SCHEDULE 14A INFORMATION
811-3364
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-
11(c) or 240.14a-12
Maxim Series Fund, Inc.
(Name of Registrant as Specified in its Charter)
Beverly A. Byrne, Esquire
The Great-West Life Assurance Company
8515 East Orchard Road
Englewood, CO 80111
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii),
14a-6(i)(1), or 14a-6(i)(2) or per investment
Company Act Rule 20a-1(c).
[ ] $500 per each party to the controversy
pursuant to Exchange Act Rule 14a-6(i)(3).
[ ] 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:
Maxim Vista Growth & Income Common Stock
_____________________________________________
(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:
_____________________________________________
[ ] 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 No.:
(3) Filing Party:
(4) Date Filed:<PAGE>
Preliminary Proxy Materials
For the Information of the Securities and Exchange
Commission Only
MAXIM VISTA GROWTH & INCOME PORTFOLIO
8515 E. Orchard Road
Englewood, Colorado 80111
Dear Valued Shareholder:
The Maxim Vista Growth & Income Portfolio (the "Fund"),
unlike most other investment companies which directly
acquire and manage their own portfolio of securities,
seeks to achieve its investment objectives by investing
all of its investable assets in Growth and Income
Portfolio (the "Master Portfolio"), an open-end
management investment company managed by Chase Manhattan
Bank, N.A. (the "Adviser"), with investment objectives
that are substantially identical to that of the Fund. In
addition, other entities may invest in the Master
Portfolio (e.g., other investment companies, insurance
company separate accounts and common and commingled trust
funds). Whenever Maxim Series Fund, Inc. (the "Company")
is requested to vote on matters pertaining to the Master
Portfolio, the Company will hold a meeting of the Fund's
shareholders and will cast its vote as instructed by Fund
shareholders. At this time, you are being asked to cast
your vote on each proposal with respect to the Fund and
the Master Portfolio.
As you may be aware, The Chase Manhattan Corporation
("Chase") has entered into an Agreement and Plan of
Merger with Chemical Banking Corporation ("Chemical")
pursuant to which Chase will merge with and into Chemical
(the "Holding Company Merger"). Pursuant to the
Investment Company Act of 1940, as amended, consummation
of the Holding Company Merger will result in the
automatic termination of the investment advisory
agreements between the Master Portfolio and The Chase
Manhattan Bank, N.A. ("the Adviser"). In addition,
subsequent to the Holding Company Merger, the Adviser
will be merged with and into Chemical Bank in a secondary
merger of the principal operating entities of Chase and
Chemical (the "Bank Merger"). The Bank Merger may also
be deemed to result in the automatic termination of the
investment advisory agreement between the Adviser and the
Master Portfolio. In anticipation of the completion of
the Holding Company Merger and the Bank Merger, and to
provide continuity in investment advisory services to the
Master Portfolio, we urge you to review the enclosed
proxy statement. In the proxy statement you are asked to
vote on the approval of an interim and a new advisory
agreement between the Master Portfolio and the Adviser
and on the approval of certain changes to the fundamental
investment restrictions of the Master Portfolio, to
permit the Fund to continue to invest in the Master
Portfolio.
The Board of Directors of the Company has voted
unanimously in favor of each proposal and recommends that
you vote "FOR" them as well. You will find more
information on the proposals in the enclosed proxy
statement.
Please be assured that there is no increase to the
advisory fee rate in the proposed advisory agreement for
the Master Portfolio.
YOUR VOTE IS IMPORTANT. Please read the enclosed proxy
statement and vote now by completing, signing and
returning the enclosed proxy ballot form(s) in the pre-
paid envelope. EVERY VOTE COUNTS.
Very truly yours,
Ruth B. Lurie
Secretary
<PAGE>
Preliminary Proxy Materials
For the Information of the Securities and Exchange
Commission Only
MAXIM VISTA GROWTH & INCOME PORTFOLIO
8515 E. Orchard Road
Englewood, Colorado 80111
Notice of Special Meeting of Shareholders to be held
April 2, 1996
A special meeting of the shareholders of the Maxim Vista
Growth Income Fund (hereinafter referred to as the
"Fund") will be held at 9:30 a.m. (Mountain time) at 8515
East Orchard Road, Englewood, Colorado, on April 2, 1996,
for the purposes indicated below:
1. To approve or disapprove an interim investment
advisory agreement between the Master
Portfolio and The Chase Manhattan Bank, N.A.
(and the successor entity thereto) (the
"Adviser") which will take effect upon the
merger of The Chase Manhattan Corporation (the
parent company of the Adviser) and Chemical
Banking Corporation. No fee increase is
proposed.
2. To approve or disapprove a new investment
advisory agreement between the Master
Portfolio and the Adviser, and a sub-advisory
agreement between the Adviser and Chase Asset
Management, Inc. with respect to the Master
Portfolio to take effect as soon as
practicable after approval by shareholders.
No fee increase is proposed.
3. To consider the following proposals pertaining
to the fundamental investment restrictions of
the Master Portfolio:
a. To approve or disapprove an amendment to
the Master Portfolio's fundamental
investment restriction concerning
borrowing;
b. To approve or disapprove an amendment to
the Master Portfolio's fundamental
investment restriction concerning
investment for the purpose of exercising
control;
c. To approve or disapprove an amendment to
the Master Portfolio's fundamental
investment restriction concerning the
making of loans;
d. To approve or disapprove an amendment to
the Master Portfolio's fundamental
investment restriction concerning
purchases of securities on margin;
e. To approve or disapprove an amendment to
the Master Portfolio's fundamental
investment restriction concerning
concentration of investment;
f. To approve or disapprove an amendment to
the Master Portfolio's fundamental
investment restriction concerning
commodities and real estate;
g. To approve or disapprove an amendment to
the Master Portfolio's fundamental
investment restriction regarding
investments in restricted and illiquid
securities;
h. To approve or disapprove of a
reclassification, as non-fundamental, of
the Master Portfolio's fundamental
restriction concerning the use of
options;
i. To approve or disapprove an amendment to
the Master Portfolio's fundamental
investment restriction concerning senior
securities; and
j. To approve or disapprove an amendment to
the Master Portfolio's fundamental
investment restriction regarding short
sales of securities.
4. To transact such other business as may
properly come before the Meeting or any
adjournment thereof.
Shareholders of record as of the close of business on
March 1, 1996 are entitled to receive notice of, and to
vote at, the Meeting and any and all adjournments
thereof. Your attention is called to the accompanying
proxy statement.
By Order of the Board of
Directors
Ruth B. Lurie
Secretary
March 22, 1996
You can help avoid the necessity and expense of sending
follow-up letters to ensure a quorum by promptly
returning the enclosed proxy. If you are unable to
attend the Meeting, please mark, sign, date and return
the enclosed proxy so that the necessary quorum may be
represented at the meeting. The enclosed envelope
requires no postage if mailed in the United States.
<PAGE>
Preliminary Proxy Materials
For the Information of the Securities and Exchange
Commission Only
MAXIM VISTA GROWTH & INCOME PORTFOLIO
8515 E. Orchard Road
Englewood, Colorado 80111
PROXY STATEMENT
The enclosed proxy is solicited on behalf of the Board of
Directors of Maxim Series Fund, Inc. (the "Company").
The proxy is revocable at any time before it is voted by
sending written notice of the revocation to the Company
or by appearing personally at the April 2, 1996 special
meeting of shareholders (the "Meeting"). The cost of
preparing and mailing the notice of meeting, the proxy
card, this proxy statement and any additional proxy
material ("Meeting Cost") insofar as it relates to the
approval of various Advisory Agreements and changes to
certain fundamental investment restrictions of the Master
Portfolio has been or is to be borne by The Chase
Manhattan Corporation, Chemical Banking Corporation
and/or their affiliates. The Chase Manhattan Bank, N.A.
(the "Adviser") is currently the investment adviser to
the Master Portfolio. Proxy solicitations will be made
primarily by mail, but may also be made by telephone,
telegraph, facsimile or personal interview conducted by
certain officers or employees of the Company, the Adviser
or its affiliates, or, if necessary, a commercial firm
retained for this purpose. In the event that the
shareholder signs and returns the proxy ballot, but does
not indicate a choice as to any of the items on the proxy
ballot, the persons named in the accompanying proxy will
vote those shares in favor of such proposal(s).
On March 1, 1996 the record date for determining
shareholders entitled to receive notice of and vote at
the Meeting (the "Record Date"), the Fund had ________
shares of beneficial interest ("Shares") outstanding,
each Share being entitled to one vote.
The holders of shares of the Fund shall be entitled to
one vote for each full share and a fractional vote for
each fractional share.
The Fund will furnish, without charge, a copy of the
Fund's 1995 annual report upon request to: Ms. Teddy
Beckman, 8515 E. Orchard Road, Englewood, CO 80111; (800)
537-2033, ext. 4538.
This proxy statement and the enclosed notice of meeting
and proxy card are first being mailed to shareholders on
or about March 22, 1996.
INTRODUCTION
The Meeting is being called for the following purposes:
(1) to approve or disapprove an interim investment
advisory agreement (the "Interim Agreement") between the
Master Portfolio and the Adviser which will take effect
upon the merger of The Chase Manhattan Corporation and
Chemical Banking Corporation; (2) to approve or
disapprove a new investment advisory agreement (the "New
Advisory Agreement") between the Master Portfolio and the
Adviser (and its successor in the Bank Merger) and a Sub-
Advisory Agreement between the Adviser and Chase Asset
Management, Inc. to take effect as soon as practicable
after approval by shareholders; (3) to approve or
disapprove amendments to the Master Portfolio's
fundamental investment restrictions; and (4) to transact
such other business as may properly come before the
Meeting or any adjournment thereof.
Approval of Proposals 1, 2 and 3 requires the vote of a
"majority of the outstanding voting securities," within
the meaning of the Investment Company Act of 1940, as
amended (the "1940 Act"), of the Master Portfolio. The
term "majority of the outstanding voting securities" is
defined under the 1940 Act to mean: (a) 67% or more of
the outstanding shares present at a meeting of
shareholders of the Fund, if the holders of more than 50%
of the outstanding shares are present or represented by
proxy, or (b) more than 50% of the outstanding, whichever
is less.
For purposes of determining the presence of a quorum and
counting votes on the matters presented, Shares
represented by abstentions and "broker non-votes" will be
counted as present, but not as votes cast, at the
Meeting. Under the 1940 Act, the affirmative vote
necessary to approve a matter under consideration may be
determined with reference to a percentage of votes
present at a meeting of shareholders, which would have
the effect of treating abstentions and non-votes as if
they were votes against the proposal.
If Proposal 1 is approved, it is anticipated that it will
become effective upon the occurrence of the Holding
Company Merger (and remain effective after the Bank
Merger). If Proposal 2 is approved, it is anticipated
that the New Advisory Agreement and the CAM, Inc.
Agreement (as defined herein) will become effective as
soon as practicable after shareholder approval (and
remain effective after the Bank Merger.) If Proposals 3
and 4 are approved, it is anticipated that the changes
effected thereby will become effective as soon as
practicable after shareholder approval.
<PAGE>
PROPOSAL 1
APPROVAL OR DISAPPROVAL OF AN INTERIM INVESTMENT
ADVISORY AGREEMENT BETWEEN THE MASTER PORTFOLIO
AND THE CHASE MANHATTAN BANK, N.A. (AND THE
SUCCESSOR ENTITY THERETO)
INTRODUCTION
The Chase Manhattan Bank, N.A. currently serves as the
Master Portfolio's investment adviser pursuant to a
separate Investment Advisory Agreement (the "Current
Advisory Agreement") for the Master Portfolio. The Chase
Manhattan Bank, N.A. is a wholly owned subsidiary of The
Chase Manhattan Corporation, a registered bank holding
company.
On August 27, 1995, The Chase Manhattan Corporation
announced its entry into an Agreement and Plan of Merger
(the "Merger Agreement") with Chemical Banking
Corporation ("Chemical"), a bank holding company,
pursuant to which The Chase Manhattan Corporation will
merge with and into Chemical (the "Holding Company
Merger"). Under the terms of the Merger Agreement,
Chemical will be the surviving corporation in the Holding
Company Merger and will continue its corporate existence
under Delaware law under the name "The Chase Manhattan
Corporation" ("New Chase"). The board of directors and
shareholders of each holding company have approved the
Holding Company Merger, which will create the largest
bank holding company in the United States based on
assets. The consummation of the Holding Company Merger
is subject to certain closing conditions. The Holding
Company Merger is expected to be completed during the
first quarter of 1996.
Subsequent to the Holding Company Merger, it is expected
that the adviser to the Master Portfolio, The Chase
Manhattan Bank, N.A., will be merged with and into
Chemical Bank, a New York State chartered bank ("Chemical
Bank") (the "Bank Merger" and together with the Holding
Company Merger, the "Mergers"). The surviving bank will
continue operations under the name The Chase Manhattan
Bank (as used herein, the term "Chase" refers to The
Chase Manhattan Bank, N.A. and its successor in the Bank
Merger, and the term "Adviser" means Chase (including its
successor in the Bank Merger) in its capacity as
investment adviser to the Master Portfolio). The
consummation of the Bank Merger is subject to certain
closing conditions, including the receipt of certain
regulatory approvals. The Bank Merger is expected to be
completed on or about July 31, 1996.
Chemical is a publicly owned bank holding company
incorporated under Delaware law and registered under the
Federal Bank Holding Company Act of 1956, as amended. As
of December 31, 1995, through its direct or indirect
subsidiaries, Chemical managed more than $57 billion in
assets, including approximately $6.9 billion in mutual
fund assets in 11 mutual fund portfolios. Chemical Bank
is a wholly owned subsidiary of Chemical and is a New
York State chartered bank.
As required by the 1940 Act, the Current Advisory
Agreement provides for its automatic termination upon its
"assignment" (as defined in the 1940 Act). Consummation
of the Holding Company Merger may be deemed to result in
an assignment of the Current Advisory Agreement and,
consequently, to terminate the Current Advisory Agreement
in accordance with its terms. Similarly, the
consummation of the Bank Merger may also be deemed to
result in an assignment and consequently, terminate the
then-existing investment advisory contract. In
anticipation of the consummation of the Mergers and to
provide continuity in investment advisory services, at a
meeting held on December 14, 1995, the Board of Trustees
of the Master Portfolio, including a majority of the
Board members who are not parties to the Agreement and
are not"interested persons" (as defined in the 1940 Act)
of the Investment Company, of any such party, approved
the Interim Advisory Agreement between the Master
Portfolio, and the Adviser to take effect upon the
consummation of the Holding Company Merger. The Board
also directed that such agreement be submitted to
shareholders for approval. In addition, the Board of
Trustees of the Master Portfolio approved the
continuation of the Interim Advisory Agreement after the
Bank Merger, on the same terms and conditions as in
effect immediately prior to the merger (except for
effective and termination dates) in the event the Interim
Advisory Agreement is deemed to terminate as a result of
the Bank Merger. Approval of Proposal 1 will also be
deemed approval of such continuation of the Interim
Advisory Agreement after the Bank Merger, if applicable.
THE INTERIM ADVISORY AGREEMENT IS IDENTICAL TO THE
CURRENT ADVISORY AGREEMENT, EXCEPT FOR ITS EFFECTIVE AND
TERMINATION DATES. THE AGGREGATE CONTRACTUAL RATE
CHARGEABLE FOR INVESTMENT ADVISORY SERVICES WILL REMAIN
THE SAME.
In connection with the Master Portfolio's approval of the
Interim Advisory Agreement, the Board of Trustees of the
Master Portfolio considered that the terms of the Mergers
do not require any change in the Adviser's investment
management or operation of the Master Portfolio, the
investment personnel managing the Master Portfolio, the
shareholder services or other business activities of the
Master Portfolio, or, the investment objectives of the
Master Portfolio. Chemical and the Adviser have informed
the Board of Trustees of the Master Portfolio that the
Mergers will not at this time result in any such change,
although no assurance can be given that such a change
will not occur. Each also has advised that, at present,
neither plans nor proposes to make any material changes
in the business, corporate structure or composition of
senior management or personnel of the Adviser, or in the
manner in which the Adviser renders investment advisory
services to each. If, after the Mergers, changes in the
Adviser are proposed that might materially affect its
services to the Master Portfolio, the Board of the Master
Portfolio will consider the effect of those changes and
take such action as it deems advisable under the
circumstances.
The Adviser has informed the Master Portfolio that it
proposes to comply with Section 15(f) of the 1940 Act.
Section 15(f) provides a non-exclusive safe harbor for an
investment adviser or any of its affiliated persons to
receive any amount or benefit in connection with a change
in control of the investment adviser as long as two
conditions are met. First, for a period of three years
after the transaction, at least 75% of the Board members
of the investment company must not be interested persons
of such investment adviser. Second, an "unfair burden"
must not be imposed on the investment company as a result
of such transaction or any express or implied terms,
conditions or understandings applicable thereto. The
term "unfair burden" is defined in Section 15(f) to
include any arrangement during the two-year period after
the transaction whereby the investment adviser, or any
interested person of any such adviser, receives or is
entitled to receive any compensation, directly or
indirectly, from the investment company or its security
holders (other than fees for bona fide investment
advisory or other services) or, with certain exceptions,
from any person in connection with the purchase or sale
of securities or other property to, from or on behalf of
the investment company. The Adviser, after due inquiry,
is not aware of any express or implied term, condition,
arrangement or understanding which would impose an
"unfair burden" on the Master Portfolio as a result of
the Mergers. New Chase, the Adviser and their affiliates
have agreed to take no action that would have the effect
of imposing an "unfair burden" on the Master Portfolio as
a result of the Mergers. Chase, Chemical and/or one or
more of their affiliates have undertaken to pay all costs
relating to the Mergers, including the costs of the
shareholders' meetings.
THE INVESTMENT ADVISER
The Advisory Agreements. The Chase Manhattan Bank, N.A.,
One Chase Manhattan Plaza, New York, New York 10081,
currently serves as investment adviser to the Master
Portfolio pursuant to an investment advisory agreement
between the Adviser and the Master Portfolio (the
"Current Advisory Agreement"). The Adviser will serve as
investment adviser to the Master Portfolio after the
Holding Company Merger under an investment advisory
agreement with the Master Portfolio (the "Interim
Advisory Agreement") which is identical in all material
respects to the Current Advisory Agreement except for its
effective and termination dates. A copy of the form of
the Interim Advisory Agreement is attached hereto as
Appendix A and should be read in conjunction with the
following.
The Chase Manhattan Bank, N.A. The Chase Manhattan Bank,
N.A., a wholly owned subsidiary of The Chase Manhattan
Corporation, a registered bank holding company, is a
commercial bank offering a wide range of banking and
investment services to customers throughout the United
States and around the world. Its headquarters are at One
Chase Manhattan Plaza, New York, New York 10081. As of
December 31, 1995, Chase was one of the largest
commercial banks in the United States, with assets of $
100.2 billion. As of such date, The Chase Manhattan
Corporation was one of the largest bank holding companies
in the United States, having total assets of
approximately $121.2 billion. As of September 30, 1995,
The Chase Manhattan Corporation through various
subsidiaries provided personal, corporate and
institutional investment management services for
approximately $57.9 billion in assets, of which Chase
provided investment management services to Vista
portfolios containing approximately $10.4 billion in
assets. Included among Chase's accounts are commingled
trust funds and a broad spectrum of individual trust and
investment management portfolios. These accounts have
varying investment objectives. Effective upon
consummation of the Holding Company Merger, The Chase
Manhattan Bank, N.A. will be a wholly owned subsidiary of
New Chase. Upon consummation of the Bank Merger, The
Chase Manhattan Bank, a New York State chartered bank
(the successor entity to The Chase Manhattan Bank, N.A.)
will continue to be a wholly owned subsidiary of New
Chase.
The other mutual funds for which the Adviser serves as
investment adviser, their assets as of December 31, 1995,
and their annual advisory fees are:
Mutual Fund Variable
Annuity Trust<PAGE>
Fee Total Assets
(In
Millions)
as of
12/31/95 <PAGE>
Growth and Income
Portfolio<PAGE>
0.60 3.680*
* In the fiscal period ended October 31, 1995, the
Adviser accrued and waived aggregate investment advisory
fees of $16,671.
The Adviser is currently a wholly-owned subsidiary of The
Chase Manhattan Corporation, a registered bank holding
company, and is a commercial bank offering a wide range
of banking and investment services to customers
throughout the U.S. and around the world. Effective upon
consummation of the Holding Company Merger, the Adviser
will be a wholly owned subsidiary of New Chase. Upon
consummation of the Bank Merger, the Adviser will
continue to be a wholly owned subsidiary of New Chase.
The principal executive officers and Directors of the
Adviser are as follows:
Thomas G. Labreque, Chairman of the Board, Chief
Executive Officer and Director.
Richard J. Boyle, Vice Chairman of the Board and
Director.
Donald L. Boudreau, Vice Chairman of the Board and
Director.
E. Michel Kruse, Vice Chairman of the Board and Director.
Susan V. Berresford, Director. Ms. Berresford is also an
Executive Vice President of The Ford Foundation.
M. Anthony Burns, Director. Mr. Burns is also Chairman
of the Board, President and Chief Executive Officer of
Ryder System, Inc.
James L. Ferguson, Director. Mr. Ferguson is also a
retired Chairman and Chief Executive Officer of General
Foods Corporation.
H. Laurance Fuller, Director. Mr. Fuller is also
President and Chief Executive Officer of the United Negro
College Fund, Inc.
David T. Kearns, Director. Mr. Kearns is also a retired
Chairman and Chief Executive Officer of The Xerox
Corporation.
Delano E. Lewis, Director. Mr. Lewis is also the
President and Chief Executive Officer of National Public
Radio.
Paul W. MacAvoy, Director. Mr. MacAvoy is also the
Williams Brothers Professor of Management Studies at the
Yale School of Management.
John H. McArthur, Director. Mr. McArthur is also a
Professor of the Harvard Graduate School of Business
Administration.
David T. McLaughlin, Director. Mr. McLaughlin is also
Chairman of the Board and Chief Executive Officer of The
Aspen Institute.
Edmund T. Pratt, Jr., Director. Mr. Pratt is also
Chairman Emeritus of Pfizer Inc.
Henry B. Schnacht, Director. Mr. Schnacht is also a
Member of the Board of Directors of Cummins Engine
Company, Inc.
Donald H. Trautlein, Director. Mr. Trautlein is also a
retired Chairman and Chief Executive Officer of Bethlehem
Steel Corporation.
The business address of the above persons is One Chase
Manhattan Plaza, New York, New York 10081.
CURRENT AND INTERIM ADVISORY AGREEMENTS
The Current and Interim Advisory Agreements for the
Master Portfolio are identical, except for their
effective and termination dates. The Current and Interim
Advisory Agreements provide for the Adviser to render
investment, supervisory and certain corporate
administrative services subject to the control of the
Board of Trustees. The Current and Interim Advisory
Agreements state that the Adviser shall, at its expense,
provide to the Master Portfolio all office space and
facilities, equipment and clerical personnel necessary to
carry out its duties under each Advisory Agreement.
Under the Current and Interim Advisory Agreements, the
Adviser pays all compensation of those officers and
employees of the Master Portfolio and of those Trustees
who are affiliated with the Adviser. The Master
Portfolio bears the cost of the preparation and setting
in type of its prospectus and reports to shareholders and
the costs of printing and distributing those copies of
such prospectuses and reports as are sent to
shareholders. Under the Current and Interim Advisory
Agreements all other expenses of the Master Portfolio not
expressly assumed by the Adviser are paid by the Master
Portfolio. Each Advisory Agreement lists examples of
such expenses; the major categories of such expenses
relate to interest, taxes, legal and audit expenses,
custodian and transfer agent or shareholder servicing
agency expenses, stock issuance and redemption costs,
certain printing costs, registration costs of the Master
Portfolio and its shares under federal and state
securities laws, and non-recurring expenses, including
litigation.
For the services it provides under the terms of the
Current and Interim Advisory Agreements, the Master
Portfolio pays the Adviser a monthly fee equal to a
specified percentage per annum of its average daily net
assets computed at the close of each business day. See
"Fees and Fee Waivers" below which sets forth the
percentage for the Master Portfolio. The Adviser may
voluntarily agree to waive a portion of the fees payable
to it.
The Current Advisory Agreement is currently in effect
until August 19, 1996 and continues from year to year
thereafter, provided that the Agreement is specifically
approved in a manner consistent with the 1940 Act.
However, the Current Advisory Agreement may be deemed to
terminate upon consummation of the Holding Company
Merger. The 1940 Act requires approval at least annually
by the Master Portfolio's Board of Trustees, including
the vote of a majority of the Trustees who are not
"interested persons" (as defined in the 1940 Act) of any
party to the Agreement cast in person at a meeting called
for the purpose of voting on approval, or by the vote of
the holders of a "majority" of the outstanding voting
securities (as defined in the 1940 Act) of the Master
Portfolio. The Interim Agreement will terminate on May
30, 1996 with respect to the Master Portfolio, unless its
shareholders approve the Interim Agreement prior to such
scheduled termination date (see "Additional
Information").
The Master Portfolio may terminate the Current and
Interim Advisory Agreements without penalty on not more
than 60 days' nor less than 30 days' written notice when
authorized by either a vote of the shareholders of the
Master Portfolio or by a vote of a majority of the Master
Portfolio's Board of Trustees, including the vote of a
majority of the Trustees who are not "interested persons"
(as defined in the 1940 Act) of any party to the
Agreement. The Adviser may terminate the Current and
Interim Advisory Agreements on not more than 60 days' nor
less than 30 days' written notice. The Advisory
Agreement will automatically terminate in the event of
its assignment (as defined in the 1940 Act).
In addition, the Current and Interim Advisory Agreements
provides that, in the event the operating expenses of the
Master Portfolio, including all investment advisory and
administration fees, but excluding brokerage commissions
and fees, distribution fees, taxes, interest and
extraordinary expenses such as litigation expenses, for
any fiscal year exceed the most restrictive expense
limitation applicable to the Master Portfolio imposed by
the securities laws or regulations thereunder of any
state in which the shares of the Master Portfolio are
qualified for a sale, as such limitations may be raised
or lowered from time to time, the Adviser shall reduce
its advisory fee described above to the extent of its
share of such excess expenses. The amount of any such
reduction to be borne by the Adviser will be deducted
from the monthly fee otherwise payable to the Adviser
during such fiscal year; and if such amounts should
exceed the monthly fee, the Adviser will pay to the
Master Portfolio its share of such excess expenses no
later than the last day of the first month of the next
succeeding fiscal year.
Certain Relationships and Activities. The Adviser and
its affiliates may have deposit, loan and other
commercial banking relationships with the issuers of
securities purchased on behalf of the Master Portfolio,
including outstanding loans to such issuers which may be
repaid in whole or in part with the proceeds of
securities so purchased. The Adviser and its affiliates
deal, trade and invest for their own accounts in U.S.
Government obligations and municipal obligations and are
among the leading dealers of various types of U.S.
Government obligations and municipal obligations. The
Adviser and its affiliates may sell U.S. Government
obligations and municipal obligations to and purchase
them from other investment companies distributed by Vista
Broker Dealer Services. The Adviser will not invest any
Master Portfolio assets in any U.S. Government
obligations or municipal obligations purchased from
itself or any affiliate, although under certain
circumstances such securities may be purchased from other
members of an underwriting syndicate in which the Adviser
or an affiliate is a non-principal member. This
restriction may limit the amount or type of U.S.
Government obligations or municipal obligations available
to be purchased on behalf of the Master Portfolio. The
Adviser has informed the Master Portfolio that in making
its investment decisions it does not obtain or use
material inside information in the possession of any
other division or department of the Adviser or in the
possession of any affiliate of the Adviser.
Both the Current and Interim Advisory Agreements provide
that, in the absence of willful misfeasance, bad faith,
gross negligence or reckless disregard for its
obligations thereunder, the Adviser shall not be liable
for any act or omission in the course of or in connection
with the rendering of its services thereunder.
CONSIDERATIONS OF BOARD OF TRUSTEES OF MASTER PORTFOLIO
In considering whether to approve the Interim Advisory
Agreement and to submit it to the shareholders for their
approval, the Board of Trustees of the Master Portfolio
considered the following factors: (1) the representation
that there would be no diminution in the scope and
quality of advisory and other services provided by the
Adviser under the Interim Advisory Agreement, and (2) the
identical nature of the terms and conditions, including
compensation payable, contained in the Interim Advisory
Agreement as compared to the Current Advisory Agreement.
Additionally, the Board considered the benefits that
would be obtained by the Master Portfolio in maintaining
continuity in the advisory services provided to it, and
determined that continuity was advantageous to the Master
Portfolio as it would serve to minimize uncertainty and
confusion, provide for the continued utilization of the
demonstrated skills and capability of the staff of the
Adviser and its familiarity with the operations of the
Master Portfolio, and avoid the possibility of disruptive
effects on the Master Portfolio that might otherwise
result from a change in the management and operations of
the Master Portfolio.
REQUIRED VOTE AND BOARD OF DIRECTOR'S RECOMMENDATION
Approval of the Interim Advisory Agreement will require
the affirmative vote of a "majority of the outstanding
voting securities" of the Master Portfolio which for this
purpose means the affirmative vote of the lesser of (1)
more than 50% of the outstanding shares of the Master
Portfolio or (2) 67% or more of the shares of the Master
Portfolio present at the meeting if more than 50% of the
outstanding shares of the Master Portfolio is represented
at the meeting in person or by proxy (a "Majority Vote").
If the shareholders of the Master Portfolio do not
approve the Interim Advisory Agreement, The Chase
Manhattan Corporation and Chemical Banking Corporation
nevertheless intend to proceed with the Holding Company
Merger and, in such case, the Current Advisory Agreement
will terminate automatically. In that event, the Board
of the Master Portfolio will take such further action as
it may deem to be in the best interests of the Master
Portfolio's shareholders.
THE BOARD OF DIRECTORS OF MAXIM SERIES FUND, INC.
RECOMMENDS THAT SHAREHOLDERS OF THE FUND VOTE "IN FAVOR
OF" PROPOSAL 1.
ADDITIONAL INFORMATION
Chase also serves as the Master Portfolio's administrator
pursuant to a separate Administration Agreement. Under
the Administration Agreement, Chase generally assists in
all aspects of the Master Portfolio's operations, subject
to the overall authority of the Board of Trustees of the
Master Portfolio in accordance with applicable state law.
Under the terms of the Administration Agreement, Chase
receives a monthly fee at the annual rate of .10% of the
value of the Master Portfolio's average daily net assets.
For the Master Portfolio, the administration fee payable,
the amount by which such fee was reduced pursuant to a
waiver by Chase, and the net administration fees paid by
the Master Portfolio under the Administration Agreement
for the indicated period are set forth below under "Fees
and Fee Waivers."
The Master Portfolio has engaged Vista Broker-Dealer
Services, Inc. (the "Sub-Administrator"), a wholly owned
subsidiary of BISYS Fund Services, Inc., located at 125
West 55th Street, New York, New York 10019, to assist it
in providing certain administrative services for the
Master Portfolio pursuant to a Sub-Administration
Agreement between the Master Portfolio, on behalf of the
Master Portfolio, and the Sub-Administrator. The Sub-
Administrator receives an annual fee, payable monthly, of
.05% of the average daily net assets of the Master
Portfolio.
On November 6, 1995, the Master Portfolio, other
investment companies advised by Chase, and Chase filed an
application (the "Application") with the Securities and
Exchange Commission (the "Commission") requesting an
order of the Commission permitting implementation,
without prior shareholder approval, of the Interim
Advisory Agreement during the interim period commencing
on the date of the closing on the Holding Company Merger
and ending at the earlier of such time as sufficient
votes are cast by the Master Portfolio's shareholders to
approve a new advisory agreement or May 30, 1996 (the
"Interim Period").
As a condition to the requested exemptive relief, the
Master Portfolio has undertaken in the Application that
the advisory compensation payable by the Master Portfolio
during the Interim Period will be maintained in an
interest-bearing escrow account and, with respect to the
Master Portfolio, amounts in the account will be paid to
Chase only upon approval by the shareholders of the
Master Portfolio of the Interim Advisory Agreement and
the compensation payable thereunder. In addition, the
Application contains representations that Chase (and its
successor, if applicable), will take all appropriate
steps to ensure that the scope and quality of its
advisory and other services provided to the Master
Portfolio during the Interim Period will be at least
equivalent to the scope and quality of the services
previously provided; and that, in the event of any
material change in the personnel providing services
pursuant to the Interim Advisory Agreements during the
Interim Period, the Board of the Master Portfolio will be
apprised and consulted to assure that they are satisfied
that the services provided will not be diminished in
scope or quality.
The Board of Trustees of the Master Portfolio concluded
that payment of the investment advisory fee under the
Interim Advisory Agreement, during the Interim Period
would be appropriate and fair considering that (1) the
fee would be paid at the same rate as was previously in
effect under the Current Advisory Agreement and services
would be provided in the same manner, (2) because of the
relatively short time frame necessary to complete the
Holding Company Merger, there was a possibility that the
Master Portfolio would not obtain the requisite number of
votes to approve the Interim Advisory Agreement prior to
the Holding Company Merger, and (3) the non-payment of
advisory fees during the Interim Period would be an
unduly harsh result in view of the services provided to
the Master Portfolio under the Interim Advisory
Agreement.
REQUIRED VOTE AND BOARD OF DIRECTORS' RECOMMENDATION
Approval of the Master Portfolio's Interim Advisory
Agreement will require the affirmative vote of a
"majority of the outstanding voting securities" of the
Master Portfolio, which for this purpose means the
affirmative vote of the lesser of (1) more than 50% of
the outstanding shares of the Master Portfolio or (2) 67%
or more of the shares of the Master Portfolio present at
the meeting if more than 50% of the outstanding shares of
the Master Portfolio are represented at the meeting in
person or by proxy (a "Majority Vote"). If the
shareholders of the Master Portfolio do not approve the
Interim Advisory Agreement, the consummation of the
Holding Company Merger will not be affected, the Current
Advisory Agreement for that Master Portfolio will have
terminated or will terminate upon the consummation of the
Holding Company Merger and the Interim Advisory Agreement
for that Master Portfolio will terminate on May 30, 1996.
In that event, if the shareholders shall not have
approved new advisory arrangements in accordance with
Proposal 2, the Board will take such further action as it
may deem to be in the best interests of the Master
Portfolio's shareholders.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" THE FOREGOING PROPOSAL.
PROPOSAL 2
APPROVAL OR DISAPPROVAL OF A NEW
INVESTMENT ADVISORY AGREEMENT BETWEEN
the Master Portfolio AND THE CHASE MANHATTAN BANK, N.A.
(AND THE SUCCESSOR ENTITY THERETO), AND A SUB-ADVISORY
AGREEMENT BETWEEN THE CHASE MANHATTAN BANK, N.A. (AND
THE SUCCESSOR ENTITY THERETO) AND CHASE ASSET
MANAGEMENT, INC.
INTRODUCTION
The Chase Manhattan Bank, N.A., the current investment
adviser of the Master Portfolio (as used herein, the term
"Chase" refers to The Chase Manhattan Bank, N.A. and its
successor in the Bank Merger, and the term "Adviser"
means Chase (including its successor in the Bank Merger)
in its capacity as Adviser to the Master Portfolio)
recommended to the Board of the Master Portfolio that the
Master Portfolio enter into a new Investment Advisory
Agreement with the Adviser (the "New Advisory Agreement")
effective as soon as practicable after the approval of
shareholders. The Adviser also recommended to the Board
of the Master Portfolio that the Adviser be permitted to
utilize the services of its wholly owned subsidiary,
Chase Asset Management, Inc. ("CAM Inc."), to render
advisory services to the Master Portfolio. CAM Inc. is
a registered investment adviser which was recently
incorporated for the purpose of the delivery of
investment advisory services by to its institutional
clients. CAM Inc. will be retained pursuant to a
proposed Sub-Advisory Agreement (the "CAM Inc.
Agreement"). The Board of the Master Portfolio has
approved, and recommends that the shareholders of the
Master Portfolio approve, the New Advisory Agreement and
CAM Inc. Agreement (collectively, the "Agreements"). In
addition, the Board of Trustees approved the continuation
of the New Advisory Agreement after the Bank Merger, on
the same terms and conditions as in effect immediately
prior to the merger (except for effective and termination
dates) in the event the New Advisory Agreement is deemed
to terminate as a result of the Bank Merger. Approval of
Proposal 2 will be deemed approval of such continuation
of the Agreement after the Bank Merger. If approved, the
New Advisory Agreement will become effective as soon as
practicable after the approval of shareholders.
No increase is proposed to the contractual fee rates
under the New Advisory Agreement and the Adviser, and not
the Master Portfolio, will compensate CAM Inc. for its
services as Sub-Adviser. Therefore, the Master Portfolio
will not bear any increase in the contractual advisory
fee rates resulting from the New Advisory Agreement or
the CAM Inc. Agreement.
While the New Advisory Agreement is described below, the
discussion is qualified by the provisions of the complete
agreement, a copy of which is attached as Appendix B. If
the shareholders of the Master Portfolio do not approve
this Proposal, then Chase will continue to act,
commencing on the Holding Company Merger, as the adviser
to the Master Portfolio under the terms of the Interim
Advisory Agreement, assuming Proposal 1 is approved. If
the Interim Advisory Agreement is not approved by
shareholders, the Board will consider the appropriate
course of action for the Master Portfolio. The New
Advisory Agreement should be read in conjunction with the
following.
Background. In connection with the Mergers, New Chase
intends to organize its corporate wide investment
management operations in order to more fully take
advantage of portfolio management skills that will exist
within the various corporate entities controlled by New
Chase. As part of this structuring, New Chase would like
to consolidate its mutual fund supervisory functions
within one entity (Chase), and its portfolio management
responsibilities within another entity (CAM Inc.). The
Adviser also seeks to retain the ability to utilize
portfolio managers employed by the various investment
management entities affiliated with the Adviser through
common ownership by New Chase.
Thus, the New Advisory Agreement would provide the
Adviser with the ability to utilize the specialized
portfolio skills of employees of all its various
affiliates, thereby providing the Master Portfolio with
greater opportunities and flexibility in accessing
investment expertise. For the foreseeable future, the
Adviser would employ certain members of the Adviser's
senior management.
Similarities Between the Current and New Advisory
Agreements:
The New Advisory Agreement is similar in many respects to
the Current Advisory Agreement and Interim Advisory
Agreement. The New Advisory Agreement contains the
material terms of the Current Advisory Agreement, but
reflects the proposed change of the investment adviser
from The Chase Manhattan Bank, N.A. to its successor
entity, and incorporates additional provisions designed
to clarify and supplement the rights and obligations of
the parties.
The contractual rate at which fees are required to be
paid by the Master Portfolio for investment advisory
services, as a percentage of average daily net assets,
will remain the same. Under the provisions of both the
Current and the New Advisory Agreements, the Master
Portfolio is required to pay the Adviser a monthly fee
equal to a stated percentage per annum of its average
daily net assets. These amounts are set forth below
under "Fees and Fee Waivers."
The following summarizes certain additional aspects of
the Current and New Advisory Agreements (collectively,
the "Agreements") which are materially the same in both
Agreements:
In the absence of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the obligations or
duties of the Adviser, the Adviser shall not be liable to
the Master Portfolio or to any shareholder for any losses
that may be sustained by the Master Portfolio in
connection with its performance of the Agreement.
The Adviser bears all expenses in connection with the
performance of its services under the Agreement. the
Master Portfolio bears the expenses incurred in its
operations. Both agreements provide that the Adviser
shall, at its expense, provide the Master Portfolio with
office space, furnishings and equipment and personnel
required by it to perform the services to be provided by
the Adviser and that the Master Portfolio shall be
responsible for all of its expenses and liabilities.
Under the Agreement, if the aggregate expenses incurred
by the Master Portfolio in any fiscal year is in excess
of the lowest applicable expense limitation imposed by
state securities laws or regulations thereunder, the
Adviser shall reduce its investment advisory fee, but not
below zero, to the extent of its share of such excess
expenses; provided, however, that certain provided
expenses are specifically excluded from such calculation.
No such reimbursement was required during the Master
Portfolio's most recent fiscal period.
The Master Portfolio may terminate the Agreement without
penalty on not more than 60 days' written notice when
authorized by either a vote of shareholders holding a
"majority of the outstanding voting securities" (within
the meaning of the 1940 Act) of the Master Portfolio or
by a vote of a majority of the Master Portfolio's Board
of Trustees. The Adviser may terminate the Agreement on
60 days' written notice to the Master Portfolio. The
Agreement terminates in the event of its assignment (as
defined in the 1940 Act).
Differences Between the Current and New Advisory
Agreements:
The following highlights summarize some of the additional
provisions which are included in the New Advisory
Agreement:
After the Bank Merger, Chase Manhattan Bank, a New York
State charted bank, the successor entity to The Chase
Manhattan Bank, N.A., will be the adviser to the Master
Portfolio rather than The Chase Manhattan Bank, N.A., and
will continuously supervise the investment and
reinvestment of cash, securities and other property
comprising the assets of the Master Portfolio. The Chase
Manhattan Bank, N.A. will be the Adviser to the Master
Portfolio until the Bank Merger.
Details Regarding the Adviser's Duties. The New Advisory
Agreement clearly specifies the duties of the Adviser.
For example, the Adviser will be required to obtain and
evaluate pertinent data and other significant events and
developments which affect the economy, the Master
Portfolio's investment programs, the issuers of
securities and the industries in which they engage, and
furnish a continuous investment program for the Master
Portfolio. The Adviser will be obligated to furnish such
reports, evaluations, information or analyses to the
Master Portfolio as its Board may request, make
recommendations to its Board with respect to trust
policies, and carry out such policies as are adopted by
its Board.
Use of Affiliated Entities. The New Advisory Agreement
clarifies that the Adviser may render services through
its own employees or the employees of one or more
affiliated companies that are qualified to act as an
investment adviser to the Master Portfolio under
applicable laws and are under the common control of New
Chase as long as all such persons are functioning as part
of an organized group of persons, and such organized
group of persons is managed at all times by authorized
officers of the Adviser. The Adviser will be as fully
responsible to the Master Portfolio for the acts and
omissions of such persons as it is for its own acts and
omissions.
Use of a Sub-Adviser. The New Advisory Agreement
clarifies that the Adviser may from time to time employ
or associate with such other entities or persons (a "Sub-
Adviser") as it believes appropriate to assist in the
performance of its obligations under of the New Advisory
Agreement with respect to the Master Portfolio. However,
the Master Portfolio will not pay any additional
compensation for any Sub-Adviser, and the Adviser will be
as fully responsible to the Master Portfolio for the acts
and omissions of the Sub-Adviser as it is for its own
acts and omissions, and the Adviser must review, monitor
and report to the Board of the Master Portfolio regarding
the performance and investment procedures of any Sub-
Adviser. The proposed Sub-Advisory agreement is discussed
below under "Consideration and Proposal of the CAM Inc.
Agreement."
Execution of Portfolio Transactions. The New Advisory
Agreement sets forth specific terms as to brokerage
transactions and the Adviser's use of broker-dealers.
For example, the Adviser will be obligated to use its
best efforts to seek to execute portfolio transactions at
prices which, under the circumstances, result in total
costs or proceeds being the most favorable to the Master
Portfolio. In assessing the best overall terms available
for any transaction, the Adviser will consider all
factors it deems relevant, including the breadth of the
market in the security, the price of the security, the
financial condition and execution capability of the
broker or dealer, research services provided and the
reasonableness of the commission, if any, both for the
specific transaction and on a continuing basis.
"Soft Dollars." A provision of the New Advisory
Agreement explicitly allows the Adviser to select brokers
or dealers who also provide brokerage and research
services (as contemplated by Section 28(e) of the
Securities Exchange Act of 1934) to the Adviser, the
Master Portfolio and/or the other accounts over which the
Adviser exercises investment discretion, and provides
that, notwithstanding the above, the Adviser may pay a
broker or dealer who provides such brokerage and research
services a commission for executing a portfolio
transaction for the Master Portfolio which is in excess
of the amount of commission another broker or dealer
would have charged for effecting that transaction if the
Adviser determines in good faith that the total
commission is reasonable in relation to the value of the
brokerage and research services provided by such broker
or dealer, viewed in terms of either that particular
transaction or the overall responsibilities of the
Adviser with respect to accounts over which it exercises
investment discretion.
Aggregation of Orders. There is also a clarification of
the authority of the Adviser to aggregate the securities
to be sold or purchased with those of other series of
funds or its other clients if, in the Adviser's
reasonable judgment, such aggregation will result in an
overall benefit to the Master Portfolio, taking into
consideration the advantageous selling or purchase price,
brokerage commission and other expenses, and trading
requirements.
Other Clarifications. The New Advisory Agreement
contains certain additional provisions which are intended
to clarify the status, rights or obligations of the
parties. For example, the Adviser is deemed to be an
independent contractor.
Consideration and Proposal of the CAM Inc. Agreement
It is being proposed that the Adviser be permitted to
utilize the services of CAM Inc. as a sub-adviser under
a proposed Investment Sub-Advisory Agreement between the
Adviser and CAM Inc. (the "CAM Inc. Agreement") in order
to enable the Adviser to more efficiently render advisory
services to the Master Portfolio.
The proposed form of the CAM Inc. Agreement is attached
as Appenidx C and should be read in conjunction with the
following.
The Adviser's decision to utilize the services of CAM
Inc. in a sub-advisory capacity was based on various
considerations, including the Adviser's desire to
consolidate its asset management responsibilities in one
entity, that the portfolio managers which currently
manage the assets of the Master Portfolio for the Adviser
will also manage the Master Portfolio as employees of CAM
Inc., that CAM Inc. provides a wide range of investment
management capabilities, including the ability to
discriminate among a wide range of potential investments
as part of an investment program for the Master
Portfolio, that risk control is integral to its
methodology, and the attractiveness of the fee structure
and estimated transaction costs that would be incurred.
Based upon the foregoing, the Adviser recommended to the
Board of Trustees of the Master Portfolio that, subject
to approval by the Board and such Master Portfolio's
shareholders of the New Advisory Agreement and the CAM
Inc. Agreement, the Adviser enter into the CAM Inc.
Agreement with CAM Inc. In considering whether to
recommend that the CAM Inc. Agreement be approved by
shareholders, the Board of the Master Portfolio requested
and evaluated various information from the Adviser and
CAM Inc. relevant to the Adviser's decision. In
addition, the Board of the Master Portfolio considered
various other factors which it deemed to be relevant,
including, but not limited to, the fact that the managers
of the Master Portfolio will continue to manage the
assets of the Master Portfolio as employees of CAM Inc.,
capabilities to be provided by CAM Inc., the stability of
its investment staff, the trading systems to be utilized
and the potential to minimize transaction costs, the
ability to customize the portfolio for the Master
Portfolio, and the Adviser's access to the various
investment and research resources of CAM Inc.
Description of the Proposed CAM Inc. Agreement
The proposed arrangement between the Adviser and CAM Inc.
under the CAM Inc. Agreement would enable the Adviser to
manage the investment activities of the Master Portfolio
covered in the CAM Inc. Agreement most effectively by
delegating to CAM Inc. portfolio management duties
relating to transactions in the securities held by the
Master Portfolio. With respect to the day to day
management of the Master Portfolio under the CAM Inc.
Agreement, CAM Inc. would make decisions concerning, and
place all orders for, purchases and sales of securities
and help maintain the records relating to such purchases
and sales. CAM Inc. may, in its discretion, provide such
services through its own employees or the employees of
one or more affiliated companies that are qualified to
act as an investment adviser to the Master Portfolio
under applicable laws and are under the common control of
New Chase; provided that (i) all persons, when providing
services under the CAM Inc. Agreement, are functioning as
part of an organized group of persons, and (ii) such
organized group of persons is managed at all times by
authorized officers of CAM Inc.
The Adviser and CAM Inc. would bear all expenses in
connection with the performance of their respective
services under the Agreement.
As investment adviser, the Adviser would oversee the
management of the Master Portfolio under the CAM Inc.
Agreement, and, subject to the general supervision of the
Board of Trustees of the Master Portfolio, would make
recommendations and provide guidelines to CAM Inc. based
on general economic trends and macroeconomic factors.
Among the recommendations which may be provided by the
Adviser to CAM Inc. would be guidelines and benchmarks
against which the Master Portfolio would be managed.
From the fee paid by the Master Portfolio under the New
Advisory Agreement to the Adviser, the Adviser will bear
responsibility for payment of sub-advisory fees to CAM
Inc. Therefore, the Master Portfolio would not bear any
increase in advisory fee rates resulting from the New
Advisory Agreement and the CAM Inc. Agreement.
The Board of Trustees of the Master Portfolio, including
a majority of the Trustees who are not parties to the CAM
Inc. Agreement or interested persons of any such party,
unanimously approved the CAM Inc. Agreement at a meeting
held on December 14, 1995. If approved by shareholders,
unless sooner terminated, the CAM Inc. Agreement will
remain in effect for two years and will thereafter
continue for successive one-year periods, provided that
such continuation is specifically approved at least
annually by the Board of Trustees of the Master
Portfolio, or by the vote of a "majority of the
outstanding voting securities" of the Master Portfolio
under the CAM Inc. Agreement as defined under the 1940
Act and, in either case, by a majority of the Trustees of
the Master Portfolio who are not parties to the CAM Inc.
Agreement or interested persons of any such party, by
votes cast in person at a meeting called for such
purpose. The CAM Inc. Agreement is terminable at any
time, without penalty, by vote of the Board of Trustees
of the Master Portfolio, by the Adviser, by the vote of
"a majority of the outstanding voting securities" of the
Master Portfolio under the CAM Inc. Agreement, or by CAM
Inc., upon 60 days' written notice. The CAM Inc.
Agreement will terminate automatically in the event of
its assignment, as defined under the 1940 Act.
In the event that both the New Advisory Agreement and the
CAM Inc. Agreement are not approved by shareholders of
the Master Portfolio, neither the New Advisory Agreement
nor the CAM Inc. Agreement will be implemented for the
Master Portfolio, and the Interim Advisory Agreement
between the Master Portfolio and the Adviser will remain
in effect. If the Interim Agreement is not approved by
shareholders, the Board of the Master Portfolio will
consider the appropriate course of action.
Information About Chase Asset Management, Inc.
Chase Asset Management, Inc. ("CAM Inc.") was organized
as a Delaware corporation on September 1, 1995, and is
registered as an investment adviser under the Investment
Advisers Act of 1940, as amended. CAM Inc. is a wholly
owned subsidiary of The Chase Manhattan Bank, N.A., which
is a wholly owned subsidiary of The Chase Manhattan
Corporation. After the completion of the mergers, CAM
Inc. will continue to be a wholly owned subsidiary of the
Adviser which will be a wholly owned subsidiary of New
Chase. CAM Inc. was formed for the purpose of providing
discretionary investment advisory services to
institutional clients and to consolidate Chase's
investment management function. Information about the
Adviser and its affiliates is set forth above.
The principal executive officers and directors of CAM
Inc. are as follows:
James W. Zeigon, Director and Chairman of the Board. Mr.
Zeigon is also an Executive Vice President of the Chase
Manhattan Bank, N.A.
Mark R. Richardson, Director, President and Chief
Investment Officer. Mr. Richardson is also a Managing
Director of the Chase Manhattan Bank, N.A.
Stephen E. Prostano, Director, Executive Vice President
and Chief Operating Officer. Mr. Prostano is also a
Managing Director of the Chase Manhattan Bank, N.A.
The business address of each of the foregoing individuals
is 1211 Avenue of the Americas, New York, New York 10036.
CONSIDERATIONS OF BOARD OF TRUSTEES OF MASTER PORTFOLIO
In considering whether to recommend that the New Advisory
Agreement and CAM Inc. Agreement be approved by
shareholders, the Board of the Master Portfolio
considered the nature and quality of services to be
provided by the Adviser and CAM Inc. and comparative data
as to advisory fees and expenses, and the Board of the
Master Portfolio requested and evaluated such other
information from Chase and Chemical which the Board
deemed to be relevant, including, but not limited to, the
Adviser's ability to select and utilize portfolio
managers from its affiliates; that the rate at which
advisory fees will initially be paid to the Adviser would
be identical to the rate at which fees are now paid; and
that the New Advisory Agreement would include certain
provisions designed to modernize the terms of the
agreement and reflect regulatory developments, such as
those concerning "soft dollars" and aggregation of orders
under regulations and releases recently issued by the
Commission.
The Board of the Master Portfolio, including a majority
of the Trustees who are not interested persons of the
Master Portfolio or the Adviser ("Disinterested
Trustees"), unanimously approved the New Advisory
Agreement and CAM Inc. Agreement at a meeting held on
December 14, 1995.
FEES AND FEE WAIVERS
Under the Current Advisory Agreement the Master Portfolio
pays the Adviser (and under the Interim and New Advisory
Agreements, the Master Portfolio would pay the Adviser)
a fee, computed daily and paid monthly, at the annual
rate of 0.40% as a percentage of average daily net
assets. The Current Advisory Agreement, dated November
15, 1993, was last approved by shareholders on November
18, 1993.
Under the Current Advisory Agreement, the Interim
Advisory Agreement and New Advisory Agreement, the
Adviser may periodically reduce all or a portion of its
advisory fee with respect to the Master Portfolio. In the
fiscal period ended October 31, 1995, the Master
Portfolio accrued aggregate investment advisory fees in
the amount of $6,815,197.
Chase also serves as the Administrator to the Master
Portfolio. For the fiscal period ended October 31, 1995,
Chase accrued fees, and waived such fees in the amount of
$830,077 and $252,586, respectively. This voluntary
waiver and/or limitation is currently in effect but may
be terminated.
ADDITIONAL INFORMATION
Additional information concerning the Adviser, the
Administrator and the Sub-Administrator is set forth
under "Additional Information" under Proposal 1.
REQUIRED VOTE AND BOARD OF DIRECTORS' RECOMMENDATION
Approval of the Proposed New Advisory Agreement and CAM
Inc. Agreement will require the affirmative vote of a
"majority of the outstanding voting securities" of the
Master Portfolio, which for this purpose means the
affirmative vote of the lesser of (1) more than 50% of
the outstanding shares of the Master Portfolio or (2) 67%
or more of the shares of the Master Portfolio present at
the meeting if more than 50% of the outstanding shares of
the Master Portfolio are represented at the meeting in
person or by proxy (a "Majority Vote"). If the
shareholders of the Master Portfolio do not approve the
Proposed Advisory Agreement and CAM Inc. Agreement, the
Adviser will continue to manage the Master Portfolio's
investments under the Interim Advisory Agreement,
assuming Proposal 1 is approved. If the Interim
Agreement is not approved by shareholders, the Board will
take such further action as it may deem to be in the best
interests of the Master Portfolio's shareholders.
THE BOARD OF DIRECTORS OF MAXIM SERIES FUND, INC.
RECOMMENDS THAT SHAREHOLDERS OF THE FUND "VOTE IN FAVOR"
OF PROPOSAL 2.
PROPOSALS 3a-j
APPROVAL OR DISAPPROVAL OF CERTAIN CHANGES TO
THE FUNDAMENTAL INVESTMENT RESTRICTIONS
OF THE MASTER PORTFOLIO
Introduction to Proposals 3a-j
Proposals 3a-j concern proposed changes to certain
current fundamental portfolio investment restrictions
("Restrictions") of the Master Portfolio. Each of these
proposals relate to Restrictions of the Master Portfolio
which are presently classified as "fundamental," which
means that they can only be changed by a vote of the
majority of the Master Portfolio's shareholders. The
current Restrictions of the Fund are substantially
similar to the current Restrictions of the Master
Portfolio. A favorable vote on each of these Proposals
constitutes a vote in favor of making any changes to the
investment policies of the Fund that may be necessary or
appropriate to conform to such changes.
The Adviser recommended to the Trustees of the Master
Portfolio that it be authorized to analyze the Master
Portfolio's current Restrictions and, where practical and
appropriate for the Master Portfolio's investment
objective, recommend to the Trustees of the Master
Portfolio, subject to shareholder approval, that certain
changes be adopted. Based on the Adviser's review and
recommendations, the Trustees of the Master Portfolio
believe that such changes should be implemented for the
Master Portfolio. These changes fall within the
following categories:
Modification. The proposal involves a modification of
certain Restrictions for reasons outlined below.
Elimination. The proposal involves an elimination of
certain Restrictions, for reasons outlined below.
Reclassification. The proposal involves a
reclassification of certain Restrictions as non-
fundamental restrictions, which could thereafter be
changed with the approval of the Board of Trustees of the
Master Portfolio, without a shareholder vote.
Based on the recommendations of the Adviser, the Trustees
of the Master Portfolio have approved the proposed
changes and believe that they are in the best interests
of the Master Portfolio and its shareholders for the
following reasons:
Standardization. Some of the Master Portfolio's
Restrictions differ in form and substance from similar
restrictions of similar mutual funds currently advised by
the Adviser. Increased standardized restrictions among
all of the Adviser's mutual funds will help promote
operational efficiencies and facilitate the monitoring of
portfolio compliance. In all cases, the adoption of the
new or revised restriction is not expected to have any
impact on the investment techniques employed by the
Master Portfolio at this time.
Modernization. the Master Portfolio's Restrictions are
derived from restrictions which have been in effect,
without changes, for many years. In connection with the
Mergers, the Adviser has recommended to all advised funds
(including the Master Portfolio) that their investment
restrictions be evaluated and amended as necessary. The
Trustees of the Master Portfolio, acting on the Adviser's
recommendation, recommend that the Master Portfolio
modernize its Restrictions, where appropriate, to conform
to current regulation and authorize the use of currently
available financial instruments and investment
techniques.
Clarification. Some of the Master Portfolio's
Restrictions contain ambiguities that, if interpreted in
a narrow way, might prevent the Master Portfolio from
following the original intent of the Restriction.
Accordingly, the Trustees of the Master Portfolio, acting
on the Adviser's recommendation, recommend that the
Master Portfolio change the Restriction, where
appropriate, to eliminate any ambiguities. Some of these
proposals include the proposed division of a Restriction
which currently covers multiple topics into two or more
distinct restrictions.
Flexibility. Several of the Master Portfolio's
Restrictions are proposed to be changed so as to allow
the Master Portfolio to respond to recent and future
regulatory developments and changes in the financial
markets. In addition, restrictions prohibiting certain
transactions have been or may be changed or eliminated by
a federal or state securities regulator. In order to
take advantage of such changes, the Master Portfolio
would need shareholder approval, which is time consuming
and costly to the Master Portfolio and its shareholders.
The Adviser believes that in most cases, the proposed
changes are not expected to have any immediate effect on
the Master Portfolio's investment strategy, since the
Master Portfolios may not have a current intention of
changing their investment strategy. However, in order to
give the Master Portfolio more flexibility in responding
to regulatory and market developments, the Trustees of
the Master Portfolio, acting on the Adviser's
recommendations, recommend changing, reclassifying or
eliminating some of the Restrictions described below so
that they can be changed by the Trustees of the Master
Portfolio without a shareholder vote. In the future,
when changes to non-fundamental restrictions of the
Master Portfolio are adopted, the Fund's prospectus and
statement of additional information will be amended to
reflect the changes and shareholders will be notified
thereof.
The proposals regarding the Restrictions are presented in
the Proposals 3a-j, below, categorized by topic (e.g.,
borrowing, concentration, etc.). In each case, Master
Portfolio's current Restriction is set forth in the left
hand column under "Current" and where it is proposed that
the Restriction be restated, eliminated, reclassified, or
otherwise changed is set forth in the right hand column
under "Proposed." In each case, the reason for, and an
explanation of, the proposed change, is set forth below
the comparison.
PROPOSAL 3a
AMENDMENT TO THE MASTER PORTFOLIO'S FUNDAMENTAL
INVESTMENT RESTRICTION CONCERNING BORROWING
Current:
The Portfolio may not borrow money or pledge, mortgage or
hypothecate its assets, except that, as a temporary
measure for extraordinary or emergency purposes, it may
borrow in an amount not to exceed 1/3 of the current
value of its net assets, including the amount borrowed,
and may pledge, mortgage or hypothecate not more than 1/3
of such assets to secure such borrowings (it is intended
that money would be borrowed by the Portfolio only from
banks and only to accommodate requests for the repurchase
of shares of the Portfolio while effecting an orderly
liquidation of portfolio securities), provided that
collateral arrangements with respect to the Portfolio's
permissible futures and options transactions, including
initial and variation margin, are not considered to be a
pledge of assets for purposes of this restriction; the
Portfolio will not purchase investment securities if its
outstanding borrowing, including reverse repurchase
agreements, exceeds 5% of the value of the Portfolio's
total assets.
Proposed:
Fundamental Restriction
The Portfolio may not borrow money, except that the
Portfolio may borrow money for temporary or emergency
purposes, or by engaging in reverse repurchase
transactions, in an amount not exceeding 33 1/3% of the
value of its total assets at the time when the loan is
made and may pledge, mortgage or hypothecate no more than
1/3 of its net assets to secure such borrowings. Any
borrowings representing more than 5% of the Portfolio's
total assets must be repaid before the Portfolio may make
additional investments.
Explanation of the proposed change: The proposed
amendment clarifies and modernizes the restriction on
borrowing. The proposed restriction will treat
borrowings for temporary or emergency purposes separately
from other borrowings. Borrowing may be necessary to
address excessive or unanticipated liquidations of Master
Portfolio shares that exceed available cash. The
proposed amendment also would allow the Master Portfolio
to enter into reverse repurchase agreements, subject to
a limitation of 33 1/3% of the Master Portfolio's assets.
Reverse repurchase agreements involve the sale of
securities by the Master Portfolio with an agreement that
the Master Portfolio will repurchase such securities at
an agreed upon price and date. The Master Portfolio may
employ reverse repurchase agreements when necessary to
meet unanticipated net redemptions so as to avoid
liquidating portfolio investments during unfavorable
market conditions. At the time it enters into a reverse
repurchase agreement, the Master Portfolio will place in
a segregated custodial account high-quality liquid debt
securities having a dollar value equal to the repurchase
price.
PROPOSAL 3b
AMENDMENT TO THE MASTER PORTFOLIO'S FUNDAMENTAL
INVESTMENT RESTRICTION CONCERNING INVESTMENT
FOR THE PURPOSE OF EXERCISING CONTROL
Current:
The Portfolio may not purchase securities of any issuer
if such purchase at the time thereof would cause more
than 10% of the voting securities of such issuer to be
held by the Portfolio.
Proposed:
Non-fundamental Restriction
The Portfolio may not, with respect to 50% of its assets,
hold more than 10% of the outstanding voting securities
of an issuer.
Explanation of the proposed change: The proposed
amendment would clarify, for the Master Portfolio, that
the restriction involving a 10% limitation on investments
in an issuer is a limitation based upon the outstanding
voting securities of the issuer as provided for in
Subchapter M of the Internal Revenue Code and would not
be applicable outside the diversification requirements
which are applicable only to 50% of the Master
Portfolio's assets. This restatement of the restriction
would clarify and help standardize the restriction and
provide additional flexibility for the investment of the
Master Portfolio's assets. Although the restrictions as
restated would allow the non-diversified Master Portfolio
to hold a larger portion of each its assets in the
outstanding voting securities of one issuer, there is no
current intention for any of the Master Portfolio to do
so. The Master Portfolio would still be required to meet
the additional diversification requirements of the 1940
Act. In addition, the reclassification as non-
fundamental and restatement of the restriction would
clarify and help standardize the restriction.
PROPOSAL 3c
AMENDMENT TO THE MASTER PORTFOLIO'S
FUNDAMENTAL INVESTMENT RESTRICTION
CONCERNING THE MAKING OF LOANS
Current:
The Portfolio is not permitted to make loans to other
persons, except (i) through the lending of its portfolio
securities and provided that any such loans not exceed
30% of the Portfolio's total assets (taken at market
value), (ii) through the use of repurchase agreements or
the purchase of short-term obligations and provided that
not more than 10% of the Portfolio's total assets will be
invested in repurchase agreements maturing in more than
seven days, or (iii) by purchasing, subject to the
limitation in paragraph 5 above [referring to the current
investment restriction under Proposal 3g below], a
portion of an issue of debt securities of types commonly
distributed privately to financial institutions, for
which purposes the purchase of short-term commercial
paper or a portion of an issue of debt securities which
are part of an issue to the public shall not be
considered the making of a loan.
Proposed:
Fundamental Restriction
The Portfolio may not make loans, except that the
Portfolio may: (i) purchase and hold debt instruments
(including without limitation, bonds, notes, debentures
or other obligations and certificates of deposit,
bankers' acceptances and fixed time deposits) in
accordance with its investment objectives and policies;
(ii) enter into repurchase agreements with respect to
portfolio securities; and (iii) lend portfolio securities
with a value not in excess of one-third of the value of
its total assets.
Explanation of the proposed change: The proposed
amendment is intended to clarify the basic limitation on
securities lending, and would also exclude those
transactions that current regulatory interpretations and
policies allow. The investment adviser will not make
loans of the Master Portfolio's portfolio securities (or
enter into repurchase agreements) unless it receives
collateral that is at least 102% of the value of the
loan, including accrued interest. During the time
portfolio securities are on loan, the borrower pays the
Master Portfolio any dividends or interest paid on such
securities, and the Master Portfolio may invest the cash
collateral and earn additional income, or it may receive
an agreed-upon amount of interest income from the
borrower who has delivered equivalent collateral or a
letter of credit. As with other extensions of credit,
there are risks of delay in recovery or even loss of
rights in the collateral should the borrower of any
loaned securities fail financially.
PROPOSAL 3d
RECLASSIFICATION OF THE MASTER PORTFOLIO'S
FUNDAMENTAL INVESTMENT RESTRICTION
CONCERNING PURCHASES OF SECURITIES ON MARGIN
Current:
The Portfolio may not purchase any security or evidence
of interest therein on margin, except that such
short-term credit may be obtained as may be necessary for
the clearance of purchases and sales of securities and
except that, with respect to the Portfolio's permissible
options and futures transactions, deposits of initial and
variation margin may be made in connection with the
purchase, ownership, holding or sale of futures or
options positions.
Proposed:
Non-fundamental Restriction
The Portfolio may not make short sales of securities,
other than short sales "against the box," or purchase
securities on margin except for short-term credits
necessary for clearance of portfolio transactions,
provided that this restriction will not be applied to
limit the use of options, futures contracts and related
options, in the manner otherwise permitted by the
investment restrictions, policies and investment program
of the Portfolio.
Explanation of the proposed change: The proposed change
modernizes and clarifies the circumstances under which
the Master Portfolio may make purchases on margin. The
reclassification as non-fundamental could enable the
Master Portfolio to respond more quickly to changes in
financial markets.
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 securities short while owning the same
securities in the same amount, or having the right to
obtain equivalent securities. Certain state regulations
currently prohibit mutual funds from entering into any
short sales, other than short sales against the box. If
the proposal is approved, however, the Board of Trustees
would be able to change the proposed non-fundamental
restriction in the future, without a vote of
shareholders, if state regulations were to change to
permit other types of short sales, or if waivers from
existing requirements were available, subject to
appropriate disclosure to investors. Although
elimination of the Master Portfolio's fundamental
restriction on short selling will not affect the Master
Portfolio's investment techniques at this time, in the
event of a change in state regulatory requirements, the
Master Portfolio Fund may alter its investment practices
in the future.
PROPOSAL 3e
AMENDMENT TO THE MASTER PORTFOLIO'S
FUNDAMENTAL INVESTMENT RESTRICTION
CONCERNING CONCENTRATION OF INVESTMENT
Current:
The Portfolio may not concentrate its investments in any
particular industry, but if it is deemed appropriate for
the achievement of the Portfolio's investment objective,
up to 25% of the assets of the Portfolio, at market value
at the time of each investment, may be invested in any
one industry, except that this restriction does not apply
to U.S. government securities (in addition, so long as a
single foreign government or supernational organization
is considered to be an "industry" for purposes of this
25% limitation, the Portfolio will comply therewith), and
except that, with respect to the Portfolio's permissible
futures and options transaction, positions in options and
futures shall not be subject to this restriction.
For purposes of this restriction, industrial development
bonds, where the payment of principal and interest is the
ultimate responsibility of companies within the same
industry, are grouped together as an "industry."
Proposed:
Fundamental Restriction
The Portfolio may not purchase the securities of any
issuer (other than securities issued or guaranteed by the
U.S. government or any of its agencies or
instrumentalities, or repurchase agreements secured
thereby) if, as a result, more than 25% of the
Portfolio's total assets would be invested in the
securities of companies whose principal business
activities are in the same industry. Notwithstanding the
foregoing, with respect to the Portfolio's permissible
futures and options transactions in U.S. government
securities, positions in such options and futures shall
not be subject to this restriction.
Explanation of the proposed change: The proposed
amendment is intended to clarify the basic limitation on
concentration of investment and now would specifically
exclude government securities, repurchase agreements
secured thereby and positions in options and futures from
the limitations imposed by the restriction.
PROPOSAL 3f
AMENDMENT TO THE MASTER PORTFOLIO'S
FUNDAMENTAL INVESTMENT RESTRICTION CONCERNING
COMMODITIES AND REAL ESTATE
Current:
The Portfolio may not purchase or sell real estate
(including limited partnership interests but excluding
securities secured by real estate or interests therein),
interests in oil, gas or mineral leases, commodities or
commodity contracts in the ordinary course of business,
other than (i) with respect to the Portfolio's
permissible futures and options transactions or
(ii) forward purchases and sales of foreign currencies or
securities (the Portfolio reserves the freedom of action
to hold and sell real estate acquired as a result of its
ownership of securities).
Proposed:
Fundamental Restriction
The Portfolio may not purchase or sell physical
commodities unless acquired as a result of ownership of
securities or other instruments but this shall not
prevent the Portfolio from (i) purchasing or selling
options and futures contracts or from investing in
securities or other instruments backed by physical
commodities or (ii) engaging in forward purchases or
sales of foreign currencies or securities.
Fundamental Restriction
The Portfolio may not purchase or sell real estate unless
acquired as a result of ownership of securities or other
instruments (but this shall not prevent the Portfolio
from investing in securities or other instruments backed
by real estate or securities of companies engaged in the
real estate business). Investments by the Portfolio in
securities backed by mortgages on real estate or in
marketable securities of companies engaged in such
activities are not hereby precluded.
Non-fundamental Restriction
The Portfolio may not purchase or sell interests in oil,
gas or mineral leases.
Explanation of the proposed changes: The proposed
changes conform the application of the restrictions
pertaining to commodities and real estate to the current
regulations of the 1940 Act by clarifying that certain
real estate-related financial instruments may be
purchased by the Master Portfolio. To a large extent,
the proposed amendment would also standardize the
restrictions applicable to the Master Portfolio by
allowing the Master Portfolio to engage in certain
transactions such as forward purchases when it is
consistent with the Master Portfolio's investment
objectives and policies.
PROPOSAL 3g
AMENDMENT OF THE MASTER PORTFOLIO'S FUNDAMENTAL
INVESTMENT RESTRICTION REGARDING INVESTMENTS
IN RESTRICTED AND ILLIQUID SECURITIES
Current:
The Portfolio may not knowingly invest in securities
which are subject to legal or contractual restrictions on
resale (including securities that are not readily
marketable, but not including repurchase agreements
maturing in not more than seven days) if, as a result
thereof, more than 10% of the Portfolio's total assets
(taken at market value) would be so invested (including
repurchase agreements maturing in more than seven days).
This limitation may be subject to additional restrictions
imposed by jurisdictions in which the Portfolio's shares
are offered for sale (currently 10%).
Proposed:
Non-fundamental Restriction
The Portfolio may not invest more than 15% of its net
assets in illiquid securities.
Explanation of the proposed changes: The current
fundamental restrictions limit purchases of all
securities that are subject to restrictions on resale,
including securities that are not readily marketable and
repurchase agreements maturing in more than seven days.
These restrictions include securities eligible for resale
under Rule 144A and Section 4(2) commercial obligations.
The proposed non-fundamental restriction incorporates
recent developments in securities markets. Under the
proposed restrictions, securities issued under such
exemptions from registration, although restricted, may
still be classified as liquid in accordance with
procedures adopted by the Board of Trustees. This
investment practice could have the effect of increasing
the level of illiquidity in the Master Portfolio.
Furthermore, to the extent that a market fails to develop
or ceases to exist with respect to these restricted
securities, illiquidity levels will increase.
When purchasing securities which could not be sold
without registration under the Securities Act of 1933,
the Master Portfolio will endeavor to obtain the right to
registration at the expense of the issuer. Generally,
there will be a lapse of time between the Master
Portfolio's decision to sell any such security and the
registration of the security permitting sale. During any
such period, the price of the securities will be subject
to market fluctuations.
The proposed changes would standardize the applicable
investment restriction, and would remove certain
interpretations of what may constitute illiquid
securities. By doing this, the Master Portfolio would be
subject to the same current interpretations, from time to
time, of what constitutes an illiquid security, under
Commission releases and other relevant authority. The
defundamentalization of this restriction would avoid the
delay and expense of a shareholder vote in the event that
the permissible guidelines for investments in illiquid
securities changes at some time in the future. This
limitation may be subject to additional restrictions
imposed by jurisdictions in which the Master Portfolio's
shares are offered for sale.
PROPOSAL 3h
RECLASSIFICATION OF THE MASTER PORTFOLIO'S
FUNDAMENTAL RESTRICTION CONCERNING
THE USE OF OPTIONS
Current:
The Portfolio may not write, purchase or sell any put or
call option or any combination thereof, provided that
this shall not prevent (i) the purchase, ownership,
holding or sale of warrants where the grantor of the
warrants is the issuer of the underlying securities,
(ii) the writing, purchasing or selling of puts, calls or
combinations thereof with respect to U.S. Government
securities or (iii) with respect to the Portfolio's
permissible futures and options transactions, the
writing, purchasing, ownership, holding or selling of
futures and options positions or of puts, calls or
combinations thereof with respect to futures.
Proposed:
Non-fundamental Restriction
The Portfolio may not write, purchase or sell any put or
call option or any combination thereof, provided that
this shall not prevent (i) the purchase, ownership,
holding or sale of warrants where the grantor of the
warrants is the issuer of the underlying securities,
(ii) the writing, purchasing or selling of puts, calls or
combinations thereof with respect to portfolio securities
or (iii) with respect to the Portfolio's permissible
futures and options transactions, the writing,
purchasing, ownership, holding or selling of futures and
options positions or of puts, calls or combinations
thereof with respect to futures.
Explanation of the proposed change: The proposed
reclassification of this restriction as non-fundamental
would avoid the delay and expense of a shareholder vote
in the event that the permissible guidelines for such
investments changes at some time in the future. The
terms of this restriction are consistent with general
restrictions, including limitations on liquidity and
portfolio diversification. Therefore, no foreseeable
impact on the Master Portfolio is anticipated by the
proposed reclassification.
Proposal 3i
AMENDMENT TO THE MASTER PORTFOLIO'S FUNDAMENTAL
INVESTMENT RESTRICTION CONCERNING
SENIOR SECURITIES
Current:
The Portfolio may not issue any senior security (as that
term is defined in the 1940 Act) if such issuance is
specifically prohibited by the 1940 Act or the rules and
regulations promulgated thereunder, provided that
collateral arrangements with respect to the Portfolio's
permissible options and futures transactions, including
deposits of initial and variation margin, are not
considered to be the issuance of a senior security for
purposes of this restriction.
Proposed:
Fundamental Restriction
The Portfolio may not issue any senior security (as
defined in the 1940 Act), except that (a) the Portfolio
may engage in transactions that may result in the
issuance of senior securities to the extent permitted
under applicable regulations and interpretations of the
1940 Act or an exemptive order; (b) the Portfolio may
acquire other securities, the acquisition of which may
result in the issuance of a senior security, to the
extent permitted under applicable regulations or
interpretations of the 1940 Act; and (c) subject to the
restrictions set forth above, the Portfolio may borrow
money as authorized by the 1940 Act. For purposes of
this restriction, collateral arrangements with respect to
the Portfolio's permissible options and futures
transactions, including deposits of initial and variation
margin, are not considered to be the issuance of a senior
security.
Explanation of proposed change: Under the 1940 Act, an
open-end investment company (such as the Master
Portfolio) cannot issue senior securities except under
certain very limited conditions. The proposed amendment
clarifies and modernizes the language concerning senior
securities to conform to provisions of the 1940 Act. It
is proposed that this restriction exclude those
transactions which are allowed by current regulatory
interpretations and policies, and which are consistent
with current investment marketplace practices.
Therefore, the proposed fundamental restrictions will
allow, for example, the following investments even though
they may result in the issuance of senior securities:
the Master Portfolio could, to the extent permitted by
applicable law or exemptive order (a) enter into
commitments, including reverse repurchase agreements and
delayed delivery and when-issued securities; (b) engage
in transactions that may result in the issuance of a
senior security; (c) engage in short sales of securities;
(d) purchase and sell futures contracts and related
options; (e) borrow money; and (f) issue multiple classes
of securities in each case subject to any other
applicable restrictions.
PROPOSAL 3j
AMENDMENT TO THE MASTER PORTFOLIO'S
FUNDAMENTAL INVESTMENT
RESTRICTION REGARDING SHORT SALES OF SECURITIES
Current:
The Portfolio may not make short sales of securities or
maintain a short position; except that the Portfolio may
only make such short sales of securities or maintain a
short position if when a short position is open the
Portfolio owns an equal amount of such securities or
securities convertible into or exchangeable, without
payment of any further consideration, for securities of
the same issue as, and equal in amount to, the securities
sold short, and not more than 10% of the Portfolio's net
assets (taken at market value) is held as collateral for
such sales at any one time (it is the present intention
of management to make such sales only for the purpose of
deferring realization of gain or loss for federal income
tax purposes; such sales would not be made of securities
subject to outstanding options).
Proposed:
It is proposed that this restriction be eliminated, as it
has been combined with a non-fundamental restriction
concerning purchases of securities on margin. (See
Proposal 3d above.)
Explanation of the proposed change: The proposed change
modernizes and clarifies the circumstances under which
the Master Portfolio may make short sales of securities.
The reclassification as non-fundamental could enable the
Master Portfolio to respond more quickly to changes in
financial markets.
Additional Information Regarding Proposals 3a-j.
Unless otherwise noted, whenever an amended or restated
investment policy or limitation states a maximum
percentage of the Master Portfolio's assets that may be
invested, such percentage limitation will be determined
immediately after and as a result of the acquisition of
such security or other asset, except in the case of
borrowings. Any subsequent change in values, assets, or
other circumstances will not be considered when
determining whether the investment complies with the
Master Portfolio's investment policies and limitations.
If any of Proposals 3a-j are not approved by
shareholders, the current restriction will remain
unchanged.
REQUIRED VOTE AND BOARD OF DIRECTORS' RECOMMENDATION
Each of the above proposals to change the Master
Portfolio's restrictions requires the approval of a
"majority of the outstanding voting securities" of the
Master Portfolio, which for this purpose means the
affirmative vote of the lesser of (1) more than 50% of
the outstanding shares of the Master Portfolio or (2) 67%
or more of the shares of the Master Portfolio present at
a meeting of shareholders if more than 50% of the
outstanding shares of the Master Portfolio are
represented at a meeting in person or by proxy.
THE BOARD OF DIRECTORS OF MAXIM SERIES FUND, INC.
RECOMMENDS THAT SHAREHOLDERS
VOTE "IN FAVOR OF" THE FOREGOING PROPOSALS.
In addition, for shareholders of the Fund, to transact
such other business as may properly come before the
meeting or any adjournment thereof.
OTHER INFORMATION
The Master Portfolio's present Sub-Administrator is Vista
Broker Dealer Services, Inc. ("VBDS"), a wholly owned
subsidiary of BISYS Funds Services, Inc. See
"Administrator" under Proposal 1. The following are
officers of the Master Portfolio who may be deemed to
have an interest in VBDS by virtue of their status as
employees and/or executive officers of VBDS:
Name<PAGE>
Position
with Mutual
Fund Group<PAGE>
Age Officer of
Mutual Fund
Group Since<PAGE>
Ann Bergin Secretary
and
Assistant
Treasurer<PAGE>
35 1995 Martin R. Dean Treasurer
and
Assistant
Secretary<PAGE>
31 1995<PAGE>
<PAGE>
Substantial Shareholders. As of the Record Date, the
shares of the Fund were owned 100% by an unregistered
separate account of Great-West Life & Annuity Insurance
Company ("GWL&A") to fund benefits under group variable
annuity contracts issued by GWL&A.
Voting Information and Discretion of the Persons Named as
Proxies. While the Meeting is called to act upon any
other business that may properly come before it, at the
date of this proxy statement the only business which the
management intends to present or knows that others will
present is the business mentioned in the Notice of
Meeting. If any other matters lawfully come before the
Meeting, and in all procedural matters at the Meeting, it
is the intention that the enclosed proxy shall be voted
in accordance with the best judgment of the persons named
as proxies therein, or their substitutes, present and
acting at the Meeting.
If at the time any session of the Meeting is called to
order a quorum is not present, in person or by proxy, the
persons named as proxies may vote those proxies which
have been received to adjourn the Meeting to a later
date. In the event that a quorum is present but
sufficient votes in favor of one or more of the proposals
have not been received, the persons named as proxies may
propose one or more adjournments of the Meeting to permit
further solicitation of proxies with respect to any such
proposal. All such adjournments will require the
affirmative vote of a majority of the Shares present in
person or by proxy at the session of the Meeting to be
adjourned. The persons named as proxies will vote those
proxies which they are entitled to vote in favor of the
proposal, in favor of such an adjournment, and will vote
those proxies required to be voted against the proposal,
against any such adjournment. A vote may be taken on one
or more of the proposals in this proxy statement prior to
any such adjournment if sufficient votes for its approval
have been received and it is otherwise appropriate.
Submission of Proposals for the Next Annual Meeting of
Maxim Series Fund, Inc. If a shareholder intends to
present a proposal at the 1997 Annual Meeting of
Shareholders of the Fund and desires to have the proposal
included in the Fund's Proxy Statement and Form of Proxy
for that meeting, the shareholder must deliver the
proposal to the offices of the Fund by December 1, 1996.
The expense of preparing, printing and mailing of the
enclosed Form of Proxy and accompanying Notice and Proxy
Statement will be borne by the Fund.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. IF
YOU DO NOT EXPECT TO ATTEND THE MEETING, PLEASE SIGN YOUR
PROXY CARD PROMPTLY AND RETURN IT IN THE ENCLOSED
ENVELOPE TO AVOID UNNECESSARY EXPENSE AND DELAY. NO
POSTAGE IS NECESSARY.
March 22, 1996
BY ORDER
OF THE
BOARD OF
DIRECTORS
OF MAXIM
SERIES
FUND, INC.
Ruth B.
Lurie
Secretary<PAGE>
APPENDIX A
Interim Investment Advisory Agreement<PAGE>
APPENDIX A
FORM OF INTERIM
INVESTMENT ADVISORY AGREEMENT
BETWEEN
MUTUAL FUND GROUP
AND
THE CHASE MANHATTAN BANK, N.A.
AGREEMENT made this day of , by and between MUTUAL
FUND GROUP (the
"Trust") on behalf of the series of the Trust (the
"Fund") and THE CHASE
MANHATTAN BANK, N.A. (the "Adviser").
W I T N E S S E T H:
WHEREAS, the Trust is registered as an open-end,
diversified management investment company under the
Investment Company Act of 1940, as amended (the"Act");
and
WHEREAS, the Trust and the Adviser desire to enter into
an agreement to provide advisory services for the Fund on
the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual promises
and agreements herein contained and other good and
valuable consideration, the receipt of which is
hereby acknowledged, it is hereby agreed by and between
the parties hereto as follows:
1. Appointment. The Adviser agrees, all as more
fully set forth herein, to act as investment adviser to
the Fund with respect to the investment of its assets and
to supervise and arrange the purchase of securities for
and the sale of securities held in the portfolio of the
Fund.
2. Duties and Obligations of the Adviser With
Respect to Investments of Assets of the Fund.
(a) Subject to the succeeding provisions of this
section and subject to the direction and control of the
Board of Trustees of the Trust, the Adviser shall:
(i) supervise continuously the investment
program of the Fund and the composition of its portfolio;
(ii) determine what securities shall be
purchased or sold by the Fund; and
(iii) arrange for the purchase and the sale
of securities held in the portfolio of the Fund.
(b) Any investment program furnished by the
Adviser under this section shall at all times conform to,
and be in accordance with, any requirements imposed by:
(i) the provisions of the Act and of any
rules or regulations in force thereunder;
(ii) any other applicable provisions of
state and federal law;
(iii) the provisions of the Declaration of
Trust and By-Laws of the Trust, as amended from time to
time;
(iv) any policies and determinations of the
Board of Trustees of the Trust; and
(v) the fundamental policies of the Fund,
as reflected in its Registration Statement under the Act,
as amended from time to time.
(c) In making recommendations for the Fund,
Trust Division personnel of the Adviser will not inquire
or take into consideration whether the issuer of
securities proposed for purchase or sale for the Fund's
account are customers of the Commercial Division of the
Adviser. In dealing with commercial customers, the
Commercial Division will not inquire or take into
consideration whether securities of those customers are
held by the Fund.
(d) The Adviser shall give the Fund the benefit
of its best judgment and effort in rendering services
hereunder, but the Adviser shall not be liable for any
loss sustained by the Fund in connection with the matters
to which this Agreement relates, including specifically
but not limited to, the calculation of net asset value
and the adoption of any investment policy or the
purchase, sale or retention of any security, whether or
not such purchase, sale or retention shall have been
based upon its own investigation and research or upon
investigation and research made by any other individual,
firm or corporation, if such purchase, sale or retention
shall have been made and such other individual, firm or
corporation shall have been selected in good faith.
Nothing herein contained shall, however, be construed to
protect the Adviser against any liability to the Fund or
its security holders by reason of willful misfeasance,
bad faith or gross negligence in the performance of its
duties, or by reason of its reckless disregard of its
obligations and duties under this Agreement.
(e) Nothing in this Agreement shall prevent the
Adviser or any affiliated person (as defined in the Act)
of the Adviser from acting as investment adviser or
manager for any other person, firm or corporation
(including other investment companies) and shall not in
any way limit or restrict the Adviser or any such
affiliated person from buying, selling or trading any
securities for its or their own accounts or for the
accounts of others for whom it or they may be acting;
provided, however, that the Adviser expressly represents
that it will undertake no activities which, in its
judgment, will adversely affect the performance of its
obligations to the Fund under this Agreement.
(f) The Fund will supply the Adviser with
certified copies of the following documents: (i) the
Trust's Declaration of Trust and By-Laws, as amended;
(ii) resolutions of the Trust's Board of Trustees and
shareholders authorizing the appointment of the Adviser
and approving this Agreement; (iii) the Trust's
Registration Statement, as filed with the SEC; and (iv)
the Fund's most recent prospectus and statement of
additional information. The Fund will furnish the
Adviser from time to time with copies of all amendments
or supplements to the foregoing, if any, and all
documents, notices and reports filed with the SEC.
(g) The Fund will supply, or cause its custodian
bank to supply, to the Adviser such financial information
as is necessary or desirable for the functions of the
Adviser hereunder.
3. Broker-Dealer Relationships. The Adviser is
responsible for decisions to buy and sell securities for
the Fund, broker-dealer selection and negotiation of its
brokerage commission rates. The Adviser's primary
consideration in effecting a security transaction will be
execution at the most favorable price. The Fund
understands that a substantial majority of the Fund's
portfolio transactions will be transacted with primary
market makers acting as principal on a net basis, with no
brokerage commissions being paid by the Fund. Such
principal transactions may, however, result in a profit
to the market makers. In certain instances the Adviser
may make purchases of underwritten issues at prices which
include underwriting fees. In selecting a broker or
dealer to execute each particular transaction, the
Adviser will take the following into consideration; the
best price available; the reliability, integrity and
financial condition of the broker or dealer; the size of
and difficulty in executing the order; and the value of
the expected contribution of the broker or dealer to the
investment performance of the Fund on a continuing basis.
Accordingly, the price to the Fund in any transaction may
be less favorable than that available from another broker
or dealer if the difference is reasonably justified by
other aspects of the portfolio execution services
offered. Subject to such policies as the Board of
Trustees may determine, the Adviser shall not be deemed
to have acted unlawfully or to have breached any duty
created by this Agreement or otherwise solely by reason
of its having caused the Fund to pay a broker or dealer
that provides brokerage and research services to the
Adviser an amount of commission for effecting a portfolio
investment transaction in excess of the amount of
commission another broker or dealer would have charged
for effecting that transaction, if the Adviser determines
in good faith that such amount of commission was
reasonable in relation to the value of the brokerage and
research services provided by such broker or dealer,
viewed in terms of either that particular transaction or
the Adviser's overall responsibilities with respect to
the Fund. The Adviser is further authorized to allocate
the orders placed by it on behalf of the Fund to such
brokers and dealers who also provide research or
statistical material, or other services to the Fund
(which material or services may also assist the Adviser
in rendering services to other clients). Such allocation
shall be in such amounts and proportions as the Adviser
shall determine and the Adviser will report on said
allocations regularly to the Board of Trustees indicating
the brokers to whom such allocations have been made and
the basis therefor.
4. Allocation of Expenses. The Adviser agrees that
it will furnish the Fund, at its expense, all office
space and facilities, equipment and clerical personnel
necessary for carrying out its duties under this
Agreement and the keeping of certain accounting records
of the Fund. The Adviser agrees that it will supply to
any sub-adviser or administrator (the "Administrator") of
the Fund all necessary financial information in
connection with the Administrator's duties under any
Agreement between the Administrator and the Trust. The
Adviser will also pay all compensation of all Trustees,
officers and employees of the Fund who are "affiliated
persons" of the Adviser as defined in the Act. All costs
and expenses not expressly assumed by the Adviser under
this Agreement or by the Administrator under the
administration agreement between it and the Trust shall
be paid by the Fund, including, but not limited to (i)
fees paid to the Adviser and the Administrator; (ii)
interest and taxes; (iii) brokerage commissions; (iv)
insurance premiums; (v) compensation and expenses of its
Trustees other than those affiliated with the Adviser or
the Administrator; (vi) legal, accounting and audit
expenses; (vii) custodian and transfer agent, or
shareholder servicing agent, fees and expenses; (viii)
expenses, including clerical expenses, incident to the
issuance, redemption or repurchase of shares, including
issuance on the payment of, or reinvestment of,
dividends; (ix) fees and expenses incident to the
registration under Federal or state securities laws of
the Fund or its shares; (x) expenses of preparing,
setting in type, printing and mailing prospectuses,
statements of additional information, reports and notices
and proxy material to shareholders of the Fund; (xi) all
other expenses incidental to holding meetings of the
Fund's shareholders; and (xii) such extraordinary
expenses as may arise, including litigation affecting the
Fund and the legal obligations which the Trust may have
to indemnify its officers and Trustees with respect
thereto.
5. Compensation of the Adviser.
(a) For the services to be rendered and the
expenses assumed by the Adviser, the Fund shall pay to
the Adviser monthly compensation at an annual rate of %
[see attached Schedule] of the Fund's average daily net
assets. Except as hereinafter set forth, compensation
under this Agreement shall be calculated and accrued
daily and the amounts of the daily accruals shall be paid
monthly. If the Agreement becomes effective subsequent to
the first day of a month or shall terminate before the
last day of a month, compensation for that part of the
month this Agreement is in effect shall be prorated in a
manner consistent with the calculation of the fees as set
forth above. Subject to the provisions of subsection (b)
hereof, payment of the Adviser's compensation for the
preceding month shall be made as promptly as possible
after completion of the computations contemplated by
subsection (b) hereof.
(b) In the event the operating expenses of the
Fund including all investment advisory, sub-advisory and
administration fees, for any fiscal year ending on a date
on which this Agreement is in effect exceed the expense
limitations applicable to the Fund imposed by the
securities laws or regulations thereunder of any state in
which the Fund's shares are qualified for sale, as such
limitations may be raised or lowered from time to time,
the Adviser shall reduce its investment advisory fee, but
not below zero, to the extent of its share of such excess
expenses; provided, however, there shall be excluded from
such expenses the amount of any interest, taxes,
brokerage commissions and extraordinary expenses
(including but not limited to legal claims and
liabilities and litigation costs and any indemnification
related thereto) paid or payable by the Fund. Such
reduction, if any, shall be computed and accrued daily,
shall be settled on a monthly basis and shall be based
upon the expense limitation applicable to the Fund as at
the end of the last business day of the month. Should
two or more of such expense limitations be applicable as
at the end of the last business day of the month, that
expense limitation which results in the largest reduction
in the Adviser's fee shall be applicable. For the
purposes of this paragraph, the Adviser's share of any
excess expenses shall be computed by multiplying such
excess expenses by a fraction, the numerator of which is
the amount of the investment advisory fee which would
otherwise be payable to the Adviser for such fiscal year
were it not for this subsection 5(b) and the denominator
of which is the sum of all investment advisory and
administrative fees which would otherwise be payable by
the Fund were it not for the expense limitation
provisions of any investment advisory or administrative
agreement to which the Fund is a party.
6. Duration, Amendment and Termination.
(a) This Agreement shall go into effect as to the
Fund on the date set forth above (the "Effective Date")
and shall, unless terminated as hereinafter provided,
continue in effect until May 30, 1996, unless the Fund's
shareholders approve the Agreement prior to such date.
Upon approval by shareholders, this agreement shall,
unless terminated as hereinafter provided, continue in
effect for two years from the date of such approval and
shall continue from year to year thereafter, but only so
long as such continuance is specifically approved at
least annually by the Board of Trustees of the Trust,
including the vote of a majority of the Trustees who are
not parties to this Agreement or "interested persons" (as
defined in the Act) of any such party cast in person at
a meeting called for the purpose of voting on such
approval, or by the vote of the holders of a "majority"
(as so defined) of the outstanding voting securities of
the Fund and by such a vote of the Trustees.
(b) This Agreement may not be amended except in
accordance with the provisions of the Act, including
specifically, the provisions of the Act and the rules and
regulations thereunder regarding series votes by
shareholders of the Fund.
(c) This Agreement may be terminated by the
Adviser at any time without penalty upon giving the Fund
sixty (60) days' written notice (which notice may be
waived by the Fund) and may be terminated by the Fund at
any time without penalty upon giving the Adviser sixty
(60) days' written notice (which notice may be waived by
the Adviser), provided that such termination by the Fund
shall be approved by the vote of a majority of all the
Trustees in office at the time or by the vote of the
holders of a majority (as defined in the Act) of the
voting securities of the Fund at the time outstanding and
entitled to vote. This Agreement may only be terminated
in accordance with the provisions of the Act, and shall
automatically terminate in the event of its assignment
(as defined in the Act).
7. Board of Trustees Meeting. The Fund agrees that
notice of each meeting of the Board of Trustees of the
Trust will be sent to the Adviser and that the Fund will
make appropriate arrangements for the attendance (as
persons present by invitation) of such person or persons
as the Adviser may designate.
8. Notices. Any notices under this Agreement shall
be in writing, addressed and delivered or mailed postage
paid to the other party at such address as such other
party may designate for the receipt of such notice.
Until further notice to the other party, it is agreed
that the address of the Fund for this purpose shall be
125 West 55th Street, New York, New York 10019, and that
of the Adviser shall be One Chase Manhattan Plaza, New
York, New York 10081.
9. Questions of Interpretation. 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 Act,
as amended, shall be resolved by reference to such term
or provision of the Act and to interpretations thereof,
if any, by the United States Courts or in the absence of
any controlling decision of any such court, by rules,
regulations or orders of the Securities and Exchange
Commission issued pursuant to said Act. In addition,
where the effect of a requirement of the Act, reflected
in any provision of this Agreement is revised by rule,
regulation or order of the Securities and Exchange
Commission, such provision shall be deemed to incorporate
the effect of such rule, regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused the
foregoing instrument to be executed by their duly
authorized officers and their seals to be hereunder
affixed, all as of the day and year first above written.
MUTUAL FUND GROUP
By:-----------------------------
Name:
Title:
ATTEST:
THE CHASE MANHATTAN BANK, N.A.
By:------------------------------
Name:
Title:
ATTEST:
<PAGE>
Schedule A
Mutual Fund Group Fee
- ------------------
- ----
Vista Short Term Bond Fund 0.25%
Vista U.S. Treasury Income Fund 0.30
Vista Bond Fund 0.30
Vista Equity Income Fund 0.40
Vista Equity Fund
0.40
Vista Balanced Fund 0.50
IEEE Balanced Fund 0.60
Vista Small Cap Equity Fund 0.65
Vista Southeast Asian Fund 0.65
Vista Japan Fund 1.00
Vista European Fund 1.00
Master Portfolios:
- ------------------
Vista Capital Growth Portfolio 0.40%
Vista Growth and Income Portfolio 0.40
Vista International Equity
Portfolio
1.00
Vista Global Fixed Income
Portfolio
0.75
<PAGE>
APPENDIX B
New Investment Advisory Agreement<PAGE>
APPENDIX
B
FORM OF NEW
INVESTMENT ADVISORY AGREEMENT
BETWEEN
MUTUAL FUND GROUP
AND
THE CHASE MANHATTAN BANK, N.A.
AND ITS SUCCESSOR
AGREEMENT made this day of , 1996, by and between
Mutual Fund Group, a Massachusetts business trust which
may issue one or more series of shares (hereinafter the
"Trust"), and The Chase Manhattan Bank, N.A., a national
banking association, and its successor, The Chase
Manhattan Bank, a New York State chartered bank
(hereinafter the "Adviser").
WHEREAS, the Trust is registered as an open-end,
management investment company under the Investment
Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Trust desires to retain the Adviser to
furnish investment advisory services in connection with
the series of the Trust listed on Schedule A (each, a
"Fund" and collectively, the "Funds"), and the Adviser
represents that it is willing and possesses legal
authority to so furnish such services;
NOW, THEREFORE, in consideration of the premises and
mutual covenants herein contained, it is agreed between
the parties hereto as follows:
1. Structure of Agreement. The Trust is entering into
this Agreement on behalf of the Funds severally and not
jointly. The responsibilities and benefits set forth in
this Agreement shall refer to each Fund severally and not
jointly. No individual Fund shall have any responsibility
for any obligation with respect to any other Fund arising
out of this Agreement. Without otherwise limiting the
generality of the foregoing,
(a) any breach of any term of this Agreement
regarding the Trust with respect to any one Fund shall
not create a right or obligation with respect to any
other Fund;
(b) under no circumstances shall the Adviser have
the right to set off claims relating to a Fund by
applying property of any other Fund; and
(c) the business and contractual relationships
created by this Agreement, the consideration for entering
into this Agreement, and the consequences of such
relationships and consideration relate solely to the
Trust and the particular Fund to which such relationship
and consideration applies.
2. Delivery of Documents. The Trust has delivered to
the Adviser copies of each of the following documents and
will deliver to it all future amendments and supplements
thereto, if any:
(a) The Trust's Declaration of Trust;
(b) The By-Laws of the Trust;
(c) Resolutions of the Board of Trustees of the
Trust authorizing the execution and delivery of this
Agreement;
(d) The most recent Post-Effective Registration
Statement under the Securities Act of 1933, as amended
(the "1933 Act"), and the Investment Company Act of 1940,
as amended (the "1940 Act"), on Form N-1A as filed with
the Securities and Exchange Commission (the "Commission")
(the "Registration Statement");
(e) Notification of Registration of the Trust under
the 1940 Act on Form N-8A as filed with the Commission;
and
(f) Prospectuses and Statements of Additional
Information of the Funds (collectively, the
"Prospectuses").
3. Appointment.
(a) General. The Trust hereby appoints the Adviser
to act as investment adviser to the Funds for the period
and on the terms set forth in this Agreement. The Adviser
accepts such appointment and agrees to furnish the
services herein set forth for the compensation herein
provided.
(b) Employees of Affiliates. The Adviser may, in its
discretion, provide such services through its own
employees or the employees of one or more affiliated
companies that are qualified to act as an investment
adviser to the Trust under applicable laws and are under
the control of The Chase Manhattan Corporation, the
parent of the Adviser; provided that (i) all persons,
when providing services hereunder, are functioning as
part of an organized group of persons, and (ii) such
organized group of persons is managed at all times by
authorized officers of the Adviser.
(c) Sub-Advisers. It is understood and agreed that
the Adviser may from time to time employ or associate
with such other entities or persons as the Adviser
believes appropriate to assist in the performance of this
Agreement with respect to a particular Fund or Funds
(each a "Sub-Adviser"), and that any such Sub-Adviser
shall have all of the rights and powers of the Adviser
set forth in this Agreement; provided that a Fund shall
not pay any additional compensation for any Sub- Adviser
and the Adviser shall be as fully responsible to the
Trust for the acts and omissions of the Sub-Adviser as it
is for its own acts and omissions; and provided further
that the retention of any Sub-Adviser shall be approved
in advance by (i) the Board of Trustees of the Trust and
(ii) the shareholders of the relevant Fund if required
under any applicable provisions of the 1940 Act. The
Adviser will review, monitor and report to the Trust's
Board of Trustees regarding the performance and
investment procedures of any Sub-Adviser. In the event
that the services of any Sub-Adviser are terminated, the
Adviser may provide investment advisory services pursuant
to this Agreement to the Fund without a Sub-Adviser and
without further shareholder approval, to the extent
consistent with the 1940 Act. A Sub-Adviser may be an
affiliate of the Adviser.
4. Investment Advisory Services.
(a) Management of the Funds. The Adviser hereby
undertakes to act as investment adviser to the Funds. The
Adviser shall regularly provide investment advice to the
Funds and continuously supervise the investment and
reinvestment of cash, securities and other property
composing the assets of the Funds and, in furtherance
thereof, shall:
(i) supervise all aspects of the operations of
the Trust and each Fund;
(ii) obtain and evaluate pertinent economic,
statistical and financial data, as well as other
significant events and developments, which affect the
economy generally, the Funds' investment programs, and
the issuers of securities included in the Funds'
portfolios and the industries in which they engage, or
which may relate to securities or other investments which
the Adviser may deem desirable for inclusion in a Fund's
portfolio;
(iii) determine which issuers and securities
shall be included in the portfolio of each Fund;
(iv) furnish a continuous investment program
for each Fund;
(v) in its discretion and without prior
consultation with the Trust, buy, sell, lend and
otherwise trade any stocks, bonds and other securities
and investment instruments on behalf of each Fund; and
(vi) take, on behalf of each Fund, all actions
the Adviser may deem necessary in order to carry into
effect such investment program and the Adviser's
functions as provided above, including the making of
appropriate periodic reports to the Trust's Board of
Trustees.
(b) Covenants. The Adviser shall carry out its
investment advisory and supervisory responsibilities in
a manner consistent with the investment objectives,
policies, and restrictions provided in: (i) each Fund's
Prospectus and Statement of Additional Information as
revised and in effect from time to time; (ii) the
Company's Trust Instrument, By-Laws or other governing
instruments, as amended from time to time; (iii) the 1940
Act; (iv) other applicable laws; and (v) such other
investment policies, procedures and/or limitations as may
be adopted by the Company with respect to a Fund and
provided to the Adviser in writing. The Adviser agrees to
use reasonable efforts to manage each Fund so that it
will qualify, and continue to qualify, as a regulated
investment company under Subchapter M of the Internal
Revenue Code of 1986, as amended, and regulations issued
thereunder (the "Code"), except as may be authorized to
the contrary by the Company's Board of Trustees. The
management of the Funds by the Adviser shall at all times
be subject to the review of the Company's Board of
Trustees.
(c) Books and Records. The Adviser shall keep each
Fund's books and records required by applicable law to be
maintained by the Funds with respect to advisory
services. The Adviser agrees that all records which it
maintains for a Fund are the property of the Fund and it
will promptly surrender any of such records to the Fund
upon the Fund's request. The Adviser further agrees to
preserve for the periods prescribed by the 1940 Act any
such records of the Fund required to be preserved by such
Rule.
(d) Reports, Evaluations and Other Services. The
Adviser shall furnish reports, evaluations, information
or analyses to the Trust with respect to the Funds and in
connection with the Adviser's services hereunder as the
Trust's Board of Trustees may request from time to time
or as the Adviser may otherwise deem to be desirable. The
Adviser shall make recommendations to the Trust's Board
of Trustees with respect to Trust policies, and shall
carry out such policies as are adopted by the Board of
Trustees. The Adviser shall, subject to review by the
Board of Trustees, furnish such other services as the
Adviser shall from time to time determine to be necessary
or useful to perform its obligations under this
Agreement.
(e) Purchase and Sale of Securities. The Adviser
shall place all orders for the purchase and sale of
portfolio securities for each Fund with brokers or
dealers selected by the Adviser, which may include
brokers or dealers affiliated with the Adviser to the
extent permitted by the 1940 Act and the Trust's policies
and procedures applicable to the Funds. The Adviser shall
use its best efforts to seek to execute portfolio
transactions at prices which, under the circumstances,
result in total costs or proceeds being the most
favorable to the Funds. In assessing the best overall
terms available for any transaction, the Adviser shall
consider all factors it deems relevant, including the
breadth of the market in the security, the price of the
security, the financial condition and execution
capability of the broker or dealer, research services
provided to the Adviser, and the reasonableness of the
commission, if any, both for the specific transaction and
on a continuing basis. In no event shall the Adviser
be under any duty to obtain the lowest commission or the
best net price for any Fund on any particular
transaction, nor shall the Adviser be under any duty to
execute any order in a fashion either preferential to any
Fund relative to other accounts managed by the Adviser or
otherwise materially adverse to such other accounts.
(f) Selection of Brokers or Dealers. In selecting
brokers or dealers qualified to execute a particular
transaction, brokers or dealers may be selected who also
provide brokerage and research services (as those terms
are defined in Section 28(e) of the Securities Exchange
Act of 1934) to the Adviser, the Funds and/or the other
accounts over which the Adviser exercises investment
discretion. The Adviser is authorized to pay a broker or
dealer who provides such brokerage and research services
a commission for executing a portfolio transaction for a
Fund which is in excess of the amount of commission
another broker or dealer would have charged for effecting
that transaction if the Adviser determines in good faith
that the total commission is reasonable in relation to
the value of the brokerage and research services provided
by such broker or dealer, viewed in terms of either that
particular transaction or the overall responsibilities of
the Adviser with respect to accounts over which it
exercises investment discretion. The Adviser shall report
to the Board of Trustees of the Trust regarding overall
commissions paid by the Funds and their reasonableness in
relation to the benefits to the Funds.
(g) Aggregation of Securities Transactions. In
executing portfolio transactions for a Fund, the Adviser
may, to the extent permitted by applicable laws and
regulations, but shall not be obligated to, aggregate the
securities to be sold or purchased with those of other
Funds or its other clients if, in the Adviser's
reasonable judgment, such aggregation (i) will result in
an overall economic benefit to the Fund, taking into
consideration the advantageous selling or purchase price,
brokerage commission and other expenses, and trading
requirements, and (ii) is not inconsistent with the
policies set forth in the Trust's registration statement
and the Fund's Prospectus and Statement of Additional
Information. In such event, the Adviser will allocate the
securities so purchased or sold, and the expenses
incurred in the transaction, in an equitable manner,
consistent with its fiduciary obligations to the Fund and
such other clients.
5. Expenses.
(a) The Adviser shall, at its expense, provide the
Funds with office space, furnishings and equipment and
personnel required by it to perform the services to be
provided by the Adviser pursuant to this Agreement. The
Adviser also hereby agrees that it will supply to any
sub-adviser or administrator (the "Administrator") of a
Fund all necessary financial information in connection
with the Administrator's duties under any Agreement
between the Administrator and the Trust.
(b) Except as provided in subparagraph (a), the
Trust shall be responsible for all of the Funds' expenses
and liabilities, including, but not limited to, taxes;
interest; fees (including fees paid to its trustees who
are not affiliated with the Adviser or any of its
affiliates); fees payable to the Securities and Exchange
Commission; state securities qualification fees;
association membership dues; costs of preparing and
printing Prospectuses for regulatory purposes and for
distribution to existing shareholders; advisory and
administration fees; charges of the custodian and
transfer agent; insurance premiums; auditing and legal
expenses; costs of shareholders' reports and
shareholders' meetings; any extraordinary expenses; and
brokerage fees and commissions, if any, in connection
with the purchase or sale of portfolio securities.
6. Compensation.
(a) In consideration of the services to be rendered
by the Adviser under this Agreement, the Trust shall pay
the Adviser monthly fees on the first Business Day (as
defined in the Prospectuses) of each month based upon the
average daily net assets of each Fund during the
preceding month (as determined on the days and at the
time set forth in the Prospectuses for determining net
asset value per share) at the annual rate set forth
opposite the Fund's name on Schedule A attached hereto.
If the fees payable to the Adviser pursuant to this
paragraph begin to accrue before the end of any month or
if this Agreement terminates before the end of any month,
the fees for the period from such date to the end of such
month or from the beginning of such month to the date of
termination, as the case may be, shall be prorated
according to the proportion which such period bears to
the full month in which such effectiveness or termination
occurs. For purposes of calculating each such monthly
fee, the value of the Funds' net assets shall be computed
in the manner specified in the Prospectuses and the
Articles for the computation of the value of the Funds'
net assets in connection with the determination of the
net asset value of shares of the Funds' capital stock.
(b) If the aggregate expenses incurred by, or
allocated to, each Fund in any fiscal year shall exceed
the lowest expense limitation, if applicable to such
Fund, imposed by state securities laws or regulations
thereunder, as such limitations may be raised or lowered
from time to time, the Adviser shall reduce its
investment advisory fee, but not below zero, to the
extent of its share of such excess expenses; provided,
however, there shall be excluded from such expenses the
amount of any interest, taxes, brokerage commissions and
extraordinary expenses (including but not limited to
legal claims and liabilities and litigation costs and any
indemnification related thereto) paid or payable by the
Fund. Such reduction, if any, shall be computed and
accrued daily, shall be settled on a monthly basis and
shall be based upon the expense limitation applicable to
the Fund as at the end of the last business day of the
month. Should two or more of such expense limitations be
applicable at the end of the last business day of the
month, that expense limitation which results in the
largest reduction in the Adviser's fee shall be
applicable. For the purposes of this paragraph, the
Adviser's share of any excess expenses shall be computed
by multiplying such excess expenses by a fraction, the
numerator of which is the amount of the investment
advisory fee which would otherwise be payable to the
Adviser for such fiscal year were it not for this
subsection 6(b) and the denominator of which is the sum
of all investment advisory and administrative fees which
would otherwise be payable by the Fund were it not for
the expense limitation provisions of any investment
advisory or administrative agreement to which the Fund is
a party.
(c) In consideration of the Adviser's undertaking
to render the services described in this Agreement, the
Trust agrees that the Adviser shall not be liable under
this Agreement for any error of judgment or mistake of
law or for any act or omission or loss suffered by the
Trust in connection with the performance of this
Agreement, provided that nothing in this Agreement shall
be deemed to protect or purport to protect the Investment
Adviser against any liability to the Trust or its
stockholders to which the Adviser would otherwise be
subject by reason of willful misfeasance, bad faith or
gross negligence in the performance of the Adviser's
duties under this Agreement or by reason of the Adviser's
reckless disregard of its obligations and duties
hereunder or breach of fiduciary duty with respect to
receipt of
compensation.
7. Non-Exclusive Services. Except to the extent
necessary to perform the Investment Adviser's obligations
under this Agreement, nothing herein shall be deemed to
limit or restrict the right of the Adviser, or any
affiliate of the Adviser, including any employee of the
Adviser, to engage in any other business or to devote
time and attention to the management or other aspects of
any other business, whether of a similar or dissimilar
nature, or to render services of any kind to any other
corporation, firm, individual or
association.
8. Effective Date; Modifications; Termination. This
Agreement shall become effective on the date hereof (the
"Effective Date"), provided that it shall have been
approved by a majority of the outstanding voting
securities of each Fund, in accordance with the
requirements of the 1940 Act, or such later date as may
be agreed by the parties following such shareholder
approval.
(a) Subject to prior termination as provided in
sub-paragraph (d) of this paragraph, this Agreement shall
continue in force for two years from the date hereof and
shall continue in effect from year to year thereafter,
but only so long as the continuance after such date shall
be specifically approved at least annually by vote of
the Trustees of the Trust or by vote of a majority of the
outstanding voting securities of each Fund.
(b) This Agreement may be modified by mutual
consent, such consent on the part of the Trust to be
authorized by vote of a majority of the outstanding
voting securities of each Fund.
(c) In addition to the requirements of
sub-paragraphs (a) and (b) of this paragraph, the terms
of any continuance or modification of this Agreement must
have been approved by the vote of a majority of those
Trustees of the Trust 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.
(d) Either party hereto may, at any time on sixty
(60) days prior written notice to the other, terminate
this Agreement, without payment of any penalty, by action
of its Trustees or Board of Trustees, as the case may be,
or by action of its authorized officers or, with respect
to a Fund, by vote of a majority of the outstanding
voting securities of that Fund. This Agreement may remain
in effect with respect to a Fund even if it has been
terminated in accordance with this paragraph with respect
to the other Funds. This Agreement shall terminate
automatically in the event of its assignment as that term
is defined under the 1940 Act.
9. Board of Trustees Meetings. The Trust agrees that
notice of each meeting the Board of Trustees of the Trust
will be sent to the Adviser and that the Trust will make
appropriate arrangements for the attendance (as persons
present by invitation) of such person or persons as the
Adviser may designate.
10. Governing Law. This Agreement shall be governed by
the laws of the State of New York.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this
Agreement to be executed by their respective officers
thereunto duly authorized, and their respective seals to
be hereunto affixed, all as of the date written above.
MUTUAL FUND GROUP
By:----------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK, N.A.
By:------------------------------
Name:
Title:
<PAGE>
Schedule A
Mutual Fund Group Fee
- ------------------
- -----
Vista Short Term Bond Fund 0.25%
Vista U.S. Treasury Income Fund 0.30
Vista Bond Fund 0.30
Vista Equity Income Fund 0.40
Vista Equity Fund 0.40
Vista Balanced Fund 0.50
IEEE Balanced Fund 0.60
Vista Small Cap Equity Fund 0.65
Vista Southeast Asian Fund 1.00
Vista Japan Fund 1.00
Vista European Fund 1.00
Master Portfolios:
- -------------------
Vista Capital Growth Portfolio 0.40%
Vista Growth and Income Portfolio 0.40
Vista International Equity
Portfolio
1.00
Vista Global Fixed Income Portfolio 0.75
<PAGE>
APPENDIX C
Proposed Sub-Advisory Agreement<PAGE>
APPENDIX C
FORM OF PROPOSED
INVESTMENT SUB-ADVISORY AGREEMENT
BETWEEN
THE CHASE MANHATTAN BANK, N.A.
AND ITS SUCCESSOR
AND
CHASE ASSET MANAGEMENT, INC.
AGREEMENT made as of the day of , 1996, by and between
The Chase Manhattan Bank, N.A., a national banking
association, and its successor, The Chase Manhattan Bank,
a New York State chartered bank (the "Adviser"), and
Chase Asset Management, Inc., a Delaware corporation (the
"Sub-Adviser").
WHEREAS, the Adviser is a registered investment adviser
under the Investment Advisers Act of 1940, as amended
(the "Advisers Act"); and
WHEREAS, the Adviser provides investment advisory
services to the series of Mutual Fund Group, a
Massachusetts business trust (the "Trust"), an open-end,
management investment company registered under the
Investment Company Act of 1940, as amended (the "1940
Act") pursuant to an Investment Advisory Agreement dated
, 1996 (the "Advisory Agreement"); and
WHEREAS, the Adviser desires to retain the Sub-Adviser to
furnish investment sub-advisory services in connection
with the series of the Trust listed on Schedule A (each,
a "Fund" and collectively, the "Funds"), and the
Sub-Adviser represents that it is willing and possesses
legal authority to so furnish such services;
NOW, THEREFORE, in consideration of the premises and
mutual covenants herein contained, it is agreed between
the parties hereto as follows:
1. Appointment.
(a) General. The Adviser hereby appoints the
Sub-Adviser to act as investment sub-adviser to the Funds
for the period and on the terms set forth in this
Agreement. The Sub-Adviser accepts such appointment and
agrees to furnish the services herein set forth for the
compensation herein provided.
(b) Employees of Affiliates. The Sub-Adviser may,
in its discretion, provide such services through its own
employees or the employees of one or more affiliated
companies that are qualified to act as an investment sub-
adviser to the Funds under applicable laws and are under
the control of New Chase, the parent of the Sub-Adviser;
provided that (i) all persons, when providing services
hereunder, are functioning as part of an organized group
of persons, and (ii) such organized group of persons is
managed at all times by authorized officers of the
Sub-Adviser.
2. Delivery of Documents. The Adviser has delivered to
the Sub-Adviser copies of each of the following documents
along with all amendments thereto through the date
hereof, and will promptly deliver to it all future
amendments and supplements thereto, if any:
(a) the Trust's Declaration of Trust;
(b) the By-Laws of the Trust;
(c) resolutions of the Board of Trustees of the
Trust authorizing the execution and delivery of the
Advisory Agreement and this Agreement;
(d) the most recent Post-Effective Amendment to the
Trust's Registration Statement under the Securities Act
of 1933, as amended (the "1933 Act"), and the 1940 Act,
on Form N-1A as filed with the Securities and Exchange
Commission (the "Commission");
(e) Notification of Registration of the Trust under
the 1940 Act on Form N-8A as filed with the Commission;
and
(f) the currently effective Prospectuses and
Statements of Additional Information of the Funds.
3. Investment Advisory Services.
(a) Management of the Portfolios. The Sub-Adviser
hereby undertakes to act as investment sub-adviser to the
Funds. The Sub-Adviser shall regularly provide investment
advice to the Funds and continuously supervise the
investment and reinvestment of cash, securities and other
property composing the assets of the Portfolios and, in
furtherance thereof, shall:
(i) obtain and evaluate pertinent economic,
statistical and financial data, as well as other
significant events and developments, which affect the
economy generally, the Funds' investment programs, and
the issuers of securities included in the portfolio of
each Fund and the industries in which they engage, or
which may relate to securities or other investments which
the Sub-Adviser may deem desirable for inclusion in a
Fund's portfolio;
(ii) determine which issuers and securities
shall be included in the portfolio of each Fund;
(iii) furnish a continuous investment program
for each Fund;
(iv) in its discretion, and without prior
consultation, buy, sell, lend and otherwise trade any
stocks, bonds and other securities and investment
instruments on behalf of each Fund; and
(v) take, on behalf of each Fund, all actions
the Sub-Adviser may deem necessary in order to carry into
effect such investment program and the Sub-Adviser's
functions as provided above, including the making of
appropriate periodic reports to the Adviser and the
Trust's Board of Trustees.
(b) Covenants. The Sub-Adviser shall carry out its
investment sub-advisory responsibilities in a manner
consistent with the investment objectives, policies, and
restrictions provided in: (i) each Fund's Prospectus and
Statement of Additional Information as revised and in
effect from time to time; (ii) the Trust's Declaration of
Trust, By-Laws or other governing instruments, as amended
from time to time; (iii) the 1940 Act; (iv) the
provisions of the Internal Revenue Code of 1986, as
amended. (v) other applicable laws; and (vi) such other
investment policies, procedures and/or limitations as may
be adopted by the Trust with respect to a Fund and
provided to the Adviser in writing. The management of the
Funds by the Adviser shall at all times be subject to the
review of the Trust's Board of
Trustees.
(c) Books and Records. Pursuant to applicable law,
the Sub-Adviser shall keep each Fund's books and records
required to be maintained by, or on behalf of, the Funds
with respect to sub-advisory services rendered hereunder.
The Sub-Adviser agrees that all records which it
maintains for a Fund are the property of the Fund and it
will promptly surrender any of such records to the Fund
upon the Fund's request. The Sub-Adviser further agrees
to preserve for the periods prescribed by Rule 31a-2
under the 1940 Act any such records of the Portfolio
required to be preserved by such Rule.
(d) Reports, Evaluations and Other Services. The
Sub-Adviser shall furnish reports, evaluations,
information or analyses to the Adviser and the Trust with
respect to the Funds and in connection with the
Sub-Adviser's services hereunder as the Adviser and/or
the Trust's Board of Trustees may request from time to
time or as the Sub-Adviser may otherwise deem to be
desirable. The Sub-Adviser shall make recommendations to
the Adviser and the Trust's Board of Trustees with
respect to the Trust's policies, and shall carry out such
policies as are adopted by the Board of Trustees. The
Sub-Adviser may, subject to review by the Adviser,
furnish such other services as the Sub-Adviser shall from
time to time determine to be necessary or useful to
perform its obligations under this Agreement.
(e) Purchase and Sale of Securities. The
Sub-Adviser shall place all orders for the purchase and
sale of portfolio securities for each Fund with brokers
or dealers selected by the Sub-Adviser, which may include
brokers or dealers affiliated with the Adviser or the
Sub-Adviser to the extent permitted by the 1940 Act and
the Trust's policies and procedures applicable to the
Funds. The Sub-Adviser shall use its best efforts to seek
to execute portfolio transactions at prices which, under
the circumstances, result in total costs or proceeds
being the most favorable to the Funds. In assessing the
best overall terms available for any transaction, the
Sub-Adviser shall consider all factors it deems relevant,
including the breadth of the market in the security, the
price of the security, the financial condition and
execution capability of the broker or dealer, research
services provided to the Sub-Adviser, and the
reasonableness of the commission, if any, both for the
specific transaction and on a continuing basis. In no
event shall the Sub-Adviser be under any duty to obtain
the lowest commission or the best net price for any Fund
on any particular transaction, nor shall the Sub-Adviser
be under any duty to execute any order in a fashion
either preferential to any Fund relative to other
accounts managed by the Sub-Adviser or otherwise
materially adverse to such other accounts.
(f) Selection of Brokers or Dealers. In selecting
brokers or dealers qualified to execute a particular
transaction, brokers or dealers may be selected who also
provide brokerage and research services (as those terms
are defined in Section 28(e) of the Securities Exchange
Act of 1934) to the Sub-Adviser, the Funds, and/or the
other accounts over which the Sub-Adviser exercises
investment discretion. The Sub-Adviser is authorized to
pay a broker or dealer who provides such brokerage and
research services a commission for executing a portfolio
transaction for a Fund which is in excess of the amount
of commission another broker or dealer would have charged
for effecting that transaction if the Sub-Adviser
determines in good faith that the total commission is
reasonable in relation to the value of the brokerage and
research services provided by such broker or dealer,
viewed in terms of either that particular transaction or
the overall responsibilities of the Sub-Adviser with
respect to accounts over which it exercises investment
discretion. The Sub-Adviser shall report to the Board of
Trustees of the Trust regarding overall commissions paid
by the Funds and their reasonableness in relation to
their benefits to the Funds.
(g) Aggregation of Securities Transactions. In
executing portfolio transactions for a Fund, the
Sub-Adviser may, to the extent permitted by applicable
laws and regulations, but shall not be obligated to,
aggregate the securities to be sold or purchased with
those of other Funds or its other clients if, in the
Sub-Adviser's reasonable judgment, such aggregation (i)
will result in an overall economic benefit to the Fund,
taking into consideration the advantageous selling or
purchase price, brokerage commission and other expenses,
and trading requirements, and (ii) is not inconsistent
with the policies set forth in the Trust's registration
statement and the Fund's Prospectus and Statement of
Additional Information. In such event, the Sub-Adviser
will allocate the securities so purchased or sold, and
the expenses incurred in the transaction, in an equitable
manner, consistent with its fiduciary obligations to the
Fund and such other clients.
4. Representations and Warranties.
(a) The Sub-Adviser hereby represents and warrants
to the Adviser as
follows:
(i) The Sub-Adviser is a corporation duly
organized and in good standing under the laws of the
State of Delaware and is fully authorized to enter into
this Agreement and carry out its duties and obligations
hereunder.
(ii) The Sub-Adviser is registered as an
investment adviser with the Commission under the Advisers
Act, and is registered or licensed as an investment
adviser under the laws of all applicable jurisdictions.
The Sub-Adviser shall maintain such registrations or
licenses in effect at all times during the term of this
Agreement.
(iii) The Sub-Adviser at all times shall provide
its best judgment and effort to the Adviser in carrying
out the Sub- Adviser's obligations hereunder.
(b) The Adviser hereby represents and warrants to
the Sub-Adviser as follows:
(i) The Adviser is a state chartered bank duly
organized and in good standing under the laws of the
State of New York and is fully authorized to enter into
this Agreement and carry out its duties and obligations
hereunder.
(ii) The Trust has been duly organized as a
business trust under the laws of the State of
Massachusetts.
(iii) The Trust is registered as an investment
company with the Commission under the 1940 Act, and
shares of each Fund are registered for offer and sale to
the public under the 1933 Act and all applicable state
securities laws where currently sold. Such registrations
will be kept in effect during the term of this Agreement.
5. Compensation.
(a) As compensation for the services which the
Sub-Adviser is to provide or cause to be provided
pursuant to Paragraph 3, with respect to each Fund, the
Adviser shall pay to the Sub-Adviser (or cause to be paid
by the Trust directly to the Sub- Adviser) a fee, which
shall be accrued daily and paid in arrears on the first
business day of each month, at an annual rate to be
determined between the parties hereto from time to time,
as a percentage of the average daily net assets of the
Fund during the preceding month (computed in the manner
set forth in the Fund's most recent Prospectus and
Statement of Additional Information). Average daily net
assets shall be based upon determinations of net assets
made as of the close of business on each business day
throughout such month. The fee for any partial month
shall be calculated on a proportionate basis, based upon
average daily net assets for such partial month, as a
percentage of average daily net assets.
(b) The Sub-Adviser shall have the right, but not
the obligation, to voluntarily waive any portion of the
sub-advisory fee from time to time. Any such voluntary
waiver will be irrevocable and determined in advance of
rendering sub-investment advisory services by the
Sub-Adviser, and shall be in writing and signed by the
parties hereto.
(c) If the aggregate expenses incurred by, or
allocated to, each Fund in any fiscal year shall exceed
the lowest expense limitation, if applicable to such
Fund, imposed by state securities laws or regulations
thereunder, as such limitations may be raised or lowered
from time to time, the Sub-Adviser shall reduce its
investment advisory fee, but not below zero, to the
extent of its share of such excess expenses; provided,
however, there shall be excluded from such expenses the
amount of any interest, taxes, brokerage commissions and
extraordinary expenses (including but not limited to
legal claims and liabilities and litigation costs and any
indemnification related thereto) paid or payable by the
Fund. Such reduction, if any, shall be computed and
accrued daily, shall be settled on a monthly basis and
shall be based upon the expense limitation applicable to
the Fund as at the end of the last business day of the
month. Should two or more of such expense limitations be
applicable at the end of the last business day of the
month, that expense limitation which results in the
largest reduction in the Sub-Adviser's fee shall be
applicable. For the purposes of this paragraph, the
Sub-Adviser's share of any excess expenses shall be
computed by multiplying such excess expenses by a
fraction, the numerator of which is the amount of the
investment advisory fee which would otherwise be payable
to the Sub-Adviser for such fiscal year were it not for
this subsection 5(b) and the denominator of which is the
sum of all investment advisory and administrative fees
which would otherwise be payable by the Fund were it not
for the expense limitation provisions of any investment
advisory or administrative agreement to which the Fund is
a party.
6. Interested Persons. It is understood that, to the
extent consistent with applicable laws, the Trustees,
officers and shareholders of the Trust or the Adviser are
or may be or become interested in the Sub-Adviser as
directors, officers or otherwise and that directors,
officers and shareholders of the Sub-Adviser are or may
be or become similarly interested in the Trust or the
Adviser.
7. Expenses. The Sub-Adviser will pay all expenses
incurred by it in connection with its activities under
this Agreement other than the cost of securities
(including brokerage commissions) purchased for or sold
by the Funds.
8. Non-Exclusive Services; Limitation of Sub-Adviser's
Liability. The services of the Sub-Adviser hereunder are
not to be deemed exclusive, and the Sub-Adviser may
render similar services to others and engage in other
activities. The Sub-Adviser and its affiliates may enter
into other agreements with the Funds, the Trust or the
Adviser for providing additional services to the Funds,
the Trust or the Adviser which are not covered by this
Agreement, and to receive additional compensation for
such services. In the
absence of willful misfeasance, bad faith, gross
negligence or reckless disregard of obligations or duties
hereunder on the part of the Sub-Adviser, or a breach of
fiduciary duty with respect to receipt of compensation,
neither the Sub-Adviser nor any of its directors,
officers, shareholders, agents, or employees shall be
liable or responsible to the Adviser, the Trust, the
Funds or to any shareholder of the Funds for any error of
judgment or mistake of law or for any act or omission in
the course of, or connected with, rendering services
hereunder or for any loss suffered by the Adviser, the
Trust, a Fund, or any shareholder of a Fund in connection
with the performance of this Agreement.
9. Effective Date; Modifications; Termination. This
Agreement shall become effective on the date hereof (the
"Effective Date") provided that it shall have been
approved by a majority of the outstanding voting
securities of each Portfolio, in accordance with the
requirements of the 1940 Act, or such later date as may
be agreed by the parties following such shareholder
approval.
(a) This Agreement shall continue in force for two
years from the Effective Date. Thereafter, this Agreement
shall continue in effect as to each Fund for successive
annual periods, provided such continuance is specifically
approved at least annually (i) by a vote of the majority
of the Trustees of the Trust 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 a vote of the Board of
Trustees of the Trust or a majority of the outstanding
voting securities of the Fund.
(b) The modification of any of the non-material
terms of this Agreement may be approved by a vote of a
majority of those Trustees of the Trust who are not
interested persons of any party to this Agreement, cast
in person at a meeting called for the purpose of voting
on such approval.
(c) Notwithstanding the foregoing provisions of
this Paragraph 9, either party hereto may terminate this
Agreement as to any Fund(s) at any time on sixty (60)
days' prior written notice to the other, without payment
of any penalty. A termination of the Sub-Adviser may be
effected as to any particular Fund by the Adviser, by a
vote of the Trust's Board of Trustees, by vote of a
majority of the outstanding voting securities of the
Fund. This Agreement shall terminate automatically in the
event of its assignment.
10. Limitation of Liability of Trustees and
Shareholders. The Sub-Adviser acknowledges the following
limitation of liability:
The terms "Mutual Fund Group"and "Trustees of Mutual Fund
Group" refer, respectively, to the trust created and the
Trustees, as trustees but not individually or personally,
acting from time to time under the Declaration of Trust,
to which reference is hereby made and a copy of which is
on file at the office of the Secretary of State of the
State of Massachusetts, such reference being inclusive of
any and all amendments thereto so filed or hereafter
filed. The obligations of "Mutual Fund Group" entered
into in the name or on behalf thereof by any of the
Trustees, representatives or agents are made not
individually, but in such capacities and are not binding
upon any of the Trustees, shareholders or representatives
of the Trust personally, but bind only the assets of the
Trust, and all persons dealing with the Trust or a Fund
must look solely to the assets of the Trust or Fund for
the enforcement of any claims against the Trust or Fund.
11. Certain Definitions. The terms "vote of a majority
of the outstanding voting securities," "assignment,"
"control," and "interested persons," when used herein,
shall have the respective meanings specified in the 1940
Act. References in this Agreement to the 1940 Act and
the Advisers Act shall be construed as references to such
laws as now in effect or as hereafter amended, and shall
be understood as inclusive of any applicable rules,
interpretations and/or orders adopted or issued
thereunder by the Commission.
12. Independent Contractor. The Sub-Adviser shall for
all purposes herein be deemed to be an independent
contractor and shall, unless otherwise expressly provided
herein or authorized by the Board of Trustees of the
Trust from time to time, have no authority to act for or
represent a Fund in any way or otherwise be deemed an
agent of a Fund.
13. Structure of Agreement. The Adviser and
Sub-Adviser are entering into this Agreement with regard
to the respective Funds severally and not jointly. The
responsibilities and benefits set forth in this Agreement
shall be deemed to be effective as between the Adviser
and Sub-Adviser in connection with each Fund severally
and not jointly. This Agreement is intended to govern
only the relationships between the Adviser, on the one
hand, and the Sub-Adviser, on the other hand, and is not
intended to and shall not govern (i) the relationship
between the Adviser or Sub-Adviser and any Fund, or (ii)
the relationships among the respective Funds.
14. Governing Law. This Agreement shall be governed by
the laws of the State of New York, provided that nothing
herein shall be construed in a manner inconsistent with
the 1940 Act or the Advisers Act.
15. Severability. If any provision of this Agreement
shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby and, to this
extent, the provisions of this Agreement shall be deemed
to be severable.
16. Notices. Notices of any kind to be given to the
Adviser hereunder by the Sub-Adviser shall be in writing
and shall be duly given if mailed or delivered to the
Adviser at or at such other address or to such individual
as shall be so specified by the Adviser to the
Sub-Adviser. Notices of any kind to be given to the
Sub-Adviser hereunder by the Adviser shall be in writing
and shall be duly given if mailed or delivered to the
Sub-Adviser at or at such other address or to such
individual as shall be so specified by the Sub-Adviser to
the Adviser. Notices shall be effective upon delivery.
IN WITNESS WHEREOF, the parties have caused this
Agreement to be executed by their respective officers
thereunto duly authorized as of the date written above.
CHASE ASSET MANAGEMENT, INC. THE CHASE
MANHATTAN BANK, N.A.
By:--------------------------
By:--------------------------
Name: Name:
Title: Title:
<PAGE>
Schedule A
Fund:
- -----
Vista Short Term Bond Fund
Vista U.S. Treasury Income Fund
Vista Bond Fund
Vista Equity Income Fund
Vista Equity Fund
Vista Balanced Fund
IEEE Balanced Fund
Vista Small Cap Equity Fund
Vista Southeast Asian Fund
Vista Japan Fund
Vista European Fund
Master Portfolio:
- -----------------
Vista Capital Growth Portfolio
Vista Growth and Income Portfolio
Vista International Equity Portfolio
Vista Global Fixed Income Portfolio
