SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 (Amendment No.______) Filed by the Registrant [X] Filed by a Party other than the Registrant [_] Check the appropriate box: [_] Preliminary Proxy Statement [_] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) [X] Definitive Proxy Statement [_] Definitive Additional Materials [_] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12 SECURITY EQUITY FUND (Name of Registrant as Specified In Its Charter) Payment of Filing Fee (Check the appropriate box): [X] No fee required. [_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. 1) Title of each class of securities to which transaction applies: 2) Aggregate number of securities to which transaction applies: 3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined): 4) Proposed maximum aggregate value of transaction: 5) Total fee paid: [_] Fee paid previously with preliminary materials. [_] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. 1) Amount Previously Paid: 2) Form, Schedule or Registration Statement No.: 3) Filing Party: 4) Date Filed:[SBG LOGO] - -------------------------------------------------------------------------------- Security Benefit Life Insurance Company 700 SW Harrison St. Security Benefit Group, Inc. Topeka, Kansas 66636-0001 Security Distributors, Inc. (785) 431-3000 Security Management Company, LLC March 8, 2002 Dear Shareholder: I am writing to inform you of the upcoming special meeting of stockholders of Security Equity Fund to be held on Wednesday, April 17, 2002. Several issues affecting the fund will be on the agenda. At this meeting you are being asked to vote on important proposals affecting your fund. WE ASK YOU TO READ THE ENCLOSED INFORMATION CAREFULLY AND VOTE YOUR SHARES. YOUR VOTE IS EXTREMELY IMPORTANT. The issues to be considered at the special meeting are: PROPOSAL NO. 1 - TO APPROVE AN AMENDMENT TO THE FUND'S INVESTMENT MANAGEMENT AND SERVICES AGREEMENT. Stockholders of the Global and Equity Series of the fund are voting on an amendment to the fund's Investment Management and Services Agreement with Security Management Company, LLC ("SMC"). The amendment would provide for SMC to receive a separate fee from the Series for investment advisory, general administrative and accounting, and transfer agency services. PROPOSAL NO. 2 - TO APPROVE ADOPTION OF A CLASS A DISTRIBUTION PLAN. We are asking the Class A and Class B shareholders of the Equity, Global, Mid Cap Value and Social Awareness Series of the fund to approve adoption of a Class A Distribution Plan for those Series of the fund. PROPOSAL NO. 3 - TO APPROVE A CHANGE IN THE SELECT 25 SERIES OF THE FUND FROM A DIVERSIFIED TO A NON-DIVERSIFIED FUND. The stockholders of Select 25 Series are asked to approve a proposal that would allow Select 25 Series to be managed as a non-diversified fund. The Board of Directors of the fund has unanimously approved the proposals and recommends that you vote "FOR" them. To vote, simply complete, sign and send us the enclosed proxy card in the envelope provided. Alternatively, you may register your vote on the Internet at www.proxyvote.com. If you have any questions concerning the issues to be voted on or need assistance completing your proxy card, please contact us at 1-866-644-6808. We appreciate your consideration of these important proposals. Thank you for investing with the Security Funds. Sincerely, JAMES R. SCHMANK James R. Schmank President Security Management Company, LLC NOTICE OF SPECIAL MEETING OF STOCKHOLDERS OF SECURITY EQUITY FUND(R)- EQUITY SERIES, GLOBAL SERIES, MID CAP VALUE SERIES, SOCIAL AWARENESS SERIES AND SELECT 25 SERIES TO BE HELD APRIL 17, 2002 700 SW HARRISON ST., TOPEKA, KANSAS 66636-0001 TELEPHONE 1-800-888-2461 TO THE STOCKHOLDERS OF > SECURITY EQUITY FUND Notice is hereby given that a special meeting of the stockholders of the Equity Series, Global Series, Mid Cap Value Series, Social Awareness Series and Select 25 Series of Security Equity Fund (the "Fund"), a Kansas corporation, will be held at the offices of Security Equity Fund, Security Benefit Group Building, 700 SW Harrison Street, Topeka, Kansas 66636-0001, on April 17, 2002 at 9:30 a.m. local time ("Meeting"), for the following purposes: 1. To approve an amendment to the Fund's Investment Management and Services Agreement, on behalf of Equity and Global Series, with Security Management Company, LLC. 2. To approve adoption of a Class A Distribution Plan for the Equity, Global, Mid Cap Value and Social Awareness Series of the Fund pursuant to Rule 12b-1 under the Investment Company Act of 1940. 3. To approve a proposal to change Select 25 Series from a diversified to a non-diversified fund. 4. To transact such other business as may properly come before the Meeting or any adjournments thereof, and to adjourn the Meeting from time to time. The Board of Directors of the Fund has fixed the close of business on February 19, 2002, as the record date for the determination of stockholders of the Fund entitled to notice of and to vote at the Meeting. THERE IS ENCLOSED A PROXY FORM SOLICITED BY THE BOARD OF DIRECTORS OF SECURITY EQUITY FUND. ANY FORM OF PROXY THAT IS EXECUTED AND RETURNED, NEVERTHELESS MAY BE REVOKED PRIOR TO ITS USE. ALL SUCH PROXIES PROPERLY EXECUTED AND RECEIVED IN TIME WILL BE VOTED AT THE MEETING. By order of the Board of Directors of Security Equity Fund, Topeka, Kansas AMY J. LEE March 8, 2002 Secretary - -------------------------------------------------------------------------------- IMPORTANT: STOCKHOLDERS WHO DO NOT EXPECT TO BE PRESENT IN PERSON AT THE MEETING ARE REQUESTED TO MARK, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD(S) TO THE FUND, OR OTHERWISE VOTE THEIR SHARES, AS EARLY AS POSSIBLE. SECURITY EQUITY FUND MEMBER OF THE SECURITY BENEFIT GROUP OF COMPANIES 700 SW HARRISON STREET, TOPEKA, KANSAS 66636-0001 SPECIAL MEETING OF STOCKHOLDERS, APRIL 17, 2002 PROXY STATEMENT MARCH 8, 2002 The enclosed proxy is solicited by and on behalf of the Board of Directors of the Fund. The Board of Directors is soliciting proxies from stockholders of the Fund with respect to the proposals set forth in the accompanying notice. We expect to mail proxies to the Fund's stockholders on or about March 8, 2002. Stockholders of each Series will vote separately with respect to Proposal Nos. 1, 2 and 3 as set forth in the table below. - -------------------------------------------------------------------------------- PROPOSAL SERIES/CLASS AFFECTED - -------------------------------------------------------------------------------- 1. To approve an amendment to the Fund's Investment Management and Services Equity and Global Agreement with Security Management Series of the Fund Company, LLC. - -------------------------------------------------------------------------------- 2. To approve a Class A Distribution Class A Shares and Class B Plan pursuant to Rule 12b-1 under Shares of Equity, Global, the Investment Company Act of 1940. Mid Cap Value and Social Awareness Series of the Fund - -------------------------------------------------------------------------------- 3. To approve a proposal to change Select 25 Series from a diversified Select 25 Series of the Fund to a non-diversified fund. - -------------------------------------------------------------------------------- PROPOSAL NO. 1 APPROVAL OF AMENDMENT OF THE FUND'S INVESTMENT MANAGEMENT AND SERVICES AGREEMENT The Board of Directors of the Fund recommends approval of an amendment (the "Amendment") to the Fund's current Investment Management and Services Agreement (the "Agreement"), on behalf of Equity and Global Series, with the Fund's investment manager, Security Management Company, LLC ("SMC" or the "Investment Manager"). If approved by stockholders, the Amendment would: (1) change the investment advisory fee for each of the Equity and Global Series of the Fund; (2) impose a separate fee for administrative, accounting, transfer agency and dividend disbursing services provided to the Equity Series and Global Series of the Fund; and (3) provide for each of Equity Series and Global Series to pay all of its expenses, which are currently paid by SMC. - -------------------------------------------------------------------------------- THE FUND WILL FURNISH, WITHOUT CHARGE, A COPY OF THE ANNUAL REPORT CONTAINING AUDITED FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2001, TO A STOCKHOLDER UPON REQUEST. SUCH REQUESTS SHOULD BE DIRECTED TO THE FUND, BY WRITING THE FUND AT 700 SW HARRISON STREET, TOPEKA, KANSAS 66636-0001, OR BY CALLING THE FUND'S TOLL-FREE TELEPHONE NUMBER 1-800-888-2461, EXTENSION 3127. DESCRIPTION OF EXISTING AGREEMENT AND PROPOSED AMENDMENT SMC currently serves as the investment manager of the Equity Series and Global Series of the Fund pursuant to the terms of the Agreement, which is dated January 31, 1989. The Board of Directors of the Fund last approved the Agreement on November 1, 2001. Fund stockholders last approved the Agreement on January 26, 2000, in connection with an amendment to permit SMC, with Board approval, to enter into or amend sub-advisory agreements without stockholder approval and in connection with the Fund's adoption of a Brokerage Enhancement Plan. Under the Agreement, SMC provides investment advisory services, general administrative, fund accounting, transfer agency and dividend disbursing services and arranges for provision to the Equity Series and Global Series of all other required services, including services of independent accountants, legal counsel, custodial services and printing, all for a single fee. In addition, SMC pays all expenses in connection with the performance of services provided or procured under the Agreement, including with respect to the Equity Series and the Global Series, all fees and charges of third parties providing services to the Series. As compensation for services provided to the Equity Series, the Fund pays SMC an annual fee equal to (i) 2% of the first $10 million of the average daily net assets, (ii) 1 1/2% of the next $20 million of the average daily net assets, and (iii) 1% of the remaining average daily net assets of the Equity Series of the Fund. For Global Series, the Fund pays an annual fee equal to (i) 2% of the first $70 million of the average daily net assets, and (ii) 1 1/2% of the remaining average daily net assets of the Global Series of the Fund. Such fees are determined daily and payable monthly. In the fiscal year ended September 30, 2001, SMC received from the Fund fees of $8,523,319 with respect to the Equity Series, and $1,648,290 with respect to the Global Series. No brokerage commissions were paid by the Fund to an affiliated broker for the fiscal year ended September 30, 2001. Unless superseded by the proposed Amendment, the Agreement will continue in effect until January 1, 2003, and from year to year thereafter, provided such continuance is specifically approved by the vote of a majority of the Board of Directors of the Fund (including a majority of such Directors who are not parties to the Agreement or interested persons of any such party (the "Independent Directors")) cast in person at a meeting specifically called for voting on such renewal. Under the terms of the Agreement, SMC is not subject to any liability for any errors of judgment or mistake of law or for any loss sustained by reason of the adoption of any investment policy so long as such recommendation shall have been made with due care and in good faith. Nothing in the Agreement, however, shall protect SMC against any liability to the Fund or its stockholders by reason of willful misfeasance, bad faith, or gross negligence in the performance of its duties or by reason of its reckless disregard of its obligations and duties under the Agreement. The Agreement may be terminated with respect to a Series without penalty at any time upon 60 days' notice by the Board of Directors of the Fund, by vote of the holders of a majority of the outstanding voting securities of the Series, or by SMC. The Agreement is terminated automatically in the event of its assignment (as such term is defined in the Investment Company Act of 1940 (the "1940 Act")). PROPOSED AMENDMENT SMC proposes to amend the Agreement with the Fund. The form of the Amendment, which is attached hereto as Exhibit A, was proposed by SMC and was approved by the Board of Directors of the Fund (including a majority of the Independent Directors) on February 1, 2002. Other than as described below, there are no material differences between the current Agreement and the proposed Amendment. It is expected that the Amendment will become effective May 1, 2002 with respect to each of Equity Series and Global Series, provided that it is approved by stockholders of the respective Series at the Meeting. The Board also has made the effectiveness of the Amendment with respect to each of the Equity Series and the Global Series contingent upon approval of Proposal No. 2 by the stockholders of the Series. If Proposal No. 1 or No. 2 is not approved, the current Agreement will continue in effect in accordance with its terms, and the Fund's Board of Directors will determine what further action, if any, to take. The Amendment provides for SMC to receive a separate fee for providing investment advisory services and general administrative, fund accounting, transfer agency and dividend disbursing services. If the Amendment is approved, the fee for advisory services will be an annual fee equal to 0.75% of the average daily net assets of the Equity Series and 1.00% of the average daily net assets of the Global Series. The fee for administrative services will be an annual fee equal to 0.09% of the average daily net assets of the Equity Series and 0.045% of the average daily net assets of the Global Series, plus a global administration fee equal on an annual basis to the greater of (1) 0.10% of the Global Series' average daily net assets, or (2) $60,000. For transfer agency services, SMC will charge a maintenance fee of $8.00 per stockholder account and a transaction fee of $1.00 per stockholder transaction, including dividends. The amount of aggregate transfer agency fees will be paid by the Fund rather than deducted from individual stockholder accounts. If the Amendment is approved, the Fund's Board of Directors could approve a change in fees for general administrative, transfer agency and dividend disbursing services without shareholder approval. Additional information about SMC, the Fund's investment manager, administrator and transfer agent, as well as its managing members, officers and affiliates, is presented in Exhibit B. REASONS FOR THE PROPOSED AMENDMENT The proposed new fee structure for the Equity Series and Global Series is intended to bring the Series' fee arrangements in line with the other series of the Fund, as well as the mutual fund industry, where most funds charge a separate fee for investment advisory, administrative and transfer agency services. SMC believes that the proposed fee arrangement will make it easier for the Fund's stockholders to compare the Equity Series' and Global Series' fees for advisory and other services to the fees of other comparable mutual funds. SMC further believes that the new arrangement makes it possible to better match the services provided by SMC and the fees attributable to those services. FEES AND EXPENSES The Amendment would affect the fees and expenses of the Equity Series and Global Series as demonstrated by the chart below. The chart sets forth the fees and expenses of each Series under the current Agreement during the fiscal year ended September 30, 2001 and, on a pro forma basis, what the fees and expenses would have been during the same period if the Amendment had been in place. ---------------------------------------------------------------- CURRENT PROPOSED PERCENTAGE NAME OF FUND FEE STRUCTURE FEE STRUCTURE DIFFERENCE ---------------------------------------------------------------- Equity Series $8,523,319* $7,617,786 -10.62%* ---------------------------------------------------------------- Global Series 1,648,290* 1,170,135 -29.01%* ---------------------------------------------------------------- *Gross fees (before deducting expenses of the Series borne by SMC). SMC pays certain expenses of the Series under the current Agreement. If gross fees are reduced by the amount of those expenses, SMC's net fees received from Equity Series are $8,250,936 and from Global Series are $1,496,221, and the percentage difference is -7.67% and -21.79%, respectively. ---------------------------------------------------------------- The following table sets forth information concerning each of Equity and Global Series' fees and expenses by class as a percentage of average net assets for the fiscal year ended September 30, 2001 under the current Agreement and assuming the Amendment and proposed Class A Distribution Plan had been in place during the same period. For more information concerning the Class A Distribution Plan, see the discussion under "Proposal No. 2 Approval of a Class A Distribution Plan," below. FEES AND EXPENSES OF THE SERIES ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund assets). - -------------------------------------------------------------------------------- CLASS A CLASS B CLASS C CLASS S - -------------------------------------------------------------------------------- EQUITY SERIES (UNDER CURRENT AGREEMENT) - -------------------------------------------------------------------------------- Management fee........................ 1.02% 1.02% 1.02% 1.03% Distribution (12b-1) fees............. 0.00% 1.00% 1.00% 1.00% Other expenses........................ 0.00% 0.00% 0.00% 0.00% TOTAL ANNUAL FUND OPERATING EXPENSES.. 1.02% 2.02% 2.02% 2.03% - -------------------------------------------------------------------------------- EQUITY SERIES (UNDER PROPOSED AMENDMENT) - -------------------------------------------------------------------------------- Management fee........................ 0.75% 0.75% 0.75% 0.75% Distribution (12b-1) fees............. 0.25%(1) 1.00% 1.00% 1.00% Other expenses(3)..................... 0.20% 0.20% 0.20% 0.20% TOTAL ANNUAL FUND OPERATING EXPENSES.. 1.20%(4) 1.95% 1.95% 1.95% - -------------------------------------------------------------------------------- GLOBAL SERIES (UNDER CURRENT AGREEMENT) - -------------------------------------------------------------------------------- Management fee........................ 1.90% 1.90% 1.91% 1.92% Distribution (12b-1) fees............. 0.00% 1.00%(2) 1.00% 1.00% Other expenses........................ 0.00% 0.00% 0.00% 0.00% TOTAL ANNUAL FUND OPERATING EXPENSES.. 1.90% 2.90% 2.91% 2.92% - -------------------------------------------------------------------------------- GLOBAL SERIES (UNDER PROPOSED AMENDMENT) - -------------------------------------------------------------------------------- Management fee........................ 1.00% 1.00% 1.00% 1.00% Distribution (12b-1) fees............. 0.25%(1) 1.00% 1.00% 1.00% Other expenses(3)..................... 0.53% 0.53% 0.53% 0.53% TOTAL ANNUAL FUND OPERATING EXPENSES.. 1.78%(4) 2.53% 2.53% 2.53% - -------------------------------------------------------------------------------- 1 Distribution Fees applicable if the Class A Distribution Plan is approved by stockholders of the respective Series. 2 The Distributor waived deduction of part of the Class B Distribution fee during fiscal year 2001. After the waiver, the Class B Distribution fee was 0.49%, and the actual expense ratio for the Global Series, Class B shares was 2.39%. 3 Other expenses are an estimate based upon expenses during the fiscal year ended September 30, 2001, assuming the proposed new fee structure and the proposed Class A Distribution Plan had been in place. 4 Total annual fund operating expenses assuming approval of Proposal No. 1, the proposed new fee structure, and Proposal No. 2, the proposed Class A Distribution Plan. - -------------------------------------------------------------------------------- EXAMPLES: These Examples assume that you invest $10,000 in a Series for the time periods indicated and that your investment has a 5% return each year. The tables first show an expense example for each class assuming that the Series' total operating expenses remain at current levels. The table then shows the effect on expenses if the proposed Amendment, Proposal No. 1, and Class A Distribution Plan, Proposal No. 2, are approved and implemented. Although your actual costs may be higher or lower, based on these assumptions your costs would be: You would pay the following expenses if you redeemed your shares at the end of each period. -------------------------------------------------------------------- FUND NAME/CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS -------------------------------------------------------------------- EQUITY SERIES - A Current Agreement $673 $ 881 $1,106 $1,751 Proposed Amendment 690 934 1,197 1,946 -------------------------------------------------------------------- EQUITY SERIES - B Current Agreement 705 934 1,288 2,090 Proposed Amendment 698 912 1,252 2,080 -------------------------------------------------------------------- EQUITY SERIES - C Current Agreement 305 634 1,088 2,348 Proposed Amendment 298 612 1,052 2,275 -------------------------------------------------------------------- EQUITY SERIES - S Current Agreement 806 1,137 1,393 2,358 Proposed Amendment 798 1,112 1,352 2,275 -------------------------------------------------------------------- GLOBAL SERIES - A Current Agreement 757 1,138 1,542 2,669 Proposed Amendment 745 1,103 1,484 2,549 -------------------------------------------------------------------- GLOBAL SERIES - B Current Agreement 742 1,045 1,475 2,478 Proposed Amendment 756 1,088 1,545 2,682 -------------------------------------------------------------------- GLOBAL SERIES - C Current Agreement 394 901 1,533 3,233 Proposed Amendment 356 788 1,345 2,866 -------------------------------------------------------------------- GLOBAL SERIES - S Current Agreement 895 1,404 1,838 3,242 Proposed Amendment 856 1,288 1,645 2,866 -------------------------------------------------------------------- You would pay the following expenses if you did not redeem your shares. -------------------------------------------------------------------- FUND NAME/CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS -------------------------------------------------------------------- EQUITY SERIES - A Current Agreement $673 $ 881 $1,106 $1,751 Proposed Amendment 690 934 1,197 1,946 -------------------------------------------------------------------- EQUITY SERIES - B Current Agreement 205 634 1,088 2,090 Proposed Amendment 198 612 1,052 2,080 -------------------------------------------------------------------- EQUITY SERIES - C Current Agreement 205 634 1,088 2,348 Proposed Amendment 198 612 1,052 2,275 -------------------------------------------------------------------- EQUITY SERIES - S Current Agreement 206 637 1,093 2,358 Proposed Amendment 198 612 1,052 2,275 -------------------------------------------------------------------- GLOBAL SERIES - A Current Agreement 757 1,138 1,542 2,669 Proposed Amendment 745 1,103 1,484 2,549 -------------------------------------------------------------------- GLOBAL SERIES - B Current Agreement 293 898 1,528 2,987 Proposed Amendment 256 788 1,345 2,682 -------------------------------------------------------------------- GLOBAL SERIES - C Current Agreement 294 901 1,533 3,233 Proposed Amendment 256 788 1,345 2,866 -------------------------------------------------------------------- GLOBAL SERIES - S Current Agreement 295 904 1,538 3,242 Proposed Amendment 256 788 1,345 2,866 -------------------------------------------------------------------- BOARD CONSIDERATION OF THE AMENDMENT The Board, including the Independent Directors, unanimously voted to approve the Amendment and to recommend to stockholders of the respective Series that they vote to approve the Amendment. At its February 1, 2002 meeting, the Board of Directors of the Fund requested, received and considered information from SMC relevant to the proposed Amendment, including (1) a comparison of the current and proposed fee structures; (2) overall expense ratios under the current and proposed arrangements; (3) industry data on expenses; (4) information regarding the nature, extent and quality of the services expected to be provided to the Series by SMC; (5) SMC's past investment performance with respect to the Series; (6) the costs of services to be provided by SMC; (7) other sources of revenue accruing to SMC and its affiliates as a result of its relationship with each Series, including any intangible benefits that accrue to SMC and its affiliates; and (8) the profitability of SMC. The Board carefully evaluated this information, and was advised by legal counsel with respect to its deliberations. In unanimously approving the Amendment and recommending its approval by the stockholders of the Equity and Global Series, the Directors, including the Independent Directors, took into account all factors that they deemed relevant and reached the following conclusions: (1) the existing fee structure of the Equity Series and Global Series is not typical in the mutual fund industry, and the Amendment would bring the fee structure into line with industry practice; (2) the proposed fee structure would make it easier for stockholders and investors to compare the Equity Series' and Global Series' fees for advisory and other services to the fees of other comparable mutual funds; (3) the proposed fee structure would allow the Directors to better match the services provided by SMC and the fees attributable to those services, making it easier for the Directors to monitor the reasonableness of SMC's compensation for advisory and other services; (4) the proposed fee structure is consistent with the fee structure of other funds in the Security Funds complex; (5) the aggregate fees for investment advisory, general administrative, fund accounting, transfer agency and dividend disbursing services under the proposed fee structure would be lower than such fees under the current arrangement; and (6) compensation to be paid SMC under the Amendment is fair and reasonable with regard to each of Equity Series and Global Series in light of the services to be provided and the anticipated costs of those services, and is comparable to management fees paid by comparable funds. Based on the foregoing considerations, and such other factors as the Board considered to be relevant, the Board determined that the Amendment is in the best interests of the respective Series and their stockholders and authorized submission of the proposal to stockholders of the Series, although the Board determined to make implementation of the Amendment contingent with respect to each Series upon approval of a Class A Distribution Plan by the Class A stockholders of the Series. Accordingly, if Proposal No. 1 is approved by the stockholders of a Series, the Board will not implement the Amendment unless the Class A stockholders of that Series also approve Proposal No. 2. THE BOARD, INCLUDING THE INDEPENDENT DIRECTORS, UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR PROPOSAL NO. 1. UNMARKED PROXIES WILL BE SO VOTED. PROPOSAL NO. 2 APPROVAL OF CLASS A DISTRIBUTION PLAN INTRODUCTION At a meeting held on February 1, 2002, the Board of Directors approved as in the best interests of each of the Equity Series, Global Series, Mid Cap Value Series and Social Awareness Series (collectively, the "Series" for purposes of Proposal No. 2) and the Class A stockholders of each Series a Distribution Plan, effective February 1, 2002, under which the Fund may use up to 0.25% of the average daily net assets attributable to Class A shares of the Series to pay for, among other things, the promotion and distribution of the Series' Class A shares and the provision of services to the beneficial owners of Class A shares. The proposed Distribution Plan is comparable to plans that currently are in place with respect to the Class A shares of the other series of the Fund. The Board's approval of the Distribution Plan with respect to the Class A shares of each of the Equity Series and Global Series is contingent upon approval of Proposal No. 1 by the stockholders of those Series; if Proposal No. 1 is not approved with respect to those Series, the Distribution Plan will not be implemented even if approved by Class A stockholders of those Series. As discussed in more detail below, the Directors approved the Distribution Plan because they believe that it offers several potential benefits to the Series and Class A stockholders despite the increase in the Series' operating expenses. In particular, the Distribution Plan will finance an array of services, described in more detail below, that Class A stockholders may consider to be helpful. In addition, the Distribution Plan should assist the Series in competing for investor dollars in a highly competitive marketplace. A greater degree of competitiveness may result in greater assets in the Series (and greater retention of assets), which benefits the Series and Class A stockholders by offering the potential for increased investment opportunities and portfolio diversification, more efficient portfolio management and more complete investment of the Series' portfolios, reduced per share expenses by spreading fixed costs across a larger asset base, and mitigation of dissipating assets (with a corresponding increase in per share expenses) in the event of market declines. The Board recommends that the Class A stockholders approve the proposed Distribution Plan, a form of which is attached as Exhibit C. DESCRIPTION OF THE DISTRIBUTION PLAN The proposed Distribution Plan authorizes payments from assets attributable to Class A shares for a variety of services with respect to Class A shares, including any type of activity that is primarily intended to result in the sale of the Class A shares, as determined by the Board, as well as related stockholder services authorized by the Board. The Distribution Plan relies on the provisions of Rule 12b-1 under the 1940 Act, to the extent applicable, to make these payments. The proposed Distribution Plan authorizes payments as compensation or reimbursement for a wide variety of services including, without limitation, the following: 1. Preparation, printing and distribution of the prospectus and statement of additional information and any supplement thereto used in connection with the offering of the Series' shares to the public; 2. Printing of additional copies of reports and other communications which were prepared by the Fund for distribution to existing stockholders for use by the Series' Distributor as sales literature; 3. Preparation, printing and distribution of any other sales literature used in connection with the offering of the Series' shares to the public; 4. Expenses incurred in advertising, promoting and selling shares of the Series to the public; 5. Any stockholder service fees paid by the Distributor to securities dealers or other entities that have executed an Agreement with the Distributor. Stockholder service fees shall include fees for account maintenance and personal service to stockholders, including, but not limited to, answering routine customer inquiries regarding the Fund, assisting customers in changing dividend options, account designations and addresses, and in enrolling into any of several special investment plans offered in connection with the purchase of the Series' Class A shares, assisting in the establishment and maintenance of customer accounts and records and in the processing of purchase and redemption transactions, investing dividends and capital gains distributions automatically in shares, providing sub-administration and/or sub-transfer agency services for the benefit of the Fund and providing such other services as the Fund or the customer may reasonably request; 6. Commissions to sales personnel for selling shares of the Series and interest expenses related thereto; and 7. Expenses incurred in promoting sales of shares of the Series by securities dealers, including the costs of preparation of materials for presentations, travel expenses, costs of entertainment, and other expenses incurred in connection with promoting sales of Series shares by dealers. The Fund's Distributor, Security Distributors, Inc. ("SDI"), may also use amounts generated under the Plan to defray legal and administrative costs associated with implementation of the Plan. The proposed Distribution Plan authorizes payment of compensation or reimbursement in an amount up to 0.25%, on an annual basis, of the average daily net assets attributable to Class A shares. Payments under the Distribution Plan may be made directly by the Fund, or indirectly through the Fund's Distributor. In accordance with Conduct Rule 2830 of the National Association of Securities Dealers, Inc. (a broker-dealer self-regulatory organization), the entire payment under the Distribution Plan may constitute a "service fee," as that term is defined in that Conduct Rule. Payments generally will be accrued daily and paid monthly, or at such other intervals as the Board may determine. As required by applicable law, the Board will review, at least quarterly, written reports concerning the amounts expended under the Distribution Plan and the purposes for which the expenditures were made. Amounts generated under the Distribution Plan may exceed the amount of expenditures made. The following table sets forth information concerning the fees and expenses of Mid Cap Value and Social Awareness Series' Class A shares as a percentage of average net assets for the fiscal year ended September 30, 2001 under each Series' current fee structure and assuming the proposed Class A Distribution Plan had been in place during the same period. (Information concerning Equity and Global Series' fees and expenses is set forth above under "Fees and Expenses of the Series," which begins on page 4.) ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund assets). - -------------------------------------------------------------------------------- CLASS A - -------------------------------------------------------------------------------- MID CAP VALUE SERIES (UNDER CURRENT FEE STRUCTURE) - -------------------------------------------------------------------------------- Management fee....................................................... 1.00% Distribution (12b-1) fees............................................ 0.00% Other expenses....................................................... 0.30% TOTAL ANNUAL FUND OPERATING EXPENSES................................. 1.30% - -------------------------------------------------------------------------------- MID CAP VALUE SERIES (UNDER PROPOSED FEE STRUCTURE) - -------------------------------------------------------------------------------- Management fee....................................................... 1.00% Distribution (12b-1) fees............................................ 0.25%(1) Other expenses....................................................... 0.30% TOTAL ANNUAL FUND OPERATING EXPENSES................................. 1.55% - -------------------------------------------------------------------------------- SOCIAL AWARENESS SERIES (UNDER CURRENT FEE STRUCTURE) - -------------------------------------------------------------------------------- Management fee....................................................... 1.00% Distribution (12b-1) fees............................................ 0.00% Other expenses....................................................... 0.43% TOTAL ANNUAL FUND OPERATING EXPENSES................................. 1.43% - -------------------------------------------------------------------------------- SOCIAL AWARENESS SERIES (UNDER PROPOSED FEE STRUCTURE) - -------------------------------------------------------------------------------- Management fee....................................................... 1.00% Distribution (12b-1) fees............................................ 0.25%(1) Other expenses....................................................... 0.43% TOTAL ANNUAL FUND OPERATING EXPENSES................................. 1.68% - -------------------------------------------------------------------------------- 1 Distribution Fees applicable if the Class A Distribution Plan is approved by stockholders of the respective Series. - -------------------------------------------------------------------------------- EXAMPLES: These Examples assume that you invest $10,000 in a Series for the time periods indicated and that your investment has a 5% return each year. The tables first show an expense example for Class A shares assuming that the Series' total operating expenses remain at current levels. The table then shows the effect on expenses if the proposed Class A Distribution Plan is approved and implemented. Although your actual costs may be higher or lower, based on these assumptions your costs would be: You would pay the following expenses if you redeemed your shares at the end of each period. - -------------------------------------------------------------------------------- Fund Name/Class* 1 Year 3 Years 5 Years 10 Years - -------------------------------------------------------------------------------- MID CAP VALUE SERIES - A Current Fee Structure $700 $ 963 $1,247 $2,053 Proposed Fee Structure 724 1,036 1,371 2,314 - -------------------------------------------------------------------------------- SOCIAL AWARENESS SERIES - A Current Fee Structure 712 1,001 1,312 2,190 Proposed Fee Structure 736 1,074 1,435 2,448 - -------------------------------------------------------------------------------- *See page 4 for similar information concerning Equity Series and Global Series. - -------------------------------------------------------------------------------- You would pay the following expenses if you did not redeem your shares. - -------------------------------------------------------------------------------- Fund Name/Class* 1 Year 3 Years 5 Years 10 Years - -------------------------------------------------------------------------------- MID CAP VALUE SERIES - A Current Fee Structure $700 $ 963 $1,247 $2,053 Proposed Fee Structure 724 1,036 1,371 2,314 - -------------------------------------------------------------------------------- SOCIAL AWARENESS SERIES - A Current Fee Structure 712 1,001 1,312 2,190 Proposed Fee Structure 736 1,074 1,435 2,448 - -------------------------------------------------------------------------------- *See page 4 for similar information concerning Equity Series and Global Series. - -------------------------------------------------------------------------------- The Distribution Plan provides that it must initially be approved, and is subject to renewal on an annual basis, by the Board, including approval by a majority of the Directors who are not "interested persons" of the Fund for regulatory purposes and who do not have any direct or indirect financial interest in the operation of the Distribution Plan or any related agreement (the "Plan Directors"). In addition, the Distribution Plan requires that its provisions relating to payment for services that are primarily intended to result in the sale of Class A shares be approved with respect to each Series by a vote of at least a "majority of the outstanding voting securities" of the Class A shares of the Series. This standard is described in more detail below under "VOTING INFORMATION - Required Vote." Plan Directors must approve any material amendments to the Distribution Plan, and Class A stockholders must approve any amendment that would materially increase the amount to be spent for services and activities that are primarily intended to result in the sale of Class A shares. The Distribution Plan also may be terminated with respect to a Series at any time by the vote of a majority of Plan Directors, or by a vote of a majority of the outstanding voting securities of the Class A shares of that Series. Because Class B shares convert to Class A shares on the eighth anniversary of purchase, Class B shareholders are also entitled to vote on approval of the Distribution Plan. If a "majority of the outstanding voting securities" of the Class B shares of the Series do not approve the Distribution Plan, but the Distribution Plan is approved by the Class A shares, the Class B shares will convert to a separate class of shares that is on the same terms as Class A shares before implementing the Distribution Plan. The attached form of the Distribution Plan qualifies in its entirety the foregoing description of that Plan. BOARD CONSIDERATION OF THE DISTRIBUTION PLAN The Board has concluded that the Distribution Plan is reasonably likely to benefit the Fund, the Series and the Class A stockholders of the Series. Accordingly, the Directors, including the Plan Directors, have unanimously approved the Distribution Plan with respect to Class A shares and the payment of fees accrued thereunder pending stockholder approval, and have authorized the submission of the Distribution Plan to Class A stockholders of the Series for their approval. The Board requested information from Fund management to determine whether it was appropriate to approve the Distribution Plan and to recommend its approval by Class A stockholders of the Series. The Board carefully evaluated this information, and was advised by legal counsel with respect to its deliberations. The Directors decided to approve the Distribution Plan and recommend that Class A stockholders approve the Plan on the basis of the following considerations, among others: 1. The Distribution Plan will permit the financing of a broad array of activities and services that are a potential source of benefit to Class A investors, and which frequently are available to retail investors in mutual funds; 2. The financing of a broad array of activities and services may make the Class A shares a more attractive investment alternative in a very competitive marketplace. Increased competitiveness may result in increased assets (and increased retention of assets), which can benefit the Series and investors in the Series by potentially increasing investment opportunities and diversification, permitting more efficient portfolio management and more complete investment of the Series' portfolios, reducing per share expenses by spreading fixed costs across a larger asset base, and mitigating dissipation of assets (with a corresponding increase in per share expenses) in the event of market declines; 3. The Distribution Plan may open up new distribution channels for selling Class A shares, such as financial intermediaries relying on ongoing payments of distribution and/or service fees. Increased opportunities for distribution may help maintain and increase asset levels, which, as discussed above, can benefit Class A investors; 4. The Distribution Plan may provide greater incentive to SDI and others to incur promotional expenses on behalf of Class A shares, which may assist in asset growth; 5. The absence of any means to finance promotional activities may make the Class A shares a less desirable investment option, which may lead to a dissipation of assets to the detriment of the Fund, the Series and Class A investors; 6. The fees that may be paid under the Distribution Plan are appropriate and reasonable in light of the services financed under the Distribution Plan, and are consistent with industry standards regarding payment for these activities and services; and 7. The Distribution Plan provides a high degree of certainty regarding compliance with applicable regulations relating to payments for the services and activities financed by the Distribution Plan, as it explicitly is subject to the substantive and procedural requirements of Rule 12b-1. Based on its review of the information requested and provided, the Board determined that the Distribution Plan was reasonably likely to benefit the Fund, the Series and Class A stockholders, and was consistent with the best interests of the Series and Class A investors. Accordingly, in light of the above considerations and such other factors and information it considered relevant, the Board unanimously approved the Distribution Plan and recommended the Distribution Plan's approval by Class A and Class B stockholders of the Series. THE BOARD, INCLUDING THE PLAN DIRECTORS, UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR PROPOSAL NO. 2. UNMARKED PROXIES WILL BE SO VOTED. PROPOSAL NO. 3 APPROVAL OF CHANGE FROM DIVERSIFIED TO NON-DIVERSIFIED FUND Select 25 Series seeks long-term growth of capital, which it provides by focusing its investments in a core position of 20-30 common stocks of growth companies, which have exhibited consistent above average earnings and/or revenue growth. Select 25 Series currently is managed as a diversified fund as defined in the 1940 Act. This means that, with respect to 75% of its total assets, Select 25 Series will not invest more than 5% of its total assets in the securities of a single issuer or own more than 10% of the outstanding voting securities of a single issuer. At a meeting held on February 1, 2002, the Board of Directors approved a recommendation by SMC that Select 25 Series be managed as a non-diversified fund. "Non-diversified" means that the proportion of the Select 25 Series' assets that may be invested in the securities of a single issuer is not limited by the 1940 Act. However, to meet federal tax requirements for qualification as a regulated investment company, a non-diversified management investment company may have: (1) no more than 25% of its total assets invested in the securities of any one issuer (other than U.S. government securities or shares of other regulated investment companies); and (2) with respect to 50% of its total assets, must not invest more than 5% of its total assets in the securities of a single issuer and must not own more than 10% of outstanding voting securities of a single issuer. Because the proposal constitutes a change to the fundamental investment policies of the Select 25 Series, stockholder approval is required for the change. SMC has recommended the change to allow the Series to hold larger positions in a smaller number of securities than a diversified fund. While a non-diversified fund can be expected to be more volatile than a diversified fund, SMC believes that the objective of the Series can best be served by taking larger positions in a smaller number of securities. An investment in a fund that is non-diversified potentially entails greater risk than an investment in a diversified fund. When a fund is non-diversified, there is a higher limit on the percentage of assets that can be invested in any single issuer. A higher percentage of investments among fewer issuers may result in greater volatility in the total market value and share price of the Select 25 Series. In addition, a single security's increase or decrease in value may have a greater impact on the Select 25 Series' net asset value and total return. THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR PROPOSAL NO. 3. UNMARKED PROXIES WILL BE SO VOTED. OTHER MATTERS The Board of Directors of the Fund is not aware of any other matters to come before the Meeting or any adjournments thereof other than those specified herein. If any other matters should come before the Meeting, it is intended that the persons named as proxies in the enclosed form(s) of proxy, or their substitutes, will vote the proxy in accordance with their best judgment on such matters. VOTING INFORMATION Each share of stock is entitled to one vote, and stockholders of each Series (or class thereof) will vote separately with respect to each proposal on which they are entitled to vote. Only Fund stockholders of record at the close of business on February 19, 2002 (the "Record Date"), are entitled to vote at the Meeting. On that date, the outstanding number of shares entitled to vote on the proposals of each of Equity Series, Global Series, Mid Cap Value Series, Social Awareness Series and Select 25 Series of the Fund was as follows: - -------------------------------------------------------------------------------- SHARES OUTSTANDING ------------------------------------------------------ ALL CLASSES SERIES OF COMMON STOCK CLASS A CLASS B COMBINED - -------------------------------------------------------------------------------- Equity Series 85,094,455.1500 15,710,978.5620 101,536,596.5590 - -------------------------------------------------------------------------------- Global Series 4,699,857.9760 2,361,792.7870 7,434,164.9610 - -------------------------------------------------------------------------------- Mid Cap Value Series 3,364,725.4480 1,925,700.6890 6,189,585.8440 - -------------------------------------------------------------------------------- Social Awareness Series 635,377.8160 519,922.7800 1,225,625.6960 - -------------------------------------------------------------------------------- Select 25 Series 1,895,712.0840 1,507,496.9780 4,032,531.7780 - -------------------------------------------------------------------------------- As of the Record Date, the following persons owned beneficially more than 5% of a Series, or of a class thereof: - ----------------------------------------------------------------------------------- % OF SERIES'/CLASS' NUMBER OF OUTSTANDING SERIES CLASS NAME* SHARES OWNED SHARES - ----------------------------------------------------------------------------------- Equity A Security Benefit 5,038,657.4710 5.92% Life Insurance Co. ----------------------------------------------------------------------- A Security Benefit Life Ins. Co. Trste. Agent for 9,735,020.4600 11.44% Security Benefit Life ----------------------------------------------------------------------- C Security Financial 90,115.8890 12.69% Resources, Inc. ----------------------------------------------------------------------- S Marianne & Thomas J. Billiard 7,042.2540 33.39% Easton, PA ----------------------------------------------------------------------- S Maryann, Renee C. & William Farley 1,123.0650 5.32% Wallington, NJ ----------------------------------------------------------------------- S Francine Faraldo 3,012.0480 14.28% Bangor, PA ----------------------------------------------------------------------- S Elaine M. Goodman Revocable Living Trust 6,637.8070 31.47% Olivette, MO - ----------------------------------------------------------------------------------- Global A Security Financial 883,896.0190 18.81% ----- Resources, Inc. ------------------------------- C 104,480.6940 28.47% ----------------------------------------------------------------------- S LW & JA Denison Charitable Remainder Trust 1,222.6520 22.28% Indianapolis, IN ----------------------------------------------------------------------- S Janice Gramaglia 392.3670 7.15% Little Egg Harbor, NJ ----------------------------------------------------------------------- S Elaine M. Goodman Revocable Living Trust 3,712.6720 67.65% Olivette, MO - ----------------------------------------------------------------------------------- Mid Cap A Security Benefit 541,302.3320 16.09% Value Life Insurance ----------------------------------------------------------------------- A Security Financial 427,152.6530 12.70% ----- Resources, Inc. ------------------------------- C 97,895.3790 18.16% - ----------------------------------------------------------------------------------- Social A Security Financial 135,468.8100 21.32% Awareness ----- Resources, Inc. ------------------------------- C 16,667.5410 24.15% ----------------------------------------------------------------------- S LW & JA Denison Charitable Remainder Trust 1,307.1900 100.00% Indianapolis, IN - ----------------------------------------------------------------------------------- Select 25 A Security Financial 424,513.5220 22.39% Resources, Inc. ----------------------------------------------------------------------- S Clifton A. Barnes 206.7520 10.27% Indianapolis, IN ----------------------------------------------------------------------- S Elizabeth Davis 233.6440 11.61% Indianapolis, IN ----------------------------------------------------------------------- S Carla Milnes 116.8220 5.80% Indianapolis, IN ----------------------------------------------------------------------- S Janice Gramaglia 563.0250 27.98% Little Egg Harbor, NJ ----------------------------------------------------------------------- S Jack A. Delmoro 316.8570 15.74% Haddonfield, NJ ----------------------------------------------------------------------- S Donald Shannon 575.3740 28.59% Fort Walton Beach, FL - ----------------------------------------------------------------------------------- *All located at 700 SW Harrison Street, Topeka, Kansas 66636-0001 unless otherwise noted. - ----------------------------------------------------------------------------------- The following chart shows the shares of common stock of the Series beneficially owned, as a group, by the Directors and the chief executive officer of the Fund as of December 31, 2001: - -------------------------------------------------------------------------------- NUMBER OF SHARES BENEFICIALLY OWNED BY ALL DIRECTORS AND CHIEF PERCENTAGE EXECUTIVE OFFICER AS A GROUP OF CLASS -------------------------------------------------- SERIES CLASS A CLASS A - -------------------------------------------------------------------------------- Equity Series 83,283.201 shares 0.096% - -------------------------------------------------------------------------------- Global Series 15,912.832 shares 0.331% - -------------------------------------------------------------------------------- Mid Cap Value Series 15,035.930 shares 0.473% - -------------------------------------------------------------------------------- Small Cap Growth Series 9,454.159 shares 0.583% - -------------------------------------------------------------------------------- Select 25 Series 22,960.423 shares 1.210% - -------------------------------------------------------------------------------- Large Cap Growth Series 661.152 shares 0.131% - -------------------------------------------------------------------------------- Technology Series 10,321.611 shares 0.998% - -------------------------------------------------------------------------------- Total Return Series 961.458 shares 0.288% - -------------------------------------------------------------------------------- The following chart shows the shares of common stock of the Series beneficially owned, individually, by the Directors and the chief executive officer of the Fund as of December 31, 2001: - -------------------------------------------------------------------------------- NUMBER OF SHARES BENEFICIALLY OWNED BY ALL DIRECTORS AND CHIEF PERCENTAGE EXECUTIVE OFFICER INDIVIDUALLY OF CLASS ----------------------------------------------------- SERIES CLASS A CLASS A - -------------------------------------------------------------------------------- Equity Series John D. Cleland - 19,904.275 shares 0.023% James R. Schmank - 57,810.977 shares 0.067% Penny A. Lumpkin - 2,105.839 shares 0.002% Donald A. Chubb, Jr. - 3,462.110 shares 0.006% - -------------------------------------------------------------------------------- John D. Cleland - 2,083.735 shares 0.043% James R. Schmank - 11,244.149 shares 0.234% Global Series Penny A. Lumpkin - 1,893.851 shares 0.039% Donald A. Chubb, Jr. - 691.097 shares 0.014% - -------------------------------------------------------------------------------- John D. Cleland - 6,905.068 shares 0.218% Mid Cap Value Series James R. Schmank - 7,784.815 shares 0.245% Penny A. Lumpkin - 346.047 shares 0.011% - -------------------------------------------------------------------------------- Small Cap Growth Series John D. Cleland - 4,967.917 shares 0.307% James R. Schmank - 4,486.242 shares 0.277% - -------------------------------------------------------------------------------- John D. Cleland - 11,006.499 shares 0.580% James R. Schmank - 6,681.677 shares 0.352% Select 25 Series Penny A. Lumpkin - 848.176 shares 0.045% Donald A. Chubb, Jr. - 4,424.071 shares 0.233% - -------------------------------------------------------------------------------- Large Cap Growth Series James R. Schmank - 661.152 shares 0.131% - -------------------------------------------------------------------------------- Technology Series John D. Cleland - 7,500.000 shares 0.726% James R. Schmank - 2,821.611 shares 0.273% - -------------------------------------------------------------------------------- Total Return Series Donald A. Chubb, Jr. - 961.458 shares 0.289% - -------------------------------------------------------------------------------- No Director or "named executive officer" of the Fund beneficially owned any shares of common stock of the Series as of December 31, 2001, except as shown in the above chart. - -------------------------------------------------------------------------------- You may vote in person at the Meeting, by telephone, by Internet, or by returning your completed proxy card in the postage-paid envelope provided. Details can be found on the enclosed proxy insert. Do not return your proxy card if you are voting by telephone or Internet. You may revoke your proxy by submitting another proxy or a notice of revocation of your proxy in proper form to the Secretary of the Fund, or by voting the shares in person at the Meeting. However, attendance in person at the Meeting, by itself, will not revoke a previously tendered proxy. A second proxy form may be obtained from the Secretary of the Fund. The presence, in person or by proxy, of more than 50% of the outstanding shares of each Fund that are entitled to vote on a proposal will be sufficient to establish a quorum for the conduct of business at the Meeting. Shares held by stockholders present in person or represented by proxy at the Meeting will be counted both for the purpose of determining the presence of a quorum and for calculating the votes cast on the proposals before the Meeting. Shares represented by timely and properly executed proxies will be voted as specified. Executed proxies that are unmarked will be voted in favor of the proposals presented at the Meeting. If a proxy represents a broker "non-vote" (that is, a proxy from a broker or nominee indicating that such a person has not received instructions from the beneficial owner or other person entitled to vote shares of the Fund on a particular matter with respect to which the broker or nominee has discretionary power) or is marked with an abstention (collectively "abstentions"), the Fund's shares represented thereby will be considered to be present at the Meeting for purposes of determining the existence of a quorum for the transaction of business. Abstentions, however, will have the effect of a "no" vote for the purpose of obtaining requisite approval for the proposals described herein and any other proposal that may come before the Meeting. In the event that a sufficient number of votes to approve a proposal were not received, the persons named as proxies may propose one or more adjournments of the Meeting to permit further solicitation of voting instructions, or for any other purpose. A vote may be taken on any proposal prior to an adjournment if sufficient votes have been received for approval. Any adjournment will require the affirmative vote of a majority of those shares represented at the Meeting in person or by proxy. Unless otherwise instructed, proxies will be voted in favor of any adjournment. At any subsequent reconvening of the Meeting, proxies (unless previously revoked) will be voted in the same manner as they would have been voted at the Meeting. REQUIRED VOTE Each proposal must be approved by the vote of a "majority of outstanding voting securities," as defined in the 1940 Act, of each Series that are entitled to vote on the proposal, which requires the approval of the lesser of (a) 67% or more of the Series' shares that are present or represented by proxy at the Meeting, if the holders of more than 50% of the outstanding shares of the Series that are entitled to vote are present in person or represented by proxy at the Meeting, or (b) more than 50% of all outstanding shares of the Series that are entitled to vote. PROXY SOLICITATION SMC will bear the cost of soliciting proxies. In addition to solicitations by mail, some of the Investment Manager's officers and employees, without extra remuneration, may conduct additional solicitation by telephone, telegraph and personal interviews. To ensure that sufficient shares of common stock are represented at the Meeting to permit approval of the proposals set forth herein, the Fund may retain the services of a proxy solicitor to assist in soliciting proxies for a fee, plus reimbursement of out-of-pocket expenses. STOCKHOLDER PROPOSALS Unless otherwise required under the 1940 Act, ordinarily it will not be necessary for the Fund to hold annual meetings of stockholders. Stockholders wishing to submit proposals for inclusion in a proxy statement for a subsequent stockholders' meeting should send their written proposals to the Secretary of the Fund at the address set forth on the cover of this proxy statement. Proposals must be received a reasonable time prior to the date of a meeting of stockholders to be considered for inclusion in the proxy materials for a meeting. Timely submission of a proposal does not, however, necessarily mean that the proposal will be included. Persons named as proxies for any subsequent stockholders' meeting will vote in their discretion with respect to proposals submitted on an untimely basis. By order of the Board of Directors of Security Equity Fund, AMY J. LEE Secretary EXHIBIT A AMENDED AND RESTATED INVESTMENT MANAGEMENT AND SERVICES AGREEMENT This Agreement, made and entered into this 27th day of January, 2000, and amended and restated effective as of the 1st day of May, 2002, by and between SECURITY EQUITY FUND, a Kansas corporation (hereinafter referred to as the "Fund"), and SECURITY MANAGEMENT COMPANY, LLC, a Kansas limited liability company (hereinafter referred to as "SMC"); WITNESSETH: WHEREAS, the Fund is engaged in business as an open-end, management investment company registered under the Investment Company Act of 1940 ("1940 Act"); and WHEREAS, SMC is willing to provide investment research and advice, general administrative, fund accounting, transfer agency, and dividend disbursing services to the Fund on the terms and conditions hereinafter set forth and to arrange for the provision of all other services (except for those services specifically excluded in this Agreement) required by the Fund, including custodial, legal, auditing and printing; NOW, THEREFORE, in consideration of the premises and mutual agreements made herein, the parties agree as follows: 1. EMPLOYMENT OF SMC. The Fund hereby employs SMC to (a) act as investment adviser to the Fund with respect to the investment of its assets and to supervise and arrange for the purchase of securities of the Fund and the sales of securities held in the portfolio of the Fund, subject always to the supervision of the Board of Directors of the Fund (or a duly appointed committee thereof), during the period and upon and subject to the terms and conditions described herein; (b) provide the Fund with general administrative, fund accounting, transfer agency, and dividend disbursing services described and set forth in Schedule A attached hereto and made a part of this Agreement by reference; and (c) arrange for, and monitor, the provision to the Fund of all other services required by the Fund, including but not limited to services of independent accountants, legal counsel, custodial services and printing. SMC may, in accordance with all applicable legal requirements, engage the services of other persons or entities, regardless of any affiliation with SMC, to provide services to the Fund under this Agreement. The Fund shall bear the expense of such other services and all other expenses of the Fund. SMC agrees to maintain sufficient trained personnel and equipment and supplies to perform its responsibilities under this Agreement and in conformity with the current Prospectus of the Fund and such other reasonable standards of performance as the Fund may from time to time specify and shall use reasonable care in selecting and monitoring the performance of third parties, who perform services for the Fund. SMC shall not guarantee the performance of such persons. SMC hereby accepts such employment and agrees to perform the services required by this Agreement for the compensation herein provided. 2. ALLOCATION OF EXPENSES AND CHARGES. (a) EXPENSES OF SMC. SMC shall pay all expenses in connection with the performance of its services under this Agreement, except as provided otherwise herein. (b) EXPENSES OF THE FUND. Anything in this Agreement to the contrary notwithstanding, the Fund shall pay or reimburse SMC for the payment of the following described expenses of the Fund whether or not billed to the Fund, SMC or any related entity: (i) brokerage fees and commissions; (ii) taxes; (iii) interest expenses; (iv) any extraordinary expenses approved by the Board of Directors of the Fund; and (v) distribution fees paid under the Fund's Class A, Class B, Class C and Class S Distribution Plans; and, in addition to those expenses set forth above, the Fund shall pay all of its expenses whether or not billed to the Fund, SMC or any related entity, including, but not limited to the following: Board of Directors' fees; legal, auditing and accounting expenses; insurance premiums; broker's commissions; taxes and governmental fees and any membership dues; fees of custodian; expenses of obtaining quotations on the Fund's portfolio securities and pricing of the Fund's shares; costs and expenses in connection with the registration of the Fund's capital stock under the Securities Act of 1933 and qualification of the Fund's capital stock under the Blue Sky laws of the states where such stock is offered; costs and expenses in connection with the registration of the Fund under the 1940 Act and all periodic and other reports required thereunder; expenses of preparing, printing and distributing reports, proxy statements, prospectuses, statements of additional information, notices and distributions to stockholders; costs of stockholder and other meetings; and expenses of maintaining the Fund's corporate existence. (c) EXPENSE CAP. For each of the Fund's full fiscal years that this Agreement remains in force, SMC agrees that if total annual expenses of each Series of the Fund identified below, exclusive of interest, taxes, extraordinary expenses (such as litigation), brokerage fees and commissions, and 12b-1 fees paid under a Fund's Class A, Class B, Class C or Class S Distribution Plans, but inclusive of SMC's compensation, exceeds the amount set forth below (the "Expense Cap"), SMC shall contribute to such Series such funds or waive such portion of its fee, adjusted monthly, as may be required to insure that the total annual expenses of the Series shall not exceed the Expense Cap. If this Agreement shall be effective for only a portion of a Series' fiscal year, then the maximum annual expenses shall be prorated for such portion. EXPENSE CAP International Series, Class A, B, C and S shares - 2.25% Enhanced Index Series, Class A, B, C and S shares - 1.75% Select 25 Series, Class A, B, C and S shares - 1.75% 3. COMPENSATION OF SMC. (a) As compensation for the investment advisory services to be rendered by SMC to Global Series, Social Awareness Series, Mid Cap Value Series, Small Cap Growth Series, Large Cap Growth Series and Technology Series, for each of the years this Agreement is in effect, each of the foregoing Series shall pay SMC an annual fee equal to 1.00% of its respective average daily net assets. Such fee shall be calculated daily and payable monthly. As compensation for the investment advisory services to be rendered by SMC to International Series for each of the years this Agreement is in effect, the International Series shall pay SMC an annual fee equal to 1.10% of its average daily net assets. Such fee shall be calculated daily and payable monthly. As compensation for the investment advisory services to be rendered by SMC to Equity Series, Total Return Series, Enhanced Index Series and Select 25 Series for each of the years this Agreement is in effect, each of the foregoing Series shall pay SMC an annual fee equal to 0.75% of its respective average daily net assets. Such fee shall be calculated daily and payable monthly. As compensation for the administrative services to be rendered by SMC to Global, International and Technology Series, each of the foregoing Series shall pay SMC an annual fee equal to 0.045% of its average daily net assets, plus the greater of 0.10% of its average daily net assets or $60,000. Such fees shall be calculated daily and payable monthly. As compensation for the administrative services to be rendered by SMC to each of the other Series of the Fund, each such Series shall pay SMC an annual fee equal to 0.09% of its average daily net assets. Such fees shall be calculated daily and payable monthly. If this Agreement shall be effective for only a portion of a year, then SMC's compensation for said year shall be prorated for such portion. For purposes of this Section 3, the value of the net assets of each Series shall be computed in the same manner at the end of the business day as the value of such net assets is computed in connection with the determination of the net asset value of the Fund's shares as described in the Fund's prospectus. For transfer agency services provided by SMC to each Series of the Fund, each Series shall pay a Maintenance Fee of $8.00 per account, a Transaction Fee of $1.00 per transaction per account and a Dividend Fee of $1.00 per dividend per account. For the purpose of calculating the Maintenance, Transaction and Dividend Fees applicable to each Series, SMC may count as a shareholder account each person that holds a beneficial interest in an omnibus account maintained on SMC's transfer agency system by a third-party administrator, broker/dealer, bank, insurance company or other entity; provided that SMC is paying such third-party administrator, broker/dealer, bank, insurance company or other entity sub-administrative, sub-accounting and/or sub-transfer agency fees for keeping individual shareholder records in connection with an investment in the Fund. (b) For each of the Fund's fiscal years this Agreement remains in force, SMC agrees that if total annual expenses of any Series of the Fund, exclusive of interest and taxes, extraordinary expenses (such as litigation) and distribution fees paid under the Fund's Class A, Class B, Class C and Class S Distribution Plans, but inclusive of SMC's compensation, exceed any expense limitation imposed by state securities law or regulation in any state in which shares of such Series of the Fund are then qualified for sale, as such regulations may be amended from time to time, SMC will contribute to such Series such funds or waive such portion of its fee, adjusted monthly, as may be requisite to insure that such annual expenses will not exceed any such limitation. If this Agreement shall be effective for only a portion of any Series' fiscal year, then the maximum annual expenses shall be prorated for such portion. Brokerage fees and commissions incurred in connection with the purchase or sale of any securities by a Series shall not be deemed to be expenses within the meaning of this paragraph (b). 4. INVESTMENT ADVISORY DUTIES. (a) INVESTMENT ADVICE. SMC shall regularly provide the Fund with investment research, advice and supervision, continuously furnish an investment program, recommend which securities shall be purchased and sold and what portion of the assets of the Fund shall be held uninvested and arrange for the purchase of securities and other investments for the Fund and the sale of securities and other investments held in the portfolio of the Fund. All investment advice furnished by SMC to the Fund under this Section 4 shall at all times conform to any requirements imposed by the provisions of the Fund's Articles of Incorporation and Bylaws, the 1940 Act, the Investment Advisors Act of 1940 and the rules and regulations promulgated thereunder, and other applicable provisions of law, and the terms of the registration statements of the Fund under the Securities Act of 1933 ("1933 Act") and/or the 1940 Act, as may be applicable at the time, all as from time to time amended. SMC shall advise and assist the officers or other agents of the Fund in taking such steps as are necessary or appropriate to carry out the decisions of the Board of Directors of the Fund (and any duly appointed committee thereof) with regard to the foregoing matters and the general account of the Fund's business. (b) SUBADVISERS. Subject to the provisions of the 1940 Act and any applicable exemptions thereto, SMC is authorized, but is under no obligation, to enter into sub-advisory agreements (the "Sub-Advisory Agreements") with one or more subadvisers (each a "Subadviser") to provide investment advisory services to any series of the Fund. Each Subadviser shall have investment discretion with respect to the assets of the series assigned to that Subadviser by SMC. Consistent with the provisions of the 1940 Act and any applicable exemption thereto, SMC may enter into Sub-Advisory Agreements or amend Sub-Advisory Agreements without the approval of the shareholders of the affected series. (c) PORTFOLIO TRANSACTIONS AND BROKERAGE. (i) Transactions in portfolio securities shall be effected by SMC, through brokers or otherwise (including affiliated brokers), in the manner permitted in this Section 4 and in such manner as SMC shall deem to be in the best interests of the Fund after consideration is given to all relevant factors. (ii) In reaching a judgment relative to the qualification of a broker to obtain the best execution of a particular transaction, SMC may take into account all relevant factors and circumstances, including the size of any contemporaneous market in such securities; the importance to the Fund of speed and efficiency of execution; whether the particular transaction is part of a larger intended change of portfolio position in the same securities; the execution capabilities required by the circumstances of the particular transaction; the capital required by the transaction; the overall capital strength of the broker; the broker's apparent knowledge of or familiarity with sources from or to whom such securities may be purchased or sold; as well as the efficiency, reliability and confidentiality with which the broker has handled the execution of prior similar transactions. (iii) Subject to any statements concerning the allocation of brokerage contained in the Fund's Prospectus or Statement of Additional Information, SMC is authorized to direct the execution of portfolio transactions for the Fund to brokers who furnish investment information or research service to the SMC. Such allocations shall be in such amounts and proportions as SMC may determine. If the transaction is directed to a broker providing brokerage and research services to SMC, the commission paid for such transaction may be in excess of the commission another broker would have charged for effecting that transaction, if SMC shall have determined in good faith that the commission is reasonable in relation to the value of the brokerage and research services provided, viewed in terms of either that particular transaction or the overall responsibilities of SMC with respect to all accounts as to which it now or hereafter exercises investment discretion. For purposes of the immediately preceding sentence, "providing brokerage and research services" shall have the meaning generally given such terms or similar terms under Section 28(e)(3) of the Securities Exchange Act of 1934, as amended. (iv) In the selection of a broker for the execution of any transaction not subject to fixed commission rates, SMC shall have no duty or obligation to seek advance competitive bidding for the most favorable negotiated commission rate to be applicable to such transaction, or to select any broker solely on the basis of its purported or "posted" commission rates. (v) In connection with transactions on markets other than national or regional securities exchanges, the Fund will deal directly with the selling principal or market maker without incurring charges for the services of a broker on its behalf unless, in the best judgment of SMC, better price or execution can be obtained by utilizing the services of a broker. (d) LIMITATION OF LIABILITY OF SMC WITH RESPECT TO RENDERING INVESTMENT ADVISORY SERVICES. So long as SMC shall give the Fund the benefit of its best judgment and effort in rendering investment advisory services hereunder, SMC shall not be liable for any errors of judgment or mistake of law, or for any loss sustained by reason of the adoption of any investment policy or the purchase, sale or retention of any security on its recommendation shall have been based upon its own investigation and research or upon investigation and research made by any other individual, firm or corporation, if such recommendation shall have been made and such other individual, firm or corporation shall have been selected with due care and in good faith. Nothing herein contained shall, however, be construed to protect SMC against any liability to the Fund or its shareholders by reason of willful misfeasance, bad faith or gross negligence in the performance of its duties or by reason of its reckless disregard of its obligations and duties under this Section 4. As used in this Section 4, "SMC" shall include directors, officers and employees of SMC, as well as SMC itself. 5. ADMINISTRATIVE AND TRANSFER AGENCY SERVICES. (a) RESPONSIBILITIES OF SMC. SMC will provide the Fund with general administrative, fund accounting, transfer agency, and dividend disbursing services described and set forth in Schedule A attached hereto and made a part of this Agreement by reference. SMC agrees to maintain sufficient trained personnel and equipment and supplies to perform such services in conformity with the current Prospectus of the Fund and such other reasonable standards of performance as the Fund may from time to time specify, and otherwise perform such services in an accurate, timely, and efficient manner. (b) INSURANCE. The Fund and SMC agree to procure and maintain, separately or as joint insureds with themselves, their directors, employees, agents and others, and other investment companies for which SMC acts as investment adviser and transfer agent, a policy or policies of insurance against loss arising from breaches of trust, errors and omissions, and a fidelity bond meeting the requirements of the 1940 Act, in the amounts and with such deductibles as may be agreed upon from time to time. SMC shall be solely responsible for the payment of premiums due for such policies. (c) REGISTRATION AND COMPLIANCE. (i) SMC represents that as of the date of this Agreement it is registered as a transfer agent with the Securities and Exchange Commission ("SEC") pursuant to Subsection 17A of the Securities and Exchange Act of 1934 and the rules and regulations thereunder, and agrees to maintain said registration and comply with all of the requirements of said Act, rules and regulations so long as this Agreement remains in force. (ii) The Fund represents that it is a management investment company registered with the SEC in accordance with the 1940 Act and the rules and regulations thereunder, and authorized to sell its shares pursuant to said Act, the 1933 Act and the rules and regulations thereunder. (d) LIABILITY AND INDEMNIFICATION WITH RESPECT TO RENDERING ADMINISTRATIVE AND TRANSFER AGENCY SERVICES. SMC shall be liable for any actual losses, claims, damages or expenses (including any reasonable counsel fees and expenses) resulting from SMC's bad faith, willful misfeasance, reckless disregard of its obligations and duties, negligence or failure to properly perform any of its responsibilities or duties under this Section 5. SMC shall not be liable and shall be indemnified and held harmless by the Fund, for any claim, demand or action brought against it arising out of or in connection with: (i) The bad faith, willful misfeasance, reckless disregard of its duties or negligence by the Board of Directors of the Fund, or SMC's acting upon any instructions properly executed or and authorized by the Board of Directors of the Fund; (ii) SMC acting in reliance upon advice given by independent counsel retained by the Board of Directors of the Fund. In the event that SMC requests the Fund to indemnify or hold it harmless hereunder, SMC shall use its best efforts to inform the Fund of the relevant facts concerning the matter in question. SMC shall use reasonable care to identify and promptly notify the Fund concerning any matter which presents, or appears likely to present, a claim for indemnification against the Fund. The Fund shall have the election of defending SMC against any claim which may be the subject of indemnification hereunder. In the event the Fund so elects, it will so notify SMC and thereupon the Fund shall take over defenses of the claim, and if so requested by the Fund, SMC shall incur no further legal or other claims related thereto for which it would be entitled to indemnity hereunder provided, however, that nothing herein contained shall prevent SMC from retaining, at its own expense, counsel to defend any claim. Except with the Fund's prior consent, SMC shall in no event confess any claim or make any compromise in any matter in which the Fund will be asked to indemnify or hold SMC harmless hereunder. PUNITIVE DAMAGES. SMC shall not be liable to the Fund, or any third party, for punitive, exemplary, indirect, special or consequential damages (even if SMC has been advised of the possibility of such damage) arising from its obligations and the services provided under this Section 5, including but not limited to loss of profits, loss of use of the shareholder accounting system, cost of capital and expenses of substitute facilities, programs or services. FORCE MAJEURE. Anything in this Section 5 to the contrary notwithstanding, SMC shall not be liable for delays or errors occurring by reason of circumstances beyond its control, including but not limited to acts of civil or military authority, national emergencies, work stoppages, fire, flood, catastrophe, earthquake, acts of God, insurrection, war, riot, failure of communication or interruption. (e) DELEGATION OF DUTIES. SMC may, at its discretion, delegate, assign or subcontract any of the duties, responsibilities and services governed by this agreement, to an affiliated company, whether or not by formal written agreement, or to any third party, provided that such arrangement with a third party has been approved by the Board of Directors of the Fund. SMC shall, however, retain ultimate responsibility to the Fund and shall implement such reasonable procedures as may be necessary for assuring that any duties, responsibilities or services so assigned, subcontracted or delegated are performed in conformity with the terms and conditions of this Agreement. 6. OTHER ACTIVITIES NOT RESTRICTED. Nothing in this Agreement shall prevent SMC or any officer thereof from acting as investment adviser, administrator or transfer agent for any other person, firm or corporation, nor shall it in any way limit or restrict SMC or any of its directors, officers, stockholders or employees from buying, selling, or trading any securities for their own accounts or for the accounts of others for whom they may be acting; provided, however, that SMC expressly represents that it will undertake no activities which, in its judgment, will conflict with the performance of its obligations to the Fund under this Agreement. The Fund acknowledges that SMC acts as investment adviser, administrator and transfer agent to other investment companies, and it expressly consents to SMC acting as such; provided, however, that if in the opinion of SMC, particular securities are consistent with the investment objectives of, and desirable purchases or sales for the portfolios of one or more of such other investment companies or series of such companies at approximately the same time, such purchases or sales will be made on a proportionate basis if feasible, and if not feasible, then on a rotating or other equitable basis. 7. AMENDMENT. This Agreement and the schedules forming a part hereof may be amended at any time, without shareholder approval to the extent permitted by applicable law, by a writing signed by each of the parties hereto. Any change in the Fund's registration statements or other documents of compliance or in the forms relating to any plan, program or service offered by its current Prospectus which would require a change in SMC's obligations hereunder shall be subject to SMC's approval, which shall not be unreasonably withheld. 8. DURATION AND TERMINATION OF AGREEMENT. This Agreement shall become effective on May 1, 2002, provided that on or before that date it has been approved by the holders of a majority of the outstanding voting securities of each series of the Fund. This Agreement shall continue in force until May 1, 2004, and for successive 12-month periods thereafter, unless terminated, provided each such continuance is specifically approved at least annually by (a) the vote of a majority of the entire Board of Directors of the Fund, and the vote of a majority of the directors of the Fund who are not parties to this Agreement or interested persons (as such terms are defined in the Investment Company Act of 1940) of any such party cast in person at a meeting of such directors called for the purpose of voting upon such approval, or (b) by the vote of the holders of a majority of the outstanding voting securities of each series of the Fund (as defined in the 1940 Act). In the event a majority of the outstanding shares of one series vote for continuance of the Agreement, it will be continued for that series even though the Agreement is not approved by either a majority of the outstanding shares of any other series or by a majority of outstanding shares of the Fund. Upon this Agreement becoming effective, any previous Agreement between the Fund and SMC providing for investment advisory, administrative and/or transfer agency services shall concurrently terminate, except that such termination shall not affect any fees accrued and guarantees of expenses with respect to any period prior to termination. This Agreement may be terminated at any time as to any series of the Fund without payment of any penalty, by the Fund upon the vote of a majority of the Fund's Board of Directors or, by a majority of the outstanding voting securities of the applicable series of the Fund, or by SMC, in each case on sixty (60) days' written notice to the other party. This Agreement shall automatically terminate in the event of its assignment (as such term is defined in the 1940 Act). 9. SEVERABILITY. If any clause or provision of this Agreement is determined to be illegal, invalid or unenforceable under present or future laws effective during the term hereof, then such clause or provision shall be considered severed herefrom and the remainder of this Agreement shall continue in full force and effect. 10. APPLICABLE LAW. This Agreement shall be subject to and construed in accordance with the laws of the State of Kansas. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective officers thereto duly authorized on the day, month and year first above written. SECURITY EQUITY FUND By ------------------------------- Title: President ATTEST: - --------------------------------------- Secretary SECURITY MANAGEMENT COMPANY, LLC By ------------------------------- Title: President ATTEST: - --------------------------------------- Secretary SCHEDULE A INVESTMENT MANAGEMENT AND SERVICES AGREEMENT SCHEDULE OF ADMINISTRATIVE AND FUND ACCOUNTING FACILITIES AND SERVICES Security Management Company, LLC agrees to provide the Fund the following administrative facilities and services. 1. FUND AND PORTFOLIO ACCOUNTING a. Maintain Fund General Ledger and Journal. b. Prepare and record disbursements for direct Fund expenses. c. Prepare daily money transfers. d. Reconcile all Fund bank and custodian accounts. e. Assist Fund independent auditors as appropriate. f. Prepare daily projection of available cash balances. g. Record trading activity for purposes of determining net asset values and daily dividend. h. Prepare daily portfolio evaluation report to value portfolio securities and determine daily accrued income. i. Determine the daily net asset value per share. j. Determine the daily, monthly, quarterly, semiannual or annual dividend per share. k. Prepare monthly, quarterly, semiannual and annual financial statements. l. Provide financial information for reports to the Securities and Exchange Commission in compliance with the provisions of the 1940 Act and the Securities Act of 1933, the Internal Revenue Service and any other regulatory agencies as required. m. Provide financial, yield, net asset value, etc. information to NASD and other survey and statistical agencies as instructed by the Fund. n. Report to the Audit Committee of the Board of Directors. 2. LEGAL a. Provide registration and other administrative services necessary to qualify the shares of the Fund for sale in those jurisdictions determined from time to time by the Fund's Board of Directors (commonly known as "Blue Sky Registration"). b. Provide registration with and reports to the Securities and Exchange Commission in compliance with the provisions of the 1940 Act and the Securities Act of 1933. c. Prepare and review Fund Prospectus and Statement of Additional Information. d. Prepare proxy statements and oversee proxy tabulation for annual meetings. e. Prepare Board materials and maintain minutes of the Board meetings. f. Draft, review and maintain contractual agreements between Fund and Investment Adviser, Custodian, Distributor and Transfer Agent. g. Oversee printing of proxy statements, financial reports to shareholders, prospectuses and Statements of Additional Information. h. Provide legal advice and oversight regarding shareholder transactions, administrative services, compliance with contractual agreements and the provisions of the 1940 Act and the Securities Act of 1933. SCHEDULE OF SHARE TRANSFER AND DIVIDEND DISBURSING SERVICES Security Management Company, LLC agrees to provide the Fund the following transfer agency and dividend disbursing services. 1. Maintain shareholder accounts, including processing of new accounts. 2. Post address changes and perform other file maintenance for shareholder accounts. 3. Post all transactions to the shareholder file, including: a. Direct purchases; b. Wire order purchases; c. Direct redemptions; d. Wire order redemptions; e. Draft redemptions; f. Direct exchanges; g. Transfers; h. Certificate issuances; and i. Certificate deposits. 4. Monitor fiduciary processing, insuring accuracy and deduction of fees. 5. Prepare daily reconciliations of shareholder processing to money movement instructions. 6. Handle bounced check collections. Immediately liquidate shares purchased and return to the shareholder the check and confirmation of the transaction. 7. Issue all checks and stop and replace lost checks. 8. Draft clearing services. a. Maintain signature cards and appropriate corporate resolutions. b. Compare the signature on the check to the signatures on the signature card for the purpose of paying the face amount of the check only. c. Receive checks presented for payment and liquidate shares after verifying account balance. d. Order checks in quantity specified by the Fund for the shareholder. 9. Mail confirmations, checks and/or certificates resulting from transaction requests to shareholders. 10. Perform all of the Fund's other mailings, including: a. Dividend and capital gain distributions; b. Semiannual and annual reports; c. 1099/year-end shareholder reporting; d. Systematic withdrawal plan payments; and e. Daily confirmations. 11. Answer all service-related telephone inquiries from shareholders and others, including: a. General and policy inquiries (research and resolve problems); b. Fund yield inquiries; c. Shareholder processing requests and account maintenance changes by telephone as described above; d. Pending requests to correspondence; e. On-line statistical performance of unit; and f. Reports on telephone activity. 12. Respond to written inquiries (research and resolve problems), including: a. Initiate shareholder account reconciliation proceeding when appropriate; b. Notify shareholder of bounced investment checks; c. Respond to financial institutions regarding verification of deposit; d. Initiate proceedings regarding lost certificates; e. Respond to complaints and log activities; and f. Correspondence control. 13. Maintain and retrieve all required past history for shareholders and provide research capabilities as follows: a. Monitor daily all processing activity to verify back-up documentation; b. Provide exception reports; c. Provide microfilming services; and d. Provide storage, retrieval and archive services. 14. Prepare materials for annual meetings. a. Address and mail annual proxy and related material. b. Prepare and submit to Fund an affidavit of mailing. c. Furnish certified list of shareholders (hard copy or microfilm) and inspectors of elections. 15. Report and remit as necessary for state escheatment requirements. Approved: Fund SMC ----------------------------- ----------------------------- EXHIBIT B MORE INFORMATION ABOUT THE INVESTMENT MANAGER AND DISTRIBUTOR SDI is principal underwriter of the Fund. SDI is a wholly-owned subsidiary of Security Benefit Group, Inc. ("SBG"), a holding company wholly owned by Security Benefit Life Insurance Company ("SBL"). SMC is a limited liability company owned by its members, SBL and SBG. SBL is wholly owned by Security Benefit Corp. (except for shares held by the Directors of SBL as required by Kansas law) and Security Benefit Corp. is wholly owned by Security Benefit Mutual Holding Company. The address of each of the foregoing companies is 700 SW Harrison Street, Topeka, Kansas 66636-0001. For the fiscal year ended September 30, 2001, SDI received $26,607.00 in Class A sales commissions. The principal occupation and position with SMC and the Fund, of each officer and managing member representative of SMC are as follows: EXECUTIVE OFFICERS OF THE FUND - ------------------------------------------------------------------------------------------ POSITION POSITION NAME, AGE AND ADDRESS* PRINCIPAL OCCUPATION WITH SMC WITH FUND - ------------------------------------------------------------------------------------------ James R. Schmank, 48** President and Managing Member President and President Representative, SMC; Senior Vice Managing Member and Director President, Security Benefit Representative Group, Inc. and Security Benefit Life Insurance Company - ------------------------------------------------------------------------------------------ John D. Cleland, 65 Senior Vice President and Managing Senior Vice Chairman of Managing Member Representative, President and the Board SMC; Senior Vice President, Managing Member and Director Security Benefit Group, Inc. and Representative Security Benefit Life Insurance Company - ------------------------------------------------------------------------------------------ Terry A. Milberger, 53 Senior Vice President and Senior Senior Vice Vice Portfolio Manager, SMC; Senior President President Vice President, Security Benefit and Senior Group, Inc. and Security Benefit Portfolio Life Insurance Company Manager - ------------------------------------------------------------------------------------------ Amy J. Lee, 40 Secretary, SMC; Vice President, Secretary Secretary Associate General Counsel and Assistant Secretary, Security Benefit Group, Inc. and Security Benefit Life Insurance Company - ------------------------------------------------------------------------------------------ Brenda M. Harwood, 38 Assistant Vice President and Assistant Vice Treasurer Treasurer, SMC; Assistant Vice President and President, Security Benefit Treasurer Group, Inc. and Security Benefit Life Insurance Company - ------------------------------------------------------------------------------------------ Cindy L. Shields, 34 Vice President and Senior Vice President Vice Portfolio Manager, SMC; Vice and Senior President President and Senior Portfolio Portfolio Manager, Security Benefit Group, Manager Inc. and Security Benefit Life Insurance Company - ------------------------------------------------------------------------------------------ James P. Schier, 44 Vice President and Senior Vice President Vice Portfolio Manager, SMC; Vice and Senior President President and Senior Portfolio Portfolio Manager, Security Benefit Group, Manager Inc. and Security Benefit Life Insurance Company - ------------------------------------------------------------------------------------------ Christopher D. Assistant Secretary, SMC; Second Assistant Assistant Swickard, 36 Vice President and Assistant Secretary Secretary Counsel, Security Benefit Group, Inc. and Security Benefit Life Insurance Company - ------------------------------------------------------------------------------------------ *All located at 700 SW Harrison Street, Topeka, KS 66636-0001 unless otherwise noted. **Principal executive officer - ------------------------------------------------------------------------------------------ SMC acts as investment adviser for certain other mutual funds with investment objectives similar to the investment objectives of Equity Series and Global Series. Set forth below are the names of the applicable Series, the name of the other similar mutual fund, information concerning the similar funds' net assets as of September 30, 2001 and the fees paid to SMC for its services to the other mutual fund (none of which were waived or reimbursed by SMC): - -------------------------------------------------------------------------------- ANNUAL RATE OF NET ASSETS OF COMPENSATION SERIES OF THE FUND NAME OF SIMILAR FUND SIMILAR FUND FOR SIMILAR FUND - -------------------------------------------------------------------------------- Equity Series SBL Fund, Series A $715,420,171 0.75% - -------------------------------------------------------------------------------- Global Series SBL Fund, Series D $385,843,225 1.00% - -------------------------------------------------------------------------------- EXHIBIT C CLASS A DISTRIBUTION PLAN SECURITY EQUITY FUND MAY 1, 2002 This Distribution Plan (the "Plan") constitutes the plan adopted pursuant to Rule 12b-1 under the Investment Company Act of 1940, as amended (the "1940 Act"), to the extent applicable, on behalf of the Class A shares of each series of the Security Equity Fund (the "Fund") set forth on Schedule A, attached hereto, as such schedule may be amended from time to time (the "Series"). 1. THE PLAN. This Plan provides for the financing by the Fund of the services and activities described in Section 2 (hereinafter called "distribution services") on behalf of the Class A shares of each Series. The principal purpose of this Plan is to enable the Fund to supplement expenditures by Security Distributors, Inc., the Distributor of its shares (the "Distributor"), for distribution services with respect to the Class A shares of the Series. The Board of Directors, in considering whether the Fund should implement the Plan, has requested and evaluated such information as it deemed necessary to make an informed determination as to whether the Plan should be implemented and has considered such pertinent factors as it deemed necessary to form the basis for a decision to use assets of the Series for such purposes. In voting to approve the implementation of the Plan, the Directors have concluded, in the exercise of their reasonable business judgment and in light of their respective fiduciary duties, that there is a reasonable likelihood that the Plan will benefit each of the Series and their respective shareholders. 2. DISTRIBUTION SERVICES. (a) The Fund may make payments under this Plan, or any agreement relating to this Plan ("Agreement"), in connection with any distribution services, including, but not limited to, the following distribution services: (i) Preparation, printing and distribution of the Prospectus and Statement of Additional Information and any supplement thereto used in connection with the offering of the Series' shares to the public; (ii) Printing of additional copies of reports and other communications which were prepared by the Fund for distribution to existing shareholders for use by the Distributor as sales literature; (iii) Preparation, printing and distribution of any other sales literature used in connection with the offering of the Series' shares to the public; (iv) Expenses incurred in advertising, promoting and selling shares of the Series to the public; (v) Payment or reimbursement of legal and administrative costs associated with implementing the Plan; (vi) Any Shareholder Service Fees paid by the Distributor to securities dealers or other entities that have executed an Agreement with the Distributor. Shareholder Service Fees shall include fees for account maintenance and personal service to shareholders, including, but not limited to, answering routine customer inquiries regarding the Fund, assisting customers in changing dividend options, account designations and addresses, and in enrolling into any of several special investment plans offered in connection with the purchase of the Series' Class A shares, assisting in the establishment and maintenance of customer accounts and records and in the processing of purchase and redemption transactions, investing dividends and capital gains distributions automatically in shares, providing sub-administration and/or sub-transfer agency services for the benefit of the Fund and providing such other services as the Fund or the customer may reasonably request; (vii) Commissions to sales personnel for selling shares of the Series and interest expenses related thereto; and (viii) Expenses incurred in promoting sales of shares of the Series by securities dealers, including the costs of preparation of materials for presentations, travel expenses, costs of entertainment, and other expenses incurred in connection with promoting sales of Series shares by dealers. (b) Any payments for distribution services shall be made pursuant to an Agreement. As required by the Rule, each Agreement relating to the implementation of this Plan shall be in writing and subject to approval and termination pursuant to the provisions of Section 6 of this Plan. However, this Plan shall not obligate the Fund or any other party to enter into such Agreement. 3. AGREEMENT WITH DISTRIBUTOR. All payments to the Distributor pursuant to this Plan shall be subject to and be made in compliance with a written agreement between the Fund and the Distributor containing a provision that the Distributor shall furnish the Fund with quarterly written reports of the amounts expended and the purposes for which such expenditures were made, and such other information relating to such expenditures or to the other distribution services undertaken or proposed to be undertaken by the Distributor during such fiscal year under its Distribution Agreement with the Fund as the Fund may reasonably request. 4. LIMITATIONS ON COVERED EXPENSES. Each Series may pay as compensation for distribution services provided under Section 2 of this Plan (including Shareholder Service Fees), or as reimbursement for distribution services rendered and/or expenses borne, in any fiscal year of the Series a fee equal to one-quarter of one percent (0.25%) of the Series' average daily net assets for such fiscal year. Except as provided in the next sentence, the payments to be paid pursuant to this Plan shall be calculated and accrued daily and paid monthly or at such other intervals as the Directors shall determine, subject to any applicable restriction imposed by rules of the National Association of Securities Dealers, Inc. The Distributor may pay to the other party to any Agreement a Shareholder Service Fee payable (a) for the first year, initially, in any amount equal to 0.25% annually of the aggregate net asset value of the shares purchased by such other party's customers or clients, and (b) for each year thereafter, quarterly, in arrears in an amount equal to such percentage (not in excess of .000685% per day or 0.25% annually) of the aggregate net asset value of the shares held by such other party's customers or clients at the close of business each day as determined from time to time by the Distributor. Payment of fees as compensation or reimbursement for any distribution service shall not: (1) duplicate payments for the same service under any other agreement or plan applicable to a Series; or (2) constitute an admission that such distribution service is a Rule 12b-1 distribution-related service. In accordance with Conduct Rule 2830 of the National Association of Securities Dealers, Inc., as amended from time to time, the entire fee payable under the Plan may constitute a "service fee" as that term is defined in Conduct Rule 2830. 5. INDEPENDENT DIRECTORS. While this Plan is in effect, the selection and nomination of Independent Directors of the Fund shall be committed to the discretion of the Independent Directors. Nothing herein shall prevent the involvement of others in such selection and nomination if the final decision on any such selection and nomination is approved by a majority of the Independent Directors. 6. EFFECTIVENESS, CONTINUATION, TERMINATION AND AMENDMENT. This Plan and each Agreement shall go into effect when approved. (a) By vote of the Fund's Directors, including the affirmative vote of a majority of the Independent Directors, cast in person at a meeting called for the purpose of voting on the Plan or the Agreement; and (b) If adopted with respect to a Series after any public offering of the Series' Class A shares or the sale of the Series' Class A shares to persons who are not affiliated persons of the Fund, affiliated persons of such persons, promoters of the Fund, or affiliated persons of such persons, the Plan (solely with respect to Rule 12b-1 distribution-related activities and/or services) must be approved by a vote of a majority of the outstanding voting securities of the Class A shares of the Series. This Plan and any Agreements relating to the implementation of this Plan shall, unless terminated as hereinafter provided, continue in effect from year to year only so long as such continuance is specifically approved at least annually by vote of the Fund's Directors, including the affirmative vote of a majority of its Independent Directors, cast in person at a meeting called for the purpose of voting on such continuance. This Plan and any Agreements relating to the implementation of this Plan may be terminated with respect to a Series, in the case of the Plan, at any time or, in the case of any Agreements, upon not more than sixty (60) days' written notice to any other party to the Agreement by vote of a majority of the Independent Directors or by the vote of the holders of a majority of the outstanding voting securities of the Class A shares of such Series. Any Agreement shall terminate automatically in the event it is assigned. Any material amendment to this Plan shall require approval by vote of the Fund's Directors, including the affirmative vote of a majority of the Independent Directors, cast in person at a meeting called for the purpose of voting on such amendment. The Plan shall not be amended to materially increase the amount spent for Rule 12b-1 distribution-related activities or services with respect to a Series without approval by a vote of a majority of the outstanding voting securities of the Class A shares of the Series. In the event this Plan should be terminated by the shareholders or Directors of the Fund, the payments paid to the Distributor pursuant to the Plan up to the date of termination shall be retained by the Distributor. Any expenses incurred by the Distributor in excess of those payments will be the sole responsibility of the Distributor. 7. RECORDS. The Fund shall preserve copies of this Plan and any Agreements and all reports made pursuant to Section 3 hereof, for a period of not less than six (6) years from the date of this Plan, any such Agreement or any such report, as the case may be, the first two years in an easily accessible place. 8. DEFINITIONS. As used in the Plan, (a) the term "Independent Directors" shall mean those Directors of the Fund who are not interested persons of the Fund and have no direct or indirect financial interest in the operation of the Plan or any Agreement, (b) the term "Rule 12b-1 distribution-related" shall mean primarily intended to result in the sale of Class A shares of a Series for purposes of Rule 12b-1, (c) the terms "affiliated person", "assignment", "interested person", "promoter" and "majority of the outstanding voting securities" shall have the respective meanings specified in the 1940 Act and the rules and regulations thereunder, subject to such exemptions as may be granted by the Securities and Exchange Commission. February 1, 2002 SCHEDULE A 1. Equity Series 2. Global Series 3. Mid Cap Value Series 4. Social Awareness Series www.securitybenefit.com [SBG LOGO] The Security Benefit Group of Companies 700 SW Harrison St. Topeka, Kansas 66636-0001 NOTICE OF SPECIAL MEETING OF STOCKHOLDERS OF SELECT 25 SERIES OF SECURITY EQUITY FUND TO BE HELD APRIL 17, 2002 700 SW HARRISON ST., TOPEKA, KANSAS 66636-0001 TELEPHONE 1-800-888-2461 The undersigned hereby appoints John D. Cleland, Donald A. Chubb, Jr., and James R. Schmank, and each of them, with full power of substitution, as proxies of the undersigned to vote at the above-stated meeting, and at all adjournments thereof, all shares of SELECT 25 SERIES OF SECURITY EQUITY FUND held by the undersigned at the Special Meeting of Stockholders of the Fund to be held at 9:30 AM, local time, on April 17, 2002, at Security Benefit Group Building, 700 SW Harrison Street, Topeka, Kansas 66636-0001, and at any adjournment thereof, in the manner directed below with respect to the matters referred to in the proxy statement for the meeting, receipt of which is hereby acknowledged, and in the proxies' discretion, upon such other matters as may properly come before the meeting or any adjournment thereof. In order to avoid the additional expense of further solicitation to your Fund, we strongly urge you to review, complete, and return your ballot as soon as possible. Your vote is important regardless of the number of shares you own. The Board of Directors recommends a vote for each of the following proposals. These voting instructions will be voted as specified and in the absence of specification will be treated as granting authority to vote "FOR" each proposal. TO VOTE BY TELEPHONE 1) Read the Proxy Statement and have the proxy card below at hand. 2) Call 1-800-690-6903 3) Enter the 12-digit control number set forth on the proxy card and follow the simple instructions. TO VOTE BY INTERNET 1) Read the Proxy Statement and have the proxy card below at hand. 2) Go to Website www.proxyvote.com 3) Enter the 12-digit control number set forth on the proxy card and follow the simple instructions. TO VOTE BY MAIL 1) Read the Proxy Statement. 2) Check the appropriate boxes on the proxy card below. 3) Sign and date the proxy card. 4) Return the proxy card in the envelope provided. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: SCURTY KEEP THIS PORTION FOR YOUR RECORDS - -------------------------------------------------------------------------------- DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. - -------------------------------------------------------------------------------- SELECT 25 SERIES OF SECURITY EQUITY FUND IMPORTANT: STOCKHOLDERS WHO DO NOT EXPECT TO BE PRESENT IN PERSON AT THE MEETING ARE REQUESTED TO MARK, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD(S) TO THE FUND, OR OTHERWISE VOTE THEIR SHARES, AS EARLY AS POSSIBLE. VOTE ON PROPOSALS FOR AGAINST ABSTAIN 1. To approve a proposal to change Select 25 Series from a diversified to a non-diversified fund. |_| |_| |_| To transact such other business as may properly come before the Meeting or any adjournments thereof, and to adjourn the Meeting from time to time. THERE IS ENCLOSED A PROXY FORM SOLICITED BY THE BOARD OF DIRECTORS OF SECURITY EQUITY FUND. ANY FORM OF PROXY THAT IS EXECUTED AND RETURNED, NEVERTHELESS MAY BE REVOKED PRIOR TO ITS USE. ALL SUCH PROXIES PROPERLY EXECUTED AND RECEIVED IN TIME WILL BE VOTED AT THE MEETING. By order of the Board of Directors of Security Equity Fund, Topeka, Kansas AMY J. LEE March 8, 2002 Secretary NOTE: Please sign exactly as the name appears on this card. EACH joint owner must sign the proxy. When signing as executor, administrator, attorney, trustee or guardian, or as custodian for a minor, please give the FULL title of such. If a corporation, please give the FULL corporate name and indicate the signer's office. If a partner, please sign in the partnership name. - ------------------------------------------- --------------------------------- Signature (PLEASE SIGN WITHIN BOX) Date Signature (Joint Owners) Date - -------------------------------------------------------------------------------- www.securitybenefit.com [SBG LOGO] The Security Benefit Group of Companies 700 SW Harrison St. Topeka, Kansas 66636-0001 NOTICE OF SPECIAL MEETING OF STOCKHOLDERS OF EQUITY SERIES OF SECURITY EQUITY FUND TO BE HELD APRIL 17, 2002 700 SW HARRISON ST., TOPEKA, KANSAS 66636-0001 TELEPHONE 1-800-888-2461 The undersigned hereby appoints John D. Cleland, Donald A. Chubb, Jr., and James R. Schmank, and each of them, with full power of substitution, as proxies of the undersigned to vote at the above-stated meeting, and at all adjournments thereof, all shares of EQUITY SERIES OF SECURITY EQUITY FUND held by the undersigned at the Special Meeting of Stockholders of the Fund to be held at 9:30 AM, local time, on April 17, 2002, at Security Benefit Group Building, 700 SW Harrison Street, Topeka, Kansas 66636-0001, and at any adjournment thereof, in the manner directed below with respect to the matters referred to in the proxy statement for the meeting, receipt of which is hereby acknowledged, and in the proxies' discretion, upon such other matters as may properly come before the meeting or any adjournment thereof. In order to avoid the additional expense of further solicitation to your Fund, we strongly urge you to review, complete, and return your ballot as soon as possible. Your vote is important regardless of the number of shares you own. The Board of Directors recommends a vote for each of the following proposals. These voting instructions will be voted as specified and in the absence of specification will be treated as granting authority to vote "FOR" each proposal. TO VOTE BY TELEPHONE 1) Read the Proxy Statement and have the proxy card below at hand. 2) Call 1-800-690-6903 3) Enter the 12-digit control number set forth on the proxy card and follow the simple instructions. TO VOTE BY INTERNET 1) Read the Proxy Statement and have the proxy card below at hand. 2) Go to Website www.proxyvote.com 3) Enter the 12-digit control number set forth on the proxy card and follow the simple instructions. TO VOTE BY MAIL 1) Read the Proxy Statement. 2) Check the appropriate boxes on the proxy card below. 3) Sign and date the proxy card. 4) Return the proxy card in the envelope provided. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: SCURT2 KEEP THIS PORTION FOR YOUR RECORDS - -------------------------------------------------------------------------------- DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. - -------------------------------------------------------------------------------- EQUITY SERIES OF SECURITY EQUITY FUND IMPORTANT: STOCKHOLDERS WHO DO NOT EXPECT TO BE PRESENT IN PERSON AT THE MEETING ARE REQUESTED TO MARK, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD(S) TO THE FUND, OR OTHERWISE VOTE THEIR SHARES, AS EARLY AS POSSIBLE. VOTE ON PROPOSALS FOR AGAINST ABSTAIN 1. To approve an amendment to the Fund's Investment Management and Services Agreement, on behalf of Equity Series, with Security Management Company, LLC. |_| |_| |_| 2. To approve adoption of a Class A Distribution Plan for the Equity Series of the Fund. |_| |_| |_| To transact such other business as may properly come before the Meeting or any adjournments thereof, and to adjourn the Meeting from time to time. THERE IS ENCLOSED A PROXY FORM SOLICITED BY THE BOARD OF DIRECTORS OF SECURITY EQUITY FUND. ANY FORM OF PROXY THAT IS EXECUTED AND RETURNED, NEVERTHELESS MAY BE REVOKED PRIOR TO ITS USE. ALL SUCH PROXIES PROPERLY EXECUTED AND RECEIVED IN TIME WILL BE VOTED AT THE MEETING. By order of the Board of Directors of Security Equity Fund, Topeka, Kansas AMY J. LEE March 8, 2002 Secretary NOTE: Please sign exactly as the name appears on this card. EACH joint owner must sign the proxy. When signing as executor, administrator, attorney, trustee or guardian, or as custodian for a minor, please give the FULL title of such. If a corporation, please give the FULL corporate name and indicate the signer's office. If a partner, please sign in the partnership name. - ------------------------------------------- --------------------------------- Signature (PLEASE SIGN WITHIN BOX) Date Signature (Joint Owners) Date - -------------------------------------------------------------------------------- www.securitybenefit.com [SBG LOGO] The Security Benefit Group of Companies 700 SW Harrison St. Topeka, Kansas 66636-0001 NOTICE OF SPECIAL MEETING OF STOCKHOLDERS OF GLOBAL SERIES OF SECURITY EQUITY FUND TO BE HELD APRIL 17, 2002 700 SW HARRISON ST., TOPEKA, KANSAS 66636-0001 TELEPHONE 1-800-888-2461 The undersigned hereby appoints John D. Cleland, Donald A. Chubb, Jr., and James R. Schmank, and each of them, with full power of substitution, as proxies of the undersigned to vote at the above-stated meeting, and at all adjournments thereof, all shares of GLOBAL SERIES OF SECURITY EQUITY FUND held by the undersigned at the Special Meeting of Stockholders of the Fund to be held at 9:30 AM, local time, on April 17, 2002, at Security Benefit Group Building, 700 SW Harrison Street, Topeka, Kansas 66636-0001, and at any adjournment thereof, in the manner directed below with respect to the matters referred to in the proxy statement for the meeting, receipt of which is hereby acknowledged, and in the proxies' discretion, upon such other matters as may properly come before the meeting or any adjournment thereof. In order to avoid the additional expense of further solicitation to your Fund, we strongly urge you to review, complete, and return your ballot as soon as possible. Your vote is important regardless of the number of shares you own. The Board of Directors recommends a vote for each of the following proposals. These voting instructions will be voted as specified and in the absence of specification will be treated as granting authority to vote "FOR" each proposal. TO VOTE BY TELEPHONE 1) Read the Proxy Statement and have the proxy card below at hand. 2) Call 1-800-690-6903 3) Enter the 12-digit control number set forth on the proxy card and follow the simple instructions. TO VOTE BY INTERNET 1) Read the Proxy Statement and have the proxy card below at hand. 2) Go to Website www.proxyvote.com 3) Enter the 12-digit control number set forth on the proxy card and follow the simple instructions. TO VOTE BY MAIL 1) Read the Proxy Statement. 2) Check the appropriate boxes on the proxy card below. 3) Sign and date the proxy card. 4) Return the proxy card in the envelope provided. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: SCURT3 KEEP THIS PORTION FOR YOUR RECORDS - -------------------------------------------------------------------------------- DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. - -------------------------------------------------------------------------------- GLOBAL SERIES OF SECURITY EQUITY FUND IMPORTANT: STOCKHOLDERS WHO DO NOT EXPECT TO BE PRESENT IN PERSON AT THE MEETING ARE REQUESTED TO MARK, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD(S) TO THE FUND, OR OTHERWISE VOTE THEIR SHARES, AS EARLY AS POSSIBLE. VOTE ON PROPOSALS FOR AGAINST ABSTAIN 1. To approve an amendment to the Fund's Investment Management and Services Agreement, on behalf of Global Series, with Security Management Company, LLC. |_| |_| |_| 2. To approve adoption of a Class A Distribution Plan for the Global Series of the Fund. |_| |_| |_| To transact such other business as may properly come before the Meeting or any adjournments thereof, and to adjourn the Meeting from time to time. THERE IS ENCLOSED A PROXY FORM SOLICITED BY THE BOARD OF DIRECTORS OF SECURITY EQUITY FUND. ANY FORM OF PROXY THAT IS EXECUTED AND RETURNED, NEVERTHELESS MAY BE REVOKED PRIOR TO ITS USE. ALL SUCH PROXIES PROPERLY EXECUTED AND RECEIVED IN TIME WILL BE VOTED AT THE MEETING. By order of the Board of Directors of Security Equity Fund, Topeka, Kansas AMY J. LEE March 8, 2002 Secretary NOTE: Please sign exactly as the name appears on this card. EACH joint owner must sign the proxy. When signing as executor, administrator, attorney, trustee or guardian, or as custodian for a minor, please give the FULL title of such. If a corporation, please give the FULL corporate name and indicate the signer's office. If a partner, please sign in the partnership name. - ------------------------------------------- --------------------------------- Signature (PLEASE SIGN WITHIN BOX) Date Signature (Joint Owners) Date - -------------------------------------------------------------------------------- www.securitybenefit.com [SBG LOGO] The Security Benefit Group of Companies 700 SW Harrison St. Topeka, Kansas 66636-0001 NOTICE OF SPECIAL MEETING OF STOCKHOLDERS OF MID CAP VALUE SERIES OF SECURITY EQUITY FUND TO BE HELD APRIL 17, 2002 700 SW HARRISON ST., TOPEKA, KANSAS 66636-0001 TELEPHONE 1-800-888-2461 The undersigned hereby appoints John D. Cleland, Donald A. Chubb, Jr., and James R. Schmank, and each of them, with full power of substitution, as proxies of the undersigned to vote at the above-stated meeting, and at all adjournments thereof, all shares of MID CAP VALUE SERIES OF SECURITY EQUITY FUND held by the undersigned at the Special Meeting of Stockholders of the Fund to be held at 9:30 AM, local time, on April 17, 2002, at Security Benefit Group Building, 700 SW Harrison Street, Topeka, Kansas 66636-0001, and at any adjournment thereof, in the manner directed below with respect to the matters referred to in the proxy statement for the meeting, receipt of which is hereby acknowledged, and in the proxies' discretion, upon such other matters as may properly come before the meeting or any adjournment thereof. In order to avoid the additional expense of further solicitation to your Fund, we strongly urge you to review, complete, and return your ballot as soon as possible. Your vote is important regardless of the number of shares you own. The Board of Directors recommends a vote for each of the following proposals. These voting instructions will be voted as specified and in the absence of specification will be treated as granting authority to vote "FOR" each proposal. TO VOTE BY TELEPHONE 1) Read the Proxy Statement and have the proxy card below at hand. 2) Call 1-800-690-6903 3) Enter the 12-digit control number set forth on the proxy card and follow the simple instructions. TO VOTE BY INTERNET 1) Read the Proxy Statement and have the proxy card below at hand. 2) Go to Website www.proxyvote.com 3) Enter the 12-digit control number set forth on the proxy card and follow the simple instructions. TO VOTE BY MAIL 1) Read the Proxy Statement. 2) Check the appropriate boxes on the proxy card below. 3) Sign and date the proxy card. 4) Return the proxy card in the envelope provided. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: SCURT4 KEEP THIS PORTION FOR YOUR RECORDS - -------------------------------------------------------------------------------- DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. - -------------------------------------------------------------------------------- MID CAP VALUE SERIES OF SECURITY EQUITY FUND IMPORTANT: STOCKHOLDERS WHO DO NOT EXPECT TO BE PRESENT IN PERSON AT THE MEETING ARE REQUESTED TO MARK, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD(S) TO THE FUND, OR OTHERWISE VOTE THEIR SHARES, AS EARLY AS POSSIBLE. VOTE ON PROPOSALS FOR AGAINST ABSTAIN 1. To approve adoption of a Class A Distribution Plan for the Mid Cap Value Series of the Fund. |_| |_| |_| To transact such other business as may properly come before the Meeting or any adjournments thereof, and to adjourn the Meeting from time to time. THERE IS ENCLOSED A PROXY FORM SOLICITED BY THE BOARD OF DIRECTORS OF SECURITY EQUITY FUND. ANY FORM OF PROXY THAT IS EXECUTED AND RETURNED, NEVERTHELESS MAY BE REVOKED PRIOR TO ITS USE. ALL SUCH PROXIES PROPERLY EXECUTED AND RECEIVED IN TIME WILL BE VOTED AT THE MEETING. By order of the Board of Directors of Security Equity Fund, Topeka, Kansas AMY J. LEE March 8, 2002 Secretary NOTE: Please sign exactly as the name appears on this card. EACH joint owner must sign the proxy. When signing as executor, administrator, attorney, trustee or guardian, or as custodian for a minor, please give the FULL title of such. If a corporation, please give the FULL corporate name and indicate the signer's office. If a partner, please sign in the partnership name. - ------------------------------------------- --------------------------------- Signature (PLEASE SIGN WITHIN BOX) Date Signature (Joint Owners) Date - -------------------------------------------------------------------------------- www.securitybenefit.com [SBG LOGO] The Security Benefit Group of Companies 700 SW Harrison St. Topeka, Kansas 66636-0001 NOTICE OF SPECIAL MEETING OF STOCKHOLDERS OF SOCIAL AWARENESS SERIES OF SECURITY EQUITY FUND TO BE HELD APRIL 17, 2002 700 SW HARRISON ST., TOPEKA, KANSAS 66636-0001 TELEPHONE 1-800-888-2461 The undersigned hereby appoints John D. Cleland, Donald A. Chubb, Jr., and James R. Schmank, and each of them, with full power of substitution, as proxies of the undersigned to vote at the above-stated meeting, and at all adjournments thereof, all shares of SOCIAL AWARENESS SERIES OF SECURITY EQUITY FUND held by the undersigned at the Special Meeting of Stockholders of the Fund to be held at 9:30 AM, local time, on April 17, 2002, at Security Benefit Group Building, 700 SW Harrison Street, Topeka, Kansas 66636-0001, and at any adjournment thereof, in the manner directed below with respect to the matters referred to in the proxy statement for the meeting, receipt of which is hereby acknowledged, and in the proxies' discretion, upon such other matters as may properly come before the meeting or any adjournment thereof. In order to avoid the additional expense of further solicitation to your Fund, we strongly urge you to review, complete, and return your ballot as soon as possible. Your vote is important regardless of the number of shares you own. The Board of Directors recommends a vote for each of the following proposals. These voting instructions will be voted as specified and in the absence of specification will be treated as granting authority to vote "FOR" each proposal. TO VOTE BY TELEPHONE 1) Read the Proxy Statement and have the proxy card below at hand. 2) Call 1-800-690-6903 3) Enter the 12-digit control number set forth on the proxy card and follow the simple instructions. TO VOTE BY INTERNET 1) Read the Proxy Statement and have the proxy card below at hand. 2) Go to Website www.proxyvote.com 3) Enter the 12-digit control number set forth on the proxy card and follow the simple instructions. TO VOTE BY MAIL 1) Read the Proxy Statement. 2) Check the appropriate boxes on the proxy card below. 3) Sign and date the proxy card. 4) Return the proxy card in the envelope provided. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: SCURT5 KEEP THIS PORTION FOR YOUR RECORDS - -------------------------------------------------------------------------------- DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. - -------------------------------------------------------------------------------- SOCIAL AWARENESS SERIES OF SECURITY EQUITY FUND IMPORTANT: STOCKHOLDERS WHO DO NOT EXPECT TO BE PRESENT IN PERSON AT THE MEETING ARE REQUESTED TO MARK, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD(S) TO THE FUND, OR OTHERWISE VOTE THEIR SHARES, AS EARLY AS POSSIBLE. VOTE ON PROPOSALS FOR AGAINST ABSTAIN 1. To approve adoption of a Class A Distribution Plan for the Social Awareness Series of the Fund. |_| |_| |_| To transact such other business as may properly come before the Meeting or any adjournments thereof, and to adjourn the Meeting from time to time. THERE IS ENCLOSED A PROXY FORM SOLICITED BY THE BOARD OF DIRECTORS OF SECURITY EQUITY FUND. ANY FORM OF PROXY THAT IS EXECUTED AND RETURNED, NEVERTHELESS MAY BE REVOKED PRIOR TO ITS USE. ALL SUCH PROXIES PROPERLY EXECUTED AND RECEIVED IN TIME WILL BE VOTED AT THE MEETING. By order of the Board of Directors of Security Equity Fund, Topeka, Kansas AMY J. LEE March 8, 2002 Secretary NOTE: Please sign exactly as the name appears on this card. EACH joint owner must sign the proxy. When signing as executor, administrator, attorney, trustee or guardian, or as custodian for a minor, please give the FULL title of such. If a corporation, please give the FULL corporate name and indicate the signer's office. If a partner, please sign in the partnership name. - ------------------------------------------- --------------------------------- Signature (PLEASE SIGN WITHIN BOX) Date Signature (Joint Owners) Date - --------------------------------------------------------------------------------
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DEF 14A Filing
Guggenheim Alpha Opportunity Fund (SAOAX) DEF 14ADefinitive proxy
Filed: 21 Feb 02, 12:00am