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
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Security Equity Life Insurance Company Separate Account 13
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(Name of Registrant as Specified in its Charter)
Security Equity Life Insurance Company
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
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N/A
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computed pursuant to Exchange Act Rule 0-11 (set forth the
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SECURITY EQUITY LIFE INSURANCE COMPANY
One Madison Avenue
New York, New York 10010
[Name]
March 31, 2003
Dear Contract Owner:
You are an owner of a variable life insurance contract (a "Contract") issued by
Security Equity Life Insurance Company ("Security Equity Life"). Initial Class
shares of the Index 500 Portfolio ("Index 500 Portfolio"), a series of the
Fidelity Variable Insurance Products Fund II, have been purchased at your
direction by Security Equity Life through its Separate Account 13 to support
contract values or fund benefits payable under your Contract. Security Equity
Life is the record owner of Index 500 Portfolio shares held in connection with
your Contract.
Security Equity Life is seeking your approval for the substitution of Class A
shares of the MetLife Stock Index Portfolio, a series of the Metropolitan Series
Fund, Inc., (the "MetLife Portfolio") for Initial Class shares of the Index 500
Portfolio. The proposed substitution is part of an effort by Security Equity
Life to make its variable contracts more efficient to administer and oversee,
and therefore more attractive to its customers.
The Contracts and the prospectuses for the Contracts issued by Security Equity
Life through Separate Account 13 condition Security Equity Life's ability to
carry out the proposed substitution on its obtaining the approval of the
Securities and Exchange Commission (the "Commission"). The Commission's approval
of the proposed substitution is subject to certain conditions, including that
Security Equity Life receive approval from Contract owners entitled to vote
(those owners who have Contract value invested in the Index 500 Portfolio as of
January 31, 2003). Since you had Contract value invested in the Index 500
Portfolio on January 31, 2003, you are entitled to vote the number of
accumulation units you own in the subaccount of Separate Account 13 investing in
shares of the Index 500 Portfolio. We are writing to you to ask that you cast
your vote in order that we may effect the proposed substitution. You may cast
your vote by: (1) filling out the enclosed Voting Form and returning it in the
enclosed self-addressed envelope, (2) using our toll-free telephone voting
facility (1-866-235-4258), or (3) visiting our website
https://vote.proxy-direct.com.
The proposed substitution will not be treated as a transfer of Contract value
for purposes of assessing transfer charges or for determining the number of
remaining permissible transfers in a Contract year. In addition, you may make
one transfer of Contract value out of the MetLife Portfolio within 30 days
following the proposed substitution without the transfer counting as a transfer
of Contract value for purposes of assessing transfer charges or for determining
the number of remaining permissible transfers in a Contract year.
We have enclosed the following to assist you in giving us your vote:
. Voting Information Statement
. Voting Form
. Postage-paid return envelope
. Toll-free number for the telephone voting facility and website
address for the website voting facility
Please read carefully the enclosed Voting Information Statement for details
about the proposed substitution. In order for your vote to be given effect, we
must receive a properly executed Voting Form or a telephone or website vote no
later than April 24, 2003 at 4:00 p.m. Eastern Standard Time.
Please complete, sign, and date the enclosed Voting Form and promptly return it
in the enclosed postage-paid envelope or compete the telephone voting or website
voting process by following the instructions available at either facility. Your
vote and participation are very important, and we appreciate your return of the
form as soon as possible. Thank you for your cooperation.
Very truly yours,
William C. Thater
President
Security Equity Life Insurance Company
SECURITY EQUITY LIFE INSURANCE COMPANY SEPARATE ACCOUNT 13
A separate account of Security Equity Life Insurance Company
VOTING INFORMATION STATEMENT
March 31, 2003
Security Equity Life Insurance Company ("Security Equity Life"), on behalf of
Security Equity Life Insurance Company Separate Account 13 ("Separate Account
13"), a separate account of Security Equity Life, is furnishing this Voting
Information Statement to solicit votes from owners of variable life insurance
contracts (the "Contracts") issued by Security Equity Life having contract
values allocated to the subaccount of Separate Account 13 investing in shares of
the Index 500 Portfolio of Fidelity Variable Insurance Products Fund II (the
"Subaccount") on January 31, 2003 (the "Record Date"). Security Equity Life is
requesting a vote to approve or disapprove the following proposal:
The substitution of Class A shares of the MetLife Stock Index Portfolio
("MetLife Portfolio"), a series of the Metropolitan Series Fund, Inc., for
Initial Class shares of the Index 500 Portfolio ("Index 500 Portfolio"), a
series of the Fidelity Variable Insurance Products Fund II.
As an owner of a Contract (an "Owner") having accumulation units representing an
investment of contract value in the Subaccount as of the close of business on
the Record Date, you are entitled to vote such accumulation units on the above
proposal.
The Contracts and prospectuses for the Contracts condition Security Equity
Life's ability to carry out the proposed substitution on its obtaining the
approval of the Securities and Exchange Commission (the "Commission"). The
Commission's approval of the proposed substitution is subject to certain
conditions, including that Security Equity Life receive approval from Owners.
GENERAL VOTING INFORMATION
This Voting Information Statement and the accompanying Voting Form are being
furnished to Owners on or about March 31, 2003. An Owner is entitled to one vote
for each accumulation unit that the Owner owns in the Subaccount.
As of the Record Date, the total number of accumulation units held in the
Subaccount and entitled to vote was: 6,555,428.
Approval of the proposed substitution requires the affirmative vote of the
lesser of: (1) a majority of the outstanding accumulation units for the
Subaccount as of the Record Date, or (2) 67% of such outstanding accumulation
units voted, if votes received represent a majority of such accumulation units
as of the Record Date.
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To the knowledge of Security Equity Life, the following Owners beneficially
owned, directly or indirectly, Contracts representing more than 5% of the
accumulation units in the Subaccount as of the Record Date:
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Number of Subaccount Percent of Class of
Name and Address of Owner Units Contract represented
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Nestle, Inc. 724,100 11%
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Union Carbide Corporation 2,305,961 35.2%
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General American Life
Insurance Company 409402 6.2%
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S.F. Pauley 1998 Trust 1,445,733 22.1%
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First Union Corporation 1,453,829 22.2%
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To the knowledge of Security Equity Life, none of the directors or officers of
Security Equity Life, individually or as a group, beneficially own, directly or
indirectly, over 1% of the outstanding accumulation units of the Subaccount as
of the Record Date. Any beneficial interest that Security Equity Life may have
in the subaccount is immaterial in relation to the interests of Owners and
Security Equity Life will not cast any votes. As the table indicates, General
American Life Insurance Company, an affiliate of Security Equity Life, owns a
Contract representing a 6.2% interest in the Subaccount. General American Life
Insurance Company will cast its vote to abstain on the proposal.
If you properly execute and return the enclosed Voting Form to Security Equity
Life at 280 Oser Avenue, Hauppage, N.Y. 11788-3610 by April 24, 2003 at 4:00
p.m. (the "Voting Deadline"), Security Equity Life will count your vote when
calculating the results of the solicitation. Security Equity Life will disregard
any Voting Forms received after the Voting Deadline. Votes attributable to
Voting Forms that are properly executed and returned but are not marked to
"Approve" or "Disapprove" the proposed substitution, will be counted as
"Approve." A vote to "Abstain" will have the effect of a vote to "Disapprove"
the proposed substitution.
You also may vote by telephone by calling 1-866-235-4258 and following the
instructions or by visiting our voting agent's website
https://vote.proxy-direct.com and following the instructions. If you cast your
telephone or website vote by the Voting Deadline, Security Equity Life will
count your vote when calculating the results of the solicitation. Security
Equity Life will disregard any votes cast by telephone or at the website after
the Voting Deadline (or any extension of the Voting Deadline). Security Equity
Life or its voting agent will use reasonable procedures to (such as requiring an
identification number) to verify the authenticity of voters using the telephone
or website voting facilities. Your voting authentication number is found on the
accompanying Voting Form.
Any Owner who has submitted a Voting Form has the right to change his or her
vote at any time prior to the Voting Deadline by submitting a letter requesting
the change or a later-dated Voting Form that Security Equity Life receives at
the above address on or before the Voting Deadline. If Security Equity Life does
not receive sufficient votes to approve the proposal, it may extend the Voting
Deadline and conduct a further solicitation of votes.
Security Equity Life will solicit votes primarily by mail, but may supplement
this effort by telephone calls, telegrams, e-mails, personal interviews, and
other communications by officers,
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employees, and agents of Security Equity Life or its affiliates. Security Equity
Life will bear the cost of soliciting votes.
THE PROPOSED SUBSTITUTION
The Transaction
On October 25, 2002, Security Equity Life and Separate Account 13 submitted an
application to the Commission requesting approval of the proposed substitution
of shares of the MetLife Portfolio for shares of the Index 500 Portfolio. If
completed, the proposed substitution will result in Security Equity Life's
redemption, in cash or "in-kind" (i.e., for portfolio securities of the Index
500 Portfolio), of shares of the Index 500 Portfolio. Security Equity Life will
then use the proceeds (either cash or portfolio securities) of such redemption
to purchase shares of the MetLife Portfolio.
If approved, the proposed substitution will take place at relative net asset
value with no change in the amount of an Owner's Contract value or death benefit
or in the dollar value of an Owner's investment in the Subaccount. Owners will
not incur any fees or charges as a result of the proposed substitution and
Owners' rights and Security Equity Life's obligations under the Contract will
not be altered in any way. All expenses incurred in connection with the proposed
substitution will be paid by Security Equity Life. In addition, the proposed
substitution will not subject Owners to any federal income tax liability.
The fees and charges that an Owner pays under his or her Contract will not
increase as a result of the proposed substitution. For Contracts taking part in
the proposed substitution, to the extent that the annualized expenses of the
MetLife Portfolio during the twenty-four months following the substitution
exceed the 2002 net expense level of the Index 500 Portfolio, Security Equity
Life will reduce Subaccount expenses under the Contracts. Therefore, for such
Contracts, for two years following the proposed substitution, combined net
expenses for the MetLife Portfolio and the Subaccount will not exceed the
combined net expenses of the Index 500 Portfolio and the Subaccount for the 2002
fiscal year. In addition, for Contracts outstanding on the date of the proposed
substitution, Security Equity Life has agreed to permanently reduce Subaccount
expenses by 0.04% by waiving charges it receives from the Subaccount under the
Contracts in that amount.
Owners are entitled to approve or disapprove the proposed substitution. The
proposed substitution will not take place without the approval of Owners
representing the lesser of: (1) a majority of the outstanding accumulation units
of the Subaccount as of the Record Date, or (2) 67% of such outstanding
accumulation units voted, if votes received represent a majority of such
accumulation units as of the Record Date.
Security Equity Life intends to effect the proposed substitution on or about
April 28, 2003, following the issuance of an order of approval by the
Commission, the approval of the proposed substitution by Owners, and any
approval required by state insurance regulators.
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Reasons for the Proposed Substitution
The proposed substitution reflects a determination by Security Equity Life to
coordinate underlying investment options with other life insurance companies
affiliated with Metropolitan Life Insurance Company, an affiliate of Security
Equity Life. At the current time, most variable life insurance and variable
annuity contracts being actively marketed by life insurance companies affiliated
with Metropolitan Life Insurance Company that offer an S&P 500 Index investment
portfolio, offer the MetLife Portfolio. Standardizing the investment options
across similar products offered by several affiliated life insurance companies
will make such contracts more efficient to administer and oversee, thereby
reducing costs to the companies and improving service to owners of all of the
contracts. For example, one variable annuity operations center provides contract
administration and contract owner services for most of the affiliated life
insurance companies. Standardizing product features, such as investment options,
will foster more efficient administration of the Contracts, thereby improving
quality control and Owner satisfaction. Similarly, as part of this
standardization process, several other mutual funds managed by companies
affiliated with Metropolitan Life Insurance Company are being merged into
investment portfolios of Metropolitan Series, including the MetLife Portfolio.
This should, as with the proposed substitution, increase the Portfolio's net
assets and lead to lower overall expenses for the Portfolio. Security Equity
Life believes that replacing the Index 500 Portfolio with the MetLife Portfolio
is appropriate and in the best interests of Owners.
Though not a principal reason for the proposed substitution, the substitution
would have the effect of transferring Contract values to an investment portfolio
managed by an affiliated person of Security Equity Life, thereby increasing the
management fees received by that affiliated person.
Security Equity Life believes that replacing the Substituted Portfolio with the
Replacement Portfolio is appropriate and in the best interests of Contract
owners because the Replacement Portfolio is larger than the Substituted
Portfolio and has excellent prospects for future growth. Although almost all
equity mutual funds have declined in size over the last two years (due primarily
to equity market declines, but also as a result of investor redemptions), the
Replacement Portfolio has, on a percentage basis, declined in size less than the
Substituted Portfolio. In large part this is because it has gained new
investors. As indicated above, Security Equity Life anticipates that, through
mergers with affiliated funds and being added as an investment option in
variable annuity and life insurance contracts of insurance companies affiliated
with Metropolitan Life Insurance Company, the Replacement Portfolio will
continue to add new investors.
Size and continued growth are important factors in the performance of an index
portfolio because they have a critical impact on expense levels. The Replacement
Portfolio had an expense ratio in 2002 of 0.31%. Security Equity Life believes
that with the growth anticipated for the Portfolio, it has excellent prospects
of maintaining or even lowering that ratio in future years. Although the
Substituted Portfolio had an actual expense ratio of 0.28% for 2002, it achieved
that ratio only after a reimbursement of 0.05% from FMR, its investment adviser.
The reimbursement is voluntary and FMR may cease reimbursing the Portfolio at
any time. In addition, FMR has the ability to seek repayment of the reimbursed
amounts under certain circumstances in future years.
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In the event that the proposed substitution does not occur (because it is not
approved by Owners or the Commission or for another reason), effective May 1,
2003, the Subaccount will no longer be available under the Contracts for
allocation of purchase payments or transfers of Contract value. (Transfers of
Contract value to the Subaccount pursuant to the "dollar-cost" averaging and
portfolio rebalancing arrangements in effect on May 1, 2003, will, however,
continue.)
Both the MetLife Portfolio and the Index 500 Portfolio have assets of more than
$2.4 billion as of December 31, 2002. The Index 500 Portfolio's asset base,
however, has declined from $5.5 billion as of December 31, 1999.
Security Equity Life Insurance Company
Security Equity Life is a stock life insurance company domiciled in New York.
Security Equity Life was established in 1983 as a wholly-owned subsidiary of
Security Mutual Life Insurance Company of New York. Security Equity Life is
admitted to sell life insurance and annuities in 40 states and the District of
Columbia. Security Equity Life sells corporate-owned life insurance contracts in
all of these jurisdictions and individual contracts to residents of New York.
Its principal executive offices are located at One Madison Avenue, New York, New
York 10010.
Security Equity Life is a wholly-owned subsidiary of GenAmerica Financial
Corporation, an intermediate stock holding company owned by MetLife, Inc.
("MetLife"), the parent of Metropolitan Life Insurance Company ("MLIC").
MetLife, Inc. is listed on the New York Stock Exchange and, through its
affiliates, is a leading provider of insurance and other financial products and
services to individuals and groups.
Security Equity Life Insurance Company Separate Account 13
Separate Account 13 is a separate investment account of Security Equity Life
established under New York law on December 30, 1994. Separate Account 13
currently has 20 subaccounts. Each subaccount invests in a corresponding
portfolio of an open-end management investment company. The Contracts that
invest in the Index 500 Portfolio have been issued through Separate Account 13
and interests in Separate Account 13 offered through such Contracts have been
registered under the Securities Act of 1933, as amended (the "1933 Act").
Separate Account 13 is registered with the Commission under the Investment
Company Act of 1940, as amended (the "1940 Act") as a unit investment trust type
of investment company.
Security Equity Life is the legal owner of the assets in Separate Account 13. To
the extent so provided in the Contracts, that portion of the assets of Separate
Account 13 equal to its reserves and other liabilities under outstanding
Contracts will not be charged with liabilities arising out of any other business
Security Equity Life may conduct. Income, gains and losses, realized or
unrealized, from the assets of Separate Account 13 are credited to or charged
against Separate Account 13 without regard to the other income, gains, or losses
of Security Equity Life.
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The Portfolios
VIP II Fund
The VIP II Fund is registered as an open-end management investment company under
the 1940 Act and currently offers 5 separate investment portfolios, including
the Index 500 Portfolio. The VIP II Fund issues a separate series of shares of
beneficial interest in connection with each portfolio, and has registered such
shares under the 1933 Act.
Metropolitan Series
The Metropolitan Series is also registered as an open-end management investment
company under the 1940 Act and currently offers 20 separate investment
portfolios, including the MetLife Portfolio. The Metropolitan Series issues a
separate series of shares of beneficial interest in connection with each
portfolio, and has registered such shares under the 1933 Act.
Management of the Portfolios
Index 500 Portfolio
Fidelity Management & Research Company ("FMR") is the investment adviser for the
Index 500 Portfolio (and other portfolios of Fidelity Variable Insurance
Products Fund II). FMR's principal offices are located at 82 Devonshire Street,
Boston, Massachusetts 02109.
FMR and the Index 500 Portfolio have entered into a subadvisory agreement with
Deutsche Asset Management, Inc. ("DAMI") to provide investment management
services. DAMI chooses the Index 500 Portfolio's investments and places orders
to buy and sell the Index 500 Portfolio's investments. DAMI is a wholly owned
subsidiary of Deutsche Bank AG. DAMI's principal offices are located at 280 Park
Avenue, New York, New York 10017. FMR has also entered into a subadvisory
agreement with FMR Co., Inc. ("FMRC") on behalf of the Index 500 Portfolio,
pursuant to which FMRC may provide investment advisory services to the Index 500
Portfolio. FMRC's principal offices are the same as those of FMR.
For its services, FMR is paid an advisory fee based on the average daily net
assets of the Index 500 Portfolio and FMR pays FMRC and DAMI for services
rendered to the Index 500 Portfolio.
MetLife Stock Index Portfolio
MetLife Advisers is the investment adviser for the MetLife Portfolio. MetLife
Advisers' principal offices are located at 501 Boylston Street, Boston,
Massachusetts 02116. MetLife Advisers is an indirect wholly-owned subsidiary of
MetLife. MetLife Advisers also performs general administrative and management
services for the Metropolitan Series Fund, Inc.
MetLife Advisers has contracted with a subadviser, MLIC, to make the day-to-day
investment management decisions for the MetLife Portfolio. MetLife Advisers is
responsible for overseeing MLIC and for making recommendations to the
Metropolitan Series Fund, Inc.'s board of
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directors relating to hiring and replacing subadviser(s). MLIC is the
Metropolitan Series Fund, Inc.'s principal underwriter and distributor. MLIC's
principal offices are located at One Madison Avenue, New York, New York 10010.
For its services, MetLife Advisers is paid an advisory fee based on the average
daily net assets of the MetLife Portfolio, and MetLife Advisers pays MLIC for
services rendered to the MetLife Portfolio.
Comparison of the Portfolios
The following discussion is primarily a summary of certain parts of the current
prospectuses and/or annual shareholder reports for 2002 for the MetLife
Portfolio and the Index 500 Portfolio. This Voting Information Statement is
accompanied by a current prospectus for the MetLife Portfolio. The 2002 annual
shareholder report for the MetLife Portfolio is available without charge upon
request. As an Owner invested in the Index 500 Portfolio, you should already
have a current prospectus (including applicable supplements) and should have
recently received the 2002 annual shareholder report for the Index 500
Portfolio. Information contained in this Voting Information Statement is
qualified by the more complete information set forth in such prospectuses and
reports which are incorporated by reference herein.
As set forth below, the investment objectives and principal investment
strategies of the two Portfolios are substantially the same, and the types of
investment advisory and administrative services provided to the MetLife
Portfolio are comparable to the types of investment advisory and administrative
services provided to the Index 500 Portfolio.
Comparison of Investment Objective and Principal Investment Policies
Investment Objectives
.. Index 500 Portfolio. The Index 500 Portfolio's investment objective is to
seek investment results that correspond to the total return of common
stocks publicly traded in the United States, as represented by the S&P 500
Index.
.. MetLife Portfolio. The MetLife Portfolio's investment objective is to seek
to equal the performance of the S&P 500 Index.
Investment Strategies
.. Index 500 Portfolio. The Index 500 Portfolio will normally invest at least
80% of its assets in common stocks included in the S&P 500 Index. The Index
500 Portfolio expects to use statistical sampling techniques to attempt to
replicate the returns of the S&P 500 Index. Statistical sampling techniques
attempt to match the investment characteristics of the S&P 500 Index and
the S&P 500 Portfolio by taking into account such factors as
capitalization, industry exposures, dividend yield, price/earnings ratio,
price/book ratio, and earnings growth. The Index 500 Portfolio also expects
to lend securities to earn income for the portfolio. The Index 500
Portfolio may lend its securities to broker-dealers or other
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institutions to earn income. The Index 500 Portfolio may also use various
techniques, such as buying and selling futures contracts, to increase or
decrease its exposure to changing security prices or other factors that
affect security values.
.. MetLife Portfolio. The MetLife Portfolio will normally invest most of its
assets in common stocks included in the S&P 500 Index. The MetLife
Portfolio also expects to invest, as a principal investment strategy, in
securities index futures contracts and/or related options to simulate full
investments in the S&P 500 Index while retaining liquidity to facilitate
trading, to reduce transaction costs, or to seek higher return when these
derivatives are priced more attractively than the underlying security.
Also, since the MetLife Portfolio attempts to keep transaction costs low,
the portfolio manager generally will rebalance the MetLife Portfolio only
if it deviates from the S&P 500 Index by a certain percent. The subadviser
monitors the tracking performance of the MetLife Portfolio through
examination of the "correlation coefficient." A perfect correlation would
produce a coefficient of 1.00. The MetLife Portfolio will attempt to
maintain a target correlation coefficient of at least .95.
The investment objectives of the two portfolios are virtually identical. Both
portfolios seek to mirror the performance of the S&P 500 Index. Further, both
portfolios' principal investment strategies are substantially the same in that
both portfolios are managed by investing portfolio assets in the common stocks
comprising the S&P 500 Index. Unlike the MetLife Portfolio, however, the Index
500 Portfolio may not always hold all of the same securities as the S&P 500
Index. Further, although the Index 500 Portfolio may use various techniques,
such as buying and selling futures contracts, to increase or decrease the its
exposure to changing security prices, the MetLife Portfolio invests, as a
principal investment strategy, in stock index futures contracts and/or related
options when such derivatives are priced more attractively than the underlying
security or to simulate full investment in the S&P 500 Index - a strategy of
potential benefit to Contract owners.
Comparison of Advisory Fees and Other Expenses
The following chart compares the total operating expenses (before and after any
waivers and reimbursements) for the year ended December 31, 2002, expressed as
an annual percentage of average daily net assets, of the Index 500 Portfolio and
the MetLife Portfolio. Neither the Initial Class shares of the Index 500
Portfolio nor Class A shares of the MetLife Portfolio has adopted any plan
pursuant to Rule 12b-1 under the 1940 Act.
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Index 500 Portfolio MetLife Portfolio (Class A)
(Initial Class)
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Management Fees 0.24% 0.25%
Other Expenses 0.09% 0.06%
----- -----
Total Operating Expenses 0.33% 0.31%
Less Expense Waivers and
Reimbursements 0.05%/1/ N/A
------
Net Operating Expenses 0.28% 0.31%
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Comparison of Advisory and Subadvisory Services
The following chart compares the fees paid for advisory and subadvisory services
for the fiscal year ending December 31, 2002, expressed as an annual percentage
of average daily net assets, by the Index 500 Portfolio and the MetLife
Portfolio.
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Index 500 Portfolio (Initial Class) MetLife Portfolio (Class A)
- -------------------------------------------------------------------------------------------------------------------
Annual Advisory Fees Annual Subadvisory Fees Annual Advisory Fees Annual Subadvisory Fees
(paid by the Adviser) (paid by the Adviser)
- -------------------------------------------------------------------------------------------------------------------
0.24% DAMI 0.006% 0.25% At Cost/2/
---------------------
FMRC 0.12%/3/
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- ----------
/1/ FMR has voluntarily agreed to reimburse the Initial Class of the Index 500
Portfolio if and to the extent that the Index 500 Portfolio's aggregate
operating expenses, including management fees, exceed an annual rate of 0.28% of
average net assets. This voluntary reimbursement arrangement may be revised or
terminated at any time. Further, FMR retains the ability to be repaid for these
expense reimbursements in the amount that expenses fall below the 0.28% limit
prior to the end of the fiscal year.
/2/ MetLife Advisers pays MetLife a subadvisory fee equal to the costs incurred
by MetLife in providing subadvisory services to the MetLife Portfolio. This fee
is anticipated to range from 0.03% to 0.05% annually.
/3/ Under the terms of the subadvisory agreement for the Index 500 Portfolio,
FMR pays FMRC fees equal to 50% of the advisory fee payable to FMR with respect
to that portion of the Index 500 Portfolio's assets that is managed by FMRC.
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Comparison of Asset Levels and Performance
The following table compares the respective asset levels, expense ratios, and
performance data of the two portfolios, as well as the performance data for the
S&P 500 Index.
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Portfolios Asset Levels Expense Ratios Performance
(as of 12/31/02) (for the year ended (as of 12/31/02)
(millions) 12/31/02)
- -------------------------------------------------------------------------------------------------------
Index 500 Portfolio . 1 YEAR: -22.25%
$2,497 0.28% . 5 YEAR: -0.84%
. 10 YEAR: 9.04%
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MetLife Portfolio . 1 YEAR: -22.10%
$2,840 0.31% . 5 YEAR: -0.66%
. 10 YEAR: 9.15%
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S&P 500 Index . 1 YEAR: -22.09%
N/A N/A . 5 YEAR: -0.58%
. 10 YEAR: 9.34%
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Comparison of Investment Risks
Each portfolio attempts to match the return of the S&P 500 Index. Because the
portfolios have virtually identical investment objectives, and investment
strategies that are substantially the same, each portfolio generally invests in
the same types of securities (i.e., equity securities of relatively large
companies), and thus, is subject to substantially the same types of risks. These
include:
Investing in larger companies. Larger more established companies may be
unable to respond quickly to new competitive challenges such as changes in
technology and consumer tastes. Many larger companies also may not be able
to attain the high growth rates of successful smaller companies, especially
during extended periods of economic expansion.
Index Investing. Unlike actively managed portfolios, portfolios that
attempt to match the return of an index generally will not use any
defensive strategies. The investor bears the risk of adverse market
conditions with respect to the market segment that the index seeks to
match. In addition, transaction costs, other portfolio or fund expenses,
brief delays that occur until a portfolio can invest cash it receives and
other tracking errors may result in the portfolio's return being lower than
the return of the applicable index.
Stock Market Volatility. Stock markets are volatile and can decline
significantly in response to adverse issuer, political, regulatory, market,
or economic developments. Different parts of the market can react
differently to these developments.
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Effects on Owners
Additional facts concerning Owners' rights in connection with the proposed
substitution are as follows:
.. Owners will not:
. experience any change in the amount of Contract value, death benefit,
or dollar value of their investments in any of the subaccounts of
Separate Account 13 as a result of the proposed substitution;
. incur any fees or charges as a result of the proposed substitution,
including charges that would otherwise be applied to transfers;
. experience an increase in the combined Subaccount and Portfolio
expenses for 24 months following the proposed substitution;
. have their rights, or Security Equity Life's obligations, under the
Contracts altered in any way as a result of the proposed substitution;
. incur any expenses as a result of the proposed substitution; and
. incur any federal income tax liability as a result of the proposed
substitution.
.. Owners will:
. before the proposed substitution occurs, be permitted to make a
transfer of Contract value from the Subaccount to any other subaccount
without charge and without that transfer counting towards the number
permitted or the number permitted without charge under the Contracts;
. during the 30 days after the proposed substitution, be permitted to
make a transfer of Contract value from the Subaccount to any other
subaccount without charge and without that transfer counting towards
the number permitted or the number permitted without charge under the
Contracts; and
. before the proposed substitution occurs, receive a copy of the most
recent MetLife Portfolio prospectus.
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.. Security Equity Life will:
. pay all expenses incurred in connection with the proposed
substitution, including legal, accounting, transactional, proxy,
brokerage commissions, and other fees and expenses.
. permanently reduce Subaccount expenses by 0.04% for Contracts
outstanding on the day of the proposed substitution.
.. Security Equity Life will not:
. exercise any right it may have under the Contracts to impose
restrictions or additional restrictions on, or charges for, Contract
value transfers made under the Contracts for a period of at least 30
days following the proposed substitution.
SECURITY EQUITY LIFE INSURANCE COMPANY RECOMMENDS THAT YOU
VOTE TO "APPROVE" THE PROPOSED SUBSTITUTION.
GENERAL INFORMATION
Cost of Solicitation
Security Equity Life will pay for the cost of the solicitation, including the
preparation and mailing of the Voting Information Statement and Voting Form, the
solicitation of votes, legal, and other expenses.
Service Providers
Walnut Street Securities, Inc. ("Walnut Street") serves as the principal
underwriter for Separate Account 13. Walnut Street is a wholly-owned subsidiary
of GenAmerica Financial Corporation. Separate Account 13 has no administrator.
Owner Proposals
Owners have no rights under the Contracts to put voting proposals before the
Owners.
Prospectuses and Annual Reports
Upon request, Security Equity Life will furnish, without charge, a copy of the
2002 annual shareholders report for the MetLife Portfolio and additional copies
of the current prospectuses and annual shareholder reports for the MetLife
Portfolio and for the Index 500 Portfolio and the 2002 annual shareholder report
for the Index 500 Portfolio. To request one of these, please call Security
Equity Life at 1-866-889-6390, or write to Security Equity Life at One Madison
Avenue, New York, New York 10010.
Dissenter's Rights of Appraisal
Taken together, New York Insurance law and the terms of the Contracts do not
appear to provide appraisal rights to investors, such as Owners, beyond their
right to receipt of the cash surrender value of their Contracts. Security Equity
Life believes that, for transactions such as the proposed
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substitution, this requires, in effect, that accumulation units have a value
equal to their net asset value determined as of 4:00 p.m. on the date of the
proposed substitution.
Interpretations of the 1940 Act by the Commission staff limit appraisal rights
of investors in a registered unit investment trust, such as Owners, to those
provided by Rule 22c-1 under the 1940 Act. Rule 22c-1, in effect, requires for
transactions such as the proposed substitution, that accumulation units have a
value equal to their net asset value per share determined as of 4:00 p.m. on the
date of the proposed substitution.
Inquiries
Owners may make inquiries by contacting their registered representative or by
writing Security Equity Life at One Madison Avenue, New York, New York 10010, or
by calling 1-866-889-6390.
SECURITY EQUITY LIFE REQUESTS THAT YOU PROMPTLY EXECUTE AND RETURN THE ENCLOSED
VOTING FORM. A PRE-ADDRESSED, POSTAGE-PAID ENVELOPE IS ENCLOSED FOR YOUR
CONVENIENCE.
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VOTING FORM
Security Equity Life Insurance Company
One Madison Avenue
New York, New York 10010
Name of Contract Owner Voting Authentication Number:
Address
City, ST 00000
Your variable life insurance contract entitles you to vote as to the number of
accumulation units you owned in the subaccount of Security Equity Life Insurance
Company Separate Account 13 investing in Initial Class shares of the Index 500
Portfolio of Fidelity Variable Insurance Products Fund II as of January 31,
2003. To be counted, Voting Forms must be received by Security Equity Life
Insurance Company ("Security Equity Life") no later than Thursday, April 24,
2003 at 4:00 p.m. Eastern Standard Time.
SECURITY EQUITY LIFE RECOMMENDS THAT YOU VOTE TO "APPROVE" THE PROPOSAL.
I hereby instruct Security Equity Life to count the accumulation units as to
which I am entitled to vote as follows:
Approve Disapprove Abstain
------- ------- -------
the following proposal:
the substitution of Class A shares of the MetLife Stock Index Portfolio of
the Metropolitan Series Fund, Inc. for Initial Class shares of the Index
500 Portfolio of Fidelity Variable Insurance Products Fund II.
I hereby revoke any and all votes with respect to the foregoing proposal
previously given by me. I acknowledge receipt of the Voting Information
Statement dated March 31, 2003, which describes the above proposal.
-------------------------- -----------
Authorized signature Date
--------------------------------------
Contract Owner Name
PLEASE COMPLETE, SIGN AND DATE THIS FORM AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE. Please use blue or black ink or dark pencil. Signed Voting Forms that
do note indicate a vote, will be treated as a vote to approve the proposal.