As filed with the Securities and Exchange Commission on January 30, 1998
Registration No. 2-75503
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 (X)
Pre-Effective Amendment No. _____ |_|
Post-Effective Amendment No. 54 |X|
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 54 |X|
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MAXIM SERIES FUND, INC.
(Exact Name of Registrant as Specified in Charter)
8515 E. Orchard Road
Englewood, Colorado 80111
Registrant's Telephone Number, including Area Code:
(303) 689-3000
W. T. McCallum
President and Chief Executive Officer
Great-West Life & Annuity Insurance Company
8515 E. Orchard Road
Englewood, Colorado 80111
(Name and Address of Agent for Service)
Copies of Communications to:
James F. Jorden, Esquire
Jorden Burt Berenson & Johnson, LLP
1025 Thomas Jefferson St. N. W.
Suite 400 East
Washington, D. C. 20007-0805
Approximate Date of Proposed Public Offering
It is proposed that this filing will become effective (check appropriate box)
|_| immediately upon filing pursuant to paragraph (b) of Rule 485 |X| on
February 27, 1998 pursuant to paragraph (b) of Rule 485 |_| 60 days after filing
pursuant to paragraph (a)(1) of Rule 485 |_| on pursuant to paragraph (a)(1) of
Rule 485 |_| 75 days after filing pursuant to paragraph (a)(2) of Rule 485 |_|
on pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
|_| this post-effective amendment designates a new effective date for a
previously filed post-effective amendment
Title of Securities Being Registered: Securities of an open-end investment
company.
<PAGE>
MAXIM SERIES FUND, INC.
REGISTRATION STATEMENT ON FORM N-1A
CROSS-REFERENCE SHEET
PART A
<TABLE>
Form N-1A Item Prospectus Caption
<S> <C> <C>
1. Cover Page Cover Page
2. Synopsis Not Applicable
3. Condensed Financial Information Financial Highlights
4. General Description of Registrant The Fund and Introduction; Fund Portfolios; The Fund and Its
Shares
5. Management of the Fund Management of the Fund
6. Capital Stock and Other Securities The Fund and Its Shares
7. Purchase of Securities Being Offered Introduction; Purchase and Redemption of Shares; Valuation
of Shares
8. Redemption or Repurchase Purchase and Redemption of Shares
9. Pending Legal Proceedings Not Applicable
PART B
Statement of Additional
Form N-1A Item Information Caption
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History Not Applicable
13. Investment Objectives and Policies The Fund Portfolios
14. Management of the Registrant Management of the Fund
15. Control Persons and Principal Purchase and Redemption of Shares
Holders of Securities
16. Investment Advisory and Other Services Management of Fund
17. Brokerage Allocation Portfolio Transactions and Brokerage
18. Capital Stock and Other Securities Not Applicable
19. Purchase, Redemption and Price of Purchase and Redemption of Shares
Securities Being Offered
20. Tax Status Taxes
21. Underwriters Not Applicable
22. Calculation of Yield Quotations Calculation of Yields and Total Return
of Performance Data
23. Financial Statements Financial Statements
PART C
Form N-1A Item Part C Caption
24. Financial Statements and Exhibits Financial Statements and Exhibits
25. Persons Controlled by or Under Persons Controlled by or Under
Common Control Common Control
26. Number of Holders of Securities Number of Holders of Securities
27. Indemnification Indemnification
28. Business and Other Connections Business and Other Connections of
of Investment Adviser Investment Adviser
29. Principal Underwriters Principal Underwriters
30. Location of Accounts and Records Location of Accounts and Records
31. Management Services Management Services
32. Undertakings Undertakings
33. Signatures Signatures
</TABLE>
12
MAXIM SERIES FUND, INC.
8515 E. Orchard Rd., Englewood, Colorado 80111
Phone No. (303) 689-3000
Maxim Series Fund, Inc. (the "Fund"), an open-end management
investment company, includes the following non-diversified investment
portfolio: the Maxim Vista Growth & Income Portfolio (the "Vista
Portfolio").
The investment objective of the Vista Portfolio is to provide its
shareholders with long-term capital appreciation and to provide dividend income.
The Vista Portfolio seeks to achieve its objective by investing all of its
investible assets in the Growth & Income Portfolio ("Growth & Income"), a
non-diversified open-end management investment company. Growth & Income seeks to
achieve its investment objective, which is identical to the investment objective
of the Vista Portfolio, by investing in common stock of issuers with a broad
range of market capitalizations.
This Prospectus sets forth concisely the information about the Vista
Portfolio that prospective investors ought to know before investing.
Additional information about the Fund has been filed with the
Securities and Exchange Commission and is available upon request, without charge
by calling or writing the Fund. The "Statement of Additional Information" bears
the same date as this Prospectus and is incorporated by reference into this
Prospectus in its entirety.
Mutual fund shares are not deposits, obligations of, or guaranteed
by, any Depositary institution. Shares are not insured by the FDIC, the Federal
Reserve Board, or any other agency, and are subject to investment risk,
including the possible loss of principal.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THIS PROSPECTUS SHOULD BE READ
AND RETAINED FOR FUTURE REFERENCE.
GW CAPITAL MANAGEMENT, LLC
Investment Adviser
The date of this Prospectus is February 27, 1998
<PAGE>
FINANCIAL HIGHLIGHTS
Selected Data for a Share of Capital Stock
For the Year Ended October 31,
MAXIM VISTA GROWTH & INCOME PORTFOLIO
<TABLE>
Period Ended October 31,
- ------------------------------------- -------------------------- ------------------------------- -----------------------------
1997 1996 19951
-------------------------- ------------------------------- -----------------------------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period $ 1.3957 $ 1.2133 $ 1.0000
Income from Investment Operations
Net Investment Income 0.0158 0.0219 0.0174
Net Realized and Unrealized Gain 0.3677 0.2147 0.2133
------------------------ -------------------------- --------------------
Total Income From
Investment Operations 0.3835 0.2366 0.2307
Less Distributions
Less Distributions
From Net Investment Income (0.0162) (0.0215) (0.0174)
From Net Realized Gain (0.1040) (0.0327)
------------------------ ----------------------- --------------------
Total Distributions (0.1202) (0.0542) (0.0174)
------------------------ -------------------------- --------------------
Total Distributions (0.0542) (0.0174)
-------------------------- ----------------------
Net Asset Value, End of Period $ 1.6590 $ 1.3957 $ 1.2133
====================== ================ -------------------
Total Return 29.33% 20.01% 22.25%
Total Return 20.01% 27.30%
Net Assets, End of Period $ 135,053,616 $ 86,430,279 $ 49,403,163
Ratio of Expenses to
Average Net Assets 1.00% 1.00% 1.01%*
Ratio of Net Investment
Income to Average 1.08% 1.75% 2.21%*
Net Assets
- ---------------------------- ---------------------- --------------------- -----------------
</TABLE>
- ---------
1 For 1995 the period is from December 21, 1994[inception] to October 31, 1995.
* Annualized
<PAGE>
INTRODUCTION
Maxim Series Fund, Inc. (the "Fund") is an open-end management
investment company (a mutual fund) that sells its shares to the Maxim Series
Account, FutureFunds Series Account, FutureFunds II Series Account, Retirement
Plan Series Account and Pinnacle Series Account of Great-West Life & Annuity
Insurance Company ("GWL&A") and to the TNE Series (k) Account (collectively
"Series Accounts") of Metropolitan Life Insurance Company ("MetLife"). The
shares in the Series Accounts are currently used to fund benefits under certain
individual and group variable annuity contracts and variable life insurance
policies (the "Variable Contracts") issued by GWL&A and MetLife. For information
concerning your rights under a variable contract, see the applicable Series
Account prospectus. Shares of the Fund are, and may in the future be, used to
fund benefits under other contracts issued by GWL&A or its affiliates, MetLife
or its affiliates, and other insurance companies. GW Capital Management, LLC
("GW Capital") is the Investment Adviser for the Fund and the Vista Portfolio.
The investment adviser of Growth & Income is The Chase Manhattan Bank ("Chase"),
270 Park Avenue, New York, New York 10017. Chase Asset Management, Inc. ("CAM")
is the sub-adviser to Growth & Income. CAM's address is 1211 Avenue of the
Americas, New York, New York 10036.
THE FUND PORTFOLIO
The Vista Portfolio has its own investment objective and investment
strategy. The investment objective may not be changed without the affirmative
vote of at least a majority of the outstanding shares of the Vista Portfolio. A
more detailed description of the Vista Portfolio's investment policies and a
glossary further describing certain investment securities mentioned in the
discussion that follows are contained in the Statement of Additional
Information. Unlike other portfolios of the Fund which directly acquire and
manage their own portfolio of securities, the Vista Portfolio will seek to
achieve its objectives by investing all of its investible assets in Growth &
Income. The Vista Portfolio has an investment objective that is identical to the
investment objective of Growth & Income. The various investments of and
techniques employed by Growth & Income are discussed under "Maxim Vista Growth &
Income Portfolio", below.
Smaller funds investing in Growth & Income may be materially affected
by the actions of larger funds invested in Growth & Income. For example, if a
large fund withdraws from Growth & Income, the remaining funds may experience
higher pro rata operating expenses, thereby producing lower returns, or Growth &
Income may become less diverse, resulting in increased portfolio risk. (However,
this possibility also exists for traditionally structured funds which have large
and/or institutional investors.) Also, funds with a greater pro rata ownership
in Growth & Income could have effective voting control of the operations of
Growth & Income. Whenever the Fund is requested to vote on matters pertaining to
Growth & Income, the Fund will cast all of its votes in the same proportion as
do the Vista Portfolio's shareholders. See "The Fund And Its Shares" in this
prospectus for additional information regarding shareholders of the Fund.
The Vista Portfolio may withdraw its investment in Growth & Income at
any time without shareholder approval if the Board of Directors of the Fund
decides it is in the best interest of the Vista Portfolio to do so. Upon any
such withdrawal, the Board will consider what action may be taken, including the
investment of assets of the Vista Portfolio in another underlying mutual fund
having the same investment objective as the Vista Portfolio or the retention of
an investment adviser to manage the Vista Portfolio's assets in accordance with
the investment objective. The investment objective of the Vista Portfolio,
however, and the investment objective of Growth & Income, can only be changed
with shareholder approval. There is no assurance that Vista Portfolio's
investment objective will be achieved nor is there any assurance that Growth &
Income's investment objective will be achieved.
Certain changes in Growth & Income's fundamental objectives, policies
and restrictions could require the Vista Portfolio to redeem its interest. Any
such redemption could result in a distribution in-kind of securities (as opposed
to cash distribution) by the underlying mutual fund. Should such a distribution
occur, the Vista Portfolio could incur brokerage fees or other transaction costs
in converting such securities to cash. In addition, a distribution in-kind could
result in a less diversified portfolio of investments for the Vista Portfolio
and could affect adversely the liquidity of the Vista Portfolio.
Following is a description of the Vista Portfolio that will be
managed on the basis described above.
Maxim Vista Growth & Income Portfolio
The investment objective of the Vista Portfolio is to provide its
shareholders with long-term capital appreciation and to provide dividend income.
The Vista Portfolio seeks to achieve its objective by investing all of its
investible assets in the Growth & Income, a non-diversified open-end management
investment company managed by Chase. Growth & Income seeks to achieve its
investment objective, which is identical to the investment objective of the
Vista Portfolio, by investing in common stocks of issuers with a broad range of
market capitalizations. Under normal market conditions, Growth & Income will
invest at least 80% of its total assets in common stocks. In addition, Growth &
Income may invest up to 20% of its total assets in convertible securities. To
the extent the assets of Growth & Income are not invested in common stocks or
convertible securities, they will consist of or be invested in cash, cash
equivalents and short-term debt securities, such as U.S. Government securities,
bank obligations, commercial paper and repurchase agreements. However, Growth &
Income reserves the right to invest up to 100% of its assets in such instruments
as well as investment grade debt securities for temporary defensive purposes
during periods that it considers to be particularly risky for investment in
common stocks. At times when its advisers deem it advisable to limit exposure to
the equity market, Growth & Income may invest up to 20% of its total assets in
U.S. Government obligations (exclusive of any investment in money market
instruments). To the extent that Growth & Income departs from its investment
policies during temporary defensive periods, its investment objective may not be
achieved.
Growth & Income intends to utilize both quantitative and fundamental
research to identify undervalued stocks with a catalyst for positive change. It
is believed that the market risk involved in seeking capital appreciation will
be moderated to an extent by the anticipated dividend returns on the stocks in
which Growth & Income invests.
Other Investment Practices
Growth & Income may also engage in the following investment
practices, when consistent with its overall objective and policies. Please see
the Statement of Additional Information for a complete discussion of these
investment practices and the risks associated therewith.
Investments in foreign securities present risks not typically
associated with investments in comparable securities of U.S. issuers. Growth &
Income may invest up to 20% of its total assets in foreign securities including
Depositary receipts as described below. Since foreign securities are normally
denominated and traded in foreign currencies, the values of Growth & Income's
foreign investments may be influenced by currency exchange rates and exchange
control regulations.
There may be less information publicly available about a foreign
corporate or government issuer than about a U.S. issuer, and foreign corporate
issuers are not generally subject to accounting, auditing and financial
reporting standards and practices comparable to those in the United States. The
securities of some foreign issuers are less liquid and at times more volatile
than securities of comparable U.S. issuers. Foreign brokerage commissions and
securities custody costs are often higher than those in the United States, and
judgments against foreign entities may be more difficult to obtain and enforce.
With respect to certain foreign countries, there is a possibility of
governmental expropriation of assets, confiscatory taxation, political or
financial instability and diplomatic developments that could affect the value of
investments in those countries. The receipt of interest on foreign government
securities may depend on the availability of tax or other revenues to satisfy
the issuer's obligations.
Growth & Income's investments in foreign securities may include
investments in emerging markets; that is countries whose economies or securities
markets are not yet highly developed. Special considerations associated with
these investments (in addition to the considerations regarding foreign
investments generally) may include, among others, greater political
uncertainties, an economy's dependence on revenues from particular commodities
or on international aid or development assistance, currency transfer
restrictions, highly limited numbers of potential buyers for such securities and
delays and disruptions in securities settlement procedures.
Most foreign securities held by Growth & Income will be denominated
in foreign currencies or traded in securities markets in which settlements are
made in foreign currencies. Similarly, any income on such securities is
generally paid to Growth & Income in foreign currencies. The value of these
foreign currencies relative to the U.S. dollar varies continually, causing
changes in the dollar value of Growth & Income's investments (even if the price
of the investments is unchanged) and changes in the dollar value of Growth &
Income's income available for distribution to its shareholders. The effect of
changes in the dollar value of a foreign currency on the dollar value of Growth
& Income's assets and on the net investment income available for distribution
may be favorable or unfavorable.
Growth & Income may incur costs in connection with conversions
between various currencies. In addition, Growth & Income may be required to
liquidate portfolio assets, or may incur increased currency conversion costs, to
compensate for a decline in the dollar value of a foreign currency occurring
between the time when Growth & Income declares and pays a dividend, or between
the time when Growth & Income accrues and pays an operating expense in U.S.
dollars.
Growth & Income may invest its assets in securities of foreign
issuers in the form of: American Depositary Receipts, European Depositary
Receipts, Global Depositary Receipts or other similar securities representing
securities of a foreign issuer (collectively, "Depositary Receipts"). Growth &
Income treats Depositary Receipts as interests in the underlying securities for
purposes of its investment policies. Unsponsored Depositary Receipts may not
carry comparable voting rights to sponsored Depositary Receipts, and a purchaser
of unsponsored Depositary Receipts may not receive as much information about the
issuer of the underlying securities as with sponsored Depositary Receipts.
Growth & Income may invest up to 20% of its net assets in convertible
securities, which are securities generally offering fixed interest or dividend
yields which may be converted either at a stated price or stated rate for common
or preferred stock. Although to a lesser extent than with fixed income
securities, generally, the market value of convertible securities tends to
decline as interest rates increase and increase as interest rates decline.
Because of the conversion feature, the market value of a convertible security
tends to vary with fluctuations in the market value of the underlying common or
preferred stock.
Growth & Income may enter into repurchase agreements. A repurchase
agreement is an agreement whereby the seller of a security agrees to repurchase
the security sold at a mutually agreed upon price and time. The resale price
would be in excess of the purchase price, reflecting an agreed upon market
interest rate. Delays or losses could result if the other party to the agreement
defaults or becomes insolvent. Moreover, it may lend portfolio securities in an
amount not exceeding 30% of its total assets in order to generate additional
income. These transactions, however, must be fully collateralized at all times.
Growth & Income may enter into forward commitments, whereby Growth & Income may
purchase securities for delivery at a future date. A forward commitment may
increase Growth & Income's overall investment exposure and involves a risk of
loss if the value of the securities declines prior to the settlement date. These
transactions involve some risk to Growth & Income if the other party should
default on its obligation and Growth & Income is delayed or prevented from
recovering the collateral or completing the transaction
Growth & Income may enter into put transactions, including those
sometimes referred to as stand-by commitments, with respect to securities in its
portfolio. In these transactions, Growth & Income would acquire the right to
sell a security at an agreed-upon price within a specified period prior to its
maturity date. These transactions involve some risk to Growth & Income if the
other party should default on its obligation and Growth & Income is delayed or
prevented from recovering the collateral or completing the transaction. A put
transaction will increase the cost of the underlying security and consequently
reduce the available yield.
Growth & Income may invest up to 10% of its total assets in shares of
other investment companies, when consistent with its investment objectives and
policies, subject to applicable regulatory requirements. Additional fees will be
charged by other investment companies, which are in addition to fees charged by
Vista Portfolio.
Growth & Income may invest up to 20% of its total assets in stripped
obligations (i.e.: separately traded principal and interest components of
securities), commonly known as "STRIPS", where the underlying obligations are
backed by the full faith and credit of the U.S. Government. Changes in interest
rates tend to make the value of these instruments fluctuate more than the value
of ordinary interest-paying debt securities with similar maturities. The risk is
greater when the period to maturity is longer.
Growth & Income may invest in debt securities issued by supranational
organizations, which include organizations such as The World Bank, the European
Community, the European Coal and Steel Community and the Asian Development Bank.
It may also invest in securities denominated in the ECU, which is a "basket"
consisting of specified amounts of the currencies of certain member states of
the European Community. These securities are typically issued by European
governments and supranational organizations.
Growth & Income may invest in investment grade debt securities which
are securities rated in the category BBB or higher by Standard & Poor's
Corporation ("S&P"), or Baa or higher by Moody's Investors Services, Inc.
("Moody's") or the equivalent by another national rating organization, or, if
unrated, determined by Growth & Income to be of comparable quality.
Growth & Income may invest its assets in derivative and related
instruments to hedge various market risks or to increase its income or gain.
Some of these instruments will be subject to asset segregation requirements to
cover Growth & Income's obligations. Growth & Income may (i) purchase, write and
exercise call and put options on securities and securities indexes (including
using options in combination with securities, other options or derivative
instruments); (ii) enter into swaps, futures contracts and options on futures
contracts; (iii) employ forward currency contracts; and (iv) purchase and sell
structured products, which are instruments designed to restructure or reflect
the characteristics of certain other investments.
There are a number of risks associated with the use of derivatives
and related instruments and no assurance can be given that any strategy will
succeed. The value of certain derivatives or related instruments in which Growth
& Income invests may be particularly sensitive to changes in prevailing economic
conditions and market value. The ability of Growth & Income to successfully
utilize these instruments may depend in part upon the ability of Growth &
Income's adviser to forecast these factors correctly. Inaccurate forecasts could
expose Growth & Income to a risk of loss. There can be no guarantee that there
will be a correlation between price movements in a hedging instrument and in the
portfolio assets being hedged. Growth & Income is not required to use any
hedging strategies. Hedging strategies, while reducing risk of loss, can also
reduce the opportunity for gain. Derivatives transactions not involving hedging
may have speculative characteristics, involve leverage and result in losses that
may exceed the original investment of Growth & Income. There can be no assurance
that a liquid market will exist at a time when Growth & Income seeks to close
out a derivatives position. Activities of large traders in the futures and
securities markets involving arbitrage, "program trading," and other investment
strategies may cause price distortions in derivatives markets. In certain
instances, particularly those involving over the counter transactions or forward
contracts, there is a greater potential that a counterparty or broker may
default. In the event of a default, Growth & Income may experience a loss. For
additional information concerning derivatives, related instruments and the
associated risks, see the Statement of Additional Information.
Growth & Income may borrow money from banks for temporary or
short-term purposes, but will not borrow for leveraging purposes. It may also
sell and simultaneously commit to repurchase a portfolio security at an
agreed-upon price and time, to avoid selling securities during unfavorable
market conditions in order to meet redemptions. This practice is commonly known
as a reverse repurchase agreement. Whenever Growth & Income enters into a
reverse repurchase agreement, it will establish a segregated account in which it
will maintain liquid assets on a daily basis in an amount at least equal to the
repurchase price (including accrued interest). Growth & Income would be required
to pay interest on amounts obtained through reverse repurchase agreements.
Reverse repurchase agreements carry the risk that the market value of the
securities which Growth & Income is obligated to repurchase may decline below
the purchase price.
MANAGEMENT OF THE FUND AND GROWTH & INCOME
Overall responsibility for management and supervision of the Fund
rests with the Fund's Directors and overall responsibility for management and
supervision of Growth & Income rests with Trustees of Growth & Income. The Fund
currently has five Directors, three of whom are not "interested persons" of the
Fund within the meaning of that term under the Investment Company Act of 1940.
The Board of Directors of the Fund meets regularly four times each year and at
other times as necessary. By virtue of the functions performed by GW Capital as
Investment Adviser to the Fund, the Fund requires no employees other than its
executive officers, none of whom devotes full time to the affairs of the Fund.
These officers are employees of GWL&A and receive compensation from it. The
Statement of Additional Information contains the names of, and general
background information regarding, each Director and executive officer of the
Fund and each Trustee and executive officer of Growth & Income.
Investment Adviser of the Fund
GW Capital, located at 8515 E. Orchard Rd., Englewood, Colorado
80111, serves as the Fund's investment adviser. GW Capital is a wholly owned
subsidiary of Great-West Life & Annuity Insurance Company which in turn is a
wholly owned subsidiary of The Great-West Life Assurance Company. The Great-West
Life Assurance Company is a subsidiary of Great-West Lifeco Inc., a holding
company. Great-West Lifeco Inc. is in turn a subsidiary of Power Financial
Corporation, a financial services company. Power Corporation of Canada, a
holding and management company, has voting control of Power Financial
Corporation. Mr. Paul Desmarais, through a group of private holding companies,
which he controls, has voting control of Power Corporation of Canada. GW Capital
presently acts as the investment adviser for Great-West Variable Annuity Account
A, a separate account of GWL&A registered as a management investment company,
Orchard Series Fund, a publicly-available registered mutual fund, and certain
non-registered, qualified corporate pension plan separate accounts of GWL&A. GW
Capital is a registered investment adviser with the Securities and Exchange
Commission.
Subject to the supervision and direction of the Fund's Board of
Directors, GW Capital generally manages the Fund's portfolios in accordance with
the Fund's stated investment objectives and policies, makes investment decisions
for the Fund and places orders to buy and sell securities on behalf of the Fund.
The investment adviser and sub-adviser to Growth & Income, in which the Vista
Portfolio invests all its assets, manage Growth & Income in accordance with
Growth & Income's stated investment objectives and policies, making investment
decisions for Growth & Income and placing orders to buy and sell securities on
behalf of Growth & Income.
With respect to the Vista Portfolio, GW Capital shall be responsible
for all expenses, except extraordinary expenses. In addition to its investment
advisory services, GW Capital is responsible for providing accounting and
administrative services for the Vista Portfolio. GW Capital receives monthly
compensation at the annual rate of 0.53% for the services it provides with
respect to the Vista Portfolio.
Investment Adviser of Growth & Income
Chase is responsible for managing the assets of Growth & Income
pursuant to an investment advisory agreement dated May 6, 1996, and has overall
responsibility for Growth & Income's investment decisions, subject to the
oversight of the Board of Trustees. Chase is a wholly owned subsidiary of the
Chase Manhattan Corporation, a bank holding company. Chase and its predecessors
have over 100 years of money management experience. For its investment advisory
services, Chase is entitled to receive an annual fee computed daily and paid
monthly based on an annual rate equal to .40% of Growth & Income's daily net
assets. Chase may, from time to time, voluntarily waive all or a portion of its
fees payable under its advisory agreement with Growth & Income. Chase's address
is 270 Park Avenue, New York, New York 10017.
CAM, a registered investment adviser serves as the sub-adviser to
Growth & Income pursuant to a sub-advisory agreement between CAM and Chase. CAM
is a wholly owned subsidiary of Chase. CAM makes the day-to-day investment
decisions for Growth & Income and is entitled to receive a fee, payable by Chase
from its advisory fee, at an annual rate equal to 0.20% of Growth & Income's
average daily net assets. CAM provides discretionary investment advisory
services to institutional clients.
Greg Adams and Diane Sobin, Senior Portfolio Managers at Chase, are
responsible for the day-to-day management of Growth & Income. Mr. Adams
joined Chase in 1987 and has been a manager of Growth & Income since March
1995. Mr. Adams is also a manager of Vista Balanced Fund and Vista Large
Cap Equity Fund. In addition, Mr. Adams has been responsible for overseeing
the proprietary computer model program used in the U.S. equity selection
process. Ms. Sobin joined Chase in 1997 and has been a manager of Growth &
Income since July 1997. Prior to joining Chase, Ms. Sobin was a senior
portfolio manager at Oppenheimer Funds Inc. where she managed mutual funds.
Prior to 1995, Ms. Sobin was a senior portfolio manager at Dean Witter
Discover, where she managed several mutual funds and other accounts.
Dave Klassen, Director, U.S. Funds Management and Equity Research at
Chase, is responsible for asset allocation and investment strategy for Chase's
domestic equity portfolios. Mr. Klassen joined Chase in 1992 and is a manager of
Vista Small Cap Equity Fund and Vista Capital Growth Portfolio. Prior to joining
Chase in 1992, Mr. Klassen was a vice president and portfolio manger at Dean
Witter Reynolds, responsible for managing several mutual funds and other
accounts.
Chase also serves as administrator to Growth & Income and is entitled
to a fee computed daily and paid monthly at an annual rate equal to 0.05% of
Growth & Income's average daily net assets. Chase may, from time to time,
voluntarily waive all or a portion of its administrative fees.
Additionally, expenses attributable to and payable by the Growth &
Income Portfolio, currently at the annual rate of 0.02% of Growth & Income's
average daily net assets, are paid monthly. Expenses include, but are not
limited to, expenses connected with the execution, recording and settlement of
security transactions; fees and expenses of Growth & Income's custodian for all
services to Growth & Income, including safekeeping of funds and securities and
maintaining required books and accounts; expenses of preparing and mailing
reports to investors and to government officers and commissions; and expenses of
meetings of investors.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Dividends from the investment income of the Vista Portfolio shall be
declared and reinvested quarterly in additional shares of Growth & Income at net
asset value. Distributions of net realized capital gains, if any, are declared
in the fiscal year in which they have been realized and are reinvested in
additional shares of Growth & Income at net asset value.
The Fund has qualified, and intends to continue to qualify, as a
registered investment company under Subchapter M of the Internal Revenue Code
("Code"). Each Portfolio of the Fund will be treated as a separate corporation
for federal income tax purposes. The Fund intends to distribute all of its net
income so as to avoid any Fund-level tax. Therefore, dividends derived from
interest and distributions of any realized capital gains will be taxable, under
Subchapter M, to the Fund's shareholders, which in this case are GWL&A's Series
Accounts. The Fund also intends to distribute sufficient income to avoid the
imposition of the Code Section 4982 excise tax.
For a discussion of the taxation of GWL&A or MetLife and the Series
Accounts, see "Federal Tax Considerations" included in the applicable Series
Account prospectus.
PURCHASE AND REDEMPTION OF SHARES
Shares of the Fund (i.e., its Portfolios) are sold and redeemed at
their net asset value next determined after initial receipt of purchase order or
notice of redemption without the imposition of any sales commission or
redemption charge. However, certain deferred sales and other charges may apply
to the variable contracts. Such charges are described in the applicable Series
Account prospectus.
VALUATION OF SHARES
The Vista Portfolio's net asset value per share is determined as of
4:00 p.m., EST/EDT time once, daily, Monday through Friday, except on: (i)
holidays on which the New York Stock Exchange is closed, or (ii) days on which
Growth & Income is not valued.
Since the Vista Portfolio will invest all its investible assets in
Growth & Income, the value of the Vista Portfolio's shares will be equal to the
value of its beneficial interests in Growth & Income. If the securities owned by
Growth & Income increase in value, the value of the Vista Portfolio's shares
will increase. If the securities owned by Growth & Income decrease in value, the
value of the Vista Portfolio's shares will also decline. In this way, investors
participate in any change in the value of the securities owned by Growth &
Income.
THE FUND AND ITS SHARES
The Fund was incorporated under the laws of the State of Maryland on
December 7, 1981 and is registered with the Securities and Exchange Commission
as an open-end, management investment company. The Fund commenced operations on
February 25, 1982.
The Fund offers a separate class of common stock for each portfolio.
All shares will have equal voting rights, except that only shares of a
respective portfolio will be entitled to vote on matters concerning only that
portfolio. Each issued and outstanding share of a portfolio is entitled to one
vote and to participate equally in dividends and distributions declared by that
portfolio and, upon liquidation or dissolution, to participate equally in the
net assets of such portfolio remaining after satisfaction of outstanding
liabilities. The shares of each portfolio, when issued, will be fully paid and
non-assessable, have no preference, preemptive, conversion, exchange or similar
rights, and will be freely transferable. Shares do not have cumulative voting
rights and the holders of more than 50% of the shares of the Fund voting for the
election of Directors can elect all of the Directors of the Fund if they choose
to do so and, in such event, holders of the remaining shares would not be able
to elect any Directors.
The Series Accounts, as part of GWL&A or MetLife, and The Great-West
Life Assurance Company ("Great-West"), which provided the Fund's initial
capitalization will be holders of the shares and be entitled to exercise the
rights directly as described in the applicable Series Account prospectus.
Whenever the Fund is requested to vote on matters pertaining to Growth & Income,
the Fund will cast all of its votes in the same proportion as do the Vista
Portfolio's shareholders.
The Fund offers its shares to the Series Accounts. For various
reasons, it may become disadvantageous for one or more of the Series Accounts to
continue to invest in Fund shares. In such an event, one or more Series Accounts
may redeem its Fund shares. For further information, see the Statement of
Additional Information.
PERFORMANCE RELATED INFORMATION
The Fund may advertise certain performance related information.
Performance information about the Fund is based on the Vista Portfolio's and/or
Growth & Income's past performance only and is no indication of future
performance.
The Fund may include total return in advertisements or other sales
materials regarding the Vista Portfolio. When the Fund advertises the total
return of the Vista Portfolio, it will usually be calculated for one year, five
years, and ten years or some other relevant period if the Vista Portfolio and
Growth & Income have been in existence for less than ten years. Total return is
measured by comparing the value of an investment in the portfolio at the
beginning of the relevant period to the value of the investment at the end of
the period (assuming immediate reinvestment of any dividends or capital gains
distributions). The performance of the Vista Portfolio will be affected by
charges and fees at the separate account level.
The Vista Portfolio may also advertise its yield in addition to total
return. This yield will be computed by dividing the net investment income per
share earned during a recent one-month period by the net asset value of a Vista
Portfolio share (reduced by any dividend expected to be paid shortly out of
Vista Portfolio income) on the last day of the period.
GENERAL INFORMATION
Reports to Shareholders
The fiscal year of the Vista Portfolio and Growth & Income ends on
October 31 of each year. The Fund will send to its shareholders, at least
semi-annually, reports of the Vista Portfolio and other information. An annual
report, containing financial statements, audited by independent certified public
accountants, will be sent to shareholders each year.
Custodian for the Fund and Growth & Income
Morgan Guaranty Trust Company of New York ("Morgan"), New York City,
New York, acts as custodian of the Fund's assets. Morgan has custody of the
Fund's assets held within and outside the United States. Morgan holds the Fund's
assets in safekeeping and collects and remits the income thereon subject to the
instructions of the Fund.
The custodian of Growth & Income's assets is Chase, whose duties
include safeguarding and controlling Growth & Income's cash and securities and
other related functions.
Independent Auditors for the Fund and Growth & Income
Deloitte & Touche LLP has been selected as the independent auditors
of the Fund. The selection of independent auditors is subject to annual
ratification by the Fund's shareholders.
Price Waterhouse LLP has been selected as the independent auditors of
Growth & Income. . The selection of independent auditors is subject to annual
ratification by Growth & Income's shareholders.
Legal Counsel for the Fund
Jorden Burt Berenson & Johnson, LLP is counsel for the Fund.
Additional Information
The telephone number or the address of the Fund appearing on the
front page of this prospectus should be used for requests for additional
information.
<PAGE>
MAXIM SERIES FUND, INC.
Vista Portfolio
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information is not a prospectus but
supplements and should be read in conjunction with the Prospectus for
the Fund. A copy of the Prospectus may be obtained from the Fund by
writing the Fund at 8515 E. Orchard Rd., Englewood, Colorado 80111 or
by calling the Fund at (303) 689-3000.
GW CAPITAL MANAGEMENT, LLC
Investment Adviser
The date of the Prospectus to which this Statement
of Additional Information relates and the date of
this Statement of Additional Information is
February 27, 1998.
<PAGE>
TABLE OF CONTENTS
Page
Sale of
Shares........................................................................3
The Fund
Portfolios....................................................................3
Description of Investment
Securities......................................................3
Information About Securities
Ratings..........................................................16
Investment Limitations............................................17
Lending of Portfolio
Securities.....................................................19
Management...................................................................20
The
Fund..............................................................20
Directors and
Officers................................................20
The Investment
Adviser.................................................21
Advisory
Fee.....................................................22
The Growth & Income
Portfolio.......................................................22
Trustees and
Officers................................................22
The Investment Adviser of Growth &
Income...................................................23
The Growth & Income
Administrator............................................25
Purchase and Redemption of
Shares.................................................................26
Calculation of
Yields........................................................................26
Calculation of Total
Return.......................................................................27
Price Make-Up
Sheet.........................................................................28
Financial
Statements...................................................................29
<PAGE>
SALE OF SHARES
Shares of the Fund are sold to the FutureFunds Series Account,
FutureFunds II Series Account, Qualified Series Account Retirement Plan Series
Account and Maxim Series Account, which are separate accounts established by
GWL&A to receive and invest premiums paid under variable annuity contracts
issued by GWL&A. Shares of the Fund are also sold to TNE Series (K) Account of
Metropolitan Life Insurance Company ("MetLife") to fund benefits under variable
annuity contracts. Shares of the Fund are also sold to the Pinnacle Series
Account, a separate account established by GWL&A to fund variable life insurance
policies. Shares of the Fund are, and in the future may be, sold to other
separate accounts of GWL&A, its affiliates or other insurance companies. It is
conceivable that in the future it may be disadvantageous for variable life
insurance separate accounts and variable annuity separate accounts to invest in
the Fund simultaneously. Although no such disadvantages are currently foreseen
either to variable life insurance policyowners or to variable annuity contract
owners, the Fund's Board of Directors intends to monitor events in order to
identify any material conflicts between such policyowners and contract owners
and to determine what action, if any, should be taken in response thereto.
Material conflicts could result from, for example, (1) changes in state
insurance laws, (2) changes in Federal income tax laws, (3) changes in the
investment management of any portfolio of the Fund, or (4) differences in voting
instructions between those given by policyowners and those given by contract
owners.
THE FUND PORTFOLIOS
The discussion that follows provides supplemental information to the
discussion captioned "The Fund Portfolios" in the Prospectus.
The Fund commenced operations as a management investment company in
1982. The Maxim Vista Growth and Income Portfolio (the "Vista Portfolio") was
added effective December 21, 1994. The Vista Portfolio invests all of its
investible assets in the Growth & Income Portfolio ("Growth & Income"), a non,
diversified open-end management investment company.
Description of Investment Securities
The following is a description of certain securities in which Growth
& Income may invest. Since Vista Portfolio invests all of its investible assets
in Growth & Income, Vista Portfolio will indirectly bear the investment risks
associated with these investments.
1. Asset-Backed Securities. Asset-backed securities may be classified as
pass-through certificates of collateralized obligations. They depend primarily
on the credit quality of the assets underlying such securities, how well the
entity issuing the security is insulated from the credit risk of the originator
or any other affiliated entities and the amount and quality of any credit
support provided to the securities. The rate of principal payment on
asset-backed securities generally depends on the rate of principal payments
received on the underlying assets which in turn may be affected by a variety of
economic and other factors. As a result, the yield on any asset-backed security
is difficult to predict with precision and actual yield to maturity may be more
or less than the anticipated yield to maturity.
Pass-through certificates are asset-backed securities which represent
an undivided fractional ownership interest in any underlying pool of assets.
Pass-through certificates usually provide for payments of principal and interest
received to be passed through to their holders, usually after deduction for
certain costs and expenses incurred in administering the pool. Because
pass-through certificates represent an ownership interest in the underlying
assets, the holders thereof bear directly the risk of any defaults by the
obligors on the underlying assets not covered by any credit support.
Asset-backed securities issued in the form of debt instruments, also
known as collateralized obligations, are generally issued as the debt of a
special purpose entity organized solely for the purposes of owning such assets
and issuing such debt. Such assets are most often trade, credit card or
automobile receivables. The assets collateralizing the debt instrument are
pledged to a trustee or custodian for the benefit of the holders thereof. Such
issuers generally hold no assets other than those underlying the security and
any credit support provided. As a result, although payments on such securities
are obligations of the issuers, in the event of a default on the underlying
assets not covered by credit support, the issuing entities are unlikely to have
sufficient assets to satisfy their obligations on the related asset-backed
securities.
2. Bank Obligations. Bank Obligations include negotiable certificates of
deposit, bankers' acceptances, fixed time deposits and deposit notes. A
certificate of deposit is a short-term negotiable certificate issued by a
commercial bank against funds deposited in the bank and is either
interest-bearing or purchased on a discount basis. A bankers' acceptance is a
short-term draft drawn on a commercial bank by a borrower, usually in connection
with an international commercial transaction. The borrower is liable for payment
as is the bank, which unconditionally guarantees to pay the draft at its face
amount on the maturity date. Fixed time deposits are obligations of branches of
United States banks or foreign banks which are payable at a stated maturity date
and bear a fixed rate of interest. Although fixed time deposits do not have a
market, there are no contractual restrictions on the right to transfer a
beneficial interest in the deposit to a third party. Fixed time deposits subject
to withdrawal penalties and with respect to which Growth & Income cannot realize
the proceeds thereon within seven days are deemed "illiquid" for the purposes of
its restriction on investments in illiquid securities. Deposit notes are notes
issued by commercial banks which generally bear fixed rates of interest and
typically have original maturities ranging from eighteen months to five years.
Banks are subject to extensive governmental regulations that may
limit both the amounts and types of loans and other financial commitments that
may be made and the interest rates and fees that may be charged. The
profitability of this industry is largely dependent upon the availability and
cost of capital funds for the purpose of financing lending operations under
prevailing money market conditions. Also, general economic conditions play an
important part in the operations of this industry and exposure to credit losses
arising from possible financial difficulties of borrowers might affect a bank's
ability to meet its obligations. Bank obligations may be general obligations of
the parent bank or may be limited to the issuing branch by the terms of the
specific obligations or by government regulation. Investors should also be aware
that securities of foreign banks and foreign branches of United States banks may
involve foreign investment risks in addition to those relating to domestic bank
obligations.
3. Commercial Paper. Commercial paper consists of short-term (usually from 1 to
270 days) unsecured promissory notes issued by corporations in order to finance
their current operations. A variable amount master demand note (which is a type
of commercial paper) represents a direct borrowing arrangement involving
periodically fluctuating rates of interest under a letter agreement between a
commercial paper issuer and an institutional lender pursuant to which the lender
may determine to invest varying amounts.
4. Corporate Reorganizations. In general, securities that are the subject of a
tender or exchange offer or proposal sell at a premium to their historic market
price immediately prior to the announcement of the offer or proposal. The
increased market price of these securities may also discount what the stated or
appraised value of the security would be if the contemplated action were
approved or consummated. These investments may be advantageous when the discount
significantly overstates the risk of the contingencies involved; significantly
undervalues the securities, assets or cash to be received by shareholders of the
prospective portfolio company as a result of the contemplated transaction; or
fails adequately to recognize the possibility that the offer or proposal may be
replaced or superseded by an offer or proposal of greater value.
The evaluation of these contingencies requires unusually broad
knowledge and experience on the part of the advisers that must appraise not only
the value of the issuer and its component businesses as well as the assets or
securities to be received as a result of the contemplated transaction, but also
the financial resources and business motivation of the offeror as well as the
dynamics of the business climate when the offer or proposal is in progress.
Investments in reorganization securities may tend to increase the turnover ratio
of Growth & Income and increase its brokerage and other transaction expenses.
5. Foreign Currency Exchange Transactions. Growth & Income may engage in foreign
currency exchange transactions to protect against uncertainty in the level of
future exchange rates. For example, Growth & Income may engage in foreign
currency exchange transactions in connection with the purchase and sale of
securities ("transaction hedging") and to protect against changes in the value
of specific positions ("position hedging").
Growth & Income may engage in transaction hedging to protect against
a change in foreign currency exchange rates between the date on which Growth &
Income contracts to purchase or sell a security and the settlement date, or to
"lock in" the U.S. dollar equivalent of a dividend or interest payment in a
foreign currency. A portfolio may purchase or sell a foreign currency on a spot
(or cash) basis at the prevailing spot rate in connection with the settlement of
transactions in securities denominated in that foreign currency.
If conditions warrant, Growth & Income may also enter into contracts
to purchase or sell foreign currencies at a future date ("forward contracts")
and purchase and sell foreign currency futures contracts as a hedge against
changes in foreign currency exchange rates between the trade and settlement
dates on particular transactions and not for speculation. A foreign currency
forward contract is a negotiated agreement to exchange currency at a future time
at a rate or rates that may be higher or lower than the spot rate. Foreign
currency futures contracts are standardized exchange-traded contracts and have
margin requirements.
For transaction hedging purposes Growth & Income may also purchase or
sell exchange-listed and over-the-counter call and put options on foreign
currency futures contracts and on foreign currencies.
Growth & Income may engage in position hedging to protect against a
decline in the value relative to the U.S. dollar of the currencies in which its
portfolio securities are denominated or quoted (or an increase in the value of
the currency in which the securities Growth & Income intends to buy are
denominated, when Growth & Income holds cash or short-term investments). For
position hedging purposes, Growth & Income may purchase or sell foreign currency
futures contracts, foreign currency forward contracts and options on foreign
currency futures contracts and on foreign currencies on exchanges or
over-the-counter markets. In connection with position hedging, Growth & Income
may also purchase or sell foreign currency on a spot basis.
Growth & Income's currency hedging transactions may call for the
delivery of one foreign currency in exchange for another foreign currency and
may at times not involve currencies in which its portfolio securities are then
denominated. "Cross hedging" activities may be engaged in when it is believed
that such transactions provide significant hedging opportunities. Cross hedging
transactions involve the risk of imperfect correlation between changes in the
values of the currencies to which such transactions relate and changes in the
value of the currency or other asset or liability which is the subject of the
hedge.
Hedging transactions involve costs and may result in losses. Growth &
Income will engage in over-the-counter transactions only when appropriate
exchange-traded transactions are unavailable and when it is believed the pricing
mechanism and liquidity are satisfactory and the participants are responsible
parties likely to meet their contractual obligations. There is no assurance that
appropriate foreign currency exchange transactions will be available with
respect to all currencies in which investments may be dominated.
Hedging transactions may also be limited by tax considerations.
Hedging transactions may affect the character or amount of distributions.
6. Foreign Securities, Eurodollar Certificates of Deposit, ECU Obligations and
Supranational Organizations. Growth & Income may invest up to 20% of its total
assets in foreign securities. Investing in securities issued by non-U.S.
companies involves considerations and potential risks not typically associated
with investing in obligations issued by U.S. companies. Less information may be
available about non-U.S. companies and these companies generally are not subject
to uniform accounting, auditing and financial reporting standards or to other
regulatory practices and requirements comparable to those applicable to U.S.
companies. The values of non-U.S. securities are affected by changes in currency
rates or exchange control regulations. Restrictions or prohibitions on the
repatriation of non-U.S. currencies, application of non-U.S. tax laws, including
withholding taxes, changes in governmental administration or economic or
monetary policy (in the U.S. or outside the U.S.) or changed circumstances in
dealing between nations. Costs are also incurred in connection with conversions
between various currencies. Investing in non-U.S. sovereign debt involves
exposure to the direct or indirect consequences or political, social or economic
changes in developing and emerging countries that issue the securities. The
ability and willingness of sovereign obligors in developing and emerging
countries or the governmental authorities that control repayment of their
external debt to pay principal and interest on such debt when due may depend on
general economic and political conditions within the relevant country.
Additional factors which may influence the ability or willingness to service
debt include, but are not limited to, a country's cash flow situation, the
availability of sufficient foreign exchange on the date a payment is due, the
relative size of its debt service burden to the economy as a whole, and its
government's policy towards the International Monetary Fund, the World Bank and
other international agencies.
Growth & Income may also invest in securities of foreign issuers in
the form of American Depositary Receipts, Global Depositary Receipts, European
Depositary Receipts or other similar securities representing securities of
foreign issuers. Growth & income treats Depositary receipts as interests in the
underlying securities for purposes of its investment policies. Growth & Income
will limit its investment in Depositary receipts not sponsored by the issuer of
the underlying securities to no more than 5% of the value of its net assets (at
the time of investment). A purchaser of an unsponsored Depositary Receipt may
not have unlimited voting rights and may not receive as much information about
the issuer of the underlying securities as with a sponsored Depositary Receipt.
Growth & Income may also invest in Eurodollar certificates of
deposit. A Eurodollar certificate of deposit is a short-term obligation of a
foreign subsidiary of a U.S. bank payable in U.S. dollars. It may also invest in
securities denominated in the ECU, which is a "basket" consisting of specified
amounts of currencies of certain member states of the European Community. The
specific amounts of currencies comprising the ECU may be adjusted by the Council
of Ministers of the European Community to reflect changes in relative values of
the underlying currencies. The Trustees of Growth & Income do not believe that
such adjustments will adversely affect holders of ECU-denominated securities or
the marketability of such securities. Growth & Income also may invest in
securities issued by supranational organizations such as The World Bank, which
was charted to finance development projects in developing member countries, the
European Community, which is a twelve nation organization engaged in cooperative
economic activities, the European Coal and Steel Community, which is an economic
union of various European nations' steel and coal industries, and the Asian
Development Bank, which is an international development bank established to lend
funds, promote investment and provide technical assistance to member nations of
the Asian and Pacific regions. The specific amounts of currencies comprising the
ECU may be adjusted by the Council of Ministers of the European Community to
reflect changes in relative values of the underlying currencies. The Trustees do
not believe that such adjustments will adversely affect holders of
ECU-denominated securities or the marketability of such securities.
7. Forward Commitments. In order to invest Growth & Income's assets immediately,
while awaiting delivery of securities purchased on a forward commitment basis,
short-term obligations that offer same day settlement and earnings will normally
be purchased. When a commitment to purchase a security on a forward commitment
basis is made, procedures are established consistent with the General Statement
of Policy of the Securities and Exchange Commission concerning such purchases.
Since that policy currently recommends that an amount of Growth & Income's
assets equal to the amount of the purchase be held aside or segregated to be
used to pay for the commitment, a separate account of Growth & Income consisting
of liquid securities equal to the amount of Growth & Income's commitments will
be established at Growth & Income's custodian bank. For the purpose of
determining the adequacy of the securities in the account, the deposited
securities will be valued at market value. If the market value of such
securities declines, additional cash, cash equivalents or highly liquid
securities will be placed in the account daily so that the value of the account
will equal the amount of such commitments by Growth & Income.
Although it is not intended that such purchases would be made for
speculative purposes, purchases of securities on a forward commitment basis may
involve more risk than other types of purchases. Securities purchased on a
forward commitment basis and the securities held in Growth & Income's portfolio
are subject to changes in value based upon the public's perception of the issuer
and changes, real or anticipated, in the level of interest rates. Purchasing
securities on a forward commitment basis can involve the risk that the yields
available in the market when the delivery takes place may actually be higher or
lower than those obtained in the transaction itself. On the settlement date of
the forward commitment transaction, Growth & Income will meet its obligations
from then available cash flow, sale of securities held in the separate account,
sale of other securities or, although it would not normally expect to do so,
from the sale of the forward commitment securities themselves (which may have a
value greater or lesser than Growth & Income's payment obligations). The sale of
securities to meet such obligations may result in the realization of capital
gains or losses.
To the extent Growth & Income engages in forward commitment
transactions, it will do so for the purpose of acquiring securities consistent
with its investment objective and policies and not for the purpose of investment
leverage, and settlement of such transactions will be within 90 days from the
trade date.
8. Forward Contracts. A forward contract involves an obligation to purchase or
sell a specific currency at a future date, which may be any fixed number of days
from the date of the contract agreed upon by the parties, at a price set at the
time of the contract. These contracts may be bought or sold to protect the
seller, to some degree, against a possible loss resulting from an adverse change
in the relationship between foreign currencies and the U.S. dollar. Forward
contracts can be used to protect the value of a seller's investment securities
by establishing a rate of exchange that the seller can achieve at some future
point in time; they do not simulate fluctuations in the underlying prices of the
securities. Additionally, although forward contracts tend to minimize the risk
of loss due to a decline in the value of the hedged currency, at the same time,
they tend to limit any potential gains that might result should the value of
such currency increase.
9. Illiquid Securities. Illiquid securities are securities that may not be sold
or disposed of in the ordinary course of business within seven days at
approximately the price used to determine a funds net asset value. Under current
SEC interpretations, the following types of securities will be considered
illiquid: (1) repurchase agreements maturing in more than seven days; (2)
certain restricted securities (securities whose public resale is subject to
legal or contractual restrictions; (3) options, with respect to specific
securities not traded on a national securities exchange that are not readily
marketable; and (4) any other securities that are not readily marketable. For
purposes of limitations on investments in illiquid securities, certain
investments might be treated as liquid; such as investments in restricted
securities for which there may be a secondary market of qualified institutional
buyers as contemplated by Rule 144A under the Securities Act of 1933, as amended
(the "Securities Act") and commercial obligations issued in reliance on the
so-called "private placement" exemption from registration afforded by Section
4(2) of the Securities Act ("Section 4(2) paper"). Rule 144A provides an
exemption from the registration requirements of the Securities Act for the
resale of certain restricted securities to qualified institutional buyers.
Section 4(2) paper is restricted as to disposition under the federal securities
laws, and generally is sold to institutional investors such as Growth & Income
who agree that they are purchasing the paper for investment and not with a view
to public distribution. Any resale of Section 4(2) paper by the purchaser must
be in an exempt transaction.
One effect of Rule 144A and Section 4(2) is that certain restricted
securities may now be liquid, though there is no assurance that a liquid market
for Rule 144A securities or Section 4(2) paper will develop or be maintained. In
determining whether a particular instrument is liquid or illiquid, consideration
is given to, among other things, the frequency of trades and quotes for the
security, the number of dealers willing to sell the security and the number of
potential purchasers, dealer undertakings to make a market in the security, the
nature of the security and the time needed to dispose of the security.
10. Interest Rate and Currency Transactions. Growth & Income may employ currency
and interest rate management techniques including transactions in options
(including yield curve options), futures, options on futures, forward foreign
currency exchange contracts, currency options and futures and currency and
interest rate swaps. The aggregate amount of Growth & Income's net currency
exposure will not exceed the total net asset value of its portfolio. However, to
the extent that Growth & Income is fully invested while also maintaining
currency positions, it may be exposed to greater combined risk.
Growth & Income will enter into interest rate and currency swaps on a
net basis, i.e., the two payment streams are netted out, with only the net
amount of the two payments being received or paid, as the case may be. Interest
rate and currency swaps do not involve the delivery of securities, the
underlying currency, other underlying assets or principal. Accordingly, the risk
of loss with respect to interest rate and currency swaps is limited to the net
amount of interest or currency payments that the party is contractually
obligated to make. If a party to an interest rate or currency swap defaults, the
risk of loss consists of the net amount of interest or currency payments that
the other party is contractually entitled to receive. Since interest rate and
currency swaps are individually negotiated, an acceptable degree of correlation
between the portfolio investments and the interest rate or currency swap
positions is expected to be achieved.
Foreign currency received may be held in connection with investments
in foreign securities when it would be beneficial to convert such currency into
U.S. dollars at a later date, based on anticipated changes in the relevant
exchange rate.
Growth & Income may purchase or sell without limitation as to a
percentage of its assets when it is anticipated that the foreign currency will
appreciate or depreciate in value, but securities denominated in that currency
do not present attractive investment opportunities and are not currently held by
Growth & Income. In addition, forward foreign currency exchange contracts may be
entered in order to protect against adverse changes in future foreign currency
exchange rates. Cross-hedging may also be engaged in by using forward contracts
in one currency to hedge against fluctuations in the value of securities
denominated in a different currency if it is believed that there is a pattern of
correlation between the two currencies. Forward contracts may reduce the
potential gain from a positive change in the relationship between the U.S.
dollar and foreign currencies. Unanticipated changes in currency prices may
result in poorer overall performance than if such contracts had not been
entered. The use of foreign currency forward contracts will not eliminate
fluctuations in the underlying U.S. dollar equivalent value of the prices of or
rates of return on foreign currency denominated portfolio securities and the use
of such techniques will subject Growth & Income to certain risks.
The matching of the increase in value of a forward contract and the
decline in the U.S. dollar equivalent value of the foreign currency denominated
asset that is the subject of the hedge generally will not be precise. In
addition, foreign currency forward contracts may not always be available at
attractive prices, and this will limit the use of such contracts to hedge or
cross-hedge assets. Also, with regard to the use of cross-hedges, there can be
no assurance that historical correlations between the movement of certain
foreign currencies relative to the U.S. dollar will continue. Thus, at any time
poor correlation may exist between movements in the exchange rates of the
foreign currencies underlying the cross-hedges and the movements in the exchange
rates of the foreign currencies in which the assets that are the subject of such
cross-hedges are denominated.
Interest rate and currency swaps may be entered to the maximum
allowed limits under applicable law. Typically, interest rate swaps will be used
to shorten the effective duration of the portfolio. Interest rate swaps involve
the exchange by one party with another party of their respective commitments to
pay or receive interest, such as an exchange of fixed rate payments for floating
rate payments. Currency swaps involve the exchange of their respective rights to
make or receive payments in specified currencies.
11. Mortgage Related Securities. Growth and Income may purchase mortgage-backed
securities-(i.e., securities representing an ownership interest in a pool of
mortgage loans) issued by lenders such as mortgage bankers, commercial banks and
savings and loan associations. Mortgage loans included in the pool, but not the
security itself, may be insured by the Government National Mortgage Association
or the Federal Housing Administration or guaranteed by the Federal National
Mortgage Association, the Federal Home Loan Mortgage Corporation or the Veterans
Administration. Mortgage-backed securities provide investors with payments
consisting of both interest and principal as the mortgages in the underlying
mortgage pools are paid off. Although providing the potential for enhanced
returns, mortgage-backed securities can also be volatile and result in
unanticipated losses.
The average life of a mortgage-backed security is likely to be
substantially less than the original maturity of the mortgage pools underlying
the securities. Prepayments of principal by mortgagors and mortgage foreclosures
will usually result in the return of the greater part of the principal invested
far in advance of the maturity of the mortgages in the pool. The actual rate of
return of a mortgage-backed security may be adversely affected by the prepayment
of mortgages included in the mortgage pool underlying the security.
Growth & Income may also invest in securities representing interests
in collateralized mortgage obligations ("CMOs"), real estate mortgage investment
conduits ("REMICs") and in pools of certain other asset backed bonds and
mortgage pass-through securities. Like a bond, interest and prepaid principal
are paid, in most cases, monthly. CMOs may be collateralized by whole mortgage
loans but are more typically collateralized by portfolios of mortgage
pass-through securities guaranteed by the U.S. Government, or U.S.
Government-related entities, and their income streams.
CMOs are structured into multiple classes, each bearing a different
stated maturity. Actual maturity and average life will depend upon the
prepayment experience of the collateral. Monthly payment of principal received
from the pool of underlying mortgages, including prepayments, are allocated to
different classes in accordance with the terms of the instruments, and changes
in prepayment rates or assumptions may significantly affect the expected average
life and value of a particular class.
REMICs include governmental and/or private entities that issue a
fixed pool of mortgages secured by an interest in real property. REMICs are
similar to CMOs in that they issue multiple classes of securities. REMICs issued
by private entities are not U.S. Government securities and are not directly
guaranteed by any government agency. They are secured by the underlying
collateral of the private issuer.
Growth & Income's advisers expect that governmental,
government-related or private entities may create mortgage loan pools and other
mortgage-related securities offering mortgage pass-through and mortgage
collateralized investments in addition to those described above. The mortgages
underlying these securities may include alternative mortgage instruments, that
is, mortgage instruments whose principal or interest payments may vary or whose
terms to maturity may differ from customary long-term fixed-rate mortgages.
Growth & Income may also invest in debentures and other securities of real
estate investment trusts. As new types of mortgage-related securities are
developed and offered to investors, Growth & Income may consider making
investments in such new types of mortgage-related securities.
12. Repurchase Agreements. A repurchase agreement is an instrument under which
the purchaser acquires ownership of a debt security and the seller agrees to
repurchase the obligation at a mutually agreed upon time and price. The total
amount received on repurchase is calculated to exceed the price paid by the
purchaser, reflecting an agreed upon market rate of interest for the period from
the time of purchase of the security to the settlement date (i.e., the time of
repurchase), and would not necessarily relate to the interest rate on the
underlying securities. A purchaser will only enter repurchase agreements with
underlying securities consisting of U.S. Government or government agency
securities, certificates of deposit, commercial paper or bankers' acceptances,
and will be entered only with primary dealers. While investment in repurchase
agreements may be made for periods up to 30 days, it is expected that typically
such periods will be for a week or less. Repurchase agreements maturing in more
than 7 days are deemed to be illiquid and are subject to Growth & Income's
investment policy regarding illiquid securities.
Although repurchase transactions usually do not impose market risks
on the purchaser, the purchaser would be subject to the risk of loss if the
seller fails to repurchase the securities for any reason and the value of the
securities is less than the agreed upon repurchase price. In addition, if the
seller defaults, the purchaser may incur disposition costs in connection with
liquidating the securities. Moreover, if the seller is insolvent and bankruptcy
proceedings are commenced, under current law, the purchaser could be ordered by
a court not to liquidate the securities for an indeterminate period of time and
the amount realized by the purchaser upon liquidation of the securities may be
limited.
13. Reverse Repurchase Agreements. Reverse repurchase agreements involve the
sale of securities held by the seller, with an agreement to repurchase the
securities at an agreed upon price, date and interest payment. The seller will
use the proceeds of the reverse repurchase agreements to purchase other money
market securities either maturing, or under an agreement to resell, at a date
simultaneous with or prior to the expiration of the reverse repurchase
agreement. The seller will utilize reverse repurchase agreements when the
interest income to be earned from the investment of the proceeds from the
transaction is greater than the interest expense of the reverse repurchase
transaction. The repurchase price is generally equal to the original sales price
plus interest. Reverse repurchase agreements are usually for seven days or less
and cannot be repaid prior to their expiration dates. Reverse repurchase
agreements involve the risk that the market value of the portfolio securities
transferred may decline below the price at which the seller is obliged to
purchase the securities.
14. Securities Loans. As discussed in the prospectus, Growth & Income is
permitted to lend its securities to broker/dealers and other institutional
investors in order to generate additional income. In connection with such loans,
Growth & Income will receive collateral consisting of cash, cash equivalents,
U.S. Government securities or irrevocable letters of credit issued by financial
institutions. Such loans of portfolio securities may not exceed 30% of the value
of Growth and Income's total assets. Such collateral will be maintained at all
times in an amount equal to at least 102% of the current market value plus
accrued interest of the securities loaned. Growth & Income can increase its
income through the investment of such collateral. Such loans will be terminable
at any time upon specified notice. Growth & Income might experience risk of loss
if the institutions with which it has engaged in portfolio loan transactions
breach their agreements. The risks in lending securities, as with other
extensions of secured credit, consist of possible delays in receiving additional
collateral or in the recovery of the securities or possible loss of rights in
the collateral should the borrower experience financial difficulty.
15. Stand-By Commitments. Stand-By Commitments are put transactions in which the
purchaser is entitled to same-day settlement and the right to receive an
exercise price equal to the amortized cost of the underlying security plus
accrued interest, if any, at the time of exercise. Stand-by commitments are
subject to certain risks, which include the inability of the issuer of the
commitment to pay for the securities at the time the commitment is exercised,
the fact that the commitment is not marketable by Growth & Income, and that the
maturity of the underlying security will generally be different from that of the
commitment.
16. Stripped Treasury Securities. Zero-Coupon Treasury Securities come in two
forms: U.S. Treasury bills issued directly by the U.S. Treasury and U.S.
Treasury bonds or notes and their unmatured interest coupons which have been
separated by their holder, typically a custodian bank or investment brokerage
firm. A number of securities firms and banks have stripped the interest coupons
from Treasury bonds and notes and resold them in custodial receipt programs with
a number of different names. The underlying Treasury bonds and notes themselves
are held in book-entry form at the Federal Reserve Bank or, in the case of
bearer securities, in trust on behalf of the owners thereof.
Publicly filed documents state that counsel to the underwriters of
these certificates or other evidences of ownership of the U.S. Treasury
securities have stated that for Federal tax and securities purposes, purchasers
of such certificates most likely will be deemed the beneficial holders of the
underlying U.S. Government securities. In addition, such documents state that
the terms of custody for the custodial receipt programs generally provide that
the underlying debt obligations will be held separate from the general assets of
the custodian and will not be subject to any right, charge, security interest,
lien, or claim of any kind in favor of the custodian or any person claiming
through the custodian, and the custodian will be responsible for applying all
payments received on these underlying debt obligations, if any, to the related
receipts or certificates without making any deductions other than applicable tax
withholding. The custodian is required to maintain insurance in customary
amounts to protect the holders of the receipts or certificates against losses
resulting from the custody arrangement. The holders of receipts or certificates,
as the real parties in interest, are entitled to the rights and privileges of
owners of the underlying debt obligations, including the right, in the event of
default, to proceed directly and individually against the U.S. Government
without acting in concert with other holders of such receipts or the custodian.
When U.S. Treasury obligations have been stripped of their unmatured
interest coupons by the holder, the stripped coupons are sold off separately.
The principal or corpus is sold at a deep discount because the buyer receives
only the right to receive a future fixed payment on the security and does not
receive any rights to periodic interest payments. Once stripped or separated,
the corpus and coupons may be sold separately. Typically, the coupons are sold
separately or grouped with other coupons with like maturity dates and sold in
bundled form. Purchasers of Stripped Treasury Securities acquire, in effect,
discount obligations that are economically identical to the "zero coupon bonds"
that have been issued by corporations.
The U.S. Treasury has facilitated transfers of ownership of Stripped
Treasury Securities by accounting separately for the beneficial ownership of
particular interest coupon and corpus payments on U.S. Treasury securities
through the Federal Reserve book-entry record-keeping system. The Federal
Reserve program, as established by the U.S. Treasury Department, is known as
Separate Trading of Registered Interest and Principal of Securities or "STRIPS".
The plan eliminates the need for the trust or custody arrangements.
17. Structured Products. Structured Products are interests in entities organized
and operated solely for the purpose of restructuring the investment
characteristics of certain other investments. This type of restructuring
involves the deposit with or purchase by an entity, such as a corporation or
trust, of specified instruments (such as commercial bank loans) and the issuance
by that entity of one or more classes of securities ("structured products")
backed by, or representing interests in, the underlying instruments. The cash
flow on the underlying instruments may be apportioned among the newly issued
structured products to create securities with different investment
characteristics such as varying maturities, payment priorities and interest rate
provisions, and the extent of the payments made with respect to structured
products is dependent on the extent of the cash flow on the underlying
instruments. Investment may be made in products which will represent derived
investment positions based on relationships among different markets or asset
classes.
Investments may be made in other types of structured products
including, among others, inverse floaters, spread trades and notes linked by a
formula to the price of an underlying instrument. Inverse floaters have coupon
rates that vary inversely at a multiple of a designated floating rate (which
typically is determined by reference to an index rate, but may also be
determined through a dutch auction or a remarketing agent or by reference to
another security) (the "reference rate"). As an example, inverse floaters may
constitute a class of CMOs with a coupon rate that moves inversely to a
designated index, such as LIBOR (London Interbank Offered Rate) or the Cost of
Funds Index. Any rise in the reference rate of an inverse floater (as a
consequence of an increase in interest rates) causes a drop in the coupon rate
while any drop in the reference rate of an inverse floater causes an increase in
the coupon rate. A spread trade is an investment position relating to a
difference in the prices or interest rates of two securities where the value of
the investment position is determined by movements in the difference between the
prices or interest rates, as the case may be, of the respective securities. When
investments are made in notes linked to the price of an underlying instrument,
the price of the underlying security is determined by a multiple (based on a
formula) of the price of such underlying security. A structured product may be
considered to be leveraged to the extent its interest rate varies by a magnitude
that exceeds the magnitude of the change in the index rate of interest. Because
they are linked to their underlying markets or securities, investments in
structured products generally are subject to greater volatility than an
investment directly in the underlying market or security. Total return on the
structured product is derived by linking return to one or more characteristics
of the underlying instrument. Because certain structured products may involve no
credit enhancement, the credit risk of those structured products generally would
be equivalent to that of the underlying instruments. Investment may be made in a
class of structured products that is either subordinated or unsubordinated to
the right of payment of another class. Subordinated structured products
typically have higher yields and present greater risks than unsubordinated
structured products. Although the purchase of subordinated structured products
would have similar economic effect to that of borrowing against the underlying
securities, the purchase will not be deemed to be leverage for purposes of
Growth & Income's fundamental investment limitation related to borrowing and
leverage.
Certain issuers of structured products may be deemed to be,
"investment companies" as defined in the 1940 Act. As a result, investments in
these structured products may be limited by the restrictions contained in the
1940 Act. Structured products are typically sold in private placement
transactions and there currently is no active trading market for structured
products. As a result, certain structured products may be deemed illiquid and
subject to its limitation on illiquid investments. Investments in structured
products generally are subject to greater volatility than an investment directly
in the underlying market or security.
18. U.S. Government Securities. U.S. Government Securities include (1) U.S.
Treasury obligations, which generally differ only in their interest rates,
maturities and times of issuance, including: U.S. Treasury bills, U.S. Treasury
notes, and U.S. Treasury bonds ; and (2) obligations issued or guaranteed by
U.S. Government agencies and instrumentalities which are supported by any of the
following: (a) the full faith and credit of the U.S. Treasury, (b) the right of
the issuer to borrow any amount listed to a specific line of credit from the
U.S. Treasury, (c) discretionary authority of the U.S. Government to purchase
certain obligations of the U.S. Government agency or instrumentality or (d) the
credit of the agency or instrumentality.
19. Warrants and Rights. Warrants are options to purchase equity securities at a
specified price for a specific period of time. Their prices do not necessarily
move parallel to the prices of the underlying securities. Rights are similar to
warrants but normally have a shorter duration and are distributed directly by
the issuer to shareholders. Rights and warrants have no voting rights, receive
no dividends and have no rights with respect to the assets of the issuer.
20. When-issued Securities. When the purchase of securities on a "when-issued"
or on a "forward delivery" basis is permitted, it is expected that, under normal
circumstances, delivery of such securities will be taken. When a commitment to
purchase a security on a when-issued or on a forward delivery basis is made,
procedures are established for such purchase consistent with the relevant
policies of the Securities and Exchange Commission. Since those policies
currently recommend that assets equal to the amount of the purchase be held
aside or segregated to be used to pay for the commitment, liquid securities
sufficient to cover any commitments or to limit any potential risk are expected
to be held. However, although it is not intended that such purchases would be
made for speculative purposes and adherence to the provisions of the Securities
and Exchange Commission policies is expected, purchase of securities on such
bases may involve more risk than other types of purchases. For example, the sale
of assets which have been set aside in order to meet redemptions may be
required. Also, if it is determined that it is advisable as a matter of
investment strategy to sell the when-issued or forward delivery securities, the
then available cash flow or the sale of securities would be required to meet the
resulting obligations, or, although it would not normally be expected, from the
sale of the when-issued or forward delivery securities themselves (which may
have a value greater or less than the payment obligation).
Derivatives and Related Instruments
Options on Securities, Securities Indexes, and Debt Instruments.
Growth & Income may purchase, sell, or exercise call and put options
on (i) securities, (ii) securities indexes, and (iii) debt instruments. A call
option gives the purchaser the right to buy the underlying securities from the
seller at a stated exercise price. A put option gives the purchaser the right to
sell the underlying securities to the seller of the put option at a stated
exercise price. Call options may be purchased to hedge against an increase in
the price of securities the purchaser ultimately wants to buy. Such hedge
protection is provided during the life of the call option since the holder of
the call option is able to buy the underlying security at the exercise price
regardless of any increase in the underlying security's market price. In order
for a call option to be profitable, the market price of the underlying security
must rise sufficiently above the exercise price to cover the premium and
transactions costs. Put options may be purchased to hedge portfolio holdings in
an underlying security against a decline in market value. Such protection is
provided during the life of the put option because the holder of the option is
able to sell the underlying security at the put exercise price regardless of any
decline in the underlying security's market price. In order for a put option to
be profitable, the market price of the underlying security must decline
sufficiently below the exercise price to cover the premium and transaction
costs. By using put options in this manner, the seller will reduce any profit it
might otherwise have realized from appreciation of the underlying security by
the premium paid for the put option and by transaction costs.
Growth & Income will only write "covered" options. When writing a
covered call option, a fund must own the underlying securities subject to the
option (or comparable securities satisfying the cover requirements of securities
exchanges). When writing a covered put option, a fund will maintain a segregated
account consisting of liquid assets equal in value to the value of the fund's
obligation under the covered put option.
Premiums are received from writing a put or call option, which
increases the return on the underlying security in the event the option expires
unexercised or is closed out at a profit. The amount of the premium reflects,
among other things, the relationship between the exercise price and the current
market value of the underlying security, the volatility of the underlying
security, the amount of time remaining until expiration, current interest rates,
and the effect of supply and demand in the options market and in the market for
the underlying security. By writing a call option, the seller limits its
opportunity to profit from any increase in the market value of the underlying
security above the exercise price of the option but continues to bear the risk
of a decline in the value of the underlying security. By writing a put option,
the seller assumes the risk that it may be required to purchase the underlying
security for an exercise price higher than its then-current market value,
resulting in a potential capital loss unless the security subsequently
appreciates in value.
In most cases, Growth & Income will purchase and sell exchange-traded
options. Growth & Income, however, may also purchase, sell or exercise dealer
options (also known as "over-the-counter options"). There may not be a
continuous liquid market for dealer options as there is for exchange-traded
options. Consequently, the value of a dealer option may be realized only by
exercising it or reselling it to the dealer who issued it. Dealer options will
only be entered into with dealers who will agree to and which are expected to be
capable of entering into closing transactions; however, there can be no
assurance the a dealer option may be liquidated at a favorable price at any time
prior to expiration. In the event of an insolvency of the counterparty, a dealer
option may not be liquidated. The staff of the SEC has taken the position that
purchased dealer options and the assets used to secure written dealer options
are illiquid securities. The "cover" used for written over-the-counter options
may be treated as liquid if the dealer agrees that the over-the-counter option
which the dealer has written may be repurchased for a maximum price to be
calculated by a predetermined formula. In such cases, the over-the-counter
option would be considered illiquid only to the extent the maximum repurchase
price under the formula exceeds the intrinsic value of the option. Accordingly,
dealer options will be treated as subject to the limitation on illiquid
securities.
Futures Contracts and Options on Futures Contracts
Growth & Income may purchase or sell (i) interest rate futures
contracts, (ii) futures contracts on specified instruments or indexes, and (iii)
options on these future contracts.
Futures Contracts. A futures contract is a bilateral agreement
providing for the purchase and sale of a specified type and amount of a
financial instrument, or, in the case of futures contracts on indexes of
securities, for the making and acceptance of a cash settlement, at a stated time
in the future for a fixed price. By its terms, a futures contract provides for a
specified settlement date on which, in the case of the majority of interest rate
futures contracts, the fixed income securities underlying a contract are
delivered by the seller and paid for by the purchaser, or on which, in the case
of a stock index futures contract, an amount equal to a dollar amount multiplied
by the difference between the value of a stock index at the close of the last
trading day of the contract and the value of such index at the time the futures
contract was originally entered into is settled between the purchaser and seller
in cash. The purchase or sale of a futures contract differs from the purchase or
sale of a security in that no purchase price is paid or received at the time the
contract is entered into. Instead, an amount of cash or cash equivalents, the
value of which may vary but is generally equal to 2% or less of the value of the
contract, must be deposited with the broker as initial deposit or "margin".
Subsequent payments to and from the broker, referred to as "variation margin",
are made on a daily basis as the value of the index underlying the futures
contract fluctuates, making positions in the futures contract more or less
valuable, a process known as "marking to the market".
At any time prior to the expiration of a futures contract, a trader
may elect to close out its position by taking an opposite position, subject to
the availability of a secondary market, which will operate to terminate the
initial position. At that time, a final determination of variation margin is
made and any loss experienced by a party is required to be paid to the exchange
clearing corporation, while any profit due to a party must be delivered to it.
Futures contracts differ from options in that they are bilateral
agreements, with both the purchaser and the seller equally obligated to complete
the transaction. Futures contracts call for settlement only on the expiration
date, and cannot be "exercised" at any other time during their term.
As indicated above, an index futures contract obligates the seller to
deliver (and the purchaser to take) an amount of cash equal to a specific dollar
amount times the difference between the value of a specific index at the close
of the last trading day of the contract and the price at which the agreement is
made. No physical delivery of the underlying securities in the index is made.
When purchasing or selling an index futures contract, a fund must (1) maintain a
segregated account consisting of liquid assets (and marked to market daily)
which, when added to any amounts deposited with a futures commission merchant as
margin, is equal to the market value of the futures contract; or (2) "cover" its
position.
Options on Futures Contracts. An option on a futures contract gives
the purchaser (the "holder") the right, but not the obligation, to enter into a
"long" position in the underlying futures contract (i.e., a purchase of such
futures contract) in the case of an option to purchase (a "call" option), or a
"short" position in the underlying futures contract (i.e., a sale of such
futures contract) in the case of an option to sell (a "put" option), at a fixed
priced (the "strike price") up to a stated expiration date. The holder pays a
nonrefundable purchase price for the option, known as the "premium". The maximum
amount of risk the purchaser of the option assumes is equal to the premium plus
related transaction costs, although this entire amount may be lost. Upon
exercise of the option by the holder, the exchange clearing corporation
establishes a corresponding short position for the seller (the "writer") of the
option in the case of a call option, or a corresponding long position in the
case of a put option. In the event that an option is exercised, the parties will
be subject to all the risks associated with the trading of futures contracts,
such as payment of variation margin deposits. In addition, the writer of an
option on a futures contract, unlike the holder, is subject to initial and
variation margin requirements on the option position.
Regulations of the CFTC require Growth & Income to enter into
transactions in futures contracts and options thereon for hedging purposes only,
in order to assure that it is not deemed to be a "commodity pool" under such
regulations. In particular, CFTC regulations require that all short futures
positions be entered into for the purpose of hedging the value of securities
held in Growth & Income's portfolio, and that all long futures positions either
constitute bona fide hedging transactions, as defined in such regulations, or
have a total value not in excess of an amount determined by reference to certain
cash and securities positions maintained for Growth & Income, and accrued
profits on such positions. In addition, Growth & Income may not purchase or sell
such instruments if, immediately thereafter, the sum of the amount of initial
margin deposits on its existing futures positions and premiums paid for options
on futures contracts would exceed 5% of the market value of Growth & Income's
total assets.
As indicated previously, when Growth & Income purchases a futures
contract, an amount of cash or cash equivalents or high quality debt securities
will be deposited in a segregated account with Growth & Income's custodian so
that the amount so segregated, plus the initial deposit and variation margin
held in the account if its broker, will at all times equal the value of the
futures contract, thereby insuring that the use of such futures is unleveraged.
Growth & Income's ability to engage in the hedging transaction
described herein may be limited by the current federal income tax requirement
that Growth & Income derive less than 30% of its gross income from the sale or
other disposition of stock or securities held for less than three months.
In addition to the foregoing requirements, the Board of Trustees has
adopted an additional restriction on the use of futures contracts and options
thereon, requiring that the aggregate market value of the futures contracts held
by Growth & Income not exceed 50% of the market value of its total assets.
Neither this restriction nor any policy with respect to the above-referenced
restrictions, would be changed by the Board of Trustees without considering the
policies and concerns of the various federal and state regulatory agencies.
In addition to any risk factors which may be described above, the
following sets forth certain information regarding the potential risks
associated with Growth & Income's futures and options transactions.
Risk of Imperfect Correlation. Growth & Income's ability effectively
to hedge all or a portion of its portfolio through transactions in futures,
options on futures or options on stock indexes depends on the degree to which
movements in the value of the securities or index underlying such hedging
instrument correlate with movements in the value of the relevant portion of
Growth & Income's portfolio. If the values of the portfolio securities being
hedged do not move in the same amount or direction as the underlying security or
index, the hedging strategy for Growth & Income might not be successful and
Growth & Income could sustain losses on its hedging transaction which would not
be offset by gains on its portfolio. It is also possible that there may be a
negative correlation between the security or index underlying a futures or
option contract and the portfolio securities being hedged, which could result in
losses both on the hedging transaction and the portfolio securities. In such
instances, Growth & Income's overall return could be less than if the hedging
transaction had not been undertaken. Stock index futures or options based on a
narrower index of securities may present greater risk than options or futures
based on a broad market index, as a narrower index is more susceptible to rapid
an extreme fluctuations resulting from changes in the value of a small number of
securities. Growth & Income would, however, effect transactions in such futures
or options only for hedging purposes.
The trading of futures and options on indexes involves the additional
risk of imperfect correlation between movements in the futures or option price
and the value of the underlying index. The anticipated spread between the prices
may be distorted due to differences in the nature of the markets, such as
differences in margin requirements, the liquidity of such markets and the
participation of speculators in the futures and options market. The purchase of
an option on a futures contract also involves the risk that changes in the value
of underlying futures contract will not be fully reflected in the value of the
option purchased. The risk of imperfect correlation, however, generally tends to
diminish as the maturity date of the futures contract or termination date of the
option approaches. The risk incurred in purchasing an option on a futures
contract is limited to the amount of the premium plus related transaction costs,
although it may be necessary under certain circumstances to exercise the option
and enter into the underlying futures contract in order to realize a profit.
Under certain extreme market conditions, it is possible that Growth & Income
will not be able to establish hedging positions, or that any hedging strategy
adopted will be insufficient to completely protect Growth & Income.
Growth & Income will purchase or sell futures contracts or options
only if, in Chase's judgment, there is expected to be a sufficient degree of
correlation between movements in the value of such instruments and changes in
the value of the relevant portion of Growth & Income's portfolio for the hedge
to be effective. There can be no assurance that Chase's judgment will be
accurate.
Potential Lack of a Liquid Secondary Market. The ordinary spreads
between prices in the cash and futures markets, due to differences in the
natures of those markets, are subject to distortions. First, all participants in
the futures market are subject to initial deposit and variation margin
requirements. This could required Growth & Income to post additional cash or
cash equivalents as the value of the position fluctuates. Further, rather than
meeting additional variation margin requirements, investors may close futures
contracts through offsetting transactions which could distort the normal
relationship between the cash and futures markets. Second, the liquidity of the
futures or options market may be lacking. Prior to exercise or expiration, a
futures or option position may be terminated only by entering into a closing
purchase or sale transaction, which requires a secondary market on the exchange
on which the position was originally established. While Growth & Income will
establish a futures or option position only if there appears to be a liquid
secondary market therefor, there can be no assurance that such a market will
exist for any particular futures or option contract at any specific time. In
such event, it may not be possible to close out a position held by Growth &
Income, which could require Growth & Income to purchase or sell the instrument
underlying the position, make or receive a cash settlement, or meet ongoing
variation margin requirements. The inability to close out futures or option
positions also could have an adverse impact on Growth & Income's ability
effectively to hedge its portfolio, or the relevant portion thereof.
The liquidity of a secondary market in a futures contract or an
option on a futures contract may be adversely affected by "daily price
fluctuation limits" established by the exchanges, which limit the amount of
fluctuation in the price of a contract during a single trading day and prohibit
trading beyond such limits once they have been reached. The trading of futures
and options contracts also is subject to the risk of trading halts, suspensions,
exchange or clearing house equipment failures, government intervention,
insolvency of the brokerage firm or clearing house or other disruptions of
normal trading activity, which could at times make it difficult or impossible to
liquidate existing positions or to recover excess variation margin payments.
Risk of Predicting Interest Rate Movements. Investments in futures
contracts on fixed income securities and related indexes involve the risk that
if Chase's investment judgment concerning the general direction of interest
rates is incorrect, Growth & Income's overall performance may be poorer than if
it had not entered into any such contract. For example, if Growth & Income has
been hedged against the possibility of an increase in interest rates which would
adversely affect the price of bonds held in its portfolio and interest rates
decrease instead, Growth & Income will lose part or all of the benefit of the
increased value of its bonds which have been hedged because it will have
offsetting losses in its futures positions. In addition, in such situations, if
Growth & Income has insufficient cash, it may have to sell bonds from its
portfolio to meet daily variation margin requirements, possibly at a time when
it may be disadvantageous to do so. Such sale of bonds may be, but will not
necessarily be, at increased prices which reflect the rising market.
Trading and Position Limits. Each contract market on which futures
and option contracts are traded has established a number of limitations
governing the maximum number of positions which may be held by a trader, whether
acting alone or in concert with others. Chase does not believe that these
trading and position limits will have an adverse impact on the hedging
strategies regarding Growth & Income's portfolio.
Information about Securities Ratings
Corporate Bonds - Moody's Investors Service, Inc.
Aaa - Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally referred to
as "gilt edge". Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.
Aa - Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.
A - Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper medium-grade obligations. Factors
giving security to principal and interest are considered adequate but elements
may be present which suggest a susceptibility to impairment sometime in the
future.
Baa - Bonds which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
Ba - Bonds which are rated Ba are judged to have speculative
elements; their future cannot be considered as well-assured. Often the
protection of interest and principal payments may be very moderate, and thereby
not well safeguarded during both good and bad times over the future. Uncertainty
of position characterizes bonds in this class.
B - Bonds where are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may be
small.
Corporate Bonds - Standard & Poor's Corporation
AAA - This is the highest rating assigned by Standard & Poor's to a
debt obligation and indicates an extremely strong capacity to pay principal and
interest.
AA - Bonds rated AA also qualify as high-quality debt obligations.
Capacity to pay principal and interest is very strong, and in the majority of
instances they differ from AAA issues only in a small degree.
A - Bonds rated A have a strong capacity to pay principal and
interest, although they are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions.
BBB - Bonds rated BBB are regarded as having an adequate capacity to
pay principal and interest. Whereas they normally exhibit protection parameters,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity for bonds rated BBB than for bonds in the A category.
BB & B - Standard & Poor's describes the BB and B rated issues
together with issues rated CCC and CC. Debt in these categories is regarded on
balance as predominantly speculative with respect to capacity to pay interest
and repay principal in accordance with the terms of the obligation. BB indicates
the lowest degree of speculation and CC the highest degree of speculation. While
such debt will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposures to adverse
conditions.
Commercial Paper - Moody's Investors Service, Inc.
Prime-1 - Commercial Paper issuers rated Prime-1 are judged to be of
the best quality. Their short-term debt obligations carry the smallest degree of
investment risk. Margins of support for current indebtedness are large or stable
with cash flow and asset protection well assured. Current liquidity provides
ample coverage of near-term liabilities and unused alternative financing
arrangements are generally available. While protective elements may change over
the intermediate or longer term, such changes are most unlikely to impair the
fundamentally strong position of short-term obligations.
Prime-2 - Issuers in the Commercial Paper market rated Prime-2 are
high quality. Protection for short-term holders is assured with liquidity and
value of current assets as well as cash generation in sound relationship to
current indebtedness. They are rated lower than the best commercial paper
issuers because margins of protection may not be as large or because
fluctuations of protective elements over the near or immediate term may be of
greater amplitude. Temporary increases in relative short and overall debt load
may occur. Alternative means of financing remain assured.
Prime-3 - Issuers in the Commercial Paper market rated Prime-3 have
an acceptable capacity for repayment of short-term promissory obligations. The
effect of industry characteristics and market composition may be more
pronounced. Variability in earning and profitability may result in changes in
the level of debt protection measurements and the requirement for relatively
high financial leverage. Adequate alternate liquidity is maintained.
Commercial Paper - Standard & Poor's Corporation
A - Issuers assigned this highest rating are regarded as having the
greatest capacity for timely payment. Issuers in this category are further
refined with the designation 1, 2 and 3 to indicate the relative degree of
safety.
A-1 - This designation indicates that the degree of safety regarding
timely payment is very strong.
A-2 - Capacity for timely payment for issuers with this designation
is strong. However, the relative degree of safety is not as overwhelming as for
issues designated "A-1".
A-3 - Issuers carrying this designation have a satisfactory capacity
for timely payment. They are, however, somewhat more vulnerable to the adverse
effects of changes in circumstances than obligations carrying the higher
designation.
Investment Limitations
The Fund has adopted limitations regarding the investment activity of
the Vista Portfolio which are fundamental policies and may not be changed
without the approval of the holders of a majority of the outstanding voting
shares of the Vista Portfolio. "Majority" for this purpose and under the
Investment Company Act of 1940 means the lesser of (i) 67% of the shares
represented at a meeting at which more than 50% of the outstanding shares are
represented or (ii) more than 50% of the outstanding shares. A complete
statement of all such limitations are set forth below.
The Vista Portfolio will not:
1. Invest more than 25% of its total assets (taken at market value at
the time of each investment) in the securities of issuers primarily
engaged in the same industry; utilities will be divided according to
their services; for example, gas, gas transmission, electric and
telephone each will be considered a separate industry for purposes of
this restriction; provided that there shall be no limitation on the
purchase of obligations issued or guaranteed by the U.S. Government,
or its agencies or instrumentalities, or of certificates of deposit
and bankers' acceptances, and positions in permissible options and
futures will not be subject to this restriction.
2. Alone or together with any other investor make investments for the
purpose of exercising control over, or management of any issuer.
3. Purchase or sell interests in commodities, commodities contracts, or
real estate, (including limited partnership interests but excluding
securities secured by real estate or interests therein), except that
the Vista Portfolio may purchase securities of issuers which invest
or deal in any of the above and may engage in permissible futures and
options transactions, permissible forward purchases or sales of
foreign currencies or securities, and the purchase and sale of
mortgage-backed securities.
4. Make loans, except as provided in limitation (5) below and except
through the purchase of debt instruments (including, without
limitation, bonds, notes, debentures or other obligations and
certificates of deposit, bankers' acceptances and fixed time
deposits) in private placements (the purchase of publicly-traded
obligations are not being considered the making of a loan) and
further, through the use of repurchase agreements or the purchase of
short-term obligations.
5. Lend its portfolio securities in excess of one-third of its total
assets, taken at market value at the time of the loan, and provided
that such loan shall be made in accordance with the guidelines set
forth under "Lending of Portfolio Securities" of this Statement of
Additional Information.
6. Borrow amounts in excess of 33 1/3% of its total assets (including
the amount borrowed), taken at market value at the time of the
borrowing, and then only from banks as a temporary measure for
extraordinary or emergency purposes or by engaging in reverse
repurchase transactions; nor may the Vista Portfolio pledge,
mortgage, or hypothecate more than 1/3 of its net assets to secure
such borrowings. In the event the Vista Portfolio borrows in excess
of 5% of its total assets, the Vista Portfolio will not purchase
additional investment securities until any borrowings that exceed 5%
of the Vista Portfolio's total assets are repaid.
7. Mortgage, pledge, hypothecate or in any manner transfer, as security
for indebtedness, any securities owned or held by the Portfolio
except as may be necessary in connection with borrowings mentioned in
limitation (6) above, and then such mortgaging, pledging or
hypothecating may not exceed 33 1/3% of the Vista Portfolio's total
assets, taken at market value at the time thereof; provided that
collateral arrangements with respect to permissible futures and
options transactions, including initial and variation margin
payments, are not considered to be the pledge of assets for purposes
of this restriction.
8. Underwrite securities of other issuers except insofar as the Vista
Portfolio may be deemed an underwriter under the Securities Act of
1933 in selling portfolio securities.
9. Issue any senior security (as defined in the 1940 Act), except that (a) the
Vista Portfolio may engage in transactions that may result in the issuance
of senior securities to the extent permitted under the Portfolio's
investment policies and applicable regulations and interpretations of the
1940 Act or an exemptive order; (b) the Vista Portfolio may acquire other
securities, the acquisition of which may result in the issuance of a senior
security, to the extent permitted under the Portfolio's investment policies
and applicable regulations or interpretations of the 1940 Act; and (c)
subject to the restrictions set forth above, the Vista Portfolio may borrow
money as authorized by the 1940 Act. For purposes of this restriction,
collateral arrangements with respect to the Vista 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.
The Vista Portfolio is subject to the following non-fundamental
investment limitations:
1. The Vista Portfolio may not invest more than 15% of its net assets in
illiquid securities.
2. The Vista Portfolio may not, with respect to 50% of its assets, hold
more than 10% of the outstanding voting securities of an issuer.
3. The Vista Portfolio may not purchase or sell interests in oil, gas, or
mineral leases.
4. Write, purchase or sell puts, calls or combinations thereof, except
that the Vista Portfolio may buy and sell permissible options and
futures, and may hold and sell warrants where the grantor of the
warrants is the issuer of the underlying securities.
5. Purchase any securities on margin (except that the Vista Portfolio
may obtain such short-term credit as may be necessary for the
clearance of purchases and sales of portfolio securities, and the
Vista Portfolio may make margin payments in connection with
permissible transactions in futures contracts and options) or make
short sales of securities or maintain a short position, except that
the Vista Portfolio may sell short against the box.
6. The Vista Portfolio will limit its investment in Depositary Receipts
not sponsored by the issuer of the underlying security to no more
than 5% of the value of its net assets (at the time of investment).
7. Investments in bank obligations are limited to those of U.S. banks
(including their foreign branches) which have total assets at the
time of purchase in excess of $1 billion and the deposits of which
are insured by either the Bank Insurance Fund or the Savings
Association Insurance Fund of the Federal Deposit Insurance
Corporation, and foreign banks (including their U.S. branches) having
total assets in excess of $10 billion (or the equivalent in other
currencies), and such other U.S. and foreign commercial banks which
are judged by the advisers to meet comparable credit standing
criteria.
In addition, Growth & Income is subject to additional fundamental and
nonfundamental investment limitations which are set forth in its prospectus and
statement of additional information. Please see Growth & Income's Statement of
Additional Information regarding these operating policies.
Lending of Portfolio Securities
The Vista 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 do not exceed 33 1/3% of the Vista 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 Vista
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 6 above, a portion of an issue of debt securities of types commonly
distributed privately to financial institutions; for purposes of this limitation
the purchase of short-term commercial paper and other debt securities which are
part of an issue offered to the public shall not be considered the making of a
loan.
For purposes of the investment restrictions described above, the
issuer of a tax-exempt security is deemed to be the entity (public or private)
ultimately responsible for the payment of the principal of and interest on the
security. For purposes of Investment Restriction No. 7 industrial developments
bonds, where the payment of principal and interest is the ultimate
responsibility of companies within the same industry, are grouped together as an
"industry".
In the event the Vista Portfolio were ever to redeem its investment
in Growth & Income and the Investment Adviser were to manage the Vista
Portfolio's assets directly (or delegate such management to a sub-adviser), the
Vista Portfolio would be subject to the above-described fundamental investment
policies. If the Vista Portfolio were to redeem its investment in Growth &
Income and invest in another investment company, the shareholders of the Vista
Portfolio would be asked to approve the adoption of the investment policies of
such investment company to the extent necessary or appropriate to allow the
Vista Portfolio to make such investment.
MANAGEMENT OF THE FUND
The Fund
Directors and Officers
The directors and executive officers of the Fund and their principal occupations
for at least the last five years are set forth below:
<TABLE>
<S> <C>
Name, Relationship with Principal Occupation
the Fund, and Address Past Five Years
Rex Jennings President Emeritus, Denver Metro Chamber
Director2 of Commerce (since 1987)
Richard P. Koeppe, Ph.D. Retired Superintendent,
Director3 Denver Public Schools (1988 - 1990)
Douglas L. Wooden Great-West Life & Annuity Insurance
Director1 5 Company: Senior Vice-President, Financial
Services (since 1996); Senior Vice-President,
Chief Financial Officer (1991-1996)
James D. Motz Great-West Life & Annuity Insurance
Director1 5 Company: Senior Vice-President, Employee Benefits
Operations (since 1991); Vice-President, Group
(1983-1990)
Sanford Zisman Attorney, Zisman & Ingraham, P.C.
Director4
Glen R. Derback Great-West Life & Annuity Insurance
Treasurer, Principal Company: Vice-President, Financial
Financial and Accounting Officer1 5 Control (since 1984);
Beverly A. Byrne Great-West Life & Annuity Insurance
Secretary1 5 Company: Assistant Vice-President and Associate
Counsel (since 1997); Assistant Counsel (1993 -
1997); Attorney (1988-1993)
- --------------------------------
1 Interested person as defined in the Investment Company Act of 1940 and affiliated person of Investment Adviser.
2 12501 East Evans Circle, Unit C, Aurora Colorado 80014
3 8679 East Kenyon Avenue, Denver, Colorado 80237
4 3773 Cherry Creek North Drive, Suite 250, Denver, Colorado 80209.
5 Great-West Life & Annuity Insurance Company, 8515 E. Orchard Road, Englewood, Colorado 80111.
</TABLE>
<PAGE>
Compensation
The Fund pays no salaries or compensation to any of its officers or
directors affiliated with GW Capital or its affiliates. The chart below sets
forth the annual fees paid or expected to be paid to the non-interested
directors and certain other information.
<TABLE>
- ---------------------------------- --------------------------------- ---------------------------------- ----------------------------
R.P. Koeppe R. Jennings S. Zisman
- ---------------------------------- --------------------------------- ---------------------------------- ----------------------------
- ---------------------------------- --------------------------------- ---------------------------------- ----------------------------
Compensation Received from the
<S> <C> <C> <C>
Fund* $ 8,500 $ 8,500 $ 8,500
- ---------------------------------- --------------------------------- ---------------------------------- ----------------------------
- ---------------------------------- --------------------------------- ---------------------------------- ----------------------------
Pension or Retirement Benefits
Accrued as Fund Expense* $ 0 $ 0 $ 0
- ---------------------------------- --------------------------------- ---------------------------------- ----------------------------
- ---------------------------------- --------------------------------- ---------------------------------- ----------------------------
Total Compensation Received from
the Fund and All Affiliated $ 16,500 $ 16,500 $ 16,500
Funds**
- ---------------------------------- --------------------------------- ---------------------------------- ----------------------------
</TABLE>
* Estimated for current Fiscal Year
** As of January 31,
1998 there were forty funds for which the directors serve as
directors or Trustees, of which thirty-four are Portfolios of the
Fund. The total compensation paid is comprised of the amount
estimated to be paid during the Fund's current fiscal year by the
Fund and its affiliated investment companies.
All of the shares of the Portfolio are owned by FutureFunds II a
separate account of Great-West Life & Annuity Insurance Company.
The Investment Adviser of the Fund
The information that follows supplements the information provided
about the Investment Adviser under the caption "Management of the Fund -
Investment Adviser of the Fund" in the Prospectus.
GW Capital Management, LLC (the "Investment Adviser") serves as the
investment adviser to the Fund pursuant to an Investment Advisory Agreement
dated April 1, 1982 with the Fund. The Investment Adviser is a wholly owned
subsidiary of GWL&A which in turn is a wholly owned subsidiary of Great-West.
Great-West is a 99.4% owned subsidiary of Great-West Lifeco Inc., which in turn
is an 86.4% subsidiary of Power Financial Corporation, Montreal, Quebec. A
majority of the common stock of Power Financial Corporation is owned by 171263
Canada Inc. 171263 Canada Inc. is a wholly owned subsidiary of Power Corporation
of Canada, which, in turn, is controlled by a Canadian investor, Paul Desmarais,
and his associates.
The Investment Advisory Agreement, as amended, was considered by the
Fund's Board of Directors, including a majority of the Directors who are not
"interested persons" (as defined in the Investment Company Act of 1940), on
November 1, 1997. The Agreement will remain in effect until November 1, 1998 and
will continue in effect from year to year if approved annually (a) by the Board
of Directors of the Fund or by a majority of the outstanding shares of the Fund,
including a majority of the outstanding shares of each portfolio, and (b) by a
majority of the Directors who are not parties to such contract or interested
persons of any such party. The agreement is not assignable and may be terminated
without penalty on 60 days' written notice at the option of either party or by
the vote of the shareholders of the Fund.
While the Investment Adviser is at all times subject to the direction
of the Board of Directors of the Fund, the Investment Advisory Agreement
provides that the Investment Adviser, subject to review by the Board of
Directors, is responsible for the actual management of the Fund and has
responsibility for making decisions to buy, sell or hold any particular
security. The Investment Adviser provides the portfolio managers for the Fund.
Such managers consider analysis from various sources, make the necessary
investment decisions and effect transactions accordingly. The Investment Adviser
also is obligated to perform certain administrative and management services for
the Fund and is obligated to provide all the office space, facilities, equipment
and personnel necessary to perform its duties under the Agreement. With respect
to the Vista Portfolio, because all the Vista Portfolio's investible assets will
be invested in Growth & Income, the investment adviser to Growth & Income will
"in effect" manage the Vista Portfolio in accordance with Growth & Income's
stated investment objectives and policies, making investment decisions for
Growth & income and placing orders to buy and sell securities on behalf of
Growth & Income. GW Capital will be responsible for accounting and
administration of the Vista Portfolio only.
Fees
For the year ended October 31, 1997, the Investment Adviser has been
paid $ 597,408 for the services it provides to
the Vista Portfolio.
The Growth and Income Portfolio
("Growth & Income")
Trustees and Officers
The Trustees and officers and their principal occupations for at
least the past five years are set forth below. Their titles may have varied
during that period. Asterisks indicate those Trustees and officers that are
"interested persons" (as defined in the 1940 Act). Unless otherwise indicated
below, the address of each officer other than the Chairman is 6 St. James
Avenue, Suite 900, Boston, Massachusetts.
FERGUS REID, III - Chairman and Trustee. Chairman of the Board of Trustees of
Mutual Fund Group and Mutual Fund Trust. Chairman and Chief Executive Officer,
Lumelite Corporation, since September 1985; Trustee, Morgan Stanley Funds.
Address: 202 June Road, Stamford, Connecticut
06903. Age: 65
H. RICHARD VARTABEDIAN* - Trustee and President. Consultant, Republic Bank of
New York; formerly, Senior Investment Officer, Division Executive of the
Investment Management Division of The Chase Manhattan Bank, N.A., 1980 through
1991. Address: P.O. Box 296, Beach Road, Hendrick's Head, Southport,
Maine 04576.
Age: 61
WILLIAM J. ARMSTRONG - Trustee. Vice President and Treasurer Ingersoll-Rand
Company. Address: 49 Aspen Way, Upper Saddle River, New Jersey 07458; Age: 55.
JOHN R.H. BLUM - Trustee. Attorney in private practice; formerly partner in the
law firm of Richards, O'Neil & Allegaert; Commissioner of Agriculture, State of
Connecticut 1992-1995. Address: 332 Main Street, Lakeville, Connecticut 06039;
Age: 68
STUART W. CRAGIN, JR. - Trustee. Retired; formerly, President, Fairfield
Testing Laboratory, Inc. He has previously served in a variety of marketing,
manufacturing and general management positions with Union Camp Corp., Trinity
Paper & Plastics Corp., and Conover Industries. Address:108 Valley Road, Cos
Cob, Connecticut 06807. Age: 64
ROLAND R. EPPLEY, JR. - Trustee. Retired; formerly President and Chief
Executive Officer, Eastern States Bankcard Association Inc. (1971-1988);
Director, Janel Hydraulics, Inc.; formerly Director of The Hanover Funds, Inc.
Address: 105 Coventry Place, Palm Beach Gardens, Florida 33418; Age: 65.
JOSEPH J. HARKINS* - Trustee. Retired; Commercial Sector Executive and
Executive Vice President of The Chase Manhattan Bank, N.A. from 1985 through
1989. He was employed by Chase in numerous capacities as an officer from 1954
through 1989. Director of Blessings Corporation, Jefferson Insurance Company of
New York, Monticello Insurance Company and National. Address: 257 Plantation
Circle South, Ponte Verde Beach, Florida 32082; Age: 65.
SARAH JONES* - Trustee.
President and Chief Operating
Officer of Chase Manhattan Funds
Corp.; formerly Managing
Director for the Global Asset
Management and Private Banking
Division of The Chase Manhattan
Bank. Address: One Chase
Manhattan Plaza, 3rd Fl., New
York, NY 10081; Age: 46.
W.D. MACCALLAN - Trustee. Director of The Adams Express Co. and Petroleum &
Resources Corp.; formerly Chairman of the Board and Chief Executive Officer of
The Adams Express Co. and Petroleum & Resources Corp.;formerly Director of The
Hanover Funds, Inc. and The Hanover Investment Funds, Inc. Address: 624 East
45th Street Savannah, Georgia 31405; Age: 70.
W. PERRY NEFF* - Trustee. Independent Financial Consultant; Director of North
America Life Assurance Co., Petroleum & Resources Corp. and The Adams Express
Co.; formerly Director and Chairman of The Hanover Funds Inc.; formerly
Director, Chairman and President of The Hanover Investments Funds Inc.
Address: RR 1 Box 102, Weston, Vermont 05181; Age: 70
LEONARD M. SPALDING, JR.* - Trustee. Executive Vice President and Chief
Executive Officer for Chase Mutual Funds, Corp.; President and Chief Executive
Officer of Vista Capital Management in 1993; Chief Investment Executive of The
Chase Manhattan Private Bank. Address: 2025 Lincoln Park Road, Springfield, KY
40069; Age: 62
DR. RICHARD E. TEN HAKEN - Trustee. Former District Superintendent of Schools,
Monroe No.2 and Orleans Counties, New York; Chairman of the Board and President,
New York State Teachers' Retirement System. Address: 4 Barnfield Road,
Pittsfield, New York 14534. Age: 63
IRVING L. THODE - Trustee. Retired; formerly Vice President of Quotron Systems.
He has previously served in a number of executive positions with Control
Data Corp., including President of its Latin American Operations, and General
Manager of its Data Services business. Address: 80 Perkins Road, Greenwich,
Connecticut 06830. Age: 66
MARTIN R. DEAN - Treasurer. Associate Director, accounting Services, BISYS Fund
Services;formerly Senior Manager, KPMG Peat Marwick (1987-1994).
Address: 3435 Stelzer Road, Columbus, OH 43219. Age: 33.
LEE SCHULTHEIS - Assitant Treasurer and Assistant Secretary. President, BISYS
Fund Distributors; formerly Managing Director, Forum Financial Group.
Address: One Chase Manhattan Plaza, Third Floor, New York, New York 10081.
Age:41.
W. ANTHONY TURNER - Secretary. Senior Vice President and Regional Client
Executive, BISYS Fund Services; formerly Senior Vice President, First Union
Brokerage Services, Inc. and Senior Vice President NationsBank
Address: 125 W. 55th Street, New York, New York 10019. Age: 37.
* Interested person as defined under the 1940 Act. Mr. Reid is not an interested
person of Growth & Income's investment advisor or principal underwriter, but may
be deemed an interested person of Growth & Income solely by reason of being an
officer of Growth & Income.
The Board of Trustees of the Trust presently has an Audit Committee.
The members of the Audit Committee are Messrs. Ten Haken (Chairman), Armstrong,
Eppley, MacCallan and Thode. The function of the Audit Committee is to recommend
independent auditors and monitor accounting and financial matters. The Audit
Committee met two times during the fiscal year ended October 31, 1997.
The board of Trustees has established an Investment Committee. The
members of the Investment Committee are Messrs. Vartabedian (President), Reid
and Spalding. The function of the Investment Committee is to review the
investment management process of Growth & Income.
The Trustees and officers of Growth & Income appearing above also
serve in the same capacities with respect to Mutual Fund Group, Mutual Fund
Trust, Mutual Fund Variable Annuity Trust, Mutual Fund Select Group, Mutual Fund
Select Trust, Capital Growth Portfolio and International Equity Portfolio.
The Investment Adviser of Growth
& Income
The Chase Manhattan Bank ("Chase") manages the assets of Growth &
Income pursuant to an investment advisory agreement, dated May 6, 1996 (the
"Advisory Agreement"). Subject to such policies as the Board of Trustees may
determine, Chase makes investment decisions for Growth & Income. Pursuant to the
terms of the Advisory Agreement, Chase provides Growth & Income with such
investment advice and supervision as it deems necessary for the proper
supervision of Growth & Income's investments. Chase continuously provides
investment programs and determines from time to time what securities shall be
purchased, sold or exchanged and what portion of Growth & Income's assets shall
be held uninvested. Chase furnishes, at its own expense, all services,
facilities and personnel necessary in connection with managing the investments
and effecting portfolio transactions for Growth & Income. The other expenses
attributable to, and payable by Growth & Income, are described under "Investment
Adviser of Growth & Income Portfolio" in the Prospectus. The Advisory Agreement
for Growth & Income will continue in effect from year to year only if such
continuance is specifically approved at least annually by the Board of Trustees
or by vote of a majority of Growth & Income's outstanding voting securities and,
in either case, by a majority of the Trustees who are not parties to the
Advisory Agreement or interested persons of any such party, at a meeting called
for the purpose of voting on such Advisory Agreement.
Under the Advisory Agreement, Chase may delegate a portion of its
responsibilities to a sub-adviser. In addition, the Advisory Agreement provides
that Chase 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
of Growth & Income and are under the common control of Chase as long as all such
persons are functioning as part of an organized group of persons, managed by
authorized officers of Chase.
Chase has entered into an investment sub-advisory agreement dated as of
May 6, 1996 with Chase Asset Management, Inc. ("CAM"). With respect to the
day-to-day management of Growth & Income, under the sub-advisory agreement, CAM
makes decisions concerning, and places all orders for, purchases and sales of
securities and helps maintain the records relating to such purchases and sales.
CAM 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 Growth & Income under applicable laws and are under the
common control of Chase; provided that (i) all persons, when providing services
under the sub-advisory 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. This arrangement will not result in the payment of
additional fees by Growth & Income.
Pursuant to the terms of the Advisory Agreement and CAM's agreement with
Chase, Chase and CAM are permitted to render services to others. Each advisory
agreement is terminable without penalty by Growth & Income on not more than 60
days, nor less than 30 days, written notice when authorized either by a majority
vote of Growth & Income's investors or by a vote of a majority of the Board of
Trustees of Growth & Income, or by Chase or CAM on not more than 60 days, nor
less than 30 days, written notice, and will automatically terminate in the event
of its "assignment" (as defined in the 1940 Act). The advisory agreements
provide that Chase or CAM under such agreement shall not be liable for any error
of judgment or mistake of law or for any loss arising out of any investment or
for any act or omission in the execution of portfolio transactions for Growth &
Income, except for willful misfeasance, bad faith or gross negligence in the
performance of its duties, or by reason of reckless disregard of its obligations
and duties thereunder.
Under the Advisory Agreement, Chase may utilize the specialized portfolio
skills of all its various affiliates, thereby providing Growth & Income with
greater opportunities and flexibility in accessing investment expertise. With
respect to Growth & Income, the equity research team of Chase looks for two key
variables when analyzing stocks for potential investment by equity portfolios:
value and momentum. To uncover these qualities, the team uses a combination of
quantitative analysis, fundamental research and computer technology to help
identify undervalued stocks.
Chase, 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. The Chase Manhattan Corporation is the entity resulting from
the merger of The Chase Manhattan Corporation into Chemical Banking Corporation
on March 31, 1996. Chemical Banking Corporation was thereupon renamed The Chase
Manhattan Corporation. Also 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.
CAM is a wholly-owned operating subsidiary of Chase. CAM is registered
with the Securities and Exchange Commission as an investment adviser and
provides discretionary investment advisory services to institutional clients,
and the same individuals who serve as portfolio managers for CAM also serve as
portfolio managers for Chase.
In consideration of the services provided by Chase pursuant to the
Advisory Agreement, Growth & Income pays an investment advisory fee computed and
paid monthly based on a rate equal to .40%. of Growth & Income's average daily
net assets, on an annualized basis for Growth & Income's then-current fiscal
year. However, Chase may voluntarily agree to waive a portion of the fees
payable to it on a month-to-month basis. For its services under its sub-advisory
agreement, CAM will be entitled to receive such compensation, payable by Chase
out of its advisory fee, as is described in the prospectus.
The Growth & Income Administrator
Pursuant to an Administration Agreement, dated November 15, 1993 (the
"Administration Agreement"), Chase serves as administrator of Growth & Income.
Chase provides certain administrative services to Growth & Income, including
among other responsibilities, coordinating the negotiation of contracts and fees
with, and the monitoring of performance and billing of, Growth & Income's
independent contractors and agents; preparation for signature by an officer of
Growth & Income of all documents required to be filed for compliance by Growth &
Income with applicable laws and regulations excluding those of the securities
laws of various states; arranging for the computation of performance data,
including net asset value and yield; responding to shareholder inquiries; and
arranging for the maintenance of books and records of Growth & Income and
providing, at its own expense, office facilities, equipment and personnel
necessary to carry out its duties. The administrator does not have any
responsibility or authority for the management of Growth & Income, the
determination of investment policy, or for any matter pertaining to the
distribution of shares of Growth & Income or the Vista Portfolio.
Under the Administration Agreement, Chase renders administrative
services to others. The administration agreement will continue in effect from
year to year with respect to Growth & Income only if such continuance is
specifically approved at least annually by the Board of Trustees or by vote of a
majority of Growth & Income's outstanding voting securities and, in either case,
by a majority of the Trustees who are not parties to the administration
agreement of "interested person" (as defined in the 1940 Act) or any such party.
The administration agreement is terminable without penalty by the Trust on
behalf of Growth & Income on 60 days written notice when authorized either by a
majority vote of Growth & Income's shareholders or by a vote of a majority of
the Board of Trustees, including a majority of the Trustees who are not
interested persons (as defined in the 1940 Act) Growth & Income, or by the
Administrator on 60 days written notice, and will automatically terminate in the
event of its assignment (as defined in the 1940 Act). The administration
agreement also provides that neither Chase nor its personnel shall be liable for
any error of judgment or mistake of law or for any act or omission in the
administration or management of Growth & Income, except for willful misfeasance,
bad faith or gross negligence in the performance of its or their duties or by
reason of reckless disregard of its or their obligations and duties under the
administration agreements.
In addition, the administration agreement provides that, in the event
the operating expenses of Growth & Income, including all investment advisory,
administration and sub-administration fees, but excluding brokerage commissions
and fees, taxes, interest and extraordinary expenses such as litigation, for any
fiscal year exceed the most restrictive expense limitation applicable to Growth
& Income imposed by the securities laws or regulations thereunder of any state
in which the shares of Growth & Income or Vista Portfolio are qualified for
sale, as such limitations may be raised or lowered from time to time, Chase
shall reduce its administration fee (which fee is described below) to the extent
of its share of such excess expenses. The amount of such reduction to be borne
by Chase shall be deducted from the monthly administration fee otherwise payable
to Chase during such fiscal year; and if such amounts should exceed the monthly
fee, Chase shall pay to Growth & Income its share of such excess expenses no
later than the last day of the first month of the next succeeding fiscal year.
In consideration of the services provided Chase pursuant to the
administration agreement, Chase receives from Growth & Income a fee computed and
paid monthly at an annual rate equal to 0.05% of Growth & Income's average daily
net assets, on an annualized basis for Growth & Income's then-current fiscal
year. Chase may voluntarily waive a portion of the fees payable to it with
respect to Growth & Income on a month-to-month basis.
For the fiscal years ended October 31, 1994, 1995, 1996 and 1997,
Chase, was paid or accrued the following administration fees and voluntarily
waived the amounts in parentheses following such fees: $600,633; $851,900,
$971,251 and $1,234,733.
PURCHASE AND REDEMPTION OF SHARES
As of October 31, 1997, 100% of the 81,406,422 outstanding shares of
the Vista Portfolio were held of record by FutureFunds II Series Account.
<PAGE>
CALCULATION OF YIELD
As summarized in the Prospectus under the heading "Performance
Related Information", yields of this Portfolio will be computed by annualizing a
recent month's net investment income, divided by a Portfolio share's net asset
value on the last trading day of that month multiplied by the average number of
outstanding shares for the period. Net investment income will reflect
amortization of any market value premium or discount of fixed income securities
and may include recognition of a pro rata portion of the stated dividend rate of
dividend paying portfolio securities. The yields of the Portfolio will vary from
time to time depending upon market conditions and the composition of the
Portfolio. Yield should also be considered relative to changes in the value of
the shares of the Portfolio and to the relative risks associated with the
investment objectives and policies of the Portfolio. Below is an example of the
yield calculation for the Portfolio.
Maxim Vista Growth & Income
Portfolio
The following is an example of the yield calculation for the
Portfolio based on a 30-day period ending October 31, 1997.
Formula: YIELD = 2[(a-b)/cd
+ 1)6-1]
Where: a = net investment income earned during the period by the
portfolio company attributable to shares owned by the
sub-account.
b = expenses accrued for the period(net of reimbursements).
c = the average daily number of accumulation units
outstanding during the period.
d = the maximum offering price per accumulation unit on
the last day of the period
Yield as of October 31, 1997:
a = 39,792.07
b = 60,473.86
c = 80,543,017.51
d = 1.658930
Therefore, 1 month yield as of October 31, 1997 is -0.19%.
<PAGE>
CALCULATION OF TOTAL RETURN
As summarized in the Prospectus under the heading "Performance
Related Information", total return is a measure of the change in value of an
investment in a Portfolio over the period covered, which assumes any dividends
or capital gains distributions are reinvested in that Portfolio immediately
rather than paid to the investor in cash. The formula for total return used
herein includes four steps: (1) adding to the total number of shares purchased
by a hypothetical $1,000 investment in the Portfolio all additional shares which
would have been purchased if all dividends and distributions paid or distributed
during the period had been immediately reinvested; (2) calculating the value of
the hypothetical initial investment of $1,000 as of the end of the period by
multiplying the total number of shares owned at the end of the period by the net
asset value per share on the last trading day of the period; (3) assuming
redemption at the end of the period and deducting any applicable contingent
deferred sales charge; and (4) dividing this account value for the hypothetical
investor by the initial $1,000 investment. Total return will be calculated for
one year, five years and ten years or some other relevant periods if a Portfolio
has not been in existence for at least ten years. Below is an example of the
total return calculation for the Portfolio.
MAXIM VISTA GROWTH & INCOME
PORTFOLIO
TOTAL RETURN PERFORMANCE
FORMULA: P(1+T)N = ERV
WHERE:
T = Average annual total return.
N = The number of years including portions of years, where
applicable, for which the performance is being measured.
ERV = Ending redeemable value of a hypothetical $1.00 payment
made at the inception of the portfolio.
P = Opening redeemable value of a hypothetical $1.00 payment
made at the inception of the portfolio.
The above formula can be restated to solve for T as follows:
T = [ERV/P)1/N] -1
One year total return as of October 31, 1997:
ERV = 1.91127
N = 1.00
P = 1.47799
Therefore, total return as of October 31, 1997 is 29.31%.
<PAGE>
Price Make-up Sheet
Maxim Vista Growth & Income
Portfolio
Period Ended 10/31/97 Per Share Amount
Undistributed Net Income -
Beginning of Year$ 22,966
Dividend Income 1,815,091
Interest Income 0
Operational Expenses 597,408
Net Investment Income 1,217,683
Dividend Distribution
- - End of Year 1,241,911
Undistributed Net Investment
Income -End of Year
(1,262)
Net Realized Gain(Loss) on
Investments - Beginning of Year
6,631,434
Net Realized Gain(Loss) on
Investments End of Year
16,621,457
Distribution from Net
Realized Gain
6,631,434
Accumulated Undistributed Net
Realized Gain(Loss)
on Investments
16,621,457
0.2042
Net Unrealized Appreciation
(Depreciation) on Investments
18,480,037
0.2270
Capital Stock at Par
8,140,642
0.1000
Additional Paid-In Capital
91,812,742
1.1278
Net Assets
135,053,656
1.6590
Shares Outstanding
81,406,422
<PAGE>
PART B
FINANCIAL STATEMENTS
MAXIM SERIES FUND, INC.
MAXIM VISTA GROWTH & INCOME PORTFOLIO
Financial Statements and Financial Highlights
for the Years Ended Ended October 31, 1997 and 1996
<PAGE>
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,
1997, the related statement of operations for the year ended October 31, 1997,
and the statements of changes in net assets and the financial highlights for the
years ended October 31, 1997 and 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, 1997 and 1996, 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, 1997, the results of
its operations for the year then ended, and the changes in net assets and the
financial highlights for the years ended October 31, 1997 and 1996, and the
period from December 21, 1994 (inception) to October 31, 1995, in conformity
with generally accepted accounting principles.
December 10, 1997
<PAGE>
MAXIM SERIES FUND INC.
<TABLE>
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1997
- -----------------------------------------------------------------------------------------------
MAXIM VISTA
GROWTH
& INCOME
PORTFOLIO
-------------------
ASSETS:
<S> <C>
Investment in Hub - Growth and Income Portfolio, at value $ 135,123,323
Receivable for investments sold 132,385
-------------------
Total assets 135,255,708
-------------------
LIABILITIES:
Payable for redemptions 139,650
Other liabilities 62,442
-------------------
Total liabilities 202,092
-------------------
NET ASSETS $ 135,053,616
===================
NET ASSETS REPRESENTED BY:
Capital stock, $.10 par value $ 8,140,642
Additional paid-in capital 91,812,742
Net unrealized appreciation on investments 18,480,037
Undistributed net investment income (1,262)
Accumulated undistributed net realized gain on investments 16,621,457
-------------------
NET ASSETS $ 135,053,616
===================
NET ASSET VALUE PER OUTSTANDING SHARE $ 1.6590
===================
SHARES OF CAPITAL STOCK:
Authorized 100,000,000
Outstanding 81,406,422
</TABLE>
See notes to financial statements.
<PAGE>
<TABLE>
MAXIM SERIES FUND INC.
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 1997
- -----------------------------------------------------------------------------------------------
MAXIM VISTA
GROWTH
& INCOME
PORTFOLIO
-------------------
INVESTMENT INCOME:
<S> <C>
Investment income allocated from Hub portfolio $ 2,346,283
Expenses allocated from Hub portfolio (531,192)
-------------------
Total investment income 1,815,091
-------------------
EXPENSES:
Advisory fees 597,408
-------------------
Total expenses 597,408
-------------------
NET INVESTMENT INCOME 1,217,683
-------------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments 16,621,457
Change in net unrealized appreciation on investments 10,136,096
-------------------
Net change in realized and unrealized appreciation on investments 26,757,553
-------------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 27,975,236
===================
</TABLE>
See notes to financial statements.
<PAGE>
<TABLE>
MAXIM SERIES FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED OCTOBER 31, 1997 AND 1996
- -----------------------------------------------------------------------------------------------
MAXIM VISTA GROWTH & INCOME
--------------------------------------
1997 1996
------------------- -----------------
INCREASE IN NET ASSETS:
OPERATIONS:
<S> <C> <C>
Net investment income $ 1,217,683 $ 1,191,701
Net realized gain 16,621,457 6,631,434
Change in net unrealized appreciation 10,136,096 3,954,475
------------------- -----------------
Net increase in net assets resulting from 27,975,236 11,777,610
operations
DISTRIBUTION TO SHAREHOLDERS:
From net investment income (1,241,911) (1,169,079)
From short-term capital gains (1,716,872) 0
From long-term capital gain (4,914,562) (1,414,461)
------------------- -----------------
Total distribution (7,873,345) (2,583,540)
SHARE TRANSACTIONS:
Net proceeds from sale of shares 28,401,339 48,967,765
Reinvestment of distributions 7,873,492 2,583,393
Cost of shares redeemed (7,753,385) (23,718,112)
------------------- -----------------
Net increase in net assets resulting from share 28,521,446 27,833,046
transactions
------------------- -----------------
Total increase in net assets 48,623,337 37,127,116
NET ASSETS:
Beginning of period 86,430,279 49,403,163
------------------- -----------------
End of period $ 135,053,616 $ 86,430,279
=================== =================
OTHER INFORMATION:
SHARES:
Sold 18,800,487 37,282,804
Issued in reinvestment of distributions 5,692,550 2,029,197
Redeemed (5,013,305) (18,102,506)
------------------- -----------------
Net increase in shares of beneficial interest 19,479,732 21,209,495
outstanding
OUTSTANDING SHARES AT:
Beginning of period 61,926,690 40,717,195
------------------- -----------------
End of period 81,406,422 61,926,690
=================== =================
</TABLE>
See notes to financial statements.
<PAGE>
<TABLE>
- ---------------------------------------------------------------------------------------------------------
MAXIM SERIES FUND, INC.
MAXIM VISTA GROWTH & INCOME PORTFOLIO
FINANCIAL HIGHLIGHTS
- ---------------------------------------------------------------------------------------------------------
Selected data for a share of capital stock for the years ended October 31, 1997
and 1996, and the period December 21, 1994 (inception) to October 31, 1995 were
as follows:
Year Ended Year Ended Period Ended
October 31, October 31, October 31,
1997 1996 1995
<S> <C> <C> <C>
Net Asset Value, Beginning of Period $ 1.3957 $ 1.2133 $ 1.0000
Income From Investment Operations
Net Investment Income 0.0158 0.0219 0.0174
Net Realized and Unrealized Gain 0.3677 0.2147 0.2133
--------------- --------------- ---------------
Total Income From Investment Operations 0.3835 0.2366 0.2307
Less Distributions
From Net Investment Income (0.0162) (0.0215) (0.0174)
From Net Realized Gain (0.1040) (0.0327) 0.0000
--------------- --------------- ---------------
Total Distributions (0.1202) (0.0542) (0.0174)
--------------- --------------- ---------------
Net Asset Value, End of Period $ 1.6590 $ 1.3957 $ 1.2133
=============== =============== ===============
Total Return 29.33% 20.01% 22.25%
Net Assets, End of Period $ 135,053,616 $ 86,430,279 $ 49,403,163
Ratio of Expenses to Average Net Assets 1.00% 1.00% 1.01% *
Ratio of Net Investment Income to Average Net 1.08% 1.75% 2.21% *
Assets
</TABLE>
* Annualized
- -------------------------------------------------------------------------------
<PAGE>
MAXIM SERIES FUND, INC.
MAXIM VISTA GROWTH & INCOME PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED OCTOBER 31, 1997 AND 1996
- -------------------------------------------------------------------------------
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 based on the
daily 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 intends to qualify 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.
<PAGE>
3. INVESTMENT ADVISORY AGREEMENT
The Fund had entered into an investment advisory agreement with The
Great-West Life Assurance Company through October 31, 1996. Effective
November 1, 1996, a wholly-owned subsidiary of the Company, GW Capital
Management, Inc. serves as investment advisor. 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 5.07% at
October 31, 1997.
<PAGE>
December 17, 1997
Growth & Income Portfolio
Shares Issuer Value
Long-Term Investments--96.4%
Common Stock--89.1%
Aerospace--0.8%
300,000 United Technologies, Corp. $21,000,000
-----------
Agricultural Production/Services--1.8%
250,000 AGCO Corp. 7,250,000
450,000 Case Corp. 26,915,625
250,000 Deere & Co. 13,156,250
----------
47,321,875
Airlines--1.3%
300,001 AMR Corp., Delaware* 34,931,366
----------
Automotive--1.3%
245,000 General Motors 15,725,938
401,000 Lear Corp.* 19,273,063
----------
34,999,001
Banking--6.4%
450,000 BankAmerica Corp. 32,175,000
325,000 Comerica, Inc. 25,695,313
410,000 First Union Corp. 20,115,625
325,000 NationsBank Corp. 19,459,375
500,000 Norwest Corp. 16,031,250
65,000 Signet Banking Corp. 3,497,813
175,000 U.S. Bancorp 17,795,312
500,000 Washington Mutual Inc. 34,218,750
----------
168,988,438
Broadcasting--1.6%
206,000 Clear Channel Communications, Inc.* 13,596,000
500,000 Comast Corp., Special Class A 13,750,000
645,341 Tele-Communications, TCI Group, Class A* 14,802,509
----------
42,148,509
Business Services--0.5%
450,000 Equifax, Inc. 13,978,125
----------
Chemicals--2.1%
450,000 Dow Chemical Co. 40,837,500
250,000 duPont (EI) deNemours 14,218,750
----------
55,056,250
<PAGE>
Growth & Income Portfolio
December 17, 1997
Shares Issuer Value
Long-Term Investments--(continued)
Computer Software--2.1%
150,000 Cisco Systems, Inc.* $12,304,680
550,000 Computer Associates International 41,009,375
35,000 McAfee Associates, Inc.* 1,741,250
---------
55,055,305
Computers/Computer Hardware--4.9%
387,500 Compaq Computer Corp.* 24,703,125
650,000 EMC Corp., Mass.* 36,400,000
338,000 International Business Machines Corp. 33,145,125
280,000 Storage Technology Corp.* 16,432,500
600,000 Sun Microsystems, Inc.* 20,550,000
----------
131,230,750
Construction Machinery--0.8%
400,000 Caterpillar, Inc. 20,500,000
----------
Consumer Products--2.2%
275,000 Avon Products, Inc. 18,012,500
200,000 Colgate-Palmolive Co. 12,950,000
725,000 Philip Morris Companies, Inc. 28,728,125
----------
59,690,625
Diversified--4.2%
95,500 American Standard Companies, Inc.* 3,414,125
1,200,000 BTR Ltd. PLC, ADR (United Kingdom) 16,359,600
1,000,000 Canadian Pacific, Ltd. 29,812,500
930,000 Tyco International Ltd. 35,107,500
1,000,000 Westinghouse Electric Corp. 26,437,500
----------
111,131,225
Electronics/Electrical Equipment--1.9%
400,000 Adaptec, Inc.* 19,375,000
200,000 Intel Corp. 15,400,000
150,000 Texas Instruments 16,003,125
----------
50,778,125
Entertainment/Leisure--4.4%
900,000 Carnival Corp., Class A 43,650,000
549,700 GTECH Holdings Corp.* 17,727,825
269,000 MGM Grand, Inc.* 11,802,375
<PAGE>
Growth & Income Portfolio
December 17, 1997
Shares Issuer Value
Long-Term Investments--(continued)
254,659 Tele-Communications TCI Ventures Group, Ser. A* $5,873,072
400,000 Time Warner, Inc. 23,075,000
500,000 Viacom, Inc. Class B* 15,125,000
----------
117,253,272
Financial Services--2.5%
650,000 Federal Home Loan Mortgage Corp. 24,618,750
350,000 Lehman Brothers Holding, Inc. 16,471,875
550,000 Morgan Stanley, Dean Witter, Discover and Co. 26,950,000
----------
68,040,625
Food/Beverage Products--3.1%
850,000 ConAgra, Inc. 25,606,250
1,000,000 PepsiCo., Inc. 36,812,500
400,000 Unilever NV, ADR (Netherlands) 21,350,000
----------
83,768,750
Health Care/Health Care Services--3.2%
401,000 Columbia/HCA Healthcare Corp. 11,328,250
1,750,000 HEALTHSOUTH Corp.* 44,734,375
500,000 Tenet Healthcare Corp.* 15,281,250
530,000 Vencor, Inc.* 14,310,000
----------
85,653,875
Insurance--4.9%
400,000 Allstate Corp. 33,175,000
215,750 American International Group 22,019,984
330,000 Equitable Companies, Inc. 13,591,875
190,000 Loews Corp. 21,220,625
240,000 NAC Re Corp. 10,680,000
400,000 Reliastar Financial Corp. 14,950,000
225,000 Travelers Group, Inc. 15,750,000
----------
131,387,484
Manufacturing--3.6%
190,100 Honeywell, Inc. 12,938,681
637,500 Ingersoll-Rand Co. 24,822,656
490,000 Johnson Controls 21,988,750
300,000 Kennametal Inc. 14,550,000
100,000 McDermott International 3,631,250
<PAGE>
Growth & Income Portfolio
December 17, 1997
Shares Issuer Value
Long-Term Investments--(continued)
400,000 Parker Hannifin Corp. $16,725,000
-----------
94,656,337
Metals/Mining--1.9%
500,000 Aluminum Co. of America (ALCOA) 36,500,000
370,000 Newmont Mining Corp. 12,950,000
----------
49,450,000
Office/Business Equipment--1.2%
400,000 Xerox Corp. 31,725,000
----------
Oil & Gas--8.5%
600,000 Apache Corp. 25,200,000
250,000 British Petroleum PLC, ADR (United Kingdom) 21,937,500
500,000 Coastal Corp. 30,062,500
400,000 Dresser Industries, Inc. 16,850,000
640,000 Halliburton Company 38,160,000
470,000 Mobil Corp. 34,221,875
525,000 Oryx Energy Co.* 14,470,313
580,000 Texaco, Inc. 33,023,750
364,900 USX-Marathon Group 13,045,175
----------
226,971,113
Paper/Forest Products--0.7%
600,000 Willamette Industries, Inc. 19,837,500
----------
Pharmaceuticals--4.4%
350,000 Bristol-Myers Squibb Co. 30,712,500
575,000 Pharmacia & Upjohn, Inc. 18,256,250
480,000 Schering-Plough Corp. 26,910,000
850,000 SmithKline Beecham PLC, ADR (United Kingdom) 40,481,250
----------
116,360,000
Pipelines--0.0%
25,000 Tubos de Acero de Mexico SA, ADR (Mexico)* 504,688
-------
Printing & Publishing--1.4%
675,000 New York Times Company, Class A 36,956,250
----------
Real Estate Investment Trust--3.0%
345,000 Beacon Properties Corp. 14,533,125
100,000 Boston Properties, Inc.* 3,200,000
<PAGE>
Growth & Income Portfolio
December 17, 1997
Shares Issuer Value
Long-Term Investments--(continued)
190,000 Cali Realty Corp. $7,695,000
655,800 Duke Realty Investments, Inc. 14,755,500
200,000 Equity Office Properties Trust 6,112,500
280,000 Equity Residential Properties Trust 14,140,000
338,181 Security Capital Industrial Trust 8,306,571
720,000 Security Capital US Realty, ADR (Luxemburg)* 10,152,000
----------
78,894,696
Retailing--6.5%
640,000 American Stores Co. 16,440,000
520,000 CVS Corp. 31,882,500
450,000 Dayton-Hudson Corp. 28,265,625
525,000 Federated Department Stores* 23,100,000
1,155,000 Kroger Co.* 37,681,875
350,000 Office Depot, Inc.* 7,218,750
300,000 Safeway, Inc.* 17,437,500
300,000 Tandy Corp. 10,312,500
----------
172,338,750
Telecommunications--4.2%
450,000 Bell Atlantic Corp. 35,943,750
650,000 BellSouth Corp. 30,753,125
400,000 Sprint Corp. 20,800,000
700,000 WorldCom, Inc. 23,537,500
----------
111,034,375
Textiles--1.1%
300,000 Liz Claiborne, Inc. 15,206,250
400,000 Unifi, Inc. 15,375,000
----------
30,581,250
Utilities--2.6%
250,000 Centrais Electricas Brasileiras
SA-Electrobras, ADR (Brazil) 5,442,400
425,000 CINergy Corp. 14,025,000
50,000 Consolidated Edison Co. of New York, Inc. 1,712,500
555,000 FPL Group Inc. 28,686,563
550,000 Pinnacle West Capital Corp. 19,146,875
----------
69,013,338
<PAGE>
Growth & Income Portfolio
December 17, 1997
Shares Issuer Value
Long-Term Investments--(continued)
Total Common Stock $2,371,236,897
(Cost $1,780,499,636)
Convertible Preferred Stock--2.3%
Airlines--0.4%
Continentail Air Finance Trust,
10,000 8.50%, 12/01/20 945,570
90,000 8.50%, 12/01/20# 8,510,130
---------
9,455,700
Aerospace--0.1%
48,000 Loral Space & Communications, Inc.,
6.00%, 11/01/06# 2,932,368
Alternate Energy--0.2%
86,000 Calenergy Capital Trust II, 6.25%, 02/25/12# 4,411,542
25,000 Calenergy Capital Trust III, 6.50%# 1,213,675
---------
5,625,217
Entertainment/Leisure--0.3%
150,000 Time Warner Financing Trust, Hasbro, $1.24 6,487,500
---------
Insurance--0.2%
67,000 American Bankers Insurance Group, 6.25%, Ser. B 5,293,000
---------
Multi-Media--0.1%
60,000 Echostar Communications Corp.
Ser. C, 6.75% 12/31/49 3,000,000
---------
Paper/Forest Products--0.2%
125,000 International Paper Capital Corp., 5.25%# 6,136,750
---------
Telecommunications--0.6%
50,000 AirTouch Communications, 4.25%, 08/16/16 3,000,000
100,000 TCI Pacific Communications Inc., Class A, 5.0%,
7/31/06 13,937,500
16,937,500
<PAGE>
Growth & Income Portfolio
December 17, 1997
Shares Issuer Value
Long-Term Investments--(continued)
Utilities--0.2%
102,000 Houston Industries, Inc., 7.00%, 07/01/00 $5,584,500
----------
Total Convertible Preferred Stock 61,452,535
(Cost $49,766,002)
Warrants--0.0%
Real Estate Investment Trust--0.0%
15,742 Security Capital Group, Class B, 09/18/98 75,758
------
(Cost $0)
Principal
Amount
Convertible Corporate Notes & Bonds--2.7%
Automotive--0.2%
$4,500,000 Magna International Inc., 5.0%,
10/15/02 5,723,460
Computers/Computer Hardware--0.2%
3,600,000 EMC Corp., 3.25%, 03/15/02# 4,937,220
---------
Electronics--0.3%
7,000,000 Xilinx Inc., 5.25%, 11/01/02# 6,905,500
---------
Entertainment /Leisure--0.1%
2,250,000 Family Golf Centers, Inc.# 5.75%,
10/15/04 2,149,695
Environmental Service--0.0%
1,000,000 USA Waste Services Inc., 4.00%,
02/01/02 1,066,250
Government Issue--0.2%
5,000,000 Republic of Italy, 5.0%, 06/28/01 5,300,000
---------
Health Care/Health Care Services--0.5%
3,000,000 Alternative Living Services, 7.0%,
06/01/04# 3,960,000
5,000,000 Atria Communities, Inc., 5.0%,
10/15/02# 5,039,050
3,500,000 Carematrix Corp., 6.25%, 08/15/04# 3,749,760
---------
12,748,810
<PAGE>
Growth & Income Portfolio
December 17, 1997
Principal
Amount Issuer Value
Long-Term Investments--(continued)
Hotels/Other Lodging--0.2%
$5,000,000 Hilton Hotels Corp.,
5.0%, 05/15/06 $5,575,000
Paper/Forest Products--0.2%
6,600,000 South African Pulp & Paper
Industries, BVI Finance Ltd.,
7.5%, 08/01/02 6,187,500
Retailing--0.6%
4,000,000 Federated Department Stores,
5.0%, 10/01/03 5,520,000
8,500,000 Rite Aide Corp., 5.25%,
09/15/02# 9,144,130
14,664,130
Telecommunications--0.2%
2,500,000 Telefonica Europe BV,
(Netherlands), 2.0%,
07/15/02# 2,537,500
3,500,000 Tel-Save Holdings Inc., 4.5%,
09/15/02# 3,701,285
6,238,785
Total Convertible Corporate
71,496,350
Notes & Bonds
(Cost $65,157,500)
U.S. Treasury Securities--2.3%
55,000,000 U.S. Treasury Bond, 7.25%,
08/15/22 62,011,950
(Cost $60,980,313)
Total Long-Term Investments 2,566,273,490
(Cost $1,956,403,451)
<PAGE>
Growth & Income Portfolio
December 17, 1997
Principal
Amount Issuer Value
Short-Term Investments--3.3%
U.S. Treasury Securities--0.0%
$1,500,000 U.S. Treasury Bill, 11/20/97 $1,495,951
----------
(Cost $1,495,951)
Commercial Paper--1.5%
20,000,000 General Electric Capital Corp.,
5.53%, 12/03/97 19,901,689
20,000,000 Household Finance Corp., 5.5%,
11/04/97 19,990,833
Total Commercial Paper 39,892,522
(Cost $39,892,522)
Time Deposit--1.8%
Deutsche Bank, AG
(United States)
47,969,000 5.66%, 11/03/97 47,969,000
(Cost $47,969,000)
Total Short-Term Investments 89,357,473
(Cost $89,357,473)
Total Investments--99.7% $2,655,630,963
(Cost $2,045,760,924)
<PAGE>
Capital Growth Portfolio
December 17, 1997
Shares Issuer Value
Long-Term Investments--95.3%
Common Stock--94.9%
Aerospace--3.4%
462,500 Precision Castparts Corp. $ 27,200,781
325,000 Sundstrand Corp. 17,671,875
----------
44,872,656
Agricultural Production/Services--1.7%
460,000 AGCO Corp. 13,340,000
153,500 Case Corp. 9,181,219
---------
22,521,219
Airlines--1.0%
299,000 Continental Airlines, Inc., Class B* 12,931,750
----------
Automotive--2.5%
500,000 Lear Corp.* 24,031,250
200,000 Tower Automotive, Inc.* 8,375,000
---------
32,406,250
Banking--5.2%
150,000 Cullen/Frost Bankers, Inc. 7,575,000
300,000 Southtrust Corp. 14,400,000
155,320 TCF Financial Corp. 8,833,825
250,000 Washington Mutual Inc. 17,109,375
527,000 Zions Bancorporation 20,487,125
----------
68,405,325
Broadcasting--3.9%
800,000 Comcast Corp., Special Class A 22,000,000
600,000 Groupe AB, SA, ADR (France)* 4,462,500
700,000 Tele-Communications, Inc., Liberty
Media Group, Ser. A* 24,368,750
50,831,250
Business Services--6.5%
234,800 CDI Corp.* 9,215,900
575,000 Equifax, Inc. 17,860,938
300,000 Fiserv, Inc.* 13,425,000
840,000 GTECH Holdings Corp.* 27,090,000
700,000 Interim Services, Inc.* 18,331,250
----------
85,923,088
<PAGE>
Growth & Income Portfolio
December 17, 1997
Shares Issuer Value
Long-Term Investments--(continued)
Chemicals--3.4%
435,000 Cytec Industries, Inc.* $ 21,206,250
195,000 OM Group, Inc. 7,361,250
150,000 Rohm & Haas Co. 12,496,875
94,250 The Carbide/Graphite Group, Inc.* 3,357,656
---------
44,422,031
Computer Software--2.1%
505,000 American Business Information, Inc., Class A* 5,302,500
505,000 American Business Information, Inc., Class B* 6,565,000
584,000 American Management Systems, Inc. 12,629,000
65,000 McAfee Associates, Inc.* 3,233,750
2,500 Netscape Communications Corp.* 82,188
------
27,812,438
Computers/Computer Hardware--4.7%
500,000 EMC Corp., Mass.* 28,000,000
200,000 Quantum Corp.* 6,325,000
400,000 Solectron Corp.* 15,700,000
198,500 Storage Technology Corp.* 11,649,469
----------
61,674,469
Distribution--0.9%
418,000 Applied Industrial Technologies, Inc. 12,148,125
Diversified--0.7%
114,500 American Standard Companies, Inc.* 4,093,375
125,000 Harnischfeger Industries, Inc. 4,921,875
---------
9,015,250
Electronics/Electrical Equipment--3.2%
400,000 Adaptec, Inc.* 19,375,000
238,000 Teleflex, Inc. 8,865,500
250,000 Teradyne Inc.* 9,359,375
25,300 UCAR International, Inc.* 948,750
100,000 Xilinx, Inc.* 3,412,500
---------
41,961,125
Entertainment/Leisure--4.2%
600,000 Carnival Corp., Class A 29,100,000
443,000 MGM Grand, Inc.* 19,436,625
<PAGE>
Growth & Income Portfolio
December 17, 1997
Shares Issuer Value
Long-Term Investments--(continued)
155,000 TCA Cable TV, Inc. $ 6,393,750
---------------
54,930,375
Environmental Services--0.6%
215,000 U.S.A. Waste Services, Inc.* 7,955,000
---------
Financial Services--3.8%
300,000 Bear Stearns Companies, Inc. 11,906,250
300,000 Finova Group, Inc. 13,181,250
410,000 Lehman Brothers Holding, Inc. 19,295,625
99,500 The PMI Group, Inc.* 6,013,531
---------
50,396,656
Health Care/Health Care Services--9.4%
150,000 Beckman Instruments, Inc. 5,906,250
499,000 Beverly Enterprises, Inc.* 7,453,813
309,500 Health Care & Retirement Corp.* 11,702,969
798,500 HEALTHSOUTH Corp.* 20,411,656
150,000 Lincare Holdings, Inc.* 8,043,750
500,000 Sun Healthcare Group, Inc.* 9,937,500
275,000 Sybron International Corp.,
Wisconsin* 11,034,375
990,000 Tenet Healthcare Corp.* 30,256,875
419,000 Universal Health Services, Inc.,
Class B* 18,462,188
123,209,376
Insurance--9.3%
125,000 ACE, Ltd.# 11,617,188
390,000 American Bankers Insurance Group,
Inc. 14,576,250
150,000 CMAC Investment Corp. 8,203,125
200,000 Equitable Companies, Inc. 8,237,500
200,000 MGIC Investment Corp. 12,062,500
350,000 Nationwide Financial Services, Inc.,
Class A* 10,653,125
950,000 Reliance Group Holdings, Inc. 11,993,750
550,000 Reliastar Financial Corp. 20,556,250
299,250 SunAmerica, Inc. 10,754,297
195,000 Transatlantic Holdings, Inc. 13,491,563
----------
122,145,548
<PAGE>
Growth & Income Portfolio
December 17, 1997
Shares Issuer Value
Long-Term Investments--(continued)
Machinery & Engineering Equipment--0.9%
200,000 Applied Power, Inc., Class A $ 12,375,000
---------------
Manufacturing--4.7%
129,000 Dexter Corp. 5,063,250
170,000 Johnson Controls, Inc. 7,628,750
250,000 Kennametal Inc. 12,125,000
300,000 Parker Hannifin Corp. 12,543,750
297,500 Pentair, Inc. 11,490,938
500,000 United Dominion Industries, Ltd. 13,062,500
----------
61,914,188
Media/Advertising--1.1%
200,000 Omnicom Group, Inc. 14,125,000
----------
Office/Business Equipment--1.2%
150,000 Avery Dennison Corp. 5,971,875
500,000 Office Depot, Inc.* 10,312,500
----------
16,284,375
Oil & Gas--3.0%
600,000 Noble Drilling Corp.* 21,337,511
100,000 Sonat, Inc. 4,593,750
198,500 Tidewater, Inc. 13,038,969
----------
38,970,230
Packaging--0.5%
300,000 NV Koninklijke KNP BT, ADR
(Netherlands) 6,832,470
Paper/Forest Products--1.2%
300,000 Boise Cascade Corp. 10,387,500
150,000 Willamette Industries, Inc. 4,959,375
---------
15,346,875
Pipelines--1.6%
299,500 Columbia Gas System, Inc. 21,638,875
----------
Power Conversion--0.8%
397,500 American Power Conversion Corp.* 10,831,875
----------
Real Estate Investment Trust--3.1%
280,000 Beacon Properties Corp. 11,795,000
120,000 Duke Realty Investments, Inc. 2,700,000
200,000 Equity Residential Properties Trust 10,100,000
<PAGE>
Growth & Income Portfolio
December 17, 1997
Shares Issuer Value
Long-Term Investments--(continued)
275,000 FelCor Suite Hotels, Inc. $10,071,875
400,000 Security Capital US Realty, ADR (Luxembourg)* 5,640,000
---------
40,306,875
Retailing--4.5%
220,000 CVS Corp. 13,488,750
250,000 Woolworth Corp. 4,750,000
200,000 General Nutrition Companies, Inc.* 6,300,000
300,000 Kroger Co.* 9,787,500
500,000 Neiman-Marcus Group, Inc. 16,593,750
300,000 Proffitt's, Inc.* 8,606,250
---------
59,526,250
Telecommunications--1.5%
510,000 Aspect Telecommunications
Corp.* 12,240,000
300,000 Nextel Communications
Inc., Class A* 7,875,000
20,115,000
Textiles--2.7%
224,500 Liz Claiborne, Inc. 11,379,340
630,000 Unifi, Inc. 24,215,624
----------
35,594,964
Utilities--1.6%
290,000 Calenergy Co., Inc.* 9,932,500
300,000 Pinnacle West Capital Corp. 10,443,750
----------
20,376,250
Total Common Stock 1,247,800,158
(Cost $923,704,163)
<PAGE>
Growth & Income Portfolio
December 17, 1997
Principal
Amount Issuer Value
Long-Term Investments--(continued)
Corporate Notes & Bonds--0.4%
Electronics--0.4%
$5,000,000 Xilinx Inc. 5.25%, 11/01/02 $4,932,500
(Cost $5,000,000)
U.S. Government Obligation--0.0%
565,000 U.S. Treasury Note, 6.88%,
05/15/06 601,019
(Cost $569,800)
Total Long-Term Investments 1,253,333,677
(Cost $929,273,963)
Short-Term Investments--3.5%
Commercial Paper--1.5%
20,000,000 Ford Motor Credit Co., Discount
Note, 5.50%, 11/04/97 19,990,833
(Cost $19,990,833)
Time Deposit--2.0%
26,430,000 Deutsche Bank AG, (United States) 5.66%,
11/03/97 26,430,000
(Cost $26,430,000)
Total Short-Term Investments 46,420,833
(Cost $46,420,833)
Total Investments--98.8% $1,299,754,510
(Cost $975,694,796)
Index
*--Non income producing security.
#--Security may only be sold to qualified institutional buyers.
ADR--American Depository Receipt.
<PAGE>
Statement of Assets and Liabilities October 31, 1997
<TABLE>
Growth & Capital
Income Growth
Portfolio Portfolio
ASSETS:
<S> <C> <C> <C>
Investment securities, at value (Note 1) $2,655,630,963 $1,299,754,510
Cash 2,918 881
Receivables:
Investment securities sold 18,219,400 20,338,534
Interest and dividends 5,747,296 462,960
Other assets 47,197 51,558
---------------------------
Total assets 2,679,647,774
-------------
1,320,608,443
LIABILITIES:
Payable for investment securities purchased 15,041,996 4,413,524
Accrued liabilities: (Note 2)
Administration fees 118,145 58,859
Investment advisory fees 944,161 470,864
Custodian 36,504 20,624
Other 196,542
-------
171,725
Total Liabilities 16,337,348 5,135,596
-------------------------------
NET ASSETS APPLICABLE TO INVESTORS'
BENEFICIAL INTERESTS $2,663,310,426 $1,315,472,847
===================================
Cost of Investments $2,045,760,924 $975,694,796
===================================
</TABLE>
<PAGE>
Statement of Operations For the year ended October 31, 1997
<TABLE>
Growth & Capital
Income Growth
Portfolio Portfolio
INVESTMENT INCOME:
<S> <C> <C>
Dividend $38,535,143 $11,201,524
Interest 13,181,160 4,663,619
Foreign taxes withheld (227,963) (315,627)
------------------------------
Total investment income 51,488,340 15,549,516
-------------------------------
EXPENSES: (Note 2)
Investment Advisory fees 9,877,868 4,971,835
Administration fees 1,234,733 621,480
Custodian fees 163,385 98,945
Amortization of organization costs (Note 1) 7,990 7,990
Professional fees 102,521
102,519
Trustees fees and expenses 49,389 24,859
Other 170,609 138,574
----------------------------
Total expenses 11,606,495 5,966,202
-------------------------------
Net investment income 39,881,845 9,583,314
-------------------------------
REALIZED AND UNREALIZED GAIN ON
INVESTMENTS:
Net realized gain (loss) on:
Investments 355,973,872 141,951,607
Futures transactions 9,654,862 --
Change in net unrealized
appreciation/depreciation on investments 231,319,779 146,677,178
--------------------------------
Net realized and unrealized gain on
investments 596,948,513 288,628,785
--------------------------------
Net increase in net assets from operations $636,830,358 $298,212,099
=================================
</TABLE>
<PAGE>
Statement of Changes in Net Assets For the Years Ended October 31,
<TABLE>
Growth & Capital
Income Growth
Portfolio Portfolio
1997 1996 1997 1996
- ------------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS:
<S> <C> <C> <C> <C>
Net investment income $ 39,881,845 $ 46,623,872 $ 9,583,314 $ 12,451,547
Net realized gain on
investments and futures
transactions 365,628,734 163,677,802 141,951,607 132,963,967
Change in net unrealized
appreciation/depreciation
on investments and futures 231,319,779 163,237,283 146,677,178 71,608,504
---------------
Increase in net assets
from operations 636,830,358 373,538,957 298,212,099 217,024,018
---------------
TRANSACTIONS IN INVESTORS' BENEFICIAL INTEREST:
Contributions 788,831,006 470,616,913 936,937,099 1,114,082,444
Withdrawals (854,698,879) (605,973,572) (1,009,808,684) (1,260,399,848)
---------------
Net increase (decrease)
from transactions in
investors' beneficial
interests (65,867,873) (135,356,659) (72,871,585) (146,317,404)
---------------
Net increase in net
assets 570,962,485 238,182,298 225,340,514 70,706,614
NET ASSETS:
Beginning of period 2,092,347,941 1,854,165,643 1,090,132,333 1,019,425,719
---------------
End of period $ 2,663,310,426 $ 2,092,347,941 $ 1,315,472,847 $ 1,090,132,333
===============
</TABLE>
<PAGE>
Notes to Financial Statements October 31, 1997 (continued)
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 19, 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 Portfolios' 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 long
futures contracts subject the Portfolio to risk of loss up to the amount
of the value of the contract.
The Portfolios 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, 1997, 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
<PAGE>
Notes to Financial Statements October 31, 1997 (continued)
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).
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, 1997 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 investment 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.
H. Expenses--Expenses directly attributable to a Portfolio are charged
to that Portfolio; other expenses are allocated on another reasonable
basis.
2. Fees and Other Transactions with Affiliates
A. Investment advisory fee--Pursuant to separate Investment Advisory
Agreements, The Chase Manhattan Bank ("Chase" or the "Advisor") acts as
the Investment Advisor to the Portfolios. Chase is a direct wholly-owned
subsidiary of The Chase Manhattan Corporation. As Investment Advisor,
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 advisor,
is the sub-investment advisor 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.
<PAGE>
Notes to Financial Statements October 31, 1997 (continued)
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.
3. Investment Transactions--For the year ended October 31, 1997, purchases and
sales of investments (excluding short-term investments) were as follows:
<TABLE>
GIP CGP
<S> <C> <C>
Purchases (excluding U.S. Government) $1,781,972,894 $863,031,652
Sales (excluding U.S. Government) 1,474,324,449 771,903,060
Purchases of U.S. Government 60,980,313 --
Sales of U.S. Government -- --
</TABLE>
The portfolio turnover rates of GIP and CGP for the year ended were 65% and 67%
respectively. The average commission rates paid per share were $.05990 and
$.0587 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, 1997, included in
Trustees Fees and Expenses in the Statement of Operations, and accrued pension
liability included in other accrued liabilities, respectively, in the Statement
of Assets and Liabilities were as follows:
Accrued
Pension Pension
Expenses Liability
GIP $21,526 $68,330
CGP 11,661 33,265
<PAGE>
Report of Independent Accounts
To the Trustees and Beneficial
Interest Holders of Growth and Income
Portfolio and Capital Growth Portfolio
In our opinion, the accompanying statement 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 Growth and Income Portfolio and Capital Growth Portfolio (the
"Portfolios") at October 31, 1997, the results of each of their operations for
the year then ended, and the changes in each of 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 the our audits, which included
confirmation of securities at October 31, 1997 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 17, 1997
<PAGE>
C-4
C-1
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
(a) Financial Statements.
The Financial Statements for the Maxim Vista Growth &
Income Portfolio and for Growth & Income Portfolio are
included in Part B.
(b) Exhibits.
Items (b)(1)-(10), b(12) and b(13) are incorporated by
reference to Registrant's Pre-Effective Amendment No. 1 to
its Registration Statement dated March 10, 1982.
Item (b)(5) is incorporated by reference to Registrant's
Post Effective Amendment No. 49 dated February 14, 1997 and
item (b)(8) is incorporated by reference to Registrant's
Post-Effective Amendment No. 24 dated March 1, 1993.
Computation of Performance Quotations is included in Part
B.
(11) Written Consents
(a) Written consent of Jorden Burt Berenson & Johnson, LLP
are included herein.
(b) Written consent of Deloitte & Touche, LLP are included
herein.
Item 25. Persons Controlled by or under Common Control with Registrant.
The organizational chart showing persons controlled by or
under common control with Registrant follows this page.
Item 26. Number of Holders of Securities:
(1) (2)
Number of
Record Holders
Title of Class as of October 31, 1997
Common Stock ($.10 par value)
- 1 -
Item 27. Indemnification.
Item 4, Part II, of Registrant's Pre-Effective Amendment No. 1 to
its Registration Statement is herein incorporated by reference.
<PAGE>
ORGANIZATIONAL CHART
Power Corporation of Canada
100% - Marquette Communications Corporation
100% - 171263 Canada Inc.
68.1% - Power Financial Corporation
77% - Great-West Lifeco Inc.
99.5% - The Great-West Life Assurance Company
100% - Great-West Life & Annuity Insurance Company
100% - GW Capital Management, LLC
100% - Financial Administrative Services Corporation
100% - One Corporation
100% - One Health Plan of Illinois, Inc.
100% - One Health Plan of Texas,Inc.
100% - One Health Plan of California, Inc.
100% - One Health Plan of Colorado, Inc.
100% - One Health Plan of Georgia, Inc.
100% - One Health Plan of North Carolina, Inc.
100% - One Health Plan of Washington, Inc.
100% - One Health Plan of Ohio, Inc.
100% - One Health Plan of Tennessee, Inc.
100% - One Health Plan of Oregon, Inc.
100% - One Health Plan of Florida, Inc.
100% - One Health Plan of Indiana, Inc.
100% - One Health Plan of Massachusetts, Inc.
100% - One Orchard Equities, Inc.
100% - Great-West Benefit Services, Inc.
13% - Private Healthcare Systems, Inc.
100% - Benefits Communication Corporation
100% - BenefitsCorp Equities, Inc.
100% - Greenwood Property Corporation
94% - Maxim Series Fund, Inc.*
100% - GWL Properties Inc.
100% - Great-West Realty Investments Inc.
50% - Westkin Properties Ltd.
100% - Confed Admin Services, Inc.
100% - Orchard Series Fund
- --------------
*5.9% New England Life Insurance Company
0.1% The Great-West Life Assurance Company
<PAGE>
Item 28. Business and Other Connections of Investment Adviser.
Part A to Item 5, Part II to Registrant's Post-Effective Amendment
No. 7 to its Registration Statement is herein incorporated by
reference.
Item 29. Principal Underwriter.
Not applicable.
Item 30. Location of Accounts and Records.
Item 7, Part II, of Registrant's Pre-Effective Amendment No. 1 to
its Registration Statement is herein incorporated by reference.
Item 31. Management Services.
Not applicable.
Item 32. Undertakings.
(a) Not applicable.
(b) Not applicable.
(c) Registrant undertakes to furnish each person to whom a prospectus
is delivered with a copy of Registrant's latest annual report to
shareholders upon request and without charge.
<PAGE>
S-4
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company
Act of 1940, the Registrant certifies that it meets all the requirements for
effectiveness of this Registration Statement pursuant to Rule 485(b) and has
duly caused Post-Effective Amendment No. 54 to the Registration Statement to be
signed on its behalf, in the City of Englewood, State of Colorado, on the 29 day
of January, 1998.
MAXIM SERIES FUND, INC.
(Registrant)
By: /s/ J.D. Motz
President (J.D. Motz)
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 54 to the Registration Statement has been signed
below by the following persons in the capacities and on the dates indicated.
Signature and Title
Date
/s/ J.D. Motz
January 29, 1998
Chairman and Director (J.D.
Motz)
/s/ R. Jennings
January 29, 1998
Director (R. Jennings)
/s/ R.P. Koeppe
January 29, 1998
Director (R.P. Koeppe)
/s/ D.L. Wooden
January 29, 1998
Director (D. L. Wooden)
/s/ S. Zisman
January 29, 1998
Director (S. Zisman)
/s/ G.R. Derback
January 29, 1998
Treasurer (G.R. Derback)
<PAGE>
Signature and Title
Date
/s/ G.R. Derback
January 29, 1998
Principal Financial Officer
(G.R. Derback)
/s/ G.R. Derback
January 29, 1998
Principal Accounting Officer
(G.R. Derback)
*By: /s/ B.A. Byrne
January 29, 1998
B.A. Byrne
Attorney-in-fact
pursuant to Powers of Attorney
filed under Post-Effective
Amendment No. 52 to this
Registration Statement.
<PAGE>
SIGNATURES
Growth and Income Portfolio has duly caused this Post-Effective Amendment to the
Registration Statement on Form N-1A of Maxim Series Fund, Inc., to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of New
York and the State of New York, on the 29 day of January, 1998.
GROWTH AND INCOME PORTFOLIO
By: /s/ H.Richard
Vartabedian
H. Richard Vartabedian
Chairman and President
This Registration Statement on Form N-1A of Maxim Series Fund, Inc. has been
signed below by the following persons in the capacities and on the dates
indicated.
/s/ H.Richard Vartabedian
President and
January 29 , 1998
H. Richard Vartabedian
Trustee
Trustee
William J. Armstrong
Trustee
John R.H. Blum
Trustee
Joseph J. Harkins
Trustee
Richard E. Ten Haken
Trustee
Stuart W. Cragin, Jr.
Trustee
Irving Thode
Chairman and
Fergus Reid, III
Trustee
Trustee
W. Perry Neff
Trustee
Roland R. Eppley, Jr.
Trustee
W.D. MacCallan
Trustee
Sarah E. Jones
Trustee
Leonard M. Spalding, Jr.
/s/ H.Richard Vartabedian
Attorney in Fact
January 29, 1998
H. Richard Vartabedian
(11)(a)
CONSENT OF JORDEN BURT BERENSON
AND JOHNSON
January 30, 1998
Maxim Series Fund
8515 East Orchard Road
Englewood, Colorado 80111
Ladies and Gentlemen:
We hereby consent to the use of our name under the caption "Legal
Counsel" for Maxim Series Fund, Inc. in the Prospectus contained in Post-
Effective Amendment No. 54 to the Registration Statement on Form N-1A (File No.
2-75503)filed by Maxim Series Fund, Inc. with the Securities Exchange Commission
under the Securities Act of 1933 and the Investment Company Act of 1940.
Very truly yours,
/s/ Jorden Burt Berenson &
Johnson, LLP
JORDEN BURT BERENSON & JOHNSON,
LLP
(11)(b)
CONSENT OF DELOITTE & TOUCHE, LLP
<PAGE>
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Post-Effective Amendment
No. 54 to Registration Statement No. 2-75503 of Maxim Series Fund, Inc. of our
report dated December 22, 1997 appearing in Part B of the Statement of
Additional Information, which is a part of such Registration Statement, and to
the reference to us under the heading "Independent Auditors for the Fund and
Growth & Income" appearing in the Prospectus, which is also a part of such
Registration Statement.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Denver, Colorado
January 28, 1998
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
Maxim Series Fund, Inc. Vista Growth & Income FDS
</LEGEND>
<CIK> 0000356476
<NAME> Maxim Series Fund, Inc.
<SERIES>
<NUMBER> 23
<NAME> Vista Growth & Income
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Oct-31-1997
<PERIOD-START> Nov-01-1996
<PERIOD-END> Oct-31-1997
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 135,123,323
<RECEIVABLES> 132,385
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 135,255,708
<PAYABLE-FOR-SECURITIES> 139,650
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 62,442
<TOTAL-LIABILITIES> 202,092
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 91,812,742
<SHARES-COMMON-STOCK> 8,140,642
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (1,262)
<ACCUMULATED-NET-GAINS> 16,621,457
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<NET-ASSETS> 135,053,616
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,815,091
<OTHER-INCOME> 0
<EXPENSES-NET> 597,408
<NET-INVESTMENT-INCOME> 1,217,683
<REALIZED-GAINS-CURRENT> 16,621,457
<APPREC-INCREASE-CURRENT> 10,136,096
<NET-CHANGE-FROM-OPS> 27,975,236
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1,241,911)
<DISTRIBUTIONS-OF-GAINS> (6,631,434)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 28,401,339
<NUMBER-OF-SHARES-REDEEMED> (7,753,385)
<SHARES-REINVESTED> 7,873,492
<NET-CHANGE-IN-ASSETS> 48,623,337
<ACCUMULATED-NII-PRIOR> 22,966
<ACCUMULATED-GAINS-PRIOR> 6,631,434
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 597,408
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 597,408
<AVERAGE-NET-ASSETS> 112,959,061
<PER-SHARE-NAV-BEGIN> 1.396
<PER-SHARE-NII> 0.016
<PER-SHARE-GAIN-APPREC> 0.368
<PER-SHARE-DIVIDEND> 0.000
<PER-SHARE-DISTRIBUTIONS> (0.120)
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<PER-SHARE-NAV-END> 1.659
<EXPENSE-RATIO> 0.491
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
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