SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant |X|
Filed by a Party other than the Registrant | |
Check the appropriate box:
|X| Preliminary proxy statement. | | Confidential, for use of the
| | Definitive proxy statement. Commissioner only (as
| | Definitive additional materials. permitted by Rule 14a-6(e)
| | Soliciting material pursuant to Rule (2)).
14a-11(c) or Rule 14a-12.
SBL FUND
(Name of Registrant as Specified in its Charter)
N/A
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
| | Fee computed on table below per Exchange Act Rules 14a-6(i) (1) and
0-11.
(1) Title of each class of securities to which transaction
applies: N/A
(2) Aggregate number of securities to which transaction applies:
N/A
(3) Per unit price or other underlying value of transaction
computed pursuant to Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was
determined): N/A
(4) Proposed maximum aggregate value of transaction: N/A
(5) Total fee paid: $0
| | 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: N/A
(2) Form, Schedule or Registration Statement No.: N/A
(3) Filing Party: N/A
(4) Date Filed: N/A
SERIES D (GLOBAL SERIES)
A SERIES OF
SBL FUND
ONE SECURITY BENEFIT PLACE
TOPEKA, KANSAS 66636-0001
1-800-888-2461
___________
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD JULY 27, 2007
___________
To the Policyowners:
Notice is hereby given that SBL Fund will hold a special meeting of shareholders
of Series D (Global Series) (the "Portfolio") on July 27, 2007, at SBL Fund's
offices, One Security Benefit Place, Topeka, Kansas 66636-0001, at 1:30 p.m.,
Central Time, as adjourned from time to time (the "Special Meeting") for the
purposes listed below:
1. To approve an investment sub-advisory agreement between 6th Avenue
Investment Management Company, LLC and Security Global Investors, LLC
pursuant to which Security Global Investors, LLC will be appointed as
an investment sub-adviser to Series D (Global Series); and
2. To transact such other business as may properly come before the
Special Meeting.
After careful consideration, the Board of Directors of SBL Fund (the "Board")
unanimously approved the new sub-advisory agreement and recommends that
shareholders vote "FOR" Proposal 1.
Shareholders of record at the close of business on June 1, 2007 are entitled to
notice of, and to vote at, the Special Meeting. If you do not expect to attend
the Special Meeting in person, you are requested to complete, date, and sign the
enclosed proxy card and return it promptly in the envelope provided for that
purpose. Your proxy card also provides instructions for voting via telephone or
the Internet if you wish to take advantage of these voting options. Proxies may
be revoked at any time by executing and submitting a revised proxy, by giving
written notice of revocation to SBL Fund, or by voting in person at the Special
Meeting.
By Order of the Board,
/s/ Amy J. Lee
Amy J. Lee
Secretary
YOUR VOTE IS VERY IMPORTANT TO US REGARDLESS OF THE NUMBER OF VOTES YOU HOLD.
SHAREHOLDERS WHO DO NOT EXPECT TO ATTEND THE SPECIAL MEETING ARE REQUESTED TO
COMPLETE, SIGN, DATE AND RETURN THE ACCOMPANYING PROXY CARD IN THE ENCLOSED
ENVELOPE, WHICH NEEDS NO POSTAGE IF MAILED IN THE UNITED STATES. IT IS IMPORTANT
THAT YOUR PROXY CARD BE RETURNED PROMPTLY.
FOR YOUR CONVENIENCE, YOU MAY ALSO VOTE BY TELEPHONE OR INTERNET BY FOLLOWING
THE ENCLOSED INSTRUCTIONS. IF YOU VOTE BY TELEPHONE OR VIA THE INTERNET, PLEASE
DO NOT RETURN YOUR PROXY CARD UNLESS YOU ELECT TO CHANGE YOUR VOTE.
SERIES D (GLOBAL SERIES)
A SERIES OF
SBL FUND
ONE SECURITY BENEFIT PLACE
TOPEKA, KANSAS 66636-0001
1-800-888-2461
___________
PROXY STATEMENT
___________
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD JULY 27, 2007
This proxy statement and enclosed proxy notice and proxy card are being
furnished in connection with the solicitation of proxies by the Board of
Directors (the "Board" or "Directors") of SBL Fund for use at a special meeting
of shareholders of Series D (Global Series) (the "Portfolio"), on July 27, 2007,
at SBL Fund's offices, One Security Benefit Place, Topeka, Kansas 66636-0001, at
1:30 p.m., Central Time, as adjourned from time to time (the "Special Meeting").
The Board is soliciting proxies from shareholders of the Portfolio with respect
to shareholder consideration of a proposed investment sub-advisory agreement
between 6th Avenue Investment Management Company, LLC (the "Investment Manager")
and Security Global Investors, LLC ("SGI") on behalf of the Portfolio (the "SGI
Sub-Advisory Agreement"), as set forth in the accompanying notice. This proxy
statement and the notice and proxy card are being first mailed to shareholders
on or about June 11, 2007.
Shares of the Portfolio are not offered directly to the public but are sold only
to insurance companies and their separate accounts as the underlying investment
medium for owners of variable annuity contracts and variable life insurance
policies. As such, Security Benefit Life Insurance Company, First Security
Benefit Life Insurance and Annuity Company of New York, and Nationwide Life
Insurance Company (collectively, the "Insurance Companies") are the only
shareholders of record of the Portfolio. SBL Fund is soliciting voting
instructions from insurance contract owners invested in the Portfolio in
connection with the proposal. As such and for ease of reference, throughout the
proxy statement, insurance contract owners are referred to as "shareholders" of
the Portfolio.
You have received this Proxy Statement because you have an insurance contract
issued by of one of the Insurance Companies and you are invested in the
Portfolio. As such, you have the right to give voting instructions on shares of
the Portfolio that are attributable to your insurance contract, if your voting
instructions are properly submitted and received prior to the Special Meeting.
INTRODUCTION
The Investment Manager, as investment adviser to the Portfolio, has
traditionally retained a sub-adviser to provide portfolio management services to
the Portfolio. Since October 1998, the Investment Manager has retained
OppenheimerFunds, Inc. ("OppenheimerFunds") to serve as investment sub-adviser
for all of the assets of the Portfolio.
Upon the Investment Manager's proposal at a meeting held on May 10-11, 2007, the
Board approved the SGI Sub-Advisory Agreement between the Investment Manager and
SGI pursuant to which SGI, subject to shareholder approval, is proposed to be
appointed as investment sub-adviser for a portion of the assets of the
Portfolio. If shareholders of the Portfolio approve the SGI Sub-Advisory
Agreement, effective on or about July 31, 2007, SGI will serve as co-investment
sub-adviser to the Portfolio pursuant to the terms of the agreement, as
described below. If the SGI Sub-Advisory Agreement is approved by shareholders,
it is anticipated that each of OppenheimerFunds and SGI will manage
approximately 50% of the Portfolio's assets, although the division of assets may
vary from time to time.
At the meeting, the Directors determined that the best interests of Portfolio
shareholders would be served by entering into the SGI Sub-Advisory Agreement.
After careful consideration, upon the recommendation of the Investment Manager
and the management of SBL Fund, the Board, including a majority of Directors who
are not "interested persons" (as defined for regulatory purposes) of SBL Fund
and who are not interested persons of any party to the SGI Sub-Advisory
Agreement (the "Independent Directors"), unanimously approved, subject to
shareholder approval, the SGI Sub-Advisory Agreement. For your reference, a form
of the SGI Sub-Advisory Agreement is attached as Exhibit A.
THE BOARD RECOMMENDS THAT THE SHAREHOLDERS OF THE PORTFOLIO APPROVE THE SGI
SUB-ADVISORY AGREEMENT.
PROPOSAL 1
APPROVAL OF THE SGI
SUB-ADVISORY AGREEMENT
INVESTMENT ADVISORY ARRANGEMENTS
The Investment Manager, located at One Security Benefit Place, Topeka, Kansas
66636-0001, serves as investment adviser to the Portfolio pursuant to an
investment advisory agreement dated as of January 27, 2000, as amended (the
"Advisory Agreement"). The Advisory Agreement was approved by the Board for an
initial term of two years and is approved annually thereafter in accordance with
applicable requirements. The Advisory Agreement was last approved by the
Directors on November 16-17, 2006, and was last approved by shareholders on
January 26, 2000. The names, addresses and principal occupations of the
principal executive officer and each Managing Member of the Investment Manager
are set forth in Exhibit B-1, as is information regarding the ownership of the
Investment Manager.
The Investment Manager manages the investment operations of the Portfolio and
supervises the composition of SBL Fund portfolios, including the purchase,
retention and disposition of portfolio securities. The Investment Manager is
authorized to enter into investment sub-advisory agreements for investment
advisory services in connection with the management of SBL Fund and each series
thereof, including the Portfolio. The Investment Manager has responsibility for
all investment advisory services furnished pursuant to any such investment
sub-advisory agreement. In connection with its management of the business
affairs of SBL Fund, the Investment Manager bears: (a) all expenses incurred by
the Investment Manager or by the Portfolio in connection with managing the
ordinary course of business of the Portfolio, other than those assumed by the
Portfolio; and (b) the fees payable to the sub-adviser pursuant to an investment
sub-advisory agreement between the Investment Manager and the sub-adviser. For
its services, the Investment Manager is compensated by the Portfolio at the
annual rate of 1.00% of the Portfolio's average daily net assets. During the
Portfolio's most recently completed fiscal year ended December 31, 2006, the
Investment Manager received a total of $5,452,108 for service as the Portfolio's
investment adviser. If the SGI Sub-Advisory Agreement is approved by
shareholders, fees payable by the Portfolio to the Investment Manager under the
Advisory Agreement will not change.
Under the Advisory Agreement, the Investment Manager reviews the performance of
all sub-advisers, and makes recommendations to the Board with respect to the
retention and renewal of agreements. In connection therewith, the Investment
Manager is obligated to keep certain books and records of SBL Fund. The
Investment Manager also administers the business affairs of SBL Fund and
furnishes SBL Fund with office facilities and certain ordinary clerical and
bookkeeping services.
The terms of the Advisory Agreement and the services to be provided to the
Portfolio thereunder will remain unchanged if the SGI Sub-Advisory Agreement is
approved.
THE EXISTING SUB-ADVISORY AGREEMENT
Since November 1998, OppenheimerFunds, Inc., Two World Financial Center, 225
Liberty Street, 11th Floor, New York, New York 10281, has served as investment
sub-adviser with respect to 100% of the Portfolio's assets pursuant to an
investment sub-advisory agreement between the Investment Manager and
OppenheimerFunds dated October 23, 1998, which was last approved by the Board at
a meeting held on November 16-17, 2006, and was last submitted to a vote of the
Portfolio's shareholders on October 28, 1998. For its services, the Investment
Manager currently pays
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OppenheimerFunds an annual fee equal to a percentage of the average daily
closing value of the combined net assets of the Portfolio and another fund in
the Security Fund complex, computed on a daily basis, as follows: 0.35% of the
combined average daily net assets up to $300 million, plus 0.30% of such assets
over $300 million up to $750 million, and 0.25% of such assets over $750
million. During the Portfolio's most recently completed fiscal year ended
December 31, 2006, OppenheimerFunds received an amount equal to $1,757,132 from
the Investment Manager for services rendered to the Portfolio. If the SGI
Sub-Advisory Agreement is approved by shareholders, the Investment Manager will
continue to compensate OppenheimerFunds for its sub-advisory services at the
same fee rate, although the fee will be paid only with respect to the portion of
the Portfolio's assets managed by OppenheimerFunds and will not take into
account the assets of another fund in the Security Fund complex.
THE PROPOSED SGI INVESTMENT SUB-ADVISORY ARRANGEMENTS
The Investment Sub-Adviser. SGI, with its principal place of business at Two
Embarcadero Center, Suite 2350, San Francisco, CA 94111, is an investment
adviser [registered as such with the U.S. Securities and Exchange Commission.]
As of June 1, 2007, SGI has approximately $__________ in assets under
management. SGI currently provides investment management and related services to
retirement accounts and pooled investment vehicles. The name, address and
principal occupation of the principal executive officer and each managing member
of SGI are set forth in Exhibit B-2. SGI is a wholly owned subsidiary of
Security Benefit Life Insurance Company ("Security Benefit"), which is in turn
controlled by Security Benefit Corporation. Security Benefit Corporation is a
wholly owned subsidiary of Security Benefit Mutual Holding Company. SGI may be
deemed to be an affiliated person of the Investment Manager.
The SGI Sub-Advisory Agreement. The following summary of the proposed SGI
Sub-Advisory Agreement is qualified in its entirety by reference to the SGI
Sub-Advisory Agreement, a form of which is attached as Exhibit A.
The SGI Sub-Advisory Agreement provides that, subject to the Investment
Manager's and the Board's supervision, SGI is responsible for managing such
portion of the Portfolio's assets as shall be allocated by the Investment
Manager to SGI for management (hereinafter, "Investments"), including making
investment decisions and placing orders to purchase and sell securities for the
Portfolio, all in accordance with the investment objective and policies of the
Portfolio as reflected in its current prospectus and statement of additional
information and as may be adopted from time to time by the Board. In accordance
with applicable requirements, SGI will also maintain, and provide the Investment
Manager with, all books and records relating to the transactions it executes or
that are otherwise required, and render to the Directors such periodic and
special reports as the Board may reasonably request. The SGI Sub-Advisory
Agreement provides that, in the absence of willful misfeasance, bad faith, or
gross negligence in the performance of its duties, or breach of its duties
thereunder, SGI will not be liable for any act or omission in connection with
its activities as sub-adviser to the Portfolio.
Under its terms, the SGI Sub-Advisory Agreement will remain in full force and
effect for a period of up to two years from the date of its execution, and will
continue thereafter as long as its continuance is approved at least annually by
the Board or by vote of a majority of the outstanding shares of the Portfolio,
as well as by a majority of the Independent Directors by vote cast in person at
a meeting called for that purpose. However, the SGI Sub-Advisory Agreement may
be terminated at any time upon 60 days' written notice without the payment of
any penalty, either by vote of the Board or by vote of a majority of the
outstanding shares of the Portfolio. The Investment Manager may terminate the
SGI Sub-Advisory Agreement upon breach by SGI of its representations or
warranties, which shall not have been cured within 20 days of receipt of written
notice of such breach, or SGI becoming unable to discharge its duties and
obligations under the SGI Sub-Advisory Agreement. Additionally, the SGI
Sub-Advisory Agreement will terminate immediately in the event of its assignment
or upon the termination of the Portfolio's Advisory Agreement with the
Investment Manager. SGI may terminate the SGI Sub-Advisory Agreement on 120
days' written notice to the Investment Manager and SBL Fund.
If shareholders do not approve the SGI Sub-Advisory Agreement, SGI would not be
able to serve as investment sub-adviser to the Portfolio, and the Board would
consider various options with respect to the Portfolio, which may include the
appointment of another investment sub-adviser in accordance with applicable law.
Fees. The compensation payable by the Investment Manager to SGI under the SGI
Sub-Advisory Agreement is lower than the compensation currently payable under
the investment sub-advisory agreement with OppenheimerFunds. Under the SGI
Sub-Advisory Agreement, SGI will receive monthly compensation from the
Investment Manager at the following annual rates (expressed as a percentage of
average daily net assets) based on a percentage of the average daily closing
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value of the combined net assets of the Portfolio and another fund in the
Security Fund complex, as follows: 0.32% of the combined average daily net
assets up to $300 million, plus 0.27% of such assets over $300 million up to
$750 million and 0.22% of such assets over $750 million. The Investment Manager
will pay this fee to SGI only with respect to the Investments. SGI is proposed
to serve as the investment sub-adviser to the other Security Fund, subject to
approval by that Fund's shareholders.
Investment Objectives, Strategies and Risks. The Portfolio's investment
objective, strategies and risks will remain substantially the same after
approval of the SGI Sub-Advisory Agreement, as SGI will manage the Investments
in accordance with the investment program currently disclosed in the Portfolio's
prospectus.
Affiliations and Affiliated Brokerage. During the fiscal year ended December 31,
2006, the Portfolio paid no commissions on portfolio brokerage transactions to
brokers who may be deemed to be affiliated persons of the Portfolio, the
Investment Manager, OppenheimerFunds, SGI, or affiliated persons of such persons
("Affiliated Brokers").
EVALUATION BY THE BOARD
On May 10-11, 2007, at an in-person meeting of the Board at which a majority of
the Directors, including a majority of the Independent Directors, were in
attendance, the Board considered whether the SGI Sub-Advisory Agreement should
be approved for a two-year period, subject to shareholder approval. Following
their review and consideration, the Directors determined that the agreement
would enable shareholders of the Portfolio to obtain high quality services at a
cost that is appropriate, reasonable, and in the best interests of its
shareholders. The Board, including the Independent Directors, unanimously
approved the SGI Sub-Advisory Agreement. In reaching their decision, the
Directors requested and obtained from the Investment Manager and SGI such
information as they deemed reasonably necessary to evaluate the proposed
agreement. The Directors also carefully considered information that they had
received throughout the year as part of their regular oversight of the Portfolio
(including information from the Investment Manager and OppenheimerFunds), as
well as information about SGI. The Directors also obtained and reviewed certain
comparative information regarding performance of the Portfolio relative to
performance of other comparable mutual funds, and performance of SGI's other
accounts. In considering the SGI Sub-Advisory Agreement, the Directors evaluated
a number of considerations that they believed, in light of the legal advice
furnished to them by SBL Fund counsel and independent legal counsel and their
own business judgment, to be relevant. They based their decisions on the
following considerations, among others, although they did not identify any
consideration or particular information that was controlling of their decisions:
The nature, extent and quality of the advisory service to be provided. The Board
considered the nature and quality of the investment sub-advisory services
anticipated to be provided by SGI to the Portfolio. The Board concluded that SGI
is capable of providing high quality services to the Portfolio, as indicated by
the nature of services provided to other accounts managed by SGI, SGI's
management capabilities demonstrated with respect to these other accounts, the
experience, capability and integrity of SGI's management, the financial
resources of SGI, and the professional qualifications and experience of SGI's
portfolio management team. The Directors also concluded that SGI proposed to
provide services that are appropriate in scope and extent in light of the
Portfolio's operations, and the competitive landscape of the investment company
business and investor needs.
The investment performance of the Portfolio. The Board reviewed comparative
information prepared by Lipper and Morningstar regarding the Portfolio's
historical performance and the performance of SGI's portfolio managers in
managing other accounts that are reasonably comparable to the Portfolio. The
Board noted that accounts managed by SGI had performed comparably to the
Portfolio over the trailing one-year, three year and five-year periods ended
December 31, 2006, while recognizing the limitations regarding the comparability
of the accounts. The Board concluded, based in particular on the Directors'
assessment of the nature, extent and quality of investment sub-advisory services
expected to be provided by SGI, and SGI's performance in managing similar
accounts, that SGI is capable of generating a level of investment performance
that is appropriate in light of the Portfolio's investment objective, policies
and strategies and competitive with other investment companies.
The cost of investment sub-advisory services provided and the level of
profitability. The Board concluded that the level of anticipated investment
sub-advisory fees payable under the SGI Sub-Advisory Agreement is appropriate in
light of its consistency with the investment sub-advisory fees currently payable
to OppenheimerFunds (except with regard to the
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percentage of the Portfolio's assets under management) in connection with
providing investment sub-advisory services to the Portfolio, the estimated
expense ratio of the Portfolio (which is expected to remain unchanged), the
competitiveness of the Portfolio's expenses when compared to the expense ratios
of comparable investment companies (based on information prepared by Lipper and
Morningstar), and the anticipated profitability of the relationship between the
Portfolio, the Investment Manager, SGI, and their affiliates.
Whether fee levels reflect economies of scale and the extent to which economies
of scale would be realized as the Portfolio grows. The Board concluded that the
existence of asset-based breakpoints in the Portfolio's sub-advisory fee
schedules appropriately benefits investors by realizing economies of scale in
the form of lower sub-advisory fees as the level of assets grows. In addition,
the Board concluded that the Portfolio's management fees appropriately reflect
the Portfolio's current size, the current economic environment for the
Investment Manager and SGI, and the competitive nature of the investment company
market. The Directors also concluded that they will have the opportunity to
periodically reexamine whether the Portfolio has achieved economies of scale and
the appropriateness of sub-advisory fees payable by the Investment Manager (as
well as the management fees that the Portfolio pays to the Investment Manager)
in the future.
Benefits (such as soft dollars) to SGI and its affiliates from their
relationship with the Portfolio. The Board concluded that other benefits derived
by SGI and its affiliates (including the Investment Manager) from their
relationship with the Portfolio are reasonable and fair, and are consistent with
industry practice and the best interests of the Portfolio and its shareholders.
In addition, the Directors previously had determined that the management,
administration, fund accounting and other fees paid by the Portfolio to the
Investment Manager and affiliates of the Investment Manager and SGI are
reasonable, fair and in the best interests of shareholders in light of the
nature and quality of the services provided, the associated costs to these
affiliates of providing the services, the impact of the costs of such services
on the Portfolio's overall operating expenses, and the necessity of the services
for the Portfolio's operations.
Other considerations. In approving the SGI Sub-Advisory Agreement, the Board
considered the high quality of SGI's portfolio management personnel and SGI's
overall portfolio management capabilities, as demonstrated with respect to other
accounts, and determined that SGI has made a substantial commitment to the
recruitment and retention of high quality personnel, and has the financial and
operational resources reasonably necessary to manage the Investments. The Board
also noted that OppenheimerFunds would remain as co-investment sub-adviser to
manage half of the Portfolio's assets. The Board considered the affiliations
existing between the Investment Manager and SGI and determined that the
underlying transaction was consistent with (and not adverse to) shareholders'
interests.
THE BOARD, INCLUDING THE INDEPENDENT DIRECTORS, UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" APPROVAL OF THE SGI SUB-ADVISORY AGREEMENT AS PROVIDED
UNDER THIS PROPOSAL. UNMARKED PROXIES WILL BE SO VOTED.
OTHER BUSINESS
The Directors do not know of any matters to be presented at the Special Meeting
other than those set forth in this proxy statement. If other business should
properly come before the Special Meeting, proxies will be voted in accordance
with the judgment of the persons named in the accompanying proxy.
ADDITIONAL INFORMATION
ADMINISTRATOR, PRINCIPAL UNDERWRITER, AND TRANSFER AGENT
The Investment Manager also serves as the Portfolio's administrator and transfer
agent. The principal underwriter/distributor is Security Distributors, Inc. (the
"Distributor"), located at One Security Benefit Place, Topeka, KS 66636-0001.
During the fiscal year ended December 31, 2006, the Portfolio paid the
Investment Manager $855,881 for administrative and transfer agent services, and
the Portfolio paid the Distributor $0 for distribution services. If the proposed
SGI Sub-Advisory Agreement is approved, the Investment Manager and the
Distributor will continue to render the same services to the Portfolio as they
currently render. The Investment Manager is controlled by its members, Security
Benefit Life Insurance Company ("Security Benefit") and Security Benefit
Corporation. Security Benefit, a life
5
insurance company, incorporated under the laws of Kansas, is controlled by
Security Benefit Corporation. Security Benefit Corporation is wholly owned by
Security Benefit Mutual Holding Company, One Security Benefit Place, Topeka,
Kansas 66636-0001. The Investment Manager is a direct, and the Distributor is an
indirect, wholly-owned subsidiary of Security Benefit.
SHAREHOLDER REPORTS
Shareholders can find important information about the Portfolio in the SBL Fund
annual report dated December 31, 2006, including financial reports for the
fiscal year ended December 31, 2006, which has been provided by the respective
insurance company from which you have purchased a variable insurance contract.
You may obtain copies of this report without charge by writing to SBL Fund, or
by calling the telephone number shown on the front page of this proxy statement.
VOTING INFORMATION
Proxy Solicitation. The principal solicitation of proxies will be by the mailing
of this proxy statement on or about June 11, 2007, but proxies may also be
solicited by telephone and/or in person by representatives of SBL Fund, regular
employees of the Investment Manager, their affiliate(s), or InvestorConnectTM ,
a private proxy services firm. If we have not received your vote as the date of
the Special Meeting approaches, you may receive a call from these parties to ask
for your vote. Arrangements will be made with brokerage houses and other
custodians, nominees, and fiduciaries to forward proxies and proxy materials to
their principals.
The costs of the Special Meeting, including the costs of retaining
InvestorConnectTM, preparation and mailing of the notice, proxy statement and
proxy, and the solicitation of proxies, including reimbursement to
broker-dealers and others who forwarded proxy materials to their clients, will
be borne one-half by the Portfolio and one-half by the Investment Manager and/or
its affiliates. The estimated cost of the special meeting is approximately
$96,500.
Shareholder Voting. Shareholders of the Portfolio who own shares at the close of
business on June 1, 2007 (the "Record Date") will be entitled to notice of, and
vote at, the Special Meeting. Shareholders are entitled to one vote for each
share held and fractional votes for fractional shares held. As of the Record
Date, there were issued and outstanding __________shares of the Portfolio,
representing the same number of votes. The persons who are known to have owned
beneficially 5% or more of the Portfolio's outstanding shares as of the Record
Date are listed on Exhibit D. As of the Record Date, the Directors and officers,
as a group, owned less than 1.00% of the outstanding shares of the Portfolio. As
of the Record Date, there were no persons who were known to control the
Portfolio.
Insurance companies that use shares of the Portfolio as funding media for their
variable annuity contracts and variable life policies will vote shares of the
Portfolio held by their separate accounts in accordance with the instructions
received from owners of the variable insurance contracts. An insurance company
also will vote shares of the Portfolio held in such separate account for which
it has not received timely instructions in the same proportion as it votes
shares held by that separate account for which it has received instructions. An
insurance company whose separate account invests in the Portfolio will vote
shares by its general account and its subsidiaries in the same proportion as
other votes cast by its separate account in the aggregate. As a result, a small
number of owners of variable annuity contracts and variable life policies could
determine the outcome of the vote if other owners fail to vote.
More than 50% of the Portfolio's shares, represented in person or by proxy, will
constitute a quorum for the Special Meeting and must be present for the
transaction of business at the Special Meeting. Only proxies that are voted,
abstentions and "broker non-votes" will be counted toward establishing a quorum.
"Broker non-votes" are shares held by a broker or nominee as to which
instructions have not been received from the beneficial owners or persons
entitled to vote, and the broker or nominee does not have discretionary voting
power. In the event that a quorum is not present at the Special Meeting, or a
quorum is present but sufficient votes to approve Proposal 1 are not received,
the persons named as proxies may propose one or more adjournments of the Special
Meeting to permit further solicitation of proxies. Any such adjournment will
require the affirmative vote of a majority of the Portfolio shares represented
at the Special Meeting in person or by proxy (excluding abstentions and broker
non-votes). The persons named as proxies will vote those proxies that they are
entitled to vote FOR Proposal 1 in favor of an adjournment of the Special
Meeting, and will vote those
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proxies required to be voted AGAINST Proposal 1 against such adjournment. A
shareholder vote may be taken on any proposal prior to any such adjournment if
sufficient votes have been received and it is otherwise appropriate.
The person(s) named as proxies on the enclosed proxy card will vote in
accordance with your directions, if your proxy is received properly executed. If
we receive your proxy, and it is executed properly, but you give no voting
instructions with respect to any proposal, your shares will be voted FOR
Proposal 1. The duly appointed proxies may, in their discretion, vote upon such
other matters as may properly come before the Special Meeting.
In order that your shares may be represented at the Special Meeting, you are
requested to vote your shares by mail, the Internet or by telephone by following
the enclosed instructions. IF YOU VOTE BY TELEPHONE OR INTERNET, PLEASE DO NOT
RETURN YOUR PROXY CARD, UNLESS YOU LATER ELECT TO CHANGE YOUR VOTE. You may
revoke your proxy: (a) at any time prior to its exercise by written notice of
its revocation to the secretary of SBL Fund prior to the Special Meeting; (b) by
the subsequent execution and return of another proxy prior to the Special
Meeting; or (c) by being present and voting in person at the Special Meeting and
giving oral notice of revocation to the chairman of the Special Meeting.
However, attendance in-person at the Special Meeting, by itself, will not revoke
a previously-tendered proxy.
Required Vote. Approval of Proposal 1, the SGI Sub-Advisory Agreement, requires
the vote of a "majority of the outstanding voting securities" of the Portfolio,
which means the vote of 67% or more of the shares that are present at the
Special Meeting, if the holders of more than 50% of the outstanding shares are
present or represented by proxy, or the vote of more than 50% of the Portfolio's
outstanding shares, whichever is less. Accordingly, assuming the presence of a
quorum, abstentions and broker non-votes have the effect of a negative vote on
Proposal 1.
Shareholders Sharing the Same Address. As permitted by law, only one copy of
this proxy statement is being delivered to shareholders residing at the same
address, unless such shareholders have notified SBL Fund of their desire to
receive multiple copies of the shareholder reports and proxy statements that SBL
Fund sends. If you would like to receive an additional copy, please contact SBL
Fund by writing to SBL Fund's address, or by calling the telephone number shown
on the front page of this proxy statement. SBL Fund will then promptly deliver,
upon request, a separate copy of the proxy statement to any shareholder residing
at an address to which only one copy was mailed. Shareholders wishing to receive
separate copies of SBL Fund's shareholder reports and proxy statements in the
future, and shareholders sharing an address that wish to receive a single copy
if they are receiving multiple copies, should also send a request as indicated.
SHAREHOLDER PROPOSALS
As a general matter, SBL Fund does not hold annual meetings of shareholders.
Shareholders wishing to submit proposals for inclusion in a proxy statement for
a subsequent shareholders' meeting should send their written proposal to the
secretary of SBL Fund, One Security Benefit Place, Topeka, Kansas 66636-0001.
Proposals must be received a reasonable time prior to the date of a meeting of
shareholders to be considered for inclusion in the proxy materials for the
meeting. Timely submission of a proposal does not, however, necessarily mean
that the proposal will be included. Persons named as proxies for any subsequent
shareholders' meeting will vote in their discretion with respect to proposals
submitted on an untimely basis.
TO ENSURE THE PRESENCE OF A QUORUM AT THE SPECIAL MEETING, PROMPT EXECUTION AND
RETURN OF THE ENCLOSED PROXY IS REQUESTED. A SELF-ADDRESSED, POSTAGE-PAID
ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE.
By Order of the Board of Directors,
/s/ Michael G. Odlum
Michael G. Odlum
President, Acting Chairman of the Board of Directors
7
LIST OF EXHIBITS
Exhibit A: Form of SGI Sub-Advisory Agreement between the Investment
Manager and SGI
Exhibit B-1: Managing Members and Principal Executive Officer of the
Investment Manager
Exhibit B-2: Managing Members and Principal Executive Officer(s) of SGI
Exhibit C: Beneficial Owners of 5% or More of the Outstanding Shares of
the Portfolio
8
EXHIBIT A
FORM OF
SUB-ADVISORY AGREEMENT
BETWEEN
6TH AVENUE MANAGEMENT COMPANY, LLC
AND
SECURITY GLOBAL INVESTORS, LLC
SUB-ADVISORY AGREEMENT
THIS AGREEMENT is made and entered into as of the __ day of ___________,
2007 between 6th Avenue Investment Management Company, LLC (the "Adviser"), a
Kansas limited liability company, registered under the Investment Advisers Act
of 1940, as amended (the "Investment Advisers Act"), and Security Global
Investors, LLC (the "Subadviser"), a Kansas limited liability company registered
under the Investment Advisers Act.
WITNESSETH:
WHEREAS, SBL Fund and Security Equity Fund, Kansas corporations, are each
registered with the Securities and Exchange Commission (the "Commission") as
open-end management investment companies under the Investment Company Act of
1940, as amended (the "Investment Company Act");
WHEREAS, SBL Fund is authorized to issue shares of Series D ("Series D"), a
separate series of SBL Fund and Security Equity Fund is authorized to issue
shares of the Global Series ("Global Series"), a separate series of Security
Equity Fund (Series D and the Global Series are referred to herein individually
as a "Fund" and collectively as the "Funds");
WHEREAS, each of the Funds has, pursuant to an Advisory Agreement with the
Adviser (the "Advisory Agreement"), retained the Adviser to act as investment
adviser for and to manage its assets;
WHEREAS, the Advisory Agreements permit the Adviser to delegate certain of
its duties under the Advisory Agreement to other investment advisers, subject to
the requirements of the Investment Company Act; and
WHEREAS, the Adviser desires to retain the Subadviser as subadviser to act
as investment adviser for and to manage the Funds' respective Investments (as
defined below) and the Subadviser desires to render such services.
NOW, THEREFORE, the Adviser and Subadviser do mutually agree and promise as
follows:
1. Appointment as Subadviser. The Adviser hereby retains the Subadviser to
act as investment adviser for and to manage the assets of the Global Series and
a portion of the assets of Series D, in each case subject to the supervision of
the Adviser and the Board of Directors of such Fund and subject to the terms of
this Agreement. The Subadviser hereby accepts such employment. In such capacity,
the Subadviser shall be responsible for each Fund's Investments (as defined
below).
2. Duties of Subadviser.
(a) Investments. The Subadviser is hereby authorized and directed and
hereby agrees, subject to the stated investment policies and restrictions
of each Fund as set forth in such Fund's prospectus and statement of
additional information as currently in effect and as supplemented or
amended from time to time (collectively referred to hereinafter as the
"Prospectus") and subject to the directions of the Adviser and the Fund's
Board of Directors to purchase, hold and sell investments for the account
of the Global Series and the portion of the assets of Series D that the
Adviser allocates to the Subadviser for management from time to time
(hereinafter "Investments") and to monitor on a continuous basis the
performance of such Investments. The Subadviser shall give the Funds the
benefit of its best efforts in rendering its services
A-1
as Subadviser. The Subadviser may contract with or consult with such banks,
other securities firms, brokers or other parties, without additional
expense to the Funds, as it may deem appropriate regarding investment
advice, research and statistical data, clerical assistance or otherwise.
(b) Brokerage. The Subadviser is authorized, subject to the
supervision of the Adviser and the respective Fund's Board to establish and
maintain accounts on behalf of each Fund with, and place orders for the
purchase and sale of each Fund's Investments with or through, such persons,
brokers or dealers as Subadviser may select which may include, to the
extent permitted by the Adviser and the respective Fund's Board, brokers or
dealers affiliated with the Subadviser or Adviser, and negotiate
commissions to be paid on such transactions. The Subadviser agrees that in
placing such orders for a Fund it shall attempt to obtain best execution,
provided that, the Subadviser may, on behalf of such Fund, pay brokerage
commissions to a broker which provides brokerage and research services to
the Subadviser in excess of the amount another broker would have charged
for effecting the transaction, provided (i) the Subadviser determines in
good faith that the amount is reasonable in relation to the value of the
brokerage and research services provided by the executing broker in terms
of the particular transaction or in terms of the Subadviser's overall
responsibilities with respect to such Fund and the accounts as to which the
Subadviser exercises investment discretion, (ii) such payment is made in
compliance with Section 28(e) of the Securities Exchange Act of 1934, as
amended, and any other applicable laws and regulations, and (iii) in the
opinion of the Subadviser, the total commissions paid by such Fund will be
reasonable in relation to the benefits to the Fund over the long term. In
reaching such determination, the Subadviser will not be required to place
or attempt to place a specific dollar value on the brokerage and/or
research services provided or being provided by such broker. It is
recognized that the services provided by such brokers may be useful to the
Subadviser in connection with the Subadviser's services to other clients.
On occasions when the Subadviser deems the purchase or sale of a security
to be in the best interests of the Fund as well as other clients of the
Subadviser, the Subadviser, to the extent permitted by applicable laws and
regulations, may, but shall be under no obligation to, aggregate the
securities to be sold or purchased in order to obtain the most favorable
price or lower brokerage commissions and efficient execution. In such
event, allocation of securities so sold or purchased, as well as the
expenses incurred in the transaction, will be made by the Subadviser in the
manner the Subadviser considers to be the most equitable and consistent
with its fiduciary obligations to the Fund or Funds involved and to such
other clients. The Subadviser will report on such allocations at the
request of the Adviser, or the respective Fund's Board, providing such
information as the number of aggregated trades to which a Fund was a party,
the broker(s) to whom such trades were directed and the basis of the
allocation for the aggregated trades.
(c) Securities Transactions. The Subadviser and any affiliated person
of the Subadviser will not purchase securities or other instruments from or
sell securities or other instruments to a Fund ("Principal Transactions");
provided, however, the Subadviser or an affiliated person of the Subadviser
may enter into a Principal Transaction with a Fund if (i) the transaction
is permissible under applicable laws and regulations, including, without
limitation, the Investment Company Act and the Investment Advisers Act and
the rules and regulations promulgated thereunder, and (ii) the transaction
or category of transactions receives the express written approval of the
Adviser.
The Subadviser agrees to observe and comply with Rule 17j-1 under the
Investment Company Act and its Code of Ethics, as the same may be amended
from time to time. The Subadviser agrees to provide the Adviser and the
Funds with a copy of such Code of Ethics.
(d) Books and Records. The Subadviser will maintain all books and
records required to be maintained pursuant to the Investment Company Act
and the rules and regulations promulgated thereunder solely with respect to
transactions made by it on behalf of the Funds including, without
limitation, the books and records required by Subsections (b)(1), (5), (6),
(7), (9), (10) and (11) and Subsection (f) of Rule 31a-1 under the
Investment Company Act and shall timely furnish to the Adviser all
information relating to the Subadviser's services hereunder needed by the
Adviser to keep such other books and records of the Funds required by Rule
31a-1 under the Investment Company Act. The Subadviser will also preserve
all such books and records for the periods prescribed in part (e) of Rule
31a-2 under the Investment Company Act, and agrees that such books and
records shall remain the sole property of the respective Fund and shall be
immediately surrendered to the appropriate Fund upon request. The
Subadviser further agrees that all books and records maintained hereunder
shall be made available to the respective Fund or the Adviser at any time
upon reasonable request and notice, including telecopy, during any business
day.
(e) Information Concerning Investments and Subadviser. From time to
time as the Adviser or a Fund may request, the Subadviser will furnish the
requesting party reports on portfolio transactions and reports on
Investments held in the portfolios, all in such detail as the Adviser or
the applicable Fund may reasonably request. The Subadviser will make
available its officers and employees to meet with the Board of Directors of
a Fund at the Fund's principal place of business on due notice to review
the Investments of the Fund.
2
The Subadviser will also provide such information as is customarily
provided by a subadviser and may be required for each Fund or the Adviser
to comply with their respective obligations under applicable laws,
including, without limitation, the Internal Revenue Code of 1986, as
amended (the "Code"), the Investment Company Act, the Investment Advisers
Act, the Securities Act of 1933, as amended (the "Securities Act") and any
state securities laws, and any rule or regulation thereunder.
During the term of this Agreement, the Adviser agrees to furnish the
Subadviser at its principal office all registration statements, proxy
statements, reports to stockholders, sales literature or other materials
prepared for distribution to stockholders of each Fund, or the public that
refer to the Subadviser for Subadviser's review and approval. The
Subadviser shall be deemed to have approved all such materials unless the
Subadviser reasonably objects by giving notice to the Adviser in writing
within five business days (or such other period as may be mutually agreed)
after receipt thereof. The Subadviser's right to object to such materials
is limited to the portions of such materials that expressly relate to the
Subadviser, its services and its clients. The Adviser agrees to use its
best efforts to ensure that materials prepared by its employees or agents
or its affiliates that refer to the Subadviser or its clients in any way
are consistent with those materials previously approved by the Subadviser
as referenced in this paragraph. Sales literature may be furnished to the
Sub-Adviser by first class or overnight mail, facsimile transmission
equipment or hand delivery.
(f) Custody Arrangements. The Subadviser shall provide each Fund's
custodian, on each business day with information relating to all
transactions concerning the Fund's assets.
(g) Compliance with Applicable Laws and Governing Documents. In all
matters relating to the performance of this Agreement, the Subadviser and
its directors, officers, partners, employees and interested persons shall
act in conformity with each Fund's Articles of Incorporation, By-Laws, and
currently effective registration statement and with the written
instructions and directions of each Fund's Board and the Adviser, after
receipt of such documents, from the relevant Fund, and shall comply with
the requirements of the Investment Company Act, the Investment Advisers
Act, the Commodity Exchange Act (the "CEA"), the rules thereunder, and all
other applicable federal and state laws and regulations.
In carrying out its obligations under this Agreement, the Subadviser
shall ensure that the Global Series and the portion of Series D allocated
to it by the Adviser complies with all applicable statutes and regulations
necessary to qualify each Fund (or portion thereof in the case of Series D)
as a Regulated Investment Company under Subchapter M of the Code (or any
successor provision), and shall notify the Adviser immediately upon having
a reasonable basis for believing that a Fund (or portion thereof in the
case of Series D) has ceased to so qualify or that it might not so qualify
in the future.
In carrying out its obligations under this Agreement, the Subadviser
shall invest the portion of the assets of Series D allocated to it by the
Adviser in such a manner as to ensure that such portion complies with the
diversification provisions of Section 817(h) of the Code (or any successor
provision) and the regulations issued thereunder relating to the
diversification requirements for variable insurance contracts and any
prospective amendments or other enacted modifications to Section 817 or
regulations thereunder. Subadviser shall notify the Adviser immediately
upon having a reasonable basis for believing that the portion of Series D
allocated to the Subadvser has ceased to comply and will take all
reasonable steps to adequately diversify the assets of Series D allocated
to, so as to achieve compliance within the grace period afforded by
Regulation 1.817-5.
The Adviser has furnished the Subadviser with copies of each of the
following documents and will furnish the Subadviser at its principal office
all future amendments and supplements to such documents, if any, as soon as
practicable after such documents become available: (i) the Articles of
Incorporation of each Fund, (ii) the By-Laws of each Fund, (iii) each
Fund's registration statement under the Investment Company Act and the
Securities Act of 1933, as amended, as filed with the Commission, and (iv)
any written instructions of the respective Fund's Board and the Adviser.
(h) Voting of Proxies. The Subadviser shall direct the custodian as to
how to vote such proxies as may be necessary or advisable in connection
with any matters submitted to a vote of shareholders of Investments held by
a Fund.
3. Independent Contractor. In the performance of its duties hereunder, the
Subadviser is and shall be an independent contractor and unless otherwise
expressly provided herein or otherwise authorized in writing, shall have no
authority to act for or represent the Funds or the Adviser in any way or
otherwise be deemed an agent of the Funds or the Adviser.
4. Compensation. The Adviser shall pay to the Subadviser, for the services
rendered hereunder, the fees set forth in Exhibit A to this Agreement.
3
5. Expenses. The Subadviser shall bear all expenses incurred by it in
connection with its services under this Agreement and will, from time to time,
at its sole expense employ or associate itself with such persons as it believes
to be particularly fitted to assist it in the execution of its duties hereunder.
However, the Subadviser shall not assign or delegate any of its investment
management duties under this Agreement without the approval of the Adviser and
the appropriate Fund's Board.
6. Representations and Warranties of Subadviser. The Subadviser represents
and warrants to the Adviser and the Funds as follows:
(a) The Subadviser is registered as an investment adviser under the
Investment Advisers Act;
(b) The Subadviser will immediately notify the Adviser of the
occurrence of any event that would disqualify the Subadviser from serving
as an investment adviser of an investment company pursuant to Section 9(a)
of the Investment Company Act;
(c) The Subadviser has filed a notice of exemption pursuant to Rule
4.14 under the CEA with the Commodity Futures Trading Commission (the
"CFTC") and the National Futures Association;
(d) The Subadviser is fully authorized under all applicable law to
serve as Subadviser to the Funds and to perform the services described
under this Agreement;
(e) The Subadviser is a limited liability company duly organized and
validly existing under the laws of the state of Kansas with the power to
own and possess its assets and carry on its business as it is now being
conducted;
(f) The execution, delivery and performance by the Subadviser of this
Agreement are within the Subadviser's powers and have been duly authorized
by all necessary action on the part of its members, and no action by or in
respect of, or filing with, any governmental body, agency or official is
required on the part of the Subadviser for the execution, delivery and
performance by the Subadviser of this Agreement, and the execution,
delivery and performance by the Subadviser of this Agreement do not
contravene or constitute a default under (i) any provision of applicable
law, rule or regulation, (ii) the Subadviser's governing instruments, or
(iii) any agreement, judgment, injunction, order, decree or other
instrument binding upon the Subadviser;
(g) This Agreement is a valid and binding agreement of the Subadviser;
(h) The Form ADV of the Subadviser previously provided to the Adviser
is a true and complete copy of the form filed with the Commission and the
information contained therein is accurate and complete in all material
respects as of its filing date, and does not omit to state any material
fact necessary in order to make the statements made, in light of the
circumstances under which they were made, not misleading;
7. Non-Exclusivity. The services of the Subadviser with respect to the
Funds are not deemed to be exclusive, and the Subadviser and its officers shall
be free to render investment advisory and administrative or other services to
others (including other investment companies) and to engage in other activities
so long as its duties hereunder are not impaired thereby.
8. Representations and Warranties of Adviser. The Adviser represents and
warrants to the Subadviser as follows:
(a) The Adviser is registered as an investment adviser under the
Investment Advisers Act;
(b) The Adviser has filed a notice of exemption pursuant to Rule 4.14
under the CEA with the Commodity Futures Trading Commission (the "CFTC")
and the National Futures Association;
(c) The Adviser is a limited liability company duly organized and
validly existing under the laws of the State of Kansas with the power to
own and possess its assets and carry on its business as it is now being
conducted;
(d) The execution, delivery and performance by the Adviser of this
Agreement and the Advisory Agreement are within the Adviser's powers and
have been duly authorized by all necessary action on the part of its
members, and no action by or in respect of, or filing with, any
governmental body, agency or official is required on the part of the
Adviser for the execution, delivery and performance by the Adviser of this
Agreement, and the execution, delivery and performance by the Adviser of
this Agreement do not contravene or constitute a default under (i) any
provision of applicable law, rule or regulation, (ii) the Adviser's
governing instruments, or (iii) any agreement, judgment, injunction, order,
decree or other instrument binding upon the Adviser;
4
(e) This Agreement and the Advisory Agreement are valid and binding
agreements of the Adviser;
(f) The Form ADV of the Adviser previously provided to the Subadviser
is a true and complete copy of the form filed with the Commission and the
information contained therein is accurate and complete in all material
respects as of its filing date and does not omit to state any material fact
necessary in order to make the statements made, in light of the
circumstances under which they were made, not misleading;
(g) The Adviser acknowledges that it received a copy of the
Subadviser's Form ADV at least 48 hours prior to the execution of this
Agreement.
9. Survival of Representations and Warranties; Duty to Update Information.
All representations and warranties made by the Subadviser and the Adviser
pursuant to Sections 6 and 8 hereof shall survive for the duration of this
Agreement and the parties hereto shall promptly notify each other in writing
upon becoming aware that any of the foregoing representations and warranties are
no longer true.
10. Liability and Indemnification.
(a) Liability. In the absence of willful misfeasance, bad faith or
gross negligence on the part of the Subadviser or a breach of its duties
hereunder, the Subadviser shall not be subject to any liability to the
Adviser, to either Fund, or any of either Fund's shareholders, and, in the
absence of willful misfeasance, bad faith or gross negligence on the part
of the Adviser or a breach of its duties hereunder, the Adviser shall not
be subject to any liability to the Subadviser, for any act or omission in
the case of, or connected with, rendering services hereunder or for any
losses that may be sustained in the purchase, holding or sale of
Investments; provided, however, that nothing herein shall relieve the
Adviser and the Subadviser from any of their respective obligations under
applicable law, including, without limitation, the federal and state
securities laws and the CEA
(b) Indemnification. The Subadviser shall indemnify the Adviser and
the Funds, and their respective officers and directors, for any liability
and expenses, including attorneys' fees, which may be sustained by the
Adviser, or the Funds, as a result of the Subadviser's willful misfeasance,
bad faith, or gross negligence, breach of its duties hereunder or violation
of applicable law, including, without limitation, the federal and state
securities laws or the CEA. The Adviser shall indemnify the Subadviser and
its officers and partners, for any liability and expenses, including
attorneys' fees, which may be sustained as a result of the Adviser's, or
the Funds' willful misfeasance, bad faith, or gross negligence, breach of
its duties hereunder or violation of applicable law, including, without
limitation, the federal and state securities laws or the CEA.
11. Duration and Termination.
(a) Duration. This Agreement shall become effective upon the date
first above written, provided that this Agreement shall not take effect
with respect to a Fund unless it has first been approved by a vote of a
majority of those directors of SBL Fund and Security Equity Fund, as
applicable, who are not parties to this Agreement or interested persons of
any such party, cast in person at a meeting called for the purpose of
voting on such approval. This Agreement shall continue in effect for a
period of two years from the date hereof, subject thereafter to being
continued in force and effect from year to year with respect to each Fund
if specifically approved each year by the Board of Directors of the
applicable Fund. In addition to the foregoing, each renewal of this
Agreement with respect to each Fund must be approved by the vote of a
majority of the applicable Fund's directors who are not parties to this
Agreement or interested persons of any such party, cast in person at a
meeting called for the purpose of voting on such approval. Prior to voting
on the renewal of this Agreement, the Board of Directors of the applicable
Fund may request and evaluate, and the Subadviser shall furnish, such
information as may reasonably be necessary to enable the Fund's Board of
Directors to evaluate the terms of this Agreement.
(b) Termination. Notwithstanding whatever may be provided herein to
the contrary, this Agreement may be terminated at any time, without payment
of any penalty:
(i) By vote of a majority of the Board of Directors of the
applicable Fund, or by vote of a majority of the outstanding voting
securities of the applicable Fund, or by the Adviser, in each case,
upon sixty (60) days' written notice to the Subadviser;
(ii) By the Adviser upon breach by the Subadviser of any
representation or warranty contained in Section 6 hereof, which shall
not have been cured within twenty (20) days of the Subadviser's
receipt of written notice of such breach;
5
(iii) By the Adviser immediately upon written notice to the
Subadviser if the Subadviser becomes unable to discharge its duties
and obligations under this Agreement; or
(iv) By the Subadviser upon 120 days written notice to the
Adviser and the applicable Fund.
This Agreement shall not be assigned (as such term is defined in the
Investment Company Act) without the prior written consent of the parties hereto.
This Agreement shall terminate automatically in the event of its assignment
without such consent or upon the termination of the Advisory Agreement.
12. Duties of the Adviser. The Adviser shall continue to have
responsibility for all services to be provided to the Funds pursuant to the
Advisory Agreement and shall oversee and review the Subadviser's performance of
its duties under this Agreement.
13. Amendment. This Agreement may be amended by mutual consent of the
parties, provided that the terms of each such amendment with respect to a Fund
shall be approved by the Board of Directors of the applicable Fund or by a vote
of a majority of the outstanding voting securities of the applicable Fund.
14. Notice. Any notice that is required to be given by the parties to each
other (or to the Fund) under the terms of this Agreement shall be in writing,
delivered, or mailed postpaid to the other party, or transmitted by facsimile
with acknowledgment of receipt, to the parties at the following addresses or
facsimile numbers, which may from time to time be changed by the parties by
notice to the other party:
(a) If to the Subadviser:
Security Global Investors, LLC
2 Embarcadero Center, Suite 2350
San Francisco, CA 94111
Attention: John Boich, Chief Investment Officer
Facsimile: (415) 274-7702
With a copy to:
Security Benefit Corporation
One Security Benefit Place
Topeka, KS 66636
Attention: General Counsel
Facsimile: (785) 438-3080
(b) If to the Adviser:
6th Avenue Investment Management Company, LLC
5801 SW 6th Avenue
Topeka, KS 66636-0001
Attention: Michael G. Odlum, President
Facsimile: (785) 438-3080
(d) If to SBL Fund:
SBL Fund
One Security Benefit Place
Topeka, Kansas 66636-0001
Attention: Amy J. Lee, Secretary
Facsimile: (785) 438-3080
6
(d) If to Security Equity Fund:
Security Equity Fund
One Security Benefit Place
Topeka, Kansas 66636-0001
Attention: Amy J. Lee, Secretary
Facsimile: (785) 438-3080
15. Governing Law; Jurisdiction. Except as indicated in Section 19(b) of
this Agreement, this Agreement shall be governed by and construed in accordance
with the laws of the State of Kansas, without regard to its conflicts of law
provisions.
16. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall together constitute one and the same
instrument.
17. Captions. The captions herein are included for convenience of reference
only and shall be ignored in the construction or interpretation hereof.
18. Severability. If any provision of this Agreement shall be held or made
invalid by a court decision or applicable law, the remainder of the Agreement
shall not be affected adversely and shall remain in full force and effect.
19. Certain Definitions.
(a) "Business day." As used herein, business day means any customary
business day in the United States on which the New York Stock Exchange is
open.
(b) Miscellaneous. As used herein, "investment company," "affiliated
person," "interested person," "assignment," "broker," "dealer" and
"affirmative vote of the majority of the Fund's outstanding voting
securities" shall all have such meaning as such terms have in the
Investment Company Act. The term "investment adviser" shall have such
meaning as such term has in the Investment Advisers Act and the Investment
Company Act, and in the event of a conflict between such Acts, the most
expansive definition shall control. In addition, where the effect of a
requirement of the Investment Company Act reflected in any provision of
this Agreement is relaxed by a rule, regulation or order of the Commission,
whether of special or general application, such provision shall be deemed
to incorporate the effect of such rule, regulation or order.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first written above.
6th Avenue Investment Management Company, LLC
By:
----------------------------------
Name: Michael G. Odlum
Title: President
Attest:
----------------------------------
Name: Amy J. Lee
Title: Secretary
Security Global Investors, LLC
By:
----------------------------------
Name:
Title:
Attest:
----------------------------------
Name:
Title:
7
EXHIBIT A
COMPENSATION
For all services rendered by the Subadviser hereunder, Adviser shall pay to
Subadviser a fee (the "Subadvisory Fee") as follows:
An annual rate of 0.32% of the combined average daily net assets of the
Funds of $300 million or less; and
An annual rate of 0.27% of the combined average daily net assets of the
Funds of more than $300 million but less than $750 million; and
An annual rate of 0.22% of the combined average daily net assets of the
Funds of more than $750 million.
For purposes of calculating the compensation to be paid hereunder, (1) the
value of the net assets of a Fund 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 then current prospectus for the applicable Fund and (2) the
value of the net assets of Series D taken into account in determining the fee to
be paid to the Subadviser shall only include the assets allocated to the
Subadviser by the Adviser to manage.
The Subadvisory Fee shall be accrued for each calendar day the Subadviser
renders subadvisory services hereunder and the sum of the daily fee accruals
shall be paid monthly to the Subadviser as soon as practicable following the
last day of each month, by wire transfer if so requested by the Subadviser, but
no later than ten (10) calendar days thereafter. If this Agreement shall be
effective for only a portion of a year, then the Subadviser's fee for said year
shall be prorated for such portion.
8
B-1
EXHIBIT B-1
MANAGING MEMBERS AND PRINCIPAL EXECUTIVE OFFICER OF THE INVESTMENT MANAGER
The business address of each managing member and principal executive officer is
One Security Benefit Place, Topeka, Kansas 66636-0001.
- ------------------------------------------------------------------------------------------------------------------------------------
Name Position with Investment Principal Occupation/Position
Manager
- ------------------------------------------------------------------------------------------------------------------------------------
Michael G. Odlum President and Managing Member Senior Vice President and Chief Investment Officer, Security Benefit
Representative Corporation and Security Benefit Life Insurance Company, Vice President
and Director, Security Distributors, Inc.; Director, Vice President and
Chief Investment Officer, First Security Benefit Life Insurance and
Annuity Company of New York.
- ------------------------------------------------------------------------------------------------------------------------------------
Mr. Odlum serves as President and Acting Chairman of the Board of Directors of
SBL Fund.
The Investment Manager is a Kansas limited liability company with its principal
offices located at One Security Benefit Place, Topeka, Kansas 66636-0001. The
Investment Manager is controlled by its members, Security Benefit and Security
Benefit Corporation. Security Benefit, a life insurance company, incorporated
under the laws of Kansas, is controlled by Security Benefit Corporation.
Security Benefit Corporation is wholly-owned by Security Benefit Mutual Holding
Company, One Security Benefit Place, Topeka, Kansas 66636-0001. The Investment
Manager is a direct, and the Distributor is an indirect, wholly-owned subsidiary
of Security Benefit.
B-1
EXHIBIT B-2
MANAGING MEMBERS AND PRINCIPAL EXECUTIVE OFFICER OF SGI
The business address of each of the following persons is One Security Benefit
Place, Topeka, Kansas 66636-0001.
- ---------------------------------------- ----------------------------------------------- -------------------------------------------
NAME POSITIONS/OFFICES HELD WITH SUB-ADVISER POSITIONS/OFFICES HELD WITH SBL FUND
- ---------------------------------------- ----------------------------------------------- -------------------------------------------
Richard M. Goldman President and Manager None
- ---------------------------------------- ----------------------------------------------- -------------------------------------------
Kris A. Robbins Manager None
- ---------------------------------------- ----------------------------------------------- -------------------------------------------
Brenda M. Harwood Chief Compliance Officer Chief Compliance Officer and Treasurer
- ---------------------------------------- ----------------------------------------------- -------------------------------------------
Amy J. Lee Secretary Secretary
- ---------------------------------------- ----------------------------------------------- -------------------------------------------
SGI is a Kansas limited liability company with its principal offices located at
Two Embarcadero Center, Suite 2350, San Francisco, CA 94111. SGI is controlled
by its member, Security Benefit. Security Benefit is a life insurance company,
incorporated under the laws of Kansas, which is controlled by Security Benefit
Corporation. Security Benefit Corporation is wholly owned by Security Benefit
Mutual Holding Company, One Security Benefit Place, Topeka, Kansas 66636-0001.
SGI is a direct, wholly-owned subsidiary of Security Benefit. No Officer or
Director of SBL Fund owns securities or has any other material indirect interest
in SGI.
B-2
EXHIBIT C
As of the Record Date, the following persons are known to have owned
beneficially 5% or more of the outstanding shares of the Portfolio:
BENEFICIAL OWNER OF SECURITIES AND ADDRESS SHARES OWNED % OWNED
SECURITY BENEFIT LIFE INSURANCE COMPANY
C-1
[PRELIMINARY PROXY - FOR SEC USE ONLY]
SBL FUND
ONE SECURITY BENEFIT PLACE
TOPEKA, KS 66636-0001
(TOLL-FREE) 1-800-888-2461
SERIES D (GLOBAL SERIES)
PROXY FOR A SPECIAL MEETING OF SHAREHOLDERS ON JULY 27, 2007
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF SBL FUND
The undersigned hereby appoint(s) Michael G. Odlum, Brenda M. Harwood and Thomas
A. Swank, or any one of them, proxies, each of them with full power of
substitution, to vote and act with respect to all shares of Series D (Global
Series) (the "Portfolio") which the undersigned is entitled to vote at the
special meeting of shareholders of the Portfolio to be held at the executive
offices of SBL Fund at the above address on July 27, 2007 at 1:30 p.m. Central
Time, and at any adjournment(s) or postponements thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. This proxy card
will be voted as instructed. IF NO SPECIFICATION IS MADE, THE PROXY CARD WILL BE
VOTED "FOR" PROPOSAL 1. Please vote, date and sign this proxy and return it
promptly in the enclosed envelope.
V FOLD AND DETACH HERE V
.................................................................................
[LASER FUND NAME HERE]
SPECIAL MEETING OF SHAREHOLDERS TO BE HELD JULY 27, 2007
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE FOLLOWING PROPOSAL
Please vote, date and sign this proxy card and return it promptly in the
enclosed envelope. Please indicate your vote by an "x" in the appropriate box
below:
1. To approve an investment sub-advisory agreement between 6th Avenue
Investment Management Company, LLC and Security Global Investors, LLC
pursuant to which Security Global Investors, LLC will be appointed as
an investment sub-adviser to Series D (Global Series).
FOR AGAINST ABSTAIN
| | | | | |
PLEASE VOTE BY CHECKING THE APPROPRIATE |X|
BOX AS IN THIS EXAMPLE
Signature: _____________________ Signature (if held jointly): __________
Date: __________________________ Date: ___________________________
This proxy must be signed exactly as your name(s) appears hereon. If as an
attorney, executor, guardian or in some representative capacity or as an officer
of a corporation, please add titles as such. Joint owners must each sign.
PROXY VOTING INSTRUCTIONS
Your mailed proxy statement provides details on important issues relating to
your Fund. The board of directors of SBL Fund recommends that you vote "FOR" the
proposal.
To make voting faster and more convenient for you, we are offering a variety of
ways to vote your proxy. You may vote using the Internet or by telephone instead
of completing and mailing the enclosed proxy card. The Internet and telephone
are generally available 24 hours a day and your vote will be confirmed and
posted immediately. Use whichever method is most convenient for you! If you
choose to vote via the Internet or by phone, you should not mail your proxy
card.
WAYS TO VOTE YOUR SHARES
Your vote is important no matter how many shares you own. Voting your shares
early will avoid costly follow-up mail and telephone solicitation.
Online 1. Click on www.myproxyonline.com.
2. Enter the 12 digit control number.
3. Follow the instructions on the Web site.
4. Once you have voted, you do not need to mail your
proxy card.
By Phone 1. Call toll-free 1-866-437-4675.
2. Enter the 12 digit control number.
3. Follow the recorded instructions.
4. Once you have voted, you do not need to mail your
proxy card
By Mail Complete and sign your proxy card and
mail it in the postage-paid envelope received
with your shareholder mailing. To ensure your
vote is validated properly, please sign your
proxy card as described in the "Instructions
for Signing Proxy Cards" section of your proxy
materials.
In Person The Shareholder Meeting will take place July 27, 2007,
at 1:30 p.m., Central time, at the office of SBL Fund,
located at One Security Benefit Place, Topeka, Kansas
66636.
V FOLD AND DETACH HERE V
- --------------------------------------------------------------------------------
Questions?
We urge you to spend time reviewing your proxy statement and the proposal
included in the package. Should you have any questions, we encourage you to call
1-866-304-2059 toll-free Monday through Friday from 9:30 a.m. to 10:00 p.m.
Eastern time. We have retained InvestorConnectTM to assist our shareholders in
the voting process. If we have not received your proxy card or vote as the date
of the special meeting approaches, representatives from InvestorConnectTM may
call you to remind you to exercise your vote.
YOUR PROXY VOTE IS IMPORTANT! PLEASE VOTE TODAY
B-