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|
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Check the appropriate box:
|_| Preliminary proxy statement. |_| Confidential, for use of the
|X| Definitive proxy statement. Commissioner only (as permitted
|_| Definitive additional materials. by Rule 14a-6(e)(2)).
|_| Soliciting material pursuant to
Rule 14a-11(c) or Rule 14a-12.
SECURITY EQUITY 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
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(4) Date Filed: N/A
GLOBAL SERIES
A SERIES OF
SECURITY EQUITY 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 Shareholders:
Notice is hereby given that Security Equity Fund (the "Fund") will hold a
special meeting of shareholders of Global Series (the "Series") on July 27,
2007, at the 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 Security
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 the 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.
Your attention is called to the accompanying Proxy Statement. 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 the 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.
GLOBAL SERIES
A SERIES OF
SECURITY EQUITY 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 Security Equity Fund (the "Fund") for
use at a special meeting of shareholders of Global Series (the "Series"), on
July 27, 2007, at the 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
Series 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"), an
affiliate of the Investment Manager, on behalf of the Series (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 15, 2007.
INTRODUCTION
The Investment Manager, as investment adviser to the Series, has traditionally
retained a sub-adviser to provide portfolio management services to the Series.
Since October 1998, the Investment Manager has retained OppenheimerFunds, Inc.
("OppenheimerFunds") to serve as investment sub-adviser for the Series.
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 the Series. If shareholders of the
Series approve the SGI Sub-Advisory Agreement, effective on or about July 31,
2007, SGI will replace OppenheimerFunds and serve as investment sub-adviser to
the Series pursuant to the terms of the agreement, as described below. The Board
recommends approving the SGI Sub-Advisory Agreement primarily in order to
provide investors in the Series with access to SGI's investment services, which
are not otherwise available to investors in registered investment companies, and
to increase the potential achievement of economies of scale for the benefit of
investors through the offering of investment management services that are
distinct from those otherwise widely available to investors. If the SGI
Sub-Advisory Agreement is approved by the shareholders, the existing
sub-advisory arrangements with OppenheimerFunds will be terminated.
At the meeting the Directors determined that the best interests of Series
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 the Fund, the Board, including a majority of Directors who
are not "interested persons" (as defined for regulatory purposes) of the 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 SERIES 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 Series pursuant to an Investment
Management Agreement, which became effective on May 1, 2002, 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
April 17, 2002. 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 Series and
supervises the composition of the Fund's 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 the Fund and each series
thereof, including the Series. 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 the Fund, the Investment Manager bears: (a) all expenses incurred by
the Investment Manager or by the Series in connection with managing the ordinary
course of the business of the Series, other than those assumed by the Series;
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 Series at the annual
rate of 1.00% of the Series' average daily net assets. During the Series' most
recently completed fiscal year ended September 30, 2006, the Investment Manager
received a total of $1,566,845 for service as the Series' investment adviser. If
the SGI Sub-Advisory Agreement is approved by shareholders, fees payable by the
Series 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 the Fund. The
Investment Manager also administers the business affairs of the Fund and
furnishes the 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
Series thereunder will remain unchanged if the SGI Sub-Advisory Agreement is
approved.
THE CURRENT SUB-ADVISER
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 to the Series 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 Series' shareholders for initial
approval on October 28, 1998. For its services, the Investment Manager currently
pays OppenheimerFunds an annual fee equal to a percentage of the average daily
closing value of the combined net assets of the Series 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 Series' most recently completed fiscal year ended September
30, 2006, OppenheimerFunds received an amount equal to $501,696 from the
Investment Manager for services rendered to the Series.
2
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. SGI
is a newly-created subsidiary of Security Benefit Life Insurance Company
("Security Benefit") formed for the purpose of acquiring the assets of Avera
Global Partners LP ("Avera"). The key personnel of Avera became the key
personnel of SGI effective June 15, 2007. As of June 15, 2007, SGI has
approximately $50,303,828 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 , 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 summarizes the material terms of the SGI Sub-Advisory
Agreement and 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 the
Series' assets, including making investment decisions and placing orders to
purchase and sell securities for the Series, all in accordance with the
investment objective and policies of the Series 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 Series.
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 Series, 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 Series. 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 Series' 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 Series, and the Board would
consider various options with respect to the Series, 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. Shareholders will
not necessarily benefit from the lower investment sub-advisory fees, because SGI
is paid by the Investment Manager, not the Series, and the management fee paid
by the Series will not change. Under the SGI Sub-Advisory Agreement, SGI will
receive monthly compensation from the Investment Manager at an annual rate
(expressed as a percentage of average daily net assets) based on a percentage of
the average daily closing value of the combined net assets of the Series and SBL
Fund Series D (Global Series), 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 portion of SBL Fund Series D (Global Series) that is managed
by SGI. SGI is proposed to serve as a co-investment sub-adviser to SBL Fund
Series D (Global Series), subject to approval by that Fund's shareholders. If
shareholders of SBL Fund Series D (Global Series) do not approve SGI to serve as
a co-investment sub-adviser, the Investment Manager
3
will not receive the benefit of that fund's assets with regard to reaching the
fee reductions available at higher asset levels ("breakpoints"). During the
fiscal year ended September 30, 2006, if SGI's sub-investment advisory agreement
had been in place, its fee with respect to the Series, with and without the
benefit of breakpoints, would have been $478,911 and $501,314, respectively.
Investment Objectives, Strategies and Risks. The Series' investment objective,
strategies and risks will remain substantially the same after approval of the
SGI Sub-Advisory Agreement, as SGI will manage the Series in accordance with the
investment program currently disclosed in the Series' prospectus.
Affiliations and Affiliated Brokerage. During the fiscal year ended September
30, 2006, the Series paid no commissions on portfolio brokerage transactions to
brokers who may be deemed to be affiliated persons of the Series, 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 Series 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 Series
(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 Series relative to
performance of other comparable mutual funds, and performance of SGI's other
accounts. The Directors also received information about the cost of
transitioning the portfolio and agreed that half of the cost would be borne by
the Series and half by the Investment Manager. 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 the Fund's
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. In
considering the capabilities of SGI, the Board took into account the fact that
SGI is a newly-created subsidiary of Security Benefit formed for the purpose of
acquiring the assets of Avera and that the key personnel of Avera would become
the key personnel of SGI, operating independently and retaining their autonomous
investment management capabilities. The Board also considered the Investment
Manager's intention not to enter into an agreement with SGI unless and until the
Avera acquisition occurs. The discussion herein concerning SGI's advisory
services and investment performance refer to the services and performance of
Avera and its portfolio managers, who are now employees of SGI. The Board also
considered the nature and quality of the investment sub-advisory services
anticipated to be provided by SGI to the Series. The Board concluded that SGI
would be capable of providing high quality services to the Series, 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 Board also concluded that SGI proposed to provide
services that are appropriate in scope and extent in light of the Series'
objectives and policies. The Board also considered the fact that the investment
services offered by OppenheimerFunds were readily available to investors through
other products while the investment services to be offered by SGI were not;
therefore, the Board concluded that the selection of SGI would provide investors
access to investment management services not otherwise available to them.
The investment performance of the Series. The Board reviewed comparative
information prepared by Lipper regarding the Series' historical performance and
the performance of SGI's portfolio managers in managing accounts that are
reasonably comparable to the Series. The Board noted that accounts managed by
SGI had performed comparably to the Series 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 Directors noted the
differences in investment styles and
4
strategy between OppenheimerFunds and SGI, and determined that SGI's more
concentrated strategy, with its quantitative processes for reducing risk,
offered shareholders an attractive opportunity for seeking to achieve their
investment goals. 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 Series' investment objective and policies
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 sub-advisory fees currently payable to
OppenheimerFunds, the estimated expense ratio of the Series (which is expected
to remain unchanged), the competitiveness of the Series' expenses when compared
to the expense ratios of comparable investment companies (based on information
prepared by the Investment Manager), and the anticipated profitability of the
relationship between the Series, 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 Series grows. The Board concluded that the
existence of asset-based breakpoints in the Series' 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. Because the Investment
Manager will benefit from lower sub-advisory fees as the level of assets grows,
the Investment Manager may be more likely to offer future breakpoints in
connection with the management fee that the Series pays the Investment Manager.
In addition, the Board concluded that the Series' management fees appropriately
reflect the Series' current size, the current economic environment for the
Investment Manager and SGI, and the competitive nature of the investment company
market. The Directors also noted that they will have the opportunity to
periodically reexamine whether the Series 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 Series pays to the Investment Manager) in
the future.
Benefits (such as soft dollars) to SGI and its affiliates from their
relationship with the Series. The Board concluded that other benefits derived by
SGI and its affiliates (including the Investment Manager) from their
relationship with the Series are reasonable and fair, and are consistent with
industry practice and the best interests of the Series and its shareholders. In
addition, the Board previously had determined that the management,
administration, fund accounting and other fees paid by the Series 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 Series' overall operating expenses, and the necessity of the services for
the Series' 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 Series. The Board also
considered the increased potential for asset growth for a fund that provides
investors access to an investment manager not otherwise available, which may
produce value to shareholders through economies of scale. 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, PROPERLY SIGNED AND DATED 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.
5
ADDITIONAL INFORMATION
ADMINISTRATOR, PRINCIPAL UNDERWRITER, AND TRANSFER AGENT
The Investment Manager also serves as the Series' 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 September 30, 2006, the Series paid the Investment
Manager $525,823 for administrative and transfer agent services, and the Series
paid the Distributor $391,033 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 Series as they currently
render. The Investment Manager is wholly owned 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 an indirect, and the Distributor is a direct,
wholly-owned subsidiary of Security Benefit Corporation.
SHAREHOLDER REPORTS
Shareholders can find important information about the Series in the Fund's
annual report dated September 30, 2006, including financial reports for the
fiscal year ended September 30, 2006 and in the Fund's semi-annual report dated
March 31, 2007. You may obtain copies of these reports without charge by writing
to the 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 15, 2007, but proxies may also be
solicited by telephone and/or in person by representatives of the Fund, regular
employees of the Investment Manager, their affiliate(s), or The Altman Group, 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 The Altman
Group, 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
Series 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 Series 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 10,040,535.402 shares of the Series,
representing the same number of votes. The persons who are known to have owned
beneficially 5% or more of the Series' outstanding shares as of the Record Date
are listed on Exhibit C. As of the Record Date, the Directors and officers, as a
group, owned less than 1.00% of the outstanding shares of the Series. As of the
Record Date, there were no persons who were known to control the Series.
More than 50% of the Series' 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 Series 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
6
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 the 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 Series,
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 Series'
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 the Fund of their desire to
receive multiple copies of the shareholder reports and proxy statements that the
Fund sends. If you would like to receive an additional copy, please contact the
Fund by writing to the Fund's address, or by calling the telephone number shown
on the front page of this proxy statement. The 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 the 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, the 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 the 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 Member and Principal Executive Officer of the Investment
Manager
Exhibit B-2: Principal Executive Officer and Managing Members of SGI
Exhibit B-3: Directors/Officers of the Fund Who Hold Positions With SGI
Exhibit C: Beneficial Owners of 5% or More of the Outstanding Shares of the
Series
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.
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
3
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;
(e) This Agreement and the Advisory Agreement are valid and
binding agreements of the Adviser;
4
(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;
(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
5
(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
(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
6
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
EXHIBIT B-1
MANAGING MEMBER AND PRINCIPAL EXECUTIVE OFFICER OF THE INVESTMENT MANAGER
The business address of the managing member and principal executive officer is
One Security Benefit Place, Topeka, Kansas 66636-0001.
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NAME POSITION/OFFICES HELD WITH PRINCIPAL OCCUPATION/POSITION
INVESTMENT 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
Security Equity 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 an indirect, and the Distributor is a direct, wholly-owned subsidiary
of Security Benefit Corporation.
B-1
EXHIBIT B-2
PRINCIPAL EXECUTIVE OFFICER AND MANAGING MEMBERS 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 PRINCIPAL OCCUPATION/POSITION
- ---------------------------------------------------------------------------------------------------------------------------------
Richard M. Goldman President and Manager Senior Vice President, Security Benefit Corporation;
Director, Security Distributors, Inc.
- ---------------------------------------------------------------------------------------------------------------------------------
Kris A. Robbins Manager Chairman of the Board, President, and Chief Executive
Officer, Security Benefit Corporation; Chairman,
President, and Chief Executive Officer, Security Benefit
Life Insurance Company.
- ---------------------------------------------------------------------------------------------------------------------------------
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 the Fund owns securities or has any other material indirect interest
in SGI.
B-2
EXHIBIT B-3
DIRECTORS/OFFICERS OF THE FUND WHO HOLD POSITIONS WITH SGI
The business address of each of the following persons is One Security Benefit
Place, Topeka, Kansas 66636-0001.
- -------------------------------------------------------------------------------------------------------------------
NAME POSITIONS/OFFICES HELD WITH SECURITY POSITIONS/OFFICES HELD WITH SUB-ADVISER
GLOBAL FUND
- -------------------------------------------------------------------------------------------------------------------
Brenda M. Harwood Chief Compliance Officer and Treasurer Chief Compliance Officer
- -------------------------------------------------------------------------------------------------------------------
Amy J. Lee Secretary Secretary
- -------------------------------------------------------------------------------------------------------------------
B-3
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 Series:
- -------------------------------------------------------------------------------------------------------------------
TITLE OF CLASS NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT OF CLASS
BENEFICIAL OWNER BENEFICIAL OWNERSHIP
- -------------------------------------------------------------------------------------------------------------------
Security Equity Fund Global Series None
- -------------------------------------------------------------------------------------------------------------------
* As of the Record Date, the Directors and officers, as a group, owned
less than 1.00% of the outstanding shares of the Series.
C-1
SECURITY EQUITY FUND
ONE SECURITY BENEFIT PLACE
TOPEKA, KANSAS 66636-0001
1-800-888-2461
SECURITY 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
SECURITY EQUITY 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 Security 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 Security Equity 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
- --------------------------------------------------------------------------------
SECURITY EQUITY FUND GLOBAL SERIES
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:
3. 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
FOR AGAINST ABSTAIN
|_| |_| |_|
PLEASE VOTE BY |X|
CHECKING THE
APPROPRIATE 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 Security Equity 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 Security Equity 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 The Altman Group 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 The Altman Group may
call you to remind you to exercise your vote.
YOUR PROXY VOTE IS IMPORTANT! PLEASE VOTE TODAY
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.