MAXIM SERIES FUND
8515 East Orchard Road
Englewood, Colorado 80111
We are pleased to present the Annual Report for the Maxim Vista
Growth & Income Portfolio
for the year ending October 31, 1996.
Moderate but consistent economic growth, low inflation and
better-than-expected corporate
earnings provided a positive environment for U.S. stock investors.
These factors, along with
significant flows of cash into equity mutual funds, helped the
unmanaged S&P 500 Index
post a 24.08% gain during the reporting period.
Government reports of stronger-than-expected economic growth
rattled U.S. bond markets
in February, 1996, leading to an extended period of market
volatility as investors worried
about potential inflation. As the inflation threat subsided, the
market rallied at the end of the
year, but the unmanaged Lehman Aggregate Bond Index - a broad
measure of performance
for corporate, government and mortgage-related bond issues - ended
the reporting year
with a return of just 5.85%.
The U.S. equity markets have delivered historically-high returns in
1995 and 1996. While it
is unreasonable to expect such strong performance to continue
unabated, equity investing
remains a vital component of any well-diversified portfolio. As
always, a long-term
perspective and the ability to persevere through down markets are
necessary to reap the
rewards of equity investing.
The following chart illustrates comparative performance for $10,000
invested in the Maxim Growth & Income
Portfolio and the Lipper Growth and Income Fund Index from December
21, 1994 to October 31, 1996.
$16,000
$15,102.19
$15,000 (Lipper Growth &
Income)
$14,781.11
$14,000 (Maxim Vista
Growth &
Income)
$12,000
$10,000
The Lipper Growth and Income Funds Index, an equally weighted
performance indicator, tracks the total
returns of the 30 largest growth and income funds in the industry.
Funds included in the index are
representative of the market.
Average Annual Total Returns for the Maxim Vista Growth & Income
Portfolio:
One Year 20.01% Past performance
is not predictive
of future
Five Year N/A results. When
shares are
redeemed, they may
Ten Year N/A be worth more or
less than the
original cost.
Since Inception 22.59%
MAXIM SERIES FUND, INC.
MAXIM VISTA GROWTH & INCOME PORTFOLIO
Financial Statements and Financial Highlights
for the Year Ended October 31, 1996 and
Period from December 21, 1994 (Inception)
to October 31, 1995 and Independent Auditors' Report
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
Maxim Series Fund, Inc.:
We have audited the accompanying statement of assets and
liabilities of Maxim Vista Growth & Income Portfolio of Maxim
Series Fund, Inc. as of October 31, 1996, the related statement of
operations for the year ended October 31, 1996, and the statements
of changes in net assets and the financial highlights for the year
ended October 31, 1996, and the period from December 21, 1994
(inception) to October 31, 1995. These financial statements and
financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities
owned as of October 31, 1996 and 1995, by correspondence with the
custodian and brokers, and the application of alternative auditing
procedures when confirmations were not received. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights
present fairly, in all material respects, the financial position of
Maxim Vista Growth & Income Portfolio of Maxim Series Fund, Inc. at
October 31, 1996, the results of its operations for the year then
ended, and the changes in net assets and the financial highlights
for the year ended October 31, 1996 and the period from December
21, 1994 (inception) to October 31, 1995, in conformity with
generally accepted accounting principles.
December 10, 1996
MAXIM SERIES FUND INC.
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1996
MAXIM VISTA
GROWTH
& INCOME
PORTFOLIO
ASSETS:
Investment in Hub - Growth and Income Portfolio, at value
$86,559,492
Receivable for investments sold
41,561
Total assets
86,601,053
LIABILITIES:
Payable for redemptions
30,500
Other liabilities
140,274
Total liabilities
170,774
NET ASSETS
$86,430,279
NET ASSETS REPRESENTED BY:
Capital stock, $.10 par value
$6,192,669
Additional paid-in capital
65,239,269
Net unrealized appreciation on investments
8,343,941
Undistributed net investment income
22,966
Accumulated undistributed net realized gain on investments
6,631,434
NET ASSETS
$86,430,279
NET ASSET VALUE PER OUTSTANDING SHARE
$1.3957
SHARES OF CAPITAL STOCK:
Authorized
100,000,000
Outstanding
61,926,690
See notes to financial statements.
MAXIM SERIES FUND INC.
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 1996
MAXIM VISTA
GROWTH
& INCOME
PORTFOLIO
INVESTMENT INCOME:
Investment income allocated from Hub portfolio
$1,873,199
Expenses allocated from Hub portfolio
(320,788)
Total investment income
1,552,411
EXPENSES:
Advisory fees
360,710
Total expenses
360,710
NET INVESTMENT INCOME
1,191,701
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments
6,631,434
Change in net unrealized appreciation on investments
3,954,475
Net change in realized and unrealized appreciation on
investments
10,585,909
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS
$11,777,610
See notes to financial statements.
MAXIM SERIES FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED OCTOBER 31, 1996 AND
THE PERIOD DECEMBER 21, 1994 (INCEPTION) TO OCTOBER 31, 1995
MAXIM VISTA GROWTH & INCOME
1996
1995
INCREASE IN NET ASSETS:
OPERATIONS:
Net investment income
$1,191,701
$638,920
Net realized gain
6,631,434
1,414,461
Change in net unrealized appreciation
3,954,475
4,389,466
Net increase in net assets resulting from operations
11,777,610
6,442,847
DISTRIBUTION TO SHAREHOLDERS:
From net investment income
(1,169,079)
(638,577)
From long-term capital gain
(1,414,461)
Total distribution
(2,583,540)
(638,577)
SHARE TRANSACTIONS:
Net proceeds from sale of shares
48,967,765
54,737,972
Reinvestment of distribution
2,583,393
638,577
Cost of shares redeemed
(23,718,112)
(11,777,656)
Net increase in net assets resulting from share transactions
27,833,046
43,598,893
Total increase in net assets
37,027,116
49,403,163
NET ASSETS:
Beginning of period
49,403,163
0
End of period
$86,430,279
$49,403,163
OTHER INFORMATION:
SHARES:
Sold
37,282,804
50,481,605
Issued in reinvestment of distributions
2,029,197
544,981
Redeemed
(18,102,506)
(10,309,391)
Net increase in shares of beneficial interest outstanding
21,209,495
40,717,195
OUTSTANDING SHARES AT:
Beginning of period
40,717,195
0
End of period
61,926,690
40,717,195
See notes to financial statements.
MAXIM SERIES FUND, INC.
MAXIM VISTA GROWTH & INCOME PORTFOLIO
FINANCIAL HIGHLIGHTS
Selected data for a share of capital stock of the portfolio for the
year ended October 31, 1996 and the period
December 21, 1994 [inception] to October 31, 1995 were as follows:
Period Ended October 31,
1996
1995
Net Asset Value, Beginning of Period
$1.2133
$1.0000
Income From Investment Operations
Net Investment Income
0.0219
0.0174
Net Realized and Unrealized Gain
0.2147
0.2133
Total Income From Investment Operations
0.2366
0.2307
Less Distributions
From Net Investment Income
(0.0215)
(0.0174)
From Net Realized Gain
(0.0327)
Total Distributions
(0.0542)
(0.0174)
Net Asset Value, End of Period
$1.3957
$1.2133
Total Return
20.01%
27.30% *
Net Assets, End of Period
$86,430,279
$49,403,163
Ratio of Expenses to Average Net Assets
1.00%
1.01% *
Ratio of Net Investment Income to Average Net Assets
1.75%
2.21% *
* Annualized
MAXIM SERIES FUND, INC.
MAXIM VISTA GROWTH & INCOME PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED OCTOBER 31, 1996 AND
THE PERIOD DECEMBER 21, 1994 (INCEPTION) TO OCTOBER 31, 1995
1. HISTORY OF THE FUND
Maxim Series Fund, Inc. (the Fund) is a Maryland corporation
organized on December 7, 1981 as an open-end management investment
company. The Maxim Vista Growth & Income Portfolio (the
Portfolio) is non-diversified. The Portfolio commenced operations
on December 21, 1994. Interests in the Portfolio are represented
by separate classes of beneficial interest of the Fund. Shares of
the Fund are sold only to FutureFunds Series Account II of
Great-West Life & Annuity Insurance Company (the Company), to fund
benefits under variable annuity contracts and variable life
insurance policies issued by the Company. The shares are sold at
a price equal to the respective net asset value per share of each
class of shares.
The Fund seeks to achieve the investment objective of the
Portfolio through the adoption of a Hub and Spoke structure.
Contribution of Portfolio (i.e., the Spoke) investible funds to the
Hub portfolio are made in exchange for beneficial interests in the
Hub portfolio of equal value. The Hub portfolio is the Growth and
Income Portfolio; a non-diversified open-end management investment
company organized as a trust under the laws of the State of New
York and registered under the Investment Company Act of 1940, as
amended. Financial statements of the Hub portfolio are presented
following the Portfolio's financial statements.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the significant accounting
policies of the Portfolio, which are in accordance with the
accounting principles generally accepted in the investment company
industry:
Dividends
Dividends from investment income of the Portfolio are declared
and reinvested quarterly and dividends from capital gains are
declared and reinvested annually.
Security Valuation
The Portfolio's investment in the Hub portfolio is valued at
the last reported net asset value of the Hub portfolio. The
Portfolio receives an allocation of investment income and Hub
expenses as well as realized and unrealized gains and losses on a
daily basis from the Hub. In addition, the Portfolio accrues its
own expenses daily as incurred.
Federal Income Taxes
For federal income tax purposes, the Portfolio qualifies as a
regulated investment company under the provisions of the Internal
Revenue Code by distributing substantially all of its taxable net
income (both ordinary and capital gain) to its shareholders and
complying with other requirements for regulated investment
companies. Accordingly, no provision for federal income taxes has
been made.
3. INVESTMENT ADVISORY AGREEMENT
The Fund has entered into an investment advisory agreement
with The Great-West Life Assurance Company (parent of the Company).
As compensation for its services to the Fund with respect to the
Maxim Vista Growth & Income Portfolio, the investment advisor
receives monthly compensation at the annual rate of .53% of the
average daily net assets of the Maxim Vista Growth & Income
Portfolio.
4. INVESTMENT TRANSACTIONS
The Portfolio's percentage interest in the Hub portfolio is
4.13% as of October 31, 1996. Increases and (decreases) in the
Portfolio's investment in the Hub during the year ended October 31,
1996 were $48,967,765 and ($23,718,112), respectively.
Growth and Income Portfolio
Portfolio of Investments October 31, 1996
Shares Issuer
Value
- -----------------------------------------------------------------
Long-Term Investments -- 94.0%
- -----------------------------------------------------------------
Common Stock -- 86.0%
- -------------------------------------------------------
Aerospace -- 1.9%
300,000 Allied-Signal, Inc.
$ 19,650,000
115,600 General Motors, Class H
6,170,150
110,000 United Technologies, Corp.
14,162,500
--------------
39,982,650
--------------
Agricultural Production/Services -- 2.0%
350,000 AGCO Corp.
8,881,250
355,000 Case Corp.
16,507,500
400,000 Deere & Co.
16,700,000
--------------
42,088,750
--------------
Airlines -- 0.5%
126,590 AMR Corp. *
10,633,560
--------------
Automotive -- 1.4%
300,000 Chrysler Corp.
10,087,500
200,000 General Motors
10,775,000
250,000 Lear Corp. *
9,250,000
--------------
30,112,500
--------------
Banking -- 5.8%
400,000 Bank of Boston Corp.
25,600,000
145,000 BankAmerica Corp.
13,267,500
175,000 Citicorp
17,325,000
204,333 Commonwealth Bank of Australia, ADR (Australia)
# 3,677,994
(Preference Stock)
220,000 First Union Corp.
16,005,000
425,000 National City Corp.
18,434,375
135,000 NationsBank Corp.
12,723,750
350,000 Norwest Corp.
15,356,250
--------------
122,389,869
--------------
Biotechnology -- 0.5%
160,000 Amgen, Inc.
9,810,000
--------------
Chemicals -- 3.0%
110,000 Dow Chemical Co.
8,552,500
245,000 duPont (EI) deNemours & Co.
22,723,750
340,000 IMC Global, Inc.
12,750,000
225,000 Praxair, Inc.
9,956,250
200,000 Union Carbide Corp.
8,525,000
--------------
62,507,500
--------------
See notes to financial statements.
68
Growth and Income Portfolio
Portfolio of Investments October 31, 1996 (continued)
Shares Issuer
Value
- -----------------------------------------------------------------
Long-Term Investments -- (continued)
- -----------------------------------------------------------------
Computer Software -- 3.0%
350,000 Cisco Systems, Inc. *
$ 21,656,250
300,000 Computer Associates International
17,737,500
90,000 Microsoft Corp. *
12,352,500
446,000 Reynolds & Reynolds, Inc., Class A
11,763,250
--------------
63,509,500
--------------
Computers/Computer Hardware -- 6.4%
300,000 Analog Devices, Inc. *
7,800,000
350,000 Compaq Computer Corp. *
24,368,750
400,000 EMC Corp. *
10,500,000
230,000 Intel Corp.
25,271,250
145,000 International Business Machines Corp.
18,705,000
100,000 SCI Systems, Inc. *
4,975,000
100,000 Seagate Technology, Inc. *
6,675,000
250,000 Storage Technology Corp. *
10,656,250
220,000 Sun Microsystems, Inc. *
13,420,000
275,000 Texas Instruments
13,234,375
--------------
135,605,625
--------------
Construction Machinery -- 0.5%
160,000 Caterpillar Inc.
10,980,000
--------------
Consumer Products -- 6.4%
450,000 Avon Products, Inc.
24,412,500
375,000 Black & Decker Corp.
14,015,625
185,000 Colgate-Palmolive Co.
17,020,000
350,000 Fruit of the Loom, Inc., Class A *
12,731,250
200,000 Liz Claiborne, Inc.
8,450,000
270,000 Nike, Inc., Class B
15,896,250
185,000 Philip Morris Companies, Inc.
17,135,625
250,000 Procter & Gamble Co.
24,750,000
--------------
134,411,250
--------------
Diversified -- 0.5%
115,000 Textron, Inc.
10,206,250
--------------
Electronics/Electrical Equipment -- 0.5%
115,000 General Electric Co.
11,126,250
--------------
Entertainment/Leisure -- 1.8%
700,000 Carnival Corp., Class A
21,087,500
330,000 Circus Circus Enterprises Inc. *
11,385,000
325,000 Trump Hotels & Casino Resorts, Inc. *
5,159,375
--------------
37,631,875
--------------
See notes to financial statements.
69
Growth and Income Portfolio
Portfolio of Investments October 31, 1996 (continued)
Shares Issuer
Value
- -----------------------------------------------------------------
Long-Term Investments -- (continued)
- -----------------------------------------------------------------
Financial Services -- 3.3%
574,500 Countrywide Credit Industries, Inc.
$ 16,373,250
175,000 Federal Home Loan Mortgage Corp.
17,675,000
360,000 Federal National Mortgage Assoc.
14,085,000
505,000 Green Tree Financial Corp.
20,010,625
--------------
68,143,875
--------------
Food/Beverage Products -- 4.4%
540,000 Coca-Cola Enterprises, Inc.
23,017,500
460,000 ConAgra, Inc.
22,942,500
535,000 PepsiCo., Inc.
15,849,375
430,000 Sara Lee Corp.
15,265,000
100,000 Unilever NV, ADR (Netherlands)
15,287,500
--------------
92,361,875
--------------
Health Care -- 2.9%
571,000 Columbia/HCA Healthcare Corp.
20,413,250
495,000 HEALTHSOUTH Corp. *
18,562,500
180,000 Medtronic, Inc.
11,587,500
500,000 Tenet Healthcare Corp. *
10,437,500
--------------
61,000,750
--------------
Insurance -- 4.3%
150,000 Aetna Inc.
10,031,250
335,000 AFLAC, Inc.
13,441,875
455,110 Allstate Corp.
25,543,049
110,500 American International Group
12,003,063
125,000 Loews Corp.
10,328,125
220,000 Mid Ocean, Ltd. (Bermuda)
10,340,000
140,000 Reliastar Financial Corp.
7,420,000
750 Transport Holdings, Inc., Class A *
57,000
--------------
89,164,362
--------------
Manufacturing -- 3.4%
350,000 Ingersoll-Rand Co.
14,568,750
225,000 Johnson Controls
16,425,000
175,000 Kennametal Inc.
5,950,000
370,000 Parker Hannifin Corp.
14,013,750
400,000 Tyco International Ltd.
19,850,000
--------------
70,807,500
--------------
Metals/Mining -- 1.4%
310,000 Aluminum Co. of America (ALCOA)
18,173,750
335,000 Inco, Ltd.
10,636,250
--------------
28,810,000
--------------
See notes to financial statements.
70
Growth and Income Portfolio
Portfolio of Investments October 31, 1996 (continued)
Shares Issuer
Value
- -----------------------------------------------------------------
Long-Term Investments -- (continued)
- -----------------------------------------------------------------
Office/Business Equipment -- 0.7%
310,000 Xerox Corp.
$ 14,376,250
--------------
Oil & Gas -- 8.2%
150,000 Amoco Corp.
11,362,500
125,000 British Petroleum PLC, ADR (United Kingdom)
16,078,125
300,000 Halliburton Company
16,987,500
195,000 Mobil Corp.
22,766,250
601,500 PanEnergy Corp.
23,157,750
355,000 Phillips Petroleum Co.
14,555,000
224,200 Smith International *
8,519,600
190,000 Texaco, Inc.
19,308,750
140,000 Tidewater, Inc.
6,125,000
250,000 Unocal Corp.
9,156,250
445,000 Williams Companies, Inc.
23,251,250
--------------
171,267,975
--------------
Paper/Forest Products -- 1.1%
325,000 Fort Howard Corp. *
8,328,125
220,000 Willamette Industries
14,850,000
--------------
23,178,125
--------------
Pharmaceuticals -- 4.2%
420,000 American Home Products Corp.
25,725,000
90,000 Bristol-Myers Squibb Co.
9,517,500
340,000 Johnson & Johnson
16,745,000
200,000 Schering-Plough Corp.
12,800,000
361,300 SmithKline Beecham PLC, ADR (United Kingdom)
22,626,413
--------------
87,413,913
--------------
Photographic Equipment -- 0.5%
135,000 Eastman Kodak Co.
10,766,250
--------------
Printing & Publishing -- 1.5%
100,000 Harcourt General, Inc.
4,975,000
370,000 New York Times Company, Class A
13,366,250
150,000 Tribune Co.
12,262,500
--------------
30,603,750
--------------
Real Estate Investment Trust -- 1.3%
283,500 Beacon Properties Corp.
8,327,813
170,000 Equity Residential Properties Trust
6,247,500
280,000 Hospitality Properties Trust
7,280,000
210,000 Security Capital Industrial Trust
3,806,250
--------------
25,661,563
--------------
See notes to financial statements.
71
Growth and Income Portfolio
Portfolio of Investments October 31, 1996 (continued)
Shares Issuer
Value
- -----------------------------------------------------------------
Long-Term Investments -- (continued)
- -----------------------------------------------------------------
Restaurants/Food Service -- 0.4%
400,000 Wendy's International, Inc.
$ 8,250,000
--------------
Retailing -- 4.2%
320,000 American Stores Co.
13,240,000
420,000 Dayton-Hudson Corp.
14,542,500
350,000 Federated Department Stores *
11,550,000
470,000 Gap, Inc.
13,630,000
542,500 Kroger Co. *
24,209,063
225,000 Sears Roebuck & Co.
10,884,375
--------------
88,055,938
--------------
Shipping/Transportation -- 1.3%
150,000 Burlington Northern, Inc.
12,356,250
130,000 Federal Express Corp. *
10,465,000
130,000 Ryder System
3,867,500
--------------
26,688,750
--------------
Telecommunications -- 5.4%
500,000 BellSouth Corp.
20,375,000
183,000 CPT Telefonica del Peru S.A., ADR (Peru)
3,774,375
300,000 Frontier Corp.
8,700,000
300,000 GTE Corp.
12,637,500
72,918 Lucent Technologies, Inc.
3,427,146
400,000 Sprint Corp.
15,700,000
800,000 Telefonaktiebolaget LM Ericsson, Sp, ADR
(Sweden) 22,100,000
150,000 Telefonica de Espana, ADR (Spain)
9,037,500
270,000 U S West, Inc.
8,201,250
350,000 WorldCom, Inc.
8,531,250
--------------
112,484,021
--------------
Utilities -- 3.3%
200,000 CINergy Corp.
6,625,000
370,000 FPL Group Inc.
17,020,000
350,000 GPU, Inc.
11,506,250
120,000 Northern States Power Co.
5,640,000
500,000 Pinnacle West Capital Corp.
15,437,500
280,000 Texas Utilities Co.
11,340,000
--------------
67,568,750
--------------
Total Common Stock (Cost $1,437,565,995)
1,797,599,226
--------------
Convertible Preferred Stock -- 4.6%
- -------------------------------------------------------
Airlines -- 0.3%
90,000 Continental Air Finance Trust, 8.50%, 12/01/20
# 5,535,000
--------------
See notes to financial statements.
72
Growth and Income Portfolio
Portfolio of Investments October 31, 1996 (continued)
Shares Issuer
Value
- -----------------------------------------------------------------
Long-Term Investments -- (continued)
- -----------------------------------------------------------------
Automotive -- 0.2%
45,000 Ford Motor Co., Ser. A, 8.4%
$ 4,601,250
--------------
Broadcasting -- 0.2%
100,000 American Radio Systems, 7.00%, #
4,900,000
--------------
Computers/Computer Hardware -- 0.3%
50,000 Ceridian Corp., 5.5%
5,450,000
--------------
Consumer Products -- 0.9%
700,000 RJR Nabisco Holdings Corp., 9.25%, Ser. C
3,937,500
960,000 Westinghouse Electric, $1.30, Ser. C #
15,255,360
--------------
19,192,860
--------------
Entertainment/Leisure -- 0.4%
200,000 Time Warner Financing Trust, $1.24
7,750,000
--------------
Financial Services -- 0.6%
100,000 American General Delaware, $3.00, Ser. A
5,225,000
91,000 SunAmerica Inc., $3.188, 10/31/99 Ser.
3,412,500
148,000 The Money Store, $1.720, 12/01/99 Ser.
3,848,000
--------------
12,485,500
--------------
Health Care -- 0.3%
225,000 FHP International Corp., Ser. A, 5.0%
6,468,750
--------------
Insurance -- 0.2%
67,000 American Bankers Insurance Group, 6.25%, Ser.
B 3,844,125
--------------
Oil & Gas -- 0.7%
90,000 Diamond Shamrock, 5% #
5,190,120
140,000 Occidental Petroleum, $3.00
8,995,000
--------------
14,185,120
--------------
Paper/Forest Products -- 0.4%
175,000 International Paper Capital Corp., 5.25% #
8,461,075
--------------
Telecommunications -- 0.1%
40,000 Viacom International, 5.0%, 7/31/06 Ser.
3,320,000
--------------
Total Convertible Preferred Stock (Cost
$88,416,322) 96,193,680
--------------
See notes to financial statements.
73
Growth and Income Portfolio
Portfolio of Investments October 31, 1996 (continued)
Principal
Amount Issuer
Value
- -----------------------------------------------------------------
Long-Term Investments -- (continued)
- -----------------------------------------------------------------
Corporate Bonds & Notes -- 1.4%
- -------------------------------------------------------
Automotive -- 0.2%
$ 4,500,000 Magna International Inc., 5.00%, 10/15/02
$ 4,910,355
--------------
Computer Hardware -- 0.2%
4,000,000 Quantum Corp., 5.00%, 03/01/03 #
4,360,000
--------------
Electronics/Electrical Equipment -- 0.3%
7,000,000 Xilinx Inc., 5.25%, 11/01/02 #
6,600,300
--------------
Financial Services -- 0.5%
1,500,000 Aames Financial Corp., 5.50%, 03/15/06 #
2,444,985
6,600,000 South African Pulp & Paper Industries, BVI
Finance 6,121,500
Ltd., 7.50%, 06/30/06
2,000,000 UBS Finance of Delaware, 2.00%, 12/15/00
1,870,000
--------------
10,436,485
--------------
Health Care -- 0.2%
4,000,000 Tenet Healthcare Corp., 6.00%, 12/01/05
4,095,000
--------------
Total Corporate Bonds & Notes (Cost $29,600,000)
30,402,140
--------------
Convertible Corporate Bonds & Notes -- 2.0%
- -------------------------------------------------------
Computers/Computer Hardware -- 0.2%
4,000,000 Applied Magnetics Corp., 7.00%, 3/15/06 #
5,166,000
--------------
Electronics/Electrical Equipment -- 0.2%
3,850,000 SCI Systems Inc., 5.00%, 05/01/06 #
4,706,625
--------------
Financial Services -- 0.2%
2,300,000 First Financial Management, 5.00%, 12/15/99
4,315,306
--------------
Health Care -- 0.1%
1,200,000 Sterling House, 6.75%, 06/30/06 #
984,000
--------------
Hotels/Other Lodging -- 0.4%
6,885,000 Hilton Hotels Corp., 5.00%, 05/15/06
7,625,138
--------------
See notes to financial statements.
74
<PAGE>
Growth and Income Portfolio
Portfolio of Investments October 31, 1996 (continued)
Principal
Amount Issuer
Value
- -----------------------------------------------------------------
Manufacturing -- 0.4%
$ 4,000,000 3 Com Corp., 10.25%, 11/01/01 #
$ 8,265,640
1,000,000 Waban Inc., 6.50%, 07/01/02
1,093,750
--------------
9,359,390
--------------
Pharmaceuticals -- 0.3%
5,000,000 ICN Pharmaceuticals, 8.50%, 11/15/99
5,385,950
--------------
Retailing -- 0.2%
4,000,000 Federated Department Stores *, 5.00%, 10/01/03
4,612,520
--------------
Total Convertible Corporate Bonds & Notes
42,154,929
(Cost $32,207,500)
- -----------------------------------------------------------------
Total Long-Term Investments
1,966,349,975
(Cost $1,587,789,817)
- -----------------------------------------------------------------
Short-Term Investments -- 6.4%
- -----------------------------------------------------------------
U.S. Government Agency Obligations -- 1.0%
- -------------------------------------------------------
20,000,000 Federal Home Loan Mortgage Corp., Discount Notes,
19,965,867
5.12%, 11/13/96
--------------
Commercial Paper -- 5.4%
- -------------------------------------------------------
20,000,000 Cargill Inc., 5.27%, 11/22/96
19,938,517
20,000,000 Commerzbank US Finance Inc., 5.24%, 11/20/96
19,944,689
33,716,000 Household Finance Corp., 5.40%, 11/01/96
33,716,000
20,000,000 Lucent Technologies, Inc., 5.21%, 11/22/96
19,939,217
20,000,000 Merrill Lynch & Co., Inc., 5.25%, 11/13/96
19,965,000
--------------
113,503,423
- -----------------------------------------------------------------
Total Short-Term Investments
133,469,290
(Cost $133,469,290)
- -----------------------------------------------------------------
- -----------------------------------------------------------------
Total Investments -- 100.4%
$2,099,819,265
(Cost $1,721,259,107)
- -----------------------------------------------------------------
See notes to financial statements.
75
Statement of Assets and Liabilities October 31, 1996
- -----------------------------------------------------------------
Growth & Capital
Income Growth
Portfolio Portfolio
- -------------- --------------
ASSETS:
Investment securities, at value (Note 1)........................
$2,099,819,265 $1,103,102,580
Cash............................................................
956 941
Receivables:
Investment securities sold....................................
20,216,167 8,824,987
Interest and dividends........................................
4,587,325 750,403
Other assets....................................................
94,485 78,120
- -------------- --------------
Total Assets..............................................
2,124,718,198 1,112,757,031
- -------------- --------------
LIABILITIES:
Payable for investment securities purchased.....................
31,402,747 22,079,842
Accrued liabilities: (Note 2)
Administration fees...........................................
88,975 47,321
Investment advisory fees......................................
710,802 378,562
Custodian.....................................................
35,044 6,110
Other.........................................................
132,689 112,863
- -------------- --------------
Total Liabilities.........................................
32,370,257 22,624,698
- -------------- --------------
NET ASSETS APPLICABLE TO INVESTORS' BENEFICIAL INTERESTS.........
$2,092,347,941 $1,090,132,333
Cost of Investments..............................................
$1,721,063,078 $ 925,693,831
============== ==============
See notes to financial statements.
83
Statement of Operations For the year ended October 31, 1996
- -----------------------------------------------------------------
Growth & Capital
Income Growth
Portfolio Portfolio
------------- -------------
INVESTMENT INCOME:
Dividend.........................................................
... $ 40,163,037 $ 11,147,019
Interest.........................................................
... 15,979,731 6,376,287
------------ ------------
Total investment
income....................................... 56,142,768
17,523,306
------------ ------------
EXPENSES: (Note 2)
Investment Advisory
fees............................................ 8,101,188
4,226,466
Administration
fees................................................. 1,012,648
528,308
Custodian
fees......................................................
141,771 81,603
Amortization of organization costs (Note
1)......................... 8,012 8,012
Professional
fees...................................................
62,232 66,809
Trustees fees and
expenses.......................................... 88,590
51,050
Other............................................................
... 104,455 109,511
------------ ------------
Total
expenses................................................
9,518,896 5,071,759
------------ ------------
Net investment
income............................................. 46,623,872
12,451,547
------------ ------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on:
Investments.......................................................
155,750,263 132,963,967
Futures and written option
transactions........................... 7,927,539
- --
Change in net unrealized appreciation/depreciation on:
Investments.......................................................
164,599,862 71,608,504
Futures and written option
transactions........................... (1,362,579)
- --
------------ ------------
Net realized and unrealized gain on
investments..................... 326,915,085 204,572,471
------------ ------------
Net increase in net assets from
operations.......................... $ 373,538,957 $ 217,024,018
============ ============
See notes to financial statements.
84
Statement of Changes in Net Assets
- -----------------------------------------------------------------
Growth & Capital
Income Growth
Portfolio Portfolio
- ----------------------------------
- ------------------------------------
Year
Year Year Year
Ended
Ended Ended Ended
10/31/96
10/31/95 10/31/96 10/31/95
- --------------- --------------- ----------------
- ----------------
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS:
Net investment income.............................. $
46,623,872 $ 49,161,074 $ 12,451,547 $
14,034,371
Net realized gain on investments and futures
transactions.....................................
163,677,802 95,276,889 132,963,967
38,313,408
Change in net unrealized appreciation on
investments and futures..........................
163,237,283 154,841,478 71,608,504
83,513,979
- -------------- -------------- ---------------
- ---------------
Increase in net assets from operations.............
373,538,957 299,279,441 217,024,018
135,861,758
- -------------- -------------- ---------------
- ---------------
TRANSACTIONS IN INVESTORS' BENEFICIAL INTEREST:
Contributions......................................
470,616,913 511,820,403 1,114,082,444
1,403,653,138
Withdrawals........................................
(605,973,572) (542,453,501) (1,260,399,848)
(1,217,251,104)
- -------------- -------------- ---------------
- ---------------
Net increase (decrease) from transactions in
investors' beneficial interests..................
(135,356,659) (30,633,098) (146,317,404)
186,402,034
- -------------- -------------- ---------------
- ---------------
Net increase in net assets...................
238,182,298 268,646,343 70,706,614
322,263,792
NET ASSETS:
Beginning of period................................
1,854,165,643 1,585,519,300 1,019,425,719
697,161,927
- -------------- -------------- ---------------
- ---------------
End of period...................................... $
2,092,347,941 $ 1,854,165,643 $ 1,090,132,333 $
1,019,425,719
============== ============== ===============
===============
See notes to financial statements.
85
Vista Mutual Funds
Notes to Financial Statements October 31, 1996
- -----------------------------------------------------------------
1. Organization and Significant Accounting Policies -- Growth and
Income
Portfolio ("GIP") and Capital Growth Portfolio ("CGP"), (the
"Portfolios") are
separately registered under the Investment Company Act of 1940, as
amended, as
non-diversified, open end management investment companies organized
as trusts
under the laws of the State of New York. Each declaration of trust
permits the
Trustees to issue beneficial interests in the respective
Portfolios. The GIP
and the CGP commenced operations on November 29, 1993.
The preparation of financial statements in accordance with
generally accepted
accounting principles requires management to make estimates and
assumptions
that affect the reported amounts and disclosures in the financial
statements.
Actual results could differ from those estimates.
The following is a summary of significant accounting policies
followed by
the Portfolios:
A. Valuation of investments -- Equity securities, purchased
options and
futures are valued at the last sale price on the exchange on
which they
are primarily traded, including the NASDAQ National Market.
Securities for
which sale prices are not available and other over-the-counter
securities
are valued at the last quoted bid price. Bonds and other fixed
income
securities (other than short-term obligations), including
listed issues,
are valued on the basis of valuations supplied by pricing
services or by
matrix pricing systems of a major dealer in bonds. Short-term
debt
securities with 61 days or more to maturity at time of purchase
are
valued, through the 61st day prior to maturity, at market value
based on
quotations obtained from market makers or other appropriate
sources;
thereafter, the value on the 61st day is amortized on a
straight-line
basis over the remaining number of days to maturity. Short-term
investments with 60 days or less to maturity at time of
purchase are
valued at amortized cost, which approximates market. Portfolio
securities
for which there are no such quotations or valuations are valued
at fair
value as determined in good faith by or at the direction of the
Trustees.
B. Repurchase agreements -- It is the Trusts' policy that
repurchase
agreements are fully collateralized by U.S. Treasury and
Government Agency
securities. All collateral is held by the Trusts' custodian
bank,
subcustodian, or a bank with which the custodian bank has
entered into a
subcustodian agreement, or is segregated in the Federal Reserve
Book Entry
System. In connection with transactions in repurchase
agreements, if the
seller defaults and the value of the collateral declines, or if
the seller
enters an insolvency proceeding, realization of the collateral
by the
Trusts may be delayed or limited.
C. Futures contracts -- When a portfolio enters into a
futures contract,
it makes an initial margin deposit in a segregated account,
either in cash
or liquid securities. Thereafter, the futures contract is
marked to market
and the portfolio makes (or receives) additional cash payments
daily to
the broker. Changes in the value of the contract are recorded
as
unrealized appreciation/depreciation until the contract is
closed or
settled.
The GIP invested a portion of its liquid assets in long stock
index
futures contracts to more fully participate in the market. Use
of futures
contracts subject the Portfolio to risk of loss up to the
amount of the
value of the contract.
The Portfolio may enter into futures contracts only on
exchanges or boards
of trade. The exchange or board of trade acts as the
counterparty to each
futures transaction, therefore, the Portfolio's credit risk is
limited to
failure of the exchange or board of trade.
As of October 31, 1996, the Portfolios had no outstanding
futures
contracts.
D. Written options -- When a portfolio writes an option on a
futures
contract, an amount equal to the premium received by the
portfolio is
included in the portfolio's Statement of Assets and Liabilities
as an
asset and corresponding liability. The amount of the liability
is adjusted
daily to reflect the current market value of the written
options and the
change is recorded in a corresponding unrealized gain or loss
account.
When a written option expires on its stipulated expiration
date, or when a
closing transaction is entered into, the related liability is
extinguished
and the portfolio realizes a gain (or loss if the cost of the
closing
transaction exceeds the premium received when the option was
written).
86
Vista Mutual Funds
Notes to Financial Statements October 31, 1996 (continued)
- -----------------------------------------------------------------
The GIP writes options on stock index securities futures. These
options
are settled for cash and subject the Portfolio to market risk
in excess of
the amounts that are reflected in the Statement of Assets and
Liabilities.
The Portfolio, however, is not subject to credit risk on
written options
as the counterparty has already performed its obligation by
paying a
premium at the inception of the contract.
As of October 31, 1996 the Portfolios had no outstanding
written options.
E. Security transactions and investment income -- Investment
transactions are accounted for on the trade date (the date the
order to
buy or sell is executed). Securities gains and losses are
calculated on
the identified cost basis. Interest income is accrued as
earned. Dividend
income is recorded on the ex-dividend date.
F. Organization costs -- Organization and initial
registration costs
incurred in connection with establishing the Portfolios have
been deferred
and are being amortized on a straight-line basis over a sixty
month period
beginning at the commencement of operations of each Portfolio.
G. Federal income taxes -- The Portfolios intend to continue
to qualify
as partnerships and therefore net income and net realized gains
are taxed
to the partners. Accordingly, no tax provisions are recorded by
the
Portfolios. The investors in the Portfolios must take into
account their
proportionate share of the Portfolios' income, gains, losses,
deductions,
credits and tax preference items in computing their federal
income tax
liability, without regard to whether they have received any
cash
distributions from the Portfolio. The Portfolios do not intend
to
distribute to investors their net investment income or their
net realized
gains, if any. It is intended that the Portfolios will be
managed in such
a way that investors in the portfolio will be able to satisfy
the
requirements of subchapter M of the Internal Revenue Code to be
taxed as
regulated investment companies.
2. Fees and Other Transactions with Affiliates
A. Investment advisory fee -- Pursuant to separate Investment
Advisory
Agreements, The Chase Manhattan Bank ("Chase" or the "Adviser")
acts as
the Investment Adviser to the Portfolios. Chase is a direct
wholly-owned
subsidiary of The Chase Manhattan Corporation. As Investment
Adviser,
Chase supervises the investments of the Portfolios and for such
services
is paid a fee.
The fee is computed daily and paid monthly at an annual rate
equal to
0.40% of the Portfolios' average daily net assets.
Chase Asset Management, Inc. ("CAM"), a registered investment
adviser, is
the sub-investment adviser to each of the Portfolios pursuant
to a
Sub-Investment Advisory Agreement between CAM and Chase. CAM is
a wholly
owned subsidiary of Chase and is entitled to receive a fee,
payable by
Chase from its advisory fee, at an annual rate equal to 0.20%
of each
Portfolio's average daily net assets.
B. Custodial fees -- Chase, as Custodian provides safekeeping
services
for the Portfolios' securities. Compensation for such services
are
presented in the Statement of Operations as custodian fees.
C. Administration fee -- Pursuant to an Administration
Agreement, Chase
(the "Administrator") provides certain administration services
to the
Trusts. For these services and facilities, the Administrator
receives from
each Portfolio a fee computed at the annual rate equal to 0.05%
of the
respective Portfolio's average daily net assets.
87
Vista Mutual Funds
Notes to Financial Statements October 31, 1996 (continued)
- -----------------------------------------------------------------
3. Investment Transactions -- For the year ended October 31,
1996, purchases
and sales of investments (excluding short-term investments) were as
follows:
GIP
CGP
- -------------- -------------
Purchases (excluding U.S. Government)...............
$1,187,045,632 $ 865,730,088
Sales (excluding U.S. Government)...................
1,135,951,143 953,423,528
Purchases of U.S. Government........................
20,197,299 570,385
Sales of U.S. Government............................
25,429,221 --
The portfolio turnover rates of GIP and CGP for the year end ended
were 62%
and 90%, respectively. The average commission rates paid per share
were
$0.05949 and $0.05843 for GIP and CGP, respectively.
4. Retirement Plan -- The Portfolios have adopted an unfunded
noncontributory defined benefit pension plan covering all
independent trustees
of the Portfolios who will have served as an independent trustee
for at least
five years at the time of retirement. Benefits under this plan are
based on
compensation and years of service. Pension expenses for the year
ended October
31, 1996, included in Trustees Fees and Expenses in the Statement
of
Operations, prepaid pension costs and accrued pension liability
included in
other assets, and other accrued liabilities, respectively, in the
Statement of
Assets and Liabilities were as follows:
Prepaid Accrued
Pension
Pension Pension
Expenses
Assets Liability
--------
------- -------
GIP.................................................. $19,631
$60,845 $80,476
CGP.................................................. 9,910
30,717 40,627
88
Report of Independent Accountants
- -----------------------------------------------------------------
- -------------
To the Trustees and Beneficial
Interest Holders of Growth and Income
Portfolio and Capital Growth Portfolio
In our opinion, the accompanying statements of assets and
liabilities,
including the portfolios of investments, and the related statements
of
operations and of changes in net assets present fairly, in all
material
respects, the financial position of Vista Growth and Income
Portfolio and
Vista Capital Growth Portfolio (the "Portfolios") at October 31,
1996, the
results of each of their operations for the year then ended, and
the changes
in their net assets for each of the two years in the period then
ended in
conformity with generally accepted accounting principles. These
financial
statements are the responsibility of the Portfolios' management;
our
responsibility is to express an opinion on these financial
statements based on
our audits. We conducted our audits of these financial statements
in
accordance with generally accepted auditing standards which require
that we
plan and perform the audit to obtain reasonable assurance about
whether the
financial statements are free of material misstatement. An audit
includes
examining, on a test basis, evidence supporting the amounts and
disclosures in
the financial statements, assessing the accounting principles used
and
significant estimates made by management, and evaluating the
overall financial
statement presentation. We believe that our audits, which included
confirmation of securities at October 31, 1996 by correspondence
with the
custodian and brokers and the application of alternative auditing
procedures
where confirmations from brokers were not received, provide a
reasonable basis
for the opinion expressed above.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York 10036
December 10, 1996
89
