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SGI | SECURITY GLOBAL
INVESTORS(SM)
March 22, 2010
VIA EDGAR
Division of Investment Management
Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549
Attn: Mr. Richard Pfordte
Ms. Kim Browning
Mr. Sonny Oh
Mr. Jeff Foor
Mr. Dominic Minore
Re: Security Equity Fund (File No. 811-01136)
Security Large Cap Value Fund (File No. 811-00487)
Security Mid Cap Growth Fund (File No. 811-01316)
Security Income Fund (File No. 811-02120)
SBL Fund (File No. 811-02753)
Rydex Series Funds (File No. 811-07584)
Rydex Dynamic Funds (File No. 811-09525)
Rydex Variable Trust (File No. 811-08821)
Rydex ETF Trust (File No. 811-21261) (each, a "Registrant" and
collectively, the "Registrants")
Ladies and Gentlemen:
On behalf of the Registrants, we are transmitting for filing pursuant to Rule
14a-6 under the Securities Exchange Act of 1934 ("1934 Act") definitive proxy
statements, forms of proxies and other soliciting materials ("Proxy Materials")
relating to a Special Joint Meeting of Shareholders of each series of the
Registrants (together, the "Funds"). No fees are required with this filing.
The Registrants wish to respond by this letter to comments of the U.S.
Securities and Exchange Commission ("SEC") staff on the preliminary Proxy
Materials filed pursuant to Rule 14a-6 under the 1934 Act on February 23, 2010
(in the case of Rydex ETF Trust) and February 24, 2010 (in the case of Security
Equity Fund, Security Large Cap Value Fund, Security Mid Cap Growth Fund,
Security Income Fund, SBL Fund, Rydex Series Funds, Rydex Dynamic Funds and
Rydex Variable Trust). Comments regarding the SBL Fund Proxy Materials were
conveyed orally by Mr. Oh of the Division of Investment Management (the
"Division") via a telephone conference with Julien Bourgeois and Brenden Carroll
at Dechert LLP on March 5, 2010. Comments regarding the Proxy Materials filed on
behalf of Rydex Series Funds, Rydex Dynamic Funds and Rydex ETF Trust were
conveyed orally by Mr. Pfordte and Ms. Browning of the Division on March 9,
2010. In light of the substantial overlap between the foregoing materials and
those filed on behalf of Rydex Variable Trust, Security Equity Fund, Security
Income Fund, Security Large Cap Value Fund and Security Mid Cap Growth Fund, Mr.
Foor (for Rydex Variable Trust) and
Security Global Investors(SM) is the investment advisory arm of Security Benefit
Corporation (Security Benefit). Security Global Investors consists of Security
Global Investors, LLC, Security Investors, LLC and Rydex Investments. Rydex
Investments is the primary businees name for PADCO Advisors, Inc. and PADCO
Advisors II, Inc. Security Global Investors and Rydex Investments are
affiliates and are both subsidiaries of Security Benefit.
9601 BLACKWELL ROAD, SUITE 500 | ROCKVILLE, MARYLAND 20850 |
WWW.SG-INVESTORS.COM | P800.258.4332
Mr. Minore (for the other Registrants) informed Mr. Bourgeois that they would
defer to the comments of their colleagues. Throughout this letter, capitalized
terms have the same meaning as in the Proxy Materials, unless otherwise noted. A
summary of the SEC staff's comments, followed by the responses of the
Registrants, is set forth below:
ALL REGISTRANTS
1. Comment: Please reference each Registrant separately in the facing
sheets to the definitive Proxy Materials.
Response: The Registrants have implemented the requested change.
2. Comment: Please provide additional disclosure regarding a shareholder's
right to revoke his or her proxy. Please provide such disclosure in (i)
the Dear Shareholder Letter and (ii) the Questions and Answers Section.
Please also clarify whether shareholders of the Funds may revoke proxies
by the same means through which they conveyed such proxies (e.g., if a
shareholder conveyed his or her proxy telephonically, may such proxy be
revoked telephonically?).
Response: The Registrants have implemented the requested change.
3. Comment: The Proxy Materials state in various places that the
Transaction should not result in material changes to the day-to-day
management and operations of the Funds or any increase in fees. If
applicable, please revise the Proxy Materials to provide that the
Transaction will not result in material changes to the day-to-day
management and operations of the Funds or any increase in fees.
Response: As discussed with the staff, the Registrants believe the
current disclosure adequately describes the Transaction, including its
presently anticipated impact on the Funds, and therefore no changes have
been made.
4. Comment: Please confirm that the fees charged by each Fund's investment
adviser and, if applicable, sub-adviser will not increase as a result of
the Transaction. Please also confirm that the terms of the new
investment advisory agreements and, if applicable, new sub-advisory
agreements will be the same in all material respects as the current
agreements.
Response: The Registrants confirm the foregoing.
5. Comment: The Proxy Materials indicate that the Boards of Directors/
Trustees (the "Boards") have been assured that there will be no material
change in the nature or quality of the services provided by the
Affiliated Service Providers as a result of the Transaction. If the
Boards have made related findings, please confirm that they have been
disclosed.
Response: The current disclosure accurately describes each Board's
considerations and findings, including the quality of services expected
to be provided by the Affiliated Service Providers.
6. Comment: In the Rydex ETF Trust Proxy Materials filed on EDGAR, certain
sentences appear to omit words (see, for example, the third paragraph on
page 4 of the Proxy Materials). Please correct the disclosure.
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Response: As discussed, this is a result of the conversion of Word
documents into EDGAR. Care will be taken in the definitive Proxy
Materials to verify that these errors do not reoccur.
7. Comment: In the body of the Proxy Materials, please consider whether the
description of the corporate transactions should be simplified.
Response: The Registrants have considered the disclosures and believe
they adequately describe the terms of the transactions. They
respectfully note that a simplified description of the transactions is
available at the beginning of the Proxy Materials, for the convenience
of shareholders who prefer reading a synopsis of the transactions.
8. Comment: The Proxy Materials state that "[i]n anticipation of the
Transaction, the parties have entered into an interim recapitalization
transaction in which the Purchaser has made a secured loan to SBC." In
your written response to the staff, please indicate whether shares or
other assets have been pledged or otherwise transferred pursuant to this
transaction, and whether this transaction could result in an
"assignment" of the Funds' investment advisory agreements that would
terminate these agreements.
Response: The Purchaser's loan to SBC has been made in exchange for a
note secured by a lien on the capital stock of Rydex Holdings, LLC, a
parent of the Investment Adviser, and certain other affiliates (the
"secured loan transaction"). However, it is important to note that the
voting and other rights with respect to the capital stock subject to the
lien have not been transferred, and the lien has not given the lien
holder any authority to take part in, or influence, the management of
Rydex Holdings, LLC, the Investment Adviser, or the Funds. Thus, the
granting of the lien does not convey to the lien holder control or
management over the Investment Adviser.
Although Section 2(a)(4) of the Investment Company Act of 1940 ("1940
Act") defines an "assignment" to include a "hypothecation" of a
controlling block of the assignor's outstanding voting securities, it
does not follow that the mere act of granting a lien necessarily results
in an assignment, particularly where, as here, the granting of the lien
does not result in a change of control or management of the investment
adviser within the meaning of Rule 2a-6 under the 1940 Act. The
Registrants respectfully submit that this analysis is consistent with
the analysis set forth by the SEC staff in Pilgrim America Group, Inc.
(pub. Avail. Oct. 8, 1996).
9. Comment: In connection with the Contingent Asset Management Purchase and
Sale, please disclose in the Proxy Materials the entity transferring the
senior unsecured note to SBC.
Response: The Registrants have implemented the requested change.
10. Comment: The Proxy Materials state that "the Transaction is expected to
result in a `change in control'" of each Fund's investment adviser.
Please revise the Proxy Materials to provide that the Transaction will
result in a change in control.
Response: The Registrants have implemented the requested change.
11. Comment: The Proxy Materials provide that the Transaction is contingent
upon the "receipt of approvals required for the assignment or
replacement of investment advisory
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contracts relating to 80% or more of the total net assets under
management" by the Funds' investment advisers. Please consider whether
such disclosure is consistent with the SEC's plain-English requirement.
Response: The Registrants believe the current disclosure adequately
describes the terms of the Transaction, and therefore no changes have
been made.
12. Comment: The Proxy Materials provide that if shareholders do not approve
the proposal to approve each Fund's new investment advisory agreement,
the Boards will evaluate other options, including, for example, interim
investment advisory agreements. Please disclose whether such agreements
could be with a Fund's current investment adviser.
Response: The Registrants have implemented the requested change.
13. Comment: The Proxy Materials state that "SecBen and the Purchaser have
agreed that they will not take any action that would have the effect,
directly or indirectly, of causing any requirement of the provisions of
Section 15(f) to be violated with respect to the Transaction." The
Funds' investment advisers further represented to the Boards that no
unfair burden would be imposed on the respective Funds as a result of
the Transaction. If the Boards made any findings in connection with such
representations, please confirm that they have been disclosed. Please
disclose that Section 15(f) may limit the ability of the Funds to engage
in brokerage transactions with certain persons and disclose if the
Funds' brokerage practices are expected to change.
Response: The current disclosure accurately describes each Board's
considerations and findings. In response to the staff comments about
limits to the ability to engage in certain brokerage transactions,
disclosure has been added.
14. Comment: The Proxy Materials provide that the new investment advisory
and sub-advisory agreements are substantially identical to those of the
current investment advisory and sub-advisory agreements, except with
respect to the dates of execution. Please remove the word
"substantially."
Response: The Registrants have implemented the requested change.
15. Appendices
a. Comment: If not already disclosed, in the Appendices please
provide the name of each Registrant of which a Fund is a series.
Response: The Registrants have implemented the requested change.
b. Comment: If not already disclosed, in the Appendices disclosing
other mutual funds with similar investment objectives of a Fund for
which the Fund's adviser or sub-adviser provides advisory services,
please clarify whether the Fund's adviser or sub-adviser is acting
as adviser or sub-adviser to such other funds.
Response: The Registrants have implemented the requested change.
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c. Comment: If not already disclosed, in the Appendices disclosing
other mutual funds with similar investment objectives of a Fund for
which the Fund's adviser or sub-adviser provides advisory services,
please provide the amount of any advisory fee waiver or reduction
for the Fund. Please also clarify the identities of the other
mutual funds for which a Fund's adviser or sub-adviser provides
advisory services.
Response: The Registrants have implemented the requested change.
16. Comment: Please include standard Tandy representation language in your
transmittal letter for your upcoming filing.
Response: Each Registrant agrees to make the following representations:
o the Registrant is responsible for the adequacy and accuracy of the
disclosure in the filing;
o the staff comments or changes to disclosure in response to staff
comments in the filing reviewed by the staff do not foreclose the
SEC from taking any action with respect to the filing; and
o the Registrant may not assert staff comments as a defense in any
proceeding initiated by the SEC under the federal securities laws.
RYDEX SERIES FUNDS, RYDEX DYNAMIC FUNDS, RYDEX VARIABLE TRUST AND RYDEX ETF
TRUST
1. Comment: With respect to the proposal to change the fundamental
investment policy on borrowing money, please disclose that, if the
proposal is approved, the change will increase the Funds' ability to
borrow for investment purposes (i.e., leverage). Please also provide
additional disclosure regarding the effects of and the risks associated
with leveraging, as well as a statement regarding the Funds' current
intention to use leverage and the amount of any such leverage. In
addition, please disclose that, if the proposal is approved, the use of
leverage by the Funds may change without further shareholder approval.
Response: The Registrants have implemented the requested change.
SBL FUND AND RYDEX VARIABLE TRUST
1. Comment: Please provide additional disclosure that shares of the Funds
are purchased by insurance companies and their separate accounts as the
underlying investment medium for owners of variable annuity contracts
and variable life insurance policies and the reason for soliciting the
owners of such contracts and policies. Please provide such disclosure in
(i) the Dear Shareholder Letter, (ii) the Questions and Answers Section,
and (iii) the Notice of Special Joint Meeting of Shareholders.
Response: The Registrants have implemented the requested change.
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Please call Julien Bourgeois at Dechert LLP at 202.261.3451 with any questions
or comments regarding this letter, or if he may assist you in any way.
Very truly yours,
/s/ Amy J. Lee
----------------------------------------------
Amy J. Lee
Vice President and Secretary, Security Equity
Fund, Security Income Fund, Security Large
Cap Value Fund, SBL Fund and Security Mid
Cap Growth Fund
Vice President and Assistant Secretary, Rydex
Series Funds, Rydex Variable Trust, Rydex
Dynamic Funds and Rydex ETF Trust
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