SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange
Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2)) [X] Definitive Proxy Statement [ ] Definitive Additional
Materials [ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss.
240.14a-12
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Maxim Series Fund, Inc.
(Name of Registrant as Specified in its Charter)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Maxim Series Fund, Inc.
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of Each class of securities to which transaction
applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule
and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
MAXIM SERIES FUND, INC.
8515 East Orchard Road
Englewood, Colorado 80111
October 2, 1998
Dear Participants and Contract Owners:
Enclosed you will find proxy solicitation materials for a special
meeting of shareholders of Maxim Series Fund, Inc. (the "Fund"). As you know,
your variable contract, issued by Great-West Life & Annuity Insurance Company
("GWL&A"), may be funded by purchases of shares of the Fund. You have the right
under the contract to direct GWL&A as to the voting of a proportionate number of
Fund shares consistent with the value of your variable contract.
There are two proposals which you are being asked to consider. Both
Proposals 1 and 2 affect only the MidCap Portfolio. As explained in the enclosed
proxy material, only those Participants and Contract Owners with an investment
corresponding to this Portfolio may vote on these matters.
We urge you to complete the enclosed proxy form and return it as promptly as
possible.
Sincerely,
/s/ Beverly A. Byrne
Beverly A. Byrne
Secretary
Maxim Series Fund, Inc.
<PAGE>
MAXIM SERIES FUND, INC.
Executive Offices 8515 East Orchard Road
Englewood, Colorado 80111
Mailing Address: P.O. Box 1700
Denver, Colorado 80201
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO THE SHAREHOLDERS OF THE MIDCAP PORTFOLIO OF MAXIM SERIES
FUND, INC.:
You are hereby notified that pursuant to the Bylaws of Maxim Series
Fund, Inc. ("the Fund"), a special meeting of its shareholders ("the Meeting")
will be held at 8515 East Orchard Road, Englewood, Colorado on Friday, October
23, 1998 at 10:00 a.m. Mountain Daylight Time for the following purposes:
1. To consider and act upon a proposal to amend the investment
objective of the MidCap Portfolio;
2. To consider and act upon a proposal to change the sub-adviser to the
MidCap Portfolio; and
3. To transact any other business which may properly come before the
Meeting or any adjournment or adjournments thereof.
The Board of Directors has fixed the close of business on September 10,
1998 as the record date for the determination of shareholders entitled to notice
of and to vote at the Meeting or any adjournment thereof. Owners of certain
variable annuity contracts issued by Great-West Life & Annuity Insurance Company
are entitled to provide voting instructions with respect to their proportionate
interest in the MidCap Portfolio.
You are invited and encouraged to attend the Meeting. Shareholders who
do not expect to attend the Meeting in person are requested to complete, date
and sign the enclosed form of Proxy and return it promptly in the envelope
provided for that purpose. The enclosed Proxy is being solicited by the Board of
Directors of the Fund.
By Order of the Board of Directors
/s/ Beverly A. Byrne
Beverly A. Byrne
Secretary
October 2, 1998
YOUR VOTE IS IMPORTANT NO MATTER HOW MANY SHARES YOU OWNED ON THE RECORD DATE.
PLEASE INDICATE YOUR VOTING INSTRUCTIONS ON THE ENCLOSED PROXY CARD. DATE, SIGN
AND RETURN IT IN THE ENVELOPE PROVIDED, WHICH IS ADDRESSED FOR YOUR CONVENIENCE
AND NEEDS NO POSTAGE IF MAILED IN THE UNITED STATES. WE ASK YOUR COOPERATION IN
MAILING YOUR PROXY CARD PROMPTLY.
<PAGE>
PROXY STATEMENT
MAXIM SERIES FUND, INC.
Executive Offices: 8515 East Orchard Road
Englewood, Colorado 80111
Mailing Address: P.O. Box 1700
Denver, Colorado 80201
October 2, 1998
SPECIAL MEETING OF SHAREHOLDERS
Introduction
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Maxim Series Fund, Inc. ("the Fund"), a
Maryland corporation, to be voted at a special meeting of shareholders of the
Fund ("the Meeting"), to be held at 8515 East Orchard Road, Englewood, Colorado,
on Friday, October 23, 1998 at 10:00 a.m. It is anticipated that the approximate
mailing date of this Proxy Statement will be October 2, 1998.
The Board of Directors has fixed the close of business on September 10,
1998 as the record date for the determination of shareholders entitled to notice
of and to vote at the Meeting and at any adjournment thereof (the "Record
Date"). Owners of Contracts ("Contractowners") issued through the Series
Accounts (as that term is defined below) by Great-West Life & Annuity Insurance
Company ("GWL&A") who have allocated contract value to the MidCap Portfolio (the
"Portfolio") as of the Record Date will be entitled to provide voting
instructions with respect to their proportionate interest (including fractional
interests) in the Portfolio. Shares of the Portfolio are sold to the Maxim
Series Account, FutureFunds Series Account and Retirement Plan Series Account of
GWL&A to fund certain variable annuity contracts issued by GWL&A. Shares are
also sold to Pinnacle Series Account to fund certain variable life insurance
contracts issued by GWL&A. The above-mentioned accounts of GWL&A are hereinafter
referred to as the "Series Accounts." In addition, shares of the Portfolio are
sold to the Qualified Series Account, FutureFunds Series Account II of GWL&A and
TNE Series (k) Account to fund certain variable annuity contracts issued by New
England Life Insurance Company. Qualified Series Account, FutureFunds Series
Account II and TNE Series (k) Account are not registered with the Securities and
Exchange Commission and the vote of the owners of contracts issued through
Qualified Series Account, FutureFunds Series Account II and TNE Series (k)
Account are not being solicited.
The investment adviser to the Fund is GW Capital Management, LLC
("GWCM") 8515 East Orchard Road, Englewood, Colorado 80111, a wholly-owned
subsidiary of GWL&A. The current sub-adviser of the Portfolio is Janus Capital
Corporation ("Janus"). GWCM also serves as the administrator for the Fund.
Shares of the Portfolio are owned by the Series Accounts, on behalf of
Contractowners and by The Great-West Life Assurance Company ("Great-West") who
provided initial capital to the Fund. In accordance with its view of present
applicable law, shares attributable to the Portfolio held in the Series Accounts
will be voted based on instructions received from Contractowners who have
allocated contract value to the Portfolio as of the Record Date. The number of
votes which a Contractowner has the right to cast will be determined by applying
his/her percentage interest in the Portfolio (held through the Series Accounts)
to the total number of votes attributable to the Portfolio. In determining the
number of votes, fractional shares will be recognized. Fund shares as to which
no timely instructions are received and Fund shares owned by Great-West,
Qualified Series Account, FutureFunds II Series Account and TNE Series (k)
Account will be voted by GWL&A in proportion to the voting instructions which
are received with respect to all Contracts having value allocated to the
Portfolio. Voting instructions to abstain on any item to be voted upon will be
applied on a pro rata basis to reduce the votes eligible to be cast. A proxy may
be revoked at any time before it is voted by the furnishing of a written
revocation, properly executed, to the Fund's Secretary before the Meeting or by
attending the Meeting. In addition to the solicitation of proxies by mail,
proxies may be solicited by officers and employees of the Fund or GWL&A or its
agents or affiliates personally, by telephone or by telefax.
If the enclosed form of proxy is duly executed and returned in time to
be voted at the Meeting, and not subsequently revoked, all shares represented by
the proxy will be voted in accordance with the instructions marked thereon.
Approval of Proposals 1 and 2 requires the vote of a "majority of the
outstanding voting securities" of the Portfolio, within the meaning of the
Investment Company Act of 1940, as amended (the "1940 Act"). The term "majority
of the outstanding voting securities" is defined under the 1940 Act to mean: (a)
67% or more of the outstanding voting shares present at a meeting of
shareholders, if the holders of more than 50% of the outstanding shares are
present or represented by proxy, or (b) more than 50% of the outstanding shares,
whichever is less.
The Board may seek one or more adjournments of the Meeting to solicit
additional shareholders, if necessary, to obtain a quorum for the Meeting, or to
obtain the required shareholder vote to approve Proposals 1 and 2. An
adjournment would require the affirmative vote of the holders of a majority of
the shares present at the Meeting (or an adjournment thereof) in person or by
proxy and entitled to vote. If adjournment is proposed in order to obtain the
required shareholder vote on a particular proposal, the persons named as proxies
will vote in favor of adjournment those shares which they are entitled to vote
in favor of such proposal and will vote against adjournment those shares which
they are required to vote against such proposal.
The Fund and the Portfolio will pay no expenses associated with this
proxy solicitation. Such expenses will be paid by GWCM. Management of the Fund
knows of no other business, other than that set forth in Proposals 1 and 2 which
will be presented for consideration at the Meeting. If any other matter is
properly presented, it is the intention of the persons named in the enclosed
Proxy to vote in accordance with their best judgment.
Beneficial Ownership
The Portfolio issues common stock with par value of $.10 per share.
Holders of common stock of the Portfolio on the Record Date will be entitled to
one vote for each share held (and fractional vote corresponding to any
fractional shares).
As of the Record Date, no persons other than the Series Accounts,
Qualified Series Account, FutureFunds II Series Account, TNE Series (k) Account
and Great-West were entitled to provide voting instructions with respect to 5%
or more of the Portfolio's outstanding shares and the Directors and executive
officers of the Fund did not own any Portfolio shares.
As of the Record Date, all of the shares of the Portfolio were owned of
record by either (1) Pinnacle Series Account ("Pinnacle"), (2) Maxim Series
Account ("Maxim Account"), (3) FutureFunds Series Account ("FutureFunds"), (4)
Retirement Plan Series Account ("Retirement Plan"), (5) Qualified Series Account
("Qualified Series"), (6) FutureFunds II Series Account ("FutureFunds II"), (7)
TNE Series (k) Account ("TNE (k)"), or (8) Great-West who provided initial
capital to the Fund. The number of shares outstanding for the Portfolio and
shares of the Portfolio held by these respective entities are set forth below.
<TABLE>
- ------------------- ----------------- -------------------- -------------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Total Aggregate Pinnacle Maxim Account FutureFunds Retirement
Shares Plan
- ------------------- ----------------- -------------------- -------------------- ---------------
- ------------------- ----------------- -------------------- -------------------- ---------------
155,341,401 N/A 555,112 31,221,663 N/A
- ------------------- ----------------- -------------------- -------------------- ---------------
</TABLE>
------------------ ----------------- -------------------- --------------------
Qualified Series FutureFunds II TNE (k) Great-West
------------------ ----------------- -------------------- --------------------
------------------ ----------------- -------------------- --------------------
N/A 123,564,626 N/A N/A
------------------ ----------------- -------------------- --------------------
PROPOSAL 1: AMENDMENT OF INVESTMENT OBJECTIVE OF THE PORTFOLIO
The Board of Directors will submit at the Meeting, for approval by the
shareholders having a voting interest in the Portfolio, a proposal to amend the
investment objective of the Portfolio.
The current investment objective of the Portfolio is to seek long-term
growth of capital by normally investing at least 65% of the Portfolio's assets
in securities issued by medium-sized companies. Medium-sized companies for these
purposes are those whose market capitalizations fall within the range of
companies in the S&P MidCap 400 Index.
The proposed new investment objective is to seek long-term capital
appreciation by investing primarily in equity securities of issuers that in the
judgment of the sub-adviser (Ariel Capital Management, Inc. ("Ariel"), if
approved under Proposal 2) are undervalued but demonstrate a strong potential
for growth.
To achieve this new objective, it is proposed that the Portfolio focus
primarily on medium-sized issuers with market capitalizations of approximately
$200 million to $5 billion.
Non-fundamental investment policies corresponding to the new objective
are discussed below.
The Portfolio expects to hold investments for a relatively long period.
It will concentrate on issuers with conservative management, accounting and
financial practices which have demonstrated long-term performance through
various economic cycles. Issuers in cyclical, commodity-based, start-up and
recently deregulated industries will be avoided.
The Portfolio will seek equities securities trading at a below average
price-to-earnings ratio and a low price relative to the sub-adviser's evaluation
of expected sales and earnings growth, book value and assets. Issuers which have
demonstrated high earnings-per-share growth potential and the ability to achieve
a high annual return on equity will be focused upon.
Normally, the Portfolio's net assets would be invested primarily in
equity securities of medium-sized issuers. The Portfolio would also invest in
bonds, other debt obligations or fixed income obligations, such as money market
instruments, for defensive or liquidity purposes or pending the investment of
proceeds from the sale of Portfolio securities.
The Portfolio's assets are currently invested pursuant to a
growth-oriented style. This strategy seeks companies with earnings momentum,
which tend to have high expectations built into their stock prices, thereby
increasing the level of risk in the Portfolio. The portfolio turnover rate of
the Portfolio currently averages in excess of 100%. Under the proposed
investment objective, the Portfolio will follow a value style, seeking companies
that have been misunderstood or ignored by Wall Street, institutional investors
and the media. Ariel believes that stocks of such companies have predictable and
consistent earnings, with recurring revenue streams that are insulated from
broader market conditions. It is anticipated that the new objective and strategy
will result in a low risk investment portfolio, which also has an average
turnover under 25%. Ariel believes that the focus on consistent and predictable
businesses will limit the downside risk of the Portfolio, while taking advantage
of the upside potential inherent in undervalued stocks.
Over the long-term, value stocks have outperformed their growth
counterparts. As such, the switch from growth to a value portfolio would result
in an investment portfolio with lower risk levels, lower turnover, and greater
return potential over the long-term.
In both FutureFunds Series Account and Maxim Series Account the
Portfolio is currently referred to as Growth Fund I. The change in investment
objective described above, if approved, would change the orientation of the
Portfolio from growth to value. As a result, the Portfolio would be referred to
in FutureFunds Series Account and Maxim Series Account as Maxim MidCap Portfolio
if this Proposal is approved.
VOTE REQUIRED
In order to approve this Proposal, the affirmative vote of the holders
of a majority of the outstanding shares of the Portfolio is required. "Majority"
for this purpose and under the 1940 Act 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.
The Board of Directors, including the independent directors, recommends a vote
FOR.
PROPOSAL 2: CHANGE OF INVESTMENT SUB-ADVISER OF THE PORTFOLIO
Background
GWCM, a Colorado limited liability company, is the investment adviser to
the Fund pursuant to an investment advisory agreement dated December 5, 1997
(the "Agreement") which will remain in effect until April 1, 1999. While GWCM is
at all times subject to the direction of the Board of Directors of the Fund, the
Agreement provides that GWCM, subject to the review of the Board of Directors,
is responsible for the actual day-to-day management of the Fund and its
Portfolios.
GWCM is a wholly-owned subsidiary of GWL&A, which is a wholly-owned
subsidiary of Great-West, a Canadian stock life insurance company. Great-West is
a 99.4% owned subsidiary of Great-West Lifeco Inc., which in turn is an 86.4%
owned subsidiary of Power Financial Corporation, Montreal, Quebec. Power
Corporation of Canada, a holding and management company, has voting control of
Power Financial Corporation of Canada. Mr. Paul Desmarais, through a group of
private holding companies, which he controls, has voting control of Power
Corporation of Canada.
GWCM contractually delegated responsibility for the day-to-day
management of the Portfolio to Janus. The sub-advisory agreement with Janus is
dated January 1, 1994. It was most recently submitted to a vote of shareholders
on April 22, 1997. The purpose of the vote was to approve a change in
sub-advisory fees paid to Janus. Based on the fee arrangement with Janus, the
aggregate amount of the fee payable to Janus during 1997 was $1,201,076. The
aggregate amount of fees that would have been payable to Ariel had the proposed
fees been in effect during that time is $752,863. This difference in aggregate
amounts represents a 37% reduction from the amount of fees received by Janus.
However, the overall advisory fee paid by the Fund will remain the same on a
percentage basis. Effective February 5, 1999, the sub-advisory arrangement with
Janus will be terminated by mutual agreement among the Fund, GWCM and Janus. If
the proposal is approved, Ariel will commence acting as sub-adviser to the
Portfolio on February 5, 1999.
Proposal
It is proposed that Ariel be approved as the sub-adviser to the
Portfolio. Ariel is an Illinois corporation, registered as an investment adviser
with the Securities and Exchange Commission. Its principal business address is
307 North Michigan Avenue, Chicago, Illinois 60601. Ariel, among other funds,
also manages the Ariel Appreciation Fund, a registered investment company under
the 1940 Act, and serves as the sub-adviser of the Small-Cap Value Portfolio of
the Fund.
The material terms and provisions of the sub-advisory agreement with
Janus are the same, in all substantive respects, as those to which Ariel will be
subject to if the proposed sub-advisory agreement with Ariel for the Portfolio
is approved.
As compensation for its services to the Portfolio, GWCM receives monthly
compensation at the annual rate of .95% of the average daily net assets of the
Portfolio. GWCM pays all compensation of, and furnishes office space for,
officers and employees of GWCM connected with investment management of all
Portfolios of the Fund, as well as the fees of all directors of the Fund who are
affiliated persons of GWCM. All other expenses incurred in the operation of the
Portfolio, including general administrative expenses, are borne by the
Portfolio. Accounting services are provided for the Portfolio by GWCM and the
Portfolio reimburses GWCM for its costs in connection with such services.
However, GWCM shall pay any expenses of the Portfolio which exceed an annual
rate of 1.10%.
The sub-adviser bears all expenses in connection with the performance of
its services for the Portfolio, such as compensating and furnishing the office
space for its officers and employees connected with the investment and economic
research, trading and investment management of the Portfolio. GWCM is
responsible for compensating the sub-adviser. With respect to the Portfolio,
GWCM currently compensates Janus at the annual rate of .60% on the first $100
million of assets, .55% on the next $400 million of assets and .45% on all
amounts over $500 million of the Portfolio. If the Proposal is approved, GWCM
will compensate Ariel at the annual rate of .50% on the first $25 million of
assets, .40% on the next $75 million of assets and .30% on all amounts over $100
million of the Portfolio. GWCM's fee will effectively increase as the
sub-adviser's fee is decreasing.
If this Proposal is approved, the day-to-day manager of the Portfolio will
be Eric T. McKissack. Mr. McKissack is the Vice Chairman and Co-Chief Investment
Officer of Ariel.
The Fund's Board of Directors has approved and recommended that the
shareholders of the Portfolio approve a new sub-advisory agreement with Ariel
which would be substantially identical to the sub-advisory agreement (except for
its effective and termination date), with Janus. If the shareholders of the
Portfolio approve the sub-advisory agreement with Ariel, the sub-advisory
agreement will become effective February 5, 1999. A copy of the proposed
sub-advisory agreement is attached to this Proxy Statement as Exhibit 1.
Evaluation of the Board of Directors
At a meeting of the Fund's Board of Directors held on August 20, 1998,
the Board (including all Independent Directors) voted to replace Janus as the
sub-adviser to the Portfolio and to approve the agreement pursuant to which
Ariel would serve as sub-adviser to the Portfolio effective as of February 5,
1999 (if this proposal is approved). The Board decided to replace Janus in light
of concerns relating to the Portfolio's investment performance of the last 12
quarters and determined that a new sub-adviser should be retained in an effort
to improve the Portfolio's performance.
Prior to and during the meeting, the Directors requested and received
all information they deemed necessary to reasonably enable them to determine
whether the proposed sub-advisory agreement is in the best interests of the
Portfolio. In considering whether to approve the sub-advisory agreement with
Ariel, the Board of Directors considered such factors as it deemed reasonably
necessary, including (1) the nature and quality of the services to be provided
to the Portfolio by Ariel and the nature of the services provided to the
Portfolio by Janus over the past 4 years; (2) the fairness of the proposed
compensation to Ariel; (3) the financial soundness of Ariel to render all
necessary services to the Portfolio; (4) that the form of the proposed
sub-advisory agreement is the same in all material respects to the existing
agreement with Janus, other than the fee rates to be paid to Ariel as discussed
above; and (5) that the total fees paid by the Portfolio will remain the same.
The Board gave appropriate weight to each of the above factors when considering
approval of the contract.
Based on the Directors' review of the materials they received, and their
evaluation of the factors noted above, the Directors determined that the
proposed sub-advisory agreement pursuant to which Ariel would assume the
day-to-day management of the Portfolio was fair, reasonable and in the best
interests of the Fund, the Portfolio and their shareholders. Accordingly, the
Board, including all of the Independent Directors, unanimously approved the
proposed sub-advisory agreement pursuant to which Ariel will assume the
day-to-day management of the Portfolio and voted to recommend that all of the
Portfolio's shareholders vote to approve the proposed sub-advisory agreement.
Information Concerning the Sub-Adviser
Ariel, 307 North Michigan Avenue, Chicago, Illinois 60601, an Illinois
corporation, is a registered investment adviser with the Securities and Exchange
Commission. GWCM has contracted with Ariel for investment advisory and research
services on behalf of the Small-Cap Value Portfolio. Ariel has the primary
responsibility for providing portfolio investment management services to this
portfolio.
Ariel is a privately held investment management firm. It is controlled by
John W. Rogers, Jr. and owned by its employees.
The principal executive officer of Ariel is John W. Rogers, Jr., whose
principal occupation is his position with Ariel. His address is 307 North
Michigan Avenue, Suite 500, Chicago, Illinois 60601.
The principal executive officers and directors of Ariel are:
<PAGE>
Name Position with Ariel Other Business
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Bert N. Mitchell, Chairman of the Board of Founder, Chairman, Mitchell & Titus,
C.P.A. Trustees LLP, New York, NY; Board Member, BJ's
Wholesale Club, Inc., Natick, MA
Mario L. Baeza Board Member Chairman, CEO, TCW/Latin America
Partners, New York, NY; Managing
Director, Trust Company of the West, New
York, NY; Director, Utendahl Capital
Management, New York, NY; Chairman of
the Board, Dekor International S.A. de
C.V., Mexico; Director, TendTudo
Materiais para Contrucao Ltda., Brazil;
Director, GDC Alimentos, S.A., Brazil
James W. Compton Board Member Chairman, Finance Committee Commonwealth
Edison Company, Chicago, IL; Chairman,
Finance Committee, Unicom Corporation,
Chicago, IL; Directors & Executive
Committee, Highland Community Bank,
Chicago, IL
William C. Audit Committee Chairman Vice President, Controller, Streamline
Dietrich, C.P.A. Mid-Atlantic, Inc., Westwood, MA
Royce N. Flippin, Board Member Director, Program Advancement for MIT,
Jr. Boston, MA; President, Flippin
Associates, East Brunswick, NJ;
Director, Kinematix, Inc., Cambridge,
MA; Director, Radkowsky Thorium Power
Corp., New York, NY
John G. Guffy Board Member Treasurer of Silby, Guffey & Co., Inc.,
Bethesda, MD; Chairman of the Calvert
Social Investment Foundation, Chevy
Chase, MD; Director of the Community
Bankers Mutual Fund, Denver, CO;
Organizing director of the Community
Capital Bank, Brooklyn, NY
Mellody Hobson Board Member Senior Vice President, Director of
Marketing, Ariel Capital Management,
Inc., Chicago, IL; Member, Women's
Business Development Center
Christopher G. Board Member Executive Vice President, Director,
Kennedy Merchandise Mart Properties, Inc.,
Chicago, IL; Director, World Trade
Center Chicago Association, Chicago, IL
Eric T. McKissack, Board Member Co-Chief Investment Officer and Vice
CFA Chairman, Ariel Capital Management, Inc.
and Ariel Mutual Funds, Chicago, IL;
Member, Cook County Economic Development
Advisory Committee, Chicago, IL
James Atkinson Executive Vice President,
Finance & Administration
Franklin Morton Vice President, Director of
Research
John W. Rogers, Jr. President & Co-Chief Director, Aon Corporation, Chicago, IL;
Investment Officer Director, Burrell Communications Group,
Chicago, IL; President of the Board,
Chicago Park District, Chicago, IL;
Director, Urban League, Chicago, IL;
Director, First Chicago NBD Corporation,
Detroit, MI
Roger Schmitt Vice President, Chief
Operating Officer
</TABLE>
<PAGE>
Ariel acts as investment adviser to one other mutual fund that has
similar investment objectives and policies to the Portfolio, for compensation at
the annual advisory fee rate of the corresponding average net asset levels of
that fund set forth in the table below. The table also sets forth the net assets
of that other fund as of December 31, 1997:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Other Fund with Net Assets of Other Annual
Similar Objective Fund Advisory Fee Rate
Ariel Appreciation Fund $241,831, 041 .75%
</TABLE>
Portfolio Transactions and Brokerage
Some of the portfolio transactions with respect to the Portfolio are
placed with broker-dealers who provide Ariel with supplementary investment and
statistical information or furnish market quotations to the Portfolio or other
clients advised by Ariel, as applicable. Although it is not possible to assign
an exact dollar value to those services, they may, to the extent used, tend to
reduce expenses of Ariel, as applicable. The services may also be used by Ariel
in connection with its other advisory accounts and in some cases may not be used
with respect to the Portfolio.
In placing orders for the purchase and sale of portfolio securities,
Ariel, with respect to the Portfolio, will select only brokers which it believes
are financially responsible, will provide efficient and effective services in
executing, clearing and settling an order and will charge commission rates,
which, when combined with the quality for the foregoing services, will produce
best price and execution for the transaction. This does not necessarily mean
that the lowest available brokerage commission will be paid. However, the
commissions are believed to be competitive with generally prevailing rates.
Ariel uses its best efforts to obtain information as to the general level of
commission rates being charged by the brokerage community from time to time and
evaluate the overall reasonableness of brokerage commissions paid on
transactions by reference to such data. In making such evaluation, all factors
affecting liquidity and execution of the order, as well as the amount of capital
commitment by the broker in connection with the order, are taken into account.
Vote Required
As provided under the 1940 Act, approval of the proposed sub-advisory
agreement with Ariel will require the affirmative vote of the majority of the
outstanding shares of the Portfolio, voting separately as a class. Such a
majority is defined in the 1940 Act as the lessor of: (a) 67% or more of the
shares present at such meeting, if the holders of more than 50% of the
outstanding shares of the Portfolio are present or represented by proxy, or (b)
more than 50% of the total outstanding shares of the Portfolio.
THE DIRECTORS, INCLUDING A MAJORITY OF THE INDEPENDENT DIRECTORS, RECOMMEND THAT
SHAREHOLDERS OF THE PORTFOLIO VOTE TO APPROVE THE PROPOSED SUB-ADVISORY
AGREEMENT AMONG THE FUND, GWCM AND ARIEL FOR THE PORTFOLIO.
ADDITIONAL INFORMATION
The Fund will furnish, without charge, a copy of the 1997 annual report and the
June 30, 1998 semi-annual report upon request to: Ms. Yvonne Brady, 8515 East
Orchard Road, Englewood, Colorado 80111; (800) 537-2033, ext. 4932.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Beverly A. Byrne
Beverly A. Byrne
Secretary
October 2, 1998
<PAGE>
Exhibit 1
SUB-ADVISORY AGREEMENT
SUB-ADVISORY AGREEMENT (herein "the Agreement" or "this Agreement") made
this day of , 1998 by and between G W Capital Management, LLC, a Colorado
limited liability company registered as an investment adviser under the
Investment Advisers Act of 1940 ("the Adviser"), Ariel Capital Management, Inc.,
an Illinois corporation registered as an investment adviser under the Investment
Advisers Act of 1940 ("the Sub-adviser"), and Maxim Series Fund, Inc., a
Maryland corporation ("the Fund"), this Agreement embodying the arrangement
whereby the Sub-adviser will act as an investment adviser to the Maxim MidCap
Portfolio of the Fund (the "Portfolio"), in conjunction with the Adviser, as
follows:
ARTICLE I
Preamble
The Fund entered into an Investment Advisory Agreement with the Adviser,
a copy of which is attached hereto as Appendix A. This advisory agreement and
all amendments thereto are hereinafter referred to as "the GW Agreement". In the
GW Agreement, the Adviser agreed to act as adviser to and manager of the Fund.
In that capacity it agreed to manage the investment and reinvestment of the
assets of any portfolio of the Fund in existence or created in the future and to
administer the Fund's affairs. The Adviser wishes to obtain assistance with
respect to its aforesaid advisory and management role with respect to the
Portfolio only to the extent described herein, and the Fund by this Agreement
agrees to such arrangement.
ARTICLE II
Duties of the Sub-adviser
The Adviser hereby employs the Sub-adviser to act with the Adviser as
investment advisers to and managers of the Portfolio, and, subject to the review
of the Board of Directors of the Fund ("the Board"), to manage the investment
and reinvestment of the assets of the Portfolio and to administer its affairs,
for the period and on the terms and conditions set forth in this Agreement. The
Sub-adviser hereby accepts such employment and agrees during such period to
render the services and to assume the obligations herein set forth for the
compensation provided for herein. The Sub-adviser shall for all purposes herein
be deemed to be an independent contractor and shall, unless otherwise expressly
provided or authorized by this Agreement or otherwise, have no authority to act
for or represent the Fund in any way or otherwise be deemed an agent of the
Fund.
A. Investment Sub-Advisory Services. In carrying out its obligations to
assist in managing the investment and reinvestment of the assets of the
Portfolio, the Sub-adviser shall, when appropriate and consistent with the
limitations set forth in Section B hereof:
(a) perform research and obtain and evaluate pertinent economic,
statistical, and financial data relevant to the investment policies of
the Portfolio;
(b) consult with the Adviser and with the Board and furnish to
the Adviser and the Board recommendations with respect to an overall
investment plan for the Portfolio for approval, modification, or
rejection by the Board;
(c) seek out specific investment opportunities for the Portfolio,
consistent with an overall investment plan approved by the Adviser and
the Board;
(d) take such steps as are necessary to implement any overall
investment plan approved by the Board for the Portfolio, including
making and carrying out decisions to acquire or dispose of permissible
investments as set forth in the Fund's Registration Statement,
management of investments and any other property of the Portfolio, and
providing or obtaining such services as may be necessary in managing,
acquiring or disposing of investments, consulting as appropriate with
the Adviser;
(e) regularly report to the Adviser and the Board with respect to
the implementation of any approved overall investment plan and any other
activities in connection with management of the assets of the Portfolio;
(f) communicate as appropriate to the Adviser the purchases and
sales within the Portfolio;
(g) arrange with the applicable broker or dealer at the time of
the purchase or sale of investments or other assets of the Portfolio for
the appropriate delivery of the investment or other asset;
(h) report monthly in writing to the Adviser and report at least
annually in person to the Board with respect to the implementation of
the approved investment plan and any other activities in connection with
management of the assets of the Portfolio;
(i) maintain all records, memoranda, instructions or
authorizations relating to the acquisition or disposition of investments
or other assets of the Portfolio required to be maintained by
Sub-adviser;
(j) arrange with the Investment Operations Department of the
Adviser an administrative process which permits the Adviser to
appropriately reflect in its daily determination of unit values, the
expenses that will be borne directly by the Portfolio and which are
incurred as a result of providing investment management services to the
Portfolio;
(k) vote all shares held by the Portfolio.
In connection with the rendering of the services required to be provided
by the Sub-adviser under this Agreement, the Sub-adviser may, to the extent it
deems appropriate and subject to compliance with the requirements of applicable
laws and regulations, and upon receipt of written approval of the Fund, make use
of its affiliated companies, if any, and their employees; provided that the
Sub-adviser shall supervise and remain fully responsible for all such services
in accordance with and to the extent provided by this Agreement.
It is understood that any information or recommendation supplied by the
Sub-adviser in connection with the performance of its obligations hereunder is
to be regarded as confidential and for use only by the Adviser in connection
with the Portfolio.
The Adviser will continue to provide all of the services described in
the GW Agreement other than the services described above which have been
delegated to the Sub-adviser in this Agreement.
If, in the judgment of the Sub-adviser, the Portfolio would be benefited
by supplemental investment research from other persons or entities, outside the
context of brokerage transactions referred to in Article IV hereof, the
Sub-adviser is authorized to obtain, and pay at its own expense, for such
information.
B. Limitations on Advisory Services. The Sub-adviser shall perform the
services under this Agreement subject to the review of the Adviser and the Board
and in a manner consistent with the investment objectives, policies, and
restrictions of the Fund as stated in its Registration Statement, as amended
from time to time, filed with the Securities and Exchange Commission, its
Articles of Incorporation and Bylaws, as amended from time to time, and the
provisions of the Investment Company Act of 1940, as amended.
The Fund has furnished or will furnish the Sub-adviser with copies of
the Fund's Registration Statement, Prospectus, Articles of Incorporation, and
Bylaws as currently in effect and agrees during the continuance of this
Agreement to furnish the Sub-adviser with copies of any amendments or
supplements thereto before or at the time the amendments or supplements become
effective. The Sub-adviser will be entitled to rely on all documents furnished
by the Fund.
ARTICLE III
Compensation of the Sub-adviser
A. Investment Advisory Fee. The Adviser, and not the Fund, will pay on
the last day of each month as monthly compensation to the Sub-adviser for the
services rendered by the Sub-adviser with respect to the Portfolio, as described
in Article II of this Agreement, based on an annual percentage of the assets of
the Portfolio (the "NAV Fee") as set forth below:
Annual Fee Assets
.50% first $25 million
.40% next $75 million
.30% over $100 million
Payment to the Sub-adviser will be made monthly by the Adviser based on the
average daily net assets of the Portfolio during each month, calculated as set
forth in the then current Registration Statement of the Fund. If this Agreement
is terminated, the payment shall be prorated to the effective date of
termination.
B. Allocation of Expenses. The Sub-adviser shall be responsible for all
expenses incurred in performing the services set forth in Article II hereof.
These expenses include only the costs incurred in providing sub-advisory
services pursuant to this Agreement (such as compensating and furnishing office
space for officers and employees of the Sub-adviser connected with investment
and economic research, trading, and investment management of the Portfolio).
As described in the GW Agreement, the Fund and/or the Adviser pays all
other expenses incurred in the operation of the Portfolio and all of its general
administrative expenses.
ARTICLE IV
Portfolio Transactions and Brokerage
The Sub-adviser agrees to determine the securities to be purchased or
sold by the Portfolio, subject to the provisions of Article II regarding
coordination with and supervision by the Adviser and the Fund's Board of
Directors, and to place orders pursuant to its determinations, either directly
with the issuer, with any broker dealer or underwriter that specializes in the
securities for which the order is made, or with any other broker or dealer
selected by the Sub-adviser, subject to the following limitations.
The Sub-adviser is authorized to select the brokers or dealers that will
execute the purchases and sales of portfolio securities for the Portfolio and
will use its best efforts to obtain the most favorable net results and execution
of the Portfolio' orders, taking into account all appropriate factors, including
price, dealer spread or commission, if any, size of the transaction, and
difficulty of the transaction.
The Sub-adviser is specifically authorized to allocate brokerage and
principal business to firms that provide such services or facilities and to
cause the Fund to pay a member of a securities exchange or any other securities
broker or dealer an amount of commission for effecting a securities transaction
in excess of the amount of commission another member of an exchange, broker or
dealer would have charged for effecting that transaction, if the Sub-adviser
determines in good faith that such amount of commission is reasonable in
relation to the value of the brokerage and research services (as such services
are defined in Section 28(e) of the Securities Exchange Act of 1934) provided by
such member, broker or dealer, viewed in terms of either that particular
transaction or the Sub-adviser's over-all responsibilities with respect to the
accounts as to which it exercises investment discretion (as that term is defined
in Section 3(a)(35) of the Securities Exchange Act of 1934). The Sub-adviser
shall regularly report to the Adviser and the Board with respect to the
brokerage commissions incurred by the Portfolio for the purchases and sales of
its portfolio securities. The Adviser and the Board will review the amount of
such brokerage commissions and consult with the Sub-adviser in that regard.
Subject to the above requirements and compliance with the provisions of
the Investment Company Act of 1940, the Securities and Exchange Act of 1934,
other applicable provisions of law, and the terms of any exemption(s) therefrom,
nothing shall prohibit the Sub-adviser from selecting brokers or dealers with
which it or the Fund are affiliated.
ARTICLE V
Activities of the Sub-adviser
The services of the Sub-adviser to the Fund under this Agreement are not
to be deemed exclusive and the Sub-adviser will be free to render similar
services to others so long as the Sub-adviser fulfills its rights and
obligations under this Agreement. It is understood that directors, officers,
employees and shareholders of the Fund are or may become interested in the
Sub-adviser, as directors, officers, employees or shareholders or otherwise, and
that directors, officers, employees or shareholders of the Sub-adviser are or
may become similarly interested in the Fund, and that the Sub-adviser is or may
become interested in the Fund as shareholder or otherwise.
It is agreed that the Sub-adviser may use any supplemental investment
research obtained for the benefit of the Portfolio in providing investment
advice to its other investment advisory accounts. The Sub-adviser or its
affiliates may use such information in managing their own accounts. Conversely,
such supplemental information obtained by the Sub-adviser for the benefit of the
Sub-adviser or other entities advised by the Sub-adviser may be considered by
and may be useful to the Sub-adviser in carrying out its obligations to the
Fund.
Securities held by the Portfolio may also be held by separate accounts
or other mutual funds for which the Sub-adviser or its affiliates act as an
adviser or sub-adviser, or by the Sub-adviser or its affiliates. Because of
different investment objectives or other factors, a particular security may be
bought by the Sub-adviser or its affiliates or for one or more clients when one
or more clients are selling the same security. If purchases or sales of
securities for the Portfolio or other entities for which the Sub-adviser or its
affiliates act as investment adviser or sub-adviser or for their advisory
clients arise for consideration at or about the same time, the Fund agrees that
the Sub-adviser may make transactions in such securities, insofar as feasible,
for the respective entities and clients in a manner deemed equitable to all. To
the extent that transactions on behalf of more than one client of the
Sub-adviser during the same period may increase the demand for securities being
purchased or the supply of securities being sold, the Fund recognizes that there
may be an adverse effect on price.
It is agreed that, on occasions when the Sub-adviser deems the purchase
or sale of a security to be in the best interests of the Portfolio as well as
other accounts or companies, it may, to the extent permitted by applicable laws
and regulations, but will not be obligated to, aggregate the securities to be so
sold or purchased for other accounts or companies in order to obtain favorable
execution and low brokerage commissions. In that event, allocation of the
securities purchased or sold, as well as the expenses incurred in the
transaction, will be made by the Sub-adviser in the manner it considers to be
most equitable and consistent with its fiduciary obligations to the Portfolio
and to such other accounts or companies.
ARTICLE VI
Effectiveness of the Agreement
The Agreement shall not become effective (and the Sub-adviser shall not
serve or act as investment adviser) unless and until it is approved by the Board
of Directors of the Fund including a majority of directors who are not parties
to this Agreement or interested persons of any such party to this Agreement; and
this Agreement shall come into full force and effect on the date on which all of
these conditions are met.
ARTICLE VII
Term of the Agreement; Amendment
The Agreement shall remain in effect until two years from the date first
above-written and shall continue so long as such continuance is annually
approved thereafter (a) by the vote of a majority of the Board of Directors of
the Fund, or by vote of a majority of the outstanding shares of the Portfolio,
and (b) by the vote of a majority of the members of the Board, who are not
parties to this Agreement or interested persons of any such party, cast in
person at a meeting called for the purpose of voting on such approval. In
connection with such approvals, the Board shall request and evaluate, and the
Sub-adviser shall furnish, such information as may be reasonably necessary to
evaluate the terms of this Agreement. This Agreement:
(a) shall not be terminated by the Sub-adviser without sixty days
prior written notice;
(b) shall be subject to termination, without the payment of any
penalty, by the Board or by vote of a majority of the outstanding
voting securities of the Portfolio, on sixty days written notice
to the Sub-adviser;
(c) may be amended only by a written instrument signed by the Fund,
the Adviser and the Sub-adviser; provided that no material
amendment of this Agreement shall be effective without specific
approval of such amendment by (i) the Board, including a majority
of those directors who are not parties to this Agreement or
interested persons of such a party, cast in person at a meeting
called for the purpose of voting on such approval, and (ii) a
majority of the outstanding shares of the Portfolio; and (d)
shall automatically terminate upon assignment by either party.
ARTICLE VIII
Recordkeeping
The Sub-adviser agrees that all accounts and records which it maintains
for the Portfolio shall be the property of the Fund and that it will surrender
promptly to the designated officers of the Fund any or all such accounts and
records upon request. The Sub-adviser further agrees to preserve for the period
prescribed by the rules and regulations of the Securities and Exchange
Commission all such records as are required to be maintained pursuant to said
rules. The Sub-adviser also agrees that it will maintain all records and
accounts regarding the investment activities of the Fund in a confidential
manner. All such accounts or records shall be made available, within five (5)
business days of the request, to the Fund's accountants or auditors during
regular business hours at the Sub-adviser's offices upon reasonable prior
written notice; provided, however, that the Sub-adviser shall be permitted to
keep such records or copies thereof for such periods of time as are necessary to
comply with the rules and regulations of the Securities and Exchange Commission
or other applicable provisions of state or federal law. In addition, the
Sub-adviser will provide any materials, reasonably related to the investment
sub-advisory services provided hereunder, as may be reasonably requested in
writing by the directors or officers of the Fund or as may be required by any
governmental agency or self-regulatory organization having jurisdiction.
ARTICLE IX
Liability of the Sub-adviser
In the absence of willful misfeasance, bad faith, gross negligence or
reckless disregard of obligations or duties on the part of the Sub-adviser or
its officers, directors, employees, controlling persons, shareholders, and any
other person or entity affiliated with the Sub-adviser, neither the Sub-adviser
nor any of its officers, directors, employees, controlling persons, shareholders
or any other person or entity affiliated with the Sub-adviser shall be subject
to liability to the Fund or to any shareholder or the Adviser for any act or
omission in the course of, or connected with, rendering services pursuant to
this Agreement, including without limitation any error of judgment or mistake of
law or for any loss suffered by the Fund or any shareholder in connection with
the matters to which this Agreement relates. The federal securities laws impose
liabilities under certain circumstances on persons who act in good faith and,
therefore, nothing herein shall in any way constitute a waiver or limitation of
any rights which the Fund or any shareholder of the Fund may have under any
federal securities laws. The Sub-adviser shall not be liable for the acts and
omissions of any independent contractor used by it nor for those of any bank,
trust company, broker or other person with whom or into whose hands any monies,
shares of the Fund, or securities and investments may be deposited or come,
pursuant to the provisions of this Agreement.
<PAGE>
ARTICLE X
Indemnification
Subject to Article IX, the Sub-adviser agrees and undertakes to hold the
Adviser harmless and to indemnify and protect the Adviser from and against any
and all lawsuits or other claims brought against the Adviser as a result of the
activities of the Sub-adviser under this Agreement, including the activities of
the Sub-adviser's officers and directors, agents, employees, controlling
persons, shareholders, and any other person or entity affiliated with the
Sub-adviser or retained by it to perform or assist in the performance of its
obligations under this Agreement; provided, however, that in no event is
Sub-adviser's indemnity in favor of Adviser deemed to protect Adviser against
any liability to which the Adviser would otherwise be subject by reason of
willful misfeasance, bad faith, or gross negligence in the performance of its
duties or by reason of its reckless disregard of its obligations or duties under
this Agreement or the GW Agreement.
The Adviser agrees and undertakes to hold the Sub-adviser harmless and
to indemnify and protect the Sub-adviser from and against any and all lawsuits
or other claims brought against the Sub-adviser as a result of the activities of
the Adviser under this Agreement and the GW Agreement, including the activities
of the Adviser's officers, directors, agents, employees, controlling persons,
shareholders, and any other person or entity affiliated with the Adviser or
retained by it to perform or assist in the performance of its obligations under
this Agreement or the GW Agreement; provided, however, that in no event is
Adviser's indemnity in favor of Sub-adviser deemed to protect Sub-adviser
against any liability to which the Sub-adviser would otherwise be subject by
reason of willful misfeasance, bad faith, or gross negligence in the performance
of its duties or by reason of its reckless disregard of its obligations or
duties under this Agreement.
ARTICLE XI
Agreements, Representations and Indemnification
Related to Disclosure Documents
A. The Sub-adviser will cooperate with the Fund and the Adviser in
connection with the registration or qualification of units of the Portfolio for
offer and sale under the securities or Blue Sky laws of such jurisdictions as
the Fund may request and will cooperate with the preparation of the Disclosure
Documents (as defined in Article XI.C. below). The Fund and the Adviser will
provide the Sub-adviser with copies of all Disclosure Documents prior to
distribution to investors or submission to governmental bodies or
self-regulatory organizations and will incorporate its reasonable comments
relating to the description of, or services to be provided by, the Sub-adviser
or its affiliates, or relating to the description of the investment objectives
and policies of the Portfolio.
B. The Fund and the Adviser, jointly and severally, represent and
warrant to the Sub-adviser that the Disclosure Documents will fully comply with
the provisions of the Securities Act of 1933, as amended, the Securities
Exchange Act of 1934, as amended, the Investment Company Act of 1940, as
amended, and other applicable laws, and the Disclosure Documents at all such
times will not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except that this representation and warranty does not
apply to statements or omissions in the Disclosure Documents made in reliance
upon information furnished to the Fund or the Adviser in writing by the
Sub-adviser which the Fund had informed the Sub-adviser was to be used, or which
the Sub-adviser had acknowledged was to be used, in the particular Disclosure
Document. The Fund and the Adviser will notify the Sub-adviser promptly of the
happening of any event which in the judgment of the Fund or the Adviser makes
any statement made in the Disclosure Documents untrue in any material respect or
requires the making of any changes in the Disclosure Documents in order to make
the statements therein, in the light of circumstances under which they were
made, not misleading in any material respect, except that the Fund and the
Adviser need not make such notification with respect to information in the
Disclosure Documents based upon information furnished in writing to the Fund or
the Adviser by the Sub-adviser which the Fund had informed the Sub-adviser was
to be used, or which the Sub-adviser had acknowledged was to be used, in the
particular Disclosure Document.
The Sub-adviser represents and warrants to the Fund and the Adviser that
the information furnished in writing by it which the Fund has informed it is to
be used, or which the Sub-adviser has acknowledged is to be used, in a
particular Disclosure Document, will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading as required by the
provisions of the Securities Act of 1933, as amended, the Securities Exchange
Act of 1934, as amended, the Investment Company Act of 1940, as amended, and
other applicable laws. The Sub-adviser will notify the Fund and the Adviser
promptly of the happening of any event which in the judgment of the Sub-adviser
makes any statement made in the Disclosure Documents untrue in any material
respect or requires the making of any changes in the Disclosure Documents in
order to make the statements therein, in the light of circumstances under which
they were made, not misleading in any material respect, except that the
Sub-adviser need only make such notification with respect to information in the
Disclosure Documents based upon information furnished in writing to the Fund or
the Adviser by the Sub-adviser which the Fund had informed the Sub-adviser was
to be used, or which the Sub-adviser had acknowledged was to be used, in the
particular Disclosure Statement.
C. Notwithstanding Article X to the contrary, the Fund and the Adviser,
jointly and severally, agree to hold harmless the Sub-adviser, its directors and
officers (each such person a "Sub-adviser Indemnified Party"), and each person,
if any, who controls the Sub-adviser within the meaning of either Section 15 of
the Securities Act of 1933, as amended, or Section 20 of the Securities Exchange
Act of 1934, as amended, from and against any and all losses, claims, damages,
liabilities and expenses (including reasonable costs of investigation) arising
out of or based upon any untrue statement or alleged untrue statement of a
material fact contained in the Fund's Registration Statement or Prospectus, or
any amendment or supplement thereto, or in any preliminary prospectus, any other
communication with investors or any other submissions to governmental bodies or
self-regulatory agencies filed or distributed on or subsequent to the date first
above-written (such documents being herein referred to as "Disclosure
Documents") or arising out of or based upon any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, except insofar as such losses, claims,
damages, liabilities or expenses arise out of or are based upon any such untrue
statement or omission or allegation thereof based upon information furnished in
writing to the Fund or the Adviser by the Sub-adviser which the Fund had
informed the Sub-adviser was to be used, or which the Sub-adviser had
acknowledged was to be used, in the particular Disclosure Document.
If any action or proceeding (including any governmental investigation)
shall be brought or asserted against the Sub-adviser Indemnified Party in
respect of which indemnity may be sought from the Fund and the Adviser, the
Sub-adviser Indemnified Party shall promptly notify the Fund and the Adviser in
writing, and the Fund and the Adviser shall assume the defense thereof,
including the employment of counsel satisfactory to the Sub-adviser and the
payment of all expenses. The Sub-adviser Indemnified Party shall have the right
to employ separate counsel in any such action and to participate in the defense
thereof, but the fees and expenses of such counsel shall be the expense of the
Sub-adviser Indemnified Party unless (a) the Fund or the Adviser has agreed to
pay such fees and expenses or (b) the Fund or the Adviser shall have failed to
assume the defense of such action or proceeding and to employ counsel
satisfactory to the Sub-adviser in any such action or proceeding or (c) the
named parties to any such action or proceeding (including any impleaded parties)
include both the Sub-adviser Indemnified Party and the Fund or the Sub-adviser
Indemnified Party shall have been advised by counsel that there may be one or
more legal defenses available to any of them which are different from or
additional to those available to the Fund or the Adviser (in which case, if the
Sub-adviser Indemnified Party notifies the Fund and the Adviser in writing that
it elects to employ separate counsel at the expense of the Fund and the Adviser,
the Fund and the Adviser shall not have the right to assume the defense of such
action or proceeding on behalf of the Sub-adviser Indemnified Party), it being
understood, however, that the Fund and the Adviser shall not, in connection with
any one such action or proceeding or separate but substantially similar or
related actions or proceedings in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the reasonable fees and
expenses of more than one separate firm of attorneys at any time for the
Sub-adviser Indemnified Party, which firm shall be designated in writing by the
Sub-adviser. Neither the Fund nor the Adviser shall be liable for any settlement
of any such action or proceeding effected without their written consent, but if
settled with their written consent, or if there be a final judgment for the
plaintiff in any such action or proceeding, the Fund and the Adviser agree to
indemnify and hold harmless the Sub-adviser Indemnified Party from and against
any loss or liability by reason of such settlement or judgment. It is understood
that neither the Fund nor the Adviser may settle on behalf of the Sub-adviser
without the consent of the Sub-adviser.
Notwithstanding Article X to the contrary, the Sub-adviser agrees to
indemnify and hold harmless the Fund and the Adviser, their directors and
officers, and each person, if any, who controls the Fund or the Adviser within
the meaning of either Section 15 of the Securities Act of 1933, as amended, or
Section 20 of the Securities Exchange Act of 1934, as amended, to the same
extent as the foregoing indemnity from the Fund and the Adviser to the
Sub-adviser, but only with respect to information furnished in writing by it
which the Fund had informed the Sub-adviser was to be used, or which the
Sub-adviser had acknowledged was to be used, in the particular Disclosure
Document. In case any action or proceeding shall be brought against the Fund or
the Adviser, their directors or officers, or any such controlling persons, in
respect of which indemnity may be sought against the Sub-adviser, the
Sub-adviser shall have the rights and duties given to the Fund and the Adviser,
and the Fund or the Adviser, their directors or officers, or such controlling
persons shall have the rights and duties given to the Sub-adviser, by the
preceding paragraph.
D. The agreements, representations and indemnification contained in this
Article XI shall remain operative and in full force and effect regardless of (a)
any investigation made by or on behalf of the Sub-adviser Indemnified Party or
by or on behalf of the Fund or the Adviser, its directors and officers, or any
person controlling the Fund or the Adviser or (b) any termination of this
Agreement.
<PAGE>
ARTICLE XII
Governing Law
This Agreement shall be construed in accordance with the laws of the
State of Colorado and the applicable provisions of the Investment Company Act of
1940, as amended, and the rules and regulations of the Securities and Exchange
Commission thereunder, including such exemptions therefrom as the Securities and
Exchange Commission may grant. Words and phrases used herein shall be
interpreted in accordance with that Act and those rules and regulations. As used
with respect to the Portfolio, the term "majority of the outstanding shares"
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. To the extent that the applicable laws of the State of
Colorado conflict with applicable provisions of the Investment Company Act of
1940, as amended, or the rules and regulations thereunder, such Act, rules and
regulations shall control.
ARTICLE XIII
Severability
If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Agreement shall
not be affected thereby.
ARTICLE XIV
Counterparts
This Agreement may be executed in any number of counterparts, and by
separate parties hereto in separate counterparts, each of which when so executed
and delivered shall be deemed an original, but all such counterparts together
shall constitute but one and the same instrument.
ARTICLE XV
Sales Literature
The Adviser will not use the Sub-adviser's name in Fund sales literature
without prior review and approval by the Sub-adviser, which will not be
unreasonably withheld or delayed.
ARTICLE XVI
Notices
Any notice under this Agreement shall be in writing and shall be deemed
given (a) upon person delivery, (b) on the first business day after receipted
delivery to a courier service that guarantees next business day delivery, under
circumstances in which such guaranty is applicable or (c) on the earlier of
delivery or three business days after mailing by United States certified mail,
postage and fees prepaid, to the appropriate party at the address set forth
below, or to such other address as the party so notifies the others in writing.
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed
by their respective officials duly authorized, as of the day and year first
above written.
Witness: GW CAPITAL MANAGEMENT, LLC
By:
Name: Name:
Title:
Address: 8515 East Orchard Road
Englewood, CO 80111
Attn: General Counsel
Witness: ARIEL CAPITAL MANAGEMENT, INC.
By:
Name: Name:
Title:
Address: 307 North Michigan Avenue
Chicago, IL 60601
Attn:
Witness: MAXIM SERIES FUND, INC.
By:
Name: Name:
Title:
Address: 8515 East Orchard Road
Englewood, CO 80111
Attn: Secretary
<PAGE>
PROXY
FOR
SPECIAL MEETING OF SHAREHOLDERS OF
THE MIDCAP PORTFOLIO OF THE MAXIM SERIES FUND
The undersigned hereby appoints Beverly A. Byrne and Glen R. Derback, or any of
them, to be the attorneys and proxies of the undersigned at a special meeting of
shareholders of the MidCap Portfolio (the "Portfolio") of the Maxim Series Fund
(the "Fund") to be held at 8515 E. Orchard Rd., Englewood, Colorado, at 10:00
a.m. on October 23, 1998 and at any adjournment thereof, and to represent and
cast the votes held on record by the undersigned on September 10, 1998, upon the
proposals below and as set forth in the Notice of Special Meeting and Proxy
Statement for such meeting.
1) PROPOSAL TO CHANGE THE INVESTMENT OBJECTIVE OF THE PORTFOLIO.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(The Board of Directors recommends a vote FOR)
2) PROPOSAL TO CHANGE THE SUB-ADVISER OF THE PORTFOLIO TO ARIEL
CAPITAL MANAGEMENT, INC.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(The Board of Directors recommends a vote FOR)
3) In the discretion of the Board of Directors, on such other
business which may properly come before the meeting or any
adjournment thereof.
This Proxy will be voted, and voted as specified. IF NO SPECIFICATIONS ARE MADE,
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE BOARD'S RECOMMENDATIONS.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE
FUND.
Dated: , 1998
- ----------------------------------------------
(Signature of Shareholder)
This Proxy may be revoked by the Shareholder (Contractowner) at any time prior
to the Special Meeting.
Please sign and date your Proxy and return promptly in the accompanying
envelope.
