As filed with the Securities and Exchange Commission on February 5, 1999
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 ( )
Post-Effective Amendment No. 58 (X)
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 58 (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 Boros Cicchetti 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):
(x ) immediately upon filing pursuant to paragraph (b) of Rule 485
( ) on ____________________ 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 (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
EXPLANATORY NOTE
This Post-Effective Amendment shall not supersede or affect this Registration
Statement as it applies to the Prospectuses or Statements of Additional
Information for the Money Market, Bond, Stock Index, U.S. Government Securities,
Small-Cap Index, International Equity, Maxim T. Rowe Price Equity/Income, Maxim
INVESCO Small-Cap Growth, Maxim INVESCO ADR, Small-Cap Value, Maxim INVESCO
Balanced, Corporate Bond, Short-Term Maturity Bond, Value Index, Growth Index,
Small-Cap Aggressive Growth, Blue Chip, MidCap Growth, Maxim Vista Growth &
Income, U.S. Government Mortgage, Investment Grade Corporate Bond, Foreign
Equity, Aggressive Profile, Moderately Aggressive Profile, Moderate Profile,
Moderately Conservative Profile, and Conservative Profile Portfolios.
<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>
1. Cover Page Cover Page
2. Synopsis Not Applicable
3. Condensed Financial Information Financial Highlights
4. General Description of Registrant Introduction; MidCap
Portfolio; 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
Form N-1A Item Statement of Additional
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 MidCap Portfolio
14. Management of the Registrant Management of the Fund
15. Control Persons and Principal Holders of Securities Purchase and Redemption of
Shares
16. Investment Advisory and Other Services Management of the Fund
17. Brokerage Allocation Portfolio Transactions and
Brokerage
18. Capital Stock and Other Securities Not Applicable
19. Purchase, Redemption and Price of Securities Purchase and Redemption of
Shares
Being Offered
20. Tax Status Taxes
21. Underwriters Not Applicable
22. Calculation of Yield Quotations of Performance Data Calculation of Yields and
Total Return
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 Common Control Persons Controlled by or
Under Common Control with
Registrant
26. Number of Holders of Securities Number of Holders of
Securities
27. Indemnification Indemnification
28. Business and Other Connections of Investment Adviser Business and Other
Connections of 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>
<PAGE>
3
MAXIM SERIES FUND, INC.
8515 East Orchard Road, Englewood, Colorado 80111
Phone No. (303) 689-3000
Maxim Series Fund, Inc. (the "Fund"), an open-end management investment
company, includes the following diversified investment portfolio: the MidCap
Portfolio (the "Portfolio").
The investment objective of the Portfolio is to provide its shareholders
with long-term capital appreciation by investing primarily in equity securities
of issuers that in the judgment of the Sub-Adviser, Ariel Capital Management,
Inc. (the "Sub-Adviser"), are undervalued but demonstrate a strong potential for
growth. In seeking its objective, the Portfolio attempts to discover relatively
unknown and undervalued companies, primarily through the Sub-Adviser's intensive
research. The Portfolio focuses primarily on medium-sized issuers with market
capitalizations of approximately $200 million to $5 billion.
This Prospectus sets forth concisely the information about the Portfolio
that prospective investors ought to know before investing.
Additional information about the Fund has been filed with the Securities
and Exchange Commission and is available upon request, without charge by calling
or writing the Fund. The "Statement of Additional Information" bears the same
date as this Prospectus and is incorporated by reference into this Prospectus in
its entirety.
Mutual fund shares are not deposits or obligations of, or guaranteed by,
any Depository institution. Shares are not insured by the FDIC, the Federal
Reserve Board, or any other agency, and are subject to investment risk,
including the possible loss of principal.
==============================================================================
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THIS PROSPECTUS SHOULD BE READ
AND RETAINED FOR FUTURE REFERENCE.
GW CAPITAL MANAGEMENT, LLC
Investment Adviser
The date of this Prospectus is February 5, 1999
<PAGE>
MID-CAP PORTFOLIO
FINANCIAL HIGHLIGHTS
<TABLE>
Selected data for a share of capital stock of the portfolio for the six months
ended June 30, 1998 and the years ended December 31, 1997, 1996, 1995 and 1994
is as follows:
Six Months
Ended June 30, Year Ended December 31,
----------------------------------------------------------
1998** 1997 1996 1995 1994
----------------- ------------- ------------ ------------- -----------
(A)
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Per$od 1.5532 $ 1.4327 $ 1.3538 $ 1.1003 $ 1.0000
Income From Investment Operations
Net Investment Income (Loss) (0.0056) (0.0083) 0.0018 0.0076
Net Short-Term Realized Gain (Loss) 0.0669 (0.0437) 0.0299
Net Long-Term Realized and Unrealized 0.1986 0.2257 0.089 0.2594 0.1003
gain ----------------- ------------- ------------ ------------- -----------
Total Income From Investment Operations 0.2599 0.182 0.0807 0.2911 0.1079
Less Distributions
From Net Investment Income and Net
Short-Term Realized Gains (0.0317) (0.0076)
From Net Long-Term Realized Gains (0.0288) (0.0615) (0.0018) (0.0059)
----------------- ------------- ------------ ------------- -----------
Total Distributions (0.0288) (0.0615) (0.0018) (0.0376) (0.0076)
----------------- ------------- ------------ ------------- -----------
Net Asset Value, End of Period $ 1.7843 $ 1.5532 $ 1.4327 $ 1.3538 $ 1.1003
----------------- ============= ============ ============= ===========
Total Return 16.93%+ 12.95% 5.96% 26.50% 10.86%
Net Assets, End of Period $ 272,920,384 $ 233,939,911 $ 214,710,803 $ 148,264,194 $ 81,088,654
Average Commission Rate Paid
per Share Bought or Sold $ 0.0375 $ 0.0413 $ 0.0461
Ratio of Expenses to Average Net Assets# 1.04%* 1.06% 1.07% 1.10% 1.07%
Ratio of Net Investment Income
to Average Net Assets (0.69)%* (0.51)% (0.66)% 0.13% 1.26%
Portfolio Turnover Rate 19.73% 139.74% 80.31% 167.21% 166.12%
(A) The portfolio commenced operations January 3, 1994. + Performance is for the
period beginnging on January 1, 1998, and ending on June 30, 1998, is not
annualized and, for the full year, may not be at the same rate. *Annualized
**Unaudited #Percentages are shown net of expenses reimbursed by The Great-West
Life Assurance Company or GW Capital Management, LLC.
</TABLE>
<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 may 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 Portfolio. GW
Capital also serves as administrator of the Fund. The Sub-Adviser of the
Portfolio is Ariel Capital Management, Inc., 307 North Michigan Avenue, Chicago,
Illinois 60601.
MIDCAP PORTFOLIO
The investment objective of the Portfolio is to provide its shareholders
with long-term capital appreciation. The Portfolio seeks to achieve its
objective by investing primarily in equity securities of issuers that in the
judgment of the Sub-Adviser are undervalued but demonstrate a strong potential
for growth. In seeking its objective, the Portfolio attempts to discover
relatively unknown and undervalued companies, principally through the
Sub-Adviser's own intensive research. The Portfolio focuses primarily on
companies with market capitalizations of approximately $200 million to $5
billion emphasizing medium sized companies.
The Portfolio will take reasonable risks in seeking to achieve its
investment objective. There is no assurance that the Portfolio will achieve its
objective.
The Sub-Adviser seeks issuers that provide quality products or services
and have not attracted significant attention from securities analysts,
institutional investors and the media. In order to take advantage of the
anticipated growth of its investments, the Portfolio expects to hold investments
for a relatively long period. Occasionally, however, securities purchased on a
long-term basis may be sold within 12 months after purchase in light of a change
in the circumstances of a particular company or industry, or in general market
or economic conditions. The Portfolio avoids issuers in cyclical,
commodity-based, start-up and recently deregulated industries.
The Sub-Adviser seeks issuers with conservative management and
accounting and financial practices which have demonstrated long-term performance
through various economic cycles. Such an issuer's balance sheet should show a
favorable cash position, limited debt and a reasonable amount of working
capital. The Sub-Adviser looks for equity securities trading at below average
price-to-earnings ratios and at a discount to their private market value - what
a rational buyer would pay for an entire business were that business to be sold.
The Portfolio is primarily interested in issuers which have demonstrated high
earnings-per-share growth potential and the ability to achieve a high annual
return on equity.
The Portfolio currently observes the following operating policies, which
may be changed without shareholder approval: (1) the Sub-Adviser actively seeks
companies that achieve excellence in both financial return and environmental
soundness, selecting issuers that take positive steps toward preserving our
environment and avoiding companies with poor environmental records; and (2) the
Portfolio will not make investments in issuers whose primary source of revenue
derives from the production of tobacco products; (3) the Portfolio will not
invest in issuers primarily engaged in the manufacture of weapons systems, the
production of nuclear energy, or the manufacture of equipment to produce nuclear
energy. It is believed that there are long-term benefits inherent in an
investment philosophy that demonstrates concern for the environment, human
rights, economic priorities and international relations.
The Sub-Adviser has engaged the services of Franklin Research and
Development Corporation of Boston ("Franklin") to provide environmental
screening for all issuers selected for the Portfolio. Franklin provides
information and opinions on the companies' environmental histories. However,
Franklin does not make recommendations or provide investment advice concerning
the purchase or sale of securities for the Portfolio.
Although any investment in securities carries risk, the conservative
approach of the Portfolio is designed to maximize growth in relation to the
risks assumed. Since the securities in which the Portfolio seeks to invest may
be less actively traded than the securities of larger issuers, those securities
may not always participate in market rallies to the same extent as more widely
known securities. Conversely, these securities may be expected to be somewhat
less vulnerable during market downturns. There is also somewhat less readily
available information concerning these securities. The issuers of these
securities tend to have a relatively higher percentage of insider ownership.
Although there is no predetermined percentage of assets to be invested
in stocks, bonds, or money market instruments, the Portfolio will normally
invest at least 80% of the value of its net assets in equity securities. Such
securities will include common stocks, convertible debt securities and preferred
stocks. The Portfolio may invest up to 20% of the value of its assets in bonds,
other debt obligations or fixed-income obligations, such as money market
instruments, for liquidity purposes or pending the investment of the proceeds
from the sale of portfolio securities. The Portfolio may also invest in
fixed-income obligations, including money market instruments, as part of a
temporary defensive posture, in which case there is no limitation on the
percentage of its assets that may be invested in fixed-income obligations.
OTHER INVESTMENT PRACTICES
The Portfolio 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.
The Portfolio may invest in debt obligations. Debt obligations in which
the Portfolio may invest may be long-term, intermediate-term, short-term or any
combination thereof, depending on the Sub-Adviser's evaluation of current and
anticipated market patterns and trends. Such debt obligations consist of the
following: corporate obligations which at the date of investment are rated
within the four highest grades established by Moody's Investor Services, Inc.
(Aaa, Aa, A, Baa), or by Standard & Poor's Corporation (AAA, AA, A, or BBB), or,
if not rated, are of comparable quality as determined by the sub-adviser (bonds
rated Baa or BBB are considered medium grade obligations and have speculative
characteristics); obligations issued or guaranteed by as to principal by the
United States Government or its agencies or instrumentalities; certificates of
deposit, time deposits, and bankers' acceptances of U.S. banks and their
branches located outside the U.S. and of U.S. branches of foreign banks,
provided that the bank has total assets of at least one billion dollars or the
equivalent in other currencies; commercial paper which at the date of investment
is rated A-2 or better by Standard & Poor's, Prime-2 or better by Moody's or, if
not rated, is of comparable quality as determined by the sub-adviser; and any of
the above securities subject to repurchase agreements with recognized securities
dealers and banks.
In the event any debt obligation held by the Portfolio is downgraded
below the lowest permissible grade, the Portfolio is not required to sell the
security, but the sub-adviser will consider the downgrade in determining whether
to hold the security. In any event, the Portfolio will not purchase or, if
downgraded, continue to hold debt obligations rated below the lowest permissible
grade if more than 5% of the Portfolio's net assets would be invested in such
debt obligations (including, for purpose of this limitation, convertible debt
securities rated below Baa or BBB, or if unrated, of comparable quality).
The Portfolio may not borrow amounts in excess of 10% of the Portfolio's
total assets taken at market value at the time of the borrowing and then only
from banks as a temporary measure for extraordinary or emergency purposes.
The Portfolio will not purchase illiquid securities if such a purchase
would cause more than 15% of the Portfolio's total assets to be invested in such
securities. "Illiquid Securities" are securities that may not be sold in the
ordinary course of business within seven days at approximately the price used in
determining the net asset value of the Portfolio. This restriction applies to
securities for which a ready market does not exist, such as restricted
securities, but does not necessarily encompass all restricted securities.
The Portfolio may invest in repurchase agreements. A repurchase
agreement is an arrangement under which the Portfolio buys securities and the
seller (a bank or securities dealer that the Sub-Adviser believes to be
financially sound) simultaneously agrees to repurchase the securities within a
specified time at a higher price that includes an amount representing interest
on the purchase price. In the event of a default by a seller of a repurchase
agreement, the Portfolio could experience delays in liquidating the underlying
securities and potential losses. The Portfolio will normally invest in
repurchase agreements maturing in less than seven days. Repurchase agreements
maturing in more than seven days are deemed to be illiquid and thus subject to
the Portfolio's limitations on investments in illiquid securities described
above.
The Portfolio will not purchase the security of any issuer (other than
cash items or U.S. Government Securities) if such purchase would cause the
Portfolio's holdings of that issuer to amount to more than 5% of the Portfolio's
total assets at the time of purchase.
The Portfolio will not concentrate 25% or more of its total assets in any
one industry. U.S. Government Securities are not subject to this limitation.
The investment restrictions set forth in the Statement of Additional
Information as fundamental policies and the Portfolio's investment objective may
not be changed without a shareholder vote. All other investment policies of the
Portfolio are not fundamental and may be changed by the Board of Directors. Any
percentage restrictions apply at the time of investment without regard to later
increases or decreases in the values of securities or total or net assets.
MANAGEMENT OF THE FUND
Overall responsibility for management and supervision of the Fund rests
with the Fund's Directors. 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.
Investment Adviser of the Fund
GW Capital, located at 8515 East Orchard Road, Englewood, Colorado
80111, serves as the Fund's investment adviser. GW Capital is a wholly owned
subsidiary of GWL&A 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 nonregistered, 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 is responsible for managing the Portfolio in accordance
with its stated investment objective and policies. With respect to the
Portfolio, GW Capital is 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
Portfolio. GW Capital pays all compensation of, and furnishes office space for,
officers and employees of GW Capital connected with investment management of the
Portfolio, as well as the fees of all directors of the Fund who are affiliated
persons of GW Capital or any of its subsidiaries. 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 GW Capital and the
Portfolio reimburses GW Capital for its costs in connection with such services.
GW Capital receives monthly compensation at the annual rate of 0.95% for the
services it provides with respect to the Portfolio. GW Capital has agreed to pay
any expenses of the Fund which exceed an annual rate of 1.10% of the average
daily net assets of the Portfolio.
The services provided to the Fund by GW Capital depend on the smooth
functioning of its computer system. Many computer software systems in use today
cannot distinguish the year 2000 from the year 1900 because of the way dates are
encoded and calculated. That failure could have a negative impact on the
handling of securities trades, pricing and account services. The investment
adviser has been actively working on necessary changes to its computer systems
to deal with the year 2000 and expects that its systems will be adapted in time
for that event. However, there can be no guarantee that there will not be any
adverse impact on the Fund or the Portfolio.
Sub-Adviser of the Portfolio
GW Capital contractually delegated responsibility for daily managing the
investment and reinvestment of assets of the Portfolio to the Sub-Adviser,
subject generally to review and supervision of GW Capital and the Board of
Directors of the Fund. The Sub-Adviser bears all expenses in connection with the
performance of its services, such as compensating and furnishing office space
for its officers and employees connected with investment and economic research,
trading and investment management of the Portfolio.
The Sub-Adviser is a privately held minority-owned money manager
registered with the Securities and Exchange Commission as an investment adviser.
It is an Illinois corporation with its principal business address at 307 North
Michigan Avenue, Chicago, Illinois 60601. The day-to-day manager for the
Portfolio is Eric T. McKissack. Mr. McKissack joined the Sub-Adviser in 1986 and
serves as Vice Chairman and Co-Chief Investment Officer. Prior to 1995, he
served as the Sub-Adviser's Senior Vice President, Director of Research.
GW Capital is responsible for compensating the Sub-Adviser, which
receives monthly compensation from GW Capital at the annual rate of 0.50% on the
first $25 million of assets, 0.40% on the next $75 million of assets and 0.30%
on all amounts over $100 million of the Portfolio.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Dividends from the investment income, if any, of the Portfolio will be
declared and reinvested semi-annually. Distributions of net realized capital
gains, if any, are declared in the fiscal year in which they have been earned
and are reinvested in additional shares of the Fund 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
(the "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
the Series Accounts of GWL&A and MetLife. 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 Portfolio 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 Portfolio's net asset value per share is determined as of 4:00 p.m.,
EST/EDT once daily Monday through Friday, except on holidays on which the New
York Stock Exchange is closed.
Net asset value of a Portfolio share is computed by dividing the value
of the net assets of the Portfolio by the total number of Portfolio shares
outstanding. Portfolio securities that are listed on an established securities
exchange or on the NASDAQ National Market System are valued at the last sale
price as of the close of business on the day the securities are being valued,
or, lacking any sales, at the mean between closing bid and asking price.
Securities traded in the over-the-counter market are valued at the mean between
the bid and asked prices or yield equivalent as obtained from one or more
dealers that make markets in the securities. Portfolio securities that are
traded both in the over-the-counter market and on an exchange are valued
according to the broadest and most representative market. Securities and assets
for which market quotations are not readily available are valued at fair value
as determined in good faith by or under the direction of the Board of Directors,
including valuations furnished by a pricing service that may be retained by the
Fund.
Market quotations of foreign securities in foreign currency are
translated to U.S. dollars at the prevailing rate of exchange. Securities for
which market quotations are not readily available, and other assets, are valued
at fair value as determined in good faith by the Board of Directors. Such a
determination may take into account, for example, quotations by dealers or
issuers for securities of similar type, quality, and maturity, or valuations
furnished by a pricing service retained by the Fund.
Money market securities held by the Fund with 60 days or less remaining
to maturity are valued on an amortized cost basis, which involves valuing a
portfolio instrument at its cost initially and thereafter assuming a constant
amortization to maturity of any discount or premium, regardless of the impact of
fluctuating interest rates on the market value of the instrument. While this
method provides certainty in valuation, it may result in periods during which
value, as determined by amortized cost, is higher or lower than the price the
Fund would receive if it sold the security.
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 and MetLife, and The Great-West
Life Assurance Company, 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.
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 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 Fund's past performance
only and is no indication of future performance.
The Fund may include total return in advertisements or other sales
materials regarding Portfolio. When the Fund advertises the total return of the
Portfolio, it will usually be calculated for one year, five years, and ten years
or some other relevant period if the Fund has not yet been in existence for at
least 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 Portfolio
will be affected by charges and fees at the separate account level.
The 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 Portfolio
share (reduced by any dividend expected to be paid shortly out of Portfolio
income) on the last day of the period. For information on the method used to
calculate the yield and total return, see the Statement of Additional
Information.
Average Annual Total Return (For the Period Ended December 31, 1998)**
One Year Since Inception+
34.79% 18.58%
**The total return calculation assumes the full redemption of the Portfolio at
the end of the period for which the calculation was made. These returns also
reflect annual returns over the period indicated. For information on the method
used to calculate the returns shown below, please see the Statement of
Additional Information. The performance shown reflects only past performance, it
is not intended to be an indication, prediction or guarantee of future
performance. Total return information, however, may be of limited use for
comparative purposes because it does not reflect charges imposed at the Series
Account level, which, if included, would decrease the total return.
+The Portfolio was established effective January 3, 1994. On February 5, 1999,
the Portfolio changed its investment objective and sub-adviser.
GENERAL INFORMATION
Reports to Shareholders
The fiscal year of the Portfolio ends on December 31 of each year. The
Fund will send to its shareholders, at least semi-annually, reports showing the
performance of the Portfolio and other information. An annual report, containing
financial statements, audited by independent certified public accountants, will
be sent to shareholders each year.
<PAGE>
Custodian of the Fund
Bank of New York, New York City ("BONY"), acts as custodian of the
Fund's assets. BONY has custody of the Fund's assets held within and outside the
United States. BONY holds the Fund's assets in safekeeping and collects and
remits the income thereon subject to the instructions of the Fund.
Independent Auditors for the Fund
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.
Legal Counsel for the Fund
Jorden Burt Boros Cicchetti 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.
MidCap 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 Road, Englewood, Colorado 80111 or by calling the Fund at (303)
689-3000.
15
-----------------------------------------------
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 5, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
Page
<S> <C>
Sale of Shares.........................................................................1
The Fund Portfolios..................................................................1
Description of Investment Securities......................................1
Information About Securities Ratings....................................7
Investment Limitations.....................................................9
Lending of Portfolio Securities...........................................11
Management of the Fund..........................................................12
The Fund....................................................................12
Compensation.....................................................13
The Investment Adviser..........................................13
Advisory Fee.......................................................14
Sub-Adviser........................................................14
Purchase and Redemption of Shares..............................................14
Calculation of Yield................................................................14
Calculation of Total Return........................................................14
</TABLE>
<PAGE>
SALE OF SHARES
Shares of Maxim Series Fund, Inc. (the "Fund") are sold to FutureFunds Series
Account, FutureFunds II Series Account, Qualified Series Account, Retirement
Plan Series Account and Maxim Series Account, which are separate accounts
established by Great-West Life & Annuity Insurance Company ("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 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 "MidCap Portfolio" in the Prospectus.
The Fund commenced operations as a management investment company in 1982. The
MidCap Portfolio (the "Portfolio") was added effective January 3, 1994.
Description of Investment Securities
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. Bankers' Acceptance. A bankers' acceptance is a time draft drawn on a
commercial bank by a borrower, usually in connection with international
commercial transactions (to finance the import, export, transfer or
storage of goods). The borrower is liable for payment as well as the
bank, which unconditionally guarantees to pay the draft at its face
amount on the maturity date. Most acceptances have maturities of six
months or less and are traded in secondary markets prior to maturity.
The Portfolio generally will not invest in acceptances with maturities
exceeding 7 days where to do so would tend to create liquidity problems.
3. Certificate of Deposit. A certificate of deposit generally is a
short-term, interest bearing negotiable certificate issued by a
commercial bank or savings and loan association against funds deposited
in the issuing institution.
4. Collateralized Mortgage Obligations. A Collateralized Mortgage
Obligation ("CMO") is a bond which uses certificates issued by the
Government National Mortgage Association, or the Federal National
Mortgage Association or the Federal Home Loan Mortgage Corporation as
collateral in trust. The trust then issues several bonds which will be
paid using the cash flow from the collateral. The trust can redirect
cash flow temporarily, first paying one bond before other bonds are
paid. The trust can also redirect prepayments from one bond to another
bond, creating some stable bonds and some volatile bonds. The proportion
of principal cash flow and interest cash flow from the collateral
flowing to each bond can also be changed, creating bonds with higher or
lower coupons to the extreme of passing through the interest only to one
bond and principal only to another bond. Variable rate or floating
coupon bonds are also often created through the use of CMO's.
5. Commercial Paper. Commercial paper is a short-term promissory note issued by
a corporation primarily to finance short-term credit needs.
6. Covered Options. There are two types of covered options. A covered call
option gives the purchaser the right to buy the underlying securities
from the seller at a stated exercise price. In writing a covered call
option, the seller must own the underlying securities subject to the
option (or comparable securities satisfying the cover requirements of
securities exchanges). A covered put option gives the purchaser the
right to sell the underlying securities at a stated price. In the case
of a covered put option, the seller will hold cash and/or high-grade
short-term debt obligations or liquid equity securities equal to the
price to be paid if the option is exercised. The seller will be
considered to have covered a put or call option if and to the extent
that it holds an option that offsets some or all of the risk of the
option it has written. Combinations of covered puts and calls may be
written on the same underlying security.
Put options may be purchased to protect its 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.
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.
Call options may be purchased to hedge against an increase in the price
of securities that the purchaser wants ultimately 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.
Special risks are presented by internationally-traded options. Because
of time differences, and because different holidays are observed in
different countries, foreign options markets may be open for trading
during hours or on days when U.S. markets are closed. As a result,
option premiums may not reflect the current prices of the underlying
interest in the United States.
7. Dealer (Over-the-Counter) Options. A dealer option is an option which is
not traded on an exchange and may be exercised through the dealer from
whom it had purchased the option. If the Portfolio were to purchase a
dealer option, failure by the dealer to perform on the option would
result in the loss of the premium paid as well as loss of the expected
benefit of the transaction.
Dealer options do not have a continuous liquid market as do
exchange-traded options. Consequently, the value of a dealer option may
be realized only be 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. A dealer option may be liquidated at a favorable
price at any time prior to expiration. In the event of an insolvency of
the contra party, 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 the 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
options 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. If the SEC changes its
position on the liquidity of dealer options, the Portfolio will change
its treatment of such instrument accordingly.
8. Eurodollar Certificate 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.
9. Floating Rate Note. A floating rate note is debt issued by a corporation
or commercial bank that is typically several years in term but has a
resetting of the interest rate on a one to six month rollover basis.
10. Forward Contracts. A forward contract is an agreement between two parties
in which one party is obligated to deliver a stated amount of a stated
asset at a specified time in the future and the other party is obligated to
pay a specified amount for the assets at the time of delivery. When used
with foreign currency exchange transactions, 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. Forward contracts generally are traded
in an interbank market conducted directly between traders (usually large
commercial banks) and their customers. Unlike futures contracts, which are
standardized contracts, forward contracts can be specifically drawn to meet
the need of the parties that enter into them. The parties to a forward
contract may agree to offset or terminate the contract before its maturity,
or may hold the contract to maturity and complete the contemplated
exchange.
11. Hybrid Instruments. Hybrid instruments have recently been developed and
combine the elements of futures contracts or options with those of debt,
preferred equity or a depository instrument. Often these hybrid instruments
are indexed to the price of a commodity, particular currency, or a domestic
or foreign debt or equity securities index. Hybrid instruments may take a
variety of forms, including, but not limited to, debt instruments with
interest or principal payments or redemption terms determined by reference
to the value of a currency or securities index at a future point in time,
preferred stock with dividend rates determined by reference to the value of
a currency, or convertible securities with the conversion terms related to
a particular commodity. The risks associated with hybrid instruments
reflect a combination of the risks of investing in securities, options,
futures and currencies, including volatility and lack of liquidity.
Further, the prices of the hybrid instrument and the related commodity or
currency may not move in the same direction or at the same time.
12. Index Futures Contracts. 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 security in the index is made. When purchasing an index
futures contract or selling index futures, (1) a segregated account
consisting of cash, U.S. Government securities, or other liquid
high-grade debt securities or liquid equity securities must be
maintained with the custodian bank (and marked to market daily) which,
when added to any amounts deposited with a futures commission merchant
as margin, are equal to the market value of the futures contract; or (2)
the Portfolio must "cover" its position.
13. Interest Rate Transactions. Interest rate swaps and interest rate caps
and floors are types of hedging transactions which are utilized to
attempt to protect the Portfolio against and potentially benefit from
fluctuations in interest rates and to preserve a return or spread on a
particular investment or portion of the Portfolio's holdings. These
transactions may also be used to attempt to protect against possible
declines in the market value of the Portfolio's assets resulting from
downward trends in the debt securities markets (generally due to a rise
in interest rates) or to protect unrealized gains in the value of the
Portfolio's holdings, or to facilitate the sale of such securities.
Interest rate swaps involve the exchange with another party of
commitments to pay or receive interest; e.g., an exchange of fixed rate
payments for variable rate payments. The purchase of an interest rate
cap entitles the purchaser, to the extent that a specified index exceeds
a predetermined interest rate, to receive payments of interest on a
notional principal amount from the party selling such interest rate cap.
The purchase of an interest rate floor entitles the purchaser, to the
extent that a specified index falls below a predetermined interest rate,
to receive payments of interest on a notional principal amount from the
party selling such interest rate floor.
The successful utilization of interest rate transactions depends on the
Portfolio manager's ability to predict correctly the direction and
degree of movements in interest rates. If the Portfolio manager's
judgment about the direction or extent of movement in interest rates is
incorrect, the Portfolio's overall performance would be worse than if it
had not entered into such transactions. For example, if the Portfolio
purchases an interest rate swap or an interest rate floor to hedge
against the expectation that interest rates will decline but instead
interest rates rise, the Portfolio would lose part or all of the benefit
of the increased payments it would receive as a result of the rising
interest rates because it would have to pay amounts to its counterparts
under the swap agreement or would have paid the purchase price of the
interest rate floor.
The swap market has grown substantially in recent years with a large
number of banks and investment banking firms acting both as principals
and as agents utilizing standardized swap documentation. Caps and floors
are more recent innovations for which standardized documentation has not
yet been developed and, accordingly, they are less liquid than swaps.
Interest rate swaps, caps and floors are considered by the staff of the
Securities and Exchange Commission to be illiquid securities and,
therefore, the Portfolio may not invest more than 15% of its assets in
such instruments. Finally, there can be no assurance that the Portfolio
will be able to enter into interest rate swaps or to purchase interest
rate caps or floors at prices or on terms the Portfolio manager believes
are advantageous to the Portfolio. In addition, although the terms of
interest rate swaps, caps and floors may provide for termination, there
can be no assurance that the Portfolio will be able to terminate an
interest rate swap or to sell or offset interest rate caps or floors
that it has purchased.
14. 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. The staff or the Securities and Exchange Commission has
taken the position that repurchase agreements of greater than 7 days should
be limited to an amount not in excess of 15% (together with other illiquid
investments) of a purchaser's total assets.
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.
15. 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.
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 recordkeeping
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. Swap Deposit. Swap deposits are foreign currency short-term investments
consisting of a foreign exchange contract, a short-term note in foreign
currency and a foreign exchange forward contract that is totally hedged
in U.S. currency. This type of investment can produce competitive yield
in U.S. dollars without incurring risks of foreign exchange.
18. Time Deposit. A time deposit is a deposit in a commercial bank for a
specified period of time at a fixed interest rate for which a negotiable
certificate is not received.
19. Variable Amount Master Demand Note. A variable amount master demand note
is a note which fixes a minimum and maximum amount of credit and
provides for lending and repayment within those limits at the discretion
of the lender. Before investing in any variable amount master demands
notes, the liquidity of the issuer must be determined through periodic
credit analysis based upon publicly available information.
20. Warrants. Warrants are pure speculation in that they have no voting
rights, pay no dividends and have no rights with respect to the assets
of the corporation issuing them. Warrants basically are options to
purchase equity securities at a specific price valid for a specific
period of time. They do not represent ownership of the securities, but
only the right to buy them. Warrants differ from call options in that
warrants are issued by the issuer of the security which may be purchased
on their exercise, whereas call options may be written or issued by
anyone. The prices of warrants do not necessarily move parallel to the
prices of the underlying securities.
21. 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, cash or other liquid assets 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
basis may involve more risk than other types of purchases. For example, the
sales 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).
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 positions characterizes bonds in this class.
B - Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payment of
maintenance of other terms of the contract over any long period of time
may be small.
Caa - Bonds which are rated Caa are of poor standing. Such issues may
be in default or there may be present elements of danger with respect
to principal or interest.
Ca - Bonds which are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or have
other marked shortcomings.
C - Bonds which are rated C are the lowest rated class of bonds, and
issues so rated can be regarded as having extremely poor prospects of
ever attaining any real investment standing.
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, CCC, and CC - Standard & Poor's describes the BB, B, CCC and CC
rated issues together with issues rated CCC and CC. Debt in these
categories is regarded on balance as predominately 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.
C - The rating C is reserved for income bonds on which no interest is
being paid.
D - Bonds rated D are in default, and payment of interest and/or
repayment of principal is in arrears.
Plus (+) or Minus (-): The ratings from "AA" to "B" may be modified by
the addition of a plus or minus sign to show relative standing within
the major rating categories.
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
Portfolio which are fundamental policies and may not be changed without the
approval of a majority of the outstanding voting shares of the 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 Portfolio will not:
1. (a) Invest more than 15% of its total assets (taken at market value at the
time of each investment) in obligations (excluding repurchase agreements)
of any one bank, or, with respect to 75% of its assets, invest more than 5%
of such assets in the securities (other than United States Government or
government agency securities) of any one issuer other than a bank (but
including repurchase agreements with any one bank); and (b) purchase more
than either (i) 10% in principal amount of the outstanding debt securities
of an issuer, or (ii) 10% of the outstanding voting securities of an
issuer, except that such restrictions shall not apply to securities issued
or guaranteed by the United States Government or its agencies, bank money
instruments or bank repurchase agreements. Under the diversification
requirements of the Investment Company Act of 1940 applicable to
diversified investment companies, such as the Portfolio, the Portfolio may
not invest more than 5% of the value of its total assets in the securities
of any one issuer (except that this statutory restriction does not apply
with respect to 25% of the value of an investment company's total assets).
Under the Fund's current interpretation of the statutory diversification
tests, bank obligations of the type in which the Portfolio invests are not
subject to this 5% limitation and thus the Portfolio's only limitation in
this regard is the 15% limitation set forth above. The staff of the
Securities and Exchange Commission, however, has taken the position that
certain bank obligations are subject to the statutory 5% limitation, and
further action by the Commission may make it necessary that the Portfolio
revise its investments in bank obligations so as not to exceed the 5%
limitation in order for the Portfolio to maintain its status as a
diversified company.
2. 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.
3. Alone or together with any other investor make investments for the purpose of
exercising control over, or management of any issuer.
4. Purchase securities of other investment companies, except in connection with
a merger, consolidation, acquisition or reorganization, or by purchase in
the open market of securities of closed-end investment companies where no
underwriter or dealer's commission or profit, other than customary broker's
commission, is involved, and only if immediately thereafter not more than
10% of such Portfolio's total assets, taken at market value, would be
invested in such securities.
5. Purchase or sell interests in commodities, commodities contracts, oil, gas
or other mineral exploration or development programs, or real estate, except
that the Portfolio may purchase securities of issuers which invest or deal
in any of the above; provided, however, that the Portfolio may invest in
futures contracts based on financial indices, foreign currency transactions
and options on permissible futures contracts.
6. Purchase securities for the Portfolio which cannot be sold without
registration or the filing of a notification under federal or state
securities laws if, as a result, such investments would exceed 10% of the
value of the Portfolio's net assets.
7. Purchase any securities on margin (except that the Portfolio may obtain such
short term credit as may be necessary for the clearance of purchases and
sales of portfolio securities, and the Portfolio may make margin payments in
connection with transactions in currency futures contracts) or make short
sales of securities or maintain a short position.
8. Make loans, except as provided in limitation (9) below and except through
the purchase of obligations in private placements (the purchase of
publicly-traded obligations are not considered the making of a loan).
9. Lend its portfolio securities in excess of 20% 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", in this Statement of Additional Information.
10. Underwrite securities of other issuers except insofar as the Portfolio may
be deemed an underwriter under the Securities Act of 1933 in selling
portfolio securities.
11. Borrow amounts in excess of 10% of the Portfolio's total assets taken at
market value at the time of the borrowing and then only from banks a
temporary measure for extraordinary or emergency purposes. In the event the
Portfolio borrows in excess of 5% of its total assets at the time of such
borrowing it will have an assets coverage of at least 300%. As a matter of
policy, all borrowings will be repaid before any investments are made.
12. Write, purchase or sell puts, calls or combinations thereof, except that the
Portfolio may buy and sell put and call options (and any combination
thereof) on securities (including index options), on index futures
contracts, on securities indices, and on foreign currencies (to the extent
the Portfolio may invest in foreign currencies) and may buy and sell put and
call warrants, the values of which are based upon securities indices.
13. Sell securities short or purchase securities on margin.
14. 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 borrowing as discussed in limitation (11),
above. Such mortgaging, pledging or hypothecating may not exceed 10% of the
Portfolio's total assets, taken at market value at the time thereof. The
Fund will not, as a matter of operating policy, mortgage, pledge or
hypothecate its portfolio securities to the extent that at any time the
percentage of the value of pledged securities will exceed 10% of the value
of the Fund's shares. This restriction does not apply to segregated
accounts.
<PAGE>
Lending of Portfolio Securities
Subject to the Investment Limitations described above, the Portfolio from
time-to-time may lend securities from its portfolio to brokers, dealers and
financial institutions and receive as collateral cash or U.S. Treasury
securities which, at all time while the loan is outstanding, will be maintained
in amounts equal to at least 100% of the current market value of the loaned
securities. Any cash collateral will be invested in short-term securities, which
will increase the current income of the Portfolio. Such loans, which will not
have terms longer than 30 days, will be terminable at any time. The Portfolio
will have the right to regain record ownership of loaned securities to exercise
beneficial rights such as voting rights, subscription rights and rights to
dividends, interest or other distributions. The Portfolio may pay reasonable
fees to persons unaffiliated with the Fund for services in arranging such loans.
<PAGE>
MANAGEMENT OF THE FUND
The Fund
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> <C> <C> <C> <C> <C>
Name, Relationship with Principal Occupation
the Fund, and Address Past Five Years
Rex Jennings President Emeritus, Denver Metro
Director2 Chamber of Commerce (since 1987)
Richard P. Koeppe, Ph.D. Retired Superintendent, Denver
Director3 Public Schools (1988-1990)
Douglas L. Wooden Great-West Life & Annuity Insurance
Director1 5 Company, Executive Vice President, Financial
Services, (since 1998); Senior Vice President, Financial Services (1996-
1998); Senior Vice President, Chief Financial Officer (1991-1996)
James D. Motz Great-West Life & Annuity Insurance
Director1 5 Company, Executive Vice President, Employee
Benefits (since 1997), Senior Vice President, Employee Benefits (1991-
1997); Vice President, Group (1983-1990)
Sanford Zisman Attorney, Zisman & Ingraham, P.C.
Director4
David G. McLeod Great-West Life & Annuity Insurance Treasurer, Principal Financial
and Accounting Officer1 5
Company, Vice President, Investment Administration (since 1998); Assistant Vice
President, Investment Administration (1994-1998); Manager, Securities and
Equities Administration (1992-1994)
Beverly A. Byrne Great-West Life & Annuity Insurance Secretary
Company, Assistant Vice President and Associate Counsel (since 1997);
Assistant Counsel (1993-1997); Attorney (1988-1993)
</TABLE>
- -----------------------------
1 Interested person as defined in the Investment Company Act of 1940 and
affiliated person of Investment Adviser.
2 6508 Hollytree Circle, Tyler, Texas 75703
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.
<PAGE>
Compensation
The Fund pays no salaries or compensation to any of its officers or Directors
affiliated with GW Capital Management, LLC (the "Investment Adviser") or its
affiliates. The chart below sets forth the annual fees paid to non-interested
Directors in 1997.
<TABLE>
R.P. Koeppe R. Jennings S. Zisman
<S> <C> <C> <C>
Compensation received from the Fund $9,000 $8,500 $9,000
Pension or retirement benefits
accrued as a Fund expense $0 $0 $0
Total compensation received from
the Fund and all affiliated funds $17,500 $17,000 $17,500
- -----------------
</TABLE>
** As of October 31, 1998, there were forty-one 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 paid during 1998 by the
Fund and all affiliated investment companies.
The Investment Adviser
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.
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
April 14, 1998. The agreement will remain in effect until April 14, 1999, 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 interested 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.
<PAGE>
Advisory Fee
The method of computing the investment advisory fee is fully described in the
Prospectus.
The Sub-Adviser
Ariel Capital Management, Inc. (the "Sub-Adviser") serves as the sub-adviser to
the Portfolio pursuant to a Sub-Advisory Agreement dated February 5, 1999. The
Sub-Adviser is a privately held minority-owned money manager.
The Sub-Adviser provides investment advisory assistance and portfolio management
advice to the Investment Adviser for the Portfolio. Subject to review and
supervision by the Investment Adviser and the Board of Directors of the Fund,
the Sub-Adviser is responsible for the actual management of the Portfolio and
for making decisions to buy, sell or hold any particular securities. The
Sub-Adviser bears all expenses in connection with the performance of its
services, such as
Portfolio.
PURCHASE AND REDEMPTION OF SHARES
As of October 31, 1998, all of the outstanding shares of the Portfolio were held
of record by FutureFunds Series Account, FutureFunds Series Account II, and
Maxim Series Account.
CALCULATION OF YIELD
As summarized in the Prospectus 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 this 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.
Formula: YIELD = 2[(a-b)+ 1)6 - 1]
------------------
cd
Where a = dividends and interest earned
during the period.
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.
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 the Portfolio over the period covered, which assumes any dividends or capital
gains distributions are reinvested in the 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 period if a portfolio
has not been in existence for at least ten years.
FORMULA: P(1+T) to the power of 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 $1.00 payment made at the
inception of the Portfolio
The above formula can be restated to solve for T as follows:
T = [(ERV/P)1/N] - 1
At any time in the future, yields and total return may be higher or lower than
past yields and there can be no assurance that any historical results will
continue.
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial
Statements and Exhibits.
(a) Financial
Statements.
The Financial Statements of the MidCap Portfolio are incorporated by
reference to Registrant's N-30D filed via EDGAR on February 27, 1998. In
addition, the unaudited Financial Statements of the MidCap Portfolio filed
on August 24, 1998, in Registrant's N-30D are also incorporated by
reference.
(b) Exhibits. Items (b)(1)-(4), (b)(6), (b)(7), (b)(9), (b)(10), (b)(12) and
(b)(13) are incorporated by reference to Registrant's Pre-Effective Amendment
No. 1 to its Registration Statement dated March 10, 1982.
Item (b)(5) is incorporated by reference to Registrant's Post-Effective
Amendment No. 49 dated February 14, 1997. The form of the sub-advisory agreement
with Ariel Capital Management, Inc., dated February 5, 1999, is included herein.
Item (b)(8) is incorporated by reference to Registrant's Post-Effective
Amendment No. 24 dated March 1, 1993. Computation of Performance Quotations is
included in Part B.
(11) Written Consents
(a) Written consent of Jorden Burt Boros Cicchetti Berenson & Johnson LLP is
included herein. (b) Written consent of Deloitte & Touche LLP is included
herein.
Item 25. Persons Controlled By or Under Common Control with Registrant.
The organizational chart showing persons controlled by or under common control
with Registrant follows this page.
Item 26. Number of Holders and Securities.
(1)
(2)
Title of Class
Number of Record Holders
as of October 31, 1998
Common Stock ($.10 par
value) - 3 -
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
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
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% - GWL&A Financial Inc.
100% - Great-West Life & Annuity Insurance Company
100% - First Great-West Life & Annuity
Insurance
Company
100% - GW Capital Management, LLC
100% - Orchard Capital Management, LLC
100% - Financial Administrative Services Corporation
100% - One Corporation
100% - One Health Plan of
Arizona, Inc.
100% - One Health Plan of Illinois,
Inc.
100% - One Health Plan of Texas,Inc.
100% - One Health Plan ofCalifornia, Inc.
100% - One Health Plan ofColorado, Inc.
100% - One Health Plan ofGeorgia, Inc.
100% - One Health Plan of NewJersey, Inc.
100% - One Health Plan of NorthCarolina, Inc.
100% - One Health Plan ofWashington, Inc.
100% - One Health Plan of Ohio,Inc.
100% - One Health Plan ofTennessee, Inc.
100% - One Health Plan of Oregon,Inc.
100% - One Health Plan ofFlorida, Inc.
100% - One Health Plan ofIndiana, Inc.
100% - One Health Plan ofMassachusetts, Inc.
100% - One Health Plan, Inc.(Vermont)
100% - One Orchard Equities, Inc.
100% - Great-West BenefitServices, Inc.
13% - Private Healthcare Systems,Inc.
100% - Anthem Health & LifeInsurance Company
100% - Benefits Communication Corporation
100% - BenefitsCorp Equities, Inc.
100% - Greenwood PropertyCorporation
94% - Maxim Series Fund, Inc.*
100% - GWL Properties Inc.
100% - Great-West RealtyInvestments Inc.
50% - Westkin Properties Ltd.
100% - Confed Admin Services, Inc.
100% - Orchard Series Fund
100% - Orchard Trust Company
</TABLE>
- -------------
* 5.9% New England LifeInsurance Company
0.1% The Great-West LifeAssurance Company
<PAGE>
Item 28. Business and Other Connections of the 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.
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 pursuant to Rule 485(b) and has duly caused this Post-Effective
Amendment No. 58 to the Registration Statement to be signed on its behalf, in
the City of Englewood, Colorado, on the 3rd of February, 1999.
MAXIM SERIES FUND, INC.
(Registrant)
By: /s/ D.L. Wooden
President (D.L. Wooden)
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 58 to the Registration Statement has been
signed by the following persons in the capacities and on the dates
indicated.
Signature
Date
/s/ D.L. Wooden
February 3, 1999
Chairman and Director (D.L. Wooden)
/s/ R. Jennings*
February 3, 1999
Director (R. Jennings)
/s/ R.P. Koeppe*
February 3, 1999
Director (R.P. Koeppe)
/s/ J.D. Motz
February 3, 1999
Director (J.D. Motz)
/s/ S. Zisman*
February 3, 1999
Director (S. Zisman)
/s/ D.G. McLeod
February 3, 1999
Treasurer (D.G. McLeod)
By: /s/ B.A. Byrne
February 3, 1999
B.A. Byrne
*Attorney-in-fact pursuant to Powers of Attorney filed under
Post-Effective Amendment No. 52 to this Registration Statement.
EXHIBIT (b)(5)
<PAGE>
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:
<PAGE>
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.
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.
<PAGE>
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.
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.
<PAGE>
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:
G W 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
EXHIBIT 11(a)
WRITTEN CONSENT OF JORDEN
BURT BOROS
CICCHETTI BERENSON
&
JOHNSON LLP
<PAGE>
February 3, 1999
Maxim Series Fund, Inc.
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 the Maxim Series Fund, Inc. in the Prospectus contained
in Post-Effective Amendment No. 58 to the Registration Statement on
Form N-1A (File No. 2-75503) filed by Maxim Series Fund, Inc. with the
Securities and Exchange Commission under the Securities Act of 1933
and the Investment Company Act of 1940.
Very truly yours,
/s/ Jorden Burt Boros
Cicchetti
Berenson
&
Johnson
LLP
JORDEN BURT BOROS CICCHETTI
BERENSON
&
JOHNSON
LLP
EXHIBIT 11(b)
WRITTEN CONSENT OF
DELOITTE & TOUCHE
LLP
<PAGE>
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Post-Effective Amendment
No. 58 to Registration Statement No. 2-75503 of Maxim Series Fund, Inc. of our
report dated January 30, 1998, appearing in the December 31, 1997, Annual Report
of Maxim Series Fund, Inc. and to the reference to us under the heading
"Independent Auditor's for the Fund" appearing in the Prospectus, which is also
a part of such Registration Statement.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Denver, Colorado
February 4, 1999
