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PROSPECTUS
SUPPLEMENT
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SBL FUND
MEMBERS OF THE SECURITY BENEFIT GROUP OF COMPANIES
700 HARRISON, TOPEKA, KANSAS 66636-0001
SUPPLEMENT DATED MARCH 29, 1999
TO PROSPECTUS DATED APRIL 1, 1998
The Board of Directors of SBL Fund has terminated Lexington Management
Corporation ("Lexington") as the sub-advisor to SBL Fund, Series K (Global
Aggressive Bond Series) and has approved an interim sub-advisory contract (the
"Interim Contract") between Security Management Company, LLC ("SMC") and
Wellington Management Company, LLP ("Wellington Management") under which
Wellington Management will succeed Lexington as the sub-advisor to Series K on
an interim basis pending shareholder approval of a definitive sub-advisory
contract. Under the Interim Contract, Wellington Management will be paid the
same fee as was paid to Lexington. It is anticipated that Wellington Management
will provide investment sub-advisory services to Series K under the Interim
Contract beginning on March 30, 1999. The Board has also terminated Meridian
Investment Management Corporation ("Meridian") as the sub-advisor to SBL Fund,
Series M (Specialized Asset Allocation Series) and has appointed Wellington
Management to serve as the sub-advisor to Series M under the Interim Contract.
For its services to Series M, Wellington Management will be paid the same fee
previously paid to Meridian. It is anticipated that Wellington Management will
provide investment sub-advisory services to Series M under the Interim Contract
beginning on May 1, 1999.
In addition, the Board has approved a definitive sub-advisory contract (the
"New Contract") between SMC and Wellington Management under which Wellington
Management will provide investment sub-advisory services to Series K and to
Series M subject to shareholder ratification. Shareholders of Series K and
Series M will be asked to approve the New Contract at a special meeting of
shareholders currently scheduled for May 14, 1999. If approved by shareholders,
the New Contract will take effect on May 15, 1999 and will replace the Interim
Contract described above.
The respective investment objectives of Series K and Series M will not change
following Wellington Management's assumption of sub-advisory duties. However,
the Board of Directors of SBL Fund has approved certain changes to the
non-fundamental investment policies of Series K and Series M. These changes will
be implemented with respect to a Series when Wellington Management begins
providing sub-advisory services to that Series. In seeking to achieve the
investment objective of Series K, Wellington Management may select debt
securities (including mortgage-related securities, structured or derivative
fixed-income securities and convertible bonds) issued by any private or
governmental entity. Investments may be made, without limitation, in any region
of the world, including investments in developed foreign countries and emerging
market foreign countries. The quality of Series K's investments will range from
investment grade to high yield debt securities or junk bonds. Investments may be
made in debt securities denominated in any currency. A portion of Series K's
assets may be invested in options, futures and forward currency contracts, the
Series may also enter into short sales of securities and currencies. These
derivative strategies will be used to adjust the portfolio's exposure to a
particular currency, manage risk, enhance income, or as a substitute for
purchasing or selling securities.
The following is a summary description of how Wellington Management expects
to manage Series M. Wellington Management will seek to achieve the investment
objective of the Series through asset allocation and security selection by
investing in a diversified portfolio of global equity and bond securities.
Wellington Management will seek to allocate on average about 80% of total assets
to equity securities and about 20% of total assets to debt securities. The
Series will not be required to allocate any particular percentage of its assets
in these asset classes. The portfolio will be rebalanced to the desired asset
allocation and currency exposure on a regular basis primarily through the use of
exchange listed futures contracts and currency forwards. The allocation of the
Series' assets to categories of investments (stocks, bonds, countries and
currencies) will be based on the Wellington Management's assessment of the
relative attractiveness of an investment category. Series M will invest in a
broadly diversified portfolio of equity securities and other securities with
equity characteristics issued in the United States and abroad, including any
investments permitted for Series K. Investments in derivatives will include
principally futures and options contracts on securities, financial indices and
currencies, as well as options on futures contracts and currency forwards.
Derivative strategies will be used to reallocate exposure to asset classes,
manage risk and enhance income.
All references in this prospectus to the sub-advisory services provided by
Lexington and MFR Advisors, Inc. ("MFR") are deleted. The section of the
prospectus entitled "MANAGEMENT OF THE FUND" is amended by adding the following:
The Investment Manager has entered into an interim sub-advisory
contract with Wellington Management Company, LLP ("Wellington
Management"), 75 State Street, Boston, Massachusetts, 02109 to provide
investment advisory services to Series K and Series M (effective May
1, 1999). Pursuant to this contract, Wellington Management will
furnish portfolio management services, including the investment and
reinvestment of the assets of each Series, and will provide for the
compilation and maintenance of trading and portfolio records
pertaining to such portfolio management services, subject to the
control and supervision of the Board of Directors of the Fund and the
Investment Manager. Wellington Management is a limited liability
partnership which currently manages over $207 billion in assets on
behalf of investment companies, employee benefit plans, endowments,
foundations and other institutions and individuals. Pursuant to this
interim sub-advisory contract, the Investment Manager pays Wellington
Management a fee equal on an annual basis to .35 percent of the
average daily net assets of Series K. Such fee is calculated daily and
payable monthly. For its services to Series M under the interim
sub-advisory contract, Wellington Management is paid by the Investment
Manager an annual fee equal to a percentage of the average daily
closing value of the net assets of Series M, computed on a daily
basis, according to the following schedule:
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AVERAGE DAILY NET ASSETS OF SERIES M ANNUAL FEE
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Less than $100 million .................... .40%, plus
$100 million but less than $200 million ... .35%, plus
$200 million but less than $400 million ... .30%, plus
$400 million or more ...................... .25%
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All references in this prospectus to Dennis P. Jamison of Lexington and Maria
Fiorini Ramirez of MFR as having day-to-day responsibility for managing Series K
are deleted. The section of the prospectus entitled "PORTFOLIO MANAGEMENT" is
amended by adding the following:
Series K is managed by Wellington Management. Lucius T. Hill, III
has day-to-day responsibility for managing the assets of Series K and
has managed the Series since March 30, 1999.
Mr. Hill is a Senior Vice President of Wellington Management, and
Chair of Wellington Management's Core Bond Strategy Group, which sets
investment policy guidelines for portfolios managed in the Core Bond
and Strategic Total Return styles. Mr. Hill is also a member of
Wellington Management's Strategic Total Return Strategy Group. Prior
to joining Wellington Management in 1993, Mr. Hill was a corporate
bond trader at C.S. First Boston Corporation (1986-1990), and a money
market trader at Dean Witter Reynolds (1983-1986).
Effective May 1, 1999, Series M will be managed by Wellington
Management. David Goerz is expected to have day-to-day responsibility
for managing the assets of Series M. Mr. Goerz is a Vice President of
Wellington Management and head of Wellington Management's Tactical
Asset Allocation research group. Prior to joining Wellington
Management in 1995, Mr. Goerz was Senior Investment Strategist and
Product Manager at TSA Capital Management (1994-1995) and Senior
Quantitative Analyst at ARCO Investment Management (1990-1994).
INVESTORS SHOULD RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE.
