SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant toss.240.14a-11(c) orss.240.14a-12
- --------------------------------------------------------------------------------
Maxim Series Fund, Inc.
-----------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
Beverly A. Byrne, Esquire
- --------------------------------------------------------------------------------
Great-West Life & Annuity Insurance Company
8515 East Orchard Road
Greenwood Village, Colorado 80111
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check appropriate box):
[X] No fee required
[ ] ___ Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
(1) Title of Each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the amount
on which the filing fee is calculated and state how it was
determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule
and the date of its filing.
(1) Amount Previously Paid:
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(4) Date Filed:
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MAXIM SERIES FUND, INC.
Executive Offices: 8515 East Orchard Road
Greenwood Village, Colorado 80111
Mailing Address: P.O. Box 1700
Denver, Colorado 80201
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS OF MAXIM SERIES FUND, INC.
TO THE SHAREHOLDERS OF MAXIM SERIES FUND, INC.:
You are hereby notified that, pursuant to the Bylaws of Maxim Series
Fund, Inc. (the "Fund"), a special meeting of shareholders (the "Meeting") will
be held at 8525 East Orchard Road, Greenwood Village, Colorado on the April 4,
2002, at 9:30 a.m., Mountain Time, for the following purposes:
1. To approve an amendment to the Profile Portfolios' fundamental
investment policy concerning investments in liquid,
non-investment company securities. Only eligible shareholders of
the following portfolios of the Fund are entitled to vote on this
proposal: Aggressive Profile I; Moderately Aggressive Profile I;
Moderate Profile I; Moderately Conservative Profile I;
Conservative Profile I; Aggressive Profile II; Moderately
Aggressive Profile II; Moderate Profile II; Moderately
Conservative Profile II; and Conservative Profile II Portfolios.
2. To approve a new sub-advisory agreement reappointing Barclays
Global Fund Advisors as sub-adviser. Only eligible shareholders
of the following portfolios of the Fund are entitled to vote on
this proposal: Maxim Stock Index; Maxim Growth Index; Maxim Value
Index; Maxim Index 600; Maxim Index 400; Maxim Index European;
and Maxim Index Pacific Portfolios.
3. To approve a new "manager-of-managers" structure for the Fund.
Eligible shareholders of all the portfolios of the Fund except
the JPMorgan Growth & Income Portfolio are entitled to vote on
this proposal.
4. To approve an amendment to the Investment Advisory Agreement
regarding a new "manager of managers" structure for the Fund.
Eligible shareholders of all the Portfolios of the Fund except
the JPMorgan Growth & Income Portfolio are entitled to vote on
this proposal.
5(a)-(h).To approve amendments to the fundamental investment policies of
the Fund generally to standardize the language of those policies
that are required to be fundamental concerning borrowing,
commodities, industry concentration, loans, diversification, real
estate, senior securities and underwriting. Eligible shareholders
of all the portfolios of the Fund except the JPMorgan Growth &
Income Portfolio are entitled to vote on these proposals.
6(a)-(f). To approve amendments to the fundamental investment policies
of the Fund generally to delete policies that are no longer
required to be fundamental due to changes in laws or which
otherwise need not be fundamental concerning purchases of
securities on margin, investments in other investment companies,
investments in oil, gas and/or mineral exploration, exercise of
control, restricted securities and foreign securities. Eligible
shareholders of specified portfolios of the Fund are entitled to
vote on these proposals.
The Board of Directors has fixed the close of business on December 31,
2001, as the record date for the determination of shareholders entitled to
notice of and to vote at the Meeting or any adjournment thereof. Owners of
certain variable annuity contracts and variable life insurance policies and
certain qualified retirement plans are entitled to provide voting instructions
with respect to their proportionate interest in the aforementioned portfolios of
the Fund.
You are invited and encouraged to attend the Meeting. Shareholders who do
not expect to attend the Meeting in person are requested to complete, date and
sign the enclosed proxy card and return it promptly in the envelope provided for
that purpose. The enclosed proxy is being solicited by the Board of Directors of
the Fund.
By Order of the Board of Directors,
Beverly A. Byrne
Secretary
Your vote is important no matter how many shares you owned on the record date.
Please indicate your voting instructions on the enclosed proxy card. Date, sign
and return it in the envelope provided, which is addressed for your convenience
and needs no postage if mailed in the United States. We ask your cooperation in
mailing your proxy card promptly.
PROXY STATEMENT
MAXIM SERIES FUND, INC.
Executive Offices: 8515 East Orchard Road
Greenwood Village, Colorado 80111
Mailing Address: P.O. Box 1700
Denver, Colorado 80201
SPECIAL MEETING OF SHAREHOLDERS OF MAXIM SERIES FUND, INC.
Introduction
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Maxim Series Fund, Inc. (the "Fund"), a
Maryland corporation, to be voted at a special meeting of shareholders of the
Fund (the "Meeting"), to be held at 8525 East Orchard Road, Greenwood Village,
Colorado, on April 4, 2002, at 9:30 a.m., Mountain Time. It is anticipated that
the approximate mailing date of this Proxy Statement will be March 5, 2002.
The Board of Directors has fixed the close of business on December 31,
2001, as the record date for the determination of shareholders entitled to
notice of and to vote at the Meeting and at any adjournment thereof (the "Record
Date"). Not all of the portfolios (each a "Portfolio" and, collectively, the
"Portfolios") will be affected by all of the proposals. Shareholders of the
Maxim JPMorgan Growth & Income Portfolio are not being asked to vote on any of
the proposals.
Owners of contracts ("Contractowners") issued through the Series
Accounts (as defined below) by Great-West Life & Annuity Insurance Company
("GWL&A") who have allocated contract value to one or more of the Portfolios for
which action is necessary pursuant to this Proxy Statement as of the Record Date
will be entitled to provide voting instructions with respect to their
proportionate interest (including fractional interests) in each Portfolio with
respect to which a proposal applies. Shares of the Portfolios are sold to
certain qualified retirement plans and to the Maxim Series Account, FutureFunds
Series Account, and Retirement Plan Series Account to fund certain variable
annuity contracts issued by GWL&A. Shares are also sold to Pinnacle Series
Account, COLI VUL-1 Series Account, COLI VUL-2 Series Account and COLI VUL-8
Series Account to fund certain variable life insurance policies issued by GWL&A.
The above-mentioned accounts of GWL&A are hereinafter referred to as the "Series
Accounts." Each of the Series Accounts is registered with the Securities and
Exchange Commission (the "SEC") as a unit investment trust under the Investment
Company Act of 1940 ("1940 Act"). In addition, shares of the Portfolios are sold
to the Qualified Series Account and FutureFunds Series Account II of GWL&A and
to the TNE Series (k) Account of New England Life Insurance Company to fund
certain variable annuity contracts. Qualified Series Account, FutureFunds Series
Account II and TNE Series (k) Account are not registered with the SEC, and the
owners of contracts issued through Qualified Series Account, FutureFunds Series
Account II and TNE Series (k) Account are also being asked to provide voting
instructions.
The investment adviser to the Fund is GW Capital Management, LLC, doing
business as Maxim Capital Management, LLC ("MCM"), 8515 East Orchard Road,
Greenwood Village, Colorado 80111, a wholly owned subsidiary of GWL&A. MCM also
provides accounting and administrative services for the Fund. The principal
underwriter to the Fund is One Orchard Equities, Inc., 8515 East Orchard Road,
Greenwood Village, Colorado 80111, a wholly owned subsidiary of GWL&A.
The Series Accounts own shares of the Portfolios on behalf of
Contractowners. In accordance with the Fund's view of applicable law, shares
attributable to each of the Portfolios held in the Series Accounts will be voted
based on instructions received from the Contractowners who have allocated
contract value to one or more Portfolios as of the Record Date. The number of
votes that a Contractowner has the right to cast will be determined by applying
his/her percentage interest in a Portfolio (held through a Series Account) to
the total number of votes attributable to such Portfolio. In determining the
number of votes, fractional shares will be recognized. The Portfolio will vote
shares for which it does not receive instructions and shares owned by GWLA,
which provided initial capital to the Fund, and shares owned by the Qualified
Series Account, FutureFunds Series Account II and TNE Series (k) Account will be
voted as recommended by the Board of Directors. Voting instructions to abstain
on any proposal will be applied on a pro rata basis to reduce the votes eligible
to be cast. A proxy may be revoked at any time before it is voted by sending
written revocation, properly executed, to the Fund's Secretary before the
Meeting or by attending the Meeting. In addition to the solicitation of proxies
by mail, proxies may be solicited by officers and employees of the Fund or its
agents or affiliates personally or by telephone, facsimile machine, telegraph,
or the Internet.
The following table indicates the eligible voters with respect to the
proposals being presented at the Meeting:
================================= ============================== ==============================
Proposal Summary Eligible Voters
================================= ============================== ==============================
- --------------------------------- ------------------------------ ------------------------------
1. To approve an amendment to Shareholders are being asked Only Contractowners having
the Profile Portfolios' to approve an amendment to an interest in an investment
fundamental investment policy the Profile Portfolios' option corresponding to the
concerning investments in fundamental investment Aggressive Profile I;
liquid, non-investment company policy to permit the Profile Moderately Aggressive
securities. Portfolios to invest in Profile I; Moderate Profile
fixed rate contracts issued I; Moderately Conservative
from the general account of Profile I; Conservative
GWL&A; short-term government Profile I; Aggressive
securities; and other Profile II; Moderately
liquid, short-term, Aggressive Profile II;
high-quality, fixed income Moderate Profile II;
investments which are only Moderately Conservative
denominated in U.S. dollars. Profile II; and Conservative
Profile II
Portfolios (the
"Profile
Portfolios" or
each a "Profile
Portfolio") on
the Record
Date.
- --------------------------------- ------------------------------ ------------------------------
- --------------------------------- ------------------------------ ------------------------------
2. To approve a new Shareholders are being asked Only Contractowners having
sub-advisory agreement to approve a new an interest in an investment
reappointing Barclays Global sub-advisory agreement option corresponding to the
Fund Advisors as sub-adviser. whereby Barclays Global Fund Maxim Stock Index, Maxim
Advisors would provide the Growth Index, Maxim Value
day-to-day investment Index, Maxim Index 600,
management of their Maxim Index 400, Maxim Index
Portfolio and fees paid to European and Maxim Index
Barclays Global Fund Pacific Portfolios (the
Advisors would be based on "Equity Index Portfolios" or
the aggregate assets of all each an "Equity Index
Maxim Equity Index Portfolio") on the Record
Portfolios and all Orchard Date.
Index Funds sub-advised by
Barclays Global Fund
Advisors, and assets in
existing and future Barclays
Global Investors, N.A.
domestic and/or non-U.S.
daily-valued collective fund
index investment strategies
for which Financial
Administrative Services
Corporation, an affiliate of
GWL&A, acts as collective
fund servicing agent.
- --------------------------------- ------------------------------ ------------------------------
- --------------------------------- ------------------------------ ------------------------------
3. To approve a new Shareholders are being asked Contractowners having an
"manager-of-managers" structure to approve a new interest in an investment
for the Fund. "manager-of-managers" option corresponding to any
structure for the Fund under of the Portfolios of the
which the Fund's investment Fund except the JPMorgan
adviser, with the approval Growth & Income Portfolio on
of the Fund's Board of the Record Date.
Directors, may enter into
and make changes to
sub-advisory agreements
without shareholder approval.
- --------------------------------- ------------------------------ ------------------------------
- --------------------------------- ------------------------------ ------------------------------
4. To approve an amendment to Shareholders are being asked Contractowners having an
the investment advisory to approve an amendment to interest in an investment
agreement regarding new the investment advisory option corresponding to any
"manager-of-managers" structure agreement relating to a new of the Portfolios of the
for the Fund. "manager-of-managers" Fund except the JPMorgan
structure for the Fund under Growth & Income Portfolio on
which the Fund's investment the Record Date.
adviser, with the approval
of the Fund's Board of
Directors, may enter into
and make changes to
sub-advisory agreements
without shareholder approval.
- --------------------------------- ------------------------------ ------------------------------
- --------------------------------- ------------------------------ ------------------------------
5(a). To approve an amendment Shareholders are being asked Contractowners having an
to the fundamental investment to approve an amendment to interest in an investment
policies of the Fund concerning the Portfolios' fundamental option corresponding to any
borrowing. investment policies in order of the Portfolios of the
to simplify, modernize and Fund except the Maxim
standardize those policies JPMorgan Growth & Income
concerning borrowing that Portfolio on the Record Date.
are required to be
fundamental.
- --------------------------------- ------------------------------ ------------------------------
- --------------------------------- ------------------------------ ------------------------------
5(b). To approve an amendment Shareholders are being asked Contractowners having an
to the fundamental investment to approve an amendment to interest in an investment
policies of the Fund concerning the Portfolios' fundamental option corresponding to any
commodities. investment policies in order of the Portfolios of the
to simplify, modernize and Fund except the Maxim
standardize those policies JPMorgan Growth & Income
concerning commodities that Portfolio on the Record Date.
are required to be
fundamental.
- --------------------------------- ------------------------------ ------------------------------
- --------------------------------- ------------------------------ ------------------------------
5(c). To approve an amendment Shareholders are being asked All Contractowners having an
to the fundamental investment to approve an amendment to interest in an investment
policies of the Fund concerning the Portfolios' fundamental option corresponding to any
industry concentration. investment policies in order of the Portfolios of the
to simplify, modernize and Fund except the Maxim
standardize those policies JPMorgan Growth & Income
concerning industry Portfolio on the Record Date.
concentration that are
required to be fundamental.
- --------------------------------- ------------------------------ ------------------------------
- --------------------------------- ------------------------------ ------------------------------
5(d). To approve an amendment Shareholders are being asked All Contractowners having an
to the fundamental investment to approve an amendment to interest in an investment
policies of the Fund concerning the Portfolios' fundamental option corresponding to any
loans. investment policies in order of the Portfolios of the
to simplify, modernize and Fund except the Maxim
standardize those policies JPMorgan Growth & Income
concerning loans that are Portfolio on the Record Date.
required to be fundamental.
- --------------------------------- ------------------------------ ------------------------------
- --------------------------------- ------------------------------ ------------------------------
5(e). To approve an amendment Shareholders are being asked All Contractowners having an
to the fundamental investment to approve an amendment to interest in an investment
policies of the Fund concerning the Portfolios' fundamental option corresponding to any
diversification. investment policies in order of the Portfolios of the
to simplify, modernize and Fund except the Maxim
standardize those policies JPMorgan Growth & Income
concerning diversification Portfolio on the Record Date.
that are required to be
fundamental.
- --------------------------------- ------------------------------ ------------------------------
- --------------------------------- ------------------------------ ------------------------------
5(f). To approve an amendment Shareholders are being asked All Contractowners having an
to the fundamental investment to approve an amendment to interest in an investment
policies of the Fund concerning the Portfolios' fundamental option corresponding to any
real estate. investment policies in order of the Portfolios of the
to simplify, modernize and Fund except the Maxim
standardize those policies JPMorgan Growth & Income
concerning real estate that Portfolio on the Record Date.
are required to be
fundamental.
- --------------------------------- ------------------------------ ------------------------------
- --------------------------------- ------------------------------ ------------------------------
5(g). To approve an amendment Shareholders are being asked All Contractowners having an
to the fundamental investment to approve an amendment to interest in an investment
policies of the Fund concerning the Portfolios' fundamental option corresponding to any
senior securities. investment policies in order of the Portfolios of the
to simplify, modernize and Fund except the Maxim
standardize those policies JPMorgan Growth & Income
concerning senior securities Portfolio on the Record Date.
that
are required to be
fundamental.
- --------------------------------- ------------------------------ ------------------------------
- --------------------------------- ------------------------------ ------------------------------
5(h). To approve an amendment Shareholders are being asked All Contractowners having an
to the fundamental investment to approve an amendment to interest in an investment
policies of the Fund concerning the Portfolios' fundamental option corresponding to any
underwriting. investment policies in order of the Portfolios of the
to simplify, modernize and Fund except the Maxim
standardize those policies JPMorgan Growth & Income
concerning underwriting that Portfolio on the Record Date.
are required to be
fundamental.
- --------------------------------- ------------------------------ ------------------------------
- --------------------------------- ------------------------------ ------------------------------
6(a). To approve an amendment Shareholders are being asked All Contractowners having an
to the fundamental investment to approve an amendment to interest in an investment
policies of the Fund concerning the Portfolios' fundamental option corresponding to any
purchases of securities on investment policies in order of the Portfolios of the
margin. to delete those policies Fund except the Maxim T.
concerning purchases of Rowe Price Equity/Income,
securities on margin that Maxim T. Rowe Price MidCap
are no longer fundamental Growth, Maxim INVESCO
due to changes in laws or Balanced, Maxim Founders
which otherwise need not be Growth & Income and JPMorgan
fundamental. Growth & Income Portfolios
on the Record Date.
- --------------------------------- ------------------------------ ------------------------------
- --------------------------------- ------------------------------ ------------------------------
6(b). To approve an amendment Shareholders are being asked Only Contractowners having
to the fundamental investment to approve an amendment to an interest in an investment
policies of the Fund concerning the Portfolios' fundamental option corresponding to the
investments in other investment investment policies in order Maxim Money Market, Maxim
companies. to delete those policies Bond, Maxim Loomis Sayles
concerning investments in Corporate Bond, Maxim U.S.
other investment companies Government Securities, Maxim
that are no longer U.S. Government Mortgage
fundamental due to changes Securities, Maxim Templeton
in laws or which otherwise International Equity, Maxim
need not be fundamental. INVESCO ADR, Maxim Ariel
MidCap Value, Maxim INVESCO
Small-Cap Growth, Maxim
Ariel Small-Cap Value, Maxim
Loomis Sayles Small-Cap
Value and Maxim Bond Index
on the Record Date.
- --------------------------------- ------------------------------ ------------------------------
- --------------------------------- ------------------------------ ------------------------------
6(c). To approve an amendment Shareholders are being asked All Contractowners having an
to the fundamental investment to approve an amendment to interest in an investment
policies of the Fund concerning the Portfolios' fundamental option corresponding to any
investments in oil, gas and/or investment policies in order of the Portfolios of the
mineral exploration. to delete those policies Fund except the Maxim
concerning investments in INVESCO Balanced, Maxim
oil, gas and/or mineral Founders Growth & Income,
explorations that are no JPMorgan Growth & Income and
longer fundamental due to Profile Portfolios on the
changes in laws or which Record Date.
otherwise need not be
fundamental.
- --------------------------------- ------------------------------ ------------------------------
- --------------------------------- ------------------------------ ------------------------------
6(d). To approve an amendment Shareholders are being asked All Contractowners having an
to the fundamental investment to approve an amendment to interest in an investment
policies of the Fund concerning the Portfolios' fundamental option corresponding to any
exercise of control. investment policies in order of the Portfolios of the
to delete those policies Fund except the Maxim T.
concerning exercise of Rowe Price Equity/Income,
control that are no longer Maxim T. Rowe Price MidCap
fundamental due to changes Growth, Maxim INVESCO
in laws or which otherwise Balanced, Maxim Founders
need not be fundamental. Growth & Income, Maxim
Global Bond, JPMorgan Growth
& Income and Profile
Portfolios on the Record
Date.
- --------------------------------- ------------------------------ ------------------------------
- --------------------------------- ------------------------------ ------------------------------
6(e). To approve an amendment Shareholders are being asked All Contractowners having an
to the fundamental investment to approve an amendment to interest in an investment
policies of the Fund concerning the Portfolios' fundamental option corresponding to any
restricted securities. investment policies in order of the Portfolios of the
to delete those policies Fund except the Maxim T.
concerning restricted Rowe Price Equity/Income,
securities that are no Maxim T. Rowe Price MidCap
longer fundamental due to Growth, Maxim INVESCO
changes in laws or which Balanced, Maxim Founders
otherwise need not be Growth & Income, Maxim
fundamental. Global Bond, Maxim
Short-Term
Maturity Bond,
JPMorgan Growth
& Income and
Profile
Portfolios on
the Record
Date.
- --------------------------------- ------------------------------ ------------------------------
- --------------------------------- ------------------------------ ------------------------------
6(f). To approve an amendment Shareholders are being asked Only Contractowners having
to the fundamental investment to approve an amendment to an interest in an investment
policies of the Fund concerning the Portfolios' fundamental option corresponding to the
foreign securities. investment policies in order Maxim Money Market, Maxim
to delete those policies U.S. Government Securities,
concerning foreign Maxim U.S. Government
securities that are no Mortgage Securities, Maxim
longer fundamental due to Stock Index, Maxim Index
changes in laws or which 600, Maxim Value Index,
otherwise need not be Maxim Growth Index, Maxim
fundamental. Index 400, and Maxim Bond
Index Portfolios on the
Record Date.
- --------------------------------- ------------------------------ ------------------------------
The Board of Directors, including all of the Directors who are not
"interested persons" of the Fund, MCM or, in the case of Proposal 2, Barclays
Global Fund Advisors (the "Independent Directors"), recommends that shareholders
vote FOR each proposal.
If the enclosed proxy card is duly executed and returned in time to be
voted at the Meeting, and not subsequently revoked, all shares represented by
the proxy will be voted in accordance with the instructions marked thereon.
Unmarked proxies received from Contractowners in the Series Accounts will be
voted in the same proportion as those proxies with voting instructions.
The Board may seek one or more adjournments of the Meeting to solicit
additional shareholders, if necessary, to obtain a quorum for the Meeting, or to
obtain the required shareholder vote for approval of the proposals. An
adjournment would require the affirmative vote of the holders of a majority
of the shares present at the Meeting (or an adjournment thereof) in person or by
proxy and entitled to vote. If adjournment is proposed in order to obtain the
required shareholder vote on a particular proposal, the persons named as proxies
will vote in favor of adjournment those shares that they are entitled to vote in
favor of such proposal and will vote against adjournment those shares that they
are required to vote against such proposal. A shareholder vote may be taken on
one or more of the proposals discussed herein prior to any such adjournment if
sufficient votes have been received and it is otherwise appropriate.
The Fund and the Portfolios will pay no expenses associated with this
proxy solicitation. Such expenses will be paid by MCM. Management of the Fund
knows of no other business, other than that set forth in Proposals 1 through 4,
which will be presented for consideration at the Meeting. If any other matter is
properly presented, it is the intention of the persons named in the enclosed
Proxy to vote in accordance with their best judgment.
Beneficial Ownership
Each Portfolio is a separate series of the Fund and is represented by a
separate class of common stock. Holders of common stock of each Portfolio on the
Record Date will be entitled to one vote for each share held (and fractional
votes corresponding to any fractional shares), with no shares having cumulative
voting rights.
As of the Record Date, no persons other than the persons identified in
the table below were entitled to provide voting instructions with respect to 5%
or more of a Portfolio's outstanding shares. The address of each of these
persons is 8515 East Orchard Road, Greenwood Village, Colorado 80111. The
number of shares outstanding for each Portfolio, the number of shares of each
Portfolio held by these respective entities and the percentage of the total
shares outstanding as of December 31, 2001, are set forth in the table below. As
of December 31, 2001, the Directors and executive officers of the Fund did not
directly own any shares of the Portfolios.
BENEFICIAL OWNERS (HOLDING MORE THAN 5% OF THE OUTSTANDING SHARES OF A PORTFOLIO) OF THE FUND
AS OF DECEMBER 31, 2001
- ------------------ --------------- ------------- ----------- ------------- ------------ ------------- ------------ ----------- -----
Portfolio Total FutureFunds Retirement FutureFunds TNE Series Maxim Maxim Maxim GWL&A
Outstanding Series Plan Series (k) Account Aggressive Moderately Moderate
Shares Account Series Account II Profile Aggressive Profile
Account II Profile II II
Portfolio Portfolio Portfolio
================== =============== ============= =========== ============= ============ ============= ============ =========== =====
- ------------------ --------------- ------------- ----------- ------------- ------------ ------------- ------------ ----------- -----
Money Market 44,354,692.96
- ------------------ --------------- ------------- ----------- ------------- ------------ ------------- ------------ ----------- -----
- ------------------ --------------- ------------- ----------- ------------- ------------ ------------- ------------ ----------- -----
Bond 173,411,565.61
- ------------------ --------------- ------------- ----------- ------------- ------------ ------------- ------------ ----------- -----
- ------------------ --------------- ------------- ----------- ------------- ------------ ------------- ------------ ----------- -----
Loomis Sayles 196,834.491.72
Corporate Bond
- ------------------ --------------- ------------- ----------- ------------- ------------ ------------- ------------ ----------- -----
- ------------------ --------------- ------------- ----------- ------------- ------------ ------------- ------------ ----------- -----
U.S. Government 132,746.691.83
Securities
- ------------------ --------------- ------------- ----------- ------------- ------------ ------------- ------------ ----------- -----
- ------------------ --------------- ------------- ----------- ------------- ------------ ------------- ------------ ----------- -----
U.S. Government 92,713,808.34
Mortgage
Securities
- ------------------ --------------- ------------- ----------- ------------- ------------ ------------- ------------ ----------- -----
- ------------------ --------------- ------------- ----------- ------------- ------------ ------------- ------------ ----------- -----
Global Bond 139,414.400.21
- ------------------ --------------- ------------- ----------- ------------- ------------ ------------- ------------ ----------- -----
- ------------------ --------------- ------------- ----------- ------------- ------------ ------------- ------------ ----------- -----
Short-Term 316,050,171.15
Maturity Bond
- ------------------ --------------- ------------- ----------- ------------- ------------ ------------- ------------ ----------- -----
- ------------------ --------------- ------------- ----------- ------------- ------------ ------------- ------------ ----------- -----
Templeton 232,523.742.87
International
Equity
- ------------------ --------------- ------------- ----------- ------------- ------------ ------------- ------------ ----------- -----
- ------------------ --------------- ------------- ----------- ------------- ------------ ------------- ------------ ----------- -----
INVESCO ADR 164,175,693.65
- ------------------ --------------- ------------- ----------- ------------- ------------ ------------- ------------ ----------- -----
- ------------------ --------------- ------------- ----------- ------------- ------------ ------------- ------------ ----------- -----
T. Rowe Price 42,992,572.34
Equity/Income
- ------------------ --------------- ------------- ----------- ------------- ------------ ------------- ------------ ----------- -----
- ------------------ --------------- ------------- ----------- ------------- ------------ ------------- ------------ ----------- -----
Founders Growth 3,957,577.79
& Income
- ------------------ --------------- ------------- ----------- ------------- ------------ ------------- ------------ ----------- -----
- ------------------ --------------- ------------- ----------- ------------- ------------ ------------- ------------ ----------- -----
INVESCO Balanced 18,771,161.15
- ------------------ --------------- ------------- ----------- ------------- ------------ ------------- ------------ ----------- -----
- ------------------ --------------- ------------- ----------- ------------- ------------ ------------- ------------ ----------- -----
Ariel MidCap 14,294,053.86
Value
- ------------------ --------------- ------------- ----------- ------------- ------------ ------------- ------------ ----------- -----
- ------------------ --------------- ------------- ----------- ------------- ------------ ------------- ------------ ----------- -----
T. Rowe Price 65,253,777.47
MidCap Growth
- ------------------ --------------- ------------- ----------- ------------- ------------ ------------- ------------ ----------- -----
- ------------------ --------------- ------------- ----------- ------------- ------------ ------------- ------------ ----------- -----
Ariel Small-Cap 106,073,981.49
Value
- ------------------ --------------- ------------- ----------- ------------- ------------ ------------- ------------ ----------- -----
- ------------------ --------------- ------------- ----------- ------------- ------------ ------------- ------------ ----------- -----
Loomis Sayles 88,728,854.70
Small-Cap Value
- ------------------ --------------- ------------- ----------- ------------- ------------ ------------- ------------ ----------- -----
- ------------------ --------------- ------------- ----------- ------------- ------------ ------------- ------------ ----------- -----
INVESCO 30,943,054.80
Small-Cap Growth
- ------------------ --------------- ------------- ----------- ------------- ------------ ------------- ------------ ----------- -----
- ------------------ --------------- ------------- ----------- ------------- ------------ ------------- ------------ ----------- -----
Bond Index 29,861,128.95
- ------------------ --------------- ------------- ----------- ------------- ------------ ------------- ------------ ----------- -----
- ------------------ --------------- ------------- ----------- ------------- ------------ ------------- ------------ ----------- -----
Stock Index 11,671,953.04
- ------------------ --------------- ------------- ----------- ------------- ------------ ------------- ------------ ----------- -----
- ------------------ --------------- ------------- ----------- ------------- ------------ ------------- ------------ ----------- -----
Value Index 9,799,179.68
- ------------------ --------------- ------------- ----------- ------------- ------------ ------------- ------------ ----------- -----
- ------------------ --------------- ------------- ----------- ------------- ------------ ------------- ------------ ----------- -----
Growth Index 7,799,935.48
- ------------------ --------------- ------------- ----------- ------------- ------------ ------------- ------------ ----------- -----
- ------------------ --------------- ------------- ----------- ------------- ------------ ------------- ------------ ----------- -----
Index 600 2,377,920.27
- ------------------ --------------- ------------- ----------- ------------- ------------ ------------- ------------ ----------- -----
- ------------------ --------------- ------------- ----------- ------------- ------------ ------------- ------------ ----------- -----
Index 400 1,781,685.28
- ------------------ --------------- ------------- ----------- ------------- ------------ ------------- ------------ ----------- -----
- ------------------ --------------- ------------- ----------- ------------- ------------ ------------- ------------ ----------- -----
Index Pacific 44,354,692.96
- ------------------ --------------- ------------- ----------- ------------- ------------ ------------- ------------ ----------- -----
- ------------------ --------------- ------------- ----------- ------------- ------------ ------------- ------------ ----------- -----
Index European 173,411,565.61
- ------------------ --------------- ------------- ----------- ------------- ------------ ------------- ------------ ----------- -----
- ------------------ --------------- ------------- ----------- ------------- ------------ ------------- ------------ ----------- -----
Aggressive 196,834.491.72
Profile I
- ------------------ --------------- ------------- ----------- ------------- ------------ ------------- ------------ ----------- -----
- ------------------ --------------- ------------- ----------- ------------- ------------ ------------- ------------ ----------- -----
Moderately 132,746.691.83
Aggressive
Profile I
- ------------------ --------------- ------------- ----------- ------------- ------------ ------------- ------------ ----------- -----
- ------------------ --------------- ------------- ----------- ------------- ------------ ------------- ------------ ----------- -----
Moderate Profile 92,713,808.34
I
- ------------------ --------------- ------------- ----------- ------------- ------------ ------------- ------------ ----------- -----
- ------------------ --------------- ------------- ----------- ------------- ------------ ------------- ------------ ----------- -----
Moderately 139,414.400.21
Conservative
Profile I
- ------------------ --------------- ------------- ----------- ------------- ------------ ------------- ------------ ----------- -----
- ------------------ --------------- ------------- ----------- ------------- ------------ ------------- ------------ ----------- -----
Conservative 316,050,171.15
Profile I
- ------------------ --------------- ------------- ----------- ------------- ------------ ------------- ------------ ----------- -----
- ------------------ --------------- ------------- ----------- ------------- ------------ ------------- ------------ ----------- -----
Aggressive 232,523.742.87
Profile II
- ------------------ --------------- ------------- ----------- ------------- ------------ ------------- ------------ ----------- -----
- ------------------ --------------- ------------- ----------- ------------- ------------ ------------- ------------ ----------- -----
Moderately 164,175,693.65
Aggressive
Profile II
- ------------------ --------------- ------------- ----------- ------------- ------------ ------------- ------------ ----------- -----
- ------------------ --------------- ------------- ----------- ------------- ------------ ------------- ------------ ----------- -----
Moderate Profile 42,992,572.34
II
- ------------------ --------------- ------------- ----------- ------------- ------------ ------------- ------------ ----------- -----
- ------------------ --------------- ------------- ----------- ------------- ------------ ------------- ------------ ----------- -----
Moderately 3,957,577.79
Conservative
Profile II
- ------------------ --------------- ------------- ----------- ------------- ------------ ------------- ------------ ----------- -----
- ------------------ --------------- ------------- ----------- ------------- ------------ ------------- ------------ ----------- -----
Conservative 18,771,161.15
Profile II
- ------------------ --------------- ------------- ----------- ------------- ------------ ------------- ------------ ----------- -----
PROPOSAL 1: TO APPROVE AN AMENDMENT TO THE PROFILE PORTFOLIOS' FUNDAMENTAL
INVESTMENT POLICY CONCERNING INVESTMENTS IN LIQUID, NON-INVESTMENT COMPANY
SECURITIES
Only eligible shareholders of the Aggressive Profile I; Moderately
Aggressive Profile I; Moderate Profile I; Moderately Conservative Profile I;
Conservative Profile I; Aggressive Profile II; Moderately Aggressive Profile II;
Moderate Profile II; Moderately Conservative Profile II; and the Conservative
Profile II Portfolios on the Record Date (each a "Profile Portfolio" and
collectively the "Profile Portfolios") on the Record Date, are entitled to vote
on this proposal.
The Profile Portfolios and their Investment Objectives
Each of the ten Profile Portfolios operates as a "fund of funds"
pursuant to an order of the SEC permitting the Profile Portfolios to invest in
other registered, open-end management companies ("Underlying Funds"), including
Underlying Funds not affiliated with the Fund, subject to certain limitations.
Consequently, each Profile Portfolio is designed to provide a different asset
allocation program based on an investor's investment goals, risk tolerance, and
investment horizon.
The investment objectives of the Profile Portfolios are as follows:
Aggressive Profile I and II Portfolios - Seek long-term capital appreciation
primarily through investments in Underlying Funds that emphasize equity
investments.
Moderately Aggressive Profile I and II Portfolios - Seek long-term capital
appreciation primarily through investments in Underlying Funds that emphasize
equity investments, and to a lesser degree, in Underlying Funds that emphasize
fixed income investments.
Moderate Profile I and II Portfolios - Seek long-term capital appreciation
primarily through investments in Underlying Funds with a relatively equal
emphasis on equity and fixed income investments.
Moderately Conservative Profile I and II Portfolios - Seek capital preservation
primarily through investments in Underlying Funds that emphasize fixed income
investments, and to a lesser degree, in Underlying Funds that emphasize equity
investments.
Conservative Profile I and II Portfolios - Seek capital preservation primarily
through investments in Underlying Funds that emphasize fixed income investments.
Description of Current Fundamental Investment Policy for the Profile Portfolios
Section 8(b) of the 1940 Act requires a mutual fund to state in its
registration statement its investment policies, which are changeable only if
authorized by shareholder vote. The Profile Portfolios have been operating under
the following fundamental investment policy concerning the purchase of
securities:
Each Profile Portfolio pursues it investment objectives by investing
exclusively in other mutual funds (the "Underlying [Funds]"),
including mutual funds that are not affiliated with [the Fund].
Subject to the supervision of the Board of Directors of the Fund, the
Adviser uses a proprietary investment process for selecting Underlying Funds,
which are placed in one of four equity asset classes (International, Small-Cap,
MidCap or Large-Cap) or one of two fixed income asset classes (Bond or
Short-Term Bond). The assets of each Profile Portfolio are allocated among those
asset classes within specified percentages of assets based on the Profile
Portfolio's investment objective. For example, a Conservative Profile Portfolio
must generally allocate 25-45% of its assets among Underlying Funds that the
Adviser has determined to be within the "Short-Term Bond" asset class, while an
Aggressive Profile Portfolio may generally allocate no more than 0-10% of its
assets among such Underlying Funds. Each Profile Portfolio is periodically
"balanced" to maintain the appropriate asset allocation based on the Profile
Portfolio's investment objective, policies and restrictions.
Description of Proposed Fundamental Investment Policy for the Profile Portfolios
The Board of Directors, including the Independent Directors, has
approved, and recommends that the shareholders of each of the Profile Portfolios
approve, a proposal to amend the fundamental investment policy of the Profile
Portfolios. The amendment would permit each Profile Portfolio to invest in fixed
rate contracts issued from the general account of GWL&A (the "Fixed
Contract(s)"); short-term "government securities," as defined in Section
2(a)(16) of the Act; and other liquid, short-term, high-quality, fixed income
investments which are only denominated in U.S. dollars.
Short-term government and debt securities are commonly referred to as
"money market instruments" and usually have a maturity of 13 months or less.
Further, for short-term debt obligations, MCM will select securities with a
rating in one of the two highest rating categories by at least one nationally
recognized statistical rating organizations such as Moody's Investor Services,
Inc. or Standard & Poor's Corporation (or unrated securities if MCM determines
that they are of comparable quality).
Fixed Contracts - As owner of a Fixed Contract, a Profile Portfolio would have
the right to deposit funds from time to time with GWL&A. The deposits would
accrue interest daily at a declared rate of interest, which is guaranteed to be
at least 3%, adjustable on a calendar quarter or other periodic basis. A Profile
Portfolio or GWL&A would be able to terminate the Fixed Contract at any time
upon seven days' written notice to the other party. Upon termination, GWL&A
would be obligated to pay the Profile Portfolio within seven days the amount of
the deposits, plus any interest earned thereon.
The Profile Portfolios would pay no sales load of any kind in purchasing
a Fixed Contract, and the interest rate paid on the Fixed Contract would be at
least as favorable as the interest rate paid on other similar fixed rate
contracts issued by GWL&A or other comparable companies. In addition, each
Profile Portfolio would be permitted to terminate a Fixed Contract at any time
without the imposition of any type of charge or reduction. GWL&A, MCM and the
Fund have filed an application for exemptions with the SEC to permit the Profile
Portfolios to invest in Fixed Contracts; however, until exemptive relief is
granted, the Profile Portfolios will only be permitted to invest underlying
Funds and in those liquid, non-investment company securities, other than Fixed
Contracts, described in this Proposal 1.
Money Market Instruments - Besides U.S. government securities such as Treasury
bills and notes, money market instruments may also include, but are not limited
to, commercial paper of domestic issuers and obligations of domestic banks.
o Commercial Paper consists of short-term (usually from 1 to 270 days)
unsecured promissory notes issued by corporations in order to finance their
current operations. A variable amount master demand note (which is a type
of commercial paper) represents a direct borrowing arrangement involving
periodically fluctuating rates of interest under a letter agreement between
a commercial paper issuer and an institutional lender pursuant to which the
lender may determine to invest varying amounts.
o Bank Obligations are limited to those of U.S. banks which have total assets
at the time of purchase in excess of $1 billion and the deposits of which
are insured by either the Bank Insurance Fund or the Savings Association
Insurance Fund of the Federal Deposit Insurance Corporation, and U.S.
branches of foreign banks having total assets in excess of $10 billion (or
the equivalent in other currencies), and such other U.S. and U.S. branches
of foreign commercial banks which are judged by MCM to meet comparable
credit standing criteria.
Bank obligations may include but are not limited to negotiable certificates
of deposit and bankers' acceptances. A certificate of deposit is a
short-term negotiable certificate issued by a commercial bank against funds
deposited in the bank and is either interest-bearing or purchased on a
discount basis. A bankers' acceptance is a time draft drawn on a commercial
bank by a borrower, usually in connection with an international commercial
transaction. The borrower is liable for payment as is the bank, which
unconditionally guarantees to pay the draft at its face amount on the
maturity date. Most acceptances have maturities of six months or less and
are traded in secondary markets prior to maturity. MCM does not intend to
invest in acceptances with maturities exceeding seven days in order to
avoid potential liquidity problems.
Each Profile Portfolio would limit its investments in Fixed Contacts,
short-term government securities and other liquid, short-term, high-quality
fixed income investments to the amount of portfolio assets that the Profile
Portfolio may allocate to the "Short-Term Bond" asset class, as specified in the
Profile Portfolio's then-current registration statement, subject to such other
limitations as may apply under the Act or the Profile Portfolio's other
investment policies and restrictions. Currently, the percentages of portfolio
assets allocable to the Short-Term Bond asset class based on overall investment
objective are as follows:
Percentage of Assets
Conservative Profile I and II 25-45%
Moderately Conservative Profile I and II 10-30%
Moderate Profile I and II 5-25%
Moderately Aggressive Profile I and II 0-10%
Aggressive Profile I and II 0-10%
Reasons for the Proposal
The Fund's Board of Directors and MCM believe that amending the
fundamental investment policy as proposed will allow the asset allocation
programs of the Profile Portfolios within the "fund of funds" structure to be
more efficient and cost-effective, and therefore, less expensive to
shareholders. The Board of Directors has also determined that the proposed
amendment of the investment policy will afford each Profile Portfolio greater
investment flexibility to reduce its volatility and overall risk within the
"fund of funds" structure, especially when the bond and/or stock markets
decline. This proposal, if approved, will give the Profile Portfolios the
flexibility to respond to changes in the markets in order to minimize losses in
net asset value and provide more liquidity in response to times of
higher-than-normal rates of redemption. Further, because other "fund of funds"
mutual funds have the authority to invest in the securities described in
Proposal 1, the Profile Portfolios may be at a competitive disadvantage without
such authority. Finally, continuing to adhere to the current investment policy
could impair the ability of the Profile Portfolios to respond competitively to
future market developments.
The Board of Directors has concluded that approval of the proposed
amendment to the fundamental investment policy of the Profile Portfolios is not
expected to significantly affect the way the Profile Portfolios are managed and
is not likely to have an impact on the investment techniques employed by the
Profile Portfolios.
Recommendation of the Board of Directors
At a meeting held on June 1, 2001, the Board of Directors evaluated this
proposal. Prior to and during the meeting, the Board of Directors requested
information it deemed necessary to determine whether the proposal is in the best
interest of each Profile Portfolio and its shareholders. Based upon its review
and evaluation of the materials it received and in consideration of all factors
deemed relevant, in particular, the fact that the proposal would permit each
Profile Portfolio to operate more efficiently and result in lower expenses to
shareholders as well as the fact that the Profile Portfolios may be
competitively disadvantaged by their current fundamental investment policy, the
Board of Directors concluded that this proposal is in the best interest of each
Profile Portfolio and its shareholders. Accordingly, the Board of Directors,
including all of the Independent Directors, voted unanimously to approve the
proposal and to recommend to shareholders of each Profile Portfolio that they
vote FOR the proposal.
Vote Required
A change to the fundamental policies of any Profile Portfolio, as set
forth in Proposal 1, requires approval by "a majority of the outstanding voting
securities" of a particular Profile Portfolio. Under the 1940 Act, the
affirmative vote of "a majority of the outstanding voting securities" is defined
as the lesser of (a) 67% or more of the voting securities present or represented
by proxy at a meeting of shareholders, if the holders of more than 50% of the
outstanding voting securities are present or represented by proxy, or (b) more
than 50% of the outstanding voting securities (a "1940 Act Majority").
Consequently, this proposal will be acted upon separately by each Profile
Portfolio; however; the affirmative vote by a 1940 Act Majority of the holders
of each Profile Portfolio is required for approval of Proposal 1 regarding the
amendment of the fundamental investment policy.
If the proposed amendment is approved by the shareholders of the Profile
Portfolios, the Fund's prospectus and statement of additional information
will be revised, as appropriate and as soon as exemptions are received from
the SEC, to reflect the change. Further, the amended investment policy will
remain fundamental to the Profile Portfolios and, as such, cannot be changed
without a further shareholder vote. On the other hand, if the amended investment
policy is not approved by shareholders, the current investment policy regarding
investments in liquid, non-investment company securities will remain in place as
a fundamental investment policy of the Profile Portfolios, and the Board of
Directors will consider other actions that may be taken.
PROPOSAL 2: TO APPROVE A NEW SUB-ADVISORY AGREEMENT APPOINTING BARCLAYS
GLOBAL FUND ADVISORS AS SUB-ADVISER
Only eligible shareholders of the Maxim Stock Index, Maxim Growth Index,
Maxim Value Index, Maxim Index 600, Maxim Index 400, Maxim Index European and
Maxim Index Pacific Portfolios (each an " Equity Index Portfolio" and
collectively the " Equity Index Portfolios") on the Record Date, are entitled to
vote on this proposal.
The Board of Directors, including the Independent Directors, has
approved, and recommends that the shareholders of each of the Equity Index
Portfolios approve a proposal to adopt a new sub-advisory agreement by and
between the Fund, MCM and Barclays Global Fund Advisors ("Barclays") with
respect to each of the Equity Index Portfolios (the "Maxim Index Sub-Advisory
Agreement") in substantially the same form as attached hereto in Exhibit A.
Barclays currently provides day-to-day investment management for each
Equity Index Portfolio. It is proposed that Barclays be appointed again as
sub-adviser to provide the day-to-day management responsibilities for the
Portfolios according to the terms and conditions of the Barclays Sub-Advisory
Agreement attached hereto as Exhibit A. MCM will continue to be responsible for
the overall management of each Equity Index Portfolio and will continue to
provide all the services it is obligated to provide to each Equity Index
Portfolio other than the services described in the Barclays Sub-Advisory
Agreement. The services provided by Barclays will be subject to review by MCM
and the Fund's Board of Directors. The material terms and provisions of the
Maxim Index Sub-Advisory Agreement are the same, in all substantive respects, as
those which Barclays currently is and will continue to be subject to except that
for purposes of calculating sub-advisory fees to be paid by MCM to Barclays, the
Maxim Index Sub-Advisory Agreement would permit the aggregation of the assets
held by all Equity Index Portfolios, with those portfolios of the Orchard Series
Funds that are also sub-advised by Barclays, specifically: the Orchard S&P 500
Index(R), Orchard Index 600, Orchard Nasdaq-100 Index(R), and the Orchard DJIA
IndexSM Funds (each an "Orchard Index Fund" and collectively the "Orchard Index
Funds"), and with assets managed in existing and future Barclays Global
Investors, N.A. ("BGI") domestic collective fund investment strategies and
non-U.S. daily-valued collective fund investment strategies for which Financial
Administrative Services Corporation, an affiliate of GWL&A, acts as collective
fund serving agent. If the Maxim Index Sub-Advisory Agreement is approved, the
total operating expense ratios for the Equity Index Portfolios will not
increase.
Description of Maxim Index Sub-Advisory Agreement
The proposed Maxim Index Sub-Advisory Agreement provides in pertinent
part that:
o MCM will pay Barclays a portion of the investment management fee that MCM
receives from each Equity Index Portfolio (as more fully described in the
Maxim Index Sub-Advisory Agreement) as follows: (1) with respect to the
aggregate assets of domestic index strategies (including, Maxim Stock
Index, Maxim Growth Index, Maxim Value Index, Maxim Index 600 and Maxim
Index 400, Portfolios, and all Orchard Index Funds and assets managed in
existing and future BGI domestic collective fund investment strategies for
which Financial Administrative Services Corporation, an affiliate of GWL&A,
acts as collective fund serving agent) - - first $2.250 billion of average
daily net assets- 0.03%; next $1.000 billion - 0.02%; over $3.250 billion -
0.01%; and (2) with respect to the aggregate assets of international index
strategies (including Maxim Index European and Maxim Index Pacific
Portfolios and assets managed in existing and future BGI non-U.S.
daily-valued collective fund investment strategies for which Financial
Administrative Services Corporation, an affiliate of GWL&A, acts as
collective fund serving agent) - - first $200 million of average daily net
assets - 0.10%; next $100 million - 0.08%; next $300 million - $0.05%; over
$600 million - 0.03%.
o Barclays will manage the Equity Index Portfolios'
investments and otherwise determine what investments each such Equity Index
Portfolio will purchase, retain and sell.
o Barclays will select brokers to effect trades for the Equity Index
Portfolios. Barclays may select Barclays Global Investor Services, a
Barclays' affiliate, to effect such trades in accordance with procedures
adopted by the Fund's Board of Directors.
o Barclays will maintain certain books and records on behalf of the
Equity Index Portfolios.
o Barclays will provide regular reports to MCM and the Fund's Board of
Directors with respect to the implementation of the approved overall
investment plan for each Equity Index Portfolio and any other activities in
connection with the management of the assets of each Equity Index Portfolio.
o MCM and Barclays will arrange for an administrative process which
permits MCM to appropriately reflect the transactions, positions and
obligations of each Equity Index Portfolio in the determination by MCM of
the daily value of each Maxim Index Portfolio.
Information About Barclays
Barclays, in combination with its worldwide advisory affiliates, is one
of the largest managers of index-style pooled investment vehicles in the world
with approximately $800 billion under management. Barclays also manages certain
index-style collective funds maintained by BGI for which Financial
Administrative Services Corporation, an affiliate of GWL&A, serves as collective
fund servicing agent. Barclays is registered with the SEC as an investment
adviser and is a wholly-owned subsidiary of BGI, a corporation organized under
the laws of the United States. The address for Barclays and BGI is 45 Fremont
Street, San Francisco, CA 94105. The table below lists the name, address and
principal occupation of the principal executive officers and each director of
Barclays.
Name Title
----------------------------------- -----------------------------------
Andrea Zulberti Director
Patricia Dunn Director and Managing Director
Garrett F. Bouton Chairman and Chief Executive
Officer
Each of the above persons is an employee of Barclays and BGI, and their
business address is: 45 Fremont Street, San Francisco, CA 94105.
Reasons for the Proposal
MCM has proposed the continued designation of Barclays as sub-adviser
for each Equity Index Portfolio in order to take advantage of Barclays'
experience and expertise as managers of index-styled pools. As of December 31,
2001, Barclays and its affiliates managed over $______ billion
in assets and, Barclays itself managed $_____ billion as of December 31,
2001. MCM believes efficiencies of scale may continue to be achieved by
utilizing Barclays' resources in implementing the overall investment plan for
each Equity Index Portfolio. These efficiencies include the potential to more
closely track the benchmark indexes of the Equity Index Portfolios and,
therefore, enhance investment performance. As such a large manager of
index-styled mutual funds, Barclays personnel are also well-positioned to
provide or obtain such services as may be necessary in managing, acquiring and
disposing of investments on behalf of the Equity Index Portfolios, consulting as
appropriate with MCM, and to perform research and obtain and evaluate the
economic, statistical and financial data relevant to the investment policies of
the Equity Index Portfolios.
Barclays' Securities Lending Program
When Barclays was originally appointed as sub-adviser to the Equity Index
portfolios, the Fund's Board of Directors intended that BGI would serve as the
securities lending agent for the Equity Index Portfolios. Consequently, the
Fund, Barclays and BGI have sought exemptive relief from the SEC to permit BGI
to receive a fee for providing such services to the Equity Index Portfolios. If
the requested relief is granted, BGI will be compensated as lending agent based
on a percentage of the revenue generated by a Equity Index Portfolio's
participation in the program. The Board of Directors will obtain competing
quotes with respect to lending agent fees to assist the Board in making the
following findings: that (i) the contract with BGI is in the best interest of
the Equity Index Portfolios and their shareholders; (ii) the services performed
by BGI are required for the Equity Index Portfolios; (iii) the nature and
quality of the services provided by BGI are at least equal to those provided by
others offering the same or similar services; and (iv) the fees for BGI's
services are fair and reasonable in light of the usual and customary charges
imposed by others for services of the same nature and quality. As well, the
contract with BGI for lending agent services will be reviewed at least annually
and will be approved for continuation only if a majority of the Board (including
a majority of Independent Directors) makes the foregoing findings. There is no
guarantee that the SEC will grant the requested relief.
Other Matters Considered by the Board
The proposal concerning the Maxim Index Sub-Advisory Agreement was
approved by the Board of Directors of the Fund, and all the Independent
Directors, on December 14, 2000. The Board received materials relating to the
proposed Equity Index Sub-Advisory Agreement in advance of the meeting at which
the Equity Index Sub-Advisory Agreement was considered, and had the opportunity
to ask questions and request further information in connection with such
consideration. The Directors considered information about, among other things:
o Barclays and its personnel, resources and investment process;
o the advisory fee rates payable to Barclays by MCM and by other funds and
client accounts managed or sub-advised by Barclays, and payable by similar
funds managed by other advisers (Exhibit B to this Proxy Statement contains
information about the fees paid to Barclays by other funds managed or
sub-advised by Barclays that have investment objectives similar to those of
the Equity Index Portfolios);
o the total expense ratios of the Equity Index Portfolios and of similar
funds managed by other advisers;
o Barclays' practices regarding the selection and compensation of brokers and
dealers that will execute portfolio transactions for the Equity Index
Portfolios; and
o Barclays experience and expertise as managers of index style mutual funds
and the fact that efficiencies of scale may continue to be achieved by
utilizing the resources of Barclays to implement the overall investment
plan for each Equity Index Portfolio including the potential to more
closely track the respective benchmark indexes of the Equity Index
Portfolios and, therefore, enhance investment performance.
After considering all information deemed necessary, the Board determined
that the proposal is in the best interest of each Equity Index Portfolio.
Accordingly, the Board of Directors, including all of the Independent Directors,
voted unanimously to approve the proposal and to recommend to shareholders of
each Equity Index Portfolio that they vote "FOR" the proposed Maxim Index
Sub-Advisory Agreement.
Information About MCM and the Advisory Agreement
MCM is a wholly-owned subsidiary of GWL&A. GWL&A is an indirectly owned
subsidiary of Great-West Lifeco Inc., a holding company. Great-West Lifeco Inc.
("Lifeco") 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.
The table below lists the name and principal occupation of each officer and
director of MCM. The business address for each of these persons is: 8515 East
Orchard Road, Greenwood Village, Colorado 80111.
S. Mark Corbett Manager, MCM; Senior Vice President, Investments, GWL&A
Mitchell T.G. Graye Manager and President, MCM; Executive Vice President and
Chief Financial Officer, GWL&A
Wayne Hoffmann Manager, MCM; Senior Vice President, Investments, GWL&A.
Douglas L. Wooden Manager, MCM; Executive Vice President,Financial Services,
GWL&A
Graham R. McDonald Treasurer, MCM; Vice President, Investment Administration,
GWL&A
Beverly A. Byrne Secretary, MCM; Vice President, Counsel and Associate
Secretary, GWL&A
Mr. Graye is also a member of the Fund's Board of Directors. Mr. McDonald
is Treasurer of the Fund and Ms. Byrne is Secretary of the Fund. No officer or
director of the Fund has any securities or other material direct or indirect
interest in MCM or GWL&A. William T. McCallum, Director and President of the
Fund is President and Chief Executive Officer of GWL&A and Co-President and
Chief Executive Officer of Great-West Lifeco Inc. Glen R. Derback, Controller of
the Fund is Vice President and Controller of GWL&A; Bruce A. Burrey, Assistant
Controller of the Fund is Corporate Controller, Financial Services Division,
GWL&A; and, Bruce Hatcher, Assistant Treasurer of the Fund is Manager, GWL&A.
Messrs. McCallum, Graye, Wooden, Corbett, Hoffmann, Derback and McDonald and Ms.
Byrne have been granted stock options in Lifeco stock. Mr. Wooden currently owns
stock in Power Financial Corporation and Mr. Graye has stock options in Power
Financial Corporation stock. No other officer or director of the Fund has any
other material direct or indirect interest in Lifeco or Power Financial
Corporation.
The investment advisory agreement between the Fund and MCM became
effective on December 5, 1997 for the Maxim Stock Index, Maxim Index 600, Maxim
Index 400, Maxim Value and Maxim Growth Index Portfolios and effective on July
26, 1999 for the Maxim Index European and Maxim Index Pacific Portfolios. The
Agreement will remain in effect until April 1, 2002, and will continue in effect
from year to year if approved annually by the Board of Directors including the
vote of a majority of the Directors who are not parties to the Agreement or
interested persons of any such party, or by vote of a majority of the
outstanding shares of the affected Portfolio.
Under the terms of the investment advisory agreement with the Fund, MCM
provides the Fund with all necessary office facilities and personnel for
servicing the Portfolios' investments, compensates all officers of the Fund and
all Directors who are "interested persons" of the Fund or of MCM, and all
personnel of the Fund or MCM performing services relating to research,
statistical and investment activities. In addition, MCM, subject to the
supervision of the Board of Directors, provides the management and
administrative services necessary for the operation of the Fund. These services
include providing facilities for maintaining the Fund's organization;
supervising relations with custodians, transfer and pricing agents, accountants,
underwriters and other persons dealing with the Fund; preparing all general
shareholder communications and conducting shareholder relations; maintaining the
Fund's records and the registration of the Fund's shares under federal
securities laws and making necessary filings under state securities laws;
developing management and shareholder services for the Fund; and furnishing
reports, evaluations and analyses on a variety of subjects to the Directors. MCM
also is authorized to retain sub-advisers to provide day-to-day investment
management for the Portfolios. For these services, MCM is compensated as
follows: For the Maxim Stock Index, Index 600, Index 400, Growth Index and Value
Index Portfolios - 0.60% of average daily net assets; for the Maxim Index
European and Maxim Index Pacific Portfolios - 1.00% of average daily net assets.
During fiscal year 2001, MCM was paid the following investment advisory fees for
the Portfolios: Maxim Stock Index - $__________; Maxim Index 600 - $__________;
Maxim Index 400 - $__________; Maxim Value Index - $__________; Maxim Growth
Index - $__________; Maxim Index European - $__________; Maxim Index Pacific -
$__________.
Vote Required
In order for this proposal to be approved for a particular Equity Index
Portfolio, the affirmative vote of the holders of a 1940 Act Majority of a
particular Index Portfolio is required for approval of Proposal 2 regarding the
new Maxim Index Sub-Advisory Agreement. Consequently, this proposal will be
acted upon separately by each Equity Index Portfolio; however; the affirmative
vote by a 1940 Act Majority of the holders of each Equity Index Portfolio is
required for approval of Proposal 2 with respect to the proposed Maxim Index
Sub-Advisory Agreement.
Further, as the aggregation of assets for purposes of calculating the
sub-advisory fees to be paid by MCM to Barclays is intended to apply to both the
Equity Index Portfolios and the Orchard Index Funds, the Board of Trustees for
the Orchard Index Funds will also be seeking approval by the holders of the
Orchard Index Funds of a proposal to adopt a new sub-advisory agreement by and
between the Orchard Index Funds, MCM and Barclays (the "Orchard Index
Sub-Advisory Agreement") which will reflect the same sub-advisory compensation
schedule contained in the proposed Maxim Index Sub-Advisory Agreement. The
Orchard Index Sub-Advisory Agreement will similarly be acted upon separately by
each Orchard Index Fund and require the affirmative vote by a 1940 Act Majority
of the holders of each Orchard Index Fund for approval of the Orchard Index
Sub-Advisory Agreement.
Thus, it is the intent of the Fund's Board of Directors that approval of
this Proposal 2 be predicated not only upon approval of this Proposal 2 by the
affirmative vote of a 1940 Act Majority of the holders of each Equity Index
Portfolio but also upon the approval of the proposed Orchard Index Sub-Advisory
Agreement by the affirmative vote of a 1940 Act Majority of the holders of each
Orchard Index Fund.
Further, if the proposed Maxim Index Sub-Advisory Agreement is not
properly approved by shareholders of the Equity Index Portfolios or the proposed
Orchard Index Sub-Advisory Agreement is not properly approved by shareholders of
the Orchard Index Funds, the Current Maxim Index Sub-Advisory Agreement will
continue in its present form, and the Board of Directors will consider other
actions that may be taken.
PROPOSAL 3: TO APPROVE A NEW MANAGER-OF-MANAGERS STRUCTURE FOR THE FUND
Eligible shareholders of all of the Portfolios except the JPMorgan
Growth & Income Portfolio on the Record Date, are entitled to vote on this
proposal to approve a new "manager-of-managers" structure for the Fund under
which MCM, the Fund's Investment Adviser, and the Fund's Board of Directors may
enter into and make material changes to sub-advisory agreements without
shareholder approval.
The Fund's Board of Directors, including all of the independent
directors, has unanimously approved, and recommends that the shareholders of
each affected Portfolio approve a proposal to adopt a manager-of-managers
structure. This new structure will not change advisory fees paid for by any
Portfolio.
Under a manager-of-managers structure, MCM will be authorized to select
(with the approval of the Fund's Board of Directors, including a majority of the
Independent Directors) one or more sub-advisers to handle the day-to-day
investment management of each Portfolio. MCM pays the fee of any sub-adviser out
of its own advisory fees so Portfolio expenses do not increase when a
sub-adviser is hired. Under this structure, MCM will monitor each sub-adviser's
performance through quantitative and qualitative analysis and periodically
report to the Fund's Board of Directors as to whether each sub-adviser's
agreement should be renewed, terminated or modified. At present, the following
Portfolios are sub-advised by a single sub-adviser:
Maxim Ariel Small-Cap Value Portfolio Maxim Ariel MidCap Value Portfolio
Maxim Founders Growth & Income Portfolio Maxim INVESCO ADR Portfolio
Maxim INVESCO Small-Cap Growth Portfolio Maxim INVESCO Balanced Portfolio
Maxim Loomis Sayles Small-Cap Value Maxim Loomis Sayles Corporate Bond
Portfolio Portfolio
Maxim T. Rowe Price Equity/Income Maxim T. Rowe Price MidCap Growth
Portfolio Portfolio
Maxim Templeton International Equity Maxim Global Bond Portfolio
Portfolio
Maxim Stock Index Portfolio Maxim Index 600 Portfolio
Maxim Index 400 Portfolio Maxim Growth Index Portfolio
Maxim Value Index Portfolio Maxim Index Pacific Portfolio
Maxim Index European Portfolio
In the future, however, one or more Portfolios, as determined by MCM, may be
sub-advised by two or more sub-advisers. Under these circumstances, MCM will
also be responsible for allocating assets between and among such sub-advisers.
Currently, the Fund must prepare a proxy statement and obtain approval from
shareholders of the applicable Portfolios to enter into or materially change any
sub-advisory agreement. Under the proposed manager-of-managers structure,
approval of shareholders having voting rights would not be required. Instead,
MCM (with the approval of the Fund's Board of Directors, including a majority of
the Independent Directors) could hire new sub-advisers, terminate existing
sub-advisers and/or materially amend agreements with sub-advisers without
incurring the expense and delay of preparing a proxy statement and conducting a
corresponding meeting of shareholders having voting rights.
Nevertheless, even though approval of shareholders having voting rights
would not be required, the Fund would send shareholders having voting rights an
information statement containing substantially all of the information about any
new sub-adviser and the new or amended sub-advisory agreement that would
otherwise have been included in a proxy statement. The Fund and MCM believe that
this structure allows advisory changes, if any, to be made more quickly and
efficiently, without sacrificing the quality of service to shareholders.
The manager-of-managers structure is permitted under an order issued by the
SEC. That order requires that the Fund seeks your approval of the structure
before it is implemented. It is that approval that is being sought under this
Proposal No. 3.
Recommendation of the Board of Directors
At a meeting held on December 14, 2000, the Board of Directors evaluated
this proposal. Prior to and during the meeting, the Board of Directors requested
information deemed necessary to enable it to determine whether the proposal is
in the best interest of each Portfolio and its shareholders. Based upon its
review and evaluation of the materials it received, and in consideration of all
factors deemed relevant, the Board of Directors determined that this proposal is
reasonable and in the best interest of each Portfolio and its shareholders. The
Board considered that the advisory fees for each Portfolio would not change as a
result of the proposal and that the new "manager-of-managers" structure will
provide an opportunity to hire new sub-advisers and materially amend
sub-advisory agreements more efficiently and with less expense. Accordingly, the
Board of Directors, including all of the Independent Directors, voted
unanimously to approve the proposal and to recommend to shareholders of each
Portfolio that they vote "FOR" the proposed change.
Vote Required
This proposal will be acted upon separately by each Portfolio. In order
for this proposal to be approved for a Portfolio, the affirmative vote of the
holders of a 1940 Act Majority is required. If this proposal is not approved
by the requisite vote of shareholders, the Board of Directors will consider
other actions that may be taken.
PROPOSAL 4: TO APPROVE AN AMENDMENT TO THE INVESTMENT ADVISORY AGREEMENT
REGARDING A NEW MANAGER-OF-MANAGERS STRUCTURE
Eligible shareholders of all of the Portfolios except the Maxim JPMorgan
Growth & Income Portfolio on the Record Date, are entitled to vote on this
proposal to approve an amendment to the investment advisory agreement between
the Fund and MCM (the "Current Agreement") regarding a new manager-of-managers
structure.
The Fund's Board of Directors, including the Independent Directors, has
unanimously approved, and recommends that the shareholders of each affected
Portfolio approve a proposal to amend the Current Agreement between the Fund and
MCM (the "Amendment"). If the Amendment is approved at the Meeting, ADVISORY
FEES UNDER THE CURRENT AGREEMENT WILL NOT CHANGE.
The Amendment reflects the adoption of a manager-of-managers structure
by the Fund. Under a manager-of-managers structure, MCM will be authorized (with
the approval of the Fund's Board of Directors, including a majority of the
Independent Directors) to select one or more sub-advisers to handle the
day-to-day investment management of each Portfolio and to make material changes
to sub-advisory agreements without shareholder approval. MCM pays the fee of any
sub-adviser out of its own advisory fees so Portfolio expenses do not increase
when a sub-adviser is hired. Under this structure, MCM will monitor each
sub-adviser's performance through quantitative and qualitative analysis and
periodically report to the Fund's Board of Directors as to whether each
sub-adviser's agreement should be renewed, terminated or modified. At present,
the following Portfolios are sub-advised by a single sub-adviser:
Maxim Ariel Small-Cap Value Portfolio Maxim Ariel MidCap Value Portfolio
Maxim Founders Growth & Income Portfolio Maxim INVESCO ADR Portfolio
Maxim INVESCO Small-Cap Growth Portfolio Maxim INVESCO Balanced Portfolio
Maxim Loomis Sayles Small-Cap Value Maxim Loomis Sayles Corporate Bond
Portfolio Portfolio
Maxim T. Rowe Price Equity/Income Maxim T. Rowe Price MidCap Growth
Portfolio Portfolio
Maxim Templeton International Equity Maxim Global Bond Portfolio
Portfolio
Maxim Stock Index Portfolio Maxim Index 600 Portfolio
Maxim Index 400 Portfolio Maxim Growth Index Portfolio
Maxim Value Index Portfolio Maxim Index Pacific Portfolio
Maxim Index European Portfolio
In the future, however, one or more Portfolios, as determined by MCM, may be
sub-advised by two or more sub-advisers. Under these circumstances, MCM will
also be responsible for allocating assets between and among such sub-advisers.
Information About MCM and the Current Agreement
MCM is a wholly-owned subsidiary of GWL&A. GWL&A is an indirectly owned
subsidiary of Great-West Lifeco Inc., a holding company. Great-West Lifeco Inc.
("Lifeco") 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.
The table below lists the name and principal occupation of each officer and
director of MCM. The business address for each of these persons is: 8515 East
Orchard Road, Greenwood Village, Colorado 80111.
S. Mark Corbett Manager, MCM; Senior Vice President, Investments, GWL&A
Mitchell T.G. Graye Manager, MCM; Executive Vice President and Chief Financial
Officer, GWL&A
Wayne Hoffmann Manager, MCM; Senior Vice President, Investments, GWL&A.
Douglas L. Wooden Manager and President, MCM; Executive Vice President,
Financial Services, GWL&A
Graham R. McDonald Treasurer, MCM; Vice President, Investment Administration,
GWL&A
Beverly A. Byrne Secretary, MCM; Vice President, Counsel and Associate
Secretary, GWL&A
Mr. Graye is also a member of the Fund's Board of Directors. Mr. McDonald is
Treasurer of the Fund and Ms. Byrne is Secretary of the Fund. No officer or
director of the Fund has any securities or other material direct or indirect
interest in MCM or GWL&A. William T. McCallum, Director and President of the
Fund is President and Chief Executive Officer of GWL&A and Co-President of
Great-West Lifeco Inc. Glen R. Derback, Controller of the Fund is Vice President
and Controller of GWL&A; Bruce A. Burrey, Assistant Controller of the Fund is
Corporate Controller, GWL&A; and, Bruce Hatcher, Assistant Treasurer of the Fund
is Manager, GWL&A. Messrs. McCallum, Graye, Wooden, Corbett, Hoffmann, Derback
and McDonald and Ms. Byrne have been granted stock options in Lifeco stock.
Messrs. Wooden and McCallum currently own stock in Power Financial Corporation
and Messrs. Graye and Wooden have been granted stock options in Power Financial
Corporation stock. No other officer or director of the Fund has any other
material direct or indirect interest in Lifeco or Power Financial Corporation.
The Current Agreement, attached hereto as Exhibit D, between the Fund
and MCM became effective on December 5, 1997 and as amended effective July 26,
1999. As approved, the Agreement will remain in effect until April 1, 2002, and
will continue in effect from year to year if approved annually by the Board of
Directors including the vote of a majority of the Directors who are not parties
to the Agreement or interested persons of any such party, or by vote of a
majority of the outstanding shares of the affected Portfolio. Any material
amendment to the Agreement becomes effective with respect to the affected
Portfolio upon approval by vote of a majority of the voting securities of that
Portfolio.
Under the terms of the Current Agreement, MCM provides the Fund with all
necessary office facilities and personnel for servicing the Portfolios'
investments, compensates all officers of the Fund and all Directors who are
"interested persons" of the Fund or of MCM, and all personnel of the Fund or MCM
performing services relating to research, statistical and investment activities.
In addition, MCM, subject to the supervision of the Board of Directors, provides
the management and administrative services necessary for the operation of the
Fund. These services include providing facilities for maintaining the Fund's
organization; supervising ___ relations with ___ custodians, ___ transfer and
pricing ___ agents, accountants, underwriters and other persons dealing with the
Fund; preparing all general shareholder communications and conducting
shareholder relations; maintaining the Fund's records and the registration of
the Fund's shares under federal securities laws and making necessary filings
under state securities laws; ___ developing management and shareholder services
for the Fund; and furnishing reports, evaluations and analyses on a variety of
subjects to the Directors. MCM also is authorized to retain sub-advisers to
provide day-to-day investment management for the Portfolios. The compensation
rate for these services and advisory fees paid to MCM during fiscal year 2001
are set forth below.
- --------------------------------------------- -------------------------- -----------------------
Fees As % of Average Fees Paid in
Portfolio Daily Net Assets Fiscal Year 2001
- --------------------------------------------- -------------------------- -----------------------
- --------------------------------------------- -------------------------- -----------------------
Maxim Loomis Sayles Corporate Bond 0.90%
- --------------------------------------------- -------------------------- -----------------------
- --------------------------------------------- -------------------------- -----------------------
Maxim Global Bond 1.30%
- --------------------------------------------- -------------------------- -----------------------
- --------------------------------------------- -------------------------- -----------------------
Maxim Ariel Small-Cap Value 1.00%
- --------------------------------------------- -------------------------- -----------------------
- --------------------------------------------- -------------------------- -----------------------
Maxim Loomis Sayles Small-Cap Value 1.00%
- --------------------------------------------- -------------------------- -----------------------
- --------------------------------------------- -------------------------- -----------------------
Maxim INVESCO Small-Cap Growth 0.95%
- --------------------------------------------- -------------------------- -----------------------
- --------------------------------------------- -------------------------- -----------------------
Maxim T. Rowe Price Mid-Cap Growth 1.00%
- --------------------------------------------- -------------------------- -----------------------
- --------------------------------------------- -------------------------- -----------------------
Maxim Ariel Mid-Cap Value 0.95%
- --------------------------------------------- -------------------------- -----------------------
- --------------------------------------------- -------------------------- -----------------------
Maxim Templeton International Equity 1.00%
- --------------------------------------------- -------------------------- -----------------------
- --------------------------------------------- -------------------------- -----------------------
Maxim INVESCO ADR 1.00%
- --------------------------------------------- -------------------------- -----------------------
- --------------------------------------------- -------------------------- -----------------------
Maxim Founders Growth & Income 1.00%
- --------------------------------------------- -------------------------- -----------------------
- --------------------------------------------- -------------------------- -----------------------
Maxim T. Rowe Price Equity/Income 0.80%
- --------------------------------------------- -------------------------- -----------------------
- --------------------------------------------- -------------------------- -----------------------
Maxim INVESCO Balanced 1.00%
- --------------------------------------------- -------------------------- -----------------------
- --------------------------------------------- -------------------------- -----------------------
Maxim Money Market 0.46%
- --------------------------------------------- -------------------------- -----------------------
- --------------------------------------------- -------------------------- -----------------------
Maxim Short-Term Maturity Bond 0.60%
- --------------------------------------------- -------------------------- -----------------------
- --------------------------------------------- -------------------------- -----------------------
Maxim U.S. Government Securities 0.60%
- --------------------------------------------- -------------------------- -----------------------
- --------------------------------------------- -------------------------- -----------------------
Maxim U.S. Government Mortgage Securities 0.60%
- --------------------------------------------- -------------------------- -----------------------
- --------------------------------------------- -------------------------- -----------------------
Maxim Bond 0.60%
- --------------------------------------------- -------------------------- -----------------------
- --------------------------------------------- -------------------------- -----------------------
Maxim Bond Index 0.50%
- --------------------------------------------- -------------------------- -----------------------
- --------------------------------------------- -------------------------- -----------------------
Maxim Stock Index 0.60%
- --------------------------------------------- -------------------------- -----------------------
- --------------------------------------------- -------------------------- -----------------------
Maxim Index 600 0.60%
- --------------------------------------------- -------------------------- -----------------------
- --------------------------------------------- -------------------------- -----------------------
Maxim Index 400 0.60%
- --------------------------------------------- -------------------------- -----------------------
- --------------------------------------------- -------------------------- -----------------------
Maxim Growth Index 0.60%
- --------------------------------------------- -------------------------- -----------------------
- --------------------------------------------- -------------------------- -----------------------
Maxim Value Index 0.60%
- --------------------------------------------- -------------------------- -----------------------
- --------------------------------------------- -------------------------- -----------------------
Maxim Index Pacific 1.00%
- --------------------------------------------- -------------------------- -----------------------
- --------------------------------------------- -------------------------- -----------------------
Maxim Index European 1.00%
- --------------------------------------------- -------------------------- -----------------------
- --------------------------------------------- -------------------------- -----------------------
Maxim Aggressive Profile I 0.25%
- --------------------------------------------- -------------------------- -----------------------
- --------------------------------------------- -------------------------- -----------------------
Maxim Moderately Aggressive Profile I 0.25%
- --------------------------------------------- -------------------------- -----------------------
- --------------------------------------------- -------------------------- -----------------------
Maxim Moderate Profile I 0.25%
- --------------------------------------------- -------------------------- -----------------------
- --------------------------------------------- -------------------------- -----------------------
Maxim Moderately Conservative Profile I 0.25%
- --------------------------------------------- -------------------------- -----------------------
- --------------------------------------------- -------------------------- -----------------------
Maxim Conservative Profile I 0.25%
- --------------------------------------------- -------------------------- -----------------------
- --------------------------------------------- -------------------------- -----------------------
Maxim Aggressive Profile II 0.10%
- --------------------------------------------- -------------------------- -----------------------
- --------------------------------------------- -------------------------- -----------------------
Maxim Moderately Aggressive Profile II 0.10%
- --------------------------------------------- -------------------------- -----------------------
- --------------------------------------------- -------------------------- -----------------------
Maxim Moderate Profile II 0.10%
- --------------------------------------------- -------------------------- -----------------------
- --------------------------------------------- -------------------------- -----------------------
Maxim Moderately Conservative Profile II 0.10%
- --------------------------------------------- -------------------------- -----------------------
- --------------------------------------------- -------------------------- -----------------------
Maxim Conservative Profile II 0.10%
- --------------------------------------------- -------------------------- -----------------------
The Amendment
The Amendment as it will appear in the Current Agreement is attached
hereto as Exhibit E. The Amendment provides in pertinent part that:
o MCM may engage one or more sub-advisers for each Portfolio
(except the Maxim JPMorgan Growth & Income Portfolio), which will have
primary responsibility for determining what investments the Portfolio
will purchase, retain, and sell;
o MCM may replace a Portfolio's sub-adviser or amend a sub-advisory
contract; and
o If a Portfolio has more than one sub-adviser, MCM will determine
the allocation of assets among that Portfolio's sub-advisers.
Recommendation of the Board of Directors
At meetings held on December 14, 2000, and February 5, 2002, the Board
of Directors evaluated this proposal. Prior to and during the meeting, the Board
of Directors requested information deemed necessary to enable it to determine
whether the proposal to approve the Amendment is in the best interest of each
Portfolio and its shareholders. Based upon its review and evaluation of the
materials it received, and in consideration of all factors deemed relevant, the
Board of Directors determined that this proposal is reasonable and in the best
interest of each Portfolio and its shareholders. The Board considered that the
advisory fees for each Portfolio would not change as a result of the Amendment
and that the new "manager-of-managers" structure will provide an opportunity to
hire new sub-advisers and materially amend sub-advisory agreements more
efficiently and with less expense. The Board also considered that all other
provisions of the Current Agreement will not change. Accordingly, the Board of
Directors, including all of the Independent Directors, voted unanimously to
approve the proposal and to recommend to shareholders of each Portfolio that
they vote "FOR" the proposed Amendment.
Vote Required
This proposal will be acted upon separately by each Portfolio. In order for
this proposal to be approved for a Portfolio, the affirmative vote of the
holders of a 1940 Act Majority is required. If this proposal is not approved by
the requisite vote of shareholders, the Board of Directors will consider other
actions that may be taken.
PROPOSAL 5: To approve amendments to the fundamental investment policies of the
Fund generally to standardize the language of those policies that are
required to be fundamental concerning borrowing, commodities, industry
concentration, loans, diversification, real estate, senior securities and
underwriting.
PROPOSAL 6: To approve amendments to the fundamental investment policies of the
Fund generally to delete policies that are no longer required to be
fundamental due to changes in laws or which otherwise need not be
fundamental concerning purchases of securities on margin, investments in
other investment companies, investments in oil, gas and/or mineral
exploration, exercise of control, restricted securities and foreign
securities.
General Discussion for Proposals 5 and 6
The Fund's Board of Directors, including the Independent Directors, has
approved, and recommends that the shareholders of each affected Portfolio
approve the proposed changes and deletions to the fundamental investment
limitations of each Portfolio of the Fund as set forth above in Proposals 4(a)
through 4(h), and 5(a) through 5(f).
The 1940 Act requires a mutual fund to indicate, in its registration
statement, its policy with respect to certain investment activities. The Fund's
Statement of Additional Information ("SAI") currently sets out these fundamental
policies (referred to as "Investment Limitations"). A fundamental policy is one
that cannot be changed without the approval of a majority of the outstanding
voting securities of each affected Portfolio. A "non-fundamental" policy, also
often referred to as "operating policies," may be changed by the Board of
Directors without shareholder approval.
The primary purpose of the proposed new fundamental investment
restrictions is to afford more flexibility and to conform to the practices
employed by the Fund's competitors. After the Fund was organized in 1981,
certain legal and regulatory requirements applicable to investment companies
changed. For example, certain restrictions that were historically imposed by
state securities laws and regulations were preempted by the National Securities
Markets Improvement Act of 1996 ("NSMIA") and, therefore, these state
requirements no longer apply to investment companies. Many of the Portfolios are
currently subject to fundamental investment restrictions that are either more
restrictive than those required under present law, or are no longer required at
all, and that were adopted in response to regulatory, business and industry
conditions that no longer exist. As well, since many Portfolios were established
after the organization of the Fund, the current investment restrictions vary
among the Portfolios. Thus, the proposed changes would:
o simplify, modernize and standardize the fundamental restrictions that
are required to be stated under the 1940 Act; and
o eliminate those fundamental restrictions that are no longer required
by either the securities laws of the various states or the SEC.
It is believed there are several advantages in revising the fundamental
investment restrictions at this time. First, by reducing the total number of
investment restrictions that can be changed only by a shareholder vote, the Fund
will be able to minimize the costs and delays associated with holding future
shareholder meetings to revise fundamental policies that become outdated or
inappropriate or are not consistent with a Portfolio's investment management
techniques. As well, the ability to manage Portfolio assets in a changing
investment environment will be enhanced because there will be greater
flexibility to respond to market, industry, regulatory or technical changes by
seeking Board approval only when necessary to revise certain investment
operating policies. Thus, investment management opportunities will be increased
by these changes. Furthermore, the standardized investment restrictions are
expected to enable the Fund to more efficiently and more easily monitor
Portfolio compliance.
Although the proposed changes will allow the Portfolios greater
flexibility to respond to future investment opportunities, MCM has advised that
none of the proposed changes are intended to materially modify the way any
Portfolio is currently managed. It is not anticipated that the proposed changes,
either individually or in the aggregate, will change the level of risk
associated with investing in the Portfolios. Nor is it anticipated that the
proposed changes will, either individually or in the aggregate, change the
manner in which the Portfolios will be managed. If adopted, the new restrictions
will be interpreted in light of future rules and orders of the SEC and SEC staff
interpretations of relevant law.
The policies that are required by law to be fundamental are those
concerning borrowing money, the purchase and sale of commodities, the
concentration of investments in a particular industry or group of industries,
the policy about making loans to other persons, fund diversification, the
purchase and sale of real estate, the issuance of senior securities, and
underwriting of securities issued by other persons. To the extent that a
Portfolio currently has investment restrictions that correspond to the new
investment restrictions, those restrictions are not discussed in this proxy
statement as there is no need to make any changes thereto.
PROPOSAL 5(a): To approve AN amendment to the fundamental investment policies of
the Fund GENERALLY TO standardize the language of those policies that are
required to be fundamental concerning Borrowing
All eligible shareholders of all the Portfolios of the Fund except the
JPMorgan Growth & Income Portfolio on the Record Date, are entitled to vote
on this proposal.
Borrowing. The 1940 Act requires investment companies to impose certain
limitations on borrowing activities. The limitations on borrowing are generally
designed to protect shareholders and their investments by restricting an
investment company's ability to subject its assets to any claims of creditors
who might have a claim to the investment company's assets or rights upon
liquidation that would take precedence over the claims of shareholders. In
addition, the 1940 Act limitations reflect a Congressional intent to limit an
investment company's exposure to payments to creditors so that the investment
company will not experience difficulty in managing a portfolio to meet debt
payment obligations while still meeting redemption requests on demand. Under the
1940 Act, an investment company's borrowing restriction must be fundamental.
Under the 1940 Act, an investment company is permitted to borrow up to 5%
of its total assets from any person for temporary purposes, and may also borrow
from banks, provided that if borrowings exceed 5%, the investment company must
have assets totaling at least 300% of the borrowing when the amount of the
borrowing is added to the company's other assets. Put another way, an investment
company may borrow, in the aggregate, from banks and others, amounts up to
one-third (33 1/3%) of its total assets (including those assets represented by
the borrowing). For example, an investment company's borrowing of an amount,
from an entity other than a bank, equal to 5% of its total assets, for temporary
purposes, would serve, while the borrowing is outstanding, to reduce the
subsequent bank borrowings that the company may make to 28 1/3% of its total
assets. Investment companies may desire to borrow money to meet redemptions
while waiting for cash from sales of new shares without being forced to sell
portfolio securities before they would have otherwise been sold. This technique
allows investment companies greater flexibility to buy and sell portfolio
securities for investment or tax considerations, rather than because of a need
for short-term cash.
The proposed restriction standardizes the language regarding this
investment restriction for each Portfolio and would expand the circumstances
when the Fund may borrow, to include any situations permitted by the 1940 Act
(for example, if the Fund intended to engage in reverse repurchase agreements.
The current investment restriction for certain of the Portfolios also states
that these Portfolios may not purchase securities while borrowings exceed 5% of
the value of the Fund's total assets. The 1940 Act's limits on borrowing
historically were interpreted to prohibit investment companies from making
additional investments in securities while borrowings exceeded 5% of total
assets. However, a 5% limit is not required under the 1940 Act and originated
from informal regulatory positions. Accordingly, under the proposed restriction,
the Fund would be permitted to make additional investments, even if borrowings
exceed 5% of total assets. Since the proposed borrowing restriction would
provide the Fund with greater borrowing flexibility, the Fund may be subject to
additional costs, as well as the risks inherent to borrowing, such as reduced
total return and increased volatility.
PROPOSAL 5(b): To approve AN amendment to the fundamental
investment policies of the Fund GENERALLY TO standardize
the language of those policies that are required to be
fundamental concerning commidities
All eligible shareholders of all the Portfolios of the
Fund except the JPMorgan Growth & Income Portfolio on the
Record Date, are entitled to vote on this proposal.
Commodities. Under the 1940 Act, an investment company's investment
restriction regarding its investments in commodities must be fundamental. The
most common types of commodities are physical commodities, such as wheat,
cotton, rice and corn. However, under federal law, futures contracts are
considered to be commodities, and therefore, financial futures contracts, such
as futures contracts related to stocks, currencies, stock indices or interest
rates, are also considered to be commodities. Investment companies typically
invest in financial futures. The proposed commodities restriction would clarify
that the Portfolios have the flexibility to: (i) purchase and sell currencies,
(ii) invest in futures contracts on securities, currencies and various indices
and (iii) purchase and sell related options. Thus, while the current restriction
had confined permissible activities to futures contracts, options, forward
foreign currency contracts and swaps, the proposed restriction expands the types
of instruments that a Portfolio may acquire and the types of transactions a
Portfolio may enter into. The proposed restriction also clarifies that
investments may be made in these instruments for any purpose, including
investment or hedging purposes.
The Portfolios have historically been permitted to invest in options on
securities and options on futures. Each Portfolio intends, in the future, to
invest in financial futures contracts and related options in an amount that will
be substantially similar to its prior investment activity. Using financial
futures instruments can involve substantial risks, and will be utilized only if
the Portfolio manager believes such investments are advisable. The risks of
financial futures ___ instruments ___ include magnified losses on transactions;
liquidity risk; and the possibility that the price of the futures contract may
not move in the same direction as the price of the underlying security or
currency.
PROPOSAL 5(c): To approve AN amendment to the fundamental
investment policies of the Fund GENERALLY TO standardize
the language of those policies that are still required to
be fundamental concerning industry concentration
All eligible shareholders of all the Portfolios of the
Fund except the JPMorgan Growth & Income Portfolio on the
Record Date, are entitled to vote on this proposal.
Industry Concentration. Under the 1940 Act, an investment company's
policy of concentrating its investments in securities of companies in the same
industry must be fundamental. Under the federal securities laws, an investment
company "concentrates" its investments, for SEC purposes, if it invests more
than 25% of its "net" assets (exclusive of certain items such as cash, U.S.
government securities and tax-exempt securities) in a particular industry or
group of industries. An investment company is not permitted to concentrate its
investments in a particular industry unless it so states.
The proposed restriction would standardize the language regarding this
investment restriction for each Portfolio and clarify that the concentration
policy applies to the Fund's "net" assets, rather than to the Fund's "total"
assets (which is consistent with the SEC's revision of its historical position).
The proposed restriction will provide investment flexibility that will help the
Fund respond to future legal, regulatory, market or technical developments.
PROPOSAL 5(d): To approve AN amendment to the fundamental
investment policies of the Fund GENERALLY TO standardize
the language of those policies that are still required to
be fundamental concerning loans
All eligible shareholders of all the Portfolios of the
Fund except the JPMorgan Growth & Income Portfolio on the
Record Date, are entitled to vote on this proposal.
Loans. Under the 1940 Act, an investment company's policy regarding lending
must be fundamental. Certain investment techniques could, under certain
circumstances, be considered to be loans. For example, if a Portfolio invests in
debt securities, such investments might be considered to be a loan from the
Portfolio to the issuer of the debt securities. In order to ensure that a
Portfolio may invest in certain debt securities or repurchase agreements, which
also could technically be characterized as the making of loans, the current
fundamental investment restrictions specifically carve out such policies from
its prohibitions. In addition, the current fundamental restrictions explicitly
permit the Fund to lend its portfolio securities; however the percentage of
portfolio securities that may be loaned differs among the Portfolios. Securities
lending is a practice that has become common in the investment company industry,
and involves the temporary loan of portfolio securities to parties that use the
securities for the settlement of other securities transactions. The collateral
delivered to the lending Portfolio in connection with such a transaction is then
invested to provide that Portfolio with additional income it might not otherwise
have. Securities lending involves certain risks if the borrower fails to return
the securities.
The proposed restriction is similar to the current restriction, but would
provide the Portfolios with somewhat greater lending flexibility. Although the
proposed restriction retains the carve-outs contained in the existing investment
restriction, it also would permit the Fund to invest in loan participations and
direct corporate loans that recently have become more common as investments for
investment companies. Furthermore, the proposed restriction standardizes this
restriction among the Portfolios.
PROPOSAL 5(e): To approve AN amendment to the fundamental
investment policies of the Fund GENERALLY TO standardize
the language of those policies that are required to be
fundamental concerning diversification
All eligible shareholders of all the Portfolios of the
Fund except the JPMorgan Growth & Income Portfolio on the
Record Date, are entitled to vote on this proposal.
Diversification. The 1940 Act distinguishes funds that are "diversified"
and those that are "non-diversified" and requires investment companies to adopt
a fundamental policy related to its diversification polices. A diversified
Portfolio, among other things, is prohibited from purchasing securities of any
one issuer if, as to 75% of the Fund's total assets, more than 5% of the Fund's
total assets would be invested in securities of that issuer at the time of
purchase. The 5% limitation does not apply to securities issued or guaranteed by
the U.S. government, its agencies or instrumentalities, or to the securities of
other investment companies. The primary purpose of proposed change is to
standardize the language of the investment restriction for all diversified
Portfolios.
PROPOSAL 5(f): To approve AN amendment to the fundamental
investment policies of the Fund GENERALLY TO standardize
the language of those policies that are required to be
fundamental concerning real estate
All eligible shareholders of all the Portfolios of the
Fund except the JPMorgan Growth & Income Portfolio on the
Record Date, are entitled to vote on this proposal.
Real Estate. Under the 1940 Act, an investment company's investment
restriction regarding investment in real estate must be fundamental. The
proposed real estate restriction is substantially the same as the real estate
limitation contained in the current restriction. Accordingly, the Portfolios
will continue to be prohibited from directly investing in real estate, but will
be permitted to purchase or sell securities of real estate investment trusts.
PROPOSAL 5(g): To approve AN amendment to the fundamental
investment policies of the Fund GENERALLY TO standardize
the language of those policies that are required to be
fundamental concerning SENIOR SECURITIES
All eligible shareholders of all the Portfolios of the
Fund except the JPMorgan Growth & Income Portfolio on the
Record Date, are entitled to vote on this proposal.
Senior Securities. Under the 1940 Act, the Fund must have an investment
policy describing its ability to issue senior securities. A "senior security" is
defined under the 1940 Act generally as an obligation of an investment company,
with respect to its earnings or assets, that takes precedence over the claims of
the investment company's shareholders with respect to the same earnings or
assets. The 1940 Act generally prohibits an open-end fund from issuing senior
securities in order to limit the ability of investment companies to use
leveraging. In general, an investment company uses leveraging when it borrows
money to enter into securities transactions, or acquires an asset without being
required to make payment until a later point in time.
SEC staff interpretations allow an investment company to engage in a
number of types of transactions which might otherwise be considered to create
"senior securities" or "leverage," provided certain conditions are met that are
designed to protect investment company shareholders. For example, some
transactions that may create senior security concerns include short sales,
certain options and futures transactions, reverse repurchase agreements and
securities transactions that obligate the investment company to pay money at a
future date (such as when-issued, forward commitment or delayed delivery
transactions). According to regulatory interpretations, when engaging in such
transactions, an investment company must mark on its or its custodian bank's
books, or set aside in a segregated account with its custodian bank, cash or
other liquid securities to meet the SEC staff's collateralization
requirements. This procedure limits the investment company's ability to engage
in these types of transactions and thereby limits the investment company's
exposure to risk associated with these transactions.
The proposed investment restriction would amend the current investment
restriction to clarify that the Portfolios may engage in options, futures
contracts and forward contracts and to make short sales as permitted under the
1940 Act, and any exemptions available under the 1940 Act. Essentially, the
proposed investment restriction clarifies the Portfolios' ability to engage in
those investment transactions (such as repurchase and reverse repurchase
transactions) which, while appearing to raise senior security concerns, have
been interpreted as not constituting the issuance of senior securities under the
federal securities laws. The proposed investment restriction has been drafted to
provide flexibility for the Fund to respond to legal, regulatory and market
developments.
PROPOSAL 5(h): To approve AN amendment to the fundamental
investment policies of the Fund GENERALLY TO standardize
the language of those policies that are still required to
be fundamental concerning UNDERWRITING
All eligible shareholders of all the Portfolios of the
Fund except the JPMorgan Growth & Income Portfolio on the
Record Date, are entitled to vote on this proposal.
Underwriting. Under the 1940 Act, policies concerning underwriting are
required to be fundamental. Under the federal securities laws, a person or
company generally is considered an underwriter if it participates in the public
distribution of securities of other issuers, usually by purchasing the
securities from the issuer with the intention of reselling the securities to the
public. Underwriters are subject to stringent regulatory requirements and are
often exposed to substantial liability. Thus, virtually all investment companies
operate in a manner that allows them to avoid acting as underwriters.
From time to time, however, an investment company may purchase a security
for investment purposes that it later resells or redistributes to institutional
investors or others under circumstances where the investment company could
possibly be considered to be an underwriter under the technical definition of
"underwriter" contained in the securities laws. For example, an investment
company often purchases securities in private securities transactions where a
resale could raise a question relating to whether or not the company is
technically acting as an underwriter. However, interpretations of the SEC Staff
clarify that resales of privately-placed securities by institutional investors
do not make the institutional investor an underwriter in these circumstances.
The proposed restriction encompasses these SEC positions. Under the 1940 Act, an
investment company will not be considered an underwriter if it sells its own
shares pursuant to a written distribution plan that complies with Rule 12b-1
under the 1940 Act.
The proposed restriction is similar to the Portfolio's current
investment restriction and is intended to conform the language to that generally
used in the industry.
PROPOSAL 6(a): To approve AN amendment to the fundamental
investment policies of the Fund GENERALLY TO delete
policies that are no longer required to be fundamental due
to changes in laws or which otherwise need not be
fundamental concerning purchases of securities on margin
All eligible shareholders of all the Portfolios of the
Fund except the Maxim T. Rowe Price Equity/Income, Maxim
T. Rowe Price MidCap Growth, Maxim INVESCO Balanced, Maxim
Founders Growth & Income and JPMorgan Growth & Income
Portfolios on the Record Date, are entitled to vote on
this proposal.
Margin. This investment restriction was originally included as an
investment limitation in response to the various state law requirements to which
investment companies were subject, which required a stated restriction in
utilizing margin accounts. As discussed above, under NSMIA, the Portfolios are
no longer required to retain a fundamental policy regarding these types of
investment activities.
As a general matter, elimination of this fundamental investment restriction
relating to purchasing securities on margin should not have an impact on the
day-to-day management of the Portfolios since the 1940 Act's prohibitions on
these types of transactions would continue to apply to the Portfolios. The
ability of each Portfolio to purchase securities on margin raises senior
security issues and is specifically prohibited under the 1940 Act, as well as
under the senior securities investment restriction. Elimination of the
investment restriction, therefore, would not affect a Portfolio's inability to
purchase securities on margin. Finally, the Portfolios have not previously, nor
do they currently intend, to engage in these types of investment activities.
PROPOSAL 6(b): To approve an amendment to the fundamental
investment policies of the Fund generally to delete
policies that are no longer required to be fundamental due
to changes in laws or which otherwise need not be
fundamental concerning investments in other investment
companies
Only eligible shareholders of the Maxim Money Market,
Maxim Bond, Maxim Loomis Sayles Corporate Bond, Maxim U.S.
Government Securities, Maxim U.S. Government Mortgage
Securities, Maxim Templeton International Equity, Maxim
INVESCO ADR, Maxim Ariel MidCap Value, Maxim INVESCO
Small-Cap Growth, Maxim Ariel Small-Cap Value, Maxim
Loomis Sayles Small-Cap Value and Maxim Bond Index on the
Record Date, are entitled to vote on this proposal.
Investments in Other Investment Companies. The current fundamental
investment restriction limits a Portfolio's ability to invest in the securities
of other open-end investment companies, except where there is no commission,
other than ordinary brokerage commission paid. This current restriction, which
is more restrictive than the 1940 Act provisions in this regard, was originally
included in the fundamental investment restrictions in response to various state
law requirements. Under NSMIA, however, the Portfolios are no longer legally
required to retain such a policy as a fundamental investment restriction.
Upon elimination of this investment restriction, the Portfolios would
remain subject to the 1940 Act's restrictions on an investment company's ability
to invest in other open-end funds. The 1940 Act's restrictions state that an
investment company may not purchase more than 3% of another investment company's
total outstanding voting stock, commit more than 5% of its assets to the
purchase of another investment company's securities, or have more than 10% of
its total assets invested in securities of all other investment companies.
Additionally, the Portfolios would continue to operate in accordance with the
exemptive orders (the "Orders") issued by the SEC that have granted relief to
the Maxim Profile Portfolios from the 1940 Act's limitations. The Orders permit,
subject to certain conditions, the Maxim Profile Portfolios to invest in other
series including those of the Fund. Other investment companies may charge fees,
which could reduce the returns of the Portfolios by subjecting the Portfolios to
the fees and expenses of the other investment companies.
PROPOSAL 6(c): To approve AN amendment to the fundamental
investment policies of the Fund GENERALLY TO delete
policies that are no longer required to be fundamental due
to changes in laws or which otherwise need not be
fundamental concerning investments in oil, gas
and/or mineral exploration
All eligible shareholders of all the Portfolios of the
Fund except the Maxim INVESCO Balanced, Maxim Founders
Growth & Income, JPMorgan Growth & Income and Profile
Portfolios on the Record Date, are entitled to vote on
this proposal.
Investments in Oil, Gas and/or Mineral Exploration. As discussed above, the
Portfolios are subject to a restriction pertaining to these types of
investments. This investment restriction was required to be adopted by certain
states prior to the enactment of NSMIA. As the restriction is no longer required
under present law, it is proposed that this investment restriction be
eliminated. Notwithstanding the elimination of the fundamental restriction, the
Portfolios do not expect to engage in these types of investments. Such
investments are subject to certain risks, including liquidity risk and increased
susceptibility to economic cycles.
PROPOSAL 6(d): To approve AN amendment to the fundamental
investment policies of the Fund GENERALLY TO delete
policies that are no longer required to be fundamental due
to changes in laws or which otherwise need not be
fundamental concerning exercise of control
All eligible shareholders of all the Portfolios of the
Fund except the Maxim T. Rowe Price Equity/Income, Maxim
T. Rowe Price MidCap Growth, Maxim INVESCO Balanced, Maxim
Founders Growth & Income, Maxim Global Bond, JPMorgan
Growth & Income and Profile Portfolios on the Record Date,
are entitled to vote on this proposal.
Exercise of Control. The current fundamental investment restriction
limits certain of the Portfolios' ability to invest for purposes of exercising
control or management. This investment restriction was enacted in response to
various state securities laws and is no longer required under NSMIA. Typically,
if an investment company acquires a large percentage of the securities of a
single issuer, it will be deemed to have invested in such issuer for the
purposes of exercising control or management. This investment restriction was
intended to ensure that an investment company would not be engaged in the
business of managing another company. The Portfolios have no present intention
of investing in an issuer for the purposes of exercising control or management.
PROPOSAL 6(e): To approve AN amendment to the fundamental
investment policies of the Fund GENERALLY TO delete
policies that are no longer required to be fundamental due
to changes in laws or which otherwise need not be
fundamental concerning restricted securities
All eligible shareholders of all the Portfolios of the
Fund except the Maxim T. Rowe Price Equity/Income, Maxim
T. Rowe Price MidCap Growth, Maxim INVESCO Balanced, Maxim
Founders Growth & Income, Maxim Global Bond, Maxim
Short-Term Maturity Bond, JPMorgan Growth & Income and
Profile Portfolios on the Record Date, are entitled to
vote on this proposal.
Restricted Securities. Certain Portfolios are subject to an investment
restriction which limits the purchase of securities which cannot be sold without
registration or the filing of a notification under federal or state securities
laws (known as "restricted securities"). This investment restriction is not
required under current law and it is, therefore, proposed that this restriction
be eliminated. Elimination of this restriction should not have an impact on the
day-to-day management of the Portfolios as there is no intention to modify the
Portfolios' current investment strategy concerning the purchase of securities
which cannot be sold without registration or the filing of a notification under
federal or state securities laws. Furthermore, the current disclosure in the
Fund's Statement of Additional Information concerning Liquidity remains in
effect. That disclosure is as follows:
Illiquid Securities. Each Portfolio may invest up to 15% of its net
assets in illiquid securities, except the Money Market Portfolio which may
invest up to 10% of its net assets in illiquid securities. The term
"illiquid securities" means securities that cannot be sold in the ordinary
course of business within seven days at approximately the price used in
determining a Portfolio's net asset value. Under the supervision of the
Board of Directors, [MCM] determines the liquidity of portfolio securities
and, through reports from [MCM], the Board of Directors monitors investments
in illiquid securities. Certain types of securities are considered generally
to be illiquid. Included among these are "restricted securities" which are
securities whose public resale is subject to legal restrictions. However,
certain types of restricted securities (commonly known as "Rule 144A
securities") that can be resold to qualified institutional investors may be
treated as liquid if they are determined to be readily marketable pursuant
to policies and guidelines of the Board of Directors.
A Portfolio may be unable to sell illiquid securities when desirable or
may be forced to sell them at a price that is lower than the price at which
they are valued or that could be obtained if the securities were more
liquid. In addition, sales of illiquid securities may require more time and
may result in higher dealer discounts and other selling expenses than do
sales of securities that are not illiquid. Illiquid securities may also be
more difficult to value due to the unavailability of reliable market
quotations for such securities.
PROPOSAL 6(f): To approve AN amendment to the fundamental
investment policies of the Fund GENERALLY TO delete
policies that are no longer required to be fundamental due
to changes in laws or which otherwise need not be
fundamental concerning foreign securities
Only eligible shareholders of the Maxim Money Market,
Maxim U.S. Government Securities, Maxim U.S. Government
Mortgage Securities, Maxim Stock Index, Maxim Index 600,
Maxim Value Index, Maxim Growth Index, Maxim Index 400,
and Maxim Bond Index Portfolios on the Record Date, are
entitled to vote on this proposal.
Foreign Securities. Many Portfolios have a current fundamental investment
restriction limiting the Portfolio's ability to invest in securities of foreign
issuers. This investment restriction is not required under current law and it
is, therefore, proposed that this restriction be eliminated. Elimination of this
restriction should not have an impact on the day-to-day management of the
Portfolios as there is no intention to modify the Portfolios' current investment
strategy concerning the purchase of securities of foreign issuers. Furthermore,
the current disclosure in the Fund's Statement of Additional Information
concerning Foreign Securities remains in effect. That disclosure is as follows:
Foreign Securities. Certain Portfolios may invest in foreign
securities and securities issued by U.S. entities with substantial foreign
operations in a manner consistent with its investment objective and
policies. Such foreign investments may involve significant risks in
addition to those risks normally associated with U.S. equity investments.
There may be less information publicly available about a foreign
corporate or government issuer than about a U.S. issuer, and foreign
corporate issuers are not generally subject to accounting, auditing and
financial reporting standards and practices comparable to those in the
United States. The securities of some foreign issuers are less liquid and
at times more volatile than securities of comparable U.S. issuers. Foreign
brokerage commissions and securities custody costs are often higher than
those in the United States, and judgments against foreign entities may be
more difficult to obtain and enforce. With respect to certain foreign
countries, there is a possibility of governmental expropriation of assets,
confiscatory taxation, political or financial instability and diplomatic
developments that could affect the value of investments in those countries.
The receipt of interest on foreign government securities may depend on the
availability of tax or other revenues to satisfy the issuer's obligations.
A Portfolio's investments in foreign securities may include
investments in countries whose economies or securities markets are not yet
highly developed. Special considerations associated with these investments
(in addition to the considerations regarding foreign investments generally)
may include, among others, greater political uncertainties, an economy's
dependence on revenues from particular commodities or on international aid
or developmental assistance, currency transfer restrictions, illiquid
markets, delays and disruptions in securities settlement procedures.
Most foreign securities in a Portfolio will be denominated in foreign
currencies or traded in securities markets in which settlements are made in
foreign currencies. Similarly, any income on such securities is generally
paid to a Portfolio in foreign currencies. The value of these foreign
currencies relative to the U.S. dollar varies continually, causing changes
in the dollar value of a Portfolio's investments (even if the price of the
investments is unchanged) and changes in the dollar value of a Portfolio's
income available for distribution to its shareholders. The effect of
changes in the dollar value of a foreign currency on the dollar value of a
Portfolio's assets and on the net investment income available for
distribution may be favorable or unfavorable.
A Portfolio may incur costs in connection with conversions between
various currencies. In addition, a Portfolio may be required to liquidate
portfolio assets, or may incur increased currency conversion costs, to
compensate for a decline in the dollar value of a foreign currency
occurring between the time when a Portfolio declares and pays a dividend,
or between the time when a Portfolio accrues and pays an operating expense
in U.S. dollars.
American Depository Receipts ("ADRs"), as well as other "hybrid" forms
of ADRs including European Depository Receipts and Global Depository
Receipts, are certificates evidencing ownership of shares of a foreign
issuer. These certificate are issued by depository banks and generally
trade on an established market in the United States or elsewhere. The
underlying shares are held in trust by a custodian bank or similar
financial institution in the issuer's home country. The depository bank may
not have physical custody of the underlying security at all times and may
charge fees for various services, including forwarding dividends and
interest and corporate actions. ADRs are an alternative to directly
purchasing the underlying foreign securities in their national markets and
currencies. However, ADRs continue to be subject to the risks associated
with investing directly in foreign securities. These risks include foreign
exchange risks as well as the political and economic risks of the
underlying issuer's country.
The current fundamental investment policies to be amended are attached
hereto as Exhibit C. The standardized fundamental investment restrictions
proposed for shareholders approval are shown below.
Proposed Standardized Fundamental Investment Restrictions
1. BORROWING. The Fund (i.e., each Portfolio) will not borrow money except
that the Fund may (i) borrow for non-leveraging, temporary, or emergency
purposes; and (ii) engage in reverse repurchase agreements and make other
investments or engage in other transactions, which may involve borrowing, in a
manner consistent with Fund's investment objective and program, provided that
any such borrowings comply with applicable regulatory requirements.
2. COMMODITIES, FUTURES, AND OPTIONS THEREON. The Fund (i.e., each
Portfolio) will not purchase or sell physical commodities; except that it may
purchase and sell derivatives (including, but not limited to, futures contracts,
options thereon and options on futures contracts). The Fund does not consider
currency contracts or hybrid investments to be commodities.
3. INDUSTRY CONCENTRATION. The Fund (i.e., each Portfolio) will not
purchase the securities of any issuer if, as a result, more than 25% of the
value of the Fund's net assets would be invested in the securities of issuers
having their principal business activities in the same industry; provided there
shall be no limitation on the purchase of obligations issued or guaranteed by
the US Government, or its agencies or instrumentalities, or of certificates of
deposit or bankers acceptances. It is the current position of the staff of the
SEC that foreign governments are industries for purposes of this restriction.
Notwithstanding the foregoing, each of the Maxim Stock Index, Maxim Growth
Index, Maxim Value Index, Maxim Index 600, Maxim Index 400, Maxim Index European
and Maxim Index Pacific Portfolios (the "Equity Index Portfolios" or each an
"Equity Index Portfolio") may concentrate its investments in a particular
industry or group of industries to approximately the same extent as its
benchmark index if its benchmark index (as described in the Equity Index
Portfolios' current prospectus) is so concentrated; for purposes of this
limitation, whether an Equity Index Portfolio is concentrating in an industry or
group of industries shall be determined in accordance with the 1940 Act and as
interpreted or modified from time to time by any regulatory or judicial
authority having jurisdiction.
4. LOANS. The Fund (i.e., each Portfolio) will not make loans, although the
Fund may (i) lend portfolio securities; (ii) enter into repurchase agreements;
and (iii) acquire debt securities, bank loan participation interests, bank
certificates of deposit, bankers' acceptances, debentures or other securities,
whether or not the purchase is made upon the original issuance of the
securities; and (iv) purchase debt.
5. DIVERSIFICATION. The Fund (i.e., each Portfolio) will not, with respect
to 75% of the value of the Portfolio's total assets, purchase a security if, as
a result (i) more than 5% of the value of the Portfolio's total assets would be
invested in the securities of a single issuer (other than the U.S. government or
any of its agencies or instrumentalities or repurchase agreements collateralized
by U.S. government securities, and other investment companies) or (ii) more than
10% of the outstanding voting securities of any issuer would be held by the Fund
(other than obligations issued or guaranteed by the U.S. government, its
agencies or instrumentalities or by other investment companies). This investment
restriction does not apply to the Equity Index Portfolios, Maxim Global Bond,
Maxim U.S. Government Mortgage Securities, and Maxim Short-Term Maturity Bond
Portfolio, as these portfolios are considered non-diversified for purposes of
the 1940 Act. This investment restriction also does not apply to the Maxim
Profile Portfolios.
6. REAL ESTATE. The Fund (i.e., each Portfolio) will not purchase or sell
real estate, including limited partnership interests therein, unless acquired as
a result of ownership of securities or other instruments (but this shall not
prevent the Fund from investing in securities or other instruments backed by
real estate or securities of companies engaged in the real estate business).
7. SENIOR SECURITIES. The Fund (i.e., each Portfolio) will not issue senior
securities except in compliance with the 1940 Act.
8. UNDERWRITING. The Fund (i.e., each Portfolio) will not underwrite
securities issued by other persons, except to the extent the Fund may be deemed
to be an underwriter under applicable law in connection with the sale of its
portfolio securities in the ordinary course of pursuing its investment program.
Recommendation of the Board of Directors
At a meeting held on November 29, 2001, the Board of Directors evaluated
each of the proposed changes. Prior to and during the meeting, the Board of
Directors requested information deemed necessary to enable it to determine
whether the proposal is in the best interest of each Portfolio and its
shareholders. Based upon its review and evaluation of the materials it received,
and in consideration of all factors deemed relevant, the Board of Directors
determined that this proposal is reasonable and in the best interest of each
Portfolio and its shareholders. The Board believes that simplifying and
standardizing or eliminating the current fundamental investment policies of the
Fund as proposed will enable the Fund to minimize the costs and delay associated
with holding future shareholder meetings to revise fundamental investment
policies that become outdated or inappropriate. Further, although the proposed
amendments may provide the Fund greater investment flexibility to respond to
future investment opportunities, the Board does not anticipate that the
amendments, if approved, individually or in the aggregate, will result in a
material change in the level of investment risk associated with an investment in
any of the Portfolios. Accordingly, the Board of Directors, including all of the
Independent Directors, voted unanimously to approve the proposal and to
recommend to shareholders of each Portfolio that they vote "FOR" the proposed
changes.
Vote Required
Each proposal will be acted upon separately by each Portfolio with
respect to each proposed change of fundamental investment restriction. In order
for each proposal to be approved for a Portfolio, the affirmative vote of the
holders of a 1940 Act Majority of each Portfolio is required.
If each proposed amendment is approved by the shareholders of the
Portfolios, the Fund's prospectus and statement of additional information will
be revised, as appropriate and as soon as practicable, to reflect the change.
Further, the amended investment policies will remain fundamental to the
Portfolios and, as such, cannot be changed without a further shareholder vote.
On the other hand, if this proposal is not approved by the shareholders, the
Board of Directors will consider other actions that may be taken.
ADDITIONAL INFORMATION
Shareholder Proposals
The Fund does not hold annual or other regular meetings of shareholders.
Shareholder proposals to be presented at any future meeting of shareholders must
be received by the Fund in writing a reasonable amount of time before the Fund
solicits proxies for that meeting, in order to be considered for inclusion in
the proxy materials for that meeting.
The Fund will furnish, without charge, a copy of the 2001 annual report upon
request to: Mr. Aaron Knode, 8515 East Orchard Road, Greenwood Village, Colorado
80111; (800) 537-2033, ext. 75332.
BY ORDER OF THE BOARD OF DIRECTORS,
Beverly A. Byrne
Secretary
EXHIBIT A
Form of
SUB-ADVISORY AGREEMENT
SUB-ADVISORY AGREEMENT (herein "the Agreement" or "this Agreement") made
this ___ day of _________, 2002 by and between Maxim Capital Management, LLC, a
Colorado limited liability company registered as an investment adviser under the
Investment Advisers Act of 1940 ("the Adviser"), Barclays Global Fund Advisors,
a corporation organized under the laws of California, 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 portfolios of the Fund (the "Portfolios") listed in
Schedule A attached hereto and commencing on the dates specified therein, as
such Schedule may be amended from time to time by mutual written agreement, 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 has been provided to the Sub-adviser. 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
Portfolios 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 Portfolios, 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 Portfolios 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, at its own expense 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
Portfolios, 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 Portfolios;
(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 Portfolios for approval, modification, or
rejection by the Board;
(c) seek out specific investment opportunities for the Portfolios
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 Portfolios 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 Portfolios 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
Portfolios;
(f) communicate as appropriate to the Adviser adequate and timely
information on investment related activity within the Portfolios,
including, but not limited to purchases, sales and contractual
commitments;
(g) arrange with the applicable broker or dealer at the time of
the purchase or sale of investments or other assets of the Portfolios
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 Portfolios;
(i) maintain all records, memoranda, instructions or
authorizations relating to the acquisition or disposition of
investments or other assets of the Portfolios required to be
maintained by Sub-adviser;
(j) arrange with the Adviser an administrative process which
permits the Adviser to appropriately reflect in its daily
determination of unit values, the transactions, positions and
obligations of the Portfolios resulting from the investment management
services provided to the Portfolios;
(k) vote all shares held by the Portfolios.
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 Portfolios.
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 Portfolios 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 Portfolios and/or 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 Portfolios, as
described in Schedule B attached hereto, as such Schedule may be amended from
time to time by mutual written agreement.
Payment to the Sub-adviser will be made monthly by the Adviser based on the
average daily net assets of the Portfolios during each month. 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 Portfolios and all of its general
administrative expenses. The Subadviser shall not be responsible for the
following expenses of the Fund: organization and certain offering expenses of
the Fund (including out-of-pocket expenses, but not including the Subadviser's
overhead and employee costs); fees payable to the Subadviser and to any other
Fund advisers or consultants; legal expenses; auditing and accounting expenses;
interest expenses; telephone, telex, facsimile, postage and other communications
expenses; taxes and governmental fees; fees, dues and expenses incurred by or
with respect to the Fund in connection with membership in investment company
trade organizations; fees and expenses of the Fund's Administrator or of any
transfer agent, registrar, or dividend disbursing agent of the Fund; payments to
the Administrator for maintaining the Fund's financial books and records and
calculating its daily net asset value; other payments for portfolio pricing or
valuation services to pricing agents, accountants, bankers and other
specialists, if any; expenses of preparing share certificates; other expenses in
connection with the issuance, offering, distribution or sale of securities
issued by the Fund; expenses relating to investor and public relations; expenses
of registering and qualifying shares of the Fund for sale; freight, insurance
and other charges in connection with the shipment of the Fund's portfolio
securities; brokerage commissions or other costs of acquiring or disposing of
any portfolio securities or other assets of the Fund, or of entering into other
transactions or engaging in any investment practices with respect to the Fund;
expenses of printing and distributing prospectuses, Statements of Additional
Information, reports, notices and dividends to stockholders; costs of stationery
or other office supplies; any litigation expenses; and costs of stockholders'
and other meetings.
ARTICLE IV
Portfolio Transactions and Brokerage
The Sub-adviser agrees to determine the securities to be purchased or
sold by the Portfolios, 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 Portfolios and
will use its best efforts to obtain the most favorable net results and execution
of the Portfolios' 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 Portfolios 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 or other 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 Portfolios 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 Portfolios 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 Portfolios 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 Portfolios 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 Portfolios
and to such other accounts or companies. The Fund recognizes that in some cases
this procedure may adversely affect the size of the position obtainable for the
Portfolios.
ARTICLE VI
Effectiveness of the Agreement
The Agreement shall not become effective (and the Sub-adviser shall not
serve or act as hereunder) 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 by
a majority of the shareholders of each of the Portfolios.
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
each of the Portfolios, 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 each of the Portfolios, on sixty days
written notice to the Sub-adviser;
(c) may be amended only by a written instrument signed by the Fund on
behalf of , 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 each of the
Portfolios; 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 Portfolios 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; provided, however, that the Sub-adviser may make such records and
accounts available to its legal counsel and independent auditors. 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 (or omissions by the Sub-adviser to carry out its obligations
hereunder) of the Sub-adviser under this Agreement, including the activities (or
such omissions) 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 (or omissions by the
Adviser to carry out its obligations hereunder or thereunder), including the
activities (or such omissions) of the Adviser's officers, directors, agents,
employees, controlling persons, shareholders, and any other person or entity
affiliated with the Adviser or retained by it to perform or assist in the
performance of its obligations under this Agreement or the GW Agreement;
provided, however, that in no event is Adviser's indemnity in favor of
Sub-adviser deemed to protect Sub-adviser against any liability to which the
Sub-adviser would otherwise be subject by reason of willful misfeasance, bad
faith, or gross negligence in the performance of its duties or by reason of its
reckless disregard of its obligations or duties under this Agreement.
ARTICLE XI
Agreements, Representations and Indemnification
Related to Disclosure Documents
A. The Sub-adviser will cooperate with the Fund and the Adviser in
connection with the registration or qualification of units of the Portfolios 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 at least 10 days
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 Portfolios.
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 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 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 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 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 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 Portfolios, 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
Non-Compete
The Adviser and Sub-adviser acknowledge that, in the course of providing
services under this Agreement, Sub-adviser may be introduced to current or
prospective customers (hereinafter a "Customer") of the Fund or any affiliate of
the Adviser and, as a result of such introduction may have access to or obtain
information about such Customer. In the event said Customer ultimately utilizes
the Fund or any affiliate of the Adviser as an investment product provider for
any defined contribution plan offered by Customer, Sub-adviser agrees:
(a) not knowingly to utilize any confidential information regarding the
Customer and/or its employees' participation in such defined contribution
plan(s) which Sub-adviser receives as a result of providing ___ services
under this Agreement in non-Fund business of the Sub-adviser of its
affiliates;
(b) not knowingly to attempt to contact the Customer without prior notification
to the Adviser; and
(c) not knowingly to attempt to sell any mutual funds affiliated with
Sub-adviser directly to Customer on a stand-alone basis if the Portfolios
are included either directly or indirectly in the Customer's defined
contribution plan(s).
In the event such Customer does not utilize the Fund or any affiliate of
the Adviser as an investment product provider, Sub-adviser is not subject to any
of the foregoing terms and conditions.
For purposes of this Section XV, defined contribution plan shall mean
401(a), 401(k), 457 and 403(b) plans.
For purposes of this Section XV, introduction shall mean inclusion of
the Portfolios in the defined contribution product offered to that Customer's
consideration.
The following situations are not subject to the provisions of this
Section XV:
(a) Customer has a pre-existing relationship with Sub-adviser; or
(b) Sub-adviser or any of its affiliate makes other funds available to another
defined contribution plan product provider and that product provider bids
on the Customer's case using publicly available information; or
(c) no introduction to Customer is made.
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: Maxim CAPITAL MANAGEMENT, LLC
By:
- ------------------------ ----------------------------------
Name: Name:
Title:
Address:8515 East Orchard Road
Greenwood Village, CO 80111
Attn: Secretary
Witness: MAXIM SERIES FUND, INC.
By:
- ------------------------ ----------------------------------
Name: Name:
Title:
Address:8515 East Orchard Road
Greenwood Village, CO 80111
Attn: Secretary
Witness: BARCLAYS GLOBAL FUND ADVISORS
By:
- ------------------------ ----------------------------------
Name: Name:
Title:
By:
----------------------------------
Name:
Title:
Address: 45 Fremont Street
San Francisco, CA 94105
Attn: Legal Department
Schedule A
Maxim Stock Index Portfolio
Maxim Index 600 Portfolio
Maxim Index 400 Portfolio
Maxim Growth Index Portfolio
Maxim Value Index Portfolio
Maxim Index European Portfolio
Maxim Index Pacific Portfolio
Schedule B
The following fees apply to the aggregate assets of the Maxim Stock Index
Portfolio, Maxim Growth Index Portfolio, Maxim Value Index Portfolio, Maxim
Index 600 Portfolio, Maxim Index 400 Portfolio, Orchard S&P 500 Index(R)
Fund, Orchard Index 600 Fund, Orchard Nasdaq-100 Index(R) Fund, and Orchard DJIA
IndexSM Fund, and existing and future Barclays Global Investors domestic and/or
non-US daily-valued collective fund index investment strategies for which
Financial Administrative Services Corporation acts as collective fund servicing
agent, assets in each type of index strategy to be aggregated for purposes of
fee calculation as set forth below:
Domestic Index Strategies:
First $2.250 billion 0.03%
Next $1.000 billion 0.02%
Over $3.250 billion 0.01%
The above fees apply to the aggregate assets of Maxim Stock Index Portfolio,
Maxim Growth Index Portfolio, Maxim Value Index Portfolio, Maxim Index 600
Portfolio, Maxim Index 400 Portfolio, Orchard S&P 500 Index(R)Fund, Orchard
Index 600 Fund, Orchard Nasdaq-100 Index(R) Fund, and Orchard DJIA IndexSM Fund,
and existing and future Barclays Global Investors domestic collective fund index
investment strategies for which Financial Administrative Services Corporation
acts as collective fund servicing agent:
International Index Strategies:
First $200 million 0.10%
Next $100 million 0.08%
Next $300 million 0.05%
Over $600 million 0.03%
The above fees apply to the aggregate assets of Maxim Index European Portfolio,
Maxim Index Pacific Portfolio, and existing and future Barclays Global Investors
non-US daily-valued collective fund index investment strategies for which
Financial Administrative Services Corporation acts as collective fund servicing
agent.
Exhibit B
Certain Other Investment Companies Advised by Barclays
Barclays acts as investment adviser or sub-adviser to the following other
investment companies that have investment objectives similar to the Equity Index
Portfolios', for compensation at the annual percentage rates of the
corresponding average net asset levels of those funds set forth below.
- ---------------------------- ----------------- ------------------------- ----------------------
Net Assets of Barclays'
Name of Fund Other Funds at Fee Rate Relationship to
December 31, Other Fund (Adviser
2001 or Sub-Adviser)
- ---------------------------- ----------------- ------------------------- ----------------------
- ---------------------------- ----------------- ------------------------- ----------------------
Master Investment $ 0.05% Advisor
Portfolio S&P 500 Fund
- ---------------------------- ----------------- ------------------------- ----------------------
- ---------------------------- ----------------- ------------------------- ----------------------
American Century Equity $ 0.05% - 1st $200 Sub-advisor
Index Fund million; 0.02% next
$300 million; 0.01%
thereafter
- ---------------------------- ----------------- ------------------------- ----------------------
- ---------------------------- ----------------- ------------------------- ----------------------
Jefferson Pilot S&P 500 $ 0.05% - 1st $500 Sub-advisor
Fund million; 0.025% next
$500 million; 0.01%
thereafter
- ---------------------------- ----------------- ------------------------- ----------------------
- ---------------------------- ----------------- ------------------------- ----------------------
Smith Barney S&P 500 Fund $ 0.02% Sub-advisor
- ---------------------------- ----------------- ------------------------- ----------------------
- ---------------------------- ----------------- ------------------------- ----------------------
Smith Barney Russell 1000 $ 0.02% Sub-advisor
Growth
- ---------------------------- ----------------- ------------------------- ----------------------
- ---------------------------- ----------------- ------------------------- ----------------------
Smith Barney Russell 1000 $ 0.02% Sub-advisor
Value
- ---------------------------- ----------------- ------------------------- ----------------------
- ---------------------------- ----------------- ------------------------- ----------------------
State Farm Large Cap $ 0.15% - 1st $50 Sub-advisor
Equity Index million; 0.02% next
$500 million; 0.01%
thereafter
- ---------------------------- ----------------- ------------------------- ----------------------
- ---------------------------- ----------------- ------------------------- ----------------------
Vantagepoint S&P 500 Fund $ 0.04% - 1st $500 Sub-advisor
million; 0.02% next
$200 million; 0.01%
thereafter
- ---------------------------- ----------------- ------------------------- ----------------------
- ---------------------------- ----------------- ------------------------- ----------------------
Wells Fargo Trust Index $ 0.20% - 1st $500 Sub-advisor
Allocation Fund million; 0.15% next $50
million; 0.10%
thereafter
- ---------------------------- ----------------- ------------------------- ----------------------
Barclays has not waived, reduced or otherwise agreed to reduce its fee under any
contract referred to in the table above.
EXHIBIT C
FUNDAMENTAL POLICIES TO BE AMENDED
Except as otherwise indicated the following chart describes the current
investment policies and the corresponding proposed new investment policy for the
following Portfolios:
Maxim Money Market, Maxim Bond, Maxim Loomis Sayles Corporate Bond, Maxim U.S.
Government Securities, Maxim Short-Term Maturity Bond, Maxim U.S. Government
Mortgage Securities, Maxim Templeton International Equity, Maxim INVESCO ADR,
Maxim Ariel MidCap Value, Maxim INVESCO Small-Cap Growth, Maxim Ariel Small-Cap
Value, Maxim Loomis Sayles Small-Cap Value, Maxim Stock Index, Maxim Index 600,
Maxim Value Index, Maxim Growth Index, Maxim Index 400, Maxim Bond Index, Maxim
Index Pacific, Maxim Index European Portfolios.
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Current Investment Policy Proposed New Investment Policy
- --------------------------------------------------- --------------------------------------------
- --------------------------------------------------- --------------------------------------------
Commodities. Each Portfolio will not purchase or Each Portfolio will not purchase or sell
sell interests in commodities, commodities physical commodities; except that it may
contracts, oil, gas or other mineral exploration purchase and sell derivatives (including,
or development programs, or real estate, except but not limited to, futures contracts,
that the Fund may purchase securities of issuers options thereon and options on futures
which invest or deal in any of the above; contracts). Current contracts or hybrid
provided, however, that the Bond, Maxim Stock investments are not considered to be
Index, Maxim Index 600, Maxim Growth Index, Maxim commodities.
Value Index, Maxim Ariel MidCap Value, Maxim
Templeton International Equity, Maxim Ariel
Small-Cap Value, Maxim Loomis Sayles Corporate
Bond, Maxim Loomis Sayles Small-Cap Value, Maxim
INVESCO Small-Cap Growth, Maxim INVESCO ADR,
Maxim Short-Term Maturity Bond, Maxim Index 400,
Maxim Index Pacific, Maxim Index European and
Maxim Bond Index Portfolios may invest in futures
contracts based on financial indices, foreign
currency transactions and options on permissible
futures contracts.
Each Portfolio will not write, purchase or sell
puts, calls or combinations thereof, except that
the Bond, Maxim Index 600, Maxim Value Index,
Maxim Growth Index, Maxim Ariel MidCap Value,
Maxim Templeton International Equity, Maxim Ariel
Small-Cap Value, Maxim Loomis Sayles Corporate
Bond, Maxim Loomis Sayles Small-Cap Value, Maxim
Short-Term Maturity Bond, Maxim INVESCO Small-Cap
Growth, Maxim Index 400, Maxim Bond Index, Maxim
Stock Index, Maxim Index European, Maxim Index
Pacific and Maxim INVESCO ADR Portfolios 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 a Portfolio may invest in foreign
currencies) and may buy and sell put and call
warrants, the values of which are based upon
securities indices. In addition, the Bond
Portfolio may buy and sell put and call options (
and any combination thereof) on permissible
futures contracts.
Each Portfolio will not sell securities short or
purchase securities on margin.
- --------------------------------------------------- --------------------------------------------
- --------------------------------------------------- --------------------------------------------
Industry Concentration. Each Portfolio will Each Portfolio will not purchase the
not invest more than 25% of its total assets securities of any issuer if, as a result,
(taken at market value at the time of each more than 25% of the value of the Fund's
investment) in the securities of issuers net assets would be invested in the
primarily engaged in the same industry; securities of issuers having their
utilities will be divided according to their principal business activities in the same
services; for example, gas, gas transmission, industry; provided there shall be no
electric and telephone each will be limitation on the purchase of obligations
considered a separate industry for purposes issued or guaranteed by the US Government,
of this restriction; provided that there or its agencies or instrumentalities, or
shall be no limitation on the purchase of of certificates of deposit or bankers
obligations issued or guaranteed by the U.S. acceptances. It is the current position
Government, or its agencies or of the staff of the SEC that foreign
instrumentalities, or of certificates of governments are industries for purposes of
deposit and bankers' acceptances. this restriction. Notwithstanding the
Notwithstanding the foregoing, each of the foregoing, each of the Maxim Stock Index,
Maxim Stock Index, Maxim Growth Index, Maxim Maxim Growth Index, Maxim Value Index,
Value Index, Maxim Index 600, Maxim Index Maxim Index 600, Maxim Index 400, Maxim
400, Maxim Index European and Maxim Index Index European and Maxim Index Pacific
Pacific Portfolios (the "Equity Index Portfolios (the "Equity Index Portfolios"
Portfolios" or each an "Equity Index or each an "Equity Index Portfolio") may
Portfolio") may concentrate its investments concentrate its investments in a
in a particular industry or group of particular industry or group of industries
industries to approximately the same extent to approximately the same extent as its
as its benchmark index if its benchmark index benchmark index if its benchmark index (as
(as described in the Equity Index Portfolios' described in the Equity Index Portfolios'
current prospectus) is so concentrated; for current prospectus) is so concentrated;
purposes of this limitation, whether an for purposes of this limitation, whether
Equity Index Portfolio is concentrating in an an Equity Index Portfolio is concentrating
industry or group of industries shall be in an industry or group of industries
determined in accordance with the Investment shall be determined in accordance with the
Company Act of 1940 and as interpreted or 1940 Act and as interpreted or modified
modified from time to time by any regulatory from time to time by any regulatory or
or judicial authority having jurisdiction. judicial authority having jurisdiction.
- --------------------------------------------------- --------------------------------------------
- --------------------------------------------------- --------------------------------------------
Borrowing. Each Portfolio will not borrow Each Portfolio will not borrow money
amounts in excess of 10% of its total assets, except that a Portfolio may (i) borrow for
taken at market value at the time of the non-leveraging, temporary, or emergency
borrowing, and then only from banks as a purposes; (ii) engage in reverse
temporary measure for extraordinary or emergency repurchase agreements and make other
purposes. In the event a Portfolio borrows in investments or engage in other
excess of 5% of its total assets, at the time of transactions, which may involve borrowing,
borrowing, it will have an asset coverage of at in a manner consistent with the
least 300%. As a matter of policy, all Portfolio's investment objective and
borrowings will be repaid before any investments program, provided that any such borrowings
are made. comply with applicable regulatory
Each Portfolio will not mortgage, pledge, requirements.
hypothecate or in any manner transfer, as
security for indebtedness, any securities owned
or held by the Fund except as may be necessary in
connection with borrowings mentioned above, and
then such mortgaging, pledging or hypothecating
may not exceed 10% of the Fund'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 ledged securities will
exceed 10% of the value of the Fund's shares.
This restriction does not apply to segregated
accounts.
- --------------------------------------------------- --------------------------------------------
- --------------------------------------------------- --------------------------------------------
Diversification. Each Portfolio will not invest Each Portfolio will not, with respect to
more than 15% of its total assets (taken at 75% of the value of the Portfolio's total
market value at the time of each investment) in assets, purchase a security if, as a
obligations (excluding repurchase agreements) of result (i) more than 5% of the value of
any one bank, or, with respect to 75% of its the Portfolio's total assets would be
assets, invest more than 5% of such assets in the invested in the securities of a single
securities (other than United States Government issuer (other than the U.S. government or
or government agency securities) of any one any of its agencies or instrumentalities
issuer other than a bank (but including or repurchase agreements collateralized by
repurchase agreements with any one bank); and (b) U.S. government securities, and other
purchase more than either (i) 10% in principal investment companies) or (ii) more than
amount of the outstanding debt securities of an 10% of the outstanding voting securities
issuer, or (ii) 10% of the outstanding voting of any issuer would be held by the Fund
securities of an issuer, except that such (other than obligations issued or
restrictions shall not apply to securities issued guaranteed by the U.S. government, its
or guaranteed by the United States Government or agencies or instrumentalities or by other
its agencies, bank money instruments or bank investment companies). This investment
repurchase agreements. Under the diversification restriction does not apply to the Equity
requirements of the Investment Company Act of Index Portfolios, Maxim Global Bond, Maxim
1940 applicable to diversified investment U.S. Government Mortgage Securities, and
companies, such as the Fund, the Fund may not Maxim Short-Term Maturity Bond Portfolio,
invest more than 5% of the value of its total as these portfolios are considered
assets in the securities of any one issuer non-diversified for purposes of the 1940
(except that this statutory restriction does not Act. This investment restriction also
apply with respect to 25% of the value of an does not apply to the Maxim Profile
investment company's total assets). Under the Portfolios.
Fund's current interpretation of the statutory
diversification tests, bank obligations of the
type in which the Fund invests are not subject to
this 5% limitation and thus the Fund'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 Fund revise its investments in
bank obligations so as not to exceed the 5%
limitation in order for the Fund to maintain its
status as a diversified company. This investment
restriction does not apply to the Maxim Global
Bond, Maxim U.S. Government Mortgage Securities
Maxim Short-Term Maturity Bond Portfolios.
Notwithstanding the foregoing, the Maxim Stock
Index, Maxim Growth Index, Maxim Value Index,
Maxim Index 600, Maxim Index 400, Maxim Index
European and Maxim Index Pacific Portfolios shall
be considered non-diversified for purposes of the
Investment Company Act of 1940.
- --------------------------------------------------- --------------------------------------------
- --------------------------------------------------- --------------------------------------------
Loans. Each Portfolio will not make loans, Each Portfolio will not make loans,
except as described, below and except through the although the Fund may (i) lend portfolio
purchase of obligations in private placements securities; (ii) enter into repurchase
(the purchase of publicly-traded obligations are agreements; and (iii) acquire debt
not considered the making of a loan. securities, bank loan participation
Lend its portfolio securities in excess of 20% of interests, bank certificates of deposit,
its total assets, taken at market value at the bankers' acceptances, debentures or other
time of the loan, and provided that such loan securities, whether or not the purchase is
shall be made in accordance with the guidelines made upon the original issuance of the
set forth below (33 1/3% for the Maxim Short-Term securities; and (iv) purchase debt.
Maturity Bond, Maxim Index 400, Maxim Index
European, Maxim Index Pacific, Maxim Stock Index,
Maxim Growth Index, Maxim Value Index and Maxim
Index 600 Portfolios).
Lending of Portfolio Securities Guidelines.
Subject to Investment Limitations described above
for all Portfolios, each Portfolio of the Fund
from time-to-time may lend its portfolio
securities to brokers, dealers and financial
institutions. Securities lending allows a fund to
retain ownership of the securities loaned and, at
the same time, to earn additional income.
Because there may be delays in the recovery of
loaned securities, or even a loss of rights in
collateral supplied should the borrower fail
financially, loans will be made only to parties
deemed by GW Capital Management to be of good
standing. Furthermore, they will only be made if,
in GW Capital Management's judgment, the
consideration to be earned from such loans would
justify the risk.
GW Capital Management understands that it is the
current view of the SEC Staff that a Fund may
engage in loan transactions only under the
following conditions: (1) the fund must receive
100% collateral in the form of cash or cash
equivalents (e.g., U.S. Treasury bills or notes)
from the borrower; (2) the borrower must increase
the collateral whenever the market value of the
securities loaned (determined on a daily basis)
rises above the value of the collateral; (3)
after giving notice, the fund must be able to
terminate the loan at any time; (4) the fund must
receive reasonable interest on the loan or a flat
fee from the borrower, as well as amounts
equivalent to any dividends, interest, or other
distributions on the securities loaned and to any
increase in market value; (5) the fund may pay
only reasonable custodian fees in connection with
the loan; and (6) the Board of Directors must be
able to vote proxies on the securities loaned,
either by terminating the loan or by entering
into an alternative arrangement with the
borrower.
Cash received through loan transactions may be
invested in other eligible securities. Investing
this cash subjects that investment, as well as
the security loaned, to market forces (i.e.,
capital appreciation or depreciation).
- --------------------------------------------------- --------------------------------------------
- --------------------------------------------------- --------------------------------------------
Real Estate. Each Portfolio will not purchase or Each Portfolio will not purchase or sell
sell interests in commodities, commodities real estate, including limited partnership
contracts, oil, gas or other mineral exploration interests therein, unless acquired as a
or development programs, or real estate, except result of ownership of securities or other
that the Fund may purchase securities of issuers instruments (but this shall not prevent
which invest or deal in any of the above; the Fund from investing in securities or
provided, however, that the Bond, Maxim Stock other instruments backed by real estate or
Index, Maxim Index 600, Maxim Growth Index, Maxim securities of companies engaged in the
Value Index, Maxim Ariel MidCap Value, Maxim real estate business).
Templeton International Equity, Maxim Ariel
Small-Cap Value, Maxim Loomis Sayles Corporate
Bond, Maxim Loomis Sayles Small-Cap Value, Maxim
INVESCO Small-Cap Growth, Maxim INVESCO ADR,
Maxim Short-Term Maturity Bond, Maxim Index 400,
Maxim Index Pacific, Maxim Index European and
Maxim Bond Index Portfolios may invest in futures
contracts based on financial indices, foreign
currency transactions and options on permissible
futures contracts.
- --------------------------------------------------- --------------------------------------------
- --------------------------------------------------- --------------------------------------------
Underwriting. Each Portfolio will not underwrite Each Portfolio will not underwrite
securities of other issuers except insofar as the securities issued by other persons, except
Fund may be deemed an underwriter under the to the extent the Fund may be deemed to be
Securities Act of 1933 in selling portfolio an underwriter under applicable law in
securities. connection with the sale of its portfolio
securities in the ordinary course of
pursuing its investment program.
- --------------------------------------------------- --------------------------------------------
- --------------------------------------------------- --------------------------------------------
Senior Securities. No current investment policy. Each Portfolio will not issue senior
securities except in compliance with the
1940 Act.
- --------------------------------------------------- --------------------------------------------
- --------------------------------------------------- --------------------------------------------
Exercise of Control. Each Portfolio will not No proposed similar investment policy.
alone or together with any other investor make
investments for the purpose of exercising control
over, or management of any issuer.
- --------------------------------------------------- --------------------------------------------
- --------------------------------------------------- --------------------------------------------
Investment in other Investment Companies. Each No proposed similar investment policy.
Portfolio will not 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 Fund's total assets,
taken at market value, would be invested in such
securities. This investment restriction does not
apply to the Maxim Short-Term Maturity Bond, nor
does this investment restriction apply to any
Equity Index Portfolio.
- --------------------------------------------------- --------------------------------------------
- --------------------------------------------------- --------------------------------------------
Restricted Securities. Each Portfolio will not No proposed similar investment policy
purchase securities for the Fund 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 such Fund's net assets
(15% for the Maxim INVESCO Small-Cap Growth and
Maxim INVESCO ADR Portfolios). This investment
restriction does not apply to the Maxim
Short-Term Maturity Bond Portfolio.
- --------------------------------------------------- --------------------------------------------
- --------------------------------------------------- --------------------------------------------
Purchase of Securities on Margin. Each Portfolio No proposed similar investment policy.
will not purchase any securities on margin
(except that the Fund may obtain such short-term
credit as may be necessary for the clearance of
purchases and sales of portfolio securities, and
the Bond, Maxim Stock Index, Maxim Index 600,
Maxim Value Index, Maxim Growth Index, Maxim
Templeton International Equity, Maxim Ariel
Small-Cap Value, Maxim Ariel MidCap Value, Maxim
Loomis Sayles Corporate Bond, Maxim Short-Term
Maturity Bond, Maxim Loomis Sayles Small-Cap
Value, Maxim INVESCO Small-Cap Growth, Maxim
INVESCO ADR, Maxim Index 400, Maxim Bond Index,
Maxim Index Pacific and Maxim Index European
Portfolios may make margin payments in connection
with transactions in futures contracts) or make
short sales of securities or maintain a short
position.
- --------------------------------------------------- --------------------------------------------
- --------------------------------------------------- --------------------------------------------
Foreign Securities. Each Portfolio will not No proposed similar investment policy.
invest in securities of foreign issuers if at the
time of acquisition more than 10% of its total
assets, taken at market value at the time of
investment, would be invested in such
securities. However, up to 25% of the total
assets of a Portfolio may be invested in
securities (i) issued, assumed or guaranteed by
foreign governments, or political subdivisions or
instrumentalities thereof, (ii) assumed or
guaranteed by domestic issuers, including
Eurodollar securities, or (iii) issued, assumed
or guaranteed by foreign issuers having a class
of securities listed for trading on the New York
Stock Exchange or on a major Canadian exchange.
This investment limitation will not apply to the
Maxim Templeton International Equity, Maxim Ariel
MidCap Value, Bond, Maxim Ariel Small-Cap Value,
Maxim Loomis Sayles Corporate Bond, Maxim
Short-Term Maturity Bond, Maxim Loomis Sayles
Small-Cap Value, Maxim INVESCO Small-Cap Growth,
Maxim INVESCO ADR, Maxim Index European and Maxim
Index Pacific Portfolios.
- --------------------------------------------------- --------------------------------------------
- --------------------------------------------------- --------------------------------------------
Investment in Oil, Gas and/or Mineral No proposed similar investment policy.
Exploration. Each Portfolio will not purchase or
sell interests in commodities, commodities
contracts, oil, gas or other mineral exploration
or development programs, or real estate, except
that the Fund may purchase securities of issuers
which invest or deal in any of the above;
provided, however, that the Bond, Maxim Stock
Index, Maxim Index 600, Maxim Growth Index, Maxim
Value Index, Maxim Ariel MidCap Value, Maxim
Templeton International Equity, Maxim Ariel
Small-Cap Value, Maxim Loomis Sayles Corporate
Bond, Maxim Loomis Sayles Small-Cap Value, Maxim
INVESCO Small-Cap Growth, Maxim INVESCO ADR,
Maxim Short-Term Maturity Bond, Maxim Index 400,
Maxim Index Pacific, Maxim Index European and
Maxim Bond Index Portfolios may invest in futures
contracts based on financial indices, foreign
currency transactions and options on permissible
futures contracts.
- --------------------------------------------------- --------------------------------------------
Except as otherwise indicated, the following chart describes the current
investment policies and the corresponding proposed new investment policy for the
following Portfolios:
Maxim T. Rowe Price Equity/Income and Maxim T. Rowe Price MidCap Value Portfolios
- ------------------------------------------------- -----------------------------------------------
Current Investment Policy Proposed New Investment Policy
- ------------------------------------------------- -----------------------------------------------
- ------------------------------------------------- -----------------------------------------------
Diversification. Each Portfolio will not Each Portfolio will not, with respect to 75%
invest more than 15% of its total assets (taken of the value of the Portfolio's total assets,
at market value at the time of each investment) purchase a security if, as a result (i) more
in obligations (excluding repurchase than 5% of the value of the Portfolio's total
agreements) of any one bank, or, with respect assets would be invested in the securities of
to 75% of its assets, invest more than 5% of a single issuer (other than the U.S.
such assets in the securities (other than government or any of its agencies or
United States Government or government agency instrumentalities or repurchase agreements
securities) of any one issuer other than a bank collateralized by U.S. government securities,
(but including repurchase agreements with any and other investment companies) or (ii) more
one bank); and (b) purchase more than either than 10% of the outstanding voting securities
(i) 10% in principal amount of the outstanding of any issuer would be held by the Fund
debt securities of an issuer, or (ii) 10% of (other than obligations issued or guaranteed
the outstanding voting securities of an issuer, by the U.S. government, its agencies or
except that such restrictions shall not apply instrumentalities or by other investment
to securities issued or guaranteed by the companies). This investment restriction does
United States Government or its agencies, bank not apply to the Equity Index Portfolios,
money instruments or bank repurchase Maxim Global Bond, Maxim U.S. Government
agreements. Under the diversification Mortgage Securities, and Maxim Short-Term
requirements of the Investment Company Act of Maturity Bond Portfolio, as these portfolios
1940 applicable to diversified investment are considered non-diversified for purposes
companies, such as the Fund, the Fund may not of the 1940 Act. This investment restriction
invest more than 5% of the value of its total also does not apply to the Maxim Profile
assets in the securities of any one issuer Portfolios.
(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 Fund
invests are not subject to this 5% limitation
and thus the Fund'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 Fund revise its investments in bank
obligations so as not to exceed the 5%
limitation in order for the Fund to maintain
its status as a diversified company.
- ------------------------------------------------- -----------------------------------------------
- ------------------------------------------------- -----------------------------------------------
Industry Concentration. Each Portfolio will Each Portfolio will not purchase the
not invest more than 25% of its total assets securities of any issuer if, as a result,
(taken at market value at the time of each more than 25% of the value of the Fund's net
investment) in the securities of issuers assets would be invested in the securities of
primarily engaged in the same industry; issuers having their principal business
utilities will be divided according to their activities in the same industry; provided
services; for example, gas, gas transmission, there shall be no limitation on the purchase
electric and telephone each will be considered of obligations issued or guaranteed by the US
a separate industry for purposes of this Government, or its agencies or
restriction; provided that there shall be no instrumentalities, or of certificates of
limitation on the purchase of obligations deposit or bankers acceptances. It is the
issued or guaranteed by the U.S. Government, or current position of the staff of the SEC that
its agencies or instrumentalities, or of foreign governments are industries for
certificates of deposit and bankers' purposes of this restriction.
acceptances. Notwithstanding the foregoing, each of the
Maxim Stock Index, Maxim
Growth Index, Maxim Value
Index, Maxim Index 600, Maxim
Index 400, Maxim Index
European and Maxim Index
Pacific Portfolios (the
"Equity Index Portfolios" or
each an "Equity Index
Portfolio") may concentrate
its investments in a
particular industry or group
of industries to approximately
the same extent as its
benchmark index if its
benchmark index (as described
in the Equity Index
Portfolios' current
prospectus) is so
concentrated; for purposes of
this limitation, whether an
Equity Index Portfolio is
concentrating in an industry
or group of industries shall
be determined in accordance
with the 1940 Act and as
interpreted or modified from
time to time by any regulatory
or judicial authority having
jurisdiction.
- ------------------------------------------------- -----------------------------------------------
- ------------------------------------------------- -----------------------------------------------
Underwriting. Each Portfolio will not Each Portfolio will not underwrite securities
underwrite securities of other issuers except issued by other persons, except to the extent
insofar as the Fund may be deemed an the Fund may be deemed to be an underwriter
underwriter under the Securities Act of 1933 in under applicable law in connection with the
selling portfolio securities. sale of its portfolio securities in the
ordinary course of pursuing its investment
program.
- ------------------------------------------------- -----------------------------------------------
- ------------------------------------------------- -----------------------------------------------
Commodities. Each Portfolio will not purchase Each Portfolio will not purchase or sell
or sell interests in commodities, commodities physical commodities; except that it may
contracts, oil, gas or other mineral purchase and sell derivatives (including, but
exploration or development programs, or real not limited to, futures contracts, options
estate, except that the Portfolio may purchase thereon and options on futures contracts).
securities of issuers which invest or deal in Current contracts or hybrid investments are
any of the above; provided, however, that the not considered to be commodities.
Portfolio may invest in futures contracts,
forward currency contracts, and options on
futures.
- ------------------------------------------------- -----------------------------------------------
- ------------------------------------------------- -----------------------------------------------
Loans. Each Portfolio will not make loans, Each Portfolio will not make loans, although
except as described below and except through the Fund may (i) lend portfolio securities;
the purchase of obligations in private (ii) enter into repurchase agreements; and
placements (the purchase of publicly-traded (iii) acquire debt securities, bank loan
obligations are not being considered the making participation interests, bank certificates of
of a loan). deposit, bankers' acceptances, debentures or
Each Portfolio will not lend its portfolio other securities, whether or not the purchase
securities in excess of 33 1/3% of its total is made upon the original issuance of the
assets, taken at market value at the time of securities; and (iv) purchase debt.
the loan, and provided that such loan shall be
made in accordance with the guidelines set
forth below.
Lending of Portfolio Securities Guidelines.
Subject to Investment Limitations described
above for all Portfolios, each Portfolio of the
Fund from time-to-time may lend its portfolio
securities to brokers, dealers and financial
institutions. Securities lending allows a fund
to retain ownership of the securities loaned
and, at the same time, to earn additional
income.
Because there may be delays in the recovery of
loaned securities, or even a loss of rights in
collateral supplied should the borrower fail
financially, loans will be made only to parties
deemed by GW Capital Management to be of good
standing. Furthermore, they will only be made
if, in GW Capital Management's judgment, the
consideration to be earned from such loans
would justify the risk.
GW Capital Management understands that it is
the current view of the SEC Staff that a Fund
may engage in loan transactions only under the
following conditions: (1) the fund must receive
100% collateral in the form of cash or cash
equivalents (e.g., U.S. Treasury bills or
notes) from the borrower; (2) the borrower must
increase the collateral whenever the market
value of the securities loaned (determined on a
daily basis) rises above the value of the
collateral; (3) after giving notice, the fund
must be able to terminate the loan at any time;
(4) the fund must receive reasonable interest
on the loan or a flat fee from the borrower, as
well as amounts equivalent to any dividends,
interest, or other distributions on the
securities loaned and to any increase in market
value; (5) the fund may pay only reasonable
custodian fees in connection with the loan; and
(6) the Board of Directors must be able to vote
proxies on the securities loaned, either by
terminating the loan or by entering into an
alternative arrangement with the borrower.
Cash received through loan transactions may be
invested in other eligible securities.
Investing this cash subjects that investment,
as well as the security loaned, to market
forces (i.e., capital appreciation or
depreciation).
- ------------------------------------------------- -----------------------------------------------
- ------------------------------------------------- -----------------------------------------------
Borrowing. Each Portfolio will not borrow, Each Portfolio will not borrow money except
except that the Portfolios may (i) borrow for that a Portfolio may (i) borrow for
non-leveraging, temporary or emergency purposes non-leveraging, temporary, or emergency
and (ii) engage in reverse repurchase purposes; (ii) engage in reverse repurchase
agreements and make other investments or engage agreements and make other investments or
in other transactions which may involve a engage in other transactions, which may
borrowing, in a manner consistent with the involve borrowing, in a manner consistent
Portfolio's investment objective and program, with the Portfolio's investment objective and
provided that the combination of (i) and (ii) program, provided that any such borrowings
shall not exceed 33 1/3% of the value of the comply with applicable regulatory
Portfolio's total assets (including the requirements.
borrowed amount) less liabilities (other than
borrowings) or such other percentage permitted
by law. Any borrowings which come to exceed
this amount will be reduced in accordance with
applicable law. Reverse repurchase agreements
and other investments which are "covered" by a
segregated account or an offsetting position in
accordance with applicable SEC requirements do
not constitute borrowings for purposes of any
asset coverage requirement.
- ------------------------------------------------- -----------------------------------------------
- ------------------------------------------------- -----------------------------------------------
Real Estate. Each Portfolio will not purchase Each Portfolio will not purchase or sell real
or sell interests in commodities, commodities estate, including limited partnership
contracts, oil, gas or other mineral interests therein, unless acquired as a
exploration or development programs, or real result of ownership of securities or other
estate, except that the Portfolio may purchase instruments (but this shall not prevent the
securities of issuers which invest or deal in Fund from investing in securities or other
any of the above; provided, however, that the instruments backed by real estate or
Portfolio may invest in futures contracts, securities of companies engaged in the real
forward currency contracts, and options on estate business).
futures.
- ------------------------------------------------- -----------------------------------------------
- ------------------------------------------------- -----------------------------------------------
Senior Securities. No Change.
- ------------------------------------------------- -----------------------------------------------
- ------------------------------------------------- -----------------------------------------------
Investment in Oil, Gas and/or Mineral No proposed similar investment policy.
Exploration. Each Portfolio will not 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,
forward currency contracts, and options on
futures.
- ------------------------------------------------- -----------------------------------------------
Except as otherwise indicated, the following chart describes the current
investment policies and the corresponding proposed new investment policy for the
following Portfolios:
Maxim Founders Growth & Income Portfolio
- ------------------------------------------------- -----------------------------------------------
Current Investment Policy Proposed New Investment Policy
- ------------------------------------------------- -----------------------------------------------
- ------------------------------------------------- -----------------------------------------------
Underwriting. The Portfolio will not Each Portfolio will not underwrite securities
underwrite securities of other issuers except issued by other persons, except to the extent
insofar as the Portfolio may be deemed an the Fund may be deemed to be an underwriter
underwriter under the Securities Act of 1933 in under applicable law in connection with the
selling portfolio securities. sale of its portfolio securities in the
ordinary course of pursuing its investment
program.
- ------------------------------------------------- -----------------------------------------------
- ------------------------------------------------- -----------------------------------------------
Commodities. The Portfolio will not invest Each Portfolio will not purchase or sell
directly in physical commodities (other than physical commodities; except that it may
foreign currencies), real estate or interests purchase and sell derivatives (including, but
in real estate; provided that the Portfolio may not limited to, futures contracts, options
invest in securities of issuers that invest in thereon and options on futures contracts).
physical commodities, real estate or interests Current contracts or hybrid investments are
in real estate; and, provided further, that not considered to be commodities.
this shall not prevent the Portfolio from
purchasing or selling options, futures, swaps
and forward contracts or from investing in
securities or other instruments backed by
physical commodities, real estate or interests
in real estate.
- ------------------------------------------------- -----------------------------------------------
- ------------------------------------------------- -----------------------------------------------
Loans. The Portfolio will not make loans to Each Portfolio will not make loans, although
other persons; the purchase of a portion of an the Fund may (i) lend portfolio securities;
issue of publicly or privately distributed (ii) enter into repurchase agreements; and
bonds, debentures or other securities is not (iii) acquire debt securities, bank loan
considered the making of a loan by the participation interests, bank certificates of
Portfolio. The Portfolio may also enter into deposit, bankers' acceptances, debentures or
repurchase agreements. other securities, whether or not the purchase
is made upon the original issuance of the
securities; and (iv) purchase debt.
- ------------------------------------------------- -----------------------------------------------
- ------------------------------------------------- -----------------------------------------------
Industry Concentration. The Portfolio will not Each Portfolio will not purchase the
make any investment if, as a result, 25% or securities of any issuer if, as a result,
more of the Portfolio's total assets would be more than 25% of the value of the Fund's net
invested in securities of issuers having their assets would be invested in the securities of
principal business activities in the same issuers having their principal business
industry, provided that this limitation does activities in the same industry; provided
not apply to obligations issued or guaranteed there shall be no limitation on the purchase
by the U.S. government, its agencies or of obligations issued or guaranteed by the US
instrumentalities. Government, or its agencies or
instrumentalities, or of
certificates of deposit or
bankers acceptances. It is the
current position of the staff
of the SEC that foreign
governments are industries for
purposes of this restriction.
Notwithstanding the foregoing,
each of the Maxim Stock Index,
Maxim Growth Index, Maxim
Value Index, Maxim Index 600,
Maxim Index 400, Maxim Index
European and Maxim Index
Pacific Portfolios (the
"Equity Index Portfolios" or
each an "Equity Index
Portfolio") may concentrate
its investments in a
particular industry or group
of industries to approximately
the same extent as its
benchmark index if its
benchmark index (as described
in the Equity Index
Portfolios' current
prospectus) is so
concentrated; for purposes of
this limitation, whether an
Equity Index Portfolio is
concentrating in an industry
or group of industries shall
be determined in accordance
with the 1940 Act and as
interpreted or modified from
time to time by any regulatory
or judicial authority having
jurisdiction.
- ------------------------------------------------- -----------------------------------------------
- ------------------------------------------------- -----------------------------------------------
Borrowing. The Portfolio will not borrow Each Portfolio will not borrow money except
money, except for extraordinary or emergency that a Portfolio may (i) borrow for
purposes, and then only from banks in amounts non-leveraging, temporary, or emergency
up to 33 1/3% of the Portfolio's total assets. purposes; (ii) engage in reverse repurchase
agreements and make other
investments or engage in other
transactions, which may
involve borrowing, in a manner
consistent with the
Portfolio's investment
objective and program,
provided that any such
borrowings comply with
applicable regulatory
requirements.
- ------------------------------------------------- -----------------------------------------------
- ------------------------------------------------- -----------------------------------------------
Real Estate. The Portfolio will not invest Each Portfolio will not purchase or sell real
directly in physical commodities (other than estate, including limited partnership
foreign currencies), real estate or interests interests therein, unless acquired as a
in real estate; provided that the Portfolio may result of ownership of securities or other
invest in securities of issuers that invest in instruments (but this shall not prevent the
physical commodities, real estate or interests Fund from investing in securities or other
in real estate; and, provided further, that instruments backed by real estate or
this shall not prevent the Portfolio from securities of companies engaged in the real
purchasing or selling options, futures, swaps estate business).
and forward contracts or from investing in
securities or other instruments backed by
physical commodities, real estate or interests
in real estate.
- ------------------------------------------------- -----------------------------------------------
- ------------------------------------------------- -----------------------------------------------
Diversification. No current investment policy. Each Portfolio will not, with respect to 75%
of the value of the Portfolio's total assets,
purchase a security if, as a result (i) more
than 5% of the value of the Portfolio's total
assets would be invested in the securities of
a single issuer (other than the U.S.
government or any of its agencies or
instrumentalities or repurchase agreements
collateralized by U.S. government securities,
and other investment companies) or (ii) more
than 10% of the outstanding voting securities
of any issuer would be held by the Fund
(other than obligations issued or guaranteed
by the U.S. government, its agencies or
instrumentalities or by other investment
companies). This investment restriction does
not apply to the Equity Index Portfolios,
Maxim Global Bond, Maxim U.S. Government
Mortgage Securities, and Maxim Short-Term
Maturity Bond Portfolio, as these portfolios
are considered non-diversified for purposes
of the 1940 Act. This investment restriction
also does not apply to the Maxim Profile
Portfolios.
- ------------------------------------------------- -----------------------------------------------
- ------------------------------------------------- -----------------------------------------------
Senior Securities. No Change.
- ------------------------------------------------- -----------------------------------------------
Except as otherwise indicated, the following chart describes the current
investment policies and the corresponding proposed new investment policy for the
following Portfolios:
Maxim INVESCO Balanced Portfolio
- ------------------------------------------------- -----------------------------------------------
Current Investment Policy Proposed New Investment Policy
- ------------------------------------------------- -----------------------------------------------
- ------------------------------------------------- -----------------------------------------------
Underwriting. The Portfolio will not Each Portfolio will not underwrite securities
underwrite securities of other issuers except issued by other persons, except to the extent
insofar as the Portfolio may be deemed an the Fund may be deemed to be an underwriter
underwriter under the Securities Act of 1933 in under applicable law in connection with the
selling portfolio securities. sale of its portfolio securities in the
ordinary course of pursuing its investment
program.
- ------------------------------------------------- -----------------------------------------------
- ------------------------------------------------- -----------------------------------------------
Loans. The Portfolio will not make loans, Each Portfolio will not make loans, although
except as described below and except through the Fund may (i) lend portfolio securities;
the purchase of obligations in private (ii) enter into repurchase agreements; and
placements (the purchase of publicly-traded (iii) acquire debt securities, bank loan
obligations are not being considered the making participation interests, bank certificates of
of a loan). deposit, bankers' acceptances, debentures or
Each Portfolio will not lend its portfolio other securities, whether or not the purchase
securities in excess of 33 1/3% of its total is made upon the original issuance of the
assets, taken at market value at the time of securities; and (iv) purchase debt.
the loan, and provided that such loan shall be
made in accordance with the guidelines set
forth below.
Lending of Portfolio Securities Guidelines.
Subject to Investment Limitations described
above for all Portfolios, each Portfolio of the
Fund from time-to-time may lend its portfolio
securities to brokers, dealers and financial
institutions. Securities lending allows a fund
to retain ownership of the securities loaned
and, at the same time, to earn additional
income.
Because there may be delays in the recovery of
loaned securities, or even a loss of rights in
collateral supplied should the borrower fail
financially, loans will be made only to parties
deemed by GW Capital Management to be of good
standing. Furthermore, they will only be made
if, in GW Capital Management's judgment, the
consideration to be earned from such loans
would justify the risk.
GW Capital Management understands that it is
the current view of the SEC Staff that a Fund
may engage in loan transactions only under the
following conditions: (1) the fund must receive
100% collateral in the form of cash or cash
equivalents (e.g., U.S. Treasury bills or
notes) from the borrower; (2) the borrower must
increase the collateral whenever the market
value of the securities loaned (determined on a
daily basis) rises above the value of the
collateral; (3) after giving notice, the fund
must be able to terminate the loan at any time;
(4) the fund must receive reasonable interest
on the loan or a flat fee from the borrower, as
well as amounts equivalent to any dividends,
interest, or other distributions on the
securities loaned and to any increase in market
value; (5) the fund may pay only reasonable
custodian fees in connection with the loan; and
(6) the Board of Directors must be able to vote
proxies on the securities loaned, either by
terminating the loan or by entering into an
alternative arrangement with the borrower.
Cash received through loan transactions may be
invested in other eligible securities.
Investing this cash subjects that investment,
as well as the security loaned, to market
forces (i.e., capital appreciation or
depreciation).
- ------------------------------------------------- -----------------------------------------------
- ------------------------------------------------- -----------------------------------------------
Real Estate. The Portfolio will not invest in Each Portfolio will not purchase or sell real
real estate or interest in real estate; estate, including limited partnership
however, the Portfolio may own debt or equity interest therein, unless acquired as a result
securities issued by companies engaged in those of ownership of securities or other
businesses. instruments (but this shall not prevent the
Fund from investing in securities or other
instruments backed by real estate or
securities of companies engaged in the real
estate business.
- ------------------------------------------------- -----------------------------------------------
- ------------------------------------------------- -----------------------------------------------
Senior Securities. The Portfolio will not Each Portfolio will not issue senior
issue senior securities. For purposes of this securities except in compliance with the 1940
restriction, the issuance of shares of common Act.
stock in multiple classes or series, obtaining
of short-term credits as may be necessary for
the clearance of purchases and sales of
portfolio securities, short sales against the
box, the purchase or sale or permissible
options and futures transactions (and the use
of initial and maintenance margin arrangements
with respect to futures contracts or related
options transactions), the purchase or sale of
securities on a when issued or delayed delivery
basis, permissible borrowings entered into in
accordance with the Portfolio's investment
policies, and reverse repurchase agreements are
not deemed to be issuances of senior securities.
- ------------------------------------------------- -----------------------------------------------
- ------------------------------------------------- -----------------------------------------------
Industry Concentration. The Portfolio will not Each Portfolio will not purchase the
invest more than 25% of its total assets (taken securities of any issuer if, as a result,
at market value at the time of each investment) more than 25% of the value of the Fund's net
in the securities of issuers primarily engaged assets would be invested in the securities of
in the same industry; utilities will be divided issuers having their principal business
according to their services; for example, gas, activities in the same industry; provided
gas transmission, electric and telephone each there shall be no limitation on the purchase
will be considered a separate industry for of obligations issued or guaranteed by the US
purposes of this restriction; provided that Government, or its agencies or
there shall be no limitation on the purchase of instrumentalities, or of certificates of
obligations issued or guaranteed by the U.S. deposit or bankers acceptances. It is the
Government, or its agencies or current position of the staff of the SEC that
instrumentalities, or of certificates of foreign governments are industries for
deposit and bankers' acceptances. purposes of this restriction.
Notwithstanding the foregoing,
each of the Maxim Stock Index,
Maxim Growth Index, Maxim
Value Index, Maxim Index 600,
Maxim Index 400, Maxim Index
European and Maxim Index
Pacific Portfolios (the
"Equity Index Portfolios" or
each an "Equity Index
Portfolio") may concentrate
its investments in a
particular industry or group
of industries to approximately
the same extent as its
benchmark index if its
benchmark index (as described
in the Equity Index
Portfolios' current
prospectus) is so
concentrated; for purposes of
this limitation, whether an
Equity Index Portfolio is
concentrating in an industry
or group of industries shall
be determined in accordance
with the 1940 Act and as
interpreted or modified from
time to time by any regulatory
or judicial authority having
jurisdiction.
- ------------------------------------------------- -----------------------------------------------
- ------------------------------------------------- -----------------------------------------------
Diversification. The Portfolio will not, with Each Portfolio will not, with respect to 75%
respect to 75% of its total assets, purchase of the value of the Portfolio's total assets,
the securities of any one issuer (except cash purchase a security if, as a result (i) more
items and "Government securities" as defined than 5% of the value of the Portfolio's total
under the 1940 Act), if the purchase would assets would be invested in the securities of
cause the Portfolio to have more than 5% of the a single issuer (other than the U.S.
value of its total assets invested in the government or any of its agencies or
securities of such issuer or to own more than instrumentalities or repurchase agreements
10% of the outstanding voting securities of collateralized by U.S. government securities,
such issuer. and other investment companies) or (ii) more
than 10% of the outstanding
voting securities of any
issuer would be held by the
Fund (other than obligations
issued or guaranteed by the
U.S. government, its agencies
or instrumentalities or by
other investment companies).
This investment restriction
does not apply to the Equity
Index Portfolios, Maxim Global
Bond, Maxim U.S. Government
Mortgage Securities, and Maxim
Short-Term Maturity Bond
Portfolio, as these portfolios
are considered non-diversified
for purposes of the 1940 Act.
This investment restriction
also does not apply to the
Maxim Profile Portfolios.
- ------------------------------------------------- -----------------------------------------------
- ------------------------------------------------- -----------------------------------------------
Borrowing. The Portfolio will not borrow Each Portfolio will not borrow money except
money, except that the Portfolio may borrow that a Portfolio may (i) borrow for
money as a temporary measure for extraordinary non-leveraging, temporary, or emergency
or emergency purposes (not for leveraging or purposes; (ii) engage in reverse repurchase
investment) and may enter into reverse agreements and make other investments or
repurchase agreements in an aggregate amount engage in other transactions, which may
not exceeding 33 1/3% of the value of its total involve borrowing, in a manner consistent
assets (including the amount borrowed) less with the Portfolio's investment objective and
liabilities (other than borrowings). Any program, provided that any such borrowings
borrowing that comes to exceed 33 1/3% of the comply with applicable regulatory
value of the Portfolio's total assets due to a requirements.
decline in net assets will be reduced within
three days to the extent necessary to comply
with the 33 1/3% limitation. This restriction
shall not prohibit deposits of assets to margin
or guarantee positions in futures, options,
swaps or forward contracts, or the segregation
of assets in connection with such contracts.
- ------------------------------------------------- -----------------------------------------------
- ------------------------------------------------- -----------------------------------------------
Commodities. No Change.
- ------------------------------------------------- -----------------------------------------------
Except as otherwise indicated, the following chart describes the current
investment policies and the corresponding proposed new investment policy for the
following Portfolios:
Maxim Global Bond Portfolio
- ------------------------------------------------- -----------------------------------------------
Current Investment Policy Proposed New Investment Policy
- ------------------------------------------------- -----------------------------------------------
- ------------------------------------------------- -----------------------------------------------
Industry Concentration. The Portfolio will not Each Portfolio will not purchase the
invest more than 25% of its total assets (taken securities of any issuer if, as a result,
at market value at the time of each investment) more than 25% of the value of the Fund's net
in the securities of issuers primarily engaged assets would be invested in the securities of
in the same industry; utilities will be divided issuers having their principal business
according to their services; for example, gas, activities in the same industry; provided
gas transmission, electric and telephone each there shall be no limitation on the purchase
will be considered a separate industry for of obligations issued or guaranteed by the US
purposes of this restriction. Government, or its agencies or
instrumentalities, or of
certificates of deposit or
bankers acceptances. It is the
current position of the staff
of the SEC that foreign
governments are industries for
purposes of this restriction.
Notwithstanding the foregoing,
each of the Maxim Stock Index,
Maxim Growth Index, Maxim
Value Index, Maxim Index 600,
Maxim Index 400, Maxim Index
European and Maxim Index
Pacific Portfolios (the
"Equity Index Portfolios" or
each an "Equity Index
Portfolio") may concentrate
its investments in a
particular industry or group
of industries to approximately
the same extent as its
benchmark index if its
benchmark index (as described
in the Equity Index
Portfolios' current
prospectus) is so
concentrated; for purposes of
this limitation, whether an
Equity Index Portfolio is
concentrating in an industry
or group of industries shall
be determined in accordance
with the 1940 Act and as
interpreted or modified from
time to time by any regulatory
or judicial authority having
jurisdiction.
- ------------------------------------------------- -----------------------------------------------
- ------------------------------------------------- -----------------------------------------------
Commodities. The Portfolio will not purchase Each Portfolio will not purchase or sell
or sell interests in commodities, commodities physical commodities; except that it may
contracts, oil, gas or other mineral purchase and sell derivatives (including, but
exploration or development programs, or real not limited to, futures contracts, options
estate, except that the Portfolio may purchase thereon and options on futures contracts).
securities of issuers which invest or deal in Current contracts or hybrid investments are
any of the above; provided, however, that the not considered to be commodities.
Portfolio may invest in futures contracts on
financial indices, foreign currency
transactions and options on permissible futures
contracts.
- ------------------------------------------------- -----------------------------------------------
- ------------------------------------------------- -----------------------------------------------
Loans. The Portfolio will not make loans, Each Portfolio will not make loans, although
except as described, below and except through the Fund may (i) lend portfolio securities;
the purchase of obligations in private (ii) enter into repurchase agreements; and
placements (the purchase of publicly-traded (iii) acquire debt securities, bank loan
obligations are not considered the making of a participation interests, bank certificates
loan) and through repurchase agreements. of deposit, bankers' acceptances, debentures
Lend its portfolio securities in excess of 33 or other securities, whether or not the
1/3% of its total assets, taken at market value purchase is made upon the original issuance
at the time of the loan, and provided that such of the securities; and (iv) purchase debt.
loan shall be made in accordance with the
guidelines set forth below
Lending of Portfolio Securities Guidelines.
Subject to Investment Limitations described
above for all Portfolios, each Portfolio of the
Fund from time-to-time may lend its portfolio
securities to brokers, dealers and financial
institutions. Securities lending allows a fund
to retain ownership of the securities loaned
and, at the same time, to earn additional
income.
Because there may be delays in the recovery of
loaned securities, or even a loss of rights in
collateral supplied should the borrower fail
financially, loans will be made only to parties
deemed by GW Capital Management to be of good
standing. Furthermore, they will only be made
if, in GW Capital Management's judgment, the
consideration to be earned from such loans
would justify the risk.
GW Capital Management understands that it is
the current view of the SEC Staff that a Fund
may engage in loan transactions only under the
following conditions: (1) the fund must receive
100% collateral in the form of cash or cash
equivalents (e.g., U.S. Treasury bills or
notes) from the borrower; (2) the borrower must
increase the collateral whenever the market
value of the securities loaned (determined on a
daily basis) rises above the value of the
collateral; (3) after giving notice, the fund
must be able to terminate the loan at any time;
(4) the fund must receive reasonable interest
on the loan or a flat fee from the borrower, as
well as amounts equivalent to any dividends,
interest, or other distributions on the
securities loaned and to any increase in market
value; (5) the fund may pay only reasonable
custodian fees in connection with the loan; and
(6) the Board of Directors must be able to vote
proxies on the securities loaned, either by
terminating the loan or by entering into an
alternative arrangement with the borrower.
Cash received through loan transactions may be
invested in other eligible securities.
Investing this cash subjects that investment,
as well as the security loaned, to market
forces (i.e., capital appreciation or
depreciation).
- ------------------------------------------------- -----------------------------------------------
- ------------------------------------------------- -----------------------------------------------
Borrowing. The Portfolio will not borrow, Each Portfolio will not borrow money except
except that the Portfolio may borrow for that each Portfolio may (i) borrow for
temporary or emergency purposes. The Portfolio non-leveraging, temporary, or emergency
will not borrow unless immediately after any purposes; (ii) engage in reverse repurchase
such borrowing there is an asset coverage of at agreements and make other investments or
least 300 percent for all borrowings of the engage in other transactions, which may
Portfolio. If such asset coverage falls below involve borrowing, in a manner consistent
300 percent, the Portfolio will within three with the Portfolio's investment objective
days thereafter reduce the amount of its and program, provided that any such
borrowings to an extent that the asset coverage borrowings comply with applicable regulatory
of such borrowings will be at least 300 requirements.
percent. Reverse repurchase agreements and
other investments which are "covered" by a
segregated account or an offsetting position in
accordance with applicable SEC requirements
("covered investments") do not constitute
borrowings for purposes of the 300% asset
coverage requirement. The Portfolio will replay
all borrowings in excess of 5% of its total
assets before any additional investments are
made. Covered investments will not be
considered borrowings for purposes of applying
the limitation on making additional investments
when borrowings exceed 5% of total assets.
The Portfolio will not mortgage, pledge,
hypothecate or in any manner transfer, as
security for indebtedness, any securities owned
or held by the Portfolio except as may be
necessary in connection with borrowings, and
then such mortgaging, pledging or hypothecating
may not exceed 10% of the Portfolio's total
assets, taken at market value at the time
thereof. The Portfolio 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 Portfolio's shares. This
limitation shall not apply to segregated
accounts.
- ------------------------------------------------- -----------------------------------------------
- ------------------------------------------------- -----------------------------------------------
Senior Securities. The Portfolio will not Each Portfolio will not issue senior
issue senior securities. The issuance of more securities except in compliance with the
than one series or classes of shares of 1940 Act.
beneficial interest, obtaining of short-term
credits as may be necessary for the clearance
of purchases and sales of portfolio securities,
short sales against the box, the purchase or
sale of permissible options and futures
transactions (and the use of initial and
maintenance margin arrangements with respect to
futures contracts or related options
transactions), the purchase or sale of
securities on a when issued or delayed delivery
basis, permissible borrowings entered into in
accordance with the Portfolio's investment
objectives and policies, and reverse repurchase
agreements are not deemed to be issuances of
senior securities.
- ------------------------------------------------- -----------------------------------------------
- ------------------------------------------------- -----------------------------------------------
Real Estate. The Portfolio will not purchase Each Portfolio will not purchase or sell
or sell interests in commodities, commodities real estate, including limited partnership
contracts, oil gas or other mineral exploration interests therein, unless acquired as a
or development programs, or real estate, except result of ownership of securities or other
that the Portfolio may purchase securities of instruments (but this shall not prevent any
issuers which invest or deal in any of the Portfolio from investing in securities or
above, provided; however, that the Portfolio other instruments backed by real estate or
may invest in futures contracts on financial securities except in compliance with the
indices, foreign currency transactions and 1940 Act.
options on permissible futures contracts.
- ------------------------------------------------- -----------------------------------------------
- ------------------------------------------------- -----------------------------------------------
Diversification. No current investment policy. Each Portfolio will not, with respect to 75%
of the value of the Portfolio's total assets,
purchase a security if, as a result (i) more
than 5% of the value of the Portfolio's total
assets would be invested in the securities of
a single issuer (other than the U.S.
government or any of its agencies or
instrumentalities or repurchase agreements
collateralized by U.S. government securities,
and other investment companies) or (ii) more
than 10% of the outstanding voting securities
of any issuer would be held by the Fund
(other than obligations issued or guaranteed
by the U.S. government, its agencies or
instrumentalities or by other investment
companies). This investment restriction does
not apply to the Equity Index Portfolios,
Maxim Global Bond, Maxim U.S. Government
Mortgage Securities, and Maxim Short-Term
Maturity Bond Portfolio, as these portfolios
are considered non-diversified for purposes
of the 1940 Act. This investment restriction
also does not apply to the Maxim Profile
Portfolios.
- ------------------------------------------------- -----------------------------------------------
- ------------------------------------------------- -----------------------------------------------
Underwriting. The Portfolio will not Each Portfolio will not underwrite
underwrite securities of other issuers except securities issued by other persons, except
insofar as the Portfolio may be deemed an to the extent the Fund may be deemed to be
underwriter under the Securities Act of 1933 in an underwriter under applicable law in
selling portfolio securities. connection with the sale of its portfolio
securities in the ordinary course of
pursuing its investment program.
- ------------------------------------------------- -----------------------------------------------
- ------------------------------------------------- -----------------------------------------------
Purchase of Securities on Margin. The No proposed similar investment policy.
Portfolio will not (a) purchase any securities
on margin, (b) make short sales of securities,
or (c) maintain a short position, except that
the Portfolio man (i) obtain such short-term
credit as may be necessary for the clearance of
purchases and sales of portfolio securities,
(ii) make margin payments in connection with
transactions in futures contracts and currency
futures contracts and enter into permissible
options transactions, and (iii) make short
sales against the box.
- ------------------------------------------------- -----------------------------------------------
- ------------------------------------------------- -----------------------------------------------
Investment in Oil, Gas and/or Mineral No proposed similar investment policy.
Exploration. The Portfolio will not 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 on
financial indices, foreign currency
transactions and options on permissible futures
contracts.
- ------------------------------------------------- -----------------------------------------------
Except as otherwise indicated, the following chart describes the current
investment policies and the corresponding proposed new investment policy for the
following Portfolios:
Maxim Profile I Portfolios and Maxim Profile II Portfolios (collectively, the
"Maxim Profile Portfolios").
- ------------------------------------------------- -----------------------------------------------
Current Investment Policy Proposed New Investment Policy
- ------------------------------------------------- -----------------------------------------------
- ------------------------------------------------- -----------------------------------------------
Industry Concentration. Each Maxim Profile Each Portfolio will not purchase the
Portfolio will not invest more than 25% of its securities of any issuer if, as a result,
total assets (taken at market value at the time more than 25% of the value of the Fund's net
of each investment) in the securities of assets would be invested in the securities of
issuers primarily engaged in the same industry; issuers having their principal business
utilities will be divided according to their activities in the same industry; provided
services; for example, gas, gas transmission, there shall be no limitation on the purchase
electric and telephone each will be considered of obligations issued or guaranteed by the US
a separate industry for purposes of this Government, or its agencies or
restriction. instrumentalities, or of certificates of
deposit or bankers
acceptances. It is the current
position of the staff of the
SEC that foreign governments
are industries for purposes of
this restriction.
Notwithstanding the foregoing,
each of the Maxim Stock Index,
Maxim Growth Index, Maxim
Value Index, Maxim Index 600,
Maxim Index 400, Maxim Index
European and Maxim Index
Pacific Portfolios (the
"Equity Index Portfolios" or
each an "Equity Index
Portfolio") may concentrate
its investments in a
particular industry or group
of industries to approximately
the same extent as its
benchmark index if its
benchmark index (as described
in the Equity Index
Portfolios' current
prospectus) is so
concentrated; for purposes of
this limitation, whether an
Equity Index Portfolio is
concentrating in an industry
or group of industries shall
be determined in accordance
with the 1940 Act and as
interpreted or modified from
time to time by any regulatory
or judicial authority having
jurisdiction.
- ------------------------------------------------- -----------------------------------------------
- ------------------------------------------------- -----------------------------------------------
Commodities. Each Maxim Profile Portfolio will Each Portfolio will not purchase or sell
not purchase or sell physical commodities other physical commodities; except that I may
than foreign currencies unless acquired as a purchase and sell derivatives (including, but
result of ownership of securities (but this not limited to, futures contracts, options
shall not prevent the Portfolio from purchasing thereon and options on futures contracts).
or selling options, futures, swap and forward The Portfolios do not consider currency
contracts or from investing in securities or contracts or hybrid investments to be
other instruments backed by physical commodities.
commodities).
- ------------------------------------------------- -----------------------------------------------
- ------------------------------------------------- -----------------------------------------------
Loans. Each Maxim Profile Portfolio will not Each Portfolio will not make loans, although
make loans, except as described, below and the Fund may (i) lend portfolio securities;
except through the purchase of obligations in (ii) enter into repurchase agreements; and
private placements (the purchase of (iii) acquire debt securities, bank loan
publicly-traded obligations are not considered participation interests, bank certificates of
the making of a loan). deposit, bankers' acceptances, debentures or
Lend its portfolio securities in excess of 33 other securities, whether or not the purchase
1/3% of its total assets, taken at market value is made upon the original issuance of the
at the time of the loan, and provided that such securities; and (iv) purchase debt.
loan shall be made in accordance with the
guidelines set forth below
Lending of Portfolio Securities Guidelines.
Subject to Investment Limitations described
above for all Portfolios, each Portfolio of the
Fund from time-to-time may lend its portfolio
securities to brokers, dealers and financial
institutions. Securities lending allows a fund
to retain ownership of the securities loaned
and, at the same time, to earn additional
income.
Because there may be delays in the recovery of
loaned securities, or even a loss of rights in
collateral supplied should the borrower fail
financially, loans will be made only to parties
deemed by GW Capital Management to be of good
standing. Furthermore, they will only be made
if, in GW Capital Management's judgment, the
consideration to be earned from such loans
would justify the risk.
GW Capital Management understands that it is
the current view of the SEC Staff that a Fund
may engage in loan transactions only under the
following conditions: (1) the fund must receive
100% collateral in the form of cash or cash
equivalents (e.g., U.S. Treasury bills or
notes) from the borrower; (2) the borrower must
increase the collateral whenever the market
value of the securities loaned (determined on a
daily basis) rises above the value of the
collateral; (3) after giving notice, the fund
must be able to terminate the loan at any time;
(4) the fund must receive reasonable interest
on the loan or a flat fee from the borrower, as
well as amounts equivalent to any dividends,
interest, or other distributions on the
securities loaned and to any increase in market
value; (5) the fund may pay only reasonable
custodian fees in connection with the loan; and
(6) the Board of Directors must be able to vote
proxies on the securities loaned, either by
terminating the loan or by entering into an
alternative arrangement with the borrower.
Cash received through loan transactions may be
invested in other eligible securities.
Investing this cash subjects that investment,
as well as the security loaned, to market
forces (i.e., capital appreciation or
depreciation).
- ------------------------------------------------- -----------------------------------------------
- ------------------------------------------------- -----------------------------------------------
Borrowing. Each Maxim Profile Portfolio will Each Portfolio will not borrow money except
not borrow money, except that the Portfolio may that each Portfolio may (i) borrow for
borrow money as a temporary measure for non-leveraging, temporary, or emergency
extraordinary or emergency purposes (not for purposes; (ii) engage in reverse repurchase
leveraging or investment) and may enter into agreements and make other investments or
reverse repurchase agreements in an aggregate engage in other transactions, which may
amount not exceeding 33 1/3% of the value of involve borrowing, in a manner consistent
its total assets (including the amount with the Portfolio's investment objective and
borrowed). Any borrowing that comes to exceed program, provided that any such borrowings
33 1/3% of the value of the Portfolio's total comply with applicable regulatory
assets due to a decline in net assets will be requirements.
reduced within three days to the extent
necessary to comply with the 33 1/3% limitation.
- ------------------------------------------------- -----------------------------------------------
- ------------------------------------------------- -----------------------------------------------
Underwriting. Each Maxim Profile Portfolio Each Portfolio will not underwrite securities
will not underwrite securities of other issuers issued by other persons, except to the extent
except insofar as the Portfolio may be deemed that a Portfolio may be deemed to be an
an underwriter under the Securities Act of 1933 underwriter under applicable law in
in selling portfolio securities. connection with the sale of its portfolio
securities in the ordinary course of pursing
its investment program.
- ------------------------------------------------- -----------------------------------------------
- ------------------------------------------------- -----------------------------------------------
Real Estate. Each Maxim Profile Portfolio will Each Portfolio will not purchase or sell real
not invest directly in real estate or interest estate, including limited partnership
in real estate; however, the Portfolio may own interests therein, unless acquired as a
debt or equity securities issued by companies result of ownership of securities or other
engaged in those businesses. instruments (but this shall not prevent any
Portfolio from investing in securities or
other instruments backed by real estate or
securities except in compliance with the 1940
Act.
- ------------------------------------------------- -----------------------------------------------
- ------------------------------------------------- -----------------------------------------------
Senior Securities. Each Maxim Profile Each Portfolio will not issue senior
Portfolio will not issue senior securities. securities except in compliance with the 1940
For purposes of this restriction, the issuance Act.
of shares of common stock in multiple classes
or series, obtaining of short-term credits as
may be necessary for the clearance of purchases
and sales of portfolio securities, short sales
against the box, the purchase or sale or
permissible options and futures transactions
(and the use of initial and maintenance margin
arrangements with respect to futures contracts
or related options transactions), the purchase
or sale of securities on a when issued or
delayed delivery basis, permissible borrowings
entered into in accordance with the Portfolio's
investment policies and reverse repurchase
agreements are not deemed to be issuances of
senior securities.
Each Maxim Profile Portfolio will not sell
securities short, unless the Portfolio owns or
has the right to obtain securities equivalent
in kind and amount to the securities sold short
without the payment of any additional
consideration therefore, and provided that
transactions in options, swaps and forward
futures contracts are not deemed to constitute
selling securities short.
- ------------------------------------------------- -----------------------------------------------
- ------------------------------------------------- -----------------------------------------------
Diversification. Each Maxim Profile Portfolios Each Portfolio will not, with respect to 75%
will not, with respect to 75% of its total of the value of the Portfolio's total assets,
assets, purchase the securities of any one purchase a security if, as a result (i) more
issuer (except cash items and "Government than 5% of the value of the Portfolio's total
securities" as defined under the 1940 Act), if assets would be invested in the securities of
the purchase would cause the Portfolio to have a single issuer (other than the U.S.
more than 5% of the value of its total assets government or any of its agencies or
invested in the securities of such issuer or to instrumentalities or repurchase agreements
own more than 10% of the outstanding voting collateralized by U.S. government securities,
securities of such issuer, except that this and other investment companies) or (ii) more
shall not apply to the Maxim Profile Portfolios. than 10% of the outstanding voting securities
of any issuer would be held by the Fund
(other than obligations issued or guaranteed
by the U.S. government, its agencies or
instrumentalities or by other investment
companies). This investment restriction does
not apply to the Equity Index Portfolios,
Maxim Global Bond, Maxim U.S. Government
Mortgage Securities, and Maxim Short-Term
Maturity Bond Portfolio, as these portfolios
are considered non-diversified for purposes
of the 1940 Act. This investment restriction
also does not apply to the Maxim Profile
Portfolios.
- ------------------------------------------------- -----------------------------------------------
- ------------------------------------------------- -----------------------------------------------
Purchase of Securities on Margin. Each Maxim No proposed similar investment policy.
Profile Portfolio will not purchase any
securities on margin except to obtain such
short-term credits as may be necessary for the
clearance of transactions, and provided that
margin payments and other deposits in
connection with transactions in options,
futures, swaps and forward contracts shall not
be deemed to constitute purchasing securities
on margin.
- ------------------------------------------------- -----------------------------------------------
EXHIBIT D
INVESTMENT ADVISORY AGREEMENT
INVESTMENT ADVISORY AGREEMENT made this 5th day of December, 1997, by
and between Maxim Series Fund, Inc., a Maryland corporation ("the Fund"), and GW
Capital Management, LLC, a Colorado Limited Liability Company registered as an
investment adviser under the Investment Advisers Act of 1940 ("the Adviser"),
whereby the Adviser will act as investment adviser to the Fund as follows:
ARTICLE I
Duties of the Adviser
The Fund hereby employs the Adviser to act as the investment adviser to
and manager of the Fund, 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 its existing portfolio and of each portfolio it may create in the future
("the Portfolios") and to administer its affairs, for the period and on the
terms and conditions set forth in this Agreement. The Adviser hereby accepts
such employment and agrees during such period, at its own expense, to render the
services and to assume the obligations herein set forth for the compensation
provided for herein. The Adviser shall for all purposes herein be deemed to be
an independent contractor and shall, unless otherwise expressly provided or
authorized, have no authority to act for or represent the Fund in any way or
otherwise be deemed an agent of the Fund.
A. Investment Advisory Services. In carrying out its obligations to manage
the investment and reinvestment of the assets of the Fund, the Adviser shall,
when appropriate and consistent with the limitations set forth in Section C
hereof:
(a) perform research and obtain and evaluate pertinent economic,
statistical, and financial data relevant to the investment policies of
the Fund;
(b) consult with the Board and furnish to the Board
recommendations with respect to an overall investment plan for
approval, modification, or rejection by the Board;
(c) seek out, present, and recommend specific investment
opportunities, consistent with any overall investment plan approved by
the Board;
(d) take such steps as are necessary to implement any overall
investment plan approved by the Board, including making and carrying
out decisions to acquire or dispose of permissible investments,
management of investments and any other property of the Fund, and
providing or obtaining such services as may be necessary in managing,
acquiring or disposing of investments;
(e) regularly report to 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 Account;
(f) maintain all required accounts, records, memoranda,
instructions or authorizations relating to the acquisition or
disposition of investments for the Fund; and
(g) determine the net asset value of the Fund as required by
applicable law.
If, in the judgment of the Adviser, the Fund would be benefited by
supplemental investment research from other persons or entities, outside the
context of a specific brokerage transaction, the Adviser is authorized to obtain
and pay a reasonable flat fee for such information. Supplemental investment
research shall be limited to statistical and other factual information, advice
regarding economic factors and trends, and advice as to occasional transactions
in specific securities, and shall not involve general advice or recommendations
regarding the purchase or sale of securities. The expense of the Adviser may not
be necessarily reduced as a result of the receipt of such supplement
information. The Adviser shall regularly report to the Board when it has secured
or, where time permits, intends to secure said supplemental investment research.
It is understood and agreed that the Board retains the right to limit the scope
of or to disapprove of said research.
B. Administrative Services. In addition to the performance of investment
advisory services, the Adviser shall perform, or supervise the performance of,
administrative services in connection with the management of the Fund and the
Portfolios, including all financial reporting for the Fund. In this connection,
the Adviser agrees to (i) assist in supervising all aspects of the Fund's
operations, including the coordination of all matters relating to the functions
of the custodian, transfer agent or other shareholder service agents, if any,
accountants, attorneys and other parties performing services or operational
functions for the Fund, (ii) provide the Fund, at the Adviser's expense, with
services of persons, who may be the Adviser's managers, competent to perform
such administrative and clerical functions as are necessary in order to provide
effective administration of the Fund, including duties in connection with
certain reports and the maintenance of certain books and records of the Fund,
and (ii) provide the Fund, at the Adviser's expense, with adequate office space
and related services necessary for its operations as contemplated in this
Agreement. Nothing contained herein will be construed to restrict the Fund's
right to hire its own employees or to contract for services to be performed by
third parties.
C. Limitations on Advisory Services. The Adviser shall perform the
services under this Agreement subject to the review of 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 "Investment Company Act").
The Fund has furnished or will furnish the Adviser with copies of the
Fund's Prospectus, Articles of Incorporation, and Bylaws as currently in effect
and agrees during the continuance of this Agreement to furnish the Adviser with
copies of any amendments or supplements thereto before or at the time the
amendments or supplements become effective. The Adviser will be entitled to rely
on all documents furnished by the Fund.
ARTICLE II
Compensation of the Adviser
A. Investment Advisory Fee. As compensation for its services to the
Fund, the Adviser receives monthly compensation at the annual rate of 0.46% of
the average daily net assets of the Money Market Portfolio; 0.50% of the average
daily net assets of the Zero-Coupon Treasury Portfolio; 0.53% of the average
daily net assets of the Maxim Vista Growth & Income Portfolio; 0.60% of the
average daily net assets of each of the Bond Portfolio, the Investment Grade
Bond Portfolio, the U.S. Government Securities Portfolio, the Total Return
Portfolio, the Stock Index Portfolio, the U.S. Government Mortgage Securities
Portfolio, the Small-Cap Index Portfolio, the Growth Index Portfolio, the Value
Index Portfolio and the Short-Term Maturity Bond Portfolio; 0.80% of the average
daily net assets of the Maxim T. Rowe Price Equity/Income Portfolio; 0.90% of
the average daily net assets of the Corporate Bond Portfolio; 0.95% of the
average daily net assets of each of the Mid-Cap Portfolio and the Maxim INVESCO
Small-Cap Growth Portfolio; and 1.00% of the average daily net assets of each of
the Maxim INVESCO Balanced Portfolio, Small-Cap Value Portfolio, the Maxim
INVESCO ADR Portfolio, the Foreign Equity Portfolio, the Small-Cap Aggressive
Growth Portfolio and the International Equity Portfolio. As compensation for its
services with respect to the Fund, the Adviser receives monthly compensation at
the annual rate of 1.00% of the average daily net assets of each of the Maxim
Blue Chip and Maxim MidCap Growth Portfolios. As compensation for its services
with respect to the Fund, the Adviser receives monthly compensation at the
annual rate of 0.25% of the average daily net assets of each of the Maxim
Aggressive Profile, Maxim Moderately Aggressive Profile, Maxim Moderate Profile,
Maxim Moderately Conservative Profile and Maxim Conservative Profile Portfolios.
B. Allocation of Expenses. Except with respect to the Portfolios
indicated below, the Adviser shall be responsible for all expenses incurred in
performing the services set forth in this Agreement and all other expenses, and
the Fund shall pay only extraordinary expenses, including the cost of
litigation.
With respect to the Small-Cap Value, MidCap, Small-Cap Aggressive
Growth, Foreign Equity, Maxim T. Rowe Price Equity/Income, Maxim INVESCO
Small-Cap Growth, Maxim INVESCO ADR, International Equity, Maxim MidCap Growth
and Maxim Blue Chip Portfolios:
(a) The Adviser shall be responsible for all of its expenses
incurred in performing the services set forth in Article I
hereunder. Such expenses include, but are not limited to, costs
incurred in providing investment advisory services; compensating
and furnishing office space for managers and employees of the
Adviser connected with investment and economic research, trading,
and investment management of the Fund; and paying all fees of all
directors of the Fund who are affiliated persons of the Adviser
or any of its subsidiaries.
(b) The Fund pays all other expenses incurred in its
operation and all of its general administrative expenses,
including, but not limited to, redemption expenses, expenses of
portfolio transactions, shareholder servicing costs, pricing
costs (including the daily calculation of net asset value),
interest, charges of the custodian and transfer agent, if any,
cost of auditing services, directors' fees, legal expenses, state
franchise and other taxes, expenses of registering the shares
under Federal and state securities laws, Securities and Exchange
Commission fees, advisory fees, insurance premiums, costs of
maintenance of corporate existence, investor services (including
allocable personnel and telephone expenses), costs of printing
proxies, stock certificates, costs of corporate meetings, and any
extraordinary expenses, including litigation costs. Accounting
services are provided for the Fund by the Adviser and the Fund
shall reimburse the Adviser for its costs in connection
therewith.
C. Notwithstanding the second paragraph of Section B, above, with
respect to the following Portfolios of the Fund, the Adviser shall pay Expenses
which exceed an annual rate of: 1.35% of the average daily net assets of the
Small-Cap Value Portfolio; 1.10% of the average daily net assets of the Mid-Cap
and Maxim INVESCO Small-Cap Growth Portfolios; 1.30% of the average daily net
assets of the Small-Cap Aggressive Growth Portfolio; 0.95% of the Maxim T. Rowe
Price Equity/Income Portfolio; 1.50% of the Maxim INVESCO ADR, Foreign Equity
and International Equity Portfolios. For purposes of this Section C, "Expenses"
with respect to a Portfolio shall mean the sum of (a) the investment advisory
fee described in Section A, above, for such Portfolio, and (b) expenses to be
paid directly by the Fund, as described in clause (b) of the second paragraph of
Section B, above, with respect to such Portfolio. Notwithstanding the second
paragraph of Section B, above, with respect to the following Portfolios of the
Fund the Adviser shall pay Expenses which exceed an annual rate of: 1.05% of the
average daily net assets of the Maxim MidCap Growth Portfolio and 1.15% of the
average daily net assets of the Maxim Blue Chip Portfolio.
ARTICLE III
Portfolio Transactions and Brokerage
The Adviser agrees to determine the securities to be purchased or sold
by the Portfolios, subject to the provisions of Article I, 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 Adviser,
subject to the following limitations.
The Adviser is authorized to select the brokers or dealers that will
execute the purchases and sales of portfolio securities for the Fund and will
use its best efforts to obtain the most favorable net results and execution of
the Fund's orders, taking into account all appropriate factors, including price,
dealer spread or commission, if any, size of the transaction, and difficulty of
the transaction. In evaluating the net results of brokerage services offered by
brokers or dealers that also provide supplemental investment research to the
Adviser for a flat fee (see Article I) the Adviser need not take such a flat fee
into consideration.
If, in the judgment of the Adviser, the Fund would be benefited by
supplemental investment research in addition to such research furnished for a
flat fee, the Adviser is authorized to pay spreads or commissions to brokers or
dealers furnishing such services in excess of spreads or commissions which
another broker or dealer may charge for the same transaction. The expenses of
the Adviser may not necessarily be reduced as a result of receipt of such
supplemental information.
Subject to the above requirements and the provisions of the Investment
Company Act of 1940, the Securities Exchange Act of 1934, other applicable
provisions of law, and the terms of any exemption(s) therefrom, nothing shall
prohibit the Adviser from selecting brokers or dealers with which it or the Fund
are affiliated.
ARTICLE IV
Activities of the Adviser
The services of the Adviser to the Fund under this Investment Advisory
Agreement are not to be deemed exclusive and the Adviser will be free to render
similar services to others so long as its services under this Investment
Advisory Agreement are not impaired. It is understood that directors, officers,
employees and shareholders of the Fund are or may become interested in the
Adviser, as managers, employees or members or otherwise and that managers,
employees or members of the Adviser are or may become similarly interested in
the Fund, and that the Adviser is or may become interested in the Fund as
shareholder or otherwise.
It is agreed that the Adviser may use any supplemental investment
research obtained for the benefit of the Fund in providing investment advice to
its other investment advisory accounts. The Adviser or its subsidiaries may use
such information in managing their own accounts. Conversely, such supplemental
information obtained by the placement of business for the Adviser or other
entities advised by the Adviser will be considered by and may be useful to the
Adviser in carrying out its obligations to the Fund.
Securities held by the Fund may also be held by separate accounts or
other mutual funds for which the Adviser acts as an adviser or by the Adviser or
its subsidiaries. Because of different investment objectives or other factors, a
particular security may be bought by the Adviser or its subsidiaries or for one
or more clients when one or more clients are selling the same security. If
purchases or sales of securities for the Fund or other entities for which the
Adviser or its subsidiaries act as investment adviser or for their advisory
clients arise for consideration at or about the same time, the Fund agrees that
the 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 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 Adviser deems the purchase or
sale of a security to be in the best interests of the Fund 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 sold
or purchased for the Fund with those to be 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 Adviser in
the manner it considers to be most equitable and consistent with its fiduciary
obligations to the Fund and to such other accounts or companies. The Fund
recognizes that in some cases this procedure may adversely affect the size of
the position obtainable for a Fund portfolio.
ARTICLE V
Effectiveness of the Agreement
This Investment Advisory Agreement shall not become effective (and the
Adviser shall not serve or act as investment adviser) unless and until it is
approved by the Board including a majority of directors who are not parties to
this Agreement or interested persons of any such party to this Agreement, and by
the sole shareholder; and this Agreement shall come into full force and effect
on the date on which it is so approved.
ARTICLE VI
Term of the Agreement
This Investment Advisory Agreement shall remain in effect until the
earlier of one year from its effective date or the date of the first annual or
special meeting of shareholders of the Fund and shall continue so long as such
continuance is specifically approved by a majority of the outstanding shares of
the Fund at that time and at least annually thereafter (a) by the vote of the
majority of the Board, or by vote of a majority of the outstanding shares of the
Fund, including a majority of the outstanding shares of each 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 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 Adviser without sixty days'
prior written notice and without the prior approval of a new
investment advisory agreement by vote of a majority of the
outstanding shares of the Fund;
(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 Fund, on sixty days' written notice to
the Adviser;
(c) shall not be amended without specific approval of such
amendment by (i) the Board, or by the vote of a majority of the
outstanding shares of the Fund, including a majority of the
outstanding shares of each Portfolio, and (ii) 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
(d) shall automatically terminate upon assignment by either party.
ARTICLE VII
Recordkeeping
The Adviser agrees that all accounts and records which it maintains for
the Fund 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 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 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 Adviser's
offices upon reasonable prior written notice. In addition, the Adviser will
provide any materials, reasonably related to the investment 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 having
jurisdiction.
ARTICLE VIII
Liability of the Adviser
In the absence of willful misfeasance, bad faith, gross negligence or
reckless disregard of obligations or duties on the part of the Adviser (or its
managers, agents, employees, members, 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), neither the Adviser nor any of its
managers, employees or agents shall be subject to liability to the Fund or to
any shareholder for any act or omission in the course of, or connected with,
rendering services hereunder, 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, except to the
extent specified in Section 36(b) of the Investment Company Act concerning loss
resulting from a breach of fiduciary duty with respect to the receipt of
compensation for services.
ARTICLE IX
Governing Law
This Investment Advisory Agreement is subject to the provisions of the
Investment Company Act, 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 Fund or any of its Portfolios, 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.
IN WITNESS WHEREOF, the parties have caused this Investment Advisory
Agreement to be signed by their respective officials duly authorized, as of the
day and year first above written.
MAXIM SERIES FUND, INC.
By: /s/ J.D. Motz
--------------
Name: J.D. Motz
Title: President
Attest:
/s/ Beverly A. Byrne
- ------------------------------------------
Name: Beverly A. Byrne
GW CAPITAL MANGEMENT, LLC
By: /s/ J.T. Hughes
--------------
Name: J.T. Hughes
Title: President
Attest:
/s/ D.G. McLeod
- ------------------------
Name: D.G. McLeod
Amendment to
Investment Advisory Agreement
between Maxim Series Fund, Inc.
and G W Capital Management, LLC
The following amendment is made to the Investment Advisory Agreement
between Maxim Series Fund, Inc. and G W Capital Management, Inc. dated December
5, 1997, (the Agreement"), and is hereby incorporated into and made a part of
the Agreement:
1. The names of the Portfolios, wherever such references shall appear in the
Agreement or the amendments thereto, shall be re-designated as follows:
Prior Designation New Designation
----------------- ---------------
Money Market Portfolio Maxim Money Market Portfolio
Bond Portfolio Maxim Bond Portfolio
Investment Grade Corporate Bond Portfolio Maxim Bond Index Portfolio
U.S. Government Securities Portfolio Maxim U.S. Government Securities Portfolio
U.S. Government Mortgage Securities Portfolio Maxim U.S. Government Mortgage Securities Portfolio
Short-Term Maturity Bond Portfolio Maxim Short-Term Maturity Bond Portfolio
Corporate Bond Portfolio Maxim Loomis Sayles Corporate Bond Portfolio
Small-Cap Value Portfolio Maxim Ariel Small-Cap Value Portfolio
Small-Cap Aggressive Growth Portfolio Maxim Loomis Sayles Small-Cap Value Portfolio
Small-Cap Index Portfolio Maxim Index 600 Portfolio
MidCap Portfolio Maxim Ariel MidCap Value Portfolio
MidCap Growth Portfolio Maxim T. Rowe Price MidCap Growth Portfolio
Blue Chip Portfolio Maxim Founders Growth & Income Portfolio
Stock Index Portfolio Maxim Stock Index Portfolio
Value Index Portfolio Maxim Value Index Portfolio
Growth Index Portfolio Maxim Growth Index Portfolio
International Equity Portfolio Maxim Templeton International Equity Portfolio
Foreign Equity Portfolio Maxim Foreign Equity Portfolio
2. Article II, Section A is amended by adding the following:
As compensation for its services with respect to the Fund, the Adviser
receives monthly compensation at the annual rate of 1.30% of the average
daily net assets of the Maxim Dreyfus Global Bond Portfolio; 1.00% of the
average daily net assets of each of the Maxim Index European and Maxim Index
Pacific Portfolios; 0.50% of the Maxim Bond Index Portfolio; 0.60% of the
Maxim Index 400 Portfolio; and 0.10% of the average daily net assets of each
of the Maxim 401(k) Aggressive Profile, Maxim 401(k) Moderately Aggressive
Profile, Maxim 401(k) Moderate Profile, Maxim 401(k) Moderately Conservative
Profile and Maxim 401(k) Conservative Profile Portfolios.
3. Article II Section B is amended by deleting the first clause of the second
paragraph thereof and substituting the following:
With respect to the Maxim Ariel Small-Cap Value, Maxim Ariel MidCap Value,
Maxim Loomis Sayles Small-Cap Value, Foreign Equity, Maxim T. Row Price
Equity/Income, Maxim INVESCO Small-Cap Growth, Maxim INVESCO ADR, Maxim
Templeton International Equity, Maxim T. Rowe Price MidCap Growth, Maxim
Founders Blue Chip, Maxim Index European and Maxim Index Pacific Portfolios:
4. Article II, Section C is amended by adding the following:
Notwithstanding the second paragraph of Section B, above, with respect to
the following Portfolios of the Fund the Adviser shall pay Expenses which
exceed an annual rate of: 1.20% of the average daily net assets of the Maxim
Index European and Maxim Index Pacific Portfolios.
IN WITNESS WHEREOF, the parties hereto have caused this amending agreement to be
executed in duplicate, in their names and on their behalf by and through their
duly authorized officers as of the 26th day of July, 1999.
MAXIM SERIES FUND, INC.
Attest: /s/ Beverly A. Byrne By:/s/ J.D. Motz
------------------------ -------------------
Name: Beverly A. Byrne Name: J.D. Motz
Title: President
G W CAPITAL MANAGEMENT, INC.
Attest: /s/ D.G. McLeod By: /s/ J.T. Hughes
-------------------------- -------------------
Name: D.G. McLeod Name: J.T. Hughes
Title: President
EXHIBIT E
Amendment to
Investment Advisory Agreement
between Maxim Series Fund, Inc.
and G W Capital Management, LLC
The following amendment is made to the Investment Advisory Agreement
between Maxim Series Fund, Inc. and GW Capital Management, LLC, dated December
5, 1997, as amended effective July 26, 1999 (the "Agreement"), and is hereby
incorporated into and made a part of the Agreement:
1. Article I, is amended by inserting the following Section D following Article
I, Section C:
D. Relationship With Sub-advisers Pursuant to Manger-of-Managers Structure.
In fulfilling its duties, the Adviser may select and contract at its own expense
with sub-advisers to manage the purchase, retention and disposition of the
investments, securities and cash of each Portfolio other than the Maxim JP
Morgan Growth & Income Portfolio or any other Portfolio that is part of a
master-feeder arrangement. Furthermore, one or more Portfolios, as determined by
the Adviser, may be advised by two or more sub-advisers. Under these
circumstances, the Adviser would allocate such a Portfolio's assets between and
among its sub-advisers. The Adviser will continue to have responsibility for all
investment advisory services furnished pursuant to any sub-advisory agreement.
The Fund and the Adviser understand and agree that the Adviser will manage
the Fund in a "manager-of-managers" style, which contemplates that the Adviser,
among other things, is responsible for
(i) reviewing and recommending prospective sub-advisers for each
Portfolio;
(ii) monitoring and supervising each
sub-adviser's performance, including each sub-adviser's
practices in placing orders and selecting brokers and dealers to
execute the Portfolios' transactions and in negotiating
commission rates;
(iii) providing investment management evaluation services including
quantitative and qualitative analysis as well as periodic
in-person, telephonic and written consultations with the
sub-advisers;
(iv) communicating performance expectations and evaluations to each
sub-adviser;
(v) determining whether each sub-advisory agreement should be
renewed, modified, or terminated; and
(vi) providing reports to the Board covering the results of its
evaluation, monitoring functions and determinations with respect
to each sub-adviser.
All actions of the Adviser are subject to review by the Board. The Fund
recognizes that a sub-adviser's services may be terminated or modified pursuant
to this process, and that the Adviser may appoint a new sub-adviser for a
sub-adviser that is so removed.
Each sub-adviser's fees will be paid by the Adviser out of the advisory
fees received from each of the Portfolios. The fee will be computed daily and
paid periodically at an annual rate applied to the value of the average daily
net assets of the Portfolio or, in the future, the portion of the Portfolio
managed by that sub-adviser. Fees paid to a sub-adviser of a Portfolio with
multiple sub-advisers would depend both on the fee rate negotiated with the
Adviser and on the percentage of the Portfolio's assets allocated to that
sub-adviser by the Adviser, which may vary from time to time. Thus, the basis
for fees paid to any such sub-adviser would not be constant, and the relative
amounts of fees paid to the various sub-advisers of a Portfolio would fluctuate.
These internal fluctuations, however, would not affect the total management fees
paid by a Portfolio, which would continue to be fixed at the rates and on the
terms described in Article II, Section A of the Agreement. The Fund and its
Portfolios have no responsibility to compensate any sub-adviser in any manner.
The sub-advisers serve in a sub-advisory capacity to the Adviser with
respect to each Portfolio for which they provide investment advice. Subject to
the general supervision and direction of the Adviser and, ultimately, the Board,
each sub-adviser for a Portfolio:
(i) furnishes a continuous investment program for the Portfolio (or, in
the future, the portion thereof for which it provides investment advice) it
advises in accordance with the Portfolio's stated investment objectives and
policies;
(ii) makes investment decisions for the Portfolio (or, in the future,
the portion thereof for which it provides investment advice); and
(iii) places all orders to purchase and sell securities on behalf of the
Portfolio (or, in the future, the portion thereof for which it provides
investment advice).
Each sub-adviser is, and any future sub-adviser will be, unless exempt,
registered as an investment adviser under the Investment Advisers Act of 1940
and is or will be an "investment adviser," as defined in Section 2(a)(20) of the
Investment Company Act, with respect to the Portfolio or Portfolios (or portion
thereof) for which it provides investment advice. In addition, a sub-adviser may
perform certain limited administrative functions associated with its services
for the relevant Portfolio(s) as set forth in the relevant sub-advisory
agreement.
If a Portfolio employs multiple sub-advisers, each of whom would have
complete discretion to purchase and sell portfolio securities for that portion
of the assets of the Portfolio assigned to it by the Adviser, the Adviser will
monitor the performance of both the Portfolio as a whole and each sub-adviser
and will reallocate Portfolio assets among individual sub-advisers, or recommend
to the Board that a Portfolio employ or terminate particular sub-advisers, to
the extent necessary to achieve the overall objective of the particular
Portfolio.
Pursuant to the "manager-of-managers" structure, each sub-adviser
recommended by the Adviser will be selected and approved by the Board, including
a majority of the Directors who are not "interested persons," as defined in
section 2(a)(19) of the Investment Company Act, of the Fund or the Manager (the
"Independent Directors"), and each sub-adviser will perform its services
pursuant to a written sub-advisory agreement that complies with Section 15(a) of
the Investment Company Act and has been approved by the Board, including a
majority of the Independent Directors.
2. The preamble is amended to reflect that the Adviser has registered to do
business under the name "Maxim Capital Management, LLC."
IN WITNESS WHEREOF, the parties hereto have caused this amending
agreement to be executed in duplicate, in their names and on their behalf by and
through their duly authorized officers as of the ___ day of __________, 2002.
MAXIM SERIES FUND, INC.
Attest: ------------------------- By:--------------------------------
Name: Beverly A. Byrne Name: W.T. McCallum
Title: President
GW CAPITAL MANAGEMENT, LLC
(d/b/a Maxim Capital Management LLC)
Attest:
----------------------------------------------------------
By:
- -----------------------------------------------------------------
Name: Beverly A. Byrne Name: M.T.G. Graye
Title: President
PROXY
FOR
SPECIAL MEETING OF SHAREHOLDERS OF
MAXIM SERIES FUND, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE FUND.
The undersigned hereby appoints Beverly A. Byrne and David T. Buhler, or any of
them, to be the attorneys and proxies of the undersigned at a special meeting of
shareholders of the Maxim Series Fund, Inc. (the "Fund") to be held at 8525 East
Orchard Road., Greenwood Village, Colorado, at 9:30 a.m., Mountain Time, on
April 4, 2002, and at any adjournment thereof, and to represent and cast the
votes held on record by the undersigned on December 31, 2001, upon the proposals
on the reverse side and as set forth in the Notice of Special Meeting and Proxy
Statement for such meeting.
Please sign and date your Proxy and return promptly in the accompanying
envelope.
Dated: , 2002
------------------------------ --------
______________________________________________
(Signature of Shareholder)
This Proxy may be revoked by the Shareholder (Contractowner) at any time prior
to the Special Meeting.
Please fill in box(es) as shown using black or blue ink or number 2 pencil [X]
PLEASE DO NOT USE FINE POINT PENS.
This Proxy will be voted, and voted as specified. IF NO SPECIFICATIONS ARE MADE,
THIS PROXY WILL BE VOTED IN THE SAME PROPORTION AS THOSE FOR WHICH
SPECIFICATIONS ARE MADE. The Board of Directors recommends a vote FOR all
proposals.
For Against Abstain
1) To approve an amendment to the Profile Portfolios' fundamental investment policy
concerning investments in liquid, non-investment company securities.
[ ] [ ] [ ] 1.
2) To approve a new sub-advisory agreement reappointing Barclays Global Fund Advisors as
sub-adviser for the Maxim Equity Index Portfolios.
[ ] [ ] [ ] 2.
3) To approve a new "Manager-of-Managers" structure for the Fund.
[ ] [ ] [ ] 3.
4) To approve an amendment to the investment advisory agreement regarding a new Manager
of Managers structure for the Fund.
[ ] [ ] [ ] 4.
5) To approve an amendment to the fundamental investment policies of the Fund
concerning:
5.a. Borrowing [ ] [ ] [ ] 5.a.
5.b. Commodities [ ] [ ] [ ] 5.b.
5.c. Industry concentration [ ] [ ] [ ] 5.c.
5.d. Loans [ ] [ ] [ ] 5.d.
5.e. Diversification [ ] [ ] [ ] 5.e.
5.f. Real estate [ ] [ ] [ ] 5.f.
5.g. Senior securities [ ] [ ] [ ] 5.g.
5.h. Underwriting [ ] [ ] [ ] 5.h.
6) To approve an amendment to the fundamental investment policies of the Fund
concerning:
6.a. Purchases of securities on margin [ ] [ ] [ ] 6.a.
6.b. Investments in other investment companies [ ] [ ] [ ] 6.b.
6.c. Investments in oil, gas and/or mineral exploration [ ] [ ] [ ] 6.c.
6.d. Exercise of control [ ] [ ] [ ] 6.d.
6.e. Restricted securities [ ] [ ] [ ] 6.e.
6.f. Foreign securities [ ] [ ] [ ] 6.f.
7) IN THE DISCRETION OF THE BOARD OF DIRECTORS, ON SUCH OTHER BUSINESS WHICH
MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.