
Cardinal Health, Inc.	700		22,568
Henry Schein, Inc.*	500		26,300
McKesson Corporation	1,000		62,500

			111,368

Health Care Equipment—1.2%
Baxter International, Inc.	2,600		152,568
Boston Scientific Corporation*	4,900		44,100
CareFusion Corporation*	2,000		50,020
Covidien plc	2,075		99,372
CR Bard, Inc.	700		54,530
Edwards Lifesciences Corporation*	360		31,266
Gen-Probe, Inc.*	350		15,015
Hologic, Inc.*	928		13,456
Hospira, Inc.*	600		30,600
Intuitive Surgical, Inc.*	200		60,664
Medtronic, Inc.	4,400		193,512
Micrus Endovascular Corporation*	1,000		15,010
ResMed, Inc.*	500		26,135
St. Jude Medical, Inc.*	2,000		73,560

The accompanying notes are an integral part of the financial statements


Schedule of Investments		Series N
December 31, 2009		(Management Asset Allocation Series)


	Shares	Value
COMMON STOCKS—51.1% (continued)
Health Care Equipment—1.2% (continued)
STERIS Corporation	500	$	13,985
Stryker Corporation	1,500		75,555
Thoratec Corporation*	600		16,152

			965,500

Health Care Facilities—0.1%
Community Health Systems, Inc.*	500		17,800
Health Management Associates, Inc.*	500		3,635
Life Point Hospitals, Inc.*	700		22,757
Tenet Healthcare Corporation*	5,700		30,723

			74,915

Health Care Services—0.4%
DaVita, Inc.*	800		46,992
Express Scripts, Inc.*	1,400		121,030
Healthways, Inc.*	300		5,502
Medco Health Solutions, Inc.*	1,600		102,256
Omnicare, Inc.	610		14,756

			290,536

Health Care Supplies—0.0%
Dentsply International, Inc.	1,000		35,170

Health Care Technology—0.0%
Cerner Corporation*	100		8,244
Computer Programs & Systems, Inc.	500		23,025

			31,269

Home Entertainment Software—0.1%
Activision Blizzard, Inc.*	2,366		26,286
Electronic Arts, Inc.*	1,600		28,400

			54,686

Home Furnishings—0.0%
Mohawk Industries, Inc.*	260		12,376

Home Improvement Retail—0.6%
Home Depot, Inc.	7,550		218,422
Lowe’s Companies, Inc.	10,600		247,934
Sherwin-Williams Company	800		49,320

			515,676

Homebuilding—0.1%
DR Horton, Inc.	1,500		16,305
Lennar Corporation	1,200		15,324
Toll Brothers, Inc.*	1,000		18,810

			50,439

Homefurnishing Retail—0.2%
Bed Bath & Beyond, Inc.*	2,800		108,164
Williams-Sonoma, Inc.	700		14,546

			122,710

Hotels, Resorts & Cruise Lines—0.2%
Choice Hotels International, Inc.	500		15,830
Gaylord Entertainment Company*	400		7,900
Marriott International, Inc.	3,638		99,136
Starwood Hotels & Resorts Worldwide, Inc.	700		25,599

			148,465

Household Products—1.4%
Church & Dwight Company, Inc.	40		2,418
Clorox Company	1,700		103,700
Colgate-Palmolive Company	800		65,720
Energizer Holdings, Inc.*	300		18,384
Kimberly-Clark Corporation	2,700		172,017
Procter & Gamble Company	12,073		731,986

			1,094,225

Human Resources & Employment Services—0.1%
Manpower, Inc.	500		27,290
Robert Half International, Inc.	500		13,365

			40,655

Hypermarkets & Super Centers—0.6%
BJ’s Wholesale Club, Inc.*	500		16,355
Costco Wholesale Corporation	100		5,917
Wal-Mart Stores, Inc.	9,200		491,740

			514,012

Independent Power Producers & Energy Traders—0.3%
AES Corporation*	1,300		17,303
Constellation Energy Group, Inc.	2,200		77,374
Mirant Corporation*	1,020		15,575
NRG Energy, Inc.*	4,500		106,245
RRI Energy, Inc.*	2,300		13,156

			229,653

Industrial Conglomerates—1.1%
3M Company	3,400		281,078
General Electric Company	32,700		494,751
McDermott International, Inc.*	1,900		45,619

			821,448

Industrial Gases—0.2%
Praxair, Inc.	1,800		144,558

Industrial Machinery—0.5%
3D Systems Corporation*	700		7,910
Actuant Corporation	680		12,600
Clarcor, Inc.	100		3,244
Danaher Corporation	3,300		248,160
Harsco Corporation	560		18,049
Illinois Tool Works, Inc.	800		38,392
John Bean Technologies Corporation	308		5,239
Nordson Corporation	300		18,354
Stanley Works	400		20,604

			372,552

Industrial REIT’s—0.0%
AMB Property Corporation	700		17,885
East Group Properties, Inc.	500		19,140

			37,025

Insurance Brokers—0.2%
AON Corporation	2,400		92,016
Marsh & McLennan Companies, Inc.	1,700		37,536

			129,552

Integrated Oil & Gas—3.8%
BP plc ADR	4,500		260,865
Chevron Corporation	7,850		604,372
ConocoPhillips	3,500		178,745
Exxon Mobil Corporation	17,880		1,219,237

The accompanying notes are an integral part of the financial statements


Schedule of Investments		Series N
December 31, 2009		(Management Asset Allocation Series)


	Shares	Value
COMMON STOCKS—51.1% (continued)
Integrated Oil & Gas—3.8% (continued)
Hess Corporation	1,300	$	78,650
Murphy Oil Corporation	2,400		130,080
Occidental Petroleum Corporation	2,600		211,510
Royal Dutch Shell plc (CI.B) ADR	3,800		220,894
Suncor Energy, Inc.	2,100		74,151

			2,978,504

Integrated Telecommunication Services—0.9%
AT&T, Inc.	26,092		731,359
Verizon Communications, Inc.	400		13,252

			744,611

Internet Retail—0.5%
Amazon.com, Inc.*	1,900		255,588
Drugstore.com, Inc.*	5,100		15,759
Expedia, Inc.*	3,200		82,272
priceline.com, Inc.*	200		43,700

			397,319

Internet Software & Services—1.0%
Art Technology Group, Inc.*	3,300		14,883
Digital River, Inc.*	300		8,097
Google, Inc.*	1,010		626,180
VeriSign, Inc.*	2,900		70,296
Yahoo!, Inc.*	2,900		48,662

			768,118

Investment Banking & Brokerage—0.9%
Charles Schwab Corporation	3,700		69,634
Goldman Sachs Group, Inc.	2,000		337,680
Morgan Stanley	6,700		198,320
Raymond James Financial, Inc.	900		21,393
Stifel Financial Corporation*	435		25,769
TD Ameritrade Holding Corporation*	2,350		45,543

			698,339

IT Consulting & Other Services—0.2%
Accenture plc	2,900		120,350
RightNow Technologies, Inc.*	500		8,685

			129,035

Leisure Products—0.1%
Hasbro, Inc.	1,800		57,708
Pool Corporation	912		17,401

			75,109

Life & Health Insurance—0.5%
Aflac, Inc.	2,500		115,625
Lincoln National Corporation	1,200		29,856
MetLife, Inc.	3,300		116,655
Prudential Financial, Inc.	2,200		109,472
StanCorp Financial Group, Inc.	500		20,010

			391,618

Life Sciences Tools & Services—0.2%
Charles River Laboratories International, Inc.*	260		8,759
Covance, Inc.*	500		27,285
lllumina, Inc.*	300		9,195
Life Technologies Corporation*	700		36,561
Techne Corporation	370		25,367
Thermo Fisher Scientific, Inc.*	800		38,153
Waters Corporation*	600		37,176

			182,496

Managed Health Care—0.5%
Aetna, Inc.	1,800		57,060
AMERIGROUP Corporation*	500		13,480
Cigna Corporation	1,300		45,851
Humana, Inc.*	900		39,501
UnitedHealth Group, Inc.	3,700		112,776
WellPoint, Inc.*	2,500		145,725

			414,393

Metal & Glass Containers—0.0%
Myers Industries, Inc.	1,000		9,100

Motorcycle Manufacturers—0.1%
Harley-Davidson, Inc.	2,100		52,920

Movies & Entertainment—0.6%
Ascent Media Corporation*	43		1,098
News Corporation*	2,600		35,594
Time Warner, Inc.	6,000		174,840
Walt Disney Company	7,200		232,200

			443,732

Multi-Line Insurance—0.2%
Assurant, Inc.	1,200		35,376
Genworth Financial, Inc.*	2,100		23,835
Hartford Financial Services Group, Inc.	1,000		23,260
Loews Corporation*	1,500		54,525

			136,996

Multi-Utilities—0.4%
Alliant Energy Corporation	900		27,234
CenterPoint Energy, Inc.	6,900		100,119
NiSource, Inc.	1,200		18,456
OGE Energy Corporation	700		25,830
Public Service Enterprise Group, Inc.	1,500		49,875
Sempra Energy	1,000		55,980
TECO Energy, Inc.	3,300		53,526
Xcel Energy, Inc.	600		12,738

			343,758

Office REITs—0.2%
Boston Properties, Inc.	900		60,363
Duke Realty Corporation	2,300		27,991
SL Green Realty Corporation	651		32,706

			121,060

Office Services & Supplies—0.0%
American Reprographics Company*	1,600		11,216
Herman Miller, Inc.	500		7,990

			19,206

Oil & Gas Drilling—0.1%
Diamond Offshore Drilling, Inc.	300		29,526
Helmerich & Payne, Inc.	700		27,916

			57,442

Oil & Gas Equipment & Services—0.9%
Baker Hughes, Inc.
	2,200		89,056

The accompanying notes are an integral part of the financial statements


Schedule of Investments		Series N
December 31, 2009		(Management Asset Allocation Series)


	Shares	Value
COMMON STOCKS—51.1% (continued)
Oil & Gas Equipment & Services—0.9% (continued)
BJ Services Company	2,800	$	52,080
Complete Production Services, Inc.*	1,300		16,900
FMC Technologies, Inc.*	1,842		106,541
Halliburton Company	1,400		42,126
Schlumberger, Ltd.	6,200		403,558
Smith International, Inc.	1,600		43,472

			753,733

Oil & Gas Exploration & Production—1.0%
Cabot Oil & Gas Corporation	1,200		52,308
Concho Resources, Inc.*	600		26,940
Devon Energy Corporation	900		66,150
EOG Resources, Inc.	1,300		126,490
Forest Oil Corporation*	400		8,900
GeoMet, Inc.*	3,300		4,818
Mariner Energy, Inc.*	500		5,805
Newfield Exploration Company*	2,720		131,186
Petrohawk Energy Corporation*	100		2,399
Range Resources Corporation	800		39,880
Southwestern Energy Company*	2,500		120,500
Ultra Petroleum Corporation*	600		29,916
Whiting Petroleum Corporation*	400		28,588
XTO Energy, Inc.	3,475		161,691

			805,571

Oil & Gas Refining & Marketing—0.1%
Holly Corporation	600		15,378
Valero Energy Corporation	2,900		48,575

			63,953

Oil & Gas Storage & Transportation—0.2%
Spectra Energy Corporation	5,100		104,601
Williams Companies, Inc.	4,300		90,644

			195,245

Other Diversified Financial Services—1.7%
Bank of America Corporation	34,178		514,721
Citigroup, Inc.	46,800		154,908
JPMorgan Chase & Company	15,636		651,552

			1,321,181

Packaged Foods & Meats—0.5%
Campbell Soup Company	2,900		98,020
JM Smucker Company	549		33,901
Kellogg Company	2,500		133,000
Kraft Foods, Inc.	5,525		150,169
Tootsie Roll Industries, Inc.	708		19,385

			434,475

Paper Products—0.2%
Clearwater Paper Corporation*	630		34,631
Domtar Corporation*	233		12,911
International Paper Company	2,800		74,984

			122,526

Personal Products—0.0%
Avon Products, Inc.	600		18,900

Pharmaceuticals—3.0%
Abbott Laboratories	5,000		269,950
Allergan, Inc.	1,800		113,418
Bristol-Myers Squibb Company	7,500		189,375
Eli Lilly & Company	3,640		129,984
GlaxoSmithKline plc ADR	3,900		164,775
Johnson & Johnson	9,758		628,513
Medicines Company*	600		5,004
Medicis Pharmaceutical Corporation	500		13,525
Merck & Company, Inc.	11,536		421,525
Pfizer, Inc.	25,072		456,060
Valeant Pharmaceuticals International*	600		19,074

			2,411,203

Property & Casualty Insurance—0.4%
Allstate Corporation	1,600		48,064
Chubb Corporation	1,900		93,442
Employers Holdings, Inc.	600		9,204
Infinity Property & Casualty Corporation	410		16,662
Markel Corporation*	60		20,400
ProAssurance Corporation*	400		21,484
SeaBright Insurance Holdings, Inc.*	1,000		11,490
Selective Insurance Group	600		9,870
Travelers Companies, Inc.	2,314		115,376
W.R. Berkley Corporation	300		7,392
White Mountains Insurance Group, Ltd.	10		3,327

			356,711

Publishing—0.1%
McGraw-Hill Companies, Inc.	1,100		36,861
Scholastic Corporation	500		14,915

			51,776

Railroads—0.4%
CSX Corporation	1,200		58,188
Norfolk Southern Corporation	1,300		68,146
Union Pacific Corporation	2,400		153,360

			279,694

Regional Banks—0.6%
Citizens Republic Bancorp, Inc.*	1,200		828
City National Corporation	400		18,240
Commerce Bancshares, Inc.	614		23,774
East West Bancorp, Inc.	600		9,480
Fifth Third Bancorp	6,100		59,475
First Horizon National Corporation*	1,753		23,490
Glacier Bancorp, Inc.	1,000		13,720
Home Bancshares, Inc.	656	��	15,790
KeyCorp	7,300		40,515
Marshall & llsley Corporation	7,199		39,235
Pinnacle Financial Partners, Inc.*	500		7,110
PNC Financial Services Group, Inc.	1,100		58,069
Popular, Inc.	2,100		4,746
Regions Financial Corporation	8,300		43,907
Sandy Spring Bancorp, Inc.	700		6,223
Signature Bank NY*	600		19,140
SunTrust Banks, Inc.	2,000		40,580
Synovus Financial Corporation	500		1,025

The accompanying notes are an integral part of the financial statements


Schedule of Investments		Series N
December 31, 2009		(Management Asset Allocation Series)


	Shares	Value
COMMON STOCKS—51.1% (continued)
Regional Banks—0.6% (continued)
TCF Financial Corporation	400	$	5,448
Texas Capital Bancshares, Inc.*	100		1,396
Westamerica Bancorporation	400		22,148
Western Alliance Bancorp*	700		2,646
Wilmington Trust Corporation	600		7,404

			464,389

Reinsurance—0.0%
Everest Re Group, Ltd.	300		25,704

Research & Consulting Services—0.1%
Advisory Board Company*	600		18,396
Corporate Executive Board Company	370		8,443
FTI Consulting, Inc.*	400		18,864
Huron Consulting Group, Inc.*	300		6,912
Navigant Consulting, Inc.*	900		13,374
Verisk Analytics, Inc.*	200		6,056

			72,045

Residential REIT’s—0.1%
AvalonBay Communities, Inc.	600		49,266
Camden Property Trust	600		25,422

			74,688

Restaurants—0.6%
McDonald’s Corporation	4,700		293,468
Sonic Corporation*	700		7,049
Starbucks Corporation*	5,500		126,830
Yum! Brands, Inc.	2,000		69,940

			497,287

Retail REIT’s—0.3%
Kimco Realty Corporation	1,300		17,589
Regency Centers Corporation	500		17,530
Simon Property Group, Inc.	1,798		143,480
Weingarten Realty Investors	1,200		23,748

			202,347

Semiconductor Equipment—0.3%
Advanced Energy Industries, Inc.*	1,300		19,604
Applied Materials, Inc.	7,300		101,762
Cymer, Inc.*	600		23,028
KLA-Tencor Corporation	700		25,312
Lam Research Corporation*	200		7,842
MEMC Electronic Materials, Inc.*	1,100		14,982
Varian Semiconductor Equipment Associates, Inc.*	850		30,498

			223,028

Semiconductors—1.1%
Advanced Micro Devices, Inc.*	4,800		46,464
Intel Corporation	23,500		479,400
Intersil Corporation	900		13,806
Marvell Technology Group, Ltd.*	1,100		22,825
Maxim Integrated Products, Inc.	1,500		30,465
Micron Technology, Inc.*	5,200		54,912
National Semiconductor Corporation	5,500		84,480
NVIDIA Corporation*	2,500		46,700
Semtech Corporation*	1,300		22,113
Texas Instruments, Inc.	2,000		52,120
Zoran Corporation*	1,189		13,138

			866,423

Soft Drinks—1.2%
Coca-Cola Company	8,000		456,000
Pepsi Bottling Group, Inc.	700		26,250
PepsiCo, Inc.	7,700		468,160
Reed’s, Inc.*	2,000		2,860

			953,270

Specialized Consumer Services—0.0%
H&R Block, Inc.	600		13,572
Jackson Hewitt Tax Service, Inc.	600		2,640

			16,212

Specialized Finance—0.3%
CME Group, Inc.	200		67,190
Interactive Brokers Group, Inc.*	400		7,088
IntercontinentalExchange, Inc.*	400		44,920
Moody’s Corporation	1,500		40,200
NASDAQ OMX Group, Inc.*	600		11,892
NYSE Euronext	1,500		37,950

			209,240

Specialized REIT’s—0.1%
LaSalle Hotel Properties	1,300		27,599
Potlatch Corporation	655		20,881

			48,480

Specialty Chemicals—0.1%
Albemarle Corporation	600		21,822
Arch Chemicals, Inc.	700		21,616
Senomyx, Inc.*	2,500		9,425
Sigma-Aldrich Corporation	100		5,053

			57,916

Specialty Stores—0.0%
AC Moore Arts & Crafts, Inc.*	1,800		5,292
Dick’s Sporting Goods, Inc.*	660		16,414
Hibbett Sports, Inc.*	400		8,796

			30,502

Steel—0.2%
Carpenter Technology Corporation	400		10,780
Cliffs Natural Resources, Inc.	200		9,218
Haynes International, Inc.	300		9,891
Nucor Corporation	1,400		65,310
Steel Dynamics, Inc.	1,300		23,036
United States Steel Corporation	1,300		71,656

			189,891

Systems Software—1.7%
Ariba, Inc.*	1,000		12,520
CA, Inc.	6,800		152,728
CommVault Systems, Inc.*	200		4,738
McAfee, Inc.*	2,900		117,653
Microsoft Corporation	31,400		957,386
Red Hat, Inc.*	3,300		101,970
Websense, Inc.*	900		15,714

			1,362,709

Technology Distributors—0.0%
SYNNEX Corporation*	700		21,462
Tech Data Corporation*	300		13,998

			35,460

Textiles—0.0%
Culp, Inc.*	800		7,984

Thrifts & Mortgage Finance—0.0%
BankAtlantic Bancorp, Inc.	1,976		2,569

The accompanying notes are an integral part of the financial statements


Schedule of Investments		Series N
December 31, 2009		(Management Asset Allocation Series)


	Shares	Value
COMMON STOCKS—51.1% (continued)
Thrifts & Mortgage Finance—0.0% (continued)
Brooklyn Federal Bancorp, Inc.	100	$	1,004
ESSA Bancorp, Inc.	300		3,510
First Defiance Financial Corporation	300		3,387
Kentucky First Federal Bancorp	300		3,300
Louisiana Bancorp, Inc.*	200		2,890
MutualFirst Financial, Inc.	100		578

			17,238

Tobacco—0.7%
Alliance One International, Inc.*	2,400		11,712
Altria Group, Inc.	7,700		151,151
Philip Morris International, Inc.	8,130		391,785

			554,648

Trading Companies & Distributors—0.1%
Applied Industrial Technologies, Inc.	900		19,863
Fastenal Company	600		24,984
H&E Equipment Services, Inc.*	400		4,196

			49,043

Trucking—0.1%
Dollar Thrifty Automotive Group, Inc.*	700		17,927
Knight Transportation, Inc.*	1,300		25,077

			43,004

Wireless Telecommunication Services—0.8%
America Movil SAB de CV ADR	1,800		84,564
American Tower Corporation*	2,730		117,963
Crown Castle International Corporation*	2,500		97,600
Leap Wireless International, Inc.*	300		5,265
MetroPCS Communications, Inc.*	4,200		32,046
Nil Holdings, Inc.*	1,300		43,654
NTELOS Holdings Corporation	900		16,038
SBA Communications Corporation*	300		10,248
Sprint Nextel Corporation*	29,800		109,068
Vodafone Group plc ADR	8,400		193,956

			710,402

TOTAL COMMON STOCKS (cost $37,765,661)		$	40,625,113


	Shares		Value
FOREIGN STOCKS—12.3%
Advertising—0.1%
Aegis Group plc^1,3	10,712		20,753
WPP plc^1,3	4,374		42,735

			63,488

Aerospace & Defense—0.2%
Finmeccanica SpA^1,3,*	3,812		60,957
QinetiQ Group pic^1,3	17,232		45,152
Rolls-Royce Group plc	5,654		44,047
Rolls-Royce Group plc (Class C Entitlement)^1,3,*	295,920		478

			150,634

Apparel Retail—0.2%
Esprit Holdings, Ltd.^1,3	6,300		41,793
Industria de Diseno Textil S.A.^1,3	786		49,026

			90,819

Apparel, Accessories & Luxury Goods—0.2%
Adidas AG^1,3	1,344		72,707
Compagnie Financiere Richemont S.A.^{1, 3}	3,133		105,246
			177,953

Application Software—0.0%
Autonomy Corporation plc^1,3^,*	1,351		32,828

Auto Parts & Equipment—0.1%
Aisin Seiki Company, Ltd.^1,3	1,300		37,578
Autoliv, Inc.^1,3	724		31,622
GKN plc^1,3	18,383		34,451
Koito Manufacturing Company, Ltd.^1,3	2,000		32,118

			135,769

Automobile Manufacturers—0.5%
Bayerische Motoren Werke AG^1,3^,*	1,275		57,968
Honda Motor Company, Ltd.^1,3	1,600		54,315
Toyota Motor Corporation^1,3	4,200		177,170
Volkswagen AG^1,3	448		42,205

			331,658

Biotechnology—0.1%
CSL, Ltd.^1,3^,*	2,426		70,549

Brewers—0.1%
Kirin Holdings Company, Ltd.^1,3	3,000		48,137

Broadcasting—0.0%
Television Broadcasts, Ltd.^1,3	5,000		24,019

Cable & Satellite—0.2%
British Sky Broadcasting Group plc^1,3	4,400		39,964
Jupiter Telecommunications Company, Ltd.^1,3	79		78,214

			118,178

Catalog Retail—0.0%
Brown Group plc^1,3	9,174		36,764

Commodity Chemicals—0.1%
Asahi Kasei Corporation^1,3	7,000		35,093
Tosoh Corporation^1,3	6,000		16,579

			51,672

Communications Equipment—0.0%
Alcatel-Lucent^1,3	11,218		37,726

Computer Storage & Peripherals—0.0%
Wacom Company, Ltd.^1,3	16		34,913

Construction & Engineering—0.3%
Bouygues S.A.^1,3	1,542		79,772
Carillion plc^1,3	8,905		43,694
China Railway Construction Corporation, Ltd.^1,3	41,000		52,237

			175,703

Construction Materials—0.0%
Boral, Ltd.^1,3	3,983		21,142
Cemex S.A. de CV*	16,243		19,252

			40,394

The accompanying notes are an integral part of the financial statements


Schedule of Investments		Series N
December 31, 2009		(Management Asset Allocation Series)


	Shares	Value
FOREIGN STOCKS—12.3% (continued)
Data Processing & Outsourced Services—0.1%
Cielo S.A.	7,300	$	64,209

Department Stores—0.1%
PPR^1,3	659		79,003

Distillers & Vintners—0.1%
Pernod-Ricard S.A.^1,3	1,157		98,810

Distributors—0.0%
Jardine Cycle & Carriage, Ltd.¹³	2,000		38,179

Diversified Banks—1.4%
Allied Irish Banks plc^1,3	8,142		13,913
Australia & New Zealand Banking
Group, Ltd.^1,3	5,347		108,966
Banco Santander S.A.^1,3	7,695		126,997
BNP Paribas^1,3	1,644		130,234
DBS Group Holdings, Ltd.^1,3	6,000		65,214
DnB NORASA^1,3^,*	10,132		109,263
Erste Group Bank AG^1,3	919		34,106
Intesa Sanpaolo SpA^1,3	18,027		81,019
Mitsubishi UFJ Financial Group, Inc.^1,3	8,400		41,399
National Bank of Greece S.A.^1,3	1,100		28,225
Nordea Bank AB^1,3	6,802		68,883
Societe Generale^1,3	1,189		82,508
Standard Chartered plc^1,3	5,544		139,380
Sumitomo Trust & Banking Company, Ltd.^1,3	10,000		49,127
Swedbank AB^1,3	7,563		74,423

			1,153,657

Diversified Capital Markets—0.2%
Close Brothers Group plc^1,3	1,821		20,293
Credit Suisse Group AG^1,3	1,107		54,787
Deutsche Bank AG^1,3,*	842		59,463

			134,543

Diversified Chemicals—0.1%
BASF AG^1,3	1,364		84,312

Diversified Metals & Mining—0.4%
BHP Billiton plc^1,3	2,700		86,149
BHP Billiton, Ltd.^1,3	2,325		88,972
Rio Tinto, Ltd.^1,3	2,132		142,324

			317,445

Diversified Real Estate Activities—0.1%
Mitsui Fudosan Company, Ltd.^1,3	3,000		50,752

Diversified REIT’s—0.1%
Mirvac Group^1,3	46,792		65,288

Education Services—0.1%
Benesse Holdings, Inc.^1,3	1,200		50,200

Electric Utilities—0.3%
E.ON AG¹^,3	4,329		181,476
EDP - Energias do Brasil S.A.	1,300		25,009
Scottish & Southern Energy plc^1,3	4,093		76,525

			283,010

Electrical Components & Equipment—0.1%
Prysmian SpA^1,3	2,943		51,306

Electronic Components—0.3%
Hamamatsu Photonics KK^1,3	1,500		36,558
Hosiden Corporation^1,3	2,300		24,642
LG Display Company, Ltd. ^1,3	1,550		52,374
Nippon Electric Glass Company, Ltd.¹^,3	5,000		68,857

			182,431

Electronic Manufacturing Services—0.0%
Venture Corporation, Ltd.^1,3	2,000		12,544

Fertilizers & Agricultural Chemicals—0.1%
Syngenta AG^1,3	229		64,606

Food Retail—0.2%
FamilyMart Company, Ltd.^1,3	1,600		47,183
Tesco plc^1,3	23,680		163,271

			210,454

Gas Utilities—0.2%
Hong Kong & China Gas Company, Ltd.¹^,3	18,000		45,141

Health Care Equipment—0.3%
Elekta AB^1,3	3,422		81,297
Fresenius SE^1,3	1,078		77,288
Terumo Corporation ^1,3	800		48,242

			206,827

Heavy Electrical Equipment—0.2%
ABB, Ltd.^1,3	2,046		39,385
Alstom S.A.^1,3	1,149		80,255
Mitsubishi Electric Corporation^1,3	13,000		96,624

			216,264

Home Entertainment Software—0.1%
Nintendo Company, Ltd.^1,3	200		47,793

Hotels, Resorts & Cruise Lines—0.1%
China CITIC Bank(CI. H)^1,3,*	125,000		105,795

Household Appliances—0.0%
Makita Corporation^1,3	700		24,057

Independent Power Producers & Energy Traders—0.1%
EDF Energies Nouvelles S.A.^1,3	510		26,271
Iberdrola Renovables S.A.^1,3	15,163		72,115

			98,386

Industrial Conglomerates—0.4%
DCC plc^1,3	2,879		80,369
Hutchison Whampoa, Ltd.^1,3	5,700		38,994
Koninklijke Philips Electronics N.V.¹^,3	2,328		68,727
SembCorp Industries, Ltd.^1,3	26,900		70,279

			258,369

The accompanying notes are an integral part of the financial statements


Schedule of Investments		Series N
December 31, 2009		(Managed Asset Allocation Series)


	Shares	Value
FOREIGN STOCKS—12.3% (continued)
Industrial Gases—0.0%
Air Water, Inc.^1,3	2,000	$	23,571

Industrial Machinery—0.1%
Cargotec Corporation (CI.B)^1,3	1,033		28,399
Charter International plc^1,3	3,642		42,391
Fanuc, Ltd.^1,3	300		27,976
Toshiba Machine Company, Ltd.^1,3	3,000		11,508

			110,274

Integrated Oil & Gas—0.3%
BG Group plc^1,3	2,638		47,703
Statoil Hydro ASA^1,3	5,100		127,054

			174,757

Integrated Telecommunication Services—0.3%
France Telecom S.A.^1,3	3,625		90,468
Hutchison Telecommunications Hong Kong Holdings, Ltd.^1,3	104,000		17,621
Singapore Telecommunications, Ltd.^1,3	14,000		30,831
Telefonica S.A.^1,3	6,637		185,529
Telstra Corporation, Ltd.^1,3	13,867		42,633

			367,082

Internet Software & Services—0.0%
Kakaku.com, Inc.^1,3	9		35,003

Investment Banking & Brokerage—0.1%
Macquarie Group, Ltd.^1,3	1,344		57,587

IT Consulting & Other Services—0.0%
Logica plc^1,3	13,045		23,860
NS Solutions Corporation^1,3	1,100		17,357

			41,217

Life & Health Insurance—0.3%
Prudential plc^1,3	6,082		62,051
Sony Financial Holdings, Inc.^1,3	25		65,096
Sun Life Financial, Inc.	3,600		103,596

			230,743

Marine—0.0%
Nippon Yusen KK^1,3	5,000		15,407

Multi-Line Insurance—0.1%
AXA S.A.^1,3	4,786		112,229

Multi-Utilities—0.1%
GDF Suez^1,3	1,428		61,784

Office Electronics—0.1%
Canon, Inc.^1,3	1,800		76,610

Oil & Gas Drilling—0.0%
China Oilfield Services, Ltd.^1,3	28,000		33,206

Oil & Gas Equipment & Services—0.2%
Fugro N.V.^1,3	464		26,618
Modec, Inc.^1,3	1,000		19,173
Saipem SpA^1,3	2,035		70,140
Subsea 7, Inc.^1,3^,*	3,700		61,200

			177,131

Oil & Gas Exploration & Production—0.1%
Beach Energy, Ltd.^1,3	51,900		42,700

Other Diversified Financial Services—0.0%
ING Groep N.V.^1,3	2,480		23,853

Packaged Foods & Meats—0.6%
Dairy Crest Group plc ^1,3	6,814		39,634
Goodman Fielder, Ltd.^1,3	18,514		26,961
House Foods Corporation^1,3	1,500		21,352
Nestle S.A.^1,3	6,099		295,706
Unilever plc^1,3	2,980		95,534

			479,187

Personal Products—0.1%
Kobayashi Pharmaceutical Company, Ltd.^1,3	800		32,073
L'Oreal S.A.^1,3	820		91,467

			123,540

Pharmaceuticals—0.7%
Astellas Pharma, Inc.^1,3	800		29,863
Chugai Pharmaceutical Company, Ltd.^1,3	1,200		22,442
Roche Holding AG^1,3	1,233		210,645
Rohto Pharmaceutical Company, Ltd.^1,3	2,000		23,080
Sanofi-Aventis S.A.^1,3	2,152		169,026

			455,056

Photographic Products—0.0%
Nikon Corporation^1,3	2,000		39,514

Property & Casualty Insurance—0.1%
QBE Insurance Group, Ltd.^1,3	3,729		85,099
Suncorp-Metway, Ltd.^1,3	3,775		29,227

			114,326

Publishing—0.1%
Informa plc^1,3	3,220		16,579
Sanoma Oyj^1,3	2,646		59,622

			76,201

Railroads—0.1%
Central Japan Railway Company^1,3	9		60,272

Real Estate Development—0.0%
China Overseas Land & Investment, Ltd.^1,3	17,760		37,207
Goldcrest Company, Ltd.^1,3	820		22,974
Soho China, Ltd.^1,3	62,000		33,304

			93,485

Regional Banks—0.1%
Bank of Yokohama, Ltd.^1,3	9,000		41,057

The accompanying notes are an integral part of the financial statements


Schedule of Investments		Series N
December 31, 2009		(Managed Asset Allocation Series)


		Shares		Value
FOREIGN STOCKS—12.3% (continued)
Reinsurance—0.1%
Muenchener Rueckversicherungs AG^1,3		574	$	89,293

Restaurants—0.1%
Compass Group plc^1,3		6,631		47,675
Mitchells & Butlers plc^1,3		7,690		30,765

				78,440

Retail REIT’s—0.1%
Unibail-Rodamco SE^1,3		466		102,242

Semiconductor Equipment—0.2%
ASML Holding N.V. ^1,3		1,687		57,525
Sumco Corporation^1,3		3,000		53,040

				110,565

Semiconductors—0.1%
Samsung Electronics Company, Ltd.^1,3		56		38,377
Taiwan Semiconductor Manufacturing Company, Ltd.^1,3		28,129		56,672

				95,049

Specialized Finance—0.1%
Deutsche Boerse AG^1,3		551		45,571

Specialty Chemicals—0.2%
Hitachi Chemical Company, Ltd.^1,3		1,800		36,705
Umicore^1,3		1,536		51,174
Wacker Chemie AG^1,3		444		77,135

				165,014

Steel—0.1%
Kobe Steel, Ltd.^1,3		21,000		38,077
SSAB Svenskt Stal AB^1,3		3,869		65,677

				103,754

Switzerland—0.1%
Swiss LifeHolding AG^1,3		732		93,043

Trading Companies & Distributors—0.3%
Mitsubishi Corporation^1,3		3,600		89,719
Mitsui & Company, Ltd.^1,3		5,800		82,324

				172,043

Trucking—0.1%
Arriva plc^1,3		4,990		39,736

Wireless Telecommunication Services—0.1%
KDDI Corporation^1,3		13		68,894

TOTAL FOREIGN STOCKS (cost $9,320,958)			$	9,794,021


	Shares		Value
PREFERRED STOCK—0.2%
Other Diversified Financial Services—0.2%
Bank of America Corporation
10.00%, 12/31/19495		9,100		135,772
Thrifts & Mortgage Finance—0.0%
Federal National Mortgage Association
8.25%, 12/31/2010*		1,050		1,155

TOTAL PREFERRED STOCK (cost $166,568)				136,927


	Shares		Value
WARRANTS—0.0%
Anvil (Cl. A)
$1.00, 2/28/2012^1,2		333		14
Anvil (Cl. B)
$1.00, 2/28/2012^1,2		370		7

TOTAL WARRANTS (cost $3,850)				21


	Principal Amount		Value
CORPORATE BONDS—13.8%
Aerospace & Defense—0.2%
Bombardier, Inc.
6.75%, 2012^1,6,7	$	50,000	$	51,625
Delta Air Lines, Inc.
12.25%, 2015^1,6,7		25,000		25,000
Lockheed Martin Corporation
4.12%, 2013¹		25,000		26,120
Spirit Aerosystems, Inc.
7.50%, 2017^1,6,7		25,000		24,625

				127,370

Airlines—0.0%
Continental Airlines, Inc.
7.25%, 2019¹		10,000		10,175
Delta Air Lines, Inc.
7.75%, 2019¹		10,000		10,200

				20,375

Automotive—0.2%
American Axle & Manufacturing, Inc.
7.88%, 2017¹		25,000		21,125
DaimlerChrysler North America Holding Corporation
6.50%, 2013¹		30,000		32,887
Erac USA Finance Company
5.60%, 2015^1,2,6,7		40,000		40,770
Ford Motor Credit Company LLC
12.00%, 2015¹		25,000		28,991
Hertz Corporation
10.50%, 2016¹		25,000		26,688
Motors Liquidation Company
8.25%, 2023^1,8		25,000		6,625

				157,086

Banking—1.4%
Bank of America Corporation
5.65%, 2018¹		105,000		106,639
BB&T Capital Trust II
6.75%, 2036¹		20,000		19,075

The accompanying notes are an integral part of the financial statements


Schedule of Investments		Series N
December 31, 2009		(Managed Asset Allocation Series)


	Principal Amount		Value
CORPORATE BONDS—13.8% (continued)
Banking—1.4% (continued)
Citigroup, Inc.
6.50%, 2013¹	$	120,000	$	127,824
Credit Suisse Guernsey, Ltd.
5.86%, 2049^1,5		40,000		34,800
Credit Suisse USA, Inc.
5.50%, 2011¹		30,000		31,872
Discover Financial Services
10.25%, 2019¹		25,000		29,234
E*Trade Financial Corporation
12.50%, 2017¹		32,000		36,360
Fifth Third Bancorp
6.25%, 2013¹		20,000		20,592
Goldman Sachs Group, Inc.
7.50%, 2019¹		40,000		46,632
JP Morgan Chase Capital XXII
6.45%, 2037¹		35,000		32,121
JPMorgan Chase & Company
4.75%, 2013¹		55,000		58,054
6.00%, 2018¹		205,000		220,375
Morgan Stanley
7.30%, 2019¹		100,000		112,293
Northern Trust Company
4.60%, 2013¹		25,000		26,242
Northern Trust Corporation
5.30%, 2011¹		30,000		31,832
5.50%, 2013¹		10,000		10,939
PNC Funding Corporation
5.63%, 2017¹		35,000		34,682
Svensk Exportkredit AB
5.13%, 2017¹		70,000		73,921
U.S. Bancorp
4.50%, 2010¹		45,000		46,113
Wells Fargo & Company
4.88%, 2011¹		90,000		93,249
Westpac Banking Corporation
4.88%, 2019¹		25,000		24,675

				1,217,524

Basic Industry—0.2%
BWAY Corporation
10.00%, 2014^1,6,7		25,000		26,437
Lubrizol Corporation
8.88%, 2019¹		20,000		24,866
Potash Corporation of Saskatchewan, Inc.
4.88%, 2020¹		45,000		44,398
Rio Tinto Finance USA, Ltd.
8.95%, 2014¹		15,000		17,975

				113,676

Basic Industry—Other—0.0%
Cooper US, Inc.
6.10%, 2017¹		35,000		38,236
Xstrata Finance Canada, Ltd.
5.50%, 2011^1,2,6,7		35,000		36,735

				74,971

Brokerage—0.9%
Ameriprise Financial, Inc.
7.30%, 2019¹		40,000		44,482
Citigroup, Inc.
5.50%, 2012¹		37,000		38,675
5.50%, 2013¹		45,000		46,654
Goldman Sachs Group, Inc.
6.15%, 2018¹		195,000		208,748
6.35%, 2034¹		30,000		28,088
Jefferies Group, Inc.
6.25%, 2036¹		35,000		27,891
Merrill Lynch & Company, Inc.
5.45%, 2013¹		35,000		36,829
6.88%, 2018¹		85,000		91,582
7.75%, 2038¹		35,000		38,456
Morgan Stanley
6.00%, 2015¹		100,000		106,523
Nuveen Investments, Inc.
10.50%, 2015¹		25,000		22,688
Willis North America, Inc.
6.20%, 2017¹		25,000		24,783

				715,399

Building Materials—0.1%
CRH America, Inc.
6.00%, 2016¹		25,000		26,112
Freeport-McMoRan Copper & Gold, Inc.
8.38%, 2017¹		50,000		54,750
Gibraltar Industries, Inc.
8.00%, 2015¹		25,000		23,875
Holcim US Finance Sarl & Cie SCS
6.00%, 2019^1,2,6,7		20,000		20,818
Lafarge S.A.
6.15%, 2011¹		20,000		20,842

				146,397

Capital Goods—0.1%
Ball Corporation
7.13%, 2016¹		25,000		25,625
Goodrich Corporation
4.88%, 2020¹		15,000		14,837
Republic Services, Inc.
5.50%, 2019^1,2,6,7		20,000		20,309
Roper Industries, Inc.
6.25%, 2019¹		10,000		10,411

				71,182

Chemicals—0.1%
Praxair, Inc.
4.63%, 2015¹		35,000		37,225
5.20%, 2017¹		35,000		36,700
Solutia, Inc.
8.75%, 2017¹		25,000		26,031

				99,956

Communications—0.3%
American Tower Corporation
4.63%, 2015^1,2,6,7		15,000		15,172
7.25%, 2019^1,2,6,7		28,000		31,220
Grupo Televisa S.A.
6.63%, 2040^1,2,6,7		15,000		14,834
Intelsat Jackson Holdings, Ltd.
8.50%, 2019^1,6,7		50,000		51,500
QVC, Inc.
7.50%, 2019^1,6,7		25,000		25,500
Telecom Italia Capital S.A.
6.18%, 2014¹		30,000		32,517

The accompanying notes are an integral part of the financial statements


Schedule of Investments		Series N
December 31, 2009		(Managed Asset Allocation Series)


	Principal Amount		Value
CORPORATE BONDS—13.8% (continued)
Communications—0.3% (continued)
Telefonica Emisiones SAU
5.88%, 2019¹	$	15,000	$	16,077
Thomson Reuters Corporation
4.70%, 2019¹		10,000		9,851

				196,671

Communications—Other—0.3%
AT&T, Inc.
5.63%, 2016¹		50,000		53,712
Dun & Bradstreet Corporation
5.50%, 2011¹		25,000		26,042
Hughes Network Systems LLC
9.50%, 2014¹		25,000		25,813
Lamar Media Corporation
6.63%, 2015¹		100,000		96,999
XM Satellite Radio, Inc.
11.25%, 2013^1,6,7		25,000		26,875

				229,441

Construction Machinery—0.1%
Commercial Vehicle Group
13.00%, 2013^1,2,7		20		16,972
Esco Corporation
8.63%, 2013^1,6,7		50,000		49,749
Honeywell International, Inc.
5.30%, 2018¹		35,000		36,916

				103,637

Consumer Noncyclical—0.1%
AmerisourceBergen Corporation
4.88%, 2019¹		25,000		24,681
Kroger Company
3.90%, 2015¹		20,000		20,109

				44,790

Consumer Noncyclical—Other—0.1%
Bunge North America Finance, LP
5.90%, 2017¹		55,000		54,445

Consumer Products—0.0%
Visant Corporation
7.63%, 2012¹		25,000		25,125

Distributors—0.0%
Ferrellgas Partners, LP
8.75%, 2012¹		25,000		25,313

Diversified Manufacturing—0.1%
3M Company
5.70%, 2037¹		35,000		36,525
Bombardier, Inc.
8.00%, 2014^1,6,7		25,000		25,969
Case New Holland, Inc.
7.75%, 2013^1,6,7		25,000		25,563
Hawk Corporation
8.75%, 2014¹		25,000		24,969

				113,026

Electric—1.1%
ACE INA Holdings, Inc.
5.90%, 2019¹		10,000		10,758
AES Corporation
7.75%, 2014¹		25,000		25,375
Allegheny Energy Supply Company LLC
6.75%, 2039^1,2,6,7		30,000		28,556
Appalachian Power Company
6.38%, 2036¹		25,000		25,265
Baltimore Gas & Electric Company
5.90%, 2016¹		50,000		52,708
Black Hills Corporation
6.50%, 2013¹		30,000		31,380
CenterPoint Energy, Inc.
7.25%, 2010¹		25,000		25,790
Consumers Energy Company
6.00%, 2014¹		25,000		27,479
El Paso Electric Company
6.00%, 2035¹		45,000		40,468
Energy Future Holdings Corporation
10.88%, 2017¹		25,000		20,438
11.25%, 2017¹		28,090		19,874
Entergy Gulf States Louisiana LLC
5.59%, 2024¹		10,000		9,994
Entergy Louisiana LLC
5.40%, 2024¹		10,000		9,754
Exelon Generation Company LLC
6.25%, 2039¹		15,000		15,282
Express Scripts, Inc.
6.25%, 2014¹		15,000		16,367
Illinois Power Company
6.13%, 2017¹		15,000		15,842
Massachusetts Electric Company
5.90%, 2039^1,2,6,7		25,000		25,383
Monongahela Power Company
5.70%, 2017^1,2,6,7		40,000		39,319
Northern States Power Company
5.35%, 2039¹		14,000		13,512
Pacific Gas & Electric Company
4.80%, 2014¹		30,000		31,860
6.35%, 2038¹		20,000		21,688
PacifiCorp
6.25%, 2037¹		40,000		43,157
Pinnacle Foods Finance LLC
9.25%, 2015¹		25,000		25,375
Public Service Company of Oklahoma
5.15%, 2019¹		15,000		14,893
Public Service Electric & Gas Company
5.70%, 2036¹		50,000		50,751
RRI Energy, Inc.
7.88%, 2017¹		25,000		24,563
Sierra Pacific Resources
7.80%, 2012¹		25,000		25,388
Southern Company
4.15%, 2014¹		20,000		20,567
Tampa Electric Company
6.15%, 2037¹		40,000		40,309
Teck Resources, Ltd.
9.75%, 2014¹		25,000		28,844

The accompanying notes are an integral part of the financial statements


Schedule of Investments		Series N
December 31, 2009		(Managed Asset Allocation Series)


	Principal Amount			Value
CORPORATE BONDS—13.8% (continued)
Electric—1.1% (continued)
Texas Competitive Electric Holdings Company LLC
10.25%, 2015¹	$	50,000		$	40,500
Union Electric Company
5.40%, 2016¹		50,000			51,447
Virginia Electric and Power Company
4.50%, 2010¹		35,000			35,996
Westar Energy, Inc.
5.10%, 2020¹		25,000	��		24,417

					933,299

Energy—0.1%
Hess Corporation
6.00%, 2040¹		15,000			14,854
North American Energy Alliance LLC
10.88%, 2016^1,6,7		25,000			26,562

					41,416

Energy-Other—0.0%
Cie Generale de Gelphysique-Veritas
9.50%, 2016^1,7		25,000			26,750

Entertainment—0.1%
Historic TW, Inc.
6.88%, 2018¹		50,000			55,148
Ticketmaster Entertainment, Inc.
10.75%, 2016¹		25,000			26,938

					82,086

Environmental—0.2%
Veolia Environnement
6.00%, 2018¹		35,000			36,957
Waste Management, Inc.
6.10%, 2018¹		55,000			58,489

					95,446

Financial—Other—0.2%
AvalonBay Communities, Inc.
6.13%, 2012¹		16,000			16,978
Duke Realty, LP
6.25%, 2013¹		20,000			20,115
First Data Corporation
10.55%, 2015¹		27,760			24,636
Kinder Morgan Finance Company ULC
5.70%, 2016¹		45,000			43,200
Nuveen Investments, Inc.
5.50%, 2015¹		25,000			17,281

					122,210

Financial Companies—0.1%
American General Finance Corporation
6.90%, 2017¹		25,000			17,359
WEA Finance LLC
7.50%, 2014^1,2,6,7		20,000			22,506

					39,865

Financial Companies—Noncaptive Consumer—0.2%
American Express Credit Corporation
5.88%, 2013¹		35,000			37,561
7.30%, 2013¹		15,000			16,858
Capital One Capital IV
6.75%, 2037^1,5		50,000			41,500
John Deere Capital Corporation
5.50%, 2017¹		20,000			21,201
SLM Corporation
5.13%, 2012¹		15,000			14,062
8.45%, 2018¹		50,000			49,337

					180,519

Financial Companies—Noncaptive Diversified—0.2%
Caterpillar Financial Services Corporation
4.25%, 2013¹		35,000			36,445
5.85%, 2017¹		25,000			26,679
International Lease Finance Corporation
6.63%, 2013¹		55,000			44,274
Wachovia Corporation
5.75%, 2018¹		55,000			57,396

					164,794

Financial Institutions—0.1%
Citigroup, Inc.
5.50%, 2014¹		20,000			20,251
JPMorgan Chase Capital XXVII
7.00%, 2039¹		30,000			30,255
SLM Corporation
5.38%, 2014¹		25,000			23,059

					73,565

Food & Beverage—0.3%
Anheuser-Busch InBev Worldwide, Inc.
5.38%, 2014^1,2,6,7		60,000			63,524
ARAMARK Corporation
3.78%, 2015^1,5		25,000			22,875
B&G Foods, Inc.
8.00%, 2011¹		25,000			25,438
Coca-Cola Amatil, Ltd.
3.25%, 2014^1,2,6,7		20,000			19,744
General Mills, Inc.
5.25%, 2013¹		15,000			16,183
Mead Johnson Nutrition Company
4.90%, 2019^1,2,6,7		10,000			9,915
Pantry, Inc.
7.75%, 2014¹		25,000			24,000
SABMiller plc
6.20%, 2011^1,2,6,7		50,000			52,915
Sysco Corporation
5.25%, 2018¹		20,000			20,882

					255,476

Gaming—0.1%
Harrah’s Operating Company, Inc.
11.25%, 2017^1,6,7		25,000			26,156

The accompanying notes are an integral part of the financial statements


Schedule of Investments		Series N
December 31, 2009		(Managed Asset Allocation Series)


	Principal Amount		Value
CORPORATE BONDS—13.8% (continued)
Gaming—0.1% (continued)
MGM Mirage
10.38%, 2014^1,6,7	$	25,000	$	27,125
11.38%, 2018^1,6,7		25,000		22,375

				75,656

Health Care—0.4%
Genentech, Inc.
4.75%, 2015¹		35,000		37,460
HCA, Inc.
9.25%, 2016¹		50,000		53,688
Highmark, Inc.
6.80%, 2013^1,2,6,7		30,000		31,389
Kellogg Company
4.25%, 2013¹		25,000		26,208
Medtronic, Inc.
4.75%, 2015¹		60,000		64,772
Talecris Biotherapeutics Holdings Corporation
7.75%, 2016^1,6,7		25,000		25,375
Vanguard Health Holding Company II LLC
9.00%, 2014¹		25,000		25,906
WellPoint, Inc.
5.00%, 2011¹		30,000		31,019
Wyeth
5.95%, 2037¹		35,000		36,497

				332,314

Home Construction—0.1%
MDC Holdings, Inc.
5.50%, 2013¹		55,000		55,258
NVR, Inc.
5.00%, 2010¹		20,000		20,184

				75,442

Independent Energy—0.3%
Canadian Natural Resources, Ltd.
6.25%, 2038¹		35,000		36,223
Connacher Oil and Gas, Ltd.
10.25%, 2015^1,6,7		25,000		22,875
Forest Oil Corporation
8.00%, 2011¹		25,000		26,063
Hilcorp Energy I, LP
7.75%, 2015^1,6,7		75,000		73,499
NRG Energy, Inc.
7.25%, 2014¹		25,000		25,313
Southern Company
5.30%, 2012¹		15,000		16,071

				200,044

Insurance—0.1%
Aflac, Inc.
6.90%, 2039¹		20,000		19,704
Genworth Financial, Inc.
8.63%, 2016¹		10,000		10,374
Markel Corporation
7.13%, 2019¹		15,000		15,488
Reinsurance Group of America, Inc.
6.45%, 2019¹		15,000		14,951

				60,517

Insurance—Life—0.3%
MetLife, Inc.
6.13%, 2011¹		50,000		53,750
NLV Financial Corporation
7.50%, 2033^1,2,6,7		30,000		25,852
Principal Financial Group, Inc.
6.05%, 2036¹		30,000		27,104
Principal Life Global Funding I
5.13%, 2013^1,2,6,7		45,000		45,623
Prudential Financial, Inc.
6.20%, 2015¹		10,000		10,759
Sun Life Financial Global Funding, LP
0.50%, 2013^1,2,5,6,7		45,000		42,174

				205,262

Insurance—Property & Casualty—0.1%
Ace INA Holdings, Inc.
5.70%, 2017¹		30,000		31,839
HUB International Holdings, Inc.
10.25%, 2015^1,6,7		25,000		23,000

				54,839

Integrated Energy—0.1%
Hess Corporation
7.88%, 2029¹		20,000		23,987
Petrobras International Finance Company
5.88%, 2018¹		35,000		35,294
Petro-Canada
6.80%, 2038¹		10,000		11,023
West Penn Power Company
5.95%, 2017^1,2,6,7		25,000		25,565

				95,869

Lodging—0.0%
Host Hotels & Resorts, LP
6.75%, 2016¹		25,000		24,875

Media-Cable—0.8%
British Sky Broadcasting Group plc
6.10%, 2018^1,2,6,7		55,000		58,264
Comcast Cable Communications Holdings, Inc.
8.38%, 2013¹		11,000		12,680
Comcast Corporation
5.70%, 2018¹		40,000		42,050
COX Communications, Inc.
7.13%, 2012¹		20,000		22,217
6.25%, 2018^1,2,6,7		10,000		10,644
8.38%, 2039^1,2,6,7		10,000		12,452
CSC Holdings, Inc.
8.50%, 2014^1,6,7		25,000		26,625
DirecTV Holdings LLC
7.63%, 2016¹		25,000		27,313
5.88%, 2019^1,2,6,7		45,000		45,769
News America, Inc.
6.15%, 2037¹		60,000		59,693
Omnicom Group, Inc.
6.25%, 2019¹		20,000		21,577
Rogers Cable, Inc.
5.50%, 2014¹		40,000		42,861
TCM Sub LLC
3.55%, 2015^1,2,6,7		35,000		34,284

The accompanying notes are an integral part of the financial statements


Schedule of Investments		Series N
December 31, 2009		(Managed Asset Allocation Series)


	Principal Amount		Value
CORPORATE BONDS—13.8% (continued)
Media—Cable—0.8% (continued)
Time Warner Cable, Inc.
5.40%, 2012¹	$	55,000	$	58,764
7.30%, 2038¹		90,000		99,775
Videotron Ltee
9.13%, 2018¹^,6,7		25,000		27,500

				602,468

Media—Non Cable—0.2%
Affinity Group, Inc.
9.00%, 2012¹		25,000		17,031
News America, Inc.
6.40%, 2035¹		45,000		46,208
Thomson Reuters Corporation
6.50%, 2018¹		25,000		28,256
Time Warner, Inc.
7.70%, 2032¹		20,000		23,487
Univision Communications, Inc.
9.75%, 2015^1,6,7		26,312		23,056
Vivendi S.A.
5.75%, 2013^1,2,6,7		35,000		36,797

				174,835

Metals & Mining—0.8%
ArcelorMittal
5.38%, 2013¹		35,000		36,933
Barrick Gold Financeco LLC
6.13%, 2013¹		30,000		32,976
BHP Billiton Finance, Ltd.
5.40%, 2017¹		30,000		32,141
Novelis, Inc.
11.50%, 2015^1,6,7		25,000		26,781
Placer Dome, Inc.
6.45%, 2035¹		35,000		35,927
Rio Tinto Finance USA, Ltd.
5.88%, 2013¹		35,000		37,767
Russel Metals, Inc.
6.38%, 2014¹		25,000		23,750
Steel Dynamics, Inc.
7.38%, 2012¹		25,000		25,750
Sunoco, Inc.
5.75%, 2017¹		34,000		34,375
Tube City IMS Corporation
9.75%, 2015¹		25,000		24,156
Vale Overseas, Ltd.
6.25%, 2017¹		20,000		20,862
6.88%, 2039¹		25,000		25,169

				356,587

Natural Gas—0.1%
AGL Capital Corporation
5.25%, 2019¹		5,000		5,035
Enogex LLC
6.25%, 2020^1,2,6,7		10,000		9,783
Enterprise Products Operating LLC
5.25%, 2020¹		5,000		4,946
7.55%, 2038¹		15,000		16,939
Magellan Midstream Partners, LP
6.55%, 2019¹		20,000		21,710
Plains All American Pipeline, LP
5.75%, 2020¹		20,000		20,015
Spectra Energy Capital LLC
5.65%, 2020¹		20,000		20,183

				98,611

Natural Gas Pipelines—0.2%
Boardwalk Pipelines LLC
5.50%, 2017¹		20,000		19,874
Buckeye Partners, LP
6.05%, 2018¹		15,000		15,539
Dynegy Holdings, Inc.
7.50%, 2015¹		25,000		23,375
El Paso Corporation
12.00%, 2013¹		25,000		29,313
Plains All American Pipeline, LP
6.50%, 2018¹		15,000		16,041
Texas Gas Transmission LLC
5.50%, 2013^1,2,6,7		50,000		52,578

				156,720

Oil Field Services—0.4%
Devon Financing Corporation ULC
7.88%, 2031¹		25,000		31,323
Diamond Offshore Drilling, Inc.
5.15%, 2014¹		25,000		26,656
El Paso Natural Gas Company
5.95%, 2017¹		13,000		13,390
EnCana Corporation
5.90%, 2017¹		35,000		37,641
6.50%, 2034¹		35,000		37,511
EOG Resources, Inc.
5.88%, 2017¹		25,000		27,224
Nabors Industries, Inc.
6.15%, 2018¹		10,000		10,393
Pemex Project Funding Master Trust
5.75%, 2018¹		80,000		80,891
Petrobras International Finance Company
7.88%, 2019¹		15,000		17,292
5.75%, 2020¹		10,000		10,173
Shell International Finance BV
6.38%, 2038¹		25,000		28,184
Southern Natural Gas Company
5.90%, 2017^1,2,6,7		13,000		13,350
Woodside Finance, Ltd.
4.50%, 2014^1,2,6,7		10,000		10,089
XTO Energy, Inc.
5.65%, 2016¹		30,000		32,788

				376,905

Paper—0.1%
Boise Cascade LLC
7.13%, 2014¹		15,000		13,519
Georgia-Pacific LLC
7.13%, 2017^1,6,7		25,000		25,313
Nielsen Finance LLC
11.63%, 2014¹		25,000		28,093

				66,925

Pharmaceuticals—0.1%
Teva Pharmaceutical Finance LLC
5.55%, 2016¹		40,000		42,223

The accompanying notes are an integral part of the financial statements


Schedule of Investments		Series N
December 31, 2009		(Managed Asset Allocation Series)


	Principal Amount		Value
CORPORATE BONDS—13.8% (continued)
Pipelines—0.0%
Kinder Morgan, Inc.
6.50%, 2012¹	$	25,000	$	26,000

Railroads—0.0%
Union Pacific Corporation
5.70%, 2018¹		25,000		26,187

Refining—0.3%
Diamond Offshore Drilling, Inc.
4.88%, 2015¹		30,000		31,668
Enterprise Products Operating, LP
6.30%, 2017¹		20,000		21,530
Marathon Oil Corporation
6.00%, 2017¹		35,000		37,023
5.90%, 2018¹		45,000		47,400
6.60%, 2037¹		15,000		15,912
Valero Energy Corporation
6.13%, 2017¹		55,000		56,289

				209,822

REIT’s—0.3%
AMB Property, LP
6.63%, 2019¹		20,000		19,617
ERP Operating, LP
5.25%, 2014¹		25,000		25,426
Federal Realty Investment Trust
6.00%, 2012¹		20,000		20,869
Hospitality Properties Trust
5.63%, 2017¹		30,000		25,976
Mack-Cali Realty Corporation
7.75%, 2019¹		20,000		20,695
Reckson Operating Partnership, LP
6.00%, 2016¹		30,000		25,682
Regency Centers, LP
5.88%, 2017¹		15,000		13,881
Simon Property Group, LP
6.75%, 2014¹		5,000		5,328
5.75%, 2015¹		55,000		56,086

				213,560

Restaurants—0.0%
Federated Retail Holdings, Inc.
5.35%, 2012¹		20,000		20,425

Retailers—0.3%
AmeriGas Partners, LP
7.13%, 2016¹		100,000		100,000
GSC Holdings Corporation
8.00%, 2012¹		25,000		25,906
Home Depot, Inc.
5.40%, 2016¹		35,000		36,640
JC Penney Corporation, Inc.
9.00%, 2012¹		30,000		33,825
Neiman Marcus Group, Inc.
10.38%, 2015¹		25,000		24,500
Rite Aid Corporation
10.25%, 2019^1,6,7		25,000		26,375

				247,246

Services—0.1%
Allied Waste North America, Inc.
7.25%, 2015¹		50,000		52,250

Sovereigns—0.2%
Brazilian Government International Bond
11.00%, 2040¹		35,000		46,638
Italian Republic
5.25%, 2016¹		85,000		90,526

				137,164

Supermarkets—0.0%
Kroger Company
7.50%, 2014¹		5,000		5,706

Technology—0.3%
Seagate Technology HDD Holdings
6.80%, 2016¹		25,000		24,188
STATS ChipPAC, Ltd.
6.75%, 2011¹		25,000		25,156
SunGard Data Systems, Inc.
9.13%, 2013¹		100,000		102,500
Xerox Corporation
5.50%, 2012¹		15,000		15,852
6.75%, 2017¹		100,000		107,277
6.35%, 2018¹		25,000		26,078

				301,051

Telecommunications—Wireless—0.6%
America Movil S.A. de CV
6.38%, 2035¹		45,000		46,453
British Telecommunications plc
5.15%, 2013¹		40,000		41,711
CC Holdings GS V LLC
7.75%, 2017^1,6,7		25,000		26,625
Cricket Communications, Inc.
7.75%, 2016¹		25,000		24,938
Digicel Group, Ltd.
12.00%, 2014^1,6,7		25,000		27,750
iPCS, Inc.
4.28%, 2014^1,5		25,283		21,491
MetroPCS Wireless, Inc.
9.25%, 2014¹		25,000		25,313
New Cingular Wireless Services, Inc.
7.88%, 2011¹		30,000		32,232
NII Capital Corporation
10.00%, 2016^1,6,7		25,000		26,188
Rogers Communications, Inc.
6.80%, 2018¹		30,000		33,598
SBA Telecommunications, Inc.
8.00%, 2016^1,6,7		25,000		26,125
Sprint Capital Corporation
8.38%, 2012¹		25,000		25,875
Sprint Nextel Corporation
8.38%, 2017¹		50,000		50,999
Verizon Global Funding Corporation
7.75%, 2030¹		35,000		41,117
Verizon Virginia, Inc.
4.63%, 2013¹		45,000		46,730

The accompanying notes are an integral part of the financial statements


Schedule of Investments		Series N
December 31, 2009		(Managed Asset Allocation Series)


	Principal Amount		Value
CORPORATE BONDS—13.8% (continued)
Telecommunications—Wireless—0.6% (continued)
Vodafone Group plc
5.63%, 2017¹	$	35,000	$	37,176
Wind Acquisition Finance S.A.
12.00%, 2015^1,6^,7		25,000		26,750

				561,071

Telecommunications—Wirelines—0.4%
AT&T Corporation
7.30%, 2011¹		15,000		16,516
AT&T, Inc.
6.45%, 2034¹		50,000		50,983
Cellco Partnership
8.50%, 2018¹		40,000		49,615
Nordic Telephone Company Holdings ApS
8.88%, 2016^1,6,7		100,000		105,750
Rogers Wireless, Inc.
7.50%, 2015¹		15,000		17,520
Telecom Italia Capital S.A.
5.25%, 2013¹		30,000		31,554
Telefonica Emisiones SAU
6.22%, 2017¹		35,000		38,578
Windstream Corporation
8.63%, 2016¹		25,000		25,438

				335,954

Textile—0.1%
Invista
9.25%, 2012^1,6,7		100,000		101,500

Tobacco—0.1%
Altria Group, Inc.
8.50%, 2013¹		25,000		28,891
9.25%, 2019¹		20,000		24,373
BAT International Finance plc
8.13%, 2013^1,2,6,7		25,000		28,900
Reynolds American, Inc.
7.25%, 2013¹		30,000		32,730

				114,894

U.S. Banking—0.1%
Bank of America Corporation
6.50%, 2016¹		20,000		21,506
Fifth Third Bancorp
8.25%, 2038¹		25,000		23,770
GMAC, Inc.
8.00%, 2031^1,6,7		25,000		22,500
USB Capital XIII Trust
6.63%, 2039¹		15,000		15,245

				83,021

TOTAL CORPORATE BOND (cost $10,557,472)			$	10,987,753


	Principal Amount		Value
FOREIGN BONDS—0.2%
Chile—0.1%
Celulosa Arauco y Constitucion S.A.
5.13%, 2013¹	$	40,000	$	41,936

France—0.1%
France Telecom S.A.
7.75%, 2011¹	$	46,000	$	49,301

United Kingdom—0.0%
HBOS plc
6.00%, 2033^1,2,6,7		40,000		30,205

TOTAL FOREIGN BOND (cost $126,793)			$	121,442


	Principal Amount		Value
FOREIGN GOVERNMENT BONDS—0.2%
Mexico—0.1%
Mexico Government International Bond
6.38%, 2013¹		45,000		49,725

South Africa—0.1%
South Africa Government International Bond
6.50%, 2014¹		65,000		71,175

TOTAL FOREIGN GOVERNMENT BOND (cost $111,628)			$	120,900


	Principal Amount		Value
MUNICIPAL BONDS—0.5%
California—0.0%
Bay Area Toll Authority Revenue Bonds
6.26%, 2049¹		25,000		23,880

District Of Columbia—0.0%
District of Columbia Revenue Bonds
5.59%, 2034¹		10,000		9,798

Georgia—0.2%
City of Atlanta Georgia Revenue Bonds
5.50%, 2017¹		35,000		38,297
County of DeKalb Georgia Revenue Bonds
5.00%, 2035¹		40,000		43,016

				81,313

Illinois—0.1%
Chicago Metropolitan Water Reclamation District-Greater Chicago General Obligation Limited
5.72%, 2038¹		15,000		14,984
Chicago Transit Authority Revenue Bonds
6.90%, 2040¹		30,000		31,326

				46,310

Kansas—0.0%
Kansas Development Finance Authority Revenue Bonds
5.50%, 2034¹		30,000		26,870

The accompanying notes are an integral part of the financial statements


Schedule of Investments		Series N
December 31, 2009		(Managed Asset Allocation Series)


	Principal Amount		Value
MUNICIPAL BONDS—0.5% (continued)
Maryland—0.0%
Maryland State Transportation Authority Revenue Bonds
5.89%, 2043¹	$	10,000	$	10,016

Massachusetts—0.2%
Massachusetts Health & Educational Facilities Authority Revenue Bonds
5.00%, 2038¹		45,000		47,292

New York—0.0%
Metropolitan Transportation Authority Revenue Bonds
7.34%, 2039¹		10,000		11,143
New York City Housing Development Corporation Revenue Bonds
6.42%, 2027¹		30,000		26,502

				37,645

Oregon—0.0%
State of Oregon General Obligation Unlimited
5.89%, 2027¹		15,000		14,865

Utah—0.0%
Utah Transit Authority Revenue Bonds
5.25%, 2038¹		35,000		37,383

West Virginia—0.0%
Tobacco Settlement Finance Authority of West Virginia Revenue Bonds
7.47%, 2047¹		45,000		35,944

TOTAL MUNICIPAL BOND (cost $373,004)			$	371,316


	Principal Amount		Value
MORTGAGE BACKED SECURITIES—10.8%
Other Non-Agency—2.0%
C.M.O.’s—2.0%
American Tower Trust
2007-1A, 5.96%, 2037^1,2,6,7	$	45,000	$	45,900
Banc of America Commercial Mortgage, Inc.
2003-1, 4.65%, 2036¹		75,000		75,579
2005-3, 4.50%, 2043¹		201,227		201,444
Banc of America Mortgage Securities, Inc.
2004-A, 4.48%, 2034^1,5		22,001		18,042
2004-D, 3.87%, 2034^1,5		2,188		2,008
2004-H, 3.76%, 2034^1,5		12,995		12,218
2004-I, 4.87%, 2034^1,5		11,097		10,596
2005-J, 5.24%, 2035^1,5		31,652		24,016
Bear Stearns Commercial Mortgage Securities
2005-PW10, 5.09%, 2040¹		39,604		40,084
2005-PWR8, 4.67%, 2041¹		60,000		57,396
2006-PW13, 5.54%, 2041¹		61,000		59,410
2005-PWR9, 4.87%, 2042¹		43,000		41,223
Citigroup
2005-CD1, 5.22%, 2044^1,5		175,000		179,080
Commercial Mortgage Loan Trust
2008-LS1, 6.02%, 2017^1,5		175,000		154,137
Credit Suisse Mortgage Capital Certificates
2006-C4, 5.47%, 2039¹		100,000		85,652
GMAC Commercial Mortgage Securities, Inc.
2001-C2, 6.70%, 2034¹		119,683		125,131
JP Morgan Chase Commercial Mortgage Securities Corporation
2001-CIBC, 6.26%, 2033 ¹		92,974		95,644
2001-CIB2, 6.24%, 2035¹		5,702		5,759
2004-LDP4, 4.82%, 2042^1,5		75,000		76,294
Morgan Stanley Capital I
2007-HQ11, 5.45%, 2044^1,5		100,000		87,634
Morgan Stanley Dean Witter Capital I
2002-T0P7, 5.98%, 2039¹		200,000		209,442

				1,606,689

				1,606,689

U.S. Government Sponsored
Agencies—7.5%
C.M.O.’s—0.1%
Federal Home Loan Mortgage Corporation
FHR 2614 IH, 4.50%, 2016^1,2,9		35,051		1,318
Federal National Mortgage Association
FNR 2003-40 Nl, 5.50%, 2028¹^,2^,⁹		1,211		11
FNS 319 2, 6.50%, 2032^1,2,9		8,364		1,903
FNR 2006-35 GK, 6.00%, 2032¹		66,013		68,955

				72,187

Pass Through’s—7.4%
Federal Home Loan Mortgage Corporation
#E01341, 5.50%, 2018¹		4,409		4,697
#E99933, 5.00%, 2018¹		2,790		2,940
#E99966, 5.00%, 2018¹		15,373		16,201
#B10343, 5.00%, 2018¹		4,075		4,294
#B19214, 5.50%, 2020¹		14,913		15,875
#J02272, 5.50%, 2020¹		50,959		54,246
#J02554, 5.50%, 2020¹		42,421		45,157
#J03203, 6.00%, 2021¹		37,256		39,852
#J03254, 6.00%, 2021¹		10,775		11,525
#J03615, 6.00%, 2021¹		69,875		74,743
#J03640, 6.00%, 2021¹		52,010		55,633
#J03672, 6.00%, 2021¹		20,941		22,400
#933890, 5.00%, 2023¹		187,095		195,731
#AA0774, 4.50%, 2024¹		174,611		179,815
#C68205, 7.00%, 2032¹		3,429		3,774
#1B0527, 3.35%, 2032^1,5		1,082		1,114

The accompanying notes are an integral part of the financial statements


Schedule of Investments		Series N
December 31, 2009		(Managed Asset Allocation Series)


	Principal Amount		Value
MORTGAGE BACKED SECURITIES—10.8% (continued)
U.S. Government Sponsored
Agencies—7.5% (continued)
Pass Through’s—7.4% (continued)
Federal Home Loan Mortgage Corporation (continued)
#A12118, 5.00%, 2033¹	$	35,799	$	36,858
#D86309, 5.00%, 2033¹		22,297		22,957
#A15907, 5.00%, 2033¹		18,950		19,511
#A15852, 5.00%, 2033¹		16,024		16,498
#A21263, 4.50%, 2034¹		110,405		110,797
#G01805, 4.50%, 2035¹		234,607		235,748
#833174, 5.17%, 2035¹^,5		158,777		166,935
#1G1762, 5.05%, 2035^1,5		26,732		28,083
#1G0661, 5.33%, 2036^1,5		11,829		12,462
#745336, 5.00%, 2036¹		94,810		97,481
#1G1353, 5.98%, 2036^1,5		67,590		72,110
#AA5588, 4.50%, 2039¹		214,499		214,320
Federal National Mortgage Association
#254140, 5.50%, 2017¹		2,822		3,000
#625931, 5.50%, 2017¹		2,422		2,575
#254234, 5.50%, 2017¹		2,915		3,099
#357280, 6.50%, 2017¹		14,100		15,308
#555345, 5.50%, 2018¹		2,800		2,977
#685202, 5.50%, 2018¹		40,990		43,711
#725098, 5.50%, 2018¹		9,992		10,655
#725528, 5.50%, 2019¹		7,398		7,889
#789885, 5.50%, 2019¹		10,084		10,753
#745406, 6.00%, 2021¹		55,968		59,980
#981614, 5.00%, 2023¹		6,367		6,661
#650075, 6.50%, 2032¹		9,047		9,776
#545759, 6.50%, 2032¹		73,605		78,896
#254514, 5.50%, 2032¹		1,815		1,909
#254550, 6.50%, 2032¹		14,704		15,889
#974321, 6.00%, 2033¹		76,780		81,386
#555417, 6.00%, 2033¹		36,896		39,479
#254767, 5.50%, 2033¹		104,142		109,458
#747387, 5.50%, 2033¹		22,799		23,963
#744692, 5.50%, 2033¹		26,504		27,857
#750362, 5.50%, 2033¹		20,179		21,209
#744750, 5.50%, 2033¹		9,647		10,140
#747571, 5.50%, 2033¹		15,314		16,096
#747549, 5.50%, 2033¹		5,880		6,180
#254983, 5.50%, 2033¹		48,024		50,475
#756190, 5.50%, 2033¹		29,236		30,728
#762076, 5.50%, 2034¹		26,455		27,805
#255028, 5.50%, 2034¹		11,983		12,555
#763700, 5.00%, 2034¹		57,820		59,521
#725424, 5.50%, 2034¹		228,879		240,561
#789293, 5.50%, 2034¹		94,270		99,214
#790044, 6.00%, 2034¹		25,254		26,935
#790217, 6.00%, 2034¹		10,291		10,976
#725704, 6.00%, 2034¹		229,696		245,344
#923129, 5.50%, 2034¹		14,590		15,335
#791574, 6.00%, 2034¹		26,474		28,237
#790237, 6.00%, 2034¹		26,821		28,606
#790629, 6.00%, 2034¹		24,501		26,132


#790788, 6.00%, 2034¹	29,431	31,390
#796104, 5.50%, 2034¹	27,292	28,685
#725946, 5.50%, 2034¹	327,080	343,776
#255459, 6.00%, 2034¹	29,081	31,017
#804395, 5.50%, 2034¹	64,289	67,570
#808951, 6.00%, 2035¹	306,324	325,948
#735502, 6.00%, 2035¹	27,874	29,729
#889829, 5.00%, 2035¹	367,181	378,331
#745216, 3.08%, 2035^1,5	32,077	32,920
#888884, 5.50%, 2035¹	132,139	138,884
#850863, 5.30%, 2035¹^,5	22,607	23,815
#848522, 5.63%, 2035^1,5	11,655	12,289
#845354, 5.50%, 2036¹	50,071	52,595
#745554, 6.50%, 2036¹	308,729	331,498
#868728, 6.50%, 2036¹	12,132	13,004
#888010, 5.99%, 2036^1,5	29,265	31,123
#900362, 6.00%, 2036¹	44,941	47,735
#896329, 6.50%, 2036¹	28,387	30,463
#893353, 6.00%, 2036¹	34,245	36,375
#745946, 5.50%, 2036¹	14,834	15,556
#905196, 6.03%, 2036¹^,5	38,937	41,245
#1B3203, 5.98%, 2037^1,5	24,092	25,508
#938883, 5.00%, 2037¹	70,604	72,539
#938089, 5.00%, 2037¹	25,594	26,295
#889543, 5.50%, 2037¹	79,456	83,251
#972155, 6.00%, 2038¹	57,624	61,081
#983288, 6.00%, 2038¹	70,892	75,146
#964926, 6.00%, 2038¹	40,551	42,984
#257407, 6.00%, 2038¹	17,961	19,041
#AA7985, 4.50%, 2039¹	64,297	64,244
#AD0441, 6.00%, 2039¹	78,770	83,558
#AC4810, 4.50%, 2039¹	25,774	25,753

		5,896,375

		5,968,562

U.S. Government Sponsored
Securities—1.3%
Pass Through’s—1.3%
Government National Mortgage Association
#780766, 7.00%, 2013¹	73	73
#67365, 11.50%, 2013¹	927	995
#781312, 7.00%, 2013¹	8,534	9,081
G2 2102, 8.00%, 2025¹	712	813
G2 3295, 5.50%, 2032¹	7,608	8,027
#615278, 5.00%, 2033¹	67,692	70,143
#612919, 5.00%, 2033¹	29,568	30,639
#604639, 5.00%, 2033¹	50,940	52,785
G2 3442, 5.00%, 2033¹	120,943	125,249
G2 3458, 5.00%, 2033¹	34,053	35,246
G2 3490, 6.50%, 2033¹	6,012	6,448
G2 3513, 5.00%, 2034¹	42,460	43,917
G2 3517, 6.00%, 2034¹	21,841	23,276
G2 3529, 5.00%, 2034¹	9,977	10,320
G2 3530, 5.50%, 2034¹	17,071	17,975
#605561, 5.50%, 2034¹	36,673	38,663
G2 4495, 4.50%, 2039¹	130,406	130,480
G2 4558, 4.50%, 2039¹	302,839	303,011

The accompanying notes are an integral part of the financial statements


Schedule of Investments		Series N
December 31, 2009		(Managed Asset Allocation Series)


	Principal Amount			Value
MORTGAGE BACKED SECURITIES—10.8% (continued)
U.S. Government Sponsored
Securities—1.3% (continued)
Pass Through’s—1.3% (continued)
Government National Mortgage Association (continued)
G2 4598, 4.50%, 2039¹	$	115,000		$	115,066

					1,022,207

					1,022,207

TOTAL MORTGAGE BACKED SECURITIES (cost $8,401,422)				$	8,597,458


	Principal Amount			Value
ASSET BACKED SECURITIES—1.4%
Auto—0.5%
AmeriCredit Automobile Receivables Trust
2006-RM, 5.53%, 2014¹	$	280,000		$	287,418
Triad Auto Receivables Owner Trust
2006-B, 5.52%, 2012¹		100,000			102,681
USAA Auto Owner Trust
2008-1, 4.16%, 2012¹		32,867			33,379

				$	423,478

Credit Cards—0.5%
Capital One Multi-Asset Execution Trust
2007-C3, 0.52%, 2013^1,5		70,000			69,276
2005-A7, 4.70%, 2015¹		70,000			73,956
GE Capital Credit Card Master Note Trust
2007-3, 0.53%, 2013^1,5		90,000			88,279
2009-2, 3.69%, 2015¹		114,000			116,442
MBNA Credit Card Master Note Trust
2006-C3, 0.52%, 2013^1,5		35,000			33,257

					381,210

Home Equity Loans—0.0%
Chase Funding Mortgage Loan Asset-Backed Certificates
2002-2, 5.60%, 2031¹		5,846			2,561

Other—0.3%
CNH Equipment Trust
2007-A, 5.09%, 2014¹		50,000			50,859
CNH Wholesale Master Note Trust
2009-1A, 1.93%, 2015^1,2,5,6,7		100,000			99,875
Greenwich Capital Commercial Funding Corporation
2007-GG9, 5.44%, 2039¹		50,000			44,177
Marriott Vacation Club Owner Trust
2006-1A, 5.74%, 2028^1,2,6,7		46,056			45,261
2006-2A, 5.36%, 2028^1,2,6,7		14,522			14,249

					254,421

Student Loans—0.1%
SLM Student Loan Trust
2008-4, 1.33%, 2012^1,5		60,000			60,785

TOTAL ASSET BACKED SECURITIES (cost $l,114,793)				$	1,122,455


	Principal Amount			Value
U.S. GOVERNMENT SPONSORED AGENCY BONDS & NOTES—0.0%
Federal Home Loan Bank
5.60%, 6/28/2011¹	$	10,000		$	10,661

TOTAL U.S. GOVERNMENT SPONSORED AGENCY BONDS & NOTES (cost $10,001)				$	10,661


	Principal Amount			Value
U.S. GOVERNMENT SECURITIES—5.7%
U.S. Treasury Bonds
4.75%, 2/15/2037	$	250,000		$	255,469
U.S. Treasury Inflation Indexed Bonds
0.88%, 4/15/2010		228,114			228,880
U.S. Treasury Note
2.38%, 8/31/2010		735,000			744,733
1.75%, 8/15/2012		1,405,000			1,414,110
3.13%, 9/30/2013		330,000			342,968
2.25%, 5/31/2014		915,000			908,781
2.63%, 7/31/2014		480,000			482,400
2.63%, 4/30/2016		40,000			38,759
4.00%, 8/15/2018		95,000			97,026

TOTAL U.S. GOVERNMENT SECURITIES (cost $4,523,816)				$	4,513,126


	Principal Amount			Value
SHORT TERM INVESTMENTS—3.0%
State Street GA Money Market Fund¹	$	496,653		$	496,653
T. Rowe Price Reserve Investment Fund¹		1,866,559			1,866,559

TOTAL SHORT TERM INVESTMENTS (cost $2,363,212)				$	2,363,212

Total Investments—99.2% ⁴ (cost $74,839,178)				$	78,764,405
Cash & Other Assets, Less Liabilities—0.8%					667,204

Total Net Assets—100.0%				$	79,431,609


INVESTMENT CONCENTRATION

At December 31, 2009, the investment diversification of the Series was as follows:
Country	% of Net Assets			Value
United States		81.1	%	$	64,482,409
United Kingdom		3.1			2,469,433
Japan		2.7			2,052,638
France		1.9			1,412,442
Switzerland		1.2			995,295
Canada		1.2			944,090
Australia		1.2			923,839
Germany		1.0			787,418
Netherlands		0.7			608,465
Spain		0.6			488,322
Sweden		0.5			395,823
Ireland		0.5			377,964
Bermuda		0.5			372,347
Italy		0.4			353,948
Singapore		0.3			242,203
Norway		0.3			236,317

The accompanying notes are an integral part of the financial statements


Schedule of Investments		Series N
December 31, 2009		(Managed Asset Allocation Series)

INVESTMENT CONCENTRATION (continued)


Country	% of Net Assets		Value
Cayman Islands	0.2	%	$	220,915
Mexico	0.3			214,828
Luxembourg	0.2			148,572
Hong Kong	0.2			145,361
Brazil	0.2			135,856
Denmark	0.1			105,750
Republic of Korea	0.1			90,751
Finland	0.1			88,021
China	0.1			85,443
Chile	0.1			77,054
South Africa	0.1			71,175
Taiwan, Province of China	0.1			56,672
Belgium	0.1			51,174
Panama	0.1			45,619
Austria	0.0			34,106
Greece	0.0			28,225
Virgin Islands (UK)	0.0			17,184
Puerto Rico	0.0			4,746

Total Investments	99.2		$	78,764,405

For federal income tax purposes the identified cost of investments owned at December 31, 2009 was $76,738,965.

ADR American Depositary Receipt

plc Public Limited Company

*	Non-income producing security

¹	Value determined based on Level 2 inputs.

²	Security is deemed illiquid. The total market value of illiquid securities is $1,180,971 (cost $1,188,768), or 1.5% of total net assets.

³	Security was subject to the fair value trigger at December 31, 2009. The total market value of fair valued securities amounts to $9,581,955 (cost $9,134,560), or 12.1% of total net assets.

⁴	Unless otherwise indicated, the values of the securities of the Portfolio are determined based on Level 1 inputs.

⁵	Variable rate security. Rate indicated is rate effective at December 31, 2009.

⁶	Security was acquired through a private placement.

⁷	Security is a 144A or Section 4(2) security. The total market value of 144A or Section 4(2) securities is $2,303,093 (cost $2,237,043), or 2.9% of total net assets.

⁸	Security is in default of interest and/or principal obligations.

⁹	Security is an interest-only strip. Rate indicated is effective yield at December 31, 2009.

The accompanying notes are an integral part of the financial statements


		Series N
		(Managed Asset Allocation Series)

Statement of Assets and Liabilities

December 31, 2009


Assets:
Investments, at value*	$	78,764,405
Cash		329
Cash denominated in a foreign currency, at value**		482
Receivables:
Fund shares sold		81,201
Securities sold		678,604
Interest		254,430
Dividends		62,459
Foreign taxes recoverable		16,269
Prepaid expenses		1,637

Total assets		79,859,816


Liabilities:

Payable for:
Fund shares redeemed		46,783
Securities purchased		194,115
Management fees		67,468
Administration fees		52,120
Transfer agent/maintenance fees		2,083
Custodian fees		27,512
Directors’ fees		1,074
Professional fees		25,321
Other fees		11,731

Total liabilities		428,207

Net assets	$	79,431,609


Net assets consist of:
Paid in capital	$	87,883,239
Undistributed net investment income		976,274
Accumulated net realized loss on sale of investments		(13,352,050	)
Net unrealized appreciation in value of investments		3,924,146

Net assets	$	79,431,609


Capital shares authorized		unlimited
Capital shares outstanding		4,415,377
Net asset value per share (net assets divided by shares outstanding)	$	17.99


* investments, at cost	$	74,839,178
** Cash denominated in a foreign currency, at cost		464

Statement of Operations

For Year Ended December 31, 2009


Investment Income:
Dividends (net of foreign withholding tax $41,226)	$	1,211,191
Interest		1,299,269

Total investment income		2,510,460

Expenses:
Management fees		743,569
Administration fees		277,883
Transfer agent/maintenance fees		25,291
Custodian fees		127,134
Directors’ fees		8,272
Professional fees		33,246
Reports to shareholders		12,141
Other		8,532

Total expenses		1,236,068

Net investment income		1,274,392


Net Realized and Unrealized Gain (Loss):
Net realized gain (loss) during the year on:
Investments		(6,684,465	)
Foreign currency transactions		(10,731	)

Net realized loss		(6,695,196	)


Net unrealized appreciation (depreciation) during the year on:
Investments		22,081,939
Translation of assets and liabilities in foreign currencies		529

Net unrealized appreciation		22,082,468

Net realized and unrealized gain		15,387,272

Net increase in net assets resulting from operations	$	16,661,664

The accompanying notes are an integral part of the financial statements


		Series N
Statement of Changes in Net Assets		(Managed Asset Allocation Series)


	Year Ended December 31, 2009			Year Ended December 31, 2008
Increase (decrease) in net assets from operations:
Net investment income	$	1,274,392		$	1,937,569
Net realized loss during the year on investments		(6,695,196	)		(6,196,875	)
Net unrealized appreciation (depreciation) during the year on investments		22,082,468			(26,102,064	)

Net increase (decrease) in net assets resulting from operations		16,661,664			(30,361,370	)


Capital share transactions:
Proceeds from sale of shares		9,550,796			25,871,130
Cost of shares redeemed		(23,202,268	)		(36,511,309	)

Net decrease from capital share transactions		(13,651,472	)		(10,640,179	)

Net increase (decrease) in net assets		3,010,192			(41,001,549	)


Net assets:
Beginning of year		76,421,417			117,422,966

End of year	$	79,431,609		$	76,421,417


Undistributed net investment income at end of year	$	976,274		$	1,692,780


Capital share activity:
Shares sold		629,934			1,491,277
Shares redeemed		(1,553,545	)		(2,121,410	)

Total capital share activity		(923,611	)		(630,133	)

The accompanying notes are an integral part of the financial statements


Financial Highlights		Series N
Selected data for each share of capital stock outstanding throughout each year		(Managed Asset Allocation Series)


	2009			2008			2007			2006			Year Ended December 31, 2005
Per Share Data
Net asset value, beginning of period	$	14.31		$	19.67		$	18.55		$	16.55		$	15.86

Income (loss) from investment operations:
Net investment income^a		0.27			0.34			0.32			0.30			0.23
Net gain (loss) on securities (realized and unrealized)		3.41			(5.70	)		0.80			1.70			0.46

Total from investment operations		3.68			(5.36	)		1.12			2.00			0.69

Net asset value, end of period	$	17.99		$	14.31		$	19.67		$	18.55		$	16.55


Total Return^b		25.72	%		(27.25	)%		6.04	%		12.08	%		4.35	%

Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	79,432		$	76,421		$	117,423		$	105,300		$	97,690

Ratios to average net assets:
Net investment income		1.71	%		1.94	%		1.63	%		1.63	%		1.44	%
Total expenses^c		1.66	%		1.52	%		1.41	%		1.41	%		1.41	%
Net expenses^d		1.66	%		1.52	%		1.41	%		1.40	%		1.41	%
Net expenses prior to custodian earnings credits and net of expense waivers		1.66	%		1.52	%		1.41	%		1.41	%		1.41	%

Portfolio turnover rate		46	%		82	%		75	%		63	%		67	%

^a	Net investment income (loss) was computed using average shares outstanding throughout the period.

^c	Total expense information reflects the expense ratios absent expense reductions by the Investment Manager and custodian earnings credits, as applicable.

^d	Net expense information reflects the expense ratios after voluntary expense waivers, reimbursements and custodian earnings credits, as applicable.

The accompanying notes are an integral part of the financial statements

This page left blank intentionally.


Managers’ Commentary
February 15, 2010


		Advised by:

To Our Shareholders:

Series O of the SBL Fund – All Cap Value Series returned 33.01%¹ during the period, besting the benchmark Russell 3000 Value Index’s return of 19.76°% and the Series’ peer group median return of 24.28%.

Our strategy is to buy companies, across the market capitalization spectrum, trading at a significant discount to their intrinsic value. Our investment approach is a defined and disciplined process with three clear philosophical tenants that drive our investment decisions: a valuation focus, a long-term perspective and an opportunistic approach.

Industrials, Health Care, Energy Top Performers

The leading three sectors in the Series outperformed due to superior stock selection.

The Series’ industrials holdings, which were a double overweight position, gained 35% compared to the 15% return of the Index. McDermott International, Inc. and Power-One, Inc. soared 143% and 266% during the period. Union Pacific Corporation was another strong performer in the sector.

Holdings in the energy sector were an underweight position but outperformed the benchmark. Global Industries, Ltd. gained 104% while Haliburton Company and Chesapeake Energy Corporation gained 68% and 62%, respectively.

Another underweight sector in the Series was health care, but a return of 80% was significantly higher than the 23% of the Russell 3000 Value Index. Leading securities for the Series included Schering-Plough Corporation and Hospira, Inc.

Financials Disappoint

The only sector in the Series that significantly underperformed was financials. The sector held 16% of the portfolio, a material underweight to the 24% position for the Index. However, stock selection for the portfolio amounted to a loss of 4% during the period while financials in the benchmark gained 12%, a 16% advantage.

The largest drop in the portfolio was registered by Capital One Financial Corporation with a dropped of 71%. Other detractors were Wilmington Trust, down 44%, and W.R. Berkley Corporation, down 20%.

Market Outlook

Our bottom-up approach looks at market uncertainty in the context of the potential long-term impact on individual companies. We are maintaining flexibility in the portfolios to take advantage of these opportunities as they arise. Our focus is on identifying companies with the ability to be substantially better over the next three to five years or have the potential to maintain their return on capital at current levels in a difficult economic environment. We are confident in our ability to find these companies and we are pleased with the positions we own today.

Sincerely,

James Schier, Portfolio Manager

Mark A. Mitchell, Portfolio Manager

¹	Fee waivers and/or reimbursements reduce Series expenses and in the absence of such waivers, the performance quoted would be reduced.


		Series O
Performance Summary		(All Cap Value Series)
December 31, 2009		(unaudited)

PERFORMANCE

LOGO

$10,000 Over 10 Years

The chart above assumes a hypothetical $10,000 investment in Series O (All Cap Value Series) on December 31, 1999, and reflects the fees and expenses of Series O. The Russell 3000 Index measures the performance of the broad value segment of the U.S equity universe. It includes those Russell 3000 companies with lower price-to-book ratios and lower forcasted growth values.

Average Annual Returns


Periods Ended 12-31-09¹	1 Year		5 Years		10 Years
Series O	33.01	%	0.75	%	3.95	%

Portfolio Composition by Sector


Consumer Discretionary	9.79	%
Consumer Staples	8.44
Energy	12.89
Financials	16.25
Health Care	6.45
Industrials	22.83
Information Technology	12.34
Materials	3.43
Telecommunication Services	1.28
Utilities	6.58
Liabilities, Less Cash & Other Assets	(0.28	)
Total Net Assets	100.00	%

The accompanying notes are an integral part of the financial statements


Schedule of Investments		Series O
December 31, 2009		(All Cap Value Series)


	Shares	Value
COMMON STOCKS—100.3%
Aerospace & Defense—3.6%
GeoEye, Inc. *	42,300	$	1,179,324
Orbital Sciences Corporation *	48,821		745,008
Precision Castparts Corporation	2,410		265,944
United Technologies Corporation	53,000		3,678,730

			5,869,006

Air Freight & Logistics—2.4%
FedEx Corporation	46,500		3,880,425

Apparel Retail—1.2%
Brown Shoe Company, Inc.	74,900		739,263
Chico’s FAS, Inc. *	70,000		983,500
Talbots, Inc.	25,209		224,612

			1,947,375

Apparel, Accessories & Luxury Goods—0.5%
Fossil, Inc.^1,*	4,100		137,596
Maidenform Brands, Inc. *	37,600		627,544

			765,140

Application Software—0.8%
Synopsys, Inc. *	57,600		1,283,328

Asset Management & Custody Banks—1.3%
Bank of New York Mellon Corporation	75,600		2,114,532

Biotechnology—0.0%
Combinatorx, Inc. *	74,696		61,998

Building Products—2.1%
Trex Company, Inc. *	34,800		682,080
USG Corporation *	192,200		2,700,410

			3,382,490

Coal & Consumable Fuels—0.2%
Evergreen Energy, Inc. *	189,894		65,134
USEC, Inc. *	63,070		242,819

			307,953

Communications Equipment—0.4%
Symmetricom, Inc. ^2,*	129,300		672,360

Computer Hardware—1.9%
Hewlett-Packard Company	60,400		3,111,204

Construction & Engineering—1.8%
Insituform Technologies, Inc. *	47,900		1,088,288
Quanta Services, Inc. *	39,900		831,516
URS Corporation *	23,200		1,032,864

			2,952,668

Construction & Farm Machinery & Heavy Trucks—0.2%
Force Protection, Inc. *	77,600		404,296

Construction Materials—0.2%
Eagle Materials, Inc.	11,723		305,384

Consumer Finance—0.3%
First Marblehead Corporation *	251,005		534,641

Data Processing & Outsourced Services—5.6%
Affiliated Computer Services, Inc. *	16,700		996,823
Computer Sciences Corporation *	55,400		3,187,162
Western Union Company	254,100		4,789,785

			8,973,770

Department Stores—1.5%
JC Penney Company, Inc.	91,400		2,432,154

Diversified Banks—2.5%
U.S. Bancorp	62,639		1,410,004
Wells Fargo & Company	98,495		2,658,380

			4,068,384

Diversified Chemicals—1.4%
Dow Chemical Company	81,000		2,238,030

Drug Retail—1.3%
CVS Caremark Corporation	65,300		2,103,313

Electric Utilities—4.4%
Allete, Inc.	28,098		918,243
Edison International	112,700		3,919,705
Great Plains Energy, Inc.	47,192		915,053
Northeast Utilities	27,064		697,981
Westar Energy, Inc.	25,400		551,942

			7,002,924

Electrical Components & Equipment—1.0%
General Cable Corporation *	28,000		823,760
Power-One, Inc. *	172,800		751,680

			1,575,440

Electronic Manufacturing Services—2.5%
Maxwell Technologies, Inc. *	68,700		1,225,608
Tyco Electronics, Ltd.	115,600		2,837,980

			4,063,588

Environmental & Facilities Services—0.3%
Covanta Holding Corporation *	31,000		560,790

Forest Products—0.7%
Louisiana-Pacific Corporation *	164,000		1,144,720

Gas Utilities—0.5%
Atmos Energy Corporation	28,500		837,900

Health Care Equipment—3.7%
Covidien plc	49,500		2,370,555
Hologic, Inc. *	39,593		574,099
Hospira, Inc. *	60,000		3,060,000

			6,004,654

Health Care Services—1.6%
Amedisys, Inc. *	9,200		446,752
Medco Health Solutions, Inc. *	7,200		460,152
Mednax, Inc. *	17,500		1,052,100
RehabCare Group, Inc. *	18,370		558,999

			2,518,003

Highways & Railtracks—0.1%
Quixote Corporation	26,100		166,257

The accompanying notes are an integral part of the financial statements


Schedule of Investments		Series O
December 31, 2009		(All Cap Value Series)


	Shares	Value
COMMON STOCKS—100.3% (continued)
Home Furnishings—0.6%
Leggett & Platt, Inc.	51,200	$	1,044,480

Home Improvement Retail—2.7%
Lowe’s Companies, Inc.	188,000		4,397,320

Human Resources & Employment Services—0.4%
Administaff, Inc.	24,100		568,519

Hypermarkets & Super Centers—2.6%
Wal-Mart Stores, Inc.	79,000		4,222,550

Independent Power Producers & Energy Traders—0.8%
NRG Energy, Inc. *	53,800		1,270,218

Industrial Conglomerates—2.2%
McDermott International, Inc. *	145,800		3,500,658

Industrial Machinery—2.6%
Dover Corporation	30,100		1,252,461
Harsco Corporation	28,400		915,332
Parker Hannifin Corporation	37,642		2,028,151

			4,195,944

Insurance Brokers—1.1%
AON Corporation	42,000		1,610,280
Arthur J Gallagher & Company	7,700		173,327

			1,783,607

Integrated Oil & Gas—5.1%
Chevron Corporation	41,200		3,171,989
ConocoPhillips	45,900		2,344,113
Exxon Mobil Corporation	39,700		2,707,143

			8,223,245

Integrated Telecommunication Services—1.3%
Windstream Corporation	188,000		2,066,120

Internet Software & Services—0.1%
AOL, Inc. *	8,951		208,379

IT Consulting & Other Services—0.2%
Satyam Computer Services, Ltd. ADR	74,036		341,306

Managed Health Care—0.8%
Aetna, Inc.	39,900		1,264,830

Movies & Entertainment—1.8%
Time Warner, Inc.	98,466		2,869,299

Multi-Line Insurance—0.7%
American Financial Group, Inc. ¹	47,800		1,192,610

Multi-Utilities—0.9%
Alliant Energy Corporation	31,400		950,164
Black Hills Corporation	22,000		585,860

			1,536,024

Office Services & Supplies—0.2%
United Stationers, Inc. *	4,895	$	278,281

Oil & Gas Equipment & Services—2.8%
Complete Production Services, Inc. *	16,200		210,600
Global Industries, Ltd. *	203,002		1,447,404
Halliburton Company	94,800		2,852,532

			4,510,536

Oil & Gas Exploration & Production—2.5%
Chesapeake Energy Corporation	85,700		2,217,916
Goodrich Petroleum Corporation *	16,026		390,233
Gulfport Energy Corporation *	31,900		365,255


Petrohawk Energy Corporation ¹,*	47,800	1,146,722

		4,120,126

Oil & Gas Storage & Transportation—2.3%
Southern Union Company	50,900	1,155,430
Williams Companies, Inc.	121,300	2,557,004

		3,712,434

Other Diversified Financial Services—1.0%
JPMorgan Chase & Company	39,400	1,641,798

Packaged Foods & Meats—3.0%
Hormel Foods Corporation ¹	42,100	1,618,745
JM Smucker Company	23,300	1,438,775
Ralcorp Holdings, Inc. *	6,300	376,173
TreeHouse Foods, Inc. *	37,000	1,437,820

		4,871,513

Paper Packaging—0.9%
Bemis Company, Inc.	21,400	634,510
Sonoco Products Company	29,900	874,575

		1,509,085

Pharmaceuticals—0.4%
Merck & Company, Inc.	16,493	602,654

Property & Casualty Insurance—6.5%
Alleghany Corporation *	3,570	985,320
Berkshire Hathaway, Inc. (CI.B) *	1,766	5,803,076
Employers Holdings, Inc.	33,000	506,220
Hanover Insurance Group, Inc.	37,700	1,675,011
W.R. Berkley Corporation	58,300	1,436,512

		10,406,139

Railroads—1.9%
Union Pacific Corporation	49,200	3,143,880

Regional Banks—2.9%
Associated Banc-Corporation	46,270	509,433
BB&T Corporation	62,400	1,583,088
Fifth Third Bancorp	50,000	487,500
Old National Bancorp	19,545	242,944
Regions Financial Corporation	331,500	1,753,635

		4,576,600

Research & Consulting Services—3.6%
Equifax, Inc.	153,600	4,744,703
ICF International, Inc. *	11,100	297,480

The accompanying notes are an integral part of the financial statements


Schedule of Investments		Series O
December 31, 2009		(All Cap Value Series)


	Shares	Value
COMMON STOCKS—100.3% (continued)
Research & Consulting Services—3.6% (continued)
Navigant Consulting, Inc. *	58,500	$	869,310

			5,911,493

Restaurants—0.8%
Burger King Holdings, Inc.	46,466		874,490
Jack in the Box, Inc. *	20,000		393,400

			1,267,890

Semiconductors—0.8%
IXYS Corporation ²	177,900		1,320,018

Specialty Chemicals—0.2%
HB Fuller Company	2,588		58,877
Zoltek Companies, Inc. *	30,900		293,550

			352,427

Specialty Stores—0.7%
Cabela’s, Inc. *	79,237		1,129,920

Tobacco—1.5%
Philip Morris International, Inc.	51,300		2,472,147

Trucking—0.4%
Saia, Inc. *	39,000		577,980

TOTAL COMMON STOCKS (cost $170,821,820)		$	162,372,757

Total Investments—100.3% ³ (cost $170,821,820)		$	162,372,757
Liabilities, Less Cash & Other Assets—(0.3)%			(454,944	)

Total Net Assets—100.0%		$	161,917,813

For federal income tax purposes the identified cost of investments owned at December 31, 2009 was $170,845,470.

ADR	American Depositary Receipt

plc	Public Limited Company

*	Non-income producing security

¹	Security is segregated as collateral for open written option contracts.

²	Security is deemed illiquid. The total market value of illiquid securities is $1,992,378 (cost $2,784,387), or 1.2% of total net assets.

³	Unless otherwise indicated, the values of the securities of the Portfolio are determined based on Level 1 inputs.

The accompanying notes are an integral part of the financial statements


		Series O
		(All Cap Value Series)

Statement of Assets and Liabilities

December 31, 2009


Assets:
Investments, at value*	$	162,372,757
Cash		345,833
Receivables:
Fund shares sold		192,969
Securities sold		385,836
Dividends		234,986
Security Investors		3,615
Prepaid expenses		3,001

Total assets		163,538,997


Liabilities:
Payable for:
Fund shares redeemed		62,181
Securities purchased		1,207,018
Written options, at value (premiums received $144,915)		177,195
Management fees		95,518
Administration fees		13,113
Transfer agent/maintenance fees		2,083
Custodian fees		769
Directors’ fees		6,240
Professional fees		32,000
Other fees		25,067

Total liabilities		1,621,184

Net assets	$	161,917,813


Net assets consist of:
Paid in capital	$	199,564,813
Undistributed net investment income		1,474,436
Accumulated net realized loss on sale of investments		(30,640,093)
Net unrealized depreciation in value of investments		(8,481,343	)

Net assets	$	161,917,813


Capital shares authorized		unlimited
Capital shares outstanding		8,461,513
Net asset value per share (net assets divided by shares outstanding)	$	19.14


*Investments, at cost	$	170,821,820

Statement of Operations

For Year Ended December 31, 2009


Investment Income:
Dividends	$	2,727,689
Interest		2,237

Total investment income		2,729,926


Expenses:
Management fees		1,033,934
Administration fees		140,772
Transfer agent/maintenance fees		25,304
Custodian fees		3,653
Directors’ fees		17,653
Professional fees		33,652
Reports to shareholders		24,775
Other		12,736

Total expenses		1,292,479
Reimbursement of expenses		(36,989	)

Net expenses		1,255,490

Net investment income		1,474,436


Net Realized and Unrealized Gain (Loss):
Net realized gain (loss) during the year on:
Investments		(12,511,431	)
Options written		288,764

Net realized loss		(12,222,667	)


Net unrealized appreciation (depreciation) during the year on:
Investments		51,539,250
Options written		(77,500	)

Net unrealized appreciation		51,461,750

Net realized and unrealized gain		39,239,083

Net increase in net assets resulting from operations	$	40,713,519

The accompanying notes are an integral part of the financial statements


		Series O
Statement of Changes in Net Assets		(All Cap Value Series)


	Year Ended December 31,2009			Year Ended December 31,2008
Increase (decrease) in net assets from operations:
Net investment income	$	1,474,436		$	4,095,123
Net realized loss during the year on investments		(12,222,667	)		(17,206,865	)
Net unrealized appreciation (depreciation) during the year on investments		51,461,750			(94,226,726	)

Net increase (decrease) in net assets resulting from operations		40,713,519			(107,338,468	)


Capital share transactions:
Proceeds from sale of shares		18,436,280			128,467,594
Cost of shares redeemed		(53,865,932	)		(152,728,104	)

Net decrease from capital share transactions		(35,429,652	)		(24,260,510	)

Net increase (decrease) in net assets		5,283,867			(131,598,978	)


Net assets:
Beginning of year		156,633,946			288,232,924

End of year	$	161,917,813		$	156,633,946


Undistributed net investment income at end of year	$	1,474,436		$	4,037,889


Capital share activity:
Shares sold		1,210,470			6,181,412
Shares redeemed		(3,632,455	)		(7,629,934	)

Total capital share activity		(2,421,985	)		(1,448,522	)

The accompanying notes are an integral part of the financial statements


Financial Highlights		Series O
Selected data for each share of capital stock outstanding throughout each year		(All Cap Value Series)


	2009			2008^a,b			2007			2006			Year Ended December 31, 2005
Per Share Data
Net asset value, beginning of period	$	14.39		$	23.37		$	22.73		$	19.13		$	18.44

Income (loss) from investment operations:
Net investment income^c		0.16			0.34			0.34			0.31			0.23
Net gain (loss) on securities (realized and unrealized)		4.59			(9.32	)		0.30			3.29			0.46

Total from investment operations		4.75			(8.98	)		0.64			3.60			0.69

Net asset value, end of period	$	19.14		$	14.39		$	23.37		$	22.73		$	19.13


Total Return^d		33.01	%		(38.43	)%		2.82	%		18.82	%		3.74	%

Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	161,918		$	156,634		$	288,233		$	295,049		$	259,728

Ratios to average net assets:
Net investment income		1.00	%		1.72	%		1.42	%		1.41	%		1.29	%
Total expenses ^e		0.87	%		1.09	%		1.14	%		1.15	%		1.15	%
Net expenses^f		0.85	%		1.07	%		1.14	%		1.15	%		1.15	%
Net expenses prior to custodian earnings credits and net of expense waivers		0.85	%		1.07	%		1.14	%		1.15	%		1.15	%

Portfolio turnover rate		19	%		124	%^g		25	%		18	%		20	%

^a	Security Global Investors, LLC (SGI) became the advisor of Series 0 effective August 15, 2008. Prior to August 15, 2008, SGI paid T. Rowe Price for sub-advisory services.

^b	Effective August 15, 2008 the Series name became All Cap Value Series. Prior to August 15, 2008 the Series was known as the Equity Income Series.

^c	Net investment income (loss) was computed using average shares outstanding throughout the period.

^e	Total expense information reflects the expense ratios absent expense reductions by the Investment Manager and custodian earnings credits, as applicable.

^f	Net expense information reflects the expense ratios after voluntary expense waivers, reimbursements and custodian earnings credits, as applicable.

^g	Significant variation in the portfolio turnover rate is due to Investment Manager’s appointment of new portfolio manager for the Series.

The accompanying notes are an integral part of the financial statements


Manager’s Commentary
February 15, 2010


		Advised by:

To Our Shareholders:

Series P of the SBL Fund – High Yield Series recorded a gain of 73.52% for the year ended December 31, 2009, outperforming the 58.2l% performance of its benchmark, the Barclays Capital U.S. High Yield Bond Index by more than 1,500 basis points. The Series outpaced its peer group median return of 46.08% by an even greater amount.

The High Yield Series will primarily invest in a diversified portfolio consisting of a broad range of high yield, high-risk debt securities rated below the top four long-term credit rating categories and maintain a dollar-weighted average duration of 3 to 15 years.

The Series’ investment approach uses a bottom-up process in selecting high yield securities. We emphasize rigorous credit analysis and relative value in selecting securities. Credit analysis includes assessing factors such as an issuer’s management experience, its debt service coverage or ability to make interest payments on its debt, cash flow, and general economic and market factors. Relative value analysis compares the credit risk and yield of a security to that of other securities. We search for securities that appear to be inexpensive relative to comparable securities and securities that have the potential for an upgrade of their credit rating. A rating upgrade would typically increase the value of the security.

High Yield Market Review

The high yield asset class had a record year, gaining 58% compared to a 26% increase for the S&P 500 Index and -4% for U.S. treasuries. Still, high yield has the potential to outperform other asset classes again in 2010 if the economy continues to improve. Default rates peaked around 10% in late 2009 and expectations are that rates could decline to around 4% in 2010, about its long-term historical average. On the other hand, unemployment may remain stubbornly high hampering the consumer and holding back an economic recovery. An additional concern is the large budget deficits in states such as California and Illinois. At best, the imbalances will be a headwind for the markets while the effect of any state or municipal defaults could be significant. New issuance continues to help struggling companies reissue debt, thereby decreasing the default rate and lowering expectations of future defaults. The sudden collapse of market liquidity caused by the Lehman bankruptcy and the subsequent widening of credit spreads was so severe that many investors recognized the value in high yield securities. The response was massive inflows to high yield mutual funds, amounting to $5 billion in the first quarter alone, causing the market to stablize and spreads to begin to moderately tighten. Cash flows into the high-yield market were on a torrid pace throughout the year with September marking the tenth consecutive month of inflows of $1 billion.

Market Outlook

While keeping a long-term perspective, we will remain slightly aggressive given the current liquidity and momentum in the market and the economic recovery. We continue to stay fully invested as we’ve pared back on holdings that have produced solid gains. We feel that our security selection process provides the portfolio with higher quality issues with good underlying asset value, which should provide downside protection. We will be looking for whether firms are able to increase revenue rather than simply reduce costs, and whether unemployment figures will begin to show the return of jobs. We will also continue to watch the high-yield mutual fund flows closely to determine whether we should add or reduce our risk exposure. However, we will be prepared to reduce risk in the portfolio if the economy, unemployment, and earnings fail to continue to recover as the market is expecting.

We appreciate your business and thank you for being an investor in the Series.

Sincerely,

David Toussaint, Portfolio Manager


		Series P
Performance Summary		(High Yield Series)
December 31, 2009		(unaudited)

PERFORMANCE

LOGO

$10,000 Over 10 Years

The chart above assumes a hypothetical $10,000 investment in Series P (High Yield Series) on December 31, 1999 and reflects the fees and expenses of Series P. The Barclays Capital U.S. Corporate High Yield Bond Index is an unmanaged index that tracks below investment grade bonds.

Average Annual Returns


Periods Ended 12-31-09¹	1 Year		5 Years		10 Years
Series P	73.52	%	7.34	%	7.17	%

Portfolio Comparison by Quality Ratings

(Based on Standard & Poor’s Ratings)


AA	0.83	%
A	0.64
BBB	7.86
BB	18.15
B	35.77
CCC	24.11
CC	1.56
C	0.44
D	2.39
NR	5.05
Common Stocks	0.18
Preferred Stocks	0.27
Cash & Other Assets, Less Liabilities	2.75
Total Net Assets	100.00	°%

The accompanying notes are an integral part of the financial statements


Schedule of Investments		Series P
December 31, 2009		(High Yield Series)


	Shares		Value
COMMON STOCKS—0.3%
Air Freight & Logistics—0.0%
Atlas Air Worldwide Holdings, Inc.*		57	$	2,122

Airlines—0.0%
Delta Air Lines, Inc.*		2,225		25,320

Broadcasting—0.0%
Adelphia Recovery Trust^1,*		5,270		264

Cable & Satellite—0.0%
Time Warner Cable, Inc.		101		4,180

Electronic Manufacturing Services—0.0%
Viasystems Group, Inc.^2,3^,*		1,207		3,621

Health Care Equipment—0.0%
MEDIQ, Inc.^4,*		92		1

Mortgage REIT’s—0.0%
Bimini Capital Management, Inc.⁴		30,450		7,308

Oil & Gas Equipment & Services—0.1%
SemGroup Corporation^2,3*		4,398		96,756

Specialized Finance—0.2%
CIT Group, Inc.*		7,613		210,195

TOTAL COMMON STOCKS (cost $828,173)			$	349,767


	Shares		Value
PREFERRED STOCKS—0.3%
Department Stores—0.2%
Sears Holdings Corporation
7.00%, 7/15/2042*		6,510	$	73,238
7.40%, 2/1/2043*		18,320		234,725

				307,963

Thrifts & Mortgage Finance—0.1%
Federal Home Loan Mortgage Corporation
8.38%, 12/31/2012*		28,000		29,400
Federal National Mortgage Association
8.25%, 12/31/2010*		28,000		30,800
4.38%, 5/13/2011		7,000		12,460

				72,660

TOTAL PREFERRED STOCK (cost $2,345,479)			$	380,623


	Shares		Value
WARRANTS—0.0%
SemGroup^2,3		4,630		23,150

TOTAL WARRANTS (cost $23,150)			$	23,150


	Principal Amount		Value
CONVERTIBLE BONDS—4.6%
Automobiles—0.6%
Sonic Automotive, Inc.
5.00%, 2029¹	$	800,000	$	864,000

Brokerage—0.9%
E*Trade Financial Corporation
0.00%, 2019¹		750,000		1,264,688

Financial Services—0.8%
Forest City Enterprises, Inc.
5.00%, 2016^1,5		1,000,000		1,087,500

Health Care Services—1.8%
Hologic, Inc.
2.00%, 2037^1,6		2,450,000		2,091,687
Invacare Corporation
4.13%, 2027¹		350,000		400,312

				2,491,999

Metals & Minerals—0.5%
USEC, Inc.
3.00%, 2014¹		1,100,000		715,000

TOTAL CONVERTIBLE BONDS (cost $5,783,589)			$	6,423,187


	Principal Amount		Value
CORPORATE BONDS—89.7%
Aerospace & Defense—0.1%
Triumph Group, Inc.
8.00%, 2017^1,5		100,000		100,875

Airlines—3.3%
Continental Airlines, Inc.
8.31%, 2011¹		541,143		505,969
7.03%, 2011¹		1,661,662		1,578,579
7.34%, 2014^2,3		600,000		535,500
Delta Air Lines, Inc.
7.71%, 2011¹		530,000		522,050
7.78%, 2012¹		1,507,264		1,446,974
7.90%^1,7		75,000		1,050

				4,590,122

Automotive—5.6%
Ford Motor Credit Company LLC
8.00%, 2014¹		1,600,000		1,642,860
8.00%, 2016¹		1,000,000		1,001,329
8.13%, 2020¹		400,000		393,080
General Motors Corporation
8.38%, 2033^1,7		1,150,000		310,500
Metaldyne Corporation
11.00%, 2012^2,3,4,7		1,000,000		—
Sonic Automotive, Inc.
8.63%, 2013¹		1,750,000		1,741,249
4.25%, 2015¹		800,000		778,000
Tenneco, Inc.
8.63%, 2014¹		800,000		807,000
TRW Automotive, Inc.
7.25%, 2014^1,5,8		1,250,000		1,212,500

				7,886,518

Banking—1.4%
FCB Capital Trust
8.05%, 2028¹		75,000		64,326

The accompanying notes are an integral part of the financial statements


Schedule of Investments		Series P
December 31, 2009		(High Yield Series)


	Principal Amount		Value
CORPORATE BONDS—89.7% (continued)
Banking—1.4% (continued)
Progress Capital Trust I
10.50%, 2027¹	$	700,000	$	733,475
Rabobank Capital Funding II
5.26%, 2049^1,5,8,9		1,400,000		1,148,001

				1,945,802

Brokerage—3.5%
E*Trade Financial Corporation
7.88%, 2015¹		2,150,000		2,002,188
Nuveen Investments, Inc.
5.00%, 2010¹		400,000		396,000
10.50%, 2015^1,5,8		2,800,000		2,541,000

				4,939,188

Chemicals—0.7%
Methanex Corporation
8.75%, 2012¹		5,000		5,188
PolyOne Corporation
6.52%, 2010¹		330,000		329,588
6.58%, 2011¹		625,000		621,874

				956,650

Construction Machinery—1.5%
RSC Equipment Rental, Inc.
9.50%, 2014¹		1,100,000		1,101,375
United Rentals North America, Inc.
6.50%, 2012¹		1,000,000		997,500

				2,098,875

Consumer Products—0.7%
Hanesbrands, Inc.
3.83%, 2014¹^,8,9		150,000		141,938
8.00%, 2016¹		750,000		764,062
Icon Health & Fitness
11.25%, 2012^2,3		25,000		17,500

				923,500

Electric— 1.2%
AES Red Oak LLC
8.54%, 2019¹		1,662,438		1,658,282
East Coast Power LLC
7.07%, 2012¹		50,383		52,158

				1,710,440

Entertainment— 1.3%
Historic TW, Inc.
9.13%, 2013¹		30,000		34,810
Marquee Holdings, Inc.
12.00%, 2014¹		1,500,000		1,246,875
Speedway Motorsports, Inc.
6.75%, 2013¹		510,000		507,450

				1,789,135

Environmental—0.3%
Casella Waste Systems, Inc.
9.75%, 2013¹		400,000		395,000

Financial—Other—4.1%
American Real Estate Partners, LP
8.13%, 2012¹		2,185,000		2,228,700

7.13%, 2013¹		400,000		408,000
Harland Clarke Holdings Corporation
9.50%, 2015¹		1,500,000		1,393,125
6.00%, 2015^1,9		1,900,000		1,553,250

				5,583,075

Financial Companies—Noncaptive Consumer—1.7%
Nelnet, Inc.
7.40%, 2036^1,9		2,000,000		1,456,622
Residential Capital LLC
8.88%, 2015¹		1,300,000		910,000

				2,366,622

Financial Companies—Noncaptive Diversified—3.0%
CIT Group, Inc.
7.00%, 2013¹		88,448		82,478
7.00%, 2014¹		132,672		123,219
7.00%, 2015¹		132,672		118,741
7.00%, 2016¹		221,119		194,585
7.00%, 2017¹		309,567		268,549
General Motors Acceptance Corporation
6.75%, 2014¹		650,000		617,401
8.00%, 2031¹		1,600,000		1,439,557
International Lease Finance Corporation
5.65%, 2014¹		1,850,000		1,398,154

				4,242,684

Food & Beverage—1.5%
Bumble Bee Foods LLC
7.75%, 2015^1,5		200,000		200,500
Constellation Brands, Inc.
7.25%, 2017¹		1,000,000		1,013,750
Dole Food Company, Inc.
8.88%, 2011¹		405,000		408,038
Pinnacle Foods Finance LLC
9.25%, 2015^1,5		450,000		456,750

				2,079,038

Gaming—6.2%
Boyd Gaming Corporation
7.13%, 2016¹		800,000		696,000
Galaxy Entertainment Finance Company, Ltd.
9.88%, 2012^1,5,8		2,475,000		2,474,999
Mandalay Resort Group
7.63%, 2013¹		1,000,000		760,000
MGM Mirage
8.50%, 2010¹		15,000		14,925
8.38%, 2011¹		55,000		52,113
6.75%, 2012¹		625,000		557,813
6.75%, 2013^1,8		250,000		215,625
7.63%, 2017¹		500,000		388,750
11.13%, 2017^1,5,8		300,000		332,250
Mohegan Tribal Gaming Authority
7.13%, 2014¹		1,750,000		1,192,188
Pinnacle Entertainment, Inc.
7.50%, 2015¹		1,980,000		1,821,599
Station Casinos, Inc.		925,000		139,906
6.00%, 2012^1,7
Turning Stone Resort Casino Enterprise
9.13%, 2014^1,5,8		150,000		146,625

				8,792,793

Health Care—4.3%
Apria Healthcare Group, Inc.

11.25%, 2014^1,5,8		600,000		658,500

The accompanying notes are an integral part of the financial statements

100


Schedule of Investments		Series P
December 31, 2009		(High Yield Series)


	Principal Amount		Value
CORPORATE BONDS—89.7% (continued)
Health Care—4.3% (continued)
HCA, Inc.
9.25%, 2016¹	$	1,750,000	$	1,879,063
Healthsouth Corporation
8.13%, 2020¹		900,000		886,500
InvaCare Corporation
9.75%, 2015^1,8		150,000		156,375
Psychiatric Solutions, Inc.
7.75%, 2015¹^,5,8		500,000		471,250
US Oncology, Inc.
10.75%, 2014¹		675,000		708,750
9.13%, 2017¹		1,100,000		1,155,000

				5,915,438

Independent Energy—2.0%
Energy XXI Gulf Coast, Inc.
10.00%, 2013¹		2,000,000		1,850,000
Hilcorp Energy I, LP
7.75%, 2015^1,5,8		250,000		245,000
Plains Exploration & Production Company
7.00%, 2017¹		500,000		491,250
Range Resources Corporation
7.38%, 2013¹		75,000		76,313
Southwestern Energy Company
7.50%, 2018¹		150,000		159,000

				2,821,563

Industrial—Other—0.6%
Belden, Inc.
7.00%, 2017¹		300,000		292,125
Noble Group, Ltd.
6.63%, 2015^1,5,8		550,000		583,000

				875,125

Insurance—Property & Casualty—2.0%
Fairfax Financial Holdings, Ltd.
7.75%, 2012¹		1,575,000		1,626,187
HUB International Holdings, Inc.
10.25%, 2015^1,5,8		265,000		243,800
Nationwide Mutual Insurance Company
8.25%, 2031^1,5,8		900,000		865,624
USI Holdings Corporation
9.75%, 2015^1,5,8		100,000		91,125

				2,826,736

Media—Cable—0.1%
CSC Holdings, Inc.
6.75%, 2012¹		42,000		43,365
UPC Germany GmbH
8.13%, 2017^1,5		100,000		101,125

				144,490

Media—Non Cable—6.0%
Block Communications, Inc.
8.25%, 2015^1,5,8		1,125,000		1,092,655
Bonten Media Acquisition Company
9.00%, 2015^1,5,8		109,594		40,824
Clear Channel Communications, Inc.
10.75%, 2016¹		1,250,000		981,249
CMP Susquehanna Corporation
9.88%, 2014¹		1,200,000		24,000
Fisher Communications, Inc.
8.63%, 2014¹		250,000		239,688
GeoEye, Inc.
9.63%, 2015^1,5		900,000		925,875
Idearc, Inc.
8.00%, 2016^1,7		650,000		45,500
Inmarsat Finance plc
7.38%, 2017^1,5		100,000		102,250
Intelsat, Ltd.
7.63%, 2012¹		1,475,000		1,460,249
Morris Publishing Group LLC
7.00%, 2013^1,8		1,625,000		475,313
Radio One, Inc.
6.38%, 2013¹		650,000		476,938
Reader’s Digest Association, Inc.
9.00%, 2017^1,7		150,000		1,688
RH Donnelley Corporation
8.88%, 2016^1,7		650,000		60,938
8.88%, 2017^1,7		3,350,000		314,063
Satelites Mexicanos S.A. de CV
9.00%, 2011^1,9		2,454,175		2,230,231

				8,471,461

Metals & Mining—3.0%
Asia Aluminum Holdings, Ltd.
8.00%, 2011^1,5,7,8		2,800,000		437,500
Cloud Peak Energy Resources LLC
8.50%, 2019^1,5		500,000		510,000
FMG Finance Pty, Ltd.
10.63%, 2016^1,5,8		2,150,000		2,378,438
Griffin Coal Mining Company Pty, Ltd.
9.50%, 2016^1,5,7,8		1,400,000		827,750

				4,153,688

Natural Gas Pipelines—1.8%
El Paso Corporation
8.25%, 2016¹		250,000		266,875
Regency Energy Partners, LP
8.38%, 2013¹		2,155,000		2,230,425

				2,497,300

Oil Field Services—1.2%
Key Energy Services, Inc.
8.38%, 2014¹		1,250,000		1,253,125
Pemex Project Funding Master Trust
9.13%, 2010¹		10,000		10,550
Stallion Oilfield Services
9.75%, 2015^1,5,7,8		700,000		409,500

				1,673,175

Packaging—1.4%
Ball Corporation
6.88%, 2012¹		400,000		405,000
Solo Cup Company
8.50%, 2014¹		1,550,000		1,515,125

				1,920,125

The accompanying notes are an integral part of the financial statements

101


Schedule of Investments		Series P
December 31, 2009		(High Yield Series)


	Principal Amount		Value
CORPORATE BONDS—89.7% (continued)
Paper—1.8%
Sino-Forest Corporation
10.25%, 2014^1,5,8	$	2,275,000	$	2,479,750

Pharmaceuticals—1.6%
Catalent Pharma Solutions, Inc.
9.50%, 2015¹		2,470,438		2,229,570

Refining—2.5%
Frontier Oil Corporation
6.63%, 2011¹		300,000		301,875
Tesoro Corporation
6.50%, 2017¹		1,900,000		1,767,000
9.75%, 2019¹		200,000		207,000
United Refining Company
10.50%, 2012¹		850,000		801,125
VeraSun Energy Corporation
9.38%, 2017^2,3,7		224,803		11,240
Western Refining, Inc.
11.25%, 2017^1,5,8		500,000		452,500

				3,540,740

REIT’S—6.3%
Forest City Enterprises, Inc.
7.63%, 2015¹		1,750,000		1,566,250
HCP, Inc.
6.70%, 2018¹		1,120,000		1,086,550
Hospitality Properties Trust
6.70%, 2018¹		3,150,000		2,882,507
HRPT Properties Trust
0.85%, 2011^1,9		1,624,000		1,508,259
Rouse Company, LP
8.00%, 2025^1,7		1,550,000		1,610,063

				8,653,629

Restaurants—0.6%
Dave & Buster’s, Inc.
11.25%, 2014¹		800,000		830,000

Retailers—4.6%
Duane Reade, Inc.
9.75%, 2011¹		1,300,000		1,324,375
Harry & David Holdings, Inc.
9.00%, 2013¹		900,000		616,500
Neiman Marcus Group, Inc.
10.38%, 2015¹		1,750,000		1,715,000
Penske Auto Group, Inc.
7.75%, 2016¹		1,750,000		1,693,125
Saks, Inc.
9.88%, 2011¹		1,050,000		1,098,563

				6,447,563

Services—5.3%
KAR Holdings, Inc.
8.75%, 2014¹		2,300,000		2,371,874
Mobile Services Group, Inc.
9.75%, 2014¹		200,000		208,000
Travelport LLC
9.88%, 2014¹		1,150,000		1,187,375
11.88%, 2016¹		650,000		689,000
West Corporation
9.50%, 2014¹		1,050,000		1,065,750
11.00%, 2016¹		1,750,000		1,828,750

				7,350,749

Technology—3.2%
Amkor Technology, Inc.
9.25%, 2016¹		2,025,000		2,151,563
Anixter International, Inc.
5.95%, 2015¹		250,000		234,375
Seagate Technology HDD Holdings
6.80%, 2016¹		1,400,000		1,354,500
SunGard Data Systems, Inc.
10.63%, 2015¹		600,000		660,750

				4,401,188

Telecommunications—Wireless—4.3%
Clearwire Communications LLC
12.00%, 2015^1,5		500,000		507,500
iPCS, Inc.
4.28%, 2014^1,9		1,997,986		1,698,288
MetroPCS Wireless, Inc.
9.25%, 2014¹		675,000		683,438
SBA Telecommunications, Inc.
8.00%, 2016^1,5,8		400,000		418,000
Sprint Capital Corporation
6.90%, 2019¹		2,850,000		2,622,000

				5,929,226

Telecommunications—Wirelines—0.1%
Qwest Corporation
7.88%, 2011¹		150,000		157,125

Textile—0.8%
Phillips-Van Heusen Corporation
8.13%, 2013¹		1,050,000		1,071,000

Transportation Services—0.1%
US Shipping Partners, LP
13.00%, 20 14^2,3,7		625,000		93,750

TOTAL CORPORATE BOND (cost $119,179,485)			$	124,883,708


	Principal Amount		Value
SENIOR FLOATING RATE INTERESTS—2.0%
Business Equipment & Services—2.0%
First Data Corporation, Initial Bl Term Loan
3.00%, 2014^1,9,10		160,100		141,822
2.98%, 2014^1,9,10		1,892,650		1,676,571
VNU, Term Loan
2.23%, 2013^1,9,10		1,045,829		976,543

				2,794,936

TOTAL SENIOR FLOATING RATE INTERESTS (cost $3,035,667)			$	2,794,936


	Principal Amount		Value
FOREIGN BOND—0.1%
Tunisia—0.1%
Banque Centrale de Tunisie
7.38%, 2012¹	$	80,000	$	86,600

The accompanying notes are an integral part of the financial statements

102


Schedule of Investments		Series P
December 31, 2009		(High Yield Series)


	Principal Amount		Value
FOREIGN BOND—0.1% (continued)
TOTAL FOREIGN BOND (cost $79,611)			$	86,600


	Principal Amount		Value
FOREIGN GOVERNMENT BONDS—0.3%
Chile—0.0%
Chile Government International Bond
7.13%, 2012¹	$	25,000	$	27,845

Mexico—0.2%
Mexico Government International Bond
8.38%, 2011¹		85,000		91,486
7.50%, 2012¹		116,000		128,469

				219,955

Russia—0.1%
Russia Government International Bond
8.25%, 2010^1,5,8		4,057		4,139
Russian Ministry of Finance
3.00%, 2011¹		80,000		80,104

				84,243

South Africa—0.0%
South Africa Government International Bond
7.38%, 2012¹		35,000		38,413

TOTAL FOREIGN GOVERNMENT B0ND (cost $337,698)			$	370,456

Total Investments—97.3%¹¹ (cost $131,612,852)			$	135,312,427
Cash & Other Assets, Less Liabilities—2.7%				3,819,812

Total Net Assets—100.0%			$	139,132,239

For federal income tax purposes the identified cost of investments owned at December 31, 2009 was $129,623,461.

plc	Public Limited Company

*	Non-income producing security

¹	Value determined based on Level 2 inputs.

²	Value determined based on Level 3 inputs.

³	Security was fair valued by the Valuation Committee at December 31, 2009. The total market value of fair valued securities amounts to $781,517 (cost $2,480,344) or 0.6% of total net assets.

⁴	Security is deemed illiquid. The total market value of illiquid securities is $7,309 (cost $l,491,332), or 0.0% of total net assets.

⁵	Security was acquired through a private placement.

⁶	Security is a step up/step down bond. The coupon increases or decreases at regular intervals until the bond reaches full maturity.

⁷	Security is in default of interest and/or principal obligations.

⁸	Security is a 144A or Section 4(2) security. The total market value of 144A or Section 4(2) securities is $20,543,981 (cost $21,840,229), or 14.8% of total net assets.

⁹	Variable rate security. Rate indicated is rate effective at December 31, 2009.

¹⁰	Security is a senior floating rate interest. See Notes to Financial Statements for additional information.

¹¹	Unless otherwise indicated, the values of the securities of the Portfolio are determined based on Level 1 inputs.

The accompanying notes are an integral part of the financial statements

103


		Series P
		(High Yield Series)

Statement of Assets and Liabilities

December 31, 2009


Assets:
Investments, at value*	$	135,312,427
Cash		1,823,842
Receivables:
Fund shares sold		48,652
Interest		2,131,760
Dividends		19,793
Prepaid expenses		3,048

Total assets		139,339,522


Liabilities:

Payable for:
Fund shares redeemed		75,834
Management fees		87,471
Administration fees		14,880
Transfer agent/maintenance fees		2,083
Custodian fees		126
Directors’ fees		1,607
Professional fees		17,275
Other fees		8,007

Total liabilities		207,283

Net assets	$	139,132,239


Net assets consist of:
Paid in capital	$	126,023,771
Undistributed net investment income		12,054,279
Accumulated net realized loss on sale of investments		(2,645,386	)
Net unrealized appreciation in value of investments		3,699,575

Net assets	$	139,132,239


Capital shares authorized		unlimited
Capital shares outstanding		5,997,533
Net asset value per share (net assets divided by shares outstanding)	$	23.20


* Investments, at cost	$	131,612,852

Statement of Operations

For Year Ended December 31, 2009


Investment Income:
Dividends	$	102,534
Interest		12,251,798

Total investment income		12,354,332


Expenses:
Management fees		828,232
Administration fees		121,099
Transfer agent/maintenance fees		25,225
Custodian fees		8,139
Directors’ fees		12,579
Professional fees		23,228
Reports to shareholders		10,363
Other		5,208

Total expenses		1,034,073

Net investment income		11,320,259


Net Realized and Unrealized Gain (Loss):
Net realized gain (loss) during the year on:
Investments		(1,184,089	)

Net realized loss		(1,184,089	)


Net unrealized appreciation (depreciation) during the year on:
Investments		48,718,757

Net unrealized appreciation		48,718,757

Net realized and unrealized gain		47,534,668

Net increase in net assets resulting from operations	$	58,854,927

The accompanying notes are an integral part of the financial statements

104


		Series P
Statement of Changes in Net Assets		(High Yield Series)


		Year Ended December 31, 2009			Year Ended December 31, 2008
Increase (decrease) in net assets from operations:
Net investment income		$	11,320,259		$	8,617,741
Net realized loss during the year on investments			(1,184,089	)		(475,444	)
Net unrealized appreciation (depreciation) during the year on investments			48,718,757			(39,644,244	)

Net increase (decrease) in net assets resulting from operations			58,854,927			(31,501,947	)


Capital share transactions:
Proceeds from sale of shares	��		63,655,395			102,209,457
Cost of shares redeemed			(66,597,004	)		(102,789,673	)

Net decrease from capital share transactions			(2,941,609	)		(580,216	)

Net increase (decrease) in net assets			55,913,318			(32,082,163	)


Net assets:
Beginning of year			83,218,921			115,301,084

End of year		$	139,132,239		$	83,218,921


Undistributed net investment income at end of year		$	12,054,279		$	9,103,520


Capital share activity:
Shares sold			3,753,671			5,951,233
Shares redeemed			(3,982,293	)		(5,738,109	)

Total capital share activity			(228,622	)		213,124

The accompanying notes are an integral part of the financial statements

105


Financial Highlights		Series P
Selected data for each share of capital stock outstanding throughout each year		(High Yield Series)


	2009			2008			2007			2006			Year Ended December 31, 2005
Per Share Data
Net asset value, beginning of period	$	13.37		$	19.18		$	18.79		$	16.90		$	16.28

Income (loss) from investment operations:
Net investment income^a		1.89			1.57			1.38			0.90			1.09
Net gain (loss) on securities (realized and unrealized)		7.94			(7.38	)		(0.99	)		0.99			(0.47	)

Total from investment operations		9.83			(5.81	)		0.39			1.89			0.62

Net asset value, end of period	$	23.20		$	13.37		$	19.18		$	18.79		$	16.90


Total Return^b		73.52	%		(30.29	)%		2.08	%		11.18	%		3.81	%

Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	139,132		$	83,219		$	115,301		$	106,144		$	77,971

Ratios to average net assets:
Net investment income		10.24	%		9.02	%		7.19	%		7.24	%		7.13	%
Total expenses^c		0.94	%		0.94	%		0.92	%		0.93	%		0.97	%
Net expenses^d		0.94	%		0.94	%		0.92	%		0.93	%		0.97	%
Net expenses prior to custodian earnings credits and net of expense waivers		0.94	%		0.94	%		0.92	%		0.93	%		0.97	%

Portfolio turnover rate		48	%		33	%		50	%		52	%		64	%

^a	Net investment income (loss) was computed using average shares outstanding throughout the period,

^c	Total expense information reflects the expense ratios absent expense reductions by the Investment Manager and custodian earnings credits, as applicable.

^d	Net expense information reflects the expense ratios after voluntary expense waivers, reimbursements and custodian earnings credits, as applicable.

The accompanying notes are an integral part of the financial statements

106

Manager’s Commentary

February 15, 2010


		Advised by:

To Our Shareholders:

For the year ended December 31, 2009, Series Q of the SBL Fund – Small Cap Value Series returned 55.93%, outperformed the Russell 2000 Value Index, which returned 20.58%, and the Series’ peer group median return of 29.40%.

Financials, Materials, and Industrials Top Performers

The Series outperformed its benchmark in nearly every sector category with the largest excess returns stemming from the financials, materials, and industrials sectors.

As a large underweight position, 9% against 35% for the Russell 2000 Value Index, in a poor performing sector, allocation to this sector made the biggest difference for the portfolio. Additionally, holdings in the portfolio gained 7% compared to a loss of 2% for the Index. Old National Bancorp increased 34% over the period while Hilltop Holdings, Inc. and Capstead Mortgage Corporation also contributed to returns.

The portfolio’s materials position was nearly a double weight relative to the Index, 11% to 6%. The Series benefited from superior stock selection as the portfolio gained 112% against a 61% gain in the benchmark. Clearwater Paper Corporation soared 445%, Louisiana-Pacific Corporation was up 240%, and Schweitzer-Mauduit International Corporation, Inc. gained 221% during the period.

An overweight position in the industrials sector actually hurt performance in the portfolio. However, good stock picking made up the difference as the Series’ holdings increased 43% versus a 13% gain in the Index. Best performing securities included Power-One, Inc., up 266%, and McDermott International, Inc., which gained 127%. Gevity HR was another contributing holding in the sector.

Utilities and Consumer Staples Disappoint

The only sectors that didn’t keep pace with the Index, utilities and consumer staples, fell short by a small margin, mostly due to allocation in the sectors rather than the securities held in the portfolio.

Still, there were several holdings that didn’t help performance in the utilities sector, which included NorthWestern Corporation, Empire District Electric Company, Allete Inc., and Westar Energy Corporation, Inc.

The same was true in the consumer staples sector for the portfolio. Holdings in Winn-Dixie Stores, Inc., Prestige Brands Holdings, Inc., and Smart Balance Inc. were a drag on returns.

The final sector that hurt the portfolio on a relative basis was telecommunication services as the manager doesn’t typically participate in the sector due its extremely low weight in the Index.

Market Outlook

The value equity team still finds it difficult to find compelling investment opportunities in today’s markets. Demand continues to be soft which will make it difficult for companies to increase earnings. In addition, earnings expectations in 2010 may be too high as it is not yet evident that consumers have changed their restrictive behavior and companies are reluctant to hire.

In such an environment, the team continues to focus on well-capitalized, high-quality companies with strong balance sheets. In the mid-capitalization space, we are finding select opportunities in insurance, government-oriented service companies, and FERC-regulated utilities while avoiding credit sensitive financial companies. The significant underweight in financials leads the portfolio to have an even or overweight position in every other sector.

We remain committed to our investment process that targets companies across a wide range of industries and sectors. We believe this broad approach will continue to allow us to identify attractive investments for future years. We thank you for your investment and your confidence in our team.

Sincerely,

James Schier, Portfolio Manager

107


		Series Q
Performance Summary		(Small Cap Value series)
December 31, 2009		(unaudited)

PERFORMANCE

LOGO

$10,000 Since Inception

The chart above assumes a hypothetical $10,000 investment in Series Q (Small Cap Value Series) on May 1, 2000 (date of inception), and reflects the fees and expenses of Series Q. The Russell 2000 Index is a capitalization-weighted index that measures the performance of the 2000 smallest companies in the Russell 3000 Index, which represents approximately 10% of the total market capitalization of the Russell 3000 Index.

Average Annual Returns


Periods Ended 12-31-09¹	1 Year		5 Years		Since Inception (5-1-00)
Series Q	55.93	%	6.52	%	12.19	%

Portfolio Composition by Sector


Consumer Discretionary	12.24	%
Consumer Staples	8.25
Energy	11.59
Financials	12.44
Health Care	4.49
Industrials	23.38
Information Technology	10.33
Materials	9.69
Utilities	6.58
Cash & Other Assets, Less Liabilities	1.01
Total Net Assets	100.00	%

The accompanying notes are an integral part of the financial statements

108


Schedule of Investments		Series Q
December 31, 2009		(Small Cap Value Series)


	Shares	Value
COMMON STOCKS—99.0%
Aerospace & Defense—5.4%
Ceradyne, Inc.*	28,000	$	537,880
DynCorp International, Inc.*	77,003		1,104,993
GeoEye, Inc.*	112,500		3,136,501
Orbital Sciences Corporation*	123,821		1,889,508

			6,668,882

Apparel Retail—4.0%
Brown Shoe Company, Inc.	148,800		1,468,656
Chico’s FAS, Inc.*	209,700		2,946,285
Talbots, Inc.	53,669		478,191

			4,893,132

Apparel, Accessories & Luxury Goods—2.4%
Fossil, Inc.^1,*	20,400		684,624
Maidenform Brands, Inc.*	139,000		2,319,910

			3,004,534

Asset Management & Custody Banks—1.5%
Fifth Street Finance Corporation	177,000		1,900,980

Building Products—1.4%
Griffon Corporation*	27,860		340,449
Trex Company, Inc.*	71,400		1,399,440

			1,739,889

Coal & Consumable Fuels—0.6%
Evergreen Energy, Inc.*	418,626		143,589
USEC, Inc.*	148,930		573,380

			716,969

Communications Equipment—0.9%
Symmetricom, Inc.²^,*	212,189		1,103,383

Computer & Electronics Retail—0.6%
Conn’s, Inc.*	138,700		810,008

Computer Hardware—1.0%
Silicon Graphics International Corporation*	180,416		1,264,716

Computer Storage & Peripherals—1.5%
Adaptec, Inc.*	564,000		1,889,400

Construction & Engineering—2.7%
Insituform Technologies, Inc.*	148,400		3,371,648

Construction & Farm Machinery & Heavy Trucks—1.3%
Force Protection, Inc.*	320,000		1,667,200

Construction Materials—0.4%
Eagle Materials, Inc.	16,998		442,798

Diversified Chemicals—0.6%
LSB Industries, Inc.*	52,743		743,676

Diversified REIT’s—0.9%
Investors Real Estate Trust	123,889		1,115,001

Electric Utilities—3.4%
Allete, Inc.	52,500		1,715,700
Empire District Electric Company	68,300		1,279,259
Westar Energy, Inc.	60,400		1,312,492

			4,307,451

Electrical Components & Equipment—4.0%
General Cable Corporation*	21,000		617,820
LaBarge, Inc.*	109,700		1,321,885
Power-One, Inc.*	574,975		2,501,141
UQM Technologies. Inc.*	57,560		394,286

			4,835,132

Electronic Manufacturing Services—3.1%
Maxwell Technologies, Inc.*	159,274		2,841,448
Methode Electronics, Inc.	121,626		1,055,714

			3,897,162

Food Retail—1.3%
Winn-Dixie Stores, Inc.*	168,400		1,690,736

Forest Products—2.5%
Louisiana-Pacific Corporation*	453,700		3,166,826

Gas Utilities—1.4%
Atmos Energy Corporation	59,400		1,746,360

Health Care Equipment—0.6%
Delcath Systems, Inc.*	140,000		719,600

Health Care Services—3.9%
Amedisys, Inc.*	22,200		1,078,032
Mednax, Inc.*	40,100		2,410,812
RehabCare Group, Inc.*	46,700		1,421,081

			4,909,925

Highways & Railtracks—0.6%
Quixote Corporation	117,200		746,564

Human Resources & Employment Services—0.9%
Administaff, Inc.	48,601		1,146,498

Industrial Conglomerates—0.4%
McDermott International, Inc.*	23,200		557,032

Industrial Machinery—1.0%
Flow International Corporation*	414,278		1,275,976

Industrial REIT’s—0.5%
First Potomac Realty Trust	51,000		641,070

Insurance Brokers—0.4%
Arthur J Gallagher & Company	22,800		513,228

IT Consulting & Other Services—2.5%
CACI International, Inc.*	48,200		2,354,570
Satyam Computer Services, Ltd. ADR	180,052		830,040

			3,184,610

The accompanying notes are an integral part of the financial statements

109


Schedule of Investments		Series Q
December 31, 2009		(Small Cap Value Series)


	Shares	Value
COMMON STOCKS—99.0% (continued)
Leisure Products—1.0%
Smith & Wesson Holding Corporation*	310,500	$	1,269,945

Metal & Glass Containers—1.0%
Myers Industries, Inc.	139,900		1,273,090

Mortgage REIT’s—0.3%
Redwood Trust, Inc.	29,100		420,786

Multi-Line Insurance—1.3%
Horace Mann Educators Corporation	128,600		1,607,500

Multi-Sector Holdings—0.8%
Pico Holdings, Inc.¹^,*	30,100		985,173

Multi-Utilities—1.8%
Northwestern Corporation	84,500		2,198,690

Office Services & Supplies—0.4%
United Stationers, Inc.*	9,591		545,248

Oil & Gas Drilling—0.7%
Vantage Drilling Company*	560,000		901,600

Oil & Gas Equipment & Services—4.3%
Global Industries, Ltd.*	251,000		1,789,630
Superior Well Services, Inc.*	64,500		919,770
Tesco Corporation*	203,900		2,632,349

			5,341,749

Oil & Gas Exploration & Production—3.2%
GMX Resources, Inc.*	72,100		990,654
Goodrich Petroleum Corporation*	70,826		1,724,613
Gulfport Energy Corporation*	60,700		695,015
Petrohawk Energy Corporation^1,*	27,700		664,523

			4,074,805

Oil & Gas Storage & Transportation—2.8%
Southern Union Company	154,400		3,504,880

Packaged Foods & Meats—4.8%
Del Monte Foods Company	227,200		2,576,448
Smart Balance, Inc.*	218,600		1,311,600
TreeHouse Foods, Inc.*	54,500		2,117,870

			6,005,918

Paper Packaging—0.8%
Bemis Company, Inc.	33,600		996,240

Paper Products—1.5%
Clearwater Paper Corporation^1,*	33,700		1,852,489

Personal Products—2.1%
Elizabeth Arden, Inc.*	183,600		2,651,184

Property & Casualty Insurance—3.4%
Employers Holdings, Inc.	76,000		1,165,840
Hanover Insurance Group, Inc.	69,800		3,101,214

			4,267,054

Regional Banks—3.3%
Associated Banc-Corporation	100,022		1,101,242
Bancfirst Corporation	13,600		503,744
Commerce Bancshares, Inc.¹	9,975		386,232
Heritage Financial Corporation	46,800		644,904
Old National Bancorp	122,697		1,525,124

			4,161,246

Research & Consulting Services—3.8%
ICF International, Inc.*	85,700		2,296,760
Navigant Consulting, Inc.*	123,900		1,841,154
School Specialty, Inc.*	24,800		580,072

			4,717,986

Restaurants—2.2%
Burger King Holdings, Inc.	101,900		1,917,758
Jack in the Box, Inc.*	45,400		893,018

			2,810,776

Semiconductors—1.3%
IXYS Corporation²	219,179		1,626,308

Specialty Chemicals—2.9%
HB Fuller Company	5,508		125,307
Landec Corporation²^,*	292,900		1,827,696
Zoltek Companies, Inc.*	182,100		1,729,950

			3,682,953

Specialty Stores—2.0%
Cabela’s, Inc.*	179,847		2,564,618

Trucking—1.6%
Saia, Inc.*	111,200		1,647,984
Universal Truckload Services, Inc.	23,011		416,499

			2,064,483

TOTAL COMMON STOCKS (cost $96,755,541)		$	124,195,107

Total Investments—99.0%³ (cost $96,755,541)		$	124,195,107
Cash & Other Assets, Less Liabilities—1.0%			1,264,816

Total Net Assets—100.0%		$	125,459,923

For federal income tax purposes the identified cost of investments owned at December 31, 2009 was $96,808,755.

ADR	American Depositary Receipt

*	Non-income producing security

¹	Security is segregated as collateral for open written option contracts.

²	Security is deemed illiquid. The total market value of illiquid securities is $4,557,387 (cost $4,201,846), or 3.6% of total net assets.

³	Unless otherwise indicated, the values securities of the Portfolio are determined based on Level 1 inputs.

The accompanying notes are an integral part of the financial statements

110

Series Q

(Small Cap Value Series)

Statement of Assets and Liabilities

December 31, 2009


Assets:
Investments, at value*	$	124,195,107
Cash		1,346,981
Receivables:
Fund shares sold		290,847
Securities sold		10,035
Dividends		98,512
Prepaid expenses		2,474

Total assets		125,943,956


Liabilities:

Payable for:
Fund shares redeemed		80,604
Securities purchased		10,324
Written options, at value (premiums received $243,492)		247,820
Management fees		99,570
Administration fees		10,257
Transfer agent/maintenance fees		2,083
Custodian fees		1,193
Directors’ fees		1,653
Professional fees		14,029
Other fees		16,500

Total liabilities		484,033

Net assets	$	125,459,923


Net assets consist of:
Paid in capital	$	119,726,781
Accumulated net realized loss on sale of investments		(21,702,096	)
Net unrealized appreciation in value of investments		27,435,238

Net assets	$	125,459,923


Capital shares authorized		unlimited
Capital shares outstanding		4,546,316
Net asset value per share (net assets divided by shares outstanding)	$	27.60


* Investments, at cost	$	96,755,541

Statement of Operations

For Year Ended December 31, 2009


Investment Income:
Dividends (net of foreign withholding tax $536)	$	1,115,658
Interest		556

Total investment income		1,116,214


Expenses:
Management fees		954,269
Administration fees		95,267
Transfer agent/maintenance fees		25,205
Custodian fees		13,080
Directors’ fees		11,297
Professional fees		17,589
Reports to shareholders		16,754
Other		6,547

Total expenses		1,140,008

Net investment loss		(23,794	)


Net Realized and Unrealized Gain (Loss):
Net realized gain (loss) during the year on:
Investments		(21,330,743	)
Options written		248,403
Foreign currency transactions		(2,247	)

Net realized loss		(21,084,587	)


Net unrealized appreciation (depreciation) during the year on:
Investments		65,223,792
Options written		(4,328	)
Translation of assets and liabilities in foreign currencies		(24	)

Net unrealized appreciation		65,219,440

Net realized and unrealized gain		44,134,853

Net increase in net assets resulting from operations	$	44,111,059

The accompanying notes are an integral part of the financial statements

111


Statement of Changes in Net Assets		Series Q
Statement of Changes in Net Assets		(Small Cap Value Series)


	Year Ended December 31, 2009			Year Ended December 31, 2008
Increase (decrease) in net assets from operations:
Net investment income (loss)	$	(23,794	)	$	321,708
Net realized gain (loss) during the year on investments		(21,084,587	)		2,997,085
Net unrealized appreciation (depreciation) during the year on investments		65,219,440			(64,564,682	)

Net increase (decrease) in net assets resulting from operations		44,111,059			(61,245,889	)


Capital share transactions:
Proceeds from sale of shares		39,411,373			51,961,281
Cost of shares redeemed		(44,006,948	)		(71,641,951	)

Net decrease from capital share transactions		(4,595,575	)		(19,680,670	)

Net increase (decrease) in net assets		39,515,484			(80,926,559	)


Net assets:
Beginning of year		85,944,439			166,870,998

End of year	$	125,459,923		$	85,944,439


Undistributed net investment income at end of year	$	—		$	319,962


Capital share activity:
Shares sold		1,768,681			2,137,129
Shares redeemed		(2,079,337	)		(3,071,142	)

Total capital share activity		(310,656	)		(934,013	)

The accompanying notes are an integral part of the financial statements

112


Financial Highlights	Series Q
Selected data for each share of capital stock outstanding throughout each year	(Small Cap Value Series	)


	2009^a			2008			2007			2006			Year Ended December 31, 2005
Per Share Data
Net asset value, beginning of period	$	17.70		$	28.82		$	26.14		$	23.05		$	20.13

Income (loss) from investment operations:
Net investment income (loss)^b		(0.01	)		0.06			(0.12	)		(0.09	)		(0.11	)
Net gain (loss) on securities (realized and unrealized)		9.91			(11.18	)		2.80			3.18			3.03

Total from investment operations		9.90			(11.12	)		2.68			3.09			2.92

Net asset value, end of period	$	27.60		$	17.70		$	28.82		$	26.14		$	23.05


Total Return^c		55.93	%		(38.58	%)		10.25	%		13.41	%		14.51	%

Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	125,460		$	85,944		$	166,871		$	159,852		$	144,166

Ratios to average net assets:
Net investment income (loss)		(0.02	)%		0.24	%		(0.42	)%		(0.36	)%		(0.58	)%
Total expenses^d		1.14	%		1.19	%		1.18	%		1.25	%		1.22	%
Net expenses^e		1.14	%		1.18	%		1.18	%		1.24	%		1.22	%
Net expenses prior to custodian earnings credits and net of expense waivers		1.14	%		1.19	%		1.18	%		1.25	%		1.22	%

Portfolio turnover rate		126	%^f		25	%		42	%		46	%		37	%

^a	Security Global Investors, LLC (SGI) became the advisor of Series Q effective February 9, 2009. Prior to February 9, 2009, SGI paid Wells Capital Management, Inc. for sub-advisory services.

^b	Net investment income (loss) was computed using average shares outstanding throughout the period.

^d	Total expense information reflects the expense ratios absent expense reductions by the Investment Manager and custodian earnings credits, as applicable.

^e	Net expense information reflects the expense ratios after voluntary expense waivers, reimbursements and custodian earnings credits, as applicable.

^f	Significant variation in the portfolio turnover rate is due to Investment Manager’s appointment of new portfolio manager for the Series.

The accompanying notes are an integral part of the financial statements

113

Manager’s Commentary

February 15, 2010


		Advised by:

To Our Shareholders:

Series V of the SBL Fund – Mid Cap Value Series posted a gain of 43.93%, more than 1,600 basis points ahead of its benchmark and 1,000 basis points better than peer competition. The Series’ benchmark, the Russell 2500 Value Index increased 27.68%, while the Series’ peer group median return was 33.42%.

Our approach with the Mid Cap Value Series is to seek companies that can increase shareholders’ return on capital. We hold such companies over three to five years to capture long-term improvements in profitability.

The investment process is fundamentally driven and quantitatively aided. We use proprietary screens to identify potential companies for investment and then perform rigorous fundamental analysis to identify the best ideas. Through this fundamental research, we determine an estimate of intrinsic value and thus a valuation target for each idea. We construct the portfolios based on the level of conviction generated by this bottom-up analysis and the upside/downside profile associated with each company.

Industrials, Health Care, Information Technology, and Energy Top Performers

The Series benefited from four exceptionally strong sectors during the calendar year 2009. Superior security selection was the leading factor in all cases although information technology and energy were also able to add to returns through overweight positions.

As an even weight position, stock picking in the industrials sector allowed the portfolio to gain 40% compared to 19% for the Index. Leaders included Power-One, Inc., which soared 266% and Gevity HR and McDermott International, Inc. which gained 165% and 143%, respectively.

Health care was another even weight against the benchmark that outperformed by 123% to 43%. Aspect Medical Systems was up 260% while Community Health Systems, Inc. and RehabCare Group, Inc. both increased by more than 100%. Another sector contributor was Menax, Inc., up 90% during the period.

The Series benefited from an overweight position and good stock selection in the information technology sector. RF Micro Devices, Inc. was up over 500% for the portfolio. Other strong performers included Maxwell Technologies, Inc. and Satyam Computer Services, Ltd.

Energy benefited the portfolio through a double weight position, 10% to 5% for the benchmark, and investing in top performing securities. Global Industries, Ltd. increased over 100%. Other leading holdings in the sector were Newfield Exploration Company, Helmerich & Payne, Inc., and Gulfport Energy Corporation.

Financials Disappoint

As usual, the financials sector was positioned as a large underweight to the Index, 14% to 31%. However, poor stock selection led to a 6% loss for the portfolio while the benchmark was up a position 5%. The largest detractors in the portfolio were W.R. Berkley Corporation, United America Indemnity Corporation, Ltd., which was down 63%, and Wilmington Trust Corporation, which lost 46%.

Market Outlook

We continue to pursue opportunities with a focus on bottom-up research rather than a macro forecast.

Our focus is on identifying companies with the ability to be substantially stronger over the next three to five years or have the potential to maintain their return on capital at current levels in a difficult economic environment. We ultimately look for companies that trade significantly below their intrinsic value. The portfolio continues to be overweight energy and information technology while being underweight financials.

On behalf of Security Global Investors, I would like to thank you for placing your trust and money with us. As always, we will continue to do our best to seek the potential available in small and mid capitalization companies.

Sincerely,

James P. Schier, Portfolio Manager

114


		Series V
Performance Summary		(Mid Cap Value Series)
December 31, 2009		(unaudited)

PERFORMANCE

LOGO

$10,000 Over 10 Years

The chart above assumes a hypothetical $10,000 investment in Series V (Mid Cap Value Series) on December 31, 1999 and reflects the fees and expenses of Series V. The Russell 2500 Value Index is an unmanaged index that measures the performance of securities of small-to-mid cap U.S. companies with greater-than-average value orientation.

Average Annual Returns


Periods Ended 12-31-09¹	1 Year		5 Years		10 Years
Series V	43.93	%	6.92	%	13.34	%

Portfolio Composition by Sector


Consumer Discretionary	10.63	%
Consumer Staples	12.93
Financials	13.26
Health Care	4.59
Industrials	21.59
Information Technology	12.16
Materials	6.12
Utilities	13.19
Convertible Bonds	0.75
Cash & Other Assets, Less Liabilities	4.78
Total Net Assets	100.00	%

The accompanying notes are an integral part of the financial statements

115


Schedule of Investments		Series V
December 31, 2009		(Mid Cap Value Series)


	Shares	Value
COMMON STOCKS—94.5%
Aerospace & Defense—3.5%
GeoEye, Inc.*	234,190	$	6,529,217
Orbital Sciences Corporation*	275,012		4,196,683

			10,725,900

Apparel Retail—3.7%
Brown Shoe Company, Inc.	294,226		2,904,011
Chico’s FAS, Inc.*	503,500		7,074,175
Talbots, Inc.	136,210		1,213,631

			11,191,817

Apparel, Accessories & Luxury Goods—1.5%
Fossil, Inc.	46,700		1,567,252
Maidenform Brands, Inc.*	180,000		3,004,200

			4,571,452

Application Software—0.4%
PLATO Learning, Inc.^2,*	257,750		1,123,790

Asset Management & Custody Banks—0.5%
Fifth Street Finance Corporation	144,000		1,546,560

Auto Parts & Equipment—0.0%
HydroGen Corporation^2,3,*	672,346		12,102

Biotechnology—0.1%
Combinatorx, Inc.*	207,744		172,428

Building Products—0.8%
Trex Company, Inc.*	118,900		2,330,440

Coal & Consumable Fuels—0.6%
Evergreen Energy, Inc.*	1,018,609		349,383
USEC, Inc.*	404,470		1,557,209

			1,906,592

Communications Equipment—1.0%
EF Johnson Technologies. Inc.*	284,000		315,240
Symmetricom, Inc.^2,*	546,680		2,842,736

			3,157,976

Construction & Engineering—4.9%
Insituform Technologies, Inc.*	286,800		6,516,097
Quanta Services, Inc.*	219,300		4,570,212
URS Corporation*	84,820		3,776,186

			14,862,495

Construction & Farm Machinery & Heavy Trucks—0.7%
Force Protection, Inc.*	426,300		2,221,023

Construction Materials—0.3%
Eagle Materials, Inc.	37,259		970,597

Consumer Finance—0.1%
First Marblehead Corporation*	211,633		450,778
Data Processing & Outsourced Services—5.6%
Affiliated Computer Services, Inc.*	94,500		5,640,705
Computer Sciences Corporation*	195,000		11,218,350

			16,859,055

Diversified REIT’s—0.9%
Investors Real Estate Trust	309,000		2,781,000

Electric Utilities—6.4%
Allete, Inc.	115,751		3,782,743
Great Plains Energy, Inc.	264,305		5,124,874
Northeast Utilities	152,481		3,932,485
Pepco Holdings, Inc.	137,500		2,316,875
Westar Energy, Inc.	192,100		4,174,333

			19,331,310

Electrical Components & Equipment—2.8%
General Cable Corporation*	51,000		1,500,420
Power-One, Inc.*	1,411,200		6,138,720
UQM Technologies. Inc.*	147,266		1,008,772

			8,647,912

Electronic Manufacturing Services—2.4%
Maxwell Technologies, Inc.*	408,700		7,291,208

Environmental & Facilities Services—1.0%
Covanta Holding Corporation*	168,500		3,048,165

Forest Products—1.3%
Louisiana-Pacific Corporation*	573,100		4,000,238

Gas Utilities—1.8%
Atmos Energy Corporation	140,000		4,116,000
UGI Corporation	61,700		1,492,523

			5,608,523

Health Care Equipment—1.0%
Hologic, Inc.*	203,344		2,948,488

Health Care Services—3.5%
Amedisys, Inc.*	55,000		2,670,800
Mednax, Inc.*	95,000		5,711,399
RehabCare Group, Inc.*	80,930		2,462,700

			10,844,899

Highways & Railtracks—0.3%
Quixote Corporation	149,800		954,226

Home Furnishings—1.2%
Leggett & Platt, Inc.	185,500		3,784,200

Human Resources & Employment Services—0.9%
Administaff, Inc.	113,305		2,672,865

Industrial Conglomerates—2.1%
McDermott International, Inc.*	266,900		6,408,269

Industrial Machinery—1.0%
Harsco Corporation	89,700		2,891,031
Thermoenergy Corporation^2,*	905,961		253,669

			3,144,700

Insurance Brokers—0.5%
Arthur J Gallagher & Company	64,100		1,442,891

IT Consulting & Other Services—0.7%
Satyam Computer Services, Ltd. ADR	449,994		2,074,472

The accompanying notes are an integral part of the financial statements

116


Schedule of Investments		Series V
December 31, 2009		(Mid Cap Value Series)


	Shares		Value
COMMON STOCKS—94.5% (continued)
Mortgage REIT’s—0.5%
Bimini Capital Management, Inc.²		699,155	$	167,797
Redwood Trust, Inc.¹		94,571		1,367,497

				1,535,294

Multi-Line Insurance—1.5%
American Financial Group, Inc.¹		177,900		4,438,605

Multi-Utilities—5.0%
Alliant Energy Corporation		167,100		5,056,446
Black Hills Corporation		120,000		3,195,600
Northwestern Corporation		167,000		4,345,340
SCANA Corporation		70,800		2,667,744

				15,265,130

Office Services & Supplies—0.5%
United Stationers, Inc.*		24,940		1,417,839
Oil & Gas Drilling—0.5%
Helmerich & Payne, Inc.		41,050		1,637,074

Oil & Gas Equipment & Services—2.9%
Complete Production Services, Inc.*		73,860		960,180
Global Industries, Ltd.*		1,094,249		7,801,996

				8,762,176

Oil & Gas Exploration & Production—2.2%
Goodrich Petroleum Corporation*		55,787		1,358,413
Gulfport Energy Corporation*		195,300		2,236,185
Petrohawk Energy Corporation^1,*		130,400		3,128,296

				6,722,894

Oil & Gas Storage & Transportation—1.7%
Southern Union Company		222,400		5,048,480

Packaged Foods & Meats—5.0%
Del Monte Foods Company		206,300		2,339,442
Hormel Foods Corporation¹		106,200		4,083,390
JM Smucker Company		111,200		6,866,600
Ralcorp Holdings, Inc.*		34,000		2,030,140

				15,319,572

Paper Packaging—3.4%
Bemis Company, Inc.		199,000		5,900,350
Sonoco Products Company		146,950		4,298,288

				10,198,638

Property & Casualty Insurance—6.3%
Alleghany Corporation*		16,235		4,480,860
Employers Holdings, Inc.		127,800		1,960,452
Hanover Insurance Group, Inc.		164,300		7,299,849
W.R. Berkley Corporation		213,800		5,268,032

				19,009,193

Regional Banks—3.0%
Associated Banc-Corporation		241,668		2,660,765
Commerce Bancshares, Inc.¹		60,354		2,336,907
First Horizon National Corporation*		52,409		702,279
Old National Bancorp		280,114		3,481,816

				9,181,767

Research & Consulting Services—2.4%
ICF International, Inc.*		114,400		3,065,920
Navigant Consulting. Inc.*		291,200		4,327,232

				7,393,152

Restaurants—2.3%
Burger King Holdings, Inc.		254,635		4,792,231
Jack in the Box, Inc.*		112,700		2,216,809

				7,009,040

Semiconductor Equipment—0.5%
Ultratech, Inc.*		105,800		1,572,188

Semiconductors—1.6%
IXYS Corporation²		670,000		4,971,400

Specialty Chemicals—1.1%
HB Fuller Company		13,351		303,735
Landec Corporation^2,*		251,145		1,567,145
Zoltek Companies. Inc.*		170,000		1,615,000

				3,485,880

Specialty Stores—1.9%
Cabela’s, Inc.*		410,431		5,852,746

Trucking—0.7%
Saia, Inc.*		133,690		1,981,286

TOTAL COMMON STOCKS (cost $275,789,225)			$	287,888,725
TOTAL COMMON STOCKS (cost $275,789,225)			$	287,888,725


	Shares		Value
WARRANTS—0.0%
Nova Biosource Fuels, Inc.
$2.40, 7/5/2011⁴		369,350		820

TOTAL WARRANTS (cost $381,520)			$	820
TOTAL WARRANTS (cost $381,520)			$	820



	Principal Amount		Value
CONVERTIBLE BONDS—0.7%
Metals & Minerals—0.7%
USEC, Inc.
3.00%, 2014⁴	$	3,500,000	$	2,275,000

TOTAL CONVERTIBLE BONDS (cost $3,500,000)			$	2,275,000

Total Investments—95.2%⁵ (cost $279,670,745)			$	290,164,545
Cash & Other Assets, Less Liabilities—4.8%				14,565,697

Total Net Assets- 100.0%			$	304,730,242

For federal income tax purposes the identified cost of investments owned at December 31, 2009 was $280,333,711.

ADR American Depositary Receipt

*	Non-income producing security

¹	Security is segregated as collateral for open written option contracts.

²	Security is deemed illiquid. The total market value of illiquid securities is $10,938,639 (cost $22,470,303), or 3.6% of total net assets.

The accompanying notes are an integral part of the financial statements

117


Schedule of Investments		Series V
December 31, 2009		(Mid Cap Value Series)

³	Investment in an affiliated issuer. See Note 6 in the Notes to Financial Statements.

⁴	Value determined based on Level 2 inputs.

⁵	Unless otherwise indicated, the values of the securities of the Portfolio are determined based on Level 1 inputs.

The accompanying notes are an integral part of the financial statements

118

Series V

(Mid Cap Value Series)

Statement of Assets and Liabilities

December 31, 2009


Assets:
Investments in unaffiliated issues, at value*	$	290,152,443
Investments in affiliated issues, at value**		12,102

Total investments		290,164,545
Cash		5,527,277
Receivables:
Fund shares sold		331,024
Securities sold		8,864,668
Interest		26,538
Dividends		800,448
Prepaid expenses		6,224

Total assets		305,720,724


Liabilities:
Payable for:
Fund shares redeemed		88,197
Securities purchased		28,410
Written options, at value (premiums received $440,888)		369,790
Management fees		189,768
Administration fees		24,247
Transfer agent/maintenance fees		2,084
Custodian fees		1,691
Directors’ fees		5,786
Professional fees		40,000
Other fees		240,509

Total liabilities		990,482

Net assets	$	304,730,242


Net assets consist of:
Paid in capital	$	320,081,834
Undistributed net investment income		2,528,388
Accumulated net realized loss on sale of investments		(28,444,878	)
Net unrealized appreciation in value of investments		10,564,898

Net assets	$	304,730,242


Capital shares authorized		unlimited
Capital shares outstanding		6,213,008
Net asset value per share (net assets divided by shares outstanding)	$	49.05


* Investments in unaffiliated issues, at cost	$	277,099,170
** Investments in affiliated issues, at cost		2,571,575

Total cost	$	279,670,745

Statement of Operations

For Year Ended December 31, 2009


Investment Income:
Dividends	$	4,735,571
Interest		170,296

Total investment income		4,905,867


Expenses:
Management fees		1,955,255
Administration fees		248,238
Transfer agent/maintenance fees		25,234
Custodian fees		13,187
Directors’ fees		26,604
Professional fees		54,878
Reports to shareholders		37,324
Other		16,759

Total expenses		2,377,479

Net investment income		2,528,388


Net Realized and Unrealized Gain (Loss):
Net realized gain (loss) during the year on:
Investments		(30,680,620	)
Options written		2,648,685

Net realized loss		(28,031,935	)


Net unrealized appreciation (depreciation) during the year on:
Investments		122,114,206
Options written		(699,260	)

Net unrealized appreciation		121,414,946

Net realized and unrealized gain		93,383,011

Net increase in net assets resulting from operations	$	95,911,399

The accompanying notes are an integral part of the financial statements

119


		Series V
Statement of Changes in Net Assets		(Mid Cap Value Series)


	Year Ended December 31, 2009			Year Ended December 31, 2008
Increase (decrease) in net assets from operations:
Net investment income	$	2,528,388		$	3,755,588
Net realized gain (loss) during the year on investments		(28,031,935	)		18,444,979
Net unrealized appreciation (depreciation) during the year on investments		121,414,946			(126,882,464	)

Net increase (decrease) in net assets resulting from operations		95,911,399			(104,681,897	)


Capital share transactions:
Proceeds from sale of shares		45,841,863			69,838,112
Cost of shares redeemed		(81,907,191	)		(129,483,458	)

Net decrease from capital share transactions		(36,065,328	)		(59,645,346	)

Net increase (decrease) in net assets		59,846,071			(164,327,243	)


Net assets:
Beginning of year		244,884,171			409,211,414

End of year	$	304,730,242		$	244,884,171


Undistributed net investment income at end of year	$	2,528,388		$	3,755,588


Capital share activity:
Shares sold		1,210,944			1,669,587
Shares redeemed		(2,183,072	)		(3,074,205	)

Total capital share activity		(972,128	)		(1,404,618	)

The accompanying notes are an integral part of the financial statements

120


Financial Highlights		Series V
Selected data for each share of capital stock outstanding throughout each year		(Mid Cap Value Series)


	2009			2008			2007			2006			Year Ended December 31, 2005
Per Share Data
Net asset value, beginning of period	$	34.08		$	47.64		$	46.78		$	40.79		$	35.10

Income (loss) from investment operations:
Net investment income^a		0.38			0.49			0.36			0.44			0.14
Net gain (loss) on securities (realized and unrealized)		14.59			(14.05	)		0.50			5.55			5.55

Total from investment operations		14.97			(13.56	)		0.86			5.99			5.69

Net asset value, end of period	$	49.05		$	34.08		$	47.64		$	46.78		$	40.79


Total Return^b		43.93	%		(28.46	)%		1.84	%		14.66	%		16.21	%

Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	304,730		$	244,884		$	409,211		$	447,271		$	384,494

Ratios to average net assets:
Net investment income		0.97	%		1.15	%		0.73	%		1.01	%		0.44	%
Total expenses^c		0.91	%		0.91	%		0.89	%		0.89	%		0.90	%
Net expenses^d		0.91	%		0.91	%		0.89	%		0.89	%		0.90	%
Net expenses prior to custodian earnings credits and net of expense waivers		0.91	%		0.91	%		0.89	%		0.89	%		0.90	%

Portfolio turnover rate		29	%		56	%		45	%		42	%		29	%

^a	Net investment income (loss) was computed using average shares outstanding throughout the period.

^c	Total expense information reflects the expense ratios absent expense reductions by the Investment Manager and earnings credits, as applicable.

^d	Net expense information reflects the expense ratios after voluntary expense waivers, reimbursements and custodian earnings credits, as applicable.

The accompanying notes are an integral part of the financial statements

121

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122


Manager’s Commentary
February 15, 2010


		Advised by:

To Our Shareholders:

Series X of the SBL Fund – Small Cap Growth Series gained 35.20% for the year, compared with a 34.47% increase in the Russell 2000 Growth Index and the Series’ peer group median return of 34.75%.

Information Technology and Industrials Top Performers

The information technology and industrials sectors led the Series performance. Information technology was an even weight position with the Index, but due to superior stock selection was able to outperform with gains of 91% versus 59%. Leading holdings were Skyworks Solutions, Inc. and Alliance Data Systems Corporation with returns of 183% and 171%, respectively. Fairchild Semiconductor International, Inc. also gained more than 100%. Alliance Data Systems and Fairchild Semiconductor were active positions not part of the Russell 2000 Growth benchmark.

The industrials sector added to performance through proper allocation and good stock picking. While it was a slight underweight against the benchmark, it outperformed 33% to 13%. Bucyrus International, Inc. soared 188% while BE Aerospace, Inc. was up 140%. Both were active bets as neither were part of the Index. Other securities in the sector contributing to returns included Constant Contact, Inc. and Regal-Beloit Corporation.

Health Care and Energy Disappoint

Health care was a large underweight relative to the Index, 12% to 25%. In addition, the holdings in the portfolio lost 8% against a 22% gain for the benchmark – a 30% difference – due to poor stock selection. The largest detractor was CardioNet, Inc., which dropped 76% over the period. Other holdings hurting performance included Martek Biosciences Corporation, down 37%, Psychiatric Solutions, Inc., losing 28%, and Wright Medical Group, Inc.

Holdings in the portfolios energy sector were also hurt by poor stock picks. Even though holdings in the Series gained 35% it could not keep pace with the 42% increase of the Index. Goodrich Petroleum Corporation and PetroQuest Energy, Inc. each declined approximately 20% while Comstock Resources, Inc. lost 14%.

Market Outlook

The main factors behind the strong equity markets of 2009 were the tremendous growth in risk appetite and the better than expected earnings results. We expect that earnings will continue to exceed expectations as cost cutting has led to significant margin expansion for most companies, which will now be combined with improving revenue growth. We are positive in our outlook for the equity markets but believe much of the gains, if there are gains, may be achieved during the 1st half of 2010.

Due to stronger than expected earnings in 2009, we watched earnings expectations for 2010 be revised upward. If the U.S. economy improves and the federal government continues the need to bring large levels of debt, we expect interest rates will climb limiting P/E expansion in the equity markets. We believe equity markets can achieve positive gains but that much of the gains may be achieved during the first half of 2010.

As always, we remain committed to our principles of investing in fast growing, high-margin companies with unique proprietary advantages and strong management teams. We have not changed our investment process. We continue to focus on our core expertise and investment process. As fellow investors in the strategy, we thank you for your long-term investment.

Sincerely,

Joe O’Connor, Portfolio Manager

123


		Series X
Performance Summary		(Small Cap Growth Series)
December 31, 2009		(unaudited)

PERFORMANCE

LOGO

$10,000 Over 10 Years

The chart above assumes a hypothetical $10,000 investment in Series X (Small Cap Growth Series) on December 31, 1999 and reflects the fees and expenses of Series X. The Russell 2000 Growth Index measures the performance of those Russell 2000 companies with higher price-to-book ratios and higher forecasted growth values.

Average Annual Returns


Periods Ended 12-31-09¹	1 Year		5 Years		10 Years
Series X	35.20	%	(3.16	)%	(2.77	)%

Portfolio Composition by Sector


Consumer Discretionary	14.31	%
Consumer Staples	3.55
Energy	5.57
Financials	5.94
Health Care	12.35
Industrials	16.56
Information Technology	25.88
Materials	5.15
Utilities	2.04
Exchange Traded Funds	5.83
Cash & Other Assets, Less Liabilities	2.82
Total Net Assets	100.00	%

The accompanying notes are an integral part of the financial statements

124


Schedule of Investments		Series X
December 31, 2009		(Small Cap Growth Series)


	Shares	Value
COMMON STOCKS—97.2%
Aerospace & Defense—2.0%
BE Aerospace, Inc.*	21,730	$	510,655
DigitalGlobe, Inc.*	8,180		197,956

			708,611

Apparel, Accessories & Luxury Goods—2.2%
Hanesbrands, Inc.*	19,000		458,090
Lululemon Athletica, Inc.*	10,800		325,080

			783,170

Application Software—7.9%
Informatica Corporation*	21,630		559,352
JDA Software Group, Inc.*	9,776		248,995
Longtop Financial Technologies, Ltd. ADR*	10,050		372,051
Nuance Communications, Inc.*	29,350		456,099
Solera Holdings, Inc.	22,350		804,823
VancelnfoTechnologies, Inc. ADR*	17,550		337,136

			2,778,456

Auto Parts & Equipment—0.6%
Gentex Corporation	11,870		211,880

Biotechnology—1.0%
Halozyme Therapeutics, Inc.*	29,310		172,050
Martek Biosciences Corporation*	8,700		164,778

			336,828

Casinos & Gaming—1.4%
WMS Industries, Inc.*	12,630		505,200

Coal & Consumable Fuels—1.5%
Massey Energy Company	12,700		533,527

Communications Equipment—1.5%
InterDigital, Inc.*	19,930		528,942

Computer Storage & Peripherals—1.9%
QLogic Corporation*	35,145		663,186

Construction & Engineering—2.1%
Aecom Technology Corporation*	27,240		749,100

Construction & Farm Machinery & Heavy Trucks—2.3%
Bucyrus International, Inc.	7,920		446,450
Wabtec Corporation	8,650		353,266

			799,716

Data Processing & Outsourced Services—1.8%
Alliance Data Systems Corporation*	9,960		643,316

Diversified Metals & Mining—0.9%
Thompson Creek Metals Company, Inc.*	26,800		314,096

Education Services—1.0%
DeVry, Inc.	6,000		340,380

Electric Utilities—1.0%
ITC Holdings Corporation	6,950		362,026

Electrical Components & Equipment—3.9%
Baldor Electric Company	15,970		448,597
Regal-Beloit Corporation	7,550		392,147
Roper Industries, Inc.	9,580		501,705

			1,342,449

Electronic Equipment & Instruments—2.2%
FLIR Systems, Inc.*	15,050		492,436
Rofin-SinarTechnologies.lnc.*	11,900		280,959

			773,395

Exchange Traded Funds—5.8%
iShares Russell 2000 Growth Index Fund	30,340		2,065,244

Fertilizers & Agricultural Chemicals—1.1%
Terra Industries, Inc.	12,440		400,444

Health Care Equipment—2.2%
Integra LifeSciences Holdings Corporation*	10,580		389,132
Wright Medical Group, Inc.*	20,350		385,633

			774,765

Health Care Services—3.3%
CardioNet, Inc.*	30,915		183,635
Clarient, Inc.*	41,000		108,650
LHC Group, lnc.*	12,560		422,142
Mednax, Inc.*	7,450		447,894

			1,162,321

Health Care Supplies—1.4%
Haemonetics Corporation*	9,035		498,280

Homebuilding—1.0%
Lennar Corporation	28,400		362,668

Homefurnishing Retail—1.1%
Select Comfort Corporation*	61,200		399,024

Household Products—1.7%
Church & Dwight Company, Inc.	10,325		624,146

Housewares & Specialties—2.6%
Jarden Corporation	29,680		917,408

Human Resources & Employment Services—0.9%
Watson Wyatt Worldwide, Inc.	6,550		311,256

Hypermarkets & Super Centers—1.1%
BJ’s Wholesale Club, Inc.*	12,100		395,791

Industrial Machinery—4.3%
IDEX Corporation	17,930		558,520
Pall Corporation	16,130		583,906
Pentair, Inc.*	10,900		352,070

			1,494,496

The accompanying notes are an integral part of the financial statements

125


Schedule of Investments		Series X
December 31, 2009		(Small Cap Growth Series)


	Shares	Value
COMMON STOCKS—97.2% (continued)
Internet Software & Services—0.6%
Constant Contact, Inc.*	13,770	$	220,320

Investment Banking & Brokerage—3.1%
Knight Capital Group, Inc.*	30,350		467,390
Stifel Financial Corporation*	9,150		542,045
TradeStation Group, Inc.*	14,440		113,932

			1,123,367

Leisure Facilities—1.8%
Life Time Fitness, Inc.*	16,355		407,730
Vail Resorts, Inc.*	6,135		231,903

			639,633

Life Sciences Tools & Services—1.0%
Charles River Laboratories International, Inc.*	11,000		370,590

Metal & Glass Containers—1.6%
Silgan Holdings, Inc.	9,800		567,224

Movies & Entertainment—0.7%
Imax Corporation*	18,635		247,846

Multi-Line Insurance—1.9%
HCC Insurance Holdings, Inc.	23,450		655,897

Multi-Utilities—1.0%
Northwestern Corporation	13,920		362,198

Oil & Gas Equipment & Services—2.5%
Oil States International, Inc.*	11,600		455,764
Superior Energy Services, Inc.*	17,090		415,116

			870,880

Oil & Gas Exploration & Production—1.6%
Bill Barrett Corporation*	10,900		339,099
Comstock Resources, Inc.*	5,640		228,815

			567,914

Packaged Foods & Meats—0.7%
Flowers Foods, Inc.	9,930		235,937

Pharmaceuticals—3.4%
Endo Pharmaceuticals Holdings, Inc.*	16,950		347,645
Perrigo Company	22,100		880,463

			1,228,108

Railroads—0.9%
Kansas City Southern*	10,005		333,066

Regional Banks—0.9%
TCF Financial Corporation	23,580		321,160

Research & Consulting Services—0.3%
ICF International, Inc.*	4,500		120,600

Restaurants—1.9%
Einstein Noah Restaurant Group, Inc.*	14,200		139,586
McCormick & Schmick’s Seafood Restaurants, Inc.*	15,850		110,316
Panera Bread Company*	6,100		408,517

			658,419

Semiconductor Equipment—2.2%
Formfactor, Inc.*	18,180		395,596
Tessera Technologies, Inc.*	16,480		383,490

			779,086

Semiconductors—5.0%
ON Semiconductor Corporation*	88,565		780,258
Skyworks Solutions, Inc.*	69,265		982,870

			1,763,128

Steel—1.5%
AK Steel Holding Corporation	25,235		538,767

Systems Software—1.3%
Rovi Corporation*	14,600		465,302

Technology Distributors—1.6%
SYNNEX Corporation*	17,900		548,814

TOTAL COMMON STOCKS (cost $27,364,506)		$	34,398,377

Total Investments—97.2%¹ (cost $27,364,506)		$	34,398,377
Cash & Other Assets, Less Liabilities—2.8%			997,545

Total Net Assets—100.0%		$	35,395,922

For federal income tax purposes the identified cost of investments owned at December 31, 2009 was $27,454,701.

ADR	American Depositary Receipt

*	Non-income producing security

¹	Unless otherwise indicated, the values of the securities of the Portfolio are determined based on Level 1 inputs.

The accompanying notes are an integral part of the financial statements

126


		Series X
		(Small Cap Growth Series)

Statement of Assets and Liabilities

December 31, 2009


Assets:
Investments, at value*	$	34,398,377
Cash		838,195
Receivables:
Fund shares sold		100,136
Securities sold		412,610
Dividends		10,406
Prepaid expenses		611

Total assets		35,760,335


Liabilities:
Payable for:
Fund shares redeemed		17,998
Securities purchased		297,367
Management fees		24,937
Administration fees		3,087
Transfer agent/maintenance fees		2,083
Custodian fees		460
Directors’ fees		502
Professional fees		9,979
Other fees		8,000

Total liabilities		364,413

Net assets	$	35,395,922


Net assets consist of:
Paid in capital	$	58,623,489
Accumulated net realized loss on sale of investments		(30,261,438	)
Net unrealized appreciation in value of investments		7,033,871

Net assets	$	35,395,922


Capital shares authorized		unlimited
Capital shares outstanding		2,438,219
Net asset value per share (net assets divided by shares outstanding)	$	14.52


* Investments, at cost	$	27,364,506

Statement of Operations

For Year Ended December 31, 2009


Investment Income:
Dividends	$	245,909
Interest		943

Total investment income		246,852


Expenses:
Management fees		262,642
Administration fees		30,259
Transfer agent/maintenance fees		25,216
Custodian fees		1,744
Directors’ fees		3,407
Professional fees		10,090
Reports to shareholders		5,147
Other		2,726

Total expenses		341,231
Earnings credits applied		(287	)

Net expenses		340,944

Net investment loss		(94,092	)


Net Realized and Unrealized Gain (Loss):
Net realized gain (loss) during the year on:
Investments		3,898,637

Net realized gain		3,898,637


Net unrealized appreciation (depreciation) during the year on:
Investments		5,705,272

Net unrealized appreciation		5,705,272

Net realized and unrealized gain		9,603,909

Net increase in net assets resulting from operations	$	9,509,817

The accompanying notes are an integral part of the financial statements

127


		Series X
Statement of Changes in Net Assets		(Small Cap Growth Series)


	Year Ended December 31, 2009			Year Ended December 31, 2008
Increase (decrease) in net assets from operations:
Net investment loss	$	(94,092	)	$	(389,974	)
Net realized gain (loss) during the year on investments		3,898,637			(26,722,317	)
Net unrealized appreciation (depreciation) during the year on investments		5,705,272			(3,538,566	)

Net increase (decrease) in net assets resulting from operations		9,509,817			(30,650,857	)


Capital share transactions:
Proceeds from sale of shares		6,072,551			14,256,113
Cost of shares redeemed		(10,470,581	)		(35,153,979	)

Net decrease from capital share transactions		(4,398,030	)		(20,897,866	)

Net increase (decrease) in net assets		5,111,787			(51,548,723	)


Net assets:
Beginning of year		30,284,135			81,832,858

End of year	$	35,395,922		$	30,284,135


Undistributed net investment income at end of year	$	—		$	—


Capital share activity:
Shares sold		541,403			931,001
Shares redeemed		(924,076	)		(2,130,808	)

Total capital share activity		(382,673	)		(1,199,807	)

The accompanying notes are an integral part of the financial statements

128


Financial Highlights		Series X
Selected data for each share of capital stock outstanding throughout each year		(Small Cap Growth Series)


	2009			2008^a			2007			2006			Year Ended December 31, 2005
Per Share Data
Net asset value, beginning of period	$	10.74		$	20.35		$	19.27		$	18.33		$	17.05

Income (loss) from investment operations:
Net investment loss^b		(0.04	)		(0.12	)		(0.17	)		(0.13	)		(0.15	)
Net gain (loss) on securities (realized and unrealized)		3.82			(9.49	)		1.25			1.07			1.43

Total from investment operations		3.78			(9.61	)		1.08			0.94			1.28

Net asset value, end of period	$	14.52		$	10.74		$	20.35		$	19.27		$	18.33


Total Return^c		35.20	%		(47.22	)%		5.60	%		5.13	%		7.51	%

Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	35,396		$	30,284		$	81,833		$	92,789		$	90,671

Ratios to average net assets:
Net investment loss		(0.30	)%		(0.80	)%		(0.82	)%		(0.66	)%		(0.85	)%
Total expenses^d		1.10	%		1.24	%		1.20	%		1.20	%		1.19	%
Net expenses^e		1.10	%		1.24	%		1.20	%		1.19	%		1.18	%
Net expenses prior to custodian earnings credits and net of expense waivers		1.10	%		1.24	%		1.20	%		1.20	%		1.19	%

Portfolio turnover rate		100	%		209	%^f		137	%		149	%		116	%

^a	Security Global Investors, LLC (SGI) became the advisor of Series X effective December 1, 2008. Prior to December 1, 2008, SGI paid RS Investments, Inc. for sub-advisory services.

^b	Net investment income (loss) was computed using average shares outstanding throughout the period.

^d	Total expense information reflects the expense ratios absent expense reductions by the Investment Manager and earnings credits, as applicable.

^e	Net expense information reflects the expense ratios after voluntary expense waivers, reimbursements and custodian earnings credits, as applicable.

^f	Significant variation in the portfolio turnover rate is due to Investment Manager’s appointment of new portfolio manager for the Series.

The accompanying notes are an integral part of the financial statements

129

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130

Manager’s Commentary

February 15, 2010


		Advised by:

To Our Shareholders:

Series Y of the SBL Fund – Select 25 Series returned 33.28% in the year, lagging the benchmark Russell 1000 Growth Index's return of 37.21% and the Series' peer group median return of 36.99%.

Our strategy is to buy companies that are trading at a significant discount to their intrinsic value. Our investment approach is a defined and disciplined process of three clear philosophical tenets that drive our investment decisions: a valuation focus, a long-term perspective and an opportunistic approach.

Our investment process is fundamentally driven and quantitatively aided. We use proprietary screens to identify potential companies for investment and then perform rigorous fundamental analysis to identify the best ideas. Through this fundamental research, we determine an estimate of intrinsic value and thus a valuation target for each idea. We construct the portfolios based on the level of conviction generated by this bottom-up analysis and the upside/downside profile associated with each company. We ultimately structure the portfolio with 25-30 names.

Materials and Consumer Staples Top Performers

The Series’ materials holdings benefited the portfolio from an overweight position that gained 74% due to superior stock selection against a 42% increase in the Index. Both Mosaic Company and Air Products & Chemicals, Inc. rose more than 60% during the period. Other holdings in the sector that boosted returns were Freeport-McMoRan Copper & Gold, Inc. and Monsanto Company.

The consumer staples sector benefited from an underweight allocation in one of the lower performing sectors in the marketplace. Nevertheless, several securities in the sector added to returns, including PepsiCo, Inc., CVS Caremark Corporation, and Colgate-Palmolive Company.

Consumer Discretionary and Consumer Staples Disappoint

The Series’ consumer discretionary sector was an overweight position in a market segment that did well. However, stock selection hurt relative performance as the portfolio gained only 18% compared to 43% for the benchmark. Dragging down returns was Coach, Inc., which declined 31% while the security actually gained 77% if held for the entire period. Similarly, Best Buy Company, Inc. was down 15% in the strategy while the security gained 43% for the year. Other detractors in the sector were Comcast Corporation (Cl A) and Lowe’s Companies, Inc.

The consumer staples sector was an underweight position that also underperformed the benchmark. While strategy holdings gained 14%, it was still below the 17% increase for the Russell 1000 Growth Index. The two main culprits were General Mills, Inc., down 16% for the portfolio while up 20% during the holding period, and Wal-Mart Stores, Inc.

Market Outlook

Our bottom-up approach looks at market uncertainty in the context of the potential long-term impact on individual companies. Often times, volatility provides opportunity, and the past year has been one of the most volatile markets in history. We are maintaining flexibility in the portfolios to take advantage of these opportunities as they arise. Our focus is on identifying companies with the ability to be substantially better over the next three to five years or have the potential to maintain their return on capital at current levels in a difficult economic environment. We are confident in our ability to find these companies.

Sincerely,

Mark P. Bronzo, Portfolio Manager

131

Performance Summary

Series Y

(Select 25 Series)

December 31, 2009

(unaudited)

PERFORMANCE

LOGO

$10,000 Over 10 Years

The chart above assumes a hypothetical $10,000 investment in Series Y (Select 25 Series) on December 31, 1999 and reflects the fees and expenses of Series Y. The Russell 1000 Growth Index is an unmanaged capitalization-weighted index which includes stocks incorporated in the United States and its territories and measures the performance of the Russell 1000 companies with higher price-to-book ratios and higher forecasted growth values.

Average Annual Returns


Periods Ended 12-31-09¹	1 Year		5 Years		10 Years
Series Y	33.28	%	(1.11	)%	(3.65	)%

Portfolio Composition by Sector


Consumer Discretionary	11.65	%
Consumer Staples	6.72
Energy	9.14
Financials	6.22
Health Care	12.48
Industrials	15.40
Information Technology	28.86
Materials	5.73
Cash & Other Assets, Less Liabilities	3.80
Total Net Assets	100.00	°%

The accompanying notes are an integral part of the financial statements

132


Schedule of Investments		Series Y
December 31, 2009		(Select 25 Series)


	Shares	Value
COMMON STOCKS—96.2%
Advertising—3.2%
Omnicom Group, Inc.	33,660	$	1,317,789

Aerospace & Defense—6.1%
Boeing Company	21,570		1,167,584
Goodrich Corporation	21,540		1,383,944

			2,551,528

Apparel Retail—3.0%
TJX Companies, Inc.	33,600		1,228,080

Biotechnology—2.9%
Amgen, Inc.*	21,240		1,201,547

Coal & Consumable Fuels—2.9%
Peabody Energy Corporation	26,670		1,205,751

Communications Equipment—6.2%
Cisco Systems, Inc.*	53,800		1,287,971
Qualcomm, Inc.	27,220		1,259,197

			2,547,168

Computer Hardware—4.3%
Apple, Inc.*	8,455		1,782,821

Computer Storage & Peripherals—3.9%
EMC Corporation*	93,130		1,626,981

Department Stores—2.7%
Kohl’s Corporation*	20,540		1,107,722

Diversified Metals & Mining—2.8%
Freeport-McMoRan Copper & Gold, Inc. (Cl.B)	14,580		1,170,628

Electrical Components & Equipment—6.1%
Cooper Industries plc	29,640		1,263,850
Emerson Electric Company	29,060		1,237,956

			2,501,806

Fertilizers & Agricultural Chemicals—2.9%
Potash Corporation of Saskatchewan, Inc.	11,025		1,196,213

Health Care Equipment—3.0%
Covidien plc	25,740		1,232,689

Hotels, Resorts & Cruise Lines—2.8%
Carnival Corporation*	36,700		1,163,023

Household Products—2.8%
Colgate-Palmolive Company	14,130		1,160,780

Industrial Conglomerates—3.2%
3M Company	15,850		1,310,320

Integrated Oil & Gas—2.9%
Occidental Petroleum Corporation	14,920		1,213,742

Internet Software & Services—4.4%
Google, Inc.*	2,950		1,828,941

Investment Banking & Brokerage—2.9%
Morgan Stanley	40,500		1,198,800

IT Consulting & Other Services—3.0%
Cognizant Technology Solutions Corporation*	27,490		1,245,297

Oil & Gas Drilling—3.3%
Transocean, Ltd.*	16,420		1,359,576

Other Diversified Financial Services—3.3%
JPMorgan Chase & Company	32,965		1,373,652

Pharmaceuticals—6.6%
Pfizer, Inc.	70,710		1,286,215
Teva Pharmaceutical Industries, Ltd. ADR	25,620		1,439,331

			2,725,546

Semiconductor Equipment—3.0%
Lam Research Corporation*	31,160		1,221,784

Semiconductors—4.1%
Intel Corporation	82,210		1,677,084

Soft Drinks—3.9%
PepsiCo, Inc.	26,600		1,617,280

TOTAL COMMON STOCKS (cost $34,706,007)		$	39,766,548

Total Investments—96.2%¹ (cost $34,706,007)		$	39,766,548
Cash & Other Assets, Less Liabilities—3.8%			1,571,788

Total Net Assets—100.0%		$	41,338,336

For federal income tax purposes the identified cost of investments owned at December 31, 2009 was $35,217,164.

ADR	American Depositary Receipt

plc	Public Limited Company

*	Non-income producing security

¹	Unless otherwise indicated, the values of the securities of the Portfolio are determined based on Level 1 inputs.

The accompanying notes are an integral part of the financial statements

133

Series Y

(Select 25 Series)

Statement of Assets and Liabilities

December 31, 2009


Assets:
Investments, at value*	$	39,766,548
Cash		1,291,324
Receivables:
Fund shares sold		303,044
Dividends		39,628
Prepaid expenses		701

Total assets		41,401,245


Liabilities:
Payable for:
Fund shares redeemed		12,892
Management fees		25,806
Administration fees		3,314
Transfer agent/maintenance fees		2.083
Custodian fees		58
Directors’ fees		1,674
Professional fees		11,341
Other fees		5,741

Total liabilities		62,909

Net assets	$	41,338,336


Net assets consist of:
Paid in capital	$	68,585,546
Undistributed net investment income		126,624
Accumulated net realized loss on sale of investments		(32,434,375	)
Net unrealized appreciation in value of investments		5,060,541

Net assets	$	41,338,336


Capital shares authorized		unlimited
Capital shares outstanding		4,848,032
Net asset value per share (net assets divided by shares outstanding)	$	8.53


* investments, at cost	$	34,706,007

Statement of Operations

For Year Ended December 31, 2009


Investment Income:
Dividends	$	464,540
Interest		685

Total investment income		465,225


Expenses:
Management fees		254,806
Administration fees		32,440
Transfer agent/maintenance fees		25,215
Custodian fees		2,349
Directors’ fees		3,874
Professional fees		11,710
Reports to shareholders		5,357
Other		2,850

Total expenses		338,601

Net expenses		338,601

Net investment income		126,624


Net Realized and Unrealized Gain (Loss):
Net realized gain (loss) during the year on:
Investments		(6,912,143	)

Net realized loss		(6,912,143	)


Net unrealized appreciation (depreciation) during the year on:
Investments		16,699,320

Net unrealized appreciation		16,699,320

Net realized and unrealized gain		9,787,177

Net increase in net assets resulting from operations	$	9,913,801

The accompanying notes are an integral part of the financial statements

134

Statement of Changes in Net Assets

Series Y

(Select 25 Series)


	Year Ended December 31, 2009			Year Ended December 31, 2008
Increase (decrease) in net assets from operations:
Net investment income	$	126,624		$	71,213
Net realized loss during the year on investments		(6,912,143	)		(7,958,784	)
Net unrealized appreciation (depreciation) during the year on investments		16,699,320			(13,376,234	)

Net increase (decrease) in net assets resulting from operations		9,913,801			(21,263,805	)


Capital share transactions:
Proceeds from sale of shares		12,453,173			13,661,292
Cost of shares redeemed		(14,612,634	)		(25,136,549	)

Net decrease from capital share transactions		(2,159,461	)		(11,475,257	)

Net increase (decrease) in net assets		7,754,340			(32,739,062	)


Net assets:
Beginning of year		33,583,996			66,323,058

End of year	$	41,338,336		$	33,583,996


Undistributed net investment income at end of year	$	126,624		$	71,213


Capital share activity:
Shares sold		1,729,313			1,592,936
Shares redeemed		(2,125,671	)		(2,867,153	)

Total capital share activity		(396,358	)		(1,274,217	)

The accompanying notes are an integral part of the financial statements

135


Financial Highlights	Series Y
Selected data for each share of capital stock outstanding throughout each year	(Select 25 Series	)


	2009			2008			2007			2006^a			Year Ended December 31, 2005
Per Share Data
Net asset value, beginning of period	$	6.40		$	10.17		$	10.84		$	10.08		$	9.02

Income (loss) from investment operations:
Net investment income^b		0.03			0.01			0.06			0.02			—
Net gain (loss) on securities (realized and unrealized)		2.10			(3.78	)		(0.73	)		0.74			1.06

Total from investment operations		2.13			(3.77	)		(0.67	)		0.76			1.06

Net asset value, end of period	$	8.53		$	6.40		$	10.17		$	10.84		$	10.08


Total Return^c		33.28	%		(37.07	)%		(6.18	)%		7.54	%		11.75	%

Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	41,338		$	33,584		$	66,323		$	85,695		$	37,018

Ratios to average net assets:
Net investment income (loss)		0.37	%		0.14	%		0.51	%		0.21	%		(0.04	)%
Total expenses^d		1.00	%		0.97	%		0.93	%		0.95	%		0.99	%
Net expenses^e		1.00	%		0.97	%		0.93	%		0.95	%		0.99	%
Net expenses prior to custodian earnings credits and net of expense waivers		1.00	%		0.97	%		0.93	%		0.95	%		0.99	%

Portfolio turnover rate		151	%		214	%^f		16	%		40	%		28	%

The financial highlights for Series Y exclude the historical financial highlights of Series G. The assets of Series G were acquired by Series Y on June 16, 2006. A total of $40,543,215 was excluded from purchases in the portfolio turnover calculation, which represents the cost of the securities Series Y received as a result of the merger.

^b	Net investment income (loss) was computed using average shares outstanding throughout the period.

^d	Total expense information reflects the expense ratios absent expense reductions by the Investment Manager and earnings credits, as applicable.

^e	Net expense information reflects the expense ratios after voluntary expense waivers, reimbursements and custodian earnings credits, as applicable.

^f	Significant variation in the portfolio turnover rate is due to Investment Manager’s appointment of new portfolio manager for the Series.

The accompanying notes are an integral part of the financial statements

136

Managers’ Commentary

February 15, 2010

Advised by:

and Subadvised by:

Mainstream Investment Advisers

To Our Shareholders:

For the year ended December 31, 2009, Series Z of the SBL Fund – Alpha Opportunity Series total return was 30.39%¹, besting its benchmark, the S&P 500 Index, by nearly 350 basis points, which returned 26.46%.

Investment Philosophy

The Series’ strategy is to invest approximately 50% of its total assets according to a long/short strategy and 50% of its total assets in a portfolio of equity securities, equity derivatives, and fixed income securities with the intention of tracking the performance of the S&P 500 Index.

The fundamental investment philosophy of the active value strategy rests first upon the belief that it is critical to identify the long-term investment theme governing the equity markets. These themes may persist for 15 to 20 years.

Second, while we also believe that valuation adds important perspective to investment decisions, it is not an efficient means of timing purchase and sale decisions. We believe those decisions are best made using technical analysis. We believe technical analysis, the study of price trends, allows us to efficiently capture gains and avoid material losses.

The third tenet of our philosophy is that changes in stock prices lead changes in fundamental corporate developments. A proactive asset management approach helps to keep our investment themes fresh and our risk levels moderate.

Financials, Consumer Discretionary, and Energy Top Performers

Stock selection in the financials sector accounted for all the excess gain above the Index. While a slight overweight position, a position in one security made the difference. General Growth Properties, Inc. soared from around $2 per share to $10 per share, an increase during the year of over 1,600%. The issue was a solid 3% average weight in the portfolio. Other top performing securities included Fortis B N.V. and Genworth Financial, Inc. (Cl A), which returned over 160% and 300%, respectively.

In the consumer discretionary sector, the shorting of Volkswagen AG, which dropped more than 60%, was responsible for the largest gain. Holdings in Marvel Entertainment and Shanda Interactive Entertainment, Ltd. were the sectors’ best performing long positions.

In the energy sector, Exxon Mobil Corporation was the best relative performer against the benchmark as a short position. Walter Energy, Inc. was the leading long position gaining over 90% during the period.

Industrials and Information Technology Disappoint

The industrials sector was hurt by a relative overweight position and poor stock selection. While the S&P 500 Index gained 20%, the Series’ industrials sector increased just 2%. Largest detractors included Lockheed Martin Corporation, a 3% position that was down 8%, Watson Wyatt Worldwide, Inc., a break-even holding, and Delta Airlines, which dropped 40% over the period.

The Series’ information technology sector’s performance kept pace with the benchmark, returning approximately 60%. However, at 11%, the portfolio weight was well below the 18% for the Index. Not holding Apple, Inc. throughout the year caused the performance of the holding to significantly lag the potential return of the security. A short position in Cree, Inc., a security that soared more than 250%, hurt performance in the sector and portfolio.

Due to a previous brokerage relationship with Lehman Brothers International Europe (“LBIE”) (which was placed into administration on September 15, 2008), the Series has certain short sale positions that it is currently unable to settle and certain long positions held by its custodian that are pledged to LBIE which the Series currently cannot access. As a result, the Series is currently unable to actively pursue the global long/short portion of its investment strategy. The Series is unable to determine when it will resume its full investment program.

Market Outlook

While global banking systems and economies appear to have stabilized, significant challenges remain. Foremost among these will be removal of the extraordinary measures taken by central banks and governments around the world to stimulate and re-liquefy economies. While growth has re-emerged in many areas of the world, the recovery remains fragile and measurement somewhat suspect.

We know that the U.S. yield curve is close to the historical peak in terms of steepness and that in the past the peak spread has been a good indicator of Fed rate hikes. As a result, we have confidence in our (not unique) view that the extraordinary measures will be removed and that policy will normalize, if not in 2010 probably by early 2011. Based on historical experience we can also be reasonably sure that when markets start to discount this development the likely symptom will be stock weakness.

Our approach remains to identify the best possible investments in all phases of the market and economic cycle.

We thank you for your investment and appreciate the trust and confidence you have placed in us.

Sincerely,

Bill Jenkins, Portfolio Manager,

Mainstream Investment Advisers

David Whittall, Portfolio Manager,

Security Global Investors

Scott Klimo, Portfolio Manager,

Security Global Investors

¹	Fee waivers and/or reimbursements reduce Series expenses and in the absence of such waivers, the performance quoted would be reduced.

137

Performance Summary

December 31, 2009

Series Z

(Alpha Opportunity Series)

(unaudited)

PERFORMANCE

LOGO

$10,000 Since Inception

The chart above assumes a hypothetical $10,000 investment in Series Z (Alpha Opportunity Series) on July 7, 2003 (date of inception), and reflects the fees and expenses of Series Z. The S&P 500 Index is a capitalization weighted index composed of 500 selected common stocks that represent the broad domestic economy and is a widely recognized unmanaged index of market performance.

Average Annual Returns


Periods Ended 12-31-09¹	1 Year		5 Years		Since Inception (7-7-03)
Series Z	30.39	%	3.93	%	7.67	%

Portfolio Composition by Sector*


Consumer Discretionary	(4.01	)%
Consumer Staples	7.30
Energy	2.21
Financials	2.12
Health Care	1.88
Industrials	6.33
Information Technology	8.22
Materials	10.07
Telecommunications	0.47
Utilities	(0.32	)
Exchange Traded Funds	4.88
U.S. Government Sponsored Agencies	17.23
Short Term Investments	10.07
Repurchase Agreement	10.20
Cash & Other Assets, Less Liabilities	23.35
Total Net Assets	100.00	%

*	Securities sold short are netted with long positions in common stocks in the appropriate sectors.

The accompanying notes are an integral part of the financial statements

138


Schedule of Investments		Series Z
December 31, 2009		(Alpha Opportunity Series)


	Shares	Value
COMMON STOCKS—75.7%
Aerospace & Defense—1.6%
Lockheed Martin Corporation^1,2	3,993	$	300,873
Northrop Grumman Corporation^1,2	1,100		61,435

			362,308

Agricultural Products—1.7%
Archer-Daniels-Midland Company	4,641		145,310
Bunge, Ltd.³	3,822		243,958

			389,268

Air Freight & Logistics—0.8%
FedEx Corporation	2,304		192,269

Aluminum—0.9%
Aluminum Corporation of China, Ltd. ADR	7,820		213,095

Apparel Retail—2.7%
Gap, Inc.^1,2	6,300		131,985
Gymboree Corporation^1,2,*	3,200		139,168
Ltd. Brands, Inc.^1,2	5,400		103,896
Ross Stores, Inc.^1,2	2,300		98,233
TJX Companies, Inc.^1,2	3,800		138,890

			612,172

Apparel, Accessories & Luxury Goods—0.2%
Phillips-Van Heusen Corporation^1,2	900		36,612

Auto Parts & Equipment—0.0%
Exide Technologies*	1,365		9,705

Biotechnology—0.5%
Amgen, Inc.1,2,*	1,900		107,483

Communications Equipment—1.7%
ADC Telecommunications, Inc.*	6,730		41,793
Cisco Systems, Inc.*	7,357		176,126
Finisar Corporation*	1,642		14,647
Harmonic, Inc.^1,2,*	11,700		74,061
Motorola, Inc.	2,653		20,587
Oplink Communications, Inc.*	1,748		28,650
Opnext, Inc.*	2,174		4,131
Plantronics, Inc.	636		16,523

			376,518

Computer & Electronics Retail—0.5%
RadioShack Corporation^1,2	5,500		107,250

Computer Storage & Peripherals—0.0%
EMC Corporation*	546		9,539

Construction & Engineering—0.6%
Michael Baker Corporation*	2,102		87,023
Shaw Group, Inc.*	1,911		54,941

			141,964

Construction & Farm Machinery & Heavy Trucks—4.6%
Joy Global, Inc.^1,2	13,322		687,282
Trinity Industries, Inc.^1,2	10,800		188,352
Wabtec Corporation	3,483		142,246

			1,017,880

Construction Materials—0.3%
Eagle Materials, Inc.	2,805		73,070

Diversified Banks—0.2%
Barclays plc ADR	2,925		51,480

Diversified Capital Markets—0.1%
UBS AG	975		15,122

Diversified Chemicals—0.9%
FMC Corporation	3,822		213,115

Diversified Metals & Mining—4.0%
Compass Minerals International, Inc.	2,063		138,613
Freeport-McMoRan Copper & Gold, Inc. (Cl.B)	2,747		220,556
General Moly, Inc.*	14,013		29,147
Horsehead Holding Corporation*	11,617		148,117
Rio Tinto plc ADR	390		84,002
Sterlite Industries India, Ltd. ADR	1,365		24,870
Teck Resources, Ltd. (Cl. B)*	5,506		192,544
Thompson Creek Metals Company, Inc.*	7,293		85,474

			923,323

Electrical Components & Equipment—0.9%
AO Smith Corporation^1,2	3,000		130,169
GrafTech International, Ltd.*	3,974		61,796
Harbin Electric, Inc.*	1,092		22,430

			214,395

Electronic Components—0.1%
AVX Corporation	2,385		30,218

Electronic Manufacturing Services—0.3%
Flextronics International, Ltd.*	8,978		65,629

Environmental & Facilities Services—0.3%
Metalico, Inc.*	15,834		77,903

Exchange Traded Funds—5.2%
Claymore/Beacon Global Timber Index ETF	8,183		146,967
iPath DowJones-UBS Coffee Subindex Total Return ETN	281		10,880
iPath MSCI India Index ETN*	780		49,967
iShares S&P Global Materials Sector Index Fund³	6,997		435,353
Market Vectors - Russia ETF	7,296		227,489
PowerShares DB Agriculture Fund^3,*	11,095		293,352

			1,164,008

Fertilizers & Agricultural Chemicals—1.5%
China Green Agriculture, Inc.*	523		7,688
Intrepid Potash, Inc.*	1,092		31,854
Monsanto Company³	3,549		290,130

			329,672

The accompanying notes are an integral part of the financial statements

139


Schedule of Investments		Series Z
December 31, 2009		(Alpha Opportunity Series)


	Shares	Value
COMMON STOCKS—75.7% (continued)
Food Distributors—0.2%
Andersons, Inc.	1,936	$	49,988

Food Retail—0.5%
QKL Stores.lnc.*	4,737		31,738
Safeway, Inc.^1,2	4,200		89,418

			121,156

General Merchandise Stores—0.5%
Family Dollar Stores, Inc.^1,2	3,900		108,537

Gold—1.7%
Iamgold Corporation	2,925		45,747
Randgold Resources, Ltd. ADR³	4,207		332,858

			378,605

Health Care Distributors—1.0%
McKesson Corporation	1,638		102,375
Owens & Minor, Inc.^1,2	2,800		120,204

			222,579

Health Care Equipment—0.5%
Baxter International, Inc.^1,2	1,900		111,492

Health Care Facilities—0.3%
Kindred Healthcare, Inc.^1,2^,*	4,100		75,686

Health Care Services—0.7%
Lincare Holdings, Inc.^1,2,*	4,100		152,192

Home Entertainment Software—3.7%
Shanda Interactive Entertainment, Ltd. ADR^1,2,*	16,000		841,760

Human Resources & Employment Services—0.6%
Monster Worldwide, Inc.*	839		14,599
Watson Wyatt Worldwide, Inc.^1,2	2,400		114,048

			128,647

Hypermarkets & Super Centers—0.5%
Wal-Mart Stores. Inc.^1,2	2,300		122,935

Independent Power Producers & Energy Traders—0.8%
Constellation Energy Group, Inc.^1,2	5,400		189,918

Industrial Conglomerates—0.3%
General Electric Company^1,2	4,500		68,085

Industrial Machinery—0.9%
Pentair, Inc.*	870		28,101
SPX Corporation	273		14,933
Timken Company	3,276		77,674
Watts Water Technologies, Inc.^1,2	3,000		92,760

			213,468

Integrated Oil & Gas—1.5%
ConocoPhillips^1,2	1,500		76,605
Occidental Petroleum Corporation	1,786		145,291
Suncor Energy, Inc.	2,925		103,282

			325,178

Integrated Telecommunication Services—1.4%
AT&T, Inc.^1,2	11,300		316,739

Life Sciences Tools & Services—1.6%
Charles River Laboratories International, Inc.^1,2^,*	2,100		70,749
Life Technologies Corporation^1,2^,*	3,000		156,690
Millipore Corporation^1,2^,*	1,900		137,465

			364,904

Managed Health Care—0.4%
WellCare Health Plans, Inc.^1,2^,*	2,400		88,224

Marine Ports & Services—0.4%
DryShips, Inc.	17,280		100,570

Movies & Entertainment—1.4%
Marvel Entertainment, Inc.^1,2^,*	5,800		313,664

Multi-Line Insurance—0.2%
Genworth Financial, Inc.^1,2^,*	4,200		47,670

Oil & Gas Drilling—0.1%
Precision Drilling Trust	1,950		14,138

Oil & Gas Equipment & Services—1.2%
Halliburton Company	1,365		41,073
National Oilwell Varco, Inc.	3,376		148,847
Willbros Group, Inc.*	4,403		74,279

			264,199

Oil & Gas Exploration & Production—1.0%
Anadarko Petroleum Corporation^1,2	2,930		182,891
Kodiak Oil & Gas Corporation*	9,282		20,606
Range Resources Corporation	273		13,609

			217,106

Oil & Gas Refining & Marketing—0.6%
World Fuel Services Corporation	4,800		128,592

Oil & Gas Storage & Transportation—0.1%
El Paso Corporation	1,911		18,785

Packaged Foods & Meats—0.5%
Cal-Maine Foods, Inc.	3,100		105,648

Paper Packaging—0.0%
Smurfit-Stone Container Corporation*	2,123		584

Personal Products—0.5%
Herbalife, Ltd.^1,2	2,600		105,482

Pharmaceuticals—2.4%
Forest Laboratories, Inc.^1,2^,*	3,600		115,596
Johnson & Johnson^1,2	5,300		341,373

The accompanying notes are an integral part of the financial statements

140


Schedule of Investments		Series Z
December 31, 2009		(Alpha Opportunity Series)


	Shares		Value
COMMON STOCKS—75.7% (continued)
Pharmaceuticals—2.4% (continued)
Viropharma, Inc.^1,2^,*		10,500	$	88,095

				545,064

Precious Metals & Minerals—1.0%
Coeur d’Alene Mines Corporation*		4,830		87,230
E-TRACS UBS Long Platinum ETN*		3,003		55,255
Stillwater Mining Company*		9,282		87,993

				230,478

Property & Casualty Insurance—0.3%
Amtrust Financial Services, Inc.^1,2		6,300		74,466

Railroads—0.2%
Genesee & Wyoming, Inc.*		1,688		55,096

Reinsurance—0.5%
Endurance Specialty Holdings, Ltd.^1,2		3,200		119,136

Restaurants—0.4%
Jack in the Box, Inc.^1,2,*		4,200		82,614

Retail REIT’s—5.8%
General Growth Properties, Inc.³		111,800		1,292,409

Semiconductor Equipment—0.6%
Amkor Technology, Inc.^1,2^,*		9,800		70,169
Brooks Automation, Inc.*		819		7,027
KLA-Tencor Corporation		546		19,743
Lam Research Corporation*		1,092		42,817

				139,756

Semiconductors—2.1%
Intel Corporation		8,549		174,401
LSI Corporation*		9,789		58,832
ON Semiconductor Corporation*		6,629		58,401
Skyworks Solutions, Inc.*		1,092		15,495
Texas Instruments, Inc.		6,006		156,516
TriQuint Semiconductor, Inc.*		2,143		12,858

				476,503

Specialized REIT’s—0.3%
Rayonier, Inc.		1,833		77,279

Specialty Chemicals—1.1%
Minerals Technologies, Inc.		2,067		112,589
OM Group, Inc.*		2,730		85,695
Rockwood Holdings, Inc.*		2,457		57,887

				256,171

Steel—0.6%
Commercial Metals Company		3,499		54,760
Gerdau Ameristeel Corporation		5,187		42,793
Schnitzer Steel Industries, Inc.		546		26,044

				123,597

Systems Software—2.5%
CA, Inc.^1,2		20,235		454,478
Symantec Corporation^1,2,*		6,300		112,707

				567,185

Technology Distributors—0.8%
Arrow Electronics, Inc.^1,2,*		2,800		82,908
Avnet, Inc.^1,2,*		3,200		96,512

				179,420

Tobacco—3.9%
Altria Group, Inc.^1,2		17,800		349,414
Philip Morris International, Inc.^1,2		10,500		505,995

				855,409

Trucking—0.3%
Con-Way, Inc.^1,2		1,800		62,838
Quality Distribution, Inc.*		2,180		8,611

				71,449

Wireless Telecommunication Services—0.2%
America Movil SAB de CV ADR		1,092		51,302

TOTAL COMMON STOCKS (cost $16,394,752)			$	17,127,863


	Shares		Value
FOREIGN STOCKS—1.8%
Diversified Banks—0.0%
Anglo Irish Bank Corporation, Ltd.^4,5,6,*		16,638	$	—

Multi-Line Insurance—0.7%
Fortis^4,6		45,503		168,224

Pharmaceuticals—1.1%
AstraZeneca plc^1,2,4,6		2,800		131,580
GlaxoSmithKline plc^1,2,4,6		5,500		116,702

				248,282

TOTAL FOREIGN STOCKS (cost $435,290)			$	416,506


	Principal Amount		Value
U.S. GOVERNMENT SPONSORED AGENCY BONDS & NOTES—17.2%
Federal Home Loan Bank
0.04%, 1/27/2010^3,4	$	700,000	$	699,980
Federal National Mortgage Association
0.04%, 2/1/2010^1,4		2,200,000		2,199,924
Federal Home Loan Mortgage Corporation
0.03%, 2/23/2010^3,4		1,000,000		999,956

TOTAL U.S. GOVERNMENT SPONSORED AGENCY BONDS & NOTES (cost $3,899,860)			$	3,899,860


	Principal Amount		Value
SHORT TERM INVESTMENTS—10.1%
State Street General Account U.S. Government Fund⁴	$	2,278,515	$	2,278,515

TOTAL SHORT TERM INVESTMENTS (cost $2,278,515)			$	2,278,515

The accompanying notes are an integral part of the financial statements

141


Schedule of Investments		Series Z
December 31, 2009		(Alpha Opportunity Series)


	Principal Amount		Value
REPURCHASE AGREEMENT—10.2%
State Street, 0.005%, dated 12/31/09, matures 1/4/10; repurchase amount $1,099,312 (Collateralized by FHLB, 9/17/10 with a value of $1,123,524)⁴	$	1,099,311	$	1,099,311
State Street, 0.005%, dated 12/31/09, matures 1/4/10; repurchase amount $1,208,686 (Collateralized by FHLB, 9/17/10 with a value of $1,237,957)⁴		1,208,685		1,208,685

TOTAL REPURCHASE AGREEMENT (cost $2,307,996)			$	2,307,996

Total Investments—115.0%⁷ (cost $25,316,413)			$	26,030,740
Liabilities, Less Cash & Other Assets—(15.0)%				(3,397,425	)

Total Net Assets—100.0%			$	22,633,315

Schedule of Securities Sold Short


	Shares			Value
COMMON STOCKS—(21.3)%
Advertising—(0.4)%
Focus Media Holding, Ltd. ADR^8,9,*	(2,500	)		$	(75,000	)

Airlines—(0.1)%
Continental Airlines, Inc.*	(613	)			(10,985	)
UAL Corporation*	(44	)			(568	)

					(11,553	)

Alternative Carriers—(0.3)%
Clearwire Corporation^8,9^,*	(2,660	)			(30,138	)
Global Crossing, Ltd.^8,9,*	(2,520	)			(40,244	)

					(70,382	)

Auto Parts & Equipment—(0.1)%
BorgWarner, Inc.	(176	)			(5,847	)
Tenneco, Inc.*	(404	)			(7,163	)
TRW Automotive Holdings Corporation *	(404	)			(9,647	)

					(22,657	)

Biotechnology—(2.9)%
Acorda Therapeutics, Inc.^8,9,*	(2,900	)			(77,575	)
Alnylam Pharmaceuticals, Inc.^8,9,*	(3,000	)			(88,230	)
AMAG Pharmaceuticals, Inc.^8,9,*	(1,900	)			(82,954	)
Cepheid, Inc.^8,9,*	(5,500	)			(84,700	)
Exelixis, Inc.^8,9,*	(4,700	)			(30,127	)
Regeneron Pharmaceuticals, Inc.^8,9,*	(3,810	)			(82,715	)
Rigel Pharmaceuticals, Inc.^8,9,*	(3,070	)			(78,838	)
Savient Pharmaceuticals, Inc.^8,9,*	(3,240	)			(64,282	)
Vertex Pharmaceuticals, Inc.^8,9,*	(2,700	)			(74,709	)

					(664,130	)

Building Products—(0.7)%
USG Corporation^8,9,*	(5,580	)			(160,258	)

Casinos & Gaming—(0.1)%
Churchill Downs, Inc.	(404	)			(15,089	)
International Game Technology	(204	)			(3,829	)

					(18,918	)

Communications Equipment—(0.3)%
Research In Motion, Ltd.*	(409	)			(27,624	)
Riverbed Technology, Inc.^8,9,*	(4,100	)			(54,530	)

					(82,154	)

Computer Storage & Peripherals—(0.2)%
Intermec, Inc.^8,9,*	(2,570	)			(50,937	)

Consumer Electronics—(0.1)%
Garmin, Ltd.	(818	)			(25,113	)

Department Stores—(0.3)%
Sears Holdings Corporation*	(825	)	��		(68,846	)

Diversified Banks—(2.5)%
Wells Fargo & Company^8,9	(12,937	)			(565,622	)

Diversified Metals & Mining—(0.2)%
Ivanhoe Mines, Ltd.^8,9,*	(4,780	)			(39,865	)

Diversified Real Estate Activities—0.0%
Consolidated-Tomoka Land Company	(20	)			(699	)

Electric Utilities—(1.2)%
Korea Electric Power Corporation ADR^8,9	(19,460	)			(263,294	)

Electrical Components & Equipment—(0.1)%
First Solar, Inc.*	(175	)			(23,695	)

Environmental & Facilities Services—(0.2)%
Stericycle, Inc.*	(818	)			(45,129	)

Exchange Traded Funds—(0.3)%
PowerShares DB US Dollar Index Bullish Fund*	(1,840	)			(42,467	)
United States Natural Gas Fund, LP*	(1,635	)			(16,481	)

					(58,948	)

Footwear—(0.1)%
K-Swiss, Inc.	(1,295	)			(12,872	)

Health Care Equipment—(0.3)%
IDEXX Laboratories, Inc.*	(202	)			(10,795	)
Intuitive Surgical, Inc.^8,9,*	(200	)			(56,100	)

					(66,895	)

Health Care Facilities—0.0%
Kindred Healthcare, Inc.*	(613	)			(11,316	)

Health Care Supplies—(0.3)%
Align Technology, Inc.^8,9,*	(6,300	)			(76,860	)

Health Care Technology—(0.4)%
athenahealth, Inc.^8,9,*	(2,700	)			(96,795	)

The accompanying notes are an integral part of the financial statements

142


Schedule of Investments		Series Z
December 31, 2009		(Alpha Opportunity Series)


	Shares		Value
COMMON STOCKS—(21.3)% (continued)
Home Entertainment Software—(0.2)%
Electronic Arts, Inc.^8,9,*	(900	)	$	(36,720	)

Home Furnishings—(0.1)%
Mohawk Industries, Inc.*	(404	)		(19,230	)

Industrial Machinery—(0.1)%
Donaldson Company, Inc.	(404	)		(17,186	)

Industrial REIT’s—0.0%
EastGroup Properties, Inc.	(220	)		(8,422	)

Integrated Telecommunication Services—(0.1)%
Qwest Communications International, Inc.	(1,008	)		(4,244	)
Verizon Communications, Inc.	(404	)		(13,384	)

				(17,628	)

Internet Retail—0.0%
PetMed Express, Inc.	(438	)		(7,722	)

Internet Software & Services—(1.1)%
Baidu, Inc. ADR^8,9,*	(200	)		(53,726	)
Equinix, Inc.^8,9,*	(1,000	)		(79,940	)
SAVVIS, Inc.^8,9,*	(5,900	)		(86,966	)
VeriSign, Inc.^8,9,*	(1,300	)		(33,319	)

				(253,951	)

Leisure Products—(1.4)%
Callaway Golf Company	(404	)		(3,046	)
Pool Corporation^8,9	(12,350	)		(305,663	)

				(308,709	)

Life Sciences Tools & Services—(0.7)%
Luminex Corporation^8,9,*	(2,700	)		(68,823	)
Pharmaceutical Product Development, Inc.	(1,011	)		(23,698	)
Sequenom, Inc.^8,9,*	(3,140	)		(64,716	)

				(157,237	)

Managed Health Care—(0.1)%
Centene Corporation*	(864	)		(18,291	)

Office REIT’s—(0.1)%
Kilroy Realty Corporation	(809	)		(24,812	)

Oil & Gas Exploration & Production—(0.5)%
BPZ Resources, Inc.^8,9,*	(6,000	)		(112,800	)

Oil & Gas Refining & Marketing—(0.1)%
Tesoro Corporation	(818	)		(11,084	)
Valero Energy Corporation	(613	)		(10,268	)

				(21,352	)

Pharmaceuticals—(0.8)%
Auxilium Pharmaceuticals, Inc.^8,9,*	(1,960	)		(72,167	)
Sepracor, Inc.^8,9,*	(1,350	)		(23,625	)
XenoPort, Inc.^8,9,*	(1,790	)		(82,036	)

				(177,828	)

Photographic Products—0.0%
Eastman Kodak Company	(1,107	)		(4,672	)

Publishing—(0.5)%
Gannett Company, Inc.	(818	)		(12,147	)
Interactive Data Corporation	(362	)		(9,159	)
McGraw-Hill Companies, Inc.	(809	)		(27,110	)
New York Times Company	(818	)		(10,110	)
Washington Post Company (Cl.B)	(117	)		(51,433	)

				(109,959	)

Regional Banks—(0.5)%
PrivateBancorp, Inc.^8,9	(2,400	)		(103,200	)
SY Bancorp, Inc.	(180	)		(3,843	)

				(107,043	)

Residential REIT’s—(0.1)%
Mid-America Apartment Communities, Inc.	(607	)		(29,306	)

Restaurants—(0.2)%
Burger King Holdings, Inc.	(664	)		(12,496	)
Cheesecake Factory, Inc.*	(1,011	)		(21,827	)
PF Chang’s China Bistro, Inc.*	(408	)		(15,467	)

				(49,790	)

Security & Alarm Services—(0.1)%
Brink’s Company	(838	)		(20,397	)

Semiconductor Equipment—(0.1)%
Varian Semiconductor Equipment Associates, Inc.^8,9,*	(1,270	)		(33,299	)

Semiconductors—(0.9)%
Cree, Inc.^8,9,*	(4,200	)		(115,332	)
Micron Technology, Inc.*	(2,023	)		(21,363	)
NVIDIA Corporation*	(604	)		(11,283	)
Rambus, Inc.^8,9,*	(3,680	)		(56,451	)

				(204,429	)

Soft Drinks—(0.4)%
Hansen Natural Corporation^8,9,*	(3,270	)		(96,825	)

Specialized Finance—(0.2)%
Moody’s Corporation	(1,416	)		(37,949	)
NASDAQ OMX Group, Inc.*	(818	)		(16,213	)

				(54,162	)

Specialized REIT’s—(0.1)%
Healthcare Realty Trust, Inc.	(809	)		(17,361	)

Specialty Chemicals—(0.2)%
Zoltek Companies, Inc.^8,9,*	(2,900	)		(52,867	)

Steel—(0.1)%
Allegheny Technologies, Inc.	(409	)		(18,311	)

Systems Software—(0.6)%
Red Hat, Inc.^8,9,*	(3,300	)		(58,905	)
VMware, Inc.^8,9,*	(2,500	)		(71,450	)

				(130,355	)

Thrifts & Mortgage Finance—0.0%
First Niagara Financial Group, Inc.	(202	)		(2,810	)
Hudson City Bancorp, Inc.	(202	)		(2,773	)

				(5,583	)

The accompanying notes are an integral part of the financial statements

143


Schedule of Investments		Series Z
December 31, 2009		(Alpha Opportunity Series)


	Shares		Value
COMMON STOCKS—(21.3)% (continued)
Trading Companies & Distributors—(0.1)%
Beacon Roofing Supply, Inc.*	(202	)	$	(3,232	)
Fastenal Company	(411	)		(17,114	)

				(20,346	)

Wireless Telecommunication Services—(0.8)%
Leap Wireless International, Inc.^8,9,*	(1,600	)		(69,440	)
SBA Communications Corporation^8,9,*	(2,600	)		(74,854	)
Telephone & Data Systems, Inc.	(886	)		(30,053	)

				(174,347	)

TOTAL COMMON STOCKS SOLD SHORT (proceeds $4,736,628)			$	(4,822,878	)


	Shares		Value
FOREIGN STOCKS—(17.1)%
Airlines—(0.2)%
Ryanair Holdings plc^8,9,*	(10,200	)	$	(38,219	)

Airport Services—(0.9)%
Beijing Capital International Airport Company, Ltd.^8,9	(232,000	)		(200,659	)

Apparel, Accessories & Luxury Goods—(0.1)%
C C Land Holdings, Ltd.^8,9	(53,000	)		(14,782	)

Automobile Manufacturers—(2.3)%
Volkswagen AG^8,9	(1,300	)		(539,375	)

Biotechnology—(1.0)%
Basilea Pharmaceutica^8,9,*	(500	)		(83,364	)
Intercell AG^8,9,*	(2,000	)		(78,778	)
Zeltia S.A.^8,9	(8,500	)		(57,969	)

				(220,111	)

Broadcasting—(0.1)%
Tokyo Broadcasting System Holdings, Inc.^8,9	(1,300	)		(21,836	)

Cable & Satellite—(0.3)%
Sky Deutschland AG^8,9,*	(4,200	)		(68,951	)

Casinos & Gaming—(0.7)%
bwin Interactive Entertainment AG^8,9,*	(1,700	)		(48,431	)
Genting Singapore plc^8,9,*	(132,800	)		(43,724	)
PartyGaming plc^8,9	(16,200	)		(60,974	)

				(153,129	)

Coal & Consumable Fuels—(0.3)%
Aquila Resources, Ltd.^8,9,*	(2,860	)		(22,783	)
Riversdale Mining, Ltd.^8,9,*	(7,100	)		(54,029	)

				(76,812	)

Construction & Engineering—(0.2)%
Ausenco, Ltd.^8,9	(2,300	)		(24,817	)
China Communications Construction Company, Ltd.^8,9	(16,000	)		(16,571	)

				(41,388	)

Construction & Farm Machinery & Heavy Trucks—(0.1)%
China National Materials Company, Ltd.^8,9	(37,600	)		(19,168	)

Construction Materials—(0.2)%
Anhui Conch Cement Company, Ltd.^8,9	(5,500	)		(24,761	)
China National Building Material Company, Ltd.^8,9	(17,300	)		(23,432	)

				(48,193	)

Department Stores—(0.9)%
Marui Group Company, Ltd.^8,9	(31,000	)		(233,862	)

Diversified Banks—(2.1)%
Aozora Bank, Ltd.^8,9	(17,300	)		(27,861	)
Erste Group Bank AG^8,9	(5,500	)		(337,971	)
Mizuho Financial Group, Inc.^8,9	(12,000	)		(49,593	)
Mizuho Trust & Banking Company, Ltd.^8,9	(18,800	)		(26,216	)

				(441,641	)

Diversified Metals & Mining—(0.3)%
Fushan International Energy Group, Ltd.^8,9	(70,000	)		(25,165	)
Western Areas NL^8,9,*	(6,600	)		(47,324	)

				(72,489	)

Diversified Real Estate Activities—(0.1)%
Franshion Properties China, Ltd.^8,9	(84,600	)		(23,552	)

Electrical Components & Equipment—(0.1)%
Toyo Tanso Company, Ltd.^8,9	(600	)		(32,408	)

Gold—(0.7)%
Agnico-Eagle Mines, Ltd.^8,9,10	(1,900	)		(125,612	)
Sino Gold Mining, Ltd.^8,9^,*	(9,100	)		(37,425	)

				(163,037	)

Highways & Railtracks—(2.1)%
Brisa Auto-Estradas de Portugal S.A.^8,9	(47,200	)		(490,927	)

Household Appliances—(1.9)%
Electrolux AB^8,9	(32,100	)		(422,058	)

Industrial Machinery—(0.3)%
Japan Steel Works, Ltd.^8,9	(1,600	)		(22,196	)
Meyer Burger Technology AG^8,9^,*	(200	)		(49,879	)

				(72,075	)

Internet Software & Services—(0.2)%
Access Company, Ltd.^8,9^,*	(18	)		(34,682	)

Investment Banking & Brokerage—(0.1)%
Monex Group, Inc.^8,9	(83	)		(29,140	)

The accompanying notes are an integral part of the financial statements

144


Schedule of Investments		Series Z
December 31, 2009		(Alpha Opportunity Series)


	Shares		Value
FOREIGN STOCKS—(17.1)% (continued)
Marine Ports & Services—(0.1)%
China Merchants Holdings International Company, Ltd.^8,9	(4,900	)	$	(17,461	)

Oil & Gas Equipment & Services—(0.4)%
Modec, Inc.^8,9	(1,000	)		(25,772	)
Sevan Marine ASA^8,9^,*	(6,300	)		(33,049	)
Trican Well Service, Ltd.^8,9	(2,200	)		(37,447	)

				(96,268	)

Oil & Gas Exploration & Production—(0.8)%
Arrow Energy, Ltd.^8,9^,*	(9,500	)		(24,514	)
Imperial Energy Corporation plc^8,9^,*	(4,200	)		(83,657	)
Queensland Gas Company, Ltd.^8,9^,*	(13,600	)		(52,897	)

				(161,068	)

Precious Metals & Minerals—(0.3)%
Silver Wheaton Corporation^8,9^,*	(6,500	)		(68,246	)

Real Estate Operating Companies—(0.3)%
Aeon Mall Company, Ltd.^8,9	(1,900	)		(58,221	)

TOTAL FOREIGN STOCKS SOLD SHORT (proceeds $3,703,004)			$	(3,859,758	)

TOTAL SECURITIES SOLD SHORT—(38.4%) (proceeds $8,439,632)			$	(8,682,636	)

INVESTMENT CONCENTRATION

At December 31, 2009, the investment diversification of the Series was as follows:


Country	% of Net Assets		Value
United States	82.2	%	$	18,562,374
Cayman Islands	3.5			793,403
Jersey	1.5			332,858
Bermuda	1.3			308,068
United Kingdom	1.3			300,107
Canada	0.9			205,790
Belgium	0.7			168,224
Marshall Islands	0.4			100,570
Singapore	0.3			65,629
Mexico	0.2			51,302
India	0.1			24,870
Norway	(0.1	)		(33,049	)
Ireland	(0.2	)		(38,219	)
Isle Of Man	(0.2	)		(43,724	)
Spain	(0.3	)		(57,969	)
Gibraltar	(0.3	)		(60,974	)
Hong Kong	(0.3	)		(66,178	)
China	(0.4	)		(71,496	)
Switzerland	(0.5	)		(118,121	)
Republic of Korea	(1.2	)		(263,294	)
Australia	(1.2	)		(263,789	)
Sweden	(1.9	)		(422,058	)
Austria	(2.1	)		(465,180	)
Portugal	(2.1	)		(490,927	)
Japan	(2.4	)%		(561,787	)
Germany	(2.6	)		(608,326	)

Total Investments	76.6		$	17,348,104

For federal income tax purposes the identified cost of investments owned at December 31, 2009 was $25,376,453.


ADR		American Depositary Receipt
plc		Public Limited Company

*	Non-income producing security

¹	Security is segregated as collateral for open short positions.

All or portion of security is deemed illiquid. The total market value of illiquid securities is $8,134,012 (cost $9,036,264), or 35.9% of total net assets. The securities were liquid at time of purchase. This security is deemed illiquid due to the Series exposure to Lehman Brothers International Europe (“LBIE”) prime brokerage services. See Note 11 in the Notes to Financial Statements for additional information.

³	Security is segregated as collateral for open futures contracts.

⁴	Value determined based on Level 2 inputs.

⁵	Security is deemed illiquid. The total market value of illiquid securities is $0 (cost $101,261), or 0.0% of total net assets.

⁶	Security was subject to the fair value trigger at December 31, 2009. The total market value of fair valued securities amounts to $416,506 (cost $435,290), or 1.8% of total net assets.

⁷	Unless otherwise indicated, the values of the securities of the Portfolio are determined based on Level 1 inputs.

⁸	Value determined based on Level 3 inputs.

⁹	Security is fair valued by the Valuation Committee at December 31, 2009. The total market value of fair valued securities amounts to $(7,786,655) (cost $(7,622,318)), or (34.4%) of total net assets.

¹⁰	Security was acquired through a private placement.

The accompanying notes are an integral part of the financial statements

145


		Series Z
		(Alpha Opportunity Series)

Statement of Assets and Liabilities

December 31, 2009


Assets:
Investments, at value*	$	26,030,740
Cash		670,395
Restricted cash		709,418
Restricted cash denominated in a foreign currency, at value****		3,725,377
Receivables:
Securities sold		834,098
Dividends		41,795
Security Investors		20,084
Foreign taxes recoverable		606
Prepaid expenses		282

Total assets		32,032,795


Liabilities:
Cash overdraft denominated in a foreign currency, at value***		474
Securities sold short, at value**		8,682,636
Payable for:
Fund shares redeemed		1,290
Securities purchased		580,135
Variation margin on futures		45,600
Dividends on short sales		732
Management fees		23,967
Administration fees		7,076
Transfer agent/maintenance fees		2,083
Custodian fees		12,936
Directors’ fees		741
Professional fees		35,936
Other fees		5,874

Total liabilities		9,399,480

Net assets	$	22,633,315


Net assets consist of:
Paid in capital	$	35,027,220
Accumulated net realized loss on sale of investments and foreign currency transactions		(12,983,939	)
Net unrealized appreciation in value of investments and translation of assets and liabilities in foreign currencies		590,034

Net assets	$	22,633,315


Capital shares authorized		unlimited
Capital shares outstanding		1,613,542
Net asset value per share (net assets divided by shares outstanding)	$	14.03


*Investments, at cost	$	25,316,413
**Securities sold short, proceeds		8,439,632
***Cash denominated in a foreign currency, at cost		(471	)
****Restricted cash denominated in a foreign currency, at cost		3,626,604

Statement of Operations

For Year Ended December 31, 2009


Investment Income:
Dividends (net of foreign withholding tax $4,453)	$	275,668
Interest		(7,475	)

Total investment income		268,193


Expenses:
Management fees		276,548
Administration fees		49,334
Transfer agent/maintenance fees		25,131
Custodian fees		73,465
Directors’ fees		2,262
Professional fees		170,218
Reports to shareholders		14,109
Other		7,325
Dividends on short sales		11,608

Total expenses		630,000
Reimbursement of expenses		(244,101	)
Earnings credits applied		(3,374	)

Net expenses		382,525

Net investment loss		(114,332	)


Net Realized and Unrealized Gain (Loss):
Net realized gain (loss) during the year on:
Investments		(538,814	)
Securities sold short		(118,674	)
Futures		1,187,273
Foreign currency transactions		11,952

Net realized gain		541,737


Net unrealized appreciation (depreciation) during the year on:
Investments		4,863,976
Securities sold short		(69,686	)
Futures		(52,752	)
Translation of assets and liabilities in foreign currencies		142,205

Net unrealized appreciation		4,883,743

Net realized and unrealized gain		5,425,480

Net increase in net assets resulting from operations	$	5,311,148

The accompanying notes are an integral part of the financial statements

146


		Series Z
Statement of Changes in Net Assets		(Alpha Opportunity Series)


	Year Ended December 31, 2009			Year Ended December 31, 2008
Increase (decrease) in net assets from operations:
Net investment loss	$	(114,332	)	$	(458,753	)
Net realized gain (loss) during the year on investments and foreign currency transactions		541,737			(12,871,877	)
Net unrealized appreciation (depreciation) during the year on investments and translation of assets and liabilities in foreign currencies		4,883,743			(4,160,796	)

Net increase (decrease) in net assets resulting from operations		5,311,148			(17,491,426	)


Capital share transactions:
Proceeds from sale of shares		441,669			25,172,030
Cost of shares redeemed		(10,096,392	)		(29,572,908	)

Net decrease from capital share transactions		(9,654,723	)		(4,400,878	)

Net decrease in net assets		(4,343,575	)		(21,892,304	)


Net assets:
Beginning of year		26,976,890			48,869,194

End of year	$	22,633,315		$	26,976,890


Accumulated net investment loss at end of year	$	—		$	(1,386	)


Capital share activity:
Shares sold		44,054			1,673,286
Shares redeemed		(936,532	)		(2,129,771	)

Total capital share activity		(892,478	)		(456,485	)

The accompanying notes are an integral part of the financial statements

147


Financial Highlights		Series Z
Selected data for each share of capital stock outstanding through out the year		(Alpha Opportunity Series)


	2009			2008^a			2007			2006			Year Ended December 31, 2005
Per Share Data
Net asset value, beginning of period	$	10.76		$	16.50		$	13.96		$	12.34		$	11.57

Income (loss) from investment operations:
Net investment income (loss)^b		(0.06	)		(0.16	)		0.01			—			(0.02	)
Net gain (loss) on securities (realized and unrealized)		3.33			(5.58	)		2.53			1.62			0.79

Total from investment operations		3.27			(5.74	)		2.54			1.62			0.77

Net asset value, end of period	$	14.03		$	10.76		$	16.50		$	13.96		$	12.34


Total Return^c		30.39	%		(34.79	)%		18.19	%		13.13	%		6.66	%

Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	22,633		$	26,977		$	48,869		$	36,442		$	25,660

Ratios to average net assets:
Net investment income (loss)		(0.52	)%		(1.09	)%		0.10	%		(0.03	)%		(0.21	)%
Total expenses^d		2.85	%		2.79	%		2.50	%		2.78	%		2.50	%
Net expenses^e		1.68	%		2.64	%		2.39	%		2.62	%		2.50	%
Net expenses prior to custodian earnings credits and net of expense waivers		1.69	%		2.79	%		2.50	%		2.78	%		2.50	%

Portfolio turnover rate		555	%		990	%		1,770	%		1,285	%		1,509	%

Security Global Investors, LLC (SGI) became the sub-advisor of 37.5% of the assets of Series Z effective August 18, 2008. Also effective August 18, 2008, Mainstream Investment Advisers, LLC (Mainstream) sub-advises 37.5% of the assets and Security Investors, LLC (SI) manages 25% of the assets. Prior to August 18, 2008, SI paid Mainstream sub-advisory fees for 60% of the assets. SI managed the remaining 40% of the assets.

^b	Net investment income (loss) was computed using average shares outstanding through out the period.

^d	Total expense information reflects the expense ratios absent expense reductions by the Investment Manager and earnings credits, as applicable.

^e	Net expense information reflects the expense ratios after voluntary expense waivers, reimbursements and custodian earnings credits, as applicable.

The accompanying notes are an integral part of the financial statements

148

Notes to Financial Statements

December 31, 2009

1. Significant Accounting Policies

SBL Fund (The Fund) is registered under the Investment Company Act of 1940 (the “1940 Act”), as amended, as an open-end management investment company of the series type. Each series, in effect, represents a separate fund. The Fund is required to account for the assets of each series separately and to allocate general liabilities of the Fund to each Series based on the net asset value of each series. Security Benefit Life Insurance Company (“SBL”) and SBL’s affiliated life insurance company as well as unaffiliated life insurance companies purchase shares of the Series for their variable annuity and variable life insurance separate accounts. The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements.

In June 2009, the Financial Accounting Standards Board (FASB) established the FASB Accounting Standards Codification™ (ASC) as the single source of authoritative accounting principles recognized by the FASB in the preparation of financial statements in conformity with GAAP. The ASC supersedes existing non-grandfathered, non-SEC accounting and reporting standards. The ASC did not change GAAP but rather organized it into a hierarchy where all guidance within the ASC carries an equal level of authority. The ASC became effective for financial statements issued for interim and annual periods ending after September 15, 2009. The ASC had no material effect on the Funds’ financial statements.

A. Security Valuation – Valuations of the Fund’s securities are supplied by pricing services approved by the Board of Directors. The Fund’s officers, under the general supervision of the Board of Directors, regularly review procedures used by, and valuations provided by, the pricing services. Each security owned by a Series that is listed on a securities exchange is valued at its last sale price on that exchange on the date as of which assets are valued. Where the security is listed on more than one exchange, the Series will use the price of that exchange that it generally considers to be the principal exchange on which the stock is traded. Securities listed on the Nasdaq Stock Market, Inc. (“Nasdaq”) will be valued at the Nasdaq Official Closing Price, which may not necessarily represent the last sale price. If there has been no sale on such exchange or NASDAQ on such day, the security is valued at the closing bid price on such day. Securities for which market quotations are not readily available are valued by a pricing service considering securities with similar yields, quality, type of issue, coupon, duration and rating. If there is no bid price or if the bid price is deemed to be unsatisfactory by the Board of Directors or by the Fund’s investment manager, then the securities are valued in good faith by such method as the Board of Directors determines will reflect the fair value. If events occur after the close of a foreign exchange that will affect the value of a series portfolio securities before the time as of which the NAV is calculated (a “significant event”), the security will generally be priced using a fair value procedure. If the Valuation Committee determines a significant event has occurred, it will evaluate the impact of that event on an affected security or securities, to determine whether a fair value adjustment would materially affect the Series net asset value per share. Some of the factors which may be considered by the Board of Directors in determining fair value are fundamental analytical data relating to the investment; the nature and duration of any restrictions on disposition; trading in similar securities of the same issuer or comparable companies; information from broker-dealers; and an evaluation of the forces that influence the market in which the securities are purchased and sold. The Fund generally will value short-term debt securities at prices based on market quotations for such securities or securities of similar type, yield, quality and duration, except those securities purchased with 60 days or less to maturity are valued on the basis of amortized cost which approximates market value.

Generally, trading in foreign securities markets is substantially completed each day at various times prior to the close of the New York Stock Exchange. The values of foreign securities are determined as of the close of such foreign markets or the close of the New York Stock Exchange, if earlier. All investments quoted in foreign currency are valued in U.S. dollars on the basis of the foreign currency exchange rates prevailing at the close of business. Investments in foreign securities may involve risks not present in domestic investments. The Valuation Committee will determine the current value of such foreign securities by taking into consideration certain factors which may include those discussed above, as well as the following factors, among others: the value of the securities traded on other foreign markets, ADR trading, closed-end fund trading, foreign currency exchange activity, and the trading prices of financial products that are tied to foreign securities such as WEBS^®. In addition, the Board of Directors has authorized the Valuation Committee and Administrator to use prices and other information supplied by a third party pricing vendor in valuing foreign securities.

The senior floating rate interests (loans) in which Series P invests are not listed on any securities exchange or board of trade. Accordingly, determinations of the value of loans may be based on infrequent and dated trades. Typically loans are valued using information provided by an independent third party pricing service. If the pricing service cannot or does not provide a valuation for a particular loan or such valuation is deemed unreliable, such loan is fair valued. In determining fair value, consideration is given to several factors, which may include, among others, one or more of the following: the fundamental business data relating to the issuer or borrower; an evaluation of the forces which influence the market in which these loans are purchased and sold; type of holding; financial statements of the borrower; cost at date of purchase; size of holding; credit worthiness and cash flow of issuer; information as to any transactions in, or offers for, the holding; price and extent of public trading in similar securities (or equity securities) of the issuer/borrower, or comparable companies; coupon payments; quality, value and saleability of collateral securing the loan; business prospects of the issuer/borrower, including any ability to obtain money or resources from a parent or affiliate; the portfolio manager’s and/or the market’s assessment of the borrower’s management; prospects for the borrower’s industry, and multiples (of earnings and/or cash flow) being paid for similar businesses in that industry; borrower’s competitive position within the industry; borrower’s ability to access additional liquidity through public and/or private markets; and other relevant factors.

149

Notes to Financial Statements

December 31, 2009

B. Repurchase Agreements – In connection with transactions in repurchase agreements, it is the Fund’s policy that its custodian take possession of the underlying collateral and that the fair value of the collateral exceed the principal amount of the repurchase transaction, including accrued interest, at all times. If the seller defaults, and the fair value of the collateral declines, realization of the collateral by the Series may be delayed or limited.

C. Foreign Currency Transactions – The accounting records of the Fund 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. 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 Series. Foreign investments may also subject the 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.

The Fund does 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 and 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 other assets and liabilities at the end of the reporting period, resulting from changes in the exchange rates.

D. Forward Foreign Currency Exchange Contracts – The Fund may enter into forward foreign exchange contracts in order to manage foreign currency risk from purchase or sale of securities denominated in foreign currency. A series may also enter into such contracts to manage the effect of changes in foreign currency exchange rates on portfolio positions. These contracts are marked to market daily, by recognizing the difference between the contract exchange rate and the current market rate as unrealized gains or losses. Realized gains or losses are recognized when contracts are settled and are reflected in the Statement of Operations. These contracts involve market risk in excess of the amount reflected in the Statement of Assets and Liabilities. The face or contract amount in U.S. dollars reflects the total exposure these funds have in that particular currency contract. Losses may arise due to changes in the value of the foreign currency or if the counterparty does not perform under the contract.

E. Futures – The Fund may utilize futures contracts to a limited extent, with the objectives of maintaining full exposure to the underlying stock market, enhancing returns, maintaining liquidity, minimizing transaction costs and economically hedging possible variations in foreign exchange values. The Fund may purchase or sell financial and foreign currency 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 series may pay from its cash balances and reduce its future positions accordingly. Returns may be enhanced by purchasing futures contracts instead of the underlying securities when futures are believed to be priced more attractively than the underlying securities. The primary risks associated with the use of futures contracts are imperfect correlation between changes in market values of stocks contained in the indexes and the prices of futures contracts, and the possibility of an illiquid market. Futures contracts are valued based upon their quoted daily settlement prices. Upon entering into a futures contract, the series are required to deposit and maintain as collateral either cash or securities, representing the initial margin, equal to a certain percentage of the contract value. Cash deposits are shown as restricted cash on the Statement of Assets and Liabilities; securities held as collateral are noted in the Schedule of Investments. Subsequent changes in the value of the contract are recorded as unrealized gains or losses. The variation margin is paid or received in cash daily by the series. The series realizes a gain or loss when the contract is closed or expires.

F. Options Purchased and Written – The Fund may purchase put and call options and write such options on a covered basis on securities that are traded on recognized securities exchanges and over-the-counter markets. Call and put options on securities give the holder the right to purchase or sell (and the writer the obligation to sell or purchase), respectively, a security at a specified price, until a certain date. Options may be used to economically hedge the series portfolio, to increase returns or to maintain exposure to the equity markets. The primary risks associated with the use of options are an imperfect correlation between the change in market value of the securities held by the series and the price of the option, the possibility of an illiquid market, and the inability of the counterparty to meet the terms of the contract.

The premium received for a written option is recorded as an asset with an equal liability which is marked to market based on the option’s quoted daily settlement price. Fluctuations in the value of such instruments are recorded as unrealized appreciation (depreciation) until terminated, at which time realized gains and losses are recognized.

G. Securities Sold Short – Certain of the Series may make short sales “against the box,” in which the Series enters into a short sale of a security it owns. At no time will more than 15% of the value of the Series’ net assets be in deposits on short sales against the box. If a Series makes a short sale, the Series does not immediately deliver from its own account the securities sold and does not receive the proceeds from the sale. To complete the sale, the Series must borrow the security (generally from the broker through which the short sale is made) in order to make delivery to the buyer. The Series must replace the security borrowed by purchasing it at the market price at the time of replacement or delivering the security from its own portfolio. The Series is said to have a “short position” in securities sold until it delivers them to

150

Notes to Financial Statements

December 31, 2009

the broker, at which time it receives the proceeds of the sale. Certain Series may make short sales that are not “against the box,” which create opportunities to increase the Series’ return but, at the same time, involve specific risk considerations and may be considered a speculative technique. Such short sales theoretically involve unlimited loss potential, as the market price of securities sold short may continually increase, although a Series may mitigate such losses by replacing the securities sold short before the market price has increased significantly. For financial statement purposes, an amount equal to the settlement amount is included in the Statement of Assets and Liabilities as an asset and an equivalent liability. The amount of the liability is subsequently marked-to-market to reflect the current value of the short position. Subsequent fluctuations in the market prices of securities sold, but not yet purchased, may require purchasing the securities at prices which differ from the market value reflected on the Statement of Assets and Liabilities. The Series are liable for any dividends or interest payable on securities while those securities are in a short position. As collateral for its short positions, the Series is required under the Investment Company Act of 1940 to maintain segregated assets consisting of cash, cash equivalents or liquid securities. These segregated assets are valued consistent with Note 1a above. These segregated assets are required to be adjusted daily to reflect changes in the market value of the securities sold short.

H. Senior Loans – Senior loans in which certain of the Series invests generally pay interest rates which are periodically adjusted by reference to short-term, floating rate plus a premium. These base lending rates are generally (i) the lending rate offered by one or more major European banks, such as the London Inter-Bank Offered Rate (LIBOR), (ii) the prime rate offered by one or more major United States banks, or (iii) the bank’s certificate of deposit rate. Senior floating rate interests often require prepayments from excess cash flows or permit the borrower to repay at its election. The rate at which the borrower repays cannot be predicted with accuracy. As a result, the actual remaining maturity may be substantially less than the stated maturities shown. The interest rate indicated is the rate in effect at December 31, 2009.

I. Security Transactions and Investment Income – Security transactions are accounted for on the date the securities are purchased or sold (trade date). Realized gains and losses are reported on an identified cost basis. Dividend income is accrued as of ex-dividend date, except that certain dividends for foreign securities where the ex-dividend date may have passed are recorded as soon as the Series is informed of the dividend in the exercise of reasonable diligence. Interest income is recognized on the accrual basis including the amortization of premiums and accretion of discounts on debt securities.

J. Expenses – Expenses that are directly related to one of the Series are charged directly to that Series. Other operating expenses are allocated to the Series on the basis of relative net assets within the Fund.

K. Distributions to Shareholders – The Fund is required by the Internal Revenue Code to distribute substantially all of its income and capital gains to its shareholders. Each year the Fund determines whether to declare and pay actual dividends or whether to secure consent of its shareholders to report and deduct a consent dividend. A consent dividend is treated for tax purposes as a distribution to shareholders occurring on the last day of the Fund’s taxable year and a shareholder contribution to capital occurring on the same day. It is the Fund’s current practice to utilize the consent dividend procedures. The character of any distributions made from net investment income and net realized gains may differ from their ultimate characterization for income tax purposes.

L. Taxes – The Series intend to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and distribute 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. Distributions may be made via consent dividends, as described in the paragraph above. Therefore, no provision for federal or state income tax is required.

The evaluation of tax positions taken or expected to be taken in the course of preparing the Series’ tax returns is required to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. For all open tax years (December 31, 2006 - December 31, 2009) and all major taxing jurisdictions through the end of the reporting period, the Series’ management has completed a review and evaluation and has determined that no tax liability is required and no additional disclosures are needed as of December 31, 2009.

M. Earnings Credits – Under the fee agreement with the custodian, the Series’ may earn credits based on overnight custody cash balances. These credits are utilized to reduce related custodial expenses. The custodian fees disclosed in the Statement of Operations are before the reduction in expense from the related earnings credits.

N. Use of Estimates – The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent 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.

O. Indemnifications – Under the Fund’s organizational documents, its Officers and Directors are indemnified against certain liabilities arising out of the performance of their duties to the Fund. In addition, in the normal course of business, the Fund enters into contracts that provide general indemnification to other parties. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred, and may not occur. However, the Fund has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

P. Recent Accounting Pronouncement – On January 21, 2010, the FASB issued an ASU, Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements which provides guidance on how

151

Notes to Financial Statements

December 31, 2009

investment assets and liabilities are to be valued and disclosed. Specifically, the amendment requires reporting entities to disclose: i) the input and valuation techniques used to measure fair value for both recurring and nonrecurring fair value measurements, for Level 2 or Level 3 positions, ii) transfers between all levels (including Level 1 and Level 2) will be required to be disclosed on a gross basis (i.e. transfers out must be disclosed separately from transfers in) as well as the reason(s) for the transfer, and iii) purchases, sales, issuances and settlements must be shown on a gross basis in the Level 3 rollforward rather than as one net number. The effective date of the amendment is for interim and annual periods beginning after December 15, 2009, however, the requirement to provide the Level 3 activity for purchases, sales, issuances and settlements on a gross basis will be effective for interim and annual periods beginning after December 15, 2010. At this time the Fund is evaluating the implications of the amendment to ASC 820 and the impact to the financial statements.

2. Management fees and other transactions with affiliates

Management fees are paid monthly to Security Investors (SI), based on the following annual rates:


	Management Fees (as a % of net assets)		Fee Waivers (as a % of net assets)
Series A (Equity Series)	0.75	%	N/A
Series B (Large Cap Value Series)	0.65		N/A
Series C (Money Market Series)	0.50		N/A
Series D (Global Series)	1.00		N/A
Series E (U.S. Intermediate Bond Series)	0.75		0.15
Series H (Enhanced Index Series)	0.75		0.25
Series J (Mid Cap Growth Series)	0.75		N/A
Series N (Managed Asset Allocation Series)	1.00		N/A
Series O (All Cap Value Series)	0.70		N/A
Series P (High Yield Series)	0.75		N/A
Series Q (Small Cap Value Series)	0.95	¹	N/A
Series V (Mid Cap Value Series)	0.75		N/A
Series X (Small Cap Growth Series)	0.85		N/A
Series Y (Select 25 Series)	0.75		N/A
Series Z (Alpha Opportunity Series)	1.25		N/A

¹	Effective February 9, 2009 SI receives a management fee from Series Q at an annual rate of 0.95% of the average daily net assets. Prior to February 9, 2009, SI received a management fee from Series Q of 1.00% of the average daily net assets.

SI also acts as the administrative agent and transfer agent for the Fund, and as such performs administrative functions, transfer agency and dividend disbursing services, and the bookkeeping, accounting and pricing functions for each series. For these services, the Investment Manager receives the following:


	Administrative Fees (as a % of net assets)*
Series A (Equity Series)	0.095	%
Series B (Large Cap Value Series)	0.095
Series C (Money Market Series)	0.095
Series D (Global Series)	0.150
Series E (U.S. Intermediate Bond Series)	0.095
Series H (Enhanced Index Series)	0.095
Series J (Mid Cap Growth Series)	0.095
Series N (Managed Asset Allocation Series)	0.150
Series O (All Cap Value Series)	0.095
Series P (High Yield Series)	0.095
Series Q (Small Cap Value Series)	0.095
Series V (Mid Cap Value Series)	0.095
Series X (Small Cap Growth Series)	0.095
Series Y (Select 25 Series)	0.095
Series Z (Alpha Opportunity Series)	0.150

*	The minimum annual charge for administrative fees is $25,000 for Series A, B, C, E, H, J, O, P, Q, V, X, Y and Z and $60,000 for Series D and N.

SI is paid the following for providing transfer agent services to the Fund:


Annual charge per account	$	5.00 - $8.00
Transaction fee	$	0.60 - $1.10
Minimum annual charge per series	$	25,000
Certain out-of-pocket charges		Varies

Effective August 18, 2008, the investment advisory contract for Series O and Series Z provides that the total expenses be limited to 0.85% and 1.70%, respectively, of average daily net assets, exclusive of brokerage costs, dividends on securities sold short, expenses of other investment companies in which a fund invests, interest, taxes, litigation, indemnification, and extraordinary expenses (as determined under generally accepted accounting principles). These contracts are in effect through April 30, 2010.

At December 31, 2009, Security Benefit Life Insurance Company, through their insurance company separate accounts, owned 100% of the outstanding shares of each Series of the Fund, except for Series B, Series J and Series N, in which it owns 99% of each Series, Series O, Series P, Series Q, Series V, in which it owns 98% of each Series, Series E in which it owns 96% and Series Y in which it owns 94%.

152

Notes to Financial Statements

December 31, 2009

3. Unrealized Appreciation/Depreciation

For federal income tax purposes, the amounts of unrealized appreciation (depreciation) on investments at December 31, 2009, were as follows:


	Gross unrealized appreciation		Gross unrealized depreciation			Net unrealized appreciation (depreciation)
Series A
(Equity)	$	24,742,423	$	(14,495,512	)	$	10,246,911
Series B
(Large Cap Value)		39,293,781		(29,408,292	)		9,885,489
Series C
(Money Market)		9,441		(35,950	)		(26,509	)
Series D
(Global)		31,111,324		(3,525,286	)		27,586,038
Series E
(U.S. Intermediate Bond)		2,058,096		(4,109,913	)		(2,051,817	)
Series H
(Enhanced Index)		2,568,410		(1,385,892	)		1,182,518
Series J
(Mid Cap Growth)		23,094,299		(1,575,319	)		21,518,980
Series N
(Managed Asset Allocation)		5,483,629		(3,458,189	)		2,025,440
Series O
(All Cap Value)		12,094,179		(20,566,892	)		(8,472,713	)
Series P
(High Yield)		19,439,136		(13,750,170	)		5,688,966
Series Q
(Small Cap Value)		29,775,393		(2,389,041	)		27,386,352
Series V
(Mid Cap Value)		42,384,018		(32,553,184	)		9,830,834
Series X
(Small Cap Growth)		7,777,932		(834,256	)		6,943,676
Series Y
(Select 25)		5,144,478		(595,094	)		4,549,384
Series Z
(Alpha Opportunity)		2,372,076		(1,717,789	)		654,287

4. Investment Transactions

Investment transactions for the year ended December 31, 2009, (excluding overnight investments, short-term commercial paper and U.S. government securities) were as follows:


	Purchases		Proceeds from Sales
Series A
(Equity)	$	125,422,753	$	145,634,623
Series B
(Large Cap Value)		39,004,827		64,395,143
Series C
(Money Market)		—		—
Series D
(Global)		783,386,527		826,885,607
Series E
(U.S. Intermediate Bond)		102,449,200		78,057,916
Series H
(Enhanced Index)		35,199,645		40,225,084
Series J
(Mid Cap Growth)		174,966,705		187,659,251
Series N
(Managed Asset Allocation)		32,779,443		48,753,719
Series O
(All Cap Value)		27,972,830		55,744,971
Series P
(High Yield)		72,718,332		48,849,081
Series Q
(Small Cap Value)		124,971,989		121,351,651
Series V
(Mid Cap Value)		74,738,241		119,455,000
Series X
(Small Cap Growth)		29,408,803		33,091,922
Series Y
(Select 25)		49,828,845		52,662,502
Series Z
(Alpha Opportunity)		94,412,408		99,651,513

153


Notes to Financial Statements
December 31, 2009

5. Open Futures Contracts

Open futures contracts for Series H and Series Z as of December 31, 2009, were as follows:


	Position	Number of Contracts	Expiration Date	Contract Amount		Market Value		Unrealized Gain/ (Loss)
Series H
S&P 500 E-Mini Future	Long	15	03/19/2010	$	826,075	$	833,025	$	6,950

Series Z
S&P 500 Index Future	Long	16	03/19/2010	$	4,422,877	$	4,442,800	$	19,923

6. Affiliated Issuers

Investments representing 5% or more of the outstanding voting securities of a portfolio company of a fund result in that portfolio company being considered an affiliated company of such fund, as defined in the 1940 Act. The aggregate market value of all securities of affiliated companies held in Series V as of December 31, 2009 amounted to $12,102, which represents 0.0% of net assets. There were no affiliated companies held in any other Series. Transactions in Series V during the year ended December 31, 2009 in which the portfolio company is an “affiliated person” are as follows:


	Balance 12/31/08		Gross Additions		Gross Reductions		Balance 12/31/09		Realized Gain/ (Loss)		Investment Income
Hydrogen Corporation (Shares)		672,346		—		—		672,346		—		—
Hydrogen Corporation (Cost)	$	2,571,575	$	—	$	—	$	2,571,575	$	—	$	—

As a result of Series V’s beneficial ownership of the common stock of these portfolio companies, applicable regulations require that the Series state that it may be deemed an affiliate of the respective portfolio company. The Series disclaims that the “affiliated persons” are affiliates of the Distributor, Advisor, Series or any other client of the Advisor.

154

Notes to Financial Statements

December 31, 2009

7. Options Written

Information as to options written by the Series during the period ended December 31, 2009 and options outstanding at period end is provided below.

Series O Written Call Options Outstanding


Common Stock	Expiration Date	Exercise Price		Number of Contracts	Market Value
Fossil, Inc.	03-19-10	$	35.00	25	$	4,000
Petrohawk Energy Corporation	03-19-10	$	23.00	478		121,890

Total call options outstanding (premiums received, $90,964)				503	$	125,890

Series O Written Call Options


	Number of Contracts		Premium Amount
Balance at December 31, 2008	155		$	45,995
Opened	3,987			332,508
Bought Back	(56	)		(10,248	)
Exercised	(240	)		(44,775	)
Expired	(3,343	)		(232,516	)

Balance at December 31, 2009	503		$	90,964

Series O Written Put Options Outstanding


Common Stock	Expiration Date	Exercise Price	Number of Contracts	Market Value
Quanta Services	01-15-10	22.50	331	$	51,305

Total put options outstanding (premiums received, $53,951)			331	$	51,305

Series O Written Put Options


	Number of Contracts		Premium Amount
Balance at December 31, 2008	—		$	—
Opened	918			117,720
Exercised	(112	)		(13,216	)
Expired	(475	)		(50,553	)

Balance at December 31, 2009	331		$	53,951

Series Q Written Call Options Outstanding


Common Stock	Expiration Date	Exercise Price		Number of Contracts	Market Value
Clearwater Paper Corp.	01-15-10	$	50.00	135	$	68,850
Commerce Bancshares, Inc.	03-19-10		40.00	99		10,395
Fossil, Inc.	03-19-10		35.00	123		19,680
Petrohawk Energy Corporation	03-19-10		23.00	277		70,635
Pico Holdings, Inc.	01-15-10		30.00	301		78,260

Total call options outstanding (premiums received, $243,492)				935	$	247,820

Series Q Written Call Options


	Number of Contracts		Premium Amount
Balance at December 31, 2008	—		$	—
Opened	4,961			691,745
Bought Back	(66	)		(12,078	)
Expired	(2,822	)		(241,692	)
Exercised	(1,138	)		(194,483	)

Balance at December 31, 2009	935		$	243,492

Series V Written Call Options Outstanding


Common Stock	Expiration Date	Exercise Price		Number of Contracts	Market Value
Commerce Bancshares, Inc.	03-19-10	$	40.00	360	$	37,800
Fossil, Inc.	03-19-10		35.00	281		44,960
Petrohawk Energy Corporation	03-19-10		23.00	750		191,250
Redwood Trust, Inc.	01-15-10		17.50	405		2,025

Total put options outstanding (premiums received, $309,842)				1,796	$	276,035

Series V Written Call Options


	Number of Contracts		Premium Amount
Balance at December 31, 2008	4,228		$	803,927
Opened	14,760			2,077,583
Bought Back	(130	)		(23,789	)
Exercised	(4,912	)		(1,056,036	)
Expired	(12,150	)		(1,491,843	)

Balance at December 31, 2009	1,796		$	309,842

Series V Written Put Options Outstanding


Common Stock	Expiration Date	Exercise Price		Number of Contracts	Market Value
Bemis Company, Inc.	01-15-10	$	25.00	244	$	1,220
Quanta Services, Inc.	01-15-10		22.50	597		92,535

Total put options outstanding (premiums received, $131,046)				841	$	93,755

Series V Written Put Options


	Number of Contracts		Premium Amount
Balance at December 31, 2008	3,805		$	549,517
Opened	5,054			749,105
Exercised	(203	)		(23,953	)
Expired	(7,815	)		(1,143,623	)

Balance at December 31, 2009	841		$	131,046

155

Notes to Financial Statements

December 31, 2009

8. Derivative Investment Holdings Categorized by Risk Exposure

The Fund adopted FASB ASC 815, Derivatives and Hedging (ASC 815), effective December 31, 2009. ASC 815 is intended to improve financial reporting about derivative instruments by requiring enhanced disclosures to enable investors to better understand how and why the Fund uses derivative instruments, how these derivative instruments are accounted for and their effects on the Funds’ financial position and results of operations. None of the derivatives currently held by the Fund are being used as hedging instruments.

The Fund seeks to gain exposure to its respective benchmark by investing in financial-linked derivative instruments, including futures and options on equity securities. The following table represents the notional amount of derivative instruments outstanding, as an approximate percentage of the Fund’s net assets on a daily basis, while the risk to the Fund is limited to the profit earned on such derivatives:


Fund	Approximate percentage of Fund’s net assets on a daily basis
Series H	1.75	%
Series O	0.11	%
Series Q	0.20	%
Series V	0.12	%
Series Z	19.63	%

The following is a summary of the location of derivative investments on the Fund’s Statements of Assets and Liabilities as of December 31, 2009:

Location on the Statements of Assets and Liabilities


Derivative Investments Type	Asset Derivatives	Liability Derivatives
Futures - equity contracts	Receivable: Variation margin	Payable: Variation margin
Options - equity contracts	Investments, at value	Outstanding options written, at value

The following table sets forth the fair value of the Fund’s derivatives contracts by primary risk exposure as of December 31, 2009:

Asset Derivative Investments Value


Fund	Futures Equity Contracts*		Options Equity Contracts		Total Value at December 31, 2009
Series H (Enhanced Index Series)	$	6,950	$	—	$	6,950
Series Z (Alpha Opportunity Series)		19,923		—		19,923

Liability Derivative Investments Value


Fund	Futures Equity Contracts*		Options Equity Contracts		Total Value at December 31, 2009
Series O (All Cap Value Series)	$	—	$	177,195	$	177,195
Series Q (Small Cap Value Series)		—		247,820		247,820
Series V (Mid Cap Value Series)		—		369,790		369,790

*	Includes cumulative appreciation (depreciation) of futures contracts as reported in the Notes to Financial Statements. Only current day’s variation margin is reported within the Statement of Assets and Liabilities.

The following is a summary of the location of derivative investments on the Fund’s Statements of Operations as of December 31, 2009:

Location on the Statements of Operations


Derivative Investments Type		Location of Gain (Loss) on Derivatives
Futures - equity contracts		Net realized gain (loss) on futures contracts and change in net unrealized appreciation (depreciation) on futures contracts
Options - equity contracts		Net realized gain (loss) on options written and change in net unrealized appreciation (depreciation) on options written

156

Notes to Financial Statements

December 31, 2009

The following is a summary of the Fund’s realized gain (loss) and change in unrealized appreciation (depreciation) on derivative investments recognized in the Statements of Operations categorized by primary risk exposure as of December 31, 2009:

Realized Gain (Loss) on Derivative Investments Recognized in the Statement of Operations


Fund	Futures Equity Contracts		Options Equity Contracts		Total Value at December 31, 2009
Series A (Equity Series)	$	—	$	7,098	$	7,098
Series B (Large Cap Value Series)		—		22,775		22,775
Series H (Enhanced Index Series)		205,203		—		205,203
Series O (All Cap Value Series)		—		288,764		288,764
Series Q (Small Cap Value Series)		—		248,403		248,403
Series V (Mid Cap Value Series)		—		2,648,685		2,648,685
Series Z (Alpha Opportunity Series)		1,187,273		—		1,187,273

Change in Unrealized Appreciation (Depreciation) on Derivative Investments

Recognized in the Statement of Operations


Fund	Futures Equity Contracts			Options Equity Contracts			Total Value at December 31, 2009
Series H (Enhanced Index Series)	$	(11,247	)	$	—		$	(11,247	)
Series O (All Cap Value Series)		—			(77,500	)		(77,500	)
Series Q (Small Cap Value Series)		—			(4,328	)		(4,238	)
Series V (Mid Cap Value Series)		—			(699,260	)		(699,260	)
Series Z (Alpha Opportunity Series)		(52,752	)		—			(52,752	)

157

Notes to Financial Statements

December 31, 2009

9. Fair Value of Financial Instruments

The Fund adopted FASB ASC 820, Fair Value Measurements and Disclosure (ASC 820) effective October 1, 2008. In accordance with ASC 820, fair value is defined as the price that the Fund would receive to sell an investment or pay to transfer a liability in an orderly transaction with an independent buyer in the principal market, or in the absence of a principal market the most advantageous market for the investment or liability. ASC 820 establishes a three-tier hierarchy to distinguish between (1) inputs that reflect the assumptions market participants would use in pricing an asset or liability developed based on market data obtained from sources independent of the reporting entity (observable inputs) and (2) inputs that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing an asset or liability developed based on the best information available in the circumstances (unobservable inputs) and to establish classification of fair value measurements for disclosure purposes. Various inputs are used in determining the value of the Fund’s investments. The inputs are summarized in the three broad levels listed below:


Level 1	-	quoted prices in active markets for identical securities. The types of assets and liabilities carried at Level 1 fair value generally are government and agency securities, equities listed in active markets, certain futures and certain options.

Level 2	-	other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.). The types of assets and liabilities carried at Level 2 fair value generally are municipal bonds, certain mortgage and asset-backed securities, certain corporate debt, commercial paper and repurchase agreements.

Level 3	-	significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments). The types of assets and liabilities carried at Level 3 fair value generally are certain mortgage and asset-backed securities, certain corporate debt and certain derivatives.

Observable inputs are those based on market data obtained from sources independent of the Fund, and unobservable inputs reflect the Fund’s own assumptions based on the best information available.

The inputs or methodology used for valuing securities are not necessarily an indication of the risk association with investing in those securities.

158

Notes to Financial Statements

December 31, 2009


Description	Total		LEVEL 1 Quoted prices in active markets for identical assets		LEVEL 2 Significant other observable inputs		LEVEL 3 Significant observable inputs
SBL Fund:
Series A (Equity Series)
Common Stocks	$	183,412,664	$	183,412,664	$	—	$	—

Series B (Large Cap Value Series)
Common Stocks		272,244,568		272,244,568		—		—
Commercial Paper		3,499,991		—		3,499,991		—

Total		275,744,559		272,244,568		3,499,991		—


Series C (Money Market Series)
Asset Backed Securities		480,570		—		480,570		—
U.S. Government Sponsored Agency Bonds & Notes		78,839,665		—		78,839,665		—
Commercial Paper		73,075,520		—		73,075,520		—

Total		152,395,755		—		152,395,755		—


Series D (Global Series)
Common Stocks		146,573,253		146,573,253		—		—
Foreign Stocks		120,778,605		2,753,127		118,025,478		—
Short Term Investments		2,109,842		—		2,109,842		—

Total		269,461,700		149,326,380		120,135,320		—


Series E (U.S. Intermediate Bond Series)
Corporate Bond		63,274,761		—		63,274,761		—
Preferred Stock		224,706		—		—		224,706
Mortgage Backed Securities		3,706,127		—		3,706,127		—
Asset Backed Securities		396,870		—		396,870		—
U.S. Government Sponsored Agency Bonds & Notes		20,459,073		—		20,459,073		—
U.S. Government Securities		38,510,540		38,510,540		—		—

Total		126,572,077		38,510,540		87,836,831		224,706


Series H (Enhanced Index Series)
Common Stocks		46,072,676		46,072,676		—		—
Preferred Stock		346,010		346,010		—		—
U.S. Government Securities		109,958		109,958		—		—
Futures Contracts		6,950		6,950		—		—

Total		46,535,594		46,535,594		—		—


Series J (Mid Cap Growth Series)
Common Stocks		149,361,581		149,361,581		—		—
Warrants		795		—		795		—

Total		149,362,376		149,361,581		795		—

159

Notes to Financial Statements

December 31, 2009


Description	Total			LEVEL 1 Quoted prices in active markets for identical assets			LEVEL 2 Significant other observable inputs		LEVEL 3 Significant observable inputs
Series N (Managed Asset Allocation)
Common Stocks	$	40,625,113		$	40,625,090		$	23	$	—
Foreign Stocks		9,794,021			212,066			9,581,955		—
Preferred Stock		136,927			136,927			—		—
Warrants		21			—			21
Corporate Bond		10,987,753			—			10,987,753		—
Foreign Bond		121,442			—			121,442		—
Foreign Government Bond		120,900			—			120,900		—
Municipal Bond		371,316			—			371,316		—
Mortgage Backed Securities		8,597,458			—			8,597,458		—
Asset Backed Securities		1,122,455			—			1,122,455		—
U.S. Government Sponsored Agency Bonds & Notes		10,661			—			10,661		—
U.S. Government Securities		4,513,126			4,513,126			—		—
Short Term Investments		2,363,212			—			2,363,212		—

Total		78,764,405			45,487,209			33,277,196		—


Series O (All Cap Value Series)
ASSETS:
Common Stocks		162,372,757			162,372,757			—		—

LIABILITIES:
Written Options (net of premiums received)		(32,280	)		(32,280	)		—		—

Series P (High Yield Series)
Common Stocks		349,767			249,126			264		100,377
Preferred Stock		380,623			380,623			—		—
Warrant		23,150			—			—		23,150
Convertible Bonds		6,423,187			—			6,423,187		—
Corporate Bond		124,883,708			—			124,225,718		657,990
Senior Floating Rate Interests		2,794,936			—			2,794,936		—
Foreign Bond		86,600			—			86,600		—
Foreign Government Bond		370,456			—			370,456		—

Total		135,312,427			629,749			133,901,161		781,517


Series Q (Small Cap Value Series)
ASSETS:
Common Stocks		124,195,107			124,195,107			—		—

LIABILITIES:
Written Options (net of premiums received)		(4,328	)		(4,328	)		—		—

Series V (Mid Cap Value Series)
ASSETS:
Common Stocks		287,888,725			287,888,725			—		—
Warrants		820			—			820		—
Convertible Bonds		2,275,000			—			2,275,000		—

Total		290,164,545			287,888,725			2,275,820		—


LIABILITIES:
Options (net of premiums received)		71,098			71,098			—		—

Series X (Small Cap Growth Series)
Common Stocks		34,398,377			34,398,377			—		—

Series Y (Select 25 Series)
Common Stocks		39,766,548			39,766,548			—		—

160

Notes to Financial Statements

December 31, 2009


Description	Total			LEVEL 1 Quoted prices in active markets for identical assets			LEVEL 2 Significant other observable inputs		LEVEL 3 Significant observable inputs
Series Z (Alpha Opportunity Series)
ASSETS:
Common Stocks	$	17,127,863		$	17,127,863		$	—	$	—
Foreign Stocks		416,506			—			416,506		—
U.S. Government Sponsored Agency Bonds & Notes		3,899,860			—			3,899,860		—
Short Term Investments		2,278,515			—			2,278,515		—
Repurchase Agreement		2,307,996			—			2,307,996		—
Futures Contracts		19,923			19,923			—		—

Total		26,050,663			17,147,786			8,902,877		—


LIABILITIES:
Common Stocks (sold short)		(4,822,878	)		(895,981	)		—		(3,926,897	)
Foreign Stocks (sold short)		(3,859,758	)		—			—		(3,859,758	)

Total		(8,682,636	)		(895,981	)		—		(7,786,655	)

161

Notes to Financial Statements

December 31, 2009

Following is a reconciliation of Level 3 assets for which significant unobservable inputs were used to determine fair value for the year ended December 31, 2009:

LEVEL 3 - Fair value measurement using significant unobservable inputs


	Securities			Total
Series E (U.S. Intermediate Bond Series)
ASSETS:
Beginning Balance	$	90,205		$	90,205
Total realized gains or losses included in earnings		—			—
Total unrealized gains or losses included in earnings		134,501			134,501
Purchases, sales, issuances, and settlements (net)		—			—
Transfers in and/or out of Level 3		—			—

Ending Balance	$	224,706		$	224,706


Series N (Managed Asset Allocation Series)
ASSETS:
Beginning Balance	$	30,793		$	30,793
Total realized gains or losses included in earnings		—			—
Total unrealized gains or losses included in earnings		14,207			14,207
Purchases, sales, issuances, and settlements (net)		—			—
Transfers in and/or out of Level 3		(45,000	)		(45,000	)

Ending Balance	$	—		$	—


Series P (High Yield Series)
ASSETS:
Beginning Balance	$	450,303		$	450,303
Total realized gains or losses included in earnings		—			—
Total unrealized gains or losses included in earnings		(1,056,176	)		(1,056,176	)
Purchases, sales, issuances, and settlements (net)		(35,928	)		(35,928	)
Transfers in and/or out of Level 3		1,423,318			1,423,318

Ending Balance	$	781,517		$	781,517


Series Z (Alpha Opportunity Series)
LIABILITIES:
Beginning Balance	$	7,786,655		$	7,786,655
Total realized gains or losses included in earnings		—			—
Total unrealized gains or losses included in earnings		—			—
Purchases, sales, issuances, and settlements (net)		—			—
Transfers in and/or out of Level 3		—			—

Ending Balance	$	7,786,655		$	7,786,655

162

Notes to Financial Statements

December 31, 2009

10. Federal Tax Matters

Net investment income and net realized gains (losses) may differ for financial statement and tax purposes because of temporary or permanent book/tax differences. These differences are primarily due to differing book and tax amortization methods for premium and market discount, consent dividends, ordinary net operating losses, realized gain/loss on foreign currency and the expiration of capital loss carryovers. To the extent these differences are permanent differences, adjustments are made to the appropriate equity accounts in the period that the differences arise. The following adjustments were made to the Statement of Assets and Liabilities at December 31, 2009 to reflect permanent differences:


	Accumulated Net Realized Gain/(Loss)			Undistributed Net Investment Income			Paid-In-Capital
Series A	$	—		$	(1,665,710	)	$	1,665,710
Series B		5,057,813			(4,509,471	)		(548,342	)
Series C		—			(3,769,489	)		3,769,489
Series D		961,906			(8,417,121	)		7,455,215
Series E		(108,274	)		(5,462,088	)		5,570,362
Series H		—			(994,450	)		994,450
Series J		—			184,141			(184,141	)
Series N		4,662			(1,990,898	)		1,986,236
Series O		—			(4,037,889	)		4,037,889
Series P		125,946			(8,369,500	)		8,243,554
Series Q		(3,109,534	)		(296,168	)		3,405,702
Series V		(18,875,628	)		(3,755,588	)		22,631,216
Series X		—			94,092			(94,092	)
Series Y		9,340,921			(71,213	)		(9,269,708	)
Series Z		(11,952	)		115,718			(103,766	)

163

Notes to Financial Statements

December 31, 2009

10. Federal Tax Matters (continued)

At December 31, 2009, the following Series had capital loss carryovers and deferred post-October losses to offset future realized capital gains as follows:


	Capital Loss Carryover Utilized in 2009		Capital Loss Carryovers Expired in 2009		Capital Loss Carryovers		Expires In	Deferred Post-October Losses
Series A	$	—	$	—	$	23,906,984	2016	$	3,148,561
		—		—		29,087,804	2017

	$	—	$	—	$	52,994,788


Series B	$	—	$	5,057,813	$	—	2009		2,174,233
		—		—		87,172,720	2010
		—		—		26,620,854	2011
		—		—		29,474,335	2016
		—		—		27,901,075	2017

	$	—	$	5,057,813	$	171,168,984


Series D	$	—	$	—	$	57,035,385	2016		6,160
		—		—		52,931,604	2017

	$	—	$	—	$	109,966,989


Series E	$	—	$	—	$	719,015	2010		—
		—		—		350,320	2012
		—		—		2,731,334	2014
		—		—		838,194	2015
		—		—		937,378	2016
		—		—		12,363,518	2017

	$	—	$	—	$	17,939,759


Series H	$	—	$	—	$	7,974,428	2016		444,580
		—		—		9,977,861	2017

	$	—	$	—	$	17,952,289


Series J	$	—	$	—	$	48,891,509	2016		781,987
		—		—		29,862,503	2017

	$	—	$	—	$	78,754,012


Series N	$	—	$	—	$	2,648,702	2016		110,779
		—		—		9,066,990	2017

	$	—	$	—	$	11,715,692


Series O	$	—	$	—	$	17,818,296	2016		—
		—		—		12,798,147	2017

	$	—	$	—	$	30,616,443


Series P	$	52,155	$	—	$	1,117,474	2016		1,155,379


Series Q	$	—	$	—	$	21,648,883	2017		—


Series V	$	—	$	—	$	27,781,912	2017		—


Series X	$	—	$	—	$	7,184,628	2010		—
		—		—		11,654,235	2016
		—		—		11,332,381	2017

	$	—	$	—	$	30,171,244


Series Y	$	—	$	9,340,921	$	—	2009		825,101
		—		—		9,284,391	2010
		—		—		6,092,310	2011
		—		—		338,147	2012
		—		—		9,012,784	2016
		—		—		6,370,486	2017

	$	—	$	9,340,921	$	31,098,118


Series Z	$	—	$	—	$	10,774,584	2016		—
		—		—		2,129,392	2017

	$	—	$	—	$	12,903,976

164

Notes to Financial Statements

December 31, 2009

10. Federal Tax Matters (continued)

The Fund declared ordinary and long-term capital gain consent dividends for the year ended December 31, 2008, as shown below.


	Ordinary Consent Dividends		Long-term Capital Gain Consent Dividends
Series A	$	1,665,710	$	—
Series B		4,509,471		—
Series C		4,249,459		—
Series D		7,455,215		—
Series E		5,570,363		—
Series H		994,450		—
Series N		1,986,236		—
Series O		4,037,889		—
Series P		8,243,554		—
Series Q		684,695		2,747,162
Series V		3,755,588		18,875,628
Series Y		71,213		—

Short term distributions are treated as ordinary distributions for federal income tax purposes.

As of December 31, 2009, the components of distributable earnings/(deficit) on a tax basis were as follows:


	Undistributed Ordinary Income		Undistributed Long-term Gain		Accumulated Capital and Other Losses			Unrealized Appreciation (Depreciation)*			Distributable Earnings (Deficit)**
Series A	$	1,140,095	$	—	$	(56,143,349	)	$	10,246,911		$	(44,756,343	)
Series B		2,616,829		—		(173,343,216	)		9,885,489			(160,840,898	)
Series C		—		—		—			(26,509	)		(26,509	)
Series D		1,919,749		—		(109,973,149	)		27,574,243			(80,479,157	)
Series E		3,803,661		—		(17,939,759	)		(2,051,817	)		(16,187,915	)
Series H		681,706		—		(18,396,869	)		1,182,518			(16,532,645	)
Series J		—		—		(79,535,999	)		21,518,980			(58,017,019	)
Series N		1,350,482		—		(11,826,471	)		2,024,359			(8,451,630	)
Series O		1,474,436		—		(30,616,443	)		(8,504,993	)		(37,647,000	)
Series P		9,769,938		—		(2,272,853	)		5,688,966			13,186,051
Series Q		—		—		(21,648,883	)		27,382,025			5,733,142
Series V		2,528,388		—		(27,781,912	)		9,901,932			(15,351,592	)
Series X		—		—		(30,171,244	)		6,943,676			(23,227,568	)
Series Y		126,624		—		(31,923,219	)		4,549,384			(27,247,211	)
Series Z		—		—		(12,903,976	)		510,071			(12,393,905	)

The difference between book basis and tax basis unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales, the realization of unrealized gains for tax purposes on futures contracts, differing book and tax methods for bond discount/premium amortization, and passive foreign investment companies.

**	The difference between total distributable earnings/(deficit) for book and tax purposes is related to the interest accrued on defaulted bonds for tax purposes.

165

Notes to Financial Statements

December 31, 2009

11. Series Z

Series Z - Alpha Opportunity Series (“Series Z”) contracted with Lehman Brothers International Europe (“LBIE”) to provide prime brokerage services related to Series Z’s short selling. On September 15, 2008, LBIE was placed into administration and a third party administrator has been named (the “Administrator”). Series Z’s exposure to LBIE consists of short sale proceeds held by LBIE, and restricted long positions held at Series Z’s custodian, as collateral for said short sales. Series Z has delivered a Notice of Termination of Loans to LBIE and the Administrator. Series Z is working to resolve these issues with LBIE and the Administrator. As of December 31, 2009, included in the statement of net assets are the value of restricted long positions of $8,134,012, restricted cash representing the value of short sale proceeds of $4,434,795 and liabilities for short sales of $7,786,655 representing the value of securities sold short at the date of termination. Until such time as the liability for short sales is settled and all restrictions are removed, Series Z cannot sell such restricted long positions and/or utilize the restricted cash balances to achieve Series Z’s investment objectives and/or meet Series Z’s redemption or other obligations. The liability for short sales recorded at December 31, 2009 may differ from the amounts ultimately due at settlement due to the inherent uncertainties in any such estimation process, including various challenges which could be made in the bankruptcy proceedings. Such differences, if any, will be reported in future periods when additional information is provided by the Administrator and the differences may be material.

12. Other Liabilities

Series A - Equity Series (“Series A”) and Series V - Mid Cap Value Series (“Series V”) each wrote put option contracts through Lehman Brothers, Inc., (“Lehman”) that were exercised prior to the option contracts expiration and prior to the bankruptcy filing by Lehman, during September 2008. However, these transactions have not settled and the securities have not been delivered to Series A or Series V as of December 31, 2009.

Although the ultimate resolution of these transactions is uncertain, Series A and Series V have recorded a liability on their respective books equal to the difference between the strike price on the put options and the market prices of the underlying security on the exercise date. The amount of liability recorded by Series A and Series V as of December 31, 2009 was $18,615 for Series A and $205,716 for Series V. Any differences will be reported in future periods when transactions have settled.

13. Subsequent Events

Management has evaluated events or transactions that may have occurred since December 31, 2009, that would merit recognition or disclosure in the financial statements. This evaluation was completed through February 25, 2010, the date the financial statements were issued.

Effective close of business April 30, 2010, SBL Fund Series H will merge into SBL Fund Series A under a plan of reorganization. This exchange will qualify as a tax free reorganization under Section (a)(i)(c) of the Internal Revenue Code.

On February 15, 2010, Security Benefit Mutual Holding Company (“SBMHC”), the parent company of Security Benefit Corporation (“SBC”) and the ultimate parent company of Security Investors entered into a Purchase and Sale Agreement whereby Guggenheim SBC Holdings LLC (“Guggenheim Holdings”) will, subject to regulatory approval, policyholder approval and approval by the shareholders of the mutual funds sponsored by affiliates of SBMHC, purchase all of the issued and outstanding stock of SBC (the “SBC Purchase Transaction”). The SBC Purchase Transaction would result in a change of control of Security Investors whereby SBC and its subsidiaries would be wholly-owned by Guggenheim Holdings. If the SBC Purchase Transaction does not close, other than as a result of a breach by Guggenheim Holdings or for certain other reasons, then SBC will sell its asset management business to Guggenheim Holdings, which would include Security Investors and would result in a change of control of the Security Investors. The sale of SBC’s asset management business, like the SBC Purchase Transaction, would be subject to regulatory approval and approval by the shareholders of the mutual funds sponsored by affiliates of SBMHC.

166

Report of Independent Registered Public Accounting Firm

To the Contractholders and Board of Directors

SBL Fund

We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of SBL Fund (comprised of Series A, B, C, D, E, H, J, N, O, P, V, X, Y and Z portfolios) (the Fund) as of December 31, 2009, and the related statements of operations for the year then ended, and the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Fund’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of investments owned as of December 31, 2009, by correspondence with the custodian, agent banks and brokers or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion.

As more fully discussed in Note 11 to the financial statements, Series Z of the SBL Fund (“Series Z”) previously utilized the services of Lehman Brothers International (Europe) (“Lehman”) to provide prime, broker services related to Series Z’s securities sold short. On September 15, 2008, Lehman was placed into administration. The financial records of Lehman are now being handled by the administrator. Management has recorded in the financial statements its best estimate of the liability for securities sold short due to Lehman, based upon management’s assessment of all available evidence, including information supplied by the administrators. Significant uncertainly exists regarding the ultimate timing of settlement, as well as the ultimate liability for securities sold short due to Lehman, and the difference between amounts currently recorded and that which may ultimately be due may be material.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each of the respective Series constituting the Fund at December 31, 2009, and the results of their operations for each of the year then ended, the changes in their net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein, in conformity with U.S. generally accepted accounting principles.

LOGO

Chicago, Illinois

February 25, 2010

167

Directors’ Disclosure

(unaudited)

Director Approval of Investment Advisory Agreement

At an in-person meeting of the Fund’s Boards of Directors held on November 9-10, 2009, called for the purpose of, among other things, voting on the renewal of the investment advisory and sub-advisory agreements applicable to the Funds, the Fund’s Board of Directors, including the Independent Directors, unanimously approved the continuation for a one year period of the investment advisory agreement between the Funds and Security Investors, LLC (“SI”), as well as each investment sub-advisory agreement applicable to the Fund. In reaching this conclusion, the Directors requested and obtained from SI and each investment sub-adviser such information as the Directors deemed reasonably necessary to evaluate the proposed renewal of the agreements. The Fund’s Board of Directors carefully evaluated this information and was advised by legal counsel with respect to its deliberations.

In considering the proposed continuation of the investment advisory and sub-advisory agreements, the Independent Directors evaluated a number of considerations, including, among others, (1) the nature, extent, and quality of the advisory services to be provided by SI and the investment sub-advisers; (2) the investment performance of the Fund, SI and the various investment sub-advisers; (3) the costs of services provided by SI and the profits derived by SI from its relationship with the Funds; (4) a comparison of each Series’ expense ratios and those of similarly situated funds; (5) benefits (such as soft dollars) to SI and its affiliates from their relationship with the funds (and any corresponding benefits to the Funds); (6) the expense limitation/fee waiver agreements between SI and certain of the funds; and (7) other factors of the Board deemed to be relevant. Each Board of Directors also took into account other considerations that it believed, in light of the legal advice furnished to the Independent Directors by their independent legal counsel and the Directors” own business judgment, to be relevant. Following its review, each Fund’s Board of Directors determined that the investment advisory agreement and each investment sub-advisory agreement applicable to the Fund (if any) will enable Fund or Series shareholders to obtain high quality services at a cost that is appropriate, reasonable and in the best interests of shareholders. Accordingly, the Directors, including the Independent Directors, unanimously approved the renewal of the investment advisory and investment sub-advisory agreements based upon the following considerations, among others:

•

The nature, extent and quality of the advisory services to be provided. Each Board of Directors concluded that SI and the investment sub-advisers retained to provide portfolio management services with respect to the Fund are capable of providing high quality services to the Fund, as indicated by the nature and quality of services provided in the past, SI’s management capabilities demonstrated with respect to the Funds and other mutual funds managed by SI, the professional qualifications and experience of SI’s and the various sub-advisers’ portfolio managers, and SI’s investment ad management oversight processes. The Directors also determined that SI and the sub-advisers proposed to provide investment and related services that were of the same quality and quantity as services provided to the Funds in the past and that these services are appropriate in scope and extent in light of the Fund’s operations, the competitive landscape of the investment company business and investor needs.

•

The investment performance of the Fund or Series. With respect to the Funds, the Directors concluded on the basis of information compiled by Morningstar that SI and the investment sub-advisers had achieved investment performance that was acceptable, and competitive or superior relative to comparable funds over trailing periods.

•

The cost of advisory services provided ant he level of profitability. On the basis of each Board’s review of the fees to be charged by SI for investment advisory and other services, and the estimated profitability of SI’s relationship with each Fund or Series, each Board concluded that the level of investment advisory fees and SI’s profitability are appropriate in light of the management fees and overall expense ratios of comparable investment companies and the anticipated profitability of the relationship between each Fund or Series and SI and its affiliates. On the basis of comparative information compiled by Morningstar, the Directors determined that the advisory fees and estimated overall expense ratio of each Fund or Series are consistent with, and often below, industry medians, particularly with respect to mutual funds of comparable size.

•

Whether the advisory fees reflect economies of scale. The directors concluded that the Funds’ investment advisory fees appropriately reflect the current economic environment for SI and the competitive nature of the mutual fund market.

•

The extent to which economies of scale will be realized as the Fund grows. While the Funds’ investment advisory fees do not reduce should Fund assets grow meaningfully, the Directors determined that the investment advisory fees payable by the Funds already reflect potential future economies of

168

Directors’ Disclosure

(unaudited)

scale to some extent by virtue of their competitive levels (determined with reference to industry standards as reported by Lipper and SI’s estimated profitability at current or foreseeable asset levels. The Directors also considered that they will have the opportunity to periodically reexamine whether each Fund or Series has achieved economies of scale, and the appropriateness of investment advisory fees payable to SI and fees payable by SI to the investment sub-advisers, in the future.

•

Benefits (such as soft dollars) to SI from its relationship with the Funds (and any corresponding benefits to the Funds). The Directors concluded that other benefits described by SI and the investment sub-advisers from their relationships with the Funds, including “soft dollar” benefits in connection with Funds’ brokerage transactions, are reasonable and fair, and consistent with industry practice and the best interests of the Funds and their shareholders. In addition, the Directors determined that the administration, transfer agency and fund accounting fees paid by the Fund to SI are reasonable, fair and in the best interests of Funds’ shareholders in light of the nature and quality of the services provided, the associated costs, and the necessity of the services for the Funds’ operations.

•

Other considerations: In approving the investment advisory and sub-advisory agreements the Directors determined that SI has made a substantial commitment to the recruitment and retention of high quality personnel, and maintains the financial, compliance and operational resources reasonably necessary to manage the Funds in a professional manner that is consistent with the best interests of the Funds and their shareholders. In this regard, the Directors favorably considered the compliance track record of the Funds and SI. The Directors also concluded that SI has made a significant entrepreneurial commitment to the management and success of the Funds, which entails a substantial financial and professional commitment, including investment advisory fee waivers and expense limitation arrangements with respect to the Funds to the benefit of Funds’ shareholders.

169

Directors (unaudited)

The business address of each director and officer is One Security Benefit Place, Topeka, KS 66636-0001


Name (Date of Birth) Year Elected***		Principal Occupation(s) During Past 5 Years
Donald A. Chubb, Jr.**		Business Broker - Griffith & Blair Realtors
(12-14-46)		Director - Jayhawk Area Boy Scouts Council
1994

Harry W. Craig, Jr.**		Chairman, CEO, Secretary & Director - The Martin Tractor Company, Inc.
(05-11-39)		Director - Stormont-Vail Corporation
2004		Director - Concerned Citizens for Topeka
		Director - Oscar S. Stauffer Executive in Residence

Jerry B. Farley**		President - Washburn University
(09-20-46)		President - J&J Bonanza
2005

Penny A. Lumpkin**		Partner - Vivian’s Gift Shop (Corporate Retail)
(08-20-39) 1993		Vice President - Palmer Companies, Inc. (Small Business and Shopping Center Development)
		Vice President - PLB (Real Estate Equipment Leasing)
		Vice President - Town Crier (Retail)
		Prior to 2002:
		Vice President - Bellaire Shopping Center (Managing and Leasing)
		Partner - Goodwin Enterprises (Retail)

Maynard F. Oliverius**		President & Chief Executive Officer - Stormont-Vail Healthcare
(12-18-43)		Director - VHA Mid-America
1998		Director - Go Topeka

Richard M. Goldman* (03-04-61) 2008 (President, Director & Chairman of the Board)		Senior Vice President - Security Benefit Corporation
		President - Security Investors, LLC
		Director - Security Distributors, Inc.
		Director - First Security Benefit Life Insurance and Annuity Company of New York
		President & Manager - Security Global Investors, LLC
		President - Security Investments Corporation
		Managing Member - RM Goldman Partners, LLC
		President & CEO - ForstmannLeff
		Managing Director - Head of the Americas Institutional Business, Deutsch Asset Management

*	This director is deemed to be an “interested person” of the Funds under the Investment Company Act of 1940, as amended, by reason of his position with the Fund’s Investment Manager and/or the parent of the Investment Manager.

These directors serve on the Fund’s joint audit committee, the purpose of which is to meet with the independent registered public accounting firm, to review the work of the independent registered public accounting firm, and to oversee the handling by Security Investors of the accounting function for the Funds.

***	Each director oversees 30 Rydex\|SGI Funds portfolios and serves until the next annual meeting, or until a successor has been duly elected and qualified.

170

Officers (unaudited)

The business address of each director and officer is One Security Benefit Place, Topeka, KS 66636-0001


Name (Date of Birth) Title - Year Elected		Principal Occupation(s) During Past 5 Years
Mark P. Bronzo (11-01-60) Vice President - 2008		Portfolio Manager, Security Investors, LLC Managing Director & Chief Compliance Officer, Nationwide Separate Accounts LLC

Christina Fletcher (07-25-72) Vice President - 2005		Vice President & Portfolio Manager - Security Investors, LLC
		Credit Analyst/Portfolio Manager - Horizon Cash Management
		Senior Money Market Trader - Scudder Investments

Brenda M. Harwood (11-03-63) Chief Compliance Officer - 2004 Treasurer - 1988		Vice President, Chief Compliance Officer & Treasurer - Security Global Investors, LLC
		Assistant Vice President - Security Benefit Life Insurance Company
		Vice President, Assistant Treasurer & Director - Security Distributors, Inc.

Amy J. Lee (06-05-61) Secretary -1987		Secretary - Security Investors, LLC
		Secretary & Chief Compliance Officer - Security Distributors, Inc.
		Vice President, Associate General Counsel & Assistant Secretary - Security Benefit Corporation & Security Benefit Life Insurance Company
		Director - Brecek & Young Advisors, Inc.

Mark Mitchell (08-24-64) Vice President - 2003		Vice President & Portfolio Manager - Security Investors, LLC
		Vice President & Portfolio Manager - Security Benefit Life Insurance Company


Joseph C. O’Connor		Portfolio Manager, Security Investors, LLC
(07-15-60)		Managing Director, Nationwide Separate Accounts LLC
Vice President - 2008

Christopher Phalen (11-09-70) Vice President - 2002		Vice President & Head of Fixed Income - Security Global Investors, LLC
		Assistant Vice President & Head of Fixed Income - Security Benefit Life Insurance Company
		Vice President & Portfolio Manager - Security Investors, LLC
		Vice President & Portfolio Manager - Security Benefit Life Insurance Company

Daniel W. Portanova		Portfolio Manager, Security Investors, LLC
(10-02-60)		Managing Director, Nationwide Separate Accounts LLC
Vice President - 2008

James P. Schier (12-28-57) Vice President - 1998		Vice President & Senior Portfolio Manager - Security Investors, LLC
James P. Schier (12-28-57) Vice President - 1998		Vice President & Senior Portfolio Manager - Security Benefit Life Insurance Company

Christopher D. Swickard (10-09-65) Assistant Secretary - 1996		Assistant Secretary - Security Investors, LLC
		Second Vice President & Assistant General Counsel - Security Benefit Corporation & Security Benefit Life Insurance Company
		Assistant Secretary - Security Distributors, Inc.

David G. Toussaint (10-10-66) Vice President - 2001		Vice President & Portfolio Manager - Security Investors, LLC
David G. Toussaint (10-10-66) Vice President - 2001		Assistant Vice President & Portfolio Manager - Security Benefit Life Insurance Company

*	Officers serve until the next annual meeting or until a successor has been duly elected and qualified.

171

Rydex | SGI Privacy Policies

Rydex Funds, Rydex | SGI Funds, Rydex Investments, Rydex Distributors, Inc., Security Investors, LLC, Security Global Investors, LLC, Security Distributors, Inc. and Rydex Advisory Services (Collectively “Rydex”)

Our Commitment to You

When you become a Rydex | SGI investor, you entrust us with not only your hard-earned money but also with personal and financial information about you. We recognize that your relationship with us is based on trust and that you expect us to act responsibly and in your best interests. Because we have access to this private information about you, we hold ourselves to the highest standards in its safekeeping and use. This means, most importantly, that we do not sell client information to anyone—whether it is your personal information or if you are a current or former Rydex | SGI client.

The Information We Collect About You

In the course of doing business with shareholders and investors, we collect nonpublic personal information about you. You typically provide personal information when you complete a Rydex | SGI account application or when you request a transaction that involves Rydex and Rydex | SGI funds or one of the Rydex | SGI affiliated companies. “Nonpublic personal information” is personally identifiable private information about you. For example, it includes information regarding your name and address, Social Security or taxpayer identification number, assets, income, account balance, bank account information and investment activity (e.g., purchase and redemption history).

How We Handle Your Personal Information

As emphasized above, we do not sell information about current or former clients or their accounts to third parties. Nor do we share such information, except when necessary to complete transactions at your request or to make you aware of related investment products and services that we offer. Additional details about how we handle your personal information are provided below. To complete certain transactions or account changes that you direct, it may be necessary to provide identifying information to companies, individuals or groups that are not affiliated with Rydex | SGI. For example, if you ask to transfer assets from another financial institution to Rydex | SGI, we will need to provide certain information about you to that company to complete the transaction. To alert you to other Rydex | SGI investment products and services, we may share your information within the Rydex | SGI family of affiliated companies. This would include, for example, sharing your information within Rydex | SGI so we can make you aware of new Rydex and Rydex | SGI funds or the services offered through another Rydex | SGI affiliated company. In certain instances, we may contract with nonaffiliated companies to perform services for us. Where necessary, we will disclose information we have about you to these third parties. In all such cases, we provide the third party with only the information necessary to carry out its assigned responsibilities and only for that purpose. And we require these third parties to treat your private information with the same high degree of confidentiality that we do. In certain instances, we may share information with other financial institutions regarding individuals and entities in response to the U.S.A. Patriot Act. Finally, we will release information about you if you direct us to do so, if we are compelled by law to do so or in other circumstances permitted by law.

Opt Out Provisions

We do not sell your personal information to anyone. The law allows you to “opt out” of only certain kinds of information sharing with third parties. The firm does not share personal information about you with any third parties that triggers this opt-out right. This means YOU ARE ALREADY OPTED OUT.

How We Protect Privacy Online

Our concern for the privacy of our shareholders also extends to those who use our web site, www.rydex-sgi.com. Our web site uses some of the most secure forms of online communication available, including encryption technology, Secure Socket Layer (SSL) protocol, firewalls and user names and passwords. These technologies provide a high level of security and privacy when you access your account information or initiate online transactions. The Rydex | SGI web site offers customized features that require our use of “http cookies”—tiny pieces of information that we ask your browser to store. However, we make very limited use of these cookies. We only use cookies for session management and security features on the Rydex | SGI web site. We do not use them to pull data from your hard drive, to learn your

172

Rydex | SGI Privacy Policies (continued)

email address, or to view data in cookies created by other web sites. We will not share the information in our cookies or give others access to it. See the legal information area on our web site for more details about web site security and privacy features.

How We Safeguard Your Personal Information

We restrict access to nonpublic personal information about shareholders to our employees and in some cases to third parties (for example, the service providers described above) as permitted by law. We maintain strict physical, electronic and procedural safeguards that comply with federal standards to guard your nonpublic personal information.

We’ll Keep You Informed

As required by federal law, we will notify shareholders of our privacy policy annually. We reserve the right to modify this policy at any time, but rest assured that if we do change it, we will tell you promptly. You will also be able to access our privacy policy from our web site at www.rydex-sgi.com. Should you have any questions regarding our privacy policy, contact us at 800.820.0888 or 301.296.5100.

173

Other Information

The Fund files a complete schedule of portfolio holdings with the U.S. Securities and Exchange Commission for the first and third quarters of each fiscal year on Form N-Q. The Forms N-Q of each such Fund are available on the Commission’s website at www.sec.gov. The Forms N-Q may be reviewed and copied at the Commission’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The portfolio holdings of the Fund are available on their website, www.securitybenefit.com and www.rydex-sgi.com or by calling 1-800-888-2461.

A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available upon request, free of charge by calling 1-800-888-2461, or accessing the U.S. Securities and Exchange Commission website at www.sec.gov. Information regarding how the Funds voted proxies relating to portfolio securities during the 12 month period ended June 30, 2009 is available upon request, free of charge by calling 1-800-888-2461, or accessing the U.S. Securities and Exchange Commission website at www.sec.gov.

The statement of additional information (“SAI”) includes additional information about the Funds’ Directors and is available upon request without charge by calling 1-800-888-2461.

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176

LOGO

One Security Benefit Place • Topeka, Kansas 66636-0001 • securitybenefit.com

Security Distributors, Inc.

SDI 425

Item 2.

Code of Ethics.

The Registrant has adopted a code of ethics that applies to its principal executive officer and principal financial officer. A copy of the Registrant’s code of ethics is filed herewith as Exhibit 10(a)(1). No amendments were made to the provisions of the code of ethics during the period covered by this report. No implicit or explicit waivers to the provisions of the code of ethics were granted during the period covered by this report. The Registrant hereby undertakes to provide any person without charge, upon request, a copy of its Code by calling the Registrant at 1-800-888-2461.

Item 3.

Audit Committee Financial Expert.

The Registrant’s Board of Directors has determined that Maynard Oliverius, a member of the Audit Committee of the Board, is an audit committee financial expert. Mr. Oliverius is “independent” for purposes of this item.

Item 4.

Principal Accountant Fees and Services.

(a)

Audit Fees. The aggregate fees billed for each of the last two fiscal years (the “Reporting Periods”) for professional services rendered by the Registrant’s principal accountant (the “Auditor”) for the audit of the Registrant’s annual financial statements, or services that are normally provided by the Auditor in connection with the statutory and regulatory filings or engagements for the Reporting Periods, were $333,700 in 2008 and $309,850 in 2009.

(b)

Audit-Related Fees. The aggregate fees billed in the Reporting Periods for assurance and related services by the Auditor that are reasonably related to the performance of the audit of the Registrant’s financial statements and are not reported under paragraph (a) of this Item 4 were $5,900 in 2008 and $5,400 in 2009. These services consisted of financial reporting advisory services.

The aggregate fees billed in the Reporting Periods for assurance and related services by the Auditor to the Registrant’s investment adviser (not including any sub-investment adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by or under common control with the investment adviser that provides ongoing services to the Registrant (“Service Affiliates”) which required pre-approval by the Audit Committee were $9,250 in 2008 and $9,250 in 2009, which related to the review of the transfer agent function.

(c)

Tax Fees. The aggregate fees billed to the Registrant in the Reporting Periods for professional services rendered by the Auditor for tax compliance, tax advice and tax planning (“Tax Services”) were $51,600 in 2008 and $64,500 in 2009. These services consisted of (i) preparation of U.S. federal, state and excise tax returns; (ii) U.S. federal and state tax planning, advice and assistance regarding statutory, regulatory or administrative developments, (iii) tax advice regarding tax qualification matters and/or treatment of various financial instruments held or proposed to be acquired and (iv) review of U.S. federal excise distribution calculations.

The aggregate fees billed in the Reporting Periods for Tax Services by the Auditor to Service Affiliates which required pre-approval by the Audit Committee were $0 in 2008 and $0 in 2009.

(d)	All Other Fees. The aggregate fees billed to the Registrant in the Reporting Periods for products and services provided by the Auditor, other than the services reported in paragraphs (a) through (c) of this Item, were $0 in 2008 and $0 in 2009.

The aggregate fees billed in the Reporting Periods for Non-Audit Services by the Auditor to Service Affiliates, other than the services reported in paragraphs (b) through (d) of this Item, which required pre-approval by the Audit Committee were $0 in 2008 and $0 in 2009.


(e)	(1)	Audit Committee Pre-Approval Policies and Procedures. The Registrant’s Audit Committee has established policies and procedures for pre-approval of the auditor’s engagements for audit and non-audit services to the Registrant. Pre-approval considerations include whether the proposed services are compatible with maintaining the auditor’s independence as specified in applicable rules.

(e)	(2)	Percentage of Non-Audit Services Approved under (c)(7)(i)(C). The percentage of the services described in each of (b) through (d) of this Item 4 (only those that relate to the Registrant) that were approved by the Audit Committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X was 0%, 0% and 0%, respectively.

(f)	Not applicable.

(g)	Non-Audit Fees. The aggregate non-audit fees were for audit-related and tax services rendered to the Registrant, and rendered to Service Affiliates, for the Reporting Periods were $66,750 in 2008 and $79,150 in 2009.

(h)

Auditor Independence. The Registrant’s Audit Committee was provided with information relating to the provision of non-audit services by Ernst & Young LLP to the Registrant (and its affiliates) that were not pre-approved by the Audit Committee so that a determination could be made whether the provision of such services is compatible with maintaining Ernst & Young LLP’s independence.

Item 5.

Audit Committee of Listed Registrants.

Not applicable.

Item 6.

Schedule of Investments.

The Schedule of Investments is included under Item 1 of this form.

Item 7.

Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.

Not applicable.

Item 8.

Portfolio Managers of Closed-End Management Investment Companies.

Not applicable.

Item 9.

Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.

Not applicable.

Item 10.

Submission of Matters to a Vote of Security Holders.

The registrant does not currently have in place procedures by which shareholders may recommend nominees to the registrant’s board.

There have been no changes to the procedures by which shareholders may recommend nominees to the registrant’s board.

Item 11.

Controls and Procedures.

(a)

The registrant’s President and Treasurer have concluded that the registrant’s disclosure controls and procedures (as defined in rule 30a-3(c) under the Investment Company Act of 1940) are effective based on their evaluation of these disclosure controls and procedures within 90 days of the filing date of this report on Form N-CSR.

(b)	There were no significant changes in the registrant’s internal controls, or in other factors that could significantly affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Item 12.

Exhibits.


(a)	(1)	Code of Ethics pursuant to Item 2 above.

	(2)	Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and required by Rule 30a-2(a) under the Investment Company Act of 1940, are attached hereto.

(b)	Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and required by Rule 30a-2(a) under the Investment Company Act of 1940, are attached hereto.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


SBL FUND

By:		/s/ RICHARD M. GOLDMAN
		Richard M. Goldman, President

Date:		March 10, 2010

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.


By:		/s/ RICHARD M. GOLDMAN
		Richard M. Goldman, President

Date:		March 10, 2010

By:		BRENDA M. HARWOOD
		Brenda M. Harwood, Treasurer

Date:		March 10, 2010

Guggenheim Variable Funds Trust N-CSRCertified annual shareholder report (management investment company)