<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No.___________)
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|X| Preliminary Proxy Statement
|_| Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
|_| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
SBL FUND
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
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NOTICE TO CONTRACTHOLDERS OF SBL VARIABLE ANNUITY ACCOUNTS III, IV, VIII,
AND VARIFLEX AND SBL VARIABLE LIFE INSURANCE ACCOUNT VARILIFE AND
VARILIFE SEPARATE ACCOUNT OF THE SPECIAL MEETING OF STOCKHOLDERS
OF SBL FUND, SERIES D TO BE HELD OCTOBER 28, 1998
700 SW HARRISON ST., TOPEKA, KANSAS 66636-0001
TELEPHONE 1-800-888-2461
TO THE STOCKHOLDERS OF
- SBL FUND
o SERIES D (WORLDWIDE EQUITY SERIES)
Notice is hereby given that a special meeting of the stockholders of Series D
(Worldwide Equity Series) (the "Series") of SBL Fund (the "Fund"), a Kansas
corporation, will be held at the offices of the Fund, Security Benefit Group
Building, 700 SW Harrison Street, Topeka, Kansas 66636-0001, on October 28, 1998
at 9:30 a.m. local time ("Meeting"), for the following purposes:
1. To approve a Sub-Advisory Contract, as exhibited in the attached proxy
statement, between the Fund's investment manager, Security Management
Company, LLC, and OppenheimerFunds, Inc.
2. a. To amend the fundamental investment limitation concerning
underwriting.
b. To amend the fundamental investment limitation concerning borrowing.
c. To amend the fundamental investment limitation concerning lending.
d. To eliminate the fundamental investment limitation concerning margin
purchases of securities and short sales.
e. To eliminate the fundamental investment limitation concerning
investment in other investment companies.
f. To amend the fundamental investment limitation regarding owning,
buying, selling or otherwise dealing in commodities or commodities
contracts.
3. To transact such other business as may properly come before the Meeting
or any adjournments thereof, and to adjourn the Meeting from time to
time.
The Board of Directors of the Fund has fixed the close of business on August
31, 1998, as the record date for the determination of stockholders of the Series
entitled to notice of and to vote at the Meeting.
THERE IS ENCLOSED A PROXY FORM SOLICITED BY THE BOARD OF DIRECTORS OF SBL
FUND. ANY FORM OF PROXY WHICH IS EXECUTED AND RETURNED, NEVERTHELESS MAY BE
REVOKED PRIOR TO ITS USE. ALL SUCH PROXIES PROPERLY EXECUTED AND RECEIVED IN
TIME WILL BE VOTED AT THE MEETING.
By order of the Board of Directors of
SBL Fund,
Topeka, Kansas AMY J. LEE
September , 1998 Secretary
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IMPORTANT: STOCKHOLDERS WHO DO NOT EXPECT TO BE PRESENT IN PERSON AT THE MEETING
ARE REQUESTED TO MARK, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD(S) TO THE
FUND AS EARLY AS POSSIBLE.
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SBL FUND
o SERIES D (WORLDWIDE EQUITY SERIES)
MEMBER OF THE SECURITY BENEFIT GROUP OF COMPANIES
700 SW HARRISON STREET, TOPEKA, KANSAS 66636-0001
SPECIAL MEETING OF STOCKHOLDERS, OCTOBER 28, 1998
PROXY STATEMENT
BENEFICIAL OWNERSHIP OF FUND SHARES
Investments made through SBL Variable Annuity Accounts III, IV, VIII, and
Variflex and through SBL Variable Life Insurance Account Varilife and Security
Varilife Separate Account do not constitute direct ownership of Fund shares.
Rather, a variable annuity contract or a variable life policy represents an
interest in one of six Security Benefit Life Insurance Company ("SBL") separate
accounts. SBL has record ownership of all Fund shares. Such contractowners and
policyowners (herein referred to as "Beneficial Owners") have a beneficial
interest in the underlying Fund shares, and retain certain voting rights with
respect to the beneficially owned shares. SBL, or its appointee, will vote the
shares beneficially owned by each Beneficial Owner in accordance with each
Beneficial Owner's instructions. The enclosed voting instruction form is
provided for this purpose. All shares for which the Beneficial Owners do not
provide voting instructions, and any shares which SBL holds for its own account,
will be voted in the same proportion as those shares for which voting
instructions have been received.
SOLICITATION AND REVOCATION OF PROXIES
The enclosed proxy is solicited by and on behalf of the Board of Directors of
SBL Fund (the "Fund") and is revocable by timely submission to the Secretary of
the Fund of another proxy or of notice of revocation in proper written form, or
by voting the shares in person at the Meeting. A second proxy form may be
obtained from the Secretary of SBL Fund. The cost of soliciting proxies will be
borne by Security Management Company, LLC, 700 SW Harrison Street, Topeka,
Kansas 66636-0001 ("SMC" or the "Investment Manager"), which will be reimbursed
by the Fund. SMC is the investment adviser and administrator of the Fund. In
addition to solicitations by mail, some of the Investment Manager's officers and
employees, without extra remuneration, may conduct additional solicitation by
telephone, telegraph and personal interviews. Proxies are expected to be mailed
on or about September 25, 1998.
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THE FUND WILL FURNISH, WITHOUT CHARGE, A COPY OF THE ANNUAL REPORT CONTAINING
AUDITED FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997, TO A
SHAREHOLDER UPON REQUEST. SUCH REQUESTS SHOULD BE DIRECTED TO THE FUND, BY
WRITING THE FUND AT 700 SW HARRISON ST., TOPEKA, KANSAS 66636-0001, OR BY
CALLING THE FUND'S TOLL-FREE TELEPHONE NUMBER 1-800-888-2461, EXTENSION 3127.
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VOTING SECURITIES
Only stockholders of record of Series D (the "Series") of the Fund at the
close of business on August 31, 1998 are entitled to vote at the special
Meeting. On that date, the outstanding number of voting securities of the Series
was as follows: _______________ shares of common stock of the Fund of the par
value of $1.00 per share. Each share is entitled to one vote.
Approval of the Sub-Advisory Contract, Proposal No. 1 and approval of the
amendments to the fundamental investment limitations, Proposal No. 2, require
the affirmative majority vote of the outstanding shares of the common stock of
the Series.
A "majority vote" is defined as the vote of either 67 percent or more of
voting securities of the Series present at the meeting in person or by proxy, or
more than 50 percent of such outstanding voting securities, whichever is less.
The presence, in person or by proxy, of more than 50 percent of the
outstanding shares of the Series will be sufficient to establish a quorum for
the conduct of business at the Meeting. Shares held by stockholders present in
person or represented by proxy at the Meeting will be counted both for the
purpose of determining the presence of a quorum and for calculating the votes
cast on the proposal before the Meeting. Shares represented by timely and
properly executed proxies will be voted as specified. Executed proxies that are
unmarked will be voted in favor of the proposals presented at the Meeting. An
abstention on any proposal, either by proxy or by vote in person at the Meeting,
will be counted for purposes of establishing a quorum, but has the same effect
as a negative vote.
In the event that a sufficient number of votes to approve a proposal is not
received, the persons named as proxies may propose one or more adjournments of
the Meeting to permit further solicitation of voting instructions, or for any
other purpose. A vote may be taken on any proposal prior to an adjournment if
sufficient votes have been received for approval. Any adjournment will require
the affirmative vote of a majority of those shares represented at the Meeting in
person or by proxy. Unless otherwise instructed, proxies will be voted in favor
of any adjournment. At any subsequent reconvening of the Meeting, proxies
(unless previously revoked) will be voted in the same manner as they would have
been voted at the Meeting.
VOTING OF PROXIES
SBL or its appointee will vote in accordance with all instructions received
prior to the Meeting. It is the present intention that unless otherwise
directed, SBL, or its appointee, will vote for Proposal No. 1, approval of a new
sub-advisory agreement between SMC and OppenheimerFunds, Inc., for Proposal No.
2, approval of amendments to the fundamental investment limitations and, in the
discretion of the persons designated as proxies, upon such other matters not now
known or determined which may properly come before the Meeting.
PROPOSAL NO. 1
APPROVAL OF A SUB-ADVISORY CONTRACT
BETWEEN SMC AND OPPENHEIMERFUNDS, INC.
The Series' stockholders are asked to approve a sub-advisory contract between
SMC and OppenheimerFunds, Inc. ("Oppenheimer" or the "Sub-Adviser"). If this
Proposal No. 1 is approved by the stockholders, Oppenheimer will provide
sub-advisory services to the Series pursuant to a sub-advisory contract between
SMC and Oppenheimer (the "Sub-Advisory Contract"). The Fund's Board of
Directors, including a majority of the disinterested Directors, approved the
Sub-Advisory Contract at a meeting held on July 24, 1998.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SERIES' STOCKHOLDERS VOTE FOR
APPROVAL OF THE SUB-ADVISORY CONTRACT.
EXISTING INVESTMENT ADVISORY CONTRACT
The Investment Manager has served as investment adviser of the Series since
its inception in accordance with the terms of an Investment Advisory Contract
dated June 20, 1977, as amended (the "Advisory Contract"). The Advisory Contract
was last submitted to a vote of the shareholders of the Fund at the annual
meeting of the shareholders held on April 26, 1991 and has not been submitted to
shareholders for approval since that date. The Advisory Contract was renewed by
directors of the Fund (including a majority of directors who are not parties to
the contract or interested persons of any such party) on February 6, 1998. The
Advisory Contract will continue in effect until May 1, 1999, and from year to
year thereafter providing such continuance is specifically approved by the vote
of a majority of the Board of Directors of the Fund (including a majority of
such directors who are not parties to the contract or interested persons of any
such party) cast in person at a meeting specifically called for voting on such
renewal.
Under the Advisory Contract, the Investment Manager furnishes the Series with
investment research and advice and an investment program. In addition, the
Investment Manager provides for the compilation and maintenance of records
relating to its duties as required by the rules and regulations of the
Securities and Exchange Commission ("SEC"). No brokerage commissions were paid
by the Fund to an affiliated broker for the year ended December 31, 1997.
For its services, the Investment Manager receives from the Fund, on an annual
basis, an amount equal to 1.0 percent of the average net assets of Series D,
computed daily and payable monthly. The Investment Manager received from the
Fund advisory fees of $2,834,657 during the fiscal year ended December 31, 1997.
The Advisory Contract provides that the aggregate annual expenses of every
character, exclusive of brokerage commissions, interest, taxes, and
extraordinary expenses (such as litigation), but inclusive of the Investment
Manager's compensation, shall not exceed the most restrictive expense limitation
imposed by any state in which shares of the Fund are then qualified for sale.
(The Investment Manager is not aware of any state that currently imposes limits
on the level of mutual fund expenses.) The Investment Manager agrees to
contribute such funds to the Fund or to waive such portion of its compensation
as may be necessary to insure that total annual expenses will not exceed this
amount.
The Advisory Contract may be terminated without penalty at any time upon
sixty days' notice by the Board of Directors of the Fund, by vote of the holders
of a majority of the outstanding voting securities of the Fund, or by the
Investment Manager. The Contract is terminated automatically in the event of its
assignment (as such term is defined in the Investment Company Act of 1940).
The Investment Manager also serves as the Fund's administrative and transfer
agent. For those services, the Investment Manager received from the Fund
$418,521 and $3,887, respectively, during the year ended December 31, 1997.
EXISTING SUB-ADVISORY CONTRACT
The Investment Manager has entered into a Sub-Advisory Contract (the
"Existing Sub-Advisory Contract") with Lexington Global Asset Managers, Inc.
("Lexington") dated April 26, 1991. The Existing Sub-Advisory Contract was
initially approved by shareholders on April 26, 1991, and has not been submitted
to shareholders since that date.
Pursuant to the Existing Sub-Advisory Contract, Lexington provides, subject
to the Investment Manager's supervision, investment research and advice and an
investment program, including decisions regarding which securities to purchase
and sell and what portion of assets to hold uninvested. In addition, Lexington
arranges for the purchase and sale of securities and other investments held by
the Fund. For these sub-advisory services, Lexington receives from the
Investment Manager an amount equal to 0.50 percent on an annual basis of the
average net assets of the Series, calculated daily and payable monthly. During
the fiscal year ended December 31, 1997, the Investment Manger paid Lexington
$1,417,329 for sub-advisory services.
The Board of Directors of the Fund approved continuance of the Existing
Sub-Advisory Contract at the meeting of the Board held on February 6, 1998. The
directors at that meeting noted they would continue to monitor the Series'
performance under Lexington's investment management. At the Board of Directors
meeting held on July 24, 1998, the Board of Directors considered the
recommendation of the management of SMC that the Board of Directors terminate
the Existing Sub-Advisory Contract and consider approval of a proposed
sub-advisory agreement with Oppenheimer, as discussed below. The Board of
Directors voted unanimously to terminate the Existing Sub-Advisory Agreement
with Lexington, effective at the close of business on October 30, 1998.
PROPOSED SUB-ADVISORY CONTRACT
SMC proposes to enter into a sub-advisory contract (the "Sub-Advisory
Contract") with Oppenheimer, a form of which is attached hereto as Exhibit "A."
The Sub-Advisory Contract was proposed by SMC and was unanimously approved by
the Board of Directors of the Fund (including a majority of such directors who
are not parties to such contract or interested persons of any such party) on
July 24, 1998. SMC proposed the Sub-Advisory Contract because it believes that
the Sub-Adviser has expertise with respect to global securities that would be
valuable in managing the Series' investments.
Under the Sub-Advisory Contract, the Sub-Adviser would furnish the Series
those services currently provided by Lexington, including investment research
and advice in connection with the Series' investment in securities and effecting
purchases and sales of portfolio securities, subject to the policies and control
of the Board of Directors and the supervision of SMC. For its services, the
Sub-Adviser will receive from SMC an annual fee equal to a percentage of the
average daily closing value of the combined net assets of the Series and another
series managed by SMC, computed on a daily basis as follows: 0.35 percent of the
combined average daily net assets up to $300 million, plus 0.30 percent of such
assets over $300 million up to $750 million and 0.25% of such assets over $750
million. Such fee shall be payable monthly. Under the terms of the Sub-Advisory
Contract, the Sub-Adviser is not subject to any liability to the Fund or the
Investment Manager connected with any services rendered under the Sub-Advisory
Contract except by reason of willful misfeasance, bad faith, or gross negligence
in the performance of its duties or by reason of a breach of its duties under
the Sub-Advisory Contract.
The Sub-Adviser has agreed to pay its expenses in connection with providing
the sub-advisory services, including any expenses associated with preparing
annual reports for the Fund's Board of Directors and expenses of travel by
employees of the Sub-Adviser in connection with such reports as well as any
expenses that it may incur in communicating with SMC.
Approval of the Sub-Advisory Contract will not increase or decrease any fee
or expense paid by the Fund or its stockholders because all fees under the
Sub-Advisory Contract are paid by SMC. The fees earned by SMC for providing
advisory services to the Fund will be increased, however, because the fees of
the Sub-Adviser pursuant to the Sub-Advisory Contract are less than those paid
to Lexington pursuant to the Existing Sub-Advisory Contract.
During the fiscal year ended December 31, 1997, the Fund paid SMC a total of
$2,834,657 for services provided under the Advisory Contract. If the
Sub-Advisory Contract had been in effect during the 1997 fiscal year, SMC would
have paid the Sub-Adviser $985,126 for services provided under that contract
compared to $1,417,329 paid to Lexington during 1997.
It is expected that the Sub-Advisory Contract will become effective on
November 2, 1998, provided that on the Meeting date it is approved by a majority
vote of the holders of the outstanding voting securities of the Series. The
contract will continue in force until November 1, 1999, and from year to year
thereafter, provided such continuance is specifically approved by a majority of
the Board of Directors of the Fund (including a majority of such directors who
are not parties to the Sub-Advisory Contract or interested persons of any such
party). The Sub-Advisory Contract may be terminated without penalty upon sixty
days' written notice by either party or by vote of the Board of Directors or by
vote of a majority of the holders of the outstanding voting securities of the
Series. The Sub-Advisory Contract will automatically terminate in the event of
the termination of the Advisory Contract between SMC and the Fund or in the
event of its assignment.
In recommending the approval of the Sub-Advisory Contract to the stockholders
of the Series, the Board of Directors considered such factors as it deemed
reasonably necessary and appropriate, including (1) the nature and quality of
the services to be provided to the Series; (2) the fairness of the compensation
of the Sub-Adviser; (3) the financial soundness of the Sub-Adviser to render all
necessary services to the Series; (4) comparative industry advisory fee
structures and expense ratios for the Series including, specifically, the
relationship of the proposed advisory fee rates to those typically charged
similar mutual funds; (5) the performance of a similar portfolio managed by the
Sub-Adviser; and (6) the total fees paid by the Series, including 12b-1 plan
fees. The Board gave equal weight to each of the above factors when considering
approval of the contract. Based on the considerations above, the Board
determined that: (1) Oppenheimer has the expertise to provide high-quality
services to the Series; (2) the advisory fee rates paid by the Series and paid
by SMC under the Sub-Advisory Contract are fair, and similar to those typically
charged similar mutual funds; (3) the financial soundness of Oppenheimer is
sufficient for Oppenheimer to render all necessary services to be provided under
the Sub-Advisory Contract; and (4) approval of the Sub-Advisory Contract will
not change the total fees paid by the Series because SMC pays all fees under the
Sub-Advisory Contract.
The Board of Directors of the Fund unanimously recommends approval of the
Sub-Advisory Contract by a vote in favor of Proposal No. 1. In the event that
the proposed contract is not approved, the Board of Directors will meet to
consider whether to present another sub-advisory contract for approval.
THE PROSPECTIVE SUB-ADVISER
Oppenheimer (including subsidiaries) currently manages investment companies,
including other Oppenheimer funds, with assets of more than $90 billion as of
June 30, 1998, and with more than 4 million shareholder accounts. Oppenheimer is
a wholly-owned subsidiary of Oppenheimer Acquisition Corp. ("OAC"), a holding
company owned in part by senior officers of Oppenheimer and controlled by
Massachusetts Mutual Life Insurance Company ("MassMutual"). Oppenheimer and OAC
are located at Two World Trade Center, New York, New York 10048. MassMutual is
located at 1295 State Street, Springfield, Massachusetts 01111. OAC acquired
Oppenheimer on October 22, 1990. No institution or person holds 5% or more of
OAC's outstanding common stock except MassMutual. MassMutual has engaged in the
life insurance business since 1851.
The names and principal occupations of the executive officer and directors of
Oppenheimer are as follows:
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NAME AND ADDRESS* PRINCIPAL OCCUPATION
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Bridget A. Macaskill... President, Chief Executive Officer and Director
Donald W. Spiro........ Chairman Emeritus and Director
James C. Swain......... Vice Chairman
George Batejan......... Executive Vice President
O. Leonard Darling..... Executive Vice President
Craig Dinsell.......... Executive Vice President
Barbara Hennigar....... Executive Vice President
James Ruff............. Executive Vice President
Loretta McCarthy....... Executive Vice President
Nancy Sperte........... Executive Vice President
Andrew J. Donohue...... Executive Vice President, General Counsel and Director
Robert C. Doll......... Executive Vice President and Director
Jeremy Griffiths....... Executive Vice President and Chief Financial Officer
George C. Bowen........ Senior Vice President and Treasurer
Charles Albers......... Senior Vice President
Peter M. Antos......... Senior Vice President
Victor Babin........... Senior Vice President
Robert A. Densen....... Senior Vice President
Ronald H. Fielding..... Senior Vice President
Robert B. Grill........ Senior Vice President
Thomas W. Keffer....... Senior Vice President
John S. Kowalik........ Senior Vice President
David Negri............ Senior Vice President
Robert E. Patterson.... Senior Vice President
Russell Read........... Senior Vice President
Richard Rubinstein..... Senior Vice President
Arthur Steinmetz....... Senior Vice President
Ralph Stellmacher...... Senior Vice President
John Stoma............. Senior Vice President
Jerry A. Webman........ Senior Vice President
William L. Wilby....... Senior Vice President
Robert G. Zack......... Senior Vice President
Arthur J. Zimmer....... Senior Vice President
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*These officers are located at one of the four offices of Oppenheimer: Two World
Trade Center, New York, New York 10048; 6803 South Tucson Way, Englewood,
Colorado 80112; 350 Linden Oaks, Rochester, New York 14625 and One Financial
Plaza, 755 Main Street, Hartford, Connecticut 06103.
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No officer or director of the Fund is an officer, employee or director of the
Sub-Adviser. No officer or director of the Fund owns any securities of, or has
any other material direct or indirect interest in, the Sub-Adviser or any of its
affiliates. No director of the Fund has any direct or indirect material interest
in any material transactions since January 1, 1998, or in any material proposed
transactions, to which the Sub-Adviser, any parent or subsidiary of the
Sub-Adviser, or any subsidiary of the parent of such entities was or is to be a
party. There is no arrangement or understanding in connection with the
Sub-Advisory Contract with respect to the composition of the Board of Directors
of the Fund or of the Sub-Adviser, or with respect to the selection or
appointment of any person to any office of either such company.
The Sub-Adviser acts as adviser for the portfolios of registered investment
companies with investment objectives similar to the Fund's investment objective
of seeking long-term growth of capital primarily through investment in common
stocks and equivalents of companies domiciled in foreign countries and the
United States. Set forth below are the names of such funds, together with
information concerning the funds' net assets and the fees paid to the
Sub-Adviser for its services.
<TABLE>
<CAPTION>
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NET ASSETS
RELATIONSHIP AS OF 6-30-98 FEE WAIVERS OR
FUND NAME OF SUB-ADVISER (IN MILLIONS) ANNUAL RATE OF COMPENSATION REIMBURSEMENTS
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<S> <C> <C> <C> <C>
Oppenheimer Quest Global Investment Adviser1 $494.1 .75% on the first $400 million N/A
.70% on the next $400 million and
.65% on the net assets in excess
of $800 million
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Oppenheimer International Investment Adviser $390.9 .80% on the first $250 million N/A
Growth Fund .77% on the next $250 million
.75% on the next $500 million
.69% on the next $1 billion and
.67% on the net assets in excess
of $2 billion
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Oppenheimer Variable Investment Adviser $1,136.5 .75% on the first $200 million N/A
Accounts Funds/Oppenheimer .72% of the next $200 million
Global Securities Fund .69% of the next $200 million
.66% of the next $200 million
.60% of net assets in excess
of $800 million
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Oppenheimer Developing Investment Adviser $53.9 1.00% of the first $250 million N/A
Markets Fund .95% of the next $250 million
.90% of the next $500 million
.85% of net assets in excess
of $1 billion
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Oppenheimer International Investment Adviser $12.4 .80% of the first $250 million N/A
Small Company Fund .77% of the next $250 million
.75% of the next $500 million
.69% of the next $1 billion
.67% of net assets in excess
of $2 billion
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Panorama Series Fund, Inc./ Investment Adviser(2) $100.1 the annual rates are: N/A
International Equity 1.00% of the average daily net
Portfolio assets up to $250 million
.90% of average daily net assets
over $250 million
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Atlas Assets, Inc./Atlas Sub-Adviser $45.0 .35% of the first $50 million N/A
Global Growth Fund .30% of the next $50 million
.25% of net assets in excess
of $100 million
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1 The Sub-Adviser pays an annual fee to OpCap Advisors, the "Sub-Adviser" to Oppenheimer Quest Global Value Fund, Inc., based on
the average daily net assets of Oppenheimer Quest Global Value Fund, Inc. ("Fund") equal to 40% of the advisory fee collected by
the Investment Adviser based on the net assets of the Fund as of November 22, 1995 (the "Base Amount") plus 30% of the investment
advisory fee collected by the Investment Adviser based on the net assets of the Fund that exceed that amount.
2 The Sub-Adviser pays an annual fee to Babson-Stewart Ivory International, the "Sub-Adviser" to Panorama Series Fund,
Inc./International Equity Portfolio, based on the average daily net assets of the International Equity Portfolio of Panorama
Series Fund, Inc.: .75% of the first $10 million, .625% of the next $15 million, .50% of the next $25 million and .375% of such
assets in excess of $50 million.
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</TABLE>
PROPOSAL NO. 2
TO APPROVE CHANGES TO THE FUNDAMENTAL INVESTMENT
LIMITATIONS OF THE SERIES
Certain investment limitations of the Series are matters of fundamental
policy and may not be changed without the approval of the Series' shareholders.
The Investment Manager has recommended to the Board of Directors that certain
fundamental investment limitations of the Series be amended as set forth below.
The Investment Manager believes that the proposed changes reflect more modern
investment practices and will more closely conform to the investment policies of
other mutual funds managed by the Sub-Adviser. The changes will allow the
Sub-Adviser to manage the Series' investments in a more streamlined and
efficient manner. The Investment Manager plans to make conforming changes to the
fundamental investment policies and limitations of the other funds under its
management to further streamline its investment and compliance processes. The
Board of Directors believes that the proposal is in the best interests of the
Series' shareholders.
The Investment Manager believes that increased standardization of fundamental
investment policies and limitations will promote operational efficiencies and
facilitate monitoring of compliance with fundamental policies. Adoption of the
revised limitations will contribute to the overall objectives of standardization
and in some cases, will give the Series the flexibility to change its investment
methods in the future without shareholder approval, provided that the Board of
Directors approves any such change. Set forth below are each of the proposed
changes. Shareholders have the option to approve all, some or none of the
proposed changes.
PROPOSAL NO. 2(A)
TO AMEND THE FUNDAMENTAL INVESTMENT LIMITATION
CONCERNING UNDERWRITING
The Series currently is subject to a fundamental investment limitation
concerning underwriting, and the Investment Manager recommends a change in the
fundamental limitation. The current and proposed fundamental investment
limitations are set forth below.
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CURRENT PROPOSED
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No Series may underwrite securities of No Series may act as underwriter of
other issuers. securities issued by others, except to
the extent that the
Series may be considered an
underwriter within the meaning of the
Securities Act of 1933 in the
disposition of restricted securities.
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The primary purpose of the proposed amendment is to clarify that the Series
is not prohibited from selling restricted securities if, as a result of such
sale, the Series is considered an underwriter under federal securities laws and
to revise the Series' fundamental limitation on underwriting so that it conforms
to a limitation which is expected to become standard for all funds managed by
the Investment Manager. While the proposed change will have no current impact on
the Series, adoption of the proposed standardized fundamental investment policy
will advance the goals of standardization discussed above. The Board of
Directors unanimously recommends that shareholders vote FOR Proposal No. 2(a).
If this Proposal No. 2(a) is approved by shareholders, the new fundamental
underwriting limitation cannot be changed without a future vote of shareholders.
PROPOSAL NO. 2(B)
TO AMEND THE FUNDAMENTAL INVESTMENT LIMITATION
CONCERNING BORROWING
The Series currently is subject to a fundamental investment limitation
concerning borrowing, and the Investment Manager recommends a change in the
fundamental investment limitation and adoption of an operating policy that may
be changed without a vote of shareholders. The current and proposed fundamental
investment limitations and proposed operating policy are set forth below.
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CURRENT PROPOSED
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No Series may borrow money or No Series may borrow in excess of 33
securities for any purposes except 1/3% of its total assets.
that borrowing up to 5% of the Series'
total assets from commercial banks is As an operating policy, no Series may
permitted for emergency or temporary borrow money or securities for any
purposes. purposes except that borrowing up to
5% of the Series' total assets from
commercial banks is permitted for
emergency or temporary purposes.
- --------------------------------------------------------------------------------
The primary purpose of the proposed change to the fundamental investment
limitation concerning borrowing is to conform it to a limitation that is
expected to become standard for all funds managed by the Investment Manager. If
the proposal is approved, the amended fundamental borrowing limitation cannot be
changed without a future vote of shareholders. The amended non-fundamental
operating policy could be changed upon the vote of the Board of Directors.
Adoption of the proposed amendment is not expected to affect the way the
Series is managed, the investment performance of the Series, or the securities
or instruments in which the Series invests.
The increase in the permissible level of borrowing would allow the Board of
Directors to amend the non-fundamental policy in the future to allow the Series
to engage in leveraging. Leveraging is a speculative investment technique which
consists of purchasing securities with borrowed funds. There are risks
associated with purchasing securities while borrowings are outstanding,
including a possible reduction of income and increased fluctuation of net asset
value per share. Interest on money borrowed is an expense the Series would not
otherwise incur, so that it may have little or no net investment income during
periods of substantial borrowings. Borrowing for investment therefore increases
both investment opportunity and risk. While the Series has no current intention
to purchase securities while borrowings equal to 5% of its total assets are
outstanding, the flexibility to do so may be beneficial to the Series at a
future date.
The proposed change will have no current impact on the Series. However,
adoption of a standardized fundamental investment policy will facilitate
investment compliance efforts and will enable the Series to respond more
promptly if circumstances suggest such a change in the future.
The Board of Directors recommends that shareholders vote FOR Proposal No.
2(b).
PROPOSAL NO. 2(C)
TO AMEND THE FUNDAMENTAL INVESTMENT LIMITATION
CONCERNING LENDING
The Series currently is subject to a fundamental investment limitation
concerning lending, and the Investment Manager recommends a change in the
fundamental investment limitation and adoption of a non-fundamental operating
policy that may be changed without a vote of shareholders. The current and
proposed fundamental investment limitations and proposed operating policy are
set forth below.
- --------------------------------------------------------------------------------
CURRENT PROPOSED
- --------------------------------------------------------------------------------
No Series may make loans to other No Series may lend any security or
persons, except by entry into make any other loan if, as a result,
repurchase agreements or by the more than 33 1/3% of the Series' total
purchase, upon original issuance or assets would be lent to other parties,
otherwise, of a portion of an issue of except (i) through the purchase of a
publicly distributed bonds, notes, portion of an issue of debt securities
debentures or other securities. in accordance with its investment
objective and policies, or (ii) by
engaging in repurchase agreements with
respect to portfolio securities.
As an operating policy, the Series
does not currently intend to lend
assets other than securities to other
parties. (This limitation does not
apply to purchases of debt securities
or to repurchase agreements.)
- --------------------------------------------------------------------------------
This proposal if adopted will affect the way in which the Series is managed
in that it will allow the Series to engage in securities lending. Securities
loans are made to broker-dealers or institutional investors or other persons,
pursuant to agreements requiring that the loans be continuously secured by
collateral at least equal at all times to the value of the securities lent
marked to market on a daily basis. The collateral received would consist of
cash, U.S. government securities, letters of credit or such other collateral as
may be permitted under the Series' investment program. While the securities
loans are outstanding, the Series would continue to receive the equivalent of
the interest or dividends paid by the issuer of the securities, as well as
interest on the investment of the collateral or a fee from the borrower. The
Series would have a right to call each loan and obtain the securities within the
period of time which coincides with the normal settlement time period for
purchases and sales of such securities in their respective markets. The Series
would not have the right to vote securities while they are being lent, but it
would call a loan in anticipation of any important vote.
The risks in lending portfolio securities, as with other extensions of
secured credit, consist of possible delay in receiving additional collateral or
in the recovery of the securities or possible loss of rights in the collateral
should the borrower fail financially. Loans would be made only to firms deemed
by the Investment Manager or Sub-Adviser to be of good standing and would not be
made unless, in the judgment of the Investment Manager or the Sub-Adviser, the
consideration to be earned from such loans would justify the risk.
In addition to the potential benefits of securities lending, the adoption of
standardized investment policies as proposed will advance the goals of
investment limitation standardization.
The Board of Directors therefore unanimously recommends that shareholders
vote FOR Proposal No. 2(c).
PROPOSAL NO. 2(D)
TO ELIMINATE THE FUNDAMENTAL INVESTMENT LIMITATION CONCERNING
MARGIN PURCHASES OF SECURITIES AND SHORT SALES
The Series currently is subject to a fundamental investment limitation
concerning margin purchases of securities and short sales, and the Investment
Manager recommends that shareholders approve the elimination of this fundamental
investment limitation. If the proposal is approved, the Directors intend to
replace the current fundamental investment limitation with a non-fundamental
operating policy which could be changed without a vote of shareholders. The
current fundamental investment limitation and proposed operating policy are set
forth below.
- --------------------------------------------------------------------------------
CURRENT PROPOSED
- --------------------------------------------------------------------------------
No Series may effect short sales of As an operating policy, the Series
securities or buy securities on margin does not currently intend to sell
(except such short-term credits as are securities short, unless it owns or
necessary for the clearance of has the right to obtain securities
portfolio transactions). equivalent in kind and amount to the
securities sold short, and provided
that transaction in futures contracts
and options are not deemed to
constitute selling securities short.
In addition, the Series does not
currently intend to purchase
securities on margin, except that the
Series may obtain such short-term
credits as are necessary for the
clearance of transactions, and
provided that margin payments in
connection with futures contracts and
options on futures contracts shall not
constitute purchasing securities on
margin.
- --------------------------------------------------------------------------------
In a short sale, an investor sells a borrowed security and has a
corresponding obligation to the lender to return the identical security. In an
investment technique known as a short sale "against the box," an investor sells
short while owning the same securities in the same amount, or having the right
to obtain equivalent securities. The investor could have the right to obtain
equivalent securities, for example, through its ownership of warrants, options,
or convertible bonds.
Margin purchases involve the purchase of securities with money borrowed from
a broker. "Margin" is the cash or eligible securities that the borrower places
with a broker as collateral against the loan. The Series' current fundamental
investment policy prohibits the Series from purchasing securities on margin,
except to obtain such short-term credits as may be necessary for the clearance
of transactions. Policies of the SEC also allow mutual funds to purchase
securities on margin for initial and variation margin payments made in
connection with the purchase and sale of futures contracts and options on
futures contracts. With these exceptions, mutual funds are prohibited from
entering into most types of margin purchases by applicable SEC policies. The
proposed non-fundamental operating policy includes these exceptions.
Elimination of the Series' fundamental investment policy on short selling and
margin purchases is unlikely to affect the Series' investment techniques at this
time. If the proposal is approved, however, the Board of Directors would be able
to change the proposed operating policy in the future, without a vote of
shareholders. In the event of a change in state or federal regulatory
requirements, the Series may alter its investment practices in the future. The
Board of Directors believes that efforts to standardize operating policy will
facilitate the Investment Manager's investment compliance and are in the best
interests of shareholders.
The Board of Directors therefore unanimously recommends that shareholders
vote FOR Proposal No. 2(d).
PROPOSAL NO. 2(E)
TO ELIMINATE THE FUNDAMENTAL INVESTMENT LIMITATION CONCERNING
INVESTMENT IN OTHER INVESTMENT COMPANIES
The Series currently is subject to a fundamental investment limitation
concerning investment in securities of other investment companies, and the
Investment Manager recommends that shareholders approve the elimination of this
fundamental investment limitation. If the proposal is approved, the Directors
intend to replace the current fundamental investment limitation with a
non-fundamental operating policy which could be changed without a vote of
shareholders. The current fundamental investment limitation and proposed
operating policy are set forth below.
- --------------------------------------------------------------------------------
CURRENT PROPOSED
- --------------------------------------------------------------------------------
No Series may invest in securities of As an operating policy, the Series may
other investment companies. not, except in connection with a
merger, consolidation, acquisition, or
reorganization, invest in the
securities of other investment
companies, including investment
companies advised by the Investment
Manager, if, immediately after such
purchase or acquisition, more than 10%
of the value of the Series' total
assets would be invested in such
securities.
- --------------------------------------------------------------------------------
Elimination of the above fundamental limitation is not expected to have a
significant impact on the Series' investment practices, because the Series
currently does not expect to invest in shares of other investment companies.
However, investment in shares of money market funds may from time to time offer
a convenient way to invest the Series' idle cash. To the extent that the Series
invests in shares of other investment companies, it will have the effect of
requiring shareholders to pay the operating expenses of two mutual funds.
The Board of Directors recommends that shareholders vote FOR Proposal No.
2(e).
PROPOSAL NO. 2(F)
TO AMEND THE FUNDAMENTAL INVESTMENT LIMITATION
REGARDING OWNING, BUYING, SELLING OR OTHERWISE DEALING
IN COMMODITIES OR COMMODITIES CONTRACTS
The Series currently is subject to a fundamental investment limitation
concerning investment in commodities or commodities contracts and the Investment
Manager recommends a change in the fundamental investment limitation. The
current and proposed fundamental investment limitations are set forth below.
- --------------------------------------------------------------------------------
CURRENT PROPOSED
- --------------------------------------------------------------------------------
No Series may own, buy, sell or No Series may invest in commodities,
otherwise deal in commodities or except that as consistent with its
commodities contracts. investment objective and policies, a
Series may: (a) purchase and sell
options, forward contracts and futures
contracts, including without
limitation those relating to indices;
(b) purchase and sell options on
futures contracts or indices; and (c)
purchase publicly traded securities of
companies engaging in such activities.
- --------------------------------------------------------------------------------
The Series has interpreted the fundamental policy limitation concerning
commodities to allow investment in financial futures contracts and options
thereon. The proposed amendment of this fundamental policy limitation modernizes
the language to reflect this interpretation but does not change the Series'
approach to investing in commodities. The Series does not intend to engage in
the selling of commodities such as pork, corn and wheat futures or related
commodity contracts other than financial instruments.
The Board of Directors recommends that shareholders vote FOR Proposal No.
2(f).
The Board of Directors believes that all of the proposed changes to the
fundamental investment limitations of the Series, as set forth in Proposal No.
2, are in the best interests of shareholders and unanimously recommends voting
FOR all of the changes set forth in Proposal No. 2. Each change that is approved
by shareholders will become effective upon the conclusion of the Meeting and the
investment limitations will be as described above and set forth in Exhibit B.
For any change that is not approved, the Series' current investment limitation,
as set forth in the applicable sub-portion of Proposal 2, will remain unchanged.
MORE INFORMATION ABOUT THE INVESTMENT MANAGER AND UNDERWRITER
SBL Fund serves as the underlying investment vehicle for the following
variable insurance products currently issued by Security Benefit Life Insurance
Company: Variflex, Variflex ES, Variflex LS, Variflex Signature and Security
Elite Benefit. Security Distributors, Inc., 700 SW Harrison Street, Topeka,
Kansas 66636-0001, a wholly-owned subsidiary of Security Benefit Group, Inc., is
the principal underwriter of the foregoing variable insurance products.
The principal occupations, and positions with SMC and the Fund, of the
principal executive officer and each officer and director of SMC are as follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
NAME AND ADDRESS* PRINCIPAL OCCUPATION POSITION WITH SMC POSITION WITH FUND
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
James R. Schmank** President and Managing Member Representative of SMC President and Managing Vice President
Member Representative and Director
- ------------------------------------------------------------------------------------------------------------------------------------
John D. Cleland Senior Vice President and Managing Member Senior Vice President President and
Representative of SMC and Managing Member Director
Representative
- ------------------------------------------------------------------------------------------------------------------------------------
Donald A. Chubb, Jr. Business broker, Griffith & Blair Realtors None Director
2222 SW 29th Street
Topeka, KS 66611
- ------------------------------------------------------------------------------------------------------------------------------------
Penny A. Lumpkin Vice President, Palmer Companies (Wholesalers, None Director
3616 Canterbury Town Road Retailers and Developers) and Bellairre Shopping
Topeka, KS 66610 Center (Leasing and Shopping Center Management);
Secretary-Treasurer, Palmer News, Inc. (Wholesale
Distributors)
- ------------------------------------------------------------------------------------------------------------------------------------
Mark L. Morris, Jr. Retired; Former General Partner, Mark Morris None Director
5500 SW 7th Street Associates (Veterinary Research and Education)
Topeka, KS 66606
- ------------------------------------------------------------------------------------------------------------------------------------
Maynard F. Oliverius President and Chief Executive Officer, Stormont-Vail None Director
1500 SW 10th Avenue Health Care
Topeka, KS 66604
- ------------------------------------------------------------------------------------------------------------------------------------
Mark E. Young Vice President, SMC; Second Vice President, Security Vice President Vice President
Benefit Group, Inc. and Security Benefit Life
Insurance Company
- ------------------------------------------------------------------------------------------------------------------------------------
Jane A. Tedder Vice President and Senior Economist, SMC; Vice Vice President and Vice President
President, Security Benefit Group, Inc. and Security Senior Economist
Benefit Life Insurance Company
- ------------------------------------------------------------------------------------------------------------------------------------
Amy J. Lee Secretary, SMC; Vice President, Associate General Secretary Secretary
Counsel and Assistant Secretary, Security Benefit
Group, Inc. and Security Benefit Life Insurance
Company
- ------------------------------------------------------------------------------------------------------------------------------------
Terry A. Milberger Senior Vice President and Senior Portfolio Manager, Senior Vice President Vice President
SMC; Senior Vice President, Security Benefit Group, and Senior Portfolio
Inc. and Security Benefit Life Insurance Company Manager
- ------------------------------------------------------------------------------------------------------------------------------------
Cindy L. Shields Vice President and Portfolio Manager, SMC; Assistant Vice President and Vice President
Vice President, Security Benefit Group, Inc. and Portfolio Manager
Security Benefit Life Insurance Company
- ------------------------------------------------------------------------------------------------------------------------------------
James P. Schier Assistant Vice President and Portfolio Manager, SMC; Assistant Vice Vice President
Assistant Vice President, Security Benefit Group, President and
Inc. and Security Benefit Life Insurance Company Portfolio Manager
- ------------------------------------------------------------------------------------------------------------------------------------
Steven M. Bowser Second Vice President and Portfolio Manager, SMC; Second Vice President Vice President
Second Vice President, Security Benefit Group, Inc. and Portfolio Manager
and Security Benefit Life Insurance Company
- ------------------------------------------------------------------------------------------------------------------------------------
Thomas A. Swank Vice President and Portfolio Manager, SMC; Vice Vice President and Vice President
President, Security Benefit Group, Inc. and Security Portfolio Manager
Benefit Life Insurance Company
- ------------------------------------------------------------------------------------------------------------------------------------
Michael A. Petersen Vice President and Senior Portfolio Manager, SMC; Vice President and Vice President
Vice President, Security Benefit Group, Inc. and Senior Portfolio
Security Benefit Life Insurance Company Manager
- ------------------------------------------------------------------------------------------------------------------------------------
David Eshnaur Assistant Vice President and Portfolio Manager, SMC; Assistant Vice Vice President
Assistant Vice President, Security Benefit Group, President and
Inc. and Security Benefit Life Insurance Company Portfolio Manager
- ------------------------------------------------------------------------------------------------------------------------------------
Brenda M. Harwood Assistant Vice President and Treasurer, SMC; Assistant Vice Treasurer
Assistant Vice President, Security Benefit Group, President and
Inc. and Security Benefit Life Insurance Company Treasurer
- ------------------------------------------------------------------------------------------------------------------------------------
Christopher D. Swickard Assistant Secretary, SMC; Assistant Vice President Assistant Assistant
and Assistant Counsel, Security Benefit Group, Inc. Secretary Secretary
and Security Benefit Life Insurance Company
- ------------------------------------------------------------------------------------------------------------------------------------
*All located at 700 Harrison, Topeka, KS 66636 unless otherwise noted.
**Principal executive officer
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
No director or "named executive officer" of the Fund beneficially owned any
shares of common stock of the Fund as of June 30, 1998.
STOCKHOLDER PROPOSALS
Unless otherwise required under the Investment Company Act of 1940,
ordinarily it will not be necessary for the Fund to hold annual meetings of
stockholders. Stockholder proposals must be received at least 120 days prior to
the next meeting of stockholders, whenever held.
OTHER MATTERS
The audited financial statements of the Fund are found in the Annual Report
for the fiscal year ended December 31, 1997, which was mailed to stockholders on
or about March 1, 1998.
The Board of Directors of the Fund is not aware of any other matters to come
before the Meeting or any adjournments thereof other than those specified
herein. If any other matters should come before the Meeting, it is intended that
the persons named as proxies in the enclosed form(s) of proxy, or their
substitutes, will vote the proxy in accordance with their best judgment on such
matters.
By order of the Board of Directors of
SBL Fund,
AMY J. LEE
Secretary
<PAGE>
EXHIBIT A
SUB-ADVISORY AGREEMENT
THIS AGREEMENT is made and entered into on this ____ day of
_____________________, 1998 between SECURITY 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
OPPENHEIMERFUNDS, INC. (the "Subadviser"), a Colorado corporation registered
under the Investment Advisers Act.
WITNESSETH:
WHEREAS, SBL Fund (the "Fund"), a Kansas corporation, is registered with the
Securities and Exchange Commission (the "Commission") as an open-end management
investment company under the Investment Company Act of 1940, as amended (the
"Investment Company Act");
WHEREAS, SBL Fund 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 Agreement permits 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 for
Series D of SBL Fund (the "Fund") to act as investment adviser for and to manage
the Fund's 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 certain assets of the Fund subject
to the supervision of the Adviser and the Board of Directors of the Fund and
subject to the terms of this Agreement; and the Subadviser hereby accepts such
employment. In such capacity, the Subadviser shall be responsible for the Fund's
Investments. The Subadviser shall not be responsible for any services to the
Fund or to bear any expenses other than those delineated in this Agreement.
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
the Fund as set forth in its 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 to purchase,
hold and sell investments for the account of the Fund (hereinafter
"Investments") and to monitor on a continuous basis the performance of such
Investments. The Subadviser shall give the Fund the benefit of its best
efforts in rendering its services as Subadviser. The Subadviser may contract
with or consult with such banks, other securities firms, brokers or other
parties, without additional expense to the Fund, 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 Fund's Board to establish and maintain accounts on
behalf of the Fund with, and place orders for the purchase and sale of the
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 SBL Fund, brokers or dealers affiliated with the Subadviser, and
negotiate commissions to be paid on such transactions. The Subadviser agrees
that in placing such orders it shall attempt to obtain best execution,
provided that, the Subadviser may, on behalf of the 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 the 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 the 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 a 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
and to such other clients. The Subadviser will report on such allocations at
the request of the Adviser, the Fund or the Fund's Board providing such
information as the number of aggregated trades to which the Fund was a party,
the broker(s) to whom such trades were directed and the basis of the
allocation for the aggregated trades. Subject to the foregoing provisions of
this subsection 2(b), the Subadviser may also consider sales of fund shares
and shares of other investment companies managed by the Subadviser or its
affiliates as a factor in the selection of brokers or dealers for the Fund's
portfolio transactions.
(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 the Fund ("Principal Transactions");
PROVIDED, HOWEVER, the Subadviser may enter into a Principal Transaction with
the 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 Fund
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 Fund 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 Fund 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 Rule 31a-2 under the Investment Company Act, and
agrees that such books and records shall remain the sole property of the Fund
and shall be immediately surrendered to the Fund upon request. The Subadviser
further agrees that all books and records maintained hereunder shall be made
available to the 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 the Fund may request, the Subadviser will furnish the
requesting party reports on portfolio transactions and reports on Investments
held in the portfolio, all in such detail as the Adviser or the Fund may
reasonably request. The Subadviser will make available its officers and
employees to meet with the Fund's Board of Directors at the Fund's principal
place of business on due notice (but no more than once in any 12-month
period) to review the Investments of the Fund.
The Subadviser will also provide such information as is customarily
provided by a subadviser and may be required for the 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.
(f) CUSTODY ARRANGEMENTS. The Subadviser shall provide the 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 the Fund's Articles of Incorporation, By-Laws, and currently
effective registration statement and with the written instructions and
directions of the Fund's Board and the Adviser, and shall comply with the
requirements of the Investment Company Act, the Investment Advisers Act, the
Commodity Exchange Act, 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 Fund complies with all applicable statutes and
regulations necessary to qualify the Fund 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 the
Fund has ceased to so qualify or that it might not so qualify in the future.
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 the Fund, (ii) the By-Laws of the Fund, (iii) the 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 SBL Fund 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 securities held by the
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 Fund or the Adviser in any way or
otherwise be deemed an agent of the Fund or the Adviser.
4. COMPENSATION. The Adviser shall pay to the Subadviser, for the services
rendered hereunder, an annual fee equal to a percentage of the average daily
closing value of the combined net assets of the Fund and Global Series of Equity
Fund, computed on a daily basis and payable monthly, as follows: 0.35 percent of
such assets up to $300 million, plus 0.30 percent of such assets over $300
million up to $750 million and 0.25 percent of such assets over $750 million. If
this Agreement shall be effective for only a portion of a year, then the
Subadviser's compensation for said year shall be prorated for such portion. For
purposes of this paragraph 4, the value of the net assets of the 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 Fund's Prospectus. Payment of the
Subadviser's compensation for the preceding month shall be made as promptly as
possible after the end of each month.
5. EXPENSES. The Subadviser shall bear all expenses incurred by it in
connection with its services under this Agreement and will, from time to time,
at its sole expense employ or associate itself with such persons as it believes
to be particularly fitted to assist it in the execution of its duties hereunder.
However, the Subadviser shall not assign or delegate any of its investment
management duties under this Agreement without the approval of the Adviser and
the Fund's Board.
6. REPRESENTATIONS AND WARRANTIES OF SUBADVISER. The Subadviser represents
and warrants to the Adviser and the Fund 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 registered as a commodities trading advisor under
the CEA with the Commodity Futures Trading Commission (the "CFTC");
(d) The Subadviser is a corporation duly organized and validly existing
under the laws of the State of Colorado with the power to own and possess its
assets and carry on its business as it is now being conducted;
(e) 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 shareholders, 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;
(f) This Agreement is a valid and binding agreement of the Subadviser;
(g) 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 Fund
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.
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;
(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 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 7 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, SBL
Fund, or the Fund or any of the 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, SBL Fund
and the Fund, and their respective officers and directors, for any liability
and expenses, including attorneys' fees, which may be sustained by the
Adviser, SBL Fund or the Fund, as a result of the Subadviser's willful
misfeasance, bad faith, 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 directors, for any liability and expenses, including
attorneys' fees, which may be sustained as a result of the Adviser's, SBL
Fund's or the Fund's willful misfeasance, bad faith, 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 SBL Fund unless it has first been approved (i) by a vote of a
majority of those directors of SBL Fund 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, and (ii) by vote of a majority of
SBL Fund's outstanding voting securities. 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 the
Fund if specifically approved each year by either (i) the Board of Directors
of SBL Fund, or (ii) by the affirmative vote of a majority of the Fund's
outstanding voting securities. In addition to the foregoing, each renewal of
this Agreement with respect to the Fund must be approved by the vote of a
majority of SBL 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 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 SBL Fund, or
by vote of a majority of the outstanding voting securities of the 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 during the notice period, upon twenty (20) days written
notice;
(iii) By the Adviser immediately upon written notice to the
Subadviser if the Subadviser becomes unable to discharge its duties and
obligations under this Agreement; or
(iv) By the Subadviser upon 180 days written notice to the Adviser
and the 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 Fund pursuant to the Advisory Agreement
and shall oversee and review the Subadviser's performance of its duties under
this Agreement. The Adviser shall remain responsible for, among other things,
providing the following services with respect to the Fund:
(a) The Adviser shall provide the Subadviser, or shall cause the Fund's
Custodian to provide to the Subadviser, on each business day as of time
deadline to be mutually agreed upon, a report or a computer download in a
mutually acceptable software program and format, detailing the Fund's
portfolio holdings, uninvested cash, current valuations and other information
requested by the Subadviser to assist it in carrying out its duties under
this Agreement, as of the close of the prior business day. In performing its
obligations under this Agreement, the Subadviser may rely upon the
information provided to it by or on behalf of the Adviser or the Fund's
Custodian.
(b) Composition of periodic reports with respect to the Fund's operations
for shareholders of the Fund, composition of proxy materials for meetings of
the Fund's shareholders and the composition of such registration statements
as may be required by Federal and state securities laws for the continuous
public offering and sale of shares of the Fund, as well as the determination
of the net asset value of shares of the Fund.
13. AMENDMENT. This Agreement may be amended by mutual consent of the
parties, provided that the terms of each such amendment with respect to the Fund
shall be approved by the Board of Directors of the Fund or by a vote of a
majority of the outstanding voting securities of the 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:
OppenheimerFunds, Inc.
Two World Trade Center
New York, New York 10048-0203
Attention: Andrew J. Donohue
Facsimile: (212) 321-1159
(b) Copy to:
OppenheimerFunds, Inc.
6801 Tucson Way
Englewood, CO 80112
Attention: Treasurer
Facsimile: (303) 768-2849
(c) If to the Adviser:
James R. Schmank
President
Security Management Company, LLC
700 SW Harrison
Topeka, Kansas 66636-0001
Attention: James R. Schmank
Facsimile: (785) 431-3080
(d) If to SBL Fund:
Amy J. Lee
Secretary
SBL Fund
700 SW Harrison
Topeka, Kansas 66636-0001
Attention: Amy J. Lee, Secretary
Facsimile: (785) 431-3080
15. GOVERNING LAW; JURISDICTION. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Kansas.
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. Any question of interpretation of any term or
provision of this Agreement having a counterpart in or otherwise derived from
a term or provision of the Investment Company Act shall be resolved by
reference to such term or provision of the Investment Company Act and to
interpretations thereof, if any, by the U.S. courts or, in the absence of any
controlling decisions of any such court, by rules, regulation or order of the
Commission validly issued pursuant to the Investment Company Act.
Specifically, 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.
SECURITY MANAGEMENT COMPANY, LLC
By: ______________________________
Name: James R. Schmank
Title: President
Attest: ______________________________
Name: Amy J. Lee
Title: Secretary
OPPENHEIMERFUNDS, INC.
By: ______________________________
Name:
Title:
Attest: ______________________________
Name:
Title:
<PAGE>
[SBG LOGO]
The Security Benefit Group of Companies
700 SW Harrison St.
Topeka, Kansas 66636-0001
SERIES D OF SBL FUND
Special Meeting of Shareholders
October 28, 1998
The undersigned hereby appoints John D. Cleland, Donald A. Chubb, Jr.,
and Donald L. Hardesty, and each of them, with full power of
substitution, as proxies of the undersigned to vote at the
above-stated special meeting, and at all adjournments thereof, all
shares of
SERIES D OF SBL FUND
held by the undersigned at the Special Meeting of Shareholders of the
Fund to be held at 9:30 AM, local time, on October 28, 1998, at
Security Benefit Group Building, 700 Harrison Street, Topeka, Kansas
66636-0001, and at any adjournment thereof, in the manner directed
below with respect to the matters referred to in the proxy statement
for the meeting, receipt of which is hereby acknowledged, and in the
proxies' discretion, upon such other matters as may properly come
before the meeting or any adjournment thereof.
In order to avoid the additional expense of further solicitation to
your Fund, we strongly urge you to review, complete, and return your
ballot as soon as possible. Your vote is important regardless of the
number of shares you own. The Board of directors recommends a vote for
each of the following proposals. These voting instructions will be
voted as specified and in the absence of specification will be treated
as granting authority to vote "FOR" each proposal.
NOTE: Please sign exactly as the name appears on this card. EACH joint
owner must sign the proxy. When signing as executor, administrator,
attorney, trustee or guardian, or as custodian for a minor, please
give the FULL title of such. If a corporation, please give the FULL
corporate name and indicate the signer's office. If a partner, please
sign in the partnership name.
PLEASE EXECUTE, SIGN, DATE, AND RETURN THIS PROXY PROMPTLY USING THE
ENCLOSED ENVELOPE.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: [X]
KEEP THIS PORTION FOR YOUR RECORDS
- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- --
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
- --------------------------------------------------------------------------------
SERIES D OF SBL FUND
For address changes and/or comments, please check [ ]
this box and write them on the back where indicated.
Vote On Proposals
FOR AGAINST ABSTAIN
1. Approval of the Sub-Advisory Contract between
SMC and OppenheimerFunds, Inc. [ ] [ ] [ ]
2. a. To amend the fundamental investment
limitation concerning underwriting. [ ] [ ] [ ]
2. b. To amend the fundamental investment
limitation concerning borrowing. [ ] [ ] [ ]
2. c. To amend the fundamental investment
limitation concerning lending [ ] [ ] [ ]
2. d. To eliminate the fundamental investment
limitation concerning margin purchases of
securities and short sales. [ ] [ ] [ ]
2. e. To eliminate the fundamental investment
limitation concerning investment in other
investment companies. [ ] [ ] [ ]
2. f. To amend the fundamental investment
limitation regarding owning, buying, selling
or otherwise dealing in commodities or
commodities contracts. [ ] [ ] [ ]
___________________________________________ _________________________________
Signature (PLEASE SIGN WITHIN BOX) Date Signature (Joint Owners) Date
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